UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: June 30, 2000
-------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number: 0-22319
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PATIENT INFOSYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Delaware 16-1476509
-------- ----------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
46 Prince Street, Rochester, NY 14607
(Address of principal executive offices)
(716) 242-7200
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the last 90 days. Yes [X] No [ ]
As of August 14, 2000, 8,220,202 common shares were outstanding.
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
<CAPTION>
PATIENT INFOSYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
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ASSETS June 30, 2000 December 31, 1999
(Unaudited) (Audited)
CURRENT ASSETS:
<S> <C> <C>
Cash and cash equivalents $600,972 $489,521
Accounts receivable 602,098 650,279
Prepaid expenses and other current assets 151,920 202,064
----------------------------------------
Total current assets 1,354,990 1,341,864
PROPERTY AND EQUIPMENT, net 1,033,603 1,291,351
Debt issuance costs (net of accumulated amortization of $279,250 and $0) 578,250 382,500
Intangible assets (net of accumulated amortization of $84,328 and $38,055) 538,396 584,669
Other assets 206,288 244,011
----------------------------------------
TOTAL ASSETS $3,711,527 $3,844,395
========================================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $185,771 $496,533
Accrued salaries and wages 160,994 190,232
Line of credit 2,500,000 -
Accrued expenses 61,337 22,767
Deferred revenue 183,513 218,200
----------------------------------------
Total current liabilities 3,091,615 927,732
----------------------------------------
LINE OF CREDIT - 500,000
STOCKHOLDERS' EQUITY:
Common stock - $.01 par value: shares authorized:
20,000,000; issued and outstanding: June 30,
2000 - 8,133,602; December 31, 1999 - 8,040,202 81,336 80,402
Preferred Stock - $.01 par value: shares authorized: 5,000,000
Series C, 9% cumulative, convertible
issued and outstanding June 30, 2000 - 100,000 1,000 -
Additional paid-in capital 23,455,626 21,968,536
Accumulated other comprehensive income 1,805 1,805
Accumulated Deficit (22,919,855) (19,634,080)
----------------------------------------
Total stockholders' equity 619,912 2,416,663
----------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $3,711,527 $3,844,395
========================================
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PATIENT INFOSYSTEMS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
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Three Months Ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
REVENUES
<S> <C> <C> <C> <C>
Operations Fees $548,113 $1,002,943 $1,136,294 $1,836,756
Development Fees 17,200 - $17,200 -
Licensing Fees 33,427 - $45,826 -
-----------------------------------------------------------------------
Total revenues 598,740 1,002,943 1,199,320 1,836,756
-----------------------------------------------------------------------
COSTS AND EXPENSES
Cost of sales 1,205,857 1,354,673 2,484,032 2,714,271
Sales and marketing 271,550 724,316 582,023 1,294,639
General and administrative 407,578 503,797 874,037 959,081
Research and development 77,647 218,698 163,199 427,447
-----------------------------------------------------------------------
Total costs and expenses 1,962,632 2,801,484 4,103,291 5,395,438
-----------------------------------------------------------------------
OPERATING LOSS (1,363,892) (1,798,541) (2,903,971) (3,558,682)
Investment Loss - (293,211) - (327,505)
Other Income (Expense) (264,479) 48,866 (359,306) 129,571
-----------------------------------------------------------------------
NET LOSS $(1,628,371) $(2,042,886) $(3,263,277) $(3,756,616)
=======================================================================
NET LOSS PER SHARE - BASIC
AND DILUTED $(0.20) $(0.25) $(0.40) $(0.47)
=======================================================================
WEIGHTED AVERAGE COMMON
AND POTENTIAL COMMON SHARES 8,071,095 8,028,186 8,070,095 8,024,125
=======================================================================
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PATIENT INFOSYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
-----------------------------------------------------------------------------------------------------
Six Months Six Months
Ended Ended
June 30, 2000 June 30, 1999
OPERATING ACTIVITIES:
<S> <C> <C>
Net loss $(3,263,277) $(3,756,616)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization 557,880 238,733
(Gain) Loss on disposal of fixed assets 18,750 -
Loss on investments - 327,505
Compensation expense related to issuance of stock warrants 1,042 6,874
(Increase) Decrease in accounts receivable, net 48,181 (363,571)
Decrease in prepaid expenses and other current assets 50,144 48,904
Decrease in other assets 37,723
(Decrease) in accounts payable (310,762) (21,625)
Increase (Decrease) in accrued salaries and wages (29,238) 219,940
Increase in accrued expenses 16,070 3,759
Increase (Decrease) in deferred revenue (34,687) 340,628
------------------------------------
Net cash used in operating activities (2,889,933) (2,955,469)
INVESTING ACTIVITY:
Property and equipment additions (11,599) (429,441)
Proceeds from sale of fixed assets 18,240 -
Purchases of available-for-sale securities - (21,073)
Maturities of available-for-sale securities - 1,050,747
Purchase of HealthDesk Intellectual Property, net - (605,427)
------------------------------------
Net cash used in investing activities 6,641 (5,194)
FINANCING ACTIVITIES:
Proceeds from issuance of common and preferred stock, net 1,012,983 1,801
Line of credit borrowings 2,000,000 -
------------------------------------
Net cash provided by financing activities 3,012,983 1,801
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 111,451 (2,958,862)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 489,521 6,316,955
------------------------------------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $600,972 $3,358,093
====================================
Supplemental disclosures of cash flow information
Cash paid and received for income taxes, net - $30,721
====================================
Supplemental disclosures of non-cash information
Fair value of stock purchasewarrants issued in conjunction with
guarantees by certain board members of borrowings on the line
of credit 475,000 -
====================================
Dividends declared on Class C Convertible Preferred Stock 22,500 -
====================================
See notes to consolidated financial statements.
</TABLE>
<PAGE>
PATIENT INFOSYSTEMS, INC.
Notes to Consolidated Financial Statements
1. The consolidated financial statements for the three month periods ended
June 30, 2000 and June 30, 1999 are unaudited and reflect all adjustments
(consisting only of normal recurring adjustments) which are, in the opinion
of management, necessary for a fair presentation of the financial position
and operating results for the interim periods. The consolidated financial
statements and notes thereto should be read in conjunction with
management's discussion and analysis of financial condition and results of
operations contained in the Company's Annual Report on Form 10-K for the
year ended December 31, 1999. The results of operations for the three and
six months ended June 30, 2000 are not necessarily indicative of the
results for the entire year ending December 31, 2000.
2. Intangible assets represent the intellectual property (i.e.: tradenames,
trademarks, licenses and brandnames) acquired from HealthDesk Corporation.
Until March 31, 2000, this asset was being amortized over 15 years using
the straight-line method. As a result of a further evaluation of this
asset, it has been decided to alter the amortization based upon having a
remaining life of 48 months starting April 1, 2000 using a straight-line
method. The net asset value for this intellectual property was $574,290 and
$538,396 on March 31 and June 30, 2000 respectively, which reflects the
change in amortization effective April 1, 2000.
3. In March 2000, the Company completed a private placement of 100,000 shares
of newly issued Series C 9% Cumulative Convertible Preferred Stock, raising
$1,000,000 in total proceeds. These shares can be converted into Common
Stock at a rate of 8 shares of Common Stock to 1 share of Preferred Stock.
Each Series C share has voting rights equivalent to 8 shares of Common
Stock. The proceeds from this issuance are being used to support the
Company's operations.
In December 1999, the Company established a credit facility for $1,500,000
guaranteed by two of the Company's Board members. In consideration for
their guarantees, the Company granted to Dr. Derace Schaffer and Mr. John
Pappajohn warrants to purchase an aggregate of 375,000 shares of common
stock for $1.5625 per share. In March 2000, the facility was increased by
$1,000,000 under substantially the same terms, also guaranteed by the same
Board members. Because this line of credit is due and payable on March 31,
2001, amounts borrowed at March 31, 2000 and December 31, 1999 are reported
as current and long term liabilities, respectively. Additional warrants for
the purchase an aggregate of 250,000 shares of common stock for $2.325 per
share, were granted to Dr. Derace Schaffer and Mr. John Pappajohn for their
guarantee of this additional line of credit.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Management's discussion and analysis provides a review of the Company's
operating results for the three and six month periods ended June 30, 2000 and
June 30, 1999 and its financial condition at June 30, 2000. The focus of this
review is on the underlying business reasons for significant changes and trends
affecting the revenues, net earnings and financial condition of the Company.
This review should be read in conjunction with the accompanying consolidated
financial statements.
In an effort to give investors a well-rounded view of the Company's current
condition and future opportunities, this Quarterly Report on Form 10-Q includes
forecasts by the Company's management about future performance and results.
Because they are forward-looking, these forecasts involve uncertainties. These
uncertainties include the Company's working capital shortfalls, risks of market
acceptance of or preference for the Company's systems and services, competitive
forces, the impact of, and changes in, government regulations, general economic
factors in the healthcare industry and other factors discussed in the Company's
filings with the Securities and Exchange Commission including the Company's
Annual Report on Form 10-K for the year ended December 31, 1999.
Results of Operations
Revenues
Revenues consist of revenues from operations, development and licensing
fees. Revenues decreased from $1,002,943 during the three months ended June 30,
1999 to $598,740 during the three months ended June 30, 2000, or 40%. Revenues
decreased from $1,836,756 during the six months ended June 30, 1999 to
$1,199,320 during the six months ended June 30, 2000, or 35%.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
Revenues 2000 1999 2000 1999
Operations Fees
<S> <C> <C> <C> <C>
Disease Management and Compliance $152,867 $408,689 $328,624 $557,467
Surveys 131,478 325,054 261,887 779,161
Demand Management 240,494 193,290 473,256 392,003
Other 23,274 75,910 72,527 108,125
------------------------- --------------------------
Total Operations Fees 548,113 1,002,943 1,136,294 1,836,756
Development Fees 17,200 - 17,200 -
Licensing Fees 33,427 - 45,826 -
------------------------- --------------------------
Total Revenues $598,740 $1,002,943 $1,199,320 $1,836,756
------------------------- --------------------------
</TABLE>
Operations revenues are generated as the Company provides services to its
customers. Operations revenues decreased from $1,002,943 during the three months
ended June 30, 1999 to $548,113 during the three months ended June 30, 2000.
Operations revenues decreased from $1,836,756 during the six months ended June
30, 1999 to $1,136,294 during the six months ended June 30, 2000. Operations
revenues continue to be the primary source of revenue for the Company. The
decrease in operations revenues reflected reduced revenues from the conduct of
surveys. This resulted from the internal elimination of a Medicare product by
one of the Company's primary customers and the completion of two compliance
initiatives on the part of a major pharmaceutical client. These clients have not
provided the Company with new assignments to replace the completed projects.
Demand Management revenues increased 20% and 17% over the three and six month
periods respectively due to increases in the membership of existing clients and
the addition of a new customer.
Development revenue represents the amounts that the Company charges its
customers for the development of its customized programs. There were $17,200 of
development revenues in the three and six months ended June 30, 2000. The
Company has entered into new development agreements but anticipates that revenue
from program development will remain immaterial in the future.
License revenues recognized from the Case Management Support System for the
three and six-month period ended June 30, 2000 were $33,427 and $45,826
respectively. The Company has not entered into any new licensing agreements for
its Case Management Support System and the revenue for the current period
reflects ongoing revenue from the existing agreements.
Costs and Expenses
Cost of sales include salaries and related benefits, services provided by
third parties, and other expenses associated with the implementation and
delivery of the Company's standard and customized population, demand, and
disease management programs. Cost of sales for the three months ended June 30,
2000 was $1,205,857 as compared to $1,354,673 for the three-month period ended
June 30, 1999. For the six months ended June 30, 2000, cost of sales was
$2,484,032, as compared to $2,714,271 for the six months ended June 30, 1999.
The decrease in these costs primarily reflects a response to the decreased level
of population and disease management operational activities. The Company's gross
margin continues to be negative. The Company anticipates that revenue must
substantially increase before it will begin to recognize economies of scale. No
assurance can be given that revenues will increase or that, if they do, they
will exceed expenses.
Sales and marketing expenses consist primarily of salaries, related
benefits, travel costs, sales materials and other marketing related expenses.
Sales and marketing expenses for the three months ended June 30, 2000 were
$271,550 as compared to $724,316 for the three-month period ended June 30, 1999.
For the six months ended June 30, 2000, sales and marketing expenses were
$582,023, as compared to $1,294,639 for the six months ended June 30, 1999.
Spending in this area has decreased due to the resignation or termination of
several members of the sales staff. The Company anticipates expansion of the
Company's sales and marketing staff and expects it will continue to invest in
the sales and marketing process in future periods.
General and administrative expenses include the costs of corporate
operations, finance and accounting, human resources and other general operating
expenses of the Company. General and administrative expenses for the three
months ended June 30, 2000 were $407,578, as compared to $503,797 for the
three-month period ended June 30, 1999. For the six months ended June 30, 2000,
general and administrative expenses was $874,037, as compared to $959,081 for
the six months ended June 30, 1999. These expenditures have been incurred to
maintain the corporate infrastructure necessary to support anticipated program
operations. The decrease in these costs was a direct result of management's cost
reduction initiatives. This full impact of the cost reduction efforts was only
partially reflected in these costs due to a one-time write-off of $87,685 in
trade receivables, which were no longer considered collectable. The Company
expects that general and administrative expenses will remain relatively constant
in future periods.
Research and development expenses consist primarily of salaries and related
benefits and administrative costs associated with the development of certain
components of the Company's integrated information capture and delivery system,
as well as development of the Company's standardized disease management programs
and the Company's Internet based technology products. Research and development
expenses for the three months ended June 30, 2000 were $77,647, as compared to
$218,698 for the three months ended June 30, 1999. For the six months ended June
30, 2000, research and development expenses were $163,199, as compared to
$427,447 for the six months ended June 30, 1999. This reduction reflects a shift
in technology staffing to support existing operations rather than research and
development activities. It is anticipated that as the Company evolves its
technology infrastructure, that modest increases in research and development
expense will be required.
The Company recorded no investment loss for the three months ended June 30,
2000 as compared to a loss of $293,211 for the three month period ended June 30,
1999. There was no investment loss recorded for the six months ended June 30,
2000 as compared to $327,505 for the six months ended June 30, 1999. In 1999,
the Company's investment loss included its investment in Patient Infosystems
Canada, Inc. and a one time write-off of it's investment in the Pulse Group.
The Company recorded a loss of $264,479 and $359,306 in other income for
the three and six-month periods ended June 30, 2000 respectively, as compared to
a gain of $48,886 and $129,571 for the three and six-month periods ended June
30, 1999 respectively. The Company is amortizing $857,500 of debt issuance costs
for the establishment of a $2,500,000 line of credit. This cost is a non-cash
item related to the fair market value of warrants to purchase the Company's
common stock, which were issued to two directors in consideration for their
guarantee of the debt. The expense recorded was $192,750 and $279,250 for the
three and six-month periods ended June 30, 2000. The Company generates interest
income from cash balances and investments and pays interest on debt. The net
interest expense recorded was $44,604 and $63,499 for the three and six-month
periods ended June 30, 2000 as compared to a net gain of $47,279 and $126,489
for the same periods of 1999. The balance of the loss of $27,125 and $16,557 for
the three and six-month periods ending June 30, 2000 primarily relate to a loss
on the sale of certain fixed assets.
The Company had a net loss of $1,628,371 for the three months ended June
30, 2000, as compared to a net loss of $2,042,886 for the three months ended
June 30, 1999. This represents a net loss per share of $0.20 for the second
quarter of 2000, as compared to a net loss of $0.25 per share in the second
quarter of 1999. The net loss for the six-month period ended June 30, 2000 is
$3,263,277 as compared to $3,756,616 for the same period of 1999. This
represents a net loss per share of $0.40 for the first half of 2000, as compared
to a net loss of $0.47 per share in the first half of 1999.
Liquidity and Capital Resources
At June 30, 2000 the Company had a working capital deficit of $1,736,626 as
compared to working capital of $414,132 at December 31, 1999. Through June 30,
2000 these amounts reflect the effects of the Company's continuing losses as
well as the borrowings against its $2,500,000 line of credit, $500,000 of which
was considered to be a long-term liability at December 31, 1999. Since its
inception, the Company has primarily funded its operations, working capital
needs and capital expenditures from the sale of equity securities. The Company
completed an initial public offering of its common stock on January 8, 1997, at
which time it generated net proceeds to the Company of $16,314,048.
In March 2000, the Company completed a private placement of 100,000 shares
of newly issued Series C 9% Cumulative Convertible Preferred Stock, raising
$1,000,000 in total proceeds. These shares can be converted into Common Stock at
a rate of 8 shares of Common Stock to 1 share of Preferred Stock. Each Series C
share has voting rights equal to the number of shares of Common Stock into which
it can be converted. The proceeds resulting from this issuance have been used to
support the Company's operations.
In December 1999, the Company established a credit facility for $1,500,000
guaranteed by two of the Company's Board members. In consideration for their
guarantees, the Company granted to Dr. Derace Schaffer and Mr. John Pappajohn
warrants to purchase an aggregate of 375,000 shares of common stock for $1.5625
per share. In March 2000, the facility was increased by $1,000,000 under
substantially the same terms, also guaranteed by the same Board members. Because
this line of credit is due and payable on March 31, 2001, amounts borrowed at
March 31, 2000 and December 31, 1999 are reported as current and long term
liabilities, respectively. Additional warrants for the purchase an aggregate of
250,000 shares of common stock for $2.325 per share, were granted to Dr. Derace
Schaffer and Mr. John Pappajohn for their guarantee of this additional line of
credit.
The Company has expended substantial amounts to expand its operational
capabilities and strengthen its infrastructure, which at the same time has
increased its administrative and technical costs. In addition, the Company's
cash has been steadily depleted as a result of operating losses. To the extent
that the Company anticipates that its losses will continue or increase, the
Company's available capital will continue to decline. Accordingly, the Company
has been required, and will for the foreseeable future continue to be required,
to seek additional capital to maintain its operations. The Company is continuing
its efforts to raise additional capital privately through the sale of
convertible preferred stock or otherwise. However, no assurance can be given
that the Company will be able to obtain additional financing on favorable terms,
if at all. In addition, any additional financing, which includes the issuance of
additional securities of the Company, may be dilutive to the Company's existing
stockholders. If the Company is unable to identify additional capital, it will
be required to curtail or cease operations.
Nasdaq Continued Listing Requirements
In order for the Company's Common Stock to continue to be quoted on the
Nasdaq National Market, it must have net tangible assets of at least $4 million
and must maintain a price of $1.00 per share. As of June 30, 2000, the Company's
net tangible assets were less than $4 million and the Company's stock has
continued to trade at a price less than $1.00. Accordingly, the Company expects
that its Common Stock may be delisted from the Nasdaq National Market. If its
shares are delisted from the Nasdaq National Market, the Company will seek to
have its Common Stock listed for trading on the Nasdaq Small Cap Market. No
assurance can be given that the liquidity of the Common Stock will not be
adversely affected if it is traded on the Nasdaq Small Cap Market ("Nasdaq"). In
order to satisfy continued listed criteria on the Nasdaq Small Cap Market, a
company must have, among other things, net tangible assets of at least $2
million and maintain a stock price in excess of $1 per share. The Company does
not satisfy the listing requirements of the Nasdaq Small Cap Market either. To
the extent that the Company is unable to raise additional equity, and its stock
price does not rise above $1, it will not be able to comply with the continued
listing requirements of the Nasdaq Small Cap Market.
If the failure to meet the maintenance criteria results in the Company's
Common Stock no longer being eligible for quotation on Nasdaq, trading, if any,
of the Common Stock would thereafter be conducted in the non-Nasdaq bulletin
board over-the-counter market. As a result of such delisting, an investor may
find it more difficult to dispose of or to obtain accurate quotations as to the
market value of the Company's Common Stock. In addition, if the Common Stock
were to become delisted from Nasdaq and the trading price of the Common Stock
was less than $5.00 per share, trading in the Common Stock would be subject to
the requirements of certain rules promulgated under the Securities Exchange Act
of 1934, as amended ("the "Exchange Act"), which require additional disclosure
by broker-dealers in conjunction with any trades involving a stock defined as a
penny stock (generally, any non-Nasdaq equity security that has a market price
of less than $5.00 per share, subject to certain exceptions). Such rules require
the delivery, prior to any penny stock transaction, of a disclosure schedule
explaining the penny stock market and the risks associated therewith, and impose
various sales practice requirements on dealer-brokers who sell penny stocks to
persons other than established customers and accredited investors (generally
institutions). For these types of transactions, the dealer-broker must make a
special suitability determination for the purchaser and must receive the
purchaser's written consent to the transaction prior to sale. The additional
burdens imposed on broker-dealers by such requirements may discourage them from
effecting transactions in the Common Stock, which could severely limit the
liquidity of the Common Stock and the ability to sell the Common Stock in the
secondary market.
In the absence of an active trading market, purchasers of the Common Stock
may experience difficulty in selling their shares. The trading price of the
Common Stock is expected to be subject to significant fluctuations in response
to variations in quarterly operating results, changes in analysts' earnings
estimates and other factors. In addition, the stock market is subject to price
and volume fluctuations that affect the market prices for companies and that are
often unrelated to operating performance.
Inflation
Inflation did not have a significant impact on the Company's costs during
the three and six-month periods ended June 30, 2000 and June 30, 1999. The
Company continues to monitor the impact of inflation in order to minimize its
effects through pricing strategies, productivity improvements and cost
reductions.
Forward Looking Statements
When used in this and in future filings by the Company with the Securities
and Exchange Commission, in the Company's press releases and in oral statements
made with the approval of an authorized executive officer of the Company, the
words or phrases "will likely result," "expects," "plans," "will continue," "is
anticipated," "estimated," "project," or "outlook" or similar expressions
(including confirmations by an authorized executive officer of the Company of
any such expressions made by a third party with respect to the Company) are
intended to identify "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. The Company wishes to caution
readers not to place undue reliance on any such forward-looking statements, each
of which speak only as of the date made. Such statements are subject to certain
risks and uncertainties that could cause actual results to differ materially
from historical earnings and those presently anticipated or projected. These
uncertainties include risks of market acceptance of or preference for the
Company's systems and services, competitive forces, the impact of, and changes
in, government regulations, general economic factors in the healthcare industry
and other factors discussed in the Company's filings with the Securities and
Exchange Commission. The Company has no obligation to publicly release the
result of any revisions, which may be made to any forward-looking statements to
reflect anticipated or unanticipated events or circumstances occurring after the
date of such statements.
<PAGE>
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The Company is exposed to changes in interest rates primarily in its cash
transactions. The interest paid on the Company's outstanding line of credit is
based upon the prime rate. The Company has the option of reducing its interest
expenses by rolling the outstanding line of credit balance into notes that carry
a rate equal to LIBOR plus 1.75%.
In relation to the operations of Patient Infosystems Canada, fluctuations
of foreign currency can impact the Company's net operating results. However,
management believes that due to the relative size of its operations in Canada,
such impact would be considered immaterial to the consolidated financial
statements. The Company currently has no significant investments in foreign
currency instruments.
The balances the Company has in cash or cash equivalents are generally
available without legal restrictions to fund ordinary business operations. The
Company regularly invests excess operating cash in certificates of deposit and
U.S. government bonds and other bonds that are subject to changes in short-term
interest rates. Accordingly, the Company believes that the market risk arising
from its holding of these financial instruments is minimal. The Company did not
make any purchases of available-for-sale securities in the three months ended
June 30, 2000.
<PAGE>
PART II - OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds
Series C Preferred Stock
On March 31, 2000, the Company received $1,000,000 in proceeds from a
private sale of 100,000 shares of Series C Convertible Preferred Stock. The
Series C Convertible Preferred carries a 9% cumulative dividend provision and
can be converted into Common Stock at a rate of 8 shares of Common to 1 share of
Preferred. Each share of Series C Convertible Preferred Stock has voting rights
equal to the number of shares of Common Stock into which it can be converted.
Item 6. Exhibits and Reports on Form 8-K
Exhibits:
(a) (11) Statements of Computation of Per Share Earnings
(27) Financial Data Schedule
(b) No reports on Form 8-K were filed during the quarter ended March 31, 2000
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: August 14, 2000
PATIENT INFOSYSTEMS, INC.
(Registrant)
Date August 14, 2000 /s/ Roger L. Chaufournier
--------------- -------------------------
Roger L. Chaufournier
Director, President and
Chief Executive Officer
Date August 14, 2000 /s/ Kent A. Tapper
--------------- -------------------------
Kent A. Tapper
Principal Accounting Officer
