Forward-Looking Statements

Historical results and trends should not be taken as indicative of future operations. Managements statements contained in this report that are not historical facts are forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934 (the Exchange Act), as amended. Actual results may differ materially from those included in the forward-looking statements. The Company intends such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and is including this statement for purposes of complying with those safe-harbor provisions. Forward-looking statements, which are based on certain assumptions and describe future plans, strategies and expectations of the Company, are generally identifiable by use of the words believe, expect, intend, anticipate, estimate, project,

prospects, or similar expressions. The Companys ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse affect on the operations and future prospects of the Company on a consolidated basis include, but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, significant restructuring activities in calendar 2004 and thereafter, and generally accepted accounting principles. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. Further information concerning the Company and its business, including additional factors that could materially affect the Companys financial results, is included herein and in the Companys other filings with the SEC.

We currently have four operating pharmacies. Our first pharmacy was opened on October 13, 2003 in Orange County, California in the city of Santa Ana. On June 10, 2004, we opened our second pharmacy location in Riverside, California. We opened our third pharmacy in Kirkland, Washington on August 11, 2004. Our fourth pharmacy was opened in Portland, Oregon on September 21, 2004.

We originally planned to establish nine operating pharmacies by December 31, 2004. We announced in our quarterly report for the three months ended September 30, 2004 that we were suspending the development of new pharmacies for a period of sixty to ninety days in order to evaluate and potentially improve the operations of our four existing pharmacies. It was the belief of our board of directors and executive management that all four stores were not operating at their full potential. This basis for this belief was primarily the reluctance of physicians to adopt our technology for electronically transmitting prescriptions and our failure to implement a successful marketing strategy to attract business. Since this announcement, management postponed activity related to the development of new locations. At the present time and following this period of evaluation, our management decided not to close any of our existing pharmacy locations. We are hopeful that we will resume the development of new pharmacies in the third or fourth quarter of 2005.

The catalyst for the decision to suspend the development of new pharmacies was substantially attributable to a lack of sufficient cash to fund the expenses associated with the development of new pharmacies. We have incurred significant expenditures in connection with purchases of inventory for our existing pharmacies. As sales increased, a time gap developed between inventory replenishing and accounts receivable. Nearly all of our pharmacy sales are to customers whose medications were covered by health benefit plans and other third party payors. As a result, we typically do not receive cash for our sales at the time of transactions and are dependent on health benefit plans to pay for all or a portion of our customers prescription purchases. There is a significant delay from the time of a customers purchase of medication to the time when we receive payment for the customers purchase from a health benefit plan or other third party payor.

Management evaluated various alternatives available to us as it related to financing future inventory purchases in the early stages of our planned principal operations. Our management was successful in securing financing for inventory purposes on an interim basis. On or about December 21, 2004, we received a loan evidenced by a promissory note from Robert James, Inc., a company under the control of our current CEO Mr. Robert DelVecchio, for the purpose of purchasing inventory for our pharmacies. The promissory note was for a maximum of $150,000 and matured on the earlier of March 6, 2005 or the date that we were able to consummate an accounts receivable factoring arrangement for our working capital. The outstanding principal amount of this promissory note bears interest at three percent (3%) per month. In consideration for this promissory note, we agreed to pay the lender an administrative fee of $1,500 and a financing fee of $2,100. In addition to these fees, we agreed to pay the lender by the fifth day of every month from January 2005 until the principal amount is repaid an administrative fee of

$1,875 and a financing fee of $2,675. We paid the loan evidenced by the promissory note from Robert James, Inc. in full on February 21, 2005.

On February 23, 2005, we entered into an accounts receivable servicing agreement and line of credit agreement with Mosaic Financial Services, LLC. These agreements allow us to successfully secure financing for inventory purchases over an extended period of time. Under the terms of the line of credit agreement, we can draw a maximum of $500,000 to purchase inventory. Beginning July 1, 2005, the maximum amount of the available line of credit will be increased to $700,000. These agreements are for a term of one year and shall automatically renew for another one year period unless either party provides notice to the other of termination within 180 days prior to the end of the effective term.

Following our period of evaluation, management cited our previous marketing practice as an area for improvement. Our prior marketing strategy consisted exclusively of making sales calls in person at physicians offices to secure business. In 2005, management has now successfully implemented a new marketing strategy that dramatically expands our efforts to attract business. Our current marketing strategy is targeted to physicians, new customers, and existing customers. With respect to new customers, we are offering a $10.00 coupon to be applied toward the customers first prescription filled at any of our pharmacies and a $5.00 gift card at any Starbucks location. With respect to our current customers, we commenced a promotion through direct mailing. We are offering our current customers a $10.00 coupon to be applied toward the purchase of prescription drugs for any prescription that is transferred to one of our pharmacies. In addition, we will hold a monthly drawing at each pharmacy for those customers that transferred a prescription and the winner will receive a $150.00 gift card. We have also recently commenced a direct mailing campaign to physicians informing them of our pharmacy operations. In an attempt to build more name recognition, we have created brochures and posters that are available in physicians waiting rooms.

Our new marketing strategy set forth above has in a short time period produced a significant increase in business. Prior to our new marketing strategy and for the three month period ended December 31, 2004, our four pharmacies filled an average of 254 prescriptions per week. From the beginning of the current fiscal year through March 31, 2005, our four pharmacies filled an average of 346 prescriptions per week. This represents an increase in the average prescriptions filled per week at our four pharmacies of approximately 36%.

Additionally, our two pharmacy locations in California have experienced difficulty participating in Californias Medicaid program, known as Medi-Cal. Medicaid is a federal/state program that provides health coverage, including prescription drug coverage to the needy. Each states Medicaid program is different, and some states impose limitations on the pharmacies that may serve the Medicaid population. In order to participate in Medicaid programs, each pharmacy must enroll as a participating supplier. The application process required to enroll as a participating supplier in Medi-Cal is onerous. We submitted our application and have not received any response at the present time. Under California law, applicants are assigned a temporary contract number if no response is received for a six month period after an application has been submitted. The receipt of a temporary contract number allows applicant to bill for services rendered until such time that their application is denied or they are assigned a permanent contract number. During the application process and until such time that we are assigned a temporary contract number, our two pharmacies in California are unable to fill prescriptions for customers who obtain health coverage through Medi-Cal because our pharmacies are not sanctioned as a participating pharmacy. We anticipate that we will have a decision on our application some time prior to August 31, 2005 and/or receive a temporary contract number by June 30, 2005.

The Medicaid program is administered and all benefits are processed by CalOptima specifically in Orange County, California. All applications to participate in the Medicaid programs for pharmacies located in Orange County are processed by CalOptima. CalOptima placed a moratorium on additional pharmacies enrolling as a supplier of prescription drugs in Orange County approximately three years ago in 2002 and this moratorium remains in effect. As a result, our location in Santa Ana, California is unable to participate as a supplier of prescription drugs to potential customers who rely on health coverage through Medicaid.

Approval to participate as a supplier to Medi-Cal would increase the customer base at our California pharmacy locations; however, there can be no assurance that our pharmacies will be able to obtain the necessary approvals to participate in Californias Medicaid program. The failure to obtain the mandatory approval could have a material adverse financial impact on our financial results.

Our management is evaluating the possibility of acquiring a pharmacy that has a current billing relationship with Medi-Cal and Cal-Optima. Such an acquisition would enable our pharmacies to participate as a supplier of prescription drugs to patients receiving benefits through Medi-Cal and Cal-Optima. We have not entered into any formal discussions and can provide no assurance that we will be successful in acquiring a pharmacy with a current billing relationship with Medi-Cal and Cal-Optima.

Similarly, some third party payors such as Health Net in California have also placed a moratorium on additional pharmacies which they will sanction as a supplier of medication to participants enrolled in the health benefit plans that they administer. The failure of government plans and other third party payors to approve additional pharmacies as suppliers of medication to participants enrolled in their health benefit plans could have a material adverse financial impact on us, and our operations.

To further strengthen our corporate infrastructure to support our existing management with their efforts to evaluate and improve our operations, management established an advisory board to consult with us on various issues relating to operating pharmacies and the implementation of our business plan. Management has contracted with sales personnel to secure agreements with physicians, technology specialists to insure the continued operation and viability of our technology, and pharmacists to insure the proper internal controls are implemented and followed in each pharmacy. In addition, management has also established methods, policies, and procedures to be implemented at each pharmacy that are designed to maximize efficiency. Management expects to hire a Chief Operating Officer and additional personnel over the next six months as needed to continue to strengthen the corporate infrastructure.

Over the next twelve months management will continuously evaluate our business plan including assessing the technology we utilize. Our business plan calls for us to continually assess the technology we utilize and improve our efficiency. We must continuously evaluate and implement the most user-friendly technology. We retained two consultants for the purpose of assessing and improving the efficiency of our technology at an anticipated cost of approximately of $200,000 annually.

Management will also consider taking actions designed to mitigate any risks associated with our business plan.

Results of Operations for the Year Ended December 2004 and November 2003

On the cash basis of accounting, our total revenue reported for the year ended December 31, 2004 was $1,164,568, $1,038 for the year ended November 30, 2003, and $7,982 for the one month transition period ended December 31, 2003. As of November 30, 2003 and December 31, 2003, we had established our first pharmacy. During the year ended December 31, 2004, we established three additional pharmacies

and had established a total of four pharmacies by the end of the fiscal year. For this reason, our revenue ability to generate revenue dramatically increased.

We are in the process of monitoring our revenues and are creating several criteria in developing a historical trend analysis based on actual claims paid in order to estimate potential contractual allowances on a monthly basis. Given that we are considered to be in the startup stage and lack sufficient operational history, we are unable to determine the fixed settlement of our revenue. Therefore, we are recognizing revenue on a cash basis until such time as management has developed the history and trends to estimate potential contractual adjustments. On an accrual basis, we would have recorded additional revenue of approximately $221,000 for the year ended December 31, 2004. As we undertake our plan of operations, we anticipate that our revenues will significantly increase.

The total cost of sales for the year ended December 31, 2004 was $1,411,163, $12,784 for the year ended November 30, 2003, and $26,267 for the one month transition period ended December 31, 2003. The cost of sales consists primarily of the pharmaceuticals. As of November 30, 2003 and December 31, 2003, we had established our first pharmacy. During the year ended December 31, 2004, we established three additional pharmacies and had established a total of four pharmacies by the end of the fiscal year. Purchasing and replenishing our inventory supply for an increased number of pharmacies over the prior fiscal year resulting in a significant increase in our total cost of sales.

We incurred total operating expenses of $8,197,168 for the year ended December 31, 2004, $1,402,262 for the year ended November 30, 2003, and $740,050 for the one month transition period ended December 31, 2003. Our operating expenses for the year ended December 31, 2004 consisted of salaries and related expenses of $1,401,017, consulting and other compensation of $2,253,848, selling, general and administrative expenses of $1,564,855, and $2,977,448 for the impairment of an intangible asset. Our operating expenses for the year ended November 30, 2003 consisted of salaries and related expenses of $314,650, consulting and other compensation of $805,455, and selling, general and administrative expenses of $282,157. For the one month transition period ended December 31, 2003, our operating expenses consisted of salaries and related expenses of $595,922, consulting and other compensation of $80,526, selling, general and administrative expenses of $63,602.

Our operating expenses incurred during the year ended December 31, 2004 were exclusively attributable to establishing our corporate infrastructure and establishing additional pharmacies. During the year ended December 31, 2004, we established three additional pharmacies and had established a total of four pharmacies by the end of the fiscal year. In the first quarter of 2004, we expensed $2,977,448 for the impairment of a license. For these reasons, our operating expenses dramatically increased in the year ended December 31, 2004 when compared to the prior year.

Our net loss for the year ended December 31, 2004 was $8,011,287 and the loss for the year ended November 30, 2003 was $1,458,995 with additional losses of $751,748 for the one month transition period ended December 31, 2003. We previously projected that each store would be cash flow positive by the ninth month of operation; however, none of our operating pharmacies currently is or ever has been cash flow positive. Increased net losses in 2004 as compared to the prior fiscal year is primarily attributable to the impairment of a license and significant expenditures related to establishing additional pharmacies in the absence of a successfully marketing strategy to generate revenue.

Our basic and diluted loss per common share for the year ended December 31, 2004 was $(0.18), $(0.06) for the year ended November 30, 2003, and $(0.02) for the one month transition period ended December 31, 2003.

Assets

As of December 31, 2004, we had total assets of $1,019,340. As of December 31, 2004, our current assets consisted of cash of $86,325, inventory of $158,009, and $34,812 in prepaid expenses and other assets. Property and equipment, net of accumulated depreciation was $740,194.

Inventory increased by $117,109, or 286%, from the transition period ended December 31, 2003 due to the increase in sales. In addition to replenishing depleted inventory, additional inventory may be required to meet the needs of an increasing number of physicians.

Property and equipment increased by $677,928, or 924%, from the transition period ended December 31, 2003. The increase in property and equipment is attributed to the build out of new pharmacies which required computer systems, furniture and fixtures, and leasehold improvements.

Liabilities and Stockholders Deficit

Our total liabilities as of December 31, 2004 were $2,264,157. Our liabilities consisted of current liabilities of $1,894,157 and long term portion of notes payable of $370,000. The notes payable consist of a note payable to our former chief executive officer in the amount of $370,000 respectively. The current portion of the notes payable to RTIN, recorded in the current liabilities section of the consolidated balance sheet, amounts to $1,013,465.

Accounts payable and accrued liabilities increased by $718,651 from December 31, 2003. This increase is primarily attributable to the new pharmacies opened and the build out of our corporate infrastructure.

Our operations were primarily funded through equity financings. Stockholders deficit was $1,938,225 as of December 31, 2004.

Liquidity and Capital Resources

As of December 31, 2004, we maintained $86,325 in cash which primarily resulted from funds raised in the private offering of common stock and receivables financing. This cash was used, among other things, to fund additional working capital needs, support the establishment of our corporate infrastructure, and to pay for additional purchases of inventory.

As of September 30, 2004, we maintained $150,000 in restricted cash. This restricted cash was set aside to be used exclusively to satisfy our obligations under leases that were personally guaranteed by an officer of our Company in the event that we are unable to pay rent at these locations from our daily operating account. We no longer maintain any restricted cash because we terminated the leases which were personally guaranteed by an officer of our Company.

During the fiscal year ended December 31, 2004, net cash used in operating activities was $3,432,266, net cash used in investing activity was $719,872, and net cash provide by financing activities was $3,528,021.

During the fourth quarter of fiscal 2004, our management anticipated that the current cash on hand was sufficient for us to operate our four existing pharmacies at the current level until December 31, 2004. Following a period of evaluation and restructuring, our management has taken aggressive steps to reduce our operating costs. During the last ninety days, we closed our regional office located in Ft. Worth, Texas. In January 2005, we relocated our corporate headquarters to a new location. We reduced our staff from

nineteen full time employees in December 2004 to fourteen at the present time. We also reduced expenses by suspending the development of new pharmacies and terminating certain leases. The cost reducing actions set forth above are estimated to reduce our operating expenses on an annual basis by approximately $1,024,000. The breakdown of these projected cost reductions is as follows:

 Costs Reducing Action                                       Annualized Savings
 Closure of the Ft. Worth Regional Office                        $ 139,295
 Relocation of corporate headquarters                               85,200
 Reduction in full time employees                                  567,508
 Reduced expense by suspending development of new pharmacies       232,016
 Total Cost Savings on an Annualized Basis                       1,024,019

Our operations since December 31, 2004 have been primarily funded through debt financings. In addition to the agreements entered into for the purpose of financing inventory purchases, we have entered into several loan and security agreements to fund our operations. The following table summarizes those other loan and security agreements we have entered into since December 31, 2004:

  Lender                Execution Date  Amount  Annual Interest Rate Maturity Date
  TAPG LLC                 1/27/05     $270,000          3%             1/14/06
  VVPH                      2/4/05     $50,000           3%            5/8/05 *
  Steven Rosner            2/10/05     $50,000           3%            5/8/05 *
  Steven Rosner            2/16/05     $90,000           3%            5/8/05 *
  Weil Consulting Corp.    3/11/05     $50,000          7.5%            5/11/05

* The maturity dates on the promissory notes entered into with VVPH and Steven Rosner are the earlier of May 8, 2005 or such date that we consummate an accounts receivable factoring arrangement. On February 21, 2005, we consummated an accounts receivable factoring arrangement with Mosaic Financial services,
LLC. As a result, the loans from VVPH and Steven Rosner have matured. We are currently negotiating the conversion of this debt into equity with VVPH and Steven Rosner.

The underlying drivers that resulted in material changes and the specific inflows and outflows of cash in calendar 2004 are as follows:

a. Expenses such as salaries, rents, legal fees, selling and administrative costs were necessary to fund our on-going business and pursue expanding doctor enrollments to increase revenue. Legal and administrative expenses resulted from expenditures to establish the business and to maintain compliance with government reporting requirements. Selling and administrative expenses have been reduced via work force reductions and expenditures associated with establishing the enterprise are non-recurring.

b. A significant breach by a licensor severely impaired our ability to operate under the original license agreement, which resulted in a material impairment of an intangible asset.

c. Our inventory level increased with the addition of two pharmacies. We continually track inventory usage and adjust inventory levels to market requirements.

d. Increases in accounts payable are the result of expenses and fees associated with establishing existing business and two new pharmacies in the Northwest.

e. We obtained the necessary funding from the issuance of common stock. Our management believes that additional issuance of stock and/or debt financing will be required to provide us with working capital and a positive cash flow in 2005.

We intend to fund operations through increased sales and debt and/or equity financing arrangements, which may be insufficient to fund our capital expenditures, working capital, or other cash requirements for the year ending December 31, 2005. We have commenced a private equity offering in an attempt to secure funding for our operations. There can be no assurance that we will be successful in raising additional funding. If we are not able to secure additional funding, the implementation of our business plan will be impaired. There can be no assurance that such additional financing will be available to us on acceptable terms or at all.

Off Balance Sheet Arrangements

As of December 31, 2004, there were no off balance sheet arrangements. Please refer to the Commitment and Contingency footnote to the Companys consolidated financial statements included elsewhere herein.

Going Concern

The accompanying consolidated financial statements have been prepared assuming we will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business. As of December 31, 2004, we had an accumulated deficit of approximately $10.5 million, largely due the expansion of the pharmacies and the establishment of a regional corporate office in Fort Worth, Texas, which is now closed.

We intend to fund operations for the year ending December 31, 2005 through increased sales and debt and/or equity financing arrangements. Thereafter, we may be required to seek additional funds to finance long-term operations. The successful outcome of future financing activities cannot be determined at this time and there is no assurance that if achieved, we will have sufficient funds to execute our intended business plan or generate positive operating results.

These factors, among others, raise substantial doubt about our ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments related to recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result should we be unable to continue as a going concern.

In response to these problems, management in coordination with our board of directors has taken the following actions:

· We suspended the development of new pharmacies for a period in order to evaluate the potential in existing pharmacies and, where needed, restructure current operations.

· We are aggressively signing up new physicians.

· We implemented a new marketing strategy to attract business.

We are seeking investment capital through the public markets.

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