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                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K
(Mark One)

     X            Annual Report Pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934

                   For the Fiscal Year Ended December 31, 2002

                Transition Report Pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934

                    For the transition period from ___ to ___

                         Commission File Number: 0-22319
                            Patient Infosystems, Inc.
             (Exact Name of Registrant as Specified in its Charter)

            Delaware                               16-1476509
   -------------------------------                 ----------
   (State or other jurisdiction of                  (I.R.S. Employer
   incorporation or organization)                   Identification
                                                    No.)
   46 Prince Street
   Rochester, New York                               14607
   -------------------------------                 ----------
   (Address of principal executive offices)        (Zip Code)

       Registrant's telephone number, including area code: (585) 242-7200
           Securities registered pursuant to Section 12(b) of the Act:
                                      None.

           Securities registered pursuant to Section 12(g) of the Act:

                     Common Stock, par value $.01 per share
                                (Title of Class)


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports)  and  (2)  has  been  subject  to such  filing
requirements for the past 90 days: X Yes _ No

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulations S-K is not contained  herein,  and will not be contained,  to the
best of registrant's  knowledge, in a definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.

Indicate  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined in Rule 12b-2 of the Act).

                                   _ Yes X No

As of June 28, 2002,  the  aggregate  market  value of the voting and  nonvoting
common stock held by  nonaffiliates of the registrant was $635,700 and 3,973,122
shares of common stock were outstanding.

As of March 31, 2003, there were 10,956,024  shares of the issuer's common stock
outstanding.

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<PAGE>


                                     PART I

Item 1.   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.
Care Team Connect for Health,  Patient Infosystems'  principal product line that
provides a complete solution for population health  management,  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 were
revised and all components were migrated to an updated technology platform. Care
Team Connect includes the following:

1)   Population Health Management and Analysis. Systems to collect, analyze, and
     report  data about an overall  target  patient  population.  These  systems
     utilize telephone, Internet, electronic or print media as input sources and
     may  be  used  for  risk  identification  and   stratification,   obtaining
     information  on  care  quality  and  patient/member  satisfaction,  and the
     provision of patient and provider education.

2)   Disease Management. Patient-centered disease management and case management
     support  systems  designed to improve  patient  compliance  with prescribed
     treatment  protocols  and to improve  the  process  of  patient  management
     outside  the  traditional  "office  visit."  The  system  utilizes  trained
     telephone operators and computerized  interactive voice response technology
     to communicate via telephone and gather relevant  information directly from
     the  patient.  This  data is  subsequently  automatically  transmitted  via
     electronic or print media to healthcare payors,  providers and patients, as
     appropriate. These services are also available via the Internet.

3)   Nurse  Help  Line  and  Demand  Management.   Services  to  facilitate  the
     appropriate  deployment  of  costly  healthcare  resources.  These  systems
     provide  enrolled  patients with 24-hour  access to a registered  nurse for
     access to health  information and management of their care between episodes
     of medical intervention.

     Patient  Infosystems  markets  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").

     Initially,  during its first two years of operations,  Patient  Infosystems
emphasized the development of disease management programs, which accounted for a
substantial  portion of its revenue through 1997.  However,  since 1998, Patient
Infosystems has devoted  resources to the  development of other  applications of
its technology platform, including demand management,  patient surveys, outcomes
analysis and Internet-based  capabilities.  These additional  products accounted
for nearly 45% of the total  revenue  of Patient  Infosystems  during the fiscal
year ended  December 31, 2002 and  accounted for 59% and 62% of total revenue of
Patient  Infosystems  during the fiscal years ended  December 31, 2001 and 2000,
respectively.

Recent Developments

     On  February  1, 2003,  Patient  Infosystems  started  operating  a smoking
cessation program, which is a new category of services for Patient Infosystems.

     On September 23, 2002,  Patient  Infosystems signed an agreement to acquire
substantially  all  the  assets  of  American  CareSource  Corporation  ("ACS"),
headquartered  in  Dallas,  Texas.  ACS  is  an  ancillary  healthcare  benefits
management  company.  It provides a bridge connecting  healthcare payers and the
providers  of  ancillary  healthcare  services.  Ancillary  healthcare  services
include a broad array of services  that  supplement or support the care provided
by hospitals and physicians,  including the  non-physician  services  associated
with outpatient surgery centers,  free-standing diagnostic imaging centers, home
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. ACS manages
the administration of these ancillary healthcare benefits.

     Under the terms of the Asset Purchase Agreement, Patient Infosystems agreed
to acquire the assets of ACS in exchange for  two-thirds  of the common stock of
Patient  Infosystems.  The agreement  provides for a closing of the  anticipated
transaction  no later  than May 2003.  The  Asset  Purchase  Agreement  contains
various  conditions to closing,  some of which may not be  satisfied.  Therefore
completion  of the  transaction  cannot  be  assured  until  closing.

     The Agreement provides that either Patient Infosystems or ACS may terminate
the Agreement if the closing of the  acquisition  does not occur by December 31,
2002, subject to certain exceptions.

     The parties are currently  negotiating a substantial amendment to the Asset
Purchase  Agreement.  As a result,  the proposed terms of the  transaction  will
change  materially.  The revised terms may include the provisions of a loan from
Patient Infosystems to ACS in the aggregate amount of approximately $1.5 million
or more.  Patient  Infosystems  will be  required  to raise  additional  capital
through a private  placement  of  preferred  stock to  finance  the loan and the
proposed transaction. No assurance can be given that Patient Infosystems and ACS
will agree on revised terms, or that the acquisition will close.

     Among the conditions to closing are the following:

o    the  approval  of  the  shareholders  of  Patient  Infosystems  of  certain
     amendments to its Certificate of Incorporation;

o    the execution by certain  stockholders of ACS and Patient  Infosystems of a
     Shareholders'  Agreement  providing  for the  voting of  shares of  Patient
     Infosystems in favor of the election of certain individuals to the board of
     directors of Patient Infosystems;

o    the execution of agreements by John  Pappajohn and Derace  Schaffer to hold
     all indebtedness of Patient Infosystems in abeyance until March 31, 2004;

o    written  documentation  that the bank debt of Patient  Infosystems to Wells
     Fargo Bank has been  renegotiated  so as to provide a grace and forbearance
     period until December 31, 2003, before any principal  payments are required
     and that John Pappajohn and Derace Schaffer will remain  guarantors of such
     bank debt if required by Wells Fargo Bank;

o    a private placement of equity securities of Patient  Infosystems  providing
     for proceeds of not less than $3 million;

o    the  execution  of a  Voting  Agreement  by  each  stockholder  of  Patient
     Infosystems  owning more than 10% of the outstanding shares of common stock
     of Patient Infosystems; and

o    fulfillment  of  customary  contractual  conditions  set forth in the Asset
     Purchase Agreement;

     The  Asset  Purchase  Agreement  may  be  terminated  and  the  acquisition
abandoned  at any time prior to the closing  date of the  transaction  under the
following conditions:


o    by mutual agreement in writing by Patient Infosystems and ACS;

o    by either Patient Infosystems or ACS if the other party materially breaches
     any of the representations,  warranties,  covenants or agreements set forth
     in the Asset  Purchase  Agreement  at the time of its  execution  or on the
     closing date;

o    by either  Patient  Infosystems  or ACS if the other party fails to perform
     timely,  in all material  respects the covenants and obligations that it is
     required to perform under the Asset Purchase  Agreement and such party does
     not obtain in writing a waiver of such performances, or

     The Agreement provides that either Patient Infosystems or ACS may terminate
the Agreement if the closing of the  acquisition  does not occur by December 31,
2002, subject to certain exceptions.

     The parties are currently  negotiating a substantial amendment to the Asset
Purchase  Agreement.  As a result,  the proposed terms of the  transaction  will
change  materially.  The revised terms may include the provisions of a loan from
Patient Infosystems to ACS in the aggregate amount of approximately $1.5 million
or more.  Patient  Infosystems  will be  required  to raise  additional  capital
through a private  placement  of  preferred  stock to  finance  the loan and the
proposed transaction. No assurance can be given that Patient Infosystems and ACS
will agree on revised terms, or that the acquisition will close.

     In December  2002,  Patient  Infosystems  loaned to ACS $200,000 of working
capital, which was loaned to Patient Infosystems by Mr. Pappajohn. The loan from
Patient  Infosystems to ACS is secured by  substantially  all the assets of ACS.
During January of 2003, Patient Infosystems made additional loans of $300,000 to
ACS under substantially the same terms.

     During the fiscal  year  ended  December  31,  2002,  approximately  54% of
Patient Infosystems' revenue came from two clients, AstraZeneca, Inc. ("Zeneca")
and a healthcare insurance entity (the "Client"). Zeneca sponsored patients from
an affiliate of Client (the "Sponsored  Group") in a program operated by Patient
Infosystems.  Client directly sponsored patients from other of its affiliates in
substantially  the same  program as that  provided to the  Sponsored  Group.  In
September 2002, Patient  Infosystems  received  notification from Zeneca that it
intended to  terminate  its service  agreement  with Patient  Infosystems  as of
January 1, 2003.  In  January  2003,  Client  assumed  approximately  20% of the
Sponsored  Group  under its  service  agreement  with  Patient  Infosystems.  In
February 2003, Patient Infosystems received  notification that Client intends to
terminate its service  agreement  with Patient  Infosystems,  effective  July 1,
2003.  Neither  Zeneca  nor  Client  cited  any  dispute  with or  breach of any
agreement by Patient  Infosystems.  Patient  Infosystems  has replaced this lost
revenue  with other  client  contracts,  but no  assurance  can be given the new
sources of revenue will be permanent.

     On February 1, 2003, Patient Infosystems  initiated operations on a smoking
cessation program for two healthcare insurance entities. The call center program
is being offered  through a strategic  alliance with Behavioral  Solutions,  the
developers of an innovative  program using behavioral  health  counselors.  This
program represents a new product line for Patient Infosystems.

Information Capture, Delivery and Analysis Technologies Utilizing the Internet

     Patient  Infosystems'  technology  platform  integrates  an advanced  voice
recognition   telephone   system,   high-speed   data  processing  and  analysis
capability,  demand  publishing and information  distribution  capabilities  and
behavior  modification-based  compliance  algorithms  with a real time  Internet
on-line  communication  system. The system utilizes its call center and Internet
technology to  communicate  via  telephone  directly with the patient at home as
well as with  payors  and  providers  in order to gather  and  deliver  relevant
patient data. Depending on a patient's response,  situation-specific  algorithms
are applied to target future questions and thus help customize the collection of
data.

     Patient  Infosystems'  system  analyzes and prepares the captured  data for
automatic  delivery to the payor,  provider  and patient  using its Internet and
demand  publishing  capabilities.  Patient  Infosystems'  Internet  capabilities
enable  Patient  Infosystems'  systems to  interface  on a real-time  basis with
patients,  payors  and  providers.  Demand  publishing  technology  enables  the
creation of highly individualized reports by inserting stored graphic images and
text that can be  customized  for race,  gender and age.  These reports are also
customized to the patient's specific  situation,  and the system can utilize the
information  received  during contacts with the patient to customize the content
of the report. The data relevant to the separate report for healthcare providers
is formatted to be automatically transmitted via mail, fax or Internet.

     Each  contact  with  a  patient  contributes  to  the  establishment  of  a
longitudinal  database,  which can be  analyzed  to  provide  information  about
treatment  modalities for patients,  providers and payors.  Patient Infosystems'
system is  designed  to  analyze  patient  compliance  to  prescribed  treatment
regimens  and  gather  additional  clinical  information  so that the  patient's
caregivers can develop improvements in such regimens.

Internet Capabilities

     In 1999,  Patient  Infosystems  acquired  substantially  all the  assets of
HealthDesk  Corporation  ("HealthDesk"),  a consumer healthcare software company
that focuses on general health and chronic  disease  management  through ongoing
targeted  support for patients,  families and  caregivers.  The acquired  assets
include  HealthDesk  OnLine and HealthDesk  OnLine for Diabetes,  which are both
accessible through the Internet and on CD-ROM. Patient Infosystems also acquired
HealthDesk's  Care Team Connect  product,  which is accessible over the Internet
and provides a communication  mechanism to caregivers.  Patient Infosystems uses
the core technologies associated with the HealthDesk products to support Patient
Infosystems'  current Care Team Connect for Health  product,  which includes the
case management support system, disease management,  demand management,  quality
of life assessments and clinical data analysis.

Integrated Disease Management System

     Patient  Infosystems'  primary  application of its  integrated  information
capture and delivery  technology is its integrated Care Team Connect approach to
chronic  condition  management---Care  Team  Connect for  Asthma,  Hypertension,
Diabetes,  and  Congestive  Heart  Failure.  This  system is  designed to assist
patients in managing their chronic disease,  to improve patient  compliance with
care plans, and, as a consequence, improve patient outcomes.

     Patient  Infosystems'  disease management  programs have been developed for
targeted  diseases on both a customized and  standardized  basis. All follow the
same conceptual approach.

     First, using a panel of medical and clinical experts,  Patient  Infosystems
develops a  disease-specific  patient  intervention and compliance  program that
includes a template  for the  integration  of each  patient's  history,  current
medical  status and treatment  protocol.  The panel  identifies  guidelines  for
generally  accepted  treatment   protocols  and  diagnostic   interventions  for
particular  diseases and then uses these guidelines to determine an intervention
protocol and the information to be gathered from the patient.

     Second, when a patient is enrolled,  a limited patient history is obtained,
which may  include  the  histories  of the  chronic  illness,  medications,  and
surgical  procedures  as  well  as  other  information  deemed  relevant  by the
disease-specific  compliance  program.  This  information is included in Patient
Infosystems'  database  for each  patient and is used to create the reports that
are  distributed to the patient's  healthcare  provider and payor, as well as to
the patient.

     Third,  Patient  Infosystems  establishes  periodic telephone contacts with
each patient to monitor the patient's compliance with prescribed  therapies,  as
well as the patient's  overall health status  treatment  progress.  Contacts are
made  in  accordance  with a  designated  patient  contact  schedule,  which  is
established for each disease  management  program and the risk level  identified
for that particular  patient.  The frequency  varies  depending upon the disease
under management and the goal of the applicable treatment.

     Fourth, the data gathered from the patient during each contact is processed
and stored in Patient Infosystems' database. Using the information obtained from
patient contacts and other available  information  regarding the patient and his
or her treatment,  personalized  reports are prepared,  typically following each
patient  contact,  for  evaluation  by the  patient,  the  patient's  healthcare
provider and, on a routine basis, payors.

     Fifth, each patient enrolled in one of the disease  management  programs is
provided  with 24 hour  telephonic  access to a registered  nurse for  questions
regarding his or her illness or other health information.

     Patient  Infosystems'  demand  publishing and Internet  technology  further
support its disease  management  programs.  These  technologies  enable  Patient
Infosystems  to  provide  personalized  behavior  modification  and  educational
materials  to  patients in addition to  individual  patient  reports,  which may
include pictures, diagrams and informative discussions relating to the treatment
course  intended to modify or  reinforce  certain  behaviors.  At the same time,
individual  patient  reports are  provided  to the  healthcare  provider.  These
reports  are more  factual in nature  and  contain  the  relevant  clinical  and
behavioral  information  that has been  gathered.  On a routine  basis,  Patient
Infosystems can provide summary  information to the patient's  healthcare  payor
with  respect to patient  progress  and  activity.  The  summary  reporting  for
customers are made available through the Internet.

     Patient  Infosystems  enrolled its first  patients in a disease  management
program in October 1996,  and has enrolled  more than 532,000  patients in those
programs through January 31, 2003.

     Patient Infosystems'  customer  agreements,  which are typically terminable
without  cause by either  party,  require  payment  to  Patient  Infosystems  of
operational  fees. The amount of the program  operational  fee generally  varies
with the length, complexity and frequency of patient contacts as dictated by the
respective program protocols. Patient enrollment in each of Patient Infosystems'
programs   will  depend  upon  the   identification   and  referral  by  Patient
Infosystems'  customers of patients to Patient  Infosystems'  system, which will
vary from  program to program.  During the 2002 fiscal year ended  December  31,
2002,  Patient  Infosystems  has  introduced  a product  enhancement  to capture
potential  patient  enrollments  through the analysis of historical  medical and
pharmacy claims.

     Patient Infosystems' disease specific management programs are as follows:

Asthma

     Patient Infosystems has developed disease management programs for asthmatic
patients  that  have been  marketed  to payors  and  other  participants  in the
healthcare  industry,  and such programs  have been  provided to patients  since
1997. Through January 31, 2003, Patient Infosystems has had approximately 15,000
patients participate in these programs.

Congestive Heart Failure

     Patient  Infosystems has services  agreements to operate disease management
programs to aid in the treatment of patients  suffering  from  congestive  heart
failure. Patient Infosystems has completed the development of the program in the
English and Spanish  languages.  These  programs  have been provided to patients
since  1997,  and  through  January  31,  2003,  Patient   Infosystems  has  had
approximately  32,700  patients  participate in the programs.  During the fiscal
year ended December 31, 2002,  approximately 54% of Patient Infosystems' revenue
came from two clients,  AstraZeneca,  Inc. ("Zeneca") and a healthcare insurance
entity (the  "Client").  Zeneca  sponsored  patients from an affiliate of Client
(the "Sponsored  Group") in a program  operated by Patient  Infosystems.  Client
directly  sponsored  patients from other of its affiliates in substantially  the
same program as that provided to the Sponsored Group. In September 2002, Patient
Infosystems received notification from Zeneca. that it intended to terminate its
service  agreement  with Patient  Infosystems  as of January 1, 2003. In January
2003, Client assumed  approximately 20% of the Sponsored Group under its service
agreement  with  Patient  Infosystems.  In February  2003,  Patient  Infosystems
received  notification  that Client  intends to terminate its service  agreement
with Patient  Infosystems,  effective  July 1, 2003.  Neither  Zeneca nor Client
cited any dispute with or breach of any agreement by Patient Infosystems.

Diabetes

     Patient  Infosystems has developed disease management programs for diabetic
patients  that  have been  marketed  to payors  and  other  participants  in the
healthcare  industry.  These programs have been provided to patients since 1997,
and through January 31, 2003, Patient  Infosystems has had approximately  10,700
patients participate in these programs.

Secondary Cardiovascular Disease

     Patient   Infosystems   has  entered   into  a  services   agreement   with
Bristol-Myers  to develop,  implement and operate a disease  management  program
relating to the  prevention  of  cardiovascular  sequelae  in patients  who have
recently  experienced  certain  cardiovascular  illnesses or treatments  such as
angina, cardiac bypass surgery or myocardial infarction. Patient Infosystems has
completed  the  development  of this  program in both the  English  and  Spanish
languages.  This program has been provided to patients  since 1997,  and through
January  31,  2003,  Patient  Infosystems  has had  approximately  500  patients
participate in this program.

Hypertension

     Patient  Infosystems  has developed a compliance  program for patients with
hypertension  that has been  marketed  to payors and other  participants  in the
healthcare  industry.  Bristol-Myers  and RxAmerica  have each retained  Patient
Infosystems  to provide this  compliance  program for patients who are suffering
from  hypertension  and are  enrolled  in  healthcare  programs  for which these
companies provide services. Through January 31, 2003, approximately 830 patients
have participated in this program.

Program Re-designs

     During 2002, Patient Infosystems re-designed each of its disease management
products in order to be more responsive to the market.  Specific  changes to the
programs  which are now  operational  under the Care Team Connect  label include
claims data analysis to identify  patients with chronic  disease and assign each
risk  level,  targeted  interventions  by  severity  of the  patient's  disease,
introduction  of  additional  clinical  content and  inclusion  of the Nurse 411
Demand Management service as a 24-hour nurse help line.

Pharmaceutical and Medical Equipment Support Programs

     Patient  Infosystems has delivered  custom programs sold to  pharmaceutical
and medical device  manufacturers that are intended to add value to their direct
to  consumer   marketing   efforts.   Patient   Infosystems   was   retained  by
Bristol-Myers,  Zeneca,  Janssen and Abbott to develop and operate programs that
support  specific  products in the areas of  diabetes,  anxiety,  prostatis  and
others. In September 2002, Patient Infosystems received notification that Zeneca
intended to  terminate  it service  agreement  with  Patient  Infosystems  as of
January 1, 2003.  As of January 31, 2003,  approximately  32,000  patients  have
participated  in  Patient  Infosystems'  pharmaceutical  and  medical  equipment
support programs. In October 2000, Patient Infosystems was retained by Urologix,
Inc.  to develop and operate a Prostate  Care Center to provide  telephonic  and
Internet support for their direct to consumer advertising  campaign.  During the
one year term of the Urologix agreement, 1,500 men participated in this program.

"Nurse411" demand management programs

     Nurse411  provides a 24 hour telephonic help line for enrolled  populations
as well as demand  management  services.  Demand management  involves  assisting
providers in evaluating  patient  treatment needs to identify those patients who
may not require immediate or intensive  services.  The goal of demand management
is to reduce the need for, and use of,  costly,  often  clinically  unnecessary,
medical services and arbitrary  managed-care  interventions  while improving the
overall quality of life of patients.  During 2002, Patient Infosystems  provided
demand management services to approximately 142,700 enrollees.

Patient survey programs

     Organizations  in many different  areas of the healthcare  industry  survey
users regarding  their products and services for a variety of reasons  including
regulatory,  marketing and research purposes.  Patient Infosystems'  information
systems,  with their ability to proactively contact patients in a cost-efficient
manner,  may be used for  this  type of  application.  Patient  Infosystems  has
developed a series of automated  surveys  ranging from general health to disease
specific instruments.  Through January 31, 2003,  approximately 440,200 patients
have participated in these survey programs.

Internet-based products and services

     Patient   Infosystems'  Case  Management  Support  System  ("CMSS")  is  an
Internet-based  software product that is used by case management  organizations.
The  customer's  case managers  access the system using an approved  browser and
Internet Service Provider ("ISP") connection.  (Browser and ISP are not supplied
by Patient  Infosystems.)  The  system  enables  care  managers  to  effectively
interface  with, and utilize,  Patient  Infosystems'  intervention  programs for
patient care planning and implementation  improves case managers' efficiency and
productivity. Additionally, the CMSS provides the case management organization's
management with a reporting tool and a case distribution and documentation  tool
that can be used to better monitor and manage case management activity.  Patient
Infosystems  licenses its CMSS  software and  operating  system to customers who
agree to an initial  license fee plus ongoing user and support fees.  There were
no new sales of this product  during 2002. As of January 31, 2003,  there is one
licensee.

Other Applications of the Integrated Information Capture and Delivery Technology

Outcomes Analysis

     Patient  Infosystems  expects to utilize  aggregate  anonymous  information
gathered  from patients  enrolled in its programs to serve two purposes.  First,
information  regarding treatment results,  success of the compliance program and
patient reaction to differing  treatments or compliance protocols may be used by
Patient Infosystems to further improve each disease-specific compliance program.
Second,  this  information may be used by payors,  pharmaceutical  companies and
healthcare  providers  to  assist  in  the  development  of  improved  treatment
modalities.  Patient  Infosystems has developed  analytical  methodologies using
database management and information technologies.

Clinical Studies

     Many  pharmaceutical  companies  and contract  research  organizations  are
seeking more  economical,  efficient  and  reliable  methods for  compiling  and
analyzing clinical data in conducting  clinical trials.  Furthermore,  many drug
development  protocols have begun to emphasize  subjective criteria and outcomes
information.  Patient  Infosystems  believes  that its  system  will allow it to
develop  programs  tailored to the  measurement of outcomes data relating to the
conduct of later stage clinical trials.  Patient  Infosystems  believes that its
system can also assist pharmaceutical  companies in studying and documenting the
efficacy of approved  products in order to provide  ongoing  information  to the
Food and Drug Administration or for marketing purposes.

Clinical Registry Technical Assistance

     Patient Infosystems assists  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.  This  project is  administered  as a  subcontract  through  the
Institute for Healthcare Improvement.

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.  Patient  Infosystems
markets its integrated  disease  management  system to organizations  within the
healthcare  industry that are involved in the treatment of disease or payment of
medical  services  for  patients  who  require  complex  or  long-term   medical
therapies.   These  industry   organizations   include  five  distinct   groups:
pharmaceutical  and  medical  equipment  manufacturers,   healthcare  providers,
pharmacy   benefits   managers,   healthcare   payors  and   self-funded   trust
funds/employer  groups.  As of July 2000,  Patient  Infosystems has also entered
into an  agreement  with USI  Administrators,  Inc.  along  with  several of its
subsidiaries  (collectively  known  as  "USI"),  one  of the  country's  largest
third-party  administrators  ("TPA"),  to co-market its products and services to
USI's potential employer client base. Similar agreements have been executed with
ACS and Future Health. ACS is a company that provides claims processing services
and  ancillary  network  referral  services to provider  networks,  managed care
organizations  and TPAs.  Future Health is a population risk management  company
that provides risk  identification case management,  utilization  management and
disease  management,   primarily  for  self-funded   employer  groups.   Patient
Infosystems  currently  employs a sales and  marketing  staff of two  persons to
market its systems.  In  addition,  the senior  members of Patient  Infosystems'
management are actively engaged in marketing Patient Infosystems' programs.

     Studies have been conducted to document the clinical and cost benefits that
result from the application of its integrated  information  capture and delivery
system.  The  results  of these  studies  are being used to  supplement  Patient
Infosystems'  marketing  efforts.  Patient  Infosystems  intends to  continue to
promote the benefits of its products  through press releases,  direct  marketing
and possibly  through  publication  in clinical  journals and  presentations  at
scientific  conferences  referencing  the favorable near  term-results  of these
studies. To date, these studies have pertained to Patient  Infosystems'  asthma,
diabetes and congestive heart failure programs.

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 $105,614, or 4.5% of
total revenues, for the fiscal year ended December 31, 2002, $190,731, or 12.0%,
of total revenues, for the fiscal year ended December 31, 2001, and $305,543, or
14.3% of total revenues,  for the fiscal year ended December 31, 2000.  Research
and  development  costs have decreased as Patient  Infosystems has completed the
development of its primary  disease  management  programs.  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.

Employees

     As of  March  1,  2003,  Patient  Infosystems  had 64  full  and  part-time
employees.



<PAGE>


                                  RISK FACTORS

Forward-Looking Statements

     When used in this and in future  filings  by Patient  Infosystems  with the
Securities and Exchange  Commission,  in Patient Infosystems' press releases and
in oral statements made with the approval of an authorized  executive officer of
Patient  Infosystems,  the words or phrases  "will  likely  result,"  "expects,"
"plans," "will continue," "is anticipated," "estimated," "project," or "outlook"
or similar  expressions  (including  confirmations  by an  authorized  executive
officer of Patient  Infosystems  of any such  expressions  made by a third party
with respect to Patient  Infosystems) are intended to identify  "forward-looking
statements" within the meaning of the Private  Securities  Litigation Reform Act
of 1995.  Patient  Infosystems  wishes to  caution  readers  not to place  undue
reliance on any such forward-looking  statements, each of which speak only as of
the date made.  Such  statements are subject to certain risks and  uncertainties
that could cause actual results to differ  materially from  historical  earnings
and  those  presently  anticipated  or  projected.  Patient  Infosystems  has no
obligation to publicly  release the result of any revisions  that may be made to
any forward-looking statements to reflect anticipated or unanticipated events or
circumstances occurring after the date of such statements.

     An investment in Patient Infosystems' common stock is speculative in nature
and involves a high degree of risk. No investment in Patient Infosystems' common
stock  should be made by any person who is not in a position  to lose the entire
amount of such investment.

Working Capital Shortfalls;  Urgent Need for Working Capital, Possible Cessation
of Operations, Qualified Auditors' Opinion;

     Patient  Infosystems  has never earned  profits and has been dependent upon
its initial public  offering,  private  placements of its equity  securities and
debt, through which Patient  Infosystems has raised over $25 million to date, to
fund its working capital requirements. Patient Infosystems incurred an operating
loss of approximately $1.7 million with a net loss of approximately $2.2 for the
year ended  December 31, 2002 and had an  approximate  $6.1  million  deficit in
working capital and a  shareholders'  deficit of  approximately  $8.7 million at
December 31, 2002. Since September 2000,  Patient  Infosystems'  operations have
been  supported  substantially  by  loans  from  certain  directors  of  Patient
Infosystems.  On March 23, 2003, Messrs. Pappajohn and Shaffer made a commitment
to Patient  Infosystems to obtain the operating  funds that Patient  Infosystems
believes  would be sufficient to fund its operations  through  December 31, 2003
based  upon an  operational  forecast  for  Patient  Infosystems.  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 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. If it is unable to
identify additional sources of capital,  Patient Infosystems will be required to
cease operations.  As a result of the above, the Independent Auditors' Report on
Patient  Infosystems'  consolidated  financial  statements  appearing at Item 15
includes an emphasis paragraph  indicating that Patient  Infosystems'  recurring
losses from operations, negative working capital and stockholders' deficit 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.

Substantial Indebtedness

     As of December 31,  2002,  Patient  Infosystems  had total  liabilities  of
$9,887,505 and a working  capital  deficit of  $6,135,451.  Also at December 31,
2002,  Patient  Infosystems had a stockholders'  deficit of $8,670,239.  Through
December  31, 2002 these  amounts  reflect  the effects of Patient  Infosystems'
continuing losses,  issuance of demand notes totaling $5,077,500 to directors of
Patient  Infosystems 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 equity securities. Patient Infosystems
is currently  maintaining  it operations  only through the receipt of continuing
loans from one of its  directors.  If these loans or  additional  funds were not
available, Patient Infosystems would likely be required to cease operations.

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.

     In October 1996, Patient  Infosystems began enrolling patients in its first
disease  management  program and only began substantial  patient contacts during
1998.  Patient  Infosystems  currently  has  patients  enrolled  in  five of its
disease-specific  programs.  Through January 2003, an aggregate of approximately
675,000 persons have been enrolled in Patient  Infosystems'  programs.  However,
Patient  Infosystems  has  never  been  able to  enroll a  sufficient  number of
patients to cover the cost of any of its particular programs.  The participation
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.  In addition,  Patient  Infosystems  has encountered
resistance   from  patients  and  other  sources  of   information   to  Patient
Infosystems' systems.

Recent Loss of Important Clients

     During the fiscal  year  ended  December  31,  2002,  approximately  54% of
Patient Infosystems' revenue came from two clients, AstraZeneca, Inc. ("Zeneca")
and a healthcare insurance entity (the "Client"). Zeneca sponsored patients from
an affiliate of Client (the "Sponsored  Group") in a program operated by Patient
Infosystems.  Client directly sponsored patients from other of its affiliates in
substantially  the same  program as that  provided to the  Sponsored  Group.  In
September 2002, Patient Infosystems  received  notification from Zeneca. that it
intended to  terminate  its service  agreement  with Patient  Infosystems  as of
January 1, 2003.  In  January  2003,  Client  assumed  approximately  20% of the
Sponsored  Group  under its  service  agreement  with  Patient  Infosystems.  In
February 2003, Patient Infosystems received  notification that Client intends to
terminate its service  agreement  with Patient  Infosystems,  effective  July 1,
2003.  Neither  Zeneca  nor  Client  cited  any  dispute  with or  breach of any
agreement by Patient  Infosystems.  Patient  Infosystems  has replaced this lost
revenue  with other  client  contracts,  but no  assurance  can be given the new
sources of revenue will be permanent.

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, 2002, Patient Infosystems now has more customers
than it did at  December  31,  2000 or 2001.  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 Zeneca,  CHA Health and Independence Blue
Cross.  Patient  Infosystems has received notice of termination  from Zeneca and
expects  that its sales 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.

Consequences of the Need to Raise Additional Working Capital

     In connection with their financing of Patient Infosystems' operations,  Mr.
Pappajohn and Dr.  Schaffer have been awarded  2,735,822  shares of common stock
over the last two years. 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.  As a result,
the value of outstanding shares of common stock could decline further.

Resignations of Directors and Management; No Independant Directors

     In February 2002, Carl Korht, a director of Patient  Infosystems,  resigned
effective  April 1,  2002.  Mr.  Korht  did not cite any  dispute  with  Patient
Infosystems   and  indicated   that  his  reasons  for  departing  from  Patient
Infosystems were personal.  No assurance can be given that Patient  Infosystems'
current or future members of management  will be able to operate the business of
Patient Infosystems effectively.  As a result, 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.  The other two, Mr.
Pappajohn and Dr.  Schaffer,  are owed  significant  amounts of money by Patient
Infosystems.  It is anticipated that it will be difficult to attract  additional
independent directors to join the Board of Directors.

Terminability of Agreements; Exclusivity Provisions

     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 addition,  Patient  Infosystems
has given  Bristol-Myers  a right of first  refusal in  responding  to any third
party's request for proposal where the Bristol-Myers  sponsored  programs may be
offered by Patient  Infosystems,  and has agreed not to resell these programs to
any of Bristol-Myers  pharmaceutical competitors. 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.

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.

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.  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.

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.

ACS' History of Operating Losses

     Pursuant to the Asset Purchase Agreement, Patient Infosystems has agreed to
acquire  substantially all of the assets of ACS. 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.

Limited Number of Customers of ACS

     ACS' five largest  customers account for approximately 79% of its revenues.
In addition, ACS does not have long-term contracts with its customers. After the
closing  of the  Asset  Purchase  Agreement,  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.

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, 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") 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.

     Patient  Infosystems is subject to state laws governing the confidentiality
of patient information. A variety of statutes and regulations exist safeguarding
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  requires  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.

     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.

Control of Patient Infosystems

     The  executive  officers,  directors  and certain  stockholders  of Patient
Infosystems  who  beneficially  own in the  aggregate  approximately  67% 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,  and 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  containing
provisions  prohibiting  the  disclosure of  confidential  information to anyone
outside  Patient  Infosystems,  requiring  employees  to  acknowledge,  and,  if
requested, assist in confirming Patient Infosystems' ownership of any new ideas,
developments,   discoveries  or  inventions  conceived  during  employment,  and
requiring  assignment  to  Patient  Infosystems  of  proprietary  rights to such
matters that are related to Patient Infosystems' business.

Item 2.   Description of Properties.

     Patient  Infosystems'  executive  and  corporate  offices  are  located  in
Rochester,  New York in  approximately  5,000 square feet of leased office space
under an  operating  lease that expires on June 30,  2003,  after which  Patient
Infosystems  expects to extend this lease at a minimum  through the end of 2003.
Patient Infosystems believes its offices are suitable to meet its current needs.

Item 3.    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.

Item 4.    Submission of Matters to a Vote of Security Holders.

     No matters were  submitted to a vote of security  holders during the fourth
quarter of the fiscal year ended December 31, 2002.


<PAGE>


                                     PART II


Item 5. Market  Price for  Registrant's  Common  Equity and Related  Stockholder
     Matters.

(a)  Market Information

     Patient  Infosystems'  common  stock  is  traded  on  the  Over-the-Counter
Bulletin  Board (the "OTC Bulletin  Board") under the symbol PATI. The following
table  sets  forth,  for the  periods  indicated,  the range of high and low bid
quotations for Patient  Infosystems'  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.

<TABLE>
<CAPTION>
                            High         Low
       2001
<S>                        <C>          <C>
       First Quarter       $0.20        $0.09
       Second Quarter      $0.43        $0.06
       Third Quarter       $0.29        $0.17
       Fourth Quarter      $0.17        $0.04

       2002
       First Quarter       $0.20        $0.06
       Second Quarter      $0.20        $0.12
       Third Quarter       $0.30        $0.09
       Fourth Quarter      $0.51        $0.08
</TABLE>

(b)  Holders

     The  approximate  number of record holders of Patient  Infosystems'  common
stock as of March 31, 2003 is 83.

(c)  Dividends

     Patient Infosystems has not declared cash dividends on its common stock.

     Patient  Infosystems  is declaring 9% cumulative  dividends on its Series C
Cumulative Convertible Preferred Stock that was issued on March 31, 2000.

(d) Recent sales of unregistered securities

     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.
These shares can be converted  into common stock at a rate of 8 shares of common
stock to 1 share of Series C Preferred  Stock.  Each share of Series C Preferred
Stock has voting rights  equivalent to 8 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 2002, Patient Infosystems  borrowed $1,170,000 from Mr. Pappajohn in the
form of demand  notes  secured  by the assets of  Patient  Infosystems.  Patient
Infosystems  anticipates that it will need to borrow  additional funds before it
can secure capital through the issuance of additional  securities.  From January
1, 2003 through March 31, 2003,  an  additional  $600,000 has been borrowed from
Mr. Pappajohn under substantially the same terms.

     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.

     On June 11, 2002,  the board of directors of Patient  Infosystems  approved
the conversion of up to $4,642,500 in debt and $438,099 of accrued interest owed
to Mr. Pappajohn and Dr. Schaffer into 36,289,993 shares of Patient Infosystems'
common  stock  using a value of $0.14 per common  share.  The  average  value of
Patient  Infosystems'  common  stock based upon an average  closing  price for a
period  immediately  before  June 11,  2002 was  $0.1354.  Patient  Infosystems'
Certificate  of  Incorporation  authorizes  Patient  Infosystems  to issue up to
20,000,000  shares  of  common  stock,  10,956,024  of  which  were  issued  and
outstanding and 2,029,040 of which were reserved for issuance under  outstanding
options,  warrants and upon  conversion  of  outstanding  convertible  preferred
stock.  Giving  effect to this  debt  conversion  transaction  will  require  an
amendment to Patient  Infosystems'  Certificate  of  Incorporation  to authorize
additional shares of common stock. Accordingly, this debt conversion transaction
cannot occur unless and until the  stockholders of Patient  Infosystems  approve
this  amendment.  The shares  will be 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.

<PAGE>

Item 6.  Selected Financial Data.

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
                                                                        Year Ended December 31,
                                                  2002            2001            2000             1999             1998
Statement of Operations Data:

<S>                                            <C>             <C>             <C>              <C>              <C>
Revenues                                       $2,355,677      $1,586,443      $2,139,262       $3,545,207       $2,344,072

Costs and expenses:
  Cost of sales                                 1,914,464       2,420,151       3,906,010        5,219,562        4,011,710
  Sales and marketing                             746,353         813,975       1,425,990        2,809,554        1,929,525
  General and administrative                    1,282,683       2,028,804       2,329,585        1,916,003        1,490,210
  Research and development                        105,614         190,731         305,543          967,365          298,686

    Total costs and expenses                    4,049,114       5,453,661       7,967,128       10,912,484        7,730,131

Operating loss                                 (1,693,437)     (3,867,218)     (5,827,866)      (7,367,277)      (5,386,059)

Other (expense) income                           (530,924)       (598,087)       (211,340)        (250,897)         556,592

NET LOSS                                       (2,224,361)     (4,465,305)     (6,039,206)      (7,618,174)      (4,829,467)

  Convertible preferred stock dividends           (90,000)        (90,000)       (617,500)             -                -

NET LOSS ATTRIBUTABLE TO
 COMMON SHAREHOLDERS                          $(2,314,361)    $(4,555,305)    $(6,656,706)     $(7,618,174)     $(4,829,467)

Net loss per share - basic and diluted             $(0.21)         $(0.47)         $(0.82)          $(0.95)          $(0.60)

Weighted average
 common shares outstanding                     10,956,024       9,770,501       8,135,635        8,032,533        8,018,398
</TABLE>

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
                                                                          As of December 31,
                                                   2002            2001            2000             1999             1998
Balance Sheet Data:

<S>                                             <C>             <C>             <C>                 <C>            <C>
Cash and cash equivalents                           $5,011         $29,449         $28,231         $489,521       $6,316,955
Working capital                                 (6,135,451)     (4,686,322)     (1,375,391)         414,132        7,992,894
Total assets                                     1,217,266       1,222,133       2,292,244        3,844,395       10,519,727
Long term obligations                            3,000,000       2,500,000       2,500,000          500,000             -
Total liabilities                                9,887,505       7,578,011       4,481,225        1,427,732          894,339
Total stockholders' (deficit) equity            (8,670,239)     (6,355,878)     (2,188,981)       2,416,663        9,625,388
</TABLE>


<PAGE>



Item 7. Management's  Discussion and Analysis of Financial Condition and Results
     of Operations.

     Management's   discussion  and  analysis   provides  a  review  of  Patient
Infosystems'  operating  results for the fiscal  years ended  December 31, 2002,
2001 and 2000,  and its financial  condition at December 31, 2002 and 2001.  The
focus of this  review is on the  underlying  business  reasons  for  significant
changes and trends affecting the revenues, net losses and financial condition of
Patient  Infosystems.  This  review  should  be read  in  conjunction  with  the
accompanying consolidated financial statements.

     In an effort to give investors a well-rounded view of Patient  Infosystems'
current  condition  and future  opportunities,  this Annual  Report on Form 10-K
includes forecasts by Patient  Infosystems'  management about future performance
and  results.   Because  they  are  forward-looking,   these  forecasts  involve
uncertainties.  They include risks of market  acceptance of, or preference  for,
Patient  Infosystems'  systems and services,  competitive forces, the impact of,
and  changes  in,  government  regulations,  general  economic  factors  in  the
healthcare industry, and other factors discussed in Patient Infosystems' filings
with the Securities and Exchange Commission.

Overview

     Patient  Infosystems  was formed on February  22,  1995.  Although  Patient
Infosystems has completed the development of its integrated  information capture
and delivery system 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.  Patient
Infosystems   currently   has   patients   enrolled  in  more  than  30  of  its
disease-specific, demand management or survey programs. Through January 2003, an
aggregate of over 675,000  persons have been enrolled or participated in Patient
Infosystems'  programs.  However,  Patient  Infosystems  has never  been able to
enroll a sufficient  number of patients to cover the cost of its  programs.  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.

     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  though targeted use of
Internet  technology.   Patient  Infosystems'  demand  management  services  and
automated surveys (general health and disease-specific),  can provide mechanisms
for enrollment to 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  services  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, and (vii)
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.  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.  During 1999 and 2000,  Patient  Infosystems  has
committed   increased   resources  to  developing   strategic  upgrades  of  its
information  and  telecommunications   technologies  to  leverage  the  emerging
capabilities of the Internet. Moreover, as 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. Patient Infosystems' program
development  contracts  typically  require payment from the customer at the time
that  the  contract  is  executed,  with  additional  payments  made as  certain
development  milestones are met. Development contract revenue is recognized on a
percentage  of  completion   basis,  in  accordance  with  the  ratio  of  total
development  cost  incurred to the  estimated  total  development  costs for the
entire  project.  Losses,  if  any,  related  to  program  development  will  be
recognized in full as identified.  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
bundled 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.

     Revenues  from   operations,   which  includes  fees  received  by  Patient
Infosystems  for  operating  its  programs,  is the most  significant  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 that include licensing of
Internet-based technology. Nevertheless, Patient Infosystems is still supporting
a substantial  infrastructure  in maintaining the capacity  necessary to deliver
its  services  and to offer its services to new  customers.  Therefore,  Patient
Infosystems  will be required to  increase  substantially  the number of patient
contacts and  management  programs to cover the costs  necessary to maintain the
capability  to  service  its  customers.   In  that  Patient  Infosystems  began
substantial patient contacts during 1998 and has still, to this date,  increased
contacts at a relatively slow rate, Patient Infosystems is continually examining
its costing structures to determine the levels that will be necessary to achieve
profitability.

     During  2002,  Patient  Infosystems  found  new  sources  of  revenue  that
increased  its revenue from $1.6 million for the fiscal year ended  December 31,
2001 to $2.4 million for the same period of 2002. Patient Infosystems maintained
control on costs and reduced its operating loss from $3.9 million for the fiscal
year ended December 31, 2001 to $1.7 million for the same period of 2002.

     The sales cycle for Patient  Infosystems'  programs 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  2002,  Patient  Infosystems  felt the  pressure  of severe  working
capital shortfalls.  Patient  Infosystems'  available cash had been reduced to a
level that  substantially  limits its operations.  Although Patient  Infosystems
established  lines of credit in the amount of $3  million,  raised $1 million in
equity in 2000 and issued $5.1 million in demand notes,  Patient  Infosystems is
continuing to incur losses and must identify  substantial  additional capital to
sustain its  operations.  Patient  Infosystems'  operations are currently  being
funded  by  loans  being  made on a  monthly  basis  by a  director  of  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 cease  operations.  As a result of the  above,  the
Independent  Auditors'  Report on Patient  Infosystems'  consolidated  financial
statements  appearing at Item 15 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.

     In November 2002, Patient  Infosystems began providing  increased technical
assistance and project management support to the federal  government's  national
Health  Disparities  Collaboratives,  a  chronic  disease  program  focusing  on
improving the care of  underserved  populations  with chronic  disease served by
federally qualified health centers.  Patient Infosystems supports the management
of the development of a clinical  registry software program and provides faculty
and staff support to the project.  This initiative is administered by the Bureau
of Primary  Health Care through a partnership  with the Institute for Healthcare
Improvement.  Although  this  contract  is a growing  product  line for  Patient
Infosystems,  there is no guarantee that the contract will continue  through the
Institute  for  Healthcare  Improvement  or will continue to be supported by the
Bureau of Primary Health Care.

<PAGE>

Results of Operations

Year Ended December 31, 2002 Compared to Year Ended December 31, 2001

     Revenues

     Revenues are comprised of revenues from operations  fees,  development fees
and licensing  fees.  Revenues  increased 49% to $2,355,677  for the fiscal year
ended  December 31, 2002 from  $1,586,443 for the fiscal year ended December 31,
2001.  A summary of these  revenues  by  category,  is as follows for the fiscal
years ended December 31:


<TABLE>
<CAPTION>
Revenues                           2002            2001

<S>                            <C>             <C>
Operations Fees                $ 2,125,522     $ 1,314,311
Consulting Fees                    168,606          72,000
Development Fees                    36,239          78,632
Licensing Fees                      25,310         121,500
                              -----------------------------

Total                          $ 2,355,677     $ 1,586,443
                              =============================
</TABLE>

     Revenues from  operations  fees  increased  61.7% from  $1,314,311  for the
fiscal  year ended  December  31, 2001 to  $2,125,522  for the fiscal year ended
December 31, 2002.  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.  This
growth is attributable primarily to its Congestive Heart Failure program and new
revenues being realized from its strategic marketing partners.

     Due in  part  to  the  impact  of  the  Health  Insurance  Portability  and
Accountability Act of 1996 ("HIPAA"),  P.L. 104-191, one of Patient Infosystems'
customers,  which  provided  50% of Patient  Infosystems'  revenue in 2002,  has
elected to terminate its services agreement with Patient  Infosystems  effective
January 1,  2003.  Under the terms of the  agreement,  Patient  Infosystems  had
provided its services to a third party that is considered a Covered Entity under
HIPAA.  Patient  Infosystems has a services  agreement and a business  associate
agreement to provide substantially the same services directly to an affiliate of
that Covered Entity and anticipates that it will continue to perform some or all
of the terminated services under such agreements. No assurance can be given that
the terminated services will be assumed under the other existing agreements,  or
that any new revenues Patient  Infosystems may receive,  if any, will offset the
loss of revenue from the terminated services agreement.

     Revenues from  consulting  increased  134% from $72,000 for the fiscal year
ended December 31, 2001 to $168,606 for the fiscal year ended December 31, 2002.
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  2003.  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 decreased 53.9% from $78,632 for the fiscal
year ended  December 31, 2001 to $36,239 for the fiscal year ended  December 31,
2002. In 2001 and 2002, 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.  Development  revenues have
declined  from year to year since the fiscal year ended  December 31,  1997,  as
Patient  Infosystems reduced the amount of development work it has performed for
its customers.  Patient  Infosystems  anticipates  that revenue from development
fees  may  continue  to  decline  unless  Patient  Infosystems  enters  into new
development agreements.

     Revenues from licensing  fees decreased  79.2% from $121,500 for the fiscal
year ended  December 31, 2001 to $25,310 for the fiscal year ended  December 31,
2002.  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 product line.  Patient  Infosystems  terminated one license agreement and
has not entered into any new licensing contracts.  All remaining initial license
fees have been  collected.  Patient  Infosystems  anticipates  that revenue from
licensing  may  decrease in future  periods  unless new license  agreements  are
signed.

     During the fiscal  year  ended  December  31,  2002,  approximately  54% of
Patient Infosystems' revenue came from two clients, AstraZeneca, Inc. ("Zeneca")
and a healthcare insurance entity (the "Client"). Zeneca sponsored patients from
an affiliate of Client (the "Sponsored  Group") in a program operated by Patient
Infosystems.  Client directly sponsored patients from other of its affiliates in
substantially  the same  program as that  provided to the  Sponsored  Group.  In
September 2002, Patient Infosystems  received  notification from Zeneca. that it
intended to  terminate  its service  agreement  with Patient  Infosystems  as of
January 1, 2003.  In  January  2003,  Client  assumed  approximately  20% of the
Sponsored  Group  under its  service  agreement  with  Patient  Infosystems.  In
February 2003, Patient Infosystems received  notification that Client intends to
terminate its service  agreement  with Patient  Infosystems,  effective  July 1,
2003.  Neither  Zeneca  nor  Client  cited  any  dispute  with or  breach of any
agreement by Patient  Infosystems.  Patient  Infosystems  has replaced this lost
revenue  with other  client  contracts,  but no  assurance  can be given the new
sources of revenue will be permanent.

     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  decreased  20.9% from  $2,420,151  for the fiscal year ended
December 31, 2001 to $1,914,464 for the fiscal year ended December 31, 2002. The
decrease in these costs primarily reflects a reduction in staff.

     Sales and marketing  expenses  decreased  8.3% from $813,975 for the fiscal
year ended  December 31, 2001 to $746,353 for the fiscal year ended December 31,
2002.  These costs consist  primarily of salaries,  related  benefits and travel
costs, sales materials and other marketing related expenses.  Decreased spending
in this area is attributable to Patient Infosystems' efforts to reduce costs and
to its limited  available  capital,  resulting in a smaller  sales and marketing
staff and  increased  dependence  on marketing  partners  during the fiscal year
ended December 31, 2002. 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 if 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
36.38% from $2,028,804 for the fiscal year ended December 31, 2001 to $1,282,683
for the fiscal year ended  December  31,  2002.  The decrease in these costs was
caused  by the  reduction  in the  amortization  of in debt  issuance  and other
financing  costs  related to funding  operations,  pay decreases for officers of
Patient   Infosystems  and  a  renegotiation  and  elimination  of  the  minimum
obligation under a vendor agreement.  Patient  Infosystems  expects that general
and administrative  expenses will 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  44.6% from $190,731 for the fiscal year ended  December 31,
2001 to $105,614 for the fiscal year ended  December  31, 2002.  The decrease in
research  and   development   expenses   reflects  the   transition  of  Patient
Infosystems' decreased investment in information systems and new technology.

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

<TABLE>
<CAPTION>
                                           2002          2001
                                        ------------- ------------
<S>                                      <C>           <C>
              Interest expense           $ (535,269)   $ (410,063)
              Other income (expense)
                Other                         4,345        11,976
                ReCall Services, Inc.                    (200,000)
                                        ------------- ------------

              Total Expense              $ (530,924)   $ (598,087)
                                        ------------- ------------
</TABLE>

     Interest expense is due to debt. Interest expense increased to $535,269 for
the fiscal year ended  December 31, 2002 from $410,063 for the fiscal year ended
December 31, 2001. The increase in interest  expense reflects the increased debt
required to fund operations.

     The other  expense for the fiscal  year ended  December  31, 2001  consists
primarily  of an  impairment  of an  investment.  In  September  of 2001 Patient
Infosystems was notified that Recall Services,  Inc. was ceasing  operations and
declared its $200,000 investment in Recall Services, Inc. impaired.

     Patient Infosystems had no tax benefit in 2002 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.

     For the fiscal year ended December 31, 2002, Patient  Infosystems  declared
$90,000 in dividends on convertible preferred stock.

     Patient  Infosystems had a net loss attributable to common  stockholders of
$2,314,361 for the fiscal year ended  December 31, 2002,  compared to $4,555,305
for the fiscal year ended December 31, 2001.  This represents a loss of $.21 per
basic and diluted share for 2002 and $.47 for 2001.

<PAGE>

Year Ended December 31, 2001 Compared to Year Ended December 31, 2000

     Revenues

     Revenues are comprised of revenues from operations  fees,  development fees
and licensing fees. Revenues decreased 25.8% from $2,139,262 for the fiscal year
ended  December 31, 2000 to  $1,586,443  for the fiscal year ended  December 31,
2001.  A summary of these  revenues  by  category,  is as follows for the fiscal
years ended December 31:

<TABLE>
<CAPTION>
Revenues                      2001              2000

<S>                       <C>               <C>
Operations Fees           $1,386,311        $1,941,810
Development Fees              78,632            81,626
Licensing Fees               121,500           115,826
                          ----------        ----------
Total                     $1,586,443        $2,139,262
</TABLE>

     Revenues from  operations  fees  decreased  28.6% from  $1,941,810  for the
fiscal  year ended  December  31, 2000 to  $1,386,311  for the fiscal year ended
December 31, 2001.  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 decreased
in 2001 due to termination of Medicare  products by two of Patient  Infosystems'
key customers and completion of two pharma  projects that generated  substantial
revenue in the first half of 2000, but made immaterial contribution during 2001.

     Revenues from  development  fees decreased 3.7% from $81,626 for the fiscal
year ended  December 31, 2000 to $78,632 for the fiscal year ended  December 31,
2001. In 2000, Patient Infosystems  received development revenues from a variety
of customers for creation of, or  modification  to, specific  programs.  Patient
Infosystems has completed  substantially all services under these agreements and
is  primarily  receiving  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.  Development revenues have declined from year to year since
the fiscal year ended  December 31,  1997,  as Patient  Infosystems  reduced the
amount  of  development  work  it  has  performed  for  its  customers.  Patient
Infosystems  anticipates  that revenue from  development  fees will  continue to
decline unless Patient Infosystems enters into new development agreements.

     Revenues from  licensing  fees  increased 4.9% from $115,826 for the fiscal
year ended  December 31, 2000 to $121,500 for the fiscal year ended December 31,
2001.  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 to other  entities,  certain of its
programs,  primarily Patient Infosystems' Internet-based Case Management Support
System product line. Patient  Infosystems has not entered into any new licensing
contracts  and a substantial  portion the initial  license fees for the existing
contracts have been collected. Patient Infosystems anticipates that revenue from
licensing  will decrease in future  periods  unless new license  agreements  are
signed.

     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  decreased  38% from  $3,906,010  for the  fiscal  year ended
December 31, 2000 to $2,420,151 for the fiscal year ended December 31, 2001. The
decrease in these costs  primarily  reflects a  decreased  level of  operational
activities and the full year realization of program  development cost reductions
initiated during the last few months of 2000.

     Sales and marketing expenses decreased 42.9% from $1,425,990 for the fiscal
year ended  December 31, 2000 to $813,975 for the fiscal year ended December 31,
2001.  These costs consist  primarily of salaries,  related  benefits and travel
costs, sales materials and other marketing related expenses.  Decreased spending
in this area is attributable to Patient Infosystems' efforts to reduce costs and
to its limited  available  capital,  resulting in a smaller  sales and marketing
staff and  increased  dependence  on marketing  partners  during the fiscal year
ended December 31, 2001. It is anticipated that Patient Infosystems will need to
invest heavily in the sales and marketing process in future periods if 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
12.9% from  $2,329,585 for the fiscal year ended December 31, 2000 to $2,028,804
for the fiscal year ended  December  31,  2001.  The decrease in these costs was
caused  by the  reduction  in the  amortization  of in debt  issuance  and other
financing costs related to funding  operations and pay decreases for officers of
Patient  Infosystems.  Without the financing  cost,  general and  administrative
expense would have  decreased  12.2% from  $1,664,835  for the fiscal year ended
December  31, 2000 to  $1,461,379  for the fiscal year ended  December 31, 2001.
Patient Infosystems expects that general and administrative expenses will 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  37.6% from $305,543 for the fiscal year ended  December 31,
2000 to $190,731 for the fiscal year ended  December  31, 2001.  The decrease in
research  and   development   expenses   reflects  the   transition  of  Patient
Infosystems'  investment in Internet  technology into operational systems during
2001.

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

<TABLE>
<CAPTION>
                                          2001         2000
                                       ------------ ------------
<S>                                     <C>          <C>
              Interest expense          $ (410,063)  $ (190,997)
              Other income (expense)
                Other                       11,976      (20,343)
                ReCall Services, Inc.     (200,000)        -
                                       ------------ ------------

              Total Expense             $ (598,087)  $ (211,340)
                                       ------------ ------------
</TABLE>

     Interest expense is due to debt. Interest expense increased to $410,063 for
the fiscal year ended  December 31, 2001 from $190,997 for the fiscal year ended
December 31, 2000. The increase in interest  expense reflects the increased debt
required to fund operations.

     The other  expense for the fiscal  year ended  December  31, 2001  consists
primarily  of an  impairment  of an  investment.  In  September  of 2001 Patient
Infosystems was notified that Recall Services,  Inc. was ceasing  operations and
declared its $200,000 investment in Recall Services, Inc. impaired.

     Patient Infosystems had no tax benefit in 2001 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.

     For the fiscal year ended December 31, 2001, Patient  Infosystems  declared
$90,000 in dividends on convertible preferred stock.

     Patient  Infosystems had a net loss attributable to common  stockholders of
$4,555,305 for the fiscal year ended  December 31, 2001,  compared to $6,656,706
for the year ended December 31, 2000.  This  represents a loss of $.47 per basic
and diluted share for 2001 and $.82 for 2000.

     Liquidity and Capital Resources

     At December 31, 2002, Patient  Infosystems had a working capital deficit of
$6,135,451  as compared to a working  capital  deficit of $4,686,322 at December
31, 2001.  Also at December 31, 2002,  Patient  Infosystems  had a stockholders'
deficit of  $8,670,239.  Through  December  31, 2002 these  amounts  reflect the
effects of Patient  Infosystems'  continuing  losses that have been  funded,  in
part,  by the  issuance of demand  notes  totaling  $5,077,500  to  directors of
Patient  Infosystems 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 equity securities and the issuance of
debt.  Patient  Infosystems is currently  maintaining it operations only through
the receipt of  continuing  loans from one of its  directors.  If these loans or
additional  funds  were not  available,  Patient  Infosystems  would  likely  be
required to cease operations.

     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.  As of the date of this filing,  there
has been no consideration for the continued guarantee.

     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.  As of the date of this filing,  there
has been no consideration for the continued guarantee.

     On June 11, 2002,  the board of directors of Patient  Infosystems  approved
the conversion of up to $4,642,500 in debt and $438,099 of accrued interest owed
to Mr. Pappajohn and Dr. Schaffer into 36,289,993 shares of Patient Infosystems'
common  stock  using a value of $0.14 per common  share.  The  average  value of
Patient  Infosystems'  common  stock based upon an average  closing  price for a
period  immediately  before  June 11,  2002 was  $0.1354.  Patient  Infosystems'
Certificate  of  Incorporation  authorizes  Patient  Infosystems  to issue up to
20,000,000  shares  of  common  stock,  10,956,024  of  which  were  issued  and
outstanding and 2,217,320 of which were reserved for issuance under  outstanding
options,  warrants and upon  conversion  of  outstanding  convertible  preferred
stock.  Giving  effect to this  debt  conversion  transaction  will  require  an
amendment to Patient  Infosystems'  Certificate  of  Incorporation  to authorize
additional shares of common stock. Accordingly, this debt conversion transaction
cannot occur unless and until the  stockholders of Patient  Infosystems  approve
this amendment.  A date for a meeting of the stockholders of Patient Infosystems
has not yet been established.

     Patient  Infosystems  has  expended   significant  amounts  to  expand  its
operational  capabilities  including increasing its administrative and technical
costs.  While Patient  Infosystems  has curtailed  its spending  levels,  to the
extent that 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 loans being made by a
director of 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 cease operations.  As
a result of the above, the Independent  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 2002 were $8,867, as compared to expenditures
of $9,204 during 2001 and $16,404  during 2000.  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.

     Inflation

     Inflation  did  not  have a  significant  impact  on  Patient  Infosystems'
operations during 2002, 2001 or 2000. Patient  Infosystems  continues to monitor
the  impact of  inflation  in order to  minimize  its  effects  through  pricing
strategies, productivity improvements and cost reductions.

     Recent Accounting Pronouncements

     New accounting pronouncements that became effective for the Company in 2002
did not have a material impact on the Company's financial statements.

     Critical Accounting Policies

     The  SEC  recently  issued  disclosure  guidance  for  critical  accounting
policies.  The SEC defines  critical  accounting  policies as 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  could be
deemed to be critical by SEC.

     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.


<PAGE>

Item 7A.  Quantitative and Qualitative Disclosures About Market Risk.

     In the normal course of business and consistent with  established  policies
and procedures,  Patient Infosystems uses the necessary financial instruments to
manage the fluctuations in interest rates. Patient Infosystems does not have any
foreign  currency  risk.  Patient  Infosystems  does not enter into any of these
transactions for speculative purposes.

Item 8.  Financial Statements and Supplemental Data.

     The financial  statements and supplementary  data, together with the report
thereon by Patient Infosystems independent auditor, are listed below in Item 15.

Item 9.  Changes  in  and  Disagreements  with  Accountants  on  Accounting  and
     Financial Disclosure.

     None.

<PAGE>

                                    PART III


Item 10. Directors and Executive Officers of the Registrant.

     The following table sets forth the names,  ages and principal  positions of
the directors and executive officers of Patient Infosystems.

<TABLE>
<CAPTION>
                Name        Age                     Title
<S>                          <C>    <C>
Derace L. Schaffer           54     Chairman of the Board of Directors
Roger Louis Chaufournier     44     President, Chief Executive Officer and Director
John Pappajohn               74     Director
Christine St. Andre          51     Chief Operating Officer
Kent Tapper                  46     Vice President, Financial Planning and Chief Financial Officer
</TABLE>

Derace L.  Schaffer,  M.D.  Dr.  Schaffer  has been  Chairman of the Board and a
Director  of Patient  Infosystems  since its  inception  in February  1995.  Dr.
Schaffer is President of the Ide Imaging Group,  P.C., as well as the Lan Group,
a  venture   capital  firm   specializing  in  healthcare  and  high  technology
investments.  He serves as a director of the following public companies:  Allion
Healthcare,  Inc. and Radiologix,  Inc. He is also a director of several private
companies,  including Analytika, Inc., Card Systems, 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.  Dr.  Schaffer
provides services to Patient Infosystems on a part-time basis.

Roger Louis  Chaufournier.  Mr.  Chaufournier  has been the  President and Chief
Executive  Officer of Patient  Infosystems since April 1, 2000. Prior to joining
Patient Infosystems,  Mr. Chaufournier was President of the STAR Advisory Group,
a healthcare  consulting firm he founded in 1998. From August 1996 to July 1999,
Mr.  Chaufournier was the Chief Operating Officer of the Managed Care Assistance
Company,  a company that developed and operated  Medicaid health plans.  Managed
Care Assistance  Company filed for protection under the federal  bankruptcy laws
in June  2000.  From  1993 to 1996,  Mr.  Chaufournier  was  Assistant  Dean for
Strategic  Planning for the Johns  Hopkins  University  School of  Medicine.  In
addition,   Mr.  Chaufournier  spent  twelve  years  in  progressive  leadership
positions  with the George  Washington  University  Medical  Center from 1981 to
1993. Mr.  Chaufournier  was also Chairman of the Board and acting  President of
Metastatin Pharmaceuticals,  a privately held company developing therapeutics in
the area of prostate cancer. Mr. Chaufournier was a three time Examiner with the
Malcolm  Baldrige  National  Quality  Award  and  has  served  as  the  national
facilitator  for the  federal  Bureau of Primary  Health  Care  chronic  disease
collaboratives.

John Pappajohn.  Mr. Pappajohn has been a Director of Patient  Infosystems since
its inception in February  1995,  and served as its Secretary and Treasurer from
inception through May 1995. Since 1969, Mr. Pappajohn has been the sole owner of
Pappajohn  Capital  Resources,  a venture  capital firm and  President of Equity
Dynamics,  Inc., a financial  consulting firm, both located in Des Moines, Iowa.
He serves as a Director for the following public companies:  Allion  Healthcare,
Inc., MC Informatics, Inc. and Pace Health Management Systems, Inc.

Christine St. Andre.  Ms. St. Andre has been the  Executive  Vice  President and
Chief Operating Officer of Patient Infosystems since June 5, 2000. Ms. St. Andre
has more than 20 years  experience  managing complex  healthcare  organizations.
From 1994 to 2000, Ms. St. Andre was Chief Executive  Officer for the University
of Utah  Hospitals  and  Clinics.  Prior to 1994,  Ms. St. Andre served as Chief
Executive  Officer  of George  Washington  University  Medical  Center.  Ms. St.
Andre's career in healthcare began in the area of information  technology at the
Thomas Jefferson University.

Kent Tapper.  Mr. Tapper has been Vice President,  Financial Planning of Patient
Infosystems 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.

Section 16(a) Beneficial Ownership Reporting Compliance

     Section 16(a) of the Securities Exchange Act of 1934, as amended,  requires
Patient  Infosystems'  executive officers and directors and persons who own more
than 10% of Patient  Infosystems'  common  stock  (collectively  referred  to as
"Reporting  Persons") to file reports of ownership and changes in ownership with
the SEC.  Reporting  Persons are required by SEC  regulations to furnish Patient
Infosystems with copies of all Section 16(a) forms they file.

     Based  solely on a review of the copies of such forms  received  or written
representations  from Reporting Persons,  Patient  Infosystems believe that with
respect to the fiscal year ended  December 31, 2002,  all the Reporting  Persons
complied with all applicable filing requirements.

Item 11.  Executive Compensation.


     The  following  table  sets  forth  information  concerning  the annual and
long-term compensation for services in all capacities to Patient Infosystems and
its subsidiary  for each of the fiscal years ended  December 31, 2002,  2001 and
2000 for those  persons who were at December 31, 2002,  (i) the Chief  Executive
Officer and (ii) certain other  executive  officers of Patient  Infosystems  who
received  compensation  in excess of $100,000 during the year ended December 31,
2002 (the "Named Executive Officers"):

<TABLE>
<CAPTION>
                                    Summary Compensation Table
                                                                              Long-Term
                                                                             Compensation

                                                   Annual Compensation        Securities
Name and Principal Position                                                   Underlying
                                             Year   Salary ($)   Bonus ($)    Options (#)

<S>                                          <C>    <C>              <C>        <C>
Roger L. Chaufournier, President and Chief   2002   $180,841         -             -
Executive Officer (1)                        2001   $196,502         -          200,000
                                             2000   $151,546         -          200,000


Christine St. Andre, Chief Operating         2002   $157,512         -             -
Officer (2)                                  2001   $171,893         -          150,000
                                             2000    $97,885         -          150,000


Kent A. Tapper, Vice President, Financial    2002   $107,942         -             -
Planning                                     2001   $116,628         -          100,000
                                             2000   $119,335         -             -
</TABLE>

(1)  Mr.  Chaufournier was appointed President and Chief Executive Officer as of
     March 23, 2000.

(2)  Ms. St. Andre was appointed Chief Operating Officer as of June 5, 2000.

     Neither the Chief Executive Officer nor any of the Named Executive Officers
of Patient Infosystems was awarded stock options during 2002.

     No stock options were  exercised by the Chief  Executive  Officer or any of
the Named Executive  Officers of Patient  Infosystems during 2002. The following
table sets forth certain information  regarding  unexercised options held by the
Chief Executive Officer and the Named Executive Officers of Patient  Infosystems
at December 31,  2001.  The table does not give effect to grants of options that
occurred after December 31, 2002.  For  additional  information  with respect to
these grants, see "Stock Option Plan".

<TABLE>
<CAPTION>
                           Aggregated Option Exercises
                        and Fiscal Year End Option Values

                             Number of securities underlying       Value of unexercised
                                  unexercised options at           in-the-money options
                                  December 31, 2002 (#)                      at
                                                                 December 31, 2002 ($)(1)
           Name              Exercisable       Unexercisable    Exercisable      Unexercisable
<S>                             <C>               <C>              <C>               <C>
Roger Chaufournier              228,000           172,000          $ 1,850           $ 650
Christine St. Andre             170,000           130,000          $ 1,375           $ 500
Kent Tapper                     108,000            28,000          $ 3,096           $ 350
</TABLE>

(1)  Calculated based upon $0.20 market value of the underlying securities as of
     December 31, 2002.

Stock Option Plan

     Patient  Infosystems'  Amended and Restated  Stock Option Plan (the "Plan")
was adopted by the Board of Directors and  stockholders in May 2000. As of March
31, 2003, up to 1,680,000 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
Patient Infosystems, 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  compensation  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 Patient  Infosystems,  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 his or her  initial  election to the
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.

<PAGE>

     As of December  31,  2002,  options to acquire  1,115,140  shares of common
stock had been granted to employees  and directors of Patient  Infosystems.  The
following  table  sets  forth  information   regarding  the  number  of  options
outstanding and the exercise price of these options.

<TABLE>
<CAPTION>
                   Number of Options Outstanding at
                        December 31, 2002               Exercise Price
                        ----------------                --------------
<S>                          <C>                             <C>
                               7,100                         $0.09
                              36,000                         $0.14
                             525,000                         $0.19
                             150,000                         $0.50
                              72,000                         $0.69
                              77,040                         $1.38
                              30,000                         $1.88
                             200,000                         $2.06
                               9,500                         $2.44
                               8,500                         $2.75
</TABLE>

     Of these options, 345,000,  exercisable for $0.1875 per share, were granted
as of January 26, 2001 to certain  officers  and key members of  management  and
vested immediately in lieu of a cash bonus. The remainder of the options granted
on January 26,  2001 and all other  options  granted  under the Plan vest to the
extent of 20% of the option grant on the first anniversary of the grant, and 20%
on each subsequent anniversary.

401(k) Profit Sharing Plan

     Patient  Infosystems  adopted a 401(k) Profit Sharing Plan. The 401(k) plan
is  available  to all  employees  who have  attained  age 21.  An  employee  may
contribute a portion of their wages on a pre-tax  basis,  subject to limitations
specified under the Internal  Revenue Code.  Under the terms of the 401(k) plan,
Patient  Infosystems may make a discretionary  matching  contribution equal to a
percentage of the employee's contribution to the 401(k) plan and a discretionary
amount  determined  annually by Patient  Infosystems  and divided among eligible
participants  based upon an employee's  annual  compensation  in relation to the
aggregate annual  compensation of all eligible  participants.  Contributions are
allocated  to each  employee's  individual  account and are,  at the  employee's
election,  invested in one,  all or some  combination  of the  investment  funds
available  under the 401(k) plan.  Employee  contributions  are fully vested and
non-forfeitable.  Any matching or discretionary  contributions vest 25% for each
year of  service.  To  date,  Patient  Infosystems  has not  made  any  matching
contributions under the 401(k) plan.

Compensation of Directors

     All  Directors are  reimbursed  for expenses  incurred in  connection  with
attending  meetings,   including  travel  expenses  to  such  meetings.  Patient
Infosystems' Directors are eligible to participate in Patient Infosystems' Stock
Option  Plan.  Pursuant to the Stock  Option  Plan,  non-employee  Directors  of
Patient  Infosystems receive a one-time grant of a non-qualified stock option to
purchase 36,000 shares of Patient Infosystems' common stock at an exercise price
equal to fair market  value per share on the date of their  initial  election to
the 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.

Compensation Committee Interlocks and Insider Participation

     Patient  Infosystems   currently  does  not  have  an  acting  compensation
committee.  During the fiscal  year  ended  December  31,  2002 no  officers  or
employees of Patient  Infosystems  participated in deliberations of the Board of
Directors   concerning   executive   officer   compensation.   None  of  Patient
Infosystems'  executive officers serves as a member of the Board or compensation
committee  of any  entity  that has one or more  executive  officers  serving on
Patient Infosystems' Board of Directors.



<PAGE>


Item 12.  Security Ownership of Certain Beneficial Owners and Management.

     The following table sets forth certain information regarding the beneficial
ownership of Patient  Infosystems common stock as of March 31, 2003 for (i) each
person or entity who is known by us to own  beneficially  more than five percent
of our common stock; (ii) each Named Executive  Officer;  (iii) each director of
Patient Infosystems; and (iv) all directors and executive officers as a group.

<TABLE>
<CAPTION>
    Beneficial Owner (1)                                        Number of Shares      Percent of
                                                                       (2)             Class (2)
                                                                ----------------      ----------
<S>                                                                   <C>               <C>
    John Pappajohn (3)                                                4,197,495         36.85%
    Derace L. Schaffer (4)                                            2,487,307         22.22%
    Edgewater Private Equity Fund II, L.P.,
       900 North Michigan Avenue, 14th Floor
       Chicago, IL 60611                                                970,000          8.85%
    Roger Louis Chaufournier (5)                                        281,000          2.50%
    Christine St. Andre (6)                                             180,000          1.62%
    Kent A. Tapper (7)                                                  115,100          1.04%
                                                                --------------------------------
    All directors and executive officers as a group (5 persons)       8,230,902         67.44%
</TABLE>

(1)  Unless  otherwise  noted,  the address of each of the listed persons is c/o
     Patient Infosystems at 46 Prince Street, Rochester, New York 14607.

(2)  Beneficial  ownership  is  determined  in  accordance  with the  rules  and
     regulations  of the Securities  and Exchange  Commission.  In computing the
     number  of  shares  beneficially  owned  by a  person  and  the  percentage
     ownership  of that  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  hereof  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 set forth opposite
     such stockholder's  name. The percentage  beneficial  ownership is based on
     10,956,024 shares of common stock outstanding as of March 31, 2003.

(3)  Includes 360,000 shares held by Halkis,  Ltd., a sole proprietorship  owned
     by  Mr.   Pappajohn,   360,000   shares  held  by  Thebes,   Ltd.,  a  sole
     proprietorship  owned by Mr.  Pappajohn's  spouse and  360,000  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 36,000 shares that are either currently  exercisable or
     that become exercisable within 60 days of March 31, 2003 and 400,000 common
     stock   equivalents   for  50,000  shares  of  Series  C  Preferred   Stock
     beneficially owned as of March 31, 2003. Does not include 32,268,550 shares
     of Patient  Infosystems  common  stock  resulting  from the  conversion  of
     $4,135,000  in debt and $382,597 of accrued  interest.  Such shares will be
     issued upon approval of Patient Infosystems'  stockholders of the amendment
     of the  certificate of  incorporation  to increase the  authorized  capital
     stock.

(4)  Includes  288,000  shares  held  by Dr.  Schaffer's  minor  children.  Also
     includes  36,000 shares that are issuable upon the exercise of options that
     are either currently  exercisable or that become exercisable within 60 days
     of March 31,  2003 and  200,000  common  stock  equivalents  for the 25,000
     shares of Series C Preferred Stock beneficially owned as of March 31, 2003.
     Does not  include  2,878,586  shares of Patient  Infosystems  common  stock
     resulting  from the  conversion  of $347,500 in debt and $55,502 of accrued
     interest.  Such shares will be issued upon approval of Patient Infosystems'
     stockholders  of the  amendment  of the  certificate  of  incorporation  to
     increase the authorized capital stock.

(5)  Includes  options to  purchase  281,000  shares  that are either  currently
     exercisable  or that become  exercisable  within 60 days of March 31, 2003.
     Does not include 119,000 shares subject to outstanding options that are not
     exercisable within 60 days of March 31, 2003.

(6)  Includes  options to  purchase  180,000  shares  that are either  currently
     exercisable  or that become  exercisable  within 60 days of March 31, 2003.
     Does not include 120,000 shares subject to outstanding options that are not
     exercisable within 60 days of March 31, 2003.

(7)  Includes  options to  purchase  115,000  shares  that are either  currently
     exercisable  or that become  exercisable  within 60 days of March 31, 2003.
     Does not include 21,000 shares subject to outstanding  options that are not
     exercisable within 60 days of March 31, 2003.


                      Equity Compensation Plan Information

     The following table gives information with respect to the equity securities
that are authorized for issuance under Patient  Infosystems'  compensation plans
as of December 31, 2002.


<TABLE>
<CAPTION>
                                                                                           Number of securities
                                                                                         remaining available for
                                 Number of Securities to        Weighted-average          future issuance under
                                 be issued upon exercise        exercise price of       equity compensation plans
                                 of outstanding options,      outstanding options,        (excluding securities
Plan Category                      warrants and rights         warrants and rights         reflected in column)
-------------------------------  -------------------------   ------------------------   ---------------------------
<S>                                      <C>                          <C>                          <C>
Equity compensation plans
approved by security holders             1,115,140                    $0.76                        301,780

-------------------------------  -------------------------   ------------------------   ---------------------------
Equity compensation plans not
approved by security holders                  -                        -                              -

Total                                    1,115,140                    $0.76                        301,780
</TABLE>

Item 13.  Certain Relationships and Related Transactions.

     In 2002,  Patient  Infosystems  borrowed  $1,170,000  from  Mr.  Pappajohn,
bringing the total  borrowed  from Mr.  Pappajohn to  $4,730,000.  Proceeds from
these loans were used to support Patient Infosystems'  operations.  The interest
rate on these  loans is 9.5% per  year.  Patient  Infosystems  has  borrowed  an
additional  $600,000  from Mr.  Pappajohn  subsequent  to January  1, 2003.  The
interest on the loans after January 1, 2003 is 7.5%

     Patient Infosystems did not borrow any additional amounts from Dr. Schaffer
in 2002. The total borrowed from Dr.  Schaffer is $347,500.  Proceeds from these
loans were used to support Patient Infosystems operations.  The interest rate on
this loan is 9.5% per year.

     The loans from Mr.  Pappajohn and Dr.  Schaffer are demand notes that total
$5,077,500  as of  December  31,  2002 and are  secured by the assets of Patient
Infosystems.

     On June 11, 2002,  the Board of Directors of Patient  Infosystems  approved
the conversion of up to $4,642,500 in debt and $438,099 of accrued interest owed
to Mr. Pappajohn and Dr. Schaffer into 36,289,993 shares of Patient  Infosystems
common stock using a value of $0.14 per share of common stock. The average value
of Patient  Infosystems  common stock based upon an average  closing price for a
period  immediately  before June 11,  2002 was  $0.1354 per share.  On August 7,
2002,  Patient  Infosystems paid $160,000 of the outstanding  debt. As a result,
$4,482,500  in debt and  $438,099 of accrued  interest  will be  converted  into
35,147,136  shares of Patient  Infosystems  common stock.  Patient  Infosystems'
Certificate  of  Incorporation  authorized  Patient  Infosystems  to issue up to
20,000,000  shares  of  common  stock,  10,956,024  of  which  were  issued  and
outstanding and 2,217,320 of which were reserved for issuance under  outstanding
options,  warrants and upon  conversion  of  outstanding  convertible  preferred
stock.  Giving  effect to this  debt  conversion  transaction  will  require  an
amendment to Patient  Infosystems'  Certificate  of  Incorporation  to authorize
additional shares of common stock. Accordingly, this debt conversion transaction
cannot occur unless and until the  stockholders of Patient  Infosystems  approve
this amendment.

     Patient  Infosystems  has  expended   significant  amounts  to  expand  its
operational  capabilities  including increasing its administrative and technical
costs.  While Patient  Infosystems  has curtailed  its spending  levels,  to the
extent that 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 loans being made by Mr.
Pappajohn,  a director of Patient  Infosystems.  There can be no assurances that
Patient  Infosystems  can  borrow  the  additional  amounts  needed  to fund its
operations.  In such instance,  if Patient Infosystems is unable to identify any
additional sources of capital, it will likely be forced to cease operations.  As
a result of the above, the Independent  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.

     In December 1999,  Patient  Infosystems  established a credit  facility for
$1,500,000  guaranteed by Dr. Schaffer and Mr.  Pappajohn.  In consideration for
their guarantees,  Patient Infosystems granted to Dr. Schaffer and Mr. Pappajohn
warrants to purchase an aggregate of 375,000  shares of common stock for $1.5625
per share.  In March 2000,  the  facility  was  increased  by  $1,000,000  under
substantially  the same  terms and also  guaranteed  by the same  Board  members
resulting in a total amount due of  $2,500,000 as of December 31, 2001 and 2000.
Additional  warrants to purchase an aggregate of 250,000  shares of common stock
for $2.325 per share,  were granted to Dr. Schaffer and Mr.  Pappajohn for their
guarantee of this additional line of credit.

     On March 28, 2001, Patient Infosystems entered into an Amended and Restated
Credit Agreement with Wells Fargo Bank, N.A., 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.   In
consideration  for their  guarantees,  the Company  re-priced  625,000  warrants
previously  granted  in  connection  with prior  guarantees  to $0.05 per share,
effective April 1, 2001.

     On June 28, 2002, Patient Infosystems and Wells Fargo agreed on an addendum
to the Amended and Restated Credit Agreement that extends the credit facility by
an additional $500,000, increasing the total credit to $3,000,000. Mr. Pappajohn
and Dr. Schaffer also guaranteed the extended credit facility.

     In 2002,  Patient  Infosystems  borrowed  $1,170,000  from  Mr.  Pappajohn,
bringing the total  borrowed  from Mr.  Pappajohn to  $4,730,000.  Proceeds from
these  loans were used to  support  the  Patient  Infosystems'  operations.  The
interest rate on these loans is 9.5% per year. Patient  Infosystems has borrowed
an additional  $600,000 from Mr.  Pappajohn  subsequent to January 1, 2003.  The
interest on the loans after January 1, 2003 is 7.5%

     The  Company did not borrow any  additional  amounts  from Dr.  Schaffer in
2002.  The total  borrowed  from Dr.  Schaffer is $347,500.  Proceeds from these
loans were used to support Patient Infosystems' operations. The interest rate on
this loan is 9.5% per year.

     The loans from Mr.  Pappajohn and Dr.  Schaffer are demand notes that total
$5,077,500  as of  December  31,  2002 and are  secured by the assets of Patient
Infosystems.

     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.

     On June 11, 2002,  the board of directors of Patient  Infosystems  approved
the conversion of up to $4,642,500 in debt and $438,099 of accrued interest owed
to Mr. Pappajohn and Dr. Schaffer into 36,289,993 shares of Patient Infosystems'
common  stock  using a value of $0.14 per common  share.  The  average  value of
Patient  Infosystems'  common  stock based upon an average  closing  price for a
period  immediately  before June 11, 2002 was $0.1354.  As of December 31, 2002,
Patient Infosystems' Certificate of Incorporation authorizes Patient Infosystems
to issue up to  20,000,000  shares of common  stock,  10,956,024  of which  were
issued and  outstanding  and 2,217,340 of which were reserved for issuance under
outstanding  options,  warrants and upon  conversion of outstanding  convertible
preferred stock. Giving effect to this debt conversion  transaction will require
an amendment to Patient  Infosystems'  Certificate of Incorporation to authorize
additional shares of common stock. Accordingly, this debt conversion transaction
cannot occur unless and until the  stockholders of Patient  Infosystems  approve
this amendment.  A date for a meeting of the stockholders of Patient Infosystems
has not yet been established.

Item 14.  Controls and Procedures.

(a) Evaluation of Disclosure Controls and Procedures.

     Based on their evaluation as of a date within 90 days of the filing date of
this Annual Report on Form 10-K,  Patient  Infosystems'  chief executive officer
and  principal  accounting  officer have  concluded  that  Patient  Infosystems'
disclosure  controls and procedures (as defined in Rules 13a-14(c) and 15d-14(c)
under the Securities Exchange Act of 1934 (the "Exchange Act")) are effective to
ensure that  information  required to be  disclosed  by Patient  Infosystems  in
reports that it files or submits under the Exchange Act is recorded,  processed,
summarized and reported within the time periods  specified in the Securities and
Exchange Commission's rules and forms.

(b) Changes in Internal Controls.

     There were no significant changes in Patient Infosystems' internal controls
or in other factors that could significantly affect these controls subsequent to
the date of their  evaluation,  including any corrective  actions with regard to
significant deficiencies and material weaknesses

<PAGE>

                                     PART IV

Item 15.  Exhibits, Financial Statement Schedules and Reports on Form 8-K.

(a)  The following  financial  statements  and schedules are filed at the end of
     this annual  report,  beginning on page F-1.  Other  schedules  are omitted
     because  they  are not  required  or are  not  applicable  or the  required
     information  is shown in the  consolidated  financial  statements  or notes
     thereto.

<TABLE>
<CAPTION>
         Index to Financial Statements                               Page

<S>                                                                   <C>
         Independent Auditors' Report                                 F-1
         Consolidated Balance Sheets                                  F-2
         Consolidated Statements of Operations                        F-3
         Consolidated Statements of Stockholders' Equity (Deficit)    F-4
         Consolidated Statements of Cash Flows                        F-5
         Notes to Consolidated Financial Statements                   F-6
         Schedule II - Valuation and Qualifying Accounts              S-1
</TABLE>

(b) Reports on Form 8-K.

     Patient Infosystems did not file any current reports on Form 8-K during the
fourth quarter of the fiscal year ended December 31, 2002.

(c) Exhibits.


Exhibit #   Description of Exhibits

3.1 *       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.

10.15 +     Asset Purchase Agreement dated as of September 29, 1998 among
            Patient Infosystems Acquisition Corp., Patient Infosystems and
            HealthDesk Corporation.

10.16 +     Amendment to Asset Purchase Agreement dated as of December 1, 1998
            among Patient Infosystems Acquisition Corp., Patient Infosystems and
            HealthDesk Corporation.

10.17 +     Second Amendment to Asset Purchase Agreement dated as of February 1,
            1999 among Patient Infosystems Acquisition Corp., Patient
            Infosystems and HealthDesk Corporation.

10.19 +     Consulting Agreement dated as of March 8, 1999 between Patient
            Infosystems and John V. Crisan.

10.20 +     Lease Agreement dated as of February 22, 1995 between Patient
            Infosystems and Conifer Prince Street Associates.

10.21 +     First Addendum to Lease Agreement dated as of August 22, 1995
            between Patient Infosystems and Conifer Prince Street Associates.

10.22 +     Second Addendum to Lease Agreement dated as of November 17, 1995
            between Patient Infosystems and Conifer Prince Street Associates.

10.23 +     Third Addendum to Lease Agreement dated as of March 28, 1996 between
            Patient Infosystems and Conifer Prince Street Associates.

10.24 +     Fourth Addendum to Lease Agreement dated as of October 29, 1996
            between Patient Infosystems and Conifer Prince Street Associates.

10.25 +     Fifth Addendum to Lease Agreement dated as of November 30, 1996
            between Patient Infosystems and Conifer Prince Street Associates.

10.26 +     Sixth Addendum to Lease Agreement dated as of November 24, 1997
            between Patient Infosystems and Conifer Prince Street Associates.

10.30 ++    Seventh Addendum to Lease Agreement dated as of June 16, 1999
            between Patient Infosystems and Conifer Prince Street Associates.

10.31 ++    Lease Agreement dated as of July 2, 1999 between Patient Infosystems
            and Cadena Properties Limited.

10.32 ++    Lease Agreement dated as of August 1, 1999 between Patient
            Infosystems and Michele M. Hoey and John E. Hoey.

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.

10.44 ***   Termination of Lease Agreement dated as of January 24, 2001 between
            Patient Infosystems and Michele M. Hoey and John E. Hoey.

10.45 ***   Amended and Restated Credit Agreement dated as of March 28, 2001
            between Patient Infosystems and Wells Fargo Bank Iowa, National
            Association.

10.46 ***   Revolving Note  dated as of March 28, 2001 between Patient
            Infosystems and Wells Fargo Bank Iowa, National Association.

10.47 ***   Form of Promissory Notes payable to Dr. Schaffer and Mr. Pappajohn.

10.48 ***   Form of Security Agreements with Dr. Schaffer and Mr. Pappajohn.

10.49 ***   Ninth Addendum to Lease Agreement dated as of January 7, 2002
            between Patient Infosystems and Conifer Prince Street Associates.

10.50 #     Letter of Agreement dated as of March 25, 2002 between Patient
            Infosystems, John Pappajohn and Derace Schaffer.

10.51 #     Second Amended and Restated Credit Agreement dated as of March 28,
            2002 between Patient Infosystems and Wells Fargo Bank Iowa, National
            Association.

10.52 #     Revolving Note dated as of March 28, 2002 between Patient
            Infosystems and Wells Fargo Bank Iowa, National Association.

10.53 #     Security Agreement dated as of March 28, 2002 between Patient
            Infosystems and Wells Fargo Bank Iowa, National Association.

10.54 ##    Addendum to Amended and Restated Credit Agreement dated as of June
            28, 2002 between Patient Infosystems and Wells Fargo Bank Iowa,
            National Association.

10.55 ##    Agreement for Purchase and Sale of Assets dated as of September 23,
            2002 between Patient Infosystems and American CareSource
            Corporation.

10.56       Tenth Addendum to Lease Agreement dated as of June 24, 2002 between
            Patient Infosystems and Conifer Prince Street Associates.

10.57       Eleventh Addendum to Lease Agreement dated as of December 30, 2002
            between Patient Infosystems and Conifer Prince Street Associates.

10.58       Letter of Agreement dated as of March 28, 2003 between Patient
            Infosystems, John Pappajohn and Derace Schaffer.

10.59       Second Addendum to Second Amended and Restated Credit Agreement
            dated as of March 28, 2003 between Patient Infosystems and Wells
            Fargo Bank, National Association.

10.60       Modification Agreement dated as of March 28, 2003 between Patient
            Infosystems and Wells Fargo Bank, National Association.

21.1 ***    Subsidiaries.

23.1        Consent of Deloitte & Touche LLP.

99.1        Certification pursuant to Section 906 of the Sarbanes-Oxley Act of
            2002.
------------------------------

*           Previously filed with the Securities and Exchange Commission
            as an Exhibit to the Registration Statement on Form S-1 filed
            on July 3, 1996 and incorporated herein by reference.

**          Previously filed with the Securities and Exchange Commission
            as an Exhibit to the Registration Statement on Form S-8 filed
            on May 3, 2000 and incorporated herein by reference.

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

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

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

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

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

<PAGE>

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  registrant  has duly  caused  this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

PATIENT INFOSYSTEMS, INC.

By:   /s/Roger L. Chaufournier                             March 31, 2003
    -----------------------------                          --------------
         Roger L. Chaufournier                             Date
         Director, President, and Chief Executive Officer


Pursuant to the  requirements  the Securities  Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  registrant and
in the capacities and on the dates indicated.


By:   /s/Roger L. Chaufournier                             March 31, 2003
    -----------------------------                          --------------
         Roger L. Chaufournier                             Date
         Director, President and Chief Executive Officer
         (Principal Executive Officer)

By:   /s/Kent A. Tapper                                    March 31, 2003
    -----------------------------                          --------------
         Kent A. Tapper                                    Date
         Vice President Financial Planning
         (Principal Financial and Accounting Officer)

By:   /s/Derace L. Schaffer                                March 31, 2003
    -----------------------------                          --------------
         Derace L. Schaffer, M.D.                          Date
         Chairman of the Board


By:   /s/John Pappajohn                                    March 31, 2003
    -----------------------------                          --------------
         John Pappajohn                                    Date
         Director

<PAGE>


                         Certification of Annual Report


     I, Roger L. Chaufournier, certify that:

1.   I have  reviewed  this annual  report on Form 10-K of Patient  Infosystems,
     Inc.;

2.   Based on my  knowledge,  this  annual  report  does not  contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this annual report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information included in this annual report,  fairly present in all material
     respects the financial  condition,  results of operations and cash flows of
     the registrant as of, and for, the periods presented in this annual report;

4.   The  registrant's  other  certifying  officer  and  I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

     a)   designed  such  disclosure  controls  and  procedures  to ensure  that
          material  information  relating  to  the  registrant,   including  its
          consolidated subsidiaries,  is made known to us by others within those
          entities,  particularly  during the period in which this annual report
          is being prepared;

     b)   evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures as of a date within 90 days prior to the filing date of
          this annual report (the "Evaluation Date"); and

     c)   presented   in  this   annual   report  our   conclusions   about  the
          effectiveness  of the disclosure  controls and procedures based on our
          evaluation as of the Evaluation Date;

5.   The registrant's  other certifying  officer and I have disclosed,  based on
     our most recent  evaluation,  to the  registrant's  auditors  and the audit
     committee of  registrant's  board of directors (or persons  performing  the
     equivalent functions):

     a)   all  significant  deficiencies  in the design or operation of internal
          controls  which could  adversely  affect the  registrant's  ability to
          record,  process,   summarize  and  report  financial  data  and  have
          identified for the  registrant's  auditors any material  weaknesses in
          internal controls; and

     b)   any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          controls; and

6.   The  registrant's  other  certifying  officer and I have  indicated in this
     annual report whether there were significant  changes in internal  controls
     or in other  factors  that could  significantly  affect  internal  controls
     subsequent  to the  date  of our  most  recent  evaluation,  including  any
     corrective  actions with regard to  significant  deficiencies  and material
     weaknesses.

Date:  March 31, 2003                   /s/Roger L. Chaufournier
      ---------------                   ----------------------------------------
                                 Name:  Roger L. Chaufournier
                                 Title:    President and Chief Executive Officer

<PAGE>

                         Certification of Annual Report


     I, Kent Tapper, certify that:

1.   I have  reviewed  this annual  report on Form 10-K of Patient  Infosystems,
     Inc.;

2.   Based on my  knowledge,  this  annual  report  does not  contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this annual report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information included in this annual report,  fairly present in all material
     respects the financial  condition,  results of operations and cash flows of
     the registrant as of, and for, the periods presented in this annual report;

4.   The  registrant's  other  certifying  officer  and  I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

     a)   designed  such  disclosure  controls  and  procedures  to ensure  that
          material  information  relating  to  the  registrant,   including  its
          consolidated subsidiaries,  is made known to us by others within those
          entities,  particularly  during the period in which this annual report
          is being prepared;

     b)   evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures as of a date within 90 days prior to the filing date of
          this annual report (the "Evaluation Date"); and

     c)   presented   in  this   annual   report  our   conclusions   about  the
          effectiveness  of the disclosure  controls and procedures based on our
          evaluation as of the Evaluation Date;

5.   The registrant's  other certifying  officer and I have disclosed,  based on
     our most recent  evaluation,  to the  registrant's  auditors  and the audit
     committee of  registrant's  board of directors (or persons  performing  the
     equivalent functions):

     a)   all  significant  deficiencies  in the design or operation of internal
          controls  which could  adversely  affect the  registrant's  ability to
          record,  process,   summarize  and  report  financial  data  and  have
          identified for the  registrant's  auditors any material  weaknesses in
          internal controls; and

     b)   any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          controls; and

6.   The  registrant's  other  certifying  officer and I have  indicated in this
     annual report whether there were significant  changes in internal  controls
     or in other  factors  that could  significantly  affect  internal  controls
     subsequent  to the  date  of our  most  recent  evaluation,  including  any
     corrective  actions with regard to  significant  deficiencies  and material
     weaknesses.

Date:  March 31, 2003              /s/Kent Tapper
      ---------------             ----------------------------------------------
                            Name:  Kent Tapper
                            Title:    Vice President Financial Planning
                                      Principal Financial and Accounting Officer

<PAGE>





INDEPENDENT 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  subsidiary  as of December  31, 2002 and 2001,  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,
2002. Our audits also included the financial  statement  schedule  listed in the
Index at Item 15. 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
subsidiary  at December 31, 2002 and 2001,  and the results of their  operations
and their cash flows for each of the three  years in the period  ended  December
31, 2002, 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, negative working capital and stockholders' deficit 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
January 17, 2003
(March 28, 2003 as to Note 3)

<PAGE>

<TABLE>
<CAPTION>
PATIENT INFOSYSTEMS, INC.

CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2002 AND 2001
-------------------------------------------------------------------------------------------------------------------

ASSETS                                                                                  2002               2001

CURRENT ASSETS:
<S>                                                                                <C>                <C>
  Cash and cash equivalents                                                             $ 5,011           $ 29,449
  Accounts receivable (net of doubtful accounts allowance of $55,000and $37,217)        441,216            273,791
  Prepaid expenses and other current assets                                             105,827             88,449
  Notes receivable                                                                      200,000               -
                                                                                  ---------------------------------
        Total current assets                                                            752,054            391,689

PROPERTY AND EQUIPMENT, net                                                             285,747            498,472

Other assets                                                                               -                 8,934
Intangible assets (net of accumulated amortization of $443,258 and $299,685)            179,465            323,038
                                                                                  ---------------------------------
TOTAL ASSETS                                                                        $ 1,217,266        $ 1,222,133
                                                                                  ---------------------------------

LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES:
  Accounts payable                                                                    $ 379,004          $ 111,018
  Accrued salaries and wages                                                            208,752            176,618
  Accrued expenses                                                                      351,621            477,205
  Accrued Interest                                                                      713,554            282,530
  Borrowings from directors                                                           5,077,500          3,907,500
  Deferred revenue                                                                      157,074            123,140
                                                                                  ---------------------------------
        Total current liabilities                                                     6,887,505          5,078,011

LINE OF CREDIT                                                                        3,000,000          2,500,000

COMMITMENTS  (Note 7)

STOCKHOLDERS' DEFICIT:
  Preferred stock - $.01 par value:  shares authorized: 5,000,000
    Series C, 9% cumulative, convertible
      issued and outstanding: 100,000                                                     1,000              1,000
  Common stock - $.01 par value:  shares authorized:
    20,000,000; issued and outstanding:  10,956,024                                     109,560            109,560
  Additional paid-in capital                                                         24,132,153         24,222,153
  Accumulated deficit                                                              (32,912,952)       (30,688,591)
                                                                                  ---------------------------------
        Total stockholders' deficit                                                 (8,670,239)        (6,355,878)
                                                                                  ---------------------------------


TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                                         $ 1,217,266        $ 1,222,133
                                                                                  ---------------------------------
</TABLE>
See notes to consolidated financial statements.

<PAGE>

<TABLE>
<CAPTION>
PATIENT INFOSYSTEMS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
----------------------------------------------------------------------------------------------------------

                                                          2002                2001                2000

<S>                                                 <C>                 <C>                 <C>
REVENUES                                              $ 2,355,677         $ 1,586,443         $ 2,139,262
                                                   -------------------------------------------------------
COSTS AND EXPENSES:
  Cost of revenue                                       1,914,464           2,420,151           3,906,010
  Sales and marketing                                     746,353             813,975           1,425,990
  General and administrative                            1,282,683           2,028,804           2,329,585
  Research and development                                105,614             190,731             305,543
                                                   -------------------------------------------------------
        Total costs and expenses                        4,049,114           5,453,661           7,967,128
                                                   -------------------------------------------------------

OPERATING LOSS                                        (1,693,437)         (3,867,218)         (5,827,866)

Other expense, net                                      (530,924)           (598,087)           (211,340)
                                                   -------------------------------------------------------


NET LOSS                                              (2,224,361)         (4,465,305)         (6,039,206)

CONVERTIBLE PREFERRED STOCK DIVIDENDS                    (90,000)            (90,000)           (617,500)
                                                   -------------------------------------------------------

NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS        $ (2,314,361)       $ (4,555,305)       $ (6,656,706)
                                                   =======================================================

NET LOSS PER SHARE - BASIC
   AND DILUTED                                           $ (0.21)            $ (0.47)            $ (0.82)
                                                   =======================================================

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING            10,956,024           9,770,501           8,135,635
                                                   -------------------------------------------------------
</TABLE>
See notes to consolidated financial statements.

<PAGE>

<TABLE>
<CAPTION>
PATIENT INFOSYSTEMS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
---------------------------------------------------------------------------------------------------------------------------
                                                                                     Additional                    Total
                                             Common Stock         Preferred Stock      Paid-in    Accumulated  Stockholders'
                                           Shares    Amount     Shares      Amount     Capital      Deficit    Equity(Deficit)

<S>                                     <C>         <C>          <C>         <C>     <C>         <C>           <C>
Balance at January 1, 2000               8,040,202   $ 80,402       -          $-    $21,970,341 $(19,634,080)  $2,416,663

Compensation expense related to
  issuance of  stock warrants and
  options                                     -          -          -           -          1,042         -           1,042
Debt issuance costs in the form
  of stock warrants                                                                      475,000                   475,000
Issuance of Series C Preferred Stock          -          -       100,000       1,000     999,000                 1,000,000
Beneficial conversion feature of
  Series C Convertible Preferred Stock        -          -          -           -        550,000     (550,000)        -

Exercise of stock options                  180,000      1,800       -           -         23,220         -          25,020

Dividends on
  Series C Convertible Preferred Stock        -          -          -           -        (67,500)        -         (67,500)

Net loss for the year ended
      December 31, 2000                       -          -          -           -           -      (6,039,206)  (6,039,206)
                                         ----------------------------------------------------------------------------------
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      4,16        -           -         (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)
                                        -----------------------------------------------------------------------------------
</TABLE>
See notes to consolidated financial statements.

<PAGE>

<TABLE>
<CAPTION>
PATIENT INFOSYSTEMS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
----------------------------------------------------------------------------------------------------------------------------
                                                                               2002             2001             2000
OPERATING :
<S>                                                                         <C>              <C>              <C>
  Net loss                                                                  $ (2,224,361)    $ (4,465,305)    $ (6,039,206)
  Adjustments to reconcile net loss to net cash used in
    operating activities:
      Depreciation and amortization                                               374,099          695,369        1,222,153
      (Gain) loss on sale of property                                                (400)           4,772           21,337
      Loss on investments                                                            -             200,000             -
      Compensation expense related to issuance of stock warrants and                 -             352,673            1,042
           options
      (Increase) decrease in accounts receivable                                 (167,425)         137,645          238,843
      (Increase) decrease in prepaid expenses and other current assets            (17,378)          77,718           35,897
      Increase (decrease) in accounts payable                                     267,986         (122,527)        (262,988)
      Increase (decrease) in accrued salaries and wages                            32,134              460          (14,074)
      (Decrease) increase in accrued expenses                                    (215,584)         198,745           98,426
      Increase in accrued interest                                                431,024          232,429           49,868
      Increase (decrease) in deferred revenue                                      33,934          (38,821)         (56,239)
                                                                          --------------------------------------------------
            Net cash used in operating activities                              (1,485,971)      (2,726,842)      (4,704,941)
                                                                          --------------------------------------------------
INVESTING:
  Property and equipment additions                                                 (8,867)          (9,240)         (16,404)
  Proceeds from sale of property and equipment                                        400              800           20,024
  Increase in notes receivable                                                   (200,000)            -                -
  Decrease in other assets                                                           -                -              44,011
                                                                          --------------------------------------------------
          Net cash (used in) provided by investing activities                    (208,467)          (8,440)          47,631
                                                                          --------------------------------------------------
FINANCING:
  Proceeds from issuance of common and preferred stock, net                          -                -           1,025,020
  Borrowings from directors                                                     1,170,000        2,736,500        1,171,000
  Proceeds from line of credit                                                    500,000             -           2,000,000
                                                                          --------------------------------------------------
            Net cash provided by financing activities                           1,670,000        2,736,500        4,196,020
                                                                          --------------------------------------------------
NET (DECREASE) INCREASE IN CASH AND CASH  EQUIVALENTS                             (24,438)           1,218         (461,290)

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                                     29,449           28,231          489,521
                                                                          --------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF YEAR                                          $ 5,011         $ 29,449         $ 28,231
                                                                          --------------------------------------------------

Supplemental disclosures of non-cash information:
  Fair value of stock purchase warrants issued in conjunction with
    guarantees by certain board members of borrowings on the line
    of credit                                                                        -            $ 35,735        $ 475,000
                                                                          ==================================================
Dividends declared on Series C Convertible Preferred Stock                       $ 90,000         $ 90,000         $ 67,500
                                                                          ==================================================
Value of beneficial conversion feature on Class C Convertible
   Preferred Stock recognized as a dividend                                          -                -           $ 550,000
                                                                          ==================================================
</TABLE>
See notes to consolidated financial statements.

<PAGE>

PATIENT INFOSYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000

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 subsidiary,  Patient Infosystems  Canada,  Inc., which
     ceased operations in January 2001.  Significant  intercompany  transactions
     and balances have been eliminated in consolidation.

     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 2002 of  $2,224,361  and had  negative
     working capital of $6,135,451 and a stockholders'  deficit of $8,670,239 at
     December 31, 2002.  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 an  acquisition  of a business and 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.  In addition,  recent 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.

     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 and the line
     of credit.  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.

     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  long-term  program  development
     contracts  require  payment from the customer at the time that the contract
     is executed.  Development contract revenue is recognized on a percentage of
     completion  basis, in accordance with the ratio of total  development  cost
     incurred to the estimated total  development  costs for the entire project.
     Losses, if any, are recognized in full as identified. The Company's program
     enhancements  are short-term in nature and 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 operates in only one business segment and its 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, 2002, 2001
     and 2000,  approximately  $1,552,943 (66%),  $955,931 (60%), and $1,030,139
     (48%) respectively, of the Company's revenues arose from contracts with two
     customers.  One of these customers,  which accounts for 50%, 34% and 17% of
     the  Company's  revenues for the years ended  December  31, 2002,  2001 and
     2000,  respectively,  terminated  its  service  agreement  with the Company
     effective  January  1,  2003.  At  December  31,  2002 and  2001,  accounts
     receivable included balances of $305,788 and $210,829,  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 2002,
     2001 and 2000.

     Intangible Assets - Intangible assets represent a purchased  software asset
     being used in the  delivery of the  Company's  web based  services  that is
     being amortized over 4 years using the straight-line method.

     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 loss available to common  stockholders of $(2,314,361),
     $(4,555,305)  and  $(6,656,706)  and a  weighted  average  number of common
     shares  outstanding  of  10,956,024,  9,770,501 and 8,135,635 for the years
     ended December 31, 2002,  2001 and 2000  respectively.  The  computation of
     fully   diluted   loss  per  share   for  2002,   2001  and  2000  did  not
     include1,915,140,   2,037,540  and   2,126,880   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.

     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 2002, 2001 and 2000.

     New Accounting  Pronouncements - New accounting  pronouncements that became
     effective  for the Company in 2002 did not have any material  impact on the
     Company's  consolidated  financial  statements,   other  than  certain  new
     disclosure requirements regarding options.

     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:


<TABLE>
<CAPTION>
                                                   2002                 2001                 2000
<S>                                           <C>                  <C>                  <C>
     Net loss attributable to common
     shareholders - as reported               $ (2,314,361)        $ (4,555,305)        $ (6,656,706)

     Net loss - pro forma                     $ (2,818,135)        $ (4,992,091)        $ (6,929,601)

     Net loss per share - basic
       and diluted - as reported                   $ (0.21)             $ (0.47)             $ (0.82)

     Net loss per share - basic
       and diluted - pro forma                     $ (0.26)             $ (0.51)             $ (0.85)
</TABLE>

     The fair value of each option grant is estimated on the date of grant using
     the Black-Scholes  option-pricing model using an assumed risk-free interest
     rates of 3.63% for the year ended  December  31,  2002,  4.71% for the year
     ended  December 31, 2001 and 5.28% for the year ended December 31, 2000 and
     an expected  life of 7 years.  The  assumed  dividend  yield was zero.  The
     Company has used a  volatility  factor of 1.78 for the year ended  December
     31, 2002,  1.24 for the year ended  December 31, 2001 and 1.33 for the year
     ended  December  31,  2000.  For  purposes  of pro  forma  disclosure,  the
     estimated  fair value of each  option is  amortized  to  expense  over that
     option's vesting period.


2. PROPERTY AND EQUIPMENT

     Property and equipment are summarized as follows at December 31:

<TABLE>
<CAPTION>
                                            2002                   2001
                                    ---------------------  ---------------------

<S>                                            <C>                    <C>
     Computer software                         $ 665,286              $ 663,887
     Computer equipment                        1,168,446              1,160,978
     Telephone equipment                         362,887                362,887
     Leasehold improvements                       41,504                 41,504
     Office furniture and equipment              354,329                354,329
                                    --------------------------------------------
                                               2,592,452              2,583,585

     Less accumulated depreciation             2,306,705              2,085,113
                                    --------------------------------------------

     Property and equipment, net               $ 285,747              $ 498,472
                                    --------------------------------------------
</TABLE>

3.       Debt

     Line of  Credit  - In  December  1999,  the  Company  established  a credit
     facility for $1,500,000  guaranteed by Derace  Schaffer and John Pappajohn,
     two directors of the Company.  In consideration for their  guarantees,  the
     Company granted to Dr. Schaffer and Mr.  Pappajohn  warrants to purchase an
     aggregate of 375,000 shares of common stock for $1.5625 per share. In March
     2000, the facility was increased by $1,000,000 under substantially the same
     terms and also  guaranteed by the same Board  members  resulting in a total
     amount due of  $2,500,000  as of  December  31,  2001 and 2000.  Additional
     warrants to purchase an  aggregate  of 250,000  shares of common  stock for
     $2.325 per share,  were granted to Dr. Schaffer and Mr. Pappajohn for their
     guarantee of this additional line of credit. The fair value of the warrants
     were recorded as debt issuance costs, which have been fully amortized as of
     March 31, 2001. The value ascribed to the warrants granted in 1999 and 2000
     were  calculated  based on the  application  of the  Black  Scholes  option
     pricing model which incorporates current stock price,  expected stock price
     volatility, expected interest rates, and the expected holding period of the
     warrant.

     On March 28, 2001, the Company  entered into an Amended and Restated Credit
     Agreement  with Wells  Fargo Bank,  N.A.,  which  extended  the term of the
     Company's  credit facility to March 31, 2002 under  substantially  the same
     terms.  Dr.  Schaffer  and Mr.  Pappajohn  guaranteed  this  extension.  In
     consideration for their guarantees,  the Company re-priced 625,000 warrants
     previously  granted in connection with prior guarantees to $0.05 per share,
     effective  April 1, 2001.  The fair value of these  re-priced  warrants was
     $35,735,  which was recorded as a debt  issuance  cost and a  corresponding
     increase to  additional  paid-in  capital.  The fair value of the re-priced
     warrants was determined using the Black Scholes option pricing model.

     On June 28, 2002,  the Company and Wells Fargo agreed on an addendum to the
     Amended and Restated  Credit  Agreement that extends the credit facility by
     an additional  $500,000,  increasing  the total credit to  $3,000,000.  Mr.
     Pappajohn and Dr. Schaffer also guaranteed the extended credit facility.

     On March, 28 2003 this line of credit was amended and is due and payable on
     January 2, 2004.  Accordingly,  the amount outstanding at December 31, 2002
     is reported  as a  long-term  liability  in the  accompanying  consolidated
     balance sheets.  Interest is due and payable at maturity at a floating rate
     based upon LIBOR plus 1.75%  (effective LIBOR rate at December 23, 2002 was
     1.4%).  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.

     Borrowings from directors - In 2002, the Company  borrowed  $1,170,000 from
     Mr.   Pappajohn,   bringing  the  total  borrowed  from  Mr.  Pappajohn  to
     $4,730,000.  Proceeds  from these loans were used to support the  Company's
     operations.  The interest rate on these loans is 9.5% per year. The Company
     has  borrowed an  additional  $600,000  from Mr.  Pappajohn  subsequent  to
     January 1, 2003. The interest on the loans after January 1, 2003 is 7.5%

     The  Company did not borrow any  additional  amounts  from Dr.  Schaffer in
     2002. The total borrowed from Dr. Schaffer is $347,500. Proceeds from these
     loans were used to support the Company's  operations.  The interest rate on
     this loan is 9.5% per year.

     The loans from Mr.  Pappajohn and Dr.  Schaffer are demand notes that total
     $5,077,500  as of  December  31,  2002 and are secured by the assets of the
     Company.

     On June 6,  2001,  the  Company  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 the Company.  Based
     upon recent trading of the Company's  common stock at the time of issuance,
     the Company  assigned a fair market  value of $0.15 per share or a total of
     $347,873,  to these  unregistered  shares and recognized  this amount as an
     operating expense during the year ended December 31, 2001.

     On June 11,  2002,  the board of  directors  of the  Company  approved  the
     conversion  of up to  $4,642,500  in debt and $438,099 of accrued  interest
     owed to Mr.  Pappajohn  and Dr.  Schaffer  into  36,289,993  shares  of the
     Company's common stock using a value of $0.14 per common share. The average
     value of the Company's common stock based upon an average closing price for
     a period immediately  before June 11, 2002 was $0.1354.  As of December 31,
     2002, the Company's Certificate of Incorporation  authorizes the Company to
     issue up to  20,000,000  shares of common  stock,  10,956,024 of which were
     issued and  outstanding  and  2,217,340 of which were reserved for issuance
     under  outstanding  options,  warrants and upon  conversion of  outstanding
     convertible   preferred  stock.  Giving  effect  to  this  debt  conversion
     transaction  will  require an  amendment to the  Company's  Certificate  of
     Incorporation to authorize additional shares of common stock.  Accordingly,
     this  debt  conversion  transaction  cannot  occur  unless  and  until  the
     stockholders of the Company approve this amendment. A date for a meeting of
     the stockholders of the Company has not yet been established.

4. INCOME TAXES

     Income tax expense for the years ended  December  31,  2002,  2001 and 2000
     were: $0, $0 and $13,422,  respectively.  The 2000 amount  represents state
     and local income taxes only and are included in general and  administrative
     expenses in the accompanying consolidated statement of operations for 2000.

     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:


<TABLE>
<CAPTION>
                                                           2002             2001             2000

<S>                                                    <C>            <C>              <C>
     Computed "expected" tax benefit                   $ (756,283)    $ (1,518,203)    $ (2,050,624)

     Change in the valuation allowance
         for deferred tax assets                          885,000        1,795,000        2,435,000

     State and local income taxes at statutory rates,
         net of federal income tax benefit               (133,462)        (267,918)        (372,069)

     Other, net                                             4,745           (8,879)           1,115
                                                     ------------------------------------------------

                                                             -         $     -            $  13,422
                                                     ------------------------------------------------
</TABLE>

<PAGE>

     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.

<TABLE>
<CAPTION>
   Deferred income tax assets:                                2002             2001
<S>                                                       <C>              <C>
     Accounts receivable, principally due
       to allowance for doubtful accounts                    $ 22,000         $ 15,000
     Deferred revenue                                          63,000           49,000
     Compensation                                              40,000           31,000
     Net operating loss carryforwards                      12,698,000       11,975,000
     Tax credit carryforwards                                  75,000           75,000
     Amortization of intangibles                              112,000           37,000
     Other                                                     36,000             -
                                                     ----------------------------------
          Total gross deferred income tax assets           13,046,000       12,182,000

          Less valuation allowance                        (12,974,000)     (12,089,000)
                                                     ----------------------------------

          Net deferred income tax assets                       72,000           93,000
                                                     ----------------------------------

     Deferred income tax liabilities:

     Property and equipment, principally due to
       differences in depreciation and amortization           (42,000)         (68,000)
     Other                                                    (30,000)         (25,000)
                                                     ----------------------------------
          Total gross deferred income tax liability           (72,000)         (93,000)
                                                     ----------------------------------

          Net deferred income tax asset                     $    -           $    -
                                                     ----------------------------------
</TABLE>

     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, 2002 the Company has net operating  loss  carryforwards  of
     approximately  $31,790,000,  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.

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.
     Each share of Series C Preferred  Stock has voting  rights  equivalent to 8
     shares of common stock.

     The fair market value of the Company's common stock at the time of issuance
     of Series C Preferred  Stock was $1.9375 per share.  The Series C Preferred
     Stock is  convertible  as a price equal to $1.25 per share of common  stock
     resulting in a discount,  or beneficial  conversion feature, of $0.6875 per
     share.  The  incremental  fair value of $550,000 for the 100,000  shares of
     Series C  Preferred  Stock  issued  is  deemed  to be the  equivalent  of a
     preferred stock dividend.  The Company  recorded the deemed dividend at the
     date of issuance by offsetting  charges and credits to  additional  paid-in
     capital of $550,000,  without any effect on total stockholders'  equity. In
     addition,  as of December  31,  2002,  the Company has accrued  $247,500 in
     dividends since inception, which was payable to the Series C stockholders.


<PAGE>

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.
     The Stock  Option Plan  authorizes  1,680,000  shares of common stock to be
     issued.  On May 2, 2000, the Company filed a Form S-8  registering  all the
     Stock Option Plan shares. 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.

     A summary of stock option activity follows:


<TABLE>
<CAPTION>
                                                                    Outstanding        Weighted-Average
                                                                      Options           Exercise Price

<S>                                                                     <C>                 <C>
     Options outstanding at December 31, 1999                           1,303,760           $ 1.39

     Options granted during the year ended December 31, 2000
       (weighted average fair value of $1.44)                             387,000           $ 1.44

     Options forfeited by holders during the year
       ended December 31, 2000                                           (808,880)          $ 1.78

     Options exercised during the year ended December 31, 2000           (180,000)          $ 0.14
                                                                 -----------------

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

     Options granted during the year ended December 31, 2001
       (weighted average fair value of $0.19)                             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 exercisable at December 31, 2002                             717,620           $ 0.64
                                                                 =================

     Options available for grant at December 31, 2002                     302,180
                                                                 =================
</TABLE>

<PAGE>

     The following  table  summarizes  information  concerning  outstanding  and
     exercisable options at December 31, 2002:


<TABLE>
<CAPTION>
                                            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

<S>                               <C>                 <C>         <C>         <C>             <C>
           $.14 - $.99              790,100           6.90        $ .29        550,500        $ 0.28

          $1.00 - $1.99             107,040           5.43        $1.52         76,320        $ 1.45

          $2.00 - $2.75             218,000           6.52        $2.10         90,800        $ 2.12
                              --------------                              -------------

                                  1,115,140                                    717,620
                              ==============                              =============
</TABLE>

7. COMMITMENTS

     The Company  leases  office  space for its  operating  facilities  under an
     operating lease agreement that expires at June 30, 2003. Rent expense under
     this operating  lease for the years ended December 31, 2002,  2001 and 2000
     was $95,508, $136,045 and $189,648 respectively.

     At December 31, 2002, future minimum lease payments under this lease totals
     $44,225



8. NOTES RECEIVABLE

     In December 2002, the Company loaned an entity $200,000,  which it received
     from Mr. Pappajohn,  secured by substantially all the assets of the entity.
     The note is due on demand with annual  interest  of 4.25%.  During  January
     2003,  the Company  made  additional  loans of $300,000 to the entity under
     substantially  the same terms.  The Company and the entity have had ongoing
     business  combination  discussions  since  September 2002 based on an asset
     purchase agreement that was entered into at that time.


<PAGE>

9. QUARTERLY RESULTS (UNAUDITED)

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

<TABLE>
<CAPTION>
                                                              First          Second          Third          Fourth
     --------------------------------------------------------------------------------------------------------------
     Year ended December 31, 2002:
<S>                                                      <C>             <C>            <C>               <C>
     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 stockholders          (684,021)       (579,019)      (496,647)       (554,674)
     Net loss per common share                                (0.06)          (0.05)         (0.05)          (0.05)

     Year ended December 31, 2001:
     Revenues                                              $ 400,027       $ 357,967      $ 353,612       $ 474,837
     Gross margin                                          (307,265)       (255,450)      (223,288)        (47,705)
     Net loss                                            (1,215,893)     (1,337,559)    (1,221,361)       (690,492)
     Net loss attributable to common stockholders        (1,238,393)     (1,360,059)    (1,243,861)       (712,992)
     Net loss per common share                                (0.15)          (0.15)         (0.11)          (0.06)
</TABLE>

<PAGE>

                                                                  S-1
<TABLE>
<CAPTION>
Schedule II
                                                          Patient InfoSystems, Inc.
                                                      Valuation and Qualifying Accounts
                                            For the Years Ended December 31, 2002, 2001 and 2000

                                           Balance at                                            Balance at
                                           Beginning                                               End of
                                            of Year         Additions        Deductions             Year
<S>                               <C>    <C>              <C>                   <C>              <C>
Allowance for Doubtful Accounts:  2002       $ 37,217        $ 59,117           $ 41,334             $ 55,000
                                  2001       $ 48,122        $ 15,447           $ 26,352             $ 37,217
                                  2000       $ 50,000        $ 92,852           $ 94,730             $ 48,122

Deferred Tax Assets Valuation
  Allowance:                      2002   $ 12,089,000       $ 885,000               -            $ 12,974,000
                                  2001   $ 10,294,000     $ 1,795,000               -            $ 12,089,000
                                  2000    $ 7,859,000     $ 2,435,000               -            $ 10,294,000
</TABLE>