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, 1997
[ ] 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
March 31, 1997 and 1996......................................1
Condensed consolidated statements of operations
for the three months and nine months ended
March 31, 1997 and 1996......................................3
Condensed consolidated statements of cash flows
for the nine months ended March 31, 1997 and 1996............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, 1997
--------------
CURRENT ASSETS:
Cash $ 28,332
Accounts receivable, net of allowance for
doubtful accounts of $7,500 116,578
Current portion of contracts receivable 7,110
Inventories 1,780
----------
TOTAL CURRENT ASSETS 153,800
----------
DEFERRED SOFTWARE COSTS 1,124,036
Less accumulated amortization (1,069,669)
----------
54,367
----------
FURNITURE, FIXTURES AND EQUIPMENT 119,302
Less accumulated depreciation and
amortization (101,175)
----------
18,127
----------
OTHER ASSETS, net 1,425
----------
$ 227,719
==========
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
March 31, 1997
CURRENT LIABILITIES:
Note Payable $ 26,809
Current portion of related
party long-term debt 7,046
Accounts payable 266,810
Accrued salaries and benefits 98,735
Amounts due to related parties 20,306
Deferred revenue 222,481
----------
Total current liabilities 642,187
----------
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 (5,064,426)
----------
Total shareholders' equity (418,311)
----------
$ 227,719
==========
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
March 31,
1997 1996
-------------------------
REVENUES $ 152,864 $ 339,039
---------- ----------
COSTS AND EXPENSES:
Cost of revenues 111,835 136,583
Selling, general and administrative 92,925 206,253
Software development 41,395 19,480
---------- ----------
246,155 362,316
---------- ----------
LOSS FROM OPERATIONS (93,291) (23,277)
---------- ----------
OTHER INCOME (EXPENSE):
Interest expense (1,376) (8,208)
Interest income 1 -
---------- ----------
Other expense, net (1,375) (8,208)
---------- ----------
NET LOSS $ ( 94,666) $ (31,485)
========== ==========
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 Nine Months Ended
March 31
1997 1996
---------- ----------
REVENUES $ 546,942 $ 892,147
---------- ----------
COSTS AND EXPENSES:
Cost of revenues 409,417 356,866
Selling, general and administrative 342,453 544,068
Software development 185,491 73,972
---------- ----------
937,361 974,906
---------- ----------
LOSS FROM OPERATIONS (390,419) (82,759)
---------- ----------
OTHER INCOME (EXPENSE):
Write-off of excess purchase price - (546,884)
Interest expense (3,678) (11,488)
Interest income 1,039 102
---------- ----------
Other expense, net (2,639) (558,207)
---------- ----------
NET LOSS $ (393,058) $ (641,029)
========== ==========
NET LOSS PER COMMON SHARE $ (.03) $ (.07)
========== ==========
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 12,471,391 9,557,140
========== ==========
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 Nine Months Ended
March 31,
1997 1996
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (393,058) $ (641,029)
Adjustments to reconcile net
loss to net cash (used in) provided
by operating activities -
Depreciation and amortization 142,530 22,600
Write-off of excess purchase price - 546,884
(Increase) decrease in assets, net
of effect of acquisitions:
Accounts receivable, net (2,083) 5,603
Inventories 3,220 2,768
Contracts receivable 20,829 15,768
Prepaid expenses - 4,150
Other assets - (866)
Increase (decrease) in liabilities,
net of effect of acquisitions:
Accounts payable (46,829) 83,840
Accrued salaries and benefits (49,398) 28,865
Amounts due to related parties 9,106 1,500
Deferred revenue 93,590 (177,703)
---------- ----------
Net cash (used in) provided by
operating activities (222,093) (107,620)
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash acquired in acquisition - 19,563
Additions to deferred software costs - (65,500)
Acquisition of furniture, fixtures and
equipment - (9,320)
--------- ----------
Net cash used in investing
activities - (55,257)
--------- ----------
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 Nine Months Ended
March 31,
1997 1996
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Conversion of warrants, net $ 81,504 $ -
Principal payments on long-term debt (40,668) (4,658)
Sale of common stock,
net of offering costs - 176,538
---------- ----------
Net cash provided by financing
activities 40,836 171,880
---------- ----------
NET INCREASE (DECREASE) IN CASH (181,257) 9,003
CASH, at beginning of period 209,589 12,498
---------- ----------
CASH, at end of period $ 28,332 $ 21,501
========== ==========
Supplemental disclosure of cash flow information:
Cash paid during the period
for interest $ 8,208 $ 11,488
========== ==========
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-
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, 1997 balance sheet, and the related condensed consolidated
statements of operations for the three and nine months ended March 31, 1997
and cash flows for the nine months ended March 31, 1997 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, 1997 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 March 31, 1997
and 1996 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 nine-month periods ended March 31, 1997 and 1996
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.
Nine Months ended Nine Months ended
March 31, 1997 March 31, 1996
---------- ----------
Revenues $ 546,942 $ 978,206
Loss from operations (390,419) (145,845)
Net loss (393,058) (740,656)
Net loss per common share (.03) (.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 nine months
eriod ended March 31, 1997.
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 March 31, 1997, 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 March 31, 1997, 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 March 31, 1997, 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 MARCH 31, 1997 COMPARED WITH THE THREE MONTHS ENDED
MARCH 31, 1996.
During the three-month period ended March 31, 1997, 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 1997 sales consisted of
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
3-month 3-month
ended % of ended % of Change % Change
3/31/97 sales 3/31/96 sales in sales of sales
------- ------ ------- ----- -------- --------
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Emergency $ 49,978 33% $130,474 39% ($80,496) (62%)
Respiratory $ 78,552 51% $126,517 37% ($47,965) (38%)
Consulting $ 24,333 16% $ 82,048 24% ($57,715) 70%
--------- ---- -------- ---- ---------- ----
$ 152,863 100% $339,039 100% ($186,176) 55%
========= ==== ======== ==== ========== ====
</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
March 31, 1997 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 March 31, 1997 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 March 31, 1997 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
March 31, 1997 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's 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 March
31, 1997 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 NINE MONTHS ENDED MARCH 31, 1997 COMPARED WITH THE NINE MONTHS ENDED
MARCH 31, 1996.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
9-month 9-month
ended % of ended % of Change
3/31/97 sales 3/31/96 sales in sales % Change
--------- ---- -------- --- -------- ----
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Emergency $233,106 46% $339,007 38% $(105,901) (31%)
Respiratory $234,320 40% $384,101 43% $(149,781) (39%)
Consulting $ 79,516 14% $169,039 19% $(345,205) (53%)
-------- ---- -------- ---- --------- -----
$546,942 100% $892,147 100% $(345,205) 39%
======== ==== ======== ==== ========= ====
</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 26% to $449,417 for the nine-month period ended
March 31, 1997 from $356,866 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 $112,300. The remainder
of this increase is due to the relatively stable cost of supporting
customers, which is dependent upon a minimum staff.
Selling, general, and administrative costs decreased 37% to $342,453 for
the nine-month period ended March 31, 1997 from $544,068 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 97% to $145,491 for the nine-month
period ended March 31, 1997 from $73,792 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 loss of $390,419 for the nine-month period ended
March 31, 1997 compared with an operating loss of $82,759 for the
corresponding period of the previous year. This is a result of the
Company's reduced revenues, the write-off of capitalized software and the
decision not to capitalize the development work on the EDNet 32 system.
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 $546,884 to $641,029
or $.07 per share as compared with a net loss of $393,052, or ($.03), per
share for the current year.
Interest expense decreased to $3,678 for the nine-month period ended
March 31, 1997 from $11,488 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 March 31, 1997 had an accumulated deficit of $5,064,426.
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 $181,257 during the nine month
period ended March 31, 1997 to $28,332 as compared to $209,589 as of June
30, 1996. The Company had a working capital deficit of $488,387 as of March
31, 1997 as compared with a deficit of $318,884 as of June 30, 1996.
Operating activities used $222,093 for the nine month period ended March
31, 1997 as compared with using $107,620 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 nine month period ended March 31, 1997 as
compared to $65,500 during the corresponding period of the previous year.
There were debt payments of $40,668 during the nine month period ended
March 31, 1997 as compared with $4,658 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 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
