- Quarterly Report (10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

[X]

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

For the quarterly period ended Ma rch 31, 2011

[ ]

TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from __________ to___________

Commission file number 001-32828

PRIMECARE SYSTEMS, INC .

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

DELAWARE 54-1707928

(State or other jurisdiction of incorporation or organization) (IRS Employer Identification No.)

610 Thimble Shoals Blvd. Ste 402A, Newport News, Virginia 23606

(Address of principal executive offices)

(757) 591- 0323

(Issuer's telephone number)

(Former name, address and former fiscal year, if changed since last report)

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. [X] Yes [ ] No

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

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date:

Class Shares Outstanding at March 31, 2011

Common Stock ($.001 par value)

110,478,120 Shares

Item 1. Financial Statements:

Balance Sheets as of March 31, 2011 (unaudited) and June 30, 2010

F-1

Statements of Operations for the three and nine months ended March 31, 2011 and

2010 (unaudited)

F-2

Statements of Cash Flows for the three and nine months ended March 31, 2011 and

2010 (unaudited)

F-3

Notes to Financial Statements:

F-4

Item 2. Management’s Discussion and Analysis or Plan of Operation

Item 3. Controls and Procedures

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

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

Item 6. Exhibits and Reports on Form 8-K

PrimeCare Systems, Inc.

Balance Sheets


	March 31,	June 30,
	2011	2010
Assets	(Unaudited and unreviewed)
Current assets:
Cash	$ 20,755	$ 24,049
Loan receivable	10,350	10,350
Total current assets	31,105	34,399
Other assets:
Property and equipment, net of accumulated depreciation	28,791	28,451
Capitalized software costs, net of accumulated amortization of $302,845 and $227,618, respectively	448,143	337,669
Other assets	1,479	2,600
Total Assets	$ 509,518	$ 403,119

Liability and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued expenses	$ 16,816	$ 13,595
Notes payable – current portion	19,070	2,019
Deferred income – current portion	6,000	6,000
Total current liabilities	41,883	21,614
Notes payable – non-current portion	175,500	175,500
Accrued interest payable	--	1,839
Deferred income – long term portion	25,500	25,500
Total liabilities	242,883	224,453

Stockholders’ equity:
Series A preferred stock, $.01 par value; 10,000,000 shares authorized, issued and outstanding 8,600 and 66,600 shares, respectively	86	86
Common stock, $.001 par value; 200,000,000 shares authorized, issued and outstanding 110,478,120 and 84,298,120 shares, respectively	110,478	110,478
Additional paid-in capital	10,296,359	10,043,359
Accumulated deficit	(10,140,288)	(9,975,257)
Total stockholders’ equity	266,635	178,666
Total liabilities and stockholders’ equity	$ 509,518	$ 403,119

See notes to financial statements.

F 1

PrimeCare Systems, Inc.

Statements of Operations


	Three Months Ended March 31,		Nine Months Ended March 31,
	2011 2010 (Unaudited and unreviewed)) (Unaudited)		2011 2010 (Unaudited and unreviewed) (Unaudited)
Revenues:
Software license fees	$ --	$ 11,300	$ 15,000	$ 14,300
Sales commissions	--	--	--	--

Total revenues	--	11,300	15,000	14,300

Operating costs and expenses:
Cost of revenues:
Amortization of capitalized software costs	23,683	26,568	71,049	75,227


Total costs of revenues	23,683	26,568	71,049	75,227
Research and development	37,408	39,618	110,474	128,490

Selling, general and administrative	24,696	14,564	98,956	64,629
Depreciation	1,553	1,774	4,659	4,867

Total operating costs and expenses	87,340	82,524	285,138	273,213

Operating loss	(87,340)	(71,224)	(270,138)	(258,913)

Interest income	--	15	27	20
Interest expense	--	(333)	(122)	(6,224)

Net loss	$ (87,340)	$ (71,542)	$ (270,233)	$ (265,117)

Income(loss) per common share, basic and diluted:	$ (00)	$ (.00)	$ (00)	$ (.00)

Weighted average number of common shares Outstanding, basic and diluted	110,478,120	85,986,398	110,478,120	84,861,369

See notes to financial statements.

F 2

PrimeCare Systems, Inc.

Statements of Cash Flows


	Nine Months Ended March 31,
	2011	2010
	(Unaudited and unreviewed) (Unaudited)
Cash flow from operating activities:
Net loss	$ (270,123)	$ (265,117)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Stock based compensation	--	1,800
Depreciation of property and equipment	4,659	4,867
Amortization of capitalized software costs	71,049	75,227
Changes in operating assets and liabilities:
Accounts receivable	--	--
Accounts payable and accrued expenses	35,883	4,378
Deferred income	(9,500)	(9,500)

Net cash provided by (used in) operating activities	(168,032)	(188,345)

Cash flows from investing activities:
Additions to property and equipment	(3,050)	(5,337)
Additions to capitalized software costs	(158,810)	(94,137)
Net cash used in investing activities	(161,810)	(99,474)

Cash flows from financing activities:

Proceeds from notes payable, net	286,000	302,500
Repayment of note payable under credit line	(9,810)	(19,491)
Proceeds from exercise of warrants	--	--
Net cash provided by (used in) financing activities	276,190	283,009

Net increase (decrease) in cash	(3,294)	(4,810)

Cash, beginning of period	24,049	35,486

Cash, end of period	20,755	$ 30,676

Supplemental disclosures of cash flow information:
Interest paid	$ 121	$ 79
Income taxes paid	--	$ --

Non-cash financing activities:

Issuance of 20,250,000 and 11,200,000 shares of common stock,

respectively, in satisfaction of $435,000 and $560,000 notes payable

and $8,843 and $29,900 accrued interest payable, respectively. $

-- $ 443,843

Issuance of 5,800,000 shares of common stock in exchange

for 58,000 shares of Series A preferred stock in 2010

$ -- $ --

See notes to financial statements.

F 3

PRIMECARE SYSTEMS, INC.

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

NOTE 1 – ORGANIZATION AND NATURE OF BUSINESS

PrimeCare Systems, Inc. (“PrimeCare” or the “Company”) was incorporated in Delaware in 1994. PrimeCare has developed and is marketing software and diagnostic products for the healthcare industry.

The accompanying financial statements have been prepared assuming that PrimeCare will continue as a going concern. At March 31, 2011 (unaudited), PrimeCare had cash of $20,755, but had negative working capital of $3,989. Further, PrimeCare incurred losses from continuing operations for the nine months ended March 31, 2011 and for the year ended June 30, 2010 of $270,233 (unaudited) and $340,081, respectively. These conditions raise substantial doubt as to PrimeCare’s ability to continue as a going concern. The financial statements do not include any adjustments that might be necessary if PrimeCare is unable to continue as a going concern. Management plans on achieving profitable operations through successful marketing of its PrimeCare software products. However, there is no assurance that the Company will be successful in this effort.

NOTE 2 – INTERIM FINANCIAL STATEMENTS

The unaudited financial statements as of M arch 31, 2011 and for the three and nine months ended March 31, 2011 and 2010 have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with instructions to Form 10-Q. In the opinion of management, the unaudited financial statements have been prepared on the same basis as the annual financial statements and reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the financial position as of March 31, 2011 and the results of operations and cash flows for the nine months ended March 31, 2011 and 2010. The financial data and other information disclosed in these notes to the interim financial statements related to these periods are unaudited. The results for the nine months ended March 31, 2011 are not necessarily indicative of the results to be expected for any subsequent quarter or the entire year ending June 30, 2011. The balance sheet at June 30, 2010 has been derived from the audited financial statements at that date.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to the Securities and Exchange Commission's rules and regulations. These unaudited financial statements should be read in conjunction with our audited financial statements and notes thereto for the year ended June 30, 2010 as included in our Form 10-K filed with the Securities and Exchange Commission on October 8, 2010.

For the nine months ended March 31, 2011 and 2010 (unaudited), diluted common shares outstanding excluded the following dilutive securities as the effect of their inclusion would be anti-dilutive:

Nine Months Ended

March 31,


	2011	2010
Series A Preferred Stock	6,638,519	6,638,519
Warrants	4,795,000	14,850,000
Total shares	11,433,519	21,488,519

F 4

NOTE 3 - NOTES PAYABLE

Notes payable consisted of:


	March 31, 2011 (unaudited)	June 30, 2010
Due bank under $20,000 revolving line of credit, interest payable monthly at bank’s prime rate plus 3%, secured by the personal guarantee of officer	$19,070	$ 2,019
Due officers, interest at 6%, interest and balance due on July 1, 2011	82,500	175,500
Total	82,500	177,519
Current portion of notes payable	--	(2,019)
Non-current portion of notes payable	$ 82,500	$ 175,500

NOTE 4 - SOFTWARE LICENSE AGREEMENT AND DEFERRED INCOME

On September 29, 2005, PrimeCare entered into a ten year license agreement with Telemédica SLR (Licensee), a company based in Argentina. As part of the consideration for becoming the exclusive licensee within the free trade association known as Mercosur, whose members are Argentina, Brazil, Chile, Paraguay and Uruguay, the Licensee paid PrimeCare $60,000 and has agreed to fund the translation and internationalization of PrimeCare V9 in both Spanish and Portuguese. The Spanish version was completed during 2005. The Licensee will sub-license PrimeCare V9 to health care providers in the Mercosur and train them in its use. In the event that the gross revenues derived by Licensee from sub licensing PrimeCare V9 are less than $2,500,000 for the third year of the Term of the agreement, or any year thereafter, the Agreement will become non-exclusive for the balance of the term. The License provided that the fee to be charged to a sub-licensee shall be not less than $4 per annum, per patient of each sub-licensee, without regard to the number of patient uses of the software during that year. PrimeCare has since agreed to a flat fee per year per sub-licensee.

PrimeCare recorded the $60,000 as deferred income in September 2005 and is amortizing this amount to income over ten years, the term of the Licensee distribution agreement.

The agreement was amended as of June 30, 2008 to provide that the Licensee will pay PrimeCare a license fee equal to 30% of the gross fees charged by Licensee with an annual minimum License Fee of $100,000 per fiscal year commencing July 1, 2008.

The agreement was amended November 13, 2009, effective June 30, 2009, and now provides that the Licensee will pay PrimeCare a license fee equal to 50% of the gross fees charged by Licensee with no annual minimum License Fee. During the quarter ended September 30, 2009, the Company recorded $25,000 as software license fee revenue. This amount was reversed in the three months ended December 31, 2009.

NOTE 5 - STOCKHOLDERS’ EQUITY

F 5

In March 2010, shareholders converted 58,000 shares of Series A Preferred Stock into 5,800,000 shares of Common Stock. The basis of conversion is 100 shares of Common Stock for each share of Series A Preferred Stock being converted.

Effective September 30, 2008, the Company issued a total of 11,200,000 shares of the Company’s Common Stock, par value $0.001 per share, in full satisfaction of $560,000 of notes payable plus accrued interest thereon of $29,900.

On March 23, 2009, a shareholder converted 970 shares of Series A Preferred Stock into 97,000 shares of Common Stock. The basis of conversion is 100 shares of Common Stock for each share of Series A Preferred Stock being converted.

Each share of Series A Preferred Stock is convertible into 100 shares of the Company’s common stock. In the event that dividends are simultaneously paid or declared on any parity stock, the holders of the Series A Preferred Stock are entitled to receive out of any funds or other property legally available therefore, when and as declared by the Board of Directors, (i) dividends in cash at the annual rate of $0.60 per share, and (ii) in addition, each share of Series A Preferred Stock shall receive 100 times the dividend paid per share of common stock.

NOTE 6 - WARRANTS

Warrants to purchase 3,100,000 shares of the Company’s Common Stock, par value $0.01 per share, with an exercise price of $.02 per share were exercised between October 8, 2008 and November 14, 2008. The aggregate amount received by the Company was $62,000.

On November 17, 2008 warrants to purchase 11,366,262 shares of the Company’s common stock expired. The expired warrants consist of:


Grant Date	Exercise Price	Number of Warrants
November 17, 2005	$ .02	1,227,206
November 17, 2005	$ .05	4,925,000
November 17, 2005	$ .07	5,214.056

Total		11,366,262

On February 23, 2009, the Company issued warrants to eighteen parties to purchase a total of 10,055,000 shares of common stock (4,425,000 to officers and directors); 1,200,000 are exercisable at $.03 per share and 8,855,000 are exercisable at $.05 per share. The warrants may be exercised at any time or from time to time, prior to February 22, 2011. The $82,197 fair value of the warrants on the date of issue was charged as follows: $75,664 to selling, general and administrative expenses and $6,533 to research and development expenses. The fair value was estimated using the Black-Scholes option pricing model and the following assumptions: expected life of 2 years, expected volatility of 249%, expected dividend yield of 0%, and risk free interest rate of 1.3%.

F 6

The Company issued warrants on April 11, 2009 to ten parties to purchase a total of 4,795,000 shares of common stock (3,850,000 to officers and directors) at $.03 per share. The warrants may be exercised at any time or from time to time, prior to April 10, 2012. The $46,144 fair value of the warrants on the date of issue was charged as follows: $29,111 to selling, general and administrative expenses and $17,033 to research and development expenses. The fair value was estimated using the Black-Scholes option pricing model and the following assumptions: expected life of 3 years, expected volatility of 263%, expected dividend yield of 0%, and risk free interest rate of 1.3%.

At March 31, 2011, warrants consist of:

Expiration

Exercise

Number of

Grant Date

Date

Price

Warrants

April 11, 2009

April 10, 2012

.03

4,795,000

Total

4,795,000

The 4,795,000 warrants outstanding and exercisable at March 31, 2011 have a weighted-average exercise price of $.03 per warrant. The weighted-average grant-date fair value of these warrants was $.0096 per warrant.

NOTE 7 - INCOME TAXES

No provisions for income taxes have been recorded since the Company has incurred net losses since inception. Based on management’s assessment, the Company has not yet determined it to be more likely than not that a deferred tax asset attributable to the future utilization of the net operating loss carry forward will be realized. Accordingly, the Company has provided a 100% allowance against the deferred tax asset in the financial statements. The Company will continue to review this valuation allowance and make adjustments as appropriate. The net operating loss carry forward of approximately $5,700,000 at June 30, 2009 expires in varying amounts from the year 2010 to year 2029.

Current tax laws limit the amount of loss available to offset against future taxable income when a substantial change in ownership occurs. Therefore, the amount available to offset future taxable income may be limited.

NOTE 8 - COMMITMENTS

PrimeCare leases office space under an operating lease which provides for an annual increase of 4%. Prior to October, 2010, it also leased space for its New Rochelle, NY office, which was closed in October, 2010. For the nine months ended March 31, 2011 and 2010 (unaudited), rent expense pursuant to such operating leases was $42,514 and $56,906, respectively. PrimeCare is currently negotiating to reduce the square footage of the committed space under the existing lease by one third, with a concomitant reduction in its ongoing annual commitment.

NOTE 9 – SUBSEQUENT EVENTS

The Company has evaluated subsequent events through the filing date of this Form 10-Q and has determined that there were no subsequent events to recognize or disclose in these financial statements.

F 7

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

General

The following discussion and analysis should be read in conjunction with the Financial Statements and Notes thereto appearing elsewhere herein. The following discussion contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and the Company intends that such forward-looking statements be subject to the safe harbors created thereby. These forward-looking statements include predictions, estimates and other statements that involve a number of risks and uncertainties. While this outlook represents the Company's current judgment on the future direction of the business, such risks and uncertainties could cause actual results to differ materially from any future performance suggested herein.

The Company has experienced recurring losses from operations and has relied on loans and the sale of equity interests in the Company to fund its operations. If necessary, the Company intends to provide additional working capital through the sale of equity interests in the Company. Although, in the past, the Company has been able to provide working capital through the sale of equity interests in the Company, there can be no assurances that the Company will succeed in its efforts, which creates a doubt about its ability to continue as a going concern.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has suffered recurring losses from operations and has a working capital deficiency that raises substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Overview

In May 1994, the PrimeCare J System was MS DOS based. In 1997, PrimeCare completed the development of its Windows 7 95 and Windows 7 NT based version of the PrimeCare J System (“PrimeCare J V8”). To increase the compatibility and versatility of Version Eight, PrimeCare added an interface that enables PrimeCare J V8 to communicate with medical office management systems (billing software, appointment scheduling software, etc.). Shortly thereafter, PrimeCare commenced a test marketing program in areas where it could install and service the product and train the office personnel in the use of the product.

In April 1998, PrimeCare completed development of CodeComplier J . During a patient office visit, the CodeComplier J organizes each item of the data in the proper classification and, using the CMS) Documentation Guidelines, automatically calculates the E&M code level used for determining the physician = s reimbursement from Medicare and other third party payers for the office visit.

During December 1998, PrimeCare completed development of its PrimeCareOnTheWeb ( A PCW @ ). The PCW Web site enables a physician to have patients answer one or more of PrimeCare = s 280 Questionnaires via the Internet. At this time, PrimeCare = s V8 was updated to include the changes.

During the period between late 1998 through 2000, PrimeCare exhibited at several industry conferences in an attempt to generate product recognition and to foster sales. The response was positive. Some licenses were sold. However, many private practice physicians were reluctant to make the capital investment for the hardware necessary to operate the software. Software updates were labor intensive. The software had to be updated at each computer. This discouraged large groups from using the system. This reluctance caused PrimeCare to redesign the system to overcome the problems. The feasibility of its product redesign was established in 2001, and the development of PrimeCare = s PrimeCare V9 began. PrimeCare

discontinued the marketing of its PrimeCare V8, and subsequently ceased supporting it. Therefore, in

2003, PrimeCare wrote off as an expense the unamortized capitalized software costs relating to its Version Eight. Since 1994, PrimeCare has written off capitalized software development costs in excess of $5,500,000.

The three-tier architecture of the PrimeCare J V9 provides advantages, including easy client installation; reduced on-site hardware and support requirements; enhanced data security; and maximum flexibility. PrimeCare J V9's reduced installation and maintenance costs and its flexibility enables it to be adapted to a wide variety of health care organizational uses, potentially including national and local health care systems, military organizations, correctional facilities, HMOs, hospitals with outpatient services, clinics, group practices and solo practitioners. The PrimeCare J V9 system is HIPAA compliant.

The Company’s main focus has been, and continues to be, the PrimeCare System. The Company believes that this business segment has excellent growth potential.

PrimeCare has experienced recurring losses from operations, and has relied on OCGT, its former parent company, to fund its operations. Since PrimeCare is no longer a subsidiary of OCGT, it will have to provide its own funding. To improve its financial position, PrimeCare issued 21,570 shares of Series A Preferred Stock in payment of $215,700 of notes payable assumed from OCGT during January 2006. To overcome its cash shortfall, in part, during January 2006, PrimeCare issued 3,000 shares of Series A Preferred Stock in payment of $30,000 of loans payable and thereafter, during the month of July 2006, PrimeCare completed a Private Offering of the Series A Preferred Stock, in which it sold 40,000 shares for $400,000 or $10 per share. $375,000 of the Offering was received during the year ended June 30, 2006 and $25,000 was received during the June 30, 2007 year. During March 2010 , 58,000 shares of the Series A Preferred Stock were converted into 5,800,000 shares of the Company’s Common Stock. During the three months ended September 30, 2007, the Company issued a total of 3,000 shares of Series A Preferred Stock in consideration of $15,000 in cash. On March 23, 2009, a shareholder converted 970 shares of Series A Preferred Stock into 97,000 shares of Common Stock.

The unconverted Preferred Shares are convertible into a total of 860,000 shares of PrimeCare = s common stock. The issuance of shares in payment of the debt was made in reliance on the exemption from registration provided under Section 4(2) of the Securities Act of 1933 (the “Act”) and issuance of shares in the Private Offering was pursuant to the exemption provided under Section 4(2) of the Act and the exemption provided by Rule 504 of Regulation D. The issuances were made in a private transaction without means of any public solicitation. The shares are restricted securities and the certificates representing the ownership of the shares contain a legend restricting further transfer unless the shares are registered or qualify for an exemption. If necessary, PrimeCare intends to provide additional working capital through the sale of additional equity interests, or obtain loans. However, there can be no assurances that it will succeed in its efforts, which creates a doubt as to its ability to continue as a going concern.

During the three months ended March 31, 2010, the Company issued a total of 20,250,000 shares of the Company’s Common Stock, par value $0.001 per share, in full satisfaction of $435,000 of notes payable plus accrued interest thereon of $8,843. The issuance of shares in payment of the debt was made in reliance on the exemption from registration provided under Section 4(2) of the Securities Act of 1933 (the “Act”) and issuance of shares in the Private Offering was pursuant to the exemption provided under Section 4(2) of the Act and the exemption provided by Rule 504 of Regulation D. The issuances were made in a private transaction without means of any public solicitation. The shares are restricted securities and the certificates representing the ownership of the shares contain a legend restricting further transfer unless the shares are registered or qualify for an exemption.

During the three months ended September 30, 2008, the Company issued a total of 11,200,000 shares of the Company’s Common Stock, par value $0.001 per share, in full satisfaction of $560,000 of notes payable plus accrued interest thereon of $29,900. The issuance of shares in payment of the debt was

made in reliance on the exemption from registration provided under Section 4(2) of the Securities Act of 1933 (the “Act”) and issuance of shares in the Private Offering was pursuant to the exemption provided under Section 4(2) of the Act and the exemption provided by Rule 504 of Regulation D. The issuances were made in a private transaction without means of any public solicitation. The shares are restricted securities and the certificates representing the ownership of the shares contain a legend restricting further transfer unless the shares are registered or qualify for an exemption.

Results of PrimeCare’s Operations for the three and nine months ended March 31, 2011, compared to the three and nine months ended March 31, 2010:

PrimeCare’s total revenue was $0 and $15,000 for the three and nine months ended March 31, 2011 compared to $11,300 and $14,300 for the three and nine months ended March 31, 2010. The decrease in revenues was partially due to the revised license agreement with Telemedica, which eliminated the minimum annual fee of $100,000 per year, but primarily because of a contractual dispute between Telemedica and the provincial government of Chubut, resulting in the provincial government’s withholding payment to Telemedica for several months in succession. Telemedica has advised PrimeCare that the dispute could lead to the recision of the contract, but as of the date of this filing, such recision has not taken place.

Research and development costs decreased from $39,618 and $128,490 for the three and nine months ended March 31, 2010 to $37,408 and $110,474 for the three and nine months ended March 31, 2010, a decrease of $2,210 and $18,016, respectively.

Selling, general and administrative costs were $24,696 and $98,956 for the three and nine months ended March 31, 2011 compared to $14,564 and $64,629 for the three and nine months ended March 31, 2010, an increase of $10,132 and $34,327, respectively.

Liquidity and Capital Resources

Cash was $20,755 at March 31, 2011. The Company has a $20,000 credit line from its bank, of which was $19,070 drawn down as of March 31, 2011. PrimeCare = s principal means of overcoming its cash shortfalls, caused by recurring losses from operations, was from Shareholders’ loans, the exercise of warrants and the sale of the Company’s stock. See Notes 3, 5 and 6 of “NOTES TO FINANCIAL STATEMENTS (Unaudited)”

During the quarter ended September 30, 2005, PrimeCare entered into a ten year license agreement for the use of PrimeCare J V9, with Telemédica, S.R.L., a company organized and based in Argentina ( A Telemédica @ ). Telemédica has advised PrimeCare that they have successfully completed a very successful pilot project for the use of PrimeCare V9, at Hospital Isola in Puerto Madryn and Puerto Pirámides Rural Hospital in the Province of Chubut, Argentina. In addition, Telemédica signed, a contract with Chubut’s Secretary of Health to provide PrimeCare V9 in the North Sector (el Sector Norte), one of the four health sectors in Chubut (population 450,000). The North Sector contract was signed by the North Sector’s Director with approval from Chubut’s Secretary of Health. The North Sector’s central hospital is Hospital Isola, around which it is organized. The use of the PrimeCare System as a key component of the health care system of the Province of Chubut and the relationship of PrimeCare and the Ministry of Health in the Province of Chubut and its three year history is discussed in an article appearing in a newspaper in the city of Puerto Madryn , w hich can be viewed at PrimeCare’s Web site http://www.pcare.com/pcnews/press074.aspx for our translation to English or as published in Spanish, at http://www.diariodemadryn.com/vernoti.php?ID=94173 .

The contract for the use of PrimeCare V9 has been replaced with a ten year contract paying a fixed amount for the first two years with provisions for increases over the balance of the contract as the use of the PrimeCare System is used throughout the Province. The PrimeCare V9 System has been thoroughly evaluated by Chubut’s Secretary of Health and an advisor from Argentina’s Ministry of Health, who has been assigned by Argentina’s President to help Chubut to reform its health system. At the request of the medical authorities of Chubut and to meet the medical system needs of Chubut, in the spirit of cooperation, PrimeCare created and added software programs to the PrimeCare System to give it the ability to: (a) input and store a physician's availability schedule and to display appointment schedules by clinic, location, and physician (It is being used as the basis for appointment scheduling by hospitals in Chubut, Argentina); (b) enable local users to provide internal procedure billing codes for use in the appointment billing module (Note that this is written specifically for insurance requirements in Argentina and does not have applicability in any other locality); (c) track source of patient personal identifier with user specified source options (e.g, the user can create a list of ID sources, such as SSAN, Passport, Driver's License, DNI, LE, LC - the last three are specific to Argentina); (d) enable installations to specify images / logos to show for their users, and to override the default program name with a locally defined name; (e) identify and color code “out of limits” lab values, as well as charting lab values which have numeric results (some lab values are only positive / negative, and cannot be charted graphically); (f) convert Argentina supplied patient demographic information into PrimeCare compatible information; (g) incorporate ICD-10 diagnostic codes in parallel with existing ICD-9 codes, with ability for each installation to supply up to two additional codes for each diagnosis; and (h) record data for patient pregnancies and deliveries, supporting Argentina's Plan Nacer ("Healthy Child" initiative). Telemédica has advised that the agreement currently being written will grant a contract to integrate Chubut’s entire healthcare system for a fixed amount per year.

Puerto Madryn, which is the North Sector's largest city, has approximately 90,000 residents. The sector's population represents between 15% and 20% of the province's population. The PrimeCare System already has incorporated 60,000 North Sector electronic medical records; has been interfaced with its laboratory; and has been installed in Hospital Isola and four rural hospitals in the communities of Gan Gan, Telsen, Gastre, and Puerto Pirámides.

Telemedica has advised PrimeCare that a dispute with the provincial government has temporarily led to suspension of payments, and could ultimately lead to the recision of the contract, but as of the date of this filing, such recision has not taken place.

Telemédica continues to market PrimeCare in other areas of Argentina and has had expressions of serious interest from places in Patagonia, Santa Fé, and a health system in Buenos Aires province. Telemédica believes that other provinces in Argentina will follow the lead of Chubut.

Telemédica anticipates that additional provinces of Argentina will commence using PrimeCare V9 in the near future and the Company’s revenues from such use will keep increasing.

PrimeCare has worked to reduce its monthly spending levels from approximately $33,000 per month to approximately $25,000 per month. Assuming our spending levels remain approximately $25,000 per month, management believes that PrimeCare can raise the funds that might be necessary to meet cash shortfalls from operations and loans from officers until sufficient revenues will be generated from the Argentine License to overcome the Company’s cash shortfalls. As of March 31, 2011 the Company had a cash balances of approximately $20,755. and had the availability of its line of credit in the amount of $20,000. Since January 1, 2007, the Company has received $1,075,000 in loans, with interest payable thereon at 6% per annum, from officers and larger shareholders to cover the Company’s cash shortfalls, of which $992,500, together with interest thereon, was repaid through the issuance of the Company’s common shares as previously discussed. There can be no assurance that these loans will continue to be available or that they can be repaid through issuing the Company’s stock.

PrimeCare = s management believes that the current and potential Licenses will provide sufficient revenues from operations to overcome its cash shortfalls caused by recurring losses from operations and will make PrimeCare profitable.

Currently, the Company has no material commitments for capital expenditures outstanding.

Item 3. Controls and Procedures

An evaluation was carried out under the supervision and with the participation of the Company's management, including the President and Chief Financial Officer ("CFO"), of the effectiveness of the Company's disclosure controls and procedures. Based on that evaluation, the President and CFO have concluded that as of the end of the period covered by this report, the Company's disclosure controls and procedures are effective to provide reasonable assurance that information required to be disclosed by the Company in reports that it files or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and timely reported as provided in the Securities and Exchange Commission rules and forms. The Company periodically reviews the design and effectiveness of our internal controls over financial reporting, including compliance with various laws and regulations that apply to the Company's operations. The Company makes modifications to improve the design and effectiveness of its internal control structure, and may take other corrective action, if the Company's reviews identify deficiencies or weaknesses in its controls. No changes occurred during the quarter ended March 31, 2011 in the Company's internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

None

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

Effective March 31, 2010, the Company issued a total of 45,000 shares of the Company’s Common Stock, par value $0.001 per share, to three employees as additional compensation (15,000 shares each). The market value of the shares issued was $0.025 per share, for an aggregate amount of $1,125. The shares are restricted securities and the certificates representing the ownership of the shares contain a legend restricting further transfer unless the shares are registered or qualify for an exemption.

During March 2009 shareholders converted 58,000 shares of Series A Preferred Stock into 5,800,000 shares of Common Stock. The basis of conversion is 100 shares of Common Stock for each share of Series A Preferred Stock being converted.

Effective December 29, 2009, the Company issued a total of 45,000 shares of the Company’s Common Stock, par value $0.001 per share, to three employees as additional compensation (15,000 shares each). The market value of the shares issued was $0.015 per share, for an aggregate amount of $675. The shares are restricted securities and the certificates representing the ownership of the shares contain a legend restricting further transfer unless the shares are registered or qualify for an exemption.

Effective November 14, 2008, the Company issued a total of 3,100,000 shares of the Company’s Common Stock, par value $0.001 per share, upon the exercise of warrants with an exercise price of $.02 per share. The aggregate amount received by the Company was $62,000. The issuance of shares upon the exercise of warrants was made in reliance on the exemption from registration provided under Section 4(2) of the Securities Act of 1933 (the “Act”) and issuance of shares in the Private Offering was pursuant to the exemption provided under Section 4(2) of the Act and the exemption provided by Rule 504 of Regulation D. The issuances were made in a private transaction without means of any public solicitation. The shares are restricted securities and the certificates representing the ownership of the shares contain a legend restricting further transfer unless the shares are registered or qualify for an exemption.

During the three months ended September 30, 2008, the Company issued a total of 11,200,000 shares of the Company’s Common Stock, par value $0.001 per share, in full payment of $560,000 of notes payable plus accrued interest of $32,999 or approximately $0.05 per share. The issuance of shares in payment of the debt was made in reliance on the exemption from registration provided under Section 4(2) of the Securities Act of 1933 (the “Act”) and issuance of shares in the Private Offering was pursuant to the exemption provided under Section 4(2) of the Act and the exemption provided by Rule 504 of Regulation D. The issuances were made in a private transaction without means of any public solicitation. The shares are restricted securities and the certificates representing the ownership of the shares contain a legend restricting further transfer unless the shares are registered or qualify for an exemption.

During the three months ended September 30, 2007, the Company issued a total of 3,000 shares of Series A Preferred Stock in consideration of $15,000 in cash. The proceeds were used as working capital.

Each share of Series A Preferred Stock is convertible into 100 shares of the Company’s common stock. In the event that dividends are simultaneously paid or declared on any parity stock, the holders of the Series A Preferred Stock are entitled to receive out of any funds or other property legally available therefore, when and as declared by the Board of Directors, (I) dividends in cash at the annual rate of $0.60 per share,

and (ii) in addition, each share of Series A Preferred Stock shall receive 100 times the dividend paid per share of common stock.

In consummating the above described sale, the Company relied upon the exemptions from registration provided by Sections 4(2) of the Securities Act of 1933, as amended (the “Securities Act”), and based upon: representations from the investor that he, she or it, (a) was acquiring the securities for his, her or its own account and not with a view towards further distribution and (b) had such sufficient knowledge and experience in financial and business matters to be capable of evaluating the merits and risks connected with the applicable investment, and the fact that (c) no general solicitation of the securities was made by the Company, (d) the securities issued were “restricted securities” as that term is defined under Rule 144 promulgated under the Securities Act, (e) the Company placed appropriate restrictive legends on the certificates representing the securities regarding the restricted nature of these securities and (f) prior to the completion of the transaction, each investor was informed in writing of the restricted nature of the securities, provided with all information regarding the Company as required under Rule 502 of Regulation D and was given the opportunity to ask questions of and receive additional information from the Company regarding its financial condition and operations.

Item 6.

Exhibits and Reports on Form 8-K

(a) Exhibit No.

Exhibit Name

3.1(a)

Certificate of Incorporation of Registrant filed May 2, 1994

3.1(b)

Certificate of Amendment of Certificate of Incorporation filed January 10, 2005

3.1(c)

Certificate of Amendment of Certificate of Incorporation filed March 24, 2005

3.2

By-Laws

4.1

Instrument defining rights of holders (See Exhibits Nos. 3.1(a) and 3.1(c), Certificate of Amendment of Certificate of Incorporation), Certificate of Designation Creating Series A Preferred Stock of PrimeCare Systems, Inc.

4.2

Form of Stock Purchase Warrant

10.1

Software License Agreement, dated as of September 29, 2005, by and between PrimeCare Systems, Inc., and Telemédica SRL

10.2

Software License Agreement, dated as of September 29, 2005, by and between PrimeCare Systems, Inc., and Nebbe Enterprises, LLC

10.3

Share Purchase Agreement, dated as of December 19, 2005, by, between and among OCGT Technology, Inc. and Bobby Vavithis

10.4

Distribution Agreement, dated as of December 19, 2005, by, between and among OCGT Technology, Inc. and PrimeCare Systems, Inc.

10.5

Agency Agreement, dated as of December 31, 2005

10.6

Escrow Agreement, dated as of December 29, 2005

10.7

Bank Creditline, dated August 21, 2001

31.1

Certification pursuant to Rule 13a-14 and 15d-14 of the Securities Exchange act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley act of 2002.

31.2

Certification pursuant to Rule 13a-14 and 15d-14 of the Securities Exchange act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley act of 2002.

32.1

Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley act of 2002.

32.

Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley act of 2002.

Incorporated by reference to Form SB -2, as amended, filed September 29, 2006

(b)

Reports on Form 8-K

No Report on Form 8-K was filed during the quarter ended December 31, 2008.

SIGNATURES

Pursuant to the requirements of Sections 13 or 15(d) the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned , thereunto duly authorized.

PRIMECARE SYSTEMS, INC.

By: /s/Robert A. Shiver

Robert A. Shiver, President

By: /s/ W. Jordan Fitzhugh

Treasurer/Chief Financial Officer

DATED: May 23, 2011

Exhibit 31.1

CERTIFICATION PURSUANT TO SECTION 302(a)
OF THE SARBANES-OXLEY ACT OF 2002

I, Robert A. Shiver, President of PrimeCare Systems, Inc., certify that:

1. I have reviewed this quarterly report on Form 10-Q of PrimeCare Systems, Inc. for the period ending March 31, 2011;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;

4. The small business issuer’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d- 15(e)) for the small business issuer and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) [Paragraph omitted pursuant to SEC Release Nos. 33-8238 and 34-47986]

(c) Evaluated the effectiveness of the small business issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the small business issuer’s internal control over financial reporting that occurred during the small business issuer’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the small business issuer’s internal control over financial reporting; and

5. The small business issuer’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer’s auditors and the audit committee of the small business issuer’s board of directors (or persons performing the equivalent function):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer’s internal control over financial reporting.

Date: Date: May 23, 2011

By: /s/Robert A. Shiver

Robert A. Shiver, President

Exhibit 31.2

CERTIFICATION PURSUANT TO SECTION 302(a)
OF THE SARBANES-OXLEY ACT OF 2002

I, W. Jordan Fitzhugh, Treasurer/Chief Financial Officer of the Registrant, PrimeCare Systems, Inc., certify that:

1. I have reviewed this quarterly report on Form 10-Q of PrimeCare Systems, Inc. for the period ending March 31, 2011;

(b) [Paragraph omitted pursuant to SEC Release Nos. 33-8238 and 34-47986]

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer’s internal control over financial reporting.

Date: Date: May 23, 2011

By: /s/ W. Jordan Fitzhugh

W. Jordan Fitzhugh, Treasurer/Chief Financial Officer

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. ss. 1350), the undersigned, Robert A. Shiver, President of PrimeCare Systems, Inc., a Delaware corporation, (the "Company"), does hereby certify, to his knowledge, that:

The Quarterly Report on Form 10-Q for the period ended March 31, 2011 of the Company (the "Report") fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and the information contained in the report fairly presents, in all material respects, the financial condition and result of operations of the Company.

Date: May 23, 2011

By: /s/Robert A. Shiver

Robert A. Shiver, President

Exhibit 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. ss. 1350), the undersigned, Edward C. Levine, Treasurer/Chief Financial Officer of PrimeCare Systems, Inc., a Delaware corporation, (the "Company"), does hereby certify, to his knowledge, that:

Date: May 23, 2011

By: /s/ W. Jordan Fitzhugh

W. Jordan Fitzhugh, Treasurer/Chief Financial Officer

PrimeCare Systems (CE) (USOTC:PCYS)
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