<PAGE>   1

                       SECURITIES AND EXCHANGE COMMISSION

                              WASHINGTON, D.C. 20459

     -----------------------------------------------------------------------

                                    FORM 10-K

                   ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF

                       THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year Ended:  August 31, 1998

Commission File Number:  0-11419

Family Health Systems, Inc.
------------------------------------------------------
(Exact Name of Registrant as specified in its Charter)

<TABLE>
<S>                                                           <C>
Delaware                                                       22-2435595
-------------------------------------------------             ------------------------------------
(State or other jurisdiction of incorporation or              (I.R.S. Employer Identification No.)
                  organization)


Post Office Box 21238, St. Simons Island, Georgia             31522-0738
-------------------------------------------------             ------------------------------------
Address of Principal executive offices of                     Zip Code
         Incorporation or organization

912-634-2584
------------------------------------------------
Registrants telephone number, including area code
</TABLE>


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 and 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 last 90 days.

         YES [ ]                                     NO [X]

At August 31, 1998, 3,161,702 shares of the Registrant's Common Stock were
issued 2,006,757 shares of the Registrant's Common Stock were outstanding and
the estimated aggregate market value of the Registrant's outstanding common
stock held by non-affiliates of the Registrant was approximately $185,000.

<PAGE>   2

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.  Properties

                                            NONE

Item 3.  Legal Proceedings

                                            NONE

Item 4.  Submission of Matters to a Vote of Security Holders:

                                            NONE


<PAGE>   3

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 and 1998.

HOLDERS:
         As of August 31, 1998, 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.  SELECTED FINANCIAL DATA:
         The following data, insofar as it relates to the period September 1,
         1996 to August 31, 1998 has been derived from annual financial
         statements, including the balance sheets at August 31, 1997 and 1998
         and the related statements of income and cash flows for the years
         ending August 31 1996 through 1998 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.

<TABLE>
<CAPTION>
                                                      1998              1997            1996
                                                      ----              ----            ----

         <S>                                        <C>               <C>             <C>
         Operating Revenues                         $     Nil         $350,301        $52,368

         Income (loss) from continuing              $ (57,333)        $317,542        $34,941

         Income (loss) from continuing
         operations per share                       $  (.0286)        $   .167        $ .0183

         Current assets                             $ 165,488         $139,251        $84,943
</TABLE>

<PAGE>   4

<TABLE>
         <S>                                        <C>               <C>             <C>
         Working Capital                            $ 163,495         $139,251        $   nil

         Total Assets                               $ 187,163         $378,806        $84,943

         Stockholders' equity                       $ 185,170         $378,806        $84,943
</TABLE>


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. The Company portfolio dropped
                  significantly in Market value at August 31, 1998 due to the
                  downturn in the market overall. Capital losses at August 31,
                  1998 reflect a write-down to market value of $324,170.

         (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. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

         The following documents are filed as part of this report:

<TABLE>
         <S>                                                                                  <C>
         (1)Financial statements:
              Balance Sheet as of August 31, 1998                                             F-1
              Statement of income for  the year ending August 31, 1998                        F-2
              Statement of cash flows for the years ending August 31, 1998                    F-3
              Notes to Financial Statements                                                   F-4
</TABLE>

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. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL MATTERS
                                    NONE

<PAGE>   5


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, 1998:

         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. 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, 1998 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. 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, 1998.

         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.

<PAGE>   6

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Transactions with Management and Certain Business Relationships.
                                    NONE

         Indebtedness of Management
                                    NONE

Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

         (c) 27.1 Financial Data Schedule (for SEC use only)
<PAGE>   7

                                   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

<PAGE>   8

                                    EXHIBITS

                              FINANCIAL INFORMATION


<PAGE>   9

                                                                     EXHIBIT F-1


                           FAMILY HEALTH SYSTEMS, INC.

                                  BALANCE SHEET
                                 August 31, 1998

<TABLE>
<S>                                                                                              <C>
         ASSETS
                  Cash                                                                           $    17,649
                  Notes receivable - current                                                          34,155
                  Investments - Common Stocks                                                        113,684
                                                                                                 -----------
                           Total current assets                                                      165,488
                                                                                                 -----------
                  Other receivables                                                                    4,800
                                                                                                 -----------
                  Investment in closely-held company                                                  16,875
                                                                                                 -----------
                           Total Assets                                                          $   187,163
                                                                                                 ===========


         LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)

                  Cash overdraft - Investment margin account                                     $     1,993

                  Common Stock                                                                         3,351
                  Paid in capital                                                                  2,673,705
                  Retained earnings (deficit)                                                     (2,491,886)
                                                                                                 -----------
                                                                                                     185,170
                                                                                                 -----------
                           Total Liabilities and stockholder's equity (deficit)                  $   187,163
                                                                                                 ===========
</TABLE>

See Notes to Financial Statements.

<PAGE>   10

                                                                     EXHIBIT F-2

                           FAMILY HEALTH SYSTEMS, INC.

                               STATEMENT OF INCOME
                            Year Ended August 31,1998


<TABLE>
         <S>                                                                                     <C>
         Revenues                                                                                $        Nil
                                                                                                 ------------
         Expenses
              Auto expense                                                                                249
              Bad debt expense                                                                         18,100
              Bank service charges                                                                          3
              Office Supplies                                                                             444
              Postage                                                                                     168
              Professional Fees                                                                         1,968
              Publications                                                                                341
              Stock Transfer Fees                                                                       1,250
              Telephone                                                                                   577
              Travel                                                                                    3,708
                                                                                                  -----------

                                                                                                       26,808
                                                                                                  -----------
         Other Income (expense)
              Dividends                                                                                   826
              Gain (loss) on available-for-sale securities                                            (31,351)
                                                                                                  -----------
                                                                                                      (30,525)
                                                                                                  -----------
              Net Income (Loss)                                                                       (57,333)

         Retained earnings (deficit), beginning                                                    (2,434,553)
                                                                                                  -----------
         Retained earnings (deficit), ending                                                      $(2,491,886)
                                                                                                  ===========
</TABLE>


See Notes to Financial Statements.

<PAGE>   11

                                                                     EXHIBIT F-3

                           FAMILY HEALTH SYSTEMS, INC.

                             STATEMENT OF CASH FLOWS
                            Year Ended August 31,1998

<TABLE>
<CAPTION>
                                                                                                     1998
                                                                                                     ----
         <S>                                                                                     <C>
         CASH FLOWS FROM OPERATING ACTIVITIES
              PROVIDED BY (USED IN) OPERATING ACTIVITIES
              Net income (loss)                                                                  $   (57,333)
              Adjustments to reconcile net income (loss) to
                  (Gain) loss on sale of investments                                                  31,351
              Change in working capital components
                  (Increase) decrease in trade receivables                                             6,500
                  Increase (decrease) in accounts payable                                            (17,550)
                                                                                                 -----------
                     Net cash provided by (used in) operating activities                             (37,032)
                                                                                                 -----------

         CASH FLOWS FROM INVESTING ACTIVITIES
              Proceeds from sale of investments                                                    1,346,849
              Purchase of investments                                                             (1,371,082)
              Advances made to drilling company                                                       (4,800)
              Repayment of advances by drilling company                                                   --
              Advances on notes receivable                                                           (40,079)
              Repayment of notes receivable                                                            5,924
              Investment in closely-held company                                                     (16,875)
                                                                                                 -----------
              Net cash provided by (used in) investing activities                                    (80,063)
                                                                                                 -----------
              Net increase (decrease) in cash                                                       (117,095)
         Cash:
              Beginning                                                                              132,751
                                                                                                 -----------
              Ending                                                                             $    15,656
                                                                                                 ===========
         Cash:
              Cash - operating                                                                   $    17,649
              Cash - Money Market (overdraft)                                                         (1,993)
                                                                                                 -----------
                                                                                                 $    15,656
                                                                                                 ===========
</TABLE>


<PAGE>   12

                                                                     EXHIBIT F-4

                           FAMILY HEALTH SYSTEMS, INC.

                          NOTES TO FINANCIAL STATEMENTS
                           Year Ended August 31, 1998

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 year ending August 31, 1998 $4,800.

<PAGE>   13

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, 1998.

         At August 31, 1998, 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:

<TABLE>
<CAPTION>
                                                                  Gross            Gross
                                                                Unrealized      Unrealized         Fair
                     Description                                  Gain             Loss            Value
         --------------------------------------                 ----------      ----------       --------

         <S>                                                    <C>             <C>              <C>
         August 31, 1998:
                 Available-for-sale securities:
                     Common Stock                                $     --        $     --        $113,684
                                                                 ========        ========        ========
</TABLE>


5.       INCOME TAXES

         As of August 31, 1998, FHS has net operating loss carryforwards of
         approximately $1,819,807, which expire under current law from 1999
         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.

<PAGE>   14


7.       EARNINGS PER SHARE

         The following data show the amounts used in computing earnings per
share.

<TABLE>
<CAPTION>
                                                                        1998
                                                                    -----------
         <S>                                                        <C>
         Income (loss) available to common
            stockholders                                            $   (57,333)

         Weighted average number of common
            shares used in basic EPS                                  2,006,757
                                                                    -----------

         Earnings per common share                                      (0.0286)
                                                                    ===========
</TABLE>


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, 1998 and
         is currently filing all late filings. Any liability resulting from the
         late filing is undetermined and is not reflected in these financial
         statements.


<PAGE>   15

                          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, 1998 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, 1998 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