UNITED STATES

| Nevada                                        | 98-0375957               |
|-----------------------------------------------|--------------------------|
| (State      or other jurisdiction of          | (IRS      Employer       |
| Incorporation      or organization)           | Identification      No.) |
|                                          |                     |
| 1871 Dogwood Ct., Kokomo,      Indiana        | 46901                    |
| (Address      of Principal Executive offices) | (Zip      Code)          |

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|          |                                                                                                                                                        | PART      I |   |
|---------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------|--------|
| Item      1.  | Financial      Statements...................................................                    | 3           |
| Item      2.  | Management’s      Discussion and Analysis of Financial                                                                                                |        |
|          | Condition      and Results of Operations................................                                                | 4           |
| Item      4T. | Controls      and Procedures...............................................                         | 5           |
|          | PART      II                                                                                                                                                |        |
| Item      6.  | Exhibits................................................................... | 6           |

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| ASSETS                                                                                                                                    |   | May      31, 2008         |   | February      29, 2008     |
|-------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------|--------|----------------------------|
| Current      assets                                                                                                                       |   |                      |   |                       |
| Cash                                                                                                                                      |   | $   12,382 |   | $   7,309   |
|     Accounts      receivable, net of the allowance of $81,935 and $81,935                                             |   | 10,329                    |   | 16,122                     |
|     Prepaid      and other current assets                                                                             |   | 1,101                     |   | 3,854                      |
| Total      current assets                                                                                                                 |   | 23,812                    |   | 27,285                     |
|                                                                                                                                      |   |                      |   |                       |
|         Fixed assets, net accumulated depreciation and impairment of      $281,032 and $280,032                                 |   | 19,000                    |   | 20,000                     |
|  Deferred      financing costs                                                                                                       |   | 99,444                    |   | 118,403                    |
| Total      assets                                                                                                                         |   | $      142,256            |   | $   165,688 |
|                                                                                                                                      |   |                      |   |                       |
| LIABILITIES      AND STOCKHOLDERS’ DEFICIT                                                                                          |   |                      |   |                       |
| Current      liabilities:                                                                                                                 |   |                      |   |                       |
| Accounts      payable and accrued liabilities                                                                                             |   | $771,835                  |   | $601,236                   |
| Accrued      Interest                                                                                                                     |   | 353,369                   |   | 302,703                    |
| Notes      payable - related parties                                                                                                      |   | -                         |   | 36,322                     |
| Callable      secured convertible notes payable, current                                                                                  |   | 787,718                   |   | -                          |
|   Mandatorily      redeemable Series C Preferred Stock, $.001 par value, 90,000 shares      authorized, issued, and outstanding |   | 75,600                    |   | 75,600                     |
| Total      current liabilities                                                                                                            |   | 1,988,522                 |   | 1,015,861                  |
|                                                                                                                                      |   |                      |   |                       |
| Derivative      liabilities                                                                                                               |   | 288,169                   |   | 307,394                    |
| Callable      secured convertible notes payable, net of current and unamortized discount      of  $368,459 and $465,759         |   | 1,822,247                 |   | 2,512,836                  |
| Total      liabilities                                                                                                                    |   | 4,098,938                 |   | 3,836,091                  |
|                                                                                                                                      |   |                      |   |                       |
| Stockholders'      deficit                                                                                                                |   |                      |   |                       |
| Series      A and B Convertible Preferred Stock, $.001 par value, 4,910,000 shares      authorized, 0 shares issued and outstanding       |   | -                         |   | -                          |
| Common      stock, $.001 par value, 500,000,000 shares authorized, 97,561,908 and      97,061,908 shares issued and outstanding           |   | 98,066                    |   | 97,066                     |
| Additional      paid-in-capital                                                                                                           |   | 61,884,859                |   | 61,885,204                 |
| Accumulated      deficit                                                                                                                  |   | (65,939,437)              |   | (65,653,003)               |
|  Total      stockholders' deficit                                                                                                    |   | (3,956,512)               |   | (3,670,403)                |
|   Total      liabilities and stockholders' deficit                                                                              |   | $142,257                  |   | $165,688                   |
|                                                                                                                                      |   |                      |   |                       |

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|                                                         | Three      months ended |
|--------------------------------------------------------------|-------------------------|
|                                                         | May      31, 2008       |   | May      31,  2007 |
| Revenue                                                      | $      78,364           |   | $      203,935 |
|                                                         |                    |   |   |
| Operating      expenses:                                     |                    |   |   |
| General      and administrative                              | 215,633                 |   | 473,881 |
| Depreciation      expense                                    | 1,000                   |   | 7,915 |
| Loss      from continuing operations                         | (138,269)               |   | (277,861) |
|                                                         |                    |   |   |
| Other      income (expense):                                 |                    |   |   |
| Gain      on derivatives                                     | 19,213                  |   | 37,100 |
| Interest      expense                                        | (167,407)               |   | (125,184) |
| Net      loss                                                | $      (286,463)        |   | $      (365,945) |
|                                                         |                    |   |   |
| Basic      and diluted loss per share                        | $(0.00)                 |   | $      (0.00) |
|                                                         |                    |   |   |
| Weighted      average shares outstanding - basic and diluted | 97,496,691              |   | 79,692,292 |

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|                                                                        |                                                                 | Three      Months ended May 31,                                            |
|-----------------------------------------------------------------------------|----------------------------------------------------------------------|----------------------------------------------------------------------------|
|                                                                        |                                                                 | May      31, 2008                                                          |   | May      31, 2007 |
| CASH      FLOWS FROM OPERATING ACTIVITIES:                                  |                                                                 |                                                                       |   |   |
| Net      loss                                                               |                                                                 | $      (286,463)                                                           |   | $      (365,945) |
| Adjustments      to reconcile net loss to cash used in operatingactivities: |                                                                 |                                                                       |   |   |
| Depreciation                                                                |                                                                 | 1,000                                                                      |   | 7,915 |
| Deferred      financing costs amortization                                  |                                                                 | 18,959                                                                     |   | 9,711 |
| Convertible      debt discount amortization                                 |                                                                 | 97,273                                                                     |   | 72,457 |
| Stock      options for services                                             |                                                                 | -                                                                          |   | 6,430 |
| Imputed      interest                                                       |                                                                 |                                                                       | - | 2,851 |
| (Gain)/Loss      on derivatives                                             |                                                                 | (19,213)                                                                   |   | (37,100) |
| Common      stock issued for services                                       |                                                                 | -                                                                          |   | 5,250 |
| Changes      in assets and liabilities:                                     |                                                                 |                                                                       |   |   |
| Accounts      receivable                                                    |                                                                 | 5,793                                                                      |   | 28,788 |
| Prepaid      and other current assets                                       |                                                                 | 2,753                                                                      |   | 17,829 |
| Stock      Payable                                                          |                                                                 | -                                                                          |   | (25,951) |
| Accounts      payable and accrued liabilities                               |                                                                 | 89,971                                                                     |   | 63,747 |
| CASH      USED IN OPERATING ACTIVITIES                                      |                                                                 | (89,927)                                                                   |   | (214,018) |
|                                                                        |                                                                 |                                                                       |   |   |
| CASH      FLOWS FROM INVESTING ACTIVITIES:                                  |                                                                 |                                                                       |   |
| Purchase      of fixed assets                                               |                                                                 | -                                                                          |   | (15,652) |
|                                                                        |                                                                 |                                                                       |   |   |
| CASH      FLOWS FROM FINANCING ACTIVITIES:                                  |                                                                 |                                                                       |   |
| Net      change in line of credit                                           |                                                                 | -                                                                          |   | (2,708) |
| Advance      from shareholder                                               |                                                                 | 95,000                                                                     |   | - |
| Proceeds      from related party advances                                   |                                                                 | -                                                                          |   |        3,955 |
| Repayment      of advances to related parties                               |                                                                 | -                                                                          |   | (14,511) |
| Proceeds      from convertible debt, net of offering costs                  |                                                                 | -                                                                          |   | 275,000 |
| CASH      PROVIDED BY FINANCING ACTIVITIES                                  | 95,000                                                               |                                                                       | 261,736 |
|                                                                        |                                                                 |                                                                       |   |   |
| NET      CHANGE IN CASH                                                     |                                                                 | 5,073                                                                      |   | 32,066 |
| Cash,      beginning of period                                              |                                                                 | 7,309                                                                      |   | 286,293 |
| Cash,      end of period                                                    |                                                                 | $      12,382                                                              |   | $      318,359 |
| Cash      paid for:                                                         |                                                                 |                                                                       |   |   |
| Interest                                                                    |                                                                 | $            - |   | $             - |
| Income      tax                                                             |                                                                 |        -                                |   |        - |
|                                                                        |                                                                 |                                                                       |   |   |
| NON-CASH      INVESTING AND FINANCING ACTIVITIES:                           |                                                                 |                                                                       |   |
| Discount      on convertible debt from derivatives                          | $           - |                                                                       | $  14,574 |
| Reclass      of related party debt to accounts payable                      | 36,322                                                               |                                                                       | - |
| Conversion      of note payable to common stock                             | 170                                                                  |                                                                       | 9,600 |

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|                                  | StockOptions |   | Weighted      average exercise price |   | Aggregate      intrinsic value               |   | Weighted      Average remaining contractual life (years) |
|---------------------------------------|--------------|--------|--------------------------------------|--------|----------------------------------------------|--------|----------------------------------------------------------|
|                                  |         |   |                                 |   |                                         |   |                                                     |
| Outstanding      at February 28, 2008 | 7,500,000    |   | $   0.021             |   |                                         |   |                                                     |
|                                  |         |   |                                 |   |                                         |   |                                                     |
| Granted                               | -            |   | -                                    |   |                                         |   |                                                     |
| Exercised                             | -            |   | -                                    |   |                                         |   |                                                     |
| Forfeited                             | -            |   | -                                    |   |                                         |   |                                                     |
| Expired                               | 6,000,000    |   | 0.014                                |   |                                         |   |                                                     |
| Outstanding      at May 31,2008       | 1,500,000    |   |  $   0.033       |   | $       - |   | 8.56                                                     |
|                                  |         |   |                                 |   |                                         |   |                                                     |
| Exercisable      at May 31,2008       | 1,500,000    |   |                                 |   |                                         |   |                                                     |

| §   | There      is an over-reliance upon independent financial reporting consultants for      review of critical accounting areas and disclosures and material      non-standard transactions. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | There      is a lack of sufficient accounting staff which results in a lack of      segregation of duties necessary for a good system of internal      control. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Exhibit      No. | Description                                                                                                                                                                                         |
|------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|             |                                                                                                                                                                                                |
| 31.1             | Certifications      Required by Rule 13a-14(a) of the Securities Exchange Act of 1934, as      amended, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of      2002 - CEO.            |
|             |                                                                                                                                                                                                |
| 31.2             | Certifications      Required by Rule 13a-14(a) of the Securities Exchange Act of 1934, as      amended, as  Adopted Pursuant to Section 302 of the      Sarbanes-Oxley Act of 2002 - CFO. |
|             |                                                                                                                                                                                                |
| 32.1             | Certification      of Chief Executive Officer Pursuant to 18 U.S.C. Section1350, as Adopted      Pursuant to Section 906 of the Sarbanes- Oxley Act of  2002.                                       |
|             |                                                                                                                                                                                                |
| 32.2             | Certification      of Chief Financial Officer Pursuant to 18 U.S.C. Section1350, as Adopted      Pursuant to Section 906 of the Sarbanes- Oxley Act of  2002.                                       |

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|               | PAPERFREE      MEDICAL SOLUTIONS, INC |
|--------------------|---------------------------------------|
|               |                                  |   |
| July      21, 2008 | By:                                   | /s/ Michael J.      Gelmon |
|               |                                  | Michael      J. Gelmon, Chief Executive |
|               |                                  | Officer      and Director |

|               |   |                                                |
|--------------------|--------|-----------------------------------------------------|
| July      21, 2008 | By:    | /s/ Michael J.      Gelmon                          |
|               |   | Michael      J. Gelmon, Chief Executive Officer and |
|               |   | Director                                            |
|               |   |                                                |