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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



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FORM 10-Q



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

For the quarterly period ending June 30, 2006

OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

For the transition period from  to

Commission file number: 333-132913



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MSCMedical Services Company

(Exact name of registrant as specified in its charter)



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|                                                              |  |                                     
|------------------------------------------------------------- |  | ------------------------------------
|Florida                                                       |  | 59-2997634                          
|(State or other jurisdiction ofincorporation or organization) |  | (I.R.S. Employer Identification No.)
|                                                              | 
|11764-1 Marco Beach Drive Jacksonville, FL                    |  | 32224                               
|(Address of principal executive offices)                      |  | (Zip Code)                          

(904) 646-0199

(Registrants telephone number, including area code)



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



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

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

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



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Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90
days.    Yes  x    No ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of
accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act.

Large accelerated
filer ̈Accelerated filer ̈Non-accelerated filer  x

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

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



|                                        |  |                              
|--------------------------------------- |  | -----------------------------
|Class                                   |  | Outstanding at August 1, 2006
|Common Stock, $1.00 par value per share |  | 100 shares                   



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Table of Contents



|     |  |                                                                                       |  |                                                                                                  |  |   
|---- |  | ------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------ |  | --
|Item |  |                                                                                       |  |                                                                                                  |  |   
|     |  | Information Regarding Forward-Looking Statements                                      |  | 3                                                                                               
|     |  |                                                                                      
|     |  | Part I - Financial Information                                                        |  |                                                                                                 
|     |  |                                                                                      
|1.   |  | Financial Statements:                                                                 |  |                                                                                                 
|     |  |                                                                                       | 
|     |  |                                                                                       |  | Condensed Balance Sheets As of June 30, 2006 (Unaudited) and December 31, 2005                   |  | 6 
|     |  |                                                                                       | 
|     |  |                                                                                       |  | Condensed Statements of Operations (Unaudited) For the Three Months Ended June 30, 2006 and 2005 |  | 8 
|     |  |                                                                                       | 
|     |  |                                                                                       |  | Condensed Statements of Operations (Unaudited) For the Six Months Ended June 30, 2006 and 2005   |  | 9 
|     |  |                                                                                       | 
|     |  |                                                                                       |  | Condensed Statements of Cash Flows (Unaudited) For the Six Months Ended June 30, 2006 and 2005   |  | 10
|     |  |                                                                                       | 
|     |  |                                                                                       |  | Notes to Condensed Financial Statements                                                          |  | 11
|     |  |                                                                                      
|2.   |  | Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 25                                                                                              
|     |  |                                                                                      
|3.   |  | Quantitative and Qualitative Disclosures About Market Risk.                           |  | 34                                                                                              
|     |  |                                                                                      
|4.   |  | Controls and Procedures                                                               |  | 34                                                                                              
|     |  |                                                                                      
|     |  | Part II  Other Information                                                           |  |                                                                                                 
|     |  |                                                                                      
|1.   |  | Legal Proceedings                                                                     |  | 34                                                                                              
|     |  |                                                                                      
|2.   |  | Unregistered Sales of Equity Securities and Use of Proceeds                           |  | 34                                                                                              
|     |  |                                                                                      
|3.   |  | Defaults Upon Senior Securities                                                       |  | 34                                                                                              
|     |  |                                                                                      
|4.   |  | Submission of Matters to a Vote of Security Holders                                   |  | 34                                                                                              
|     |  |                                                                                      
|5.   |  | Other Information                                                                     |  | 35                                                                                              
|     |  |                                                                                      
|6.   |  | Exhibits                                                                              |  | 35                                                                                              
|     |  |                                                                                      
|     |  | Signatures                                                                            |  | 36                                                                                              



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CAUTIONARY STATEMENTS

Forward-Looking Statements

Management may from time-to-time make written or oral forward-looking statements with respect to the
Companys annual or long-term goals, including statements contained in this Quarterly Report on Form 10-Q and the Registration Statement on Form S-4 amended May 17, 2006 and filed with the Securities and Exchange Commission (the
SEC). These statements are subject to risks and uncertainties that could cause actual results to differ materially from historical earnings and those currently anticipated or projected. Management cautions readers not to place undue
reliance on any of the Companys forward-looking statements, which speak only as of the date made.

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



| |  |  | Managements expectation that gross profit as a percentage of net sales may be positively or adversely affected as a result of ongoing requests for proposals;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------



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



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



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

In connection with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, management is identifying important factors that could
affect the Companys financial performance and could cause actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements. The Companys future
results could be adversely affected by a variety of factors, including:



| |  | the Companys dependence on sophisticated data processing software and hardware may impact business operations if they fail to operate properly or not as anticipated;
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | the Companys net sales and operating results may fluctuate quarterly;
|- |  | ----------------------------------------------------------------------



3



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| |  | operational disruptions due to natural disasters, particularly in regions susceptible to hurricanes;
|- |  | ----------------------------------------------------------------------------------------------------



| |  | the Companys inability to obtain certain medical supplies and pharmaceuticals, due to vendor supply disruptions;
|- |  | -----------------------------------------------------------------------------------------------------------------



| |  | increasing competitive pricing pressures on its sales to companys who are self-insured for workers compensation insurance and workers compensation provider groups;
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | government legislation or changes in government regulations that reduce workers compensation reimbursement rates that may have an adverse impact on the Companys revenues
in the Pharmaceutical and Medical Products and Services product lines;
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | the Companys dependence on a limited number of large customers;
|- |  | ----------------------------------------------------------------



| |  | the Companys ability to successfully restructure operations to remove operational and other costs associated with revenue declines due to the loss of a large customer;
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | the Company may not be able to continue to compete successfully with other medical supply companies and direct manufacturers;
|- |  | -----------------------------------------------------------------------------------------------------------------------------



| |  | continued consolidation within the healthcare industry may lead to increased competition;
|- |  | -----------------------------------------------------------------------------------------



| |  | the expansion of the multi-tiered pricing structure may place the Company at a competitive disadvantage;
|- |  | --------------------------------------------------------------------------------------------------------



| |  | the Companys dependence on the availability of lower cost, multi-tiered pricing of products;
|- |  | ---------------------------------------------------------------------------------------------



| |  | cost of goods sold may increase due to fuel surcharges from third parties;
|- |  | --------------------------------------------------------------------------



| |  | the Companys dependence on its ability to maintain good relations with customers and vendors;
|- |  | ----------------------------------------------------------------------------------------------



| |  | the loss of any significant agreements or the renegotiation of terms and conditions of existing agreements;
|- |  | -----------------------------------------------------------------------------------------------------------



| |  | the Companys ability to hire and retain qualified sales representatives to continue its sales growth;
|- |  | ------------------------------------------------------------------------------------------------------



| |  | the Companys ability to retain the services of senior management;
|- |  | ------------------------------------------------------------------



| |  | the Companys failure to execute its business plan and strategies for growth;
|- |  | -----------------------------------------------------------------------------



| |  | the Companys level of indebtedness, which may limit its ability to obtain financing in the future and may limit flexibility to react to market conditions;
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------



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| |  | tax legislative initiatives and potential interest and penalty exposure related to existing and future state sales tax audits;
|- |  | ------------------------------------------------------------------------------------------------------------------------------



| |  | litigation and liability exposure for existing and potential claims;
|- |  | --------------------------------------------------------------------



| |  | failure to maintain an effective system of internal controls may impact the Companys ability to accurately report its financial results;
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------



| |  | failure to comply with Federal and state regulations pertaining to physical security, record-keeping, and required reporting related to the purchase, sale, and distribution of
controlled and legend drugs;
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | failure to comply with Federal and state regulations pertaining to filing claims for health care reimbursement or changes in the interpretation of those requirements;
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | willful circumvention of Federal and state regulations pertaining to filing claims for health care reimbursement by Company employees;
|- |  | --------------------------------------------------------------------------------------------------------------------------------------



| |  | the adoption of new accounting pronouncements or Securities and Exchange Commission rules and regulations; and
|- |  | --------------------------------------------------------------------------------------------------------------



| |  | the ongoing costs of complying with the provisions of Section 404 of the Sarbanes-Oxley Act.
|- |  | --------------------------------------------------------------------------------------------

In addition, all forward-looking statements are qualified by and should be read in conjunction with the risks described or referred to under the heading Risk Factors of the Registration Statement on
Form S-4 amended May 17, 2006 and filed with the SEC.



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MSC-Medical Services Company

Condensed Balance Sheets

(Dollars in thousands, except share data)



|                                                                                                                   |  |               |         |                   |   |        
|------------------------------------------------------------------------------------------------------------------ |  | ------------- | ------- | ----------------- | - | -------
|                                                                                                                   |  | June 30, 2006 |         | December 31, 2005
|                                                                                                                   |  | (Unaudited)   |         |                  
|Assets                                                                                                             |  |               |         |                   |   |        
|Current assets:                                                                                                    |  |               |         |                   |   |        
|Cash                                                                                                               |  | $             | 4,038   |                   | $ | 8,300  
|Accounts receivable, less allowance of $19,367 at June 30, 2006 and $17,889 at December 31, 2005                   |  |               | 61,134  |                   |   | 56,488 
|Income tax receivable                                                                                              |  |               |        |                   |   | 7,194  
|Other current assets                                                                                               |  |               | 1,212   |                   |   | 857    
|Deferred income taxes                                                                                              |  |               | 9,486   |                   |   | 8,058  
|                                                                                                                   |  |               |         |                   |   |        
|Total current assets                                                                                               |  |               | 75,870  |                   |   | 80,897 
|                                                                                                                   |  |              
|Property and equipment, net of accumulated depreciation of $3,434 at June 30, 2006 and $1,873 at December 31, 2005 |  |               | 5,680   |                   |   | 5,151  
|Intangible assets:                                                                                                 |  |               |         |                   |   |        
|Goodwill                                                                                                           |  |               | 234,423 |                   |   | 234,423
|Trademarks                                                                                                         |  |               | 24,100  |                   |   | 24,100 
|Customer relationships, net                                                                                        |  |               | 52,675  |                   |   | 55,125 
|Other Intangibles, net                                                                                             |  |               | 41,890  |                   |   | 43,773 
|                                                                                                                   |  |               |         |                   |   |        
|Total intangible assets                                                                                            |  |               | 353,088 |                   |   | 357,421
|                                                                                                                   |  |              
|Other assets:                                                                                                      |  |               |         |                   |   |        
|Deferred debt issuance costs, net                                                                                  |  |               | 5,282   |                   |   | 5,815  
|Other                                                                                                              |  |               | 2,525   |                   |   | 601    
|                                                                                                                   |  |               |         |                   |   |        
|Total other assets                                                                                                 |  |               | 7,807   |                   |   | 6,416  
|                                                                                                                   |  |               |         |                   |   |        
|Total assets                                                                                                       |  | $             | 442,445 |                   | $ | 449,885
|                                                                                                                   |  |               |         |                   |   |        

See notes to condensed financial statements.



6



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MSC-Medical Services Company

Condensed Balance SheetsContinued

(Dollars in thousands, except share
data)



|                                                                                          |  |               |         |   |                   |   |         |  
|----------------------------------------------------------------------------------------- |  | ------------- | ------- | - | ----------------- | - | ------- | -
|                                                                                          |  | June 30, 2006 |         |   | December 31, 2005 |  
|                                                                                          |  | (Unaudited)   |         |   |                   |  
|Liabilities and stockholders equity                                                      |  |               |         |   |                   |   |         |  
|Current liabilities:                                                                      |  |               |         |   |                   |   |         |  
|Short-term debt                                                                           |  | $             | 16,620  |   |                   | $ | 16,620  |  
|Accounts payable                                                                          |  |               | 12,506  |   |                   |   | 10,631  |  
|Accrued expenses                                                                          |  |               | 38,281  |   |                   |   | 36,300  |  
|Other current liabilities                                                                 |  |               | 3,856   |   |                   |   | 12,918  |  
|                                                                                          |  |               |         |   |                   |   |         |  
|Total current liabilities                                                                 |  |               | 71,263  |   |                   |   | 76,469  |  
|                                                                                          |  |              
|Non-current liabilities:                                                                  |  |               |         |   |                   |   |         |  
|Long-term debt                                                                            |  |               | 148,771 |   |                   |   | 148,645 |  
|Deferred income taxes                                                                     |  |               | 33,624  |   |                   |   | 33,950  |  
|                                                                                          |  |               |         |   |                   |   |         |  
|Total non-current liabilities                                                             |  |               | 182,395 |   |                   |   | 182,595 |  
|                                                                                          |  |               |         |   |                   |   |         |  
|Total liabilities                                                                         |  |               | 253,658 |   |                   |   | 259,064 |  
|Stockholders equity:                                                                     |  |               |         |   |                   |   |         |  
|Common stock, $1.00 par value, 1,000 shares authorized, 100 shares issued and outstanding |  |               |        |   |                   |   |        |  
|Additional paid-in capital                                                                |  |               | 214,181 |   |                   |   | 213,525 |  
|                                                                                          |  |              
|Accumulated other comprehensive income                                                    |  |               | 1,566   |   |                   |   | 353     |  
|Accumulated deficit                                                                       |  |               | (26,960 | ) |                   |   | (23,057 | )
|                                                                                          |  |               |         |   |                   |   |         |  
|Total stockholders equity                                                                |  |               | 188,787 |   |                   |   | 190,821 |  
|                                                                                          |  |               |         |   |                   |   |         |  
|Total liabilities and stockholders equity                                                |  | $             | 442,445 |   |                   | $ | 449,885 |  
|                                                                                          |  |               |         |   |                   |   |         |  

See notes to condensed financial statements.



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MSC-Medical Services Company

Condensed Statements of Operations

For the Three Months Ended June 30, 2006 and 2005

(Unaudited)

(Dollars in thousands, except share data)



|                               |  |                             |        |   |      |   |        |  
|------------------------------ |  | --------------------------- | ------ | - | ---- | - | ------ | -
|                               |  | Three Months Ended June 30, |       
|                               |  | 2006                        |        |   | 2005 |  
|Net Revenue:                   |  |                             |        |   |      |   |        |  
|Pharmaceutical                 |  | $                           | 43,966 |   |      | $ | 39,776 |  
|Medical products & services    |  |                             | 40,130 |   |      |   | 35,594 |  
|                               |  |                             |        |   |      |   |        |  
|Total net revenue              |  |                             | 84,096 |   |      |   | 75,370 |  
|Cost of Revenue:               |  |                             |        |   |      |   |        |  
|Pharmaceutical                 |  |                             | 36,841 |   |      |   | 34,032 |  
|Medical products & services    |  |                             | 30,112 |   |      |   | 27,956 |  
|                               |  |                             |        |   |      |   |        |  
|Total cost of revenue          |  |                             | 66,953 |   |      |   | 61,988 |  
|                               |  |                             |        |   |      |   |        |  
|Gross profit                   |  |                             | 17,143 |   |      |   | 13,382 |  
|                               |  |                            
|Operating expenses             |  |                             | 11,230 |   |      |   | 7,649  |  
|Depreciation and amortization  |  |                             | 3,004  |   |      |   | 2,698  |  
|                               |  |                             |        |   |      |   |        |  
|Total expenses                 |  |                             | 14,234 |   |      |   | 10,347 |  
|                               |  |                             |        |   |      |   |        |  
|Operating income               |  |                             | 2,909  |   |      |   | 3,035  |  
|Interest expense               |  |                             | 5,266  |   |      |   | 10,910 |  
|                               |  |                             |        |   |      |   |        |  
|Loss before income tax benefit |  |                             | (2,357 | ) |      |   | (7,875 | )
|Income tax benefit             |  |                             | 885    |   |      |   | 3,048  |  
|                               |  |                             |        |   |      |   |        |  
|Net loss                       |  | $                           | (1,472 | ) |      | $ | (4,827 | )
|                               |  |                             |        |   |      |   |        |  

See notes to condensed financial statements.



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MSC-Medical Services Company

Condensed Statements of Operations

For the Six Months Ended June 30, 2006 and 2005

(Unaudited)

(Dollars in thousands, except share data)



|                               |  |                                |         |   |                                  |   |        |                                   |  |   |         |  
|------------------------------ |  | ------------------------------ | ------- | - | -------------------------------- | - | ------ | --------------------------------- |  | - | ------- | -
|                               |  | Successor                      |         |   | Successor                        |   |        | Predecessor                       | 
|                               |  | Six months ended June 30, 2006 |         |   | Three months ended June 30, 2005 |   |        | Three months ended March 31, 2005 | 
|Net Revenue:                   |  |                                |         |   |                                  |   |        |                                   |  |   |         |  
|Pharmaceutical                 |  | $                              | 87,209  |   |                                  | $ | 39,776 |                                   |  | $ | 37,278  |  
|Medical products & services    |  |                                | 76,568  |   |                                  |   | 35,594 |                                   |  |   | 37,782  |  
|                               |  |                                |         |   |                                  |   |        |                                   |  |   |         |  
|Total net revenue              |  |                                | 163,777 |   |                                  |   | 75,370 |                                   |  |   | 75,060  |  
|Cost of Revenue:               |  |                                |         |   |                                  |   |        |                                   |  |   |         |  
|Pharmaceutical                 |  |                                | 73,097  |   |                                  |   | 34,032 |                                   |  |   | 31,606  |  
|Medical products & services    |  |                                | 58,167  |   |                                  |   | 27,956 |                                   |  |   | 29,449  |  
|                               |  |                                |         |   |                                  |   |        |                                   |  |   |         |  
|Total cost of revenue          |  |                                | 131,264 |   |                                  |   | 61,988 |                                   |  |   | 61,055  |  
|                               |  |                                |         |   |                                  |   |        |                                   |  |   |         |  
|Gross profit                   |  |                                | 32,513  |   |                                  |   | 13,382 |                                   |  |   | 14,005  |  
|                               |  |                                |        
|Operating expenses             |  |                                | 22,595  |   |                                  |   | 7,649  |                                   |  |   | 11,706  |  
|Transaction expenses           |  |                                |        |   |                                  |   |       |                                   |  |   | 24,697  |  
|Depreciation and amortization  |  |                                | 5,894   |   |                                  |   | 2,698  |                                   |  |   | 785     |  
|                               |  |                                |         |   |                                  |   |        |                                   |  |   |         |  
|Total expenses                 |  |                                | 28,489  |   |                                  |   | 10,347 |                                   |  |   | 37,188  |  
|                               |  |                                |         |   |                                  |   |        |                                   |  |   |         |  
|Operating income (loss)        |  |                                | 4,024   |   |                                  |   | 3,035  |                                   |  |   | (23,183 | )
|Interest expense               |  |                                | 10,275  |   |                                  |   | 11,410 |                                   |  |   | 969     |  
|                               |  |                                |         |   |                                  |   |        |                                   |  |   |         |  
|Loss before income tax benefit |  |                                | (6,251  | ) |                                  |   | (8,375 | )                                 |  |   | (24,152 | )
|Income tax benefit             |  |                                | 2,348   |   |                                  |   | 3,257  |                                   |  |   | 9,466   |  
|                               |  |                                |         |   |                                  |   |        |                                   |  |   |         |  
|Net loss                       |  | $                              | (3,903  | ) |                                  | $ | (5,118 | )                                 |  | $ | (14,686 | )
|                               |  |                                |         |   |                                  |   |        |                                   |  |   |         |  

See notes to condensed financial statements.



9



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##### Table of Contents

MSC-Medical Services Company

Condensed Statements of Cash Flows

For the Six Months Ended June 30, 2006 and 2005

(Unaudited)

(Dollars in thousands)



|                                                                                          |  |                               |         |   |                                  |   |          |                                   |  |   |         |  
|----------------------------------------------------------------------------------------- |  | ----------------------------- | ------- | - | -------------------------------- | - | -------- | --------------------------------- |  | - | ------- | -
|                                                                                          |  | Successor                     |         |   | Successor                        |   |          | Predecessor                       | 
|                                                                                          |  | Six months ended June 30,2006 |         |   | Three months ended June 30, 2005 |   |          | Three months ended March 31, 2005 | 
|Operating activities                                                                      |  |                               |         |   |                                  |   |          |                                   |  |   |         |  
|Net loss                                                                                  |  | $                             | (3,903  | ) |                                  | $ | (5,118   | )                                 |  | $ | (14,686 | )
|                                                                                          |  |                               |        
|Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |  |                               |         |   |                                  |   |          |                                   |  |   |         |  
|Depreciation                                                                              |  |                               | 1,561   |   |                                  |   | 1,075    |                                   |  |   | 544     |  
|Amortization of intangibles                                                               |  |                               | 4,333   |   |                                  |   | 1,623    |                                   |  |   | 241     |  
|Amortization of debt issuance costs and debt discount                                     |  |                               | 659     |   |                                  |   | 7,698    |                                   |  |   | 183     |  
|Provision for deferred income taxes                                                       |  |                               | (1,754  | ) |                                  |   | 199      |                                   |  |   | (12,313 | )
|Provision for bad debts                                                                   |  |                               | 4,089   |   |                                  |   | 1,068    |                                   |  |   | 637     |  
|Stock-based compensation                                                                  |  |                               | 704     |   |                                  |   |         |                                   |  |   | 4,266   |  
|                                                                                          |  |                               |        
|Changes in operating assets and liabilities:                                              |  |                               |         |   |                                  |   |          |                                   |  |   |         |  
|Increase in accounts receivable                                                           |  |                               | (8,735  | ) |                                  |   | (9,344   | )                                 |  |   | (4,264  | )
|Decrease in inventories                                                                   |  |                               | 23      |   |                                  |   | 145      |                                   |  |   | 52      |  
|(Increase) decrease in income tax receivable                                              |  |                               | 7,194   |   |                                  |   | (264     | )                                 |  |   |        |  
|(Increase) decrease in other current assets                                               |  |                               | (378    | ) |                                  |   | (155     | )                                 |  |   | 210     |  
|Increase in other non-current assets                                                      |  |                               | (711    | ) |                                  |   |         |                                   |  |   |        |  
|Increase (decrease) in accounts payable & accrued expenses                                |  |                               | 3,808   |   |                                  |   | 3,385    |                                   |  |   | (1,471  | )
|Increase (decrease) in transaction expenses                                               |  |                               |        |   |                                  |   | (24,697  | )                                 |  |   | 24,697  |  
|Increase (decrease) in deferred revenue                                                   |  |                               | 113     |   |                                  |   | (79      | )                                 |  |   | 42      |  
|Increase (decrease) in income taxes payable                                               |  |                               | (372    | ) |                                  |   | (3,341   | )                                 |  |   | 1,945   |  
|                                                                                          |  |                               |         |   |                                  |   |          |                                   |  |   |         |  
|Net cash provided by (used in) operating activities                                       |  |                               | 6,631   |   |                                  |   | (27,805  | )                                 |  |   | 83      |  
|Investing Activities                                                                      |  |                               |         |   |                                  |   |          |                                   |  |   |         |  
|Purchases of property and equipment                                                       |  |                               | (2,090  | ) |                                  |   | (1,111   | )                                 |  |   | (364    | )
|Payment to former owners                                                                  |  |                               | (8,803  | ) |                                  |   |         |                                   |  |   | (4,500  | )
|Payments in connection with business acquisition                                          |  |                               |        |   |                                  |   | (296,343 | )                                 |  |   |        |  
|                                                                                          |  |                               |         |   |                                  |   |          |                                   |  |   |         |  
|Net cash used in investing activities                                                     |  |                               | (10,893 | ) |                                  |   | (297,454 | )                                 |  |   | (4,864  | )
|Financing activities                                                                      |  |                               |         |   |                                  |   |          |                                   |  |   |         |  
|Proceeds from short-term debt                                                             |  |                               |        |   |                                  |   | 15,120   |                                   |  |   | 3,500   |  
|Proceeds from long-term debt                                                              |  |                               |        |   |                                  |   | 148,631  |                                   |  |   |        |  
|Repayment of short-term debt                                                              |  |                               |        |   |                                  |   | (19,000  | )                                 |  |   |        |  
|Repayment of long-term debt                                                               |  |                               |        |   |                                  |   | (17,000  | )                                 |  |   |        |  
|Debt issuance cost                                                                        |  |                               |        |   |                                  |   | (12,745  | )                                 |  |   |        |  
|Capital contribution from Parent company                                                  |  |                               |        |   |                                  |   | 210,253  |                                   |  |   |        |  
|Other                                                                                     |  |                               |        |   |                                  |   |         |                                   |  |   | (9      | )
|                                                                                          |  |                               |         |   |                                  |   |          |                                   |  |   |         |  
|Net cash provided by financing activities                                                 |  |                               |        |   |                                  |   | 325,259  |                                   |  |   | 3,491   |  
|                                                                                          |  |                               |         |   |                                  |   |          |                                   |  |   |         |  
|Net decrease in cash                                                                      |  |                               | (4,262  | ) |                                  |   |         |                                   |  |   | (1,290  | )
|Cash, beginning of period                                                                 |  |                               | 8,300   |   |                                  |   |         |                                   |  |   | 1,290   |  
|                                                                                          |  |                               |         |   |                                  |   |          |                                   |  |   |         |  
|Cash, end of period                                                                       |  | $                             | 4,038   |   |                                  | $ |         |                                   |  | $ |        |  
|                                                                                          |  |                               |         |   |                                  |   |          |                                   |  |   |         |  

See notes to condensed financial statements.



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##### Table of Contents

MSC  Medical Services Company

June 30, 2006

Notes to Condensed Financial Statements (Unaudited)

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

1. Summary of Significant Accounting Policies

Description of Business

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

Basis of Presentation

The accompanying condensed unaudited interim financial statements have been prepared in accordance with the rules and regulations of the United States Securities and
Exchange Commission (the SEC). Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP) have been
omitted pursuant to the SEC rules and regulations for interim reporting. The financial statements reflect, in the opinion of management, all adjustments necessary to present fairly the financial position and results of operations for the periods
indicated. All such adjustments are of a normal, recurring nature. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions about future events that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Operating results for the interim periods reported are not
necessarily indicative of the results that may be expected for the year ending December 31, 2006.

The condensed balance sheet at December 31,
2005 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements.

For further information, refer to the financial statements and footnotes thereto included in MSC-Medical Services Companys Registration Statement on Form S-4 amended as of May 17, 2006 and filed with the
SEC, which includes the audited financial statements for the year ended December 31, 2005.



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##### Table of Contents

MSC  Medical Services Company

Notes to Condensed Financial Statements (continued)



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

The funds necessary to complete the Acquisition (the Financings) were provided by (i) $9.0 million of borrowings under the $40.0 million senior secured revolving credit facility: (ii) $175.0 million of borrowings under
a senior secured term loan facility; (iii) a $179.9 million aggregate cash equity investment by investment funds affiliated with Monitor Clipper Partners, LLC and certain other institutional investors; (iv) $4.7 million of rollover equity
from certain members of the Companys management; and (v) $0.4 million in Company cash balance for funding of the subsequent working capital adjustment.

The condensed balance sheet as of December 31, 2005, includes the acquisition of MSC-Medical Services Company by MCP-MSC Acquisition, Inc and is that of MSC (Successor). The condensed statements of operations and cash flows
for the six months ended June 30, 2005, include those of MSC Acquisition, Inc. (Predecessor) for the period January 1, 2005 through March 31, 2005. In the opinion of management, these financial statements reflect all
adjustments necessary for a fair presentation of the financial statements.

Allowance for Doubtful Accounts

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

Included in the
allowance for doubtful accounts are provisions for sales allowances totaling $0.7 million at June 30, 2006 and $0.5 million at June 30, 2005.

Bad debt expense for the six months ended June 30, 2006 and 2005 was approximately $4.1 million and $1.7 million, respectively. The increase is a result of a change in the factor utilized to estimate future bad debt-expense based on
current period billings to 2.5% of net revenues for the period ended June 30, 2006 versus 1.1% for the period ending June 30, 2005.



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##### Table of Contents

MSC  Medical Services Company

Notes to Condensed Financial Statements (continued)



Recently Issued Accounting Standards

On March 16, 2004, the Financial Accounting Standards Board (FASB) issued SFAS No. 123 (revised 2004), Share-Based Payment, which is a revision of SFAS No. 123, Accounting for Stock-Based
Compensation. SFAS No. 123(R) supersedes APB Opinion No. 25 and amends SFAS No. 95, Statement of Cash Flows. Generally, the approach in SFAS No. 123(R) is similar to the approach described in SFAS No. 123. However, SFAS
No. 123(R) requires all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values. The Company adopted this Statement on January 1, 2006 (see Note 2
for the Companys disclosure).

During the period ended June 30, 2006, FASB issued SFAS No. 155 Accounting for Certain Hybrid Financial
Instrumentsan amendment of FASB Statements No. 133 and 140, SFAS No. 156 Accounting for Servicing of Financial Assetsan amendment of FASB Statement No. 140 and FSP FIN 46(R)-6Determining the Variability to be
Considered in Applying FASB Interpretation No. 46(R). The Company has completed its evaluation of the SFAS pronouncements and staff position and concluded that they do not impact the current financial reporting period.

In June 2006, FASB also issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxesan interpretation of FASB Statement No. 109.This Interpretation provides guidance for recognizing and measuring tax positions taken or expected to be taken in a tax return that directly or indirectly affect amounts reported in financial statements, as well as provides accounting guidance
for the related income tax effects of tax positions that do not meet the recognition threshold specified in this Interpretation. This Interpretation will be effective for fiscal years beginning after December 15, 2006. Early adoption is
permitted, provided the Company has not yet issued financial statements, including financial statements for any interim period, for that fiscal year. The Company has not completed its evaluation of the impact of adopting this interpretation.

2. Stock Based Compensation

Effective January 1,
2006, the Company adopted SFAS No. 123(R), Share-Based Payment, (SFAS No. 123(R)) applying the modified prospective method. SFAS No. 123(R) requires all equity-based payments to employees, including grants of employee
stock options, to be recognized in the statement of earnings based on the grant date fair value of the award. Under the modified prospective method, the Company is required to record equity-based compensation expense for all awards granted after the
date of adoption and for the unvested portion of previously granted awards outstanding as of the date of adoption. The fair values of stock options granted during 2005 and after the Company adopted SFAS No. 123(R) were determined using a
Black-Scholes-Merton valuation model.



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##### Table of Contents

MSC  Medical Services Company

Notes to Condensed Financial Statements (continued)



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

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

The impact of the equity-based compensation is reflected in cash flow from operations on the Condensed Statement of Cash Flows.

The following table illustrates the impact of equity-based compensation expense on reported amounts:



|                   |  |                                      |       |                                    |                                    |      |             |  |   |                                    |   |  |   |      |  
|------------------ |  | ------------------------------------ | ----- | ---------------------------------- | ---------------------------------- | ---- | ----------- |  | - | ---------------------------------- | - |  | - | ---- | -
|                   |  | For Three Months Ended June 30, 2006 |       |                                    | For Six Months Ended June 30, 2006 |     
|                   |  | As Reported                          |       | Impact of Equity-BasedCompensation |                                    |      | As Reported |  |   | Impact of Equity-BasedCompensation |  
|Operating income12 |  | $                                    | 2,909 |                                    | $                                  | (343 | )           |  | $ | 4,024                              |   |  | $ | (704 | )
|Net (loss)         |  | $                                    | 1,472 |                                    | $                                  | (214 | )           |  | $ | (3,903                             | ) |  | $ | (440 | )

---

|1 | The total equity-based compensation expense includes gross employee stock option expense of approximately $0.3 million and $0.6 million, respectively, during the
three and six months ended June 30, 2006. The expense related to stock options represents the unvested portion of previously granted stock option awards outstanding as of the date of adoption and expense for all awards granted after the date of
adoption.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|2 | The total equity-based compensation expense includes gross restricted share expense of approximately $0.1 million for both the three and six months ended
June 30, 2006.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

MSC  Medical Services Company

Notes to Condensed Financial Statements (continued)



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



|                                         |  |                  |   |  |                                           |       |   |                                                     |      |                        |   |      
|---------------------------------------- |  | ---------------- | - |  | ----------------------------------------- | ----- | - | --------------------------------------------------- | ---- | ---------------------- | - | -----
|                                         |  | Number of Shares |   |  | Weighted Average Exercise Price Per Share |       |   | Weighted Average RemainingContractual Life in Years |      | Fair Value($ in 000s)
|Options outstanding at December 31, 2005 |  | 35,393,695       |   |  | $                                         | 1.35  |   |                                                     |      |                        |   |      
|Options granted  time vesting           |  | 2,090,911        |   |  | $                                         | 1.40  |   |                                                     |      |                        |   |      
|Options granted  performance vesting    |  | 1,045,455        |   |  | $                                         | 1.40  |   |                                                     |      |                        |   |      
|Options forfeited                        |  | (2,547,666       | ) |  | $                                         | (1.17 | ) |                                                     |      |                        |   |      
|Options outstanding March 31, 2006       |  | 35,982,395       |   |  | $                                         | 1.39  |   |                                                     |      |                        |   |      
|                                         |  |                  |   |  |                                           |       |   |                                                     |      |                        |   |      
|Options granted  time vesting           |  | 220,000          |   |  | $                                         | 1.50  |   |                                                     |      |                        |   |      
|Options granted  performance vesting    |  | 110,000          |   |  | $                                         | 1.50  |   |                                                     |      |                        |   |      
|Options forfeited                        |  | (6,556,831       | ) |  | $                                         | (1.50 | ) |                                                     |      |                        |   |      
|                                         |  |                  |   |  |                                           |       |   |                                                     |      |                        |   |      
|Options outstanding at June 30, 2006     |  | 29,755,564       |   |  | $                                         | 1.36  |   |                                                     | 8.96 |                        | $ | 9,046
|                                         |  |                  |   |  |                                           |       |   |                                                     |      |                        |   |      
|Exercisable at June 30, 2006             |  | 8,942,278        |   |  | $                                         | 0.98  |   |                                                     | 8.75 |                        | $ | 4,997
|                                         |  |                  |   |  |                                           |       |   |                                                     |      |                        |   |      

Two-thirds of options granted vest over a three-year period, with an exercise price ranging from $1.00 to $3.00.
The remaining one-third vest only upon change in control and also have exercise prices ranging from $1.00 to $3.00. Any portion of the stock options not then vested shall immediately vest. The 8.9 million vested shares at June 30, 2006
have exercise prices between $0.29 and $3.00.

The fair value of options granted during the six months ended June 30, 2006 was approximately $0.4
million and is expected to be expensed over a period of 36 months. The intrinsic value of the options outstanding at June 30, 2006 and December 31, 2005 was $2 million and $2.5 million, respectively. The decrease in intrinsic value
resulted from forfeitures during the six months ended June 30, 2006.

The estimated fair value of each option granted after January 1, 2006 is
calculated using the Black-Scholes option pricing model. The assumptions used for calculating fair value of grants issued during the six months ended June 30, 2006 varied in range as follows: expected life of 3.4  3.5 years, risk-free
interest rate of 4.7%  4.9%, expected volatility of 24.4%  24.8% and no expected dividend yield.

An estimated expected life of 3.4
 3.5 years before exercise was used for the June 30, 2006 and March 31, 2006 grants respectively. This estimate was based on the typical investment holding period of the shareholder with a controlling interest in MSC. A targeted
holding period range of three to six years is cited in Monitor Clipper Equity Partners II, L.P. Private Placement



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##### Table of Contents

MSC  Medical Services Company

Notes to Condensed Financial Statements (continued)



Memorandumat which time all shares would be expected to be vested and then exercised. Implicit in this
assumption is that option-holders would not likely exercise before a transaction date as they would become the holders of minority interest shares subject to marketability discounts should they wish to sell their shares. The expected change in
control will likely provide a liquidity event for option-holders.

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

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



|                                                |  |                  |  |                          |    
|----------------------------------------------- |  | ---------------- |  | ------------------------ | ---
|                                                |  | Number of Shares |  | Fair value at grant date
|Restricted shares outstanding at March 31, 2006 |  | 900,000          |  | $                        | .88
|Restricted shares outstanding at June 30, 2006  |  | 900,000          |  | $                        | .88
|                                                |  |                  |  |                          |    
|                                                |  | 900,000          |  | $                        | .88
|                                                |  |                  |  |                          |    
|Exercisable at June 30, 2006                    |  |                 |  | $                        |   
|                                                |  |                  |  |                          |    

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

Prior to the first quarter of fiscal 2006, the Company accounted for equity-based awards under the intrinsic value method, which followed the
recognition and measurement principles of APB Opinion No. 25 and related Interpretations. Therefore, except for options exercised in connection with the Acquisition completed March 31, 2005, no compensation expense was recognized in net
earnings, as all options granted had an exercise price greater than the market value of the underlying stock on the date of grant. There would be no effect on net earnings if the Company had applied the fair value recognition provisions of SFAS
No. 123, Accounting for Stock-Based Compensation to options granted under the Companys stock option plan for the three months ended March 31, 2005. If the Company applied the fair value recognition provisions for the six
months ended June 30, 2005, net earnings would have been reduced by approximately $0.3 million.

3. Comprehensive Income

Comprehensive income represents all changes in equity of the enterprise that results from recognized transactions and other economic events during the period. Other
comprehensive (loss) income refers to revenues, expenses, gains, and losses that under GAAP are included in comprehensive income but excluded from net income, such as the unrealized gain or loss on the



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##### Table of Contents

MSC  Medical Services Company

Notes to Condensed Financial Statements (continued)



Companys interest rate swap. The following table details the components of comprehensive (loss) for the periods
presented.



|                                                  |  |                    |        |   |                  |   |        |              |  |   |              |   |  |   |         |  
|------------------------------------------------- |  | ------------------ | ------ | - | ---------------- | - | ------ | ------------ |  | - | ------------ | - |  | - | ------- | -
|                                                  |  | Three Months Ended |        |   | Six Months Ended |  
|(in 000s)                                        |  | June 30,2006       |        |   | June 30,2005     |   |        | June 30,2006 |  |   | June 30,2005 |  
|Net loss                                          |  | $                  | (1,472 | ) |                  | $ | (4,827 | )            |  | $ | (3,903       | ) |  | $ | (19,804 | )
|Other comprehensive (loss) income:                |  |                    |        |   |                  |   |        |              |  |   |              |   |  |   |         |  
|Unrealized gain on interest rate swap, net of tax |  |                    | 488    |   |                  |   |       |              |  |   | 1,213        |   |  |   |        |  
|                                                  |  |                    |        |   |                  |   |        |              |  |   |              |   |  |   |         |  
|Comprehensive loss                                |  | $                  | (984   | ) |                  | $ | (4,827 | )            |  | $ | (2,690       | ) |  | $ | (19,804 | )
|                                                  |  |                    |        |   |                  |   |        |              |  |   |              |   |  |   |         |  

4. Commitments and Contingencies

In conjunction with the sale of the Company in March 2005 an escrow account was established with Wells Fargo Bank as the escrow agent and $15.0 million of the purchase price was deposited in the escrow account to be
used as security for and to satisfy claims arising out of the transaction. On May 26, 2006, the Buyer of the Company, MCP-MSC Acquisition, Inc., delivered to the Stockholder Representative for the Sellers an indemnification
claim against the escrow balance. On June 15, 2006, the Stockholder Representative delivered to MCP-MSC Acquisition, Inc. a Dispute Notice disputing the entirety of the indemnification claim. Any recovery of funds in escrow will be
accounted for as a reduction in purchase price.

5. Guarantor Financial Statements

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

The Company
has not presented separate financial statements for the Guarantor because it has deemed that such financial statements would not provide investors with any material additional information. Included in the tables below are the consolidating balance
sheet as of June 30, 2006 and December 31, 2005, the condensed consolidating statement of operations for the three months and six months ended June 30, 2006 and 2005 and statements of cash flows for the six months ended June 30,
2006 and 2005 of: (a) the Parent (Guarantor), (b) the Company, (c) elimination entries necessary to consolidate the Parent with the Company, and (d) the consolidated company, MCPMSC Acquisition, Inc.



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##### Table of Contents

MSC  Medical Services Company

Notes to Condensed Financial Statements (continued)



MCP-MSC Acquisition, Inc.

Consolidating Balance Sheets



|                                      |  |                        |         |                        |   |              |  |   |              |   |          |   |              |  |              |         |  |              |         |  |   |          |   |  |   |        
|------------------------------------- |  | ---------------------- | ------- | ---------------------- | - | ------------ |  | - | ------------ | - | -------- | - | ------------ |  | ------------ | ------- |  | ------------ | ------- |  | - | -------- | - |  | - | -------
|                                      |  | June 30, 2006          |         | December 31, 2005     
|                                      |  | (Parent)               |         | (Subsidiary)           |   | Eliminations |  |   | Consolidated |   | (Parent) |   | (Subsidiary) |  | Eliminations |         |  | Consolidated
|                                      |  | (Dollars in thousands) |         | (Dollars in thousands)
|Assets                                |  |                        |         |                        |   |              |  |   |              |   |          |   |              |  |              |         |  |              |         |  |   |          |   |  |   |        
|Current assets:                       |  |                        |         |                        |   |              |  |   |              |   |          |   |              |  |              |         |  |              |         |  |   |          |   |  |   |        
|Cash                                  |  | $                      |        |                        | $ | 4,038        |  | $ |             |   |          | $ | 4,038        |  | $            |        |  | $            | 8,300   |  | $ |         |   |  | $ | 8,300  
|Accounts receivable                   |  |                        |        |                        |   | 61,134       |  |   |             |   |          |   | 61,134       |  |              |        |  |              | 56,488  |  |   |         |   |  |   | 56,488 
|Income tax receivable                 |  |                        |        |                        |   |             |  |   |             |   |          |   |             |  |              |        |  |              | 7,194   |  |   |         |   |  |   | 7,194  
|Other current assets                  |  |                        |        |                        |   | 1,212        |  |   |             |   |          |   | 1,212        |  |              |        |  |              | 857     |  |   |         |   |  |   | 857    
|Current deferred income taxes         |  |                        | 1,910   |                        |   | 9,486        |  |   |             |   |          |   | 11,396       |  |              | 1,058   |  |              | 8,058   |  |   |         |   |  |   | 9,116  
|                                      |  |                        |         |                        |   |              |  |   |              |   |          |   |              |  |              |         |  |              |         |  |   |          |   |  |   |        
|Total current assets                  |  |                        | 1,910   |                        |   | 75,870       |  |   |             |   |          |   | 77,780       |  |              | 1,058   |  |              | 80,897  |  |   |         |   |  |   | 81,955 
|                                      |  |                        |         |                        |   |              |  |  
|Property and equipment                |  |                        |        |                        |   | 5,680        |  |   |             |   |          |   | 5,680        |  |              |        |  |              | 5,151   |  |   |         |   |  |   | 5,151  
|                                      |  |                        |         |                        |   |              |  |  
|Intangible assets:                    |  |                        |         |                        |   |              |  |   |              |   |          |   |              |  |              |         |  |              |         |  |   |          |   |  |   |        
|Goodwill                              |  |                        |        |                        |   | 234,423      |  |   |             |   |          |   | 234,423      |  |              |        |  |              | 234,423 |  |   |         |   |  |   | 234,423
|Trademarks                            |  |                        |        |                        |   | 24,100       |  |   |             |   |          |   | 24,100       |  |              |        |  |              | 24,100  |  |   |         |   |  |   | 24,100 
|Customer relationships, net           |  |                        |        |                        |   | 52,675       |  |   |             |   |          |   | 52,675       |  |              |        |  |              | 55,125  |  |   |         |   |  |   | 55,125 
|Other intangibles, net                |  |                        |        |                        |   | 41,890       |  |   |             |   |          |   | 41,890       |  |              |        |  |              | 43,773  |  |   |         |   |  |   | 43,773 
|                                      |  |                        |         |                        |   |              |  |   |              |   |          |   |              |  |              |         |  |              |         |  |   |          |   |  |   |        
|Total intangible assets               |  |                        |        |                        |   | 353,088      |  |   |             |   |          |   | 353,088      |  |              |        |  |              | 357,421 |  |   |         |   |  |   | 357,421
|                                      |  |                        |         |                        |   |              |  |  
|Other assets:                         |  |                        |         |                        |   |              |  |   |              |   |          |   |              |  |              |         |  |              |         |  |   |          |   |  |   |        
|Investment in consolidated subsidiary |  |                        | 187,221 |                        |   |             |  |   | (187,221     | ) |          |   |             |  |              | 190,468 |  |              |        |  |   | (190,468 | ) |  |   |       
|Deferred debt issuance costs, net     |  |                        | 708     |                        |   | 5,282        |  |   |             |   |          |   | 5,990        |  |              | 760     |  |              | 5,815   |  |   |         |   |  |   | 6,575  
|Other                                 |  |                        |        |                        |   | 2,525        |  |   |             |   |          |   | 2,525        |  |              |         |  |              | 601     |  |   |         |   |  |   | 601    
|                                      |  |                        |         |                        |   |              |  |   |              |   |          |   |              |  |              |         |  |              |         |  |   |          |   |  |   |        
|Total other assets                    |  |                        | 187,929 |                        |   | 7,807        |  |   |             |   |          |   | 8,515        |  |              | 191,228 |  |              | 6,416   |  |   |         |   |  |   | 7,176  
|                                      |  |                        |         |                        |   |              |  |   |              |   |          |   |              |  |              |         |  |              |         |  |   |          |   |  |   |        
|Total Assets                          |  | $                      | 189,839 |                        | $ | 442,445      |  | $ | (187,221     | ) |          | $ | 445,063      |  | $            | 192,286 |  | $            | 449,885 |  | $ | (190,468 | ) |  | $ | 451,703
|                                      |  |                        |         |                        |   |              |  |   |              |   |          |   |              |  |              |         |  |              |         |  |   |          |   |  |   |        



18



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##### Table of Contents

MSC  Medical Services Company

Notes to Condensed Financial Statements (continued)



MCP-MSC Acquisition, Inc.

Consolidating Balance Sheets - Continued



|                                                                                                        |  |                        |         |   |                        |   |         |              |  |   |              |   |  |          |         |   |              |   |         |              |  |   |              |   |  |   |          |   |  |   |         |  
|------------------------------------------------------------------------------------------------------- |  | ---------------------- | ------- | - | ---------------------- | - | ------- | ------------ |  | - | ------------ | - |  | -------- | ------- | - | ------------ | - | ------- | ------------ |  | - | ------------ | - |  | - | -------- | - |  | - | ------- | -
|                                                                                                        |  | June 30, 2006          |         |   | December 31, 2005      |  
|                                                                                                        |  | (Parent)               |         |   | (Subsidiary)           |   |         | Eliminations |  |   | Consolidated |   |  | (Parent) |         |   | (Subsidiary) |   |         | Eliminations |  |   | Consolidated |  
|                                                                                                        |  | (Dollars in thousands) |         |   | (Dollars in thousands) |  
|Liabilities and stockholders equity                                                                    |  |                        |         |   |                        |   |         |              |  |   |              |   |  |          |         |   |              |   |         |              |  |   |              |   |  |   |          |   |  |   |         |  
|Current liabilities:                                                                                    |  |                        |         |   |                        |   |         |              |  |   |              |   |  |          |         |   |              |   |         |              |  |   |              |   |  |   |          |   |  |   |         |  
|Short-term debt                                                                                         |  | $                      |        |   |                        | $ | 16,620  |              |  | $ |             |   |  | $        | 16,620  |   |              | $ |        |              |  | $ | 16,620       |   |  | $ |         |   |  | $ | 16,620  |  
|Accounts payable                                                                                        |  |                        |        |   |                        | $ | 12,506  |              |  |   |             |   |  |          | 12,506  |   |              |   |        |              |  | $ | 10,631       |   |  |   |         |   |  |   | 10,631  |  
|Accrued expenses                                                                                        |  |                        | 714     |   |                        | $ | 38,281  |              |  |   |             |   |  |          | 38,995  |   |              |   | 712     |              |  | $ | 36,300       |   |  |   |         |   |  |   | 37,012  |  
|Other current liabilities                                                                               |  |                        |        |   |                        | $ | 3,856   |              |  |   |             |   |  |          | 3,856   |   |              |   |        |              |  | $ | 12,918       |   |  |   |         |   |  |   | 12,918  |  
|                                                                                                        |  |                        |         |   |                        |   |         |              |  |   |              |   |  |          |         |   |              |   |         |              |  |   |              |   |  |   |          |   |  |   |         |  
|Total current liabilities                                                                               |  |                        | 714     |   |                        |   | 71,263  |              |  |   |             |   |  |          | 71,977  |   |              |   | 712     |              |  |   | 76,469       |   |  |   |         |   |  |   | 77,181  |  
|                                                                                                        |  |                        |         |   |                        |   |         |             
|Non-current liabilities:                                                                                |  |                        |         |   |                        |   |         |              |  |   |              |   |  |          |         |   |              |   |         |              |  |   |              |   |  |   |          |   |  |   |         |  
|Long-term debt                                                                                          |  |                        | 33,878  |   |                        |   | 148,771 |              |  |   |             |   |  |          | 182,649 |   |              |   | 31,664  |              |  |   | 148,645      |   |  |   |         |   |  |   | 180,309 |  
|Deferred income taxes                                                                                   |  |                        |         |   |                        |   | 33,624  |              |  |   |             |   |  |          | 33,624  |   |              |   |        |              |  |   | 33,950       |   |  |   |         |   |  |   | 33,950  |  
|                                                                                                        |  |                        |         |   |                        |   |         |              |  |   |              |   |  |          |         |   |              |   |         |              |  |   |              |   |  |   |          |   |  |   |         |  
|Total non-current liabilities                                                                           |  |                        | 33,878  |   |                        |   | 182,395 |              |  |   |             |   |  |          | 216,273 |   |              |   | 31,664  |              |  |   | 182,595      |   |  |   |         |   |  |   | 214,259 |  
|                                                                                                        |  |                        |         |   |                        |   |         |             
|Total liabilities                                                                                       |  |                        | 34,592  |   |                        |   | 253,658 |              |  |   |             |   |  |          | 288,250 |   |              |   | 32,376  |              |  |   | 259,064      |   |  |   |         |   |  |   | 291,440 |  
|Stockholders equity:                                                                                   |  |                        |         |   |                        |   |         |              |  |   |              |   |  |          |         |   |              |   |         |              |  |   |              |   |  |   |          |   |  |   |         |  
|Common stock, $.001 par value, 225,000,000 shares authorized, 181,375,000 shares issued and outstanding |  |                        | 181     |   |                        |   |        |              |  |   |             |   |  |          | 181     |   |              |   | 181     |              |  |   |             |   |  |   |         |   |  |   | 181     |  
|Common stock, $1.00 par value, 1,000 shares authorized, 100 shares issued and outstanding               |  |                        |        |   |                        |   |        |              |  |   |             |   |  |          |        |   |              |   |        |              |  |   |             |   |  |   |         |   |  |   |        |  
|Additional paid-in capital                                                                              |  |                        | 185,128 |   |                        |   | 214,181 |              |  |   | (214,181     | ) |  |          | 185,128 |   |              |   | 184,470 |              |  |   | 213,525      |   |  |   | (213,525 | ) |  |   | 184,470 |  
|Accumulated other comprehensive income                                                                  |  |                        |        |   |                        |   | 1,566   |              |  |   |             |   |  |          | 1,566   |   |              |   |        |              |  |   | 353          |   |  |   |         |   |  |   | 353     |  
|Accumulated deficit                                                                                     |  |                        | (30,062 | ) |                        |   | (26,960 | )            |  |   | 26,960       |   |  |          | (30,062 | ) |              |   | (24,741 | )            |  |   | (23,057      | ) |  |   | 23,057   |   |  |   | (24,741 | )
|Total stockholders equity                                                                              |  |                        | 155,247 |   |                        |   | 188,787 |              |  |   | (187,221     | ) |  |          | 156,813 |   |              |   | 159,910 |              |  |   | 190,821      |   |  |   | (190,468 | ) |  |   | 160,263 |  
|                                                                                                        |  |                        |         |   |                        |   |         |              |  |   |              |   |  |          |         |   |              |   |         |              |  |   |              |   |  |   |          |   |  |   |         |  
|Total Liabilities and Stockholders Equity                                                              |  | $                      | 189,839 |   |                        | $ | 442,445 |              |  | $ | (187,221     | ) |  | $        | 445,063 |   |              | $ | 192,286 |              |  | $ | 449,885      |   |  | $ | (190,468 | ) |  | $ | 451,703 |  
|                                                                                                        |  |                        |         |   |                        |   |         |              |  |   |              |   |  |          |         |   |              |   |         |              |  |   |              |   |  |   |          |   |  |   |         |  



19



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##### Table of Contents

MSC  Medical Services Company

Notes to Condensed Financial Statements (continued)



MCP-MSC Acquisition, Inc.

Condensed Consolidating Statements of Operations

For the Three Months Ended
June 30, 2006 and 2005



|                                          |  |                        |        |   |                        |   |        |              |  |              |       |  |           |        |   |              |   |        |              |  |              |        |   |  |   |       |  |   |        |  
|----------------------------------------- |  | ---------------------- | ------ | - | ---------------------- | - | ------ | ------------ |  | ------------ | ----- |  | --------- | ------ | - | ------------ | - | ------ | ------------ |  | ------------ | ------ | - |  | - | ----- |  | - | ------ | -
|                                          |  | June 30, 2006          |        |   | June 30, 2005          |  
|                                          |  |                        |        |   |                        |   |        |              |  |              |       |  | Successor |       
|                                          |  | (Parent)               |        |   | (Subsidiary)           |   |        | Eliminations |  | Consolidated |       |  | (Parent)  |        |   | (Subsidiary) |   |        | Eliminations |  | Consolidated |       
|                                          |  | (Dollars in thousands) |        |   | (Dollars in thousands) |  
|Net revenue                               |  | $                      |       |   |                        |   | 84,096 |              |  | $            |      |  | $         | 84,096 |   |              | $ |       |              |  |              | 75,370 |   |  | $ |      |  | $ | 75,370 |  
|Cost of revenue                           |  |                        |       |   |                        |   | 66,953 |              |  |              |      |  |           | 66,953 |   |              |   |       |              |  |              | 61,988 |   |  |   |      |  |   | 61,988 |  
|                                          |  |                        |        |   |                        |   |        |             
|Gross profit                              |  |                        |       |   |                        |   | 17,143 |              |  |              |      |  |           | 17,143 |   |              |   |       |              |  |              | 13,382 |   |  |   |      |  |   | 13,382 |  
|Operating expenses                        |  |                        |       |   |                        |   | 11,230 |              |  |              |      |  |           | 11,230 |   |              |   |       |              |  |              | 7,649  |   |  |   |      |  |   | 7,649  |  
|Transaction expenses                      |  |                        |       |   |                        |   |       |              |  |              |      |  |           |       |   |              |   |       |              |  |              |        |   |  |   |      |  |   |       |  
|Depreciation and amortization             |  |                        |       |   |                        |   | 3,004  |              |  |              |      |  |           | 3,004  |   |              |   |       |              |  |              | 2,698  |   |  |   |      |  |   | 2,698  |  
|                                          |  |                        |        |   |                        |   |        |              |  |              |       |  |           |        |   |              |   |        |              |  |              |        |   |  |   |       |  |   |        |  
|Total expenses                            |  |                        |       |   |                        |   | 14,234 |              |  |              |      |  |           | 14,234 |   |              |   |       |              |  |              | 10,347 |   |  |   |      |  |   | 10,347 |  
|                                          |  |                        |        |   |                        |   |        |              |  |              |       |  |           |        |   |              |   |        |              |  |              |        |   |  |   |       |  |   |        |  
|Operating income (loss)                   |  |                        |       |   |                        |   | 2,909  |              |  |              |      |  |           | 2,909  |   |              |   |       |              |  |              | 3,035  |   |  |   |      |  |   | 3,035  |  
|Equity in loss of consolidated subsidiary |  |                        | (1,472 | ) |                        |   |       |              |  |              | 1,472 |  |           |       |   |              |   | (4,827 | )            |  |              |       |   |  |   | 4,827 |  |   |       |  
|Interest expense                          |  |                        | 1,134  |   |                        |   | 5,266  |              |  |              |      |  |           | 6,400  |   |              |   | 587    |              |  |              | 10,910 |   |  |   |      |  |   | 11,497 |  
|                                          |  |                        |        |   |                        |   |        |              |  |              |       |  |           |        |   |              |   |        |              |  |              |        |   |  |   |       |  |   |        |  
|Loss before income tax benefit            |  |                        | (2,606 | ) |                        |   | (2,357 | )            |  |              | 1,472 |  |           | (3,491 | ) |              |   | (5,414 | )            |  |              | (7,875 | ) |  |   | 4,827 |  |   | (8,462 | )
|Income tax benefit                        |  |                        | 426    |   |                        |   | 885    |              |  |              |      |  |           | 1,311  |   |              |   | 228    |              |  |              | 3,048  |   |  |   |      |  |   | 3,276  |  
|                                          |  |                        |        |   |                        |   |        |              |  |              |       |  |           |        |   |              |   |        |              |  |              |        |   |  |   |       |  |   |        |  
|Net loss                                  |  | $                      | (2,180 | ) |                        | $ | (1,472 | )            |  | $            | 1,472 |  | $         | (2,180 | ) |              | $ | (5,186 | )            |  | $            | (4,827 | ) |  | $ | 4,827 |  | $ | (5,186 | )
|                                          |  |                        |        |   |                        |   |        |              |  |              |       |  |           |        |   |              |   |        |              |  |              |        |   |  |   |       |  |   |        |  



20



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##### Table of Contents

MSC  Medical Services Company

Notes to Condensed Financial Statements (continued)



MCP-MSC Acquisition, Inc.

Condensed Consolidating Statements of Operations

For the Six Months Ended
June 30, 2006 and 2005



|                                          |  |                        |        |   |                        |   |         |              |  |              |       |  |           |         |   |              |   |        |              |  |              |        |   |  |   |       |  |   |        |  
|----------------------------------------- |  | ---------------------- | ------ | - | ---------------------- | - | ------- | ------------ |  | ------------ | ----- |  | --------- | ------- | - | ------------ | - | ------ | ------------ |  | ------------ | ------ | - |  | - | ----- |  | - | ------ | -
|                                          |  | June 30, 2006          |        |   | June 30, 2005          |  
|                                          |  |                        |        |   |                        |   |         |              |  |              |       |  | Successor |        
|                                          |  | (Parent)               |        |   | (Subsidiary)           |   |         | Eliminations |  | Consolidated |       |  | (Parent)  |         |   | (Subsidiary) |   |        | Eliminations |  | Consolidated |       
|                                          |  | (Dollars in thousands) |        |   | (Dollars in thousands) |  
|Net revenue                               |  | $                      |       |   |                        |   | 163,777 |              |  | $            |      |  | $         | 163,777 |   |              | $ |       |              |  |              | 75,370 |   |  | $ |      |  | $ | 75,370 |  
|Cost of revenue                           |  |                        |       |   |                        |   | 131,264 |              |  |              |      |  |           | 131,264 |   |              |   |       |              |  |              | 61,988 |   |  |   |      |  |   | 61,988 |  
|                                          |  |                        |        |   |                        |   |         |             
|Gross profit                              |  |                        |       |   |                        |   | 32,513  |              |  |              |      |  |           | 32,513  |   |              |   |       |              |  |              | 13,382 |   |  |   |      |  |   | 13,382 |  
|Operating expenses                        |  |                        |       |   |                        |   | 22,595  |              |  |              |      |  |           | 22,595  |   |              |   |       |              |  |              | 7,649  |   |  |   |      |  |   | 7,649  |  
|Transaction expenses                      |  |                        |       |   |                        |   |        |              |  |              |      |  |           |        |   |              |   |       |              |  |              |        |   |  |   |      |  |   |       |  
|Depreciation and amortization             |  |                        |       |   |                        |   | 5,894   |              |  |              |      |  |           | 5,894   |   |              |   |       |              |  |              | 2,698  |   |  |   |      |  |   | 2,698  |  
|                                          |  |                        |        |   |                        |   |         |              |  |              |       |  |           |         |   |              |   |        |              |  |              |        |   |  |   |       |  |   |        |  
|Total expenses                            |  |                        |       |   |                        |   | 28,489  |              |  |              |      |  |           | 28,489  |   |              |   |       |              |  |              | 10,347 |   |  |   |      |  |   | 10,347 |  
|                                          |  |                        |        |   |                        |   |         |              |  |              |       |  |           |         |   |              |   |        |              |  |              |        |   |  |   |       |  |   |        |  
|Operating income (loss)                   |  |                        |       |   |                        |   | 4,024   |              |  |              |      |  |           | 4,024   |   |              |   |       |              |  |              | 3,035  |   |  |   |      |  |   | 3,035  |  
|Equity in loss of consolidated subsidiary |  |                        | (3,903 | ) |                        |   |        |              |  |              | 3,903 |  |           |        |   |              |   | (5,118 | )            |  |              |       |   |  |   | 5,118 |  |   |       |  
|Interest expense                          |  |                        | 2,267  |   |                        |   | 10,275  |              |  |              |      |  |           | 12,542  |   |              |   | 587    |              |  |              | 11,410 |   |  |   |      |  |   | 11,997 |  
|                                          |  |                        |        |   |                        |   |         |              |  |              |       |  |           |         |   |              |   |        |              |  |              |        |   |  |   |       |  |   |        |  
|Loss before income tax benefit            |  |                        | (6,170 | ) |                        |   | (6,251  | )            |  |              | 3,903 |  |           | (8,518  | ) |              |   | (5,705 | )            |  |              | (8,375 | ) |  |   | 5,118 |  |   | (8,962 | )
|Income tax benefit                        |  |                        | 851    |   |                        |   | 2,348   |              |  |              |      |  |           | 3,199   |   |              |   | 228    |              |  |              | 3,257  |   |  |   |      |  |   | 3,485  |  
|                                          |  |                        |        |   |                        |   |         |              |  |              |       |  |           |         |   |              |   |        |              |  |              |        |   |  |   |       |  |   |        |  
|Net loss                                  |  | $                      | (5,319 | ) |                        | $ | (3,903  | )            |  | $            | 3,903 |  | $         | (5,319  | ) |              | $ | (5,477 | )            |  | $            | (5,118 | ) |  | $ | 5,118 |  | $ | (5,477 | )
|                                          |  |                        |        |   |                        |   |         |              |  |              |       |  |           |         |   |              |   |        |              |  |              |        |   |  |   |       |  |   |        |  



21



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##### Table of Contents

MSC  Medical Services Company

Notes to Condensed Financial Statements (continued)



MCP-MSC Acquisition, Inc.

Consolidating Statement of Cash Flows



|                                                                              |  |                        |   |  |                        |   |  |              |   |  |              |   |  |           |   |  |              |   |  |              |   |  |              |  
|----------------------------------------------------------------------------- |  | ---------------------- | - |  | ---------------------- | - |  | ------------ | - |  | ------------ | - |  | --------- | - |  | ------------ | - |  | ------------ | - |  | ------------ | -
|                                                                              |  | June 30, 2006          |   |  | June 30, 2005          |  
|                                                                              |  |                        |   |  |                        |   |  |              |   |  |              |   |  | Successor |  
|                                                                              |  | (Parent)               |   |  | (Subsidiary)           |   |  | Eliminations |   |  | Consolidated |   |  | (Parent)  |   |  | (Subsidiary) |   |  | Eliminations |   |  | Consolidated |  
|                                                                              |  | (Dollars in thousands) |   |  | (Dollars in thousands) |  
|Operating activities                                                          |  |                        |   |  |                        |   |  |              |   |  |              |   |  |           |   |  |              |   |  |              |   |  |              |  
|Net loss                                                                      |  | (5,319                 | ) |  | (3,903                 | ) |  | 3,903        |   |  | (5,319       | ) |  | (5,477    | ) |  | (5,118       | ) |  | 5,118        |   |  | (5,477       | )
|Adjustments to reconcile net (loss) to net cash used in operating activities: |  |                        |   |  |                        |   |  |              |   |  |              |   |  |           |   |  |              |   |  |              |   |  |              |  
|Equity in loss of consolidated subsidiary                                     |  | 3,903                  |   |  |                       |   |  | (3,903       | ) |  |             |   |  | 5,118     |   |  |             |   |  | (5,118       | ) |  |             |  
|Depreciation                                                                  |  |                       |   |  | 1,561                  |   |  |             |   |  | 1,561        |   |  |          |   |  | 1,075        |   |  |             |   |  | 1,075        |  
|Amortization of intangibles                                                   |  |                       |   |  | 4,333                  |   |  |             |   |  | 4,333        |   |  |          |   |  | 1,623        |   |  |             |   |  | 1,623        |  
|Amortization of debt issuance costs and debt discount                         |  | 129                    |   |  | 659                    |   |  |             |   |  | 788          |   |  | 41        |   |  | 7,698        |   |  |             |   |  | 7,739        |  
|Provision for deferred income taxes                                           |  | (852                   | ) |  | (1,754                 | ) |  |             |   |  | (2,606       | ) |  | (228      | ) |  | 199          |   |  |             |   |  | (29          | )
|Provision for bad debts                                                       |  |                       |   |  | 4,089                  |   |  |             |   |  | 4,089        |   |  |          |   |  | 1,068        |   |  |             |   |  | 1,068        |  
|Stock-based compensation                                                      |  |                       |   |  | 704                    |   |  |             |   |  | 704          |   |  |          |   |  |             |   |  |             |   |  |             |  
|Changes in operating assets and liabilities:                                  |  |                        |   |  |                        |   |  |              |   |  |              |   |  |           |   |  |              |   |  |              |   |  |              |  
|Increase in accounts receivable                                               |  |                       |   |  | (8,735                 | ) |  |             |   |  | (8,735       | ) |  |          |   |  | (9,344       | ) |  |             |   |  | (9,344       | )
|Decrease in inventories                                                       |  |                       |   |  | 23                     |   |  |             |   |  | 23           |   |  |          |   |  | 145          |   |  |             |   |  | 145          |  
|(Increase) decrease in income tax receivable                                  |  |                       |   |  | 7,194                  |   |  |             |   |  | 7,194        |   |  |          |   |  | (264         | ) |  |             |   |  | (264         | )
|Increase in other current assets                                              |  |                       |   |  | (378                   | ) |  |             |   |  | (378         | ) |  |          |   |  | (155         | ) |  |             |   |  | (155         | )
|Increase in other non-current assets                                          |  |                       |   |  | (711                   | ) |  |             |   |  | (711         | ) |  |          |   |  |             |   |  |             |   |  |             |  
|Increase (decrease) in accounts payable                                       |  |                        |   |  |                        |   |  |              |   |  |              |   |  |           |   |  |              |   |  |              |   |  |              |  
|& accrued expenses                                                            |  | 2,139                  |   |  | 3,808                  |   |  |             |   |  | 5,947        |   |  | 546       |   |  | 3,385        |   |  |              |   |  | 3,931        |  
|Decrease in transaction expense                                               |  |                       |   |  |                       |   |  |             |   |  |             |   |  |          |   |  | (24,697      | ) |  |             |   |  | (24,697      | )
|Increase (decrease) in deferred revenue                                       |  |                       |   |  | 113                    |   |  |             |   |  | 113          |   |  |          |   |  | (79          | ) |  |             |   |  | (79          | )
|Decrease in income taxes payable                                              |  |                       |   |  | (372                   | ) |  |             |   |  | (372         | ) |  |          |   |  | (3,341       | ) |  |             |   |  | (3,341       | )
|                                                                              |  |                        |   |  |                        |   |  |              |   |  |              |   |  |           |   |  |              |   |  |              |   |  |              |  
|Net cash provided by/(used) in operating activities                           |  |                       |   |  | 6,631                  |   |  |             |   |  | 6,631        |   |  |          |   |  | (27,805      | ) |  |             |   |  | (27,805      | )
|                                                                              |  |                        |   |  |                        |   |  |              |   |  |              |   |  |           |   |  |              |   |  |              |   |  |              |  



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MSC  Medical Services Company

Notes to Condensed Financial Statements (continued)



MCP-MSC Acquisition, Inc.

Consolidating Statement of Cash Flows



|                                                    |  |                        |   |              |                        |         |              |  |              |   |  |           |         |   |              |   |          |              |  |              |          |   |  |   |   |  |   |          |  
|--------------------------------------------------- |  | ---------------------- | - | ------------ | ---------------------- | ------- | ------------ |  | ------------ | - |  | --------- | ------- | - | ------------ | - | -------- | ------------ |  | ------------ | -------- | - |  | - | - |  | - | -------- | -
|                                                    |  | June 30, 2006          |   |              | June 30, 2005          |        
|                                                    |  |                        |   |              |                        |         |              |  |              |   |  | Successor |        
|                                                    |  | (Parent)               |   | (Subsidiary) |                        |         | Eliminations |  | Consolidated |   |  | (Parent)  |         |   | (Subsidiary) |   |          | Eliminations |  | Consolidated |         
|                                                    |  | (Dollars in thousands) |   |              | (Dollars in thousands) |        
|Investing activities                                |  |                        |   |              |                        |         |              |  |              |   |  |           |         |   |              |   |          |              |  |              |          |   |  |   |   |  |   |          |  
|Purchases of property and equipment                 |  |                        |  |              |                        | (2,090  | )            |  |              |  |  |           | (2,090  | ) |              |   |         |              |  |              | (1,111   | ) |  |   |  |  |   | (1,111   | )
|Payment to former owners                            |  |                        |  |              |                        | (8,803  | )            |  |              |  |  |           | (8,803  | ) |              |   |         |              |  |              |         |   |  |   |  |  |   |         |  
|Payments in connection with business acquisition    |  |                        |  |              |                        |        |              |  |              |  |  |           |        |   |              |   | 181,375  |              |  |              | (296,343 | ) |  |   |  |  |   | (114,968 | )
|                                                    |  |                        |   |              |                        |         |              |  |              |   |  |           |         |   |              |   |          |              |  |              |          |   |  |   |   |  |   |          |  
|Net cash provided by/(used) in investingactivities  |  |                        |  |              |                        | (10,893 | )            |  |              |  |  |           | (10,893 | ) |              |   | 181,375  |              |  |              | (297,454 | ) |  |   |  |  |   | (116,079 | )
|                                                    |  |                        |   |              |                        |         |              |  |              |   |  |           |         |   |              |   |          |              |  |              |          |   |  |   |   |  |   |          |  
|Financing activities                                |  |                        |   |              |                        |         |              |  |              |   |  |           |         |   |              |   |          |              |  |              |          |   |  |   |   |  |   |          |  
|Proceeds from short-term debt                       |  |                        |  |              |                        |        |              |  |              |  |  |           |        |   |              |   |         |              |  |              | 15,120   |   |  |   |  |  |   | 15,120   |  
|Proceeds from long-term debt                        |  |                        |  |              |                        |        |              |  |              |  |  |           |        |   |              |   |         |              |  |              | 148,631  |   |  |   |  |  |   | 148,631  |  
|Repayment of short-term debt                        |  |                        |  |              |                        |        |              |  |              |  |  |           |        |   |              |   |         |              |  |              | (19,000  | ) |  |   |  |  |   | (19,000  | )
|Repayment of long-term debt                         |  |                        |  |              |                        |        |              |  |              |  |  |           |        |   |              |   |         |              |  |              | (17,000  | ) |  |   |  |  |   | (17,000  | )
|Debt issuance cost                                  |  |                        |  |              |                        |        |              |  |              |  |  |           |        |   |              |   |         |              |  |              | (12,745  | ) |  |   |  |  |   | (12,745  | )
|Capital contribution from Parent company            |  |                        |  |              |                        |        |              |  |              |  |  |           |        |   |              |   | (181,375 | )            |  |              | 210,253  |   |  |   |  |  |   | 28,878   |  
|Other                                               |  |                        |  |              |                        |        |              |  |              |  |  |           |        |   |              |   |         |              |  |              |         |   |  |   |  |  |   |         |  
|                                                    |  |                        |   |              |                        |         |              |  |              |   |  |           |         |   |              |   |          |              |  |              |          |   |  |   |   |  |   |          |  
|Net cash provided by/(used) in financing activities |  |                        |  |              |                        |        |              |  |              |  |  |           |        |   |              |   | (181,375 | )            |  |              | 325,259  |   |  |   |  |  |   | 143,884  |  
|                                                    |  |                        |   |              |                        |         |              |  |              |   |  |           |         |   |              |   |          |              |  |              |          |   |  |   |   |  |   |          |  
|Net increase (decrease) in cash                     |  |                        |  |              |                        | (4,262  | )            |  |              |  |  |           | (4,262  | ) |              |   |         |              |  |              |         |   |  |   |  |  |   |         |  
|Cash, beginning of period                           |  |                        |  |              |                        | 8,300   |              |  |              |  |  |           | 8,300   |   |              |   |         |              |  |              |         |   |  |   |  |  |   |         |  
|                                                    |  |                        |   |              |                        |         |              |  |              |   |  |           |         |   |              |   |          |              |  |              |          |   |  |   |   |  |   |          |  
|Cash, end of period                                 |  | $                      |  |              | $                      | 4,038   |              |  | $            |  |  | $         | 4,038   |   |              | $ |         |              |  | $            |         |   |  | $ |  |  | $ |         |  
|                                                    |  |                        |   |              |                        |         |              |  |              |   |  |           |         |   |              |   |          |              |  |              |          |   |  |   |   |  |   |          |  



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MSC  Medical Services Company

Notes to Condensed Financial Statements (continued)



6. Subsequent Event

On May 12, 2005, MCP-MSC Acquisition, Inc. (HoldCo), the parent company to MSC-Medical Services Company, issued 13.50% Senior Discount Notes due 2013 to Banc of America Securities LLC (Banc of America) in the
principal amount at maturity of $38,732,000 (the Notes). The Notes were issued under the Indenture, dated as of May 12, 2005, between HoldCo and U.S. Bank National Association (U.S. Bank) as Trustee. On August 8,
2006, MCP-MSC Investment LLC (MCP-MSC) purchased the Notes for $25,000,000 from Banc of America. MCP-MSC was formed by Monitor Clipper Equity Partners II, L.P. and Monitor Clipper Equity Partners (NQP) II, L.P., the primary stockholders
of HoldCo, as a special-purpose limited liability company for the purpose of purchasing and holding the Notes. A First Supplemental Indenture between HoldCo and U.S. Bank was also signed on August 8, 2006 to amend certain calculations contained
in the Indenture to reflect this purchase.



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Item 2  Managements Discussion and Analysis of Financial Condition and Results of Operations.

The following
should be read in conjunction with the financial statements and the notes to those financial statements included in the Companys Registration Statement on Form S-4 amended as of May 17, 2006 as filed with the SEC. In addition, all
forward-looking statements are qualified by and should be read in conjunction with the risks described under the heading Forward Looking Statements of this Form 10-Q and under the heading Risk Factors of the Registration
Statement on Form S-4 amended as of May 17, 2006.

Overview

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

Workers compensation legislation in the United States generally requires employers to fund the total cost of an employees medical treatment, lost wages and
other costs associated with a work-related injury or illness. Employers are generally required to provide coverage of costs with no co-payment or deductible from the ill or injured employee, and there is typically no lifetime limit on medical
expenses. Workers compensation programs vary across jurisdictions; each state separately determines the level of wage replacement that must be paid and the level of medical care to be provided.

Factors affecting our financial results

Revenue. Revenue
consists of amounts charged to customers for the products and services the Company provides. Overall, revenue is affected by the size of the workers compensation market for pharmaceutical and medical products and services, federal and state
fee schedules mandating maximum billable amounts, the extent of outsourcing in the industry and any market share changes resulting from shifts with existing customers and new customer wins. These factors combine to affect the number of patients
served and revenue per patient.

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

The Company operates in a competitive market
place where revenue may be affected by the competitive bidding process among other service providers. In addition, the Companys



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customers may also periodically engage in formal requests for proposals (RFP) on non-contracted, as well as
contracted business. The Company may decide to offer reduced pricing in certain situations given the overall economics of the proposed business identified in the RFP and the competitive environment.

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

Gross Profit. Gross profit reflects the differential between the price at which the Company sells its products and services and the cost of revenue. Margins are
positively affected when the Company negotiates lower prices from its vendors without a change in pricing to customers. Conversely, margins are negatively affected when the Company lowers prices charged to customers without receiving a reduction in
pricing from vendors. Examples of this include customer negotiations where the Company agrees to lower prices, and certain legislative changes which result in a decrease in pharmaceutical prices that can be charged. The growth in revenue from the
Pharmaceuticals product line (which has lower margins) relative to Medical Products and Services product line revenues has historically lowered the Companys overall margins; however, this impact on margins has been partially offset by the
negotiation of discounts with vendors. Fluctuations in revenue or the cost of revenue do not necessarily result in corresponding changes in gross profit margins. For example, in the Pharmaceuticals product line, the price at which the Company is
able to procure pharmaceuticals and the prices that it charges customers are frequently tied to a common measurement, such as average wholesale price (AWP). As the benchmark moves up or down, revenue and cost of revenue move
correspondingly, leaving gross profit margins largely unaffected. Recently, the proportion of generic drugs dispensed has increased. This has generally reduced revenue while improving overall gross margins.

Significant customers.For the six months ended June 30, 2006, our largest customer accounted for approximately 16% of our billings for the period versus 19%
for the year ended December 31, 2005. Only one other customer accounted for more than 9% and 8%, respectively for the six months ended June 30, 2006 and for the year ended December 31, 2005. Billings to the Companys top ten
customers increased for the six month period ended June 30, 2006 and represented 48% of total billings for this period versus 47% for the year ended December 31, 2005.

The Company is currently participating in RFP processes with new customers, as well as some of its existing customers regarding new business or portions of their existing business with the Company. The outcome of
these RFPs could have a positive or adverse impact on the Companys future revenues and operating income.



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

Results of Operations

Three and Six
Months Ended June 30, 2006 Compared to June 30, 2005.

Total Revenue

For the three months ended June 30, 2006 net revenue increased $8.7 million, or 11.6% to $84.1 million from $75.4 million for the same period in 2005. The components of this increase in total revenue are
increases in Pharmaceutical revenues and Medical Products and Services revenues for the three month period ended June 30, 2006 versus the same period in 2005. These increases result from the roll out and ramp up of Pharmaceutical services to
new customers in the second half of 2005 and increased orders in our Medical Products and Services product line.

Net revenue increased by $13.4 million,
or 8.9%, to $163.8 million for the six months ended June 30, 2006 from $150.4 million for the comparable period in 2005. This revenue growth was driven primarily by increases in the Companys Pharmaceutical revenues which increased 13.2%
period over period and Medical Products and Services revenues which increased 4.3% period over period.

There was sequential growth in revenue from first
quarter 2006 to second quarter 2006 of $4.4 million, or 6% driven primarily by a $3.7 million, or 10.1% increase in the Companys Medical Products and Services business and $0.7 million, or 1.7% increase in the Companys Pharmaceutical
line.

The Company also experienced sequential growth in its average revenue per day of $0.1 million, or 8.3% to $1.3 million in the second quarter of
2006, up from $1.2 million in the first quarter of 2006.

During the three and six months ended June 30, 2006, the Company served 8.3% and 11.3% more
individual patients, respectively, compared to the same periods in 2005. In spite of the increase in patients served for the three and six month periods ended June 30, 2006, due to a change in the components of revenue, total revenue per
patient decreased 2.1% to $1,190 for the six months ended June 30, 2006 from $1,216 for the comparable period in 2005. This decline is a result of several factors including a shift in product mix within the Medical Products and Services lines
as described below, as well as pricing concessions in certain of the Companys product lines, primarily Pharmaceutical products. The Company estimates the affect of pricing



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concessions on total revenue for the six months ended June 30, 2006 to be approximately $1.5 million. Adjusting
total revenue for these concessions would have resulted in revenue per patient of $1,201 for the six month period ended June 30, 2006. The remaining decline in revenue per patient can be attributed to a shift in product mix in the Medical
Products and Services line, as well as the planned reduction in specific products that are typically higher revenue, lower quantity and lower margin. The results of the planned reduction yielded a 1.5% increase in gross margin on this product line
in the six months ended June 30, 2006 versus the same period in 2005, as well as the second quarter of 2006 versus the first quarter of 2006.

Pharmaceutical Revenue

Revenue from the Pharmaceutical product line of $44 million and $87.2 million for the three and six month periods
ended June 30, 2006, respectively, represented an increase of $4.2 million and $10.2 million, or 10.5% and 13.2%, respectively, over the same periods ended June 30, 2005. Pharmaceutical revenues from the Companys Retail Pharmacy
Services (Retail Services) showed the largest increase at 13.8% and 17.1%, or $5 million and $11.9 million, respectively, for the three and six months ended June 30, 2006 versus the same periods in 2005. These increases were offset
by declines in revenues from the Companys Mail Order Pharmacy Services (Mail Order Services) of 21.4% and 23.2%, or $0.7 million and $1.7 million for the three and six month periods ended June 30, 2006, respectively, versus
the same periods in 2005. The increase in Retail Services revenue period over period for the three and six month periods ended June 30, 2006 and 2005 is due primarily to new customer wins while the decline in Mail Order Services revenues period
over period was due primarily to a) attrition of long-term mail order patients who have been in the mail order program since the inception of our Pharmaceutical services, and b) improved screening practices designed to better identify mail order
candidates versus using mail order as the default when adding a new patient.

Pharmaceutical revenues showed sequential growth from the first quarter of
2006, an increase of $0.7 million, or 1.7% from first quarter revenue of $43.2 million. This increase is a result of the formalization of relationships with certain customers which resulted in increased penetration of approximately $0.5 million in
addition to ongoing sales efforts targeting new customers.

Total prescription fills increased by 123,000 fills, or 18.3% for the six month period ended
June 30, 2006 versus 2005 due to new customers added, especially during the second half of 2005, that have now been fully integrated. Total fills increased 13,000 fills for the three months ended June 30, 2006 versus the three months ended
March 31, 2006. The growth in prescription fills contributed approximately $14.1 million of additional revenue over the six month period ended June 30, 2006, offset by approximately $3.7 million in revenue decline due to a shift in product
mix from brand to generic and approximately $0.2 million in revenue decline due to various pricing effects, e.g. AWP, state fee schedules and pricing concessions. Generic prescription fills represented the largest increase in fills for the three and
six month periods ended June 30, 2006 from the comparable periods in 2005. Average generic fills as a percent of total fills increased 3.5% for the six month period ended June 30, 2006.

The Companys Pharmaceutical product line experienced a 22.6% increase in total patients served in the six month period ended June 30, 2006 versus the same
period ended in 2005. The



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Company also experienced a 24.9% increase in generic fills versus a 7.3% increase in branded fills. Taking into
consideration the average revenue per generic fill for the six months ended June 30, 2006 was 67.4% less than the average revenue for brand fills, this combination of an increase in the number of patients served and a shift to a proportionately
higher consumption of generic versus branded pharmaceuticals, resulted in a decrease in overall revenue per patient period over period. The shift to generic fills is due primarily to industry-wide carrier initiatives that specify a generic fill if
available.

Medical Products and Services

Revenue from
the Medical Products and Services product line increased $4.5 million and $3.2 million, or 12.7% and 4.3%, to $40.1 million and $76.6 million from $35.6 million and $73.4 million for the respective three and six month periods ended June 30,
2006 and 2005. Medical Services reflects the largest three and six month period over period increase in revenue of 30.5% and 15.5%, or $3.6 million and $3.9 million, respectively, due principally to increased billings per order and volume of orders
in transportation and our home health care divisions. For the three months ended June 30, 2006 there was a $.9 million, or 3.9%, increase in Medical Products revenue versus the comparable period in 2005. This increase is due principally to
order volume increases in supplies, durable medical equipment and orthotics for the three month period over period. These increases were mitigated by a six month ended June 30, 2006 versus 2005 period over period decline in Medical Products of
1.5% or $0.7 million due to planned reduction principally in the second half of fiscal 2005 in certain medical device product categories due to profitability considerations.

During the three and six months ended June 30, 2006, the Companys total orders for Medical Products and Services increased by 14,000 and 4,000, respectively, versus the three and six months ended
June 30, 2005. Based on the planned reduction of certain products as discussed earlier, there was a shift in the product mix and increase in orders for product lines with moderate revenue but higher margins such as durable medical equipment,
electrotherapy and transportation. The increases in these lines are primarily a result of an increased focus on quality and business process for our more service intensive and higher dollar volume product lines.

Cost of Revenue. For the three and six months ended June 30, 2006, cost of revenue increased by $5.0 million and $8.2 million, or 8% and 6.7%, respectively,
over the same periods ended in 2005. Cost of revenue, as a percentage of revenue, was 79.6% and 80.1% for the three and six month period ended June 30, 2006, respectively, a decrease of 2.6% and 1.7% from 82.2% and 81.8%, respectively, for the
same three and six month periods ended June 30, 2005. The decrease as a percentage of revenue was due to savings achieved from productivity gains of internal operating costs through automation and outsourcing of certain functions, as well as
negotiation of improved costs with certain of our key pharmaceutical services suppliers and increased purchasing from our best price vendors in certain of our Medical Products lines.

Pharmaceutical cost of revenue increased $2.8 and $7.5 million, or 8.2% and 11.4% for the three and six month periods ended June 30, 2006, respectively, compared to the same periods ended in 2005. The increases
are a result of increases in the total number of prescription fills for the three and six month periods and an increase in the Companys cost per fill for branded drugs which



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increased 6.5%, for the six months ended June 30, 2006 from the comparable period in 2005. Generic cost per fill,
however, decreased by less than 1% for the six months ended June 30, 2006 from the comparable period in 2005. The full effect of the increased cost per branded fill was mitigated by pricing concessions from selected vendors and a shift from
branded to less expensive generic pharmaceuticals.

Medical Products and Services cost of revenue increased $2.1 million and $0.7 million or 7.7% and 1.3%,
respectively, for the three and six month periods ended June 30, 2006 compared to the same periods ended 2005. This increase, as it relates to the increase in Medical Products and Services revenue, is primarily a result of a product mix shift
within this line, as discussed above, and evidenced by improvements in Medical Products and Services gross margin for the three and six month periods ended June 30, 2006 versus 2005. Medical Products and Services cost of revenue, as a
percentage of that same revenue, was 75.0% and 76.0 %, respectively, for the three and six month periods ended June 30, 2006, a decrease of 3.5 % and 2.2%, respectively, from the comparable three and six month periods in 2005,
resulting primarily from the Companys efforts to increase margins through various cost improvement initiatives, such as the de-emphasis of the dynasplint product line. See Revenue related to Medical Products and Services discussed
above.

Operating Expenses. For the three and six month periods ended June 30, 2006, operating expenses increased $3.6 million and $3.2
million, respectively versus the same three and six month periods of 2005. For the three and six month periods ended June 30, 2006, the Company incurred $0.3 million and $0.7 million, respectively, for non-cash stock compensation expense as a
result of the implementation of SFAS No. 123(R) versus $4.3 million of non-cash stock compensation for the six months ended June 30, 2005 associated with the Acquisition and no expense for the three month period ended June 30, 2005.
The Company incurred $1 million and $1.9 million of increases, respectively, for the three and six month periods ended June 30, 2006 versus the same periods in 2005 related to salaries and wages. These increases were comprised of approximately
$0.2 and $0.3 million of information technology contract labor net of capitalized salary amounts, approximately $0.4 and $1 million relating to increased head count and the addition of key management positions and approximately $0.4 and $0.6 million
related to annual salary increases, respectively, for the three and six month periods ended June 30, 2006 versus 2005.

Bad debt expense increased $1
million and $2.9 million in the three and six months ended June 30, 2006 versus the same periods ended 2005. This increase is due primarily to the change in the estimation factor for anticipated future losses from 0.85% for the first quarter of
2005 and 1.4% in the second quarter of 2005 to 2.5% of net sales for the current six months of 2006 as well as the increase in revenues for the three and six month period over period. The estimation factor increased as a result of analysis performed
during the third quarter of 2005 that indicated the factor being used at the time was not sufficient to address the collection risk of the Companys portfolio of receivables.



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Other increases for the six month period ended June 30, 2006 versus 2005 include $0.3 million related to other
personnel expenses, $0.9 million of professional & consulting fees related to the S-4 filing, IT consulting and market research, and $0.8 million of sales tax expense.

For the three and six month periods ended June 30, 2006, operating expenses as a percent of net revenue were 13.3% and 13.8%, respectively, versus 10.2% and 12.8%, respectively, for the same three and six month
periods in 2005. The Company incurred approximately $0.2 million and $0.5 million of costs, respectively, for the three and six month periods in 2006 related to the Companys S-4 Registration Statement filed in 2006. Other charges in the three
and six months ended June 30, 2006 not included in the same periods in 2005 include approximately $0.3 million and $0.6 million, respectively, of temporary contract labor related to collection efforts, $0.4 million and $0.8 million,
respectively, of sales tax expenses and $0.4 million of employee severance costs, Chief Information Officer transition costs and other consulting fees in the six months ended June 30, 2006.

There was a sequential decrease of $0.1 million in operating expenses from the first quarter 2006 to the second quarter 2006 driven primarily by decreases in salaries,
non-cash stock compensation expense as a result of forfeitures, payroll taxes and marketing expenses.

Transaction Expenses. Transaction expenses of
$24.7 million for the six month period ended June 30, 2005 include expenses incurred by the selling shareholders upon sale of the Company on March 31, 2005. These expenses include a $7.3 million long-term incentive payment to a former
employee pursuant to the terms of his employment contract, $7.1 million in fees to the former owner, $6.2 million in fees to the Companys financial advisor, a $2.6 million long-term incentive payment to a former officer pursuant to the terms
of his employment contract, $0.6 million in payments to employees, $0.6 million in legal expenses and $0.6 million in other fees and accounting-related expenses.

Depreciation and Amortization. For the three and six month period ended June 30, 2006, depreciation and amortization increased $0.3 million and $2.4 million, respectively, versus the same periods ended June 30, 2005. The
increase in the three month period is a result of capitalizable projects started in late 2005 and completed in 2006 and the increase in the six month period is a result of amortizable intangible assets resulting from the Acquisition consummated on
March 31, 2005.

Operating Income. For the three month period ended June 30, 2006, operating income decreased $0.1 million versus the same
period in 2005, primarily due to the factors discussed above. During the six month period ended June 30, 2006, operating income increased $24.1 million to income of $4.0 million from a $20.1 million loss for the same period ended June 30,
2005. This increase is due principally to the effects of the transaction expenses of $24.7 million incurred in the first quarter of 2005.

Interest
Expense. Interest expense decreased by $5.6 million and $2.1 million, respectively, for the three and six month period ended June 30, 2006. The decrease in interest expense in the three



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and six month periods is the result of capitalized debt issuance costs incurred in 2005 being written off in association
with a refinancing under the Companys Senior Secured Notes and Senior Secured Revolving Credit Facility associated with the permanent financing for the business purchase transaction.

Income Tax Benefit. For the three and six month periods ended June 30, 2006, the income tax benefit decreased $2.2 million and $10.4 million, respectively,
from the same periods ended June 30, 2005. The June 30, 2005 income tax benefit was the result of a loss before income taxes arising from the costs associated with the business purchase transaction. If the 37.6% effective rate remains
constant for the remainder of the year, it would reflect a 0.6% decrease from the effective tax rate at December 31, 2005 of 38.2%. The Company currently expects to be able to utilize the tax benefit through the reversal of deferred tax
liabilities in future periods.

Liquidity and Capital Resources

Operating activities provided $6.6 million of cash for the six month period ended June 30, 2006 compared to a use of $27.7 million for the comparable period in 2005. The change in operating cash flows activities was due primarily to
transaction expenses incurred in connection with the Acquisition in 2005 and receipt of income tax receivables in the six month period ended June 30, 2006 of approximately $8.0 million, offset by increases in operating cash flow investment in
accounts receivable of $8.7 million for the six month period ended June 30, 2006 versus $13.6 million for the comparable period in June 30, 2005. Days sales outstanding for the period ended June 30, 2006 showed over a 15 day
improvement versus the same period ended June 30, 2005.

For the three month period ended June 30, 2006, operating activities provided $9.1
million of operating cash flow, which is principally from income tax refunds associated with the filing of amended returns for prior years, as well as improvements in the rate of cash collections which mitigated the increase in accounts receivable
from the 6% sequential growth in revenue from the first quarter 2006. Excluding the impact of the income tax receivable, the Company generated $0.3 million of operational cash flow during the three months ended June 30, 2006. Also during the
three month period ended June 30, 2006, the Company experienced a $2.3 million increase in average monthly cash collections to $27.4 million versus $25.1 million for the three month period ended March 31, 2006. While cash collections have
increased during the year, our cash balance declined approximately $4.3 million from December 31, 2005. This decrease is primarily due to the $9.0 million of interest payments made in connection with the Companys outstanding debt
obligations as discussed below.

Investing activities used cash of $10.9 million in the six month period ended June 30, 2006 compared to $302.3
million for the six months ended June 30, 2005. Cash used by the predecessors investing activities in 2005 reflects payments made to the selling shareholders in connection with the Acquisition. The proceeds from income tax refunds
received in the six month period ended June 30, 2006 were disbursed to the former owners as required by the purchase agreement. Capital expenditures were $2.1 million for the six month period ended June 30, 2006 versus $1.5 million for the
comparable period in 2005. The $296 million of payments in connection with business acquisition includes payments for intangibles offset by deferral of debt issue costs and payables to former owners.



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Financing activities for the six months ended June 30, 2006 provided no cash compared to $328.8 million in the six
months ended June 30, 2005. Cash provided in 2005 was from borrowings on the revolving credit facility and proceeds from long-term debt during the six months then ended, as well as cash capital contributions from the parent company, partially
offset by the repayment of the debt.

In connection with the Acquisition on March 31, 2005, the Company entered into a senior secured revolving credit
facility. The senior secured revolving credit facility consists of a $40 million revolving loan, subject to a borrowing base test. Based on the covenant levels under the senior secured revolving credit facility, the Company had, as of June 30,
2006, $15.2 million of available borrowing capacity under the revolving credit facility and had no additional borrowings on its revolving line of credit during the six month period then ended.

The senior secured revolving credit facility is guaranteed by the parent, and secured by a first priority lien on substantially all of the Companys and the
parents current and future assets, including all of the capital stock of MSC. Concurrent with the senior secured revolving credit facility, the Company entered into a $175.0 million senior secured term loan facility in order to finance a
portion of the purchase price for the Acquisition and the related transaction fees and expenses.

On May 12, 2005, our parent issued $38.7 million
principal amount at maturity of 13.50% senior discount notes (the senior discount notes) and contributed $28.9 million of net proceeds from the offering, to the Company. We used that contribution, together with approximately $1.3 million
in borrowings under the senior secured revolving credit facility, to refinance $30.0 million in indebtedness under our senior secured term loan facility and to pay fees and expenses in connection with the senior discount notes offering.

On June 21, 2005, the Company issued senior secured floating rate notes due 2011 in the principal amount of $150.0 million with net proceeds of $148.5 million.
The Company used the net proceeds together with additional borrowings under its senior secured revolving credit facility to repay the remaining indebtedness under its senior secured term loan facility and to pay fees and expenses in connection with
such offering.

The Company believes that, based on current levels of operations and anticipated growth, cash from operations, together with other
available sources of liquidity, including borrowings available under its senior secured revolving credit facility, will be sufficient to fund its operations, anticipated capital expenditures and required payments on its debt for at least the next 12
months. In connection with its borrowings, the Company made interest payments totaling $9 million in the six month period ended June 30, 2006. Its available sources of liquidity are dependent upon its future operating performance, which, in
turn, is subject to factors beyond its control, including the conditions of the workers compensation industry. Effective June 22, 2006, the exchange offer specified in our Registration Statement on Form S-4 amended as of May 17, 2006
closed and was considered consummated per the terms of the Companys debt agreement.



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The Company cannot assure that its business will generate cash from operations, or that it will be able to obtain
financing from other sources, sufficient to satisfy its debt service or other requirements.

As of June 30, 2006, the
Company was compliant with all debt covenants.

Critical Accounting Estimates and Policies

There has been no change in the Companys Critical Accounting Estimates and Policies, as disclosed in the Registration Statement on Form S-4 amended May 17,
2006.

Item 3  Quantitative and Qualitative Disclosures About Market Risk

Due to the significant amount of indebtedness
that we have incurred in connection with the Transactions, we are exposed to interest rate risk. Pursuant to the terms of our senior secured revolving credit facility, we are required to enter into interest rate swap contracts such that at least 50%
of all of our and our parents indebtedness is subject to fixed interest rate protection. Based on our current hedging positions, under which we have secured a fixed rate for over 50% of our indebtedness, and outstanding debt at June 30,
2006, a 1% increase in interest rates would result in an increase in interest expense of $0.4 million.

Item 4  Controls and Procedures

Not applicable

Part II  Other Information

Item 1  Legal Proceedings

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

Item 1A  Risk Factors

There has been no material change in factors that may affect future results as
detailed in the Companys Registration Statement on Form S-4 amended May 17, 2006 under the heading Risk Factors.

Item 2  Unregistered Sales of Equity Securities and Use of Proceeds

None

Item 3  Defaults upon Senior Securities

None

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

None



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Item 5  Other information

None

Item 6. Exhibits

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



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SIGNATURES

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



|                      |  |                              |  |                                             
|--------------------- |  | ---------------------------- |  | --------------------------------------------
|                      |  | MSCMedical Services Company
|                      |  |                             
|Date: August 14, 2006 |  | By:                          |  | /s/ JOSEPH P. DELANEY                       
|                      |  |                              |  | Joseph P. Delaney                           
|                      |  |                              |  | President and Chief Executive Officer       
|                      |  |                              |  | (principal executive officer)               
|                      |  |                             
|Date: August 14, 2006 |  | By:                          |  | /s/ Gary S. Jensen                          
|                      |  |                              |  | Gary S. Jensen, Chief Financial Officer     
|                      |  |                              |  | (principal financial and accounting officer)



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