ITEM 1. BUSINESS
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. (formerly known as Gambino Apparel Group, Inc., hereafter referred to as “PPRG”)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 PPRG, we became a leading provider of innovative non-medical service solutions for hospitals. The Company's services are delivered over the Company's state-of-the-art proprietary technology platform. The Company uses the technology to create a communication portal between patients, hospitals and third parties, allowing the delivery of many useful services focused on impacting satisfaction and improving financial outcomes for hospitals.
On November 1, 2007 the Company raised $7,000,000through the issuance of a convertible debenture agreements with Dutchess Private Equities Fund, Ltd. These funds were primarily utilized for acquisition purposes.
In June, 2009 the Company closed on a transaction with Dutchess Private Equities Fund, Ltd. to restructure the convertible debenture.
On November 2, 2007, the Company acquired 100% of the capital stock of TB&A Hospital Television, Inc. (hereinafter "TB&A").
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.
CURRENT PLAN OF OPERATIONS
The healthcare industry is in the midst of dramatic change which is redefining the way hospitals provide services to patients. Education, safety, entertainment, comfort and enhanced communication all contribute greatly to a quality experience for patients and their families. Not surprisingly, these non-medical services rank higher on importance and lower on satisfaction than most care delivery needs.
Patient Portal is positioned in the marketplace as the nation’s first Total Satisfaction Company. We are focused on developing and delivering a broad array of patient centric, non-medical services. Our leading edge technologies and 24/7 personal call communication center leverage a hospital’s existing infrastructure to connect patients and their families to a whole suite of customizable services designed to enhance the patient experience, reduce costs, increase efficiency and generate revenue.
Patient Portal works with healthcare facilities to address patient needs in three simple stages - before, during and after a hospital stay. At each stage, we have the opportunity to add value to the patient experience, which in turn, adds value to the hospital. We work with hospitals to achieve Total Satisfaction - for patients and their families, the hospital and other third parties.
The advantages of or solution is that it requires minimal capital, can integrate with legacy systems, has a low per patient cost and can be installed with minimal physical modification. All of which will make perfect sense to healthcare facilities challenged with making the best use of every dollar for maximum impact in a competitive market. Additionally we support our service platform with a 24/7 employee staffed communication center which provides a market distinction and results in a very personable and customer centric outcome.
Our business objective is to support hospitals as they work to improve patient outcomes and enhance satisfaction throughout the continuum of care cycle. The benefit of our proprietary technology platform supported by our communication center is that it allows us to be in a unique position to deliver a variety of services aimed at impacting these areas of hospital performance. From a financial perspective our services are high impact, high margin, low cost and are scalable with the addition of new hospital accounts, with low fixed costs.
The Company has adopted a recurring subscription based revenue model that utilizes patient interactions. We have approximately 60 long term contracts with hospitals, serving over 1 million patients annually.
Our sophisticated technology platform can be expanded to support additional revenue streams, with minimal cost, as market demand changes. This scalable architecture creates even greater profitability by enabling multiple services to be delivered over the Company’s service delivery platform.
Our growth strategy involves gaining market share through competitive advantage as well as utilizing acquisitions where appropriate.
PATIENT PORTAL TECHNOLOGY SERVICES
The Company offers a menu of services under its Total Satisfaction program. All of these services are aimed at impacting the non-medical patient experience before, during and after the hospital stay.
The services are paid for by hospitals, patients and third parties based upon the type and benefit of the service. Most of the services are fully supported and delivered over the Company’s proprietary technology platform supported by an employee staffed communication center that is available to patients 24/7.
The Company is focused on delivering patient services at three points in time; prior to entry and admission into the hospital; during the hospital stay and post discharge. The pre admission services include a reminder call to patient at their home, information package that can be emailed or direct mailed and condition specific 30 second med clip videos. Services during the hospital stay include installation, support and management of the bedside entertainment system (TV and phone) inside a patient’s room (including the remote activation, billing / collecting and deactivation of the service), patient education through the monitor, concierge response line and in room patient surveys. Post discharge services include medication management service including coordination of hand off of prescriptions between doctor / hospital / third party and home delivery of medication, post discharge follow up call and survey and after care med clips.
The chart below summarizes the services currently offered under Total Satisfaction.
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 education and 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. 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.
MedEx(SM)Home Delivery: MedEx(SM) Home Delivery coordinates the information flow between the doctor/ hospital / fulfillment company for the patients medication upon discharge from the hospital. The patient also recives home delivery of thir prescription with a short tim after discharge. The fulfillment and delivery service is provide through third party partners.With MedEx(SM), we offer aturnkey 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. 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.
Instant 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 facility 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 facility 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.
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 February 28, 2010 the Company and its affiliates had approximately 40 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.
ITEM 1A.
ITEM 1A. RISK FACTORS
An investment in our common stock involves a high degree of risk. Prospective investors should consider carefully the following factors and other information in this report before deciding to invest in shares of our common stock. If any of the following risks actually occur, our business, financial condition, results of operations and prospects for growth would likely suffer.
Risks Related to Our Company
We Have A Limited History of Operations.
The Company's present business operations are conducted through its newly-acquired subsidiaries, Patient Portal Connect, Inc. and TB&A Hospital Television, Inc. The Company has only been operating in its current business since 2006 and therefore has a limited history of operations.
We May Need Additional Funding.
Management believes that is has sufficient cash operating capability and access to capital to satisfy the Company needs for 2010. The Company also has a good relationship with a commercial bank which has provided lines of credit. However, there can be no assurance that additional funds will not be required for additional working capital purposes during such period or thereafter or that, if required, such funds will then be available on terms satisfactory to the Company, if at all.
We Have Given Five Star Bank A Security Interest In Certain Property.
As part of our commercial banking relationship we had granted Five Star Banka first priority security interest in certain property of the Company to secure the performance and discharge in full of all of Company's obligations under the loan agreement.
Our Business Operations Could Be Significantly Disrupted If We Lose Members Of Our Management Team.
Our future performance is substantially dependent on the continued services of our management team and our ability to retain and motivate them. The loss of the services of any of our officers or senior managers could harm our business, as we may not be able to find suitable replacements. We do not have employment agreements with any of our key personnel, and we do not maintain any "key person" life insurance policies.
We May Not Be Able To Hire And Retain A Sufficient Number Of Qualified Employees And, As A Result, We May Not Be Able To Grow As We Expect Or Maintain The Quality Of Our Services.
Our future success will depend on our ability to attract, train, retain and motivate other highly skilled technical, managerial, marketing and customer support personnel. Competition for these personnel is intense, especially for software developers, Web designers and sales personnel, and we may be unable to successfully attract sufficiently qualified personnel. We will need to maintain the size of our staff to support our anticipated growth, without compromising the quality of our product offerings or customer service. Our inability to locate, hire, integrate and retain qualified personnel in sufficient numbers may reduce the quality of our services.
Risks Related to Our Products and Services
New Products And Technological Change.
The markets for our products and services are characterized by rapidly changing technology and new product introductions. Accordingly, the Company believes that its future success will depend on its ability to enhance its existing products and to develop and introduce in a timely fashion new products that achieve market acceptance. Management believes that the Company will be able to continue to compete and adapt to potential new industrial and commercial applications for its products with continuous technological enhancements. although there can be no assurance that the Company will in fact be able to identify, develop, manufacture, market or support such products successfully or that the Company will in fact be able to respond effectively to technological changes or product announcements by competitors.
We Face Significant Competition.
The Company faces significant competition from a variety of healthcare industry service providers, and may in the future face competition from a variety of potential providers, many of which have or will have considerably larger and greater financial and human resources and marketing capabilities. We believe that we will be able to compete favorably in this competitive marketplace because of our flexibility in responding to changing and emerging markets, our innovative and competitive services and products, our quick response to customer requirements, and our ability to identify, develop, produce and market original products and derivative product concepts.
We Must Continue To Upgrade Our Technology Infrastructure.
We must continue to add hardware and enhance software to accommodate the increased services which we provide and increased use of our platform. In order to make timely decisions about hardware and software enhancements, we must be able to accurately forecast the growth in demand for our services. This growth in demand for our services is difficult to forecast and the potential audience for our services is large. If we are unable to increase the data storage and processing capacity of our systems at least as fast as the growth in demand, our systems may become unstable and our customers may encounter delays or disruptions in their service. Unscheduled downtime could harm our business and also could discourage current and potential customers and reduce future revenues.
Our Network Infrastructure And Computer Systems May Fail.
An unexpected event like a telecommunications failure, fire, flood, earthquake, or other catastrophic loss at our service providers' facilities or at our on-site data facility could cause the loss of critical data and prevent us from offering our products and services.
In addition, we rely on third parties to securely store our archived data, house our servers and network systems and connect us to the Internet. While our service providers have planned for certain contingencies, the failure by any of these third parties to provide these services satisfactorily and our inability to find suitable replacements would impair our ability to access archives and operate our systems and software.
We May Lose Users And Lose Revenues If Our Security Measures Fail.
If the security measures that we use to protect personal information are ineffective, we may lose users of our services, which could reduce our revenues. We rely on security and authentication technology which we have developed. With this technology, we perform real-time credit card authorization and verification. We cannot predict whether these security measures could be circumvented by new technological developments. In addition, our software, databases and servers may be vulnerable to computer viruses, physical or electronic break-ins and similar disruptions. We may need to spend significant resources to protect against security breaches or to alleviate problems caused by any breaches. We cannot assure that we can prevent all security breaches.
Risks Related to Our Stock Being Publicly Traded
Our Stock Price May Be Volatile.
Our Common Stock has been trading in the public market since 2004. However, throughout our history trading volume has been extremely low. We cannot predict the extent to which a trading market will develop for our Common Stock or how liquid that market might become. The trading price of our Common Stock has been and is expected to continue to be highly volatile as well as subject to wide fluctuations in price in response to various factors, some of which are beyond our control. These factors include:
●
Quarterly variations in our results of operations or those of ourcompetitors.
●
Announcements by us or our competitors of acquisitions, new products, significant contracts, commercial relationships or capital commitments.
●
Disruption to our operations.
●
Our ability to develop and market new and enhanced products on a timely basis.
●
Adverse impact of litigation.
●
Any major change in our board of directors or management.
●
Changes in earnings estimates or recommendations by securities analysts.
●
General economic conditions and slow or negative growth of related markets.
In addition, the stock market in general, and the market for technology companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of those companies. These broad market and industry factors may seriously harm the market price of our Common Stock, regardless of our actual operating performance. In addition, in the past, following periods of volatility in the overall market and the market price of a company's securities, securities class action litigation has often been instituted against these companies. Such litigation, if instituted against us, could result in substantial costs and a diversion of our management's attention and resources.
We Do Not Intend To Pay Dividends On Our Common Stock.
We have never declared or paid any cash dividend on our Common Stock. We currently intend to retain any future earnings and do not expect to pay any dividends in the foreseeable future.
Provisions in our charter documents and under Delaware law could discourage atakeover that stockholders may consider favorable.
Provisions in our Certificate of Incorporation and By-laws may have the effect of delaying or preventing a change of control or changes in our management. These provisions include the following:
●
Our board of directors has the right to elect directors to fill a vacancy created by the expansion of the board of directors or the resignation, death or removal of a director, which may prevent stockholders from being able to fill vacancies on our board of directors.
●
Our stockholders may act by written consent, provided that such consent is signed by all the shareholders entitled to vote with respect to the subject matter thereof. As a result, a holder, or holders, controlling a majority of our capital stock would not be able to take certain actions without holding a stockholders' meeting.
●
Our Certificate of Incorporation prohibits cumulative voting in the election of directors. This limits the ability of minority stockholders to elect director candidates. Additionally the new class of Preferred Stock to be issued to Dutchess will allow them to appoint three directors of their choosing to the board.
As a Delaware corporation, we are also subject to certain Delaware anti-takeover provisions. Under Delaware law, a corporation may not engage in a business combination with any holder of 15% or more of its capital stock unless the holder has held the stock for three years or, among other things, the board of directors has approved the transaction. Our board of directors could rely on Delaware law to prevent or delay an acquisition of us.
You May Experience Substantial Dilution If We Raise Funds Through The Issuance Of Additional Equity And/Or Convertible Securities.
Investors may experience substantial dilution if and when Dutchess converts its Preferred Stock into common stock. They have the right to convert the $7.9 million of Preferred Stock in to an approximate 35% ownership interest in the Company's common stock at anytime.
Our Common Stock Has A Small Public Float And Future Sales Of Our Common Stock,May Negatively Affect The Market Price Of Our Common Stock.
As of February 28, 2010 there were 45,979,553 shares of our Common Stock outstanding, at a closing market price (average of best bid and ask prices) of $.19 for a total market valuation of approximately $ 8.736,000. Our Common Stock has a public float of approximately 32,000,000 shares, which shares are in the hands of public investors, and which, as the term "public float" is defined by NASDAQ, excludes shares that are held directly or indirectly by any of our officers or directors or any other person who is the beneficial owner of more than 10% of our total shares outstanding. These 32,000,000 shares are held by approximately 300 shareholders. We cannot predict the effect, if any, that future sales of shares of our Common Stock into the market will have on the market price of our Common Stock. However, sales of substantial amounts of Common Stock, including future shares issued upon the exercise of 33,056,136 Common Stock Purchase Warrants, future shares issued upon the exercise of stock options (of which none are outstanding as of April 6, 2009 and 1,000,000 have been reserved for potential future issuance), or the perception that such transactions could occur, may materially and adversely affect prevailing market prices for our Common Stock.
We Could Terminate Our Securities And Exchange Commission Registration, Which Could Cause Our Common Stock To Be De-listed From The Over The Counter Bulletin Board ("OTCBB").
As a public company with more than 300 shareholders, we are required to file our periodic reports with the SEC and register our shares of Common Stock under the Securities Exchange Act of 1934 (the "Exchange Act"). In the event that our Company would have less than 300 shareholders of record, our reporting requirements would be on a voluntary basis. In the event that in the future we would have fewer than 300 stockholders of record, we would be eligible to de-register our Common Stock under the Exchange Act. If the Company were to take such action, it could inhibit the ability of the Company's common stock holders to trade the shares in the open market, thereby severely limiting the liquidity of such shares. Furthermore, if we were to de-register, we would no longer be required to file annual and quarterly reports with the SEC and would no longer be subject to various substantive requirements of SEC regulations. De-registration would reduce the amount of information available to investors about our Company and may cause our Common Stock to be de-listed from the OTCBB. In addition, investors would not have the protections of certain SEC regulations to which we would no longer be subject.
Because The Market For And Liquidity Of Our Shares Is Volatile And Limited, And Because We Are Subject To The "Penny Stock" Rules, The Level Of Trading Activity In Our Common Stock May Be Reduced.
Our Common Stock is quoted on the OTC Bulletin Board under the trading symbol PPRG. The OTCBB is generally considered to be a less efficient market than the established exchanges or the NASDAQ markets. While our Common Stock continues to be quoted on the OTCBB, an investor may find it more difficult to dispose of, or to obtain accurate quotations as to the price of our Common Stock, compared to if our securities were traded on NASDAQ or a national exchange. In addition, our Common Stock is subject to certain rules and regulations relating to "penny stocks" (generally defined as any equity security that is not quoted on the NASDAQ Stock Market and that has a price less than $5.00 per share, subject to certain exemptions). Broker-dealers who sell penny stocks are subject to certain "sales practice requirements" for sales in certain nonexempt transactions (i.e., sales to persons other than established customers and institutional "accredited investors"), including requiring delivery of a risk disclosure document relating to the penny stock market and monthly statements disclosing recent bid and offer quotations for the penny stock held in the account, and certain other restrictions. If the broker-dealer is the sole market maker, the broker-dealer must disclose this, as well as the broker-dealers presumed control over the market. For as long as our securities are subject to the rules on penny stocks, the liquidity of our Common Stock could be significantly limited. This lack of liquidity may also make it more difficult for us to raise capital in the future.
ITEM 1B.
ITEM 1B. UNRESOLVED STAFF COMMENTS - None.
ITEM 2.
ITEM 2. PROPERTIES
As of December 31, 2009, the principal property assets of the Company consisted of hospital telecommunications services contracts, furniture, fixtures and computer and network equipment owned by our wholly-owned subsidiaries Patient Portal Connect, Inc. and TB&A Hospital Television, Inc.
During the year ended December 31, 2009, the Company had no significant equipment leases in effect. The Company maintained office space in three locations under real estate leases: Baldwinsville, NY and Amherst, NY and Jupiter, Fla. The non-cancelable lease payments for the year ended December 31, 2009 were $313,741.00. The future minimum lease payments for the three years ending December 31, 2010, 2011 and 2012 are $272,000.00, $216,000.00 and $216,000.00 respectively. The future minimum lease payments for years 2013 through 2015 are $216,000.00 and $49,500.00 for 2016.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
The Company is presently involved in two lawsuits which management believes do 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.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company’s annual meeting was held on September 17, 2009. At that meeting there were four resolutions voted on and approved by the shareholders. The resolutions were for the election of the Board of Directors, approval to amend the Certificate of Incorporation to create the Series C Preferred Stock, approval to amend the Certificate of Incorporation to authorize the Board of Directors to create new classes and series of capital stock without shareholder approval and approval of the 2009 Long Term Incentive Stock Option Plan.
PART II
ITEM 5.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDERS MATTERS
(a) The Company's Common Stock was initially listed on the OTC Bulletin Board Market (Current OTCBB Symbol: "PPRG") from July 27, 2005 to January, 2006, and resumed trading on the Bulletin Board from July, 2007 through December, 2009.
Sales prices do not include commissions or other adjustments to the selling price.
(b) HOLDERS - As of February 28, 2010, there were approximately 300 shareholders of record of the Company's Common Stock.
(c) DIVIDENDS - The Company has not paid or declared any dividends upon its common stock and it intends for the foreseeable future to retain any earnings to support the growth of its business. Any payment of cash dividends in the future, as determined at the discretion of the Board of Directors, will be dependent upon the Company's earnings and financial condition, capital requirements, and other factors deemed relevant.
(d) WARRANTS AND OPTIONS- As of February 28, 2010, 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:
INCENTIVE STOCK OPTION PLAN
On September 17, 2009 the Shareholders of the Company ratified the Company's "2009 Long Term Incentive Stock Option Plan" and reserved 10,000,000 shares for issuance pursuant to said Plan. As of February 28, 2010, there were 8,000,000 options awarded pursuant to this Plan.
RECENT SALES OF UNREGISTERED SECURITIES
The following sets forth the equity securities we sold during the period covered by this report, not previously reported on Forms 10-QSB or 8-K, which was not registered under the Securities Act.
During calendar year 2009 the Company sold 500,000 shares of unregistered common stock under a private placement for approximately $100,000. The Company also issued 7,937 shares of Series C Preferred Stock as consideration, to Dutchess Private Equities Fund Ltd., for converting approximately $6,600,000 of long term debt and retiring approximately 22.8 million common stock warrants. The preferred stock carries an 8% payment in kind dividend and is convertible into approximately 35% of the Company’s common stock at the option of the holder.
The Company relied on the exemption under section 4(2) of the Securities Act of 1933 (the "Act") for the above issuances. No commission or other remuneration was paid on these issuances.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth selected financial data which is derived from, and should be read in conjunction with, the Consolidated Financial Statements and the related Notes and Management's Discussion and Analysis of Financial Condition and Results of Operations contained in this Annual Report.
Selected Financial Information
(in thousands, except per share data)
Fiscal Year Ended December 31,
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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.
General Discussion on Results of Operations and Analysis of Financial Condition
We begin our General Discussion and Analysis with a discussion of the Results of Operations for the years ended December 31, 2009 and 2008, followed by a discussion of Liquidity and Capital Resources available to finance our operations.
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.
Legal Contingencies
From time to time, we are involved in routine legal matters incidental to our business. 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.
RESULTS OF OPERATIONS
The Company was established in November, 2002. On December 7, 2006, the Company acquired Patient Portal Connect, Inc., and on November 4, 2007 acquired TB&A Hospital Television, Inc. As of December 31, 2009, these are the only operating subsidiaries of the Company. The results of operations for the year ended December 31, 2009 includes the business operations of these subsidiaries and revenues from acquired contracts for the periods subsequent to their acquisition, including hospital contracts acquired in November 2008.
During 2009 the Company decided to exit the ownership of the television equipment sales business and instead work with third party distributors to provide equipment to customers as needed. This decision allows the company to focus its resources exclusively on it service business where it has a strong competitive advantage.
During 2009 the equipment business revenues declined approximately 39% from the 2008 level of $9.2 million to the 2009 level of $5.6 million while the gross margin declined 69% from $1.6 million on 208 to $500,000 in 2009. At the same time the service business revenue increased 15% over 2008 levels from $8.7 million in 2008 to just over $10.0 million in 2009. Gross margin from the service business increased 19% from $4.8 million in 2008 to $5.7 million in 2009.
The company expects the growth in revenue and percentage of margin to continue to grow into 2010.
Year Ended December 31, 2009 vs. December 31, 2008
The Company reported $16,096,337 of revenue for the Year Ended December 31, 2009 and $ 17,592,615 for the comparable period in 2008. This change was comprised of a reduction in equipment revenue of 39% over the 2008 level, or approximately $3.6 million, offset by an increase in service revenue of 15% over the 2008 levels, or $1.3 million, as well as the impact of recording the sale of certain equipment unit assets.
Cost of sales for the Year Ended December 31, 2009 was $9,411,802 as compared to cost of sales of $11,380,147 during the same period in 2008. This decrease was a combination of a $2.5 million cost reduction related to decreased equipment revenues offset by $382,000 increase as a result of higher service revenues over 2008.
Selling and Administrative expenses were $5,356,766 for the Year Ended December 31, 2009 as compared to $5,231,764 in 2008. These expense as a percentage of revenue increased for the equipment unit from 15% in 2008 to 25% in 2009 as fixed costs remained high as compared to reduced revenues. These expenses declined from 42% of service revenue in 2008 to 40% in 2009.
Interest costs were $ 1,061,866 for the Year Ended December 31, 2009 compared to $2,093,830 in 2008. This decrease was primarily due to the restructuring of the debt associated with Dutchess Private Equities, Ltd.
The Company reported a net loss of ($4,232,371) for the Year Ended December 31, 2009 as compared to a net loss of ($2,311,990) during the same period in 2008. Approximately $2.6 of the 2009 loss was attributable to expenses associated with restructuring the Company. The overall loss, before restructuring was approximately $1.6 million for 2009 compared to $2.3 million for 2008. This represents a loss per share of ($.10) during the Year Ended December 31, 2009 as compared to a loss per share of $ (.06) for the same period in 2008.
Year Ended December 31, 2008 vs. December 31, 2007
The Company reported $ 17,592,615 of revenue for the Year Ended December 31, 2008 and $4,705,035 for the comparable period in 2007. This majority of this increase, approximately $11.8 million, is attributable to the full year impact of acquired hospital contracts (from 2007) and the full year of operations from TB&A Hospital Television, Inc. (TB&A). The remaining revenue increase of $1.0 million is from existing customer growth and as well as the addition of new customers.
Cost of sales for the Year Ended December 31, 2008 was $11,380,147 as compared to cost of sales of $3,056,835 during the same period in 2007. This increase followed the increase in revenue over 2007.
Selling and Administrative expenses were $5,231,764 for the Year Ended December 31, 2008 as compared to $2,948,026 in 2007. These expense as a percentage of revenue decreased from 62% in 2007 to 29% in 2008 primarily due to the stabilization of expenses as the Company grew its revenues as well as a reduction of start up and organization of expenses of approximately $1.2 million from 2007 to 2008. We expect these expenses to continue to decline as a percentage of revenue.
Interest costs were $2,093,830 for the Year Ended December 31, 2008 compared to $295,868 in 2007. This increase in interest costs was primarily due to the full year cash and non-m cash interest expense associated with the Dutchess debt.
The Company reported a net loss of ($2,311,990) for the Year Ended December 31, 2008 as compared to a net loss of ($2,059,386) during the same period in 2007. This represents a loss per share of ($.06) during the Year Ended December 31, 2008 as compared to a loss per share of $ (.08) for the same period in 2007.
LIQUIDITY AND CAPITAL RESOURCES
As shown in the above financial statements, the Company incurred a net loss of ($4,232,371) during the year ended December 31, 2009 and ($2,311,990) during the year ended December 31, 2008. The Company, in the past, 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 as well as increasing existing bank line so credit if necessary. 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. Under its current plan management expects the Company to be operating on a positive cash income basis for 2010, although there is no certainty to these projections. Management also expects that the sale of the unprofitable equipment business unit coupled with the balance sheet restructuring completed in 2009 have put the Company into a much stronger capital and liquidity position entering 2010.
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. Because our business is evolving and changing, our future operating cash flows will be significantly increased from past results, and past operations are not a good gauge for anticipating future operations.
SUBSEQUENT EVENTS
There were no significant subsequent events to report.
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 7A.
ITEM 7A. QUANTITATIVE AND QULAITATIVE DISCLOSURES ABOUT MARKET RISK
We have no market risk associated with any of our financial based transactions or borrowings.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements required by this report are located beginningon page of this report and incorporated by reference.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
The Board of Directors
Patient Portal Technologies, Inc.
Baldwinsville, New York
REPORT OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTANT
We have audited the balance sheet of Patient Portal Technologies, Inc. and subsidiaries (the "Company") as of December 31, 2009 and December 31, 2008, and the related statements of operations, stockholders' equity and cash flows for the years ended December 31, 2009 and December 31, 2008. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on the audit.
We conducted the audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit includes examining on test basis evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that the audit provides a reasonable basis for the opinion.
In our opinion, the financial statements referred to above present fairly in all material respects, the financial position of Patient Portal Technologies, Inc. and subsidiaries at December 31, 2009 and December 31, 2008 and the related statements of operations, stockholders' equity and cash flows for the year ended December 31, 2009 and December 31, 2008, in conformity with accounting principles generally accepted in the United States of America.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of December 31, 2009, based on criteria established in the Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated March 15, 2009 expressed an unqualified opinion on Patient Portal Technologies, Inc. and subsidiaries internal control over financial reporting.
/s/ Harris F. Rattray
Harris F. Rattray CPA
Pembroke Pines, Florida
March 15,
PATIENT PORTAL TECHNOLOGIES,INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
DECEMBER 31,
PATIENT PORTAL TECHNOLOGIES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31,
PATIENT PORTAL TECHNOLOGIES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND PREFERRED STOCK
DECEMBER 31, 2009
PATIENT PORTAL TECHNOLOGIES, INC. AND SUBSIDIARY
RESTATED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND PREFERRED STOCK
DECEMBER 31, 2008
Patient Portal Technologies, Inc.
Notes to Consolidated Financial Statements
For the Years ended December 31, 2009 and 2008
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 provided for in these financial
statements.
Cash Equivalents- The Company considers all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents.
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 $323,000 as of December 31, 2009.
Debt Issuance Costs - Cost incurred to issue debt are deferred and amortized 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.
2. NON CASH TRANSACTIONS
During 2009 the Company had two significant non cash transactions. A summary of each follows:
Dutchess Private Equities Fund, Ltd.
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.
The Series C Preferred Stock can be converted into common stock at a rate of .0072% of the outstanding common shares for each share of preferred stock that is converted. This formula fixes the conversion of preferred stock into an approximate 36% ownership level. The preferred stock also carries a payment in kind dividend of 8% annual, payable quarterly.
Equipment Business Unit Sale
In 2009 the Company made the decision to discontinue the ownership of the television equipment sales business and on December 21, 2009 the Company sold specific assets associate with this business to a former manager, for approximately $807,000 in consideration (See Note 9). The assets sold included the name TB&A, customer lists, equipment inventory, purchasing contracts, two lease agreements and the records associated with the television equipment sales business.
The Company will continue to sell and service television equipment through relationships it has established with third party distributors.
The purchase price consisted of a cash payment of approximately $269,000 and non cash consideration, in the form of assumed debt in the amount of approximately $538,000. The non cash items were treated as such in the financial statements for the period ending December 31, 2009.
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.
4. BUSINESS COMBINATIONS AND ACQUISITIONS
During 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.
5. INVESTMENTS
During April 2007 the Company acquired a 9% minority interest in Virtual Nurse, Inc. and in March 2007, acquired a 9% minority interest in OmniCast, Inc. These investments are carried at cost.
6. 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 fifty years. Property and equipment consist of the following at December 31:
7. INTANGIBLE ASSETS
In accordance with SFAS No. 142 the Company's intangible assets are amortized over the anticipated useful life of the assets. The intangible assets represent hospital contracts that have been purchased by the Company. The balances summarized below reflect the unamortized portion of the balances. The contracts are being amortized over a 120 month period using the straight line method. See note 4. A summary of the balance at December 31, follows:
The amortization expense for 2009 and 2008 was $907,833 and $858,867 respectively and the estimated annual amortization for the next five years will be approximately $854,000.
8. LONG-TERM DEBT
Long-term debt consists of the following at December 31:
12% Convertible Debenture - In May 2009 the Company converted the outstanding debenture into Preferred Stock (See Note 2).
Five Star Bank - There are two separate credit facilities; a $500,000 equipment based line of credit, with floating interest rates ranging from 4.46% to 5.58% and a revolving working capital line of credit, at an interest rate of 5.25%. The equipment line of credit is being amortized over 36 months and the revolving line of credit is interest only.
Other Long term Debt - Approximate $333,000 of this balance is paid monthly in amounts ranging up to $5,000, including interest payable, at rates 12%-17%, through 2014. The remaining balance represents term notes due through 2015 at interest rates ranging from 8%-14%.These notes are unsecured.
9. EQUIPMENT BUSINESS UNIT SALE
On December 21, 2009 the Company exited the ownership of the hospital television equipment sales business, which had been part of the acquisition of TB&A. The Company retained ownership over all of the hospital service and support contracts and will continue to offer televisions for sale through relationship with third party equipment distributors.
The business unit was sold for approximately $807,000 and resulted in a gain on the transaction of approximately $499,000 after transaction expenses. The sales price included approximately $269,000 in cash and $538,000 in assumption of debt. A summary of the key elements of the sale and gain follows:
As part of the transaction the purchaser signed a five year non-compete agreement covering the Company’s existing customer base.
10. COMMITMENTS AND CONTINGENCIES
Lease Commitments - During the Year ended December 31, 2009 the Company had no significant equipment leases in effect.
Lease and rent expense for the Year ended December 31, 2009 and 2008 was $313,741 and $ 307,942 respectively. Future payments under operating leases with terms currently greater than one year as follows:
Employment Agreements - As of December 31, 2009, the Company has three employment agreements in effect for key management.
Litigation - The Company is currently involved in two lawsuits stemming from prior business transactions. The Company believes there is no merit in either lawsuit and no decision would result in liabilities in excess of amounts accrued in the financial statements.
Warrants and Options - As of December 31, 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:
2009 Incentive Stock Option Plan
On September 17, 2009, the Shareholders of the Company ratified the Company's "2009 Long Term Incentive Stock Option Plan" and reserved 10,000,000 shares for issuance pursuant to the Plan. As of February 28, 2010, 8,000,000 options have been awarded pursuant to this Plan.
11. SUBSEQUENT EVENTS
There were no significant subsequent events to report.
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
There have been no disagreements between the Company and its independent accountants on any matter of accounting principles or practices, or financial statement disclosure.
ITEM 9A.
ITEM 9A. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
As of December 31, 2009, we conducted an evaluation, under the supervision and with the participation of the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of December 31, 2009.
Internal Controls over Financial Reporting
There have been no changes in our internal controls during our most recently completed fiscal quarter covered by this report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Management is responsible for establishing and maintaining adequate internal control over financial reporting. A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures maydeteriorate.
Management, including the Chief Executive Officer and Chief Financial Officer, has conducted an evaluation of the effectiveness of the Company's internal control over financial reporting as of December 31, 2009, based on the criteria for effective internal control described in Internal Control -- Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on its assessment, management concluded that the Company's internal control, as defined in Rules 13a-15(e) and 15d - 15(e) of the Exchange Act of 1934, over financial reporting were effective as of December 31, 2009.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANT ON
INTERNAL CONTROL OVER FINANCIAL REPORTING
The shareholders and Board of Directors of Patient Portal Technologies, Inc.
I have audited Patient Portal Technologies, Inc.'s internal control over financial reporting as of December 31, 2009, based on criteria established in Internal Control--Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Patient Portal Technologies, Inc.'s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management's Report on Internal Control over Financial Reporting. My responsibility is to express an opinion on the Company's internal control over financial reporting based on my audit.
I conducted my audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that I plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. My audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as I considered necessary in the circumstances. I believe that my audit provides a reasonable basis for my opinion.
A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A Company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit the preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company's assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. In my opinion, Patient Portal Technologies, Inc. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2009, based on the COSO criteria.
I also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Patient Portal Technologies, Inc. as of December 31, 2008 and December 31, 2007 and my report expressed an unqualified opinion thereon.
/s/ Harris F Rattray
Certified Public Accountant
Pembroke Pines, Florida
March 15,
Item 9B.
Item 9B. Other Information
None.
PART III
Item 10.
Item 10. Directors, Executive Officers and Corporate Governance
The information called for by this Item and not provided above in Item 4A is incorporated by reference to our proxy statement which we intend to file with the Securities and Exchange Commission and mail to shareholders within 120 days of our fiscal year ended December 31, 2009.
Item 11.
Item 11. Executive Compensation.
The information required by this Item is incorporated by reference to our proxy statement which we intend to file with the Securities and Exchange Commission and mail to shareholders within 120 days of our fiscal year ended December 31, 2009.
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The information required by this Item is incorporated by reference to our proxy statement which we intend to file with the Securities and Exchange Commission and mail to shareholders within 120 days of our fiscal year ended December 31, 2009.
Item 13.
Item 13. Certain Relationships and Related Transactions, and Director Independence.
The information required by this Item is incorporated by reference to our proxy statement which we intend to file with the Securities and Exchange Commission and mail to shareholders within 120 days of our fiscal year ended December 31, 2009.
Item 14.
Item 14. Principal Accounting Fees and Services.
The information required by this item is incorporated by reference to our proxy statement which we intend to file with the Security and Exchange Commission and mail to shareholders within 120 days of our fiscal year ended December 31, 2009.
PART IV
Item 15.
Item 15. Exhibits, Financial Statement Schedules
a) Financial Statements and Schedules The financial statements are set forth under Item 8 of this Annual Report on Form 10-K. Financial statement schedules have been omitted since they are either not required, not applicable, or the information is otherwise included.
b) Exhibit Listing
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the Company caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
PATIENT PORTAL TECHNOLOGIES, INC.
March 29, 2010
by:
/s/ Kevin Kelly
Kevin Kelly
CEO
March 29, 2010
by:
/s/ Thomas Hagan
Thomas Hagan
Secretary, Acting CFO
March 29, 2010
by:
/s/ Doug D’Agata
Doug D'Agata
Director
Chairman - Audit Committee