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, 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.
(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 19,065,862 shares of common stock outstanding at March 31,
2000
<PAGE>
Tenet Information Services, Inc.
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed consolidated balance sheet as of March 31, 2000 . . 1
Condensed consolidated statements of operations for the three
months and nine months ended March 31, 2000 and 1999. . . . 3
Condensed consolidated statements of cash flows for the nine
months ended March 31, 2000 and 1999 . . . . . . . . . . . . 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
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM I - Financial Statements
TENET INFORMATION SERVICES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)
ASSETS
March 31, 2000
--------------
CURRENT ASSETS:
Cash $ 19,234
Accounts receivable, net of allowance for
doubtful accounts of $7,500 154,304
Total current assets 173,538
-------------
FURNITURE, FIXTURES AND EQUIPMENT 149,137
Less accumulated depreciation and
amortization (128,996)
20,141
-------------
OTHER ASSETS, net 1,425
-------------
Total Assets $ 195,104
=============
The accompanying notes are an integral part of this balance sheet.
<PAGE>
-1-
TENET INFORMATION SERVICES, INC. AND SUSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEET (Continued)
(Unaudited)
LIABILITIES AND SHAREHOLDERS' EQUITY
March 31, 2000
--------------
CURRENT LIABILITIES:
Accounts payable $ 115,422
Accrued expenses 72,178
Accrued interest 2,644
Deferred revenue 123,271
Billings in excess of costs and estimated
earnings on uncompleted contracts 34,473
Current portion of long term liabilities 17,221
--------------
Total current liabilities 365,209
--------------
Long Term Liabilities:
Notes Payable 25,000
Notes Payable to related parties 26,436
--------------
Total long term liabilities 51,436
--------------
TOTAL LIABILITIES 416,645
SHAREHOLDERS' EQUITY:
Common stock, $.001 par value;
100,000,000 shares authorized;
19,065,862 shares outstanding 19,066
Additional paid-in capital 4,843,476
Warrants outstanding 7,987
Accumulated deficit (5,092,070)
--------------
Total shareholders' equity (221,541)
--------------
Total liabilities and stockholders equity $ 195,104
==============
The accompanying notes are an integral part of this balance sheet.
<PAGE>
-2-
TENET INFORMATION SERVICES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the Three Months Ended
March 31,
----------------------------
2000 1999
---------- -----------
REVENUES $ 170,992 $ 216,709
---------- -----------
COSTS AND EXPENSES:
Cost of revenues 65,975 69,943
Selling, general and administrative 73,272 90,645
Software development 52,661 50,909
---------- -----------
Total costs and expenses 191,908 211,497
---------- -----------
INCOME OR (LOSS) FROM OPERATIONS (20,916) 5,212
---------- -----------
OTHER INCOME (EXPENSE):
Interest expense (1,290) (1,707)
Interest income 4 55
---------- -----------
Other expense, net (1,286) (1,652)
---------- ------------
NET INCOME OR LOSS $ (22,202) $ 3,560
========== ===========
BASIC EARNINGS (LOSS) PER SHARE $ (.00) $ .00
========== ===========
DILUTED EARNINGS (LOSS) PER SHARE $ (.00) $ .00
========== ===========
The accompanying notes are an integral part of these statements.
<PAGE>
-3-
TENET INFORMATION SERVICES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the Nine Months Ended
March 31
-----------------------------
2000 1999
---------- ----------
REVENUES $ 622,404 $ 683,359
---------- ----------
COSTS AND EXPENSES:
Cost of revenues 240,146 220,554
Selling, general and administrative 227,557 238,975
Software development 163,548 134,215
---------- ----------
Total Costs and Expenses 631,251 593,744
---------- ----------
INCOME OR (LOSS) FROM OPERATIONS (8,847) 89,615
OTHER INCOME (EXPENSE):
Interest expense (4,951) (5,867)
Interest income 118 756
---------- ----------
Other expense, net (4,833) (5,111)
---------- ----------
Net Income or (Loss) Before (13,680) 84,504
Extraordinary Item
Extraordinary Item - Net of 0 Tax Expense
Gain on extinguishment of debt - 16,903
----------- ----------
NET INCOME OR (LOSS) $ (13,680) $ 101,407
========== ==========
Basic Earnings (Loss) per Share
Operations $ (.00) $ .01
Extraordinary Item $ (.00) $ .00
---------- ----------
Total Basic Earnings (Loss) per share $ (.00) $ .01
========== ==========
Diluted Earnings (Loss) per Share
Operations $ (.00) $ .01
Extraordinary Item $ (.00) $ .00
---------- ----------
Total Diluted Earnings(Loss) Per Share $ (.00) $ .01
========== ==========
The accompanying notes are an integral part of these statements.
<PAGE>
-4-
TENET INFORMATION SERVICES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Nine Months Ended
March 31,
2000 1999
---------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (13,680) $ 101,407
Adjustments to reconcile net income
(loss) to net cash (used in) provided
by operating activities
Depreciation and amortization 6,815 4,162
Gain on forgiveness of debt - (16,903)
Changes in Assets and Liabilities
Accounts receivable, net (15,115) (53,197)
Accounts payable 17,992 (10,843)
Accrued Liabilities 9,992 4,015
Deferred revenue 19,608 (40,903)
Billings in excess of earned
Revenues (32,210) 36,593
----------- ----------
Net cash (used in) provided by
operating activities (6,598) 24,331
----------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of furniture, fixtures and
equipment (4,548) (11,467)
----------- ----------
Net cash used in investing
activities ( 4,548) (11,467)
----------- ----------
The accompanying notes are an integral part of these statements.
<PAGE>
-5-
TENET INFORMATION SERVICES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATEAD STATEMENTS OF CASH FLOWS (Continued)
(Unaudited)
For the Nine Months Ended
March 31,
2000 1999
-------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term debt $ (1,659) $ (2,537)
Principal payments on related party debt - (3,070)
Net cash used by financing
activities (1,659) (5,607)
NET INCREASE (DECREASE) IN CASH (12,805) 7,257
CASH, at beginning of period 32,039 21,937
---------- -----------
CASH, at end of period $ 19,234 $ 29,194
========== ===========
Supplemental disclosure of cash flow information:
Cash paid during the period for
interest $ 609 $ 406
========== ==========
The accompanying notes are an integral part of these statements.
<PAGE>
-6-
TENET INFORMATION SERVICES, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(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.
<PAGE>
-7-
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,
2000 and the results of its operations and its cash flows for three and
nine months ended March 31, 2000 and 1999 respectively. The results of
operations for the three and nine-month periods ended March 31, 2000 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 and nine months ended March 31, 2000 and the effect on
income and the weighted average number of shares of dilutive potential
common stock.
For the Three For the Nine
Months Ended Months Ended
March 31, 1999 March 31, 1999
-------------- --------------
Income (loss) available to common
shareholders used in basic
earnings per share $ 3,560 $ 84,504
-------------- --------------
Income available to common shareholders
after assumed conversions of
dilutive securities 3,560 $ 84,504
============== ==============
Weighted average number of common
shares used in basic earnings
per share 19,065,862 18,909,975
Effect of dilutive securities:
Stock Options 50,000 50,000
Stock Warrants 688,075 688,075
Weighted average number of common -------------- --------------
shares and dilutive potential
common shares Used in dilutive
earnings per share 19,803,937 19,648,050
=============== ==============
Options on 50,000 shares of common stock and warrants on 688,075 of common
stock were not included in computing diluted loss per share for the three
and nine months ended March 31, 2000 because their effects were antidilutive.
<PAGE>
-8-
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 practice which specializes in methods and
systems improvements, productivity measurement, cost identification and
organizational analysis for all inpatient and outpatient hospital
departments, as well as customized software solutions for specific
hospital departmental requirements.
As of March 31, 2000, the Company has installed its EDNet product in 25
clients, 15 of which have been upgraded to the EDNet32 Windows version.
In addition, the Company is in the process of upgrading 5 additional
current clients and has received a purchase order from a new client.
Three current clients are also adding additional site licenses at
satellite facilities, bringing the total number of sites using the EDNet
product to 29. All sites have annual maintenance contracts for continued
support and updates. It is anticipated that most, if not all of these
sites, will renew this maintenance on an annual basis.
Results of Operations
For the three months ended March 31, 2000 compared with the three months
ended March 31, 1999.
During the three-month period ended March 31, 2000, the Company had
revenues of $170,992, which represented a 21 percent decrease from
$216,700 for the corresponding period of the prior fiscal year. The 2000
sales consisted of:
3-month % of 3-month % of Change %
ended sales ended sales in sales Change
3/31/00 3/31/99 of sales
--------- ----- -------- ---- -------- --------
Emergency $ 141,652 83% $148,942 69% ($ 7,290) ( 5%)
Respiratory $ 0 0% $ 31,157 14% ($31,157) (100%)
Consulting $ 29,340 17% $ 36,601 17% ($ 7,261) (20%)
--------- --- -------- --- -------- ----
$170,992 100% $216,700 100% ($45,708) (21%)
======== === ======== === ======== ====
The Company exited the respiratory software market on December 31, 1999
and the sales decrease reflects the termination of all respiratory revenue
as of that date as well as modest declines in consulting and emergency
department revenue.
Cost of revenues decreased 6% to $65,975 for the three-month period ended
March 31, 2000 from $69,943 for the corresponding period of the prior
fiscal year. This mirrors the modest decline in sales.
<PAGE>
-7-
Selling, general, and administrative costs decreased 19% to $73,272 for
the three-month period ended March 31, 2000 from $90,645 for the
corresponding period of the previous fiscal year. The Company continues
to tightly control administrative costs.
Software development costs increased 3% to $52,661 for the three-month
period ended March 31, 2000 from $50,909 for the corresponding period of
the prior fiscal year. The company has elected not to capitalize any of
its development expenses.
The Company had operating loss of ($22,202) for the three-month period
ended March 31, 2000 compared with an operating income of $5,212 for the
corresponding period of the previous year. Decreased expenses did not
entirely offset the decline in sales.
Interest expense declined to $1,290 for the three-month period ended March
31, 2000 from $1,707 for the corresponding period of the prior year.
The Company's net income per share decreased to ($.00) as compared with
net income of $0.00 for the corresponding period of the previous year.
For the nine months ended March 31, 2000 compared with the nine months
ended March 31, 1999.
During the nine month period ended March 31, 2000 the Company had revenues
of $622,404 which represents a 9% decline from $683,359 for the
corresponding period of the prior fiscal year. The 2000 sales consisted of:
9-month % of 9-month % of Change
ended sales ended sales in sales % Change
3/31/00 3/31/99
-------- ----- -------- ---- -------- ---------
Emergency $474,525 77% $446,941 65% $ 27,584 6%
Respiratory $ 27,053 4% $ 93,035 14% $(68,982) (72%)
Consulting $120,826 19% $143,383 21% $(22,557) (16%)
-------- ---- -------- --- -------- ----
$622,404 100% $683,359 100% $(63,955) ( 9%)
======== === ======== ==== ======== ====
This decrease in sales was due to the continuing decline in respiratory
maintenance revenue which was not entirely offset by the increase in
Emergency Department revenue. Consulting revenue also declined due to the
timing of completion of existing products.
Cost of revenues increased 9% to $240,146 for the nine-month period ended
March 31, 2000 from $220,554 for the corresponding period of the prior
fiscal year. This increase is due to the increased mix of consulting
revenue in total sales. Consulting has a lower gross margin than the sale
and installation of software.
Selling, general, and administrative costs decreased 5% to $227,557 for
the nine-month period ended March 31, 2000 from $238,975 for the
corresponding period of the previous fiscal year.
Software development costs increased 22% to $163,548 for the nine-month
period ended March 31, 2000 from $134,215 for the corresponding period of
the prior fiscal year. Development efforts are now focused on product
enhancements to meet customer requirements.
<PAGE>
-8-
The Company incurred an operating loss of ($8,847) for the nine-month
period ended March 31, 2000 compared with an operating gain of $89,615 for
the corresponding period of the previous year. Lower overall sales totals
and higher expense levels contributed to the decline in operating earnings.
Interest expense decreased to $4,951 for the nine-month period ended March
31, 2000 from $5,867 for the corresponding period of the prior year. This
decline reflects the improved working capital position of the Company as
well as debt reduction.
The Company's net income per share was ($0.00) as compared with $0.01 for
the corresponding period of the previous year.
Liquidity and Capital Resources
The Company's primary needs for capital are to fund an increased sales
effort and to keep the software products current in the marketplace. For
the nine months ended March 31, 2000 net cash used in operating activities
was $6,598 as compared to those same activities providing $24,331 in the
nine months ended March 31, 1999, a decrease of $30,929. The Company has
sufficient capital for its current operations. However, in order to
significantly expand sales, the Company will require additional cash from
an external source. At March 31, 2000, the Company had total assets of
$195,104 and shareholders equity of ($221,541) compared to total assets of
$195,062 and shareholders equity of ($207,860) at June 30, 1999, the
Company's fiscal year end. The 7% reduction in shareholders equity is
primarily the result of operations. The company did not capitalize any
software costs during the nine months ended March 31, 2000 nor did it
capitalize any such costs during the prior year. The Company's cash
position decreased by $12,805 during the nine month period ended March 31,
2000 to $19,234 down from $32,039 as of June 30, 1999. The Company had a
working capital deficit of ($191,671) at of March 31, 2000 as compared to
($180,257) at of June 30, 1999, a decline of 6%.
Inflation has not had a significant impact on the Company's operations.
<PAGE>
-9-
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
<PAGE>
-10-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: May 15, 2000 TENET INFORMATION
SERVICES, INC.
/s/ Jerald L. Nelson
-------------------------
Jerald L. Nelson
Chairman of The Board
<PAGE>
-11-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: : May 15, 2000 TENET INFORMATION
SERVICES, INC.
Jerald L. Nelson
Chairman of the Board
-12-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AS OF MARCH 31, 2000, AND STATEMENTS OF OPERATIONS FOR THE NINE MONTHS
ENDED MARCH 31, 2000, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-END> MAR-31-2000
<CASH> 19,234
<SECURITIES> 0
<RECEIVABLES> 161,804
<ALLOWANCES> 7,500
<INVENTORY> 0
<CURRENT-ASSETS> 173,538
<PP&E> 149,137
<DEPRECIATION> (128,996)
<TOTAL-ASSETS> 195,104
<CURRENT-LIABILITIES> 365,209
<BONDS> 0
0
0
<COMMON> 19,066
<OTHER-SE> (240,607)
<TOTAL-LIABILITY-AND-EQUITY> 195,104
<SALES> 622,404
<TOTAL-REVENUES> 622,404
<CGS> 240,146
<TOTAL-COSTS> 631,251
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,951
<INCOME-PRETAX> (13,680)
<INCOME-TAX> 0
<INCOME-CONTINUING> (8,847)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (13,680)
<EPS-BASIC> (0.00)
<EPS-DILUTED> (0.00)
</TABLE>
