Patient Infosystems, Inc.
46 Prince Street
Rochester, New York 14607
May 26, 1998
Dear Stockholder:
You are cordially invited to attend the Patient Infosystems, Inc. Annual Meeting
of Stockholders to be held at 9:30 a.m. Eastern Daylight Time, Thursday, June
25, 1998 in the Harvard-Oxford Room at the Strathallan Hotel, 550 East Avenue,
Rochester, New York 14607.
The matters proposed for consideration at the meeting are the election of six
directors, the ratification of the appointment of Deloitte & Touche LLP as the
Company's auditors, and to transact other business as may come before the
meeting or any adjournment thereof. The accompanying Notice of Annual Meeting of
Stockholders and Proxy Statement discuss these matters in further detail. We
urge you to review this information carefully.
You will have an opportunity at the meeting to discuss each item of business
described in the Notice of Annual Meeting of Stockholders and Proxy Statement
and to ask questions about the Company and its operations.
It is important that your shares be represented and voted at the Annual Meeting.
Whether or not you plan to attend, please sign and promptly return the enclosed
proxy card, using the envelope provided. If you do attend the Annual Meeting,
you may withdraw your proxy and vote your shares in person.
Sincerely,
Donald A. Carlberg
President and Chief Executive Officer
<PAGE>
Patient Infosystems, Inc.
46 Prince Street
Rochester, New York 14607
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 25, 1998
The Annual Meeting of Stockholders of Patient Infosystems, Inc. will be held on
Thursday, June 25, 1998 at 9:30 a.m. Eastern Daylight Time in the Harvard-Oxford
Room at the Strathallan Hotel, 550 East Avenue, Rochester, New York 14607.
1. To elect six directors to hold office until the next Annual Meeting of
Stockholders or until their respective successors have been duly elected and
qualified;
2. To ratify the appointment of Deloitte & Touche LLP as auditors; and
3. To transact such other business as may properly come before the meeting
or any adjournment thereof.
The Board of Directors has fixed the close of business on Thursday, May 21, 1998
as the record date for the determination of stockholders entitled to notice of
and to vote at the Annual Meeting of Stockholders.
The Company requests that all stockholders, whether or not you expect to attend
this meeting, sign the enclosed proxy and return it as promptly as possible in
the accompanying postage paid envelope. You may revoke your proxy at any time
before it is voted. If you are present at the meeting, you may vote your shares
in person and the proxy will not be used.
You are respectfully urged to read the Proxy Statement contained in this booklet
for further information concerning individuals nominated as directors, the
appointment of Deloitte & Touche LLP as auditors and the use of the proxy.
A copy of the Company's Annual Report to Stockholders for the fiscal year ended
December 31, 1997 accompanies this Proxy Statement.
By Order of the Board of Directors,
Donald A. Carlberg
President and Chief Executive Officer
May 26, 1998
IMPORTANT - PLEASE MAIL YOUR SIGNED PROXY
PROMPTLY IN THE ENCLOSED ENVELOPE
<PAGE>
Patient Infosystems, Inc.
46 Prince Street
Rochester, New York 14607
PROXY STATEMENT
For the Annual Meeting of Stockholders to be held June 25, 1998
This Proxy Statement is furnished in connection with the solicitation of proxies
to be voted at the Annual Meeting of Stockholders of Patient Infosystems, Inc.
(the "Company" or "Patient Infosystems"), to be held on Thursday, June 25, 1998,
and at any postponements or adjournments thereof, for the purposes set forth in
the accompanying Notice of Annual Meeting of Stockholders. This Proxy Statement
and the proxy are being mailed to stockholders on or about May 26, 1998.
The enclosed proxy is solicited by the Board of Directors of the Company and
will be voted at the Annual Meeting and any adjournments thereof. Shares
represented by a properly executed proxy in the accompanying form will be voted
at the Annual Meeting in accordance with any instructions specified by the
stockholder. If no instructions are given, the stockholder's shares will be
voted in accordance with the recommendations of the Board of Directors FOR each
of the proposals presented in this Proxy Statement. Those recommendations are
described later in this Proxy Statement.
The proxy may be revoked at any time before it is exercised by delivering a
written notice of revocation to the Assistant Secretary of the Company. If you
attend the Annual Meeting in person, you may revoke your proxy by either giving
notice of revocation to the inspectors of election at the Annual Meeting or by
voting at the Annual Meeting in person.
The only items of business that the Board of Directors intends to present or
knows will be presented at the Annual Meeting are the items discussed in this
Proxy Statement. The proxy confers discretionary authority upon the persons
named therein, or their substitutes, to vote on any other items of business that
may properly come before the meeting.
Only stockholders of record at the close of business on May 21, 1998, the record
date for the Annual Meeting (the "Record Date"), are entitled to notice of and
to vote at the Annual Meeting. As of the Record Date the Company had 8,020,042
shares of Common Stock, par value $.01 per share ("Common Stock"), issued and
outstanding. Each share is entitled to one vote on each matter submitted to a
vote at the Annual Meeting. A majority of the issued and outstanding shares
constitutes a quorum at the meeting.
VOTING PROCEDURES
The directors will be elected by the affirmative vote of a majority of the
shares of Common Stock present in person or represented by proxy at the Annual
Meeting, provided a quorum exists. A quorum is established if, at least a
majority of the outstanding shares of Common Stock as of the Record Date are
present in person or represented by proxy at the Annual Meeting. The
ratification of Deloitte & Touche LLP as auditors and all other matters at the
meeting will also be decided by the affirmative vote of a majority of the shares
of Common Stock cast with respect thereto, provided a quorum exists. Votes will
be counted and certified by one or more Inspectors of Election who are expected
to be employees of the Company or Continental Stock Transfer & Trust Company,
the Company's stock transfer agent. In accordance with Delaware law, abstentions
and "broker non-votes" (i.e. proxies from brokers or nominees indicating that
such persons have not received instructions from the beneficial owner or other
persons entitled to vote shares as to a matter with respect to which the brokers
or nominees do not have discretionary power to vote) will be treated as present
for purposes of determining the presence of a quorum. For purposes of
determining approval of a matter presented at the meeting, abstentions will be
deemed present and entitled to vote and will, therefore, have the same legal
effect as a vote "against" a matter presented at the meeting. Broker non-votes
will be deemed not entitled to vote on the subject matter as to which the
non-vote is indicated and will, therefore, have no legal effect on the vote on
that particular matter. Each stockholder may revoke a previously granted proxy
at any time before it is exercised by filing with the Assistant Secretary of the
Company either a notice of revocation or a duly executed proxy bearing a later
date. The powers of the proxy holders will be suspended if the person executing
the proxy attends the meeting in person and so requests. Attendance at the
meeting will not, in itself, constitute revocation of a previously granted
proxy.
VOTING SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the shares of the Company's Common Stock as of May 21, 1998, (i) by
each person the Company knows to be the beneficial owner of 5% or more of the
outstanding shares of Common Stock, (ii) each named executive officer listed in
the Summary Compensation Table, (iii) each director of the Company and (iv) all
executive officers and directors of the Company as a group.
Shares Percentage
Beneficially Beneficially
Beneficial Owner (1) Owned Owned
- -------------------- ----- -----
Derace L. Schaffer (2) 1,718,900 21.4%
John Pappajohn (3) 1,456,880 18.2%
Edgewater Private Equity Fund II, L.P.
666 Grand Avenue, Suite 200 970,000 12.1%
Donald A. Carlberg (4) 145,000 1.8%
Marion B. LaVigne (5) 10,080 *
Victoria Nelson Neidigh (6) 3,360 *
Kent Tapper (7) 14,500 *
Barbara J. McNeil (8) 21,600 *
Carl F. Kohrt (7) 14,400 *
David B. Nash (9) - *
All directors and executive officers as a group
(9 persons) (10) 3,384,720 42.3%
* Less than one percent.
(1) Unless otherwise noted, the address of each of the listed persons is c/o the
Company at 46 Prince Street, Rochester, New York 14607.
(2) Includes 288,000 shares held by Dr. Schaffer's minor children. Also includes
14,400 shares which are issuable upon the exercise of options that are either
currently exercisable or which become exercisable within 60 days of May 21,
1998. Does not include 21,600 shares subject to outstanding options which are
not exercisable within 60 days of May 21, 1998.
(3) Includes 360,000 shares held by Halkis, Ltd., a sole proprietorship owned by
Mr. Pappajohn, 360,000 shares held by Thebes, Ltd., a sole proprietorship owned
by Mr. Pappajohn's spouse and 360,000 shares held directly by Mr. Pappajohn's
spouse. Mr. Pappajohn disclaims beneficial ownership of the shares owned by
Thebes, Ltd. and by his spouse. Includes options to purchase 14,400 shares which
are either currently exercisable or which become exercisable within 60 days of
May 21, 1998. Does not include 21,600 shares subject to outstanding options
which are not exercisable within 60 days of May 21, 1998.
(4) Includes 1,000 shares held by Mr. Carlberg's minor child. Represents options
to purchase 144,000 shares which are either currently exercisable or which
become exercisable within 60 days of May 21, 1998. Does not include 90,000
shares subject to outstanding options which are not exercisable within 60 days
of May 21, 1998.
(5) Includes options to purchase 10,080 shares which are either currently
exercisable or which become exercisable within 60 days of May 21, 1998. Does not
include 57,920 shares subject to outstanding options which are not exercisable
within 60 days of May 21, 1998.
(6) Includes options and warrants to purchase 3,360 shares which are either
currently exercisable or which become exercisable within 60 days of May 21,
1998. Does not include 63,440 shares subject to outstanding options and warrants
which are not exercisable within 60 days of May 21, 1998.
(7) Includes options to purchase 14,400 shares which are either currently
exercisable or which become exercisable within 60 days of May 21, 1998. Does not
include 21,600 shares subject to outstanding options which are not exercisable
within 60 days of May 21, 1998.
(8) Includes options and warrants to purchase 21,600 shares which are either
currently exercisable or which become exercisable within 60 days of May 21,
1998. Does not include 14,400 shares subject to outstanding options and warrants
which are not exercisable within 60 days of May 21, 1998
(9) Includes options and warrants to purchase 5,760 shares which are either
currently exercisable or which become exercisable within 60 days of May 21,
1998. Does not include 64,640 shares subject to outstanding options and warrants
which are not exercisable within 60 days of May 21, 1998
(10) Includes options and warrants to purchase 242,400 which are either
currently exercisable or which become exercisable within 60 days of May 21,
1998. Does not include 376,800 shares subject to outstanding options and
warrants which are not exercisable within 60 days of May 21, 1998.
PROPOSAL 1
ELECTION OF DIRECTORS
At this year's Annual Meeting of Stockholders, six directors will be elected to
hold office for a term expiring at the next Annual Meeting of Stockholders. Each
director will be elected to serve until a successor is elected and qualified or
until the director's earlier resignation or removal.
Proxies granted by stockholders will be voted individually for the election, as
directors of the Company, of the persons listed below, unless a proxy specifies
that it is not to be voted in favor of a nominee for director. In the event any
of the nominees listed below shall be unable to serve, it is intended that the
proxy will be voted for such other nominees as are designated by the Board of
Directors. Each of the persons named below has indicated to the Board of
Directors of the Company that they are available to serve.
The names, ages, principal occupations and other information concerning the
director nominees, based upon information received from them, are set forth
below.
Derace L. Schaffer, M.D., 50 (Chairman of the Board of Directors since 1995).
Dr. Schaffer has been the President of The Ide Group, P.C., a group of
physicians providing radiological services at multiple locations in New York
State, since 1980, and since 1990 he has also been President of The Lan Group, a
venture capital firm specializing in health care investments. He serves as a
Clinical Professor at the University of Rochester School of Medicine and a
Director of American Physician Partners, Inc., Medifax, Inc., NeuralMed, Inc.,
NeuralTech, Inc., Oncor, Inc., Preferred Oncology Networks of America, Inc. and
The Care Group, Inc. and as well as several not-for-profit corporations.
Donald A. Carlberg, 45 (Director since 1995). Mr. Carlberg has been President,
Chief Executive Officer and a Director of the Company since its inception in
February 1995. From February 1993 to December 1994 Mr. Carlberg served as Chief
Executive Officer of Patient Management Technologies, Inc., a medical services
consulting company, which he founded. From 1992 to 1994 Mr. Carlberg served as
Senior Vice President, Sales and Marketing for Neurocare, Inc./Paradigm Health
Corp. From 1990 to 1992 Mr. Carlberg served as Director of Managed Care for
Baxter Healthcare International where he started managed care initiatives for
its Caremark Division. From 1985 to 1990 Mr. Carlberg held several senior level
positions in managed care at Blue Cross/Blue Shield of Rochester, New York and
Independence Blue Cross in Philadelphia, Pennsylvania.
Carl F. Kohrt, Ph.D., 54 (Director since 1996). Dr. Kohrt is Executive Vice
President and Assistant Chief Operating Officer of the Eastman Kodak Company,
where he has served in various capacities since 1971. Dr. Kohrt is a recipient
of a Sloan Fellowship for study at Massachusetts Institute of Technology.
Barbara J. McNeil, M.D., Ph.D., 57 (Director since 1995). Dr. McNeil is Head of
the Department of Health Care Policy and a Professor of Radiology at Harvard
Medical School where she has served in various capacities since 1971. For four
years she has served as Chair of the Blue Cross Massachusetts Hospital
Association Fund for Cooperative Innovation and currently she is a member of the
National Council on Radiation Protection, the American College of Radiology and
its Board of Chancellors, the Society of Nuclear Medicine, the Advisory Council
for the Agency for Health Care Policy and Research and the National Academy of
Sciences' Institute of Medicine where she is a Council member. She also serves
as a Director of CV Therapeutics, Inc.
David B. Nash, M.D., 42 (Director since April 1998) has been Executive Vice
President, Medical Affairs of the Company since April 1996. Dr. Nash is
currently and has been for at least the last five years, Director of Health
Policy and Clinical Outcomes at Thomas Jefferson University Hospital and
Associate Professor of Medicine at Jefferson Medical College. Dr. Nash is the
recipient of the 1995 Clifton Latiolias Prize in Managed Care from the American
Managed Care Pharmacy Association. He also serves as a scientific advisory board
member of iSTAT Corp. Dr. Nash provides his services to the Company on a
part-time consulting basis.
John Pappajohn, 69 (Director since 1995). Mr. Pappajohn has been the sole owner
of Pappajohn Capital Resources, a venture capital firm specializing in health
care investments, and President of Equity Dynamics, Inc., a financial consulting
firm, both located in Des Moines, Iowa, since 1969. He serves as a Director for
the following public companies: CORE, Inc., Drug Screening Systems, Inc., Fuisz
Technologies, Ltd., GalaGen, Inc., HealthDesk Corporation, OncorMed, Inc., Pace
Health Management Systems, Inc. and The Care Group, Inc.
During the 1997 fiscal year there were five meetings of the Board of Directors.
Each Director attended at least 80% of the aggregate total number of the
meetings of the Board of Directors held during the year.
The Board of Directors has standing Audit and Compensation Committees, which
deal with certain specific areas of the Board's responsibility.
The Audit Committee, which met once during the 1997 fiscal year, recommends the
firm to be appointed as independent public accountants to audit the Company's
financial statements and reviews the scope and results of the audit and other
services provided by the Company's independent public accountants. The members
of the Audit Committee are Mr. Pappajohn, Dr.
McNeil, and Dr. Kohrt.
The Compensation Committee, which met once during the 1997 fiscal year, develops
the Company's executive compensation philosophy and reviews and recommends the
compensation programs for officers of the Company, including salaries and
incentive compensation. The Compensation Committee also administers the
Company's Employee Stock Option Plan. The members of the Compensation Committee
are Dr. Schaffer, Dr. McNeil and Dr. Kohrt.
Directors who are not currently receiving compensation as officers or employees
of the Company are entitled to reimbursement of expenses for attending each
meeting of the Board of Directors and each meeting of any committee. Dr. Nash
provides consulting services to the Company with respect to certain medicine
matters. In 1997, Dr. Nash received $25,000 in consulting fees from the Company.
The Company's directors are eligible to participate in the Company's Employee
Stock Option Plan. Pursuant to the Employee Stock Option Plan, non-employee
directors of the Company receive a one-time grant of a non-qualified stock
option to purchase 36,000 shares of the Company's Common Stock at an exercise
price equal to fair market value per share on the date of their initial election
to the Company's Board of Directors. Such non-qualified stock option vests as to
20% of the option grant on the first anniversary of the grant, and 20% on each
subsequent anniversary, is exercisable only during the non-employee director's
term and automatically expires on the date such director's service terminates.
Upon the occurrence of a change of control, as defined in the Employee Stock
Option Plan, all outstanding unvested options immediately vest.
Section 16(a) of the Exchange Act requires that the Company's executive officers
and directors, and beneficial owners of 10% or more of the Company's stock file
initial reports of ownership and of changes of ownership with the Securities and
Exchange Commission and the NASDAQ Stock Market. Executive officers, directors
and 10% beneficial owners are required by securities regulations to furnish the
Company with copies of all Section 16(a) forms they file.
Based on a review of the copies of reports furnished to the Company, the Company
believes that during the year ended December 31, 1997 all filing requirements
applicable to its officers, directors and ten percent beneficial owners were
met, except that initial reports of beneficial ownership on Form 3 were filed
late for Leonard M. Serafino, the former Chief Operating Officer of the Company.
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid or accrued by the Company
for services rendered in all capacities for executive officers of the Company
who received compensation in excess of $100,000 during the years ended December
31, 1997 and 1996 and during the period from inception on February 22, 1995 to
December 31, 1995.
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Compensation
Awards
Annual Compensation Securities
Name and Principal Position Year Salary Bonus Underlying Options (#)
- --------------------------- ---- ------ ----- ----------------------
<S> <C> <C> <C> <C>
Donald A. Carlberg, President and Chief 1997 $161,538 $25,000 0
Executive Officer 1996 $131,731 $25,000 18,000
1995 (1) $96,417 $15,000 216,000
Kent Tapper, Chief Information Officer 1997 $101,923 $10,000 0
1996 $86,298 $5,000 0
1995 (1) $32,308 $0 36,000
</TABLE>
(1) Reflects compensation paid from inception on February 22, 1995 to December
31, 1995.
Marion B. LaVigne, Ph.D. and Victoria Nelson Neidigh, who were recently elected
as officers of the Company, were not executive officers during the year ended
December 31, 1997. However, Ms. Neidigh received salary of $101,754 during the
year ended December 31, 1997. Ms. LaVigne and Ms. Neidigh are each currently
compensated at the rate of $115,000 annually. No options were granted during
1997 to either of the named executive officers. No stock options were exercised
by the Chief Executive Officer or other named executive officers of the Company
during 1997. The following table sets forth certain information regarding
unexercised options held by the Chief Executive Officer and the other named
executive officer of the Company at December 31, 1997.
Option Values on December 31, 1997
<TABLE>
<CAPTION>
Number of Securities Underlying Value of Unexercised
Unexercised Options at In-the-Money Options at
December 31, 1997(#) December 31, 1997($)(1)
-------------------- -----------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Donald A. Carlberg 111,600 122,400 $295,740 $324,360
Kent A. Tapper 14,400 21,600 $38,160 $57,240
</TABLE>
(1) Calculated based upon $2.65 market value of the underlying securities as of
December 31, 1997.
The Company's Stock Option Plan (the "Plan") was originally adopted by the Board
of Directors and stockholders in June 1995. Up to 1,080,000 shares of Common
Stock have been authorized and reserved for issuance under the Plan. Under the
Plan, options may be granted in the form of incentive stock options ("ISOs") or
non-qualified stock options ("NQOs") from time to time to salaried employees,
officers, directors and consultants of the Company, as determined by the
Compensation Committee of the Board of Directors. The Compensation Committee
determines the terms and conditions of options granted under the Plan, including
the exercise price. The Plan provides that the Committee must establish an
exercise price for ISOs that is not less than the fair market value per share at
the date of the grant. However, if ISOs are granted to persons owning more than
10% of the voting stock of the Company, the Plan provides that the exercise
price must not be less than 110% of the fair market value per share at the date
of the grant. The Plan also provides for a non-employee director to be entitled
to receive a one-time grant of a NQO to purchase 36,000 shares at an exercise
price equal to fair market value per share on the date of their initial election
to the Company's Board of Directors. Such NQO is exercisable only during the
non-employee director's term and automatically expires on the date such
director's service terminates. Each option, whether an ISO or NQO, must expire
within ten years of the date of the grant.
As of December 31, 1997 there were 798,060 options outstanding under the Plan,
having exercise prices ranging from $0.14 to $10.00 per share. As of March 17,
1998, the Board of Directors of the Company voted to reprice options to purchase
72,900 shares of common stock granted to 19 employees of the Company, which were
granted from November 1996 to June 1997 at prices ranging from $5.13 to $10.00,
to an exercise price of $3.13, being the fair market value of the Company's
common stock on such date. No director nor named executive officer had any
options repriced on such date. Marion B. LaVigne, Ph.D. and Victoria Nelson
Neidigh had 16,800 options to purchase 1,800 and 15,000 shares of common stock,
respectively, repriced on such date.
Employment Agreement
The Company has entered into an employment agreement with Mr. Carlberg as its
President and Chief Executive Officer dated March 1, 1995, which has a term of
one year and is automatically renewed for successive one-year periods unless
either party receives written notice from the other party of such party's
intention not to renew within 60 days of the agreement's expiration date. The
agreement calls for Mr. Carlberg to receive a base salary of $125,000 per year,
which was increased to $150,000 per year in September 1996 and $175,000 in June
1997. Upon execution of the agreement, Mr. Carlberg received a $15,000 signing
bonus and an option to purchase up to 180,000 shares of Common Stock of the
Company at an exercise price of $.14 per share, and in March of 1996 and 1997 he
received bonuses of $25,000. The option has a ten-year term, vests over five
years and was 20% vested upon grant. The remainder of the option vests at a rate
of 20% per year, and the option is therefore fully exercisable after the first
five years of employment. Mr. Carlberg is eligible for any discretionary bonuses
and additional option grants in amounts to be determined by the Company's Board
of Directors based upon the performance of the Company and Mr. Carlberg. The
agreement prohibits Mr. Carlberg from engaging in any business activity
involving the measurement of clinical outcomes for patients with acute or
chronic diseases, or the measurement of patient compliance with prescribed
treatments for acute or chronic diseases within one year of the termination of
his employment with the Company.
REPORT OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
Compensation for the Company's executive officers was determined in light of the
responsibilities involved in commencing the Company's business operations,
developing its initial and ongoing customer relationships, commencing patient
information programs and negotiating with the Company's investment bankers.
During 1997, Mr. Carlberg received a bonus of $25,000 reflecting Mr. Carlberg's
efforts in connection with the expansion of the Company's operations and the
substantial roll-out of the Company's patient information systems.
The Compensation Committee evaluates the performance of each executive officer
of the Company in the context of the goals and challenges that the Company faces
over the next year. The determinations as to salary and bonus are made in a
context of the challenges faced in the Company, the individual performance of
the individual and the salaries of executives at comparative companies in the
Company's industry.
Dr. Derace L. Schaffer
Dr. Barbara J. McNeil
Dr. Carl F. Kohrt
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company was initially capitalized on February 22, 1995 through the sale of
3,600,000 shares of its Common Stock for $.14 per share. Included among the
participants in that transaction were Dr. Derace L. Schaffer, Chairman of the
Board, who purchased 1,656,000 shares, Dr. Schaffer's spouse who purchased
144,000 shares, John Pappajohn, a director, who purchased 541,800 shares, a sole
proprietorship owned by Mr. Pappajohn which purchased 360,000 shares, Mr.
Pappajohn's spouse, who purchased 360,000 shares, and a sole proprietorship
owned by Mr. Pappajohn's spouse which purchased 360,000 shares.
In August and September of 1995 the Company sold 1,800,000 shares of its Series
A Preferred Stock in a private placement for $1.00 per share. Included among the
participants in that transaction were Gregory D. Brown, who was at such time,
the Company's Sr. Vice President, Chief Financial Officer, Secretary and
Treasurer, who purchased 10,000 shares and Mr. Pappajohn who purchased 10,000
shares. In addition, Edgewater Private Equity Fund II, L.P., ("Edgewater"), a
five percent owner of the Common Stock of the Company, acquired 1,000,000 shares
of Series A Convertible Preferred Stock in the Series A Convertible Preferred
Stock offering. Each share of Series A Convertible Preferred Stock has been
converted into .72 shares of the Company's Common Stock.
In May and June of 1996, the Company sold 600,000 shares of its Series B
Convertible Preferred Stock in a private placement for $5.00 per share. Included
among the participants in that transaction were Dr. Schaffer, who purchased
20,000 shares, Mr. Pappajohn, who purchased 40,000 shares and Edgewater which
purchased 200,000 shares. Each share of Series B Convertible Preferred Stock has
been converted into 1.25 shares of the Company's Common Stock.
COMPANY PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return on the
Common Stock of Patient Infosystems, Inc. from December 19, 1996 (the date the
Common Stock was first offered to the public at an initial public offering price
of $8.00 per share) through December 31, 1997 with the cumulative total return
on the NASDAQ Stock Market - U.S. Index and the cumulative total return on the
NASDAQ Health Services Index. The Company did not pay any dividends during this
period. The NASDAQ Stock Market - U.S. Index and the NASDAQ Health Services
Index are published daily.
The graph assumes an investment of $100 in each of Patient Infosystems, Inc.,
the NASDAQ Stock Market - U.S. Index and the NASDAQ Health Services Index on
December 31, 1997. The Comparison also assumes that all dividends are
reinvested.
COMPARISON OF CUMULATIVE TOTAL RETURN
AMONG PATIENT INFOSYSTEMS, INC., THE NASDAQ STOCK
MARKET - U.S. INDEX AND THE NASDAQ HEALTH SERVICES INDEX
(The following table is represented as a line chart in the printed material)
12/19/96 12/31/96 12/31/97
-------- -------- --------
Patient Infosystems, Inc. 100.00 115.63 33.13
NASDAQ Stock Market - U.S. Index 100.00 99.49 122.15
NASDAQ Health Services Index 100.00 100.55 103.16
The comparisons in this table are required by the rules of the Securities and
Exchange Commission and are not intended to forecast or be indicative of
possible future performance of the Company's Common Stock. The stock price
performance graph shall not be deemed to be incorporated into any filing under
the Securities Act or the Exchange Act, notwithstanding any general statement
contained in any such filing incorporating this Proxy Statement by reference,
except to the extent that the Company specifically incorporates this information
by reference.
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF
INDEPENDENT AUDITORS
The independent public accounting firm utilized by the Company during the fiscal
years ended December 31, 1995, 1996 and 1997 was Deloitte & Touche LLP,
independent certified public accountants. Although the appointment of auditors
is not required to be submitted to a vote of stockholders, the Board of
Directors believes that it is appropriate as a matter of policy to request that
the stockholders ratify the appointment. If the stockholders should not ratify
the appointment, the Audit Committee will investigate the reasons for the
stockholders' rejection and the Board of Directors will reconsider the
appointment. It is expected that a representative of Deloitte & Touche LLP will
be present at the meeting.
The Board of Directors unanimously recommends that the stockholders vote FOR
ratification of the appointment of Deloitte & Touche LLP as the Company's
independent auditors.
STOCKHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
Stockholders who wish to present proposals appropriate for consideration at the
Company's 1999 Annual Meeting of Stockholders must submit the proposal in proper
form to the Company at its address set forth on the first page of this Proxy
Statement not later than January 26, 1999 in order for the proposition to be
considered for inclusion in the Company's proxy statement and form of proxy
relating to such annual meeting. Any such proposals, as well as any questions
related thereto, should be directed to the Assistant Secretary of the Company.
ADDITIONAL INFORMATION
The expenses in connection with the solicitation of proxies will be borne by the
Company. Solicitation will be made by mail, but may also be made by telephone or
personal call by officers, directors or employees of the Company who will not be
specially compensated for such solicitation. The Company may request that
brokerage houses and other nominees or fiduciaries forward copies of the
Company's Proxy Statement and Annual Report to Stockholders to beneficial owners
of stock held in their names, and the Company may reimburse them for reasonable
out-of-pocket expenses incurred in doing so
A COPY OF THE COMPANY'S ANNUAL REPORT FOR THE YEAR ENDED DECEMBER 31, 1997 IS
BEING FURNISHED HEREWITH TO EACH STOCKHOLDER OF RECORD AS OF THE CLOSE OF
BUSINESS ON MAY 21, 1998. COPIES OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K
WILL BE PROVIDED FOR A NOMINAL CHARGE UPON WRITTEN REQUEST TO:
PATIENT INFOSYSTEMS, INC.
46 Prince Street
Rochester, New York 14607
Attention: Lynda J. Bates
By Order of the Board of Directors,
Donald A. Carlberg
President and Chief Executive Officer
