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.
Item 2. Properties
NONE
Item 3.
Item 3. Legal Proceedings
NONE
Item 4.
Item 4. Submission of Matters to a Vote of Security Holders: NONE
Item 5.
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Market information: The Registrant's common stock trades in the over-the-counter market. The Registrant's common stock was listed on the NASDAQ National Market System, under the symbol FHSI until November 26, 1986, at which time such listing was suspended until FHS assets and Net Worth were increased to the minimum required levels. FHS was reinstated on NASDAQ on April 2, 1987, but was again suspended on February 12, 1988 when its assets and net worth were below the NASDAQ minimum requirements. There has not been any trading of FHS common stock any listed exchange during calendar years 1995, 1996, 1997, 1998 and 1999.
HOLDERS: As of August 31, 1999, the approximate number of holders of record of the Registrant's common stock was 568. In addition to those who hold shares in their individual names, it is reported to Registrant that there are 267 holder's in "street names" for a total of 835 shareholders.
DIVIDENDS: Cash dividends have not been paid by the Registrant since it was formed; however, Registrant has during past fiscal years paid stock dividends in it's wholly-owned subsidiaries from 1987-1988.
Item 6.
Item 6. SELECTED FINANCIAL DATA: The following data, insofar as it relates to the period September 1, 1996 to August 31, 1999 has been derived from annual financial statements, including the balance sheets at August 31, 1999, 1998 and 1997 and the related statements of income and cash flows for the years ending August 31 1997 through 1999 and notes thereto appearing elsewhere herein. This financial data should be read in conjunction with the financial statements of the Company and the related notes thereto included in Item 8 of this Annual Report.
Item 7.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
(a) Results of Operations The discontinuance in 1988 of the professional administrative marketing business decreased revenues; however, it also decreased liabilities and the risk of potential liabilities. The only income presently is gains and losses from sales of stock in the marketplace. Gains from sales of stocks during the year ending August 31, 1999 aggregated $75,596. The Company portfolio dropped significantly in Market value at August 31, 1998 due to the downturn in the market overall.
(b) Financial Condition, Liquidity and Capital Resources. Management does not expect that the condition of FHS can be improved unless it can form a business relationship between it and another going concern.
Item 8.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The following documents are filed as part of this report:
(1)Financial statements: Balance Sheet as of August 31, 1999 Statement of income for the year ending August 31, 1999 Statement of cash flows for the years ending August 31, 1999 Notes to Financial Statements
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.
Item 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL MATTERS NONE
Item 10.
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth all the directors, executive officers and significant employees of the Registrant as of August 31, 1999:
William S. Bryant President Chief Executive Officer Treasurer Director
Directors hold office until the next annual meeting of shareholders. Officers are elected by the Board of Directors following the Annual meeting of stockholders.
Item 11.
Item 11. EXECUTIVE COMPENSATION
Cash compensation. The following table sets forth the actual cash compensation of any officer or director of the Registrant who received in excess of $60,000 in the fiscal year ended August 31, 1999 and the actual cash compensation of all officers and directors of the Registrant as a group for said fiscal year.
Officer or Director NONE All Officers or Directors as a group NONE
Compensation of Directors:
During the Registrant's fiscal year ended August 31, 1987, the Registrant passed a resolution that all officers and directors who attended meetings of the Board of Directors or Shareholders and who were not on other salary with FHS, would receive restricted shares of stock of FHS, equal to $500 per day. The number of shares to be determined by the bid price of the stock on the meeting date.
Item 12.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNER AND MANAGEMENT
The following table sets forth information regarding ownership of the Registrant's common stock by all persons who are known by the Registrant to own more than 5% of the total outstanding shares and by all officers and directors of the Company as of August 31, 1999.
E.L. Carman 1,009,673 shares 53% ownership
Changes in Control:
Registrant is not aware of any arrangement which may result in a change of control of Registrant at present.
Item 13.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Transactions with Management and Certain Business Relationships. NONE
Indebtedness of Management NONE
Item 14.
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(c) 27.1 Financial Data Schedule (for SEC use only)
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
EXHIBITS
FINANCIAL INFORMATION
EXHIBIT
FAMILY HEALTH SYSTEMS, INC.
BALANCE SHEET August 31, 1999
See Notes to Financial Statements.
EXHIBIT
FAMILY HEALTH SYSTEMS, INC.
STATEMENT OF INCOME Year Ended August 31,1999
See Notes to Financial Statements.
EXHIBIT
FAMILY HEALTH SYSTEMS, INC.
STATEMENT OF CASH FLOWS Year Ended August 31,1999
See Notes to Financial Statements.
EXHIBIT
FAMILY HEALTH SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS Year Ended August 31, 1999
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. NATURE OF BUSINESS -- Family Health Systems, Inc. ("FHS") was organized to provide comprehensive administrative, marketing and consulting services to group dental and medical practices and began operations on May 1, 1983. Effective in October 1987, all administrative and marketing agreements had been terminated and the Corporation has been inactive since that time.
B. BASIS OF ACCOUNTING -- The Company's policy is to prepare its financial statements on the accrual basis of accounting.
C. NET INCOME (LOSS) PER SHARE -- Net income (loss) per share has been computed using the weighted average number of shares of common stock outstanding during the applicable period.
D. ESTIMATES -- The process of preparing financial statements in conformity with generally accepted accounting principles requires the use of management's estimates and assumptions regarding certain types of assets, liabilities revenues and expenses. Such estimates primarily relate to unsettled transactions and events as of the date of the financial statements. Accordingly, upon settlement, actual results may differ from estimated amounts.
2. NOTES RECEIVABLE
During August of 1998, the Company advanced $25,000 to a going concern. This advance bears no interest or maturity date. The advance was repaid in November 1998.
An advance was made to the majority stockholder of the Company during 1998. This advance was evidenced by a note receivable in the amount of $15,079. The balance outstanding and unpaid at August 31, 1998 was $9,155. This note was repaid subsequent to August 31, 1998.
3. OTHER RECEIVABLES
The Company is currently advancing funds to a going concern involved in pumping water into otherwise non-productive or low production oil wells and extracting the raw crude oil. These advances are non-interest bearing with no stated method of repayment and are not evidenced by a note. Advances made during the years August 31, 1999 aggregated $112,323. Repayments of advances in the amount of $24,750 were made during the year ending August 31, 1999.
In addition, the Company made advances during the year ending August 31, 1999 in connection with a natural gas drilling operation in West Virginia. The drilling operations are on acreage adjoining a producing natural gas field. Advances made to the Company during the year ending August 31, 1999 aggregated $22,050. No repayments have been received.
4. INVESTMENTS
The Company investments in marketable equity securities are held for an indefinite period and thus are classified as available for sale. Available for sale securities are recorded at fair value in investments on the balance sheet, with the change in fair value during the period excluded from earnings and recorded in the equity section of the balance sheet. There were no unrealized holding gains or losses at August 31, 1999.
At August 31, 1999, investments were written down to their estimated realizable values, because in the opinion of management, the decline in market value of those securities is considered to be other than temporary.
Investments in securities are summarized below:
5. INCOME TAXES
As of August 31, 1999, FHS has net operating loss carryforwards of approximately $1,819,807, which expire under current law from 2000 through 2013. FHS also has investment tax credit carryforwards expiring in 2000.
6. RELATED PARTY TRANSACTIONS
The president and majority stockholder are reimbursed for travel expenses as incurred in the ordinary course of business.
As mentioned in Note 2, the Company advanced $15,079 to the majority stockholder in 1998.
7. EARNINGS PER SHARE
The following data show the amounts used in computing earnings per share.
8. CONCENTRATIONS OF CREDIT RISK
The Company has outstanding accounts receivable from companies in oil and gas exploration industry which are considered speculative industries. Therefore, the Company has an industry concentration of credit risk in the oil and gas industry.
9. CONTINGENCY
As disclosed in Note 1, the Company has been inactive in its operating business since 1987. As a result, several Forms 10-K and 10-Q have not been filed. The Company has since filed a notification of late filing with the Securities and Exchange Commission for reports 10-K and 10-Q due to be filed for the period August 31, 1997 to August 31, 1999 and is currently filing all late filings. Any liability resulting from the late filing is undetermined and is not reflected in these financial statements.
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors Family Health Systems, Inc. St. Simons Island, Georgia
We have audited the accompanying balance sheets of Family Health Systems, Inc. as of August 31, 1999 and the related statements of income and retained earnings (deficit), and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Family Health Systems, Inc. as of August 31, 1999 and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles.
MOORE STEPHENS TILLER LLC
Brunswick, Georgia February 20, 2000