SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)OF
THE SECURITIES EXCHANGE ACT OF 1934 FOR THE PERIOD
ENDED MARCH 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE
TRANSITION PERIOD FROM TO
----------------
Commission file number 0-18160
4HEALTH, INC.
(Exact name of registrant as specified in its charter)
----------------
Utah 87-0468225
(State of incorporation) (I.R.S. Employer Identification No.)
5485 Conestoga Court
Boulder, Colorado 80301
(Address of principal executive offices)
Registrant's telephone number: (303) 546-6306
----------------
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 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 past 90 days. Yes: X No:
The number of shares of the registrant's Common Stock, par
value $.01 per share, outstanding as of April 18, 1997 was
11,384,847.
1
4Health, Inc.
Index to Form 10-Q
<TABLE>
<CAPTION>
<S> <C>
PART I. FINANCIAL INFORMATION Page
Item 1. Financial Statements:
Condensed Balance Sheets as of March 31, 1997
and March 31, 1996 3
Condensed Statement of Operations for Three
Months Ended March 31, 1997 and 1996 4
Condensed Statements of Cash Flows for Three
Months Ended March 31, 1997 and 1996 5
Notes to Condensed Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 6
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 9
Item 2(c).Changes in Securities 10
Item 4. Submission of Matters to a Vote of Security
Holders 11
Item 5. Other Information 11
Item 6. Exhibits and Reports on Form 8-K 11
SIGNATURES 15
</TABLE>
This Quarterly Report on Form 10-Q includes "forward-looking
statements" within the meaning of Section 27A of the
Securities Act of 1933, as amended (the "Securities Act") and
Section 21E of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). All statements other than
statements of historical facts included in this Quarterly
Report, including, without limitation, those regarding the
Company's financial position, business, marketing and product
introduction and development plans and objectives of
management for future operations, are forward looking
statements. Although the Company believes that the
expectations reflected in such forward-looking statements are
reasonable, it can give no assurance that such expectations
will prove to have been correct. Important factors that could
cause actual results to differ materially from the Company's
expectations ("Cautionary Statements") are disclosed under
"Risks Related to the Business of 4Health" and elsewhere in
the Company's Annual Report on Form 10-K dated March 27, 1997
and in "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and else-where in the
Annual Report. All subsequent written and oral forward-
looking statements attributable to the Company or persons
acting on behalf of the Company, are expressly qualified in
their entirety by the Cautionary Statements.
2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
4Health, Inc.
Condensed Balance Sheets
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
--------- -----------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 422,780 $ 1,086,168
Accounts receivable, net 1,848,058 1,105,207
Inventories 1,684,801 2,534,881
Deferred tax asset 336,509 313,872
Prepaid expenses 704,148 171,138
Notes receivable 275,380 265,820
--------- ---------
Total current assets 5,271,676 5,477,086
PROPERTY AND EQUIPMENT, NET 2,560,627 2,559,629
OTHER ASSETS, NET 1,088,614 1,136,531
NOTES RECEIVABLE 106,747 116,308
--------- ---------
Total assets $ 9,027,664 $ 9,289,553
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 920,819 $ 484,079
Accrued liabilities 665,812 878,025
Taxes payable 77,895 113,833
Notes payable 27,693 20,555
Capital leases 2,080 3,733
--------- ---------
Total current liabilities 1,694,298 1,500,225
DEFERRED TAXES 33,271 152,112
NOTES PAYABLE 1,320,086 1,275,716
STOCKHOLDERS' EQUITY
Common stock 113,828 113,695
Additional paid in capital -
common stock 8,272,618 8,227,752
Treasury stock (50,000) (50,000)
Accumulated deficit (2,356,438) (1,929,947)
--------- ---------
Total stockholders' equity 5,980,008 6,361,500
Total liabilities and stockholders' --------- ---------
equity $ 9,027,664 $ 9,289,553
========= =========
</TABLE>
See notes to condensed financial statement
3
4Health, Inc.
Condensed Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31,
1997 1996
---------------------------
<S> <C> <C>
Net Sales $ 3,795,953 $ 3,473,399
Cost of goods sold 1,715,328 1,257,455
--------- ---------
Gross margin 2,080,625 2,215,944
Operating Expenses:
Sales 541,588 527,828
Marketing 1,186,337 997,700
Research and development 173,803 59,487
General and administrative 769,083 596,676
--------- ---------
Total operating expenses 2,670,811 2,181,691
--------- ---------
Net income from operations (590,186) 34,253
Other income (expense) 22,317 (10,429)
--------- ---------
Net income (loss) before
income taxes (567,869) 23,824
Income tax benefit (provision) 141,378 (12,162)
--------- ---------
NET INCOME (LOSS) $ (426,491) $ 11,662
========= =========
Net income (loss) per common share (.038) .001
========= =========
Weighted average shares
outstanding 11,374,500 8,714,727
========= =========
</TABLE>
See notes to condensed financial statements.
4
4Health, Inc.
Condensed Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31,
1997 1996
----------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (426,491) $ 11,662
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation and amortization 87,816 42,627
Loss on disposal of assets 1,719 0
(Increase) decrease in:
Accounts receivable (742,851) (48,166)
Inventory 850,080 64,945
Prepaid expenses and other (510,932) (67,063)
Deferred income tax assets (22,637) 0
(Increase) decrease in:
Accounts payable 436,740 296,070
Accrued interest payable 0 1,246
Accrued liabilities (212,214) 31,953
Taxes payable (35,938) 18,258
Deferred income tax liability (118,841) 0
------- -------
Net cash (used in) from operating
activities (693,549) 351,531
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed assets (64,693) (172,306)
Net cash from (used in) investing ------- -------
activities (64,693) (172,306)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from common stock 45,000 0
Repayments on borrowings 51,508 0
Repayments on capital leases (1,653) (1,858)
Net cash used in financing ------- -------
activities 94,855 (1,858)
------- -------
NET (DECREASE) INCREASE IN CASH (663,388) 177,367
CASH AND CASH EQUIVALENTS, at
beginning of period 1,086,168 919,935
CASH AND CASH EQUIVALENTS, at end
of period $ 422,780 $ 1,097,303
========= =========
</TABLE>
See notes to condensed financial statements.
5
4Health, Inc.
Notes to Condensed Financial Statements March 31, 1997
(Unaudited)
Note 1:
Basis of Presentation
The accompanying unaudited condensed financial
statements have been prepared in accordance with generally
accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not
include all of the information and footnotes required by
generally accepted accounting principles for complete
financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been
included. Operating results for the three month period ended
March 31, 1997 are not necessarily indicative of the results
that may be expected for the year ended December 31, 1997.
For further information, refer to the consolidated financial
statements and footnotes thereto included in the Form 10-K
dated March 31, 1997 and the Company's Proxy Statement dated
April 25, 1997.
Note 2:
Certain Sales Transactions
In February 1997, the Company entered into a negotiated
settlement with General Nutrition Corporation, Inc. ("GNC")
to settle all pending litigation between the two parties.
The terms of the settlement include the Company supplying GNC
with certain 4Health products free of charge and taking back
certain other 4Health products. The execution of this
settlement agreement was partially completed in the first
quarter of 1997 but had no material effect on the results of
operations or financial position of the Company.
On February 25, 1997, 4Health entered into a barter
agreement with Active Media Services, Inc. Under the terms
of the agreement, the Company will sell to Active Media
certain inventory with an approximate cost of $780,000 for
which the Company will receive $2,300,000 in barter credits.
Product costing $424,149, with an equivalent sales price, was
shipped to Active Media during the first quarter. The
balance of this transaction should take place in the second
quarter of 1997.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
See the disclosure regarding forward looking statements
above.
6
Results of Operations
Comparison of First Quarter 1997 to 1996
Net sales for the three months ended March 31, 1997,
increased 9.3% to $3.8 million from $3.5 million compared to
the same period a year ago. Net sales in the Nature's Secret
brand were down 11.5%, or $369 thousand, for the first
quarter 1997 compared to the first quarter 1996 due primarily
to a drop in sales to a major customer. The overall increase
in year-to-date 1997 net sales compared to 1996 can be
attributed to $538 thousand of net sales of the new Undo
product into the mass retail channel of distribution and $149
thousand in net sales to international customers. Also
included in the Company's first quarter 1997 net sales was a
$424 thousand sale to Active Media Services, Inc., a barter
company. This sale was recorded at the cost of the product
sold.
Gross profit decreased 6.1 % to $2.08 million for the
first quarter 1997 from $2.22 million for the same period in
1996. Gross margin for the first quarter 1997 declined 9.0%
compared to the first quarter 1996. Management attributes
this decline to the $424 thousand sale to Active Media
Services, Inc. recorded at the cost of the product sold. This
transaction accounted for 6.9% of the 9.0% decline. The
balance of the decline was due to more aggressive discounting
and a shift in sales to products with lower profit margins.
General and administrative expenses increased 29% to
$769 thousand in the first quarter 1997 compared to $597
thousand in the first quarter 1996, however, as a percentage
of net sales, these expenses only increased 3.2% to 20.3% in
the first quarter 1997 from 17.1% in the first quarter 1996.
The increase was due to legal fees related to the settlement
of a dispute with a major customer, costs associated with the
merger with Surgical Technologies Inc., and costs related to
operating as a publicly held company. Sales and marketing
expenses increased 13.2% in the first quarter of 1997 to $1.7
million compared to $1.5 million for the same period in 1996.
However, as a percentage of sales, sales and marketing
expenses only increased 1.6% to 45.5% in the first quarter
1997 from 43.9% in the first quarter 1996. Management
attributes the increase to increased advertising and
promotion costs in the marketing department. 4Health's
research and development department increased spending $114
thousand in the first quarter 1997 compared to the first
quarter 1996. Development of new products and clinical
studies related to new and existing products explain this
increase.
Interest income increased 62.5% to $26 thousand in the
first quarter 1997 from $16 thousand in the first quarter
1996. The reason for this increase was the average balance
of cash and cash equivalents in the first quarter of 1997 was
greater than during the same period a year earlier.
7
The Company reported a net loss of $426 thousand, or
$.038 per share, for the three months ended March 31, 1997
compared to net income of $12 thousand, or $.001 per share,
for the three months ended March 31, 1996.
Liquidity and Capital Resources
The Company's cash and cash equivalents position at
March 31, 1997, was $.4 million compared to $1.1 million on
December 31, 1996. The $.7 million decrease in cash and
cash equivalents position was a result of these resources
being used to fund ongoing operations. The Company has a
working capital ratio of 3.1 to 1.
The Company invests it's cash in an interest bearing
money market account.
Accounts receivable totaled $1.8 million at March 31,
1997 as compared to $1.1 million on December 31, 1996. This
$.7 million or 67% increase was primarily due to the
receivable created by the sale to Active Media Services,
Inc. and a general increase in net sales on account in the
first quarter of 1997 when compared to the fourth quarter of
1996.
Inventories were valued at $1.7 million at March 31,
1997 as compared to $2.5 million at December 31, 1996, which
represents 32% decrease or $.8 million. This decrease was
due primarily to the sale to Active Media Services, Inc. of
$.4 million and a general increase in net sales in the first
quarter of 1997 when compared to the fourth quarter of 1996.
The prepayment of advertising and promotion costs
related to the Undo product, as well as expenses associated
with the introduction of new products and packaging, caused
prepaid expenses to increase to $.7 million at March 31, 1997
from $.2 million at December 31, 1996. This represents an
increase of 311%.
Capital expenditures for the first three months of 1997
were $65 thousand compared to $172 thousand for the same
period in 1996.
Accounts payable and accrued liabilities increased $.2
million which is primarily related to amounts due suppliers
for inventory and unpaid advertising and promotion costs.
The deferred tax liability decreased $118 thousand as a
result of interim tax estimates by management.
The Company had $.4 million in cash reserves at March
31, 1997 and working capital of $3.6 million with a 3.1 to 1
working capital ratio. Former Surgical Stockholders were
issued 1,135,554 Warrants and, if exercised at an $11.00
exercise price, could generate $12.5 million in cash for
8
4Health, Inc. These Warrants expire 18 months from the
issuance date of July 15, 1996 and likelihood of the
Warrants being exercised is dependent on the performance of
the 4Health, Inc. Common Stock. The likelihood of exercise
increases as the stock price exceeds $11.00 per share.
Currently, the stock is trading at approximately $5.75 per
share.
The Company's future capital requirements will depend on
many factors, including the nature and timing of orders from
customers, collection of accounts on trade sales, the
expansion of sales and marketing efforts, costs associated
with entering into new channels of distribution, and the
status of competitive products.
Management believes that its working capital will be
sufficient to satisfy anticipated sales growth, investment,
and facilities for at least 3 months. The Company is
currently seeking additional financing, but there can be no
assurance that any additional financing will be available at
an acceptable terms, or at all. The inability to obtain such
financing could have a material adverse effect on the
Company's business, financial condition, and results of
operations.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
In May of 1996, the Company became aware of the use of
the trademark "Take Charge", for which the Company had
applied for a federally registered trademark (the "Mark"), by
a company in Virginia, Ultra Nutrition International, Inc.
On July 3, 1996, the Company filed an action, 4Health, Inc.
vs. Ultra Nutrition International, Inc. (96-2-1618), in the
United States District Court for the District of Colorado for
a declaratory judgment to establish the Company's right to
continue using the Mark. On July 19, 1996, Ultra Nutrition
International, Inc., filed an action, Ultra Nutrition
International, Inc. vs. 4Health, Inc. (96-0048-C), in the
United States District Court for the Western District of
Virginia, alleging that the Company's use of the Mark was in
violation of the rights of Ultra Nutrition International,
Inc., and seeking damages relating to the use of the Mark by
the Company and injunctive relief to prohibit use of the Mark
by the Company. On August 9, 1996, Ultra Nutrition
International, Inc., amended its complaint to add as a
defendant one of the Company's customers, General Nutrition
Corporation, ("GNC"). Thereafter, GNC filed a crossclaim
against the Company for breach of contract and fraud,
asserting its rights to damages and recission with respect to
those items of product bearing the Mark which GNC had
purchased from the Company. The Company tendered defense of
the action to its insurance carrier, U.S. Fire, and the
carrier accepted the defense of the action, reserving its
rights under the applicable policy.
9
The Company answered the amended complaint, asserting
that its rights to the Mark were superior to those of Ultra
Nutrition International, Inc., that it acted in good faith
and that no damages or other relief was available. With
respect to the cross-claim of GNC, the Company filed an
answer asserting that the Company did not violate any
obligations toward GNC and that GNC is not entitled to any
relief.
On October 8, 1996, the Company entered into a
negotiated settlement with Ultra Nutrition International,
Inc., which involved the payment of certain funds to Ultra
Nutrition International, Inc. by the Company's insurance
carrier, and the immediate cessation by the Company of the
use of the Mark in certain advertisements, and the cessation
(after ten months) of the sale of products bearing the Mark
to retailers. The settlement provides for a dismissal with
prejudice of the action against the Company by Ultra
Nutrition International, Inc.
In February, 1997, the Company entered into a negotiated
settlement with GNC which involved supplying certain 4Health
products free of charge to GNC, taking back certain inventory
from GNC, and abandoning certain claims brought against GNC
in a separate lawsuit filed by 4Health in Colorado on January
30, 1997. In return, GNC agreed to dismiss certain of its
cross-claims with prejudice and agreed to a covenant not to
sue with respect to the remaining claims. As a consequence,
all claims between GNC and 4Health have now been resolved.
4Health has demanded that its insurance carrier, U.S. Fire,
reimburse it for the costs associated with the settlement.
To date, U.S. Fire has denied any obligation to 4Health in
connection with the GNC claims.
Item 2(c). Changes in Securities
On February 21, 1997 an engagement letter was signed
between 4Health and Allen & Company Incorporated which
provided that Allen & Company will act as the Company's
financial advisor with respect to investment banking and
other corporate matters in exchange for specified warrants
("Warrants") to purchase 4Health Common Stock. On April 15,
1997 two warrant certificates ("Warrant Certificates") were
executed by both parties.
The first warrant certificate entitles the holder to
purchase 250,000 shares of 4Health Common Stock at a purchase
price of $4.00 per share. The second warrant certificate
entitles the holder to purchase 1,000,000 shares of 4Health
Common Stock at a purchase price of $6.00 per share. The
Warrants are exercisable, at the option of the holder, in
whole or in part at any time from the date of issuance until
their expiration on February 28, 2002, (a) in cash, or (b) at
the election of the holder, without the payment of cash, by
reducing the number of shares of Common Stock that would be
10
obtainable upon the exercise of a warrant and payment of the
exercise price in cash so as to yield a number of shares of
Common Stock upon such exercise equal to the product of (i)
the number of shares of Common Stock for which such warrant
is exercisable as of the date of exercise and (ii) a
fraction, the numerator of which is the excess of the current
market value per share of the Common Stock on the exercise
date over the exercise price per share as of the exercise
date and the denominator of which is the current market value
per share of the Common Stock on the exercise date. Each
Warrant Certificate gives the holder a one-time right to
require the Company to prepare and file a registration
statement.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security holders
during the first quarter ended March 31, 1997.
Item 5. Other Information
No other relevant matters occurred during the first
quarter
ended March 31, 1997.
Item 6. Exhibits and Reports on Form 8-K
Exhibit Index
Item 2. Plan of Acquisition, Reorganization, Liquidation,
or Succession
2.01 Agreement and Plan of Merger dated April 10, 1996,
by and between 4health, Inc., and Surgical Technologies, Inc.
as amended June 4, 1996. Incorporated by Reference(3).
2.02 Asset Purchase Agreement dated November 30, 1995,
by and between Microtek Medical, Inc., and Surgical
Technologies, Inc. Incorporated by Reference(2).
2.03 Acquisition Agreement dated effective January 1,
1996, by and between Rex Industries Acquisition Corporation
and Rex Industries, Inc. Incorporated by Reference(2).
Item 3. Articles of Incorporation and Bylaws
3.01 Articles of Incorporation of Surgical Subsidiary,
Inc., a Utah Corporation now known as Surgical Technologies,
Inc. Incorporated by Reference(5).
3.02 Articles of Merger and related Plan of Merger.
Incorporated by Reference(5).
3.03 Bylaws. Incorporated by Reference(5).
11
3.04 Articles of Merger and related Plan of Merger.
Incorporated by Reference(3).
Item 4. Instruments Defining the Rights of Security Holders
4.01 Form of Warrant Agreement between 4Health, Inc. and
Zions First National Bank with related form of Warrant.
Incorporated by Reference(3).
4.02 Form of Sale Restriction Agreement respecting
shareholders of both Surgical Technologies, Inc., and
4Health, Inc. Incorporated by Reference (3).
4.03 Form of Consent, Approval, and Irrevocable Proxy
respecting certain Surgical stockholders with related
schedule. Incorporated by Reference(3).
4.04 Form of Consent, Approval, and Irrevocable Proxy
respecting certain 4Health stockholders with related
schedule. Incorporated by Reference(3).
4.05 Specimen Common Stock Certificate. Incorporated by
Reference(3).
4.06 Specimen Warrant Certificate. Incorporated by
Reference(3).
4.07 Warrant certificates between 4Health and Allen &
Company Incorporated dated April 15, 1997. Incorporated by
Reference(7).
Item 10. Material Contracts
10.01 Form of Directors' Options. Incorporated by
Reference(2)*.
10.02 Stock Option and Stock Award Plan. Incorporated by
Reference(2)*.
10.03 1991 Directors' Stock Option Plan. Incorporated by
Reference(2)*.
10.04 Directors' Stock Option Plan. Incorporated by
Reference(4)*.
10.05 Technology Purchase Agreement between Ellis E.
Williams, Professional Medical, Inc., and Surgical
Technologies, Inc., dated February 4, 1993. Incorporated by
Reference(5).
10.06 Patent Cross-License Agreement between Utah Medical
Products, Inc., and Professional Medical, Inc., dated
February 9, 1993. Incorporated by Reference(5).
12
10.07 Form of Promissory Note in the amount of $1,000,000
payable to First Interstate Bank, dated August 16, 1994.
Incorporated by Reference(6).
10.08 Deed of Trust Note and related Deed of Trust,
Assignment of Rents, Security Agreement, and Fixture Filing,
dated April 8, 1994, in the principal amount of $1,000,000
due Standard Insurance Company. Incorporated by Reference(5).
10.09 Stock Purchase Agreement dated May 6, 1994, between
Surgical Technologies, Inc., and Benitex, A.G. Incorporated
by Reference(5).
10.10 Real Estate Contract dated February 2, 1994,
between Surgical Technologies, Inc. and Rex Crosland related
to the facilities at 2801 South Decker Lake Lane, Salt Lake
City, Utah. Incorporated by Reference(5).
10.11 Asset Purchase Agreement between Milwaukee
Acquisition Company, Insulation Distributors, Inc., and
Surgical Technologies, Inc., effective September 30, 1993.
Incorporated by Reference(5).
10.12 All-Inclusive Promissory Note and related All-
Inclusive Trust Deed, relating to sale of building and
property, dated March 31, 1995, in the principal amount of
$981,375.32. Incorporated by Reference(6).
10.13 1996 Long-Term Stock Incentive Plan. Incorporated
by Reference(3).
10.14 Form of $2.00 option granted to Surgical directors,
officers, and employees with related schedule. Incorporated
by Reference (3)*.
10.15 Form of Option granted to Todd B. Crosland.
Incorporated by Reference(3)*.
10.16 Form of Option granted to Rockwell D. Schutjer.
Incorporated by Reference(3)*.
10.17 Form of Proprietary Information, Inventions, and
Non-Competition Agreement between 4Health and R. Lindsey
Duncan. Incorporated by Reference(3).
10.18 Form of Employment Agreement between the Surviving
Corporation and Rockwell D. Schutjer. Incorporated by
Reference(3)*.
10.19 Deed of Trust Note and related Deed of Trust,
Assignment of Rents, Security Agreement, and Fixture Filing,
dated February 20, 1997, in the principal amount of
$1,350,000 due Standard Insurance Company. Incorporated by
Reference(1).
Item 20. Other Documents or Statements to Security Holders
20.01 Notice of change of transfer and warrant agent.
This Filing.
13
Item 27. Financial Data Schedule
27.01 Financial Data Schedule. This Filing.
(1) Incorporated by reference from 4Health's report on Form
10-K for the year ended December 31, 1996.
(2) Incorporated by reference from Surgical's registration
statement on Form S-1 filed with the Commission, SEC file
number 33-31863.
(3) Incorporate by reference from Surgical's registration
statement on Form S-4 filed with the Commission, SEC file
number 33-03243.
(4) Incorporated by reference from Surgical's report on Form
10-K for the year ended March 31, 1992.
(5) Incorporated by reference from Surgical's report on Form
10-K for the year ended March 31, 1994.
(6) Incorporated by reference from Surgical's report on Form
10-Q for the quarter ended December 31, 1995.
(7) Incorporated by reference from Schedule 13D filed with
the Commission by Allen & Company Incorporated on April 18,
1997.
* Represents a management contract, compensatory plan, or
arrangement required to be filed as an exhibit.
14
Signatures
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized.
4Health, Inc.
Dated: May 13, 1997 By: /s/ R. LINDSEY DUNCAN
R. Lindsey Duncan
President and Chief Executive Officer
Dated: May 13, 1997 By: /s/ SCOTT W. LUSK
Scott W. Lusk Controller (Principal
Accounting Officer)
15
20.01 Notice of Change of Transfer and Warrant Agent.
February 19, 1997
Dear 4Health, Inc. Stock or Warrant Holder:
This is to notify you that American Securities Transfer &
Trust, Inc. (AST) has been appointed by 4Health, Inc. as the
transfer agent for the common shares (stock symbol HHHH,
cusip 351043-10-4) and the warrants (stock symbol HHHHW,
cusip 351043-11-2). Should you choose to exercise your
warrants, please submit your warrant certificate along with
the warrant exercise amount to AST at:
938 Quail Street
Suite 101
Lakewood, CO 80215
Should you have any question, please contact AST at
303)234-5300.
Sincerely,
/s/ R. LINDSEY DUNCAN
R. Lindsey Duncan
President
16
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information
extracted from the consolidated financial statements and is
qualified in its entirety by reference to such financial
statements.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-Mos
<FISCAL-YEAR-END> Dec-31-1997
<PERIOD-START> Jan-01-1997
<PERIOD-END> Mar-31-1996
<CASH> 423
<SECURITIES> 0
<RECEIVABLES> 1,848
<ALLOWANCES> 0
<INVENTORY> 1,685
<CURRENT-ASSETS> 5,272
<PP&E> 2,560
<DEPRECIATION> (62)
<TOTAL-ASSETS> 9,028
<CURRENT-LIABILITIES> 1,694
<BONDS> 0
0
0
<COMMON> 114
<TOTAL-LIABILITY-AND-EQUITY> 9,028
<SALES> 3,796
<TOTAL-REVENUES> 3,796
<CGS> 1,715
<TOTAL-COSTS> 4,386
<OTHER-EXPENSES> (22)
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