UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[ x ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to _____________
Commission File No.
0-18113
TENET INFORMATION SERVICES, INC.
--------------------------------
(Exact name of small business issuer as specified in its charter)
UTAH 87-0405405
---------- ------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
4885 South 900 East #107
Salt Lake City, Utah 84117
---------------------------
(Address of principal executive office)
(801) 268-3480
--------------
(Issuer's telephone number)
No Change
---------
(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 Exchange Act during the past 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.
(1) Yes _X_ No ___
(2) Yes _X_ No ___
The Company had 10,708,248 shares of common stock outstanding at May 20, 1996
<PAGE>
Tenet Information Services, Inc.
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed consolidated balance sheet as of March 31, 1996 1
Condensed consolidated statements of operations for the
three months and nine months ended March 31, 1996 and 1995 3
Condensed consolidated statements of cash flows for the
nine months ended March 31, 1996 and 1995 5
Notes to condensed consolidated financial statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10
PART II OTHER INFORMATION
Item 1. Litigation 15
Item 2. Changes in Securities 15
Item 3. Defaults Upon Senior Securities 15
Item 4. Submission of Matters to a Vote of Security Holders 15
Item 5. Other Information 15
Item 6. Exhibits and Reports on Form 8-K 15
SIGNATURES 16
PART I - FINANCIAL INFORMATION
ITEM I - Financial Statements
TENET INFORMATION SERVICES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)
ASSETS
March 31, 1996
CURRENT ASSETS:
Cash $ 21,501
Accounts receivable, net of allowance for
doubtful accounts of $7,500 101,917
Current portion of contracts receivable 28,013
Inventories 30,492
Prepaid expenses 10,075
----------
Total current assets 191,998
----------
CONTRACTS RECEIVABLE, net of current portion 6,952
----------
DEFERRED SOFTWARE COSTS 1,237,419
Less accumulated amortization (890,769)
----------
346,650
----------
FURNITURE, FIXTURES AND EQUIPMENT 199,053
Less accumulated depreciation and
amortization (151,279)
----------
47,774
----------
OTHER ASSETS, net 5,425
----------
$ 598,799
==========
The accompanying notes are an integral part of this balance sheet.
1
<PAGE>
TENET INFORMATION SERVICES, INC. AND SUSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEET (Continued)
(Unaudited)
LIABILITIES AND SHAREHOLDERS' EQUITY
March 31, 1996
CURRENT LIABILITIES:
Current portion of related
party long-term debt $ 6,822
Accounts payable 229,154
Accrued salaries and benefits 78,948
Amounts due to related parties 41,500
Deferred revenue 37,491
----------
Total current liabilities 393,915
----------
RELATED PARTY LONG-TERM DEBT,
net of current portion 5,682
----------
SHAREHOLDERS' EQUITY:
Common stock, $.001 par value;
100,000,000 shares authorized;
10,708,248 shares outstanding 10,708
Additional paid-in capital 4,250,647
Warrants outstanding 126,000
Deferred compensation (8,125)
Accumulated deficit (4,180,028)
----------
Total shareholders' equity 199,202
----------
$ 598,799
==========
The accompanying notes are an integral part of this balance sheet.
2
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TENET INFORMATION SERVICES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the Three Months Ended
March 31,
1996 1995
REVENUES $ 339,039 $ 77,357
---------- ----------
COSTS AND EXPENSES:
Cost of revenues 136,583 61,142
Selling, general and administrative 206,253 86,571
Software development 19,480 30,044
---------- ----------
362,316 177,757
--------- ----------
LOSS FROM OPERATIONS (23,277) (100,400)
---------- ----------
OTHER INCOME (EXPENSE):
Interest expense (8,208) (1,967)
Interest income -0- 120
---------- ----------
Other expense, net (8,208) (1,847)
---------- ----------
NET LOSS $ ( 31,485) $ (102,247)
========== ==========
NET LOSS PER COMMON SHARE $ (.00) $ (.02)
========== ==========
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 10,708,248 4,800,594
========== ==========
The accompanying notes are an integral part of these statements.
3
<PAGE>
TENET INFORMATION SERVICES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the Nine Months Ended
March 31,
1996 1995
REVENUES $ 892,147 $ 280,740
---------- ----------
COSTS AND EXPENSES:
Cost of revenues 356,866 162,536
Selling, general and administrative 544,068 253,626
Software development 73,972 71,319
---------- ----------
974,906 487,481
---------- ----------
LOSS FROM OPERATIONS (82,759) (206,741)
---------- ----------
OTHER INCOME (EXPENSE):
Write-off of excess net purchase price (546,884) -
Interest expense (11,488) (9,020)
Interest income 102 846
---------- ----------
Other expense, net (558,270) (8,174)
---------- ----------
NET LOSS $ (641,029) $ (214,915)
========== ==========
NET LOSS PER COMMON SHARE $ (.07) $ (.05)
========== ==========
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 9,557,140 4,523,467
========== ==========
The accompanying notes are an integral part of these statements.
4
<PAGE>
TENET INFORMATION SERVICES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Nine Months Ended
March 31,
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (641,029) $(214,915)
Adjustments to reconcile net
loss to net cash (used in) provided
by operating activities -
Depreciation and amortization 22,600 39,000
Write-off of excess purchase price 546,884 -
(Increase) decrease in assets, net
of effect of acquisitions:
Accounts receivable, net 5,603 10,001
Inventories 2,768 5,208
Contracts receivable 15,768 133,790
Prepaid expenses 4,150 -
Other assets (866) (79)
Increase (decrease) in liabilities,
net of effect of acquisitions:
Accounts payable 83,840 14,933
Accrued salaries and benefits 28,865 6,976
Amounts due to related parties 1,500 (80)
Deferred revenue (177,703) 25,321
----------- ----------
Net cash (used in) provided by
operating activities (107,620) 20,155
----------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash acquired in acquisition 19,563 -
Additions to deferred software costs (65,500) (90,000)
Acquisition of furniture, fixtures and
equipment (9,320) (870)
----------- ----------
Net cash used in investing
activities (55,257) (90,870)
----------- ----------
The accompanying notes are an integral part of these statements.
5
<PAGE>
TENET INFORMATION SERVICES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATEAD STATEMENTS OF CASH FLOWS (Continued)
(Unaudited)
For the Nine Months Ended
March 31,
1996 1995
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from bridge loan financing $ -0- $ 30,000
Principal payments on long-term debt (4,658) (7,614)
Sale of common stock,
net of offering costs 176,538 -
Net cash provided by financing ----------- ----------
activities 171,880 22,386
----------- ----------
NET INCREASE (DECREASE) IN CASH 9,003 (48,329)
CASH, at beginning of period 12,498 74,905
---------- ----------
CASH, at end of period $ 21,501 $ 26,576
========== ==========
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 11,488 $ 9,020
========== ==========
Supplemental disclosure of non-cash financing and investing activities:
During the nine-month period ended March 31, 1996, the Company acquired certain
assets of the International HealthCare Consulting Group (HCG) in exchange for
assuming $30,000 of debt and issuing common stock valued at $7,000.
(See Note 3) The Company also exchanged 3,000,000 shares of its common stock
for all outstanding stock of National Microcomputer Corporation. The assets
acquired and liabilities assumed are described in Note 3. In addition, the
Company converted $50,000 of bridge financing notes payable to common stock.
The accompanying notes are an integral part of these statements.
6
<PAGE>
TENET INFORMATION SERVICES, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(1) Presentation of Interim Financial Statements
The accompanying condensed consolidated financial statements have been
prepared by the Company without audit, pursuant to the rules and regulations
of the Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations, although the Company believes that the
disclosures are adequate to make the information presented not misleading.
These financial statements should be read in conjunction with the financial
statements and the notes thereto included in the Company's most recent Annual
Report on Form 10-K.
These condensed financial statements include the necessary adjustments to the
March 31, 1996 balance sheet, and the related condensed consolidated
statements of operations for the three and nine months ended March 31, 1996
and cash flows for the nine months ended March 31, 1996 to reflect the
Company's acquisition of National Microcomputer Corporation on September 29,
1995 and the acquisition of certain assets of the International HealthCare
Consulting Group on September 5, 1995.
In the opinion of management, these financial statements include all
adjustments (consisting only of normal recurring adjustments) necessary to
present fairly the Company's consolidated financial position at March 31, 1996
and the results of its operations and its cash flows for the periods presented
herein. The results of operations for the three-month and nine-month periods
ended March 31, 1996 are not necessarily indicative of the results that may be
expected for the remainder of the fiscal year ending June 30, 1996.
(2) Net Loss Per Common Share
Net loss per common share for the three and six months ended March 31, 1996
and 1995 are based on the weighted average number of common shares outstanding
during the periods. Warrants and options outstanding have not been included
in the computations since any assumption of conversion would have an
antidilutive effect thereby decreasing the net loss per common share.
(3) Acquisitions
On September 5, 1995, the Company entered into an agreement to acquire certain
assets consisting primarily of software products and intangible assets of the
International HealthCare Consulting Group ("HCG") located in Salt Lake City,
Utah. HCG provides consulting services and information systems to various
hospital departments. As consideration, the Company issued 50,000 shares of
its common stock valued at $7,000 and assumed $30,000 of debt. Due to the
immaterial amount of tangible assets acquired and contingencies related to the
realizability of the amount paid for the intangible assets, the entire
purchase price of $37,000 was expensed in September 1995.
In connection with the asset purchase, the Company entered into employment
agreements with HCG's two principal shareholders and consultants. The
employment agreements provide for base annual salaries and incentive stock
options or bonuses.
7
<PAGE>
Effective September 29, 1995, the Company and National Microcomputer
Corporation ("NMC"), with locations in San Diego and San Jose, California,
approved a Plan of Reorganization in which NMC was merged with and into Tenet
Merger Subsidiary, a wholly-owned subsidiary of the Company incorporated for
the purpose of effecting the merger. NMC develops and markets information
systems to hospital emergency departments. Three million shares of the
Company's common stock were exchanged for all outstanding stock of NMC. The
three million shares were valued at $420,000. The merger has been accounted
for as a purchase with the results of operations of HCG being combined with
those of the Company from the date of acquisition. The total purchase price
was allocated to the assets and liabilities acquired or assumed as follows:
Assets acquired at estimated fair value:
Cash $ 19,553
Accounts receivable, net 88,946
Other current assets 16,665
Furniture and equipment 2,660
Deferred software costs 47,913
Liabilities assumed:
Accounts payable (19,143)
Accrued liabilities (4,284)
Deferred revenue (215,194)
----------
Net liabilities assumed (62,884)
Add: Legal and accounting fees directly
related to the acquisition (27,000)
Value of common stock issued (420,000)
----------
Excess purchase price $ 509,884
==========
Due to NMC's lack of historical profitability and contingencies related to the
future realizability of the excess purchase price, the Company expensed the
entire $509,884 during September, 1995.
Management believes that the amount of common stock issued for NMC was fair
and reasonable based on expected synergies to be achieved by combining NMC
with the Company. In addition, NMC brought a customer base of 24 sites and a
backlog of four installations.
The following unaudited proforma consolidated statements of operations
information for each of the six-month periods ended March 31, 1996 and 1994
presents the proforma results of operations of the Company as if the
acquisitions of HCG and NMC had been consummated as of July 1, 1995 or July 1,
1995, respectively.
Nine Months ended Nine Months ended
March 31, 1996 March 31, 1995
Revenues $ 978,206 $ 776,152
Loss from operations (145,845) (204,077)
Net loss (740,656) (235,582)
Net loss per common share (.08) (.04)
(4) Sales of Common Stock and Issuance of Warrants
During the nine months ended March 31, 1996, the Company completed a
private placement of its common stock in which $252,000 of common stock and
common stock warrants were subscribed representing 900,000 units at $.28 per
8
<PAGE>
unit. Each unit consisted of (i) one share of common stock, (ii) a warrant to
purchase two shares of common stock at $.07 per share, and (iii) a warrant to
purchase one share of common stock at $.42. In connection with the private
placement, $50,000 of bridge financing was converted to equity and an
additional $202,000 was subscribed of which all but $25,000 had been received
by March 31, 1996. A portion of the unit price of $.28 was allocated to the
warrants to purchase additional shares at $.07 per share, based on estimated
fair value. The total amount allocated to the warrants of $126,000 is
separately reflected in the accompanying March 31, 1996 balance sheet.
During February, 1996 the Company authorized a private placement of its common
stock with a minimum of $201,000 and a maximum of $600,000 to be raised on a
best efforts basis. This offering consists of a minimum of 670,000 units and
a maximum of 2,000,000 units priced at $.30 per unit. Each unit consists of
(i) one share of common stock and (ii) a warrant to purchase an additional
share at $.25 per share if exercised within one year of the placement closing
and $.42 afterward until the termination date three years after the placement
closing.
9
<PAGE>
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations.
General
This discussion should be read in conjunction with management's discussion and
analysis of financial condition and results of operations included in the
Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1995.
The Company is engaged in developing and servicing specialized data processing
information products used in the respiratory services departments of larger
hospitals. During the nine months ended March 31, 1996, the Company acquired
certain assets of the International HealthCare Consulting Group ("HCG") and
acquired National Microcomputer Corporation ("NMC").
The Company's base product, RCMS/X, has been redeveloped utilizing a UNIX
operating system and the Oracle data base. As a result of the acquisitions,
the Company has expanded its product lines to include an emergency department
computer system known as "EDNet". The Company also has a consulting group
which conducts efficiency studies in various hospital situations, as well as
customized software solutions to specific hospital requirements.
As of March 31, 1996, the Company had sold or leased its RCMS product to six
hospitals and its RCMS/X product to two hospitals at various locations
throughout the United States. Generally, the Company's customers purchase the
computer hardware from the Company, lease the Company's software and enter
into a service contract for the lease period. The Company has just recently
begun the marketing of this product through alternative methods, including a
distributor.
As of March 31, 1996, the Company had sold its EDNet product to 25 emergency
department sites. These sites have annual maintenance contracts for continued
support and updates. It is anticipated that a vast majority , if not all of
these sites, will renew this maintenance on an annual basis. As of March 31,
1996, the Company was in the process of installing EDNet at an additional site
and is in final contract negotiations with two other hospitals.
As of March 31, 1996, the Company has consulting arrangements with four
hospitals, with projected revenues over the next six months of approximately
$75,000, with other contracts for services in negotiation, one of which has
made a retainer deposit of $15,000 for additional work. The Company
recognized revenues of $87,000 during the period ended March 31, 1996 from
consulting.
10
<PAGE>
Results of Operations
For the three months ended March 31, 1996 compared with the three months ended
March 31, 1995.
During the three-month period ended March 31, 1996, the Company had revenues
of $339,039 which represented a 438 percent increase from $ 77,357 for the
corresponding period of the prior fiscal year. These sales consisted of
respiratory software and support $126,517 (37%), emergency department software
of $95,099 (28%), emergency department support of $35,375 (10%) and
consulting, $82,048 (25%).
This increase in sales is due to the acquisition of NMC which accounted for
$130,474 in revenues and the acquisition of HCG which accounted for the
$82,048 in revenue from consulting. Revenues from the sale of equipment and
respiratory software and support increased to $126,517 from $77,357 in the
prior period.
Cost of revenues increased 223% to $136,583 for the three-month period ended
March 31, 1996 from $61,142 for the corresponding period of the prior fiscal
year as a result of the costs of consulting services which amounted to $47,884
and the additional cost of emergency department installation and support of
$72,063.
Selling, general, and administrative costs increased 238% to $206,253 for the
three-month period ended March 31, 1996 from $86,571 for the corresponding
period of the previous fiscal year. This increase in costs reflects the
Company's increased marketing costs associated with the consulting group of
$17,900, sales and marketing cost of the emergency system of $26,500,
additional Company wide-marketing of $14,500, increased consulting fees of
$37,700, and increased legal and accounting fees of $21,000.
Software development costs decreased 35% to $19,480 for the three-month period
ended March 31, 1996 from $30,044 for the corresponding period of the prior
fiscal year. This is primarily the result of the elimination of the Software
Manger position and also as a result of software personnel being involved with
installations and service.
The Company incurred an operating loss of $23,277 (nil per share) for the
three-month period ended March 31, 1996 compared with an operating loss of
$100,400 ($(.02.) per share) for the corresponding period of the previous
year.
Interest expense decreased to nil for the three-month period ended March 31,
1996 from $.02 for the corresponding period of the prior year as a result of
the related debt being converted to equity.
11
<PAGE>
For the nine months ended March 31, 1996 compared with the six months ended
March 31, 1995.
During the nine-month period ended March 31, 1996, the Company had revenues of
$892,147 which represented a 318 percent increase from $280,740 for the
corresponding period of the prior fiscal year. The 1995 sales consisted of
equipment $58,000 (7%), respiratory software and support $281,000 (32%),
emergency department software $319,000 (36%) emergency department support
$65,000 (7%), and consulting $169,000 (18%).
This increase in sales was due to the Company's acquisition of HCG and NMC.
Had these acquisitions not occurred, sales would have remained at the same
level. As disclosed in the proforma information included in footnote 3 to the
Company's March 31, 1996 financial statements, proforma revenues for the
combined entities increased from $776,152 for the nine months ended March 31,
1995 to $978,206 for the nine months ended March 31, 1996. This increase is
the result of an increase in emergency department revenues of $202,000 to
$495,000 as compared with $293,000 for the corresponding period of the prior
year. Consulting revenues were relatively stable.
Cost of revenues increased 220% to $356,866 for the nine-month period ended
March 31, 1996 from $162,356 for the corresponding period of the prior fiscal
year as a result of a decrease in the costs associated with respiratory
software and support of $21,000 and an increase in the costs of consulting
services of $93,000 compared with the corresponding period of the prior fiscal
year and an increase in the cost of emergency room of $122,000.
Selling, general, and administrative costs increased 215% to $544,068 for the
nine-month period ended March 31, 1996 from $253,626 for the corresponding
period of the previous fiscal year. This increase in costs reflects the
Company's increased marketing costs associated with the consulting group of
$46,000 and of the sales and marketing cost of the emergency system of
$58,000, additional Company wide marketing of $65,000, increased consulting
fees of $47,000, increased legal and accounting fees of $28,000, in addition
to increased employee costs of $26,000 for the increased work force.
Software development costs increased 104% to $73,972 for the nine-month period
ended March 31, 1996 from $71,319 for the corresponding period of the prior
fiscal year. This is a result of personnel changes and of certain software
costs being deferred related to the Respiratory Care product and development
of a Windows version of the Emergency Department system..
The Company incurred an operating loss of $82,759 for the nine-month period
ended March 31, 1996 compared with an operating loss of $206,741 for the
corresponding period of the previous year.
12
<PAGE>
In connection with the acquisitions of HCG and NMC during the nine months
ended March 31, 1996, the Company expensed $546,884 of excess purchase price.
The Company determined based on the historical losses of the operations
acquired and contingencies related to the future realizability of the excess
purchase price, to charge this amount to expense during the nine months ended
March 31, 1996. This write-off increased the net loss by $546,844 to $641,029
or $.07 per share as compared with a net loss of $214,915, or ($.05), per
share for the corresponding period of the prior year.
Interest expense increased to $11,488 for the nine-month period ended March
31, 1996 from $ 9,020 for the corresponding period of the prior year as a
result of interest due officers as a result of accred expenses.
Liquidity and Capital Resources
The Company has suffered recurring losses from operations since fiscal year
1989, and as of March 31, 1996 had an accumulated deficit of $4,180,028. The
operating losses are due in part to significant decreases in revenues in
fiscal years 1994, 1993 and 1992 as the Company redeveloped and updated its
respiratory product and also as a result of the Company's expensing $546,884
of excess purchase price related to the recent NMC and HCG acquisitions.
Management believes that those arrangements were fair, and represent a
valuable addition to the Company. The Company has completed converting its
proprietary computer-based medical information systems to operate within the
networked computer environment. Management believes, based on current
favorable customer and market reactions to the new system, that revenues will
increase and operations will move to a profitable level. The conversion was
completed during fiscal year 1993. Systems were installed at two beta sites
in fiscal year 1994. The first production site was sold during fiscal year
1995.
Management expects that the Company's acquisitions of HCG and NMC will allow
the Company to achieve synergies with a larger sales base and to obtain
efficiencies with expanded operations.
However, as a result of these acquisitions, the Company assumed $215,194 in
deferred revenue, as well as other liabilities of $53,427. The actual cost to
install the systems to which the deferred revenue relates is anticipated to be
substantially less than the amount of deferred revenue.
In addition, during the nine months ended March 31, 1996 the Company signed
long-term software license contracts which will provide approximately
$400,000 of future cash flows over the remaining life (51-54 months) of these
contracts. While not reflected as an asset or revenue, this contract is
expected to enhance the Company's cash flow into the future.
The Company also has contracts to install emergency systems in 2 hospitals
with revenues of $170,000.
13
<PAGE>
At June 30, 1995, the Company had $50,000 in bridge financing. During the
nine months ended March 31, 1996 this "bridge financing" of $50,000 was
converted to equity. The Company also received subscriptions for an
additional $202,000 of equity which was received by March 31, 1996.
Effective September 5, 1995, the Company acquired certain assets of HCG. The
assets acquired include certain accounts receivable, equipment, software
products and other intangible assets. In exchange for the assets acquired,
the Company agreed to issue 50,000 shares of common stock and assume $30,000
of debt.
On September 29, 1995, the Company and NMC approved the terms of an Agreement
and Plan of Reorganization (the "Agreement") pursuant to which NMC was merged
with and into Tenet Merger Subsidiary, Inc., a wholly owned subsidiary of the
Company incorporated for the purpose of effecting the merger. NMC develops
and markets an integrated information management/patient tracking system
designed specifically for use in emergency departments.
During the nine months ended March 31, 1996, the Company signed a letter of
intent to raise an additional minimum of $201,000 in equity funding and is
proceeding with a private placement of its common stock with a minimum of
$201,000 and a maximum of $600,000 to be raised on a best efforts basis. This
offering consists of a minimum of 670,000 units and a maximum of 2,000,000
units priced at $.30 per unit. Each unit consists of (i) one share of common
stock and (ii) a warrant to purchase an additional share at $.25 per share if
exercised within one year of the placement closing and $.42 afterward until
the termination date three years after the placement closing.
The Company's cash position increased by $9,003 during the nine month period
ended March 31, 1996 to $21,501 as compared to $12,498 as of June 30, 1995.
However, the Company had a working capital deficit of $201,917 as of March 31,
1996 as compared with a deficit of $60,244 as of June 30, 1995. Operating
activities used $107,620 for the nine-month period ended March 31, 1996 as
compared with providing $20,155 for the corresponding period of the previous
year. The principal sources of cash have been (i) proceeds from private
placements of common stock of $176,538, and (ii) $19,553 of cash acquired in
the merger with NMC. The Company invested $65,500 in software development
costs during the nine-month period ended March 31, 1996 as compared with
$90,000 during the corresponding period of the previous year. There were debt
payments of $4,658 during the nine months ended March 31, 1996 as compared to
$7,614 in the previous year. The Company also expended $9,320 for capital
equipment during the nine-month period ended March 31, 1996, as compared with
$870 capital investment during the corresponding period of the prior year.
The Company has contingency plans should cash flows decrease to a significant
degree. At the present time, the Company believes that these contingency
plans, which include slowing the continued development of the new system, will
not have to be implemented during fiscal year 1996. Continued installations
require financing arrangements, which the Company believes it can obtain in a
timely manner.
14
<PAGE>
Management believes that cash flows from existing contract arrangements will
be sufficient to allow the Company to operate through the next twelve month
period. However, in order to significantly expand its sales, the Company will
require additional cash infusions through additional private placements or
borrowing arrangements.
Inflation has not had a significant impact on the Company's operations.
PART II OTHER INFORMATION
Item 1. Litigation N/A
Item 2. Changes in Securities N/A
Item 3. Defaults Upon Senior Securities N/A
Item 4. Submission of Matters to a Vote of
Security Holders N/A
Item 5. Other Information N/A
Item 6. Exhibits and Reports on Form 8-K
Exhibit 27 - Financial Data Schedule
15
<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.
Dated: May 20, 1996 TENET INFORMATION
SERVICES, INC.
/s/ Fred J. Anderson
--------------------
Fred J. Anderson
Corporate Secretary
and Chief Financial and Accounting Officer
16
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM TENET
INFORMATION SERVICES, INC. MARCH 31, 1996 FINANCIAL STATEMENTS AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> MAR-31-1996
<CASH> $21,501
<SECURITIES> 0
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<ALLOWANCES> 7,500
<INVENTORY> 30,492
<CURRENT-ASSETS> 191,998
<PP&E> 199,053
<DEPRECIATION> 151,279
<TOTAL-ASSETS> 598,799
<CURRENT-LIABILITIES> 393,915
<BONDS> 0
<COMMON> 10,708
0
0
<OTHER-SE> 188,494
<TOTAL-LIABILITY-AND-EQUITY> 598,799
<SALES> 892,147
<TOTAL-REVENUES> 892,147
<CGS> 356,866
<TOTAL-COSTS> 974,906
<OTHER-EXPENSES> 546,782
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 11,488
<INCOME-PRETAX> (641,029)
<INCOME-TAX> 0
<INCOME-CONTINUING> (641,029)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (641,029)
<EPS-PRIMARY> (.07)
<EPS-DILUTED> (.07)
</TABLE>
