EXHIBIT 10.4


                              CONSULTING AGREEMENT


         This CONSULTING AGREEMENT ("Agreement") is made effective this 10th day
of October, 1997 by and between HealthWatch, Inc., a Minnesota corporation with
its principal offices located at 2445 Cades Way, Vista, California 92083 (the
"Company"), and Larry Fisher (the "Consultant").

                                    RECITALS

A. The Company desires to retain the services of Consultant as an independent
contractor in accordance with this Agreement.

B. The Consultant desires to render services for the Company as an independent
contractor in accordance with this Agreement.

                                    AGREEMENT

         In consideration of the above recitals and the promises set forth in
this Agreement, the parties agree as follows:

1. Consulting Services. During the "Term of Services" (which shall mean the
period of time described in Section 3 hereof), Consultant agrees to serve on the
Company's Board of Directors; assist the Company in raising working capital
through the sale of its securities; assist the Company in identifying businesses
to be acquired by the Company; assist the Company in acquiring businesses
identified by Consultant or others; work with the Company's management to
maximize management's performance and contributions to the Company; and provide
any other services agreed to by the parties (collectively, the "Services").
Consultant shall devote Consultant's best efforts in rendering the Services, it
being understood that Consultant is a full-time employee of HALIS, Inc.

2. Consideration for Services. As consideration for the Services, the Company
hereby grants Consultant a Nonstatutory Stock Option pursuant to the Company's
1995 Stock Option Plan to purchase up to 400,000 shares of the Company's Common
Stock at an exercise price of $0.53125 per share (the fair market value for the
Company's Common Stock on the date hereof), the terms of which option are set
forth in Schedule I hereto.

3. Term of Services. The Term of Services shall commence on October 10, 1997 and
end on December 31, 1998 (the "Termination Date"), unless earlier terminated or
extended by the parties pursuant to this Agreement.

4. Extension of Services. At any time before the Termination Date, the Company
and Consultant may agree to renew and extend the Term of Services for such
additional periods as the parties may agree.

5. Termination of Services. This Agreement and the Services may be terminated
before the Termination Date only as follows:

         (a) This Agreement and the Services shall automatically terminate upon
         the death or permanent disability of Consultant.

<PAGE>


         (b) This Agreement and the Services may terminate at any time upon
mutual agreement of the parties.

6. Relationship of Parties. Consultant is an independent contractor and not an
employee or agent of the Company.

7. Employment Taxes and Benefits. To the extent required under applicable law,
Consultant shall report as income all compensation received by Consultant
pursuant to this Agreement and pay all taxes due on such compensation.
Consultant is solely responsible for all federal, state and local taxes which
may be payable in connection with the Services or this Agreement.

8. Expenses. The Company will reimburse Consultant for reasonable out-of pocket
expenses, which have been approved by the Company and are incurred by Consultant
in rendering the Services. For all such expenses, Consultant shall furnish to
the Company statements, receipts and vouchers as and when required by and to the
reasonable satisfaction of the Company.

9. Indemnification. Consultant shall indemnify and hold harmless the Company and
its employees, officers, directors, representatives, and agents from any and all
claims and expenses (including court costs and reasonable fees of attorneys and
other professionals) arising from any obligation imposed on the Company to pay
any withholding taxes, social security, unemployment insurance, workers'
compensation insurance, disability insurance or similar items, including
interest and penalties thereon, in connection with any payments made to
Consultant pursuant to this Agreement.

10. Ownership of Creative Works. Consultant agrees to promptly disclose to the
Company in writing any invention, improvement, concept, design, work of
authorship, trademark, discovery or idea (whether patentable or not and
including those which may be subject to copyright protection) generated,
conceived, or reduced to practice by the Consultant alone or in conjunction with
others in connection with the Services (collectively, "Creative Works").
Consultant agrees that the Creative Works shall be considered a "work made for
hire" as defined in the Copyright Act at 17 U.S.C. Section 101. Consultant
agrees that all Creative Works are the exclusive property of the Company and
hereby assigns to the Company all rights in the Creative Works including,
without limitation, all patent, copyrights, trademark and trade secret rights
(collectively, "Intellectual Property Rights"). Consultant shall hereafter
execute such assignments and other documents, and take such other action as the
Company reasonably requests, without payment of additional consideration, as may
be necessary or advisable to convey full ownership to the Company of all
Intellectual Property Rights to the Creative Works and to protect the Company's
interest in the Creative Works.

Notwithstanding any provision herein to the contrary, this Agreement does not
apply to any invention or other Creative Works generated, conceived, or reduced
to practice by the Consultant alone or in conjunction with others in connection
with services which Consultant performs for others, including HALIS, Inc., for
which no equipment, supplies, facility, or trade secret information of the
Company was used and which was developed entirely on Consultant's own time, and
which does not relate directly to the business of the Company or to its actual
or demonstrably anticipated research or development, or which does not result
from any work performed by Consultant for the Company.

11. Confidential Information. Consultant acknowledge and agree that the Creative
Works and all other nonpublic information concerning the Company or its business
and disclosed to or developed by Consultant, are valuable trade secrets of the
Company and shall remain confidential (collectively, "Confidential
Information"). Consultant shall not use or disclose any Confidential Information
or copy or remove any

<PAGE>


records, documents or other materials from the premises of the Company, except
to the extent necessary for rendering the Services and with the Company's prior
consent.

12. Return of Confidential Information. At any time upon request by the Company,
Consultant shall (a) promptly return to the Company (or destroy if requested by
the Company) all items and materials which contain Confidential Information and
(b) certify in writing to the Company that all such items and materials in the
possession or control of Consultant and which contain Confidential Information
have been returned or destroyed.

13. Non-Solicitation Covenants. Consultant covenants that Consultant shall,
during the term of this Agreement, and for one year following the termination or
expiration of this Agreement, comply with the following separate and independent
covenants:

         (a) Consultant will not, without the prior written consent of the
         Company, either directly or indirectly, on Consultant's own behalf or
         in the service or on behalf of others, solicit, divert, or appropriate,
         or attempt to solicit, divert, or appropriate, to any competing
         enterprise, any person or entity that was a customer of the Company
         during the Term of this Agreement.

         (b) Consultant will not, without the Company's prior written consent,
         either directly or indirectly, on Consultant's own behalf or in the
         service or on behalf of others, solicit, divert, or hire away, or
         attempt to solicit, divert, or hire away, to any competing enterprise,
         any person employed by the Company or one of its affiliates, whether or
         not such employee is a full-time or a temporary employee of the Company
         or such affiliate and whether or not such employment is pursuant to
         written agreement and whether or not such employment is at will.

14. Remedies. In addition to any other remedies, the Company shall have a right
of injunctive relief for breach of Sections 11, 12 and 13 by Consultant. The
prevailing party in any action or claim under this Agreement shall have the
right to recover reasonable attorneys' fees and costs.

15. General. Each of the parties shall pay their own expenses incurred in the
preparation and negotiation of this Agreement. The provisions of Sections 9, 10,
11, 12, 13 and 14 above shall survive the expiration or termination of this
Agreement or any renewal of the term of this Agreement. Consultant may not
assign this Agreement or delegate the Services without the Company's prior
written consent. No amendment to this Agreement or waiver of the rights or
obligations of either party shall be effective unless in writing signed by the
parties. This Agreement is governed by the laws of the State of Georgia. If any
provision of this Agreement is held invalid or unenforceable by any court of
competent jurisdiction, the other provisions of this Agreement will remain in
full force and effect. Any provision of this Agreement held invalid or
unenforceable only in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable. Any notices, consents or other
communications pursuant to this Agreement must be in writing and delivered by
mail, courier or facsimile (with written confirmation of receipt) to the address
of the recipient party shown above (or to such other address provided by such
notice). This Agreement contains the entire agreement and understanding of the
parties concerning the subject matter of this Agreement. This Agreement may be
signed by facsimile and in counterparts.

<PAGE>


         IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.

                                           COMPANY

                                           HealthWatch, Inc.


                                           By:
                                              ----------------------------------
                                           Its:
                                               ---------------------------------


                                           CONSULTANT


                                           -------------------------------------
                                           Larry Fisher

<PAGE>


                                                                      SCHEDULE I

                                HEALTHWATCH, INC.
                       NONSTATUTORY STOCK OPTION AGREEMENT
                        UNDER THE 1995 STOCK OPTION PLAN


Between:

HEALTHWATCH, INC. (the "Company") and Larry Fisher (the "Consultant"), dated
October 10, 1997.


         The Company hereby grants to the Consultant an option (the "Option")
under the HealthWatch, Inc., 1995 Stock Option Plan (the "Plan") to purchase
400,000 shares (the "Shares") of the Company's common stock under the terms and
conditions set forth below. The terms and conditions applicable to the Option
are as follows:

         1. Nonstatutory Stock Option. The Option shall be a Nonstatutory Stock
Option, as defined in the Plan.

         2. Purchase Price - The purchase price of the stock is $0.53125 per
share which is not less than the Fair Market Value of the Shares.

         3. Period of Exercise - The Option will expire on the date (the
"Expiration Date") seven years from the date of this Agreement. The Option may
be exercised for up to, but not in excess of, the amounts of shares subject to
the Option specified below, based on the Consultant's number of months of
providing continuous services to the Company from the date hereof pursuant to
that certain Consulting Agreement between the Company and Consultant dated
October 10, 1997 (the "Consulting Agreement"). In applying the following
limitations, the amount of shares, if any, previously purchased by Consultant
shall be counted in determining the amount of shares the Consultant can purchase
at any time in accordance with said limitations. The Consultant may exercise the
Option in the amounts and in accordance with the conditions set forth below:

                  (a) At any time during the first 12 months of such continuous
         service, the Option may be exercised for up to 50,000 of the shares
         subject to the Option.

                  (b) After 12 months of such continuous service, the Option may
         be exercised for not in excess of 90,000 of the shares originally
         subject to the Option;

                  (c) After 36 months of such continuous service, the Option may
         be exercised for not in excess of 320,000 of the shares originally
         subject to the Option;

<PAGE>


                  (d) At the expiration of 48 months of such continuous service,
         the Option may be exercised at any time and from time to time within
         its terms in whole or in part, but it shall not be exercisable after
         the Expiration Date.

                  (e) Notwithstanding the foregoing, the extent to which the
         Option may be exercised shall be accelerated as follows in the event
         that any of the following shall occur:

                           (i) If the Company successfully raises at least
         $500,000 of additional working capital within twelve months of the date
         of this Agreement, the Option may be exercised for up to 190,000 of the
         shares originally subject to the Option plus any other shares otherwise
         subject to exercise pursuant to subparagraphs 3(a), (b) and (e) of this
         Agreement.

                           (ii) If the Company successfully raises $700,000 in
         addition to the $500,000 referred to in subparagraph 3(e)(i) hereof of
         additional working capital within twelve months of the date of this
         Agreement, the Option may be exercised for up to 40,000 of the shares
         originally subject to the Option plus any other shares otherwise
         subject to exercise pursuant to subparagraphs 3(a), (b) and (e) of this
         Agreement.

                           (iii) If the Company completes the acquisition by
         June 30, 1999 of other businesses which have in the aggregate annual
         revenues of at least $5,000,000, the Option may be exercised for up to
         40,000 of the shares originally subject to the Option plus any other
         shares otherwise subject to exercise pursuant to subparagraphs 3(a),
         (b), (c) and (e) of this Agreement.

                           (iv) If the Company completes the acquisition by June
         30, 2000 of other businesses which have in the aggregate annual
         revenues (including businesses which are part of the $5,000,000 amount
         referred to in subparagraph 3(e)(iii) hereof) of at least $15,000,000,
         the Option may be exercised for up to 40,000 of the shares originally
         subject to the Option plus any other shares otherwise subject to
         exercise pursuant to subparagraphs 3(a), (b), (c) and (e) of this
         Agreement.

         4. Transferability - This Option is not transferable except by will or
the laws of descent and distribution and may be exercised during the lifetime of
the Consultant only by the Consultant. If the Consultant dies, the Option may be
exercised (to the extent exercisable by the Consultant at the date of death) by
the legal representative of Consultant or by a person who acquired the right to
exercise such option by bequest or inheritance or by reason of the death of the
Consultant.

         5. Termination of Services - In the event that services of the
Consultant with the Company pursuant to the Consulting Agreement are terminated,
the Option may be exercised (to

<PAGE>


the extent exercisable at the date of termination) by the Consultant, but the
Option shall terminate with respect to any of the Shares not then exercisable.
Thereafter, the Option shall remain outstanding and may be exercised to the
extent exercisable at the date of termination in accordance with the terms of
the Option at any time prior to the Expiration Date.

         6. No Guarantee of Continued Service - This Agreement shall in no way
restrict the right of the Company to terminate the Consulting Agreement and
Consultant's services thereunder.

         7. Registration of Shares - The shares of the Company's common stock
issuable upon exercise of the Option shall, at the time of exercise of the
Option, be subject to an effective registration statement under the Securities
Act of 1933.

         8. Method of Exercise; Use of Company Stock - The Option may be
exercised, subject to the terms and conditions of this Agreement, by written
notice to the Company. The notice shall be in the form attached to this
Agreement and will be accompanied by payment (in such form as the Company may
specify) of the full purchase price of the shares to be issued, and in the event
of an exercise under the terms of paragraph 4 hereof, appropriate proof of the
right to exercise the Option. The Company will issue and deliver certificates
representing the number of shares purchased under the Option, registered in the
name of the Consultant (or other purchaser under paragraph 4 hereof) as soon as
practicable after receipt of the notice.

         When exercising this Option Consultant may make payment either in money
or, if approved by the Board of Directors, by tendering shares of the Company
Stock owned by the Consultant, or by a combination of the two. Where shares of
stock of the Company are employed to pay all or part of the exercise price, the
shares of said stock shall be valued at their Fair Market Value at the time of
payment.

         9. Withholding - In any case where withholding is required or advisable
under federal, state or local law in connection with any exercise by Consultant
hereunder, the Company is authorized to withhold appropriate amounts from
amounts payable to Consultant, or may require Consultant to remit to the Company
an amount equal to such appropriate amounts.

         Consultant acknowledges and understands that under the provisions of
the Internal Revenue Code as presently in effect, the Consultant will have
taxable compensation income at the date of exercise of the Option equal to the
difference between the purchase price under the Option and the then Fair Market
Value of the stock. Consultant specifically agrees that as a condition to
permitting exercise, the Company may require that appropriate arrangements for
withholding be made with the Consultant as provided above.

         10. Merger, Consolidation or Acceleration Event - The terms of this
Agreement are subject to modification upon the occurrence of certain events as
described in of the Plan.

         11. Incorporation of Plan - This Agreement is made pursuant to the
provisions of the Plan, which Plan is incorporated by reference herein. Terms
used herein shall have the meaning 

<PAGE>


employed in the Plan, unless the context clearly requires otherwise. In the
event of a conflict between the provisions of the Plan and the provisions of
this Agreement, the provisions of the Plan shall govern.


                                          HEALTHWATCH, INC.

ACCEPTED:
                                          By
                                            ------------------------------------
                                            Its
--------------------------------               ---------------------------------
    Consultant

<PAGE>


                                HEALTHWATCH, INC.

             NOTICE OF EXERCISE OF NONSTATUTORY STOCK OPTION ISSUED

                        UNDER THE 1995 STOCK OPTION PLAN

To:      Stock Option Committee
         HEALTHWATCH, INC.
         2445 Cades Way
         Vista, California 92083

         I hereby exercise my Option dated ___________, 199__ to purchase shares
of $0.07 par value common stock of the Company at the option exercise price of
$_________ per share. Enclosed is a certified or cashier's check in the total
amount of $________, or payment in such other form as the Company has specified.

         I represent to you that I am acquiring said shares for investment
purposes and not with a view to any distribution thereof. I understand that my
stock certificate may bear an appropriate legend restricting the transfer of my
shares and that a stop transfer order may be placed with the Company's transfer
agent with respect to such shares.

         I request that my shares be issued to me as follows:

                  -------------------------------------------
  (Print your name in the form in which you wish to have the shares registered)

                  -------------------------------------------
                            (Social Security Number)

                  -------------------------------------------
                               (Street and Number)

                  -------------------------------------------
                            (City) (State) (Zip Code)




Dated:                   , 199   .    Signature:
      -------------------     ---                -------------------------------