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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-QSB
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: September 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
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Commission file number: 0-22319
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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 November 15, 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]
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
PATIENT INFOSYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED) AS OF
ASSETS September 30, 2004 December 31, 2003
------------------ -----------------
CURRENT ASSETS:
Cash and cash equivalents $ 954,408 $ 397,851
Accounts receivable 1,078,465 771,258
Prepaid expenses and other current assets 265,674 156,729
------------------ ----------------------
Total current assets 2,298,547 1,325,838
Property and equipment, net 605,913 305,551
OTHER ASSETS:
Intangible assets 642,700 497,893
Goodwill 13,866,989 6,981,876
------------------ ----------------------
TOTAL ASSETS $ 17,414,149 $ 9,111,158
================== ======================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Bank overdraft $ - $ 189,608
Accounts payable 1,283,197 1,337,862
Accrued salaries and wages 667,956 442,299
Accrued expenses 256,049 1,043,247
Accrued dividends 1,111,593 490,756
Current maturities of long-term debt 25,518 294,117
Deferred revenue 293,761 336,598
------------------ ----------------------
Total current liabilities 3,638,074 4,134,487
------------------ ----------------------
LINE OF CREDIT 7,000,000 3,000,000
LONG-TERM DEBT 23,172 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 September 30, 2004, 100,000 as of December 31, 2003 750 1,000
Series D, 9% cumulative, convertible, issued and outstanding - 840,118
as of September 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 September 30, 2004,
4,960,354 as of December 31, 2003 96,381 49,604
Additional paid-in capital 54,541,419 45,596,684
Unearned debt issuance cost (1,955,967) -
Accumulated deficit (45,938,081) (43,719,213)
------------------ ----------------------
Total stockholders' equity 6,752,903 1,936,376
------------------ ----------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 17,414,149 $ 9,111,158
================== ======================
See notes to unaudited consolidated financial statements.
PATIENT INFOSYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATION (UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
2004 2003 2004 2003
---- ---- ---- ----
REVENUES
Disease and demand management fees $ 1,967,444 $ 1,429,692 $ 5,991,597 $ 3,957,408
Ancillary benefits management fees 1,406,376 - 4,476,082 -
-------------- ---------------- ---------------- ----------------
Total revenues 3,373,820 1,429,692 10,467,679 3,957,408
-------------- ---------------- ---------------- ----------------
COSTS AND EXPENSES
Cost of sales 2,801,762 1,107,776 8,578,400 3,054,233
Sales and marketing 363,123 230,606 1,060,756 675,667
General and administrative 611,089 341,526 2,256,920 913,837
Research and development 31,451 35,060 89,685 100,288
-------------- ---------------- ---------------- ----------------
Total costs and expenses 3,807,425 1,714,968 11,985,761 4,744,025
-------------- ---------------- ---------------- ----------------
OPERATING LOSS (433,605) (285,276) (1,518,082) (786,617)
OTHER EXPENSE
Financing cost (203,158) (754,101) (545,908) (1,467,947)
Interest expense, net (21,552) (151,262) (76,698) (447,479)
-------------- ---------------- ---------------- ----------------
NET LOSS (658,315) (1,190,639) (2,140,688) (2,702,043)
CONVERTIBLE PREFERRED STOCK DIVIDENDS (205,902) (667,924) (699,018) (2,180,242)
-------------- ---------------- ---------------- ----------------
NET LOSS ATTRIBUTABLE TO
COMMON STOCKHOLDERS $ (864,217) $ (1,858,563) $ (2,839,706) $ (4,882,285)
============== ================ ================ ================
NET LOSS PER SHARE - BASIC
AND DILUTED $ (0.09) $ (2.04) $ (0.39) $ (5.35)
============== ================ ================ ================
WEIGHTED AVERAGE COMMON SHARES 9,638,067 913,035 7,202,947 913,015
============== ================ ================ ================
See notes to unaudited consolidated financial statements.
PATIENT INFOSYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Nine Months Nine Months
Ended Ended
September 30, 2004 September 30, 2003
OPERATING ACTIVITIES:
Net loss $ (2,140,688) $ (2,702,042)
Adjustments to reconcile net loss to net cash used in
operating activities net of acquisition:
Depreciation and amortization 788,203 1,704,499
Compensation expense related to warrants 245,463 -
(Increase) decrease in accounts receivable (226,869) 284,440
(Decrease) Increase in prepaid expenses and other current assets 38,904 (80,672)
(Increase) decrease in accounts payable (153,586) 265,087
Increase in accrued salaries and wages 86,651 180,737
(Decrease) increase in accrued expenses (791,330) 403,365
Decrease in deferred revenue (42,837) (10,314)
---------------- ---------------------
Net cash (used in) provided by operating activities (2,196,089) 45,100
---------------- ---------------------
INVESTING ACTIVITIES:
Property and equipment additions (259,820) (27,744)
Property and equipment disposals and retirements 4,206 -
Acquisition of CBCA Care Management, net (7,235,000) -
Additional expenses related to ACS acquisition (45,343) -
---------------- ---------------------
Increase in notes receivable - (2,900,000)
---------------- ---------------------
Net cash used in investing activities (7,535,957) (2,927,744)
---------------- ---------------------
FINANCING ACTIVITIES:
Borrowing from directors, net - 1,500,000
Borrowing from stockholders - 2,125,002
Borrowing from line of credit 4,000,000 -
Decrease in bank overdraft (189,608) -
Payment of debt (285,722) -
Proceeds from the sale of capital stock 7,343,039 36
Expenses related to the sale of capital stock (579,106) -
---------------- ---------------------
Net cash provided by financing activities 10,288,603 3,625,038
---------------- ---------------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 556,557 742,394
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 397,851 5,011
---------------- ---------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 954,408 $ 747,405
=========== =========
Supplemental disclosures of non-cash information
Dividend declared on Convertible Preferred Stock $ 620,837 $ 155,887
=========== ===========
Beneficial conversion feature of Convertible Preferred Stock $ 78,180 $ 2,024,354
=========== ===========
Portion of Finance Cost recorded as debt discount $ 2,024,354
===========
Fair market value of:
Warrants issued for debt guarantee $ 2,501,875
============
See notes to unaudited consolidated financial statements.
PATIENT INFOSYSTEMS, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements for the period ended
September 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; American Caresource Holdings, Inc.
("ACS"), which was created in December 2003 and CBCA Care Management Inc.
("CM"), which the Company purchased on September 22, 2004. Significant
intercompany transactions and balances have been eliminated in
consolidation.
The accompanying consolidated financial statements for the three and nine
month periods ended September 30, 2004 and September 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 nine months
ended September 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.
Acquisitions - 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 the American Caresource
Corporation acquisition using the purchase method of accounting and
therefore, the operations of ACS are included only since the date of the
acquisition.
On September 22, 2004, the Company acquired all the outstanding equity of
CBCA Care Management, Inc. for a total purchase price of $7,235,000 which
included (1) $7,100,000 in cash and (2) estimated direct expenses of
$135,000. The Company recorded the CBCA Care Management, Inc. acquisition
using the purchase method of accounting.
Information related to the CBCA Care Management acquisition is as follows:
Purchase price: $ 7,235,000
========================
Purchase allocation:
Property and equipment 181,852
Identifiable intangible assets 250,000
Current liabilities (242,059)
Current assets 228,187
Goodwill 6,817,020
------------------------
$ 7,235,000
========================
The acquisition has been accounted for using the purchase method of
accounting and accordingly, the results of operations of the acquired
entity for the eight day period ending September 30, 2004 have been
included in the consolidated financial statements.
The allocation of the identifiable intangible assets and goodwill have not
been finalized and any required adjustments will be recorded as necessary
when the information becomes available.
The following unaudited pro forma presents the Company's consolidated
results of operations for the three and nine month periods ended September
30, 2003 and 2004 as if the acquisition of CM and ACS had been consummated
at January 1, 2003. The pro forma results of operations including certain
pro forma adjustments, including the amortization of identifiable
intangible assets and interest on certain debt.
Pro forma for the Pro forma for the
Three months ended Nine months ended
September 30, September 30,
2004 2003 2004 2003
---- ---- ---- ----
Revenue 5,058,649 5,407,656 15,903,688 15,756,866
------------- -------------- --------------- ----------------
Net loss attributable to common share
holders (1,099,213) (2,597,885) (2,842,830) (8,028,146)
============= ============== =============== ================
Earnings per share (0.11) (1.29) (0.39) (3.99)
============= ============== =============== ================
Weighted average common shares 9,638,067 2,013,035 7,202,947 2,013,015
Earnings per share - The calculations for the basic and diluted loss per
share for the three and nine month periods ended September 30, 2004 and
2003 did not include options to purchase, respectively, 1,419,827 and
92,827 shares of common stock, nor the common equivalent shares issuable
upon conversion of 75,000 and 840,118 shares, respectively, of Series C
Preferred Stock and Series D Preferred Stock 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 Nine Months Ended
September 30, September 30,
2004 2003 2004 2003
---- ---- ---- ----
Net loss $ (658,315) $ (1,190,639) $ (2,140,688) $ (2,702,043)
Convertible preferred stock dividends (205,902) (667,924) (699,018) (2,180,242)
---------- --------- --------- -----------
Net loss attributable to
Common Stockholders $ (864,217) $ (1,858,563) $ (2,839,706) $ (4,882,285)
=============== =============== =============== ==============
Weighted average common shares 9,638,067 913,035 7,202,947 913,015
--------------- --------------- --------------- --------------
Net loss per share - Basic and diluted $ (0.09) $ (2.04) $ (0.39) $ (5.35)
=============== =============== =============== ==============
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 Nine Months Ended
September 30, September 30,
2004 2003 2004 2003
---- ---- ---- ----
Net loss attributable to common
shareholders - as reported ($864,217) ($1,858,563) ($2,839,706) ($4,882,285)
Stock compensation expense (90,150) (30,961) (1,347,952) (88,123)
--------------- ---------------- --------------- ----------------
Net loss - pro forma (954,367) (1,889,524) (4,187,658) (4,970,408)
--------------- ---------------- --------------- ----------------
Net loss per share - basic
and diluted - as reported ($0.09) ($2.04) ($0.39) ($5.35)
=============== ================ =============== ================
Net loss per share - basic
and diluted - pro forma ($0.10) ($2.07) ($0.58) ($5.44)
=============== ================ =============== ================
Weighted average common shares 9,638,067 913,035 7,202,947 913,015
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 3.75% as of September 30, 2004 and
3.79% as of December 31, 2003. The assumed dividend yield was zero. The
Company has used a volatility factor of 119% as of September 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 such
option's vesting period and only the compensation expense related to the
three and nine month periods ended September 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.
On September 21, 2004, the Company entered into the Fourth Addendum to the
Second Amended and Restated Credit Agreement with Well Fargo Bank Iowa,
N.A., which increased the amount of the credit facility to $7,000,000 and
extended the term of the facility to July 31, 2006. Dr. Schaffer and Mr.
Pappajohn, directors of the Company, guaranteed these extensions. In
consideration of their guarantees, in September 2004 the Company granted to
Dr. Schaffer and Mr. Pappajohn warrants to purchase an aggregate of
1,000,000 shares of the Company's common stock for $1.68 per share expiring
September 21, 2009. The Company valued these warrants at $1,416,500 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 23 month period of the loan guarantee. During the three and nine months
ended September 30, 2004, the Company recorded a financing cost of $203,158
and $545,908, 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 nine month period ended September 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 for $7,471,289, which
consisted of $7,263,200 of working capital, forgiveness of $53,180 of
accrued interest payable, forgiveness of $26,659 of debt and payment of
$128,250 of services. The Company incurred $579,106 of costs directly
attributable to the sale of its common stock.
During the nine month period ended September 30, 2004, the Company issued
72,125 shares of its common stock as payment of $128,250 in expenses
related to the sale of common stock 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. These 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 September 30, 2004, the Company operated in
two segments: (i) Patient Infoystems, which includes disease management,
demand management, provider improvement as well as case management and
utilization review services which were acquired on September 22, 2004
through the acquisition of CM, whose operations since September 22, 2004
are insignificant; and (ii) ACS, which includes ancillary benefits
management services. Selected financial information on the Company's
segments for the three and nine month periods ended September 30, 2004 and
2003 and pro forma combined as if the ACS acquisition had occurred as of
January 1, 2003 are presented as follows:
Three Months ended September 30, Nine Months ended September 30,
2004 2003 2003 2004 2003 2003
Revenues Pro Forma Pro Forma
Patient Infosystems, Inc. $ 1,967,444 $ 1,429,692 $ 1,429,692 $ 5,991,597 $ 3,957,408 $ 3,957,408
American Caresource Holdings, Inc. 1,406,376 - 2,183,344 4,476,082 - 6,963,475
-------------- --------------- -------------- -------------- --------------- --------------
Total revenue 3,373,820 1,429,692 3,613,036 10,467,679 3,957,408 10,920,883
Cost of goods
Patient Infosystems, Inc. 1,354,896 1,107,776 1,107,776 4,145,574 3,054,233 3,054,233
American Caresource Holdings, Inc. 1,446,866 - 2,360,031 4,432,826 - 7,920,539
Selling, General and Administrative
Patient Infosystems, Inc. 632,353 607,192 607,192 1,771,486 1,689,792 1,689,792
American Caresource Holdings, Inc. 373,310 - 610,963 1,635,875 - 1,848,093
Other
Patient Infosystems, Inc. 222,541 905,363 905,363 609,971 1,915,426 1,915,426
American Caresource Holdings, Inc. 2,169 - 53,992 12,635 - 102,719
-------------- --------------- -------------- -------------- --------------- --------------
Net loss
Patient Infosystems, Inc. (242,346) (1,190,639) (1,190,639) (535,434) (2,702,043) (2,702,043)
American Caresource Holdings, Inc. (415,969) - (841,642) (1,605,254) - (2,907,876)
-------------- --------------- -------------- -------------- --------------- --------------
Total net loss (658,315) (1,190,639) (2,032,281) (2,140,688) (2,702,043) (5,609,919)
Preferred Stock dividends (205,902) (667,924) (767,621) (699,018) (2,180,242) (2,537,230)
-------------- --------------- -------------- -------------- --------------- --------------
Net loss attributable to
common shareholders (864,217) (1,858,563) (2,799,902) (2,839,706) (4,882,285) (8,147,149)
============== =============== ============== ============== =============== ==============
Net loss per share basic and diluted $ (0.09) $ (2.04) $ (1.39) $ (0.39) $ (5.35) $ (4.05)
============== =============== ============== ============== =============== ==============
Weighted average common shares 9,638,067 913,035 2,013,035 7,202,947 913,015 2,013,015
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 nine month period ended
September 30, 2004 of $2,140,688 and had a working capital deficit of
$1,339,527 at September 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 nine month periods ended September 30, 2004
as compared to the three and nine month periods ended September 30, 2003 and a
review of the Company's financial condition at September 30, 2004 as compared to
September 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
It is anticipated that operations of CBCA Care Management, Inc. will be
consolidated with Patient Infosystems in future periods.
To assist the reader's understanding of the results of operations, each of
the Company's segments, Patient Infosystems, Inc. and American Caresource
Holdings, Inc., 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 nine month periods ended September 30, 2003 for
comparative purposes. The results of operation during the 8 days ended September
30, 2004 of CBCA Care Management, Inc. have been included with results of
operations of the Patient Infosystems Segment.
Three Months ended September 30,
Patient Infosystems American Caresource
2004 2003 2004 2003
---- ---- ---- ----
pro forma
Revenues $ 1,967444 $ 1,429,692 $ 1,406,376 $ 2,183,344
Costs and expenses
Cost of goods 1,354,896 1,107,776 1,446,866 2,410,583
Sales and marketing 264,180 230,606 98,943 102,636
General and administrative 336,722 341,526 274,367 457,775
Research & development 31,451 35,060 - -
------------- ---------------- ---------------- ----------------
Total costs and expenses 1,987,249 1,714,968 1,820,176 2,970,994
------------- ---------------- ---------------- ----------------
Operating loss (19,805) (285,276) (413,800) (787,650)
Other (222,541) (905,363) (2,169) (53,992)
------------- ---------------- ---------------- ----------------
Net loss (242,346) (1,190,639) (415,969) (841,642)
============= ================ ================ ================
Nine Months ended September 30,
Patient Infosystems American Caresource
2004 2003 2004 2003
---- ---- ---- ----
pro forma
Revenues $ 5,991,597 $ 3,957,408 $ 4,476,082 $ 6,963,475
Costs and expenses
Cost of goods 4,145,574 3,054,233 4,432,826 7,920,539
Sales and marketing 711,698 675,667 349,058 339,898
General and administrative 970,103 913,837 1,286,817 1,508,195
Research & development 89,685 100,288 - -
------------- ---------------- ---------------- ----------------
Total costs and expenses 5,917,060 4,744,025 6,068,701 9,768,632
------------- ---------------- ---------------- ----------------
Operating profit (loss) 74,537 (786,617) (1,592,619) (2,805,157)
Other (609,971) (1,915,426) (12,635) (102,719)
------------- ---------------- ---------------- ----------------
Net loss (535,434) (2,702,043) (1,605,254) (2,907,876)
============= ================ ================ ================
PATIENT INFOSYSTEMS SEGMENT INFORMATION
Revenues
Revenues consist of revenues from operations and other fees. Revenues
increased 38% to $1,967,444 for the three months ended September 30, 2004, from
$1,429,692 for the three months ended September 30, 2003. Revenues increased 51%
from $3,957,408 for the nine months ended September 30, 2003 to $5,991,597 for
the nine months ended September 30, 2004.
Three Months Ended Nine Months Ended
September 30, September 30,
Revenues 2004 2003 2004 2003
-------- ---- ---- ---- ----
Operations fees
Provider improvement $ 1,058,000 $ 928,306 $ 4,082,019 $ 2,226,157
Case and utilization management 180,762 - 180,762 -
Disease and demand management 726,723 492,427 1,715,786 1,684,807
--------------- ----------------- ----------------- ------------------
Total operations fees 1,965,485 1,420,733 5,978,567 3,910,964
Other fees 1,959 8,959 13,030 46,444
--------------- ----------------- ----------------- ------------------
Total revenues $ 1,967,444 $ 1,429,692 $ 5,991,597 $ 3,957,408
--------------- ----------------- ----------------- ------------------
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. More than 95% of
the provider innovation and improvement revenue is related to a subcontract with
the Institute for Healthcare Improvement. Provider improvement fee revenues for
the three and nine month periods ended September 30, 2004 increased to
$1,058,000 and $4,082,019, respectively, as compared to $928,306 and $2,226,157
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 nine month
periods ended September 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 September 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.
Case and utilization management fee revenues are primarily attributable to
the operation of the Company's wholly owned subsidiary, CBCA Care Management,
Inc. The Company acquired CBCA Care Management, Inc. on September 22, 2004. ,
The $180,762 of revenue attributable to CBCA Care Management, Inc. during the
eight days of operation following the acquisition during three and nine month
periods ended September 30, 2004. Revenue recognized during the three and nine
month periods ended September 30, 2004 are not necessarily indicative of the
results to be expected for the entire year ending December 31, 2004.
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 nine month periods ended September 30, 2004 increased
to $726,723 and $1,715,786, respectively, as compared to $492,427 and $1,684,807
for the same respective periods of 2003. The increase in these fees is primarily
attributable to the new sales of Care Team Connect. 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 condition of Patient Infosystems.
Other fee revenues for the three and nine month periods ended September 30,
2004 were $1,959 and $13,030, respectively, as compared to $8,959 and $46,444
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, case and utilization
management and demand and disease management programs. Cost of sales for the
three and nine month periods ended September 30, 2004 were $1,354,896 and
$4,145,574, respectively, as compared to $1,107,776 and $3,054,233 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 and nine month
periods ended September 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 nine months ended September 30,
2004 were $264,180 and $711,698, respectively, as compared to $230,606 and
$675,667 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 nine month periods ended September 30, 2004 were $336,722 and
$970,103, respectively, as compared to $341,526 and $913,837 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 may increase in future periods
as it continues to establish the resources needed to comply with Section 404 of
the Sarbanes-Oxley Act of 2002.
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 nine month periods ended
September 30, 2004 were $31,451 and $89,685, respectively, as compared to
$35,060 and $100,288 for the same respective periods of 2003.
Patient Infosystems recorded other expenses for the three and nine month
periods ended September 30, 2004 of $222,541 and $609,971, respectively, as
compared to $905,363 and $1,915,426 for the same respective periods of, 2003.
This change was principally due to the interest expense and related financing
cost on debt.
Patient Infosystems had a net loss for the three and nine month periods
ended September 30, 2004 of $242,346 and $535,434, respectively, as compared to
$1,190,639 and $2,702,043 for the same respective periods of 2003.
AMERICAN CARESOURCE SEGMENT INFORMATION
Revenues
Revenues of American CareSource Holdings, Inc. ("ACS") are comprised of
revenues from ancillary service claims and processing of patient claims.
Revenues decreased to $1.4 million from $2.2 million during the three months
ended September 30, 2004 and 2003, respectively, or 36%. Revenues decreased to
$4.5 million from $7.0 million during the nine months ended September 30, 2004
and 2003, respectively, or 36%.
Three Months Ended Nine Months Ended
September 30 September 30
Revenues 2004 2003 2004 2003
-------- ---- ---- ---- ----
Pro forma Pro forma
Ancillary Health $ 1,267,981 $ 2,058,439 $ 4,079,460 $ 6,632,511
Patient Claims 138,395 124,905 396,622 330,964
---------------- ---------------- --------------- --------------
Total Revenues $ 1,406,376 $2,183,344 $ 4,476,082 $6,963,475
Ancillary health claims revenue for the three and nine month periods ended
September 30, 2004 decreased to $1,267,981 and $4,079,460, respectively, as
compared to $2,058,439 and $6,632,511 for the same respective periods of 2003.
This decrease is attributable to the cancellation of contracts by major clients
and to the reduction of revenue from certain providers in ACS' ancillary health
provider network, partially offset by the addition of new clients. Pinnacol
Assurance ("Pinnacol") notified ACS on December 19, 2003 of its intent to
terminate its contract with ACS effective March 18, 2004, and was winding down
through the first quarter and into the second quarter of 2004. There was no
revenue from Pinnacol in the third quarter of 2004. Revenue from Pinnacol in the
third quarter of 2003 was $1,097,322. Revenue from Pinnacol decreased 81.4% from
$3,034,121 for the nine month period ended September 30, 2003 to $563,042 for
the same period in 2004. Plan Vista, from which ACS received $110,577 and
$554,746 of revenue for the three and nine month periods ended September 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
nine month period ended September 30, 2004. The decreased revenue due to the
termination of clients was partially offset by $271,512 of new business from
three new clients in the nine months ended September 30, 2004, of which $207,342
was generated in the third quarter. ACS has experienced improved relations with
providers in its network as a result of the acquisition by Patient Infosystems,
due to better funding. ACS also has been able to expand its provider network by
seeking to restore relationships with providers previously in the network and
adding new providers as ACS obtained new client payor contracts. ACS expects to
see growth in the number of client and payor relationships due to increased
emphasis on sales. No assurances can be given that ACS will be able to continue
to expand its provider or payor relationships, nor that any such expansion will
result in an improvement in the results of operations of ACS.
The processing of patient claims revenues for the three and nine month
periods ended September 30, 2004 increased 10.8% to $138,395 and increased 19.8%
to $396,622, respectively, as compared to $124,905 and $330,964 for the same
respective periods of 2003. The Company 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 nine month periods ended September
30, 2004 decreased to $1,446,866 and $4,433,826, respectively, as compared to
$2,410,583 and $7,920,539 for the same respective periods of 2003. This decrease
was due to a decrease in provider payments, the renegotiation of management fees
payable to one client, and 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 nine month periods ended
September 30, 2004 decreased $687,576 and $2,262,675, respectively as compared
to the same respective periods of 2003. Management fees from ppoNEXT during the
three and nine month periods ended September 30, 2004 decreased $107,949 and
$320,987, respectively, as compared to the same respective periods of 2003, as
contract changes negotiated in July 2003 took effect upon the acquisition of ACS
by Patient Infosystems. Direct expenses and overhead associated with ACS
services provided during the three and nine month periods ended September 30,
2004 decreased $212,481 and $889,197, 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
nine month periods ended September 30, 2004 were $98,943 and $349,058, as
compared to $102,636 and $339,898 for the same respective periods of 2003. 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 nine month periods ended September 30,
2004 were $274,367 and $1,286,817, respectively, as compared to $457,775 and
$1,508,195 for the same respective periods of 2003. Compared to the prior year,
legal fees decreased $39,868 and $216,652 and administrative and finance
compensation expense decreased $100,786 and $210,343 for the three and nine
month periods ended September 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.
The Company recorded other expense for the three and nine month periods
ended September 30, 2004 of $2,169 and $12,635, respectively, as compared to
$53,992 and $102,719 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 nine month periods ended September 30,
2004 of $415,969 and $1,605,254, respectively, as compared to $841,642 and
$2,907,876 for the same respective periods of 2003.
INCOME (LOSS)
The Company reported a net loss attributable to common shareholders for the
three and nine month periods ended September 30, 2004 of $864,576 and
$2,839,706, respectively, as compared to $1,858,563 and $4,882,285 for the same
respective periods of 2003. This represents a loss per share of $0.09 and $0.39
for the same respective periods or 2004 as compared to $2.04 and $5.35 for the
same respective periods of 2003. The pro forma earnings per share assuming that
the acquisition of substantially all the assets and liabilities of American
Caresource Corporation had occurred on January 1, 2003 was $1.39 and $4.05,
respectively, as compared to $0.09 and $0.39 loss per share for the same
respective period of 2004. During the nine months ended September 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 $620,837 of dividends on the outstanding
preferred stock.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 2004, the Company had a working capital deficit of
$1,339,527 as compared to a deficit of $2,808,649 at December 31, 2003. Through
September 30, 2004, these amounts reflect the effects of the Company's
continuing losses and borrowings as well as the recent borrowing necessary to
complete the acquisition of CBCA Care Management, partially 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 for 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 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.
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 September 30, 2004,
the Company borrowed $570,000 of working capital from Mr. Pappajohn which was
repaid in September 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.
On September 21, 2004, the Company entered into the Fourth Addendum to the
Second Amended and Restated Credit Agreement with Well Fargo Bank Iowa, N.A.,
which increased the amount of the credit facility to $7,000,000 and extended the
term to July 31, 2006. Dr. Schaffer and Mr. Pappajohn, directors of the Company,
guaranteed these extensions. In consideration of their guarantees, in September
2004 the Company granted to Dr. Schaffer and Mr. Pappajohn warrants to purchase
an aggregate of 1,000,000 shares of the Company's common stock for $1.68 per
share. The Company valued these warrants at $1,416,500 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 23 month period of the loan
guarantee. During the three and nine months ended September 30, 2004, the
Company recorded a financing cost of $203,158 and $545,908, respectively.
During the nine month period ended September 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 for an aggregate of
$7,471,289 which consisted of $7,263,200 of working capital, forgiveness of
$53,180 of accrued interest payable, forgiveness of $26,659 of debt and payment
of $128,250 of services. The Company incurred $533,658 of costs directly
attributable to the sale of its common stock.
During the nine month period ended September 30, 2004, the Company issued
72,125 shares of its common stock as payment of $128,250 in expenses related to
the sale of common stock 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. These 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
of the assets 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 borrowings and 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 nine month periods ended September 30, 2004 and September 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 September 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 September 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 the Company intends to contest the plaintiff's
claims vigorously.
Item 6. Exhibits
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.
10.75 Agreement of Purchase and Sale dated as of August 26, 2004 by and
among the Registrant, CBCA Care Management, Inc. and CBCA, Inc.
previously filed with the Securities and Exchange Commission as an
Exhibit to the Current Report on Form 8-K filed on September 1, 2004
and incorporated herein by reference.
10.76 Fourth Addendum to Second Amended and Restated Credit Agreement dated
as of September 21, 2004 between Patient Infosystems and Wells Fargo
Bank, National Association.
10.77 Modification Agreement dated as of September 22, 2004 between Patient
Infosystems and Wells Fargo Bank, National Association.
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 Quarterly Report on Form 10-QSB filed on August 16, 2004 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.
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: November 15, 2004 By: /s/Kent A. Tapper
--------------------- -----------------------------------
Name: Kent A. Tapper
Title: Senior Vice President
(Principal Financial Officer)
Date: November 15, 2004 By: /s/Roger L. Chaufournier
--------------------- -----------------------------------
Name: Roger L. Chaufournier
Title: Director, President and
Chief Executive Officer
(Authorized Officer and
Principal Executive Officer)