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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB/A
(Mark One)
X Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Fiscal Year Ended December 31, 2003
Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the transition period from ___ to ___
Commission File Number: 0-22319
Patient Infosystems, Inc.
(Exact Name of Registrant as Specified in its Charter)
Delaware 16-1476509
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification
No.)
46 Prince Street
Rochester, New York 14607
------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area
code: (585) 242-7200 Securities registered
pursuant to Section 12(b) of the Act:
None.
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.01 per share
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days: Yes [X] No [_]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulations S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in a definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act).
Yes [_] No [X]
As of March 25, 2004, the aggregate market value of the voting and nonvoting
common stock held by nonaffiliates of the registrant was $12,084,880 and
2,416,976 shares of common stock were outstanding.
As of March 30, 2004, there were 6,002,854 shares of the issuer's common stock
outstanding.
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EXPLANATORY NOTE
The Registrant is amending its Annual Report on Form 10-KSB for the
year ended December 31, 2003 to include the information required in Part III,
Items 9 through 12, which was omitted in the original filing pursuant to General
Instruction E(3) of this Form 10-KSB.
PART III
Item 9. Directors and Executive Officers of the Registrant.
Name Title Age
-------------------------- ---------------------------------- ------------
Derace L. Schaffer, M.D Chairman 56
Roger L. Chaufournier CEO and Director 46
John Pappajohn Director 75
Christine St. Andre Chief Operating Officer 53
Kent Tapper Vice President Financial Planning 47
Derace L. Schaffer, M.D., 56 (Chairman of the Board of Directors since
1995). Dr. Schaffer has been Chairman of the Board and a Director of Patient
Infosystems since its inception in February 1995. Dr. Schaffer is the founder
and CEO of the Lan Group, a venture capital firm specializing in healthcare and
high technology investments which position he has held for more than the last
five years. He serves as a director of Allion Healthcare, Inc., a public
company. He is also a director of several private companies, including Source
Medical Inc. and Logisticare, Inc. Dr. Schaffer is a board certified
radiologist. He received his postgraduate radiology training at Harvard Medical
School and Massachusetts General Hospital, where he served as Chief Resident.
Dr. Schaffer is a member of Alpha Omega Alpha, the national medical honor
society, and is Clinical Professor of Radiology at the University of Rochester
School of Medicine.
Roger Louis Chaufournier, 46 (President and Chief Executive Officer since
April 1, 2000) Mr. Chaufournier has been the President and Chief Executive
Officer of Patient Infosystems since April 1, 2000. Prior to joining Patient
Infosystems, Mr. Chaufournier was President of the STAR Advisory Group, a
healthcare consulting firm he founded in 1998. From August 1996 to July 1999,
Mr. Chaufournier was the Chief Operating Officer of the Managed Care Assistance
Company, a company that developed and operated Medicaid health plans. Managed
Care Assistance Company filed for protection under the federal bankruptcy laws
in June 2000. From 1993 to 1996, Mr. Chaufournier was Assistant Dean for
Strategic Planning for the Johns Hopkins University School of Medicine. In
addition, Mr. Chaufournier spent twelve years in progressive leadership
positions with the George Washington University Medical Center from 1981 to
1993. Mr. Chaufournier was also Chairman of the Board and acting President of
Metastatin Pharmaceuticals, a privately held company developing therapeutics in
the area of prostate cancer. Mr. Chaufournier was a three time Examiner with the
Malcolm Baldrige National Quality Award and has served as the national
facilitator for the federal Bureau of Primary Health Care chronic disease
collaboratives.
John Pappajohn, 75 (Director since 1995). Mr. Pappajohn has been a Director
of Patient Infosystems since its inception in February 1995, and served as its
Secretary and Treasurer from inception through May 1995. Since 1969, Mr.
Pappajohn has been the sole owner of Pappajohn Capital Resources, a venture
capital firm and President of Equity Dynamics, Inc., a financial consulting
firm, both located in Des Moines, Iowa. He serves as a director for the
following public companies: Allion Healthcare, Inc., MC Informatics, Inc. and
Pace Health Management Systems, Inc.
Christine St. Andre, 53 (Executive Vice President and Chief Operating
Officer since June 5, 2000) Ms. St. Andre has been the Executive Vice President
and Chief Operating Officer of Patient Infosystems since June 5, 2000. Ms. St.
Andre has more than 20 years experience managing complex healthcare
organizations. From 1994 to 2000, Ms. St. Andre was Chief Executive Officer for
the University of Utah Hospitals and Clinics. Prior to 1994, Ms. St. Andre
served as Chief Executive Officer of George Washington University Medical
Center. Ms. St. Andre's career in healthcare began in the area of information
technology at the Thomas Jefferson University.
Kent Tapper, 47 (Vice President, Financial Planning of the Company since
April 1999). Mr. Tapper has served as Chief Information Officer and Vice
President, Systems Engineering and has been with Patient Infosystems since July
1995. Mr. Tapper became the acting Chief Financial Officer of Patient
Infosystems in April 2000. From 1992 to 1995, Mr. Tapper served as Product
Manager, Audio Response and Call Center Platforms for Northern Telecom, Inc.
From 1983 to 1992, Mr. Tapper held Product Manager, Systems Engineering Manager
and various engineering management positions with Northern Telecom.
COMPLIANCE WITH SECTION 16(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's executive officers and directors, and persons who own more than
10% of a registered class of the Company's equity securities (who are referred
to as "Reporting Persons"), to file reports of ownership and changes in
ownership with the Securities and Exchange Commission. Reporting Persons are
required by SEC regulations to furnish us with copies of all Section 16(a) forms
they file. Based on a review of the copies of reports furnished to the Company,
the Company believes that during the year ended December 31, 2003 all filing
requirements applicable to its officers, directors and ten percent beneficial
owners were met.
AUDIT COMMITTEE
The Audit Committee, which held four meetings during fiscal year 2003,
periodically reviews the Company's auditing practices and procedures, makes
recommendations to management or to the Board of Directors as to any changes to
such practices and procedures deemed necessary from time to time to comply with
applicable auditing rules, regulations and practices, reviews all Form 10-KSB
Annual and 10-QSB interim reports and recommends independent auditors for the
Company to be elected by the stockholders.
The Audit Committee consists of John Pappajohn and Dr. Derace Schaffer. The
Audit Committee has one audit committee financial expert, John Pappajohn who is
not independent.
The Audit Committee meets with the Company's independent auditors quarterly
and reviews the scope of the audit performed by the Company's independent
auditors. The Audit Committee and the Company's independent auditors review the
Company's accounting principles and internal accounting controls.
CODE OF ETHICS
The Board of Directors of the Company has adopted a code of ethics
(attached hereto as Exhibit 14) which defines the ethical principles which
govern the conduct of all senior officers. Such senior officers include the
Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, and
Principal Accounting Officer.
Item 10. Executive Compensation.
The following table sets forth information concerning the annual and
long-term compensation for services in all capacities to the Company and its
subsidiary for each of the fiscal years ended December 31, 2003, 2002 and 2001
for those persons who were at December 31, 2003, (i) the Chief Executive Officer
and (ii) the other two most highly compensated executive officers of the Company
who received compensation in excess of $100,000 during the fiscal year ended
December 31, 2003 (the "named executive officers"):
Summary Compensation Table
Long-Term
Compensation
Awards
Annual Compensation Securities
Name and Principal Position Year Salary Bonus Underlying Options (#)
--------------------------- ---- ------ ----- ------------------
Roger L. Chaufournier, President and Chief 2003 $219,611 $25,385 0
Executive Officer 2002 180,841 0 0
2001 196,502 0 16,666
Christine St. Andre, Vice President, Chief 2003 $184,050 $22,212 0
Operating Officer 2002 157,512 0 0
2001 171,893 0 12,500
Kent A. Tapper, Vice President, Financial 2003 $124,154 $14,913 0
Planning 2002 107,942 0 0
2001 116,628 0 8,333
No stock options were granted to the Chief Executive Officer and the named
executive officers of the Company during 2003.
No stock options were exercised by the Chief Executive Officer or the named
executive officers of the Company during 2003. The following table sets forth
certain information regarding unexercised options held by the Chief Executive
Officer and the named executive officers of the Company at December 31, 2003.
The table does not give effect to grants of options that occurred after December
31, 2003. For additional information with respect to these grants, see "Stock
Option Plan".
Aggregated Option Exercises during 2003
and Option Values on December 31, 2003
Number of Securities Underlying Value of Unexercised
Unexercised Options at In-the-Money Options at
December 31, 2003(#) December 31, 2003($)(1)
-------------------- -----------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
Roger L. Chaufournier 23,415 9,917 $1,500 1,000
Christine St. Andre 17,499 7,501 1,125 750
Kent A. Tapper 9,582 1,751 3,187 263
(1) Calculated based upon $2.40 market value of the underlying securities as of
December 31, 2003.
STOCK OPTION PLAN
The Company's Amended and Restated Stock Option Plan (the "Plan") was
adopted by the Board of Directors and stockholders in 1995 and amended as of
December 2003. Up to 3,500,000 shares of Common Stock are authorized and
reserved for issuance under the Plan. Under the Plan, options may be granted in
the form of incentive stock options ("ISOs") or non-qualified stock options
("NQOs") from time to time to salaried employees, officers, directors and
consultants of the Company, as determined by the Compensation Committee of the
Board of Directors. The Compensation Committee determines the terms and
conditions of options granted under the Plan, including the exercise price. The
Plan provides that the Committee must establish an exercise price for ISOs that
is not less than the fair market value per share at the date of the grant.
However, if ISOs are granted to persons owning more than 10% of the voting stock
of the Company, the Plan provides that the exercise price must not be less than
110% of the fair market value per share at the date of the grant. The Plan also
provides for a non-employee director to be entitled to receive a one-time grant
of a NQO to purchase 36,000 shares at an exercise price equal to fair market
value per share on the date of their initial election to the Company's Board of
Directors. Such NQO is exercisable only during the non-employee director's term
and automatically expires on the date such director's service terminates. Each
option, whether an ISO or NQO, must expire within ten years of the date of the
grant.
As of April 28, 2004, options to acquire 1,527,160 shares of Common Stock
have been granted to employees and directors of the Company. The following table
sets forth information regarding the number of options outstanding and the
exercise price of these options.
Number of Options
Outstanding at April
28, 2004 Exercise Price
-------------------- --------------
499 $1.08
3,000 $1.67
43,748 $2.25
1,426,000 $2.28
12,500 $6.00
6,000 $8.33
8,333 $16.50
6,417 $22.56
2,500 $24.72
16,666 $29.26
789 $33.00
Of these options, 92,827 of the options granted before December 31, 2003
were fully vested, 1,426,000 were granted on January 9, 2004, 456,400 of which
vested immediately. The remaining options and all other options granted under
the Plan vest as to 20% of the option grant on the first anniversary of the
grant, and 20% on each subsequent anniversary.
Item 11. Security Ownership of Certain Beneficial Owners and Management.
The following table sets forth certain information regarding the beneficial
ownership of the shares of the Company's Common and Common equivalent Preferred
Stock as of June 27, 2004, (i) by each person the Company knows to be the
beneficial owner of 5% or more of the outstanding shares of Common Stock, (ii)
the Chief Executive Officer and each named executive officer listed in the
Summary Compensation Table below, (iii) each director and nominee for director
of the Company and (iv) all executive officers and directors of the Company as a
group. As of April 28, 2004, there were 6,051,638 shares outstanding.
Shares Percentage
Beneficially Beneficially Owned
Beneficial Owner(1) Owned
John Pappajohn(2) 7,640,090 71.48%
Principle Life Insurance(3) 3,551,490 36.98%
810 Grand Ave.
Des Moines, IA 50392
American Caresource Corporation 1,100,000 18.18%
17400 Dallas Parkway
Dallas, TX 75287
Derace L. Schaffer(4) 926,470 14.14%
Roger Louis Chaufournier(5) 233,332 3.71%
Christine St. Andre(6) 125,000 2.02%
Kent A. Tapper(7) 73,841 1.21%
All directors and executive officers as a group (6 persons) 8,998,733 77.44%
Total Shares Outstanding as of April 28, 2004 6,051,638
(1) Unless otherwise noted, the address of each of the listed persons is c/o
the Company at 46 Prince Street, Rochester, New York 14607.
(2) Includes 30,000 shares held by Halkis, Ltd., a sole proprietorship owned by
Mr. Pappajohn, 30,000 shares held by Thebes, Ltd., a sole proprietorship
owned by Mr. Pappajohn's spouse and 30,000 shares held directly by Mr.
Pappajohn's spouse. Mr. Pappajohn disclaims beneficial ownership of the
shares owned by Thebes, Ltd. and by his spouse. Includes options to
purchase 3,000 shares which are either currently exercisable or which
become exercisable within 60 days of April 28, 2004, 110,000 Common Share
equivalents for the 11,000 shares of Series C Convertible Preferred Stock
and 4,242,330 Common Share equivalents for the 424,233 shares of Series D
Convertible Preferred Stock beneficially owned as of April 28, 2004.
(3) Includes 3,551,490 Common Share equivalents for the 355,149 shares of
Series D Convertible Preferred Stock beneficially owned as of April 28,
2004.
(4) Includes 24,000 shares held by Dr. Schaffer's children. Also includes 3,000
shares which are issuable upon the exercise of options that are either
currently exercisable or which become exercisable within 60 days of April
28, 2004, 250,000 Common Share equivalents for the 25,000 shares of Series
C Convertible Preferred Stock and 53,180 Common Share equivalents for the
5,318 shares of Series D Convertible Preferred Stock beneficially owned as
of April 28, 2004.
(5) Includes options to purchase 233,332 shares which are either currently
exercisable or which become exercisable within 60 days of the date of April
28, 2004. Does not include 200,000 shares subject to outstanding options
that are not exercisable within 60 days of April 28, 2004.
(6) Includes options to purchase 125,000 shares which are either currently
exercisable or which become exercisable within 60 days of the date of April
28, 2004. Does not include 100,000 shares subject to outstanding options
that are not exercisable within 60 days of April 28, 2004.
(7) Includes options to purchase 73,933 shares which are either currently
exercisable or which become exercisable within 60 days of April 28, 2004.
Does not include 62,500 shares subject to outstanding options that are not
exercisable within 60 days of April 28, 2004.
Item 12. Certain Relationships and Related Transactions.
In December 1999, Patient Infosystems established a credit facility for
$1,500,000 guaranteed by Derace Schaffer and John Pappajohn, two directors of
Patient Infosystems. In March 2000, the facility was increased by $1,000,000
under substantially the same terms, also guaranteed by the same Board members.
On March 28, 2001, Patient Infosystems entered into an Amended and Restated
Credit Agreement with Wells Fargo Bank Iowa, N.A. ("Wells Fargo"), which
extended the term of Patient Infosystems' credit facility to March 31, 2002
under substantially the same terms. Dr. Schaffer and Mr. Pappajohn guaranteed
this extension.
On March 28, 2002, Wells Fargo extended the term of the credit facility to
March 31, 2003 under substantially the same terms. Dr. Schaffer and Mr.
Pappajohn also guaranteed this extension.
On June 28, 2002, Patient Infosystems and Wells Fargo agreed on an addendum
to the Amended and Restated Credit Agreement which extends the credit facility
by an additional $500,000, increasing the total credit facility to $3,000,000.
Mr. Pappajohn and Dr. Schaffer also guaranteed this extended credit facility.
On March 28, 2003, Wells Fargo extended the term of the credit facility to
January 2, 2004 under substantially the same terms. Dr. Schaffer and Mr.
Pappajohn also guaranteed this extension.
On December 31, 2003, Patient Infosystems and Wells Fargo further amended
the credit facility and is due and payable on June 30, 2005. Dr. Schaffer and
Mr. Pappajohn also 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 9%
Cumulative Convertible Preferred Stock("Series D Preferred Stock"), convertible
into 475,000 shares of the Company's common stock for $10.00 per preferred
share.
Prior to December 31, 2003, the Company had borrowings from Mr. Pappajohn
and Dr. Schaffer. At December 31, 2002, such borrowings totaled $5,077,500. The
Company borrowed an additional $150,000 from these directors during 2003.
On December 31, 2003, the Company converted $4,482,500 in debt and $438,099
of accrued interest owed to Mr. Pappajohn and Dr. Schaffer into common stock by
issuing 2,928,986 shares of the Company's common stock using a value of $1.68
per common share. Additionally on December 31, 2003, Mr. Pappajohn agreed to
convert his remaining debt of $745,000 and accrued interest of $711,110 into
145,611 shares of the Company's Series D Convertible Preferred Stock at a price
of $10.00 per preferred share.
Between April 2003 and January 2004, Patient Infosystems issued 840,118
shares of Series D Preferred Stock under the terms of the Note and Stock
Purchase Agreement dated April 11, 2003 and amended on September 10, 2003. These
shares can be converted into common stock at a rate of 10 shares of common stock
to 1 share of Series D Preferred Stock. Each share of Series D Preferred Stock
has voting rights equivalent to 10 shares of common stock. John Pappajohn and
Derace Schaffer, members of the Board of Directors of Patient Infosystems, hold
424,233 and 5,318 shares of Series D Preferred Stock respectively.
In January 2004, Patient Infosystems borrowed $200,000 from Mr. Pappajohn,
a director of the Company, in exchange for an unsecured note that bore no
interest if repaid on or before March 31, 2004. The note was repaid on March 29,
2004 and bore no interest as of that date.
SIGNATURE PAGE
Pursuant to the requirements of Section 13 or 15(d) 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.
PATIENT INFOSYSTEMS, INC.
By: April 29, 2004
-------------------------------------------- --------------
Roger L. Chaufournier Date
Director, President, and Chief Executive Officer
EXHIBIT INDEX
14 Code of Ethics
31.1 Certification of the Patient Infosystems, Inc. Chief Executive Officer,
Roger L. Chaufournier, pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
31.2 Certification of the Patient Infosystems, Inc. Chief Financial Officer,
Kent Tapper, 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.