**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**WASHINGTON,      D.C. 20549**

**FORM      10-Q**

| **x**                                                                                                                                                                                |   | **QUARTERLY                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND                EXCHANGE ACT OF 1934.**  |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                 |   |                                                                                                                                      |
| For                the quarterly period ended September 30, 2008                                                                                                                     |
|                                                                                                                                                                                 |   |                                                                                                                                      |
| OR                                                                                                                                                                                   |
|                                                                                                                                                                                 |   |                                                                                                                                      |
| **o**                                                                                                                                                                                |   | **TRANSITION                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND                EXCHANGE ACT OF 1934.** |
|                                                                                                                                                                                 |   |                                                                                                                                      |
| For                the transition period                from                                 to |

| Commission                File Number: |
|----------------------------------------|
| 0-27554                                |

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

| Delaware                                                                      |   | 42-1297992                                       |
|-------------------------------------------------------------------------------|--------|--------------------------------------------------|
| (State                or other jurisdiction of incorporation or organization) |   | (IRS                Employer Identification No.) |

| 7250                Parkway Dr., Suite 400Hanover,                MD |   | 21076                     |
|----------------------------------------------------------------------|--------|---------------------------|
| (Address                of principal executive offices)              |   | (Zip                Code) |

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

| Large                  Accelerated filer o | Accelerated                  filer o | Non-Accelerated                  filer o | Smaller                  reporting company x |
|--------------------------------------------|--------------------------------------|------------------------------------------|----------------------------------------------|

|                                                     | Number                of Shares Outstanding |
|----------------------------------------------------------|---------------------------------------------|
| Class                                                    | November                13, 2008            |
| Common                Stock, $0.0001 par value per share | 12,457,539                                  |

----

**CONMED      HEALTHCARE MANAGEMENT, INC.**

**TABLE      OF CONTENTS**

**PART      I.**
**FINANCIAL      INFORMATION**

|                                                                                                                                 | Page                                                                                                                                                                                                                                                                                                                                                        |
|--------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ITEM                  1. FINANCIAL STATEMENTS (UNAUDITED)                                                                            |                                                                                                                                                                                                                                                                                                                                                        |
|                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                        |   |
| Consolidated                  Balance Sheets                                                                                         |                                                                                                                                                                                                                                                                                                                                                        |
|                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                        |   |
|                                                                                                                                 | September                  30, 2008 and December 31, 2007                                                                                                                                                                                                                                                                                                   | 1 |
|                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                        |   |
| Consolidated                  Statements of Operations                                                                               |                                                                                                                                                                                                                                                                                                                                                        |
|                                                                                                                                 | For                  the nine months ended September 30, 2008, the 248 day period January                  26,                  2007 to September 30, 2007 , the 25-day period January 1, 2007                  to January                  25, 2007 (Predecessor) and the three months ended September 30,                  2008 and                  2007 | 2 |
|                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                        |   |
| Consolidated                  Statements of Cash Flows                                                                               |                                                                                                                                                                                                                                                                                                                                                        |
|                                                                                                                                 | For                  the nine months ended September 30, 2008, the 248-day period January                  26,                  2007 to September 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 OF FINANCIAL CONDITION AND RESULTS                  OF OPERATION | 13                                                                                                                                                                                                                                                                                                                                                          |
|                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                        |   |
| ITEM                  3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET                  RISK                                 | 20                                                                                                                                                                                                                                                                                                                                                          |
|                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                        |   |
| ITEM                  4(T). CONTROLS AND PROCEDURES                                                                                  | 20                                                                                                                                                                                                                                                                                                                                                          |
|                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                        |   |
|                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                        |   |
|                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                        |   |
| **PART                  II. OTHER INFORMATION**                                                                                      |
|                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                        |   |
| ITEM                  1. LEGAL PROCEEDINGS                                                                                           | 21                                                                                                                                                                                                                                                                                                                                                          |
|                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                        |   |
| ITEM                  2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF                  PROCEEDS                                | 21                                                                                                                                                                                                                                                                                                                                                          |
|                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                        |   |
| ITEM                  3. DEFAULTS UPON SENIOR SECURITIES                                                                             | 21                                                                                                                                                                                                                                                                                                                                                          |
|                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                        |   |
| ITEM                  4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                                         | 21                                                                                                                                                                                                                                                                                                                                                          |
|                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                        |   |
| ITEM                  5. OTHER INFORMATION                                                                                           | 21                                                                                                                                                                                                                                                                                                                                                          |
|                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                        |   |
| ITEM                  6. EXHIBITS                                                                                                    | 21                                                                                                                                                                                                                                                                                                                                                          |
|                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                        |   |
| SIGNATURES                                                                                                                           | 22                                                                                                                                                                                                                                                                                                                                                          |

----

**PART      1. FINANCIAL INFORMATION**

**ITEM      1. FINANCIAL      STATEMENTS**

**CONMED      HEALTHCARE MANAGEMENT, INC.**

**CONSOLIDATED      BALANCE SHEETS**

|                                                                                                                                                           |   |  **SUCCESSOR                September 30, 2008 (unaudited)** |        |  **SUCCESSOR                December 31, 2007** |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------|-------------|------------------------------------------------------|--------|
| **ASSETS**                                                                                                                                                     |   |                                                         |        |                                            |   |
| CURRENT                ASSETS                                                                                                                                  |   |                                                         |        |                                            |   |
| Cash                and cash equivalents                                                                                                                       |   | $                                                                 | 8,229,776   |                                                 | $      | 7,136,720 |   |
| Accounts                receivable                                                                                                                             |   |                                                              | 2,709,170   |                                                 |   | 1,622,424 |   |
| Prepaid                expenses                                                                                                                                |   |                                                              | 492,414     |                                                 |   | 214,834 |   |
| **Total                current assets**                                                                                                                        |   |                                                              | 11,431,360  |                                                 |   | 8,973,978 |   |
| PROPERTY                AND EQUIPMENT, NET                                                                                                                     |   |                                                              | 495,606     |                                                 |   | 212,815 |   |
| DEFERRED                TAXES                                                                                                                                  |   |                                                              | 390,000     |                                                 |   | 90,000 |   |
| OTHER                ASSETS                                                                                                                                    |   |                                                              |        |                                                 |   |   |   |
| Service                contracts acquired, net                                                                                                                 |   |                                                              | 1,716,000   |                                                 |   | 2,699,000 |   |
| Non-compete                agreements, net                                                                                                                     |   |                                                              | 633,000     |                                                 |   | 749,000 |   |
| Goodwill                                                                                                                                                       |   |                                                              | 5,068,478   |                                                 |   | 4,852,338 |   |
| Deposits                                                                                                                                                       |   |                                                              | 38,699      |                                                 |   | 58,698 |   |
| **Total                other assets**                                                                                                                          |   |                                                              | 7,456,177   |                                                 |   | 8,359,036 |   |
|                                                                                                                                                           |   | $                                                                 | 19,773,143  |                                                 | $      | 17,635,829 |   |
|                                                                                                                                                           |   |                                                              |        |                                                 |   |   |   |
| **LIABILITIES                AND SHAREHOLDERS’ EQUITY**                                                                                                  |   |                                                              |        |                                                 |   |   |   |
| CURRENT                LIABILITIES                                                                                                                             |   |                                                              |        |                                                 |   |   |   |
| Accounts                payable                                                                                                                                |   | $                                                                 | 886,868     |                                                 | $      | 837,144 |   |
| Accrued                expenses                                                                                                                                |   |                                                              | 3,817,573   |                                                 |   | 1,563,020 |   |
| Taxes                payable                                                                                                                                   |   |                                                              | 208,260     |                                                 |   | 5,000 |   |
| Deferred                revenue                                                                                                                                |   |                                                              | 219,152     |                                                 |   | 353,075 |   |
| Notes                payable, current portion                                                                                                                  |   |                                                              | 74,200      |                                                 |   | 7,798 |   |
| **Total                current liabilities**                                                                                                                   |   |                                                              | 5,206,053   |                                                 |   | 2,766,037 |   |
| NOTES                PAYABLE, LONG-TERM                                                                                                                        |   |                                                              | 17,327      |                                                 |   | 5,418 |   |
| SHAREHOLDERS’                EQUITY                                                                                                                      |   |                                                              |        |                                                 |   |   |   |
| Preferred                stock no par value; authorized 5,000,000 shares; issued and outstanding                zero shares as of September 30, 2008           |   |                                                              | --          |                                                 |   | -- |   |
| Common                stock, $0.0001 par value, authorized 40,000,000 shares; issued and                outstanding 12,024,222 shares as of September 30, 2008 |   |                                                              | 1,202       |                                                 |   | 1,194 |   |
| Additional                paid-in capital                                                                                                                      |   |                                                              | 36,525,100  |                                                 |   | 35,901,874 |   |
| Retained                (deficit)                                                                                                                              |   |                                                              | (21,976,539 | )                                                    |   | (21,038,694 | ) |
| **Total                shareholders' equity**                                                                                                                  |   |                                                              | 14,549,763  |                                                 |   | 14,864,374 |   |
|                                                                                                                                                           |   | $                                                                 | 19,773,143  |                                                 | $      | 17,635,829 |   |

| *See                Notes to unaudited Financial                Statements* |
|-----------------------------------------------------------------------------|

----

**CONMED      HEALTHCARE MANAGEMENT, INC.**

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

|                                                 |   |  **SUCCESSOR                For the Nine Months Ended September 30, 2008** |       | **SUCCESSOR                For the Period January 26, 2007 to September 30, 2007** |   | **PREDECESSOR****For                the Period January 1, 2007 to January 25 2007** |   |  **SUCCESSOR                For the Three Months Ended September 30, 2008** |      |  **SUCCESSOR                For the Three Months Ended September 30, 2007** |   |
|------------------------------------------------------|--------|---------------------------------------------------------------------------------|------------|------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------|-----------|----------------------------------------------------------------------------------|--------|
|                                                 |   |                                                                            |       |                                                                               |   |                                                                                |   |                                                                        |      |                                                                             |   |
| **Service                contract revenue**          |   | $                                                                               | 28,362,281 |                                                                               | $      | 16,980,432                                                                          |   | $                                                                                | 1,504,565 |                                                                             | $      | 11,531,168 |   | $ | 6,964,838 |   |
|                                                 |   |                                                                            |       |                                                                               |   |                                                                                |   |                                                                             |      |                                                                             |   |   |   |   |   |   |
| HEALTHCARE                EXPENSES:                  |   |                                                                            |       |                                                                               |   |                                                                                |   |                                                                             |      |                                                                             |   |   |   |   |   |   |
| Salaries,                wages and employee benefits |   |                                                                            | 14,695,467 |                                                                               |   | 8,640,886                                                                           |   |                                                                             | 842,575   |                                                                             |   | 5,975,707 |   |   | 3,645,035 |   |
| Medical                expenses                      |   |                                                                            | 7,702,791  |                                                                               |   | 4,530,430                                                                           |   |                                                                             | 439,206   |                                                                             |   | 3,042,867 |   |   | 1,850,211 |   |
| Other                operating expenses              |   |                                                                            | 933,932    |                                                                               |   | 651,230                                                                             |   |                                                                             | 45,552    |                                                                             |   | 446,228 |   |   | 239,545 |   |
| **Total                healthcare expenses**         |   |                                                                            | 23,332,190 |                                                                               |   | 13,822,546                                                                          |   |                                                                             | 1,327,333 |                                                                             |   | 9,464,802 |   |   | 5,734,791 |   |
|                                                 |   |                                                                            |       |                                                                               |   |                                                                                |   |                                                                             |      |                                                                             |   |   |   |   |   |   |
| **Gross                profit**                      |   |                                                                            | 5,030,091  |                                                                               |   | 3,157,886                                                                           |   |                                                                             | 177,232   |                                                                             |   | 2,066,366 |   |   | 1,230,047 |   |
|                                                 |   |                                                                            |       |                                                                               |   |                                                                                |   |                                                                             |      |                                                                             |   |   |   |   |   |   |
| Selling                and administrative expenses   |   |                                                                            | 4,574,429  |                                                                               |   | 3,150,816                                                                           |   |                                                                             | 92,264    |                                                                             |   | 1,490,008 |   |   | 1,105,514 |   |
| Depreciation                and amortization         |   |                                                                            | 1,533,870  |                                                                               |   | 1,593,046                                                                           |   |                                                                             | 1,698     |                                                                             |   | 504,295 |   |   | 521,394 |   |
| **Total                operating expenses**          |   |                                                                            | 6,108,299  |                                                                               |   | 4,743,862                                                                           |   |                                                                             | 93,962    |                                                                             |   | 1,994,303 |   |   | 1,626,908 |   |
|                                                 |   |                                                                            |       |                                                                               |   |                                                                                |   |                                                                             |      |                                                                             |   |   |   |   |   |   |
| **Operating                income (loss)**           |   |                                                                            | (1,078,208 | )                                                                                  |   | (1,585,976                                                                          | )      |                                                                             | 83,270    |                                                                             |   | 72,063 |   |   | (396,861 | ) |
|                                                 |   |                                                                            |       |                                                                               |   |                                                                                |   |                                                                             |      |                                                                             |   |   |   |   |   |   |
| INTEREST                INCOME (EXPENSE)             |   |                                                                            |       |                                                                               |   |                                                                                |   |                                                                             |      |                                                                             |   |   |   |   |   |   |
| Interest                income                       |   |                                                                            | 145,085    |                                                                               |   | 228,628                                                                             |   |                                                                             | 287       |                                                                             |   | 37,934 |   |   | 84,685 |   |
| Interest                (expense)                    |   |                                                                            | (4,721     | )                                                                                  |   | (3,638                                                                              | )      |                                                                             | (93       | )                                                                                |   | (1,527 | ) |   | (3,216 | ) |
| **Total                interest income**             |   |                                                                            | 140,364    |                                                                               |   | 224,990                                                                             |   |                                                                             | 194       |                                                                             |   | 36,407 |   |   | 81,469 |   |
|                                                 |   |                                                                            |       |                                                                               |   |                                                                                |   |                                                                             |      |                                                                             |   |   |   |   |   |   |
| **Income                (loss) before income taxes** |   |                                                                            | (937,844   | )                                                                                  |   | (1,360,986                                                                          | )      |                                                                             | 83,464    |                                                                             |   | 108,470 |   |   | (315,392 | ) |
| Income                tax benefit                    |   |                                                                            | --         |                                                                               |   | --                                                                                  |   |                                                                             | --        |                                                                             |   | -- |   |   | 291,000 |   |
| **Net                income (loss)**                 |   | $                                                                               | (937,844   | )                                                                                  | $      | (1,360,986                                                                          | )      | $                                                                                | 83,464    |                                                                             | $      | 108,470 |   | $ | (606,392 | ) |
|                                                 |   |                                                                            |       |                                                                               |   |                                                                                |   |                                                                             |      |                                                                             |   |   |   |   |   |   |
| EARNINGS                (LOSS) PER COMMON SHARE      |   |                                                                            |       |                                                                               |   |                                                                                |   |                                                                             |      |                                                                             |   |   |   |   |   |   |
| Basic                                                |   | $                                                                               | (0.08      | )                                                                                  | $      | (0.14                                                                               | )      |                                                                             |      |                                                                             |   | 0.01 |   |   | (0.05 | ) |
| Diluted                                              |   | $                                                                               | (0.08      | )                                                                                  | $      | (0.14                                                                               | )      |                                                                             |      |                                                                             |   | 0.01 |   |   | (0.05 | ) |
|                                                 |   |                                                                            |       |                                                                               |   |                                                                                |   |                                                                             |      |                                                                             |   |   |   |   |   |   |
| WEIGHTED-AVERAGE                SHARES OUTSTANDING   |   |                                                                            |       |                                                                               |   |                                                                                |   |                                                                             |      |                                                                             |   |   |   |   |   |   |
| Basic                                                |   |                                                                            | 12,012,681 |                                                                               |   | 9,705,520                                                                           |   |                                                                             |      |                                                                             |   | 12,024,222 |   |   | 11,937,489 |   |
| Diluted                                              |   |                                                                            | 12,012,681 |                                                                               |   | 9,705,520                                                                           |   |                                                                             |      |                                                                             |   | 13,305,347 |   |   | 11,937,489 |   |

| *See                Notes to unaudited Financial                Statements* |
|-----------------------------------------------------------------------------|

----

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

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

|                                                                                                           |   | **SUCCESSOR                For the Nine Months Ended September 30, 2008** |       |  **SUCCESSOR                For the Period January 26, 2007 to September 30,                2007** |   |  **PREDECESSOR                For the Period January 1, 2007 to January 25,                2007** |   |
|----------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------|------------|---------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------|--------|
| CASH                FLOWS FROM OPERATING ACTIVITIES                                                            |   |                                                                      |       |                                                                                               |   |                                                                                              |   |
| Net                income (loss)                                                                               |   | $                                                                         | (937,844   | )                                                                                                       | $      | (1,360,986                                                                                             | )      | $ | 83,464 |   |
| Adjustments                to reconcile net income to net cash provided by operating                activities |   |                                                                      |       |                                                                                                    |   |                                                                                                   |   |   |   |   |
| Depreciation                                                                                                   |   |                                                                      | 72,870     |                                                                                                    |   | 27,046                                                                                                 |   |   | 1,698 |   |
| Amortization                                                                                                   |   |                                                                      | 1,461,000  |                                                                                                    |   | 1,566,000                                                                                              |   |   | -- |   |
| Stock-based                compensation                                                                        |   |                                                                      | 423,221    |                                                                                                    |   | 423,370                                                                                                |   |   | -- |   |
| Loss                on disposal of property                                                                    |   |                                                                      | 2,257      |                                                                                                    |   | --                                                                                                     |   |   | -- |   |
| Deferred                income taxes                                                                           |   |                                                                      | (300,000   | )                                                                                                       |   | --                                                                                                     |   |   | -- |   |
| Changes                in working capital components                                                           |   |                                                                      |       |                                                                                                    |   |                                                                                                   |   |   |   |   |
| Decrease                (increase) in accounts receivable                                                      |   |                                                                      | (1,086,746 | )                                                                                                       |   | (1,011,502                                                                                             | )      |   | 197,327 |   |
| (Increase)                in taxes receivable                                                                  |   |                                                                      | --         |                                                                                                    |   | (85,000                                                                                                | )      |   | -- |   |
| (Increase)                in claims against escrow                                                             |   |                                                                      | --         |                                                                                                    |   | (370,283                                                                                               | )      |   | -- |   |
| Decrease                (increase) in prepaid expenses                                                         |   |                                                                      | (277,580   | )                                                                                                       |   | 71,924                                                                                                 |   |   | 30,687 |   |
| Decrease                (increase) in deposits                                                                 |   |                                                                      | 19,999     |                                                                                                    |   | (200                                                                                                   | )      |   | -- |   |
| Increase                in accounts payable                                                                    |   |                                                                      | 49,724     |                                                                                                    |   | 97,292                                                                                                 |   |   | 258,562 |   |
| Increase                (decrease) in accrued expenses                                                         |   |                                                                      | 2,254,553  |                                                                                                    |   | 987,664                                                                                                |   |   | (469,320 | ) |
| Increase                in income taxes payable                                                                |   |                                                                      | 203,260    |                                                                                                    |   | --                                                                                                     |   |   | -- |   |
| Increase                (decrease) in deferred revenue                                                         |   |                                                                      | (133,923   | )                                                                                                       |   | 63,616                                                                                                 |   |   | (29,155 | ) |
| **Net                cash provided by operating activities**                                                   |   |                                                                      | 1,750,791  |                                                                                                    |   | 408,941                                                                                                |   |   | 73,263 |   |
|                                                                                                           |   |                                                                      |       |                                                                                                    |   |                                                                                                   |   |   |   |   |
| CASH                FLOWS FROM INVESTING ACTIVITIES                                                            |   |                                                                      |       |                                                                                                    |   |                                                                                                   |   |   |   |   |
| Purchase                of property and equipment                                                              |   |                                                                      | (357,918   | )                                                                                                       |   | (87,751                                                                                                | )      |   | -- |   |
| Asset                Purchase from EMDC, P.C.                                                                  |   |                                                                      | (245,853   | )                                                                                                       |   | --                                                                                                     |   |   | -- |   |
| Acquisition                of Conmed, Inc., net of cash acquired                                               |   |                                                                      | --         |                                                                                                    |   | (7,675,097                                                                                             | )      |   | -- |   |
| **Net                cash used in investing activities**                                                       |   |                                                                      | (603,771   | )                                                                                                       |   | (7,762,848                                                                                             | )      |   | -- |   |
|                                                                                                           |   |                                                                      |       |                                                                                                    |   |                                                                                                   |   |   |   |   |
| CASH                FLOWS FROM FINANCING ACTIVITIES                                                            |   |                                                                      |       |                                                                                                    |   |                                                                                                   |   |   |   |   |
| Short-term                borrowings                                                                           |   |                                                                      | --         |                                                                                                    |   | 289,368                                                                                                |   |   | -- |   |
| Payments                on loans                                                                               |   |                                                                      | (53,964    | )                                                                                                       |   | (198,799                                                                                               | )      |   | (594 | ) |
| Net                proceeds from Private Placement                                                             |   |                                                                      | --         |                                                                                                    |   | 13,085,649                                                                                             |   |   | -- |   |
| Proceeds                from exercise of warrants                                                              |   |                                                                      | --         |                                                                                                    |   | 36,000                                                                                                 |   |   | -- |   |
| **Net                cash provided by (used in) financing activities**                                         |   |                                                                      | (53,964    | )                                                                                                       |   | 13,212,218                                                                                             |   |   | (594 | ) |
|                                                                                                           |   |                                                                      |       |                                                                                                    |   |                                                                                                   |   |   |   |   |
| **Net                increase in cash and cash equivalents**                                                   |   |                                                                      | 1,093,056  |                                                                                                    |   | 5,858,311                                                                                              |   |   | 72,669 |   |
|                                                                                                           |   |                                                                      |       |                                                                                                    |   |                                                                                                   |   |   |   |   |
| CASH                AND CASH EQUIVALENTS                                                                       |   |                                                                      |       |                                                                                                    |   |                                                                                                   |   |   |   |   |
| Beginning                                                                                                      |   |                                                                      | 7,136,720  |                                                                                                    |   | 662,305                                                                                                |   |   | 122,269 |   |
| Ending                                                                                                         |   | $                                                                         | 8,229,776  |                                                                                                    | $      | 6,520,616                                                                                              |   | $ | 194,938 |   |

|                                                                        |   |   |    |         |   |         |   |
|-----------------------------------------------------------------------------|--------|--------|---------|--------------|--------|--------------|--------|
| NON-CASH                INVESTING AND FINANCING ACTIVITIES WERE AS FOLLOWS: |   |   |    |    |   |    |   |
| Escrow                payments on Acquisition in prior periods              |   | $      | --      |         | $      | 500,000      |   | $ | -- |   |
| EMDC                Asset Purchase, common stock 81,081 shares              |   |   | 150,000 |         |   | --           |   |   | -- |   |
| EMDC                Asset Purchase, promissory note payable                 |   |   | 132,275 |         |   | --           |   |   | -- |   |
| EMDC                Asset Purchase, warrants 80,000 shares                  |   |   | 50,013  |         |   | --           |   |   | -- |   |
| Acquisition                expenses paid in prior periods                   |   |   | --      |         |   | 239,935      |   |   | -- |   |
| Private                Placement expenses paid in prior periods             |   |   | --      |         |   | 148,652      |   |   | -- |   |
|                                                                        |   | $      | 332,288 |         | $      | 888,587      |   | $ | -- |   |
|                                                                        |   |   |    |         |   |         |   |   |   |   |
| SUPPLEMENTAL                DISCLOSURE OF CASH FLOW INFORMATION             |   |   |    |         |   |         |   |   |   |   |
| Cash                payments for interest                                   |   | $      | 4,721   |         | $      | 3,638        |   | $ | 93 |   |
| Income                taxes paid                                            |   |   | 96,740  |         |   | 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*

| **Asset**                                 |   | **Fair                Value** |    |
|-------------------------------------------|--------|-------------------------------|---------|
| Service                contracts acquired |   | $                             | 242,000 |   |
| Non-compete                agreements     |   |                          | 120,000 |   |
| Goodwill                                  |   |                          | 216,140 |   |
| **Total**                                 |   | $                             | 578,140 |   |

| **Net                Cash Paid** |   |   |     |
|----------------------------------|--------|--------|----------|
| Purchase                Price    |   | $      | 578,140  |   |
| Stock                Issued      |   |   | (150,000 | ) |
| Note                Issued       |   |   | (132,275 | ) |
| Warrants                Issued   |   |   | (50,012  | ) |
| **Total**                        |   | $      | 245,853  |   |

----

*Service      Contracts Acquired*

| **For                the Twelve Months ended September 30,** |   | **Amortization** |      |
|--------------------------------------------------------------|--------|------------------|-----------|
| 2009                                                         |   | $                | 1,198,000 |   |
| 2010                                                         |   |             | 375,000   |   |
| 2011                                                         |   |             | 143,000   |   |
|                                                         |   | $                | 1,716,000 |   |

*Non-Compete      Agreements*

| **For                the Twelve Months ended September 30,** |   | **Amortization** |    |
|--------------------------------------------------------------|--------|------------------|---------|
| 2009                                                         |   | $                | 329,000 |   |
| 2010                                                         |   |             | 247,000 |   |
| 2011                                                         |   |             | 57,000  |   |
|                                                         |   | $                | 633,000 |   |

*Goodwill *

*Goodwill      and Other Intangible Assets*

----

*Fair      Value of Financial Instruments*

*Fair      Value Measurements*
*Effective      Date of FASB Statement No. 157*

|   | · | 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. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*The      Fair Value Option for Financial Assets and Financial      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****September                30, 2008** |      | **SUCCESSOR****December                31, 2007** |   |
|-------------------------------------------------------|--------|----------------------------------------------------|-----------|---------------------------------------------------|--------|
| Accrued                salaries and employee benefits |   | $                                                  | 2,222,353 |                                              | $      | 1,005,852 |   |
| Accrued                medical claims liability       |   |                                               | 1,354,984 |                                              |   | 542,975 |   |
| Other                                                 |   |                                               | 240,236   |                                              |   | 14,193 |   |
| **Total                accrued expenses**             |   | $                                                  | 3,817,573 |                                              | $      | 1,563,020 |   |

----

**NOTE      5.       Earnings      Per Share **

|                                                                                                        |   |  **SUCCESSOR                For the Nine Months Ended September 30, 2008** |       | **SUCCESSOR                For the Period January 26, 2007 to September 30, 2007** |   | **PREDECESSOR****For                the Period January 1, 2007 to January 25 2007** |   |  **SUCCESSOR                For the Three Months Ended September 30, 2008** |   |  **SUCCESSOR                For the Three Months Ended September 30, 2007** |   |
|-------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------|------------|------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------|--------|
| Numerator                for basic and diluted earnings per share:                                          |   |                                                                            |       |                                                                               |   |                                                                                |   |                                                                        |   |                                                                             |   |
| **Net                income (loss)**                                                                        |   | $                                                                               | (937,844   | )                                                                                  | $      | (1,360,986                                                                          | )      | $                                                                                | 83,464 |                                                                             | $      | 108,470 |   | $ | (375,252 | ) |
|                                                                                                        |   |                                                                            |       |                                                                               |   |                                                                                |   |                                                                             |   |                                                                             |   |   |   |   |   |   |
| Denominator:                                                                                                |   |                                                                            |       |                                                                               |   |                                                                                |   |                                                                             |   |                                                                             |   |   |   |   |   |   |
| Weighted-average                basic shares outstanding                                                    |   |                                                                            | 12,012,681 |                                                                               |   | 9,705,520                                                                           |   |                                                                             |   |                                                                             |   | 12,024,222 |   |   | 11,937,489 |   |
| Assumed                conversion of dilutive securities:                                                   |   |                                                                            |       |                                                                               |   |                                                                                |   |                                                                             |   |                                                                             |   |   |   |   |   |   |
| Stock                options                                                                                |   |                                                                            | --         |                                                                               |   | --                                                                                  |   |                                                                             |   |                                                                             |   | 67,145 |   |   | -- |   |
| Warrants                                                                                                    |   |                                                                            | --         |                                                                               |   | --                                                                                  |   |                                                                             |   |                                                                             |   | 1,213,980 |   |   | -- |   |
| Potentially                dilutive common shares                                                           |   |                                                                            | --         |                                                                               |   | --                                                                                  |   |                                                                             |   |                                                                             |   | 1,281,125 |   |   | -- |   |
|                                                                                                        |   |                                                                            |       |                                                                               |   |                                                                                |   |                                                                             |   |                                                                             |   |   |   |   |   |   |
| Denominator                for diluted earnings per share - Adjusted weighted average                shares |   |                                                                            | 12,012,681 |                                                                               |   | 9,705,520                                                                           |   |                                                                             |   |                                                                             |   | 13,305,347 |   |   | 11,937,489 |   |
|                                                                                                        |   |                                                                            |       |                                                                               |   |                                                                                |   |                                                                             |   |                                                                             |   |   |   |   |   |   |
| Earnings                (loss) per common share:                                                            |   |                                                                            |       |                                                                               |   |                                                                                |   |                                                                             |   |                                                                             |   |   |   |   |   |   |
| Basic                                                                                                       |   | $                                                                               | (0.08      | )                                                                                  | $      | (0.14                                                                               | )      |                                                                             |   |                                                                             |   | 0.01 |   |   | (0.05 | ) |
| Diluted                                                                                                     |   | $                                                                               | (0.08      | )                                                                                  | $      | (0.14                                                                               | )      |                                                                             |   |                                                                             |   | 0.01 |   |   | (0.05 | ) |

**NOTE      6. Major      Customers and Commitments **

*Major      Customers *

|                           |   | **SUCCESSOR****For                the Nine Months ended****September                30, 2008** |      | **SUCCESSOR****For                the Period January 26, 2007 to****September                30, 2007** |   | **PREDECESSOR****For                the Period January 1, 2007 to****January                25, 2007** |   |
|--------------------------------|--------|------------------------------------------------------------------------------------------------|-----------|---------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------|--------|
|                           |   | **Revenue**                                                                                    |      | **Accounts                Receivable**                                                                  |   | **Revenue**                                                                                            |   | **Accounts                Receivable** |   | **Revenue** |   | **Accounts                Receivable** |   |
| Company                A  |   | $                                                                                              | 4,574,000 |                                                                                                    | $      | 119,000                                                                                                |   | $ | 3,865,000 |   | $ | 18,000 |   | $ | 374,000 |   | $ | 26,000 |   |
| Company                B       |   |                                                                                           | 3,079,000 |                                                                                                    |   | 361,000                                                                                                |   |   | 2,343,000 |   |   | 596,000 |   |   | 240,000 |   |   | -- |   |
| Company                C       |   |                                                                                           | 2,211,000 |                                                                                                    |   | 514,000                                                                                                |   |   | 967,000 |   |   | 240,000 |   |   | -- |   |   | -- |   |
| Company                D       |   |                                                                                           | 1,964,000 |                                                                                                    |   | 225,000                                                                                                |   |   | 1,211,000 |   |   | 217,000 |   |   | 103,000 |   |   | 127,000 |   |
| Company                E       |   |                                                                                           | 1,880,000 |                                                                                                    |   | 258,000                                                                                                |   |   | -- |   |   | -- |   |   | -- |   |   | -- |   |
| Company                F       |   |                                                                                           | 1,837,000 |                                                                                                    |   | 207,000                                                                                                |   |   | -- |   |   | -- |   |   |   |   |   |   |   |
| Company                G       |   |                                                                                           | 1,752,000 |                                                                                                    |   | 192,000                                                                                                |   |   | 1,343,000 |   |   | 167,000 |   |   | 135,000 |   |   | 173,000 |   |

----

*Commitments*

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

**NOTE      8.       Subsequent      Event**

----

**ITEM      2. MANAGEMENT’S      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF      OPERATION**

*Information      included in this section contains forward-looking statements regarding the      business, operations and financial condition of both Conmed Healthcare      Management, Inc. (together with its consolidated subsidiaries, “we”, “us”, or“our” unless otherwise specified or the context otherwise requires) and Conmed,      Inc. (“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 our 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      our future plans, strategies and expectations, and other statements that are      not      historical facts, 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. Our actual results could differ materially from those expressed or implied      by the forward-looking statements as a result of various factors. We caution      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. We undertake 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 we make in future public statements      and press releases. *
*More      detailed information about us and the risk factors that may affect the      realization of forward-looking statements is set forth in our filings with      the      Securities and Exchange Commission, including our Annual Report on Form 10-KSB      filed with the SEC for the fiscal year ended December 31, 2007. Investors and      security holders are urged to read this document free of charge on the SEC's      web      site at www.sec.gov.*

**General**

**Critical      Accounting Policies**

----

**Recently      adopted accounting **
**standards**

*Fair      Value Measurements*
*Effective      Date of FASB Statement No. 157*

|   | · | 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. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*The      Fair Value Option for Financial Assets and Financial      Liabilities*

**New      Accounting Pronouncements**

*Business      Combinations *

*Noncontrolling      Interests in Consolidated Financial Statements*

----

*Disclosures      about Derivative Instruments and Hedging Activities - an amendment of FASB      Statement No. 133*

**Presentation      of share and per share information**

**Results      of Operations**

*Three      Months Ended September 30, 2008 compared to Three Months Ended September 30,      2007*

|                                                          |   | **Three                Months Ended****September                30, 2008** |       |  **Three                Months Ended****September                30, 2007** |   |
|---------------------------------------------------------------|--------|----------------------------------------------------------------------------|------------|----------------------------------------------------------------------------------|--------|
|                                                          |   | **Amount**                                                                 |       | **%                of Revenue**                                                  |   |  **Amount** |   | **%                of Revenue** |   |
| Service                contract revenue                       |   | $                                                                          | 11,531,168 |                                                                             |   | 100.0 | % | $ | 6,964,838 |   |   | 100.0 | % |
|                                                          |   |                                                                       |       |                                                                             |   |   |   |   |   |   |   |   |   |
| HEALTHCARE                EXPENSES:                           |   |                                                                       |       |                                                                             |   |   |   |   |   |   |   |   |   |
| Salaries,                wages and employee benefits          |   |                                                                       | 5,975,707  |                                                                             |   | 51.8 | % |   | 3,645,035 |   |   | 52.3 | % |
| Medical                expenses                               |   |                                                                       | 3,042,867  |                                                                             |   | 26.4 | % |   | 1,850,211 |   |   | 26.6 | % |
| Other                operating expenses                       |   |                                                                       | 446,228    |                                                                             |   | 3.9 | % |   | 239,545 |   |   | 3.4 | % |
| Total                healthcare expenses                      |   |                                                                       | 9,464,802  |                                                                             |   | 82.1 | % |   | 5,734,791 |   |   | 82.3 | % |
|                                                          |   |                                                                       |       |                                                                             |   |   |   |   |   |   |   |   |   |
| Gross                profit                                   |   |                                                                       | 2,066,366  |                                                                             |   | 17.9 | % |   | 1,230,047 |   |   | 17.7 | % |
|                                                          |   |                                                                       |       |                                                                             |   |   |   |   |   |   |   |   |   |
| OPERATING                EXPENSES:                            |   |                                                                       |       |                                                                             |   |   |   |   |   |   |   |   |   |
| Selling,                general & administrative expenses |   |                                                                       | 1,490,008  |                                                                             |   | 12.9 | % |   | 1,105,514 |   |   | 15.9 | % |
| Depreciation                and amortization                  |   |                                                                       | 504,295    |                                                                             |   | 4.4 | % |   | 521,394 |   |   | 7.5 | % |
| Total                operating expenses                       |   |                                                                       | 1,994,303  |                                                                             |   | 17.3 | % |   | 1,626,908 |   |   | 23.4 | % |
|                                                          |   |                                                                       |       |                                                                             |   |   |   |   |   |   |   |   |   |
| Operating                income (loss)                        |   |                                                                       | 72,063     |                                                                             |   | 0.6 | % |   | (396,861 | ) |   | (5.7 | )% |
|                                                          |   |                                                                       |       |                                                                             |   |   |   |   |   |   |   |   |   |
| Net                interest income and (expense)              |   |                                                                       | 36,407     |                                                                             |   | 0.3 | % |   | 81,469 |   |   | 1.2 | % |
|                                                          |   |                                                                       |       |                                                                             |   |   |   |   |   |   |   |   |   |
| Income                (loss) before income taxes              |   |                                                                       | 108,470    |                                                                             |   | 0.9 | % |   | (315,392 | ) |   | (4.5 | )% |
|                                                          |   |                                                                       |       |                                                                             |   |   |   |   |   |   |   |   |   |
| Income                tax expense                             |   |                                                                       | --         |                                                                             |   | 0.0 | % |   | 291,000 |   |   | 4.2 | % |
|                                                          |   |                                                                       |       |                                                                             |   |   |   |   |   |   |   |   |   |
| Net                income (loss)                              |   | $                                                                          | 108,470    |                                                                             |   | 0.9 | % | $ | (606,392 | ) |   | (8.7 | )% |

*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*

*Nine      Months Ended September 30, 2008 compared to Nine Months Ended September 30,      2007*

|                                                          |   | **Nine                Months Ended****September                30, 2008** |       |  **Nine                Months Ended****September                30, 2007** |   |
|---------------------------------------------------------------|--------|---------------------------------------------------------------------------|------------|---------------------------------------------------------------------------------|--------|
|                                                          |   | **Amount**                                                                |       | **%                of Revenue**                                                 |   |  **Amount** |   | **%                of Revenue** |   |
| Service                contract revenue                       |   | $                                                                         | 28,362,281 |                                                                            |   | 100.0 | % | $ | 18,484,997 |   |   | 100.0 | % |
|                                                          |   |                                                                      |       |                                                                            |   |   |   |   |   |   |   |   |   |
| HEALTHCARE                EXPENSES:                           |   |                                                                      |       |                                                                            |   |   |   |   |   |   |   |   |   |
| Salaries,                wages and employee benefits          |   |                                                                      | 14,695,467 |                                                                            |   | 51.8 | % |   | 9,483,499 |   |   | 51.3 | % |
| Medical                expenses                               |   |                                                                      | 7,702,791  |                                                                            |   | 27.2 | % |   | 4,929,637 |   |   | 26.7 | % |
| Other                operating expenses                       |   |                                                                      | 933,932    |                                                                            |   | 3.3 | % |   | 696,781 |   |   | 3.8 | % |
| Total                healthcare expenses                      |   |                                                                      | 23,332,190 |                                                                            |   | 82.3 | % |   | 15,109,917 |   |   | 81.7 | % |
|                                                          |   |                                                                      |       |                                                                            |   |   |   |   |   |   |   |   |   |
| Gross                profit                                   |   |                                                                      | 5,030,091  |                                                                            |   | 17.7 | % |   | 3,375,080 |   |   | 18.3 | % |
|                                                          |   |                                                                      |       |                                                                            |   |   |   |   |   |   |   |   |   |
| OPERATING                EXPENSES:                            |   |                                                                      |       |                                                                            |   |   |   |   |   |   |   |   |   |
| Selling,                general & administrative expenses |   |                                                                      | 4,574,429  |                                                                            |   | 16.1 | % |   | 3,258,714 |   |   | 17.6 | % |
| Depreciation                and amortization                  |   |                                                                      | 1,533,870  |                                                                            |   | 5.4 | % |   | 1,770,744 |   |   | 9.6 | % |
| Total                operating expenses                       |   |                                                                      | 6,108,299  |                                                                            |   | 21.5 | % |   | 5,029,458 |   |   | 27.2 | % |
|                                                          |   |                                                                      |       |                                                                            |   |   |   |   |   |   |   |   |   |
| Operating                loss                                 |   |                                                                      | (1,078,208 | )                                                                               |   | (3.8 | )% |   | (1,654,378 | ) |   | (8.9 | )% |
|                                                          |   |                                                                      |       |                                                                            |   |   |   |   |   |   |   |   |   |
| Net                interest income and (expense)              |   |                                                                      | 140,364    |                                                                            |   | 0.5 | % |   | 225,183 |   |   | 1.2 | % |
|                                                          |   |                                                                      |       |                                                                            |   |   |   |   |   |   |   |   |   |
| Loss                before income taxes                       |   |                                                                      | (937,844   | )                                                                               |   | (3.3 | )% |   | (1,429,195 | ) |   | (7.7 | )% |
|                                                          |   |                                                                      |       |                                                                            |   |   |   |   |   |   |   |   |   |
| Income                tax (benefit)                           |   |                                                                      | --         |                                                                            |   | 0.0 | % |   | -- |   |   | 0.0 | % |
|                                                          |   |                                                                      |       |                                                                            |   |   |   |   |   |   |   |   |   |
| Net                (loss)                                     |   | $                                                                         | (937,844   | )                                                                               |   | (3.3 | )% | $ | (1,429,195 | ) |   | (7.7 | )% |

----

*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 nine-month period ended September 30, 2008.*

*Liquidity*

*Loans*

*Off      Balance Sheet Arrangements*

----

*Contractual      Obligations*

|                                                |   |  **Total** |    | **Due                  as of 9/30/09** |   | **Due                  as of****9/30/10                    and 9/30/11** |   |  **Due                  as of****9/30/12                    and 9/30/13** |    | **Due****Thereafter** |   |
|-----------------------------------------------------|--------|-----------------|---------|----------------------------------------|--------|--------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------|---------|-----------------------|--------|
| Automobile                  Loan                    |   | $               | 7,030   |                                   | $      | 7,030                                                                    |   | $                                                                              | --      |                  | $      | -- |   | $ | -- |   |
| Note                  Payable                       |   |            | 87,500  |                                   |   | 70,000                                                                   |   |                                                                           | 17,500  |                  |   | -- |   |   | -- |   |
| Equipment                  Leases                   |   |            | 127,967 |                                   |   | 56,097                                                                   |   |                                                                           | 69,716  |                  |   | 2,154 |   |   |  |   |
| Automobile                  Leases                  |   |            | 68,089  |                                   |   | 29,776                                                                   |   |                                                                           | 38,313  |                  |   | -- |   |   | -- |   |
| Office                  Space Leased                |   |            | 653,427 |                                   |   | 170,917                                                                  |   |                                                                           | 286,321 |                  |   | 196,190 |   |   | -- |   |
| Total                  Contractual Cash Obligations |   | $               | 944,013 |                                   | $      | 333,820                                                                  |   | $                                                                              | 411,850 |                  | $      | 198,344 |   | $ | -- |   |

*Effects      of Inflation*

*Potential      Future Service Contract Revenue*

**ITEM      3. QUANTITATIVE      AND QUALITATIVE DISCLOSURES      ABOUT      MARKET RISK**

**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      AND USE      OF PROCEEDS**

**ITEM      3. DEFAULT      UPON SENIOR SECURITIES**

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

**ITEM      5. OTHER      INFORMATION**

**ITEM      6. EXHIBITS**

| 10.1 | Medical                Service Agreement with Charles County, Maryland dated July 2,                2008    |
|------|-------------------------------------------------------------------------------------------------------------|
| 10.2 | Professional                Services Contract with Pima County, Arizona dated August 1,                2008 |
| 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                      |

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**SIGNATURES**

|                               | **Conmed                  Healthcare Management, Inc.**** **               |
|------------------------------------|---------------------------------------------------------------------------------|
|                               |                                                                            |
|                               |                                                                            |
|                               |                                                                            |
|                               |                                                                            |
| November                  13, 2008 |                                                                            |
|                               | By                  /s/ Richard W. Turner                                       |
|                               | Richard                  W. Turner, Ph.D.                                       |
|                               | Chairman                  and Chief Executive Officer                           |
|                               | (principal                  executive officer)                                  |
|                               |                                                                            |
|                               |                                                                            |
|                               |                                                                            |
|                               |                                                                            |
| November                  13, 2008 |                                                                            |
|                               | By                  /s/ Thomas W. Fry                                           |
|                               | Thomas                  W. Fry                                                  |
|                               | Chief                  Financial Officer and Secretary                          |
|                               | (principal                  financial officer and principal accounting officer) |
|                               |                                                                            |

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