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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C 20459
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FORM 10-K
ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year Ended: August 31, 1999
Commission File Number: 0-11419
Family Health Systems, Inc.
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(Exact Name of Registrant as specified in its Charter)
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<S> <C>
Delaware 22-2435595
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(State or other jurisdiction of incorporation or (I.R.S. Employer Identification No.)
organization)
Post Office Box 21238, St. Simons Island, Georgia 31522-0738
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Address of Principal executive offices of Zip Code
Incorporation or organization
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912-634-2584
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Registrants telephone number, including area code
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by section 13 or 15(d) of the Securities and Exchange Act of 1934
during the preceding 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 last 90 days.
YES [ ] NO [X]
At August 31, 1999, 3,161,702 shares of the Registrant's Common Stock were
issued and 2,006,757 shares of the Registrant's Common Stock were outstanding
and the estimated aggregate market value of the Registrant's outstanding common
stock held by non-affiliates of the Registrant was approximately $246,000.
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Item 1. Management's Discussion and Analysis of Financial Condition and results
of operation
(A) General Development of Business.
Family Health Systems, Inc. (FHS or REGISTRANT), a Delaware
corporation, was incorporated on January 20, 1983. The
Registrant was formed to provide comprehensive business
services to physicians, dentists and professional corporations
operating full service dental centers and emergency/industrial
medical centers. FHS found this activity to be unprofitable
and it exited the business service activity in fiscal year
1987 and became engaged in the formation, registration,
distribution and sale of developmental stage companies. FHS
has no activities other than investment portfolio management
at this time.
(B) Description of business:
The Registrant is currently inactive in the formation of
subsidiaries, by registration of those stocks through filing
with the SEC, and is seeking a merger or business combination
for itself.
(C) Competition.
NONE
(D) Employees
NONE
Item 2. Properties
NONE
Item 3. Legal Proceedings
NONE
Item 4. Submission of Matters to a Vote of Security Holders:
NONE
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Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Market information:
The Registrant's common stock trades in the over-the-counter market.
The Registrant's common stock was listed on the NASDAQ National Market
System, under the symbol FHSI until November 26, 1986, at which time
such listing was suspended until FHS assets and Net Worth were
increased to the minimum required levels. FHS was reinstated on NASDAQ
on April 2, 1987, but was again suspended on February 12, 1988 when its
assets and net worth were below the NASDAQ minimum requirements. There
has not been any trading of FHS common stock any listed exchange during
calendar years 1995, 1996, 1997, 1998 and 1999.
HOLDERS:
As of August 31, 1999, the approximate number of holders of record of
the Registrant's common stock was 568. In addition to those who hold
shares in their individual names, it is reported to Registrant that
there are 267 holder's in "street names" for a total of 835
shareholders.
DIVIDENDS:
Cash dividends have not been paid by the Registrant since it was
formed; however, Registrant has during past fiscal years paid stock
dividends in it's wholly-owned subsidiaries from 1987-1988.
Item 6. SELECTED FINANCIAL DATA:
The following data, insofar as it relates to the period September 1,
1996 to August 31, 1999 has been derived from annual financial
statements, including the balance sheets at August 31, 1999, 1998 and
1997 and the related statements of income and cash flows for the years
ending August 31 1997 through 1999 and notes thereto appearing
elsewhere herein. This financial data should be read in conjunction
with the financial statements of the Company and the related notes
thereto included in Item 8 of this Annual Report.
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<CAPTION>
1999 1998 1997
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<S> <C> <C> <C>
Operating Revenues $ Nil $ Nil $350,301
Income (loss) from continuing
Operations $ 60,821 $(57,333) $317,542
Income (loss) from continuing
operations per share $ .0303 $ (.0286) $ .167
Current assets $169,451 $165,488 $139,251
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<S> <C> <C> <C>
Working Capital $114,693 $163,495 $139,251
Total Assets $300,749 $187,163 $378,806
Stockholders' equity $245,991 $185,170 $378,806
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Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION
(a) Results of Operations
The discontinuance in 1988 of the professional administrative
marketing business decreased revenues; however, it also
decreased liabilities and the risk of potential liabilities.
The only income presently is gains and losses from sales of
stock in the marketplace. Gains from sales of stocks during
the year ending August 31, 1999 aggregated $75,596. The
Company portfolio dropped significantly in Market value at
August 31, 1998 due to the downturn in the market overall.
(b) Financial Condition, Liquidity and Capital Resources.
Management does not expect that the condition of FHS can be
improved unless it can form a business relationship between it
and another going concern.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The following documents are filed as part of this report:
(1)Financial statements:
Balance Sheet as of August 31, 1999 F-1
Statement of income for the year ending August 31, 1999 F-2
Statement of cash flows for the years ending August 31, 1999 F-3
Notes to Financial Statements F-4
All other schedules are omitted because they are not applicable or the required
information is shown in the financial statements or other notes herein.
Item 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL MATTERS
NONE
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Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth all the directors, executive officers
and significant employees of the Registrant as of August 31, 1999:
William S. Bryant President
Chief Executive Officer
Treasurer
Director
Directors hold office until the next annual meeting of shareholders.
Officers are elected by the Board of Directors following the Annual
meeting of stockholders.
Item 11. EXECUTIVE COMPENSATION
Cash compensation. The following table sets forth the actual cash
compensation of any officer or director of the Registrant who received
in excess of $60,000 in the fiscal year ended August 31, 1999 and the
actual cash compensation of all officers and directors of the
Registrant as a group for said fiscal year.
Officer or Director NONE
All Officers or Directors as a group NONE
Compensation of Directors:
During the Registrant's fiscal year ended August 31, 1987, the
Registrant passed a resolution that all officers and directors who
attended meetings of the Board of Directors or Shareholders and who
were not on other salary with FHS, would receive restricted shares of
stock of FHS, equal to $500 per day. The number of shares to be
determined by the bid price of the stock on the meeting date.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNER AND MANAGEMENT
The following table sets forth information regarding ownership of the
Registrant's common stock by all persons who are known by the
Registrant to own more than 5% of the total outstanding shares and by
all officers and directors of the Company as of August 31, 1999.
E.L. Carman 1,009,673 shares 53% ownership
Changes in Control:
Registrant is not aware of any arrangement which may result in a change
of control of Registrant at present.
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Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Transactions with Management and Certain Business Relationships.
NONE
Indebtedness of Management
NONE
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(c) 27.1 Financial Data Schedule (for SEC use only)
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SIGNATURES
Pursuant to the requirements of the Section 3 or 15(d) of the Securities
Exchange Act of 1934, Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
FAMILY HEALTH SYSTEMS, INC.
Date 06/09/2000 /s/ William S. Bryant
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William S. Bryant, President
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
Date 06/09/2000 /s/ William S. Bryant
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WILLIAM S. BRYANT, Director,
Chairman of the Board, President,
Chief Executive Officer,
Chief Financial and Accounting Officer
Treasurer
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EXHIBITS
FINANCIAL INFORMATION
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EXHIBIT F-1
FAMILY HEALTH SYSTEMS, INC.
BALANCE SHEET
August 31, 1999
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<CAPTION>
<S> <C>
ASSETS
Cash $ 2,718
Accounts receivable 688
Marketable securities 166,045
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Total current assets 169,451
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Other receivables 114,423
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Investment in closely-held company 16,875
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Total Assets $ 300,749
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LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)
Cash overdraft - Investment margin account $ 54,758
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Common Stock 3,351
Paid in capital 2,673,705
Retained earnings (deficit) (2,431,065)
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245,991
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Total Liabilities and stockholder's equity (deficit) $ 300,749
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See Notes to Financial Statements.
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EXHIBIT F-2
FAMILY HEALTH SYSTEMS, INC.
STATEMENT OF INCOME
Year Ended August 31,1999
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Revenues $ Nil
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Expenses
Auto expense 718
Bank service charges 3
Miscellaneous 3,194
Office Supplies 371
Postage 341
Professional Fees 3,000
Publications 4,928
Stock Transfer Fees (1,250)
Telephone 216
Travel 3,254
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14,775
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Net operating (loss) (14,775)
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Other income (loss)
Capital gains on available-for-sale securities 75,596
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Net Income (Loss) 60,821
Retained earnings (deficit), beginning (2,491,886)
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Retained earnings (deficit), ending $ (2,431,065)
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See Notes to Financial Statements.
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EXHIBIT F-3
FAMILY HEALTH SYSTEMS, INC.
STATEMENT OF CASH FLOWS
Year Ended August 31,1999
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1999
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CASH FLOWS FROM OPERATING ACTIVITIES
PROVIDED BY (USED IN) OPERATING ACTIVITIES
Net income (loss) $ 60,821
Adjustments to reconcile net income (loss) to
(Gain) loss on sale of investments (75,596)
Change in working capital components
(Increase) decrease in trade receivables (688)
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Net cash (used in) operating activities (15,463)
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CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of investments 514,325
Purchase of investments (491,090)
Advances made to drilling company (134,373)
Repayment of advances by drilling company 24,750
Repayment of notes receivable 34,155
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Net cash (used in) investing activities (52,233)
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Net (decrease) in cash (67,696)
Cash:
Beginning 15,656
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Ending $ (52,040)
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Cash:
Cash - operating $ 2,718
Cash - Money Market (overdraft) (54,758)
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$ (52,040)
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See Notes to Financial Statements.
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EXHIBIT F-4
FAMILY HEALTH SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
Year Ended August 31, 1999
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. NATURE OF BUSINESS -- Family Health Systems, Inc. ("FHS") was
organized to provide comprehensive administrative, marketing
and consulting services to group dental and medical practices
and began operations on May 1, 1983. Effective in October
1987, all administrative and marketing agreements had been
terminated and the Corporation has been inactive since that
time.
B. BASIS OF ACCOUNTING -- The Company's policy is to prepare its
financial statements on the accrual basis of accounting.
C. NET INCOME (LOSS) PER SHARE -- Net income (loss) per share has
been computed using the weighted average number of shares of
common stock outstanding during the applicable period.
D. ESTIMATES -- The process of preparing financial statements in
conformity with generally accepted accounting principles
requires the use of management's estimates and assumptions
regarding certain types of assets, liabilities revenues and
expenses. Such estimates primarily relate to unsettled
transactions and events as of the date of the financial
statements. Accordingly, upon settlement, actual results may
differ from estimated amounts.
2. NOTES RECEIVABLE
During August of 1998, the Company advanced $25,000 to a going concern.
This advance bears no interest or maturity date. The advance was repaid
in November 1998.
An advance was made to the majority stockholder of the Company during
1998. This advance was evidenced by a note receivable in the amount of
$15,079. The balance outstanding and unpaid at August 31, 1998 was
$9,155. This note was repaid subsequent to August 31, 1998.
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3. OTHER RECEIVABLES
The Company is currently advancing funds to a going concern involved in
pumping water into otherwise non-productive or low production oil wells
and extracting the raw crude oil. These advances are non-interest
bearing with no stated method of repayment and are not evidenced by a
note. Advances made during the years August 31, 1999 aggregated
$112,323. Repayments of advances in the amount of $24,750 were made
during the year ending August 31, 1999.
In addition, the Company made advances during the year ending August
31, 1999 in connection with a natural gas drilling operation in West
Virginia. The drilling operations are on acreage adjoining a producing
natural gas field. Advances made to the Company during the year ending
August 31, 1999 aggregated $22,050. No repayments have been received.
4. INVESTMENTS
The Company investments in marketable equity securities are held for an
indefinite period and thus are classified as available for sale.
Available for sale securities are recorded at fair value in investments
on the balance sheet, with the change in fair value during the period
excluded from earnings and recorded in the equity section of the
balance sheet. There were no unrealized holding gains or losses at
August 31, 1999.
At August 31, 1999, investments were written down to their estimated
realizable values, because in the opinion of management, the decline in
market value of those securities is considered to be other than
temporary.
Investments in securities are summarized below:
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<CAPTION>
Gross Gross
Unrealized Unrealized Fair
Description Gain Loss Value
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<S> <C> <C> <C>
August 31, 1999:
Available-for-sale securities:
Common Stock $ -- $ -- $166,045
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5. INCOME TAXES
As of August 31, 1999, FHS has net operating loss carryforwards of
approximately $1,819,807, which expire under current law from 2000
through 2013. FHS also has investment tax credit carryforwards expiring
in 2000.
6. RELATED PARTY TRANSACTIONS
The president and majority stockholder are reimbursed for travel
expenses as incurred in the ordinary course of business.
As mentioned in Note 2, the Company advanced $15,079 to the majority
stockholder in 1998.
7. EARNINGS PER SHARE
The following data show the amounts used in computing earnings per
share.
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<CAPTION>
1999
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<S> <C>
Income (loss) available to common
stockholders $ 60,821
Weighted average number of common
shares used in basic EPS 2,006,757
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Earnings per common share $ 0.0303
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8. CONCENTRATIONS OF CREDIT RISK
The Company has outstanding accounts receivable from companies in oil
and gas exploration industry which are considered speculative
industries. Therefore, the Company has an industry concentration of
credit risk in the oil and gas industry.
9. CONTINGENCY
As disclosed in Note 1, the Company has been inactive in its operating
business since 1987. As a result, several Forms 10-K and 10-Q have not
been filed. The Company has since filed a notification of late filing
with the Securities and Exchange Commission for reports 10-K and 10-Q
due to be filed for the period August 31, 1997 to August 31, 1999 and
is currently filing all late filings. Any liability resulting from the
late filing is undetermined and is not reflected in these financial
statements.
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INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
Family Health Systems, Inc.
St. Simons Island, Georgia
We have audited the accompanying balance sheets of Family Health Systems, Inc.
as of August 31, 1999 and the related statements of income and retained earnings
(deficit), and cash flows for the year then ended. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Family Health Systems, Inc. as
of August 31, 1999 and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.
MOORE STEPHENS TILLER LLC
Brunswick, Georgia
February 20, 2000
