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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

Commission file number 0-23598

NWH, INC.
(Exact name of registrant as specified in its charter)

Securities registered pursuant to section 12(b) of the Act: None

Securities registered pursuant to section 12(g) of the Act:
Common Stock, $.01 Par Value
Rights to Purchase Series A Junior Preferred Stock

        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 ý    No o

        Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statement incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ý

        The aggregate market value of the voting stock held by non-affiliates of the registrant was approximately $36,171,240 as of January 9, 2003, based upon the last sales price per share of the Registrant's Common Stock, as reported on the Nasdaq National Market on such date. As of January 9, 2003, 2,920,100 shares of Common Stock, $.01 par value, of the Registrant were outstanding.

NWH, INC.
FORM 10-K
FOR THE FISCAL YEAR ENDED OCTOBER 31, 2002

TABLE OF CONTENTS

PART I

ITEM 1.    BUSINESS

The Company

        NWH, Inc. ("NWH" or the "Company", formerly National Wireless Holdings Inc.), a Delaware corporation organized on August 31, 1993, is an electronic commerce and communications company focusing primarily on acquisition and operation of telecommunications, e-commerce and other strategically linked businesses. The Company currently owns and operates Electronic Network Systems, Inc. ("ENS"), a business-to-business healthcare e-commerce data interchange company, providing links between healthcare providers and payers. In addition, the Company continues its business of acquiring controlling interests in telecommunications, healthcare and other strategically linked areas. The Company may acquire or invest in other businesses. In June 1997, the Company sold its wireless cable assets in Miami, Florida, in exchange for common stock of BellSouth Corporation.

        The Company's executive offices are located at 156 West 56th Street, Suite 2001, New York, New York 10019, telephone: (212) 582-1212.

Electronic Network Systems, Inc.

General

        NWH manages ENS and owns 94% of ENS' outstanding stock. ENS changed its name from Electronic Data Submission Systems, Inc. in December, 2001.

        ENS is a leading healthcare transactions-processing intermediary. At ENS, we execute a full-cycle suite of payer-driven services known as Health-e Network® that establishes a transactions processing environment for payers, physicians and other healthcare providers, including hospitals and laboratories. Our services, (1) create healthcare e-commerce connectivity between payers, physicians and other healthcare providers, (2) significantly reduce the volume of paper healthcare transactions and processing errors, and (3) set a clear migration path for payers, physicians and other healthcare providers to utilize Internet and Web-based applications and services effectively for greater operational efficiency. We believe Health-e Network® is one of the most effective services addressing the need to handle both paper and electronic transactions on behalf of its customers, to reduce or eliminate inefficient paper transactions and to conduct business electronically.

        In excess of 25,000 providers are connected to our e-commerce and Internet services and, through our payer contracts, we currently conduct daily paper to e-commerce claim conversion for another 185,000 healthcare providers. Our revenues are generated from payers, physicians, other providers and strategic partners through recurring subscriptions, flat or per transaction fees and revenue sharing. As of January 10, 2003, we were connected to over 1,000 commercial healthcare plans, managed care organizations and Blue Cross/Blue Shield plans, as well as Medicare, Medicaid and CHAMPUS.

        We focus on the current and future connectivity and transactions processing requirements of the healthcare industry. We provide healthcare providers with a secure infrastructure for web-based and private network transactions consisting of, among others, electronic medical claims processing, electronic claims tracking and patient eligibility verification. We also provide health care payers e-commerce connectivity with their provider constituency as well as paper claims conversion, pre-adjudication, reporting, education and marketing support to increase utilization of e-commerce in this industry. Our strategy for the future is to facilitate the migration of provider and payer clients from their current inefficient, non-integrated transactions processing environments to efficient, seamlessly integrated applications utilizing the transactions processing capabilities of Health-e Network®. Traditional applications linked to on-all-the-time Internet capabilities or Application Service Provider (ASP) environments will be able to route real-time transactions to and from all payers utilizing

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Health-e Network®. We believe that the transition to these new levels of integrated transactions processing capabilities will drastically change how the business of healthcare is conducted among healthcare participants. We plan to continue to expand this transactions infrastructure as management believes these applications will evolve into viable and widely used systems over the next three to five years.

ENS Services—Health-e Network®

        Health-e Network® suite of services addresses 100% of the healthcare industry's transaction processing, both e-commerce and paper. As a provider of a full-cycle payer, physician and provider e-commerce suite of services, ENS developed these services to enhance the providers' and payers' administrative efficiency. The service offerings range from a front-end data capture/transmission software, to advanced pre-adjudication software, to simple mailroom services. ENS presently services over 1,000 payer clients for the e-commerce claims component of Health-e Network®and provides five payer organizations with the full suite of payer services.

        Health-e Network® includes the following:

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Healthcare e-Commerce Transactions Processing    ENS delivers multiple applications that enable healthcare providers to conduct easily key healthcare transactions with many payers. ENS provides these e-commerce applications through the Internet and on multiple operating systems. ENS also delivers transaction processing capabilities to strategic partners, such as medical management companies, who with their own software, access payers to conduct electronic business transactions via use of ENS' Application Programming Interface (API). ENS currently processes and routes medical and hospital claims, eligibility requests and responses, claims status, claims tracking, claim payment remittance information, reporting, referral and authorization transactions. ENS plans to support all of the HIPAA defined transactions and deliver to providers various methods of conducting those transactions with payers.



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Provider Connectivity (Xpedite™)    enables ENS to identify the paper and manual transaction volumes of a payer's provider groups, target high paper submitters, track internal progress, and market specifically to selected healthcare transaction submitters. Based on payer specific criteria, ENS assigns different levels of internal resources to convert these providers to electronic business processes with the payer. The Xpedite™ conversion program then goes beyond the sales process and combines efforts of all ENS internal departments. The purpose of Xpedite™ is to connect providers on behalf of payer organizations to make the participants more efficient through e-commerce.



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Automated Document Services™ (ADS™)    provides payers the complete front-end handling and conversion (imaging/scanning) of paper claims forms to an e-commerce format. Paper claims still constitute from 55-60% of provider claims volume industry-wide to commercial payers. As the claims are converted to an electronic format, ENS captures the names of all paper-submitting providers in order to convert them for other e-commerce services with the payer's support. Utilization of Health-e Network® (which includes ADS™) provides a payer with the opportunity to have 100% e-commerce claims receipts. With ENS as their partner and core e-commerce strategy implementer, payers can increase e-commerce transactions from their provider constituency.



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Pre-Adjudication Software System™ (PASS™)    provides a single, HIPAA-compliant connectivity entry point to a payer for all claims transactions, including transactions received via the Internet, through private e-commerce networks, and received on paper. PASS™ channels the claims by utilizing customized and algorithm-based logic, and conducts the vital claims processing function of provider and member matching, including real-time eligibility verification, a critical payer

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requirement for increased claims paying accuracy and efficiency. ENS' PASS™ is an open, flexible solution that is used with the vast majority of today's payer operating environments.

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HIPAA Payer Portal and Hosting (Health-e Xchange™)    ENS' transactions infrastructure receives data from providers in virtually any file format and translates to any healthcare Payers' file specifications, facilitating HIPAA transactions compliance. ENS delivers transactions compliance for Providers, Payers, and Application Service Providers. ENS provides compliance, connectivity, and routing on all HIPAA-defined administrative healthcare transactions with a participating Payer including: healthcare claims or encounter information; health plan eligibility; healthcare claim status; referral certification and authorization; healthcare payment and remittance advice; health plan enrollments; and health plan premium payments.

        ENS also provides transaction hosting for Payers so they can outsource their transaction processing needs. ENS' transaction hosting capabilities provide for compliance, connectivity, routing, and processing of the transaction for the Payer on the following HIPAA-defined administrative healthcare transactions: health plan eligibility; healthcare claim status; referral certification and authorization

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Eligibility    is an ENS service that provides physician practices with immediate access to participating payers plus various regional and governmental payers for determining member plan eligibility. This service is delivered over the Internet and receives constant updating.



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Electronic Claims Tracking (ECT™)    provides immediate Internet-based tracking of both e-commerce claims and, for those payers utilizing Health-e Network®, up-dated status on the paper claims that have been converted to an e-commerce format. ENS believes that this is the first tool that affords providers the opportunity to utilize an Internet application to track claims forwarded to payers electronically.



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Direct-Payer e-Commerce    provides network connectivity for HIPAA-defined transactions to and from payer organizations from existing physicians and gateways.



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Customer Service.    As an adjunct to its transaction processing services, we maintain customer service facilities with help desks for real-time customer inquiries. We offer on-line and personal technical support. Client support employs a modern call tracking and response system that is directly connected to the processing center.

        As of January 9, 2003, in excess of 25,000 physicians were actively submitting electronic healthcare transactions via Health-e Network® suite of services with over an additional 2,500 contracted providers scheduled to be installed in 2003.

Strategy

        ENS' mission is to eliminate paper and administrative expenses and delays within the healthcare industry. According to the U.S. General Accounting Office (GAO), $0.20 of every healthcare dollar is spent on administrative costs. In addition to the almost 8 billion medical claims filed each year, HIPAA mandates health care plans to process electronically roughly 35 billion additional related transactions.

        ENS' main business objectives are 1) to increase revenue through new payer and provider clients as well as strategic partners and vendors; 2) to increase profitability of its existing business by increasing transaction types and services delivered by the Company; 3) to improve customer satisfaction and service levels; and 4) to develop and foster a positive employee work environment. These strategic initiatives are being driven through a full cycle payer-driven model of implementing and increasing payers' provider e-commerce connectivity for HIPAA-mandated transactions, processing and "cleaning" claims for auto-adjudication by the payers, and helping to facilitate the payers' regulatory electronic transaction needs.

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        We have retained consultants and financial advisors in reviewing the strategies of ENS and providing advice relating to the development of ENS' business in the complex healthcare area, including seeking possible strategic alliances, acquisitions or dispositions.

—Connectivity Strategy

        Xpedite is ENS' system for targeting and marketing to providers, and connecting providers to payers. This has evolved into a solution for all the provider e-commerce connectivity needs of health care payers. Specific markets are identified by payers, then ENS seeks to coordinate all the key payers within a particular market and to develop a specific co-marketing plan directed towards paper-submitting providers. This plan includes targeted mailers, educational seminars, promotional discounts, and a number of other activities geared toward enticing the providers to convert from paper to electronic processing.

—"Clean Claim" Strategy

        ENS enables payers to process claims cleanly as follows: 1) payers only receive those claims that are theirs; 2) duplicates are not included; 3) if necessary, claims are automatically rerouted to other organizations, such as a preferred provider organization or delegated provider group; and 4) payers receive claims in a form that fits their system configuration. Clean claims mean higher auto-adjudication, faster payments, less administrative costs, and higher accuracy. PASS™, ENS' pre-adjudication software system, has continued to grow and evolve in functionality, while keeping with its premise of "delivering a clean claim."

—HIPAA Transaction Portal Strategy.

        ENS simplifies the payer information technology environment by providing management of all front-end format requirements of a payer. ENS' strategy is to provide a payer-focused solution that meets HIPAA mandates for targeted payer organizations. The ENS HIPAA transaction portal 1) provides a compliance methodology on all HIPAA-mandated transactions; 2) offers payer-to-provider connectivity services on all related e-commerce transactions through Xpedite; 3) connects practice management software organizations through a HIPAA-compliant vendor integration API (Application Programming Interface); 4) presents an all-payer co-brandable (or private label) graphical user interface application with potential revenue sharing for payers to conduct e-commerce transactions with their providers; 5) incorporates PASS™ services, including claims receipt and response, eligibility request/response, and possible claims status; and 6) enables use of ADS™. In addition, in 2002, ENS added Health-e Xchange which not only allows ENS to receive HIPAA transactions on behalf of a payer but also host the transactions.

—Marketing and Branding Strategy.

        With the public announcement of the name change to Electronic Network Systems (ENS) on December 3, 2001, ENS has taken the opportunity to launch a new logo, new look, and new website. With new co-brandable services introduced in 2002, and our new co-brandable Web Enrollment service, ENS is using the tagline of Health-e Network® for all services, whether sold via ENS, payer clients, or practice management software vendors. Health-e Network® will be carried through all services with its own domain/URL site. Payer-partners and vendor-partners will be referred to as participants in ENS' Health-e Network®.

—Advisory Board.

        The Company has assembled an Advisory Board consisting of executives with knowledge of the medical data processing industry and general business trends in order to help the Company and ENS

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anticipate industry trends and develop strategies to meet the challenges of ENS' business. They will be compensated out of the incentive bonus program described below.

Industry

        We believe that healthcare information services will continue to be one of the fastest growing segments within the healthcare industry, and the use of e-commerce and the Internet (though in their early stages) will dramatically increase over the next 3 to 5 years as a major component of daily operations for healthcare industry participants.

        Demand for our services is driven by three factors. First, payer organizations are tightening their budgets and lowering reimbursements to providers. Payers must secure outsourcing services that bring them greater efficiencies and support higher levels of electronic transaction processing between them and their respective provider networks. Second, the payer community is focusing on decreasing operating costs and increasing profit margins. Payers have an incentive to increase the use of e-commerce and the Internet because electronic transactions cost payers less to administer. By contracting with ENS for utilization of our services, payers have an opportunity for fixed cost pricing and significant levels of overhead reduction. Third, government and industry legislation and rulemaking, especially the Health Insurance Portability and Accountability Act (HIPAA), the Joint Commission on Accreditation of Healthcare Organizations (JCAHO), industry accreditation groups such as the National Committee for Quality Assurance (NCQA) and organized lobbies representing provider groups are requiring the use of standard transactions, standard identifiers, security and other standards and requirements for the transmission of certain electronic health information. These regulations are also driving the development and standardization of many other electronic healthcare transaction types for additional administrative simplification. As a result, payers are moving to outsource many primary transactions processing functions (i.e. paper claims, imaging/scanning, e-commerce implementation, pre-adjudication, mailroom services, etc.) to reduce their internal information technology staffing costs, meet government regulations, as well as partnering to achieve increased levels of provider connectivity.

        Growing interest in electronic healthcare administrative and financial transactions has resulted from the anticipated lower costs of adopting and utilizing the Internet. The healthcare industry's continuing reliance on paper and manual processing is costly and inefficient, a status making it a prime target for many of the latest workflow technologies. The promise of the Internet has been met with a flurry of companies offering all levels of new Internet—based services to the healthcare industry. Although technically the efficiencies are clearly available, healthcare as an industry moves slowly and adoption and integration of these offerings into daily practice has so far been at a very low level.

        The Administration Simplification Act, Section F of HIPAA, requires the adoption of eight standard financial and administrative formats to enable health information to be exchanged electronically, thus improving the efficiency and effectiveness of the health care system. HIPAA-AS should accelerate the number of electronic claims, and related transactions, such as eligibility, enrollments and disenrollments, etc. As payers must develop the capacity to accept or send HIPAA-AS mandated transaction sets, payers can look to third parties such as ENS' Health-e Network® to accept or send transaction information on their behalf. Management believes that the combination of HIPAA, NCQA, and other healthcare lobbying groups should drive the growth of batch (medical) claims, real-time transactions, and claims outsourcing processes.

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Competition

        The healthcare industry continues to suffer from outdated paper and manual processing. Although technically the efficiencies from use of the internet and other e-commerce tools are clearly available, healthcare remains today less technically sophisticated for most of its transaction processing. Many competitors, such as WedMD, ProxyMed and others, offer all levels of new Internet-based services to the healthcare industry. To date, adoption and integration into daily practice of these offerings has been at a very low level. ENS expects increasing levels of e-commerce application adoption by the healthcare industry's primary participants over the next three to five years. ENS competes against traditional claims clearinghouses, such as WebMD, MedUnite, Per-Se Technologies, ProxyMed, and others. ENS has in the past competed with legacy practice management systems vendors offering a claims processing component. However, in the past year, ENS began partnering with many new vendors by offering back-end processing and integrated and co-brandable solutions.

        Factors influencing competition in the healthcare market include (i) compatibility with the provider's software and inclusion in practice management products and (ii) relationships with third-party payers, including managed care organizations. ENS believes that the most significant factors in developing and maintaining relationships with its customers are the breadth, price and quality of ENS' services, provider level support and ENS' ability to address its customers' current needs effectively while facilitating the transition to high levels of utilization of Internet and HIPAA supported transaction standards applications. We continue to establish a predictable recurring revenue stream by entering into multi-year agreements.

Sales and Marketing

        ENS develops and maintains payer, provider and vendor relationships through our sales and marketing personnel located in five geographic regions. Our sales and marketing strategy focuses on selling our services to providers directly through sales representatives and through organizations, such as healthcare finance consulting firms, practice management software firms, application service providers, and health care plan administrators, that have relationships with or access to a large number of providers. ENS develops long-term relationships with systems vendors, third party payers and other large submitters of healthcare transactions. In addition, we work closely with practice management system vendors to provide an integrated solution to providers.

        Some of our payer clients co-sponsor marketing initiatives with healthcare provider groups to educate and help initiate the adoption of healthcare e-commerce utilizing ENS services. These initiatives have proven to be effective in driving the e-commerce connectivity of payer organizations with their provider base via ENS.

Customers

        Our principal customers consist of healthcare providers, such as physicians, hospitals, clinics and billing services, and third-party payers, such as indemnity insurers, managed care organizations, preferred provider organizations, claims submitters and state/federal governmental agencies. In addition, ENS markets its services indirectly to providers and payers through third party administrators, aggregators, consultants and accountants. Benesight and Lifeguard accounted for 30% and 12%, respectively, of total revenues during fiscal 2001. Benesight and Lifeguard accounted for 31% and 11%, respectively, of total revenues during fiscal 2002. The California State Department of Managed Health Care Operations (DMCO) conserved Lifeguard under receivership during fiscal 2002 and ordered Lifeguard to wind down its membership business by December 31, 2002. Therefore, Lifeguard will not continue as a significant customer. Accordingly, Benesight in combination with its sister organization, Harrington, is expected to account for a higher percentage of our revenues in fiscal 2003. ENS recently

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entered into a multi-year agreement with Pacificare Health Systems, one of the largest national consumer health organizations.

        We typically provide real-time services to customers under contracts that are not exclusive and generally do not guarantee a specific transaction volume or revenue stream. The pricing of our services both on a monthly and per-claim basis is set under contracts typically having terms of one to seven years, subject to a variety of early cancellation arrangements.

        We enter into contracts with providers, payers and other claim submitters, such as third party administrators, practice management system vendors, clearinghouses and billing services. Our claim submitter contracts often contain exclusivity provisions whereby the submitter agrees to process all claims through ENS, provided that ENS has network access to the payer.

Operations

        We deliver our services via a state-of-the-art network comprised of multiple servers, a mixture of commercial and Health-e Network® proprietary software, high-speed Ethernet connections, and dial-up and private-line connections to/from customers.

        Our computer network provides for multi-path host access with a high degree of accuracy and integrity. It was designed to operate continuously and was constructed and engineered with fault tolerance and redundancy in mind. Servers are typically configured with redundant hard drives, multiple power supplies, and multiple processors. Power is provided via uninterruptible power supply systems. The software and related data files that are maintained and processed on the network are backed up nightly and stored off-site from the data center. We outsource some of the data entry and programming functions.

        Our communications network consists of redundant connections to the Internet as well as private, direct connections to payers ranging from DSO's to full T-1's. The communications network also includes expansive facilities for analog transfer of data to and from providers. The entire network is designed to facilitate secure, electronic, real-time communications among payers, providers and other users, of critical and sensitive healthcare information.

Proprietary Rights

        We own certain of the software and systems designs that we use and have a limited, perpetual, nonexclusive, royalty-free license to use other software and systems designs. We also license certain other software from third parties.

        Our success is dependent in part upon electronic transaction processing technology developed by us. We have not sought patents or copyright protection for any of our software or related technology. A combination of trade secrets, service mark and contract protection is used to establish and protect that technology. There can be no assurance that these legal protections and the precautions will be adequate to prevent misappropriation of technology used by us. Furthermore, the legal protections do not prevent independent third-party development of competitive technology.

Name Change

        On December 3, 2001, ENS announced the change of its name from Electronic Data Submission Systems Inc. to Electronic Network Systems, Inc. in settlement of a trademark dispute. This name change and the accompanying change in logo reflect the expansion of our healthcare and e-commerce services.

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Government Regulation and Healthcare Reform

        The healthcare industry is highly regulated and subject to changing political, economic and regulatory influences that may affect the procurement practices and operation of healthcare organizations. Our services are designed to function within the structure of the healthcare financing and reimbursement system currently being used in the United States. Changes in such systems could result in the need for unplanned product enhancements, delays or cancellations of orders, or the revocation of endorsement of our services by hospital associations or other customers. Any of such occurrences could have a materially adverse effect on our business, financial condition and results of operations.

        During the past several years, the United States of America's healthcare industry has been subject to an increase in governmental regulation of, among other things, reimbursement rates. Certain proposals to reform the U.S. healthcare system are periodically considered by Congress and certain state legislatures. These programs may contain proposals to increase governmental involvement in healthcare or otherwise change the operating environment for our current and potential customers. Healthcare organizations may react to these proposals and the uncertainty surrounding such proposals by curtailing or deferring investments, including those for our services. On the other hand, changes in the regulatory environment have increased and may continue to increase the needs of healthcare organizations for cost-effective information management and thereby enhance the marketability of our services.

        We cannot predict with any certainty what impact, if any, such proposals or reforms might have on ENS' business, results of operations and financial condition. In addition, many providers are consolidating to create integrated healthcare delivery systems with greater regional market power. As a result, these emerging systems could have greater bargaining power, which may lead to price erosion of our services. The failure of ENS to maintain adequate price levels would have a materially adverse effect on our business, financial condition and results of operations. Other legislative or market-driven reforms could have unpredictable effects on our business, financial condition and results of operations.

        Recent government and industry legislation and rulemaking, especially the Health Insurance Portability and Accountability Act (HIPAA), the Joint Commission on Accreditation of Healthcare Organizations (JCAHO), industry accreditation groups such as the National Committee for Quality Assurance (NCQA) and organized lobbies representing physician groups are requiring the use of standard transactions, standard identifiers, security and other standards and requirements for the transmission of certain electronic health information. HIPAA should accelerate the number of electronic claims and related real-time transactions, such as eligibility, verification, enrollment, etc. A section of HIPAA, the Administrative Simplification Act, requires payers to use eight standardized real-time transactions, including eligibility. On August 17, 2000, the U.S. Department of Health and Human Services published final regulations to govern these eight standardized real-time transactions involving health information, which required compliance by October 16, 2002 and which later allowed for an amendment to be filed extending compliance until October 16, 2003. Payers should be able to meet these requirements by outsourcing the claims processing function to third parties such as Health-e Network.®

        The United States Food and Drug Administration (FDA) is responsible for assuring the safety and effectiveness of medical devices under the Federal Food, Drug and Cosmetic Act. Computer products and services are subject to regulation when they are used or are intended to be used in the diagnosis of disease or other conditions, or in the cure, mitigation, treatment or prevention of disease, or are intended to affect the structure or function of the body. The FDA could determine in the future that any predictive aspects of our services make them clinical decision tools subject to FDA regulation. Compliance with these regulations could be burdensome, time-consuming and expensive. We also could become subject to future legislation and regulations concerning the development and marketing of

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healthcare software systems. These could increase the cost and time necessary to market new services and could affect us in other respects not presently foreseeable. We cannot predict the effect of possible future legislation and regulation.

        The confidentiality of patient records and the circumstances under which such records may be released for inclusion in our databases are subject to substantial regulation by state and federal governments. These state laws and regulations govern both the disclosure and the use of confidential patient medical record information. Although compliance with these laws and regulations is at present principally the responsibility of the hospital, physician or other provider, regulations governing patient confidentiality rights are evolving rapidly. Additional legislation governing the dissemination of medical record information has been proposed at both the state and federal level. This legislation may require holders of such information to implement security measures that may require substantial expenditures by ENS. There can be no assurance that changes to state or federal laws will not materially restrict the ability of providers to submit information from patient records using our services.

Facilities

        ENS' executive and corporate offices are located in Colorado Springs, Colorado in approximately 20,000 square feet of office space under a lease that expires June 14, 2003. ENS has a processing center in Pueblo, Colorado that occupies approximately 11,000 square feet. We believe that our facilities are adequate for our current operations.

Employees

        As of January 2, 2003, ENS had 177 employees, including 74 salaried and 103 hourly employees (including temporary employees). None of these employees is represented by a union or other collective bargaining group. ENS believes its relationship with its employees is good.

Incentive bonus program

        In January 2003, the Company adopted an incentive bonus plan for executives and consultants of ENS and members of the Advisory Board providing for payment of approximately 5% of any gain to the Company in the event of a sale of ENS or a public offering by ENS.

Litigation

        ENS is not currently party to any material litigation.

Telecommunications

        We have sold or otherwise disposed of all our telecommunications assets, but we continue actively to seek acquisitions in the area. For instance, we participated in a bid for a bankrupt competitive local exchange carrier in December 2001. Management believes that the prices of telecommunications businesses have only recently been reduced sufficiently to offer again attractive opportunities. Some of our former telecommunications operations are described below.

Wireless Cable

        In June 1997 the Company completed the sale of its subsidiary, South Florida Television Inc., which held its rights to provide wireless cable television service in Miami, to BellSouth Corporation (NYSE: BLS) for 1,048,321 shares of BellSouth common stock, based on a $48 million purchase price. We do not currently own any wireless cable systems or channels, and, while we continue to seek and review opportunities in this area, we have no specific agreements or understandings to acquire any such assets.

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TLC Productions

        In April 2001, we closed our subsidiary TLC Productions, Inc. ("TLC"), a teleport and uplink facility located in North Miami, Florida, that provided satellite uplink services to clients who then are able to rebroadcast signals to video programming distributors.

Other Operations

        In addition to ENS, the Company continues its business of acquiring controlling interests in telecommunications, healthcare and other strategically linked areas. The Company may acquire or invest in other businesses.

Developing Technology

        The Company is reviewing on a preliminary basis acquisitions of healthcare, telecommunications and strategically linked companies.

Acquisitions

        The Company is actively seeking to acquire other businesses in telecommunications, e-health, e-commerce, media and unrelated areas, but currently has no specific agreements or arrangements to acquire any such businesses.

Anagram International Communications Ltd.

        Anagram International Communications Ltd. ("Anagram") was organized in 1995 to engage in, among other things, the business of acquiring television programming for distribution in the United States and abroad. The Company invested an aggregate of $636,875 in Anagram. Anagram wound down most of its business in 2000.

Other Events

        On January 23, 2002, we changed the Company's name from National Wireless Holdings Inc. to NWH, Inc., reflecting its expansion as a holding company into healthcare e-commerce and interest in acquisitions in other areas.

        In August and December, 2001, and July 2002, we purchased additional shares of Common Stock of ENS from stockholders in separate transactions in exchange for cash aggregating $890,070 and a $200,000 contingent note payable only in the event of sale of ENS. We currently own 94% of the outstanding diluted common stock of ENS.

        Our board of directors authorized the repurchase of up to 20% of our common shares because we believe, under current market conditions, the repurchase is a favorable investment. The repurchased shares will also be available for sale upon exercise of outstanding options. In fiscal 2001, we repurchased an aggregate of 16,500 shares for an aggregate cost of $192,995. In fiscal 2002, we repurchased an aggregate of 371,900 shares for an aggregate cost of $4,529,075, and, between October 31, 2002, and January 9, 2003, we repurchased 24,500 additional shares for an aggregate cost of $293,293.

Special Note Regarding Forward-Looking Statements

        Certain statements contained in this Annual Report on Form 10-K, including, without limitation, statements containing the words "believes," "anticipates," "expects" and words of similar import, constitute "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995 or by the Securities and Exchange Commission in its rules, regulations and releases, regarding the Company's financial and business prospects and capital requirements. Such forward-looking statements

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involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following: the limited nature of the Company's operations and the risk of the Company's failure to acquire additional businesses; the uncertain acceptance of Health-e Network®; competition; existing government regulations and changes in, or the failure to comply with, government regulations; the ability of the Company to sustain, manage or forecast its growth; dependence on significant customers and the potential loss thereof; the ability to attract and retain qualified personnel; risk of technological obsolescence, and other factors referenced in this Annual Report on Form 10-K. Certain of these factors are discussed in more detail elsewhere in this Annual Report on Form 10-K, including, without limitation, under the captions "Selected Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations", "Business" and Exhibit 99.1 hereto. Given these uncertainties, undue reliance should not be placed on such forward-looking statements. The Company disclaims any obligation to update any such factors or to publicly announce the result of any revisions to any of the forward-looking statements contained or incorporated by reference herein to reflect future events or developments.

ITEM 2.    PROPERTIES

        The Company generally leases the real estate where its business and offices are located. The Company leases office space for its offices in New York pursuant to a lease expiring January 31, 2007, at a rate per month of $14,917 plus escalation charges. ENS leases approximately 20,000 square feet of office space in Colorado Springs, Colorado under a lease that expires June 14, 2003. ENS also maintains offices in Pueblo, CO and Cooper City, FL. The Company's subsidiary, TLC, has accrued liabilities for expenses on a terminated lease. The Company's total lease expense for the year ended October 31, 2002 was approximately $685,000 (net of $52,500 of rental income) as compared to approximately $750,000 (net of $51,000 of rental income) for the year ended October 31, 2001. The Company believes its properties are adequate for its current needs.

ITEM 3.    LEGAL PROCEEDINGS

        Not applicable.

ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

        At its Annual Meeting of Stockholders held on August 9, 2002, the Company's stockholders approved and ratified the following actions:

        1.    Election of Directors:

        The following individuals were re-elected as Class II directors of the Corporation:

to serve until the 2005 Annual Meeting of Stockholders and until their respective successors have been elected and qualified.

        2.    2,939,187 shares of all shares entitled to vote were voted in favor of, and 0 votes were withheld for, the appointment of PricewaterhouseCoopers L.L.P. as independent auditors of the Company until the next Annual Meeting of Stockholders.

12

PART II

ITEM 5.    MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

        The Company's Common Stock, $.01 par value, is traded on the Nasdaq National Market ("Nasdaq") under the symbol "NWIR". The following table sets forth the range of high and low sale price information for the Common Stock for each full fiscal quarterly period for the last two years as reported by Nasdaq.

        As of January 9, 2003, there were approximately 1,000 beneficial holders of Common Stock.

        The Company does not anticipate paying cash dividends on the Common Stock in the foreseeable future. The payment of cash dividends on shares of Common Stock will be within the discretion of the Company's Board of Directors and will depend upon the earnings of the Company, the Company's capital requirements and other financial factors which are considered relevant by the Company's Board of Directors.

ITEM 6.    SELECTED FINANCIAL DATA

        The selected historical financial data for the Company presented below under the captions "Operating Data" and "Balance Sheet Data" as of October 31, 1998, 1999, 2000, 2001 and 2002, and for the years ended October 31, 1998, 1999, 2000, 2001, and 2002 are derived from the Company's consolidated financial statements. The selected financial data should be read in conjunction with

13

"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS."

(1)

Includes Gain (Loss) on Securities transactions, net, interest income, dividend income, and interest expense.

(2)

During the fiscal year ended October 31, 2001, the Company adopted the provisions of SFAS 133 (Accounting for Derivative Instruments and Hedging Activities) which resulted in a cumulative effect adjustment of $2,812,000. See Note 2 to Consolidated Financial Statements.

(3)

See Notes 2, 3 and 13 to Consolidated Financial Statements

14

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

        NWH, Inc. ("NWH" or the "Company"), a Delaware corporation, is an electronic commerce and communications company focusing primarily on acquisition and operation of telecommunications, e-commerce and other strategically linked businesses. The Company currently owns and operates Electronic Network Systems, Inc. ("ENS"), formerly known as Electronic Data Submission Systems, Inc., a business-to-business healthcare e-commerce data interchange company, providing links between healthcare providers and payers. In addition, the Company continues its business of acquiring controlling interests in telecommunications, healthcare, other strategically linked areas and other unrelated businesses. In June 1997, the Company sold its wireless cable assets in Miami, Florida in exchange for common stock of BellSouth Corporation.

        The Company was incorporated in Delaware on August 31, 1993. The Company's fiscal year ends on October 31.

        Certain statements contained in this Annual Report on Form 10-K constitute "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995 or by the Securities and Exchange Commission in its rules, regulations and releases, regarding the Company's financial and business prospects and capital requirements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors as described in Exhibit 99 to this Annual Report on Form 10-K that may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Given these uncertainties, prospective investors are cautioned not to place undue reliance on such forward-looking statements. See "Business—Special Note Regarding Forward-Looking Statements".

1)

RESULTS OF OPERATIONS

        The following sets forth results of operations for the Company. See below for a more detailed discussion of ENS results of operations.

Fiscal year ended October 31, 2002 as compared to fiscal year ended October 31, 2001:

        Services Revenue:

        Services revenue decreased from $12,183,824 for the fiscal year ended October 31, 2001 to $11,930,646 for the fiscal year ended October 31, 2002, primarily reflecting ENS' reduced volumes of paper processing, and related decrease in sales of those services, as we succeeded in shifting providers from paper claims to electronic submissions.

        Cost of Services:

        Cost of services decreased from $7,030,617 for the fiscal year ended October 31, 2001 to $5,600,431 for the fiscal year ended October 31, 2002 as a result of improved efficiency of operations at ENS and reduced paper claims operations. Depreciation of equipment and amortization of software costs in the amount of $819,156 is included in Cost of Services for the year ended October 31, 2002. Depreciation of equipment and amortization of software costs in the amount of $635,870 for the year ended October 31, 2001 was reclassified and is included in Cost of Services.

        Professional Fees:

        Professional fees increased from $586,640 in the fiscal year ended October 31, 2001 to $693,110 in the fiscal year ended October 31, 2002 as a result of additional compliance reviews and corporate matters.

15

        General and Administrative:

        General and administrative expense decreased from $7,530,421 in the fiscal year ended October 31, 2001 to $5,875,099 in the fiscal year ended October 31, 2002, primarily as a result of improved efficiency of operations and decrease in sales commissions relating to reductions in less profitable services at ENS.

        Depreciation and Amortization:

        Depreciation and amortization decreased from $756,759 in the fiscal year ended October 31, 2001 to $343,223 in the fiscal year ended October 31, 2002, primarily due to a reduction of approximately $315,000 in amortization of goodwill as compared to the prior period resulting from our adoption of FASB 142 and a reduction of approximately $125,000 in depreciation and amortization of our former subsidiary TLC, which was closed during the quarter ending April 30, 2001. See Note 1 to the Consolidated Financial Statements.

        Loss from Operations:

        As a result of the foregoing events, loss from operations decreased from ($3,720,613) for the fiscal year ended October 31, 2001 to ($581,217) for the fiscal year ended October 31, 2002.

        Gain on Securities Transactions, net:

        Gain on securities transactions, net, decreased from gain of $8,614,811 for the fiscal year ended October 31, 2001 to gain of $5,322,634 for the fiscal year ended October 31, 2002, representing the net results of written call option and short sale liabilities and settlements and realized gains from the sale of BellSouth common stock. Under Financial Accounting Standards Board Statement No. 133 "Accounting for Derivative Instruments and Hedging Activities," unrealized gains and losses related to written call options and short sales are recorded in the Statement of Operations. Further, unrealized gains and losses on BellSouth common stock, are recorded through Other Comprehensive Income (Loss) and are only recorded in the Statement of Operations when realized upon ultimate sale. The unrealized loss on Bell South common stock, reflected in Other Comprehensive Loss, net of income taxes, for the fiscal year ended October 31, 2001 was ($4,062,105) as compared to ($3,909,775) for the fiscal year ended October 31, 2002.

        Interest and Dividend Income:

        Interest income decreased from $1,897,846 for the fiscal year ended October 31, 2001 to $438,263 for the fiscal year ended October 31, 2002, primarily because high yielding investments matured and were reinvested at lower market interest rates. In addition, we reduced our cash investments because of the repurchase of our common stock and changes in cash levels relating to written call option and short positions on BellSouth common stock. Dividend income increased from $396,068 in the fiscal year ended October 31, 2001 to $403,841 in the fiscal year ended October 31, 2002, due to higher dividends received on BellSouth common stock, and a lower short position maintained during the year.

        Interest Expense:

        Interest expense decreased from $123,673 in the fiscal year ended October 31, 2001 to $97,813 in the fiscal year ended October 31, 2002, primarily due to lower interest rates despite a small increase in the average amount of debt outstanding at ENS during the period. Capital lease obligations decreased during the period but were offset by an increase in other debt.

        Income Before Provision for Income Taxes and Cumulative Effect of a Change in Accounting for Written Call Options:

        We realized income before provision for income taxes and cumulative effect of a change in accounting for written call options of $5,485,708 for the fiscal year ended October 31, 2002, as compared to income before provision for income taxes and cumulative effect of a change in accounting for written call options of $7,064,439 for the fiscal year ended October 31, 2001, primarily as a result of the decrease in the (Loss) from Operations offset by lower gains on options and short positions and sales and decreased interest income, as described above.

16

        Provision for Income Taxes:

        Provision for income taxes was $1,300,000 for the fiscal year ended October 31, 2002, as compared to a provision for income taxes of $2,100,000 for the fiscal year ended October 31, 2001.

        Income before Cumulative Effect of Change in Accounting for Written Call Options:

        Net income before cumulative effect of change in accounting method decreased from $4,964,439 for the fiscal year ended October 31, 2001 to $4,185,708 for the fiscal year ended October 31, 2002, as a result of the foregoing events.

        Cumulative Effect of a Change in Accounting for Written Call Options:

        Cumulative effect of a change in accounting for written call options net of taxes of $1,514,667 was ($2,812,000) for 2001 as a result of the adoption of FAS 133 in 2001.

        Net Income:

        Net income increased from $2,152,439 for the fiscal year ended October 31, 2001 to $4,185,708 for the fiscal year ended October 31, 2002 as a result of the foregoing events.

2001 as Compared to 2000:

        Services Revenue:

        Services revenue increased from $9,031,402 in 2000 to $12,183,824 in 2001, primarily reflecting increased revenues of ENS, a then 91.5% owned subsidiary. ENS' results are discussed in detail below.

        Cost of Services:

        Cost of services increased from $5,311,549 in 2000 to $7,030,617 in 2001, as a result of increased business levels of ENS. Depreciation of equipment and amortization of software costs of $267,492 and $635,870 for the years ended October 31, 2001 and 2000, respectively have been reclassified and are included in Cost of Services.

        Professional Fees:

        Professional fees decreased from $624,969 in 2000 to $586,640 in 2001, as a result of lower activity relating to tax and corporate actions in 2001.

        General and Administrative:

        General and administrative expenses increased from $6,631,458 in 2000 to $7,530,421 in 2001, primarily as a result of increased business levels at ENS.

        Depreciation and Amortization:

        Depreciation and amortization decreased from $777,452 in 2000 to $756,759, primarily because the TLC operations were closed during 2001, the effect of which was partially offset by increased acquisition of equipment at ENS. See Note 1 to the Consolidated Financial Statements.

        Loss from Operations:

        As a result of the foregoing events, loss from operations was ($4,314,026) in 2000 as compared to a loss from operations of ($3,720,613) in 2001.

        Gain (Loss) on Securities Transactions, Net:

        We realized a net gain on securities transactions for 2001 of $8,614,811 compared to a net gain for 2000 of $4,040,583, primarily as a result of closing written call option positions on, and the sale of, BellSouth common stock. The effect of unrealized (losses) on marketable securities as reflected in Other Comprehensive Income (Loss), net of related income taxes, amounts to ($4,062,105), in 2001 and ($1,280,073) in 2000.

        Interest and Dividend Income:

        Interest income increased from $1,729,998 in 2000 to $1,897,846 in 2001, primarily as a result of increased cash, cash equivalents and marketable securities balances and higher interest rates. Dividend

17

income decreased from $449,963 in 2000 to $396,068 in 2001, due to lower dividends received on BellSouth common stock as shares were sold during the year.

        Interest Expense:

        Interest expense increased from $72,906 in 2000 to $123,673 in 2001, primarily due to increase in capital lease obligations and higher debt of ENS.

        Income (Loss) before Provision for Income Taxes and Cumulative Effect of a Change in Accounting for Written Call Options:

        We realized income before provision for income taxes and cumulative effect of a change in accounting for written call options of $7,064,439 for 2001, as compared to $1,833,612 for 2000, primarily as a result of increased gain on securities transactions and reduced loss from operations at ENS.

        Provision for Income Taxes:

        The provision for income taxes was $2,100,000 for 2001, as compared to a provision for income taxes of $51,000 for 2000.

        Income before Cumulative Effect of a Change in Accounting for Written Call Options:

        Income before cumulative effect of a change in accounting for written call options increased from $1,782,612 for 2000 to $4,964,439 for 2001, as a result of the foregoing events.

        Cumulative Effect of a Change in Accounting for Written Call Options:

        Cumulative effect of a change in accounting for written call options net of taxes of $1,514,667 was ($2,812,000) for 2001 as the result of the adoption of FAS 133 in 2001.

        Net Income:

        Net income increased from $1,782,612 for 2000 to net income of $2,152,439 for 2001, as a result of the foregoing events.

ENS—Results of Operations:

        See Note 16 to the Consolidated Financial Statements for segment information concerning ENS.

        ENS—fiscal year ended September 30, 2002 as compared to fiscal year ended September 30, 2001:

        Services Revenue:

        Services revenue decreased from $12,153,746 for the fiscal year ended September 30, 2001 to $11,930,646 for the fiscal year ended September 30, 2002 (or approximately 1.8%), primarily reflecting ENS' reduced volumes of paper processing on all of its major contracts due primarily to the shift of providers from submitting paper claims to electronic submissions, and without substantial effect from the loss of Lifeguard as a customer. Shifting claims from paper to e-commerce reduces overall revenue as the revenue per claim for e-commerce is less than paper; however, the shift from paper claims increases efficiency for both payers and providers and, for ENS, generates significantly higher gross profit per claim. While two large customers reduced the amount of paper claims submitted, ENS has increased its number of direct e-commerce connections with payers and increased its number of direct provider connections by 28.7% since September 30, 2001. We expect to replace the Lifeguard revenue stream, which will end in fiscal 2003, with growth from existing customers and new customers.

        Cost of Services:

        Cost of services decreased from $7,027,736 in the fiscal year ended September 30, 2001 to $5,600,431 in the fiscal year ended September 30, 2002 (or approximately 20.3%), as a result of cost containment measures, increased electronic claim processing and reduced ADS paper claims operations. The decrease was substantially higher, in proportion, than the decrease in services revenue because of implementation of our business model, including a controlled growth program, with most of the decrease in costs concentrated in less profitable services. Included in Cost of Services for the fiscal

18

year ended September 30, 2002 and September 30, 2001 is amortization of software costs and depreciation of equipment of $819,156 and $635,870 respectively.

        General and Administrative:

        General and administrative expense decreased from $4,365,607 in the fiscal year ended September 30, 2001 to $3,677,097 in the fiscal year ended September 30, 2002 (or approximately 15.8%) as a result of cost containment measures. This amount excludes selling and advertising in the amount of $1,335,738 and $1,042,326 and includes professional fees of $118,780 and $94,450 as of September 30, 2001 and 2002, respectively.

        Depreciation and Amortization:

        Depreciation and amortization decreased from $600,417 in the fiscal year ended September 30, 2001 to $334,201 in the fiscal year ended September 30, 2002 (or approximately 44.3%), primarily due to a reduction of approximately $315,000 in amortization of goodwill as compared to the prior period from our adoption of FASB 142. See Note 6 to the Consolidated Financial Statements

        Income (Loss) from Operations:

        As a result of the foregoing, income from operations increased from a loss of ($1,175,752) for the fiscal year ended September 30, 2001 to income of $1,276,591 for the fiscal year ended September 30, 2002, reflecting the full implementation of our business model, including cost containment and related reduction of less profitable lines of business. We believe ENS will continue to generate positive income from operations through 2003.

        Interest Expense:

        Interest expense, exclusive of interest payable to NWH, decreased from $122,432 in the fiscal year ended September 30, 2001 to $97,813 (or approximately 20.1%) in the fiscal year ended September 30, 2002, primarily due to a decrease in the average amount of debt outstanding at ENS during the period. Capital lease obligations decreased during the period but were offset by an increase in other debt. For the fiscal year ended September 30, 2002, $447,000 of interest expense was payable by ENS to NWH and was eliminated in consolidation.

        EBITDA:

        EBITDA increased from $60,535 for the fiscal year ended September 30, 2001 to $2,429,948 for the fiscal year ended September 30, 2002 as a result of lower costs as a percent of revenue, as discussed above. We provide EBITDA (earnings before interest, taxes, depreciation and amortization) information as a guide to the operating performance of ENS. EBITDA, which is not a term recognized under generally accepted accounting principles, is calculated as the (loss) income from operations plus depreciation and amortization. Included in depreciation and amortization for the purpose of calculating EBITDA is depreciation of equipment and amortization of software costs, which is included in cost of services. EBITDA as calculated by the Company may not be comparable to calculations of similarly titled items reported by other companies.

        ENS—Fiscal year ended September 30, 2001 as Compared to fiscal year ended September 30, 2000:

        Services Revenue:

        Services revenue increased from $8,805,124 in 2000 to $12,153,746 in 2001 (or approximately 38.0%), primarily reflecting the full implementation of all long term contracts and increases in our customers' claim volumes.

        Cost of Services:

        Cost of services increased from $4,964,388 in 2000 to $7,027,736 in 2001 (or approximately 41.6%), as a result of the full implementation of all long term contracts. The increase was proportionately slightly lower than the increase in services revenue in part because of implementation of our business model and cost containment, and in part because of economies of scale. Cost of services for the fiscal

19

years ended September 30, 2000 and 2001 have been reclassified to include depreciation and amortization of software costs of $635,870 and $267,492, respectively.

        General and Administrative:

        General and administrative expense decreased from $4,113,852 in 2000 to $4,365,607 in 2001 (or approximately 6.1%), primarily because of implementation of our business model and cost containment, and in part because of economies of scale. General and administrative expenses for the fiscal years ended September 30, 2000 and 2001exclude selling and advertising of $986,257 and $1,335,738, respectively, and include professional fees of $217,987 and $118,780, respectively.

        Depreciation and Amortization:

        Depreciation and amortization increased from $394,271 in 2000 to $600,417 in 2001 as a result of additional furniture, computer software and equipment purchased for increased business levels. See Note 5 to the Consolidated Financial Statements.

        Interest Expense:

        Interest expense, exclusive of interest payable to NWH, increased from $73,075 in 2000 to $122,432 in 2001, due to higher debt incurred to purchase equipment under capital lease obligations and manage operations. As of September 30, 2001, $465,000 of interest expense was payable by ENS to the Company and is eliminated in consolidation and computation of EBITDA.

        Loss from Operations:

        As a result of the foregoing events and reflecting in part more profitable operations in ENS' fourth fiscal quarter, loss from operations decreased from ($2,164,386) in 2000 to ($1,175,752) in 2001.

        EBITDA:

        EBITDA increased from ($1,435,263) for 2000 to $60,535 for 2001 as a result of increased revenue and, on a proportionate basis, lower costs, as discussed above. We provide EBITDA (earnings before interest, taxes, depreciation and amortization) information as a guide to the operating performance of ENS. EBITDA, which is not a term recognized under generally accepted accounting principles, is calculated as the (loss) income from operations plus depreciation and amortization. Included in depreciation and amortization for the purpose of calculating EBITDA is amortization of software costs, which is included in cost of services. EBITDA as calculated by the Company may not be comparable to calculations of similarly titled items reported by other companies.

2)

LIQUIDITY AND CAPITAL RESOURCES

        As of October 31, 2002, we had approximately $45.5 million in cash and marketable securities, as well as our interest in ENS and other investments. Our assets have been used for, and are currently reserved to fund acquisitions of healthcare e-commerce investments, telecommunications assets, media businesses, development of our other businesses and development and acquisition of new technologies and businesses in other areas. Such amount, with earnings thereon including proceeds from sale of BellSouth common stock and related derivatives, is expected to be sufficient to implement this business plan through October 2003, or for a shorter period if we determine to invest a substantial portion of our assets in major acquisitions, equity investments or stock repurchases. We actively seek to acquire or invest in healthcare e-commerce, other businesses in telecommunications, media or in unrelated areas. We may also dispose of assets from time to time. We have no specific arrangements with respect to any such acquisitions, dispositions or investments at the present time. There can be no assurance that any such acquisitions, dispositions or investments will be made.

        Our board of directors authorized the repurchase of up to 20% of our common stock because we believe, under current market conditions, the repurchase is a favorable investment. The repurchased shares will also be available for issuance upon exercise of outstanding options. As of October 31, 2002, we repurchased 388,400 shares for an aggregate cost of $4,722,070.

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        During the fiscal year ended October 31, 2002, we settled part of our option liabilities on BellSouth common stock. While we continue to review our holdings of BellSouth common stock and from time to time have sold and purchased shares and options of these holdings, we have not yet determined whether we will sell or hedge our remaining BellSouth securities in the near future or how we will invest the proceeds of any such transaction.

        In the fiscal year ended October 31, 2002, interest receivable by the Company from ENS increased by $356,518 to $1,286,329 at October 31, 2002, for a total outstanding loan to the Company of $6,466,329, including accrued interest. The outstanding balance under this loan agreement including interest has been eliminated from the consolidated Financial Statements. During fiscal year 2002, the Company spent $1,152,682 on fixed assets, including $983,581 for internally developed software and $169,101 for computer equipment required for increased claims processing and the development of Xpedite, our provider targeting and tracking system. We purchased additional shares of ENS from former officers in December 2001 for $500,000 cash and a $200,000 contingent note, and in June 2002 for $290,070 in cash. We currently own 94% of the diluted common stock of ENS.

        Operating overhead costs of ENS have decreased as a result of cost cutting measures and production efficiencies gained. We anticipate increased revenues in the near future. The combination of these factors going forward will improve overall profitability, allowing ENS to sustain itself on cash flows from its operations without further investment from NWH.

ENS—Liquidity and Capital Resources:

        ENS' losses have been financed principally through equity investments by the Company and loans from the Company, which loans aggregated $6,438,985 through September 30, 2002 (including accrued interest of $1,258,985). ENS plans additional investment in its technology enhancements, including further development and implementation of Xpedite, its full contact management operating system; its Internet claims processing system; Web Enrollment, a remote Internet based technology to enroll customers at time of sale; ECT, an Internet based full claims tracking system; additional payer connectivity; and enhancements to broaden the transactions processing infrastructure.

        Although we believe that ENS may need to obtain additional financing to accelerate its strategic business plan based upon existing contracts with physicians, other providers, payers and management companies and current expense levels, management expects ENS to continue profitable operations, established in the third quarter of fiscal 2001, through fiscal 2003.

3)

INFLATION

        In the opinion of management, inflation has not had a material effect on the operations of the Company.

4)

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

        In October, 2001, the Financial Accounting Standards Board issued SFAS No. 144 "Accounting for the Impairment or Disposal of Long-Lived Assets". This statement defines the accounting for long-lived assets to be held and used, assets held for sale and assets to be disposed of by other than sale and is effective for fiscal years beginning after December 15, 2001. The Company does not expect the adoption of this pronouncement to have a material effect on the earnings or financial position of the Company.

        In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities". The standard requires companies to recognize costs associated with exit or disposal activities when they are incurred rather than at the date of a commitment to an exit or disposal plan. Previous accounting guidance was provided by EITF Issue No. 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including

21

Certain Costs incurred in a Restructuring)". SFAS No. 146 replaces Issue 94-3. The provisions of SFAS No. 146 are to be applied prospectively to exit or disposal activities initiated after December 31, 2002. The Company does not expect the adoption of this pronouncement to have a material effect on the earnings or financial position of the Company.

        On December 31, 2002, the FASB issued SFAS No. 148, "Accounting for Stock Based Compensation—Transition and Disclosure—an amendment to FAS 123". This statement amends SFAS 123, "Accounting for Stock-Based Compensation", to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation and amends the disclosure requirements of SFAS 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. The transition and annual disclosure provisions of FAS 148 are effective for fiscal years ending after December 15, 2002. The Company does not expect the adoption to have a material effect on the earnings or financial position of the Company.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

        The primary objective of our investment activities, other than activities relating to ENS and potential acquisitions, is to preserve principal and maintain liquidity, while at the same time maximizing the yield we receive from our investment portfolio. We also utilize options and short sales to protect our position in BellSouth common stock, preserve its tax basis and reduce equity price risk.

        Changes in prevailing interest rates and stock price of BellSouth will cause the yield on our investments and the costs of shorts and options to fluctuate. To minimize this risk, we maintain our portfolio of cash equivalents, short-term investments and marketable securities (other than BellSouth common stock and related shorts and options) in commercial paper, non-government debt securities, money market funds, highly liquid U.S. Treasury notes and federal agency notes and other low risk investments. We view these high grade securities within our portfolio as having similar market risk characteristics. The weighted-average interest rate of the portfolio was 1.8% at October 31, 2002.

        Currently almost all our revenues and expenses are denominated in U.S. dollars and, as a result, we have experienced no significant foreign exchange gains and losses to date. We conduct only limited transactions in foreign currencies, and we do not anticipate that foreign exchange gains or losses will be significant in the foreseeable future. We have not engaged in foreign currency hedging activities to date.

ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS

        Information with respect to this item is contained in the financial statements appearing in Item 15 of this report. Such information is incorporated by reference.

ITEM 9. CHANGES IN AND DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

        Not applicable.

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PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

        Information concerning the current directors and executive officers of the Company is set forth as follows:

        Mr. Cassidy has been President, Chief Executive Officer and a director of the Company since its incorporation in August 1993. He was an independent financial consultant from 1988 to 1993. Prior to 1988, he served as a Vice President and principal of Allen & Company Incorporated, an investment banking firm, for 15 years with a concentration in communications. Prior to 1973, he served as co-director of research at Shields & Company, a brokerage firm. From 1994 to 2000, he was a director of Absolute Bank, a Republic of Georgia bank.

        Since 1992, Mr. DiBenedetto has been President of Junction Investors, Ltd., an investment banking firm based in Boston, Massachusetts. From 1989 to the present, he has been a general partner of Boston International Group, LP, a private investment fund. He has been, since 1985, a director and member of the Audit Committee of Alexanders Inc., a retailing and real estate company. From 1982 to the present, he has been a Managing Director of Olympic Partners, a real estate investment firm.

        Since April 1996, Mr. Lloyd has been President of Belfinance Securities, Inc., a broker-dealer. He was President and Chief Executive Officer of Republic New York Securities Corporation, a brokerage firm subsidiary of Republic New York Corporation, from 1991 to 1994. For more than five years prior to joining Republic, Mr. Lloyd was a Senior Executive Vice President of Shearson Lehman Brothers in its Worldwide Institutional Equity Trading and Sales Departments. Since 1992 he has been a director, and from 1992 to 2000 chairman, of Antigua Enterprises, an apparel company. From December 1994 to December 2000, he was Vice Chairman of Absolute Bank, a Republic of Georgia bank.

        Mr. McManus has been President and CEO of Misonix Inc., a medical device company, since November, 1998. He was President and Chief Executive Officer of New York Bancorp Inc. ("NYBI") from 1991 to 1998, a director of NYBI from 1990 to 1998 and a director and Vice Chairman of Home Federal Savings Bank, NYBI's subsidiary, from 1991 to 1998. He is also a director of the United States Olympic Committee, Document Imaging System Corp., American Home Mortgage Holdings, Inc., and

23

Novavax Inc. He has served in numerous government capacities, including Assistant to the President of the United States from 1982 to 1985 and as Special Assistant to the Secretary of Commerce during the Ford Administration.

        Mr. Tese has been Chairman of Wireless Cable International Inc. since April 1995. Mr. Tese was Chairman of Cross Country Wireless Inc. from October 1994 to July 1995 and was a corporate officer and a general partner of Cross Country Wireless Inc.'s predecessors, Cross Country Wireless Cable—I, L.P. and Cross Country Wireless Cable West, L.P., from 1990 until October 1994. Mr. Tese was the Director of Economic Development for the State of New York from June 1987 to December 1994. Mr. Tese is currently a director and Chairman of the Audit Committee of The Bear Stearns Companies, Inc.

Timothy A. Mathews

        Executive Vice President—Technology.    Mr. Mathews has served as the Company's Executive Vice President—Technology since September 1995. For more than seven years prior to that time, he served in a variety of managerial capacities for other pay television companies, including in construction, technical, supervisory, contractor, marketing and installation capacities.

Section 16(a) Beneficial Ownership Reporting Compliance

        Section 16(a) of the Exchange Act requires the Company's officers, directors and beneficial owners of more than ten percent of any class of equity securities of the Company to file initial reports of ownership and reports of changes in ownership with the "SEC" and each exchange on which its securities are traded. Officers and directors are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms they file. Based solely on a review of the copies of such forms furnished to the Company, all requisite filings were made in 2002.

24

ITEM 11. EXECUTIVE COMPENSATION

        The following table sets forth information as to compensation paid by the Company and its subsidiaries for the fiscal years ended October 31, 2000, 2001, and 2002 to each of the directors and executive officers of the Company:

Summary Compensation Table

¹

Not including 50,000 options which expired on July 14, 2002.

²

Paid to an affiliate of Mr. Specchio.

³

Resigned in March 2000.

25

Option Grants and Surrenders

Option/SAR Grants in Last Fiscal Year

(1)

The grant date fair value was calculated using the Black-Scholes option pricing model applied as of the grant dates, February 7, 2002 and July 15, 2002. The value generated by this model depends upon the following assumptions: an option exercise date five years after the grant date, a constant dividend yield on the underlying stock of 0%, an assumed annual volatility of the underlying stock of 45%; and a risk-free rate of return for the option period of 2.93%. The market value on the grant date is the closing price of the Common Stock on the day preceding the grant date.

Aggregated Option/SAR Exercises in Last Fiscal Year and FY-End Option/SAR Values

Remuneration of Directors and Related Matters

        Each member of the Board of Directors, other than an employee-director (Mr. Cassidy is the only such employee-director), receives an annual fee of $5,000 and $500 per meeting attended ($1,000 per Audit Committee meeting), and, in addition, he will automatically be granted an option to purchase 2,500 shares of our Common Stock on the date of our annual stockholder's meeting pursuant to our 2000 Non-Employee Directors Plan.

        On February 7, 2002, we granted five-year above-market options to purchase an aggregate of 55,000 shares of our Common Stock to each director in the following amounts at an exercise price of $14.50 per share, 114% of the closing sale price of our Common Stock on the date of the grant. On February 7, 2002, our Common Stock closed at $12.70 on the Nasdaq National Market.

        On July 14, 2002, options to purchase 50,000 shares, exercisable at a price of $17.05 per share, issued to Terrence S. Cassidy under the 1993 Incentive Option Plan in July 1997 expired. On July 15,

26

2002, the Company granted to Mr. Cassidy under the 1993 Incentive Option Plan options to purchase 50,000 shares, exercisable at a price of $14.86, 112% of the fair market value of the Common Stock.

        Each of Messrs. DiBenedetto, Lloyd, McManus and Tese received a five-year option to purchase 2,500 shares at an exercise price of $12.06 per share in August 2002 pursuant to our 2000 Non-Employee Directors Plan.

        Except as set forth above, we have not named particular individuals who will receive options or rights under the 1993 Incentive Option Plan or 1997 Equity Incentive Plan, as amended, we have not set the number of shares to be covered by any options or rights granted to a single individual, and we have not set the number of individuals who will receive grants of such options or rights. We will use the proceeds, if any, from the sale of stock pursuant to the 1993 Incentive Option Plan or 1997 Equity Incentive Plan for the general purposes of the Company. In addition, our Board of Directors will determine uses for proceeds from the receipt of payment in shares of Common Stock, including redelivery of the shares received upon exercise of options.

Employment Contracts and Other Arrangements with Executive Officers

        Pursuant to the employment agreement, as amended, with Terrence S. Cassidy, President and Chief Executive Officer of the Company, Mr. Cassidy received $260,000 per year, with a raise to $300,000 per year effective June 26, 2002. The agreement provides for an initial term of three years, commencing as of June 26, 2000, with automatic extensions at the end of each year for additional one-year periods unless either party gives notice of termination prior to the end of such year. The agreement also provides that in the event of a change in control of the Company, Mr. Cassidy may in certain circumstances terminate his employment and receive severance benefit pay equal to three times such executive's annual compensation, including certain bonuses, if any. Pursuant to this agreement, Mr. Cassidy has agreed not to compete with the Company during the term of his agreement and for a period of one year thereafter, and the Company has agreed to indemnify him against expenses incurred in any proceeding arising out of his employment to the maximum extent provided by law.

Board of Directors Interlocks and Insider Participation:

        The Board of Directors consists of Messrs. Cassidy, DiBenedetto, Lloyd, McManus and Tese. Mr. Cassidy is an employee of the Company. The non-employee directors participated in all deliberations and actions of the Company's Board of Directors concerning executive officer compensation. There are no interlocks between the Company and other entities involving the Company's executive officers and Board members who serve as executive officers or Board members of such other entities.

Report of Board of Directors Regarding Compensation

        The principal goal of the Company's compensation program is to help the Company attract, motivate and retain the executive talent required to develop and achieve the Company's strategic and operating goals with a view to maximizing stockholder value. The key elements of this program and the objectives of each element are as follows:

Base Salary:

•

Establish base salaries that are competitive with those payable to executives holding comparable positions at similar-sized strategic resource companies.



•

Provide periodic base salary increases as appropriate, consistent with the Company's overall operating and financial performance, with a view to rewarding successful individual performance and keeping pace with competitive practices.

27

Long-term Incentive:

•

Facilitate the alignment of executives' interests with those of the Company's shareholders by providing opportunities for meaningful stock ownership.

Bonuses, Salary Increases and Option Grants:

•

Executive officers are eligible to receive option grants, cash bonuses and increases in salary based upon the performance of the Company and their individual progress during the preceding year. Such grants, if any, are determined by the Option Committee or Board of Directors from time to time during each fiscal year with the input and recommendation of the Company's Chief Executive Officer. Although the Board does not have an established policy for measuring performance and establishing salary, bonuses and option grants, the Board is influenced by the Company's financial performance and the contributions made by individual executives to that performance. The Board of Directors believes that such a retrospective analysis is most appropriate and practicable for an acquisition-oriented company specializing in development-stage enterprises like the Company, which operates in an uncertain environment and without the same sorts of standard measures of performance as are available to more seasoned companies. In addition, options may be granted to attract new executives or directors. The Company does not consider the amount and terms of options and stock already held by executive officers in its deliberations to determine awards.

Compensation of Chief Executive Officer:

•

The base salary of the Chief Executive Officer is determined according to the same principles described above as applicable to compensation of the Company's other executive officers. When determining base salaries, the Board of Directors considers salary, bonus and long-term incentive compensation for other comparable companies in the high technology sector, in similar geographic areas and at similar stages of growth and development, as reported in public filings of such comparable companies. The Board of Directors also has discussions with other industry executives and financial advisors. The Chief Executive Officer has a great deal of experience in acquiring and building emerging companies, and the Board views his leadership as a critical factor in the successes the Company has achieved to date and as very important to realization of the Company's near-term goals.

Summary of Actions Taken

Compensation Review.

        Generally once a year, and at more frequent periodic intervals when deemed necessary in individual cases, the Board of Directors reviews the performance of the Company's executive officers. In 2002, the Board of Directors took no action concerning the performance or compensation of its executive officers.

        The above report was prepared by the entire Board of Directors: Terrence S. Cassidy, Michael A. McManus, Jr., Vincent Tese, Louis B. Lloyd, Thomas R. DiBenedetto

Performance Graph

        The following graph provides a comparison of the Company's cumulative total stockholder return on its Common Stock over the last five fiscal years, with (a) the Nasdaq Market Index, which is being used as the required broad entity market index, (b) a peer group including the following healthcare information technology companies: Allscripts Healthcare Solutions, Cerner Corporation, Eclipsys

28

Corporation, First Consulting Group, Inc., IDX Systems Corporation, Vitalworks Inc., NDCHealth Corporation, Neoforma, Inc., Per-Se Technologies, Inc., QuadraMed Corporation, Quality Systems, Inc., Quovadx, Inc., TriZetto Group, Inc., WebMD Corporation, and ProxyMed, Inc. ("Peer Group"). The data for the Peer Group is compiled by Media General Financial Services, Inc.

        The graph below is based on stockholder return, that is, the sum of the dividends paid and the change in the market price of stock. The following graph assumes $100 invested on November 1, 1997 in the Company's Common Stock, the Nasdaq Composite Index, and the Peer Group, and dividend reinvested in fiscal 2001The comparisons in the graph are required by the SEC and are not intended to forecast or be indicative of possible future performance of the Company's Common Stock.

29

ITEM 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

        The following table lists the number of shares of Common Stock beneficially owned as of January 9, 2003, by those known by the Company to own beneficially 5% or more of the Common Stock, all the directors, each executive officer listed in the table under the caption "Executive Compensation" and all directors and executive officers of the Company as a group. As of January 9, 2003, 2,920,100 shares of Common Stock, $.01 par value, of the Registrant were outstanding.

+

The number of shares beneficially owned is deemed to include shares of the Company's Common Stock as to which the beneficial owner has or shares either investment or voting power. Unless otherwise stated, and except for voting powers held jointly with a person's spouse, the persons and entities named in the table have voting and investment power with respect to all shares of Common Stock shown as beneficially owned by them. All information with respect to beneficial ownership is based on filings made by the respective beneficial owners with the Securities and

30

Exchange Commission (the "SEC") or information provided to the Company by such beneficial owners.

*

Less than 1%.

¹

Includes 87,819 shares currently issuable upon exercise of options, 50,000 shares owned by a family trust, of which Mr. Cassidy disclaims beneficial ownership of 25,000 shares, and 8,334 shares issuable upon exercise of options beginning January 30, 2003.

²

Includes 12,563 shares currently issuable upon exercise of options and 1,668 shares issuable upon exercise of options beginning January 30, 2003.

³

Includes 42,820 shares currently issuable upon exercise of options and 8,334 shares issuable upon exercise of options beginning January 30, 2003.

⁴

Does not include an aggregate of 2,000 shares owned by family trusts, of which Mr. DiBenedetto disclaims beneficial ownership.

⁵

Based on Schedule 13G, filed on February 15, 2002.

⁶

Based on Schedule 13D/A, filed on October 16, 2002.

⁷

Based on Schedule 13D, filed on December 13, 2002.

31

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

        All current transactions between the Company, and its officers, directors and principal stockholders or any affiliates thereof are, and in the future such transactions will be, on terms no less favorable to the Company than could be obtained from unaffiliated third parties.

ITEM 14. CONTROLS AND PROCEDURES

        Within the 90-day period prior to the filing date of this report, an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures was carried out under the supervision and with the participation of the Company's management. Based on that evaluation, management has concluded that the Company's disclosure controls and procedures are effective to ensure that material information relating to the Company and its consolidated subsidiaries is made known to them, particularly during the period when our periodic reports are being prepared. Subsequent to the date of management's evaluation, there were no significant changes in the Company's internal controls or in other factors that could significantly affect the internal controls, including any corrective actions with regard to significant deficiencies and material weaknesses.

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a)

The following documents are filed as part of this report:

1.

The financial statements:

        The consolidated financial statements included in this item are indexed on page F—1 "Index to Financial Statements".

2.

Financial Statement schedules:

        None

3.

Exhibit list.

32

        The following exhibits were previously filed as indicated or are filed herewith.

¹

—Filed with the initial filing of the Company's Registration Statement on Form S-1, File No. 33-7914.

²

—Filed with Amendment No. 3 to the Company's Registration Statement.

³

—Filed with Form 10-Q for the Quarter ended July 31, 1995.

⁴

—Filed with Form 8-K dated February 26, 1997.

⁷

—Filed with Form 10-Q for the Quarter ended April 30, 1997.

⁵

—Filed with Form 10-Q for the Quarter ended July 31, 1997.

⁶

—Filed with Form 10-Q for the Quarter ended April 30, 1999.

⁷

—Filed with Form 10-Q for the Quarter ended April 30, 2000.

⁸

—Filed with Form 10-Q for the Quarter ended July 31, 2000.

⁹

—Filed with Form 10-K for the Year ended October 31, 2000

¹⁰

—Filed with Form 10-K for the Year ended October 31, 2001.

¹¹

—Filed with Schedule 14A dated May 26, 2000.

¹²

—Filed with Form 10-Q for the Quarter ended January 31, 2001.

¹³

—Filed with Form 10-Q for the Quarter ended July 31, 2002.

¹⁴

—Filed herewith.

33

NWH, Inc.
Consolidated Financial Statements

F-1

Report of Independent Accountants

To the Board of Directors and Stockholders
of NWH, Inc.:

        In our opinion, the consolidated financial statements listed in the index appearing under item 15(a)(1) on page 32 present fairly, in all material respects, the financial position of NWH, Inc. and its subsidiaries at October 31, 2002 and 2001, and the results of their operations and their cash flows for each of the three years in the period ended October 31, 2002 in conformity with accounting principles generally accepted in the United States of America. 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 of these statements in accordance with auditing standards generally accepted in the United States of America, which 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, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

January 15, 2003

F-2

NWH, Inc.
Consolidated Balance Sheets
As of October 31, 2002 and 2001

F-3

NWH, Inc.
Consolidated Statements of Operations
For the years ended October 31, 2002, 2001 and 2000

F-4

NWH, Inc.
Consolidated Statements of Comprehensive Loss
For the years ended October 31, 2002, 2001 and 2000

F-5

NWH, Inc.
Consolidated Statements of Stockholders' Equity
For the years ended October 31, 2002, 2001 and 2000

F-6

NWH, Inc.
Consolidated Statements of Cash Flows
For the years ended October 31, 2002, 2001 and 2000

F-7

NWH Inc.

Notes to Consolidated Financial Statements

1.    Company Operations

        NWH, Inc. ("the Company") formerly known as National Wireless Holdings Inc., a Delaware corporation organized on August 31, 1993, is an electronic commerce and communications company focusing primarily on acquisition and operation of telecommunications, e-commerce and other strategically linked businesses. The Company currently owns substantially all of Electronic Network Systems Inc., ("ENS") formerly known as Electronic Data Submission Systems, Inc., a business-to-business healthcare e-commerce data interchange company, providing links between healthcare providers and payers. In addition to this business, the Company continues its business of acquiring controlling interests in telecommunications, healthcare and other strategically linked areas. The Company may acquire or invest in other businesses. In June 1997, the Company sold its wireless cable assets in Miami, Florida in exchange for common stock of BellSouth Corporation.

        In April 2001, the Company decided to exit its satellite programming uplink operations. The effect of this decision was a net charge of $524,645, representing the write-down of assets, included in general and administrative expenses. The net assets remaining of approximately $91,000 represent cash and receivables at their net recoverable amount.

2.    Summary of Significant Accounting Policies

Basis of Consolidation

        The consolidated financial statements include the accounts of the Company and its majority-owned subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation. ENS fiscal year end is September 30, and as such elimination of intercompany transactions were made accordingly.

Cash and Cash Equivalents

        Cash and cash equivalents include all highly liquid investments with original maturities of three months or less. The Company routinely invests all surplus operating funds in various money market funds. These funds generally invest in highly liquid U.S. government and agency obligations.

Marketable Securities

        Marketable securities include an investment in BellSouth Corporation ("BellSouth") common stock and government debt securities. The marketable securities are classified as available for sale, and are measured at fair value on the balance sheet. Investment income or loss including realized gains and losses on investments, interest and dividends is included in the statement of operations. Unrealized gains and losses on investments are recorded, net of tax, as a separate component of stockholders' equity. Gains and losses on securities sold are determined based on the specific identification method.

        Effective November 1, 2001, the Company adopted SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities. Under the pronouncement, written call options are measured at fair value on the balance sheet with unrealized gains and losses recognized in the statement of operations. Previously, written call options were measured at fair value on the balance sheet, however, unrealized gains and losses were not recognized in the statement of operations until settlement. The unrealized loss on written call options, which was balanced by a rise in the market value of the underlying stock, was approximately $4,327,000 on November 1, 2000 and was recorded as a cumulative effect. The tax effect of this unrealized loss was $1,515,000.

F-8

        The Company utilizes written call options to protect its position in BellSouth common stock, preserve its tax basis and reduce equity price risk.

Property and Equipment

        Property and equipment purchases are recorded at cost. Depreciation is provided using the straight-line method over the estimated useful lives of the related assets as follows: