--------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10QSB
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: June 30, 2004
-----------------------------------------------
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: 0-22319
-------------------------------------------------------
PATIENT INFOSYSTEMS, INC.
-------------------------
(Exact name of small business issuer 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)
(585) 242-7200
(Issuer's telephone number, including area code)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15 (d) of the Exchange Act during the past 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 [ ]
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: As of August 16, 2004,
9,638,076 shares of the Company's common stock, par value $0.01 per share, were
outstanding.
Transitional Small Business Disclosure Format (check one) Yes [ ] No [X]
--------------------------------------------------------------------------------
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
PATIENT INFOSYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED) AS OF
ASSETS June 30, 2004 December 31, 2003
------------- -----------------
CURRENT ASSETS:
Cash and cash equivalents $ 4,860,965 $ 397,851
Accounts receivable 781,544 771,258
Prepaid expenses and other current assets 125,615 156,729
---------------- -----------------
Total current assets 5,768,124 1,325,838
Property and equipment, net 260,352 305,551
OTHER ASSETS:
Intangible assets 415,800 497,893
Goodwill 7,004,626 6,981,876
---------------- -----------------
TOTAL ASSETS $ 13,448,902 $ 9,111,158
================ =================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Bank overdraft $ - $ 189,608
Accounts payable 1,173,673 1,337,862
Accrued salaries and wages 464,935 442,299
Accrued expenses 250,683 1,043,247
Accrued dividends 905,692 490,756
Current maturities of long-term debt 35,148 294,117
Deferred revenue 142,809 336,598
---------------- -----------------
Total current liabilities 2,972,940 4,134,487
---------------- -----------------
LINE OF CREDIT 3,000,000 3,000,000
LONG-TERM DEBT 27,741 40,295
STOCKHOLDERS' EQUITY:
Preferred stock - $.01 par value: shares authorized: 20,000,000
Series C, 9% cumulative, convertible, issued and outstanding - 75,000
as of June 30, 2004, 100,000 as of December 31, 2003 750 1,000
Series D, 9% cumulative, convertible, issued and outstanding - 840,118
as of June 30, 2004, 830,100 as of December 31, 2003 8,401 8,301
Common stock - $.01 par value: shares authorized:
80,000,000; issued and outstanding - 9,638,067 as of June 30, 2004,
4,960,354 as of December 31, 2003 96,381 49,604
Additional paid-in capital 53,365,081 45,596,684
Unearned debt issuance cost (742,625) -
Accumulated deficit (45,279,767) (43,719,213)
---------------- -----------------
Total stockholders' equity 7,448,221 1,936,376
---------------- -----------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 13,448,902 $ 9,111,158
================ =================
See notes to unaudited consolidated financial statements.
PATIENT INFOSYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATION (UNAUDITED)
Three Months Ended Six Months Ended
June 30, June 30,
2004 2003 2004 2003
---- ---- ---- ----
REVENUES
Disease and demand management fees $ 1,679,726 $ 1,580,037 $ 4,024,153 $ 2,527,716
Ancillary benefits management fees 1,393,196 - 3,069,706 -
------------- ----------------- ---------------- -----------------
Total revenues 3,072,922 1,580,037 7,093,859 2,527,716
------------- ----------------- ---------------- -----------------
COSTS AND EXPENSES
Cost of sales 2,605,933 1,184,855 5,776,638 1,946,457
Sales and marketing 326,511 202,458 697,633 445,061
General and administrative 628,970 296,842 1,645,831 572,311
Research and development 25,627 33,470 58,234 65,228
------------- ----------------- ---------------- -----------------
Total costs and expenses 3,587,041 1,717,625 8,178,336 3,029,057
------------- ----------------- ---------------- -----------------
OPERATING LOSS (514,119) (137,588) (1,084,477) (501,341)
OTHER EXPENSE
Financing cost (171,375) (713,846) (342,750) (713,846)
Interest expense, net (25,180) (154,764) (55,146) (296,217)
------------- ----------------- ---------------- -----------------
NET LOSS (710,674) (1,006,198) (1,482,373) (1,511,404)
CONVERTIBLE PREFERRED STOCK DIVIDENDS (205,902) (1,489,818) (493,116) (1,512,318)
------------- ----------------- ---------------- -----------------
NET LOSS ATTRIBUTABLE TO
COMMON STOCKHOLDERS $ (916,576) $(2,496,016) $(1,975,489) $(3,023,722)
============= ================= ================ =================
NET LOSS PER SHARE - BASIC AND DILUTED $ (0.14) $ (2.73) $ (0.33) $ (3.31)
============= ================= ================ =================
WEIGHTED AVERAGE COMMON SHARES 6,589,015 913,009 5,972,007 913,005
============= ================= ================ =================
See notes to unaudited consolidated financial statements.
PATIENT INFOSYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Six Months Six Months
Ended Ended
June 30, 2004 June 30, 2003
OPERATING ACTIVITIES:
Net loss $ (1,482,373) $ (1,511,404)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization 517,683 874,205
Compensation expense related to warrants 234,275 -
Increase) in accounts receivable (10,286) (113,814)
Decrease (increase) in prepaid expenses and other current assets 31,114 (16,080)
(Increase) decrease in accounts payable (164,189) 191,089
Increase in accrued salaries and wages 22,636 17,169
(Decrease) increase in accrued expenses (792,564) 228,815
Decrease in deferred revenue (193,789) (24,036)
-------------- --------------
Net cash used in operating activities (1,837,493) (354,056)
-------------- --------------
INVESTING ACTIVITIES:
Property and equipment additions (51,849) (25,932)
Property and equipment disposals and retirements 4,206 -
Increase in notes receivable - (2,050,000)
-------------- --------------
Net cash used in investing activities (47,643) (2,075,932)
-------------- --------------
FINANCING ACTIVITIES:
Borrowing from directors, net - 1,050,000
Borrowing from stockholders - 1,600,000
Decrease in bank overdraft (189,608) -
Payment of debt (271,523) -
Proceeds from the sale of capital stock 7,343,039 36
Offering costs related to the sale of capital stock (533,658) -
-------------- --------------
Net cash provided by financing activities 6,348,250 2,650,036
-------------- --------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 4,463,114 220,048
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 397,851 5,011
-------------- --------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 4,860,965 $ 225,059
============= ============
Supplemental disclosures of non-cash information
Dividend declared on Convertible Preferred Stock $ 414,936 $ 62,126
============= ============
Beneficial conversion feature of Convertible Preferred Stock $ 78,180 $ 1,450,192
============= ============
Portion of Finance Cost recorded as debt discount $ 713,846
============
Fair market value of:
Warrants issued as an offering cost of sale of Common Stock $ 288,913
============
Warrants issued as acquisition expense $ 22,750
============
Warrants issued for debt guarantee $ 1,085,375
============
Common Stock issued for services $ 128,250
============
See notes to unaudited consolidated financial statements.
PATIENT INFOSYSTEMS, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements for the period ended June
30, 2004
1. The consolidated financial statements include the accounts of the Company
and its wholly owned subsidiaries, Patient Infosystems Canada, Inc., which
ceased operations in January 2001 and American Caresource Holdings, Inc.
("ACS") which was created in December 2003. Significant intercompany
transactions and balances have been eliminated in consolidation.
Acquisition - On December 31, 2003, the Company acquired substantially all
the assets and liabilities of American Caresource Corporation for a total
purchase price of $5,754,866. The Company recorded this acquisition using
the purchase method of accounting and therefore, the operations of ACS are
included only since the date of the acquisition.
The accompanying consolidated financial statements for the three and six
month periods ended June 30, 2004 and June 30, 2003 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 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-KSB for the year ended December 31, 2003. Certain
reclassifications of 2003 amounts have been made to conform to 2004
presentations. The results of operations for the three and six months ended
June 30, 2004 are not necessarily indicative of the results for the entire
year ending December 31, 2004.
All share and per share information contained herein gives effect to the 1
for 12 reverse stock split which was effective as of January 9, 2004.
The calculations for the basic and diluted loss per share for the three and
six month periods ended June 30, 2004 and 2003 did not include options to
purchase, respectively, 1,442,127 and 92,877 shares of common stock nor the
common equivalent shares issuable upon conversion of the 75,000 and
840,118, respectively, shares of Series C and Series D Preferred Stock
which were outstanding because the effect would have been antidilutive due
to the net loss in those periods. The computation of basic and diluted net
loss per share is as follows:
Three Months Ended Six Months Ended
June 30, June 30,
2004 2003 2004 2003
---- ---- ---- ----
Net loss $ (710,674) $(1,006,198) $(1,482,373) $(1,511,404)
Convertible preferred Stock dividends (205,902) (1,489,818) (493,116) (1,512,318)
--------- ----------- --------- -----------
Net loss attributable to
Common Stockholders $ (916,576) $(2,496,016) $(1,975,489) $(3,023,722)
----------- ------------ ------------ ------------
Weighted average common shares 6,589,015 913,009 5,972,007 913,005
---------- -------- --------- -------
Net loss per share - Basic and diluted $ (0.14) $ (2.73) $ (0.33) $ (3.31)
======== ======== ======== ========
Stock-Based Compensation - In 2002, the Company adopted Statement of
Financial Accounting Standards ("SFAS") No. 148, "Accounting for
Stock-Based Compensation - Transition and Disclosure." This standard
provides alternative methods of transition for voluntary change to the fair
value based method of accounting for stock-based employee compensation.
Additionally, the standard also requires prominent disclosures in the
Company's financial statements about the method of accounting used for
stock-based employee compensation, and the effect of the method used when
reporting financial statements.
The Company accounts for stock-based compensation in accordance with SFAS
No. 123, "Accounting for Stock-Based Compensation". As permitted by SFAS
No. 123, the Company continues to measure compensation for such plans using
the intrinsic value based method of accounting, prescribed by Accounting
Principles Board ("APB"), Opinion No. 25, "Accounting for Stock Issued to
Employees." Had compensation cost for the Company's stock-based
compensation plans been determined based on the fair value at the date of
grant for awards consistent with the provisions of SFAS No. 123, the
Company's net loss and net loss per share would have been increased to the
pro forma amounts indicated below:
Three Months Ended Six Months Ended
June 30, June 30,
2004 2003 2004 2003
---- ---- ---- ----
Net loss attributable to common
shareholders - as reported $(916,576) $(2,496,016) $(1,975,489) $(3,023,722)
Stock compensation expense (95,843) (30,828) (1,257,802) (57,162)
------------- ---------------- ----------------- ---------------
Net loss - pro forma (1,012,419) (2,526,844) (3,233,291) (3,080,884)
Net loss per share - basic
and diluted - as reported $ (0.14) $ (2.73) $ (0.33) $ (3.31)
============= ================ ================= ===============
Net loss per share - basic
and diluted - pro forma $ (0.15) $ (2.77) $ (0.54) $ (3.37)
============= ================ ================= ===============
Weighted average common shares 6,589,015 913,009 5,972,007 913,005
The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option-pricing model using an expected life of 7 years
and assumed risk-free interest rates of 4.35% as of June 30, 2004 and 3.79%
as of December 31, 2003. The assumed dividend yield was zero. The Company
has used a volatility factor of 113% as of June 30, 2004 and 98% as of
December 31, 2003. For purposes of pro forma disclosure, the estimated fair
value of each option is amortized to expense over that option's vesting
period and only the compensation expense related to the three and six month
periods ended June 30, 2003 and 2004 were used to adjust the net loss on a
pro forma basis.
2. On December 31, 2003, the Company entered into the Third Addendum to the
Second Amended and Restated Credit Agreement with Well Fargo Bank Iowa,
N.A., which extended the term of the $3,000,000 credit facility to July 31,
2005. Dr. Schaffer and Mr. Pappajohn, directors of the Company, guaranteed
this extension. In consideration of their guarantees, in February 2004 the
Company granted to Dr. Schaffer and Mr. Pappajohn warrants to purchase an
aggregate of 47,500 shares of Series D Convertible Preferred Stock, which
are convertible into an aggregate of 475,000 shares of the Company's common
Stock for $10.00 per preferred share. The Company valued these warrants at
$1,085,375 using the Black-Scholes method. The value of these warrants was
recorded as unearned debt issuance costs and will be amortized as financing
costs over the nineteen month period of the loan guarantee. During the
three and six months ended June 30, 2004, the Company recorded a financing
cost of $171,375 and $342,750, respectively.
3. On March 28, 2004, Mr. Pappajohn and Dr. Schaffer signed a letter to the
Company in which they made a commitment to obtain the operating funds that
the Company believes would be sufficient to fund its operations through
January 1, 2005. There can be no assurances given that Mr. Pappajohn or Dr.
Schaffer can raise either the required working capital through the sale of
the Company's securities or that the Company can borrow the additional
amounts needed.
4. During the six month period ended June 30, 2004, the Company issued
4,427,713 shares of its common stock and 10,018 shares of its Series D
Convertible Preferred Stock to certain investors in exchange for $7,471,289
which consisted of $7,263,200 of working capital, $53,180 of accrued
interest payable, $26,659 of debt and $128,250 of services. The Company
incurred $533,658 of costs directly attributable to the sale of its common
stock.
During the six month period ended June 30, 2004, the Company paid $439,913
of expenses by issuing shares of its common stock and warrants to purchase
shares of its common stock. The Company issued 72,125 shares of its common
stock as payment of $128,250 in consulting expenses and issued warrants to
placement agents to purchase 118,450 shares of its common stock at exercise
prices between $1.68 and $2.75 per share. The warrants were assigned an
aggregate fair market value of $311,663 using a Black-Scholes valuation
method.
Of the warrants to purchase 118,450 shares of the Company's common stock,
the issuance of warrants to purchase 12,500 shares, assigned a value of
$22,750, resulted in an additional expense related to the purchase of
substantially all the assets of and assumption of liabilities from American
Caresource Corporation on December 31, 2003. Accordingly, goodwill related
to this acquisition was increased by $22,750.
5. During the three months ended June 30, 2004, the Company operated in two
segments: (i) Patient Infoystems, which includes disease management, demand
management and provider improvement services; and (ii) American Caresource,
which includes ancillary benefits management services. Selected financial
information on the Company's segments for the three and six month periods
ended June 30, 2004 and 2003 and pro forma combined as if the acquisition
had occurred as of January 1, 2003 are presented as follows:
Three Months ended June 30, Six Months ended June 30,
2004 2003 2003 2004 2003 2003
------------- ------------- ------------- ------------ -------------- -------------
Revenues Pro Forma Pro Forma
Patient Infosystems, Inc. $ 1,679,726 $ 1,580,037 $ 1,580,037 $ 4,024,153 $ 2,527,716 $ 2,527,716
American Caresource Holdings, Inc. 1,393,196 - 2,198,514 3,069,706 - 4,780,131
------------- ------------- ------------- ------------ -------------- -------------
Total revenue 3,072,922 1,580,037 3,778,551 7,093,859 2,527,716 7,307,847
Cost of goods
Patient Infosystems, Inc. 1,264,083 1,184,855 1,184,855 2,790,678 1,946,457 1,946,457
American Caresource Holdings, Inc. 1,341,850 - 2,578,961 2,985,960 - 5,578,364
Selling, General and Administrative
Patient Infosystems, Inc. 537,341 532,770 532,770 1,139,133 1,082,600 1,082,600
American Caresource Holdings, Inc. 443,767 - 561,883 1,262,565 - 1,219,274
Other
Patient Infosystems, Inc. 190,658 868,610 868,610 387,430 1,010,063 1,010,063
American Caresource Holdings, Inc. 5,897 - 43,269 10,466 - 48,727
------------- ------------- ------------- ------------ -------------- -------------
Net loss
Patient Infosystems, Inc. (312,356) (1,006,198) (1,006,198) (293,088) (1,511,404) (1,511,404)
American Caresource Holdings, Inc. (398,318) - (985,599) (1,189,285) - (2,066,234)
------------- ------------- ------------- ------------ -------------- -------------
Total net loss (710,674) (1,006,198) (1,991,797) (1,482,373) (1,511,404) (3,577,638)
Dividends (205,902) (1,489,818) (1,598,650) (493,116) (1,512,318) (1,769,609)
------------- ------------- ------------- ------------ -------------- -------------
Net loss attributable to
common shareholders (916,576) (2,496,016) (3,590,447) (1,975,489) (3,023,722) (5,347,247)
============= ============= ============= ============ ============== =============
Net loss per share basic and
diluted $ (0.14) $ (2.73) $ (1.78) $ (0.33) $ (3.31) $ (2.66)
============= ============= ============= ============ ============== =============
Weighted average common shares 6,589,015 913,009 2,013,009 5,972,007 913,005 2,013,005
6. The accompanying unaudited 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 consolidated financial
statements, the Company incurred a net loss for the six month period ended
June 30, 2004 of $1,482,373 and had working capital of $2,795,184 at June
30, 2004. 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 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 or Plan of Operations.
Management's discussion and analysis provides a review of the Company's
operating results for the three and six month periods ended June 30, 2004 as
compared to the three and six month periods ended June 30, 2003 and a review of
the Company's financial condition at June 30, 2004 as compared to June 30, 2003
and December 31, 2003. The focus of this review is on the underlying 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 consolidated financial statements.
In an effort to give investors a well-rounded forward-looking view of the
Company's current condition and future opportunities, this Quarterly Report on
Form 10-QSB includes information from the Company's management about future
performance and results. Because they are forward-looking, this information
involves 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-KSB for the year ended December 31, 2003.
Results of Operations
To assist the reader's understanding of the results of operations, each of
the Company's segments will be presented separately using the following
segmented statement of operations, which includes pro forma results of American
Caresource Holdings, Inc. for the three and six month periods ended June 30,
2003 for comparative purposes:
Three Months ended June 30,
Patient Infosystems American Caresource
2004 2003 2004 2003
---- ---- ---- ----
pro forma
Revenues $1,679,726 $ 1,580,037 $ 1,393,196 $ 2,198,514
Costs and expenses
Cost of goods 1,264,083 1,184,855 1,341,850 2,578,961
Sales and marketing 225,508 202,458 101,003 56,359
General and Administrative 286,206 296,842 342,764 505,524
Research and Development 25,627 33,470 - -
------------ ----------------- ----------------- -----------------
Total costs and expenses 1,801,424 1,717,625 1,785,617 3,140,844
------------ ----------------- ----------------- -----------------
Operating loss (121,698) (137,588) (392,421) (942,330)
Other (190,658) (868,610) (5,897) (43,269)
------------ ----------------- ----------------- -----------------
Net loss (312,356) (1,006,198) (398,318) (985,599)
============ ================= ================= =================
Six Months ended June 30,
Patient Infosystems American Caresource
2004 2003 2004 2003
---- ---- ---- ----
pro forma
Revenues $ 4,024,153 $ 2,527,716 $ 3,069,706 $ 4,780,131
Costs and expenses
Cost of goods 2,790,678 1,946,457 2,985,960 5,578,364
Sales and marketing 447,518 445,061 250,115 124,587
General and Administrative 633,381 572,311 1,012,450 1,094,687
Research and Development 58,234 65,228 - -
------------ ----------------- ----------------- -----------------
Total costs and expenses 3,929,811 3,029,057 4,248,525 6,797,638
------------ ----------------- ----------------- -----------------
Operating Profit (loss) 94,342 (501,341) (1,178,819) (2,017,507)
Other (387,430) (1,010,063) (10,466) (48,727)
------------ ----------------- ----------------- -----------------
Net loss (293,088) (1,511,404) (1,189,285) (2,066,234)
============ ================= ================= =================
PATIENT INFOSYSTEMS
Revenues
Revenues consist of revenues from operations and other fees. Revenues
increased to $1,679,726 from $1,580,037 during the three months ended June 30,
2004 and 2003, respectively, or 6%. Revenues increased to $4,024,153 from
$2,527,716 during the six months ended June 30, 2004 and 2003, respectively, or
59%.
Three Months Ended Six Months Ended
June 30, June 30,
Revenues 2004 2003 2004 2003
-------- ---- ---- ---- ----
Operations Fees
Provider Improvement $ 1,165,916 $ 927,854 $ 3,024,019 $ 1,297,850
Disease and demand management 505,425 643,074 989,063 1,192,381
------------- ---------------- ---------------- -----------------
Total Operations Fees 1,671,341 1,570,928 4,013,082 2,490,231
Other Fees 8,385 9,109 11,071 37,485
------------- ---------------- ---------------- -----------------
Total Revenues $ 1,679,726 $ 1,580,037 $ 4,024,153 $ 2,527,716
------------- ---------------- ---------------- -----------------
Provider innovations and improvement fee revenues are primarily
attributable to assistance provided to organizations for the management of
patients with chronic disease, including information technology support,
learning organization services and data analysis and reporting. For a
substantial part of its innovation and improvement work, Patient Infosystems
provides services as a subcontractor to the Institute for Healthcare
Improvement. Provider improvement fee revenues for the three and six month
periods ended June 30, 2004 increased to $1,165,916 and $3,024,019,
respectively, as compared to $927,854 and $1,297,850 for the same respective
periods of 2003. The Company does not have a long term agreement with the
Institute for Healthcare Improvement and no assurances can be given that Patient
Infosystems will continue to provide these services at the current levels, or at
all. Revenue recognized during the three and six month periods ended June 30,
2004 are not necessarily indicative of the results to be expected for the entire
year ending December 31, 2004. The contracts for substantially all the provider
improvement services are annual in nature, the largest of which ended as of June
30, 2004. Patient Infosystems anticipates renewing this contract and is
therefore continuing to provide these services during the renewal process. No
assurance can be given that the contract will be renewed.
Disease and demand management fee revenues are primarily attributable to
the operation of Patient Infosystems' call center and the delivery of Care Team
Connect for Health directly to patients. Disease and demand management fee
revenues for the three and six month periods ended June 30, 2004 decreased to
$505,425 and $989,063, respectively, as compared to $643,074 and $1,192,381 for
the same respective periods of 2003. The decrease in these fees is primarily
attributable to the termination of one customer on July 1, 2003 for which
Patient Infosystems had $113,560 and $274,179 of revenue during the three and
six month periods ended June 30, 2003, respectively. Patient Infosystems is
actively marketing its disease and demand management services and anticipates
continuing to sell its services. No assurances can be given that Patient
Infosystems will be able to sell its demand and disease management services, or,
to the extent there are sales, that any such sales will have a material effect
on the financial status of Patient Infosystems.
Other fee revenues for the three and six month periods ended June 30, 2004
were $8,385 and $11,071, respectively, as compared to $9,109 and $37,485 for the
same respective periods of 2003. Patient Infosystems received other revenues for
(i) development fees from a variety of customers for creation of, or
modification to, specific programs and (ii) license fees. Patient Infosystems
has completed substantially all services under these agreements. Development fee
revenues include clinical, technical and operational design or modification of
Patient Infosystems' primary disease management programs. Patient Infosystems
anticipates that revenue from development fees will continue to be low unless
Patient Infosystems enters into new development agreements. Patient Infosystems
has not entered into any new licensing agreements and the revenue for the
current period reflects revenue generated exclusively from the existing
agreements.
Costs and Expenses
Cost of sales includes salaries and related benefits, services provided by
third parties, and other expenses associated with the implementation and
delivery of Patient Infosystems' provider improvement and demand and disease
management programs. Cost of sales for the three and six month periods ended
June 30, 2004 were $1,264,083 and 2,790,678, respectively, as compared to
$1,184,855 and $1,946,457 for the same respective periods of 2003. The increase
in these costs was primarily the result of increased operational activity.
Patient Infosystems' gross margin, being total revenues over cost of sales, was
positive for the three an six month periods ended June 30, 2004 and 2003.
Patient Infosystems anticipates that revenue must increase for it to recognize
economies of scale adequate to improve its margins. No assurance can be given
that revenues will increase or that, if they do, they will continue to 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 and six months ended June 30, 2004
were $225,508 and $447,518, respectively, as compared to $202,458 and 445,061
for the same respective periods of 2003. Patient Infosystems anticipates
expansion of Patient Infosystems' 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 Patient Infosystems. General and administrative expenses for the
three and six month periods ended June 30, 2004 were $286,206 and 633,381,
respectively, as compared to $296,842 and $572,311 for the same respective
periods of 2003. These expenditures have been incurred to maintain the corporate
infrastructure necessary to support anticipated program operations. General and
administrative expenses are expected to 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 Patient Infosystems' integrated information capture and delivery
system, as well as development of Patient Infosystems' standardized disease
management programs and Patient Infosystems' Internet based technology products.
Research and development expenses for the three and six month periods ended June
30, 2004 were $25,627 and $58,234, respectively, as compared to $33,470 and
$65,228 for the same respective periods of 2003.
Patient Infosystems recorded other expenses for the three and six month
periods ended June 30, 2004 of $190,658 and $387,430, respectively, as compared
to $868,610 and $1,010,063 for the same respective periods of, 2003. This
increase was principally due to the interest expense and other related financing
cost on debt.
Patient Infosystems had a net loss for the three and six month periods
ended June 30, 2004 of $312,356 and $293,088, respectively, as compared to
$1,006,198 and $1,511,404 for the same respective periods of 2003.
AMERICAN CARESOURCE
Revenues
Revenues of American Caresource Holdings, Inc. ("ACS") are comprised of
revenues from ancillary service claims and processing of patient claims. ACS is
the wholly-owned subsidiary of Patient Infosystems, which holds the assets
acquired from American Caresource Corporation following the closing of such
acquisition on December 31, 2003. Revenues decreased to $1.4 million from $2.2
million during the three months ended June 30, 2004 and 2003, respectively, or
37%. Revenues decreased to $3.1 million from $4.8 million during the six months
ended June 30, 2004 and 2003, respectively, or 36%.
Three Months Ended Six Months Ended
June 30 June 30
Revenues 2004 2003 2004 2003
-------- ---- ---- ---- ----
Pro forma Pro forma
Ancillary Health $ 1,266,631 $ 2,100,625 $ 2,811,479 $ 4,577,569
Patient Claims 126,565 97,889 258,227 202,562
--------------- -------------------- -------------------- --------------------
Total Revenues $ 1,393,196 $2,198,514 $ 3,069,706 $4,780,131
Ancillary health claims revenue for the three and six month periods ended
June 30, 2004 decreased to $1,266,631 and $2,811,479, respectively, as compared
to $2,100,625 and $4,577,569 for the same respective periods of 2003. This
decrease is primarily attributable to the cancellation of contracts by major
clients and the reduction of revenue from certain providers in ACS' ancillary
health provider network. Pinnacol Assurance ("Pinnacol") notified ACS on
December 19, 2003 of its intent to terminate its contract with ACS effective
March 18, 2004. This contract was winding down through the first quarter and
into the second quarter of 2004. Revenue for Pinnacol decreased 97.2% from
$955,530 and 70.9% from $1,936,799 for the three and six month periods ended
June 30, 2003, respectively, to $27,007 and $563,042 for the three and six month
periods ended June 30, 2004, respectively. Plan Vista, for which ACS had
$129,748 and $444,169 of revenue for the three and six month periods ended June
30, 2003, respectively, notified ACS of its intent to terminate its contract
effective October 13, 2004 and did not generate any revenue for ACS during the
six month period ended June 30 2004. Terminations of contracts with these two
major providers resulted in a decrease of revenue of $169,330 and $557,513 for
the three and six month periods ended June 30, 2003, respectively. ACS expects
relations with providers in its network to improve as a result of the
acquisition by Patient Infosystems. ACS also expects to expand its provider
network by seeking to restore relationships with providers previously in the
network and add new providers as ACS adds new client payor contracts. No
assurances can be given that ACS will expand its provider or payor
relationships, or that, to the extent such expansion occurs, that such expansion
will result in an improvement in the results of operations of ACS.
The processing of patient claims revenues for the three and six month
periods ended June 30, 2004 increased 29.3% to $126,565 and increased 27.5% to
$258,227, respectively, as compared to $97,889 and $202,562 for the same
respective periods of 2003. ACS does not expect to increase its revenues from
claims processing in future periods.
Costs and Expenses
Cost of revenues includes provider payments, direct expenses incurred for
providing services and the related direct labor and overhead of providing such
services. ACS is not liable for costs incurred by its contracted providers
unless and until these providers obtain approval from the appropriate payors and
provide the contracted services and ACS receives payment from the payors. Costs
of revenues also include direct expenses to administer claims, including direct
labor associated with recruitment and contracting with providers, database
maintenance, data entry of claims, claims repricing, fulfillment and overhead
costs. Costs of revenues for the three and six month periods ended June 30, 2004
decreased to $1,341,850 and $2,985,960, respectively, as compared to $2,578,961
and $5,578,364 for the same respective periods of 2003. This decrease was due to
a decrease in provider payments, renegotiation of management fees payable to one
client, and to a reduction in direct expenses and overhead associated with the
decrease in claims volume related to revenue. Provider payments related to
revenues during the three and six month periods ended June 30, 2004 decreased
$813,176 and $1,628,830, respectively as compared to the same respective periods
of 2003. Management fees for services rendered to ppoNEXT during the three and
six month periods ended June 30, 2004 decreased $85,866 and $213,039,
respectively, as compared to the same respective periods of 2003, as contract
changes negotiated in July 2003 took effect upon the acquisition of American
Caresource Corporation by Patient Infosystems. Direct expenses and overhead
associated with ACS service provision during the three and six month periods
ended June 30, 2004 decreased $353,488 and $713,897, respectively, as compared
to the same respective periods of 2003, as reductions were made to personnel and
other costs to align ACS' cost structure with its claims volume.
Sales and marketing expenses include the salaries and related benefits of
ACS' account development employees, travel and other costs for those employees,
and sales materials and other marketing or sales expenses of ACS. Commissions
paid to independent outside salespeople are based directly on net margin per
client. Payments to providers and all billing and processing of claims expenses
are included in cost of revenues. Sales and marketing expenses for the three and
six month periods ended June 30, 2004 increased to $101,003 and $250,115, as
compared to $56,359 and $124,587 for the same respective periods of 2003. The
increase in the second quarter was attributable to additional salary expense of
$42,070 as ACS expanded its sales and marketing staff. The year-to-date increase
also includes a $59,480 salary accrual related to the termination of one
employee. ACS anticipates continued investment in the sales and marketing
process, and that expenses related to sales and marketing may continue to
increase in future periods.
General and administrative expenses include the salaries and related
benefits of ACS' executive employees, systems development and finance and
accounting employees, travel and other costs for those employees. General and
administrative expenses for the three and six month periods ended June 30, 2004
were $342,764 and 1,012,450, respectively, as compared to $505,524 and
$1,094,687 for the same respective periods of 2003. Compared to the prior year,
legal fees decreased $77,577 and $176,786 and administrative and finance
compensation expense decreased $58,445 and $109,557 for the three and six month
periods ended June 30, 2004, respectively. The personnel cost reductions were
due to consolidation of these functions with Patient Infosystems as well as
efficiencies and reductions in payment processing volume. The cost reductions
were offset by a one time warrant compensation expense of $211,900 charged in
the first quarter of 2004 as a result of the issuance of a warrant to an
employee of American Caresource Corporation.
ACS recorded other expense for the three and six month periods ended June
30, 2004 of $5,897 and $10,466, respectively, as compared to $43,269 and $48,727
for the same respective periods of 2003. Any new financing arrangements will be
made by Patient Infosystems. Consequently, ACS' interest expense is expected to
be minimal in future periods.
ACS had a net loss for the three and six month periods ended June 30, 2004
of $398,318 and $1,189,285, respectively, as compared to $985,599 and $2,066,234
for the same respective periods of 2003.
INCOME (LOSS)
The Company reported a net loss attributable to common shareholders for the
three month periods ended June 30, 2004 of $916,576 and $1,975,489,
respectively, as compared to $2,496,016 and $3,023,722 for the same respective
periods of 2003. This represents a loss per share of $0.14 and $0.33 for the
same respective periods or 2004 as compared to $2.73 and $3.31 for the same
respective periods of 2003. The Company's loss per share for the three and six
month periods ended June 30, 2003, on a pro forma basis, assuming that the
acquisition of substantially all the assets and liabilities of American
Caresource Corporation had occurred on January 1, 2003 was $1.78 and $2.66,
respectively, as compared to $0.14 and $0.33 loss per share for the same
respective period of 2004. During the six months ended June 30, 2004, the
Company recorded a beneficial conversion feature of $78,180 related to the
issuance of 10,018 shares of the Company's Series D Preferred Stock, which was
recorded as a dividend, and declared $414,936 of dividends on the outstanding
preferred stock.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 2004, the Company had working capital of $2,795,184 as compared
to a deficit of $2,808,649 at December 31, 2003. Through June 30, 2004, these
amounts reflect the effects of the Company's continuing losses, borrowings,
offset by its recent sale of capital stock. Since its inception, the Company has
primarily funded its operations, working capital needs and capital expenditures
from the sale of equity securities or the incurrence of debt.
On March 28, 2003, the Company entered into an Amended and Restated Credit
Agreement with Wells Fargo Bank Iowa, N.A., which extended the term of the
Company's $3,000,000 credit facility to January 2, 2004, under substantially the
same terms. Mr. Pappajohn and Dr. Schaffer, directors of the Company, guaranteed
this extension.
On December 31, 2003, the Company entered into the Third Addendum to the
Second Amended and Restated Credit Agreement with Well Fargo Bank Iowa, N.A.,
which extended the term of the $3,000,000 credit facility to July 31, 2005. Mr.
Pappajohn and Dr. Schaffer guaranteed this extension. In consideration of their
guarantees, In February 2004 the Company granted to Dr. Schaffer and Mr.
Pappajohn warrants to purchase an aggregate of 47,500 shares of Series D
Convertible Preferred Stock, convertible into 475,000 shares of the Company's
common stock for $10.00 per preferred share. The Company valued these warrants
at $1,085,375 using the Black-Scholes method. The value of these warrants was
recorded as unearned debt issuance cost and will be amortized as financing costs
over the nineteen month period of the loan guarantee. During the six months
ended June 30, 2004, the Company recorded a financing cost of $342,750.
In January 2004, the Company borrowed $200,000 for working capital from Mr.
Pappajohn which was repaid in March 2004 using the proceeds of the sale of the
Company's common stock. During the three month period ended June 30, 2004, the
Company borrowed $570,000 of working capital from Mr. Pappajohn which was repaid
in June 2004 using the proceeds of the sale of the Company's common stock.
On March 28, 2004, Mr. Pappajohn and Dr. Schaffer signed a letter to the
Company in which they made a commitment to obtain the operating funds that the
Company believes would be sufficient to fund its operations through January 1,
2005. There can be no assurances given that Mr. Pappajohn or Dr. Schaffer can
raise either the required working capital through the sale of the Company's
securities or that the Company can borrow the additional amounts needed.
During the six month period ended June 30, 2004, the Company issued
4,427,713 shares of its common stock and 10,018 shares of its Series D
Convertible Preferred Stock to certain investors in exchange for an aggregate of
$7,471,289 which consisted of $7,263,200 of working capital, $53,180 of accrued
interest payable, $26,659 of debt and $128,250 of services. The Company incurred
$533,658 of costs directly attributable to the sale of its common stock.
During the six month period ended June 30, 2004, the Company paid $439,913
of expenses by issuing shares of its common stock and warrants to purchase
shares of its common stock. The Company issued 72,125 shares of its common stock
as payment of $128,250 in consulting expenses and issued warrants to placement
agents to purchase 118,450 shares of its common stock at exercise prices between
$1.68 and $2.75 per share. The warrants were assigned an aggregate fair market
value of $311,663 using a Black-Scholes valuation method.
Of the warrants to purchase 118,450 shares of the Company's common stock,
the issuance of warrants to purchase 12,500 shares, assigned a value of $22,750,
resulted in an additional expense related to the purchase of substantially all
the assets of and assumption of liabilities from American Caresource Corporation
on December 31, 2003. Accordingly, goodwill related to this acquisition was
increased by $22,750.
The Company has expended significant amounts to expand its operational
capabilities, including increasing its administrative and technical costs. While
Patient Infosystems has both curtailed its spending levels and increased its
revenue, to the extent that ACS. revenues do not increase substantially, the
Company's' losses will continue and its available capital will diminish further.
The Company's' operations are currently being funded by the sale of equity
securities. There can be no assurances given that the Company can raise either
the required working capital through the sale of its securities or that Patient
Infosystems can borrow the additional amounts needed. In such instance, if
Patient Infosystems is unable to identify additional sources of capital, it will
likely be forced to curtail or cease operations. As a result of the above, the
Independent Auditors' Report on Patient Infosystems' consolidated financial
statements for the year ended December 31, 2003 includes an emphasis paragraph
indicating that Patient Infosystems' recurring losses from operations raise
substantial doubt about Patient Infosystems' ability to continue as a going
concern. The accompanying consolidated financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
INFLATION
Inflation did not have a significant impact on the Company's costs during
the three and six month periods ended June 30, 2004 and June 30, 2003. 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 of the Company with the Securities
and Exchange Commission ("SEC"), 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, including those made with respect to future sources of revenue, new
customers and control of costs and expenses, 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 SEC including the Company's Annual Report on Form 10-KSB for the year ended
December 31, 2003. 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.
Item 3. Controls and Procedures.
Our management, with the participation of our Chief Executive Officer and
Vice President, Financial Planning, has evaluated the effectiveness of our
disclosure controls and procedure as of June 30, 2004. Based upon this
evaluation, our Chief Executive Officer and Vice President, Financial Planning
concluded that our disclosure controls and procedures are effective for
recording, processing, summarizing and reporting the information we are required
to disclose in the reports we file under the Securities Exchange Act of 1934,
within the time periods specified in the SEC's rules and forms. Such evaluation
did not identify any change in our internal control over financial reporting
that occurred during the quarter ended June 30, 2004 that has materially
affected, or is reasonably likely to affect, our internal control over financial
reporting.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
A former employee of American Caresource Corporation filed a lawsuit on
June 16, 2004 entitled Schrier v. American Caresource Corporation, (Ind.
Superior Ct.), alleging that she was terminated on February 5, 2003 in
retaliation for refusing to engage in illegal conduct. She alleges that American
Caresource Corporation engaged in various activities that would have constituted
violations of agreements with customers, various laws, rules and regulations and
would have resulted in inaccurate financial information being provided to the
Company in connection with the acquisition transaction. The plaintiff has
demanded damages of $123,000. We have conducted a preliminary investigation into
the allegations and ACS and we intend to contest the plaintiff's claims
vigorously.
Item 2. Changes in Securities and Use of Proceeds
Recent Sales of Unregistered Securities
On June 17, 2004, the Company sold 3,365,000 shares of its common stock to
institutional and other accredited investors for an aggregate purchase price of
$5,653,200. C.E. Unterberg, Towbin acted as placement agent in the transaction.
C.E. Unterberg, Towbin was paid $360,158 in fees and expenses and received a
warrant to purchase 93,450 shares of the Company's common stock at an exercise
price of $1.68 per share. In addition, Lipman Capital Group received 50,000
shares of the Company's common stock in connection with consulting services
relating to the transaction. Derace Shaffer, the Company's Chairman of the
Board, purchased 100,000 shares of common stock in the private placement.
As a result of the June 17, 2004 transaction, the Company was obligated
pursuant to the anti-dilution provisions in the Company's agreements with
certain stockholders who purchased the Company's securities during the first
quarter of 2004, to issue an additional 155,161 shares of common stock to such
stockholders such that the effective price per share for the shares originally
purchased by those stockholders would be $1.68, being the price per share for
the stock sold on June 17, 2004.
The securities issued by the Company on June 17, 2004 were issued in
reliance upon the exemption from the registration requirements of the Securities
Act of 1933 ("Securities Act"), as set forth in section 4(2) of the Securities
Act and Rule 506 of Regulation D promulgated thereunder. All persons and
entities who received the Company's securities represented to the Company that
they were accredited investors and were acquiring the securities for investment
and not distribution and that they could bear the risks of the investment. The
Company provided written disclosure that the securities had not been registered
under the Securities Act and that any resale must be made pursuant to a
registration or an available exemption from registration.
Item 6. Exhibits and Reports on Form 8-K
Exhibit # Description of Exhibits
3.1-- Certificate of Amendment to the Certificate of Incorporation
3.2 * By-Laws
4.1-- Patient Infosystems, Inc. Amended and Restated Stock Option Plan
4.2 *** Certificate of Designations, Powers, Preferences and Relative,
Participating, Optional or Other Special Rights, and the Qualifications,
Limitations Thereof of the Series C Preferred Stock of Patient
InfoSystems, Inc.
4.3 Certificate of Designations, Powers, Preferences and Relative,
Participating, Optional or Other Special Rights, and the Qualifications,
Limitations Thereof of the Series D Preferred Stock of Patient
InfoSystems, Inc.
10.20 + Lease Agreement dated as of February 22, 1995 between Patient
Infosystems and Conifer Prince Street Associates.
10.21 + First Addendum to Lease Agreement dated as of August 22, 1995 between
Patient Infosystems and Conifer Prince Street Associates.
10.22 + Second Addendum to Lease Agreement dated as of November 17, 1995 between
Patient Infosystems and Conifer Prince Street Associates.
10.23 + Third Addendum to Lease Agreement dated as of March 28, 1996 between
Patient Infosystems and Conifer Prince Street Associates.
10.24 + Fourth Addendum to Lease Agreement dated as of October 29, 1996 between
Patient Infosystems and Conifer Prince Street Associates.
10.25 + Fifth Addendum to Lease Agreement dated as of November 30, 1996 between
Patient Infosystems and Conifer Prince Street Associates.
10.26 + Sixth Addendum to Lease Agreement dated as of November 24, 1997 between
Patient Infosystems and Conifer Prince Street Associates.
10.30 ++ Seventh Addendum to Lease Agreement dated as of June 16, 1999 between
Patient Infosystems and Conifer Prince Street Associates.
10.33 ++ Revolving Note dated as of December 23, 1999 between Patient
Infosystems and Norwest Bank Iowa, National Association.
10.34 ++ Credit Agreement dated as of December 23, 1999 between Patient
Infosystems and Norwest Bank Iowa, National Association.
10.35 ++ Security Agreement dated as of December 23, 1999 between Patient
Infosystems and Norwest Bank Iowa, National Association.
10.36 ++ Arbitration Agreement dated as of December 23, 1999 between Patient
Infosystems and Norwest Bank Iowa, National Association.
10.37 ++ Financing Statement executed by Patient Infosystems and Norwest Bank
Iowa, National Association.
10.38 ++ First Amendment to Credit Agreement dated as of March 21, 2000 between
Patient Infosystems and Norwest Bank Iowa, National Association.
10.39 ++ Note Modification Agreement dated as of March 21, 2000 between Patient
Infosystems and Norwest Bank Iowa, National Association.
10.41 *** Form of Subscription Agreement dated on or about March 31, 2000
between Patient Infosystems and John Pappajohn, Derace Schaffer, Gerald
Kirke and Michael Richards for Series C 9% Cumulative Convertible
Preferred Stock.
10.42 *** Form of Registration Rights Agreement dated on or about March 31, 2000
between Patient Infosystems and John Pappajohn, Derace Schaffer, Gerald
Kirke and Michael Richards for Series C 9% Cumulative Convertible
Preferred Stock.
10.43 *** Eighth Addendum to Lease Agreement dated as of December 8, 2000
between Patient Infosystems and Conifer Prince Street Associates.
10.45 *** Amended and Restated Credit Agreement dated as of March 28, 2001
between Patient Infosystems and Wells Fargo Bank Iowa, National
Association.
10.46 *** Revolving Note dated as of March 28, 2001 between Patient Infosystems
and Wells Fargo Bank Iowa, National Association.
10.47 *** Form of Promissory Notes payable to Dr. Schaffer and Mr. Pappajohn.
10.48 *** Form of Security Agreements with Dr. Schaffer and Mr. Pappajohn.
10.49 *** Ninth Addendum to Lease Agreement dated as of January 7, 2002 between
Patient Infosystems and Conifer Prince Street Associates.
10.50 # Letter of Agreement dated as of March 25, 2002 between Patient
Infosystems, John Pappajohn and Derace Schaffer.
10.51 # Second Amended and Restated Credit Agreement dated as of March 28, 2002
between Patient Infosystems and Wells Fargo Bank Iowa, National Association.
10.52 # Revolving Note dated as of March 28, 2002 between Patient Infosystems
and Wells Fargo Bank Iowa, National Association.
10.53 # Security Agreement dated as of March 28, 2002 between Patient
Infosystems and Wells Fargo Bank Iowa, National Association.
10.54 ## Addendum to Amended and Restated Credit Agreement dated as of June 28,
2002 between Patient Infosystems and Wells Fargo Bank Iowa, National
Association.
10.55 ## Agreement for Purchase and Sale of Assets dated as of September 23,
2002 between Patient Infosystems and American CareSource Corporation.
10.56 ### Tenth Addendum to Lease Agreement dated as of June 24, 2002 between
Patient Infosystems and Conifer Prince Street Associates.
10.57 ### Eleventh Addendum to Lease Agreement dated as of December 30, 2002
between Patient Infosystems and Conifer Prince Street Associates.
10.58 ### Letter of Agreement dated as of March 28, 2003 between Patient
Infosystems, John Pappajohn and Derace Schaffer.
10.59 ### Second Addendum to Second Amended and Restated Credit Agreement dated
as of March 28, 2003 between Patient Infosystems and Wells Fargo Bank,
National Association.
10.60 ### Modification Agreement dated as of March 28, 2003 between Patient
Infosystems and Wells Fargo Bank, National Association.
10.61 ^ Amended and Restated Agreement for the Purchase and Sale of Assets among
Patient Infosystems, Inc., American Caresource Corporation, formerly
known as Health Data Solutions, and the Stockholders Signatory hereto,
dated April 10, 2003.
10.62 ^ Note and Stock Purchase Agreement between Patient Infosystems, Inc. and
a group of investors, dated April 10, 2003.
10.63 ^ Patient Infosystems, Inc. Series D Convertible Preferred Stock
Registration Right Agreement dated April 10, 2003.
10.64 ^ Credit Agreement between American Caresource Corporation and Patient
Infosystems, Inc. dated April 10, 2003.
10.65 ^^ Twelfth Addendum to Lease Agreement dated as of April 28, 2003 between
Patient Infosystems and Conifer Prince Street Associates.
10.66 ^^ Thirteenth Addendum to Lease Agreement dated as of June 27, 2003
between Patient Infosystems and Conifer Prince Street Associates.
10.67 ^^^ Amendment No. 1 to the Amended and Restated Agreement for the Purchase
and Sale of Assets dated as of July 30, 2003 between Patient Infosystems
and American Caresource Corporation.
10.68 ^^^ Amendment No. 1 to the Note and Stock Purchase Agreement dated as of
September 11, 2003 between Patient Infosystems and a group of investors.
10.69 ^^^ Amendment No. 1 to the Credit Agreement dated as of July 30, 2003
between Patient Infosystems and American Caresource Corporation.
10.70 ^^^ Amendment No. 2 to the Amended and Restated Agreement for the Purchase
and Sale of Assets dated as of October 8, 2003 between Patient
Infosystems and American Caresource Corporation.
10.71 -- Third Addendum to Second Amended and Restated Credit Agreement dated as
of December 31, 2003 between Patient Infosystems and Wells Fargo Bank,
National Association.
10.72-- Form of Securities Purchase Agreement.
10.73 Fourteenth Addendum to Lease Agreement dated as of May 18, 2004
between Patient Infosystems and Conifer Prince Street Associates.
10.74 Form of Securities Purchase Agreement.
31.1 Certification of the Chief Executive Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.
31.2 Certification of the Principal Accounting Officer pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.
32.1 Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
-- Previously filed with the Securities and Exchange Commission as an Exhibit
to the Annual Report on Form 10-K filed on March 30, 2004 and incorporated
herein by reference.
* Previously filed with the Securities and Exchange Commission as an Exhibit
to the Registration Statement on Form S-1 filed on July 3, 1996 and
incorporated herein by reference.
** Previously filed with the Securities and Exchange Commission as an Exhibit
to the Registration Statement on Form S-8 filed on May 3, 2000 and
incorporated herein by reference.
*** Previously filed with the Securities and Exchange Commission as an Exhibit
to the Annual Report on Form 10-K filed on April 2, 2001 and incorporated
herein by reference.
+ Previously filed with the Securities and Exchange Commission as an Exhibit
to the Annual Report on Form 10-K filed on April 13, 1999 and incorporated
herein by reference.
++ Previously filed with the Securities and Exchange Commission as an Exhibit
to the Annual Report on Form 10-K filed on March 30, 2000 and incorporated
herein by reference.
# Previously filed with the Securities and Exchange Commission as an Exhibit
to the Annual Report on Form 10-K filed on April 10, 2002 and incorporated
herein by reference.
## Previously filed with the Securities and Exchange Commission as an Exhibit
to the Quarterly Report on Form 10-Q filed on November 14, 2002 and
incorporated herein by reference.
### Previously filed with the Securities and Exchange Commission as an Exhibit
to the Annual Report on Form 10-K filed on March 31, 2003 and incorporated
herein by reference.
^ Previously filed with the Securities and Exchange Commission as an Exhibit
to the Quarterly Report on Form 10-QSB filed on May 15, 2003 and
incorporated herein by reference.
^^ Previously filed with the Securities and Exchange Commission as an Exhibit
to the Quarterly Report on Form 10-QSB filed on August 15, 2003 and
incorporated herein by reference.
^^^ Previously filed with the Securities and Exchange Commission as an Exhibit
to the Quarterly Report on Form 10-QSB filed on November 14, 2003 and
incorporated herein by reference.
(b) The following current reports on Form 8-K have been filed as of August 16,
2004:
On April 8, 2004, the Company filed a current report on Form 8-K
reporting that the Company issued a press release announcing a new
customer.
On April 28, 2004, the Company filed a current report on Form 8-K
reporting a change in the Company's independent accountants from Deloitte
and Touche LLP to McGladrey and Pullen LLP.
On May 18, 2004, the Company filed a current report on Form 8-K
reporting that the Company issued a press release regarding the Company's
earnings for the quarter ended March 31, 2004.
On June 18, 2004, the Company filed a current report on Form 8-K
reporting that the Company issued a press release regarding the closing of
a private placement of shares of its common stock.
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
PATIENT INFOSYSTEMS, INC.
Date: August 16, 2004 By: /s/Kent A. Tapper
--------------------- -----------------------------------
Name: Kent A. Tapper
Title: Senior Vice President
(Principal Financial Officer)
Date: August 16, 2004 /s/Roger L. Chaufournier
--------------------- --------------------------------------------
Roger L. Chaufournier
Director, President and
Chief Executive Officer
(Authorized Officer and
Principal Executive Officer)