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 September 30, 1999
[ ] 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
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
4885 South 900 East #107
Salt Lake City, Utah 84117
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(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 19,065,892 shares of common stock outstanding at
November 8, 1999
<PAGE>
Tenet Information Services, Inc.
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed consolidated balance sheet as of
September 30, 1999. . . . . . . . . . . . . . . . . . . . 1
Condensed consolidated statements of operations for
the three months ended September 30, 1999 and 1998. . . . 3
Condensed consolidated statements of cash flows for
the three months ended September 30, 1999 and 1998 . . . 4
Notes to condensed consolidated financial statements. . . 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . 8
PART II OTHER INFORMATION
Item 1. Litigation. . . . . . . . . . . . . . . . . . . . . . . . . 9
Item 2. Changes in Securities . . . . . . . . . . . . . . . . . . . 9
Item 3. Defaults Upon Senior Securities . . . . . . . . . . . . . . 9
Item 4. Submission of Matters to a Vote of Security Holders . . . . 9
Item 5. Other Information . . . . . . . . . . . . . . . . . . . . . 9
Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . . . 9
SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM I - FINANCIAL STATEMENTS
TENET INFORMATION SERVICES, INC. AND
SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)
ASSETS
September 30, 1999
CURRENT ASSETS:
Cash $ 66,126
Accounts receivable, net of allowance for
doubtful accounts of $7,500 149,482
Work performed in excess of billings 51,867
----------
Total current assets 267,475
----------
FURNITURE, FIXTURES AND EQUIPMENT 148,680
Less accumulated depreciation and amortization (124,280)
----------
24,400
----------
OTHER ASSETS, net 1,425
----------
$ 293,300
==========
The accompanying notes are an integral part of this balance sheet.
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<PAGE>
TENET INFORMATION SERVICES, INC. AND SUSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEET (Continued)
(Unaudited)
LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY
September 30, 1999
CURRENT LIABILITIES:
Accounts payable 94,898
Accrued salaries and benefits 63,753
Accrued interest 1,586
Amounts due to related parties 17,783
Deferred revenue 179,926
Billings in excess of costs 91,205
----------
Total current liabilities 449,151
----------
LONG TERM LIABILITIES:
Notes Payable 25,000
Notes payable to related party 26,436
----------
Total long term liabilities 51,436
----------
Total Liabilities 500,587
SHAREHOLDERS' EQUITY:
Common stock, $.001 par value;
100,000,000 shares authorized;
19,065,892 shares issued 19,066
Additional paid-in capital 4,843,476
Warrants outstanding 7,987
Accumulated deficit (5,077,816)
----------
Total shareholders' equity (207,287)
----------
Total Liabilities and Shareholders Equity $ 293,300
==========
The accompanying notes are an integral part of this balance sheet.
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<PAGE>
TENET INFORMATION SERVICES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the three Months Ended
September 30,
-----------------------
1999 1998
----------- ----------
REVENUES $ 202,291 $ 241,923
COSTS AND EXPENSES:
Cost of revenues 93,051 73,400
Selling, general and administrative 70,903 68,282
Software development 35,959 27,843
----------- ----------
199,913 169,525
----------- ----------
INCOME (LOSS) FROM OPERATIONS 2,378 72,398
OTHER INCOME (EXPENSE):
Interest expense (1,874) ( 2,053)
Interest income 70 138
----------- ----------
Other Expense, net (1,804) (1,915)
----------- -----------
NET INCOME (LOSS) $ 574 $ 70,483
=========== ===========
NET LOSS PER COMMON SHARE $ (.00) $ (.00)
=========== ===========
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 19,065,892 18,833,717
=========== ===========
The accompanying notes are an integral part of these statements.
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<PAGE>
TENET INFORMATION SERVICES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Three Months Ended
September 30,
------------------------
1999 1998
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 573 $ 70,483
Adjustments to reconcile net
loss to net cash (used in) provided
by operating activities:
Accrued interest 529 2,053
Depreciation and amortization 2,099 1,279
(Increase) decrease in assets, net
of effect of acquisitions:
Accounts receivable, net (62,159) (11,214)
Increase (decrease) in liabilities,
net of effect of acquisitions:
Accounts payable (2,532) (15,720)
Accrued salaries and benefits (20) (835)
Deferred Revenue (76,263) (10,246)
Billings in excess of cost 24,522 19,750
----------- -----------
Net cash (used by) provided by
operating activities (4,091) 55,550
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of furniture, fixtures and
equipment (4,091) (7,995)
----------- -----------
Net cash used by investing
activities (4,091) (7,995)
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The accompanying notes are an integral part of these statements.
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<PAGE>
TENET INFORMATION SERVICES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATEAD STATEMENTS OF CASH FLOWS (Continued)
(Unaudited)
For the Three Months Ended
September 30,
------------------------
1999 1998
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES: - -
NET INCREASE (DECREASE) IN CASH 34,087 47,555
CASH, at beginning of period 32,039 21,937
----------- -----------
CASH, at end of period $ 66,126 $ 69,492
=========== ===========
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 609 $ -
=========== ===========
The accompanying notes are an integral part of these statements.
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<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 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.
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
September 30, 1999 and the results of its operations and its cash flows
for the three months ended September 30, 1999 and 1998 respectively.
The results of operations for the three-month period ended September 30,
1999 are not necessarily indicative of the results that may be expected
for the remainder of the fiscal year ending June 30, 2000.
(2) Basic and Diluted Earnings per Common Share
The following data shows the amounts used in computing earnings per
share for the three months ended September 30, 1999 and the effect on
income and the weighted average number of shares of dilutive potential
common stock.
For the Three
Months Ended
September 30,1999
------------------
Income (loss) available to common shareholders
used in basic earnings per share $ 574
Income available to common shareholders after
assumed conversions of dilutive securities 574
===========
Weighted average number of common shares used
in basic earnings per share 19,065,892
Effect of dilutive securities:
Stock Options 50,000
Stock Warrants 688,075
-----------
Weighted average number of common shares and
dilutive potential common shares Used in
dilutive earnings per share 19,803,967
============
Options on 810,000 shares of common stock were not included in computing
diluted loss per share because their effects were antidilutive.
(3) Revenue recognition on long term software contracts
Revenues from long term software installations are recognized on the
percentage of completion method, measured by the percentage of costs
incurred to date to total estimated costs for each contract.
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<PAGE>
Contract costs include all direct material, labor and subcontract costs
and those indirect costs relating to contract performance. General and
administrative costs are charged to expense as incurred. Provisions for
estimated losses on uncompleted contracts are recognized in the period
in which such losses are determined. Changes in job performance, job
conditions and estimated profitability, including those arising from
contract penalty provisions, and final contract settlements may result
in revisions to revenues and costs and are recognized in the period in
which the revisions are determined. An amount equal to contract costs
attributable to claims is included in revenues when realization is
probable and the amount can be reliably estimated.
The asset, Costs and estimated earnings in excess of billings on
uncompleted contracts, represents revenues recognized in excess of
amounts billed. The liability, Billings in excess of costs and
estimated earnings on uncompleted contracts, represents billings in
excess of revenue recognized. Contract retentions are included in
accounts receivable.
-7-
<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, 1999.
The Company is engaged in developing and servicing data processing
information products used in hospitals. The Company's main product is
an emergency department computer system known as EDNet. In addition,
the Company also has a consulting group which conducts efficiency
studies in various hospital situations, as well as customizes software
solutions to specific hospital requirements.
As of September 30, 1999, the Company had sold its EDNet product to 27
emergency department and urgent care 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 September 30, 1999 the
Company was in the process of installing EDNet32 upgrades at 13 sites.
The Company has previously completed the installations of its new
Windows 32 product at 10 sites.
RESULTS OF OPERATIONS
For the Three Months Ended September 30, 1999 Compared with the Three
Months Ended September 30, 1998.
During the three month period ended September 30, 1999, the Company had
revenues of $202,292 which represented a 16 percent decrease from
$241,923 for the corresponding period of the prior fiscal year. The
sales consisted of emergency $171,810 (85%), respiratory, $15,531 (8%),
and consulting $ 14,950 (7%) compared with $14,929 (62%), $30,399 (13%)
and $62,233 (26%), respectively, for the corresponding period of the
prior fiscal year.
Cost of revenues increased 27% to $93,051 for the three month period
ended September 30, 1999 from $73,400 for the corresponding period of
the prior year. This increase was directly related to the larger volume
of emergency department installations occurring during the 3 months
ended September 30, 1999.
Selling, general, and administrative costs increased 4% to $70,903 for
the three month period ended September 30, 1999 from $68,282 for the
corresponding period of the previous fiscal year. The Company continues
to tightly control administrative costs.
Software development costs increased 29% to $35,959 for the three-month
period ended September 30, 1999 from $27,843 for the corresponding
period of the prior fiscal year. Development activities are now focused
on enhancements to the EDNet software and required 29% increase in
resources.
The Company earned an operating profit of $2,378 for the three-month
period ended September 30, 1999 compared with a profit of $70,398 for
the corresponding period of the previous year. Lower consulting and
respiratory revenues as well as the cost of EDNet installation
activities resulted in lower operating profit.
-8-
<PAGE>
Interest expense declined to $1,874 for the three-month period ended
September 30, 1999 from $2,053 for the corresponding period of the prior
year.
The Company had net income of $574 or $0.00 per share for the three
month period ended September 30, 1999 compared with a net income of
$70,483 or $.00 per share for the corresponding period of the prior year.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary needs for capital are to fund an increased sales
effort and stay current on its internal hardware needs. For the three
months ended September 30, 1999, net cash provided by operating
activities was $38,178 as compared to $55,550 for corresponding period
of the prior year, an decrease of $17,371 or 31%. The Company has
sufficient capital for its current operations. However, in order to
significantly expand sales, the Company will require additional cash
from borrowing or a private placement. At September 30, 1999, the
company had total assets of $241,433 and shareholders equity of
($207,286) compared to total assets of $195,062 and shareholders equity
of ($207,860) at June 30, 1999, the Company's last fiscal year end. The
6% increase in assets is primarily the result of increased cash and
accounts receivable. The improvement in shareholders equity is
primarily the result of operations. The Company did not capitalize any
software development costs during the three months ended September 30,
1999.
At September 30, 1999 the Company's working capital was ($181,676) as
compared to ($180,257) at June 30, 1999, a decline of (1%).
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 Vote of
Security Holders N/A
Item 5. Other Information N/A
Item 6. Exhibits and Reports on Form 8-K
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: November 11, 1999 TENET INFORMATION
SERVICES, INC.
/s/ Jerald L. Nelson
----------------------------------
Chairman of the Board of Directors
Jerald L. Nelson
Chairman of the Board of Directors
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<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the balance
sheet as of September 30, 1999, and statements of operations for the three months
ended September 30, 1999, and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-END> SEP-30-1999
<CASH> 66,126
<SECURITIES> 0
<RECEIVABLES> 156,982
<ALLOWANCES> (7,500)
<INVENTORY> 0
<CURRENT-ASSETS> 267,475
<PP&E> 148,680
<DEPRECIATION> (124,280)
<TOTAL-ASSETS> 293,300
<CURRENT-LIABILITIES> 449,151
<BONDS> 51,436
0
0
<COMMON> 19,066
<OTHER-SE> (226,353)
<TOTAL-LIABILITY-AND-EQUITY> 293,300
<SALES> 202,291
<TOTAL-REVENUES> 202,291
<CGS> 93,051
<TOTAL-COSTS> 93,051
<OTHER-EXPENSES> 106,862
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,804
<INCOME-PRETAX> 574
<INCOME-TAX> 0
<INCOME-CONTINUING> 574
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 574
<EPS-BASIC> 0.00
<EPS-DILUTED> 0.00
</TABLE>
