UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

|X|   ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934

                  For the Fiscal Year Ended: 28 February, 2006

|_|   TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
      OF 1934

                        For the transition period from         to

                          Commission File No. 333-86706

                        PAPERFREE MEDICAL SOLUTIONS, INC.
              Exact Name of Registrant as Specified in its Charter)

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<CAPTION>
<S>                             <C>                             <C>
           Nevada                           7374                     98-0375957
           ------                           -----                    ----------
(State or Other Jurisdiction    (Primary Standard Industrial       (IRS Employer
     of Incorporation)           Classification Code Number)    Identification. No.)
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                   121 West Sycamore St. Kokomo, Indiana 46901
               (Address of Principal Executive Offices) (Zip Code)

         Issuer's telephone number, including area code: (765) 456-1089

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

    Securities registered pursuant to Section 12(g) of the Act: Common Stock,
                           par value $0.001 per share

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

                    Yes |X|                              No |_|

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB.

                    Yes |X|                              No |_|

State issuer's revenues for its most recent fiscal year:     Nil


                                       1
<PAGE>

State the aggregate market value of the voting and non-voting common equity held
by non-affiliates computed by reference to the price at which the common equity
was sold, or the average bid and asked price of such common equity, as of a
specified date within the past 60 days. (See definition of affiliate in Rule
12b-2 of the Exchange Act.)

$891,285 as at July 13, 2006 based on the last sale price of our shares

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date.

68,561,857


                                       2
<PAGE>

                    NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Form 10-KSB may contain certain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. For this
purpose any statements contained in this Form 10-KSB that are not statements of
historical fact may be deemed to be forward-looking statements. Without limiting
the foregoing, words such as "may," "will," "expect," "believe," "anticipate,"
"estimate" or "continue" or comparable terminology is intended to identify
forward-looking statements. It is important to note that our actual results
could differ materially from those anticipated from the forward-looking
statements depending on various important factors. These important factors
include our history of losses and ability to continue as a going concern, the
uncertainty of acceptance of current and new products in our markets,
competition in our markets, our dependence on our distributors and the other
factors discussed in our "Risk Factors" found on page 10.

FORWARD-LOOKING STATEMENTS

Portions of this Form 10-KSB, including disclosure under "Management's
Discussion and Analysis or Plan of Operation," contain forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended (the "Securities Act"), Section 21E of the Securities and Exchange Act
of 1934, as amended (the "Exchange Act"), and the Private Securities Litigation
Reform Act of 1995, as amended. These forward-looking statements are subject to
risks and uncertainties and other factors that may cause our actual results,
performance or achievements to be materially different from the results,
performance or achievements expressed or implied by the forward-looking
statements. You should not unduly rely on these statements. Forward-looking
statements involve assumptions and describe our plans, strategies, and
expectations. You can generally identify a forward-looking statement by words
such as may, will, should, expect, anticipate, estimate, believe, intend,
contemplate or project. Factors, risks, and uncertainties that could cause
actual results to differ materially from those in the forward-looking statements
include, among others,

o     our ability to raise capital,

o     our ability obtain and retain customers,

o     our ability to provide our products and services at competitive rates,

o     our ability to execute our business strategy in a very competitive
      environment,

o     our degree of financial leverage,

o     risks associated with our acquiring and integrating companies into our
      own,

o     risks related to market acceptance and demand for our services,

o     the impact of competitive services,

o     other risks referenced from time to time in our SEC filings.

With respect to any forward-looking statement that includes a statement of its
underlying assumptions or bases, we caution that, while we believe such
assumptions or bases to be reasonable and have formed them in good faith,
assumed facts or bases almost always vary from actual results, and the
differences between assumed facts or bases and actual results can be material
depending on the circumstances. When, in any forward-looking statement, we or
our management express an expectation or belief as to future results, that
expectation or belief is expressed in good faith and is believed to have a
reasonable basis, but there can be no assurance that the stated expectation or
belief will result or be achieved or accomplished. All subsequent written and
oral forward-looking statements attributable to us, or anyone acting on our
behalf, are expressly qualified in their entirety by the cautionary statements.
We do not undertake any obligations to publicly release any revisions to any
forward-looking statements to reflect events or circumstances after the date of
this report or to reflect unanticipated events that may occur.


                                       3
<PAGE>

PART I

ITEM 1: DESCRIPTION OF BUSINESS

(a)  Business Development

PaperFree Medical Solutions, Inc. (the "Company") was incorporated on January
29th, 2002 under the laws of the State of Nevada under the name of Link Media
Publishing Ltd.

From the date of its incorporation to February 28th, 2006 the
Company has undertaken the following activity:

(1) Through an agreement dated February 15, 2002 and completed on February 22,
2002, we acquired a 100% equity interest in Business to Business Publishing Ltd.
("B2B"), a private British Columbia company involved in the publication and
distribution of industry and profession specific wall planners. The agreement
was in consideration of 2,600,000 (13,000,000 post forward 5:1 split, and
325,000 after the 1:40 reverse split) restricted shares of its common stock and
by advancing B2B with $50,000 in long-term loans carrying no interest or fixed
terms of repayment. As a result of the transaction B2B became a wholly owned
subsidiary of the Company and their operations were merged.

The Company through B2B, which had no salaried employees, was considered a
start-up corporation involved in the production and distribution of industry
specific and special interests wall planners. Revenue was generated by B2B by
selling advertising space in its wall planners. The wall planners were
distributed, free of charge, to targeted professionals or individuals who
comprise the industry or interest groups for which the planners were designed
and produced.

(2) During the fiscal year ended February 28, 2003, our subsidiary suspended
operations due to our failure to raise sufficient working capital to fund
ongoing operations and our inability to attain profitable operations. We
attempted to raise additional financing to fund future operations, but were not
successful.

(3) On July 14, 2003, the Company completed a 5:1 stock split of its outstanding
share capital in connection with the proposed acquisition of Crown Medical
Systems, Inc. resulting in an increase in outstanding common shares from
6,390,367 shares to 31,951,835 shares.

(4) On September 3, 2003, the Company executed an Agreement and Plan of Merger
(the "Merger Agreement") with Crown Medical Systems, Inc. ("Crown Delaware").
Crown Delaware is a private Delaware company that provides computer software,
hardware and support solutions to the health care industry.

(5) Effective December 18, 2003 the Company changed its name to Crown Medical
Systems, Inc.

(6) On February 23, 2004 the Company disposed of its entire interest in the
shares of Business to Business Publishing Inc. in return for the surrender for
cancellation of the 13,000,000 post forward split shares of the Company issued
in connection with the acquisition of Business to Business Publishing Inc.

(7) The Company, through an agreement dated January 27, 2004 acquired the rights
to MD PaperFree, a proprietary EMR (Electronic Medical Record) software program
used by Medical Practitioners to document patient encounters.

(8) On September 1, 2004, PaperFree, in connection with its aborted takeover of
Crown Medical Systems, Inc. (Delaware) for 4,396,825 Preferred Series A shares.
These Series A shares were immediately converted into 39,901,187 PaperFree
common shares. As the former management of Crown Medical Systems, Inc.
(Delaware) were unable to provide financial records in a format that was
economically susceptible to audit verification by an independent registered
accounting firm, the PaperFree Board of Directors took formal action to abandon
the investment in Crown Medical Systems, Inc. (Delaware).

(9) On September 3, 2004, the Company executed an Agreement and Plan of Merger
(the "Merger Agreement") with Crown Delaware. This Merger Agreement takes
precedent over the Share Purchase Agreement executed June 20, 2004. Crown
Delaware is a private Delaware company that provides computer software, hardware
and support solutions to the health care industry. As the former management of
Crown Medical Systems, Inc. (Delaware) were unable to provide financial records
in a format that was economically susceptible to audit verification by an
independent registered accounting firm, the PaperFree Board of Directors took
formal action to abandon the investment in Crown Medical Systems, Inc.
(Delaware).

(10) Following the decision to abandon the Crown acquisition, PaperFree
Management undertook a search for a replacement operating company. They
identified a Company known as KMS Computer Services , Inc., located in Kokomo,
Indiana. KMS is a provider of paper-free turnkey medical solutions for small to
large multi-physician, multi-specialty offices, hospitals and integrated
delivery networks.


                                       4
<PAGE>

(11) On March 1, 2005, PaperFree acquired 100 percent of the outstanding common
shares of KMS Computer Services, Inc. (`KMS") in exchange for the issuance of
2,400,000 shares of PaperFree common stock. The results of KMS's operations have
been included in the consolidated statement of operations since that date. KMS
is a provider of billing and practice management software. PapeFree is expected
to be the leading provider of paper-free turnkey medical solutions for small to
large multi-physician, multi-specialty offices, hospitals and integrated
delivery networks.

The aggregate purchase price was 2,400,000 shares of Paperfree's common stock
valued at $3,000,000. The value of the 2,400,000 common shares issued was
determined based on the market price of PaperFree's common shares on the date of
the initial agreement

(12) For the period ended February 28, 2006, the Company had total assets of
$2,060,015 (February 28, 2005 - $121,837). Current Assets were comprised of cash
resources of $213,368 (2005 - $121,837), and Accounts Receivable of $68,223
after taking into account a bad debt allowance of $75,000. The cash and
equivalents and Accounts Receivable represent the Company's present source of
liquidity.

Long term assets included Fixed Assets of $54,255 (net of accumulated
depreciation of $111,721), goodwill of $1,632,502 and other long term assets of
$91,667. Total assets were $2,060,015 (2005 - $121,837)

The Company's liabilities at February 28, 2006 totalled $1,056,325 (2005 -
$362,954), consisting of $332,852 (2005 - $106,810) in accounts payables and
accrued liabilities and $103,849 (2005 - $170,400) in stock payable and $195,529
(2005 - $10,144) due to related parties, as well as a line of credit of $16,913.
And mandatory redeemable preferred stock shown as a current liability item was
$75,600 (2005 - $75,600).

During the year the Company entered into a financing arrangement that created
long term liabilities of $160,305 in Callable secured convertible notes payable
and a derivative liability associated with the long term note of $171,267.

The acquisition of KMS at the beginning of the fiscal year resulted in revenues
of $979,381. During the year ended February 28, 2005 the Company had no revenues
from continuing operations. The Company incurred net losses for the year from
operations of $3,561,441 (2005 - $57,417,891) and after recording
non-operational expenses the Company had net losses for the year of $3,242,071
(2005 - $57,434,858)

The Company is presently operating at a loss. The Company's ability to continue
as an ongoing concern is dependent on its ability to generate revenues from
software sales. Failing that, the Company may need to raise additional capital,
either debt or equity capital, to fund future operation and ultimately to attain
profitable operation.

(13) During the year ended February 28, 2006 we incurred losses of $3,242,071

We intend to seek financing necessary to fund future operations and to fund our
investigation, negotiation and acquisition of other business acquisition
opportunities. Currently, we have no anticipated source of financing.

We anticipate that additional funding will be required in the form of equity
financing from the sale of our common stock or from director loans. However, we
cannot provide investors with any assurance that we will be able to raise
sufficient funding from the sale of our common stock or arrange director loans
in order to continue operations.

(b) Business of Issuer

GENERAL

The Company is in the business of providing Medical Practitioners with billing
services and software and associated hardware solutions, which meet or exceed
security levels specified by the Health Insurance Portability and Accountability
Act of 1996.

(1)   Distribution Method of Services

With the acquisition of KMS Computer Services, Inc. the at the start of the
fiscal year, the Company has been able to use the sales and marketing network
provided by KMS to market the MD PaperFree(R) EMR software.

The Company is actively looking to increase its presence in the Medical Billing
marketplace.

(2)   Principal Products or Services and Their Markets:

(i)   Principal Products or Services

The Company generates revenue from the provision of billing services to medical
practioners and from the sale of its proprietary Electronic Medical Record
software, to physician offices, clinics, and hospitals.

(ii)  Markets

Inside the Medical Practitioner marketplace, the Company focus is upon sole
practitioners, doctors and other health providers operating in clinics of up to
ten practioners, and small hospitals.


                                       5
<PAGE>

In addition to the normal risks associated with a new business venture, there
can be no assurance that the Company's venture will be a commercial success.

In order to reach potential buyers, the company's licensee will use a network of
distributors acting as independent contractors, who have existing relationships
within the medical practitioner arena.

(iii) Business Applications of Services

Pursuant to the Health Insurance Portability and Accountability Act of 1996,
Medical Practitioners MD PaperFree(R) EMR is the Company's proprietary EMR
software used by Medical Practitioners to document patient encounters. MD
PaperFree(R) EMR was designed to enhance physician productivity using tablet
PCs, or desktop workstations, to automate the most common physician activities.
MD PaperFree(R) EMR replaces paper-based medical records and is available as a
hosted solution.

Designed to reduce the workload of all key staff members within the healthcare
provider organization, MD PaperFree(R) EMR features revenue stabilization and
enhancement tools, as well as built in safeguards to significantly reduce
potential malpractice lawsuits and HIPAA violations. Additionally, physicians
can justify enhanced levels of patient billing due to more complete diagnosis.

(3)   Status Of Any Publicly Announced New Product Or Service

The company has an active website at http://www.mdpaperfree.com

Effective May 24, 2006 the Company entered into an Engagement Agreement for
Revenue Cycle Management Services with Saint John's Health System in Andersen
Indiana, pursuant to which KMS Computer Services, Inc. (a wholly owned
subsidiary of PaperFree Medical Solutions, Inc) is to provide outsourced billing
and collections services. While the ultimate revenue to the Company is dependent
upon billings generated by St. John's, the Company anticipates generating fees
of $500,000 from this contract in fiscal 2007.

(4)   Competitive Business Conditions And The Small Business Issuer's
Competitive Position In The Industry And Methods Of Competition

Healthcare provider markets are highly competitive and characterized by rapid
changes due to regulation and technological improvements. The healthcare
industry is currently being driven by process optimization initiatives
especially as it relates to HIPAA compliance, reducing medical errors and
improving financial performance.

The Company's products and services compete with other healthcare software-based
companies currently in the market, as well as other companies that may enter the
market with emerging technologies. While the Company is more limited in terms of
operating history, financial resources, facilities and personnel relative to its
competitors, its strategy is to compete with larger companies on the basis on
providing an integrated software, hardware and service solution and its ability
to provide integration, implementation and ongoing system and database
maintenance through its ASP model.

(5)   Sources and availability of raw materials and the names of principal
suppliers:

The components required to provide all of the Company's services are readily
available in the marketplace.

(8)   Need for any government approval of principal products or services:

At this time there is no direct required government approval of the services
offered. However, the Company's ultimate customers operate in the highly
regulated Medical sector.

(9)   Effect of existing or probable governmental regulations on the business:
Not applicable - see (8) above.

(10)  Estimate of the amount spent during each of the last two fiscal years on
research and development activities, and if applicable the extent to which the
cost of such activities are borne directly by customers: The Company acquired
the MD PaperFree(R) software at the end of its fiscal year. No Research and
Development activities were undertaken by the Company.

(11)  Costs and effects of compliance with environmental laws (federal, state
and local):

There are no costs and effects of compliance with any environmental laws.

(12)  Number of total employees and number of full time employees:

As of February 28, 2006, PaperFree and had approximately 20 full-time employees,
and 3 part-time employees. None of our employees is represented by a labor
organization. We maintain various employee benefit plans and we believe we have
excellent relations with our employees.. All of our directors and officers
provide their services on an as needed basis.


                                       6
<PAGE>

Risk Factors

In addition to the other information in this current report, the following
factors should be carefully considered in evaluating our business and prospects:

RISKS SPECIFIC TO OUR COMPANY

Unsuccessful Operating History

We have a limited operating history upon which an evaluation of our future
prospects can be made. Our prior business history has been limited to the
publication and distribution of industry and profession specific wall planners
Currently we are engaged in the provision of Billing Services as well as the
sale of computerized Practice Management and Electronic Medical Record solutions
to medical practioners. We are not yet profitable. There is no guarantee that we
will be able to raise the financing necessary to develop any future business
plan we may adopt.

If We Do Not Obtain Additional Financing, We Will Not Be Able to Acquire Any
Assets

As of February 28, 2006, we had cash on hand in the amount of $213,368. We will
likely have to raise funds to acquire new assets and finance operation or
acquire new assets and to finance operations. If we are not able to raise the
funds necessary to fund our business objectives, we may have to delay the
implementation of any future business plan.

We do not have any arrangements for financing and we can provide no assurance
that we will be able to obtain the required financing when needed. Obtaining
additional financing will be subject to a number of factors, including:

*     Market conditions;
*     Investor acceptance of potential business assets; and
*     Investor sentiment.

These factors may make the timing, amount, terms and conditions of additional
financing unattractive or unavailable to us. If we are not successful in
achieving financing id operation or acquire business assets, our development
will be delayed.

If We Are Unable To Generate Significant Revenues From Our Operations, Our
Business Will Fail.

If we are unable to generate significant revenues from operations, we will not
be able to achieve profitability or continue operations.

RISKS SPECIFIC TO OUR INDUSTRY

Changes in the health care delivery, financing or reimbursement systems could
adversely affect our business.

      The healthcare industry in the United States may be entering a period of
change and uncertainty. Health care organizations, public or private, may
dramatically change the way they operate and pay for services. Our business is
designed to function within the current health care financing and reimbursement
system. During the past several years, the health care industry has been subject
to increasing levels of government regulation of, among other things,
reimbursement rates and relationships with referring physicians. In addition,
proposals to reform the health care system have been considered by Congress. In
light of the continued increases in the cost of health care and the current
economic weakness, there may be new proposals to change the health care system
and control costs. These proposals, if enacted, could further increase the
government's oversight role and involvement in health care, lower reimbursement
rates and otherwise change the operating environment for health care companies.
We cannot predict the likelihood of those events or what impact they may have on
our business.

We operate in highly competitive businesses.

      The healthcare industry is characterized by rapidly developing technology
and increased competition. In all of our product and service lines, we compete
with companies, large and small, located in the United States and abroad.
Competition is strong in all of our lines without regard to the number and size
of the competing companies involved. Some of our competitors and potential
competitors have significantly greater financial, technical and sales resources
than we do and may, in some locations, possess licenses or certificates that
permit them to provide products and services that we cannot currently provide.
We compete on a number of factors, including innovative products and services,
customer loyalty and price.

      There can be no assurance that we will not encounter increased or more
effective competition in the future which could limit our ability to maintain or
increase our business and adversely affect our operating results.

Our Industry Is Competitive and As Such Competitive Pressures Could Prevent Us
From Obtaining Profits, Forcing Us to Abandon or Curtail Our Business Plan and
Possibly Liquidate Our Assets.


                                       7
<PAGE>

      One of the main factors in determining in whether the Company will be able
to realize any profits and/or be able to continue its business plan will be
whether or not the Company is able to successfully compete in the medical
billing and software services industry. The industry is highly competitive and
the Company may be competing against companies with greater resources and more
experience in the industry. If the Company is unable to compete in the
marketplace and fails to generate any profits, the Company may be forced to
liquidate its assets and any investment in our Company could be lost.

Risks Related to Our Securities

Our Securities May Be Subject to Penny Stock Regulation.

If an active trading market for our securities develops and the price of our
common stock falls below $5.00 per share, then we will be subject to "penny
stock" regulation. "Penny stock" rules impose additional sales practice
requirements on broker-dealers who sell such securities to persons other than
established customers and accredited investors (generally those with assets in
excess of $1,000,000 or annual income exceeding $200,000 or $300,000 together
with a spouse). For transactions covered by these rules, the broker-dealer must
make a special suitability determination for the purchase of such securities and
have received the purchaser's written consent to the transaction prior to the
purchase. Additionally, for any transaction involving a penny stock, unless
exempt, the rules require the delivery, prior to the transaction, of a
disclosure schedule prescribed by the Commission relating to the penny stock
market. The broker-dealer also must disclose the commissions payable to both the
broker-dealer and the registered representative and current quotations for the
securities. Finally, monthly statements must be sent disclosing recent price
information on the limited market in penny stocks. Consequently, the "penny
stock" rules may restrict the ability of broker-dealers to sell our shares of
common stock. The market price of our shares would likely suffer as a result.

Our share price may be highly volatile.

      The market prices of equity securities of small companies have experienced
extreme price volatility in recent years not necessarily related to the
individual performance of specific companies. Factors such as announcements by
us, or our competitors concerning products, technology, governmental regulatory
actions, other events affecting healthcare companies generally and general
market conditions may have a significant impact on the market price of our
shares and could cause it to fluctuate substantially.

The National Association of Securities Dealers Inc., or NASD, has adopted sales
practice requirements, which may limit a stockholder's ability to buy and sell
our shares.

      In addition to the "penny stock" rules described above, the NASD has
adopted rules requiring that in recommending an investment to a customer, a
broker-dealer must have reasonable grounds for believing that the investment is
suitable for that customer. Prior to recommending speculative low-priced
securities to their non-institutional customers, broker dealers must make
reasonable efforts to obtain information about the customer's financial status,
tax status, investment objectives and other information. Under interpretations
of these rules, the NASD believes that there is a high probability that
speculative low-priced securities will not be suitable for at least some
customers. The NASD requirements make it more difficult for broker-dealers to
recommend that their customers buy our common stock, which may limit our
shareholders' ability to buy and sell our stock and which may have an adverse
effect on the market for our shares.

Forward-Looking Statements

      This prospectus contains forward-looking statements that involve risks and
uncertainties. We use words such as anticipate, believe, plan, expect, future,
intend and similar expressions to identify such forward-looking statements. You
should not place too much reliance on these forward-looking statements. Our
actual results are most likely to differ materially from those anticipated in
these forward-looking statements for many reasons, including the risks faced by
us described in the this Risk Factors section and elsewhere in this prospectus.

Item 2. Description Of Property
The Company leases premises at 121 West Sycamore Street in Kokomo Indiana..

Item 3. Legal Proceedings
From time to time, we may become party to litigation or other legal proceedings
that we consider to be a part of the ordinary course of our business.


                                       8
<PAGE>

We are not currently involved in legal proceedings that could reasonably be
expected to have a material adverse effect on our business, prospects, financial
condition or results of operations. We may become involved in material legal
proceedings in the future.

No directors, officer or affiliate of the Company, and no owner of record or
beneficial owner of more than 5% of the securities of the Company, or an
associate of any such director, officer or security holder is a party adverse to
the Company or has a material interest adverse to the Company in reference to
any litigation.

Item 4. Submission of Matters to a Vote of Security Holders

No matters were submitted to a vote of security holders during fiscal 2006 or
2005


                                       9
<PAGE>

PART II

ITEM 5: MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Market Information

Crown's common stock is quoted on the NASD OTC Bulletin Board under the symbol
"PFMS.OB" (formerly "PFMSE", prior to that "CWMS", and prior to that "LKME").
The table below gives the high and low bid information for each fiscal quarter
for the past year. The bid information was obtained from OTC Bulletin Board, and
reflects inter-dealer prices, without retail mark-up, mark-down or commission,
and may not represent actual transactions.

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
<S>                               <C>                     <C>                 <C>
Period Ended                      High                    Low                 Source
--------------------------------------------------------------------------------------------------
                                                                              Yahoo Finance
--------------------------------------------------------------------------------------------------
June 20, 2005                     0.019                   0.015               Yahoo Finance
--------------------------------------------------------------------------------------------------
February 28, 2006                 0.07                    0.02                Yahoo Finance
--------------------------------------------------------------------------------------------------
November 30, 2005                 0.08                    0.02                Yahoo Finance
--------------------------------------------------------------------------------------------------
August 31, 2005                   0.93                    0.07                Yahoo Finance
--------------------------------------------------------------------------------------------------
May 31, 2005                      1.47                    0.65                Yahoo Finance
--------------------------------------------------------------------------------------------------
February 28, 2005                 1.11                    1.08                Yahoo Finance
--------------------------------------------------------------------------------------------------
November 30, 2004                 1.05                    0.85                Yahoo Finance
--------------------------------------------------------------------------------------------------
August 31, 2004                   0.16                    0.12                CNET
--------------------------------------------------------------------------------------------------
May 31, 2004                      1.85                    0.36                Yahoo Finance
--------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------
</TABLE>

We have approximately 357 shareholders of record as at the date of this annual
report.

Dividends

There are no restrictions in our articles of incorporation or bylaws that
prevent us from declaring dividends. The Nevada Revised Statutes, however, do
prohibit us from declaring dividends where, after giving effect to the
distribution of the dividend:

1. we would not be able to pay our debts as they become due in the usual course
of business; or

2. our total assets would be less than the sum of our total liabilities plus the
amount that would be needed to satisfy the rights of shareholders who have
preferential rights superior to those receiving the distribution.

We have not declared any dividends, and we do not plan to declare any dividends
in the foreseeable future.

Equity Compensation Plan Information

      We currently do not have any stock option or equity compensation plans or
arrangements.

Recent Sales of Unregistered Securities

      We did not issue any equity securities that were not registered under the
Securities Act of 1933 during the fiscal year ended February 28, 2006 that were
not otherwise disclosed in a quarterly report on Form 10-QSB or in a current
report on Form 8-K.


                                       10
<PAGE>

ITEM 6: MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

PaperFree Medical Solutions, Inc. ("the Company") was incorporated as Link Media
Publishing Ltd in the state of Nevada on January 29, 2002. Pursuant to an
Agreement dated February 15, 2002, and completed February 22, 2002, the Company
acquired all of the issued and outstanding shares of Business-to-Business
Publishing Ltd. ("B2B"), a British Columbia, Canada corporation, in
consideration of 2,600,000 (13,000,000 post split) restricted shares of its
common stock and by advancing B2B with $50,000 in long-term loans carrying no
interest or fixed terms of repayment.

On February 23, 2004 we disposed of its interest in the shares of B2B to its
original vendors, in return for the surrender for cancellation of the 13,000,000
post forward split shares of the Company issued in connection with the
acquisition of Business to Business Publishing Inc., resulting in a gain on
disposition of $2,495. The B2B operations have been shown as discontinued
operations in the accompanying financial statements.

The Company, through an agreement dated January 27, 2004 acquired MD PaperFree,
a proprietary EMR (Electronic Medical Record) software program used by Medical
Practitioners to document patient encounters.

On September 1, 2004, PaperFree, in connection with its aborted takeover of
Crown Medical Systems, Inc. (Delaware) for 4,396,825 Preferred Series A shares.
These Series A shares were immediately converted into 39,901,187 PaperFree
common shares.

As the former management of Crown Medical Systems, Inc. (Delaware) were
unable to provide financial records in a format that was economically
susceptible to audit verification by an independent registered accounting firm,
the PaperFree Board of Directors took formal action to abandon the investment in
Crown Medical Systems, Inc. (Delaware).

For the period ended February 28, 2006, the Company had total assets of
$2,060,015. Current Assets were comprised of cash resources of $213,368, and
Accounts Receivable of $68,223 after taking into account a bad debt allowance of
$75,000. The cash and equivalents and Accounts Receivable represent the
Company's present source of liquidity.

Long term assets included Fixed Assets of $54,255 (net of accumulated
depreciation of $111,721), goodwill of $1,632,502 and other long term assets of
$91,667. Total assets were $2,060,015 as of February 28, 2006.

The Company's liabilities at February 28, 2006 totalled $1,056,325, consisting
of $332,852 in accounts payables and accrued liabilities and $103,849 (2005
$170,400) in stock payable and $195,529 due to related parties, as well as a
line of credit of $16,913. And mandatorily redeemable preferred stock shown as a
current liability item was $75,600.

During the year the Company entered into a financing arrangement that created
long term liabilities of $160,305 in Callable secured convertible notes payable
and a derivative liability associated with the long term note of $171,267.

The acquisition of KMS at the beginning of the fiscal year resulted in revenues
of $979,381. During the year ended February 28, 2005 the Company had no revenues
from continuing operations. The Company incurred net losses for the year from
operations of $3,561,441 and after recording non-operational expenses the
Company had net losses for the year of $3,242,071.

The Company is presently operating at a loss. The Company's ability to continue
as an ongoing concern is dependent on its ability to generate revenues from
software sales. Failing that, the Company may need to raise additional capital,
either debt or equity capital, to fund future operation and ultimately to attain
profitable operation.

Plan of Operation

During the fiscal year ended February 28, 2006 we generated revenue of $979,381
but incurred a net loss from operations of $3,561,441 and a net loss for the
year of $3,242,071.

The Company engaged Bristol Alliance, a firm of outside consultants to assist
the Company in reducing costs, and improving the Company's marketing efforts. By
following the recommendations from the consultants, the Company was able to
reduce operating costs and commence marketing activities.

The Company has enhanced its sales activities by allocating staff to these
activities. One of the first results was a contract with St. Johns. Effective
May 24, 2006 the Company entered into an Engagement Agreement for Revenue Cycle
Management Services with Saint John's Health System in Andersen Indiana,
pursuant to which KMS Computer Services, Inc. (a wholly owned subsidiary of
PaperFree Medical Solutions, Inc) is to provide outsourced billing and
collections services. While the ultimate revenue to the Company is dependent
upon billings generated by St. John's, the Company anticipates generating fees
of $500,000 from this contract in fiscal 2007.


                                       11
<PAGE>

We intend to seek financing necessary to fund future operations and to fund our
investigation, negotiation and acquisition of other business acquisition
opportunities. Currently, we have no anticipated source of financing.

We anticipate that additional funding will be required in the form of equity
financing from the sale of our common stock or from the sale of additional
convertible notes.. However, we cannot provide investors with any assurance that
we will be able to raise sufficient funding from the sale of our common stock or
arrange director loans in order to continue operations.

Results of Operations

For the fiscal year ended February 28, 2006 we generated revenue of $979,381 but
incurred a net loss from operations of $3,561,441 (including the impairment of
the KMS goodwill of $1,709,442) and after the recording of, a gain on
derivatives associated with the convertible notes and interest expense of
$182,223 we recorded a net loss for the year of $3,242,071.

For the fiscal year ended February 28, 2005 we earned no revenues, and we
incurred Consulting Fees of $30,177,144, General and Administrative Expenses of
$27,240,777, resulting in a loss from operations of $57,417,891 and after
interest expense of $16,967 we incurred a net loss of $57,434,858.

                          CRITICAL ACCOUNTING POLICIES

      In December 2001, the SEC requested that all registrants discuss their
most "critical accounting policies" in management's discussion and analysis of
financial condition and results of operations. The SEC indicated that a
"critical accounting policy" is one which is both important to the portrayal of
the company's financial condition and results and requires management's most
difficult, subjective or complex judgments, often as a result of the need to
make estimates about the effect of matters that are inherently uncertain. Our
significant accounting policies are described in Note 1 to our consolidated
financial statements included in this annual report, however, we believe that
none of them are considered to be critical.

                      RECENTLY ISSUED ACCOUNTING STANDARDS

      In December 2004, the FASB issued SFAS No.123R, "Accounting for
Stock-Based Compensation". SFAS No.123R establishes standards for the accounting
for transactions in which an entity exchanges its equity instruments for goods
or services. This Statement focuses primarily on accounting for transactions in
which an entity obtains employee services in share-based payment transactions.
SFAS No.123R requires that the fair value of such equity instruments be
recognized as expense in the historical financial statements as services are
performed. Prior to SFAS No.123R, only certain pro forma disclosures of fair
value were required. SFAS No.123R shall be effective for small business issuers
as of the beginning of the first interim or annual reporting period that begins
after December 15, 2005. While PaperFree has not issued any option to employees
recently, the adoption of this new accounting pronouncement is not expected to
have a material impact on the financial statements of PaperFree during fiscal
year 2006.

      PaperFree does not expect the adoption of any other recently issued
accounting pronouncements to have a significant impact on their consolidated
financial position, results of operations or cash flow.


                                       12
<PAGE>

ITEM 7: FINANCIAL STATEMENTS

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors
   PAPERFREE MEDICAL SOLUTIONS, INC.
   Kokomo, Indiana

We have audited the accompanying consolidated balance sheet of PaperFree Medical
Solutions, Inc. ("PaperFree") as of February 28, 2006 and the related
consolidated statements of operations, changes in stockholders' equity and cash
flows for the years ended February 28, 2006 and 2005. These consolidated
financial statements are the responsibility of Paperfree's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

We conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatements. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall consolidated 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 consolidated financial position of
PaperFree as of February 28, 2006 and the consolidated results of its operations
and its cash flows for the periods described in conformity with accounting
principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming
that PaperFree will continue as a going concern. As discussed in Note 2 to the
consolidated financial statements, PaperFree has suffered recurring losses from
operations, which raises substantial doubt about its ability to continue as a
going concern. Management's plans regarding those matters are described in Note
2. The consolidated financial statements do not include any adjustments that
might result from the outcome of this uncertainty.


MALONE & BAILEY, PC
www.malone-bailey.com
Houston, Texas

June 21, 2006


                                       13
<PAGE>

                        PAPERFREE MEDICAL SOLUTIONS, INC.
                           CONSOLIDATED BALANCE SHEET

                                     ASSETS

                                  February 28,

                                                                       2006
                                                               ------------
Current assets:
  Cash                                                         $    213,368
  Accounts receivable, net allowance
    for bad debts of $75,000 and $0                                  68,223
                                                               ------------
Total current assets                                                281,591

Fixed assets, net accumulated depreciation
  of $111,721                                                        54,255
Other asset                                                          91,667
Goodwill                                                          1,632,502
                                                               ------------
Total assets                                                   $  2,060,015
                                                               ============

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Account payable and accrued liabilities                      $    332,862
  Stock payable                                                     103,849
  Notes payable - related parties                                   195,529
  Line of credit                                                     16,913
  Mandatory redeemable Series C Preferred
  Stock, $0.001 par value, 90,000 shares
    authorized, issued and outstanding                               75,600
                                                               ------------
Total current liabilities                                           724,753

Derivative liability                                                160,305
Callable secured convertible notes payable                          171,267
                                                               ------------
Total liabilities                                                 1,056,325

Commitments and contingencies                                            --

Stockholders' equity:
  Series A Convertible Preferred Stock,
    $0.001 par value, 5,000,000 shares
    authorized, 0 shares issued and outstanding                          --
  Series B Preferred Stock, $0.001 par value,
    5,000,000 shares authorized, 0 shares
    issued and outstanding                                               --
  Common stock, $0.001 par value, 70,000,000
    shares authorized, 68,561,857 and 47,732,214
    shares issued and outstanding                                    68,561
  Additional paid-in-capital                                     61,749,888
  Accumulated deficit                                           (60,814,759)
                                                               ------------
Total stockholders' equity (deficit)                              1,003,690
                                                               ------------
Total liabilities and stockholders' equity                     $  2,060,015
                                                               ============

          See accompanying summary of accounting policies and notes to
                             financial statements.


                                       14
<PAGE>

                        PAPERFREE MEDICAL SOLUTIONS, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                     Years ended February 28, 2006 and 2005

                                                     2006           2005
                                                 ------------   ------------

Sales                                            $    979,381   $         --
Cost of sales                                         167,260             --
                                                 ------------   ------------
Gross profit                                          812,121             --

Operating expenses:
  General and administrative                        2,043,769     27,240,777
  Goodwill impairment                               1,709,442              -
  Consulting fees                                     227,276     30,177,114
  Lawsuit settlement                                  393,075              -
                                                 ------------   ------------
Net loss from operations                           (3,561,441)   (57,417,891)

Gain on derivatives                                   501,593             --
Interest expense                                     (182,223)       (16,967)
                                                 ------------   ------------

Net loss                                         $ (3,242,071)  $(57,434,858)
                                                 ============   ============

Basic and diluted loss per share                 $      (0.06)  $      (2.56)

Weighted average shares outstanding                52,872,258     22,391,892

          See accompanying summary of accounting policies and notes to
                             financial statements.


                                       15
<PAGE>


                        PAPERFREE MEDICAL SOLUTIONS, INC.
            CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                     Years ended February 28, 2006 and 2005

<TABLE>
<CAPTION>
                                                                                        Additional
                                 Preferred                         Common                 Paid in       Retained
                           Shares          Amount          Shares         Amount          Capital        Deficit           Total
                        ------------    ------------    ------------   ------------    ------------    ------------    ------------
<S>                     <C>             <C>             <C>            <C>             <C>             <C>             <C>
Balances, 02/29/04                --    $         --         511,296   $        511    $  1,590,099        (137,830)   $  1,452,780
Shares issued for
 - services                  600,000             600         512,500            513       1,076,637              --       1,077,750
 - Crown Delaware          4,396,825           4,397              --             --      24,734,333              --      24,738,730
 - exercise warrants              --              --       1,000,000          1,000          19,000              --          20,000
 - cash                           --              --         362,240            362         158,360              --         158,722
Offering costs                    --              --              --             --         (15,871)             --         (15,871)
Conversion of P/S
  to C/S                  (4,396,825)     39,901,178          39,901        (35,504)             --              --
Conversion of P/S
  to C/S                    (600,000)           (600)      5,445,000          5,445          (4,845)             --              --
Warrant expenses                  --              --              --             --      29,761,630              --      29,761,630
Net loss                          --              --              --             --              --     (57,434,858)
                        ------------    ------------    ------------   ------------    ------------    ------------    ------------
Balances, 02/28/05                --              --      47,732,214         47,732      57,283,839     (57,572,688)       (241,117)

Shares issued for
  KMS acquisition                 --              --       2,400,000          2,400       2,997,600              --       3,000,000
Shares issued for
  Cash                            --              --         682,416            682         109,201              --         109,883
Shares issued for
  Services                        --              --       8,547,227          8,547         579,777              --         588,324
Shares issued for
  Exercise of warrants            --              --       1,200,000          1,200         401,800              --         403,000
Shares issued for
  Lawsuit settlement              --              --       8,000,000          8,000         368,000              --         376,000
Imputed interest on
  Related party loan              --              --              --             --           9,671              --           9,671

Net Loss                          --              --              --             --              --      (3,242,071)     (3,242,071)
                        ------------    ------------    ------------   ------------    ------------    ------------    ------------
Balances, 02/28/06                --              --      68,561,857   $     68,561    $ 61,749,888    $(60,814,759    $  1,003,690
                        ============    ============    ============   ============    ============    ============    ============
</TABLE>

          See accompanying summary of accounting policies and notes to
                             financial statements.


                                       16
<PAGE>

                        PAPERFREE MEDICAL SOLUTIONS, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                     Years ended February 28, 2006 and 2005

                                                       2006            2005
                                                   ------------    ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                         $ (3,242,071)   $(57,434,858)
    Adjustments to reconcile net loss to cash
      used in operating activities:
    Depreciation expense                                 20,106              --
    Amortization expense                                 41,498       1,500,000
    Goodwill impairment                               1,709,442              --
    Interest on Preferred C shares discount                  --          15,600
    Shares issued for services                          588,324      25,816,480
    Shares issued for lawsuit settlement                376,000              --
    Warrant expense                                          --      29,761,631
    Imputed interest                                      9,671              --
    Gain on derivatives                                (501,593)             --
    Changes in assets and liabilities:
      Accounts receivable                                58,807              --
      Other asset                                      (100,000)             --
      Stock payable                                     (66,551)             --
      Accounts payable and accrued liabilities         (135,540)         66,638
                                                   ------------    ------------
CASH USED IN OPERATING ACTIVITIES                    (1,241,907)       (274,509)

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of fixed assets                               (1,947)             --
                                                   ------------    ------------
CASH USED BY INVESTING ACTIVITIES                        (1,947)             --
                                                   ------------    ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Advances from related party                           170,612           1,144
  Repayment to related party                            (35,049)             --
  Shares issued for exercise of warrants                403,000          20,000
  Prepayments for exercise of warrants                       --         170,400
  Shares issued for cash                                109,883         202,850
  Repayment on line of credit                          (113,061)             --
  Borrowings on notes payable                           800,000              --
                                                   ------------    ------------
CASH PROVIDED BY FINANCING ACTIVITIES                 1,335,385         394,394
                                                   ------------    ------------

NET INCREASE IN CASH                                     91,531         119,885
  Cash, beginning of period                             121,837           1,952
                                                   ------------    ------------
  Cash, end of period                              $    213,368    $    121,837
                                                   ============    ============

Cash paid for:
  Interest                                         $    107,707    $         --
  Income tax                                                 --              --

Non-cash investing and financing activities:
  Shares issued for purchase of KMS                $  3,000,000    $         --
  Discount on derivatives                               672,860              --

     See accompanying summary of accounting policies and notes to financial
                                  statements.


                                       17
<PAGE>

                        PAPERFREE MEDICAL SOLUTIONS, INC.
                          NOTES TO FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF ACCOUNTING POLICIES

Crown Medical Systems, Inc. (Nevada) ("Crown") was incorporated on January 29,
2002 in the State of Nevada. On September 2, 2004, Crown changed its name to
PaperFree Medical Solutions, Inc. ("PaperFree"). PaperFree's fiscal year end is
February 28 with its initial period being from January 29, 2002 (inception) to
February 28, 2002. On March 1, 2005, PaperFree acquired KMS Computer Services,
Inc. ("KMS") and expected to be the leading provider of paper-free turnkey
medical solutions for small to large multi-physician, multi-specialty offices,
hospitals and integrated delivery networks.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of
PaperFree, its wholly owned subsidiary, KMS. All significant inter-company
accounts and balances have been eliminated in consolidation.

Reclassifications

Certain amounts in the 2005 financial statements have been reclassified to
conform to the 2006 financial statement presentation. In the prior year,
PaperFree was presented as a development stage enterprise. At the commencement
of the fiscal year ended February 28, 2006, PaperFree is no longer considered
development stage and the additional disclosures have been removed.

Use of Estimates

The preparation of consolidated financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, the 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. Actual
results could differ from those estimates.

Revenue Recognition

PaperFree recognizes revenues in accordance with the provisions of Statement of
Position, or SOP, No. 97-2, "Software Revenue Recognition," as amended by SOP
98-9 and clarified by Staff Accounting Bulletin, or SAB, 101 "Revenue
Recognition in Financial Statements." SOP No 97-2, as amended, generally
requires revenue earned on software arrangements involving multiple elements to
be allocated to each element based on the relative fair values of those
elements.

PaperFree's contractual arrangements are evaluated on a contract-by-contract
basis and often require judgment and estimates that affect the timing of revenue
recognized in PaperFree' statements of operations. Specifically, PaperFree may
be required to make judgments about:

      o whether the fees associated with PaperFree products and services are
      fixed or determinable;
      o whether or not collection of PaperFree' fees is reasonably assured;
      o whether professional services are essential to the functionality of the
      related software product;
      o whether PaperFree has the ability to make reasonably dependable
      estimates in the application of the percentage-of-completion method; and
      o whether PaperFree have verifiable objective evidence of fair value for
      PaperFree products and services.


                                       18
<PAGE>

Basic and Diluted Net Loss per Share

The basic net loss per common share is computed by dividing the net loss by the
weighted average number of common shares outstanding. Diluted net loss per
common share is computed by dividing the net loss adjusted on an "as if
converted" basis, by the weighted average number of common shares outstanding
plus potential dilutive securities. For the years ended February 28, 2006 and
2005, potential dilutive securities had an anti-dilutive effect and were not
included in the calculation of diluted net loss per common share.

Cash and Cash Equivalents

For purposes of the statements of cash flows, cash equivalents include all
highly liquid investments with original maturities of three months or less.

Computer Software

In accordance with Statement of Position (SOP) No. 98-1, "Accounting for the
Costs of Computer Software Developed or Obtained for Internal Use" and Statement
of Financial Accounting Standards ("SFAS") No. 86, software development costs
are expensed as incurred until technological feasibility has been established,
at which time such costs are capitalized until commercial operations have
commenced. These capitalized costs are subject to an ongoing assessment of
recoverability based on anticipated future revenues and changes in hardware and
software technologies. Software development costs capitalized include direct
labor and purchased software expenses incurred after technological feasibility
has been established. Amortization of capitalized software costs begins upon the
commencement of commercial operations. Capitalized costs will be amortized over
the estimated product life of three to five years, using the greater of the
straight-line method or the ratio of current product revenues to total projected
future revenues. At the balance sheet date, PaperFree evaluates the net
realizable value of the capitalized costs and adjusts the current period
amortization for any impairment of the capitalized asset value.

Goodwill

In July 2001, the FASB issued Statement of Financial Accounting Standards No.
142 ("SFAS 142"), "Goodwill and Intangible Assets", which revises the accounting
for purchased goodwill and intangible assets. Under SFAS 142, goodwill and
intangible assets with indefinite lives will no longer be amortized and will be
tested for impairment annually or whenever events or circumstances indicate that
the estimated fair value is less than the related carrying value as determined
on a reporting unit basis.

Derivative Financial Instruments

PaperFree does not use derivative instruments to hedge exposures to cash flow,
market, or foreign currency risks. PaperFree evaluates all of it financial
instruments to determine if such instruments are derivatives or contain features
that qualify as embedded derivatives. For derivative financial instruments that
are accounted for as liabilities, the derivative instrument is initially
recorded at its fair value and is then re-valued at each reporting date using
the Black-Scholes pricing model, with changes in the fair value reported as
charges or credits to income. For option-based derivative financial instruments,
PaperFree uses the Black-Scholes option-pricing model to value the derivative
instruments at inception and subsequent valuation dates. The classification of
derivative instruments, including whether such instruments should be recorded as
liabilities or as equity, is re-assessed at the end of each reporting period.
Derivative instrument liabilities are classified in the balance sheet as current
or non-current based on whether or not net-cash settlement of the derivative
instrument could be required within 12 months of the balance sheet date.


                                       19
<PAGE>

Income Taxes

Income tax expense is based on reported earnings before income taxes. Deferred
income taxes reflect the impact of temporary differences between assets and
liabilities recognized for consolidated financial reporting purposes and such
amounts recognized for tax purposes, and are measured by applying enacted tax
rates in effect in years in which the differences are expected to reverse.

Recently Issued Accounting Pronouncements

In December 2004, the FASB issued SFAS No.123R, "Accounting for Stock-Based
Compensation". SFAS No.123R establishes standards for the accounting for
transactions in which an entity exchanges its equity instruments for goods or
services. This Statement focuses primarily on accounting for transactions in
which an entity obtains employee services in share-based payment transactions.
SFAS No.123R requires that the fair value of such equity instruments be
recognized as expense in the historical financial statements as services are
performed. Prior to SFAS No.123R, only certain pro forma disclosures of fair
value were required. SFAS No.123R shall be effective for small business issuers
as of the beginning of the first interim or annual reporting period that begins
after December 15, 2005. While PaperFree has not issued any option to employees
recently, the adoption of this new accounting pronouncement is not expected to
have a material impact on the financial statements of PaperFree during fiscal
year 2007.

PaperFree does not expect the adoption of any other recently issued accounting
pronouncements to have a significant impact on their consolidated financial
position, results of operations or cash flow.

NOTE 2 - GOING CONCERN

As shown in the accompanying financial statements, PaperFree incurred recurring
net losses of $3,242,071 and $57,434,858 in fiscal 2006 and 2005, respectively,
has an accumulated deficit of $60,814,759 and a working capital deficit of
February 28, 2006. Also, the continued operations of PaperFree and the
recoverability of the carrying value of assets is dependent upon the ability of
PaperFree to obtain necessary financing to fund future operations and ultimately
to attain profitable operations.

These conditions raise substantial doubt as to PaperFree's ability to continue
as a going concern. Management's plans include obtaining additional capital
through debt or equity financing. The financial statements do not include any
adjustments that might be necessary if PaperFree is unable to continue as a
going concern.

NOTE 3 - PURCHASE OF KMS COMPUTER SERVICES

On March 1, 2005, PaperFree acquired 100 percent of the outstanding common
shares of KMS in exchange for the issuance of 2,400,000 shares of PaperFree
common stock. The results of KMS's operations have been included in the
consolidated statement of operations since that date. KMS is a provider of
billing and practice management software. PapeFree is expected to be the leading
provider of paper-free turnkey medical solutions for small to large
multi-physician, multi-specialty offices, hospitals and integrated delivery
networks.

The aggregate purchase price was 2,400,000 shares of Paperfree's common stock
valued at $3,000,000. The value of the 2,400,000 common shares issued was
determined based on the market price of PaperFree's common shares on the date of
the initial agreement.

The acquisition is accounted for as a purchase. Goodwill in the amount of
$3,341,944 is recorded at the date of the acquisition. The following table
summarizes the estimated fair value of the assets acquired and liabilities
assumed at the date of acquisition.

   Current assets                  $   141,888
   Goodwill                          3,341,944
   Property, plant and equipment        72,414
                                   -----------
   Total assets acquired             3,556,246

   Current liabilities                (426,269)
   Long-term liabilities              (129,977)
                                   -----------
   Total liabilities assumed          (556,246)
                                   -----------
   Total purchase price            $ 3,000,000
                                   ===========


                                       20
<PAGE>

The following are pro forma condensed statements of operations for the year
ended February 28, 2005, as though the acquisition had occurred on March 1,
2004.

                          Year Ended
                         February 28,
                            2005
                         ------------
   Revenue               $    229,678
   Net loss                  (730,487)

   Loss per share -
     basic and diluted   $      (0.01)

On February 28, 2006, PaperFree completed the valuation of the goodwill acquired
in the KMS transaction. In management's judgment, the final valuation, the
remaining excess purchase price of $1,632,502 was assigned to the goodwill.
PaperFree recognized $1,709,442 goodwill impairment loss for the year ended
February 28, 2006.

NOTE 4 - PURCHASE OF MD PAPERFREE SOFTWARE PROGRAM

PaperFree, through an agreement dated January 12, 2004 and amended January 27,
2004, acquired a proprietary EMR (Electronic Medical Record) software program
("MD PaperFree") to be marketed to medical practitioners for their use in
documenting patient encounters and replacing existing paper-based patient
charts. The consideration paid was 1,500,000 shares of the PaperFree's common
stock with a fair value of $1.00 per share. PaperFree capitalized software
acquisition costs totaling $1,500,000.

During the year ended February 28, 2005 the management determined that the
carrying value of the software capitalized is not recoverable and therefore an
impairment of $1,500,000 on the computer application software was recorded.

NOTE 5 - ACQUISITION AND ABANDONMENT OF CROWN MEDICAL SYSTEMS, INC. (Delaware)

On September 1, 2004, PaperFree acquired Crown Medical Systems, Inc. (Delaware)
for 4,396,825 Preferred Series A shares. These Series A shares were immediately
converted into 39,901,187 PaperFree common shares, for a total 45,869,983
post-acquisition outstanding common shares.

As the former management of Crown Medical Systems, Inc. (Delaware) were unable
to provide financial records in a format that was economically acceptable to
audit by an independent registered accounting firm, the PaperFree Board of
Directors took formal action to abandon the investment in Crown Medical Systems,
Inc. (Delaware).

The 39,901,187 shares of common stock were valued at their then-current trading
price of $0.62 per share, or $24,738,730 and they remain outstanding.


                                       21
<PAGE>

Following the abandonment of the investment in Crown Medical Systems, Inc
(Delaware), PaperFree management undertook a review of carrying value of its
Software and deferred acquisition costs. Management concluded that without the
Crown assets there was no certainty that PaperFree would be able to recover the
value of these assets and accordingly recorded the impairment during the third
quarter.

NOTE 6 - STOCK PAYABLE

During the year ended February 28, 2006, a former director of Paperfree sold
179,000 shares of common stock to investors for proceeds of $89,500. These stock
sales were not approved by the board prior to their occurrence and the director
never transferred the proceeds to Paperfree. Paperfree has agreed to issue the
investors the stock in exchange for indemnification. Paperfree has accrued a
stock payable and fraud loss of $89,500 during the year ended February 28, 2006.
As at February 28, 2006, claims were received for $2,796 resulting in the
issuance of 54,500 shares. It is unknown if the 179,000 shares represent all
shares sold by the former director without the board's approval. PaperFree may
have further liabilities to accrue and stock to issue if future claims are made.

In September 2005, Paperfree entered into a lawsuit settlement agreement with PW
Management. See Note 15 for details. Pursuant to the agreement, any additional
issuances of common stock in excess of the number of shares outstanding as of
the settlement date will activate an anti-dilution right for PW Management. This
right entitles PW Management to additional shares equal to 14.7% of all
additional issuances. Subsequent to the settlement but prior to February 28,
2006, Paperfree had issued 3,024,217 additional common shares to its consultants
for their services. These additional issuances created 444,341 anti-diluted
shares to PW Management. These shares were valued at $17,015. The anti-dilutive
shares had not been issued to PW Management as of February 28, 2006 and a
liability of $17,015 has been accrued to stock payable.

NOTE 7 - CALLABLE SECURED CONVERTIBLE NOTES PAYABLE

Paperfree entered into a securities purchase agreement with four investors (the
"note holders") on November 30, 2005, for the sale of (i) $1,500,000 in callable
secured convertible notes and (ii) warrants to purchase 3,000,000 shares of
common stock at an exercise price of $0.10 per share. The securities purchase
agreement required the purchase of an aggregate of $1,500,000 of the callable
secured convertible notes and 3,000,000 warrants occurring in three traunches as
follows:

      (i)   $800,000 on November 30, 2005 and 1,599,600 warrants to purchase
            common stock;

      (ii)  $400,000 within two days after filing a registration statement
            covering the number of shares of common stock underlying the
            callable secured convertible notes and 800,000 warrants to purchase
            common stock; and

      (iii) $300,000 within two days of the effectiveness of the registration
            statement and 600,000 warrants to purchase common stock.

The callable secured convertible notes bear interest at 8% per annum from the
date of issuance. Interest is computed on the basis of a 365-day year and is
payable quarterly in cash. The callable secured convertible notes mature three
years from the date of issuance, and are convertible into common stock at the
note holders' option, at the lower of (i) $2.00 or (ii) 65% of the average of
the three lowest intraday trading prices for the common stock on the OTC
Bulletin Board for the 20 trading days before but not including the conversion
date. Accordingly, there is no limit to the number of shares into which the
callable secured convertible notes may be converted. The callable secured
convertible notes are secured by Paperfree's assets, including inventory,
accounts receivable and intellectual property.


                                       22
<PAGE>

The agreement restricts the note holder's ability to convert their callable
secured convertible notes or exercise their warrants and receive shares of
common stock such that the number of shares of common stock held by them in the
aggregate and their affiliates after such conversion or exercise does not exceed
4.99% of the then issued and outstanding shares of common stock. However, the
note holders may repeatedly sell shares of common stock in order to reduce their
ownership percentage, and subsequently convert additional callable secured
convertible notes.

Paperfree incurred direct financing costs of $100,000 associated with the
issuance of the convertible notes. These costs were recorded as an "other long
term asset" to be amortized over the life of the notes using the effective
interest method. Costs incurred included:

  Debt arrangement fees                 $ 35,000
  Broker fees                             40,000
  Key man life insurance single premium   20,000
  Legal fees                               5,000
                                        --------
  Total associated fees                  100,000
  Less: amortization                      (8,333)
                                        --------
  Total associated fees - net           $ 91,667
                                        ========

Paperfree analyzed the Convertible Notes and the Warrants for derivative
financial instruments, in accordance with SFAS No. 133. The Convertible Notes
are a hybrid instrument which contains more than one embedded derivative feature
which would individually warrant separate accounting as derivative instruments
under SFAS 133. The various embedded derivative features have been bundled
together as a single, compound embedded derivative instrument that has been
bifurcated from the debt host contract, and referred to as the "Single Compound
Embedded Derivatives within the Convertible Notes". The single compound embedded
derivative features include the conversion feature within the Convertible Notes,
the early redemption option and the Contract Rate adjustment. Paperfree valued
the compound embedded derivatives based on a probability weighted discounted
cash flow model. The value of the single compound embedded derivative liability
was bifurcated from the debt host contract and recorded as a derivative
liability, which resulted in a reduction of the initial carrying amount (as
unamortized discount) of the Convertible Notes of $555,809 at inception on
November 30, 2005. The unamortized discount will be amortized to interest
expense using the effective interest method over the life of the Convertible
Notes, or 36 months.

The Stock Purchase Warrants are freestanding derivative financial instruments
which were valued using the Black-Scholes method. The fair value of the
derivative was computed at $106,089 at inception on November 30, 2005 and was
recorded as a derivative liability which resulted in a reduction of the initial
carrying amount (as unamortized discount) of the Convertible Notes. The
unamortized discount will be amortized to interest expense using the effective
interest method over the life of the Convertible Notes, or 36 months.

Both the embedded and freestanding derivative financial instruments were
recorded as liabilities in the consolidated balance sheet and measured at fair
value. These derivative liabilities will be marked-to-market each quarter with
the change in fair value recorded in the income statement.

Variables used in the Black-Scholes option-pricing model including (1) 4.42% to
4.67% risk-free interest rate, (2) expected warrant lift is the actual remaining
life of the warrant as of each period end, (3) expected volatility is from 176%
to 200% and (4) zero expected dividends.


                                       23
<PAGE>

The impact of the application of SFAS 133 and EITF 00-19 on the balance sheets
and statements of operations as of and through February 28, 2006 was as follows:

                                        Transaction   Liability        Gain
                                           Date         as of         through
                                        (11/30/05)    (02/28/06)    (02/28/06)
                                       ------------  ------------  ------------
Convertible notes                      $    555,809  $    130,115  $    425,694
Warrants                                    106,089        30,190        75,899
                                       ------------  ------------  ------------
Total                                  $    661,898  $    160,305  $    501,593
                                       ============  ============  ============

The following summarizes the financial presentation of the Convertible Notes at
February 28, 2006:

Face value of convertible notes                                $ 800,000

Adjustments:
     Discount for derivative liability - convertible notes
       with compound embedded derivatives                       (555,809)
     Discount for derivative liability - investors warrant      (106,089)
     Amortization of debt discount                                33,165
                                                               ---------
Convertible Notes balance, as adjusted                         $ 171,267
                                                               =========

NOTE 8 - RELATED PARTY TRANSACTIONS

Notes payable - related parties of $195,529 at February 28, 2006, represent
funds advanced to PaperFree by company's minority shareholders. The advances are
due on demand, bear no interest and are unsecured. Imputed interest expense of
8% was recorded during the period.

NOTE 9 - MANDATORILY REDEEMABLE PREFERRED STOCK

On September 16, 2004 PaperFree issued 90,000 shares of Series C preferred stock
for cash consideration of $60,000. These shares, as a class, carry the number of
votes equal to the number of votes of all outstanding Common Stock plus one
additional vote such that the holders of shares of Preferred Stock shall always
constitute a majority of the voting rights of the Corporation. All of the
Preferred Stock outstanding on the ninetieth day after the issuance will be
redeemed on such date for the cash redemption price of $0.84 per share or a
total of $75,600 for all such shares. During the years ended February 28, 2006
and 2005, PaperFree recorded interest expenses aggregating $15,600 resulted from
the discounts of the initial issuance of Series C preferred stock.

NOTE 10 - INCOME TAXES

PaperFree uses the liability method, where deferred tax assets and liabilities
are determined based on the expected future tax consequences of temporary
differences between the carrying amounts of assets and liabilities for financial
and income tax reporting purposes. During fiscal 2006 and 2005, PaperFree
incurred net losses and, therefore, has no tax liability. The net deferred tax
asset generated by the loss carry-forward has been fully reserved. The
cumulative net operating loss carry-forward is approximately $57,000,000 at
February 28, 2006, and will expire in the years 2022 through 2026.

At February 28, 2006, deferred tax assets consisted of the following:

                  Deferred tax assets
                    Net operating losses        $ 19,380,000
                    Less: valuation allowance    (19,380,000)
                                                ------------
                  Net deferred tax asset        $         --
                                                ============


                                       24
<PAGE>

NOTE 11 - COMMON STOCK

During the year ended February 28, 2006:

- PaperFree issued 2,400,000 shares of its common stock to the stockholders of
KMS. These shares were recorded at their fair value of $3,000,000.

- PaperFree issued 682,416 shares for cash consideration of $122,093 through
several Reg S stock sales and incurred an offering cost of $12,210 to its
broker.

- PaperFree issued 8,547,227 shares of its common stock to several consultants
for their services. There shares were recorded at their fair value of $588,324.

- Several investors exercised 1,200,000 warrants to PaperFree's common stock.
PaperFree received $403,000 in cash.

- PaperFree issued 8,000,000 shares of its common stock to settle a lawsuit
launched by PW Management. See Note 15 for details. There shares were recorded
at their fair value of $376,000.

NOTE 13 - WARRANTS

During the year ended February 28, 2006:
- PaperFree granted four investors 1,599,600 warrants associated with the sale
of PaperFree's convertible notes. These warrants are exercisable immediately at
$0.10 per share and expire in 57 months. See Note 7 for details.

- Several investors elected to exercise their 1,200,000 units of warrants to
PaperFree's common stock.

Summary information regarding options and warrants is as follows:

                                                            Weighted
                                                            Average
                                                            Exercise
                                              Warrants       Price
                                             ----------    ----------
          Outstanding at February 28, 2004           --    $       --

          Year ended February 28, 2005:
            Granted                           2,620,000          0.27
            Exercised                        (1,000,000)         0.02
                                             ----------    ----------
          Outstanding at February 28, 2005    1,620,000          0.42

          Year ended February 28, 2006:
            Granted                           1,599,600          0.10
            Exercised                        (1,200,000)         0.34
                                             ----------    ----------
          Outstanding at February 28, 2006    2,019,600    $     0.22
                                             ==========    ==========


Warrants outstanding and exercisable as of February 28, 2006:

Exercise    Remaining      Warrants
Price         Life       Outstanding
--------    ---------    -----------
$0.58       3.5 years        220,000
 0.75       3.5 years        200,000
 0.10       4.75years      1,599,600
                         -----------
                           2,019,600
                         ===========


                                       25
<PAGE>

NOTE 14 - COMMITMENT

By agreement dated January 12, 2004, PaperFree entered into a one year investor
relations contract with a consultant at $5,000 per month. This contract was
terminated on June 30, 2004

PaperFree leases its premises from a related party, pursuant to an 18 year lease
expiring February 28, 2023. The terms of the lease fix the rent at $10,000 per
month without escalation over the entire term. The lease is net of utilities,
taxes and insurance. Under the terms of the lease the company is committed to
annual rent of: Fiscal 2007 to fiscal 2023 at $120,000 per year.

Note 15 - LAWSUIT SETTLEMENT

On September 12, 2005 Paperfree approved a settlement of a lawsuit launched by
PW Management in connection with the return of funding provided to Crown Medical
Systems, Inc. [Delaware]. Although Paperfree abandoned its merger with Crown
[Delaware], it was deemed expedient to settle the lawsuit. Accordingly, on
January 4, 2006 Paperfree issued 2,000,000 shares to each of four entities for a
total consideration of 8,000,000 shares. Paperfree issued 4,100,000 shares of
common stock valued at $127,405 for professional fees incurred due to the
settlement resulting in an aggregate settlement expense of $376,000.

NOTE 16 - SUBSEQUENT EVENTS

In May 2006, PaperFree entered into an Engagement Agreement for Revenue Cycle
Management Services with Saint John's Health System in Andersen Indiana,
pursuant to which KMS is to provide outsourced billing and collections services.


                                       26
<PAGE>

ITEM 8: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.

Item 8A.   Controls and Procedures

      We maintain disclosure controls and procedures that are designed to ensure
that information required to be disclosed in our Exchange Act reports is
recorded, processed, summarized, and reported within the time periods specified
in the Securities and Exchange Commission's rules and forms, and that such
information is accumulated and communicated to our management, including our
Chief Executive Officer and Chief Financial Officer, as appropriate, to allow
timely decisions regarding required disclosure based on the definition of
"disclosure controls and procedures" in Rule 13a-15(e). In designing and
evaluating the disclosure controls and procedures, our management recognized
that any controls and procedures, no matter how well designed and operated, can
provide only reasonable assurance of achieving the desired control objectives,
and management necessarily was required to apply its judgment in evaluating the
cost-benefit relationship of possible controls and procedures.

      At the end of the period covered by this Annual Report on Form 10-KSB, we
carried out an evaluation, under the supervision and with the participation of
our management, including our Chief Executive Officer and Chief Financial
Officer, of the effectiveness of the design and operation of our disclosure
controls and procedures. Based on the foregoing, our Chief Executive Officer and
our Chief Financial Officer concluded that our disclosure controls and
procedures were not effective to ensure that all material information required
to be disclosed in this Annual Report on Form 10-KSB has been made known to them
in a timely fashion. In connection with the completion of its audit of, and the
issuance of its report on, our financial statements for the year ended February
28, 2006, Malone & Bailey, PC identified deficiencies that existed in the design
or operation of our internal control over financial reporting. The deficiencies
in our internal control related to goodwill impairment, valuation of shares
issued for services, valuation of derivative liabilities, expense recognition,
related party transactions, and disclosure control deficiencies related to
transactions involving goodwill and derivatives. These deficiencies have been
disclosed to our Board of Directors. Additional effort is needed to fully remedy
these deficiencies and we are continuing our efforts to improve and strengthen
our control processes and procedures. We are in the process of improving our
internal control over financial reporting in an effort to remediate these
deficiencies by improving supervision and increasing training of our accounting
staff with respect to generally accepted accounting principles, providing
additional training to our management regarding use of estimates in accordance
with generally accepted accounting principles, adding additional accounting
personnel to assist daily transactions, and increasing the frequency of internal
financial statement review.

      Our Chief Executive Officer and Chief Financial Officer have also
evaluated whether any change in our internal controls occurred during the fourth
fiscal quarter and have concluded that there were no changes in our internal
controls or in other factors that occurred during the fourth fiscal quarter that
has materially affected, or is reasonably likely to materially affect, these
controls.


                                       27
<PAGE>

PART III

ITEM 9: DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS

As of 28 February 2006, the following are the directors and executive officers
of the Company.

Directors:
Name of Director                    Age
----------------                    ---

David L. Bailey                     65

Richard J. Paver                    45

William L. Sklar                    58

T. Marshall Wilde                   42

Executive Officers:
Name of Officer            Age      Office
-------------------        ---      ------
William L Sklar            58       President, Chief Executive Officer, Chief
                                    Financial Officer, Chief Accounting Officer

Set forth below is a brief description of the background and business experience
of each of our executive officers and directors for the past five years.

      William L. Sklar, President, Chief Financial Officer, Chief Accounting
Officer, Secretary and Director, Age 58. Mr. Sklar has operated Willmar
Management Corp., a consultancy providing business and financial services since
1988. Since 1999, he has acted as a consultant to Secure Electrans Ltd., a UK
provider of domestic electric meters. He served as director and Vice Chairman
for Metro Toronto Housing Authority a Provincial-Federal board overseeing 32,000
rental units in Toronto from 1983-1989 Mr. Sklar was appointed a Director on
January 17, 2004

      David L Bailey, Director, Age 65 - Mr. Bailey served as Chairman of the
Board, President and Chief Executive Officer of CeriStar, Inc., a publicly
traded company whose principal product is the delivery of voice, video and data
services over a fiber network, from December 1999 until October 9, 2003. From
May 1997 to December 1999, Mr. Bailey served as Managing Partner of DL Group, a
limited liability corporation, which marketed computer software and
telecommunications products. From 1993 to 1997, he was Chairman and Chief
Executive Officer of VZ Corp., a software development company. Mr. Bailey has
also been Chairman and Chief Executive Officer of Clyde Digital Systems and
Cericor, and was the lead founder and Chief Executive Officer of Iomega, Inc.

      Dr. Richard J. Paver, Director, Age 45 - Dr. Richard Paver, Director -Dr.
Paver is a Family Practice Physician who currently serves with the US Navy. In
1988, Commander Paver was commissioned in the Medical Corps under the HPSP
program, graduating from the College of Osteopathic Medicine of the Pacific in
1992. He performed his internship at Naval Hospital Camp Pendleton and completed
his Residency in Family Practice in 1995. Immediately thereafter he reported for
duty to Branch Medical Clinic, Sasebo, Japan where he served as staff physician.
In October 1998, he reported to Naval Hospital, Okinawa, Japan where he served
as Department Head of Evans and Bush Branch Medical Clinics. In July 2002, he
reported to Naval Hospital, Rota, Spain where he has served in a variety of
capacities of steadily increasing responsibility, and in his current role as
Director of Medical Services since June 2004. Dr. Paver is an actively
practicing physician with both outpatient and in-patient responsibilities,
including obstetrics. He brings an interest and experience in performance
improvement activities such as: IM/IT utilization in the practice setting; HIPPA
implementation; cost, productivity and workload analyses; JCAHO sustainment and
coding. Current appointments include the Executive Committee of the Medical
Staff and the Executive Steering Committee. He has maintained board
certification with the American Academy of Family Practice since 1995 with
re-certification in July 2001.

      T. Marshall Wilde Director, age 42 - has been a marketing consultant since
February 2006. From June 2005 to January 2006 Marshall was VP Sales for Clarity
Systems in Toronto. Marshall was the Managing Director Canada between February
2003 and June 2005, for Sybase Canada a $1 Billion software Industry leader with
technology and solutions that integrate platforms, databases and applications.
Between February 2000 and September 2002 Marshall was Director, Field Operations
for SAP Canada, Inc. SAP is the Global leader in inter-enterprise business
application software with over 28,000 employees and revenues of $6 Billion.


                                       28
<PAGE>

TERM OF OFFICE

Our Directors are appointed for a one-year term to hold office until the next
annual general meeting of our shareholders or until removed from office in
accordance with our bylaws. Our officers are appointed by our board of directors
and hold office until removed by the board.

SIGNIFICANT EMPLOYEES

As of February 28, 2006, PaperFree and had approximately 20 full-time employees,
and 3 part-time employees. None of our employees is represented by a labor
organization. We maintain various employee benefit plans and we believe we have
excellent relations with our employees.

FAMILY RELATIONSHIPS

There are no other family relationships among our officers, directors,
promoters, or persons nominated for such positions.

LEGAL PROCEEDINGS

No officer, director, or persons nominated for such positions, promoter or
significant employee has been involved in legal proceedings that would be
material to an evaluation of our management. Our directors, executive officers
and control persons have not been involved in any of the following events during
the past five years:

     1. any bankruptcy petition filed by or against any business of which such
person was a general partner or executive officer either at the time of the
bankruptcy or within two years prior to that time;

     2. any conviction in a criminal proceeding or being subject to a pending
criminal proceeding (excluding traffic violations and other minor offences);

     3. being subject to any order, judgement, or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining, barring, suspending or otherwise limiting
his involvement in any type of business, securities or banking activities; or

     4. being found by a court of competent jurisdiction (in a civil action),the
Commission or the Commodity Futures Trading Commission to have violated a
federal or state securities or commodities law, and the judgement has not been
reversed, suspended, or vacated.

COMMITTEES OF THE BOARD OF DIRECTORS

We presently do not have an audit committee, compensation committee, nominating
committee, an executive committee of our board of directors, stock plan
committee or any other committees. However, our board of directors is
considering establishing various such committees during the current fiscal year.
Currently, our Board of Directors makes the decisions regarding compensation,
our audit, the appointment of auditors, and the inclusion of financial
statements in our periodic reports.

AUDIT COMMITTEE

We have no financial expert. We believe that the cost related to retaining a
financial expert at this time is prohibitive. Identification of Audit Committee
The Company does not have a separately-designated standing audit committee.
Rather, Crown's audit committee is comprised of all of its directors and
officers.. Crown's audit committee is responsible for: (1) selection and
oversight of our independent accountant; (2) establishing procedures for the
receipt, retention and treatment of complaints regarding accounting, internal
controls and auditing matters; (3) establishing procedures for the confidential,
anonymous submission by our employees of concerns regarding accounting and
auditing matters; (4) engaging outside advisors; and, (5) funding for the
outside auditory and any outside advisors engagement by the audit committee.
Communicate has adopted an audit committee charter, a copy of which is filed as
an exhibit to this report.

CODE OF ETHICS

We have not yet adopted a corporate code of ethics. Our board of directors is
considering establishing, over the next year, a code of ethics to deter
wrongdoing and promote honest and ethical conduct; provide full, fair, accurate,
timely and understandable disclosure in public reports; comply with applicable
laws; ensure prompt internal reporting of code violations; and provide
accountability for adherence to the code.


                                       29
<PAGE>

ITEM 10: EXECUTIVE COMPENSATION

The table below summarizes all compensation awarded to, earned by, or paid to
our executive officers by any person for all services rendered in all capacities
to us for the fiscal year ended February 28, 2006 and 2005.

<TABLE>
<CAPTION>
                                                 Annual Compensation                    Long Term Compensation Awards
                                                ---------------------                   -----------------------------
Name & Position                Year     Salary     Bonus        Other Compensation      Restricted       Securities
                                                                                        Stock Awards     Underlying
                                                                                                         Options/SAR

<S>                            <C>      <C>        <C>          <C>                     <C>              <C>
William L. Sklar      -        2006     10,000     0            0                       0                0
President/ Director            2005     22,000
</TABLE>

Section 16(A) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires our executive officers and directors,
and persons who beneficially own more than 10% of our equity securities, to file
reports of ownership and changes in ownership with the Securities and Exchange
Commission. Officers, directors and greater than 10% shareholders are required
by SEC regulation to furnish us with copies of all Section 16(a) forms they
file. Based on our review of the copies of such forms we received, we believe
that during the fiscal year ended February 28, 2006 all uch filing requirements
applicable to our officers and directors were complied with.


                                       30
<PAGE>

ITEM 11: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information regarding the beneficial ownership of
our shares of common stock at July 13, 2006, by (i) each person known by us to
be the beneficial owner of more than 5% of our outstanding shares of common
stock, (ii) each of our directors, (iii) our executive officers, and (iv) by all
directors and executive officers as a group. Each person named in the table, has
sole voting and investment power with respect to all shares shown as
beneficially owned by such person and can be contacted at our executive office
address.

<TABLE>
<CAPTION>
                  Name and Address                   Amount and Nature          Percent
Title of Class    of Beneficial Owner                of Beneficial Owner        of Class

<S>               <C>                                <C>                        <C>
Common Stock      William Sklar                      1,944,643                  2.8%
                  513 Roselawn Ave.
                  Toronto, Ontario
                  M5N 1K2

Common Stock      All current executive officers     1,944,643                  2.8 %
                  And directors as a group
</TABLE>

The percent of class is based on 68,561,8757of common stock issued and
outstanding as of July 13, 2006

ITEM 12: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Except as disclosed below, during our most recently completed fiscal year, none
of our directors or officers, nor any proposed nominee for election as a
director, nor any person who beneficially owns, directly or indirectly, shares
carrying more than 10% of the voting rights attached to all of our outstanding
shares, nor any promoter, nor any relative or spouse of any of the foregoing
persons has any material interest, direct or indirect, in any transaction since
our incorporation or in any presently proposed transaction which, in either
case, has or will materially affect us.

Our management is involved in other business activities and may, in the future
become involved in other business opportunities. If a specific business
opportunity becomes available, such persons may face a conflict in selecting
between our business and their other business interests. In the event that a
conflict of interest arises at a meeting of our directors, a director who has
such a conflict will disclose his interest in a proposed transaction and will
abstain from voting for or against the approval of such transaction.

ITEM 13: EXHIBITS AND REPORTS

(b)     Two reports on Form 8-K were filed during the last quarter of 2005. In
the first report filed December 9, 2004, the change in Auditors was announced
was reported.. In the second report, filed February 14, 2005, the resignation of
Crawford Shaw as a director was reported.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Audit Fees

The aggregate fees billed for the fiscal year ended February 28, 2006 for
professional services rendered by the principal accountant for the audit of our
annual financial statements included in our Form 10-KSB and review of the
quarterly financial statements included in our Form 10-QSB for services that are
normally provided by the accountant in connection with statutory and regulatory
filings for engagements for these fiscal periods were approximately, $50,800

Audit-Related Fees

None.


                                       31
<PAGE>

Tax Fees

None.

All Other Fees

None.

Exhibits

31.1    Certification required by Rule 13a-14(b) or Rule 15d-14(b)
31.2    Certification required by Rule 13a-14(b) or Rule 15d-14(b)
32.1    Certification required by section 906 of the Sarbanes-Oxley Act of 2002,
        18 U.S.C. Section 1350.
32.2    Certification required by section 906 of the Sarbanes-Oxley Act of 2002,
        18 U.S.C. Section 1350.

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

PaperFree Medical Solutions, Inc.

By       /S/William L Sklar
------------------------------------------------------------------------
         William L Sklar
         President & Director
         Date: July 15, 2006

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

By       /s/ William L Sklar
------------------------------------------------------------------------
         William L Sklar
         President & Director
         Date: July 15, 2006

By       /s/ David Bailey
------------------------------------------------------------------------
         David Bailey      Director
         Date: July 15, 2006

By       /s/ Richard Paver
------------------------------------------------------------------------
         Richard Paver
         Director
         Date: July 15, 2006


                                       32
<PAGE>

 By       /s/ T. Marshall Wilde
------------------------------------------------------------------------
         T. Marshall Wilde
         Director
         Date: July 15, 2006


                                       33