-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DRzoFIWJ4NI4rjRjw5r9NYDknwe/4VkvwlwNNfVKG6tKe0s6Uf0MbZFiINXJ6Xjv wPkFpaqY4DZmyj9MHngWoA== 0001017813-98-000012.txt : 19980817 0001017813-98-000012.hdr.sgml : 19980817 ACCESSION NUMBER: 0001017813-98-000012 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980814 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: PATIENT INFOSYSTEMS INC CENTRAL INDEX KEY: 0001017813 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MISC HEALTH & ALLIED SERVICES, NEC [8090] IRS NUMBER: 161476509 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-22319 FILM NUMBER: 98690808 BUSINESS ADDRESS: STREET 1: 46 PRINCE ST CITY: ROCHESTER STATE: NY ZIP: 14607 BUSINESS PHONE: 7162427200 MAIL ADDRESS: STREET 1: 46 PRINCE ST CITY: ROCHESTER STATE: NY ZIP: 14607 10-Q 1 QUARTERLY REPORT FOR PATIENT INFOSYSTEMS, INC. U.S. Securities and Exchange Commission Washington D.C. 20549 FORM 10Q (Mark One) [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: June 30, 1998 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF For the transition period from ...................to...................... Commission file number: 0-22319 PATIENT INFOSYSTEMS, INC. (Exact name of registrant as specified in its charter) __________Delaware_________________ _________16-1476509______________ (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 46 Prince Street, Rochester, NY 14607 (Address of principal executive offices) (Zip Code) (716) 242-7200 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the last 90 days. Yes [X] No [ ] As of July 31, 1998, 8,020,042 common shares were outstanding. PART 1. FINANCIAL INFORMATION Item 1. Financial Statements. PATIENT INFOSYSTEMS, INC. CONDENSED BALANCE SHEETS - --------------------------------------------------------------------------------
ASSETS June 30, 1998 December 31, 1997 - ------ ------------- ----------------- (Unaudited) (Audited) CURRENT ASSETS: Cash and cash equivalents .................................................... $ 821,244 $ 779,317 Available-for-sale securities ................................................ 9,971,547 12,232,335 Accounts receivable .......................................................... 897,511 412,956 Prepaid expenses and other current assets .................................... 323,722 405,507 ------- ------- Total current assets ................................................... 12,014,024 13,830,115 PROPERTY AND EQUIPMENT, net .................................................... 1,017,194 958,965 OTHER ASSETS ................................................................... 447,393 247,393 ------- ------- TOTAL ASSETS ................................................................... $ 13,478,611 $ 15,036,473 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable ............................................................. $ 208,795 $ 89,674 Accrued salaries and wages ................................................... 368,157 320,272 Accrued expenses ............................................................. 24,034 79,236 Deferred revenue ............................................................. 134,031 67,549 Accrued loss on development contracts ........................................ 30,997 30,997 ------ ------ Total current liabilities .............................................. 766,014 587,728 ------- ------- STOCKHOLDERS' EQUITY: Common stock - $.01 par value: shares authorized: 20,000,000; issued and outstanding: June 30, 1998 - 8,020,042; December 31, 1997 - 8,011,522 ........................... 80,200 80,115 Additional paid-in capital ................................................... 21,558,924 21,550,009 Unrealized gain (loss) on available-for-sale securities ...................... (5,033) 5,060 Accumulated deficit .......................................................... (8,921,494) (7,186,439) ---------- ---------- Total stockholders' equity ............................................. 12,712,597 14,448,745 ---------- ---------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ..................................... $ 13,478,611 $ 15,036,473 ============ ============
See notes to condensed financial statements. PATIENT INFOSYSTEMS, INC. CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED) - --------------------------------------------------------------------------------
Three Months Ended Six Months Ended June 30, June 30, 1998 1997 1998 1997 ---- ---- ---- ---- REVENUES ......................................................... $ 874,119 $ 570,330 $ 1,164,473 $ 1,093,806 ----------- ----------- ----------- ----------- COSTS AND EXPENSES: Cost of sales .................................................. 549,271 534,491 934,558 886,143 Sales and marketing ............................................ 412,279 394,148 834,701 803,660 General and administrative ..................................... 679,245 573,558 1,313,511 984,934 Research and development ....................................... 67,984 179,985 143,065 337,169 ------ ------- ------- ------- Total costs and expenses ................................. 1,708,779 1,682,182 3,225,835 3,011,906 --------- --------- --------- --------- OPERATING LOSS ................................................... (834,660) (1,111,852) (2,061,362) (1,918,100) INTEREST INCOME .................................................. 154,643 218,946 326,307 436,670 ------- ------- ------- ------- NET LOSS ......................................................... $ (680,017) $ (892,906) $(1,735,055) $(1,481,430) =========== =========== =========== =========== NET LOSS PER SHARE - BASIC AND DILUTED ................................................... $ (.08) $ (.11) $ (.22) $ (.19) =========== =========== =========== =========== WEIGHTED AVERAGE COMMON AND POTENTIAL COMMON SHARES .................................... 8,019,789 7,971,802 8,016,727 7,957,220 ========= ========= ========= =========
See notes to condensed financial statements PATIENT INFOSYSTEMS, INC. CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) - --------------------------------------------------------------------------------
Six Months Six Months Ended Ended June 30, 1998 June 30, 1997 ------------- ------------- OPERATING ACTIVITIES: Net loss ..................................................................... $ (1,735,055) $ (1,481,430) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization ............................................ 172,115 142,161 Amortization of premiums and discounts on available-for-sale securities .. (97,025) (118,014) Compensation expense related to issuance of stock warrants ............... 5,218 9,040 (Increase) in accounts receivable ........................................ (484,555) (19,573) Decrease (increase) in accrued interest receivable ....................... 30,109 (117,046) Decrease (increase) in prepaid expenses and other current assets ......... 51,676 (45,915) Increase in accounts payable ............................................. 119,121 199,916 Increase in accrued salaries and wages ................................... 47,885 99,812 (Decrease) in accrued expenses ........................................... (55,202) (80,151) Increase (decrease) in deferred revenue .................................. 66,481 (173,298) (Decrease) in accrued loss on development contracts ...................... -- (9,243) ------ ------ Net cash used in operating activities ................................ (1,879,232) (1,593,741) ---------- ---------- INVESTING ACTIVITY: Property and equipment additions ............................................. (230,345) (264,699) Purchases of available-for-sale securities .................................. (6,797,236) (14,539,161) Maturities of available-for-sale securities .................................. 9,144,959 1,493,000 Increase in other assets ..................................................... (200,000) (250,000) -------- -------- Net cash provided by (used in) investing activities .................. 1,917,378 (13,560,860) --------- ----------- FINANCING ACTIVITIES: Proceeds from issuance of common and preferred stock, net .................... 3,781 2,237,599 Decrease in accrued initial public offering costs ............................ -- (446,568) ----- -------- Net cash provided by financing activities ............................ 3,781 1,791,031 ----- --------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ............................... 41,927 (13,363,570) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD .......................................................... 779,317 15,666,609 ------- ---------- CASH AND CASH EQUIVALENTS AT END OF PERIOD ................................................................ $ 821,244 $ 2,303,039 ============ ============ Supplemental disclosures of cash flow information Cash paid for income taxes, net ............................................. $ 5,016 $ 11,500 ============ ============
See notes to condensed financial statements. PATIENT INFOSYSTEMS, INC. Notes to Condensed Financial Statements 1. The condensed financial statements for the three and six month periods ended June 30, 1998 and June 30, 1997 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. The condensed financial statements should be read in conjunction with the financial statements and notes thereto, together with management's discussion and analysis of financial condition and results of operations contained in the Company's Annual Report on Form 10-K for the year ended December 31, 1997. The results of operations for the six months ended June 30, 1998 are not necessarily indicative of the results for the entire year ending December 31, 1998. 2. Effective January 1, 1998, the Company adopted Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income." This statement requires that all items recognized under accounting standards as components of comprehensive earnings be reported in an annual financial statement that is displayed with the same prominence as other annual financial statements. This statement also requires that an entity classify items of other comprehensive earnings by their nature in an annual financial statement. For example, other comprehensive earnings may include foreign currency translation adjustments, minimum pension liability adjustments, and unrealized gains and losses on marketable securities classified as available-for-sale. Annual financial statements for prior periods will be reclassified, as required. The Company's total comprehensive earnings were as follows:
Three Months Ended Six Months Ended June 30, June 30, 1998 1997 1998 1997 ---- ---- ---- ---- Net losses $(680,017) $(892,906) $(1,735,055) $(1,481,430) Other comprehensive earnings: Unrealized gains (losses) on available-for-sale securities (2,700) 29,004 (10,093) 6,645 ------ ------ ------- ----- Comprehensive earnings $(682,717) $(863,902) $(1,745,148) $(1,474,785) ========= ========= =========== ===========
3. In March 1998 the Accounting Standards Executive Committee issued Statement of Position 98-1, "Accounting for the Costs of Computer Software Developed or Obtained for Internal Use". This statement provides guidance on accounting for the costs of computer software developed or obtained for internal use. This statement will be effective for fiscal years beginning after December 15, 1998. Management is evaluating the impact on the Company's financial statements. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Management's discussion and analysis provides a review of the Company's operating results for the three and six month periods ended June 30, 1998 and June 30, 1997 and its financial condition at June 30, 1998. The focus of this review is on the underlying business reasons for significant changes and trends affecting the revenues, net earnings and financial condition of the Company. This review should be read in conjunction with the accompanying condensed financial statements. In an effort to give investors a well-rounded view of the Company's current condition and future opportunities, this Quarterly Report on Form 10-Q includes forecasts by the Company's management about future performance and results. Because they are forward-looking, these forecasts involve uncertainties. These uncertainties include risks of market acceptance of or preference for the Company's systems and services, competitive forces, the impact of, and 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. Results of Operations Revenues Revenues consist of revenues from development, licensing and operational fees. Revenues increased from $570,330 during the three months ended June 30, 1997 to $874,119 during the three months ended June 30, 1998, or 53%, and increased from $1,093,806 for the six months ended June 30, 1997 to $1,164,473 or 6% for the six months ended June 30, 1998. Three Months Ended Six Months Ended June 30, June 30, Revenues 1998 1997 1998 1997 - -------- ---- ---- ---- ---- Development Fees $532,812 $197,020 $ 553,403 $ 603,104 Licensing Fees 6,945 195,834 169,445 283,333 Operational Fees 334,362 177,476 441,625 207,369 ------- ------- ------- ------- Total Revenues $874,119 $570,330 $1,164,473 $1,093,806 ======== ======== ========== ========== Revenue from development fees increased from $197,020 during the second quarter of 1997 to $532,812 during the second quarter of 1998, or 170% and decreased from $603,104 during the first six months of 1997 to $553,403, or 8%, during the first six months of 1998. Development revenues include clinical, technical and operational design or modification and customization of the Company's primary disease management programs. The increase in development fees from the three months ended 1998 as compared to the three months ended 1997 was a result of development activities conducted during the quarter under new arrangements, of which approximately $485,000 was derived from services provided to a single customer. Revenue from licensing fees decreased from $195,834 in the second quarter of 1997 to $6,945 during the second quarter of 1998, or 96% and decreased from $283,333 during the first six months of 1997 to $169,445, or 40%, during the first six months of 1998. Licensing revenue represents amounts the Company charges its customers, a one-time fee basis, for the right to enroll patients in or the right to license other entities certain of its programs, primarily, but not limited to, the Company's standardized asthma and diabetes programs. During the second quarter of 1997 the Company had received $150,000 under a one time licensing agreement. The Company has not entered into any such agreements during the second quarter of 1998. Revenue from operational fees increased from $177,476 during the second quarter of 1997 to $334,362 during the second quarter of 1998, or 88%, and increased from $207,369 during the first six months of 1997 to $441,625, or 113%, during the first six months of 1998. The increase in operational revenues are due to increases in membership levels in the Company's disease management programs and primarily from the Company's nurse triage demand management programs. The nurse triage demand management programs operate from the Company's medical call center which was established in May 1998 in Wayne, PA. The medical call center is staffed by registered nurses on a 24 hour, 7 day a week schedule. Revenues from the Company's contracts is recognized ratably in accordance with contract terms on the basis of per-member and/or per enrollment fees. The Company anticipates that operational revenues will continue to increase over the next twelve months to the extent that enrollments increase. The Company also provides other services to customers in the healthcare industry which involve new applications of its information capture and delivery systems. These services include patient surveys, health risk assessments, patient satisfaction surveys, physician education programs and marketing support functions. As the Company expands its operations, it intends to emphasize operational revenue to the exclusion of development revenues. Costs and Expenses Cost of sales include salaries and related benefits, services provided by third parties, and other expenses associated with the development of the Company's customized disease state management programs, as well as the operation of each of its disease state management programs. Cost of sales was $549,271 for the three months ended June 30, 1998, as compared to $534,491 for the three months ended June 30, 1997. For the six months ended June 30, 1998, cost of sales was $934,558, as compared to $886,143 for the six months ended June 30, 1997. The increase in these costs reflects an increased level of program operational activities, as well as the Company's creation of the capacity necessary to handle anticipated increases in the number of individuals to whom the Company provides services. Sales and marketing expenses for the three months ended June 30, 1998 were $412,279, as compared to $394,148 for the three months ended June 30, 1997. For the six months ended June 30, 1998, cost of sales were $834,701, as compared to $803,660 for the six months ended June 30, 1997. These costs consist primarily of salaries, related benefits, travel costs, sales materials and other marketing related expenses. Spending in this area has increased due to expansion of the Company's sales and marketing staff. It is anticipated that the Company will continue to invest in the sales and marketing process, and that such expenses will increase in future periods. General and administrative expenses include the costs of corporate operations, finance and accounting, human resources and other general operating expenses of the Company. General and administrative expenses for the three months ended June 30, 1998 were $679,245 as compared to $573,558 for the three months ended June 30, 1997. For the six months ended June 30, 1998, general and administrative expenses were $1,313,511 as compared to $984,934 for the six months ended June 30, 1997. These expenditures have been incurred to maintain the corporate infrastructure necessary to support anticipated program operations. The increase in these costs was caused by an increase in the Company's level of business activity, and the addition of required administrative personnel. The Company expects that general and administrative expenses will continue to increase in future periods. Research and development expenses consist primarily of salaries and related benefits and administrative costs allocated to the Company's research and development personnel for development of certain components of its integrated information capture and delivery system, as well as development of the Company's standardized disease state management programs. Research and development expenses for the three months ended June 30, 1998 were $67,984 as compared to $179,985 for the three months ended June 30, 1977. For the six months ended June 30, 1998, research and development expenses were $143,065 as compared to $337,169 for the six months ended June 30, 1997. The decrease in research and development expenses from the second quarter of 1997 to the second quarter of 1998 reflects the Company's completion of the development of its primary disease management programs The Company anticipates that research and development expenses will continue to decrease in future periods, as the Company continues to expand its operations. Interest income was $154,643 for the three months ended June 30, 1998, as compared to $218,946 for the three months ended June 30, 1997. For the six months ended June 30, 1998, interest income was $326,307 as compared to $436,670 for the six months ended June 30, 1997. The decrease in interest income reflects the use by the Company of its available cash and the reduction of proceeds that can earn interest. The Company had a net loss of $680,017 for the three months ended June 30, 1998 as compared to $892,906 for the three months ended June 30, 1997. For the six months ended June 30, 1998, the Company had a net loss of $1,735,055 as compared to $1,481,430 for the six months ended June 30, 1997. This represents a net loss per share of $.08 for the second quarter of 1998, as compared to a net loss of $.11 per share in the second quarter of 1997. For the six months ended June 30, 1998, the net loss per share is $.22 as compared to $.19 net loss per share for the six months ended June 30, 1997. Liquidity and Capital Resources At June 30, 1998 the Company had working capital of $11,248,010 as compared to working capital of $13,242,387 at December 31, 1997. Since its inception the Company has primarily funded its operations, working capital needs and capital expenditures from the sale of equity securities. The Company's initial capitalization of $500,000 was completed in February 1995. The Company received $1,800,000 from the sale of equity securities in a private placement during the third quarter of 1995, and $3,000,000 from the sale of additional equity securities in a private placement during the second quarter of 1996. On December 19, 1996 the Company completed an initial public offering of its common stock which generated net proceeds to the Company of $14,082,048. The underwriters of the Company's initial public offering exercised their over-allotment option on January 8, 1997 resulting in net proceeds to the Company of $2,232,000. The Company has continued to expend increasing amounts to expand its operational capabilities including, increasing its administrative, sales and technical costs. To the extent that revenues do not increase, the Company's losses will increase, creating an increased burden on the Company's available capital. Inflation Inflation did not have a significant impact on the Company's costs during the three and six month periods ended June 30, 1998 and June 30, 1997. The Company continues to monitor the impact of inflation in order to minimize its effects through pricing strategies, productivity improvements and cost reductions. Forward Looking Statements When used in this and in future filings by the Company with the Securities and Exchange Commission, in the Company's press releases and in oral statements made with the approval of an authorized executive officer of the Company, the words or phrases "will likely result," "expects," "plans," "will continue," "is anticipated," "estimated," "project," or "outlook" or similar expressions (including confirmations by an authorized executive officer of the Company of any such expressions made by a third party with respect to the Company) are intended to identify "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. The Company wishes to caution readers not to place undue reliance on any such forward-looking statements, each of which speak only as of the date made. Such statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical earnings and those presently anticipated or projected. These uncertainties include risks of market acceptance of or preference for the Company's systems and services, competitive forces, the impact of, and 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. 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. PART II - OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders The Company's annual meeting of stockholders was held in Rochester, New York at 9:30 a.m. local time on Thursday, June 25, 1998. Proxies for the meeting were solicited pursuant to Regulation 14 under the Securities Exchange Act of 1934, as amended. There was no solicitation in opposition to the nominees for election as directors as listed in the proxy statement, and all nominees were elected. Out of a total of 8,020,042 shares of the Company's common stock outstanding and entitled to vote, 7,055,617 shares were present at the meeting in person or by proxy, representing approximately 88 percent. Matters voted upon at the meeting were as follows: a) Election of six directors to serve on the Company's board of directors. Drs. Schaffer, Kohrt, McNeil and Nash and Messrs. Carlberg and Pappajohn were elected to serve until the next annual meeting of stockholders or until their successors are duly elected and qualified. The vote tabulation with respect to each nominee was as follows: Nominee Votes For Votes Against - ------- --------- ------------- Dr. Derace L. Schaffer 7,054,932 685 Donald A. Carlberg 7,054,932 685 Dr. Carl Kohrt 7,054,932 685 Dr. Barbara J. McNeil 7,054,932 685 Dr. David B. Nash 7,054,932 685 John Pappajohn 7,054,932 685 b) To ratify the selection of Deloitte & Touche, LLP as the Company's independent auditors for the fiscal year ending December 31, 1998. The selection was approved with 7,041,552 votes for the selection, 13,065 against the selection and 1,000 abstained from the selection. Item 6. Exhibits and Reports on Form 8-K No reports on Form 8-K were filed during the quarter ended June 30, 1998. Exhibits: (11) Statements of Computation of Per Share Earnings See Page 10 of this Quarter Report on Form 10-Q. (27) Financial Data Schedule Filed electronically EX-11 2 COMPUTATION OF PER SHARE EARNINGS Exhibit 11. Statement of Computation of Per Share Earnings PATIENT INFOSYSTEMS, INC.
Three Months Ended Six Months Ended June 30, June 30, 1998 1997 1998 1997 ---- ---- ---- ---- Net Loss ........................................... $ (680,017) $ (892,906) $(1,735,055) $(1,481,430) ----------- ----------- ----------- ----------- Weighted average common and potential common shares ....................... 8,019,789 7,971,802 8,016,727 7,957,220 --------- --------- --------- --------- Net Loss per share - Basic and Diluted ............. $ (0.08) $ (0.11) $ (0.22) $ (0.19) =========== =========== =========== ==========
SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Dated: August 14, 1998 PATIENT INFSYSTEMS, INC. (Registrant) /s/ Donald A. Carlberg August 14, 1998 - ---------------------- --------------- Donald A. Carlberg Date Director, President and Chief Executive Officer /s/ Lynda J. Bates August 14, 1998 - ------------------ --------------- Lynda J. Bates Date Controller EX-27 3 FINANCIAL DATA SCHEDULE WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
5 1 6-MOS DEC-31-1998 JAN-01-1998 JUN-30-1998 821,244 9,971,547 897,511 0 0 12,014,024 1,691,728 674,534 13,478,611 766,014 0 0 0 80,200 12,632,397 13,478,611 1,164,473 1,164,473 934,558 3,225,835 0 0 0 (1,735,055) 0 (1,735,055) 0 0 0 (1,735,055) (0.22) (0.22
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