<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED
MARCH 31, 2000.
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM
______ TO ______.
COMMISSION FILE NO. 0-22913
RNETHEALTH.COM, INC.
- --------------------------------------------------------------------------------
(Exact Name of Small Business Issuer as Specified in Its Charter)
Colorado 39-1731029
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
506 Santa Monica Blvd, Suite 400, Santa Monica, California, 90401
(Address of Principal Executive Offices)
ISSUER'S TELEPHONE NUMBER, INCLUDING AREA CODE: (310) 393-3979
Check whether the issuer: (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act during the
past 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes [X] No [ ]
Check whether the registrant filed all documents and reports
required to be filed by Section 12, 13 or 15(d) of the Exchange
Act after the distribution of securities under a plan confirmed by a court.
Yes [X] No [ ]
State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date: 31,792,707
shares as of April 13, 2000.
TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT (CHECK ONE):
Yes [ ] No [X]
<PAGE> 2
RNETHEALTH.COM, INC.
INDEX
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION
Page
----
<S> <C>
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of March 31, 2000
(unaudited) and June 30, 1999.......................................................................3
Condensed Consolidated Statements of Operations
(unaudited) for the three-month and nine-month periods
ended March 31, 2000 and 1999.......................................................................4
Condensed Consolidated Statements of Cash Flows
(unaudited) for the nine-month periods ended March 31,
2000 and 1999.......................................................................................5
Notes to Condensed Consolidated Financial Statements (unaudited)....................................6
Item 2. Management's Discussion and Analysis of Financial
Condition and results of Operations.....................................................................11
PART II - OTHER INFORMATION
Item 1. Legal proceedings..............................................................................14
Item 6. Exhibits and Reports on Form 8-K ..............................................................14
Signature Page..........................................................................................15
</TABLE>
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
RNETHEALTH.COM, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
MARCH 31,
2000
ASSETS (UNAUDITED) JUNE 30,1999
------------- -------------
<S> <C> <C>
Current assets:
Cash $ 877,917 $ 136,058
Accounts receivable, net of allowance for doubtful
accounts of $16,000 as of March 31, 2000 and
$32,000 as of June 30, 1999 84,934 256,499
Current portion of capitalized programming costs, net 85,000 98,000
Inventory 63,978 55,593
Prepaid expenses 112,978 70,345
------------- -------------
Total current assets 1,224,807 616,495
Capitalized programming costs, net 110,577 421,648
Furniture and equipment, net 136,069 177,550
Capitalized website development costs, net 152,270 --
Other 52,185 52,686
------------- -------------
$ 1,675,908 $ 1,268,379
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Short-term notes payable, net of unamortized debt
discount of $0 and $181,318 $ 37,500 $ 481,015
Accounts payable 406,613 442,085
Accrued payroll and benefits 179,861 139,086
Other accrued liabilities 240,656 295,256
Accrued royalty expense 273,275 503,137
Current portion of capital lease obligations -- 19,817
------------- -------------
Total current liabilities 1,137,905 1,880,396
------------- -------------
Commitments
Shareholders' equity (deficit):
Common stock, $0.01 par value; 50,000,000 shares authorized;
29,960,872 and 15,494,507 shares issued and outstanding at
March 31, 2000 and June 30, 1999, respectively 299,606 154,945
Additional paid-in capital 29,641,294 21,813,509
Common stock subscription receivable -- (50,000)
Prepaid consulting -- (230,331)
Accumulated deficit (29,402,897) (22,300,140)
------------- -------------
Total shareholders' equity (deficit) 538,003 (612,017)
------------- -------------
$ 1,675,908 $ 1,268,379
============= =============
</TABLE>
See accompanying notes to condensed consolidated financial statement
<PAGE> 4
RNETHEALTH.COM, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE-MONTH PERIODS ENDED NINE-MONTH PERIODS ENDED
MARCH 31, MARCH 31,
------------------------------ ------------------------------
2000 1999 2000 1999
------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
Domestic sales $ 264,209 $ 268,433 $ 985,880 $ 947,392
------------ ----------- ------------ -----------
Operating expenses:
Salaries and consulting expenses 620,904 866,021 3,401,509 3,153,255
General and administrative expenses 557,283 222,274 1,156,428 1,592,613
Programming expenses 17,173 168,653 455,596 1,496,726
Cost of video and publication sales 160,668 91,313 412,763 309,377
Marketing expenses 3,077 233,401 22,061 396,506
------------ ----------- ------------ -----------
Total operating expenses 1,359,105 1,581,662 5,448,357 6,948,477
------------ ----------- ------------ -----------
Loss from operations (1,094,896) (1,313,229) (4,462,477) (6,001,085)
Other income (expense):
Interest expense (5,695) (285,375) (1,919,590) (299,253)
Gain on investment in joint venture -- 597,675 -- 597,675
Interest income -- 2,000 1,291 62,686
------------ ----------- ------------ -----------
Loss before provision for state income taxes (1,100,591) (998,929) (6,380,776)
(5,639,977)
Provision for state income taxes -- -- -- 974
------------ ----------- ------------ -----------
Net loss $ (1,100,591) $ (998,929) $ (6,380,776) $(5,640,951)
============ =========== ============ ===========
Loss per share information - basic and
diluted loss per share $ (0.04) $ (0.14) $ (0.30) $ (0.75)
============ =========== ============ ===========
Weighted average number of common and
common equivalent shares outstanding 25,329,152 7,142,575 21,426,404 6,643,258
============ =========== ============ ===========
</TABLE>
See accompanying notes to condensed consolidated financial statement
<PAGE> 5
RNETHEALTH.COM, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE-MONTH PERIODS ENDED
MARCH 31,
-----------------------------
2000 1999
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(6,380,776) $(5,640,951)
Adjustments to reconcile net loss to net cash used in
operating activities:
Amortization of prepaid consulting 230,331 --
Value of shares issued for interest expense,
compensation and other services 1,142,224 795,016
Imputed interest on beneficial conversion of debt 448,944 --
Value of options and warrants granted 2,226,879 --
Amortization of notes payable discount 181,318 255,000
Accrued interest on notes converted to stock 51,493 --
Amortization of capitalized programming costs 337,071 626,000
Depreciation and other amortization 63,343 90,056
Gain on investment in joint venture -- (597,675)
Changes in operating assets and liabilities:
Accounts receivable 171,565 181,215
Inventory (8,385) (7,072)
Prepaid expenses (42,633) 24,188
Other assets 501 (34,655)
Capitalized programming costs (13,000) (249,917)
Accounts payable, accrued payroll and benefits, and
other accrued liabilities (49,297) 699,643
Accrued royalty expense (229,862) --
Due to joint venture -- (74,500)
----------- -----------
Net cash used in operating activities (1,870,284) (3,933,652)
----------- -----------
Cash flows from investing activities:
Costs incurred for website development (152,270) --
Purchases of furniture and equipment (21,862) (101,079)
Investment in joint venture -- (150,000)
----------- -----------
Net cash used in investing activities (174,132) (251,079)
----------- -----------
Cash flows from financing activities:
Proceeds from borrowings from shareholders 230,000 499,000
Payments on borrowings (37,500) --
Payments on capital lease obligations (19,817) (7,121)
Deferred offering and financing costs incurred -- (100,000)
Net proceeds from the issuance of common stock, shares
committed to be issued and collections of
subscription receivable 2,613,592 1,664,536
----------- -----------
Net cash provided by financing activities 2,786,275 2,056,415
----------- -----------
Net increase (decrease) in cash 741,859 (2,128,316)
Cash, beginning of period 136,058 2,219,145
----------- -----------
Cash, end of period $ 877,917 $ 90,829
=========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statement
<PAGE> 6
RNETHEALTH.COM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
MARCH 31, 200
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements of
RnetHealth.com, Inc. (the "Company") have been prepared in accordance with
generally accepted accounting principles for interim financial statements and
the instructions to Form 10-QSB related to interim period financial statements.
Accordingly, these condensed consolidated financial statements do not include
certain information and footnotes required by generally accepted accounting
principles for complete financial statements. However, the accompanying
unaudited condensed consolidated financial statements contain all adjustments
(consisting only of normal recurring accruals) which, in the opinion of
management, are necessary in order to present the financial statements fairly.
The results of operations for interim periods are not necessarily indicative of
the results to be expected for the full year. These condensed consolidated
financial statements should be read in conjunction with the Company's audited
financial statements, and notes thereto, which are included in the Company's
Registration Statement on Form SB-2/A (File No. 333-90481 dated November 12,
1999), and the Company's Annual Report on Form 10-KSB for the year ended June
30, 1999.
Web Site Development Costs
During the quarter ended March 31, 2000, the Company adopted EITF 00-02,
"Accounting for Web Site Development Costs," which states that all costs
relating to software used to operate a web site and relating to development of
initial graphics and web page design should be accounted for using Statement of
Position ("SOP") 98-1. SOP 98-1 allows the capitalization of these costs. As a
result, the Company has capitalized $152,270 of such costs during the quarter
ended March 31, 2000. These costs will be amortized over a two year period
beginning when the web site is operating (anticipated to be during the quarter
ending June 30, 2000.
NOTE 2 - ISSUANCE OF COMMON STOCK
In July 1999, the Company issued 931,687 shares of stock to employees and
consultants for services rendered in the Company's fiscal year ended June 30,
1999. The value of such shares was recorded previously as shares subscribed;
therefore, the issuance of these shares had no impact on operations or equity.
In addition, the Company received $50,000 from the June 1999 private placement
and the related shares were issued out of escrow.
From July 1999 to March 2000, the Company issued 999,612 shares of stock to
employees and consultants for employment and other consulting services,
recognizing expenses of $595,392. In that same period, the Company issued
1,064,445 shares to various related-party lenders who provided short-term
financing for the Company. The value of such shares (totaling $384,331) has been
recorded as additional interest expense in the accompanying consolidated
statement of operations for 1999 since the related short-term notes were
immediately convertible at the option of the note holder. In addition, the
Company has committed to issue 86,182 shares at March 31, 2000 to various
employees and service providers, the estimated value of which (totaling
$162,501) has been recognized in operating expenses in the quarter ended March
31, 2000.
From July to March 2000, option and warrant holders exercised their rights to
acquire 3,336,868 shares of common stock, resulting in proceeds of $739,859 to
the Company.
<PAGE> 7
RNETHEALTH.COM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)
MARCH 31, 2000
NOTE 2 - ISSUANCE OF COMMON STOCK, CONTINUED
On September 28, 1999, the Company entered into a Restructuring Agreement with
various investors. Pursuant to the Restructuring Agreement, the Company agreed
to the following: (i) issue 500,000 shares to various investors in lieu of any
further reset rights under June 1998 private placement agreement; (ii) issue
400,000 shares as an initial reset of the purchase price of common stock under
the June 1999 subscription agreement, with all further resets based on a
purchase price of $0.50 with a subsequent issuance of 1,200,000 shares as a
further reset; (iii) fix the conversion price on the $100,000 convertible note
(see below) at $0.50; and (iv) reprice 500,000 warrants issued in May 1999 from
$0.01 to $0.25 per share (see Note 3), all of which were exercised during the
period ended March 31, 2000 (see above). The issuance of the 2,100,000 under
various reset rights described above were recorded as a stock dividend of
$721,980.
In January 2000, the Company issued 336,842 shares to an investor, resulting in
net proceeds of $200,000. Also in January 2000, the Company issued 2,221,606
shares to a group of existing investors, resulting in proceeds of $556,271. The
Company also received $1,067,462 in proceeds for stock that has not yet been
issued. See Note 8 for more details.
Debt Restructuring
On October 12, 1999, the Company entered into Debt Restructuring Agreements with
certain note holders. Pursuant to these agreements, the note holders agreed to
accept shares of the Company's common stock at the rate of $0.25 per share as
payment for the principal and interest owed. The total debt and accrued interest
balance converted was $760,826 for 3,043,305 shares. The Company recorded
interest expense of $191,728 related to this conversion. Also, the note holders
were given the right to acquire an additional 3,043,305 shares at $0.25 per
share for at least a minimum of 45 days, which was subsequently extended to
January 15, 2000. The value of these warrants was $760,826, which was recorded
as interest expense for the quarter ended December 31, 1999. In January 2000,
1,966,366 of these warrants were exercised. The remaining warrants have expired.
On November 18, 1999, additional notes and accrued interest totaling $108,000
were converted for 432,000 shares at a beneficial price of $0.25 per share
resulting in additional imputed interest expense of $27,216.
Authorized Shares
On February 24, 2000, the shareholders of the Company voted to increase common
stock authorized to 50,000,000 from 25,000,000.
<PAGE> 8
RNETHEALTH.COM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)
MARCH 31, 2000
NOTE 3 - STOCK OPTIONS AND WARRANTS
In connection with various arrangements, the Company has granted options and
warrants to acquire a total of 9,638,717 shares of common stock to various
investors, employees, consultants and Board of Director members for the
nine-month period ended March 31, 2000. These options have exercise prices
between $0.15 and $1.50 per share and vest immediately through two years. The
estimated fair value of the non-employee options and warrants granted (under
SFAS No. 123) or amended during the nine-month period ended March 31, 2000 (see
Note 2) or the intrinsic value of employee options and warrants granted below
market value (under APB Opinion 25), at the time of grant, totaled approximately
$2,226,879 and has been included in equity. During the quarter ended March 31,
2000, the Company granted 450,000 options (50% of which vested by March 31, 2000
subject to further conditions) to an employee who resigned effective April 28,
2000. The fair value of the vested warrants (approximately $380,000) was not
recorded in the accompanying statement of operations as the termination (and
related expense reversal) occurred within one day of end of the fiscal quarter
and management believes that presenting the expense in one quarter and the
reversal in the following quarter would be misleading to the reader of these
statements.
In addition to the options mentioned above, approximately 1,569,552 options and
warrants expired during the period.
NOTE 4 - DEBT
Debt consists of an unsecured note payable to Group W Network Services, interest
at 10%, principal and interest due March 31, 2000, totaling $37,500. Management
believes that this obligation will be satisfied in the near future. The debt is
currently past due. However, management believes that there will not be a
material negative impact as a result of the late satisfaction of this note
payable.
The debt discount amortization totaled $181,318 during the period ended December
31, 1999. In connection with the $230,000 of promissory notes (which were
converted to common stock - see Note 2), the note holders received 1,064,445
shares of stock (valued at $384,331) that have been recorded as additional
interest expense for the period ended December 31, 1999. Also, the promissory
note holders were given a conversion option equivalent to 50% of the share price
on the date of conversion. This beneficial conversion was recorded as additional
interest expense of $230,000 during the quarter ended September 30, 1999 as the
notes were immediately convertible.
NOTE 5 - LOSS PER SHARE
Net loss per share is based on the weighted average number of common shares
outstanding and dilutive common stock equivalents during the periods presented.
Options and warrants to purchase 11,736,273 shares of common stock (at prices
ranging from $.01 to $9.075 per share) and 5,450,835 shares of common stock (at
prices ranging from $0.01 to $9.075 per share) were outstanding as of March 31,
2000 and 1999, respectively, and were excluded from the computation of loss per
share assuming dilution as they would have been anti-dilutive.
<PAGE> 9
RNETHEALTH.COM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)
MARCH 31, 2000
NOTE 6 - GOING CONCERN
The accompanying condensed consolidated financial statements have been prepared
assuming the Company will continue as a going concern. The Company has
significant recurring losses from operations and limited operating revenues.
These factors (among others) raise substantial doubt about the Company's ability
to continue as a going concern. The ability of the Company to operate as a going
concern is dependent upon its ability to obtain sufficient additional debt
and/or equity capital. The Company plans to raise additional working capital
through strategic alliances and private and public offerings. The successful
outcome of future activities cannot be determined at this time and there are no
assurances that if achieved, the Company will have sufficient funds to execute
its intended business plan or generate positive operating results.
The financial statements do not include any adjustments related to the
recoverability and classification of assets carrying amounts or the amount and
classification of liabilities that might result should the Company be unable to
continue as a going concern.
NOTE 7 - COMMITMENTS AND CONTINGENCIES
The Company has a consulting agreement with an unrelated company. In connection
with the agreement, the Company is obligated to reserve for issuance 200,000
shares, which will be paid to the consultant over a twenty-four month period at
8,333 shares per month. If the agreement is terminated prior to the conclusion
of the twenty-four month period, the consultant has no right to receive any
additional shares that have not yet been granted. Through December 31, 1999,
57,331 shares have been granted under this agreement. An additional 25,000
shares are committed to be issued as of March 31, 2000, valued at $55,389, which
is included in shareholders' equity.
NOTE 8 - SUBSEQUENT EVENTS
Stock Activity
Through April 13, 2000, the Company has issued an additional 1,831,835 shares of
common stock, as follows: (1) 800,000 shares issued to investors for $800,000
that was received prior to March 31, 2000; (2) 875,653 shares issued in
connection with the exercise of warrants totaling $237,500 that was received
prior to March 31, 2000; (3) 150,000 shares issued to investors for $150,000
that was received after March 31, 2000; and (4) 6,182 shares issued to an
employee for services rendered prior to March 31, 2000 (and recognized at March
31, 2000).
The Company is committed to issue an additional 80,000 shares for services that
were accrued at March 31, 2000 (see Note 2). In addition, the Company is
committed to issue an additional 119,848 shares in connection with $29,962
received from existing shareholders.
Commitments
The Company has entered into an agreement with the University of Florida to
research, prepare and compile or create certain clinical materials for the
Company. The agreement is for a one-year period, requiring minimum payments of
$50,000 and maximum payments of $300,000.
<PAGE> 10
RNETHEALTH.COM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)
MARCH 31, 2000
NOTE 9 - SEGMENT REPORTING
The Company is currently operating under one business segment and developing two
other segments. Thus, no additional segment reporting is required.
<PAGE> 11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS:
NINE-MONTH PERIODS ENDED MARCH 31, 2000 AND 1999:
Net sales of $985,880 for the nine-month period ended March 31, 2000 were 4%
higher than the net sales of $947,392 for the nine-month period ended March 31,
1999, due to normal sales growth.
Operating expenses of $5,448,357 for the nine-month period ended March 31, 2000
were 22% lower than the operating expenses of $6,530,802 for the nine-month
period ended March 31, 1999, due primarily to reductions in programming and
marketing expenses.
Interest expense of $1,919,590 for the nine-month period ended March 31, 2000
was $1,620,337 higher than the interest expense of $299,253 for the nine-month
period ended March 31, 1999. The increase is primarily attributed to non-cash
interest charges incurred in connection with the issuance of convertible notes
during the nine-month period ended March 31, 2000 (approximately $1,720,000).
As a result of the above factors, the net loss for the nine-month period ended
March 31, 2000 was $6,380,776 or $0.30 per share as compared to a net loss of
$5,640,951 or $0.75 per share for the nine-month period ended March 31, 1999.
THREE-MONTH PERIODS ENDED MARCH 31, 2000 AND 1999:
Net sales of $264,209 for the three-month period ended March 31, 2000 were
essentially the same as net sales of $268,433 for the three-month period ended
March 31, 1999.
Operating expenses of $1,359,105 for the three-month period ended March 31, 2000
were 14% lower than the operating expenses of $1,581,662 for the three-month
period ended March 31, 1999. The decrease was due a reduction in non-cash
charges during the three-month period ended March 31, 2000 related to the
issuance of shares for compensation and other services (totaling approximately
$211,000) as compared to March 31, 1999 (totaling approximately $795,000). This
was offset in part due to increased payroll due to a larger workforce over the
same period in the prior year due to the Company's anticipated growth.
Interest expense of $5,695 for the three-month period ended March 31, 2000 was
$279,680 lower than the interest expense of $285,375 for the three-month period
ended March 31,1999. The decrease is primarily attributed to amortization of
debt discount during the three-month period ending March 31, 1999.
As a result of the above factors and a gain on investment in joint venture of
$597,675 recorded in 1999, the net loss for the three-month period ended March
31, 2000 was $1,100,591 or $0.04 per share as compared to a net loss of $998,929
or $0.14 per share for the three-month period ended March 31, 1999.
<PAGE> 12
FINANCIAL POSITION:
Total assets increased from $1,268,379 at June 30, 1999 to $1,675,908 at March
31, 2000. The increase is primarily attributed to the increase in cash primarily
due to proceeds from the issuance of common stock of approximately $2,614,000
which was offset by the cash used in operating activities of approximately
$1,870,284. The increase in cash was offset by reductions in accounts receivable
(due to normal seasonal fluctuations) and capitalized programming costs (due to
no significant new programming being acquired or developed yet in fiscal 2000
due to change in Company's focus from cable broadcasting to internet).
Total liabilities decreased from $1,880,396 at June 30, 1999 to $1,137,905 at
March 31, 2000. The decrease in primarily attributed to a debt conversion of
approximately $406,000 and reductions in accounts payable and accrued expenses
of approximately $279,000.
Shareholders' equity (deficit) increased from $(612,197) at June 30, 1999 to
$538,003 at March 31, 2000. The increase is primarily attributed to the proceeds
received and fair value of services received (totaling approximately $6,650,000)
related to issuances of stock, warrants and options to investors, employees and
consultants and debt of approximately $900,000 converted to common stock during
the period, offset in part by a net loss of approximately $6,400,000 during the
nine-month period ended March 31, 2000.
LIQUIDITY AND CAPITAL RESOURCES:
The Company's primary capital requirements in the next twelve months will be to
fund the costs of developing its internet operations and to fund its affiliate
marketing efforts, satellite transponder costs, costs for up-link, master
control and transmission services, and other working capital expenses. The
Company's capital requirements have been and will continue to be significant,
and its cash requirements continue to exceed its cash flow from operations. At
March 31, 2000, the Company had a cash balance of $877,917 and had positive
working capital of $86,902. Due to (among other things) the lack of meaningful
revenue and costs associated with program development and affiliated marketing
efforts, the Company has been substantially dependent upon various debt and
equity private placements and its initial public offering to fund its
operations.
The Company's cash flow used in operating activities decreased from $3,933,652
for the nine-month period ended March 31, 1999 to $1,870,284 for the nine-month
period ended March 31, 2000. This decrease is primarily due to the Company's
significant cutbacks in personnel, overhead and other corporate expenses and the
Company's ability to pay many expenses in stock and warrants rather than cash.
Total net non-cash charges for the nine-month period ended March 31, 2000 were
$4,681,603 as compared to only $1,168,397 for the nine-month period ended March
31, 1999.
During the nine-month period ended March 31, 2000, the Company has obtained
liquidity from the proceeds received from debt issuances, common stock issuances
and commitments and collections of subscription receivable totaling $2,843,592.
In April 2000, the Company received an additional $150,000 in cash for 150,000
shares of common stock.
The Company currently anticipates that the proceeds received during the
nine-month period ended March 2000 and in April 2000 from the new stock activity
and the exercise of stock options and warrants, together with projected revenues
from operations, will be sufficient to fund the Company's operations and capital
requirements beyond June 30, 2000. There can be no assurance, however, that such
funds will be sufficient to fund the Company's operations and capital
requirements until June 30, 2000 or that such funds will not be expended prior
thereto due to unanticipated changes in economic conditions or other unforeseen
circumstances. The Company has no current arrangements with respect to any
additional financing, and it is not anticipated that existing shareholders will
provide any substantial portion of the Company's future financing requirements.
However, the Company is actively negotiating certain strategic alliances and
private placements. Consequently, there can be no assurance that any additional
financing will be available to the Company when needed, on commercially
reasonable terms, or al all. An inability to obtain additional
<PAGE> 13
financing when needed would have material adverse effect on the Company,
requiring it to curtail and possibly cease its operations. In addition, any
additional equity financing may involve substantial dilution to the interests of
the Company's then existing shareholders. In addition, the Company's equity is
currently below the $4 million minimum required for re-listing of the Company's
shares on the NASDAQ Small Cap exchange. Unless the Company can demonstrate the
ability to raise the Company's equity to an amount in excess of $4 million, and
present a plan that will satisfy NASDAQ's other standards regarding
profitability and stock price stability maintaining minimum bid price over
$4.00, the Company's shares may not be registered on the NASDAQ Small Cap
exchange.
DISCLOSURE REGARDING PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
This report contains certain forward-looking statements with respect to the
future performance of the Company that involve risks and uncertainties. Various
factors could cause actual results to differ materially from those projected in
such statements. These factors include, but are not limited to, the Company's
lack of meaningful revenues, its significant and continuing losses, its
significant capital requirements, the uncertainty of its ability to implement
its plan of operation and other factors discussed herein and in the Company's
other filings with the Securities and Exchange Commission.
<PAGE> 14
PART II
ITEM 1. LEGAL PROCEEDINGS
Refer to the Company's Form 10-QSB filed for the quarter ended September 30,
1999.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
27.1 Financial Data Schedule.
10 University of Florida Contract
(b) Reports on form 8-K
None.
<PAGE> 15
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.
RNETHEALTH.COM, INC.
Dated: May 4, 2000 By: /s/ Stacey Romm
----------------------------------
Stacey Romm
Chief Financial Officer
<PAGE> 1
EXHIBIT 10
AGREEMENT BETWEEN
RNETHEALTH.COM, INC.
AND
UNIVERSITY OF FLORIDA
FOR
MEDICAL DIRECTOR AND CLINICAL CONTENT SERVICES
THIS AGREEMENT (this "Agreement"), effective as of the date of its
execution ("Effective Date") by and between RNETHEALTH.COM, INC. ("RNETHEALTH"
herein), and the UNIVERSITY OF FLORIDA ("UNIVERSITY" herein), FOR AND ON BEHALF
OF THE BOARD OF REGENTS OF THE STATE OF FLORIDA, FOR THE BENEFIT OF THE
DEPARTMENT OF PSYCHIATRY, COLLEGE OF MEDICINE, UNIVERSITY OF FLORIDA,
W I T N E S S E T H :
WHEREAS, RNETHEALTH is in need of constantly updated clinical content
materials for its business (which includes the dissemination of such material on
RNETHEALTH's public and commercial websites; and RNETHEALTH desires to engage
UNIVERSITY to provide such services; and
WHEREAS, UNIVERSITY has among its faculty qualified physicians who are
available to develop and update clinical content materials for RNETHEALTH, and
desires to provide such services for RNETHEALTH; and
WHEREAS, UNIVERSITY, in its educational programs for the development of
medical professionals, has responsibility for the training of resident
physicians, who are agents or employees of the State of Florida, and who require
clinical education in various medical disciplines to complete their professional
development; and
WHEREAS, the educational programs of UNIVERSITY will be enhanced because
of opportunities for students, resident physicians, and faculty to participate
in health care responsibilities through the cooperative efforts of RNETHEALTH
and UNIVERSITY; and
WHEREAS, UNIVERSITY, pursuant to Section 6C-9.017, Florida
Administrative Code, and in furtherance of its education, training, and service
responsibilities, authorizes its professional faculty and staff, as an integral
part of their academic activities and their employment as faculty and staff, to
provide health, medical, and dental care and treatment to patients, including
patients at independent hospitals, other institutions, and various other
clinical sites; the Colleges of Medicine, Dentistry, and Health Professions are
authorized, pursuant to said Section 6C-9.017, to develop and maintain faculty
practice plans for the orderly collection and distribution of fees and income
generated from such faculty practice activities; the College of Medicine has
established and maintains such a faculty practice plan, known as the "College of
Medicine Faculty Practice Plan";
NOW, THEREFORE, in consideration of the terms and covenants hereinafter
set forth, and the mutual benefits each unto the other flowing, the parties
heretofore named hereby agree as follows:
1. SERVICES. UNIVERSITY shall render to RNETHEALTH the following
services:
a. Clinical Content Services: In the first year of this
Agreement, appropriately credentialled and qualified personnel of
UNIVERSITY shall research, prepare, compile or create certain clinical
content materials. The materials will be current and, in the case of
original materials prepared by UNIVERSITY, designed for the education of
the public. The materials will be kept up-to-date by UNIVERSITY based
upon current research at prominent universities in the United States.
i. 50 "drug world" documents, to be authored or
co-authored by Dr. Wayne Goodman, Dr. Mark Gold
or Dr. John Gums, similar in format and content
to Exhibit A
<PAGE> 2
ii. 50 "disease world" documents, to be authored or
co-authored by Dr. Wayne Goodman or Dr. Mark
Gold,similar in format and content to Exhibit B
iii. Original articles, pamphlets and booklets
In subsequent years of this agreement, UNIVERSITY will review at
appropriate intervals all UNIVERSITY materials and determine whether the
materials are still correct. If revisions are deemed necessary by
UNIVERSITY to its materials, UNIVERSITY shall make appropriate
revisions.
RNETHEALTH may convert materials created by UNIVERSITY and referenced
above into a form ready for display on RNETHEALTH's on-line site and,
with UNIVERSITY's permission, may combine in a non-confusing or
misleading way such digitized versions with other digitized images,
photographs, animation, video, audio text, software and other content.
b. Editorial Review Services: Appropriate and qualified
UNIVERSITY personnel will review documents and materials ["content"] provided by
RNETHEALTH for clinical accuracy and appropriateness. After digitization or
modification of content produced by UNIVERSITY as described in (a), above,
UNIVERSITY shall review content in context with any additions made by RNETHEALTH
for continued appropriateness. For all content so reviewed by UNIVERSITY,
RNETHEALTH shall be entitled to place a Quality Assurance byline prominently on
each page of the on-line site on which the content is viewed as follows:
"Clinically reviewed by [x], [y], and [z] at the University of Florida College
of Medicine."
2. TIME OBLIGATION. UNIVERSITY agrees that the services of the Faculty
Physician under this Agreement shall be provided at times mutually agreed upon
from time to time between UNIVERSITY and RNETHEALTH, depending upon the needs of
RNETHEALTH and UNIVERSITY's programs.
3. COMPENSATION. RNETHEALTH shall pay UNIVERSITY for the Services as
follows:
a. Clinical Content Services: In the first year
i. The sum of $2,000 per drug world produced (not
to exceed an amount equal to $100,000)
ii. The sum of $2,500 per disease world produced
(not to exceed an amount equal to $125,000)
iii. A continuing fee of $2,083 per month for all
other original articles, pamphlets and books
provided by qualified departmental personnel
(for a period of one year not to exceed $25,000)
b. Editorial Services: A continuing fee of $4,167 per month (for a period of one
year not to exceed $50,000)
In subsequent Renewal Terms (defined herein in Paragraph 6), RNETHEALTH shall
pay to UNIVERSITY 20% of the first year payments for continued exclusive display
or use of the contents provided by UNIVERSITY or materials editorially reviewed
by UNIVERSITY (as provided under Paragraph 9, herein). The UNIVERSITY shall
receive an amount equal to 1/12th of 20% of the first year's payment per month
(not to exceed $5,000 per month).
4. PAYMENT SCHEDULE. The costs associated with the drug worlds and
disease worlds shall be paid in installments equal to 1/6th of the total costs
payable to the UNIVERSITY's clinical practice plan. The first installment is due
and payable to the UNIVERSITY upon execution of this Agreement.
For all other costs associated with this Agreement, including Editorial Services
rendered and original articles, pamphlets and/or booklets, the UNIVERSITY shall
submit a monthly invoices to be paid in accordance with RNETHEALTH's accounts
payable procedures.
<PAGE> 3
5. CONFIDENTIALITY. It is the intention of the parties that all of the
Services provided by the UNIVERSITY under this Agreement are for the purpose of
developing and creating trade secrets of RNETHEALTH. UNIVERSITY shall hold as
confidential all information (whether written or oral) received or created
pursuant to this Agreement, subject to the provisions of applicable Florida law.
UNIVERSITY will limit the receipt of any such information only to such of
UNIVERSITY's employees performing services under this Agreement, and only on a
"need to know" basis. Both parties acknowledge that Florida law may require the
disclosure of documents which do not constitute trade secrets (or which meets
certain other limited exemptions from disclosure under Florida law) to any
person making a public records request. However, UNIVERSITY will give RNETHEALTH
notice of any request for any documents related to this Agreement or the
services rendered by UNIVERSITY under this Agreement (such notice to be given
immediately upon UNIVERSITY's receipt of the request) and will provide to
RNETHEALTH a copy of the request, as well as a statement as to when the law
would require UNIVERSITY to respond to such request). To the extent permitted by
law, UNIVERSITY will not respond to such request until RNETHEALTH has had a
reasonable opportunity to evaluate and, if it so chooses, to object to the
provision of the requested information. If RNETHEALTH shall object to the
production of the information sought under the request, UNIVERSITY will
cooperate with RNETHEALTH in such objection, but subject to UNIVERSITY's
obligations under applicable Florida law.
6. TERM/RENEWAL TERM/ AMENDMENTS. This Agreement shall commence on the
Effective Date, and remain in full force and effect for a period of one year
(the "Term"). Thereafter, the term of the Agreement shall automatically renew
for successive one year periods (each a "Renewal Term") on the same terms and
conditions hereunder unless either party gives written notice of its intent not
to renew to the other party not later than ninety (90) days prior to the last
day of the then current term. RNETHEALTH and UNIVERSITY agree that the terms of
this Agreement may be revised at any time only by formal written amendment to
this Agreement executed by both parties hereto.
7. TERMINATION.
a. During the Term, this Agreement may only be terminated
with cause by either party upon written notice to the
other party at least ninety (90) days prior to the
intended date of termination. Thereafter, in any
subsequent Renewal Term, this Agreement may be
terminated with or without cause by either party in
accordance with Paragraph 6.
b. Subject to the provisions of this Agreement, UNIVERSITY
shall have the right to terminate this Agreement at any
time for refusal by RNETHEALTH to allow public access to
all documents, papers, letters, or other materials
subject to the provisions of Chapters 119 and 240.241,
Florida Statutes, and made or received by RNETHEALTH in
conjunction with this Agreement, not designated by
RNETHEALTH to be confidential or proprietary
information.
c. Subject to the provisions of this Agreement, RNETHEALTH
shall have the right to terminate this Agreement at any
time upon the failure of UNIVERSITY to perform any of
its obligations under this Agreement for more than ten
(10) calendar days after written notice thereof from
RNETHEALTH.
8. INDEPENDENT CONTRACTOR RELATIONSHIP. All parties expressly intend
that with regard to the provisions of this Agreement said parties shall be
independent contractors and no party hereto shall receive any other benefits
besides those expressly provided for herein. Further, it is the express intent
of the parties hereto that no agent, servant, contractor, or employee of one
party be deemed an agent, servant, contractor, or employee of the other party.
All personnel of UNIVERSITY rendering services pursuant to this Agreement shall
be employees/agents of the University of Florida. Regardless of anything else
contained in or implied from this Agreement, any employee of UNIVERSITY who may
be performing the services herein described shall be under the exclusive control
and direction of UNIVERSITY, but subject to the terms of this
<PAGE> 4
Agreement. The students, faculty, or other employees of UNIVERSITY shall wear
pictured name tags identifying their status with the University of Florida.
9. NOTICES. All notices by either party required or permitted by this
Agreement shall be in writing and delivered by registered or certified mail with
the United States Postal Service, postage prepaid, return receipt requested, by
overnight delivery (for which evidence of delivery is obtained by the sender),
or by hand delivery, to the representatives specified herein. The name and
address of the representative of UNIVERSITY for this Agreement is Wayne K.
Goodman, M.D., Chairman, Department of Psychiatry, College of Medicine, P.O. Box
100256, Gainesville, FL 32610-0256, with copies provided to Susan B.
Collingwood, Associate General Counsel, P.O. Box 100215, Gainesville, FL
32610-0215. The name and address of the representative of RNETHEALTH for this
Agreement is Jay Handline, RNETHEALTH.COM, INC., 506 Santa Monica Blvd., Suite
400, Santa Monica, CA 90401, with copies to William D. Moses, Chief Executive
Officer, 506 Santa Monica Blvd., Suite 400, Santa Monica, CA 90401. In the event
that representatives change due to a change in personnel after execution of this
Agreement, notice of the name and address of the new representative shall be
furnished in writing to the other party and a copy of said notification attached
to the originals of this Agreement.
10. INTELLECTUAL PROPERTY. Copyright for original documents generated by
UNIVERSITY pursuant to this Agreement will remain with UNIVERSITY. During the
term of this agreement, under the conditions listed below, UNIVERSITY grants to
RNETHEALTH a royalty-free exclusive license to use or publish the documents.
Upon expiration, termination or cancellation of this Agreement, RNETHEALTH may
purchase a continuing exclusive license to use or publish the documents, under
the terms set out in Paragraph 3, above. The conditions for the license
described herein are that:
a. the documents always properly identify the author(s) and the
author's affiliation with UNIVERSITY,
b. if published on a website accessible anonymously by members of
the general public, the documents are provided to the general
public accessing such website free of charge,
c. if published in traditional media ("paper" publishing), the
documents are provided to the general public at RNETHEALTH's
reasonable cost to produce the document.
RNETHEALTH shall have no authority to alter the contents of original
copyrightable works of UNIVERSITY without UNIVERSITY's express consent in
writing.
11. USE OF NAME. No party to this Agreement shall use the name, logo or
likeness of another party to this Agreement or of any other of the other party's
staff in any signage, advertising or promotional material without the prior
written consent of the party, which consent shall not be unreasonably withheld.
Subject to prior approval by UNIVERSITY as described herein, RNETHEALTH shall be
permitted to use the name and logo of UNIVERSITY and the name of Faculty
Physician in published material created by UNIVERSITY pursuant to this
agreement, and in published material about RNETHEALTH generally (including,
without limitation, on RNETHEALTH's website). In documents, the size of
UNIVERSITY's logo shall be consistent with the size of the text identifying
Faculty Physician or Expert. The final text and logo shall be submitted to
UNIVERSITY for approval in advance of its appearance in any such materials. The
decision to consent or not consent shall be provided to the requesting party
within five (5) business days following receipt of the request. RNETHEALTH shall
at all times during the term of this Agreement be permitted to represent orally
that UNIVERSITY, under the direction of Faculty Physician, is providing the
services described in this Agreement, without having to obtain any consent from
UNIVERSITY. The point of contact for UNIVERSITY in this regard is Arline
Phillips-Han, CPRC, Director, Health Science Center Office of Public
Information, P. O. Box 100253, University of Florida, Gainesville, FL
32610-0253, telephone (352) 392-9542, fax (352) 392-9220. In the event of the
absence of Ms. Phillips Hon, the alternate point of contact in this regard is
Rhona L. Williams, Assistant Vice President for Health Affairs, P. O. Box
100014, University of Florida, Gainesville, FL 32610-0014, telephone (352)
392-5953, fax (352) 392-9395. The point of contact for RNETHEALTH in this regard
is Jay Handline, RNETHEALTH.COM, INC., 506 Santa Monica Blvd., Suite 400, Santa
Monica, CA 90401, telephone (310) 393-3979, fax (310) 393-5749.
<PAGE> 5
12. PERFORMANCE CONTINGENCY. UNIVERSITY's performance and obligation
under this Agreement shall be contingent upon an annual appropriation by the
Florida Legislature.
13. UNIVERSITY RESPONSIBILITY. UNIVERSITY assumes the full
responsibility for the negligent acts and omissions of its agents, servants and
employees committed within the course and scope of employment, subject to the
provisions of FS 768.28.
14. BINDING BY SIGNATURE. This Agreement is not binding on the parties
until it has been signed by the Dean, College of Medicine, University of
Florida, and the duly authorized representative of RNETHEALTH.
15. GOVERNANCE. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida.
16. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which together constitute one Agreement.
17. ENTIRETY OF AGREEMENT. The terms set forth in this Agreement
constitute all the terms and conditions agreed upon by the parties hereto with
respect to the Services, and no other terms or conditions in the future shall be
valid and binding on either party unless reduced to writing and executed by both
parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused these presents to be
executed in several counterparts, each of which shall be deemed an original, as
of the day and year first above set forth.
UNIVERSITY OF FLORIDA, FOR AND ON
BEHALF OF THE BOARD OF REGENTS OF
THE STATE OF FLORIDA, FOR THE
BENEFIT OF THE DEPARTMENT OF
PSYCHIATRY, COLLEGE OF MEDICINE,
RNETHEALTH.COM, INC. UNIVERSITY OF FLORIDA
By: /s/ WILLIAM D. MOSES 4/15/00 By: /s/ KENNETH I. BERNS 4/6/00
------------------------------- ---------------------------------
William D. Moses Date Kenneth I. Berns, M.D., Ph.D. Date
Chief Executive Officer Dean, College of Medicine
University of Florida
<PAGE> 6
ACKNOWLEDGING SIGNATURES TO AGREEMENT BETWEEN RNETHEALTH, UNIVERSITY OF FLORIDA,
FOR CLINICAL CONTENT AND MEDICAL DIRECTOR SERVICES
ACKNOWLEDGED:
By: /S/ WAYNE K. GOODMAN 4/5/00
------------------------------------
Wayne K. Goodman, M.D. Date
Chairman
Department of Psychiatry
College of Medicine
University of Florida
<PAGE> 7
EXHIBIT A
GENERIC NAME: Alprazolam
BRAND NAME(S): Xanax(R)
AVAILABLE DOSES: 0.25, 0.5, 1, 2 mg tablets
PILL DESCRIPTION: As numerous brand and generic products are available, a
description of all products is not feasible in this space.
FDA APPROVED INDICATIONS AND USES: Alprazolam is approved by the FDA for the
treatment of anxiety and panic disorders.
"OFF-LABEL" INDICATIONS AND USES: Alprazolam has been used for other conditions
including premenstrual syndrome and insomnia.
MECHANISM OF ACTION AND METABOLISM/ELIMINATION: Neurons use many different
compounds, called neurotransmitters, to transmit information. A neuron will
secrete a neurotransmitter from one end, and the next neuron will sense this
though receptor proteins on its surface. Often, if the second cell senses enough
of a neurotransmitter, then the second neuron will "fire," sending the
information to the other neurons that it touches. Some neurotransmitters,
however, cause the second neuron to "fire" less often. One such neurotransmitter
is gamma-amino butyric acid (GABA). Benzodiazepines, such as alprazolam, bind to
the GABA receptor protein, and make the GABA work more efficiently. This can
cause some overactive neurons in the brain and spinal cord to "fire" less
frequently. As a result, epileptic seizures are stopped, anxiety is reduced,
muscles relax, and sedation occurs. Alprazolam is rapidly metabolized in the
liver to two major metabolites, one active and the other inactive. The
metabolites are eliminated in the urine.
HISTORY: Alprazolam was originally approved by the FDA in 1981.
DOSING: The typical starting dose of alprazolam in treatment of anxiety is
usually 0.25-0.5 mg three times a day. The maximum daily dose 4 mg a day. Doses
should be approximately 50% of that in children and the elderly. For treatment
of panic, higher doses are used. The starting dose is 0.5 mg three times a day.
This can be increased by 1 mg a day increments every 3-4 days. Frequently, doses
above 4 mg a day are required. The maximum dose is 10 mg a day. For insomnia,
1-2 mg is given at bedtime. Doses should be reduced in patients with liver
disorders.
SIDE EFFECTS AND COMPLIANCE ISSUES: The most common side effect (in >20% of
patients) seen with alprazolam are drowsiness and loss of coordination. Other
side effects, in decreasing order of frequency include memory impairment,
constipation, dizziness, fatigue, and difficulty speaking clearly. Abrupt
discontinuation of alprazolam in any patient can lead to a withdrawal syndrome,
which can vary in severity depending on the dose and duration of alprazolam
therapy, as well as patient-specific factors. For most patients, symptoms are
mostly malaise (nausea, vomiting, fatigue), moodiness, and insomnia. In severe
cases, it can be life-threatening, with rapid heart rate, and even seizures. In
general, withdrawal symptoms are greater for a shorter-acting benzodiazepine,
such as alprazolam, than they are for longer-acting benzodiazepines, such as
diazepam (Valium(R)), though they may last for a somewhat shorter time.
Withdrawal syndrome is particularly problematic in panic disorder patients, as
their dose is high.
REASONS FOR DISCONTINUATION: The percentage of patients who discontinued the
drug during clinical trials, or their reasons for doing so, are not readily
available. In practice, some common reasons for discontinuation of therapy
include sleepiness, depression, dizziness, nervousness, loss of coordination,
and reduced intellectual ability.
CONTRAINDICATIONS, PRECAUTIONS (INCLUDING PREGNANCY AND LACTATION ISSUES):
Persons with hypersensitivity to alprazolam, and possibly other benzodiazepines,
should not take this medication. Alprazolam should be used very cautiously in
patients with pre-existing respiratory depression, such as those with end stage
chronic obstructive pulmonary disease or severe sleep apnea. It should also be
used cautiously in patients with central nervous system (CNS) depression, such
as patients in shock or coma. Alprazolam should not be used in patients with
narrow angle glaucoma or a history of drug abuse. Tolerance and addiction are
both possible with alprazolam. Because of this, the FDA has classified
alprazolam as a schedule C-IV drug. Alprazolam is categorized by the FDA as
Pregnancy Category D. Studies have shown an increase in the risk of congenital
malformations with use of other benzodiazepines in the first trimester of
pregnancy. Thus, it should be avoided in pregnancy whenever possible. Alprazolam
also is excreted into breast milk. As such, alprazolam is not recommended for
breast-feeding mothers.
DRUG INTERACTIONS: Alprazolam can have additive to synergistic effects when
combined with other CNS depressants. These include alcohol, barbiturates,
opiates, and tricyclic antidepressants, among many others. These combinations
can be fatal. Flumazenil may be used to reverse the effects of alprazolam, but
its use has the potential to induce seizures. Certain drugs may lead to
accumulation of alprazolam and an increased risk of side effects. Examples
include ketoconazole (Nizoral(R)), itraconazole (Sporanox(R)), erythromycin, and
fluoxetine (Prozac(R)). The accumulation is much more problematic in patients
already taking high doses.
<PAGE> 8
COST RANGE PER DOSE, PER MONTH OF TREATMENT: Depending on brand and dosage
strength, costs will range from approximately $6-$88 for a month's treatment.
COST COMPARISON TO OTHER TREATMENT IN SAME DISEASE:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------
DRUG EXAMPLE DOSE AVERAGE COST/MONTH
----------------------------------------------------------------------------------
<S> <C> <C>
Alprazolam (Xanax(R)) 0.5 mg three times a day $9.20 ($85.60 for brand)
----------------------------------------------------------------------------------
Diazepam 5 mg twice a day $7.40
----------------------------------------------------------------------------------
Clonazepam 0.5 mg twice a day $17.40
----------------------------------------------------------------------------------
Lorazepam 1 mg three times a day $44.20
----------------------------------------------------------------------------------
BuSpar(R) 10 mg twice a day $75.70
---------------------------- ------------------------- ---------------------------
</TABLE>
EFFICACY COMPARISON TO OTHER TREATMENT IN SAME DISEASE:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
DRUG ONSET DURATION SEDATION DEPENDENCE
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alprazolam (Xanax(R)) Minutes-hours Intermediate +++ ++
- ------------------------------------------------------------------------------------
Diazepam Minutes-hours Long +++ ++
- ------------------------------------------------------------------------------------
Clonazepam Minutes-hours Long +++ ++
- ------------------------------------------------------------------------------------
Lorazepam Minutes-hours Short +++ ++
- ------------------------------------------------------------------------------------
BuSpar(R) 2-6 weeks Short - -
- ------------------------------------------------------------------------------------
</TABLE>
SAMPLE PATIENT EDUCATIONAL MATERIAL TO BE GIVEN AT TIME THAT RX IS WRITTEN OR
FILLED:
ALPRAZOLAM (XANAX(R))
Alprazolam is a benzodiazepine used to help in the treatment of several
different types of anxiety and panic disorders, and insomnia. It acts by
inhibiting the firing of certain neurons in the brain and the spinal cord. For
treatment of anxiety, the typical oral dose is approximately 0.5 mg three times
a day. The maximum dose is 4 mg a day. Panic disorder requires higher doses for
treatment. Doses are between 1-10 mg a day, divided into three doses, with an
average of 5-6 mg a day. For insomnia, the doses are smaller, 1-2 mg a day, and
taken as a single dose at bedtime. In children and the elderly, doses are
typically about half of the usual dose. You should try not to miss any doses. If
you do forget to take a dose, do not double your next dose. You should not
increase your dose or take it more frequently than prescribed without your
physician's permission. Doses may be taken with or without food.
Alprazolam has been proven to be effective in the treatment of anxiety,
reducing the number of anxiety symptoms by at least half for the average
patient. As many as 82% of panic patients will have their panic attacks
eliminated. Symptoms will generally improve rapidly, often after the first few
doses. It may take somewhat longer for the full effects to be felt. It is
unclear how long the patient should remain on alprazolam. Most clinical studies
are for 3-4 months. However, it has proven to be effective in trials lasting up
to 8 months. Maintenance doses can often be less than the initial therapeutic
dose. This is not necessarily the case when alprazolam is used as a sleep aid.
Tolerance often develops to the sedative actions of alprazolam, but the
anti-anxiety effects do not seem to appreciably abate.
The most common side effects seen with alprazolam are drowsiness and
loss of coordination. Other side effects include memory impairment,
constipation, dizziness, fatigue, and difficulty speaking clearly. Abrupt
discontinuation of alprazolam in any patient can lead to a withdrawal syndrome,
which can range from mild (malaise, insomnia) to severe (seizures, death).
Alprazolam should always be slowly tapered down when discontinuing the
medication. If it is difficult to taper a patient off of alprazolam without
withdrawal symptoms (a frequent occurrence in patients with panic disorder),
very slow taper can be tried. If that fails, a long-acting benzodiazepine, such
as diazepam (Valium(R)) can be substituted for the alprazolam. This often allows
discontinuance.
Alprazolam can interact with a number of other medications. Ask your
doctor or pharmacist if you have any questions about your medications. It should
not be used in combination with other drugs which can cause sedation or
decreased mental function. Such drugs include opiates, barbiturates, tricyclic
antidepressants, and especially alcohol, among many others. These combinations
can be fatal. Other drugs, such as ketoconazole (Nizoral(R)) and itraconazole
(Sporanox(R)) can increase the amount of alprazolam by slowing its breakdown.
This increases the risk of side effects substantially. The manufacturer does not
recommend simultaneous use of these drugs with alprazolam.
<PAGE> 9
EXHIBIT B
[ILLEGIBLE LOGO]
TITLE: Depression World
DEFINITION: According to the DSM-IV, depression disorder can occur as any of the
following: Major Depressive Disorder, Major Depressive Episode, Dysthymic
Disorder, Adjustment Disorder with depressed mood, or Bipolar Disorder.
Depression can be described as feeling sad, difficulty in thinking and
concentration, lack of motivation, a decrease or increase in appetite and sleep,
feelings of hopelessness, and sometimes suicidal tendencies.
A person suffering from MAJOR DEPRESSIVE DISORDER must have a depressed mood or
loss of interest in daily activities for at least 2 weeks. This mood must be
different from the person's normal mood. For example, academic, occupational,
social and other functions must be negatively effected. A mood change due to
substance abuse, medication, or a medical condition is not considered a major
depressive disorder. Also, major depressive disorder can not be diagnosed in
individuals with a history of manic depression, mixed episodes, or bipolar
disorder.
A person suffering from MAJOR DEPRESSIVE EPISODE must have a depressed mood or
loss of interest in daily activities for at least 2 weeks. This mood must be
different from the person's normal mood. For example, academic, occupational,
social and other functions must be negatively effected. There is a lost of
interest or pleasure in nearly all activities. This person may describe their
mood as depressed, sad, hopeless, discouraged, or "down in the dumps." Major
depressive episode is part of another disorder such as major depressive disorder
or bipolar disorder.
A person who suffers from DYSTHYMIC DISORDER exhibits an overwhelming yet
lasting state of depression. This mood last for at least 2 years and more days
than not. This person usually describes their mood as sad or "down in the
dumps." During the two-year period, at least 2 of the following symptoms are
present: poor appetite or overeating, insomnia or hypersomnia, low energy or
fatigue, low self-esteem, poor concentration or difficulty making decisions, and
feelings of hopelessness.
A person suffering from ADJUSTMENT DISORDER WITH DEPRESSED MOOD develops
emotional or behavioral symptoms within 3 months of an identifiable stressor.
Once the stressor terminates, symptoms do not occur for more than 6 months
afterwards. Stressors can be a single event, multiple events, and a recurrent
event or continuous event. Stressors may affect a single individual, a family,
or large group. Persons have symptoms such as depressed mood, tearfulness, or
feelings of hopelessness.
A person who suffers from BIPOLAR DISORDER may be diagnosed with either Bipolar
I Disorder or Bipolar II Disorder. Individuals suffering from Bipolar I Disorder
can exhibit a single manic episode, or the most recent episode may be hypomanic,
manic, or mixed. Individuals suffering from Bipolar II Disorder presently have,
or have a history of, one or more Major Depressive Episodes and at least one
Hypomanic Episode. There has never been a manic episode or a mixed episode.
GOOD NEWS: The good news about depression is it is not an individual's fault or
a flaw. There are resources now available allowing for people to become more
knowledgeable and educate themselves about depression and it symptoms. Also,
physicians are able to better properly diagnose patients with depression and
offer treatment. There is more treatment available to help individuals with
depression along with support organizations that spread awareness and educate
people about depression.
Ten years ago, there were some effective treatments and cures for depression,
but the real Good News then was that medicine had begun to clearly differentiate
between a disease that was "depression," and a symptom of other diseases that
appeared to be depression. This breakthrough was the result of interview
schedules, self assessments, tests and diagnostic instruments that were
developed and implemented by a handful of psychiatrists and neuroscientists who
worked tirelessly, and often without recognition, to bring a new science to the
practice of psychiatry and the relief of mental suffering. Those who worked in
this new field called it the new medicine of the mind. But the "New" "Good News"
that explains to patients why this is the best time in history to be depressed
is more than the knowledge we now have about how the brain works and what
probably is at the root of depression.
<PAGE> 10
The progress of medication development for depression has also improved, thus
enhancing the treatment of depression. Tranquilizers were the main treatment for
depression starting in the 1950s. They were used for the slightest symptoms of
depression. In 1952, chlorpromazine was discovered for treating psychosis. Drug
treatment discoveries for depression during the 1960s were accidental. Research
conducted for other purposes happen to show results that may help in treating
depression. Lithium was introduced in the 1970s for bipolar disorder. And,
imipramine was discovered for treating depression.
Today, there are four classes of medications: TCAs (tricyclic) and HCAs
(heterocyclic), MAOIs (monoamine inhibitors) and SSRIs (selective serotonin
re-uptake inhibitors). TCAs and HCAs were named for their chemical structure,
and MAOIs and SSRIs were named for their neurochemical effects. SSRIs
medications are the most commonly used for treating depression. Examples are
Prozac, Paxil, Zoloft, and Luvox. A new class of drugs, recently approved by the
FDA is bupropion. This group includes Venlafaxine, Nefazodine, and Mirtazapine.
Also, alternative medicines, such as ST. John's Wort, are becoming more popular
in treating depression today.
KNOWLEDGE: WHAT DO WE KNOW ABOUT DEPRESSION?
Depression disorders are among the most responsive to treatment. 80% of patients
with depression show improvement and lead productive lives when given the proper
treatment. Mental suffering comes in many forms; depression is one of the most
common. Mental illness of some sort may affect up to 50 million of the USA's 252
million citizens at some point in their lives. Throughout the world, over one
hundred million people are estimated to be suffering from severe biological
depression requiring, although not necessarily receiving, a doctor's care. In
the United States, that number may be as high as sixteen million. Along with the
millions who exhibit overt symptoms of depression, hundreds of thousands of
others suffer from grief, demoralization, negativism or "denial depression," in
which they do not realize that their physical aches and pains are actually
symptoms of depression.
Depression affects 10% of the population 18 years of age and older in a given
year. More than 19 million, one out of ten adults, is affected by depression.
According to the DSM-IV, depression disorder can occur as any of the following:
Major Depressive Disorder, Major Depressive Episode, Dysthymic Disorder,
Adjustment Disorder with depressed mood, or Bipolar Disorder. Symptoms of
depression are:
- - Prolonged sadness or unexplained crying spells
- - Significant changes in appetite, sleep patterns
- - Irritability, anger, worry, agitation, anxiety
- - Pessimism, indifference
- - Loss of energy, persistent lethargy
- - Feelings of guilt, worthlessness
- - Inability to concentrate, indecisiveness
- - Inability to enjoy former interests, social withdrawal
- - Unexplained aches, pains
- - Recurring thoughts of death or suicide
Women are twice as likely to suffer from depression compared to men. This
two-to-one ratio holds firm regardless of race or ethnicity. 3 out of 100
persons 65 years of age and older suffers from depression. And a recent study
using 9 to 17 year olds shows a 6% prevalence of depression with 4.9% suffering
from major depression. In, 1997, suicide was the 3rd cause of death among 10 to
24 year olds. 7% of children suffering from depression will commit suicide in
their younger adult years.
The precise causes of depression are not known. However, the broader forces that
cause depression are known. These forces are biological, psychological, and
social/cultural. The cause of illness and disease is an interplay or interaction
of these forces, with some mainly due to a biological predisposition. Genetic
endowment and stressful life events are also forces that cause depression.
Treatment of depression consists of psychotherapy, hospitalization, medication,
electroconvulsive therapy, self-help, and a combination of psychotherapy and
medication. Psychotherapy involves using psychological means to treat mental
illness. Some examples of psychotherapy are cognitive-behavioral therapy,
behavioral therapy, individual therapy, family therapy, and group therapy.
Hospitalization is necessary when an individual has attempted suicide or
<PAGE> 11
has a plan for doing so. The preferred medications for depression are
antidepressants. SSRIs (selective serotonin re-uptake inhibitors) are the most
commonly prescribed (Prozac, Paxil, Zoloft, and Luvox). ECT (electroconvulsive
therapy) is used as a last resort to treat depression. It is never used as an
initial treatment. ECT can be seen as necessary when trying to prevent a patient
from attempting suicide. Self-help consists of support groups allowing the
patient to socialize with others. The patient is given the opportunity to share
their experiences and feelings with people who are suffering from the same or
similar disorder. Self-help books are also available to help with coping skills
and explore emotions. The preferred treatment of choice, and the most commonly
used, is a combination of psychotherapy and medication.
MIMICS:
Depression can be a biological illness for which you need a doctor. It can be
the first sign of a developing, perhaps deadly physical illness. It can be a
""side effect" of virtually any prescription or illegal drug, or of physical
illness. In any of these cases, traditional psychotherapy in the absence of
appropriate medical diagnosis and care will not help you and may even hurt you.
One recent study shows, for example, that the longer the delay in receiving
appropriate medical care for major (biological) depression, the more likely it
is that the condition will become chronic and possibly untreatable. Different
types of depression share the same constellation of symptoms. You cannot know
what kind of depression you have unless you consult a specialist in the
differential diagnosis of depression: a biopsychiatrist. Today, most of
physicians recognize that this is the type of psychiatry that gets the best
results.
Major Depressive Disorder can not be diagnosed if there is a history of a Manic,
Mixed, or Hypomanic Episode. Major Depressive Episodes in Major Depressive
Disorder must be distinguished form a Mood Disorder due to a General Medical
Condition (e.g. stroke). A Substance-Induced Mood Disorder must be distinguished
form Major Depressive Episodes in Major Depressive Disorder by the fact that a
substance is causing the mood disturbance (e.g. cocaine). Dysthmic Disorder and
Major Depressive Disorder must be distinguished from one another. In Major
Depressive Disorder, the depressed mood must be present for most of the day,
nearly every day, for at least a 2-week period. In Dysthmic Disorder, the
depressed mood must be present for more days than not for at least 2 years.
Schizoaffective Disorder must be distinguished from Major Depressive disorder
with the requirement that there must be at last 2 weeks of delusions and
hallucinations occurring in the absence of mood symptoms. Depressive symptoms
can occur with Schizophrenia, Delusional Disorder, and Psychotic Disorder not
otherwise specified. However, such symptoms are considered associated features
of these disorders. In elderly persons, Dementia must be distinguished from
Major Depressive Disorder. This can be done through a general medical evaluation
and helping to determine the premorbid state. Individuals with Major Depressive
Disorder tend to have a normal premorbid state.
A Major Depressive Episode must be distinguished from a Mood Disorder due to a
General Medical Condition (e.g. stroke). It must also be distinguished from a
Substance-Induced Mood Disorder meaning a substance is causing the mood
disturbance (e.g. cocaine). In elderly persons, Dementia must be distinguished
from a Major Depressive Episode. This can be done through a general medical
evaluation and helping to determine the premorbid state. Individuals with Major
Depressive Disorder tend to have a normal premorbid state. A Major Depressive
Episode with irritable mood can be difficult to distinguish from Manic Episodes
with irritable mood or from Mixed Episodes. If symptoms are met for a Manic
Episode and a Major Depressive Episode every day for at least 1 week, then it
can be deemed a Mixed Episode. A Major Depressive Disorder and
Attention-Deficit/Hyperactivity Disorder can consist of distractibility and low
frustration tolerance. If symptoms are met for both, then
Attention-Deficit/Hyperactivity Disorder can be diagnosed in addition to the
mood disorder. Adjustment Disorder with Depressed Mood must be distinguished
from a Major Depressive Episode by all symptoms of a depressive episode being
met and not for the adjustment disorder. Periods of sadness must also be
distinguished from a Major Depressive Episode as long as criteria for severity,
duration and impairment are not met.
Dysthmic Disorder and Major Depressive Disorder share similar symptoms. Major
Depressive Disorder usually consists of one or more Major Depressive Episodes
that can be distinguished from the individual's normal functioning. Dysthmic
Disorder involves chronic, less severe depressive symptoms that have been
present for many years. Depressive symptoms are also associated with Chronic
Psychotic Disorders (e.g. Schizoaffective Disorder, Schizophrenia, Delusional
Disorder). Dysthmic Disorder can not be diagnosed if symptoms occur during a
psychotic disorder. Dysthmic Disorder must be distinguished from a Mood Disorder
due to a General Medical Condition (e.g. stroke). Dysthmic Disorder must be
distinguished from a Substance-Induced Mood Disorder meaning a substance is
causing the mood disturbance (e.g. cocaine).
<PAGE> 12
Adjustment Disorder with Depressed Mood is a response to an identifiable
stressor. Personality Disorders are also sometimes evoked by stress, and, in
this case, Adjustment Disorder could not be diagnosed. However, if symptoms
occur that are not characteristic of the personality disorder, then Adjustment
Disorder can be additionally diagnosed. Posttraumatic Stress Disorder and Acute
Stress Disorder are responses to the presence of extreme stressors and specific
symptoms. A stressor of any severity and a wide possibility of symptoms can
evoke adjustment Disorder. In Psychological factors affecting Medical
Conditions, specific psychological symptoms can led to, complicate treatment of,
or increase the risk of general medical conditions. In Adjustment Disorder,
psychological symptoms develop in response to the stress of having or being
diagnosed with a general medical condition. Some individuals may have both
conditions. Bereavement is diagnosed instead of Adjustment Disorder when the
reaction due to the loss of a loved one. However, Adjustment Disorder can be
diagnosed if the reaction persist longer than expected.
Bipolar I Disorder must be distinguished from a depressed mood due to Mood
Disorder due to a General Medical Condition (e.g. stroke). Bipolar I Disorder
must be distinguished from a Substance-Induced Mood Disorder meaning a substance
is causing the mood disturbance (e.g. cocaine). Bipolar I Disorder needs to be
distinguished form Major Depressive Disorder and Dysthmic Disorder with a
history of at least one Manic or Mixed Episode. Bipolar I Disorder is
distinguished form Bipolar II Disorder by one or more Manic or Mixed Episodes.
When a person diagnosed with Bipolar II Disorder develops a manic or mixed
episode, the diagnosis is changed to Bipolar I Disorder. Bipolar I Disorder must
be distinguished from Cyclothymic Disorder by one or more Manic or Mixed
Episodes. If manic or mixed episodes occur after the first 2 years of
Cyclothymic Disorder, then both Bipolar I disorder and Cyclothymic Disorder may
be diagnosed.
Hypomanic and Major Depressive Episodes in Bipolar II Disorder must be
distinguished from a Mood Disorder due to a General Medical Condition (e.g.
hypothyroidism). A Substance-Induced Mood Disorder must be distinguished from
Hypomanic and Major Depressive Episodes in Bipolar II Disorder by a substance
causing the mood disturbance (e.g. a drug of abuse). Bipolar II Disorder must be
distinguished form Major Depressive Disorder and Dysthmic Disorder by the person
having a history if at least one Hypomanic Episode. Bipolar II Disorder must be
distinguished form Bipolar I Disorder by one or more manic or mixed episodes. An
individual who has been diagnosed with Bipolar II Disorder develops a manic or
mixed episode, the diagnosis is changes to Bipolar I Disorder. Bipolar II
Disorder must be distinguished form Cyclothymic Disorder by one or more Major
Depressive Episodes. If a Major Depressive Episode occurs after the first 2
years of Cyclothymic Disorder, then both Bipolar II Disorder and Cyclothymic
Disorder are diagnosed. Bipolar II Disorder must be distinguished form Psychotic
Disorders by periods of psychotic symptoms occurring in the absence of mood
symptoms.
WHO ARE THE EXPERTS?:
[US MAP]
DIAGNOSIS:
Arriving at a diagnosis can be the longest, most challenging, and most difficult
step for a doctor. No two patients are identical in health or illness. Virtually
no one will exhibit the ""classic" symptom and test result patterns described in
textbooks. Often, too, a physician will be searching for a disease that is in a
stage of development in which it does not exhibit its characteristic appearance.
<PAGE> 13
The time it may take a physician to diagnose your problem may be long and
frustrating, but it's worth the wait. The doctor who can pinpoint your problem
is best equipped to target the treatment precisely. The medical diagnostic
process begins with a clinical interview in which the doctor takes a history of
the specific complaint and of your overall health as well as your family's
health patterns. The doctor next performs an examination in which he or she
hopes to see, feel, or demonstrate the presence of a particular illness or
condition. Usually the physician will order lab tests. Together with the
physician's clinical impression, the laboratory will help to confirm a diagnosis
as well as to verify the progress of treatment.
Diagnoses made on the basis solely of a patient's symptoms are the least
accurate or useful to a non-psychiatric physician. Symptoms are usually vague
and often difficult to describe and to remember. Emotional symptoms tend to be
the most unreliable because the patient's description of them is colored by the
emotion itself. For example, if you are depressed and a doctor asks you how long
you have felt that way, unintentionally you will probably exaggerate because
depression distorts your sense of time. In addition, when you're depressed, it's
difficult to remember events or experiences that occurred when you were not
depressed. Similarly, if you're not depressed now, you won't remember many of
the details of your last depression.
There is no ""mental" symptom that is specific to psychiatric illness alone. You
could be standing on a street corner having bizarre Technicolor hallucinations
and still not be ""crazy"; your visions may indicate you're in the midst of the
aura that precedes a small percentage of migraine headaches. Visual
hallucinations could also be symptomatic of a brain tumor, of cocaine or MDMA
intoxication, or of alcohol or sleeping pill withdrawal. Or they could be a side
effect of over-the-counter or other commonly prescribed medications. This means
that no one--psychiatrist, internist, or psychologist--can conclude that a
patient is in the midst of a major depressive episode without first ruling out
possible organic causes.
Major Depressive Disorder:
- - Diagnostic criteria according to the DSM IV
A. Single episode - presence of a single Major depressive episode
Recurrent episode - presence of two or more Major depressive episodes (with
an interval of at least 2 months)
B. The Major depressive episode is not necessarily caused by or cause
schizophrenia, schizophreniaform disorder, delusional disorder, or psychotic
disorders
C. The individual has never had a manic episode (a period of abnormal and
persistent elevated, expansive, or irritable mood lasting at least 1 week),
a mixed episode (manic and major depressive episode), or a hypomanic episode
(a period of abnormal and persistent elevated, expansive, or irritable mood
lasting at least 4 days and is clearly different from the unusual
nondepressed mood)
Major Depressive Episode:
- - Diagnostic criteria according to the DSM IV
A. Five or more of the following symptoms have been present during that same
two-week period. At least one of the symptoms is depressed mood or loss of
interest or pleasure.
1. depressed mood most of the day, nearly every day, as indicated by
either subjective report (e.g., feels sad or empty) or observation made
by others (e.g., appears tearful). (In children and adolescents, this
may be characterized as an irritable mood.)
2. markedly diminished interest or pleasure in all, or almost all,
activities most of the day, nearly every day
3. significant weight loss when not dieting or weight gain (e.g., a
change of more than 5% of body weight in a month), or decrease or
increase in appetite nearly every day.
4. insomnia or hypersomnia nearly every day
5. psychomotor agitation or retardation nearly every day
6. fatigue or loss of energy nearly every day
7. feelings of worthlessness or excessive or inappropriate guilt nearly
every day
8. diminished ability to think or concentrate, or indecisiveness, nearly
every day
9. recurrent thoughts of death (not just fear of dying), recurrent
suicidal ideation without a specific plan, or a suicide attempt or a
specific plan for committing suicide
B. The symptoms do not meet criteria for a mixed episode.
C. The symptoms cause distress or impairment in social, occupational, or other
areas of functioning.
<PAGE> 14
D. The disturbance is not due to a direct physiological effect of a substance
such as medication or drug abuse, or a general medical condition such as
hypothyroidism
E. Symptoms are better noticed if person is not grieving over a loss, if
symptoms persist longer than 2 months or there is functional impairment,
preoccupation with worthlessness or suicide
Dysthymic Disorder:
- - Diagnostic criteria according to the DSM IV
A. depressed mood for most of the day and for more days than not for at least 2
years
B. Two or more of the following present while depressed
1. poor appetite or overeating
2. insomnia or hypersomnia
3. low energy or fatigue
4. low self-esteem
5. poor concentration or difficulty making decisions
6. feelings of hopelessness
C. During the 2 year period (1 year for children or adolescents), the
individual has not been without the criteria in A and B for more than 2
months at a time
D. No major depressive episode has been present during the first 2 years (1
year for children or adolescents)
E. There has never been a manic episode, a mixed episode, or a hypomanic
episode
F. The disturbance does not occur exclusively during the course of a chronic
Psychotic disorder (schizophrenia or delusional disorder)
G. The disturbance is not due to a direct physiological effect of a substance
such as medication or drug abuse, or a general medical condition such as
hyperthyroidism
H. The symptoms cause distress or impairment in social, occupational or other
areas of functioning
Adjustment Disorder with depressed mood
- - Diagnostic criteria according to the DSM IV
A. The development of emotional or behavioral symptoms within 3 months of an
identifiable stressor.
B. Either of the following symptoms:
1. distress that is excess of what would be expected from the stressor.
2. significant impairment in social, occupational, or academic functioning.
C. The stress-related disturbance does not meet the criteria of another
disorder.
D. The symptoms are not bereavement.
E. Once the stressor has terminated, symptoms do not persist for more than 6
months.
Bipolar I Disorder
- - Diagnostic criteria according to the DSM IV
Single Manic Episode
A. Presence of only one manic episode and no past major depressive episodes.
B. The manic episode is not due to another disorder or condition.
Most recent episode hypomanic
A. Currently, or most recently, in a hypomanic episode.
B. There has previously been at least one manic episode or mixed episode.
C. Mood symptoms cause distress or impairment in social, occupational, or
academic functioning.
D. Symptoms are not due to another disorder.
Most recent episode manic
A. Currently, or most recently, in a manic episode.
B. There has been at least one Major Depressive Episode, Manic Episode, or
Mixed Episode.
C. The symptoms are not due to another disorder.
Most recent episode mixed
A. Currently, or most recently, in a mixed episode.
B. There has been at least one Major Depressive Episode, Manic Episode, or
Mixed Episode.
D. The symptoms are not due to another disorder.
<PAGE> 15
Most recent episode depressed
A. Currently, or most recently, in a Major depressive Episode.
B. There has been at least one Major Depressive Episode, Manic Episode, or
Mixed Episode.
C. The symptoms are not due to another disorder.
Most recent episode unspecified
A. Criteria are currently, or most recently, met for a Manic, Hypomanic, or
Major Depressive Episode.
B. There has been at least one manic episode or mixed episode.
C. Mood symptoms cause distress or impairment in social, occupational, or
academic functioning.
D. The symptoms are not due to another disorder.
E. Symptoms are due to the effects of a substance or general medical condition.
Bipolar II Disorder
~ Diagnostic criteria according to the DSM IV
A. One or more Major Depressive Episode.
B. At least one Hypomanic episode.
C. There has never been a manic episode or a mixed episode.
D. The symptoms are not due to another disorder.
E. Mood symptoms cause distress or impairment in social, occupational, or
academic functioning.
CHECKLIST:
Major depressive Disorder
Presence of a single major depressive episode Y [ ] N [ ]
Presence of two or more Major depressive episodes (with an interval of at least
2 months)
Y [ ] N [ ]
Have you been diagnosed, or have a family history of, schizophrenia,
schizophreniaform disorder, delusional disorder, or psychotic disorders?
Y [ ] N [ ]
Have you ever had a manic episode (a period of abnormal and persistent elevated,
expansive, or irritable mood lasting at least 1 week), a mixed episode (manic
and major depressive episode), or a hypomanic episode (a period of abnormal and
persistent elevated, expansive, or irritable mood lasting at least 4 days and is
clearly different from the unusual nondepressed mood)?
Y [ ] N [ ]
Major Depressive Episode
Five or more of the following symptoms have been present during that same
two-week period. At least one of the symptoms is depressed mood or loss of
interest or pleasure.
1. depressed mood most of the day, nearly every day, as indicated by
either subjective report (e.g., feels sad or empty) or observation
made by others (e.g., appears tearful). (In children and
adolescents, this may be characterized as an irritable mood.)
Y [ ] N [ ]
2. markedly diminished interest or pleasure in all, or almost all,
activities most of the day, nearly every day
Y [ ] N [ ]
3. significant weight loss when not dieting or weight gain (e.g., a
change of more than 5% of body weight in a month), or decrease or
increase in appetite nearly every day.
Y [ ] N [ ]
4. insomnia or hypersomnia nearly every day
Y [ ] N [ ]
<PAGE> 16
5. psychomotor agitation or retardation nearly every day
Y [ ] N [ ]
6. fatigue or loss of energy nearly every day
Y [ ] N [ ]
7. feelings of worthlessness or excessive or inappropriate guilt nearly
every day
Y [ ] N [ ]
8. diminished ability to think or concentrate, or indecisiveness,
nearly every day
Y [ ] N [ ]
9. recurrent thoughts of death (not just fear of dying), recurrent
suicidal ideation without a specific plan, or a suicide attempt or a
specific plan for committing suicide
Y [ ] N [ ]
Do the symptoms cause distress or impairment in social, occupational, or other
areas of functioning.
Y [ ] N [ ]
Are you currently taking any medication? Y [ ] N [ ]
Are you abusing any substances (e.g. alcohol)? Y [ ] N [ ]
Have you been diagnosed with any medical conditions?
Y [ ] N [ ]
Are you currently grieving over the loss of a loved one?
Y [ ] N [ ]
Dysthmic Disorder
Depressed mood for most of the day and for more days than not for at least 2
years
Y [ ] N [ ]
Two or more of the following present while depressed
7. poor appetite or overeating Y [ ] N [ ]
8. insomnia or hypersomnia Y [ ] N [ ]
9. low energy or fatigue Y [ ] N [ ]
10. low self-esteem Y [ ] N [ ]
11. poor concentration or difficulty making decisions
Y [ ] N [ ]
12. feelings of hopelessness Y [ ] N [ ]
During a 2 year period (1 year for children or adolescents), the individual has
not been without the above criteria for more than 2 months at a time Y [ ] N [ ]
No major depressive episode has been present during the first 2 years (1 year
for children or adolescents)
Y [ ] N [ ]
Has there ever been a manic episode, a mixed episode, or a hypomanic episode
Y [ ] N [ ]
Have you been diagnosed, or have a family history of, schizophrenia or
delusional disorder?
Y [ ] N [ ]
<PAGE> 17
Are you currently taking any medication? Y [ ] N [ ]
Are you abusing any substances (e.g. alcohol)? Y [ ] N [ ]
Have you been diagnosed with any medical conditions?
Y [ ] N [ ]
Do the symptoms cause distress or impairment in social, occupational or other
areas of functioning?
Y [ ] N [ ]
Adjustment Disorder with depressed mood
Has there been development of emotional or behavioral symptoms within 3 months
of an identifiable stressor?
Y [ ] N [ ]
Either of the following symptoms:
3. distress that is excess of what would be expected from the stressor.
Y [ ] N [ ]
4. significant impairment in social, occupational, or academic functioning.
Y [ ] N [ ]
Are you currently grieving over the loss of a loved one?
Y [ ] N [ ]
Bipolar I Disorder
Single Manic Episode
Presence of only one manic episode and no past major depressive episodes.
Y [ ] N [ ]
The manic episode is not due to another disorder or condition.
Y [ ] N [ ]
Most recent episode hypomanic
Currently, or most recently, in a hypomanic episode.
Y [ ] N [ ]
There has previously been at least one manic episode or mixed episode.
Y [ ] N [ ]
Mood symptoms cause distress or impairment in social, occupational, or academic
functioning.
Y [ ] N [ ]
Most recent episode manic
Currently, or most recently, in a manic episode. Y [ ] N [ ]
There has been at least one Major Depressive Episode, Manic Episode, or Mixed
Episode.
Y [ ] N [ ]
Most recent episode mixed
Currently, or most recently, in a mixed episode. Y [ ] N [ ]
There has been at least one Major Depressive Episode, Manic Episode, or Mixed
Episode.
<PAGE> 18
Y [ ] N [ ]
Most recent episode depressed
Currently, or most recently, in a Major depressive Episode.
Y [ ] N [ ]
There has been at least one Major Depressive Episode, Manic Episode, or Mixed
Episode.
Y [ ] N [ ]
Most recent episode unspecified
Criteria are currently, or most recently, met for a Manic, Hypomanic, or Major
Depressive Episode.
Y [ ] N [ ]
There has been at least one manic episode or mixed episode.
Y [ ] N [ ]
Mood symptoms cause distress or impairment in social, occupational, or academic
functioning.
Y [ ] N [ ]
Are you currently taking medication? Y [ ] N [ ]
Have you been diagnosed with a medical condition? Y [ ] N [ ]
Are you abusing any substances (e.g. alcohol)? Y [ ] N [ ]
Bipolar II Disorder
The presence of one or more Major Depressive Episode.
Y [ ] N [ ]
At least one Hypomanic episode. Y [ ] N [ ]
There has never been a manic episode or a mixed episode.
Y [ ] N [ ]
Mood symptoms cause distress or impairment in social, occupational, or academic
functioning.
Y [ ] N [ ]
WHY BOTHER? : WHAT HAPPENS IF WE IGNORE THE DISEASE?
The effects of depression and its painful symptoms can devastate entire
families. Suicide, often provoked by depression is increasing. In 1991, 30,000
people in the U.S. committed suicide and over 500,000 attempted suicide. Put
another way, in a two-year period, as many Americans killed themselves as were
killed in the entire Vietnam War.
Sociologically, mental illness affects our whole society. According to recent
U.S. government figures, a third of the homeless suffer from untreated and
severe mental illness. In fact, only 10%-20% of those who would benefit from
medication actually receives treatment. Depression, untreated depression, can
and does progress to the point where the person gives up hope and where the
medications that may cure the problem early on, fail to work.
Suicide is not a disorder; rather it is a symptom of depression. Over 60% of
suicides have depression. 5 million people, men, women, and every group of the
population, think about suicide with approximately 30,000 completing suicide.
Out of the 30,000, 30%-75% has had psychiatric treatment at some point. 20%-45%
was receiving treatment at the time of their death. 70% of elderly persons
completing suicide was in contact with their primary care physician within 1
month of suicide.
<PAGE> 19
All suicidal behaviors occur in context with a mental disorder. At risk persons
are those with a history of, or family history of, mental disorders and/or
substance abuse. Suicide among adolescent males is usually due to depression
including alcohol and substance abuse. Adolescent females complete suicide in
response to a mood disorder not usually including alcohol use. White males
55 years and older have the highest rate of suicide. They are 6 times as likely
to use alcohol as compared to the national average. Suicide is usually in
response to alcohol use and a late onset of depression. Men are 4 times as
likely to commit suicide than women, and women have higher rates of depression.
Depression is difficult to diagnose among elderly persons because of physical
illness; therefore, depression is not treated adequately.
CONDITIONAL RESOURCES:
NIMH (National Institute of Mental Health) website
NDMDA (national depression and Manic Depression Association) website
Mentalhelp.net website
The Good News About Depression, Mark S. Gold, MD
DSM-IV
The International Journal of Neuropsychiatric Medicine
(C)Mark S. Gold, MD, 2000
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<TOTAL-LIABILITY-AND-EQUITY> 1,675,908
<SALES> 985,880
<TOTAL-REVENUES> 985,880
<CGS> 412,763
<TOTAL-COSTS> 5,448,357
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,919,590
<INCOME-PRETAX> (6,380,776)
<INCOME-TAX> 0
<INCOME-CONTINUING> (6,380,776)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6,380,776)
<EPS-BASIC> (.30)
<EPS-DILUTED> (.30)
</TABLE>
