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, 2000
[ ] 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.
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(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
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(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, 2000
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Tenet Information Services, Inc.
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed consolidated balance sheet as of September 30, 2000 1
Condensed consolidated statements of operations for the
three months ended September 30, 2000 and 1999 3
Condensed consolidated statements of cash flows for the
three months ended September 30, 2000 and 1999 4
Notes to condensed consolidated financial statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7
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
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PART I - FINANCIAL INFORMATION
ITEM I - Financial Statements
TENET INFORMATION SERVICES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)
ASSETS
September 30, 2000
------------------
CURRENT ASSETS:
Cash $ 37,487
Accounts receivable, net of allowance for
doubtful accounts of $7,500 179,343
Prepaid Expenses 1,299
Work performed in excess of billings 16,950
----------
Total current assets 235,079
----------
FURNITURE, FIXTURES AND EQUIPMENT 149,137
Less accumulated depreciation and
amortization (133,719)
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15,418
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OTHER ASSETS, net 1,425
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$ 251,922
==========
The accompanying notes are an integral part of this balance
sheet.
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TENET INFORMATION SERVICES, INC. AND SUSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEET (Continued)
(Unaudited)
LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY
September 30, 2000
------------------
CURRENT LIABILITIES:
Accounts payable 110,949
Accrued expenses 69,880
Accrued interest 3,701
Note Payable 12,500
Amounts due to related parties 17,505
Deferred revenue 158,593
Billings in excess of costs 29,150
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Total current liabilities 402,278
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LONG TERM LIABILITIES:
Notes Payable 12,500
Notes payable to related party 26,436
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Total long term liabilities 38,936
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Total Liabilities 441,214
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 (5,059,821)
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Total shareholders' equity (189,292)
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Total Liabilities and Shareholders Equity $ 251,922
==========
The accompanying notes are an integral part of this balance
sheet.
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TENET INFORMATION SERVICES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the three Months Ended
September 30,
-------------------------
2000 1999
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REVENUES
SW licenses & support $ 97,808 $ 171,810
Consulting Services 92,098 14,950
Respiratory Support -0- 15,531
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TOTAL REVENUES $ 189,906 $ 202,291
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COSTS AND EXPENSES:
Cost of revenues 80,461 93,051
Selling, general and administrative 65,302 70,903
Software development 32,951 35,959
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178,714 199,913
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INCOME FROM OPERATIONS 11,192 2,378
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OTHER INCOME (EXPENSE):
Interest expense (1,587) ( 1,874)
Interest income -0- 70
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Other Expense, net (1,587) (1,804)
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NET INCOME $ 9,605 $ 574
========== ==========
BASIC EARNINGS PER SHARE $ .00 $ .00
========== ==========
DILUTED EARNINGS PER SHARE $ .00 $ .00
========== ==========
The accompanying notes are an integral part of these
statements.
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TENET INFORMATION SERVICES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Three Months Ended
September 30,
------------------------
2000 1999
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 9,605 $ 574
Adjustments to reconcile net
income to net cash (used in) provided
by operating activities:
Depreciation and amortization 2,374 2,099
Changes in assets and liabilities
Prepaid Expenses 4,310 -0-
Work performed in excess
of billing 2,590 (35,191)
Accounts receivable, net (28,802) (26,968)
Accounts payable (24,629) (2,532)
Accrued expenses 7,754 508
Deferred Revenue 29,643 76,263
Billings in excess of cost 20,032 24,522
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Net cash provided by
operating activities 22,877 39,275
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CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of furniture, fixtures and
equipment -0- (4,091)
Net cash used by investing ----------- ---------
activities -0- (4,091)
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The accompanying notes are an integral part of these
statements.
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TENET INFORMATION SERVICES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATEAD STATEMENTS OF CASH FLOWS (Continued)
(Unaudited)
For the Three Months Ended
September 30,
----------------------
2000 1999
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CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on debt to
related parties -0- (1,097)
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Net cash used in financing
Activities -0- (1,097)
NET INCREASE (DECREASE) IN CASH 22,877 34,087
CASH, at beginning of period 14,610 32,039
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CASH, at end of period $ 37,487 $ 66,126
========= ==========
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 609 $ 609
========= ==========
The accompanying notes are an integral part of these
statements.
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TENET INFORMATION SERVICES, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Item 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, 2000 and the
results of its operations and its cash flows for the three
months ended September 30, 2000 and 1999 respectively. The
results of operations for the three-month period ended
September 30, 2000 are not necessarily indicative of the
results that may be expected for the remainder of the fiscal
year ending June 30, 2001.
(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,
2000 and 1999 and the effect on income and the weighted
average number of shares of dilutive potential common stock.
For the Three For the Three
Months Ended Months Ended
September 30, September 30,
2000 1999
----------- ------------
Income (loss) available to common shareholders
used in basic earnings per share $ 9,605 $ 574
----------- ------------
Income available to common shareholders after
assumed conversions of dilutive securities 9,605 574
=========== ============
Weighted average number of common shares used
in basic earnings per share 19,065,892 19,065,892
Effect of dilutive securities:
Stock Options 1,015,783 1,031,411
Weighted average number of common shares and
dilutive potential common shares Used in
dilutive earnings per share 20,081,675 20,097,303
=========== ===========
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(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.
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, Work performed in excess of billings, represents
costs incurred and revenues earned in excess of amounts
billed. The liability, Billings in excess of costs,
represents billings in excess of costs incurred and revenue
recognized. Contract retentions are included in accounts
receivable.
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, 2000.
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, 2000, the Company had installed its EDNet
product to 25 emergency department and urgent care sites. All
sites have annual maintenance contracts for continued support
and updates. As of September 30, 2000 the Company was in the
process of installing EDNet32 upgrades at 5 additional sites
and 1 installation at a new client.
The Consulting division provides consulting support to major
hospitals throughout the country. These services consist
primarily of cost benefit evaluations, patient classification
for nursing, and productivity management for all other
departments. Consulting services are charged on a negotiated
fee basis. As of September 30, 2000 the Company was providing
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consulting services to four hospitals, two of which are
industry "Top 100" Hospitals. One of the "Top 100" Hospitals
has received "magnet" designation, which only 13 hospitals in
the country have received.
Results of Operations
For the three months ended September 30, 2000 compared with
the three months ended September 30, 1999.
During the three month period ended September 30, 2000, the
Company had revenues of $189,906, which represented an 6
percent decrease from $202,292 for the corresponding period of
the prior fiscal year. The sales consisted of EDNet license
and support $97,808 (52%), consulting $92,098 (48%) and
respiratory, $0 (0%), compared with $171,810 (85%), $14,950
(7%), and $15,531 (8%) respectively, for the corresponding
period of the prior fiscal year.
Cost of revenues decreased 14% to $80,461 for the three month
period ended September 30, 2000 from $93,051 for the
corresponding period of the prior year. This decrease was
directly related to the decline in EDNet revenue.
Selling, general, and administrative expense decreased 8% to
$65,302 for the three-month period ended September 30, 2000
from $70,903 for the corresponding period of the previous
fiscal year. The decrease was consistent with the decreased
revenue.
Software development costs decreased 8% to $32,951 for the
three-month period ended September 30, 2000 from $35,959 for
the corresponding period of the prior fiscal year. The
decrease was consistent with the decreased revenue.
Development activities are now focused on enhancements to the
EDNet software.
The Company earned an operating profit of $11,192 for the
three-month period ended September 30, 2000 compared with a
profit of $2,378 for the corresponding period of the previous
year. Consulting revenue was substantially higher in the
current quarter than a year ago and the gross margin on
consulting revenue was significantly higher than the gross
margin on EDNet revenue last year.
Interest expense declined to $1,587 for the three-month period
ended September 30, 2000 from $1,874 for the corresponding
period of the prior year. The reduced interest expense is a
result of debt retirement.
The Company had net income of $9,605 or $0.00 per share for
the three month period ended September 30, 2000 compared with
a net income of $574 or $0.00 per share for the corresponding
period of the prior year.
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Liquidity and Capital Resources
The Company's primary needs for capital are to fund an
increased sales effort and stay current on its continuing
product development. For the three months ended September 30,
2000, net cash provided by operating activities was $22,877 as
compared to net cash provided by operations of $39,275 for
corresponding period of the prior year. 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, 2000, the company had total assets of $251,922
and shareholders deficit of $189,292 compared to total assets
of $209,517 and shareholders deficit of $198,897 at June 30,
2000, the Company's last fiscal year end. The 20% increase in
assets is primarily the result of increased cash and accounts
receivable. The improvement in shareholders' deficit is
primarily the result of operations. The Company did not
capitalize any software development costs during the three
months ended September 30, 2000.
At September 30, 2000 the Company had a working capital
deficit of $167,199 as compared to a working capital deficit
of $179,178 at September 30, 1999, an improvement of 7%.
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
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<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: November 10, 2000 TENET INFORMATION
SERVICES, INC.
/s/Jerald L. Nelson
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Chairman of the Board of Directors
Jerald L. Nelson
Chairman of the Board of Directors
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