SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
[X] Annual report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 [Fee Required]. For the fiscal
year ended December 31, 1996 or
[ ] Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 [No Fee Required]
For the transition period from to
Commission file number 000-22151
PetHealth Systems, Inc. (f/k/a Triangle, Inc.)
(Exact Name of Registrant as Specified in its Charter)
Colorado 93-0969365
(State or other jurisdiction of (IRS Employer Ident. No)
incorporation or organization)
444 Madison Ave., Suite 1710
New York, New York 10022
(Address/principal executive offices) (Zip Code)
Issuer's Telephone Number: (212) 750-7878
Securities registered pursuant to Section 12(b) of the Act:None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, without par value
(Title of Class)
Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the
issuer was required to file such reports): Yes X No ; and (2)
has been subject to such filing requirements for the past 90 days:
Yes No X .
Check if there is no disclosure of delinquent filers in
response to Item 405 of Regulation S-B contained in this form, and
no disclosure will be contained, to the best of the issuer's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB: [ X ].
State issuer's revenues for its most recent year ended
December 31, 1996: $ -0-.
State the aggregate market value of the 585,030 shares of
voting stock held by non-affiliates computed by reference to the
price at which the stock was sold, or the average bid and asked
prices of such stock, as reported by the Electronic Bulletin Board
of the NASD for the prior week: $1,170,060 as of March 31, 1997,
based on the prior week average bid and ask prices.
State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date:
3,285,030 shares of Common Stock, as of March 31, 1997.
Documents Incorporated by Reference
If the following documents are incorporated by reference,
briefly describe them and identify the part of the Form 10-KSB into
which the document is incorporated: (1) any annual report to
security holders; (2) any proxy or information statement; and (3)
any prospectus filed pursuant to Rule 424(b) or (c) of the
Securities Act of 1933 ("Securities Act"). The listed documents
should be clearly described for identification purposes. None.
Transitional Small Business Disclosure Format: Yes X No
PART I
Item 1. Description of Business
Corporate History Through December 31, 1996.
The Company (or "registrant") was organized as a Colorado
corporation on December 8, 1981 under the name Triangle, Inc. for
the purpose of evaluating, structuring and completing a merger with
or acquisition of, prospects consisting of private companies,
partnerships or sole proprietorships. In 1989, the registrant
closed a public offering of 20,316 units for gross proceeds of
$203,160; each unit contained 1,000 shares of Common Stock and
1,000 Class A and 1,000 Class B Warrants to Purchase Common Stock
(the Warrants expired in 1991). The registrant was funded as a
"blank check" company.
By December 31, 1991 the registrant had spent most of the
proceeds of the public offering on general and administrative
expenses, and in an unsuccessful merger transaction with Enterprise
Car Rental. Ltd., a British Columbia corporation, the contract for
which transaction was signed in 1989. After the merger had been
closed, the registrant advanced $120,000 to Enterprise to pay debts
expenses, and in an unsuccessful merger transaction with Enterprise
Car Rental and other obligations. When the merger was canceled,
Enterprise gave the registrant a promissory note for $150,000 to
pay back the advanced funds and to pay the registrant's expenses
which had been incurred in the transaction, however, the note
subsequently was written off as uncollectible.
During fiscal years 1992 through 1995 the registrant's general
and administrative expenses were funded with proceeds of the
purchase of restricted shares of Common Stock by the principal
shareholders of the registrant. During such years, the registrant
was inactive except for its continued unsuccessful search for
business opportunities.
As of November 29, 1996 the registrant signed a letter of
intent for the acquisition by the registrant of PetCare, Inc.
("PetCare"), a Delaware corporation organized in November, 1996.
Such acquisition was closed after December 31, 1996. See below.
Acquisition of PetCare, Inc. Subsequent to December 31, 1996.
Pursuant to the Agreement and Plan of Share Exchange
("Exchange Agreement") between the registrant and PetCare, Inc.
entered into subsequent to December 31, 1996, the registrant
acquired all the outstanding shares of Common Stock of PetCare,
Inc. from its shareholders effective as of February 10, 1997, in
exchange for 3,000,000 restricted shares of Common Stock of the
registrant issued to such individuals. See Part III, Item 11
"Security Ownership of Certain Beneficial Owners and Management" and
Item 12 "Certain Relationships and Related Transactions" of this
Report.
In addition, the following occurred in connection with the
closing of the Exchange Agreement: the three directors of the
registrant (as of February 7, 1996) elected the directors of
PetCare, Inc. to the board of directors of the registrant, and the
three directors resigned (see Part III, Item 9 "Directors,
Executive Officers, Promoters and Control Persons; Compliance with
Section 16(a) of the Exchange Act"); the name of the registrant was
changed to PetHealth Systems, Inc.; and (effective as of February
24, 1997) the outstanding shares of Common Stock of the registrant
were subjected to a 1 for 200 reverse stock split. Except as
otherwise noted, all share and per share information in this Report
reflects the reverse stock split. As of the date of this Report,
there are issued and outstanding 3,285,030 shares of Common Stock
of the registrant.
Registration under Section 12(g).
From 1989 through December 31, 1996 the registrant filed
periodic reports with the Securities and Exchange Commission
("Commission") pursuant to Section 15(d) of the Securities Exchange
Act of 1934 ("Exchange Act"). During such period of time, the
registrant had no class of securities registered with the
Securities and Exchange Commission pursuant to Section 12 of the
Exchange Act.
Effective February 14, 1997, the registrant's Common Stock was
registered with the Commission pursuant to Section 12(g) of the
Exchange Act. Pursuant to such registration, the registrant is
required to file periodic and other reports as required by Section
13 of the Exchange Act, and persons acquiring 5% or more of the
outstanding shares of Common Stock of the registrant are required
to file with the Commission a statement concerning such acquisition
of shares. In addition, the registrant is subject to the proxy and
information statement solicitation and distribution provisions of
Section 14 of the Exchange Act. Section 16(a) of the Exchange Act
requires the directors, executive officers, and significant
shareholders of the registrant, to file with the Commission certain
reports concerning their ownership of the registrant's securities
(See Part III, Item 9 below).
<PAGE>
Business of the Registrant (Subsequent to December 31, 1996).
For information on the business of the registrant prior to
December 31, 1996, see paragraph (a) above.
As a result of the closing of the Exchange Agreement, the
business of the registrant as of the date of this Report is to
purchase and operate companion pet veterinary hospital practices
which meet certain financial criteria and demographic profiles for
growth. The principal founders of PetCare, Inc. (and as of the date
of this Report, the officers, and two of the directors and
significant shareholders of the registrant) are Ted A. Sprinkle,
Jr., DVM, and Kenneth J. Rotondo, DVM (see Part III, Item 9).
The registrant initially intends to acquire existing
veterinary practices which are located in the northeastern United
States. There are currently over 39,000 licensed veterinarians
providing health care to companion animal pets; these veterinarians
represent approximately 16,000 veterinary practices, which are
conducted in facilities traditionally called "hospitals." Each
hospital is typically a sole proprietorship comprised of an owner-operator
and one employed veterinary associate. The practice is
usually staffed by non-medical personnel. Typically, there is no
formal training program.
The operating model for the registrant is a veterinary
hospital located in upstate New York, which was developed and is
operated by Dr. Rotondo, an officer and director of the registrant,
which hospital currently is proposed to be acquired by the
registrant. In conjunction with this operating hospital, a training
facility will be set up by the registrant, at which continuing
education will be provided for non-professional and professional
employees.
As with many industries and professions in the 1990s, the
successful veterinary practices have attracted and retained clients
by providing quality care, expanding services, making services and
hours more convenient, offering alternative methods of payment, and
training the staff to improve customer service in a caring and
professional manner.
Corporate consolidation of veterinary practices began in the
early 1990s; such form of ownership currently holds fewer than 600
hospitals, excluding multi-hospital practices in large metropolitan
areas which usually are structured as professional corporations.
The hospitals to be sought by the registrant for acquisition
generally are expected to show gross revenues of at least $700,000
and a financial history which is indicative of profitability and
revenue growth. Following each acquisition, the appearance and
operations of these hospitals will be changed and streamlined by
the registrant into centralized corporate functions in order to
realize operating efficiencies compared to historical operations.
These and other business enhancements are intended to enable the
veterinarian to focus on the practice of medicine and provide
quality animal care, while improving operating margins and net
profits for the hospitals.
At the time of acquisition, management will make a
determination as to whether to lease or purchase the real estate
associated with the hospital.
As of the date of this Report, the registrant has reached
agreements in principle to acquire two companion pet veterinary
hospitals in New York; one is owned by Dr. Rotondo, an officer and
director of the registrant. Although management of the registrant
believes such hospitals will be acquired in the second quarter of
1997, none of these acquisitions should be deemed probable as of
the date of this Report. See "-Agreements to Acquire Two Hospitals";
Part III, Item 12 "Certain Relationships and Related Transactions";
and Part II, Item 6 "Management's Discussion and Analysis or Plan
of Operation."
Agreements to Acquire Two Hospitals. In December 1996,
PetCare, Inc. entered into separate letters of intent to acquire
two veterinary hospitals for cash, notes and shares of Common Stock
or other securities of PetCare, Inc., in amounts and on terms to be
finalized between the parties after the date of filing of this
report. As a result of the closing of the Exchange Agreement, such
acquisitions would be conducted by the registrant. There is no
assurance either hospital will in fact be acquired. Further, unless
the parties agree to final terms, and the registrant has sufficient
funds to close the cash portion of either transaction, neither of
the proposed acquisitions should be deemed probable. The proposed
acquisitions are:
Animal Health Center. Animal Health Center ("AHC") is located
in a semi-rural and suburban area at 1656 Route 9, Clifton
Park, New York. AHC, which started operations in 1989, is
owned by Dr. Kenneth J. Rotondo, an officer, director and
principal shareholder of the registrant. The facilities
include .8 acres of land owned by AHC, one building covering
8,300 square feet of space, and equipment. AHC is a full
service companion pet veterinary hospital, providing routine
and emergency medical care (including the full range of
surgical procedures), animal boarding and animal training.
AHC employs 17 people, including two veterinarians. AHC also
provides on site training to students of veterinary medicine
(primarily at Cornell University).
The AHC facility was acquired by Dr. Rotondo in 1994. The
original building was demolished in 1995 and has since been
replaced with the current 8,300 square feet facility,
including new equipment and furnishings.
Saratoga Veterinary Hospital. Saratoga Veterinary Hospital
("SVH") is located in a suburban area, Box 373, Route 9,
Saratoga Springs, New York. SVH commenced operations in 1973;
the owner is not affiliated with the registrant or any
affiliate of the registrant. SVH's facilities are located on
35 acres of land owned by SVH, including one building covering
5,000 square feet, and equipment. SVH is a full service
companion pet veterinary hospital, providing routine and
emergency medical care (including surgical procedures), animal
boarding, and grooming. SVH employs 15 people, including 3
veterinarians.
Competition
Veterinary Centers of America, Inc. ("VCA") was founded in 1986
for the purpose of acquiring full-service veterinary hospitals. VCA
is a public company. One of the company's initial purchases was the
large and prestigious West Los Angeles Animal Hospital. Most of
VCA's early acquisitions also were in southern California. The
company now owns and operates approximately 175 hospitals in at
least ten states. In addition, VCA acquired a number of veterinary
clinical labs. VCA also owns and operates diagnostic laboratories
and distributes pet food and other supplies through its hospitals.
VCA operates in Southern California, the Midwest, the Mid-Atlantic
states, and Florida.
Due to its current focus of acquisitions in the northeastern
United States, the registrant does not presently compete with VCA.
VCA is a much larger and well financed company than the registrant,
such that the registrant might be at a disadvantage if it were to
compete with VCA in acquiring hospitals.
Another potential competitor is VetsMart, a division of
PetsMart, which is the only full service veterinary hospital
currently in existence within a superstore environment. However,
since VetsMart is relatively new (1994), its overall impact on the
market is not yet clear.
With the exception of VCA, there is no other corporation or
entity currently known to the registrant to be pursuing
acquisitions of veterinary practices on a similar scale or in a
similar model as the registrant. There are numerous entrepreneurial
veterinarians who are establishing their own networks of owned and
operated practices. Some are in closely defined market areas while
others have operations in multiple states. On a local level, the
registrant will compete with locally owned and operated veterinary
hospitals.
Facilities and Employees
The registrant presently is provided administrative support
services by and shares office space with Ameristar Group
Incorporated, a private corporation of which Joseph J. Messina and
Martin I. Saposnick are directors. See Item 12. Subsequent to the
date of this Report, and subject to the registrant having funds
available, the registrant intends to lease corporate headquarters
facilities in Fairfield County, Connecticut, initially consisting
of approximately 3,000 square feet. This facility will contain
offices for corporate management, veterinary operations, human
resources, accounting, administration and management information
systems.
As of the date of this Report, the registrant employs two
officers.
Item 2. Description of Property.
See above.
Item 3. Legal Proceedings.
To the knowledge of the registrant, there is no litigation
pending or threatened against the registrant, or its officers and
directors in their capacities as such, nor are there any legal or
administrative proceedings to which the registrant or its officers
and directors, as such, are a party.
Item 4. Submission of Matters to a Vote of Security Holders.
(a) The registrant called a special shareholders' meeting on
February 7, 1997. No proxies were solicited for and no
information statement was distributed in connection with
such meeting. The record date for the meeting was January
24, 1996.
(b) Not applicable.
(c) At the meeting, shareholders voted in favor of the
following proposals:
1. A proposed amendment to the Articles of Incorporation to change
the name of the registrant to "PetHealth Systems, Inc."
2. A 1-for-200 reverse split of the outstanding shares of Common
Stock of the registrant, such that the 57,006,090 shares of
Common Stock then issued and outstanding would become 285,030
shares of Common Stock.
(Proposals 1 and 2 were proposed in connection with and as contemplated by
the Exchange Agreement with PetCare, Inc.)
3. The adoption of the "1997 Stock Award Program" and the reservation
thereunder of 300,000 shares of Common Stock (after the reverse
stock split is in effect) for issuance to employees and
consultants for services to be rendered in the future. The number
of shares to be issued would in any instance be based on the value
of services rendered to the registrant, as determined by the board
of directors, and the market price of the Common Stock on the date
the shares are granted.
4. The readoption of the 1988 Incentive Stock Option Plan ("ISOP") of
the registrant as the "1997 Incentive Stock Option Plan" with any
qualified option to be granted thereunder to have a term not to
exceed 10 years from approval of such ISOP by the shareholders,
with the ISOP expiring on such tenth anniversary.
5. The relocation of the legal domicile of the registrant from
Colorado to Delaware, without material change to the provisions of
the Articles of Incorporation of the registrant. Implementation of
such relocation of legal domicile would be through further action
of the board of directors and the filing of Articles of
Incorporation and Articles of Merger in the State of Delaware,
and other corporate filings in the State of Colorado, however,
the board of directors would not be required to implement such
relocation and will have the authority to abandon such relocation
in their sole discretion.
(d) Not applicable.
PART II
Item 5. Market for Common Equity and Related Stockholder Matters.
(a) Market information.
The registrant's Common Stock was not publicly traded during
the two fiscal years ended December 31, 1996 except for 232,000
shares (before the 1 for 200 reverse split) at $.05 per share,
prior to the registrant's transaction with PetCare, Inc. Since
December 31, 1996, the registrant's Common Stock has been quoted
under the symbol " PHSI " on the NASD's Electronic Bulletin Board.
However, there have been few shares traded. The current price
quotation as of this report date is $1.50 bid and $2.50 asked.
(b) Holders.
At March 21, 1997, there were approximately 80 shareholders of
record of the registrant's Common Stock.
(c) Dividends.
The registrant has not paid any cash dividends with respect to
its Common Stock. There are no contractual restrictions on the
registrant's present or future ability to pay cash dividends,
however, the registrant intends to retain any earnings in the near
future for operations.
(d) Recent Sales of Unregistered Securities.
During the three years ended December 31, 1996, the registrant
has sold shares of Common Stock without registration under the
Securities Act of 1933, as follows:
A total of 6,575 shares (after application of the 1 for 200
reverse stock split in 1997) were sold in 9 separate transactions
with officers and directors of the registrant, for total cash
proceeds to the registrant of $13,150 ($2.01 per share). Such
proceeds were used to pay general and administrative costs.
Subsequent to December 31, 1996, in February 1997, the
registrant issued 3,000,000 shares to the shareholders of PetCare,
Inc. in exchange for the 3,000,000 (100%) shares of Common Stock of
that company held by such persons.
No underwriters were involved in the foregoing transactions.
None of the securities were offered publicly.
In connection with the foregoing transactions, the registrant
relied upon the exemption from the Section 5 registration
requirements of the Securities Act of 1933, provided by Section
4(2) thereof. Each person who acquired such shares either was an
officer and director of the registrant (with respect to the
transaction up until the closing of the Exchange Agreement), or
represented to the registrant in connection with the shares
acquired under the Exchange Agreement that he was experienced in
financial and investment matters, that he had reviewed all filings
made by the registrant pursuant to Section 15(d) of the Securities
Exchange Act of 1934 prior to closing of the Exchange Agreement,
and that he was acquiring such shares for investment purposes under
Rule 144 of the Securities Act of 1933.
Item 6. Management's Discussion and Analysis or Plan of Operation.
The following table sets forth certain selected financial data
with respect to the registrant, and is qualified in its entirety by
reference to the financial statements and notes thereto filed
herewith:
Fiscal Years Ending December 31,
1996 1995 1994 1993 1992
Total Assets $ -0- $ 136 $ 116 $ 123 $ 1,672
Short-Term
Obligations $4,307 $10,840 $ 9,767 $ 8,283 $15,543
Net Sales $ -0- $ -0- $ -0- $ -0- $ -0-
Net Income
(Loss) $2,767 $(6,853) $(5,216) $(33,944) $(10,929)
Net Income
(Loss) per
Common Share $ (a) $ (a) $ (a) $ (a) $ (a)
Dividends per
Common Share $ -0- $ -0- $ -0- $ -0- $ -0-
(a) Less than $0.01 per share.
Plan of Operation
For the 12 months ending December 31, 1997 the registrant will
require at least $1,200,000 of financing to implement its business
plan, including an estimated $400,000 to purchase two veterinary
practices, $500,000 for general and administrative expense;
$250,000 for design and implementation of management systems; and
$50,000 to repay short-term debt expected to be incurred (see
below). Significant amounts of funding in addition to such
$1,200,000 would be required if the registrant is to acquire
veterinary practices in addition to the two for which letters of
intent are in place as of the date of this report.
As of the date of this report, the registrant has limited
funds with which to meet the foregoing cash requirements. General
and administrative expenses up to the date of this report have been
funded by advances from Ameristar Capital Corporation, a private
corporation affiliated with Joseph J. Messina and Martin I.
Saposnick, officers and directors of the registrant.
The registrant has received approximately $75,000 in private
equity financing in the first quarter of 1997, and will seek
additional such funding in the second quarter of 1997 to meet cash
requirements. There is no assurance the financing efforts will be
successful.
No product research or product development work is planned for
fiscal 1997.
Improved real estate and hospital equipment will be acquired
by the registrant as veterinary hospitals are acquired, however,
the value of such assets cannot be estimated until signed contracts
are in place for such acquisitions and audited financial statements
for the targeted hospitals have been provided to the registrant.
The number of employees will increase from the current level
(two as of the date of this report) as the registrant implements
its business plan. The number expected to be employed by December
31, 1997 cannot be predicted with certainty, but subject to receipt
of financing for its business plan, the registrant expects to
employ from 10 to 18 people by fiscal year end, depending on
whether more than two hospitals are acquired.
Liquidity and Capital Resources
As of December 31, 1996 the registrant's current liabilities
exceeded current assets by $4,387. For such year, the registrant
recognized a net loss of $2,767 on $ -0- revenues, and $7,455 of
income recognized from the forgiveness of debt, compared to a net
loss of $6,853 for fiscal 1995. There were no revenues and no
income recognition in 1995. Expenses in 1996 and 1995 were
comprised of general and administrative costs associated with
audit, legal and SEC reporting obligations; such costs were funded
with proceeds of the registrant's sales of shares of Common Stock
to officers and directors. See Part II, Item 5 "Recent Sales of
Unregistered Securities."
By the end of fiscal 1996, the registrant had negotiated a
letter of intent for the acquisition of PetCare, Inc., which
transaction closed after December 31, 1996. Operations for fiscal
1996 and thereafter will require substantial new financing. See
"Plan of Operation."
Results of Operations
For the two years ended December 31, 1996 the registrant was
engaged in no active business. Activities were limited to looking
at various business opportunities for possible acquisition by the
registrant, and paying the costs incident to periodic reporting to
the Commission, and audit and legal fees associated therewith.
Forward Looking Statements
This report contains certain forward-looking statements within
the meaning of Section 27A of the Securities Act and Section 21E of
the Securities Exchange Act of 1934 and are subject to the safe
harbors created thereby. These forward-looking statements include
the plans and objectives of management for future operations,
including plans and objectives relating to the acquisition of
veterinary hospitals and the overall implementation of the business
plan resulting from the acquisition of PetCare, Inc. Although the
registrant believes that the assumption underlying the forward-looking
statements is reasonable, i.e. that the registrant can
raise the funds necessary to implement the business plan, such
assumption could prove inaccurate. In light of the significant
uncertainties inherent in the forward-looking information included
herein, the inclusion of such information should not be regarded as
a representation by the registrant or its affiliates that the
objectives or plans of the registrant will be achieved.
Item 7. Financial Statements.
Financial statements of the registrant, as of December 31,
1996 and for the two years then ended, are included in this report
and incorporated herein by reference.
Item 8. Changes In and Disagreements With Accountants on
Accounting and Financial Disclosure.
There were no changes in or disagreements with accountants on
accounting and financial disclosure matters in fiscal 1995 or 1996.
Subsequent to December 31, 1996, the registrant dismissed the
independent accounting firm which had audited the financial
statements of the registrant for prior years. Such dismissal was
approved by the registrant's board of directors. There had been no
disagreements with the former accounting firm (Schmidt +
Associates, P.C.) on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or
procedure. The prior firm's audit reports had stated that the
financial statements had been prepared with the assumption that the
registrant would continue as a going concern.
In March 1997, the registrant engaged a separate independent
accounting firm (Janet Loss, CPA) to audit and report upon the
financial statements of the registrant for fiscal 1996.
On March 25, 1997, the registrant filed a Current Report on
Form 8-K concerning the change in accounting firms.<PAGE>
TRIANGLE, INC.
(A DEVELOPMENT STAGE COMPANY)
Index to Financial Statements
Independent Auditor's Report . . . . . . . . . . . . . . . .F-13
Financial Statements:
Balance Sheets. . . . . . . . . . . . . . . . . . . . .F-14
Statements of Operations. . . . . . . . . . . . . . . .F-15
Statements of Stockholders' Equity (Deficit). . . . . .F-16
Statements of Cash Flows. . . . . . . . . . . . . . . .F-17
Notes to Financial Statements . . . . . . . . .F-18 to F-20
<PAGE>
Janet Loss, C.P.A., P.C.
Certified Public Accountant
9101 East Kenyon Avenue, Suite 2000
Denver, Colorado 80237
Board of Directors
Triangle, Inc.
(A Development Stage Company)
I have audited the accompanying balance sheets of Triangle, Inc. (a
development stage company)as of December 31, 1996 and 1995, and the
related statements of operations, shareholders' equity (deficit)
and cash flows for the years ended December 31, 1996 and 1995.
These financial statements are the responsibility of the Company's
management. My responsibility is to express an opinion on these
financial statements based on my audits.
I conducted my audits in accordance with generally accepted
auditing standards. Those standards require that I 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. I believe that my audits provide
a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of
Triangle, Inc. (a development stage company) as of December 31,
1996 and 1995, and the results of its operations and its cash flows
for the years ended December 31, 1996 and 1995.
/s/ Janet Loss, C.P.A.
Janet Loss, C.P.A., P.C.
April 2, 1997
<PAGE>
TRIANGLE, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
December 31, 1996 and 1995
1996 1995
ASSETS
CURRENT ASSETS:
Cash in checking $ 0 $ 136
TOTAL ASSETS $ 0 $ 136
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $ 4,307 $ 10,840
TOTAL LIABILITIES 4,307 10,840
STOCKHOLDERS' (DEFICIT):
Preferred Stock, $.10 par value,
100,000,000 shares authorized,
none issued - -
Common Stock, Class A no par value,
800,000,000 shares authorized,
57,006,090 and 56,643,090 shares
issued and outstanding 216,954 213,324
Deficit accumulated during
development stage (221,261) (224,028)
TOTAL STOCKHOLDERS' (DEFICIT) (4,307) (10,704)
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY (DEFICIT) $ 0 $ 136
The accompanying notes are an integral part of the financial statements.
TRIANGLE, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
For the Years Ended December 31, 1996 and 1995
and
From December 8, 1991 (Inception) to December 31, 1996
December
8,1991
Year Ended Year Ended (Inception) to
December 31, December 31, December 31,
1996 1995 1996
Revenues $ - $ - $ -
OPERATING EXPENSES:
Legal and accounting 2,975 6,395 55,013
Filing and transfer fees 1,649 250 8,510
Public relations - - 14,414
Other 64 208 34,899
TOTAL OPERATING EXPENSES 4,688 6,853 112,836
NET (LOSS) BEFORE
OTHER INCOME (EXPENSES) (4,688) (6,853) (112,836)
OTHER INCOME AND (EXPENSES):
Writeoff of advances
recision of merger (Note 6) - - (119,110)
Forgiveness of debt 7,455 - 7,455
Interest income - - 3,230
TOTAL OTHER INCOME
(EXPENSES) 7,455 - (108,425)
NET INCOME (LOSS) $ 2,767 $ (6,853) $ (221,261)
NET (LOSS) PER
COMMON SHARE $ * $ * $ *
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 56,956,173 56,351,967
* less than $.01 net loss per share
The accompanying notes are an integral part of the financial statements.
TRIANGLE, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
For the Years Ended December 31, 1996 and 1995
Common Stock
Deficit
Accumulated Total
Number During Stockholders'
of Development Equity
Shares Amount Stage (Deficit)
Balance,
January 1, 1995 56,063,090 $207,524 $(217,175) $(9,651)
Issuance of stock to
officer for cash,
January 1995
($.01 per share) 20,000 200 -- 200
Issuance of stock to
officer for cash,
April 1995
($.01 per share) 200,000 2,000 -- 2,000
Issuance of stock to
officer for cash,
($.01 per share) 60,000 600 -- 600
Issuance of stock to
officer for cash,
September 1995
($.01 per share) 300,000 3,000 -- 3,000
Net (loss) for the year
ended December 31, 1995 -- -- (6,853) (6,853)
Balances,
December 31, 1995 56,643,090 $213,324 $(224,028) $(10,704)
Issuance of stock
to officer for cash,
January 1996
($.01 per share) 100,000 1,000 -- 1,000
Issuance of stock to
officer for cash,
February 1996 ($.01
per share) 260,000 2,600 -- 2,600
Issuance of stock to
officer for cash,
December 1996 ($.01
per share) 3,000 30 -- 30
Net Income for the
year ended December
31, 1996 -- -- 2,767 2,767
Balance,
December 31, 1996 57,006,090 $216,954 $(221,261) $(4,307)
The accompanying notes are an integral part of the financial statements.
TRIANGLE, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 1996 and 1995
December 8,1991
Year Ended Year Ended (Inception) to
December 31, December 31, December 31,
1996 1995 1996
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) $ 2,767 $ (6,853) $ (221,261)
Adjustments to reconcile
net (loss) to net cash used
by operating activities:
Amortization - - 750
Stock issued for
Services/expenses - - 26,425
Changes in operating assets
and liabilities:
Increase (decrease) in
accounts payable (6,533) 1,073 4,307
NET CASH (USED) BY
OPERATING ACTIVITIES (3,766) (5,780) (189,779)
CASH FLOWS FROM INVESTING ACTIVITIES:
Organization costs - - (750)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance
of common stock 3,630 5,800 251,964
Proceeds from issuance
of Class B common stock - - 10,000
Deferred offering costs - - (71,435)
NET CASH PROVIDED BY
FINANCING ACTIVITIES 3,630 5,800 190,529
NET INCREASE (DECREASE) IN CASH (136) 20 0
CASH, BEGINNING OF PERIOD $ 136 $ 116 $ 0
CASH, END OF PERIOD $ 0 $ 136 $ 0
The accompanying notes are an integral part of the financial statements.
TRIANGLE, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Triangle, Inc. (the Company) is a development stage organization
formed under the laws of the State of Colorado on December 8, 1981.
Since inception, the company has been inactive except for recent
organizational and initial financing efforts. The Company's fiscal
year end is December 31, and there was no activity prior to the
year ended December 31, 1988.
Accounting Method
The Company records income and expenses on the accrual method.
Organization Costs
Costs incurred in organizing the Company are being amortized
over a sixty-month period.
Deferred Offering Costs
The Company incurred costs in connection with its public
offering. When the offering of the Company's stock was
successful in April of 1989, these costs were charged as a
reduction of the proceeds of the offering.
NOTE 2 - RELATED PARTY TRANSACTIONS
The Company maintains its offices in space provided by the
Company's president pursuant to an oral agreement on a rent-free
basis with reimbursement for out-of-pocket expenses, such as
telephone.
During the year ended December 31, 1988, the Company's president
advanced $20,157 on an unsecured, interest-free basis to provide
funds for efforts related to the public offering and for operating
needs. These advances were repaid from the offering proceeds in
April of 1989.
In 1997, the Company has received advances of monies for its
operating expenses from a related company, Ameristar Group
Incorporated. The company ("Ameristar") also serves as a consultant
to Pet Health Systems, Inc. (formerly Triangle, Inc.). This
agreement shall be in effect until June 30, 1997, at which time the
parties will determine if this agreement is to be extended or
modified.
NOTE 3 - CAPITALIZATION
In December of 1981, the Company authorized 50,000 shares of no par
value common stock. In March of 1988, the Company amended and
restated its certificate of incorporation to authorize 800,000,000
shares of no par value common stock and 100,000,000 shares of $.10
par value preferred stock. No preferred stock is issued or
outstanding as of December 31, 1996.
<PAGE>
TRIANGLE, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOTE 4 - INCENTIVE STOCK OPTION PLAN
Effective March 3, 1988, the Company adopted an incentive stock
option plan for company executives and key employees. The Company
has reserved 10,000,000 common shares for issuance pursuant to the
plan. The plan provides that no option may be granted at an
exercise price less than the fair market value of the common shares
of the Company on the date of grant and no option can have a term
in excess of ten years. To date, no options have been granted
pursuant to the plan.
NOTE 5 - CLASS B COMMON STOCK
In April of 1989, the Company sold 1,000,000 shares of no par value
Class B common stock at $.01 per share to a founder, a company
wholly-owned by a founder and an entity and an individual related
to a founder. The Class B common stock has no voting rights or
preemptive rights, is not redeemable or assessable and is not
entitled to the benefit of any sinking fund or antidilution
provisions. Further, the Class B common stock is not entitled to
the payment of dividends and does not participate in any
distributions upon liquidation, whether voluntary or involuntary,
of the Company.
In September of 1989, the Class B common stock was converted into
common stock at a rate of fifteen shares of common stock for each
share of Class B common stock surrendered for conversion. The
conversion occurred subsequent to the consummation of the
acquisition of Enterprise Car Rental by the Company and prior to
the recision of that merger (Note 6).
NOTE 6 - MERGER AND RELATED RECISION
In August of 1989, the Company consummated an exchange transaction
pursuant to which Triangle acquired all of the outstanding shares
of Enterprise Car Rental, Ltd. d.b.a. Wheels International Rent A
Car ("Wheels") in exchange for 326,500,800 shares of no par value
common stock. In conjunction with the merger, Triangle advanced
$119,110 to Wheels. Effective September 30, 1989, Triangle and
Wheels consummated a Compromise and Settlement Agreement pursuant
to which the merger was reversed. Wheel's shareholders returned all
but 10,000,000 common shares to Triangle in exchange for their
original shares of Wheels to indemnify and hold harmless Triangle
from actions by third parties to Wheels and to secure performance
of obligations of Wheels to cooperate in any legal actions
undertaken by Triangle against third parties of Wheels.
The stockholders' (deficit) in the accompanying financial
statements has been reported as if the merger had not taken place.
The 10,000,000 common shares not returned are recorded as issued in
October of 1989 for no consideration. The advances to Wheels of
$119,110 were written off at December 31, 1989. Management does not
TRIANGLE, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOTE 6 - CONTINUED
anticipate any further contingencies associated with this failed
merger, however, there is no assurance that there will be no
further contingencies.
NOTE 7 - SUBSEQUENT EVENTS
On January 29, 1997, an Agreement and Plan of Share Exchange
("Agreement") was entered into by and between the Company and (I)
PetCare, Inc., a Delaware corporation and (ii) the PetCare
shareholders. Under the terms of this Agreement, Triangle, Inc.
acquired all of the 3,000,000 issued and outstanding shares of
common stock of PetCare, Inc. in exchange for 600,000,000 shares of
the common stock of Triangle, Inc. It is intended that this
transaction shall be a tax-free exchange of shares. The Triangle,
Inc. shares are voting shares, are restricted from transfer without
registration under the Securities Act of 1933, as amended, and are
subject to escrow until PetCare completes the acquisition of its
first veterinary hospital.
Also, under the terms of the Agreement, certain conditions
precedent were met by Triangle, Inc., which included among other
items, a 1-for-200 reverse stock split of its common stock on
February 23, 1997.
NOTE 8 - NAME CHANGED
The corporate name has been changed from Triangle, Inc. to
PetHealth Systems, Inc. effective February 10, 1997.<PAGE>
PART III
Item 9. Directors, Executive Officers, Promoters and Control
Persons, Compliance with Section 16(a) of the Exchange
Act.
The officers and directors of the Company as of the date of
this report are:
Name Age Position
Ted A. Sprinkle, Jr. DVM 52 President, Chief Executive
Officer, Director
Kenneth J. Rotondo, DVM 47 Executive Vice President, Chief
Operating Officer, Chief Financial
Officer, Secretary, Treasurer,
Director
Joseph J. Messina 42 Director and Chairman of the
Board of Directors
Martin I. Saposnick 50 Director
Ted A. Sprinkle, Jr., DVM is a co-founder of the Company. From
1987 to 1996 Dr. Sprinkle was Chief Executive Officer of Nedlaw
Stable, Inc., a syndicated horse racing organization. Dr. Sprinkle
started Nedlaw Stable, Inc. after 20 years of experience as a
successful equine veterinarian. Dr. Sprinkle received his DVM
degree from Cornell University in 1969.
Kenneth J. Rotondo, DVM, MBA has practiced veterinary medicine
in the Capital Region of New York for 21 years, and presently owns
and is the Hospital Director of the Animal Health Center, Clifton
Park, New York. Dr. Rotondo owns a Culligan Water Treatment
dealership in central New York, and is a director and shareholder
of Software Sense, Inc., Rochester, New York, a private company
which sells specialized computer software to the chemical and
utility industries. Dr. Rotondo is active in community and
professional activities and lectures at Cornell University.
Dr. Rotondo is Past President of the Animal Protective
Foundation of Schenectady County, New York, has held offices in the
Capital District Veterinary Medical Society, and was appointed by
the Dean of Cornell University to the Cornell University Veterinary
College Advisory Council. Dr. Rotondo served 11 years as a member
of the Executive Board of Directors, New York State Veterinary
Medical society, and was elected President of this organization in
1990. In 1989 he received the Award of Merit from the New York
State Veterinary Medical Society, and the Gold Centennial Medallion
from this same organization in 1990. In 1992 Dr. Rotondo was named
New York State's Veterinarian of the Year.
Dr. Rotondo received his Bachelor of Science degree in 1971
from the State University of New York, a Doctor of Veterinary
Medicine degree from Cornell University in 1975, and a Masters of
Business Administration from Rennsalaer Polytechnic Institute in
1979.
Joseph J. Messina, a co-founder of the Company, is Chairman and
Chief Executive Officer of Ameristar Capital Corporation, a lease
financing and asset based lender, and of Ameristar Group
Incorporated, an investment banking and financial consulting firm
specializing in "small cap" opportunities. Mr. Messina previously
was President and Chief Operating Officer of Vendor Funding
Co.,Inc., a subsidiary of Bank of Ireland First Holdings. Vendor
Funding Co., Inc., a national middle market lessor and asset based
lender, was co-founded by Mr. Messina and subsequently sold to
First NH Banks of Manchester, New Hampshire prior to its
acquisition by Bank of Ireland First Holdings. Mr. Messina is a
director of Credit America Venture Capital, an entity formed to
acquire the manufacturing and distribution network of Mako Marine
International, Inc., a public company of which he is a director.
Mr. Messina is past President of the Eastern Association of
Equipment Lessors.
Martin I. Saposnick, a co-founder of the Company, is President
of Ameristar Group Incorporated. Previously, Mr. Saposnick was
President of Remsen Group, an independent investment banking and
financial consulting services company. Prior thereto, Mr. Saposnick
was Chairman and President of Marsan Securities Co., Inc., a
financial services firm which was wholly-owned by Marsan Capital
Corporation, a public company, of which he was Chairman and
President. In 1985 Mr. Saposnick entered into a consent decree with
the Commission, pursuant to which Mr. Saposnick agreed to
revocation of his registrations with the Commission as a broker and
broker-dealer financial principal; the agreement ended
administrative proceedings initiated by the Commission in
connection with Mr. Saposnick's alleged participation in the
initial public offering of securities of North Atlantic Airlines,
Inc. From 1974 to 1977, Mr. Saposnick was Vice President of
Chestman Securities, Inc. and worked at the New York Stock Exchange
as Assistant Manager of the Specialist Surveillance Division from
1969 to 1974. Mr. Saposnick is a graduate of Hunter College, New
York, and completed studies in finance and investments at Baruch
College, New York.
Based solely upon a review of Forms 3 and 4 and amendments
thereto furnished to the registrant under Rule 16a-3(e) during its
most recent fiscal year, and Forms 5 and amendments thereto
furnished to the registrant with respect to its most recent fiscal
year, and any written representation referred to in Item 405(b) of
Regulation S-B, no director, officer, beneficial owner of more than
10% of the Common Stock of the registrant failed to file on a
timely basis any reports required by Section 16(a) of the Exchange
Act during the most recent fiscal year. Because the Common Stock of
the registrant was not registered under Section 12(g) of the
Exchange Act until subsequent to December 31, 1996, the directors
and officers and holders of more than 10% of the Common Stock were
not subject to Section 16 of the Exchange Act, and therefore there
were no filings with the Commission of Form 3, 4 or 5 by such
persons prior to December 31, 1996.
Item 10. Executive Compensation.
The following table sets forth the compensation paid to the
Chief Executive Officer, and those of the four most highly
compensated executive officers of the registrant who were paid more
than $100,000 cash in any of the three fiscal years ended December
31, 1996. The table includes compensation paid such persons by any
subsidiaries of the registrant (there were none at December 31,
1996).
Subsequent to December 31, 1996, the Company issued warrants to
purchase 37,500 shares of Common Stock to Robert K. Ellis, former
President and director of the Company, and warrants to purchase
37,500 shares of Common Stock to Peter Ellis, former Secretary and
Treasurer and director of the Company, for the services provided by
such persons for many years to the Company for which they were not
paid any compensation. The warrants will be exercisable from
February 15, 1998 through February 15, 2000, at an exercise price
of $1.00 per share; upon exercise the Company will file a
registration statement for the resale of such shares by such
persons, at the Company's sole expense.
Summary Compensation Table
Long Term Compensation
Annual Compensation Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (I)
Other
Name Annual Restricted All Other
and Compen- Stock LTIP Compen-
Principal Salary Bonus sation Award(s) Options/ Payouts sation
Position Year ($) ($) ($) SARs(#) ($) ($)(2)
- --------------------------------------------------------------------------------
Robert K. Ellis 1996 $-0- -0- -0- $-0- -0- -0- $-0-
CEO and 1995 -0- $-0- -0- -0- -0- -- -0-
President 1994 -0- -0- -0- 9,600(1) -0- -0- -0-
Peter W. Ellis 1996 $-0- $-0- -0- -0- -0- -- -0-
Secretary and 1995 -0- -0- -0- 8,100(1) -0- -0- -0-
Treasurer 1994 -0- -0- -0- 8,640(1) -0- -0- -0-
(1) See "Recent Sales of Unregistered Securities" under Part II, Item 5.<PAGE>
Cash Compensation.
Subsequent to December 31, 1996 and subject to the availability of
funds, the Company will pay Ted A. Sprinkle, Jr. an annual salary
of $85,000 as President of the Company. Dr. Kenneth J. Rotondo
will be paid an annual salary of $70,000 as Executive Vice
President of the Company. As of the date of this report, there is
no policy regarding payment of any fees to non-executive directors,
but such persons will be reimbursed for out-of-pocket expenses
related to the business of the Company or attendance at meetings of
the board of directors.
Stock Plans.
Incentive Stock Option Plan.
The Company adopted an Incentive Stock Option Plan ("ISOP") in
1988, and the shareholders of the Company readopted the ISOP in
February 1997, to provide for the grant of options to purchase
Common Stock; the options are intended to qualify for the delayed
income recognition provisions of Section 422A of the Internal
Revenue Code of 1986, as amended. 50,000 shares are reserved for
issue on exercise of options which may be granted in the future.
Options may be granted to employees and directors of the Company,
as determined by the board of directors or a committee thereof.
The exercise price must always equal at least the fair market value
of the Common Stock on option grant date; options granted to
holders of more than 10% of the Company's Common Stock must have an
exercise price equal to 110% of fair market value on the option
grant date. Options may have a term of up to 10 years, except for
options granted to 10% holders, which must have a term not
exceeding 5 years. No options have been granted to date. The
Company has filed with the Commission a registration statement on
Form S-8 to register the resale of such shares as may be issued on
exercise of options which may be granted in the future.
1997 Stock Award Plan.
Subsequent to December 31, 1997, the Company adopted (in February
1997) the 1997 Stock Award Plan, pursuant to which up to 400,000
shares of Common Stock may be issued to persons for consulting or
other services provided to the Company, as determined by the board
of directors or a committee thereof. Such shares will be valued
based on market price at the time of issue and the services
provided; issuance of shares will constitute income to the
recipient and be treated as an expense on the books of the Company.
The Company has filed a registration statement on Form S-8 to
register the resale of such shares as may be issued. In February
1997 the new board of directors of the Company approved the
issuance of 75,000 shares to two former officers (37,500 shares
each), for services valued at $75,000 ($37,500 each) previously
provided to the Company. See "Certain Relationships and Related
Transactions."
Item 11. Security Ownership of Certain Beneficial Owners and
Management
The number of issued and outstanding shares of Common Stock of the
registrant, and the percentage of the total of the outstanding
shares, owned as of the date of this report, by (I) each officer
and director of the registrant, (ii) each person known to the
registrant to own 5% or more of the total issued and outstanding
shares of Common Stock of the registrant, and (iii) the officers
and directors of the registrant as a group, are stated below.
Title of Name and Address of Amount and Nature of Percent
of
Class Beneficial Owner Beneficial Ownership Class
Common, Ted A. Sprinkle, Jr.* 630,000 shares 19.2%
no par 1343 Mill Hill Terrace direct
Southport, CT 06490
Joseph J. Messina* 630,000 shares 19.2%
444 Madison Ave. direct
Suite 1710
New York, NY 10022
MIS Management, Inc. 630,000 shares 19.2%
444 Madison Ave. direct**
Suite 1710
New York, NY 10022
Martin I. Saposnick* 630,000 shares 19.2%
444 Madison Ave. indirect**
Suite 1710
New York, NY 10222
Kenneth J. Rotondo* 630,000 shares 19.2%
25 Habel Lane direct
Scotia, NY 12302
Thomas LeVine 180,000 shares 6.0%
400 Main Street direct
Stamford, CT 06901
Officers and directors
as a group (4 persons) 2,520,000 76.1%
* Officer and/or director
** Mr. Saposnick is a shareholder of MIS Management, Inc.,
a private corporation is the owner of record of the
630,000 shares of Common Stock.
<PAGE>
Item 12. Certain Relationships and Related Transactions
Exchange Transaction. The Exchange, pursuant to which PetCare,
Inc. was acquired as a wholly-owned subsidiary, and the Company was
recapitalized by the reverse stock split, was negotiated at arms'
length between the former directors of the Company, and the
directors of PetCare, Inc. (such four individuals became the
current directors of the Company following the Exchange in February
1997). The shares of Common Stock of PetCare, Inc. which were
acquired by the PetCare, Inc. shareholders were purchased by such
persons for $3,000 aggregate cash consideration, and for services
provided by such persons and by other shareholders of PetCare, Inc.
Subsequent to their capitalization of PetCare, additional funding
of approximately $50,000 has been provided by Ameristar Group
Incorporated, a corporation owned by Mr. Saposnick and Mr. Messina.
Issuance of Shares to Officers. During the two fiscal years
ended December 31, 1996 the Company issued 6,575 shares of
restricted Common Stock to two former officers at $2.01 per share
(for a total of $13,150 cash) contributed to the Company by such
persons to pay general and administrative expenses.
Consulting Agreement - Ameristar Group, Incorporated. The
Company has agreed to pay Ameristar Group, Incorporated $10,000 per
month for the 12 months after first receipt of funds from an equity
financing of the Company, for financial consulting and general
administrative support services which are provided to the Company
by Ameristar Group, Incorporated. Such general administrative
support services have included the provision of office space and
equipment, telephone and other telecommunication services, and
administrative and clerical support staff. Such agreement was not
negotiated at arms' length due to the relationship between the
Company and Mr. Saposnick and Mr. Messina, directors and record or
beneficial shareholders of the Company.
Issuance of Shares by PetCare, Inc. Prior to Exchange. Prior
to the negotiation of the Agreement and Plan of Share Exchange
between PetCare, Inc. and the Company, in December, 1996 PetCare,
Inc. issued 300,000 shares of Common Stock, to persons not
affiliated with PetCare, Inc., for services provided to PetCare
including legal, accounting and marketing consulting services.
Such shares were exchanged for an equal number of shares of Common
Stock of PetHealth Systems, Inc. upon consummation of the Exchange.
Such shares of PetHealth Systems, Inc. constitute restricted
securities under the 1933 Act and Rule 144 promulgated thereunder
by the Commission, however, because such shares were issued as
compensation under a compensatory plan or contract pursuant to Rule
701 promulgated by the Commission, such shares may be resold by the
holders without registration under the Act commencing 90 days after
issuance by PetCare, Inc.
Proposed Acquisition of Animal Health Center. Dr. Kenneth J.
Rotondo, an officer, director and principal shareholder of the
Company, is the owner and chief executive officer of Animal Health
Center ("AHC"), a veterinary hospital located in Clifton Park, New
York. The Company has entered into a letter of intent with Dr.
Rotondo to acquire AHC on terms to be finalized after the date of
this report. Although Dr. Rotondo will not vote as a director on
approval of final terms to be offered by the Company for AHC, the
transaction (if consummated) between the Company and Dr. Rotondo
will not be an arms' length transaction.
PART IV
Item 13. Exhibits and Reports on Form 8-K.
(a) Exhibits
Exhibit
Number Title of Exhibit
2.0 Agreement and Plan of Share Exchange(1)
3.1 Amendments to Articles of Incorporation(2)
10.1 1997 Stock Award Plan(2)
10.2 Incentive Stock Option Plan(2)
(1) Incorporated by reference from exhibits filed with the Form 8-K, which
was filed with the Commission on February 19, 1997.
(2) Incorporated by reference from exhibits filed with the registrant's
Registration Statement on Form S-8, filed February 21, 1997, registration
number 333-22203.
(b) Reports filed on Form 8-K.
During the fourth quarter of the fiscal year ended December
31, 1996 the registrant filed one Current Report on Form 8-K
(December 27, 1996) reporting an Item 5 event (the signing of a
letter of intent between the registrant and PetCare, Inc.). No
financial statements were filed with such 8-K Report.
<PAGE>
Signatures
In accordance with Section 13 of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
PetHealth Systems, Inc.
(Registrant)
/s/ Ted A. Sprinkle, Jr.
Ted A. Sprinkle, Jr.
April 11, 1997
Pursuant to the requirements of the Exchange Act, this report has
been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
/s/ Ted A. Sprinkle, Jr.
Ted A. Sprinkle, Jr., President,
Director
April 11, 1997
/s/ Kenneth J. Rotondo
Kenneth J. Rotondo, Chief Financial Officer,
Treasurer, Secretary, Director
April 11, 1997
/s/ Joseph J. Messina
Joseph J. Messina, Director
April 11, 1997
/s/ Martin I. Saposnick
Martin I. Saposnick, Director
April 11, 1997
