UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549




FORM
10-Q


(Mark
One)




xAnnual report under
Section 13 or 15(d) of the Securities Exchange Act of 1934




For the
fiscal year ended June 30,
2010.




oTransition report under
Section 13 or 15(d) of the Securities Exchange Act of 1934 (No fee
required)




For the
transition period from _______ to _______.




Commission file number: 000-27407




SPINE
PAIN MANAGEMENT, INC.


(Formerly “VERSA
CARD, INC.”)


(Name of
Registrant in Its Charter)




Delaware
            98-0187705(State
      or Other Jurisdiction of
            (I.R.S.
      EmployerIncorporation
      or Organization)
            Identification No.)




5225
Katy Freeway


Suite
600


Houston,
Texas   77007


(Address
of Principal Executive Offices)




(713)
521-4220


(Issuer's
Telephone Number, Including Area Code)




Securities
registered under Section 12(g) of the Exchange Act:




Title of Each
Class


Common
Stock ($0.001 Par Value)




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


Yes  x    No   ̈




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




Large
accelerated filer   ̈    Accelerated
filer   ̈




Non-accelerated
filer   ̈    Smaller
reporting company  x




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
August 11, 2010, the registrant had 17,603,396 shares of common stock, $0.001
par value (the only class of voting stock), issued and outstanding.









SPINE
PAIN MANAGEMENT, INC.


(Formerly “VERSA
CARD, INC.”)





FORM
10-Q





TABLE OF
CONTENTS





PART
      I
            FINANCIAL
      INFORMATIONItem
      1.
            Financial
      StatementsBalance
      Sheets as of June 30, 2010 (Unaudited) and December 31,
    2009
            3Statements
      of Operations for the three and six months ended June 30, 2010 and 2009
      (Unaudited)
            4Statements
      of Cash Flows for the six months ended June30, 2010 and 2009
      (Unaudited)
            5Notes
      to Financial Statements (Unaudited)
            6Item
      2.
            Management's
      Discussion and Analysis of Financial Condition and Results of
      Operations
            16Item
      4.
            Controls
      and Procedures
            18PART
      II
            OTHER
      INFORMATIONItem
      1.
            Legal
      Proceedings
            18Item
      2.
            Unregistered
      Sales of Equity Securities and Use of Proceeds
            20Item
      3.
            Defaults
      Upon Senior Securities
            20Item
      6.
            Exhibits
            21Signatures
            23




2


SPINE
      PAIN MANAGEMENT, INC. (FORMERLY "VERSA CARD, INC.")BALANCE
      SHEETS




June
      30,
              
              
              December
      31,ASSETS
              
              2010
              
              
              2009(Unaudited)CURRENT
      ASSETS:Cash
              
              $
              13,639
              
              
              $
              32,789Account
      receivable, net
              
              
              1,988,507
              
              
              
              508,499Total
      current assets
              
              
              2,002,146
              
              
              
              541,288TOTAL
      ASSETS
              
              $
              2,002,146
              
              
              $
              541,288LIABILITIES
      AND STOCKHOLDERS' EQUITY (DEFICIT)CURRENT
      LIABILITIESAccounts
      payable and accrued liabilities
              
              $
              859,237
              
              
              $
              475,138Notes
      payable
              
              
              11,317
              
              
              
              11,317Due
      to former officers and directors
              
              
              56,016
              
              
              
              56,016Due
      to related party
              
              
              310,699
              
              
              
              269,295Total
      current liabilities
              
              
              1,237,269
              
              
              
              811,766COMMITMENTS
      AND CONTINGENCIESSTOCKHOLDERS'
      EQUITY (DEFICIT)Common
      stock: $0.001 par value, 50,000,000 sharesauthorized;
      17,403,396 and 16,867,682 shares issued and outstandingat
      June 30,  2010 and December 31, 2009, respectively
      and
                50,000
      issuable at June 30, 2010.
              
              
              17,453
              
              
              
              16,868Additional
      paid-in capital
              
              
              15,126,767
              
              
              
              14,717,352Accumulated
      deficit
              
              
              (14,379,343
              )
              
              
              (15,004,698
              )Total
      stockholders’ equity (deficit)
              
              
              764,877
              
              
              
              (270,478
              )TOTAL
      LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
              
              $
              2,002,146
              
              
              $
              541,288




See
      accompanying notes to the condensed financial
  statements




3




SPINE
      PAIN MANAGEMENT, INC. (FORMERLY "VERSA CARD, INC.")UNAUDITED
      STATEMENTS OF OPERATIONS




FOR
      THE
                THREE
      MONTHS ENDED
                JUNE
      30,
              
              
              FOR
      THE
                SIX
      MONTHS ENDED
                JUNE
      30,2010
              
              
              2009
              
              
              2010
              
              
              2009REVENUE
              
              $
              1,732,126
              
              
              $
              -
              
              
              $
              3,184,259
              
              
              $
              -COST
      OF SALESService
      costs
              
              
              368,400
              
              
              
              -
              
              
              
              687,100
              
              
              
              -GROSS
      PROFIT
              
              
              1,363,726
              
              
              
              -
              
              
              
              2,497,159
              
              
              
              -OPERATING
      EXPENSESGeneral
      and administrative expenses
              
              $
              297,738
              
              
              
              394,029
              
              
              
              382,178
              
              
              
              1,050,903Bad
      and Doubtful Debts expense
              
              
              799,246
              
              
              
              -
              
              
              
              1,494,616
              
              
              
              -Total
      Operating Expenses
              
              
              1,096,984
              
              
              
              394,029
              
              
              
              1,876,794
              
              
              
              1,050,903NET
      INCOME (LOSS) FROM OPERATIONS
              
              
              266,742
              
              
              
              (394,029
              )
              
              
              620,365
              
              
              
              (1,050,903
              )Other
      income
              
              
              3,490
              
              
              
              -
              
              
              
              4,990
              
              
              
              -NET
      INCOME (LOSS)
              
              $
              270,232
              
              
              $
              (394,029
              )
              
              $
              625,355
              
              
              $
              (1,050,903
              )NET
      INCOME (LOSS) PER SHARE:Basic
      and Diluted
              
              $
              0.02
              
              
              $
              (0.02
              )
              
              $
              0.04
              
              
              $
              (0.07
              )WEIGHTED-AVERAGE
      SHARES:Basic
      and Diluted
              
              
              17,118,467
              
              
              
              16,317,682
              
              
              
              16,993,767
              
              
              
              15,356,356




See
      accompanying notes to the condensed financial
  statements




4




SPINE
      PAIN MANAGEMENT, INC. (FORMERLY "VERSA CARD, INC.")UNAUDITED
      STATEMENTS OF CASH FLOWS




FOR
      THE
                  SIX
      MONTHS ENDED
                  JUNE
      30,2010
                
                
                2009CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      income (loss)
                
                $
                625,355
                
                
                $
                (1,050,903
                )Adjustments to reconcile net income (loss) to net cash used in operating
      activities:Bad
      and Doubtful Debts expense
                
                
                1,494,616
                
                
                
                -Issuance
      of common stock towards payable to NSO (see Note 7)
                
                
                200,000
                
                
                
                -Issuance
      of common stock for consulting services and stock based
      compensation
                
                
                210,000
                
                
                
                544,000Issuance
      of common stock towards acquisition of intangible assets
                
                
                -
                
                
                
                225,000Changes
      in assets and liabilities:Accounts
      receivable
                
                
                (2,974,625
                )
                
                
                -Accounts
      payable and accrued liabilities
                
                
                384,100
                
                
                
                118,182Due
      to related parties
                
                
                41,404
                
                
                
                163,721Net
      cash used in operating activities
                
                
                (19,150
                )
                
                
                -CASH
      FLOWS FROM INVESTING ACTIVITIES:Net
      cash provided by (used in) investing activities
                
                
                -
                
                
                
                -CASH
      FLOWS FROM FINANCING ACTIVITIES:Net
      cash provided by (used in) financing activities
                
                
                -
                
                
                
                -NET
      DECREASE IN CASH AND CASH EQUIVALENTS
                
                
                (19,150
                )
                
                
                -BEGINNING
      OF PERIOD
                
                
                32,789
                
                
                
                -END
      OF PERIOD
                
                $
                13,639
                
                
                $
                -Supplementary
      disclosure of cash flow information:Cash
      paid for interest
                
                $
                -
                
                
                $
                -Cash
      paid for income taxes
                
                $
                -
                
                
                $
                -Supplementary
      disclosure of non-cash investing and financing activities:Issuance
      of common stock towards payable to NSO
                
                $
                200,000
                
                
                $
                -Issuance
      of common stock towards consulting services and stock based
      compensation
                
                $
                210,000
                
                
                $
                -Acquisition
      of intangible assets
                
                $
                -
                
                
                $
                (225,000
                )Issuance
      of common stock towards acquisition of intangible assets
                
                
                -
                
                
                
                225,000$
                -
                
                
                $
                -




See
      accompanying notes to the condensed financial
  statements




5




PART
I




SPINE PAIN MANAGEMENT, INC.,
(Formerly “Versa Card, Inc.”)





NOTES TO THE FINANCIAL
STATEMENTS (Unaudited)





NOTE
1.  DESCRIPTION OF BUSINESS




Spine
Pain Management, Inc., formerly known as Versa Card, Inc., Intrepid Global
Imaging 3D, Inc., MangaPets, Inc. and Newmark Ventures, Inc. (the
“Company”),  was incorporated in Delaware on March 4, 1998 to acquire
interests in various business operations and assist in their development. On
November 12, 2009, the Company changed its name from Versa Card, Inc. to Spine
Pain Management, Inc. The Company commenced commercial operations in August,
2009 and is no longer considered a development stage company.




Since
inception, the Company had engaged in and contemplated several ventures and
acquisitions, many of which were not consummated. In April 2005, the Company
began focusing on the development of the “MangaPets” interactive web portal and
acquiring other ventures in the technology sector. The Company entered into a
Portal Development Agreement in July 2005, with Sygenics Interactive Inc.
(“Sygenics”), a developer of advanced information management technology, located
in Montreal, Quebec, Canada, and an authorized licensee of Sygenics Inc. The
agreement provided for the design, development and deployment of an online
virtual pet portal/website. However, in 2006, prior to Sygenics’ completion of
the first stage of the portal, a dispute arose between the Company and Sygenics
that resulted in work being halted. Since that time, the Company has attempted
to develop the web portal or form another strategic relationship with a
different developer to complete development of the web portal.  The
Company has reevaluated MangaPet's business of developing a web portal
containing games, merchandizing, and other entertainment activities to determine
the viability of that business concept. It has been determined that this
business segment is no longer appropriate to pursue given the Company’s current
business plan.




During
2006, in addition to developing the Manga themed web portal, the Company
expended resources toward establishing a United Kingdom based subsidiary company
to pursue acquisitions in the gaming sector. On the advice of counsel, and
unfavorable events in the United States pertaining to on-line gaming, the
Company decided not to pursue on-line gaming ventures.




Commencing
in the fourth quarter of 2007, the Company focused on consummating a transaction
with a smartcard / e-purse company, First Versatile Smartcard Solutions
Corporation (“FVS”), and put on hold the development of its web portal for the
Company’s MangaPets business. In November 2007, the Company entered into an
agreement to merge with FVS, and subsequently in April 2008, the transaction was
restructured as a stock purchase agreement.   Based on various
factors, the acquisition of FVS did not meet the expectations of the Company or
FVS, and on December 30, 2008 the Company entered into a Mutual Release and
Settlement Agreement to effectively rescind the transactions effected by the FVS
acquisition agreements.




At the
end of December 2008, the Company began moving forward to launch its new
business concept of delivering turnkey solutions to spine surgeons, orthopedic
surgeons and other healthcare providers for necessary and appropriate treatment
of musculo-skeletal spine injuries. In connection with this business plan, in
February, 2009, the Company acquired the website and propriety methodologies of
One Source Plaintiff Funding, Inc. (“One Source”), a Florida corporation, which
the Company planned to use in the business of “lawsuit
funding”.  Based on several factors, however, the Company decided in
July 2009 not to enter the business of lawsuit funding (as described in more
detail below in Note 2, “Change in Business”), and focus solely on assisting
healthcare providers in providing necessary and appropriate treatment for
patients with spine injuries.





In August
2009, the Company opened its first spine injury treatment center in Houston,
Texas.  On June 19, 2010, the Company opened a new Spine Diagnostic
Center in McAllen, Texas. This new center facilitates medical spine injection
procedures to patients from the lower Rio Grand Valley, including the cities of
Harlingen, Brownsville and Edinburg, Texas.  Like the Company’s
Houston facility, the McAllen center uses a fellowship trained pain doctor to
provide spine diagnostic injections, with assistance from Emergency Medical
Transit and specialized radiological personnel.  The Company is also
currently evaluating the development of additional spine injury treatment
centers in Texas and across the United States.




6




Spine
Pain Management is a medical marketing, management and billing and
collection company facilitating treatment for patients who have sustained spine
injuries resulting from automobile and work-related accidents. The Company’s
mission is to deliver turnkey solutions to spine surgeons, orthopedic surgeons
and other health care providers for necessary and appropriate treatment for
spine related injuries. The goal of the Company is to become a leader in
providing care management services to spine surgeons and orthopedic surgeons to
facilitate proper treatment of their injured clients. By providing early
treatment, the Company believes that spine injuries can be managed, and injured
victims can be quickly placed on the road to recovery. The Company believes its
advocacy will be rewarding to patients who obtain needed relief from painful
conditions. The Company provides a care management program that advocates for
the injured victims by moving treatment forward to conclusion without the delay
and hindrance of the legal process.




GOING
CONCERN




The
Company has a history of recurring losses from operations and has an accumulated
deficit of approximately $14.4 million as of June 30,
2010.  Successful business operations and its transition to attaining
profitability are dependent upon obtaining additional financing and achieving a
level of revenue adequate to support its cost structure. Considering the nature
of the business, the Company is not generating immediate liquidity and
sufficient working capital within a reasonable period of time to fund its
planned operations and strategic business plan through December 31, 2010;
therefore, it is actively seeking additional debt or equity financing. There can
be no assurances that there will be adequate financing available to the Company.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. This basis of accounting contemplates
the recovery of the Company’s assets and the satisfaction of liabilities in the
normal course of business. The financial statements do not include any
adjustments to reflect the possible future effects on the recoverability and
classification of assets or the amounts and classification of liabilities that
may result from the outcome of this uncertainty.





NOTE
2. CHANGE IN BUSINESS





At the
end of 2008, the Company launched its new business concept of spine pain
management.  The Company’s goal is to engage in the delivery of
turnkey solutions to spine surgeons, orthopedic surgeons and other healthcare
providers for necessary and appropriate treatment of musculo-skeletal spine
injuries. With the new business plan, the Company has reevaluated MangaPet's
business of developing a web portal containing games, merchandizing, and other
entertainment activities to determine the viability of that business
concept.  It has been determined that this business segment is no
longer appropriate to pursue given the Company’s current business
plan.





On
February 28, 2009, in connection with the launch of its new spine pain injury
treatment business segment, the Company entered into an agreement with Brian
Koslow and David Waltzer to acquire the website and proprietary methodologies of
One Source Plaintiff Funding, Inc., a Florida corporation (“One Source”). The
agreement provided for the Company to acquire the website and proprietary
methodologies of One Source in exchange for 900,000 shares of the Company’s
common stock. One Source’s website and proprietary methodologies were designed
for the business of "lawsuit funding" for plaintiff personal injury
cases.  In connection with the One Source transaction, the Company
entered into employment agreements with Mr. Koslow and Mr. Waltzer, the founders
of One Source, with Mr. Koslow being appointed as Executive Vice President of
Business Development of the Company.  With the assistance of Messrs.
Koslow and Waltzer, the Company planned to further develop One Source’s website
and proprietary methodologies so that the Company could enter the business of
lawsuit funding.  In July 2009, however, Mr. Koslow and Mr. Waltzer
unexpectedly resigned from the Company.  With the resignations of
Messrs. Koslow and Waltzer, the Company realized it would be unable to use the
proprietary methodology of One Source and has decided not to enter the business
of lawsuit funding, focusing instead on its spine pain injury treatment
business.  Accordingly, the Company will have no use for the website
and proprietary methodologies of One Source.  Upon an evaluation of
the expected life of the acquired One Source assets in the amount of
approximately $231,000, it was decided at December 31, 2009 that these assets
had no value, and the acquired cost of the impaired assets have been written off
and recorded in the Company’s statement of operations for the year ended
December 31, 2009.  The Company also filed a lawsuit against Messrs.
Koslow and Waltzer, which was recently resolved through a settlement agreement,
as described in Note 12, “Commitments and Contingencies.”




7




On Nov.
12, 2009 the Company changed its name from "Versa Card, Inc." to "Spine Pain
Management, Inc." and has changed its trading symbol from "IGLB" to "SPIN." The
name change was effected legally with the Delaware Secretary of State on
November 12, 2009 and was effected in the market on November 27, 2009. OTC
Bulletin Board: SPIN.




NOTE
3.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES




The
following are summarized accounting policies considered to be significant by the
Company’s management:




Basis
of Presentation





The
accompanying unaudited condensed financial statements of Spine Pain Management,
Inc. (the "Company") have been prepared pursuant to the rules and regulations of
the Securities and Exchange Commission (the "SEC). Certain information and
footnote disclosures, normally included in financial statements prepared in
accordance with accounting principles generally accepted in the United States of
America have been condensed or omitted pursuant to such SEC rules and
regulations. Nevertheless, the Company believes that the disclosures are
adequate to make the information presented not misleading. These interim
condensed financial statements should be read in conjunction with the audited
financial statements and notes thereto included in the Company's 2009 Annual
Report as filed on Form 10K. In the opinion of management, all adjustments,
including normal recurring adjustments necessary to present fairly the financial
position of the Company with respect to the interim financial statements and the
results of its operations for the interim period ended June 30, 2010, have been
included. The results of operations for interim periods are not necessarily
indicative of the results for a full year.




Accounting
Method




The
Company’s financial statements are prepared using the accrual basis of
accounting in accordance with accounting principles generally accepted in the
United States of America and have been consistently applied in the preparation
of the financial statements.




Change
from Development Stage




Pursuant
to FASB ASC 915, “Development Stage Entities”, the Company was considered to be
a development stage entity from March 4, 1998 to December 31, 2008. Among other
provisions, FASB ASC 915 stipulates the reporting of inception to date results
of operations, cash flows and other financial information. Since August 2009,
the Company began generating revenues from planned commercial operations.
Although the Company’s management expects to focus a significant amount of
resources to business development and expansion type activities over the next 2
to 3 years, the Company has been generating revenues that originate from planned
principle operations relative to new business concept of spine pain
management.  Consequently, these financial statements are reported in
accordance with accounting principles for an operating company and do not
reflect inception to date information.




8




Use
of Estimates




The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires the use of estimates and
assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities known to exist as of the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Uncertainties with respect to such estimates and
assumptions are inherent in the preparation of the Company’s financial
statements; accordingly, it is possible that the actual results could differ
from these estimates and assumptions and could have a material effect on the
reported amounts of the Company’s financial position and results of
operations.




Revenue
Recognition




Revenues
are recognized in accordance with SEC staff accounting bulletin, Topic 13,
Revenue Recognition, which specifies that only when persuasive evidence for an
arrangement exists; the fee is fixed or determinable; and collection is
reasonably assured can revenue be recognized.




Persuasive
evidence of an arrangement is obtained prior to services being rendered when the
patient completes and signs the medical and financial paperwork.  Delivery
of services is considered to have occurred when treatment(s) are provided to the
patient.  The price and terms for the services are considered fixed and
determinable at the time that the treatments are provided and are based upon the
type and extent of the services rendered.  The Company’s credit policy has
been established based upon extensive experience by management in the industry
and has been determined to ensure that collectability is reasonably
assured.  Payment for services are primarily made to the Company by a third
party. Due to the Company’s relatively recent entry into this area of
operations, collection is averaging over 220 days. However, management believes
that the number of days outstanding on the collections will be reduced in the
near future.












Income
Taxes




The
Company accounts for income taxes in accordance with the liability method. Under
the liability method, deferred assets and liabilities are recognized based upon
anticipated future tax consequences attributable to differences between
financial statement carrying amounts of assets and liabilities and their
respective tax bases. The Company establishes a valuation allowance to the
extent that it is more likely than not that deferred tax assets will not be
utilized against future taxable income.




Uncertain
tax positions




In July
2006, the Financial Accounting Standards Board (“FASB”) issued guidance codified
in Accounting Standards Codification (“ASC”) Topic 740-10-25 “Accounting for
Uncertainty in Income Taxes”. ASC Topic 740-10-25 supersedes guidance codified
in ASC Topic 450, “Accounting for Contingencies”, as it relates to income tax
liabilities and lowers the minimum threshold a tax position is required to meet
before being recognized in the financial statements from “probable” to “more
likely than not” (i.e., a likelihood of occurrence greater than fifty percent).
Under ASC Topic 740-10-25, the recognition threshold is met when an entity
concludes that a tax position, based solely on its technical merits, is more
likely than not to be sustained upon examination by the relevant taxing
authority. Those tax positions failing to qualify for initial recognition are
recognized in the first interim period in which they meet the more likely than
not standard, or are resolved through negotiation or litigation with the taxing
authority, or upon expiration of the statute of limitations. De-recognition of a
tax position that was previously recognized occurs when an entity subsequently
determines that a tax position no longer meets the more likely than not
threshold of being sustained.




The
Company is subject to ongoing tax exposures, examinations and assessments in
various jurisdictions. Accordingly, the Company may incur additional tax expense
based upon the outcomes of such matters. In addition, when applicable, the
Company will adjust tax expense to reflect the Company’s ongoing assessments of
such matters which require judgment and can materially increase or decrease its
effective rate as well as impact operating results.




9




Under ASC
Topic 740-10-25, only the portion of the liability that is expected to be paid
within one year is classified as a current liability. As a result, liabilities
expected to be resolved without the payment of cash (e.g. resolution due to the
expiration of the statute of limitations) or are not expected to be paid within
one year are not classified as current. The Company has recently adopted a
policy of recording estimated interest and penalties as income tax expense and
tax credits as a reduction in income tax expense.




The
Company did not file federal and applicable state income tax returns for the
years ended December 31, 2009, 2008 and 2007, respectively. Although the Company
has incurred losses since its inception, the Company is obligated to file income
tax returns for compliance with IRS regulations and that of applicable state
jurisdictions. The Company anticipates filing tax returns for the years ended
December 31, 2009, 2008 and 2007 within 30 days of this
report.  Management believes that the Company will not incur
significant penalty and interest for non-filing of federal and state income tax
returns, as well as, federal and state income tax liabilities, as applicable,
for the years ended December 31, 2009, 2008 and 2007, respectively, considering
its loss making history since inception. The Company is still in the process of
determining the amount of net taxable operating losses eligible to be carried
forward for federal and applicable state income tax purposes for the years ended
December 31, 2009, 2008 and 2007, respectively. The Company has not made any
provision for federal and state income tax liabilities that may result from this
uncertainty as of December 31, 2009 and 2008, respectively.




Although
the Company has net income from operations of $625,355 for the six months ended
June 30, 2010, management believes that no provision for federal and state
income taxes is considered necessary for the six months ended June 30, 2010 as
the company has a benefit of significant net operating losses carried forward
from prior years. Management also determined that any amounts payable in the
form of federal and state income tax liabilities including resultant penalties
and interest, will not have a material impact on the Company’s financial
position, its results of operations and its cash flows.




The
number of years with open tax audits varies depending on the tax jurisdiction.
The Company’s major taxing jurisdictions include the United States (including
applicable states).





Reclassification -
Certain prior period amounts have been reclassified to conform to current period
presentations.





Accounting
Standard Updates





In
October 2009, the FASB has published Accounting Standard Updates (“ASU”) No.
2009-13, “Revenue Recognition (Topic 605)-Multiple Deliverable Revenue
Arrangements,” which addresses the accounting for multiple-deliverable
arrangements to enable vendors to account for products or services
(deliverables) separately rather than as a combined unit. Specifically, this
guidance amends the criteria in Subtopic 605-25, “Revenue
Recognition-Multiple-Element Arrangements,” for separating consideration in
multiple-deliverable arrangements. This guidance establishes a selling price
hierarchy for determining the selling price of a deliverable, which is based on:
(a) vendor-specific objective evidence; (b) third-party evidence; or (c)
estimates. This guidance also eliminates the residual method of allocation and
requires that arrangement consideration be allocated at the inception of the
arrangement to all deliverables using the relative selling price method and also
requires expanded disclosures. The guidance in this update is effective
prospectively for revenue arrangements entered into or materially modified in
fiscal years beginning on or after June 15, 2010. Early adoption is permitted.
The adoption of this standard is not expected to have a material impact on the
Company’s financial position and results of operations.





In April
2010, the FASB issued Accounting Standard Update No. 2010-12. “Income Taxes”
(Topic 740). ASU No.2010-12 amends FASB Accounting Standard Codification
subtopic 740-10 Income Taxes to include paragraph 740-10-S99-4. FASB
Codification topic 740, Income Taxes, requires the measurement of current and
deferred tax liabilities and assets to be based on provisions of enacted tax
law. The effects of future changes in tax laws are not anticipated. Therefore,
the different enactment dates of the Act and reconciliation measure may affect
registrants with a period-end that falls between March 23, 2010 (enactment date
of the Act), and March 30, 2010 (enactment date of the reconciliation measure).
However, the announcement states that the SEC would not object if such
registrants were to account for the enactment of both the Act and the
reconciliation measure in a period ending on or after March 23, 2010, but notes
that the SEC staff “does not believe that it would be appropriate for
registrants to analogize to this view in any other fact patterns.” The adoption
of this guidance is not expected to have a material impact on the Company’s
consolidated financial statements.




10





In April
2010, the FASB issued Accounting Standard Update No. 2010-17. “Revenue
Recognition-Milestone Method” (Topic 605) ASU No.2010-17 provides guidance on
defining a milestone and determining when it may be appropriate to apply the
milestone method of revenue recognition for research or development
transactions. An entity often recognizes these milestone payments as revenue in
their entirety upon achieving a specific result from the research or development
efforts. A vendor can recognize consideration that is contingent upon
achievement of a milestone in its entirety as revenue in the period in which the
milestone is achieved only if the milestone meets all criteria to be considered
substantive. Determining whether a milestone is substantive is a matter of
judgment made at the inception of the arrangement. The ASU is effective for
fiscal years and interim periods within those fiscal years beginning on or after
June 15, 2010. Early application is permitted. Entities can apply this guidance
prospectively to milestones achieved after adoption. However, retrospective
application to all prior periods is also permitted. The adoption of this
guidance is not expected to have a material impact on the Company’s consolidated
financial statements.





Other
ASUs that are effective after June 30, 2010, are not expected to have a
significant effect on the Company’s financial position or results of
operations.




NOTE 4.  NOTES
PAYABLE




Notes
payable consist of the following:





June
      30,
            
            
            December
      31,2010
            
            
            2009Note
      payable to an individual
            
            $
            9,334
            
            
            $
            9,334Note
      payable to a company
            
            
            1,983
            
            
            
            1,983Total
            
            $
            11,317
            
            
            $
            11,317





The
aforesaid notes are secured by all assets of the Company, due on demand and do
not follow any specific repayment schedule. These notes have been placed on
non-interest accrual status effective January 1, 2010 as amount due under these
notes have not been claimed by third parties for a considerable period of
time.





NOTE 5. DUE TO FORMER OFFICERS AND
DIRECTORS





Due to
former related parties consist of:





June
      30,
            
            
            December
      31,2010
            
            
            2009Due
      to former chief executive officer
            
            $
            4,237
            
            
            $
            4,237Due
      to former chief accounting officer
            
            
            51,779
            
            
            
            51,779Total
            
            $
            56,016
            
            
            $
            56,016





Amounts
due to former related parties are unsecured, non-interest bearing, due on demand
and do not follow any specific repayment terms.




11





NOTE 6.  DUE TO
RELATED PARTIES





Due to
related parties consists of:





June
      30,
            
            
            December
      31,2010
            
            
            2009Due
      to chief executive officer
            
            $
            310,699
            
            
            $
            269,295Total
            
            $
            310,699
            
            
            $
            269,295





Amounts
due to Chief Executive Officer are unsecured, non-interest bearing, due on
demand and do not follow any specific repayment terms. The Company used the
amount financed for meeting with its working capital requirements.





NOTE 7.
RELATED PARTY TRANSACTIONS





Medical
Services Agreement





In August
2009, the Company entered into a medical services agreement (the “Agreement”)
with Northshore Orthopedics, Assoc. ("NSO") to open its first spine injury
treatment center in Houston, Texas. Pursuant to the terms of the Agreement, NSO
will operate as an independent contractor for the Company to provide medical
diagnostic services for evaluation and treatment of patients with spine injuries
at pre-determined and pre-negotiated rate per patient.  NSO will be
deemed for all purposes an independent contractor and not an employee, agent,
joint venturer or partner of the Company.  NSO will be responsible for
its own taxes associated with its performance of the services and receipt of
payments pursuant to this Agreement. The Agreement has a term of three years,
and thereafter will automatically renew for another three years at the
discretion of involved parties.  During
2010, the Company incurred $640,900 towards NSO’s costs which is included as
cost of sales in the accompanying statement of operations. As of June 30, 2010,
the Company had a balance of $440,900 payable towards NSO’s costs for providing
medical diagnostic services relative to spine injuries which is included as
accounts payable and accrued liabilities in the accompanying balance sheets. On
May 25, 2010, the Company issued 285,714 shares of common stock valued at $0.70
per share totaling approximately $200,000 towards partial payment of
amounts due to NSO. NSO is owned by Dr. William Donovan, Chief Executive Officer
of the Company.




In-kind
Contributions




Since
August, 2009, the Company maintains its office at: 5225 Katy Freeway, Suite 600,
Houston, Texas 77007.  This office space encompasses approximately 450
square feet and is currently provided to the Company at no cost by Dr. William
Donovan, the Company’s Director and Chief Executive Officer. As a result, the
Company has recognized in-kind contributions of $3,000 as other income and
related rental expense of $3,000 as general and administration expenses in the
accompanying statement of operations for the six months ended June 30, 2010
(none in June 30, 2009).




NOTE 8.
COMMON STOCK




Stock Issuances




In
February, 2009, the Company issued 2,100,000 shares of Company common stock
to various individuals, including certain directors, officers and stockholders,
for services and compensation valued at approximately $544,000.




Pursuant
to a Stock Exchange Agreement dated February, 2009, the Company acquired the
website and proprietary methodologies of One Source Plaintiff Funding, Inc. in
exchange for 900,000 shares of its common stock valued at $225,000.




12




On
December 28, 2009, the Company issued 500,000 restricted shares of common stock
to William Donovan, M.D., the Company’s Chief Executive Officer, for the
conversion of $349,400 of outstanding debt owed by the Company to Dr.
Donovan.




On May 11, 2010, The Company
approvedand authorized the issuance to John Talamas 50,000
shares of common stock at $0.70 per share valued at $35,000, towards his
services as the Chief Operating Officer.


On May
13, 2010, the Company issued 250,000 restricted shares of common stock to
Richard Specht, a Director of the Company, at $0.70 per share valued at $175,000
as consideration for serving on the Board of Directors.




On May
25, 2010, the Company issued 285,714 restricted shares of common stock to
William Donovan, M.D., the Company’s Chief Executive Officer, for the conversion
of $200,000 of outstanding amounts owed by the Company to NSO (see Note
7).




NOTE 9.  INCOME
TAXES




The
Company has not made provision for income taxes for the six-month period ended
June 30, 2010 and in the years ended December 31, 2009 and 2008, respectively,
since the Company has incurred net operating losses in these
periods.




Deferred
income tax assets consist of:




June 30,
              2010
            
            
            December
      31,
              2009Net
      operating loss carryforwards
            
            $
            2,431,700
            
            
            $
            2,675,400Less
      valuation allowance
            
            $
            (2,431,700
            )
            
            $
            (2,675,400
            )Deferred
      income tax assets, net
            
            $
            -
            
            
            $
            -




Due to
uncertainties surrounding the Company’s ability to generate future taxable
income to realize these assets, a full valuation has been established to offset
the net deferred income tax asset.  Based on management’s assessment,
utilizing an effective combined tax rate for federal and state taxes of
approximately 39%, the Company has determined it to be more likely than not that
a deferred income tax asset of approximately $2,431,700 and $2,675,400
attributable to the future utilization of the approximately $6,235,000 and
$6,860,000 in eligible net operating loss carryforwards as of June 30, 2010 and
December 31, 2009, respectively, will not be realized. The Company will continue
to review this valuation allowance and make adjustments as appropriate. The net
operating loss carryforwards will begin to expire in varying amounts from year
2018 to 2029.




Current
income tax laws limit the amount of loss available to be offset against future
taxable income when a substantial change in ownership occurs. Therefore, amounts
available to offset future taxable income may be limited.




As the
Company has not filed federal and applicable state income tax returns for the
years ended December 31, 2009, 2008 and 2007, respectively, it is not
practicable to determine amounts of interest and/or penalties related to income
tax matters that will be due as of December 31, 2009 and 2008, respectively.
Accordingly, the Company had no accrual for interest or penalties on the
Company’s balance sheets at December 31, 2009 and 2008, respectively, and
has not recognized interest and/or penalties in the accompanying statements of
operations for the years ended December 31, 2009 and 2008, respectively.
However, management of the Company believes that non-filing of federal and
applicable state income tax returns will not have a significant impact on the
Company’s financial position, its results of operations and cash flows
considering continued operating losses since inception.




The
Company is subject to taxation in the United States and certain state
jurisdictions. The Company’s tax years for 2002 and forward are subject to
examination by the United States and applicable state tax authorities due to the
carry forward of unutilized net operating losses.




13




NOTE
10.  COMMITMENTS AND CONTINGENCIES




On June
22, 2010, the Company filed a lawsuit against HSC Holdings, LLC (“HSC”) and
Ilona Alexis Mandelbaum.  The Company had previously executed certain
consulting agreements with HSC providing for the Company to engage HSC as a
consultant to provide certain business services.  In the lawsuit, the
Company alleges that (a) defendants made certain material misrepresentations to
the Company, thereby fraudulently inducing the Company to enter into the
consulting agreements, and (b) in the alternative, the defendants breached the
consulting agreements.  The Company also seeks a declaratory judgment
from the Court regarding certain communications the Company had with the
defendants for a mutually agreed upon resolution of this dispute.  The
defendants have not yet filed an answer to the Company’s
complaint.  The case is still pending in District
Court.  The Company strongly believes the facts support its case
against the defendants.  There can be no assurance, however, that the
outcome of this case will be favorable to the Company.




On
January 19, 2010, James McKay and Celebrity Foods, Inc. (“CFI”) filed a lawsuit
against the Company and Dr. William Donovan, M.D., individually, in the United
States District Court, Eastern District of Pennsylvania.  Based on the
lawsuit, in March 2009, Plaintiffs contacted the Company’s transfer agent to
have restrictive legends removed on shares the plaintiffs had previously
obtained from the Company in connection with a stock purchase
agreement.  The Company subsequently requested that the transfer agent
place a stop transfer order on the shares.  Plaintiffs allege the
Company’s actions constitute a breach of contract, fraud and/or unjust
enrichment.  They are seeking monetary and punitive damages,
attorneys’ fees and costs, as well as a divestment of all shares and a
rescission of the stock purchase agreement.  The Company filed a
motion to dismiss on April 16, 2010.  The case is still pending in
District Court.  We believe the case is without merit and are
vigorously fighting the lawsuit. There can be, however, no assurance that the
outcome of this case will be favorable to the Company.




In
November 2009, the Company filed a lawsuit against Brian Koslow and David
Waltzer in Harris County District Court.  The lawsuit was removed to
the District Court for the Southern District of Texas.  The lawsuit
relates to the transactions the Company entered into with Messrs. Koslow and
Waltzer to acquire the website and proprietary methodologies of One Source
Plaintiff Funding, Inc.  In the suit, the Company alleges that Messrs.
Koslow and Waltzer (a) breached an agreement to rescind the One Source
acquisition, (b) made fraudulent representations to the Company to induce them
to enter into the One Source acquisition, (c) will be unjustly enriched if the
One Source acquisition is not rescinded, and (d) breached a fiduciary duty owed
to the Company.  Messrs. Koslow and Waltzer answered the Original
Petition and asserted counterclaims against the Company for breach of contract
and fraud.  The parties mediated the lawsuit on April 16,
2010.  During the mediation, the parties entered into a preliminary
hand-written agreement for settlement of the lawsuit.  In August 2010,
the parties entered into a definitive settlement agreement.  This
agreement provides that (1) the Company will transfer to Messrs. Koslow and
Waltzer the 1,000 shares of common stock of One Source Plaintiff Funding, Inc.
and an aggregate of 200,000 options to purchase common stock of the Company at
an exercise price of $1.00 per share for a term of three years, (2) Messrs
Koslow and Waltzer will transfer to the Company an aggregate of 625,000 shares
of common stock of the Company (thereby Messrs Koslow and Waltzer will retain an
aggregate of 375,000 shares of common stock), (3) Messrs. Koslow and Waltzer
will enter into a Lock Up/Leak Out Agreement whereby they can sell no more than
an aggregate of 11,250 shares of common stock of the Company during any calendar
month, and (4) all parties to the lawsuit will mutually release each other from
all claims of liability.  The Company anticipates filing the
settlement agreement with the Court to have the case dismissed, as soon as
possible.




On
October 27, 2009, William R. Dunavant and William R. Dunavant Family Holdings,
Inc. filed suit in the 55th Judicial District Court of Harris County, Texas,
against the Company, William Donovan, M.D., Richard Specht, Rene Hamouth and
Signature Stock Transfer, Inc.  Plaintiffs claim that the Company
issued 2,000,000 shares of stock as compensation for work performed on behalf of
the Company.  On December 31, 2008, and again in early 2009,
Plaintiffs sold some of their shares.  However, on February 10, 2009,
the Company issued a stop transfer resolution preventing Plaintiffs from selling
any of the remaining shares.  Plaintiffs claim the following causes of
action: 1) breach of contract, stating that Defendants agreed to compensate
Plaintiffs by tendering 2,000,000 shares of stock free and clear; 2) conversion,
claiming Defendants wrongfully and without authority converted the common stock
owned by Plaintiffs; 3) fraud and fraudulent inducement, claiming Defendants’
conduct constitutes legal fraud and deceit; 4) breach of fiduciary duty,
claiming Defendants had a fiduciary relationship with Plaintiffs and owed them
the utmost duty of good faith, fair dealing, loyalty and candor; 5) intentional
Infliction of emotional distress, claiming Defendants’ conduct was extreme,
outrageous, deliberate and intentional; 6) unjust enrichment, claiming that
Defendants had no right to prevent Plaintiffs from selling the stock; and 7)
declaratory judgment, seeking the Court to declare the common stock was proper
and authorized.  Plaintiffs seek exemplary and punitive damages, as
well as attorney fees.  The case is currently scheduled to go to trial
in January 2011.  We believe the case is without merit and are
vigorously fighting the lawsuit. There can be no assurance, however, that the
outcome of this case will be favorable to the Company.




14




In March
2008, Kent Carasquero, Leslie Lounsbury, Riverside Manitoba, Inc. and Tyeee
Capital Consultants, Inc. filed suit against the Company, Richard Specht, Rene
Hamouth, Hamouth Family Trust, William R. Dunavant, and William R. Dunavant
Family Holdings, Inc. The suit was filed in The United States District Court,
Middle District of Florida and requests damages and injunctive relief for
various breaches of contract and securities violations. A default judgment was
entered against the defendants on July 20, 2008. The default judgment was set
aside and the case reopened on November 7, 2008. The Company believes all claims
against it are without merit, and it will continue to vigorously defend itself
against such claims. There is no assurance, however, that the matter can be
settled on terms favorable to the Company.




NOTE 11.  SUBSEQUENT
EVENTS




On July
13, 2010, the Company held its 2009 Annual Shareholders' meeting at the
Company's home office in Houston, Texas. At the meeting, the Company’s
shareholders approved the appointment of an auditor for the Company, re-election
of the current two Directors and election of three new members to the Board of
Directors. The three new Directors are:




Jerry Bratton,
J.D., MBA,age
57 - Mr. Bratton has served as President of Bratton Steel, L.P. since 2006 and
previously with Bratton Steel, Inc. (its predecessor) since 1991. Bratton Steel
is a structural steel fabricating company. As President, Mr. Bratton has grown
the company from a startup to a company that employs up to approximately 75
employees. He has significant experience in overseeing sales, estimating,
project management and contracting. Mr. Bratton served as President of the Texas
Structure Steel Institute from 2007 to 2008. He is also a member of the American
Institute of Steel Construction. Mr. Bratton has business and investment
background in medical software, personal medical information records storage,
RFID security products and energy ventures. Mr. Bratton is a licensed attorney
in the State of Texas and previously served as an assistant general counsel in
the construction industry. Mr. Bratton earned a Juris Doctorate and Master of
Business Administration degree from Texas Tech University in 1977.




Franklin A. Rose,
M.D.,age
58 - Dr. Rose is a Board Certified plastic and reconstructive surgeon. He has
been in private practice since 1984 and currently has hospital affiliations in
Houston, Texas with First Street Surgical Center, Woman's Hospital of Texas,
Memorial Hermann Hospital-Northwest and Twelve Oaks Hospital. Dr. Rose is an
experienced surgeon, well acquainted with various surgical and medical
procedures. He has also been involved in investing with multiple micro-cap
medical companies. Dr. Rose earned a Doctor of Medicine degree from the
University of Colorado in 1977, and a Bachelor of Science degree from the
University of Wisconsin, Madison in 1973. He is a member of the American Medical
Association, the American Society of Plastic Surgeons, the Lipolysis Society of
North America and the American Society of North America. He is also the
attending plastic surgeon to The Texas Institute of Plastic
Surgery.




John Bergeron,
CPA, age 53 - Mr. Bergeron currently serves as President of Jolpeg Inc.,
a private firm that consults on financial matters in service industries, a
position he has held since May 2008. Also since May 2008, he has worked as
Controller of Christian Brothers Automotive Corporation, of which he also
currently owns and operates a franchise. From May 2005 until May 2008, Mr.
Bergeron served as Divisional Controller of Able Manufacturing, a division of
NCI Group, Inc, where his responsibilities included financial reporting,
budgeting and Sarbanes-Oxley Act compliance. Prior to that, Mr. Bergeron worked
as controller of different internet companies and as an accounting manager for
several other private firms. He has also worked as an auditor for Arthur
Andersen. Mr. Bergeron has more than thirty years' experience in financial
management and corporate development of manufacturing and service industry
companies. He has extensive experience in financial reporting of public
companies, risk management, business process re-engineering, structuring and
implementing accounting procedures and internal control programs for
Sarbanes-Oxley Act compliance. Mr. Bergeron is a Certified Public Accountant. He
received a Bachelor of Business Administration in Accounting from Lamar
University in 1979. He is also currently the President of the Montgomery County
MUD #83.




15




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




The
following discussion should be read in conjunction with our consolidated
financial statements and the related notes to the financial statements included
in this Form 10-Q.





FORWARD
LOOKING STATEMENT AND INFORMATION





We are
including the following cautionary statement in this Form 10-Q to make
applicable and take advantage of the safe harbor provision of the Private
Securities Litigation Reform Act of 1995 for any forward-looking statements made
by us or on behalf of us. Forward-looking statements include statements
concerning plans, objectives, goals, strategies, future events or performance
and underlying assumptions and other statements, which are other than statements
of historical facts. Certain statements in this Form 10-Q are forward-looking
statements. Words such as "expects," "believes," "anticipates," "may," and
"estimates" and similar expressions are intended to identify forward-looking
statements. Such statements are subject to risks and uncertainties that could
cause actual results to differ materially from those projected. Such risks and
uncertainties are set forth below. Our expectations, beliefs and projections are
expressed in good faith and we believe that they have a reasonable basis,
including without limitation, our examination of historical operating trends,
data contained in our records and other data available from third parties. There
can be no assurance that our expectations, beliefs or projections will result,
be achieved, or be accomplished.




Management
Overview




At the
end of 2008, the Company launched its new business concept of delivering turnkey
solutions to spine surgeons, orthopedic surgeons and other healthcare providers
for necessary, reasonable and appropriate treatment for musculo-skeletal spine
injuries. Moving forward, the Company’s main focus will be on the expansion and
development of spine testing centers and/or business relationships with
subcontractors owning such facilities as needed by spine surgeons, orthopedic
surgeons and other healthcare providers across the nation.




Results
of Operations




Comparison
of the three month period ended June 30, 2010 with the three month period ended
June 30, 2009.




The
Company recorded approximately $1,732,000 in service revenues for the three
months ended June 30, 2010 and no revenue in the same period in
2009.  This increase is attributable to revenues generated from the
Company’s spine injury treatment centers in Houston and McAllen, Texas. The
centers were not open in the quarter ended June 30, 2009. During the three month
period ended June 30, 2009, the Company’s operations were limited to initial
planning of the Company’s spine injury treatment business, preparing for the
opening of its first spine injury treatment center and satisfying continuous
public disclosure requirements. The Company’s spine injury treatment center in
Houston opened in August 2009, and its center in McAllen opened in June
2010.




16




Service
cost was approximately $368,000 for the three months ended June 30, 2010
compared to none in the same period in 2009.




During
the three months ended June 30, 2010, the Company incurred approximately
$298,000 of general and administration expenses as compared to approximately
$394,000 for the same period in 2009.  Approximately $298,000 of
general and administrative expenses incurred during the three months ended June
30, 2010 includes recurring general and administrative charges, as well as
approximately $210,000 of stock based compensation recorded as general and
administrative expenses.




The total
operating expenses for the three months ended June 30, 2010 and 2009 were
approximately $1,097,000 and $394,000, respectively, representing an increase of
approximately $703,000 or 178.4%.  This increase is due primarily to
allowance for doubtful accounts of approximately $799,000 for the three months
ended June 30, 2010, which expense was not present for the same period ended
June 30, 2009; offset in part by a decrease in stock based compensation. Total
operating expenses for the three months ended June 30, 2009 were related to
selling, general and administrative expenses.




As a
result of the foregoing, we had a net income of approximately $270,200 for the
three months ended June 30, 2010, compared to a net loss of approximately
$394,000 for the three months ended June 30, 2009, a change
of  $664,200 or 168.6%.





Comparison
of the six month period ended June 30, 2010 with the six month period ended June
30, 2009.




The
Company recorded approximately $3,184,300 in service revenues for the six months
ended June 30, 2010 and no revenue in the same period in 2009.  This
increase is attributable to revenues generated from the Company’s spine injury
treatment centers in Houston and McAllen, Texas. The centers were not open for
the six months ended June 30, 2009. During the six month period ended June 30,
2009, the Company’s operations were limited to initial planning of the Company’s
spine injury treatment business, preparing for the opening of its first spine
injury treatment center and satisfying continuous public disclosure
requirements.




Service
cost was approximately $687,000 for the six months ended June 30, 2010 compared
to none in the same period in 2009.




During
the six months ended June 30, 2010, the Company incurred approximately $382,200
of general and administration expenses as compared to approximately $1.1 million
for the same period in 2009.  The $382,200 of general and
administrative expenses incurred during the six months ended June 30, 2010
includes recurring general and administrative charges, as well as approximately
$210,000 of stock based compensation recorded as general and administrative
expenses. For the six months ended June 30, 2009, there was approximately
$769,000 of stock based compensation recorded as well as approximately $282,000
towards legal settlement and other expenses included as general and
administrative expenses.




The total
operating expenses for the six months ended June 30, 2010 and 2009 were
approximately $1,876,800 and $1,051,000 respectively, representing an increase
of approximately $825,800 or 78.6%.  This increase is due primarily to
allowance for doubtful accounts of approximately $1.5 million for the six months
ended June 30, 2010, which expense was not present for the same period ended
June 30, 2009, offset by a decrease in stock based compensation and other
general and administrative expenses from the same period in 2009.




As a
result of the foregoing, we incurred a net income of $625,355 for the six months
ended June 30, 2010, compared to a net loss of $1,050,903 for the six months
ended June 30, 2009, a change of  $1,676,258 or 159.5%.




17




Liquidity
and Capital Resources




For the
six months ended June 30, 2010, cash used in operations was $19,150, which
primarily included an increase in accounts receivable of approximately $3.0
million; partially offset by an increase in amounts due to related parties of
approximately $41,400 and an increase to accounts payable and accrued
liabilities of $384,000, an allowance for doubtful accounts of approximately
$1.5 million, issuance of common stock towards payable to NSO of
$200,000, issuance of common stock for consulting services and stock based
compensation of $210,000 and net income of approximately $625,400 from
operations.  For the same period in 2009, net cash used in operating
activities was $0, due primarily to a net loss of approximately $1.1 million,
offset by costs of issuing common stock for consulting services, stock based
compensation & acquisition of intangible assets of $769,000, an
increase in amounts due to related parties of $163,721 and an increase in
accounts payable and accrued liabilities of approximately $118,000.




There was
no cash provided or used in investing and financing activities for the six
months ended June 30, 2010 or 2009.




ITEM
4.   CONTROLS AND PROCEDURES





Our
principal executive officer and principal financial officer are responsible for
establishing and maintaining disclosure controls and procedures for the Company.
Such officers have concluded (based upon their evaluation of these controls and
procedures as of the end of the period covered by this report) that our
disclosure controls and procedures are effective to ensure that information
required to be disclosed by us in this report is accumulated and communicated to
management, including our principal executive and principal financial officer as
appropriate, to allow timely decisions regarding required
disclosure.





Our
principal executive officer and principal financial officer have also indicated
that, upon evaluation, there were no changes in our internal control over
financial reporting or other factors during the period covered by this report
that have materially affected, or are reasonably likely to materially affect,
the Company’s internal control over financial reporting.




Our
management, including our principal executive officer and principal financial
officer, does not expect that our disclosure controls or our internal controls
will prevent all error and all fraud. A control system, no matter how well
conceived and operated, can provide only reasonable, not absolute, assurance
that the objectives of the control system are met. In addition, the design of a
control system must reflect the fact that there are resource constraints, and
the benefits of controls must be considered relative to their costs. Because of
the inherent limitations in all control systems, no evaluation of controls can
provide absolute assurance that all control issues and instances of fraud, if
any, within a company have been detected. These inherent limitations include the
realities that judgments in decision-making can be faulty, and that breakdowns
can occur because of simple error or mistake. Additionally, controls can be
circumvented by the individual acts of some persons, by collusion of two or more
people or by management override of the control. The design of any system of
controls also is based in part upon certain assumptions about the likelihood of
future events, and there can be no assurance that any design will succeed in
achieving its stated goals under all potential future conditions. Because of
these inherent limitations in a cost-effective control system, misstatements due
to error or fraud may occur and not be detected.




PART
II   OTHER INFORMATION




ITEM
1.  LEGAL PROCEEDINGS





On June
22, 2010, the Company filed a lawsuit against HSC Holdings, LLC (“HSC”) and
Ilona Alexis Mandelbaum.  The Company had previously executed certain
consulting agreements with HSC providing for the Company to engage HSC as a
consultant to provide certain business services.  In the lawsuit, the
Company alleges that (a) defendants made certain material misrepresentations to
the Company, thereby fraudulently inducing the Company to enter into the
consulting agreements, and (b) in the alternative, the defendants breached the
consulting agreements.  The Company also seeks a declaratory judgment
from the Court regarding certain communications the Company had with the
defendants for a mutually agreed upon resolution of this dispute.  The
defendants have not yet filed an answer to the Company’s
complaint.  The case is still pending in District
Court.  The Company strongly believes the facts support its case
against the defendants.  There can be no assurance, however, that the
outcome of this case will be favorable to the Company.




18




On
January 19, 2010, James McKay and Celebrity Foods, Inc. (“CFI”) filed a lawsuit
against the Company and Dr. William Donovan, M.D., individually, in the United
States District Court, Eastern District of Pennsylvania.  Based on the
lawsuit, in March 2009, Plaintiffs contacted the Company’s transfer agent to
have restrictive legends removed on shares the plaintiffs had previously
obtained from the Company in connection with a stock purchase
agreement.  The Company subsequently requested that the transfer agent
place a stop transfer order on the shares.  Plaintiffs allege the
Company’s actions constitute a breach of contract, fraud and/or unjust
enrichment.  They are seeking monetary and punitive damages,
attorneys’ fees and costs, as well as a divestment of all shares and a
rescission of the stock purchase agreement.  The Company filed a
motion to dismiss on April 16, 2010.  The case is still pending in
District Court.  We believe the case is without merit and are
vigorously fighting the lawsuit. There can be, however, no assurance that the
outcome of this case will be favorable to the Company.




In
November 2009, the Company filed a lawsuit against Brian Koslow and David
Waltzer in Harris County District Court.  The lawsuit was removed to
the District Court for the Southern District of Texas.  The lawsuit
relates to the transactions the Company entered into with Messrs. Koslow and
Waltzer to acquire the website and proprietary methodologies of One Source
Plaintiff Funding, Inc.  In the suit, the Company alleges that Messrs.
Koslow and Waltzer (a) breached an agreement to rescind the One Source
acquisition, (b) made fraudulent representations to the Company to induce them
to enter into the One Source acquisition, (c) will be unjustly enriched if the
One Source acquisition is not rescinded, and (d) breached a fiduciary duty owed
to the Company.  Messrs. Koslow and Waltzer answered the Original
Petition and asserted counterclaims against the Company for breach of contract
and fraud.  The parties mediated the lawsuit on April 16,
2010.  During the mediation, the parties entered into a preliminary
hand-written agreement for settlement of the lawsuit.  In August 2010,
the parties entered into a definitive settlement agreement.  This
agreement provides that (1) the Company will transfer to Messrs. Koslow and
Waltzer the 1,000 shares of common stock of One Source Plaintiff Funding, Inc.
and an aggregate of 200,000 options to purchase common stock of the Company at
an exercise price of $1.00 per share for a term of three years, (2) Messrs
Koslow and Waltzer will transfer to the Company an aggregate of 625,000 shares
of common stock of the Company (thereby Messrs Koslow and Waltzer will retain an
aggregate of 375,000 shares of common stock), (3) Messrs. Koslow and Waltzer
will enter into a Lock Up/Leak Out Agreement whereby they can sell no more than
an aggregate of 11,250 shares of common stock of the Company during any calendar
month, and (4) all parties to the lawsuit will mutually release each other from
all claims of liability.  The Company anticipates filing the
settlement agreement with the Court to have the case dismissed, as soon as
possible.




On
October 27, 2009, William R. Dunavant and William R. Dunavant Family Holdings,
Inc. filed suit in the 55th Judicial District Court of Harris County, Texas,
against the Company, William Donovan, M.D., Richard Specht, Rene Hamouth and
Signature Stock Transfer, Inc.  Plaintiffs claim that the Company
issued 2,000,000 shares of stock as compensation for work performed on behalf of
the Company.  On December 31, 2008, and again in early 2009,
Plaintiffs sold some of their shares.  However, on February 10, 2009,
the Company issued a stop transfer resolution preventing Plaintiffs from selling
any of the remaining shares.  Plaintiffs claim the following causes of
action: 1) breach of contract, stating that Defendants agreed to compensate
Plaintiffs by tendering 2,000,000 shares of stock free and clear; 2) conversion,
claiming Defendants wrongfully and without authority converted the common stock
owned by Plaintiffs; 3) fraud and fraudulent inducement, claiming Defendants’
conduct constitutes legal fraud and deceit; 4) breach of fiduciary duty,
claiming Defendants had a fiduciary relationship with Plaintiffs and owed them
the utmost duty of good faith, fair dealing, loyalty and candor; 5) intentional
Infliction of emotional distress, claiming Defendants’ conduct was extreme,
outrageous, deliberate and intentional; 6) unjust enrichment, claiming that
Defendants had no right to prevent Plaintiffs from selling the stock; and 7)
declaratory judgment, seeking the Court to declare the common stock was proper
and authorized.  Plaintiffs seek exemplary and punitive damages, as
well as attorney fees.  The case is currently scheduled to go to trial
in January 2011.  We believe the case is without merit and are
vigorously fighting the lawsuit. There can be no assurance, however, that the
outcome of this case will be favorable to the Company.




19




In March 2008, Kent Carasquero, Leslie
Lounsbury, Riverside Manitoba, Inc. and Tyeee Capital Consultants, Inc. filed
suit against the Company, Richard Specht, Rene Hamouth, -Hamouth Family Trust,
William R. Dunavant, and William R. Dunavant Family Holdings, Inc. The suit was
filed in The United States District Court, Middle District of Florida and
requests damages and injunctive relief for various breaches of contract and
securities violations. A default judgment was entered against the defendants on
July 20, 2008. The default judgment was set aside and the case reopened on
November 7, 2008. The Company believes all claims against it are without merit,
and it will continue to vigorously defend itself against such claims. There is
no assurance, however, that the matter can be settled on terms favorable to the
Company.




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




On May
11, 2010, the Company approved and authorized the issuance to John Talamas, the
Company’s Chief Operating Officer, of 50,000 shares of restricted common stock
as consideration for serving as an executive officer.  The shares were
issued under the exemption from registration provided by Section 4(2) of the
Securities Act of 1933 and the rules and regulations promulgated
thereunder.  The offer and sale of the shares was made exclusively to
an “accredited investor” (as such term is defined in Rule 501(a) of Regulation
D) in an offer and sale not involving a public offering.  The holder
of the shares purchased the securities for his own account and not with a view
towards or for resale. There was no general solicitation or advertising
conducted in connection with the sale of the securities.
 
 On May
11, 2010, the Company approved and authorized the issuance to Richard Specht,
a  Director of the Company, of 250,000 shares of restricted common
stock as consideration for serving on the Board of Directors.  The
shares were issued under the exemption from registration provided by Section
4(2) of the Securities Act of 1933 and the rules and regulations promulgated
thereunder.  The offer and sale of the shares was made exclusively to
an “accredited investor” (as such term is defined in Rule 501(a) of Regulation
D) in an offer and sale not involving a public offering.  The holder
of the shares purchased the securities for his own account and not with a view
towards or for resale. There was no general solicitation or advertising
conducted in connection with the sale of the securities.




ITEM
3.   DEFAULTS UPON SENIOR SECURITIES




None.




20




ITEM 6. EXHIBITS




INDEX
TO EXHIBITS




ExhibitNo.
            
            Description3(i)(a)
            
            Articles
      of Incorporation dated March 4, 1998. (Incorporated by reference from Form
      10SB filed with the SEC on January 5, 2000.) *3(i)(b)
            
            Amended
      Articles of Incorporation dated April 23,1998. (Incorporated by reference
      from Form 10SB filed with the SEC on January 5, 2000.)
*3(i)(c)
            
            Amended
      Articles of Incorporation dated January 4, 2002. (Incorporated by
      reference from Form 10KSB filed with the SEC on May 21, 2003.)
      *3(i)(d)
            
            Amended
      Articles of Incorporation dated December 19, 2003. (Incorporated by
      reference from Form 10KSB filed with the SEC on May 20, 2004.)
      *3(i)(e)
            
            Amended
      Articles of Incorporation dated November 4, 2004. (Incorporated by
      reference from Form 10KSB filed with the SEC on April 15,2005)
      *3(i)(f)
            
            Amended
      Articles of Incorporation dated September 7,2005. (Incorporated by
      reference from Form 10QSB filed with the SEC on November 16, 2005)
      *3(ii)
            
            By-Laws
      dated April 23, 1998. (Incorporated by reference from Form 10SB filed with
      the SEC on January 5, 2000.) *10(i)
            
            The
      2003 Benefit Plan of Delta Capital Technologies, Inc. dated August 20,
      2003 (Incorporated by reference from Form S-8 filed with the SEC on August
      26, 2003) *10(ii)
            
            Employee
      Agreement dated April 30, 2004 between the Company and Kent Carasquero.
      (Incorporated by reference from Form 10KSB filed with the SEC on May 20,
      2004 *10(iii)
            
            Employee
      Agreement dated April 30, 2004 between the Company and Martin Tutschek.
      (Incorporated by reference from Form 10KSB filed with the SEC on May 20,
      2004) *10(iv)
            
            Employee
      Agreement dated October 1, 2004 between the Company and Roderick Shand
      (Incorporated by reference from Form 10KSB filed with the SEC on April 15,
      2005) *10(v)
            
            Employee
      Agreement dated October 1, 2004 between the Company and Mr. Paul Bains
      (Incorporated by reference from Form 10KSB filed with the SEC on April 15,
      2005) *10(vi)
            
            Consulting
      Agreement dated October 1, 2004 between the Company and Kent Carasquero.
      (Incorporated by reference from Form 10KSB filed with the SEC on April 15,
      2005) *10(vii)
            
            Portal
      Development Agreement dated July 15, 2005 between the Company and Sygenics
      Interactive Inc. (Incorporated by reference from Form 8-K filed with the
      SEC on August 9, 2005) *10(viii)
            
            Debt
      Settlement Agreement dated August 3, 2005 between the Company and Rajesh
      Vadavia and Sygenics Interactive, Inc. (Incorporated by reference from
      Form 10KSB filed with the SEC on April 17, 2006) *10(ix)
            
            Debt
      Settlement Agreement dated September 30, 2005 between the Company and
      Leslie Lounsbury.  (Incorporated by reference from Form 10QSB
      filed with the SEC on November 16, 2005) *10(x)
            
            Debt
      Settlement Agreement dated November 9, 2005 between the Company and
      Roderick Shand. (Incorporated by reference from Form 10KSB filed on April
      17, 2006) *10(xi)
            
            Debt
      Settlement Agreement dated November 9, 2005 between the Company and Paul
      Bains. (Incorporated by reference from Form 10KSB filed on April 17, 2006)
      *




21




10(xii)
            
            Agreement
      and Plan of Merger between MangaPets Inc. and Intrepid World
      Communications Corporation dated January 29, 2007.(Incorporated by
      reference from Form 8k filed on January 29,2007) *10(xiii)
            
            Merger
      Agreement dated November 21, 2007 between the Company and First Versatile
      Smartcard Solutions Corporation (Incorporated by reference from Form 8-K
      filed on April 22, 2008) *10(xiv)
            
            Stock
      Purchase Agreement dated April 28, 2008 between the Company, First
      Versatile Smartcard Solutions Corporation and MacKay Group,
      Ltd. (Incorporated by reference from Form 10-K filed on April 15,
      2009)*10(xv)
            
            Mutual
      Release and Settlement Agreement dated December 30, 2008 between the
      Company, James MacKay, MacKay Group, Ltd., Celebrity Foods, Inc. and
      Michael Cimino. (Incorporated by reference from Form 10-K filed on April
      15, 2009)*10(xvi)
            
            Employment
      Agreement dated February 21, 2009 between the Company and William Donovan,
      M.D. (Incorporated by reference from Form 10-K filed on April 15,
      2009)*10(xvii)
            
            Employment
      Agreement dated February 25, 2009 between the Company and John Talamas
      (Incorporated by reference from Form 10-K filed on April 15,
      2009)*10(xviii)
            
            Employment
      Agreement dated February 21, 2009 between the Company and Brian Koslow
      (Incorporated by reference from Form 10-K filed on April 15,
      2009)*14
            
            Code
      of Ethics (Incorporated by reference from Form 10KSB filed with the SEC on
      April 15, 2005) *31(i)
            
            Certification
      of principal executive officer required by Rule 13a – 14(1) or Rule 15d –
      14(a) of the Securities Exchange Act of 1934, as adopted pursuant to
      Section 302 of the Sarbanes-Oxley Act of 2002.31(ii)
            
            Certification
      of principal financial officer required by Rule 13a – 14(1) or Rule 15d –
      14(a) of the Securities Exchange Act of 1934, as adopted pursuant to
      Section 302 of the Sarbanes-Oxley Act of 2002.32(i)
            
            Certification
      of principal executive officer pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002 and Section 1350 of 18 U.S.C.
    63.32(ii)
            
            Certification
      of principal financial officer pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002 and Section 1350 of 18 U.S.C.
    63.







*
Incorporated by reference from previous filings of the Company




22


SIGNATURES





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




Spine
      Pain Management, Inc.Date:
      August 16, 2010
            /s/
      William F. Donovan, M.D.By:
      William F. Donovan, M.D.Chief
      Executive Officer and Principal Financial
  Officer




23