As filed with the Securities and Exchange Commission on [________], 2004
                                                Registration No. 333-115217
================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                              Washington D.C. 20549


                                 AMENDMENT NO. 1
                                       TO
                                    FORM SB-2
                             REGISTRATION STATEMENT
                                      Under
                           THE SECURITIES ACT OF 1933



                            PATIENT INFOSYSTEMS, INC.
                 (Name of small business issuer in its charter)

         Delaware                      8090                  16-1476509
---------------------------  ----------------------------    ----------
(State or other jurisdiction (Primary Standard Industrial  (I.R.S. Employer
   of incorporation or        Classification Code Number) Identification Number)
     organization)

                                46 Prince Street
                            Rochester, New York 14607
                                 (585) 242-7200

              (Address and telephone number of principal executive
                    offices and principal place of business)

                            Roger Louis Chaufournier
                      President and Chief Executive Officer
                            Patient Infosystems, Inc.
                                46 Prince Street
                            Rochester, New York 14607
                                 (585) 242-7200

            (Name, address and telephone number of agent for service)
                          -----------------------------
                          Copies of Communications to:
                             Jeffrey A. Baumel, Esq.
                             McCarter & English, LLP
                               Four Gateway Center
                               100 Mulberry Street
                            Newark, New Jersey 07102
                                 (973) 622-4444
                          ----------------------------

            Approximate date of commencement of proposed sale of the
           securities to the public: As soon as practicable after the
                 effective date of this Registration Statement.


     If this form is filed to  register  additional  securities  for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list  the  Securities  Act  registration  statement  number  of the  earlier
effective registration statement for the same offering.

     If this form is a  post-effective  amendment  filed pursuant to Rule 462(c)
under the  Securities  Act,  check the following box and list the Securities Act
registration  statement number of the earlier effective  registration  statement
for the same offering.

     If this form is a  post-effective  amendment  filed pursuant to Rule 462(d)
under the  Securities  Act,  check the following box and list the Securities Act
registration  statement number of the earlier effective  registration  statement
for the same offering.

     If delivery of the  prospectus is expected to be made pursuant to Rule 434,
please check the following box.

                        CALCULATION OF REGISTRATION FEES



---------------------------- ------------------- ----------------------- ----------------------- ---------------------------
                                                    Proposed Maximum        Proposed Maximum
Title of Each Class of       Amount to be          Offering Price Per      Aggregate Offering      Amount of Registration
Securities to be Registered  Registered (1)             Unit (2)               Price (2)                  Fee (3)
---------------------------- ------------------- ----------------------- ----------------------- ---------------------------
Common Stock, par value
                                                                                               
$0.01 per share                    877,125               2.80                    $2,455,950                $311.17
---------------------------- ------------------- ----------------------- ----------------------- ---------------------------


(1)  Includes 62,500 shares of common stock issuable upon the exercise of common
     stock purchase  warrants.

(2)  Estimated  solely for purposes of calculating the registration fee pursuant
     to Rule 457(c) under the Securities Act of 1933.


The Registrant hereby amends this  Registration  Statement on such date or dates
as may be necessary to delay its effective date until the Registrant  shall file
a further amendment which specifically  states that this Registration  Statement
shall  thereafter  become  effective  in  accordance  with  Section  8(a) of the
Securities  Act of  1933 or  until  this  Registration  Statement  shall  become
effective on such date as the Commission,  acting pursuant to said Section 8(a),
may determine.





The  information in this  prospectus is not complete and may be changed.  We may
not sell  these  securities  until the  registration  statement  filed  with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to  sell  these  securities  and we  are  not  soliciting  offers  to buy  these
securities in any state where the offer or sale is not permitted.

                    Subject to Completion, dated May 5, 2004

PRELIMINARY PROSPECTUS

                            PATIENT INFOSYSTEMS, INC.

                         877,125 Shares of Common Stock

     The  stockholders  named on page 48 are selling up to 877,125 shares of our
common  stock.  62,500 of the shares we are  registering  are issuable  upon the
exercise of outstanding common stock purchase warrants. The selling stockholders
may offer and sell their shares on a continuous  or delayed basis in the future.
These  sales may be  conducted  in the open  market or in  privately  negotiated
transactions and at market prices,  fixed prices or negotiated  prices.  We will
not  receive  any of the  proceeds  from  the  sale  of  shares  by the  selling
stockholders, but we will receive funds from the exercise of their warrants.

     Our common  stock is currently  listed on the OTC Bulletin  Board under the
symbol  "PATY." On May 5, 2004,  the last  reported  sale price of our common
stock on the Nasdaq OTC Bulletin Board was $2.80 per share.


     Investing  in our  common  stock  involves  risks.  Please  read the  "Risk
Factors" section beginning on page 5 to read about certain risks that you should
consider before purchasing shares of our common stock.

     Neither the  Securities and Exchange  Commission  nor any state  securities
commission has approved or  disapproved  of these  securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.


                                       The date of this Prospectus is , 2004


                                        i



--------------------------------------------------------------------------------

     No dealer,  salesperson  or other  person has been  authorized  to give any
information or to make any  representations  other than those  contained in this
prospectus,  and if given or made, such information or representations  must not
be relied upon as having been authorized by us, the selling  stockholders or any
underwriter.  You  should  rely  only  on  the  information  contained  in  this
prospectus.  This  prospectus  does  not  constitute  an  offer  to  sell or the
solicitation of an offer to buy any security other than the common stock offered
by this prospectus, or an offer to sell or a solicitation of an offer to buy any
security by any person in any  jurisdiction  in which such offer or solicitation
would be  unlawful.  Neither the delivery of this  prospectus  nor any sale made
hereunder  shall,  under any  circumstances,  imply that the information in this
prospectus is correct as of any time subsequent to the date of this prospectus.

--------------------------------------------------------------------------------


                                TABLE OF CONTENTS

                                                                     Page

SUMMARY  ..............................................................3
RISK FACTORS...........................................................5
SPECIAL CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS..........13
USE OF PROCEEDS.......................................................14
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS..............14
BUSINESS .............................................................16
MANAGEMENT 'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS...........27
MANAGEMENT............................................................38
EXECUTIVE COMPENSATION................................................41
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS........................44
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT........46
SELLING STOCKHOLDERS..................................................48
PLAN OF DISTRIBUTION..................................................50
DESCRIPTION OF CAPITAL STOCK..........................................52
LEGAL MATTERS.........................................................56
EXPERTS...............................................................56
WHERE YOU CAN FIND ADDITIONAL INFORMATION.............................57
INDEX TO FINANCIAL STATEMENTS.........................................58





                                       ii

                                     SUMMARY

     You should read this summary  together with the more detailed  information,
including our financial  statements  and related notes,  appearing  elsewhere in
this prospectus. Unless otherwise indicated, all share and per share information
contained  herein gives effect to a 1 for 12 reverse stock split effected at the
close of business on January 9, 2004.

                                   Our Company

     We are a health  management  solutions  company which primarily  engages in
integrating  clinical  expertise  with advanced  Internet,  call center and data
management  capabilities.  We have evolved to offer a comprehensive portfolio of
products and services  designed to improve patient clinical outcomes and quality
of  life,   reduce   healthcare  costs  and  facilitate   patient-provider-payor
communication. These products are now marketed under the label Care Team Connect
for  Health.  On  December  31,  2003,  we  acquired  the assets and assumed the
liabilities of American Caresource Corporation.

     Our principal executive offices are located at 46 Prince Street, Rochester,
New York 14607 and our telephone  number is (585) 242-7200.  We are incorporated
under  the  laws of  Delaware.  Our  Internet  address  is  www.ptisys.com.  The
information on our web site is not  incorporated by reference into, and does not
constitute part of, this prospectus.


                                  The Offering

Shares of common
 stock offered      877,125

Use of Proceeds     We will not receive any proceeds from the sale of the common
                    stock offered by the selling  stockholders.  However, we may
                    receive an  aggregate  of $162,500  upon the exercise of all
                    the warrants held by selling stockholders,  if such warrants
                    are exercised for cash. We will use such funds,  if any, for
                    working capital and general corporate purposes.

OTC Bulletin
 Board Symbol       PATY


                                       3


                          Summary Financial Information

     The  summary  financial  data is  derived  from  the  historical  financial
statements of Patient  Infosystems,  Inc. This summary  financial data should be
read in  conjunction  with  "Management's  Discussion  and  Analysis  or Plan of
Operation" as well as our historical  financial statements and the related notes
thereto, included elsewhere in this prospectus.

Statement of operations data:



                                                  Year Ended December 31,
                                                   2003            2002           2001           2000           1999
                                                   ----            ----           ----           ----           ----
Statement of Operations Data:
                                                                                              
Revenues                                         $5,687,293     $2,355,677     $1,586,443     $2,139,262      $3,545,207
                                                 -----------    -----------    -----------    -----------     ----------
Costs and expenses:
  Cost of sales                                    4,162,759      1,914,464      2,420,151      3,906,010       5,219,562
  Sales and marketing                                893,833        746,353        813,975      1,425,990       2,809,554
  General and administrative                       1,125,926      1,282,683      2,028,804      2,329,585       1,916,003
  Research and development                          131,782        105,614        190,731        305,543         967,365
                                                    --------       --------       --------       --------        --------
    Total costs and expenses                      6,314,300      4,049,114      5,453,661      7,967,128      10,912,484
                                                  ----------     ----------     ----------     ----------     -----------
Operating loss                                     (627,007)    (1,693,437)    (3,867,218)    (5,827,866)     (7,367,277)

Other income                                     (2,750,954)      (530,924)      (598,087)      (211,340)       (250,897)
                                                 -----------      ---------      ---------      ---------       ---------
NET LOSS                                        $(3,377,960)   $(2,224,361)   $(4,465,305)   $(6,039,206)    $(7,618,174)

  Convertible preferred stock dividends          (7,671,557)       (90,000)       (90,000)      (617,500)            -
                                                 -----------       --------       --------      ---------            ----
NET LOSS ATTRIBUTABLE TO
 COMMON SHAREHOLDERS                           $(11,049,517)   $(2,314,361)   $(4,555,305)   $(6,656,706)    $(7,618,174)
                                               =============   ============   ============   ============    ============
Net loss per share - basic and diluted            $   (3.25)     $   (2.36)     $   (5.17)     $   (9.14)      $  (11.38)
                                                  ==========     ==========     ==========     ==========      ==========
Weighted average
  common shares outstanding                       3,399,616        979,668        880,875        727,969         669,377
                                                  ==========       ========       ========       ========        =======




                                                                           As of December 31,
                                                   2003            2002           2001           2000           1999
                                                   ----            ----           ----           ----           ----
Balance Sheet Data:
                                                                                                   
Cash and cash equivalents                         $  397,851      $   5,011      $  29,449      $  28,231      $  489,521
Working capital                                  (2,808,649)    (6,135,451)    (4,686,322)    (1,375,391)         414,132
Total assets                                       9,111,158      1,217,266      1,222,133      2,292,244       3,844,395
Long term obligations                              3,040,295      3,000,000      2,500,000      2,500,000         500,000
Total liabilities                                  7,174,782      9,887,505      7,578,011      4,481,225       1,427,732
Total stockholders' (deficit) equity               1,936,376    (8,670,239)    (6,355,878)    (2,188,981)       2,416,663


                                       4


                                  RISK FACTORS

     Prospective  investors should carefully consider the following factors,  in
addition to the other  information  contained in this prospectus,  in connection
with an  investment  in our  common  stock.  This  prospectus  contains  certain
forward-looking  statements,  which involve risks and uncertainties.  Our actual
results could differ  materially from those  anticipated in the  forward-looking
statements as a result of certain  factors,  including those set forth below and
elsewhere in this prospectus.  An investment in our common stock involves a high
degree of risk and is suitable  only for  investors who can afford to lose their
entire investment.

Working Capital Shortfalls;  Urgent Need for Working Capital; Possible Cessation
of Operations

     Patient  Infosystems  has never earned a profit and has  depended  upon the
over $30 million that the Company has raised to date through its initial  public
offering,  private  placements  of its equity  securities  and debt, to fund its
working capital requirements.  Patient Infosystems incurred an operating loss of
approximately $0.6 million with a net loss of approximately $3.4 million for the
year ended  December 31, 2003 and had an  approximate  $2.8  million  deficit in
working capital and shareholders' equity of approximately $2 million at December
31, 2003. As of December 31, 2003, Patient  Infosystems had total liabilities of
$7,174,782 and a working capital deficit of $2,808,649.  Since May 2003, Patient
Infosystems' operation has been supported  substantially by its operational cash
flow.  On December  31,  2003,  Patient  Infosystems  acquired the assets of and
assumed the  liabilities  for  American  Caresource  Corporation  and placed the
operational  assets and  liabilities  into a wholly-owned  subsidiary,  American
Caresource  Holdings,  Inc.  ("ACS").  It is  anticipated  that ACS will require
significant  additional  working capital until it can fund its operational needs
from  operational  cash flow, if at all.  Existing  working capital will last no
more than a few months, and the Company  anticipates that it will be required to
raise at least an additional $2 million in 2004 to sustain the operation of ACS.
As with any  forward-looking  projection,  no assurances can be given concerning
the  outcome  of  Patient   Infosystems'   actual  financial  status  given  the
substantial  uncertainties  that exist.  There can be no assurances that Patient
Infosystems  can raise either the required  working  capital through the sale of
its securities or that Patient  Infosystems  can borrow the  additional  amounts
needed.  If it is unable to  identify  additional  sources of  capital,  Patient
Infosystems will likely be forced to curtail its operations or the operations of
ACS.  As a result of the above,  the  Auditors'  Report on Patient  Infosystems'
consolidated  financial  statements  appearing  on page 59  includes an emphasis
paragraph indicating that Patient Infosystems'  recurring losses from operations
and  negative  working  capital  raise  substantial  doubt  about its 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.

                                       5


ACS' History of Operating Losses

     ACS has incurred  losses in each of the past four years and has not,  since
its  inception,  operated  profitability.  There  can be no  assurance  that the
acquisition  of ACS will  result in an  increase  in  revenue  or cash  flows of
Patient Infosystems.

     During the last six months,  ACS has received  written  notification of the
termination  of  contractual  relations  from Pinnacol  Assurance and two of its
other customers  which in the aggregate  accounted for over 56% of ACS' revenues
during the  fiscal  year ended  December  31,  2003.  The  termination  of these
contracts will result in a significant  reduction of ACS'  revenues.  Although a
variety of reasons may be provided for the  termination  of each of the customer
agreements, the termination of such an extensive amount of customer business may
reflect  a  substantial  level of  customer  dissatisfaction  with the  services
provided  by ACS.  Although  Patient  Infosystems  believes  that it can provide
assistance to ACS and that in combination with Patient Infosystems,  ACS will be
able to provide better  services,  no assurance can be given that more customers
will not  terminate  their  relationships  with ACS following the closing of the
Acquisition.  In addition,  ACS generally does not have long-term contracts with
its other customers. Significant declines in the level of use of ACS services by
one or more of its remaining  customers could have a material  adverse effect on
ACS' business and results of operations.  Additionally, an adverse change in the
financial condition of any of these customers,  including an adverse change as a
result of a change in governmental or private reimbursement programs, could have
a material adverse effect on its business.

History of Operating Losses; Continued Limited Patient Enrollment

     Patient  Infosystems  has  incurred  losses  in  every  quarter  since  its
inception in February 1995. Patient  Infosystems'  ability to operate profitably
is  dependent  upon its  ability  to  develop  and  market  its  products  in an
economically  successful manner. To date, Patient Infosystems has been unable to
do so. No  assurances  can be given  that  Patient  Infosystems  will be able to
generate revenues or ever operate profitably in the future.

     Patient Infosystems'  prospects must be considered in light of the numerous
risks, expenses,  delays and difficulties  frequently encountered in an industry
characterized  by  intense  competition,  as well as the risks  inherent  in the
development  of  new  programs  and  the   commercialization   of  new  services
particularly  given its failure to date to operate  profitably.  There can be no
assurance  that  Patient   Infosystems   will  achieve   recurring   revenue  or
profitability on a consistent basis, if at all.

     Patient Infosystems currently has patients enrolled in its disease-specific
programs.  Through January 2004, an aggregate of  approximately  775,000 persons
have been enrolled in Patient Infosystems'  programs.  While Patient Infosystems
has been able to enroll a sufficient number of patients to cover the cost of its
programs,  it still has not been able to generate sufficient  operational margin
to achieve a net profit.

                                       6


Significant Customer Concentration

     During 2000, a significant  customer ceased operation of services  supplied
by Patient  Infosystems,  which had a material  adverse effect on the results of
operations.  As of December 31, 2003, Patient Infosystems now has more customers
than it did at  December  31,  2001 or 2002.  While  the  customer  base is more
diverse,  there is still a  significant  concentration  of Patient  Infosystems'
business in a small number of  customers,  with several of Patient  Infosystems'
most  significant  contracts  being  with  IHI,  CBCA  and CHA  Health.  Patient
Infosystems  expects that its sale of services will be  concentrated  in a small
number of customers for the foreseeable  future.  Consequently,  the loss of any
one of its customers could have a material adverse effect on Patient Infosystems
and its operations. There can be no assurance that customers will maintain their
agreements with Patient  Infosystems,  enroll a sufficient number of patients in
the programs developed by Patient Infosystems for Patient Infosystems to achieve
or maintain  profitability,  or that customers  will renew their  contracts upon
expiration, or on terms favorable to, Patient Infosystems.

     ACS'  five  largest  customers  (including  its  non-continuing  customers)
account for  approximately 85% of its revenues.  In addition,  ACS does not have
long-term  contracts  with  its  customers.  The  loss of one or  more of  these
customers,  or an adverse  change in the  financial  condition of one or more of
these  customers,  could  have a material  adverse  effect on the  business  and
results of operations of Patient Infosystems.

Consequences of the Need to Raise Additional Working Capital

     As Patient  Infosystems  seeks  additional  financing or  purchases,  it is
likely that it will issue a substantial  number of additional shares that may be
extremely  dilutive to the current  stockholders  and required  substantial  and
material charges to earnings which will impact the net loss  attributable to the
common  shareholders.  As a result,  the value of  outstanding  shares of common
stock could decline further.

Only One Independent Director

     The Board of Directors of Patient  Infosystems  now only  consists of three
persons. One director, Mr. Chaufournier,  is also the Chief Executive Officer of
Patient Infosystems.  There are no independent directors. It is anticipated that
it will be difficult  to attract  additional  independent  directors to join the
Board of Directors.  The Company is seeking to identify  additional  persons who
can serve as independent  members of the Board of Directors and who may serve as
members of its Audit Committee.

Terminability of Agreements

     Patient   Infosystems'  current  services  agreements  with  its  customers
generally  automatically  renew and may be terminated by those customers without
cause upon notice of between 30 and 90 days. In general,  customer contracts may
include  significant  performance  criteria  and  implementation  schedules  for
Patient  Infosystems.  Failure to satisfy such  criteria or meet such  schedules
could result in termination of the agreements.

                                       7


New Concept; Uncertainty of Market Acceptance;  Limitations of Commercialization
Strategy

     In connection with the  commercialization  of Patient  Infosystems'  health
information  system,  Patient  Infosystems is marketing  relatively new services
designed to link patients,  health care providers and payors in order to provide
specialized disease management services for targeted chronic diseases.  However,
at this time,  services  of this type have not gained  general  acceptance  from
Patient  Infosystems'  customers.  This is still  perceived to be a new business
concept in an industry  characterized by an increasing number of market entrants
who have introduced or are developing an array of new services. As is typical in
the case of a new  business  concept,  demand  and market  acceptance  for newly
introduced services are subject to a high level of uncertainty, and there can be
no  assurance  as to  the  ultimate  level  of  market  acceptance  for  Patient
Infosystems'  system,  especially  in the  health  care  industry,  in which the
containment of costs is emphasized.  Because of the subjective nature of patient
compliance,  Patient Infosystems may be unable, for an extensive period of time,
to develop a significant  amount of data to demonstrate  to potential  customers
the  effectiveness  of its  services.  Even after such time, no assurance can be
given  that  Patient  Infosystems'  data  and  results  will  be  convincing  or
determinative  as to the success of its system.  There can be no assurance  that
increased  marketing  efforts  and the  implementation  of Patient  Infosystems'
strategies  will result in market  acceptance  for its services or that a market
for Patient Infosystems' services will develop or not be limited.

Unpredictability of Patient Behavior May Affect Success of Programs

     The ability of Patient  Infosystems to monitor and modify patient  behavior
and to provide information to health care providers and payors, and consequently
the success of Patient Infosystems' disease management system, is dependent upon
the accuracy of information received from patients.  Patient Infosystems has not
taken and does not expect that it will take,  specific measures to determine the
accuracy of information  provided to Patient  Infosystems by patients  regarding
their medical histories. No assurance can be given that the information provided
to Patient Infosystems by patients will be accurate. To the extent that patients
have  chosen not to comply  with  prescribed  treatments,  such  patients  might
provide  inaccurate  information to avoid  detection.  Because of the subjective
nature of medical  treatment,  it will be difficult for Patient  Infosystems  to
validate or confirm any such information. In the event that patients enrolled in
Patient  Infosystems'  programs provide inaccurate  information to a significant
degree,   Patient  Infosystems  would  be  materially  and  adversely  affected.
Furthermore,  there can be no assurance  that patient  interventions  by Patient
Infosystems will be successful in modifying patient behavior,  improving patient
health or reducing costs in any given case.  Many  potential  customers may seek
data from Patient  Infosystems with respect to the results of its programs prior
to retaining it to develop new disease  management  or other health  information
programs. Patient Infosystems' ability to market its system to new customers may
be limited if it is unable to demonstrate successful results for its programs.

                                       8


Competition

     The market for health care  information  products and services is intensely
competitive  and we expect this  competition  to increase.  Patient  Infosystems
competes with various  companies in each of its disease target markets.  Many of
Patient   Infosystems'   competitors  have   significantly   greater  financial,
technical, product development and marketing resources than Patient Infosystems.
Furthermore,  other major information,  pharmaceutical and health care companies
not  presently  offering  disease  management  or other health care  information
services may enter the markets in which Patient  Infosystems intends to compete.
In  addition,  with  sufficient  financial  and other  resources,  many of these
competitors may provide services similar to those of Patient Infosystems without
substantial  barriers.  Patient  Infosystems  does not possess any patents  with
respect to its integrated information capture and delivery system.

     Patient  Infosystems'  competitors include specialty health care companies,
health care  information  system and software  vendors,  health care  management
organizations,  pharmaceutical  companies and other service companies within the
health care  industry.  Many of these  competitors  have  substantial  installed
customer  bases in the health care industry and the ability to fund  significant
product development and acquisition  efforts.  Patient Infosystems also competes
against other companies that provide  statistical and data management  services,
including clinical trial services to pharmaceutical companies.

     Patient Infosystems believes that the principal  competitive factors in its
market are the ability to link patients,  health care providers and payors,  and
provide the relevant health care information at an acceptable cost. In addition,
Patient  Infosystems  believes  that the  ability to  anticipate  changes in the
health care  industry  and  identify  current  needs are  important  competitive
factors.  There can be no assurance that  competitive  pressures will not have a
material adverse effect on Patient Infosystems.

Substantial Fluctuation in Quarterly Operating Results

     Patient  Infosystems'  results of operations have fluctuated  significantly
from quarter to quarter as a result of a number of factors, including the volume
and timing of sales and the rate at which customers implement disease management
and  other  health  information   programs  within  their  patient  populations.
Accordingly,  Patient  Infosystems'  future  operating  results are likely to be
subject to variability  from quarter to quarter and could be adversely  affected
in any particular quarter.

Dependence on Data Processing and Telephone Equipment

     The business of Patient Infosystems is dependent upon its ability to store,
retrieve,  process  and  manage  data  and to  maintain  and  upgrade  its  data
processing  capabilities.  Interruption of data processing  capabilities for any
extended length of time, loss of stored data, programming errors, other computer
problems or  interruptions  of telephone  service could have a material  adverse
effect on the business of Patient Infosystems.

                                       9


Quality Control

     Patient  Infosystems  has developed  quality control  measures  designed to
insure that information obtained from patients is accurately  transcribed,  that
reports covering each patient contact are delivered to health care providers and
patients  and  that  Patient   Infosystems'   personnel  and   technologies  are
interacting  appropriately  with  patients  and health care  providers.  Quality
control systems include random monitoring of telephone calls, patient surveys to
confirm patient  participation and effectiveness of the particular program,  and
supervisory reviews of telephone agents.

Patient  Infosystems  may have  difficulty  integrating the business of ACS with
existing operations

     The  acquisition of ACS will involve the  integration of a company that has
previously  operated  in an  entirely  different  business  than that of Patient
Infosystems.  Patient  Infosystems  cannot  assure you that the  integration  of
Patient Infosystems with ACS will be successfully completed without encountering
difficulties  or  experiencing  the  loss  of  key  Patient  Infosystems  or ACS
employees,  customers or suppliers,  or that the benefits from such  integration
will be realized.  In addition,  Patient  Infosystems cannot assure you that the
management  teams of ACS and Patient  Infosystems  will be able to  successfully
work with each other.

Government Regulation

     The  health  care  industry,  including  the  current  business  of Patient
Infosystems and the expanded  operations of Patient  Infosystems,  including the
business  of ACS,  is subject to  extensive  regulation  by both the Federal and
state  governments.  A number  of  states  have  extensive  licensing  and other
regulatory  requirements  applicable  to  companies  that  provide  health  care
services.  Additionally,  services  provided to health  benefit plans in certain
cases are subject to the provisions of the Employee  Retirement  Income Security
Act of 1974, as amended ("ERISA") and may be affected by other state and Federal
statutes.  Generally,  state laws  prohibit the practice of medicine and nursing
without a license.  Many  states  interpret  the  practice of nursing to include
health  teaching,  health  counseling,  the provision of care  supportive to, or
restorative  of,  life and well  being and the  execution  of  medical  regimens
prescribed by a physician.  Accordingly,  to the extent that Patient Infosystems
assists  providers in improving  patient  compliance by  publishing  educational
materials  or  providing  behavior  modification  training  to  patients,   such
activities could be deemed by a state to be the practice of medicine or nursing.
Although Patient Infosystems has not conducted a survey of the applicable law in
all 50 states, it believes that it is not engaged in the practice of medicine or
nursing.  There  can  be  no  assurance,   however,  that  Patient  Infosystems'
operations  will not be challenged as  constituting  the unlicensed  practice of
medicine or nursing.  If such a challenge were made  successfully  in any state,
Patient  Infosystems could be subject to civil and criminal penalties under such
state's law and could be required to restructure its contractual arrangements in
that state.  Such  results or the  inability  to  successfully  restructure  its
contractual  arrangements  could  have a  material  adverse  effect  on  Patient
Infosystems.

                                       10


     Patient  Infosystems is subject to state laws governing the confidentiality
of patient information. A variety of statutes and regulations exist to safeguard
privacy and  regulating the  disclosure  and use of medical  information.  State
constitutions  may provide  privacy rights and states may provide private causes
of action for  violations  of an  individual's  "expectation  of privacy."  Tort
liability  may  result  from   unauthorized   access  and  breaches  of  patient
confidence. Patient Infosystems intends to comply with state law and regulations
governing medical information privacy.

     In  addition,  on August 21,  1996  Congress  passed  the Health  Insurance
Portability  and  Accountability  Act of  1996  ("HIPAA"),  P.L.  104-191.  This
legislation  required  the  Secretary  of the  Department  of  Health  and Human
Services to adopt national standards for electronic health  transactions and the
data  elements  used in such  transactions.  The  Secretary is required to adopt
safeguards  to  ensure  the  integrity  and   confidentiality   of  such  health
information.  Violation of the standards is punishable by fines and, in the case
of negligent or  intentional  disclosure  of  individually  identifiable  health
information,  imprisonment. The Secretary has promulgated final rules addressing
the  standards,  however,  the  implementation  time line  extends into 2003 and
beyond.  Although Patient Infosystems intends to comply with all applicable laws
and regulations  regarding medical information  privacy,  failure to do so could
have an adverse effect on Patient Infosystems' business.

     Patient  Infosystems  and its customers may be subject to Federal and state
laws and regulations that govern financial and other  arrangements  among health
care providers.  These laws prohibit  certain fee splitting  arrangements  among
health care  providers,  as well as direct and indirect  payments,  referrals or
other  financial  arrangements  that are  designed  to induce or  encourage  the
referral of patients to, or the  recommendation  of, a  particular  provider for
medical  products  and  services.  Possible  sanctions  for  violation  of these
restrictions include civil and criminal penalties. Specifically, HIPAA increased
the  amount  of civil  monetary  penalties  from  $2,000  to  $10,000.  Criminal
penalties range from misdemeanors, which carry fines of not more than $10,000 or
imprisonment for not more than one year, or both, to felonies, which carry fines
of not more than $25,000 or imprisonment  for not more than five years, or both.
Further,  criminal violations may result in permanent  mandatory  exclusions and
additional  permissive  exclusions from  participation  in Medicare and Medicaid
programs.

     Furthermore,  Patient  Infosystems  and its  customers  may be  subject  to
federal  and  state  laws and  regulations  governing  the  submission  of false
healthcare claims to the government and private payers.  Possible  sanctions for
violations of these laws and regulations include minimum civil penalties between
$5,000-$10,000 for each false claim and treble damages.

                                       11


     Regulation  in the  health  care  field  is  constantly  evolving.  Patient
Infosystems is unable to predict what government regulations,  if any, affecting
its business may be promulgated  in the future.  Patient  Infosystems'  business
could be  adversely  affected by the  failure to obtain  required  licenses  and
governmental  approvals,  comply  with  applicable  regulations  or comply  with
existing or future laws, rules or regulations or their interpretations.

Significant and Extensive Changes in the Health Care Industry

     The health care  industry is subject to changing  political,  economic  and
regulatory  influences that may affect the procurement  practices and operations
of health care industry participants. Several lawmakers have announced that they
intend to propose programs to reform the U.S. health care system. These programs
may contain proposals to increase governmental involvement in health care, lower
reimbursement  rates and otherwise change the operating  environment for Patient
Infosystems and its targeted  customers.  Health care industry  participants may
react to these  proposals  and the  uncertainty  surrounding  such  proposals by
curtailing  or  deferring  certain  expenditures,  including  those for  Patient
Infosystems'  programs.  Patient Infosystems cannot predict what impact, if any,
such changes in the health care industry  might have on its business,  financial
condition and results of operations. In addition, many health care providers are
consolidating  to create larger health care  delivery  enterprises  with greater
regional market power. As a result, the remaining enterprises could have greater
bargaining  power,  which  may lead to price  erosion  of  Patient  Infosystems'
programs.  The failure of Patient  Infosystems to maintain adequate price levels
could have a material adverse effect on its business.

Dependence on Customers for Marketing and Patient Enrollment

     Patient Infosystems has limited financial, personnel and other resources to
undertake extensive marketing  activities.  One element of Patient  Infosystems'
marketing strategy involves marketing specialized disease management programs to
pharmaceutical  companies and managed care  organizations,  with the intent that
those  customers will market the program to parties  responsible for the payment
of health care costs,  who will enroll  patients in the  programs.  Accordingly,
Patient  Infosystems,  will to a degree,  be dependent upon its customers,  over
whom it has no control, for the marketing and implementation of its programs and
for the receipt of valid patient  information.  The timing and extent of patient
enrollment is completely within the control of Patient  Infosystems'  customers.
Patient   Infosystems  has  faced  difficulty  in  receiving   reliable  patient
information from certain  customers,  which has hampered its ability to complete
certain of its projects.  To the extent that an adequate  number of patients are
not enrolled in the program,  or enrollment of initial patients by a customer is
delayed for any reason,  Patient  Infosystems'  revenue may be  insufficient  to
support its activities.

                                       12


Control of Patient Infosystems

     The  executive  officers,  directors  and certain  stockholders  of Patient
Infosystems who  beneficially  own in the aggregate  approximately  87.5% of the
outstanding  common  stock  control  Patient  Infosystems.  As a result  of such
ownership,  these  stockholders,  in the event  they act in  concert,  will have
control  over the  management  policies of Patient  Infosystems  and all matters
requiring  approval by the  stockholders of Patient  Infosystems,  including the
election of directors.

Potential Liability and Insurance

     Patient  Infosystems will provide  information to health care providers and
managed care organizations upon which determinations affecting medical care will
be made.  As a result,  it could share in potential  liabilities  for  resulting
adverse medical consequences to patients. In addition, Patient Infosystems could
have  potential  legal  liability in the event it fails to record or disseminate
correctly  patient  information.  Patient  Infosystems  maintains  an errors and
omissions  insurance policy with coverage of $5 million in the aggregate and per
occurrence.  Although Patient Infosystems does not believe that it will directly
engage in the  practice of medicine or direct  delivery of medical  services and
has not  been a party  to any  such  litigation,  it  maintains  a  professional
liability  policy  with  coverage  of  $5  million  in  the  aggregate  and  per
occurrence.  There can be no assurance that Patient Infosystems'  procedures for
limiting liability have been or will be effective, that Patient Infosystems will
not be subject to litigation  that may  adversely  affect  Patient  Infosystems'
results of operations, that appropriate insurance will be available to it in the
future at acceptable cost or at all or that any insurance  maintained by Patient
Infosystems  will  cover,  as to scope or amount,  any  claims  that may be made
against Patient Infosystems.

Intellectual Property

     Patient Infosystems considers its methodologies,  processes and know-how to
be proprietary. Patient Infosystems seeks to protect its proprietary information
through  confidentiality  agreements  with its employees.  Patient  Infosystems'
policy is to have employees enter into  confidentiality  agreements that contain
provisions  prohibiting  the  disclosure of  confidential  information to anyone
outside  Patient  Infosystems.  In addition,  the policy  requires  employees to
acknowledge,  and,  if  requested,  assist in  confirming  Patient  Infosystems'
ownership of any new ideas,  developments,  discoveries or inventions  conceived
during employment, and requires assignment to Patient Infosystems of proprietary
rights to such matters that are related to Patient Infosystems' business.


          SPECIAL CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

     This  prospectus  contains  many  forward-looking  statements  that involve
substantial  risks and  uncertainties.  You can  identify  these  statements  by
forward-looking words such as "may," "will," "expect," "anticipate,"  "believe,"
"estimate,"  and "continue" or similar words.  You should read  statements  that
contain  these words  carefully  because they  discuss our future  expectations,
contain  projections  of  our  future  operating  results  or of  our  financial
condition or state other "forward-looking" information.

                                       13


     We believe in the importance of  communicating  our future  expectations to
our investors. However, we may be unable to accurately predict or control events
in the future.  The factors listed in the sections  captioned "Risk Factors" and
"Management's  Discussion  and  Analysis or Plan of  Operation,"  as well as any
other  cautionary  language  in this  prospectus,  provide  examples  of  risks,
uncertainties  and events that may cause our actual results to differ materially
from the expectations we describe in our forward-looking statements.


                                 USE OF PROCEEDS

     We will not  receive  any  proceeds  from the sale of  common  stock by the
selling  stockholders.  We  will  receive  proceeds  upon  the  exercise  of any
warrants.  If all of the selling stockholders exercise all of their warrants for
cash, we will receive an aggregate of $162,500.  We will use such funds, if any,
for working capital and general corporate purposes.


            MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     During  the fiscal  years  ended  December  31,  2002 and 2003 and  through
January 9, 2004,  our common stock  traded on the OTC  Bulletin  Board under the
symbol  PATI.  From  January 12,  2004,  our common  stock has traded on the OTC
Bulletin  Board under the symbol PATY. The closing price for our common stock on
May 5, 2004 was $2.80.

     The following  table sets forth,  for the periods  indicated,  the range of
high and low bid  quotations for shares of our common stock as quoted on the OTC
Bulletin Board. The reported bid quotations reflect inter-dealer prices, without
retail markup, markdown or commissions, and may not necessarily represent actual
transactions.  Information  contained  herein gives effect to a 1 for 12 reverse
stock split effected at the close of business on January 9, 2004.


                  High      Low
2002

First Quarter     $2.40     $0.72
Second Quarter    $2.40     $1.44
Third Quarter     $3.60     $1.08
Fourth Quarter    $6.12     $0.96

2003

First Quarter     $3.12     $1.68
Second Quarter    $3.00     $0.96
Third Quarter     $3.00     $0.96
Fourth Quarter    $4.08     $1.32


                                       14


Holders of common stock

     As of February 27, 2004,  there were  approximately 89 holders of record of
our common stock.

Dividends

     We have never paid or declared a cash dividend on our common stock.

     We are obligated to declare 9% cumulative dividends on our 75,000 shares of
Series C  Cumulative  Convertible  Preferred  Stock that was issued on March 31,
2000 and our 840,118 shares of Series D Cumulative  Convertible  Preferred Stock
that was issued between April 2003 and January 2004.




                      Equity Compensation Plan Information

-------------------------------------------- --------------------- ---------------- ------------------------
                                                  Number of        Weighted-average      Number of
                                              securities to be       exercise            securities
                                               issued upon the       price of       remaining available
                                                 exercise of        outstanding     for future issuance
                                                 outstanding         options,           under equity
                                              options, warrants    warrants and      compensation plans
                                                 and rights           rights             (excluding
                                                                                         securities
                                                                                    reflected in column
                                                     (a)
                                                                                            (b)
                                                                                            (a))
                                                                                            (c)
-------------------------------------------- --------------------- ---------------- ------------------------
Equity compensation plans approved by
                                                                                      
securities holders                                      101,160           $9.36                3,376,917
-------------------------------------------- --------------------- ---------------- ------------------------
Equity compensation plans not approved
by securities holders
-------------------------------------------- --------------------- ---------------- ------------------------
Total                                                   101,160           $9.36                3,376,917
-------------------------------------------- --------------------- ---------------- ------------------------


                                       15


Description of Business

General

     Patient Infosystems,  Inc. ("Patient  Infosystems") was incorporated in the
State of Delaware on  February  22, 1995 under the name DSMI Corp.,  changed its
name to Disease State Management, Inc. on October 13, 1995, and then changed its
name to  Patient  Infosystems,  Inc.  on June  28,  1996.  Patient  Infosystems'
principal executive offices are located at 46 Prince Street, Rochester, New York
14607 and its telephone number is 585-242-7200.  Patient  Infosystems'  Internet
address is www.ptisys.com.

     Patient   Infosystems  is  a  health  management   solutions  company  that
integrates  clinical  expertise  with  advanced  Internet,  call center and data
management  capabilities.  Founded  in 1995  as a  disease  management  company,
Patient  Infosystems has evolved to offer a comprehensive  portfolio of products
and services  designed to improve patient clinical outcomes and quality of life,
reduce healthcare costs and facilitate  patient-provider-  payor  communication.
These products are now marketed under the label Care Team Connect for Health.

     Patient Infosystems has historically marketed its services to a broad range
of  clients,   including  self-insured  employers  and  trust  funds,  insurance
companies,  pharmaceutical  and  medical  equipment  and  device  manufacturers,
pharmacy benefit managers  ("PBMs"),  other healthcare  payors,  such as managed
care  organizations  ("MCOs") and  healthcare  providers,  including  integrated
delivery  networks   ("IDN's").   Current  marketing  efforts  are  targeted  to
self-insured  employers,  employer  groups,  union health and welfare funds, and
others who pay for the health care of defined populations.

     During its first two years of operations,  Patient  Infosystems  emphasized
the  development  of pure disease  management  programs,  which  accounted for a
substantial  portion of its revenue  through 1997.  However,  beginning in 1998,
Patient Infosystems devoted resources to the development of broader applications
of its  technology  platform,  and its  additional  products grew to account for
nearly 45% of the total  revenue of Patient  Infosystems  during the fiscal year
ended December 31, 2002.  During 2003, the Company further  expanded its product
mix to include  services in support of providers and their clinical  improvement
efforts.   These  services  include  support  for   development,   training  and
maintenance of clinical registry software,  consultative services in improvement
methodologies and support of web-based informational and reporting resources. On
December  31,  2003,  Patient  Infosystems   acquired  the  assets  of  American
Caresource  Corporation  ("ACS").  ACS provides  ancillary  benefits  management
services,  including a network of ancillary  specialty providers and value-added
services  that  assist  our  clients  control  the cost of a range of  ancillary
medical services.

     The Care Team Connect portfolio now represents 40% percent of the Company's
revenue;  innovation and improvement services for providers represent 60% of the
2003 revenue.


                                       16


Products and Capabilities

Care Team Connect for Health

     Care Team  Connect  for  Health,  which is Patient  Infosystems'  principal
product line, provides a complete solution for population health management that
can be marketed as a comprehensive  solution or a set of discrete  services that
complement a client's existing operations. Care Team Connect integrates a number
of components that had historically  been marketed by the Company as stand alone
products.  During the 2002 year,  the clinical  content of these  components was
revised and all  components  were  migrated to an updated  technology  platform.
During  2003,  the Care Team  Connect  product was  expanded to include  certain
wellness  services,  as well  as  utilization  management  and  case  management
services, provided through subcontract relationships with partner organizations.
Care Team Connect includes the following:

o        24-hour nurse help/triage line,
o        Population analysis and identification,
o        Disease management services,
o        Care management,
o        Smoking cessation program,

     Nurse help line

          The Care Team Connect for Health nurse help line is a triage,  advice,
     referral and health-counseling  service that provides employees and members
     with  round-the-clock  access to registered nurses who use  algorithm-based
     assessment  tools and have access to provider  and/or network  information.
     The help line can provide users with  information  about a specific  health
     problems or answers to their  health-related  questions.  Use of nationally
     recognized  clinical  algorithms  assist  callers in  determining  the most
     cost-effective  options for acute care treatment and has  effectively  been
     able to  reduce  the use of  emergency  rooms  and  after  hours  physician
     contact.  Through the Nurse Help Line,  individuals  may also be identified
     for referral into disease management or case management  intervention.  The
     nurse help line is operated from Patient  Infosystems'  Utilization  Review
     Accreditation Commission ("URAC") accredited call center.

     Population analysis and identification

          As  part  of its  disease  management  services,  Patient  Infosystems
     provides  comprehensive  medical and  pharmaceutical  claims  analysis that
     includes the administration of proprietary  algorithms to identify patients
     with  chronic  disease and then  stratifies  them by level of risk for high
     resource utilization.

                                       17


          The  stratification  algorithm  employed is  categorical  in nature as
     patients are classified into low,  moderate,  high and critical  groupings.
     The data  employed in the  algorithm  are both  nominal  (using claim codes
     known as "ICD9" and  procedure  codes  known as "CPT") and ratio  (usage of
     resources).  The nominal  data  determines  the  presence  of a  particular
     chronic condition and thus identifies patients with a specific condition. A
     combination  of the nominal and ratio data, as defined in the algorithm for
     each condition, determines the risk level for the individual patient.

          Following identification and stratification, patients/employees can be
     enrolled into the appropriate  (low,  moderate or high) disease  management
     intervention program.

          The first  time the  claims  analysis  is  completed  on the  client's
     historical  claims data,  the client will be provided with a summary report
     that  profiles  its  population  as related to health care  dollars  spent,
     prevalence  of disease,  and the numbers of identified  at-risk  members by
     risk  level.  Claims  data is used on a  retrospective  basis to assess the
     financial  impact of the Care Team Connect  programs and calculate  savings
     and return on investment.

     Disease management services

          Patient  Infosystems'  disease  management  services  are provided for
     individuals  with  a  diagnosis  of  asthma,  diabetes,   hypertension,  or
     congestive heart failure.  These services are comprehensive in approach and
     focus on both the medical  and  behavioral  aspects of chronic  health care
     management.  The programs involve clinical  assessments and the delivery of
     messages on  self-care,  medication  compliance  and  treatment  adherence.
     Through monitoring and on-going  assistance,  they empower the participants
     to become  more  proficient  and  proactive  in managing  their  disease or
     condition. By including 24-hour access to the nurse help line, participants
     always have a place to turn for  questions  or issues that arise with their
     disease.  The long-term  goal of Patient  Infosystems'  disease  management
     services is a judicious use of health care  resources  through  health care
     education, as well as reinforcement of the provider's treatment plan.

          The disease  management  programs are based on  nationally  recognized
     treatment   guidelines  for  each  disease  state.   The  programs  provide
     condition-specific  assessment,  support and education with  behavior-based
     interventions  according to the patient's  identified  risk level.  Each of
     Patient  Infosystems' chronic condition management programs is reviewed and
     updated as needed on an annual basis to assure that these programs  reflect
     current knowledge and practices in clinical management.

                                       18


          Disease management  interventions include various components according
     to the  risk  level  of the  target  individual.  These  components  are as
     follows:

     --------------- -----------------------------------------------------
                     o  Quality of life surveys
     Low risk:       o  Reminders
                     o  Static educational mailings
                     o  24-hour nurse help line
     --------------- -----------------------------------------------------
                     o  Nurse engagement
     Moderate risk:  o  Quality of life surveys
                     o  Chronic condition management program
                     o  Reminders
                     o  Static educational mailings
                     o  24-hour nurse help line
     --------------- -----------------------------------------------------
                     o  Nurse engagement
     High risk:      o  Quality of life surveys
                     o  "Gold" chronic condition management program
                     o  Telemonitoring signs and symptoms assessment
                     o  Reminders
                     o  Static educational mailings
                     o  24-hour nurse help line
     --------------- -----------------------------------------------------
                     o  Dedicated registered nurse as disease care
     Critical risk:       manager
                     o  Baseline clinical assessment and treatment
                          action plan
                     o  Regularly scheduled on-going clinical patient
                          assessments
     --------------- -----------------------------------------------------

     Disease management program components

     Nurse engagement call

          All moderate, high and critical risk disease management programs begin
     with a nurse  engagement  call.  The  nurse  care  counselor  explains  the
     specific  program for which the member is targeted  and the benefits of the
     program,  while starting to build a relationship with the member. The nurse
     care counselor confirms the patient's acceptance to participate and obtains
     pertinent member information.

          The nurse intervention  assesses specific areas of clinical management
     based on national clinical practice  guidelines.  Specific to each disease,
     these include the following types of information:

     o Healthcare utilization.
     o Disease status.
     o Functional status.
     o Quality of care.
     o Treatment adherence and self-care practices.
     o Education/knowledge.
     o Motivation and program evaluation.

                                       19


          The  assessment  focuses on the most  important  health  behaviors the
     patient  must  manage in order to  effectively  control  symptoms  of their
     disease.

     Chronic condition management program

          Moderate  risk   patients  are  enrolled  in  our  chronic   condition
     management  programs.  Each of the chronic  condition  management  programs
     utilize a  combination  of  telephone  and mail  interventions  to  monitor
     patients while providing  educational  information  about  disease-specific
     treatment guidelines.

          By providing unique,  individually tailored  intervention  strategies,
     Patient  Infosystems  provides each patient with personalized,  educational
     feedback  and positive  reinforcement,  both  verbally and through  written
     communication.  Each  telephonic  intervention  also generates an on-demand
     published report for the patient's physician/case manager.

     "Gold" chronic condition management program

          High risk  patients  are  enrolled  in our  "gold"  chronic  condition
     management  program.  The "gold" program  includes all of the components of
     the chronic condition  management programs described  previously,  plus the
     incorporation of symptom assessment and monitoring  throughout the duration
     of the contract.

     Quality of life re-assessment and on-going monitoring

          Quality  of life  surveys  are  periodically  administered  to  assess
     patients' functional status.

     Educational mailings

          During  the  re-assessment  and  on-going  monitoring  portion  of the
     program,   patients  receive   disease-specific   educational  or  reminder
     mailings.

     Reminders

          Patients are periodically  reminded of preventive measures they should
     take to better manage their health.


     Disease care management for critical risk patients

          Disease care management is a specialized  clinical  intervention.  The
     highly  specialized  clinical  support by a registered  nurse  provides the
     management  and  coordination  of patient care  services for  critical-risk
     individuals in a population.

                                       20


     The program's key functions are the following:

     1.   One-on-one support by a dedicated registered nurse.

     2.   Establishing an extensive  baseline clinical  assessment and treatment
          action plan.

     3.   Regularly scheduled on-going clinical patient assessments that include
          extensive disease monitoring and surveillance.

          All facets of the individual's care are  comprehensively and regularly
     reviewed by the disease care manager and regular communication is made with
     all members of the health care team.

          At any point during a disease  care  management  intervention,  if the
     patient is assessed to require even more intense management, the Nurse will
     connect the patient with traditional case management.

     Care management services

          Care  management   programs  include  the  components  of  utilization
     management and case management and ensure that participants receive quality
     medical care at the best possible  price,  while  maximizing plan benefits.
     The programs assist in avoiding unnecessary expenditures with an objective,
     information-intensive   approach  that  combines   clinical  judgment  with
     accepted practice patterns.

          Care  management  services  are  provided  through  subcontracts  with
     partner  companies that are accredited by URAC. All policies and procedures
     reflect  compliance with URAC standards and are further developed to ensure
     compliance  with  the  legislative  requirements  of the  states  in  which
     utilization review functions are performed.

          The data collected from the Care Team Connect for Health interventions
     is stored in an integrated  information  warehouse which links the numerous
     programs and services.  This integrated data warehouse  allows our clients,
     the patient's  providers and other associated  service  providers access to
     program data as necessary in order to best manage the member's health.

     Smoking Cessation Services

          During  2003,  Patient  Infosystems  began  providing  the call center
     operations for a smoking  cessation  program which is owned by and marketed
     by Behavioral Solutions. Patient Infosystems has the right to independently
     market this program for direct sales.

                                       21


Provider innovation and improvement support

     In 2003,  Patient  Infosystems  expanded  its role in  services  to certain
federally  funded  health  centers  that are  sponsored by the Bureau of Primary
Healthcare through the Institute for Healthcare Improvement that promote disease
management programs directly to the providers in the health centers.

Population Health Disease Management Systems and Strategies

     Patient  Infosystems  provides  technical  assistance to the health centers
relative to management of chronic disease.  This includes  organizations such as
the federal government,  health plans, state primary care associations,  and the
National Association of Community Health Centers.

Learning Organization Services

     Patient Infosystems serves as a teaching organization promoting improvement
in care delivery systems. This includes logistics support for learning sessions,
training;  recruitment,  development  and  support of  faculty,  subject  matter
experts in key topics;  training in improvement methods and knowledge management
of best practices. Topics include chronic disease management, idealized clinical
practice  design and the business  case for planned  care.  Patient  Infosystems
collaborates with the Institute for Healthcare Improvement on such initiatives.

Technical assistance

     Patient  Infosystems  assists with the  development of clinical  registries
used  to  more  effectively  manage  patients  with  chronic  disease.   Patient
Infosystems  services  include (i) project  management and  Implementation  of a
patient  registry for  federally  qualified  health  centers  through a national
initiative  known as the  Health  Disparities  Collaboratives  and (ii)  Patient
Infosystems  provides technical  assistance in web based reporting  applications
for clinical outcomes. This project is administered as a subcontract through the
Institute for Healthcare Improvement.

Outcome Assessment, Data Collection and Reporting

     Patient  Infosystems  collects data about clinical,  financial,  quality of
life and satisfaction. This data is analyzed and outcomes are reported.

                                       22


Ancillary benefits management

     Ancillary  healthcare  services  include  a broad  array of  services  that
supplement or support the care provided by hospitals and  physicians,  including
the  non-hospital,  non-physician  services  associated  with  surgery  centers,
free-standing  diagnostic  imaging  centers,  home health and infusion,  durable
medical  equipment,  orthotics  and  prosthetics,   laboratory  and  many  other
services.  These  ancillary  services are provided to patients as benefits under
Group Health plans and Workers Compensation plans.

                                     o OrthoticsOandaProstheticspy/Rehab
o Home Health Services               o Pain Management
o Surgical Centers                   o Pharmacy
o Laboratory Services                o Respiratory Services
o Home Infusion therapy              o Sleep Studies
o Chiropractic Services              o Sub-Acute and Skilled Nursing facilities
o Diagnostic Imaging/Radiology       o Hospice Services
o Dialysis Services                  o Bone Growth Stimulators
o Durable Medical Equipment

     ACS  manages  the  administration  of  these  non-hospital,   non-physician
services.

     Through its contracts with over 5000 ancillary service providers (with over
13,000 sites  nationwide),  ACS is able to offer its clients direct cost savings
in the form of discounted rates for contracted  services and administrative cost
savings by functioning as a single point of contact for managing a comprehensive
array of ancillary benefits. ACS benefits management services include processing
the claims submitted by its covered providers, re-pricing the claims, submitting
the claims for payment,  receiving and disbursing claims payments and performing
customer  service  functions  for its  clients  and  contracted  providers.  For
preferred provider organization  ("PPO"),  third party administrator ("TPA") and
similar  clients,  contracting  with ACS  also  allows  the  clients  to  market
comprehensive,  efficient and  affordable  ancillary  service  benefits to their
payor customers.

     As part of its ancillary benefits management services,  ancillary providers
submit claims at full retail  charges to ACS for services  performed for covered
members.  ACS  re-prices  these claims under the relevant  payor fee  schedules,
performs electronic  conversion and HIPAA formatting  services,  and submits the
re-priced claims to the appropriate payors.  After adjudication of the claims by
the Payor, the Payor issues an Explanation of Benefits and check for each claim.
In most cases,  these checks are sent to ACS. ACS then pays the providers  under
the relevant provider fee schedules. The difference between the amounts received
by ACS from its clients and the amounts paid by ACS to its contracted  providers
represents ACS gross margin on its benefits management services.

     Value-added   services  that  ACS  provides  to  its  clients  include  the
following:

     Ancillary network analysis.  ACS analyzes the available claims history from
     each client and develops a specific plan to meet their needs. This analysis
     identifies  high-volume  providers that are not already in ACS network. ACS
     attempts to contract with such  providers to maximize  discount  levels and
     capture rates.

                                       23


     Ancillary out-of-network negotiations.  For services performed by providers
     outside of the ACS network, ACS negotiates a discounted rate for the client
     on a case specific basis.

     Ancillary  custom network.  ACS customizes its network to meet the needs of
     each client. In particular, ACS reviews the "out-of-network" claims history
     through its network  analysis  service and  develops a strategy to create a
     network that efficiently serves the client's needs. This may involve adding
     additional  providers for a client and removing  providers the client wants
     excluded from their network.

     Ancillary reimbursement.  ACS uses its network analysis to develop a single
     reimbursement level for all ancillary providers. ACS also processes denials
     and appeals for its clients and for its contracted providers.

     Ancillary  network  management.  ACS  manages  ancillary  service  provider
     contracts,  reimbursement and credentialing for its clients.  This provides
     administrative  benefits to ACS clients and reduces the burden on providers
     who  typically  must  supply  credentialing  documentation  and  engage  in
     contract negotiation with separate payors.

     Ancillary   utilization   management  support.  ACS  provides  support  for
     utilization and case management efforts used by each payor. ACS facilitates
     preauthorization   at  the  point  of  referral  based  on  pre-established
     criteria.  ACS also "flags" cases for  follow-up,  review,  and  concurrent
     reviews to ensure all the payor  guidelines  are  followed by each  service
     provider  and the  efficacy  of  services  and  progress  of the patient is
     satisfactory.  There  are a large  number  of high  demand  cases  that are
     subject to case management  efforts.  For those cases, ACS helps coordinate
     the  supporting  documentation  and  preparation  of  reports to manage and
     monitor progress and establishment of reserves for specific claims.

     Ancillary  systems  integration.  ACS has  created a  proprietary  software
     system that  enables it to manage many  different  customized  accounts and
     includes the following modules:

       o Provider network management
       o Credentialing
       o Eligibility management and card printing
       o Claims and case referral management
       o Data transfer management/EDI
       o Repricing and auto-adjudication
       o Multi-level reimbursement management
       o Posting, EOB, check, and e-funds processes
       o Customer service management
       o Directory management
       o Claim repricing / adjudication
       o Advanced data reporting

                                       24


     Ancillary  reporting.  ACS  provides  a  complete  suite of reports to each
     client monthly.  The reports cover  contracting  efforts and capture rates,
     discount  levels,  referral volumes by service category and complete claims
     and utilization reports.

     Ancillary  claims  management.  ACS  provides  claims  management  services
     through its  operation  in  Pittsboro,  Indiana.  ACS can manage  ancillary
     claims flow,  both  electronic  and paper,  and integrate into the client's
     process  electronically  or through  repriced  paper  claims.  ACS can also
     perform a number of customized processes that add additional value for each
     client.  As  part  of  the  claims  management  process,  ACS  manages  the
     documentation   requirements  specific  to  each  payor.  When  claims  are
     submitted from the service  provider without  required  documentation,  ACS
     works with the provider to get the  documentation  so that the claim is not
     denied by the payor. This also saves labor costs for the payors.

     ACS estimates  that at least 80% of all claims in ACS ancillary  categories
     are submitted by paper.  ACS is able to provide a conversion of these paper
     claims into the  HIPAA-compliant  Electronic Data Interchange  ("EDI") form
     through its scanning operations.

Sales and Marketing

     Through  1997,  Patient  Infosystems'  efforts  focused  primarily  on  the
development  of  disease  management   programs.   Beginning  in  1998,  Patient
Infosystems began aggressively  marketing the other services that its technology
platform  can   provide,   including   demand   management,   patient   surveys,
pharmaceutical  support  programs and outcomes  analysis.  During 2002 and 2003,
Patient  Infosystems  has marketed its  integrated  Care Team Connect for Health
product.  Its  target  market  is the  organization  that pays for  health  care
services on behalf of its members,  employees or  beneficiaries.  These industry
organizations  include  several  groups:   insurance  companies,   managed  care
organizations,  third  party  administrators  (TPA's),  Taft-Hartley  health and
welfare funds, purchasing coalitions, and self-funded employer groups.

     Sales and marketing  efforts for the ACS product line are currently focused
on healthcare payor organizations as well as certain  value-added  re-sellers in
the form of TPAs or PPOs. ACS spent several years developing its business model,
know-how,  infrastructure,  client base and  provider  base and until 2001,  ACS
focused on managing  ancillary benefits in the Workers  Compensation  market. In
early 2001, ACS expanded and refocused its business to address the management of
ancillary  benefits in the Group  Health  market.  It launched  its Group Health
initiatives by marketing to healthcare networks such as TPAs and PPOs. As of the
end of 2003,  ACS began to focus  its  marketing  efforts  on the  direct  payor
community.  This is in  alignment  with the  marketing  focus  for the Care Team
Connect product line.

                                       25


     Patient Infosystems  currently employs a sales and marketing staff of three
persons to market its services. The Ancillary Network of ACS is marketed through
one full time sales  person and  independent  contractors  providing  additional
commission salespersons. In addition, the senior members of Patient Infosystems'
management are actively engaged in marketing Patient Infosystems' programs.

     Patient  Infosystems has agreements in place with several  organizations to
co-market Patient  Infosystems'  products and services.  These agreements are in
place with CBCA,  formerly USI  Administrators,  Inc.,  Gilsbar,  and Behavioral
Solutions. CBCA and Gilsbar are third-party administrators; Behavioral Solutions
is a subsidiary of Nelson Communications and the developers of the Quitting Your
Way  smoking  cessation  program.  These  agreements  permit  either  company to
co-market and sub-contract for the services of the other company.

Competition

     The market for health care  information  products and services is intensely
competitive.  Competitors  vary in size and in scope and breadth of products and
services  offered,  and Patient  Infosystems  competes with various companies in
each of its disease target markets.  Patient  Infosystems'  competitors  include
specialty  health care companies,  health care  information  system and software
vendors,  health care  management  organizations,  pharmaceutical  companies and
other  service  companies  within  the  health  care  industry.  Many  of  these
competitors  have  substantial  installed  customer  bases  in the  health  care
industry and the ability to fund significant product development and acquisition
efforts.  Patient Infosystems also competes against other companies that provide
statistical and data management  services,  including clinical trial services to
pharmaceutical companies.

Research and Development

     Research and development  expenses consist  primarily of salaries,  related
benefits and administrative costs allocated to Patient Infosystems' research and
development  personnel.  These personnel are actively involved in the conversion
of Patient  Infosystems'  technology  platform  to a fully  web-enabled  design.
Patient Infosystems' research and development expenses were $131,782, or 2.3% of
total revenues for the fiscal year ended December 31, 2003, $105,614, or 4.5% of
total  revenues,  for the fiscal year ended December 31, 2002, and $190,731,  or
12.0%, of total revenues,  for the fiscal year ended December 31, 2001.  Patient
Infosystems  anticipates  that the amount spent on research and development will
remain  relatively  constant  in future  periods as it  continues  its  internal
process to update its products.

Government Regulation

     The  health  care  industry,  including  the  current  business  of Patient
Infosystems and the expanded  operations of Patient  Infosystems,  including the
business of ACS, following the closing of the acquisition described in the Asset
Purchase Agreement,  is subject to extensive  regulation by both the Federal and
state  governments.  A number  of  states  have  extensive  licensing  and other
regulatory  requirements  applicable  to  companies  that  provide  health  care
services.  Additionally,  services  provided to health  benefit plans in certain
cases are subject to the provisions of the Employee  Retirement  Income Security
Act of 1974, as amended ("ERISA").

                                       26


     Furthermore,  state laws govern the  confidentiality of patient information
through statutes and regulations that safeguard privacy rights. In addition,  on
August  21,  1996  Congress   passed  the  Health   Insurance   Portability  and
Accountability Act of 1996 ("HIPAA"),  P.L. 104-191.  This legislation  required
the Secretary of the  Department of Health and Human  Services to adopt national
standards for electronic health  transactions and the data elements used in such
transactions.  Patient  Infosystems  and its customers may be subject to Federal
and state laws and  regulations  that govern  financial  and other  arrangements
among health care providers.  Furthermore, Patient Infosystems and its customers
may be  subject  to  federal  and  state  laws  and  regulations  governing  the
submission of false  healthcare  claims to the  government  and private  payers.
Possible sanctions for violations of these laws and regulations  include minimum
civil penalties between $5,000-$10,000 for each false claim and treble damages.

     Threrefor,   Patient   Infosystems  must  continually   adapt  to  changing
regulations. If Patient Infosystems' fails to comply with these applicable laws,
the company may be subject to fines, civil penalties, or criminal prosecution.

Employees

     As of March 1, 2004, Patient  Infosystems had 90 full time and 37 part-time
employees.

Legal Proceedings

     Neither Patient Infosystems, nor any of its subsidiaries, is a party to any
material legal proceeding,  nor, to the knowledge of Patient Infosystems, is any
such proceeding threatened against it or any of its subsidiaries.


           MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

     The following  discussion of our financial  condition and plan of operation
should be read in  conjunction  with our  financial  statements  and the related
notes included  elsewhere in this prospectus.  This prospectus  contains certain
statements of a  forward-looking  nature relating to future events or our future
financial  performance.  We caution  prospective  investors that such statements
involve  risks and  uncertainties,  and that actual events or results may differ
materially.   In  evaluating  such  statements,   prospective  investors  should
specifically  consider  the  various  factors  identified  in  this  prospectus,
including  the matters set forth under the caption  "Risk  Factors"  which could
cause  actual  results  to  differ  materially  from  those  indicated  by  such
forward-looking  statements.  We disclaim any  obligation to update  information
contained in any forward-looking statement.

                                       27


Overview

     Patient  Infosystems  was formed on February  22,  1995.  Although  Patient
Infosystems  has completed the development of its core systems and has developed
several disease management  programs for specific diseases,  Patient Infosystems
is continuing  to refine its products for  additional  applications.  In October
1996,  Patient  Infosystems  began  enrolling  patients  in  its  first  disease
management  program and began substantial  patient contacts during 1998. Also in
1998,  Patient  Infosystems  expanded  its offered  products  to include  demand
management and health related surveys.

     On December 31, 2003, Patient  Infosystems  acquired  substantially all the
assets and  liabilities  of American  Caresource  Corporation  in  exchange  for
1,100,000  shares of  Patient  Infosystems  common  stock.  Patient  Infosystems
created a wholly-owned subsidiary, American Caresource Holdings, Inc. ("ACS"), a
Delaware corporation, and assigned the acquired assets and liabilities into this
subsidiary,  net of certain amounts which represented borrowings between Patient
Infosystems and American Caresource Corporation. ACS enters into agreements with
the   providers   of   ancillary   services   pursuant  to  which  ACS  provides
administrative   services  for  its  contracted  providers,   including  patient
scheduling  services,  call center services,  payor  contracting  services,  and
billing and collection services.  ACS also enters into agreements with preferred
provider organizations ("PPOs"),  third party administrators  ("TPAs"),  workers
compensation  benefits  administrators,   utilization  review  companies,   case
management  companies  and  other  healthcare  networks  pursuant  to which  ACS
provides ancillary benefits management services for these payor clients.

     Because the  acquisition  of assets and the  operation  of ACS  occurred on
December 31, 2003,  the 2003  consolidated  statement of  operations  of Patient
Infosystems does not include any ACS operational  results.  Patient  Infosystems
acquired  $1,118,567 of assets and assumed $2,368,327 of liabilities,  resulting
in a  deficiency  on the fair value of the net assets  acquired  of  $1,249,760.
During 2004, Patient  Infosystems will complete an independent  valuation of the
identifiable intangible assets acquired and any changes to the estimated amounts
will be offset by a corresponding change in goodwill.

     Patient Infosystems  currently has patients enrolled in more than 30 of its
disease-specific, demand management or survey programs. Through January 2004, an
aggregate of over 775,000  persons have been enrolled or participated in Patient
Infosystems'  programs.  Patient  Infosystems  has  never  been able to enroll a
sufficient number of patients to cover the administrative  cost of the business.
The enrollment of patients in Patient Infosystems'  programs has been limited by
several  factors,  including the limited  ability of clients to provide  Patient
Infosystems  with  accurate  information  with respect to the  specific  patient
populations and coding errors that necessitated  extensive  labor-intensive data
processing prior to program implementation.

                                       28


     In response to these market dynamics, Patient Infosystems has taken several
tactical and strategic steps including, formal designation of internal personnel
at customer sites to assist clients with  implementation;  closer integration of
Patient  Infosystems' systems personnel with clients to facilitate accurate data
transfers;  promotion  of a  broader  product  line to enable  clients  to enter
Patient  Infosystems' disease management programs through a variety of channels;
fully  integrating  demand,  disease and case management  services to facilitate
internal mechanisms for patient referrals and providing the customers access and
control over their patients'  confidential  information  through targeted use of
Internet  technology.  The  clinical  design of the programs has been refined to
enable participation  through mail only, retaining those patients who previously
would have been unable to participate because of missing or inaccurate telephone
contact information. Patient Infosystems' demand management services and surveys
(general  health  and   disease-specific),   can  also  provide  mechanisms  for
enrollment  into  Patient  Infosystems'  disease  management  programs.  Patient
Infosystems  continues to develop capabilities or relationships that will enable
its  customers  to more  effectively  leverage  the data stored in their  legacy
systems.  Nevertheless,  no  assurance  can be given that  Patient  Infosystems'
efforts will succeed in increasing patient enrollment in its programs.

     Patient  Infosystems  has  entered  into  service  agreements  to  develop,
implement and operate  programs for: (i) patients who have recently  experienced
certain  cardiovascular  events;  (ii)  patients  who have been  diagnosed  with
primary  congestive heart failure;  (iii) patients  suffering from asthma;  (iv)
patients   suffering  from  diabetes,   (v)  patients  who  are  suffering  from
hypertension,  (vi) demand  management,  which provides access to nurses,  (vii)
case and  utilization  management  services  provided by a third  party,  (viii)
various  survey  initiatives  which assess,  among other  things,  satisfaction,
compliance of providers or payors to national  standards,  health status or risk
of  specific  health  related  events  and  (ix)  the  performance  of  specific
administrative and management functions on behalf of a customer. These contracts
provide  for fees  paid by its  customers  based  upon the  number  of  patients
participating in each of its programs, as well as initial program implementation
and set-up fees from customers.  To the extent that Patient  Infosystems has had
limited enrollment of patients in its programs,  Patient Infosystems' operations
revenue has been, and may continue to be, limited.

     Patient  Infosystems  has completed the  development of its primary disease
management programs, it anticipates that development revenue will continue to be
minimal  unless  and  until  Patient  Infosystems  enters  into new  development
agreements.  Substantially all of the development  revenue recognized during the
years ended  December  31, 2003,  2002 and 2001 of $51,110,  $36,239 and $78,632
related to requested feature  modification or customization.  These revenues are
recognized upon completion and delivery of the requested feature.

     Patient  Infosystems'  contracts typically call for a fee to be paid by the
customer for each patient  enrolled  for a series of program  services,  require
payment for services incrementally as they are delivered or require payment of a
fixed fee per patient or member each month for program  services.  The timing of
customer  payments  for the  delivery of program  services  varies by  contract.
Revenues from program  operations are recognized ratably as the program services
are delivered.  The amount of the per patient fee varies from program to program
depending upon the number of patient  contacts  required,  the complexity of the
interventions,  the cost of the  resources  used and the  detail of the  reports
generated.

                                       29


     Patient  Infosystems'   administration  and  management  services  cover  a
predefined set of deliverables and responsibilities  undertaken on behalf of the
customer.  The customer  pays for these  services on a monthly basis and Patient
Infosystems  recognizes  revenue  each month based upon the  services  provided.
During the year ended December 31, 2003,  revenues  received for  administrative
and  management  services  were the most  significant  source  of  revenue.  The
services  included:  assisting  organizations  with the  development of clinical
registries  used to  increase  effective  management  of patients  with  chronic
disease.  Patient  Infosystems is supporting the development,  including project
management and  implementation,  of a patient  registry for federally  qualified
health centers,  through a national  initiative known as the Health  Disparities
Collaboratives.  The  contract  for  these  services  is  renewed  annually.  No
assurances  can be given  that  Patient  Infosystems  will be able to retain his
source of revenue at its current level if at all.

     Revenues  from  operations of  $2,241,796  for the year ended  December 31,
2003,  which  includes  fees received by Patient  Infosystems  for operating its
programs,  is the most  strategically  important source of Patient  Infosystems'
revenues.  Patient  Infosystems is continuing to devote  significant  efforts to
increasing  the number of programs that are in operation,  as well as developing
resources  to expand its  products.  The revenue from these  services  currently
exceeds  the  cost to  provide  them,  but the  volume  of  patients  must  grow
substantially  in order to  provide  sufficient  operating  margin  to cover the
administrative overhead of Patient Infosystems.

     During  2003,  Patient  Infosystems  found  new  sources  of  revenue  that
increased  its revenue from $2.4 million for the fiscal year ended  December 31,
2002 to $5.7 million for the same period of 2003. Patient Infosystems maintained
control on costs and reduced its operating loss from $1.7 million for the fiscal
year ended  December 31, 2002 to $0.6  million for the same period of 2003.  The
most  significant  new  sources  of revenue  were (i)  Provider  Innovation  and
Improvement   support   services   provided  to  the  Institute  for  Healthcare
Improvement  which  provided $3.2 million of revenue in 2003 as compared to $0.1
million  in  2002,  (ii)  Care  Team  Connect  service  provided  to Park  Place
Entertainment  which  provided $0.6 million of new revenue in 2003 and (iii) the
Care Team Connect smoking  cessation  program which provided $0.5 million of new
revenue in 2003. No assurances can be given that revenue from these sources will
continue at their current level, if at all, in future periods.

     One  source  of  additional  new  revenue  in 2004 is ACS.  ACS  recognizes
revenues for ancillary  services when services by providers have been authorized
and performed and collections from payors are reasonably assured. Patient claims
revenues are  recognized by ACS as services are  provided.  Cost of revenues for
ancillary  services consist of expenses due to providers for providing  employee
(patient)  services  and ACS' related  direct  labor and overhead of  processing
invoices,  collections  and  payments.  ACS is not liable for costs  incurred by
independent contract service providers until payment is received by ACS from the


                                       30


payors. ACS recognizes actual or estimated  liabilities to independent  contract
service providers as the related revenues are recognized. Patient claim costs of
revenue  consist of amounts due the  providers  as well as ACS' direct labor and
overhead to administer the patient  claims.  ACS has never operated at a profit,
and will  require  significant  growth in either  claims  volume  from  existing
contracts,  new  contracts or both in order to generate  sufficient  operational
margin to become profitable.  No assurances can be given that sufficient sources
of new revenue will be  identified  and other sources of capital will have to be
secured  by  Patient  Infosystems  to  support  these  operations.   If  Patient
Infosystems  in unable to generate  enough  working  capital either from its own
operations or through the sale of its equity securities,  ACS may be required to
curtail or cease operations.

     The sales cycle for  Patient  Infosystems  may be  extensive  from  initial
contact to contract  execution.  During these periods,  Patient  Infosystems may
expend  substantial  time,  effort and funds to prepare a contract  proposal and
negotiate  the  contract.  Patient  Infosystems  may be unable to  consummate  a
commercial relationship after the expenditure of such time, effort and financial
resources.

     During 2003, the pressure of working capital  shortfalls  eased for Patient
Infosystems. Patient Infosystems' had $123,998 of net cash provided by operating
activities during 2003. During 2003.  Patient  Infosystems  raised an additional
$3.5 million of working  capital and an additional  $1.6 million as of March 31,
2004, through and the sale of its equity securities.  These additional funds are
being used to provide  working  capital  for ACS.  Patient  Infosystems  and ACS
continue to incur losses and must  identify  substantial  additional  capital to
sustain its operations. ACS' working capital shortfall is currently being funded
by  Patient  Infosystems.   There  can  be  no  assurances  given  that  Patient
Infosystems  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  any
additional sources of capital,  it will likely be forced to curtail or cease its
operations  or the  operations  of ACS. As a result of the above,  the Auditors'
Report on Patient  Infosystems'  consolidated  financial statements appearing at
page 59 includes an emphasis  paragraph  indicating  that  Patient  Infosystems'
recurring  losses from operations,  negative  working capital and  stockholders'
deficit 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.

                                       31


Results of Operations

Year Ended December 31, 2003 Compared to Year Ended December 31, 2002

     Revenues

     Revenues are comprised of revenues from operations  fees,  development fees
and licensing  fees.  Revenues  increased 141% to $5,687,293 for the fiscal year
ended  December 31, 2003 from  $2,355,677 for the fiscal year ended December 31,
2002. A summary of these revenues by category is as follows for the fiscal years
ended December 31:

Revenues                             2003                2002
--------                             ----                ----

Operations Fees                   $ 2,241,796         $ 2,125,522
Consulting Fees                     3,391,867             168,606
Development Fees                       51,110              36,239
Licensing Fees                          2,520              25,310
                               --------------- -------------------

Total                             $ 5,687,293         $ 2,355,677
                               =============== ===================

     Revenues from operations fees increased 5.5% from $2,125,522 for the fiscal
year ended  December 31, 2002 to $2,241,796  for the fiscal year ended  December
31, 2003.  Operations  revenues are  generated as Patient  Infosystems  provides
services to its customers for their disease-specific  programs, patient surveys,
health risk  assessments,  patient  satisfaction  surveys,  physician  education
programs and marketing support programs.  Operations  revenues increased in 2002
due to the growth of its disease and demand management business despite the loss
of $1,125,823 of revenue from a customer who terminated as of December 31, 2002.
This growth is attributable  primarily to Park Place  Entertainment  which added
$622,067  of new  revenues  and a new  smoking  cessation  program  which  added
$491,362 of new revenues.  Patient  Infosystems  has devoted the majority of its
sales and marketing  efforts  toward  increasing  revenue from  operations,  and
anticipates  that it will retain most of its  existing  business and continue to
add additional new clients.  No assurances can be given that these revenues will
increase,  or that any change will be material to Patient Infosystems  operating
results.

     Revenues from consulting increased 1,912% from $168,606 for the fiscal year
ended  December 31, 2002 to  $3,391,867  for the fiscal year ended  December 31,
2003. This increase is due to Patient  Infosystems'  expanded role in support of
the Health Disparities Collaboratives funded by the Bureau of Primary Healthcare
and  administered  by the Institute for  Healthcare  Improvement.  Revenues from
consulting  may increase  during  2004.  No  assurances  can be given that these
revenues  will  increase,  or that  any  change  will  be  material  to  Patient
Infosystems operating results.

     Revenues from  development  fees  increased 41% from $36,239 for the fiscal
year ended  December 31, 2002 to $51,110 for the fiscal year ended  December 31,
2003. In 2002 and 2003, Patient  Infosystems  received  development  revenues in
connection with the enhancement of its existing programs.  Development  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 remain immaterial.

                                       32


     Revenues from licensing fees decreased 90% from $25,310 for the fiscal year
ended  December 31, 2002 to $2,520 for the fiscal year ended  December 31, 2003.
Licensing  revenue  represents  amounts  that  Patient  Infosystems  charges its
customers,  either on a  one-time  only or  continuing  basis,  for the right to
enroll  patients  in, or the right to  license  other  entities,  certain of its
programs,  primarily Patient Infosystems' Internet-based Case Management Support
System. Patient Infosystems  anticipates that revenue from licensing will remain
immaterial in future periods.

     Costs and Expenses

     Cost of sales includes salaries and related benefits,  services provided by
third parties,  and other expenses  associated  with the  development of Patient
Infosystems'  customized  disease  state  management  programs,  as  well as the
operation of each of its disease state management programs.

     Cost of sales  increased  117.4% from  $1,914,464 for the fiscal year ended
December 31, 2002 to $4,162,759 for the fiscal year ended December 31, 2003. The
increase in these costs primarily reflects an $1,187,960  increase in the use of
outsourced  services and addition of $893,680 in staff costs related to the 141%
increase in revenue.

     Sales and marketing  expenses  increased 19.8% from $746,353 for the fiscal
year ended  December 31, 2002 to $893,833 for the fiscal year ended December 31,
2003.  These costs consist  primarily of salaries,  related  benefits and travel
costs, sales materials and other marketing related expenses.  Increased spending
in this area is  attributed  primarily to an $155,051  increase in staff related
expenses. It is anticipated that Patient Infosystems will need to invest heavily
in the sales and marketing  process in future  periods,  and intends to do so as
funds are available.  To the extent that Patient  Infosystems  has limited funds
available for sales and marketing, or cannot leverage its marketing partnerships
adequately,  it will  likely be unable  to  invest  in the  necessary  marketing
activities to generate substantially greater sales.

     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 decreased
12.2% from  $1,282,683 for the fiscal year ended December 31, 2002 to $1,125,926
for the fiscal year ended December 31, 2003.  Patient  Infosystems  expects that
general  and  administrative  expenses  will  increase  during  2004  due to the
addition of the administrative costs of its new subsidiary,  American Caresource
Holdings,  Inc. and then remain relatively  constant in future periods,  but may
experience fluctuations due to uncertainties related to financing costs.

     Research and development expenses consist primarily of salaries and related
benefits and administrative costs allocated to Patient Infosystems' research and
development  personnel for  development of certain  components of its integrated
information  capture and delivery system, its  Internet-based  software products
and its standardized disease state management programs. Research and development
expenses  decreased  24.8% from $105,614 for the fiscal year ended  December 31,
2002 to $131,782 for the fiscal year ended  December  31, 2003.  The addition of
American Caresource Holdings,  Inc. is expected to increase overall research and
development  expenses during 2004.  Patient  Infosystems  expects these costs to
remain approximately at 15% of its total investment into information  technology
resources.

                                       33


     Financing  costs were $2,143,120 in 2003. This cost relates to the issuance
of equity to, and incurrence of debt from,  certain lenders pursuant to the Note
and Stock  Purchase  Agreement  dated April 10, 2003 and as amended on September
11, 2003,  pursuant to which the lenders  agreed to make short term loans to the
Company. The total value received by the lenders from the Company under the Note
and Stock Purchase  Agreement as amended was $8,852,458.  In accordance with APB
Opinion  No. 14, a portion of the cash  received  totaling  $2,143,120  for year
ended  December 31, 2003 is allocable to equity  resulting in a debt discount in
that same amount, which was fully amortized as of December 31, 2003.

     Other  Income/Expense  is  comprised  of  interest  expense  and  losses on
investments. The totals are as follows for the fiscal years ended December 31:

                               2003                   2002
                        --------------------- ----------------------
Interest expense             $ (753,685)            $ (535,269)
Interest income                 145,473
Other income (expense)              376                  4,345
                        --------------------- ----------------------

Total Expense                $ (607,836)            $ (530,924)
                        --------------------- ----------------------

     Interest expense is due to debt. Interest expense increased to $753,685 for
the fiscal year ended  December 31, 2003 from $535,269 for the fiscal year ended
December 31, 2002. The increase in interest  expense reflects the increased debt
required  to fund  operations  and obtain  capital  which was loaned to American
Caresource Corporation.

     Interest income was realized from loans to American Caresource Corporation,
which  offset  substantially  all interest  expense  which  Patient  Infosystems
incurred to obtain these funds.

     Patient Infosystems had no tax benefit in 2003 due, in part, to recording a
full valuation allowance to reduce its deferred tax assets. Patient Infosystems'
deferred tax assets consist primarily of the tax benefit associated with its net
operating loss carryforwards.

     Management of Patient  Infosystems  has  evaluated  the available  evidence
about  future  taxable  income  and other  possible  sources of  realization  of
deferred tax assets.  The  valuation  allowance  reduces  deferred tax assets to
zero, which represents management's best estimate of the amount of such deferred
tax assets that more likely than not will be realized.

                                       34


     For the fiscal year ended December 31, 2003, Patient  Infosystems  recorded
$7,671,557 in dividends on  convertible  preferred  stock as compared to $90,000
for the year ended  December 31, 2002.  The increase was due to: (i) $153,257 of
dividends  on 830,100  shares of Series D 9%  Cumulative  Convertible  Preferred
Stock  ("Series D Preferred  Stock")  which was issued at various  times between
April and December 2003, (ii) a $2,143,120 beneficial conversion feature related
to shares of Series D Preferred  Stock issued to certain  lenders in  connection
with  borrowings  and (iii)  $5,285,180  beneficial  conversion  feature for the
shares of Series D Preferred Stock issued on December 31, 2003 upon the exercise
of the lender's option to convert their debt and accrued interest.

     Patient  Infosystems had a net loss attributable to common  stockholders of
$11,049,518 for the fiscal year ended December 31, 2003,  compared to $2,314,361
for the fiscal year ended December 31, 2002. This represents a loss of $3.25 per
basic and diluted share for 2003 and $2.36 for 2002,  after giving effect to the
1 for 12 reverse stock split which was approved by the  shareholders on December
31, 2003.

Liquidity and Capital Resources

     At December 31, 2003, Patient  Infosystems had a working capital deficit of
$2,808,649  as compared to a working  capital  deficit of $6,135,451 at December
31, 2002. At December 31, 2003, Patient  Infosystems had a stockholders'  equity
of $1,936,376.  Through  December 31, 2003 these amounts  reflect the effects of
Patient  Infosystems'  continuing  losses that have been funded, in part, by the
issuance of equity and long term  borrowings of  $3,000,000  against its line of
credit.  Patient  Infosystems has never earned profits and, since its inception,
Patient  Infosystems has primarily funded its operations,  working capital needs
and  capital  expenditures  from  the  sale of its  equity  securities.  Patient
Infosystems is currently  maintaining it operations  only through the receipt of
proceeds from the sale of equity securities.  If these additional funds were not
available,   Patient   Infosystems  would  likely  be  required  to  reduce  its
operations, reduce or cease the operations of American Caresource Holdings, Inc.
or take other measures to curtail its losses.

     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.

                                       35


     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
Convertible  Preferred  Stock,  convertible into 475,000 shares of the Company's
common stock for $10.00 per preferred share.

     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.

     On March  30,  2004,  Mr.  Pappajohn  and Mr.  Schaffer  signed a letter to
Patient  Infosystems in which they committed to obtain the operating  funds that
Patient Infosystems  believes would be sufficient to fund its operations through
December 31, 2004.  There can be no assurances  given that Mr.  Pappajohn or Dr.
Schaffer  can raise  either the  required  working  capital  through the sale of
Patient  Infosystems'  securities  or that  Patient  Infosystems  can borrow the
additional amounts needed.

     Patient  Infosystems  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 American  Caresource  Holdings,  Inc.
revenues  do  not  increase  substantially,  Patient  Infosystems'  losses  will
continue and its available capital will diminish further.  Patient  Infosystems'
operations are currently  being funded by the sale of equity  securities.  There
can be no  assurances  given  that  Patient  Infosystems  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
Auditors'  Report on  Patient  Infosystems'  consolidated  financial  statements
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.

     Capital  expenditures during 2003 were $34,185, as compared to expenditures
of $8,867  during 2002 and $9,240  during 2001.  The  expenditures  during these
periods  represented  the  purchase of  technology  platform  components  of the
integrated  information  capture  and  delivery  systems,  as well as  purchases
required to maintain Patient Infosystems' technology infrastructure. On December
31, 2003, Patient Infosystems acquired  substantially all the assets and assumed
substantially all the liabilities of American Caresource  Corporation.  Included
among the assets  acquired was $152,480 of capital  assets,  which  consisted of
computer   hardware  and   software,   furnishings,   fixtures   and   leasehold
improvements.

                                       36


Inflation

     Inflation  did  not  have a  significant  impact  on  Patient  Infosystems'
operations during 2003, 2002 or 2001. Patient  Infosystems  continues to monitor
the  impact of  inflation  in order to  minimize  its  effects  through  pricing
strategies, productivity improvements and cost reductions.

Critical Accounting Policies

     Critical   accounting  policies  are  those  that  require  application  of
management's most difficult,  subjective or complex judgments, often as a result
of the need to make  estimates  about the effect of matters that are  inherently
uncertain and may change in subsequent periods.

     Patient Infosystems significant accounting policies are described in Note 1
to  the  Consolidated  Financial  Statements.   Not  all  of  these  significant
accounting policies require management to make difficult,  subjective or complex
judgments or estimates. However, the following accounting policies are deemed to
be critical by the Company's management.

     Use of  Estimates.  In  preparing  the  consolidated  financial  statements
Patient  Infosystems  uses estimates in determining the economic useful lives of
its assets,  provisions  for doubtful  accounts,  tax valuation  allowances  and
various other recorded or disclosed amounts. Estimates require management to use
its judgment.  While Patient  Infosystems  believes that its estimates for these
matters are reasonable, if the actual amount is significantly different than the
estimated  amount,  its  assets,  liabilities  or results of  operations  may be
overstated or understated.

     Impairment of Long-Lived  Assets.  Patient  Infosystems  records impairment
losses on  long-lived  assets used in operations  when events and  circumstances
indicate  that the assets  might be impaired  and the  undiscounted  future cash
flows  estimated  to be  generated  by those  assets are less than the  carrying
amount of those assets. Recoverability of assets to be held and used is measured
by a  comparison  of the  carrying  amount of the asset to future net cash flows
expected  to be  generated  by the  asset.  If the  asset  is  considered  to be
impaired, the impairment to be recognized is measured by the amount by which the
carrying  amount of the asset exceeds the fair value of the asset. If the actual
value is significantly less than the estimated value, Patient Infosystems assets
may be overstated.


                                       37


                                   MANAGEMENT

Executive Officers and Directors

     The names,  ages and  positions  of our  current  directors  and  executive
officers are as follows:

Name                     Age  Position

Roger Louis Chaufournier  46  Director, President and Chief Executive Officer
Kent A. Tapper            47  Vice President Financial Planning,
                                Acting Chief Financial Officer
Christine St. Andre       53  Chief Operating Officer
Derace L. Schaffer, MD    56  Chairman of the Board
John Pappajohn            75  Director

     There are no familial  relationships  among our directors  and/or officers.
Directors hold office until the next annual meeting of our stockholders or until
their respective successors have been elected and qualified.

     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.

                                       38


     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.

     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.

     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. 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.

     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.

Board Composition

     We  currently  have  three  directors,  each  serving a term until the next
annual meeting of stockholders.

                                       39


Compensation of Directors

     Our  directors  do  not  receive  compensation  pursuant  to  any  standard
arrangement  for their  services as directors.  All directors are reimbursed for
expenses  incurred in  connection  with  attending  meetings,  including  travel
expenses to such meetings.

     Our directors  are eligible to  participate  in the Company's  Stock Option
Plan. Pursuant to the Stock Option Plan,  non-employee  directors of the Company
receive a one-time  grant of a  non-qualified  stock  option to purchase  36,000
shares of the Company's  Common Stock 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 non-qualified  stock option vests as to 20% of the option grant
on the first  anniversary of the grant, and 20% on each subsequent  anniversary,
is exercisable  only during the non-employee  director's term and  automatically
expires on the date such director's service terminates. Upon the occurrence of a
change of control, as defined in the Stock Option Plan, all outstanding unvested
options immediately vest.

Indemnification Matters

     Our  Certificate  of  Incorporation  eliminates  the personal  liability of
directors to the fullest extent  permitted by the provisions of paragraph (7) of
subsection  (b) of Section 102 of the General  Corporation  Law of Delaware.  In
addition,  our Certificate of Incorporation includes provisions to indemnify our
officers and directors and other persons against expenses,  judgments, fines and
amounts paid in settlement in connection with  threatened,  pending or completed
suits or proceedings against those persons by reason of serving or having served
as officers, directors or in other capacities to the fullest extent permitted by
Section 145 of the General Corporation Law of Delaware.

     Our  bylaws  provide  the  power  to  indemnify  our  officers,  directors,
employees  and  agents or any  person  serving  at our  request  as a  director,
officer, employee or agent of another corporation,  partnership,  joint venture,
trust or other enterprise to the fullest extent permitted by Delaware law.



                                       40


                             EXECUTIVE COMPENSATION

     The following table sets forth certain information  regarding  compensation
paid by us and our  predecessors  during each of the last three  fiscal years to
our  Chief  Executive  Officer  and any other  executive  officer  who  received
compensation greater than $100,000 during any of the last three fiscal years.

Summary Compensation Table



                                               Annual Compensation         Long-Term
                                                                           Compensation Awards
                                                                           Securities Underlying
        Name and Principal Position          Year   Salary ($)    Bonus    Options
        ---------------------------          ----   ----------    -----
                                                                 
Roger L. Chaufournier,                       2003    219,611      25,385       -
President and Chief Executive Officer
                                             2002    180,841        -          -
                                             2001    196,502        -        16,666

Christine St. Andre,                         2003    184,050      22,212       -
Vice President, Chief Operating Officer
                                             2002    157,512        -          -
                                             2001    171,893        -        12,500
Kent A. Tapper,                              2003    124,154      14,913       -
Vice President, Financial Planning           2002    107,942        -          -
                                             2001    116,628        -         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".


                                       41


                                      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.


                                       42


Employment Agreements

     There were no employment  agreements  with any of the  Company's  executive
officers.


Stock Option Plan

     The  Company's  Amended and  Restated  Stock  Option Plan (the  "Plan") was
adopted by the Board of Directors and stockholders in December 2003. As of April
20, 2004, 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 May 5, 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 May
                            5, 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

                                       43


     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.

                 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, which 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
Convertible  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.

                                       44


     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 9%  Cumulative  Convertible  Preferred  Stock  ("Series  D
Preferred Stock") under the terms of the Note and Stock Purchase Agreement dated
April 11,  2003 and as  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.


                                       45


                    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 July 4,  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 May 5, 2004, there were 6,051,638 shares  outstanding.  None of the
persons listed below are Selling Stockholders.



                                                                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 May 5, 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 May 5, 2004.

                                       46


(3)  Includes  3,551,490  Common  Share  equivalents  for the 355,149  shares of
     Series D Convertible Preferred Stock beneficially owned as of May 5, 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 May 5,
     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 May 5, 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 May
     5, 2004.  Does not include  200,000 shares  subject to outstanding  options
     that are not exercisable within 60 days of May 5, 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 May
     5, 2004.  Does not include  100,000 shares  subject to outstanding  options
     that are not exercisable within 60 days of May 5, 2004.

(7)  Includes  options to  purchase  73,933  shares  which are either  currently
     exercisable or which become exercisable within 60 days of May 5, 2004. Does
     not include  62,500  shares  subject to  outstanding  options  that are not
     exercisable within 60 days of May 5, 2004.


                                       47


                              SELLING STOCKHOLDERS


     The following table lists the name of each selling stockholder,  the number
of shares owned by each selling stockholder and the number of shares that may be
offered for resale under this  prospectus.  To the extent  permitted by law, the
selling  stockholders  who are not natural persons may distribute  shares,  from
time to time,  to one or more of their  respective  affiliates,  which  may sell
shares pursuant to this prospectus. We have registered the sale of the shares to
permit the selling  stockholders and their respective  permitted  transferees or
other  successors  in  interest  that  receive  their  shares  from the  selling
stockholders  after  the  date of this  prospectus  to  resell  the  shares.  An
aggregate  of up to 877,125  shares of our common  stock may be offered and sold
pursuant  to  this  prospectus  by the  selling  stockholders.  We  will  file a
post-effective amendment to identify any additional selling shareholders.


     No selling  stockholder  has held any  position or office or had a material
relationship  with us within the past three  years other than as a result of the
ownership of our common stock and other securities.


     The  following  table sets forth certain  information  as of April 15, 2004
regarding the sale by the selling stockholders of 877,125 shares of common stock
in this offering.




                                        Shares Beneficially  Shares to be        Shares
                                         Owned Before the    Registered    Beneficially Owned
            Selling Stockholder            Offering (1)      Pursuant to    After the Offering
                                                           this Offering

                                                                        
John C. Lipman                                135,205           114,625 (2)      135,205
Jack Erlanger                                 73,520            50,000           73,520
Mark Finkle                                   50,000            50,000           50,000
Edward Newman                                 25,000            25,000           25,000
Patrick Tully                                 175,000           175,000          175,000
Wasatch Micro Cap Value Fund (3)              250,000           250,000          250,000
Tucson Traditions (4)                         50,000            50,000           50,000
American High Growth Equities Retirement
Fund (5)                                      100,000           100,000          100,000
Joseph Giamanco (6)                           50,000            50,000           50,000
TR Winston (7)                                12,500            12,500           12,500



(1)  Beneficial ownership is determined in accordance with rules and regulations
     of the  Securities  and Exchange  Commission.  In  computing  the number of
     shares  beneficially  owned by a person,  shares of common stock subject to
     options or warrants held by that person that are currently  exercisable  or
     exercisable  within  60 days of the  date of  this  prospectus  are  deemed
     outstanding.  Except  as  indicated  in the  footnotes  to this  table  and
     pursuant to applicable  community  property laws, each stockholder named in
     the table has sole voting and  investment  power with respect to the shares
     beneficially owned by him. Selling  stockholders are deemed to beneficially
     own the  shares  of  common  stock  issuable  upon  the  exercise  of their
     warrants.

                                       48


(2)  Includes  shares of common  stock  issuable  upon  exercise of a warrant to
     purchase  50,000  shares of common  stock.  Such  warrants  were issued for
     consulting  services in connection  with an investor  relations  agreement.
     Such warrants were issued under an exemption from registration  pursuant to
     Section 4(2) and Rule 506 of the Securities Act of 1933.

(3)  Brian  Bythrow  exercises  voting  control  over the shares held by Wasatch
     Micro Cap Value Fund.

(4)  In March 2004,  Patient  Infosystems  sold 50,000 shares of common stock to
     Tucson  Traditions for $100,000 cash, under an exemption from  registration
     pursuant to Section 4(2) and Rule 506 of the Securities Act of 1933. Edward
     Burger exercises voting control over the shares held by Tucson Traditions.

(5)  In March 2004,  Patient  Infosystems sold 100,000 shares of common stock to
     American High Growth Equities  Retirement Fund for $200,000 cash,  under an
     exemption  from  registration  pursuant to Section 4(2) and Rule 506 of the
     Securities  Act of 1933.  Brad Butler  exercises  voting  control  over the
     shares held by American High Growth Equities Retirement Fund.

(6)  In March 2004,  Patient  Infosystems  sold 50,000 shares of common stock to
     Joseph  Giamanco for $100,000 cash,  under an exemption  from  registration
     pursuant to Section 4(2) and Rule 506 of the Securities Act of 1933.

(7)  Includes  shares of common  stock  issuable  upon  exercise of a warrant to
     purchase  12,500  shares of common  stock.  Andrew Scott  exercises  voting
     control over the shares held by T.R. Winston and Co., Inc.


     On February 24, 2004,  Patient  Infosystems  sold 592,500  shares of common
stock,  for  $1,185,000 to six  accredited  investors,  under an exemption  from
registration  pursuant  to Section  4(2) and Rule 506 of the  Securities  Act of
1933.  There was $68,250 of fees paid and a warrant to purchase 12,500 shares of
Patient  Infosystems  common stock for $2.00 per share issued in connection with
these funds. Patient Infosystems has agreed to file this registration  statement
on Form SB-2 for the sale of these shares.

                                       49


                              Plan Of Distribution

     The selling  stockholders and any of their pledgees,  donees,  transferees,
assignees or other  successors-in-interest  may, from time to time,  sell any or
all of the shares of common stock offered hereby on any stock  exchange,  market
or trading  facility on which the shares are traded or in private  transactions.
Our common stock currently  trades on the OTC Bulletin  Board.  Any sales by the
selling  stockholders  may  be  at  fixed  or  negotiated  prices.  The  selling
stockholders  may use any one or more  of the  following  methods  when  selling
shares:

o    ordinary brokerage transactions and transactions in which the broker-dealer
     solicits purchasers;

o    block trades in which the broker-dealer  will attempt to sell the shares as
     agent but may  position  and resell a portion of the block as  principal to
     facilitate the transaction;

o    purchases by a broker-dealer  as principal and resale by the  broker-dealer
     for its account;

o    an exchange  distribution  in accordance  with the rules of the  applicable
     exchange;

o    privately negotiated transactions;

o    short sales;

o    broker-dealers  may agree with the selling  stockholder to sell a specified
     number of such shares at a stipulated price per share;

o    a combination of any such methods of sale; and

o    any other method permitted pursuant to applicable law.

     The  selling  stockholders  may also sell  shares  under Rule 144 under the
Securities Act, if available, rather than under this prospectus.

     Broker-dealers  engaged by the selling  stockholders  may arrange for other
brokers-dealers to participate in sales.  Broker-dealers may receive commissions
or discounts from the selling  stockholders  (or, if any  broker-dealer  acts as
agent  for the  purchaser  of  shares,  from the  purchaser)  in  amounts  to be
negotiated.  The  selling  stockholders  do not  expect  these  commissions  and
discounts to exceed what is customary in the types of transactions involved.

     The selling  stockholders  may from time to time pledge or grant a security
interest in any of their  warrants or common stock  issuable upon  conversion of
their  warrants  and,  if they  default  in the  performance  of  their  secured
obligations,  the  pledgees  or  secured  parties  may offer and sell the shares
underlying the warrants from time to time under this prospectus.


                                       50


     The selling  stockholders  also may  transfer  their  warrants or shares of
common stock issuable upon conversion of their warrants in other  circumstances,
in  which  case  the   pledges,   donees,   transferees,   assignees   or  other
successors-in-interest  will be a "selling  stockholder"  for  purposes  of this
prospectus.

     The selling stockholders and any broker-dealers or agents that are involved
in selling the shares may be deemed to be  "underwriters"  within the meaning of
the Securities Act in connection with such sales. In such event, any commissions
received  by such  broker-dealers  or agents and any profit on the resale of the
shares  purchased  by them  may be  deemed  to be  underwriting  commissions  or
discounts  under the Securities Act. The selling  stockholders  have informed us
that it does not have any agreement or  understanding,  directly or  indirectly,
with any person to distribute the common stock.

     We will not  receive any  proceeds  from sales of any shares by the selling
stockholders. However, we may receive an aggregate of $162,500 upon the exercise
of all the warrants held by selling stockholders, if such warrants are exercised
for cash.  We will use such  funds,  if any,  for  working  capital  and general
corporate purposes.


                                       51


                          DESCRIPTION OF CAPITAL STOCK

     We are authorized to issue 100,000,000 shares of capital stock divided into
(i)  80,000,000  shares of  common  stock,  par  value  $0.01 per share and (ii)
20,000,000 shares of preferred stock, par value $0.01 per share. As of April 20,
2004, there are 6,024,979 shares of our common stock outstanding, held of record
by approximately 750  stockholders.  There are 915,118 shares of Preferred Stock
outstanding, held by 39 stockholders.

Common Stock

     The  holders of our common  stock are  entitled  to one vote for each share
held of record in the election of directors and in all other matters to be voted
on by the  stockholders.  There is no  cumulative  voting  with  respect  to the
election of directors.  As a result,  the holders of more than 50% of the shares
voting for the election of directors can elect all of the directors.  Holders of
common stock are entitled:

     o    to receive any  dividends as may be declared by the Board of Directors
          out of funds  legally  available  for such  purpose  after  payment of
          accrued dividends on the outstanding shares of preferred stock; and

     o    in the event of our liquidation,  dissolution, or winding up, to share
          ratably in all assets remaining after payment of liabilities and after
          provision has been made for each class of stock having preference over
          the common stock.

     All of the  outstanding  shares of common stock are validly  issued,  fully
paid and nonassessable.  Holders of our common stock have no preemptive right to
subscribe for or purchase additional shares of any class of our capital stock.

Preferred Stock

     Our Board of Directors has the authority,  within the limitations set forth
in our certificate of designations  and certificate of  incorporation to provide
by  resolution  for the issuance of preferred  stock,  in one or more classes or
series, and to fix the rights, preferences, privileges and restrictions thereof,
including  dividend  rights,   conversion  rights,   voting  rights,   terms  of
redemption,  liquidation  preferences and the number of shares  constituting any
series or the designation of such series.

     Series C Preferred Stock

     The  holders of Series C  Preferred  Stock are  entitled to eight votes for
each share held of record on all matters  submitted  to a vote of  stockholders.
Holders  of Series C  Preferred  Stock are  entitled  to receive  cumulative  9%
dividends on an annual  basis and ratably  such  dividends as may be declared by
the Board of Directors of Patient  Infosystems  out of funds  legally  available
therefor. In the event of any voluntary or involuntary liquidation,  dissolution
or winding up of Patient  Infosystems,  then,  prior,  and in  preference to any
distribution of any assets to the holders of common stock, the holders of Series
C Preferred  Stock will be entitled to be paid in full in an amount equal to (i)
a per share price for each share of Series C Preferred  Stock  outstanding  plus
(ii) an amount  equal to a  cumulative,  unpaid  dividend at a 9% rate per annum
plus (iii) an amount  equal to all  declared  but unpaid  dividends on each such
share accrued up to such date of distribution. For purposes of calculating these
preference  payments,  the per share  price  has been  $10.00  for the  Series C
Preferred  Stock.  One share of the Series C Preferred Stock may be converted at
any time, at the holder's option, into eight shares of common stock.  Holders of
Series C Preferred Stock have no preemptive rights.


                                       52


     The conversion rate will be adjusted if Patient Infosystems pays a dividend
on its common stock or subdivides or combines its  outstanding  common stock. If
at any time, Patient Infosystems  proposes to offer and sell shares of preferred
stock  having a  conversion  rate  that is less  than  $1.25 per share of common
stock,  then the  conversion  rate  for the  Series C  Preferred  Stock  will be
adjusted  such that each share of Series C Preferred  Stock will be  convertible
into such number of shares that equals $10.00 divided by the conversion  rate of
the new shares of preferred  stock offered and sold. As a result,  each share of
Series C Preferred  Stock will be convertible  into 10 shares of common stock or
an aggregate of 750,000.

     Series D Preferred Stock

     The  holders of Series D  Preferred  Stock are  currently  entitled  to one
hundred twenty votes for each share held of record on all matters submitted to a
vote of  stockholders.  Holders  of Series D  Preferred  Stock are  entitled  to
receive cumulative 9% dividends on an annual basis and ratably such dividends as
may be declared by the Board of  Directors of Patient  Infosystems  out of funds
legally  available  therefore.  In the  event of any  voluntary  or  involuntary
liquidation,  dissolution or winding up of Patient Infosystems, then, prior, and
in preference to any  distribution of any assets to the holders of Common Stock,
the holders of Series D  Preferred  Stock will be entitled to be paid in full in
an amount  equal to (i) a per share  price for each share of Series D  Preferred
Stock outstanding plus (ii) an amount equal to a cumulative,  unpaid dividend at
a 9% rate per  annum  plus  (iii) an amount  equal to all  declared  but  unpaid
dividends  on each  such  share  accrued  up to such date of  distribution.  For
purposes of calculating these preference  payments,  the per share price will be
$10.00 for each  share of Series D  Preferred  Stock.  One share of the Series D
Preferred Stock may be converted at any time, at the holder's  option,  into one
hundred twenty shares of Common Stock.  Holders of Series D Preferred Stock have
no preemptive rights. The 840,118 shares of Series D Preferred Stock outstanding
may be convertible into 8,401,180 shares of common stock.

     The conversion rate will be adjusted if Patient Infosystems pays a dividend
on its common stock or subdivides or combines its outstanding  common stock. The
conversion  rate will also be  adjusted if Patient  Infosystems  issues or sells
common stock or  securities  convertible  into common stock at a price less than
the then effective  conversion  rate, in which case the conversion  rate will be
adjusted to an amount equal to the effective  price per share of the  securities
sold in the transaction giving rise to the adjustment.

     Holders of a majority in voting power of the Series D Preferred  Stock have
the right to elect two members of the Board of Directors of Patient Infosystems.
Warrants

                                       53


     As of  April  15,  2004,  we have  outstanding  warrants  to  purchase  the
equivalent of 570,000 shares of our common stock. We issued warrants to purchase
12,500  shares  of our  common  stock at an  exercise  price of $2.00  per share
pursuant to a private placement that occurred in February 2004.


Market for Common Stock

     Shares of our common stock are listed on the OTC  Bulletin  Board under the
symbol PATY.

Transfer Agent and Registrar

     Our transfer  agent and registrar is  Continental  Stock Transfer and Trust
Company, 17 Battery Place, New York, New York 10004.

Shares Eligible for Future Sale

     We currently  have  6,024,979  shares of common stock  outstanding.  Of the
6,024,979 shares of common stock outstanding,  up to 1,803,384 shares are freely
tradable without  restriction or further  registration under the Securities Act,
except for any shares purchased by an "affiliate",  which will be subject to the
resale limitations of Rule 144 promulgated under the Securities Act.

     All of the  remaining  shares of common  stock  currently  outstanding  are
"restricted securities" or owned by "affiliates",  as those terms are defined in
Rule 144,  and may not be sold  publicly  unless they are  registered  under the
Securities  Act or are sold  pursuant  to Rule  144 or  another  exemption  from
registration.  The  restricted  securities  are not  eligible  for sale  without
registration  under Rule 144. As of April  [__],  2004,  there were  outstanding
options and warrants to purchase 1,996,000 shares of our common stock.


                                       54


Rule 144

     Generally,   under  Rule  144  as  currently  in  effect,  subject  to  the
satisfaction  of  certain  other  conditions,  a  person,  including  any of our
affiliates or persons  whose shares are  aggregated  with an affiliate,  who has
owned restricted  shares of common stock  beneficially for at least one year, is
entitled to sell,  within any three-month  period,  a number of shares that does
not exceed the greater of:

     o    1% of our then outstanding shares of common stock; or

     o    the average weekly trading volume of shares of our common stock during
          the four calendar weeks preceding such sale.

     A person who is not an  affiliate,  has not been an affiliate  within three
months prior to sale, and has  beneficially  owned the restricted  shares for at
least two years is entitled to sell such shares under Rule 144(k) without regard
to any of the limitations described above.

Charter and Bylaws Provisions and Delaware Anti-Takeover Statute

     We are  subject to Section  203 of the  Delaware  General  Corporation  Law
regulating corporate takeovers. This section prevents Delaware corporations from
engaging  under  certain  circumstances,  in  a  "business  combination",  which
includes a merger or sale of more than 10% of the corporation's assets, with any
"interested  stockholder",  or a  stockholder  who  owns  15%  or  more  of  the
corporation's  outstanding voting stock, as well as affiliates and associates of
any such persons,  for three years following the date such stockholder became an
"interested stockholder", unless (i) the business combination or the transaction
in which such stockholder became an "interested  stockholder" is approved by the
board of directors prior to the date the "interested  stockholder" attained such
status;  (ii)  upon  consummation  of  the  transaction  that  resulted  in  the
stockholder becoming an "interested  stockholder",  the "interested stockholder"
owned at least 85% of the voting  stock of the  corporation  outstanding  at the
time the transaction commenced, excluding for purposes of determining the number
of shares  outstanding  those shares owned by (x) persons who are  directors and
also officers and (y) employee stock plans in which employee participants do not
have the right to determine  confidentially  whether  shares held subject to the
plan will be tendered in a tender or  exchange  offer;  or (iii) on or after the
date the "interested  stockholder" attained such status the business combination
is approved by the board of  directors  and  authorized  at an annual or special
meeting of stockholders by the  affirmative  vote of at least  two-thirds of the
outstanding voting stock that is not owned by the "interested stockholder."

     Our certificate of  incorporation  and bylaws do not provide for cumulative
voting  in the  election  of  directors.  Our  bylaws  eliminate  the  right  of
stockholders  to  call  special  meetings  of  stockholders.   These  and  other
provisions  may have the effect of  delaying,  deferring or  preventing  hostile
takeovers or changes in the control or management of Patient  Infosystems,  Inc.
even if doing so would be beneficial to our stockholders.


                                       55


Reports to Stockholders

     We have and will  continue to comply  with the  periodic  reporting,  proxy
solicitation and other applicable requirements of the Securities Exchange Act of
1934.

                                  LEGAL MATTERS

     The validity of the common stock offered by this  prospectus will be passed
upon by McCarter & English, LLP.

                                     EXPERTS

     The consolidated  financial  statements and the related financial statement
schedule of Patient  Infosystems,  Inc.  included in this  prospectus  have been
audited  by  Deloitte & Touche  LLP,  independent  auditors,  as stated in their
report  appearing  herein (which  report  expresses an  unqualified  opinion and
includes  an  explanatory  paragraph  expressing  substantial  doubt  about  the
Company's ability to continue as a going concern),  and have been so included in
reliance  upon the report of such firm given upon their  authority as experts in
accounting and auditing.

     The consolidated  financial  statements of American Caresource  Corporation
that have been  audited by  McGladrey & Pullen  LLP,  independent  auditors,  as
stated in their report  appearing  herein (which report expresses an unqualified
opinion),  and have been so included  in  reliance  upon the report of such firm
given upon their authority as experts in accounting and auditing.

CHANGES IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND  FINANCIAL
DISCLOSURE

a)   Deloitte & Touche LLP resigned as the Registrant's  independent accountants
     on April 21, 2004.

b)   The Audit Committee of the Board of Directors of the Registrant approved on
     April 28, 2004 the engagement of the accounting firm of McGladrey & Pullen,
     LLP as accountants for the Registrant for the year ending December 31, 2004
     subject to their normal client acceptance procedures.

c)   Deloitte & Touche LLP's  reports on the financial  statements  for the past
     two years ended December 31, 2003 and 2002 contained no adverse  opinion or
     disclaimer  of opinion.  Deloitte & Touche LLP's  reports on the  financial
     statements contained an explanatory paragraph expressing  substantial doubt
     about the Registrant's ability to continue as a going concern.

d)   In  connection  with its audits for the two most recent  fiscal years ended
     December 31, 2003 and 2002 and through  April 21, 2004,  there have been no
     disagreements  with  Deloitte  & Touche  LLP on any  matter  of  accounting
     principles or practices,  financial statement disclosure, or auditing scope
     or procedure,  which  disagreements  if not resolved to the satisfaction of
     Deloitte & Touche LLP would have caused them to make  reference  thereto in
     their report on the financial statements for such years.


                                       56


                    WHERE YOU CAN FIND ADDITIONAL INFORMATION

     We have filed with the Securities and Exchange  Commission,  a Registration
Statement  on Form SB-2  under the  Securities  Act of 1933 with  respect to the
common stock offered by this prospectus. This prospectus does not contain all of
the  information  set forth in the  registration  statement and the exhibits and
schedules to the registration statement. For further information with respect to
us and the common  stock  offered by this  prospectus,  reference is made to the
registration  statement  and the exhibits and  schedules  filed as a part of the
registration  statement.  Additionally,  we file annual,  quarterly  and current
reports,  proxy  statements and other documents with the Securities and Exchange
Commission.  You may read and copy any materials we file with the Securities and
Exchange Commission at the Securities and Exchange Commission's Public Reference
Room  at 450  Fifth  Street,  N.W.,  Washington,  D.C.  20549.  You  may  obtain
information  on the  operation  of the  Public  Reference  Room by  calling  the
Securities  and  Exchange  Commission  at  1-800-SEC-0330.  The  Securities  and
Exchange  Commission also maintains a World Wide Web site that contains reports,
proxy and information  statements and other  information  regarding  registrants
that file  electronically  with the  Securities  and  Exchange  Commission.  The
address   of  the   Securities   and   Exchange   Commission's   Web   site   is
http://www.sec.gov.


                                       57


                          Index to Financial Statements

Patient Infosystems, Inc.
Annual Financial Statements
Independent Auditor's Report................................................59
Consolidated Balance Sheets at December 31, 2003 and 2002...................60
Consolidated Statements of Operations for the years ended
   December 31, 2003, 2002 and 2001.........................................61
Consolidated Statements of Changes in Stockholders' Equity for
   the years ended December 31, 2003, 2002 and 2001.........................62
Consolidated Statements of Cash Flows for the years ended
   December 31, 2003, 2002 and 2001.........................................63
Notes to Consolidated Financial Statements..................................64
Schedule-II.................................................................78

American Caresource Corporation
Annual Financial Statements
Independent Auditor's Reports...............................................79
Consolidated Balance Sheets at December 31, 2003 and 2002...................81
Consolidated Statements of Operations for the years ended
   December 31, 2003, 2002 and 2001.........................................83
Consolidated Statements of Changes in Stockholders'
   Equity for the years endedDecember 31, 2003, 2002 and 2001...............84
Consolidated Statements of Cash Flows for the years ended
   December 31, 2003, 2002 and 2001.........................................85
Notes to Consolidated Financial Statements..................................86

Unaudited Pro Forma Combined Condensed Financial Statement
Unaudited Pro Forma Combined Condensed Financial Statement..................97
Unaudited Pro Forma Combined Condensed Statements of
  Operations for the year ended December 31, 2003...........................98
Notes to Unaudited Pro Forma Combined Condensed Statements
  of Operations for the year ended December 31, 2003........................99


                                       58


AUDITORS' REPORT




To the Board of Directors and Stockholders of Patient InfoSystems, Inc.
Rochester, New York


     We have audited the  accompanying  consolidated  balance  sheets of Patient
Infosystems,  Inc. and  subsidiaries  as of December 31, 2003 and 2002,  and the
related consolidated  statements of operations,  stockholders' equity (deficit),
and cash flows for each of the three  years in the  period  ended  December  31,
2003.  Our audits also  included the  financial  statement  schedule on page 77.
These   financial   statements   and  financial   statement   schedule  are  the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial  statements and financial statement schedule based on
our audits.

     We conducted our audits in accordance  with  auditing  standards  generally
accepted in the United States of America.  Those standards  require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

     In our opinion,  such consolidated  financial statements present fairly, in
all material respects,  the financial position of Patient Infosystems,  Inc. and
subsidiaries at December 31, 2003 and 2002, and the results of their  operations
and their cash flows for each of the three  years in the period  ended  December
31, 2003, in conformity with  accounting  principles  generally  accepted in the
United  States of  America.  Also,  in our  opinion,  such  financial  statement
schedule,  when  considered  in  relation  to the basic  consolidated  financial
statements  taken as a whole,  presents  fairly  in all  material  respects  the
information set forth therein.

     The  accompanying  consolidated  financial  statements  have been  prepared
assuming that the Company will continue as a going concern. As discussed in Note
1 to the consolidated financial statements,  the Company's recurring losses from
operations  and  negative  working  capital  raise  substantial  doubt about its
ability to continue  as a going  concern.  Management's  plans  concerning  this
matter are also described in Note 1. The  consolidated  financial  statements do
not  include  any  adjustments  that  might  result  from  the  outcome  of this
uncertainty.

Deloitte & Touche LLP
Rochester, New York
March 30, 2004


                                       59


PATIENT INFOSYSTEMS, INC.



CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2003 AND 2002
-------------------------------------------------------------------------------------------------- ------------------


ASSETS                                                                                 2003              2002

CURRENT ASSETS:
                                                                                               
  Cash and cash equivalents                                                          $    397,851    $         5,011
  Accounts receivable (net of doubtful accounts allowance of $52,141 and $55,000)         771,258            441,216
  Prepaid expenses and other current assets                                               156,729            105,827
  Notes receivable                                                                           -               200,000
                                                                                 ----------------- ------------------
        Total current assets                                                            1,325,838            752,054

PROPERTY AND EQUIPMENT, net                                                               305,551            285,747

OTHER ASSETS:
  Intangible assets (net of accumulated amortization of $586,830 and $443,258)            497,893            179,465
  Goodwill                                                                              6,981,876
                                                                                 ----------------- ------------------

TOTAL ASSETS                                                                          $ 9,111,158        $ 1,217,266
                                                                                 ----------------- ------------------

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES:
  Bank overdraft                                                                      $   189,608         $     -
  Accounts payable                                                                      1,337,862            379,004
  Accrued salaries and wages                                                              442,299            208,752
  Accrued expenses                                                                      1,472,445            351,621
  Accrued interest                                                                         61,558            713,554
  Current maturities of long-term debt                                                    294,117               -
  Borrowings from directors                                                                  -             5,077,500
  Deferred revenue                                                                        336,598            157,074
                                                                                 ----------------- ------------------
        Total current liabilities                                                       4,134,487          6,887,505

LINE OF CREDIT                                                                          3,000,000          3,000,000
LONG-TERM DEBT                                                                             40,295               -

COMMITMENTS  (Note 7)

STOCKHOLDERS' EQUITY (DEFICIT):
  Preferred stock - $.01 par value:  shares authorized: 20,000,000
    Series C, 9% cumulative, convertible
      issued and outstanding: 2003 & 2002 - 100,000                                         1,000              1,000
    Series D, 9% cumulative, convertible
      issued and outstanding: 2003 - 830,100                                                8,301               -
  Common stock - $.01 par value:
      authorized: 80,000,000; issued and outstanding:  2003 - 4,960,354
      authorized: 20,000,000; issued and outstanding:  2002 - 10,956,024                   49,604            109,560
  Additional paid-in capital                                                           45,596,684         24,132,153
  Accumulated deficit                                                                 (43,719,213)       (32,912,952)
                                                                                 ----------------- ------------------
        Total stockholders' equity (deficit)                                            1,936,376         (8,670,239)
                                                                                 ----------------- ------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)                                  $ 9,111,158        $ 1,217,266
                                                                                 ----------------- ------------------


See notes to consolidated financial statements.


                                       60


PATIENT INFOSYSTEMS, INC.



CONSOLIDATED  STATEMENTS OF OPERATIONS  YEARS ENDED DECEMBER 31, 2003,  2002 AND 2001
-----------------------------------------------------------------------------------------------

                                              2003                2002                2001


                                                                        
REVENUES                                 $    5,687,293      $   2,355,677       $   1,586,443
                                     ------------------- ------------------ -------------------
COSTS AND EXPENSES:
  Cost of revenue                             4,162,759          1,914,464           2,420,151
  Sales and marketing                           893,833            746,353             813,975
  General and administrative                  1,125,926          1,282,683           2,028,804
  Research and development                      131,782            105,614             190,731
                                     ------------------- ------------------ -------------------
        Total costs and expenses              6,314,300          4,049,114           5,453,661
                                     ------------------- ------------------ -------------------

OPERATING LOSS                                (627,007)        (1,693,437)         (3,867,218)

Amortization of debt discount               (2,143,120)                  -                   -
Other expense, net                            (607,834)          (530,924)           (598,087)
                                     ------------------- ------------------ -------------------

NET LOSS                                    (3,377,961)        (2,224,361)         (4,465,305)

CONVERTIBLE PREFERRED STOCK DIVIDENDS       (7,671,557)           (90,000)            (90,000)
                                     ------------------- ------------------ -------------------

NET LOSS ATTRIBUTABLE TO
 COMMON STOCKHOLDERS                     $ (11,049,518)      $ (2,314,361)       $ (4,555,305)
                                     =================== ================== ===================
NET LOSS PER SHARE - BASIC
   AND DILUTED                                 $ (3.25)           $ (2.36)            $ (5.17)
                                     =================== ================== ===================
WEIGHTED AVERAGE COMMON
   SHARES OUTSTANDING                         3,399,616            979,668             880,875


See notes to consolidated financial statements.



                                       61


PATIENT INFOSYSTEMS, INC.



CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
-------------------------------------------------------------------------------------------------------------------------------
                                                                                      Additional                      Total
                                                Common Stock        Preferred Stock     Paid-in     Accumulated   Stockholders'
                                              Shares      Amount    Shares   Amount     Capital       Deficit     Equity(Deficit)
                                           ------------ ---------- --------- -------- ------------ -------------- -------------
                                                                                             
Balance at December 31, 2000                 8,220,202   $ 82,202   100,000  $ 1,000  $23,951,103  $(26,223,286)  $ (2,188,981)

Compensation expense related to
  issuance of  stock                         2,319,156     23,191      -        -         329,482          -           352,673

Debt issuance costs in the form
  stock warrants                                  -          -         -        -          35,735          -            35,735

Immaculate exercise of stock warrants          416,666      4,167      -        -          (4,167)         -              -

Dividends on
  Series C Convertible Preferred Stock            -          -         -        -         (90,000)         -           (90,000)

Net loss for the year ended
      December 31, 2001                           -          -         -        -            -       (4,465,305)    (4,465,305)
                                           ------------ ---------- --------- -------- ------------ -------------- -------------
Balance at December 31, 2001                10,956,024    109,560   100,000    1,000   24,222,153   (30,688,591)    (6,355,878)

Dividends on
  Series C Convertible Preferred Stock            -          -         -        -         (90,000)         -           (90,000)

Net loss for the year ended
      December 31, 2002                           -          -         -        -            -       (2,224,361)    (2,224,361)
                                           ------------ ---------- --------- -------- ------------ -------------- -------------
Balance at December 31, 2002                10,956,024    109,560   100,000    1,000   24,132,153   (32,912,952)    (8,670,239)

Exercise of stock options                          400          4      -        -              32          -                36

Give effect to 1 for 12 reverse split of
common stock                               (10,043,389)  (100,434)     -        -         100,434          -              -

Issuance of common stock                     4,047,319     40,474      -        -       6,759,023          -         6,799,497

Issuance of Series D Preferred                    -          -      830,100    8,301    7,419,999          -         7,428,300

Beneficial Conversion on Series D issuance        -          -         -        -       7,428,300    (7,428,300)          -

Dividends on
  Series C Convertible Preferred Stock            -          -         -        -         (90,000)         -           (90,000)

  Series D Convertible Preferred Stock            -          -         -        -        (153,257)         -          (153,257)

Net loss for the year ended
      December 31, 2003                           -          -         -        -             -      (3,377,961)    (3,377,961)
                                           ------------ ---------- --------- -------- ------------ -------------- -------------

Balance at December 31, 2003                 4,960,354   $ 49,604   930,100  $ 9,301  $45,596,684  $(43,719,213)   $ 1,936,376
                                           ============ ========== ========= ======== ============ ============== =============


See notes to consolidated financial statements.


                                       62


PATIENT INFOSYSTEMS, INC.



CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
----------------------------------------------------------------------------------------------------------------------------

                                                                                 2003             2002             2001
                                                                                 ----             ----             ----

OPERATING :
                                                                                                     
  Net loss                                                                  $ (3,377,961)   $ (2,224,361)     $ (4,465,305)
  Adjustments to reconcile net loss to net cash provided by (used in)
    operating activities:
      Depreciation and amortization                                               310,433         374,099           695,369
      Amortization of debt discount                                             2,143,120            -                 -
      Gain on sale of property                                                       -               (400)            4,772
      Noncash interest income                                                    (129,499)           -                 -
      Loss on investments                                                            -               -              200,000
      Compensation expense related to issuance of stock warrants and options         -               -              352,673
      Decrease (increase) in accounts receivable                                  156,393        (167,425)          137,645
      (Increase) decrease in prepaid expenses and other current assets            (34,960)        (17,378)           77,718
      Increase (decrease) in accounts payable                                     172,084         267,986          (122,527)
      Increase in accrued salaries and wages                                       40,025          32,134               460
      Increase (decrease) in accrued expenses                                      19,007        (215,584)          198,745
      Increase in accrued interest                                                645,832         431,024           232,429
      Increase (decrease) in deferred revenue                                     179,524          33,934           (38,821)
                                                                            -------------- --------------- -----------------
            Net cash provided by (used in) operating activities                   123,998      (1,485,971)       (2,726,842)
                                                                            -------------- --------------- -----------------
INVESTING:
  Property and equipment additions                                                (34,185)         (8,867)           (9,240)
  Proceeds from sale of property and equipment                                       -                400               800
  Increase in notes receivable                                                       -           (200,000)             -
  Acquisition of American Caresource, net of cash acquired of $1,710           (3,348,290)           -                 -
  Acquisition expenses                                                           (173,719)           -                 -
                                                                            -------------- --------------- -----------------
          Net cash used in investing activities                                (3,556,194)       (208,467)           (8,440)
                                                                            -------------- --------------- -----------------

FINANCING:
  Exercise of stock options                                                            36            -                 -
  Borrowings from directors                                                       150,000       1,170,000         2,736,500
  Borrowings from shareholders                                                  3,675,000            -                 -
  Proceeds from line of credit                                                       -            500,000              -
                                                                            -------------- --------------- -----------------
            Net cash provided by financing activities                           3,825,036       1,670,000         2,736,500
                                                                            -------------- --------------- -----------------
NET INCREASE (DECREASE) IN CASH AND CASH  EQUIVALENTS                             392,840         (24,438)            1,218

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                                      5,011          29,449            28,231
                                                                            -------------- --------------- -----------------
CASH AND CASH EQUIVALENTS AT END OF YEAR                                        $ 397,851         $ 5,011          $ 29,449
                                                                            -------------- --------------- -----------------
Supplemental disclosures of cash flow information
   Cash paid for interest expense                                                $ 97,559       $ 102,856         $ 169,490
                                                                            ============== =============== =================


See notes to consolidated financial statements.



                                       63


PATIENT INFOSYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001

1.   DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Organization  - Patient  Infosystems,  Inc.  (the  "Company")  designs  and
     develops health care  information  systems and services to manage,  collect
     and analyze patient-related  information to improve patient compliance with
     prescribed  treatment  protocols.  Through its various  patient  compliance
     programs  for disease  state  management,  the Company  provides  important
     benefits for the patient, the health care provider and the payor.

     The consolidated  financial  statements include the accounts of the Company
     and its wholly owned subsidiaries,  Patient Infosystems Canada, Inc., which
     ceased operations in January 2001 and American  Caresource  Holdings,  Inc.
     which was created in December 2003. Significant  intercompany  transactions
     and balances have been eliminated in consolidation.

     Acquisition - On December 31, 2003, the Company acquired  substantially all
     the assets and liabilities of American  Caresource  Corporation for a total
     purchase  price of  $5,732,116.  The  purchase  consideration  included (a)
     1,100,000  shares of common stock valued at  $1,848,000;  (b) $3,679,499 of
     notes  and  accrued  interest  owed  the  Company  by  American  Caresource
     Corporation  that was  extinguished  by the  business  combination  and (c)
     $204,617 of direct  expenses  associated with the  acquisition.  The common
     stock  issued in the  transaction  was valued at $1.68 per share based upon
     the measurement  date for this  transaction of April 14, 2003, which is the
     date the terms of the proposed  transaction  were agreed upon and announced
     to the public.

     Information related to the acquisition is as follows:

     Purchase price                           $      5,732,116
                                              ================
     Purchase allocation:
     Current assets                           $        504,087
     Property and equipment                            152,480
     Identifiable intangible assets                    462,000
     Current liabilities, excluding current
        portion of long-term debt                   (2,033,915)
     Long-term debt                                   (334,412)
     Goodwill                                        6,981,876
                                               ---------------
                                              $      5,732,116

     This  acquisition  has been  accounted  for  using the  purchase  method of
     accounting  and  accordingly,   the  results  of  the  operations  of  this
     acquisition  have been included in the  consolidated  financial  statements
     from the date of the  acquisition.  Since the  acquisition  occurred at the
     close of business on December  31,  2003,  there are no  operating  results
     reflected in the accompanying 2003 consolidated statement of operations.

     The allocation of the purchase price to identifiable  intangible assets and
     goodwill  has not been  finalized,  and any  required  adjustments  will be
     recorded as necessary in 2004.


                                       64


     The  following   unaudited   pro  forma  summary   presents  the  Company's
     consolidated  results of operations for 2003 and 2002 as if the acquisition
     had been consummated at January 1, 2002. The pro forma consolidated results
     of  operations  include  certain  pro  forma  adjustments,   including  the
     amortization  of  identifiable  intangible  assets and  interest on certain
     debt.



                                                                        December 31,
                                                                    2003                  2002
                                                           --------------------- ---------------------
                                                                               
     Revenue                                                 $    14,851,682         $  11,996,817

     Operational costs                                          (18,882,522)          (17,936,490)

     Other costs                                                 (2,490,533)             (166,707)
                                                           --------------------- ---------------------
     Net loss                                                    (6,521,373)           (6,106,380)

     Dividends and beneficial conversions                          (837,090)           (8,265,390)
                                                           --------------------- ---------------------
     Net loss attributable to common shareholders            $   (7,358,463)         $(14,371,770)
                                                           ===================== =====================
     Net loss per share (using 3,399,616 weighted average
     shares outstanding at December 31, 2003.                $        (2.16)         $      (4.23)
                                                           ===================== =====================


     The pro forma  results are not  necessarily  indicative of those that would
     have  occurred  had the  acquisition  taken place at the  beginning  of the
     periods presented.

     Going Concern - The  accompanying  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  consolidated  financial statements,
     the Company  incurred a net loss for 2003 of  $3,377,961  and had  negative
     working  capital of $2,808,649 at December 31, 2003.  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  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  continuation  as a going concern is dependant upon
     its ability to generate  sufficient cash flow to meet its  obligations,  to
     obtain  additional   financing  and,   ultimately,   to  attain  successful
     operations.

     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.  The recently
     completed   acquisition  of  American   Caresource   Corporation  is  being
     integrated into the operation of the Company.  Opportunities  to expand the
     existing  customer  relationships  of both  organizations  to  include  the
     services of both organizations are being assessed by management. Management
     believes that the access to capital will provide the newly acquired  entity
     the stability needed to begin a period of growth. In addition, successes in
     outcomes from disease management programs are being leveraged in an attempt
     to increase revenues from sales.

     Use  of  Estimates  in  the  Preparation  of  Financial  Statements  -  The
     preparation  of  financial   statements  in  conformity   with   accounting
     principles  generally  accepted  in the United  States of America  requires
     management  to make  estimates  and  assumptions  that affect the  reported
     amounts of assets and liabilities  and disclosure of contingent  assets and
     liabilities  at the  date of the  financial  statements  and  the  reported
     amounts of  revenues  and  expenses  during the  reporting  period.  Actual
     amounts could differ from those estimates.


                                       65


     Fair Value of Financial  Instruments - The Company's financial  instruments
     consist  primarily  of cash  and  cash  equivalents,  accounts  receivable,
     accounts payable,  accrued expenses,  borrowings from directors,  a line of
     credit and long-term  debt.  The fair value of instruments is determined by
     reference  to  various  market  data and  other  valuation  techniques,  as
     appropriate.  Unless  otherwise  disclosed,  the fair  value of  short-term
     financial  instruments  approximates  their  recorded  values  due  to  the
     short-term  nature  of  the  instruments.  Based  on  the  borrowing  rates
     currently  available to the Company for bank loans with  similar  terms and
     average  maturities,  the fair value of  long-term  debt  approximates  its
     carrying value.

     Revenue  Recognition and Deferred Revenue - The Company's  principal source
     of  revenue to date has been from  contracts  with  various  pharmaceutical
     companies and managed care  organizations for the development and operation
     of disease  management  programs for chronic diseases,  disease  management
     programs and other health care information  system  applications.  Deferred
     revenue  represents  amounts  billed in advance  of  delivery  under  these
     contracts.

     Development  Contracts  - The  Company's  program  enhancements  consist of
     specific  changes  or  modifications  to  existing  products  requested  by
     customers and are  short-term in nature.  Therefore,  revenue is recognized
     upon delivery of the enhancement.

     Program  Operations - The Company's program operation  contracts call for a
     per-enrolled patient fee to be paid by the customer for a series of program
     services as defined in the contract. The timing of customer payments varies
     by contract,  but typically  occurs in advance of the  associated  services
     being provided.  Revenues from program operations are recognized ratably as
     the program services are delivered.

     Licenses - Revenue  derived from software  license fees is recognized  when
     the criteria  established by Statement of Position 97-2,  Software  Revenue
     Recognition,   is   satisfied.   License  fees   associated   with  hosting
     arrangements (e.g.,  arrangements that include the right of the customer to
     use the software stored on the Company's hardware),  are recognized ratably
     over the hosting period when such fees are fixed and determinable.  Hosting
     fees with payment terms  extending past one year are recognized as payments
     become due.

     Cash and Cash  Equivalents - Cash and cash  equivalents  include all highly
     liquid debt instruments with original maturities of three months or less.

     Concentrations  of Credit Risk - Financial  instruments,  which potentially
     subject the Company to concentration of credit risk, consist principally of
     cash and cash equivalents and accounts  receivable.  The Company places its
     cash and cash equivalents with high credit quality institutions.

     The  Company's  current  contracts  are  concentrated  in a small number of
     customers,  consequently, the loss of any one of its customers could have a
     material adverse effect on the Company and its operations. During the years
     ended December 31, 2003,  2002 and 2001,  approximately  $3,635,661  (64%),
     $1,680,475  (71%),  and $1,027,931  (65%),  respectively,  of the Company's
     revenues arose from contracts  with three  customers.  At December 31, 2003
     and 2002,  accounts  receivable included balances of $151,688 and $317,046,
     respectively, from contracts with these customers.

     Property  and  Equipment  -  Property  and  equipment  are  stated at cost.
     Depreciation is computed using the straight-line  method over the estimated
     useful lives of the assets, which range from 3 to 10 years.

     Asset  Impairment  - The Company  regularly  assesses all of its long lived
     assets for  impairment  and recognizes a loss when the carrying value of an
     asset  exceeds its fair value.  The Company  determined  that no impairment
     loss of long lived assets need be recognized for applicable assets in 2003,
     2002 and 2001.


                                       66


     Intangible  Assets -  Intangible  assets at December  31, 2002  represent a
     purchased  software asset of the Company's web based services that is being
     amortized over 4 years using the straight-line  method.  This asset balance
     at December 31, 2003  totaled  $35,893.  At December  31, 2003,  intangible
     assets also includes, among other things, a customer list and relationships
     acquired from American Caresource Corporation on December 31, 2003 totaling
     $462,000.

     Research and Development - Research and  development  costs are expensed as
     incurred.

     Income Taxes - Deferred  income tax assets and  liabilities  are recognized
     for the future tax  consequences  attributable  to differences  between the
     financial statement carrying amounts of existing assets and liabilities and
     their   respective  tax  bases  and  net  operating  loss  and  tax  credit
     carryforwards.

     Net Loss Per Share - The  calculations  for the basic and diluted  loss per
     share  were  based on net  loss  attributable  to  common  stockholders  of
     $11,049,518,  $2,314,361 and  $4,555,305  and a weighted  average number of
     common shares  outstanding,  including  convertible  preferred  shares,  of
     3,399,616,  979,668 and 880,875 for the years ended December 31, 2003, 2002
     and 2001 after giving effect to the 1 for 12 reverse  stock split  approved
     by the Company's stockholders on December 31, 2003,  respectively.  All per
     share information included in the consolidated financial statements and the
     footnotes  thereto  have been  restated  for effect of the 1 for 12 reverse
     stock split. The computation of fully diluted loss per share for 2003, 2002
     and 2001 did not  include  101,160,  92,928  and  103,128  shares of common
     stock,  respectively,  which consist of outstanding  convertible  preferred
     shares,  options and warrants  because the effect would be antidilutive due
     to the net loss in those years.

     The  calculation  of the  Company's  net loss per share for the years ended
     December 31, 2003, 2002 and 2001 is as follows:



                                                                2003               2002             2001
                                                                ----               ----             ----
     Net loss per share - basic and diluted
                                                                                       
        Net loss attributable to common stockholders        $(11,049,518)      $(2,314,361)     $(4,555,305)
                                                         ----------------- ----------------- ----------------
        Actual weighted average common shares outstanding         924,109           913,002          814,209
        Weighted average preferred shares outstanding
           convertible into common shares                       2,475,507            66,666           66,666
                                                         ----------------- ----------------- ----------------
        Total weighted average common shares outstanding        3,399,616           979,668          880,875
                                                         ----------------- ----------------- ----------------
        Net loss per share - basic and diluted                 $   (3.25)         $  (2.36)        $  (5.17)
                                                         ================= ================= ================


     Retirement  Plan - The Company has a retirement  plan that qualifies  under
     Section 401(k) of the Internal  Revenue Code.  This  retirement plan allows
     eligible  employees  to  contribute  a portion of their  income on a pretax
     basis to the plan, subject to the limitations  specified under the Internal
     Revenue  Code.  The  Company's  annual  contribution  to the plan is at the
     discretion of the Board of Directors.  The Company made no contributions to
     this plan in 2003, 2002 and 2001.

     New Accounting  Pronouncements - In January 2003, the Financial  Accounting
     Standards Board ("FASB") issued  Interpretation  No. 46,  Consolidation  of
     Variable  Interest  Entities ("FIN 46"). FIN 46 requires  disclosure  about
     variable  interest  entities for which it is  reasonably  possible that the
     Company will be required to  consolidate or disclose  information  when the
     Interpretation  becomes effective.  The Company has determined that it does
     not have any variable interest  entities which would require  consolidation
     in accordance with FIN 46.


                                       67


     In May 2003, the FASB issued  Statement of Financial  Accounting  Standards
     No. 150, Accounting for Certain Financial  Instruments with Characteristics
     of Both Liabilities and Equity,  ("SFAS No. 150"). SFAS No. 150 establishes
     standards  for how an issuer  classifies  and  measures  certain  financial
     instruments  with  characteristics  of  both  liabilities  and  equity.  It
     requires that an issuer classify a financial  instrument that is within its
     scope as a liability (or an asset in some  circumstances).  The adoption of
     SFAS No. 150 in 2003 did not have an effect on the  Company's  consolidated
     financial statements.

     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:




                                              2003            2002           2001
                                              ----            ----           ----

     Net loss attributable to common
                                                                
     shareholders - as reported         $ (11,049,518)   $ (2,314,361)   $ (4,555,305)

     Stock compensation expense              (118,257)       (136,306)       (210,471)
                                      ----------------- --------------- ---------------
     Net loss - pro forma               $ (11,167,775)   $ (2,450,667)   $ (4,765,776)
                                      ================= =============== ===============
     Net loss per share - basic
       and diluted - as reported              $ (3.25)        $ (2.36)        $ (5.17)
                                      ================= =============== ===============
     Net loss per share - basic
       and diluted - pro forma                $ (3.29)        $ (2.50)        $ (5.41)
                                      ================= =============== ===============



     The fair value of each option grant is estimated on the date of grant using
     the Black-Scholes  option-pricing  model using assumed  risk-free  interest
     rates of 3.79% for the year ended  December  31,  2003,  3.63% for the year
     ended  December 31, 2002 and 4.86% for the year ended December 31, 2001 and
     an expected  life of 7 years.  The  assumed  dividend  yield was zero.  The
     Company has used a volatility factor of .98 for the year ended December 31,
     2003, 1.78 for the year ended December 31, 2002 and 1.24 for the year ended
     December 31, 2001. For purposes of pro forma disclosure, the estimated fair
     value of each option is  amortized to expense  over that  option's  vesting
     period.


                                       68


     Consolidated  Statements of Cash Flows - Supplemental noncash investing and
     financing  activities for the years ended December 31, 2003,  2002 and 2001
     are as follows:



                                                          2003          2002         2001
     Common stock activities:
        Borrowings from directors converted into
                                                                         
            common stock                               $4,482,500    $     -      $     -
        Accrued interest converted into common stock      438,099          -            -
        Common stock issued in acquisition              1,848,000          -            -
        Common stock issued for acquisition expenses       30,898          -            -
                                                      ------------- ------------ ------------
        Total of noncash common stock activities       $6,799,497    $     -      $     -
                                                      ============= ============ ============
     Preferred stock activities:
        Borrowings from directors converted to
            preferred stock                             $ 745,000    $     -      $     -
        Borrowings from shareholders converted into
            preferred stock                             3,675,000          -            -
        Accrued interest converted into preferred
            stock                                         865,180          -            -
        Issuance of preferred stock in connection
            with issuance of debt                       2,143,120          -            -
                                                      ------------- ------------ ------------
        Total noncash preferred stock activities       $7,428,300    $     -      $     -
                                                      ============= ============ ============
     Dividends declared on Series C & D Convertible
          Preferred Stock                               $ 243,257    $  90,000    $  90,000
                                                      ============= ============ ============
     Value of beneficial conversion feature on Series
          D Convertible Preferred Stock recognized as
          a dividend                                   $7,428,300    $     -      $     -
                                                      ============= ============ ============


     Segments - Prior to the American Caresource  Corporation  acquisition,  the
     Company  operated  in one  segment.  As a result  of the  acquisition,  the
     Company anticipates that it will operate in two segments.  Accordingly, the
     required segment information will be disclosed commencing in 2004.

2.   PROPERTY AND EQUIPMENT

     Property and equipment consists of the following at December 31:

                                        2003        2002

     Computer software               $  686,792  $  665,286
     Computer equipment               1,514,547   1,168,445
     Telephone equipment                365,204     362,887
     Leasehold improvements              64,897      41,504
     Office furniture and equipment     395,720     354,329
                                   ------------- -----------
                                      3,027,160   2,592,451

     Less accumulated depreciation    2,721,609   2,306,705
                                   ------------- -----------

     Property and equipment, net      $ 305,551  $  285,746
                                   ------------- -----------


                                       69


3.   Debt

     Line  of  Credit  - At  December  31,  2003,  the  Company  has  borrowings
     outstanding  totaling  $3,000,000  under a line  of  credit,  which  is the
     maximum amount  available under the line of credit.  The amount borrowed is
     due and payable on July 31,  2005.  Interest is due and payable at maturity
     at a floating  rate based  upon LIBOR plus 1.75%  (effective  LIBOR rate at
     December 23, 2003 was 1.2%).  There is a commitment  fee of 0.25% per annum
     on the  average  daily  unused  amount  of the  line of  credit  to be paid
     quarterly in arrears. The line of credit is secured by substantially all of
     the Company's  assets and is guaranteed by Dr. Schaffer and Mr.  Pappajohn,
     directors  of the  Company.  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,  convertible  into 475,000 shares of the Company's common
     stock for $10.00 per preferred share.

     At December 31, 2002, the Company's  borrowings  outstanding under the line
     of credit totaled $3,000,000.  This line of credit was amended during 2003,
     the amended terms of which are described in the preceding paragraph.

     Borrowings  from  directors - 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. See
     Note 5.


                                       70


     Long-Term  Debt  -  Long-term  debt,   which  was  acquired  from  American
     Caresource Corporation, consists of the following at December 31, 2003:



     Unsecured non-interest bearing note to a stockholder, payable in monthly
                                                                                 
     installments of $10,127, matured in December 2003                              $    40,507

     Unsecured non-interest bearing obligation to a stockholder, payable in
     monthly installments of $5,000, maturing in April 2004                              15,732

     Unsecured loan at index rate plus 2.5% (6.5%) to a stockholder, due on demand
                                                                                         30,478
     19% obligation assumed and due an individual in connection with the purchase
     of certain assets, payable in monthly installments of $2,000, matured in
     December 2003                                                                       11,577

     5% unsecured note payable to a client, with principal and interest maturing
     in March 2004                                                                      165,000

     Other                                                                                7,610

     Capital lease obligations (see Note 7)                                              63,508
                                                                                    ------------
     Total debt                                                                         334,412

     Less current portion                                                             (294,117)
                                                                                    ------------
     Total long-term debt                                                           $    40,295
                                                                                    ============


     Scheduled payments in each of the next four years are as follows:

     Year ended December 31,
     ------------------------ --------------
     2004                         $ 294,117
     2005                            21,360
     2006                            12,748
     2007                             6,187
     ------------------------ --------------
     Total                      $   334,412
                              ==============


                                       71


4.   INCOME TAXES

     There was no income tax expense for the years ended December 31, 2003, 2002
     and 2001.

     Income tax expense for the years ended  December 31 differed  from the U.S.
     federal income tax rate of 34% as a result of the following:



                                                           2003            2002          2001

                                                                           
     Computed "expected" tax benefit                  $ (1,148,507)    $ (756,283)  $ (1,518,203)

     Change in the valuation allowance
         for deferred tax assets                            487,000        885,000      1,795,000

     Amortization of debt discount is not deductible        728,660              -              -

     State and local income taxes at statutory rates,
         net of federal income tax benefit                 (73,350)      (133,462)      (267,918)

     Other, net                                               6,197          4,745        (8,879)
                                                      -------------- -------------- --------------

                                                         $     -        $     -        $    -
                                                      -------------- -------------- --------------


     The tax  effects of  temporary  differences  that give rise to  significant
     portions  of the  deferred  income  tax  assets  and  deferred  income  tax
     liabilities at December 31, are presented below.

     Deferred income tax assets:                        2003            2002

     Accounts receivable, principally due
       to allowance for doubtful accounts          $     21,000  $      22,000
     Deferred revenue                                   135,000         63,000
     Compensation                                        53,000         40,000
     Net operating loss carryforwards                13,053,000     12,698,000
     Tax credit carryforwards                            75,000         75,000
     Amortization of intangibles                        153,000        112,000
     Other                                               36,000         36,000
                                                   ------------- --------------
          Total gross deferred income tax assets     13,526,000     13,046,000

          Less valuation allowance                 (13,461,000)   (12,974,000)
                                                   ------------- --------------

          Net deferred income tax assets                 65,000         72,000
                                                   ------------- --------------

     Deferred income tax liabilities:

     Property and equipment, principally due to
       differences in depreciation and amortization     (9,000)       (30,000)
     Other                                             (56,000)       (42,000)
                                                   ------------- --------------
          Total gross deferred income tax liability    (65,000)       (72,000)
                                                   ------------- --------------

          Net deferred income taxes                 $     -        $     -
                                                   ------------- --------------


                                       72


     Management of the Company has evaluated the available evidence about future
     taxable  income and other  possible  sources of realization of deferred tax
     assets. The valuation  allowance reduces deferred tax assets to zero, which
     represents  management's  best  estimate of the amount of such deferred tax
     assets that more likely than not will be realized.

     At December 31, 2003 the Company has net operating  loss  carryforwards  of
     approximately  $32,684,000,  which are available to offset  future  taxable
     income,  if any,  which  begin to  expire  in 2010.  The  Company  also has
     investment  tax credit  carryforwards  for federal  income tax  purposes of
     approximately  $75,000, which are available to reduce future federal income
     taxes,  if any,  which  begin to expire in 2010.  These loss and tax credit
     carryforwards  may be subject to  limitation  by  certain  sections  of the
     Internal Revenue Code relating to ownership changes.

5.   PREFERRED STOCK

     On March 31,  2000,  the Company  completed a private  placement of 100,000
     shares of newly issued Series C 9% Cumulative  Convertible  Preferred Stock
     ("Series C Preferred Stock"),  raising $1,000,000 in total proceeds.  These
     shares can be  converted  at any time by the holder into common  stock at a
     rate of 8 shares of common stock to 1 share of Series C Preferred Stock. In
     2003, this rate changed to 10 shares of common stock to 1 share of Series C
     Preferred  Stock.  Each share of Series C Preferred Stock has voting rights
     equivalent  to 10 shares of common  stock.  As of December  31,  2003,  the
     Company  has accrued  $337,500  in  dividends  since  inception,  which was
     payable to the Series C stockholders.

     During  2003 the  Company  issued a total of 301,582  shares of Series D 9%
     Cumulative  Convertible  Preferred  Stock  ("Series D Preferred  Stock") in
     connection  with certain  borrowings  during 2003. In  accordance  with APB
     Opinion  No. 14, a portion of the cash  received  totaling  $2,143,120  was
     allocated to the preferred  stock  resulting in a debt discount in the same
     amount,  which was fully  amortized by December 31, 2003.  Additionally,  a
     beneficial  conversion  feature has arisen since the value recorded for the
     preferred  stock,  which is convertible into common stock, is less than the
     fair  market  value of the  common  stock  totaling  $5,177,458.  While the
     resulting beneficial conversion feature totals $3,034,338,  the Company can
     only record a  beneficial  conversion  equal to the value of the  preferred
     stock  recorded,  $2,143,120.  Such  amount  is  reflected  in the net loss
     attributable  to the common  stockholders  for the year ended  December 31,
     2003  because  the  preferred  stock is  immediately  convertible  into the
     Company's  common stock.  As of December 31, 2003,  the Company has accrued
     $153,257 in dividends  since  inception,  which was payable to the Series D
     stockholders.

     On December 31, 2003, $5,285,180 of debt and accrued interest was converted
     into  528,518  shares of Series D Preferred  Stock at a price of $10.00 per
     share.  Because the effective purchase price per common share was $1.00 per
     share while the fair market value on December 31, 2003 was $2.40 per share,
     there is a  beneficial  conversion  feature of these  Series D  Convertible
     Preferred  shares  totaling  $7,399,252.  While  the  resulting  beneficial
     conversion  feature  totals  $7,399,252,  the  Company  can  only  record a
     beneficial  conversion  equal to the value of the preferred stock recorded,
     $5,285,180.  Such amount is reflected in the net loss  attributable  to the
     common  stockholders  for the year ended  December  31,  2003  because  the
     preferred stock is immediately convertible into the Company's common stock.


                                       73


6.   STOCK OPTIONS AND WARRANTS

     The Company has an Employee Stock Option Plan (the "Stock Option Plan") for
     the benefit of certain employees, non-employee directors, and key advisors.
     On December 31, 2003, the  stockholders  approved an amendment to the Stock
     Option Plan that increased its authorized shares from 1,680,000 shares on a
     pre-split  basis to 3,500,000  shares  after giving  effect to the 1 for 12
     reverse  stock  split and  increase  in the  Company's  overall  authorized
     capital. On May 2, 2000, the Company filed a Form S-8 registering 1,680,000
     of the Stock Option Plan shares,  the Company plans to file an amended Form
     S-8 which will register the full  3,500,000  shares now  authorized.  Stock
     options  granted  under  the Stock  Option  Plan may be of two  types:  (1)
     incentive  stock options and (2)  nonqualified  stock  options.  The option
     price of such grants  shall be  determined  by a Committee  of the Board of
     Directors (the "Committee"),  but shall not be less than the estimated fair
     market  value of the common  stock at the date the option is  granted.  The
     Committee  shall fix the terms of the grants  with no option  term  lasting
     longer  than ten years.  The  ability to  exercise  such  options  shall be
     determined  by the  Committee  when the  options  are  granted.  Generally,
     outstanding  options vest at the rate of 20% per year.  During  2001,  some
     grants had a portion of the options  vest  immediately  with the balance of
     the options vesting at a rate of 20% per year.


                                       74


     A summary of stock option activity follows:



                                                            Outstanding    Weighted-Average
                                                              Options       Exercise Price

                                                                          
Options outstanding at December 31, 2000                      701,880           $ 1.28

Options granted during the year ended December 31, 2001
  (weighted average fair value of $0.18)                      536,500           $ 0.19

Options forfeited by holders during the year
  ended December 31, 2001                                    (40,840)           $ 1.83

Options outstanding at December 31, 2001                    1,197,540           $ 0.77

Options forfeited by holders during the year
  ended December 31, 2002                                    (82,400)           $ 0.86
                                                           -----------
Options outstanding at December 31, 2002                    1,115,140           $ 0.76

Options granted during the year ended December 31, 2003
  (weighted average fair value of $0.20)                      100,000           $ 0.20

Options forfeited by holders during the year
  ended December 31, 2003                                       (700)           $ 0.09

Options exercised during the year ended December 31, 2003       (400)           $ 0.09
                                                           -----------
Options outstanding at December 31, 2003
  before giving effect to the 1 for 12 reverse stock split  1,214,040           $ 0.78
                                                           ===========
Options outstanding at December 31, 2003
  after giving effect to the 1 for 12 reverse stock split     101,160           $ 9.36
                                                           ===========
Options exercisable at December 31, 2003                       70,565           $ 8.54
                                                           ===========
Options available for grant at December 31, 2003            3,376,917
                                                           ===========



                                       75


     The following  table  summarizes  information  concerning  outstanding  and
     exercisable  options at December 31, 2003, after giving effect to the 1 for
     12 reverse stock split:





                               Options Outstanding                Options Exercisable
                     -------------------------------------   ---------------------------
                                    Weighted
                                     Average     Weighted                      Weighted
                                      Remaining   Average                       Average
        Range of       Number        Contractual Exercise        Number        Exercise
     Exercise Price  Outstanding         Life      Price      Exercisable        Price

                                                                
     $1.08 - $11.99         65,747       5.73      $ 3.48         51,449       $  3.47

     $12.00 - $23.99        17,250       4.88      $15.20          7,917       $ 17.65

     $22.00 - $33.00        18,163       5.55      $25.24         11,199       $ 25.40
                     --------------                         -------------

                           101,160                                70,565
                     ==============                         =============


7.   COMMITMENTS

     The Company leases an automobile,  certain equipment and other office space
     under  non-cancelable  lease  agreements,  which  expire at  various  dates
     through April 2008.

     Rent expense for office space for the years ended  December 31, 2003,  2002
     and 2001 was $139,256, $95,508 and $136,045, respectively.

     At December  31, 2003  minimum  annual lease  payments  for  operating  and
     capital leases are as follows:

                                             Leases
     Years ending December 31,          Capital   Operating
     --------------------------------- --------- -----------
                       2004            $ 28,467   $ 386,839
                       2005              24,362     324,993
                       2006              14,036     308,783
                       2007               7,040     304,951
                       2008                -        110,888
     Less amount representing interest (10,397)
     --------------------------------- --------- -----------
     Net present value of
     minimum lease payments            $ 63,508  $1,436,454


                                       76


8.   QUARTERLY RESULTS (UNAUDITED)

     The following is a summary of the unaudited  interim  results of operations
     by quarter:



                                                     First     Second       Third      Fourth
     -------------------------------------------------------------------------------------------
     Year ended December 31, 2003:
                                                                        
     Revenues                                     $ 947,679 $ 1,580,037 $ 1,429,692 $ 1,729,885
     Gross margin                                   186,077     395,182     321,916     621,359
     Net loss                                     (505,206) (1,006,198) (1,190,639)   (675,918)
     Net loss attributable to common shareholders (527,706) (2,496,016) (1,858,563) (6,167,233)
     Net loss per common share                       (0.54)      (0.70)      (0.45)      (1.26)

     Year ended December 31, 2002:
     Revenues                                     $ 499,328   $ 542,716   $ 586,100   $ 727,533
     Gross margin                                    11,475      80,990     118,938     229,810
     Net loss                                     (661,521)   (556,519)   (474,147)   (532,174)
     Net loss attributable to common shareholders (684,021)   (579,019)   (496,647)   (554,674)
     Net loss per common share                       (0.70)      (0.59)      (0.51)      (0.57)



                                       77


Schedule II

                            Patient InfoSystems, Inc.
                        Valuation and Qualifying Accounts
              For the Years Ended December 31, 2003, 2002 and 2001



                                           Balance at                                            Balance at
                                            Beginning                                              End of
                                             of Year         Additions         Deductions           Year
Allowance for Doubtful Accounts:
                                                                                
                                  2003   $     55,000      $        92           $  2,951      $     52,141
                                  2002   $     37,217      $    59,117           $ 41,334      $     55,000
                                  2001   $     48,122      $    15,447           $ 26,352      $     37,217

Deferred Tax Assets Valuation
  Allowance:
                                  2003   $ 12,974,000      $   487,000               -         $ 13,461,000
                                  2002   $ 12,089,000      $   885,000               -         $ 12,974,000
                                  2001   $ 10,294,000      $ 1,795,000               -         $ 12,089,000


                                       78



             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



To the Board of Directors
American CareSource Corporation
Irving, Texas

We have  audited  the  accompanying  pre-acquisition  balance  sheet of American
CareSource  Corporation as of December 31, 2003,  and the related  statements of
operations,  stockholders' deficit and cash flows for the year then ended. These
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is to express an opinion on these financial  statements based on
our audit.


We conducted our audit in accordance with the standards of the Public Accounting
Oversight  Board  (United  States).  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amount and  disclosures  in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audit  provides  a
reasonable basis for our opinion.



In our opinion,  the financial  statements  referred to above present fairly, in
all  material  respects,  the  pre-acquisition  financial  position  of American
CareSource  Corporation  as of  December  31,  2003,  and  the  results  of  its
operations  and its cash  flows  for the year  then  ended  in  conformity  with
U.S. generally accepted accounting principles.



/s/McGladrey & Pullen LLP

McGladrey & Pullen LLP
Des Moines, Iowa


                                       79


Independent Auditors' Report


To the Board of Directors and Stockholders
of American CareSource Corporation
Irving, Texas

We  have  audited  the  accompanying   balance  sheet  of  American   CareSource
Corporation (the Company) as of December 31, 2002 and the related  statements of
operations,  stockholders' deficit and cash flows for the year then ended. These
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

We conducted our audit in accordance with auditing standards  generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audit  provides  a
reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects, the financial position of American CareSource Corporation
as of December 31, 2002 and the results of its operations and its cash flows for
the year then ended in conformity with accounting  principles generally accepted
in the United States of America.


/s/ BDO Seidman, LLP
BDO Seidman, LLP
Dallas, Texas
May 2, 2003, except for Note 2, as to
which the date is December 31, 2003

                                       80



                         American CareSource Corporation

                                 Balance Sheets


December 31,                                                                  2003             2002
------------------------------------------------------------------------------------------------------
                                                                        (pre-acquisition -
                                                                            See Note 1)
Assets

Current assets
                                                                                  
     Cash and cash equivalents                                           $       1,710  $    158,968
     Accounts receivable                                                       486,435       958,334
     Prepaid and other                                                          15,942        17,352
------------------------------------------------------------------------------------------------------
Total current assets                                                           504,087     1,134,654
------------------------------------------------------------------------------------------------------
Property and equipment, net                                                    152,480       207,926
------------------------------------------------------------------------------------------------------

Total assets                                                             $     656,567  $  1,342,580
------------------------------------------------------------------------------------------------------

                                       81



Liabilities and Stockholders' Deficit

Current liabilities
      Excess of outstanding checks over bank balance                     $     189,608  $          -
     Due to service providers                                                  709,982     1,519,757
     Accounts payable and accrued liabilities                                1,263,824     1,190,764
     Current maturities of long-term debt                                    3,844,117       460,823
-----------------------------------------------------------------------------------------------------
Total current liabilities                                                    6,007,531     3,171,344

Long-term debt, less current maturities                                         40,295     2,382,406
-----------------------------------------------------------------------------------------------------
Total liabilities                                                            6,047,826     5,553,750
-----------------------------------------------------------------------------------------------------

Stockholders' Deficit
     Common stock: no par value, 100,000 shares
         authorized; 28,500 shares issued and outstanding as of
         December 31, 2003 and 2002                                          4,500,100     4,500,100
     Additional paid in capital                                              2,422,703             -
      Accumulated deficit                                                 (12,314,062)   (8,711,270)
-----------------------------------------------------------------------------------------------------
Total stockholders' deficit                                                (5,391,259)   (4,211,170)
-----------------------------------------------------------------------------------------------------

Total liabilities and stockholders' deficit                              $     656,567  $  1,342,580
-----------------------------------------------------------------------------------------------------


See Notes to Financial Statements.

                                       82



                         American CareSource Corporation

                            Statements of Operations

  Years ended December 31,                                     2003                   2002
  -----------------------------------------------------------------------------------------
  Revenues
                                                                    
       Ancillary health                             $     8,706,471       $      9,161,386
       Patient claims                                       457,918                479,754
  -----------------------------------------------------------------------------------------
                                                          9,164,389              9,641,140

  Costs of revenues                                      10,196,728             11,175,947
  -----------------------------------------------------------------------------------------
  Contribution Deficit                                  (1,032,339)            (1,534,807)
  -----------------------------------------------------------------------------------------
  Operating Expenses:
       Selling, general and administrative expenses       2,193,780              2,533,123
       Depreciation and amortization                         85,314                 85,906
  -----------------------------------------------------------------------------------------
  Total Operating Expenses                                2,279,094              2,619,029
  -----------------------------------------------------------------------------------------
  Operating Loss                                        (3,311,433)            (4,153,836)
  Other Expense:
       Interest expense                                     282,204                362,804
       Other                                                  9,155                  3,470
  -----------------------------------------------------------------------------------------
  Net Loss                                          $   (3,602,792)       $    (4,520,110)
  -----------------------------------------------------------------------------------------
  Net Loss Per Share - Basic and Diluted            $      (126.41)       $       (212.17)
  -----------------------------------------------------------------------------------------
  Weighted Average Common Shares Outstanding                 28,500                 21,304
  -----------------------------------------------------------------------------------------


See Notes to Financial Statements.

                                       83




                         American CareSource Corporation

                       Statements of Stockholders' Deficit


                                  Common Stock                    Accumulated      Additional      Stockholder
                                     Shares           Amount        Deficit       Paid in Capital   Receivable       Total
-----------------------------------------------------------------------------------------------------------------------------
                                                                                              
Balance at December 31, 2001          20,000  $           100     $ (4,191,160) $             -      $ (72,155) $ (4,263,215)

Change in stockholder receivable           -                -                -                -         72,155        72,155

Net loss                                   -                -       (4,520,110)               -              -    (4,520,110)

Stock issuance                         8,500        4,500,000                -                -              -     4,500,000
-----------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 2002          28,500        4,500,100       (8,711,270)               -              -    (4,211,170)

Net loss                                   -                -       (3,602,792)               -              -    (3,602,792)

Forgiveness of shareholder debt            -                -                -        2,422,703              -     2,422,703
----------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 2003          28,500  $     4,500,100 $    (12,314,062) $     2,422,703      $       -  $ (5,391,259)



See Notes to Financial Statements.

                                       84




                         American CareSource Corporation

                            Statements of Cash Flows

                           Increase (Decrease) in Cash
Years ended December 31,                                                              2003                  2002
--------------------------------------------------------------------------------------------------------------------
Operating Activities:
                                                                                      
     Net loss                                                               $   (3,602,792) $         (4,520,110)
     Adjustments to reconcile net loss to net cash (used in) operating
        activities:
         Depreciation and amortization                                               85,314                85,906
         Forgiveness of stockholder receivable                                            -                72,155
           Changes in operating assets and liabilities:
              Accounts receivable                                                   471,899             (639,294)
              Prepaid and other current assets                                        1,410               (1,775)
              Due to service providers                                            (809,775)             1,147,568
              Accounts payable and accrued liabilities                               73,060               550,652
--------------------------------------------------------------------------------------------------------------------
Net cash (used in) operating activities                                         (3,780,884)           (3,304,898)
--------------------------------------------------------------------------------------------------------------------
Cash (Used in) Investing Activities,  purchase of
     property and equipment                                                        (29,868)              (96,272)
--------------------------------------------------------------------------------------------------------------------
Cash Provided By Financing Activities:
     Proceeds from long-term debt                                                 3,702,332             3,634,334
     Principal payments on long-term debt                                         (238,446)           (4,592,023)
     Stock issuance                                                                       -             4,500,000
     Increase in excess of outstanding checks over bank balance                     189,608                     -
--------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities                                         3,653,494             3,542,311
--------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash                                                   (157,258)               141,141
Cash and cash equivalents, beginning of year                                        158,968                17,827
--------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of year                                      $         1,710       $       158,968
--------------------------------------------------------------------------------------------------------------------
Supplemental Cash Flow Information:
     Cash paid for interest                                                 $       147,727       $       349,153
Supplemental Disclosure of Non-Cash Investing and Financing Activities:
     Equipment purchased with long-term debt                                $             -       $        96,101
     Long-term debt forgiven by shareholder                                       2,422,703                     -
--------------------------------------------------------------------------------------------------------------------


See Notes to Financial Statements.

                                       85


                         American CareSource Corporation

                          Notes to Financial Statements

1.   Summary of  Significant  Description  of  business

     American CareSource  Corporation (ACS) (formerly Health Accounting Policies
     Data  Solutions,  Inc.),  an Indiana C  Corporation,  was formed in October
     1997.  It  is  in  the  business  of  providing  national   administration,
     coordination  and case  management  of  ancillary  healthcare  services for
     employment  groups through  separate  contracts with a national  network of
     providers and it provides  administration of patient claims for health care
     organizations.

     Basis of  Presentation  - The Company's  December 31, 2003 balance sheet is
     presented just prior to a sale of substantially all of the Company's assets
     and  the  assumption  of  the  Company's  operating  and  business  related
     liabilities  (See Note 2) which  occurred  after the close of  business  on
     December  31,  2003 in exchange  for  1,100,000  shares of common  stock of
     Patient Infosystems, Inc. (PATI). After the transaction, the Company's only
     recorded  assets  were the  shares  of  PATI,  which  will be  subsequently
     distributed  to  Company  shareholders.  The  Company  plans to wind up its
     affairs and liquidate in 2004.

     Revenue  recognition - Ancillary health revenues are reported when services
     by providers have been authorized and performed and collections  from third
     party payors are  reasonably  assured.  These  revenues are recognized on a
     gross basis,  i.e. the revenue recorded is the amount of claims received or
     expected to be  received  from third party  payors for the  performance  of
     services by  providers  and costs of revenues  are  recorded for the amount
     paid or expected to be paid to medical  service  providers.  Patient claims
     revenues are  recognized by the Company as the services are provided at the
     fee to be received for services rendered.

     Costs of revenues - Costs of ancillary  health revenues consist of expenses
     due to providers for providing  employee (patient) services and the related
     direct labor and overhead of providing  such  services.  The Company is not
     liable for costs incurred by independent  contract service  providers until
     payment is received by the Company from the payors.  The Company recognizes
     actual or estimated  liabilities to independent  contract service providers
     as related revenues are recognized.

                                       86


     Costs of patient  claims  revenues  consist of direct labor and overhead to
     administer the patient claims.

     Concentration  of revenues - The Company has five customers  which comprise
     the  following   approximate  amounts  of  Company  revenues  and  accounts
     receivable:



                              2003                                 2002
               ------------------------------------ ---------------------------------
                                          % of                                 % of
                Accounts                 Total       Accounts                 Total
               Receivable   Revenue     Revenue     Receivable   Revenue     Revenue
               ----------------------------------------------------------------------

                                                             
     Customer A  $102,000  $4,133,000      45%        $ 31,000 $ 2,786,000     29%

     Customer B    90,000   1,066,000      12          140,000   1,499,000     16

     Customer C   110,000   1,032,000      11          294,000   1,797,000     19

     Customer D    69,000     984,000      11          171,000     912,000      9

     Customer E     2,000     557,000       6          128,000   1,063,000     11
               ----------------------------------------------------------------------
                 $373,000  $7,772,000      85%        $764,000 $ 8,057,000     84%
               ======================================================================


     Effective December 19, 2003,  Customer A notified the Company that they are
     terminating their contract for services.

     Cash and cash  equivalents  - All highly liquid  investments  with original
     maturities of twelve months or less are considered to be cash equivalents.

     Accounts  receivable - Accounts receivable are reported at amounts expected
     to be received from third party payors and other customers.

     Because of the nature of the Company's business, all receivable amounts are
     expected to be colleted,  hence, the Company does not have an allowance for
     doubtful accounts.

     Fair value of financial  instruments - The Company's financial  instruments
     include cash,  accounts receivable and accounts payable that are carried at
     cost,  which  approximates  fair value.  Notes  payable are carried at cost
     which  approximates  fair value as these notes were  assumed as part of the
     business combination as discussed in Note 2.

     Property  and  equipment - Property and  equipment  are stated at cost less
     accumulated depreciation and amortization. Depreciation and amortization is
     computed  over  the  estimated   useful  lives  of  the  assets  using  the
     straight-line   method  for  financial   reporting   purposes  and  on  the
     straight-line   and  accelerated   methods  for  tax  purposes.   Leasehold
     improvements  are  amortized  using the  straight-line  method  over  their
     estimated  useful lives or the lease term,  whichever is shorter.  Ordinary
     maintenance and repairs are charged to operations. Expenditures that extend
     the physical or economic life of property and equipment are capitalized.

                                       87


     The estimated useful lives of property and equipment are as follows:

                    Leasehold Improvements                5 years
                    Computer Equipment                  3-5 years
                    Furniture and Fixtures                7 years
                    Software                            3-5 years

     The Company  periodically  reviews  the  carrying  value of its  long-lived
     assets  for  possible  impairment.  In  management's  opinion,  there is no
     impairment of such assets at December 31, 2003.

     Stock splits - Effective April 8, 2002, the Company's outstanding shares of
     common stock  increased  as a result of a 100:1 stock split.  The effect of
     this increase has been retroactively  reflected throughout the accompanying
     financial statements.

     Earnings  Per  Common  Share - Basic  earnings  per  share is  computed  by
     dividing  net loss by the  weighted  average  number of shares  outstanding
     during each of the periods. Since there are no dilutive securities, diluted
     earnings per share is the same amount.

     Income   taxes  -  Income  taxes  are  provided  for  the  tax  effects  of
     transactions  reported  in the  financial  statements  and consist of taxes
     currently due plus deferred taxes related primarily to differences  between
     the basis of assets and liabilities for financial and income tax reporting.
     The net deferred tax assets and liabilities represent the future tax return
     consequences  of  those  differences,  which  will  either  be  taxable  or
     deductible  when the  assets  or  liabilities  are  recovered  or  settled.
     Deferred  tax  assets  are  reduced by a  valuation  allowance  when in the
     opinion of  management  it is more likely than not that some portion or all
     of the deferred tax assets will not be realized.

                                       88


     Management's  estimates  and  assumptions  - The  preparation  of financial
     statements in conformity with accounting  principles  generally accepted in
     the United  States of America  requires  management  to make  estimates and
     assumptions that affect the reported amounts of assets and liabilities, the
     disclosure of contingent  assets and liabilities at the balance sheet dates
     and the reported amounts of revenues and expenses during the period. Actual
     results may differ from such estimates. The Company reviews all significant
     estimates  affecting  the  financial  statements  on a recurring  basis and
     records the effect of any necessary adjustments prior to their issuance.

     New accounting  pronouncements - In January 2003, the Financial  Accounting
     Standards  Board  issued  FASB  Interpretation  No.  46,  Consolidation  of
     Variable Interest Entities. FIN 46 and related  interpretations explain how
     to identify variable  interest entities and how an enterprise  assesses its
     interests in a variable  interest entity,  to decide whether to consolidate
     that entity. The Interpretation  requires existing  unconsolidated variable
     interest entities to be consolidated by their primary  beneficiaries if the
     entities do not effectively disperse risks among parties involved.  FIN No.
     46 is effective  immediately for variable  interest  entities created after
     January 31, 2003, and to variable  interest entities in which an enterprise
     obtains an interest after that date. The  Interpretation  will apply to the
     Company for its year ending  December 31, 2005.  Adoption of this  standard
     will not have any immediate effect on the financial statements.

     In April 2003, the Financial Accounting Standards Board issued Statement of
     Financial  Accounting  Standards  No. 149,  Amendment of  Statement  133 on
     Derivative Instruments and Hedging Activities (SFAS 149), which amends SFAS
     133, Accounting for Derivative Instrument and Hedging Activities,  to amend
     and clarify financial  accounting and reporting for derivative  instruments
     embedded in other contracts  (collectively  referred to as derivatives) and
     hedging  activities.  SFAS 149 is effective for  contracts  entered into or
     modified  after June 30, 2003.  Adoption of this  standard did not have any
     immediate effect on the Company's financial statements.

                                       89


     In May 2003, the Financial  Accounting  Standards Board issued Statement of
     Financial  Accounting  Standards No. 150,  Accounting for Certain Financial
     Instruments with Characteristics of Both Liabilities and Equity (SFAS 150),
     which  establishes  standards  for how an issuer  classifies  and  measures
     certain financial instruments with characteristics of both debt and equity.
     It requires that an issuer  classify a financial  instrument that is within
     its scope as a liability (or an asset in some  circumstances)  because that
     financial instrument embodies an obligation to the issuer. Adoption of this
     standard  did not have any  immediate  effect  on the  Company's  financial
     statements.

2.   Agreement for Sale of Assets

     Effective after the close of business on December 31, 2003, the Company and
     PATI executed an Asset Purchase  Agreement (the Agreement)  dated September
     23, 2002 (as further amended on April 10, 2003,  July 30, 2003,  October 8,
     2003 and December 23, 2003).  Under the  Agreement,  the Company  exchanged
     substantially  all of its assets and  liabilities in exchange for 1,100,000
     shares  of PATI  stock  in a  tax-free  reorganization.  PATI  is a  public
     company,  listed  under the symbol of PATY.  The  1,100,000  shares of PATI
     common stock represent approximately 12% of PATI's outstanding common stock
     on a fully diluted basis.

     The  Purchase  Agreement  includes  all of the  Company  assets used in its
     business and all of the  operating  and business  related  liabilities,  as
     defined in the Agreement.  The liabilities  retained by the Company include
     liabilities  known to the Company or its  shareholders and not disclosed to
     PATI,  obligations to pay taxes,  and claims or  liabilities  based upon or
     arising out of the  purchase or sale of newly issued PATI  securities.  The
     Company believes there are no such liabilities.  The Company has previously
     issued warrants for the purchase of Company stock to PATI, exercisable only
     if the Agreement  was  terminated.  The  execution of the Agreement  caused
     immediate expiration of these warrants.

                                       90


3.   Property and Equipment

     Property and equipment consist of the following:

     December 31,                              2003                  2002
     ----------------------------------------------------------------------
     Computer equipment             $       327,489   $           213,330
     Software                                20,056                18,326
     Furniture and fixtures                  40,666               120,693
     Leasehold improvements                  12,313                12,313
     ----------------------------------------------------------------------
                                            400,524               364,662
     Less accumulated depreciation
         and amortization                 (248,044)             (156,736)
     ----------------------------------------------------------------------
                                    $       152,480   $           207,926
     ----------------------------------------------------------------------

                                       91


     Included in property and equipment are capitalized leases as follows:

     December 31,                              2003                  2002
     ----------------------------------------------------------------------
     Computer equipment             $        99,182   $            99,182

     Less accumulated amortization         (41,541)              (17,337)
     ----------------------------------------------------------------------
                                    $        57,641   $            81,845
     ----------------------------------------------------------------------


4.   Letter of Credit

     The Company had outstanding  irrevocable  standby letters of credit (LOC's)
     of  $1,000,000  and $500,000 at December  31, 2003 and 2002,  respectively.
     These  LOC's act as a  guarantee  of  payment to a certain  third  party in
     accordance with specified  terms and  conditions.  As of December 31, 2003,
     there  have been no draws on these  LOC's.  The  LOC's are  unconditionally
     guaranteed by certain  stockholders  of the Company and expire in April and
     May 2004.

5.   Line of Credit

     On July 7, 2000,  the  Company  entered  into two  separate  line of credit
     agreements  each  totaling  $400,000  with a scheduled  expiration  date of
     January 31,  2002.  Both lines of credit bore  interest at the bank's index
     rate   (4.75%  at   December   31,   2001).   Both  lines  of  credit  were
     unconditionally guaranteed by an officer/stockholder of the Company.

     On  February  12,  2002,   the  Company  was  notified  of  a  default  and
     acceleration  of the drawn amount owed from both of the lenders.  Effective
     May 9, 2002, a  stockholder  of the Company  purchased  the lines of credit
     from the  financial  institutions  for the  outstanding  amount owed by the
     Company in the principal of $383,913  plus accrued  interest and late fees.
     As of December  31,  2002,  this debt is included in the balance of the 10%
     subordinated note payable to a stockholder.

     On October 8, 2003 the  stockholder  forgave the entire  amount of the debt
     totaling  $2,422,703  as part of the PATI  Sale of Assets  Agreement.  Such
     amount was added to the additional paid in capital.

                                       92


6.   Long-Term Debt Long-term debt consists of the following:



     December 31,                                           2003                 2002
     ------------------------------------------------------------------------------------

     Index rate plus 3.0% (7.0%) note payable
     to PATI, due on demand and collateralized
     by all intangible and tangible assets
                                                                
                                                   $     3,550,000    $         200,000

     10% subordinated note payable to a
     stockholder, with principal and interest
     due at maturity, maturing in March 2007.                    -            2,302,675
     On October 8, 2003 shareholder forgave
     $2,422,703 note as part of PATI merger

     Unsecured non-interest bearing note to a
     stockholder, payable in monthly
     installments of $10,127, maturing in
     December 2003                                          40,507              121,520

     Unsecured non-interest bearing obligation
     to a stockholder, payable in monthly
     installments of $5,000, maturing in April
     2004                                                   15,732               75,732

     Unsecured loan at index rate plus 2.5%
     (6.5%) to a stockholder, due on demand                 30,478               33,540

     19% obligation assumed and due an individual in
     connection with the purchase of certain assets,
     payable in monthly installments of $2,000,
     maturing
     in December 2003                                       11,577               24,057

     5% unsecured note payable to a client,
     with principal and interest maturing in
     March 2004                                            165,000                    -

     Other                                                   7,610                    -

     Capital lease obligations (Note 8)                     63,508               85,705
     ------------------------------------------------------------------------------------
                                                         3,884,412            2,843,229

     Less current maturities                           (3,844,117)            (460,823)
     ------------------------------------------------------------------------------------
     Long-term debt, less current maturities       $        40,295    $       2,382,406
     ------------------------------------------------------------------------------------


                                       93


     Scheduled  payments  in each of the next five years and  thereafter  on the
     debt and capital lease obligations are as follows:

                                Related         Unrelated
                                 Party            Party           Total
     Year ended December 31,      Debt            Debt             Debt
     -------------------------------------------------------------------------
     2004                   $    3,606,239   $     237,878   $    3,844,117
     2005                                -          21,360           21,360
     2006                                -          12,748           12,748
     2007                                -           6,187            6,187
     -------------------------------------------------------------------------
                            $    3,606,239   $     278,173   $    3,884,412
     -------------------------------------------------------------------------

7.   Income Taxes

     Differences  between  financial  accounting  principles  and tax laws cause
     differences  between  the  bases of  certain  assets  and  liabilities  for
     financial reporting purposes and tax purposes.

     The tax effects of these differences, to the extent they are temporary, are
     recorded  as  deferred  tax  assets  and  liabilities  under  SFAS  109 and
     consisted of the following components:

     December 31                                   2003             2002
     Deferred tax assets:
          Operating loss carryforward  $      2,316,000  $     1,904,000
          Goodwill                              378,000          408,000
          Accrued vacation                       26,000           27,000
          Other                                  16,000            8,000
     --------------------------------------------------------------------
                                              2,736,000        2,347,000
          Valuation allowance               (2,736,000)      (2,347,000)
     --------------------------------------------------------------------
                                       $              -  $             -
     --------------------------------------------------------------------

     The valuation  allowance increased $389,000 and $1,525,000 during the years
     ended December 31, 2003 and 2002, respectively.

     The  Company  has  a  net  operating  loss  carryforward  of  approximately
     $6,812,000  which  begins  to  expire  in 2021.  Upon  consummation  of the
     transaction  referred  to in  Note 2,  the  future  utilization  of the net
     operating loss carryforward may be limited.

                                       94


8.   Commitments and Contingencies

     Operating leases
     The Company leases office space from a related party under a non-cancelable
     lease  agreement  that  expires  in  April  2008.  The  Company  leases  an
     automobile,  certain equipment and other office space under  non-cancelable
     lease agreements, which expire at various dates through April 2008.

     At December  31, 2003  minimum  annual lease  payments  for  operating  and
     capital leases are as follows:




                                                           Operating Leases
                                                ---------------------------------------
                                    Capital      Related      Unrelated
     Years Ending December 31,       Leases       Party         Party        Total
     ----------------------------------------------------------------------------------
                                                          
     2004                         $   28,467  $    252,301  $    61,450  $    338,402
     2005                             24,362       252,301       54,980       324,993
     2006                             14,036       252,301       45,922       308,783
     2007                              7,040       252,301       45,922       304,951
     2008                                  -        84,100       26,788       110,888
     ----------------------------------------------------------------------------------
     Total minimum lease payments
                                      73,905  $  1,093,304  $   235,062  $  1,388,017
                                             ------------------------------------------
     Less- amount representing
     interest                       (10,397)
     ----------------------------------------
     Net present value of future
     minimum lease payments       $   63,508
     ----------------------------------------


     Rent expense  related to operating  leases was  approximately  $270,000 and
     $298,000 for the years ended December 31, 2003 and 2002, respectively.  The
     Company  incurred  related  party rent  expense for its  corporate  offices
     totaling  approximately  $258,000 and $235,000 for the years ended December
     31, 2003 and 2002, respectively.

                                       95


     Employment  Agreements
     The Company has executed employment  agreements with three officers and one
     employee  effective  through  various dates from December 2004 to September
     2005, providing for minimum annual salaries and incentives.

     Contingencies
     The Company is party to certain  complaints  arising  from  certain  former
     employees.  Management  believes  that  the  ultimate  resolution  of these
     complaints  will  not  have a  material  adverse  effect  on the  financial
     condition, results of operations or liquidity of the Company.

9.   Related Party Transactions

     See Notes 4, 5 and 6 for information regarding related party debt. See Note
     8 for information regarding related party leases and commitments.

     A  stockholder  was  paid  independent  contractor  fees in the  amount  of
     $120,000,  debt  payments  in the  amount  of  $60,000  as  well  as  other
     out-of-pocket  expenses  in each of the years ended  December  31, 2003 and
     2002.

     The  stockholder  receivable  in the amount of $72,155 at December 31, 2001
     was written-off to salary expense during 2002.

10.  Basic and Diluted Loss per Share

     The  calculations  for the basic and diluted loss per share were based upon
     loss attributable to common shareholders of $3,602,792 and $4,520,110 and a
     weighted  average number of common shares  outstanding of 28,500 and 21,304
     for the years ended December 31, 2003 and 2002, respectively. No options or
     warrants were outstanding for the years ended December 31, 2003 and 2002.

                                       96


           UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS

     Patient Infosystems has closed an agreement to acquire substantially all of
the assets and substantially  all of the liabilities of ACS (the  "Acquisition")
in exchange for 1,100,000  shares of Patient  Infosystems  common  stock,  after
giving effect to the 1 for 12 reverse stock split.  The following  unaudited pro
forma combined condensed financial  statements give effect to the Acquisition to
be accounted for by the purchase method of accounting.

     The  consolidated  balance  sheet  for the year  ended  December  31,  2003
presented  in the audited  financial  statements  of Patient  Infosystems  gives
effect to the business combination.

     The unaudited pro forma combined statement of operations for the year ended
December 31, 2003  combines the audited  historical  statements of operations of
Patient  Infosystems  and ACS for the year ended December 31, 2003 giving effect
to the Acquisition as though it had occurred on January 1, 2003.

     The unaudited pro forma information is presented for illustrative  purposes
only and is not  necessarily  indicative of the  operating  results or financial
position that would have occurred if the Acquisition had been consummated at the
beginning of 2003, nor is it necessarily  indicative of future operating results
or  financial  position.  The  unaudited  pro forma  adjustments  are based upon
information  and  assumptions  available  at the time of the filing of this Form
SB-2. The unaudited pro forma information should be read in conjunction with the
accompanying notes thereto, Patient Infosystems' historical financial statements
and ACS' historical financial statements and related notes included elsewhere.

     In  accordance  with  Statement of Financial  Accounting  Standards No. 141
"Business  Combinations,"  a  portion  of the  purchase  consideration  has been
attributed to the  intangible  assets of ACS and will be amortized over the life
of those  assets,  estimated  at five  years for the  purposes  of the pro forma
presentation.   The  actual  value  of  these   intangible   assets  may  change
significantly based upon the final determination of valuation. Any change in the
valuation will be offset by a change in goodwill.

     The  pro  forma  presentation  contemplates  a  purchase  consideration  of
1,100,000  shares of Patient  Infosystems  common stock with an assumed value of
$1,848,000.  In addition,  the pro forma  presentation gives effect to a private
placement of $3.675 million of Series D Preferred Stock which was a condition of
the Asset Purchase Agreement.

                                       97


              Pro Forma Combined Condensed Statement of Operations
                      For the Year Ended December 31, 2003



                                        Patient
                                      Infosystems          ACS        Adjustments          Pro Forma

                                                                              
REVENUES                                 $ 5,687,293     $9,164,389                         $14,851,682
                                     ---------------- --------------                     ---------------
COSTS AND EXPENSES:
  Cost of revenue                          4,162,759     10,196,728          92,400  a       14,451,887
  Selling, general and administrative      2,019,759      2,279,094                           4,298,853
  Research and development                   131,782              -                             131,782
                                     ---------------- --------------                     ---------------
  Total costs and expenses                 6,314,300     12,475,822                          18,882,522
                                     ---------------- --------------                     ---------------
OPERATING LOSS                             (627,007)    (3,311,433)                         (4,030,840)

Other expense                            (2,750,954)      (291,359)         120,028  b      (2,922,285)
Provision for taxes                                -              -                                   -
                                     ---------------- --------------                     ---------------
NET LOSS                                $(3,377,961)   $(3,602,792)                        $(6,953,125)

CONVERTIBLE PREFERRED STOCK DIVIDENDS    (7,671,557)              -       (593,833)  c      (8,265,390)
                                     ---------------- --------------                     ---------------
NET LOSS ATTRIBUTABLE TO
 COMMON STOCKHOLDERS                  $ (11,049,518)   $(3,602,792)                       $(15,218,515)
                                     ================ ==============                     ===============
NET LOSS PER SHARE - BASIC
AND DILUTED                                  $(3.25)                                            $(4.48)
                                     ---------------- --------------                     ---------------
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING                         3,399,616                                          3,399,616
                                     ---------------- --------------                     ---------------



                                       98


                                  Notes to the
              Pro Forma Combined Condensed Statement of Operations
                      For the Year Ended December 31, 2003

   NOTES

     a    Pro forma amortization of identifiable  intangible assets that results
          from  the  acquisition  based  upon  an  estimated  life  of  the  ACS
          intangible assets of five years.

     b    Pursuant to Amendment No. 2 to the Amended and Restated  Agreement for
          Purchase  and  Sale of  Assets,  $2,419,064  consisting  of ACS  notes
          payable and all interest due on such notes,  are liabilities that will
          not be acquired. Accordingly,  $120,028 of interest expense recognized
          for this debt for the year ended December 31, 2003 has been eliminated
          for pro forma purposes.

     c    The Company declared $153,257 of dividends for the outstanding  Series
          D Preferred  Stock during the year ended  December  31,  2003.  If the
          830,100 shares had been outstanding for all of 2003, the Company would
          have declared annual dividends of $747,090 to these shareholders.

                                       99


                                     PART II

                     INFORMATION NOT REQUIRED IN PROSPECTUS

Item 24. Indemnification of Directors and Officers

     Our  Certificate  of  Incorporation  eliminates  the personal  liability of
directors to the fullest extent  permitted by the provisions of paragraph (7) of
subsection  (b) of Section 102 of the General  Corporation  Law of Delaware.  In
addition,  our Certificate of Incorporation includes provisions to indemnify our
officers and directors and other persons against expenses,  judgments, fines and
amounts paid in settlement in connection with  threatened,  pending or completed
suits or proceedings against those persons by reason of serving or having served
as officers, directors or in other capacities to the fullest extent permitted by
Section 145 of the General Corporation Law of Delaware.

     Our  bylaws  provide  the  power  to  indemnify  our  officers,  directors,
employees  and  agents or any  person  serving  at our  request  as a  director,
officer, employee or agent of another corporation,  partnership,  joint venture,
trust or other enterprise to the fullest extent permitted by Delaware law.

Item 25. Other Expenses of Issuance and Distribution

     Expenses  payable in connection  with the issuance and  distribution of the
securities  being registered  (estimated  except in the case of the registration
fee) are as follows:

                                             Amount

Registration Fee                           $    311
Legal Fees and Expenses                    $ 55,000
Accounting Fees and Expenses               $ 25,000
Consulting feees                           $ 90,000

                                  TOTAL    $170,311

     The above fees will be paid by us and not by the selling stockholders.

                                      100


Item 26. Recent Sales of Unregistered Securities

     On February 24, 2004,  Patient  Infosystems  sold 592,500  shares of common
stock,  for  $1,185,000 to six  accredited  investors,  under an exemption  from
registration  pursuant  to Section  4(2) and Rule 506 of the  Securities  Act of
1933.  There was $68,250 of fees paid and a warrant to purchase 12,500 shares of
Patient  Infosystems  common stock for $2.00 per share issued in connection with
these funds. Patient Infosystems has agreed to file a registration  statement on
Form SB-2 for these shares by April 23, 2004.

     Between April 2003 and January 2004,  Patient  Infosystems  issued  840,118
shares  of  Series  D 9%  Cumulative  Convertible  Preferred  Stock  ("Series  D
Preferred Stock") under the terms of the Note and Stock Purchase Agreement dated
April 11, 2003 and amended on September 10, 2003.  There was no placement  agent
and no  commissions  were paid to any party.  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, held 424,233 and 5,318
shares of Series D Preferred  Stock  respectively.  There was no placement agent
and no commissions  were paid to any party. The proceeds from this issuance have
been used to repay debt and  support  the  operations  of  Patient  Infosystems'
subsidiary, American Caresource Holdings, Inc.

     On December 31, 2003,  $4,482,500 in debt and $438,099 of accrued  interest
owed to Mr.  Pappajohn and Dr.  Schaffer was converted into 2,928,986  shares of
Patient Infosystems' common stock, adjusted for the 1 for 12 reverse stock split
that was approved by the shareholders on December 31, 2003. This debt conversion
transaction  could  not occur  until the  stockholders  of  Patient  Infosystems
approved  the  amendment  to  the  Certificate  of   Incorporation   authorizing
sufficient  capital  stock on  December  31,  2003.  The shares  were  issued to
accredited  investors under an exemption from  registration  pursuant to Section
4(2) and Rule 506 of the  Securities Act of 1933.  There was no placement  agent
and  no  commissions  were  paid  to any  party.  A date  for a  meeting  of the
stockholders of Patient Infosystems has not yet been established.

     On March 31, 2000,  Patient  Infosystems  completed a private  placement of
100,000  shares of newly issued  Series C 9%  Cumulative  Convertible  Preferred
Stock ("Series C Preferred Stock"),  raising  $1,000,000 in total proceeds.  The
shares  were  sold  to  four  accredited  investors,  under  an  exemption  from
registration  pursuant  to Section  4(2) and Rule 506 of the  Securities  Act of
1933.  There was no placement  agent and no commissions  were paid to any party.
Due to the effect of the  anti-dilution  provisions  of the  Series C  Preferred
Stock and as a result of the  issuance  of the Series D Preferred  Stock,  these
shares  can be  converted  into  common  stock at a rate of ten shares of common
stock to one share of Series C Preferred Stock. Each share of Series C 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,
purchased 50,000 and 25,000 shares of Series C Preferred Stock respectively. The
proceeds  from this  issuance  have been used to  support  Patient  Infosystems'
operations. In February 2004, certain holders of 25,000 shares of these Series C
Preferred Stock converted their shares into 250,000 shares of common stock.

                                      101


     On June 6, 2001, Patient  Infosystems issued a total of 2,319,156 shares of
unregistered common stock to Mr. Pappajohn and Dr. Schaffer as consideration for
their  continued  financial  support of Patient  Infosystems.  Based upon recent
trading of Patient  Infosystems'  common stock at the time of issuance,  Patient
Infosystems  assigned  a fair  market  value  of $0.15  per  share or a total of
$347,873 to these  unregistered  shares and realized this amount as an operating
expense in June of 2001. The shares were issued to accredited investors under an
exemption  from  registration  pursuant  to  Section  4(2)  and  Rule 506 of the
Securities Act of 1933.  There was no placement  agent and no  commissions  were
paid to any party.

Item 27. 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.

5.1            Opinion of McCarter & English, LLP (to be filed by amendment)

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 andConifer 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.

                                      102


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.

                                      103


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,
               2002between 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.

                                      104


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.

23.1           Consent of McCarter & English, LLP (included in Exhibit 5.1)

23.2           Consent of Deloitte & Touche LLP

23.3           Consent of McGladrey & Pullen LLP

23.4           Consent of BDO Seidman, LLP

24.1           Power of Attorney (included on signature page)

--   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.

                                      105


***  Previously filed with the Securities and Exchange  Commission as an Exhibit
     to the Annual  Report on Form 10-K filed on April 2, 2001 and  incorporated
     herein by reference.

+    Previously filed with the Securities and Exchange  Commission as an Exhibit
     to the Annual Report on Form 10-K filed on April 13, 1999 and  incorporated
     herein by reference.

++   Previously filed with the Securities and Exchange  Commission as an Exhibit
     to the Annual Report on Form 10-K filed on March 30, 2000 and  incorporated
     herein by reference.

#    Previously filed with the Securities and Exchange  Commission as an Exhibit
     to the Annual Report on Form 10-K filed on April 10, 2002 and  incorporated
     herein by reference.

##   Previously filed with the Securities and Exchange  Commission as an Exhibit
     to the  Quarterly  Report  on Form  10-Q  filed on  November  14,  2002 and
     incorporated herein by reference.

###  Previously filed with the Securities and Exchange  Commission as an Exhibit
     to the Annual Report on Form 10-K filed on March 31, 2003 and  incorporated
     herein by reference.

^    Previously filed with the Securities and Exchange  Commission as an Exhibit
     to the  Quarterly  Report  on  Form  10-QSB  filed  on  May  15,  2003  and
     incorporated herein by reference.

^^   Previously filed with the Securities and Exchange  Commission as an Exhibit
     to the  Quarterly  Report  on Form  10-QSB  filed on  August  15,  2003 and
     incorporated herein by reference.

^^^  Previously filed with the Securities and Exchange  Commission as an Exhibit
     to the  Quarterly  Report on Form  10-QSB  filed on  November  14, 2003 and
     incorporated herein by reference.


Item 28. Undertakings

     The undersigned registrant hereby undertakes:

     (1)  To file, during any period in which it offers or sells  securities,  a
          post-effective amendment to this registration statement to:

          (i)  Include  any  prospectus  required  by  Section  10(a)(3)  of the
               Securities Act;

          (ii) Reflect in the prospectus any facts or events which, individually
               or together, represent a fundamental change in the information in
               the registration  statement.  Notwithstanding the foregoing,  any
               increase  or  decrease  in volume of  securities  offered (if the
               total dollar value of  securities  offered  would not exceed that
               which was  registered) and any deviation from the low or high end
               of the estimated  maximum  offering range may be reflected in the
               form of  prospectus  filed with the  Commission  pursuant to Rule
               424(b)  if, in the  aggregate,  the  changes  in volume and price
               represent  no  more  than a 20  percent  change  in  the  maximum
               aggregate  offering  price  set  forth  in  the  "Calculation  of
               Registration Fee" table in the effective registration  statement;
               and

                                      106


          (iii)Include any  additional or changed  material  information  on the
               plan of distribution.

     (2)  For  determining  liability  under the  Securities  Act, to treat each
          post-effective  amendment  as a  new  registration  statement  of  the
          securities offered, and the offering of the securities at that time to
          be the initial bona fide offering.

     (3)  To file a post-effective  amendment to remove from registration any of
          the securities which remain unsold at the end of the offering.

     Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors,  officers and controlling  persons of the
registrant pursuant to the foregoing  provisions,  or otherwise,  the registrant
has been advised that in the opinion of the Securities  and Exchange  Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable.

     In the event  that a claim for  indemnification  against  such  liabilities
(other than the  payment by the  registrant  of  expenses  incurred or paid by a
director,  officer or  controlling  person of the  registrant in the  successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling  person in connection with the securities being  registered,  the
registrant  will,  unless in the  opinion  of its  counsel  the  matter has been
settled by controlling precedent,  submit to a court of appropriate jurisdiction
the question  whether such  indemnification  by it is against  public  policy as
expressed in the Securities  Act and will be governed by the final  adjudication
of such issue.


                                      107


                                                    SIGNATURES

     In accordance  with the  requirements  of the  Securities  Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the  requirements  for filing on Form SB-2 and authorized  this  registration
statement  to be  signed  on its  behalf  by the  undersigned,  in the  City  of
Rochester, State of New York, on June 14, 2004.


                                            PATIENT INFOSYSTEMS, INC.


                                           By: /s/Roger L. Chaufournier
                                              -----------------------------
                                                  Roger L. Chaufournier
                                                  Chief Executive Officer

                                      108


     KNOW ALL MEN BY THESE  PRESENTS,  each of the  undersigned  constitutes and
appoints   Roger   Chaufournier   and  Kent  Tapper,   and  each  of  them,   as
attorneys-in-fact   and   agents,   with   full   power  of   substitution   and
resubstitution,  for and in the name, place and stead of the undersigned, in any
and all  capacities,  to sign any and all amendments  (including  post-effective
amendments) to this  registration  statement or any  registration  statement for
this  offering that is to be effective  upon the filing  pursuant to Rule 462(b)
under the Securities Act of 1933, as amended, and all post-effective  amendments
thereto, and to file the same, with all exhibits thereto and all other documents
in connection therewith,  with the Securities and Exchange Commission,  granting
unto said  attorneys-in-fact  and  agents  full  power and  authority  to do and
perform each and every act and thing  requisite  and necessary to be done in and
about the  premises,  as fully to all  intents and  purposes as the  undersigned
might or could do in person,  hereby  ratifying and  confirming all that each of
said attorney-in-fact or substitute or substitutes,  may lawfully do or cause to
be done by virtue hereof.

     In accordance  with the  requirements  of the Securities Act of 1933,  this
registration  statement  has  been  signed  by  the  following  persons  in  the
capacities and on the dates stated.


         Signature               Title                            Date

/s/Derace L. Schaffer   Chairman of the Board                 June 14, 2004
-----------------------
Dr. Derace L. Schaffer


/s/Roger L. Chaufournier Chief Executive Officer and          June 14, 2004
------------------------ Director
Roger L. Chaufournier   (principal executive officer)


/s/Kent Tapper          Acting Chief Financial Officer        June 14, 2004
----------------------- and Vice President, Financial
Kent Tapper             Planning (principal financial and
                        accounting officer)
                        accounting officer)


/s/John Pappajohn       Director                              June 14, 2004
-----------------------
John Pappajohn

                                      109