UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



FORM 10-QSB



[X]

QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



For the quarterly period ended June 30, 2006



[  ]

TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
for the transition period from  _________________ to _______________



Commission File Number 0-23514





ROCKPORT HEALTHCARE GROUP, INC.

(Exact name of small business issuer as specified in its charter)



|                                                                |  |                                  
|--------------------------------------------------------------- |  | ---------------------------------
|Delaware                                                        |  | 33-0611497                       
|(State or other jurisdiction of 
incorporation or organization) |  | (IRS Employer Identification No.)



50 Briar Hollow Lane, Suite 515W, Houston, Texas 77027

(Address of principal executive offices)



(713) 621-9424

(Issuers telephone number)





Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes x        No  ̈



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



State the number of shares outstanding of each of the issuers classes of common equity, as of the latest practicable date: As of August 16, 2006, there were outstanding 15,239,884 shares of common stock, $.001 par value per share.



Transitional Small Business Disclosure Format (Check one):   Yes  ̈        No x





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ROCKPORT HEALTHCARE GROUP, INC.





TABLE OF CONTENTS





|                                                                                                              |     
|------------------------------------------------------------------------------------------------------------- | ----
|                                                                                                              | PAGE
|                                                                                                              |     
|Part I      Financial Information                                                                             |     
|                                                                                                              |     
|Item 1.    Financial Statements                                                                               |     
|Condensed Consolidated Balance Sheets for June 30, 2006 (unaudited) and March 31, 2006                        | 3   
|Condensed Consolidated Statements of Operations (unaudited) for the Three Months Ended
June 30, 2006 and 2005 | 4   
|Condensed Consolidated Statements of Cash Flows (unaudited) for the Three Months Ended
June 30, 2006 and 2005 | 5   
|Notes to Condensed Consolidated Financial Statements                                                          | 6   
|Item 2.    Management's Discussion and Analysis of Results of Operations and Financial Condition              | 12  
|Item 3.    Controls and Procedures                                                                            | 17  
|                                                                                                              |     
|Part II     Other Information                                                                                 |     
|                                                                                                              |     
|Item 1.    Legal Proceedings                                                                                  | 18  
|Item 2.    Changes in Securities and Use of Proceeds                                                          | 18  
|Item 3.    Defaults Upon Senior Securities                                                                    | 18  
|Item 4.    Submission of Matters to a Vote of Security Holders                                                | 18  
|Item 5.    Other Information                                                                                  | 18  
|Item 6.    Exhibits                                                                                           | 18  





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PART I.  FINANCIAL INFORMATION

Item 1.

FINANCIAL STATEMENTS



ROCKPORT HEALTHCARE GROUP, INC.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

|                                                                                                                                                         |          |             |           |   |            
|-------------------------------------------------------------------------------------------------------------------------------------------------------- | -------- | ----------- | --------- | - | -----------
|                                                                                                                                                         | June 30, |             | March 31,
|                                                                                                                                                         | 2006     |             | 2006     
|ASSETS                                                                                                                                                   |          | (Unaudited) |           |  
|Current assets:                                                                                                                                          |          |             |           |   |            
|Cash                                                                                                                                                     | $        | 90,113      |           | $ | 89,131     
|Accounts receivable, net of allowance of $75,000 and $50,000 at
June 30, 2006 and March 31, 2006, respectively                                           |          | 584,792     |           |   | 663,279    
|Prepaid expenses                                                                                                                                         |          | 676         |           |   | 1,278      
|Total current assets                                                                                                                                     |          | 675,581     |           |   | 753,688    
|Property and equipment:                                                                                                                                  |          |             |           |   |            
|Office furniture and equipment                                                                                                                           |          | 43,838      |           |   | 43,838     
|Computer equipment and software                                                                                                                          |          | 133,944     |           |   | 133,944    
|Telephone equipment                                                                                                                                      |          | 15,844      |           |   | 15,844     
|                                                                                                                                                         |          | 193,626     |           |   | 193,626    
|Less accumulated depreciation                                                                                                                            |          | (173,001)   |           |   | (169,630)  
|Net property and equipment                                                                                                                               |          | 20,625      |           |   | 23,996     
|Other assets:                                                                                                                                            |          |             |           |   |            
|Deposits                                                                                                                                                 |          | 8,915       |           |   | 8,915      
|Intangible assets, net                                                                                                                                   |          | 350,000     |           |   | 362,500    
|                                                                                                                                                         |          | 358,915     |           |   | 371,415    
|Total assets                                                                                                                                             | $        | 1,055,121   |           | $ | 1,149,099  
|                                                                                                                                                         |          |             |           |   |            
|LIABILITIES AND SHAREHOLDERS' DEFICIT                                                                                                                   
|Current liabilities:                                                                                                                                     |          |             |           |   |            
|Current portion of long-term debt                                                                                                                        | $        | 1,451,072   |           | $ | 1,456,679  
|Accounts payable, trade                                                                                                                                  |          | 342,055     |           |   | 490,004    
|Due to directors, officers and employees                                                                                                                 |          | 269,423     |           |   | 234,478    
|Other current liabilities                                                                                                                                |          | 453,204     |           |   | 367,877    
|Total current liabilities                                                                                                                                |          | 2,515,754   |           |   | 2,549,038  
|Commitments and contingencies (Note 4)                                                                                                                   |          |             |           |   |            
|Temporary equity:                                                                                                                                        |          |             |           |   |            
|Redeemable common stock, 500,000 shares issued and outstanding at June 30, 2006
and March 31, 2006, respectively                                         |          | 500,000     |           |   | 500,000    
|Shareholders' deficit:                                                                                                                                   |          |             |           |   |            
|Preferred stock, $.001 par value, 1,000,000 shares authorized, none issued                                                                               |          | --          |           |   | --         
|Common stock, $.001 par value, 50,000,000 shares authorized, 14,739,884 shares issued 
and outstanding at June 30, 2006 and March 31, 2006, respectively |          | 14,740      |           |   | 14,740     
|Additional paid-in capital                                                                                                                               |          | 6,502,666   |           |   | 6,476,041  
|Accumulated deficit                                                                                                                                      |          | (8,478,039) |           |   | (8,390,720)
|Total shareholders deficit                                                                                                                              |          | (1,960,633) |           |   | (1,899,939)
|Total liabilities and shareholders' deficit                                                                                                              | $        | 1,055,121   |           | $ | 1,149,099  

See accompanying notes to condensed consolidated financial statements.



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ROCKPORT HEALTHCARE GROUP, INC.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)





|                                                      |                            |            |          |   |           
|----------------------------------------------------- | -------------------------- | ---------- | -------- | - | ----------
|                                                      | For the Three Months Ended
|                                                      | June 30,                   |            | June 30,
|                                                      | 2006                       |            | 2005    
|Revenue                                               | $                          | 704,907    |          | $ | 848,584   
|Cost of sales                                         |                            | 198,292    |          |   | 253,854   
|Gross profit                                          |                            | 506,615    |          |   | 594,730   
|                                                      |                            |            |          |   |           
|Operating expenses:                                   |                            |            |          |   |           
|Selling, general and administrative expenses:         |                            |            |          |   |           
|Payroll and related expenses                          |                            | 351,295    |          |   | 455,154   
|Stock option expense                                  |                            | 26,625     |          |   | --        
|Office administration                                 |                            | 67,798     |          |   | 78,907    
|Professional services                                 |                            | 75,491     |          |   | 81,049    
|Other                                                 |                            | 33,804     |          |   | 72,005    
|Total selling, general and administrative expenses    |                            | 555,013    |          |   | 687,115   
|Depreciation and amortization                         |                            | 15,871     |          |   | 15,322    
|Total operating expenses                              |                            | 570,884    |          |   | 702,437   
|                                                      |                            |            |          |   |           
|Loss from operations                                  |                            | (64,269)   |          |   | (107,707) 
|Interest, net                                         |                            | 23,050     |          |   | 35,421    
|Net loss                                              | $                          | (87,319)   |          | $ | (143,128) 
|                                                      |                            |            |          |   |           
|Net loss per share:                                   |                            |            |          |   |           
|Basic and diluted                                     | $                          | (0.01)     |          | $ | (0.01)    
|                                                      |                            |            |          |   |           
|Weighted average number of common shares outstanding: |                            |            |          |   |           
|Basic and diluted                                     |                            | 15,239,884 |          |   | 15,028,294



See accompanying notes to condensed consolidated financial statements.



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ROCKPORT HEALTHCARE GROUP, INC.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED JUNE 30, 2006 AND 2005

(Unaudited)



|                                                                        |      |           |      |   |          
|----------------------------------------------------------------------- | ---- | --------- | ---- | - | ---------
|                                                                        | 2006 |           | 2005
|Cash flows from operating activities:                                   |      |           |      |   |          
|Net loss                                                                | $    | (87,319)  |      | $ | (143,128)
|Adjustments to reconcile net loss to cash
used in operating activities: |      |           |      |   |          
|Depreciation                                                            |      | 3,371     |      |   | 2,822    
|Amortization                                                            |      | 12,500    |      |   | 12,500   
|Bad debt expense                                                        |      | 25,000    |      |   | 3,000    
|Issuance of stock for services                                          |      | --        |      |   | 493      
|Stock option expense                                                    |      | 26,625    |      |   | --       
|Stock issued in settlement                                              |      | --        |      |   | 9,600    
|Changes in assets and liabilities:                                      |      |           |      |   |          
|Accounts receivable  trade and other                                   |      | 53,487    |      |   | (34,589) 
|Prepaid expenses and other                                              |      | 601       |      |   | 869      
|Accounts payable                                                        |      | (147,949) |      |   | 75,257   
|Due to directors, officers and employees                                |      | 34,945    |      |   | 25,549   
|Other current liabilities                                               |      | 79,721    |      |   | 43,245   
|Cash used in operating activities                                       |      | 982       |      |   | (4,382)  
|                                                                        |      |           |      |   |          
|Cash flows from investing activities:                                   |      |           |      |   |          
|Purchase of fixed assets                                                |      | --        |      |   | (1,711)  
|Cash used in investing activities                                       |      | --        |      |   | (1,711)  
|Net increase (decrease) in cash                                         |      | 982       |      |   | (6,093)  
|Cash and cash equivalents, beginning of year                            |      | 89,131    |      |   | 66,824   
|Cash and cash equivalents, end of year                                  | $    | 90,113    |      | $ | 60,731   
|                                                                        |      |           |      |   |          
|Supplemental cash flow information:                                     |      |           |      |   |          
|Stock option expense (non-cash)                                         | $    | 26,625    |      | $ | --       
|Additional paid-in capital (non-cash)                                   | $    | (26,625)  |      | $ | --       
|Interest paid                                                           | $    | --        |      | $ | 7,500    



See accompanying notes to condensed consolidated financial statements.



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ROCKPORT HEALTHCARE GROUP, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2006



Note 1.

Organization and Nature of Business



Statement of Information Furnished



The accompanying condensed consolidated financial statements of Rockport Healthcare Group, Inc. and Subsidiaries (the Company or Rockport) have been prepared pursuant to the rules and regulations for interim financial information and the instructions to Form 10-QSB and Regulation S-B.  Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States have been omitted.  In the opinion of management, the consolidated financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the financial position as of June 30, 2006, the results of operations for the three month periods ended June 30, 2006 and 2005, and the cash flows for the three-month periods ended June 30, 2006 and 2005.



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 reported amounts of revenues and expenses during the reporting period.  Operating results for interim periods are not necessarily indicative of the results that may be expected for the complete fiscal year.  The accompanying condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Companys Annual Report on Form 10-KSB for the year ended March 31, 2006, previously filed with the Securities and Exchange Commission.



Business



Rockport Healthcare Group, Inc. was incorporated in the State of Delaware on May 4, 1992, as Protokopus Corporation. The Company had no operating history other than organizational matters until December 17, 1997.  On December 17, 1997, the Company acquired all of the issued and outstanding common stock of The Rockport Group of Texas, Inc. (Rockport Texas), a Nevada corporation, in a business combination accounted for as a reverse acquisition.  Pursuant to an Agreement and Plan of Reorganization dated December 12, 1997, between the Company and Rockport Texas, each outstanding share of common stock of Rockport Texas was converted to the right to receive 961.6212 shares of common stock of the Company.  On January 18, 1998, the Company changed its name from Protokopus Corporation to Rockport Healthcare Group, Inc.



Rockport is a management company dedicated to developing, operating and managing networks consisting of healthcare providers and medical suppliers that serve employees with work-related injuries and illnesses.  Rockport offers access to a comprehensive healthcare network at a local, state or national level for its clients and their customers.  Typically, Rockports clients are property and casualty insurance companies, employers, bill review/medical cost containment companies, managed care organizations, software/bill review companies and third party administrators.



The Company contracts with physicians, hospitals and ancillary healthcare providers at rates below the maximum allowed by applicable state fee schedules or if there is no state fee schedule, rates below usual and customary charges for work-related injuries and illnesses.  The Company generates revenue by receiving as a fee, a percentage of the medical cost savings realized by its clients.  The medical cost savings realized by its clients is the difference between the maximum rate allowed for workers compensation claims in accordance with the state allowed fee schedules or usual and customary charges and the discounted rates negotiated by the Company with its healthcare providers.



The Company has contracts with healthcare providers and/or network partners in all fifty states and the District of Columbia.  The Company currently has in excess of 300,000 healthcare providers nationwide that serve its clients and their customers for their injured employees care.  Should a client or their customer have particular needs in an under-served market, Rockport or its network partner has a skilled team of experienced network development personnel capable of custom building the under-served market for the client.



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As of June 30, 2006, the Company has three wholly owned subsidiaries: Rockport Community Network, Inc., Rockport Group of Texas, Inc. and Rockport Preferred, Inc.  Rockport Community Network, Inc. (RCN) was incorporated in the State of Nevada on November 14, 1997.  Rockport Group of Texas, Inc. (RGT) was incorporated in the State of Nevada on July 23, 1997.  RCN and RGT, for accounting purposes, are solely disbursing entities for the Company and have no business operations.  RCN prepares and issues invoices to the Companys clients, collects accounts receivable and issues checks to the Companys network partners for network access fees, to outside sales personnel for sales commissions and for commission overwrites.  RGT processes payroll and pays payroll costs and other selling, general and administrative expenses on behalf of the Company.  Rockport Preferred, Inc. is a dormant subsidiary, which has no ongoing operations.  All material inter-company balances and inter-company transactions have been eliminated for the purpose of presenting the accompanying unaudited condensed consolidated financial statements.



Stock-Based Compensation



In December 2004, the Financial Accounting Standards Board (FASB) issued Financial Accounting Standard (SFAS) No. 123R, Share-Based Payment. This statement is a revision to SFAS No. 123, Accounting for Stock-Based Compensation and supersedes Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees. SFAS No. 123R establishes accounting for share-based compensation awards exchanged for employee services and requires companies to expense the estimated fair value of these awards over the requisite employee service period.



The Company adopted SFAS No. 123R on April 1, 2006, using the modified prospective application, which provides for certain changes to the method for valuing share-based compensation. Under the modified prospective application, prior periods are not revised for comparative purposes. The valuation provisions of SFAS No. 123R apply to new awards and to awards that are outstanding on the effective date and subsequently are modified or cancelled. Estimated compensation expense for awards outstanding at the effective date will be recognized over the remaining service period using the compensation cost calculated for pro forma disclosure purposes under SFAS No. 123 with modification for estimated forfeitures.



Stock-based Compensation Information under SFAS No. 123R



Upon adoption of SFAS No. 123R, the Company is continuing to use the Black-Scholes option-pricing model for valuation of share-based awards granted following April 1, 2006, but with future modifications for estimated vesting forfeiture rates applied. The Company decided that the Black-Scholes option-pricing model is an appropriate method for valuing employee grants due to the historical volatility of our stock price combined with vesting provisions for a majority of the stock option grants.



As share-based compensation expense recognized in the Condensed Consolidated Statement of Operations for the three months ended June 30, 2006 is based on awards ultimately expected to vest, it is reduced for estimated forfeitures. SFAS No. 123R requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. In the Companys pro forma information required under SFAS No. 123 for the periods prior to 2006, the Company also accounted for forfeitures, but as they occurred.



The Company recorded $26,625 in share-based compensation expense during the three months ended June 30, 2006.



Prior to adopting the provisions of SFAS No. 123R, the Company estimated its share-based employee compensation expense using the intrinsic value method of accounting in accordance with APB Opinion No. 25. Because the Company established the exercise price based on the fair market value of the Companys stock at the date of grant, the options had no intrinsic value upon grant, and therefore no expense was recorded.





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Note 2.

Notes Payable



Notes payable consisted of the following at:

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  |               |           |                |   |           | 
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- | --------- | -------------- | - | --------- | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  | June 30,
2006 |           | March 31,
2006
|Convertible unsecured notes payable to a shareholder, with interest payable monthly at 15% per annum.  The notes are personally guaranteed by two officers of the Company.  On March 31, 2002, the Company renegotiated the terms of the notes which were originally convertible into Company common stock at an average conversion price of $1.50 per share and due April 1, 2003.  The notes are now convertible into Company common stock at any time prior to April 1, 2005 at a conversion price of $.36 per share and were due April 1, 2004.  On December 31, 2002, the due date of the notes was extended to April 1, 2006.  During June 2005 the Company obtained an extension on the due date of these notes to April 2007.  The Company issued 150,000 shares of its common stock in connection with these notes, the cost of which was recorded as loan fees and amortized using the interest yield method over the original term of the notes.                                                                                                                                                                                                                                                                                                                                                                                                      |  | $             | 188,857   |                | $ | 194,464  
|Unsecured note payable due to a director with interest at 8% per annum and principal and interest due April 1, 2004.  During June 2005 the Company renegotiated the due date of the note which is now due April 1, 2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  |               | 227,493   |                |   | 227,493  
|Three-year 10% convertible subordinated unsecured notes to a director due April 2007.  Interest is either accrued or paid quarterly, as determined by the Board of Directors.  The notes are convertible into Company common stock at conversion prices ranging from $.18 to $.36 per share anytime prior to their maturity in April 2007.  On December 31, 2002, the Company renegotiated the terms of $300,000 principal amount of these notes with Mr. Baldwin, a director of the Company, and extended the due date and conversion date to April 1, 2005, which has now been extended to April 2007.  On March 31, 2004, the Company issued $60,000 principal amount to Mr. Baldwin which is due now April 1, 2007 and is convertible into Company common stock at a conversion price of $.18 per share.  In June 2004, the Company retired $200,000 principal amount and accrued interest.  To raise the needed funds for the retirement, the Company issued Mr. Baldwin additional 10% convertible notes in the amount of $270,000 which notes are due April 2007 and which have a conversion price of $.20 per share.  In November 2004, the Company issued Mr. Baldwin additional 10% convertible notes in the amount of $135,000 to retire $100,000 principal amount due October 2004 which notes are due April 2007 and convertible at $.18 per share. |  |               | 765,000   |                |   | 765,000  
|Accrued interest due on long-term portion of three-year 10% convertible unsecured notes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |  |               | 269,722   |                |   | 269,722  
|Current portion of Long-term debt                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  | $             | 1,451,072 |                | $ | 1,456,679



See Note 3 Commitments and Contingencies and Note 4 Liquidity for a discussion of financing provided by related parties.



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Note 3.

Commitments and Contingent Liabilities



One of the Companys subsidiaries has assumed leases for office space and equipment under operating leases expiring at various dates through 2006.  Management expects that in the normal course of business, leases will be renewed or replaced by similar leases.  Future minimum lease payments under non-cancelable leases with terms in excess of one year are as follows:



|                       |   |       
|---------------------- | - | ------
|Years Ending March 31, |   |       
|2007                   | $ | 13,746
|2008                   |   | 14,001
|2009                   |   | 14,001
|Total                  | $ | 41,748



One of the Companys subsidiaries, Rockport Group of Texas, Inc., has issued 1,000 shares of its 8%, cumulative, non-participating preferred stock.  The stock is redeemable at the option of the Company at $200 per share and is redeemable out of future cash flows of the Company.  These shares are owned by a director of the Company and were issued prior to the reverse merger.



Mr. Baldwin, a director of the Company, has an engagement agreement with the Company effective April 1, 2001, whereby he earns a fee for performance of legal services of $250 per hour, with a minimum guaranteed payment of $5,000 per month.  Effective April 1, 2002, the agreement was amended and the minimum guaranteed payment was increased to $6,500 per month.  This agreement has a one-year term and automatically renews for one-year periods thereafter unless either party terminates the agreement within sixty days prior to the end of any annual period.  This agreement automatically renewed effective April 1, 2005.  During the three months ended June 30, 2006 and 2005, Mr. Baldwin earned $19,500 and $19,500, respectively, from this agreement.



Note 4.

Stock Options and Warrants



Stock Option Plans



On August 5, 2002, the Board of Directors of the Company adopted the 2002 Stock Option Plan (the 2002 Plan).  The shareholders of the Company approved the 2002 Plan on October 9, 2002.  The 2002 Plan provides for the granting of awards of up to 1,000,000 shares of the Companys common stock to key employees, directors and other persons who have contributed or are contributing to the Companys success.  Awards under the 2002 Plan will be granted as determined by the Companys Board of Directors.  The options that may be granted pursuant to the 2002 Plan may be either incentive stock options qualifying for beneficial tax treatment for the recipient or nonqualified stock options.  As of June 30, 2006, incentive stock options to purchase 486,700 shares exercisable at prices ranging from $0.19 to $0.23 per share that vest over a three-year period had been granted.  324,366 of these stock options were exercisable as of June 30, 2006.  As of June 30, 2006, non-qualified stock options to purchase 120,000 shares exercisable at $0.25 per share expiring in February 2009 and immediately exercisable were outstanding.



On December 7, 2000, the directors of the Company adopted the 2000 Long-Term Incentive Plan (the 2000 Plan).  The 2000 Plan was approved by the Companys shareholders at its annual shareholder meeting held in September 2001.  The 2000 Plan provides for the granting of awards of up to 1,000,000 shares of the Companys common stock to key employees, directors and other persons who have contributed or are contributing to the Companys success.  Awards under the 2000 Plan will be granted as determined by the Companys Board of Directors.  The options that may be granted pursuant to the 2000 Plan may be either incentive stock options qualifying for beneficial tax treatment for the recipient or nonqualified stock options.  As of June 30, 2006, incentive stock options to purchase 912,200 shares exercisable at prices ranging from $0.19 to $0.50 per share that vest over a three-year period were outstanding.  Of this amount, 827,767 stock options were exercisable as of June 30, 2006.  As of June 30, 2006, non-qualified stock options to purchase 50,000 shares exercisable at $0.25 per share and immediately exercisable were outstanding.  The Companys board of directors extended the expiration date for all options originally expiring in December 2004 pursuant to the 2000 Plan to December 2006.



Stock Warrants





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On November 26, 2001, in conjunction with a consulting services agreement with an individual, the Company issued warrants to purchase 1,000,000 shares of restricted common stock of the Company at any time until November 25, 2011, at a price of $.345 per share, the fair market value on the date of grant determined by the mean between the closing bid and asked price.  The consulting services agreement is for a period of ten years, however, the warrants issued pursuant to the consulting agreement vested immediately and are currently exercisable regardless of whether the consulting agreement is terminated prior to the expiration of its ten-year term.  Since the warrants are immediately exercisable, the Company has expensed the full amount of the fair value of the warrants issued as of the date of issuance, which was $345,000.  No warrants have been exercised as of June 30, 2006.  The fair value of the warrants was estimated at the date of grant using the Black-Scholes option pricing model with the following assumptions: risk free rate of 6%; volatility of 320%; no assumed dividend yield and an estimated life of three years.



Note 5.

Related Party Transactions



See Note 2 Notes Payable for a discussion of financing provided by Mr. Baldwin, chairman of the board and a director.



See Note 3 Commitments and Contingent Liabilities for a discussion of legal services provided by Mr. Baldwin.



Note 6.

Significant Concentration



Three clients accounted for approximately 15.9%, 12.9% and 11.0% of sales for the three months ended June 30, 2006.  No other clients represented more than 10% of sales of the Company for that period.  The Company had four clients, each which had in excess of 10% of the Companys accounts receivable balance at June 30, 2006.  These four clients represented 28.7%, 21.3%, 13.0% and 10.8% of the Companys accounts receivable balance.



Note 7.

Liquidity



The accompanying financial statements have been prepared assuming that Rockport Healthcare Group, Inc. will continue as a going concern.  The Company has a total deficit in shareholders equity of $1,960,633 as of June 30, 2006.



The Company has funded its operations through the sale of Company common stock, borrowing funds from outside sources and conversion of employee, director and shareholder debt into restricted common stock.  At June 30, 2006, the Company had available cash in non-restrictive accounts of $90,113 and negative working capital of $1,840,173.  As of June 30, 2006, the Company had outstanding debt, excluding accrued interest, of: (a) $765,000 in principal amount in the form of 10% convertible notes, (b) $227,493 in principal amount in the form of an 8% note, and (c) $188,857 in principal amount in the form of a 15% convertible note.



10% convertible notes.  As of June 30, 2006, the Company had outstanding $765,000 principal amount in the form of 10% convertible notes, all of which was held by Mr. Baldwin, a director of the Company.  The Company had $100,000 in principal and $34,550 in interest due to an individual which was due October 31, 2004.  On November 1, 2004, the Company sold a new 10% convertible note to Mr. Baldwin in the amount of $135,000 due April 2007 convertible at the rate of $.18 per share.  The Company used the proceeds of the new 10% convertible note to retire the maturing note held by an individual which note was due October 31, 2004.  As of the date of this report, the Company has the following 10% convertible notes outstanding: (a) $135,000 in principal amount due April 2007 convertible at a price of $.18 per share; (b) $300,000 in principal amount due April 2007 convertible at a price of $.36 per share; (c) $60,000 in principal amount due April 2007 convertible at a price of $.18 per share; and (d) $270,000 in principal amount due April 2007 convertible at a price of $.20 per share.



Interest on the 10% convertible notes is payable quarterly out of available cash flow from operations as determined by the Companys Board of Directors, or if not paid but accrued, will be paid at the next fiscal quarter or at maturity.  The conversion prices of the notes were calculated based on the average of the high bid and low asked stock quotations on the date of funding.



Accrued debenture interest on the convertible debentures has been added to the principal of the debentures resulting in a reclassification of some of the accrued interest to long-term debt.





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8% notes.  In November 2001 and in January 2002, the Company borrowed an aggregate of $100,000 from Mr. Baldwin.  In June 2002, the Company renegotiated the terms of the notes and added $93,000 of accrued consulting fees due and $34,493 of accrued overwrite fees due to the principal amount of the note.  In December 2002, the Company renegotiated the terms of the note and extended the due date to April 1, 2005 and in March 2005 extended the due date to April 1, 2007.  This debt is accruing interest at 8% payable monthly, however, in accordance with a verbal agreement with the note holder, the Company ceased paying the interest on this note on October 1, 2003.



15% convertible notes.  In 1998, the Company borrowed $200,000 from a shareholder on two separate notes which were convertible into Company common stock with interest payable monthly at 15% per annum.  The notes are personally guaranteed by two officers of the Company.  In March 2002, the Company renegotiated the terms of the notes which were originally convertible into Company common stock at an average conversion price of $1.50 per share and were due April 1, 2003.  The notes have been modified on three occasions and are now convertible into Company common stock at a conversion price of $.36 per share and the due date and the conversion date of the notes is April 1, 2007.



As discussed above, the Company does have $1,451,072 in principal and accrued interest due in April 2007.  The Company is currently seeking sources of financing to retire these notes, as it has no current means to pay the notes as they become due.  If the Company is unable to refinance these notes, it will be required to raise funds to retire the notes, or it will be in default of the notes.  The Company has no commitments for the needed funds to retire these notes, and the failure to raise such funds or refinance the notes could subject the Company to a claim by the note holders for repayment, which would materially adversely affect the Companys financial condition.



The Companys cash in non-restrictive accounts has decreased to $90,113 at June 30, 2006. In addition at June 30, 2006, the Company has negative working capital of $1,840,173.  Included in the working capital balance in the amount Due to directors, officers and employees is $214,500 of accrued legal fees to Mr. Baldwin, which he has verbally agreed to allow the Company to accrue his fees and not pay them at this time.  The Company has $584,792 in net accounts receivable at June 30, 2006, which it intends to collect and provide a portion of the cash required by the Company to meet its obligations over the next twelve months coupled with new clients it has signed contracts with and is implementing into its medical bill repricing software.  The Company does not anticipate any funding requirements for capital expenditures during the fiscal year ending March 31, 2007.  The Companys future growth is conditioned on the Company signing more employers, insurers and others for access to its provider network and obtaining a greater participation by consumers who are covered by such payors.  The Company will dedicate a significant portion of its cash flow from operations to the continuing development and marketing of its provider network.



There can be no assurances that managements plans as described above can be accomplished.



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Item 2.

MANAGEMENTS DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION



The following discussion and analysis of the Companys financial condition as of June 30, 2006, and the Companys results of operations for the three month periods ended June 30, 2006 and 2005, should be read in conjunction with the Companys audited financial statements included in its Form 10-KSB for the year ended March 31, 2006, previously filed with the Securities and Exchange Commission..



Overview



Rockport Healthcare Group, Inc. (Rockport or the Company) is a management company dedicated to developing, operating and managing networks consisting of healthcare providers and medical suppliers that serve employees with work-related injuries and illnesses.  Rockport offers access to a comprehensive healthcare network at a local, state or national level for its clients and their customers.  Typically, Rockports clients are property and casualty insurance companies, employers, bill review/medical cost containment companies, managed care organizations, software/bill review companies and third party administrators.



The Company contracts with physicians, hospitals and ancillary healthcare providers at rates below the maximum allowed by applicable state fee schedules, or if there is no state fee schedule, rates below usual and customary allowables for work-related injuries and illnesses.  The Company generates revenue by receiving as a fee, a percentage of the medical cost savings realized by its clients.  The medical cost savings realized by its clients is the difference between the maximum rate allowed for workers compensation medical services in accordance with the state allowed fee schedules or usual and customary allowables and the discounted rates negotiated by the Company with its healthcare providers.



The Companys mission to its clients and healthcare providers is to: (1) maintain, update and distribute accurate information on each and every healthcare provider that is directly contracted by the Company or is accessed through the Companys network partners relationships; (2) demonstrate, educate and offer each client and their customer referral products and services that encourage, enable and guide their injured workers to the Companys healthcare providers; and (3) provide clear, concise and accurate preferred provider organization (PPO) repricing information and assistance in facilitating payment to the contracted rates and provide resolution to reimbursement problems in a timely manner.



The Companys goals are to: (1) create and maintain profitability within industry standards and create shareholder value; (2) become the national network of choice for work-related injuries and illnesses; (3) market and position its networks, state by state, to increase business to its healthcare providers while offering significant savings to its clients and their customers; (4) continually develop information systems that improve processes, measurements and the integrity of its healthcare provider data and reporting structure; (5) continue its dedication to client and healthcare provider support services; and (6) provide any payor, managed care organization or bill review/software company an alternative national workers compensation network in a non-competitive relationship.



The Company has healthcare providers and/or network partners in all fifty states and the District of Columbia.  As of June 30, 2006, the Company has in excess of 300,000 healthcare providers nationwide that serve its clients and their customers for their injured employees care.  Should a client or their customer have particular needs in an under-served market, Rockport or its network partner has a skilled team of experienced network development personnel capable of custom building the under-served market for the client.





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Critical Accounting Policies



General



The Condensed Consolidated Financial Statements and Notes to Condensed Consolidated Financial Statements contain information that is pertinent to this managements discussion and analysis.  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 any contingent assets and liabilities.  Management believes these accounting policies involve judgment due to the sensitivity of the methods, assumptions and estimates necessary in determining the related asset and liability amounts.  Management believes it has exercised proper judgment in determining these estimates based on the facts and circumstances available to its management at the time the estimates were made.  The significant accounting policies are described in the Company's financial statements (See Note 2 in Notes to Consolidated Financial Statements in the Companys Form 10-KSB for the year ended March 31, 2006).



Revenue Recognition



Revenue is recognized when earned.  The Companys revenue is a contractual percentage of the medical cost savings realized and is determined at such time as the Companys contractual discounts with its healthcare providers are applied to its clients medical bills, which produces a medical cost savings.



Allowance for Doubtful Accounts



The Company maintains an allowance for doubtful accounts, which reflects the estimate of losses that may result from the inability of some of the Companys clients to make required payments.  The estimate for the allowance for doubtful accounts is based on known circumstances regarding collectability of client accounts and historical collections experience.  If the financial condition of one or more of the Companys clients were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required.  Material differences between the historical trends used to estimate the allowance for doubtful accounts and actual collection experience could result in a material change to the Companys consolidated results of operations or financial position.



Intangible Assets



As of June 30, 2006, the Company had $350,000 of unamortized intangible assets resulting from the acquisition of the Protegrity network.  Effective July 7, 2003, the Company purchased all healthcare provider agreements from Protegrity Services, Inc., (Protegrity), a third party administrator (TPA) and managed care organization.  The Company was acquiring healthcare provider agreements in order to expand the size of its network.  This acquisition did not result in the acquisition of clients or revenue.  This acquisition of provider contracts was funded with the issuance of 500,000 shares of Company common stock valued at $500,000, and because the Company would earn revenue in the future from the acquired provider agreements, the Company recorded the value of the stock issued as an intangible asset.  The value of $500,000 attributed to the acquisition was based on the number of shares issued multiplied by $1.00 per share.  If Protegrity has not sold its shares of Rockport by July 2008, the Company has agreed to purchase from Protegrity at a price of $1.00 per share, all of the remaining outstanding shares then owned by Protegrity.  Amounts paid for provider agreements are being amortized to expense on the straight-line method over the estimated useful lives of the agreements of ten years.  However, intangible assets are subject to an impairment assessment at least annually which may result in a charge to operations if the fair value of the intangible asset is impaired which would have a negative impact on  the Companys financial condition and results would be negatively affected.





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Accounting for Stock-Based Compensation



The Company adopted Financial Accounting Standard (SFAS) No. 123R, Share-Based Payment on April 1, 2006, using the modified prospective application, which provides for certain changes to the method for valuing share-based compensation. Under the modified prospective application, prior periods are not revised for comparative purposes. The valuation provisions of SFAS No. 123R apply to new awards and to awards that are outstanding on the effective date and subsequently are modified or cancelled. Estimated compensation expense for awards outstanding at the effective date will be recognized over the remaining service period using the compensation cost calculated for pro forma disclosure purposes under SFAS No. 123 with modification for estimated forfeitures. The Company recorded $26,625 in share-based compensation expense during the three months ended June 30, 2006.



Results of Operations



Three Months Ended June 30, 2006 to Three Ended June 30, 2005



The following table sets forth certain operating information regarding the Company for the three months ended June 30, 2006 and 2005.

|                                             |      |          |      |   |          
|-------------------------------------------- | ---- | -------- | ---- | - | ---------
|                                             | 2006 |          | 2005
|Revenue                                      | $    | 704,907  |      | $ | 848,584  
|Cost of sales                                |      | 198,292  |      |   | 253,854  
|Gross profit                                 |      | 506,615  |      |   | 594,730  
|Selling, general and administrative expenses |      | 555,013  |      |   | 687,115  
|Depreciation and amortization                |      | 15,871   |      |   | 15,322   
|Loss from operations                         |      | (64,269) |      |   | (107,707)
|Interest, net                                |      | 23,050   |      |   | 35,421   
|Net loss                                     | $    | (87,319) |      | $ | (143,128)
|Net loss per share  basic and diluted       | $    | (0.01)   |      | $ | (0.01)   



Revenue.  The Company's source of revenue is fees it receives from its clients and their customers that access and utilize the Company's healthcare provider network for work-related injuries and illnesses.  When an injured employee utilizes a healthcare provider within the Companys PPO network, the employer realizes medical cost savings, which it would not have realized had the employee utilized a healthcare provider not within the Companys PPO network.  The Companys clients and their customers, where permitted by law, direct their injured employees to healthcare providers within the Companys healthcare provider network, which in turn creates a medical cost savings as a result of the discounts the Company has negotiated with its healthcare providers.  The agreements the Company has with its clients provide the Company with a fee based upon a percentage of the medical cost savings realized by its clients.  The fee percent the Company receives from its clients is negotiated by the Company and usually is determined by the amount of potential business the Company will receive from the client.  Typically, these agreements are short-term in nature, which is standard within the healthcare industry, but which make the predictability of the Companys future revenues difficult.



The Company continues to expand its PPO network in additional areas of the country in conjunction with the expansion of its client base, either through direct contracting with providers, through strategic network alliances with third party networks, which it refers to as network partners, or through purchases of networks.  The Company utilizes its own network development staff to enhance its PPO network and custom build in a market for a given client.  Effective July 7, 2003, the Company purchased the healthcare provider agreements from Protegrity Services, Inc., (Protegrity) which included certified networks in the states of Florida and Kentucky and providers in a variety of other states.  As consideration for the purchase, the Company issued 500,000 shares of restricted common stock to Protegrity which it recorded as an intangible asset valued at $500,000 and granted Protegrity an earnout of a percentage of the revenue the Company receives in the states of Florida, Kentucky and Missouri over the next five years.  The Company intends to utilize this purchase to expand its sales and marketing strategies in those states and further strengthen its position in the southeastern United States.  This purchase brought the total number of providers within the Companys network to in excess of 300,000 physicians, hospitals and ancillary healthcare facilities in all 50 states and the District of Columbia.  Costs associated with developing the Companys networks are charged to expense when incurred and are included in selling, general and administrative expenses.



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Revenue for the three months ended June 30, 2006, was $704,907 which was $143,677 less than revenue for the three months ended June 30, 2005, of $848,584. The decrease in revenue was primarily attributable to two clients significant loss of customers and decreased access to the Companys network of healthcare providers. These losses were somewhat offset by adding new clients and stronger network utilization by other existing clients.



With respect to the source of the Company's revenue, the Company had three clients, each which provided more than 10% of the Company's revenue for the three months ended June 30, 2006.  Those clients were Fair Isaacs Corporation, which contributed 15.9%,, Intracorp, which contributed 12.9% and Stratacare which contributed 11.0% of total revenue.



Cost of sales.  The Company's cost of sales consists of fees paid for access to third party provider networks, or network partners, fees paid for sales commissions to non-employee sales personnel and commission overwrites.  Cost of sales decreased by $55,562, from $253,854 during the three months ended June 30, 2005, to $198,292 during the three months ended June 30, 2006.  As the Company expands its business outside the State of Texas, to states where it does not have its own network, the Company will continue developing strategic network alliances and network access fees will increase, which will in turn increase the Companys cost of sales and decrease its gross margins.  The purchase of the Protegrity network in Florida and Kentucky will allow the Company to increase its revenue in those states without a corresponding increase in network access fees, however, for a period of five years, Protegrity will receive an earnout fee as a percentage of revenue received by the Company from the states of Florida, Kentucky and Missouri.  Those fees for the three months ended June 30, 2006 amounted to $20,319, an increase of $5,319 over the prior year period and are included in sales commissions.  Fees incurred for access to third party provider networks are based on a percentage of the Companys revenue from using such network.  Sales commissions and commission overwrites paid by the Company are based on a percentage of revenue billed and collected.  For the three months ended June 30, 2006, cost of sales were comprised of network access fees of $144,355 and sales commissions and commission overwrites of $53,936.



During September 1998, the Company acquired Newton Healthcare Network, LLC from Bannon Energy Incorporated (Bannon) of which Robert D. Johnson, a former director of the Company, was sole owner of Bannon.  In accordance with the purchase and sale agreement, Bannon receives a commission overwrite of 2% of the gross revenue attributable to Rockport Community Network, Inc.  For the three months ended June 30, 2006, Bannon earned $19,217.



Gross profit.  The Company's gross profit decreased by $88,115 from $594,730 during the three months ended June 30, 2005, to $506,615 during the three months ended June 30, 2006.  Gross profit as a percentage of sales was 71.9% for the current year period and 70.1% for the prior year period.  The decrease in gross profit was attributable to the decrease in revenue caused by two clients significant loss of customers and decreased access to the Companys network of healthcare providers. The Company expects its gross profit as a percentage of sales will decrease as it expands its business outside the State of Texas and continues to incur access fees to third party networks, however, the Company believes having network partners is the most economical method of building a nationwide network.



Selling, general and administrative expenses.  Selling, general and administrative expenses decreased by $132,102, or 19.2%, from $687,115 during the three months ended June 30, 2005, to $555,013 during the three months ended June 30, 2006.



·

Payroll and related expenses decreased from $455,154 during the three months ended June 30, 2005, to $377,920 during the three months ended June 30, 2006.  The primary reason for the decrease was due to the resignation of a Company executive in February. The position has not been filled as of June 30, 2006. In addition, the Company incurred $26,625 in non-cash expense for stock options during the current quarter.



·

Office administration expenses decreased from $78,907 during the three months ended June 30, 2005, to $67,798 for the three months ended June 30, 2006. The primary reason for the $11,109 decrease in administration expenses were the decrease in the office rent which was re-negotiated to lower monthly lease payments.



·

Professional services, which are comprised of accounting and audit, legal, investor relations, consulting and other professional fees, decreased from $81,049 during the three months ended June 30, 2005, to $75,491 during the three months ended June 30, 2006. The primary component of the decrease was less usage of consulting services.



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·

Other expenses decreased by 38,201 from $72,005 during the three months ended June 30, 2005 to $33,804 during the three months ended June 30, 2006. The Company incurred expenses of $39,472 in the settlement of a dispute of two sales personnel during the prior year quarter.



The Company currently has fully staffed all of its departments with highly qualified personnel to market its provider network to potential clients, develop its provider network, design and develop its management information systems, perform its client services and provide for the administration of the Company.  As a result of this staffing, the Company has increased its sales and processing capabilities and believes the Company is well positioned to experience new growth.  The Company believes there will not be any significant increase in selling, general and administrative expenses as it implements its business plan.



Net loss.  The Company had a net loss for the three months ended June 30, 2006, of $87,319, or $0.006 per share (basic and diluted), compared with a net loss of $143,128, or $0.01 per share (basic and diluted), for the three months ended June 30, 2005.



Liquidity and Capital Resources



The following summary table presents comparative cash flows of the Company for the three month periods ended June 30, 2006 and 2005:



|                                                    |      |     |      |   |        
|--------------------------------------------------- | ---- | --- | ---- | - | -------
|                                                    | 2006 |     | 2005
|Net cash provided by (used in) operating activities | $    | 982 |      | $ | (4,382)
|Net cash used in investing activities               | $    | --  |      | $ | (1,711)
|Net cash provided by financing activities           | $    | --  |      | $ | --     



Changes in cash flow.  The Company currently manages the payment of its current liabilities and other obligations on a monthly basis, as cash becomes available.  Net cash provided by operating activities for the three months ended June 30, 2006, was $982 compared with net cash used in operating activities of $4,382 for the three months ended June 30, 2005.  This was an increase of $5,364 when compared to the prior year period.  The primary reasons for the net increase in cash flow from operations was the decrease in the loss form operations from $143,128 for the three months ended June 30, 2005 to $87,319 for the current three month period.



Liquidity and capital resources.  The Company has funded its operations through the sale of Company common stock, borrowing funds from outside sources and conversion of employee, director and shareholder debt into restricted common stock.  At June 30, 2006, the Company had available cash in non-restrictive accounts of $90,113 and negative working capital of $1,840,173. As of June 30, 2006, the Company had outstanding debt of: (a) $765,000 in principal amount in the form of 10% convertible notes, (b) $227,493 in principal amount in the form of an 8% note, and (c) $188,857 in principal amount in the form of a 15% convertible note.



For fiscal 2007, the Company is projecting its monthly cash operating expenses, excluding network access fees, commissions and commission overwrites, to be approximately $200,000.  As discussed above, the Company has $1,451,072 of notes payable and accrued interest due in April 2007.  The Company is currently seeking sources of financing to retire these notes, as it has no current means to pay the notes as they become due, and as it does not expect to be able to retire these notes from its operating cash.  If the Company is unable to refinance these notes, it will be required to raise funds to retire the notes, or it will be in default of the notes.  The Company has no commitments for the needed funds to retire these notes, and the failure to raise such funds or refinance the notes could subject the Company to a claim by the note holders for repayment, which would materially adversely affect the Companys financial condition.



The Companys future growth is conditioned on the Company signing more employers, insurers and others for access to its provider network and obtaining a greater participation by consumers who are covered by such payors.  The Company will dedicate a significant portion of its cash flow from operations to the continuing development and marketing of its provider network.







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Off-Balance Sheet Arrangements



On July 7, 2003, the Company purchased the healthcare provider contracts from Protegrity services for 500,000 shares of the Companys common stock.  The Company committed to repurchase the shares for $1.00 per share if Protegrity has not been able to realize this amount by July 2008.



New Accounting Pronouncements



New Accounting Standards and Disclosures.  In December 2004, the FASB issued Statement of Financial Accounting Standards No. 123R Shared Based Payment (SFAS 123R).  This statement is a revision of SFAS Statement No 123 Accounting for Stock-Based Compensation and supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees, and its related implementation guidance.  SFAS 123R addresses all forms of shared based compensation (SBP) awards, including shares issued under employee stock purchase plans, stock options, restricted stock and stock appreciation rights.  Under SFAS 123R, SBP awards result in a cost that will be measured at fair value on the awards grant date, based on the estimated number of awards that are expected to vest and will be reflected as compensation cost in the historical financial statements.  This statement is effective for public entities that file as small business issuers as of the beginning of the first interim or annual reporting period of the registrants first fiscal year that begins after December 15, 2005. The Company adopted SFAS No. 123R, Share-Based Payment on April 1, 2006.



Item 3.

Controls and Procedures



Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in company reports filed or submitted under the Securities Exchange Act of 1934 (the Exchange Act) is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commissions rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in company reports filed under the Exchange Act is accumulated and communicated to management, including the Companys Chief Executive Officer and Chief Financial Officer (the Certifying Officers), as appropriate to allow timely decisions regarding required disclosure.



As required by Rules 13a-15 and 15d-15 under the Exchange Act, the Certifying Officers carried out an evaluation of the effectiveness of the design and operation of the Companys disclosure controls and procedures as of June 30, 2006. Their evaluation was carried out with the participation of other members of the Companys management.  Based upon their evaluation, the Certifying Officers concluded that the Companys disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commissions rules and forms.



The Companys internal control over financial reporting is a process designed by, or under the supervision of, the Certifying Officers and effected by the Companys Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of the Companys financial reporting and the preparation of the Companys financial statements for external purposes in accordance with generally accepted accounting principles. Internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the Companys assets; provide reasonable assurance that transactions are recorded as necessary to permit preparation of the Companys financial statements in accordance with generally accepted accounting principles, and that the Companys receipts and expenditures are being made only in accordance with the authorization of the Companys Board of Directors and management; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Companys assets that could have a material effect on its financial statements. There has been no change in the Companys internal control over financial reporting that occurred in the quarter ended June 30, 2006, that has materially affected, or is reasonably likely to affect, the Companys internal control over financial reporting.





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PART II.  OTHER INFORMATION



Item 1.

Legal Proceedings. - None



Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds.



The Company had no sales of its securities for the quarter ended June 30, 2006.



During the quarter ended June 30, 2006, the Company did not make any repurchases of its common stock.



Item 3.

Defaults Upon Senior Securities  None



Item 4.

Submission of Matters to a Vote of Security Holders - None



Item 5.

Other Information



On August 13, 2006, the Companys board of directors approved a change in the Companys independent accountants. The change in accountants was submitted to the SEC on Form 8-K filed on August 16, 2006.



The Company engaged Thomas Leger & Co., L.L.P. ("Thomas Leger") as the Company's independent accountants to audit the Company's consolidated financial statements for the year ending March 31, 2007. Hein & Associates LLP ("Hein"), who had been engaged as the Company's principal independent accountants since January 6, 2000 was dismissed on such date. Thomas Leger will also perform a review of the unaudited condensed quarterly financial statements to be included in the Company's quarterly reports on Form 10-QSB beginning with the June 30, 2006 Form 10-QSB.

During the two-year period ended March 31, 2006, and the subsequent interim period preceding such dismissal, the Company did not have any disagreements with Hein on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Hein, would have caused it to make a reference to the subject matter of the disagreements in connection with its reports.

Item 6.

Exhibits



(a)

Exhibits.



Exhibit No.

Description



31.1

Certification of Chief Executive Officer, pursuant to Rule 13a-14(a) of the Exchange Act, as enacted by Section 302 of the Sarbanes-Oxley Act of 2002. (1)



31.2

Certification of Chief Financial Officer, pursuant to Rule 13a-14(a) of the Exchange Act, as enacted by Section 302 of the Sarbanes-Oxley Act of 2002. (1)



32.1

Certification of Chief Executive Officer and Chief Financial Officer, pursuant to 18 United States Code Section 1350, as enacted by Section 906 of the Sarbanes-Oxley Act of 2002. (1)



_____________________

(1)  Filed herewith







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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.



ROCKPORT HEALTHCARE GROUP, INC.

(Registrant)



|                |                                        
|--------------- | ---------------------------------------
|August 21, 2006 | By:  /s/ Harry M. Neer                 
|                | Harry M. Neer, Chief Executive Officer,
|                | Chief Financial Officer and Treasurer  













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