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 December 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 13,018,514 shares of common stock outstanding at
October 6, 1997
Tenet Information Services, Inc.
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed consolidated balance sheet as of
December 31, 1996............................................1
Condensed consolidated statements of operations
for the three months and six months ended
December 31, 1996 and 1995...................................3
Condensed consolidated statements of cash flows
for the six months ended December 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
PARRT 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
December 31, 1996
-----------------
CURRENT ASSETS:
Cash $ 37,040
Accounts receivable, net of allowance for
doubtful accounts of $7,500 84,795
Current portion of contracts receivable 14,162
Inventories 3,561
----------
TOTAL CURRENT ASSETS 139,558
----------
DEFERRED SOFTWARE COSTS 1,124,036
Less accumulated amortization (1,015,269)
----------
108,767
----------
FURNITURE, FIXTURES AND EQUIPMENT 119,302
Less accumulated depreciation and
amortization (95,765)
----------
23,537
----------
OTHER ASSETS, net 1,425
----------
$ 273,287
==========
The accompanying notes are an integral part of this balance sheet.
-1-
TENET INFORMATION SERVICES, INC. AND SUSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEET (CONTINUED)
(UNAUDITED)
LIABILITIES AND SHAREHOLDERS' EQUITY
December 31, 1996
-----------------
CURRENT LIABILITIES:
Note Payable $ 26,009
Current portion of related
party long-term debt 7,046
Accounts payable 266,622
Accrued salaries and benefits 110,907
Amounts due to related parties 19,731
Deferred revenue 162,774
----------
Total current liabilities 593,089
RELATED PARTY LONG-TERM DEBT,
net of current portion 3,843
----------
SHAREHOLDERS' EQUITY:
Common stock, $.001 par value;
100,000,000 shares authorized;
10,708,248 shares outstanding 13,021
Additional paid-in capital 4,497,998
Warrants outstanding 143,221
Deferred compensation (8,125)
Accumulated deficit (4,969,760)
----------
Total shareholders' equity (323,645)
----------
$ 273,287
==========
The accompanying notes are an integral part of this balance sheet.
-2-
TENET INFORMATION SERVICES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
For the Three Months Ended
December 31
1996 1995
---------- ----------
REVENUES $ 147,556 $ 411,269
---------- ----------
COSTS AND EXPENSES:
Cost of revenues 151,118 164,175
Selling, general and administrative 104,986 245,504
Software development 49,716 30,480
---------- ----------
305,820 440,159
---------- ----------
LOSS FROM OPERATIONS (158,264) ( 28,890)
---------- ----------
OTHER INCOME (EXPENSE):
Interest expense (1,126) -
Interest income 344 -
---------- ----------
Other expense, net (782) -
---------- ----------
NET LOSS $ (159,046) $ ( 28,890)
========== ==========
NET LOSS PER COMMON SHARE $ (.01) $ (.00)
========== ==========
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 13,018,514 10,708,248
========== ==========
The accompanying notes are an integral part of these statements.
-3-
TENET INFORMATION SERVICES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
For the Six Months Ended
December 31
1996 1995
---------- ----------
REVENUES $ 394,078 $ 553,108
---------- ----------
COSTS AND EXPENSES:
Cost of revenues 297,582 220,283
Selling, general and administrative 249,528 337,815
Software development 144,096 54,492
---------- ----------
691,206 612,590
---------- ----------
LOSS FROM OPERATIONS (297,128) (59,482)
---------- ----------
OTHER INCOME (EXPENSE):
Write-off of excess net
purchase price - (546,884)
Interest expense (2,302) (3,280)
Interest income 1,038 102
---------- ----------
Other expense, net (1,264) (550,062)
---------- ----------
NET LOSS $ (298,392) $ (609,544)
========== ==========
NET LOSS PER COMMON SHARE $ (.02) $ (.07)
========== ==========
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 12,207,798 8,983,085
========== ==========
The accompanying notes are an integral part of these statements.
-4-
TENET INFORMATION SERVICES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For the Six Months Ended
December 31,
1996 1995
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (298,392) $ (609,544)
Adjustments to reconcile net
loss to net cash (used in) provided
by operating activities -
Depreciation and amortization 82,720 16,150
Write-off of excess purchase price - 546,884
(Increase) decrease in assets, net
of effect of acquisitions:
Accounts receivable, net 29,700 (12,204)
Inventories 1,439 6,324
Contracts receivable 13,777 3,819
Prepaid expenses - 4,150
Other assets - (866)
Increase (decrease) in liabilities,
net of effect of acquisitions:
Accounts payable (47,017) 27,334
Accrued salaries and benefits (37,226) 20,328
Amounts due related parties 8,531 -
Notes payable 571 -
Deferred revenues 33,883 (63,771)
----------- ----------
Net cash (used in) provided by
operating activities (212,014) (61,396)
----------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash acquired in acquisition - 19,553
Additions to deferred software costs - (47,500)
Acquisition of furniture, fixtures and
equipment - (8,365)
---------- ----------
Net cash used in investing
activities - (36,312)
---------- ----------
The accompanying notes are an integral part of these statements.
-5-
TENET INFORMATION SERVICES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATEAD STATEMENTS OF CASH FLOWS (CONTINUED)
(UNAUDITED)
For the Six Months Ended
December 31,
1996 1995
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Conversion of warrents, net $ 81,054 $ -
Payments on notes -
Principal payments on long-term debt (41,589) (3,046)
Sale of common stock,
net of offering costs - 161,530
---------- ----------
Net cash provided by financing
activities 39,465 158,484
---------- ----------
NET INCREASE (DECREASE) IN CASH (172,549) 60,776
CASH, at beginning of period 209,589 12,498
---------- ----------
CASH, at end of period $ 37,040 $ 73,274
========== ==========
Supplemental disclosure of cash flow information:
Cash paid during the period
for interest $ 2,302 $ 3,280
========== ==========
Supplemental disclosure of non-cash financing and investing activities:
During the six-month period ended December 31, 1995, 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-
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 December 31, 1996 balance sheet, and the related condensed
consolidated statements of operations for the three and six months
ended December 31, 1996 and cash flows for the six months ended December
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
December 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 six-month periods ended December 31, 1996 are not
necessarily indicative of the results that may be expected for the
remainder of the fiscal year ending June 30, 1997.
(2) Net Loss Per Common Share
Net loss per common share for the three and six months ended December
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.
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:
NMC HCG
---------- ----------
Cash $ 19,553
Accounts receivable, net 88,946
Other current assets 16,665
Furniture and equipment 2,660
Deferred software costs 47,913
---------- ----------
175,737 -0-
Liabilities assumed:
Note payable - 30,000
Accounts payable (19,143)
Accrued liabilities (4,284)
Deferred revenue (215,194)
---------- ----------
Net liabilities assumed (238,621) 30,000
---------- ----------
Legal and accounting fees directly
related to the acquisition (27,000)
---------- ----------
Value of common stock issued (420,000) 7,000
---------- ----------
Excess purchase price $ 509,884 37,000
========== ==========
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 December 31, 1995
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, 1994, respectively.
Six Months ended Six Months ended
December 31, 1996 December 31, 1995
----------------- -----------------
Revenues $ 394,078 $ 639,167
Loss from operations (297,128) (122,568)
Net loss (298,391) (675,100)
Net loss per common share (.02) (.08)
(4) Conversion of Warrants
On August 30, 1996, the board of directors authorized a reduction of the
exercise price of the Company's Class B warrants to $.05 from $.07 per
share, contingent upon conversion by September 30, 1996. A total of
1,621,424 warrants were exercised, leaving 178,575 Class B warrants
outstanding. Proceeds to the Company totaled $81,071, of which $10,643
was paid through the conversion of existing debt owing to the warrant
holder.
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(sb) for the fiscal year ended
June 30, 1996.
The Company was engaged in servicing specialized data processing information
products used in the respiratory services departments of larger hospitals.
During the six months ended December 31, 1995, the Company acquired certain
assets of the International HealthCare Consulting Group ("HCG") and acquired
National Microcomputer Corporation ("NMC").
As a result of the Company's decision to focus its limited time and monetary
resources towards the development of an Emergency Department Windows product,
the EDNet has become the Company's basic line. Therefore, the Company's
discussion to this resource allocation has resulted in the Company's lack
of marketing and/or product development of its Respiratory Product. This
product provided for 46% of revenues for the six months period ended
December 31, 1996.
The Company's efforts to sell the Emergency DOS product have languished,
however, and the development of the EDNet 32 system is behind operating
management projections.
Two members of the Board, Dr. Richard Gwinn and Dr. Robert Smith resigned
as directors of the Company effective November 1, 1996 and December 12, 1996
respectively. Dr. Gwinn resigned as an employee November 1, 1996. However,
both have continued to render services on an hourly basis for continued
support of existing customers, as well as review and critique of the EDNet
32 product.
Effective March 21, 1997, the Vice president of Marketing resigned on a
mutually accepted basis. This resignation and the disagreement with
management over marketing methods has significantly reduced the number
of potential sales leads for the Company.
The net result of the resignations above is dramatic decrease in consulting
revenues of the Company as the efforts of those involved with consulting
have been more focused on EDNet 32 than before. Also, pending consulting
contracts have not materialized. The Company is concerned about the
reduced level of consulting revenues and is considering marketing
alternatives.
As of December 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 at this time is not actively marketing the RCMS/X product,
and there is no present development program ongoing, however, the Company
intends to reconsider additional development and marketing if or when
additional operating become available.
As of December 31, 1996, the Company had sold its EDNet product to 20
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 December 31, 1996, the Company was in the process of installing
EDNet at two additional sites. The Company is continuing in its development
of EDNet32 windows based product and is hopeful of a product launch in
the later part of calendar 1997.
RESULTS OF OPERATIONS
FOR THE THREE MONTHS ENDED DECEMBER 31, 1996 COMPARED WITH THE THREE
MONTHS ENDED DECEMBER 31, 1995.
During the three-month period ended December 31, 1996, the Company had
revenues of $147,536 which represented a 64 percent decrease from $411,269
for the corresponding period of the prior fiscal year. The 1996 sales
consisted of
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
3-month % of 3-month % of Change in % Change
ended sales ended sales sales of sales
12/31/96 12/31/95
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Emergency $ 48,800 33% $253,715 62% ($204,915) (81%)
Respiratory $ 83,312 56% $ 82,459 20% ($ 853) ( 1%)
Consulting $ 15,444 11% $ 73,295 18% ($ 57,851) (79%)
-------- --- -------- --- ---------- -----
$147,556 100% $411,269 100% ($263,619 (64%)
======== ==== ======== ==== ========== =====
</TABLE>
This decrease in sales was due to the Company's decision to market the
EDNet32 system in lieu of continuing aggressive marketing of the DOS
product, lack of follow-on Respiratory sales and fewer RCMS customers.
Also, the effect of the consulting group working on the ENDet32 project,
as well as delays in anticipated contracts, resulted in lower consulting
revenues.
Cost of revenues decreased 8% to $151,118 for the three-month period ended
December 31, 1996 from $164,275 for the corresponding period of the prior
fiscal year. This is consistent with the decline in sales and staffing,
and support remaining constant.
Selling, general, and administrative costs increased 57% to $104,986 for
the three-month period ended December 31, 1996 from $245,504 for the
corresponding period of the previous fiscal year. This coincides with
a reduction of personnel in the marketing of the Respiratory arena, the
combination of the Chief Operating Officer position with the head of
consulting, and reduced commissions and travel Software development costs
increased 63% to $49,716 for the three-month period ended December 31, 1996
from $30,480 for the corresponding period of the prior fiscal year.
This is primarily the result of the Company's acquisition of the emergency
department product, and of the fact that the Company has elected not to
capitalize any of the development costs for EDNet32.
The Company incurred an loss of $159,046 for the three-month period ended
December 31, 1996 compared with an operating loss of $28,890 for the
corresponding period of the previous year. This is a direct result of
lack of sales and orders for the Company's product.
The Company loss per share increased to $(.01) as compared with nil for
the corresponding period of the previous year.
Interest expense increased to $782 for the three-month period ended
December 31, 1996 from none for the corresponding period of the prior
year as a result of the lack of sufficient working capital to make
payments in a timely manner to suppliers, consultants and employees.
FOR THE SIX MONTHS ENDED DECEMBER 31, 1996 COMPARED WITH THE SIX MONTHS
ENDED DECEMBER 31, 1995.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
6-month 6-month
ended % of ended % of Change in
12/31/96 sales 12/31/95 sales sales % Change
-------- ----- -------- ----- ------- --------
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Emergency $183,128 46% $252,816 45% $ 69,688 (28%)
Respiratory $155,768 40% $213,218 39% $ 57,450 (27%)
Consulting $ 55,182 14% $ 87,074 16% $ 31,892 37%
-------- ---- -------- ---- --------- ----
$394,078 100% $553,108 100% $ 159,030 29%
======== ==== ======== ==== ========= ====
</TABLE>
This decrease in sales was due to the Company's decision to market the
EDNet32 system in lieu of continuing aggressive marketing of the DOS
product, lack of follow-on Respiratory sales and fewer RCMS customers.
Also, the effect of the consulting group working on the ENDet32 project,
as well as delays in anticipated contracts, resulted in lower consulting
revenues.
Cost of revenues increased 35% to $297,582 for the six-month period ended
December 31, 1996 from $220,283 for the corresponding period of the prior
fiscal year. The primary reason for the increase was the Company decision
to write-off its capitalized software over the final 9 months of fiscal
1997. This amounted to an increased charge of $56,151. The remainder of
this increase is due to the relatively stagnant cost of supporting
customers, which is dependent upon a minimum staff.
Selling, general, and administrative costs decreased 26% to $249,528 for
the six-month period ended December 31, 1996 from $337,815 for the
corresponding period of the previous fiscal year. This coincides with a
reduction of personnel in the marketing of the Respiratory arena, the
combination of the Chief Operating Officer position with the head of
consulting, and reduced commissions and travel.
Software development costs increased 16% to $144,096 for the six-month
period ended December 31, 1996 from $54,492 for the corresponding period
of the prior fiscal year. This is primarily the result of the Company's
acquisition of the emergency department product, and of the fact that
the Company has elected not to capitalize any of the development costs
for EDNet 32.
The Company incurred an operating loss of $298,392 for the six-month
period ended December 31, 1996 compared with an operating loss of $609,544
for the corresponding period of the previous year. This is a direct result
of lack of sales and orders for the Company's product.
The Company's loss per share increased to $(.02) as compared with $(.07)
for the corresponding period of the previous year.
In connection with the acquisitions of HCG and NMC during the six months
ended December 31, 1995, 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
six months ended December 31, 1995. This write-off increased the net
loss by $546,884 to $609,544 or $.07 per share as compared with a net
loss of $298,392, or ($.02), per share for the current year.
Interest expense decreased to $2,302 for the six-month period ended
December 31, 1996 from $3,280 for the corresponding period of the prior
year as a result of converting the related debt to equity.
LIQUIDITY AND CAPITAL RESOURCES
The Company has suffered recurring losses from operations since fiscal year
1989, and as of December 31, 1996 had an accumulated deficit of $4,969,760.
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.
During the fiscal year ended June 30, 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. This offering closed on June 28, 1996 raising for
the Company a net amount of $185,852.
The Company also accelerated conversion of its Class B warrants by
offering a discount to $.05 from $.07 if exercised prior to September
30, 1996. A total of 1,621,424 warrants were exercised, creating $70,429
in cash and $10,643 in debt reduction.
At June 30, 1996, the Company had $40,000 in bridge financing. This was
repaid from the Private Placement Offering.
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.
The Company's cash position decreased by $172,549 during the six month
period ended December 31, 1996 to $37,040 as compared to $209,589 as of
June 30, 1996. The Company had a working capital deficit of $453,531
as of December 31, 1996 as compared with a deficit of $318,884 as of
June 30, 1996. Operating activities used $212,014 for the six month
period ended December 31, 1996 as compared with using $61,396 for the
corresponding period of the previous year. The principal sources of
cash have been (i) proceeds from conversion of warrants of $81,054, and
(ii) the $185,852 net raised in the above mentioned private placement.
The Company has not capitalize software development costs during the six
month period ended December 31, 1996 as compared to $47,500 during the
corresponding period of the previous year. There were debt payments
of $41,589 during the six month period ended December 31, 1996 as compared
with $3,046 for the corresponding period of the previous year.
While a significant portion of the current liabilities, approximately
$130,000, is owed to present officers and/or directors, there can be no
assurances that these officers/directors will not seek payment in the
near term. In addition, it appears that certain directors and/or officers,
as well as officers and/or directors who recently resigned, intend to
expand their amounts due with claims of penalties and for interest,
the viability of such is contested by the Company.
The Company has contingency plans should cash flows continue to decrease
significantly. 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 1997.
Continued installations require financing arrangements, which the Company
hopes can be obtained. The Company is also considering the potential
sale of some or all of its product lines in the event development is not
timely for the EDNet32 system, sales of systems do not increase, or that
the Company has sufficient working capital.
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 None
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: October 6, 1997 TENET INFORMATION
SERVICES, INC.
/s/ Fred J. Anderson
---------------------
Fred J. Anderson
Corporate Secretary
and Chief Financial and Accounting Officer
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 October 6, 1997 TENET INFORMATION
SERVICES, INC.
_______________________
Fred J. Anderson
Corporate Secretary
Chief Financial and Accounting Officer
