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:
March 31, 1999 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.)
9040 Roswell Road, Suite 470, Atlanta, Georgia 30350
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(Address of principal executive offices) (Zip Code)
(770) 641-5555
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Issuer's telephone number, including area code:
Not Applicable
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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
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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, 51,033,315 shares are outstanding
at April 30, 1999
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PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
HALIS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
MARCH 31, 1999
ASSETS
- ------
CURRENT ASSETS
- --------------
Cash $ 85,666
Customer claims and premium funds 904,156
Receivables, less allowance for possible losses
of $179,000 494,472
Other receivables 0
Other current assets 86,223
----------
Total current assets 1,570,517
PROPERTY AND EQUIPMENT
- ----------------------
Computer equipment 387,286
Office furniture and fixtures 64,617
Leasehold improvements 6,880
Less: accumulated depreciation (81,023)
----------
Total property and equipment, net 377,760
OTHER ASSETS
- ------------
Deposits 99,250
Goodwill, net of accumulated
amortization of $834,555 1,179,858
Capitalized software development costs,
net of accumulated amortization of $72,850 88,145
Other intangibles, net of
accumulated amortization of $24,744 94,026
Notes receivable - related parties 603,125
Long-term investments 104,166
----------
Total other assets 2,168,570
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TOTAL ASSETS $4,116,847
==========
The accompanying notes are an integral part of these statements.
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HALIS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
MARCH 31, 1999
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable and accrued expenses $1,047,902
Deferred revenue and customer deposits 1,170,675
Payroll and sales taxes payable 251,558
Notes payable - unrelated parties 359,547
Notes payable - related parties 33,241
Obligations under capital leases - current portion 50,139
Deferred gain on sale of subsidiary 0
Other current liabilities 571,236
----------
Total current liabilities 3,484,298
LONG-TERM DEBT
Obligations under capital leases - net of current portion 233,010
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock $.10 par value 5,000,000
authorized; 0 issued and outstanding 0
Common stock $.01 par value 100,000,000
authorized; 50,783,315 issued and outstanding 507,833
Additional paid-in capital 36,493,875
Unrealized loss on investment (20,834)
Accumulated deficit (36,581,335)
-----------
Total stockholders' equity (deficit) 399,539
-----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $4,116,847
=========
The accompanying notes are an integral part of these statements.
3
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HALIS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND
THE THREE MONTHS ENDED MARCH 31, 1998
1999 1998
------------- -------------
SALES REVENUE $ 1,582,836 $ 2,191,097
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COST AND EXPENSES
- -----------------
Cost of goods sold 367,226 733,270
Selling, general, and administrative 959,352 2,624,271
Research and development 69,702 233,398
Amortization and depreciation 139,516 265,417
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1,535,796 3,856,356
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OPERATING INCOME (LOSS) 47,040 (1,665,259)
- --------------
OTHER INCOME (EXPENSES)
- -----------------------
Interest expense (17,829) (21,275)
Interest income 6,630 6,604
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(11,199) (14,671)
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NET INCOME (LOSS) $ 35,841 $ (1,679,930)
=========== ===========
BASIC AND DILUTED INCOME (LOSS) PER
COMMON SHARE $ (0.00) $ (0.04)
=========== ===========
BASIC AND DILUTED WEIGHTED AVERAGE
SHARES OUTSTANDING 48,887,856 46,883,412
=========== ===========
The accompanying notes are an integral part of these statements.
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HALIS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND
THE THREE MONTHS ENDED MARCH 31, 1998
<TABLE>
<CAPTION>
1999 1998
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<S> <C> <C>
Cash flows from operating activities
Net Income (loss) $ 35,841 $ (1,679,930)
Adjustments to reconcile net loss to
net cash used by operating activities:
Amortization and depreciation 139,516 265,417
Changes in allowances for losses on accounts receivable (16,654) 57,713
Changes in operating assets and liabilities, net of assets and
liabilities acquired and sold
Decrease (increase) in customer claims and premium funds 33,148 (35,115)
Increase in accounts receivable (114,887) (244,402)
Increase in accounts receivable - related parties 0 (1,186)
Increase in notes receivable - related parties (6,833) 0
Increase (decrease) in other current assets (15,352) 11,351
Decrease in deposits 70,137 0
Decrease in accounts payable & accrued expenses (159,740) (353,405)
Decrease in sales & payroll taxes (12,776) (37,023)
Increase in deferred revenues & customer deposits 76,325 531,549
Decrease (increase) in other current liabilities (101,060) 30,350
--------- ----------
Total adjustments (108,175) 225,246
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Net cash used by operating activities (72,334) (1,454,681)
Cash flows from investing activities:
Purchases of property and equipment 0 (9,670)
--------- ----------
Net cash used by investing activities 0 (9,670)
Cash flows from financing activities:
Proceeds from issuance of common stock 50,000 0
Proceeds from 6% convertible debentures 0 758,000
Proceeds from 4% convertible debentures 0 100,000
Private equity rescissions 0 (50,000)
Net payments on 7% convertible promissory notes 0 (190,000)
Net payments on lines of credit 0 (92,334)
Payments on capital leases (6,244) (53,587)
Net payments (proceeds) from notes payable (15,979) 73,273
Net proceeds from notes payable - related parties 77,741 40,000
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Net cash provided by financing activities 105,518 585,352
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Net increase (decrease) in cash 33,183 (878,999)
Cash, beginning of the period 52,483 1,160,809
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Cash, end of period $ 85,666 $ 281,810
========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
5
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HALIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 1999 AND MARCH 31, 1998
BASIS OF PRESENTATION:
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-QSB.
Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In management's opinion, all adjustments (consisting of normal
recurring accruals) necessary for a fair presentation have been included.
Operating results for the three-month period ended March 31, 1999 are not
necessarily indicative of the results that may be expected for the year
ending December 31, 1999. For further information, refer to the consolidated
financial statements and the notes thereto included in the Company's annual
report on Form 10-KSB for the year ended December 31, 1998.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Principles of Consolidation
The consolidated financial statements include the accounts of HALIS,
Inc. and its wholly-owned subsidiaries. All significant inter-company
accounts and transactions have been eliminated.
Revenue Recognition
Revenue consists primarily of physician practice management fees,
third party claims processing fees, consulting services, software licensing
fees, sales of related computer hardware, and post contract customer support
and maintenance.
Practice management, claims When the services are provided.
processing, consulting
services, installation,
training and education
Software Licensing Revenue After shipment of the product and
fulfillment of acceptance terms,
provided no significant obligations
remain and collection of resulting
receivable is deemed probable.
Contract Support Ratably over the life of the
contract from the effective date.
Hardware Upon shipment of computer equipment
to the customer, provided no
significant obligations remain and
collection of resulting receivable
is deemed probable.
Subscription Sales Ratably over the life of the
contract from the effective date.
Goodwill
Goodwill represents the excess of cost over the fair value of assets
acquired and is amortized using the straight-line method over a period of 5
years. The Company assesses the recoverability of its goodwill whenever
adverse events or changes in circumstances or business climate indicate that
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expected future cash flows (undiscounted and without interest charges) in
individual business units may not be sufficient to support recorded
goodwill. If undiscounted cash flows are not sufficient to support the
recorded asset, an impairment is recognized to reduce the carrying value of
the goodwill based on the expected future cash flows of the business unit.
Realization of Assets
The accompanying financial statements have been prepared in conformity
with generally accepted accounting principles, which contemplate the
continuation of the Company as a going concern. The Company has sustained
losses during the years ended December 31, 1998 and 1997. Although such
losses have not continued in fiscal year 1999, there can be no assurance that
profitable operations will continue. Additionally, the Company has used,
rather than provided, cash in its operating activities during the years ended
December 31, 1998 and 1997, and this continues to be the case in 1999, although
on a much reduced basis. The Company had a working capital deficiency as of
December 31, 1998 and as of March 31, 1999 of $2,457,627 and $1,913,781,
respectively. Specifically, the Company incurred negative cash flow from
operating activities of approximately $72,334 from December 31, 1998 to
March 31, 1999. Due to its cash flow situation, the Company has negotiated
payment terms with vendors representing a significant portion of the accounts
payable and is managing the payment of the remaining accounts payable on a
case by case basis.
In view of the matters described in the preceding paragraph, there is
significant doubt about the Company's ability to continue as a going
concern. The recoverability of the recorded assets and satisfaction of the
liabilities reflected in the accompanying balance sheet is dependent upon
continued operation of the Company, which is in turn dependent upon the
Company's ability to meet its financing requirements on a continuing basis
and to succeed in its future operations. The financial statements do not
include any adjustments relating to the recoverability and classification of
recorded asset amounts or amounts and classification of liabilities that
might be necessary should the Company be unable to continue in existence.
Management has been successful in reducing its operating overhead which
has resulted in a decrease in its ongoing cash requirements. Additionally,
the Company has been successful in generating cash investment from various
entities to supplement its cash generated from operations. However, if the
Company is unable to increase revenues and maintain its lower overhead
structure during 1999, an additional capital infusion may be required for
the Company to meet its obligations.
Thus far in 1999, although interest in its HES product continues to
increase, the Company has had limited success entering into contracts
for the sale of the HES product due to the long sales cycle involved in
decision process of potential customers. The Company continues to focus
on the sale of HES software, which the Company believes will continue to
gain market acceptance. In addition to focusing on near term profitability,
the Company is seeking strategic relationships, including possible business
combinations or joint ventures, which will enhance the Company's capital
structure, as well as its sales and marketing infrastructure. In this
regard, the Company has assigned a number of its service and research and
development personnel to its HealthWatch affiliate (which owns approximately
21% of the Company), and will outsource its service and support functions to
HealthWatch in an effort to reduce its overhead and conserve its cash
resources. By taking this step, the Company's management has made the
decision to focus the Company on the sale of its HES product and the
expansion of its claims administration business, while its affiliate converts
itself into a services and support company that provides these services to
the Company's customers. While the Company believes the plan that it is
undertaking will be successful and is in the best interest of the Company,
no assurances can be given that the Company indeed will be successful and that
the Company will continue as a going concern. Risk factors include, among
others, (i) timely completion of modifications and enhancements to the
Company's healthcare products, (ii) continued working capital availability
while such products are being developed, (iii) continued availability of key
members of management, (iv) acceptance of the Company's products by
customers in the healthcare market, (v) uncertainty of market acceptance,
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(vi) reliance on a limited number of products, (vii) effective integration
of acquisitions, if any (viii) technological change, and (ix) competition.
Merger Agreements
On July 31, 1998, the Company and HealthWatch, Inc. ("HealthWatch")
(NASDAQ: HEAL) announced the signing of a Letter of Intent to Merge dated as
of July 14, 1998. The merger was expected to be in the form of a tax-free
stock exchange and is subject to, among other things, the completion of due
diligence and approval by the disinterested shareholders of both companies.
At the present time the consummation of the merger as contemplated in the
Letter of Intent is uncertain. In the interim, HALIS and HealthWatch, an
information technology company, are working together to provide the
Company's software and services to the HealthWatch customer base. The two
companies share certain expenses pursuant to a business collaboration
agreement. Paul W. Harrison and Larry Fisher, who are each a director of the
Company, also serve as directors of HealthWatch. Additionally, Mr. Harrison
serves as Chairman, President and Chief Executive Officer of both companies.
Brian L. Schleicher, the Vice President, Chief Administrative Officer and
General Counsel of the Company, also serves as Chief Financial Officer, Chief
Administrative Officer and General Counsel to HealthWatch. As of April 30,
1999, HealthWatch beneficially owned approximately 21% of the Company's common
stock. Mr. Harrison, who directly owns 5.9% of the Company's common stock,
indirectly controls in excess of 27% of the common stock of the Company by
virtue of his positions at HealthWatch. Mr. Fisher directly owns less than
1% of the Company's common stock, and less than 1% of the common stock of
HealthWatch. Mr. Schleicher does not own any shares of the Companys stock
and less than 5% of the outstanding shares of HealthWatch.
On November 18, 1996, the Company entered into a license agreement with
Paul Harrison Enterprises, Inc. (now known as MERAD Software, Inc.) relating
to a proprietary application software utility (the "MERAD Technology") that is
owned by MERAD Software. MERAD Software was acquired by HealthWatch in October
1998, therefore HealthWatch, through its subsidiary, is entitled to receive from
the Company a license fee equal to 10% of the gross revenues generated from any
software products utilizing or incorporating MERAD and any derivations thereof
by the Company or any of its affiliates. The Company's HES software was created
utilizing MERAD, therefor any sales of the HES software will result in a royalty
payment due directly to MERAD Software and indirectly to HealthWatch. In
addition, the Company was obligated to pay MERAD Corporation, a MERAD Software
subsidiary, a development fee of $15,000 per month pursuant to a license and
software development agreement entered between MERAD Corporation and HALIS
Software, Inc., the predecessor company of HALIS Services, Inc., a wholly-owned
subsidiary of the Company. This arrangement terminated on June 30, 1998. Mr.
Harrison serves as President and is a 21% shareholder of MERAD Corporation.
During 1997 and 1998, $180,000 and $60,000, respectively, was paid to MERAD
Corporation for specific enhancements and maintenance required by the Company
to its software products. The Company owes MERAD Corporation $30,000 at
March 31, 1999.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION.
FINANCIAL CONDITION
Total assets at March 31, 1999 were $4,116,847, an increase of
$375,935 from total assets of $3,740,912 at December 31, 1998. The increase is
attributable to a $131,541 increase in receivables due to increased sales of
the HES system and the $245,350 purchase of a new computer by ABAS.
Current liabilities decreased by $396,918 from $3,881,216 at
December 31, 1998 to $3,484,298 at March 31, 1999. The decrease is primarily
attributable to the conversion of a $157,741 note payable due to HealthWatch
into 1,824,645 shares of common stock of the Company and the conversion of
a $255,000 salary deferral by a senior executive into 1,500,000 shares of
common stock of the Company. These decreases were supplemented by the Company
reducing accounts payable, accrued expenses, and other current liabilities
8
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by a total of $196,962. Increases in deferred revenue and customer deposits
and in current portions of capital leases of $$76,325 and $42,474, respectively,
offset the decreases. The total increase in obligations under capital leases of
$239,106 is due to the purchase of a new computer system by ABAS.
Stockholder's equity increased from $(176,682) at December 31, 1998
to $399,539 at March 31, 1999, an increase of $576,221. This increase
is attributable to net income during the period of $35,841, the sale of 666,667
shares of common stock of the Company for $50,000 in a private placement, an
unrealized gain of $67,708 in the Company's long-term investment in an
affiliate, and the issuance of 3,856,884 shares of common stock upon the
conversion of related party notes payable, salary deferrals by a senior
executive, and accrued expenses by outside advisors, during the three months
ended March 31, 1999.
RESULTS OF OPERATIONS
Sales revenue decreased by $608,261 for the three-month
period ended March 31, 1999 as compared to the same period for the
prior year. The changes in the three-month period are
primarily the result of lost revenues of $1,179,649 from the
divestiture of the Company's PRN and Homa subsidiaries, offset by
increases in revenues of HES of $314,063 and ABAS of $126,937.
Cost of goods sold decreased $366,044 for the three-month
period ended March 31, 1999 as compared to the same period for
the prior year. As a percentage of sales revenue, cost of
goods sold were 23.2% and 33.5% for the three months ended March 31, 1999
and 1998, respectively. This decrease is largely attributable to the sale
of the PRN and Homa subsidiaries and the loss of their higher margin revenues.
Selling, general and administrative expenses decreased by $1,664,919 to
$959,352 for the three-month period ended March 31, 1999. The decrease in
primarily the result of reduced expenses associated with the disposition
of the Company's PRN and Homa subsidiaries of approximately $1.25 million
and a decrease in corporate overhead of approximately $664,000,
including $250,000 in salaries as part of the Company's downsizing.
The decrease is further affected by the Company's business collaboration
agreement with HealthWatch. The Company recorded a net $60,000 reduction
in selling, general and administrative expenses during the quarter as a
result of this agreement.
Research and development costs decreased by $163,696 for the
three-month period ended March 31, 1999 as compared to the same period
for the prior year. These reductions are primarily the result of
the movement of the Company's HES system from the initial and
beta phase of development to commercial viability during 1998 and
the shift of certain research and development personnel to work as part
of the Merad Software services group for HealthWatch effective March 1, 1999.
Net income of $35,841 for the three months ended March 31, 1999 as
compared to a net loss of $1,679,930 for the three months ended March 31,
1998 are an improvement of $1,715,771. The improvement is attributable to a
decrease in the selling, general and administrative expenses resulting from
the downsizing of the Company and the net effect of its divestiture activity.
The improvement is also the result of the beginning of market acceptance
of the Company's HES product during the second half of 1998 and the first
quarter of 1999 and increased business at the Company's ABAS subsidiary.
LIQUIDITY AND CAPITAL RESOURCES
During the three month period ended March 31, 1999, operating
activities consumed $72,334 of cash as compared to $1,454,681 for the same
period for the prior year. As discussed in the previous section, the
primary reasons for the improvement are decreases in selling,
general and administrative expenses and research and development
expenses, the results of the Company's divestiture strategy, and
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the beginning of market acceptance of the Company's HES product during the
second half of 1998 and the first quarter of 1999 and increased business
at the Company's ABAS subsidiary.
The Company continues to monitor its cash situation very closely. Due to
the down-sizing of the Company, its cash needs are not as acute as they
were during 1998. However, if the Company is unable to increase sales of its
HES system during the second and third quarters of 1999, the Company
may not be able to continue to generate sufficient positive cash flow to
meet its obligations without seeking additional capital.
YEAR 2000
Software applications that use only two digits to identify a year in
the date field may cause fatal errors in the processing of data (the "Year
2000 Concern"). The Company acknowledges that the failure of its software
to recognize the proper date codes could cause substantial harm to the
Company and its customers. Accordingly, the Company developed its HES
software with the Year 2000 Concern in mind and has designed its software to
be Year 2000 compliant. This means that the Company believes that all of
the Company's healthcare software sold to customers will accept and recognize
date codes for the Year 2000 and beyond, and process that information
recognizing the correct year in the date field. The Company does not believe
that the failure of any of the software that it utilizes in its operations from
third-party vendors to be Year 2000 compliant will have a material effect on
the Company, with the exception of the claims processing software utilized by
its ABAS subsidiary. ABAS is a third-party administrator and is in the
process of switching to a new claims processing system that will be Year 2000
compliant. The Company estimates that it will convert all of ABAS' data by the
end of the second quarter of 1999, at a cost of approximately $400,000.
Additionally, the Company will be undertaking a review of its business systems
to make a determination of whether those systems are Year 2000 compliant
and will query those vendors whose systems are material to the Company to
determine their Year 2000 readiness. The Company believes that, with the
exception of the software utilized its ABAS subsidiary, even if the remaining
software it utilizes from vendors is not Year 2000 compliant, there are
sufficient alternatives available that the Company can resolve any issues by
the second quarter of 1999 without incurring any material amounts to resolve
any Year 2000 Concerns.
FORWARD-LOOKING STATEMENTS
This Form 10-QSB contains certain forward-looking statements within the
meaning of Section 27A of the Securities Act and Section 21E of the
Securities and Exchange Act of 1934, as amended, which are intended to be
covered by the safe harbors created thereby. These statements include the
plans and objectives of the Company for future operations. The forward-
looking statements included herein are based on current expectations that
involve numerous risks and uncertainties. The Company's plans and
objectives are based on the assumption that the Company's entry into the
healthcare industry will be successful, that competitive conditions within
the healthcare industry will not change materially or adversely, and that
there will be no material adverse change in the Company's operations or
business. Assumptions relating to the foregoing involve judgments with
respect to, among other things, future economic, competitive and market
conditions, as well as future business decisions, all of which are difficult
or impossible to predict accurately and many of which are beyond the control
of the Company. Although the Company believes that the assumptions
underlying the forward-looking statements included herein are reasonable,
the inclusion of such information should not be regarded as a representation
by the Company, or any other person, that the objectives and plans of the
Company will be achieved.
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PART II
OTHER INFORMATION
ITEM 1 LEGAL PROCEEDINGS.
Debra B. York v. HALIS, Inc. and Paul Harrison, Fulton Superior
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Court Civil Action File No. 1999CV06535
On March 22, 1999, the Company and Paul Harrison were sued by
Debra York, the former President of the Company's wholly-owned
subsidiary, The Compass Group, Inc. Ms. York's complaint alleges that
the Company breached an Employment Agreement with Ms. York by failing
to pay certain commissions due for fiscal years 1997 and 1998, the
Company breached one or more oral agreements as to the amount of the
alleged commissions owed, and the Company and Mr. Harrison made false
representations regarding the Company and the HES product in an effort
to induce Ms. York to sell her company to the Company in January 1997
and make further investment in the Company subsequent to that date.
Ms. York seeks at least $250,000 in damages, plus attorneys fees and
punitive damages of an undisclosed amount. The date for answering the
complaint has not yet passed. The Company will be picking up the
defense for Mr. Harrison. The Company denies that any amounts are due
to Ms. York under her Employment Agreement, that any oral agreements
were entered with Ms. York, or that any false representations were
made to Ms. York by the Company or Mr. Harrison, and will vigorously
defend the action. In addition, the Company plans to raise a number
of counter-claims in its answer against Ms. York.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
During the three-month period ended March 31, 1999, the Company raised
$50,000 through a private placement of its common stock, resulting in the
Company issuing 666,667 shares. An addition 1,500,000 shares were issued to
Paul Harrison in lieu of $255,000 of unpaid but accrued salary owed to Mr.
Harrison for 1998. Further, 1,824,645 shares of common stock were issued to
HealthWatch in satisfaction of $157,741 due to HealthWatch under a 6%
convertible debenture entered into in 1998 and subsequent advances. Lastly,
532,239 shares of common stock were issued to consultants for services
rendered to the Company during 1998 and the three-month period ended March 31,
1999. In total an aggregate of 4,523,551 shares of common stock were issued
during the three-month period ended March 31, 1999.
The issuance of securities described above were made in reliance on the
exemption from registration provided by Section 3(b) and/or 4(2) of the
Securities Act of 1933 as transactions by an issuer not involving a public
offering. All of the securities were acquired by the recipients thereof for
investment and with no view toward the resale or distribution thereof. In
each instance, the offers and sales were made without any public
solicitation, the certificates bear restrictive legends and appropriate stop
transfer instructions have been or will be given to the transfer agent. No
underwriter was involved in the transactions and no commissions were paid.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits. The following exhibits are filed with or incorporated
by reference into this report:
3.1 Certificate of Incorporation, as amended (incorporated
by reference to Exhibit 3.1 of the Company's Registration
Statement on Form S-2 (No. 333-45783) filed February 6, 1998)
3.2 Amended and Restated Bylaws (incorporated by reference
to Exhibit 3.2 of the Company's Registration Statement
on Form S-2 (No. 333-34215) filed August 22, 1997)
4.1 Form of Common Stock Certificate (incorporated by reference to
Exhibit 4.1 of the Company's Registration Statement on Form
S-18 (No. 33-14114-A), filed May 7, 1987, as amended)
4.2 Form of 6% Convertible Debenture Subscription Agreement and
Convertible Debenture (incorporated by reference to Exhibit 4.2
of the Company's Quarterly Report on Form 10QSB for the period
ended June 30, 1998, filed August 13, 1998)
27.1 Financial Data Schedule (for SEC use only)
(b) Reports on Form 8-K.
The following reports on Form 8-K were filed during the quarter ended
March 31,1999.
None
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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 its behalf by the
undersigned thereunto duly authorized.
HALIS, INC.
Dated: May 14, 1999 By: /s/ Paul W. Harrison
------------------------------------
Paul W. Harrison, Chairman of
the Board, Chief Executive Officer
and President
(Principal Executive Officer)
Dated: May 14, 1999 By: /s/ Brian L. Schleicher
------------------------------------
Brian L. Schleicher, Vice President
and Chief Administrative Officer
(Principal Financial and Accounting
Officer)
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EXHIBIT INDEX
Exhibit
Number Description
---------- ---------------
3.1 Certificate of Incorporation, as amended (incorporated
by reference to Exhibit 3.1 of the Company's
Registration Statement on Form S-2 (No. 333-45783) filed
February 6, 1998)
3.2 Amended and Restated Bylaws (incorporated by reference
to Exhibit 3.2 of the Company's Registration Statement
on Form S-2 (No. 333-34215) filed August 22, 1997)
4.1 Form of Common Stock Certificate (incorporated by
reference to Exhibit 4.1 of the Company's Registration
Statement on Form S-18 (No. 33-14114-A), filed May 7,
1987, as amended)
4.2 Form of 6% Convertible Debenture Subscription Agreement
and Convertible Debenture (incorporated by reference to
Exhibit 4.2 of the Company's Quarterly Report on Form
10QSB for the period ended June 30, 1998, filed August
13, 1998)
27.1 Financial Data Schedule (for SEC use only)
13
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF HALIS, INC. FOR THE THREE-MONTH PERIOD ENDED MARCH 31,
1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 989,822
<SECURITIES> 0
<RECEIVABLES> 673,472
<ALLOWANCES> 179,000
<INVENTORY> 0
<CURRENT-ASSETS> 1,570,517
<PP&E> 458,783
<DEPRECIATION> 81,023
<TOTAL-ASSETS> 4,116,847
<CURRENT-LIABILITIES> 3,484,298
<BONDS> 0
0
0
<COMMON> 507,833
<OTHER-SE> 108,294
<TOTAL-LIABILITY-AND-EQUITY> 4,116,847
<SALES> 1,582,836
<TOTAL-REVENUES> 1,582,836
<CGS> 367,226
<TOTAL-COSTS> 1,535,796
<OTHER-EXPENSES> (11,199)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 17,829
<INCOME-PRETAX> 35,841
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 35,841
<EPS-PRIMARY> (0)
<EPS-DILUTED> (0)
</TABLE>
