Attached files
UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-K
x ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
FOR
THE FISCAL YEAR ENDED DECEMBER 31, 2009
OR
o TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
FOR THE
TRANSITION PERIOD FROM _________ TO __________
COMMISSION
FILE NUMBER 333-107826
PATIENT
PORTAL TECHNOLOGIES, INC.
DELAWARE
|
02-0656132
|
(STATE
OF INCORPORATION)
|
(I.R.S.
ID)
|
8276
Willett Parkway, Baldwinsville, NY 13027
(315)
638-6708
Securities
registered pursuant to Section 12(b) of the Act:
COMMON
STOCK OTC:
BB
Securities
registered pursuant to Section 12(g) of the Act:
NONE
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. Yeso
No x
Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Exchange Act. Yes o No x
Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes x No
o
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. x
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer,""accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.
Large
accelerated filer o
|
Accelerated
filer o
|
Non-accelerated
filer o
|
Smaller
reporting company x
|
(Do not
check if a smaller reporting company)
Indicate
by check mark whether the registrant is a shell company (as defined inRule 12b-2
of the Exchange Act). Yeso No x
As of
February 28, 2010, the aggregate market value of the registrant's common stock
held by non-affiliates of the registrant was $ 8,736,115 based on the closing
sale price as reported on the OTC:BB. As of February 28,2010, there were
45,979,553 shares of common stock outstanding.
DOCUMENTS
INCORPORATED BY REFERENCE
Portions
of the definitive Proxy Statement to be delivered to shareholders in
connection
with the Annual Meeting of Shareholders to be held on June 24, 2010 are
incorporated by reference into Part III.
Patient
Portal Technologies, Inc.
FORM
10-K
For The
Fiscal Year Ended December 31, 2008
INDEX
PART
I
|
Page | |
Item
1.
|
Business
|
1 |
Item
1A.
|
Risk
Factors
|
7 |
Item
1B.
|
Unresolved
Staff Comments
|
13 |
Item
2.
|
Properties
|
13 |
Item
3.
|
Legal
Proceedings
|
14 |
Item
4.
|
Submission
of Matters to a Vote of Security Holders
|
14 |
PART
II
|
||
Item
5.
|
Market
for Registrant's Common Equity, Related Stockholder Matters, and Issuer
Purchases of Equity Securities
|
15 |
Item
6.
|
Selected
Financial Data
|
17 |
Item
7.
|
Management's
Discussion and Analysis of Financial Condition and Results of
Operations
|
18 |
Item
7A.
|
Quantitative
and Qualitative Disclosures about Market Risk
|
23 |
Item
8.
|
Financial
Statements and Supplementary Data
|
23 |
Item
9.
|
Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosure
|
24 |
Item
9A.
|
Controls
and Procedures Report of Management on Internal Control over Financial
Reporting Report of Independent Registered Public Accounting
Firm
|
24 |
Item
9B.
|
Other
Information
|
25 |
PART
III
|
||
Item
10.
|
Directors,
Executive Officers and Corporate Governance
|
26 |
Item
11.
|
Executive
Compensation
|
26 |
Item
12.
|
Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
|
26 |
Item
13.
|
Certain
Relationships and Related Transactions, and Director
Independence
|
26 |
Item
14.
|
Principal
Accounting Fees and Services
|
26 |
PART
IV
|
||
Item
15.
|
Exhibits
and Financial Statement Schedules Signatures
|
27 |
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.
1
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.
2
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.
3
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.
4
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.
5
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.
6
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.
7
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.
8
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:
9
●
|
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.
|
|
●
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Disruption
to our operations.
|
|
●
|
Our
ability to develop and market new and enhanced products on a timely
basis.
|
|
●
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Adverse
impact of litigation.
|
|
●
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Any
major change in our board of directors or management.
|
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●
|
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.
10
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.
11
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.
12
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. UNRESOLVED STAFF COMMENTS - None.
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.
13
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. 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.
14
PART
II
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.
HIGH
|
LOW
|
HIGH
|
LOW
|
||||||||||||||
BID
PRICES
|
ASK PRICES | ||||||||||||||||
Fiscal
Year 2007
|
|||||||||||||||||
Quarter
Ended 3/31/07
|
$ | .14 | $ | .08 | $ | .17 | $ | .10 | |||||||||
Quarter
Ended 6/30/07
|
$ | 1.45 | $ | .35 | $ | 1.60 | $ | .38 | |||||||||
Quarter
Ended 9/30/07
|
$ | .80 | $ | .22 | $ | .90 | $ | .20 | |||||||||
Quarter
Ended 12/31/07
|
$ | 1.50 | $ | .15 | $ | 1.75 | $ | .18 | |||||||||
Fiscal
Year 2008
|
|||||||||||||||||
Quarter
Ended 3/31/08
|
$ | 1.65 | $ | .30 | $ | 1.75 | $ | .45 | |||||||||
Quarter
Ended 6/30/08
|
$ | 1.65 | $ | .80 | $ | 1.75 | $ | .90 | |||||||||
Quarter
Ended 9/30/08
|
$ | .81 | $ | 20.95 | $ | .25 | |||||||||||
Quarter
Ended 12/31/08
|
$ | .47 | $ | 13 | $ | .50 | $ | .15 | |||||||||
Fiscal
Year 2009
|
|||||||||||||||||
Quarter
Ended 3/31/09
|
$ | .40 | $ | .08 | $ | .45 | $ | .12 | |||||||||
Quarter
Ended 6/30/09
|
$ | .20 | $ | .04 | $ | .25 | $ | .06 | |||||||||
Quarter
Ended 9/30/09
|
$ | .40 | $ | .12 | $ | .51 | $ | .16 | |||||||||
Quarter
Ended 12/31/09
|
$ | .15 | $ | .04 | $ | .18 | $ | .06 | |||||||||
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:
15
Exercise
|
|||||||||||
Description
|
Number
|
Price
|
Expiration
|
||||||||
Class
"A" Warrants
|
250,000 | $ | 2.00 |
12/31/11
|
|||||||
Class
"B" Warrants
|
250,000 | $ | 3.00 |
12/31/11
|
|||||||
Class
"C" Warrants
|
250,000 | $ | 4.00 |
12/31/11
|
|||||||
Class
"D" Warrants
|
9,540,050 | $ | 0.50 |
12/31/11
|
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 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.
16
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,
2009
|
2008
|
2007
|
2006
|
2005
|
||||||||||||||||
Revenues
|
$ | 16,096 | $ | 17,953 | $ | 4,705 | $ | 13 | $ | - | ||||||||||
Operating
(Loss)
|
$ | (376 | ) | $ | (202 | ) | $ | (1,764 | ) | $ | (275 | ) | $ | (105 | ) | |||||
Net
(Loss)
|
$ | (4,232 | ) | $ | (2,312 | ) | $ | (2,060 | ) | $ | (401 | ) | $ | (131 | ) | |||||
Net
(Loss) Per Share
|
$ | (0.10 | ) | $ | (0.06 | ) | $ | (0.08 | ) | $ | (0.01 | ) | $ | (0.01 | ) | |||||
Cash
and Equivalents
|
$ | 35 | $ | 411 | $ | 404 | $ | 2 | $ | 1 | ||||||||||
Total
Assets
|
$ | 14,792 | $ | 17,025 | $ | 14,851 | $ | 1,103 | $ | 259 | ||||||||||
Long
Term Obligations
|
$ | 3,374 | $ | 3,883 | $ | 3,446 | $ | - | $ | - | ||||||||||
Shareholder
Equity
|
$ | 8,282 | $ | 5,883 | $ | 7,425 | $ | 718 | $ | 202 |
17
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.
18
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.
19
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.
20
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.
21
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.
22
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. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements required by
this report are located beginningon page F-1 of this report and incorporated by
reference.
INDEX TO
CONSOLIDATED FINANCIAL STATEMENTS
Page
|
|
Report
of The Independent Registered Public Accountant
|
F-1
|
Balance
Sheets as of December 31, 2009 and December 31, 2008
|
F-2
|
Statements
of Operations for the two years ended December 31,2009 and
2008
|
F-3
|
Statements
of Cash Flows for the two years ended December 31,2009 and
2008
|
F-4
|
Statements
of Stockholders' Equity December 31, 2009 and December 31,
2008
|
F-5,6
|
Notes
to Financial Statements
|
F-7
to F-14
|
23
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,
2010
F-1
PATIENT
PORTAL TECHNOLOGIES,INC. AND SUBSIDIARY
CONSOLIDATED
BALANCE SHEET
DECEMBER
31,
ASSETS | |||||||||
2009
|
2008
|
||||||||
Cash
|
$ | 34,781 | $ | 411,229 | |||||
Accounts
Receivable, net
|
1,692,924 | 2,046,836 | |||||||
Prepaids
|
290,999 | 54,919 | |||||||
Other
|
63,192 | 292,416 | |||||||
TOTAL
CURRENT ASSETS
|
$ | 2,081,896 | $ | 2,805,400 | |||||
Property,
Plant & Equipment, net
|
4,167,115 | 4,355,532 | |||||||
Investments
|
1,475,000 | 1,475,000 | |||||||
Hospital
Contracts, Net
|
6,784,619 | 7,692,452 | |||||||
Debt
Issuance Costs
|
283,477 | 696,280 | |||||||
TOTAL
ASSETS
|
$ | 14,792,106 | $ | 17,024,664 | |||||
LIABILITIES AND STOCKHOLDERS EQUITY | |||||||||
Accounts
Payable
|
$ | 2,049,316 | $ | 3,320,317 | |||||
Current
Portion - LTD
|
405,845 | 1,409,597 | |||||||
Current
Portion - Leases
|
125,007 | 127,581 | |||||||
Accrued
Expenses
|
555,774 | 1,336,675 | |||||||
Notes
Payable - Current
|
- | 1,065,000 | |||||||
TOTAL
CURRENT LIABILITIES
|
$ | 3,135,942 | $ | 7,259,170 | |||||
Long
Term Debt
|
3,205,492 | 3,584,413 | |||||||
Long
Term Leases
|
168,460 | 298,259 | |||||||
TOTAL
LIABILITIES
|
$ | 6,509,894 | $ | 11,141,842 | |||||
Series
C Convertible Preferred Stock , $.01 par value authorized
1,000,000: 7,937 issued and
outstanding Dec 31, 2009
|
79 | ||||||||
|
|||||||||
Series
B Redeemable Preferred Stock , $.01 par value authorized 1,000,000:
88,333 Dec 31, 2008
|
883 | ||||||||
Common
Stock, $.001 par value, authorized 100,000,000:
45,979,553 (Dec 31, 2009) and 39,466,757
(Dec 31, 2008) issued and outstanding
|
45,980 | 39,467 | |||||||
Additional
Paid in Capital
|
17,241,308 | 9,702,213 | |||||||
Additional
Paid In Capital - Warrants
|
- | 913,043 | |||||||
Retained
Deficit
|
(9,005,155 | ) | (4,772,784 | ) | |||||
TOTAL
STOCKHOLDER'S EQUITY
|
$ | 8,282,212 | $ | 5,882,822 | |||||
|
|||||||||
TOTAL
LIABILITIES AND STOCKHOLDER's
EQUITY
|
$ | 14,792,106 | $ | 17,024,664 | |||||
See notes to the consolidated financial statements |
F-2
PATIENT PORTAL TECHNOLOGIES,INC. AND SUBSIDIARY | ||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
FOR THE YEAR ENDED DECEMBER 31, | ||||||||
2009
|
2008
|
|||||||
NET
SALES
|
$ | 16,096,337 | $ | 17,952,615 | ||||
COST
OF SALES
|
9,411,802 | 11,380,147 | ||||||
GROSS
PROFIT
|
$ | 6,684,535 | $ | 6,572,468 | ||||
DIRECT
OPERATING EXPENSES:
|
||||||||
Selling
and Administrative
|
5,356,766 | 5,231,764 | ||||||
Depreciation
and Amortization
|
1,703,394 | 1,542,736 | ||||||
TOTAL
OPERATING EXPENSES
|
7,060,160 | 6,774,500 | ||||||
(LOSS)
FROM OPERATIONS BEFOREOTHER INCOME AND EXPENSE
|
(375,625 | ) | (202,032 | ) | ||||
OTHER
INCOME AND EXPENSE
|
||||||||
Interest
Expense
|
1,061,866 | 2,093,830 | ||||||
OPERATING
(LOSS) BEFORE INCOME TAXES
|
(1,437,491 | ) | (2,295,862 | ) | ||||
Debt
Extinguishment Charges
|
2,623,042 | - | ||||||
TAXABLE
INCOME
|
(4,060,533 | ) | (2,295,862 | ) | ||||
PROVISION
FOR INCOME TAXES
|
14,391 | 16,128 | ||||||
NET
(LOSS) BEFORE PREFERRED STOCK DIVIDEND
|
(4,074,924 | ) | (2,311,990 | ) | ||||
PREFERRED
STOCK DIVIDEND
|
157,447 | - | ||||||
NET
(LOSS)
|
(4,232,371 | ) | (2,311,990 | ) | ||||
NET
(LOSS) PER COMMON SHARE:
|
$ | (0.10 | ) | $ | (0.06 | ) | ||
COMMON
SHARES OUTSTANDING (weighted)
|
43,637,007 | 36,976,110 | ||||||
See notes to the consolidated financial statements |
F-3
PATIENT
PORTAL TECHNOLOGIES, INC. AND SUBSIDIARY
CONSOLIDATED
STATEMENTS OF CASH FLOWS
FOR THE
YEARS ENDED DECEMBER 31,
2009
|
2008
|
|||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Net
(Loss)
|
$ | (4,232,371 | ) | $ | (2,311,990 | ) | ||
Adjustments
to reconcile net income (loss) to net cash provided by
operations:
|
||||||||
Depreciation
and amortization
|
1,703,394 | 1,542,736 | ||||||
Debt
Discount and Loan Cost Amortization
|
2,639,100 | 898,720 | ||||||
(Increase)
decrease in assets:
|
||||||||
Accounts
receivable
|
353,912 | (579,843 | ) | |||||
Prepaids
and Other current assets
|
(6,856 | ) | (243,873 | ) | ||||
Increase
(decrease) in liabilities:
|
||||||||
Accounts
payable
|
(1,271,001 | ) | 1,445,461 | |||||
Short
term Notes Payable
|
(1,065,000 | ) | - | |||||
Other
current liabilities
|
(780,901 | ) | (319,538 | ) | ||||
Total
adjustments
|
1,572,648 | 2,743,662 | ||||||
NET
CASH FLOWS PROVIDED (USED) BY OPERATING ACTIVITIES
|
(2,659,723 | ) | 431,673 | |||||
CASH
FLOWS INVESTING ACTIVITIES:
|
||||||||
Purchase
of property, plant and equipment
|
(483,849 | ) | (1,221,344 | ) | ||||
NET CASH FLOWS (USED IN) INVESTING ACTIVITIES
|
(483,849 | ) | (1,221,344 | ) | ||||
|
||||||||
FINANCING ACTIVITIES:
|
||||||||
Proceeds
from Common Stock Issued
|
101,160 | 570,102 | ||||||
Proceeds
from Long-Term Debt
|
3,000,000 | - | ||||||
Repayment
of Long-Term Debt and Leases
|
(334,097 | ) | (798,144 | ) | ||||
NET
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES
|
2,767,063 | 796,958 | ||||||
NET
(DECREASE) IN CASH
|
(376,508 | ) | 7,287 | |||||
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
|
411,289 | 404,002 | ||||||
CASH AND CASH EQUIVALENTS, END OF PERIOD
|
$ | 34,781 | $ | 411,289 | ||||
Supplemental
disclosure of cash flow information:
|
||||||||
Cash
paid during the period for:
|
||||||||
Interest,
net
|
$ | 370,700 | $ | 1,102,224 | ||||
See
notes to the consolidated financial
statements
|
F-4
PATIENT
PORTAL TECHNOLOGIES, INC. AND SUBSIDIARY
CONSOLIDATED
STATEMENTS OF STOCKHOLDERS' EQUITY AND PREFERRED STOCK
DECEMBER
31, 2009
Common
Stock
|
Preferred
Stock
|
Additional | Retained | |||||||||||||||||||||||||
Shares
|
Par
Value
|
Shares
|
Par
Value
|
Paid-In Capital |
Deficit
|
Total | ||||||||||||||||||||||
Balance
January 1, 2009
|
39,466,757 | $ | 39,467 | 88,333 | $ | 883 | $ | 10,615,256 | $ | (4,772,784 | ) | $ | 5,882,822 | |||||||||||||||
Issuance
of Restricted Stock For Consulting Agreements
|
2,000,000 | 2,000 | (2,000 | ) | - | |||||||||||||||||||||||
Issuance
of Common Stock For services
|
574,476 | 574 | (574 | ) | 0 | |||||||||||||||||||||||
Sale
of Common Stock
|
649,400 | 649 | 100,804 | 101,453 | ||||||||||||||||||||||||
Issue
of Common Stock for Employment Agreements
|
400,000 | 400 | 3,600 | 4,000 | ||||||||||||||||||||||||
Conversion
of Preferred Stock to Common Stock
|
1,170,870 | 1,171 | (88,333 | ) | (883 | ) | (288 | ) | - | |||||||||||||||||||
Conversion
of Debt to Common Stock
|
1,718,050 | 1,718 | 7,500,185 | 7,501,903 | ||||||||||||||||||||||||
Elimination
of Warrants in Dutchess Debt Conversion
|
(913,043 | ) | (913,043 | ) | ||||||||||||||||||||||||
Dutchess
Debt Restructuring Paid from Capital
|
(160,000 | ) | (160,000 | ) | ||||||||||||||||||||||||
Conversion
of Debt to Preferred Stock
|
7,840 | 78 | (78 | ) | - | |||||||||||||||||||||||
Preferred
Stock Dividend Paid in Kind
|
157 | 1.6 | 157,445 | 157,447 | ||||||||||||||||||||||||
Preferred
Stock Repurchases
|
(60 | ) | (0.6 | ) | (59,999 | ) | (60,000 | ) | ||||||||||||||||||||
Net
loss for the Year
|
(4,232,371 | ) | (4,232,371 | ) | ||||||||||||||||||||||||
Balance
December 31, 2009
|
45,979,553 | $ | 45,980 | 7,937 | $ | 79 | $ | 17,241,308 | $ | (9,005,155 | ) | $ | 8,282,212 | |||||||||||||||
See
notes to the consolidated financial
statements
|
F-5
PATIENT
PORTAL TECHNOLOGIES, INC. AND SUBSIDIARY
RESTATED
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND PREFERRED STOCK
DECEMBER
31, 2008
Common
and Preferred Stock
|
Additional
|
Retained
|
|
|||||||||||||||||
Shares
|
Par
Value
|
Paid-In Capital | Deficit | Total | ||||||||||||||||
Balance
January 1, 2008
|
36,675,707 | $ | 37,171 | $ | 9,848,333 | $ | (2,460,794 | ) | $ | 7,424,710 | ||||||||||
Issuance
of Common Stock
|
2,846,050 | 2,846 | 567,256 | 570,102 | ||||||||||||||||
Issuance
of Preferred Stock
|
33,333 | 333 | 199,667 | 200,000 | ||||||||||||||||
Net
loss for the Year
|
(2,311,990 | ) | (2,311,990 | ) | ||||||||||||||||
Balance
December 31, 2008
|
39,555,090 | $ | 40,350 | $ | 10,615,256 | $ | (4,772,784 | ) | $ | 5,882,822 | ||||||||||
See notes to the consolidated financial statements |
F-6
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.
F-7
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.
F-8
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:
F-9
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.
F-10
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:
2009
|
2008
|
|||||||
Hospital
Television Equipment
|
$ | 3,757,328 | $ | 3,289,521 | ||||
Computer
equipment and Software
|
1,405,372 | 1,389,330 | ||||||
Office
equipment
|
339,492 | 339,492 | ||||||
5,502,192 | 5,018,343 | |||||||
Less:
Accumulated depreciation
|
1,335,077 | 662,811 | ||||||
Total
|
$ | 4,167,115 | $ | 4,355,532 |
F-11
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:
|
2009
|
2008
|
||||||
Hospital
Contracts
|
$ | 8,795,156 | $ | 8,795,156 | ||||
Less:
Accumulated Amortization
|
2,010,537 | 1,102,704 | ||||||
Total
|
$ | 6,784,619 | $ | 7,692,452 |
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:
2009
|
2008
|
|||||||
12%
Convertible Debenture
|
- | 6,343,610 | ||||||
Five
Star Bank
|
2,979,122 | - | ||||||
Other
Long–term Debt
|
632,215 | 813,061 | ||||||
3,611,337 | 7,156,671 | |||||||
Less:
|
||||||||
Current
portion of long-term debt
|
405,845 | 1,409,597 | ||||||
Discount
on Convertible Debt
|
- | 2,162,661 | ||||||
Total
|
$ | 3,205,492 | $ | 3,584,413 |
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.
F-12
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:
Total
|
||||
Equipment
(Leases)
|
$ | 127,711 | ||
Inventory
|
139,711 | |||
Intangible
Assets
|
540,217 | |||
Total
Purchase Price
|
$ | 807,639 | ||
Less:
|
||||
Equipment Value
|
$ | (113,057 | ) | |
Inventory
Value
|
(139,711 | ) | ||
Closing
/ Transaction Expenses
|
(55,877 | ) | ||
Gain on Sale | $ | 498,994 |
As part of the transaction the purchaser signed a five year non-compete
agreement covering the Company’s existing customer base.
F-13
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:
2010
|
$ | 296,232 | ||
2011
|
$ | 296,232 | ||
2012
|
$ | 296,232 | ||
2013
|
$ | 296,232 | ||
2014
|
$ | 276,174 | ||
Thereafter
|
$ | 0 |
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:
Exercise
|
|||||||||||
Description
|
Number
|
Price
|
Expiration
|
||||||||
Class
"A" Warrants
|
250,000 | $ | 2.00 | 12/31/11 | |||||||
Class
"B" Warrants
|
250,000 | $ | 3.00 |
12/31/11
|
|||||||
Class
"C" Warrants
|
250,000 | $ | 4.00 |
12/31/11
|
|||||||
Class
"D" Warrants
|
9,540,050 | $ | .50 |
12/31/11
|
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.
F-14
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.
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.
24
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,
2010
Item 9B.
Other Information
None.
25
PART
III
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.
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.
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.
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.
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.
26
PART
IV
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
Exhibit Number | Description | |
31.1 | Certification of Chief Executive Officer | |
31.2 | Certification of Chief Financial Officer | |
32.1 |
Certification
of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, As Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
|
|
32.2 |
Certification
of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, As
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
|
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
|
27