<![CDATA[PATIENT PORTAL TECHNOLOGIES, INC.
INDEX
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PART I FINANCIAL INFORMATION - Unaudited
Condensed Consolidated Balance Sheet-Sept 30, 2007...........................1
Condensed Consolidated Statements of Operations-Three Months
and Nine Months Ended Sept 30, 2007 and 2006...............................2
Condensed Consolidated Statement of Cash Flows-Three Months
Ended Sept 30, 2007 and 2006...............................................3
Notes to the Condensed Consolidated Financial Statements..................... 4
Management's Discussion and Analysis of Financial
Condition and Results of Operations...........................................8
PART II OTHER INFORMATION
Item 1. Legal Proceedings....................................................15
Item 2. Changes in Securities................................................15
Item 3. Defaults Upon Senior Securities......................................15
Item 4. Submission of Matters to a Vote of Security Holders..................15
Item 5. Other Information....................................................15
Item 6. Exhibits on Reports on Form 8-K......................................15
Signature Page...............................................................16
-i-
PATIENT PORTAL TECHNOLOGIES, INC., AND SUBSIDIARY CONDENSED
CONSOLIDATED BALANCE SHEET (Unaudited)
ASSETS
September 30 December 31
2007 2006
--------------- ---------------
CURRENT ASSETS:
Cash and cash equivalents $ 124,502 1,690
Accounts receivable 2,398 1,202
Prepaid expenses 16,250 27,500
Other current assets 16,288 0
--------------- ---------------
TOTAL CURRENT ASSETS 159,438 30,392
PROPERTY, PLANT AND EQUIPMENT, net 810,116 822,288
HOSPITAL CONTRACTS, net 1,512,251 0
LONG-TERM NOTE RECEIVABLE 250,000 250,000
--------------- ---------------
TOTAL ASSETS $ 2,731,805 1,102,680
=============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable 18,703 34,255
Notes payable 23,877 337,317
Note payable, shareholder 50,000 0
Accrued liabilities 603 0
Other current liabilities 627,984 13,131
--------------- ---------------
TOTAL CURRENT LIABILITIES 721,167 384,703
--------------- ---------------
LONG TERM DEBT 39,394 0
REDEEMABLE PREFERRED STOCK, $.01 par
value, authorized 1,000,000:Issued
110,000 shares, at par value
Present value of redemption amount
in excess of par value 1,100 600
--------------- ---------------
STOCKHOLDERS' EQUITY:
Common stock, $.001 par value,
authorized: 100,000,000;
25,721,113 shares issued and
outstanding at Sept 30, 2007 25,721 23,671
Additional paid-in-capital 5,739,396 3,523,446
Retained deficit (3,794,973) (2,829,740)
--------------- ---------------
TOTAL STOCKHOLDERS' EQUITY 1,971,244 717,977
--------------- ---------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY 2,731,805 1,102,680
=============== ===============
See notes to the condensed consolidated financial statements.
1
PATIENT PORTAL TECHNOLOGIES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended Nine Months Ended
Sept 30, Sept 30
(Unaudited) (Unaudited)
2007 2006 2007 2006
---------- ----------- ----------- -------------
NET SALES 347,421 - $ 991,255 -
COST OF SALES 423,530 - 892,810 -
---------- ----------- ----------- -------------
GROSS PROFIT (76,109) - 98,445 -
---------- ----------- ----------- -------------
DIRECT OPERATING EXPENSES:
Administration 414,881 35,000 649,587 70,000
Research and Development 0 0 53,678 -
---------- ----------- ----------- -------------
TOTAL OPERATING EXPENSES 414,881 35,000 703,265 70,000
---------- ----------- ----------- -------------
(LOSS) FROM OPERATIONS
BEFORE OTHER INCOME
AND EXPENSE (490,990) (35,000) (604,820) (70,000)
---------- ----------- ----------- -------------
OTHER INCOME AND EXPENSES
Start Up and
Re-alignment Costs
Interest Costs (net) - - 1,693 -
Depreciation Expense 43,331 - 130,001 -
Amortization Expense 141,671 228,719 -
---------- ----------- ----------- -------------
TOTAL OTHER INCOME/EXPENSES (185,002) (35,000) (360,413) (70,000)
OPERATING LOSS BEFORE TAXES (675,992) (35,000) (965,233) (70,000)
PROVISION FOR INCOME TAX -- -- -- --
---------- ----------- ----------- -------------
NET (LOSS) $ (675,992) $ ( 35,000) $ (965,233) $ (70,000)
========== =========== =========== =============
Net Loss per share: $ (.01) $ (.01) $ (.01) $ (.01)
========== =========== =========== =============
Common shares outstanding 25,721,113 9,979,479 25,721,113 9,979,479
========== =========== =========== =============
See notes to the condensed consolidated financial statements.
2
PATIENT PORTAL TECHNOLOGIES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended
Sept 30,
(Unaudited)
2007 2006
----------- -----------
OPERATING ACTIVITIES:
Net Income (Loss) $ (965,233) $ (46,966)
Adjustments to reconcile net income (loss)
to net cash provided by operations:
Common stock and Warrants issued for services -- --
Depreciation and amortization 511,252 --
Book value of assets disposed -- --
Bad debt -- --
(Increase) decrease in assets:
Accounts receivable (1,196) 869
Inventory 17,318
Other current assets- prepaid expenses (16,250) 7,500
Other assets (16,288) --
Increase (decrease) in liabilities:
Accounts payable (14,949) 118,832
Other current liabilities 614,853 (7,250)
Accrued expenses - other -- (5,844)
Note Payable (263,440) --
----------- -----------
Total adjustments $ (151,251) 144,150
----------- -----------
NET CASH (USED IN) OPERATING ACTIVITIES $ (151,251) (3,980)
----------- -----------
INVESTING ACTIVITIES:
Purchase of fixed assets $ (270,362) --
Purchase retail hospital contracts $(1,740,970)
----------- -----------
NET CASH FLOWS (USED IN) INVESTING ACTIVITIES $(2,011,332) --
----------- -----------
FINANCING ACTIVITIES:
Issuance of preferred stock $ 537,499 --
Issuance of common stock $ 1,681,002
Long term debt 39,394
----------- -----------
NET CASH FLOWS PROVIDED BY (USED IN)
FINANCING ACTIVITIES $ 2,257,895 --
----------- -----------
NET INCREASE (DECREASE) IN CASH 95,312 (3,980)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 29,190 4,722
----------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 124,502 $ 742
=========== ===========
See notes to the condensed consolidated financial statements.
3
PATIENT PORTAL TECHNOLOGIES, INC. And SUBSIDIARY
CONDENSED NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 -- BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States of America for the interim financial information and are unaudited
pursuant to the rules and regulations of the Securities and Exchange Commission.
Accordingly, they do not include all of the information and footnotes required
by accounting principles generally accepted in the United States of America for
complete financial statements. All adjustments which, in the opinion of
managements, are considered necessary for the fair presentation of the results
of operations for the periods shown, are of a normal recurring nature and have
been reflected in the condensed consolidated financial statements. The results
of operations for the periods presented are not necessarily indicative of the
results expected for the full fiscal year or for any future period. The
information included in these condensed consolidated financial statements and
accompanying notes include in the Patient Portal Technologies, Inc. (the
"Company") Annual Report on Form 10-K for the fiscal year ended December 31,
2006.
The preparation of 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 could differ from those estimates.
NOTE 2 -- ORGANIZATION AND NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING
POLICIES
Effective September 28, 2005, the Company sold its entire equity
interest in Caribbean Pacific Natural Products, Inc. and CP Suncoast
Manufacturing, Inc. to Suncoast Nutriceuticals, Inc. (SNI) in exchange for a
two-year Promissory Note in the principal amount of $250,000 and 3,500,000
Shares of Common Stock of SNI. The assets and liabilities attributable to the
two subsidiaries were assumed by SNI as a result of this transaction.
On December 8, 2006, the Registrant acquired 100% of the capital stock
of Patient Portal Connect, Inc. of Palm Beach Gardens, FL through the issuance
of 17,500,000 shares of Common Stock of the Company to the shareholders of
Patient Portal Connect, Inc. in a tax-free share exchange. As a result of this
transaction, Patient Portal Connect, Inc. became a wholly-owned operating
subsidiary of the Company.
NOTE 3 -- GOODWILL AND INTANGIBLE ASSETS
In accordance with SFAS No. 142, "Goodwill and Other Intangible
Assets," the Company has completed the fair value analysis for goodwill and
other intangible assets as of December 31, 2005, and concluded that no
impairment existed. As of September 30, 2007, the Company believed that no
indicators of impairment existed. Aggregate amortization expense on identifiable
intangible assets was approximately 2.5% and 2.4% for the three months ended
September 30, 200 and 2006, respectively. Amortization expense is expected to be
approximately 10.0% in each of the next five fiscal years.
PROPERTY, PLANT AND EQUIPMENT
Property plant and equipment is recorded at cost. Depreciation is
provided on the straight-line method over estimated useful lives of three to
five years.
STOCK BASED COMPENSATION
Financial Accounting Statement No. 123, Accounting for tock Based
Compensation, encourages, but does not require companies to record compensation
cost for stock-based employee compensation plans at fair value. Through December
31, 2003, the Company had chosen to account for stock-based compensation using
the intrinsic method prescribed in Accounting Principles Board Opinion No. 25,
Accounting for Stock Issued to Employees, and related interpretations.
Accordingly, compensation cost for stock options issued through December 31,
2003, was measured as the excess, if any, of the quoted market price of the
Company's stock at the date of the grant over the amount an employee must pay to
acquire the stock.
Effective for the fiscal years ended December 31, 2004, and for
December 31, 2006, the Company has adopted the fair value method of accounting
described in SFAS 123 and SFAS 148.
ADVERTISING
Advertising costs are expensed within the period in which they are
utilized. Advertising expense is comprised of media advertising, presented as
part of sales and marketing expense; co-operative advertising, which will be
accounted for as a deduction from sales; and free product, which is accounted
for as part of cost of sales. No advertising costs were incurred for the
year-ended December 31, 2006.
NOTE 4 - INVENTORY
The Company had no inventory as of September 30, 2007.
4
PATIENT PORTAL TECHNOLOGIES, INC. And SUBSIDIARY
CONDENSED NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE 5 - PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consisted of the following as of:
Sept 30,
2007
Machinery and equipment, $ 342,969
Computer software and website 802,500
-------------
$ 1,145,469
Less: Accumulated depreciation (335,353)
-------------
Property, Plant and Equipment, net $ 810,116
=============
NOTE 6 - SEGMENT INFORMATION
The Company divested its former operating subsidiary as of September
30, 2005. Prior to that date, the Company had one reporting segment relating to
the sales of all natural sun-care and skincare products for luxury resorts,
theme parks and spas. As defined in SFAS 31, "Disclosures about Segments of an
Enterprise and Related Information," allocate resources and assess the
performance of the Company based on revenue and overall profitability.
The Company's present operations are conducted solely in the United
States, and all revenues are derived from the operations of the Company's
Wholly-owned Patient Portal Connect, Inc. subsidiary.
NOTE 7 - CONVERTIBLE REDEEMABLE PREFERRED STOCK
On December 31, 2002, the Company issued 100,000 Shares of Preferred
Stock, designated Class "A" Redeemable Preferred Stock, to The Quigley
Corporation as partial consideration for the acquisition of 60% of the Common
Stock of Caribbean Pacific Natural Products, Inc. All 100,000 of these Shares
were converted by the holder on December 1, 2006 into 850,000 Shares of common
stock.
During the quarter ended December 31, 2006, the Company sold 60,000
Shares of Preferred Stock, designated Class "A" Convertible Redeemable Preferred
Stock, to six investors for total net consideration of $566,440.
During the quarter ended March 31, 2007, the Company sold 50,000 Shares
of Preferred Stock, designated Class "A" Convertible Redeemable Preferred Stock,
to five investors for total net consideration of $403,144.
The holders of the Class A Stock shall be entitled to receive in
preference to the holders of the Corporation's Common Stock, when, as and if
declared by the Corporation's Board of Directors, annual dividends at the rate
of $.10 per share and no more. Dividends on the Class A Stock shall be
cumulative, and declared but unpaid dividends shall not bear interest. The
holders of Class A Stock shall have no voting rights. No other Series or Class
of Preferred Stock which may subsequently be designated or authorized by the
Board of Directors shall be granted or otherwise be entitled to any voting
rights.
The Corporation shall have the sole right to redeem the shares of Class
A Stock at any time following the date of issuance. The Redemption Price for
each share shall be $12.50 per share plus an interest factor which shall accrue
from the date of issuance through the date of redemption. The interest rate
shall be a fixed annual rate of 10%.
NOTE 8 - CAPITAL STOCK TRANSACTIONS
Significant provisions of the Company's capital stock are highlighted
below and are subject to the provisions of the Company's Certificate of
Incorporation and the Bylaws:
Preferred Stock
The Company presently authorized to issue up to 1,000,000 shares of
preferred stock, $.01 par value per share. Such preferred stock may be issued in
one or more series on such terms and with such rights, preferences and
designations as our board of directors may determine. Such preferred stock may
be issued without action by stockholders.
5
PATIENT PORTAL TECHNOLOGIES, INC. And SUBSIDIARY
CONDENSED NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Common Stock
The Company is presently authorized to issue up to 100,000,000 shares
of common stock, $.001 par value per share. The holders of common stock are
entitled to one vote for each share held of record on each matter submitted to a
vote of stockholders. Subject to the prior rights of any series of preferred
stock which may from time to time be outstanding, holders of common stock are
entitled to receive ratably such dividends as may be declared by our Board of
Directors out of funds legally available therefor, and, upon our liquidation,
dissolution or winding up, they are entitled to share ratably in all assets
remaining after payment of liabilities and payment of accrued dividends and
liquidation preference on the preferred stock, if any. Holders of common stock
have no preemptive rights and have no rights to convert their common stock into
any other securities.
On September 1, 2006, the Company undertook a reverse-split of its
common stock through the issuance of one new share of common stock for each ten
issued and outstanding shares of common stock.
On December 1, 2006, the Company issued 850,000 Shares of common stock
to The Quigley Corporation in conversion of its 100,000 Shares of Series A
Redeemable Convertible Preferred Stock.
On December 1, 2006, the Company issued 1,700,000 shares of common
stock in conversion and satisfaction of $170,000 of outstanding loans payable
and 500,000 shares of common stock in settlement of a contingent liability.
On December 8, 2006, the Company issued 17,500,000 Shares of its common
stock in exchange for 100% of the issued and outstanding capital stock of
Patient Portal Connect, Inc. and 500,000 shares of common stock in conversion
and satisfaction of $500,000 of short-term loans payable of Patient Portal
Connect, Inc.
During the year ended December 31, 2006, the Company issued a total of
2,123,652 Shares of Common Stock pursuant to its employment agreements and as
partial compensation for legal and marketing services.
During the quarter ended June 30, 2007, the Company issued 1,000,000
shares of Common Stock as a portion of the purchase price for certain hospital
contract assets, and a total of 150,000 Shares of Common Stock in lieu of cash
compensation for services rendered and as partial compensation for legal and
marketing services.
WARRANTS AND OPTIONS- As of Sept 30, 2007, 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:
Description Number Exercise Price Expiration
---------------------------------------------------------------------------
Class "A" Warrants 390,000 $ 2.00 12/31/11
Class "B" Warrants 390,000 $ 3.00 12/31/11
Class "C" Warrants 390,000 $ 4.00 12/31/11
Class "D" Warrants 3,650,000 $ .50 12/31/09
2002 INVENTIVE STOCK OPTION PLAN
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 Sept 30, 2007, no options have been
awarded pursuant to this Plan.
Reserved Shares
The Company has also reserved for insurance up to 1,000,000 shares of
common stock in connection with the 2002 Incentive Stock Option Plan. To date,
no options have been granted under this plan.
NOTE 9 - COMMITMENTS AND CONTINGENCIES
Operating Leases
During the year ended December 31, 2006 and the quarter ended Sept 30,
2007, the Company had no equipment or operating leases in effect. The Company
paid a portion of real estate leases on four properties representing primary
office space and company apartments in Palm Beach Gardens, FL and Baldwinsville,
NY. The future minimum non-cancelable lease payments under leases are
$93,427.29, $89,640.00, and $87,840.00 for the three years ended December 31,
2007, 2008, and 2009 respectively. The minimum lease payments for years 2010
through 2015 are $82,240.00 per year. The minimum lease payments for 2016 are
$21,060.
6
PATIENT PORTAL TECHNOLOGIES, INC. And SUBSIDIARY
CONDENSED NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Employment Agreements
As of September 30, 2007, the Company had no Employment Agreements in
effect.
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.
NOTE 10 - RELATED PARTY TRANSACTIONS
During the period ended June 30, 2007, the Company entered into asset
purchase agreements whereby it acquired certain retail hospital contracts from
Patient Portal, Inc. for the purchase price of $1,245,991.
During the period ended March 31, 2007, the Company entered into asset
purchase agreements whereby it acquired certain retail hospital contracts from
Patient Portal, Inc. for the purchase price of $407,931.
During the period ended December 31, 2006, the Company entered into
asset purchase agreements whereby it acquired certain software and technology
from Patient Portal, Inc. for the purchase prices of $750,000 and $63,852 of
Common Stock pursuant to its employment agreements and as partial compensation
for legal and marketing services.
During the year ended December 31, 2006, costs and expenses of the
Company include billings of $5,537.48 from Patient Portal, Inc. for call-center
services in support of hospital service contracts. Selling, General and
Administrative expenses include $2,500 from Patient Portal, Inc. for IT support
services. For the quarter ended March 31, 2007, these costs and expenses totaled
$119,107. The controlling shareholders of the Company are also the controlling
shareholders of Patient Portal, Inc., and the purchase and sale transactions
were at market value for the assets acquired.
7
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND PLAN OF
OPERATIONS.
The following is Management's discussion and analysis of certain
significant factors which have affected the Company's financial position and
operating results during the periods included in the accompanying financial
statements, as well as information relating to the plans of the Company's
current management.
FORWARD-LOOKING STATEMENTS
This report contains "forward-looking statements". In some cases, you
can identify forward-looking statements by terms such as "may," "intend,"
"might," "will," "should," "could," "would," "expect," "believe," "estimate,"
"predict," "potential," or the negative of these terms and similar expressions
intended to identify forward-looking statements. These statements reflect the
Company's current views with respect to future events and are based on
assumptions and subject to risks and uncertainties. These risks and
uncertainties may cause the Company's actual results, performance, or
achievements to be materially different from any future results, performance, or
achievements expressed or implied by the forward-looking statements. You should
not place undue reliance on these forward-looking statements. Also, these
forward-looking statements represent the Company's estimates and assumptions as
of the date of this report. The Company is under no duty to update any of the
forward-looking statements after the date of this report to conform such
statements to actual results or to changes in our expectations.
RESULTS OF OPERATIONS
---------------------
The Company was established in November, 2002. On December 7, 2006, the
Company acquired Patient Portal Connect, Inc., which as of September 30, 2007 is
its only operating subsidiary. The results of operations for the three months
ended Sept 30, 2007 includes the business operations of this subsidiary.
Three Months Ended Sept 30, 2007 vs. Sept 30, 2006
----------------------------------------------------
The Company reported no revenue for the three months ended Sept 30,
2006 due to the divestiture of its former operating subsidiary in September,
2005. In December, 2006, the Company acquired a new operating subsidiary,
Patient Portal Connect, Inc., and the revenues for this reporting period reflect
the revenues of this operating subsidiary. Due to the lack of business
operations during the quarter ended March 31, 2006 there are no year-to-year
comparisons for revenues and expenses.
Revenues for the three months ended Sept 30, 2007 were $347,421 and
were derived from hospital service contracts acquired by the Company during this
quarter. Cost of sales for the three months ended Sept 30, 2007 were $_423,530.
Selling and marketing expenses were $0for the three months ended Sept
30, 2007, and Research and Development Expenses were $0. Depreciation and
Amortization expenses for this three-month period totaled $185,002. The increase
in selling and marketing expenses is primarily due to the hiring of additional
employees and start-up costs related to newly-acquired hospital contracts. The
increase in non-cash items (amortization and depreciation) is due to charges
related tothe purchase of additional hospital contracts during the first nine
months of this year.
The Company reported a net loss of ($675,992) for the three month
period ended Sept 30, 2007 as compared to a net loss of ($35,000) during the
three months ended Sept 30, 2006. This represents a loss per share of $.01 for
the three months ended Sept 30, 2007 as compared to a loss per share of $.01 for
the three months ended Sept 30, 2006.
Nine Months Ended Sept 30, 2007 vs. Sept 30, 2006
----------------------------------------------------
The Company reported no revenue for the six months ended Sept 30, 2006
due to the divestiture of its former operating subsidiary in September, 2005. In
December, 2006, the Company acquired a new operating subsidiary, Patient Portal
Connect, Inc., and the revenues for this reporting period reflect the revenues
of this operating subsidiary. Due to the lack of business operations during the
nine-month period ended Sept 30, 2006 there are no year-to-year comparisons for
revenues and expenses.
Revenues for the nine months ended Sept 30, 2007 were $991,255 and were
derived from hospital service contracts acquired by the Company during this
nine-month period. Cost of sales for the six months ended Sept 30, 2007 were
$892,810.
8
Selling and marketing expenses were $0 for the nine months ended Sept
30, 2007, and Research and Development Expenses were $53,678. Depreciation and
Amortization expenses for this nine-month period totaled $358,720.
The Company reported a net loss of ($965,233) for the nine month period
ended Sept 30, 2007 as compared to a net loss of ($70,000) during the nine
months ended Sept 30, 2006. This represents a loss per share of $.01 for the
nine months ended Sept 30, 2007 as compared to a loss per share of $.01 for the
nine months ended Sept 30, 2006.
CURRENT PLAN OF OPERATIONS
--------------------------
Patient Portal Technologies, Inc. through its newly acquired
subsidiary, Patient Portal Connect, Inc. (PPC) is well positioned to be the
premier provider of integrated workflow solutions in the healthcare industry.
Having developed the industry's newest, leading-edge process improvement
delivery 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. PPC's revolutionary
solutions are changing the way hospitals and patients do business in today's
healthcare environment.
Nationwide, an explosive demand for more customized healthcare has
resulted in a greater need for improved productivity, efficiency, and customer
service in hospitals. PPC 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. PPC's proven technologies provide tremendous economic benefit for
healthcare providers.
PPC intends to rapidly gain market share by leveraging strategic
relationships and acquiring companies with existing hospital contracts. The
company's acquisition strategy will enable it to achieve immediate
profitability, grow rapidly, and quickly gain first mover advantage. PPC's
sophisticated technology platform allows the company to create additional
revenue streams with minimal cost by accessing enhanced service modules as
market demand changes. This scaleable architecture creates even greater
profitability by enabling multiple services to be delivered over the PPC service
delivery platform.
Management believes that PPC is primed to swiftly react to the
ever-changing healthcare industry. Unlike the costly, capital-intensive and
stand-alone products offered by our industry competitors, PPC's sophisticated
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 PPC to present a tailored
solution to our customers at a cost-effective price and will dramatically
enhance our ability to capture significant market share nationwide.
PPC's expertise is in its ability to create win-win opportunities for
hospitals and patients by clearly defining customized, flexible, and integrated
healthcare solutions with measurable results. PPC enables 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.
SUBSEQUENT EVENTS
-----------------
Stock Purchase Transaction With TB&A Hospital Television, Inc.
--------------------------------------------------------------
On October 31, 2007, we entered into an Agreement for Purchase and Sale
of Stock with TB&A Hospital Television, Inc. ("TB&A") On November 2, 2007, we
completed the transactions contemplated by this Agreement by acquiring all of
the capital stock of TB&A for a purchase price of $3,875,000 in cash and
$400,000 in assumed debt. The consideration issued in the stock purchase was
determined as a result of arm's-length negotiations between the parties.
Following the stock purchase, we are 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.
9
The unaudited Pro Forma Consolidated financial statements as of
December 31, 2006 and 2007 and the six months ended June 30, 2006 and 2007
reflecting the acquisition of this wholly-owned subsidiary are set forth as an
Exhibit to the Current Report on Form 8-K filed on November 13, 2007.
Asset Purchase and Sale Agreement With Worldnet Communications, Inc.
--------------------------------------------------------------------
On November 2, 2007, we completed the previously-reported Asset
Purchase and Sale Agreement with Worldnet Communications, Inc. ("Worldnet"),
whereby we acquired eighteen hospital telecommunications services contracts. The
purchase price for the contracts was $2,500,000, consisting of $1,500,000 in
cash and 1,000,000 Shares of our Common Stock with a stated value of $1.00 per
Share.
We have assigned the contracts to our wholly-owned operating
subsidiary, Patient Portal Connect, Inc. Prior to this transaction we have had a
business relationship with Worldnet, which provides us with operator call center
and data center services on a contract basis. Three of our controlling
shareholders are also shareholders of Worldnet, and the President of Worldnet,
Brian Kelly, is the brother of our President, Kevin Kelly. There are no common
Officers or Directors of our Company and Worldnet. The consideration issued in
this asset purchase was determined as a result of arm's-length negotiations
between the parties and our valuation of the present and future cash flow
generated by the purchased contracts.
PATIENT PORTAL PRODUCTS AND SERVICES
------------------------------------
Many hospitals are plagued with decentralized workflows and vertical
silos of information that create redundant, costly processes and a disjointed
patient experience. Competition and consumers are demanding change.
PPC addresses that need for change with customized solutions that
improve efficiency and productivity of administrative processes directly
affecting the patient relationship and the hospital's ability to generate
revenue. Hospitals gain real-time reports, reallocation of labor hours,
improvements in productivity and revenue, opportunities to enhance customer
service, enhanced branding, and compliance with government directives to measure
outcomes. The sophistication of our system core elements can be integrated into
any hospital nationwide while allowing for cost-effective customization to meet
the specific needs of each institution.
o PPC was created as an outcome of working with our hospital
partners in a live laboratory to create process solutions that are
cost-effective, scalable, and allow for seamless and transparent
integration into the hospital's legacy systems and culture.
o Our workflow and patient management systems bring the hospital in
compliance with Joint Commission on Accreditation of Healthcare
Organizations (JCAHO) mandates, which boost the hospital's
pay-for-performance reimbursements.
The following is a brief description of the principal services
delivered by PPC:
Patient Tracker Services:
-------------------------
Having the right patient in the right place at the right time is a key
tenet of business in healthcare. That can be difficult and costly when up to 60
percent of all admissions come through the Emergency Department and are
unplanned. Coordinating efforts of interdepartmental staff involved in patient
flow is challenging when hospitals continue to work with paper slips and white
boards to determine room availability. Inefficiency is costly considering each
patient who leaves or is diverted from the ED costs the hospital $15,000 or
more. With overcrowding and Emergency Department diversions becoming the norm,
hospitals are searching for innovative, cost-effective ways to manage patient
throughput.
In support of this trend, the Joint Commission on the Accreditation of
Health Care Organizations (JCAHO) issued a standard in January 2005, Managing
Patient Flow (LD.3.15). This standard measures leadership progress towards
development and implementation of plans to identify and mitigate impediments to
efficient patient flow throughout the hospital.
Patient Tracker is PPC's direct response to address this critical
industry-wide challenge. Patient Tracker was developed with guidance from one of
the most respected technology hospitals in the industry. The system provides
real-time information on the current location of all patients by collecting and
displaying critical-path information within departments and hospital-wide. The
interactive screens provide each member of the care team with useful information
concerning critical tasks, room availability, messaging, and time-stamped
10
workflow. We have developed a user-friendly graphical interface that allows all
hospital stakeholders including nurses, administration, transport, and
housekeeping to determine patient location, room availability, and staff
performance. To minimize costs we have designed a centralized data management
architecture that allows hospitals to share in the savings of networked based
capabilities and realize a documented ROI of less than 12 months.
Patient Tracker provides quantitative and qualitative data that allows
administrators to predict trends and determine best use of critical resources.
Further, the system is flexible and scalable for customized integration into any
hospital's legacy systems and culture. The Patient Tracker system's
effectiveness is further enhanced by a unique module, ED Tracker, unmatched by
any software application in the industry. Made specifically for the Emergency
Department, this application seamlessly integrates with our hospital-wide
Patient Tracker system and is customized to provide for transparent use within
the hospital's current process flow.
Patient Relationship Services:
------------------------------
The typical flow of information through a hospital can often stop at
the front line since nurses hear most patients' needs--medical and
non-medical--but have little time to react to anything beyond medical concerns.
In all facets of healthcare, effective communication with patients and
addressing their non-medical needs are often bypassed for more pressing medical
issues...until recently. Industry studies continue to prove that there is a
direct correlation between effective patient communication and improved medical
outcomes. The shift toward improved patient satisfaction can be enhanced further
if patients are given a means of controlling their hospital environment and if
information about patients can be shared among caregivers.
Stimulated by this trend, new JCAHO mandates call for improved patient
communication and management with 2007 National Patient Safety Goals, "Improve
the effectiveness of communication among caregivers (Goal 2)," "Encourage
patient's active involvement in their own care...(Goal 13)," and "Define and
communicate the means for patients and their families to report concerns about
safety...(Goal 13A)." As hospital compliance with these goals determines
pay-for-performance reimbursements, administrators put high value on process
improvements that enhance patient communication, customer service, and process
efficiency.
To meet these needs and requirements, PPC has developed the following
patient relationship services:
Scheduler Elite: A suite of innovative and elegantly simple
applications designed to collect and display scheduling data on a "real-time"
basis within departments and enterprise-wide. Scheduler Elite is a
comprehensive, web-based patient management application featuring interactive
data controls that allow multi-user simultaneous access so doctor's offices,
hospital departments, and scheduling services can share and collect patient data
across multiple platforms. Scheduler Elite's unique configurability incorporates
processes to facilitate compliance and best practices. PPC retains extraordinary
value by gaining multiple patient touch points, integrating 24/7 call coverage,
and hosting the application and data.
ConnectMD: This is a innovative service platform which provides nearly
effortless customer service for patients on behalf of the heathcare institution,
ensuring consistent communication with patients, which closes the loop between
medical offices, patients, and the hospital after hours or during ED overflow
when a timely response can be critical. ConnectMD features live-answer contact
with our Patient Contact Representatives and custom scripting for the doctor's
office or hospital department. ConnectMD provides a third communication option
for our varied customer base beyond web and electronic systems.
Physician Finder: The advanced technology of Physician Finder
seamlessly integrates with the hospital databases to create a customized
application for instantaneous data queries across multiple matrices matching
physicians with patient criteria. The sophistication of this platform supports
enhanced customer service initiatives, such as an automatically generated letter
or email listing the selections and personalized directions to the medical
offices from the patient's specified address. Further, all patient data and
physician selections can be queried and cross matched in real-time reports for
more focused marketing and targeted education to the patient.
Instant Response Line: An interactive, live response solution that
enables patients to log a non-medical need, which is electronically transferred
to an appropriate hospital department for resolution in a timely fashion.
Putting the hospital in proactive mode, improves interdepartmental
communication, and adds an unparalleled level of customer service for the
patient. A key element to the success of this system is time-stamped reporting
that allows administrators to see how quickly and efficiently their staff
responds. Administrators can request immediate notification regarding certain
calls for direct intervention and response. Instant Response Line provides a
single point of contact for all patient problems and leads to greater patient
satisfaction.
11
Quick Pulse Surveys: Quick inpatient surveys allow hospital
administrators to keep their "finger on the pulse" of what patients are thinking
while in house--a vastly different concept from industry standard post-discharge
surveys hospitals typically employ. This customized service focuses on finite
issues, allowing the hospital to direct specific, timely solutions. A key
differentiator between our service and competing survey services is our ability
to collect patient response data in real time while the patient is still
involved in the experience. The data is also made available in real-time with
follow-up analysis available so hospitals can benchmark and measure
improvements, putting the hospital in compliance with pay-for-performance
government initiatives.
Outcomes Optimizer: Nationally, the prevalence of medical errors
related to the discontinuity of care from the inpatient to the outpatient
setting is high and may be associated with an increased risk of
re-hospitalization. Further, more than one in five seniors take five or more
different prescription drugs every day. The difficulty in coordinating medical
care among providers is exacerbated with poor communication vehicles and
disparate technology systems making continuity of care nearly impossible.
To address this pressing concern, beginning in 2008, the Joint
Commission on the Accreditation of Healthcare Organizations (JCAHO) requirements
mandate hospitals to implement processes that manage patient treatment across
the full continuum of care from hospital to home and between all caregivers. To
satisfy requirements for successful accreditation and pay-for-performance
reimbursements, hospitals must look outside the traditional healthcare paradigm
to create a broader spectrum of care and communication.
In direct response to one of healthcare's most critical needs, Patient
Portal Connect's Outcomes Optimizer is a revolutionary system that enables
incongruent providers to coordinate efforts across a full continuum of care.
Outcomes Optimizer effectively bridges the communication gaps between providers
with multi-layered architecture that coordinates tasks and patient information
in real time. Our state-of-the-art system gains us strategic competitive
advantage with applications that qualify and quantify critical patient data and
measure improvements in patient outcomes to ensure hospital reimbursements for
JCAHO compliance in 2008. We are positioned ahead of the curve enabling
hospitals to proactively address preventative medicine and wellness education
among caregivers from the hospital to the home with remote diagnostic
monitoring, wellness education, and medication monitoring. These services
provide a continuum of support and position us to be at the forefront of
outcomes-based requirements for healthcare.
A critical component of our Outcomes Optimizer is the ability to
provide feedback to physicians and close the communication loop with web-based
access to patient information for home healthcare providers, hospitals, and
physicians. To ensure the discharge management process continues the hospital's
relationship with the patient at the home, our Outcome Optimizer system provides
critical data feedback and continuous, real-time patient data flow to multiple
providers after discharge. These factors are distinctive to our services and
emphasize a private-branded full continuum of care for the hospital.
12
VIRTUAL NURSE(TM) MARKETING AGREEMENT
-------------------------------------
In April, 2007, the Company acquired a minority interest in Virtual
Nurse, Inc. of Palm Beach Gardens, FL, 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
efficient, cost-effective nursing solutions. 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.
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.
HEALTHCAST(TM) PATIENT NETWORK SYSTEM LICENSE AGREEMENT
-------------------------------------------------------
As part of its healthcare services package, PPC has recently begun to
market the newly-developed HealthCast Patient Network System under an exclusive
technology license from Omnicast, Inc. HealthCast 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 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 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's
proprietary platform captures viewing metrics so hospitals can document
educational content delivery for pay-for-performance reimbursement, and
commercial sponsors can respond to patient viewing habits
HealthCast's Foundation Channel, Education Services Channel, and MyMail
station present personalized content to specific patients In turn, patients have
opportunities to interact with the multimedia platform to respond to channel
content, such as with live auctions on the Foundation Channel, text messaging or
E-Greetings on MyMail, or by answering questions to win prizes after watching
condition-specific educational programming. The Foundation Channel promotes
fundraising events and announcements with celebrity endorsements and national
sponsorship.
13
EMPLOYEES
---------
As of Sept,2007, the Company currently has seven full-time employees
and three part-time employees. In addition, the Company contracts for 24/7
Operator Call Center and Data Management Services with Worldnet Communications,
Inc. of Syracuse, NY. The Company's sales and marketing is primarily conducted
through a Master Dealer Agreement with VOX Technologies, Inc., which utilizes
over one hundred independent dealer representatives throughout the United States
to market the Company's products and services to healthcare institutions on a
commission-only basis.
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
As shown in the above financial statements, the Company incurred a net
loss of ($401,408) during the year ended December 31, 2006 and ($________)
during the three months ended Sept 30, 2007. The Company plans to raise more
capital through public or private financing, through the issuance of its common
stock, the issuance of debt instruments, including debt convertible to equity,
or otherwise attain financing, which 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. These factors create substantial doubt as to the Company's
ability to continue as a going concern.
The Company intends to continue its efforts to complete the necessary
steps in order to meet its cash flow requirements throughout fiscal 2007 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
its Patient Portal Connect subsidiary and the continuing roll-out of its product
line to its existing and future 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.
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.
ITEM 3. CONTROLS AND PROCEDURES
Under the supervision and with the participation of management
including the Chief Executive Officer and Chief Financial Officer, we have
evaluated the effectiveness of the design and operation of our disclosure
controls and procedures pursuant to Exchange Act Rule 13a-14c and of the end of
the period covered by this report. Based on that evaluation, the Chief Executive
Officer and Chief Financial Officer have concluded that these disclosure
controls and procedures are effective. There were no changes in our internal
control over financial reporting during the quarter ended March 31, 2006 that
have materially affected, or are reasonably likely to materially affect, our
internal controls over financial reporting.
14
PART II
-------
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
The Company is at present not involved in any legal proceedings which
management believes will have a material effect upon the financial condition of
the Company, nor are any such material legal proceedings anticipated. The
Company is presently negotiating with a judgment creditor to repay on negotiated
terms a promissory note in the amount of $300,000 plus accrued interest and
costs. In the event that the judgment is not satisfied, or successfully
renegotiated, the creditor will have the right to execute upon its judgment.
Based upon the original terms of its Promissory Note, the creditor also retains
the right to convert the principal amount of said judgment into shares of Common
Stock at a conversion price of $1.00 per Share.
ITEM 2. CHANGES IN SECURITIES.
NONE
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
NONE
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
NONE
ITEM 5. OTHER INFORMATION.
NONE
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
Exhibit 31.1 31.2 32.1 32.2 - Officer Certifications
Reports on Form 8-K: NONE
15
SIGNATURES
----------
In accordance with the requirements of the Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant, caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
Patient Portal Technologies, Inc.
Dated: November 14, 2007
By: /s/ KEVIN KELLY
----------------------------
Kevin Kelly, President
Pursuant to the requirement of the Securities Exchange Act of 1934,
this report has been signed by the following persons on behalf of the Registrant
and in the capacities and on the dates indicated.
NAME TITLE DATE
-------------------------------------------------------------------------------
By: /s/ KEVIN KELLY President, 11/14/07
----------------------- Chairman of the
Kevin Kelly Board of Directors
By: /s/ THOMAS HAGAN Acting Chief Financial
----------------------- Officer, Director 11/14/07
Thomas Hagan
By: /s/ DANIEL COHOLAN Director 11/14/07
-----------------------
Daniel Coholan
16
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