UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended Commission File Number
------------------------------ ----------------------
September 30, 2001 0-11476
HEALTHWATCH, INC.
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(Exact Name of Small Business Issuer as Specified in Its Charter)
Minnesota 84-0916792
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
1100 Johnson Ferry Road, Suite 670, Atlanta, GA 30342
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(Address of Principal Executive Offices)
(404) 256-0083
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(Issuer's Telephone Number, Including Area Code)
N/A
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(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. Yes X No
--- ---
Number of registrant's common shares outstanding at October 31, 2001
4,460,575
---------
Transitional Small Business Disclosure Format (check one)
Yes No X
--- ---
PART I.
FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
HEALTHWATCH, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 2001
(UNAUDITED)
ASSETS
CURRENT ASSETS
Cash $ 42,492
Accounts receivable 191,523
Inventory 23,261
Net assets of discontinued subsidiary 321,761
Other current assets 133,227
-------------
TOTAL CURRENT ASSETS 712,264
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OTHER ASSETS
Property and equipment, net of accumulated depreciation of $465,443 148,829
Intangible assets, net of accumulated amortization of $373,141 6,462,858
-------------
TOTAL OTHER ASSETS 6,611,687
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TOTAL ASSETS $ 7,323,951
=============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 1,133,063
Accrued payroll and payroll taxes 29,796
Debentures payable 25,000
Deferred rent obligation 33,246
Note payable to a bank 194,227
Income taxes payable 43,612
-------------
TOTAL LIABILITIES (ALL CURRENT) 1,458,944
-------------
SHAREHOLDERS' EQUITY
Cumulative preferred stock, 15,000,000 shares authorized,
$.05 par value; $11,132,300 liquidation preference:
Series P, 66,886 shares issued and outstanding 3,344
Series C, 4,000 shares issued and outstanding 200
Series D, 73,880 shares issued and outstanding 3,695
Common stock, $.05 par value; 50,000,000 shares authorized:
2,713,884 shares issued and outstanding 135,695
1,743,064 shares to be issued 87,153
Additional paid-in capital 41,777,442
Unearned compensation (88,091)
Accumulated deficit (36,054,431)
TOTAL SHAREHOLDERS' EQUITY 5,865,007
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 7,323,951
=============
The accompanying notes are an integral part of these consolidated financial
statements.
2
HEALTHWATCH, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000
2001 2000
---- ----
SALES $ 330,552 $ 104,266
COST OF SALES 17,503 22,576
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GROSS PROFIT 313,049 81,690
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OPERATING EXPENSES
Selling, general and administrative 221,798 915,340
Depreciation and amortization 388,154 57,709
Research and development 39,732 38,480
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Total operating expenses 649,684 1,011,529
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OPERATING LOSS (336,635) (929,839)
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OTHER INCOME (EXPENSE)
Loss from investment in Halis, Inc. -- (118,660)
Realized gain on marketable securities -- 150
Interest income 68 58,104
Interest expense (2,380) (3,614)
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Total other income (expense) (2,312) (64,020)
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LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES (338,947) (993,859)
INCOME TAX BENEFIT 20,027 --
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LOSS FROM CONTINUING OPERATIONS (318,920) (993,859)
DISCONTINUED OPERATIONS (NET OF INCOME TAX OF $20,027) 30,040 --
------------- ------------
NET LOSS $ (288,880) $ (993,859)
============= ============
BASIC AND DILUTED NET LOSS PER COMMON SHARE
Loss from continuing operations $ (318,920) $ (993,859)
Less preferred stock dividends (undeclared) 222,646 223,521
Less amortization of beneficial conversion option on Series D and
Series P preferred stock
763,095 1,495,845
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Loss from continuing operations available to common shareholders (1,304,661) (2,713,225)
Discontinued operations 30,040 --
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NET LOSS AVAILABLE TO COMMON SHAREHOLDERS $ (1,274,621) $ (2,713,225)
------------- ------------
NET LOSS PER COMMON SHARE, BASIC AND DILUTED
Loss from continuing operations $ (0.29) $ (1.27)
Discontinued operations, net of income tax -- --
------------- ------------
Net loss $ (0.29) $ (1.27)
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WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 4,455,124 2,142,751
============= ============
The accompanying notes are an integral part of these consolidated financial
statements.
3
HEALTHWATCH, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000
2001 2000
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(288,880) $(993,859)
Adjustments:
Depreciation 15,013 1,716
Amortization 373,141 55,993
Loss from investment in Halis, Inc. -- 118,660
Gain on sale of marketable securities -- (150)
Change in net assets of discontinued subsidiary 515 --
Stock options issued for services 10,571 --
Changes in assets and liabilities:
Accounts receivable (156,664) (16,926)
Inventory 4,282 3,410
Other current assets 32,253 26,441
Other assets -- (1,366)
Accounts payable and accrued expenses (58,143) 68,347
Deferred revenue and customer deposits -- (1,225)
--------- ---------
Total adjustments 220,968 254,900
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Net cash used in operating activities (67,912) (738,959)
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CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment -- (57,680)
Proceeds from sale of marketable securities -- 794,745
Decrease in due from Halis, Inc. -- 146,670
Purchase of intangible assets, capitalized MERAD
technology costs and other -- (97,723)
--------- ---------
Net cash provided in investing activities -- 786,012
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CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on note payable to a bank (24,200) --
--------- ---------
Net cash used by financing activities (24,200) --
--------- ---------
NET INCREASE (DECREASE) IN CASH (92,112) 47,053
CASH, BEGINNING OF PERIOD 134,604 16,264
--------- ---------
CASH, END OF PERIOD $ 42,492 $ 63,317
========= =========
The accompanying notes are an integral part of these consolidated financial
statements.
4
HEALTHWATCH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2001
(UNAUDITED)
PRINCIPLES OF PRESENTATION
The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with the instructions to Form 10-QSB. Accordingly, they do not include all
of the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) necessary for a fair
presentation of the Company's financial position as of September 30, 2001, and
its results of operations and cash flows for the three months then ended have
been included. However, operating results for the interim periods noted are not
necessarily indicative of the results that may be expected for the year ending
June 30, 2002. This report should be read in conjunction with the Company's
financial statements and notes thereto contained in the Company's annual report
on Form 10-KSB for the year ended June 30, 2001.
ORGANIZATION AND NATURE OF BUSINESS
HealthWatch, Inc. ("HealthWatch") and subsidiaries (collectively the "Company")
was founded in 1983 and while continuing to be a supplier of parts and services
for noninvasive vascular diagnostic medical instruments to hospitals and medical
clinics throughout the United States, continues to evolve into primarily a
software information technology ("IT") company. The Company's virtual software
application utility (the "MERAD Technology") utilizes an advanced multi-media
object and relational database which creates knowledge objects that can be used
and reused in virtually unlimited numbers of combinations to provide efficient
applications that can be accessed in both an Internet and Intranet environment.
Headquartered in Atlanta, Georgia, HealthWatch has research and development,
marketing, sales and support capabilities in the healthcare IT sector.
The Company's objective is to become a leading provider of enterprise software
applications to process and manage transactions for physician offices,
hospitals, outpatient clinics, and other healthcare providers. As part of this
plan, the Company will offer and market an enterprise software solution, known
as the Healthcare Enterprise System (the "HES System"). The HES System uses
proprietary technology to distribute, in a compressed digital format, one system
that includes over 30 integrated applications for the management of a healthcare
enterprise's resources, patient data, clinical data, and finances. The HES
System was designed and built using the Company's software application utility,
the "MERAD Technology".
5
INTANGIBLE ASSETS
Intangible assets are being amortized over five years using the straight-line
method.
LONG-LIVED ASSETS
HealthWatch evaluates the carrying value of long-lived assets, including
intangibles, whenever events or changes in circumstances indicate that the
carrying value of the asset may be impaired. An impairment loss is recognized
when estimated undiscounted future cash flows expected to result from the use of
the asset, including disposition, is less than the carrying value of the asset.
If such assets are considered to be impaired, the impairment to be recognized is
measured by the amount by which the carrying value exceeds the fair value of the
assets, as measured by discounted cash flows over the remaining life of the
assets.
SIGNIFICANT ESTIMATES
Management has estimated the undiscounted future cash flows that are expected to
result from the use of its technology. These estimates are based on current
letters of intent and anticipated future sales. Achieving these estimates
depends on the Company's success in implementing its sales plan and penetrating
the market with its available resources. Management's estimates of projected
cash flows are subject to risks and uncertainties of change affecting the
recoverability of the Company's intangible assets. Although management has made
its best estimate of these factors based on current conditions and information,
it is reasonably possible that changes could occur in the near term which could
adversely affect management's estimate of net cash flows expected to be
generated from its technology and the need for asset impairment write-downs. As
a result, the carrying amount of the Company's intangible assets of
approximately $6.5 million may be reduced materially in the near term.
REVENUE RECOGNITION
Revenue consists of software licensing fees, product and supply sales,
consulting services, and third party claims processing fees. The Company
recognizes revenue from product sales at the time ownership transfers to the
customer, principally at shipment. Revenues from licensing agreements are
recognized after shipment of the product and fulfillment of acceptance terms,
provided no significant obligations remain and collection of resulting
receivables are deemed probable. Service revenues are recognized when the
services are performed. Claims processing fees are recognized monthly as
services are performed, with fees computed based on a percent premium or a fee
per participant.
6
NET LOSS PER SHARE
Basic loss per share is calculated as net loss available to common shareholders
divided by the weighted average number of common shares outstanding for the
period. Diluted earnings per share reflects the potential dilution that could
occur from common shares issuable through stock options, stock warrants and
convertible debt and stock. As the Company's stock options, stock warrants and
convertible debt and stock are antidilutive for all periods presented, dilutive
loss per share is the same as basic loss per share.
INCOME TAXES
Deferred income tax assets and liabilities are recognized for the estimated tax
effects of temporary differences between the financial reporting and tax
reporting bases of assets and liabilities and for loss carryforwards based on
enacted tax laws and rates. A valuation allowance is used to eliminate deferred
income tax assets to the amount that is more likely than not to be utilized.
DEBENTURES PAYABLE
As of September 30, 2001, the Company had outstanding debentures with principal
totaling $25,000. The debentures accrue interest at an annual rate of 10%,
payable quarterly. The debentures matured on March 1, 1998, and are currently in
default as to the payment of principal and past due interest. The debentures,
including unpaid accrued interest, could be converted, at the option of the
holder, into shares of the Company's common stock. As of September 30, 2001,
$16,334 in accrued but unpaid interest was outstanding on the debentures. The
Company is attempting to reach an agreement with the remaining debenture holder
in an effort to resolve the amounts outstanding or otherwise bring the
debentures out of their default status.
SUBSEQUENT EVENT
On October 9, 2001, the Company sold its claims processing subsidiary, ABAS, to
a company controlled by the President of ABAS. The sales agreement specifies a
maximum purchase price of $1,320,000. This purchase price consists of $265,000
paid at closing, $55,000 to be paid on or before June 1, 2002, and profit
sharing revenues of $1,000,000, of which $465,000 is guaranteed through a
promissory note. The agreement also includes a marketing and administrative
services agreement to jointly pursue certain new technology based services and
share in revenues. The sale resulted in an estimated pre-tax gain of
approximately $585,000 ($351,000 after estimated taxes).
The following is a summary of operations of ABAS included in the consolidated
financial statements of HealthWatch for the three months ended September 30,
2001 and 2000:
2001 2000
---- ----
Sales $1,115,979 $ --
Operating expenses 1,060,232 --
---------- -------
Operating income 55,747 --
---------- -------
Interest expense (5,680) --
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Net income $ 50,067 $ --
========== =======
7
Assets and liabilities of ABAS at September 30, 2001 are summarized as follows:
Cash $113,251
Restricted cash 3,056
Receivables 219,236
Deferred income taxes 45,000
Other current assets 79,623
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Total current assets 460,166
Property and equipment, net 176,560
Other assets 17,722
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Total assets $654,448
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Accounts payable and accrued expenses $107,181
Deferred rent obligation 66,230
Capital lease obligations - current 56,979
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Total current liabilities 230,390
Capital lease obligations - long term 102,297
--------
Total liabilities $332,687
========
8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
Forward Looking Statements
The following discussion of HealthWatch's financial condition and results of
operations contains forward looking statements within the meaning of Section 27A
of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act
of 1934, which are intended to be covered by the safe harbors created thereby.
These statements include the plans and objectives of HealthWatch for future
operations. The forward looking statements included herein are based on current
expectations that involve numerous risks and uncertainties. HealthWatch's plans
and objectives are based on certain assumptions including, but not limited to,
competitive conditions within the healthcare industry will not change materially
or adversely and that there will be no material adverse change in HealthWatch's
operations or business. Assumptions relating to the foregoing involve judgments
with respect to, among other things, future economic, competitive and market
conditions, as well as future business decisions, all of which are difficult or
impossible to predict accurately and many of which are beyond HealthWatch's
control. Although HealthWatch believes that the assumptions underlying the
forward looking statements included herein are reasonable, the inclusion of such
information should not be regarded as a representation by HealthWatch, or any
other person, that the objectives and plans of HealthWatch will be achieved.
Financial Condition
Total assets at September 30, 2001 decreased $347,752 to $7,323,951 from
$7,671,703 at June 30, 2001. The decrease is primarily due to the amortization
of intangibles of $373,141, a reduction of $92,112 in cash used to reduce
current liabilities, offset by an increase in accounts receivables of $156,664.
Current liabilities at September 30, 2001 decreased $69,443 to $1,458,944 from
$1,528,387 at June 30, 2001. The decrease is primarily due to the repayment of
current liabilities. Shareholders' equity at September 30, 2001 decreased
$278,309 to $5,865,007 from $6,143,316 at June 30, 2001. This decrease is
primarily due to the net loss for the three months ended September 30, 2001 of
$288,880.
Results of Operations
Three months ended September 30, 2001 compared to
three months ended September 30, 2000
Revenues increased $226,286, or 217% to $330,552 in the first quarter ended
September 30, 2001 from $104,266 during the same period in 2000. The increase
results from licensing revenue of the Company's HES System.
Cost of products sold decreased $5,073 or 22.5% to $17,503 in the first quarter
ended September 30, 2001 from $22,576 during the same period in 2000. The
decrease is primarily due to the continued shift from product sales to service
and support at Healthwatch Technologies.
Gross margins increased to $313,049, 94.7%, in the first quarter ended September
30, 2001 from
9
$81,690, 78.3%, during the same period in 2000. Higher gross margins were
achieved from the revenue generated from the HES System and the continued shift
from product sales to service and support at Healthwatch Technologies.
Selling, general and administrative expenses decreased $693,542 or 75.8% to
$221,798 in the first quarter ended September 30, 2001 from $915,340 during the
same period in 2000. This decrease was primarily due to a decrease in
compensation expense, the discontinuance of payments to Halis under the business
collaboration agreement subsequent to the merger, and general reductions in
operating expenses.
Research and development expenses remained substantially the same at $39,732 in
the first quarter ended September 30, 2001 as compared to $38,480 during the
same period in 2000.
Depreciation and amortization increased $330,445 to $388,154 in the first
quarter ended September 30, 2001 from $57,709 during the same period in 2000.
The increase is primarily the result of amortization expense of $300,162 related
to intangible assets acquired in the Halis merger which was effective May 31,
2001.
Equity loss from investment in Halis decreased $118,660 due to the consummation
of the Halis merger.
Interest income decreased $58,036 to $68 in the first quarter ended September
30, 2001 as compared to $58,104 during the same period in 2000. The decrease is
due to the sale of Marketable Securities used for working capital purposes.
Interest expense decreased $1,234 to $2,380 in the first quarter ended September
30, 2001 as compared to $3,614 during the same period in 2000. The decrease is
due to margin interest paid in the first quarter of 2000.
Liquidity and Capital Resources
At September 30, 2001, HealthWatch had a cash balance of $42,492. During the
three months ended September 30, 2001, operating activities consumed $67,912 of
cash as compared to $738,959 for the same period in 2000. The decrease in cash
used in operations is primarily the result of lower expenses, including the
discontinuance of payments to Halis under the business collaboration agreement
subsequent to the merger.
There were no cash investing activities during the three months ended September
30, 2001.
Financing activities used $24,200 cash during the three months ended September
30, 2001. In the first quarter 2001, the Company made principal payments on the
note payable to a bank.
The Company has begun to implement its business plan. Currently, HealthWatch
does not have any material commitments outstanding for capital expenditures and
does not anticipate making any material capital expenditures in the short term.
HealthWatch is not currently generating positive cash flow from its operations,
and does not currently have liquid assets necessary to sustain operations over
the next twelve months. Management believes that it will be able to
10
provide the necessary operating capital from sales of its products and services.
However, if HealthWatch is unable to generate sufficient cash flow from its
business it will be necessary to seek additional equity or debt financing. There
can be no assurance that the Company will be successful in obtaining additional
financing under acceptable terms, if at all.
11
PART II.
OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
During the quarter ended September 30, 2001, the Company issued 3,571 shares of
common stock as a result of the conversion of 125 shares of Series D preferred
stock.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
On March 1, 1998, $580,000 principal amount of the Company's 10% secured
convertible debentures ("Debentures") were due and payable. The Company was
unable to pay the Debentures in accordance with their terms and the Company
obtained no further extension of the maturity date from the holders. During
fiscal 1999, $100,000 in principal of the Debentures was paid to the holders
thereof. In January and February 2000, the Debenture holders converted $455,000
of their Debentures and related accrued interest of $139,357 into 316,990 shares
of common stock of the Company. As of September 30, 2001, a principal balance of
$25,000 remains outstanding.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of the Company's shareholders during
the first quarter ended September 30, 2001.
12
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS. The following exhibits are filed with or incorporated by
reference into this report:
2.1 Agreement and Plan of Merger by and among Halis, Inc., HealthWatch
Merger Sub, Inc. and HealthWatch, Inc. dated as of June 29, 2000 (1).
2.2 Amendment to the Agreement and Plan of Merger dated as of September
29, 2000 (1).
2.3 Letter of Intent between HealthWatch, Inc. and Halis, Inc. dated March
8, 2000 (1).
2.4 Amendment to the Financing Option between HealthWatch, Inc. and Halis,
Inc. dated July 28, 2000 (1).
2.5 Second Amendment to the Agreement and Plan of Merger, dated as of
January 31, 2001 (1).
3.1 Articles of Incorporation of HealthWatch, Inc., dated June 10, 1983
(1).
3.2 Certificate of Amendment of Articles of Incorporation of HealthWatch,
Inc., dated October 20, 1987(1)
3.3 Articles of Amendment of Articles of Incorporation of HealthWatch,
Inc., dated December 5, 1989 (1).
3.4 Articles of Amendment of Articles of Incorporation of HealthWatch,
Inc., dated December 8, 1999 (1).
3.5 Bylaws of HealthWatch, Inc. (1).
3.13 Certification of Designation, Preferences, Rights and Limitations of
the 6% Series A Convertible Preferred Stock of HealthWatch, Inc. dated
June 9, 1998 (1).
3.14 Amended and Restated Certification of Designation, Preferences, Rights
and Limitations of the Series P Preferred Stock of HealthWatch, Inc.
dated March 22, 2000 (1).
3.15 Certification of Designation, Preferences, Rights and Limitations of
the Series C 8% Convertible Preferred Stock of HealthWatch, Inc. dated
March 20, 2000 (1).
3.16 Certification of Designation, Preferences, Rights and Limitations of
the Series D 8% Convertible Preferred Stock of HealthWatch, Inc. dated
March 20, 2000 (1).
4.1 Specimen form of the Company's Common Stock certificate (2)
4.8 Subscription and Purchase Agreement dated as of the 14th day of August
1992 between the Company and the Purchasers of the Company's 10%
convertible senior debentures due 1997 (including as an appendix
thereto the form of the debenture certificate) (3)
10.1 Business Collaboration Agreement dated as of October 10, 1997 between
HealthWatch, Inc. and Halis, Inc. (1)
10.6 Form of Warrant Certificate of HealthWatch, Inc. (1)
10.8 Amended and Restated Agency Agreement between Commonwealth Associates,
L.P. and HealthWatch, Inc. dated February 7, 2000 (1).
10.9 HealthWatch, Inc. 2000 Stock Option Plan, adopted as of May 8, 2000,
approved by HealthWatch stockholders July 14 2000 (1).
10.10 Form of Stock Option Agreement (1).
10.11 Amendment to the Business Collaboration Agreement dated September 20,
2000 between Halis, Inc. and HealthWatch, Inc. (1)
10.12 Finders Agreement between HealthWatch, Inc. and Commonwealth
Associates, L.P., dated March 21, 2000 (1)
21.1 Subsidiaries of HealthWatch, Inc. (1).
13
(b) REPORTS ON FORM 8-K. The following reports on Form 8-K were filed
during the quarter ended September 30, 2001.
None.
_________________________
(1) Incorporated herein by reference to the Company's Registration
Statement on Form S-4, as amended, originally filed on October 24,
2000 ( File No. 333-48546).
(2) Incorporated herein by reference to Registration Statement on Form
S-18 (File No. 2-85688D).
(3) Incorporated herein by reference to Registration Statement on Form
SB-2 (File No. 33-73462).
14
SIGNATURES
In accordance with the Exchange Act, the registrant caused this report
to be signed by the undersigned, thereunto duly authorized.
HEALTHWATCH, INC.
Date: November 8, 2001 /s/ Paul W. Harrison
-----------------------
Paul W. Harrison
Chairman, President and
Chief Executive Officer
Date: November 8, 2001 /s/ Thomas C. Ridenour
---------------------------
Chief Financial Officer and
Principal Accounting Officer
15
EXHIBIT INDEX
Number Description
------ -----------
2.1 Agreement and Plan of Merger by and among Halis, Inc., HealthWatch
Merger Sub, Inc. and HealthWatch, Inc. dated as of June 29, 2000 (1).
2.2 Amendment to the Agreement and Plan of Merger dated as of September
29, 2000 (1).
2.3 Letter of Intent between HealthWatch, Inc. and Halis, Inc. dated March
8, 2000 (1).
2.4 Amendment to the Financing Option between HealthWatch, Inc. and Halis,
Inc. dated July 28, 2000 (1).
2.5 Second Amendment to the Agreement and Plan of Merger, dated as of
January 31, 2001 (1).
2.6 Third Amendment to the Agreement and Plan of Merger, dated as of
February 16, 2001 (1).
2.7 Fourth Amendment to the Agreement and Plan of Merger, dated as of
March 28, 2001 (1).
2.8 Fifth Amendment to the Agreement and Plan of Merger, dated as of April
26, 2001 (1).
3.1 Articles of Incorporation of HealthWatch, Inc., dated June 10, 1983
(1).
3.2 Certificate of Amendment of Articles of Incorporation of HealthWatch,
Inc., dated October 20, 1987(1)
3.3 Articles of Amendment of Articles of Incorporation of HealthWatch,
Inc., dated December 5, 1989 (1).
3.4 Articles of Amendment of Articles of Incorporation of HealthWatch,
Inc., dated December 8, 1999 (1).
3.5 Bylaws of HealthWatch, Inc. (1).
3.13 Certification of Designation, Preferences, Rights and Limitations of
the 6% Series A Convertible Preferred Stock of HealthWatch, Inc. dated
June 9, 1998 (1).
3.14 Amended and Restated Certification of Designation, Preferences, Rights
and Limitations of the Series P Preferred Stock of HealthWatch, Inc.
dated March 22, 2000 (1).
3.15 Certification of Designation, Preferences, Rights and Limitations of
the Series C 8% Convertible Preferred Stock of HealthWatch, Inc. dated
March 20, 2000 (1).
3.16 Certification of Designation, Preferences, Rights and Limitations of
the Series D 8% Convertible Preferred Stock of HealthWatch, Inc. dated
March 20, 2000 (1).
4.1 Specimen form of the Company's Common Stock certificate (2)
4.8 Subscription and Purchase Agreement dated as of the 14th day of August
1992 between the Company and the Purchasers of the Company's 10%
convertible senior debentures due 1997 (including as an appendix
thereto the form of the debenture certificate) (3)
10.1 Business Collaboration Agreement dated as of October 10, 1997 between
HealthWatch, Inc. and Halis, Inc. (1)
10.6 Form of Warrant Certificate of HealthWatch, Inc. (1)
10.8 Amended and Restated Agency Agreement between Commonwealth Associates,
L.P. and HealthWatch, Inc. dated February 7, 2000 (1).
10.9 HealthWatch, Inc. 2000 Stock Option Plan, adopted as of May 8, 2000,
approved by HealthWatch stockholders July 14 2000 (1).
10.10 Form of Stock Option Agreement (1).
10.11 Amendment to the Business Collaboration Agreement dated September 20,
2000 between Halis, Inc. and HealthWatch, Inc. (1)
10.12 Finders Agreement between HealthWatch, Inc. and Commonwealth
Associates, L.P., dated March 21, 2000 (1)
16
21.1 Subsidiaries of HealthWatch, Inc. (1)
________________________
(1) Incorporated herein by reference to the Company's Registration
Statement on Form S-4, as amended, originally filed on October 24,
2000 ( File No. 333-48546).
(2) Incorporated herein by reference to Registration Statement on Form
S-18 (File No. 2-85688D).
(3) Incorporated herein by reference to Registration Statement on Form
SB-2 (File No. 33-73462).
17