<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For Period Ended March 31, 2000
---------------------------------------------------------------
[ ] Transition Report Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
For the transition period from to
--------------------- --------------------------
Commission File Number 333-76427
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Panoramic Care Systems, Inc.
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(Exact name of registrant as specified in its charter)
DELAWARE 84-1165714
------------------------ ------------------------
(State of Incorporation) (IRS Employer ID Number)
5181 Ward Road Wheat Ridge, CO 80033
- ---------------------------------------- ------------------------------
(Address of principle executive offices) (city) (state) (zip code)
(303) 422-3886
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Registrant's telephone number including area code
----------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the Registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES NO X
--- ---
Transitional Small Business Disclosure format (check one):
YES NO X
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The number of shares outstanding of the Registrant's $0.001 par value common
stock on May 5, 2000 was 4,880,000.
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PANORAMIC CARE SYSTEMS, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page No.
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements 3 - 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8 - 11
PART II. OTHER INFORMATION ITEM 12
</TABLE>
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
PANORAMIC CARE SYSTEMS, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
----------- -----------
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and equivalents $ 175,500 $ 119,684
Accounts receivable:
Trade, net of allowance for doubtful accounts - 9,000
Subscription Receivable - -
Prepaid expense and other 8,068 17,856
----------- -----------
Total current assets 183,568 146,540
PROPERTY AND EQUIPMENT, AT COST: 140,688 140,688
----------- -----------
Less accumulated depreciation (73,124) (64,098)
----------- -----------
Net property and equipment 67,564 76,590
CAPITALIZED SOFTWARE COSTS, net of accumulated
amortization of $19,800 and $0, respectively 415,994 456,981
Deferred Financing Costs 21,684 -
TOTAL ASSETS $ 688,810 $ 680,111
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities $ 224,345 $ 210,571
Deferred revenue - -
----------- -----------
Total current liabilities 224,345 210,571
STOCKHOLDERS' EQUITY
Common stock, par value $.001 per share;
authorized 50,000,000 shares; 4,880,000
and 3,016,000 issued and outstanding
March 31, 2000 and December 31, 1999, respectively 4,880 4,875
Additional paid-in capital 2,822,903 2,488,908
Accumulated deficit (2,363,317) (2,024,243)
----------- -----------
Total stockholders' equity 464,466 469,540
----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 688,810 $ 680,111
=========== ===========
</TABLE>
Approved on Behalf of the Board:
/s/ Donald Muir /s/ Jill S. Flateland
- -------------------- --------------------------
Donald Muir Jill S. Flateland
The accompanying notes are an integral part of the financial statements.
3
<PAGE> 4
PANORAMIC CARE SYSTEMS, INC
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
MARCH 31,
---------------------------
2000 1999
--------- ---------
<S> <C> <C>
REVENUES:
Software license fees $ - $ -
Royalties - -
Consulting fees - -
Other - -
--------- ---------
Total revenues 0 -
OPERATING EXPENSES
Cost of Sales - -
Salaries and benefits 172,342 49,909
Management fee - -
Product development costs 13,525 1,218
Consulting fees 28,259 22,076
Recruiting fees 4,064 60,500
Other general and administrative 121,500 31,933
--------- ---------
339,690 165,636
Operating loss (339,690) (165,636)
OTHER INCOME (EXPENSE):
Interest income 617 2,540
--------- ---------
NET INCOME (LOSS) $(339,073) $(163,096)
========= =========
BASIC AND DILUTED LOSS
PER COMMON SHARE: $ (0.07) $ (0.05)
========= =========
BASIC AND DILUTED WEIGHTED AVERAGE
SHARES OUTSTANDING 4,875,110 3,116,000
========= =========
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE> 5
PANORAMIC CARE SYSTEMS, INC.
STATEMENTS OF STOCKHOLDER EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL TOTAL
------------------------ PAID-IN ACCUMULATED STOCKHOLDERS'
SHARES AMOUNT CAPITAL DEFICIT EQUITY
--------- ------ ---------- ----------- -------------
<S> <C> <C> <C> <C> <C>
BALANCE, December 31, 1999 4,875,000 $4,875 $2,488,908 ($2,024,243) $ 469,540
Issuance of stock pursuant to warrant 5,000 5 4,995 - 5,000
conversion
Issuance of special warrants - - 329,000 - 329,000
Net loss for the Three months ended
March 31, 2000 - - - (339,073) (339,073)
--------- ------ ---------- ----------- ---------
BALANCE, March 31, 2000 4,880,000 $4,880 $2,822,909 ($2,363,316) $ 464,467
========= ====== ========== =========== =========
</TABLE>
5
<PAGE> 6
PANORAMIC CARE SYSTEMS, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
MARCH 31,
------------------------------
2000 1999
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<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net loss $(339,073) $(163,096)
Adjustments to reconcile net loss to net cash from operating activities:
Contributed services - -
Depreciation & software amortization 50,012 3,750
Decrease in accounts receivable 9,000 -
Increase in prepaid expenses (11,896) (17,859)
Increase (decrease) in accounts payable (34,496) 51,282
Increase in accrued liabilities 48,269 -
--------- ---------
Net cash provided by (used in) operating activities (278,184) (125,923)
CASH FLOW FROM INVESTING ACTIVITIES:
Purchase of property plant and equipment - (56,222)
Capitalized software costs - (109,376)
--------- ---------
Net cash used in investing activities 0 (165,598)
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from issuance of special warrants 329,000 71,975
Proceeds from conversion of warrants 5,000
Deferred Offering Costs (73,285)
Stock subscriptions receivable - 99,400
--------- ---------
Net cash provided by financing activities 334,000 98,090
NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS 55,816 (193,431)
CASH AND EQUIVALENTS, BEGINNING OF PERIOD 119,684 350,122
--------- ---------
CASH AND EQUIVALENTS, END OF PERIOD $ 175,500 $ 156,691
========= =========
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE> 7
PANORAMIC CARE SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
1. Interim Financial Information - Basis of presentation
The accompanying financial statements of Panoramic Care Systems, Inc.
(the "Company") have been prepared in accordance with generally
accepted accounting principles for interim financial information and
with the instructions for Form 10-QSB and Article 10 of Regulation S-B.
The balance sheet as of March 31, 2000 and the statements of operations
for the three ended March 31, 2000 and 1999, and the statements of cash
flows for three months ended March 31, 2000 and 1999, are unaudited but
include all adjustments (consisting of normal recurring adjustments)
which the Company considers necessary for a fair presentation of the
financial position at such date and the operating results and cash
flows for those periods. Although the Company believes that the
disclosures in these financial statements are adequate to make the
information presented not misleading, certain information normally
included in financial statements and related footnotes prepared in
accordance with generally accepted accounting principles have been
condensed or omitted pursuant to the rules and regulations of the
Securities and Exchange Commission. The accompanying financial
statements should be read in conjunction with the financial statements
and notes included in the Company's 10-KSB filed with the Securities
and Exchange Commission.
Results for any interim period are not necessarily indicative of
results for any other interim period or for the entire year. In the
opinion of management, the accompanying unaudited financial statements
contain all adjustments necessary to present fairly the financial
position as of March 31, 2000 and the results of operations and
statement of cash flows for the periods presented. These statements
reflect all adjustments, consisting of normal recurring adjustments,
which in the opinion of management, are necessary for fair presentation
of information contained therein. The results of operations for the
three month periods ending March 31, 2000 and 1999 are not necessarily
indicative of results to be expected for the full year.
2. Net Income (Loss) per Share
Basic earnings (loss) per share are calculated by dividing the net loss
by the weighted average common shares outstanding during the period.
For purposes of computing diluted earnings per share, dilutive
securities are not included when the effect is antidilutive.
Options to employees to purchase 580,000 shares and warrants to
purchase 1,326,057 shares of common stock were not included in the
computation of diluted earnings per share because their effect was
anti-dilutive for the period ending March 31, 2000.
7
<PAGE> 8
FORWARD-LOOKING STATEMENTS
Statements made in this Form 10-QSB that are not historical or current
facts are "forward-looking statements" made pursuant to the safe harbor
provisions of Section 27A of the Securities Act of 1933 ("The ACT") and Section
21E of the Securities Exchange Act of 1934. These statement often can be
identified by the use of terms such as "may," "will," "expect," "believes,"
"anticipate," "estimate," "approximate" or "continue," or the negative thereof.
The Company intends that such forward-looking statements be subject to the safe
harbors for such statements. The Company wishes to caution readers not to place
undue reliance on any such forward-looking statements, which speak only as of
the date made. Any forward-looking statements represent management's best
judgment as to what may occur in the future. However, forward-looking statements
are subject to risks, uncertainties and important factors beyond the control of
the Company that could cause actual results and events to differ materially from
historical results of operations and events and those presently anticipated or
projected. These factors include adverse economic conditions, entry of new and
stronger competitors, inadequate capital, unexpected costs and failure to
capitalize upon access to new markets. You should understand that various
factors, in addition to those discussed elsewhere in this document and in the
documents referred to in this document, could affect the future results of the
Company and could cause results to differ materially from those expressed in
such forward-looking statements. The Company disclaims any obligation
subsequently to revise any forward-looking statements to reflect events or
circumstances after the date of such statement or to reflect the occurrence of
anticipated or unanticipated events.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following is a discussion and analysis of Panoramic Care Systems, Inc.
financial condition and results of operations for the three months ended March
31, 2000 and 1999. We also discuss certain factors that may affect our
prospective financial condition and results of operations. This section should
be read in conjunction with the Condensed Financial Statements and the Company's
10-KSB which has been filed with the Securities and Exchange Commission and is
available from the Company at no charge.
The company sells computer software and provides consulting services to
healthcare professionals to assist in identifying, estimating, and managing
costs and expenses related to the provision of patient care services in extended
stay healthcare facilities. The computer software uses patient symptoms to
develop a detailed treatment plan and forecast expected costs of treatment to
the healthcare provider.
In the first quarter of 2000 the company took several steps to address the
weak sales results for 1999. These include: bringing on Don C. Muir as
President/CEO beginning February 1, 2000, adoption of an e-solutions business
model, and identification of target companies for either strategic partnering or
discussion relative to merger or acquisition.
Mr. Muir brings to Panoramic Care Systems 17 years of diverse experience in
the healthcare industry covering business development, operations, information
systems and finance. In addition to holding executive level positions at several
major medical centers, he has founded several start-up healthcare companies and
is currently Chairman/President of Ohio Renaissance Healthcare Options, an Ohio
based managed care organization. Mr. Muir obtained an MBA from the University of
Florida (1981) and a B.S. in Public Health from Westchester University (1979).
Because of several factors that apply in the healthcare industry, Panoramic
Care has adopted a business model that offers even more value than that of an
ASP or Application Service Provider. In this model the company will function as
a "general contractor" in transitioning all the necessary elements in the
customer organization to the new Internet based, thin-client technology and then
managing it thereafter. Centralized hosting of both Panoramic's and other "best
of breed" applications is provided through the ASP role, which may be internal
to Panoramic or sub-contracted. Internet connectivity/bandwidth, transaction
processing and on-site support will be provided by established companies with
installation coordinated by Panoramic. We believe that the key to long term
success in this business model is the quality and breadth of the
industry-specific content/software applications, knowledge base and the ability
to provide transaction processing.
Given the above, discussions with several key acquisition and strategic
partnering targets in order to achieve the necessary breadth of content/software
applications and a critical mass of customers within the target vertical markets
have been initiated. We are hopeful that several of these discussions will
result in arrangements that will significantly improve Panoramic's position
8
<PAGE> 9
within these respective vertical markets. On April 13, 2000 Panoramic Care
Systems signed a Letter of Intent to acquire Management Data Inc. ("MDI") of St.
Louis, Missouri, a provider of software accounting systems to the Long Term Care
market. Over the last three years MDI has achieved compounded revenue growth of
50% per year, while net income over the same period grew at an average of 149%.
MDIs 1999 revenues were more than $ 4.5 million with pre-bonus net income of
almost $1.8 million.
Our limited operating history and the early stage of discussions with
prospective partners or acquisitions makes it difficult or impossible to predict
our revenue and operating results. We believe that our prospects should be
considered in light of the risks and difficulties encountered by early stage
companies that have yet to establish a sustainable position in the marketplace.
Our e-solutions business model and the associated acquisition and partnering
strategy may not be adequate to address these risks.
RESULTS OF OPERATIONS FOR THREE MONTHS ENDED MARCH 31, 1999
COMPARED TO THE THREE MONTHS ENDED MARCH 31, 1998
Net revenue for the three months ended March 31, 2000 was $0. This was due
to the Company changing its focus to that of providing its software from direct
installs or license revenue to providing the software in an ASP (application
service provider). This compares to $0 revenue in 1999.
General and Administrative Expenses (G&A) increased $174,054 or 105% from
$165,636 in 1999 to $339,690 for the quarter ending March 2000. Salaries and
benefits increased $122,434 from $49,909 in 1999 to $172,342 in 2000. This
increase in G&A expenses and salaries is associated with the hiring of
additional personnel and relocation to new office facilities in anticipation of
the release of ASP applications. Other Increases which occurred due to occupying
the facility for entire quarter versus one month in the first quarter of 1999
are as follows: Rent expense increased $7,825, Business Insurance increased
$8595 and software amortization increased $40,986. Travel expenses $24,888 over
the previous period due to travel incurred in the exploring possible strategic
relationship, targeting acquisition activities and sales related travel.
Interest income decreased $1,922 for the three months ended March 31, 2000
from $ 2,540 in 1999 to $617 in 2000. This decrease is associated with
utilization of funds in support of operations.
Net Loss was $339,073 for the three months ended March 2000, compared to
$163,096 net loss for the same period in 1999, or an increase of $175,977 loss
over the same period. The net losses are associated with the increased G&A
necessary to maintain a continued realignment of the business to support the
delivery of the application in an ASP environment. Losses are anticipated to
continue through the current fiscal year due to expenditures in attempting to
reposition the product to the market place.
LIQUIDITY AND CAPITAL RESOURCES
During the quarter the Company completed a private placement begun in
December 1999, the Company commenced a private placement of 625,000 special
warrants at $.56 to officers and friends of the company. Each special warrant
can be converted into one share of common stock with one-half warrant attached.
The Company accepted a subscription and issued 187,500 special warrants to an
officer of the Company resulting in the receipt of $104,887 net of issuance
costs of $113 in December 1999. The Company closed on $245,000 or 437,500
special warrant to officers and friends of the Company in February 2000. The
special warrant allows the warrant holder to have issued, at no additional
costs, one share of the Company's common stock for each special warrant
purchased.
In March 2000, the Company commenced a private placement of 1,000,000
special warrants at $1.20. Each special warrant can be converted into one share
of common stock with one-half warrant attached. The Company accepted a
subscription and issued 70,000 special warrants to a friend of the Company
resulting in the receipt of $84,000. The Company closed on $1,116,000 or 930,000
special warrants of the private placement in April of 2000. The special warrant
allows the warrant holder to have issued, at no additional costs, one share of
the Company's common stock for each special warrant purchased.
9
<PAGE> 10
The Company currently has 580,000 stock options and 1,326,057 warrants
outstanding. All the options and warrants are exercisable at a price from, $.56
- - $4.47 per share. If all stock options and warrants were exercised, the Company
would receive proceeds of $2,632,307. All of these funds would be available to
the Company as working capital.
Cash Flow
During the three months ended March 31, 2000, cash increased by $55,817.
Net cash used in operating activities for the three months ended March 31, 2000
was $278,183 compared to $125,923 for the three months ended March 31, 1999. The
increase of $152,261 was primarily due to an increase in the net loss. This
resulted from additional employees hired to continue software development,
support and sales of the new product, and realignment of the product for the ASP
market.
Net cash used in investing activities for the three months ended March 31,
2000 was $0 compared to $165,598 for the comparable period in 1999. The company
had completed its product in the previous quarter for the development required
for the ASP and no additional expenditures were required for fixed assets.
Net Cash provided from financing activities for the three months ended
March 31, 2000 was $334,000 compared to $98,090 for the same period in 1999.
This increase is associated with the private placements, and exercise of stock
warrants.
The Company will continue to capitalize software development costs
consistent with its strategy of the development of the software for the
marketplace.
10
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable
Item 2. Changes in Securities
Not applicable
Item 3. Defaults Upon Senior Securities
Not applicable
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable
Item 5. Other Information
Not applicable
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
27 Financial Data Schedule.
b) Reports on Form 8-K.
During the quarter covered by this report, the Company filed
the following reports on Form 8-K.
None
11
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
(Registrant)
Date: May 11, 2000 /s/ Donald Muir
---------------- -----------------------------------
Donald Muir
President, Chief Executive Officer
Date: May 11, 2000 /s/ Kent A. Nuzum
---------------- ----------------------------------
Kent A. Nuzum
Chief Financial Officer
12
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EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
27 Financial Data Schedule.
<TABLE> <S> <C>
<ARTICLE> 5
<CURRENCY> U.S. DOLLAR
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<EXCHANGE-RATE> 1
<CASH> 175,500
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 183,568
<PP&E> 140,688
<DEPRECIATION> (73,124)
<TOTAL-ASSETS> 688,810
<CURRENT-LIABILITIES> 224,345
<BONDS> 0
0
0
<COMMON> 4,880
<OTHER-SE> 464,465
<TOTAL-LIABILITY-AND-EQUITY> 688,810
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 339,690
<OTHER-EXPENSES> (617)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (339,073)
<INCOME-TAX> 0
<INCOME-CONTINUING> (339,073)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (339,073)
<EPS-BASIC> 0.07
<EPS-DILUTED> 0.07
</TABLE>
