SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
Amendment No. 1
[X] Annual Report Pursuant to Section 13 or 15 (d)of the Securities Exchange Act
of 1934
For the Fiscal Year Ended: December 31, 1999
-----------------
Commission File Number: 0-22319
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Patient Infosystems, Inc.
-------------------------
(Exact Name of Registrant as Specified in its Charter)
Delaware 16-1476509
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(State or Other Jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
46 Prince Street, Rochester, NY 14607
------------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (716) 244-1367
--------------
Securities registered pursuant to Section 12(b) of the Exchange Act of 1934:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.01 per share
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12
months (or for such shorter period that the registrant was required to file such
reports) and (2) has been subject to such filing requirements for the past 90
days: Yes[X] No[ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulations S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in a definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
The aggregate market value of the voting stock held by nonaffiliates of the
registrant as of April 28, 2000
COMMON STOCK, PAR VALUE, $.01 PER SHARE- Approximately $5.4 million
The number of shares outstanding of the issuer's common stock as of April 28,
2000:
COMMON STOCK, PAR VALUE, $.01 PER SHARE - 8,050,202
DOCUMENTS INCORPORATED BY REFERENCE:
None
<PAGE>
EXPLANATORY NOTE
The Registrant is amending its Annual Report on Form 10-K for the year
ended December 31, 1999 to include the information required in Part III, Items
10 through 13, which was omitted in the original filing pursuant to General
Instruction G(3) of this Form 10-K.
PART III
ITEM 10 DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The names, ages, principal occupations and other information concerning the
directors and executive officers of the Company, based upon information received
from them, are set forth below.
Derace L. Schaffer, M.D., 52 (Chairman of the Board of Directors since
1995). Dr. Schaffer has been Chairman of the Board and a Director of the Company
since its inception in February 1995. Dr. Schaffer is President of the Ide
Imaging Group, P.C., as well as the Lan Group, a venture capital firm
specializing in health care and high technology investments. He serves as a
director of the following public companies: Allion Healthcare, Inc. and
Radiologix, Inc. He is also a director of several private companies, including
Analytika, Inc., Card Systems, Inc. and Logisticare, Inc. Dr. Schaffer is a
board certified radiologist. He received his postgraduate radiology training at
Harvard Medical School and Massachusetts General Hospital, where he served as
Chief Resident. Dr. Schaffer is a member of Alpha Omega Alpha, the national
medical honor society, and is Clinical Professor of Radiology at the University
of Rochester School of Medicine. Dr. Schaffer provides services to the Company
on a part-time basis.
Roger Louis Chaufournier, 42 (President and Chief Executive Officer since
April 1, 2000) Prior to joining Patient Infosystems, Mr. Chaufournier was
President of the STAR Advisory Group, a health care consulting firm he founded
in 1998. Mr. Chaufournier was previously the Chief Operating Officer of the
Managed Care Assistance Corporation (1996-1999), a company which developed and
operated Medicaid health plans. Mr. Chaufournier was a former Assistant Dean for
Strategic Planning for the Johns Hopkins University School of Medicine
(1993-96). In addition, Mr. Chaufournier spent twelve years in progressive
leadership positions with the George Washington University Medical Center
(1981-1993). Mr. Chaufournier was also Chairman of the Board and acting
President of Metastatin Pharmaceuticals, a privately held company developing
therapeutics in the area of prostate cancer. Mr. Chaufournier was a three time
Examiner with the Malcolm Baldrige National Quality Award and has served as the
national facilitator for the federal Bureau of Primary Health Care chronic
disease collaboratives.
Carl F. Kohrt, Ph.D., 56 (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., 59 (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 several 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.
John Pappajohn, 71 (Director since 1995). Mr. Pappajohn has been a Director
of the Company since its inception in February 1995, and served as its Secretary
and Treasurer from inception through May 1995. Since 1969 Mr. Pappajohn has been
the sole owner of Pappajohn Capital Resources, a venture capital firm and
President of Equity Dynamics, Inc., a financial consulting firm, both located in
Des Moines, Iowa. He serves as a Director for the following public companies:
Allion Healthcare, Inc., MC Informatics, Inc., Pace Health Management Systems,
Inc. and Radiologix, Inc.
Kent Tapper, 43 (Vice President, Financial Planning of the Company since
April 1999). Mr Tapper has served as Chief Information Officer and Vice
President, Systems Engineering and has been with the Company since July 1995.
Prior to joining the Company and since 1992, Mr. Tapper served as Product
Manager, Audio Response and Call Center Platforms for Northern Telecom, Inc.
From 1983 to 1992, Mr. Tapper held Product Manager, Systems Engineering Manager
and various engineering management positions with Northern Telecom.
MEETINGS OF THE BOARD AND COMMITTEES
During the 1999 fiscal year there were 5 meetings of the Board of
Directors. Each Director attended at least one of the aggregate total number of
the meetings of the Board of Directors held during the year.
The Board of Directors of the Company has appointed two committees: the
Audit Committee and the Compensation Committee. The Audit Committee, which held
1 meeting during fiscal year 1999, periodically reviews the Company's auditing
practices and procedures, makes recommendations to management or to the Board of
Directors as to any changes to such practices and procedures deemed necessary
from time to time to comply with applicable auditing rules, regulations and
practices, and recommends independent auditors for the Company to be elected by
the stockholders. The Audit Committee consists of John Pappajohn, Barbara J.
McNeil and Carl F. Kohrt. The Compensation Committee, which held one meeting
during fiscal year 1999, meets periodically to make recommendations to the Board
of Directors concerning the compensation and benefits payable to the Company's
executive officers and other senior executives. The Compensation Committee also
administers the Company's Employee Stock Option Plan. The Compensation Committee
consists of Derace L. Schaffer, Barbara J. McNeil and Carl F. Kohrt.
COMPENSATION OF DIRECTORS
During 1999, the Company paid Derace L. Schaffer $122,083 in connection
with the part-time performance of his duties as Chairman of the Board of
Directors. All Directors were also reimbursed for expenses incurred in
connection with attending meetings, including travel expenses to such meetings.
The Company's directors are eligible to participate in the Company's Stock
Option Plan. Pursuant to the 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 Stock Option Plan, all
outstanding unvested options immediately vest.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's executive officers and directors, and persons who own more than
10% of a registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission.
Based on a review of the copies of reports furnished to the Company, the Company
believes that during the year ended December 31, 1999 all filing requirements
applicable to its officers, directors and ten percent beneficial owners were
met.
ITEM 11 EXECUTIVE COMPENSATION
The following table sets forth information concerning the annual and
long-term compensation for services in all capacities to the Company and its
subsidiary for each of the fiscal years ended December 31, 1999, 1998 and 1997
for those persons who were at December 31, 1999, (i) the Chief Executive Officer
and (ii) the other three most highly compensated executive officers of the
Company who received compensation in excess of $100,000 during the fiscal year
ended December 31, 1999 (the "named executive officers"):
<TABLE>
<CAPTION>
Summary Compensation Table
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 1999 $200,734 $ 25,000 50,000
Executive Officer(1) 1998 $194,231 $ 25,000 20,000
1997 $161,538 $ 25,000 0
John V. Crisan, Chief Financial Officer(2) 1999 $107,500 $ 0 250,000
Kent A. Tapper, Vice President, Financial 1999 $114,702 $ 0 0
Planning 1998 $118,039 $ 0 0
1997 $101,923 $ 10,000 0
A. Neal Westermeyer, Chief Operating 1999 $142,860 $ 0 250,000
Officer(3)
Victoria Nelson Neidigh, Vice President, 1999 $114,182 $ 0 0
Sales(4) 1998 $139,646 $ 0 50,000
1997 $ 83,254 $ 18,500 15,000
</TABLE>
(1) Mr. Carlberg resigned his position as President and Chief Executive Officer
as of March 31, 2000.
(2) Mr. Crisan resigned his position as Chief Financial Officer as of March 31,
2000.
(3) Mr. Westermeyer resigned his position as Chief Operating Officer as of
January 18, 2000.
(4) Ms. Victoria Neidigh resigned her position as Vice President, Sales as of
July 23, 1999.
The following table sets forth certain information regarding options
granted to the Chief Executive Officer and the named executive officers of the
Company during 1999.
<TABLE>
<CAPTION>
Option Grants During 1999
Individual Grants
-----------------
Potential Realizable
Number of Value at Assumed Annual
Securities % of Total Options of Stock Price
Underlying Granted to Appreciation for Option
Options Employees in Exercise Expiration Term (3)
Name Granted(#)(1) Fiscal Year(2) Price $/Share Date 5%($) 10%($)
- ---- ------------- -------------- ------------- ---- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Donald A. Carlberg 50,000(4) 7.19% $2.44 5/12/09 $ 76,725 $194,437
John V. Crisan 150,000(5) 21.58% $1.50 3/8/09 $141,501 $358,592
100,000(6) 14.39% $2.44 5/12/09 $153,450 $388,873
A. Neal Westermeyer 150,000(7) 21.58% $1.50 5/8/09 $141,501 $358,592
100,000(8) 14.39% $2.44 5/12/09 $153,450 $388,873
Kent A. Tapper - - - - - -
</TABLE>
(1) Options typically become exercisable at the rate of 20% per year from the
date of grant and have ten year terms as long as the optionee's employment with
the Company continues. The exercise price of each option is equal to the fair
market value of the underlying Common Stock on the date of the grant, as
determined by the Board of Directors.
(2) Total number of options granted during fiscal year 1999 was 695,100.
(3) Future value of current year grants assumes appreciation in the market value
of the Common Stock of 5% and 10% per year over the ten-year option period as
required by the rules of the Securities and Exchange Commission and do not
represent the Company's estimate or projection of actual values. The actual
value realized may be greater than or less than the potential realizable values
set forth in the table.
(4) Mr. Carlberg resigned his position as Chief Executive Officer and as a
Director of the Company effective March 31, 2000. As of the date of his
resignation, none of Mr. Carlberg's 1999 option grant was exercisable and was
forfeited.
(5) Mr. Crisan resigned his position as Chief Financial Officer and as a
Director of the Company effective March 31, 2000. On March 8, 2000, one year
from the date of Mr. Crisan's resignation, 75,000 options became exercisable;
the remaining 75,000 of the indicated options were forfeited.
(6) Mr. Crisan resigned his position as Chief Financial Officer and as a
Director of the Company effective March 31, 2000. Upon the date of his
resignation, all 100,000 unvested options were forfeited.
(7) Mr. Westermeyer resigned his position as Chief Operating Officer of the
Company effective January 18, 2000. Upon the date of his resignation, 110,000 of
the indicated unvested options were forfeited; the remaining 40,000 options are
exercisable.
(8) Mr. Westermeyer resigned his position as Chief Operating Officer of the
Company effective January 18, 2000. Upon the date of his resignation, all
100,000 of the indicated unvested options were forfeited.
No stock options were exercised by the Chief Executive Officer or the named
executive officers of the Company during 1999. The following table sets forth
certain information regarding unexercised options held by the Chief Executive
Officer and the named executive officers of the Company at December 31, 1999.
The table does not give effect to grants of options that occurred after December
31, 1999. For additional information with respect to these grants, see "Stock
Option Plan".
<PAGE>
<TABLE>
<CAPTION>
Aggregated Option Exercises during 1999
and Option Values on December 31, 1999
Number of Securities Underlying Value of Unexercised
Unexercised Options at In-the-Money Options at
December 31, 1999(#) December 31, 1999($)(1)
-------------------- -----------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Donald A. Carlberg(2) 194,800 109,200 $352,596 $84,900
Kent A. Tapper 28,800 7,200 $57,197 $14,299
John V. Crisan(3) 0 250,000 $ 0 $93,750
A. Neal Westermeyer(4) 40,000 210,000 $25,000 $68,750
</TABLE>
(1) Calculated based upon $2.125 market value of the underlying securities as of
December 31, 1999.
(2) Mr. Carlberg resigned his position as Chief Executive Officer and as a
Director of the Company effective March 31, 2000. As of April 28, 2000, Mr.
Carlberg has exercised 10,000 options, has 213,600 options exercisable and
80,400 options have been forfeited.
(3) Mr. Crisan resigned his position as Chief Financial Officer and as a
Director of the Company effective March 31, 2000. On March 8, 2000, 75,000
options became exercisable. The remaining 175,000 options were forfeited as a
result of Mr. Crisan's resignation.
(4) Mr. Westermeyer resigned his position as Chief Operating Officer of the
Company effective January 18, 2000. On March 8, 1999, 40,000 options became
exercisable. The remaining 210,000 options were forfeited as a result of Mr.
Westermeyer's resignation.
STOCK OPTION PLAN
The Company's Stock Option Plan (the "Plan") was originally adopted by the
Board of Directors and stockholders in June 1995. Up to 1,680,000 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 April 28, 2000, options to acquire 997,500 shares of Common Stock had
been granted to employees and directors of the Company. The following table sets
forth information regarding the number of options outstanding and the exercise
price of these options.
Number of Options
Outstanding at
April 28, 2000 Exercise Price
-------------- --------------
242,000 $0.14
100,800 $0.69
2,880 $1.04
238,320 $1.38
115,000 $1.50
1,000 $1.53
30,000 $1.88
200,000 $2.06
5,000 $2.19
42,000 $2.44
20,500 $2.75
Of these options, 36,000 were granted as of March 1, 1995 to Mr. Carlberg
and vested immediately. The remainder of Mr. Carlberg's options and all other
options granted under the plan vest as to 20% of the option grant on the first
anniversary of the grant, and 20% on each subsequent anniversary.
Included in the options are grants made to the following officers of the
Company: (i) on March 8, 1999, 150,000 options exercisable at $1.50 per share
were granted to John V. Crisan, the former Chief Financial Officer of the
Company, 75,000 of these options vested on March 5, 2000, the remaining 75,000
options vest in lots of 25,000 options on March 5 of 2001, 2002 and 2003; (ii)
on May 12, 1999, 100,000 options granted to Mr. Crisan, which vest at the rate
of 20% per year from the date of grant and have a ten year term and are
exercisable at $2.44 per share; (iii) on May 12, 1999, 50,000 options granted to
Donald A. Carlberg, the former President and Chief Executive Officer of the
Company, which vest at the rate of 20% per year from the date of grant and have
a ten year term and are exercisable at $2.44 per share; (iv) on March 8, 1999,
150,000 options granted to Neal Westermeyer, the former Chief Operating Officer
of the Company, 40,000 of these options vested on March 8, 1999, the remaining
110,000 options vest at the rate of 20% per year from the date of grant and have
a ten year term and are exercisable at $1.50 per share; and (v) on May 12, 1999,
100,000 options granted to Mr. Westermeyer, which vest at the rate of 20% per
year from the date of grant and have a ten year term and are exercisable at
$2.44 per share. In addition, the Company granted to each of Messrs. Pappajohn
and Schaffer, Directors of the Company, warrants to purchase 187,500 shares of
the Company's Common Stock at an exercise price of $1.5625 per share (see Item
13). On March 21, 2000 the Company granted warrants to purchase 125,000 shares
of the Company's Common Stock at an exercise price of $2.375 per share.
EMPLOYMENT CONTRACTS
The Company has entered into a Letter Agreement dated March 30, 2000 with
Roger Louis Chaufournier pursuant to which Mr. Chaufournier serves as the
Company's President and Chief Executive Officer. The Letter Agreement calls for
Mr. Chaufournier to receive a base salary of $200,000 per year. Upon execution
of the Letter Agreement, Mr. Chaufournier received an option to purchase up to
200,000 shares of Common Stock of the Company at an exercise price of $2.06 per
share. The option has a ten-year term and vests at a rate of 20% per year over
five years. The option, therefore, will be fully exercisable after the first
five years of employment.
On February 7, 2000, the Company entered into a Severance and Release
Agreement with A. Neal Westermeyer, its former Chief Operating Officer. The
Agreement provides that Mr. Westermeyer's employment with the Company terminated
on January 18, 2000. The Agreement further provides that the Employment and
Severance Agreement between the Company and Mr. Westermeyer dated as of March 8,
1999 terminated effective January 18, 2000. The Company agreed to pay Mr.
Westermeyer severance pay in the gross amount of $87,500. In addition, the
Company agreed to extend the date during which any stock options that have been
granted to Mr. Westermeyer may be exercised for a limited period of time.
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 and
commencing patient information programs. During 1999, 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 roll-out of the Company's patient
information systems. The compensation for Mr. Chaufournier was determined in
2000 by arms-length negotiations between members of the Board of Directors of
the Company and Mr. Chaufournier. The Compensation Committee believes that the
amount agreed upon reflects fair compensation for an executive with the
experience and capabilities that are possessed by Mr. Chaufournier.
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. 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 and negotiating with the Company's investment bankers.
Dr. Derace L. Schaffer
Dr. Barbara J. McNeil
Dr. Carl F. Kohrt
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee consisted of Derace L. Schaffer, Barbara J.
McNeil and Carl F. Kohrt for the fiscal year ended December 31, 1999. None of
these individuals was at any time during fiscal year 1999 or any other time an
officer or employee of the Company. No executive officer of the Company serves
as a member of the board of directors or compensation committee of any other
entity that has one or more executive officers serving as a member of the
Company's Board of Directors or Compensation Committee.
ITEM 12 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 April 28,
2000, (i) by each person the Company knows to be the beneficial owner of 5% or
more of the outstanding shares of Common Stock, (ii) the Chief Executive Officer
and each named executive officer listed in the Summary Compensation Table below,
(iii) each director of the Company and (iv) all executive officers and directors
of the Company as a group.
<TABLE>
<CAPTION>
Shares Beneficially Percentage Beneficially
Beneficial Owner (1) Owned Owned
-------------------- ----- -----
<S> <C> <C>
John Pappajohn (2)............................ 2,313,780 26.32%
Derace L. Schaffer (3)........................ 2,245,800 26.14%
Edgewater Private Equity Fund II, L.P.,
666 Grand Avenue, Suite 20
Des Moines, IA 50309 970,000 12.05%
ProMed Partners, L.P., and Barry Kurokawa
125 Cambridgepark Drive
Cambridge, MA 02140 (4) 425,000 5.28%
Donald A. Carlberg (5)........................ 224,600 2.72%
John V. Crisan (6)............................ 75,000 *
Neal Westermeyer (7).......................... 40,000 *
Kent A. Tapper (8)............................ 28,900 *
Barbara J. McNeil (9)........................ 36,000 *
Carl F. Kohrt (8)............................. 28,800 *
Roger Louis Chaufournier(10) 0 *
All directors and executive officers as a 6,387,880 65.48%
group (7 persons) (11)........................
</TABLE>
* 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 360,000 shares held by Halkis, Ltd., a sole proprietorship owned by
Mr. Pappajohn, 360,000 shares held by Thebes, Inc. 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, Inc. and by his spouse. Also includes (i) options to purchase 28,800
shares that are either currently exercisable or that become exercisable within
60 days of April 28, 2000; (ii) 312,500 shares that are issuable upon the
exercise of warrants that are either currently exercisable or that become
exercisable within 60 days of April 28, 2000; and (iii) 400,000 shares of Common
Stock issuable upon the conversion of Series C Convertible Preferred Stock. Does
not include 7,200 shares subject to outstanding options that are not exercisable
within 60 days of April 28, 2000.
(3) Includes 288,000 shares held by Dr. Schaffer's minor children. Also
includes (i) 28,800 shares that are issuable upon the exercise of options that
are either currently exercisable or that become exercisable within 60 days of
April 28, 2000; (ii) 312,500 shares that are issuable upon the exercise of
warrants that are either currently exercisable or that become exercisable within
60 days of April 28, 2000 and (iii) 200,000 shares of Common Stock issuable upon
the conversion of Series C Convertible Preferred Stock. Does not include 7,200
shares subject to outstanding options that are not exercisable within 60 days of
April 28, 2000.
(4) Includes 407,500 shares owned by ProMed Partners, L.P. and 18,000 shares
owned by Mr. Kurokawa, a partner in ProMed Partners, L.P. Mr. Kurokawa disclaims
beneficial ownership of the shares held by ProMed Partners, L.P., which
represents the interests of other partners. The information contained above with
respect to ProMed Partners, L.P. and Mr. Kurokawa was obtained from a filing on
Schedule 13G made by ProMed Partners, L.P. and Mr. Kurokawa with the Securities
and Exchange Commission. The Company has not verified this information
independently.
(5) Mr. Carlberg resigned his position as Chief Executive Officer and as a
Director of the Company effective March 31, 2000. Includes 1,000 shares held by
Mr. Carlberg's minor child and options to purchase 213,600 shares that are
either currently exercisable or that become exercisable within 60 days of the
date of April 28, 2000.
(6) Mr. Crisan resigned his position as Chief Financial Officer and as a
Director of the Company effective March 31, 2000. Includes 75,000 shares that
are either currently exercisable or that become exercisable within 60 days of
the date of April 28, 2000.
(7) Mr. Westermeyer resigned his position as Chief Operating Officer of the
Company effective January 2000. . Includes 40,000 shares that are either
currently exercisable or that become exercisable within 60 days of the date of
April 28, 2000.
(8) Includes options to purchase 28,800 shares that are either currently
exercisable or that become exercisable within 60 days of April 28, 2000. Does
not include 7,200 shares subject to outstanding options that are not exercisable
within 60 days of April 28, 2000.
(9) Includes options to purchase 36,000 shares that are either currently
exercisable or that become exercisable within 60 days of April 28, 2000
(10) Does not include 200,000 shares subject to outstanding options that are not
exercisable within 60 days of April 28, 2000.
(11) Includes 600,000 shares of Common Stock issuable upon the conversion of
Series C Convertible Preferred Stock as well as options and warrants to purchase
1,104,200 shares that are either currently exercisable or that become
exercisable within 60 days of April 28, 2000. Does not include 28,800 shares
subject to outstanding options and warrants that are not exercisable within 60
days of April 28, 2000.
ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In December 1999, the Company established a credit facility with Norwest
Bank Iowa, National Association for $1.5 million (the "Original Line of
Credit"). Two of the Company's directors, John Pappajohn and Derace L. Schaffer
provided personal guarantees for the Original Line of Credit (the "Original
Guarantees"). In March 2000, the Original Line of Credit was increased to a
total of $2.5 million and also guaranteed by Messrs. Pappajohn and Schaffer (the
"Additional Guarantees").
In consideration of the Original Guarantees, the Company granted to each of
Messrs. Pappajohn and Schaffer warrants to purchase 187,500 shares of the
Company's Common Stock at an exercise price of $1.5625 per share, which was the
closing price of the Company's Common Stock on December 28, 1999. In
consideration of the Additional Guarantees, the Company granted to each of
Messrs. Pappajohn and Schaffer warrants to purchase 125,000 shares of the
Company's Common Stock at an exercise price of $2.375 per share, which was the
closing price of the Company's Common Stock on March 21, 2000.
No assurance can be given that Messrs. Pappajohn and Schaffer will provide
any additional guarantees in the future.
On March 31, 2000, Messrs. Schaffer and Pappajohn purchased 25,000 and
50,000 shares of the Company's Series C Preferred Stock, ("Preferred Stock")
respectively, at a purchase price of $10 per share. Messrs. Schaffer and
Pappajohn invested alongside other investors who purchase an additional 25,000
shares of Preferred Stock in connection with a private placement conducted by
the Company. The Preferred Stock may be converted at any time into common stock
of the Company at the rate of 8 shares of common stock for every share of
Preferred Stock. Dividends may be payable on the Preferred Stock at the rate of
9% per annum. The conversion rate may be adjusted to the extent that additional
shares of Preferred Stock are sold having a higher conversion ratio of Common
Stock to Preferred 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, 1999 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, 1999 and 1998. The Comparison also assumes that all dividends
are reinvested.
<TABLE>
<CAPTION>
12/19/96 12/31/96 12/31/97 12/31/98 12/31/99
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Patient Infosystems, Inc. 100.00 115.63 33.13 23.44 26.56
NASDAQ Stock Market - U.S. Index 100.00 99.49 122.15 171.40 310.33
NASDAQ Health Services Index 100.00 100.55 103.16 88.13 71.93
</TABLE>
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.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunder duly authorized.
PATIENT INFOSYSTEMS, INC.
(Registrant)
/s/ Roger Louis Chaufournier
- ----------------------------
Roger Louis Chaufournier
President, Chief Executive Officer
May 1, 2000
- -----------
Dated
