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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[Mark One]
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
Or
[ ] 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 333-91619
MD2PATIENT, INC.
(exact name of registrant as specified in its charter)
Georgia 62-1798114
(state or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
501 Corporate Centre Drive, Suite 200, Franklin, Tennessee 37067
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (615) 383-8400
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 [X] No [ ]
The number of shares outstanding of the issuer's only class of Common
Stock, $0.01 par value, as of September 30, 2000 was 26,907,083.
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MD2PATIENT, INC.
INDEX
<TABLE>
<S> <C> <C>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Condensed Balance Sheets at December 31, 1999 and September 30, 2000 (Unaudited)......................... 1
Condensed Statements of Operations for the three and nine month periods ended September 30, 2000
(Unaudited).............................................................................................. 2
Condensed Statement of Cash Flows for the nine month periods ended September 30, 2000 (Unaudited)........ 3
Notes to Condensed Financial Statements.................................................................. 4
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.................... 6
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK................................................ 9
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS........................................................................................ 9
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS................................................................ 9
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.......................................................................... 9
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS...................................................... 9
ITEM 5. OTHER INFORMATION........................................................................................ 9
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K......................................................................... 10
</TABLE>
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
MD2PATIENT, INC.
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, 1999 September 30, 2000
----------------- ------------------
(unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents ......................................... $ 4,025,058 $ 292,204
Prepaid and other ................................................. 107,168 54,946
----------- -----------
Total current assets ............................................ 4,132,226 347,150
Deferred offering costs ........................................... 184,328 --
Computer software costs ........................................... 259,283 2,184,271
Equipment and furniture, net ...................................... 92,073 429,910
----------- -----------
Total assets .................................................... $ 4,667,910 $ 2,961,331
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses ............................. $ 257,292 $ 2,384,634
Deferred subscription fees ........................................ 80,333 444,654
Promissory notes payable .......................................... -- 3,125,000
----------- -----------
Total current liabilities ....................................... 337,625 5,954,288
Deferred subscription fees ........................................ 144,667 505,740
----------- -----------
Total liabilities ............................................... 482,292 6,460,028
----------- -----------
STOCKHOLDERS' EQUITY:
Convertible preferred stock, $.01 par value, 300,000,000
shares authorized:
- Series A Convertible; 50,000,000 shares designated; 5,000,000
shares issued and outstanding (liquidation preference of
$5,000,000 at September 30, 2000) ............................. 50,000 50,000
- Series B Convertible; 50,000,000 shares designated; no
shares issued and outstanding ................................. -- --
Common stock, $.01 par value, 300,000,000 shares authorized;
10,000,000 and 26,907,083 shares issued and outstanding at
December 31, 1999 and September 30, 2000, respectively ........ 100,000 269,071
Unearned stock grant compensation ............................. -- (83,858)
Additional paid-in capital ........................................ 4,686,087 4,686,087
Deficit accumulated during development stage ...................... (650,469) (8,419,997)
----------- -----------
4,185,618 (3,498,697)
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Total liabilities and stockholders' equity ........................... $ 4,667,910 $ 2,961,331
=========== ===========
</TABLE>
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MD2PATIENT, INC.
CONDENSED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Nine Months
Ended Ended
September 30, 2000 September 30, 2000
------------------ ------------------
(unaudited) (unaudited)
<S> <C> <C>
REVENUE ............................................. $ 142,765 $ 230,765
OPERATING EXPENSES:
Selling, general and administrative .............. (3,486,721) (7,957,157)
------------ ------------
Loss from operations ............................. (3,343,956) (7,726,392)
Interest income .................................. 4,329 37,280
Interest expense ................................. (75,416) (80,416)
------------ ------------
Net loss ....................................... $ (3,415,043) $ (7,769,528)
============ ============
Basic and diluted net loss per share ................ $ (0.12) $ (0.30)
============ ============
Basic and diluted weighted average shares outstanding 28,652,518 26,103,555
============ ============
</TABLE>
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MD2PATIENT, INC.
CONDENSED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Nine Months
Ended
September 30, 2000
------------------
(unaudited)
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss .............................................. $(7,769,528)
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation and amortization ..................... 417,953
Stock grant compensation .......................... 85,212
Write off of deferred offering costs .............. 858,941
Change in assets and liabilities:
Prepaid and other ............................... 52,222
Accounts payable and accrued expenses ........... 2,127,341
Deferred subscription fees ...................... 725,395
-----------
Net cash used in operating activities ......... (3,502,464)
CASH FLOWS USED BY INVESTING ACTIVITIES:
Capital expenditures .................................. (2,680,777)
-----------
Net cash used in investing activities ......... (2,680,777)
-----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Deferred offering costs ............................... (674,613)
Proceeds from promissory notes payable ................ 3,125,000
-----------
Net cash provided by financing activities ..... 2,450,387
-----------
Net decrease in cash .......................... (3,732,854)
-----------
Cash, beginning of period ............................. 4,025,058
-----------
Cash, end of period ................................... $ 292,204
===========
</TABLE>
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MD2PATIENT, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
1. ORGANIZATION AND NATURE OF BUSINESS
MD2patient, Inc. ("the Company") is a Georgia corporation which was incorporated
and capitalized by Heritage Group LLC ("Heritage") in July 1999 under the name
of MDpathways, Inc. The Company changed its name to MD2patient, Inc. in December
1999. The Company is developing a web site to provide access to selected on-line
healthcare content and services and to develop web pages for its physician
subscribers.
MD2patient, Inc. is in the development stage as its operations principally
involve the building of its web site infrastructure, market analysis, capital
raising and other business planning activities. Only $230,765 of revenue has
been generated for the nine months ended September 30, 2000. Since MD2patient,
Inc. is in the development stage, the accompanying financial statements should
not be regarded as typical for normal operating periods.
2. BASIS OF PRESENTATION
The condensed financial statements included herein are unaudited and reflect all
adjustments, consisting only of normal recurring adjustments, which in the
opinion of management are necessary to fairly state the Company's financial
position, results of operations and cash flows for the periods presented. These
financial statements should be read in conjunction with the Company's financial
statements and notes thereto for the year ended December 31, 1999, which are
contained in the Company's Registration Statement filed on Form S-1 with the
Securities and Exchange Commission (File No. 333-91619). The results of
operations for the nine-month period ended September 30, 2000, are not
necessarily indicative of results that may be expected for any other interim
period or for the full fiscal year.
3. NET LOSS PER SHARE
Basic net loss per share is computed by dividing the net loss available to
common shareholders for the period by the weighted average number of common
shares outstanding during the period. Diluted loss per share is computed by
dividing the net loss for the period by the weighted average number of common
and common equivalent shares outstanding during the period. Common equivalent
shares, composed of incremental common shares issuable upon an assumed
conversion of outstanding Series A Convertible Preferred Stock and an assumed
exercise of outstanding Warrants, are included in diluted net loss per share
only when these shares are dilutive. The total number of shares excluded from
the calculations of dilutive loss per share was 6,000,000 at September 30, 2000.
4. EMPLOYMENT AGREEMENTS
In August 2000, two executive officers resigned and their severance payments
totaling $425,000 have been accrued on the accompanying balance sheet. On
October 31, 2000, the Company terminated its employment agreements with six
executive officers. The executive officers remain in the employment of the
Company without contracts.
5. COMMON STOCK
On July 3, 1999, md2patient was formed as a wholly-owned subsidiary of Heritage
Group LLC and accordingly issued 50,000,000 shares of Common Stock for a
purchase price of $100,000. On November 23, 1999 and on October 31, 2000, the
Company and Heritage Group LLC effected recapitalizations pursuant to which all
50,000,000 shares of Common Stock were returned to md2patient to be available
for reissuance at the discretion of the Board of Directors.
6. 2000 LONG-TERM INCENTIVE PLAN
Effective January 13, 2000, the Board of Directors and shareholders approved the
2000 Long-term Incentive Plan which provides for the grant of nonqualified and
incentive stock options, stock appreciation rights, performance shares,
restricted stock and other stock-based awards. There are 10,000,000 shares
available under this plan for
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future grants at September 30, 2000. Under the provisions of the 2000 plan,
incentive stock options are to be granted at an exercise price of not less than
fair market value of our Common Stock on the date of grant, and nonqualified
stock options are to be granted at an exercise price not less than 85% of the
fair market value of our Common Stock on the date of grant. To date no grants
have been made under this plan.
7. RESTRICTED STOCK GRANTS
During 2000, the Company granted 16,055,000 restricted shares of Common Stock to
certain of its employees and directors. Shares were awarded in the name of the
employee, who has all rights of a shareholder, subject to certain restrictions
on transferability and a risk of forfeiture. The forfeiture provisions expire
monthly, over a period not to exceed five years. Restricted shares subject to
forfeiture provisions have been recorded as unearned stock grant compensation
totaling $127,086 in stockholders' equity and, accordingly, $43,237 has been
recognized as compensation expense for the nine months ending September 30,
2000. As of October 31, 2000 and after giving effect to resignations,
forfeitures and amendments to certain grants, the aggregate number of shares
granted to employees and directors and subject to such restrictions was
8,051,596 shares.
8. STOCK GRANTS
During February 2000, the Company granted 597,500 shares of Common Stock to
seven individuals who had been instrumental in the initial start-up activities
during 1999. Accordingly, $5,975 of compensation expense was recorded relating
to these grants.
During June 2000, the Company issued 3,600,000 shares of Common Stock to
Heritage Health Systems, Inc.("HHS") pursuant to an Internet Services Agreement
entered into between HHS and the Company. HHS provides various management and
administrative services to independent physician associations ("IPA"). Pursuant
to the terms of the agreement, we will have the opportunity to provide
consulting and Internet-related services to HHS. HHS has agreed to exclusively
endorse and recommend our services to its IPAs. HHS has agreed to exclusively
endorse and recommend our services to its affiliated independent physician
associations involving joint ownership of entities that will provide Internet
services to the associations. We recorded $36,000 of consulting expense in
connection with this issuance.
On October 31, 2000, the Company granted 4,600,000 shares of Common Stock to an
individual who agreed to serve as a member of the Company's Board of Directors.
Accordingly, $46,000 of consulting expense was recorded related to this grant.
9. PROMISSORY NOTES PAYABLE
During June to October 2000, the Company borrowed $3,350,000 pursuant to
promissory notes that bear interest at an annual rate of 12% and mature one year
from date of issuance. The Company may pre-pay the promissory notes at any time
without penalty. A total of $2,000,000 of these promissory notes were issued to
directors, executive officers, family members of a director and employees of the
Company, including: $275,000 to Rock A. Morphis (Chairman), $200,000 to Joseph
B. Crace (Director), $200,000 to Mr. Crace's parents, R. Joseph and Rita H.
Crace; $200,000 to Mr. Crace's brother, Robert K. Crace; $400,000 to Albert
Rodewald (Executive Vice President, Chief Technology Officer and Director);
$250,000 to John E. Blount (Director); and $200,000 to James G. Petway, Jr.
(President and Chief Financial Officer).
10. OFFERINGS
In November 1999, we filed a registration statement on Form S-1 with the
Securities and Exchange Commission with respect to certain securities being
offered by the Company. The terms of such public offering included a requirement
that the Company receive offers to purchase a minimum of 5,000,000 shares of
Series B Convertible Preferred Stock as a condition precedent to closing the
offering. While the Company received offers to purchase approximately 3,400,000
shares in such offering, we failed to meet the designated minimum and,
therefore, we terminated the offering and withdrew the registration statement
effective October 24, 2000. On November 9, 2000, we initiated a private
placement of convertible promissory notes. We are seeking to raise up to $10
million through the issuance of such notes. The notes will bear interest at an
annual rate of 8% and will mature ten years from the
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date of issuance. The notes will be convertible into Common Stock upon the
occurrence of certain events or, at the option of the holder, any time after the
first anniversary of the date of issuance. To date the Company has not issued
any notes in connection with the private placement, and therefore, has not
received any offering proceeds.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
FORWARD LOOKING STATEMENTS
The following discussion of the financial condition and results of
operation should be read in conjunction with our condensed financial statements
and related notes thereto included elsewhere in this report. This document
contains certain forward-looking statements that involve risks and
uncertainties, such as statements of our plans, objectives, expectations and
intentions. When used in this document, the words "expects," "anticipates,"
"intends," "believes," and "plans" and similar expressions are intended to
identify certain of these forward-looking statements. The cautionary statements
made in this document should be read as being applicable to all related
forward-looking statements wherever they appear in this document. Our actual
results could differ materially from those discussed in this document. We do not
intend to update any of the forward-looking statements after the date of this
filing on Form 10-Q to conform these statements to actual results. Facts that
could cause or contribute to such differences include those discussed below, as
well as those discussed in our registration statement filed on Form S-1 (File
No. 333-91619) in connection with our public offering.
OVERVIEW
We are a development stage company formed to assist physicians in
web-enabling their practices by building a community of on-line physicians and
providing access to selected web-based content and services. Our business model
is premised on our belief that by web-enabling the practices of our physician
subscribers, we can assist them in improving patient outcomes, enhancing the
efficiency of their practices, and developing products and services that can
improve the economic performance of their practices through the application of
innovative technologies. We completed the initial development and launch of our
web site during April 2000, and have begun to offer limited Internet services.
ANTICIPATED SOURCES OF REVENUE
We will seek to generate revenue primarily from the following sources:
- fees paid by physician subscribers;
- fees paid by pharmaceutical and drug manufacturing companies in
connection with patient compliance and drug awareness programs,
e-detailing, surveys and sponsorships; and
- fees paid by vendors in connection with business-to-business e-commerce
transactions generated through our site.
PHYSICIAN SUBSCRIPTIONS. We plan to build and to retain a physician
subscriber base by offering an evolving array of content and services selected
by our physician specialty panels. Subscriptions will be sold to individual
physicians for three years of service to be paid in a single lump sum of $1,000
or three annual installments of $400. As of September 30, 2000, we had over
3,000 physician subscribers.
PHARMACEUTICAL OPPORTUNITIES
PATIENT ADHERENCE PROGRAMS. Based on recent studies, patients receiving
prescription medications for chronic diseases experience a non-compliance
(fallout) rate of 40% to 60% by the sixth month. Currently, patient adherence
programs for chronic drugs are generally underwritten by pharmaceutical
companies and outsourced to third parties for implementation. The adherence
program typically consists of letters forwarded to the patient via U.S. mail.
md2patient has developed an innovative notification system which automates the
communication to the patient, patient's family and caregiver. md2patient's
system is Internet based and allows adherence programs to be
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launched and sponsored by the patient's physician and are designed to educate
the patient on the importance of chronic drug therapy and remind the patient
about a prescription renewal. Subject to federal and state healthcare regulatory
requirements, we anticipate compensating physicians at fair market value for
their time and services in connection with the deployment and maintenance of
this notification system. As of the date of this Filing, we have not entered
into any agreements with pharmaceutical companies to provide such services.
DRUG AWARENESS PROGRAMS TARGETING PHYSICIANS. These programs are
designed to (a) increase the awareness of a drug's attributes/efficacy within a
targeted population of physicians, (b) as a means to determine/educate
alternative uses of a pharmaceutical drug, and the benefits of using this drug
as opposed to those produced and sold by competitors. The md2patient model
enables pharmaceutical companies to efficiently access and educate physicians,
as well as recruit physicians to participate in alternative use tests. In
addition, the md2patient model provides a means to efficiently communicate to
physician awareness program findings.
E-DETAILING. md2patient has a multifaceted platform from which to
access physicians by specialty and geography. e-Detailing is a label used for a
number of different programs, which facilitates pharmaceutical companies
communication of specific drug attributes to a physician. The most common
detailing is done by a local market drug representative via a face-to-face visit
to the practice office during business hours. Our physician subscribers have
confirmed their preference to interface with pharmaceutical companies in ways
other than the traditional sales representative visits. We intend to work with
pharmaceutical companies and their local and regional representatives to
structure targeted campaigns to our physician subscribers and set specific dates
and times to meet with each at a time that is convenient. Such campaigns may
include on-line meetings as an efficient means to disseminate the information to
such physicians. The revenue opportunity for md2patient is a fee for each
physician contacted. As of the date of this Filing, we have not been engaged to
provide these e-detailing services.
SURVEYS. md2patient can facilitate rapid access to desirable physician
specialties for surveys and on-line interactive forums for pharmaceutical
companies.
SPONSORSHIPS. Sponsorships typically consist of a rental arrangement
for defined space on a web site where the sponsoring organization can
display/communicate pertinent information about their product. For example, for
specific procedures/diseases, we can host on-line informational brochures
designed for either physicians or patients. We intend to target pharmaceutical
companies, insurance and healthcare companies to contract for sponsorships;
however, as of the date of this Filing, we have not entered into any sponsorship
agreements.
BUSINESS TO BUSINESS E-COMMERCE TRANSACTIONS. In connection with the
development of our web site, we can currently offer and will continue to deploy
services and applications to assist physicians and their practice staff in the
day-to-day management and operation of their practices. Examples of these tools
include eligibility verification, claims submission, patient registration,
appointment verification and prescription refill requests.
CURRENT AND ANTICIPATED FINANCIAL COMMITMENTS
Beginning in late March 2000, we accelerated our efforts to implement
our business plan and our associated spending. Arthur Andersen LLP continued to
assist us in developing our technical infrastructure and web site through June
30, 2000. However, beginning in July we brought virtually all programming and
maintenance functions in-house to be managed by our information and technology
development team.
We currently employ 36 persons, including senior level personnel who
supervise operations, content management and information services. We also
anticipate a need in the near future to hire additional personnel, especially in
the area of field operations to service our physician subscribers and their
offices.
As a result of these activities, we anticipate incurring substantial
additional costs and expenses related to the continued development of our web
portal and the hiring of qualified personnel. Future costs and expenses will
include sales and marketing expenses incurred to attract physician subscribers
to our web services, ongoing technology costs to enhance the content and
services available to our physician subscribers and their patients, and costs
associated with field operations which service our physicians and their offices.
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LIQUIDITY AND CAPITAL RESOURCES
During 1999, we raised $5,000,000 through a private placement of
5,000,000 shares of our Series A Convertible Preferred Stock and warrants. We
also raised $100,000 through the private placement of Common Stock to Heritage
Group, LLC. In November 1999, we filed a registration statement on Form S-1 with
the Securities and Exchange Commission with respect to certain securities being
offered by the Company. The terms of such public offering included a requirement
that the Company receive offers to purchase a minimum of 5,000,000 shares of
Series B Convertible Preferred Stock as a condition precedent to closing the
offering. While the Company received offers to purchase approximately 3,400,000
shares in such offering, we failed to meet the designated minimum and,
therefore, on October 24, 2000 we terminated the offering and withdrew the
registration statement. On November 9, 2000, we initiated a private placement of
convertible promissory notes. We are seeking to raise up to $10 million through
the issuance of such notes. The notes will bear interest at an annual rate of 8%
and will mature ten years from the date of issuance. The notes will be
convertible into Common Stock upon the occurrence of certain events or, at the
option of the holder, any time after the first anniversary of the date of
issuance. To date the Company has not issued any notes in connection with the
private placement, and therefore, has not received any offering proceeds.
Since inception of our business operations, our principal commitments
have consisted of our agreements with Arthur Andersen, our web site consultant,
debt incurred to finance our working capital needs, including, payroll,
technology purchases, and the costs and expenses incurred in connection with our
efforts to raise capital. Our web site presently makes limited content and
services available to our physician subscribers, including the development of
customized physician web pages and various clinical information databases. The
physician web pages provide patient access to information related to individual
physician practices.
In late March 2000, we accelerated the implementation of our business
plan by, among other things, expanding our technical and sales infrastructure
which resulted in an increase in the general and administrative expenses
associated with operating our business. As of September 30, 2000, our primary
source of liquidity was the $0.3 million of cash and cash equivalents on hand.
We do not have a bank credit facility. Accordingly, since June 2000, we have
borrowed $3,350,000 to meet our working capital needs. These loans were
principally made by our executive officers and directors and are evidenced by
promissory notes that bear interest at an annual rate of 12% and mature one year
from the date of issuance. To reduce operating expenses, in May and June we
hired several information technology personnel and brought virtually all
programming and maintenance functions related to our web site in-house. This
allowed us to substantially reduce the fees we were paying to Arthur Andersen in
connection with the development and maintenance of our technical infrastructure.
Additionally, in August we reduced our work force from 58 to approximately 39
employees and our five most senior executive officers and other employees agreed
to voluntary salary deferrals to further reduce our current cash outflows. If we
are successful in issuing at least $5 million worth of notes in our ongoing
private placement, we believe we will have sufficient capital to meet current
liabilities, however, without a further reduction in our operating expenses, we
believe we will still need additional capital to meet our anticipated long-term
working capital requirements.
We expect a significant deployment of cash during the remainder of the
calendar year as we continue to implement our business plan and procure the
content and services to be provided to our physician subscribers. We are
actively pursuing other sources of new cash financing, including the possibility
of creating a new series of preferred stock to be issued to institutional
investors in connection with a convertible debt or equity investment in
md2patient. Additionally, we are exploring other strategic alternatives that may
include a joint venture, strategic alliance or, possibly, the sale of the
company. If additional funds are raised through the issuance of equity or
convertible debt securities, these securities may have rights, preferences or
privileges that are superior to those securities currently outstanding and may
result in substantial dilution to existing shareholders. Furthermore, there can
be no assurance that additional financing will be available when needed or that
if available, such financing will be on acceptable terms. If such financing is
not available when required or is not available on acceptable terms, we may be
unable to develop or enhance our products and services, take advantage of
business opportunities, respond to competitive pressures, or meet operating
obligations, any of which would have a material adverse affect on our business,
financial condition and results of operations.
Cash used in operating activities for the nine months ended September
30, 2000 was $3,502,000. The cash used in operating activities was attributable
to funding net operating losses offset by non-cash charges for amortization of
deferred stock compensation, write off of deferred offering costs, depreciation
and amortization.
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These amounts were further offset by increases in deferred subscription fees,
accounts payable and accrued expenses. Cash used in investing activities for the
nine months ended September 30, 2000 was $2,681,000. The cash used in investing
activities was attributable to capital expenditures. Cash provided by financing
activities for the nine months ended September 30, 2000 was $2,450,000, which
was attributable to the proceeds from promissory notes offset by deferred
offering costs incurred.
Our losses from inception to September 30, 2000 total $8,419,997,
consisting principally of costs incurred in the form of direct expenses
primarily consisting of payroll, legal and consulting fees. These costs relate
to the development of our web site, sales and marketing expenses incurred to
attract physician subscribers to our Internet services, and our capital-raising
activities to date.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
None.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
None.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
(D) USE OF PROCEEDS
The effective date of our first registration statement, filed on Form
S-1 under the Securities Act of 1933, as amended (File No. 333-91619), and
relating to the initial public offering of (i) Series B Convertible Preferred
Stock (ii) Series A Convertible Preferred Stock, and (iii) Warrants to purchase
Series A Convertible Preferred Stock, was April 7, 2000. On October 24, 2000, we
terminated the offering and requested the withdrawal of the registration
statement. None of the shares of Series B Convertible Preferred Stock, Series A
Convertible Preferred Stock or Warrants were sold and, therefore, we did not
receive any offering proceeds.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5. OTHER INFORMATION.
On November 9, 2000, we initiated a private placement of convertible
promissory notes. We are seeking to raise up to $10 million through the issuance
of such notes. The notes will bear interest at an annual rate of 8% and will
mature ten years from the date of issuance. The notes will be convertible into
Common Stock upon the occurrence of certain events or, at the option of the
holder, any time after the first anniversary of the date of issuance. To date
the Company has not issued any notes in connection with the private placement
and, therefore, has not received any offering proceeds.
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(A) EXHIBITS
Exhibit 27 Financial Data Schedule
(B) REPORTS ON FORM 8-K
The Company filed a Current Report on Form 8-K on August 23, 2000.
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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.
MD2PATIENT, INC.
/s/ John E. Blount
-------------------------------------
John E. Blount
Chief Executive Officer
/s/ James G. Petway, Jr.
-------------------------------------
James G. Petway, Jr.
President and Chief Financial Officer
November 13, 20000
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