UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 2009
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: 333-107824
PATIENT PORTAL TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 02-0656132
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
8276 Willett Parkway
Baldwinsville, NY 13027
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(Address of principal executive offices) (Zip Code)
(315) 638-6708
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(Registrant's telephone number, including area code)
|
N/A
(Former name, former address and former fiscal year,
if changed since last report)
i
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, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer |_| Accelerated filer |_|
Non-accelerated filer |_| Smaller reporting company |X|
(Do not check if a smaller reporting company)
|
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.
As of March 31, 2009, there were 39,466,757 shares of common stock, $.001 par
value per share, outstanding.
ii
TABLE OF CONTENTS
Page No.
--------
PART I - Financial Information
Item 1. Condensed Consolidated Financial Statements 1
Item 2. Management's Discussion and Analysis of Financial 11
Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About
Market Risk 20
Item 4T. Controls and Procedures 20
PART II - Other Information
Item 1. Legal Proceedings 21
Item 4. Submission of Matters to a Vote of Security Holders 21
Item 6. Exhibits 21
Signatures 22
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iii
Part I. Financial Information
Item 1. Condensed Consolidated Financial Statements
PATIENT PORTAL TECHNOLOGIES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
(Unaudited)
June 30, December 31,
ASSETS 2009 2008
--------- ------------ -------------
Cash $ 695,989 $ 411,229
Accounts Receivable, net 1,890,805 2,046,836
Prepaids 144,353 54,919
Other 356,788 292,416
------------ -------------
TOTAL CURRENT ASSETS $ 3,087,934 $ 2,805,400
------------ -------------
Property, Plant & Equipment 4,219,711 4,355,532
Investments 1,475,000 1,475,000
Hospital Contracts, Net 7,370,908 7,692,452
Debt Issuance Costs 330,723 696,280
Note Receviable - -
------------ -------------
TOTAL ASSETS $ 16,484,276 $ 17,024,664
------------ -------------
LIABILITIES AND CAPITAL
-------------------------
Accounts Payable 2,571,557 $ 3,320,317
Current Portion - LTD / Leases 229,598 1,537,178
Accrued Expenses 1,013,304 1,336,675
Notes Payable - Current 265,000 1,065,000
------------ -------------
TOTAL CURRENT LIABILITIES $ 4,079,459 $ 7,259,170
------------ -------------
Long Term Debt, net of discount 3,196,186 3,584,413
Long Term Leases 234,198 298,259
------------ -------------
TOTAL LIABILITIES $ 7,509,842 $ 11,141,842
------------ -------------
STOCKHOLDER'S EQUITY
------------------------
Redeemable Preferred Stock , $.01 par value
authorized 1,000,000: 0 (June 30, 2009) and
88,333 (Dec 31, 2008) issued and outstanding - 883
Common Stock, $.001 par value, authorized
100,000,000: 45,005,757 (June 30, 2009) and
39,466,757 (Dec 31, 2008) issued and outstanding 45,005 39,467
Additional Paid in Capital 17,500,621 9,702,213
Additional Paid In Capital - Warrants - 913,043
Retained Deficit (8,571,192) (4,772,784)
------------ -------------
TOTAL STOCKHOLDER'S EQUITY $ 8,974,434 $ 5,882,822
------------ -------------
TOTAL LIABILITIES AND
STOCKHOLDER'S EQUITY $ 16,484,276 $ 17,024,664
------------ -------------
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See notes to the condensed consolidated financial statements
1
PATIENT PORTAL TECHNOLOGIES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
Restated Restated
June 30, June 30, June 30, June 30,
2009 2008 2009 2008
------------ ------------ ------------- ------------
Total Revenue $ 4,135,516 $ 4,495,470 $ 8,018,277 $ 8,753,406
Cost of Revenue 2,495,653 2,851,426 4,752,909 5,799,821
------------ ------------ ------------- ------------
Gross Profit $ 1,639,863 $ 1,644,044 $ 3,265,367 $ 2,953,586
Operating Expenses
Selling, General & Administrative 1,412,923 1,299,749 2,821,523 2,543,151
Depreciation and Amortization 358,569 353,594 729,465 714,003
------------ ------------ ------------- ------------
(Loss) from Continuing Operations $ (131,628) $ (9,300) $ (285,621) $ (303,568)
Interest Expense 375,918 463,933 875,354 900,690
------------ ------------ ------------- ------------
Income (Loss) Before Taxes (507,546) (473,233) (1,160,975) (1,204,258)
Income Tax Expense 14,391 - 14,391 -
------------ ------------ ------------- ------------
Net (Loss) from Continuing
Operations $ (521,937) $ (473,233) $ (1,175,366) $ (1,204,258)
Extraordinary Item - Restructuring
Charge 2,623,042 - 2,623,042 -
------------ ------------ ------------- ------------
Net Loss $ (3,144,979) $ (473,233) $ (3,798,409) $ (1,204,258)
------------ ------------ ------------- ------------
Net (Loss) Per Share $ (0.07) $ (0.01) $ (0.09) $ (0.03)
------------ ------------ ------------- ------------
Weighted Average Shares Outstanding 42,696,198 36,687,557 42,106,478 36,687,557
See notes to the condensed consolidated financial statements
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2
PATIENT PORTAL TECHNOLOGIES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED), SIX MONTHS ENDED
Restated
June 30, June 30,
2009 2008
------------ -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) $ (3,798,409) $ (1,204,258)
------------ -------------
Adjustments to reconcile net (loss) to net
cash used in operations:
Depreciation and amortization 729,465 714,003
Debt Discount and Loan Costs Amortization 2,785,156 449,360
(Increase) decrease in assets:
Accounts receivable 156,031 (729,355)
Other current assets 46,204 (63,392)
Increase (decrease) in liabilities:
Accounts payable (748,759) 405,434
Other current liabilities (78,121) (300,924)
Short Term Notes payable (800,000) (175,384)
------------ -------------
Total adjustments 2,089,975 299,742
------------ -------------
Net cash flows used in
operating activities (1,708,433) (904,516)
------------ -------------
CASH FLOWS INVESTING ACTIVITIES:
Purchase of property, plant and equipment (198,324) (422,508)
------------ -------------
Net cash used in investing activities (198,324) (422,508)
------------ -------------
CASH FLOWS FINANCING ACTIVITIES:
Deferred Loan Issuance Costs (330,723) -
Proceeds from stock issued 101,160 100,275
Proceeds from long-term debt and leases 2,500,000 1,086,464
Payments on long-term debt and leases (78,920) (229,815)
------------ -------------
Net cash flows provided by
financing activities 2,191,517 956,924
------------ -------------
NET (DECREASE) INCREASE IN CASH 284,760 (370,100)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 411,229 404,003
------------ -------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 695,989 $ 33,903
------------ -------------
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest, net $ 128,702 $ 451,330
------------ -------------
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See notes to the condensed consolidated financial statements
3
PATIENT PORTAL TECHNOLOGIES, INC.,
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Operations and Basis of Presentation - Patient Portal Technologies,
Inc. and its wholly owned subsidiaries (The "Company") are in two primary
businesses. First, the sale of televisions and associated equipment to hospital
facilities and second, providing non medical management and patient support
services assisting hospitals to improve patient satisfaction and outcomes. The
accompanying consolidated financial statements have been prepared in accordance
with accounting principles generally accepted in the United States of America.
Consolidation- The accompanying consolidated financial statements
include the accounts of Patient Portal Technologies, Inc. and its wholly owned
subsidiaries. All intercompany transactions and balances have been eliminated in
consolidation.
Financial Statement Preparation- The preparation of the consolidated
financial statements in conformity with accounting principles generally accepted
in the United States of America requires management to make estimates and
assumptions that affect the reported amounts and related disclosures. Actual
results may differ from those estimates.
Revenue Recognition- The Company recognizes revenue from the sales of
televisions when the product is received by the customer. Revenue for its other
management and patient centers services is recognized when the service is
rendered. Revenue from hospitals for equipment sales or other services is
recorded when the service is performed or the equipment sale is finalized
Income Taxes - Income taxes are not provided for in these financial
statements since the Company has a significant net operating loss carry-forward
from previous years and incurred a loss for the period.
Cash Equivalents- The Company considers all highly liquid debt
instruments purchased with an original maturity of three months or less to be
cash equivalents.
4
Cash Receivable - The Company performs ongoing credit evaluations of
its customers and adjusts credit limits based upon payment history and the
customer's current creditworthiness, as determined by review of their credit
information. The Company continuously monitors collections and payments from its
customers and maintains a provision for estimated credit losses based upon
historical experience and any specific customer collection issues that have been
identified. Credit losses have historically been within management's
expectations and the provisions established. The allowance for bad debts was
approximately $460,000 as of June 30, 2009.
Debt Issuance Costs - Cost incurred to issue debt are deferred and
amortized as interest expense over the term of the related debt.
Convertible Instrument Discount - Discounts associated with issuance of
debt are amortized over the term of the debt using the interest method.
Recent Accounting Pronouncements - In September 2006, the FASB issued
SFAS NO 157 "Fair Value Measurements" (SFAS 157) which provides guidance for
measuring assets and liabilities at fair value. SFAS 157 is effective for
financial statements issued for fiscal years beginning after November 15, 2007.
The adoption of SFAS 157 is not expected to have a material impact on the
Company's consolidated financial statements.
In December 2007, the FASB issued Statements of Financial Accounting
Standards NO. 141 (revised 2007), "Business Combinations" (FAS 141(R)) and No.
160, "Non-controlling Interests in Consolidated Financial Statements, an
amendment for ARB No. 41 (FAS 160)". FAS 141(R) will change how business
acquisitions are accounted for and FAS 160 will change the accounting and
reporting for minority interests, which will be characterized as non-controlling
interests and classified as a component of equity. FAS 141(R) and FAS 160 are
effective for fiscal years beginning on or after December 15, 2008 (January 1,
2009 for the Company). The adoption of FAS 141(R) and FAS 160 will not have a
material impact on the Company's consolidated financial statements.
Effective January 1, 2008, the Company adopted Statement of Financial
Accounting Standards No. 157, "Fair Value Measurements" (SFAS 157). SFAS 157
defines fair value, establishes a framework for measuring fair value in
accordance with generally accepted accounting principles and expands disclosures
about the fair value measurements. The adoption of SFAS 157 did not have a
material impact on the Company's financial condition and results of operations.
For additional information on the fair value of certain financial assets and
liabilities, see Note 8, "Fair Value Measurements".
Fair Value Option: In February 2007, the FASB issues SFAS No. 159, "The
Fair Value Option for Financial Assets and Financial Liabilities - including an
amendment of FASB Statement No. 115," which permits an entity to measure certain
financial assets and financial liabilities at fair value, with unrealized gains
and losses reported in earnings at each subsequent measurement date. The fair
value option may be elected on an instrument-by-instrument basis, as long as it
is applied to the instrument in its entirety. The fair value option election is
irrevocable, unless an event specifies in SFAS No. 159 occurs that results in a
new election date. This statement is effective for fiscal years beginning after
November 15, 2007. The Company adopted SFAS No. 159 as of January 1, 2008 and
has elected not to measure any additional financial instruments and other items
at fair value.
5
Note 2 - FINANCIAL STATEMENT RESTATEMENTS
Fiscal Year 2008
During fiscal 2007, the Company changed its accounting for patient
service revenue from the cash method to the accrual method in accordance with
SFAC 5. This correction resulted in an increase in revenue of approximately
$382,000 and an increase in operating income of approximately $74,000 for the
quarter ended March 31, 2008.
The Company also incorrectly accounted for some aspects of the Dutchess
financing transaction in fiscal 2007. Errors were made in properly accounting
for the preferred conversion feature and the sale of warrants and the
calculation of the debt issuance balance. These corrections resulted in an
increase in paid in capital of $3,061,381, establishing a debt discount balance
of $3,061,381and increasing the debt issuance balance by approximately $265,000.
These corrections resulted in an increase in interest expense of approximately
$224,000 during the period ended March 31, 2008 and an increase in amortization
expense of approximately $59,000 for the same period.
Note 3 - BUSINESS COMBINATIONS AND ACQUISITIONS
During November 2008 the Company acquired certain assets and assumed
certain liabilities in a transaction with Worldnet Communications, Inc. The
Company purchased six hospital contracts and certain fixed assets in a
transaction valued at approximately $2.2 million of which approximately $2.0
million included the assumption of certain liabilities associated with the
assets purchased.
Note 4 - NON CASH TRANSACTIONS
During 2008 the Company had two significant non cash transactions. A
summary of each follows:
Worldnet Communications
The Company purchased 6 hospital contracts and certain fixed assets for
a combination of cash equivalents and assumption of liabilities. The non cash
portion of the transaction was approximately $1,957,000 and represented the
purchase of hospital contracts for $1.9 million and certain fixed assets for
approximately $57,000.
Capitalized Leases
During 2008 the Company entered into a series of capitalized leases for
equipment used in the business. The total of these leases was approximately
$285,000. The offsetting entry was recorded in fixed assets based upon the terms
of these leases.
6
During 2009 there was one significant non cash transaction that
impacted the Company's financial statement. A summary follows:
Dutchess Restructuring
During the second quarter the Company closed on a debt restructuring
transaction with Dutchess. This resulted in the conversion of Dutchess debt into
equity (preferred stock), approximately $7.9 million dollars, the elimination of
warrants, approximately $1.3 million, the write-off of debt discount and debt
issuance expenses, approximately $2.5 million, as well as accrued interest and
long term debt of approximately $6.6 million. All of these transactions were non
cash in nature and treated as such in the financial statements.
Note 5 - PROPERTY, PLANT & EQUIPMENT
Property and equipment are stated at cost and depreciated and amortized
generally on the straight-line method over their estimated useful lives of three
to fifteen years. Property and equipment consist of the following at March 31,
2009 and December 31, 2008.
June 30, December 31,
2009 2008
------------ -------------
Television sets/system installations, equipment $ 3,475,258 $ 3,289,521
Computer equipment and Software 1,401,908 1,389,330
Office equipment 339,492 339,492
------------ -------------
5,216,617 5,018,343
Accumulated depreciation 996,956 662,811
------------ -------------
Total $ 4,219,711 $ 4,355,532
============ =============
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Note 6 - INTANGIBLE ASSETS
In accordance with SFAS No. 142 the Company's intangible assets are
being amortized over the anticipated useful life of the assets. At the end of
March 31, 2009 there was a balance of $7,531,680 in intangible assets which
reflected the unamortized portion of multiyear hospital contracts purchased
during 2007 and 2008. The contracts are being amortized over a 120 month period
using the straight line method. See note 3. A summary of the balance at March
31, 2009 and December 31, 2008 follows:
June 30, December 31,
2009 2008
------------ -------------
Hospital Contracts $ 8,795,156 $ 8,795,156
Accumulated Amortization 1,424,248 1,102,704
------------ -------------
Total $ 7,370,908 $ 7,692,452
============ =============
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The amortization expense for the three month period ended June 30, 2009
was approximately $ 161,000 and for fiscal 2008 was approximately $859,000. The
estimated annual amortization for the next five years will be $890,000.
7
Note 7 - LONG TERM DEBT
Long-term debt consists of the following:
June 30, December 31,
2009 2008
------------ -------------
Bank Term Loan $ 2,500,000 $ 6,343,610
Other Long-term Debt 798,202 813,061
------------ -------------
3,298,202 7,156,671
Less: Current portion of long-term debt 102,016 1,409,597
Debt Discount 2,162,661
------------ -------------
$ 3,196,186 $ 3,584,413
============ =============
|
On May 19, 2009 the Company closed on a debt restructuring transaction
with Dutchess Private Equities Fund, LTD (Dutchess) which resulted in converting
all of the outstanding debt and accrued interest into Preferred Stock. See Note
9.
On June 19, 2009 the Company closed on a new credit facility with a
commercial bank. The facility included a $2.5 million term loan and a $500,000
equipment facility. The term loan is repayable over 42 months with interest only
payments for the first six months. Interest is payable at prime plus 2% with a
floor of 5.25%.
Other Long term Debt - Debt is payable in monthly installments of $833
to $4804 including interest at 12 % expiring at various dates through January
2012. These notes are secured by television equipment.
Note 8 - COMMITMENTS AND CONTINGENCIES
Lease Commitments - The Company finances its use of certain facilities
and equipment under committed lease arrangements provided by various
institutions. At March 31, 2009 future lease payments, under the long-term real
estate leases, totaled approximately $1.6 Million.
Employment Agreements - As of June 30, 2009, the Company has four
employment agreements in effect for senior executives.
Litigation - From time to time the Company may be involved in various
legal proceedings and other matters, including nominal disputes with creditors
relating to the dollar amount of outstanding obligations of the Company, arising
in the normal course of business. The Company believes no such actions would
result in liabilities in excess of amounts accrued in the financial statements.
Warrants and Options - As of June 30, 2009, in addition to the
Company's aforesaid outstanding Common Stock, there are issued and outstanding
Common Stock Purchase Warrants which are exercisable at the price-per-share
indicated, and which expire on the date indicated, as follows:
8
Exercise
Description Number Price Expiration
------------------------------------------
Class "A" Warrants 365,000 $ 2.00 12/31/11
Class "B" Warrants 365,000 $ 3.00 12/31/11
Class "C" Warrants 365,000 $ 4.00 12/31/11
Class "D" Warrants 9,480,050 $ .50 12/31/11
|
On November 22, 2002, the Shareholders of the Company ratified the
Company's "2002 Incentive Stock Option Plan" and reserved 1,000,000 shares for
issuance pursuant to said Plan. As of March 31, 2009, no options have been
awarded pursuant to this Plan.
Note 9 - DUTCHESS DEBT RESTRUCTURING
On May 18, 2009 the Company closed on a transaction with Dutchess
Private Equities Fund, Ltd. to restructure all of its outstanding debt with the
Company. This transaction will have a material positive impact on both the
Company's balance sheet as well as statement of operations on a going forward
basis.
The key aspects of the transaction are as follows: Dutchess converted
all of their outstanding debt and accrued interest,which was approximately $6.6
million as of the closing date, retired all of their outstanding warrants
(22,826,022),and terminated their security interest in the Company's assets; in
return for $7.9 million in preferred convertible stock,a cash payment of
$100,000 and 4% of the then outstanding common stock of the Company,
approximately 1,718,000 shares.
The preferred stock will have an 8% cumulative dividend payable in cash
or additional preferred stock at the Company's option, and be convertible into
36.8% of the Company's common stock at the option of the holder. The Company
also has the right to call up to $1 million of the preferred stock at the time
of a capital raising event. The issuance of the Preferred Stock is pending
shareholder final approval.
This transaction impacted the Company's balance sheet by reducing short
and long term debt by approximately $6.6 million; increasing equity by $7.9
million less the elimination of the outstanding warrants of approximately $1.3
million for a net change of approximately $6.6 million. Additionally, the debt
discount balance of approximately $1.9 million and debt issuance costs of
approximately $600,000 will be written off, further reducing the overall equity
impact by approximately $2.5 million. In summary the transaction increased
equity by approximately $4.1 million after the adjustments are recorded.
The transaction will also reduce ongoing net interest expense by
approximately $1.0 million annually and reduce amortization expense by
approximately $200,000.
The write-off of the debt discount and deferred debt issuance costs as
well as the expenses associated with the transaction, approximately $2.6
million, were classified as a onetime restructuring charge in the income
statement for the period ending June 2009.
9
Note 10 - FAIR VALUE MEASUREMENTS
As described in Note 2, "New Accounting Standards", the Company adopted
SFAS 157 effective January 1, 2008. SFAS 157 defines fair value as the price
that would be received for an asset or paid to transfer a liability (an exit
price) in the principal or most advantageous market for the asset or liability
in an orderly transaction between market participants on the measurement date.
SFAS 157 also describes three levels of inputs that may be used to measure fair
value:
Level 1 - quoted prices in active markets for identical assets and
liabilities.
Level 2 - observable inputs other than quoted prices in active markets
for identical assets and liabilities.
Level 3 - unobserved inputs in which there is little or no market data
available, which require the reporting entity to develop its own assumptions.
10
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Forward-Looking Statements
In addition to historical information, this Report contains
forward-looking statements. These forward-looking statements are subject to
certain risks and uncertainties that could cause actual results to differ
materially from those reflected in these forward-looking statements. Factors
that might cause such a difference include, but are not limited to, management
of growth, competition, pricing pressures on the Company's products, industry
growth and general economic conditions. Readers are cautioned not to place undue
reliance on these forward-looking statements, which reflect management's
opinions only as of the date hereof. The Company undertakes no obligation to
revise or publicly release the results of any revision to these forward-looking
statements.
General
This discussion and analysis should be read in conjunction with our
financial statements and accompanying notes, which are included elsewhere in
this prospectus. This discussion includes forward-looking statements that
involve risks and uncertainties. Operating results are not necessarily
indicative of results that may occur in future periods. When used in this
discussion, the words "believes", "anticipates", "expects" and similar
expressions are intended to identify forward-looking statements. Such statements
are subject to certain risks and uncertainties that could cause actual results
to differ materially from those projected.
Our business and results of operations are affected by a wide variety
of factors, as we discuss under the caption "Risk Factors" and elsewhere in this
prospectus, which could materially and adversely affect us and our actual
results. As a result of these factors, we may experience material fluctuations
in future operating results on a quarterly or annual basis, which could
materially and adversely affect our business, financial condition, operating
results and stock price.
Any forward-looking statements herein speak only as of the date hereof.
Except as required by applicable law, we undertake no obligation to publicly
release the results of any revisions to these forward-looking statements that
may be made to reflect events or circumstances after the date hereof or to
reflect the occurrence of unanticipated events.
Income Taxes
We make estimates to determine our current provision for income taxes,
as well as our income taxes payable. Our estimates with respect to the current
provision for income taxes take into account current tax laws and our
interpretation of current tax laws, as well as possible outcomes of any future
tax audits. Changes in tax laws or our interpretation of tax laws and the
resolution of any future tax audits could significantly impact the amounts
provided for income taxes in our financial statements.
11
Legal Contingencies
The Company is presently involved in one lawsuit which management
believes does not have any merit and will not have a material effect upon the
financial condition of the Company. There are no other lawsuits pending nor are
any such material legal proceedings anticipated.
In the opinion of management, the ultimate resolution of such matters
will not have a material adverse effect on our financial position, results of
operations or liquidity.
CORPORATE INFORMATION
The Company is a Delaware corporation which was originally organized on
November 22, 2002 as Suncoast Naturals, Inc. and commenced business operations
in January, 2003. Pursuant to a Registration Statement filed in accordance with
the Securities Act of 1933, as amended, and declared effective by the Securities
and Exchange Commission on July 3, 2004, the Company in October, 2004
distributed 499,282 Shares of its Common Stock to shareholders of record of The
Quigley Corporation.
On December 8, 2006, Patient Portal Connect, Inc. of Palm Beach
Gardens, Florida, a Delaware corporation organized in May 2006, acquired
approximately 80% of the capital stock of Patient Portal Technologies, Inc. in a
tax free exchange that resulted in the shareholders of Patient Portal Connect,
Inc. owning 17,500,000 shares of Common Stock of Patient Portal Technologies,
Inc., as part of a "reverse" transaction. As a result of this transaction,
Patient Portal Connect, Inc. (hereinafter referred to as "PPC") became a
wholly-owned operating subsidiary of the Company.
Through this acquisition of PPC, we became a leading provider of
innovative technology solutions for healthcare institutions. The Company's
products and services are delivered over the Company's state-of-the-art
proprietary technology platform. This platform is used by the Company as the
delivery system for its services. The Company uses the technology to create a
communication portal that allows many third parties to communicate and exchange
information in a cost effective way. This solution allows the Company to offer
many services that optimize patient satisfaction and outcomes, reduces
administrative costs, and maximizes reimbursement for their customers.
To provide funds for acquisition purposes, on November 1, 2007, the
Company entered into a $7,000,000 convertible debenture agreement with Dutchess
Private Equities Fund, LTD ("Dutchess"). If Dutchess elects to convert its
debentures (the "Debentures") into shares of common stock, par value $0.001 (the
"Common Stock") of the Company, the conversion price for their shares of Common
Stock is the lower of 85% of the lowest closing bid during the previous twenty
day period prior to the conversion or $.46. Part of the financing transaction
included issuing warrants to purchase up to 22,826,086 shares of the Company's
common stock at a price of $.46 per share. The warrant agreement expires on
November 1, 2012. Dutchess' overall ownership in the Company is limited to 4.99%
of the then outstanding shares of Common Stock, in accordance with the financing
documents. As a result, the number of shares issuable to Dutchess, upon
conversion of the Debenture and exercising of its warrants, could potentially be
materially adverse to current and potential investors. Although there is a
restriction on ownership of 4.99%, Dutchess is free to sell any shares issued to
them into the market, thereby enabling Dutchess to systematically convert the
remaining Debentures or exercise additional Warrants into shares of Common
Stock.
12
On May 18, 2009 the Company closed on a transaction with Dutchess
Private Equities Fund, Ltd. to restructure all of its outstanding debt with the
Company. This transaction will have a material positive impact on both the
Company's balance sheet as well as statement of operations on a going forward
basis.
The key aspects of the transaction are as follows: Dutchess converted
all of their outstanding debt and accrued interest,which was approximately $6.6
million as of the closing date, retired all of their outstanding warrants
(22,826,022),and terminated their security interest in the Company's assets; in
return for $7.9 million in preferred convertible stock,a cash payment of
$100,000 and 4% of the then outstanding common stock of the Company,
approximately 1,718,000 shares.
The preferred stock will have an 8% cumulative dividend payable in cash
or additional preferred stock at the Company's option, and be convertible into
36.8% of the Company's common stock at the option of the holder. The Company
also has the right to call up to $1 million of the preferred stock at the time
of a capital raising event.
On June 21, 2009 the Company closed on a $3.0 million working capital
facility with a regional bank located in New York State. The funds will be used
to support Company operations as well as consolidate some previous more costly
debt.
On November 2, 2007, the Company acquired 100% of the capital stock of
TB&A Hospital Television, Inc. (hereinafter "TB&A") for a cash purchase price of
approximately $3,000,000 and credit for some of the existing accounts
receivable, estimated at $300,000.. The consideration issued in the stock
purchase was determined as a result of arm's-length negotiations between the
parties.
Following this acquisition, the Company is carrying on the business
operations of TB&A as a wholly-owned subsidiary. Prior to the stock purchase,
there were no material relationships between us and TB&A or any of our
respective affiliates, directors or officers, or any associates of the
respective officers or directors.
The Company's offices are located at 8276 Willett Parkway, Suite 200,
Baldwinsville, New York 13027. The telephone number is (888) 774-3579. The
Company's website is www.patientportal.com.
13
OUR PLAN OF OPERATIONS
Our Company, through its operating subsidiaries, Patient Portal
Connect, Inc. (PPC) and TB&A Hospital Television, Inc., provides patient centric
nonmedical services which improve hospital financial performance. Having
developed the industry's newest, leading-edge communication/information platform
for the healthcare industry, PPC is poised to capture a significant segment of
the multi-billion dollar healthcare market. Its proprietary systems were
developed in close coordination with hospital industry partners to provide
multi-layer functionality across a wide spectrum of critical patient-centric
workflows that result in immediate improvements in cost savings, patient
outcomes, and revenue growth for hospitals. Our systems and solutions are
designed to integrate with existing hospital systems and processes to improve
outcomes in today's healthcare environment.
The Company's technology allows it to leverage the hospitals existing
television and cable infrastructure to create a communication portal for
patients and third parties.
Nationwide, the demand for more customized healthcare has resulted in a
greater need for improved productivity, efficiency, and customer service in
hospitals and other healthcare institutions. We have has pioneered the
development of integrated software applications that combine technology and
industry expertise with unique customization designed to better manage the
hospital/patient relationship and improve hospital operational processes.
Further, our solutions enable hospitals to achieve compliance with strict
government mandates that affect reimbursements by requiring measured
improvements in productivity, efficiency, and patient satisfaction. Our proven
technologies provide tremendous economic benefit for healthcare providers.
We intend to rapidly gain market share by leveraging strategic
relationships and by acquiring companies with existing hospital contracts. Our
acquisition strategy will enable us to achieve greater profitability, grow
rapidly, and quickly gain first-mover advantage. Our proprietary technology
platform allows us to create additional revenue streams with minimal cost by
accessing enhanced service modules as market demand changes. This scalable
architecture creates even greater profitability by enabling multiple services to
be delivered over our service delivery platform.
We believe that our Company is positioned to quickly react to the
requirements of an ever-changing healthcare industry. Unlike the costly,
capital-intensive and stand-alone products offered by our industry competitors,
our sophisticated technology platform offers flexible solutions and
functionalities that are universal enough to have broad appeal while still
allowing for a level of customization that is necessary to integrate with a
hospital's existing legacy system, and at an affordable cost. Our flexible
platform also enables the healthcare providers to fulfill the government's
newest mandates for a full "continuum of care" from the hospital to the home.
This unique ability enables us to present a tailored solution to our customers
at a cost-effective price and will significantly enhances our ability to capture
significant market share nationwide.
Our products and services enable hospitals to improve patient flow,
enhance patient satisfaction, and create long-term relationships with patients
as they move from hospital to home. In so doing, hospitals gain productivity and
efficiency enhancements, reduce the burden on staff and increase cash flow by
optimizing reimbursements from third-party sources including Medicare and
private insurers.
The Company has adopted a multi year subscription revenue model that is
based on patient interactions. We have long term contracts with third parties
that pay the Company on a per patient basis based upon a variety of factors.
This approach provides the Company with an ability to increase revenue as
patient flow and services increase.
14
PATIENT PORTAL PRODUCTS AND SERVICES
The healthcare industry is in the midst of dynamic change that is
redefining the way healthcare facilities do business. Competition, government
scrutiny, and consumer demand for more value present new challenges. Giving good
medical care is no longer enough. Healthcare facilities are searching for
innovative ways to gain and retain patients as life-long customers. This
necessitates implementing immediate changes that focus on improving the patient
experience across a full continuum of care, and, for the first time, collecting
and managing pertinent, real-time data to measure success and improve
profitability.
Many healthcare facilities are plagued with decentralized workflows and
vertical silos of information that create redundant, costly processes, and a
disjointed patient experience. There is increasing need to improve education and
communication with the patient before, during, and after their medical stay. To
accomplish this, facilities need better systems, data management, and
information services to assist them in meeting their goals.
Our strategy is to utilize our proprietary communications technology
platform as a basis to gain and improve business relationships, then build upon
that platform to integrate more and more services over time, thereby fully
leveraging assets and maximizing profitability.
Our platform integrates with existing communication systems and
workflows to present private branded services and information to the patient.
Once the patient relationship is established, value is extended beyond the
bedside with service offerings before and after a stay. This portal can be
utilized by any number of third parties, including healthcare facilities, drug
and health companies, patient education services, and family members, which
ensures myriad revenue opportunities.
The core system was created in concert with our healthcare partners in
a live laboratory to create solutions that are cost-effective, scalable, and
allow for seamless and transparent integration into a facility's legacy systems
and culture. Healthcare facilities gain with real-time metrics of all patient
activity, which leads to improved medical outcomes, patient satisfaction scores,
compliance with government regulations, and, ultimately, higher profits.
The following is a brief description of some of the principal products
and services that we deliver to our customers:
HealthCast(TM) Patient Network System: In March 2007, we acquired a
nine percent interest in Omnicast, Inc. in exchange for 2,950,000 shares of the
Company's common stock. Omnicast, Inc. is a leading-edge technology and media
provider that offers a variety of customized education and entertainment
solutions for the healthcare industry.
As a part of this agreement, the Company received an exclusive
technology license for the newly developed communication portal, HealthCast(TM)
Patient Network System. We believe that HealthCast(TM) will fundamentally change
the way patient communications are delivered at the bedside, leading to
significant revenue opportunities.
HealthCast(TM) is the first suite of customized hospital television
channels that invites viewers to interact with channel programming and delivers
condition-specific content directly to a patient's TV, IP phone, or home
computer. HealthCast(TM) features an exclusive digital-signage platform that
promotes an unparalleled level of communication by simultaneously showing video,
an information scroll, and additional customized messaging to a single patient,
certain patient groups, or to specific areas of the hospital. HealthCast(TM) is
the only patient network that puts the hospital in control of multiple
information streams for an unprecedented level of communication and education
for patients and families. In addition, HealthCast(TM)'s proprietary platform
captures viewing metrics so hospitals can document content delivery for
pay-for-performance reimbursement, and commercial sponsors can respond to
patient viewing habits. In response to demand from healthcare facilities, we
have developed channels for Patient Education, Hospital Foundation, Maternity
and New Born Care, Patient Safety, General Information, and Nutrition, in
addition to customized, condition-specific content that can be delivered
on-demand to patients.
15
MedEx(SM): MedEx(SM) Home Delivery offers the patient free home
delivery within hours of all prescription medications issued to the patient at
discharge and free delivery of all refills, too. With MedEx(SM), we offer a
turnkey solution for healthcare facilities that improves the hand-off of
prescriptions when patients are discharged and returns all real-time data to the
facility and physician for improved medication reconciliation and medication
therapy management. The Company controls the private-branded process by
deploying its technology to manage the information flow between all
stakeholders, in addition to being the primary interface between the healthcare
provider, patient, drivers, and pharmacy. This service is provided in
conjunction with national pharmacy retailers. MedEx(SM) presents a unique
vehicle to extend the patient relationship to the home and opens an array of
revenue streams through patient education, aftercare, advertising, and product
offerings.
TInstant Response Line: The Instant Response Line is an interactive,
live-response solution that enables patients to log a non-medical need that is
electronically transferred to an appropriate facitliy department for resolution
in a timely fashion. Multiple staff can be notified using various media, and all
communications are time stamped and escalated as needed for immediate service
recovery. A key element to the success of this system is access to real-time
data, which enables administrators to see how quickly and efficiently staff
respond and allows for improved strategic planning over time. Instant Response
Line provides a single point of contact for all patient problems and leads to
greater patient satisfaction. Putting the facitliy in proactive mode improves
interdepartmental communication and adds an unparalleled level of customer
service for the patient.
Quick Pulse Surveys: Quick inpatient surveys allow administrators to
keep their "finger on the pulse" of what patients are thinking while in house or
shortly after returning home. By conducting live surveys with patients while
they are still involved in the experience leads to a higher response rate and
gives the facility opportunity to proactively respond in real time. This
presents a vastly different concept from the standard post-discharge written
surveys healthcare facilities typically employ that include a six to eight week
delay in data return. Our customized surveys focus on finite issues, allowing
the facility to direct specific, timely solutions. These short, flexible surveys
are cost effective enough to be repeated frequently, which enables the facility
to benchmark data and measure improvements in operational efficiencies over
time. Giving administrators real-time access to patient response data is a key
differentiator between our service and competing survey services.
VIRTUAL NURSE(TM) MARKETING AGREEMENT
In April, 2007, we acquired a 9% minority interest in Virtual Nurse,
Inc. of Palm Beach Gardens, FL, in exchange for 750,000 shares of the Company's
common stock and entered into a joint Marketing Agreement to introduce Patient
Portal and Virtual Nurse(TM) services to healthcare institutions throughout the
United States.
Virtual Nurse's mission is to provide healthcare organizations with
outsourced pre admission screening and scheduling services provided by using
licensed nurse working from their home. After the service is complete the
Company provides the healthcare provider with a digital record of the screening.
It offers the highest quality of care through experienced, skilled, productive,
and motivated nurses who benefit from the convenience of working at home on a
flexible time schedule. As a result, it is able to give healthcare facilities
assurance that every patient receives condition-specific education before
entering their facilities and ensure that every assessment has been carefully
documented and delivered on time.
Virtual Nurse's "PASS" (Pre-Admission Screening Services) program
fulfills a critical need in the healthcare industry. As expenditures continue to
increase and nursing shortages become greater Virtual Nurse offers the expertise
of registered nurses without the challenges or costs of adding on-site staff.
Virtual Nurse's RNs perform the administrative medical screening tasks usually
conducted by registered nurses in a healthcare facility, with one important
distinction: their RNs are dedicated to this service seven days a week,
including extended hours, while hospital nurses attempt to contact patients
during abbreviated calling hours.
16
Virtual Nurse enables healthcare providers to reallocate all available
RNs to medical areas where they are needed most, free from the time-consuming
administrative responsibilities of calling patients and coordinating paperwork.
Further, the perception to patients is that the healthcare facility is the
service provider. Therefore, the healthcare facilities gain improved patient
care and satisfaction, superior customer service, and enhanced brand image.
COMPETITION
Our Company's markets are extremely competitive and are subject to
rapid technological change. We believe that our Company is unique in the
healthcare industry because we are positioned to provide services and products
across the entire patient-service spectrum. Our competitors typically focus
products on specific market niches that address a finite need within the
industry. We approach the market with more innovation and versatility. Our
services coordinate multiple processes toward improved productivity and
communication between various stakeholders.
The competition that we face in this healthcare services marketplace
can be broken down into two different company types:
Small Niche Competitors: The competition in this category is comprised
of smaller companies offering few very specific products. They focus on one or
two areas, such as providing patient education information or administrative
services. Some of the competitors in this area include Get Well Network, Allen
Technologies, Skylight Systems, Beryl, and TeleTracking. Most companies in this
category have a very small hospital base (ten or fewer). Patient Portal Connect
has a unique advantage vis-a-vis the small-niche competitors because we offer
revenue-generating opportunities across a full continuum of care instead of a
stand-alone application, 24/7 integration with our Patient Contact Center,
access to an extensive customer base, and a long history serving hospitals and
patients.
Large Technology-based Providers: The large technology-based providers
typically offer very expensive and complex systems that deliver a variety of
administrative services at high cost. Companies such as Siemens and Hill-Rom are
in this category. Although the product set is enticing, to date they have sold
few services due to the cost, complexity of integration, and the amount of
system wide change required to sustain the services. Our technology allows us to
integrate new products easily without requiring a cultural shift or debt load.
Patient Portal Connect focuses on rapidly deploying less expensive,
user-friendly services compared to the competition.
RESEARCH AND DEVELOPMENT
The Company employs a multiple product and services sourcing strategy
that includes internal software and hardware development and licensing from
third parties. In the future, Company strategy may also include acquisitions of
technologies, product lines or companies.
As part of our business strategy to reduce direct costs and improve
margins, elements of some of the Company's products and services are licensed
from third parties. Our main outsourcing activities are related to both
developing new modules for our software, and marketing and supporting our
product. While our business depends somewhat on our ability to outsource, we are
not dependent on any one contractor or vendor.
In the future, the Company may make select strategic acquisitions to
secure certain technology, people and products which complement or augment
overall product and services strategy. Both time-to-market and potential market
share growth, among other factors, are considered when evaluating acquisitions
of technologies, product lines or companies. Management may acquire and/or
dispose of other technologies and products in the future.
As a technology and services Company, we realize that we must maintain
our investment in research and development to design both new, experimental
products and marketing campaigns. Management anticipates incurring additional
research and development expenditures as its business grows and adequate cash
flow becomes available to fund such costs.
EMPLOYEES
As of March 31, 2009, the Company and its affiliates had approximately
60 full time equivalent employees.
REGULATORY ISSUES
We are not subject to any special governmental regulation concerning
our supplying of products and services to the market place and we believe we are
in compliance in all material respects with all existing regulations governing
other aspects of our businesses.
17
RESULTS OF OPERATIONS
Recently Issued Accounting Standards
In September 2006, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standards (SFAS) 157, " Fair Value
Measurements ". SFAS 157 defines fair value, establishes a framework for
measuring fair value in generally accepted accounting principles (GAAP) and
expands disclosures about fair value measurements. SFAS 157 is effective for
fiscal years beginning after November 15, 2007 and interim periods within those
fiscal years. The adoption of this standard has not had a significant impact on
the Company's consolidated financial position, results of operations or cash
flows.
In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option
for Financial Assets and Financial Liabilities ", including an amendment of FASB
No. 115 ("FAS 159"). The Statement permits companies to choose to measure many
financial instruments and certain other items at fair value in order to mitigate
volatility in reported earnings caused by measuring related assets and
liabilities differently without having to apply complex hedge accounting
provisions. FAS 159 is effective for the Company beginning January 1, 2008. The
adoption of this standard has not had a significant impact on the Company's
consolidated financial position, results of operations or cash flows.
In December 2007, the FASB issued Statement of Financial Accounting
Standard No. 160, "Non-controlling Interests in Consolidated Financial
Statements -- an amendment of ARB No. 51" ("FAS 160"). FAS 160 establishes
accounting and reporting standards for the non-controlling interest in a
subsidiary and for the retained interest and gain or loss when a subsidiary is
deconsolidated. This statement is effective for financial statements issued for
fiscal years beginning on or after December 15, 2008 with earlier adoption
prohibited. The Company is currently evaluating the impact, if any, of FAS 160
on its operating results and financial position.
In December 2007, the FASB issued SFAS No. 141R, "Business
Combinations," ("SFAS 141R") which establishes principles and requirements for
how an acquirer recognizes and measures in its financial statements the
identifiable assets acquired, the liabilities assumed and any non-controlling
interest in the acquirer. SFAS 141R also establishes disclosure requirements to
enable the evaluation of the nature and financial effects of the business
combination. SFAS 141R applies prospectively to business combinations for which
the acquisition date is on or after the beginning of the first annual reporting
period beginning on or after December 15, 2008, and interim periods within those
fiscal years.
Critical Accounting Estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities at the dates of the
financial statements and the reported amounts of revenues and expenses during
the reporting periods. Actual results could differ from those estimates.
Management believes there are no material charges to net income in the
current period related to sales from a prior period.
Three months ended June 30, 2009 compared with three months ended June 30, 2008
Net sales for the three month period ended June 30, 2009 were $
4,136,000, reflecting a decrease of $360,000 over the net sales of $4,496,000
for the comparable three month period ended June 30, 2008. The decrease was
caused by a reduction of equipment sales of approximately $797,000 offset by an
increase in patient services revenue of approximately $ 437,000.
18
Cost of sales as a percentage of net sales for the three months ended
June 30, 2009 was 60.3% compared to 63.4% for the comparable 2008 period. The
decrease was due to the mix of revenue shifting from equipment sales, with lower
higher cost of sales, to patient services, with lower cost of sales.
Sales and administrative expenses for the three month period ended June
30, 2009 were $1,413,000, an increase of $ 113,000 over the 2008 amount of
$1,300,000 which was due to the increase in costs associated with patient
service revenue increasing 21% over the second period of 2008.
Six months ended June 30, 2009 compared with six months ended June 30, 2008
Net sales for the six month period ended June 30, 2009 were $
8,018,000, reflecting a decrease of $735,000 over the net sales of $8,753,000
for the comparable six month period ended June 30, 2008. The decrease was caused
by a reduction of equipment sales of approximately $ 2,000,000 offset by an
increase in patient services revenue of approximately $ 1,265,000, which
represents an increase of approximately 30%.
Cost of sales as a percentage of net sales for the six months ended
June 30, 2009 was 59.2% compared to 66.2% for the comparable 2008 period. The
decrease was due to the mix of revenue shifting from equipment sales, with lower
higher cost of sales, to patient services, with lower cost of sales.
Sales and administrative expenses for the three month period ended June
30, 2009 were $2,821,000, an increase of $ 278,000 over the 2008 amount of
$2,543,000 which was due to the increase in costs associated with patient
service revenue increasing 30% over the comparable six month period of 2008.
Liquidity and Capital Resources
As shown in the above financial statements, the Company incurred a net
loss of ($3,798,000) during the six month period ended June 30, 2009 and
($2,311,990)during the year ended December 31, 2008. Approximately $2.6 million
of the loss was due to a onetime restructuring charge associated with the
restructuring of the company's debt. A majority of the charge was non cash and
represented the accelerated write off of debt discount and deferred debt charges
associated with the initial Dutchess transaction.
The Company has been successful in raising capital through private
placements of its equity. It has plans to raise more capital through public or
private financing, through the issuance of its common stock and the issuance of
debt instruments, including debt convertible to equity. When attaining financing
if available, it cannot be certain such financing will be on attractive terms.
Should the Company obtain more capital, in turn, it may cause dilution to its
existing stockholders and providing the Company can obtain more capital, it
cannot be assured to ultimately attain profitability. However, management
expects that its core business will continue to experience positive growth and
the restructuring transaction with Dutchess Capital will have a significant
positive impact on the company's liquidity and overall operations.
19
As part of the debt restructuring transaction the Company closed on a
$3.0 million credit facility to be used to fund working capital. The new debt
was obtained at competitive commercial bank rates.
The Company intends to continue its efforts to complete the necessary
steps in order to meet its cash flow requirements throughout fiscal 2009 and to
continue its product development efforts and adjust its operating structure to
reduce losses and ultimately attain profitability. Management's plans in this
regard include, but are not limited to, the increase in business operations
which it expects from the acquisition of additional retail hospital contracts by
our Patient Portal Connect subsidiary and the continuing roll-out of its product
line to its existing and future customer base. We also expect to see significant
growth in the revenues of our TB&A Hospital Television, Inc. subsidiary during
the second half of fiscal 2009 both through new contracts and through the sale
of new flat-screen television equipment to our existing customer base.
Management believes that actions presently being taken will generate
sufficient revenues to provide cash flows from operations and that sufficient
capital will be available, when required, to permit the Company to realize its
plans. However, there can be no assurance that this will occur. The accompanying
financial statements do not include any adjustments that might result from the
outcome of this uncertainty. Because our business is evolving and changing,
particularly regarding our recent acquisitions and the Dutchess restructuring
transaction, our future operating cash flows will be significantly increased
from past results, and past operations are not a good gauge for anticipating
future operations.
Inflation
The rate of inflation has had little impact on the Company's results of
operations and is not expected to have a significant impact on continuing
operations.
Capital Expenditures
Capital expenditures during the remainder of 2009 are not expected to
be material.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
The Company's operations are not subject to risks of material foreign
currency fluctuations, nor does it use derivative financial instruments in its
investment practices. The Company places its marketable investments in
instruments that meet high credit quality standards. The Company does not expect
material losses with respect to its investment portfolio or exposure to market
risks associated with interest rates. The impact on the Company's results of one
percentage point change in short-term interest rates would not have a material
impact on the Company's future earnings, fair value, or cash flows related to
investments in cash equivalents or interest-earning marketable securities..
Item 4T. Quantitative and Qualitative Disclosures about Market Risk
Based on their evaluation as of the end of the period covered by this
report, the Company's Chief Executive Officer and Chief Financial Officer have
concluded that the Company's disclosure controls and procedures (as defined in
Rules 13a-15 and 15d-15 under the Securities Exchange Act of 1934, as amended)
are effective. There have been no significant changes in internal controls or in
other factors that could significantly affect these controls subsequent to the
date of their evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses. In accordance with the
Sarbanes-Oxley Act of 2002, as amended, the Company has included an assessment
of its internal control over financial reporting and attestation from an
independent registered public accounting firm in its Annual Reports on Form 10-K
commencing with the fiscal year ended December 31, 2007. The Company has
undergone an ongoing comprehensive effort in preparation for compliance with
Section 404 of the Sarbanes-Oxley Act of 2002. This has involved the
documentation, testing and review of our internal controls under the direction
of senior management.
20
Part II. Other Information
Item 1. Legal Proceedings
The Company is presently involved in two lawsuits which management
believes does not have any merit and will not have a material effect upon the
financial condition of the Company. There are no other lawsuits pending nor are
any such material legal proceedings anticipated.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 6. Exhibits
(1) Exhibit 31.1 Certification by the Chief Executive Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
(2) Exhibit 31.2 Certification by the Chief Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
(3) Exhibit 32.1 Certification by the Chief Executive Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
(4) Exhibit 32.2 Certification by the Chief Financial Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
21
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PATIENT PORTAL TECHNOLOGIES, INC.
By: /s/ Kevin J. Kelly
------------------
KEVIN J. KELLY
Chief Exec. Officer
Date: August 2, 2009
|
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