AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 24, 1999
REGISTRATION NO. 333-76427
================================================================================
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 2 TO
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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PANORAMIC CARE SYSTEMS, INC.
(Exact name of small business issuer as specified in its charter)
DELAWARE
(State or jurisdiction 7232 84-1165714
of incorporation or (Primary Standard Industrial (I.R.S. Employer
organization) Classification Code Number) Identification Number)
5181 WARD ROAD THE CORPORATION TRUST COMPANY
WHEAT RIDGE, CO 80033 5181 WARD ROAD 1209 ORANGE STREET
(303) 422-3886 WHEAT RIDGE, CO 80033 WILMINGTON, DELAWARE 19801
(Address and telephone (303) 422-3886 (302) 658-7581
number of principal (Address of principal (Name, address and telephone
executive offices) place of business) number of agent for service)
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Copies to:
LESTER R. WOODWARD, ESQ.
DAVIS, GRAHAM & STUBBS LLP
370 SEVENTEENTH STREET, SUITE 4700
DENVER, COLORADO 80202
(303) 892-9400
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APPROXIMATE DATE OF PROPOSED SALE TO PUBLIC:
As soon as practicable after the effective date of this Registration Statement.
---------------
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. |X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. |_|
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CALCULATION OF REGISTRATION FEE
<TABLE>
Proposed Maximum Proposed Maximum
Title of Each Class of Amount to be Offering Price Aggregate Amount of
Securities to be Registered Registered Per Share(1) Offering Price(1) Registration Fee
<S> <C> <C> <C> <C>
Common Stock, par value
$.001 per share................ 3,531,500 $1.00 $3,531,500 $989(2)
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee, based
upon the expected price at which the shares of common stock, $.001 par
value, are to be offered in a public offering.
(2) $970 fee paid on April 16, 1999.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
<PAGE>
EXPLANATORY NOTE
This registration statement covers (a) the primary public offering by
Panoramic of 1,265,000 shares of common stock, $.001 par value, which includes
165,000 shares issuable pursuant to an over-allotment option, (b) 110,000 shares
to be paid to the placement agent, Canaccord, as a corporate finance fee, (c)
165,000 shares underlying a warrant to be paid to Canaccord in consideration of
Canaccord's commitment to sell all 1,265,000 shares in the public offering, and
(d) the concurrent offering on a delayed basis of 1,991,500 shares of common
stock by certain selling stockholders of Panoramic. The primary prospectus
covers the shares being offered by Panoramic and Canaccord and referenced in
(a), (b) and (c) above. An alternate prospectus will be used by the selling
stockholders in connection with an offering by them for their accounts of up to
1,991,500 shares of common stock held by such selling stockholders. The
alternative prospectus is identical to the primary prospectus, except for (1)
alternate front and back cover pages, which alternate cover pages are noted in
the registration statement, (2) the sections entitled "Table of Contents,"
"Summary," "Use of Proceeds" and "Plan of Distribution," which alternate
sections are indicated in the registration statement, (3) the sections entitled
"Determination of Offering Price" and "Dilution" which sections shall appear
only in the primary prospectus.
<PAGE>
THIS INFORMATION IS NOT COMPLETE AND MAY BE CHANGED. WE MAY NOT DELIVER THESE
SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE
SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY
STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED JUNE 24, 1999
INITIAL PUBLIC OFFERING
PROSPECTUS
1,100,000 Shares
$1.00 per share
[LOGO]
PANORAMIC CARE SYSTEMS, INC.
Common Stock, $.001 par value
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Panoramic Care Systems, Inc. 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. Panoramic's computer
software uses patient symptoms to develop a detailed treatment plan and forecast
expected costs of treatment to the healthcare provider.
Canaccord Capital Corporation, Panoramic's agent, has entered into a firm
commitment agreement to sell all of the stock in this public offering at a price
of $1.00 per share, for aggregate gross proceeds of $1,100,000.
The common stock of Panoramic Care Systems, Inc. is approved for listing on
the Vancouver Stock Exchange.
UNDERWRITTEN BY:
CANACCORD CAPITAL CORPORATION
TOTAL PER SHARE
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Public Offering Price $1,100,000 $1.00
Underwriter Commissions* $82,500 $0.075
Proceeds $1,017,500 $0.925
*Assuming the over allotment option is not exercised
Panoramic has paid Canaccord a sponsorship fee of $10,000, granted to
Canaccord an over-allotment option to solicit and accept subscriptions for
up to an additional 165,000 shares of common stock at a price of $1.00 per
share and granted to Canaccord a warrant entitling it to purchase shares of
common stock in the future. Panoramic also will pay Canaccord a corporate
finance fee of 110,000 shares of common stock.
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THE SHARES OF COMMON STOCK OFFERED HEREBY INVOLVE A HIGH
DEGREE OF RISK. SEE "RISK FACTORS" LOCATED AT PAGES 2 TO 6.
------------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON
THE ADEQUACY OR ACCURACY OF THE PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The date of this prospectus is _______, 1999
<PAGE>
TABLE OF CONTENTS
PAGE
Summary..................................................................1
Risk Factors.............................................................2
Dilution.................................................................7
Use of Proceeds..........................................................8
Description of Panoramic................................................10
Management Discussion and Analysis of financial Condition
and Results of Operations.............................................24
Description of Securities...............................................28
Plan of Distribution....................................................30
Directors and Senior Officers...........................................32
Certain Relationships and Related Transactions..........................34
Executive Compensation..................................................35
Cautionary Statement Concerning Forward Looking Statements..............36
Dividend Record and Policy..............................................36
Experts.................................................................36
Legal Matters...........................................................36
Where You Can Find More Information.....................................37
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<PAGE>
SUMMARY
This summary highlights selected information from this document and may not
contain all of the information that is important to you. To better understand
the offering, you should read this entire document and the documents we have
referred you to. See "Where You Can Find More Information."
BUSINESS OF PANORAMIC: Panoramic is a software development company that creates
and markets software products to standardize and
consolidate clinical, financial, quality and
administrative management for patients in care settings
outside of hospitals. Panoramic has recently designed a
line of software known as Panoramic Care Manager(TM)
(the "PCM Software") which provides software and
Internet integration for the post-acute healthcare
industry. The PCM Software is designed to provide
healthcare professionals with automated patient
management tools.
Panoramic started out by producing educational materials
for critical care programs. This was followed by the
development of intensive patient management tools in
printed format under the trade name STATpath(TM).
STATpath materials are the foundation for the PCM
Software.
OFFERING: The offering consists of 1,100,000 shares of common stock
to be offered to the public. Upon completion of the
offering, there will be approximately 5,040,000 shares
of common stock issued and outstanding. In addition:
o Panoramic has granted stock options pursuant to
which up to 465,000 shares may be issued in the
future pursuant to Panoramic's Stock Option Plan.
o Panoramic has granted warrants pursuant to which up
to 375,000 shares may be issued in the future.
USE OF PROCEEDS: The net proceeds from this offering (after
deducting commissions to the underwriter but before
expenses) will be $1,017,500. The net proceeds, combined
with Panoramic's working capital deficit of
approximately $300,000 as of May 31, 1999 totals
approximately $717,500 and will be used to further
Panoramic's business objectives outlined in the
"Description of Business" section of this prospectus.
<PAGE>
RISK FACTORS
An investment in Panoramic common stock involves certain risks.
Prospective investors should carefully consider the following risk factors, in
addition to all of the other information in this prospectus, in determining
whether to purchase shares of Panoramic stock.
WE CANNOT BE SURE THAT SUFFICIENT CAPITAL WILL BE AVAILABLE TO COVER NECESSARY
EXPENSES
Panoramic has expended and will continue to expend substantial funds for
research and development, testing, capital expenditures, manufacturing and
marketing of its products. The timing and amount of such spending is difficult
to predict accurately and will depend upon several factors, including the
progress of research and development efforts and competing technological and
market developments, commercialization of products currently under development
and market acceptance and demand for Panoramic's products. Panoramic currently
estimates that it will be necessary to spend approximately $2,765,000 during
1999, which exceeds the proceeds from the offering and Panoramic's working
capital. If Panoramic's sales do not cover this deficit, Panoramic may seek
additional funds through equity or debt financing, through collaborative or
other arrangements with other companies and from other sources. If additional
funds are raised by issuing equity securities, further dilution to shareholders
could occur. There can be no assurance that additional financing will be
available when needed or on terms acceptable to Panoramic. If adequate funds are
not available, Panoramic could be required to delay development or
commercialization of the PCM Software, to license to third parties the rights to
commercialize certain products or technologies that Panoramic would otherwise
seek to commercialize for itself or to reduce the marketing, customer support or
other resources devoted to certain of its products, each of which could have a
material adverse effect on Panoramic's business, financial condition and results
of operations.
WE HAVE HAD CONTINUING LOSSES WHICH ARE EXPECTED TO CONTINUE
Panoramic has a limited history of operations that has consisted primarily
of research and development, consulting and initial sales of STATpath. Panoramic
has generated only limited revenues from sales of STATpath and does not have
experience in manufacturing, selling or marketing its products in large,
commercial quantities. In addition, the PCM Software has not gained significant
market exposure or acceptance. Net losses as of May 31, 1999 were approximately
$300,000. Given the absence of clear market acceptance of our line of products,
there can be no assurance that we will achieve projected market penetration
rates and generate the sales revenues that we expect.
WE RELY ON KEY PERSONNEL
Panoramic's future success depends in significant part upon the continued
service of certain key technical and management personnel and its continuing
ability to attract and retain highly qualified technical and managerial
personnel. Key employees of Panoramic include William M. Hunter (President and
Chief Executive Officer), Jill Flateland (Executive Vice President and Chief
Operating Officer), and Byron Flateland (Chief Technical Officer) and Panoramic
has entered into employment agreements with each of these three key personnel.
The employment agreement with William Hunter extends from March 1, 1999
until February 28, 2000 and provides for a monthly salary of $10,000. The
employment agreements with Jill Flateland and Byron Flateland both extend from
January 1, 1999 until December 31, 2000 and each provides for a monthly salary
of $8,133. The employment agreements with all three of these individuals include
non-competition provisions that extend for twelve months following the
employee's termination and non-disclosure provisions that extend indefinitely
following the employee's termination.
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<PAGE>
Competition for personnel is intense, and there can be no assurance that
Panoramic can retain its key technical and managerial personnel or that it can
attract, assimilate or retain other highly qualified technical and managerial
personnel in the future. The loss of key personnel, especially if without
advance notice, or the inability to hire or retain qualified personnel, could
have a material adverse effect upon Panoramic's business, financial condition
and results of operations.
A LARGE PROPORTION OF OUR HISTORICAL REVENUES COMES FROM ONE MAJOR CUSTOMER WHO
IS NOT EXPECTED TO CONTINUE PURCHASING OUR PRODUCT
Historically, Panoramic has marketed its products through distribution
channels. The Center for Health Education has accounted for a significant
portion of Panoramic's product sales and royalty revenue on the STATpath
product. Sales to the Center for Health Education accounted for 53.6% of
Panoramic's total revenues during 1998, and for 68.3% of Panoramic's total
revenues during 1997. The Center for Health Education, however, does not market
software and has phased out the STATpath product in 1999. The ability of
Panoramic to secure new sources of revenues for new products remains an area of
risk.
WE HAVE LIMITED SALES AND MARKETING EXPERIENCE
Panoramic's proposed products have not been proven in a commercial
environment and there is no assurance that it will be able to successfully build
a distribution channel or market the products. Panoramic intends to sell the PCM
Software in the United States to post-acute medical facilities through strategic
partners, distributors, and through healthcare consulting organizations. Market
acceptance of the PCM Software will also require Panoramic to demonstrate that
the cost of its products is competitive with currently available alternatives.
WE MAY BE ADVERSELY AFFECTED BY YEAR 2000 COMPLIANCE ISSUES
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.
Panoramic's PCM Software product is being developed to be fully Year 2000
compliant, although the effectiveness of present efforts to address the Year
2000 issue cannot be assured. In addition, Panoramic has implemented programs
designed to ensure that all software and hardware used in connection with the
design of its PCM Software and the provision of services to its customers and
suppliers and its internal operations will manage and manipulate data involving
the transition of dates from 1999 to 2000 without functional or data
abnormality. Panoramic has sought information from third parties, including
their customers and suppliers, with respect to compliance with Year 2000 issues.
If the present efforts to address the Year 2000 issue are unsuccessful, or if
other third parties with which Panoramic conducts business do not successfully
address the Year 2000 issue, the business and financial condition of Panoramic
could be adversely affected.
PROTECTION OF OUR INTELLECTUAL PROPERTY IS LIMITED; RISK OF THIRD PARTY CLAIMS
OF INFRINGEMENT
The patent, trademark, copyright and trade secret positions of medical
software companies, including those of Panoramic, are uncertain and involve
complex legal and factual issues. The coverage sought in a patent application
can be denied or significantly reduced before or after the patent is issued.
Consequently,
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<PAGE>
there can be no assurance that any patents from any future patent application
will be issued, that the scope of the patent protection will exclude competitors
or provide competitive advantages to Panoramic, that any of Panoramic's patents
will be held valid if challenged or that others will not claim rights in or
ownership of the patents and other proprietary rights held by Panoramic. In
addition, there can be no assurance that competitors, many of which have
substantial resources, will not obtain patents that will interfere with
Panoramic's ability to make or sell its products. Litigation or regulatory
proceedings, which could result in substantial cost and uncertainty to
Panoramic, may also be necessary to enforce patent or other intellectual
property rights of Panoramic or to determine the scope and validity of other
parties' proprietary rights. There can be no assurance that Panoramic will have
enough money to defend its patents, trademarks and copyrights from infringement
or claims of invalidity.
Panoramic also relies upon unpatented proprietary technology, and no
assurance can be given that others will not develop similar technology gain
access to or disclose Panoramic's proprietary technology, or that Panoramic can
protect its rights in such unpatented proprietary technology. Panoramic's policy
is to require each of its employees, consultants, investigators and advisors to
execute a confidentiality agreement upon the commencement of an employment or
consulting relationship with Panoramic. These agreements generally provide that
all inventions conceived by the individual during the term of the relationship
shall be the exclusive property of Panoramic and shall be kept confidential and
not be disclosed to third parties except in specified circumstances. There can
be no assurance, however, that these agreements will provide meaningful
protection for Panoramic's proprietary information in the event of unauthorized
use or disclosure of such information.
WE MAY BE UNABLE TO MAINTAIN OUR CURRENT PRODUCTION SCHEDULE
Panoramic currently uses M1 Software to produce limited quantities of
software products for sales. Panoramic has no experience manufacturing its
products in the volumes or with the margins that will be necessary for Panoramic
to achieve significant commercial sales, and there can be no assurance that
Panoramic can establish high volume manufacturing capacity or, if established,
that Panoramic will be able to manufacture its products in high volumes with
commercially acceptable margins. While Panoramic believes that its current
relationship with M1 Software will be adequate to support its commercial
manufacturing activities in the near term, Panoramic may be required to expand
its manufacturing facilities to commence large-scale manufacturing. Panoramic's
inability to successfully manufacture or commercialize its devices in a timely
matter could have a material adverse effect on Panoramic's business, financial
condition and results of operations.
TO SUCCESSFULLY MARKET OUR PRODUCTS, WE MUST DEVELOP STRATEGIC AND DISTRIBUTOR
RELATIONSHIPS, WHICH WE HAVE DONE TO A VERY LIMITED EXTENT
Panoramic's future success will depend, in part, on its ability to enter
into and successfully develop strategic relationships and distributor
relationships with other parties with respect to the marketing and distribution
of its products. The success of Panoramic's relationship with future strategic
or distributor relationships will depend on the other parties' interests in the
specific products involved and their willingness and ability to perform the role
contemplated by Panoramic. Panoramic may have limited or no control over the
resources that any particular strategic party or distributor devotes to its
relationship with Panoramic. Moreover, there can be no assurance that Panoramic
will be successful in locating qualified parties with whom to enter into
additional strategic or distributor relationships or that any such relationships
can be maintained or will ultimately beneficial to Panoramic. In the event
Panoramic does not successfully develop additional relationships, Panoramic's
business, financial condition and results of operations would be materially
adversely affected.
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<PAGE>
WE MUST DEVELOP AND SELL NEW PRODUCTS IN ORDER TO KEEP UP WITH TECHNOLOGICAL
CHANGES
The medical software industry is characterized by rapid and significant
technological change. Many software applications have a life cycle of under
twelve months. Panoramic's future success will depend in large part on
Panoramic's ability to continue to respond to such changes. There can be no
assurance that Panoramic will be able to respond to such changes or that new or
improved competing products will not be developed that render the PCM Software
non-competitive. Product research and development will require substantial
expenditures and will be subject to inherent risks and there can be no assurance
that Panoramic will be successful in developing or improving products that have
the characteristics necessary to effectively meet the needs of the post-acute
segment of the managed care market, or that any new products introduced will be
successfully commercialized. Panoramic's products may face competition from, or
be rendered obsolete by, new products that have yet to be launched.
WE DO NOT HAVE PRODUCT LIABILITY INSURANCE
Panoramic's business involves the risk of product liability claims.
Although Panoramic has not experienced any product liability claims to date, any
such claims could have a material adverse effect on Panoramic. Panoramic does
not have product liability insurance. If Panoramic were to determine that such
insurance was necessary or desirable, there can be no assurance that it would be
available on commercially acceptable terms, or at all. Furthermore, even if
Panoramic obtains product liability insurance, there can be no assurance that it
would prove adequate or that a product liability claim, insured or uninsured,
would not have a material adverse effect on Panoramic's business, financial
condition, and results of operations. Even if a product liability claim is not
successful, the time and expense of defending against such a claim may adversely
affect Panoramic's business, financial condition and results of operations.
OUR STOCK HAS NEVER BEEN PUBLICLY TRADED; POSSIBLE VOLATILITY OF STOCK
There has been no public market for Panoramic's common stock, and there
can be no assurance that an active trading market will develop and be sustained
upon the completion of the offering, or that the market price of the shares will
not decline below the initial public offering price. The market prices for
securities of healthcare software companies have historically been highly
volatile. Announcements of technological innovations or new products by
Panoramic or its competitors, developments concerning proprietary rights,
including patents and litigation matters, and changes in financial estimates by
securities analysts or failure of Panoramic to meet such estimates and other
factors may have a significant impact on the market price of the shares. In
addition, Panoramic believes that fluctuations in its operating results may
cause the market price of its shares to fluctuate, perhaps substantially.
INVESTORS WILL EXPERIENCE IMMEDIATE AND SUBSTANTIAL DILUTION AND MAY EXPERIENCE
FURTHER DILUTION
The initial public offering price of the common stock in this offering
will be substantially higher than the net tangible bookvalue per share of the
common stock immediately after this offering. Therefore, if you purchase shares
of common stock in this offering, you will incur immediate and substantial
dilution of $0.71 per share in the net tangible bookvalue per share of common
stock from the price you paid, assuming an initial public offering price of
$1.00 per share.
THE UNITED STATES PENNY STOCK RULES MAY MAKE IT MORE DIFFICULT FOR INVESTORS TO
SELL THEIR SHARES
Because shares of Panoramic common stock will not be quoted on a national
securities exchange in the United States, the shares will be subject to rules
adopted by the U.S. Securities and Exchange Commission regulating broker-dealer
practices in connection with transactions in "penny stocks." Such rules
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<PAGE>
require that, prior to effecting any transaction in a penny stock, a broker or
dealer must give the customer a risk disclosure document that describes various
risks associated with an investment in penny stocks, as well as various costs
and fees associated with such an investment. It is possible that some brokers
may be unwilling to engage in transactions in shares of Panoramic common stock
because of these added disclosure requirements, which would make it more
difficult for a purchaser in this offering to sell their shares.
THE POTENTIAL SUPPLY OF MARKETABLE SHARES FOR IMMEDIATE SALE MAY ADVERSELY
IMPACT THE MARKET PRICE OF THE SHARES.
Concurrently with the registration of the shares offered under this
prospectus, Panoramic has registered under the U.S. securities laws
approximately 2,000,000 shares of its common stock that are presently owned by
the shareholders. Approximately 1,424,000 of those shares were initially
purchased by the shareholders in private transactions between December 1998 and
May 1, 1999. Although some of these shares are subject to restrictions on their
sale for periods of time specified by the Vancouver Stock Exchange, it is
anticipated that approximately 255,038 of the shares purchased in these private
transactions, in addition to those offered under this prospectus, would be
immediately available for sale to the public, thus adding to the supply of
shares in the market. If a significant portion of those shares are offered for
sale within a short period of time, the price of the shares in the market would
likely decline. If the supply substantial exceeds the demand, it might become
impossible to find buyers for all the shares that are being offered, which would
likely further depress the price and, perhaps, make it impossible for you to
sell all of your shares as quickly as you may desire.
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<PAGE>
DILUTION
The following sets forth the dilution per share (as at March 31, 1999)
after giving effect to this offering:
- --------------------------------------------------------------------------------
Effective price of shares offered hereunder: $1.00
Net tangible book value before the offering:(1) $0.06
Increase in net tangible book value attributable to
the offering $0.17
Net tangible book value after the offering: $0.23 $0.23
Dilution to investor: $0.77
Dilution to investor (as a percentage): 77%
- --------------------------------------------------------------------------------
(1) This table gives effect to the issuance of an aggregate of 100,000 shares
of common stock on April 6, 1999 and May 4, 1999, and the exercise of a
warrant by Bolder Venture Partners to purchase 200,000 shares of common
stock at $.25 per share on May 1, 1999.
Panoramic issued 1,000 shares to Byron and Jill Flateland upon
incorporation for cash consideration of $1,000. These shares were subject to a
2,000:1 share split effective December 4, 1998, yielding an effective price per
share of $0.0005. On December 22, 1998, Panoramic issued 40,000 shares to Kent
Nuzum at a price per share of $.050.
These are currently outstanding stock options pursuant to which 465,000
shares may be issued in the future and warrants pursuant to which 375,000 shares
may be issued at $1.00 per share. If all such options and warrants are exercised
after completion of the offering, then there would be a total of approximately
5,880,000 shares issued and outstanding.
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<PAGE>
USE OF PROCEEDS
The gross proceeds from this offering will be $1,100,000 (assuming the
over-allotment option is not exercised). From these proceeds, Panoramic will pay
an aggregate commission of $82,500 to Canaccord. After deducting the commission
and prior to expenses of the offering, the net proceeds from this offering will
be $1,017,500. Panoramic's working capital deficit as of April 30, 1999 was
approximately $300,000. The net proceeds from the offering plus the working
capital totals approximately $717,500 which will be used as follows:
Funds Available: $ 717,500
==========
Proposed Uses:
Costs of this Offering:
Legal Fees $ 50,000
Accounting Fees $ 3,000
Registration Fees $ 2,000
Listing Fees $ 3,000
Transfer Agent Fees $ 2,000
Printing $ 5,000
Sales and Distribution Channel Development(1): $ 201,250
Capital Equipment Purchases and Establishment of
Permanent Office Facilities(1) $ 60,000
Management and Staff Recruitment and Hiring:
Management: $ 80,000
Sales and Marketing: $ 140,000
Product Development(1): $ 127,000
Working Capital to Fund Ongoing Operations(2)(3): $ 44,250
----------
$ 717,500
==========
(1) Expenditures for sales and distribution channel development, capital
equipment purchases and product development are expected to occur over 12
months following the Listing Date.
(2) During this period any proceeds from the exercise of warrants or of stock
options and any proceeds generated from internal cash flow will be added to
working capital.
(3) Including salaries not provided for under "Management and Staff Recruitment
and Hiring" and $35,000 in annual rent.
Panoramic will spend the funds available to it upon completion of this
offering to further Panoramic's business objectives set out in "Description of
Business."
The use of proceeds described above represents Panoramic's best estimate
of its allocation of the funds available based upon the current state of its
business operations, its current plans and current economic and industry
conditions. There may be circumstances where, for sound business reasons, a
reallocation of funds may be necessary in order for Panoramic to achieve its
business objectives.
If Canaccord exercises its option to solicit and accept subscriptions for
up to 165,000 additional shares at a price of $1.00 per share, Panoramic will
receive additional gross proceeds of up to $165,000 and pay an aggregate
commission of up to $12,375 to Canaccord. If the over-allotment option is
exercised, the net proceeds from the sale of those shares, after deducting the
commission payable in respect thereof, will be added to Panoramic's working
capital. If Canaccord exercises its warrant to purchase up to 165,000 shares at
a price of $1.00 per share, Panoramic will receive additional proceeds of up to
$165,000 if exercised at any
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<PAGE>
time up to one year from the listing date and thereafter up to $189,750 if
exercised at any time up to that date which is two years after the listing date.
If Canaccord exercises the warrant, the proceeds will also be added to
Panoramic's working capital.
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<PAGE>
DESCRIPTION OF PANORAMIC
Panoramic was incorporated under the laws of the State of Colorado on
September 4, 1990 under the name "FreeStyle Publications, Inc." Panoramic
changed its name from "FreeStyle Publications, Inc." to "Panoramic Care Manager,
Inc.," effective as of December 8, 1998. On April 27, 1999, Panoramic was
reincorporated under the laws of the State of Delaware and the name was changed
to Panoramic Care Systems, Inc.
Panoramic's principal office is located at 5181 Ward Road, Wheat Ridge,
Colorado 80033. Panoramic's registered agent is located at 11350 West 72nd
Place, Arvada, Colorado 80005. Panoramic has no subsidiaries.
INTRODUCTION AND BUSINESS HISTORY
Initially, Panoramic's focus was on the provision of educational materials
for a variety of facilities and institutions within the healthcare industry.
More specifically, Panoramic developed and marketed educational materials for
critical care health providers.
In 1991, Panoramic began the development of a set of paper-based patient
management tools under the name STATpath. STATpath is currently comprised of 32
binder-size printed volumes that cover 364 medical diagnoses and are based on
220 standards of practice. Panoramic's STATpath procedures take standard
diagnoses and apply a critical path analysis to assure the right treatment is
given at the right time to the right patient. STATpath "pathways" outline the
specific treatments and procedures that should be followed given a particular
diagnosis for each patient. Unlike traditional approaches, where a medical
diagnosis is the basis of the pathway to be followed, Panoramic has developed a
methodology and process--through computerization of STATpath components--where
individual patient signs and symptoms trigger a treatment plan (often referred
to as "interventions")--are the primary basis of determining the pathway to
follow. This patient-driven clinical path approach was unique to STATpath. The
same concept is being used in the development of the PCM Software. The STATpath
product line is presently available in printed copy or on CD-ROM.
PRODUCT LINE AND SERVICES
Health Design Consultants
Following the market acceptance of the STATpath printed material, (over
500 copies of STATpath have been issued to date), Panoramic developed a
consulting practice to assist customers in implementing the STATpath
methodology. This practice resulted in the management of Panoramic providing
consulting services under the business name "Health Design Consultants," which
became a service mark of Panoramic on August 12, 1997.
There are over 500 healthcare facilities using STATpath, many of which
requested computerization of the product.
PCM Software
In 1997, Panoramic's management realized that the STATpath paper-based
product was reaching the peak of its commercial life cycle. Recognizing that the
information could be more easily accessed on a computer system, Panoramic began
developing a personal computer-based software application, the PCM Software,
using the large amount of procedural and practice data developed within
STATpath. The focus of
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the PCM Software was a personal computer-based software application that
initially could be used by post-acute healthcare providers such as those working
in nursing homes.
The PCM Software is aimed, in part, at providing medical professionals
with automated patient management tools. In this regard, the PCM Software is
meant to assist these users in quickly, efficiently and accurately identifying,
estimating and managing direct and indirect costs related to the provision of
patient care services in North American extended healthcare facilities. During
1999, Panoramic is targeting the PCM Software at post-acute healthcare
providers. Over the medium to long-term, Panoramic wants to create additional
software applications in the patient management area (referred to as disease
management) as well as in the home health marketplace.
Panoramic has been developing PCM Software 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 PCM Software:
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.
HISTORY OF PCM SOFTWARE DEVELOPMENT
Development of the PCM Software initially began in 1997. In August of
1998, Panoramic began beta testing the screening modules of the PCM Software at
Alpine Living Center in Thornton, Colorado. In November of 1998, Panoramic also
began beta testing its post-acute module for skilled nursing facilities at
Crestmount North in Lakewood, Ohio. Testing continues at Crestmont North with
data being gathered regarding functionality and usability.
In order to complete the development of the first commercial release of
the PCM Software for the second quarter of 1999, Panoramic has entered into a
letter of engagement with M1 Software, Inc. of Santa Monica, California. M1 has
been retained by Panoramic to test and debug the initial version of the PCM
Software as well as undertake all of the technical work necessary to create the
next version of the PCM Software and the additional planned software
applications. This work will be done under the guidance and direction of
Panoramic.
STATUS OF PCM SOFTWARE DEVELOPMENT
Panoramic released the product, "Panoramic Care - Post Acute Manager," in
the second quarter of 1999 and plans to release its second product, "PCM for
Disease Management," in the fourth quarter of 2000.
The PCM Software has been developed from approximately 50 software
libraries (libraries are a collection of tables or clinical data files such as a
list of lab tests, medical diagnoses, billing codes, nursing
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care interventions, patient education, etc.). Panoramic's definition of its
database elements and objects is referred to by management as the PCM Software's
"Clinical Information Infrastructure" ("CII").
To create the CII, Panoramic has used standard computer and software
development tools in defining the appropriate interrelationships among the
various data elements. This work involved approximately eight years of
development. Approximately 400 healthcare professionals (comprised of
physicians, nurses, therapists, social workers, dieticians, pharmacists, and
radiology and lab technicians) were consulted in compiling the STATpath and CII,
which means that the PCM Software has been constructed upon a broad base of
extensive data, information, procedures and, most importantly, the
interrelationships between all of these elements. For example, one of the
principal libraries of information itself contains 533 medical diagnoses, and
elements of many of the CII libraries are each linked to one or more of these
diagnoses.
Other PCM Software libraries include financial components such as billing
codes for diagnoses, billing codes for treatments, billing codes for medications
and prescreening calculators.
Clinical libraries include medications, interventions for eight different
disciplines, patient education, consults, diagnostic studies, diets, and
treatments. Administrative libraries include follow-up questions for patients,
discharge planning, and transfer, discharge and referral criteria.
Quality libraries include variance tracking, expected outcomes for each
acuity level, safety issues and national quality indicators.
The PCM Software has been designed to interrelate so that the various
software libraries can be linked and a large number of relationships can be
established based on different care situations and markets. Panoramic plans for
PCM Software to be used on stand-alone workstations, intranets and over the
Internet.
Version 1.0 of PCM is designed for one facility to use the software.
Panoramic plans to broaden the type of development for version two of its PCM
Software by having M1 Software use Microsoft Corporation's Visual Basic 6.0(TM),
"middle ware" technologies such as Microsoft Transaction Service, DCOM & COM and
Microsoft Corporation's SQL Server 7.0(TM). This will allow the software to be
shared between facilities. A client server can be located at corporate
headquarters and several nursing homes can access the program.
PCM SOFTWARE PRODUCT LINE
Panoramic proposes to develop a number of software products that address
the requirements of different sectors of the post-acute market. Panoramic's
initial development projects are described below.
Panoramic Care - Post Acute Manager
Panoramic Care - Post Acute Manager ("PC-PaM") has been undergoing beta
testing since mid 1998. M1 software will be responsible for completing the
development of this product under the guidance and direction of the management
of Panoramic. The core functions of PC-PaM are described below:
o PC-PaM meets Health Care Finance Administration (the US Government
agency responsible for administering Medicare) requirements for
assessing a long term care patient's ability to function and perform
activities of daily living. Under the U.S. federal government's new
balanced budget, a Prospective Payment System initiative began to be
phased in on July 1, 1998 for skilled nursing facilities. The
Prospective Payment System means that skilled nursing facilities
will receive a fixed amount of payment for their services
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provided to a patient. This fundamental change means that cost
estimating of patients at the start of their stay is becoming
critical as the Prospective Payment System is phased in over the
next 60 months. Not only does PC-PaM estimate the cost of care, but
it also estimates reimbursement rates. An integral part of
estimating reimbursement rates is the ability of facilities to
properly complete the Minimum Data Set, which is a standardized
assessment tool required by the Health Care Finance Administration.
A Minimum Data Set assessment must be completed at admission and at
various times throughout a resident's stay. The PCM Software
includes the major components of the MDS form and provides an
admission assessment. Caregivers using the PCM Software need only
collect the required information once. The software application
automates the patient's plan of care (clinical pathway) and
documents the initial patient assessment and treatment delivered,
and transmits the Minimum Data Set for each patient.
o PC-PaM has a built-in form and reimbursement calculator so that care
managers are able to determine the exact amount of reimbursement
that can be expected for each patient during a specified time frame.
The care manager can now better understand the probable financial
results of admitting a patient which allows the care manager to more
quickly and accurately determine whether to accept such a patient.
PC-PaM calculates the estimated cost of care to be delivered and
compares the cost to the reimbursement rate calculated.
o PC-PaM automatically creates an interdisciplinary plan of care
(referred to many healthcare professionals as the "clinical path").
Upon identification of a key patient problem, the PCM Software
automatically proposes to the care giver a plan of care that is
customized for the patient.
o PC-PaM documents all services delivered by each discipline and lists
expected outcomes. Upon developing the clinical path, the PCM
Software enables clinical staff members to check off the services as
they are given and completed. The PCM software also creates a list
of expected outcomes for each day in order to assist in assessing
the patient's actual medical progress.
The prototype was tested by Crestmont North, a skilled nursing facility in
Lakewood, Ohio. All beta testing was successfully completed and Crestmont North
is now scheduled to be the first installation of the finished product.
PCM for Disease Management
A beta prototype of this PCM Software product has been developed by
Panoramic. The core functions of PCM for Disease Management are described below:
o PCM for Disease Management software provides tools and staging
criteria based on each patient's assessment. This allows care to be
individualized for each patient. The patient's symptoms trigger
expected key problems and the software gauges the severity of each
problem according to certain defined criteria.
o The PCM for Disease Management software assists in automating
patient follow-up by creating and managing a schedule of patients
due for follow-up. During telephone interviews, the PCM for Disease
Management software provides a list of questions to ask the patient,
based upon the patient's key problems and stages, and collects the
information the patient provides. Based upon the answers received,
the PCM for Disease Management
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software is able to produce a list of interventions or an additional
set of questions to help the interviewer assess severity. The PCM
for Disease Management software's questions and responses are built
from medical and procedural tools frequently used in emergency
departments. Three levels of referrals are built from each of the
four algorithms for each disease process.
o The PCM for Disease Management software contains more than 200
patient education topics that can be provided directly to the
patient.
MARKET
As a result of the Balanced Budget Act of 1997, growth in Medicare
spending between 1998 and 2002 is expected to slow. Under the Balanced Budget
Act, effective July 1, 1998, a Medicare Prospective Payment System and a new,
more complex, billing system was introduced to skilled nursing facilities in the
United States, resulting in a shift in the way skilled nursing facilities
operate and how payments would be made for post-acute healthcare facilities.
Effective with cost reporting periods beginning on or after July 1, 1998,
post-acute healthcare facilities will no longer be paid on a reasonable cost
basis, but rather on a Prospective Payment System. The Prospective Payment
System payment rates will be implemented on a per diem basis, and will cover all
costs related to the services and treatment provided. Recognizing this as an
unmet need in a market segment that Panoramic had already established a presence
in with the STATpath product line, Panoramic embarked on a path to develop a
software system that would satisfy that unmet need.
Reimbursement under Medicare is now determined by multiplying the case
weight associated with the area by an average standardized per-case payment
rate. The payment rate is set by the Medicare program and is modified according
to the geographic location, urban or rural setting, and prevailing labor costs
of a hospital. Case weight represents the average costs of patients in an area
relative to the average costs of patients in all areas. By basing reimbursement
on utilization patterns, the Medicare program hopes to give hospitals a
financial incentive to use fewer resources.
Panoramic estimates that the total potential market in the United States
for PCM Software is in excess of $1,800,000,000 calculated as follows:
Number of Average Total
Facilities Sale/Facility Potential Sale
---------- ------------- --------------
Sub-acute ................ 6,000 $ 22,500 $ 132,000,000
Nursing Homes ............ 17,600 $ 22,500 $ 387,200,000
Disease Management ....... 26,750 $ 50,000 $1,337,500,000
TOTAL .................... $1,856,700,000
Source: "Official National Nursing Home Industry Directory," "Hospital's Blue
Book" and "Home Health Industry Directory" published by Billian's HealthDATA
Group, Atlanta, Georgia.
HEALTHCARE INDUSTRY
Over the past five years, the healthcare industry in the U.S. has seen a
trend towards cost cutting and consolidation. This trend has created
opportunities for information technology firms to provide hospitals and other
health care providers with software and computer systems that improve operating
efficiency. In addition to the cost cutting and consolidation trend, the
healthcare industry has seen a move towards managed
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care, forcing healthcare providers to minimize costs while improving the quality
of care in an effort to decrease follow-up visits.
The focus of medical software companies has been: identification of
problems to reduce severity; insurance coverage tracking; processing of
referrals to laboratories and specialists; creating paperless medical records;
and submitting bills electronically.
Table No. 1 (below) outlines the Hospitals and Post-acute Units Status Under The
Prospective Payment System:
TABLE NO. 1
HOSPITAL AND POST-ACUTE STATUS UNDER THE PROSPECTIVE PAYMENT SYSTEM
Total hospitals...................................................... 6,345
HOSPITALS UNDER PPS.................................................. 5,233
Hospitals receiving special consideration............................ 800
Regional referral centers............................................ 129
Sole community hospitals............................................. 671
NON-PPS HOSPITALS.................................................... 1,112
Categorically exempt................................................. 1,049
Psychiatric.......................................................... 675
All other non short-stay............................................. 374
Short-stay hospitals in waiver states or demonstrations.............. 50
Short-stay hospitals in outlying areas............................... 4
Cancer hospitals..................................................... 9
TOTAL EXCLUDED UNITS................................................. 2,257
Psychiatric.......................................................... 1,426
Rehabilitation....................................................... 831
Source: Health Care Finance Administration Online Survey, Certification and
Report, Winter 1997, Volume 19, Number 2.
In the United States, total spending for health care is projected to
increase from $1.0 trillion in 1996 to $2.1 trillion in 2007, averaging annual
increases of 6.8%. Over this period, health spending as a share of gross
domestic product is estimated to increase from 13.6% to 16.6%. (Projections
reported in "The Next Ten Years of Health Spending: What Does the Future Hold?"
published in the September/October 1998 issue of Health Affairs. The projections
were produced by the Health Care Financing Administration's Office of the
Actuary).
National health spending growth is expected to accelerate beginning in
1998, growing at an average annual rate of 6.5% between 1998 and 2001. This
compares to 5.0% average annual growth from 1993- 1996. Source: Health Spending:
The Next Decade, September/October 1996, p. 264.
Real per capita public sector health spending growth is expected to
decelerate between 1998 and 2002, primarily as a result of the Balanced Budget
Act and its effect on Medicare. The introduction of prospective payment systems
for different services and cutbacks in payment formulas are expected to slow the
rate of increase in Medicare expenditures. However, growth in Medicare managed
care enrollment as a result of the Balanced Budget Act is not expected to reduce
growth in overall Medicare spending.
Patterns of growth will differ substantially across types of services.
While all health providers will be affected by rising costs, hospitals are
expected to continue to face relatively slow growth in labor
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compensation as downsizing in this sector continues. Hospital growth is
projected to lag increasingly behind growth in drugs and physician and other
professional services as the trend away from the inpatient setting towards
ambulatory care settings is reinforced by the movement of Medicare beneficiaries
into managed care. The management of Panoramic believes that the rapid rise in
outpatient hospital services will increase as the potential for further
substitution for inpatient services declines.
Medical Software
Dorenforest & Associates of Chicago, Illinois, a health care information
system consulting company, estimated the U.S. healthcare information services
market to be $13.6 billion in 1997, growing at an average annual rate of 16%
from a level of $7.5 billion in 1993. Meta Group Inc., a market research firm
based in Stamford, Connecticut predicts that medical software will see 15% to
20% annual 24 growth. According to Meta Group Inc., healthcare providers spend
on average 1.5% to 2% of their operational budgets on information technology. A
recent study by Deloitte & Touche estimated that the healthcare industry spends
$2,800 per year per employee on information technology in comparison with $5,700
by retailers and $10,400 by banks. Source: Everett Dorenforest, 1997 HIMMS
Conference, 1997 (Los Angeles, California).
MARKETING PLAN AND STRATEGIES
Panoramic plans to market the PCM Software product line primarily through
strategic alliances with pharmaceutical organizations, practice management
companies and consulting firms. Panoramic will also market its products in the
U.S. directly to national and regional chains that operate a number of health
care facilities. Panoramic's sales and marketing staff will be comprised of a
number of individuals with clinical, technical, and financial backgrounds in
order to assess aspects of a potential client's decision-making process.
Panoramic will focus its PCM Disease Management marketing efforts on
managed care organizations, independent physician associations and physician
practice management companies.
Initially Panoramic plans to market its products through indirect channels
(including large pharmaceutical organizations) and direct contact by sales
representatives with management, consulting and professional organizations.
Panoramic will support its direct sales professionals with marketing support
employees specializing in the clinical, technical, and financial aspects of PCM
Software application.
Panoramic will also attempt to generate brand awareness through attendance
at key health industry trade shows and through offering educational seminars on
various topics related to using clinical, financial and administrative
information in the post-acute healthcare industry.
BUSINESS OBJECTIVES AND MILESTONES
1. Panoramic has released a commercial version of Panoramic Care - Post Acute
Manager in the second quarter of 1999 and plans to complete and release a
pilot version of PCM for Disease Management by the fourth quarter of 2000.
In order to attain these objectives, the following milestones will have to
occur:
o complete testing and debugging of the Panoramic Care - Post Acute
Manager and release a commercial version in the second quarter of
1999 at an estimated cost of $52,000; and
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o complete the initial development of PCM for Disease Management to
the pilot testing stage in the fourth quarter of 2000 at an
estimated cost (including cost of medical consultant to be retained)
of $178,000.
The total estimated cost for these expenditures is $230,000 and is
accounted for as part of Panoramic's proposed Product Development
expenses, as set out below. This cost has been allocated from the proceeds
of this offering. See "Use of Proceeds--Product Development."
2. Panoramic intends to develop a sales and marketing structure that it
expects will assist in the development of marketing channels and result in
increased sales. In order to attain this objective, the following
milestones will have to occur:
o select independent distributor groups to represent Panoramic's PCM
Software products in Colorado, Wyoming, New Mexico and Arizona;
o select one pharmacy based distributor group to represent Panoramic's
PCM Software products;
o select one consultant group to represent Panoramic's PCM Software
products in Ohio, Pennsylvania, Michigan add Illinois;
o produce multi-media materials to be used by sales representatives,
distributors and customers; and
o implement remaining elements of the marketing plan including
editorial articles, press releases and speaking engagements.
The total estimated cost for these expenditures is $326,250 and is
accounted for as part of Panoramic's proposed Sales and Marketing expenses, as
set out below. This cost has been allocated from the proceeds of this offering.
See "Use of Proceeds: Sales and Distribution Channel Development."
3. Panoramic proposes to increase its internal sales and marketing staff, to
be comprised of individuals with clinical, technical and financial
backgrounds, in order to allow Panoramic to begin the process of creating
strategic alliances with potential customers and resellers. In order to
achieve this objective, the following milestones will have to occur:
o hire and train one technical support representative in the third
quarter of 1999; and
o hire and train one clinical support representative in the third
quarter of 1999.
The total estimated annual cost for these expenditures (including
recruitment costs and annual salaries) is $170,000 and is accounted for as
part of Panoramic's proposed Sales and Marketing Expenses, as set out
below. This cost has been allocated from the proceeds of this offering.
See "Use of Proceeds: Management and Staff Recruitment and Hiring--Sales
and Marketing."
4. Panoramic intends to improve management depth by hiring management with
experience managing publicly listed companies. In order to achieve this
objective, Panoramic will have to hire a Vice President/Chief Financial
Officer in the third quarter of 1999.
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The total estimated cost for this expenditure is $80,000 and is
accounted for as part of Panoramic's proposed General and Administrative
expenses, as set out below. This cost has been allocated from the proceeds
of this offering. See "Use of Proceeds: Management and Staff Recruitment
and Hiring--Management."
5. Panoramic has recently entered into a lease for a 2,856 square foot
facility in Wheat Ridge, Colorado which it proposes to use to establish a
permanent operations office. The lease terminates on September 15, 2000
with an option to renew for one year. Panoramic believes that this
facility is adequate to meet its current and reasonably anticipated future
requirements. In order to prepare the facility for the projected growth
and increase in staffing, Panoramic will have to acquire computers and
office equipment for these facilities.
The total estimated cost for these expenditures is $83,000 and is
accounted for as part of Panoramic's proposed General and Administrative
expenses, as set out below. This cost has been allocated from the proceeds of
this offering. See "Use of Proceeds: Capital Equipment Purchases and
Establishment of Permanent Office Facilities."
The proposed first year expenses associated with Panoramic's general and
administrative, sales and marketing and product development functions generally,
including, but not limited to, the Business Objectives and Milestones described
above, are as follows:
General and Administrative $ 659,256
Sales and Marketing $ 1,318,080
Product Development $ 787,000
Total: $ 2,764,336
These proposed expenditures exceed the Funds Available. There is no
assurance that Panoramic will be able to generate the sales necessary to produce
the cash flow which is required to cover the expense for any projects which are
not proposed to be funded by the proceeds of this offering. If sales revenues
are not generated as planned, Panoramic will be required to reduce its overhead
expenses or to obtain additional funding by debt or equity financing. See "Risk
Factors."
Management anticipates that the total administrative, product development,
and sales and marketing expenses that will be incurred in order to meet the
foregoing objectives over the period referred to will be approximately $659,256,
$787,000, and $1,318,080, respectively. These break down as follows:
ADMINISTRATIVE EXPENSES:
Expense Monthly Cost in $ Twelve Month Cost in $
- ----------------------------------- ----------------- ----------------------
Management Salaries................ 26,666 319,992
Administrative Salaries............ 5,000 60,000
Payroll and Employment Taxes....... 4,272 51,264
Consulting Fees - BVP.............. 6,000 18,000(1)
Rent............................... 3,500 42,000
Telephone / Supplies............... 2,000 24,000
Computer software / lease.......... 6,000 72,000
Travel............................. 6,000 72,000
Total.............................. 59,438 659,256
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(1) For consulting services in March, April, and May, 1999.
PRODUCT DEVELOPMENT EXPENSE:
Expense Monthly Cost in $ Twelve Month Cost in $
- ----------------------------------- ----------------- ----------------------
Salaries........................... 17,917 215,000
Payroll Taxes and Benefits......... 3,583 43,000
Outside Software Development....... 38,417 461,000
Travel............................. 5,667 68,000
Total.............................. 787,000
SALES AND MARKETING EXPENSE:
Expense Monthly Cost in $ Twelve Month Cost in $
- ----------------------------------- ----------------- ----------------------
Salaries........................... 16,917 203,000
Payroll Taxes and Benefits......... 3,383 40,600
Commissions........................ 50,000 600,000
Travel Expenses.................... 13,965 167,580
Office Expenses.................... 1,408 16,900
Advertising and Public Relations... 16,667 200,000
Convention Expenses................ 7,500 90,000
Total.............................. 1,318,080
COMPETITION
The software market outside of hospitals is highly fragmented. Many
companies offer only a single product for a single task which forces
organizations to purchase a variety of software solutions for financial,
clinical, quality and administrative requirements. Panoramic's PCM Software
integrates these requirements.
At the beginning of 1998, most post-acute software was still available
only for DOS or UNIX based computer operating systems, although some were
converting to Microsoft Windows during 1998. Many small DOS-based companies are
finding it prohibitively expensive to upgrade their customer base to a
Windows-based product. None of the major software suppliers in the acute care
arena have made a serious attempt to enter the post-acute market.
Skilled Nursing Facilities
There are three major competitors in the skilled nursing industry:
QuickCare, Care Computer Systems and OmniCare.
QUICKCARE. QuickCare is a Windows-based integrated clinical and financial
software package and is privately owned with headquarters in Dallas. It was
founded in 1992 and its first product was a DOS-based clinical system released
in October, 1995. In 1996 QuickCare rewrote its package to become
Window/NT-based and merged with a financial software company to provide services
to long-term care facilities and assisted living centers. They have grown the
business in four major locations - Dallas, TX; Cleveland, OH; Los Angeles, CA;
and Tampa, FL. Their installed base is about 600 facilities.
QuickCare provides the minimum requirements for the Prospective Payment
System and builds the plan of care based on the patient's medical diagnosis.
There is also a pre-screening tool for determining reimbursement, but it does
not connect to the calculator system (used by the Prospective Payment System) so
the amounts need to be manually coordinated. The plan of care includes a
long-term goal for each problem
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identified but there is no progression of outcomes so variances for quality
assurance are not easily tracked. There is no clinical path component to lay out
day-to-day or week-by-week care and there is no quality component.
CARE COMPUTER SYSTEMS. Care Computer Systems is a privately held company
headquartered in Bellevue, WA. The Care Computer Systems product is designed for
subacute, long-term and home health care. The product includes Prospective
Payment System requirements, care plans for 33 disease categories, cost analysis
with payroll, general ledger, accounts receivable, accounts payable and dietary
management. Home health does not yet include the required OASIS, which is an
assessment tool used by the Health Care Financing Administration to determine
the functionality of Medicare patients that require home healthcare. Care
Computer is in the process of converting the system from DOS to Windows NT. Care
Computer has the largest market penetration with just over 3000 facilities using
their product. (a 6.3% market penetration.)
OMNICARE. OmniCare is the only publicly held company in the post-acute
market. OmniCare is a leading provider of professional pharmacy and related
consulting services for nursing homes, retirement centers and other
institutions. Of the four products acquired by OmniCare, two are written in DOS,
one in FoxPro and one in Visual Basic.
PATENTS, TRADEMARKS AND COPYRIGHTS
Copyrights
Panoramic holds copyrights on various STATpath clinical path volumes filed
with the United States Copyright Office on January 31, 1994, March 7, 1994, June
17, 1994 and July 22, 1994. Panoramic also holds registered copyrights on 26
audio cassette courses.
Service Marks
Health Design Consultants became a service mark of Panoramic on August 12,
1997. The service number is 75-036,975 and the registration number is 2,088,282.
Trademarks
STATpath is a non-registered trademark of Panoramic and has been in use
since 1991. On March 2, 1998, Panoramic Care Manager was filed as a registered
trademark of Panoramic, serial number 75/323044.
Patents
Panoramic holds no patents, nor are any patents pending as of the date of
this prospectus. Panoramic's management has obtained a preliminary opinion of
legal counsel that its PCM Software may be able to be patented. The degree and
extent to which such a patent would be available is uncertain as of the date of
this prospectus. See "Risk Factors" located at pages 12 to 17.
Non-Disclosure Agreements
Panoramic typically requires non-disclosure agreements with companies that
are involved in reviewing or assisting with the development of the PCM Software.
Panoramic is currently a party to a number of such non-disclosure agreements.
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MANAGEMENT
William M. Hunter
Mr. Hunter, age 55, is the President, Chief Executive Officer and a
director of Panoramic and is employed by Panoramic on a full time basis. Mr.
Hunter has served Panoramic in this capacity since March 1, 1999.
Mr. Hunter has over 28 years of experience in the healthcare industry, and
has been a consultant to start-up ventures in the healthcare industry for the
past two years. Prior to that he was the President and CEO of Gynecare, Inc. a
company he took public on Nasdaq National Market through an initial public
offering in 1995. Gynecare, Inc. was later sold to Johnson & Johnson. Before
that, Mr. Hunter's positions have included: Director of Worldwide Marketing for
the Valleylab Division of Pfizer, a medical device company located in Boulder,
Colorado; International Marketing Manager for the Ohmeda Anesthesia Division of
British Oxygen; and UK Sales Manager for the Technicare Division of Johnson &
Johnson. Mr. Hunter holds a BS from Boston State College and an MBA from the
University of Connecticut.
On March 1, 1999, Panoramic and Mr. Hunter entered into an employment
agreement that extends for a term of 12 months. Under the terms of the
agreement, Panoramic is obligated to pay Mr. Hunter the sum of $10,000 per
month. The agreement includes a non-competition provision that extends for 12
months following the termination of Mr. Hunter's employment with Panoramic. The
agreement also includes non-disclosure provisions which extend indefinitely
following the termination of Mr. Hunter's employment with Panoramic.
Jill Flateland
Ms. Flateland, age 48, is the Executive Vice-President, Chief Operating
Officer and a director of Panoramic and is employed by Panoramic on a full time
basis. Ms. Flateland has served Panoramic in this capacity since March 1, 1999.
From September 4, 1990 until March 1, 1999 Ms. Flateland was President and CEO.
Prior to and co-incident with working with Panoramic, Ms. Flateland was
with Columbia North Suburban Medical Centre, a health care facility in Thornton,
Colorado, where she served as Director of Integrated Management for 3 years. Ms.
Flateland also served as Supervisor of the Intensive Care Unit/ Critical Care
Unit of Columbia North Suburban Medical Centre for two years from April 1990 to
June 1992. Ms. Flateland holds a Bachelor of Science (Nursing) degree from the
University of North Dakota in 1972 and an MBA degree from Regis University in
1986.
On January 1, 1999, Panoramic and Ms. Flateland entered into an employment
agreement that extends for a term of 12 months. Under the terms of the
agreement, Panoramic is obligated to pay Ms. Flateland the sum of $8,133 per
month. The agreement includes a non-competition provision that extends for 12
months following the termination of Ms. Flateland's employment with Panoramic.
The agreement also includes non-disclosure provisions which extend indefinitely
following the termination of Ms. Flateland's employment with Panoramic.
Byron Flateland
Mr. Flateland, age 48, is the Secretary, Chief Technical Officer and a
director of Panoramic and is employed by Panoramic on a full time basis. Mr.
Flateland has served Panoramic in this capacity since June, 1995.
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<PAGE>
Prior to joining Panoramic, Mr. Flateland was with InfoNow Corp., a
computer software marketing company located in Denver, Colorado, where he served
as Vice-President, Marketing for one year. Mr. Flateland has also been employed
by Destron-Fearing Corp. an electronic identification company located in St.
Paul, Minnesota, where he served as Director, Business Development for 5 years
from May 1989 to November 1994.
Mr. Flateland holds a BSEE (Bachelor of Science, Electrical Engineering)
degree and an MSEE (Master of Science, Electrical Engineering) degree from the
University of North Dakota in 1972 and 1973 respectively, an MBA degree from the
University of North Colorado in 1978 and an MCIS degree from the University of
Denver in 1994.
On January 1, 1999, Panoramic and Mr. Flateland entered into an employment
agreement that extends for a term of 12 months. Under the terms of the
agreement, Panoramic is obligated to pay Mr. Flateland the sum of $8,133 per
month. The agreement includes a non-competition provision that extends for 12
months following the termination of Mr. Flateland's employment with Panoramic.
The agreement also includes non-disclosure provisions which extend indefinitely
following the termination of Mr. Flateland's employment with Panoramic.
Scott Sanders
Mr. Sanders, age 42, is Vice President, Marketing and Sales and is
employed by Panoramic on a full time basis. Mr. Sanders has served Panoramic in
this capacity since February, 1999.
Prior to joining Panoramic, Mr. Sanders was with Boston Scientific
Schneider/Namic, a diagnostic cardiology company located in Minneapolis,
Minnesota, where he served as Director, Group Sales from 1997 to December 1998.
Mr. Sanders has also been employed by Pfizer Valleylab, a medical device company
located in Boulder, Colorado from 1990 to 1997, initially as Director of
Marketing from 1990 to 1994, and as Manager of Corporate Sales from 1994 to
1997. Mr. Sanders holds a BA in Biology (Bachelor of Arts, Biology) from the
University of Denver in 1978.
On February 22, 1999, Panoramic and Mr. Sanders entered into an employment
agreement that extends for a term of 12 months. Under the terms of the
agreement, Panoramic is obligated to pay Mr. Sanders the sum of $7,500 per
month. The agreement includes a non-competition provision that extends for 12
months following the termination of Mr. Sanders' employment with Panoramic. The
agreement also includes non-disclosure provisions which extend indefinitely
following the termination of Mr. Sanders' employment with Panoramic.
Kent Nuzum
Mr. Nuzum, age 32, is the Chief Financial Officer of Panoramic and
contracts his services to Panoramic on a part time basis. Mr. Nuzum devotes
approximately 50% of his time to Panoramic, and has served Panoramic in this
capacity since October 6, 1998.
Mr. Nuzum has been employed by Bolder Venture Partners LLC since November
1, 1998. Bolder Venture Partners is a venture capital company and a consultant
to Panoramic under a consulting agreement made December 7, 1998 and amended
March 1, 1999. Mr. Nuzum was formerly employed by Daryl Yurek since January
1997. Mr. Nuzum was previously employed with Bank One as Assistant
Vice-President, Commercial Loans, from August 1990 to January 1997. Mr. Nuzum
holds a B.S. in Economics from Arizona State University in 1989 and is currently
enrolled in the CIS - Masters program at the University of Denver.
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<PAGE>
Mr. Nuzum has not entered into a non-competition or non-disclosure
agreement with Panoramic.
PERSONNEL
As of March 15, 1999, Panoramic had a total of 7 full-time employees, 1
part-time employee, and 3 part-time consultants. Of these, 2 employees and 1
consultant serve in a management and administration capacity, 2 employees and 1
consultant serve in a research and development capacity, 3 employees serve in a
marketing and sales capacity and 1 consultant serves in a marketing capacity.
These employees and consultants operate out of Panoramic's office facility or,
in the case of consultants, the consultant's own office facilities.
The initial management team has been hired, with the exception of the
Chief Financial Officer. Panoramic expects to fill this position in the third
quarter of 1999. Additional personnel will be added as and when circumstances
warrant and profits or additional funding permits.
DEPENDENCY ON SUPPLIERS
The computers and software that Panoramic utilizes to develop its software
are widely available in the market place. Panoramic has the ability to obtain
such goods from a wide range of prospective suppliers, depending upon pricing,
delivery, quality assurance and related considerations.
DEPENDENCY UPON SPECIFIC CUSTOMERS
Panoramic does not expect to enter into any supply relationship in the
year subsequent to listing that would make it unusually dependent upon any one
customer for future sales. Instead Panoramic anticipates that its customer base
will consist of a diversified array of private sector businesses, primarily
located in the United States. As Panoramic's market exposure increases and brand
recognition grows, we expect that a still broader market base will be
established.
OFFICES
Until March 15, 1999 Panoramic operated from a home office facility owned
by the founders of Panoramic, Jill Flateland and Byron Flateland. Panoramic
currently leases 2,856 square feet of office space at 5181 Ward Road, Wheat
Ridge, Colorado 80033.
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<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read together with Panoramic's
financial statements and accompanying notes included elsewhere in this
prospectus.
INTRODUCTION
For the fiscal years ended December 31, 1996 to 1998 Panoramic's revenues
have been received from sale of the STATpath product and from related consulting
services. Royalty revenues represent royalties received from the sale of
STATpath by Citation, a software company in Saint Louis, Missouri and the Center
for Health Education, a non-profit organization. The Center for Health
Education's Board of Directors consists of Jill Flateland and Byron Flateland.
Royalties have represented 53.6%, 68.3% and 30.8% of total revenues for the
fiscal years ended December 31, 1998 to 1996, respectively. For the year ended
December 31, 1998 product royalties declined to over $27,000 as Panoramic
focused its efforts on PCM Software product development as opposed to marketing.
Over the three years ended December 31, 1998 Panoramic's revenues have
decreased 63.5%. Revenues have decreased as Panoramic has focused primarily on
PCM Software product development as the STATpath product has reached the peak of
its commercial life cycle. Accordingly, consulting revenue has decreased from
$92,305 in the year ended December 31, 1996 to $23,180 in the year ended
December 31, 1998. Consulting revenues are principally derived from the services
of Jill Flateland and Byron Flateland. Consulting revenues are almost entirely
associated with implementing the STATpath method of care in an organization.
Selling, general and administrative expenses, as a percentage of total
revenue, have fluctuated significantly over the past three years. In fiscal year
1998, selling, general and administrative expenses, as a percentage of total
revenue reached its highest point of 134.9% of total revenue as overall revenue
growth slowed. In fiscal year 1997 selling, general and administrative expenses
fell to 46.1% of total revenue from 88.2% of total revenue for the fiscal year
1996.
Subsequent to the establishment of the technological feasibility in
mid-1998, the Company capitalized software development costs of $75,000. All
development costs incurred prior to this point have been charged to operations
as incurred, as required by both U.S. and Canadian generally accepted accounting
principles.
For the year ended December 31, 1998, Panoramic completed on or near
December 15, 1998 a series of private placements totaling $508,000 that was
undertaken at $0.50 per share. The private placements were undertaken in order
to provide the funds necessary to further PCM Software product development.
Historically, Panoramic has operated with limited working capital,
however, as of December 31, 1998, Panoramic had working capital of $449,522 due
to a private placement of common stock in December 1998, which compared to
working capital of $384 as of December 31, 1997. As of March 31, 1999,
Panoramic's working capital was approximately $91,000.
QUARTER ENDED MARCH 31, 1999 COMPARED TO QUARTER ENDED MARCH 31, 1998
Panoramic had no revenues for the quarter ended March 31, 1999 as the
Company's efforts were focused on PCM Software product development and sales of
the STATpath product were discontinued as of December 31, 1998.
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<PAGE>
Panoramic earned interest income of $2,540 for the 1999 quarter from the
invested proceeds of the private placement completed in late 1998 and early
1999.
Total operating expenses for the 1999 quarter increased $107,143, or 183%,
to $165,636 from $58,493 for the 1998 quarter. Salary expense did not change
significantly as Panoramic's new employees were not added until late in the 1999
quarter. Management fees decreased from $6,100 in 1998 to $0 in 1999 as the
management agreement was terminated effective December 31, 1998. Consulting fees
increased to $22,076 for the 1999 quarter primarily due to the consulting
agreement with Bolder Venture Partners which was entered into in late 1998.
Panoramic incurred recruiting fees of $60,500 in the 1999 quarter connected to
the hiring of three new executives. Other general and administrative expenses
increased $29,540 to $31,933 for 1999 from $2,933 for 1998 due primarily to
costs associated with Panoramic's new office space.
FISCAL YEAR ENDED DECEMBER 31, 1998 COMPARED TO FISCAL YEAR ENDED DECEMBER 31,
1997
Royalty income for 1998 decreased $26,192, or 48.6%, to $27,613 from
$53,805 for 1997. This decrease is due to decreased sales of STATpath and audio
tape products by CHE as Panoramic focused more of its efforts on product
development during 1998. Consulting fees for 1998 increased $3,576, or 18.2%, to
$23,180 from $19,604 for 1997. This increase is primarily due to a contract with
Life Source Services to assist in administrative and patient care practices with
respect to Medicare reimbursement issues in 1998. Total revenues for 1998
decreased $27,256 or 34.6%, to $51,507 from $78,763 for 1997.
Total operating expenses for 1998 increased $2,789, or 1.2%, to $238,824
from $236,035 for 1997. Salaries decreased by $74,222 due to the capitalization
of $75,000 in salaries as software development costs in 1998. As described in
Note 4 to the financial statements, Panoramic records as a capital contribution
the difference between the estimated value of services provided by its officers
and the actual amounts paid to the officers. This capital contribution, which is
a non-cash expense, amounted to $152,193 and $165,112 for 1998 and 1997,
respectively. Management fees increased by $5,680, or 32.4%, to $23,180 for 1998
from $17,500 for 1997, primarily due to higher accounting costs related to the
increased level of corporate activity in 1998. Panoramic incurred consulting
fees of $61,650 in 1998 under a consulting agreement with Bolder Venture
Partners. This amount includes a non-cash expense of $51,000 representing the
fair value of warrants issued under the consulting agreement. Other general and
administrative costs increased by $8,802, or 54.4%, to $24,995 for 1998 from
$16,193 for 1997. This increase was primarily due to a $9,029 increase in travel
costs related to product development and corporate development.
CAPITAL RESOURCES AND LIQUIDITY
Panoramic has incurred capital losses since inception. In addition to
having to rely upon cash generated from operations, Panoramic 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.
In preparation for the introduction of a new product line (PCM Software),
Panoramic has entered into various commitments including an office lease,
consulting agreement, and employment agreements. Furthermore, Panoramic has
incurred significant expenses for software development, and sales of Panoramic's
existing product line have essentially been discontinued. Panoramic believes
that its resources, together with financings that it expects to complete
(including the offering described in this prospectus), and anticipated revenue
from operations will be sufficient to meet Panoramic's financial requirements
for the next year. If, however, cash flow is insufficient to cover cash
expenditures, Panoramic 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 Panoramic in the amount required at
any particular time or for any
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<PAGE>
particular period or, if available, that it can be obtained on terms
satisfactory to Panoramic. Other than as described under "Business Objectives
and Milestones" and "Use of Proceeds," Panoramic does not have any commitments
for material capital expenditures over either the near or long term and none are
presently contemplated over normal operating requirements.
Panoramic currently has 465,000 stock options and 375,000 warrants
outstanding. All the options and warrants are exercisable at at least $1.00 per
share. If all of the stock options and warrants are exercised, Panoramic would
receive proceeds of $855,000. All of these funds would be available to Panoramic
as working capital. See also "Options to Purchase and Agreements to Issue
Securities."
YEAR 2000 PROBLEM
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 have 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 plain 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 is to devote significant resources to correcting
such problems. To Panoramic's knowledge, however, the internal accounting
systems have attested by the suppliers as Year 2000 compliant. Due to the
general uncertainty inherent in the Year 2000 computer problem, resulting from
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<PAGE>
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.
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<PAGE>
DESCRIPTION OF SECURITIES
STOCK CAPITAL
The authorized capital stock of Panoramic consists of 50,000,000 common
shares of common stock with a par value of $0.001 per share. There are
approximately 47 holders of Panoramic common stock and as of the date of this
prospectus, Panoramic had a total of 3,500,000 shares issued and outstanding.
All of the issued shares of Panoramic common stock are fully paid and not
subject to any future call or assessment. Panoramic common stock is currently
approved for listing on the Vancouver Stock Exchange.
Under Panoramic's Articles of Incorporation, all of the common shares rank
equally as to voting rights, participation in a distribution of the assets of
Panoramic on a liquidation, dissolution or winding-up of Panoramic and the
entitlement to dividends. The holders of the common shares are entitled to
receive notice of all meetings of shareholders and to attend and vote the shares
at the meetings. Each share of common stock carries with it the right to one
vote.
In the event of the liquidation, dissolution or winding-up of Panoramic or
other distribution of its assets, the holders of the common shares will be
entitled to receive, on a pro rata basis, all of the assets remaining after
Panoramic has paid out its liabilities. Distribution in the form of dividends,
if any, will be set by the board of directors.
Provision as to the modification, amendment or variation of the rights
attached to the capital of Panoramic are contained in Panoramic's Articles of
Incorporation and the Colorado Business Corporation Act. Generally speaking,
substantive changes to the share capital require the approval of the
shareholders by special resolution (at least 75% of the votes cast).
SHARES ELIGIBLE FOR SALE
As of the date of this prospectus, 3,500,000 shares of Panoramic common
stock are issued and outstanding. These shares are subject to resale
restrictions imposed by the Vancouver Stock Exchange, which allows shares to be
released for trading at various times commencing on the date the shares are
initially listed for public trading. Pursuant to these regulations the shares
will be released as follows:
NUMBER OF SHARES TIME OF RELEASE AFTER
RELEASED DATE OF LISTING
-------------------- -----------------------
626,850 Immediately
783,300 Three Months
256,550 Six Months
586,950 Nine Months
586,950 Twelve Months
329,700 Fifteen Months
329,700 Eighteen Months
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STOCK OWNERSHIP
The following are the shareholdings of the directors, senior officers and
promoters of Panoramic and of any other shareholders that, to the knowledge of
Panoramic, beneficially own, directly or indirectly, more than five percent of
the issued common stock of Panoramic:
<TABLE>
Number of Percentage of Issued
Common Shares Percentage of Share Capital After
Name and Municipality of Beneficially Issued Share the Completion of
Residence of Shareholder Owned Capital This Offering
- --------------------------------- ------------- ------------- --------------------
<S> <C> <C> <C>
Jill S. Flateland and Byron B.
Flateland(1)................... 2,146,000 61.43% 42.66%
5181 Ward Road
Wheat Ridge, Colorado 80033
Daryl Yurek...................... 258,000 7.37% 5.12%
7 St. Paul, Suite 1600
Baltimore, Maryland 21202
Kent A. Nuzum.................... 135,750(2) 3.77% 2.62%
c/o 1919 14th St., Suite 800
Boulder, Colorado 80302
Directors, Senior Officers....... 2,536,000 66.86% 46.43%
and Promoters as a Group
</TABLE>
(1) Byron B. Flateland holds 826,000 shares individually, Jill S. Flateland
holds 1,170,000 individually, and Byron Flateland and Jill Flateland hold
150,000 shares jointly.
(2) Includes warrants to purchase up to 3,750 shares.
OPTIONS TO PURCHASE AND AGREEMENTS TO ISSUE SECURITIES
Panoramic has granted stock options pursuant to which up to 465,000 shares
may be issued in the future pursuant to Panoramic's Stock Option Plan, and
warrants pursuant to which up to 375,000 shares may be issued in the future.
There are currently 900,000 shares available for issuance under the Stock Option
Plan.
Effective May 12, 1999, Panoramic issued five convertible notes in the
aggregate principal amount of $100,000. The convertible notes, which are
convertible at the option of the holder into shares of common stock of
Panoramic, are due on the earlier of the fifth business day after Panoramic
common stock begins trading on the Vancouver Stock Exchange and September 30,
1999. The convertible notes bear interest at the annual rate of 8% until paid.
In consideration for making these loans, Panoramic has granted to each
holder a warrant to acquire one-quarter of a share of common stock for each
$1.00 loaned. Each whole warrant is exercisable at $1.00 per share during the
first year of the warrant and $1.15 per share during the second year.
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PLAN OF DISTRIBUTION
OFFERING AND APPOINTMENT OF AGENT
By an agreement dated for reference the 24th day of March, 1999, Panoramic
appointed Canaccord Capital Corporation as its agent to offer a total of
1,100,000 shares to non-U.S. persons in Canada through the facilities of the
Vancouver Stock Exchange. The shares will be offered at a price of $1.00 per
share on a day, as determined by Canaccord and Panoramic, with the consent of
the Vancouver Stock Exchange, which is not more than 90 days following the date
of the receipt issued by the British Columbia Securities Commission for the
Canadian prospectus relating to this offering. In accordance with Vancouver
Stock Exchange rules, Panoramic will receive the net proceeds of the offering
within ten business days of the Offering Day. The offering will be made in
accordance with the rules and policies of the Vancouver Stock Exchange.
Under the terms of the agreement with Canaccord, Panoramic has agreed to
pay to Canaccord a commission of $0.075 per share for each share sold from this
offering including shares sold by Canaccord, if any, pursuant to the
over-allotment option described below.
The securities being offered herein have been approved for listing on the
Vancouver Stock Exchange.
Canaccord has reserved the right to offer selling group participation in
the normal course of the brokerage business to selling groups of other licensed
broker-dealers, brokers and investment dealers who may or may not be offered
part of the commissions or agent's warrant (described below).
Panoramic has granted Canaccord a right of first refusal to provide
further public equity financing to Panoramic for a period of twelve months from
the effective date of this prospectus.
The obligations of Canaccord may be terminated prior to the opening of the
market on the day Panoramic's shares are to commence trading on the Vancouver
Stock Exchange at the discretion of Canaccord on the basis of its assessment of
the state of the financial markets. The agreement may also be terminated at any
time upon the occurrence of certain stated events.
AGENT'S GUARANTEE AND AGENT'S WARRANT
Canaccord has agreed to purchase the balance of any shares remaining
unsold in the offering. In consideration of this guarantee, Canaccord has been
granted a warrant.
The warrant entitles Canaccord to purchase up to 165,000 shares at a price
of $1.00 per share at any time up to 5:00 p.m. on the first anniversary of the
day Panoramic's shares commence trading on the Vancouver Stock Exchange and
thereafter at a price of $1.15 per share at any time up to 5:00 p.m. on the
second anniversary of such day. The warrant is non-transferable and will
contain, among other things, anti-dilution provisions and provision for
appropriate adjustment for the class, number and price of shares issuable
pursuant to any exercise thereof upon the occurrence of certain events,
including any subdivision, consolidation or reclassification of the shares or
the payment of stock dividends or the amalgamation of Panoramic.
Additionally, as consideration for services provided to Panoramic by
Canaccord, including providing advice with respect to the structure, timing and
price of the offering, Panoramic paid Canaccord a sponsorship fee of $10,000,
and Panoramic will pay Canaccord a corporate finance fee of 110,000 shares upon
completion of this offering.
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The shares of common stock comprising the corporate finance fee and the
shares underlying Canaccord's warrant are being registered pursuant to the
registration statement of which this prospectus forms a part.
OVER-ALLOTMENT OPTION
Panoramic has granted Canaccord an over allotment option which will permit
Canaccord to solicit and accept subscriptions for up to 165,000 additional
shares at a price of $1.00 per share. The number of shares subject to the
over-allotment option will be determined on or before the day Panoramic's shares
commence trading on the Vancouver Stock Exchange and will be the lesser of
165,000 shares or the actual number of shares subscribed for by way of
oversubscription.
In order to exercise the over-allotment option, Canaccord must give notice
to Panoramic within 60 calendar days of the day that Panoramic shares are
initially offered to the public. Canaccord is not obliged to cover the
over-allotment of this offering by exercising the over-allotment option.
Canaccord may, in its discretion, cover the over-allotment by purchasing shares
in the open market.
THE PURPOSE OF THIS PROSPECTUS
This prospectus has been included in a registration statement filed under
the U.S. Securities Act of 1933 in order to permit the shares to be legally sold
to the United States purchasers. Copies of this prospectus are being furnished
to each purchaser of the shares, whether in the United States, Canada, or
elsewhere. In addition, the United States securities laws require that the
prospectus be furnished to all subsequent purchasers of the shares from the
original purchasers in this offering for a period of 90 days after the effective
date of the U.S. registration statement. Copies of the prospectus will therefore
be made available to any securities broker-dealer who proposes to sell any of
the shares for a customer to a U.S.
purchaser.
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DIRECTORS AND SENIOR OFFICERS
DIRECTORS AND SENIOR OFFICERS
The following is a list of the current directors and senior officers of
Panoramic, and their municipalities of residence, current positions with
Panoramic, and principal occupations during the past five years:
<TABLE>
Name and Municipality
of Residence Principal Occupation for Previous Five Years
- -------------------------- ----------------------------------------------------------------------
<S> <C>
William M. Hunter President and a director of Panoramic since March 1, 1999; prior
Lafayette, Colorado to that he was consulting with various start-up ventures; prior to
President, Chief Executive that he was President and Chief Executive Officer of Gynecare,
Officer and Director Inc., a medical device company in Menlo Park, California, from
Age: 55 June 1994 to July 1996. From September 1985 to June 1994, he was
employed by the Valleylab medical device division of Pfizer,
lastly as the Director of Worldwide Marketing.
Jill S. Flateland Executive Vice-President and Chief Operating Officer of
Arvada, Colorado Panoramic since March of 1999, and was President and a director
Executive Vice-President, of Panoramic from August of 1990 to March of 1999; prior to that
Chief Operating Officer, she was Director of Integrated Management at Columbia North
Chairman of Board of Suburban Medical Centre, a health care facility in Thornton,
Directors Colorado, from June 1992 to November, 1995; prior to that she was
Age: 48 Supervisor of the Intensive Care Unit/Critical Care Unit at
Columbia North Suburban Medical Centre from April 1990 to June
1992. Ms. Flateland is married to Byron B. Flateland.
Byron B. Flateland Secretary and a director of Panoramic since August, 1990; Chief
Arvada, Colorado Technical Officer of Panoramic since October 6, 1998; prior to that
Chief Technical Officer, he was Vice-President, Marketing of InfoNow Corp., a software
Secretary and Director development company located in Denver, Colorado, from
Age: 48 November 1994 to June 1995; prior to that he was Director of
Business Development for Destron-Fearing Corporation, an
electronic identification company located in St. Paul, Minnesota,
from May 1989 to November 1994. Mr. Flateland is married to
Jill S. Flateland.
Frank L. Poggio Director of Panoramic since March 1, 1999; Principal of Kelzon
Chesterfield, Missouri Healthcare Consulting Group, a company providing strategic and
Director operational consulting services to the healthcare industry, since
Age: 52 July, 1996; prior to that he was President and Chief Operating
Officer (January 1995 to July 1996) and Executive Vice-President
(December 1992 to January 1995) of CITATION Computer Systems Inc.,
a company specializing in the delivery of client server based
systems for healthcare; prior to that he was President of Health
Micro Data Systems, Inc., a firm specializing in microcomputer
software systems and consulting services to the healthcare
industry since 1980. Health Micro Data Systems, Inc. merged with
CITATION Computer Systems, Inc. in December 1992.
</TABLE>
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Other than receiving stock options from time to time, the directors of
Panoramic are not compensated for serving as directors. See "Principal Holders
of Securities" for particulars of the shares held by the directors and senior
officers.
Other Associations
During the past five years, the principals of Panoramic have served as
principals of the following reporting issuers during the periods and in the
capacities noted below:
PRINCIPAL REPORTING ISSUER CAPACITY PERIOD
- ------------------ ------------------------- ------------- ------------
Kent Nuzum eSoft, Inc. Director 9/97-3/98
Frank Poggio CITATION Computer Systems Director 12/92-Present
William M. Hunter Gynecare, Inc. Director 6/94-7/96
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Consulting Agreement
The Company is party to a consulting agreement with Bolder Venture
Partners L.L.C. made December 7, 1998 and amended March 1, 1999. Bolder Venture
Partners is a limited liability company incorporated under the laws of the State
of Colorado and is owned 90% by Daryl Yurek, the promoter of this offering, and
10% by Kent Nuzum, Chief Financial Officer of the Company.
Under the terms of the consulting agreement, Bolder Venture Partners
agrees to provide consulting services to the officers of Panoramic relating to
matters of corporate development, strategic planning, raising of capital and
other financial matters, and to assist with certain private placements and
public offerings of Panoramic's securities, including this offering.
In consideration of these services, Panoramic agrees to pay Bolder Venture
Partners a monthly retainer of $6,000 per month, an advisory fee in an amount
equal to 7.5% of the gross proceeds raised in any private placements and share
purchase warrants to acquire 550,000 shares of Panoramic. On May 1, 1999, Bolder
Venture Partners exercised warrants to purchase 200,000 shares of Panoramic at a
price of $0.25 per share. The remaining 350,000 warrants are exercisable at a
price of $1.00 for a period of 5 years from the date the warrants are issued.
The term of the consulting agreement was extended on June 1, 1999 for an
additional six-month term. The consulting agreement requires Bolder Venture
Partners not to disclose any confidential information relating to Panoramic for
a period of 5 years following the termination of the consulting agreement.
-34-
<PAGE>
EXECUTIVE COMPENSATION
The following table is a summary of the compensation paid to the two most
highly paid executive officers of Panoramic during the most recently completed
financial year for services rendered to Panoramic:
<TABLE>
Long Term
Compensation
-------------------
Annual Compensation Awards Payouts
--------------------------------- -------- ---------
Options/
Name and SARs
Principle Other Annual Granted LTIP(1) All other
Position Period Salary Bonus Compensation (#) Payouts Compensation
- ------------------- ------------- ---------- -------- ------------ -------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Jill Flateland, (2) Year ended $23,904(3) N/A N/A N/A N/A N/A
President Dec. 31, 1998
Byron Flateland Year ended $23,904(3) N/A N/A N/A N/A N/A
Secretary, Chief Dec. 31, 1998
Technical Officer
</TABLE>
(1) "LTIP" or "long term incentive plan" means any plan which provides
compensation intended to serve as incentive for performance to occur over a
period longer than one financial year, but does not include option or stock
appreciation right plans.
(2) Ms. Flateland served as the president and chief executive officer of
Panoramic from September 4, 1990 until March 1, 1999, at which time she
began serving as the executive vice-president and chief operating officer
of Panoramic. On March 1, 1999, William M. Hunter accepted the position of
president and chief executive officer at an annual salary of $120,000.
(3) Ms. Flateland and Mr. Flateland were the sole shareholders of Panoramic in
1998, and provided services to Panoramic at salaries below the fair market
value of such services. For accounting purposes, Panoramic imputed salaries
of $100,000 to each of Ms. Flateland and Mr. Flateland; $23,904 of which
was paid to each in cash, and the remaining $76,096 of which was recorded
as a capital contribution on Panoramic's financial statements for 1998.
The chief executive officer, chief operating officer, chief technical
officer, the vice presidents, and all director level employees are eligible to
participate in Panoramic's Senior Management Bonus Plan for Fiscal Year 1999.
For the achievement of certain specified levels of total company sales, eligible
individuals may receive from 10% to 50% of their base salary as bonus.
-35-
<PAGE>
CAUTIONARY STATEMENT CONCERNING
FORWARD LOOKING STATEMENTS
We have made certain forward-looking statements in this document and in
the documents referred to in this document which are subject to risks and
uncertainties. These statements are based on the beliefs and assumptions of the
management of the companies and on the information currently available to such
management. Forward-looking statements include information concerning possible
or assumed future results of Panoramic. These statements may be preceded by,
followed by, or otherwise include the words "believes," "expects,"
"anticipates," "intends," "plans," "estimates" or similar expressions.
Forward-looking statements are not guarantees of performance. They involve
risks, uncertainties and assumptions. The future results and stockholder values
of Panoramic may differ materially from those expressed in these forward-looking
statements. Many of the factors that will determine these results and values are
beyond our ability to control or predict. Investors are cautioned not to put
undue reliance on any forward-looking statements. Except for their ongoing
obligations to disclose material information as required by the federal
securities law, we do not have any intention or obligation to update
forward-looking statements after this prospectus is delivered, even if new
information, future events or other circumstances have made them incorrect or
misleading.
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 combined company following the merger and
could cause results to differ materially from those expressed in such
forward-looking statements.
DIVIDEND RECORD AND POLICY
Panoramic has not paid any dividends since incorporation and it has no
plans to pay dividends in the immediate future. Panoramic expects to retain its
earnings to finance further growth and, when appropriate, retire debt. The
directors of Panoramic will determine if and when dividends should be declared
and paid in the future based on Panoramic's financial position at the relevant
time. All of the shares of Panoramic are entitled to an equal share in any
dividends declared and paid.
EXPERTS
The auditors of Panoramic are Hein + Associates LLP, Certified Public
Accountants, 717 - 17th Street, Suite 1600, Denver, Colorado, U.S.A. 80202. The
financial statements of Panoramic Care Systems, Inc., as of and for each of the
two years in the period ended December 31, 1998 included in this prospectus have
been audited by Hein + Associates LLP, Certified Public Accountants, to the
extent and for the periods set forth in their report appearing elsewhere herein,
and are included herein in reliance upon such report given upon the authority of
said firm as experts in auditing and accounting.
LEGAL MATTERS
Panoramic knows of no material pending legal proceedings to which
Panoramic is or is likely to be a party or of which any of its properties are or
are likely to be the subject.
-36-
<PAGE>
Campney & Murphy, Barristers and Solicitors, 2100, 1111 West Georgia
Street, Vancouver, British Columbia, Canada, V7X 1K9 has served as legal counsel
of Panoramic in connection with the offering of the securities in Canada on the
Vancouver Stock Exchange.
The validity of the securities offered will be passed upon for Panoramic
by Davis, Graham & Stubbs LLP, Denver, Colorado.
WHERE YOU CAN FIND MORE INFORMATION
You may read and copy any reports, statements or other information that we
file with the Securities and Exchange Commission at the SEC's public reference
rooms in Washington, D.C.; New York, New York; and Chicago, Illinois. Please
call the Securities and Exchange Commission at 1 (800) SEC-0330 for further
information on the public reference rooms. Our SEC filings are also available to
the public from commercial document retrieval services and at the web site
maintained by the Securities and Exchange Commission at "http://www.sec.gov."
-37-
<PAGE>
THIS INFORMATION IS NOT COMPLETE AND MAY BE CHANGED. WE MAY NOT DELIVER THESE
SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE
SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY
STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED JUNE 24, 1999
ALTERNATE
PROSPECTUS
1,991,500 Shares
$1.00 per share
[LOGO]
PANORAMIC CARE SYSTEMS, INC.
Common Stock, $.001 par value
------------------------------
Panoramic Care Systems, Inc. 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. Panoramic's computer
software uses patient symptoms to develop a detailed treatment plan and forecast
expected costs of treatment to the healthcare provider.
The common stock may be offered and sold from time to time by the selling
stockholders through underwriters, dealers, agents, or directly to one or more
purchasers in fixed price offerings, in negotiated transactions, at market
prices prevailing at the time of sale or at prices related to such market
prices. The terms of the offering and sale of common stock in respect of which
this prospectus is being delivered, including any initial public offering price,
any discounts, commissions, or concessions allowed or paid to underwriters,
dealers, or agents, the purchase price of the common stock and the proceeds to
the selling stockholders, and any other material terms shall be set forth in a
prospectus supplement.
All 1,991,500 shares of common stock of Panoramic Care Systems, Inc.
offered hereby are being offered for sale by the selling stockholders identified
herein. See "Selling Stockholders." Panoramic will not receive any proceeds from
the sale of the common stock by the selling stockholders.
------------------------------
THE SHARES OF COMMON STOCK OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" LOCATED AT ALTERNATE PAGES 2 TO 6.
------------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is ____, 1999
<PAGE>
TABLE OF CONTENTS
PAGE
Summary..............................................................Alternate 1
Risk Factors ........................................................Alternate 2
Selling Stockholders.................................................Alternate 6
Plan of Distribution................................................Alternate 10
Use of Proceeds.....................................................Alternate 10
Alternate -i-
<PAGE>
SUMMARY
This summary highlights selected information from this document and may not
contain all of the information that is important to you. To better understand
the offering, you should read this entire document and the documents we have
referred you to. See "Where You Can Find More Information."
BUSINESS OF PANORAMIC: Panoramic is a software development company that creates
and markets software products to standardize and
consolidate clinical, financial, quality and
administrative management for patients in care settings
outside of hospitals. Panoramic has recently designed a
line of software known as Panoramic Care Manager(TM)
(the "PCM Software") which provides software and
Internet integration for the post-acute healthcare
industry. The PCM Software is designed to provide
healthcare professionals with automated patient
management tools.
Panoramic started out by producing educational materials
for critical care programs. This was followed by the
development of intensive patient management tools in
printed format under the trade name STATpath(TM).
STATpath materials are the foundation for the PCM
Software.
OFFERING: Common Stock Offered by the
Selling Stockholders: 1,991,500 shares
SELLING STOCKHOLDERS: The selling stockholders are founders of
Panoramic or purchased their shares in a private
placement pursuant to an exemption provided by
Regulation D under the Securities Act of 1933, as
amended.
USE OF PROCEEDS: All proceeds from the offering will be received by the
selling stockholders.
<PAGE>
RISK FACTORS
An investment in Panoramic common stock involves certain risks.
Prospective investors should carefully consider the following risk factors, in
addition to all of the other information in this prospectus, in determining
whether to purchase shares of Panoramic stock.
WE CANNOT BE SURE THAT SUFFICIENT CAPITAL WILL BE AVAILABLE TO COVER NECESSARY
EXPENSES
Panoramic has expended and will continue to expend substantial funds for
research and development, testing, capital expenditures, manufacturing and
marketing of its products. The timing and amount of such spending is difficult
to predict accurately and will depend upon several factors, including the
progress of research and development efforts and competing technological and
market developments, commercialization of products currently under development
and market acceptance and demand for Panoramic's products. Panoramic currently
estimates that it will be necessary to spend approximately $2,765,000 during
1999, which exceeds the proceeds from the offering and Panoramic's working
capital. If Panoramic's sales do not cover this deficit, Panoramic may seek
additional funds through equity or debt financing, through collaborative or
other arrangements with other companies and from other sources. If additional
funds are raised by issuing equity securities, further dilution to shareholders
could occur. There can be no assurance that additional financing will be
available when needed or on terms acceptable to Panoramic. If adequate funds are
not available, Panoramic could be required to delay development or
commercialization of the PCM Software, to license to third parties the rights to
commercialize certain products or technologies that Panoramic would otherwise
seek to commercialize for itself or to reduce the marketing, customer support or
other resources devoted to certain of its products, each of which could have a
material adverse effect on Panoramic's business, financial condition and results
of operations. See also "Management's Discussion and Analysis of Operating
Results--Capital Resources and Liquidity."
WE HAVE HAD CONTINUING LOSSES WHICH ARE EXPECTED TO CONTINUE
Panoramic has a limited history of operations that has consisted primarily
of research and development, consulting and initial sales of STATpath. Panoramic
has generated only limited revenues from sales of STATpath and does not have
experience in manufacturing, selling or marketing its products in large,
commercial quantities. In addition, the PCM Software has not gained significant
market exposure or acceptance. Net losses as of May 31, 1999 were approximately
$300,000. Given the absence of clear market acceptance of our line of products,
there can be no assurance that we will achieve projected market penetration
rates and generate the sales revenues that we expect.
WE RELY ON KEY PERSONNEL
Panoramic's future success depends in significant part upon the continued
service of certain key technical and management personnel and its continuing
ability to attract and retain highly qualified technical and managerial
personnel. Key employees of Panoramic include William M. Hunter (President and
Chief Executive Officer), Jill Flateland (Executive Vice President and Chief
Operating Officer), and Byron Flateland (Chief Technical Officer) and Panoramic
has entered into employment agreements with each of these three key personnel.
The employment agreement with William Hunter extends from March 1, 1999
until February 28, 2000 and provides for a monthly salary of $10,000. The
employment agreements with Jill Flateland and Byron Flateland both extend from
January 1, 1999 until December 31, 2000 and each provides for a monthly salary
of $8,133. The employment agreements with all three of these individuals include
non-competition
Alternate 2
<PAGE>
provisions that extend for twelve months following the employee's termination
and non-disclosure provisions that extend indefinitely following the employee's
termination.
Competition for personnel is intense, and there can be no assurance that
Panoramic can retain its key technical and managerial personnel or that it can
attract, assimilate or retain other highly qualified technical and managerial
personnel in the future. The loss of key personnel, especially if without
advance notice, or the inability to hire or retain qualified personnel, could
have a material adverse effect upon Panoramic's business, financial condition
and results of operations.
A LARGE PROPORTION OF OUR HISTORICAL REVENUES COMES FROM ONE MAJOR CUSTOMER WHO
WILL NOT LIKELY CONTINUE PURCHASING OUR PRODUCT
Historically, Panoramic has marketed its products through distribution
channels. The Center for Health Education has accounted for a significant
portion of Panoramic's product sales and royalty revenue on the STATpath
product. Sales to the Center for Health Education accounted for 53.6% of
Panoramic's total revenues during 1998, and for 68.3% of Panoramic's total
revenues during 1997. The Center for Health Education, however, does not market
software and has phased out the STATpath product in 1999. The ability of
Panoramic to secure new sources of revenues for new products remains an area of
risk.
WE HAVE LIMITED SALES AND MARKETING EXPERIENCE
Panoramic's proposed products have not been proven in a commercial
environment and there is no assurance that it will be able to successfully build
a distribution channel or market the products. Panoramic intends to sell the PCM
Software in the United States to post-acute medical facilities through strategic
partners, distributors, and through healthcare consulting organizations. Market
acceptance of the PCM Software will also require Panoramic to demonstrate that
the cost of its products is competitive with currently available alternatives.
WE MAY BE ADVERSELY AFFECTED BY YEAR 2000 COMPLIANCE ISSUES
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.
Panoramic's PCM Software product is being developed to be fully Year 2000
compliant, although the effectiveness of present efforts to address the Year
2000 issue cannot be assured. In addition, Panoramic has implemented programs
designed to ensure that all software and hardware used in connection with the
design of its PCM Software and the provision of services to its customers and
suppliers and its internal operations will manage and manipulate data involving
the transition of dates from 1999 to 2000 without functional or data
abnormality. Panoramic has sought information from third parties, including
their customers and suppliers, with respect to compliance with Year 2000 issues.
If the present efforts to address the Year 2000 issue are unsuccessful, or if
other third parties with which Panoramic conducts business do not successfully
address the Year 2000 issue, the business and financial condition of Panoramic
could be adversely affected.
Alternate 3
<PAGE>
PROTECTION OF OUR INTELLECTUAL PROPERTY IS LIMITED; RISK OF THIRD PARTY CLAIMS
OF INFRINGEMENT
The patent, trademark, copyright and trade secret positions of medical
software companies, including those of Panoramic, are uncertain and involve
complex legal and factual issues. The coverage sought in a patent application
can be denied or significantly reduced before or after the patent is issued.
Consequently, there can be no assurance that any patents from any future patent
application will be issued, that the scope of the patent protection will exclude
competitors or provide competitive advantages to Panoramic, that any of
Panoramic's patents will be held valid if challenged or that others will not
claim rights in or ownership of the patents and other proprietary rights held by
Panoramic. In addition, there can be no assurance that competitors, many of
which have substantial resources, will not obtain patents that will interfere
with Panoramic's ability to make or sell its products. Litigation or regulatory
proceedings, which could result in substantial cost and uncertainty to
Panoramic, may also be necessary to enforce patent or other intellectual
property rights of Panoramic or to determine the scope and validity of other
parties' proprietary rights. There can be no assurance that Panoramic will have
enough money to defend its patents, trademarks and copyrights from infringement
or claims of invalidity.
Panoramic also relies upon unpatented proprietary technology, and no
assurance can be given that others will not develop similar technology gain
access to or disclose Panoramic's proprietary technology, or that Panoramic can
protect its rights in such unpatented proprietary technology. Panoramic's policy
is to require each of its employees, consultants, investigators and advisors to
execute a confidentiality agreement upon the commencement of an employment or
consulting relationship with Panoramic. These agreements generally provide that
all inventions conceived by the individual during the term of the relationship
shall be the exclusive property of Panoramic and shall be kept confidential and
not be disclosed to third parties except in specified circumstances. There can
be no assurance, however, that these agreements will provide meaningful
protection for Panoramic's proprietary information in the event of unauthorized
use or disclosure of such information.
WE MAY BE UNABLE TO MAINTAIN OUR CURRENT PRODUCTION SCHEDULE
Panoramic currently uses M1 Software to produce limited quantities of
software products for sales. Panoramic has no experience manufacturing its
products in the volumes or with the margins that will be necessary for Panoramic
to achieve significant commercial sales, and there can be no assurance that
Panoramic can establish high volume manufacturing capacity or, if established,
that Panoramic will be able to manufacture its products in high volumes with
commercially acceptable margins. While Panoramic believes that its current
relationship with M1 Software will be adequate to support its commercial
manufacturing activities in the near term, Panoramic may be required to expand
its manufacturing facilities to commence large-scale manufacturing. Panoramic's
inability to successfully manufacture or commercialize its devices in a timely
matter could have a material adverse effect on Panoramic's business, financial
condition and results of operations.
TO SUCCESSFULLY MARKET OUR PRODUCTS, WE MUST DEVELOP STRATEGIC AND DISTRIBUTOR
RELATIONSHIPS, WHICH WE HAVE DONE TO A VERY LIMITED EXTENT
Panoramic's future success will depend, in part, on its ability to enter
into and successfully develop strategic relationships and distributor
relationships with other parties with respect to the marketing and distribution
of its products. The success of Panoramic's relationship with future strategic
or distributor relationships will depend on the other parties' interests in the
specific products involved and their willingness and ability to perform the role
contemplated by Panoramic. Panoramic may have limited or no control over the
resources that any particular strategic party or distributor devotes to its
relationship with Panoramic. Moreover, there can be no assurance that Panoramic
will be successful in locating qualified parties with
Alternate 4
<PAGE>
whom to enter into additional strategic or distributor relationships or that any
such relationships can be maintained or will ultimately beneficial to Panoramic.
In the event Panoramic does not successfully develop additional relationships,
Panoramic's business, financial condition and results of operations would be
materially adversely affected.
WE MUST DEVELOP AND SELL NEW PRODUCTS IN ORDER TO KEEP UP WITH TECHNOLOGICAL
CHANGES
The medical software industry is characterized by rapid and significant
technological change. Many software applications have a life cycle of under
twelve months. Panoramic's future success will depend in large part on
Panoramic's ability to continue to respond to such changes. There can be no
assurance that Panoramic will be able to respond to such changes or that new or
improved competing products will not be developed that render the PCM Software
non-competitive. Product research and development will require substantial
expenditures and will be subject to inherent risks and there can be no assurance
that Panoramic will be successful in developing or improving products that have
the characteristics necessary to effectively meet the needs of the post-acute
segment of the managed care market, or that any new products introduced will be
successfully commercialized. Panoramic's products may face competition from, or
be rendered obsolete by, new products that have yet to be launched.
WE DO NOT HAVE PRODUCT LIABILITY INSURANCE
Panoramic's business involves the risk of product liability claims.
Although Panoramic has not experienced any product liability claims to date, any
such claims could have a material adverse effect on Panoramic. Panoramic does
not have product liability insurance. If Panoramic were to determine that such
insurance was necessary or desirable, there can be no assurance that it would be
available on commercially acceptable terms, or at all. Furthermore, even if
Panoramic obtains product liability insurance, there can be no assurance that it
would prove adequate or that a product liability claim, insured or uninsured,
would not have a material adverse effect on Panoramic's business, financial
condition, and results of operations. Even if a product liability claim is not
successful, the time and expense of defending against such a claim may adversely
affect Panoramic's business, financial condition and results of operations.
OUR STOCK HAS NEVER BEEN PUBLICLY TRADED; POSSIBLE VOLATILITY OF STOCK
Until June of 1999, there has been no public market for Panoramic's common
stock, and there can be no assurance that an active trading market will develop
and be sustained. The market prices for securities of healthcare software
companies have historically been highly volatile. Announcements of technological
innovations or new products by Panoramic or its competitors, developments
concerning proprietary rights, including patents and litigation matters, and
changes in financial estimates by securities analysts or failure of Panoramic to
meet such estimates and other factors may have a significant impact on the
market price of the shares. In addition, Panoramic believes that fluctuations in
its operating results may cause the market price of its shares to fluctuate,
perhaps substantially.
THE UNITED STATES PENNY STOCK RULES MAY MAKE IT MORE DIFFICULT FOR INVESTORS TO
SELL THEIR SHARES
Because shares of Panoramic common stock will not be quoted on a national
securities exchange in the United States, the shares will be subject to rules
adopted by the U.S. Securities and Exchange Commission regulating broker-dealer
practices in connection with transactions in "penny stocks." Such rules require
that, prior to effecting any transaction in a penny stock, a broker or dealer
must give the customer a risk disclosure document that describes various risks
associated with an investment in penny stocks, as well as various costs and fees
associated with such an investment. It is possible that some brokers may be
Alternate 5
<PAGE>
unwilling to engage in transactions in shares of Panoramic common stock because
of these added disclosure requirements, which would make it more difficult for a
purchaser to sell their shares.
THE POTENTIAL SUPPLY OF MARKETABLE SHARES FOR IMMEDIATE SALE MAY ADVERSELY
IMPACT THE MARKET PRICE OF THE SHARES
Panoramic has registered under the U.S. securities laws approximately
2,000,000 shares of its common stock that are presently owned by the
sharesholders. Approximately 1,424,000 of those shares were initially purchased
by the shareholders in private transactions between December 1998 and May 1,
1999. Although some of these shares are subject to restrictions on their sale
for periods of time specified by the Vancouver Stock Exchange, it is anticipated
that approximately 255,038 of these shares, in addition to those offered in the
public offering would be immediately available for sale to the public, thus
adding to the supply of shares in the market. If a significant portion of those
shares are offered for sale within a short period of time, the price of the
shares in the market would likely decline. If the supply substantial exceeds the
demand, it might become impossible to find buyers for all the shares that are
being offered, which would likely further depress the price and, perhaps, make
it impossible for you to sell all of your shares as quickly as you may desire.
Alternate 6
<PAGE>
SELLING STOCKHOLDERS
The following table sets forth certain information with respect to the
beneficial ownership of Panoramic's common stock as of April 6, 1999, and as
adjusted to reflect the sale of shares being offered hereby, for each of the
selling stockholders. Except as otherwise noted, the persons or entities in this
table have sole voting and investing power with respect to all of the shares
owned by them.
<TABLE>
Shares Shares Shares
Beneficially Offered Beneficially Post-Offering
Owned Pre- in the Owned Post- %
Name and Address Offering Offering Offering Ownership
- -------------------------- ------------ -------- ------------ -------------
<S> <C> <C> <C> <C>
Byron Flateland (Chief 826,000 250,000 576,000 11.51%
Technical Officer)
5181 Ward Rd.
Wheat Ridge, CO 80033
Jane Abou-Chedid 20,000 20,000 -0- -0-
1849 Holdens Arbor Run
Westlake, OH 44145
James Richard Anderson 20,000 20,000 -0- -0-
5820 Cantrell Road
Richmond, BC V7C 3H1
Paul A. Chalmers 10,000 10,000 -0- -0-
c/o Canaccord Capital
Corporation
2200 609 Granville St.
Vancouver, BC V7Y 1H2
Channing Investments 100,000 100,000 -0- -0-
Corporation
800 - 1450 Creekside Dr.
Vancouver, BC V6J 5B3
Jeanette Clark 20,000 20,000 -0- -0-
2515 Amber Court
Coquitlam, BC V3E 3K8
Kenneth & Mary Cooper 8,000 8,000 -0- -0-
4001 Bradley Road
Westlake, OH 44145
Anthony M. Coury 15,000 15,000 -0- -0-
8183 Creekside Trace
Broadview Hts., OH 44147
David Coury 15,000 15,000 -0- -0-
247 Arundel Road
Rocky River, OH 44116
Ghazi J. Faddoul & 10,000 10,000 -0- -0-
Bernadette C. Faddoul
27982 Forestwood Pkwy
North Olmsted, OH 44070
Oscar Flateland 2,000 2,000 -0- -0-
P.O. Box 116
Oklee, MN 56742
</TABLE>
Alternate 7
<PAGE>
<TABLE>
Shares Shares Shares
Beneficially Offered Beneficially Post-Offering
Owned Pre- in the Owned Post- %
Name and Address Offering Offering Offering Ownership
- -------------------------- ------------ -------- ------------ -------------
<S> <C> <C> <C> <C>
Patricia A. Gibbs 4,000 4,000 -0- -0-
6874 Smith Road
Middleburg Hts., OH 44130
Debra G. Hafemeister 4,000 4,000 -0- -0-
1626 West 6th Ave.
Oshkosh, WI 54901
Joanne T. Kelly 21,750(5) 21,750 -0- -0-
1237 Meadowlark Drive
Boulder, CO 80303
Terrence McDonald & Deborah 10,000 10,000 -0- -0-
McDonald
3645 Chrisfield Drive
Rocky River, OH 44116
Clifford B. Mah 56,250(3) 56,250 -0- -0-
2005 289 Drake St.
Vancouver, BC V6B 5Z5
Keith Maitland 8,000 8,000 -0- -0-
31415 Turtle Drive
Bay Village, OH 44140
Mary Murphy 60,000 60,000 -0- -0-
c/o Canaccord Capital
Corporation
2200 609 Granville Street
Vancouver, BC V7Y 1H2
Kent Nuzum (Chief Financial 135,750(1)(5) 304,340 -0- -0-
Officer)
c/o 1919 14th St., Suite 800
Boulder, CO 80302
C. Michael O'Brien 12,000 12,000 -0- -0-
895 Fairmile Road
West Vancouver, BC V7S JR4
Brian Lawrence O'Brien 56,250(3) 56,250 -0- -0-
1826 West 13th Ave.
Vancouver, BC V6J 2H3
James Oleynick 45,000(4) 45,000 -0- -0-
Pacific International
Securities Inc.
1900 666 Burrard Street
Vancouver, BC V6C 3N1
Lorraine Rose Rumberg 40,000 40,000 -0- -0-
14189 25A Avenue
White Rock, BC V4P 2G4
Daniel Seighman 10,000 10,000 -0- -0-
6024 Forest Ridge Drive
North Olmsted, OH 44107
Mary Spooner 10,000 10,000 -0- -0-
19706 Echo Drive
Strongsville, OH 44136
</TABLE>
Alternate 8
<PAGE>
<TABLE>
Shares Shares Shares
Beneficially Offered Beneficially Post-Offering
Owned Pre- in the Owned Post- %
Name and Address Offering Offering Offering Ownership
- -------------------------- ------------ -------- ------------ -------------
<S> <C> <C> <C> <C>
Union Securities Ltd. 100,000 100,000 -0- -0-
609 Granville St.,
Suite 900
Vancouver BC V7Y 1H4
Vera E. Williams 10,000 10,000 -0- -0-
6393 Decorah Bch
Oshkosh, WI 54901
Darryl Yea 12,000 12,000 -0- -0-
5294 Keith Road
West Vancouver BC V7W 2N1
Daryl F. Yurek 258,000(2) 455,910 -0- -0-
7 St. Paul, Suite 1600
Baltimore, MD 21202
574733 B.C. Ltd. 26,000 26,000 -0- -0-
Stikeman, Elliott
1700 666 Burrard St.
Vancouver BC V6C 2X8
Christine and Don 46,000 46,000 -0- -0-
Marcellus
1147 Piedmont Avenue
Boulder, CO 80303
Christine Marcellus 10,000 10,000 -0- -0-
1147 Piedmont Avenue
Boulder, CO 80303
Gregory Pavlich and 8,000 8,000 -0- -0-
Ann Mygatt
2350 Panorama
Boulder, CO 80304
Don G. Parker 8,000 8,000 -0- -0-
6244 Simmons Drive
Boulder, CO 80303
Connie K. Packard 4,000 4,000 -0- -0-
6244 Simmons Drive
Boulder, CO 80303
James C. Curley 2,000 2,000 -0- -0-
8773 W. Arbor Avenue
Littleton, CO 80123
Ronald Smaron 14,000 14,000 -0- -0-
4567 Sandpiper Ct.
Boulder, CO 80301
Howard William Morse II 2,000 2,000 -0- -0-
2509 Belmont Blvd.
Nashville, TN 37212-5505
Matthew Albert Pascal 14,000 14,000 -0- -0-
5550 Flower St.
Arvada, CO 80002
</TABLE>
Alternate 9
<PAGE>
<TABLE>
Shares Shares Shares
Beneficially Offered Beneficially Post-Offering
Owned Pre- in the Owned Post- %
Name and Address Offering Offering Offering Ownership
- -------------------------- ------------ -------- ------------ -------------
<S> <C> <C> <C> <C>
Philip W. Robinson 8,000 8,000 -0- -0-
912 Pontiac St.
Denver, CO 80220
Garth R. Albright 30,000 30,000 -0- -0-
4397 Cheviot Road
North Vancouver, BC V7R 3T3
Bruce Bragagnolo 15,000 15,000 -0- -0-
3477 West 28th Ave.
Vancouver, BC V6S 1R8
Linda M. Smith 15,000 15,000 -0- -0-
3595 Princess Ave.
North Vancouver, BC V7N 2E4
M1 Software 100,000 100,000 -0- -0-
1639 11th Street
Suite 200
Santa Monica, CA 90404
Lyle C. Williams and 4,000 4,000 -0- -0-
Rosemary E. Williams
JTWROS
307 Fingal Drive
Alexandria, MN 56308
TOTAL 2,205,000 1,991,500 -0- -0-
</TABLE>
(1) Shares Beneficially Owned Pre-Offering excludes warrants to purchase up to
168,590 shares exercisable after the public offering and expiring five
years from the date the shares are listed for public trading on the
Vancouver Stock Exchange, but Shares Offered in the Offering includes such
warrant shares.
(2) Includes 150,000 shares in the name of Solomon Smith Barney IRA FBO Daryl
F. Yurek, of which Daryl F. Yurek is the sole owner. Shares Beneficially
Owned Pre-Offering excludes warrants to purchase up to 197,910 shares
exercisable after the public offering and expiring five years from the date
the shares are listed for public trading on the Vancouver Stock Exchange,
but Shares Offered in the Offering includes such warrant shares.
(3) Includes warrants to purchase up to 6,250 shares now exercisable and
expiring September 30, 2001.
(4) Includes warrants to purchase up to 5,000 shares now exercisable and
expiring September 30, 2001.
(5) Includes warrants to purchase up to 3,750 shares now exercisable and
expiring September 30, 2001.
Alternate 10
<PAGE>
PLAN OF DISTRIBUTION
The common stock offered hereby may be sold from time to time to
purchasers directly by the selling stockholders. Alternatively, the selling
stockholders may from time to time offer the shares through underwriters,
dealers or agents, who may receive compensation in the form of underwriting
discounts, concessions or commissions from the selling stockholders and/or the
purchasers of the shares for whom they may act as agent. The selling
stockholders and any underwriters, dealers or agents that participate in the
distribution of the shares may be deemed to be underwriters and any profit on
the sale of the shares by them and any discounts, commissions or concessions
received by any such underwriters, dealers or agents might be deemed to be
underwriting discounts and commissions under the U.S. securities laws. At the
time a particular offer of shares is made, to the extent required, a prospectus
supplement will be distributed that will set forth the specific shares to be
sold and the terms of the offering, including the name or names of any
underwriters or dealer agents, any discounts, commissions and other items
constituting compensation from the selling stockholders and any discounts,
commissions or concessions allowed or reallowed or paid to dealers.
The shares may be sold from time to time in one or more transactions at a
fixed offering price that may be changed or at varying prices determined at the
time of sale or negotiated prices.
Panoramic has paid substantially all of the expenses incident to the
offering of the shares, other than commissions and discounts of underwriters,
dealers or agents and the fees and expenses of counsel to the selling
stockholders.
USE OF PROCEEDS
Panoramic will not receive any of the proceeds from the offering. All of
such proceeds will be received by the selling stockholders.
Alternate 11
<PAGE>
INDEX TO FINANCIAL STATEMENTS
PAGE
INDEPENDENT AUDITOR'S REPORT...............................................F-2
BALANCE SHEETS - March 31, 1999 (Unaudited) and
December 31, 1998 and 1997............................................F-3
STATEMENTS OF OPERATIONS - For the Three Months Ended
March 31, 1999 and 1998 (Unaudited) and For the
Years Ended December 31, 1998 and 1997................................F-4
STATEMENTS OF STOCKHOLDERS' EQUITY - For the Three Months
Ended March 31, 1999 (Unaudited) and For the Years
Ended December 31, 1998 and 1997......................................F-5
STATEMENTS OF CASH FLOWS - For the Three Months Ended
March 31, 1999 and 1998 (Unaudited) and For the
Years Ended December 31, 1998 and 1997................................F-6
NOTES TO FINANCIAL STATEMENTS..............................................F-7
F-1
<PAGE>
INDEPENDENT AUDITOR'S REPORT
Board of Directors
Panoramic Care Systems, Inc.
Arvada, Colorado
We have audited the accompanying balance sheets of Panoramic Care Systems, Inc.
as of December 31, 1998 and 1997, and the related statements of operations,
stockholders' equity, and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Panoramic Care Systems, Inc. as
of December 31, 1998 and 1997, and the results of its operations and its cash
flows for the years then ended, in conformity with generally accepted accounting
principles.
HEIN + ASSOCIATES LLP
Denver, Colorado
March 4, 1999
F-2
<PAGE>
PANORAMIC CARE SYSTEMS, INC.
BALANCE SHEETS
MARCH 31, DECEMBER 31,
1999 1998 1997
---- ---- ----
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and equivalents $156,691 $350,122 $ 336
Stock subscriptions receivable -- 99,400 --
Royalties receivable -- -- 9,640
Prepaid expenses and other 17,856 -- 48
-------- -------- --------
Total current assets 174,547 449,522 10,024
SOFTWARE DEVELOPMENT COSTS 184,376 75,000 --
PROPERTY AND EQUIPMENT, net of accumulated
depreciation of $38,761 (unaudited),
$35,011, and $25,481, respectively 62,746 10,271 15,160
DEFERRED OFFERING COSTS 73,285 -- --
-------- -------- --------
TOTAL ASSETS $494,954 $534,793 $ 25,184
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES -
Accounts payable and accrued
liabilities $ 83,539 $ 32,257 $ --
COMMITMENTS (Notes 2, 4, and 6)
STOCKHOLDERS' EQUITY:
Common stock, $.001 par value;
50,000,000 shares authorized,
3,200,000 (unaudited),
3,016,000 and 2,000,000 shares
issued and outstanding,
respectively 3,200 3,016 2,000
Additional paid-in capital 1,274,556 1,202,765 539,112
Accumulated deficit (866,341) (703,245) (515,928)
--------- --------- -------
Total stockholders' equity 411,415 502,536 25,184
--------- --------- -------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 494,954 $ 534,793 $ 25,184
========= ========= ========
SEE ACCOMPANYING NOTES TO THESE FINANCIAL STATEMENTS.
F-3
<PAGE>
PANORAMIC CARE SYSTEMS, INC.
STATEMENTS OF OPERATIONS
<TABLE>
FOR THE THREE FOR THE
MONTHS ENDED YEARS ENDED
MARCH 31, DECEMBER 31,
1999 1998 1998 1997
----------- ----------- ----------- -----------
(Unaudited)
<S> <C> <C> <C> <C>
REVENUES:
Royalties $ -- $ 9,660 $ 27,613 $ 53,805
Consulting fees -- -- 23,180 19,604
License fees -- -- 714 5,354
----------- ----------- ----------- -----------
Total revenues -- 9660 51507 78763
OPERATING EXPENSES:
Salaries 49,909 50,000 125,778 200,000
Management fee -- 6,100 23,180 17,500
Product development costs 1,218 -- 3,221 2,342
Consulting fees 22,076 -- 61,650 --
Recruiting fees 60,500 -- -- --
Other general and administrative 31,933 2,393 24,995 16,193
----------- ----------- ----------- -----------
Total operating expenses 165,636 58,493 238,824 236,035
----------- ----------- ----------- -----------
Operating loss (165,636) (48,833) (187,317) (157,272)
OTHER INCOME (EXPENSE) -
Interest income 2,540 -- -- --
----------- ----------- ----------- -----------
NET LOSS $ (163,096) $ (48,833) $ (187,317) $ (157,272)
=========== =========== =========== ===========
NET LOSS PER COMMON SHARE $ (.05) $ (.02) $ (.09) $ (.08)
=========== =========== =========== ===========
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING 3,116,000 2,000,000 2,043,000 2,000,000
=========== =========== =========== ===========
</TABLE>
SEE ACCOMPANYING NOTES TO THESE FINANCIAL STATEMENTS.
F-4
<PAGE>
PANORAMIC CARE SYSTEMS, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 1999 (UNAUDITED) AND
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
ADDITIONAL
COMMON STOCK PAID-IN ACCUMULATED
SHARES AMOUNT CAPITAL DEFICIT TOTAL
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
BALANCES, January 1, 1997 2,000,000 $ 2,000 $ 374,000 $ (358,656) $ 17,344
Contributed services -- -- 165,112 -- 165,112
Net loss -- -- -- (157,272) (157,272)
---------- ---------- ---------- ---------- ----------
BALANCES, December 31, 1997 2,000,000 2,000 539,112 (515,928) 25,184
Contributed services -- -- 152,193 -- 152,193
Issuance of common stock in private
placement, net of offering costs of
$46,524 1,016,000 1,016 460,460 -- 461,476
Warrants issued for consulting fees -- -- 51,000 -- 51,000
Net loss -- -- -- (187,317) (187,317)
---------- ---------- ---------- ---------- ----------
BALANCES, December 31, 1998 3,016,000 3,016 1,202,765 (703,245) 502,536
Issuance of common stock in private
placement, net of offering costs of
$20,025 (unaudited) 184,000 184 71,791 -- 71,975
Net loss (unaudited) -- -- -- (163,096) (163,096)
---------- ---------- ---------- ---------- ----------
BALANCES, March 31, 1999 (Unaudited) 3,200,000 $ 3,200 $1,274,556 $ (866,341) $ 411,415
========== ========== ========== ========== ==========
</TABLE>
SEE ACCOMPANYING NOTES TO THESE FINANCIAL STATEMENTS.
F-5
<PAGE>
PANORAMIC CARE SYSTEMS, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
FOR THE THREE FOR THE
MONTHS ENDED YEARS ENDED
MARCH 31, DECEMBER 31,
1999 1998 1998 1997
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(163,096) $ (48,833) $(187,317) $(157,272)
Adjustments to reconcile net loss to net cash
from operating activities:
Contributed services -- 30,500 77,193 165,112
Warrants issued for services -- -- 51,000 --
Depreciation expense 3,750 2,375 9,578 10,339
Increase in prepaid expenses (17,859) -- -- --
(Increase) decrease in royalty receivable -- 9,640 9,640 (9,640)
Increase in accounts payable 51,282 6,100 32,257 --
--------- --------- --------- ---------
Net cash provided by (used in) operating
activities (125,923) (218) (7,649) 8,539
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (56,222) -- (4,641) (8,268)
Capitalized software development costs (109,376) -- -- --
--------- --------- --------- ---------
Net cash used in investing activities (165,598) -- (4,641) (8,268)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock, net of
offering costs 71,975 -- 461,476 --
Deferred offering costs (73,285) -- -- --
Stock subscriptions receivable 99,400 -- (99,400) --
--------- --------- --------- ---------
Net cash provided by financing activities 98,090 -- 362,076 --
--------- --------- --------- ---------
NET INCREASE (DECREASE) IN CASH AND
EQUIVALENTS (193,431) (218) 349,786 271
CASH AND EQUIVALENTS, beginning of period 350,122 336 336 65
--------- --------- --------- ---------
CASH AND EQUIVALENTS, end of period $ 156,691 $ 118 $ 350,122 $ 336
========= ========= ========= =========
NON-CASH INVESTING AND FINANCING
ACTIVITIES -
Contributed services included in software
development costs $ -- $ -- $ 75,000 $ --
========= ========= ========= =========
</TABLE>
SEE ACCOMPANYING NOTES TO THESE FINANCIAL STATEMENTS.
F-6
<PAGE>
PANORAMIC CARE SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
(INFORMATION FOR PERIODS SUBSEQUENT TO DECEMBER 31, 1998 IS UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES:
ORGANIZATION AND NATURE OF OPERATIONS - Panoramic Care Systems, Inc.
(the "Company") was originally incorporated in 1990 as Free Style
Publications, Inc. The name of the Company was changed to Panoramic
Care Systems, Inc. in December 1998. The Company is engaged in
providing patient management systems to the post-acute health care
industry. The products have been provided in printed and CD-ROM format.
The Company is now transforming the products into software products
designed to standardize and systemize the delivery of health care.
USE OF ESTIMATES - The preparation of the Company's financial
statements in conformity with generally accepted accounting principles
requires the Company's management to make estimates and assumptions
that affect the amounts reported in these financial statements and
accompanying notes.
Actual results could differ from those estimates.
The Company's financial statements are based on a number of estimates,
including the value assigned to contributed services and the carrying
value of software development costs. It is reasonably possible that
these estimates could change in the forthcoming year and such revisions
could be material.
CASH EQUIVALENTS - The Company considers all highly liquid debt
instruments purchased with an original maturity of three months or less
to be cash equivalents.
PROPERTY AND EQUIPMENT - Property and equipment are stated at cost.
Depreciation of property and equipment is calculated using the
straight-line method over the estimated useful lives (ranging generally
3 years) of the respective assets. The cost of normal maintenance and
repairs is charged to operating expenses as incurred. Material
expenditures which increase the life of an asset are capitalized and
depreciated over the estimated remaining useful life of the asset. The
cost of properties sold, or otherwise disposed of, and the related
accumulated depreciation or amortization are removed from the accounts,
and any gains or losses are reflected in current operations.
SOFTWARE DEVELOPMENT COSTS - The Company capitalizes costs of producing
software to be sold, leased, or otherwise marketed, incurred subsequent
to establishing technological feasibility in accordance with Statement
of Financial Accounting Standards (SFAS) No. 86.
Amortization of capitalized software development costs is computed on a
product-by-product basis. The annual amortization is the greater of the
amount computed using the ratio of current gross revenue for a product
to the total of current and anticipated future gross revenue for that
product or the straight-line method, not to exceed 3 years.
Amortization had not commenced at March 31, 1999 because the product
was not yet available for market release. In addition, management
periodically compares the unamortized capitalized costs for each
product to the net realizable value of that product. If the unamortized
capitalized costs exceed the net realizable value, the excess will be
charged to operations.
Costs incurred in researching, designing and planning for the
development of new software are charged to operations as incurred.
F-7
<PAGE>
PANORAMIC CARE SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
(INFORMATION FOR PERIODS SUBSEQUENT TO DECEMBER 31, 1998 IS UNAUDITED)
IMPAIRMENT OF LONG-LIVED ASSETS - Management of the Company assesses
impairment whenever events or changes in circumstances indicate that
the carrying amount of a long-lived asset may not be recoverable. If
the net carrying value exceeds the net cash flows, then impairment will
be recognized to reduce the carrying value to the estimated fair value.
EARNINGS PER SHARE - Net loss per common share is presented in
accordance with the provisions of SFAS No. 128, Earnings Per Share.
SFAS No. 128 replaces the presentation of primary and fully diluted
earnings per share (EPS), with a presentation of basic EPS and diluted
EPS. Under SFAS No. 128, basic EPS excludes dilution for potential
common shares and is computed by dividing the net loss by the weighted
average number of common shares outstanding for the year. Diluted EPS
reflects the potential dilution that could occur if securities or other
contracts to issue common stock were exercised or converted into common
stock and resulted in the issuance of common stock. Basic and diluted
EPS are the same in 1998 and 1997 as there were no potential common
shares.
INCOME TAXES - The Company accounts for income taxes under the
liability method, which requires recognition of deferred tax assets and
liabilities for the expected future tax consequences of events that
have been included in the financial statements or tax returns. Under
this method, deferred tax assets and liabilities are determined based
on the difference between the financial statement and tax bases of
assets and liabilities using enacted tax rates.
REVENUE RECOGNITION - The Company recognizes royalty income when sales
are made by the licensee. Consulting fees are recognized when the
services are performed.
Revenue from the sale of the Company's proprietary software will be
recognized when the software is delivered and the Company has
substantially performed all material obligations relating to the sale
agreement and collectibility is deemed probable by management.
UNAUDITED INTERIM INFORMATION - The balance sheet as of March 31, 1999
the statements of operations for the three month periods ended March
31, 1999 and 1998 were taken from the Company's books and records
without audit. However, in the opinion of management, such information
includes all adjustments (consisting only of normal recurring accruals)
which are necessary to properly reflect the financial position of the
Company as of March 31, 1999 and the results of operations for the
three months ended March 31, 1999 and 1998. The results of operations
for the interim periods presented are not necessarily indicative of
those to be expected for the year.
2. RELATED PARTY TRANSACTIONS:
The Company has entered into a marketing agreement with Center for
Health Education (CHE), a non-profit organization. Under this
agreement, the Company granted to CHE a non-exclusive license to market
the Company's STATpaths and audio courses. CHE pays a royalty to the
Company of 15% of gross income from sales of these products. The
Company's president is also the president of CHE. Total royalties
received from CHE for 1998 and 1997 were $27,613 and $53,805,
respectively. This
F-8
<PAGE>
PANORAMIC CARE SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
(INFORMATION FOR PERIODS SUBSEQUENT TO DECEMBER 31, 1998 IS UNAUDITED)
agreement expired as of December 31, 1998, and the Company does not
expect future revenues for the sale of their products.
The Company pays a management fee under an informal agreement for cost
sharing to an entity which is owned by the two major stockholders of
the Company. This fee represents reimbursement for expenses such as
rent, utilities, and accounting costs. Management fees paid for 1998
and 1997 were $23,180 and $17,500, respectively. This agreement expired
as of December 31, 1998.
3. INCOME TAXES:
The temporary differences between the tax basis and book basis of
assets and liabilities are primarily due to depreciation, warrants
issued for services, and the use of cash basis of accounting for income
tax purposes. Such differences were not material for 1998 or 1997.
4. STOCKHOLDERS' EQUITY:
In December 1998, the Company completed the first tranche of a private
placement of 1,016,000 shares of common stock for a total of $508,000,
less offering costs of $46,524, of this amount, $99,400 was received
after year-end. In February 1999, the Company completed the second
tranche consisting of 184,000 shares of common stock for a total of
$92,000, less offering costs of $20,025.
In December 1998, the Board of Directors approved an increase in the
authorized shares to 50,000,000, a reduction in the par value of each
share to $.001, and a 2,000 for 1 stock split. All share and per share
amounts in the financial statements have been restated to reflect the
stock split.
The Company has recorded as a capital contribution the difference
between the estimated value of services provided by its officers who
are major shareholders and the actual amounts paid to the officers. The
estimates are based upon the salaries paid commencing in 1999. In 1998,
$75,000 of the contributed services was recorded as software
development costs, based on the number of hours worked by the chief
technical officer subsequent to the establishment of technological
feasibility of the product.
In January 1999, the Company entered into an agreement with an
underwriter for a proposed public offering of up to $1,100,000 on the
Vancouver (Canada) stock exchange. The underwriter will receive fees
totaling approximately $30,000, plus a commission of 7.5% of the
offering proceeds. In addition, the underwriter will receive 110,000
shares of common stock and warrants to purchase 15% of the number of
shares issued in the public offering, exercisable at the public
offering price for one year and at 115% of the public offering price
for one additional year.
F-9
<PAGE>
PANORAMIC CARE SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
(INFORMATION FOR PERIODS SUBSEQUENT TO DECEMBER 31, 1998 IS UNAUDITED)
5. DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS AND
CONCENTRATIONS OF CREDIT RISKS:
FAIR VALUE OF FINANCIAL INSTRUMENTS - The carrying amounts of cash and
equivalents, accounts receivable, and accounts payable approximate fair
value due to the short maturity of these items.
These fair value estimates are subjective in nature and involve
uncertainties and matters of significant judgment and therefore, cannot
be determined with precision. Changes in assumptions could
significantly affect these estimates.
CONCENTRATIONS OF CREDIT RISK - Credit risk represents the accounting
loss that would be recognized at the reporting date if counterparties
failed completely to perform as contracted. Concentrations of credit
risk (whether on or off balance sheet) that arise from financial
instruments exist for groups of customers or counterparties when they
have similar economic characteristics that would cause their ability to
meet contractual obligations to be similarly effected by changes in
economic or other conditions. The Company operates primarily in the
health care industry.
At December 31, 1998, the Company had an investment in a single money
market mutual fund of $300,000, which is not covered by Federal
insurance.
6. COMMITMENTS:
In December 1998, the Company entered into a consulting agreement with
an entity (the "Consultant") to provide consulting services regarding
capital raisings corporate development and other financial matters,
including the private placement which was completed in 1998 and the
proposed public offering (see Note 7). The Consultant is to receive a
fee of $6,000 per month through May 1999. The Consultant also received
warrants to purchase 200,000 shares of stock at $.25 per share,
expiring immediately prior to the Company's proposed public offering.
The Company has recorded the fair value of these warrants of $51,000 as
an expense in 1998. At the completion of the private placement, the
Consultant received an advisory fee of $45,000 and warrants to purchase
240,000 shares of stock at $1.00 per share, exercisable for five years.
Upon completion of the public offering, the Consultant will receive
warrants to purchase 10% of the number of shares issued in the
offering, at an exercise price equal to the public offering price,
expiring five years from issuance.
In February 1999, the Company entered into an office lease agreement
which requires monthly rental payments of approximately $2,900 from
March 15, 1999 through September 15, 2000.
F-10
<PAGE>
PANORAMIC CARE SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
(INFORMATION FOR PERIODS SUBSEQUENT TO DECEMBER 31, 1998 IS UNAUDITED)
7. LIQUIDITY:
The Company has incurred operating losses from inception, primarily due
to non-cash expenses for services contributed by major stockholders. In
late 1998 and early 1999, the Company entered into various commitments
including an office lease, consulting agreement, and employment
agreements, and has incurred significant expenditures for software
development costs. In addition, sales of the Company's existing product
have essentially been discontinued. Management believes that revenues
from the Company's new software products, along with the proceeds of
the Company's proposed public offering, will be sufficient to fund
operations for the coming year. If revenues from the software products
are less than anticipated, or if the proposed public offering is not
completed, the Company will be required to reduce its overhead expenses
or seek additional equity or debt financing.
F-11
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF OFFICERS AND DIRECTORS
INDEMNIFICATION OF DIRECTORS AND OFFICERS
(a) As permitted by the Colorado General Corporation Law, the Amended and
Restated Articles of Incorporation of Panoramic eliminates the liability of
directors to Panoramic or its shareholders for monetary damages for breach of
fiduciary duty as a director, except to the extent otherwise required by the
Colorado General Corporation Law.
(b) The Amended and Restated Articles of Incorporation provides that
Panoramic will indemnify each person who was or is made a party to any
proceeding by reason of the fact that such person is or was a director or
officer of Panoramic against all expense, liability and loss reasonably incurred
or suffered by such person in connection therewith to the fullest extent
authorized by the Colorado General Corporation Law. Panoramic's Bylaws provide
for a similar indemnity to directors and officers of Panoramic to the fullest
extent authorized by the Colorado General Corporation Law.
(c) The Amended and Restated Articles of Incorporation also gives
Panoramic the ability to enter into indemnification agreements with each of its
directors and officers. Panoramic has entered into indemnification agreements
with each of its directors and officers (see "Other Material Facts--Other
Agreements"), which provide for the indemnification of directors and officers of
Panoramic against any and all expenses, judgments, fines, penalties and amounts
paid in settlement, to the fullest extent permitted by law.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Legal Fees $ 50,000
Accounting Fees $ 3,000
Registration Fees $ 2,000
Listing Fees $ 3,000
Transfer Agent Fees $ 2,000
Printing $ 5,000
---------
$ 65,000
II-1
<PAGE>
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
During the period from Panoramic's incorporation through to the date of
this prospectus, Panoramic has issued the following shares, after giving effect
to the December 4, 1998 stock split of 2,000 to 1:
Number of Price Per Total
Date Issued Shares Share Consideration
----------------- --------------- --------- -------------
Prior sales: September 4, 1990 2,000,000(1)(3) $0.0005 $ 1,000
February 10, 1999 1,200,000(2)(3) $0.50 $ 600,000
(1) Panoramic issued 490 shares to Byron Flateland and 510 shares to Jill
Flateland on incorporation for total aggregate cash consideration of
$1,000. These shares were subject to a 2,000:1 share split effective
December 4, 1998.
(2) Panoramic issued 1,200,000 shares to a total of 45 individuals at a price
of $0.50 per share to raise seed capital of $600,000.
(3) Panoramic issued all presently outstanding shares in exempt transactions
under Section 4(a) of the Securities Act of 1933 and Rule 504 of Regulation
D, as no public offering was involved.
o Pursuant to Rule 701 of the Securities Act of 1933, Panoramic has granted
465,000 options to purchase shares of common stock to seven of its
employees and to its one non-employee director under the terms of the
Company's Stock Option Plan. 7/36ths of the options become exercisable on
the first day of the seventh month of the date of grant, and thereafter
1/36th of the total options granted become exercisable on the first day of
each subsequent month until all options are exercisable.
o Effective May 12, 1999 Panoramic issued convertible notes in the aggregate
principal amount of $100,000. In consideration for making the loans,
Panoramic granted to the holders a warrant to acquire one-quarter of a
share of Panoramic common stock for each $1.00 loaned. Each warrant is
exercisable at $1.00 per share during the first year of the warrant and
$1.15 per share during the second year. These securities were issued under
Regulation S.
o Pursuant to Rule 504 of Regulation D, Panoramic issued 100,000 shares to M1
Software pursuant to the terms of a Letter of Engagement entered into
between Panoramic and M1 on December 7, 1998, which was later amended by
resolution of the board of directors. As part of the compensation to be
paid M1 for its services under this agreement, Panoramic agreed to grant M1
60 shares of common stock for each hour of services provided.
II-2
<PAGE>
ITEM 27. EXHIBITS
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------- ----------------------------------------------------------------
1 Agency Agreement dated March 24, 1999 between Panoramic Care Manager,
Inc. and Canaccord Capital Corporation*
3.1 Amended and Restated Articles of Incorporation of FreeStyle
Publications, Inc.*
3.2 Bylaws*
5.1 Legal Opinion of Davis, Graham & Stubbs LLP***
10.1 Amended Consulting Agreement dated as of March 1, 1999 between
Panoramic Care Manager, Inc. and Bolder Venture Partners, L.L.C.*
10.2 Letter of Engagement dated February 7, 1999 between Panoramic Care
Manager, Inc. and M1 Software*
10.3 Form of Nondisclosure Agreement between FreeStyle Publications, Inc.
(n/k/a Panoramic Care Systems, Inc.) and various entities*
10.4 Sponsorship Agreement dated February 16, 1999 between Panoramic Care
Manager, Inc. and Canaccord Capital Corporation*
10.5 Lease effective as of March 15, 1999 between Panoramic Care Manager,
Inc. and Jefferson Park West (landlord) for property located at
Jefferson Park West, Bldg. 4, 5181 Ward Road, Arvada, Colorado, USA
80005.*
10.6 Software Distribution Agreement dated January 28, 1999 between
Panoramic Care Manager, Inc. and InterCare Network.*
10.7 Stock Option Plan*
10.8 Senior Management Bonus Plan*
10.9 Form of Employment Agreement*
10.10 Form of Convertible Note**
10.11 Form of Warrant Agreement**
23 Consent of Certified Public Accountant**
27 Financial Data Schedule**
* Filed with Registration Statement on Form SB-2 on April 16, 1999.
** Filed with Amendment No. 1 on Form SB-2 on June 7, 1999.
*** Filed herewith.
II-3
<PAGE>
UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended (the "Act") may be permitted to directors, officers and
controlling persons of Panoramic pursuant to Panoramic's Bylaws or Articles of
Incorporation, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is therefore unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
The undersigned hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Act shall be deemed to be part of this registration statement as of
the time it was declared effective.
(2) For the purpose of determining any liability under the Act, each
post-effective amendment that contains a form of prospectus shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) It will file, during any period in which it offers or sells
securities, a post-effective amendment to this registration statement to:
(i) Include any prospectus required by section 10(a)(3) of the
Securities Act;
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the information in
the registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any deviation
from the low or high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price represent no more
than a 20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration statement.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements of filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned, in the City of Wheat
Ridge, State of Colorado, on the 23rd day of June, 1999.
Panoramic Care Systems, Inc.
By: /S/ WILLIAM M. HUNTER
---------------------------------------
Name: William M. Hunter
Title: President and Chief Executive
Officer
In accordance with the requirements of the Securities Act of 1933, as
amended, this registration statement has been signed by the following persons in
the capacities and on the dates indicated.
Signatures Title Date
- ------------------------------- ----------------------------- ------------
/S/ William S. Hunter Chief Executive Officer, June 23, 1999
- ------------------------------- President and Director
William M. Hunter
/S/ Jill S. Flateland Executive Vice President June 23, 1999
- ------------------------------- and Chief Operating Officer
Jill S. Flateland and Director
/S/ Byron B. Flateland Chief Technical Officer, June 23, 1999
- ------------------------------- Secretary and Director
Byron B. Flateland
/S/ Kent B. Nuzum Chief Financial Officer June 23, 1999
- -------------------------------
Kent B. Nuzum
/S/ Frank L. Poggio Director June 23, 1999
- -------------------------------
Frank L. Poggio
II-5
[DGS LETTERHEAD]
EXHIBIT 5.1
June 23, 1999
Panoramic Care Systems, Inc.
5181 Ward Road
Wheat Ridge, CO 80033
Re: Registration Statement on Form SB-2 (Registration No. 333-76427)
Relating to 3,531,500 shares of Common Stock, $.001 par value
Ladies and Gentlemen:
We have acted as counsel for Panoramic Care Systems, a Delaware
corporation (the "Company"), in connection with the preparation of a
Registration Statement on Form SB-2 (the "Registration Statement") filed by the
Company with the Securities and Exchange Commission (the "Commission"). The
Registration Statement relates to the registration under the Securities Act of
1933, as amended (the "1933 Act"), of 3,531,500 shares of common stock, $.001
par value of the Company (the "Securities") of which 1,540,000 shares will be
offered for sale by the company, and 1,991,500 shares may be sold by the holders
thereof (the "Selling Stockholders").
This opinion is delivered pursuant to the requirements of Item 601(b)(5)
of Regulation S-B under the 1933 Act.
We have examined and relied on originals or copies, certified or otherwise
identified to our satisfaction, of such documents, corporate records and other
instruments, have made such inquiries as to questions of fact of officers and
representatives of the Company and have made such examinations of law as we have
deemed necessary or appropriate for purposes of giving the opinion expressed
below. In such examination, we have assumed the genuineness of all signatures,
the authenticity of all documents submitted to us as originals and the
conformity with the originals of all documents submitted to us as copies.
The following opinions are limited solely to applicable federal law of the
United States of America and the corporate law of the State of Delaware. While
we are not licensed to practice in the State of Delaware, we have reviewed
applicable provisions of the corporate law of the State of Delaware as we have
deemed appropriate in connection with the opinions expressed herein. Except as
described, we have neither examined nor do we express any opinion with respect
to Delaware law.
<PAGE>
Panoramic Care Systems, Inc.
June 23, 1999
Page 2
Based upon and subject to the foregoing, we are of the opinion that the
Securities offered for sale by the Company and the Securities offered for sale
by the Selling Stockholders, as provided in the Registration Statement, were
duly and validly authorized by all necessary corporate action of the Company,
and are validly issued, fully paid and non-assessable.
We hereby consent to the filing of this opinion with the Commission as
Exhibit 5.1 to the Registration Statement. We also consent to the reference to
this firm under the heading "Legal Matters" in the Prospectus included in the
Registration Statement as the counsel who will pass upon the validity of the
Securities. In giving this consent, we do not thereby admit that we are in the
category of persons whose consent is required under Section 7 of the Securities
Act or the rules of the Securities and Exchange Commission.
Very truly yours,
/s/ Davis, Graham & Stubbs LLP
DAVIS, GRAHAM & STUBBS, LLP