March 9, 2007 Dear Valued Shareholders, Company Supporters and Friends: With 2007 now firmly underway, PainCare remains focused on accomplishing a number of key objectives critical to the long-term success of our Company.  Moreover, management is methodically and diligently working our way through a complex series of initiatives that, collectively, should help to reinforce our current operating platform and position PainCare for potentially profound expansion in the years ahead.  But this requires, to some degree, patience and fortitude on all our behalves to ensure that missteps are avoided and positive growth momentum is achieved and maintained.

Despite the many challenges our Company has faced and overcome to a large extent over the past 14 months, one thing remains abundantly clear – PainCare is here to stay.  We have indeed established a foundation capable of supporting aggressive, enduring growth and have committed to executing strategies to successfully leverage our Company’s noted leadership in the field of pain through 2007 and well beyond.

As more fully described in news announcements released over the past several months, PainCare’s management team is taking steps to restructure the Company’s balance sheet with the intent of eliminating or materially reducing our debt obligations and strengthening our cash resources to fund both organic and strategic growth initiatives.  To that end, we have elected to divest our ambulatory surgery centers located in Florida and Maryland – valuable assets that should yield a sizable cash infusion to PainCare upon their sale.  It is our belief that we will successfully conclude negotiations and complete the ASC sales within the next several months, assuming that our negotiations continue to progress favorably, as expected. 

PainCare also continues to host discussions with leading financial restructuring experts and world-class financial institutions to empower management with the best possible information and guidance necessary to execute an overall restructuring plan capable of achieving maximum benefits.  With a near-term goal of launching the first and only managed services organization offering a multidisciplinary healthcare network focused on pain management, it is imperative that we attack this opportunity from a position of strength – one defined by solid financial resources and a sound and profitable core base of operation. 

PainCare is dedicated to achieving strong organic growth in its existing network of affiliated physician practices through strategic expansion programs suited to each practice.  Realizing and maintaining steady, upward growth momentum in each of our practices is essential to our plan; this can only be realized if PainCare remains finely attuned and attentive to the prevailing dynamics of the pain industry and the leadership role our practices will play in its evolution and advancement.   Through expansion of staff physicians and/or improved medical diagnostic capabilities, PainCare believes it can aid its individual practices in achieving much greater levels of efficiency and profit potential than currently being realized.  In this regard, we have adopted a much more hands-on approach to managing our affiliated practices and are implementing new programs designed to provide our shareholder physicians with enhanced financial incentives necessary to inspire and support accelerated, profitable growth.

At PainCare, we firmly believe that strong and transparent corporate governance is critical to building and maintaining public trust.  In this regard, we have made a point of adopting industry best practices in our public company corporate governance and board oversight, and will continue to identify ways to enhance and strengthen our corporate stewardship as PainCare evolves and prospers. 

These are just a few among many important initiatives and directives helping to refine the PainCare of today, and to define the PainCare of tomorrow.  On behalf of everyone at PainCare, I’d like to once again thank you for your support.  We greatly appreciate your continued patience as we take each vital step forward in our efforts to restore overall confidence in PainCare, its management team and our Company’s high-growth potential. 

We remain confident—and absolutely committed—to ensuring that our efforts will indeed deliver a company that is deserving of your respect, enthusiasm and long-term support.

Sincerely,

Randy Lubinsky
Chief Executive Officer
PainCare Holdings, Inc.