UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) June 9, 2003 (May 23, 2003)
TENET INFORMATION SERVICES, INC.
(Exact Name of Registrant as Specified in Charter)
Utah 0-18113 87-0405405
(State or Other (Commission File (I.R.S. Employer Identification
Jurisdiction of Number) No.)
Incorporation)
53 West 9000 South
Sandy, Utah 84070
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (801) 568-0899
ITEM 2. Acquisition or Disposition of Assets
On May 23, 2003, Tenet Information Services, Inc. ("Tenet") sold all of the
assets of its Consulting Division to Delta Healthcare Consulting Group, Inc.
("Delta"), a company formed by Frank C. Overfelt, pursuant to the terms and
conditions of the Agreement For Sale and Purchase of Assets among Tenet
Information Services, Inc, Delta Healthcare Consulting Group, Inc., and Frank
Overfelt, dated May 23, 2003 (the "Purchase Agreement").
The disposed assets included (i) all equipment and hardware, furniture,
contracts and license agreements, customer listings and records, marketing
materials, and other assets primarily used in Tenet's Consulting Division and
(ii) a license of the IntelliChart software, all as more specifically defined in
the Purchase Agreement (the "Acquired Assets").
In exchange for the Acquired Assets, Delta delivered to Tenet (i) a $25,698.53
promissory whereby Delta will pay $2,000 per quarter beginning August 14, 2003
to Tenet, with interest at the rate of 8% per annum (the "Note") and (2) a
certificate of cancellation of indebtedness that cancelled and extinguished the
following obligations that Tenet owed to either Mr. Frank Overfelt or to
International HealthCare Consulting Group:
(1) All amounts payable by Tenet to Overfelt in connection with Overfelt's
employment with Tenet (including, without limitation, all compensation payable,
or reimbursements for expenses, or accrued benefits) for periods prior to April
1, 2003;
(2) Any amounts payable by Tenet to Overfelt in connection with Overfelt's
employment with Tenet for any period after May 2, 2003 and prior to May 23,
2003; and
(3) All indebtedness owed by Tenet to Overfelt and International
HealthCare Consulting Group (the outstanding principal amount of which is
approximately $54,029.95).
The Note is secured by (i) a pledge and security agreement of all shares of
Tenet's Common Stock held by Mr. Overfelt and certain children of Mr. Overfelt
and (ii) a guaranty by Mr. Overfelt.
Prior to the closing of the Purchase Agreement, Mr. Overfelt was an employee,
officer, and director of Tenet. Upon the closing on May 23, 2003, Mr. Overfelt
resigned as an employee, officer, and director of Tenet to devote his full-time
efforts to Delta.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(b) Pro forma Financial Information
The following pro forma condensed consolidated financial statements are
presented to illustrate the effects of the sale of the Consulting Division (the
"Disposition") on the historical financial position and operating results of
Tenet.
The following pro forma condensed consolidated balance sheet of Tenet at March
31, 2003 gives effect to the Disposition as if it had occurred on that date.
The pro forma condensed consolidated statements of operations for the nine
months ended March 31, 2002 and 2003 and for the years ended June 30, 2001 and
2002 give effect to the Disposition as if it had occurred as of the beginning of
the earliest period presented.
The pro forma condensed consolidated financial statements have been derived
from, and should be read in conjunction with, Tenet's historical consolidated
financial statements, including the accompanying notes. Those financial
statements are included in the Quarterly Report on Form 10-QSB for the nine
months ended March 31, 2003 and the Annual Report on Form 10-KSB for the year
ended June 30, 2002.
The pro forma condensed consolidated financial statements are presented only for
informational purposes. As a result, the accompanying pro forma condensed
consolidated financial statements are also not necessarily indicative of the
financial position or results of operations of Tenet that would have occurred
had the Disposition been consummated as of the dates indicated.
Tenet Information Services, Inc. and Subsidiary
Pro Forma Condensed Consolidated Balance Sheet
March 31, 2003
(Unaudited)
as of March 31, 2003
Pro forma
Tenet adjustments Pro forma
(a) (b) Tenet
-------------------------------------------------------------------------------------
ASSETS
Current Assets
Cash $ 116,265 $ -0- $ 116,265
Accounts receivable 138,236 (97,219) (1,2) 41,017
Work performed in excess of 42,216 (6,847) (3) 35,369
billings
-------------------------------------------------------------------------------------
Total current assets 296,717 (104,066) 192,651
Property and Equipment
Equipment 136,058 (22,950) (3) 113,108
Less: Accumulated depreciation (120,031) 17,157 (3) (102,874)
------------------------------------------------------------------------------------
Net property and equipment 16,027 (5,793) 10,234
Other Assets
Trademarks & deposits 3,575 (1,425) (3) 2,150
-------------------------------------------------------------------------------------
Total other assets 3,575 (1,425) 2,150
Total Assets $ 316,319 $ (111,284) $ 205,035
=====================================================================================
See accompanying Notes to Pro Forma Condensed Consolidated Balance Sheet
page 3
Tenet Information Services, Inc. and Subsidiary
Pro Forma Condensed Consolidated Balance Sheet
March 31, 2003
(Unaudited)
---------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 149,305 $ (89,168) (4,5) $ 60,137
Accrued expenses 83,366 (29,680) (4,5) 53,686
Accrued interest 10,649 -0- 10,649
Amounts due to related parties 48,071 (4,952) (5) 43,119
Deferred revenue 132,325 -0- 132,325
Billings in excess of costs and 106,635 (56,325) (4) 50,310
---------------------------------------------------------------------------------------
estimated earnings on
Uncompleted contracts
Total Liabilities 530,351 (180,125) 350,226
Stockholders' Equity
Common stock, $0.001par value, 19,336 -0- 19,336
Additional paid-in capital 4,853,896 -0- 4,853,896
Retained deficit (5,087,264) 68,841 (6) (5,018,423)
---------------------------------------------------------------------------------------
Total stockholders' equity (214,032) 68,841 (145,191)
---------------------------------------------------------------------------------------
Total Liabilities and Stockholders' $ 316,319 $ (111,284) $ 205,035
Equity
=======================================================================================
See accompanying Notes to Pro Forma Condensed Consolidated Balance Sheet
page 4
Tenet Information Services, Inc. and Subsidiary
Notes To Pro Forma Condensed Consolidated Balance Sheet
As of March 31, 2003
(Unaudited)
(a) Reflects Tenet's historical financial position at March 31, 2003.
(b) Pro forma adjustments to record the Disposition as of March 31, 2003
reflect:
(1) consideration paid by Delta to Tenet in the form of a note
receivable in the amount of $27,500;
(2) the exclusion of $124,719 in receivables related to the Consulting
Business. The receivables were collected by Tenet before the
consummation of the transaction to sell the assets to Delta;
(3) the exclusion of various assets related to the Consulting
Business;
(4) the exclusion of various liabilities related to the Consulting
Business;
(5) consideration paid by Delta to Tenet in the form of debt
forgiveness of i) accounts payable of $38,551 of expenses owed by
Tenet to Overfelt, ii) accrued expenses of $10,527 of vacation and
compensation amounts owed by Tenet to Overfelt, and iii) amounts
due to related parties of $4,952 in a note payable owed by Tenet
to a company owned by Overfelt for a total forgiveness of debt by
Delta of $54,030;
(6) the gain recognized on the consummation of the transactions.
page 5
Tenet Information Services, Inc. and Subsidiary
Pro Forma Condensed Consolidated Statements of Operations
For the Year Ended June 30, 2002
(Unaudited)
Pro forma
Tenet adjustments Pro forma
(a) (b) Tenet
-----------------------------------------------------------------------------------
Revenue $ 717,005 $ (249,463) $ 467,542
Expenses
Cost of Revenue 365,132 (139,927) 225,205
Selling, general, and 178,015 (196,163) (18,148)
administrative expenses
Software development 104,658 -0- 104,658
-----------------------------------------------------------------------------------
Total Expenses 647,805 (336,090) 311,715
-----------------------------------------------------------------------------------
Net Gain or Loss from Operations 69,200 86,627 155,827
Other Income / (Expense)
Interest expense (20,446) -0- (20,446)
Interest income 511 -0- 511
-----------------------------------------------------------------------------------
Total Other Income/(Expense) (19,935) -0- (19,935)
-----------------------------------------------------------------------------------
Loss before income taxes and 49,265 86,627 135,892
extraordinary item
Income taxes -0- -0- -0-
-----------------------------------------------------------------------------------
Loss before extraordinary item 49,265 86,627 135,892
Forgiveness of debt 21,625 -0- 21,625
-----------------------------------------------------------------------------------
Net income $ 70,890 $ 86,627 $ 157,517
===================================================================================
See accompanying Notes to Pro Forma Condensed Consolidated
Statement of Operations
page 6
Tenet Information Services, Inc. and Subsidiary
Pro Forma Condensed Consolidated Statements of Operations
For the Nine Months Ended March 31, 2003
(Unaudited)
Pro forma
Tenet adjustments Pro forma
(a) (b) Tenet
-----------------------------------------------------------------------------------
Revenue $ 663,061 $ (239,692) $ 423,369
Expenses
Cost of Revenue 355,002 (225,222) 129,780
Selling, general, and 204,207 (60,102) 144,105
administrative expenses
Software development 88,254 -0- 88,254
-----------------------------------------------------------------------------------
Total Expenses 647,463 (285,324) 362,139
-----------------------------------------------------------------------------------
Net Gain or Loss from Operations 15,598 45,632 61,230
Other Income / (Expense)
Interest expense (13,811) -0- (13,811)
Interest income -0- -0- -0-
-----------------------------------------------------------------------------------
Total Other Income/(Expense) (13,811) -0- (13,811)
-----------------------------------------------------------------------------------
Loss before income taxes and 1,787 45,632 47,419
extraordinary item
Income taxes -0- -0- -0-
-----------------------------------------------------------------------------------
Loss before extraordinary item 1,787 45,632 47,419
Forgiveness of debt -0- -0- -0-
-----------------------------------------------------------------------------------
Net income $ 1,787 $ 45,632 $ 47,419
===================================================================================
See accompanying Notes to Pro Forma Condensed Consolidated
Statement of Operations
page 7
Tenet Information Services, Inc. and Subsidiary
Notes To Pro Forma Condensed Consolidated Statements of Operations
For the Nine Months Ended March 31, 2003 and
the Year Ended June 30, 2002
(Unaudited)
(a) Reflects Tenet's historical operating results for the nine months
ended March 31, 2003 and for the year ended March 31, 2002.
(b) Pro forma adjustments to record the Disposition for the nine
months ended March 31, 2003 and for the year ended March 31, 2002.
(c) Exhibits
Exhibit Number Description
2.1 Agreement for Sale and Purchase of Assets among Tenet
Information Services, Inc., Delta Healthcare Consulting
Group, Inc., and Frank Overfelt, dated May 23, 2003.
10.1 Tenet Information Services, Inc. and Delta Healthcare
Consulting Group, Inc. Agreement Regarding IntelliChart,
dated effective May 23, 2003.
SIGNATURE
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 hereunto duly authorized.
TENET INFORMATION SERVICES, INC.
Date: June 9, 2003 /s/ Jerald L. Nelson
--------------------
Jerald L. Nelson
Corporate Treasurer and Chairman of the Board of
Directors