<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
[X] 15, ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 1995
Commission file number 33-17387
ALLIANCE HEALTH, INC.
- - --------------------------------------------------------------------------------
(Name of small business issuer in its charter)
Delaware 75-219377
- - ------------------------------- -------------------------------
(State or other jurisdiction of (I.R.S. Employer I.D.#)
incorporation or organization)
421 E. Airport Freeway, Irving, Texas 75062
- - ------------------------------------------- -------------------------------
(Address of principal executive office) (Zip Code)
Issuer's telephone number, including area code (214)-255-5533
---------------
Securities registered under Section 12(b) of the Exchange Act:
Name of each exchange on
Title of each class which registered
- - --------------------------------------------------------------------------------
Securities registered under Section 12(g) of the Exchange Act:
________________________________________________________________________________
(Title of class)
________________________________________________________________________________
(Title of class)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes X
-------
No ______
State issuer's revenues for its most recent fiscal year $1,082,756.
State the aggregate market value of the voting stock held by non-affiliates
computed by reference to the price at which the stock was sold, or the average
bid and asked prices of such stock, as of a specified date within the past 60
days. No market for common stock.
--------------------------
Check whether the issuer has filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes X No
----- -----
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date. 3,590,000
---------
<PAGE>
PART I
ITEM 1. DESCRIPTION OF BUSINESS.
Alliance Health, Inc. ("Company") was incorporated on September 4, 1987.
It had no business activity until July 1989 at which time it began to operate,
through its wholly owned subsidiary, Alliance KMC, Inc., one clinic in Dallas,
Texas, which it closed the same year.
On May 12, 1995 the Company acquired from K Clinics, P.A. ("K Clinics"),
the marketing division of K Clinics. The marketing division will continue to
contract to perform advertising and marketing services for S. J. Kechejian,
M.D., P.A.'s 19 medical clinics in the Dallas/Ft. Worth Metroplex.
The goals of Alliance Health are to meet the structural changes taking
place in the health care industry and provide the means for physicians to
operate quality practices and maintain costs. With the emergence of multi
provider systems, it becomes increasingly difficult for the physicians with
small medical practices to compete with larger medical groups. The Company has
developed proven systems of information management and cost control and
continues to research and develop improved systems to help the medical provider
contain costs while maintaining a high level of quality medical services.
Alliance Health is working to structure a Management Service Organization
(MSO) which will not only provide systems for data entry, billing, collections,
transcription, analytical reports and all administrative functions, including
physician recruitment, but will develop marketing and advertising strategies
that will be forerunners in this market. The MSO will be offering all or any of
the services to participants and will continually offer new and innovative
methods to improve patient care, analysis and control costs.
The Company intends to contract with individual or groups of physicians to
provide comprehensive management services and the medical provider(s) agrees to
practice medical and pay a fee for the contract service(s). The MSO
relationship will create an integrated delivery system that will deal
effectively with the issue of governance and policy setting for the overall
relationship and create a "partnership" between the medical group and MSO.
Alliance Health will not only provide the referenced services but will
avidly search for practices that are for sale in prime locations and purchase
the assets of those practices. At that point the Company will locate a
physician to buy the practice, lease the assets, and create a "partnership"
between the physician and the MSO.
Metroplex Specialties, P.A. is one of the "partnerships" of the Company.
On October 23, 1995 the Company began leasing an MRI it purchased and installed
at 200 W. Colorado Blvd., Dallas, Texas to Metroplex Specialties, P.A. As the
medical groups in "partnership" with the MSO increase in other areas, the
potential for specialty services will increase also and the Company will
consider purchasing additional specialty equipment to be leased by the medical
group.
Alliance Health has the experience through its association with K Clinics
in the Dallas/Fort Worth area to offer the services of an MSO. K Clinic has
developed innovative marketing, advertising and administrative services over the
past ten years in conjunction with S. J. Kechejian, M.D., P.A. In May 1995 the
division of K Clinics that developed these systems
-2-
<PAGE>
was sold to Alliance Health, Inc. for the further development of the MSO and
offering of additional administrative and specialty services to physicians and
medical groups. Alliance Health, Inc.'s business objective is to promote the
practice of quality, caring, professional medicine, develop systems to contain
costs and research methods of organizational administration to meet the changing
structure of the medical profession in the 1990's.
ITEM 2. DESCRIPTION OF PROPERTY.
Hitachi Magnetic Resonance Imaging System MRP-7000 which is in new
condition and located at 200 W. Colorado, Dallas, Texas.
ITEM 3. LEGAL PROCEEDINGS.
The Company is not a party to any pending legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of security holders during the fourth
quarter of the fiscal year covered by this report.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SHAREHOLDER
MATTERS.
On September 30, 1995 the approximate number of holders of record of the
Company common stock was 330. The Company's common stock has no established
trading market.
The Company has never paid any dividends on the common stock and does not
expect to do so in the foreseeable future.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
Prior to May 1995, the Company had no operating business since June 1990.
On May 12, 1995, an 8-K was filed regarding the acquisition of the Marketing
Division of K Clinics which included $285,879 in cash in exchange for one
million two hundred thousand (1,200,000) shares of common stock of Alliance
Health, Inc. (the "Company"). K Clinics is wholly owned by Sarkis J. Kechejian,
M.D. who is also the principal shareholder of the Company.
The Company's primary source of income was from the marketing service and
was $1,080,000 in 1995, compared to $1,095,438 in 1994 as a division of K
Clinics. The marketing income in 1995 was less than two percent down from 1994.
S. J. Kechejian, M.D., P.A. has had an ongoing arrangement with the marketing
division at $90,000 per month and will continue at such rate until such time as
there is a substantial increase in the marketing needs due to increased
locations or changes in business.
The Company does not anticipate any reduction in revenues but there is no
agreement with S. J. Kechejian, M.D., P.A. and the amount of services performed
for them could be reduced or terminated.
-3-
<PAGE>
Expenses increased only one percent in 1995 as compared to 1994. The
advertising expense actually decreased by six percent in 1995 which was due to
small variations in time and length of advertising on radio, television and
various printed brochures.
Salaries and employee benefits increased six percent due to increase in
salaries and benefits.
The Company purchased a Magnetic Resonance Imaging System ("MRI") which
was put into operation in October, 1995. The MRI will be leased on a per scan
basis, initially to Metroplex Specialties, P.A., a professional association
wholly owned by Sarkis J. Kechejian, M.D.
On August 3, 1995, the Company purchased the assets of Aldine Medical
Clinic ("Clinic"). The assets consisted of leasehold improvements, furniture,
fixtures and equipment and miscellaneous office and medical supplies. The Board
of Directors decided to keep the facility open by paying rent on the premises
and advancing operating funds as needed to the clinic. The proposed plan of
operation is to find a physician to sell the general medical practice to and
enter into an MSO agreement for the operation of a medical clinic primarily
doing job and auto injuries.
Liquidity and Financial Resources
- - ---------------------------------
The Company had $46,741 in cash at the September 30, 1995 year end. On
April 18, 1995, the Company signed a contract for the purchase of a MRI for
$850,000.00. The cash to purchase the equipment was raised primarily by selling
common stock. The Company sold 200,000 shares of stock at $3.00 per share;
70,000 to K Clinics, P.A. and 130,000 to S. J. Kechejian, M.D., P.A., both
wholly owned by Sarkis Kechejian, M.D. who is also the principal shareholder of
the Company.
The Company has a lease agreement with Metroplex Specialties for the MRI
at $300/per scan. It is expected this lease will produce approximately $25,000
to $30,000 per month.
The Company receives $90,000 per month from S. J. Kechejian, M.D., P.A.
for marketing services. This is an ongoing arrangement acquired with the
marketing division from K Clinics.
The Aldine Medical Clinic has been advanced operating funds of $23,000.00.
The Company hopes to find a physician to take over the general medical practice
of the clinic. It is expected the income from the practice will allow the
clinic to repay the advance and cover general operating expenses.
The Company has no long term debt outstanding at year end. Income from the
marketing division and lease of the MRI are expected to be sufficient cash flow
to cover all operating and administrative expenses.
ITEM 7. FINANCIAL STATEMENTS.
Financial statements in response to Item 7 are presented on pages F-1
through F-9.
-4-
<PAGE>
ALLIANCE HEALTH, INC.
INDEX TO AUDITED COMBINED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Independent Auditors' Report....................................... F-2
Combined Balance Sheets at September 30, 1995 and 1994............. F-3
Combined Statements of Income for the Years Ended
September 30, 1995 and 1994................................... F-4
Combined Statements of Changes in Stockholders' Equity (Deficit)
for the Years Ended September 30, 1995 and 1994............... F-5
Combined Statements of Cash Flows for the Years Ended
September 30, 1995 and 1994................................... F-6
Notes to Combined Financial Statements............................. F-7
</TABLE>
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors
Alliance Health, Inc.
We have audited the accompanying combined balance sheets of Alliance Health,
Inc. as of September 30, 1995 and 1994, and the related combined statements of
income, changes in stockholders' equity and cash flows for the years then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the financial position of Alliance Health,
Inc. as of September 30, 1995 and 1994, and the results of its operations and
its cash flows for the years then ended in conformity with generally accepted
accounting principles.
Jackson & Rhodes P.C.
Dallas, Texas
November 20, 1995
F-2
<PAGE>
ALLIANCE HEALTH, INC.
COMBINED BALANCE SHEETS
September 30, 1995 and 1994
ASSETS
<TABLE>
<CAPTION>
1995 1994
------------ --------------
(Restated)
<S> <C> <C>
Current assets:
Cash 46,741 1,297
Accounts receivable - affiliates (Note 3) 26,532 152,601
Other assets 2,110 -
------------ --------------
Total current assets 75,383 153,898
Property and equipment (Note 4) 956,202 -
Less accumulated depreciation (7,890) -
------------ --------------
948,312 -
------------ --------------
$ 1,023,695 $ 153,898
============ ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
<CAPTION>
<S> <C> <C>
Current liabilities:
Accounts payable: (Note 3)
Trade $ 8,251 $ -
Officer 1,455 4,600
Affiliate - 1,334
Accrued liabilities 63,553 -
------------ --------------
Total current liabilities 73,259 5,934
------------ --------------
Commitments and contingencies (Note 3) - -
Stockholders' equity:
Common stock, $.01 par, 20,000,000 shares
authorized, issued 3,590,000 and
4,000,000 shares, respectively 35,900 40,000
Paid-in capital 831,166 165,000
Retained earnings (deficit) 83,370 (5,936)
------------ --------------
950,436 199,064
Less treasury stock, 610,000 shares, at cost - (51,100)
------------ --------------
Total stockholders' equity 950,436 147,964
------------ --------------
$ 1,023,695 $ 153,898
============ ==============
</TABLE>
See accompanying notes to combined financial statements.
F-3
<PAGE>
ALLIANCE HEALTH, INC.
COMBINED STATEMENTS OF INCOME
Years Ended September 30, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
-------------- --------------
(Restated)
<S> <C> <C>
Revenues:
Advertising income from affiliate (Note 3) $ 1,080,000 $ 1,095,438
Interest 2,756 -
-------------- --------------
1,082,756 1,095,438
Expenses:
Advertising 532,217 567,749
Salaries and employee benefits 201,945 189,805
Depreciation 7,890 -
General and administrative 170,098 143,133
-------------- --------------
912,150 900,687
Income before taxes 170,606 194,751
Income taxes (Note 4) 36,300 67,000
-------------- --------------
Net income $ 134,306 $ 127,751
============== ==============
Earnings per common share $ 0.04 $ 0.04
============== ==============
Weighted average number of
common shares outstanding 3,402,500 3,390,000
============== ==============
</TABLE>
See accompanying notes to combined financial statements.
F-4
<PAGE>
ALLIANCE HEALTH, INC.
COMBINED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Years Ended September 30, 1995 and 1994
<TABLE>
<CAPTION>
Additional Retained
Common Stock Paid-in Earnings Treasury
-----------------------------
Shares Par Value Capital (Deficit) Stock Total
-------------- ------------- -------------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Balance, September 30, 1993 (Restated) 4,000,000 $ 40,000 $ 165,000 $ (133,687) $ (51,100) $ 20,213
Net income - - - 127,751 - 127,751
-------------- ------------- -------------- ------------- ------------ ------------
Balance, September 30, 1994 4,000,000 40,000 165,000 (5,936) (51,100) 147,964
Sale of common stock 200,000 2,000 598,000 - - 600,000
Contribution of capital - - 68,166 - - 68,166
Cancellation of treasury stock (610,000) (6,100) - (45,000) 51,100 -
Net income - - - 134,306 - 134,306
-------------- ------------- -------------- ------------- ------------ ------------
Balance, September 30, 1995 3,590,000 $ 35,900 $ 831,166 $ 83,370 $ - $ 950,436
============== ============= ============== ============= ============ ============
</TABLE>
See accompanying notes to combined financial statements.
F-5
<PAGE>
ALLIANCE HEALTH, INC.
COMBINED STATEMENTS OF CASH FLOWS
Years Ended September 30, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
------------ -------------
(Restated)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 134,306 $ 127,751
Adjustments to reconcile net loss
to net cash provided by (used in) operating activities:
Depreciation 7,890 -
Net change in accounts receivable 149,301 (128,213)
Other assets (2,110) -
Accounts payable 8,251 -
Accrued liabilities 63,553 -
------------ -------------
Net cash provided by (used in) operating activities 361,191 (462)
------------ -------------
Cash flows from investing activities:
Purchase of equipment (956,202) -
------------ -------------
Cash flows from financing activities:
Issuance of common stock 600,000 -
Additional contribution of capital 68,166 -
Net change in due to stockholder (3,145) -
Net change in due to affiliates (24,566) 1,334
------------ -------------
Net cash provided by financing activities 640,455 1,334
------------ -------------
Net increase in cash 45,444 872
Cash at beginning of year 1,297 425
------------ -------------
Cash at end of year $ 46,741 $ 1,297
============ =============
</TABLE>
See accompanying notes to combined financial statements.
F-6
<PAGE>
ALLIANCE HEALTH, INC
Notes to Combined Financial statements
September 30, 1995 and 1994
1. ORGANIZATION
Alliance Health, Inc. (the "Company") was incorporated in Delaware on
September 4, 1987. Effective May 12, 1995, the Company acquired the
advertising division (the "Division") of K Clinics, P.A. ("K Clinics"), from
Dr. S. J. Kechejian, M.D., for 1,200,000 shares of the Company's stock. The
acquisition will be accounted for in a manner similar to the pooling-of-
interests method due to Dr. Kechejian's control of the respective companies.
Accordingly, the Company has presented, in the accompanying combined
financial statements, the combination of the companies as if the acquisition
had occurred on October 1, 1993.
Included in the combined results of operations for the period from October
1, 1994 to May 12, 1995, and the year ended September 30, 1994, are the
following results of the previously separate companies:
<TABLE>
<CAPTION>
Company Division Combined
-------- --------- --------
<S> <C> <C> <C>
Period from October 1, 1994 to
May 12, 1995 (unaudited):
Revenues $ - $675,000 $ 675,000
Net income (loss) $ - $ 65,109 $ 65,109
Year ended September 30, 1994:
Revenues $ - $1,095,438 $1,095,438
Net income (loss) $ (462) $ 128,213 $ 127,751
</TABLE>
The Company currently offers its advertising services to medical clinics of
an affiliated company. In the future, the Company plans to offer these
services to other medical clinics.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Restatement
The 1994 financial statements have been restated to reflect the combination
of the Division as explained in Note 1.
Statement of Cash Flows
For statement of cash flow purposes, the Company considers short-term
investments with original maturities of three months or less to be cash
equivalents.
F-7
<PAGE>
ALLIANCE HEALTH, INC.
Notes to Combined Financial Statements
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Property and Equipment
Property and equipment are stated at cost. Cost of property renewals and
betterments are capitalized; cost of property maintenance and repairs are
charged against operations as incurred.
Depreciation is computed using the straight-line method over the estimated
useful lives of the individual assets as follows:
<TABLE>
<S> <C>
Equipment 7 years
Furniture and fixtures 4 years
Leasehold improvements 5 years
</TABLE>
Income Taxes
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS
109"). SFAS 109 requires a change from the deferred method to the asset and
liability method of computing deferred income taxes. The objective of the
asset and liability method is to establish deferred tax assets and
liabilities for the temporary differences between the financial reporting
basis and the tax basis of the Company's assets and liabilities at enacted
tax rates expected to be in effect when such amounts are realized or
settled.
Earnings Per Common Share
Per share amounts have been computed using the weighted average number of
shares of common stock outstanding for each period.
3. RELATED PARTY TRANSACTIONS
All of the Company's advertising income was for services rendered to S. J.
Kechejian, M.D., P.A., a company owned by the Company's major stockholder.
In 1994, the entire accounts receivable affiliate balance was due from K
Clinics P.A.
During the year, the Company paid certain salaries on behalf of S. J.
Kechejian, M.D., P.A., an affiliated company, in lieu of paying the
affiliate an administrative fee. The amounts paid in 1995 and 1994 were
$43,099 and $73,438, respectively. However, as of May 1995, the Company
discontinued paying certain salaries on behalf of Dr. Kechejian, and began
paying a service fee of $3,500 a month for an additional amount of $17,500.
During 1995, the Company acquired $87,000 of property and equipment from an
affiliate.
F-8
<PAGE>
ALLIANCE HEALTH, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS
3. RELATED PARTY TRANSACTIONS (CONTINUED)
The Company leases its office space on a month to month basis from S. J.
Kechejian, M.D., P.A., an affiliated company. The amount paid in 1995 and
1994 was $12,000 and $22,500, respectively.
4. PROPERTY AND EQUIPMENT
Property and equipment consisted of the following at September 30, 1995:
<TABLE>
<S> <C>
Equipment (principally magnetic
resonance imaging) $867,113
Leasehold improvements 50,089
Furniture and fixtures 39,000
--------
$956,202
========
</TABLE>
5. INCOME TAXES
Following is a reconciliation between reported income taxes and the amount
computed by applying the statutory federal income tax rates to pre-tax
accounting income for the periods ended September 30:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Expected provision for federal
income taxes $58,000 $66,200
Utilization of net operating loss carryforward
for earnings after acquisition of K Clinics (21,700) -
Other - 800
------- ------
$36,300 $67,000
======= =======
</TABLE>
Income tax expense for each year consisted of current taxes.
The components of the deferred tax asset (liability) are as follows at
September 30, 1995 and 1994:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Depreciation $(38,700) $ -
Deduction of sales tax expense (21,500) -
Net operating loss carryforward 91,700 53,900
Deferred tax asset valuation allowance (31,500) (53,900)
-------- --------
$ - $ -
======== ========
</TABLE>
At September 30, 1995, the Company has net operating loss carryforwards
available to offset future taxable income for income tax reporting purposes of
approximately $270,000. These carryforwards will expire, if not utilized,
beginning in 2003.
F-9
<PAGE>
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.
The executive officers and directors of Alliance Health, Inc. are
identified in the following table. Each has held the indicated positions with
Alliance Health, Inc. since May 19, 1995 and will serve in these offices until
their successors are elected and qualified.
NAME AGE POSITION
---- --- --------
Sarkis J. Kechejian, M.D. 57 President, Treasurer and Director
Sharilyn J. Bruntz Wilson 45 Vice-President and Secretary
Kenneth Guest 56 Director
James Kenney 54 Director
George Nicolaou, M.D. 74 Director
Dr. Kechejian is also president and sole owner of S. J. Kechejian, M.D.,
P.A. dba Doctor's Clinic which consists of nineteen clinics doing primarily
physiotherapy and treatment of industrial work-related injuries.
Ms. Wilson is Secretary and Chief Financial Officer of S. J. Kechejian,
M.D., P.A. and was Secretary/Treasurer of K Med Centers, Inc. from January, 1987
until December, 1991. Prior to that time, for over five years, she was a Legal
Assistant with several law firms.
Mr. Guest is an attorney who has been practicing in the Dallas area since
1965. He is with the law firm of Ken Guest and Associates. He has investments
in several manufacturing and retail businesses.
James W. Kenney has been a Director since September, 1992. He is currently
associated with San Jacinto Securities, Inc. as Executive Vice President. From
February, 1992 to June, 1993 he served as Vice President of Investments for
Renaissance Capital Group, Inc. From October, 1989 to February, 1992 he served
as Senior Vice President, Director of Trading and Sales for Capital
Institutional Services. From February, 1987 to October, 1989, he served as
Senior Vice President for retail sales for Rauscher Pierce Refsnes, Inc. Mr.
Kenney received a BA degree in economics from the University of Colorado in
Boulder, Colorado. Mr. Kenney also currently serves on the Board of Directors
of the following companies: Consolidated Health Care Associates, Inc., Coded
Communications Corp., Industrial Holdings, Inc., Prism Group, Inc., Scientific
Measurement Systems, Appoint Technologies, Tecnol Medical Products, Inc., and
Tricom Corporation.
Dr. Nicolaou is a retired physician. He has extensive business experience
doing consulting work.
-5-
<PAGE>
ITEM 10. EXECUTIVE COMPENSATION.
Cash Compensation
- - -----------------
For the fiscal year ended September 30, 1995, Dr. Kechejian received no cash
remuneration. Ms. Wilson received a salary of $20,248.18 and was the only
officer to receive compensation in the year ended September 30, 1995.
Compensation of Directors
- - -------------------------
Directors received $500.00 for each of the two Board of Director's meetings
attended.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGERS.
The following information is submitted as of September 30, 1995 with respect
to the Company's voting securities owned beneficially by each person known to
the Company who owns more than 5% of the Common Stock of the Company, this being
the only class of voting securities now outstanding and by all directors and
officers of the Company individually and as a group.
<TABLE>
<CAPTION>
Name and Address of Amount Bene- Approximate
Beneficial Owner ficially owned Percent of Class
<S> <C> <C>
Sarkis J. Kechejian, M.D. 3,259,518 91%
421 E. Airport Freeway
Irving, Texas 75062
</TABLE>
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The Company's two primary customers are S. J. Kechejian, M.D., P.A. and
Metroplex Specialties, P.A., both professional corporations wholly owned by S.
J. Kechejian, M.D. These companies provide diagnostic and therapeutic medical
services to patients suffering from soft tissue injuries generally incurred in
automobile or job related accidents. Dr. Kechejian owns, directly or
indirectly, 3,259,518 shares of Common Stock of the Company (91% of the
outstanding shares).
Furthermore, the Company's office facilities are located in the same office
building owned by Dr. Kechejian. The Company will offer its services to non-
affiliated physician groups and clinics, but there is no assurance that the
Company will be able to secure any additional, non-affiliated business.
PART IV
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.
a. Exhibit 10, Lease Agreement with Metroplex Specialties, P.A.
Exhibit 27, Financial Data Schedule
b. None.
-6-
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
ALLIANCE HEALTH, INC.
DATED: December 22, 1995 By: Sarkis J. Kechejian, M.D.
-------------------------
Sarkis J. Kechejian, M.D.
Chairman of the Board,
President and Treasurer
In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and on
the dates indicated.
DATED: December 22, 1995 Sarkis J. Kechejian, M.D.
--------------------------------
Chairman of the Board, President
and Treasurer
DATED: December 22, 1995 James Kenney
--------------------------------
Director
DATED: December 22, 1995 George Nicolaou, M.D.
--------------------------------
Director
DATED: December 22, 1995 Kenneth Guest
--------------------------------
Director
-7-
<PAGE>
EXHIBIT 10
ALLIANCE HEALTH, INC.
LEASE AGREEMENT
State of Texas )
)
County of Dallas )
This Agreement is made this 31st day of October, 1995, between Alliance
Health, Inc. ("Alliance") and Metroplex Specialties, P.A.. ("Customer").
Alliance would like to enter into a Lease Agreement with Customer on the
following terms and conditions and the Customer would also like to accept a
Lease Agreement with Alliance on the terms and conditions indicated in this
document.
In consideration of the agreements and covenants contained in this
contract and other valuable consideration, the receipt of which is acknowledged,
the parties intending to be legally bound, agree as follows:
1. PERMISSION TO USE. Alliance grants to Customer the exclusive
-----------------
right to use one Hitachi Magnetic Resonance Imaging System with equipment (the
"Equipment") as shown below:
Hitachi Magnetic Resonance Imaging System
Model #MRP-7000
Serial No. 70-142
2. TERM. The term of this Agreement begins on October 31, 1995 and
----
shall continue for the next twelve months. At the expiration of the initial
twelve month term, this Agreement shall continue automatically on a month-to-
month basis unless the Customer gives Isotechnologies 60 days written notice of
termination.
3. PAYMENT OF LEASE. During the initial twelve month term of this
----------------
Agreement or any month-to-month continuation period, the Customer shall pay
Lease to Alliance in the amount of $300/scan.
4. SERVICE. Service on the Equipment for normal wear and tear shall
-------
be the responsibility of Alliance during the first twelve month term of this
Agreement. In conducting its service responsibilities, Alliance shall endeavor
to have all service problems resolved within two working days after notification
by Customer.
5. TAXES. All taxes, including Sales, Property and Use Tax, if
-----
any, will be Customer's responsibility.
6. CONDITIONS. During the term of this Agreement, and as a
----------
condition to the continued use of the Equipment, Customer warrants and
represents the following:
<PAGE>
a. That Customer has the power and authority to enter into
this Agreement and any other agreements or instruments
required by this relationship;
b. That Customer shall at its own expense obtain and maintain
insurance on the Equipment against loss or damage by fire,
theft, explosion, or any other hazard or risk covered by
extended coverage insurance. In addition, Customer shall
obtain and maintain public liability insurance against
claims for bodily injury, death or property damage arising
out of the use, possession, operation or condition of the
Equipment in an amount not less than $1.0 million.
7. RISK OF LOSS. Customer assumes all responsibility for loss
------------
attributable to the use of the Equipment and all risk of loss should the
Equipment be damaged or destroyed regardless of the cause of loss.
8. INDEMNITY. Alliance assumes financial responsibility for product
---------
liability claims against Alliance which are attributable to manufacturing
defects in the Equipment. Customer assumes responsibility for all other claims
or losses, including reasonable attorney's fees, attributable to the Equipment
while in Customer's possession or due to Customers' failure to comply with this
Agreement.
9. DISCLAIMER. Alliance makes no warranty representation, express
----------
or implied, of merchantability or otherwise, including but not limited to the
fitness, condition or capacity of the Equipment. Alliance shall not be liable
for consequential damages resulting from customer's use of the Equipment.
Further, both parties acknowledge that Alliance assumes no responsibility for,
nor does it participate in, practice or other health care/business decisions of
the Customer.
10. TITLE. Title to the Equipment shall remain with Alliance.
-----
Alliance is entitled to place a decal or other such identification on the
Equipment to indicate its ownership. Customer shall protect and defend
Alliances' title to the Equipment from and against all claims, encumbrances,
liens and legal process and will keep the Equipment free and clear of all such
claims, encumbrances, liens and legal process. The Equipment shall not be
removed from the address shown in this Agreement without the prior written
consent of Alliance. The Equipment shall be returned (if applicable) to Alliance
in good condition, reasonable wear and tear excepted.
11. WAIVER. Alliances' failure to enforce or require strict
------
performance by Customer of any provision of this Agreement will not waive or
diminish any right Alliance has to thereafter demand strict compliance and
performance with the terms of this Agreement.
12. DEFAULT. Anyone of the following events will be an event of
-------
default:
a. The failure by Customer to timely perform, keep, or observe
any obligation contained in this Agreement.
2
<PAGE>
b. The filing or commencement of any application or proceeding
by or against Customer under the Bankruptcy Act or for the
appointment of a receiver, trustee, or custodian for all or
any part of the property of Customer;
c. The failure to use the Equipment in accordance with
generally accepted practices and procedures.
13. REMEDIES. If a default should occur, Alliance has the right to
--------
do any one or more of the following:
a. Declare any obligation for unpaid Lease or other amounts
immediately due and payable and proceed against Customer
therefor;
b. Declare this Agreement terminated. Such termination will
not affect or impair any obligations or right relating to
transactions which occurred prior to the termination;
c. Enter the premises where the Equipment is kept and take
possession of the Equipment.
14. MISCELLANEOUS. This Agreement is governed by Texas law and is
-------------
the full statement of the agreement between Customer and Alliance. This
Agreement may only be amended in writing and the amendment must be signed by the
parties. This Agreement shall be binding upon and inure to the benefit of the
successors and assigns of the parties; however, the Customer cannot assign its
obligations under this Agreement without the prior written consent of Alliance.
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed
and sealed the day and year first above written.
CUSTOMER: ALLIANCE HEALTH, INC.
By:_______________________________ By:____________________________
Print: SARKIS J. KECHEJIAN, M.D. Print: SHARILYN J. BRUNTZ WILSON
Title: President Title: Vice President
Indicate below the address and phone number where Equipment will be located.
The Equipment cannot be removed from the location indicated without prior
written authorization by Alliance.
200 W. Colorado Blvd.
Dallas, TX 75208
(214) 948-8339
3
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