Overview

During 2008, we shifted our focus from the electronic medical claims processing, funding and collection solutions and began focusing our efforts on purchasing leases for digital medical equipment and services that provide a low cost solution to physicians for converting medical records to a digital format as well as being able to create EMR with original intake forms. The Company will also begin selling the digital medical equipment leases directly to the healthcare facilities as part of our licensing arrangement with the outside vendor that we are currently purchasing the leases from. To date we have not sold any digital medical equipment; however since December 2008, we have financed six leases of such equipment and will derive approximately $410,000 in revenue from such financing activities over 36 to 48 month periods. The digital pen and associated services can improve billing time and accuracy and allows for substantial savings on paper and record storage.

We also can provide term loans and purchase medical equipment to improve our client's cash flows and to finance certain leases.

Through March 31, 2009, all of our revenue has been derived from our prior line of business, the electronic medical claims processing, funding and collection solution business. From the Company's inception, we offered a comprehensive technology-based selection of electronic medical claims processing, funding and collection solutions to the healthcare provider industry through an internet web browser. Our services helped doctors, hospital based practices, and other healthcare providers and their vendors to significantly improve daily insurance claims transaction administration and management. This part of our business was not deemed viable any longer and was closed down on February 27, 2009.

Our future operations will continue to be subject to risks inherent in the establishing and acquiring of new businesses, including, among other things, efficiently deploying our capital, developing our product and services offerings, developing and implementing our marketing campaigns and strategies and developing awareness and acceptance of our products. Our ability to generate future revenue will be dependent on a number of factors, many of which are beyond our control, including the pricing of other services, overall demand for our products, market competition and government regulation.

Critical Accounting Policies

The discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

We apply the Securities and Exchange Commission's Staff Accounting Bulletin 104 for revenue recognition. In general, we record revenue when persuasive evidence of an arrangement exists, services have been rendered or product delivery has occurred, the sales price to the customer is fixed or determinable, and collectibility is reasonably assured. We have identified the policy below as critical to our business operations and understanding of our financial results:

Through February 2009, the Company, through its subsidiaries, provided advance funding for medical claims and term loan services to unaffiliated healthcare providers that were customers of the Company. The customer advances were typically collateralized by Security Agreements granting first position liens on the medical claims submitted by its customers to third party payers (the ''Payers''). The advances were repaid through the remittance of payments of customer medical claims, by Payers, directly to the Company. The Company could withhold from these advances interest, an administrative fee and other charges as well as any amount for prior advances that remain unpaid after a specified number of days. These interest charges, administrative fees and other charges were recognized as revenue when earned. There was no right of cancellation or refund provisions in these arrangements and the Company had no further obligations once the services are rendered.

The Company, through its subsidiaries, also provided notes and claims purchasing for medical claims to unaffiliated healthcare providers that are customers of the Company. The customer advances were repaid through the remittance of payments of customer medical claims, by Payers. The Company could charge interest, an administrative fee and other charges as well as any amount for prior advances that remain unpaid after a specified number of days. These interest charges, administrative fees and other charges were recognized as revenue when earned. There was no right of cancellation or refund provisions in these arrangements and the Company had no further obligations once the services are rendered.

The Company, through its subsidiaries, now provides purchasing medical equipment and software leases from an unaffiliated healthcare customer. The customer assigns the rights to these leases and the Company is repaid directly from the monthly lease payments from the lessees. The Company can receive interest, an administrative fee and other charges. These interest charges, administrative fees and other charges are recognized as revenue when earned. Under certain circumstances, there are warranties and refund provisions in these arrangements and the agreements are non-cancellable without our consent.

Revenue derived from fees related to billing and collection services were generally recognized when the customer's accounts receivable are collected.

Revenue from implementation fees were generally recognized over the term of the customer's agreement. Revenue derived from maintenance, administrative and support fees were generally recognized at the time the services are provided to the customer.

Results of Operations

For the Three Months Ended March 31, 2009 Versus the Three Months Ended March 31, 2008

Revenue

For the three months ended March 31, 2009, we recorded total revenue of $161,643. Of this total, we recorded service fee revenue of $78,944, accounting for 48.8% of total revenue, and financing income of $82,699, accounting for 51.2% of total revenue. For the three months ended March 31, 2008, we recorded total revenue of $203,461. Of this total, we recorded service fee revenue of $162,242, accounting for 79.7% of total revenue and financing income of $41,219, accounting for 20.3% of total revenue. The decrease in revenue from 2008 resulted primarily from the closing down of our advance funding and claims processing, billing and collecting business.

Operating Expenses

For the three months ended March 31, 2009, total operating expenses were $1,092,427 as compared to $1,423,161 for the three months ended March 31, 2008, a decrease of $330,734 or 23.2%. Included in this decrease for the three months ended March 31, 2009 is the following:

1. We recorded compensation expense of $542,784 as compared to $902,102 for the three months ended March 31, 2008. This $359,318 or 39.8% decrease was primarily attributable to lower salaries due to fewer employees needed for the digital pen business, amortization of stock options of $77,477 and executive bonuses of $13,750 paid during the three months ended March 31, 2009 versus amortization of stock option of $381,505 and executive bonuses of $55,000 during the three months ended March 31, 2008; and

2. Consulting expense amounted to $95,025 as compared to $65,481 for the three months ended March 31, 2008, an increase of $29,544, or 45.1%. This increase resulted from the addition of an outside business development consultant; and

3. Professional fees amounted to $130,957 as compared to $164,688 for the three months ended March 31, 2008, a decrease of $33,731, or 20.5%. This expense was attributable to a decrease in legal fees related to SEC filings and Series B Convertible Preferred Stock offerings; and

4. Selling, general and administrative expenses were $323,661 as compared to $290,890 for the three months ended March 31, 2008, an increase of $32,771, or 11.3%. This increase resulted from an information technology expense adjustment that lowered expenses in the prior year.

For the three months ended March 31, 2009 and 2008, selling, general and administrative expenses consisted of the following:

                                            March 31,      March 31,
                                               2009           2008
Employee benefits and payroll taxes            116,293        111,625
Information technology                          56,378            153
Occupancy and office expenses                   41,274         46,709
Other selling, general and administrative      109,716        132,403
                                            $  323,661     $  290,890

Other Income (Expenses)

For the three months ended March 31, 2009, interest income was $24,263 as compared to $1,924 for the three months ended March 31, 2008, an increase of $22,339. This increase was principally due to larger cash balances invested in 2009.

For the three months ended March 31, 2009, interest expense was $375,076 as compared to $532,557 for the three months ended March 31, 2008, a decrease of $157,481. This decrease was primarily due to lower non-cash interest amortization of debt discount in connection with our notes payable.

Net Loss

We reported a net loss of $1,281,597 for the three months ended March 31, 2009 as compared to net loss of $1,750,184 for the three months ended March 31, 2008. The loss per share was $.09 for the three months ended March 31, 2009 as compared to a per share loss of $.14 for three months ended March 31, 2008.

Liquidity and Capital Resources

We used the proceeds from the sales of preferred stock through March 31, 2009 and proceeds from notes and loans payable for working capital purposes and to fund our notes receivable of $1,418,717 and accounts receivable of $397,816 owed to us at March 31, 2009. We will continue to advance funds under note agreements to providers that subscribe to our financial services lending solutions.

On April 20, 2009, we, along with our subsidiary Xeni Financial Services, Corp. ("XFS"), entered into a Loan and Securities Purchase Agreement (the "Loan Agreement") with Vicis Capital Master Fund ("Vicis"), dated April 15, 2009 pursuant to which Vicis loaned the Company $3,200,000, less a deduction for an original issue discount of 2%. The proceeds from the loan from Vicis are being used for our corporate operations.

Pursuant to the Loan Agreement, we issued a Senior Secured Promissory Note, dated April 15, 2009, to Vicis in the original principal amount of $3,851,374 (the "Vicis Note") comprised of the current loan of $3,200,000, and prior advances, accrued interest, and professional and other fees of $651,375 relative to prior loans and commitments. The Vicis Note bears interest at the rate of 13% per annum and is payable monthly, in arrears on the first day of each month, commencing on October 15, 2009. Principal payments in the monthly amount of $40,000 commence on October 15, 2009 and, subject to events of default specified in the Loan Agreement, the entire amount of principal and accrued but unpaid interest due under the note becomes due and payable on October 15, 2011.

We believe we have sufficient funds and prospective business activity to conduct our business and operations as they are currently undertaken for the next 12 months.

We currently have no material commitments for capital expenditures.

Cash flows

At March 31, 2009, we had cash of $297,125. On April 21, 2009, we received cash of approximately $3,100,000, in connection with a loan from Vicis. The cash proceeds are being used for our corporate operations.

Net cash used in operating activities was $926,682 for the three months ended March 31, 2009 as compared to $583,605 for the three months ended March 31, 2008, an increase of $343,077. This increase is primarily attributable to a decrease in the net loss and the following:

1. Gottbetter and Vicis debt offering costs of $84,408 and debt discount costs of $279,096, as compared to debt related costs during the three months ended March 31, 2008 of $492,458;

2. Stock-based compensation of $77,477 versus stock-based compensation expense of $381,505 for the three months ended March 31, 2008;

3. A net increase in notes receivable, accounts receivable, leases receivable, and prepaid expenses aggregating $275,431 principally related to the increases in leases receivables;

4. A net decrease in accounts payable and accrued expenses related to an increase in operating activities aggregating $177,834.

Net cash provided by financing activities was $0 for the three months ended March 31, 2009 as compared to net cash provided by financing activities of $7,191,284 for the three months ended March 31, 2008 due to the proceeds from the sale of Series B preferred stock in 2008.

Off Balance Sheet Arrangements

We had no off balance sheet arrangements as of March 31, 2009.