Filed Pursuant to Rule 424(b)(3)
Under the Securities Act of 1933
Registration No. 333-76427
SELLING STOCKHOLDER
PROSPECTUS
1,991,500 Shares
$1.00 per share
[GRAPHIC OMITTED]
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.
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.
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THE SHARES OF COMMON STOCK OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" LOCATED AT ALTERNATE PAGES 2 TO 6.
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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 June 24, 1999
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TABLE OF CONTENTS
PAGE
SUMMARY......................................................................1
RISK FACTORS.................................................................2
DILUTION.....................................................................6
USE OF PROCEEDS..............................................................7
DESCRIPTION OF PANORAMIC.....................................................7
MANAGEMENT DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS.........................18
DESCRIPTION OF SECURITIES...................................................22
SELLING STOCKHOLDERS........................................................23
PLAN OF DISTRIBUTION........................................................27
DIRECTORS AND SENIOR OFFICERS...............................................28
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS..............................30
EXECUTIVE COMPENSATION......................................................30
CAUTIONARY STATEMENT CONCERNING
FORWARD LOOKING STATEMENTS............................................31
DIVIDEND RECORD AND POLICY..................................................31
EXPERTS.....................................................................32
LEGAL MATTERS...............................................................32
WHERE YOU CAN FIND MORE INFORMATION.........................................32
INDEX TO FINANCIAL STATEMENTS..............................................F-1
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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.
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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.
PANORAMIC'S FUTURE SUCCESS DEPENDS UPON CERTAIN KEY TECHNICAL AND MANAGEMENT
PERSONNEL AND ITS ABILITY TO ATTRACT AND RETAIN HIGHLY QUALIFIED TECHNICAL AND
MANAGERIAL 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
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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.
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
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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, 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
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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.
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.
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LISTING THE STOCK ON THE VANCOUVER STOCK EXCHANGE DOES NOT ASSURE A MARKET FOR
THE SHARES AT ALL TIMES.
The shares of Panoramic common stock have been approved for listing on the
Vancouver Stock Exchange and will be primarily traded on that Exchange. The
rules of the Vancouver Stock Exchange do not require any market maker or
specialist to maintain a market for the listed shares at all times. Therefore,
the Exchange listing does not assure a stockholder that there will be a
purchaser for his shares when the stockholder wishes to sell.
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
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 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.
DILUTION
On June 29, 1999 Panoramic completed an initial public offering of
1,100,000 shares of common stock through the facilities of the Vancouver Stock
Exchange. The following sets forth the dilution per share (as at March 31, 1999)
after giving effect to this offering:
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Effective price of shares offered in the
initial public offering: $1.00
Net tangible book value before the initial
public offering:(1) $0.06
Increase in net tangible book value attributable to
the initial public offering: $0.17
Net tangible book value after the initial public offering: $0.23 $0.23
Dilution to investor in the initial public offering: $0.77
Dilution to investor in the initial public offering
(as a percentage): 77%
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(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.
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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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USE OF PROCEEDS
Panoramic will not receive any of the proceeds from this offering. All of
such proceeds will be received by the selling stockholders.
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.
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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 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.
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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 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.
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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 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.
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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 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:
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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 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.
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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 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.
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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
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.
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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.
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
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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
(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
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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 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.
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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.
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.
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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.
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.
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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 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."
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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
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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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
-23-
<PAGE>
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.
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
-24-
<PAGE>
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>
<CAPTION>
Shares Shares
Beneficially Shares Beneficially Post-offering
Owned Pre- Offered Owned Post- %
Name and Address Offering in the Offering Offering Ownership
- --------------------------------- ------------ --------------- ------------ -------------
<S> <C> <C> <C> <C>
Byron Flateland (Chief Technical 826,000 250,000 576,000 11.51%
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 Corporation 100,000 100,000 -0- -0-
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 & Bernadette C. 10,000 10,000 -0- -0-
Faddoul
27982 Forestwood Pkwy
North Olmsted, OH 44070
Oscar Flateland 2,000 2,000 -0- -0-
P.O. Box 116
Oklee, MN 56742
-25-
<PAGE>
Shares Shares
Beneficially Shares Beneficially Post-offering
Owned Pre- Offered Owned Post- %
Name and Address Offering in the Offering Offering Ownership
- --------------------------------- ------------ --------------- ------------ -------------
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
-26-
<PAGE>
Shares Shares
Beneficially Shares Beneficially Post-offering
Owned Pre- Offered Owned Post- %
Name and Address Offering in the Offering Offering Ownership
- --------------------------------- ------------ --------------- ------------ -------------
Mary Spooner 10,000 10,000 -0- -0-
19706 Echo Drive
Strongsville, OH 44136
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 Marcellus 46,000 46,000 -0- -0-
1147 Piedmont Avenue
Boulder, CO 80303
Christine Marcellus 10,000 10,000 -0- -0-
1147 Piedmont Avenue
Boulder, CO 80303
Gregory Pavlich and Ann Mygatt 8,000 8,000 -0- -0-
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
-27-
<PAGE>
Shares Shares
Beneficially Shares Beneficially Post-offering
Owned Pre- Offered Owned Post- %
Name and Address Offering in the Offering Offering Ownership
- --------------------------------- ------------ --------------- ------------ -------------
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
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 Rosemary E. 4,000 4,000 -0- -0-
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.
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,
-28-
<PAGE>
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.
The shares of Panoramic common stock have been approved for listing on the
Vancouver Stock Exchange and will be primarily traded on that Exchange. The
rules of the Vancouver Stock Exchange do not require any market maker or
specialist to maintain a market for the listed shares at all times. Therefore,
the Exchange listing does not assure a stockholder that there will be a
purchaser for his shares when the stockholder wishes to sell.
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.
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.
-29-
<PAGE>
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>
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:
<TABLE>
<CAPTION>
Principal Reporting Issuer Capacity Period
- ------------------- ------------------------- ------------- -------------
<S> <C> <C> <C>
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
</TABLE>
-30-
<PAGE>
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.
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
-31-
<PAGE>
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.
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.
-32-
<PAGE>
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.
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."
-33-
<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
