SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (date of earliest event reported): OCTOBER 13, 1997
HEALTHWATCH, INC.
(Exact name of registrant as specified in its charter)
MINNESOTA
(State or other jurisdiction of incorporation)
0-11476 84-0916792
(Commission File Number) (IRS Employer Identification No.)
2445 CADES WAY, VISTA, CALIFORNIA 92083
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (760) 598-4333
N/A
(Former name or former address, if changed since last report)
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PART I
ITEM 5. OTHER EVENTS.
The Company has recently implemented actions to expand its products and
services to include medical equipment and services for monitoring, capturing and
managing medical information. This business is expected to include both the
development and sale of medical equipment which captures information at the
point of care and transmits the information automatically to other application
processing systems such as registration, medical records and billing systems and
the acquisition of healthcare system integrators in major metropolitan areas
throughout the United States. The Company expects to begin marketing its new
systems integration product during fiscal 1998.
During October 1997, the Company expects to complete a series of
transactions with HALIS, Inc., a Georgia corporation ("HALIS"), two officers and
directors of HALIS; MERAD Corporation, a Georgia corporation ("MERAD"), which is
a wholly-owned subsidiary of Paul Harrison Enterprises, Inc. ("PHE"), an
affiliate of HALIS, and several shareholders of HALIS.
These transactions follow the execution during August 1997, by
HealthWatch and HALIS of a letter of intent which contemplated a merger of the
two companies. HALIS, based in Atlanta, Georgia, is a publicly-traded company
(OTC Bulletin Board Symbol: "HLIS"), which supplies information technology
services focused on the healthcare industry. Utilizing advanced healthcare
models and information technology, HALIS has developed the HALIS Health Care
Enterprise System, a single program which integrates all of the major functions
needed by clinics, hospitals, healthcare practices, payers, long-term care
facilities, laboratories, pharmacies and home healthcare facilities. HALIS is
implementing a corporate strategy which combines external acquisitions and
internal sales growth.
HALIS and HealthWatch had originally planned to merge. Following
discussions, HALIS and HealthWatch determined that it would be preferable for
the two companies to adopt a shared business development strategy, but for
HealthWatch to remain a separate company. To implement this strategy,
HealthWatch and HALIS have agreed to enter into a joint venture and co-marketing
arrangement whereby HealthWatch and HALIS will share sales prospects and
HealthWatch will develop technology and an integration database engine designed
to monitor, capture and manage medical information at the point of care.
In addition, the Company is to obtain a license from MERAD to certain
artificial intelligence computer software and a multimedia database utility, and
will retain MERAD to develop proprietary software technology which will be used
to expand HealthWatch's product offerings to include products and services
specifically focused on monitoring, capturing and managing medical information
at the point of care. Further, Paul Harrison, Chairman of the Board, Chief
Executive Officer and President of HALIS, has joined the HealthWatch Board of
Directors; and Larry Fisher, a Director and Executive Vice-President, Chief
Administrative Officer and Secretary of HALIS has agreed to join the HealthWatch
Board of Directors.
PHE (an investment firm controlled by Mr. Harrison), Mr. Fisher and two
non-affiliated shareholders of HALIS have exchanged 1,100,000 of their shares of
HALIS common stock for 4,400,000 shares of the Company's common stock, the
exchange ratio being based on the market value for each company's common stock
at the time that the transaction was negotiated, HALIS has invested $125,000 in
HealthWatch and private investors are investing $500,000 in HealthWatch,
$405,000 of which had been invested as of October 13, 1997. In addition, during
July and August, 1997, an additional $90,433 was raised through the sale of the
Company's securities. Following these transactions, HALIS and its affiliates
owned approximately 30% of the Company's then outstanding shares of common
stock.
Set forth below is a proforma balance sheet for HealthWatch as of
August 31, 1997, adjusted to reflect HealthWatch's investment in HALIS common
stock and the sale of the Company's securities (an aggregate of 1,450,000 shares
for $440,000) which occurred between August 31, 1997 and October 13, 1997.
<PAGE>
HEALTHWATCH, INC.
PRO FORMA CONSOLIDATED BALANCE SHEET
August 31, 1997 (unaudited)
Assets
- ------
Actual As Adjusted
----------- -----------
Current Assets
Cash and marketable securities $ 5,114 $ 2,457,614
Accounts Receivable, net
of allowance for doubtful
accounts of $23,165 97,941 97,941
Subscription Receivable 87,500 --
Other current assets 692,942 692,942
----------- -----------
Total current assets 883,497 3,248,497
Property and equipment, net 58,665 58,665
Intangible assets, net 881,238 881,238
Other assets 42,769 42,769
----------- -----------
Total Assets $ 1,866,169 $ 4,231,169
=========== ===========
Liabilities and Shareholders' Equity
- ------------------------------------
Current liabilities $ 1,445,383 $ 1,445,383
Shareholders' equity 284,575 694,075
Common Stock, $.07 par
value 4,085,352 and 9,935,352
shares, respectively
Additional paid-in-capital 14,725,978 16,681,478
Accumulated deficit [14,542,868] [14,542,868]
Equity adjustment from foreign
currency translation [46,899] [46,899]
----------- -----------
Total Shareholders' Equity 420,786 2,785,786
----------- -----------
Total Liabilities and
Shareholders' Equity $ 1,866,169 $ 4,231,169
=========== ===========
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on behalf of the
undersigned thereunto duly authorized.
Dated: October 17, 1997 HEALTHWATCH, INC.
By /s/ Annette D. Agner
Annette D. Agner
Chief Financial Officer
GP:425731 v1
