U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
(Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
[ ] 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 000-22151
PETHEALTH SYSTEMS, INC.
(Exact name of small business issuer as specified in its charter)
Colorado 93-0969365
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
444 Madison Avenue, Suite 1710, New York, NY 10022
(Address of principal executive offices)
(212) 750-7878
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past
12 months (or for such shorter period that the registrant was
required to file such reports), Yes No x ; and (2) has been
subject to such filing requirements for the past
90 days. Yes x No
1,153,027 shares of Common Stock, no par value, outstanding on
July 20, 1998.
PETHEALTH SYSTEMS, INC.
Form 10-QSB Quarterly Report
For the Period Ended June 30, 1998
Table of Contents
Page
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements 3
Unaudited Balance Sheets at June 30, 1998 and
December 31, 1997 4
Unaudited Statements of Operations For Three and Six
Months Ended June 30, 1998 and June 30, 1997 and
From Inception (December 8, 1981) through June 30, 1998 5
Unaudited Statements of Cash Flows For Six
Months Ended June 30, 1998 and 1997 and From Inception
(December 8, 1981) to June 30, 1998 6
Statement of Stockholders' Equity (Deficit) 7
Item 2. Management's Discussion and Analysis of 8
Financial Condition and Results of
Operations
PART II -- OTHER INFORMATION 9
Item 1. Legal Proceedings 9
Item 2. Changes in Securities 9
Item 3. Defaults Upon Senior Securities 9
Item 4. Submission of Matters to a Vote of Security Holders 9
Item 5. Other Information 9
SIGNATURES 9
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements:
BASIS OF PRESENTATION
The accompanying unaudited financial statements are presented in
accordance with generally accepted accounting principles for
interim financial information and the instructions to Form 10-QSB
and item 310 under subpart A of Regulation S-B. Accordingly,
they do not include all of the information and footnotes required
by generally accepted accounting principles for complete
financial statements. The accompanying statements should be read
in conjunction with the audited financial statements for the
years ended December 31, 1997 and 1996. In the opinion of
management, all adjustments (consisting only of normal occurring
accruals) considered necessary in order to make the financial
statements not misleading, have been included. Operating results
for the six months ended June 30, 1998 are not necessarily
indicative of results that may be expected for the year ending
December 31, 1998. The financial statements are presented on the
accrual basis.
PETHEALTH SYSTEMS, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS (UNAUDITED)
June 30, December 31,
1998 1997
ASSETS
CURRENT ASSETS:
Cash in checking 321 $ 265
Stock Receivable $ 380 $ 380
TOTAL CURRENT ASSETS $ 701 $ 645
FIXED ASSETS:
Equipment 3,138 3,138
Less accumulated depreciation $ (1,025) $ (523)
Net fixed assets 2,113 2,615
TOTAL ASSETS $ 2,814 3,260
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $ 6,351 $ 8,174
Due to Ameristar Group
Incorporated (Note 2) 127,300 122,500
TOTAL CURRENT LIABILITIES 133,651 130,674
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,
1,153,027 shares issued and
outstanding 243,834 243,834
Deficit accumulated during
development stage (374,671) (371,248)
TOTAL STOCKHOLDERS' (DEFICIT) (130,837) (127,414)
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY (DEFICIT) $ 2,814 $ 3,260
PETHEALTH SYSTEMS, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended Six Months Ended For the
Period
June 30, June 30, December 8,1981
(Inception) to
1998 1997 1998 1997 June 30, 1998
Revenues $ - $ - $ - $ - $ -
OPERATING EXPENSES:
Legal and accounting 675 22,199 2,175 41,053 103,838
Management services
(Note 2) - 30,000 - 60,000 120,000
Amortization - 25 - 50 750
Consulting Fees - 8,000 - 20,500 47,000
Depreciation Expense 251 157 502 209 1,025
Filing and transfer fees 207 421 399 4,749 14,459
Public relations - - - - 14,414
Office and Printing
Expense 64 3,971 127 4,908 4,904
Taxes, Franchise - 62 220 660 905
Travel Expenses - 534 - 534 534
Other Expenses - - - - 34,468
TOTAL OPERATING
EXPENSES 1,197 65,369 3,423 132,663 342,297
NET (LOSS) BEFORE
OTHER INCOME (EXPENSES) (1,197) (65,369) (3,423)(132,663) (342,297)
OTHER INCOME AND (EXPENSES):
Writeoff of advances
recision of merger - - - - (119,110)
Sale of business plan - - - - 76,000
Forgiveness of debt - - - - 7,455
Interest income - - - - 3,230
TOTAL OTHER INCOME
(EXPENSES) - - - - (32,425)
NET INCOME (LOSS) $ (1,197) $(65,369) (3,423)$(132,663)(374,722)
NET (LOSS) PER
COMMON SHARE $ * $ * $ * $ (.04)$ N/A
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES
OUTSTANDING 1,153,027 3,285,030 1,153,027 3,285,030 N/A
* less than $.01 net loss per share
The accompanying notes are an integral part of the financial
statements.
PETHEALTH SYSTEMS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
For the Six Months Ended For the Period
June 30, December 8,1981
(Unaudited) (Inception) to
1998 1997 June 30, 1998
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) $ (3,423) $ (132,663) $ (374,671)
Adjustments to reconcile
net (loss) to net cash used
by operating activities:
Amortization - 50 750
Depreciation 502 209 1,025
Stock issued for
Services/expenses - - 52,925
Changes in operating assets
and liabilities:
Increase in stock receivable - - (380)
Increase (decrease) in
Current liabilities 2,977 62,475 133,651
NET CASH (USED) BY
OPERATING ACTIVITIES 56 (69,929) (186,700)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchased Fixed Assets (3,138) (3,138)
Organization Costs - - (750)
NET CASH (USED) BY INVESTING
ACTIVITIES: 56 (3,138) (3,888)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of
common stock - 76,000 252,344
Proceeds from issuance
of Class B common stock - - 10,000
Deferred offering costs - - (71,435)
NET CASH PROVIDED BY
FINANCING ACTIVITIES 0 76,000 190,909
NET INCREASE (DECREASE) IN CASH 56 2,933 321
CASH, BEGINNING OF PERIOD $ 265 $ 0 $ 0
CASH, END OF PERIOD $ 321 $ 2,933 $ 321
PETHEALTH SYSTEMS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
For the Six Months Ended June 30, 1998 (UNAUDITED)
Deficit
Accumulated Total
Number Common During Stockholders'
Of Stock Development Equity
Shares Amount Issuable Stage (Deficit)
Balance,
January 1, 1998 1,153,027 $243,834 $ 0 $(371,248) $(127,414)
Net Loss for the
Six Months Ended
June 30, 1998 -- -- -- $ (3,423) $ (3,423)
Balance,
June 30, 1998 1,153,027 $243,834 $ -- $(374,671) $(130,837)
Item 2. Management's Discussion and Analysis of Financial
Conditions and Results of Operations:
Plan of Operation
The Registrant is continuing its efforts to locate a business
opportunity for the purpose of making an acquisition.
It is possible that the registrant will be successful in locating
such a business opportunity and negotiating and closing
an acquisition thereof by the issuance of restricted shares of
the registrant's Common Stock, without the necessity
of paying any cash consideration for such acquisition. However,
if the registrant cannot effect a non-cash acquisition,
the registrant may have to raise funds from a private offering of
its securities under Rule 506 of Regulation D. There
is no assurance the registrant would obtain any such equity
funding.
As of the date of this report, and throughout fiscal 1997, the
registrant's general and administrative expenses which
were paid have been funded by advances from Ameristar Capital
Corporation, a private corporation affiliated with
Joseph J. Messina and Martin I. Saposnick, former directors of
the registrant. As of June 30, 1998, such advances
represent $ 7,300 of the liabilities of the registrant, and the
consulting agreement with Ameristar represents $120,000
of such liabilities. See Note 2 to financial Statements, "Related
Party Transactions" in the Company's Form 10-KSB
for the year ended December 31, 1997..
Results of Operations
The Company did not have any operating income during the
quarterly period ended June 30, 1998, and has not had
any operating income since its inception. For this quarterly
period, the registrant recognized a net loss of $1,197
compared to a net loss of $65,369 for the quarterly period ended
June 30, 1997. General and administrative expenses
during the current quarterly period were funded by Ameristar
Capital Corporation, a private corporation affiliated
with two directors of the registrant. Expenses for the quarterly
period ended June 30, 1998 were comprised of costs
associated with audit, legal and SEC reporting obligations.
Liquidity and Capital Resources
At June 30, 1998 the Company had no capital resources other than
an insignificant amount of cash, and will rely on
advances from related parties to fund administrative expenses
pending acquisition of an operating company.
Presently there are no agreements in place for such acquisition,
and there is no assurance any acquisition will be
consummated. Alternatively, the Company may seek equity funding
for administrative costs and anticipated costs
of negotiating a possible acquisition, but such equity funding
currently is not underway.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings. Not applicable.
Item 2. Changes in Securities. None.
Item 3. Defaults Upon Senior Securities. Not Applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information. None.
Item 6. Exhibits and Reports of Form 8-K. None.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly
caused this report to be signed in its behalf by the undersigned,
thereunto duly authorized, on July 20, 1998.
PETHEALTH SYSTEMS, INC.
By: /s/ Robert Gordon
Robert Gordon, President