UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549





FORM 10-K





ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT
OF 1934

For the fiscal year ended December 31, 2007

Commission file number: 333-132913





MSCMedical Services
Company

(Exact name of registrant as specified in its charter)







|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Florida                                                        |  | 59-2997634                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)



|                                                 |  |           
|------------------------------------------------ |  | ----------
|841 Prudential Drive, Suite 900 Jacksonville, FL |  | 32207     
|(Address of principal executive offices)         |  | (Zip Code)

(904) 646-0199

(Registrants telephone number, including area code)





Securities registered
pursuant to Section 12(b) of the Act:



|                    |  |                                          
|------------------- |  | -----------------------------------------
|Title of each class |  | Name of each exchange on which registered
|None                |  | None                                     

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





The registrant has no securities registered pursuant to Sections 12(b) or 12(g). The registrant files periodic reports under the Securities Exchange Act
of 1934 solely to comply with requirements under that certain Indenture related to its Senior Secured Floating Rate Notes due 2011. The Indenture and form of note are filed with the Securities and Exchange Commission as part of the registrants
Registration Statement on Form S-4, amended as of May 17, 2006.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined
in Rule 405 of the Securities Act.    Yes   ̈    No  x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.    Yes   ̈    No  x

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of larger 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  x   |  | Smaller reporting company   ̈ |  | 

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

Indicate the number of shares outstanding of each of the issuers classes of common stock, as of the latest practicable date.



|                                        |  |                              
|--------------------------------------- |  | -----------------------------
|Class                                   |  | Outstanding at March 25, 2008
|Common Stock, $1.00 par value per share |  | 100 shares                   









---

Table of Contents



|       |  |                                                                                                              |  |    
|------ |  | ------------------------------------------------------------------------------------------------------------ |  | ---
|Item   |  |                                                                                                              |  |    
|       |  |                                                                                                             
|       |  | Cautionary Statements  Forward-Looking Statements                                                           |  | 3  
|       |  |                                                                                                             
|       |  | Part I                                                                                                       |  | 4  
|       |  |                                                                                                             
|1.     |  | Business                                                                                                     |  | 4  
|       |  |                                                                                                             
|1A.    |  | Risk Factors                                                                                                 |  | 13 
|       |  |                                                                                                             
|1B.    |  | Unresolved Staff Comments                                                                                    |  | 24 
|       |  |                                                                                                             
|2.     |  | Properties                                                                                                   |  | 24 
|       |  |                                                                                                             
|3.     |  | Legal Proceedings                                                                                            |  | 24 
|       |  |                                                                                                             
|4.     |  | Submission of Matters to a Vote of Security Holders                                                          |  | 24 
|       |  |                                                                                                             
|       |  | Part II                                                                                                      |  | 24 
|       |  |                                                                                                             
|5.     |  | Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |  | 24 
|       |  |                                                                                                             
|6.     |  | Selected Financial Data                                                                                      |  | 25 
|       |  |                                                                                                             
|7.     |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                        |  | 26 
|       |  |                                                                                                             
|7A.    |  | Quantitative and Qualitative Disclosures About Market Risk                                                   |  | 42 
|       |  |                                                                                                             
|8.     |  | Financial Statements and Supplementary Data                                                                  |  | F-1
|       |  |                                                                                                             
|9.     |  | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure                         |  | 43 
|       |  |                                                                                                             
|9A(T). |  | Controls and Procedures                                                                                      |  | 43 
|       |  |                                                                                                             
|9B.    |  | Other Information                                                                                            |  | 44 
|       |  |                                                                                                             
|       |  | Part III                                                                                                     |  | 44 
|       |  |                                                                                                             
|10.    |  | Directors and Executive Officers                                                                             |  | 44 
|       |  |                                                                                                             
|11.    |  | Executive Compensation                                                                                       |  | 47 
|       |  |                                                                                                             
|12.    |  | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters               |  | 57 
|       |  |                                                                                                             
|13.    |  | Certain Relationships and Related Transactions                                                               |  | 59 
|       |  |                                                                                                             
|14.    |  | Principal Accounting Fees and Services                                                                       |  | 59 
|       |  |                                                                                                             
|       |  | Part IV                                                                                                      |  |    
|       |  |                                                                                                             
|15.    |  | Exhibits and Financial Statement Schedules                                                                   |  | 60 



---

CAUTIONARY STATEMENTS

Unless specified to the contrary, all information in Part I of this Annual Report on Form 10-K is
reported as of December 31, 2007, which was the end of our most recently completed fiscal year.

Forward-Looking Statements

Management may from time-to-time make written or oral forward-looking statements with respect to the Companys annual or long-term goals, including statements
contained in this Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, press releases, and other communications. These statements are subject to risks and uncertainties that could cause actual results to
differ materially from historical earnings and those currently anticipated or projected. Management cautions readers not to place undue reliance on any of the Companys forward-looking statements, which speak only as of the date made.

Words such as anticipates, expects, intends, plans, believes, seeks,
estimates, may, could, and similar expressions identify forward-looking statements. Forward-looking statements contained in this Annual Report on Form 10-K that involve risks and uncertainties include,
without limitation:



| |  |  | Managements expectation that gross margin, gross profit and net (loss) income may be positively or adversely affected as a result of completed or ongoing
requests for proposals;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Managements expectation that as the average wholesale price of pharmaceuticals moves up or down, revenue and cost of revenue moves correspondingly, leaving
gross profit margins largely unaffected;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Managements expectation that tax benefits will be utilized through the reversal of deferred tax liabilities in future periods; and
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------



| |  |  | Managements expectation that current levels of operation and anticipated growth, cash from operations, together with other available sources of liquidity,
including borrowings available under its senior secured revolving credit facility, will be sufficient to fund its operations, anticipated capital expenditures and required payments on its debt for at least the next 12 months.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In connection with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, management is
identifying important factors that could affect the Companys financial performance and could cause actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current
statements. The Companys future results could be adversely affected by a variety of factors, including those discussed in Item 1A. Risk Factors. In addition, all forward-looking statements are qualified by and should be read in
conjunction with the risks described or referred to in Item 1A. Risk Factors.



3



---

For information concerning our financial condition, results of operations and related financial data, you should review
the Managements Discussion and Analysis of Financial Condition and Results of Operations and the Financial Statements and Supplementary Data sections of this document. You also should review and consider the risks
relating to our business and industry that we describe below under Risk Factors.

PART I



|ITEM 1. | BUSINESS
|------- | --------

Unless the context indicates or otherwise requires,
the terms The Company, we, us, our, and MSC refer to MSC-Medical Services Company and our parent refers to the owner of 100% of our equity interests, MCP-MSC Acquisition, Inc.
MSC-Medical Services Company became a wholly owned subsidiary of MCP-MSC Acquisition, Inc. on March 31, 2005.

The Company

MSC is one of the largest procurement providers of pharmacy and medical products and services to workers compensation payors in the United States. We coordinate the
delivery of these products and services from our vendor network to workers compensation patients on behalf of our clients, which include large insurers, state or local governments, self insured companies and third party administrators, or
TPAs. By offering our clients a one stop shop to outsource these activities, we offer cost savings by leveraging purchasing volumes and by reducing the administrative burdens associated with directly procuring such products and services.
We serve 22 of the 25 largest U.S. workers compensation insurers and all 10 of the largest TPAs.

We have built a proprietary nationwide network of
over 7,000 vendors to provide over 20,000 health care products and services to ill or injured workers outside the clinical setting. After a physician treats the affected worker, a regimen of care is prescribed, including a suite of products and
services to be delivered outside the clinical setting. The products and services that we provide can be divided into two groups:



| |  |  | Pharmaceutical Services (PBM): The Companys Pharmacy Benefit Management, and Mail Order Pharmacy product lines together represented 53.1%
of our 2007 revenues and 53.7% of our 2006 revenues. We administer prescription drug services through a retail card program and also offer mail order delivery services which are outsourced to an outside vendor.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Medical Products and Services (also referred to as Ancillary): The Medical Devices, Orthotics & Prosthetics, Durable Medical Equipment
and Medical Supplies product lines together represented 27.8% of our 2007 revenues and 28.4% of our 2006 revenues. The Home Health Services and Transportation/Translation product lines together represented 19.1% of 2007 revenues and 17.9% of 2006
revenues. With each of the products and services, we identify vendors from our network, procure products and services and follow up with patients in an effort to ensure their satisfaction with the products and services delivered.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



4



---

Case managers typically handle hundreds of cases at a time and may need to order multiple Medical Products and Services
over a period of months to years for each case. We streamline the time-consuming process of administering, procuring and billing for these products and services, which we estimate represent only approximately 18% of total workers compensation
claims expense. Our clients have increasingly outsourced these activities to enable their case managers to focus on managing indemnity payments and hospital, clinic and physician costs, which we estimate represent the remaining 82% of the total
claims expense. A typical case management process involving our Medical Products and Services proceeds as follows:



| |  |  | A workers compensation payor is notified of a workers compensation injury and assigns the claim to a case manager;
| | - |  | --------------------------------------------------------------------------------------------------------------------



| |  |  | The case manager administers indemnity payments and coordinates medical care with hospitals and doctors;
| | - |  | --------------------------------------------------------------------------------------------------------



| |  |  | After the patient is discharged from the hospital and as need for our products and services arises, the case manager contacts an MSC customer service representative
(CSR);
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Our CSR identifies the optimal supplier (by quality, location and price) from our vendor network, obtains payment authorization (either written or verbal) from the
payor and contacts the patient after delivery in an effort to ensure patient satisfaction with products and services delivered; and
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We send a customized bill to the payor.
| | - |  | ---------------------------------------

Our PBM
services enable clients to more effectively manage pharmaceutical costs. Our pharmacy service offering provides patients with a retail card to present to pharmacists for workers compensation related prescription fills. As part of the PBM
service we contact patients before and after delivery of the retail card to encourage its use. By increasing usage rates and therefore increasing penetration, we help clients realize direct cost savings through the lower prices we have negotiated
via our network. In addition, our program enables our clients to more effectively manage their overall spending on pharmaceuticals by controlling drug utilization through a customized formulary. Our efforts to increase card usage are particularly
important to workers compensation payors because legislation generally does not allow a payor to limit claimants to use of a specific provider network.

For the workers compensation insurance carriers and TPAs, we employ a two-pronged sales and marketing strategy that targets clients corporate and field offices. At the corporate level, we seek designation as a preferred provider
on our product and service offerings. Obtaining preferred provider status typically indicates that our client will work, in conjunction with our sales force, to increase usage of our products and services by case managers. In the field offices, our
sales force educates case managers on the benefits of using our services, thereby increasing our penetration rate within that particular customer account.



5



---

Industry Overview

According to the Survey of Occupational Injuries and Illnesses by the Bureau of Labor Statistics (BLS), U.S. Department of Labor, nonfatal workplace injuries and illnesses occurred at a rate of 4.4 cases per 100 equivalent full-time workers
among private industry employers in 2006. This was a decline from the rate of 4.6 cases per 100 equivalent full-time workers reported by the BLS for 2005. The rate resulted from a total of 4.1 million nonfatal injuries and illnesses in private
industry workplaces during 2006, relatively unchanged compared to 2005, and a 2 percent increase in the number of hours worked. Incidence rates for injuries and illnesses combined declined significantly in 2006 for most case types, with the
exception of cases with days away from work.

According to IMS Healthcare, Inc. (IMS), an independent third party provider of information to
the pharmaceutical and healthcare industry, pharmaceutical sales in the United States are expected to grow between 5% and 6% in 2008 and between 3% and 6% compounded annually over the next five years. IMS also forecasted that certain sectors of the
market, such as biotechnology, specialty products and the generics market will grow at higher rates.

The factors contributing to the growth of the
pharmaceutical industry in the United States, and other industry trends, include:

Introduction of New Pharmaceuticals. Traditional research and
development, as well as the advent of new research, production and delivery methods, such as biotechnology and gene research and therapy, continue to generate new compounds and delivery methods that are more effective in treating injuries and
diseases. These compounds have been responsible for significant increases in pharmaceutical sales. We believe ongoing research and development of pharmaceutical drugs will provide opportunities for continued growth of our PBM business.

Increased Use of Drug Therapies. In response to rising healthcare costs, governmental and private payors have adopted cost containment measures that encourage
the use of efficient drug therapies to treat injuries. While aggregate healthcare costs have risen, we believe drug therapy has had a beneficial impact on overall healthcare costs by reducing expensive surgeries and prolonged hospital stays.
Pharmaceutical manufacturers continued emphasis on research and development is expected to result in the continuing introduction of cost-effective drug therapies and new uses for existing drug therapies.

Legislative Developments.The Deficit Reduction Act of 2005 (DRA) has reduced Medicaid reimbursement for certain prescription drugs, and the U.S.
Congress may consider further reductions to Medicaid reimbursement. We continue to monitor state and federal regulatory changes to determine possible impacts on our operation and how we approach the market to manage any changes.

Expiration of Patents for Brand Name Pharmaceuticals. A significant number of patents for widely-used brand name pharmaceutical products will expire during the
next several years. We consider this a favorable trend because generic products have historically provided a greater gross profit margin opportunity than brand name products.



6



---

Business Strategy

Increase Sales at Our Existing Clients

We have an experienced sales force that is well-positioned to increase sales at our existing
clients. We estimate that purchases during 2007 by our top ten clients represent less than 40% of their aggregate spending on the types of products and services we provide. We seek to increase sales to existing clients by:



| |  |  | Obtaining Preferred Provider Status. We seek to leverage our reputation and our track record to gain preferred provider status at existing clients where we
are not currently a preferred provider. At clients where we are currently a preferred provider for certain products or services, we seek to extend preferred provider status to a broader array of our product and service offerings. In 2007, six of our
top fifty clients awarded us with preferred provider status in additional product lines.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Increasing Client Utilization of our Network. We work with each client to maximize use of our network by directly marketing to field offices. Examples of our
direct marketing effort include frequent contact with individual case managers to foster relationships, training case managers on using our services, continuing education sessions in coordination with vendors and reviewing our clients claimant
histories to identify attractive opportunities for outsourcing. For clients where we are a preferred provider, we focus these efforts on offices and case managers that we, in conjunction with those clients, have identified as having significant
potential for increased use of our network to procure products and services. We also review adjuster usage patterns to focus on those adjusters who are not currently utilizing the full complement of our product offerings to understand why and what
can be done to increase penetration.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Continue to Pursue New Clients

We target new client relationships and have a strong track record of winning accounts. During the year ended December 31, 2007, we gained 113 new clients. We believe that our two-pronged sales approach,
reputation for quality service, national coverage and scale, and competitive pricing positions us well to win new clients. In addition, we have an opportunity for additional revenue growth due to our strong competitive position in the fragmented
markets we serve, especially the Medical Product and Services product category.

Growth in Market Share Through Acquisition

On an ongoing basis, we actively seek strategic growth opportunities in the form of potential acquisitions that are well matched to our core competencies. Potential
acquisitions are sought out and researched based on a variety of factors including growth potential, value, and potential synergies with our existing business model. Subsequent to year end, we completed the acquisition of three companies within the
workers compensation industry that met our strategic objectives. See Note 20 to Consolidated Financial Statements for a discussion of such subsequent acquisitions.



7



---

Increase Margins Through Cost Management

In the past, we focused our efforts primarily on increasing sales and quality of service, with a limited focus on increasing profit through cost management. During 2006 and continuing into 2007, we began to focus on
leveraging our size and reducing costs through several of the following strategic initiatives:



| |  |  | Vendor Management (Pharmaceuticals). We negotiated and will continue to negotiate pricing with our pharmaceuticals vendor based on managements analysis
of costs.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Vendor Management (Medical Products and Services). We continue to implement this initiative in Medical Products and Services by negotiating lower pricing and
identifying preferred vendors based on price, quality and geographic considerations. Additionally, Point Right, our vendor management software, allows CSRs to identify and increase utilization of these preferred vendors, avoiding more costly,
one-time orders from vendors outside of our preferred vendor network. We are extending this initiative on a product by product basis and giving priority to our largest product lines and the largest states served.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Inventory Management (Pharmaceuticals, Medical Products and Services). We have reduced our on-hand inventory levels by employing just-in-time
inventory management and utilizing outside vendors to ship product directly to patients. This relationship has allowed us to reduce costs in our Pharmaceuticals product line.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Optimization of Case Management Process. We are in the process of streamlining aspects of our more manual and paper-based product and service offerings, such
as Home Health and Transportation by outsourcing much of the process. In addition, with the acquisition of ZoneCare we are planning on moving our transportation business to their efficient platform (See Note 20 of the Notes to our Consolidated
Financial Statements relating to Subsequent Events). We are implementing improvements in all of our product lines to enhance workflow by streamlining and automating the claims handling process, including additional updates to a previously released
desktop function for CSRs called CSRD; which has increased the number of claims handled per hour by our CSRs. In addition, we have implemented and are continuing to implement outsourcing initiatives to reduce the level of data entry required in our
claims processing and vendor payment processes.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Automation of Cash Application Process. The implementation of Health Logic/Bank Of Americas lock box has continued to increase the percentage of cash
receipts which auto post. This project has continued to improve our auto post rate (i.e. increased to approximately 82% for 2007, an increase from approximately 75% in 2006) and generated significant efficiencies in our cash
application process by reducing manual intervention. We have also continued to improve efficiency of this business process with outsourcing some of the more manual functions.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



8



---

Product Lines

Our
products and services are listed below in order of revenue contribution:

PBM services. Our PBM services are predominately administered through a
retail card program that enables patients to access prescription drugs at approximately 64,700 retail and institutional pharmacies nationwide. We also provide clinical support services such as drug utilization review and formulary management. Our
PBM services program benefits clients and patients by providing convenient access to prescribed medications while controlling eligibility, drug safety and drug suitability through a proprietary formulary designed for workers compensation
injuries and customized for our clients. We also provide certain clients with a retroactive review of a patients prescription history to recommend improvements in treatment and reductions in drug costs. We currently have an exclusive
partnership with one vendor, Restat, a division of The F. Dohmen Co. (Restat), who has contracted with national pharmacies at negotiated rates for prescription pharmaceuticals offered in our PBM services product line.

Medical Devices. We provide, through our vendors, a wide variety of medical devices, including continuous passive motion machines, bone growth stimulators,
transcutaneous electrical nerve stimulation units (TENS units) and other related products. In addition to coordinating delivery of these devices, we actively monitor equipment usage and manage the ordering of monthly supplies such as
batteries, electrodes and other consumables. These add-on services minimize costs by shipping only necessary supplies each month.

Home Health
Services. We coordinate in-home nursing, IV therapy, home health aide and rehabilitation and therapist services for workers compensation patients. Our CSRs directly communicate with patients and in-home nurses and therapists to verify that
patients receive appropriate care. We regularly conduct follow up surveys with patients after they receive services in an effort to ensure patient satisfaction.

Durable Medical Equipment (DME). We procure the delivery of in-home equipment to workers compensation patients, including such items as hospital beds, wheelchairs and patient lifts. After delivery of the equipment, our CSRs or
representatives of our outsourcing partners, follow up with the patient to verify that the vendor provided timely delivery, sufficient product explanation and training and all necessary support services. We provide over 2,900 products in our DME
line.

Orthotics & Prosthetics. We coordinate with patients to provide treatment from a practitioner who will fit orthotics and prosthetics
in the patients home or in the practitioners office.

Mail Order Pharmacy. Our Mail Order Pharmacy Services, pursuant to which
workers compensation patients may obtain their prescribed medications through home delivery, are outsourced to an outside vendor.

Transportation. We procure transportation services for patients, including ambulatory services, air transportation services, and wheelchair and stretcher services from the hospital to the patients home, as well as
transportation to and from caregivers offices or hospitals for aftercare. We also provide translation services between non-English speaking patients and healthcare professionals or our clients representatives. Revenues from this service
are included in transportation revenue.



9



---

Medical Supplies. We provide patients with basic medical supplies, including wound care, urinary care and other
common and easily-shipped personal care products. These medical supplies are products commonly utilized when providing health care, such as gauze, sterile gloves, wraps, bandages, tubing or swabs.

Sales and Marketing

Corporate Sales Team Organization

Our nationwide sales and marketing organization is led by our Chief Executive Officer and our Senior Vice President of Sales, who recently joined the
Company. Our Senior Vice President of National Accounts, focuses on our medical products and services, and our Vice President of Pharmacy Sales, focuses on the pharmaceutical product lines.

The field sales force is led by Regional Vice Presidents (RVPs) and Regional Area Directors, who are responsible for identifying and responding to preferred
provider opportunities at the corporate level of potential clients as well as directing the activities of field sales representatives in their respective regions. Within these regions we introduced Pharmaceutical-specific RVPs in 2006 and recently
we have sharpened the focus of our sales initiative by adding dedicated sales representatives whose focus is growing new PBM business while our Medical Products and Services team focuses on increasing penetration within our existing customer
relationships as well as winning new Medical Products and Service business on a regional basis. Both RVPs and our field sales representatives are responsible for visiting individual claims offices and educating case managers on the products and
services that we offer as well as our record of cost containment and high-quality client service.

While our field sales force is organized by region, our
inside sales force is organized by client so that we are able to fulfill each clients specific billing, reporting and client service requirements. Through direct mailers, promotional products and continuous client contact, the inside sales
force works to maintain our prominent position within each claims office.

We offer our sales force an attractive base salary and the potential for
incentive bonuses in an effort to foster a team environment within our sales organization. Management believes that this positive team environment is critical to building and maintaining solid relationships with case managers, which enable us to
increase sales penetration within claims offices.

Sales Process

We have a two-pronged approach to sales development at large insurance carriers and TPA customers. The first tier is at the payors headquarters, where we seek preferred provider status from each client on our
offered products and services. Our Senior Vice President of National Accounts, Senior Vice President of Sales and Regional Vice Presidents and Area Directors are primarily responsible for actively managing this level of sales. Activities within the
first tier include:



| |  |  | Proposal development and submission, with a focus on establishing preferred provider relationships;
| | - |  | ---------------------------------------------------------------------------------------------------



10



---

| |  |  | Formulation of customized services for our larger clients;
| | - |  | ----------------------------------------------------------



| |  |  | Development of claims office communication plans and detailed roll-out schedules;
| | - |  | ---------------------------------------------------------------------------------



| |  |  | Collaboration with clients to maximize outsourcing to MSC;
| | - |  | ----------------------------------------------------------



| |  |  | Corporate level presentation of our cost containment, high-quality products and services, and customized case management capabilities; and
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Representation at national trade shows and industry seminars oriented towards workers compensation insurers and TPAs.
| | - |  | ----------------------------------------------------------------------------------------------------------------------

The second tier of sales development occurs at the case manager level at clients claims offices. We work in connection with our payors corporate offices to
promote our services. While many payors recognize the benefits of outsourcing the procurement of Medical Products and Services, the decision on a case-by-case basis often remains with a case manager, and payors are often reluctant to mandate
compliance with corporate policies. As a result, the presence of our sales force within claims offices and our continued efforts to maximize case manager usage of our services is key to increasing network compliance.

With our information technology system (IT System), we are able to analyze purchases of our products or use of our services by claims offices and case
managers and can target sales force efforts where we believe we can have the greatest impact. Our sales force seeks to maximize contact between our sales representatives and case managers through the following activities:



| |  |  | Educating case managers about our ability to deliver high-quality products and services while saving case managers time and money;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------



| |  |  | Sponsoring continuing medical education (CME) seminars in conjunction with our vendors, in which we showcase our products or services;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Conducting file reviews, where we review claimant histories to identify opportunities for outsourcing, at the request of our clients; and
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Representing MSC at regional trade shows oriented towards case managers.
| | - |  | ------------------------------------------------------------------------

Information Technology

The Ancillary business process is supported by a combination of a medical distribution
program from Fastrack Healthcare Systems (Fastrack) and a proprietary front-end application called CSRD. The Fastrack and CSRD systems simplify the order entry, vendor selection and billing process. The CSRD application has an advanced
selection engine that determines the best vendors based on criteria such as price, quality and geography and presents these vendors to the CSR.



11



---

As part of our 2006 IT System enhancements MSC developed Auto Authorization which automated the process of
obtaining authorization when a prescription is denied at the pharmacy. Prior to the automation of this process, the pharmacist was required to call MSC and a CSR would enter the prescription information into MSCs website (OASIS) so that
it could be accepted or denied by the adjuster. A CSR would then communicate the adjusters decision back to the pharmacy via phone or fax. The Auto Authorization application has significantly reduced the need for CSRs manual
intervention by taking an electronic denial from the pharmacy and routing it to the adjuster via email and MSCs website. This process results in better application of the customers business rules, as well as reduced wait time for
claimants at the pharmacies. Under this process, the adjuster is able to log into the website and authorize or deny the prescription and the result is automatically faxed to the pharmacy. Auto Authorization was introduced on a limited scale in
October 2005 and further enhancements, as well as a full roll-out, were completed during fiscal 2006.

In 2007 a new system called MVP was developed and
deployed to support the pharmacy billing process. This new system integrates with other pharmacy systems to ensure all pharmacy charges are properly validated against global edits, customer specific business rules and is priced with the latest
fee schedule information. This system ensures that the pharmacy charges are over 99.99% accurate and facilitates the payment process.

MSC employs
Electronic Data Interchange, or EDI, with certain customers and vendors. EDI facilitates the electronic exchange of patient eligibility and billing between MSC and its clients, eliminating the need for manual data entry. Benefits of EDI include
lower processing costs and reduced error rates. Substantially all of our Pharmaceuticals product line employs EDI. During 2007 we added 23 additional Pharmaceuticals customers to EDI. For 2008, we will continue to encourage additional Medical
Products and Services customers to increase EDI usage. As of December 31, 2007, the total of EDI customers was 65. In addition to EDI, we offer our customers an Electronic Funds Transfer option for the settlement of payments to us. We believe
that our productivity and margins will continue to improve as additional clients adopt EDI and Electronic Funds Transfer.

The states of Texas and
California are developing electronic billing standards for workers compensation claims. The state of Texas will require all workers compensation payors and providers (subject to very limited exemptions) to utilize electronic billing
effective January 1, 2008. The state of California will also require all workers compensation payors to be able to accept electronic billing from providers. No effective date for compliance has been set by the state of California,
however, we anticipate such effective date to be in 2008.

Competition

We compete in a highly fragmented industry. Our competition consists of: (1) national procurement providers and national PBMs; (2) local or regional networks or vendors who have direct relationships with
physicians and payors; and (3) manufacturers who distribute their products directly to clients.

Quality, efficiency of service and pricing are the
principal basis of competition in the workers compensation industry. We believe that our history of quality client service, our consistent efforts to maximize case manager usage of our services, and our competitive



12



---

prices place us in a favorable position relative to our competitors. Our principal competitors among national procurement providers offering PBM and Medical
Products and Services that we provide are PMSI (a division of AmerisourceBergen), Progressive Medical, One Call Medical, Health Esystems, Modern Medical, TechHealth and Cypress Care.

Specifically within our Pharmaceuticals product line, our competitors currently, and may in the future, include many well-established companies that have significant financial, marketing and other resources. We
compete with a wide variety of competitors, including large national PBMs, such as Medco Health Solutions, Caremark Rx, Inc. and Express Scripts, many of which have existing relationships with carriers on the group health side. Each of these
companies has national sales and account teams, mail service pharmacies and extensive technology infrastructure. We believe that our disciplined focus on the workers compensation industry and our systematic efforts to maximize usage of our PBM
services are a competitive advantage relative to larger national PBMs, for which workers compensation claims are only a small portion of their overall service offering.

Employees

As of December 31, 2007, we employed 633 full time employees. We believe that we have a good working
relationship with our employees. None of our employees are subject to a collective bargaining agreement.



|ITEM 1A. | RISK FACTORS
|-------- | ------------

Our business involves a number of risks, some of
which are beyond our control. The risks and uncertainties we describe below are not the only ones we face. Additional risks and uncertainties that we do not currently know or that we currently believe to be immaterial may also adversely affect our
business.

Risks Relating to Our Business

Intense competition may erode our profit margins.

The provision of health care products and services for the workers
compensation industry is highly competitive. We compete primarily with the following:



| |  |  | National procurement providers and national PBMs;
| | - |  | -------------------------------------------------



| |  |  | Local or regional procurement providers or vendors who have direct relationships with physicians and payors; and
| | - |  | ----------------------------------------------------------------------------------------------------------------



| |  |  | Manufacturers who distribute their products directly to clients.
| | - |  | ----------------------------------------------------------------

We compete based on client service and ability to drive utilization, as well as on cost containment and clinical management services provided to our customers. We cannot be sure that we will continue to remain
competitive, nor can we be sure that we will be able to market our services to clients successfully. Competition in our market could lead us to reduce the prices that we charge to our clients, which would exert pressure on our gross profits and
gross margins. If we do not compete effectively, our business, profitability and growth prospects would suffer.



13



---

Competition from other national procurement providers and national PBMs could adversely affect our future financial
results. Our principal current competitors among national procurement providers and national PBMs are PMSI (a division of AmerisourceBergen), Progressive Medical, Concentra Operating Corporation, Express Scripts, Modern Medical, TechHealth and
Cypress Care. Some of these competitors have greater financial resources than we have. Market share gains by these competitors would affect our ability to grow our business.

If additional large, national health care entities that do not currently directly compete with us move into the workers compensation PBM services and Medical Products and Services market, competition could
significantly increase. Larger, national health care entities have significant financial resources, national sales and account teams, mail order pharmacies and extensive technology infrastructure. Because our Pharmaceuticals product line accounted
for approximately 53% of 2007 revenue, if entities of national scope and leverage move meaningfully into the workers compensation pharmaceuticals market, our business, profitability and growth prospects could suffer. In addition, companies
that currently compete in certain of our product lines could begin competing with additional product lines through the acquisition of an existing company or de novo expansion into new product lines. Additionally, consolidation, especially by way of
the acquisition of any of our competitors by any large, national health care entity, could also lead to increased competition.

Historically, competition
in the marketplace has caused us to reduce the prices charged to clients for core services. This trend toward lower pricing, as well as increased demand for enhanced service offerings and higher service levels, has put pressure on operating margins.
We expect to continue marketing our services to larger clients, who typically have greater bargaining power than smaller clients. In order to attract these larger clients, we could be forced to further reduce prices, which would exert further
pressure on our margins. We can give no assurance that new services provided to these clients will fully compensate for these reduced margins.

We
are subject to credit risk with respect to the products and services that we provide on behalf of our clients.

Our business model is such that we
are subject to credit risk on many of the products and services that we provide on behalf of our clients. Once we have identified a supplier from our vendor network, we purchase the product or service based on a referral received from our carrier
client, who, in turn, pays us pursuant to our agreement for procuring services and the invoice submitted by MSC. Typically, a differential of approximately 60 to 70 days exists between the date of invoice and the date upon which we are paid by our
client. We collect the majority of our receivables within 12 months; however, the collection period of some receivables ranges from 24 to 36 months, and in some cases beyond. In the event that receivables are outstanding over long durations of time
or in increased amounts, we may need to access our senior secured revolving credit facility or other financing sources to provide working capital for our business, and may incur additional expenses with respect to our collections. In addition, in
certain situations, we could decide to



14



---

write off a portion of such receivables in excess of reserves already established. This would have a negative effect on our operating margin and our net
income, which effect could be significant. Many factors, including a failure of ours, our outsourcing partner, or our clients computer and communications hardware and software systems, could delay payments. To this extent, we depend on the
efficient and uninterrupted operation of our outsourcing partner and our clients information technology systems. See Failure in our information technology systems could significantly disrupt our operations, which could reduce our
client base or result in lost revenue.

Additionally, our clients may dispute the amount of our bills or may default on their obligations due to
bankruptcy, lack of liquidity, operational failure or other reasons. While the states in which we do business guarantee the payment obligations of workers compensation payors to varying degrees, we cannot be certain that we would be fully
reimbursed in the event of a failure or default by one of our clients in payment. We may be materially and adversely affected in the event of a significant failure or default by our clients in payment. Certain of our clients account for significant
portions of our revenue. Liberty Mutual accounted for approximately 12.1% of revenues in 2007 and 7.5% gross accounts receivable at December 31, 2007. Sedgwick Claims Management Services, Inc. and its affiliates (Sedgwick), accounted for
approximately 11% of our revenue for 2007 and approximately 5.0% of gross accounts receivable at December 31, 2007. The majority of the Liberty Mutual accounts receivable outstanding in December stemmed from the Ancillary product lines where we
still have an ongoing relationship. If these customers were to go bankrupt or experience financial difficulty or for any other reason would not pay, a significant proportion of our total accounts receivable could become uncollectible, in which case
we would likely have to make a substantial provision for bad debt or write off such accounts receivable, which would significantly reduce our net income.

Failure in our information technology systems could significantly disrupt our operations, which could reduce our client base or result in lost revenue.

Our ability to efficiently and successfully coordinate the delivery of treatments, supplies and services to patients on behalf of our clients, as well as our ability to provide customized and efficient billing to our
clients, is critical to our success and depends upon our data processing systems, as well as the systems of our outsourcing partner, to:



| |  |  | receive and fulfill customer orders;
| | - |  | ------------------------------------



| |  |  | appropriately pay our vendors;
| | - |  | ------------------------------



| |  |  | manage customer billings and collections;
| | - |  | -----------------------------------------



| |  |  | provide point-of-sale product cost information;
| | - |  | -----------------------------------------------



| |  |  | track and report third-party billing services;
| | - |  | ----------------------------------------------



| |  |  | provide product reporting, such as product sales by vendor and vendor incentives earned;
| | - |  | ----------------------------------------------------------------------------------------



| |  |  | manage centralized procurement and inventory management processes;
| | - |  | ------------------------------------------------------------------



| |  |  | track and report regulatory compliance related to certain drugs and devices;
| | - |  | ----------------------------------------------------------------------------



15



---

| |  |  | provide customer and vendor rebate tracking, compliance, verification, and correction;
| | - |  | --------------------------------------------------------------------------------------



| |  |  | ensure payments to vendors are made in accordance with negotiated terms;
| | - |  | ------------------------------------------------------------------------



| |  |  | ensure certain key automated internal controls are operating;
| | - |  | -------------------------------------------------------------



| |  |  | report financial statements and related information on a quarterly basis to the public; and
| | - |  | -------------------------------------------------------------------------------------------



| |  |  | process employee compensation and provide record keeping.
| | - |  | ---------------------------------------------------------

The Companys business, financial condition and results of operations may be materially adversely affected if, among other things:



| |  |  | data errors are created by the system and remain undetected;
| | - |  | ------------------------------------------------------------



| |  |  | data processing capabilities are interrupted or fail to operate for any extended length of time;
| | - |  | ------------------------------------------------------------------------------------------------



| |  |  | data services are not kept current;
| | - |  | -----------------------------------



| |  |  | the data processing system becomes unable to support expanded business;
| | - |  | -----------------------------------------------------------------------



| |  |  | data is lost or unable to be re-stored or processed;
| | - |  | ----------------------------------------------------



| |  |  | data security is breached;
| | - |  | --------------------------



| |  |  | product maintenance and upgrades to various systems, without reasonable notification, are no longer provided, by vendors; or
| | - |  | ----------------------------------------------------------------------------------------------------------------------------



| |  |  | a revision is made to the estimated useful lives for certain computer software.
| | - |  | -------------------------------------------------------------------------------

Our operating revenue and profitability could suffer upon our loss of one or more significant clients.

Our
business model is dependent upon the development and retention of long standing client relationships. We have not formalized these relationships with many of our clients, including many of those that have awarded us preferred provider status, and
therefore have not contractually protected our relationships. Additionally, clients with whom we have entered into written contracts are not obligated to use our services exclusively, or at all, and may terminate at their sole discretion, requiring
up to 90 days advanced notice. For the year ended December 31, 2007, our largest client accounted for 11.5% of our unadjusted total billings, and our top ten clients accounted for 43.4% of unadjusted billings. The loss of one or more of our
major clients could lead to a significant reduction in revenue and net income. In general, our client relationships are also subject to requests for proposal or other similar bidding processes pursuant to which we could potentially (a) lose the
business of our clients or (b) be required to offer reductions in pricing, or other less favorable terms, in order to retain the business of our clients. Either of these events could have a material adverse effect on our business.

If key employees leave MSC, our operating results may be adversely affected.

Many of our client relationships depend upon relationships that have developed over many years between management and our clients senior executives, and between our field sales force and case managers at our
clients. If certain of these managers or certain of our regional field sales representatives leave us, our client relationships could be impaired, which could adversely affect our revenue. We cannot be certain that we will be able to retain these or
any other key employees.



16



---

Additionally, we generally depend on our senior management for our operations. If some of these managers leave us,
operating results could be adversely affected. We cannot provide any assurance that we will be able to retain these or any other key employees.

We
are dependent on our vendors and our outsourcing partner for the efficient provision of services.

Our business depends on third party vendors,
including our outsourcing partner, to perform services or deliver products as ordered, and our margins are dependent on our ability to negotiate favorable pricing for products and services. Vendors failure to efficiently provide services or
deliver products may result in additional costs to us, for example by requiring us to use an out of network vendor with whom we have not negotiated favorable pricing. We are dependent on our outsourcing partner to perform many critical billing
functions, vendor invoice processing, reporting, and other backroom operations. If any of these services are not delivered on time or the partners people, processes, or IT systems fail, relationships with our customers could be negatively
impacted and could result in a material adverse effect on our business and additional costs.

With respect to certain of our product lines, our
vendor network is highly concentrated.

With respect to certain products and services, our vendor network is highly concentrated. We currently
utilize Restat as our processor in our retail PBM services product line, which represented approximately 53% of our total 2007 revenue. Additionally, we have outsourced with our Mail Order Pharmacy services to a single vendor. If either our PBM
services vendor or our Mail Order Pharmacy services vendor were to breach its contract with us or suffer adverse developments affecting its ability to provide services to us, our business could be significantly disrupted. While replacements exist,
the process of transitioning to a new vendor could be costly and time consuming and could materially adversely affect our operations.

Failure to
expand into additional product lines could impede our future growth and adversely affect our competitive position.

As part of our growth strategy,
we may expand into new product lines. We might achieve this by contracting with vendors in a new product line, and marketing that line to our clients. An attempt at such development may not be successful. For example, we may partner with vendors who
prove to be unreliable, or we may find that our clients demand for the new service falls short of our expectations. In such an event, we might lose our investment, including the value of our managements and employees diverted time
and energy.

We also might expand into new product lines through the acquisition of smaller regional and national procurement providers that we believe
will, in each case, enable us to generate revenue growth and enhance our competitive position. Such future acquisitions may involve significant cash expenditures and operating losses that could have a material adverse effect on our financial
condition and results of operations. Additionally, such future acquisitions may not lead to successful results, as acquisitions involve numerous risks and challenges including:



| |  |  | Difficulties assimilating acquired personnel and integrating distinct business cultures;
| | - |  | ----------------------------------------------------------------------------------------



17



---

| |  |  | Difficulties in integrating IT and other business systems;
| | - |  | ----------------------------------------------------------



| |  |  | Diversion of managements time and resources from our existing operations;
| | - |  | --------------------------------------------------------------------------



| |  |  | Potential loss of key employees or clients of acquired companies; and
| | - |  | ---------------------------------------------------------------------



| |  |  | Exposure to unknown or contingent liabilities of acquired companies, including liabilities for failure to comply with health care laws.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Further, the businesses we acquire may not perform well enough to justify our investment.
| | - |  | -----------------------------------------------------------------------------------------

Failure to effectively integrate the targets of our acquisitions could negatively impact our customers and result in lost revenue, increased costs and negative impact o
our brand. The integration of any such acquisitions may not lead to successful results, as acquisitions involve numerous risks as outlined above.

Changes in prescription patterns may affect our financial results.

Our financial results with respect to Pharmaceuticals will vary
depending on the drugs prescribed to patients utilizing our retail card and our mail order pharmacy services. Filling of certain prescriptions creates more favorable margins than does filling of other prescriptions. The Company earns a higher margin
on mail order transactions versus retail card transactions. Variables include the average wholesale price of the drug, whether a drug is under patent or generic and regulatory changes adopted by the various state workers compensation agencies,
such as closed formulary directives. Changes in prescribing patterns may occur and may have a negative effect on our margins.

Occurrence of natural
disasters, including hurricanes, may damage our facilities and limit our ability to operate.

Our operations are based in Florida. The occurrence
of a natural disaster in Florida could damage our facilities and limit our ability to operate. Material damage to our Florida facility could significantly disrupt the operation of our business. We have developed a business continuity plan, including
plans for the relocation of IT Systems and staff, to limit the disruption to our business in the event of a natural disaster. Natural disasters as well as fire and other accidents could result in substantial facility-reconstruction costs to us, and
additionally could result in disruption, delay or suspension of our business operations and substantial costs to reconstruct files and records.

The
Companys indebtedness may limit its ability to obtain additional financing in the future and may limit its flexibility to react to industry or economic conditions.

The Company maintains an asset-based revolving line of credit (LOC), which permits maximum borrowings of up to $40 million. Availability of borrowings depends upon a borrowing base calculation
consisting of accounts receivable, subject to satisfaction of certain eligibility requirements. Any deterioration in the ability to collect on these assets could reduce the availability of borrowings under the LOC. At December 31, 2007, there
were $18.6 million of outstanding borrowings under the LOC and the Company had sufficient assets based on eligible accounts receivables to borrow up to an additional $4.1 million.



18



---

Increases in the level of the Companys indebtedness could adversely affect the Companys liquidity and reduce
the Companys ability to:



| |  |  | obtain additional financing in the future for working capital requirements;
| | - |  | ---------------------------------------------------------------------------



| |  |  | make capital expenditures;
| | - |  | --------------------------



| |  |  | make interest payments on its senior secured floating rate notes; and
| | - |  | ---------------------------------------------------------------------



| |  |  | react to changes in the industry and economic conditions in general.
| | - |  | --------------------------------------------------------------------

Operating cash requirements are normally funded by borrowings under the LOC and cash flow from operating activities. The Company expects that sources of capital to fund future growth in the business will be provided
by a combination of cash flow from operating activities, borrowings under the LOC and/or other financing arrangements. However, adverse changes to the Companys operations may disrupt the Companys ability to maintain adequate levels of
liquidity.

If the Company is unable to generate sufficient cash flow from operating activities to service the indebtedness, the Company will be forced to
adopt an alternative strategy that may include the following options:



| |  |  | reduce or delay acquisitions and capital expenditures;
| | - |  | ------------------------------------------------------



| |  |  | sell assets;
| | - |  | ------------



| |  |  | restructure or refinance existing indebtedness; and
| | - |  | ---------------------------------------------------



| |  |  | seek additional equity capital.
| | - |  | -------------------------------

Regulatory Risks

Changes in the regulation of workers compensation may affect our revenue and income.

Changes in the nature of health care delivery to workers compensation claimants, including the possible expansion of managed care practices in connection with such
delivery, could fundamentally alter the nature of the industry in which we operate, thereby requiring us to make significant changes to our business and exposing us to new competition. Workers compensation benefits are federally mandated,
state-regulated programs that require employers to provide comprehensive medical benefits and wage replacement to employees that are injured at work. Due to the complex nature of state and federal regulation of workers compensation,
reimbursement practices differ from those in the general health care industry. States determine the level of medical care required to be provided, the ability of injured employees to select health care providers, and the maximum level of
reimbursement. We may not be able to adjust our business model or operations to accommodate fundamental changes in workers compensation-related health care delivery and, even if we could do so, our profitability and growth prospects could
suffer.

Over the last several years, we have seen substantial changes in the workers compensation system in the state of California, including its
medical coverage and reimbursement system. Among the changes in the system was a significant reduction to the maximum amounts that we are allowed to charge our clients for our Pharmaceutical products. We currently generate more revenue in



19



---

California than in any other state. We took several measures in response to this development, including cost reductions from our pharmacy vendors and some
shifting from retail pharmacy fills to higher-margin mail order. Nonetheless, our results of operations (including our gross margins) were adversely affected by such changes. It is possible that there may be further changes in California or in other
states. At least one state in which we do business has considered adopting a single-provider model. If a single provider model were adopted and we were not selected as the single provider (or as a subcontractor to the single provider), we could be
entirely excluded from conducting operations in that state. Further changes in California or in other states could require substantial changes to our business, which could impose substantial costs on us, both in operating expenses and in changed
revenue patterns, and could result in further margin reductions.

Our compliance in certain states may be subject to challenge.

As an intermediary between health care providers and workers compensation payors, we are subject to state laws and regulations affecting the delivery of health
care to workers compensation beneficiaries. Such requirements may restrict our operations, including our billing relationships, the scope of our vendor network and the services that we provide to our clients, and impose reporting requirements
with respect to claims amounts and health care delivery. In addition, there are regulations in certain states that may prohibit intermediaries from charging payors in respect of procured products and services comprehensive fees that are in excess of
the purchase prices paid to vendors for those products and services and that do not separately itemize or bill administrative expenses. It is also possible that our billing arrangements with third party administrators and other similar organizations
could be subject to challenge. We closely monitor requirements that are applicable to us, including possible changes to the existing regulations, and we have not been subject to any suit or investigation alleging noncompliance to date. However, it
is possible that we may be found to be in noncompliance with current requirements or with any future requirements. An administrative or judicial determination that we are in noncompliance with any requirements could result in substantial costs to
us, in the form of legal fees, fines and penalties, and modifications of our business structure that could be materially adverse to our business.

In
addition, requirements imposed on our clients by state laws and regulations governing workers compensation-related health care delivery could affect us indirectly. For example, some states have adopted, and other states may adopt, regulations
requiring workers compensation payors to report to the state the amounts paid to health care providers for products and services. In most states we do not qualify as a health care provider, and as such, reporting the amounts that payors pay to
us may not satisfy such regulations. However, as in our PBM business, we do not always directly contract with health care providers, so we cannot always provide our clients such payment information. A challenge under such regulations could require
us or our clients to restructure our or their payment and business arrangements in a manner materially adverse to our business.

Changes in state and
federal regulations regarding pharmaceuticals could restrict our ability to conduct our Pharmaceuticals product line.



20



---

Numerous state and federal laws and regulations affect our Pharmaceuticals product line. The categories include, but are
not necessarily limited to:



| |  |  | State legislation regulating PBMs or imposing fiduciary status on PBMs;
| | - |  | -----------------------------------------------------------------------



| |  |  | Laws regarding utilization of non-network pharmacies;
| | - |  | -----------------------------------------------------



| |  |  | Legislation directing formulary composition, including requirements for generic substitution;
| | - |  | ---------------------------------------------------------------------------------------------



| |  |  | Drug pricing legislation, including most favored nation pricing and unitary pricing legislation;
| | - |  | ----------------------------------------------------------------------------------------------------



| |  |  | Pharmacy laws and regulations; and
| | - |  | ----------------------------------



| |  |  | Pending legislation regarding importation of drug products into the United States.
| | - |  | ----------------------------------------------------------------------------------

A number of state and federal law enforcement agencies and regulatory agencies have initiated investigations or litigation that involves certain of our competitors in the PBM product line. These investigations
involve, among other issues, the propriety of the management of manufacturers rebates and the inappropriate coding of prescriptions. The outcome of the investigations and litigation involving some of our competitors could affect our business.
For example, an outcome preventing PBMs from receiving rebates from drug manufacturers could result in increased costs.

Average wholesale price, or AWP,
is a pricing benchmark published by First DataBank, Inc., as well as others, which is widely used to calculate a portion of the Medicaid and Medicare Part D reimbursements payable to pharmacy providers for the drugs and biologicals they provide.
First DataBank recently agreed to a proposed settlement of a legal proceeding that would require First DataBank to stop publishing AWP two years after the settlement becomes effective unless a competitor of First DataBank is publishing AWP at that
future time. First DataBank would also be required to change the way it calculates AWP during the two-year interim period. The settlement agreement is not final, and we are evaluating the potential impact that it could have on our business. We
currently price and pay for pharmaceuticals based on AWP information derived from data published by a competitor to First DataBank. There can be no assurance that the settlement, if approved, would not have an adverse impact on the business of our
customers and/or our business.

The federal government may adopt measures in the future that would further reduce Medicare and/or Medicaid spending or
impose additional requirements on health care entities. At this time, we can provide no assurances that such changes, if adopted, would not have an adverse effect on our business.

We believe we are operating our business in substantial compliance with all existing legal requirements material to the operation of our business. Nonetheless, we cannot provide any assurance that one or more of the
applicable agencies will not interpret the requirements differently, or, if an enforcement action were brought against us, that our interpretation would prevail. In addition, there are numerous proposed health care laws and regulations at the
federal and state levels, and these could materially affect the industry



21



---

in which we operate and our ability to conduct our business. For example, if legislation were enacted permitting drug importation, our clients might obtain
pharmaceuticals from foreign pharmacies. Similarly, in states where changes to the state-set maximum billing amounts may occur, such as occurred in California, and in other states where such limits already exist, it is possible, notwithstanding the
negotiated character of our pricing, that we could be subject to liability or to repayment of excess amount in some instances for any billing in excess of the legal maximum. We are unable to predict what additional federal or state legislation or
regulatory initiatives may be enacted in the future relating to our business or the health care industry in general, or what effect any such legislation or regulations might have on us.

Changes in state health care, licensure or insurance laws could affect our business.

States commonly
regulate parties involved in the delivery of health care. For example, many states have so-called all-payor statutes, often paralleling the federal Anti-Kickback and Stark laws, limiting the types of payments that can be made between health care
providers and other parties who may influence referrals to those providers. Many of these statutes have not been interpreted to the extent of their federal analogues, and therefore are not as clear in their scope and application. Further development
in such interpretations could cause our existing practices to be deemed to be in noncompliance, and therefore could impose costs on us, either as penalties of noncompliance or as the result of restructuring our relationships.

States also have varying licensure requirements. Prior to outsourcing of our mail order pharmacy, we were required in many states to hold licenses as an out-of-state
mail order pharmacy. Pursuant to similar requirements, we currently must hold licenses in some states for the delivery of durable medical equipment. Although we believe that we are in compliance with such licensure requirements, it is possible that
we are in noncompliance with the requirements of one or more states, and that such noncompliance could result in costs to us. Some states licensure requirements also extend to and regulate so-called preferred provider organizations (or similar
entities that perform like functions), and entities that perform operations such as utilization and bill review in connection with the delivery of health care. It is possible that this type of regulation could broaden to encompass our business, and
that such broadening could result in costs to us.

States also regulate workers compensation insurers. This regulation includes both licensure
requirements and more direct operational restrictions on the activities of carriers. We do not believe that we are engaged in the business of insurance, and we therefore do not believe that we are subject to such regulation. However, a number of our
customers are workers compensation insurers subject to state regulation. A change in the insurance laws or regulations of any state could alter the way that some of our customers elect to do business with us, or could make insurance
regulations applicable to us directly. This could negatively affect our business.

Federal and state laws that protect patient health information may
increase our costs and limit our ability to collect and use that information.

Because we are engaged primarily in the delivery of health care
services to workers compensation claimants (and, to a significantly lesser degree, to claimants under our clients automobile-related personal injury protection policies) and do not electronically bill



22



---

payors for any unrelated claims, we do not believe that we are at this point subject to the administrative simplification provisions of the federal Health
Insurance Portability and Accountability Act of 1996 and related rules and regulations (HIPAA). HIPAA contains provisions generally applicable to three aspects of health care delivery: portability and continuity of health insurance for groups and
individuals; fraud abuse and prevention; and information exchange. The Department of Health and Human Services has issued final regulations implementing the administrative simplification provisions of HIPAA concerning the privacy and security of
individually identifiable health information, and the use of standard transactions and code sets for electronic transactions conducted by covered entities. The HIPAA privacy regulations, with which compliance was required as of April 2003, impose on
covered entities (including certain hospitals, physicians, pharmacies, group health plans and certain other health care providers) significant restrictions on the use and disclosure of individually identifiable health information. The HIPAA security
regulations, with which compliance was required by April 2005, impose on covered entities certain administrative, technical, and physical safeguard requirements with respect to individually identifiable health information maintained or transmitted
electronically. The HIPAA regulations establishing electronic transaction and code set standards require that covered entities use standard transactions and code sets when electronically submitting or receiving to health plans individually
identifiable health information in connection with certain health care transactions. These regulations became effective in October 2002, but Congress extended the compliance deadline until October 2003 for organizations that submitted a request for
an extension. It is possible that HIPAA will, in the future, be expanded to cover entities engaged in our business, and if in the future we decide to expand our services to include the delivery of health care services to TRICARE or Medicare
claimants, we would become subject to the administrative simplification provisions of HIPAA.

In addition, numerous state laws and regulations exist that
govern the collection, disclosure, dissemination, use, security and confidentiality of patient information. Because our business requires us to process a substantial volume of patient information, many of those laws and regulations may apply or may
be interpreted to apply to us. While we have implemented measures to protect this private information, the costs associated with any further requirements could be substantial, and failure to comply with privacy laws could expose us to substantial
civil and criminal penalties. We can provide no assurance that the costs incurred in any future compliance efforts or in penalties that we may incur for failure to comply with privacy laws will not have a material effect on us.

Certain activities of our business could be challenged under consumer protection or other laws.

The federal government and states have consumer protection laws that have been the basis for investigations, lawsuits and multi-state settlements relating to the
delivery of, and the provision of insurance coverage for, healthcare services. Such investigations, lawsuits and settlements have targeted, among other issues, the exchange of financial incentives, deceptive billing practices and illegal billing
price structures. Although we have not to our knowledge been the subject of any such investigation, lawsuit or settlement, it is possible that these laws could apply to certain activities of our business.



23



---

Tax legislation initiatives could adversely affect the Companys net earnings and tax liabilities.

The Company is subject to the tax laws and regulations of the United States Federal, state and local governments. From time to time, various legislative
initiatives may be proposed that could adversely affect the Companys tax positions. There can be no assurance that the Companys effective tax rate will not be adversely affected by these initiatives. In addition, United States Federal,
state and local tax laws and regulations are extremely complex and subject to varying interpretations. Although the Company believes that its historical tax positions are sound and consistent with applicable laws, regulations and existing precedent,
there can be no assurance that the Companys tax positions will not be challenged by relevant tax authorities or that the Company would be successful in any such challenge.



|ITEM 1B. | UNRESOLVED STAFF COMMENTS
|-------- | -------------------------

The Company has received no written
comments regarding its periodic or current reports from the staff of the Securities and Exchange Commission that were issued 180 days or more preceding the end of fiscal year 2007 and there are no open comments.



|ITEM 2. | PROPERTY
|------- | --------

We lease our main facility, including our executive
offices, which is currently located at 841 Prudential Drive, Suite 900, Jacksonville, FL 32223. The lease for approximately 100,000 square feet has a 94 month term which commenced in September 2007. The lease provides for an option to renew and
extend the lease for two terms of five years each, commencing at the expiration of the initial term of the lease. The Company also has the option to contract 24,415 square feet of the space through calendar year 2008.



|ITEM 3. | LEGAL PROCEEDINGS
|------- | -----------------

We are from time to time involved in litigation
incidental to the conduct of our business. We believe that no litigation currently pending against us, if adversely decided, would have a material adverse effect on our financial position or results of operations.



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

No matters were submitted to a vote of shareholders during the quarter ended December 31, 2007.

PART II



|ITEM 5. | MARKET FOR THE REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
|------- | -------------------------------------------------------------------------

Market Information

Shares of the Companys common stock are not quoted for sale on any public market.



24



---

|ITEM 6. | SELECTED FINANCIAL DATA
|------- | -----------------------

The following table sets forth our
selected historical financial data as of the dates and for the periods indicated. We derived the selected historical statement of income data for the years-ended December 31, 2003 and 2004 and the three months ended March 31, 2005 and the selected
historical balance sheet data as of December 31, 2003 and 2004 and the three months ended March 31, 2005 from the audited consolidated financial statements of the Predecessor. We derived the selected historical statement of income data for the
period form April 1, 2005 through December 31, 2005 and the selected historical balance sheet data as of December 31, 2005 from the audited consolidated financial statements of MSC-Medical Services Company (Successor). We derived the selected
historical statement of income data for the years ended December 31, 2007 and 2006 and the selected historical balance sheet data as of December 31, 2007 and 2006 from our audited financial statements for the period then ended.

The selected financial data below should be read in conjunction with the Companys financial statements and the notes thereto and Item 7, Managements
Discussion and Analysis of Financial Condition and Results of Operations.



|                                                  |  |                          |         |                                   |           |                |                                 |   |                   |                          |  |      |         |   |      |   |         |   |  |   |         |  
|------------------------------------------------- |  | ------------------------ | ------- | --------------------------------- | --------- | -------------- | ------------------------------- | - | ----------------- | ------------------------ |  | ---- | ------- | - | ---- | - | ------- | - |  | - | ------- | -
|                                                  |  | Predecessor              |         |                                   | Successor |               
|                                                  |  | Years Ended December 31, |         | Period fromJanuary 1, 2005through |           |                | Period fromApril 1, 2005through |   |                   | Years Ended December 31, | 
|                                                  |  | 2003                     |         | 2004                              |           | March 31, 2005 |                                 |   | December 31, 2005 |                          |  | 2006 |         |   | 2007 |  
|Statement of Income Data:                         |  |                          |         |                                   |           |                |                                 |   |                   |                          |  |      |         |   |      |   |         |   |  |   |         |  
|Net revenue                                       |  | $                        | 187,144 |                                   | $         | 264,936        |                                 | $ | 75,060            |                          |  | $    | 226,551 |   |      | $ | 324,890 |   |  | $ | 313,020 |  
|Cost of revenue                                   |  |                          | 152,412 |                                   |           | 218,014        |                                 |   | 61,055            |                          |  |      | 185,411 |   |      |   | 260,779 |   |  |   | 247,956 |  
|Gross profit                                      |  |                          | 34,732  |                                   |           | 46,922         |                                 |   | 14,005            |                          |  |      | 41,140  |   |      |   | 64,111  |   |  |   | 65,064  |  
|Operating expenses                                |  |                          | 19,628  |                                   |           | 30,536         |                                 |   | 11,706            |                          |  |      | 27,204  |   |      |   | 44,741  |   |  |   | 45,655  |  
|Impairment of goodwill and other intangibles      |  |                          |        |                                   |           |               |                                 |   |                  |                          |  |      |        |   |      |   |        |   |  |   | 48,516  |  
|Transaction expenses                              |  |                          |        |                                   |           |               |                                 |   | 24,697            |                          |  |      |        |   |      |   |        |   |  |   |        |  
|Adjustment to accounts receivable                 |  |                          |        |                                   |           |               |                                 |   |                  |                          |  |      | 18,527  |   |      |   |        |   |  |   |        |  
|Adjustment to sales tax liability                 |  |                          |        |                                   |           |               |                                 |   |                  |                          |  |      | 3,047   |   |      |   |        |   |  |   |        |  
|Depreciation and amortization                     |  |                          | 2,218   |                                   |           | 3,101          |                                 |   | 785               |                          |  |      | 8,273   |   |      |   | 11,990  |   |  |   | 11,909  |  
|Net loss on disposal of fixed assets              |  |                          |        |                                   |           |               |                                 |   |                  |                          |  |      |        |   |      |   |        |   |  |   | 15      |  
|Litigation settlement                             |  |                          |        |                                   |           |               |                                 |   |                  |                          |  |      |        |   |      |   |        |   |  |   | (12,363 | )
|Operating income (loss)                           |  |                          | 12,886  |                                   |           | 13,285         |                                 |   | (23,183           | )                        |  |      | (15,911 | ) |      |   | 7,380   |   |  |   | (28,668 | )
|Interest expense, net                             |  |                          | 2,603   |                                   |           | 3,432          |                                 |   | 969               |                          |  |      | 21,374  |   |      |   | 20,945  |   |  |   | 21,400  |  
|Income (loss) before income tax expense (benefit) |  |                          | 10,283  |                                   |           | 9,853          |                                 |   | (24,152           | )                        |  |      | (37,285 | ) |      |   | (13,565 | ) |  |   | (50,068 | )
|Income tax expense (benefit)                      |  |                          | 3,994   |                                   |           | 4,112          |                                 |   | (9,466            | )                        |  |      | (14,228 | ) |      |   | (5,093  | ) |  |   | (8,695  | )
|Net income (loss)                                 |  |                          | 6,289   |                                   |           | 5,741          |                                 |   | (14,686           | )                        |  |      | (23,057 | ) |      |   | (8,472  | ) |  |   | (41,373 | )
|Balance Sheet Data (end of period):               |  |                          |         |                                   |           |                |                                 |   |                   |                          |  |      |         |   |      |   |         |   |  |   |         |  
|Cash                                              |  | $                        | 1,038   |                                   | $         | 1,290          |                                 | $ |                  |                          |  | $    | 8,300   |   |      | $ | 6,101   |   |  | $ | 5,750   |  
|Total assets                                      |  |                          | 71,702  |                                   |           | 98,824         |                                 |   |                  |                          |  |      | 449,885 |   |      |   | 441,706 |   |  |   | 373,743 |  
|Long term debt, less current portion              |  |                          | 18,865  |                                   |           | 16,890         |                                 |   |                  |                          |  |      | 148,645 |   |      |   | 148,895 |   |  |   | 149,145 |  
|Total debt, including capital leases              |  |                          | 25,882  |                                   |           | 32,390         |                                 |   |                  |                          |  |      | 165,265 |   |      |   | 169,015 |   |  |   | 167,765 |  
|Total stockholders equity                        |  |                          | 16,346  |                                   |           | 22,523         |                                 |   |                  |                          |  |      | 190,821 |   |      |   | 183,675 |   |  |   | 142,410 |  
|Other Financial Data:                             |  |                          |         |                                   |           |                |                                 |   |                   |                          |  |      |         |   |      |   |         |   |  |   |         |  
|Capital expenditures                              |  |                          | 3,382   |                                   |           | 1,817          |                                 |   | 364               |                          |  |      | 2,412   |   |      |   | 3,972   |   |  |   | 4,583   |  



25



---

|ITEM 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------- | -------------------------------------------------------------------------------------

Overview

MSC-Medical Services Company is one of the largest procurement provider of health care products and
services to workers compensation payors in the United States, based on its knowledge of the industry. The Company coordinates the delivery of these products and services from its vendor network to workers compensation patients on behalf
of its clients, which include payors such as insurers and third party administrators.

The Company was established in 1986 as a local, family-owned company
focused on providing durable medical equipment to patients on behalf of a variety of payors, including group health insurers. Over time, the Company broadened its product offerings, creating a regional network focused solely on the workers
compensation market. In 2002, the Company consummated a recapitalization when an institutional investor acquired a controlling interest. After the recapitalization, the Company expanded its business to a national level and hired additional
management to assist in the achievement of its growth strategy.

On March 31, 2005, through a series of transactions, the Company was acquired (the
Acquisition) by MCP-MSC Acquisition, Inc., a Delaware corporation formed by investment funds affiliated with Monitor Clipper Partners, LLC, certain other institutional investors and members of management.

Factors affecting our financial results

Revenue. Revenue
consists of amounts charged to customers for the products and services we provide. Overall, revenue is affected by the size of the workers compensation market for Pharmaceuticals and Medical Products and Services, federal and state fee
schedules mandating maximum billable amounts, the extent of outsourcing in the industry and any market share changes resulting from shifts with existing customers and the acquisition of the business of new customers. These factors combine to affect
the number of patients served and revenue per patient.

We have identified two distinct product lines consisting of Pharmaceuticals, comprised primarily of
PBM services and mail order prescription medication, and Medical Products and Services which describes all other components of revenue. In our Pharmaceuticals product line, revenue per patient reflects costs of new and existing medications, drug
prescribing patterns and drug utilization controls, for example, generic substitution. In our Medical Products and Services product line, revenue per patient is largely driven by the nature and quantity of products and services used by patients and
the prices we are able to charge our customers for the provision of such products and services.



26



---

We operate in a competitive market place where revenue may be affected by the competitive bidding process among other
service providers. In addition, our customers may also periodically engage in formal requests for proposals (RFP) on non-contracted, as well as contracted business. We have historically and may decide in the future to offer reduced
pricing in certain situations given the overall economics of the proposed business identified in the RFP and the competitive environment. The outcome of these RFPs could have a positive or adverse impact on our future revenues, gross margin
and operating income. In 2006 Liberty Mutual submitted an RFP for its two geographically focused workers compensation pharmaceutical programs. In March of 2007, MSC was informed of Liberty Mutuals intent to award the contract to another
vendor and thereby terminate our agreement. The effective date of the termination was June 4, 2007. The termination of the PBM agreement had no effect on the Companys other services to Liberty Mutual, including Home Health Services and
Durable Medical Equipment. Liberty Mutual represented approximately 12% of the Companys total billings for the year ended December 31, 2007 compared to 19% in the prior year. Gross billings before sales adjustments from the Liberty Mutual
PBM Agreement totaled approximately $38.3 million in the year ended 2007 compared to $42.8 million in prior year.

Additionally, there is continuing
consolidation within the healthcare industry leading to increased competition. In this regard, one of our non-contracted Ancillary business customers took action in fiscal year 2007 to consolidate its vendor relationships, thereby reducing the
number of vendors they utilize. While this action had an adverse short-term impact on our Ancillary revenue growth as the customer accounted for approximately 3% of total billings for the year ended December 31, 2006, we continue to believe our
competitive product offering and value proposition affords us opportunities for revenue growth from this industry-wide consolidation in the future.

Cost of Revenue. Cost of revenue consists of payments to vendors for delivery of products and services, customer service representative costs (CSR), inventory carrying costs and shipping costs. In our Pharmaceutical Services product
line, cost of revenue also includes credits for vendor rebates, as well as costs related to other service providers (e.g. retail card distributor). We negotiate prices for the provision of services and products with vendors in our network. In many
cases, prices are pre-negotiated under a contract or pre-agreed price list with vendors. Prior to procuring products or services, we typically obtain written or verbal authorization and pricing approval from customers to minimize reimbursement risk.
We also typically finalize the cost of products and services with our vendors before delivery.

Gross Profit. Gross profit reflects the differential
between the price at which we sell our products and services and the cost of revenue. Margins are positively affected when we negotiate lower costs from our vendors without a change in pricing to our customers. Conversely, margins are negatively
affected when we lower prices charged to customers without receiving a reduction in costs from vendors. Examples of this include customer negotiations where we agree to lower prices, and certain legislative changes which result in a decrease in
prices that can be charged. Fluctuations in revenue or the cost of revenue do not necessarily result in



27



---

corresponding changes in gross profit margins. For example, in the Pharmaceutical Services product line, the price at which we are able to procure
pharmaceuticals and the prices we charge customers are frequently tied to a common measurement, such as AWP. As the benchmark moves up or down, revenue and cost of revenue move correspondingly, leaving gross profit margins largely unaffected. During
fiscal 2007, the proportion of generic drugs dispensed increased, which has generally reduced revenue while improving overall gross margins.

Significant customers.For the year ended December 31, 2007, Liberty Mutual, our largest customer accounted for approximately 12.3% of our billings versus 19.4% for the year ended December 31, 2006. One other customer,
Sedgwick, accounted for approximately 11% and 9.4%, respectively, for the year ended December 31, 2007 and 2006. Billings to our top ten customers decreased for the year ended December 31, 2007 and represented 43% of total billings for
this period versus 48% for the same period in 2006.

Operating Expenses. Operating expenses include cash compensation, as well as non-cash
compensation associated with stock compensation, other costs associated with our sales force and general and administrative expenses, including expenses related to information technology, accounting, human resources, travel, professional fees,
corporate overhead and bad debt expenses.

Results of Operations

Year Ended December 31, 2007 Versus December 31, 2006, and December 31, 2006 versus December 31, 2005.

Total Revenue



|                              |  |                                |         |      |   |         |  |   |        
|----------------------------- |  | ------------------------------ | ------- | ---- | - | ------- |  | - | -------
|                              |  | For the Year EndedDecember 31,
|(in thousands)                |  | 2007                           |         | 2006 |   | 2005   
|Pharmaceutical Services       |  | $                              | 166,070 |      | $ | 174,431 |  | $ | 159,963
|Medical Products and Services |  |                                | 146,950 |      |   | 150,459 |  |   | 141,648
|                              |  |                                |         |      |   |         |  |   |        
|Total Net Revenue             |  | $                              | 313,020 |      | $ | 324,890 |  | $ | 301,611
|                              |  |                                |         |      |   |         |  |   |        

Factors contributing to the 3.6% decrease in total net revenue during the year ended December 31, 2007, as
compared to the prior year, are the loss of the Liberty Mutual PBM Agreement in June 2007, lower order volume in selected product categories and the loss of a non-contracted Ancillary customer, offset by the continuing implementation of
Pharmaceutical services to new customers and the continued shift toward generic drugs, AWP price increases and product mix shift to higher margin products in our Medical Products and Services product lines. The Liberty Mutual PBM Agreement
represented approximately $42.8 million of billings in 2006. The loss of the non-contracted customer accounted for $4.4 million of the decrease in Medical Products and Services during the year ended December 31, 2007.



28



---

Factors contributing to the 7.7% increase in total net revenue for the year ended December 31, 2006, as compared to
the prior year, were increased prescription fills, increased patients served and increased orders within certain product categories of our Medical Products and Services lines.

During the year ended December 31, 2007, we served 4.6% fewer individual patient injuries compared to the same period in 2006. This decrease in patients is primarily due to losses of (a) the Liberty Mutual
PBM Agreement, and (b) a non-contracted Ancillary customer. With out these customers, our patients served increased by 2.5%. However, total revenue per patient injury increased 1.0% as compared to the same period in 2006. This increase is a
result of several factors including a shift in product mix within the Medical Products and Services lines as described below, as well as pricing adjustments in certain of our product lines, primarily Pharmaceutical products and Medical Products.

During the year ended December 31, 2006, we served 9.8% more individual patients compared to the same period in 2005. Total revenue per patient
injury decreased 1.9% from the comparable period in 2005. This increase is a result of several factors including a shift in product mix within the Medical Products and Services lines as described below, rate adjustments in certain of our product
lines, offset by a shift in the mix between brand and generic prescription fills and selected pricing concessions.

The State of New York enacted revisions
to the pharmacy and durable goods workers compensation fee schedules, effective July 11, 2007, which significantly reduced the maximum allowable reimbursements for pharmacy and ancillary workers compensation services in New York.
There has been an adverse financial impact to our operating results and cash flow over the short term.

Total margins increased 1.1% for the year ended
December 31, 2007 versus 2006. In our Pharmaceutical Services line, margins increased 1.3% to 17.0% for the year ended December 31, 2007 versus 2006. Margins also increased 0.7% for the year ended December 31, 2007 versus 2006 in our
Medical Products and Services line. This increase is in response to the planned reduction in specific products that are typically higher revenue, lower quantity and lower margin.

Total margins increased 1.4% for the year ended December 31, 2006 versus 2005. In our Pharmaceutical Services line, margins increased 1.4% to 15.7% for the year ended December 31, 2006 versus 2005. Margins
also increased 1.6% for the year ended December 31, 2006 versus 2005 in our Medical Products and Services line. The shift in mix from brand to generic positively impacted our PBM line as generic drugs are higher margin products. The results of
the reduction of certain lower margin products, along with select rate adjustments yielded a 4.1% increase in Medical Services gross margin in the year ended December 31, 2006 versus the same period in 2005.



29



---

Pharmaceutical Services Revenue



|                                     |  |                                |         |      |   |         |  |   |        
|------------------------------------ |  | ------------------------------ | ------- | ---- | - | ------- |  | - | -------
|                                     |  | For the Year EndedDecember 31,
|(in thousands)                       |  | 2007                           |         | 2006 |   | 2005   
|Pharmacy Benefit Management Services |  | $                              | 157,151 |      | $ | 163,426 |  | $ | 146,098
|Mail Order Services                  |  |                                | 8,919   |      |   | 11,005  |  |   | 13,865 
|                                     |  |                                |         |      |   |         |  |   |        
|Total Net Revenue                    |  | $                              | 166,070 |      | $ | 174,431 |  | $ | 159,963
|                                     |  |                                |         |      |   |         |  |   |        

The decrease in Pharmacy Benefit Management Services revenue of 4.8% for the year ended December 31, 2007, as
compared to the same period in 2006, is due primarily to the loss of the Liberty Mutual PBM Agreement in early June of 2007, partially offset by new customers and the impact of AWP net price increases. Excluding Liberty Mutual, pharmacy billings for
the year ended December 31, 2007 increased by 12.7%, as compared to the same period in 2006. Based on an analysis performed by the Company regarding total spending for workers compensation claims outside of the acute care setting of several of
its larger customers, the overall decline is also partially attributable to the decline in customer claims volume, which is partially offset by the increase in the Companys share of these claims. The increase in PBM services revenue for the
year ended December 31, 2006 versus 2005 is due primarily to the acquisition of business from new customers and increases in number of individual patients served. The decline in Mail Order Services (MO) revenue of 19.0% in 2007 and
26.5% in 2006 was due primarily to (a) attrition of long-term mail order patients who have been in the mail order program since the inception of our retail pharmaceutical services program, (b) improved screening practices designed to
identify mail order candidates versus the historic method of using mail order as the default when adding new patients, and (c) implementation of our retail pharmacy card program. All of these factors combined have resulted in less mail order
conversion opportunities despite the economic benefit to the customer.

Total prescription fills decreased by 10%, for the year ended December 31,
2007 as compared to the same period in 2006 due to loss of the Liberty Mutual PBM Agreement in early June, partially offset by prescription fill increases for other customers. Excluding Liberty Mutual, prescription fills for the year ended
December 31, 2007 increased by 3.5%, as compared to the same period in 2006.



30



---

The decrease in revenue reflects a decline related to prescription fills of $17.4 million (without the impact of the Liberty Mutual PBM Agreement revenue
would be up 5%), and a shift in mix from brand to generic of $3.0 million, partially offset by the impact of favorable pricing of $12.0 million. Total prescription fills increased by 9.2% for the year ended December 31, 2006 versus 2005
due to new customer additions, especially customers added during the second half of 2005 whose business was fully ramped up in 2006.

The shift to generic
fills is due primarily to industry-wide carrier initiatives that specify a generic fill if available. Generic prescription fills as a percent of total fills was 67.7%, for the year ended December 31, 2007 versus 66.4% during the same period in
2006 and 63.9% for 2005.

Medical Products and Services



|                  |  |                                |         |      |   |         |  |   |        
|----------------- |  | ------------------------------ | ------- | ---- | - | ------- |  | - | -------
|                  |  | For the Year EndedDecember 31,
|(in thousands)    |  | 2007                           |         | 2006 |   | 2005   
|Medical Products  |  | $                              | 87,113  |      | $ | 92,200  |  | $ | 91,744 
|Medical Services  |  |                                | 59,837  |      |   | 58,259  |  |   | 49,904 
|                  |  |                                |         |      |   |         |  |   |        
|Total Net Revenue |  | $                              | 146,950 |      | $ | 150,459 |  | $ | 141,648
|                  |  |                                |         |      |   |         |  |   |        

During the year ended December 31, 2007, total orders for Medical Products and Services decreased by
approximately 11.1%, while billings per order increased by 9.3%, versus the same period in 2006. Revenue for the year ended December 31, 2007 reflects the impact of lower product orders, and a decline in revenue from a non-contracted customer
due to its vendor consolidation initiative, offset by an increase in average billings per order achieved as a result of business process improvement for our more service intensive, higher billing value product lines. Excluding the impact of this
lost customer, orders for MPS decreased.

During the year ended December 31, 2006, total orders for Medical Products and Services increased by
approximately 3.9% versus the same period in 2005. As a result of a planned reduction of certain products, there was a shift in the product mix and an increase in orders for product lines with moderate revenue but higher margins, e.g.
Electro-therapy products, IV therapy, pain pumps and



31



---

transportation. The increases are primarily a result of an increased focus on referral volume and business process order fulfillment improvements for our
more service intensive and higher dollar volume product lines.

Cost of Revenue



|                              |  |                                |         |      |   |         |  |   |        
|----------------------------- |  | ------------------------------ | ------- | ---- | - | ------- |  | - | -------
|                              |  | For the Year EndedDecember 31,
|(in thousands)                |  | 2007                           |         | 2006 |   | 2005   
|Pharmaceutical Services       |  | $                              | 137,831 |      | $ | 146,993 |  | $ | 137,108
|Medical Products and Services |  |                                | 110,125 |      |   | 113,786 |  |   | 109,358
|                              |  |                                |         |      |   |         |  |   |        
|Total Cost of Revenue         |  | $                              | 247,956 |      | $ | 260,779 |  | $ | 246,466
|                              |  |                                |         |      |   |         |  |   |        

Total cost of revenue, as a percentage of revenue, was 79.3%, 80.3%, and 81.7% for the years ended
December 31, 2007, 2006, and 2005 respectively, an average decrease of 1.2%. This decrease as a percentage of revenue is due to (a) favorable vendor pricing actions, (b) more favorable product mix towards higher margin products and
services, and (c) savings achieved from productivity gains of internal operating costs, primarily CSR related expenses.

Pharmaceutical Services cost
of revenue decreases are a result of decreases in the total number of prescription fills for the year ended December 31, 2007 versus 2006, primarily attributable to the loss of the Liberty Mutual PBM Agreement in early June, 2007. This decrease
is offset by an increase in the average cost per fill for branded drugs which increased approximately 8.82% per fill, for the year ended December 31, 2007 as compared to the same period in 2006. Generic cost per fill, however, decreased
5.54%, for the year ended December 31, 2007 as compared to the same period in 2006.

In 2006, Pharmaceutical Services cost of revenue increases are a
result of increases in the total number of prescription fills for the year ended December 31, 2006 versus 2005 and an increase in AWP for branded and generic drugs which increased 9.1% and 3.2%, respectively, per fill, for the year ended
December 31, 2006 versus 2005. The effect of increased AWP was mitigated by pricing concessions from our PBM vendor and a shift from branded to less expensive generic pharmaceuticals. Our cost for branded fills increased 7.7% while our generic
cost per fill decreased 8.5% for the year ended December 31, 2006 versus 2005. As a result, Pharmaceutical Services gross margin percentage improved 1.4% to 15.7% for the year ended December 31, 2006 versus 14.3% for the comparable period
in 2005.

Medical Products and Services cost of revenue decreases are primarily a result of product mix shifts, as discussed in Medical Products and
Services Revenueabove. Medical Products and Services gross margin increased 0.7% to 25.0% for the year ended December 31, 2007 compared to 24.3% for the same period in 2006. Medical Products and Services gross margin increased 1.5% to



32



---

24.3% for the year ended December 31, 2006 versus 22.8% for the same period in 2005. These improvements in gross margin resulted primarily from our
efforts to increase margins through various cost improvement initiatives, such as the de-emphasis of certain product lines, pricing actions and product mix shifts.

Expenses



|                                             |  |                                |         |   |      |   |        |  |   |       
|-------------------------------------------- |  | ------------------------------ | ------- | - | ---- | - | ------ |  | - | ------
|                                             |  | For the Year EndedDecember 31,
|(in thousands)                               |  | 2007                           |         |   | 2006 |   | 2005  
|Operating Expenses                           |  | $                              | 45,655  |   |      | $ | 44,741 |  | $ | 38,910
|Transaction Expense                          |  |                                |        |   |      |   |       |  |   | 24,697
|Adjustment to Allowance                      |  |                                |        |   |      |   |       |  |   | 18,527
|Adjustment to Sales Tax Liability            |  |                                |        |   |      |   |       |  |   | 3,047 
|Impairment of Goodwill and other intangibles |  |                                | 48,516  |   |      |   |       |  |   |      
|Depreciation and Amortization                |  |                                | 11,909  |   |      |   | 11,990 |  |   | 8,273 
|Loss on Disposal of Fixed Assets             |  |                                | 15      |   |      |   |       |  |   |      
|Litigation Settlement                        |  |                                | (12,363 | ) |      |   |       |  |   |      
|                                             |  |                                |         |   |      |   |        |  |   |       
|Expenses                                     |  | $                              | 93,732  |   |      | $ | 56,731 |  | $ | 93,454
|                                             |  |                                |         |   |      |   |        |  |   |       

Operating Expenses. Total operating expenses of $45.7 million including 24.6 million of compensation and
benefit related expenses, increased $0.9 million for the year ended December 31, 2007, driven primarily by personnel expenses increasing approximately $0.5 million versus 2006, and all other expenses increased approximately $0.5 million versus
the same period in 2006. Total operating expenses increased $5.8 million for the year ended December 31, 2006, with total personnel expenses declining approximately $0.4 million versus 2005, overhead expenses declined approximately $0.1 million
versus 2005 and all other expenses increased approximately $6.3 million versus 2005 driven mainly by bad debt, sales tax, and consulting fees.

The $0.5
million increase in personnel costs for 2007 over the prior year includes costs for non-cash stock compensation expense, which remained at $1.2 million for the years ended 2006 and 2007. In 2006, the decrease in personnel costs from 2005 was due to
the $3.3 million decrease in stock compensation expense, which was offset by $0.8 million of increases related to salaries/wages, health insurance and severance, $1.4 million of temporary IT consultation and $1.2 million of temporary staffing. Stock
compensation expense was $4.5 million in 2005 related to the initial adoption of SFAS 123R. We also incurred $1.5 million of increases related to salaries/wages, of which $0.7 million related to IT personnel costs related to non capitalizable
projects in 2006. This was offset by a decrease in insurance and benefits of $0.4 million due to a decrease in average full time employees from 2006.

The
$0.5 million increase in other operating expenses for the year ended December 31, 2007



33



---

includes $0.6 million of costs associated with relocating to a new leased office facility in September 2007; such costs include a $0.3 million expense for
lease termination costs associated with the facility that was vacated by the Company. Such amount is expected to be paid out during the next six months. Bad debt expense remained flat for the year ended December 31, 2007 when compared to the
same period in the prior year.

For the year ended December 31, 2006 net bad debt expense increased $2.1 million to $7.6 million versus 2005. This
increase is due primarily to the change in the estimation factor for anticipated future losses from 0.85% for the first quarter of 2005 and 1.4% in the second quarter of 2005 to 2.5% of net sales for the third quarter of 2005 through the year ended
December 31, 2006 as well as increase in revenues year over year. The estimation factor increased as a result of an analysis performed during the third quarter of 2005 that indicated the estimation factor being used should be increased to
address the current collection risk of the Companys portfolio of receivables. We continue to review this estimation factor on a quarterly basis. As a result, we released a total of $0.5 million from the bad debt reserve in the third and fourth
quarters of fiscal 2006 as detailed in Note 2 to Financial Statements, Summary of Significant Accounting PoliciesAllowance for Doubtful Accounts (roll forward schedule). Other increases to operating expenses for the year ended
December 31, 2006 versus 2005 include $3.1 million of professional and consulting fees related to increased bank fees, SEC filings, Sarbanes Oxley consulting and various business process consulting projects. Other operating expense increases
also include $1.1 million of sales tax expense for the year ended December 31, 2006 versus 2005. The increase in sales tax expense in fiscal year 2006 relates to the accrual and payment of sales tax expense on sales of certain products. This
practice was initiated in the third quarter of fiscal year 2005 as a result of inquiries we were receiving from several states as discussed below inAdjustment to Sales Tax Liability.

Transaction Expenses. Transaction expenses of $24.7 million for the year ended December 31, 2005 include expenses incurred by the selling shareholders upon
sale of the Company on March 31, 2005. These expenses include a $7.3 million long-term incentive payment to a former employee pursuant to the terms of his employment contract, $7.1 million in fees to the former owner, $6.2 million in fees to
the Companys financial advisor, a $2.6 million long-term incentive payment to a former officer pursuant to the terms of his employment contract, $0.6 million in payments to employees, $0.6 million in legal expenses and $0.6 million in other
fees and accounting-related expenses.

Adjustment to Allowance.Adjustment to allowance for doubtful accounts of $18.5 million for the year ended
December, 31 2005 is more completely described in Note 17 to the Financial Statements.

Adjustment to Sales Tax Liability.Adjustment to Sales Tax
Liability of $3.0 million for the year ended December 31, 2005 was a result of inquiries from several states regarding the Companys sales tax filing practices. Based on these inquiries, the Company performed a review of its existing
liability for sales tax payable. This analysis included researching the taxability of the Companys product categories in all states, the voluntary disclosure benefits, and the sales tax exposure existing with all states. The Companys
analysis was completed in the third quarter of 2005 and accordingly the Company incurred a charge and a corresponding adjustment to increase its sales tax liability.



34



---

Impairment of Goodwill and Other Intangibles. For the year ended December 31, 2007, $40.1 million was charged
to expense for the impairment of goodwill and $8.4 million was charged for the impairment of trademarks. See Footnote No. 5 of the Notes to the Consolidated Financial Statements for further discussion of impairment testing.

Depreciation and Amortization. For the year ended December 31, 2007, depreciation remained flat when compared to the same period of the prior year. For the
year ended December 31, 2006, depreciation and amortization increased $2.9 million to $12 million versus the same period in 2005. The increase is a result of a full years amortization of intangible assets resulting from the Acquisition
consummated on March 31, 2005, capitalizable projects started in late 2005 and completed in 2006 and other fixed asset additions.

Loss on Disposal
of Fixed Assets.In conjunction with the termination of the former lease in 2007 related to the move to the new facility, certain asset were sold or otherwise disposed of. As a result of the disposals, a $15 thousand loss on disposals was
realized in 2007.

Litigation Settlement.In conjunction with the sale of the Company in March 2005, an escrow account was established with Wells
Fargo Bank as the escrow agent and $15.0 million of the purchase price was deposited in the escrow account to be used as security for and to satisfy claims arising out of the transaction. On May 26, 2006, the parent delivered to the
stockholder representative for the sellers of the Company an indemnification claim against the escrow balance. A $12.4 million settlement was reached on May 30, 2007 by and between the Company and the sellers as part of a settlement
agreement that included a cash settlement to the Company paid out from the escrow account of $9.0 million and forfeiture of $3.4 million of unpaid tax benefits. Consistent with applicable accounting standards and SEC guidance, this transaction has
been accounted for as an adjustment to results of operations.

Operating Income. For the year ended December 31, 2007, operating income
decreased $37.0 million versus the same period in 2006, primarily due to the goodwill and other intangible write-off, which was partially offset by the litigation settlement discussed previously. For the year ended December 31, 2006, operating
income increased $46.5 million versus the same period in 2005, primarily due to transaction expenses of $24.7 million, the adjustments for allowance for doubtful accounts of $18.5 million and sales tax liabilities of $3.0 million recorded in fiscal
2005.

Interest Expense. Interest expense increased by $0.5 million for the year ended December 31, 2007 versus the same period in 2006. The
increase in interest expense is a result of an increase in the average outstanding interest bearing debt. For the year ended December 31, 2006, interest expense increased by $0.6 million versus the same period in 2005. The increase in interest
expense is a result of an increase in the average monthly 3-Month LIBOR rate of approximately 1.6% versus the same period in 2005. The interest rate increase was offset by reductions in interest expense in 2006 for certain items that occurred in
2005, such as the write-off of capitalized debt issuance costs incurred as a result of a refinancing under the Companys Senior Secured Notes and Senior Secured Revolving Credit Facility associated with the permanent financing for the
Acquisition.



35



---

Income Tax Benefit. For the year ended December 31, 2007, the income tax benefit increased $3.6 million from
the same period in 2006. The litigation settlement mentioned above, was a non-taxable event, therefore not affecting taxable income. For the year ended December 31, 2006, the income tax benefit decreased $18.6 million from the same period in
2005. The December 31, 2005 income tax benefit of $23.7 million was the result of a loss before income taxes arising from the costs associated with the Acquisition. The 17.4% effective tax rate for the year ended December 31, 2007 reflects
a 20.1% decrease from the 2006 rate of 37.5% due to the non-taxable litigation settlement along with the goodwill impairment charge. The 37.5% effective rate for the year ended December 31, 2006 reflects a 0.7% decrease from the effective tax
rate for the nine month period ended December 31, 2005 of 38.2% primarily due to the effect of non-deductible items for tax purposes. We currently expect to be able to utilize the tax benefit through the reversal of deferred tax liabilities in
future periods.

Liquidity and Capital Resources

Operating activities provided $5.7 million, $7.3 million, and used $19.2 million of cash flow for the years ended December 31, 2007, 2006 and 2005, respectively. Operating cash flow for 2007 includes the impact of the litigation
settlement. Excluding the impact of this settlement, cash provided by operating activities for the year ended December 31, 2007 was approximately $10.6 million lower than the same period in 2006. The year-to-year decline in operating cash flow
activities is primarily the result the loss of cash collections from the Liberty Mutual PBM Agreement combined with the decrease in accounts payable of $9.5 million. The $9.0 million in cash received from the litigation settlement was used to fund
payments to vendors and repay outstanding borrowings under the revolving credit facility of $3.5 million. The increase in cash from the litigation settlement was offset by the loss of cash receipts from the Liberty Mutual PBM contract, which
terminated in June 2007. Days sales outstanding was 68 days for the year ended December 31, 2007 compared to 71 days in 2006 and 68 days in 2005.

The increase in operating cash flow activities for the year ended December 31, 2006 from the prior year was due primarily to a) transaction expenses incurred in connection with the Acquisition in 2005 of $24.7 million, b) decrease in
the provision for deferred income tax of $12.4 million for the year ended December 31, 2006 versus 2005, and c) the collection of $7.2 million of income tax receivables in 2006. These provisions were offset by increases in accounts receivable
of $14.6 million for the year ended December 31, 2006 versus $12.6 million for the comparable period in 2005.

Investing activities used cash of $4.5
million, $12.8 million, and $303.5 million for the years ended December 31, 2007, 2006 and 2005 respectively. Cash used for investing activities in 2007 was exclusively related to capital expenditures of $4.6 million.



36



---

Cash used by the predecessors investing activities in 2005 reflects payments made to the selling shareholders in
connection with the Acquisition. The proceeds from income tax refunds received in the year ended December 31, 2006 were disbursed to the former owners in 2006 as required by the purchase agreement. Capital expenditures were $4.0 million for the
year ended December 31, 2006 versus $2.8 million for the same period in 2005. These expenditures related primarily to ongoing capitalizable information systems projects and software improvements.

Financing activities for the year ended December 31, 2007 used $1.5 million compared to $3.3 million provided in 2006 and $329.8 million in 2005. We repaid $3.5
million on our revolving credit line, which was drawn in 2006, using the proceeds from the litigation settlement discussed previously. We also borrowed an additional $2.0 million on our revolving credit line to use fund our necessary working capital
requirements.

We believe that, based on current levels of operations and anticipated growth, cash from operations, together with other available sources
of liquidity, including borrowings available under our senior secured revolving credit facility, will be sufficient to fund operations, anticipated capital expenditures and required payments on our debt for at least the next 12 months. In connection
with our borrowings, we made interest payments totaling $21.2 million for the year ended December 31, 2007. Our available sources of liquidity are dependent upon future operating performance, which, in turn, is subject to factors beyond
our control, including the conditions of the workers compensation industry. The Company cannot assure that its business will generate cash from operations, or that it will be able to obtain financing from other sources, sufficient to satisfy
its debt service or other requirements.

As of December 31, 2007, the Company was compliant with all debt covenants.

Subsequent Event

The following statements are subject to risks
and uncertainties that could cause actual results to differ materially from those currently anticipated or projected. The estimates and ranges provided are for informational purposes, however, Management cautions readers not to place undue reliance
on any of the Companys forward-looking statements, which speak only as of the date made. See page 3 for Cautionary Statements  Forward Looking Statements

As reported on the Companys Current Reports on Form 8-K dated on February 1, 2008 and March 28, 2008, on January 28, 2008, the Company acquired 100% of the outstanding membership interests of ZoneCare
USA of Delray, LLC, a Florida limited liability company (ZoneCare), and Speedy Re-employment, LLC, a Florida limited liability company (Speedy), and substantially all of the assets of SelectMRI, LLC, a Florida limited
liability company (Select MRI and together with ZoneCare and Speedy, the Acquisition Entities) for $25,000,000, $7,000,000, and $500,000, respectively, paid in cash subject to escrows and holdbacks. In connection with the
purchase of the assets of SelectMRI, the Company formed a wholly-owned subsidiary, SelectMRI Acquisition, LLC, a Delaware limited liability company (Select Acquisition), which actually acquired the assets of SelectMRI.



37



---

In connection with these acquisitions the Company restructured its debt agreements to account for the acquisitions. On
January 18, 2008, the Company entered into Amendment No. 4 (Amendment No. 4) to the Credit Agreement dated as of March 31, 2005 among the Company, MCP-MSC Acquisition, Inc., the banks, financial institutions and
other lenders party thereto (collectively, the Lenders) and Bank of America, N.A., as administrative agent (in such capacity, the Administrative Agent) for the Lenders, as amended by Amendment No. 1 to the Credit
Agreement dated as of May 12, 2005, Amendment No. 2 to the Credit Agreement dated as of December 9, 2005 and Amendment No. 3 to the Credit Agreement dated as of December 14, 2006. See footnote 6 of the Notes to the
Consolidated Financial Statements for other requirements under the Credit Agreement.

In Amendment No. 4, the Company, the Administrative Agent and
the Lenders agreed to amend the Credit Agreement in certain respects, including, but not limited to, the items set forth below:



| |  |  | Pro Forma Calculations. a new section regarding pro forma calculations was added which provides that for the purposes of calculating the consolidated fixed
charge coverage ratio and the first lien leverage ratio, investments made by the Company or any of its subsidiaries during the applicable measurement period shall be calculated on a pro forma basis assuming that all such investments (and the change
in consolidated EBITDA resulting therefrom and any indebtedness incurred in connection therewith) had occurred on the first day of the applicable measurement period. Additionally, consolidated EBITDA of the Company in respect of the fiscal quarters
ended June 30, 2007, September 30, 2007 and December 31, 2007 shall be increased by $1.4 million, $1.1 million and $1.2 million, respectively, in order to give pro forma effect to the acquisition of all of the membership
interests in Speedy Re-Employment, LLC, and ZoneCare USA of Delray, LLC (together with its subsidiary ZoneCareUSA DME, LLC) and, through SelectMRI Acquisition, LLC, substantially all of the assets of SelectMRI, LLC.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Restricted Transactions. Any investments financed solely with investment equity contribution proceeds and any transactions falling within clause (e) of
the definition of restricted transaction shall be excluded from the covenant restricting restricted transactions.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Consolidated Fixed Charge Coverage Ratio. The minimum consolidated fixed charge coverage ratios required to be maintained by the Company under the Credit
Agreement beginning during the fiscal quarter period ending on March 31, 2008 and thereafter have been reduced to a range of 0.80:1.00 to 1.25:1.00.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Capital Expenditures. The Companys annual limits on capital expenditures were amended to allow a range of $5 million to $5.8 million for the remainder
of the term of the Credit Agreement.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Definitions. In connection with the amendments described above, Amendment No. 4 amended the definition of Subsidiary, Suspension
Consolidated Fixed Charge Coverage Ratio and Transaction Conditions, and added Investment Equity Contribution Proceeds as a new defined term to the Credit Agreement.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



38



---

As reported on the Companys Current Reports on Form 8-K dated February 8, 2008, and March 28, 2008, on
February 5, 2008 the Company, the Parent, each of ZoneCare, ZoneCareUSA DME, LLC, a Florida limited liability company, Speedy, and SelectMRI (the Subsidiaries), and U.S. Bank National Association (the Trustee) entered
Supplemental Indentures (the Supplemental Indentures), pursuant to which the Subsidiaries were added as new subsidiaries of the Company under the Indenture (the Indenture), dated as of June 21, 2005, between the Company
and the Trustee. The Company issued its Senior Secured Floating Rate Notes due 2011 (the Notes) under the Indenture. The Supplemental Indentures provide that the Subsidiaries will guarantee all of the obligations of the Company under the
Notes and the Indenture, subject to the terms of the Supplemental Indentures. In connection with the Supplemental Indentures, the Subsidiaries entered into Second Lien Security Agreement Supplements on February 5, 2008 (the Second Lien
Security Supplements) pursuant to which the Subsidiaries joined as parties to the Second Lien Security Agreements among the Company and the Parent, addressed to Trustee, as indenture trustee and collateral agent for the benefit of Trustee and
the holders from time to time of the certain second lien notes as defined in such agreement.

On February 5, 2008, the Subsidiaries entered into
Security Agreement Supplements (the Security Agreement Supplements) with Bank of America, N.A. (the Administrative Agent), as administrative agent under the Revolving Credit Agreement (the Revolving Credit
Agreement), dated as of March 31, 2005, among the Company, the lenders party thereto and the Administrative Agent. Pursuant to the Security Agreement Supplements, the Subsidiaries pledged certain assets as security for the Companys
obligations under the Revolving Credit Agreement and the related loan documents and also agreed to be bound as Grantors by all of the terms and provisions of the Security Agreement, dated as of March 31, 2005 and executed in
connection with the Revolving Credit Agreement, to the same extent as each of the other Grantors. The Subsidiaries also entered Subsidiary Guaranty Supplements (the Subsidiary Guaranty Supplements), dated as of February 5, 2008,
with the Administrative Agent, pursuant to which the Subsidiaries agreed to be bound as Guarantors by all of the terms and conditions of the Subsidiary Guaranty, dated as of March 31, 2005 and executed in connection with the
Revolving Credit Agreement, to the same extent as each of the other Guarantors.

Contractual Obligations

The following table represents our contractual commitments specified below as of December 31, 2007 (in thousands):



|                              |  |      |       |      |   |       |  |      |       |      |   |            |  |       |       |  |   |       |  |   |        
|----------------------------- |  | ---- | ----- | ---- | - | ----- |  | ---- | ----- | ---- | - | ---------- |  | ----- | ----- |  | - | ----- |  | - | -------
|                              |  | 2008 |       | 2009 |   | 2010  |  | 2011 |       | 2012 |   | Thereafter |  | Total
|Contractual cash obligations: |  |      |       |      |   |       |  |      |       |      |   |            |  |       |       |  |   |       |  |   |        
|Long-term debt obligations(1) |  | $    |      |      | $ |      |  | $    |      |      | $ | 167,745    |  | $     |      |  | $ |      |  | $ | 167,745
|Interest on fixed rate debt   |  |      | 5,953 |      |   | 5,953 |  |      | 5,953 |      |   | 5,953      |  |       | 5,953 |  |   | 2,977 |  |   | 32,732 
|Consulting fees to parent     |  |      | 500   |      |   | 500   |  |      | 500   |      |   | 500        |  |       | 500   |  |   |      |  |   | 2,500  
|Non-cancelable contracts      |  |      | 36    |      |   | 36    |  |      | 36    |      |   |           |  |       |      |  |   |      |  |   | 108    
|Operating lease obligations   |  |      | 1,258 |      |   | 1,706 |  |      | 1,786 |      |   | 1,868      |  |       | 1,943 |  |   | 5,195 |  |   | 13,756 
|                              |  |      |       |      |   |       |  |      |       |      |   |            |  |       |       |  |   |       |  |   |        
|Total                         |  | $    | 7,747 |      | $ | 8,195 |  | $    | 8,275 |      | $ | 176,066    |  | $     | 8,396 |  | $ | 8,162 |  | $ | 216,841
|                              |  |      |       |      |   |       |  |      |       |      |   |            |  |       |       |  |   |       |  |   |        



|(1) | Represents the outstanding balance of the senior secured revolving credit facility ($18.6 million) and the principal amount of the Senior Secured Floating Rate Notes.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------



39



---

APPLICATION OF CRITICAL ACCOUNTING POLICIES

In preparing the financial statements in conformity with U.S. generally accepted accounting principles, management is required to make certain estimates, judgments, and assumptions. These estimates, judgments, and
assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the periods presented. The significant accounting policies which management and the
audit committee believe are the most critical to fully understand and evaluate the Companys financial position and results of operations include the following.

Revenue Recognition

The Company recognizes revenue from product sales and services in the period that the service or
rental activity occurs after obtaining a referral and authorization (either written or verbal) from the payor since at that time there is persuasive evidence that an arrangement exists, the price is fixed and determinable, and the collection of the
resulting accounts receivable is reasonably assured.

Customers have the right to return consumable products and equipment. Sales allowances are recorded
as a reduction of revenue for potential product returns and estimated billing errors. Management analyzes sales allowances quarterly using historical data adjusted for significant changes in volume and business conditions, as well as specific
identification of significant returns or billing errors. Estimated provisions for sales allowances are recorded, if necessary, in the period the sale is recorded as a reduction to revenue. As of December 31, 2007 and 2006, the reserve for sales
allowance was approximately $0.7 million and $0.5 million, respectively, and is included in the allowance for doubtful accounts balance.

Unbilled accounts
receivable represents those transactions for which services have been performed but for which the Company is awaiting final cost information from its service provider, the exact amount of which are uncertain. Each month, the Company estimates this
portion of earned but unbilled revenue and the corresponding receivable and cost of good sold, based on historical trends and estimation methodologies. These estimates are adjusted in subsequent periods when information becomes available from the
service providers. Historically, these estimates have reasonably approximated the level of revenue actually billed to payors in the



40



---

relevant period. As of December 31, 2007 and 2006, unbilled receivables were approximately 33.7% and 21.9%, respectively, of total accounts receivable.
The increase in 2007 over 2006 is due to a lag associated with the new outsourcing process implemented in late 2007.

The Company generally does not charge
additional amounts to customers for shipping and handling costs as any such costs are included in the sales price. The Company includes all of its costs of shipping and handling in operating expenses (approximately $0.6 million for the years ended
December 31, 2007 and 2006, and $0.9 million for the year ended December 31, 2005, respectively).

Estimating Allowances for Doubtful Accounts

The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability to collect outstanding amounts due from its
customers. The allowances include specific amounts for those accounts that are likely to be uncollectible, and a general allowance for those accounts that management currently believes to be collectible but later become uncollectible. Estimates are
used to determine the allowances for doubtful accounts and are based on historical collection experience, current economic trends, credit-worthiness of customers, changes in customer payment patterns, and percentages applied to the accounts
receivable aging categories. The percentage of each aging category that is reserved is determined by analyzing historical write-offs and current trends in the credit quality of the customer base.

Estimating Useful Lives of Property and Equipment

Property and
equipment is recorded at cost and is depreciated on a straight-line basis over the following estimated useful lives.



|                               |  |                      
|------------------------------ |  | ---------------------
|                               |  | Estimated Useful Life
|Furniture and office equipment |  | 5 years              
|Computer hardware and software |  | 3 years              

Management is required to use judgment in determining the estimated useful lives of such assets. Changes in
circumstances such as technological advances, changes to the Companys business model, changes in the Companys business strategy, or changes in the planned use of property and equipment could result in the actual useful lives differing
from the Companys current estimates. In those cases where the Company determines that the useful life of property and equipment should be shortened or extended, the Company would depreciate the net book value in excess of the estimated salvage
value over its revised remaining useful life.

Impairment of Goodwill, Intangibles, and Other Long-Lived Assets

SFAS No. 142, Goodwill and Other Intangible Assets(SFAS 142) requires goodwill and indefinite-lived intangible assets to be



41



---

tested for impairment annually or whenever events or changes in circumstances indicate the carrying amount may be impaired. Goodwill and indefinite-lived
intangible assets are reviewed for impairment annually as of October 31st. In accordance with SFAS 142, management concluded there is a single reporting unit. Management, based on the opinion of a third party valuation specialist, took an
expense charge for an impairment of goodwill amounting to $40.1 million and an impairment of the trademarks amounting to $8.4 million were identified and expensed for the year ended December 31, 2007. The third party specialist used a
combination of discounted cash flows and market value approaches to develop the fair values of the intangible assets.

The key factors that lead to the
impairment in the fourth quarter of 2007, were the increase in discount rates used to discount expected future cash flows, and recent softening of the ancillary business, which caused management to revise its future projections of ancillary results
in the short term from the latest projections used in the analysis performed during the first quarter of 2007. One non-contracted ancillary customer was lost subsequent to the first quarter analysis as well as some temporary declines from ancillary
business received from other customers.

The impairment and disposal of long-lived assets is accounted for in accordance with SFAS No. 144,
Accounting for the Impairment or Disposal of Long-Lived Assets, (SFAS 144). SFAS 144 requires that long-lived assets, such as property and equipment and intangible assets subject to amortization, be reviewed for
impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Certain factors which may occur and indicate that an impairment exists include, but are not limited to: (i) significant
underperformance relative to expected historical or projected future operating results; (ii) significant changes in the manner of the Companys use of the underlying assets; and (iii) significant adverse industry or market economic
trends.

In the event that the carrying value of assets are determined to be unrecoverable, the Company would estimate the fair value of the assets or
reporting unit and record an impairment charge for the excess of the carrying value over the fair value. Management must make assumptions regarding estimated future cash flows, revenues, earnings, and other factors to determine the fair value of
these respective assets. If these estimates or related assumptions change in the future, the Company may be required to record an impairment charge. Impairment charges would be included in general and administrative expenses in the accompanying
statements of operations, and would result in reduced carrying amounts of the related assets in the accompanying balance sheets. With the exception of the goodwill impairment of the intangible assets discussed above, management does not believe
there were any circumstances which indicated that the carrying value of any other asset may not be recoverable.



|ITEM 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|-------- | ----------------------------------------------------------

Due to
the significant amount of indebtedness that we have incurred in connection with the Transactions, we are exposed to interest rate risk. Pursuant to the terms of our senior secured revolving credit facility, we are required to enter into interest
rate swap contracts such that at least 50% of all of our and our parents indebtedness is subject to fixed interest rate protection. Based on our current hedging positions, under which we have secured a fixed rate for over 50% of our
indebtedness outstanding at December 31, 2007, a 1% increase in interest rates would result in an increase in interest expense of $0.9 million.



42



---

|ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|------- | -------------------------------------------

INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS



|                                                                                                     |  |     
|---------------------------------------------------------------------------------------------------- |  | ----
|                                                                                                     |  | Page
|                                                                                                     | 
|Report of Independent Registered Public Accounting Firm                                              |  | F-2 
|                                                                                                     | 
|Consolidated Balance SheetsDecember 31, 2007 and 2006                                               |  | F-3 
|                                                                                                     | 
|Consolidated Statements of Operations for the Years Ended December 31, 2007, 2006 and 2005           |  | F-5 
|                                                                                                     | 
|Consolidated Statements of Stockholders Equity for the Years Ended December 31, 2007, 2006 and 2005 |  | F-6 
|                                                                                                     | 
|Consolidated Statements of Cash Flows for the Years Ended December 31, 2007, 2006 and 2005           |  | F-7 
|                                                                                                     | 
|Notes to Consolidated Financial Statements                                                           |  | F-8 



F - 1



---

Report of Independent Registered Public Accounting Firm

The Board of Directors

MSC  Medical Services Company

We have audited the accompanying
consolidated balance sheets of MSC  Medical Services Company (the Company) as of December 31, 2007 and 2006, and the related consolidated statements of operations, stockholders equity, and cash flows for the years ended
December 31, 2007 and 2006, the period April 1, 2005 to December 31, 2005 (Successor), and the period January 1, 2005 to March 31, 2005 (Predecessor). These financial statements are the responsibility of the Companys
management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the
auditing standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.
An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Companys internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of MSC  Medical Services
Company at December 31, 2007 and 2006, and the results of its operations and its cash flows for the years ended December 31, 2007 and 2006, the period April 1, 2005 to December 31, 2005 (Successor), and the period January 1,
2005 to March 31, 2005 (Predecessor) in conformity with U.S. generally accepted accounting principles.

As discussed in Note 2 to the financial
statements, the Company adopted Statement of Financial Accounting Standards No. 123R, Share-Based Payments in 2006.



/s/ Ernst & Young LLP




|                
|----------------
|Jacksonville, FL
|March 26, 2008  



F - 2



---

MSC-Medical Services Company

Consolidated Balance Sheets

December 31, 2007 and 2006

(Dollars in thousands, except share data)



|                                                                                              |  |      |         |      |   |        
|--------------------------------------------------------------------------------------------- |  | ---- | ------- | ---- | - | -------
|                                                                                              |  | 2007 |         | 2006
|Assets                                                                                        |  |      |         |      |   |        
|Current assets:                                                                               |  |      |         |      |   |        
|Cash                                                                                          |  | $    | 5,750   |      | $ | 6,101  
|Accounts receivable, less allowance of $19,553 and $18,795 in 2007 and 2006                   |  |      | 57,858  |      |   | 63,537 
|Income tax receivable                                                                         |  |      | 398     |      |   |       
|Other current assets                                                                          |  |      | 734     |      |   | 1,254  
|Current deferred income taxes                                                                 |  |      | 7,642   |      |   | 7,965  
|                                                                                              |  |      |         |      |   |        
|Total current assets                                                                          |  |      | 72,382  |      |   | 78,857 
|Property and equipment, net of accumulated depreciation of $7,485 and $5,196 in 2007 and 2006 |  |      | 8,034   |      |   | 5,801  
|Intangible assets:                                                                            |  |      |         |      |   |        
|Goodwill                                                                                      |  |      | 196,091 |      |   | 236,207
|Trademarks                                                                                    |  |      | 15,700  |      |   | 24,100 
|Vendor contracts, net                                                                         |  |      | 18,053  |      |   | 20,543 
|Customer relationships, net                                                                   |  |      | 63,509  |      |   | 69,688 
|                                                                                              |  |      |         |      |   |        
|Total intangible assets                                                                       |  |      | 293,353 |      |   | 350,538
|Other assets:                                                                                 |  |      |         |      |   |        
|Deferred debt issuance costs, net                                                             |  |      | 3,820   |      |   | 4,959  
|Other                                                                                         |  |      | 154     |      |   | 921    
|                                                                                              |  |      |         |      |   |        
|Total other assets                                                                            |  |      | 3,974   |      |   | 5,880  
|                                                                                              |  |      |         |      |   |        
|Total assets                                                                                  |  | $    | 377,743 |      | $ | 441,076
|                                                                                              |  |      |         |      |   |        

See notes to financial statements.



F - 3



---

MSC-Medical Services Company

Consolidated Balance SheetsContinued

December 31, 2007 and 2006

(Dollars in thousands, except share data)



|                                                                                          |  |      |         |   |      |   |         |  
|----------------------------------------------------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | -
|                                                                                          |  | 2007 |         |   | 2006 |  
|Liabilities and stockholders equity                                                      |  |      |         |   |      |   |         |  
|Current liabilities:                                                                      |  |      |         |   |      |   |         |  
|Short-term debt                                                                           |  | $    | 18,620  |   |      | $ | 20,120  |  
|Accounts payable                                                                          |  |      | 6,328   |   |      |   | 11,874  |  
|Accrued expenses                                                                          |  |      | 39,205  |   |      |   | 42,369  |  
|Due to former owners                                                                      |  |      |        |   |      |   | 3,366   |  
|Deferred revenue                                                                          |  |      | 373     |   |      |   | 185     |  
|Income taxes payable                                                                      |  |      |        |   |      |   | 48      |  
|                                                                                          |  |      |         |   |      |   |         |  
|Total current liabilities                                                                 |  |      | 64,526  |   |      |   | 77,962  |  
|Non-current liabilities:                                                                  |  |      |         |   |      |   |         |  
|Long-term debt, less current portion                                                      |  |      | 149,145 |   |      |   | 148,895 |  
|Other liabilities                                                                         |  |      | 797     |   |      |   |        |  
|Deferred income taxes                                                                     |  |      | 20,865  |   |      |   | 30,544  |  
|                                                                                          |  |      |         |   |      |   |         |  
|Total non-current liabilities                                                             |  |      | 170,807 |   |      |   | 179,439 |  
|                                                                                          |  |      |         |   |      |   |         |  
|Total liabilities                                                                         |  |      | 235,333 |   |      |   | 257,401 |  
|                                                                                          |  |      |         |   |      |   |         |  
|Stockholders equity:                                                                     |  |      |         |   |      |   |         |  
|Common stock, $1.00 par value, 1,000 shares authorized, 100 shares issued and outstanding |  |      |         |   |      |   |         |  
|Additional paid-in capital                                                                |  |      | 216,090 |   |      |   | 214,643 |  
|Accumulated other comprehensive (loss) income                                             |  |      | (778    | ) |      |   | 561     |  
|Retained deficit                                                                          |  |      | (72,902 | ) |      |   | (31,529 | )
|                                                                                          |  |      |         |   |      |   |         |  
|Total stockholders equity                                                                |  |      | 142,410 |   |      |   | 183,675 |  
|                                                                                          |  |      |         |   |      |   |         |  
|Total liabilities and stockholders equity                                                |  | $    | 377,743 |   |      | $ | 441,076 |  
|                                                                                          |  |      |         |   |      |   |         |  

See notes to financial statements.



F - 4



---

MSC-Medical Services Company

Consolidated Statements of Operations

(Dollars in thousands, except share data)



|                                             |  |                        |         |   |                        |   |         |                                                  |  |   |                           |   |  |   |         |  
|-------------------------------------------- |  | ---------------------- | ------- | - | ---------------------- | - | ------- | ------------------------------------------------ |  | - | ------------------------- | - |  | - | ------- | -
|                                             |  | Successor              |         |   | Predecessor            |  
|                                             |  | Year EndedDecember 31, |         |   | Year EndedDecember 31, |   |         | Post-Acquisitionand NineMonths EndedDecember 31, |  |   | ThreeMonthsEndedMarch 31, |  
|                                             |  | 2007                   |         |   | 2006                   |   |         | 2005                                             |  |   | 2005                      |  
|Net Revenue:                                 |  |                        |         |   |                        |   |         |                                                  |  |   |                           |   |  |   |         |  
|Pharmaceutical                               |  | $                      | 166,070 |   |                        | $ | 174,431 |                                                  |  | $ | 122,685                   |   |  | $ | 37,278  |  
|Medical Products                             |  |                        | 87,113  |   |                        |   | 92,200  |                                                  |  |   | 67,563                    |   |  |   | 24,181  |  
|Medical Services                             |  |                        | 59,837  |   |                        |   | 58,259  |                                                  |  |   | 36,303                    |   |  |   | 13,601  |  
|                                             |  |                        |         |   |                        |   |         |                                                  |  |   |                           |   |  |   |         |  
|Total Net Revenue                            |  |                        | 313,020 |   |                        |   | 324,890 |                                                  |  |   | 226,551                   |   |  |   | 75,060  |  
|Cost of Revenue:                             |  |                        |         |   |                        |   |         |                                                  |  |   |                           |   |  |   |         |  
|Pharmaceutical                               |  |                        | 137,831 |   |                        |   | 146,993 |                                                  |  |   | 105,502                   |   |  |   | 31,606  |  
|Medical Products                             |  |                        | 64,826  |   |                        |   | 70,143  |                                                  |  |   | 51,272                    |   |  |   | 18,724  |  
|Medical Services                             |  |                        | 45,299  |   |                        |   | 43,643  |                                                  |  |   | 28,637                    |   |  |   | 10,725  |  
|                                             |  |                        |         |   |                        |   |         |                                                  |  |   |                           |   |  |   |         |  
|Total Cost of Revenue                        |  |                        | 247,956 |   |                        |   | 260,779 |                                                  |  |   | 185,411                   |   |  |   | 61,055  |  
|                                             |  |                        |         |   |                        |   |         |                                                  |  |   |                           |   |  |   |         |  
|Gross profit                                 |  |                        | 65,064  |   |                        |   | 64,111  |                                                  |  |   | 41,140                    |   |  |   | 14,005  |  
|Operating expenses                           |  |                        | 45,655  |   |                        |   | 44,741  |                                                  |  |   | 27,204                    |   |  |   | 11,706  |  
|Impairment of goodwill and other intangibles |  |                        | 48,516  |   |                        |   |        |                                                  |  |   |                          |   |  |   |        |  
|Transaction expenses                         |  |                        |        |   |                        |   |        |                                                  |  |   |                          |   |  |   | 24,697  |  
|Adjustment for accounts receivable           |  |                        |        |   |                        |   |        |                                                  |  |   | 18,527                    |   |  |   |        |  
|Adjustment for state sales tax               |  |                        |        |   |                        |   |        |                                                  |  |   | 3,047                     |   |  |   |        |  
|Depreciation and amortization                |  |                        | 11,909  |   |                        |   | 11,990  |                                                  |  |   | 8,273                     |   |  |   | 785     |  
|Net loss on disposal of fixed assets         |  |                        | 15      |   |                        |   |        |                                                  |  |   |                          |   |  |   |        |  
|Litigation settlement                        |  |                        | (12,363 | ) |                        |   |        |                                                  |  |   |                          |   |  |   |        |  
|                                             |  |                        |         |   |                        |   |         |                                                  |  |   |                           |   |  |   |         |  
|Total Expenses                               |  |                        | 93,732  |   |                        |   | 56,731  |                                                  |  |   | 57,051                    |   |  |   | 37,188  |  
|                                             |  |                        |         |   |                        |   |         |                                                  |  |   |                           |   |  |   |         |  
|Operating income (loss)                      |  |                        | (28,668 | ) |                        |   | 7,380   |                                                  |  |   | (15,911                   | ) |  |   | (23,183 | )
|Interest expense (net)                       |  |                        | 21,400  |   |                        |   | 20,945  |                                                  |  |   | 21,374                    |   |  |   | 969     |  
|Loss before income tax benefit               |  |                        | (50,068 | ) |                        |   | (13,565 | )                                                |  |   | (37,285                   | ) |  |   | (24,152 | )
|Income tax benefit                           |  |                        | (8,695  | ) |                        |   | (5,093  | )                                                |  |   | (14,228                   | ) |  |   | (9,466  | )
|                                             |  |                        |         |   |                        |   |         |                                                  |  |   |                           |   |  |   |         |  
|Net loss                                     |  | $                      | (41,373 | ) |                        | $ | (8,472  | )                                                |  | $ | (23,057                   | ) |  | $ | (14,686 | )
|                                             |  |                        |         |   |                        |   |         |                                                  |  |   |                           |   |  |   |         |  

See notes to financial statements.



F - 5



---

MSC-Medical Services Company

Consolidated Statements of Changes in Stockholders Equity

(Dollars in thousands)



|                                                                 |  |                      |  |             |     |                          |   |                              |  |                 |  |   |                                             |   |  |       |        |   |  |   |         |  
|---------------------------------------------------------------- |  | -------------------- |  | ----------- | --- | ------------------------ | - | ---------------------------- |  | --------------- |  | - | ------------------------------------------- | - |  | ----- | ------ | - |  | - | ------- | -
|                                                                 |  | Shares ofCommonStock |  | CommonStock |     | AdditionalPaid-inCapital |   | WarrantstoAcquireCommonStock |  | RetainedDeficit |  |   | Accumulated othercomprehensiveincome/(loss) |   |  | Total |       
|(Predecessor)                                                    |  |                      |  |             |     |                          |   |                              |  |                 |  |   |                                             |   |  |       |        |   |  |   |         |  
|Balance at December 31, 2004                                     |  | 10,000,000           |  | $           | 100 |                          | $ | 7,983                        |  | 175             |  | $ | 14,265                                      |   |  |       |       |   |  | $ | 22,523  |  
|Net loss for the three months ended March 31, 2005               |  |                     |  |             |    |                          |   |                             |  |                |  |   | (14,686                                     | ) |  |       |       |   |  |   | (14,686 | )
|Stock-based compensation                                         |  |                     |  |             |    |                          |   | 4,266                        |  |                |  |   |                                            |   |  |       |       |   |  |   | 4,266   |  
|                                                                 |  |                      |  |             |     |                          |   |                              |  |                 |  |   |                                             |   |  |       |        |   |  |   |         |  
|Balance at March 31, 2005                                        |  | 10,000,000           |  | $           | 100 |                          | $ | 12,249                       |  | 175             |  | $ | (421                                        | ) |  | $     |       |   |  | $ | 12,103  |  
|                                                                 |  |                      |  |             |     |                          |   |                              |  |                 |  |   |                                             |   |  |       |        |   |  |   |         |  
|(Successor)                                                      |  |                      |  |             |     |                          |   |                              |  |                 |  |   |                                             |   |  |       |        |   |  |   |         |  
|Balance at April 1, 2005                                         |  | 100                  |  | $           |    |                          | $ |                             |  |                |  | $ |                                            |   |  | $     |       |   |  | $ |        |  
|Carryover basis                                                  |  |                     |  |             |    |                          |   | 3,277                        |  |                |  |   |                                            |   |  |       |       |   |  |   | 3,277   |  
|Parent equity investment                                         |  |                     |  |             |    |                          |   | 181,375                      |  |                |  |   |                                            |   |  |       |       |   |  |   | 181,375 |  
|Parent contribution                                              |  |                     |  |             |    |                          |   | 28,873                       |  |                |  |   |                                            |   |  |       |       |   |  |   | 28,873  |  
|Net loss for the nine months ended December 31, 2005 (Successor) |  |                     |  |             |    |                          |   |                             |  |                |  |   | (23,057                                     | ) |  |       |       |   |  |   | (23,057 | )
|Unrealized gain on derivatives (net of taxes of $221)            |  |                     |  |             |    |                          |   |                             |  |                |  |   |                                            |   |  |       | 353    |   |  |   | 353     |  
|                                                                 |  |                      |  |             |     |                          |   |                              |  |                 |  |   |                                             |   |  |       |        |   |  |   |         |  
|                                                                 |  |                      |  |             |     |                          |   |                              |  |                 |  |   |                                             |   |  | $     | 353    |   |  | $ | (22,704 | )
|                                                                 |  |                      |  |             |     |                          |   |                              |  |                 |  |   |                                             |   |  |       |        |   |  |   |         |  
|Balance at December 31, 2005                                     |  | 100                  |  | $           |    |                          | $ | 213,525                      |  |                |  | $ | (23,057                                     | ) |  | $     | 353    |   |  | $ | 190,821 |  
|                                                                 |  |                      |  |             |     |                          |   |                              |  |                 |  |   |                                             |   |  |       |        |   |  |   |         |  
|Net loss for the year ended December 31, 2006                    |  |                     |  |             |    |                          |   |                             |  |                |  |   | (8,472                                      | ) |  |       |       |   |  |   | (8,472  | )
|Unrealized gain on derivatives (net of taxes of $131)            |  |                     |  |             |    |                          |   |                             |  |                |  |   |                                            |   |  |       | 208    |   |  |   | 208     |  
|                                                                 |  |                      |  |             |     |                          |   |                              |  |                 |  |   |                                             |   |  |       |        |   |  |   |         |  
|                                                                 |  |                      |  |             |     |                          |   |                              |  |                 |  |   |                                             |   |  | $     | 208    |   |  | $ | (8,264  | )
|                                                                 |  |                      |  |             |     |                          |   |                              |  |                 |  |   |                                             |   |  |       |        |   |  |   |         |  
|Stock-based compensation                                         |  |                     |  |             |    |                          |   | 1,118                        |  |                |  |   |                                            |   |  |       |       |   |  |   | 1,118   |  
|                                                                 |  |                      |  |             |     |                          |   |                              |  |                 |  |   |                                             |   |  |       |        |   |  |   |         |  
|Balance at December 31, 2006                                     |  | 100                  |  | $           |    |                          | $ | 214,643                      |  |                |  | $ | (31,529                                     | ) |  | $     | 561    |   |  | $ | 183,675 |  
|                                                                 |  |                      |  |             |     |                          |   |                              |  |                 |  |   |                                             |   |  |       |        |   |  |   |         |  
|Net loss for the year ended December 31, 2007                    |  |                     |  |             |    |                          |   |                             |  |                |  |   | (41,373                                     | ) |  |       |       |   |  |   | (41,373 | )
|Unrealized loss on derivatives (net of taxes of $473)            |  |                     |  |             |    |                          |   |                             |  |                |  |   |                                            |   |  |       | (1,339 | ) |  |   | (1,339  | )
|                                                                 |  |                      |  |             |     |                          |   |                              |  |                 |  |   |                                             |   |  |       |        |   |  |   |         |  
|                                                                 |  |                      |  |             |     |                          |   |                              |  |                 |  |   |                                             |   |  | $     | (1,339 | ) |  | $ | (42,712 | )
|                                                                 |  |                      |  |             |     |                          |   |                              |  |                 |  |   |                                             |   |  |       |        |   |  |   |         |  
|Stock-based compensation                                         |  |                     |  |             |    |                          |   | 1,207                        |  |                |  |   |                                            |   |  |       |       |   |  |   | 1,207   |  
|Stock issued for services                                        |  |                     |  |             |    |                          |   | 240                          |  |                |  |   |                                            |   |  |       |       |   |  |   | 240     |  
|                                                                 |  |                      |  |             |     |                          |   |                              |  |                 |  |   |                                             |   |  |       |        |   |  |   |         |  
|Balance at December 31, 2007                                     |  | 100                  |  | $           |    |                          | $ | 216,090                      |  |                |  | $ | (72,902                                     | ) |  | $     | (778   | ) |  | $ | 142,410 |  
|                                                                 |  |                      |  |             |     |                          |   |                              |  |                 |  |   |                                             |   |  |       |        |   |  |   |         |  

See notes to financial statements.



F - 6



---

MSC-Medical Services Company

Consolidated Statements of Cash Flows

(Dollars in thousands)



|                                                                               |  |                            |         |   |                            |   |         |                                                      |  |   |                                 |   |  |   |         |  
|------------------------------------------------------------------------------ |  | -------------------------- | ------- | - | -------------------------- | - | ------- | ---------------------------------------------------- |  | - | ------------------------------- | - |  | - | ------- | -
|                                                                               |  |                            |         |   | Successor                  |   |         | Predecessor                                          | 
|                                                                               |  | Year EndedDecember 31,2007 |         |   | Year EndedDecember 31,2006 |   |         | Post-Acquisitionand NineMonths EndedDecember 31,2005 |  |   | Three MonthsEnded March 31,2005 |  
|Operating activities                                                           |  |                            |         |   |                            |   |         |                                                      |  |   |                                 |   |  |   |         |  
|Net loss                                                                       |  | $                          | (41,373 | ) |                            | $ | (8,472  | )                                                    |  | $ | (23,057                         | ) |  | $ | (14,686 | )
|Adjustments to reconcile net loss to net cash provided by (used in) operating: |  |                            |         |   |                            |   |         |                                                      |  |   |                                 |   |  |   |         |  
|Depreciation                                                                   |  |                            | 3,241   |   |                            |   | 3,322   |                                                      |  |   | 1,782                           |   |  |   | 544     |  
|Impairment of goodwill and other intangible assets                             |  |                            | 48,516  |   |                            |   |        |                                                      |  |   |                                |   |  |   |        |  
|Amortization of intangibles                                                    |  |                            | 8,668   |   |                            |   | 8,668   |                                                      |  |   | 6,502                           |   |  |   | 241     |  
|Amortization of debt issuance costs and debt discount                          |  |                            | 1,326   |   |                            |   | 1,337   |                                                      |  |   | 7,436                           |   |  |   | 183     |  
|Provision for deferred income taxes                                            |  |                            | (9,168  | ) |                            |   | (5,098  | )                                                    |  |   | (5,208                          | ) |  |   | (12,313 | )
|Provision for bad debts                                                        |  |                            | 7,466   |   |                            |   | 7,576   |                                                      |  |   | 4,853                           |   |  |   | 637     |  
|Adjustment for accounts receivables                                            |  |                            |        |   |                            |   |        |                                                      |  |   | 18,527                          |   |  |   |        |  
|Adjustment for state sales tax                                                 |  |                            |        |   |                            |   |        |                                                      |  |   | 3,047                           |   |  |   |        |  
|Stock-based compensation                                                       |  |                            | 1,207   |   |                            |   | 1,118   |                                                      |  |   |                                |   |  |   | 4,266   |  
|Non-cash gain on litigation settlement                                         |  |                            | (3,366  | ) |                            |   |        |                                                      |  |   |                                |   |  |   |        |  
|Other                                                                          |  |                            | (41     | ) |                            |   |        |                                                      |  |   |                                |   |  |   |        |  
|Parent contribution for consulting expense                                     |  |                            | 240     |   |                            |   |        |                                                      |  |   |                                |   |  |   |        |  
|Changes in operating assets and liabilities:                                   |  |                            |         |   |                            |   |         |                                                      |  |   |                                 |   |  |   |         |  
|Accounts receivable                                                            |  |                            | (1,787  | ) |                            |   | (14,625 | )                                                    |  |   | (8,384                          | ) |  |   | (4,264  | )
|Other current assets                                                           |  |                            | 521     |   |                            |   | (397    | )                                                    |  |   | 849                             |   |  |   | 262     |  
|Other non-current assets                                                       |  |                            | (146    | ) |                            |   | (112    | )                                                    |  |   |                                 |   |  |   |         |  
|Accounts payable accrued expenses & other                                      |  |                            | (9,542  | ) |                            |   | 7,312   |                                                      |  |   | 8,071                           |   |  |   | (1,471  | )
|Transaction expenses                                                           |  |                            |        |   |                            |   |        |                                                      |  |   | (24,697                         | ) |  |   | 24,697  |  
|Deferred revenue                                                               |  |                            | 188     |   |                            |   | 18      |                                                      |  |   | (70                             | ) |  |   | 42      |  
|Income taxes payable/receivable                                                |  |                            | (248    | ) |                            |   | 6,660   |                                                      |  |   | (8,946                          | ) |  |   | 1,945   |  
|                                                                               |  |                            |         |   |                            |   |         |                                                      |  |   |                                 |   |  |   |         |  
|Net cash provided by (used in) operating activities                            |  |                            | 5,662   |   |                            |   | 7,307   |                                                      |  |   | (19,295                         | ) |  |   | 83      |  
|Investing activities                                                           |  |                            |         |   |                            |   |         |                                                      |  |   |                                 |   |  |   |         |  
|Payments in connection with business acquisition                               |  |                            |        |   |                            |   |        |                                                      |  |   | (296,257                        | ) |  |   |        |  
|Purchases of property and equipment                                            |  |                            | (4,583  | ) |                            |   | (3,972  | )                                                    |  |   | (2,412                          | ) |  |   | (364    | )
|Proceeds from disposal of property & equipment                                 |  |                            | 70      |   |                            |   |        |                                                      |  |   |                                |   |  |   |        |  
|Payment to former owners                                                       |  |                            |        |   |                            |   | (8,803  | )                                                    |  |   |                                |   |  |   | (4,500  | )
|                                                                               |  |                            |         |   |                            |   |         |                                                      |  |   |                                 |   |  |   |         |  
|Net cash used in investing activities                                          |  |                            | (4,513  | ) |                            |   | (12,775 | )                                                    |  |   | (298,669                        | ) |  |   | (4,864  | )
|                                                                               |  |                            |         |   |                            |   |         |                                                      |  |   |                                 |   |  |   |         |  
|Financing activities                                                           |  |                            |         |   |                            |   |         |                                                      |  |   |                                 |   |  |   |         |  
|Proceeds from short-term debt                                                  |  |                            | 2,000   |   |                            |   | 3,500   |                                                      |  |   | 16,620                          |   |  |   | 3,500   |  
|Repayment on short-term debt                                                   |  |                            | (3,500  | ) |                            |   |        |                                                      |  |   | (19,000                         | ) |  |   |        |  
|Proceeds from long-term debt                                                   |  |                            |        |   |                            |   |        |                                                      |  |   | 323,500                         |   |  |   |        |  
|Repayment on long-term debt                                                    |  |                            |        |   |                            |   | (231    | )                                                    |  |   | (192,000                        | ) |  |   |        |  
|Debt issuance costs                                                            |  |                            |        |   |                            |   |        |                                                      |  |   | (13,104                         | ) |  |   |        |  
|Capital contribution from Parent company                                       |  |                            |        |   |                            |   |        |                                                      |  |   | 210,248                         |   |  |   |        |  
|Other                                                                          |  |                            |        |   |                            |   |        |                                                      |  |   |                                |   |  |   | (9      | )
|                                                                               |  |                            |         |   |                            |   |         |                                                      |  |   |                                 |   |  |   |         |  
|Net cash (used in) provided by financing activities                            |  |                            | (1,500  | ) |                            |   | 3,269   |                                                      |  |   | 326,264                         |   |  |   | 3,491   |  
|                                                                               |  |                            |         |   |                            |   |         |                                                      |  |   |                                 |   |  |   |         |  
|Net increase (decrease) in cash                                                |  |                            | (351    | ) |                            |   | (2,199  | )                                                    |  |   | 8,300                           |   |  |   | (1,290  | )
|Cash, beginning of period                                                      |  |                            | 6,101   |   |                            |   | 8,300   |                                                      |  |   |                                |   |  |   | 1,290   |  
|                                                                               |  |                            |         |   |                            |   |         |                                                      |  |   |                                 |   |  |   |         |  
|Cash, end of period                                                            |  | $                          | 5,750   |   |                            | $ | 6,101   |                                                      |  | $ | 8,300                           |   |  | $ | 0       |  
|                                                                               |  |                            |         |   |                            |   |         |                                                      |  |   |                                 |   |  |   |         |  
|Supplemental disclosure of cash flow information:                              |  |                            |         |   |                            |   |         |                                                      |  |   |                                 |   |  |   |         |  
|Income taxes paid                                                              |  | $                          | 255     |   |                            | $ | 732     |                                                      |  | $ | 1,265                           |   |  | $ | 1,604   |  
|                                                                               |  |                            |         |   |                            |   |         |                                                      |  |   |                                 |   |  |   |         |  
|Interest paid                                                                  |  |                            | 21,292  |   |                            |   | 19,886  |                                                      |  |   | 9,628                           |   |  |   | 676     |  
|                                                                               |  |                            |         |   |                            |   |         |                                                      |  |   |                                 |   |  |   |         |  

The Company financed the purchase of certain leasehold improvements of $1 million through the lessor of the leased
property.



F - 7



---

MSC  Medical Services Company

Notes to Consolidated Financial Statements

December 31, 2007, 2006 and 2005

(Dollar
amounts in thousands except per share data, unless otherwise stated)

1. Description of Business

MSC  Medical Services Company (the Company or MSC) is a provider of healthcare products and services for the workers compensation industry
in the United States. The Company provides workers compensation payors, such as insurers and third party administrators, with a quality alternative to the costly and time-consuming process of coordinating the logistics for the delivery of non-acute
care needs to their claimants. MSC currently manages relationships with over 7,000 vendors, enabling it to provide over 20,000 healthcare products and services to workers compensation patients throughout the United States.

On March 31, 2005, through a series of transactions, all of the issued and outstanding stock of MSCMedical Services Company was acquired (the
Acquisition) by MCP-MSC Acquisition, Inc. (the Parent), a Delaware corporation formed by investment funds affiliated with Monitor Clipper Partners, LLC, certain other institutional investors and members of management. The
total cost of the Acquisition was $369.0 million, including actual transaction fees, expenses and repayment of existing debt and a $0.4 million working capital adjustment paid in July 2005.

The funds necessary to complete the Acquisition (the Financings) were provided by: (i) $9.0 million of borrowings under the $40.0 million senior secured
revolving credit facility; (ii) $175.0 million of borrowings under a senior secured term loan facility; (iii) a $179.9 million aggregate cash equity investment by investment funds affiliated with Monitor Clipper Partners, LLC and certain
other institutional investors; (iv) $4.7 million of rollover equity from certain members of the Companys management; and (v) $0.4 million in Company cash balance for funding of the subsequent working capital adjustment. On
May 12, 2005, the Parent issued $38.7 million principal amount at maturity of 13.50% Senior Discount Notes and contributed net proceeds from offering of $28.9 million, to the Company.

2. Summary of Significant Accounting Policies

Basis of
Presentation

The accompanying consolidated financial statements have been prepared in accordance
with U.S. generally accepted accounting principles (GAAP) and include the accounts of MSC. The Company reports its year-end financial position, results of operations, and cash flows on December 31st.

The consolidated balance sheet as of December 31, 2007 and the consolidated
statement of operations and consolidated cash flows for the year ended December 31, 2006 is those of MSC (Successor) and subsidiaries. The statement of operations and cash flows for the post Acquisition activity since March 31,
2005 are that of MSC (Successor). The statement of operations and cash flows for the three months ended March 31, 2005, are those of MSC Acquisition, Inc. (Predecessor).



F - 8



---

MSC  Medical Services Company

Notes to Consolidated Financial Statements (Continued)



The preparation of these consolidated financial statements in conformity with GAAP requires management to make
estimates and assumptions about future events that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues
and expenses during the reporting period.

Cash

Cash
includes currency on hand and demand deposits with banks and other financial institutions.

Accounts Receivable

The Company invoices its customers with general payment terms of 30  60 days from invoice date as required in certain instances by state statutes governing the
workers compensation industry. Credit is extended to the Companys customers and collateral is not required.

Accounts receivable includes
billed and estimated unbilled receivables and is comprised primarily of amounts due from third-party payors. The Company values its receivables at the net amount it expects to receive from the third-party payors. The Company collects a substantial
portion of its receivables within 12 months; however, the collection period of some receivables ranges from 24 to 36 months and in some cases beyond.

Allowance for Doubtful Accounts

Additions to the allowance for doubtful accounts are made by means of the provision for bad debts which is
based upon managements assessment of historical and expected collections and other collection indicators. The provision for bad debts includes reserves for specific high-collection risk customer accounts and reserves for other customer
collection risks. Such reserves and estimation factors are reviewed and updated periodically as uncollectible accounts are deducted from the allowance, and subsequent recoveries are added.

Below is a roll forward of the allowance for doubtful accounts (in thousands):



F - 9



---

MSC  Medical Services Company

Notes to Consolidated Financial Statements (Continued)



|                                |  |                              |        |                                 |   |                         |  |   |            |      |  |                            |         |   |  |   |       
|------------------------------- |  | ---------------------------- | ------ | ------------------------------- | - | ----------------------- |  | - | ---------- | ---- |  | -------------------------- | ------- | - |  | - | ------
|                                |  |                              |        | Additions                       |   |                         |  |   |            |     
|(in thousands) Description      |  | Balance atBeginningof Period |        | Charged toCosts andExpenses (1) |   | Chargedto OtherAccounts |  |   | Write-offs |      |  | Balance atEnd ofPeriod (2)
|Year Ended December 31, 2005    |  |                              |        |                                 |   |                         |  |   |            |      |  |                            |         |   |  |   |       
|Allowance for doubtful accounts |  | $                            | 3,935  |                                 | $ | 24,017                  |  | $ | 327        |      |  | $                          | (11,090 | ) |  | $ | 17,189
|Year Ended December 31, 2006    |  |                              |        |                                 |   |                         |  |   |            |      |  |                            |         |   |  |   |       
|Allowance for doubtful accounts |  | $                            | 17,189 |                                 | $ | 8,121                   |  | $ | (545       | )(3) |  | $                          | (6,478  | ) |  | $ | 18,287
|Year Ended December 31, 2007    |  |                              |        |                                 |   |                         |  |   |            |      |  |                            |         |   |  |   |       
|Allowance for doubtful accounts |  | $                            | 18,287 |                                 | $ | 8,107                   |  | $ | (589       | )(3) |  | $                          | (6,903  | ) |  | $ | 18,902



|(1) | Represents the provision for doubtful accounts receivable.
|--- | ----------------------------------------------------------

|(2) | This amount excludes the reserve for sales allowances of $0.7 million and $0.5 million for the years ended December 31, 2007 and 2006, respectively.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Amount represents release of reserve to income during the year.
|--- | ---------------------------------------------------------------

Bad debt
expense, net for the year ended December 31, 2007, 2006 and 2005 was approximately $7.5 million, $7.6 million and $5.5 million, respectively. In addition, the Company recorded adjustments to the allowance for doubtful accounts of approximately
$18.5 million for the year ended December 31, 2005 (See footnote 17  Adjustment to Net Accounts Receivable Balance).

Excluding the $18.5
million charge in 2005, the increase from fiscal 2005 to 2006 is a result of a change in the factor utilized to estimate future bad debt-expense based on current period billings to 2.5% of net revenues for the year ended December 31, 2006
versus 0.85% for the first quarter of 2005 and 1.4% in the second quarter of 2005 and 2.5% for the last two quarters of 2005. The estimation factor increased as a result of an analysis performed during the third quarter of 2005 that indicated that
the factor being used should be increased to address the collection risk of the Companys portfolio of receivables. The Company has continued to use the 2.5% provisioning rate since the second half of 2005.

Property and Equipment

Property and equipment is stated at
historical cost. Upon disposal, costs of property and equipment and related accumulated depreciation are removed from the accounts with any resulting gain or loss reflected in the results of operations. Maintenance and repairs are charged to current
operations as incurred. For financial reporting purposes, depreciation is computed using the straight-line method.



F - 10



---

MSC  Medical Services Company

Notes to Consolidated Financial Statements (Continued)



Internally developed computer software costs, including internal development time, are capitalized and amortized in
accordance with Statement of Position 98-1, Accounting for Costs of Computer Software Developed or Obtained for Internal Use.

Impairment of Long-Lived
Assets

Goodwill represents the excess purchase price paid over net assets acquired resulting from the application of the purchase method of accounting.
Goodwill is tested annually for impairment.

Under Statement of Financial Accounting Standards (SFAS) No. 142, Goodwill and Other
Intangible Assets, goodwill and intangible assets with indefinite lives are no longer amortized but are reviewed at least annually for impairment. The Company performed its annual impairment review of goodwill and trademarks as of the
measurement date, October 31, for fiscal year 2007, which indicated a goodwill impairment of $40.1 million and trademark impairment of $8.4 million. See footnote No. 5 for balances and changes in goodwill and intangible assets.

The Company evaluates its long-lived assets for impairment whenever circumstances indicate that the carrying amount of the asset may not be recoverable from estimated
future cash flows, in accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. There were no impairment losses recognized for the years ended December 31, 2007, 2006 and 2005 under SFAS
No. 144.

Debt Issuance Costs

Costs incurred
related to debt financings have been capitalized and are being amortized over the terms of the debt using the effective interest method. Amortization of deferred debt issuance costs is included in interest expense in the accompanying statement of
operations.

Revenue Recognition

The Company
recognizes revenue from product sales and services in the period that the service or rental activity occurs after obtaining a referral and authorization (either written or verbal) from the payor. Estimated provisions for sales allowances are
recorded, if necessary, in the period the sale is recorded as a reduction to revenue. As of December 31, 2007 and 2006, the reserve for sales allowance was approximately $0.7 million and $0.5 million, respectively, and is included in the
allowance for doubtful accounts balance.

Unbilled accounts receivable represents those transactions for which services have been performed but for which
the Company is awaiting final cost information from its service provider. The Company estimates this portion of earned but unbilled revenue and the corresponding receivable monthly, based on historical trends and estimation methodologies. These
estimates are adjusted in subsequent periods when information becomes available from the service providers. Historically, these estimates have reasonably



F - 11



---

MSC  Medical Services Company

Notes to Consolidated Financial Statements (Continued)



approximated the level of revenue actually billed to payors in the relevant period. As of December 31, 2007 and 2006, unbilled receivables were
approximately 33.7% and 21.9%, respectively, of total accounts receivable.

The Company generally does not charge additional amounts to customers for
shipping and handling costs as any such costs are included in the sales price. The Company includes all of its costs of shipping and handling in operating expenses (approximately $0.6 million for the years ended December 31, 2007 and 2006, and
$0.9 million for 2005).

The Companys revenues are derived from the following:

Pharmacy Benefit Management and Mail Order Pharmacy programsCompany administers claimants prescription medication needs through a
retail card program and also provides a mail order delivery alternative, where the execution of such deliveries is performed by a mail order provider.

Medical Products and SuppliesCompany supplies claimants with orthotics and prosthetics, durable medical equipment and miscellaneous medical devices and supplies. The Company procures and coordinates the
delivery of these products, monitors equipment usage and manages supply orders for claimants on behalf of their insurer.

Medical
ServicesCompany coordinates the scheduling of home health care services with patients and providers and offers, among other services, nursing care, I.V. therapy, physical therapy, and ambulatory and non-ambulatory transportation and
translation services.

Cost of Revenue

The
Companys cost of revenue includes administrative costs associated with the outsourcing of pharmaceutical services, costs for services performed by vendors (including the cost of unbilled revenue), and customer service operations and product
costs, including shipping and handling.

Derivatives

The Company uses derivative financial instruments to reduce its exposure to adverse fluctuations in interest rates. The Company does not enter into derivative financial instruments for trading purposes. The Company records changes in the
fair value of derivatives to operations or other comprehensive income (loss), depending on whether a derivative is designated as part of a hedge transaction and, if it is, the type of hedge transaction.



F - 12



---

MSC  Medical Services Company

Notes to Consolidated Financial Statements (Continued)



Sales Tax

The
Company remits sales taxes to various taxing jurisdictions as a result of revenue earned from the sale of products and services to its customers. Sales tax liabilities are incurred primarily from the sale of the Companys Medical Products.
Specific sales tax rates applicable to the Companys products and services vary by taxing jurisdiction and certain of the Companys Medical Products are deemed to be tax exempt. The Company does not currently assess sales tax on billings
to its customers. Expenses associated with amounts due to the various taxing jurisdictions are reflected on an on-going basis in the Consolidated Statement of Operations as a component of Operating Expenses.

Comprehensive Income

Comprehensive income represents all changes in
equity resulting from recognized transactions and other economic events during the period. Other comprehensive income refers to revenues, expenses, gains, and losses that under generally accepted accounting principles are included in comprehensive
income but excluded from net income (loss), such as the unrealized gain or loss on the interest rate swap (See footnote 12). For the years ended December 31, 2007, 2006, and 2005 other comprehensive income was ($1.3) million, $0.2 million, and
$0.4 million respectively, net of the tax effect (at statutory rates) of ($0.5) million, $0.1 million, and $0.2 million respectively, and is reported on the Consolidated Statement of Changes in Stockholders Equity.

Stock Based Compensation

The Company had adopted the disclosure
provisions of SFAS No. 148, Accounting for Stock-Based CompensationTransition and Disclosurean Amendment of FASB Statement No. 123. SFAS No. 148 allowed continued use of recognition and measurement principles of
Accounting Principles Board (APB) Opinion No. 25 and related interpretations in accounting for stock options to employees. The Company applied the intrinsic-value recognition and measurement principles of APB Opinion No. 25 and
related interpretations, under which approximately $4.3 million of compensation cost related to stock options was recognized for the year ended December 31, 2005.

Effective January 1, 2006, the Company adopted SFAS No. 123(R), Share-Based Payment, (SFAS No. 123(R)) applying the modified prospective method. See Footnote 12Stock Based Compensation
for additional information.

Income Taxes

The Company
computes its income taxes in accordance with SFAS No. 109, Accounting for Income Taxes. Under SFAS No. 109, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Income taxes are accounted for under the asset and liability method.



F - 13



---

MSC  Medical Services Company

Notes to Consolidated Financial Statements (Continued)



Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rate is recognized in operations in the period that includes the enactment date.

In June 2006, the FASB issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxesan interpretation of FASB Statement No. 109and subsequently, on May 2, 2007, the FASB also issued FASB Staff Position (FSP) No. FIN 48-1Definition ofSettlementin FASB Interpretation No. 48. This Interpretation and FSP provide
guidance for recognizing and measuring tax positions taken or expected to be taken in a tax return that directly or indirectly affect amounts reported in financial statements, as well as provide accounting guidance for the related income tax effects
of tax positions that do not meet the recognition threshold specified in this Interpretation. This Interpretation is effective for fiscal years beginning after December 15, 2006. The provisions of the FSP are effective upon the initial adoption
of FIN 48. The Company adopted the provisions of these pronouncements effective January 1, 2007 as discussed in further detail in Note 10 of Notes to Consolidated Financial Statements in this report.

Fair Value of Financial Instruments

Fair value estimates and
assumptions used to estimate the fair value of the Companys financial instruments are made in accordance with the requirements of SFAS No. 107, Disclosure about Fair Value of Financial Instruments. The Company used available information
to derive its estimates. However, because estimates are made as a specific point of time, they are not necessarily indicative of amounts the Company could realize currently. The use of different assumptions or estimating methods may have a material
effect on the estimated fair value amounts.

The carrying amounts of the Companys financial instruments including cash, accounts receivable and
accounts payable approximate fair value due to the short-term maturity of these instruments. The carrying values of the short and long-term debt approximate fair value based upon market rates. The fair value of the interest rate swap was determined
using an interest rate analysis as of December 31, 2007.

Use of Estimates

The preparation of financial statements and the accompanying notes in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingencies at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. The most significant estimates made by management in
the accompanying financial statements relate to revenue and accounts receivable, allowance for doubtful accounts and goodwill and intangible assets. Actual results could differ from those estimates.



F - 14



---

MSC  Medical Services Company

Notes to Consolidated Financial Statements (Continued)



Recently Issued Accounting Standards

In September 2006, the Financial Accounting Standards Board (FASB) issued SFAS No. 157, Fair Value Measurements.This Statement defines fair value, establishes a framework for measuring fair value in
generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. This Statement is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within
those fiscal years. On February 12, 2008 the FASB approved the Financial Staff Position (FSP) No. SFAS 157-2 Effective Date of FASB Statement No. 157 (FSP FAS 157-2), which delays the effective date of SFAS 157 to fiscal
years beginning after November 15, 2008, and interim periods within those fiscal years for non-financial assets and non-financial liabilities, except for those items that are recognized or disclosed at fair value in the financial statements on
a recurring basis (at least annually). The Company is currently evaluating the impact, if any, that adopting SFAS 157 will have on its operations and financial condition. The Company is currently evaluating the impact of adopting these
interpretations.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial
Liabilities  Including an Amendment of FASB Statement No. 115(SFAS 159), which becomes effective for fiscal years beginning after November 15, 2007. SFAS 159 permits companies to choose to measure many
financial instruments and certain other items at fair value on a per instrument basis, with changes in fair value recognized in earnings each reporting period. This statement is effective for fiscal years beginning after November 15,
2007. The Company does not expect the pronouncement to have a material effect on our financial statements.

In December 2007 the FASB issued
SFAS No. 141(R), Business Combinations, (SFAS 141(R)) which replaces SFAS No. 141, Business Combinations, (SFAS 141). SFAS 141(R) establishes principles and requirements for
how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, any noncontrolling interest in the acquiree and the goodwill acquired. The Statement also establishes disclosure
requirements which will enable users of the financial statements to evaluate the nature and financial effects of the business combination. SFAS 141(R) applies prospectively to business combinations for which the acquisition date is on or after
the beginning of the first annual reporting period beginning on or after December 15, 2008, except for certain tax adjustments for prior business combinations. The Company will adopt the provisions of this pronouncement effective as of
January 1, 2009 since it is prospective only.



F - 15



---

MSC  Medical Services Company

Notes to Consolidated Financial Statements (Continued)



3. Business Combinations

The Acquisition described in Footnote 1. Description of Businesswas accounted for as a purchase by MCP-MSC Acquisition, Inc. in accordance with Statement of Financial Accounting Standards (SFAS) No. 141, Business
Combinations, and Emerging Issues Task Force (EITF) No. 88-16 Basis in Leveraged buyout Transactions. Accordingly the interest retained by certain members of management was recorded at carryover basis. The remainder of the
investment in the assets acquired and liabilities assumed was recorded at estimated fair value based on a purchase price allocation. The final purchase price allocation and the estimated useful lives are based on the results of an independent
appraisal. The Company estimates that approximately $9.3 million of goodwill will be deductible for income tax purposes.

Goodwill of $234.4 million was
recorded as a result of the Acquisition. The main drivers of goodwill were the Companys historical revenue growth rate as well as expectations for future revenue and EBITDA growth from organic and strategic initiatives. The Company believes it
is well positioned, with its current product and service offerings, in a market that is fragmented and without a dominant market leader, especially in the Medical Product segment. These expectations of future business performance were key factors
influencing the premium paid for the business as part of the competitive auction process, which included other buyers who also viewed the business as an attractive investment opportunity.

The following summary, prepared on a pro forma basis, presents the unaudited results of operations as if the business combination had occurred as of the beginning of the
fiscal 2005 year, after including the impact of amortization of intangibles, increased interest expense related to new debt and the related income tax effects. The results for the year ended December 31, 2005 include both the results of the
Predecessor for the period January 1, 2005 to March 31, 2005 and the Successor for the post acquisition activity and the nine months ended December 31, 2005.



|                                                          |  |                            |         |  
|--------------------------------------------------------- |  | -------------------------- | ------- | -
|                                                          |  | Year EndedDecember 31,2005 |        
|(in thousands)                                            |  |                            |        
|Net revenue from product sales and services  as reported |  | $                          | 301,611 |  
|Net revenue from product sales and services  pro forma   |  | $                          | 301,611 |  
|Net loss  as reported                                    |  | $                          | (37,743 | )
|Net loss  pro forma                                      |  | $                          | (42,004 | )



F - 16



---

MSC  Medical Services Company

Notes to Consolidated Financial Statements (Continued)



4. Property and Equipment

The details of the Companys property and equipment are as follows (in thousands):



|                               |  |                      |      |  |              |        |  |   |       
|------------------------------ |  | -------------------- | ---- |  | ------------ | ------ |  | - | ------
|                               |  | EstimatedUseful Life |      |  | December 31,
|                               |  |                      | 2007 |  | 2006        
|Leasehold improvements         |  | (a                   | )    |  | $            | 1,557  |  | $ | 557   
|Furniture and office equipment |  | 5 years              |      |  |              | 2,062  |  |   | 1,792 
|Computer hardware and software |  | 3 years              |      |  |              | 11,900 |  |   | 8,648 
|                               |  |                      |      |  |              |        |  |   |       
|                               |  |                      |      |  |              | 15,519 |  |   | 10,997
|Less accumulated depreciation  |  |                      |      |  |              | 7,485  |  |   | 5,196 
|                               |  |                      |      |  |              |        |  |   |       
|Total                          |  |                      |      |  | $            | 8,034  |  | $ | 5,801 
|                               |  |                      |      |  |              |        |  |   |       



|(a) | Leasehold improvements are amortized over the shorter of the lease term or the estimated useful lives.
|--- | ------------------------------------------------------------------------------------------------------

Depreciation expense was approximately $3.2 million, $3.3 million, and $2.3 million for the years ended December 31, 2007, 2006 and 2005, respectively.

5. Goodwill and Amortizable Intangible Assets

Goodwill totaled
$196.1 million and $236.2 million as of December 31, 2007 and 2006, respectively, and represents the excess of the purchase price over the fair value of the tangible and intangible assets associated with the March 31, 2005 acquisition of
100% of the outstanding common stock of MSC Acquisition, Inc. In 2006 an adjusting entry was recorded to increase the deferred tax liability balance at the Acquisition date by $1.8 million with a corresponding increase to goodwill to exclude tax
deductible goodwill from the tax basis of intangible assets.

Under SFAS No. 142, the Company performs its annual impairment testing of goodwill and
non-amortizable intangibles as of the October 31, 2007 measurement date or as potential indications of impairment are identified. In 2007, the Company utilized a third party valuation specialist to assist in the analysis and they used a
combination of the discounted cash flows and market value approaches to determine fair market value as discussed below. The Companys impairment testing indicated that the carrying value of the reporting unit exceeded the fair value. The key
factors that lead to the impairment in the fourth quarter of 2007, were the increase in the discount rate used to discount expected future cash flow, and recent softening of the ancillary business, which caused management to revise its future
projections of ancillary results in the short term from the latest projections used in the analysis performed during the first quarter of 2007. One non-contracted ancillary customer was lost subsequent to the first quarter analysis as well as some
temporary declines from ancillary business received from other customers.

The fair value was determined using a combination of a discounted cash flows
approach and a market comparable transactions approach (step 1). Under SFAS 142, this scenario indicates that impairment exists and requires that a second step be performed in which the aggregate fair value of each of the Companys
assets, excluding goodwill, is compared to the fair value determined in



F - 17



---

MSC  Medical Services Company

Notes to Consolidated Financial Statements (Continued)



step 1 (step 2). The resulting difference is the new value of goodwill for the reporting unit. As a result of the testing, goodwill of $40.1
million was written off against operating income in 2007.

Changes in goodwill balances follow.



|                             |  |                                          |         |  
|---------------------------- |  | ---------------------------------------- | ------- | -
|                             |  | Goodwill resultingfrom acquisitionby MCP |        
|Balance, December 31, 2005   |  | $                                        | 234,423 |  
|Deferred income tax revision |  |                                          | 1,784   |  
|                             |  |                                          |         |  
|Balance, December 31, 2006   |  |                                          | 236,207 |  
|Impairment of goodwill       |  |                                          | (40,116 | )
|                             |  |                                          |         |  
|Balance, December 31, 2007   |  | $                                        | 196,091 |  
|                             |  |                                          |         |  

Identifiable intangible assets include trademarks of approximately $15.7 million as of December 31, 2007 and
$24.9 million as of December 31, 2006. It has been determined that these trademarks will generate cash flows for an indefinite period of time and therefore, are not subject to amortization. As a result of the impairment testing under SFAS 142 as
discussed previously, it was determined that trademarks had a carrying value which exceeded fair market value, as such an impairment in the amount of $8.4 million was recorded against operating income in 2007.

The details of the Companys amortizable intangible assets are as follows (in thousands):



|                              |  |                      |      |              |         |  |   |        
|----------------------------- |  | -------------------- | ---- | ------------ | ------- |  | - | -------
|                              |  | EstimatedUseful Life |      | December 31,
|                              |  |                      | 2007 |              | 2006   
|Vendor contracts              |  | 10-15 years          |      | $            | 24,900  |  | $ | 24,900 
|Customer relationships        |  | 10-12 years          |      |              | 58,800  |  |   | 58,800 
|Carrier relationships         |  | 12 years             |      |              | 11,100  |  |   | 11,100 
|Pharmacy relationships        |  | 30 years             |      |              | 10,600  |  |   | 10,600 
|                              |  |                      |      |              |         |  |   |        
|                              |  |                      |      |              | 105,400 |  |   | 105,400
|Less accumulated amortization |  |                      |      |              | 23,838  |  |   | 15,170 
|                              |  |                      |      |              |         |  |   |        
|Total                         |  |                      |      | $            | 81,562  |  | $ | 90,230 
|                              |  |                      |      |              |         |  |   |        



F - 18



---

MSC  Medical Services Company

Notes to Consolidated Financial Statements (Continued)



Amortization expense of intangibles was approximately $8.7 million for the years ended December 31, 2007 and
2006 and $6.7 million for the year ended December 31, 2005.

The Company estimates amortization expense for these intangible assets will be as follows
(in thousands):



|                        |  |   |       
|----------------------- |  | - | ------
|Year ended December 31, |  |  
|2008                    |  | $ | 8,668 
|2009                    |  |   | 8,668 
|2010                    |  |   | 8,668 
|2011                    |  |   | 8,668 
|2012                    |  |   | 8,668 
|Thereafter              |  |   | 38,222
|                        |  |   |       
|Total                   |  | $ | 81,562
|                        |  |   |       

6. Debt Obligations

Short-Term Debt

The Company maintains an asset-based line of credit (LOC) which permits maximum borrowings of up to $40
million. The Revolver has a term of 6 years and will expire on March 31, 2011. Borrowings under the Revolver of $18.6 million at December 31, 2007 and $20.1 million at December 31, 2006 bear interest at an initial rate per annum equal
to the applicable base rate plus 2.0% or the Eurodollar (LIBOR) rate plus 3.0%. As of December 31, 2007, the Company had the ability to borrow an additional $4.1 million under the LOC facility.

On December 14, 2006, the Company entered into Amendment No. 3 (Amendment No. 3) to the Revolving Credit Agreement (the Credit
Agreement) dated as of March 31, 2005 among the Company, MCP-MSC Acquisition, Inc., the banks, financial institutions and other lenders party thereto (collectively, the Lenders) and Bank of America, N.A., as
administrative agent (in such capacity, the Administrative Agent) for the Lenders, as amended by Amendment No. 1 to the Revolving Credit Agreement dated as of May 12, 2005 and Amendment No. 2 to the Revolving Credit
Agreement dated as of December 9, 2005.

In Amendment No. 3, the Company, the Administrative Agent and the Lenders have agreed to amend the
Credit Agreement in certain respects, including, but not limited to, the items set forth below (Refer to Footnote No. 20 for changes subsequent to December 31, 2007):



| |  |  | Consolidated Fixed Charge Coverage Ratio. The minimum consolidated fixed charge coverage ratios required to be maintained by the Company under the Credit
Agreement during the four fiscal quarter periods commencing with the four fiscal quarter period ending December 31, 2006 through the four fiscal quarter period ending June 30, 2008 have been reduced to a range of 0.90:1.00 to 1.25:1.00.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F - 19



---

MSC  Medical Services Company

Notes to Consolidated Financial Statements (Continued)



| |  |  | Capital Expenditures. The Company will be subject to a new restrictive covenant ranging from $5 million to $6.5 million that will impose an annual limit on
the amount of capital expenditures the Company will be permitted to make for the remainder of the term of the Credit Agreement. Commencing in 2007, if the Company does not use the entire amount permitted in respect of any fiscal year, the Company
may carry over the unused amount (subject to a cap) into the following fiscal year, subject to compliance with the minimum consolidated fixed charge coverage ratio at the time such amount is expended.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Restricted Transactions. The Company will not be permitted to take certain actions under the Credit Agreement, including making certain acquisitions, other
specified investments and certain restricted payments, unless at the time of such transaction the Company is in compliance with the specified minimum consolidated fixed charge coverage ratio which varies over time and differs depending on the type
of restricted transaction being consummated. In addition, after each such restricted transaction has been consummated, the Company will be subject to a minimum borrowing availability requirement unless or until the Company meets the specified
minimum consolidated fixed charge coverage ratio.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | In connection with the amendments described above, Amendment No. 3 amends the definition of Consolidated EBITDA, and adds the following new defined
terms to, the Credit Agreement: Calculation Period, Capital Expenditure Carryover Amount, Restricted Transaction, Suspension Consolidated Fixed Charge Coverage Ratio, Suspension Date and
Transaction Conditions.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Under its credit agreement, the Company is required to maintain a fixed rate on 50% of its funded
debt for a period of three years. In order to achieve compliance with that requirement, in August 2005 the Company entered into an Interest Rate Swap (Swap) with JP Morgan Chase Bank, N.A., the Floating Amount Payer and MSCMedical
Services Company, the Fixed Rate Payer. Through this Swap, the Company has fixed the interest rate on $125.0 million of its funded debt through October 15, 2007, and $75.0 million of its funded debt from October 15, 2007 through
October 15, 2009. There are eight 3-month maturity fixed rate swaps remaining at December 31, 2007, with the fixed interest rate ranging from 4.6% to 4.8% while the variable rate is based on the three month Eurodollar (LIBOR) rate.

Interest rate swaps are designated and qualify as cash flow hedges and the gains or losses on the swaps are recorded in other assets or liabilities in the
balance sheet with a corresponding adjustment to accumulated other comprehensive loss, a component of stockholders equity. Amounts are reclassified from accumulated other comprehensive loss and reflected as an adjustment to interest expense as
interest is accrued on the underlying debt.



F - 20



---

MSC  Medical Services Company

Notes to Consolidated Financial Statements (Continued)



The Companys Swaps qualify as perfectly effective cash flow hedges, as defined by SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities. As such, there was no ineffective portion to the hedge recognized in earnings. The fair value of the interest rate swaps resulted in an unrealized (loss)/gain of ($0.8) million and $0.6
million net of tax recorded as accumulated other comprehensive income at December 31, 2007 and 2006, respectively. The interest rate swap reduced interest expense by $0.9 million $0.8 million for the years ended December 31, 2007 and 2006,
respectively, and had no effect on interest expense for the year ended December 31, 2005.

Long-term debt

Long-term debt consisted of the following (in thousands):



|                                                                                                                                                                                                                                                                                                |  |              |         |      |   |        
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | ------- | ---- | - | -------
|                                                                                                                                                                                                                                                                                                |  | December 31,
|                                                                                                                                                                                                                                                                                                |  | 2007         |         | 2006
|Senior Secured Floating Rate Notes (net of unamortized discount of $855 and $1,105 at December 31, 2007 and 2006), interest only is
payable quarterly at LIBOR plus 7.5% (12.6% and 12.9% at December 31, 2007 and 2006), principal is payable in full in a balloon payment on October 15, 2011 |  | $            | 149,145 |      | $ | 148,895
|Less current portion                                                                                                                                                                                                                                                                            |  |              |        |      |   |       
|                                                                                                                                                                                                                                                                                                |  |              |         |      |   |        
|Long-term debt, less current portion                                                                                                                                                                                                                                                            |  | $            | 149,145 |      | $ | 148,895
|                                                                                                                                                                                                                                                                                                |  |              |         |      |   |        

For the years ended December 31, 2007, 2006 and 2005, amortization of debt issuance costs was approximately
$1.1 million, $1.3 million and $7.6 million, respectively.

The Companys debt agreements require compliance with various financial
covenants, including leverage ratios and fixed charge coverage ratios as well as placing limitations on new debt obligations, capital expenditures, leases, and asset sales. In addition, the Company must maintain certain multiples of earnings before
interest, taxes, depreciation, and amortization, adjusted for certain expenses, times interest expense. Substantially all of the Companys assets are pledged as collateral under the Companys debt obligations.

7. Leases

The Company leases facilities and certain other assets
under operating leases expiring at various times through February 28, 2015.



F - 21



---

MSC  Medical Services Company

Notes to Consolidated Financial Statements (Continued)



Effective December 4, 2006, MSC  Medical Services Company entered into a full service lease agreement with
South Shore Group Partners, LLC for new corporate headquarters office space of approximately 100,000 square feet located at The Aetna Building, 841 Prudential Drive, Jacksonville, FL 32207. The lease has a 94 month term, which commenced in September
2007. The lease provides for an option to renew and extend the lease for two terms of five years each, commencing at the expiration of the initial term of the lease. MSC also has the option to contract 24,415 square feet of the space through
calendar year 2008.

Future minimum rental payments under non-cancelable operating leases having terms in excess of one year are as follows at
December 31, 2007 (in thousands):



|                        |  |   |       
|----------------------- |  | - | ------
|Year ended December 31, |  |  
|2008                    |  | $ | 1,258 
|2009                    |  |   | 1,706 
|2010                    |  |   | 1,786 
|2011                    |  |   | 1,868 
|2012                    |  |   | 1,943 
|Thereafter              |  |   | 5,195 
|                        |  |   |       
|Total minimum payments  |  | $ | 13,756
|                        |  |   |       

Rent expense was approximately $1.6 million for the year ended December 31, 2007, and $1.0 million for the
years ended December 31, 2006 and 2005, respectively. Included in the $1.6 million of rent expense in 2007 was the accrual of $0.4 million in lease termination costs pursuant to the terms of the Companys prior lease, which are expected to
be paid in 2008.

8. Contingent Purchase Price Payments and Settlement

The Company has an obligation to pay the former owners for the tax benefits, as realized by the Company, relating to expenses incurred in connection with the Acquisition. The Company estimated these tax benefits to be
approximately $12.2 million related to the transaction expenses incurred in the three months ended March 31, 2005. In 2006 the Company received approximately $8.8 million in tax refunds from the filing of amended returns in connection with the
Acquisition. These refunds were paid to the former owners under the purchase agreement. The remaining tax benefit associated with the transaction expense that could not be carried back on amended tax returns is reflected in the December 31,
2006 balance sheet as due to former owners.



F - 22



---

MSC  Medical Services Company

Notes to Consolidated Financial Statements (Continued)



In conjunction with the sale of the Company in March 2005 an escrow account was established with Wells Fargo Bank as
the escrow agent and $15.0 million of the purchase price was deposited in the escrow account to be used as security for and to satisfy claims arising out of the transaction. On May 26, 2006, the Buyer of the Company, MCP-MSC Acquisition, Inc.,
delivered to the Stockholder Representative for the Sellers an indemnification claim against the escrow balance. A $12.4 million settlement was reached on May 30, 2007 by and between the Company and the sellers as part of a settlement
agreement that included a cash settlement to the Company paid out from the escrow account of $9 million and forfeiture of $3.4 million of unpaid tax benefits due to the seller. Consistent with applicable accounting standards and SEC guidance, this
transaction was accounted for as an adjustment to results of operations in fiscal 2007. The Company has no further contingencies associated with the purchase.

9. Retirement Benefits

The Company maintains a 401(k) retirement plan covering substantially all employees and matches 25% of employee
contributions up to 4% of contributions or 1% of employees total salary. The Company expensed approximately $0.2 million related to its 401(k) plan for the year ended December 31, 2007 and $0.1 million for the years ended
December 31, 2006 and 2005, respectively.

10. Income Taxes

The provision for income taxes is summarized as follows (in thousands):



|          |  |                            |        |   |                            |   |        |                                  |  |   |                                |   |  |   |        |  
|--------- |  | -------------------------- | ------ | - | -------------------------- | - | ------ | -------------------------------- |  | - | ------------------------------ | - |  | - | ------ | -
|          |  | Successor                  |        |   | Predecessor                |  
|          |  | Year EndedDecember 31,2007 |        |   | Year EndedDecember 31,2006 |   |        | Nine MonthsEndedDecember 31,2005 |  |   | Three MonthsEndedMarch 31,2005 |  
|Current:  |  |                            |        |   |                            |   |        |                                  |  |   |                                |   |  |   |        |  
|Federal   |  | $                          |       |   |                            | $ |       |                                  |  | $ |                               |   |  | $ | (7,100 | )
|State     |  |                            |       |   |                            |   |       |                                  |  |   |                               |   |  |   | 11     |  
|          |  |                            |        |   |                            |   |        |                                  |  |   |                                |   |  |   |        |  
|          |  |                            |       |   |                            |   |       |                                  |  |   |                               |   |  |   | (7,089 | )
|Deferred: |  |                            |        |   |                            |   |        |                                  |  |   |                                |   |  |   |        |  
|Federal   |  |                            | (7,651 | ) |                            |   | (4,490 | )                                |  |   | (12,543                        | ) |  |   | (1,090 | )
|State     |  |                            | (1,044 | ) |                            |   | (603   | )                                |  |   | (1,685                         | ) |  |   | (1,287 | )
|          |  |                            |        |   |                            |   |        |                                  |  |   |                                |   |  |   |        |  
|          |  |                            | (8,695 | ) |                            |   | (5,093 | )                                |  |   | (14,228                        | ) |  |   | (2,377 | )
|          |  |                            |        |   |                            |   |        |                                  |  |   |                                |   |  |   |        |  
|Total     |  | $                          | (8,695 | ) |                            | $ | (5,093 | )                                |  | $ | (14,228                        | ) |  | $ | (9,466 | )
|          |  |                            |        |   |                            |   |        |                                  |  |   |                                |   |  |   |        |  



F - 23



---

MSC  Medical Services Company

Notes to Consolidated Financial Statements (Continued)



Income tax expense reconciled to the tax computed at statutory rates (in thousands):



|                       |  |                         |    |  |      |   
|---------------------- |  | ----------------------- | -- |  | ---- | --
|                       |  | Years EndedDecember 31, |   
|                       |  | 2007                    |    |  | 2006 |   
|Statutory federal rate |  | 34.0                    | %  |  | 34.0 | % 
|State income taxes     |  | 4.6                     | %  |  | 4.6  | % 
|Litigation settlement  |  | 9.0                     | %  |  | 0.0  | % 
|Goodwill impairment    |  | (29.4                   | )% |  | 0.0  | % 
|Other                  |  | (0.6                    | )% |  | (1.1 | )%
|                       |  |                         |    |  |      |   
|Effective tax rate     |  | 17.4                    | %  |  | 37.5 | % 

In 2007 the Companys effective tax rate is lower than the Federal Statutory tax rate of 34% due primarily to
the net effect of the litigation settlement and state taxes and the impairment of goodwill.

Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

Components of the Companys deferred income taxes assets are as follows (in thousands):



|                                |  |                   |       |                   |   |         |  |             |       |  |   |       
|------------------------------- |  | ----------------- | ----- | ----------------- | - | ------- |  | ----------- | ----- |  | - | ------
|                                |  | December 31, 2007 |       | December 31, 2006
|                                |  | Current           |       | Non-current       |   | Current |  | Non-current
|Allowance for doubtful accounts |  | $                 | 7,291 |                   | $ |        |  | $           | 7,503 |  | $ |      
|UNICAP                          |  |                   | 7     |                   |   |        |  |             | 8     |  |   |      
|Accrued sales tax               |  |                   | 469   |                   |   |        |  |             | 940   |  |   |      
|AMT Credit                      |  |                   |      |                   |   | 451     |  |             |      |  |   | 451   
|NOL                             |  |                   |      |                   |   | 11,373  |  |             |      |  |   | 9,485 
|Charitable Contributions        |  |                   |      |                   |   | 22      |  |             |      |  |   | 10    
|Share-based payment             |  |                   |      |                   |   | 871     |  |             |      |  |   | 475   
|Depreciation                    |  |                   |      |                   |   | 274     |  |             |      |  |   | 342   
|Other                           |  |                   |      |                   |   | 473     |  |             |      |  |   |      
|                                |  |                   |       |                   |   |         |  |             |       |  |   |       
|Total deferred tax assets       |  | $                 | 7,767 |                   | $ | 13,464  |  | $           | 8,001 |  | $ | 10,763
|                                |  |                   |       |                   |   |         |  |             |       |  |   |       



F - 24



---

MSC  Medical Services Company

Notes to Consolidated Financial Statements (Continued)



Components of the Companys deferred income taxes liability are as follows (in thousands):



|                               |  |                   |      |   |                   |   |         |         |  |   |             |   |  |   |         |  
|------------------------------ |  | ----------------- | ---- | - | ----------------- | - | ------- | ------- |  | - | ----------- | - |  | - | ------- | -
|                               |  | December 31, 2007 |      |   | December 31, 2006 |  
|                               |  | Current           |      |   | Non-current       |   |         | Current |  |   | Non-current |  
|Prepaid insurance & other      |  | $                 | (125 | ) |                   | $ |        |         |  | $ | (36         | ) |  | $ |        |  
|Acquired identifiable assets   |  |                   |     |   |                   |   | (34,217 | )       |  |   |            |   |  |   | (40,470 | )
|Goodwill                       |  |                   |     |   |                   |   | (113    | )       |  |   |            |   |  |   | (485    | )
|Other                          |  |                   |     |   |                   |   |        |         |  |   |            |   |  |   | (352    | )
|                               |  |                   |      |   |                   |   |         |         |  |   |             |   |  |   |         |  
|Total deferred tax liabilities |  | $                 | (125 | ) |                   | $ | (34,329 | )       |  | $ | (36         | ) |  | $ | (41,307 | )
|                               |  |                   |      |   |                   |   |         |         |  |   |             |   |  |   |         |  

The Company has federal net operating losses of approximately $26.8 million available for carry forward that will
expire in 18-20 years.

In June 2006, the FASB issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxesan interpretation
of FASB Statement No. 109 (FIN 48).This Interpretation and related guidance prescribe a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected
to be taken in a tax return. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosures, and transitions.



F - 25



---

MSC  Medical Services Company

Notes to Consolidated Financial Statements (Continued)



Effective January 1, 2007, the Company adopted the provisions of FIN 48 and related guidance. As of
January 1, 2007, the unrecognized tax benefit amount recorded was $0.2 million of which $0.1 million would affect income tax expense if recognized, which did not require adjustment as a result of the adoption of FIN 48. As of December 31,
2007 the unrecognized tax benefit amount recorded was $0.1 million of which $0.1 would affect income tax expense if recognized.

Our policy is to recognize
interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. As of the date of adoption and as of December 31, 2007, the Company did not recognize interest or penalties associated with any unrecognized
tax benefits in the statement of operations. The Company recognized a $0.1 gross decrease in unrecognized tax benefits as a result of tax payments in 2007. It is reasonably possible that the total amount of unrecognized tax benefits will change
within the next 12 months.

Income tax expense for the year ended December 31, 2007 differed from our normal effective tax rate, due to the goodwill
impairment, which was only partially deductible, and the litigation settlement gain recognized during the second quarter of 2007 which was not taxable. Excluding the impact of this non-taxable gain and impairment charge, the Companys effective
tax rate remained consistent with the prior year.

11. Stock Based Compensation

During 2002, the Predecessor adopted a stock compensation plan (the Plan), allowed for the issuance of options to acquire up to 1,500,000 shares of the Predecessors common stock. The Plan provided
for stock options to be granted with vesting provisions as determined by the Board of Directors. The granted stock options had a term as provided by the Board of Directors, provided that such term did not exceed ten years. In connection with the
sale of the Predecessor, all stock options of the Predecessor either vested or terminated under the terms of the Predecessors stock option plan. As a result of vesting certain of these options under the Plan, the Predecessor recorded $4.3
million of compensation expense for the three months ended March 31, 2005.

During 2005, the Parent adopted a stock compensation plan (the Stock
Option Plan), under which options to acquire 37,186,044 shares of the Parents common stock may be granted. Stock options granted to two executives of the Company to acquire 3,821,271 shares of common stock were fully vested and had terms
not exceeding 10 years. The remaining stock options granted had terms of 10 years and vest over time and in the event of a change of control.

Effective
January 1, 2006, the Company adopted SFAS No. 123(R), Share-Based Payment, (SFAS No. 123(R)) applying the modified prospective method. SFAS No. 123(R) requires all equity-based payments to employees, including grants
of employee stock options, to be recognized in the statement of earnings based on the grant date fair value of the award. Under the modified prospective



F - 26



---

MSC  Medical Services Company

Notes to Consolidated Financial Statements (Continued)



method, the Company is required to record equity-based compensation expense for all awards granted after the date of adoption and for the unvested portion of
previously granted awards outstanding as of the date of adoption. The fair values of stock options granted during 2005 and after the Company adopted SFAS No. 123(R) were determined using a Black-Scholes-Merton valuation model.

In adopting SFAS No. 123(R), the Company did not modify the terms of any previously granted options.

The fair value of restricted shares is determined by the number of shares granted and the grant date fair value of the Companys Common Shares. The compensation expense recognized for all equity-based awards is
net of estimated forfeitures and is recognized over the awards service period. In accordance with Staff Accounting Bulletin (SAB) No. 107, the Company classified equity-based compensation within operating expenses to
correspond with the same line item as the majority of the cash compensation paid to employees.

The impact of the equity-based compensation is reflected in
cash flow from operations on the Statement of Cash Flows, except for any excess tax benefit which are recorded in financing activities.

Fair Value
Disclosures Prior to Adopting SFAS No. 123(R)

The following table illustrates the proforma impact on reported amounts after applying
the fair value recognition provisions to share-based compensation expense in periods prior to the adoption of SFAS No. 123(R) (in thousands). This table only shows 2005 pro forma amounts since the Company adopted the fair value recognition
provisions of SFAS 123(R) in the first quarter of 2006. Therefore, expenses were recognized in the Consolidated Statement of Operations for all unvested share-based compensation in 2006 and 2007. Share-based compensation expense in the amount of
$0.7 million and $0.7 million was recorded for fiscal year ended 2007 and 2006, net of related tax benefit of $0.5 million and $0.4 million, respectively.



|                                                                                                                                    |  |                  |         |  
|----------------------------------------------------------------------------------------------------------------------------------- |  | ---------------- | ------- | -
|                                                                                                                                    |  | December 31,2005 |        
|Net loss, as reported                                                                                                               |  | $                | (37,743 | )
|Stock-based employee compensation expense included in reported net income (loss), net of related tax effects                        |  |                  | 2,636   |  
|Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax
effects |  |                  | (3,172  | )
|                                                                                                                                    |  |                  |         |  
|Pro forma net loss                                                                                                                  |  | $                | (38,279 | )
|                                                                                                                                    |  |                  |         |  



F - 27



---

MSC  Medical Services Company

Notes to Consolidated Financial Statements (Continued)



Activity relative to the Parents common stock options is as follows:



|                                         |  |                 |   |  |                                        |       |   |                                                  |      |                             |   |      
|---------------------------------------- |  | --------------- | - |  | -------------------------------------- | ----- | - | ------------------------------------------------ | ---- | --------------------------- | - | -----
|                                         |  | Numberof Shares |   |  | WeightedAverageExercise PricePer
Share |       |   | WeightedAverageRemainingContractualLife in Years |      | Intrinsic Value($ in 000s)
|Options outstanding at December 31, 2006 |  | 29,782,003      |   |  | $                                      | 1.34  |   |                                                  |      |                             | $ | 1,789
|                                         |  |                 |   |  |                                        |       |   |                                                  |      |                             |   |      
|Options granted  time vesting           |  | 2,925,479       |   |  | $                                      | 1.50  |   |                                                  |      |                             |   |      
|Options granted  performance vesting    |  | 1,462,740       |   |  | $                                      | 1.50  |   |                                                  |      |                             |   |      
|Options forfeited                        |  | (4,141,612      | ) |  | $                                      | (1.48 | ) |                                                  |      |                             |   |      
|                                         |  |                 |   |  |                                        |       |   |                                                  |      |                             |   |      
|Options outstanding at December 31, 2007 |  | 30,028,610      |   |  | $                                      | 1.35  |   |                                                  | 7.75 |                             | $ | 1,750
|                                         |  |                 |   |  |                                        |       |   |                                                  |      |                             |   |      
|Exercisable at December 31, 2007         |  | 15,948,480      |   |  | $                                      | 1.18  |   |                                                  | 7.64 |                             | $ | 1,750
|                                         |  |                 |   |  |                                        |       |   |                                                  |      |                             |   |      

Two-thirds of options granted vest over a three-year period, with an exercise price ranging from $1.00 to $3.00.
The remaining one-third vest only upon change in control and also have exercise prices ranging from $1.00 to $3.00. Any portion of the stock options not then vested shall immediately vest upon change of control. The 15.9 million vested shares
at December 31, 2007 have exercise prices between $0.29 and $3.00.

The grant date fair value of options vested during the years ended
December 31, 2007, 2006, and 2005, was $1.1 million, $1.7 million and $3.8 million, respectively.

The fair value of options granted during the years
ended December 31, 2007 and 2006 was approximately $0.3 million and $0.6 million, respectively and is expected to be expensed over a period of 36 months. The intrinsic value of the options outstanding for fiscal years ended 2007 and 2006 was
$1.8 million, as compared to $2.5 million for 2005, as detailed in the schedule above. The decrease in intrinsic value resulted from forfeitures during the years ended December 31, 2006 and 2007 and decline in stock value.

The total compensation cost related to nonvested awards not yet recognized is approximately $1.9 million at December 31, 2007 and is expected to be expensed over a
weighted-average period of less than one year.

The estimated fair value of each option granted after January 1, 2006 is calculated using the
Black-Scholes option pricing model. The assumptions used for calculating fair value of grants issued during the year ended December 31, 2007 varied in range as follows: expected life of 2.5  3 years, risk-free interest rate of 4.5% 
4.8%, expected volatility of 20.5%  26.3% and no expected dividend yield.



F - 28



---

MSC  Medical Services Company

Notes to Consolidated Financial Statements (Continued)



An estimated expected life of 2.5  3 years before exercise was used for the grants during the year ended
December 31, 2007 based on the typical investment holding period of the shareholder with a controlling interest in MSC. A targeted holding period range of three to six years is cited in Monitor Clipper Equity Partners II, L.P. Private
Placement Memorandumat which time all shares would be expected to be vested and then exercised. Implicit in this assumption is that option-holders would not likely exercise before a transaction date as they would become the holders of minority
interest shares subject to marketability discounts should they wish to sell their shares. The expected change in control will likely provide a liquidity event for option-holders.

In order to calculate volatility, the Company analyzed the publicly traded stock options of guideline companies with respect to implied volatility. Implied volatilities were calculated using an average of the 10-day
trailing 720-day term to expiration on at the money options as of the valuation date. The Company relied exclusively on the median implied volatility as a proxy for expected volatility in the Black-Scholes model as the Company believes
it provides the best indication of expected volatility over the expected lives of the options.

Activity relative to the Companys restricted stock is
as follows:



|                                                   |  |                 |   |  |                                      |    
|-------------------------------------------------- |  | --------------- | - |  | ------------------------------------ | ---
|                                                   |  | Numberof Shares |   |  | Weighted AverageGrant-Date FairValue
|Restricted shares outstanding at December 31, 2005 |  |                |   |  | $                                    |   
|Restricted shares issued March 31, 2006            |  | 900,000         |   |  |                                      | .88
|Issued/Forfeited                                   |  |                |   |  |                                      |   
|                                                   |  |                 |   |  |                                      |    
|Restricted shares outstanding at December 31, 2006 |  | 900,000         |   |  | $                                    | .88
|                                                   |  |                 |   |  |                                      |    
|Restricted shares issued March 7, 2007             |  | 550,000         |   |  |                                      | .81
|Issued/Forfeited                                   |  | (300,000        | ) |  |                                      | .88
|                                                   |  |                 |   |  |                                      |    
|Restricted shares outstanding at December 31, 2007 |  | 1,150,000       |   |  | $                                    | .85
|                                                   |  |                 |   |  |                                      |    

12. Comprehensive Income

Comprehensive income represents all changes in equity of the enterprise that results from recognized transactions and other economic events during the period. Other comprehensive (loss) income refers to revenues,
expenses, gains, and losses that under GAAP are included in comprehensive income but excluded from net income, such as the unrealized gain or loss on the Companys interest rate swap. The following table details the components of comprehensive
(loss) for the periods presented.



F - 29



---

MSC  Medical Services Company

Notes to Consolidated Financial Statements (Continued)



|                                   |  |                         |         |   |      |   |        |      |  |   |         |  
|---------------------------------- |  | ----------------------- | ------- | - | ---- | - | ------ | ---- |  | - | ------- | -
|                                   |  | Year Ended December 31, |        
|(in thousands)                     |  | 2007                    |         |   | 2006 |   |        | 2005 | 
|Net (loss)                         |  | $                       | (41,373 | ) |      | $ | (8,472 | )    |  | $ | (37,743 | )
|Other comprehensive (loss) income: |  |                         |         |   |      |   |        |      |  |   |         |  
|Unrealized (loss)/gain             |  |                         |         |   |      |   |        |      |  |   |         |  
|Interest rate swap, net of tax     |  |                         | (1,339  | ) |      |   | 208    |      |  |   | 353     |  
|                                   |  |                         |         |   |      |   |        |      |  |   |         |  
|Comprehensive (loss)               |  | $                       | (42,712 | ) |      | $ | (8,264 | )    |  | $ | (37,390 | )
|                                   |  |                         |         |   |      |   |        |      |  |   |         |  

13. Commitments and Contingencies

The Company has entered into various multi-year contracts to purchase products or services in the ordinary course of business. These contracts typically include either a volume commitment or a fixed expiration date,
pricing terms based on the vendors published list price, termination provisions, and other standard contractual considerations. Certain of these contracts are cancelable, typically upon written notice of intent to cancel. Contracts for both
non-cancelable agreements and agreements where remedies upon cancellation are not specified totaled approximately $36 thousand as of December 31, 2007 and range from one to three years as follows:



|                        |  |   |    
|----------------------- |  | - | ---
|(in thousands)          |  |  
|Year ended December 31, |  |   |    
|2007                    |  |   | 36 
|2008                    |  |   | 36 
|2009                    |  |   | 36 
|                        |  |   |    
|Total                   |  | $ | 108
|                        |  |   |    

The Company has various insurance policies covering risks and in amounts it considers adequate. Additionally, the
Companys standard agreement with its vendors provide for indemnification by such vendors. There can be no assurance that the insurance coverage maintained by the Company is sufficient or will be available in adequate amounts or at a reasonable
cost, or that indemnification agreements will provide adequate protection for the Company.

The Company is a party to various other legal and
administrative proceedings and claims arising in the normal course of business. While any litigation contains an element of uncertainty, the Company, after consultation with outside legal counsel, believes that the outcome of such other proceedings
or claims which are pending or known to be threatened will not have a material adverse effect on the Companys financial position, liquidity, or results of operations.



F - 30



---

MSC  Medical Services Company

Notes to Consolidated Financial Statements (Continued)



14. Related Party Transactions

On June 7, 2002, the Predecessor entered into a management agreement with HIG Capital, an affiliate of a majority stockholder of the Predecessor. Under the agreement, HIG Capital would provide management and
advisory services to the Company through June 1, 2012. HIG Capital was entitled to an annual fee of $0.5 million for these services. The Company expensed $0.1 million for the three months ended March 31, 2005. As a result of the
Acquisition, the contract terminated.

In addition, the Predecessor paid $7.1 million in fees in connection with the Acquisition to HIG Capital which is
included in transaction expenses in the accompanying statement of operations for the three months ended March 31, 2005. See footnote 15Transaction expenses.

On March 31, 2005, the Company entered into a management fee agreement with Monitor Clipper Partners, LLC (MCP). MCP, who is affiliated with our parent, will provide operational and financial services
for an annual fee of $0.5 million paid to MCP on a quarterly basis ($0.4 million for the nine months ended December 31, 2005). For the years ended December 31, 2007 and 2006, MSC incurred $0.5 and $0.3 million of the management fee to MCP.
As of December 31, 2007 $0.4 million remained payable to MCP. In 2006 the management fee was not paid in its entirety due to the Company engaging and paying approximately $0.3 million to a consulting and marketing firm associated with MCP to
conduct a market survey. The management fee is included in operating expenses of the accompanying statement of operations. In 2007 the Parent issued shares worth approximately $240,000 on behalf of the Company in lieu of paying cash for certain
consulting services provided by a related entity of MCP. The fee was included in operating expenses in the 2007 Consolidated Statements of Operations and paid in capital on the Companys Consolidated Statement of Changes in Stockholders
Equity.

15. Transaction Expenses

In connection with
the March 31, 2005 Acquisition, the Predecessor incurred transaction expenses totaling $24.7 million for the three months ended March 31, 2005 which included the following expenses: $7.3 million long-term incentive payment to the
former Senior Vice President of Sales and Marketing pursuant to the terms of his employment contract, $7.1 million in fees to former owners, $6.2 million in fees to the Companys financial advisor, a $2.6 million long-term incentive
payment to a former officer pursuant to the terms of his employment contract, $0.6 million in payments to employees of the Company, $0.6 million in legal expenses, $0.1 million in accounting-related expenses, and $0.2 million in
other fees and expenses.



F - 31



---

MSC  Medical Services Company

Notes to Consolidated Financial Statements (Continued)



16. Adjustment to Net Accounts Receivable Balance

In 2004, the Company implemented a new billing system before establishing certain necessary back office processes. As a result, until these processes were established,
billings were delayed and often did not contain the information required by the Companys customers. The Companys resources were overwhelmed by the large number of small dollar invoices, leading to failures to include proper billing
information, and efforts to collect these invoices increasingly strained relationships with the Companys customers. In the third quarter of 2005, the Company concluded that continued collection efforts were having and would continue to have a
negative impact on the future prospects of the Company. Therefore, the Company determined not to continue pursuing collection efforts with respect to certain receivables it had deemed uncollectible and recorded charges and reserve increases to
adjust the net accounts receivable balance to the estimated collectible amount. As a result, during the third quarter of 2005, the Company recorded an adjustment related to a change in estimate to write-off of accounts receivable and an increase in
the reserve for doubtful accounts. The $15.5 million charge included a $10.5 million write-off of accounts receivable, of which $5.4 million was previously reserved, and a $10.4 million increase in the reserve for doubtful accounts. During the third
quarter of 2005 and for the remainder of the year, the Company increased the provision for doubtful accounts from 0.85% to 2.5% of net sales. Accordingly, the increase in the provision for doubtful accounts in the third quarter of 2005 of $1.2
million (increasing the provision rate from 0.85% to 2.5%) was not included in the $15.5 million adjustment referred to above.

In conjunction with
preparing the Companys 2005 annual financial statements, the Company re-assessed the collection opportunity of outstanding receivables, taking into account the analysis and adjustment occurring during the third quarter of fiscal 2005. During
this process the Company evaluated various factors, such as, cash collected on individual receivables, aging of receivable balances and specific communications with individual customers. The Company also contacted a significant number of customers
in an effort to obtain direct confirmation regarding individual invoice balances outstanding as of December 31, 2005. As a result, the Company identified additional facts and circumstances from those previously noted during the third quarter
fiscal 2005 review with respect to certain classes of products and services. The Company concluded that its allowance for doubtful accounts balance was insufficient to cover its collectibility risks associated with (a) non-standard products and
services, (b) net receivable balances after the Companys billing was partially paid by its customer, and (c) aged portfolio of receivables. Therefore, the Company recorded an additional charge of $3.1 million, in addition to the $1.8
million recorded as a result of its existing estimation methodologies resulting in a total bad debt reserve of $17.2 million for the year ended December 31, 2005.

17. Adjustment to Sales Tax Liability

During 2005 the Company began to receive inquiries from several states
regarding the Companys sales tax filing practices. Based on these inquiries, the Company performed a review of its existing liability for sales tax payable. This analysis included researching the taxability of the Companys product
categories in all states, the voluntary disclosure benefits, and the sales tax exposure existing



F - 32



---

MSC  Medical Services Company

Notes to Consolidated Financial Statements (Continued)



with all states. The Companys analysis was completed in the third quarter of 2005 and indicated that its existing liability was understated by
approximately $3.0 million. As a result of this change in estimate, the Company incurred a charge and a corresponding increase in its sales tax liability. The amount of sales tax payable is reflected in accrued expenses in the Companys
December 31, 2007 and 2006 balance sheet. The Company has implemented several new procedures to improve the accrual and reporting process. The Company deems the additional process controls and the recorded charge to be adequate as of
December 31, 2007 and 2006.

18. Litigation Settlement

In conjunction with the sale of the Company in March 2005, an escrow account was established with Wells Fargo Bank as the escrow agent and $15.0 million of the purchase price was deposited in the escrow account to be used as security for
and to satisfy claims arising out of the transaction. On May 26, 2006, the parent delivered to the stockholder representative for the sellers of the Company an indemnification claim against the escrow balance. A $12.4 million
settlement was reached on May 30, 2007 by and between the Company and the sellers as part of a settlement agreement that included a cash settlement to the Company paid out from the escrow account of $9 million and forfeiture of $3.4
million of unpaid tax benefits. Consistent with applicable accounting standards and SEC guidance, this transaction has been accounted for as an adjustment to results of operations in 2007.

19. Selected Quarterly Financial Data (Unaudited)

The following
is selected quarterly financial data for the years ended December 31, 2007 and 2006.



|                              |  |                |        |               |   |              |  |               |        |  |   |       
|----------------------------- |  | -------------- | ------ | ------------- | - | ------------ |  | ------------- | ------ |  | - | ------
|                              |  | FirstQuarter   |        | SecondQuarter |   | ThirdQuarter |  | FourthQuarter
|                              |  | (in thousands)
|Year Ended 2007:              |  |                |        |               |   |              |  |               |        |  |   |       
|Net sales                     |  | $              | 85,391 |               | $ | 82,552       |  | $             | 73,378 |  | $ | 71,699
|Cost of revenue               |  |                | 68,151 |               |   | 65,167       |  |               | 57,916 |  |   | 56,722
|Gross profit                  |  |                | 17,240 |               |   | 17,385       |  |               | 15,462 |  |   | 14,997
|Operating expenses            |  |                | 11,810 |               |   | 11,537       |  |               | 11,664 |  |   | 10,659
|Depreciation and amortization |  |                | 2,931  |               |   | 2,854        |  |               | 2,774  |  |   | 3,350 



F - 33



---

MSC  Medical Services Company

Notes to Consolidated Financial Statements (Continued)



|                                       |  |   |        |   |  |   |         |   |  |   |        |   |  |   |         |  
|-------------------------------------- |  | - | ------ | - |  | - | ------- | - |  | - | ------ | - |  | - | ------- | -
|Impairment of goodwill and intangibles |  |   |        |   |  |   |         |   |  |   |        |   |  |   | 48,516  |  
|Litigation settlement                  |  |   |       |   |  |   | (12,363 | ) |  |   |       |   |  |   |        |  
|Operating income (loss)                |  |   | 2,499  |   |  |   | 15,357  |   |  |   | 1,024  |   |  |   | (47,548 | )
|Interest expense, net                  |  |   | 5,294  |   |  |   | 5,417   |   |  |   | 5,272  |   |  |   | 5,417   |  
|(Loss)/Income before income taxes      |  |   | (2,795 | ) |  |   | 9,940   |   |  |   | (4,248 | ) |  |   | (52,965 | )
|Income tax (benefit)                   |  |   | (1,051 | ) |  |   | (597    | ) |  |   | (1,672 | ) |  |   | (5,375  | )
|Net (loss)/income                      |  | $ | (1,744 | ) |  | $ | 10,537  |   |  | $ | (2,576 | ) |  | $ | (47,590 | )



|                              |  |                |        |   |               |   |        |              |  |   |               |   |  |   |        |  
|----------------------------- |  | -------------- | ------ | - | ------------- | - | ------ | ------------ |  | - | ------------- | - |  | - | ------ | -
|                              |  | FirstQuarter   |        |   | SecondQuarter |   |        | ThirdQuarter |  |   | FourthQuarter |  
|                              |  | (in thousands) |       
|Year Ended 2006:              |  |                |        |   |               |   |        |              |  |   |               |   |  |   |        |  
|Net sales                     |  | $              | 79,681 |   |               | $ | 84,096 |              |  | $ | 81,496        |   |  | $ | 79,617 |  
|Cost of revenue               |  |                | 64,311 |   |               |   | 66,953 |              |  |   | 65,120        |   |  |   | 64,395 |  
|Gross profit                  |  |                | 15,370 |   |               |   | 17,143 |              |  |   | 16,376        |   |  |   | 15,222 |  
|Operating expenses            |  |                | 11,365 |   |               |   | 11,230 |              |  |   | 10,860        |   |  |   | 11,286 |  
|Depreciation and amortization |  |                | 2,890  |   |               |   | 3,004  |              |  |   | 3,080         |   |  |   | 3,016  |  
|Operating income              |  |                | 1,115  |   |               |   | 2,909  |              |  |   | 2,436         |   |  |   | 920    |  
|Interest expense              |  |                | 5,009  |   |               |   | 5,266  |              |  |   | 5,430         |   |  |   | 5,240  |  
|(Loss) before income taxes    |  |                | (3,894 | ) |               |   | (2,357 | )            |  |   | (2,994        | ) |  |   | (4,320 | )
|Income tax (benefit)          |  |                | (1,462 | ) |               |   | (885   | )            |  |   | (1,125        | ) |  |   | (1,621 | )
|Net (loss)                    |  | $              | (2,432 | ) |               | $ | (1,472 | )            |  | $ | (1,869        | ) |  | $ | (2,699 | )

20. Subsequent Event

On January 28, 2008, the Company acquired 100% of the outstanding membership interests of ZoneCare USA of Delray, LLC, a Florida limited liability company (ZoneCare), and Speedy Re-employment, LLC, a Florida limited
liability company (Speedy), and substantially all of the assets of SelectMRI, LLC, a Florida limited liability company (Select MRI and together with ZoneCare and Speedy, the Acquisition Entities) for $25,000,000,
$7,000,000, and $500,000, respectively, paid in cash subject to escrows and



F - 34



---

MSC  Medical Services Company

Notes to Consolidated Financial Statements (Continued)



holdbacks. In connection with the purchase of the assets of SelectMRI, the Company formed a wholly-owned subsidiary, SelectMRI Acquisition, LLC, a Delaware
limited liability company (Select Acquisition), which actually acquired the assets of SelectMRI. The purchase of the Acquisition Entities was funded through a combination of equity instruments issued to investors by the Parent. The funds
generated through the issuance were pushed down to the Company to purchase the Acquisition Entities, which are now wholly owned subsidiaries of the Company.

In connection with the acquisitions the Company restructured its debt agreements to account for the acquisitions. On January 18, 2008, the Company entered into Amendment No. 4 (Amendment No. 4) to the Credit
Agreement dated as of March 31, 2005 among the Company, MCP-MSC Acquisition, Inc., the banks, financial institutions and other lenders party thereto (collectively, the Lenders) and Bank of America, N.A., as administrative agent
(in such capacity, the Administrative Agent) for the Lenders, as amended by Amendment No. 1 to the Credit Agreement dated as of May 12, 2005, Amendment No. 2 to the Credit Agreement dated as of December 9, 2005 and
Amendment No. 3 to the Credit Agreement dated as of December 14, 2006. See footnote 6 for other requirement under the Credit Agreement.

In
Amendment No. 4, the Company, the Administrative Agent and the Lenders agreed to amend the Credit Agreement in certain respects, including, but not limited to, the items set forth below:



| |  |  | Pro Forma Calculations. a new section regarding pro forma calculations was added which provides that for the purposes of calculating the consolidated fixed
charge coverage ratio and the first lien leverage ratio, investments made by the Company or any of its subsidiaries during the applicable measurement period shall be calculated on a pro forma basis assuming that all such investments (and the change
in consolidated EBITDA resulting therefrom and any indebtedness incurred in connection therewith) had occurred on the first day of the applicable measurement period. Additionally, consolidated EBITDA of the Company in respect of the fiscal quarters
ended June 30, 2007, September 30, 2007 and December 31, 2007 shall be increased by $1.4 million, $1.1 million and $1.2 million, respectively, in order to give pro forma effect to the acquisition of all of the membership
interests in Speedy Re-Employment, LLC, and ZoneCare USA of Delray, LLC (together with its subsidiary ZoneCareUSA DME, LLC) and, through SelectMRI Acquisition, LLC, substantially all of the assets of SelectMRI, LLC.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Restricted Transactions. Any investments financed solely with investment equity contribution proceeds and any transactions falling within clause (e) of
the definition of restricted transaction shall be excluded from the covenant restricting restricted transactions.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Consolidated Fixed Charge Coverage Ratio. The minimum consolidated fixed charge coverage ratios required to be maintained by the Company under the Credit
Agreement beginning during the fiscal quarter period ending on March 31, 2008 and thereafter have been reduced to a range of 0.80:1.00 to 1.25:1.00.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F - 35



---

MSC  Medical Services Company

Notes to Consolidated Financial Statements (Continued)



| |  |  | Capital Expenditures. The Companys annual limits on capital expenditures were amended to allow a range of $5 million to $5.8 million for the remainder
of the term of the Credit Agreement.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Definitions. In connection with the amendments described above, Amendment No. 4 amended the definition of Subsidiary, Suspension
Consolidated Fixed Charge Coverage Ratio and Transaction Conditions, and added Investment Equity Contribution Proceeds as a new defined term to the Credit Agreement.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

On February 5, 2008, the Company, the Parent, each of ZoneCare, ZoneCareUSA DME, LLC, a Florida limited liability company, Speedy, and SelectMRI (the
Subsidiaries), and U.S. Bank National Association (the Trustee) entered Supplemental Indentures (the Supplemental Indentures), pursuant to which the Subsidiaries were added as new subsidiaries of the Company under
the Indenture (the Indenture), dated as of June 21, 2005, between the Company and the Trustee. The Company issued its Senior Secured Floating Rate Notes due 2011 (the Notes) under the Indenture. The Supplemental
Indentures provide that the Subsidiaries will guarantee all of the obligations of the Company under the Notes and the Indenture, subject to the terms of the Supplemental Indentures. In connection with the Supplemental Indentures, the Subsidiaries
entered into Second Lien Security Agreement Supplements on February 5, 2008 (the Second Lien Security Supplements) pursuant to which the Subsidiaries joined as parties to the Second Lien Security Agreements among the Company and the
Parent, addressed to Trustee, as indenture trustee and collateral agent for the benefit of Trustee and the holders from time to time of the certain second lien notes as defined in such agreement.

On February 5, 2008, the Subsidiaries entered into Security Agreement Supplements (the Security Agreement Supplements) with Bank of America, N.A. (the
Administrative Agent), as administrative agent under the Revolving Credit Agreement (the Revolving Credit Agreement), dated as of March 31, 2005, among the Company, the lenders party thereto and the Administrative Agent.
Pursuant to the Security Agreement Supplements, the Subsidiaries pledged certain assets as security for the Companys obligations under the Revolving Credit Agreement and the related loan documents and also agreed to be bound as
Grantors by all of the terms and provisions of the Security Agreement, dated as of March 31, 2005 and executed in connection with the Revolving Credit Agreement, to the same extent as each of the other Grantors. The Subsidiaries
also entered Subsidiary Guaranty Supplements (the Subsidiary Guaranty Supplements), dated as of February 5, 2008, with the Administrative Agent, pursuant to which the Subsidiaries agreed to be bound as Guarantors by all
of the terms and conditions of the Subsidiary Guaranty, dated as of March 31, 2005 and executed in connection with the Revolving Credit Agreement, to the same extent as each of the other Guarantors.

21. Guarantor Financial Statements

On May 12, 2005, MCP-MSC
Acquisition, Inc. (HoldCo), the parent company of MSC- Medical Services Company, issued



F - 36



---

MSC  Medical Services Company

Notes to Consolidated Financial Statements (Continued)



13.50% Senior Discount Notes due April 2013, to Banc of America Securities LLC (Banc of America) in the principal amount at maturity of
$38,732,000 with a current carrying amount of $33,916,975 (the Notes). The Notes were issued under the Indenture, dated as of May 12, 2005, between HoldCo and U.S. Bank National Association (U.S. Bank) as Trustee.

On August 8, 2006, MCP-MSC Investment LLC (MCP-MSC) purchased the Notes for $25,000,000 from Banc of America. MCP-MSC was formed by
Monitor Clipper Equity Partners II, L.P. and Monitor Clipper Equity Partners (NQP) II, L.P., the primary stockholders of HoldCo, as a special-purpose limited liability company for the purpose of purchasing and holding the Notes. A First Supplemental
Indenture between HoldCo and U.S. Bank was also signed on August 8, 2006 to amend certain calculations contained in the Indenture to reflect this purchase. There were no changes to HoldCos obligation under the Indenture as a result of the
purchase. In accordance with the terms of the Note, no interest payments were required to be made to MCP-MSC in the year ended December 31, 2006 or 2007.

The Companys Senior Secured Floating Rate Notes are guaranteed by the Parent (Guarantor) on a senior secured basis. The notes are the Companys and the Guarantors senior secured obligation and will rank equally
in right of payment with all of the Companys and Guarantors existing and future unsubordinated indebtedness. The notes are effectively junior to the Companys and Guarantors indebtedness under the Companys senior secured
revolving credit facility to the extent of the value of the assets securing such facility. The notes are secured by a second priority lien on substantially all of the Companys and Guarantors existing and future assets, as well as capital
stock. The senior secured revolving credit facility is secured by a first priority lien on all such assets.

The Company has not presented separate
financial statements for the Guarantor because it has deemed that such financial statements would not provide investors with any material additional information. Included in the tables below are the consolidating balance sheets as of
December 31, 2007 and December 31, 2006, the consolidating statements of operations for the three years ended December 31, 2007, 2006 and 2005 and statements of cash flows for the three years ended December 31, 2007, 2006 and
2005 of: (a) the Parent (Guarantor), (b) the Company, (c) elimination entries necessary to consolidate the Parent with the Company, and (d) the consolidated company, MCPMSC Acquisition, Inc.

The consolidating statement of operations and statements of cash flows for the year ended December 31, 2005 represent activity subsequent to the Acquisition date of
March 31, 2005 for the Successor parent and subsidiary companies only.



F - 37



---

MCP-MSC Acquisition, Inc.

Consolidating Balance Sheet

(Dollars in thousands)



|                                      |  |                   |         |                   |   |              |  |   |              |   |          |   |              |  |              |         |  |              |         |  |   |          |   |  |   |        
|------------------------------------- |  | ----------------- | ------- | ----------------- | - | ------------ |  | - | ------------ | - | -------- | - | ------------ |  | ------------ | ------- |  | ------------ | ------- |  | - | -------- | - |  | - | -------
|                                      |  | December 31, 2007 |         | December 31, 2006
|                                      |  | (Parent)          |         | (Subsidiary)      |   | Eliminations |  |   | Consolidated |   | (Parent) |   | (Subsidiary) |  | Eliminations |         |  | Consolidated
|Assets                                |  |                   |         |                   |   |              |  |   |              |   |          |   |              |  |              |         |  |              |         |  |   |          |   |  |   |        
|Current assets:                       |  |                   |         |                   |   |              |  |   |              |   |          |   |              |  |              |         |  |              |         |  |   |          |   |  |   |        
|Cash                                  |  | $                 |        |                   | $ | 5,750        |  | $ |             |   |          | $ | 5,750        |  | $            |        |  | $            | 6,101   |  | $ |         |   |  | $ | 6,101  
|Accounts receivable                   |  |                   |        |                   |   | 57,858       |  |   |             |   |          |   | 57,858       |  |              |        |  |              | 63,537  |  |   |         |   |  |   | 63,537 
|Income tax receivable                 |  |                   |        |                   |   | 398          |  |   |             |   |          |   | 398          |  |              |        |  |              |        |  |   |         |   |  |   |       
|Other current assets                  |  |                   |        |                   |   | 734          |  |   |             |   |          |   | 734          |  |              |        |  |              | 1,254   |  |   |         |   |  |   | 1,254  
|Current deferred income taxes         |  |                   |        |                   |   | 7,642        |  |   |             |   |          |   | 7,642        |  |              |        |  |              | 7,965   |  |   |         |   |  |   | 7,965  
|                                      |  |                   |         |                   |   |              |  |   |              |   |          |   |              |  |              |         |  |              |         |  |   |          |   |  |   |        
|Total current assets                  |  |                   |        |                   |   | 72,382       |  |   |             |   |          |   | 72,382       |  |              |        |  |              | 78,857  |  |   |         |   |  |   | 78,857 
|Property and equipment                |  |                   |        |                   |   | 8,034        |  |   |             |   |          |   | 8,034        |  |              |        |  |              | 5,801   |  |   |         |   |  |   | 5,801  
|Intangible assets:                    |  |                   |         |                   |   |              |  |   |              |   |          |   |              |  |              |         |  |              |         |  |   |          |   |  |   |        
|Goodwill                              |  |                   |        |                   |   | 196,091      |  |   |             |   |          |   | 196,091      |  |              |        |  |              | 236,207 |  |   |         |   |  |   | 236,207
|Trademarks                            |  |                   |        |                   |   | 15,700       |  |   |             |   |          |   | 15,700       |  |              |        |  |              | 24,100  |  |   |         |   |  |   | 24,100 
|Vendor contracts, net                 |  |                   |        |                   |   | 18,053       |  |   |             |   |          |   | 18,053       |  |              |        |  |              | 20,543  |  |   |         |   |  |   | 20,543 
|Customer relationships, net           |  |                   |        |                   |   | 63,509       |  |   |             |   |          |   | 63,509       |  |              |        |  |              | 69,688  |  |   |         |   |  |   | 69,688 
|                                      |  |                   |         |                   |   |              |  |   |              |   |          |   |              |  |              |         |  |              |         |  |   |          |   |  |   |        
|Total intangible assets               |  |                   |        |                   |   | 293,353      |  |   |             |   |          |   | 293,353      |  |              |        |  |              | 350,538 |  |   |         |   |  |   | 350,538
|Other assets:                         |  |                   |         |                   |   |              |  |   |              |   |          |   |              |  |              |         |  |              |         |  |   |          |   |  |   |        
|Investment in consolidated subsidiary |  |                   | 142,410 |                   |   |             |  |   | (142,410     | ) |          |   |             |  |              | 183,675 |  |              |        |  |   | (183,675 | ) |  |   |       
|Deferred debt issuance costs, net     |  |                   | 560     |                   |   | 3,820        |  |   |             |   |          |   | 4,380        |  |              | 658     |  |              | 4,959   |  |   |         |   |  |   | 5,617  
|Other                                 |  |                   |        |                   |   | 154          |  |   |             |   |          |   | 154          |  |              |        |  |              | 921     |  |   |         |   |  |   | 921    
|Deferred income taxes                 |  |                   | 4,944   |                   |   |             |  |   |             |   |          |   | 4,944        |  |              | 2,855   |  |              |        |  |   |         |   |  |   | 2,855  
|                                      |  |                   |         |                   |   |              |  |   |              |   |          |   |              |  |              |         |  |              |         |  |   |          |   |  |   |        
|Total other assets                    |  |                   | 147,914 |                   |   | 3,974        |  |   | (142,410     | ) |          |   | 9,478        |  |              | 187,188 |  |              | 5,880   |  |   | (183,675 | ) |  |   | 9,393  
|                                      |  |                   |         |                   |   |              |  |   |              |   |          |   |              |  |              |         |  |              |         |  |   |          |   |  |   |        
|Total assets                          |  | $                 | 147,914 |                   | $ | 377,743      |  | $ | (142,410     | ) |          | $ | 383,247      |  | $            | 187,188 |  | $            | 441,076 |  | $ | (183,675 | ) |  | $ | 444,589
|                                      |  |                   |         |                   |   |              |  |   |              |   |          |   |              |  |              |         |  |              |         |  |   |          |   |  |   |        



F - 38



---

MCP-MSC Acquisition, Inc.

Consolidating Balance Sheet

(Dollars in thousands)



|                                                                                                                             |  |                   |         |   |                   |   |         |              |  |   |              |   |  |                        |         |   |              |   |         |              |  |   |              |   |  |   |          |   |  |   |         |  
|---------------------------------------------------------------------------------------------------------------------------- |  | ----------------- | ------- | - | ----------------- | - | ------- | ------------ |  | - | ------------ | - |  | ---------------------- | ------- | - | ------------ | - | ------- | ------------ |  | - | ------------ | - |  | - | -------- | - |  | - | ------- | -
|                                                                                                                             |  | December 31, 2007 |         |   | December 31, 2006 |  
|                                                                                                                             |  | (Parent)          |         |   | (Subsidiary)      |   |         | Eliminations |  |   | Consolidated |   |  | (Parent)               |         |   | (Subsidiary) |   |         | Eliminations |  |   | Consolidated |  
|                                                                                                                             |  |                   |         |   |                   |   |         |              |  |   |              |   |  | (Dollars in thousands) |        
|Liabilities and stockholders equity                                                                                         |  |                   |         |   |                   |   |         |              |  |   |              |   |  |                        |         |   |              |   |         |              |  |   |              |   |  |   |          |   |  |   |         |  
|Current liabilities:                                                                                                         |  |                   |         |   |                   |   |         |              |  |   |              |   |  |                        |         |   |              |   |         |              |  |   |              |   |  |   |          |   |  |   |         |  
|Short-term debt                                                                                                              |  | $                 |        |   |                   | $ | 18,620  |              |  | $ |             |   |  | $                      | 18,620  |   |              | $ |        |              |  | $ | 20,120       |   |  | $ |         |   |  | $ | 20,120  |  
|Accounts payable                                                                                                             |  |                   |        |   |                   |   | 6,328   |              |  |   |             |   |  |                        | 6,328   |   |              |   |        |              |  |   | 11,874       |   |  |   |         |   |  |   | 11,874  |  
|Accrued expenses                                                                                                             |  |                   | 918     |   |                   |   | 39,205  |              |  |   |             |   |  |                        | 40,123  |   |              |   | 817     |              |  |   | 42,369       |   |  |   |         |   |  |   | 43,186  |  
|Due to former owners                                                                                                         |  |                   |        |   |                   |   |        |              |  |   |             |   |  |                        |        |   |              |   |        |              |  |   | 3,366        |   |  |   |         |   |  |   | 3,366   |  
|Deferred revenue                                                                                                             |  |                   |        |   |                   |   | 373     |              |  |   |             |   |  |                        | 373     |   |              |   |        |              |  |   | 185          |   |  |   |         |   |  |   | 185     |  
|Income taxes payable                                                                                                         |  |                   |        |   |                   |   |        |              |  |   |             |   |  |                        |        |   |              |   |        |              |  |   | 48           |   |  |   |         |   |  |   | 48      |  
|                                                                                                                             |  |                   |         |   |                   |   |         |              |  |   |              |   |  |                        |         |   |              |   |         |              |  |   |              |   |  |   |          |   |  |   |         |  
|Total current liabilities                                                                                                    |  |                   | 918     |   |                   |   | 64,526  |              |  |   |             |   |  |                        | 65,444  |   |              |   | 817     |              |  |   | 77,962       |   |  |   |         |   |  |   | 78,779  |  
|Non-current liabilities:                                                                                                     |  |                   |         |   |                   |   |         |              |  |   |              |   |  |                        |         |   |              |   |         |              |  |   |              |   |  |   |          |   |  |   |         |  
|Long-term debt                                                                                                               |  |                   | 41,311  |   |                   |   | 149,145 |              |  |   |             |   |  |                        | 190,456 |   |              |   | 36,241  |              |  |   | 148,895      |   |  |   |         |   |  |   | 185,136 |  
|Other liabilities                                                                                                            |  |                   |        |   |                   |   | 797     |              |  |   |             |   |  |                        | 797     |   |              |   |        |              |  |   |             |   |  |   |         |   |  |   |        |  
|Deferred income taxes                                                                                                        |  |                   |        |   |                   |   | 20,865  |              |  |   |             |   |  |                        | 20,865  |   |              |   |        |              |  |   | 30,544       |   |  |   |         |   |  |   | 30,544  |  
|                                                                                                                             |  |                   |         |   |                   |   |         |              |  |   |              |   |  |                        |         |   |              |   |         |              |  |   |              |   |  |   |          |   |  |   |         |  
|Total non-current liabilities                                                                                                |  |                   | 41,311  |   |                   |   | 170,807 |              |  |   |             |   |  |                        | 212,118 |   |              |   | 36,241  |              |  |   | 179,439      |   |  |   |         |   |  |   | 215,680 |  
|                                                                                                                             |  |                   |         |   |                   |   |         |              |  |   |              |   |  |                        |         |   |              |   |         |              |  |   |              |   |  |   |          |   |  |   |         |  
|Total liabilities                                                                                                            |  |                   | 42,229  |   |                   |   | 235,333 |              |  |   |             |   |  |                        | 277,562 |   |              |   | 37,058  |              |  |   | 257,401      |   |  |   |         |   |  |   | 294,459 |  
|Stockholders equity:                                                                                                        |  |                   |         |   |                   |   |         |              |  |   |              |   |  |                        |         |   |              |   |         |              |  |   |              |   |  |   |          |   |  |   |         |  
|Common stock, $.001 par value, 225,000,000 shares authorized, 181,375,000 shares issued and outstanding at December 31,
2005 |  |                   | 185     |   |                   |   |        |              |  |   |             |   |  |                        | 185     |   |              |   | 181     |              |  |   |             |   |  |   |         |   |  |   | 181     |  
|Additional paid-in capital                                                                                                   |  |                   | 187,035 |   |                   |   | 216,090 |              |  |   | (216,090     | ) |  |                        | 187,035 |   |              |   | 185,590 |              |  |   | 214,643      |   |  |   | (214,643 | ) |  |   | 185,590 |  
|Accumulated other comprehensive income                                                                                       |  |                   | (778    | ) |                   |   | (778    | )            |  |   | 778          |   |  |                        | (778    | ) |              |   | 561     |              |  |   | 561          |   |  |   | (561     | ) |  |   | 561     |  
|Retained (deficit) earnings                                                                                                  |  |                   | (80,757 | ) |                   |   | (72,902 | )            |  |   | 72,902       |   |  |                        | (80,757 | ) |              |   | (36,202 | )            |  |   | (31,529      | ) |  |   | 31,529   |   |  |   | (36,202 | )
|                                                                                                                             |  |                   |         |   |                   |   |         |              |  |   |              |   |  |                        |         |   |              |   |         |              |  |   |              |   |  |   |          |   |  |   |         |  
|Total stockholders equity                                                                                                   |  |                   | 105,685 |   |                   |   | 142,410 |              |  |   | (142,410     | ) |  |                        | 105,685 |   |              |   | 150,130 |              |  |   | 183,675      |   |  |   | (183,675 | ) |  |   | 150,130 |  
|                                                                                                                             |  |                   |         |   |                   |   |         |              |  |   |              |   |  |                        |         |   |              |   |         |              |  |   |              |   |  |   |          |   |  |   |         |  
|Total liabilities and stockholders equity                                                                                   |  | $                 | 147,914 |   |                   | $ | 377,743 |              |  | $ | (142,410     | ) |  | $                      | 383,247 |   |              | $ | 187,188 |              |  | $ | 441,076      |   |  | $ | (183,675 | ) |  | $ | 444,589 |  
|                                                                                                                             |  |                   |         |   |                   |   |         |              |  |   |              |   |  |                        |         |   |              |   |         |              |  |   |              |   |  |   |          |   |  |   |         |  



F - 39



---

MCP-MSC Acquisition, Inc.

Consolidating Statement of Operations

(Dollars in thousands)



|                                             |  |                   |         |   |              |   |         |              |  |              |        |  |   |         |  
|-------------------------------------------- |  | ----------------- | ------- | - | ------------ | - | ------- | ------------ |  | ------------ | ------ |  | - | ------- | -
|                                             |  | December 31, 2007 |        
|                                             |  | (Parent)          |         |   | (Subsidiary) |   |         | Eliminations |  | Consolidated |       
|Net revenue                                  |  | $                 |        |   |              | $ | 313,020 |              |  | $            |       |  | $ | 313,020 |  
|Cost of revenue                              |  |                   |        |   |              |   | 247,956 |              |  |              |       |  |   | 247,956 |  
|                                             |  |                   |         |  
|Gross profit                                 |  |                   |        |   |              |   | 65,064  |              |  |              |       |  |   | 65,064  |  
|Operating expenses                           |  |                   |        |   |              |   | 45,655  |              |  |              |       |  |   | 45,655  |  
|Impairment of goodwill and other intangibles |  |                   |        |   |              |   | 48,516  |              |  |              |       |  |   | 48,516  |  
|Adjustment for accounts receivable           |  |                   |        |   |              |   |        |              |  |              |       |  |   |        |  
|Adjustment for state sales tax               |  |                   |        |   |              |   |        |              |  |              |       |  |   |        |  
|Net loss on disposal of fixed assets         |  |                   |        |   |              |   | 15      |              |  |              |       |  |   | 15      |  
|Litigation settlement                        |  |                   |        |   |              |   | (12,363 | )            |  |              |       |  |   | (12,363 | )
|Depreciation and amortization                |  |                   |        |   |              |   | 11,909  |              |  |              |       |  |   | 11,909  |  
|                                             |  |                   |         |   |              |   |         |              |  |              |        |  |   |         |  
|Total expenses                               |  |                   |        |   |              |   | 93,732  |              |  |              |       |  |   | 93,732  |  
|                                             |  |                   |         |   |              |   |         |              |  |              |        |  |   |         |  
|Operating income                             |  |                   |        |   |              |   | (28,668 | )            |  |              |       |  |   | (28,668 | )
|Equity in loss of consolidated subsidiary    |  |                   | (41,373 | ) |              |   |        |              |  |              | 41,373 |  |   |        |  
|Interest expense, net                        |  |                   | 4,784   |   |              |   | 21,400  |              |  |              |       |  |   | 26,184  |  
|                                             |  |                   |         |   |              |   |         |              |  |              |        |  |   |         |  
|Loss before income tax (benefit)             |  |                   | (46,157 | ) |              |   | (50,068 | )            |  |              | 41,373 |  |   | (54,852 | )
|Income tax (benefit)                         |  |                   | (2,031  | ) |              |   | (8,695  | )            |  |              |       |  |   | (10,726 | )
|                                             |  |                   |         |   |              |   |         |              |  |              |        |  |   |         |  
|Net loss                                     |  | $                 | (44,126 | ) |              | $ | (41,373 | )            |  | $            | 41,373 |  | $ | (44,126 | )
|                                             |  |                   |         |   |              |   |         |              |  |              |        |  |   |         |  



F - 40



---

MCP-MSC Acquisition, Inc.

Consolidating Statement of Operations

(Dollars in thousands)



|                                          |  |                   |         |   |              |   |         |              |  |              |       |  |   |         |  
|----------------------------------------- |  | ----------------- | ------- | - | ------------ | - | ------- | ------------ |  | ------------ | ----- |  | - | ------- | -
|                                          |  | December 31, 2006 |        
|                                          |  | (Parent)          |         |   | (Subsidiary) |   |         | Eliminations |  | Consolidated |      
|Net revenue                               |  | $                 |        |   |              | $ | 324,890 |              |  | $            |      |  | $ | 324,890 |  
|Cost of revenue                           |  |                   |        |   |              |   | 260,779 |              |  |              |      |  |   | 260,779 |  
|                                          |  |                   |         |  
|Gross profit                              |  |                   |        |   |              |   | 64,111  |              |  |              |      |  |   | 64,111  |  
|Operating expenses                        |  |                   |        |   |              |   | 44,741  |              |  |              |      |  |   | 44,741  |  
|Impairment of goodwill                    |  |                   |        |   |              |   |        |              |  |              |      |  |   |        |  
|Adjustment for accounts receivable        |  |                   |        |   |              |   |        |              |  |              |      |  |   |        |  
|Adjustment for state sales tax            |  |                   |        |   |              |   |        |              |  |              |      |  |   |        |  
|Net loss on disposal of fixed assets      |  |                   |        |   |              |   |        |              |  |              |      |  |   |        |  
|Litigation settlement                     |  |                   |        |   |              |   |        |              |  |              |      |  |   |        |  
|Depreciation and amortization             |  |                   |        |   |              |   | 11,990  |              |  |              |      |  |   | 11,990  |  
|                                          |  |                   |         |   |              |   |         |              |  |              |       |  |   |         |  
|Total expenses                            |  |                   |        |   |              |   | 56,731  |              |  |              |      |  |   | 56,731  |  
|                                          |  |                   |         |   |              |   |         |              |  |              |       |  |   |         |  
|Operating income                          |  |                   |        |   |              |   | 7,380   |              |  |              |      |  |   | 7,380   |  
|Equity in loss of consolidated subsidiary |  |                   | (8,472  | ) |              |   |        |              |  |              | 8,472 |  |   |        |  
|Interest expense, net                     |  |                   | 4,784   |   |              |   | 20,945  |              |  |              |      |  |   | 25,729  |  
|                                          |  |                   |         |   |              |   |         |              |  |              |       |  |   |         |  
|Loss before income tax (benefit)          |  |                   | (13,256 | ) |              |   | (13,565 | )            |  |              | 8,472 |  |   | (18,349 | )
|Income tax (benefit)                      |  |                   | (1,797  | ) |              |   | (5,093  | )            |  |              |      |  |   | (6,890  | )
|                                          |  |                   |         |   |              |   |         |              |  |              |       |  |   |         |  
|Net loss                                  |  | $                 | (11,459 | ) |              | $ | (8,472  | )            |  | $            | 8,472 |  | $ | (11,459 | )
|                                          |  |                   |         |   |              |   |         |              |  |              |       |  |   |         |  



F - 41



---

MCP-MSC Acquisition, Inc.

Consolidating Statement of Operations

(Dollars in thousands)



|                                          |  |                                                      |         |   |              |   |         |              |  |              |        |  |   |         |  
|----------------------------------------- |  | ---------------------------------------------------- | ------- | - | ------------ | - | ------- | ------------ |  | ------------ | ------ |  | - | ------- | -
|                                          |  | Post-Acquisition Nine Months Ended December 31, 2005 |        
|                                          |  | (Parent)                                             |         |   | (Subsidiary) |   |         | Eliminations |  | Consolidated |       
|Net revenue                               |  | $                                                    |        |   |              | $ | 226,551 |              |  | $            |       |  | $ | 226,551 |  
|Cost of revenue                           |  |                                                      |        |   |              |   | 185,411 |              |  |              |       |  |   | 185,411 |  
|                                          |  |                                                      |         |  
|Gross profit                              |  |                                                      |        |   |              |   | 41,140  |              |  |              |       |  |   | 41,140  |  
|Operating expenses                        |  |                                                      |        |   |              |   | 27,204  |              |  |              |       |  |   | 27,204  |  
|Impairment of goodwill                    |  |                                                      |        |   |              |   |        |              |  |              |       |  |   |        |  
|Adjustment for accounts receivable        |  |                                                      |        |   |              |   | 18,527  |              |  |              |       |  |   | 18,527  |  
|Adjustment for state sales tax            |  |                                                      |        |   |              |   | 3,047   |              |  |              |       |  |   | 3,047   |  
|Net loss on disposal of fixed assets      |  |                                                      |        |   |              |   |        |              |  |              |       |  |   |        |  
|Litigation settlement                     |  |                                                      |        |   |              |   |        |              |  |              |       |  |   |        |  
|Depreciation and amortization             |  |                                                      |        |   |              |   | 8,273   |              |  |              |       |  |   | 8,273   |  
|                                          |  |                                                      |         |   |              |   |         |              |  |              |        |  |   |         |  
|Total expenses                            |  |                                                      |        |   |              |   | 57,051  |              |  |              |       |  |   | 57,051  |  
|                                          |  |                                                      |         |   |              |   |         |              |  |              |        |  |   |         |  
|Operating income                          |  |                                                      |        |   |              |   | (15,911 | )            |  |              |       |  |   | (15,911 | )
|Equity in loss of consolidated subsidiary |  |                                                      | (23,057 | ) |              |   |        |              |  |              | 23,057 |  |   |        |  
|Interest expense, net                     |  |                                                      | 2,742   |   |              |   | 21,374  |              |  |              |       |  |   | 24,116  |  
|                                          |  |                                                      |         |   |              |   |         |              |  |              |        |  |   |         |  
|Loss before income tax (benefit)          |  |                                                      | (25,799 | ) |              |   | (37,285 | )            |  |              | 23,057 |  |   | (40,027 | )
|Income tax (benefit)                      |  |                                                      | (1,058  | ) |              |   | (14,228 | )            |  |              |       |  |   | (15,286 | )
|                                          |  |                                                      |         |   |              |   |         |              |  |              |        |  |   |         |  
|Net loss                                  |  | $                                                    | (24,741 | ) |              | $ | (23,057 | )            |  | $            | 23,057 |  | $ | (24,741 | )
|                                          |  |                                                      |         |   |              |   |         |              |  |              |        |  |   |         |  



F - 42



---

MCP-MSC Acquisition, Inc.

Consolidating Statement of Cash Flows

(Dollars in thousands)



|                                                                              |  |                   |         |   |              |   |         |              |  |   |              |   |  |   |         |  
|----------------------------------------------------------------------------- |  | ----------------- | ------- | - | ------------ | - | ------- | ------------ |  | - | ------------ | - |  | - | ------- | -
|                                                                              |  | December 31, 2007 |        
|                                                                              |  | (Parent)          |         |   | (Subsidiary) |   |         | Eliminations |  |   | Consolidated |  
|Operating activities                                                          |  |                   |         |   |              |   |         |              |  |   |              |   |  |   |         |  
|Net loss                                                                      |  | $                 | (44,126 | ) |              | $ | (41,373 | )            |  | $ | 41,373       |   |  | $ | (44,126 | )
|Adjustments to reconcile net (loss) to net cash used in operating activities: |  |                   |         |   |              |   |         |              |  |   |              |   |  |   |         |  
|Equity in loss of consolidated subsidiary                                     |  |                   | 41,373  |   |              |   |        |              |  |   | (41,373      | ) |  |   |        |  
|Depreciation                                                                  |  |                   |        |   |              |   | 3,241   |              |  |   |             |   |  |   | 3,241   |  
|Impairment of goodwill                                                        |  |                   |        |   |              |   | 48,516  |              |  |   |             |   |  |   | 48,516  |  
|Amortization of intangibles                                                   |  |                   |        |   |              |   | 8,668   |              |  |   |             |   |  |   | 8,668   |  
|Amortization of debt issuance costs and debt discount                         |  |                   |        |   |              |   | 1,326   |              |  |   |             |   |  |   | 1,326   |  
|Provision for deferred income taxes                                           |  |                   |        |   |              |   | (9,168  | )            |  |   |             |   |  |   | (9,168  | )
|Provision for bad debts                                                       |  |                   |        |   |              |   | 7,466   |              |  |   |             |   |  |   | 7,466   |  
|Stock-based compensation                                                      |  |                   |        |   |              |   | 1,207   |              |  |   |             |   |  |   | 1,207   |  
|Non-cash gain on litigation settlement                                        |  |                   |        |   |              |   | (3,366  | )            |  |   |             |   |  |   | (3,366  | )
|Other                                                                         |  |                   |        |   |              |   | (41     | )            |  |   |             |   |  |   | (41     | )
|Parent contribution for consulting expense                                    |  |                   |        |   |              |   | 240     |              |  |   |             |   |  |   | 240     |  
|Changes in operating assets and liabilities:                                  |  |                   |        |   |              |   |        |              |  |   |             |   |  |   |        |  
|Increase in accounts receivable                                               |  |                   |        |   |              |   | (1,787  | )            |  |   |             |   |  |   | (1,787  | )
|Decrease in other current assets                                              |  |                   |        |   |              |   | 521     |              |  |   |             |   |  |   | 521     |  
|Decrease in other non-current assets                                          |  |                   |        |   |              |   | (146    | )            |  |   |             |   |  |   | (146    | )
|Increase (decrease) in accounts payable & other                               |  |                   | 2,753   |   |              |   | (9,542  | )            |  |   |             |   |  |   | (6,789  | )
|Decrease in transaction expenses                                              |  |                   |        |   |              |   |        |              |  |   |             |   |  |   |        |  
|Increase in deferred revenue                                                  |  |                   |        |   |              |   | 188     |              |  |   |             |   |  |   | 188     |  
|Increase (decrease) in income taxes payable/receivable                        |  |                   |        |   |              |   | (288    | )            |  |   |             |   |  |   | (288    | )
|                                                                              |  |                   |         |   |              |   |         |              |  |   |              |   |  |   |         |  
|Net cash provided by operating activities                                     |  |                   |        |   |              |   | 5,662   |              |  |   |             |   |  |   | 5,662   |  
|                                                                              |  |                   |         |   |              |   |         |              |  |   |              |   |  |   |         |  
|Investing activities                                                          |  |                   |         |   |              |   |         |              |  |   |              |   |  |   |         |  
|Purchases of property and equipment                                           |  |                   |        |   |              |   | (4,583  | )            |  |   |             |   |  |   | (4,583  | )
|Proceeds from disposals of property and equipment                             |  |                   |        |   |              |   | 70      |              |  |   |             |   |  |   | 70      |  
|                                                                              |  |                   |         |   |              |   |         |              |  |   |              |   |  |   |         |  
|Net cash used in investing activities                                         |  |                   |        |   |              |   | (4,513  | )            |  |   |             |   |  |   | (4,513  | )
|                                                                              |  |                   |         |   |              |   |         |              |  |   |              |   |  |   |         |  
|Financing activities                                                          |  |                   |         |   |              |   |         |              |  |   |              |   |  |   |         |  
|Proceeds from short-term debt                                                 |  |                   |        |   |              |   | 2,000   |              |  |   |             |   |  |   | 2,000   |  
|Repayment of short-term debt                                                  |  |                   |        |   |              |   | (3,500  | )            |  |   |             |   |  |   | (3,500  | )
|                                                                              |  |                   |         |   |              |   |         |              |  |   |              |   |  |   |         |  
|Net cash provided by financing activities                                     |  |                   |        |   |              |   | (1,500  | )            |  |   |             |   |  |   | (1,500  | )
|                                                                              |  |                   |         |   |              |   |         |              |  |   |              |   |  |   |         |  
|Net increase (decrease) in cash                                               |  |                   |        |   |              |   | (351    | )            |  |   |             |   |  |   | (351    | )
|Cash, beginning of period                                                     |  |                   |        |   |              |   | 6,101   |              |  |   |             |   |  |   | 6,101   |  
|                                                                              |  |                   |         |   |              |   |         |              |  |   |              |   |  |   |         |  
|Cash, end of period                                                           |  | $                 |        |   |              | $ | 5,750   |              |  | $ |             |   |  | $ | 5,750   |  
|                                                                              |  |                   |         |   |              |   |         |              |  |   |              |   |  |   |         |  



F - 43



---

MCP-MSC Acquisition, Inc.

Consolidating Statement of Cash Flows

(Dollars in thousands)



|                                                                              |  |                   |         |   |              |   |         |              |  |   |              |   |  |   |         |  
|----------------------------------------------------------------------------- |  | ----------------- | ------- | - | ------------ | - | ------- | ------------ |  | - | ------------ | - |  | - | ------- | -
|                                                                              |  | December 31, 2006 |        
|                                                                              |  | (Parent)          |         |   | (Subsidiary) |   |         | Eliminations |  |   | Consolidated |  
|Operating activities                                                          |  |                   |         |   |              |   |         |              |  |   |              |   |  |   |         |  
|Net loss                                                                      |  | $                 | (11,459 | ) |              | $ | (8,472  | )            |  | $ | 8,472        |   |  | $ | (11,459 | )
|Adjustments to reconcile net (loss) to net cash used in operating activities: |  |                   |         |   |              |   |         |              |  |   |              |   |  |   |         |  
|Equity in loss of consolidated subsidiary                                     |  |                   | 8,472   |   |              |   |        |              |  |   | (8,472       | ) |  |   |        |  
|Depreciation                                                                  |  |                   |        |   |              |   | 3,322   |              |  |   |             |   |  |   | 3,322   |  
|Amortization of intangibles                                                   |  |                   |        |   |              |   | 8,668   |              |  |   |             |   |  |   | 8,668   |  
|Amortization of debt issuance costs and debt discount                         |  |                   | 257     |   |              |   | 1,337   |              |  |   |             |   |  |   | 1,594   |  
|Provision for deferred income taxes                                           |  |                   | (1,797  | ) |              |   | (5,098  | )            |  |   |             |   |  |   | (6,895  | )
|Provision for bad debts                                                       |  |                   |        |   |              |   | 7,576   |              |  |   |             |   |  |   | 7,576   |  
|Stock-based compensation                                                      |  |                   |        |   |              |   | 1,118   |              |  |   |             |   |  |   | 1,118   |  
|Changes in operating assets and liabilities:                                  |  |                   |         |   |              |   |         |              |  |   |              |   |  |   |         |  
|Increase in accounts receivable                                               |  |                   |        |   |              |   | (14,625 | )            |  |   |             |   |  |   | (14,625 | )
|Increase in inventories                                                       |  |                   |        |   |              |   | 32      |              |  |   |             |   |  |   | 32      |  
|Decrease in other current assets                                              |  |                   |        |   |              |   | (429    | )            |  |   |             |   |  |   | (429    | )
|Decrease in other non-current assets                                          |  |                   |        |   |              |   | (112    | )            |  |   |             |   |  |   | (112    | )
|Increase (decrease) in accounts payable & accrued expenses                    |  |                   | 4,527   |   |              |   | 7,312   |              |  |   |             |   |  |   | 11,839  |  
|Increase in deferred revenue                                                  |  |                   |        |   |              |   | 18      |              |  |   |             |   |  |   | 18      |  
|Increase (decrease) in income taxes payable/receivable                        |  |                   |        |   |              |   | 6,660   |              |  |   |             |   |  |   | (534    | )
|                                                                              |  |                   |         |   |              |   |         |              |  |   |              |   |  |   |         |  
|Net cash provided by operating activities                                     |  |                   |        |   |              |   | 7,307   |              |  |   |             |   |  |   | 7,307   |  
|                                                                              |  |                   |         |   |              |   |         |              |  |   |              |   |  |   |         |  
|Investing activities                                                          |  |                   |         |   |              |   |         |              |  |   |              |   |  |   |         |  
|Purchases of property and equipment                                           |  |                   |        |   |              |   | (3,972  | )            |  |   |             |   |  |   | (3,972  | )
|Cash paid to former owners                                                    |  |                   |        |   |              |   | (8,803  | )            |  |   |             |   |  |   | (8,803  | )
|                                                                              |  |                   |         |   |              |   |         |              |  |   |              |   |  |   |         |  
|Net cash used in investing activities                                         |  |                   |        |   |              |   | (12,775 | )            |  |   |             |   |  |   | (12,775 | )
|                                                                              |  |                   |         |   |              |   |         |              |  |   |              |   |  |   |         |  
|Financing activities                                                          |  |                   |         |   |              |   |         |              |  |   |              |   |  |   |         |  
|Proceeds from short-term debt                                                 |  |                   |        |   |              |   | 3,500   |              |  |   |             |   |  |   | 3,500   |  
|Debt issuance costs                                                           |  |                   |        |   |              |   | (231    | )            |  |   |             |   |  |   | (231    | )
|                                                                              |  |                   |         |   |              |   |         |              |  |   |              |   |  |   |         |  
|Net cash provided by financing activities                                     |  |                   |        |   |              |   | 3,269   |              |  |   |             |   |  |   | 3,269   |  
|                                                                              |  |                   |         |   |              |   |         |              |  |   |              |   |  |   |         |  
|Net increase (decrease) in cash                                               |  |                   |        |   |              |   | (2,199  | )            |  |   |             |   |  |   | (2,199  | )
|Cash, beginning of period                                                     |  |                   |        |   |              |   | 8,300   |              |  |   |             |   |  |   | 8,300   |  
|                                                                              |  |                   |         |   |              |   |         |              |  |   |              |   |  |   |         |  
|Cash, end of period                                                           |  | $                 |        |   |              | $ | 6,101   |              |  | $ |             |   |  | $ | 6,101   |  
|                                                                              |  |                   |         |   |              |   |         |              |  |   |              |   |  |   |         |  



F - 44



---

MCP-MSC Acquisition, Inc.

Consolidating Statement of Cash Flows

(Dollars in thousands)



|                                                                              |  |                                                      |          |   |              |   |          |              |  |   |              |   |  |   |          |  
|----------------------------------------------------------------------------- |  | ---------------------------------------------------- | -------- | - | ------------ | - | -------- | ------------ |  | - | ------------ | - |  | - | -------- | -
|                                                                              |  | Post-Acquisition Nine Months Ended December 31, 2005 |         
|                                                                              |  | (Parent)                                             |          |   | (Subsidiary) |   |          | Eliminations |  |   | Consolidated |  
|Operating activities                                                          |  |                                                      |          |   |              |   |          |              |  |   |              |   |  |   |          |  
|Net loss                                                                      |  | $                                                    | (24,741  | ) |              | $ | (23,057  | )            |  | $ | 23,057       |   |  | $ | (24,741  | )
|Adjustments to reconcile net (loss) to net cash used in operating activities: |  |                                                      |          |   |              |   |          |              |  |   |              |   |  |   |          |  
|Equity in loss of consolidated subsidiary                                     |  |                                                      | 23,057   |   |              |   |         |              |  |   | (23,057      | ) |  |   |         |  
|Depreciation                                                                  |  |                                                      |         |   |              |   | 1,771    |              |  |   |             |   |  |   | 1,771    |  
|Amortization of intangibles                                                   |  |                                                      |         |   |              |   | 6,502    |              |  |   |             |   |  |   | 6,502    |  
|Amortization of debt issuance costs and debt discount                         |  |                                                      | 103      |   |              |   | 7,436    |              |  |   |             |   |  |   | 7,539    |  
|Provision for deferred income taxes                                           |  |                                                      | (1,058   | ) |              |   | (5,208   | )            |  |   |             |   |  |   | (6,266   | )
|Provision for bad debts                                                       |  |                                                      |         |   |              |   | 4,853    |              |  |   |             |   |  |   | 4,853    |  
|Adjustment to allowance for doubtful accounts                                 |  |                                                      |         |   |              |   | 18,527   |              |  |   |             |   |  |   | 18,527   |  
|Stock-based compensation                                                      |  |                                                      |         |   |              |   |         |              |  |   |             |   |  |   |         |  
|Adjustment for sales tax liability                                            |  |                                                      |         |   |              |   | 3,047    |              |  |   |             |   |  |   | 3,047    |  
|Changes in operating assets and liabilities:                                  |  |                                                      |          |   |              |   |          |              |  |   |             |   |  |   |          |  
|Increase in accounts receivable                                               |  |                                                      |         |   |              |   | (8,384   | )            |  |   |             |   |  |   | (8,384   | )
|Increase in inventories                                                       |  |                                                      |         |   |              |   | 774      |              |  |   |             |   |  |   | 774      |  
|Decrease in other current assets                                              |  |                                                      |         |   |              |   | 75       |              |  |   |             |   |  |   | 75       |  
|Decrease in other non-current assets                                          |  |                                                      | 1,927    |   |              |   |         |              |  |   |             |   |  |   | 1,927    |  
|Increase (decrease) in accounts payable & accrued expenses                    |  |                                                      | 712      |   |              |   | 8,071    |              |  |   |             |   |  |   | 8,783    |  
|Decrease in transaction expenses                                              |  |                                                      |         |   |              |   | (24,697  | )            |  |   |             |   |  |   | (24,697  | )
|Increase in deferred revenue                                                  |  |                                                      |         |   |              |   | (70      | )            |  |   |             |   |  |   | (70      | )
|Increase (decrease) in income taxes payable/receivable                        |  |                                                      |         |   |              |   | (8,946   | )            |  |   |             |   |  |   | (1,752   | )
|                                                                              |  |                                                      |          |   |              |   |          |              |  |   |              |   |  |   |          |  
|Net cash provided by operating activities                                     |  |                                                      |         |   |              |   | (19,306  | )            |  |   |             |   |  |   | (19,306  | )
|                                                                              |  |                                                      |          |   |              |   |          |              |  |   |              |   |  |   |          |  
|Investing activities                                                          |  |                                                      |          |   |              |   |          |              |  |   |              |   |  |   |          |  
|Payments in connection with business combination                              |  |                                                      |         |   |              |   | (296,246 | )            |  |   |             |   |  |   | (296,246 | )
|Purchases of property and equipment                                           |  |                                                      |         |   |              |   | (2,412   | )            |  |   |             |   |  |   | (2,412   | )
|                                                                              |  |                                                      |          |   |              |   |          |              |  |   |              |   |  |   |          |  
|Net cash used in investing activities                                         |  |                                                      |         |   |              |   | (298,658 | )            |  |   |             |   |  |   | (298,658 | )
|                                                                              |  |                                                      |          |   |              |   |          |              |  |   |              |   |  |   |          |  
|Financing activities                                                          |  |                                                      |          |   |              |   |          |              |  |   |              |   |  |   |          |  
|Proceeds from short-term debt                                                 |  |                                                      |         |   |              |   | 16,620   |              |  |   |             |   |  |   | 16,620   |  
|Proceeds from long-term debt                                                  |  |                                                      | 29,700   |   |              |   | 323,500  |              |  |   |             |   |  |   | 353,200  |  
|Repayment of short-term debt                                                  |  |                                                      |         |   |              |   | (19,000  | )            |  |   |             |   |  |   | (19,000  | )
|Repayment of long-term debt                                                   |  |                                                      |         |   |              |   | (192,000 | )            |  |   |             |   |  |   | (192,000 | )
|Debt issuance costs                                                           |  |                                                      | (827     | ) |              |   | (13,104  | )            |  |   |             |   |  |   | (13,931  | )
|Proceeds from stock issuance                                                  |  |                                                      | 181,375  |   |              |   |         |              |  |   |             |   |  |   | 181,375  |  
|Capital contribution from Parent company                                      |  |                                                      | (210,248 | ) |              |   | 210,248  |              |  |   |             |   |  |   |         |  
|                                                                              |  |                                                      |          |   |              |   |          |              |  |   |              |   |  |   |          |  
|Net cash provided by financing activities                                     |  |                                                      |         |   |              |   | 326,264  |              |  |   |             |   |  |   | 326,264  |  
|                                                                              |  |                                                      |          |   |              |   |          |              |  |   |              |   |  |   |          |  
|Net increase (decrease) in cash                                               |  |                                                      |         |   |              |   | 8,300    |              |  |   |             |   |  |   | 8,300    |  
|Cash, beginning of period                                                     |  |                                                      |         |   |              |   |         |              |  |   |             |   |  |   |         |  
|                                                                              |  |                                                      |          |   |              |   |          |              |  |   |              |   |  |   |          |  
|Cash, end of period                                                           |  | $                                                    |         |   |              | $ | 8,300    |              |  | $ |             |   |  | $ | 8,300    |  
|                                                                              |  |                                                      |          |   |              |   |          |              |  |   |              |   |  |   |          |  



F - 45



---

|ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|------- | ------------------------------------------------------------------------------------

None.



|ITEM 9A. | CONTROLS AND PROCEDURES
|-------- | -----------------------

Evaluation of Disclosure Controls
and Procedures

The Company maintains disclosure controls and procedures that are intended to ensure that information required to be disclosed in
the Companys reports submitted under the Securities Exchange Act of 1934, as amended (the Exchange Act), is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. These
controls and procedures also are intended to ensure that information required to be disclosed in such reports is accumulated and communicated to management to allow timely decisions regarding required disclosures.

The Companys Chief Executive Officer and Chief Financial Officer, with the participation of other members of the Companys management, have evaluated the
effectiveness of the Companys disclosure controls and procedures (as such term is defined in Rules 13a  15(e) and 15d  15(e) under the Exchange Act) and have concluded that the Companys disclosure controls and procedures were
effective for their intended purposes as of the end of the period covered by this report.

There were no changes in our internal control over financial
reporting that occurred during the quarter ended December 31, 2007 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

MANAGEMENTS REPORT ON INTERNAL CONTROL OVER FINANCIAL

REPORTING

Management is responsible for establishing and maintaining adequate internal control over financial
reporting, as such term is defined in Exchange Act Rule 13a-15(f). Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the
effectiveness of our internal control over financial reporting. Management has adopted the framework in Internal Control-Integrated Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on our
evaluation under this framework, our management concluded that our internal control over financial reporting was effective as of December 31, 2007.

This Annual Report on Form 10-K does not include an attestation report of the Companys registered public accounting firm regarding internal control over financial reporting. Managements report was not subject to attestation by
the Companys registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only managements report in this Annual Report on Form 10-K.



43



---

|ITEM 9B. | OTHER INFORMATION
|-------- | -----------------

As reported on the Companys Current Report
on Form 8-K on March 10, 2008, the Company appointed Robert DiProva as Senior Vice President of Finance to be effective March 17, 2008 for a transitional period ending April 1, 2008, when he will assume the position of Chief Financial Officer.

PART III



|ITEM 10. | DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
|-------- | --------------------------------------------------

Executive
Officers and Directors

Our directors and executive officers, and their ages and positions within our company as of December 31, 2007 are as
follows:



|                   |  |     |  |                                                                
|------------------ |  | --- |  | ---------------------------------------------------------------
|Name               |  | Age |  | Position                                                       
|Patrick G. Dills   |  | 54  |  | Executive Chairman and Director                                
|                   |  |    
|Joseph P. Delaney  |  | 39  |  | President and Chief Executive Officer                          
|                   |  |    
|Thomas E. Moloney  |  | 64  |  | Interim Chief Financial Officer and Director                   
|                   |  |    
|Linda Lane         |  | 41  |  | Senior Vice President of National Accounts and Product Strategy
|                   |  |    
|Jay Wilson         |  | 43  |  | Chief Information Officer                                      
|                   |  |    
|Cliff Honiker      |  | 50  |  | Vice President of Provider Relations and Analysis              
|                   |  |    
|James M. Freeman   |  | 35  |  | Senior Vice President of Pharmacy Services                     
|                   |  |    
|Will Smith         |  | 35  |  | Vice President of Ancillory Services                           
|                   |  |    
|Timothy A. Crass   |  | 35  |  | Vice President, General Counsel                                
|                   |  |    
|Kevin A. Macdonald |  | 47  |  | Director                                                       
|                   |  |    
|Peter S. Laino     |  | 43  |  | Director                                                       
|                   |  |    
|Adam S. Doctoroff  |  | 34  |  | Director                                                       

Patrick G. Dills joined MSC as Executive Chairman in February 2006. Mr. Dills previously served First
Health Group as Executive Vice President from 1988-2005 and President of CCN and Health Net Plus, both wholly owned subsidiaries of First Health, from, respectively, 2001-2005 and 2003-2005. Mr. Dills holds a B.S degree in Economics from the
Wharton School at the University of Pennsylvania and currently serves on the board of directors of PRG Schultz International, Inc., NASDAQ (PRGX), a recovery audit services company.

Joseph P. Delaney became President and Chief Executive Officer of MSC in February 2006, after joining MSC in 2004 as Chief Operating Officer. Mr. Delaney previously served as a consultant from 1997 to
2002 and a Partner from 2002 to 2004 at The



44



---

Parthenon Group, a strategic advisory and principal investing firm. During his tenure there, he led a wide range of cost reduction and revenue enhancement
projects for Fortune 1000 clients.

Thomas E. Moloney joined MSC as interim Chief Financial Officer in December 2007. Mr. Moloney also serves
as a director. Mr. Moloney also serves as the Chairman of the Audit Committee. Mr. Moloney served as Senior Executive Vice President and Chief Financial Officer of John Hancock Financial Services from 1992 through its acquisition by
Manulife in 2004. In that role, he played a critical role in Hancocks demutualization, IPO, strategy and subsequent sale to Manulife. He has served as a director for eight Hancock subsidiaries, chairman of three, and as chairman of several
audit committees. He also serves on the board of 5 Star Life Insurance Company, Shawmut Design and Construction Company and Manulife International Hong Kong. Mr. Moloney is the past Chairman of the Boston Municipal Research Bureau, was the past
Chairman of the Board of Trustees for the Boston Childrens Museum and is currently a member of the Board of Directors, and a member of the Board of Nashoba Learning Center. Since his retirement from John Hancock Financial Services,
Mr. Moloney has worked as an independent consultant and focused on philanthropic endeavors.

Linda Lane, who joined MSC in 1996, became
MSCs Senior Vice President of National Accounts in May 2005. In her ten years at MSC, she has held the positions of Vice President of Sales and National Accounts, Regional Area Director and Regional Account Manager.

Jay Wilsonjoined MSC as Chief Information Officer in March 2006. Previously Mr. Wilson was employed by Concentra, Inc., a workers compensation and
occupational health services provider, where he served as Vice President of Information Technology of its Health Services Division from 2000 to 2006.

Cliff Honikerhas been employed with MSC since May 2005, and has served as Vice President of Provider Relations & Analysis since September 2006. Mr. Honiker is a retired Air Force Medical Service Corps Officer, and
prior to joining MSC, from August 2000 to December 2004, was the Chief Operating Officer of Aperture Credentialing, the nations largest provider credentials verification organization.

James M. Freeman has been employed with MSC since February 2003, and has served as Senior Vice President of Pharmacy Services since September 2004.
Mr. Freeman served as Medications Operations Manager and Director of Clinical Services before his current role. Prior to joining MSC, Mr. Freeman was a Critical Care Pharmacist with Memorial Hospital Jacksonville.

Will Smithhas been employed with MSC since November 1999, and has served in his current role as Vice President of Medical Products since January 2006.
Mr. Smith has served as Executive Director of Medical Products and DME Manager of Operations.

Timothy A. Crassbecame Vice President and
General Counsel of MSC in September 2005. Prior to joining MSC, Mr. Crass was an attorney with Akerman Senterfitt PA from 2000 to 2005 and an attorney with Morgan Lewis & Bockius LLP from 1999 to 2000.



45



---

Kevin A. Macdonald is a Co-Founder and Managing Director of Monitor Clipper Partners. Prior to joining MCP,
Mr. Macdonald was a Managing Director and founding member of The Clipper Group, L.P. Prior to joining Clipper in 1990, Mr. Macdonald was a Vice President in Credit Suisse First Bostons Leveraged Buyout Group and a member of the
firms Leveraged Acquisitions Group. Mr. Macdonald is a director of several private companies and is Chairman of the Board of Trustees of the Chestnut Hill School. Mr. Macdonald joined our Board of Directors in May 2005.

Peter S. Laino is a Managing Director of Monitor Clipper Partners, which he joined in August 1998. Previously, Mr. Laino was Director, Development for
K-III Communications Corporation, a media holding company formed by Kohlberg Kravis Roberts & Co., L.P. Earlier, he was an associate in the corporate finance group of Dillon, Read & Co., Inc. Mr. Laino currently serves as a
director of American Fibers and Yarns, Technology Partners Incorporated, and Reverse Logistics.

Adam S. Doctoroff is a Partner of Monitor Clipper
Partners, which he joined in September 1998. Previously, Mr. Doctoroff was a consultant at The Monitor Group. Mr. Doctoroff has been a board observer of Service Partners, LLC, Filogix, Inc. and Metro International Trade Services LLC.

Board Committees

Audit Committee

The audit committee of our Board of Directors is currently composed of two members, Thomas Moloney and Adam Doctoroff. Mr. Moloney chairs the
audit committee and has been designated by the Board of Directors as the audit committee financial expert within the meaning of SEC regulations. Until Mr. Moloneys appointment as Interim CFO on December 31, 2007, Mr. Moloney
served as an independent director within the meaning of Item 7(d)(3)(iv) of Schedule 14A under the Securities and Exchange Act of 1934, as amended. The charter for the Audit Committee is filed as an exhibit to our Annual Report on Form 10-K.

Compensation Committee

The compensation
committee of our Board of Directors, as of December 31, was composed of two members, Patrick Dills and Peter Laino. Mr. Dills chairs the compensation committee.

Compensation Committee Interlocks and Insider Participation

The Companys Board approves compensation
decisions recommended by the Compensation Committee. As of December 31, 2007, the Compensation Committee was composed of Mr. Dills (Chairman) and Mr. Laino, neither of whom served as an officer or employee during 2007, except for
Mr. Dills service as an Executive Chairman of the Company. Joseph Delaney, the Chief Executive Officer of the Company during 2007, participated in the Committees deliberations regarding certain executive compensation matters.



46



---

Code of Business Conduct and Ethics

The Company has adopted a Code of Business Conduct and Ethics applicable to all its officers, directors and employees. A copy of the Code of Business Conduct and Ethics has been filed as an exhibit to our Annual
Report on Form 10-K. Any amendments to and waivers from any provision of the Companys Code of Business Conduct and Ethics relating to any element of the code of ethics definition enumerated in Item 406(b) of Regulation S-K will be filed
with the Companys SEC filings or posted on the Companys website.



|ITEM 11. | EXECUTIVE COMPENSATION
|-------- | ----------------------

Director Compensation

The members of our Board of Directors, other than Mr. Moloney and Mr. Dills, are not separately compensated for their services as directors, other than
reimbursement for out-of-pocket expenses incurred in connection with rendering such services. As reflected in the table below, in 2007 pursuant to the Companys 2005 Stock Option Plan, Mr. Moloney received options to purchase 150,000
shares of our parents common stock for his service, two-thirds of which vest over time and one-third of which vest upon a change in control, with two-thirds of such options at a strike price of $1, one-sixth of such options at a strike price
of $2, and one-sixth of such options at a strike price of $3. In addition, Mr. Moloney receives $30,000 in cash compensation. Mr. Dills, Executive Chairman and Director, received for his service, options to purchase 1,800,000 shares of our
parents common stock granted in 2006 pursuant to the 2005 Stock Option Plan, two-thirds of which vest over a period of three years and one-third of which vest upon a change in control, with two-thirds of such options at a strike price of $1
and one-third of such options at a strike price of $2. In 2006, the Company also issued 900,000 restricted shares of our parents common stock to Mr. Dills at a purchase price of $0.001 per share with one-third of the shares vesting on
February 14 of each of 2007, 2008 and 2009. In 2007, Mr. Dills received (i) an additional option to purchase 800,000 shares of our parents common stock pursuant to the 2005 Stock Option Plan, two-thirds of which vest over a
period of three years and one-third of which vest upon a change in control, with two-thirds of such options at a strike price of $1 and one-sixth of such options at a strike price of $2 and one-sixth of such options at a strike price of $3, and
(ii) 300,000 additional restricted shares of our parents common stock to Mr. Dills at a purchase price of $0.001 per share with one-third of the shares vesting on January 31 of each of 2008, 2009 and 2010. In addition, he
received $175,000 in cash compensation during the year ended December 31, 2006, received $200,000 in compensation for the year ended December 31, 2007 and will receive such amount each year thereafter, in addition to a cash bonus
concurrent with each vesting of his restricted shares, health, disability and pension benefits and a performance bonus in an amount, if any, determined by the Board.



47



---

|                       |  |                             |        |                 |     |                  |   |       |                                          |  |                                                                       |  |                           |  |           |  |   |       
|---------------------- |  | --------------------------- | ------ | --------------- | --- | ---------------- | - | ----- | ---------------------------------------- |  | --------------------------------------------------------------------- |  | ------------------------- |  | --------- |  | - | ------
|Name                   |  | FeesEarnedorPaid inCash ($) |        | StockAwards ($) |     | OptionAwards ($) |   |       | Non-EquityIncentive PlanCompensation ($) |  | Change inPensionValue andNonqualifiedDeferredCompensationEarnings ($) |  | All OtherCompensation ($) |  | Total ($)
|Patrick G. Dills       |  |                             | (1)    |                 | (1) |                  |   | (1)   |                                          |  | (1)                                                                   |  | (1)                       |  | (1)       |  |   | (1)   
|Thomas E. Moloney      |  | $                           | 30,000 |                 |    |                  | $ | 7,568 | (2)                                      |  |                                                                      |  |                          |  |          |  | $ | 37,568
|Kevin A. MacDonald (3) |  |                             |       |                 |    |                  |   |      |                                          |  |                                                                      |  |                          |  |          |  |   |      
|Peter S. Laino (3)     |  |                             |       |                 |    |                  |   |      |                                          |  |                                                                      |  |                          |  |          |  |   |      
|Adam S. Doctoroff (3)  |  |                             |       |                 |    |                  |   |      |                                          |  |                                                                      |  |                          |  |          |  |   |      



|(1) | Mr. Dills compensation is set forth in the Summary Compensation Table below.
|--- | ----------------------------------------------------------------------------

|(2) | These amounts represent the compensation expense recognized in the Companys 2007 consolidated financial statements under SFAS 123(R). This expense relates to stock options
granted in 2007, as well as options granted in prior years. Please refer to Note 11 to the Companys consolidated financial statements for the year ended December 31, 2007 included in the Annual Report on Form 10-K for the assumptions used to
calculate these amounts.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Each of such directors may have an indirect benefit in compensation made under the management fee agreement the Company has with Monitor Clipper Partners, LLC (MCP), due
to such directors affiliation with MCP. The payments under the management fee agreement are set forth in Note 14 to our Notes to the Consolidated Financial Statements and the directors affiliation to MCP are set forth in footnote 5 to
the table entitled Security Ownership of Certain Beneficial Owners and Management.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Compensation Discussion and
Analysis

The following Compensation Discussion and Analysis discusses the Companys compensation objectives and policies with respect to its
senior executive officers. The Compensation Committee is responsible for approval and administrative oversight of the compensation and certain benefit programs, including short-term and long-term incentive performance-based incentive programs for
the named executive officers, as well as all other senior executives. In making such compensation decisions, the Committee considers recommendations from our Chief Executive Officer with respect to compensation of the other named executive officers.
The Committee, from time to time as needed, conducts research to obtain relevant market data and alternatives to consider and assist it in making compensation decisions for the Companys named executive officers.



48



---

The Companys executive compensation program is designed to:



| |  |  | attract and retain highly-qualified executive officers as the Company competes for talented executives in Jacksonville, Florida area;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------



| |  |  | motivate the Companys named executive officers to help the Company accomplish long and short-term strategic and financial objectives;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------



| |  |  | align the Companys named executive officers interest with those of the Companys shareholders; and
| | - |  | ----------------------------------------------------------------------------------------------------



| |  |  | reward the Companys named executive officers for improvement in the Companys financial performance.
| | - |  | -----------------------------------------------------------------------------------------------------

The Companys executive compensation program is designed to balance fixed-base salaries with compensation that is performance-based and to reward annual performance
while maintaining a focus on longer-term objectives. The Company strives to provide compensation incentives commensurate with individual management responsibilities and to reward past and future contributions to corporate objectives. The mix of
compensation elements varies based on the named executive officers position and responsibilities.

Elements of Compensation

The Companys executive compensation program consists of two main types of compensation: (1) annual compensation and (2) long-term compensation.

Annual Compensation. Annual compensation includes base salary and annual bonus.

Base Salary:Base salaries provide a base level of compensation for services rendered during the year. The Compensation Committee determines the level of the named executive officers salaries by
considering the responsibilities associated with their positions, the skills and experience required for the job, their individual performance, business performance, and labor market conditions, among other factors. Salary increases are considered
annually and are based on both financial and non-financial results achieved by the Company and the executive during the preceding fiscal year. Actual decisions to adjust salaries on an annual or other basis are contingent on market conditions,
business and individual employee performance and based on reasoned subjective determinations by the Compensation Committee.

Bonus:The Company
maintains an annual MSCPerformance Bonus Plan to provide for performance-based compensation, as set by the Compensation Committee. The annual bonus, referred to as non-equity incentive plan compensation within the Summary Compensation Table,
is designed to encourage the achievement of corporate and individual goals and reward the Companys named executive officers when these goals have been achieved. The annual bonus for each named executive officer is based upon the achievement of
objective Company-wide performance goals, set at the beginning of each fiscal year, and generally are tied to final,



49



---

audited adjusted EBITDA, as was the case for 2007. Annual bonuses are expressed as a percentage of base salary and are paid to the executive subject to
attaining the targeted adjusted EBITDA number and satisfaction of job performance criteria. During 2007, if targeted adjusted EBITDA had been met, executives would have received bonuses ranging from 15% to 60% of their base salary.

In addition to annual performance-based bonuses based on corporate and/or divisional performance under the MSCPerformance Bonus Plan, the Company may pay annual
bonuses to employees based on individual performance goals from time to time. Bonuses based on individual performance are paid on a discretionary basis based on achievement of pre-established goals, which may include executing strategies to support
the Companys vision, developing people, supporting social responsibility and driving operational excellence.

Long-Term Compensation

Equity-based Incentive Plan: The Company maintains a 2005 Stock Option Plan to provide for equity-based compensation. Awards under this plan are
designed to:



| |  |  | align the financial interests of the Companys named executive officers with those of the Companys shareholders;
| | - |  | -----------------------------------------------------------------------------------------------------------------



| |  |  | reward the Companys named executive officers for building shareholder value; and
| | - |  | ---------------------------------------------------------------------------------



| |  |  | encourage the named executive officers to remain in our employ over the long term.
| | - |  | ----------------------------------------------------------------------------------

The Compensation Committee believes that stock ownership by management is beneficial to the Company and shareholders and as such, over the years, it has granted stock options and restricted stock to its named
executive officers and other key employees. The Compensation Committee administers all aspects of these plans and determines the amount of and terms applicable to any award under this plan.

In determining the number of shares of restricted stock and/or the number of options to be awarded to the Companys named executive officers in 2007, the
Compensation Committee took into consideration each executives level of responsibility, leadership abilities, corporate collaboration, development of Company culture, brand contribution and commitment to the Companys success. The
Compensation Committee also considers the recommendations of Chief Executive Officer, the individual performance of the executive and the number of shares previously awarded to the executive. As a general practice, both the number of shares granted
to any named executive officer, as well as the proportion of these shares relative to the total number of shares granted, increase in some proportion to increases in each executives responsibilities.

Stock Option Awards:The Company grants stock options as part of its equity compensation program. Stock options were intended to tie the interests of the named
executive officers with those of the Companys shareholders by providing for financial gain based on the appreciation of the Companys stock price. The vesting schedule for such options extends over at least 3 years to encourage such
individuals to remain in the Companys employ during the vesting period.



50



---

Restricted Stock:The Compensation Committee has additional made a few grants of shares of restricted stock to
certain key executives. These shares are subject to certain restrictions and vest over a period of three years from the date of grant. This vesting schedule encourages retention and long-term investment in the Company by participating executives.
The Company believes that modest annual grants of restricted stock have some advantages as an equity compensation vehicle and over grants of stock options. This is because shares of restricted stock have an intrinsic value when granted (as opposed
to options).

The Company does not maintain a deferred compensation program. Perquisites and personal benefits, if any, are contained in each
executives employment agreements which are summarized below.

Employment Agreements

The Compensation Committee reviews and approvals all employment agreements with senior management. During 2007, the Company maintained employment agreements (each, an
Employment Agreement and collectively, Employment Agreements) with each of its named executives, Patrick G. Dills, Joseph P. Delaney, Gary Jensen, Linda Lane and James M. Freeman. Effective December 31, 2007, the Company
with Mr. Jensen entered into a consulting agreement terminating his employment agreement. For a description of these employment agreements, see Employment Agreements below.

Tax Implications

Deductibility of Executive Compensation:The
Compensation Committee reviews and considers the deductibility of executive compensation under Section 162(m) of the Internal Revenue Code, which provides that the Company may not deduct compensation of more than $1,000,000 that is paid to
certain individuals. The Company believes that compensation paid under the management incentive plans is generally fully deductible for federal income tax purposes. The Companys annual bonus plan is designed to qualify under
Section 162(m). However, in certain situations, the Compensation Committee may approve compensation that will not meet these requirements, but the Committee believes to be in the best interest of its shareholders in order to ensure competitive
levels of total compensation for the named executive officers.

COMPENSATION COMMITTEE REPORT

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis set forth above with the Companys management. Based on such review
and discussions, the Compensation Committee recommended to the Companys Board of Directors that the Compensation Discussion and Analysis be included in this report.

THE COMPENSATION COMMITTEE

Patrick G. Dills (Chairman)

Peter S. Laino



51



---

Summary Compensation Table

The following tables set forth compensation information for the years ended December 31, 2006 and 2007 for our Chief Executive Officer, our Chief Financial Officer and our three most highly compensated executive officers serving as
executive officers for the last completed fiscal year. We refer to these individuals collectively as our named executive officers.



|                                |  |      |  |                     |         |       |   |                 |  |                  |         |                                     |   |                                                                     |  |                       |  |   |       |   |         |     |  |   |          
|------------------------------- |  | ---- |  | ------------------- | ------- | ----- | - | --------------- |  | ---------------- | ------- | ----------------------------------- | - | ------------------------------------------------------------------- |  | --------------------- |  | - | ----- | - | ------- | --- |  | - | ---------
|                                |  |      |  | Annual Compensation
|Name and PrincipalPosition(s)   |  | Year |  | Salary              |         | Bonus |   | StockAwards (1) |  | OptionAwards (1) |         | Non-EquityIncentivePlanCompensation |   | Change inPensionValue andNon- qualifiedDeferredCompensationEarnings |  | All OtherCompensation |  |   | Total
|Joseph P. Delaney               |  | 2007 |  | $                   | 300,000 |       |   |                |  | $                | 97,369  |                                     | $ | 157,220                                                             |  |                      |  |  |       |   | 95,411  |     |  | $ | 650,495  
|President, Chief                |  | 2006 |  | $                   | 294,346 |       | $ | 120,000         |  |                  |        |                                     | $ | 174,466                                                             |  |                      |  |  |       |   |        |     |  | $ | 588,812  
|Executive Officer               |  |      |  |                     |         |       |   |                 |  |                  |         |                                     |   |                                                                     |  |                       |  |   |       |   |         |     |  |   |          
|                                |  |      |  |                     |         |       |   |                 | 
|Gary Jensen                     |  | 2007 |  | $                   | 270,000 |       |   |                |  |                  |        |                                     | $ | 48,659                                                              |  |                      |  |  |       |   | 2,251   |     |  | $ | 320,910  
|Senior Vice President, Chief    |  | 2006 |  | $                   | 260,000 |       | $ | 67,500          |  |                  |        |                                     | $ | 41,443                                                              |  |                      |  |  |       |   |        |     |  | $ | 327,500  
|Financial Officer (former)      |  |      |  |                     |         |       |   |                 |  |                  |         |                                     |   |                                                                     |  |                       |  |   |       |   |         |     |  |   |          
|                                |  |      |  |                     |         |       |   |                 | 
|Pat Dills                       |  | 2007 |  | $                   | 196,154 |       |   |                |  |                  |        |                                     | $ | 56,611                                                              |  |                      |  |  |       | $ | 423,505 | (3) |  | $ | 676,270  
|Executive Chairman and Director |  | 2006 |  | $                   | 175,000 |       | $ | 43,750          |  | $                | 792,000 |                                     | $ | 221,880                                                             |  |                      |  |  |       | $ | 390,060 | (4) |  | $ | 1,622,690
|                                |  |      |  |                     |         |       |   |                 | 
|Linda Lane                      |  | 2007 |  | $                   | 250,000 |       |   |                |  |                  |        |                                     | $ | 96,521                                                              |  |                      |  |  |       |   | 6,508   |     |  | $ | 353,029  
|Senior Vice President, National |  | 2006 |  | $                   | 250,000 |       | $ | 25,000          |  |                  |        |                                     | $ | 96,521                                                              |  |                      |  |  |       | $ | 7,604   | (2) |  | $ | 282,604  
|Accounts & Product Strategy     |  |      |  |                     |         |       |   |                 |  |                  |         |                                     |   |                                                                     |  |                       |  |   |       |   |         |     |  |   |          
|                                |  |      |  |                     |         |       |   |                 | 
|James M. Freeman                |  | 2007 |  | $                   | 200,000 |       |   |                 |  |                  |         |                                     | $ | 68,553                                                              |  |                       |  |   |       | $ | 2,750   |     |  | $ | 271,303  
|Senior Vice President           |  | 2006 |  | $                   | 169,231 |       | $ | 90,000          |  |                  |         |                                     | $ | 68,553                                                              |  |                       |  |   |       | $ | 2,750   |     |  | $ | 280,539  



|(1) | See Footnote to Financial Statements No. 11 Stock Based Compensation for assumptions made in the valuation of these awards.
|--- | ---------------------------------------------------------------------------------------------------------------------------

|(2) | Proceeds related to bonuses paid in connection with the consummation of the Acquisition.
|--- | ----------------------------------------------------------------------------------------

|(3) | $406,275 relates to a tax bonus to be paid in connection with the vesting of the Restricted Stock Grant; $17,230 relates to reimbursement for certain travel, computer services and
other expenses.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Relates to a tax bonus to be paid in connection with the vesting of the Restricted Stock Grant.
|--- | -----------------------------------------------------------------------------------------------



52



---

Grants of Plan-Based Awards

For Fiscal Year-End

December 31, 2007



|                  |  |              |  |                                                                    |  |                                                            |  |                                                          |  |                                                                |  |                                           |  |                                             |  |                          |  |         |  |   |       |  |   |        
|----------------- |  | ------------ |  | ------------------------------------------------------------------ |  | ---------------------------------------------------------- |  | -------------------------------------------------------- |  | -------------------------------------------------------------- |  | ----------------------------------------- |  | ------------------------------------------- |  | ------------------------ |  | ------- |  | - | ----- |  | - | -------
|Name              |  | GrantDate    |  | Estimated Future Payouts UnderNon- Equity Incentive PlanAwards (1) |  | Estimated Future Payouts UnderEquity Incentive Plan Awards |  | All OtherStockAwards:Number ofShares ofStock orUnits (#) |  | All OtherOptionAwards:Number ofSecuritiesUnderlyingOptions (#) |  | ExerciseOr BasePrice ofOptionAwards($/Sh) |  | GrantDate FairValue ofStock andOptionAwards
|                  |  | Threshold($) |  | Target($)                                                          |  | Maximum($)                                                 |  | Threshold(#)                                             |  | Target(#)                                                      |  | Maximum(#)                                |  |                                             |  |                         
|Joseph P. Delaney |  |             |  |                                                                   |  |                                                           |  |                                                         |  |                                                               |  |                                          |  |                                            |  |                         |  |        |  |   |      |  |   |       
|                  |  | 3/7/2007     |  |                                                                   |  |                                                           |  |                                                         |  |                                                               |  |                                          |  |                                            |  | 250,000 restrictedstock |  |        |  | $ | 0.001 |  | $ | 202,500
|                  |  | 3/7/2007     |  |                                                                   |  |                                                           |  |                                                         |  |                                                               |  |                                          |  |                                            |  |                         |  | 983,525 |  |   | (2)   |  | $ | 49,619 
|                  |  |              |  |                                                                    |  |                                                            |  |                                                          |  |                                                                | 
|Gary Jensen       |  |             |  |                                                                   |  |                                                           |  |                                                         |  |                                                               |  |                                          |  |                                            |  |                         |  |        |  |   |      |  |   |       
|                  |  | 7/16/2007    |  |                                                                   |  |                                                           |  |                                                         |  |                                                               |  |                                          |  |                                            |  |                         |  | 655,683 |  |   | (2)   |  | $ | 66,038 
|                  |  |              |  |                                                                    |  |                                                            |  |                                                          |  |                                                                | 
|Pat Dills         |  |             |  |                                                                   |  |                                                           |  |                                                         |  |                                                               |  |                                          |  |                                            |  |                         |  |        |  |   |      |  |   |       
|                  |  | 3/7/2007     |  |                                                                   |  |                                                           |  |                                                         |  |                                                               |  |                                          |  |                                            |  | 300,000 restrictedstock |  |        |  | $ | 0.001 |  | $ | 243,000
|                  |  | 3/7/2007     |  |                                                                   |  |                                                           |  |                                                         |  |                                                               |  |                                          |  |                                            |  |                         |  | 800,000 |  |   | (2)   |  | $ | 40,360 
|                  |  |              |  |                                                                    |  |                                                            |  |                                                          |  |                                                                | 
|Linda Lane        |  |             |  |                                                                   |  |                                                           |  |                                                         |  |                                                               |  |                                          |  |                                            |  |                         |  |        |  |   |      |  |   |       
|                  |  |              |  |                                                                    |  |                                                            |  |                                                          |  |                                                                | 
|James M. Freeman  |  |             |  |                                                                   |  |                                                           |  |                                                         |  |                                                               |  |                                          |  |                                            |  |                         |  |        |  |   |      |  |   |       



|(1) | Annual bonuses awarded under the Companys non-equity incentive program are based on a percentage of the named executive officers salary. Bonus awards are contingent on
the achievement of financial targets of the Company and no amount is awarded if performance is not achieved. Annual bonus payments made to the named executive officers are disclosed in the Summary Compensation Table under the Non-Equity
Incentive Plan Compensation caption.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | The exercise prices for the option are as follows: (a) two-thirds of the option is exercisable at a per share price of $1.00; (b) one-sixth of the option is exercisable at
a per share price of $2.00; and (c) one-sixth of the option is exercisable at a per share price of $3.00.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



53



---

Outstanding Equity Awards at Fiscal Year-End

December 31, 2007



|                  |  |                                                                  |  |                                                                   |  |                                                                                      |  |                        |      |                      |           |                                                    |         |                                                           |   |                                                                                           |  |                                                                                                         |  |  
|----------------- |  | ---------------------------------------------------------------- |  | ----------------------------------------------------------------- |  | ------------------------------------------------------------------------------------ |  | ---------------------- | ---- | -------------------- | --------- | -------------------------------------------------- | ------- | --------------------------------------------------------- | - | ----------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------- |  | -
|                  |  | Option Awards                                                    |  | Stock Awards                                                     
|Name              |  | Number ofSecuritiesUnderlyingUnexercisedOptions (#)(Exercisable) |  | Number ofSecuritiesUnderlyingUnexercisedOptions(#)(Unexercisable) |  | EquityIncentivePlanAwards:Number
ofSecuritiesUnderlyingUnexercisedUnearnedOptions(#) |  | OptionExercisePrice($) |      | OptionExpirationDate |           | NumberofSharesorUnits ofStockThatHave NotVested(#) |         | MarketValue ofShares orUnits ofStockThat HaveNotVested($) |   | EquityIncentivePlanAwards:NumberofUnearnedShares,Units orOtherRightsThatHave NotVested(#) |  | EquityIncentivePlanAwards:MarketorPayoutValue ofUnearnedShares,Unitsor OtherRightsThatHave NotVested($)
|Joseph P. Delaney |  |                                                                 |  |                                                                  |  |                                                                                     |  |                        |     |                      |          |                                                    | 250,000 |                                                           | $ | 145,675                                                                                   |  |                                                                                                        |  | 
|                  |  |                                                                 |  | 983,525                                                           |  |                                                                                     |  |                        | (1)  |                      | 3/16/2017 |                                                    |        |                                                           |   |                                                                                          |  |                                                                                                        |  | 
|                  |  | 1,046,893.6                                                      |  | 592,314.4                                                         |  |                                                                                     |  |                        | (1)  |                      | 7/2/2016  |                                                    |        |                                                           |   |                                                                                          |  |                                                                                                        |  | 
|                  |  | 2,005,970.48                                                     |  | 1,272,445.52                                                      |  |                                                                                     |  |                        | (1)  |                      | 3/31/2015 |                                                    |        |                                                           |   |                                                                                          |  |                                                                                                        |  | 
|                  |  | 739,601                                                          |  | 0                                                                 |  |                                                                                     |  | $                      | 0.61 |                      | 11/8/2014 |                                                    |        |                                                           |   |                                                                                          |  |                                                                                                        |  | 
|                  |  |                                                                  |  |                                                                   |  |                                                                                      |  |                        |     
|Gary Jensen       |  | 0                                                                |  | 655,683                                                           |  |                                                                                     |  |                        | (1)  |                      | 7/15/2017 |                                                    |        |                                                           |   |                                                                                          |  |                                                                                                        |  | 
|                  |  | 1,013,163.01                                                     |  | 953,886.99                                                        |  |                                                                                     |  |                        | (1)  |                      | 9/5/2015  |                                                    |        |                                                           |   |                                                                                          |  |                                                                                                        |  | 
|                  |  |                                                                  |  |                                                                   |  |                                                                                      |  |                        |     
|Pat Dills         |  |                                                                 |  |                                                                  |  |                                                                                     |  |                        |     |                      |          |                                                    | 300,000 |                                                           | $ | 174,810                                                                                   |  |                                                                                                        |  | 
|                  |  |                                                                 |  |                                                                  |  |                                                                                     |  |                        |     |                      |          |                                                    | 900,000 |                                                           | $ | 524,430                                                                                   |  |                                                                                                        |  | 
|                  |  |                                                                 |  | 800,000                                                           |  |                                                                                     |  |                        | (2)  |                      | 3/6/2017  |                                                    |        |                                                           |   |                                                                                          |  |                                                                                                        |  | 
|                  |  | 701,369.75                                                       |  | 1,098,630.25                                                      |  |                                                                                      |  |                        | (1)  |                      | 2/14/2016 |                                                    |        |                                                           |   |                                                                                          |  |                                                                                                        |  | 
|                  |  |                                                                  |  |                                                                   |  |                                                                                      |  |                        |     
|Linda Lane        |  | 1,203,582.49                                                     |  | 763,466.51                                                        |  |                                                                                     |  |                        | (1)  |                      | 3/31/2015 |                                                    |        |                                                           |   |                                                                                          |  |                                                                                                        |  | 
|                  |  |                                                                  |  |                                                                   |  |                                                                                      |  |                        |     
|James M. Freeman  |  | 1,203,582.49                                                     |  | 763,466.51                                                        |  |                                                                                     |  |                        | (1)  |                      | 3/31/2015 |                                                    |        |                                                           |   |                                                                                          |  |                                                                                                        |  | 



|(1) | The exercise prices for the option are as follows: (a) two-thirds of the option is exercisable at a per share price of $1.00; (b) one-sixth of the option is exercisable at
a per share price of $2.00; and (c) one-sixth of the option is exercisable at a per share price of $3.00.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | The exercise prices for the option are as follows: (a) two-thirds of the option is exercisable at a per share price of $1.00; and (b) one-third of the option is
exercisable at a per share price of $2.00.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



54



---

Option Exercises and Stock Vested

as of Fiscal Year-End December 31, 2007



|                                           |  |                                       |  |                              |  |                                      |  |                             |        
|------------------------------------------ |  | ------------------------------------- |  | ---------------------------- |  | ------------------------------------ |  | --------------------------- | -------
|                                           |  | Option Awards                         |  | Stock Awards                
|Name                                       |  | Number ofSharesAcquired onExercise(#) |  | Value Realizedon Exercise($) |  | Number ofSharesAcquired onVesting(#) |  | Value Realized onVesting($)
|Joseph P. Delaney, President and CEO       |  |                                      |  |                             |  |                                     |  |                             |       
|Gary Jensen, Senior VP, and CFO            |  |                                      |  |                             |  |                                     |  |                             |       
|Pat Dills, Executive Chairman and Director |  |                                      |  |                             |  | 300,000 restricted stock            |  | $                           | 246,000
|Linda Lane, Senior VP                      |  |                                      |  |                             |  |                                     |  |                             |       
|James M. Freeman, Senior VP                |  |                                      |  |                             |  |                                     |  |                             |       

Potential Payouts upon Termination or Change in Control

As noted in the executive compensation discussion above, the Company provides employment agreements to certain of the named executive officers, which provide for certain
potential post-termination severance payments and change in control payments. These payments are described below. Effective December 31, 2007, Mr. Jensen and the Company entered into a consulting agreement terminating his employment
agreement.

Mr. Dills employment agreement provides for severance, in the event he is terminated by the Company without cause, which includes
continuing bi-weekly payments of his base salary, medical and life insurance for the period beginning on the termination date and ending on February 14, 2009 and a non-competitive requirement continuing until the later of (i) one year
following the termination date or (ii) February 14, 2010. In the event of a change of control of the Company, Mr. Dills unvested stock options or restricted stock shall vest immediately.



55



---

Mr. Delaneys employment agreement provides for severance, in the event he is terminated by the Company without
cause, which includes continuing bi-weekly payments of his base salary, medical and life insurance for a period of nine months following termination, as well as the pro rata portion of any annual bonus to which he would have been entitled under the
agreement, with a non-competitive requirement continuing for one year from the date of termination. In the event of a change of control of the Company, Mr. Delaneys unvested stock options or restricted stock shall vest immediately.

Ms. Lanes employment agreement provides for severance, in the event she is terminated by the Company without cause, which includes continuing
bi-weekly payments of her base salary, medical and life insurance for a period of six months following termination with a non-competitive requirement continuing for two years from the date of termination. In the event of a change of control of the
Company, Ms. Lanes unvested stock options shall vest immediately.

Mr. Freemans employment agreement provides for severance, in the
event he is terminated by the Company without cause, which includes continuing bi-weekly payments of his base salary, medical and life insurance for a period of nine months following termination with a non-competitive requirement continuing for two
years from the date of termination. In the event of a change of control of the Company, Mr. Freemans unvested stock options shall vest immediately.

At December 31, 2007, if the named executive officers were terminated for cause, the amounts that would have been paid out would have been as follows: Mr. Dills  $224,657.53; Mr. Delaney  $225,000; Ms. Lane
 $125,000; Mr. Freeman  $150,000. In the event of a change in control, Mr. Dills would immediately vest in his restricted stock shares, and Mr. Delaney would immediately vest in his restricted stock shares.

Employment Agreements

The Company maintains employment agreements
(each, an Employment Agreement and collectively, Employment Agreements) with Patrick G. Dills, Joseph P. Delaney, Gary Jensen, Linda Lane and James M. Freeman. Mr. Dills Employment Agreement states that he shall
serve as Executive Chairman and Director and shall report to the Board of Directors. Mr. Delaneys Employment Agreement specifies that he shall serve as President and Chief Executive Officer of the Company and shall report to the Board of
Directors. Mr. Jensens Employment Agreement specifies that he shall serve as the Chief Financial Officer of the Company and shall report to the Chief Executive Officer. Ms. Laness Employment Agreement specifies, that she shall
serve as the Vice President of National Accounts of the Company (which title has been subsequently revised to Senior Vice President, National Accounts and Product Strategy) and shall report to the Chief Executive Officer. Mr. Freemans
Employment Agreement specifies that he shall serve as Senior Vice President, Pharmacy Services and shall report to the Chief Executive Officer. Effective December 31, 2007, the Company with Mr. Jensen entered into a consulting agreement
terminating his employment agreement.



56



---

With the exception of the foregoing, the Employment Agreements are substantially similar in form and substance. Each
Employment Agreement provides for the following, among other terms:



| |  |  | Terms of employment ranging from 2-3 years, with an automatic one-year extension on each annual anniversary date.
| | - |  | -----------------------------------------------------------------------------------------------------------------



| |  |  | Continuation of annual base salary at individually specific rates, subject to increase in accordance with the Companys prevailing practices from time to time.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Incentive compensation, bonuses and benefits (which currently include life insurance, short-term and long-term disability insurance, 401(k) matching contributions
and subsidized medical insurance) in accordance with the Companys prevailing practices from time to time.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Customary rights on the part of the Company to terminate for cause (which includes, among other things, conviction of certain crimes).
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------

Each of these agreements provides that if we terminate the executive without cause, or in the case of death or disability, the executive will be paid an amount
ranging up to one years base salary plus benefits.

Each Employment Agreement obligates the executive to refrain for a period of one year after any
termination of the executives employment from competing, directly or indirectly, with any business in which the Company or its subsidiaries engages and from soliciting any clients of or other employees of the Company. Ms. Lanes and
Mr. Freemans Employment Agreements are concurrently being filed as Exhibits to this Form 10-K Annual Report.



|ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|-------- | ----------------------------------------------------------------------------------------------

Security Ownership of Certain Beneficial Owners and Management

The following table sets forth information as of
December 31, 2007, with respect to the beneficial ownership of our parents capital stock by (i) our chief executive officer and each of the other named executive officers set forth below, (ii) each of our directors,
(iii) all of our directors and executive officers as a group and (iv) each holder of five percent (5%) or more of any class of our parents outstanding capital stock.



|                                                              |  |                                 |  |                                    |  
|------------------------------------------------------------- |  | ------------------------------- |  | ---------------------------------- | -
|Name of Beneficial Owner                                      |  | Common SharesBeneficially Owned |  | Percent ofOutstandingCommon Shares |  
|Monitor Clipper Equity Partners II, L.P. and Related Funds(1) |  | 120,125,000                     |  | 64.7                               | %
|The Northwestern Mutual Life Insurance Company(2)             |  | 15,250,000                      |  | 8.2                                | %
|New York Life Capital Partners II, L.P.(3)                    |  | 15,250,000                      |  | 8.2                                | %



57



---

|                                                               |  |            |  |     |  |  
|-------------------------------------------------------------- |  | ---------- |  | --- |  | -
|HarbourVest Partners VIDirect Fund, L.P. and Related Funds(4) |  | 15,250,000 |  | 8.2 |  | %
|Joseph P. Delaney                                              |  |           |  |    |  |  
|Pat Dills                                                      |  | 300,000    |  | *   |  |  
|Robert A. Calhoun(5)                                           |  |           |  |    |  |  
|Kevin A. Macdonald(5)                                          |  |           |  |    |  |  
|Peter S. Laino(5)                                              |  |           |  |    |  |  
|Adam S. Doctoroff(5)                                           |  |           |  |    |  |  
|Thomas E. Moloney                                              |  |           |  |    |  |  
|All directors and executive officers as a group                |  | 300,000    |  | *   |  |  



|* | Less than one percent
|- | ---------------------

|(1) | Represents shares owned by the following group of investments funds affiliated with Monitor Clipper Partners funds: (i) 117,572,494 shares of common stock owned by Monitor
Clipper Equity Partners II, L.P., whose general partner is Monitor Clipper Partners II, L.P., whose general partner is MCP GP II, Inc. and (ii) 2,552,506 shares of common stock owned by Monitor Clipper Equity Partners (NQP) II, L.P., whose
general partner is Monitor Clipper Partners II, L.P., whose general partner is MCP GP II, Inc. The address is c/o Monitor Clipper Partners, LLC, Fourth Floor, Two Canal Park, Cambridge, MA 02141.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | The address for The Northwestern Mutual Life Insurance Company is 720 East Wisconsin Avenue, Milwaukee, Wisconsin 53202-4797.
|--- | -----------------------------------------------------------------------------------------------------------------------------

|(3) | The address for New York Life Capital Partners II, L.P. is 51 Madison Avenue, Suite 3200 New York, NY 10010.
|--- | ------------------------------------------------------------------------------------------------------------

|(4) | Represents shares owned by the following group of investments funds affiliated with HarbourVest funds: (i) 10,000,000 shares of common stock owned by HarbourVest Partners
VIDirect Fund, L.P, whose general partner is HarbourVest Partners VIDirect Associates LLC, whose managing member is HarbourVest Partners, LLC and (ii) 5,250,000 shares of common stock owned by HarbourVest Partners 2004 Direct Fund,
L.P, whose general partner is HarbourVest Partners 2004Direct Associates LLC, whose managing member is HarbourVest Partners, LLC. The address is One Financial Center, 44th Floor, Boston, MA 02111.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | Messrs. Macdonald, and Laino are directors of MSCMedical Services Company. Calhoun served as a director until December, 2007. Messrs. Calhoun, Macdonald, and Laino are
Managing Directors of Monitor Clipper Partners, LLC. Mr. Doctoroff is a Principal of Monitor Clipper Partners, LLC. Accordingly, Messrs. Calhoun, Macdonald, Laino and Doctoroff may be deemed to beneficially own the shares of common stock held
by the Monitor Clipper Partners Funds. Messrs. Calhoun, Macdonald, Laino and Doctoroff disclaim beneficial ownership of such shares except to the extent of their pecuniary interests therein. The business address for each is c/o Monitor Clipper
Partners, LLC, Fourth Floor, Two Canal Park, Cambridge, MA 02141.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



58



---

|ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
|-------- | ----------------------------------------------

Transactions
with Management

See Note 14 of the Notes to the Consolidated Financial Statements relating to the management fee agreement between the Company and
MCP.

Director Independence

Until
Mr. Moloneys appointment as Interim CFO on December 31, 2007, Mr. Moloney served as an independent director within the meaning of Item 7(d)(3)(iv) of Schedule 14A under the Securities and Exchange Act of 1934, as amended.
The Company currently has no independent directors.



|ITEM 14. | PRINCIPAL ACCOUNTANT FEES AND SERVICES
|-------- | --------------------------------------

Independent Registered
Public Accounting Firms Fees

The Audit Committee, which approved the scope of the engagement, has adopted a policy that sets forth guidelines and
procedures for the pre-approval of certain services to be performed by the independent registered public accounting firm and fees associated with those services. Any services in excess of certain fee amount thresholds not covered under the general
audit engagement require specific approval by the Audit Committee. The Audit Committee has delegated to the Chairperson of the committee the authority to evaluate and approve services and fees on behalf of the Audit Committee in the event
pre-approval is required between meetings. If the Chairperson grants such approval, he or she shall report that approval to the full Audit Committee at its next scheduled meeting. The Audit Committee reviews and establishes pre-approval fee amount
thresholds for services to be provided by the independent registered public accounting firm as necessary. The Audit Committee does not delegate to management its responsibilities to pre-approve services performed by the independent registered public
accounting firm. All fiscal year 2007 audit and non-audit services provided by the independent registered public accounting firm were pre-approved.

During
the fiscal years ended December 31, 2007 and 2006, Ernst & Young LLP, the Companys independent registered public accounting firm, billed the Company the fees set forth below in connection with services rendered by the independent
registered public accounting firm to the Company:



|                   |  |                 |         |                 |   |          
|------------------ |  | --------------- | ------- | --------------- | - | ---------
|Fee Category       |  | Fiscal year2007 |         | Fiscal year2006
|Audit Fees         |  | $               | 360,000 |                 | $ | 423,000  
|Audit-Related Fees |  |                 |        |                 |   | 25,000   
|Tax Fees           |  |                 | 388,221 |                 |   | 667,648  
|All Other Fees     |  |                 | 31,100  |                 |   | 1,500    
|                   |  |                 |         |                 |   |          
|TOTAL              |  | $               | 779,321 |                 | $ | 1,117,148

In the above tables, in accordance with definitions and rules, audit fees are fees billed to the
Company for professional services for



59



---

the audit of the Companys financial statements included in Form 10-K and review of financial statements included in Forms 10-Q; and for services that
are normally provided by the accountants in connection with statutory and regulatory filings or engagements. Audit-related fees are fees billed for the audit of the Companys 401(k) plan; assurance and related services that are
reasonably related to the performance of the audit or review of the Companys financial statements; tax fees are fees billed for tax compliance, tax advice and tax planning, and all other fees are fees billed for
subscription fees for internet-based professional literature and research capabilities.



|ITEM 15. | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
|-------- | ------------------------------------------

(a)(1) The following
financial statements are included in Item 8 of this report:



|                                                                                                     |  |     
|---------------------------------------------------------------------------------------------------- |  | ----
|                                                                                                     |  | Page
|Report of Independent Registered Public Accounting Firm                                              |  | F-2 
|Consolidated Balance SheetsDecember 31, 2007 and 2006                                               |  | F-3 
|Consolidated Statements of Operations for the Years Ended December 31, 2007, 2006 and 2005           |  | F-5 
|Consolidated Statements of Stockholders Equity for the Years Ended December 31, 2007, 2006 and 2005 |  | F-6 
|Consolidated Statements of Cash Flows for the Years Ended December 31, 2007, 2006 and 2005           |  | F-7 
|Notes to Consolidated Financial Statements                                                           |  | F-8 

(a)(2) Financial Statement Schedules. The information required by Schedule II, Valuation and Qualifying
Accounts is included in Note 2 to the Consolidated Financial Statements. All other Financial Statement Schedules are not applicable.

(a)(3) Exhibits
required by Item 601 of Regulation S-K:

Exhibits

Pursuant to the terms of the Indenture dated as of June 21, 2005, among the Registrant, MCP-MSC Acquisition, Inc. and U.S. Bank National Association relating to the Senior Secured Floating Rate Notes Due 2011, the Registrant is not
required to provide the certifications contained in exhibits 31.1, 31.2, 32.1 and 32.2.



|            |  |                                                                                                                                                                                                                                                                                                      
|----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                          
|2.1         |  | Stock Purchase Agreement dated March 7, 2005 by and among MCP-MSC Acquisition, Inc., MSC Acquisition, Inc. and its stockholders and warrantholders (incorporated by reference to the
Registrants Form S-4 Registration Statement filed with the Commission on March 31, 2006)                       
|            | 
|2.2         |  | First Amendment to Stock Purchase Agreement dated as of March 31, 2005 by and among MCP-MSC Acquisition, Inc., MSC Acquisition, Inc., HIG-MSC, Inc. and the Equityholders (incorporated by
reference to the Registrants Form S-4 Registration Statement filed with the Commission on March 31, 2006)
|            | 
|3.1         |  | Amended and Restated Certificate of Incorporation of MCP-MSC Acquisition, Inc. (incorporated by reference to the Registrants Form S-4 Registration Statement filed with the Commission on
March 31, 2006)                                                                                           



60



---

|    |  |                                                                                                                                                                                                                                                                                                                        
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | 
|3.2 |  | By-laws of MCP-MSC Acquisition, Inc. (incorporated by reference to the Registrants Form S-4 Registration Statement filed with the Commission on March 31, 2006)                                                                                                                                                       
|    | 
|3.3 |  | Articles of Incorporation of MSC-Medical Services Company (incorporated by reference to the Registrants Form S-4 Registration Statement filed with the Commission on March 31,
2006)                                                                                                                                  
|    | 
|3.4 |  | Amended and Restated Bylaws of MSC-Medical Services Company (incorporated by reference to the Registrants Form S-4 Registration Statement filed with the Commission on March 31,
2006)                                                                                                                                
|    | 
|3.5 |  | Amended and Restated Certificate of Incorporation of MCP-MSC Acquisition, Inc. (incorporated by reference to the Registrants Form 8-K Current Report filed with the Commission on February
1, 2008)                                                                                                                   
|    | 
|4.1 |  | Indenture dated as of June 21, 2005, by and among MSC-Medical Services Company, MCP-MSC Acquisition, Inc. and U.S. Bank National Association, as Trustee (incorporated by reference to the
Registrants Form S-4 Registration Statement filed with the Commission on March 31, 2006)                                   
|    | 
|4.2 |  | Registration Rights Agreement dated as of June 21, 2005 by and among MSC-Medical Services Company, MCP-MSC Acquisition, Inc. and Banc of America Securities LLC J.P. Morgan Securities Inc.
(incorporated by reference to the Registrants Form S-4 Registration Statement filed with the Commission on March 31, 2006)
|    | 
|4.3 |  | Purchase Agreement dated June 15, 2005 by and among MSC-Medical Services Company and MCP-MSC Acquisition, Inc., Banc of America Securities LLC and J.P. Morgan Securities Inc. (incorporated by
reference to the Registrants Form S-4 Registration Statement filed with the Commission on March 31, 2006)             
|    | 
|4.4 |  | Form of Senior Secured Floating Rate Note due 2011 (incorporated by reference to Exhibit 4.1 the Registrants Form S-4 Registration Statement filed with the Commission on March 31, 2006)                                                                                                                             
|    | 
|4.5 |  | Supplemental Indenture dated as of July 24, 2007 among MSC  Medical Services Company, MSC Billing, Inc., MCP  MSC Acquisition, Inc., and U.S. Bank National Association (the
Trustee) (incorporated by reference to the Registrants Form 8-K Current Report filed with the Commission on August 3, 2007)          
|    | 
|4.6 |  | Common stock Purchase Warrant January 28, 2008 among MCP-MSC Equity Investment, LLC and MCP-MSC Acquisition, Inc. (incorporated by reference to the Registrants Form 8-K Current Report
filed with the Commission on February 1, 2008)                                                                                
|    | 
|4.7 |  | ZoneCareUSA of Delray, LLC Supplemental Indenture dated February 5, 2008 (incorporated by reference to the Registrants Form 8-K Current Report filed with the Commission on February 8,
2008)                                                                                                                         
|    | 
|4.8 |  | ZoneCareUSA DME, LLC Supplemental Indenture dated February 5, 2008 (incorporated by reference to the Registrants Form 8-K Current Report filed with the Commission on February 8,
2008)                                                                                                                               
|    | 
|4.9 |  | Speedy Re-Employment, LLC Supplemental Indenture dated February 5, 2008 (incorporated by reference to the Registrants Form 8-K Current Report filed with the Commission on February 8, 2008)                                                                                                                          



61



---

|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     | 
|4.10 |  | SelectMRI Acquisition, LLC Supplemental Indenture dated February 5, 2008 (incorporated by reference to the Registrants Form 8-K Current Report filed with the Commission on
February 8, 2008)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|     | 
|4.11 |  | ZoneCareUSA of Delray, LLC Second Lien Security Supplement dated February 5, 2008 (incorporated by reference to the Registrants Form 8-K Current Report filed with the Commission on
February 8, 2008)                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|     | 
|4.12 |  | ZoneCareUSA DME, LLC Second Lien Security Supplement dated February 5, 2008 (incorporated by reference to the Registrants Form 8-K Current Report filed with the Commission on February 8,
2008)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|     | 
|4.13 |  | Speedy Re-Employment, LLC Second Lien Security Supplement dated February 5, 2008 (incorporated by reference to the Registrants Form 8-K Current Report filed with the Commission on February
8, 2008)                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|     | 
|4.14 |  | SelectMRI Acquisition, LLC Second Lien Security Supplement dated February 5, 2008 (incorporated by reference to the Registrants Form 8-K Current Report filed with the Commission on
February 8, 2008)                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|     | 
|10.1 |  | Stockholders Agreement dated as of March 31, 2005 among MCP-MSC Acquisition, Inc., Monitor Clipper Equity Partners II, L.P., Monitor Clipper Equity Partners II (NQP), L.P. and certain Other
Investors (incorporated by reference to the Registrants Form S-4 Registration Statement filed with the Commission on March 31, 2006)                                                                                                                                                                                                                                                                                                                                               
|     | 
|10.2 |  | Roll-Over Stock Subscription Agreement dated as of March 31, 2005 among MCP-MSC Acquisition, Inc and Ronald Hofstetter (incorporated by reference to the Registrants Form S-4 Registration
Statement filed with the Commission on March 31, 2006)                                                                                                                                                                                                                                                                                                                                                                                                                                
|     | 
|10.3 |  | Stock Subscription Agreement dated as of March 31, 2005 among MCP-MSC Acquisition, Inc., Monitor Clipper Equity Partners II, L.P. and Monitor Clipper Equity Partners II (NQP), L.P. (incorporated
by reference to the Registrants Form S-4 Registration Statement filed with the Commission on March 31, 2006)                                                                                                                                                                                                                                                                                                                                                                  
|     | 
|10.4 |  | Coinvestor Stock Subscription Agreement dated as of March 30, 2005 among MCP-MSC Acquisition, Inc., A.S.F. Co-Investment Partners II, L.P., New York Life Capital Partners, II, L.P., The
Northwestern Mutual Life Insurance Company, HarbourVest Partners VIDirect Fund, L.P., GS Private Equity Partners 2002, L.P., GS Private Equity Partners 2002 Offshore Holdings L.P., GS Private Equity Partners 2002 Employee Fund, L.P., CSFB CPP
Investment Board Co-Investment Fund, L.P., CFIG Co-Investors, L.P., and CSFB Co-Investment Program, L.P. (incorporated by reference to the Registrants Form S-4 Registration Statement filed with the Commission on March 31,
2006)
|     | 
|10.5 |  | MCP-MSC Acquisition, Inc. 2005 Stock Option Plan (incorporated by reference to the Registrants Form S-4 Registration Statement filed with the Commission on March 31, 2006)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|     | 
|10.6 |  | Form of Nonstatutory Stock Option Granted Under MCP-MSC Acquisition, Inc. 2005 Stock Option Plan (incorporated by reference to the Registrants Form S-4 Registration Statement filed with
the Commission on March 31, 2006)                                                                                                                                                                                                                                                                                                                                                                                                                                                      



62



---

|      |  |                                                                                                                                                                                                                                                                                                                                                                                               
|----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      | 
|10.7  |  | Employment Agreement dated as of October, 2004 by and between MSC-Medical Services Company and Joseph Delaney (incorporated by reference to the Registrants Form S-4 Registration Statement
filed with the Commission on March 31, 2006)                                                                                                                                                     
|      | 
|10.8  |  | Amendment No. 1 to Employment Agreement dated as of March 31, 2005 by and between MSC-Medical Services Company and Joseph Delaney (incorporated by reference to the Registrants Form S-4
Registration Statement filed with the Commission on March 31, 2006)                                                                                                                                 
|      | 
|10.9  |  | Amended and Restated Employment Agreement dated as of March 31, 2005 by and between MSC-Medical Services Company, MCP-MSC Acquisition, Inc. and Robert Bunker (incorporated by reference to the
Registrants Form S-4 Registration Statement filed with the Commission on March 31, 2006)                                                                                                     
|      | 
|10.10 |  | Employment Agreement dated as of June 1, 2005 by and between MSC-Medical Services Company and Craig Rollins (incorporated by reference to the Registrants Form S-4 Registration Statement
filed with the Commission on March 31, 2006)                                                                                                                                                       
|      | 
|10.11 |  | Revolving Credit Agreement dated as of March 31, 2005 among Mustang MSC-Florida Acquisition, Inc., MCP-MSC Acquisition, Inc., Bank Of America, N.A., the Other Lenders Party Hereto, and Banc Of
America Securities LLC. (incorporated by reference to the Registrants Form S-4 Registration Statement filed with the Commission on March 31, 2006)                                          
|      | 
|10.12 |  | First Lien Security Agreement dated as of March 31, 2005 from the Grantors referred to therein to Bank of America, N.A. (incorporated by reference to the Registrants Form S-4 Registration
Statement filed with the Commission on March 31, 2006)                                                                                                                                           
|      | 
|10.13 |  | Subsidiary Guaranty, dated as of March 31, 2005 from the Guarantors named therein and the Additional Guarantors referred to therein, as guarantors in favor of the Secured Parties referred to in
the Revolving Credit Agreement referred to therein. (incorporated by reference to the Registrants Form S-4 Registration Statement filed with the Commission on March 31, 2006)             
|      | 
|10.14 |  | Intellectual Property Security Agreement dated March 31, 2005, is made by the Persons listed on the signature pages hereof (collectively, the Grantors) in favor of Bank Of
America, N.A., for the Secured Parties as defined in the Revolving Credit Agreement. (incorporated by reference to the Registrants Form S-4 Registration Statement filed with the Commission on March 31, 2006)
|      | 
|10.15 |  | Amendment No. 1 to the Revolving Credit Agreement dated as of May 12, 2005 among MSC-Medical Services Company, MCP-MSC Acquisition, Inc., the banks, financial institutions and other lenders
party thereto and Bank of America, N.A. as Administrative Agent. (incorporated by reference to the Registrants Form S-4 Registration Statement filed with the Commission on March 31, 2006)    
|      | 
|10.16 |  | Amendment No. 2 to the Revolving Credit Agreement dated as of December 9, 2005 among MSC-Medical Services Company, MCP-MSC Acquisition, Inc., the banks, financial institutions and other lenders
party thereto and Bank of America, N.A. as Administrative Agent. (incorporated by reference to the Registrants Form S-4 Registration Statement filed with the Commission on March 31, 2006)
|      | 
|10.17 |  | Employment Agreement dated as of March 31, 2006 between MSCMedical Services Company and Patrick Dills. (incorporated by reference to the Registrants Amendment No. 1 to Form S-4
Registration Statement filed with the Commission on May 17, 2006)                                                                                                                                          



63



---

|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      | 
|10.18 |  | Restricted Stock Agreement dated as of March 31, 2006 between MCPMSC Acquisition, Inc. and Patrick Dills. (incorporated by reference to the Registrants Amendment No. 1 to Form
S-4 Registration Statement filed with the Commission on May 17, 2006)                                                                                                                                                                                                                                                                                                                                                     
|      | 
|10.19 |  | Standard Office Lease Dated As Of December 4, 2006 (incorporated by reference to the Registrants Form 8-K Current Report filed with the Commission on December 8, 2006)                                                                                                                                                                                                                                                                                                                                                                                                                                    
|      | 
|10.20 |  | Amendment No. 3 To The Revolving Credit Agreement dated as of December 14, 2006 (this Amendment) among MSC-Medical Services Company, a Florida corporation (the
Borrower), MCP-MSC Acquisition, Inc., a Delaware corporation (Holdings), the banks, financial institutions and other lenders party hereto (collectively, the Lenders) and Bank of America, N.A.
(Bank of America), as administrative agent (in such capacity, the Administrative Agent) for the Lenders. (incorporated by reference to the Registrants Form 8-K Current Report filed with the Commission on
December 19, 2006 )
|      | 
|10.21 |  | Amendment to Employment Agreement dated as of July 3, 2006 between Joseph P. Delaney and MSC  Medical Services Company (incorporated by reference to the Registrants Form 8-K Current
Report filed with the Commission on March 13, 2007)                                                                                                                                                                                                                                                                                                                                                                 
|      | 
|10.22 |  | Amended and Restated Employment Agreement dated as of March 7, 2007 between Joseph P. Delaney and MSC  Medical Services Company (incorporated by reference to the Registrants Form 8-K
Current Report filed with the Commission on March 13, 2007)                                                                                                                                                                                                                                                                                                                                                        
|      | 
|10.23 |  | Restricted Stock Agreement dated as of March 7, 2007 between Joseph P. Delaney and MCP-MSC Acquisition, Inc. (incorporated by reference to the Registrants Form 8-K Current Report filed
with the Commission on March 13, 2007)                                                                                                                                                                                                                                                                                                                                                                            
|      | 
|10.24 |  | Amendment to Employment Agreement dated as of March 7, 2007 between Patrick Dills, MCP-MSC Acquisition, Inc. and MSC  Medical Services Company (incorporated by reference to the
Registrants Form 8-K Current Report filed with the Commission on March 13, 2007)                                                                                                                                                                                                                                                                                                                                         
|      | 
|10.25 |  | Restricted Stock Agreement dated as of March 7, 2007 between Patrick Dills and MCP-MSC Acquisition, Inc. (incorporated by reference to the Registrants Form 8-K Current Report filed with
the Commission on March 13, 2007)                                                                                                                                                                                                                                                                                                                                                                                
|      | 
|10.26 |  | Amended and Restated Employment Agreement, dated July 16, 2007, by and between the Company and Gary S. Jensen. (incorporated by reference to the Registrants Form 8-K Current Report filed
with the Commission on July 20, 2007)                                                                                                                                                                                                                                                                                                                                                                           
|      | 
|10.27 |  | Security Agreement Supplement dated as of July 24, 2007 between MSC Billing, Inc. and Bank of America, N.A., as administrative agent. (incorporated by reference to the Registrants Form 8-K
Current Report filed with the Commission on August 3, 2007)                                                                                                                                                                                                                                                                                                                                                   
|      | 
|10.28 |  | Subsidiary Guaranty Supplement dated as of July 24, 2007 between MSC Billing, Inc. and Bank of America, N.A., as administrative agent. (incorporated by reference to the Registrants Form
8-K Current Report filed with the Commission on August 3, 2007)                                                                                                                                                                                                                                                                                                                                                  



64



---

|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      | 
|10.29 |  | Separation Agreement as of November 1, 2007 by and between the Company and Craig Rollins (incorporated by reference to the Registrants Form 10-Q Quarterly Report filed with the
Commission on November 14, 2007)                                                                                                                                                                                                                                                                               
|      | 
|10.30 |  | Consulting Agreement dated as of December 31, 2007 between MSC - Medical Services Company and Gary Jensen. (incorporated by reference to the Registrants Form 8-K Current Report filed with
the Commission on December 31, 2007)                                                                                                                                                                                                                                                                
|      | 
|10.31 |  | Employment Agreement dated as of December 13, 2007 between MSC - Medical Services Company and Paul Bode (incorporated by reference to the Registrants Form 8-K Current Report filed
with the Commission on January 7, 2008)                                                                                                                                                                                                                                                                     
|      | 
|10.32 |  | Class A Common Stock Purchase Agreement dated as of January 28, 2008 among MCP-MSC Equity Investment, LLC and MCP-MSC Acquisition, Inc. (incorporated by reference to the Registrants Form
8-K Current Report filed with the Commission on February 1, 2008)                                                                                                                                                                                                                                    
|      | 
|10.33 |  | Membership Interest Purchase Agreement dated as January 28, 2008 among MSC-Medical Services Company, Zonecare USA of Delray LLC, and the named members of ZoneCare (incorporated by reference to
the Registrants Form 8-K Current Report filed with the Commission on February 1, 2008)                                                                                                                                                                                                         
|      | 
|10.34 |  | Membership Interest Purchase Agreement dated as January 28, 2008 among MSC-Medical Services Company, Speedy Re-employment, LLC and named members of Speedy, LLC (incorporated by reference to the
Registrants Form 8-K Current Report filed with the Commission on February 1, 2008)                                                                                                                                                                                                            
|      | 
|10.35 |  | Asset Purchase Agreement dated as January 28, 2008 among SelectMRI Acquisition, LLC, SelectMRI, LLC and the named members of SelectMRI, LLC (incorporated by reference to the Registrants
Form 8-K Current Report filed with the Commission on February 1, 2008)                                                                                                                                                                                                                                
|      | 
|10.36 |  | Amendment No. 4 to the Revolving Credit Agreement Amendment, dated as of January 18, 2008, among MSC-Medical Services Company, MCP-MSC Acquisition, Inc., the banks, financial institutions and
other lenders party thereto (collectively, the Lenders) and Bank of America, N.A., as administrative agent (in such capacity, the Administrative Agent) for the Lenders (incorporated by reference to the Registrants Form
8-K Current Report filed with the Commission on February 1, 2008)
|      | 
|10.37 |  | ZoneCareUSA of Delray, LLC Security Agreement Supplement dated February 5, 2008 (incorporated by reference to the Registrants Form 8-K Current Report filed with the Commission on February
8, 2008)                                                                                                                                                                                                                                                                                            
|      | 
|10.38 |  | ZoneCareUSA DME, LLC Security Agreement Supplement dated February 5, 2008 (incorporated by reference to the Registrants Form 8-K Current Report filed with the Commission on February 8,
2008)                                                                                                                                                                                                                                                                                                  
|      | 
|10.39 |  | Speedy Re-Employment, LLC Security Agreement Supplement dated February 5, 2008 (incorporated by reference to the Registrants Form 8-K Current Report filed with the Commission on February
8, 2008)                                                                                                                                                                                                                                                                                             
|      | 
|10.40 |  | SelectMRI Acquisition, LLC Security Agreement Supplement dated February 5, 2008 (incorporated by reference to the Registrants Form 8-K Current Report filed with the Commission on February
8, 2008)                                                                                                                                                                                                                                                                                            



65



---

|       |  |                                                                                                                                                                                                                            
|------ |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       | 
|10.41  |  | ZoneCareUSA of Delray, LLC Subsidiary Guaranty Supplement dated February 5, 2008 (incorporated by reference to the Registrants Form 8-K Current Report filed with the Commission on
February 8, 2008)                     
|       | 
|10.42  |  | ZoneCareUSA DME, LLC Subsidiary Guaranty Supplement dated February 5, 2008 (incorporated by reference to the Registrants Form 8-K Current Report filed with the Commission on February 8,
2008)                           
|       | 
|10.43  |  | Speedy Re-Employment, LLC Subsidiary Guaranty Supplement dated February 5, 2008 (incorporated by reference to the Registrants Form 8-K Current Report filed with the Commission on February
8, 2008)                      
|       | 
|10.44  |  | SelectMRI Acquisition, LLC Subsidiary Guaranty Supplement dated February 5, 2008 (incorporated by reference to the Registrants Form 8-K Current Report filed with the Commission on February
8, 2008)                     
|       | 
|10.45  |  | Employment Agreement dated as of March 10, 2008 between MSCMedical Services Company and Robert DiProva (incorporated by reference to the Registrants Form 8-K Current Report
filed with the Commission on March 12, 2008)
|       | 
|10.46* |  | Amended and Restated Employment Agreement dated as of November 1, 2006 by an among MSC  Medical Services Company and Mitch Freeman                                                                                        
|       | 
|10.47* |  | Employment Agreement dated as of December 2, 2004 by an among MSC  Medical Services Company and Linda Lane, as amended on March, 2005                                                                                     
|       | 
|14.1*  |  | MSC  Medical Services Company Code of Business Conduct and Ethics                                                                                                                                                         
|       | 
|21.1*  |  | List of Subsidiaries                                                                                                                                                                                                       
|       | 
|99.1*  |  | Audit Committee Charter                                                                                                                                                                                                    



|* | Filed herewith.
|- | ---------------



66



---

SIGNATURES

Pursuant to the requirements of the Indenture dated as of June 21, 2005, among the Registrant, MCP-MSC Acquisition, Inc. and U.S. Bank National Association relating to the Senior Secured Floating Rate Notes Due 2011, the Registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



|                     |  |                              |  |                                                                                     
|-------------------- |  | ---------------------------- |  | ------------------------------------------------------------------------------------
|                     |  | MSCMedical Services Company
|                     |  |                             
|Date: March 31, 2008 |  | By:                          |  | /s/ JOSEPH P. DELANEY                                                               
|                     |  |                              |  | Joseph P. Delaney                                                                   
|                     |  |                              |  | President and Chief Executive Officer                                               
|                     |  |                              |  | (principal executive officer)                                                       
|                     |  |                             
|Date: March 31, 2008 |  | By:                          |  | /s/ Thomas Moloney                                                                  
|                     |  |                              |  | Thomas Moloney, Chief Financial Officer (principal financial and accounting officer)



67