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 September 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
November 13, 1998.
PETHEALTH SYSTEMS, INC.
Form 10-QSB Quarterly Report
For the Period Ended September 30, 1998
Table of Contents
Page
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements 3
Unaudited Balance Sheets at September 30, 1998 and
December 31, 1997 4
Unaudited Statements of Operations For Three and Nine
Months Ended September 30, 1998 and September 30, 1997 and
From Inception (December 8, 1981) through September 30, 1998 5
Unaudited Statements of Cash Flows For Nine
Months Ended September 30, 1998 and 1997 and From Inception
(December 8, 1981) to September 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 nine
months ended September 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) (AUDITED)
September 30, December 31,
1998 1997
ASSETS
CURRENT ASSETS:
Cash in checking 18 $ 265
Stock Receivable $ 380 $ 380
TOTAL CURRENT ASSETS $ 398 $ 645
FIXED ASSETS:
Equipment 3,138 3,138
Less accumulated depreciation $ (1,276) $ (523)
Net fixed assets 1,862 2,615
TOTAL ASSETS $ 2,260 3,260
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $ 6,799 $ 8,174
Due to Ameristar Group
Incorporated (Note 2) 127,300 122,500
TOTAL CURRENT LIABILITIES 134,099 130,674
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 (375,673) (371,248)
TOTAL STOCKHOLDERS' (DEFICIT) (131,839) (127,414)
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY (DEFICIT) $ 2,260 $ 3,260
PETHEALTH SYSTEMS, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS(UNAUDITED)
Three Months Ended Nine Months Ended For the Period
September 30, September 30, December 8,1981
(Inception) to
1998 1997 1998 1997 September 30, 1998
Revenues $ - $ - $ - $ - $ -
OPERATING EXPENSES:
Legal and accounting 450 581 2,625 41,634 104,288
Management services
(Note 2) - 30,000 - 90,000 120,000
Amortization - - - - 750
Consulting Fees - 24,500 - 45,000 47,000
Depreciation Expense 251 157 753 366 1,276
Filing and transfer fees243 127 642 4,876 14,702
Public relations - - - - 14,414
Office and Printing
Expense 57 16 184 4,974 4,911
Taxes, Franchise - - 220 660 905
Travel Expenses - - - 534 534
Other Expenses - - - - 34,468
TOTAL OPERATING
EXPENSES 1,001 55,381 4,424 188,044 343,248
NET (LOSS) BEFORE
OTHER INCOME (EXPENSES)(1,001) (55,381) (4,424)(188,044) (343,248)
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) $ (1,001)$(55,381) (4,424)(188,044) (375,673)
NET (LOSS) PER
COMMON SHARE $ * $ (.09) * $ (.08) $ N/A
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES
OUTSTANDING 1,153,027 623,030 1,153,027 2,397,697 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 (UNAUDITED)
For the Nine Months Ended For the Period
September 30, December 8,1981
(Unaudited) (Inception) to
1998 1997 September 30, 1998
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) $ (4,424) $ (188,044) $ (374,671)
Adjustments to reconcile
net (loss) to net cash used
by operating activities:
Amortization - - 750
Depreciation 753 366 1,025
Stock issued for
Services/expenses - 24,500 52,925
Changes in operating assets
and liabilities:
Increase in stock receivable - - (380)
Increase (decrease) in
Current liabilities 3,368 90,470 133,651
NET CASH (USED) BY
OPERATING ACTIVITIES (303) (72,708) (186,700)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchased Fixed Assets (3,138) (3,138)
Organization Costs - - (750)
NET CASH (USED) BY INVESTING
ACTIVITIES: (303) (75,846) (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 (303) - 321
CASH, BEGINNING OF PERIOD $ 321 $ 0 $ 0
CASH, END OF PERIOD $ 18 $ 154 $ 321
PETHEALTH SYSTEMS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
For the Nine Months Ended September 30, 1998 (UNAUDITED)
Deficit
Accumulated Total
Number During Stockholders'
Of Development Equity
Shares Amount Stage (Deficit)
Balance,
January 1, 1998 1,153,027 $243,834 $(371,248) $(127,414)
Net Loss for the
Nine Months Ended
September 30, 1998 -- -- $ (4,424) $ (4,424)
Balance,
June 30, 1998 1,153,027 $243,834 $(375,672) $(131,838)
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 September 30, 1998, and has not had any operating income since its
inception. For this quarterly period, the registrant recognized a net loss
of $1,001 compared to a net loss of $55,381 for the quarterly period ended
September 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 September 30, 1998 were comprised of costs
associated with audit, legal and SEC reporting obligations.
Liquidity and Capital Resources
At September 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.
Potential Change of Control
On September 25, 1998 an Agreement was entered into between a group of
individual stockholders representing a controlling interest in the Company
and a group of foreign investors whereby the foreign investors will acquire
a majority of the issued and outstanding common stock of the Company. The
closing under this Agreement is scheduled to occur prior to the end of
November, 1998. If the closing takes place as scheduled there will be a
change of control in the Company, present management will resign and new
management (including both officers and directors) will be elected and/or
appointed.
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.
Exhibit 27 - Financial Data Schedule - Electronic Filing Only
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 November 13,
1998.
PETHEALTH SYSTEMS, INC.
By: /s/ Robert Gordon
Robert Gordon, President
[ARTICLE] 5
[PERIOD-TYPE] 3-MOS 9-MOS
3-MOS 9-MOS
[FISCAL-YEAR-END] DEC-31-1998
DEC-31-1998 DEC-31-1997 DEC-31-1997
[PERIOD-START] JUL-01-1998
JAN-01-1998 JUL-01-1997 JAN-01-1997
[PERIOD-END] SEP-01-1998
SEP-01-1998 SEP-01-1997 SEP-01-1997
[CASH] 0
18 0 0
[SECURITIES] 0
0 0 0
[RECEIVABLES] 0
380 0 0
[ALLOWANCES] 0
0 0 0
[INVENTORY] 0
0 0 0
[CURRENT-ASSETS] 0
398 0 0
[PP&E] 0
3138 0 0
[DEPRECIATION] 0
(1276) 0 0
[TOTAL-ASSETS] 0
2260 0 0
[CURRENT-LIABILITIES] 0
134099 0 0
[BONDS] 0
0 0 0
[PREFERRED-MANDATORY] 0
0 0 0
[PREFERRED] 0
0 0 0
[COMMON] 0
243834 0 0
[OTHER-SE] 0
(375673) 0 0
[TOTAL-LIABILITY-AND-EQUITY] 0
2260 0 0
[SALES] 0
0 0 0
[TOTAL-REVENUES] 0
0 0 0
[CGS] 0
0 0 0
[TOTAL-COSTS] 0
0 0 0
[OTHER-EXPENSES] 1001
4424 55381 188044
[LOSS-PROVISION] 0
0 0 0
[INTEREST-EXPENSE] 0
0 0 0
[INCOME-PRETAX] 0
0 0 0
[INCOME-TAX] 0
0 0 0
[INCOME-CONTINUING] 0
0 0 0
[DISCONTINUED] 0
0 0 0
[EXTRAORDINARY] 0
0 0 0
[CHANGES] 0
0 0 0
[NET-INCOME] (4424)
(4424) (55381) (188044)
[EPS-PRIMARY] 0
0 0 0
[EPS-DILUTED] 0
0 0 0
<F1>
<FN>
<F1>The accompanying notes are an integral part of the financial statements.
</FN>
/TABLE