<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 Period Ended September 30, 1999
[ ] Transition Report Pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934
For the transition period from _____________________ to _____________________
Commission File Number 333-76427
Panoramic Care Systems, Inc.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 84-1165714
-------------------------- ------------------------
(State of Incorporation) (IRS Employer ID Number)
5181 Ward Road Wheat Ridge, CO 80033
- ---------------------------------------- ------------------------
(Address of principle executive offices) city) (state) (zip code)
(303) 422-3886
---------------------------------------------------
Registrant's telephone number including area code
-----------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the Registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES NO X
--- ---
Transitional Small Business Disclosure format (check one):
YES NO X
--- ---
The number of shares outstanding of the Registrant's $0.001 par value common
stock on November 15, 1999 was 4,875,000.
<PAGE> 2
PANORAMIC CARE SYSTEMS, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page No.
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements 3 - 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8 - 12
PART II. OTHER INFORMATION ITEM 13
</TABLE>
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
PANORAMIC CARE SYSTEMS, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1999 1998
------------ ------------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and equivalents $ 283,238 $ 350,122
Accounts receivable:
Trade, net of allowance for doubtful accounts 84,080 --
Subscription Receivable -- 99,400
Prepaid expense and other 27,856 --
------------ ------------
Total current assets 395,174 449,522
PROPERTY AND EQUIPMENT, AT COST: 139,189 45,282
Less accumulated depreciation (55,761) (35,011)
------------ ------------
Net property and equipment 83,428 10,271
CAPITALIZED SOFTWARE COSTS, net of accumulated
amortization of $57,874 and $0, respectively 433,963 75,000
------------ ------------
TOTAL ASSETS $ 912,565 $ 534,793
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities $ 135,626 $ 32,257
Accrued payroll 29,675
Other accrued liabilities 13,359
Deferred revenue 7,920 --
------------ ------------
Total current liabilities 186,580 32,257
STOCKHOLDERS' EQUITY
Common stock, par value $.001 per share;
authorized 50,000,000 shares; 4,875,000 and
3,016,000 issued and outstanding September 30, 1999
and December 31, 1998, respectively 4,875 3,016
Additional paid-in capital 2,382,076 1,202,765
Accumulated deficit (1,660,966) (703,245)
------------ ------------
Total stockholders' equity 725,985 502,536
------------ ------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 912,565 $ 534,793
============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE> 4
PANORAMIC CARE SYSTEMS, INC
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
REVENUES:
Software license fees $ 39,970 $ -- $ 76,160 $ --
Royalties 894 4,399 894 30,247
Consulting fees -- 14,048 21,989
Other -- -- -- 713
------------ ------------ ------------ ------------
Total revenues 40,864 18,447 77,054 52,949
OPERATING EXPENSES
Cost of Sales 10,822 25,448 47,618 32,899
Salaries and benefits 199,641 23,993 414,838 71,978
Management fee -- 14,048 -- 21,989
Consulting fees 11,670 -- 64,529 --
Recruiting fees 18,460 -- 78,960 --
Software amortization 38,074 -- 57,874
Other general and administrative 160,131 6,405 376,916 14,759
------------ ------------ ------------ ------------
438,798 69,894 1,040,735 141,625
Operating loss (397,934) (51,447) (963,681) (88,676)
OTHER INCOME (EXPENSE):
Interest income 2,871 -- 5,960 --
------------ ------------ ------------ ------------
NET INCOME (LOSS) $ (395,063) $ (51,447) $ (957,721) $ (88,676)
============ ============ ============ ============
BASIC AND DILUTED LOSS
PER COMMON SHARE: $ (0.08) $ (0.03) $ (0.25) $ (0.04)
============ ============ ============ ============
BASIC AND DILUTED
WEIGHTED AVERAGE
SHARES OUTSTANDING 4,820,863 2,000,000 3,788,343 2,000,000
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE> 5
PANORAMIC CARE SYSTEMS, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED
SEPTEMBER 30,
1999 1998
------------ ------------
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net loss $ (957,721) $ (88,676)
Adjustments to reconcile net loss to net cash from operating activities:
Contributed services -- 50,673
Depreciation & software amortization 78,624 6,750
(Increase) decrease in accounts receivable (84,080) 9,640
Increase in prepaid expenses (27,856) --
Increase in accounts payable 104,264 7,817
Increase in accrued liabilities 43,033 14,084
Increase in deferred revenue 7,025 --
------------ ------------
Net cash provided by (used in) operating activities (836,711) 288
CASH FLOW FROM INVESTING ACTIVITIES:
Purchase of property plant and equipment (93,907) (4,641)
Capitalized software costs (316,837) --
------------ ------------
Net cash used in investing activities (410,744) (4,641)
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock, net of offering costs 1,081,171 --
Stock subscriptions receivable 99,400 --
------------ ------------
Net cash provided by financing activities 1,180,571 --
NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS (66,884) (4,353)
CASH AND EQUIVALENTS, BEGINNING OF PERIOD 350,122 5,354
------------ ------------
CASH AND EQUIVALENTS, END OF PERIOD $ 283,238 $ 1,001
============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE> 6
PANORAMIC CARE SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
1. INTERIM FINANCIAL INFORMATION - BASIS OF PRESENTATION
The accompanying financial statements of Panoramic Care Systems, Inc.
(the "Company") have been prepared in accordance with generally
accepted accounting principles for interim financial information and
with the instructions for Form 10-QSB and Article 10 of Regulation S-X.
The balance sheet as of September 30, 1999 and the statements of
operations for the three and nine months ended September 30, 1999 and
1998, and the statements of cash flows for nine months ended September
30, 1999 and 1998, are unaudited but include all adjustments
(consisting of normal recurring adjustments) which the Company
considers necessary for a fair presentation of the financial position
at such date and the operating results and cash flows for those
periods. Although the Company believes that the disclosures in these
financial statements are adequate to make the information presented not
misleading, certain information normally included in financial
statements and related footnotes prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant
to the rules and regulations of the Securities and Exchange Commission.
The accompanying financial statements should be read in conjunction
with the financial statements and notes included in the Company's
prospectus filed on June 24, 1999 with the Securities and Exchange
Commission.
Results for any interim period are not necessarily indicative of
results for any other interim period or for the entire year. In the
opinion of management, the accompanying unaudited financial statements
contain all adjustments necessary to present fairly the financial
position as of September 30, 1999 and the results of operations and
statement of cash flows for the periods presented. These statements
reflect all adjustments, consisting of normal recurring adjustments,
which in the opinion of management, are necessary for fair presentation
of information contained therein. The results of operations for the
nine month periods ending September 30, 1999 and 1998 are not
necessarily indicative of results to be expected for the full year.
2. TRADE RECEIVABLES
The following information summarizes trade receivables:
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1999 1998
------------ ------------
<S> <C> <C>
Accounts Receivable 84,080 --
Less allowance for doubtful accounts (--) --
------------ ------------
$ 84,080 $ --
============ ============
</TABLE>
The Company in the third quarter had two installations that represented
64% and 31% of its quarterly sales. The company had five customers,
which comprised 10% or more of the sales through the nine month ending
September 30, 1999.
3. REVENUE RECOGNITION
The Company recognizes software license fees revenue at the time the
product is installed at the customer's site. During the three month
period ending September 30, 1999, the Company completed two
installations, and software license and maintenance agreement fees for
the period were $39,970. The Company has installed for the nine months
ending September 30, 1999 five systems for revenues of $76,160 for the
period. Revenue from support and software maintenance agreements is
deferred at the time the agreement is executed and recognized ratably
over the contractual period of twelve months. At the end of September
30, 1999 the Company had deferred revenue of $7,920 associated with
software maintenance agreements. The Company recognizes revenues from
consulting services when such services are provided. All costs
associated with licensing of software products, support and update
services, and training and consulting services are expensed as
incurred.
6
<PAGE> 7
4. NET INCOME (LOSS) PER SHARE
Basic earnings (loss) per share are calculated by dividing the net loss
by the weighted average common shares outstanding during the period.
For purposes of computing diluted earnings per share, dilutive
securities are not included when the effect is antidilutive.
Options to employees to purchase 390,000 shares and warrants to
purchase 540,000 shares of common stock were not included in the
computation of diluted earnings per share because their effect was
anti-dilutive for the period ending September 30, 1999.
7
<PAGE> 8
FORWARD-LOOKING STATEMENTS
Statements made in this Form 10-QSB that are not historical or
current facts are "forward-looking statements" made pursuant to the
safe harbor provisions of Section 27A of the Securities Act of 1933
("The ACT") and Section 21E of the Securities Exchange Act of 1934.
These statement often can be identified by the use of terms such as
"may," "will," "expect," "believes," "anticipate," "estimate,"
"approximate" or "continue," or the negative thereof. The Company
intends that such forward-looking statements be subject to the safe
harbors for such statements. The Company wishes to caution readers not
to place undue reliance on any such forward-looking statements, which
speak only as of the date made. Any forward-looking statements
represent management's best judgment as to what may occur in the
future. However, forward-looking statements are subject to risks,
uncertainties and important factors beyond the control of the Company
that could cause actual results and events to differ materially from
historical results of operations and events and those presently
anticipated or projected. These factors include adverse economic
conditions, entry of new and stronger competitors, inadequate capital,
unexpected costs and failure to capitalize upon access to new markets.
You should understand that various factors, in addition to those
discussed elsewhere in this document and in the documents referred to
in this document, could affect the future results of the Company and
could cause results to differ materially from those expressed in such
forward-looking statements. The Company disclaims any obligation
subsequently to revise any forward-looking statements to reflect events
or circumstances after the date of such statement or to reflect the
occurrence of anticipated or unanticipated events.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following is a discussion and analysis of Panoramic Care
Systems, Inc. financial condition and results of operations for the
three months and nine months ended September 30, 1999 and 1998. We also
discuss certain factors that may affect our prospective financial
condition and results of operations. This section should be read in
conjunction with the Condensed Financial Statements and the Company's
Prospectus dated June 24, 1999 which has been filed with the Securities
and Exchange Commission and is available from the Company at no charge.
The company sells computer software and provides consulting
services to healthcare professionals to assist in identifying,
estimating, and managing costs and expenses related to the provision of
patient care services in extended stay healthcare facilities. The
computer software uses patient symptoms to develop a detailed treatment
plan and forecast expected costs of treatment to the healthcare
provider.
Panoramic developed Pathfinder SC with the aim of: (i) automating
access to all pertinent guidelines; (ii) providing standardized
guidance as to when and where to most appropriately deliver each
service a patient requires; and (iii) automating the documentation to
assure timely reimbursement and compliance.
Panoramic is attempting to achieve four goals with this product:
1. Minimize costs by effectively managing the clinical
services delivered;
2. Reduce the administrative time associated with regulatory
and guideline compliance;
3. Provide users with the ability to accurately diagnose and
track services delivered to assist in delivering adequate
quality of care, efficiently; and
4. Enable the sharing of information between care-giving
facilities.
In the third quarter of 1999 the Company moved from development to
the sales and marketing of the product to customers. During the quarter
the Company signed two new contracts with marketing distribution
companies that will sell the product to end users. Additionally the
Company sold and installed two systems to end users. The Company during
the quarter submitted a proposal to a large group purchasing
organization for the installation of its software in the organization's
institutions which will cover all fifty states in the United States.
The proposal is still be reviewed by the organization and the Company
is uncertain as to its success in this proposal. The Company's sales in
the
8
<PAGE> 9
quarter did not meet its expectations and subsequent to the quarter end
focused on building an internal sales force. The Company plans to hire
additional sales personnel to aggressively market and sell its products
Clients are searching for an integrated clinical and financial
software solution. In response, the Company is exploring joint venture
opportunities with financial software companies to enhance their
clinical software. Many of the company's clients need to upgrade their
hardware and networking capabilities in order to use the software. This
is very time consuming and costly for clients. Panoramic is providing a
"turn-key" system that includes the necessary hardware to run their
software. The Company is also one of the first software companies to
move into the wireless market. Wireless capabilities allow clients to
network multiple PCs throughout a facility without running expensive
cable and conduit.
Our limited operating history and the early stage of development
in the markets for our software makes it difficult or impossible to
predict our revenues and operating results. We believe that our
prospects should be considered in light of the risks and difficulties
encountered by companies at early stage development. We may not be
successful in addressing these risks and difficulties.
RESULTS OF OPERATIONS FOR THREE MONTHS ENDED SEPTEMBER 30, 1999
COMPARED TO THE THREE MONTHS ENDED SEPTEMBER 30, 1998
Net revenue for the three months ended September 30, 1999 was
$40,864. This was an increase of $22,417 or 122% from $18,447 for the
three months ended September 30, 1998 The increase is associated with
the release of Pathfinder SC in the second quarter and the installation
at two sites during the third quarter, including software maintenance
fees. Contribution to the increase in sales was the direct result of
the Company's direct sales efforts. The results from one software
distributor has been disappointing and the Company is focusing its
efforts on direct sales of its software products to end users. For the
quarter ending September 1999 the Company experienced software sales of
$39,970 compared to $36,190 software license fee revenue during the
second quarter in 1999. The Company's revenues in previous quarters and
previous years were mainly derived from royalties and consulting fees
versus software licensing fees in 1999.
Cost of Revenues in the current quarter was $10,822 or 27% of
software revenue. It is anticipated that the cost of revenues will
improve as training of new system installers is completed and they
become more familiar with installation of new systems.
General and Administrative Expenses (G&A) increased $383,531 or
863% from $44,445 in 1998 to $427,976 for the quarter ending September
30, 1999. Salaries and employee benefits increased $175,648 from
$23,993 in 1998 to $199,641 in 1999. This increase in G&A expenses and
salaries is associated with the hiring of additional personnel in the
sales and support areas of the Company and relocation to new office
facilities to assist in the ability of the Company to expand sales.
Consulting and recruiting fees increased to $30,130 in 1999 compared to
$ 0 in the same period in 1998. This is the result of the Company
utilizing outside services relating to the growth and financing of the
Company in addition to the addition of a software development
individual in the third quarter through a recruiter. Software
amortization increased to $38,074 from $ 0 in the same period in 1998.
Other general and administrative expenses increased $153,727 in 1999
from $6,405 in 1998. The increased expenditure are mainly attributed to
increased expenditures in the following areas: travel $48,193, business
insurance $23,128, depreciation $10,767, printing expense $18,758,
office leasing expense $11,424 and accounting fees of $7,081.
Interest income increased $2,871 in the three months ended
September 30, 1999 from $ 0 in 1998 to $2,871 in 1999. This increase in
interest income is attributed to the initial public offering in the
first quarter.
Net Loss was $395,063 for the three months ended September 30,
1999, compared to $51,447 net loss for the same period in 1998, or an
increase of $343,616 over the same period. The net losses are
associated with the increased G&A necessary to maintain a continued
quarterly sales growth rate after the rollout of the new software
products. Losses are anticipated to continue through the current fiscal
year due to expenditures necessary in attempting to leading sales
growth rates.
9
<PAGE> 10
RESULTS OF OPERATIONS FOR NINE MONTHS ENDED SEPTEMBER 30, 1999
COMPARED TO THE NINE MONTHS ENDED SEPTEMBER 30, 1998
Net revenue for the six months ended September 30, 1999 was
$77,054 compared to revenues of $52,949 for the same period in 1998.
This represents an increase of $24,105 or 46% over the nine month
ending September 30, 1998. The increase is associated with delivery of
the Pathfinder SC software and installation of the product in five
skilled nursing facilities in the first nine months of 1999.
Cost of Revenues was $47,618 or 63% of software revenue compared
to $32,899 for the nine months ended September 30, 1998. It is
anticipated that cost of revenues will improve through the remainder of
the fiscal year as installations grow and the resellers have more
experience with the installation process.
General and Administrative Expenses (G&A) increased $884,391 or
813% from $108,726 for the first nine months in 1998 to $993,117 for
the same nine months period in the 1999. Salaries and employee benefits
increased $342,860 from $71,978 in 1998 to $414,638 in 1999. This
increase is associated with the addition of professional staff in Q1
through Q3 required to meet the ramp of the Company's anticipated sales
growth rates and continued product development. The Company added an
additional software developer at the beginning of the third quarter.
The salaries and employee benefits represents 39% of the total
operating expenses for the nine months. Recruiting and consulting fees
totaled $143,489 for the nine months compared to $0 in the previous
period in 1998. This increase is associated with the recruitment of a
CEO, Vice President Sales and Marketing, Director of Technical Support,
software development person in the third quarter and the use of
consulting service to fill roles schedule to be added in the future.
Software amortization expense increased by $57,874 due to the release
of the product versus $0 in 1998. Other general and administrative
expense increased $362,158 from $14,759 in the 1998 period compared to
total other general and administrative expenses of $376,916 for the
nine months in 1999. The significant increases are attributed to
increases over 1998 expenditures from office lease of $20,735,
telephone expense $14,493, travel expenses of $92,109, marketing
material & advertising expenditures of $126,236, trade show expense of
$13,129, business labor of $13,140 and depreciation expense of $14,000.
The increase in G&A is attributed to the Company's plan to expand the
sales volume of the Company's software products requiring the addition
of personnel and primarily consists of marketing costs and amortization
of software development costs.
Interest income increased $5,960 in the nine months ended
September 30, 1999 from $0 in 1998. This increase in interest income is
attributed to the completion of the private placements and the initial
public offering in the second quarter of 1999.
Net loss totaled $957,721 for the nine months ended September 30,
1999, compared to $88,676 net loss for the same period in 1998, an
increased loss of $869,045 net loss over the same period. The net loss
is associated with the increased G&A necessary to ramp quarterly sales
growth rate. Losses are anticipated to continue through the current
fiscal year due to expenditures leading sales growth rates.
LIQUIDITY AND CAPITAL RESOURCES
During the first quarter the Company completed a $92,000 private
placement of 184,000 shares of the Company's common stock, all at a
price of $.50 per share to officers, directors, key employees,
consultants and friends of the Company. The Company received $71,975
from the offering net of offering costs of $20,025.
During the second quarter consultants of the Company exercised a
warrant to purchase 200,000 shares of the Company's Common stock all at
a price of $.25 per share. The Company received $25,000 from the
exercise of these warrants.
During the second quarter the Company issued to the software
developers 100,000 shares of the Company's common stock all at a price
of $1.00 in exchange for services provided in development of the
Company's software product. The $100,000 in costs were capitalized as
software development costs.
10
<PAGE> 11
In June 1999, the Company completed its initial public offering of
1,100,000 shares of the Company's common stock at an offering price of
$1.00 per share. As part of the initial public offering the holders of
the $100,000 8% convertible notes, at their option, converted the notes
into 100,000 shares of common stock at $1.00 per share. Additionally,
the Agent was issued 110,000 shares of the Company's common stock in
the Canadian Offering along with warrants to purchase 190,000 shares of
the Company's common stock at a price of $1.00 for the first 12 months
and at a price of $1.15 for the next 12 months. In July 1999, the
Company completed the green shoe for the IPO selling an additional
165,000 shares at a price of $1.00. The net cash proceeds to the
Company from the initial public offering and the green shoe were
approximately $954,195 after payment of expenses of approximately
$305,805.
Net proceeds from the issuances by the Company for the above
listed offerings and warrant exercise were approximately $1,081,170.
As a result of the private placement and the Company's IPO in June
1999, completion of the green shoe in July 1999 and the Company's
expenditures, the cash position decreased by $66,884 since December 31,
1998 and its working capital decreased from $417,265 at December 31,
1998 to $205,594 at September 30, 1999. The Company has incurred losses
since inception. In addition to having to rely upon cash generated from
operations, the Company has had to rely upon the sale of equity
securities for cash required for administration, research and
development, capital improvements, sales and marketing programs and
advertising, among other things. Management anticipates to continue to
incur losses and to increase its accounts receivables as the growth of
sales is expected to continue with the installation of new systems.
Management has had to raise additional funds subsequent to September
30, 1999 to meet its current cash requirements and anticipates it may
have to raise additional funds to meet its working capital needs in the
future. If, cash flow is insufficient to cover cash expenditures, the
Company will have to continue to rely upon equity and debt financing
during such period. There can be no assurance that financing, whether
debt or equity, will always be available to the Company in the amount
required at any particular time or particular period or, if available,
that it can be obtained on terms satisfactory to the Company.
The Company currently has stock options to 390,000 and 540,000
warrants outstanding to purchase common stock. All the options and
warrants are exercisable at a price of at least, $1.00 per share. If
all stock options and warrants were exercised, the Company would
receive proceeds of $1,030,000. All of these funds would be available
to the Company as working capital.
Cash Flow
During the nine months ended September 30, 1999, cash decreased by
$66,884. Net cash used in operating activities for the nine months
ended September 30, 1999 was $836,711 compared to cash provided of $288
for the nine months ended September 30, 1998. The decrease of $836,999
was primarily due to an increase in the net loss. This resulted from
additional employees hired to continue software development, support
and sales of the new product, as well as primarily marketing costs.
Net cash used in investing activities for the nine months ended
September 30, 1999 was $410,744 compared to $4,641 for the comparable
period in 1998. The increase was due primarily from the capitalization
of software development costs totaling $316,837 associated with the
completion of the PCM software. Additionally, the company acquired
$93,907 in office and computer equipment for new office space and
personnel.
Net Cash provided from financing activities for the nine months
ended September 30, 1999 was $1,180,571 compared to $0 for the same
period in 1998. This increase is associated with the private
placements, initial public offering, greenshoe, warrant exercise and
collection of stock subscription receivable.
The Company will continue to capitalize software development costs
consistent with its strategy of the development of the software for the
marketplace.
11
<PAGE> 12
IMPACT OF THE YEAR 2000 ISSUE
The Year 2000 computer problem refers to the potential for system
and processing failures of date-related data as a result of
computer-controlled systems using two digits rather than four to define
the applicable year. For example, computer programs that have
time-sensitive software may recognize a date represented as "00" as the
year 1900 rather than the year 2000. This could result in a system
failure or miscalculations causing disruptions of operations,
including, among other things, a temporary inability to process
transactions, send invoices, or engage in similar normal business
activities.
State of Readiness
All Panoramic products and upgrades will be Year 2000 compliant.
Panoramic, however, may be affected by Year 2000 issues related to
non-compliant internal systems developed by third party vendors.
Panoramic has reviewed its internal systems, including its accounting
system, and has found them to be Year 2000 compliant. Panoramic is not
currently aware of any Year 2000 problem relating to any of its
internal, material systems. Panoramic does not believe that it has any
material systems that contain embedded chips that are not Year 2000
compliant.
Management believes that absent a systemic failure outside the
control of Panoramic, such as a prolonged loss of electrical or
telephone service, Year 2000 problems at third parties will not have a
material impact on Panoramic. Panoramic has no contingency plan for
systemic failures such as loss of electrical or telephone services.
Panoramic's contingency plan in the event of a non-systemic failure is
to establish relationships with alternative suppliers or vendors to
replace failed suppliers or vendors. Panoramic has no other contingency
plans or intention to create other contingency plans.
Cost Associated With Year 2000 Compliance
Panoramic does not separately track expenditures relating to Year
2000 compliance. Such expenditures are primarily absorbed within the
product development organization. Based on its overall development
expenditure and the amount of time people in the organization are
spending on Year 2000 compliance, Panoramic believes that its spending
on compliance to date has not been material.
Any failure of Panoramic to make its products Year 2000 compliant
could result in a decrease in sales of its products, an increase in
allocation of resources to address Year 2000 problems of its customers
without additional revenue commensurate with such dedication of
resources, or an increase in litigation costs relating to losses
suffered by Panoramic's customers due to such Year 2000 problems.
Failure of Panoramic's internal systems could temporarily prevent it
from processing orders, issuing invoices, and developing products, and
could require to devote significant resources to correcting such
problems. To Panoramic's knowledge, however, the internal accounting
systems have been attested by the suppliers as Year 2000 compliant. Due
to the general uncertainty inherent in the Year 2000 computer problem
resulting from the uncertainty of the Year 2000 readiness of third
party suppliers and vendors, Panoramic is unable to determine at this
time whether the consequences of Year 2000 failures will have a
material impact on its business, results of operations, and financial
condition.
12
<PAGE> 13
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable
Item 2. Changes in Securities
Not applicable
Item 3. Defaults Upon Senior Securities
Not applicable
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable
Item 5. Other Information
Not applicable
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
27 Financial Data Schedule.
b) Reports on Form 8-K.
During the quarter covered by this report, the Company filed
the following reports on Form 8-K.
None
13
<PAGE> 14
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.
(Registrant)
Date: November 19, 1999 /s/ Jill Flateland
----------------------- -------------------------------------
Jill Flateland
President, Chief Operating Officer
Date: November 19, 1999 /s/ Kent A. Nuzum
----------------------- -------------------------------------
Kent A. Nuzum
Chief Financial Officer
14
<PAGE> 15
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
27 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 283,238
<SECURITIES> 0
<RECEIVABLES> 84,080
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 395,174
<PP&E> 139,189
<DEPRECIATION> (55,761)
<TOTAL-ASSETS> 912,565
<CURRENT-LIABILITIES> 186,580
<BONDS> 0
0
0
<COMMON> 4,875
<OTHER-SE> 2,382,076
<TOTAL-LIABILITY-AND-EQUITY> 725,985
<SALES> 77,054
<TOTAL-REVENUES> 77,054
<CGS> 47,618
<TOTAL-COSTS> 993,117
<OTHER-EXPENSES> (5,960)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (957,721)
<INCOME-TAX> 0
<INCOME-CONTINUING> (957,721)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (957,721)
<EPS-BASIC> 0.25
<EPS-DILUTED> 0.25
</TABLE>
