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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: March 31, 2001
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number: 0-22319
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PATIENT INFOSYSTEMS, INC.
-------------------------
(Exact name of registrant as specified in its charter)
Delaware 16-1476509
-------- ----------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
46 Prince Street, Rochester, NY 14607
-------------------------------------
(Address of principal executive offices)
(Zip Code)
(716) 242-7200
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(Registrant's telephone number, including area code)
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 last 90 days. Yes [X] No [ ]
As of May 15, 2001, 8,220,202 common shares were outstanding.
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PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
ASSETS March 31, 2001 December 31, 2000
-------------- -----------------
CURRENT ASSETS:
Cash and cash equivalents $70,989 $28,231
Accounts receivable 344,446 411,436
Prepaid expenses and other current assets 109,836 166,167
----------------------------------
Total current assets 525,271 605,834
PROPERTY AND EQUIPMENT, net 744,733 827,050
Debt issuance costs (net of accumulated amortization of $857,500 and - 192,750
$664,750)
Intangible assets (net of accumulated amortization of $192,007 and 430,717 466,610
$156,113)
Other assets 200,000 200,000
----------------------------------
TOTAL ASSETS $ 1,900,721 $ 2,292,244
==================================
LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY
CURRENT LIABILITIES:
Accounts payable $287,431 $233,545
Accrued salaries and wages 252,201 176,158
Borrowings from directors 1,831,000 1,171,000
Line of credit 2,500,000 -
Accrued expenses 299,145 238,561
Deferred revenue 158,318 161,961
----------------------------------
Total current liabilities 5,328,094 1,981,225
----------------------------------
LINE OF CREDIT - 2,500,000
STOCKHOLDERS' (DEFICIT) EQUITY:
Common stock - $.01 par value: shares authorized:
20,000,000; issued and outstanding: March 31,
2001 - 8,220,202; December 31, 2000 - 8,220,202 82,202 82,202
Preferred stock - $.01 par value: shares authorized: 5,000,000
Series C, 9% cumulative, convertible
issued and outstanding - 100,000 1,000 1,000
Additional paid-in capital 24,016,798 24,016,798
Accumulated other comprehensive income 1,805 1,805
Accumulated deficit (27,529,178) (26,290,786)
----------------------------------
Total stockholders' (deficit) equity (3,427,373) (2,188,981)
----------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY $ 1,900,721 $ 2,292,244
==================================
See notes to unaudited condensed consolidated financial statements.
PATIENT INFOSYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended
March 31,
2001 2000
---- ----
REVENUES
Operations Fees $ 344,242 $ 584,181
Development Fees 29,285 4,000
Licensing Fees 26,500 12,399
------------------------------------
Total revenues 400,027 600,580
------------------------------------
COSTS AND EXPENSES
Cost of sales 707,292 1,166,062
Sales and marketing 224,919 414,111
General and administrative 546,182 561,434
Research and development 53,326 85,552
------------------------------------
Total costs and expenses 1,531,719 2,227,159
------------------------------------
OPERATING LOSS (1,131,692) (1,626,579)
OTHER EXPENSE (84,201) (8,327)
------------------------------------
NET LOSS (1,215,893) (1,634,906)
------------------------------------
CONVERTIBLE PREFERRED STOCK DIVIDENDS (22,500) (550,000)
------------------------------------
NET LOSS ATTRIBUTABLE TO
COMMON STOCKHOLDERS $ (1,238,393) $(2,184,906)
====================================
NET LOSS PER SHARE - BASIC
AND DILUTED $ (0.15) $ (0.27)
====================================
WEIGHTED AVERAGE COMMON SHARES 8,220,202 8,040,202
====================================
See notes to unaudited condensed consolidated financial statements.
PATIENT INFOSYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Three Months Three Months
Ended Ended
March 31, 2001 March 31, 2000
OPERATING ACTIVITIES:
Net loss $ (1,215,893) $ (1,634,906)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization 317,296 223,911
Gain on sale of property (305) -
Compensation expense related to issuance of stock warrants - 1,042
Decrease (increase) in accounts receivable, net 66,990 (38,286)
Decrease in prepaid expenses and other current assets 56,331 45,336
Decrease in other assets - 18,861
Increase (decrease) in accounts payable 53,886 (269,747)
Increase in accrued salaries and wages 76,043 147,624
Increase in accrued expenses 38,084 10,799
(Decrease) increase in deferred revenue (3,643) 98,024
------- ------
Net cash used in operating activities (611,210) (1,397,342)
--------- -----------
INVESTING ACTIVITIES:
Property and equipment additions (6,831) (20,003)
Proceeds form the sale of property 800 -
- -
Net cash used in investing activities (6,031) (20,003)
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FINANCING ACTIVITIES:
Proceeds from issuance of common and preferred stock, net - 1,000,000
Borrowing from directors 660,000 -
Line of credit borrowings - 2,000,000
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Net cash provided by financing activities 660,000 3,000,000
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NET INCREASE IN CASH AND CASH EQUIVALENTS 42,759 1,582,655
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 28,231 489,521
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CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 70,989 $ 2,072,176
========= ===========
Supplemental disclosures of non-cash information
Dividend delared on Class C Convertible Preferred Stock $ 22,500 $-
========= =========
Value of beneficial conversion feature on Class C Convertible Preferred Stock
recognized as a dividend $- $550,000
========= ========
See notes to unaudited condensed consolidated financial statements.
PATIENT INFOSYSTEMS, INC.
Notes to Unaudited Condensed Consolidated Financial Statements for the period
ended March 31, 2001
1. The accompanying condensed consolidated financial statements for the three
month periods ended March 31, 2001 and March 31, 2000 are unaudited and
reflect all adjustments (consisting only of normal recurring adjustments)
which are, in the opinion of management, necessary for a fair presentation
of the financial position and operating results for the interim periods.
These unaudited condensed consolidated financial statements should be read
in conjunction with the audited consolidated financial statements and notes
thereto, together with management's discussion and analysis of financial
condition and results of operations contained in the Company's Annual
Report on Form 10-K for the year ended December 31, 2000. Certain
reclassifications of 2000 amounts have been made to conform to 2001
presentations. The results of operations for the three months ended March
31, 2001 are not necessarily indicative of the results for the entire year
ending December 31, 2001.
2. In December 1999, the Company established a credit facility for $1,500,000
guaranteed by Derace Schaffer and John Pappajohn, two directors of the
Company. In consideration for their guarantees, the Company granted to Dr.
Schaffer and Mr. Pappajohn warrants to purchase an aggregate of 375,000
shares of common stock for $1.5625 per share. In March 2000, the facility
was increased by $1,000,000 under substantially the same terms, also
guaranteed by the same Board members. Additional warrants to purchase an
aggregate of 250,000 shares of Common Stock for $2.325 per share, were
granted to Dr. Schaffer and Mr. Pappajohn for their guarantee of this
additional line of credit. The estimated fair value of the warrants at
March 31, 2000 is approximately $857,500 based on the application of the
Black Scholes option pricing model which incorporates current stock price,
expected stock price volatility, expected interest rates, and the expected
holding period of the warrant. The Company completed the amortization of
$857,500 as debt issuance expense as of March 31, 2001.
Effective April 1, 2001, the Company entered into an Amended and Restated
Credit Agreement with Wells Fargo Bank Iowa, N.A., which extended the term
of the credit facility to March 31, 2002 under substantially the same
terms. Dr. Schaffer and Mr. Pappajohn also guaranteed this extension. In
consideration for their extended guarantees, the Company re-priced the
625,000 warrants previously granted in connection with prior guarantees to
$0.05 per share. The net value of these re-priced warrants is $35,735. The
Company intends to fully amortize this amount as debt issuance costs using
a straight-line method over the 12-month period ending March 31, 2002. The
estimated fair value of the re-priced warrants was determined using the
Black Scholes method.
3. The Company borrowed $660,000 for working capital from Mr. Pappajohn during
the three month period ended March 31, 2001. From March 31, 2001 through
May 14, 2001, the Company borrowed an additional $330,000 from Mr.
Pappajohn. A total of $2,161,000 has been borrowed from Mr. Pappajohn and
Dr. Schaffer, all of which is secured by the assets of the Company. There
can be no assurances that Mr. Pappajohn will continue to make funds
available to the Company. If such funds are not available, the Company will
cease operations.
4. The calculations for the basic and diluted loss per share were based upon
loss attributable to common stockholders of $1,238,393 and $2,184,906 and a
weighted average number of common shares of 8,220,202 and 8,040,202 for the
three-month periods ended March 31, 2001 and 2000 respectively. Options and
warrants to purchase shares of Common Stock were outstanding but not
included in the computation of diluted loss per share for the three-month
periods ended March 31, 2001 and 2000 because the effect would have been
antidilutive due to the net loss in those periods.
5. The accompanying unaudited condensed consolidated financial statements have
been prepared on a going concern basis, which contemplates the realization
of assets and the satisfaction of liabilities in the normal course of
business. As shown in the accompanying unaudited condensed consolidated
financial statements, the Company incurred a net loss for the three-month
period ended March 31, 2001 of $1,215,893 and had an accumulated deficit of
$27,529,178 at March 31, 2001. These factors, among others may indicate
that the Company will be unable to continue as a going concern for a
reasonable period of time.
The unaudited condensed consolidated financial statements do not include
any adjustments relating to the recoverability of assets and classification
of liabilities that might be necessary should the Company be unable to
continue as a going concern. The Company's ability to continue as a going
concern is dependant upon its ability to generate sufficient cash flow to
meet its obligations. Management is currently assessing the Company's
operating structure for the purpose of reducing ongoing expenses,
increasing sources of revenue and is negotiating the terms of additional
debt or equity financing.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Management's discussion and analysis provides a review of the Company's
operating results for the three-month periods ended March 31, 2001 and March 31,
2000 and its financial condition at March 31, 2001. The focus of this review is
on the underlying business reasons for significant changes and trends affecting
the revenues, net earnings and financial condition of the Company. This review
should be read in conjunction with the accompanying unaudited condensed
consolidated financial statements.
In an effort to give investors a well-rounded view of the Company's current
condition and future opportunities, this Quarterly Report on Form 10-Q includes
forecasts by the Company's management about future performance and results.
Because they are forward-looking, these forecasts involve uncertainties. These
uncertainties include the Company's ability to continue its operations as a
result of, among other things, continuing losses, working capital short falls,
uncertainties with respect to sources of capital, risks of market acceptance of
or preference for the Company's systems and services, competitive forces, the
impact of, changes in government regulations, general economic factors in the
healthcare industry and other factors discussed in the Company's filings with
the Securities and Exchange Commission including the Company's Annual Report on
Form 10-K for the year ended December 31, 2000.
Results of Operations
Revenues
Revenues consist of revenues from operations, development fees and
licensing fees. Revenues decreased from $600,580 during the three months ended
March 31, 2000 to $400,027 during the three months ended March 31, 2001, or 33%.
Three Months Ended
March 31,
Revenues 2001 2000
-------- ---- ----
Operations Fees
Disease Management and Compliance $ 137,177 $ 171,757
Surveys 50,121 130,409
Demand Management 138,944 232,762
Other 18,000 49,253
---------------------------
Total Operations Fees 344,242 584,181
Development Fees 29,285 4,000
Licensing Fees 26,500 12,399
---------------------------
Total Revenues $ 400,027 $ 600,580
---------------------------
Operations revenues are generated as the Company provides services to its
customers. Operations revenues decreased from $584,181 during the three months
ended March 31, 2000 to $344,242 during the three months ended March 31, 2001.
Operations revenues continue to be the primary source of revenue for the
Company. Operations revenues declined because of the termination of assignments
for the conduct of surveys as a result of the elimination of a Medicare product
by two of the Company's primary customers and the completion of several
compliance programs which have not been replaced by new programs.
The Companies revenue has continued to decline. The Company has established
relationships with several new customers and entered into a joint marketing
relationship with one of its strategic partners. While revenues from these
relationships have been realized and are expected to grow, no assurances can be
given that such revenues will be material to the Company's results of operations
and financial condition. The Company has identified other possible new
customers, but there can be no assurance that such prospects will contribute
revenue in the near term, if at all.
Development fee revenues increased from $4,000 to $29,285 for the
three-month periods ended March 31, 2000 and 2001 respectively. This increase
was due to increased focus on development of new programs. Development fee
revenue represents the amounts that the Company charges its customers for the
development of customized programs for which it anticipates on-going operations
revenues. The Company has entered into new development agreements but
anticipates that revenue from program development will remain immaterial in the
future.
License fee revenues recognized from the Case Management Support System was
$26,500 and $12,399 for the three-month periods ended March 31, 2001 and 2000
respectively. The Company has not entered into any new licensing agreements for
its Case Management Support System and the revenue for the current period
reflects ongoing revenue from the existing agreements.
Costs and Expenses
Cost of sales include salaries and related benefits, services provided by
third parties, and other expenses associated with the implementation and
delivery of the Company's standard and customized population, demand, and
disease management programs. Cost of sales for the three months ended March 31,
2001 was $707,292 as compared to $1,166,062 for the three-month period ended
March 31, 2000. The decrease in these costs primarily reflects a response to the
decreased level of population and disease management operational activities. The
Company's gross margin continues to be negative. The Company anticipates that
revenue must increase before it will recognize economies of scale. No assurance
can be given that revenues will increase or that, if they do, they will exceed
costs and expenses.
Sales and marketing expenses consist primarily of salaries, related
benefits, travel costs, sales materials and other marketing related expenses.
Sales and marketing expenses for the three months ended March 31, 2001 were
$224,919 as compared to $414,111 for the three-month period ended March 31,
2000. Spending in this area has decreased due to the termination of staff. The
Company anticipates expansion of the Company's sales and marketing staff and
expects it will continue to invest in the sales and marketing process, and that
such expenses related to sales and marketing may increase in future periods.
General and administrative expenses include the costs of corporate
operations, finance and accounting, human resources and other general operating
expenses of the Company. General and administrative expenses for the three
months ended March 31, 2001 were $546,182, as compared to $561,434 for the
three-month period ended March 31, 2000. These expenditures have been incurred
to maintain the corporate infrastructure necessary to support anticipated
program operations. The decrease in these costs during the period reflected the
amortization of $857,500 in debt issuance cost for the establishment of a
$2,500,000 line of credit during the three months ended March 31, 2001. This
cost represents a non-cash adjustment related to the fair market value of
warrants to purchase the Company's common stock, which were issued to Mr.
Pappajohn and Dr. Schaffer in consideration for their guarantee of the debt. The
amortization expense recorded was $86,500 and $192,750 for the three-month
periods ended March 31, 2000 and 2001 respectively. Without these charges,
general and administrative costs would have decreased from $474,934 to $353,432
for the three-month periods ended March 31, 2000 and 2001 respectively. The
$857,500 debt issuance cost was fully amortized as of March 31, 2001. The
Company anticipates that an additional debt issuance cost of $73,063 will be
amortized over the 12 month period ending March 31, 2002, for a re-pricing of
the original warrants in consideration for a 12 month extension of guarantee by
Mr. Pappajohn and Dr. Schaffer. The Company expects that general and
administrative expenses will remain relatively constant in future periods.
Research and development expenses consist primarily of salaries and related
benefits and administrative costs associated with the development of certain
components of the Company's integrated information capture and delivery system,
as well as development of the Company's standardized disease management programs
and the Company's Internet based technology products. Research and development
expenses for the three months ended March 31, 2001 were $53,326, as compared to
$85,552 for the three months ended March 31, 2000.
The Company recorded other expenses of $84,201 for the three-month period
ended March 31, 2001 as compared to $8,327 for the three-month period ended
March 31, 2000, principally due to the increase of interest expenses on debt.
The Company had a net loss attributable to the common shareholders after
preferred stock dividends, of $1,238,393 and $2,184,906 for the three-month
periods ended March 31, 2001 and 2000 respectively. This represents a net loss
per common share of $.15 for the first quarter of 2001, as compared to a net
loss of $.27 per common share in the first quarter of 2000. The preferred stock
dividends in 2000 include a beneficial conversion feature for the 100,000 shares
of Series C Stock of $550,000.
Liquidity and Capital Resources
At March 31, 2001 the Company had a working capital deficit of $4,802,823
as compared to $1,375,391 at December 31, 2000. Through March 31, 2001 these
amounts reflect the effects of the Company's continuing losses as well as
increased borrowings, $2,500,000 of which was considered to be a long-term
liability at December 31, 2000 but is classified as a current liability at March
31, 2001. Since its inception, the Company has primarily funded its operations,
working capital needs and capital expenditures from the sale of equity
securities. The Company completed an initial public offering of its common stock
on January 8, 1997, at which time, it generated net proceeds to the Company of
$16,314,048.
On March 31, 2000, the Company completed a private placement of 100,000
shares of newly issued Series C 9% Cumulative Convertible Preferred Stock
("Series C"), raising $1,000,000 in total proceeds. These shares can be
converted into Common Stock at a rate of 8 shares of Common Stock to 1 share of
Series C Preferred Stock. Each Series C share has voting rights equivalent to 8
shares of Common Stock (800,000 shares). The proceeds from this issuance were
used to support the Company's operations. The fair market value of the Company's
Common Stock at the time of issuance of Series C Stock was $1.9375 per share.
The Series C Preferred Stock is convertible as a price equal to $1.25 per share
of Common Stock resulting in a discount, or beneficial conversion feature, of
$0.6875 per share. The total amount of this beneficial conversion feature
($550,000) is deemed to be the equivalent of a preferred stock dividend. The
Company recorded the deemed dividend at the date of issuance by increasing
accumulated deficit and increasing additional paid-in capital. Accordingly,
there was no net effect on total stockholders' equity.
In December 1999, the Company established a credit facility for $1,500,000
guaranteed by Derace Schaffer and John Pappajohn, two directors of the Company.
In consideration for their guarantees, the Company granted to Dr. Schaffer and
Mr. Pappajohn warrants to purchase an aggregate of 375,000 shares of common
stock for $1.5625 per share. In March 2000, the facility was increased by
$1,000,000 under substantially the same terms, also guaranteed by the same Board
members. Additional warrants to purchase an aggregate of 250,000 shares of
Common Stock for $2.325 per share, were granted to Dr. Schaffer and Mr.
Pappajohn for their guarantee of this additional line of credit. The estimated
fair value of the warrants at March 31, 2000 was approximately $857,500 based on
the application of the Black Scholes option pricing model which incorporates
current stock price, expected stock price volatility, expected interest rates,
and the expected holding period of the warrant. The Company completed the
amortization of $857,500 as debt issuance expense as of March 31, 2001.
On March 28, 2001, the Company entered into an Amended and Restated Credit
Agreement with Wells Fargo Bank Iowa, N.A., which extended the term of the
credit facility to March 31, 2002 under substantially the same terms. Dr.
Schaffer and Mr. Pappajohn also guaranteed this extension. In consideration for
their extended guarantees, the Company re-priced the 625,000 warrants previously
granted in connection with prior guarantees to $0.05 per share, effective April
1, 2001. The Company assigned a fair value of $73,875 to the warrants and
intends to fully amortize this expense using a straight-line method over the
12-month period ending March 31, 2002. The estimated fair value of the re-priced
warrants was determined as $46,500, or $0.0774 per share using the Black Scholes
method and because recent sales of Company's Common Stock at April 1, 2001 were
$0.0938 per share, a beneficial conversion feature of $27,375, or $0.0438 per
share.
The Company borrowed $660,000 for working capital from Mr. Pappajohn during
the three month period ended March 31, 2001. From March 31, 2001 through May 14,
2001, the Company borrowed an additional $330,000 from Mr. Pappajohn. A total of
$2,161,000 has been borrowed from Mr. Pappajohn and Dr. Schaffer, all of which
is secured by the assets of the Company. There can be no assurances that Mr.
Pappajohn will continue to make funds available to the Company. If such funds
are not available, the Company will cease operations.
The Company has expended substantial amounts to expand its operational
capabilities and strengthen its infrastructure, which at the same time has
increased its administrative and technical costs. In addition, the Company's
cash has been steadily depleted as a result of operating losses. The Company
anticipates that its losses will continue and, but for the loans from Mr.
Pappajohn, the Company has no available capital. Accordingly, the Company has
been required to seek capital to maintain its operations. The Company is
continuing its efforts to raise additional capital privately through the sale of
convertible preferred stock in a private placement to accredited investors
through the efforts of its officers and directors. No assurance can be given
that the Company will successfully raise the necessary funds. Any additional
financing, which includes the issuance of additional securities of the Company,
may be dilutive to the Company's existing stockholders. If the Company is unable
to identify additional capital, it will be required to cease operations.
Inflation
Inflation did not have a significant impact on the Company's costs during
the three periods ended March 31, 2001 and March 31, 2000. The Company continues
to monitor the impact of inflation in order to minimize its effects through
pricing strategies, productivity improvements and cost reductions.
Forward Looking Statements
When used in this and in future filings by the Company with the Securities
and Exchange Commission, in the Company's press releases and in oral statements
made with the approval of an authorized executive officer of the Company, the
words or phrases "will likely result," "expects," "plans," "will continue," "is
anticipated," "estimated," "project," or "outlook" or similar expressions
(including confirmations by an authorized executive officer of the Company of
any such expressions made by a third party with respect to the Company) are
intended to identify "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. The Company wishes to caution
readers not to place undue reliance on any such forward-looking statements, each
of which speak only as of the date made. Such statements are subject to certain
risks and uncertainties that could cause actual results to differ materially
from historical earnings and those presently anticipated or projected. These
uncertainties include the Company's ability to continue its operations as a
result of, among other things, continuing losses, working capital short falls,
uncertainties with respect to sources of capital, risks of market acceptance of
or preference for the Company's systems and services, competitive forces, the
impact of, changes in government regulations, general economic factors in the
healthcare industry and other factors discussed in the Company's filings with
the Securities and Exchange Commission including the Company's Annual Report on
Form 10-K for the year ended December 31, 2000. The Company has no obligation to
publicly release the result of any revisions, which may be made to any
forward-looking statements to reflect anticipated or unanticipated events or
circumstances occurring after the date of such statements.
Accounting Pronouncements
During the first quarter of 2001, the Company adopted Statement of
Financial Accounting Standards ("SFAS") No. 133, Accounting for Derivative
Instruments and Hedging Activities. The Company has not identified any
derivatives that meet criteria for a derivative instrument and does not
participate in any hedging activities. As a result, management of the Company
concluded that there was no material effect on the Company's consolidated
financial position, results of operations or cash flows resulting from the
adoption of SFAS No. 133 at March 31, 2001.
In September 2000, the Financial Accounting Standards Board issued SFAS No.
140, "Accounting for Transfers and Servicing of Financial Assets and
Extinguishment of Liabilities," which supercedes SFAS No. 125, "Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities."
This standard is effective for transfers occurring after March 31, 2001, with
certain disclosure requirements effective for the year ending December 31, 2000.
The Company does not believe the adoption of this standard will have a
significant impact on the Company's condensed consolidated financial position,
results of operations or cash flows.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The Company is exposed to changes in interest rates primarily in its cash
transactions. The interest paid on the Company's outstanding line of credit is
based upon the prime rate. The Company has the option of reducing its interest
expenses by rolling the outstanding line of credit balance into notes that carry
a rate equal to LIBOR plus 1.75%.
In relation to the operations of Patient Infosystems Canada, fluctuations
of foreign currency can impact the Company's net operating results. However,
management believes that due to the relative size of its operations in Canada,
such impact would be considered immaterial to the consolidated financial
statements. The Company currently has no significant investments in foreign
currency instruments.
The balances the Company has in cash or cash equivalents are generally
available without legal restrictions to fund ordinary business operations. The
Company regularly invests excess operating cash in certificates of deposit and
U.S. government bonds and other bonds that are subject to changes in short-term
interest rates. Accordingly, the Company believes that the market risk arising
from its holding of these financial instruments is minimal. The Company did not
make any purchases of available-for-sale securities in the three months ended
March 31, 2000 and 2001.
PART II - OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds
Borrowing from directors
The Company borrowed $660,000 for working capital from Mr. Pappajohn during
the three month period ended March 31, 2001. From March 31, 2001 through May 14,
2001, the Company borrowed an additional $330,000 from Mr. Pappajohn. A total of
$2,161,000 has been borrowed from Mr. Pappajohn and Dr. Schaffer, all of which
is secured by the assets of the Company. There can be no assurances that Mr.
Pappajohn will continue to make funds available to the Company. If such funds
are not available, the Company will cease operations.
Item 6. Exhibits and Reports on Form 8-K
Exhibits:
--------
(a) (11) Statements of Computation of Per Share Earnings
(b) No reports on Form 8-K were filed during the quarter ended March 31, 2001
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.
Dated: May 15, 2001
PATIENT INFOSYSTEMS, INC.
Date: May 15, 2001 /s/ Roger L. Chaufournier
------------------------------ -----------------------------------
Roger L. Chaufournier
Director, President and
Chief Executive Officer
Date: May 15, 2001 /s/ Kent A. Tapper
------------------------------ -----------------------------------
Kent A. Tapper
Principal Accounting Officer
Exhibit 11. Statement of Computation of Per Share Earnings
PATIENT INFOSYSTEMS, INC.
Three Months Ended
March 31,
2001 2000
---- ----
Net loss $(1,215,893) $(1,634,906)
Convertible preferred Stock dividends (22,500) (550,000)
-------- ---------
Net loss attributable to
Common Stockholders $(1,238,393) $(2,184,906)
------------ ------------
Weighted average common shares 8,220,202 8,040,202
---------- ---------
Net loss per share - Basic and diluted $(0.15) $(0.27)
======= =======