**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**WASHINGTON,      D.C. 20549**

**FORM      10-Q**

**QUARTERLY      REPORT UNDER SECTION 13 OR 15(d)**

**OF      THE SECURITIES EXCHANGE ACT OF 1934**

| For                the quarter ended: |   | Commission                File Number: |
|---------------------------------------|--------|----------------------------------------|
| June                30, 2008          |   | 0-27554                                |

**Conmed      Healthcare Management, Inc**
**.**

| Delaware                                                                                    |   | 42-1297992                                          |
|---------------------------------------------------------------------------------------------|--------|-----------------------------------------------------|
| (State                or other jurisdiction ofincorporation                or organization) |   | (IRS                Employer Identification Number) |

| 7250                Parkway Dr., Suite 400Hanover,                MD 21076          |
|-------------------------------------------------------------------------------------|
| (Address                and zip code of principal executive                offices) |

| (410)                567-5520                                                         |
|---------------------------------------------------------------------------------------|
| (Issuer’s                telephone -number, including area                code) |

|                                                     |   | Number                of Shares Outstanding |
|----------------------------------------------------------|--------|---------------------------------------------|
| Class                                                    |   | August                14, 2008              |
| Common                Stock, $0.0001 par value per share |   | 12,024,222                                  |

----

**CONMED      HEALTHCARE MANAGEMENT, INC.**

**TABLE      OF CONTENTS**

|                                                                                                                                                                                                                                                                                                                                   | **Page** |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------|
|                                                                                                                                                                                                                                                                                                                                        |     |
|  **PART                    I.** **FINANCIAL INFORMATION**                                                                                                                                                                                                                                                                    |     |
|                                                                                                                                                                                                                                                                                                                                   |     |
| ITEM                    1. FINANCIAL STATEMENTS (UNAUDITED)                                                                                                                                                                                                                                                                            |     |
|                                                                                                                                                                                                                                                                                                                                   |     |
| Consolidated                    Balance Sheets                                                                                                                                                                                                                                                                                         |     |
| June                    30, 2008 and December 31, 2007                                                                                                                                                                                                                                                                                 | 1        |
|                                                                                                                                                                                                                                                                                                                                   |     |
| Consolidated                    Statements of Operations                                                                                                                                                                                                                                                                               |     |
| For                    the six months ended June 30, 2008, the 156 day period January                    26, 2007 to                    June 30, 2007 , the 25-day period January 1, 2007 to January                    25, 2007                    (Predecessor) and the three months ended June 30, 2008 and                    2007 | 2        |
|                                                                                                                                                                                                                                                                                                                                   |     |
| Consolidated                    Statements of Cash Flows                                                                                                                                                                                                                                                                               |     |
| For                    the six months ended June 30, 2008, the 156-day period January                    26, 2007 to                    June 30, 2007 and the 25-day period January 1, 2007 to January                    25, 2007                    (Predecessor)                                                                    | 3        |
|                                                                                                                                                                                                                                                                                                                                   |     |
| Notes                    to Consolidated Financial Statements                                                                                                                                                                                                                                                                          | 4        |
|                                                                                                                                                                                                                                                                                                                                   |     |
| ITEM                    2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF                    OPERATION                                                                                                                                                                                                                          | 12       |
|                                                                                                                                                                                                                                                                                                                                   |     |
| ITEM                    3. QUANTITATIVE AND QUALITATIVE DISCLOSURES                                                                                                                                                                                                                                                                    | 19       |
|                                                                                                                                                                                                                                                                                                                                   |     |
| ITEM                    4(T). CONTROLS AND PROCEDURES                                                                                                                                                                                                                                                                                  | 19       |
|                                                                                                                                                                                                                                                                                                                                   |     |
| **PART                    II.** **OTHER                    INFORMATION**                                                                                                                                                                                                                                                          |     |
|                                                                                                                                                                                                                                                                                                                                   |     |
| ITEM                    1. LEGAL PROCEEDINGS                                                                                                                                                                                                                                                                                           | 20       |
|                                                                                                                                                                                                                                                                                                                                   |     |
| ITEM                    2. UNREGISTERED SALES OF EQUITY SECURITIES                                                                                                                                                                                                                                                                     | 20       |
|                                                                                                                                                                                                                                                                                                                                   |     |
| ITEM                    3. DEFAULT UPON SENIOR SECURITIES                                                                                                                                                                                                                                                                              | 20       |
|                                                                                                                                                                                                                                                                                                                                   |     |
| ITEM                    4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                                                                                                                                                                                                                                         | 20       |
|                                                                                                                                                                                                                                                                                                                                   |     |
| ITEM                    5. OTHER INFORMATION                                                                                                                                                                                                                                                                                           | 20       |
|                                                                                                                                                                                                                                                                                                                                   |     |
| ITEM                    6. EXHIBITS                                                                                                                                                                                                                                                                                                    | 20       |
|                                                                                                                                                                                                                                                                                                                                   |     |
|                                                                                                                                                                                                                                                                                                                                   |     |
| SIGNATURES                                                                                                                                                                                                                                                                                                                             | 21       |

----

**PART      1. FINANCIAL INFORMATION**

**ITEM      1. FINANCIAL      STATEMENTS**

**CONMED      HEALTHCARE MANAGEMENT, INC.**

**CONSOLIDATED      BALANCE SHEETS**

|                                                                                                                                                                           |   | **SUCCESSOR****June 30, 2008****(unaudited)** |        | **SUCCESSOR****December 31,****2007** |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------|-------------|--------------------------------------------|--------|
| **ASSETS**                                                                                                                                                                     |   |                                                    |        |                                       |   |   |   |
| CURRENT ASSETS                                                                                                                                                            |   |                                                    |        |                                       |   |   |   |
| Cash                  and cash equivalents                                                                                                                                     |   | $                                                       | 7,251,819   |                                       | $      | 7,136,720 |   |
| Accounts                  receivable                                                                                                                                           |   |                                                    | 1,780,606   |                                       |   | 1,622,424 |   |
| Prepaid                  expenses                                                                                                                                              |   |                                                    | 542,789     |                                       |   | 214,834 |   |
| **Total                  current assets**                                                                                                                                      |   |                                                    | 9,575,214   |                                       |   | 8,973,978 |   |
| PROPERTY                  AND EQUIPMENT, NET                                                                                                                                   |   |                                                    | 442,380     |                                       |   | 212,815 |   |
| DEFERRED                  TAXES                                                                                                                                                |   |                                                    | 90,000      |                                       |   | 90,000 |   |
| OTHER                  ASSETS                                                                                                                                                  |   |                                                    |        |                                       |   |   |   |
| Service                  contracts acquired, net                                                                                                                               |   |                                                    | 2,105,000   |                                       |   | 2,699,000 |   |
| Non-compete                  agreements, net                                                                                                                                   |   |                                                    | 715,000     |                                       |   | 749,000 |   |
| Goodwill                                                                                                                                                                       |   |                                                    | 5,068,388   |                                       |   | 4,852,338 |   |
| Deposits                                                                                                                                                                       |   |                                                    | 13,698      |                                       |   | 58,698 |   |
| **Total                  other assets**                                                                                                                                        |   |                                                    | 7,902,086   |                                       |   | 8,359,036 |   |
|                                                                                                                                                                           |   | $                                                       | 18,009,680  |                                       | $      | 17,635,829 |   |
|                                                                                                                                                                           |   |                                                    |        |                                       |   |   |   |
| **LIABILITIES                  AND SHAREHOLDERS’ EQUITY**                                                                                                                |   |                                                    |        |                                       |   |   |   |
| CURRENT                  LIABILITIES                                                                                                                                           |   |                                                    |        |                                       |   |   |   |
| Accounts                  payable                                                                                                                                              |   | $                                                       | 997,100     |                                       | $      | 837,144 |   |
| Accrued                  expenses                                                                                                                                              |   |                                                    | 2,590,453   |                                       |   | 1,563,020 |   |
| Taxes                  payable                                                                                                                                                 |   |                                                    | 5,000       |                                       |   | 5,000 |   |
| Deferred                  revenue                                                                                                                                              |   |                                                    | 26,247      |                                       |   | 353,075 |   |
| Notes                  payable, current portion                                                                                                                                |   |                                                    | 73,784      |                                       |   | 7,798 |   |
| **Total                  current liabilities**                                                                                                                                 |   |                                                    | 3,692,584   |                                       |   | 2,766,037 |   |
| NOTES                  PAYABLE, LONG-TERM                                                                                                                                      |   |                                                    | 35,777      |                                       |   | 5,418 |   |
| SHAREHOLDERS’                  EQUITY                                                                                                                                    |   |                                                    |        |                                       |   |   |   |
| Preferred                  stock no par value; authorized 5,000,000 shares; issued and outstanding                  zero shares as of June 30, 2008                            |   |                                                    | —     |                                       |   | — |   |
| Common                  stock, $0.0001 par value, authorized 40,000,000 shares; issued                  and                  outstanding 12,024,222 shares as of June 30, 2008 |   |                                                    | 1,202       |                                       |   | 1,194 |   |
| Additional                  paid-in capital                                                                                                                                    |   |                                                    | 36,365,126  |                                       |   | 35,901,874 |   |
| Retained                  (deficit)                                                                                                                                            |   |                                                    | (22,085,009 | )                                          |   | (21,038,694 | ) |
| **Total                  shareholders' equity**                                                                                                                                |   |                                                    | 14,281,319  |                                       |   | 14,864,374 |   |
|                                                                                                                                                                           |   | $                                                       | 18,009,680  |                                       | $      | 17,635,829 |   |

*See      Notes to unaudited Financial Statements*

----

**CONMED      HEALTHCARE MANAGEMENT, INC.**

**CONSOLIDATED      STATEMENTS OF OPERATIONS (UNAUDITED)**
** **

|                                                   |   | **SUCCESSOR ****For the Six****Months Ended****June 30, 2008** |       | **SUCCESSOR****For the Period****January 26,****2007 to June ****3****0, 2007 ** |   | **PREDECESSOR ****For the Period****January 1,****2007 to****January 25****2007** |   |  **SUCCESSOR****For the Three****Months Ended****June 30, 2008** |      | **SUCCESSOR****For the Three****Months Ended****June 30, 2007** |   |
|--------------------------------------------------------|--------|----------------------------------------------------------------------------------------------|------------|--------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------|-----------|------------------------------------------------------------------------------------------|--------|
|                                                   |   |                                                                                         |       |                                                                                                                     |   |                                                                                                            |   |                                                                                      |      |                                                                                     |   |
| **Service                  contract revenue**          |   | $                                                                                            | 16,831,113 |                                                                                                                     | $      | 10,015,594                                                                                                      |   | $                                                                                              | 1,504,565 |                                                                                     | $      | 8,994,863 |   | $ | 5,969,220 |   |
|                                                   |   |                                                                                         |       |                                                                                                                     |   |                                                                                                            |   |                                                                                           |      |                                                                                     |   |   |   |   |   |   |
| HEALTHCARE                  EXPENSES:                  |   |                                                                                         |       |                                                                                                                     |   |                                                                                                            |   |                                                                                           |      |                                                                                     |   |   |   |   |   |   |
| Salaries,                  wages and employee benefits |   |                                                                                         | 8,719,760  |                                                                                                                     |   | 4,995,851                                                                                                       |   |                                                                                           | 842,575   |                                                                                     |   | 4,605,733 |   |   | 3,093,425 |   |
| Medical                  expenses                      |   |                                                                                         | 4,659,923  |                                                                                                                     |   | 2,680,219                                                                                                       |   |                                                                                           | 439,206   |                                                                                     |   | 2,643,335 |   |   | 1,505,682 |   |
| Other                  operating expenses              |   |                                                                                         | 487,704    |                                                                                                                     |   | 411,685                                                                                                         |   |                                                                                           | 45,552    |                                                                                     |   | 254,269 |   |   | 246,619 |   |
| **Total                  healthcare expenses**         |   |                                                                                         | 13,867,387 |                                                                                                                     |   | 8,087,755                                                                                                       |   |                                                                                           | 1,327,333 |                                                                                     |   | 7,503,337 |   |   | 4,845,726 |   |
|                                                   |   |                                                                                         |       |                                                                                                                     |   |                                                                                                            |   |                                                                                           |      |                                                                                     |   |   |   |   |   |   |
| **Gross                  profit**                      |   |                                                                                         | 2,963,726  |                                                                                                                     |   | 1,927,839                                                                                                       |   |                                                                                           | 177,232   |                                                                                     |   | 1,491,526 |   |   | 1,123,494 |   |
|                                                   |   |                                                                                         |       |                                                                                                                     |   |                                                                                                            |   |                                                                                           |      |                                                                                     |   |   |   |   |   |   |
| Selling                  and administrative expenses   |   |                                                                                         | 3,084,421  |                                                                                                                     |   | 2,045,301                                                                                                       |   |                                                                                           | 92,264    |                                                                                     |   | 1,495,409 |   |   | 1,178,286 |   |
| Depreciation                  and amortization         |   |                                                                                         | 1,029,575  |                                                                                                                     |   | 1,071,652                                                                                                       |   |                                                                                           | 1,698     |                                                                                     |   | 530,126 |   |   | 572,409 |   |
| **Total                  operating expenses**          |   |                                                                                         | 4,113,996  |                                                                                                                     |   | 3,116,953                                                                                                       |   |                                                                                           | 93,962    |                                                                                     |   | 2,025,535 |   |   | 1,750,695 |   |
|                                                   |   |                                                                                         |       |                                                                                                                     |   |                                                                                                            |   |                                                                                           |      |                                                                                     |   |   |   |   |   |   |
| **Operating                  income (loss)**           |   |                                                                                         | (1,150,270 | )                                                                                                                        |   | (1,189,114                                                                                                      | )      |                                                                                           | 83,270    |                                                                                     |   | (534,009 | ) |   | (627,201 | ) |
|                                                   |   |                                                                                         |       |                                                                                                                     |   |                                                                                                            |   |                                                                                           |      |                                                                                     |   |   |   |   |   |   |
| INTEREST                  INCOME (EXPENSE)             |   |                                                                                         |       |                                                                                                                     |   |                                                                                                            |   |                                                                                           |      |                                                                                     |   |   |   |   |   |   |
| Interest                  income                       |   |                                                                                         | 107,150    |                                                                                                                     |   | 143,943                                                                                                         |   |                                                                                           | 287       |                                                                                     |   | 41,253 |   |   | 84,193 |   |
| Interest                  (expense)                    |   |                                                                                         | (3,194     | )                                                                                                                        |   | (422                                                                                                            | )      |                                                                                           | (93       | )                                                                                        |   | (1,504 | ) |   | (244 | ) |
| **Total                  interest income**             |   |                                                                                         | 103,956    |                                                                                                                     |   | 143,521                                                                                                         |   |                                                                                           | 194       |                                                                                     |   | 39,749 |   |   | 83,949 |   |
|                                                   |   |                                                                                         |       |                                                                                                                     |   |                                                                                                            |   |                                                                                           |      |                                                                                     |   |   |   |   |   |   |
| **Income                  (loss) before income taxes** |   |                                                                                         | (1,046,314 | )                                                                                                                        |   | (1,045,593                                                                                                      | )      |                                                                                           | 83,464    |                                                                                     |   | (494,260 | ) |   | (543,252 | ) |
| Income                  tax benefit                    |   |                                                                                         | —    |                                                                                                                     |   | (291,000                                                                                                        | )      |                                                                                           | —   |                                                                                     |   | — |   |   | (168,000 | ) |
| **Net                  income (loss)**                 |   | $                                                                                            | (1,046,314 | )                                                                                                                        | $      | (754,593                                                                                                        | )      | $                                                                                              | 83,464    |                                                                                     | $      | (494,260 | ) | $ | (375,252 | ) |
|                                                   |   |                                                                                         |       |                                                                                                                     |   |                                                                                                            |   |                                                                                           |      |                                                                                     |   |   |   |   |   |   |
| LOSS                  PER COMMON SHARE                 |   |                                                                                         |       |                                                                                                                     |   |                                                                                                            |   |                                                                                           |      |                                                                                     |   |   |   |   |   |   |
| Basic                  and diluted                     |   | $                                                                                            | (0.09      | )                                                                                                                        | $      | (0.09                                                                                                           | )      |                                                                                           |      |                                                                                     |   | (0.04 | ) |   | (0.03 | ) |
|                                                   |   |                                                                                         |       |                                                                                                                     |   |                                                                                                            |   |                                                                                           |      |                                                                                     |   |   |   |   |   |   |
| WEIGHTED-AVERAGE                  SHARES OUTSTANDING   |   |                                                                                         |       |                                                                                                                     |   |                                                                                                            |   |                                                                                           |      |                                                                                     |   |   |   |   |   |   |
| Basic                  and diluted                     |   |                                                                                         | 12,006,848 |                                                                                                                     |   | 8,389,615                                                                                                       |   |                                                                                           |      |                                                                                     |   | 12,024,222 |   |   | 11,833,356 |   |

*See      Notes to unaudited Financial Statements*

----

**CONMED      HEALTH****CARE      MANAGEMENT, INC.**

**CONSOLIDATED      STATEMENTS OF CASH FLOWS (UNAUDITED)**

|                                                                                                                                          |   | **SUCCESSOR ****For the Six Months****Ended June 30,****2008** |       | **SUCCESSOR ****For the Period****January 26, 2007****to June 30, 2007** |   | **PREDECESSOR ****For the Period****January 1, 2007 to****January 25, 2007** |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------|------------|------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------|--------|
| CASH                  FLOWS FROM OPERATING ACTIVITIES                                                                                         |   |                                                                                         |       |                                                                                                             |   |                                                                                                                 |   |   |   |   |
| Net                  income (loss)                                                                                                            |   | $                                                                                            | (1,046,314 | )                                                                                                                | $      | (754,593                                                                                                             | )      | $ | 83,464 |   |
| Adjustments                  to reconcile net income to net cash provided by operating                  activities                            |   |                                                                                         |       |                                                                                                             |   |                                                                                                                 |   |   |   |   |
| Depreciation                                                                                                                                  |   |                                                                                         | 39,575     |                                                                                                             |   | 14,652                                                                                                               |   |   | 1,698 |   |
| Amortization                                                                                                                                  |   |                                                                                         | 990,000    |                                                                                                             |   | 1,057,000                                                                                                            |   |   | — |   |
| Stock-based                  compensation                                                                                                     |   |                                                                                         | 263,246    |                                                                                                             |   | 299,449                                                                                                              |   |   | — |   |
| Loss                  on disposal of property                                                                                                 |   |                                                                                         | 2,257      |                                                                                                             |   | —                                                                                                              |   |   | — |   |
| Deferred                  income taxes                                                                                                        |   |                                                                                         | —    |                                                                                                             |   | (376,000                                                                                                             | )      |   | — |   |
| Changes                  in working capital components                                                                                        |   |                                                                                         |       |                                                                                                             |   |                                                                                                                 |   |   |   |   |
| Decrease                  (increase) in accounts receivable                                                                                   |   |                                                                                         | (158,182   | )                                                                                                                |   | (264,283                                                                                                             | )      |   | 197,327 |   |
| (Increase)                  in claims against escrow                                                                                          |   |                                                                                         | —    |                                                                                                             |   | (333,373                                                                                                             | )      |   | — |   |
| Decrease                  (increase) in prepaid expenses                                                                                      |   |                                                                                         | (327,955   | )                                                                                                                |   | (32,571                                                                                                              | )      |   | 30,687 |   |
| Decrease                  in deposits                                                                                                         |   |                                                                                         | 45,000     |                                                                                                             |   | —                                                                                                              |   |   | — |   |
| Increase                  in accounts payable                                                                                                 |   |                                                                                         | 159,956    |                                                                                                             |   | 146,558                                                                                                              |   |   | 258,562 |   |
| Increase                  (decrease) in accrued expenses                                                                                      |   |                                                                                         | 1,027,433  |                                                                                                             |   | 643,374                                                                                                              |   |   | (469,320 | ) |
| (Decrease)                  in deferred revenue                                                                                               |   |                                                                                         | (326,828   | )                                                                                                                |   | (49,521                                                                                                              | )      |   | (29,155 | ) |
| **Net                  cash provided by operating activities**                                                                                |   |                                                                                         | 668,188    |                                                                                                             |   | 350,692                                                                                                              |   |   | 73,263 |   |
|                                                                                                                                          |   |                                                                                         |       |                                                                                                             |   |                                                                                                                 |   |   |   |   |
| CASH                  FLOWS FROM INVESTING ACTIVITIES                                                                                         |   |                                                                                         |       |                                                                                                             |   |                                                                                                                 |   |   |   |   |
| Purchase                  of property and equipment                                                                                           |   |                                                                                         | (271,397   | )                                                                                                                |   | (37,313                                                                                                              | )      |   | — |   |
| Asset                  Purchase from EMDC, P.C.                                                                                               |   |                                                                                         | (245,762   | )                                                                                                                |   | —                                                                                                              |   |   | — |   |
| Acquisition                  of Conmed, Inc., net of cash acquired                                                                            |   |                                                                                         | —    |                                                                                                             |   | (7,675,097                                                                                                           | )      |   | — |   |
| **Net                  cash used in investing activities**                                                                                    |   |                                                                                         | (517,159   | )                                                                                                                |   | (7,712,410                                                                                                           | )      |   | — |   |
|                                                                                                                                          |   |                                                                                         |       |                                                                                                             |   |                                                                                                                 |   |   |   |   |
| CASH                  FLOWS FROM FINANCING ACTIVITIES                                                                                         |   |                                                                                         |       |                                                                                                             |   |                                                                                                                 |   |   |   |   |
| Short-term                  borrowings                                                                                                        |   |                                                                                         | —    |                                                                                                             |   | 289,368                                                                                                              |   |   | — |   |
| Payments                  on loans                                                                                                            |   |                                                                                         | (35,930    | )                                                                                                                |   | (134,307                                                                                                             | )      |   | (594 | ) |
| Net                  proceeds from Private Placement                                                                                          |   |                                                                                         | —    |                                                                                                             |   | 13,085,649                                                                                                           |   |   | — |   |
| Proceeds                  from exercise of warrants                                                                                           |   |                                                                                         | —    |                                                                                                             |   | 33,000                                                                                                               |   |   | — |   |
| **Net                  cash provided by (used in) financing activities**                                                                      |   |                                                                                         | (35,930    | )                                                                                                                |   | 13,273,710                                                                                                           |   |   | (594 | ) |
|                                                                                                                                          |   |                                                                                         |       |                                                                                                             |   |                                                                                                                 |   |   |   |   |
| **Net                  increase in cash and cash equivalents**                                                                                |   |                                                                                         | 115,099    |                                                                                                             |   | 5,911,992                                                                                                            |   |   | 72,669 |   |
|                                                                                                                                          |   |                                                                                         |       |                                                                                                             |   |                                                                                                                 |   |   |   |   |
| CASH                  AND CASH EQUIVALENTS                                                                                                    |   |                                                                                         |       |                                                                                                             |   |                                                                                                                 |   |   |   |   |
| Beginning                                                                                                                                     |   |                                                                                         | 7,136,720  |                                                                                                             |   | 662,305                                                                                                              |   |   | 122,269 |   |
| Ending                                                                                                                                        |   | $                                                                                            | 7,251,819  |                                                                                                             | $      | 6,574,297                                                                                                            |   | $ | 194,938 |   |
|                                                                                                                                          |   |                                                                                         |       |                                                                                                             |   |                                                                                                                 |   |   |   |   |
| NON-CASH                  INVESTING AND FINANCING ACTIVITIES WERE AS FOLLOWS:                                                                 |   |                                                                                         |       |                                                                                                             |   |                                                                                                                 |   |   |   |   |
| Escrow                  payments on Acquisition in prior periods                                                                              |   | $                                                                                            | —    |                                                                                                             | $      | 500,000                                                                                                              |   | $ | — |   |
| Stock                  (81,081 Shares) for Asset Purchase from EMDC, P.C.                                                                     |   |                                                                                         | 150,000    |                                                                                                             |   | —                                                                                                              |   |   | — |   |
| Promissory                  Note payable to EMDC, P.C. for Asset Purchase                                                                     |   |                                                                                         | 132,275    |                                                                                                             |   | —                                                                                                              |   |   | — |   |
| Warrants                  (80,000 Shares) for Asset Purchase from EMDC, P.C.                                                                  |   |                                                                                         | 50,013     |                                                                                                             |   | —                                                                                                              |   |   | — |   |
| Acquisition                  expenses paid in prior periods                                                                                   |   |                                                                                         | —    |                                                                                                             |   | 239,935                                                                                                              |   |   | — |   |
| Private                  Placement expenses paid in prior periods                                                                             |   |                                                                                         | —    |                                                                                                             |   | 148,652                                                                                                              |   |   | — |   |
| Income                  tax claims receivable related to tax benefit received from the                  exercise of                  warrants |   |                                                                                         | —    |                                                                                                             |   | 85,000                                                                                                               |   |   | — |   |
| Deferred                  tax effect related to tax benefit received from the exercise of                  warrants                           |   |                                                                                         | —    |                                                                                                             |   | 61,000                                                                                                               |   |   | — |   |
|                                                                                                                                          |   | $                                                                                            | 332,288    |                                                                                                             | $      | 1,034,587                                                                                                            |   | $ | — |   |
|                                                                                                                                          |   |                                                                                         |       |                                                                                                             |   |                                                                                                                 |   |   |   |   |
| SUPPLEMENTAL                  DISCLOSURE OF CASH FLOW INFORMATION                                                                             |   |                                                                                         |       |                                                                                                             |   |                                                                                                                 |   |   |   |   |
| Cash                  payments for interest                                                                                                   |   | $                                                                                            | 3,194      |                                                                                                             | $      | 422                                                                                                                  |   | $ | 93 |   |
| Income                  taxes paid                                                                                                            |   |                                                                                         | —    |                                                                                                             |   | 85,000                                                                                                               |   |   | — |   |

*See      Notes to unaudited Financial Statements*

----

**CONMED      HEALTHCARE MANAGEMENT, INC.**

**NOTES      TO      UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS **

**NOTE      1. Nature      of      Business**

*Nature      of Business*

*Reclassifications*
* *

**NOTE      2. Significant      Accounting Policies**

----

*Accounting      Estimates and Assumption*

*Acquisition*

*Business      Combinations*

| **Asset**                                 |   | **Fair Value** |       |
|-------------------------------------------|--------|---------------------|------------|
| Service                contracts acquired |   | $                   | 4,500,000  |   |
| Non-compete                agreements     |   |                | 1,000,000  |   |
| Goodwill                                  |   |                | 4,852,338  |   |
| **Total**                                 |   | $                   | 10,352,338 |   |

*Asset      Purchase*

*Business      Combinations*

| **Asset**                                 |   | **Fair Value** |    |
|-------------------------------------------|--------|---------------------|---------|
| Service                contracts acquired |   | $                   | 242,000 |   |
| Non-compete                agreements     |   |                | 120,000 |   |
| Goodwill                                  |   |                | 216,050 |   |
| **Total**                                 |   | $                   | 578,050 |   |

| **Net                Cash Paid** |   |   |     |
|----------------------------------|--------|--------|----------|
| Purchase                Price    |   | $      | 578,050  |   |
| Stock                Issued      |   |   | (150,000 | ) |
| Note                Issued       |   |   | (132,275 | ) |
| Warrants                Issued   |   |   | (50,013  | ) |
| **Total**                        |   | $      | 245,762  |   |

----

*Service      Contracts Acquired*

| **For the Twelve Months ****ended June 30,** |   | **Amortization** |      |
|----------------------------------------------------------------------------|--------|------------------|-----------|
| 2009                                                                       |   |             | 1,449,000 |   |
| 2010                                                                       |   |             | 462,000   |   |
| 2011                                                                       |   |             | 173,000   |   |
| 2012                                                                       |   |             | 21,000    |   |
|                                                                       |   | $                | 2,105,000 |   |

*Non-Compete      Agreements*

| **For the Twelve Months ****ended June 30,** |   | **Amortization** |    |
|----------------------------------------------------------------------------|--------|------------------|---------|
| 2009                                                                       |   | $                | 329,000 |   |
| 2010                                                                       |   |             | 285,000 |   |
| 2011                                                                       |   |             | 101,000 |   |
| 2012                                                                       |   |             | — |   |
|                                                                       |   | $                | 715,000 |   |

----

*Goodwill: *

*Goodwill      and Other Intangible Assets*

*Fair      Value of Financial Instruments*

|   | · | Level                1 – Quoted prices in active markets for identical assets or                liabilities. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------|

|   | · | Level                2 – Inputs other than Level 1 that are observable, either directly or                indirectly, such as quoted prices for similar assets or liabilities;                quoted prices in markets that are not active; or other inputs that                are                observable or can be corroborated by observable market data for                substantially the full term of the assets or                liabilities. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Level                3 – Unobservable inputs that are supported by little or no market activity                and that are significant to the fair value of the assets or                liabilities. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Principles      of Consolidation:*

*Revenue      Recognition*

----

*Accrued      Medical Claims Liability*

*Stock      Compensation*

*Shared-Based      Payments *

*Income      Taxes*

*Basic      and Diluted Loss Per Share*

*Earnings      per Share*

----

*New      Accounting Pronouncements*

*Business      Combinations*

*Noncontrolling      Interests in Consolidated Financial Statements*

*Presentation      of share and Per Share Information*

**NOTE      3. **
**Common      Stock Warrants and Options **

*Common      Stock Warrants *

----

*Common      Stock Options *

**NOTE      4. Accrued      Expenses**

|                                                       |   | **SUCCESSOR****June 30, 2008** |      | **SUCCESSOR****June 30, 2007** |   |
|------------------------------------------------------------|--------|------------------------------------------|-----------|------------------------------------------|--------|
| Accrued salaries and employee benefits |   | $                                        | 1,218,843 |                                     | $      | 813,434 |   |
| Accrued                    medical claims liability        |   |                                     | 1,274,530 |                                     |   | 528,665 |   |
| Other                                                      |   |                                     | 97,080    |                                     |   | 10,117 |   |
| **Total                    accrued expenses**              |   | $                                        | 2,590,453 |                                     | $      | 1,352,216 |   |

**NOTE      5. ****Earnings      Per Share**

|                                                 |   | **SUCCESSOR ****For the Six****Months Ended****June 30, 2008** |       | **SUCCESSOR****For the Period****January 26, 2007****to June 30, 2007** |   | **PREDECESSOR****For the Period****January 1, 2007 to****January 25, 2007** |   |
|------------------------------------------------------|--------|----------------------------------------------------------------------------------------------|------------|------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------|--------|
| Net income (loss)                          |   | $                                                                                            | (1,046,314 | )                                                                                                          | $      | (754,593                                                                                                       | )      | $ | 83,464 |   |
| Weighted                  average shares outstanding |   |                                                                                         | 12,024,222 |                                                                                                       |   | 8,389,615                                                                                                      |   |   | — |   |
| Income                  (loss) per common share      |   | $                                                                                            | (0.09      | )                                                                                                          | $      | (0.09                                                                                                          | )      |   |   |   |

----

**NOTE      6. ****Major      Customers and Commitments**

|                       |   | **SUCCESSOR****For the Six Months ended June****30, 2008** |      | **SUCCESSOR****For the Period January 26, 2007 to****June 30, 2007** |   | **PREDECESSOR****For the Period January 1, 2007 to****January 25, 2007** |   |
|----------------------------|--------|------------------------------------------------------------------------------------------|-----------|--------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------|--------|
|                       |   | **Revenue**                                                                              |      | **Accounts ****Receivable**                                                                             |   | **Revenue**                                                                                                      |   | **Accounts ****Receivable** |   | **Revenue** |   | **Accounts ****Receivable** |   |
| Company A        |   | $                                                                                        | 3,066,000 |                                                                                                         | $      | 41,000                                                                                                           |   | $ | 2,548,000 |   | $ | — |   | $ | 374,000 |   | $ | 26,000 |   |
| Company                  B |   |                                                                                     | 2,080,000 |                                                                                                         |   | 349,000                                                                                                          |   |   | 1,532,000 |   |   | 242,000 |   |   | 240,000 |   |   | — |   |
| Company                  C |   |                                                                                     | 1,446,000 |                                                                                                         |   | 247,000                                                                                                          |   |   | — |   |   | — |   |   | — |   |   | — |   |
| Company                  D |   |                                                                                     | 1,305,000 |                                                                                                         |   | 221,000                                                                                                          |   |   | 687,000 |   |   | 127,000 |   |   | 103,000 |   |   | 127,000 |   |
| Company                  E |   |                                                                                     | 1,077,000 |                                                                                                         |   | 223,000                                                                                                          |   |   | 866,000 |   |   | 150,000 |   |   | 135,000 |   |   | 173,000 |   |
| Company                  F |   |                                                                                     | 836,000   |                                                                                                         |   | 95,000                                                                                                           |   |   | — |   |   | — |   |   | — |   |   | — |   |

**NOTE      7. ****Income      Tax Matters**

----

**ITEM      2. MANAGEMENT’S      DISCUSSION AND ANALYSIS OR PLAN OF OPERATION**

*Information      included in this section contains forward-looking statements regarding the      business, operations and financial condition of both the Company and Conmed,      Inc. within the meaning of Section 27A of the Securities Act of 1933, as amended      and Section 21E of the Securities Exchange Act of 1934, as amended (the      "Exchange Act"). This information may involve known and unknown risks,      uncertainties and other factors which may cause the Company’s actual results,      performance or achievements to be materially different from our future results,      performance or achievements expressed or implied by any forward-looking      statements. Forward-looking statements, which involve assumptions and describe      the Company’s future plans, strategies and expectations, are generally      identifiable by use of the words "may," "will," "should," "expect,"      "anticipate," "estimate," "believe," "intend," “plan,” “potential” or "project"      or the negative of these words or other variations on these words or comparable      terminology. These forward-looking statements are based on assumptions that      may      be incorrect, and there can be no assurance that these projections included      in      these forward-looking statements will come to pass. The Company’s actual results      could differ materially from those expressed or implied by the forward-looking      statements as a result of various factors. The Company cautions you not to      place      undue reliance on these forward-looking statements. Such forward-looking      statements relate only to events as of the date on which the statements are      made. The Company undertakes no obligation to update any forward-looking      statements, whether as a result of new information, future events or otherwise,      even if experience or future changes make it clear that any projected results      or      events expressed or implied therein will not be realized. You are advised,      however, to consult any further disclosures the Company makes in future public      statements and press releases.*

**General**

**Recently      adopted accounting standards**

----

|   | · | Level                1 – Quoted prices in active markets for identical assets or                liabilities. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------|

|   | · | Level                2 – Inputs other than Level 1 that are observable, either directly or                indirectly, such as quoted prices for similar assets or liabilities;                quoted prices in markets that are not active; or other inputs that                are                observable or can be corroborated by observable market data for                substantially the full term of the assets or                liabilities. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Level                3 – Unobservable inputs that are supported by little or no market activity                and that are significant to the fair value of the assets or                liabilities. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**New      Accounting Pronouncements**

*Business      Combinations*

*Noncontrolling      Interests in Consolidated Financial Statements*

**Presentation      of share and per share information**

----

**Results      of Operations**

*Three-Months      Ended June 30, 2008 compared June 30, 2007*

|                                                          |   | **Three Months Ended****June 30, 2008** |      | **Three Months Ended ****June 30, 2007** |   |
|---------------------------------------------------------------|--------|-------------------------------------------------------------|-----------|-------------------------------------------------------------------|--------|
|                                                          |   | **Amount**                                                  |      | **% of ****Revenue**                                    |   | **Amount** |   | **% of ****Revenue** |   |
| Service contract revenue                            |   | $                                                           | 8,994,863 |                                                              |   | 100.0 | % | $ | 5,969,220 |   |   | 100.0 | % |
|                                                          |   |                                                        |      |                                                              |   |   |   |   |   |   |   |   |   |
| HEALTHCARE                EXPENSES:                           |   |                                                        |      |                                                              |   |   |   |   |   |   |   |   |   |
| Salaries,                wages and employee benefits          |   |                                                        | 4,605,733 |                                                              |   | 51.2 | % |   | 3,093,425 |   |   | 51.8 | % |
| Medical                expenses                               |   |                                                        | 2,643,335 |                                                              |   | 29.4 | % |   | 1,505,682 |   |   | 25.2 | % |
| Other                operating expenses                       |   |                                                        | 254,269   |                                                              |   | 2.8 | % |   | 246,619 |   |   | 4.1 | % |
| Total                healthcare expenses                      |   |                                                        | 7,503,337 |                                                              |   | 83.4 | % |   | 4,845,726 |   |   | 81.2 | % |
|                                                          |   |                                                        |      |                                                              |   |   |   |   |   |   |   |   |   |
| Gross                profit                                   |   |                                                        | 1,491,526 |                                                              |   | 16.6 | % |   | 1,123,494 |   |   | 18.8 | % |
|                                                          |   |                                                        |      |                                                              |   |   |   |   |   |   |   |   |   |
| OPERATING                EXPENSES:                            |   |                                                        |      |                                                              |   |   |   |   |   |   |   |   |   |
| Selling,                general & administrative expenses |   |                                                        | 1,495,409 |                                                              |   | 16.6 | % |   | 1,178,286 |   |   | 19.7 | % |
| Depreciation                and amortization                  |   |                                                        | 530,126   |                                                              |   | 5.9 | % |   | 572,409 |   |   | 9.6 | % |
| Total                operating expenses                       |   |                                                        | 2,025,535 |                                                              |   | 22.5 | % |   | 1,750,695 |   |   | 29.3 | % |
|                                                          |   |                                                        |      |                                                              |   |   |   |   |   |   |   |   |   |
| Operating                loss                                 |   |                                                        | (534,009  | )                                                                 |   | (5.9 | )% |   | (627,201 | ) |   | (10.5 | )% |
|                                                          |   |                                                        |      |                                                              |   |   |   |   |   |   |   |   |   |
| Net                interest income and (expense)              |   |                                                        | 39,749    |                                                              |   | 0.4 | % |   | 83,949 |   |   | 1.4 | % |
|                                                          |   |                                                        |      |                                                              |   |   |   |   |   |   |   |   |   |
| Loss                before income taxes                       |   |                                                        | (494,260  | )                                                                 |   | (5.5 | )% |   | (543,252 | ) |   | (9.1 | )% |
|                                                          |   |                                                        |      |                                                              |   |   |   |   |   |   |   |   |   |
| Income                tax expense                             |   |                                                        | —   |                                                              |   | 0.0 | % |   | (168,000 | ) |   | 2.8 | % |
|                                                          |   |                                                        |      |                                                              |   |   |   |   |   |   |   |   |   |
| Net                (loss)                                     |   | $                                                           | (494,260  | )                                                                 |   | (5.5 | )% | $ | (375,252 | ) |   | (6.3 | )% |

*Revenues*

----

*Healthcare      Expenses *

*Salaries      and employee benefits*

*Medical      expenses*

*Other      operating expenses*

*Operating      Expenses*

*Selling,      general and administrative expenses*

*Depreciation      and amortization*

*Interest      income*

*Interest      expense*

*Income      tax expense*

----

*Six-Months      Ended June 30, 2008 compared June 30, 2007*

|                                                          |   | **Six Months Ended****June 30, 2008** |       | **Six Months Ended ****June 30, 2007** |   |
|---------------------------------------------------------------|--------|-----------------------------------------------------------|------------|-----------------------------------------------------------------|--------|
|                                                          |   | **Amount**                                                |       | **% of ****Revenue**                                  |   | **Amount** |   | **% of ****Revenue** |   |
| Service contract revenue                            |   | $                                                         | 16,831,113 |                                                            |   | 100.0 | % | $ | 11,520,159 |   |   | 100.0 | % |
|                                                          |   |                                                      |       |                                                            |   |   |   |   |   |   |   |   |   |
| HEALTHCARE                EXPENSES:                           |   |                                                      |       |                                                            |   |   |   |   |   |   |   |   |   |
| Salaries,                wages and employee benefits          |   |                                                      | 8,719,760  |                                                            |   | 51.8 | % |   | 5,838,464 |   |   | 50.7 | % |
| Medical                expenses                               |   |                                                      | 4,659,923  |                                                            |   | 27.7 | % |   | 3,079,426 |   |   | 26.7 | % |
| Other                operating expenses                       |   |                                                      | 487,704    |                                                            |   | 2.9 | % |   | 457,236 |   |   | 4.0 | % |
| Total                healthcare expenses                      |   |                                                      | 13,867,387 |                                                            |   | 82.4 | % |   | 9,375,126 |   |   | 81.4 | % |
|                                                          |   |                                                      |       |                                                            |   |   |   |   |   |   |   |   |   |
| Gross                profit                                   |   |                                                      | 2,963,726  |                                                            |   | 17.6 | % |   | 2,145,033 |   |   | 18.6 | % |
|                                                          |   |                                                      |       |                                                            |   |   |   |   |   |   |   |   |   |
| OPERATING                EXPENSES:                            |   |                                                      |       |                                                            |   |   |   |   |   |   |   |   |   |
| Selling,                general & administrative expenses |   |                                                      | 3,084,421  |                                                            |   | 18.3 | % |   | 2,153,200 |   |   | 18.7 | % |
| Depreciation                and amortization                  |   |                                                      | 1,029,575  |                                                            |   | 6.1 | % |   | 1,249,350 |   |   | 10.8 | % |
| Total                operating expenses                       |   |                                                      | 4,113,996  |                                                            |   | 24.4 | % |   | 3,402,550 |   |   | 29.5 | % |
|                                                          |   |                                                      |       |                                                            |   |   |   |   |   |   |   |   |   |
| Operating                loss                                 |   |                                                      | (1,150,270 | )                                                               |   | (6.8 | )% |   | (1,257,517 | ) |   | (10.9 | )% |
|                                                          |   |                                                      |       |                                                            |   |   |   |   |   |   |   |   |   |
| Net                interest income and (expense)              |   |                                                      | 103,956    |                                                            |   | 0.6 | % |   | 143,714 |   |   | 1.2 | % |
|                                                          |   |                                                      |       |                                                            |   |   |   |   |   |   |   |   |   |
| Loss                before income taxes                       |   |                                                      | (1,046,314 | )                                                               |   | (6.2 | )% |   | (1,113,803 | ) |   | (9.7 | )% |
|                                                          |   |                                                      |       |                                                            |   |   |   |   |   |   |   |   |   |
| Income                tax (benefit)                           |   |                                                      | —    |                                                            |   | 0.0 | % |   | (429,000 | ) |   | (3.7 | )% |
|                                                          |   |                                                      |       |                                                            |   |   |   |   |   |   |   |   |   |
| Net                (loss)                                     |   | $                                                         | (1,046,314 | )                                                               |   | (6.2 | )% | $ | (684,803 | ) |   | (5.9 | )% |

*Revenues*

----

*Healthcare      Expenses *

*Salaries      and employee benefits*

*Medical      expenses*

*Other      operating expenses*

*Operating      Expenses*

*Selling,      general and administrative expenses*

*Depreciation      and amortization*

*Interest      income*

*Interest      expense*

*Income      tax expense*

----

**LIQUIDITY      AND CAPITAL RESOURCES**

*Cash      flow for the six-month period ended June 30, 2008.*

*Liquidity*

*Loans*

*Off      Balance Sheet Arrangements*

*Contractual      Obligations*

|                                              |   | **  Total** |    | **Due as of**** 6/30/09  ** |   | **Due as of ****6/30/10 ****and ****6/30/11  ** |   | **Due as of ****6/30/12 ****a****nd ****6/30/13  ** |    | **Due ****Thereafter** |   |
|---------------------------------------------------|--------|-----------------------|---------|------------------------------------------------------|--------|------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------|---------|-----------------------------|--------|
| Automobile Loan                              |   | $                     | 9,092   |                                                 | $      | 8,248                                                                              |   | $                                                                                      | 844     |                        | $      | — |   | $ | — |   |
| Note                Payable                       |   |                  | 105,000 |                                                 |   | 70,000                                                                             |   |                                                                                   | 35,000  |                        |   | — |   |   | — |   |
| Equipment                Leases                   |   |                  | 97,017  |                                                 |   | 36,283                                                                             |   |                                                                                   | 56,426  |                        |   | 4,308 |   |   |   |   |
| Automobile                Leases                  |   |                  | 60,328  |                                                 |   | 24,845                                                                             |   |                                                                                   | 35,483  |                        |   | — |   |   | — |   |
| Office                Space Leased                |   |                  | 702,727 |                                                 |   | 178,121                                                                            |   |                                                                                   | 292,440 |                        |   | 232,166 |   |   | — |   |
| Total                Contractual Cash Obligations |   | $                     | 974,164 |                                                 | $      | 317,497                                                                            |   | $                                                                                      | 420,193 |                        | $      | 236,474 |   | $ | — |   |

*Effects      of Inflation*

----

*Potential      Future Service Contract Revenue*

**ITEM      3. QUANTITATIVE      AND QUALITATIVE DISCLOSURES**

**ITEM      4(T). **
**CONTROLS      AND PROCEDURES **

*Evaluation      of Disclosure Controls and Procedures.*

*Changes      in Internal Control over Financial Reporting. *

----

**PART      II.  OTHER INFORMATION**

** ITEM      1. LEGAL      PROCEEDINGS **

**ITEM      2. UNREGISTERED      SALES OF EQUITY SECURITIES**

**ITEM      3. DEFAULT      UPON SENIOR SECURITIES**

**ITEM      4. SUBMISSION      OF MATTERS TO A VOTE OF SECURITY HOLDERS**

|   | B. | Not                Applicable |
|--------|----|-------------------------------|

|   | C. | Five                directors were elected. John Pappajohn, Richard W. Turner, Edward                B.                Berger, Terry E. Branstad, John W. Colloton until the 2009 Annual                Meeting                of Stockholders or until their successors are duly elected and qualified.                The minimum number of votes cast in favor of their elections was                9,844,285. |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**ITEM      5. OTHER      INFORMATION**

**ITEM      6. EXHIBITS**

| 31.1 | Section                302 Certification of Principal Executive Officer                |
|------|----------------------------------------------------------------------------------------|
| 31.2 | Section                302 Certification of Principal Financial Officer                |
| 32.1 | Section                906 Certification of Principal Executive Officer                |
| 32.2 | Section                906 Certification of Principal Financial                Officer |

----

**SIGNATURES**

| **Conmed                Healthcare Management, Inc.** |
|-------------------------------------------------------|
|                                                  |   |
| August                14, 2008                        |   |
|                                                  | By                /s/ Richard W. Turner |
|                                                  | Richard                W. Turner, Ph.D. |
|                                                  | President                and Chief Executive Officer |
|                                                  |   |
| August                14, 2008                        |   |
|                                                  | By                /s/ Thomas W. Fry |
|                                                  | Thomas                W. Fry |
|                                                  | Chief                Financial Officer and Secretary |

----