UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-Q





(Mark
One)





xQUARTERLY REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934





For the
quarterly period endedJune 30,
2008





or





 ̈TRANSITION REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934





For the
transition period from
                               
to





Commission
File Number:  333-107824





PATIENT
      PORTAL TECHNOLOGIES, INC.(Exact
      name of registrant as specified in its
charter)








Delaware
            02-0656132(State
      or other jurisdiction of incorporation or organization)
            (I.R.S.
      Employer Identification No.)








8276
      Willett Parkway
              Baldwinsville,
      NY
            13027(Address
      of principal executive offices)
            (Zip
      Code)








(315)
      638-6708(Registrant’s
      telephone number, including area code)N/A(Former
      name, former address and former fiscal year, if changed since last
      report)





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.     Yesx
     No ̈




Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company.  See the definitions of “large accelerated filer,” “accelerated
filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. 
(Check one):




Large
      accelerated filer ̈
            Accelerated
      filer ̈Non-accelerated
      filer  ̈ (Do not
      check if a smaller reporting company)
            Smaller
      reporting companyx





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).     Yes ̈
     Nox





Indicate
the number of shares outstanding of each of the issuer’s classes of common
stock, as of the latest practicable date.




As of
August 10, 2008, there were 36,241,257 shares of common stock, $.001 par value
per share, outstanding.






















TABLE
OF CONTENTS
 
 
 
 Page
      No.PART
      I - Financial InformationItem
      1.
              Condensed
      Consolidated Financial Statements
              1Item
      2.
              Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
              13Item
      3.
              Quantitative
      and Qualitative Disclosures About Market Risk
              24Item
      4T.
              Controls
      and Procedures
              24PART
      II - Other InformationItem
      1.
              Legal
      Proceedings
              25Item
      4.
              Submission
      of Matters to a Vote of Security Holders
              25Item
      6.
              Exhibits
              26Signatures
              
              27







i




Part I. Financial Information







Item
1.          Condensed
Consolidated Financial Statements




PATIENT PORTAL TECHNOLOGIES, INC. AND
      SUBSIDIARYCONDENSED
      CONSOLIDATED BALANCE SHEETASSETSJune
      31, 2008
            
            
            December
      31,(Unaudited)
            
            
            2007CURRENT  ASSETS:Cash
      and cash equivalents
            
            $
            33,902
            
            
            $
            406,503Accounts
      receivable
            
            
            1,884,217
            
            
            
            1,073,949Inventories,
      net
            
            
            75,861
            
            
            
            81,611Prepaid
      expenses
            
            
            46,887
            
            
            
            -TOTAL  CURRENT  ASSETS
            
            
            2,040,866
            
            
            
            1,562,063PROPERTY,  PLANT  AND  EQUIPMENT,
      net
            
            
            3,511,166
            
            
            
            3,270,339LONG-TERM  NOTE  RECEIVABLE
            
            
            264,567
            
            
            
            276,967HOSPITAL  CONTRACTS,
      net
            
            
            6,704,038
            
            
            
            7,070,086MINORITY
      INVESTMENTS
            
            
            1,475,000
            
            
            
            1,475,000DEBT  ISSUANCE  COSTS
            
            
            807,182
            
            
            
            896,868TOTAL  ASSETS
            
            $
            14,802,819
            
            
            $
            14,551,323LIABILITIES AND STOCKHOLDERS' EQUITYCURRENT  LIABILITIES:Current
      portion in long-term liabilities
            
            $
            1,225,612
            
            
            $
            1,175,684Accounts
      payable
            
            
            1,990,491
            
            
            
            1,385,083Short
      Term Notes payable
            
            
            399,610
            
            
            
            752,219Other
      current liabilities
            
            
            248,281
            
            
            
            270,337TOTAL  CURRENT  LIABILITIES
            
            
            3,863,994
            
            
            
            3,583,323LONG-TERM  DEBT,
      Net of Discount on Convertible Instrument
            
            
            4,222,499
            
            
            
            3,155,286REDEEMABLE  PREFERRED  STOCK,  $.01
      par value,1,000,000authorizedIssued
      and outstanding 30,000 shares at June 30, 2008 andDecember
      31, 2007 at par value
            
            
            300
            
            
            
            300STOCKHOLDERS'  EQUITY:Common
      stock, $.001 par value, 100,000,000 shares authorized;36,241,257
      at June 30, 2008 and 36,040,707at December 31,2007issued
      and outstanding
            
            
            36,241
            
            
            
            36,040Additional
      paid-in-capital
            
            
            11,974,090
            
            
            
            11,874,016Additional
      paid-in-capital - warrants
            
            
            913,043
            
            
            
            913,043Retained
      deficit
            
            
            (6,207,347
            )
            
            
            (5,010,685
            )TOTAL  STOCKHOLDERS'  EQUITY
            
            
            6,716,327
            
            
            
            7,812,714TOTAL  LIABILITIES  AND
      STOCKHOLDERS'  EQUITY
            
            $
            14,802,819
            
            
            $
            14,551,323See
      notes to the condensed consolidated financial statements







1







PATIENT
      PORTAL TECHNOLOGIES, INC. AND SUBSIDIARYCONDENSED
      CONSOLIDATED STATEMENTS OF OPERATIONS
      (UNAUDITED)THREE
      MONTHS ENDED
            
            
            SIX
      MONTHS ENDEDJune
      30,
            
            
            June
      30,
            
            
            June
      30,
            
            
            June
      30,2008
            
            
            2007
            
            
            2008
            
            
            2007NET  SALES
            
            $
            4,194,982
            
            
            $
            391,856
            
            
            $
            8,071,215
            
            
            $
            634,834COST  OF  SALES
            
            
            3,157,774
            
            
            
            273,384
            
            
            
            6,470,702
            
            
            
            469,068GROSS  PROFIT
            
            
            1,037,208
            
            
            
            118,472
            
            
            
            1,600,513
            
            
            
            165,766DIRECT  OPERATING  EXPENSES:Sales
      and marketing
            
            
            261,434
            
            
            
            144,653
            
            
            
            359,846
            
            
            
            234,706Administration
            
            
            798,722
            
            
            
            155,007
            
            
            
            1,536,441
            
            
            
            227,396TOTAL
      OPERATING  EXPENSES
            
            
            1,060,156
            
            
            
            299,660
            
            
            
            1,896,288
            
            
            
            462,102(LOSS)  FROM  OPERATIONS  BEFOREOTHER
      INCOME  AND EXPENSE
            
            
            (22,948
            )
            
            
            (181,188
            )
            
            
            (295,774
            )
            
            
            (296,336
            )OTHER  INCOME  AND  EXPENSESInterest
      expense, Including Amortization of Debt Discount
            
            
            464,132
            
            
            
            1,693
            
            
            
            900,888
            
            
            
            1,693OPERATING  LOSS  BEFORE  TAXES
            
            
            (487,080
            )
            
            
            (182,881
            )
            
            
            (1,196,663
            )
            
            
            (298,029
            )PROVISION  FOR  INCOME  TAX
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -NET  (LOSS)
            
            $
            (487,080
            )
            
            $
            (182,881
            )
            
            $
            (1,196,663
            )
            
            $
            (298,029
            )Net
      Loss per share:Basic
            
            $
            (0.01
            )
            
            $
            (0.01
            )
            
            $
            (0.03
            )
            
            $
            (0.01
            )Weighted
      common shares:Basic
            
            
            36,090,707
            
            
            
            25,286,601
            
            
            
            36,090,707
            
            
            
            25,286,601See
      notes to the condensed consolidated financial statements







2








PATIENT
      PORTAL TECHNOLOGIES, INC. AND SUBSIDIARYCONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED), SIX
      MONTHS ENDEDJune
      30,
            
            
            June
      30,2008
            
            
            2007CASH
      FLOWS FROM OPERATING  ACTIVITIES:Net
      (Loss)
            
            $
            (1,196,662
            )
            
            $
            (298,029
            )Adjustments
      to reconcile net (loss) to net cash used in operations:Depreciation
            
            
            180,510
            
            
            
            173,718(Increase)
      decrease in assets:Accounts
      receivable
            
            
            (810,268
            )
            
            
            (1,935
            )Inventories
            
            
            5,751
            
            
            
            -Other
      current assets
            
            
            (46,887
            )
            
            
            (70,413
            )Increase
      (decrease) in liabilities:Accounts
      payable
            
            
            605,408
            
            
            
            (18,704
            )Other
      current liabilities
            
            
            (22,056
            )
            
            
            13,131Short
      Term Notes payable
            
            
            (352,609
            )
            
            
            50,000Total
      adjustments
            
            
            (440,151
            )
            
            
            145,797Net
      cash flows used in operating activities
            
            
            (1,636,813
            )
            
            
            (152,232
            )CASH
      FLOWS INVESTING  ACTIVITIES:Purchase
      of property, plant and equipment
            
            
            (421,337
            )
            
            
            (3,159
            )Long
      Term Receivable
            
            
            12,400
            
            
            
            -Amortization/(Purchase)
      of hospital contracts
            
            
            366,048
            
            
            
            (1,444,472
            )Amortization
      - Deferred loan costs
            
            
            89,686
            
            
            
            -Net
      cash used in investing activities
            
            
            46,796
            
            
            
            (1,447,631
            )CASH
      FLOWS FINANCING  ACTIVITIES:Proceeds
      from stock issued
            
            
            100,275
            
            
            
            1,628,472Proceeds
      from long-term debt
            
            
            903,860Principal
      payments on long term debt
            
            
            (236,079
            )Debt
      Discount Costs
            
            
            449,361Net
      cash flows provided by financing activities
            
            
            1,217,416
            
            
            
            1,628,472NET  (DECREASE)
      INCREASE  IN  CASH
            
            
            (372,601
            )
            
            
            28,609CASH  AND  CASH  EQUIVALENTS,  BEGINNING  OF  PERIOD
            
            
            406,503
            
            
            
            12,080CASH  AND  CASH  EQUIVALENTS,  END  OF  PERIOD
            
            $
            33,902
            
            
            $
            40,689Supplemental
      disclosure of cash flow information:Cash
      paid during the six month period for:Interest,
      net
            
            $
            451,528
            
            
            
            -See
      notes to the condensed consolidated financial statements








3




PATIENT
PORTAL TECHNOLOGIES, INC.,


NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)








Note
1     SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES




Operations and Basis of
Presentation-Patient Portal Technologies, Inc. and its wholly owned
subsidiaries (The “Company”) is in the business of owning, operating and
investing in and marketing equipment primarily in hospital television and cable
facilities. The company’s principal customers are hospitals and hospital
patients. 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 patient services when payment is received.
Revenue from hospitals for equipment sales or other services is recorded when
the service is performed or the equipment sale is finalized.




Income Taxes – Income taxes
are not provided for in these financial statements since the Company incurred a
net loss for the year ended December 31, 2007.





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. No allowance was made for doubtful accounts.




4




Inventories/Supplies – The
Company values inventory in accordance with the First in First out Method.
Inventory consists of televisions for resale, miscellaneous television system
piece parts and supplies associated with the television equipment business. The
Company regularly reviews inventory quantities on hand and records a provision
for excess and obsolete inventory based primarily on historical demand and new
product designs.





Debt Issuance Costs – Cost
incurred to issue debt are deferred and amortized as interest expense over the
term of the related debt.




Convertible Instrument Discount -Discounts
associated with issuance of debt are amortized over the term of the debt using
the interest method.





Recent Accounting
Pronouncements - In September 2006, the FASB issued SFAS NO 157 “Fair
Value Measurements” (SFAS 157) which provides guidance for measuring assets and
liabilities at fair value. SFAS 157 is effective for financial statements issued
for fiscal years beginning after November 15, 2007. The adoption of SFAS 157 is
not expected to have a material impact on the Company’s consolidated financial
statements.





In
December 2007, the FASB issued Statements of Financial Accounting Standards NO.
141 (revised 2007), “Business Combinations” (FAS 141®) and No. 160,
“Non-controlling Interests in Consolidated Financial Statements, an amendment
for ARB No. 41 (FAS 160)”. FAS 141(R) will change how business acquisitions are
accounted for and FAS 160 will change the accounting and reporting for minority
interests, which will be characterized as non-controlling interests and
classified as a component of equity. FAS 141(R) and FAS 160 are effective for
fiscal years beginning on or after December 15, 2008 (January 1, 2009 for the
Company). The adoption of FAS 141(R) and FAS 160 will not have a material impact
on the Company’s consolidated financial statements.





Effective
January 1, 2008, the Company adopted Statement of Financial Accounting Standards
No. 157, “Fair Value Measurements” (SFAS 157). SFAS 157 defines fair value,
establishes a framework for measuring fair value in accordance with generally
accepted accounting principles and expands disclosures about the fair value
measurements. The adoption of SFAS 157 did not have a material impact on the
Company’s financial condition and results of operations. For additional
information on the fair value of certain financial assets and liabilities, see
Note 8, “Fair Value Measurements”.





Fair
Value Option: In February 2007, the FASB issues SFAS No. 159, “The Fair Value
Option for Financial Assets and Financial Liabilities – including an amendment
of FASB Statement No. 115,” which permits an entity to measure certain financial
assets and financial liabilities at fair value, with unrealized gains and losses
reported in earnings at each subsequent measurement date. The fair value option
may be elected on an instrument-by-instrument basis, as long as it is applied to
the instrument in its entirety. The fair value option election is irrevocable,
unless an event specifies in SFAS No. 159 occurs that results in a new election
date. This statement is effective for fiscal years beginning after November 15,
2007. The Company adopted SFAS No. 159 as of January 1, 2008 and has elected not
to measure any additional financial instruments and other items at fair
value.








5





Note
2     BUSINESS COMBINATIONS AND
ACQUISITIONS




During
2007 and 2006, the Company completed two significant acquisitions which were
accounted for as purchases under SFAS No 141, “Business Combinations.” The
assets purchased and liabilities assumed for these acquisitions have been
reflected in the accompanying consolidated balance sheets as of December 31,
2007 and 2006 and the results of operations for the acquisitions are included in
the accompanying consolidated statement of earnings from the respective dates of
acquisition. Additionally, the company acquired a total of 22 hospital contracts
at various times throughout the year. The operational results of those contracts
have been reflected in the accompanying consolidated financial
statements.





Patient
Portal Connect, Inc.


On
December 7, 2006, the Company acquired 100% of the outstanding shares of Patient
Portal Connect, Inc. from its shareholder in a Share Exchange Agreement, in
exchange for 17,500,000 shares of the company’s common stock.  Patient
Portal is a leading provider of patient centric solutions which assist hospitals
improve service and their financial performance. The integration of Patient
Portal with the Company’s existing operations provides a technology and
innovation platform to aggressively grow the company by expanding the type and
number of services it offers, across numerous healthcare related
markets.




TB&A Hospital
Television, Inc.


On
November 2, 2007, the Company acquired 100% of the outstanding stock in TB&A
Hospital Television, Inc. a privately held company. TB & A Hospital
Television, Inc. is a leading provider of television systems and billing
services for over 600 hospitals nationwide. As a result of this acquisition,
Patient Portal Technologies can expand its broader product and service offerings
nationwide.





The
aggregate purchase price was approximately $ 3,800,000 which included $3,000,000
in cash at closing and credit for the outstanding accounts receivable at the
time of closing, which was approximately $800,000. The credit for the accounts
receivable balance was due and payable to the seller as collected. As of
December 31, 2007 the amount has been paid in full.





The
following table summarizes the fair values of assets acquired and liabilities
assumed:





Inventories
            
            $
            90,000Other
      current assets
            
            
            3,000Property
      and equipment
            
            
            2,500,000Intangible
      Assets
            
            
            3,080,000Accounts
      payable and accrued liabilities
            
            
            (1,873,000)Total
      Purchase Price
            
            $
            3,800,000




6




The
original amounts assigned to the assets acquired and liabilities assumed
exceeded the purchase price by approximately $1.7 million. In accordance with
SFAS 141 this difference was allocated as a pro rata reduction of the non
current asset values.





The
full amount of intangible assets was allocated to the existing 50 hospital
contracts and 6 buying group contracts. The value was determined using a net
present value analysis of the future value of these contracts in accordance with
SFAS 141 and 142. The asset category is being amortized over a useful life of 10
years, which approximates the anticipated term (including renewals) for these
contracts.





Consolidated
pro forma revenues for fiscal years 2007 and 2006, giving effect to the Patient
Portal and TB&A acquisitions as if they occurred on January 1, 2007 and 2006
were $13,039,826 and $9,258,073 respectively.





Consolidated
pro forma revenues for fiscal year 2007, giving effect to the TB&A
acquisitions as if they occurred on January 1, 2007 for the three-month period
ended March 31, 2008 were approximate.





Worldnet
Communications, Inc.


In
January, April and November 2007 the company acquired 22 active hospital
contracts from Worldnet Communications, Inc. These contacts covered a variety of
services including television and phone rental and billing services as well as
other products and service supporting hospital patient management
improvement.





Total
consideration for these contacts was approximately $4.2 million which consisted
of $2.4 million in cash and $1.8 million in common stock equal to 2,500,000
shares of common stock. The company’s common stock was valued in a range of $.50
- $1.00 based upon the market conditions at the time of the transaction. The
value of the hospital contracts was negotiated at arms length and was based upon
the anticipated future value of the agreements. The value is being amortized
over 10 years in accordance with the typical length (including renewals) of
these agreements.




7





Note 3 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.





Virtual
Nurse, Inc





The
Company acquired a 9% interest in Virtual Nurse, Inc. for $375,000 in common
stock. The investment was valued at $.50 per share, in an arms length
transaction, which represented the average market price at the time the
transaction occurred. Virtual Nurse's mission is to provide healthcare
organizations with efficient, cost-effective nursing solutions.  It
offers the highest quality of care through experienced, skilled, productive, and
motivated nurses who benefit from the convenience of working at home on a
flexible time schedule.  As a result, it is able to give healthcare
facilities assurance that every patient receives condition-specific education
before entering their facilities and ensure that every assessment has been
carefully documented and delivered on time.





The
investment allowed the Company to enter into an exclusive joint marketing
relationship which will allow Patient Portal access to the customer base of
Virtual Nurse. The agreement also provides for the Company to market the Virtual
Nurse platform to its customer base.





OmniCast,
Inc.




The
Company acquired a 9% interest in OmniCast, Inc. for $1,100,000 in common stock.
The investment was valued at $.50 per share, in an arms length transaction,
which represented the average market price at the time the transaction occurred.
Omnicast, Inc. is a leading-edge technology and media provider that offers a
variety of customized education and entertainment solutions for the healthcare
industry.




The
investment in OmniCast followed the execution of an exclusive license agreement,
between OmniCast and Patient Portal Technologies, for the HealthCast platform.
This platform serves as a critical element of the Company’s strategy to
management patient information and content flow before, during and after
hospital care.




8




Note
4     INVENTORIES





Inventory
consists of televisions for resale, miscellaneous television system piece parts
and supplies associated with the television equipment business. The inventory is
valued at the lower of cost or market using the First in First out (FIFO) method
of accounting.




June
      30, 2008
            
            December
      31, 2008Finished
      products
            $75,861
            
            $81,611





Note
5     PROPERTY, PLANT & EQUIPMENT




Property
and equipment are stated at cost and depreciated and amortized generally on the
straight-line method over their estimated useful lives of three to fifty
years. Property and equipment consist of the following at June 30, 2008 and
December 31, 2007:




2008
            
            
            2007Television
      sets/system installations, equipment
            
            $
            2,977,879
            
            
            $
            2,590,339Computer
      equipment and Software
            
            
            853,812
            
            
            
            840,000Office
      equipment
            
            
            59,985
            
            
            
            40,0003,891,676
            
            
            
            3,470,339Accumulated
      depreciation
            
            
            380,510
            
            
            
            200,000Total
            
            $
            3,511,166
            
            
            $
            3,270,339





9





Note 6     GOODWILL AND INTANGIBLE
ASSETS





In
accordance with SFAS No. 142 the Company’s intangible assets are amortized over
the anticipated useful life of the assets. At the end of June 30, 2008
there was approximately $6.7 million in intangible assets which reflected the
unamortized portion of multi year hospital contracts purchased during 2007. The
contracts are being amortized over a 120 month period using the straight line
method. See note 2.








Note 7    
LONG TERM DEBT





Long-term
      debt consists of the following:June 30, 2008
            
            
            December 31, 200712%
      Convertible Debenture
            
            $
            6,770,184
            
            
            $
            7,000,000Line
      of Credit
            
            
            675,000
            
            
            
            0Leases
            
            
            228,860
            
            
            
            0Other
      Long-term Debt
            
            
            386,087
            
            
            
            392,3518,060,131
            
            
            
            7,392,351Less:
            Current
      portion of long-term debt
            
            
            1,225,612
            
            
            
            1,175,684Debt
      Discount
            
            
            2,612,020
            
            
            
            3,061,381$
            4,222,499
            
            
            $
            3,155,286





12% Convertible Debenture -
On November 1, 2007 the Company entered into an agreement with Duchess Private
Equities Fund, LTD (“Dutchess”) to borrow $7,000,000 for acquisition
purposes.  This amount is being repaid, at a monthly amount, including
principal and interest, of $183,825.17. All amounts due and payable under the
debenture mature on November 1, 2010.





Approximately
13% of the proceeds or $913,043 was allocated to the detached warrants using a
fair market value of $.04, which was the difference between the exercise price
and estimated fair value of the common stock at the transaction date. The offset
was charged to the discount account in accordance with EITF 98-5 and EITF 00-27.
Additionally the debenture has a conversion feature which was determined to be
beneficial to the holder at the date of issuance. The conversion feature allows
the holder with an option to convert the outstanding principal for common stock
at a price equal to the lesser of 85% of the lowest closing bid for the Common
Stock, during the 20 days prior to the conversion, or $.46 per share. This
conversion feature was determined to have an intrinsic value of $2,148,338. This
balance was charged to additional paid in capital with the offset charged to
debt discount. The debt discount will be amortized using the interest method
over the term of the debt.




Line of Credit– A $750,000
line of credit from Five Star Bank, payments of monthly interest only at prime
plus 0.5%





Leases –Consist of various
leases secured by television equipment at annual rates ranging from 14% to
14.5%. The lease terms range from three to five years.





Other Long term Debt –
Amounts due to individuals’ payable in monthly installments of $1,750 to $2,333
including interest at 10 percent expiring at various dates through January 2012.
These notes are secured by hospital television contracts.




10





Note 8     COMMITMENTS
AND CONTINGENCIES





Lease Commitments – The
Company finances its use of certain facilities and equipment under committed
lease arrangements provided by various institutions. At June 30, 2008 under the
long-term real estate leases, totaled approximately $1.6 Million.





Employment Agreements – As of
June 30, 2008, the Company had two Employment Agreement in effect for senior
executives involved with overseeing the operations of T B & A.





Litigation – From time to
time the Company may be involved in various legal proceedings and other matters,
including nominal disputes with creditors relating to the dollar amount of
outstanding obligations of the Company, arising in the normal course of
business.  The Company believes no such actions would result in
liabilities in excess of amounts accrued in the financial
statements.





Warrantsand Options–As of June 30,
2008, in addition to the Company's aforesaid outstanding Common
Stock, there are issued and outstanding Common Stock Purchase Warrants
which are exercisable at the price-per-share indicated, and which expire on
the date indicated, as follows:







Description
            
            Number
            
            
            Exercise
      Price
            
            ExpirationClass
      "A" Warrants
            
            
            365,000
            
            
            $
            2.00
            
            12/31/11Class
      "B" Warrants
            
            
            365,000
            
            
            $
            3.00
            
            12/31/11Class
      "C" Warrants
            
            
            365,000
            
            
            $
            4.00
            
            12/31/11Class
      "D" Warrants
            
            
            5,650,000
            
            
            $
            .50
            
            12/31/09Dutchess
      Warrants   (A)
            
            
            22,826,086
            
            
            $
            .46
            
            11/01/12(A)
      The Dutchess warrants are part of a financing transaction that closed in
      November 2007. There is a limit of 4.99% on the amount of the Company’s
      common stock that Dutchess can own at any point in
  time.





On
November 22, 2002, the Shareholders of the
Company ratified the Company's "2002 Incentive Stock Option Plan" and
reserved 1,000,000 shares for issuance pursuant to said
Plan.  As of June 30, 2008, no options have been awarded pursuant
to this Plan.




11




Note 9     FAIR
VALUE MEASUREMENTS





As
described in Note 2, “New Accounting Standards”, the Company adopted SFAS 157
effective January 1, 2008. SFAS 157 defines fair value as the price that would
be received for an asset or paid to transfer a liability (an exit price) in the
principal or most advantageous market for the asset or liability in an orderly
transaction between market participants on the measurement date. SFAS 157 also
describes three levels of inputs that may be used to measure fair
value:





Level 1 –
quoted prices in active markets for identical assets and
liabilities.





Level 2 –
observable inputs other than quoted prices in active markets for identical
assets and liabilities.





Level 3 –
unobserved inputs in which there is little or no market data available, which
require the reporting entity to develop its own assumptions.


12




Item 2.
            Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations




Forward-Looking
Statements





In
addition to historical information, this Report contains forward-looking
statements. These forward-looking statements are subject to certain risks and
uncertainties that could cause actual results to differ materially from those
reflected in these forward-looking statements. Factors that might cause such a
difference include, but are not limited to, management of growth, competition,
pricing pressures on the Company’s products, industry growth and general
economic conditions. Readers are cautioned not to place undue reliance on these
forward-looking statements, which reflect management’s opinions only as of the
date hereof. The Company undertakes no obligation to revise or publicly release
the results of any revision to these forward-looking statements.




General




This
discussion and analysis should be read in conjunction with our financial
statements and accompanying notes, which are included elsewhere in this
prospectus. This discussion includes forward-looking statements that involve
risks and uncertainties. Operating results are not necessarily indicative of
results that may occur in future periods. When used in this discussion, the
words “believes”, “anticipates”, “expects” and similar expressions are intended
to identify forward-looking statements. Such statements are subject to certain
risks and uncertainties that could cause actual results to differ materially
from those projected.




Our
business and results of operations are affected by a wide variety of factors, as
we discuss under the caption “Risk Factors” and elsewhere in this prospectus,
which could materially and adversely affect us and our actual results. As a
result of these factors, we may experience material fluctuations in future
operating results on a quarterly or annual basis, which could materially and
adversely affect our business, financial condition, operating results and stock
price.




Any
forward-looking statements herein speak only as of the date hereof. Except as
required by applicable law, we undertake no obligation to publicly release the
results of any revisions to these forward-looking statements that may be made to
reflect events or circumstances after the date hereof or to reflect the
occurrence of unanticipated events.




Income
Taxes




We
make estimates to determine our current provision for income taxes, as well as
our income taxes payable. Our estimates with respect to the current provision
for income taxes take into account current tax laws and our interpretation of
current tax laws, as well as possible outcomes of any future tax audits. Changes
in tax laws or our interpretation of tax laws and the resolution of any future
tax audits could significantly impact the amounts provided for income taxes
in our financial statements.





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.







13




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.





On
December 8, 2006, Patient Portal Connect, Inc. of Palm Beach Gardens, Florida, a
Delaware corporation organized in May 2006, acquired approximately 80% of the
capital stock of Patient Portal Technologies, Inc. in a tax free exchange that
resulted in the shareholders of Patient Portal Connect, Inc. owning 17,500,000
shares of Common Stock of Patient Portal Technologies, Inc., as part of a
“reverse” transaction.   As a result of this
transaction, Patient Portal Connect, Inc. (hereinafter
referred to as “PPC”) became a wholly-owned operating subsidiary of
the Company.





Through
this transaction with PPC, we became a leading provider of
innovative  technology solutions for healthcare
institutions.  The company's products and services utilize a
state-of-the-art proprietary software platform that controls bedside patient
communications by converting existing television infrastructure into an
intelligent network. The company uses their technology to create a communication
portal that allows many third parties to communicate and exchange information in
a cost effective way. This solution allows the company to offer many services
that optimize patient satisfaction and outcomes, reduces administrative costs,
and maximizes reimbursement for their customers.




To
provide funds for acquisition purposes, on November 1, 2007, we entered into a
$7,000,000 convertible debenture agreement with Dutchess Private Equities Fund,
LTD (“Dutchess”). If Dutchess elects to convert its debentures (the
“Debentures”) into shares of common stock, par value $0.001 (the “Common Stock”)
of the Company, the conversion price for their shares of Common Stock will be at
a maximum price of $.46 per share but may fluctuate at a substantial percentage
discount (15%) to fluctuating market prices.  As a result, the number of
shares issuable to Dutchess, upon conversion of the Debentures could be
potentially materially adverse to current and potential investors. Dutchess’
overall ownership at any one moment is limited to 4.9% of the outstanding shares
of Common Stock in accordance with the financing documents. However, Dutchess is
free to sell any shares into the market, which have been issued to them, thereby
enabling Dutchess to convert the remaining Debentures or exercise additional
Warrants into shares of Common Stock.





In
November 2, 2007, we acquired 100% of the capital stock of  TB&A
Hospital Television, Inc. (hereinafter "TB&A") for a purchase price of
$3,875,000 in cash and $400,000 in assumed debt. The consideration issued in the
stock purchase was determined as a result of arm's-length negotiations between
the parties.




Following
this acquisition, we are carrying on the business operations of TB&A as a
wholly-owned subsidiary. Prior to the stock purchase, there were no material
relationships between us and TB&A or any of our respective affiliates,
directors or officers, or any associates of the respective officers or
directors.




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.




14





CURRENT
PLAN OF OPERATIONS




Our
Company, through its operating subsidiaries, Patient Portal Connect, Inc. (PPC)
and TB&A Hospital Television, Inc., is well positioned to be the premier
provider of information and communication based solutions in the healthcare
industry. Having developed the industry's newest, leading-edge
communication/information platform for the healthcare industry, PPC is poised to
capture a significant  segment of the multi-billion  dollar
healthcare market. Its proprietary systems were developed in close coordination
with hospital industry partners to provide multi-layer functionality across a
wide spectrum of critical patient-centric workflows that result in immediate
improvements in cost savings, patient outcomes, and revenue growth for
hospitals.  Our systems and solutions are designed to integrate with
existing hospital systems and processes to improve outcomes in today's
healthcare environment.




The
company’s technology allows it to leverage the hospitals existing television and
cable infrastructure to create a communication portal for patients and third
parties.




Nationwide,
the demand for more customized healthcare has resulted in a greater need for
improved productivity, efficiency, and customer service in hospitals and other
healthcare institutions. We have has pioneered the development of integrated
software applications that combine  technology and industry expertise
with unique customization designed to better manage the hospital/patient
relationship and improve hospital operational processes. Further, our solutions
enable hospitals to achieve compliance with strict government mandates that
affect reimbursements by requiring measured improvements in productivity,
efficiency, and patient satisfaction. Our proven technologies provide tremendous
economic benefit for healthcare providers.





We intend
to rapidly gain market share by leveraging strategic relationships and by
acquiring companies with existing hospital contracts. Our acquisition strategy
will enable us to achieve greater profitability, grow rapidly, and quickly gain
first-mover advantage. Our proprietary technology platform allows us to create
additional revenue streams with minimal cost by accessing enhanced service
modules as market demand changes.  This scaleable architecture creates
even greater profitability by enabling multiple services to be delivered over
our service delivery platform.




We
believe that our Company is primed to swiftly react to the requirements of an
ever-changing healthcare industry. Unlike the costly, capital-intensive and
stand-alone products offered by our industry competitors, our sophisticated
technology platform offers flexible solutions and functionalities that are
universal enough to have broad appeal while still allowing for a level of
customization that is necessary to integrate with a hospital's existing legacy
system, and at an affordable cost. Our flexible platform also enables the
healthcare providers to fulfill the government's newest mandates for a full
"continuum of care" from the hospital to the home. This unique ability enables
us to present a tailored solution to our customers at a cost-effective price and
will dramatically enhance our ability to capture significant market share
nationwide.




15




Our
Company’s expertise in creating win-win opportunities for hospitals and patients
by clearly defining customized, flexible, and integrated healthcare solutions
with measurable results. Our products and services enable hospitals to improve
patient flow, enhance patient satisfaction, and create long-term relationships
with patients as they move from hospital to home. In so doing, hospitals gain
productivity and efficiency enhancements, reduce the burden on staff and
increase cash flow by optimizing reimbursements from third-party sources
including Medicare and private insurers.




The
company has adopted a multi year subscription revenue model that is based on
patient interactions. They have long term contracts with third parties that pay
the company on a per patient basis based upon a variety of factors. This
approach provides the company with an ability to increase revenue as patient
flow and services increase.




PATIENT
PORTAL PRODUCTS AND SERVICES




Many
hospitals are plagued with decentralized workflows and vertical silos of
information that create redundant, costly processes and a disjointed patient
experience. Competition and consumers are demanding change. There is increasing
need to improve communication with the patient before, during and after their
hospital stay. To accomplish this, hospitals need better systems and information
services to assist them in meeting their goals.





Our
strategy is establishing hospital relationships that utilizes our proprietary
technology platform. This platform utilizes the existing television and cable
infrastructure to caret a communication portal that can be delivered to the
patient bedside. This portal can be utilized by any number of third parties
including the hospitals, drug and heath companies, patient education services
and family members creating numerous revenue possibilities.




Our core
system was created as an outcome  of working  with
our  hospital  partners in a
live  laboratory  to  create
a solution  that is  cost-effective, scalable, and
allow for seamless and transparent integration into the hospital's legacy
systems and culture.




The
following is a brief description of some of the principal products and services
which we deliver to our customers utilizing the information and power of the
communication portal platform:







16





HealthCast (TM)
Patient Network System: As part of our healthcare
services package, we are aggressively marketing the newly-developed HealthCast
Patient Network System under an exclusive technology license from Omnicast, Inc
specifically for the healthcare industry.  We believe that HealthCast
will fundamentally change the way patient communications at the bedside are
managed leading to significant revenue opportunities. HealthCast is the first
suite of customized hospital television channels that invites viewers to
interact with channel programming and delivers condition-specific content
directly to a patient's TV, IP phone, or home computer.  HealthCast
features an exclusive digital signage platform that promotes an unparalleled
level of communication by simultaneously showing video, an information scroll,
and additional customized messaging to a single patient, certain patient groups,
or to specific areas of the hospital.  HealthCast is the only patient
network that puts the hospital in control of multiple information streams for an
unprecedented level of communication and education for patients and
families.  In addition, HealthCast's proprietary platform captures
viewing metrics so hospitals can document educational content delivery for
pay-for-performance reimbursement, and commercial sponsors can respond to
patient viewing habits.




HealthCast's
Foundation Channel, Education Services Channel, and MyMail station present
personalized content to specific patients.  In turn, patients have
opportunities to interact with the multimedia platform to respond to channel
content, such as with live auctions on the Foundation Channel, text messaging or
E-Greetings on MyMail, or by answering questions to win prizes after watching
condition-specific educational programming.  The Foundation Channel
promotes fundraising events and announcements with celebrity endorsements and
national sponsorship.





MedEx: The
Company provides a turn key solution to hospitals that improves the management
and hand-off of prescription drugs when patients are discharged. The company
controls and manages the process of providing the patient free home delivery for
prescription drugs, within four hours of being discharge. This service is
provided in conjunction with national or regional drug fulfillment companies.
This service also provides an opportunity to extend the patient relationship
into the home environment. The service is provided on a per patient basis for
both inpatients as well as outpatients.




Instant Response
Line:   An interactive, live response solution that
enables patients to log a non-medical need, which is electronically transferred
to an appropriate hospital department for resolution in a timely
fashion.  Putting the hospital in proactive mode, improves
interdepartmental communication, and adds an unparalleled level of customer
service for the patient.  A key element to the success of this system
is time-stamped reporting that allows administrators to see how quickly and
efficiently their staff responds.  Administrators can request
immediate notification regarding certain calls for direct intervention and
response.  Instant Response Line provides a single point of contact
for all patient problems and leads to greater patient satisfaction.




Quick Pulse
Surveys:   Quick inpatient surveys allow hospital
administrators to keep their "finger on the pulse" of what patients are thinking
while in house--a vastly different concept from industry standard post-discharge
surveys hospitals typically employ.  This customized service focuses
on finite issues, allowing the hospital to direct specific, timely
solutions.  A key differentiator between our service and competing
survey services is our ability to collect patient response data in real time
while the patient is still involved in the experience.  The data is
also made available in real-time with follow-up analysis available so hospitals
can benchmark and measure improvements, putting the hospital in compliance with
pay-for-performance government initiatives.




17




VIRTUAL
NURSE(TM) MARKETING AGREEMENT




In April,
2007, we acquired a 9% minority interest in Virtual Nurse, Inc.  of
Palm Beach Gardens, FL, and entered into a joint Marketing Agreement to
introduce Patient Portal and Virtual Nurse(TM) services to healthcare
institutions throughout the United States.




Virtual
Nurse's mission is to provide healthcare organizations with efficient,
cost-effective nursing solutions.  It offers the highest quality of
care through experienced, skilled, productive, and motivated nurses who benefit
from the convenience of working at home on a flexible time
schedule.  As a result, it is able to give healthcare facilities
assurance that every patient receives condition-specific education before
entering their facilities and ensure that every assessment has been carefully
documented and delivered on time.





Virtual
Nurse's “PASS” (Pre-Admission Screening Services) program fulfills a critical
need in the healthcare industry as expenditures continue to increase and nursing
shortages become greater Virtual Nurse offers the expertise of registered nurses
without the challenges or costs of adding on-site staff.  Virtual
Nurse's RNs perform the administrative medical screening tasks usually conducted
by registered nurses in a healthcare facility, with one important distinction:
their RNs are dedicated to this service seven days a week, including extended
hours, while hospital nurses attempt to contact patients during abbreviated
calling hours.




Virtual
Nurse enables healthcare providers to reallocate all available RNs to medical
areas where they are needed most, free from the time-consuming administrative
responsibilities of calling patients and coordinating
paperwork.  Further, the perception to patients is that the healthcare
facility is the service provider.  Therefore, the healthcare
facilities gain improved patient care and satisfaction, superior customer
service, and enhanced brand image.







18





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-à-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.







19




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 affect 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 June 30, 2008, the Company and its affiliates had approximately 60 full
time employees. We also have a comprehensive National Master Dealer Agreement
with VOX Technologies, Inc., through which we utilize over one hundred
independent dealer representatives throughout the United States to market the
Company's products and services to healthcare institutions on a commission-only
basis.  In addition, we have a long-term contract to out-source our
24/7 Operator Call Center and Data Management Services with Worldnet
Communications, Inc. of Syracuse, NY.




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.








20





RESULTS
OF OPERATIONS





Recently
Issued Accounting Standards





In
September 2006, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) 157, “Fair Value Measurements
”. SFAS 157 defines fair value, establishes a framework for measuring fair
value in generally accepted accounting principles (GAAP) and expands disclosures
about fair value measurements.  SFAS 157 is effective for fiscal years
beginning after November 15, 2007 and interim periods within those fiscal
years.  The adoption of this standard has not had a significant impact on
the Company’s consolidated financial position, results of operations or cash
flows.





In
February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial
Assets and Financial Liabilities ”, including an amendment of FASB No.
115 ("FAS 159"). The Statement permits companies to choose to measure many
financial instruments and certain other items at fair value in order to mitigate
volatility in reported earnings caused by measuring related assets and
liabilities differently without having to apply complex hedge accounting
provisions. FAS 159 is effective for the Company beginning January 1, 2008. The
adoption of this standard has not had a significant impact on the Company’s
consolidated financial position, results of operations or cash
flows.




In
December 2007, the FASB issued Statement of Financial Accounting Standard
No. 160,“Non-controlling
Interests in Consolidated Financial Statements — an amendment of ARB
No. 51”  (“FAS 160”).  FAS 160 establishes
accounting and reporting standards for the non-controlling interest in a
subsidiary and for the retained interest and gain or loss when a subsidiary is
deconsolidated. This statement is effective for financial statements issued for
fiscal years beginning on or after December 15, 2008 with earlier adoption
prohibited. The Company is currently evaluating the impact, if any, of FAS 160
on its operating results and financial position.




In
December 2007, the FASB issued SFAS No. 141R,"Business Combinations,"
(“SFAS 141R”) which establishes principles and requirements for how an acquirer
recognizes and measures in its financial statements the identifiable assets
acquired, the liabilities assumed and any non-controlling interest in the
acquirer. SFAS 141R also establishes disclosure requirements to enable the
evaluation of the nature and financial effects of the business combination. SFAS
141R applies prospectively to business combinations for which the acquisition
date is on or after the beginning of the first annual reporting period beginning
on or after December 15, 2008, and interim periods within those fiscal
years.




21




Critical
Accounting Estimates





The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent liabilities at the dates of the financial statements
and the reported amounts of revenues and expenses during the reporting
periods.  Actual results could differ from those
estimates.





Management
believes there are no material charges to net income in the current period
related to sales from a prior period.




Three
months ended June 30, 2008 compared with three months ended June 30,
2007





Net sales
for the three month period ended June 30, 2008 were $ 4,194,982, reflecting an
increase of $3,803,126 over the net sales of


$391,856
for the comparable three month period ended June 30, 2007.





Cost of
sales as a percentage of net sales for the three months ended June 30, 2008 was
75.2 % compared to 69.7 % for the comparable 2007 period, an increase of
5.5%.    The increase was largely due to the mix of products
and services between the two periods.





Sales and
marketing expenses for the three month period ended June 30, 2008 were $261,434,
an increase of $ 116,781 over the comparable 2007 period amount of $
144,653.





General
and administration costs for the three month period ended June 30, 2008 were $
798,722 compared to $ 155,007 for the 2007 period, an increase of $ 643,715
between the periods.  The increase in 2008 was primarily due to the
full operations and activity associated with the integration of pervious
acquired assets as well as TB & A.





Research
and development costs during the three months ended June 30, 2008 were
negligible compared to minimal amounts during the 2007.





Six
months ended June 30, 2008 compared with six months ended June 30,
2007





Net sales for the six month period
ended June 30, 2008 were $ 8,071,215, reflecting an increase of $ 7,436,381 over
the net sales of $ 634,834 for the comparable six month period ended June 30,
2007





Cost of
sales as a percentage of net sales for the six months ended June 30, 2008 was
80% compared to 74% for the comparable 2007 period, an increase of 6
%.    The increase was largely due to the mix of products
and services sold during the period.





Sales and
marketing expenses for the six month period ended June 30, 2008 were $ 359,846,
an increase of $ 125,140 over the comparable 2007 period amount of $
234,706.





General
and administration costs for the six month period ended June 30, 2008 were $
1,536,441 compared to $ 227,396 for the 2007 period, an increase of $
1,309,045 between the periods.  The increase in 2008 was primarily due
to full operations of and activity associated with the integration of previous
acquired assets and TB & A.





Research
and development costs during the six months ended June 30, 2008 were negligible
compared to minimal amounts during the 2007 comparable period.




22





Liquidity
and Capital Resources





The
Company had working capital of ($ 1,823,128) and ($ 2,021,260) at June 30, 2008
and December 31, 2007, respectively.  Working capital improved by almost
$200,000 during the period due to the following items: Cash decreased
approximately $370,000 Accounts Payable increased approximately $600,000.
Offsetting these decreases were increases in Accounts Receivable of
approximately $800,000 and decrease in notes payable of $350,000. Total cash
balances at June 30, 2008 were $ 33,902 compared to $406,503 at December 31,
2007.  Other current liabilities decreased by approximately
$20,000.





As shown
in the above financial statements, the Company incurred a net loss of
($2,180,945) during the year ended December 31, 2007 and ($1,196,663)
during the six months ended June 30, 2008. The Company plans to raise more
capital through public or private financing, through the issuance of its
common stock, the issuance of debt instruments, including debt convertible
to equity, or otherwise attain financing, which if available, it cannot be
certain such financing will be on attractive terms. Should the Company
obtain more capital, in turn, it may cause dilution to its existing
stockholders and providing the company can obtain more capital, it cannot
be assured to ultimately attain profitability.  However, management
expects that the acquisitions in November, 2007 of our TB&A Hospital
Television, Inc. subsidiary and additional hospital service contracts will, when
results of operations are reported on a quarterly and annual basis for calendar
year 2008, significantly increase the revenues, profitability, and liquidity of
the Company.




The
Company intends to continue its efforts to complete the necessary steps in
order to meet its cash flow requirements throughout fiscal 2008 and
to continue its product development efforts and adjust its operating
structure to reduce losses and ultimately attain profitability.
Management's plans in this regard include, but are not limited to, the
increase in business operations which it expects from the acquisition of
additional retail hospital contracts by our Patient Portal Connect
subsidiary and the continuing roll-out of its product line to its existing
and future customer base.  We also expect to see significant growth in the
revenues of our TB&A Hospital Television, Inc. subsidiary during 2008 both
through new contracts and through the sale of new flat-screen television
equipment to our existing customer base.




Management
believes that actions presently being taken will generate sufficient
revenues to provide cash flows from operations and that sufficient capital
will be available, when required, to permit the Company to realize
its plans. However, there can be no assurance that this will occur. The
accompanying financial statements do not include any adjustments that might
result from the outcome of this uncertainty.  Because our
business is evolving and changing, particularly regarding our recent
acquisitions and the Dutchess financing transaction, our operating cash flow
will be significantly increased from past results, and past operations are not a
good gauge for anticipating future operations.




23




Inflation




The rate
of inflation has had little impact on the Company's results of operations
and is not expected to have a significant impact on
continuing operations.








Capital
Expenditures





Capital
expenditures during the remainder of 2008 are not expected to be
material.







Item 3.
            Quantitative
      and Qualitative Disclosures about Market
Risk




The
Company's operations are not subject to risks of material foreign currency
fluctuations, nor does it use derivative financial instruments in its investment
practices. The Company places its marketable investments in instruments that
meet high credit quality standards. The Company does not expect material losses
with respect to its investment portfolio or exposure to market risks associated
with interest rates. The impact on the Company's results of one percentage point
change in short-term interest rates would not have a material impact on the
Company’s future earnings, fair value, or cash flows related to investments in
cash equivalents or interest-earning marketable securities..






Item 4T.
            Quantitative
      and Qualitative Disclosures about Market
Risk




Based on
their evaluation as of the end of the period covered by this report, the
Company’s Chief Executive Officer and Chief  Financial Officer have
concluded that the Company’s disclosure controls and procedures (as defined in
Rules 13a-15 and 15d-15 under the Securities Exchange Act of 1934, as amended)
are effective. There have been no significant changes in internal controls or in
other factors that could significantly affect these controls subsequent to the
date of their evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.  In accordance with the
Sarbanes-Oxley Act of 2002, as amended, the Company has included an assessment
of its internal control over financial reporting and attestation from an
independent registered public accounting firm in its Annual Reports on Form 10-K
commencing with the fiscal year ended December 31, 2007.  The Company has
undergone an ongoing comprehensive effort in preparation for compliance with
Section 404 of the Sarbanes-Oxley Act of 2002. This has involved the
documentation, testing and review of our internal controls under the direction
of senior management.








24





Part
II.  Other Information







Item 1.
            Legal
      Proceedings





The
Company is at present not involved in any
legal  proceedings  which management  believes
will have a material effect upon the financial condition of
the  Company,  nor are any
such  material  legal  proceedings  anticipated.  The
Company is presently negotiating with a judgment creditor to repay on negotiated
terms a promissory note in the amount of
$300,000 plus accrued interest and costs.  In
the  event  that  the  judgment  is
not  satisfied,  or  successfully
renegotiated,  the creditor  will have the right to
execute  upon its  judgment.





Based
upon the original terms of its Promissory Note, the creditor also retains
the right to convert the principal amount of said judgment into shares of Common
Stock at a conversion price of $1.00 per Share.







Item 4.
            Submission
      of Matters to a Vote of Security
Holders




The
Annual Meeting of Stockholders of the Company was held on June 11, 2008 with
36,241,257 shares eligible to vote.  The presence of a quorum was
reached and the following proposals were approved by the
stockholders:





(i)
            To
      elect a Board of Directors to serve for the ensuing year until the next
      Annual Meeting of Stockholders and until their respective successors have
      been duly elected and qualified.








(ii)
            To
      ratify the appointment of Harris Rattray CPA as independent auditors for
      the year ending December 31, 2008.





For
proposals (i) and (ii) above, the votes were cast as follows:




Proposal
            Position
            For
            Against
            Withhold
              Authority
            Abstentions
            Broker
              Non-Votes(i)    
      By nominee:Kevin
      J. Kelly
            Chairman
      of the Board,
              President,
      CEO
            22,765,450
            
            0
            18,762Thomas
      Hagan
            Secretary,
      Acting CFO
              and
      Director
            22,765,450
            
            0
            18,762Daniel
      Coholan
            Director
            22,765,450
            
            0
            18,762Rounsevelle
      W. Schaum
            Director
            22,765,450
            
            0
            18,762(ii)  
      Harris Rattray CPA
            Independent
      Auditors
            22,765,450
            
            0
            18,762
            
            
            
            -








25










Item 6.
            Exhibits








(1)
            Exhibit
      31.1
            Certification
      by the Chief Executive Officer pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002(2)
            Exhibit
      31.2
            Certification
      by the Chief Financial Officer pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002(3)
            Exhibit
      32.1
            Certification
      by the Chief Executive Officer pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002(4)
            Exhibit
      32.2
            Certification
      by the Chief Financial Officer pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002








26








SIGNATURES





Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.








PATIENT
      PORTAL TECHNOLOGIES, INC.By:
            /s/
      Kevin J. KellyKEVIN
      J. KELLYPresident,
      Chief Exec. Officer





Date:
August 13, 2008








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