<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C 20459
-------------------------------------------------------------------------------
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, 1997
Commission File Number: 0-11419
Family Health Systems, Inc.
---------------------------------------------------------------
(Exact Name of Registrant as specified in its Charter)
<TABLE>
<S> <C>
Delaware 22-2435595
-------------------------------------------------- --------------------------------------------------
(State or other jurisdiction of incorporation or (I.R.S. Employer Identification No.)
organization)
Post Office Box 21238, St. Simons Island, Georgia 31522-0738
-------------------------------------------------- -----------------------------------------------
Address of Principal executive offices of Zip Code
Incorporation or organization
</TABLE>
912-634-2584
-----------------------------------------------
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, 1997, 3,161,702 shares of the Registrant's Common Stock were
issued 2,006,757 were outstanding and the estimated aggregate market value of
the Registrant's outstanding common stock held by non-affiliates of the
Registrant was approximately $260,053.
<PAGE> 2
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
<PAGE> 3
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 and 1997.
HOLDERS:
As of August 31, 1997, 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,
1995 to August 31, 1997 has been derived from annual financial
statements, including the balance sheets at August 31, 1997 and 1996
and the related statements of income and cash flows for the years
ending August 31 1995 through 1997 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.
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Operating Revenues $ 231,549 $ 52,368 $ Nil
Income (loss) from continuing $ 198,790 $ 34,941 $ Nil
Income (loss) from continuing
operations per share $ .167 $ 0183 $ Nil
Current assets $ 139,251 $ 84,943 $ Nil
</TABLE>
<PAGE> 4
<TABLE>
<S> <C> <C> <C>
Working Capital $ 121,701 $ Nil $ Nil
Total Assets $ 260,053 $ 84,943 $ Nil
Stockholders' equity $ 242,503 $ 84,943 $ Nil
</TABLE>
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.
(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:
<TABLE>
<S> <C>
(1)Financial statements:
Balance Sheet as of August 31, 1997 F-1
Statement of income for the year ending August 31, 1997 F-2
Statement of cash flows for the years ending August 31, 1997 F-3
Notes to Financial Statements F-4
</TABLE>
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
<PAGE> 5
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, 1997:
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, 1997 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, 1997.
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.
<PAGE> 6
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)
<PAGE> 7
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
-----------------------------------------------------
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
-----------------------------------------------------
WILLIAM S. BRYANT, Director,
Chairman of the Board, President,
Chief Executive Officer,
Chief Financial and Accounting Officer
Treasurer
<PAGE> 8
EXHIBITS
FINANCIAL INFORMATION
<PAGE> 9
EXHIBIT F-1
FAMILY HEALTH SYSTEMS, INC.
BALANCE SHEET
August 31, 1997
<TABLE>
<S> <C>
ASSETS
Cash $ 3,836
Money Market 128,915
Investments - Common Stocks 120,802
Trade Notes and Receivables 6,500
-------------
Total Assets $ 260,053
=============
LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)
Accounts Payable $ 17,550
-------------
Common Stock 25,271
Paid in capital 2,651,785
Retained earnings (deficit) (2,434,553)
-------------
242,503
-------------
Total Liabilities and stockholder's equity (deficit) $ 260,053
=============
</TABLE>
See Notes to Financial Statements.
<PAGE> 10
EXHIBIT F-2
FAMILY HEALTH SYSTEMS, INC.
STATEMENT OF INCOME
Year Ended August 31, 1997
<TABLE>
<S> <C>
Revenues $ 231,549
---------------
Expenses
Auto expense 291
Bad debt expense 2,850
Bank service charges 49
Office Supplies 382
Postage 396
Professional Fees 2,651
Publications 320
Telephone 1,994
Travel 23,826
---------------
32,759
---------------
Net Income 198,790
Retained earnings (deficit), beginning (2,633,343)
---------------
Retained earnings (deficit), ending $ (2,434,553)
===============
</TABLE>
See Notes to Financial Statements.
<PAGE> 11
FAMILY HEALTH SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
Year Ended August 31, 1997
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
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
$6,500. The balance outstanding and unpaid at August 31, 1997 was
$6,500.
3. 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, 1997.
At August 31, 1997, 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.
<PAGE> 12
Investments in securities are summarized below:
<TABLE>
<CAPTION>
Gross Gross
Unrealized Unrealized Fair
Description Gain Loss Value
-------------------------------------- ---------- ---------- ---------
<S> <C> <C> <C>
August 31, 1997:
Available-for-sale securities:
Common Stock $ - $ - $ 120,802
========== ========== =========
</TABLE>
4. INCOME TAXES
As of August 31, 1997, FHS has net operating loss carryforwards of
approximately $2,412,611, which expire under current law from 1999
through 2013. FHS also has investment tax credit carryforwards of
$22,332 expiring in 2000.
5. 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 $6,500 to the majority
stockholder in 1997.
6. EARNINGS PER SHARE
The following data show the amounts used in computing earnings per
share.
<TABLE>
<CAPTION>
1997
----------
<S> <C>
Income (loss) available to common
stockholders $ 198,790
Weighted average number of common
shares used in basic EPS 2,006,757
----------
Earnings per common share 0.0991
==========
</TABLE>
7. 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.
<PAGE> 13
8. 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.
<PAGE> 14
To the Board of Directors and Stockholders
of Family Health Systems, Inc.
We were engaged to audit the accompanying balance sheet of Family Health
Systems, Inc. (a Delaware corporation) as of August 31, 1997, and the related
statements of income, retained earnings (deficit), and cash flows for the year
then ended. These financial statements are the responsibility of the Company's
management.
We were unable to confirm cost of certain investments at August 31, 1997. We
were unable to satisfy ourselves regarding book value of certain investments at
August 31, 1997 by other means.
Because we were unable to satisfy ourselves as to the historical cost of
certain investments, and we were unable to apply other auditing procedures
regarding investments assertions as discussed in the preceding paragraph, the
scope of our work was not sufficient to enable us to express, and we do not
express, an opinion on the financial statements referred to in the first
paragraph.
MOORE STEPHENS TILLER LLC
Brunswick, Georgia
February 20, 2000
