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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



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FORM 10-QSB



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(Mark One)



|x | QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2007



| ̈ | 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: 000-13858



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MEDICAL SOLUTIONS MANAGEMENT INC.

(Exact Name Of Registrant As Specified In Its Charter)



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|                         |  |                                     
|------------------------ |  | ------------------------------------
|Nevada                   |  | 86-0214815                          
|(State of Incorporation) |  | (I.R.S. Employer Identification No.)

237 Cedar Hill Street, Marlborough, Massachusetts 01752

(Address of principal executive offices)(Zip Code)

(508) 597-6300

(Registrants telephone number, including area code)





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(Former name, former address and former fiscal year, if changed since last report)



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Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12
months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  x    No ̈

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

As of May 10, 2007, there were 20,446,729
shares of the issuers common stock issued and outstanding.

Transitional Small Business Disclosure Format (Check
one): Yes ̈No  x



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TABLE OF CONTENTS



|                             |  |                                                             |  |     
|---------------------------- |  | ----------------------------------------------------------- |  | ----
|                             |  |                                                             |  | Page
|PART I
FINANCIAL INFORMATION |  | 1                                                          
|                             |  |                                                            
|ITEM 1.                      |  | FINANCIAL STATEMENTS                                        |  | 1   
|ITEM 2.                      |  | MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION   |  | 14  
|ITEM 3A(T).                  |  | CONTROLS AND PROCEDURES                                     |  | 22  
|                             | 
|PART II
OTHER INFORMATION    |  | 24                                                         
|                             |  |                                                            
|ITEM 1.                      |  | LEGAL PROCEEDINGS                                           |  | 24  
|ITEM 2.                      |  | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |  | 24  
|ITEM 3.                      |  | DEFAULTS UPON SENIOR SECURITIES                             |  | 24  
|ITEM 4.                      |  | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS         |  | 24  
|ITEM 5.                      |  | OTHER INFORMATION                                           |  | 24  
|ITEM 6.                      |  | EXHIBITS                                                    |  | 25  



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Explanatory Notes

Unless the context otherwise requires, in this quarterly report on Form 10-QSB the term MSMI refers Medical Solutions Management Inc. and the term OrthoSupply refers to MSMIs wholly-owned
subsidiary, OrthoSupply Management, Inc.

Note on Forward-Looking Information

Except for historical facts, the statements in this quarterly report on Form 10-QSB are forward-looking statements. Forward-looking statements are
merely our current predictions of future events. These statements are inherently uncertain, and actual events could differ materially from our predictions. Important factors that could cause actual events to vary from our predictions include those
discussed under the headings Risk Factors, Managements Discussion and Analysis or Plan of Operations and Business in our Annual Report on Form 10-KSB for fiscal year ended December 31, 2006. We assume
no obligation to update our forward-looking statements to reflect new information or developments. We urge readers to review carefully the risk factors described in the Annual Report on Form 10-KSB for fiscal year ended December 31, 2006 and
the other documents that we file with the SEC. You can read these documents atwww.sec.gov.



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PART I FINANCIAL INFORMATION



|ITEM 1: | FINANCIAL STATEMENTS
|------- | --------------------

Medical Solutions Management
Inc.

Consolidated Balance Sheet (unaudited)

March 31, 2007



|                                                                                      |  |                     |             |  
|------------------------------------------------------------------------------------- |  | ------------------- | ----------- | -
|                                                                                      |  | As ofMarch 31, 2007 |            
|Assets                                                                                |  |                     |             |  
|Current Assets                                                                        |  |                     |             |  
|Cash & cash equivalents                                                               |  | $                   | 7,489       |  
|Trade accounts receivable, net                                                        |  |                     | 772,359     |  
|Other receivables, net                                                                |  |                     | 412,095     |  
|Inventory                                                                             |  |                     | 222,656     |  
|Prepaid expenses                                                                      |  |                     | 52,844      |  
|                                                                                      |  |                     |             |  
|Total current assets                                                                  |  |                     | 1,467,443   |  
|Property & equipment (net)                                                            |  |                     | 112,091     |  
|                                                                                      |  |                     |             |  
|Total assets                                                                          |  | $                   | 1,579,534   |  
|Liabilities & Stockholders Deficiency                                                |  |                     |             |  
|Current Liabilities:                                                                  |  |                     |             |  
|Accounts payable                                                                      |  | $                   | 303,687     |  
|Accrued expenses                                                                      |  |                     | 619,043     |  
|Advances payable                                                                      |  |                     | 186,154     |  
|Accrued note extension expense                                                        |  |                     | 8,676,888   |  
|Borrowings from revolving line of credit due in less than one year                    |  |                     | 300,000     |  
|Notes payable due in less than one year                                               |  |                     | 1, 050,000  |  
|Convertible notes payable due in less than one year                                   |  |                     | 236,588     |  
|                                                                                      |  |                     |             |  
|Total current liabilities                                                             |  |                     | 11,372,360  |  
|Convertible notes payable long term (net)                                            |  |                     | 1,119,366   |  
|                                                                                      |  |                     |             |  
|Total long-term liabilities                                                           |  |                     | 1,119,366   |  
|                                                                                      |  |                     |             |  
|Total Liabilities                                                                     |  |                     | 12,491,726  |  
|Stockholders Deficiency                                                              |  |                     |             |  
|Preferred stock-5,000,000 authorized $0.001 par value-none issued and outstanding     |  |                     |             |  
|Common stock-100,000,000 authorized $0.0001 par value 20,446,729 issued & outstanding |  |                     | 2,045       |  
|Additional paid in capital                                                            |  |                     | 15,039,749  |  
|Accumulated Deficit                                                                   |  |                     | (25,953,986 | )
|                                                                                      |  |                     |             |  
|Total Stockholders Deficiency                                                        |  |                     | (10,912,192 | )
|                                                                                      |  |                     |             |  
|Total Liabilities & Stockholders Deficiency                                          |  | $                   | 1,579,534   |  

See Notes to Unaudited Interim Financial Statements.



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Medical Solutions Management Inc.

Consolidated Statement of Operations from January 1, 2007 to March 31, 2007 (unaudited)

and the comparative period for Fiscal Year 2006



|                                                   |  |                                   |             |   |                                  |   |            |  
|-------------------------------------------------- |  | --------------------------------- | ----------- | - | -------------------------------- | - | ---------- | -
|                                                   |  | Three Months Ended March 31,
2007 |             |   | Three Months Ended April 1,
2006 |  
|                                                   |  |                                   |             |   | (Restated)                       |  
|Revenue:                                           |  |                                   |             |   |                                  |   |            |  
|Sales of Medical Products                          |  | $                                 | 649,935     |   |                                  | $ | 125,793    |  
|Service Revenue                                    |  |                                   | 81,899      |   |                                  |   | 27,870     |  
|                                                   |  |                                   |             |   |                                  |   |            |  
|Total revenue                                      |  | $                                 | 731,834     |   |                                  | $ | 153,663    |  
|                                                   |  |                                   |             |   |                                  |   |            |  
|Cost of Sales:                                     |  |                                   |             |   |                                  |   |            |  
|Cost of Medical Products                           |  |                                   | 403,295     |   |                                  |   | 92,016     |  
|Cost of Services                                   |  |                                   | 146,743     |   |                                  |   | 17,907     |  
|                                                   |  |                                   |             |   |                                  |   |            |  
|Costs Applicable to Sales & Service Revenue        |  |                                   | 550,038     |   |                                  |   | 109,923    |  
|                                                   |  |                                   |             |   |                                  |   |            |  
|Gross Profit                                       |  |                                   | 181,796     |   |                                  |   | 43,740     |  
|                                                   |  |                                   | 24.8        | % |                                  |   | 28.5       | %
|Selling, General & Administrative Expenses         |  |                                   | 1,079,423   |   |                                  |   | 493,975    |  
|Revolving line of credit financing expense         |  |                                   | 11,471,023  |   |                                  |   | 0          |  
|Note extension penalty expense                     |  |                                   | 8,676,888   |   |                                  |   | 0          |  
|                                                   |  |                                   |             |   |                                  |   |            |  
|Total Operating Expenses                           |  |                                   | 21,227,334  |   |                                  |   | 493,975    |  
|                                                   |  |                                   |             |   |                                  |   |            |  
|(Loss) Before Other Income (Expense)               |  |                                   | (21,045,538 | ) |                                  |   | (450,235   | )
|Other Income (Expense)                             |  |                                   |             |   |                                  |   |            |  
|Interest Income                                    |  |                                   | 886         |   |                                  |   | 2009       |  
|Interest Expense                                   |  |                                   | (169,854    | ) |                                  |   | 0          |  
|                                                   |  |                                   |             |   |                                  |   |            |  
|Interest (expense), net                            |  |                                   | (168,968    | ) |                                  |   | 2009       |  
|                                                   |  |                                   |             |   |                                  |   |            |  
|(Loss) Before Income Taxes                         |  |                                   | (21,214,506 | ) |                                  |   | (448,895   | )
|                                                   |  |                                   |             |   |                                  |   |            |  
|Income Taxes                                       |  |                                   | 3,162       |   |                                  |   | 669        |  
|                                                   |  |                                   |             |   |                                  |   |            |  
|Net Loss available to common shareholders          |  | $                                 | (21,217,668 | ) |                                  | $ | (448,895   | )
|                                                   |  |                                   |             |   |                                  |   |            |  
|Basic and Diluted Net Loss Per Common Share        |  | $                                 | (1.04       | ) |                                  | $ | (0.02      | )
|                                                   |  |                                   |             |   |                                  |   |            |  
|Weighted Average Common Shares Outstanding (Basic) |  |                                   | 20,446,729  |   |                                  |   | 19,766,201 |  



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Medical Solutions Management Inc.

Consolidated Statement of Cash Flows from January 1, 2007 to March 31, 2007 (unaudited)

and the comparative period for Fiscal Year 2006



|                                                                                    |  |                                   |             |   |                                  |   |          |  
|----------------------------------------------------------------------------------- |  | --------------------------------- | ----------- | - | -------------------------------- | - | -------- | -
|                                                                                    |  | Three Months Ended March 31,
2007 |             |   | Three Months Ended April 1,
2006 |  
|                                                                                    |  |                                   |             |   | (Restated)                       |  
|Cash Flows from Operating Activities:                                               |  |                                   |             |   |                                  |   |          |  
|Net Income                                                                          |  | $                                 | (21,217,668 | ) |                                  | $ | (448,895 | )
|Adjustments required to reconcile net loss to cash flows from operating activities: |  |                                   |             |   |                                  |   |          |  
|Increase in allowance for doubtful accounts                                         |  |                                   | 22,832      |   |                                  |   | 29,702   |  
|Depreciation & Amortization                                                         |  |                                   | 14,021      |   |                                  |   | 8,800    |  
|Amortization of debt discount                                                       |  |                                   | 129,233     |   |                                  |   | 0        |  
|Stock and options issued for services                                               |  |                                   | 0           |   |                                  |   | 15,000   |  
|Fair value of warrants issued for revolving line of credit financing                |  |                                   | 11,471,023  |   |                                  |   | 0        |  
|Fair value of warrants issuable for extension on maturity of notes                  |  |                                   | 8,676,888   |   |                                  |   | 0        |  
|Changes in Operating Assets & Liabilities                                           |  |                                   |             |   |                                  |   |          |  
|Trade accounts receivable                                                           |  |                                   | (410,941    | ) |                                  |   | (55,136  | )
|Other receivables                                                                   |  |                                   | (286,882    | ) |                                  |   | 0        |  
|Inventory                                                                           |  |                                   | (1,323      | ) |                                  |   | (31,258  | )
|Prepaid expenses                                                                    |  |                                   | (16,898     | ) |                                  |   | (6,869   | )
|Accounts payable                                                                    |  |                                   | (22,476     | ) |                                  |   | (174,969 | )
|Accrued expenses                                                                    |  |                                   | 183,581     |   |                                  |   | 143,047  |  
|Advances payable                                                                    |  |                                   | 186,154     |   |                                  |   | 0        |  
|                                                                                    |  |                                   |             |   |                                  |   |          |  
|Net cash used by operating activities                                               |  |                                   | (1,272,456  | ) |                                  |   | (520,578 | )
|                                                                                    |  |                                   |             |   |                                  |   |          |  
|Cash Flows from Investing Activities:                                               |  |                                   |             |   |                                  |   |          |  
|Purchase of Equipment                                                               |  |                                   | (23,113     | ) |                                  |   | (2,321   | )
|                                                                                    |  |                                   |             |   |                                  |   |          |  
|Net cash used by investing activities                                               |  |                                   | (23,113     | ) |                                  |   | (2,321   | )
|                                                                                    |  |                                   |             |   |                                  |   |          |  
|Cash Flows from Financing Activities:                                               |  |                                   |             |   |                                  |   |          |  
|Proceeds from borrowings                                                            |  |                                   | 650,000     |   |                                  |   | 0        |  
|Proceeds from borrowings from revolving line of credit                              |  |                                   | 300,000     |   |                                  |   | 0        |  
|                                                                                    |  |                                   |             |   |                                  |   |          |  
|Net cash used by financing activities                                               |  |                                   | 950,000     |   |                                  |   | 0        |  
|                                                                                    |  |                                   |             |   |                                  |   |          |  
|Net Change In Cash                                                                  |  |                                   | (345,569    | ) |                                  |   | (522,899 | )
|Cash-Beginning                                                                      |  |                                   | 353,058     |   |                                  |   | 699,740  |  
|                                                                                    |  |                                   |             |   |                                  |   |          |  
|Cash-Ending                                                                         |  | $                                 | 7,489       |   |                                  |   | 176,841  |  
|                                                                                    |  |                                   |             |   |                                  |   |          |  
|See Notes to Interim Financial Statements                                           |  |                                   |             |   |                                  |   |          |  
|Supplemental disclosure of non-cash transactions:                                   |  |                                   |             |   |                                  |   |          |  
|Value of common stock warrants issued for services and financing charges            |  |                                   | 11,471,023  |   |                                  |   | 0        |  

See Notes to Unaudited Interim Financial Statements.



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MEDICAL SOLUTIONS MANAGEMENT INC.

NOTES TO UNAUDITED INTERIM FINANCIALS STATEMENTS

1. Basis of Presentation

The Financial Statements presented herein have been prepared by us in accordance with the accounting policies described in our Annual Report on Form 10-KSB for fiscal
year ended December 31, 2006 and should be read in conjunction with the Notes to Consolidated Financial Statements which appear in that report.

The
preparation of these financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses,
and related disclosure of contingent assets and liabilities. Amounts from 2006 may also be reclassified to conform to current 2007 classifications. On an on going basis, the Company evaluates its estimates, including those related intangible assets,
income taxes, insurance obligations and contingencies and litigation. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the
basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other resources. Actual results may differ from these estimates under different assumptions or conditions.

In the opinion of management, the information furnished in this Form 10-QSB reflects all adjustments necessary for a fair statement of the financial position and results
of operations and cash flows as of and for the three-month period ended March 31, 2007 and April 1, 2006. All such adjustments are of a normal recurring nature. The Consolidated Financial Statements have been prepared in accordance with
the instructions to Form 10-QSB and therefore do not include some information and notes necessary to conform to annual reporting requirements.

2.
Earnings/Loss Per Share

Basic earnings per share are computed by dividing income available to common shareholders (the numerator) by the
weighted-average number of common shares outstanding (the denominator) for the period. Diluted earnings per share assume that any dilutive convertible securities outstanding were converted, with related preferred stock dividend requirements and
outstanding common shares adjusted accordingly. It also assumes that outstanding common shares were increased by shares issuable upon exercise of those stock options for which market price exceeds the exercise price, less shares which could have
been purchased by us with the related proceeds. In periods of losses, diluted loss per share is computed on the same basis as basic loss per share as the inclusion of any other potential shares outstanding would be anti-dilutive.

3. New Accounting Standards

In May 2005, the FASB issued SFAS
No. 154, Accounting Changes and Error Corrections, which replaced APB Opinion No. 20 Accounting Changes, and FASB Statement No. 3 Reporting Accounting Changes in Interim Financial Statements, and
changed the requirements for the accounting for and reporting of a change in accounting principle. This Statement requires retrospective application to prior periods financial statements of changes in accounting principle, unless it is
impracticable to determine either the period-specific effects or the cumulative effect of the change. This Statement is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. We do not
believe that adoption of SFAS 154 will have a material impact on our financial statements.

On December 21, 2006, FASB Staff Position (FSP EITF
00-19-2) Accounting for Registration Payment Arrangements,specifies that the contingent obligation to make future payments or otherwise transfer consideration under a registration payment arrangement, whether issued as a separate agreement
or included as a provision of a financial instrument or other agreement, should be separately recognized and measured in accordance with FASB Statement No. 5, Accounting for Contingencies. The guidance in this FSP amends FASB Statement
No. 133, Accounting for Derivative Instruments and Hedging Activities,and No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity,and FASB Interpretation No. 45,
Guarantors Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Others,to include scope exceptions for registration payment arrangements. This FSP further clarifies that a financial instrument subject
to a registration payment arrangement should be accounted for in accordance with other applicable generally accepted accounting principles (GAAP) without regard to the contingent obligation to transfer consideration pursuant to the registration
payment arrangement.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (SFAS 157). SFAS 157 provides guidance for using
fair value to measure assets and liabilities. It also responds to investors requests for expanded information about the extent to which companies measure assets and liabilities at fair value, the information used to measure fair value, and the
effect of fair value measurements on earnings. SFAS 157 applies whenever other standards required (or permit) assets or liabilities to be measured at fair



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value, and does not expand the use of fair value in any new circumstances. SFAS 157 is effective for financial statements issued for fiscal years beginning
after November 15, 2007. We are currently evaluating the effect that the adoption of SFAS 157 will have on our results of operations and financial condition and are not yet in a position to determine such effects.

In September 2006, the SEC staff issued Staff Accounting Bulletin No. 108, Considering the Effects of Prior Year Misstatements when Quantifying
Misstatements in Current Year Financial Statements(SAB 108). SAB 108 establishes an approach that requires quantification of financial statement misstatements based on the effects of the misstatements on each of the
Companys consolidated financial statements and the related financial statement disclosures. SAB 108 is effective for the year ending December 31, 2006. We have adopted SAB 108 and have determined that it has no effect on our
financial statements.

In June 2006, the FASB issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxesan
Interpretation of FASB Statement 109 (FIN 48), which clarifies the accounting for uncertain tax positions. This Interpretation allows the tax effects from an uncertain tax position to be recognized in the Companys financial
statements if the position is more likely than not to be sustained upon audit, based on the technical merits of the position. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods,
disclosure and transition. FIN 48 is effective for fiscal years beginning after December 15, 2006. We do not expect the adoption of FIN 48 to have a material impact on our financial statements.

4. Notes Payable

Convertible Note Payable

On June 28, 2006, we issued a $2.0 million convertible promissory note (the Note). The Note bears interest at 6% per annum until paid or
converted and interest is payable quarterly commencing September 30, 2006. The Note matures on June 27, 2008. The conversion rate is approximately $0.21 per share (subject to certain anti-dilution provisions).

The Note was issued with a non-detachable conversion feature and 16,000,000 detachable warrants. The Company evaluates and accounts for such securities in accordance
with EITF Issue Nos. 98-5, 00-19, 00-27, 05-02, 05-04 and 05-08, and SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended (SFAS No. 133).

In accordance SFAS No. 133, we evaluate that the holders conversion right provision, interest rate adjustment provision, liquidated damages clause, cash
premium option (if applicable), and the redemption option (collectively, the debt features) contained in the terms governing the Note to determine whether they are or are not clearly and closely related to the characteristics of the
Note. Accordingly, if the features qualify as embedded derivative instruments at issuance and, furthermore if they do or do not qualify for any scope exception within SFAS No. 133 (paragraphs 12-32), then they are required by SFAS
No. 133 to be accounted for separately from the debt instrument and recorded as derivative financial instruments.

The Note is convertible at the
option of the holder at any time and from time to time into common stock of the Company at a conversion price of $0.207016 per share, subject to certain anti-dilution adjustments. Pursuant to the terms of the Note, the conversion price will be reset
(the Reset Provision) in the event we issue shares, convertible securities or options entitling the recipient to subscribe for or purchase shares at a price per share less than the fixed conversion price then in effect.

The Note contains customary negative covenants for loans of this type, including limitations on the Companys ability to incur indebtedness, issue securities, make
loans and investments, make capital expenditures, dispose of assets and enter into mergers and acquisition transactions. Events of default under the Note are described below and include breaches of the Companys obligations under the Note and
other agreements relating to the transaction, certain defaults under any other indebtedness of at least $250,000 and certain bankruptcy events. Upon an event of default, all outstanding principal plus all accrued and unpaid interest become
immediately due and payable. As of December 31, 2006, the Company is not in default on any of its debt covenants.

Material events that would cause
default under the Note include:



| |  |  | failure to pay principal or any premium on any Note when due;
| | - |  | -------------------------------------------------------------



| |  |  | failure to pay any interest, late fees or liquidated damages on any Note after a period of ten business days;
| | - |  | -------------------------------------------------------------------------------------------------------------



| |  |  | failure to perform other covenants under any Note that is not cured by thirty-five days after notice;
| | - |  | -----------------------------------------------------------------------------------------------------



| |  |  | any representation or warranty under the financing documents that is untrue or incorrect in any material respect;
| | - |  | -----------------------------------------------------------------------------------------------------------------



| |  |  | certain events such as bankruptcy or assignment for the benefit of creditors of the Company or any of its subsidiaries;
| | - |  | -----------------------------------------------------------------------------------------------------------------------



| |  |  | any default by the Company or its subsidiaries under any instrument in excess of $250,000 that results in such obligation becoming due and payable prior to
maturity;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| |  |  | the Company becoming party to a change of control transaction; and
| | - |  | ------------------------------------------------------------------



| |  |  | failure to maintain the required reservation of additional shares of authorized common stock.
| | - |  | ---------------------------------------------------------------------------------------------

On June 28, 2006, we entered into a Securities Purchase Agreement (the SPA) with Vicis Capital Master Fund (Vicis). This SPA affirmed that
the financing was a private placement to accredited investors and accordingly exempt from registration pursuant to Section 4(2) of the Securities Act of 1933, as amended. Pursuant to the SPA, Vicis purchased a Senior Secured Convertible Note
(Note) in aggregate the principal amount of which was $2,000,000 together with warrants (Warrants) to purchase an aggregate of 16,000,000 shares of our common stock. We also entered into a Security Agreement dated
June 28, 2006 by and between the Company and the Vicis (the Security Agreement), pursuant to which the Note is secured by substantially all of the assets of the Company, including our intellectual property.

Interest is payable, in cash, at maturity and accrues at 6%. The entire principal amount of the Note is payable on its maturity date of June 28, 2008, subject to
its earlier conversion, acceleration or redemption. At the option of the Company, interest payable upon conversion of all or a portion of the converted principal amount may be settled either in cash or in registered common stock (at a conversion
price equal to the then current debt conversion price of the common stock).

The 16,000,000 Warrants permit the Vicis to purchase 8,000,000 shares of
common stock at an exercise price of $0.375 per share and to purchase 8,000,000 shares of common stock at an exercise price of $0.345 per share and are exercisable from June 28, 2006 until June 27, 2011. The Warrants contain anti-dilution
provisions similar to the convertible debt and are required to be reduced to an exercise price not less than amounts received for new issues of common stock or rates granted to newly issued convertible securities, or exercise prices of options in an
equity financing.

The values ascribed to the Note, the conversion feature of the Note, other potential embedded derivative features, and detachable
Warrants follow the guidance of EITF Issue No. 00-19, Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Companys Own Stock; SFAS No. 150, Accounting for Certain Financial Instruments with
Characteristics of both Liabilities and Equity; and EITF Issue No. 00-27, Application of Issue No. 98-5 to Certain Convertible Instruments. The Company evaluated the impact of the registration rights agreement on the embedded
conversion feature and the Warrants and determined their effect based on EITF Issue No. 00-19. In accordance with EITF Issue No. 00-19, a transaction which includes a potential for net-cash settlement, including liquidated damages, requires that
derivative financial instruments, including warrants and the embedded conversion feature, be bifurcated, and initially recorded at fair value as an asset or liability and subsequent changes in fair value be reflected in the statement of operations.
Since the liquidated damages may be settled in shares at our discretion, we applied the criteria in EITF 00-19 and determined that the related instruments were equity instruments.

The terms of the convertible debentures include a reset conversion feature which provides for a reduction in conversion price of the debentures into shares of the Companys common stock at a rate equal to the
terms of any future offering. The Company has determined that the current conversion rate is fixed and determinate and will change only in circumstances under managements control. Also, because the conversion option is indexed to its own stock
and a separate instrument with the same terms would be classified in stockholders equity in the statement of financial position, the written option is not considered to be a derivative instrument for the issuer under SFAS 133 paragraph 11(a)
and, accordingly, was not separated from the host contract.

In accordance with the FASB Emerging Issues Task Force (EITF) Issue No. 98-5
Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjustable Conversion Ratios and EITF Issue No. 00-27 Application of Issue No. 98-5 to Certain Convertible Instruments, we
determined that the Note contains an embedded beneficial conversion feature resulting in a discount to the carrying amount of the Notes equal to:



|(i) | the difference between the stated conversion rate and the market price of our common stock on the date of issuance; multiplied by
|--- | ---------------------------------------------------------------------------------------------------------------------------------



|(ii) | the number of shares into which the Notes are convertible. Per EITF Issue No. 98-5 and EITF Issue No. 00-27, upon issuance we recorded a $791,972 discount to the Notes.
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------

For convertible debt securities, any recorded discount resulting from the allocation
of proceeds to the beneficial conversion feature should be recognized as interest expense over the minimum period from the date of issuance to the date at which the debt holder can realize that return (that is, through the date of earliest
conversion ) using the effective yield method. Because the debt holder can realize the benefit of conversion immediately, we have recorded the entire discount as interest expense in the period in which the Note was issued.



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Discount arising from the allocation of a portion of the proceeds to the equity component based upon relative fair value
resulted in a discount of $1,208,028. This discount is being amortized to interest expense over the term of the Note using the effective yield method. A schedule of accretion of the carrying value of the Note and corresponding amortization of
discount is as follows:



|                                      |  |   |           |  
|------------------------------------- |  | - | --------- | -
|Face amount of note                   |  | $ | 2,000,000 |  
|Amortization of discount through 2007 |  |   | (466,676  | )
|Amortization of discount through 2008 |  |   | (413,957  | )
|                                      |  |   |           |  
|Current carrying value                |  | $ | 1,119,366 |  

Investor Rights Agreement

In connection with issuance of the Note and Warrants, on June 28, 2006 the Company entered into an Amended and Restated Investor Rights Agreement (the Investor Rights Agreement) with the Vicis and certain other
stockholders, pursuant to which the Company is obligated to register with the SEC the shares of common stock underlying the Note and Warrants. Under the Investor Rights Agreement, the Company is required to file a registration statement with respect
to certain securities within thirty days of the closing of the sale of the Notes and to have the registration statement declared effective by the SEC within 120 days of that closing. Additionally, the Company is required to keep the registration
statement effective at all times until all of the shares registered have been sold or may be resold pursuant to Rule 144(k) under the Securities Act of 1933, as amended. If the Company does not satisfy these registration obligations, it would
constitute an event of default, and the Company would have to pay each holder of the Notes or Warrants an amount in cash or unregistered stock, as partial liquidated damages, as provided in the Investor Rights Agreement, as discussed further below.

The Investor Rights Agreement provides for liquidated damages for failure to register or maintain an effective registration statement for the shares
underlying the Notes and Warrants. If the Company fails to have the registration statement declared effective within the specified period, we would be required to pay liquidated damages to the investor(s) until:



| |  |  | the registration statement is declared effective;
| | - |  | -------------------------------------------------



| |  |  | effectiveness is maintained for a prescribed period; or
| | - |  | -------------------------------------------------------



| |  |  | the purchasers are no longer incurring damages for the Companys failure to register the securities (e. g., if the securities become freely transferable after
a holding period under Rule 144(k) of the Securities Act of 1933).
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Liquidated damages are paid in cash or unregistered shares, at our
discretion and the amount is determined by a formula in the Investor Rights Agreement. The liquidated damages are 1% per month of the aggregate purchase price paid by the holder of the Note and are capped at 16%. As of December 31, 2006,
the maximum penalty that could be payable in the event of a breach of the Investor Rights Agreement are shares with an underlying market value of $160,000.

Adoption of FSP EITF 00-19-2:

This FASB Staff Position (FSP) addresses an issuers accounting for registration payment arrangements.
This FSP specifies that the contingent obligation to make future payments or otherwise transfer consideration under a registration payment arrangement, whether issued as a separate agreement or included as a provision of a financial instrument or
other agreement, should be separately recognized and measured in accordance with FASB Statement No. 5, Accounting for Contingencies. This FSP further clarifies that a financial instrument subject to a registration payment arrangement should be
accounted for in accordance with other applicable generally accepted accounting principles (GAAP) without regard to the contingent obligation to transfer consideration pursuant to the registration payment arrangement.

Initially, the Company determined that the transfer of consideration under the registration payment arrangement was not probable and, accordingly, did not allocate a
portion of the proceeds to the financing transaction. At December 31, 2006 (subsequent to the inception of the arrangement), the Company determined the transfer of consideration under the registration payment arrangement was probable and could
be reasonably estimated. We estimated the penalty amount to be $160,000 and recognized the related contingent liability and charged earnings for a like amount. The carrying amounts of other instruments that were originally issued together with the
separately recognized registration payment arrangement were not adjusted upon adoption of this FSP.

Prior to the adoption of FSP EITF 00-19-2, the Company
treated the registration rights agreement under View C as described in the EITF Issue No. 05-4 Issue Summary No. 1. Under View C, registration rights agreements and the associated financial instruments are accounted for as separate
instruments. The financial instruments were classified as equity under the provisions of Issue 00-19, and the registration rights agreement was accounted for under FAS 133.

The impact of other related, recently issued, pronouncements are summarized as follows:

EITF Issue 04-8, The Effect
of Contingently Convertible Instruments on Diluted Earnings per Share. The EITF reached a consensus that contingently convertible instruments, such as contingently convertible debt, contingently convertible preferred stock,



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and other such securities should be included in diluted earnings per share (if dilutive) regardless of whether the market price trigger has been met. The
consensus became effective for reporting periods ending after December 15, 2004. The adoption of this pronouncement does not currently have an effect on the Companys financial statements because the inclusion of common stock equivalents
in earnings per share is anti-dilutive.

In September 2005, the FASB ratified the Emerging Issues Task Forces (EITF) Issue
No. 05-7, Accounting for Modifications to Conversion Options Embedded in Debt Instruments and Related Issues, which addresses whether a modification to a conversion option that changes its fair value affects the recognition of
interest expense for the associated debt instrument after the modification and whether a borrower should recognize a beneficial conversion feature not a debt extinguishment if a debt modification increases the intrinsic value of the debt (for
example, the modification reduces the conversion price of the debt). In September 2005, the FASB also ratified the EITFs Issue No. 05-8, Income Tax Consequences of Issuing Convertible Debt with a Beneficial Conversion
Feature, which discusses whether the issuance of convertible debt with a beneficial conversion feature results in a basis difference arising from the intrinsic value of the beneficial conversion feature on the commitment date (which is treated
as recorded in the shareholders equity for book purposes, but as a liability for income tax purposes), and, if so, whether that basis difference is a temporary difference under FASB Statement No. 109, Accounting for Income
Taxes. The Company is currently in the process of evaluating the effect that the adoption of this pronouncement may have on its financial statements.

In September 2005, the FASB also ratified the EITFs Issue No. 05-8, Income Tax Consequences of Issuing Convertible Debt with a Beneficial Conversion Feature, which discusses whether the issuance of convertible
debt with a beneficial conversion feature results in a basis difference arising from the intrinsic value of the beneficial conversion feature on the commitment date (which is treated recorded in the shareholders equity for book purposes, but
as a liability for income tax purposes), and, if so, whether that basis difference is a temporary difference under FASB Statement No. 109, Accounting for Income Taxes. The Company currently carries an allowance for all deferred
taxes and, therefore the Company does not believe the adoption of this pronouncement will have any impact on its financial statements.

Other Notes
Payable

On November 28, 2006, the Company issued an unsecured promissory note in the original principal amount of $216,000 in exchange for
$200,000 in cash. The original principal amount of this note is payable at maturity, May 15, 2007 after which time interest will accrue at 18% per annum. This note may be converted to common stock, at the election of the holder, upon the
completion of qualified financing of at least $2.5 million. The conversion formula will be set at the time the qualified financing terms are determined.

On December 21, 2006, the Company issued an unsecured promissory note in the amount of $400,000. This note bears interest at 5% and interest is payable at maturity, February 21, 2007. The Company is permitted to prepay principal
and interest under this note at any time without penalty. In the event the Company does not repay all outstanding principal and interest under this note on or before February 21, 2007, the maturity date of this note will be extended to
April 21, 2007 and the Company will be obligated to issue to Vicis a warrant to purchase 2,666,667 shares of common stock, which warrant will have an exercise price of $2.00 per share (subject to adjustment upon the occurrence of certain
events) and will be exercisable for five years. Because the Company did not repay this note and accrued interest thereon on or before the maturity date of February 21, 2007, the maturity date was automatically extended to April 21, 2007,
and the Company is obligated to issue the warrant.

On January 18, 2007, the Company issued a promissory note in the principal amount of $200,000 in
favor of Vicis. The maturity date of this note is March 31, 2007 and interest accrues under this note at the rate of 5% per annum. The Company is permitted to prepay principal and interest under this note at any time without penalty. In
the event the Company does not repay all outstanding principal and interest under this note on or before March 31, 2007, the maturity date of this note will be extended to May 30, 2007 and the Company will be obligated to issue to Vicis a
warrant to purchase 1,333,334 shares of common stock, which warrant will have an exercise price of $2.00 per share (subject to adjustment upon the occurrence of certain events) and will be exercisable for five years. Because the Company did not
repay this note and accrued interest thereon on or before the maturity date of March 31, 2007, the maturity date was automatically extended to May 30, 2007, and the Company is obligated to issue the warrant.

The Company issued to Vicis a warrant to purchase 4,000,001 shares of common stock at an exercise price of $2.00, exercisable for five years. This warrant was issued to
Vicis on April 17, 2007, in order to satisfy the extension obligations of the promissory notes issued to Vicis on December 21, 2007 in the principal amount of $400,000 and the promissory note issued on January 18, 2007 in the
principal amount of $200,000, which were not repaid by their original stated maturity dates of February 21, 2007 and March 31, 2007, respectively. We evaluate and account for such securities in accordance with EITF Issue Nos. 98-5, 00-19,
00-27, 05-02, 05-04 (Superseded by FSP EITF 00-19-2) and 05-08, and SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities as amended. The estimated fair market value of the warrant was calculated to be $8,676,888
using the Black Scholes Option Pricing model as of the date of issuance. This amount was accounted for as an accrued expense in the quarter ended March 31, 2007, in order to recognize the expense in the period in which the obligation to issue
the warrant occurred. In April, 2007, the period in which the warrant was issued, the $8,676,888 was reclassed from accrued expense to additional paid in capital.



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On February 20, 2007, the Company issued a promissory note in the principal amount of $450,000 in favor of Vicis.
The maturity date of this note is April 30, 2007. Interest accrues under this note at the rate of 5% per annum. The Company is permitted to prepay principal and interest under this note at any time without penalty. In the event the Company
does not repay all outstanding principal and interest under this note on or before April 30, 2007, the maturity date of this note will be extended to June 30, 2007 and the Company will be obligated to issue to Vicis a warrant to purchase
3,000,000 shares of the our common stock, which warrant will have an exercise price of $2.00 per share (subject to adjustment upon the occurrence of certain events) and will be exercisable for five years.

Sovereign Bank Revolving Line of Credit Agreement.On March 16, 2007, the Company entered into a Revolving Line of Credit Agreement (the Line of Credit
Agreement) with Sovereign Bank (Sovereign) pursuant to which Sovereign established a revolving line of credit in favor of the Company in the aggregate principal amount of $1,500,000. The Companys right to request loans under
this Line of Credit Agreement terminates 120 days prior to expiration of the letter of credit described below. Any loans made to the Company under the Line of Credit Agreement bear interest at a fluctuating rate per annum equal to, at the election
of the Company, (i) the sum of the then LIBOR rate plus a margin ranging from .75% to 1.25% or (ii) the then Prime rate less 200 basis points. The Company is required to pay to Sovereign a monthly fee on any unused amounts under the line
of credit equal to the product obtained by multiplying the average unused amount for a given month by a fraction, the numerator of which ranges from .125% to .25% and the denominator of which is 12. On March 22, 2007, the Company borrowed
$300,000 under the Line Credit. On April 2, 2007, the Company borrowed an additional $500,000 under the Line of Credit, for an aggregate principal amount of borrowings totaling $800,000 under this Line of Credit.

In connection with the transactions consummated with the Sovereign Line of Credit Agreement, (i) Custodial Trust Company (CTC) issued an irrevocable
letter of credit in favor of Sovereign up to an aggregate amount of $1,530,000, which letter of credit expires on March 15, 2008, and (ii) the Company, CTC and Vicis entered into a Letter of Credit Reimbursement, Guarantee, Security and
Pledge Agreement (the CTC Agreement) pursuant to which the Company agreed to reimburse CTC for any payments CTC is required to make under the letter of credit it issued in favor of Sovereign. Vicis guaranteed the Companys
performance of such obligations and in connection therewith deposited with CTC certain of its assets.

The Company, Vicis and OrthoSupply Management, Inc.
(OrthoSupply), a wholly-owned subsidiary of Medical Solutions Management Inc., also entered into a Guarantee Fee, Reimbursement and Indemnification Agreement pursuant to which the Company agreed to reimburse Vicis for any payment Vicis
is required to make under the CTC Agreement and issued to Vicis a warrant to purchase 3,060,000 shares of the Companys common stock, which warrant is exercisable for five years at a per share exercise price of $1.00. The Company also issued a
warrant to purchase 153,000 shares of its common stock, which warrant is exercisable for five years at a per share exercise price of $1.00, to Midtown Partners & Co., LLC (Midtown) for services rendered to the Company in
connection with the transactions described herein. OrthoSupply guaranteed the Companys performance of its obligations under this agreement. In the event Vicis is required to make any payment under the CTC Agreement or any assets of Vicis
deposited with CTC are foreclosed or otherwise taken, the Company is obligated to immediately reimburse Vicis for the amount paid or the value of the assets taken. If the Company does not timely reimburse Vicis it is obligated to issue to Vicis and
Midtown warrants to purchase a number of shares of common stock equal to 200% (in the case of Vicis) and 10% (in the case of Midtown) of the value of the Vicis assets taken, which warrants shall be exercisable for five years at a per share exercise
price of $1.00.

The warrants, issued on March 16, 2007, to purchase an aggregate of 3,213,000 shares, were estimated at a value of $11,471,023. We
evaluate and account for such securities in accordance with EITF Issue Nos. 98-5, 00-19, 00-27, 05-02, 05-04 (superseded by FSP EITF 00-19-2) and 05-08, and SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities as
amended. The estimated fair market value of the warrants was calculated using the Black Scholes Option Pricing model as of the date of issuance.

5.
Stock-Based Compensation-Adoption of SFAS 123R

On January 1, 2006, the Company adopted the provisions of Statement of Financial Accounting
Standards (SFAS) 123R, Share-Based Payment (SFAS 123(R)), which requires that companies measure and recognize compensation expense at an amount equal to the fair value of share-based payments granted under
compensation arrangements. Prior to January 1, 2006, the Company accounted for its stock-based compensation plans under the recognition and measurement principles of Accounting Principles Board (APB) Opinion 25, Accounting for
Stock Issued to Employees, and related interpretations, and recognized no compensation expense for stock option grants since all options granted had an exercise price equal to the market value of the underlying common stock on the date of
grant.

The Company adopted SFAS 123(R) using the modified prospective method, which results in no restatement of prior period amounts. Under
this method, the provisions of SFAS 123(R) apply to all awards granted or modified after the date of adoption. In addition, compensation expense must be recognized for any unvested stock option awards outstanding as of the date of adoption on a
straight-line basis over the remaining vesting period. The Company calculates the fair value of options using a Black-Scholes option pricing model.



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SFAS 123(R) also requires the benefits of tax deductions in excess of recognized compensation expense to be reported in
the Statement of Cash Flows as a financing cash inflow rather than an operating cash inflow. In addition, SFAS 123(R) required a modification to the Companys calculation of the dilutive effect of stock option awards on earnings per share. For
companies that adopt SFAS 123(R) using the modified prospective method, disclosure of pro forma information for periods prior to adoption must continue to be made.

As of March 31, 2007, there was no unrecognized compensation cost related to non-vested options granted under the plan. The total fair value of shares issued and vested during the three-month period ended
March 31, 2007 was $0.

Summary of Warrant Activity

In connection with the Guarantee Fee, Reimbursement and Indemnification Agreement with Vicis and CTC, more fully explained under the Sovereign Bank Revolving Line of Credit Agreement above, the Company issued a warrant to purchase 3,060,000
shares of common stock, which warrant is exercisable for five years at a per share exercise price of $1.00. The Company also issued a warrant to purchase 153,000 shares of its common stock, which warrant is exercisable for five years at a per share
exercise price of $1.00, to Midtown for services rendered to the Company in connection with the transactions noted above. These warrants, issued on March 16, 2007, to purchase an aggregate of 3,213,000 shares, were estimated at a fair value of
$11,471,023 using the Black Scholes Option Pricing model. We evaluate and account for such securities in accordance with EITF Issue Nos. 98-5, 00-19, 00-27, 05-02, 05-04 (Superseded by FSP EITF 00-19-2) and 05-08, and SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities as amended.

The following table summarizes the status of our aggregate warrants as of
March 31, 2007:



|                         |  |                      |  |                                      |      |                      |        |  |                              |  |   |     
|------------------------ |  | -------------------- |  | ------------------------------------ | ---- | -------------------- | ------ |  | ---------------------------- |  | - | ----
|                         |  | Warrants Outstanding |  | Weightedaverageremaininglife inyears |      | Warrants Exercisable
|Range of exercise prices |  | Shares               |  | Weightedaverageexerciseprice         |      |                      | Shares |  | weightedaverageexerciseprice
|$0.30-$.75               |  | 16,214,667           |  | $                                    | 0.37 |                      | 5.5    |  | 16,214,667                   |  | $ | 0.37
|$0.76-$1.75              |  | 5,562,668            |  | $                                    | 1.47 |                      | 4.9    |  | 5,562,668                    |  | $ | 1.47
|$1.00                    |  | 3,213000             |  | $                                    | 1.00 |                      | 5.0    |  | 3,213,000                    |  | $ | 1.00
|                         |  |                      |  |                                      |      |                      |        |  |                              |  |   |     
|Total Shares             |  | 24,990,335           |  |                                      | .69  |                      | 5.29   |  | 24,990,335                   |  | $ | .69 
|                         |  |                      |  |                                      |      |                      |        |  |                              |  |   |     

Summary of Options Activity

We adopted SFAS No. 123(R) beginning January 1, 2006. As a result of adopting SFAS No. 123R on January 1, 2006, the Companys operating loss, loss before income taxes and net loss for
2006 were the same as when the Company had continued to account for stock-based compensation to employees under APB 25. The Company did not grant any employee options in 2006 nor was there a material amount of deferred, unrecognized
compensation at the date of adoption. The Company recognized $87,581 of expense associated with the grant of options to non-employees in 2006. These options were fully vested at December 31, 2006. The Company continues to recognize the fair
value of awards granted to non-employees. The adoption of SFAS No. 123R had no impact on the Companys net cash used in operating or provided by financing activities for 2006.

In estimating the fair value of stock-based compensation, the Company uses the quoted market price of common stock as determined in the most active market for stock
awards, and the Black Scholes Option Pricing Model for stock options and warrants. The Company estimates future volatility based on past volatility of our common stock; and the Company estimates the expected length of the option on several criteria,
including the vesting period of the grant, and the expected volatility. In computing fair value, the Company used the following assumptions:



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|                         |  |                        |   |  |      |  
|------------------------ |  | ---------------------- | - |  | ---- | -
|                         |  | Period Ended March 31, |  
|                         |  | 2007                   |   |  | 2006 |  
|Risk-free interest rate  |  | 5.00                   | % |  | 4.35 | %
|Dividend yield           |  | 0.00                   | % |  | 0.00 | %
|Expected volatility      |  | 100                    | % |  | 75   | %
|Expected term (in years) |  | 4.5                    |   |  | 4.5  |  



|                                         |  |                                               |   |  |                                 |      |                                                    |     |                            |   |          
|---------------------------------------- |  | --------------------------------------------- | - |  | ------------------------------- | ---- | -------------------------------------------------- | --- | -------------------------- | - | ---------
|                                         |  | All Plan & Non-Plan Compensatory Type Options
|                                         |  | Shares                                        |   |  | Weighted average exercise price |      | Weighted average remaining contractual term(years) |     | Aggregate intrinsic value*
|Options outstanding at December 31, 2006 |  | 900,000                                       |   |  | $                               | 0.01 |                                                    |     |                            | $ | 4,041,000
|Granted                                  |  |                                               |   |  |                                 | 0.00 |                                                    |     |                            |   |          
|Exercised                                |  | (25,000                                       | ) |  |                                 | 0.01 |                                                    |     |                            |   |          
|Lapsed/forfeited                         |  | (75,000                                       | ) |  |                                 | 0.01 |                                                    |     |                            |   |          
|                                         |  |                                               |   |  |                                 |      |                                                    |     |                            |   |          
|Options outstanding at March 31, 2007    |  | 800,000                                       |   |  |                                 | 0.01 |                                                    | 2.6 |                            | $ | 1,792,000
|                                         |  |                                               |   |  |                                 |      |                                                    |     |                            |   |          
|Options exercisable at March 31, 2007    |  | 800,000                                       |   |  | $                               | 0.01 |                                                    | 2.6 |                            | $ | 1,792,000



|* | Amount by which the fair value of the stock at the balance sheet date exceeds the exercise price
|- | ------------------------------------------------------------------------------------------------



|* | Includes options to purchase an aggregate 500,000 shares of common stock of OrthoSupply to be converted to substantially equivalent options in the Company in accordance with the
2006 Equity Incentive Plan.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Aggregate intrinsic value of outstanding options at March 31, 2007 was approximately $ 1,792,000. Aggregate
intrinsic value of vested options at March 31, 2007 was approximately $ 1,792,000.

As of March 31, 2007, there was no unrecognized compensation
cost related to options.

Stock Option Plan: On July 31, 2006, the Company adopted the 2006 Equity Incentive Plan. This Plan is intended to
encourage ownership of common stock by employees, consultants and directors of the Company and its affiliates and to provide additional incentive for them to promote the success of the Companys business. The term of the Plan is ten years from
the date of its adoption unless earlier terminated by the Board. The number of shares of common stock to be issued pursuant to incentive stock options may not exceed three million (3,000,000) shares of common stock. Both incentive stock options
and non-qualified options, as well as restricted stock awards, may be issued under the Plan. The Plan shall be administered by the Committee, however, the Board may itself exercise any of the powers and responsibilities assigned the Committee. The
Committee may grant awards to any employee or consultant to the Company and its affiliates or to any non-employee member of the Board. However, only employees of the Company are eligible for the grant of an incentive stock option. Further, in no
event shall the number of shares of common stock covered by options or other awards granted to any one person in any one calendar year (or portion of a year) ending after such date exceed fifty percent (50%) of the aggregate number of shares of
common stock subject to the Plan.

As of April 1, 2006, there was no unrecognized compensation cost related to non-vested options granted under the
plan. The total fair value of shares vested during the three-month period ended April 1, 2006 was $0.

6. Managements Plan

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in the note to the unaudited financial
statements, the Companys losses have resulted in an accumulated deficit of $25,953,986 as of March 31, 2007, including an aggregate of $20,147,911 resulting from the valuation of warrants expensed during the three month period ending
March 31, 2007. Operating activities consumed $1,272,706 in cash. These conditions raise substantial doubt about the Companys ability to continue as a going concern. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.



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The Companys two main objectives for fiscal year 2007 are to continue its ability to finance the Company and to
focus on expanding revenue in key locations across the country. The Company also plans to expand its billing and collecting services to new markets, including pharmaceutical prescriptions. In connection with this expansion, the Company is in the
process of seeking asset based financing to support this business. The Company expects that our current cash availability will support current operations through May 2007; however, the Company is anticipating increasing its revolving line of credit
with Sovereign Bank to maintain its liquidity until additional financing can be secured. In addition, on April 17, 2007, the Company successfully restructured four short-term notes payable into two long-term convertible debentures in the aggregate
principal amount of $1,266,000 due on April 17, 2009. The Companys current monthly cash burn rate is approximately $450,000. The Company anticipates that it will need to complete additional financing to support current working capital needs
and potential acquisitions. Through these financings, the Company hopes to expand the business organically and acquisitively.

The Companys plan for
organic growth includes increasing our sales force in key locations across the country. In fiscal year 2007, the Company plans to build its sales force from its current level of six sales people to ten sales people. The Company currently plans to
hire two regional sales managers in the Southwest and the west coast of the United States. The plan also includes support programs for the sales efforts including marketing, communications and program literature.

The Company has increased its resources in accounting and administration by recently hiring a staff accountant. In January 2007, the Company hired a Vice President of
Operations and added five additional employees to enhance and support our service group. During the three months ended March 31, 2007, the Company also hired five additional physician extenders in order to further support its current service
model. The Company expects to hire additional administrative and field support resources to support the growth in new clinics during 2007 and beyond.

The
Company does not anticipate devoting its resources to research and development in fiscal year 2007 at the current time.

7. Restatement of Financial
Statements

In connection with the filing of a registration statement on Form SB-2, the Company received a comment letter from the staff of the
Securities and Exchange Commission asking for additional information regarding its Preferred Stock. Upon review, the Company determined that it had accounted for our Preferred Stock in error. Previously, the Company classified the Preferred Stock as
a component of stockholders equity, however, the Company has subsequently determined the provision in the certificate of designation allowing the holders of a majority of the issued and outstanding shares of Series A Preferred Stock to elect,
upon a change in control of the Company, to cause the Company to redeem all or a portion of the issued and outstanding shares of Series A Preferred Stock, at a per share price equal to $1.00 plus accrued dividends to be not solely within its
control. United States S.E.C. Reg. S-X Rule 5-02(28) requires public companies to report such redeemable preferred stock outside stockholders equity. The Company also changed the carrying value from stated redemption value to fair value
measured initially at the gross proceeds less direct offering costs incurred. Such costs totaled $353,445. These costs were previously reported as a reduction of additional paid-in capital. Accordingly the Company has reduced previously stated total
stockholders equity by the carrying value of the preferred stock, or $1,346,555. These changes also increased additional paid-in capital by the amount of the preferred offering costs of $353,445. Pursuant to the Exchange Agreement among the
Company, Vicis, Midtown Partners & Co., LLC and Nite Capital L.P., dated as of April 13, 2006, such shareholders assigned, exchanged and converted their right, title and interest to shares of the Companys then outstanding Series
A Preferred Stock and, in exchange thereof and upon such conversion, the Company issued such shareholders shares of the Companys common stock. As a result, there are no shares of Series A Preferred Stock presently outstanding.

The Company has also determined our previous accounting for the reverse merger was in error. For financial reporting purposes, Ortho Supply Management, Inc. was treated
as the acquiring company and the transaction should have been accounted for as a recapitalization. At the date of recapitalization, December 31, 2005, China Media Networks International, Inc. (n/k/a Medical Solutions Management Inc.) was a
public shell company, defined as an inactive, publicly-quoted company with nominal assets and liabilities. The restated Statement of Stockholders Equity in compliance with U.S. GAAP eliminates all references to China Media prior to the
recapitalization and replaces it with a reporting of the chronological transactions of the deemed accounting acquiror, Ortho Supply Management, Inc. Because OrthoSupply Management, Inc. began business in 2005, there are no transactions for all
periods preceding 2005. The restated treatment of the acquisition as a recapitalization had no impact on previously stated stockholders equity accounts but the chronological issuance of shares of OrthoSupply Management, Inc. differed from the
chronological issuance of shares of China Media Networks International, Inc. The change in reporting resulted in the weighted average shares outstanding during 2005 increased from 503,142 to 16,414,419. The Company has restated its Balance Sheet as
of April 1, 2006 and the Statements of Operations and Shareholders Deficit for the period then ended to correctly reflect these items.

8.
Subsequent Events

On April 17, 2007, the Company entered into a Securities Purchase and Exchange Agreement (Purchase
Agreement) with Vicis and Apogee Financial Investments Inc. (Apogee). Pursuant to the Purchase Agreement, the Company issued (1) two 6% convertible senior secured debentures in the aggregate principal amount of $1,266,000
convertible into shares of common stock at a



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conversion price of $0.30 per share, (2) two warrants to purchase an aggregate of 4,220,000 shares of common stock at an exercise price of $0.345 per
share and (3) two warrants to purchase an aggregate of 4,220,000 shares of common stock at an exercise price of $0.375 per share. The debentures mature on March 30, 2009 and are secured by a lien on all the personal property and assets of
the Company. The warrants are exercisable for a period of five years.

In accordance with the FASB Emerging Issues Task Force (EITF) Issue
No. 98-5 Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjustable Conversion Ratios and EITF Issue No. 00-27 Application of Issue No. 98-5 to Certain Convertible
Instruments, the Company determined that the Note contains an embedded beneficial conversion feature resulting in a discount to the carrying amount of the Notes equal to:



|(i) | the difference between the stated conversion rate and the market price of our common stock on the date of issuance; multiplied by
|--- | ---------------------------------------------------------------------------------------------------------------------------------



|(ii) | the number of shares into which the Notes are convertible. Per EITF Issue No. 98-5 and EITF Issue No. 00-27, upon issuance the Company recorded a $440,820 discount to the
Notes.
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

For convertible debt securities, any recorded discount resulting from the
allocation of proceeds to the beneficial conversion feature should be recognized as interest expense over the minimum period from the date of issuance to the date at which the debt holder can realize that return (that is, through the date of
earliest conversion ) using the effective yield method. Because the debt holder can realize the benefit of conversion immediately, the Company has recorded the entire discount as interest expense in the period in which the Note was issued.

Discount arising from the allocation of a portion of the proceeds to the equity component based upon relative fair value is expected to result in a
discount of $825,180. This discount will be amortized to interest expense over the term of the Note using the effective yield method. A schedule of accretion of the carrying value of the Note and corresponding amortization of discount is as follows:



|                                      |  |   |           |  
|------------------------------------- |  | - | --------- | -
|Face amount of note                   |  | $ | 1,266,000 |  
|Amortization of discount through 2007 |  |   | (119,533  | )
|Amortization of discount through 2008 |  |   | (390,222  | )
|                                      |  |   |           |  
|Amortization of discount through 2009 |  |   | (315,425  | )
|                                      |  |   |           |  
|Carrying value on April 17, 2007      |  | $ | 825,180   |  

As consideration for the debentures and warrants, Vicis surrendered the promissory note in the
principal amount of $450,000 issued on February 20, 2007, the promissory note in the principal amount of $200,000 issued on January 18, 2007, and the promissory note in the principal amount of $400,000 issued on December 21, 2006. As
consideration for the debenture and warrants, Apogee surrendered a promissory and original discount note in the original principal amount of $216,000 issued on November 28, 2006. These promissory notes and the original discount note are more
fully described in the Other Notes Payable section of note 4, Notes Payable.

In connection with this transaction, the Company, Vicis and
Apogee entered into a Subordination Agreement whereby the lien on all the personal property and assets of the Company securing the obligations of the Company under debentures is subordinated to the lien granted by the Company to Vicis to secure the
obligations of the Company under a separate debenture previously issued by the Company to Vicis on June 28, 2006.

On April 17,
2007, the Company also issued to Vicis an additional warrant to purchase 4,000,001 shares of common stock at an exercise price of $2.00, exercisable for five years. This warrant was issued to Vicis in order to satisfy the extension requirement of
the promissory notes issued to Vicis on December 21, 2007 in the principal amount of $400,000 and the promissory note issued on January 18, 2007 in the principal amount of $200,000, which were not repaid by their original stated maturity
dates of February 21, 2007 and March 31, 2007, respectively. The Company evaluates and accounts for such securities in accordance with EITF Issue Nos. 98-5, 00-19, 00-27, 05-02, 05-04 (Superseded by FSP EITF 00-19-2) and 05-08, and SFAS
No. 133, Accounting for Derivative Instruments and Hedging Activities as amended. The estimated fair market value of the warrant was calculated to be $8,676,888 using the Black Scholes Option Pricing model as of the date of issuance.
This amount was accounted for as an accrued expense in the quarter ended March 31, 2007, in order to recognize the expense in the period in which the obligation to issue the warrant occurred. In April, 2007, the period in which the warrant was
issued, the $8,676,888 was reclassed from accrued expense to additional paid in capital.



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|ITEM 2. | MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
|------- | ----------------------------------------------------------

The following discussion and analysis of our financial condition and plan of operations should be read in conjunction with the financial statements and the related notes. This discussion contains forward-looking
statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. Our actual results and the timing of certain events could differ materially from those anticipated in these
forward-looking statements as a result of certain factors, including those set forth in Annual Report on Form 10-KSB for the fiscal year ended December 31, 2006 under Risk Factors, Managements Discussion and Analysis or
Plan of Operations and Business.

Background

On July 31, 2006, we changed our name to Medical Solutions Management Inc. from China Media Networks International, Inc. On December 30, 2005, in connection with a merger transaction, OrthoSupply Management,
Inc. continued as the surviving corporation and wholly-owned subsidiary of Medical Solutions Management Inc. OrthoSupply Management, Inc. acts as our operating company and we are the parent holding company, and sole stockholder, of OrthoSupply
Management, Inc.

OrthoSupply Management, Inc. has generated revenue from its operations since February 2005. In May and June 2006, we
completed debt financings that raised aggregate gross proceeds of $2,000,000. In November and December of 2006, we completed debt financings of $600,000 and in January and February of 2007 we completed additional debt financings of $650,000 which we
have used for working capital purposes. In March of 2007, we established a revolving line of credit with Sovereign Bank for $1.5 million of which $300,000 has been utilized through March 31, 2007. The discussion below focuses upon OrthoSupply
Management, Inc.s financial condition, results of operations and liquidity and capital resources.

Our Business

We are a provider of orthopedic and podiatric durable medical equipment, specializing in the provision of products and services using our turnkey program.
Through our turnkey program, we enable orthopedic and podiatric practices to dispense an array of durable medical equipment directly to their patients during office visits. The system, which is transportable to other types of medical practices, also
provides billing and collection services, inventory management and insurance verifications. We have expanded our billing and collecting services to include pharmaceutical prescriptions.

Results of Operations

We operate our business on a calendar year basis, with our fiscal year
ending on December 31.

Three Months Ended March 31, 2007 Compared to Three Months Ended April 1, 2006

Net Revenue. Set forth below are the net revenues.



|                          |  |                    |         |              |   |          |  |           |         |  |      
|------------------------- |  | ------------------ | ------- | ------------ | - | -------- |  | --------- | ------- |  | -----
|                          |  | Three Months Ended |         |              |   |         
|                          |  | March 31,2007      |         | April 1,2006 |   | Increase |  | %Increase
|Sales of Medical Products |  | $                  | 649,935 |              | $ | 125,793  |  | $         | 524,142 |  | 416.7
|Service Revenue           |  |                    | 81,899  |              |   | 27,870   |  |           | 54,029  |  | 193.9
|                          |  |                    |         |              |   |          |  |           |         |  |      
|Total Revenue             |  | $                  | 731,834 |              | $ | 153,663  |  | $         | 578,171 |  | 376.3

Net revenues increased in the three months ended March 31, 2007 primarily due to the increase
in the number of clinics operating from 10 in the first quarter of 2006 to 44 in the first quarter of 2007. Expansion into new regions throughout the United States has been the driving factor for the increase in clinics as we continue to grow our
operations. A total of five clinics were added during the three months ended March 31, 2007. Three of these new clinics were added in the last week of the first quarter; therefore the revenue impact of these clinics will not commence until the
second quarter. Service revenue increased mainly due to the increase in clinics driving billing, and collection, revenue, plus additional revenue from physician extenders. Approximately $27,000 of our service revenue was attributable to billing and
collection services for pharmaceutical claims.

Cost of Sales. Set forth below are the cost of sales.



|                               |  |                    |         |              |       |   |              |   |              |  |      |          |  |            |         |  |       |  
|------------------------------ |  | ------------------ | ------- | ------------ | ----- | - | ------------ | - | ------------ |  | ---- | -------- |  | ---------- | ------- |  | ----- | -
|                               |  | Three Months Ended |         |              |       |   |              |  
|                               |  | March 31, 2007     |         | % of Revenue |       |   | April 1,2006 |   | % of Revenue |  |      | Increase |  | % Increase |        
|Cost of Medical Products       |  | $                  | 403,295 |              | 62.1  | % |              | $ | 92,016       |  | 73.1 | %        |  | $          | 311,279 |  | 338.3 | %
|Cost of services               |  |                    | 146,743 |              | 179.2 |   |              |   | 17,907       |  | 64.3 |          |  |            | 128,836 |  | 719.5 |  
|                               |  |                    |         |              |       |   |              |   |              |  |      |          |  |            |         |  |       |  
|Costs of Products and Services |  | $                  | 550,038 |              | 75.2  | % |              | $ | 109,923      |  | 71.5 | %        |  | $          | 440,115 |  | 400.4 | %



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Cost of sales increased primarily due to higher sales from the increase in operating clinics over the
comparative period in 2006. Cost of medical products sales improved as a percentage of revenue over the comparative period in 2006 due to higher volume, and product mix. Cost of services revenue exceeded service revenue in the first three months of
2007 mainly due to timing differences in recognizing pharmaceutical billing and collection revenue on a cash basis versus costs incurred for salaries and related costs of $60,180 recognized currently. We do not expect this trend to continue as up
front costs to provide these services stabilize and realization of collections increase and exceed costs incurred.

Operating
Expenses. Set forth below are the operating expenses.



|                             |  |                    |            |              |        |   |               |   |              |  |       |          |  |            |            |  |         |  
|---------------------------- |  | ------------------ | ---------- | ------------ | ------ | - | ------------- | - | ------------ |  | ----- | -------- |  | ---------- | ---------- |  | ------- | -
|                             |  | Three Months Ended |            |              |        |   |               |  
|                             |  | March 31, 2007     |            | % of Revenue |        |   | April 1, 2006 |   | % of Revenue |  |       | Increase |  | % Increase |           
|Salaries and benefits        |  | $                  | 414,461    |              | 56.6   | % |               | $ | 218,633      |  | 142.3 | %        |  | $          | 195,828    |  | 89.6    | %
|Legal, consulting, insurance |  |                    | 244,053    |              | 33.3   |   |               |   | 188,141      |  | 122.4 |          |  |            | 55,912     |  | 29.7    |  
|All Other                    |  |                    | 20,568,820 |              | 2810.6 |   |               |   | 87,201       |  | 56.7  |          |  |            | 20,481,619 |  | 23487.8 |  
|                             |  |                    |            |              |        |   |               |   |              |  |       |          |  |            |            |  |         |  
|Operating Expenses           |  | $                  | 21,227,334 |              | 2900.6 | % |               | $ | 493,975      |  | 321.5 | %        |  | $          | 20,733,359 |  | 4197.2  | %

Salaries and Benefits Expense.

Salaries and benefits expense increased due to an increase in sales, administrative and service staff as we continue to grow our operation. Total
employees for the three months ended March 31, 2007 were 34 compared to 14 in comparative period in 2006. We expect to continue to add additional sales, administrative and service support staff as we expand our operation.

Legal, Consulting & Insurance Expenses.

Legal and consulting expenses were $244,053 for the three months ended March 31, 2007 compared to $188,141 for the comparative period in the first three months of 2006. These expenses incurred in the first three
months of 2007 are primarily related to services rendered to secure additional financing, review of our periodic filings, as well as general counsel services. This compares to costs incurred in 2006 relating to the reverse merger and general counsel
expenses. Insurance costs were $17,591 for the three months ended March 31, 2007 compared to $6,385 in the comparative period in 2006 due to higher premiums resulting from increased revenue, employees, and related coverage limits.

All Other Expenses.

Our most
significant expenses were interest and financing expenses, explained below. Other expenses include printing expenses of $26,165 relating to the production of forms for new clinics, marketing program expense of $31,549 and investment banking fees of
$45,000 as well as general expenses to support a growing operation are the driving factors for the increase in expenses from 2006 to the comparative period in 2007.

Interest and Financing Expenses.

Our most significant expenses were for the estimated fair value,
$11,471,023, of warrants to purchase an aggregate of 3,213,000 shares of the companys, stock at $1.00 per share, issued pursuant to a Guarantee Fee, Reimbursement and Indemnification Agreement, in connection to the Companys Revolving
Line of Credit Agreement with Sovereign Bank, and the estimated fair value, $8,676,888, of warrants to purchase 4,000,001 shares at 2.00 per share, accrued to recognize the expense for the Companys obligations for the extension of the maturity
and repayment of two promissory notes, and accrued interest thereon. The aggregate expense charge of $20,147,911 resulting from the warrants had no direct cash impact on the operations of the company. Interest expense was $169,854, including
aggregate amortization of discount of $129,233 on the convertible note payable issued to Vicis in June 2006 and the convertible note payable issued to Apogee on November 28, 2006.

Net Loss. Set forth below is the Net loss.



|         |  |                    |             |   |                    |        |   |                     |   |          |             |  |       |   |  |   |             |   |  |         |   
|-------- |  | ------------------ | ----------- | - | ------------------ | ------ | - | ------------------- | - | -------- | ----------- |  | ----- | - |  | - | ----------- | - |  | ------- | --
|         |  | Three Months Ended |             |   | Increase(Decrease) |        |   | %Increase(Decrease) |  
|         |  | March 31, 2007     |             |   | % ofRevenue        |        |   | April 1,2006        |   |          | % ofRevenue |  |       |  
|Net Loss |  | $                  | (21,217,668 | ) |                    | 2899.2 | % |                     | $ | (448,895 | )           |  | 292.1 | % |  | $ | (20,768,773 | ) |  | (4626.6 | )%

The Net loss for the three months ended March 31, 2007 was primarily attributable to non-cash
charges for the estimated fair value, $11,471,023, of warrants to purchase an aggregate of 3,213,000 shares of the companys stock at $1.00 per share, issued pursuant to a Guarantee Fee, Reimbursement and Indemnification Agreement, in
connection to the Companys Revolving Line of Credit Agreement with Sovereign Bank, and the estimated fair value, $8,676,888, of warrants to purchase 4,000,001 shares at 2.00 per share, accrued to recognize the expense for the
Companys obligations for the extension of the maturity and repayment of two promissory notes, and accrued interest thereon. Operationally, our loss was driven mainly from selling and administrative costs



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incurred to continue to grow revenue and support our operations. We continue to invest in building a national sales force and additional service support
personnel to drive additional revenue growth in the future.

Our reserve for doubtful accounts. Our reserve amount is
based upon estimated losses for customers who were billed directly for products and services. For the three months ended March 31, 2007, we increased our reserve for doubtful accounts by $22,832 or 3.1% of revenues for the quarter to a total of
$42,863. The reserve amount is based on the age of the accounts and managements judgment regarding collectibility of certain accounts. We have not written off any accounts receivable to date.

Our reserve for excess or obsolete inventories. We provide reserves for estimated excess, obsolete and shrink for durable medical equipment
inventory maintained at clinics. Determining a clinics specific inventory levels and product mix can be difficult, particularly during the start-up phase of a clinic, and until proper controls can be established. Physical inventory counts are
performed at clinic sites each month and reconciled to book value. For the three months ended March 31, 2007, we have provided a reserve of $58,942, or 21% of total inventory, compared to $948 or 5% of total inventory for the quarter ended
April 1, 2006. Our reserve formula, modified during the second quarter of 2006, is calculated by reserving approximately 25% of the inventory value for operating clinics based on prior loss experience and managements judgment as to net
realizeable value of inventory at the Companys location.

Liquidity and Capital Resources

Cash used in operations during the three months ended March 31, 2007 was $1,272,456, compared to $520,578 in the comparative period in 2006. However,
financing activities from loans from Vicis Capital Master Fund of $650,000 and $300,000 from our revolving line of credit with Sovereign Bank resulted in an overall net reduction in cash of $345,569. As of March 31, 2007, we had $1,579,534 in
total assets, compared to $599,492 at April 1, 2006. Total liabilities at the end of the period were $12,491,726, which includes $8,676,888 accrued for the estimated fair value of a warrant to purchase 4,000,001 shares in order to satisfy the
Companys obligation for the extension of the maturity and repayment of two promissory notes, compared to $1,690,224, which includes $1,346,555 of preferred stock outstanding, which was later converted to common stock in April of 2006, at
April 1, 2006. In addition, on April 17, 2007, the Company successfully restructured four short-term notes payable into two long-term convertible debentures in the aggregate principal amount of $1,266,000 due on April 17, 2009. Our current cash
availability will support current operations through May, 2007 based on our current cash burn rate of $450,000 per month. However, the Company is anticipating an increase in its revolving line of credit with Sovereign Bank to maintain its liquidity
until additional financing can be secured to support current working capital needs and potential acquisitions. Through these financings, we hope to expand the business organically and acquisitively.

Plan of Operations

The accompanying financial
statements have been prepared assuming that the Company will continue as a going concern. As discussed in the notes to the unaudited financial statements, the Companys losses have resulted in an accumulated deficit of $25,953,986 as of
March 31, 2007, including an aggregate of $20,147,911 resulting from the fair market valuation of warrants, using the Black Scholes Option Pricing model, expensed during the three month period ending March 31, 2007. Operating activities
consumed $1,272,706 of cash. These conditions raise substantial doubt about our ability to continue as a going concern. Managements plans in regard to these matters are described in the notes. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.

Our main objectives for the next twelve months are to continue to
finance the Company and to focus on expanding medical products revenue in key locations across the country, and service revenue, primarily through pharmaceutical billing and collecting services. The pharmaceutical billing and collecting initiative
has the potential for strong growth, but is dependent on our ability to obtain financing to support its growth. In connection with this expansion, the Company is in the process of seeking asset based financing to support this business. We are also
pursuing additional follow-on financing to support current working capital needs and potential acquisitions. We expect that our current cash availability will support current operations through the May, 2007 based on our current monthly burn rate of
approximately $450,000. However, the Company is anticipating increasing its revolving line of credit with Sovereign Bank to maintain its liquidity until additional financing can be secured. Through the additional financings, we hope to expand the
business organically and acquisitively.

Our plan for organic growth includes increasing our sales force penetration in key areas of the
country. We plan to build our sales force from our current level of six sales people to ten regional sales people. We currently plan to hire one regional sales manager in the southwest and an additional regional sales manager on the west coast. The
plan also includes support programs for the sales efforts including marketing, communications and program literature.

We have increased
our resources in accounting and administration by recently hiring a staff accountant. In January 2007, we hired a Vice President of Operations and added five additional employees to enhance and support our service group. During the three



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months ended March 31, 2007 we also hired five additional physician extenders in order to further support our current service model. We expect to hire
additional administrative and field support resources to support the growth in new clinics during 2007 and beyond.

We do not anticipate
devoting our resources to research and development in fiscal year 2007 at the current time.

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations is based upon our consolidated financial
statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of
assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including those related to contractual allowances, doubtful accounts, inventories,
rebates, product returns, warranty obligations, income taxes, intangibles and investments. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of
which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our
consolidated financial statements, and this discussion and analysis of our financial condition and results of operations.

Principles
of Consolidation: The March 31, 2007 financial statements include the accounts of Medical Solutions Management Inc. and its wholly-owned subsidiary OrthoSupply Management, Inc. All significant inter-company balances and
transactions have been eliminated in consolidation.

Use of Estimates: The preparation of financial statements in conformity
with generally accepted accounting principles requires our management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statement
and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from the estimates.

Cash
and Cash Equivalents: For financial statement presentation purposes, we consider those short-term, highly liquid investments with original maturities of three months or less to be cash or cash equivalents.

Revenue Recognition:Our principal sources of revenues are from the sale of medical products and from providing related management
services. Our revenue recognition policies are in compliance with Staff Accounting Bulletin (SAB) No. 104, Revenue Recognition, SAB No. 101, Revenue Recognition in Financial Statements, EITF Issue No. 00-21,
Revenue Arrangements with Multiple Deliverables, and EITF Issue No. 99-19, Reporting Revenue Gross as a Principal versus Net as an Agent. Revenue is recognized when persuasive evidence of an agreement with the customer
exists, products are shipped or title passes pursuant to the terms of the agreement with the customer, the amount due from the customer is fixed or determinable, collectibility is reasonably assured, and there are no significant future performance
obligations. Service revenues are recognized at the time performance is completed and usually billed monthly. Revenues from separate service maintenance agreements are recognized ratably over the term of the agreements.

These policies require management, at the time of the transaction, to assess whether the amounts due are fixed or determinable, collection is reasonably
assured, and no future performance obligations exist. These assessments are based on the terms of the agreement with the customer, past history and creditworthiness of the customer. If management determines that collection is not reasonably assured
or future performance obligations exist, revenue recognition is deferred until these conditions are satisfied.

Our sources of revenue are
generated from the sale of products and related services.

Sales of product - sales of durable medical equipment, or DME, primarily to
orthopedic and podiatry clinical practices:



| |  |  | Direct Purchase Model - Under this arrangement the clinic places an order with the Company, which then places the actual DME product order to one of its suppliers.
Title to the product is transferred to the Company upon shipment from the supplier. The Company bills the clinic upon confirmation of receipt and acceptance of the delivered products. Upon billing, the Companys performance obligation is
considered fulfilled and, accordingly, revenue is recognized at that time.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Purchase as Dispensed Model- Under the purchase as dispensed model, the order and shipping process, payment terms, and pricing is the same as described
above. However, in this model, the product remains the property of the Company upon delivery to the clinic. The product is included in the Companys inventory held at the clinic site until it is dispensed to a
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| | patient. Once dispensed, it becomes billable to the clinic. Upon billing, the Companys performance obligation is considered fulfilled and, accordingly,
revenue is recognized at that time.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

We have evaluated the gross sales reporting criteria set forth in paragraphs 7-14 of EITF 99-19 and
determined all our sales of goods and products are required to be reported on a gross basis.

Sales of services - Sales of third party
billing and collection services and Physician Extenders services



| |  |  | Billing and Collection services model - The Company also provides certain clinics with third party billing and collection services. Under this program, the Company
provides clinics with patient agreements which are filled in with DME product information dispensed to a patient along with proper coding. The Company periodically receives this information from the clinic and inputs it into an electronic billing
system for transmittal, on behalf of the clinic, to the appropriate third party payors. The Company charges a fee for this service equal to a fixed percentage of the amounts actually collected by the clinic. The service fee revenue is recognized, on
a net basis, upon collection of the third party billings in accordance with Staff Topic 13 and is invoiced to clinics on a monthly basis. We have evaluated the net sales reporting criteria set forth in paragraph 16 of EITF 99-19 and determined all
our billing and collection services are required to be reported on a net basis. Billing and collection contract terms are for one to two years with termination subject to thirty days notice for cause, and 90 to 120 day notice without cause.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Physician Extenders (PE) services model - PEs are generally Certified Athletic Trainers. These health care professionals are employed by the Company but work
on site at one or more clinics. They assist the clinic in DME dispensing, inventory management, injury evaluation, prevention and rehabilitation. The Company charges a contractually agreed upon flat fee to the clinic for this service. The fee is
invoiced monthly. Related fee revenue is recognized at the end of each month that the service has been provided and costs are included in cost of sales. Contract terms are generally the same as those of Billing and Collecting services.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In accordance with EITF Issue 00-10, Accounting for Shipping and Handling Fees and Costs, we included all
shipping and handling billings to customers in revenues, and freight costs incurred for product shipments have been included in cost of products sold.



| |  |  | Pharmacy Claims Servicing Revenue - The Company has entered into an arrangement in which it acquires dispensed pharmaceutical prescription claims from a
management company which aggregates the claims on behalf of a group of physician clinics which dispense the pharmaceuticals to their patients. Under the arrangement, the company advances funds to the management company at a discounted percentage
from the face amount of the claims being transferred. In return, the ownership and all rights to full payment of the claims from third party payers are assigned exclusively to the Company. The Company is free to pledge or exchange the transferred
assets, and the transferor is not entitled to repurchase or redeem the claims. The Company has full responsibility for servicing the claims, including submission of the claims to third party payers (such as insurance companies and state workers
compensation funds) and follow-up until settlement occurs. However, if any claims are denied by a payor as an invalid workers compensation claim, the claim reverts back to the management company for credit to the Company equal to our original cost
to acquire the claim.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The Company evaluated the accounting for the acquisition and disposition of the pharmacy claims in
accordance with SFAS 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities,as amended by SFAS 156, Accounting for Servicing of Financial Assets (as amended) and Staff Topic 13 regarding revenue
recognition. In accordance with paragraph 9 of SFAS 140, the Company has treated the acquisition of the claims as a purchase since the management company (transferor) has surrendered control over these assets to OrthoSupply, our wholly owned
operating company. The claim assets are recorded in other receivables, separately from our trade receivables, at the Companys cost. We earn servicing revenue by processing, submitting and collecting the claims as described above.
Servicing revenue is recognized at the time the claim is collected, and is calculated as the difference between the amount actually collected on the claim from third party payers and our cost basis in the claim.

Fair Value of Financial Instruments: Our financial instruments consist of cash and cash equivalents, trade accounts receivable, accounts
payable, accrued expenses, and long and short-term borrowings. The fair value of these instruments approximates their recorded value. We do not have financial instruments with off-balance sheet risk. The fair value estimates were based on market
information available to management as of March 31, 2007.

Financial instruments that potentially subject us to concentrations of
market/credit risk consist principally of cash and cash equivalents, trade accounts receivable and other receivables. We invest cash through a high credit-quality financial institution, which, at times, may exceed federally insured limits. The
Company has not experienced any losses in such accounts.



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A concentration of credit risk may exist with respect to trade receivables and other receivables. We
perform ongoing credit evaluations of customers but generally do not require collateral from our customers or third party payors. We review accounts receivable on a regular basis to determine if any such amounts may be potentially uncollectible. We
establish a general reserve based on a range of percentages applied to accounts receivable aging categories. These percentages are based on historical collection and write-off experience. We include any balances that are determined to be
uncollectible, along with the general reserve, in the overall allowance for doubtful accounts. After all attempts to collect a receivable have failed, the receivable is written off against the allowance. Based on our best estimate, we believe the
allowance for doubtful accounts of $42,863 is adequate as presented. Historically, we have not experienced significant losses related to receivables from individual customers or groups of customers in any particular industry or geographic area.

Valuation of Long-Lived Assets:We review the recoverability of our long-lived assets, including buildings, equipment and
intangible assets, when events or changes in circumstances occur that indicate that the carrying value of the asset may not be recoverable. The assessment of possible impairment is based on our ability to recover the carrying value of the asset from
the expected future pre-tax cash flows (undiscounted and without interest charges) of the related operations. If these cash flows are less than the carrying value of such asset, an impairment loss is recognized for the difference between estimated
fair value and carrying value. Our primary measure of fair value is based on discounted cash flows. The measurement of impairment requires management to make estimates of these cash flows related to long-lived assets, as well as other fair value
determinations.

Accounting for Obligations and Instruments Potentially to be Settled in the Companys own Stock: We
account for obligations and instruments potentially to be settled in the Companys stock in accordance with EITF Issue No. 00-19, Accounting for Derivative Financial Instruments Indexed To, and Potentially Settled In a Companys
Own Stock. This issue addresses the initial balance sheet classification and measurement of contracts that are indexed to, and potentially settled in, the Companys own stock. We account for warrants issued in connection with
financing arrangements in accordance with EITF Issue No. 00-19, Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Companys Own Stock. Pursuant to EITF Issue No. 00-19, an evaluation of
specifically identified conditions is made to determine whether the fair value of warrants issued is required to be classified as a derivative liability. The fair value of warrants classified as derivative liabilities is adjusted for changes in fair
value at each reporting period, and the corresponding noncash gain or loss is recorded in current period earnings.

Warrant
Derivative Liabilities:We account for warrants issued in connection with financing arrangements in accordance with EITF Issue No. 00-19, Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a
Companys Own Stock. Pursuant to EITF Issue No. 00-19, an evaluation of specifically identified conditions is made to determine whether the fair value of warrants issued is required be classified as a derivative liability. The fair value of
warrants classified as derivative liabilities is adjusted for changes in fair value at each reporting period, and the corresponding non-cash gain or loss is recorded in current period earnings.

Registration Rights:We have issued financial instruments that are convertible into or exchangeable for our common stock. In some cases, in
conjunction with the issuance of these financial instruments, we issued rights that under certain circumstances provide that we will register the underlying common stock shares with the Securities and Exchange Commission (SEC) so that
such common stock shares may be resold by the holders (registration rights). For purposes of determining the accounting treatment for the financial instruments and any related registration rights, we assess whether the financial
instrument and related registration rights represent one combined instrument or whether the financial instrument and related registration rights represent separate instruments.

We initially adopted View C as described in the EITF Issue No. 05-4 Issue Summary No. 1. Under View C, registration rights agreements and the
associated financial instruments are accounted for as separate instruments. View C of EITF 05-4 takes the position that the registration rights should be accounted for separately from the financial instrument as the payoff of the financial
instruments is not dependent on the payoff of the registration rights agreement, and according to DIG K-1, registration rights agreements and the financial instruments do not meet the combining criteria as they relate to different risks.

We elected early adoption of FASB Staff Position (FSP) EITF No. 00-19-.2 This FSP specifies that the contingent obligation to make future payments or
otherwise transfer consideration under a registration rights agreement, whether issued as a separate agreement or included as a provision of a financial instrument or other agreement, should be separately recognized and measured in accordance with
FASB Statement No. 5, Accounting for Contingencies.

As of March 31, 2007, we had the $2,000,000 of convertible notes that are
convertible onto 9,661,089 shares of our common stock outstanding.



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Accounting for Stock-Based Employee Compensation.In December 2004, the FASB issued
SFAS No. 123 (revised 2004) Share-Based Payment, or SFAS No. 123(R). SFAS No. 123(R) revises FASB Statement No. 123 Accounting for Stock-Based Compensation, and supersedes APB Opinion No. 25, and its
related implementation guidance. This Statement eliminates the ability to account for share-based compensation using the intrinsic value method under APB Opinion No. 25. SFAS No. 123(R) focuses primarily on accounting for transactions in
which an entity obtains employee services in share-based payment transactions. SFAS No. 123(R) requires a public entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date
fair value of the award (with limited exceptions). That cost will be recognized over the period during which an employee is required to provide service in exchange for the award, known as the requisite service period, which is usually the vesting
period. SFAS No. 123(R) is effective for companies filing under Regulation SB as of the beginning of the first interim or annual reporting period that begins after December 15, 2005, which for us was our first quarter of the year ending
December 31, 2006.

Accordingly, the provisions of SFAS No. 123(R) apply to new awards and to awards modified, repurchased, or
cancelled after January 1, 2006. Additionally, compensation cost for the portion of awards for which the requisite service has not been rendered that were outstanding as of January 1, 2006 must be recognized as the requisite service is
rendered on or after January 1, 2006. These new accounting rules will lead to a decrease in reported earnings. As permitted under SFAS No. 123(R), we have elected to recognize compensation cost for all options with graded vesting on a
straight-line basis over the vesting period of the entire option. Our adoption of SFAS No. 123(R) could have a material impact on our financial position and results of operations.

Prior to January 1, 2006, we accounted for stock-based compensation, as permitted by FASB Statement No. 123, Accounting for Stock-Based
Compensation, under the intrinsic value method described in APB Opinion No. 25, Accounting for Stock Issued to Employees, and related Interpretations. Under the intrinsic value method, no stock-based employee compensation cost is recorded when
the exercise price is equal to, or higher than, the market value of the underlying common stock on the date of grant. We recognized stock-based compensation expense for all grants to consultants and for those grants to employees where the exercise
prices were below the market price of the underlying stock at the measurement date of the grant.

We adopted SFAS No. 123(R) in the
quarter ending March 31, 2006. Accordingly, the provisions of SFAS No. 123(R) apply to new awards and to awards modified, repurchased, or cancelled after the required effective date.

Earnings per Common Share: Basic earnings per share is computed by dividing income available to common shareholders (the numerator) by the
weighted-average number of common shares outstanding (the denominator) for the period. Diluted earnings per share assumes that any dilutive convertible securities outstanding were converted, with related preferred stock dividend requirements and
outstanding common shares adjusted accordingly. It also assumes that outstanding common shares were increased by shares issuable upon exercise of those stock options for which market price exceeds the exercise price, less shares which could have
been purchased by us with the related proceeds. In periods of losses, diluted loss per share is computed on the same basis as basic loss per share as the inclusion of any other potential shares outstanding would be anti-dilutive.

If we had generated earnings during the quarter ended March 31, 2007, we would have added 29,003,447 common equivalent shares to the weighted
average shares outstanding to compute the diluted weighted average shares outstanding. The weighted average includes the weighted impact of 25,790,335 shares of non-vested in the money restricted common stock option awards and detachable
warrants and 9,661,089 shares issuable upon the conversion of convertible debt.

Income Taxes:We must make certain estimates
and judgments in determining income tax expense for financial statement purposes. These estimates and judgments occur in the calculation of certain tax assets and liabilities, which arise from differences in the timing of recognition of revenue and
expense for tax and financial statement purposes.

Recent Accounting Pronouncements

On December 21, 2006, FASB Staff Position (FSP EITF 00-19-2) Accounting for Registration Payment Arrangements,specifies that the contingent
obligation to make future payments or otherwise transfer consideration under a registration payment arrangement, whether issued as a separate agreement or included as a provision of a financial instrument or other agreement, should be separately
recognized and measured in accordance with FASB Statement No. 5, Accounting for Contingencies. The guidance in this FSP amends FASB Statement No. 133, Accounting for Derivative Instruments and Hedging Activities,and No. 150,
Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity,and FASB Interpretation No. 45, Guarantors Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Others,to include scope exceptions for registration payment arrangements. This FSP further clarifies that a financial instrument subject to a registration payment arrangement



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should be accounted for in accordance with other applicable generally accepted accounting principles (GAAP) without regard to the contingent obligation to
transfer consideration pursuant to the registration payment arrangement.

In September 2006, the FASB issued SFAS No. 157, Fair
Value Measurements (SFAS 157). SFAS 157 provides guidance for using fair value to measure assets and liabilities. It also responds to investors requests for expanded information about the extent to which companies measure assets and
liabilities at fair value, the information used to measure fair value, and the effect of fair value measurements on earnings. SFAS 157 applies whenever other standards required (or permit) assets or liabilities to be measured at fair value, and does
not expand the use of fair value in any new circumstances. SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007. We are currently evaluating the effect that the adoption of SFAS 157 will have
on our results of operations and financial condition and are not yet in a position to determine such effects.

In September 2006,
the SEC staff issued Staff Accounting Bulletin No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements(SAB 108). SAB 108
establishes an approach that requires quantification of financial statement misstatements based on the effects of the misstatements on each of the Companys consolidated financial statements and the related financial statement disclosures.
SAB 108 is effective for the year ending December 31, 2006. We have adopted SAB 108 and have determined that it has no effect on our financial statements.

In June 2006, the FASB issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxesan Interpretation of FASB
Statement 109 (FIN 48), which clarifies the accounting for uncertain tax positions. This Interpretation allows the tax effects from an uncertain tax position to be recognized in the Companys financial statements if the position
is more likely than not to be sustained upon audit, based on the technical merits of the position. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. FIN
48 is effective for fiscal years beginning after December 15, 2006. We do not expect the adoption of FIN 48 to have a material impact on our financial statements.

Off Balance Sheet Arrangements

We do not have any off balance sheet arrangements.



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ITEM 3A(T). CONTROLS AND PROCEDURES.

Evaluation of disclosure controls and procedures.

As required by Rule 13a-15 under the Exchange Act, as of the end of the period covered by this report, we carried out an evaluation under the supervision
and with the participation of our management, including our President and Treasurer (our principal executive officer) and Chief Financial Officer (our principal accounting and finance officer), of the effectiveness of the design and operation of our
disclosure controls and procedures. In designing and evaluating our disclosure controls and procedures, we and our management recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance
of achieving the desired control objectives, and our management necessarily was required to apply its judgment in evaluating and implementing possible controls and procedures. The effectiveness of our disclosure controls and procedures and our
internal control over financial reporting is subject to various inherent limitations, including cost limitations, judgments used in decision making, assumptions about the likelihood of future events, the soundness of our systems, the possibility of
human error, and the risk of fraud. Moreover, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions and the risk that the degree of compliance
with policies or procedures may deteriorate over time. Because of these limitations, there can be no assurance that any system of disclosure controls and procedures or internal control over financial reporting will be successful in preventing all
errors or fraud or in making all material information known in a timely manner to the appropriate levels of management.

The Company became
aware of the material weakness in connection with the receipt of comments from the Staff of the Securities and Exchange Commission received by the Company on August 31, 2006 and November 3, 2006 with respect to the Companys
Registration Statement on Form SB-2, filed by the Company on August 8, 2006 (File No. File No. 333-136392). A control deficiency exists when the design or operation of a control does not allow management or employees, in the ordinary
course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the Companys ability to
initiate, authorize, record, process, or report external financial data reliably in accordance with GAAP, such that there is a more than remote likelihood that a misstatement of the Companys annual or interim financial statements that is more
than inconsequential will not be prevented or detected. A material weakness is a control deficiency, or combination of control 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.

Based upon an evaluation conducted for the period ended March 31, 2007, our
President and Treasurer (our principal executive officer) and Chief Financial Officer (our principal accounting and finance officer) have concluded that as of the end of the period covered by this report, we have identified the following material
weaknesses:



| |  |  | Reliance upon independent financial reporting consultants for review of critical accounting areas and disclosures and material non-standard transactions.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | A limited number of on-site accounting personnel which results in a lack of segregation of duties necessary for a good system of internal control.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------

Managements review of our internal controls is on-going and will take whatever measures necessary to reduce the
material deficiencies noted. Implementation of our remediation plan has included investing in upgrading our accounting and information technology systems, hiring additional permanent employees in accounting, purchasing and field operations,
establishing additional training programs, instituting employee compliance and code of ethics requirements, and engaging outside expert consultants. Our plan is to continue to strengthen our organization and internal controls and it may include
hiring additional management and support personnel. The effectiveness of the steps we have taken to date and the steps we are still in the process of completing is subject to continued management review, and we may make additional changes to our
internal controls and procedures. Although we have undertaken the foregoing initiatives, we cannot assure you that we will not in the future identify further material weaknesses in our internal control over financial reporting that we have not
discovered to date. We will continue to review and document our disclosure controls and procedures, including our internal controls and procedures for financial reporting, on an ongoing basis, and may from time to time make changes aimed at
enhancing their effectiveness and to ensure that our systems evolve with our business.

Based on the evaluation of our disclosure controls
and procedures as set forth above as of the end of the period covered by this report, our President and Treasurer (our principal executive officer) and Chief Financial Officer (our principal accounting and finance officer) concluded that, as of such
date, our disclosure controls and procedures were not effective at the reasonable assurance level.



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Changes in internal control over financial reporting.

There was no change in our internal control over financial reporting that occurred during the period covered by this report on Form 10-QSB that has
materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.



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PART II OTHER INFORMATION



|ITEM 1. | LEGAL PROCEEDINGS
|------- | -----------------

None.



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

On January 18, 2007, the Company issued a promissory note in the principal amount of $200,000 in favor of Vicis Capital Master Fund (Vicis). The Company received $200,000 in cash as consideration for
this promissory note. . In the event the Company does not repay all outstanding principal and interest under this note on or before March 31, 2007, the maturity date of the note will be extended to May 30, 2007 and the Company will be
obligated to issue to Vicis a warrant to purchase 1,333,334 shares of common stock, which warrant will have an exercise price of $2.00 per share and will be exercisable for five years. The Company relied upon Rule 506 of Regulation D of the
Securities Act of 1933, as amended, for the issuance of this promissory note.

On February 20, 2007, the Company issued a promissory
note in the principal amount of $450,000 in favor of Vicis. In the event the Company does not repay all outstanding principal and interest under the note on or before April 30, 2007, the maturity date of the note will be extended to
June 30, 2007 and the Company will be obligated to issue to Vicis a warrant to purchase 3,000,000 shares of the our common stock, which warrant will have an exercise price of $2.00 per share and will be exercisable for five years. The Company
relied upon Rule 506 of Regulation D of the Securities Act of 1933, as amended, for the issuance of this promissory note.

On
March 16, 2007, in connection with the entry of a Revolving Line of Credit Agreement (the Line of Credit Agreement) with Sovereign Bank (Sovereign), the Company issued to Vicis a warrant to purchase 3,060,000 shares of
the Companys common stock, which warrant is exercisable for five years at a per share exercise price of $1.00. This warrant was issued in exchange for the entry by Vicis into a certain Guarantee Fee, Reimbursement and Indemnification Agreement
on March 16, 2007 (the Guarantee Agreement). If the Company does not timely reimburse Vicis any payments Vicis is required to make pursuant to the Guarantee Agreement, the Company is obligated to issue to Vicis additional warrants
to purchase a number of shares of common stock equal to 200% of the value payments required of Vicis, which warrants shall be exercisable for five years at a per share exercise price of $1.00. The Company relied upon Rule 506 of Regulation D of the
Securities Act of 1933, as amended, for the issuance of this warrant.

On March 16, 2007, the Company issued a warrant to
purchase 153,000 shares of its common stock, which warrant is exercisable for five years at a per share exercise price of $1.00, to Midtown Partners & Co., LLC (Midtown) for services rendered to the Company in connection with
the transactions described in the Revolving Line of Credit. If the Company does not timely reimburse Vicis any payments Vicis is required to make pursuant to the Guarantee Agreement, the Company is obligated to issue a number of shares of common
stock to Midtown equal to 10% of the value of the payments required of Vicis, which warrants shall be exercisable for five years at a per share exercise price of $1.00. The Company relied upon Rule 506 of Regulation D of the Securities Act of 1933,
as amended, for the issuance of this promissory note.



|ITEM 3. | DEFAULTS UPON SENIOR SECURITIES
|------- | -------------------------------

None



|ITEM 4. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
|------- | ----------------------------------------------------

None.



|ITEM 5. | OTHER INFORMATION
|------- | -----------------

(a) Not applicable.

(b) Not applicable.



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|ITEM 6. | EXHIBITS.
|------- | ---------



|            |  |                                                                                                                                                                                                          
|----------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                              
|            | 
|3.1         |  | Amended and Restated Articles of Incorporation of the Registrant (incorporated by reference to Appendix A to the Registrants Definitive Information Statement on Schedule 14C filed on July
11, 2006)   
|            | 
|3.2         |  | Amended and Restated Bylaws of the Registrant (incorporated by reference to Appendix C from the Registrants Definitive Information Statement on Schedule 14C filed on July 11,
2006)                    
|            | 
|10.1        |  | Promissory Note for the principal amount of $200,000 issued by the Registrant in favor of Vicis Capital Master Fund on January 18, 2007 (filed herewith)                                                 
|            | 
|10.2        |  | Employment Agreement by and between the Registrant and Robert Graves dated as of January 22, 2007 (filed herewith)                                                                                       
|            | 
|10.3        |  | Promissory Note for the principal amount of $450,000 issued by the Registrant in favor of Vicis Capital Master Fund on February 20, 2007 (filed herewith)                                                
|            | 
|10.4        |  | Revolving Line of Credit Agreement dated as of March 16, 2007 by and between the Registrant and Sovereign Bank (filed herewith)                                                                          
|            | 
|10.5        |  | Guarantee Fee, Reimbursement and Indemnification Agreement dated as of March 16, 2007 by and between the Registrant, OrthoSupply Management, Inc. and Vicis Capital Master Fund (filed
herewith)         
|            | 
|10.6        |  | Letter of Credit Reimbursement, Guarantee, Security and Pledge Agreement dated as of March 16, 2007 by and between the Registrant, Custodial Trust Company and Vicis Capital Master Fund (filed
herewith)
|            | 
|31.1        |  | Certification of principal executive officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002 (filed herewith)                                                                                  
|            | 
|31.2        |  | Certification of principal accounting and finance officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002 (filed herewith)                                                                     
|            | 
|32.1        |  | Certification of principal executive officer and principal accounting and finance officer pursuant to Section 906 of the Sarbanes Oxley Act of 2002 (filed herewith)                                     



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MEDICAL SOLUTIONS MANAGEMENT INC.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant
has duly caused this Form 10-QSB to be signed on its behalf by the undersigned thereunto duly authorized.



|                   |  |  |  |                                   |  |                     |  |                                                                   
|------------------ |  |  |  | --------------------------------- |  | ------------------- |  | ------------------------------------------------------------------
|                   |  |  |  | MEDICAL SOLUTIONS MANAGEMENT INC.
|                   |  |  | 
|Date: May 14, 2007 |  |  |  | By:                               |  | /s/ Kenneth Fischer
|                   |  |  |  |                                   |  |                     |  | Kenneth Fischer                                                   
|                   |  |  |  |                                   |  |                     |  | Chief Financial Officer (principal accounting
and finance officer)



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EXHIBIT INDEX



|            |  |                                                                                                                                                                                                          
|----------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                              
|            | 
|3.1         |  | Amended and Restated Articles of Incorporation of the Registrant (incorporated by reference to Appendix A to the Registrants Definitive Information Statement on Schedule 14C filed on July
11, 2006)   
|            | 
|3.2         |  | Amended and Restated Bylaws of the Registrant (incorporated by reference to Appendix C from the Registrants Definitive Information Statement on Schedule 14C filed on July 11,
2006)                    
|            | 
|10.1        |  | Promissory Note for the principal amount of $200,000 issued by the Registrant in favor of Vicis Capital Master Fund on January 18, 2007 (filed herewith)                                                 
|            | 
|10.2        |  | Employment Agreement by and between the Registrant and Robert Graves dated as of January 22, 2007 (filed herewith)                                                                                       
|            | 
|10.3        |  | Promissory Note for the principal amount of $450,000 issued by the Registrant in favor of Vicis Capital Master Fund on February 20, 2007 (filed herewith)                                                
|            | 
|10.4        |  | Revolving Line of Credit Agreement dated as of March 16, 2007 by and between the Registrant and Sovereign Bank (filed herewith)                                                                          
|            | 
|10.5        |  | Guarantee Fee, Reimbursement and Indemnification Agreement dated as of March 16, 2007 by and between the Registrant, OrthoSupply Management, Inc. and Vicis Capital Master Fund (filed
herewith)         
|            | 
|10.6        |  | Letter of Credit Reimbursement, Guarantee, Security and Pledge Agreement dated as of March 16, 2007 by and between the Registrant, Custodial Trust Company and Vicis Capital Master Fund (filed
herewith)
|            | 
|31.2        |  | Certification of principal executive officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002 (filed herewith)                                                                                  
|            | 
|31.2        |  | Certification of principal accounting and finance officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002 (filed herewith)                                                                     
|            | 
|32.1        |  | Certification of principal executive officer and principal accounting and finance officer pursuant to Section 906 of the Sarbanes Oxley Act of 2002 (filed herewith)