UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549




FORM
10-Q


(Mark
one)


x
            Quarterly
      report pursuant to Section 13 or 15(d) of the Securities Exchange Act of
      1934
              
              For
      the quarterly period ended June 30,
2008




OR




[
      ]
            Transition
      report pursuant to Section 13 or 15(d) of the Securities Exchange Act of
      1934 for the transition period from _____________ to
      _____________




Commission
file number: 000-51561




HEALTHCARE
PROVIDERS DIRECT, INC.


(Exact
name of registrant as specified in its charter)




Nevada
              (State
      or other jurisdiction
              of
      incorporation or organization)
            
            20-1063591
              (IRS
      Employer
              Identification
      No.)





3371
Route One, Suite 200


Lawrenceville,
New Jersey 08648


(Address
and zip code of principal executive offices)




Telephone
Number: (609) 919-1932


(Registrant’s
telephone number, including area code)




Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days:   [X] Yes   [ ] No




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


Large
accelerated filer
                                                                                                           Accelerated
filer


Non-accelerated
filer(Do not check if a smaller reporting
company)    Smaller reporting companyx





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).Yes  [
]   No   [X]




As
of August 19, 2008, there were 45,344,038 outstanding shares of the
Issuer’s Common Stock, par value $0.001 per share.











1


















HEALTHCARE
PROVIDERS DIRECT, INC.


Index








Page NumberPART
      I.
            FINANCIAL
      INFORMATIONItem
      1.
            Financial
      StatementsConsolidated
      Condensed Balance Sheets as of June 30, 2008 (unaudited)  and
      December 31, 2007 (audited)
            3Consolidated
      Condensed Statements of Operations for the three and six months ended June
      30, 2008 and 2007 (unaudited)
            4Consolidated
      Condensed Statements of Cash Flows for the six months ended June 30, 2008
      and 2007 (unaudited)
            5Notes
      to the Consolidated Condensed Financial Statements
            6Item
      2.
            Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
            17Item
      3.
            Quantitative
      and Qualitative Disclosures about Market Risk
            23Item
      4.
            Controls
      and Procedures
            23PART
      II
            OTHER
      INFORMATION
            24Item
      1.
            Legal
      Proceedings
            24Item
      1a.
            Risk
      Factors
            24Item
      2.
            Unregistered
      Sales of Equity Securities and  Use of Proceeds
            24Item
      3.
            Defaults
      Upon Senior Securities
            24Item
      4.
            Submission
      of Matters to a Vote of Security Holders
            24Item
      5.
            Other
      Information
            24Item
      6.
            Exhibits
            24SIGNATURES
            25









2









PART
I - FINANCIAL INFORMATION




Item
1. Financial Statements




HEALTHCARE
      PROVIDERS DIRECT, INC.
              CONSOLIDATED
      CONDENSED BALANCE SHEETSJune
      30,
            
            
            December
      31,2008
            
            
            2007(derived
      from(unaudited)
            
            
            auditedstatements)ASSETSCurrent
      assets:Cash
      and cash equivalents
            
            $
            5,464
            
            
            $
            277,530Accounts
      receivable, net of allowance for doubtful accounts of
    $9,833
            
            
            30,102
            
            
            
            26,726Other
      receivables – related party, net of allowance for doubtful accounts
      of
              $23,512
            
            
            -
            
            
            
            -Inventories
            
            
            180,732
            
            
            
            236,477Prepaid
      and other current assets
            
            
            120,456
            
            
            
            28,713Total
      current assets
            
            
            336,754
            
            
            
            569,446Equipment,
      net
            
            
            11,434
            
            
            
            16,210Deferred
      financing costs
            
            
            343,993
            
            
            
            394,281Intangible
      assets, net
            
            
            13,889
            
            
            
            19,444Total
      assets
            
            $
            706,070
            
            
            $
            999,381




LIABILITIES
      AND SHAREHOLDERS’ EQUITYCurrent
      liabilities:Accounts
      payable
            
            $
            572,405
            
            
            $
            202,056Accrued
      expenses and other current liabilities
            
            
            606,841
            
            
            
            303,865Accrued
      royalties
            
            
            116,053
            
            
            
            108,961Convertible
      notes payable –related party, net of discounts of $28,302 and
      $0
            
            
            136,698
            
            
            
            -Note
      payable
            
            
            86,000
            
            
            
            -Convertible
      notes payable, net of discounts of $1,413,460 and $1,869,911,
              respectively
            
            
            727,748
            
            
            
            280,089Total
      current liabilities
            
            
            2,245,745
            
            
            
            894,971Note
      payable
            
            
            14,000
            
            
            
            -Note
      payable – related parties
            
            
            90,000
            
            
            
            90,000Total
      liabilities
            
            
            2,349,745
            
            
            
            984,971Commitments
            
            
            -
            
            
            
            -Shareholders'
      equity:Preferred
      stock, $0.001 par value per share; 25,000,000 shares
      authorized;
              no
      shares issued and outstanding for 2008 and 2007,
    respectively
            
            
            -
            
            
            
            -Common
      stock, $0.001 par value per share; 375,000,000 shares authorized;
      45,344,038 and 44,906,538 shares issued and outstanding for 2008 and 2007,
      respectively
            
            
            45,344
            
            
            
            44,907Additional
      paid-in capital
            
            
            8,672,734
            
            
            
            8,516,305Accumulated
      deficit
            
            
            (10,361,753
            )
            
            
            (8,546,802
            )Total
      shareholders' equity
            
            
            (1,643,675
            )
            
            
            14,410Total
      liabilities and shareholders' equity
            
            $
            706,070
            
            
            $
            999,381






The
accompanying notes are an integral part of these consolidated condensed
financial statements.








3






HEALTHCARE
      PROVIDERS DIRECT, INC.
              CONSOLIDATED
      CONDENSED STATEMENTS OF INCOME (UNAUDITED)For
      The Three Months
              Ended
            
            
            For
      The Six Months
              EndedJune
      30,
              2008
            
            
            June
      30,
              2007
            
            
            June
      30,
              2008
            
            
            June
      30,
              2007Revenues,
      net
            
            $
            91,799
            
            
            $
            168,672
            
            
            $
            229,595
            
            
            $
            307,570Cost
      of revenues
            
            
            53,533
            
            
            
            85,651
            
            
            
            138,422
            
            
            
            147,472Gross
      profit
            
            
            38,266
            
            
            
            83,021
            
            
            
            91,173
            
            
            
            160,098Operating
      expenses:Research  and
      development
            
            
            118,222
            
            
            
            160,406
            
            
            
            127,463
            
            
            
            207,688Sales
      and marketing costs
            
            
            224,885
            
            
            
            257,246
            
            
            
            357,077
            
            
            
            485,363Issuance
      of warrants in connection with reverse merger
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            2,927,285General
      and administrative
            
            
            366,044
            
            
            
            478,191
            
            
            
            760,253
            
            
            
            1,331,947Total
      operating expenses
            
            
            709,151
            
            
            
            895,843
            
            
            
            1,244,793
            
            
            
            4,952,283Loss
      from operations
            
            
            (670,885
            )
            
            
            (812,222
            )
            
            
            (1,153,620
            )
            
            
            (4,792,185
            )Interest
      expense
            
            
            (333,900
            )
            
            
            (2,014
            )
            
            
            (661,332
            )
            
            
            (4,954
            )Net
      loss
            
            $
            (1,004,785
            )
            
            $
            (814,836
            )
            
            $
            (1,814,952
            )
            
            $
            (4,797,139
            )Net
      Loss Per Common Share -Basic and Diluted
            
            $
            (0.02
            )
            
            $
            (0.02
            )
            
            $
            (0.04
            )
            
            $
            (0.11
            )Weighted
      average common shares - Basic and Diluted
            
            
            45,054,121
            
            
            
            44,864,038
            
            
            
            44,983,223
            
            
            
            44,423,698







The
accompanying notes are an integral part of these consolidated condensed
financial statements.











4














HEALTHCARE
      PROVIDERS DIRECT, INC.
              CONSOLIDATED
      CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)




For the Six Months
      Ended June 302008
            
            
            2007Cash
      flows from operating activities:Net
      loss
            
            $
            (1,814,952
            )
            
            $
            (4,797,139
            )Adjustments
      to reconcile net loss to net cash used in operating
      activities:Depreciation
            
            
            6,542
            
            
            
            5,152Amortization
      of intangible assets
            
            
            5,555
            
            
            
            27,778Amortization
      of debt discount on convertible notes
            
            
            490,908
            
            
            
            -Amortization
      of deferred financing costs
            
            
            72,632
            
            
            
            -Stock-based
      compensation expense
            
            
            53,562
            
            
            
            343,678Issuance
      of common stock for services
            
            
            22,075
            
            
            
            -Issuance
      of warrants for services
            
            
            17,127
            
            
            
            27,156Issuance
      of warrants in connection with reverse merger
            
            
            -
            
            
            
            2,927,285Provision
      for doubtful accounts
            
            
            -
            
            
            
            (167
            )Changes
      in operating assets and liabilities:Accounts
      receivable
            
            
            (3,376
            )
            
            
            9,101Inventories
            
            
            55,745
            
            
            
            53,194Prepaid
      expenses and other current assets
            
            
            (91,743
            )
            
            
            (52,621
            )Accounts
      payable
            
            
            370,349
            
            
            
            1,527Accrued
      expenses and accrued royalties
            
            
            310,068
            
            
            
            (179,113
            )Net
      cash used in operating activities
            
            
            (505,508
            )
            
            
            (1,634,169
            )Cash
      flows from investing activities:Purchases
      of equipment
            
            
            (1,766
            )
            
            
            (12,587
            )Net
      cash used in investing activities
            
            
            (1,766
            )
            
            
            (12,587
            )Cash
      flows from financing activities:Proceeds
      from convertible notes, net of issuance costs of $21,000
            
            
            319,000
            
            
            
            -Repayment
      of convertible notes payable
            
            
            (83,792
            )
            
            
            -Repayment
      of notes payable
            
            
            -
            
            
            
            (250,000
            )Proceeds
      from issuance of common stock
            
            
            -
            
            
            
            500,000Proceeds
      from sale of Series B preferred stock, net of issuance costs
      of
              $158,847
            
            
            -
            
            
            
            1,144,153Net
      cash (used in) provided by financing activities
            
            
            235,208
            
            
            
            1,394,153Net
      (decrease)increase in cash and cash equivalents
            
            
            (272,066
            )
            
            
            (252,603
            )Cash
      and cash equivalents at beginning of period
            
            
            277,530
            
            
            
            263,494Cash
      and cash equivalents at end of period
            
            $
            5,464
            
            
            $
            10,891Supplemental Disclosures Of
      Cash Flow Information:Cash
      paid during the year for:Interest
            
            $
            46,410
            
            
            $
            19,230Taxes
            
            
            -
            
            
            
            -Non-cash
      financing activities:Conversion
      of Series A and B preferred stock into common stock
            
            $
            -
            
            
            $
            2,548,000Conversion
      of convertible note into a note payable
            
            
            100,000Warrants
      issued to holders of convertible notes
            
            
            62,759
            
            
            
            -Warrants
      issued to placement agent on issuance of convertible notes
            
            
            1,344
            
            
            
            -








The
accompanying notes are an integral part of these consolidated condensed
financial statements.










5








HEALTHCARE
PROVIDERS DIRECT, INC.


NOTES
TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS


(UNAUDITED)




NOTE
1 – ORGANIZATION AND BASIS OF PRESENTATION:





The
accompanying consolidated condensed financial statements included herein have
been  prepared  by the  Company  pursuant to the rules
and  regulations  of the Securities and Exchange Commission 
(the  "Commission")  for interim  financial
information.  Accordingly, they do not include all of the information
and footnotes required by accounting principles generally accepted in the United
States of America for complete financial  statement  presentation
and should be read in conjunction with the audited  consolidated 
financial  statements and related footnotes  thereto for the
fiscal year ended December 31, 2007  included in the  Company's 
current  report on Form  10-KSB,  filed  with the 
Commission on April 8, 2008. The financial  statements 
presented  in this  quarterly  report are  unaudited 
but include all adjustments  that are of a normal  recurring 
nature that management considers  necessary for the fair 
statement  of the  results  for the  interim periods. 
The condensed balance sheet as of December 31, 2007 has been derived from the
Company’s Audited Financial Statements. Results for interim periods are not
necessarily indicative of results for the full fiscal year. There have been
no changes in significant accounting policies since December 31,
2007.





The
Company was originally incorporated in Nevada in April 2004 as Alpha Motorsport,
Inc. (“Alpha”), a development stage company that attempted to engage in the
business of automobile sales and had minimal business operations prior to the
time of the Share Exchange and Merger. On January 24, 2007, Alpha formed a
wholly-owned subsidiary, Healthcare Providers Direct, Inc., a Nevada corporation
and on January 24, 2007, completed a short-form merger pursuant to the Nevada
Revised Statutes, and effectively changed its name to “Healthcare Providers
Direct, Inc.”, a Nevada corporation.




Healthcare
Providers Direct, Inc. (“HPD”) was formed as a Delaware corporation incorporated
on October 28, 2004 for the purpose of selling and distributing diagnostic tests
directly to physician offices and other healthcare providers in the United
Sates. After the Share Exchange and Merger, Alpha succeeded to the line of
business of HPD, which will be continued as its sole line of
business.





The
Company’s common stock is quoted on the Over-the-Counter Bulletin Board (the
“OTCBB”) under the symbol “HPRD.”





Effective
February 7, 2007, the Company entered into a definitive Share Exchange Agreement
with Alpha Motorsport, Inc., a Nevada corporation and the shareholders of HPD
pursuant to which HPD became a wholly-owned subsidiary of the Company (the
“Merger”). The share exchange agreement provided for the acquisition of all of
the issued and outstanding capital stock of HPD consisting of 4,683 shares of
common stock (on an as-converted, issued and outstanding basis), in exchange for
34,464,038 shares of the Alpha Motorsport’s common stock, par value $.001 per
share (the “Share Exchange”). The following table shows the exchange of common
stock in the reverse merger:





Common
      stock of HPD before share exchange
            
            
            Shares
      of common stock in registrant after share exchangeSeries
      A Preferred Stock
            
            
            577
            
            
            
            4,246,370Series
      B Preferred Stock
            
            
            2,548
            
            
            
            18,751,734Common
      Stock
            
            
            1,558
            
            
            
            11,465,934Total
            
            
            4,683
            
            
            
            34,464,038Total
      outside shares of Alpha Mortorsport, Inc. issued upon closing of share
      exchange
            
            
            
            
            
            
            10,000,000Total
      shares outstanding subsequent to the share exchange
            
            
            
            
            
            
            44,464,038





In
connection with the Share Exchange Agreeemnt, the Company assumed the obligation
to register up to 400,000 shares of common stock issued by Alpha in a private
placement (the “Alpha Private Placement”).  In return, the Company
received $500,000 upon the closing of the Merger on February 7, 2007 for
issuance of 400,000 shares of common stock.





Upon the
closing of the Share Exchange, Alpha Motorsport, Inc. had 10,000,000 shares of
common stock issued and outstanding and subsequent to the Share Exchange the
Company had 44,464,038 shares of common stock issued and outstanding. Upon the
closing of the Merger on February 7, 2007, HPD became a wholly-owned subsidiary
of the Company. The share exchange was accounted for as a reverse merger for
accounting purposes. As a result, the Company treated the merger as a capital
transaction and has retroactively revised shareholders’ equity to give effect to
the merger. Prior to the reverse merger, each share of Series A and Series B
preferred stock of HPD was automatically converted into one share of common
stock. Effective with the reverse merger, all shares of common stock of HPD were
exchanged for shares in the registrant, in accordance with the Share
Exchange








6




NOTE
1 – ORGANIZATION AND BASIS OF PRESENTATION (CONTINUED):





Agreement.
In connection with the Series B Private Placement financing, the Company issued
warrants to brokers with the right to purchase up to 1,368,847 shares of common
stock at an exercise price of $0.1359.





Investa
Warrants





On
February 7, 2007, the Company issued warrants to Investa Capital Partners Inc.
(“Investa”) for services performed in connection with the reverse merger
transaction, which were exercisable in two tranches. The tranche A warrants gave
Investa the right to purchase 2,705,659 shares of common stock at an exercise
price of $0.1848 per share. The tranche B warrants gave Investa the right to
purchase 2,032,982 shares of common stock at an exercise price of $0.2459 per
share. The warrants had a fair value of $2,927,285 (calculated to be the fair
value based on the Black-Scholes pricing model on the issuance date.) and have
been recorded as an expense for the six months ended June 30, 2007.  Both
tranche A and the tranche B warrants were exercisable for a period of 365 days
from the date of issuance until the warrants expired on February 7,
2008.





The
Investa warrants expired on February 7, 2008. Investa did not exercise these
warrants and the Company did not exercise the put feature.





Liquidity





The
Company has net losses of $1,814,952 and negative cash flow from operating
activities of $505,508 for the six months ended June 30, 2008, and an
accumulated deficit of $10,361,753 as of June 30, 2008. These circumstances
raise substantial doubt about the Company’s ability to continue as a going
concern. The Company has taken steps to mitigate the negative operating results
by attempting to increase their sales by expanding their market, introducing new
products, and increasing the emphasis on sales and marketing. The Company’s
ultimate success is dependent upon fulfilling its operating plans and raising
additional capital or financing. The financial statements have been prepared on
the basis that the Company will continue as a going concern, which contemplates
the realization of assets and the satisfaction of liabilities in the normal
course of business. There have been no adjustments to the financial statements
to reflect the outcome of this uncertainty.








NOTE
2 – SIGNIFICANT ACCOUNTING POLICIES:




The
summary of significant accounting policies presented below is designed to assist
in understanding the Company's consolidated financial statements. Such
consolidated financial statements and accompanying notes are the representations
of the Company’s management, who is responsible for their integrity and
objectivity. These accounting policies conform to accounting principles
generally accepted in the United States of America (“GAAP") in all material
respects, and have been consistently applied in preparing the accompanying
consolidated financial statements.





Uses of
Estimates—The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Significant accounting estimates used in the
Company’s financial statements include allowances for doubtful accounts,
valuations of options and warrants, and the valuation allowance on the deferred
tax assets. Actual results could differ from those estimates.





Share-Based
Compensation—The
Company accounts for its stock options in accordance with SFAS No. 123(R), which
requires the measurement and recognition of compensation expense for all
share-based payment awards based on estimated fair values at the date of the
grant. Determining the fair value of share-based awards at the grant date
requires judgment in developing assumptions, which involve a number of
variables. These variables include, but are not limited to, the expected stock
price volatility over the term of the awards, and expected stock option exercise
behavior. In addition, we also use judgment in estimating the number of
share-based awards that are expected to be forfeited.





Fair Value of
Financial Instruments—Statement No. 107, Disclosure About Fair Value of Financial Instruments,
requires the disclosure of the fair value of certain financial instruments. Cash
and cash equivalents, accounts receivable, accounts payable and accrued
expenses, notes payable and other current liabilities are reflected on the
accompanying consolidated balance sheet at carrying value which approximates
fair value due to the short-term nature of these instruments.




Revenue
Recognition-Revenue
is recognized when goods are shipped, provided that there is evidence of an
arrangement with the customer, the price is fixed and determinable and
collection is reasonably assured.




Reclassification-Certain reclassifications
have been made to prior year’s consolidated condensed financial statements to
conform to the current year presentation.






7




NOTE 3 – PER SHARE
INFORMATION:




In
accordance with SFAS No. 128 “Earnings Per Share”, basic earnings per common
share (“Basic EPS”) is computed by dividing the net income (loss) by the
weighted-average number of common shares outstanding. Diluted earnings per
common share (“Diluted EPS”) is computed by dividing the net income (loss) by
the sum of the weighted-average number of common shares and dilutive common
stock equivalents and convertible securities then outstanding. SFAS No. 128
requires presentation of both Basic EPS and Diluted EPS on the face of the
Company’s Consolidated Statements of Operations. Consolidated common stock
equivalents totaling 22,733,571 and 22,294,494 were excluded from the
computation of Diluted EPS for the three and six months ended June 30, 2008,
respectively, and 9,006,432 for the three and six months ended June 30, 2007, as
their effect on the computation of Diluted EPS would have been
anti-dilutive.





The
following table sets forth the computation of basic and diluted per share
information:




For
      the Three Months Ended June 30,
              June
      30
            
            
            For
      the Six Months
              Ended
      June 30,2008
            
            
            2007
            
            
            2008
            
            
            2007Numerator:Net
      loss
            
            $
            (1,004,785
            )
            
            $
            (814,836
            )
            
            $
            (1,814,952
            )
            
            $
            (4,797,139
            )Denominator:Weighted-average
      common shares outstanding basic and diluted
            
            
            45,054,121
            
            
            
            44,864,038
            
            
            
            44,983,223
            
            
            
            44,423,698Per
      share information – basic and diluted:Net
      loss
            
            $
            (0.02
            )
            
            $
            (0.02
            )
            
            $
            (0.04
            )
            
            $
            (0.11
            )




NOTE
4 – CONVERTIBLE NOTES PAYABLE:





2007
Convertible notes payable:




From July
31, 2007 through August 31, 2007, the Company issued $2,150,000 of its 9% Senior
Secured Convertible Debentures (the “9% Debentures”) in a private placement. The
9% Debentures are convertible into the Company’s common stock, at the option of
the holder, at any time up to maturity at an initial conversion price equal to
$0.25 per share. The debentures have a three-year term and accrue interest at
9% per year.




Accrued
interest on the convertible debt is payable semi-annually in cash or in common
stock, at the Company’s option provided, however, payment in shares of common
stock may only occur if during the 20 trading days immediately prior to the
applicable interest payment date (i) the Company shall have given the investor
notice (ii) such shares to be delivered on the interest payment date are
registered at the time of issuance, (iii) at the time of issuance there are a
sufficient number of registered shares to cover all of the shares of common
stock issuable upon conversion of the debenture and (iv) the common stock is
trading on the trading market and the Registrable Securities are listed for
trading on a trading market (and the Company believes, in good faith, that
trading of the common stock on a trading market will continue uninterrupted for
the foreseeable future).  Accrued interest was approximately $119,000
and $76,000 as of June 30, 2008 and December 31, 2007,
respectively.





Beginning
on the six-month anniversary of the closing of each 9% Debenture and continuing
on the same day of each successive month thereafter, the Company must repay
1/29th of the
aggregate face amount, beginning in March 2008, of the 9% Debentures, plus all
accrued interest thereon, either in cash or in common stock, at the Company’s
option.





The
Company has not made certain payments of interest and principal due beginning in
March 2008. As of June 30, 2008, the Company was in default of $269,656 of
principal and $118,805 of interest on its 9% Debentures. If the redemption
payment and interest are paid in common stock, the number of shares issued will
be based on a 25% discount to the volume weighted average price (VWAP) of the
common stock for the ten (10) trading days immediately preceding (but not
including) the applicable prepayment date. Notwithstanding the foregoing, the
Company’s right to prepay the 9% Debentures in shares of common stock on each
prepayment date is subject to the condition that the Registration Statement must
be effective on such prepayment date and available for use by the
investors.





The
Company will have the ability to cause the investors to convert their 9%
Debentures and any accrued but as yet unpaid interest thereon into common stock
if (i) the Registration Statement is effective and available for use by the
investors on the date the conversion notice is given by the Company, (ii) the
closing price of the common stock exceeded $1.00 for each of the 20
consecutive


trading
days immediately preceding the date that the conversion notice is given by the
Company, and (iii) the average daily trading volume for the common stock during
such 20 consecutive trading day period exceeded 125,000 shares.





For each
aggregate face amount of 9% Debentures purchased, each investor received a
warrant to purchase such number of shares of common stock equal to the aggregate
face amount of their respective 9% Debenture divided by the conversion
price.  The warrants are exercisable for a period of five years at an
exercise price of $0.50 per share.  As of June 30, 2008 there are
8,600,000 warrantsassociated
with the 9% Debentures outstanding with an aggregate value of approximately
$1,483,000.  The costs associated with the warrants were recorded as a
debt discount and are being amortized using the effective interest method over
the three year term of the notes.  In addition, the debentures
conversion feature has been valued at approximately $656,000 due to the excess
of the market value of the common stock over the conversion price. The discount
attributable to the beneficial conversion is being amortized using the effective
interest method over the term of the debentures.






8






NOTE
4 – CONVERTIBLE NOTES PAYABLE (CONTINUED):








In
consideration for placement services, the Company has paid the placement agent a
commission of 8% of the gross proceeds of the offering plus 5-year warrants to
purchase up to such number of shares of common stock equal to 8% of the
aggregate amount of securities subscribed for at $0.19 per share or 100% of the
5-day average closing price of the common stock for the five days preceding, but
not including, the closing date.  The commissions paid to the
placement agent and other costs of issuance were recorded as deferred financing
costs of approximately $441,000 of which approximately $153,000 were related to
the issuance of warrants and approximately $289,000 was paid as cash for
placement agent fees and various other direct costs of
issuance.





In
accordance with the terms of the 9% Debenture agreement, the Company may not pay
dividends or other distributions on the Company's equity securities during the
period that any portion of the 9% Debenture is outstanding.





The SB-2
Registration statement was declared effective January 28, 2008. 11,871,993
shares of common stock were registered, including 8,600,000 shares of common
stock which are issuable upon conversion of the 9% Debentures at a conversion
price of $0.25 per share.





On May
16, 2008, in consideration for the cancellation of the 9% Debenture to one of
the above mentioned debt holders, the Company issued a $100,000 9% per annum
promissory note.





2008
Convertible notes payable:





From May
30, 2008 through June 30, 2008, the Company received $175,000 in proceeds
through the issuance of Secured Convertible Debentures with an annual interest
rate of 12% (the “12% Debentures”). The 12% Debenture is convertible into common
stock at a conversion price of $0.25 and matures in one year. In connection with
the issuance, the Company also issued five year warrants to purchase up to
700,000 shares of common stock at an exercise price of $0.25 per
shares.




The
proceeds from the issuance have been allocated on a relative fair value basis
between the debt and the warrants. This resulted in notes payable of $142,139
and $32,861 for the warrant issuance.  The resulting discount of
$32,861 on the 12% Debentures will be amortized to interest expense over the
term of the notes.





The
Company will have the ability to cause the investors to convert their 12%
Debentures and any accrued but as yet unpaid interest thereon into common stock
if (i) the Registration Statement is effective and available for use by the
investors on the date the conversion notice is given by the Company, (ii) the
closing price of the common stock exceeded $0.40 for each of the 20 consecutive
trading days immediately preceding the date that the conversion notice is given
by the Company, and (iii) the average daily trading volume for the common stock
during such 20 consecutive trading day period exceeded 150,000
shares.





If at any
time within 150 days of the final closing the Company shall determine to file
with the securities and exchange commission a registration statement relating to
an offering for its own account or the account of others under the Securities
Act of 1933, of any of its equity securities, the Company shall use its best
efforts to include in such registration statement all of the shares issuable
upon conversion of the securities sold pursuant to the terms of the
agreement.





If all or
any of the principal and accrued but unpaid interest underlying the 12%
Debentures remains outstanding prior to the next sale by the Company of its debt
or equity securities which yields gross proceeds to the Company of at least
$2,000,000, the investor shall have the right, at its option, at any time during
the 10 business days following the closing of the financing event, to convert
the outstanding principal balance and accrued and unpaid interest on the 12%
Debentures, or any portion thereof and return his outstanding warrant to be
issued in the this offering, into the number of fully paid and non-assessable
shares of financing securities issued by the Company as a result of the
financing event, at a conversion price per share equal to a 25% discount of the
price by the investors in the financing event.





For each
12% Debenture purchased, the investor received a warrant to purchase such number
of shares of common stock equal to the face amount of the debenture divided by
the exercise price.  The warrants are exercisable for a period of five
years at an exercise price of $0.25 per share.  At June 30, 2008 there
were 700,000 warrants associated with the debentures
outstanding.





In
consideration for placement services, the Company paid the Placement Agent a
commission of 8% of a portion of the gross


proceeds
of the offering plus 5-year warrants to purchase up to such number of shares of
common stock equal to 8% of the aggregate  amount of securities
subscribed for at $0.25 per share. The Commissions paid to the placement agent
and other costs of issuance were recorded as deferred financing costs of
approximately $22,000 of which approximately $1,000 were related to
the






9




NOTE
4 – CONVERTIBLE NOTES PAYABLE (CONTINUED):





issuance
of warrants and approximately $21,000 was paid as cash for placement agent fees
and various other direct costs of issuance.





The
following table summarizes the convertible notes transactions as
of:









2007 Convertible NotesJune
      30, 2008
                (unaudited)
              
              
              December
      31, 2007
                (audited)Convertible
      notes issued
              
              
              
              
              $
              2,150,000
              
              
              
              
              
              $
              2,150,000Less:
      Debenture cancellation
              
              
              
              
              
              (100,000
              )
              
              
              
              
              
              -Less:
      Principal payments
              
              
              
              
              
              (83,792
              )
              
              
              
              
              
              -1,966,208
              
              
              
              
              
              
              2,150,000Debt
      discount on convertible notesattributable
      to beneficial conversions
              
              
              655,830
              
              
              
              
              
              
              
              655,830Less:
      Accumulated amortization
              
              
              (229,591
              )
              
              
              (426,239
              )
              
              
              (80,466
              )
              
              
              (575,364
              )Debt
      discount attributable to warrants
              
              
              1,483,084
              
              
              
              
              
              
              
              1,483,084Less:
      Accumulated amortization
              
              
              (526,330
              )
              
              
              (956,754
              )
              
              
              (188,537
              )
              
              
              (1,294,547
              )Convertible
      notes payable, net ofdiscounts$
              583,215
              
              
              
              
              
              
              $
              280,089






2008 Convertible NotesJune
      30, 2008
              
              
              December
      31, 2007(unaudited)
              
              
              (audited)Convertible
      notes issued
              
              
              
              
              $
              175,000
              
              
              
              
              
              $
              -Debt
      discount attributable to warrants
              
              
              32,861
              
              
              
              
              
              
              
              -Less:
      Accumulated amortization
              
              
              (2,394
              )
              
              
              (30,467
              )
              
              
              -
              
              
              
              -Convertible
      notes payable, net of discounts
              
              
              
              
              
              $
              144,533
              
              
              
              
              
              
              $
              -








Convertible NotesCombinedJune
      30, 2008
              
              
              December
      31, 2007(unaudited)
              
              
              (audited)Convertible
      notes issued
              
              
              
              
              $
              2,325,000
              
              
              
              
              
              $
              2,150,000Less:
      Debenture cancellation
              
              
              
              
              
              (100,000
              )
              
              
              
              
              
              -Less:  Principal
      payments
              
              
              
              
              
              (83,792
              )
              
              
              
              
              
              -2,141,208
              
              
              
              
              
              
              2,150,000Debt
      discount on convertible notes
                attributable
      to beneficial conversions
              
              
              655,830
              
              
              
              
              
              
              
              655,830Less:
      Accumulated amortization
              
              
              (229,591
              )
              
              
              (426,239
              )
              
              
              (80,466
              )
              
              
              (575,364
              )Debt
      discount attributable to warrants
              
              
              1,515,945
              
              
              
              
              
              
              
              1,483,084Less:
      Accumulated amortization
              
              
              (528,724
              )
              
              
              (987,221
              )
              
              
              (188,537
              )
              
              
              (1,294,547
              )Convertible
      notes payable, net of
                discounts
              
              
              
              
              
              $
              727,748
              
              
              
              
              
              
              $
              280,089









10




NOTE
4 – CONVERTIBLE NOTES PAYABLE (CONTINUED):








The
      approximate future minimum principal payments on the convertible notes
      payable as of June 30, 2008 are as
follows:




Year
      Ended
              December
      31,
            
            Amount2008
            
            $
            694,0002009
            
            
            848,0002010
            
            
            424,000$
            1,966,000





NOTE
5 – NOTES PAYABLE – RELATED PARTY:







On June
28, 2007, the maturity date of the loan from management dated June 1, 2006 in
the amount of $90,000 was extended to December 31, 2007 at an annual interest
rate of 11.5%. On January 1, 2008, the maturity date of this loan was extended
to December 31, 2009 at an annual interest rate of 7.0%.





From May
30, 2008 through June 30, 2008, in connection with the 2008 convertible notes
payable, the Company received $165,000 in proceeds from Norman R. Proulx,
President and CEO of the Company and Donald Farley, a member of the Board of
Directors in the amounts of $65,000 and $100,000, respectively. The 12%
debentures are convertible into common stock at a conversion price of $0.25 and
mature in one year. In connection with the issuance, the Company also issued
five year warrants to purchase up to 660,000 shares of common stock with an
exercise price of $0.25 per shares.




The
proceeds from the issuance placement have been allocated on a relative fair
value basis between the debt and the warrants. This allocation resulted in notes
payable of $135,102 and $29,898 valuation for the warrant
issuance.  The resulting discount of $29,898 on the 12% Debentures
will be amortized to interest expense over the term of the notes





The
following table summarizes the convertible notes payable-related party as of
June 30, 2008:







June
      30, 2008(unaudited)Convertible
      notes issued – related party
            
            
            
            
            $
            165,000Debt
      discount attributable to warrants – related party
            
            
            29,898Less:
      Accumulated amortization – related party
            
            
            (1,596
            )
            
            
            (28,302
            )Convertible
      notes payable – related party, net ofdiscounts
            
            
            
            
            
            $
            136,698








The
      approximate future minimum principal payments on the convertible notes
      payable as of June 30, 2008 are as
follows:







Year
      Ended
              December
      31,
            
            Amount2009
            
            $
            165,000








11








NOTE
6 – NOTE PAYABLE:





On August
16, 2007, the Company and debt holder entered into a Subscription Agreement
pursuant to which a convertible debt holder purchased a 9% Senior Secured
Convertible Debenture for an aggregate principal amount of $100,000 (the
“Debenture”). On May 16, 2008, the Company issued a $100,000 9% per annum
promissory note to the above mentioned debt holder in consideration for the
cancellation of the Debenture. This note is payable in twelve
installments.







The
      approximate future minimum principal payments on the promissory note as of
      June 30, 2008 are as follows:




Year
      Ended
              December
      31,
            
            Amount2008
            
            $
            86,0002009
            
            
            -2010
            
            
            14,000$
            100,000










NOTE
7 – ACCRUED EXPENSES:





The
Company’s accrued expenses as of June 30, 2008 and December 31, 2007, are as
follows:








June
      30,
            
            
            December
      31,2008
            
            
            2007Salaries-related
      parties
            
            $
            289,583
            
            
            $
            204,583Salaries-other
            
            
            69,400
            
            
            
            15,000Insurance
            
            
            77,347
            
            
            
            1,853Professional
      fees
            
            
            34,500
            
            
            
            2,562Interest
            
            
            132,071
            
            
            
            76,462Other
            
            
            3,940
            
            
            
            3,405Total
            
            $
            606,841
            
            
            $
            303,865

















12













NOTE
8 – COMMITMENTS:





Purchase
Commitments





The
Company has two purchase agreements for diagnostic tests with remaining terms
ranging from one to three years, which requires the Company to order minimum
amounts of diagnostic tests. Should the Company fail to meet these minimum
ordering requirements, these agreements can be terminated by the vendors.
The Company’s purchase commitments required under the agreements as of June
30, 2008, are as follows:




Year
      Ended
              December
            
            Number
      of Units
            
            
            AmountRemainder
      - 2008
            
            
            125,000
            
            
            $
            416,9352009
            
            
            187,500
            
            
            
            656,2502010
            
            
            512,500
            
            
            
            1,793,7502011
            
            
            375,000
            
            
            
            1,312,500Total
            
            
            1,200,000
            
            
            $
            4,179,435








Donation
Commitment





The
Company pledges to make a $2.00 donation to Crossing the Finish Line, Inc.
(“CFL”), a Pennsylvania not-for-profit corporation for each direct-to-consumer
Fecal Occult Blood Test kit sold in consideration of CFL providing all
individual testimonials for the sixty second direct response commercial,
including three colon cancer victims and two physicians.








NOTE
9 – COMMON STOCK, OPTIONS AND WARRANTS:








Common
Stock





On
January 8, 2008 the Company issued 5,000 shares of restricted common stock for
legal services rendered, valued at $450.





On June
26, 2008, the Company issued 7,500 and 425,000 shares of restricted common stock
for legal and investor relation services rendered, valued at $375 and $21,250,
respectively.








Stock
Options





On
December 18, 2006, the HPD Board of Directors adopted the Healthcare Providers
Direct, Inc. Stock Option Plan (the “Plan”) which provides for the grant of
incentive stock options and nonqualified stock options. On December 27, 2006 the
Company’s shareholders approved the Plan.





The Board
of Directors has approved and adopted the 2007 Stock Incentive Plan effective
and dated June 26, 2007. Options with an exercise price of $1.20 which were
granted on March 28, 2007 to HPD employees, were exchanged for options granted
under the 2007 HPD’s Incentive Stock Option Plan for an equal number of options
as originally granted, but at the exercise price of $0.60, representing the
closing price of the Company’s common stock on June 26, 2007.





Key
employees, consultants and non-employee directors of the Company are eligible to
receive awards under the Plan. Except to the extent set forth in any award
agreement to the contrary, options granted under the Plan vest in three equal
annual installments for non-employee directors and in four equal annual
installments for all other option holders commencing on the first anniversary of
the date of grant. Options are granted at no less than fair market value of the
Company’s stock on the date of grant.





There are
6,402,672 shares of common stock reserved for issuance upon the exercise of
options. Options have a term of ten years. In the event of a termination of
employment or service, options that are vested at the time of such termination
generally remain exercisable for ninety days in the event of involuntary
termination or termination due to retirement or disability, and for one year in
the event of termination due to death. Vested options are immediately canceled
upon termination for “Cause”. All unvested




13






NOTE
9 – COMMON STOCK, OPTIONS AND WARRANTS (CONTINUED):





options
are canceled immediately upon termination for any reason. Upon the date of a
“change in control”, all outstanding unvested options become immediately vested
and fully exercisable.





The
Company’s compensation expense related to stock option awards (“stock options”)
was approximately $31,000 and $62,000 for the three months ended June 30, 2008
and 2007, respectively, and $54,000 and $344,000 for the six months ended June
30, 2008 and 2007, respectively.





Compensation expense related to stock options granted is recognized ratably over the service vesting period for the entire option award. The total number of stock option awards
expected to vest is adjusted by the estimated forfeiture rate. The
Company does not anticipate any forfeitures. The Company determined the fair
market value of each stock option issued on the date of grant using the
Black-Scholes option-pricing model based on the following weighted-average
assumptions for the six months ended June 30, 2008 and 2007:





Assumptions:
            
            2008
            
            
            
            2007Risk-free
      interest rate
            
            
            3.6
            %
            
            
            
            4.9
            %Expected
      option life in years
            
            
            5.0
            
            years
            
            
            5.0
            
            yearsExpected
      stock price volatility
            
            
            239.4
            %
            
            
            
            71.0
            %Expected
      dividend yield
            
            
            0.0
            %
            
            
            
            0.0
            %








The
computation of the expected option life is based on a weighted-average
calculation combining the average life of options that have already been
exercised and post-vest cancellations with the estimated life of the remaining
vested and unexercised options. The expected volatility is based on the
Company’s historical stock price. The risk-free interest rate is based on the
U.S. Treasury yield curve over the expected term of the option. The Company has
never paid cash dividends on its common stock and does not anticipate paying
cash dividends in the foreseeable future. Consequently, the Company uses an
expected dividend yield of zero in the Black-Scholes option valuation
model.





The
Company’s determination of fair value is affected by the Company’s stock price
as well as a number of assumptions that require judgment. The weighted-average
fair value per share was approximately $0.05 and $0.10 for the three and six
months ended June 30, 2008. No options were exercised during the three and six
months ended June 30, 2008. As of June 30, 2008, total unrecognized compensation
cost related to all stock options granted was approximately $52,000 and the
related weighted-average period over which it is expected to be recognized is
approximately 0.9 years. The maximum term to exercise the Company’s stock
options is ten years.





A summary
of the status of stock option activity for the six months ended June 30, 2008 is
as follows:





Summary of activity:
            
            Number
      of SharesOutstanding
      as of December 31, 2007
            
            
            2,347,209Granted
            
            
            1,100,000Exercised
            
            
            -Cancelled,
      forfeited or expired
            
            
            (673,594
            )Outstanding
      as of June 30, 2008
            
            
            2,773,615Vested
      and Expected to vest as of
              June
      30, 2008
            
            
            2,773,615Exercisable:
            
            
            1,987,572Available
      for future grants:
            
            
            3,629,057














14











NOTE
9 – COMMON STOCK, OPTIONS AND WARRANTS (CONTINUED):





Warrants





On
January 10, 2008, the Company issued 5-year warrants to Lincoln Associates LLC,
a related party, for general business services to be performed during 2008,
which are exercisable in two tranches.  Tranche A warrant gives
Lincoln Associates LLC the right to purchase up to 100,000 shares of the
Company’s common stock. This warrant is exercisable at any time at an exercise
price of $0.09 per share, valued at $8,643 (calculated to be the fair value
based on the Black-Scholes pricing model on the issuance date).  The
tranche B warrant gives Lincoln Associates LLC the right to purchase up to
100,000 shares of the Company’s common stock. This warrant is exercisable at any
time at an exercise price of $0.19 per share, valued at $8,484 (calculated to be
the fair value based on the Black-Scholes pricing model on the issuance
date).





On May
30, 2008, in connection with the 2008 Convertible Notes Payable, the Company
issued warrants to brokers with the right to purchase up to 16,000 shares of the
Company’s common stock at an exercise price of $0.25. Such warrants were valued
at $948 (calculated to be the fair value based on the Black-Scholes pricing
model on the issuance date). The value of these warrants of $948 was charged to
deferred financing costs and is being amortized over the life of the
notes.





On June
26, 2008, in connection with the 12% Debentures, the Company issued warrants to
brokers with the right to purchase up to 8,000 shares of the Company’s common
stock at an exercise price of $0.25. Such warrants were valued at $396
(calculated to be the fair value based on the Black-Scholes pricing model on the
issuance date). The value of these warrants of $396 was charged to deferred
financing costs and is being amortized over the life of the notes.





From May
30, 2008 through June 30, 2008, in connection with the 12% Debentures (See note
4 Convertible Notes Payable), each investor received a warrant to purchase such
number of shares of common stock equal to the aggregate face amount of their
respective debenture divided by the exercise price. The warrants are exercisable
for a period of five years at an exercise price of $0.25 per share. At June 30,
2008, there were 700,000 warrants associated with the debentures outstanding
with an aggregate value of approximately $33,000.





From May
30, 2008 through June 30, 2008, in connection with the 12% Debentures sold to
related party (See Note 5 Notes Payable-Related Party), in connection with the
issuance, the Company also issued five year warrants to purchase up to 660,000
shares of common stock with an exercise price of $0.25 per share with an
aggregate value of approximately $30,000.











A summary of the status of warrant activity for the
six months ended June 30, 2008 is as follows:





Summary of activity:
            
            Number
      of SharesOutstanding
      as of December 31, 2007
            
            
            15,740,223Granted
            
            
            1,584,000Exercised
            
            
            -Cancelled,
      forfeited or expired
            
            
            (4,738,641
            )Outstanding
      as of June 30, 2008
            
            
            12,585,582







NOTE
10 – PREFERRED STOCK:





The
Company has authorized 25,000,000 shares of preferred stock, $0.001 par value.
The Company had no issued and outstanding preferred stock as of June 30, 2008 or
December 31, 2007.











15










NOTE
11 – SUBSEQUENT EVENTS:






From July
1, 2008 through August 14, 2008, the Company received $125,000 in proceeds
through the issuance of the 12% Debentures (See Note 4). The 12% debenture is
convertible into common stock at a conversion price of $0.25 and matures in one
year. In connection with the issuance, the Company also issued five year
warrants to purchase up to 500,000 shares of common stock with an exercise price
of $0.25 per shares.




The
proceeds from the issuance placement have been allocated on a relative fair
value basis between the debt and the warrants. This allocation resulted in notes
payable of $107,286 and $17,714 for the warrant issuance.  The
resulting discount of $17,714 on the 12% Debentures will be amortized to
interest expense over the term of the notes.





In
consideration for placement services, the Company has paid the Placement Agent a
commission of 8% of a portion of the gross proceeds of the Offering plus 5-year
warrants to purchase up to such number of shares of common stock equal to 8% of
the aggregate amount of Securities subscribed for at $0.25 per
share.  The commissions paid to the placement agent and other costs of
issuance were recorded as deferred financing costs of approximately $4,000 of
which approximately $1,000 were related to the issuance of warrants and
approximately $3,000 was paid as cash for placement agent fees and various other
direct costs of issuance.






16






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




This
Report contains certain forward-looking statements and information relating to
the Company that is based on the beliefs of the Company’s management, as well as
assumptions made by, and information currently available to, the Company’s
management. When used in this Report, the words “anticipate”, “believe”,
“estimate”, “expect”, “there can be no assurance”, “may”, “could”, “would”,
“might”, “intends” and similar expressions and their negatives, as they relate
to the Company or the Company’s management, are intended to identify
forward-looking statements. Such statements reflect the view of the Company at
the date they are made with respect to future events, are not guarantees of
future performance and are subject to various risks and uncertainties as
identified in the Company’s Annual Report on Form 10-KSB for the year ended
December 31, 2007 and those described from time to time in previous and future
reports filed with the Securities and Exchange Commission. Should one or more of
these risks or uncertainties materialize, or should underlying assumptions prove
incorrect, actual results may vary materially from those described herein with
the forward-looking statements referred to above and as set forth in the Form
10-Q. The Company does not intend to update these forward-looking statements for
new information, or otherwise, for the occurrence of future events.







Results
of Operations




For the Three Months EndedJune30, 2008, as Compared to the
Comparable Period in 2007




Revenues





Net
revenues for the three months ended June 30, 2008 and 2007 were $91,799 and
$168,672, respectively.  The decrease in revenues of $76,873 or 45.6%
was primarily due to significant competitive activity during the period, which
negatively affected the average selling price for our Rapid HIV Diagnostic Test.
In addition, there was an approximate $50,000 decrease in overall product
sales.





Cost
of Sales





Our cost
of sales decreased to $53,533 for the three months ended June 30, 2008, as
compared to $85,651 for the three months ended June 30, 2007. This decrease of
$32,118 was primarily attributed to the overall decrease in product mix sales.
Cost of sales as a percentage of product sales increased to 58.3% in the three
months ended June 30, 2008 from 50.8% for the three months ended June 30,
2007.  This increase was attributed to the increase in lower profit
margin product mix sales.








Gross
Profit





Gross
profit for the three months ended June 30, 2008 decreased to $38,266 or 41.7% of
revenues from $83,021 or 49.2% of revenues for the three months ended June 30,
2007. The decrease in the gross profit percentage was due primarily to a
decrease in higher profit product sales.





Expenses





For the
three months ended June 30, 2008, operating expenses decreased $186,692 to
$709,151, as compared to $895,843 for the three months ended June 30,
2007.  Expenses consist of clinical research and development work on
one new diagnostic test, sales and marketing expenses and general and
administrative expenses.





Research
and Development





Research
and development expenses were $118,222 and $160,406 for the three months ended
June 30, 2008 and 2007, respectively.  The majority of research and
development expenses consist of external costs for studies and analysis
activities. The decrease of $42,184 was the result of completing various
projects, during the three months ended June 30, 2007. We expect our research
and development costs to increase in future periods primarily due to the
expenses associated with the completion of clinical trials.





Sales
and Marketing





Sales and
marketing expenses were $224,885 and $257,246 for the three months ended June
30, 2008 and 2007, respectively. This decrease of $32,361 was the result of an
approximate decrease of $75,000 for marketing efforts during the three months
ended June 30, 2007, to establish existing business relationships (EBR’s) with
potential new customers. In addition, there was an approximate $20,000 decrease
in spending on existing customer communications during the three months ended
June 30, 2008. To offset these decreases, there was an approximate $44,000
increase for the production of new product marketing materials for the three
months ended June 30, 2008. There was also an approximate $17,000 increase in
salaries and benefits for the three months ended June 30, 2008 as a result of
additional staff hired.








17








General
and Administrative






General
and administrative expenses decreased $112,147 to $366,044 for the three months
ended June 30, 2008, as compared to $478,191 for the three months ending June
30, 2007.  This decrease was partially the result of an approximate
$60,000 decrease in accounting and other professional fees due to the Company
changing audit firms and a one-time charge during the three months ended June
30, 2007 to complete the Company’s business plan.  There was an
approximate $30,000 decrease in salaries and benefits in 2008 as a result of a
reduction in staff.  There was an approximate $12,000 decrease in the
amortization of the Company’s intangible asset. Additionally, there was an
approximate $9,000 decrease in the recording of stock based compensation and the
issuance of stock and warrants for services rendered.








Operating
Loss





Our operating loss was $670,885 for the
three months ended June 30, 2008, as compared to an operating loss of $812,822
for the three months ended June 30, 2007. The decrease of $141,937 in the
operating loss is primarily due to the aforementioned factors as described
above.





Interest
Expense





Interest
expense was $333,900 and $2,014 for the three months ended June 30, 2008 and
2007, respectively. The increase of $331,886 was primarily due to the
amortization of both the deferred financing and the debt discount on convertible
debentures of approximately $285,000 and interest expense on these debentures of
approximately $45,000.





Net
Loss





The aforementioned factors resulted in
a net loss of $1,004,785 during the three months ended June 30, 2008, as
compared to a net loss of $814,836 during the three months ended June 30, 2007,
an increase of approximately 23%.  This increase was primarily due to
the aforementioned factors as described above




For theSixMonths EndedJune30, 2008, as Compared to the
Comparable Period in 2007




Revenues





Net
revenues for the six months ended June 30, 2008 and 2007 were $229,595 and
$307,570, respectively.  The decrease in revenues of $77,975 or 25.4%
was primarily due to significant competitive activity during the second quarter
of 2008, which negatively affected the average selling price for our Rapid HIV
Diagnostic Test. In addition, there was an approximate $50,000 decrease in
overall product sales.








Cost
of Sales





Our cost
of sales decreased to $138,422 for the six months ended June 30, 2008, as
compared to $147,472 for the six months ended June 30, 2007. This decrease of
$9,050 was primarily attributed to the overall decrease and change in product
mix sales. The Zstat Flu test which was sold until September 2007 (the product
expiration date), had a low product cost and was replaced with a higher product
cost flu test. Cost of sales as a percentage of product sales increased to 60.3%
for the six months ended June 30, 2008 as compared to 47.9% for the six months
ended June 30, 2007.  This increase was attributed to the change in
product mix sales as discussed above.




Gross
Profit





Gross
profit for the six months ended June 30, 2008 decreased to $91,173 or 39.7% of
revenues from $160,098 or 52.1% of revenues for the six months ended June 30,
2007. The decrease in the gross profit percentage was due primarily to a
decrease in higher profit and overall product sales.





Expenses





For the
six months ended June 30, 2008, operating expenses decreased $3,707,490 to
$1,244,793, as compared to $4,952,283 for the six months ended June 30,
2007.  This decrease was primarily the result of recording merger
related expenses during the six months ended June 30, 2007. Expenses consist of
clinical research and development work on one new diagnostic test, sales and
marketing expenses, merger related and general and administrative
expenses.





Research
and Development





Research
and development expenses were $127,463 and $207,688 for the six months ended
June 30, 2008 and 2007, respectively.  The majority of research and
development expenses consist of external costs for studies and analysis
activities. The decrease of $80,225 was the result of completing various
projects, during the first six months of 2007. We expect our research and
development costs to increase in future periods primarily due to the expenses
associated with the completion of clinical trials.






18





Sales
and Marketing





Sales and
marketing expenses were $357,077 and $485,363 for the six months ended June 30,
2008 and 2007 respectively. This decrease of $128,286 was the result of an
approximate decrease of $200,000 for marketing efforts during the six months
ended June 30, 2007, to establish existing business relationships (EBR’s) with
potential new customers. To offset this decrease, there was an approximate
$70,000 increase in salaries and benefits in 2008 as a result of additional
staff hired.








Merger
Related





Merger
related expenses were $0 for the six months ended June 30, 2008, as compared to
$2,927,285 for the six months ended June 30, 2007. This decrease was the result
of recording the Investa Capital Partners warrant expense issued for services
performed in connection with the reverse merger transaction (see note 1 to the
financial statements included herein).








General
and Administrative




General
and administrative expenses decreased $571,694 to $760,253 for the six months
ended June 30, 2008, as compared to $1,331,947 for the six months ending June
30, 2007.  This decrease was partially the result of recording stock
based compensation and the issuance of stock and warrants for services rendered
in the approximate amounts of $93,000 for the six months ended June 30, 2008 as
compared to $371,000 for the six months ended June 30, 2007. There was an
approximate $56,000 decrease in legal expense in 2008 as compared to 2007. There
was approximately $0 incurred for new hire recruitment fees and reimbursement
coding work during the six months ended June 30, 2008, respectively, as compared
to $75,000 and $50,000 for the six months ended June 30, 2007,
respectively.  There was an approximate $75,000 decrease in other
professional fees and expenses relating to the Zstat Flu test which expired in
September 2007 and the Company’s decision not to utilize the remaining term of
the licensing component for the above mentioned product. Additionally, there was
an approximate $30,000 decrease in salaries and benefits in 2008 as a result of
a reduction in staff.





Operating
Loss





Our operating loss was $1,153,620 for
the six months ended June 30, 2008, as compared to an operating loss of
$4,792,185 for the six months ended June 30, 2007. The decrease of $3,638,565 in
the operating loss is primarily due to the aforementioned factors as described
above.





Interest
Expense





Interest
expense was $661,332 and $4,954 for the six months ended June 30, 2008 and 2007,
respectively. The increase of $656,378 was primarily due to the amortization of
both the deferred financing and the debt discount on convertible debentures of
approximately $564,000 and interest expense on these debentures of approximately
$93,000.





Net
Loss





The aforementioned factors resulted in
a net loss of $1,814,952 during the six months ended June 30, 2008, as compared
to a net loss of $4,797,139 during the six months ended June 30, 2007, a
decrease of approximately 62%.











19










Liquidity
and Capital Resources




The
Company has not historically generated, and does not currently generate, enough
revenue to provide the cash needed to support its operations, and has continued
to operate primarily by raising capital and incurring debt. In order to better
position the Company to take advantage of potential growth opportunities and to
fund future operations, the Company sold $2,150,000 of its 9% Senior Secured
Convertible Debentures (the “9% Debentures”) in a private placement from July
31, 2007 through August 31, 2007. The debentures are convertible into the
Company’s common stock at the option of the holder at any time up to maturity at
an initial conversion price equal to $0.25 per share. The 9% Debentures have a
three-year term and accrue interest at 9% per year.





Accrued
interest on the convertible debt  is payable semi-annually in cash or
in common stock, at the Company’s option provided,however,
payment in shares of common stock may only occur if during the 20 trading days
immediately prior to the applicable interest payment date (i) the Company shall
have given the investor notice (ii) such shares to be delivered on the interest
payment date are registered at the time of issuance, (iii) at the time of
issuance there are a sufficient number of registered shares to cover all of the
shares of common stock issuable upon conversion of the debenture and (iv) the
Common Stock is trading on the trading market and the registrable securities are
listed for trading on a trading market (and the Company believes, in good faith,
that trading of the common stock on a trading market will continue uninterrupted
for the foreseeable future).  Accrued interest as of June 30, 2008 is
approximately $119,000.





Beginning
on the six-month anniversary of the Closing of each 9% Debenture, and continuing
on the same day of each successive month thereafter, the Company must repay
1/29th  of the aggregate face amount beginning in March 2008, of
the 9% Debentures, plus all accrued interest thereon, either in cash or in
common stock, at the Company’s option.





The
Company has not made certain payments of interest and principal due beginning in
March 2008. If the redemption payment and interest are paid in common stock, the
number of shares issued will be based on a 25% discount to the volume weighted
average price (VWAP) of the common stock for the ten (10) trading days
immediately preceding (but not including) the applicable prepayment
date.





The
Company will have the ability to cause the investors to convert their 9%
Debentures and any accrued but as yet unpaid interest thereon into common stock
if (i) the Registration Statement is effective and available for use by the
Investors on the date the conversion notice is given by the Company, (ii) the
closing price of the common stock exceeded $1.00 for each of the 20 consecutive
trading days immediately preceding the date that the conversion notice is given
by the Company, and (iii) the average daily trading volume for the common stock
during such 20 consecutive trading day period exceeded 125,000
shares.





For each
aggregate face amount of 9% Debentures purchased, each investor received a
warrant to purchase such number of shares of common stock equal to the aggregate
face amount of their respective 9% Debenture divided by the conversion
price.  The warrants are exercisable for a period of five years at an
exercise price of $0.50 per share.  At June 30, 2008 there are
8,600,000 warrants associated with the 9% Debentures
outstanding.





From May
30, 2008 through June 30, 2008, the Company received $340,000 in proceeds
through the issuance of Secured Convertible Debentures with an annual interest
rate of 12% (the “12% Debentures”). The 12% debentures are convertible into
common stock at a conversion price of $0.25 and mature in one year. In
connection with the issuance, the Company also issued five year warrants to
purchase up to 1,360,000 shares of common stock with an exercise price of $0.25
per shares.





The
Company will have the ability to cause the investors to convert their Debentures
and any accrued but as yet unpaid interest thereon into Common Stock if (i) the
Registration Statement is effective and available for use by the Investors on
the date the conversion notice is given by the Company, (ii) the closing price
of the Common Stock exceeded $0.40 for each of the 20 consecutive trading days
immediately preceding the date that the conversion notice is given by the
Company, and (iii) the average daily trading volume for the Common Stock during
such 20 consecutive trading day period exceeded 150,000 shares.





If at any
time within 150 days of the final closing the Company shall determine to file
with the securities and exchange commission a registration statement relating to
an offering for its own account or the account of others under the Securities
Act of 1933, of any of its equity securities, the Company shall use its best
efforts to include in such registration statement all of the shares issuable
upon conversion of the securities sold pursuant to the terms of the
agreement.





If all or
any of the principal and accrued but unpaid interest underlying the 12%
Debentures remains outstanding prior to the next sale by the Company of its debt
or equity securities which yields gross proceeds to the Company of at least
$2,000,000, the investor shall have the right, at its option, at any time during
the 10 business days following the closing of the financing event, to convert
the outstanding principal balance and accrued and unpaid interest on the 12%
Debentures, or any portion thereof and return his outstanding warrant to be
issued in the this offering, into the number of fully paid and non-assessable
shares of financing securities issued by the Company as a result of the
financing event, at a conversion price per share equal to a 25% discount of the
price by the investors in the financing event.








20





For each
12% Debenture purchased, the investor received a warrant to purchase such number
of shares of common stock equal to the face amount of the debenture divided by
the exercise price.  The warrants are exercisable for a period of five
years at an exercise price of $0.25 per share.  At June 30, 2008 there
were 700,000 warrants associated with the debentures outstanding





As of
June 30, 2008, Healthcare Providers Direct, Inc. had a working capital deficit
of $1,908,991 and cash on hand of $5,464.  During the six months ended
June 30, 2008, cash flows used in operating activities were $505,508. This was
principally due to the net loss of $1,814,952, less non-cash items of $668,401.
The non-cash items consisted of amortization of the convertible notes and
deferred financing costs and the recording of stock based compensation expense.
Accounts payable and accrued expenses increased approximately $673,000 which
provided cash flow.





For
the six months ended June 30, 2008, cash flows used in investing activities were
$1,766 for purchase of equipment.





For
the six months ended June 30, 2008, cash flows provided by financing activities
were $235,208 due to the current financing and the convertible notes principal
payments as described
above.




Future
Liquidity and Capital Needs





Based
upon our current working capital position, current operating plans and expected
business conditions, management believes that the Company needs additional debt
and/or equity financing to finance operations in 2008. The financial statements
do not include any adjustments to reflect the possible future effects on the
recoverability and classification of assets or the amounts and classification of
liabilities that may result from our possible inability to continue as a going
concern.




Significant
additional capital resources are required from sources including equity and/or
debt financings, license arrangements, grants and/or collaborative research
arrangements in order to develop products. Thereafter, additional working
capital will need to be raised.





Additional
investments are being sought, but we cannot guarantee that we will be able to
obtain such investments. The trading price of our common stock and a downturn in
the U.S. stock and debt markets could make it more difficult to obtain financing
through the issuance of equity or debt securities. Even if we are able to raise
the funds required, it is possible that we could incur unexpected costs and
expenses, fail to collect significant amounts owed to us, or experience
unexpected cash requirements that would force us to seek alternative financing.
Furthermore, if we issue additional equity or debt securities, stockholders may
experience additional dilution or the new equity securities may have rights,
preferences or privileges senior to those of existing holders of our common
stock. If additional financing is not available or is not available on
acceptable terms, we will have to curtail our operations.




The
timing and degree of any future capital requirements will depend on many
factors, including:





·
            The
      magnitude and scope of our research and development programs and our
      ability to establish, enforce and maintain strategic arrangement for
      research, development, clinical testing, manufacturing and
      marketing;




·
            our
      progress with preclinical development and clinical
  trials;




·
            the
      time and costs involved in obtaining regulatory
  approvals;




·
            the
      costs involved in preparing, filing, prosecuting, maintaining, defending
      and enforcing patents; and claims;
and




·
            the
      number and type of product candidates that we
  pursue





Further,
if additional funds are obtained through arrangements with collaborative
partners, these arrangements may require us to relinquish rights to some of our
technologies, product candidates or products that we would otherwise seek to
develop and commercialize on our own. If sufficient capital is not available, we
may be required to delay, reduce the scope of or eliminate one or more of our
product lines.








Off-Balance
Sheet Arrangements




An
off-balance sheet arrangement is any contractual arrangement involving an
unconsolidated entity under which a company has (a) made guarantees,
(b) a retained or a contingent interest in transferred assets, (c) any
obligation under certain derivative instruments or (d) any obligation under
a material variable interest in an unconsolidated entity that provides
financing, liquidity, market risk, or credit risk support to the Company, or
engages in leasing, hedging, or research and development services within the
Company.




The
Company does not have any off-balance sheet financing.








21








Management’s
Discussion of Critical Accounting Policies and Estimates




Accounting
estimates and assumptions are those that we consider to be the most critical to
an understanding of our financial statements because they inherently involve
significant judgments and uncertainties. For all of these estimates, we caution
that future events rarely develop exactly as forecast, and the best estimates
routinely require adjustments. Management believes that these policies, are
fully described under “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” in the Company’s Annual Report on Form
10-KSB for the year ended December 31, 2007. The Company has made no changes to
these policies during 2008.







22








Item3.Quantitative
and Qualitative Disclosures about Market Risk





N/A




Item4T. Controls and
Procedures




(a)   Evaluation
      of Disclosure Controls and
Procedures




Our
management, with the participation of our Chief Executive Officer and Chief
Financial Officer, evaluated the effectiveness of our disclosure controls and
procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934 as
of December 31, 2007. In designing and evaluating the disclosure controls
and procedures, management recognizes that any controls and procedures, no
matter how well designed and operated, can provide only reasonable assurance of
achieving the desired control objectives. In addition, the design of disclosure
controls and procedures must reflect the fact that there are resource
constraints and that management is required to apply its judgment in evaluating
the benefits of possible controls and procedures relative to their
costs.





Based
on our evaluation, our Chief Executive Officer and Chief Financial Officer
concluded that our disclosure controls and procedures are designed at a
reasonable assurance level and are effective to provide reasonable assurance
that information we are required to disclose in reports that we file or submit
under the Exchange Act is recorded, processed, summarized and reported within
the time periods specified in Securities and Exchange Commission rules and
forms, and that such information is accumulated and communicated to our
management, including our Chief Executive Officer and Chief Financial Officer,
as appropriate, to allow timely decisions regarding required
disclosure.




(b)   Changes
      in Internal Controls




There
were no changes that occurred during the fiscal quarter covered by this
Quarterly Report on Form 10-Q that have materially affected, or are reasonably
likely to materially affect, the Company’s internal controls over financial
reporting.







23











PART
II - OTHER INFORMATION




Item
1. Legal
Proceedings




None.




Item 1a. Risk
Factors





None





Item 2. Unregistered Sales
of Equity Securities and Use of Proceeds




On June
26, 2008, we issued 7,500 shares of common stock to Sichenzia Ross Friedman
Ference LLP for legal services rendered to us. On June 26, 2008, we issued
425,000 shares of common stock to Trilogy Capital Partners, Inc. for investor
relation services rendered to us.  The shares were issued pursuant to
an exemption under Section 4(2) of the Securities Act of 1933.




Item 3. Defaults upon Senior
Securities




As of
June 30, 2008, Healthcare Providers Direct, Inc. has not made payments of
$269,656 of principal and $118,805 of interest on its 9% Senior Convertible
Debentures and is in default under the terms of such debentures.




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




Pursuant
to a written consent of a majority of the stockholders, dated March 6, 2008, in
lieu of a special meeting of the stockholders, a majority of the stockholders
approved the following actions:





1.                        To
amend the Company’s Articles of Incorporation to create 25,000,000 shares of
blank check preferred stock, $0.001 par value.





The
Company filed a preliminary information statement on Schedule 14C with the
Securities and Exchange Commission on April 10, 2008.  A definitive
information statement was filed with the Securities and Exchange Commission on
April 22, 2008.  The Company will take the actions approved by a
majority of the stockholders 20 days after the definitive information statement
is mailed to the shareholder of record of the Company on March 6,
2008.




Item 5. Other
Information




None.




Item 6.
Exhibits







Exhibit
      Number
            
            Description
      of Exhibit31
            
            Certification
      of Principal Executive Officer and Principal Financial Officer pursuant to
      Rule 13a-14 and Rule 15d-14(a), promulgated under the Securities and
      Exchange Act of 1934, as amended32
            
            Certification
      pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
      the Sarbanes-Oxley Act of 2002 (Chief Executive Officer and Chief
      Financial Officer)










24









SIGNATURES





In
accordance with the requirements of the Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.







HEALTHCARE PROVIDERS DIRECT,
      INC.Date:
      August__, 2008
              By:
              /s/Norman
      ProulxChief
      Executive Officer (Principal Executive Officer) and Chief Financial
      Officer (Principal Financial Officer and Accounting Officer) and
      Director












25