<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarterly Period Ended Commission File Number:
October 31, 1996 0-16288
HALIS, INC.
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(Exact name of small business issuer as specified in its charter)
Georgia 58-1366235
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1950 Spectrum Circle, Suite 400, Marietta, Georgia 30067
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (770) 857-4461
--------------------------------
Fisher Business Systems, Inc.
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(Former name, former address and former fiscal year, if changed since last
report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the last 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes X No
----- -----
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
Common Stock, $.01 Par Value 23,506,538
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Class Outstanding at December 13, 1996
<PAGE>
Fisher Business Systems, Inc.
Condensed Balance Sheet
(Unaudited)
<TABLE>
<CAPTION>
ASSETS
October 31 January 31
1996 1996
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<S> <C> <C>
Current Assets
Cash and cash equivalents $ 120,355 $177,649
Accounts receivable-affiliates (Note C) 1,127,375 0
Accounts receivable - net 31,838 3,028
Other current assets 0 8,254
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Total current assets 1,279,568 188,931
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Equipment, Furniture and Vehicles
Computer equipment 188,087 143,550
Office furniture and fixtures 64,930 64,930
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253,017 208,480
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Less accumulated depreciation 205,064 197,048
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Net equipment, furniture and vehicles 47,953 11,432
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Net investment in sales type lease 0 31,484
Other 199,751 55,687
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Total Assets $1,527,272 $287,534
============= ============
</TABLE>
The condensed financial statements as of January 31, 1996 were
derived from the audited financial statements at that date.
See notes to condensed financial statements.
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<PAGE>
Fisher Business Systems, Inc.
Condensed Balance Sheet
(Unaudited)
<TABLE>
<CAPTION>
Liabilities and Shareholders' Deficit
October 31 January 31
1996 1996
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<S> <C> <C>
Current Liabilities
Accounts payable and accrued expenses $340,752 $360,018
Notes Payable 210,000 0
Deferred revenue 35,343 228,405
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Total current liabilities 586,095 588,423
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Convertible promissory notes (Note D) 1,470,000 0
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Shareholders' deficit
Preferred stock, par value $.10, authorized
5,000,000 shares, zero and 1,500,000 issued 0 150,000
Common stock, par value $.01, authorized
11,500,000 and 10,000,000 shares 50,195 48,695
Additional paid-in-capital 8,657,486 8,508,986
Accumulated deficit (9,229,754) (9,001,820)
Less treasury stock at cost (6,750) (6,750)
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Total shareholders' deficit (528,823) (300,889)
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Total liabilities and shareholders' deficit $1,527,272 $287,534
============ ===========
</TABLE>
The condensed financial statements as of January 31, 1996 were
derived from the audited financial statements at that date.
See notes to condensed financial statements.
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<PAGE>
Fisher Business Systems, Inc.
Condensed Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended October 31, 1996 1995
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<S> <C> <C>
Revenues $ 86,505 $154,398
Cost of Goods Sold 43,581 65,286
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Gross Margin 42,924 89,112
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Expense
Selling, general and administrative 138,614 155,849
Miscellaneous expense 21,088 0
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Total expenses 159,702 155,849
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Net loss from operations before extraordinary
item (116,778) (66,737)
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Extraordinary income from debt restructuring 0 94,891
Net Income (Loss) $(116,778) $ 28,154
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Net income (loss) per share of Common Stock $ (0.02) $ 0.01
============ ===========
Weighted average shares outstanding 7,450,046 4,439,822
============ ===========
</TABLE>
See Notes to condensed financial statements
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<PAGE>
Fisher Business Systems, Inc.
Condensed Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended October 31, 1996 1995
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<S> <C> <C>
Revenues $324,621 $527,470
Cost of Goods Sold 117,009 192,431
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Gross Margin 207,612 335,039
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Expense
Selling, general and administrative 462,478 453,536
Miscellaneous expense 51,298 0
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Total expenses 513,776 453,536
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Net loss from operations before extraordinary
item (306,164) (118,497)
Extraordinary income from debt restructuring 78,230 112,100
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Net Loss $(227,934) $(6,397)
============ ===========
Loss Per Share of Common Stock (0.03) (0.01)
============ ===========
Weighted Average Shares Outstanding 7,450,046 4,205,370
============ ===========
</TABLE>
See Notes to condensed financial statements
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<PAGE>
Fisher Business Systems, Inc.
Condensed Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
For the Nine Months Ended October 31, 1996 1995
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<S> <C> <C>
Cash Flows From Operating Activities
Net Loss $(227,934) $(6,397)
Adjustments to reconcile net income to net
cash provided (used for) operating activities:
Forgiveness of debt 0 (112,100)
Depreciation and amortization 8,016 10,019
Changes in operating assets and liabilities
affecting operations:
Accounts receivable (28,810) (45,000)
Accounts receivable - affiliates (1,127,375) 0
Certificate of deposit 0 36,586
Other current assets 8,254 684
Accounts payable and accrued expenses (19,266) (140,319)
Accrued compensation and benefits 0 (9,736)
Deferred revenue (193,062) (226,364)
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Net cash provided by (used for) operating
activities (1,580,177) (492,627)
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Cash Flows From Investing Activities
Net sale (purchases) of equipment and furniture (44,537) (1,280)
Repurchase of redeemable stock 0 (192,370)
Organization costs (144,064) 0
Proceed from sales type lease 31,484 0
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Net cash provided by (used for) investing
activities (157,117) (193,650)
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Cash Flows From Financing Activities
Net proceeds from private placement 1,470,000 0
Proceeds from Notes Payable 210,000 0
Proceeds from sale of preferred stock 0 300,000
Proceeds from sale of common stock 0 500,000
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Net cash provided by (used for) financing
activities 1,680,000 800,000
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(Decrease) Increase in cash and cash equivalents (57,294) 113,723
Cash and Cash Equivalents, at beginning of period 177,649 69,219
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Cash and Cash Equivalents, at end of period $120,355 $182,942
============ ===========
</TABLE>
See Notes to condensed financial statements
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<PAGE>
Fisher Business Systems, Inc.
Notes to Condensed Financial Statements
(Unaudited)
October 31, 1996
Note A - Basis of Presentation
The accompanying unaudited condensed financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-QSB and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. These statements should be read in conjunction with Form
10-KSB for the fiscal year ended January 31, 1996. In the opinion of
management, all adjustments considered necessary for a fair presentation have
been made and are of a normal recurring nature. Operating results for the nine
month period ended October 31, 1996 are not necessarily indicative of the
results that may be expected for the year ending December 31, 1996.
Note B - Net Loss Per Share of Common Stock
Loss per share for the fiscal periods ended October 31, 1996 and 1995 has been
computed on the weighted average number of shares outstanding. The effects of
common share equivalents have been considered using the treasury stock method.
However, the effects are not material and antidilutive, and they have been
excluded from the calculation.
Note C - Affiliate Receivables
In connection with its agreement and plan of merger and reorganiation with
AUBIS, LLC ("AUBIS") and HALIS, LLC ("HALIS"), the Company has advanced AUBIS
and HALIS $1,127,375. These notes bear interest at rates ranging from 10% to
12% and are due and payable on the first anniversary of the date of the
advance.
Note D - Convertible Promissory Notes
During the quarter ended April 30, 1996, the Company commenced a private
placement of 7% convertible promissory notes which are due January 15, 1998.
Proceeds from the private placement totalled $1,470,000.
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<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
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OF OPERATIONS.
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GENERAL
The Company has embarked upon a strategy of strategic acquisitions to
position the Company to be a leading information technology company in the
healthcare industry. In furtherance of this strategy, the Company on November
19, 1996 acquired AUBIS Hospitality Systems, Inc. ("AHS") and AUBIS Systems
Integration, Inc. ("ASI") (collectively, the "AUBIS Subsidiaries"), each a
wholly-owned subsidiary of AUBIS, L.L.C. ("AUBIS"). Pursuant to the Amended and
Restated Agreement and Plan of Merger and Reorganization, dated December 13,
1995 and amended and restated as of March 29, 1996 and as further amended on
September 27, 1996 (the "AUBIS Agreement"), among AUBIS, the AUBIS Subsidiaries,
certain affiliates of AUBIS, the Company and two newly organized subsidiaries of
the Company (the "AUBIS Acquisition Subsidiaries"), the AUBIS Subsidiaries were
merged with and into the AUBIS Acquisition Subsidiaries, whereby the AUBIS
Subsidiaries became wholly-owned subsidiaries of the Company. Pursuant to the
AUBIS Agreement, AUBIS received an aggregate of 10,000,000 shares of common
stock of the Company (such transaction referred to herein as the "AUBIS
Transaction").
On November 19, 1996, the Company also consummated the acquisition of HALIS
Software, Inc. ("HSI"), a wholly-owned subsidiary of HALIS, L.L.C. ("HALIS").
Pursuant to the Stock Purchase Agreement, dated as of March 29, 1996 and amended
as of September 27, 1996 (the "HALIS Agreement"), between the Company and HALIS
and its affiliates, HSI was merged with and into a newly organized subsidiary of
the Company, whereby HSI became a wholly-owned subsidiary of the Company.
Pursuant to the HALIS Agreement, HALIS received an aggregate of 5,000,000 shares
of common stock of the Company (such transaction referred to herein as the
"HALIS Transaction").
The Company has accounted for the AUBIS and HALIS Transactions as a reverse
purchase for accounting and financial reporting purposes. Under this method of
accounting, AUBIS and HALIS will be treated as the acquiring entities. As a
result, the historical pre-merger financial statements of the combined company
will be those of AUBIS and HALIS, rather than the Company.
Immediately following consummation of the AUBIS and HALIS transactions, the
Company's corporate name was changed to HALIS, Inc.
FINANCIAL CONDITION
Total assets increased $1,239,738 or 331% from January 31, 1996 due
primarily to an increase in accounts receivable from affiliates of $1,127,375.
The increase in accounts receivable results from the advance by the Company of
$1,127,375 to AUBIS and HALIS during the period to support their operations.
AUBIS's cash needs result, in part, from the loss of a significant supplier and
customer of AHS. This supplier accounted for approximately 54% of the total
revenues of the AUBIS Subsidiaries for the year ended December 31, 1995. The
Company was able to fund these advances to AUBIS and HALIS from the proceeds of
its private placement of 7.0% Convertible Promissory Notes due January 15, 1998.
See "--Liquidity and Capital Resources."
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<PAGE>
In an effort to continue to resolve its liquidity problems, the Company
successfully renegotiated terms with many of its vendors which resulted in
reductions of vendor payables of $78,230 during the nine months ended October
31, 1996. The vendor renegotiations were conducted periodically on a vendor-by-
vendor basis over a period of time beginning the fourth quarter of fiscal 1994
and ending the first quarter of fiscal 1997. No unresolved items are
outstanding concerning the Company's liability for the debts. Management does
not believe that these debt restructurings will have a material adverse impact
on the continued availability of vendor credits.
RESULTS OF OPERATIONS
Revenues for the nine months ended October 31, 1996 were $324,621, a
decrease of $202,849, or 38%, from the prior period revenues of $527,470.
Revenues for the three months ended October 31, 1996 were $86,505, a decrease of
$67,893, or 44%, from the prior period revenues of $154,398. The decrease in
revenues is primarily attributable to a reduction in software sales. During the
three months ended October 31, 1996, all of the Company's revenues were from
support services. The increased percentage of revenues from services is a result
of the Company's inability to sell its restaurant software.
Selling, general and administrative expenses were $462,478 for the nine
months ended October 31, 1996 compared to $453,536 for the prior year period.
Selling, general and administrative expenses were $138,614 for the three months
ended October 31, 1996 compared to $155,849 for the prior year period. The
increase for the nine month period in 1996 was largely due to activities
relating to the AUBIS and HALIS Transactions.
The Company recorded a net loss of $227,934 for the nine months ended
October 31, 1996, as compared to a net loss of $6,397 for the prior year period.
The Company recorded a net loss of $116,778 for the three months ended October
31, 1996, as compared to net income of $28,154 for the prior year period. The
net loss for the 1996 periods was higher as a result of lower revenues, coupled
with higher selling, general and administratine expenses relating to the AUBIS
and HALIS Transactions. The net loss for the nine months ended October 31, 1996
would have been greater, but for a benefit of $78,230 of extraordinary income
from debt restructuring.
LIQUIDITY AND CAPITAL RESOURCES
At October 31, 1996, the Company had working capital of $693,473, compared
to a deficit of $379,492 at January 31, 1996. The increase in working capital
is principally due to proceeds from the private placement of Notes completed in
the first half of fiscal 1997. With the departure in January 1994 of
substantially all of the former Blue Mountain employees,the Company lost its
ability to provide client/server services to its customers, including MCI.
Accordingly,the Company's revenues and cash flow for the last two fiscal years
has been materially adversely affected by the loss of revenues from its former
client/server business. Prior to the consummation of the AUBIS and HALIS
Transactions, the Company's revenue was limited to revenue from support
contracts with existing customers and sales of its software and services.
Pending completion of the Transactions and the conversion of the Company's
business to that of a provider of software applications and technology services
to the healthcare industry,the Company
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<PAGE>
instituted stringent measures designed to reduce expenses as much as possible
consistent with providing the level of services required by its customers,
including a reduction of the number of personnel.
In the first half of fiscal 1997, the Company completed an offering of
$1,470,000 of 7.0% Convertible Promissory Notes due January 15, 1998 (the
"Notes"). Interest on the Notes is payable quarterly by the Company and the
principal thereof (plus any accrued interest) may, at the option of the holder,
be converted into shares of the Company Common Stock at a conversion price of
$1.00 per share. Any such conversion must be made on or before January 15,
1998. Approximately $1,127,375 of the proceeds of this offering have been
advanced to AUBIS and HALIS to support their operations (which advances have
been accounted for as notes receivable from affiliates), while the balance of
the proceeds from the sale of the Notes have been utilized to expand the
Company's sales and marketing capabilities in anticipation of the AUBIS and
HALIS Transactions. The advances to AUBIS and HALIS were converted to equity
upon consummation of the AUBIS and HALIS Transactions.
Subsequent to consummation of the Transactions, the Company successfully
attained the minimum offering of 1,000,000 shares of Common Stock in a private
placement. Accordingly, on that date, net proceeds of $1,133,889 were
distributed to the Company by the Escrow Agent, with the Company issuing
1,051,059 shares of Common Stock and 455,458 Warrants. The offering will
continue until March 1, 1997, unless earlier terminated by the Company. Up to
5,000,000 shares are being offered on a best-efforts basis through a registered
broker-dealer. The net proceeds of the offering will be utilized by the
Company to expand its sales and marketing efforts, enhance its software
products, support the growth of its administrative infrastructure, acquire
selected healthcare software and service companies and system integration
companies and for general corporate purposes.
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<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
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(a) Exhibits. The following exhibit is filed with this report:
27.1 Financial Data Schedule (for SEC use only)
(b) Reports on Form 8-K. No reports on Form 8-K were filed during
the quarter ended October 31, 1996.
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<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FISHER BUSINESS SYSTEMS, INC.
Dated: December 13, 1996 By: /s/ Larry Fisher
---------------------------- ---------------------------
Larry Fisher, President
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM OCTOBER 31,
1996 AND 1995 FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS CONTAINED IN THE REGISTRANT'S QUARTERLY REPORT ON
FORM 10-QSB FOR THE QUARTER ENDED OCTOBER 31, 1996.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> FEB-01-1996
<PERIOD-END> OCT-31-1996
<CASH> 120,355
<SECURITIES> 0
<RECEIVABLES> 1,159,213
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,279,568
<PP&E> 253,017
<DEPRECIATION> 205,064
<TOTAL-ASSETS> 1,527,272
<CURRENT-LIABILITIES> 586,095
<BONDS> 0
0
0
<COMMON> 50,195
<OTHER-SE> (478,628)
<TOTAL-LIABILITY-AND-EQUITY> 1,527,272
<SALES> 324,621
<TOTAL-REVENUES> 324,621
<CGS> 117,009
<TOTAL-COSTS> 117,009
<OTHER-EXPENSES> 513,776
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (306,164)
<INCOME-TAX> 0
<INCOME-CONTINUING> (306,164)
<DISCONTINUED> 0
<EXTRAORDINARY> 78,230
<CHANGES> 0
<NET-INCOME> (227,934)
<EPS-PRIMARY> (0.03)
<EPS-DILUTED> (0.03)
</TABLE>
