<PAGE>
U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from _________ to __________
Commission file number 33-17387
ALLIANCE HEALTH, INC.
(Exact name of small business issuer as specified in its charter)
Delaware 75-2192377
(State or other jurisdiction of (IRS Employer Identification
incorporation or organization) No.)
421 E. Airport Freeway, Irving, Texas 75062
(Address of principal executive office)
(214)-255-5533
(Issuer's telephone number)
____________________________________________________________
(Former name, former address and former fiscal year,
if changed since last year)
Check whether 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
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: At March 31,
1996, 3,660,000 shares of common stock, $0.01 par value, were
outstanding.
Transitional Small Business Disclosure Format (Check one):
Yes No X
<PAGE>
ALLIANCE HEALTH, INC.
INDEX
PAGE NUMBER
PART I FINANCIAL INFORMATION
Balance Sheet - March 31, 1996 and
September 30, 1995 1
Statement of Loss - Three Months and
Six Months Ended March 31, 1996 2
Statement of Cash Flow - Six Months Ended
March 31, 1996 and 1995 3
Notes to Financial Statements 4-5
Management's Discussion and Analysis of
Financial Condition and Results of
Operation 6-7
PART II OTHER INFORMATION
Item 5. Exhibits and Reports on Form 8-K 8
SIGNATURES 9
<PAGE>
ALLIANCE HEALTH, INC.
PART I - FINANCIAL INFORMATION
BALANCE SHEET
ASSETS
<TABLE>
<CAPTION>
Mar 31, 1996 Sep 30, 1995
Unaudited Audited
<S> <C> <C>
Current assets:
Cash $ 176,597 $ 46,741
Accounts receivable-affiliate 15,000 26,532
Other Assets 11,597 2,110
________ ________
Total Current Assets 203,194 75,383
Property & Equipment 1,104,672 956,202
Less Accumulated Depreciation (88,370) (7,890)
_________ _________
$1,219,496 $1,023,695
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable
Trade $ 1,465 $ 8,251
Officer 3,905 1,455
Accrued liabilities -0- 63,553
________ _________
Total Current Liabilities $ 5,370 $ 73,259
Stockholders' Equity:
Common stock-par value of $0.01
per share; authorized 20,000,000,
issued 3,660,000 shares 36,600 35,900
Additional paid-in capital 837,466 831,166
Retained earnings 340,060 83,370
_________ _________
Total Stockholders' equity 1,214,126 950,436
_________ _________
1,219,496 1,023,695
</TABLE>
The accompanying notes are an integral part of these financial
statements
-1-
<PAGE>
ALLIANCE HEALTH, INC.
STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Month Ended
Mar 31, Mar 31, Mar 31, Mar 31,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
REVENUES: $ 402,273 $ 360,000 $ 749,576 $ 540,000
EXPENSES:
Advertising 119,710 98,009 237,619 260,380
Salaries & Employee
Benefits 62,957 54,671 110,094 136,375
Depreciation 41,768 -0- 80,481 -0-
General & Administrative 39,596 15,187 64,691 56,958
_________ ________ _________ _________
264,031 167,867 492,885 453,713
Operating income 138,242 192,133 256,691 86,287
Income Taxes (Benefit) -0- 65,500 -0- 29,500
_________ ________ _________ _________
Net income 138,242 $ 126,633 256,691 56,787
_________ ________ _________ _________
Net income per
common share $ .04 $ .04 $ .07 $ .02
Weighted average number of
shares outstanding 3,601,667 3,390,000 3,595,833 3,390,000
</TABLE>
The accompanying notes are an integral part of the financial
statements.
-2-
<PAGE>
ALLIANCE HEALTH, INC.
STATEMENT OF CASH FLOW
<TABLE>
<CAPTION>
Six Months Ended
Mar 31 Mar 31
1996 1995
(Unaudited) (Unaudited)
<S> <C> <C>
Cash flows from operating
activities:
Net income (loss) $ 256,691 $ 56,787
Adjustments to reconcile net
loss to net cash provided by
(used in) operating activities:
Depreciation 80,480 -0-
Accounts Receivable 14,932 57,290
Other Assets (9,487) -0-
Accounts Payable (7,737) -0-
Accrued liabilities (63,553) -0-
________ _______
Net cash provided by
(used in) operating
activities 271,326 (503)
________ _______
Cash flows from investing activities:
Purchase of equipment (141,470) -0-
________ ________
Net increase (decrease) in cash 129,856 (503)
Cash at beginning of period 46,741 1,297
________ ________
Cash at end of period $ 176,597 $ 794
_________ ________
</TABLE>
Non-cash transaction: During six months ended March 31, 1996, the
Company acquired certain assets, including customer list, for 70,000
shares of Company common stock valued at $7,000.
The accompanying notes are an integral part of these financial
statements.
-3-
<PAGE>
ALLIANCE HEALTH, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Note 1. Basis of Presentation
The accompanying unaudited financial statements have been
prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form
10-QSB of Regulation S-B. They do not include all information and
footnotes required by generally accepted accounting principles for
complete financial statements. However, except as disclosed herein,
there has been no material change in the information disclosed in the
notes to the financial statements for the year ended September 30,
1995 included in the Company's Annual Report on Form 10-KSB filed with
the Securities and Exchange Commission. The interim unaudited
financial statements should be read in conjunction with those
financial statements included in the Form 10-KSB. In the opinion of
Management, all adjustments considered necessary for a fair
presentation, consisting solely of normal recurring adjustments, have
been made. Operating results for the three month period ended March
31, 1996 are not necessarily indicative of the results that may be
expected for the year ending September 30, 1996.
All of the Company's advertising income was for services rendered
to S. J. Kechejian, M.D., P.A. and Metroplex Specialties, P.A.,
companies owned by the Company's major stockholder.
Note 2. 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 S. J. Kechejian, M.D. for 1,200,000 shares of the
Company's stock. The acquisition has been 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, 1994.
Included in the combined results of operations for the period
from October 1, 1994 to March 31, 1995 are the following results of
the previously separate companies:
-4-
<PAGE>
Company Division Combined
Six Months ended
March 31, 1995:
Revenues $ 0 $540,000 $540,000
Net income (loss) $ (321) 57,108 56,787
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.
Note 3. Summary of Significant Accounting Policies
Restatement
The 1995 financial statements have been restated to reflect the
combination of the Division as explained in Note 1.
-5-
<PAGE>
ALLIANCE HEALTH, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF INTERIM FINANCIAL INFORMATION
The following is management's discussion and analysis of certain
significant factors which have affected the Company's financial
condition and operating results for the period included in the
accompanying financial statements.
Results of Operation and Financial Condition
For the quarter ending March 31, 1996, the Company had a net gain
of $138,242. Revenues consisted of $64,500 from Metroplex Specialties
for lease of the company's MRI, $337,500 for advertising from S. J.
Kechejian, M.D., P.A. and Metroplex Specialties, P.A. and bank
interest in the amount of $273. The income generated from Metroplex
Specialties' lease of the Company's MRI is expected to continue at
roughly $30,000 per month during the next period. The advertising
income generated from S. J. Kechejian, M.D., P.A. is an ongoing
arrangement with the Company billed at $270,000 during the quarter;
the advertising income generated from Metroplex Specialties, P.A., is
an arrangement with the company that began January 1, 1996 billed at
$67,500 during the quarter. The quarter's revenue constitutes a 12%
increase over the same quarter in 1995. For the six months ended
March 31, 1996 and 1995, the Company had a net income of $256,691.
Revenues consisted of $141,600 from Metroplex Specialties for the
lease of the Company's MRI, $607,500 for advertising from S. J.
Kechejian, M.D., P.A. and Metroplex Specialties and $476 in bank
interest. The Company's 1996 revenue constitutes a 39% increase over
the same six months ended March 31, 1995.
On March 15, 1996, the Company acquired the assets of Elina &
Associates in exchange for 70,000 shares of stock (See Exhibit 1).
The assets purchased had a fair market value of $7,000. The Financial
Health division will process third party claims, primarily worker's
compensation, for hospitals throughout Texas. The Company expects to
expand this division by acquiring accounts as well as giving seminars
in the financial recovery area.
Other expenses during the quarter ended March 31, 1996 included
advertising, salaries and employee benefits and other general and
administrative costs in the amount of $222,263. This is roughly a 32%
increase in expenses from last year at this time partially due to the
acquisition of Elina Associates. For the six months ended March 31,
1996, expenses for advertising, salaries and employee benefits and
other general and administrative costs were $492,885. This represents
only an 8% increase in costs from the six months ended March 31, 1995.
-6-
<PAGE>
Liquidity and Capital Resources
The Company had total assets of $1,219,496 at March 31, 1996.
Advertising income is expected to continue at approximately $90,000
per month and may increase if S. J. Kechejian, M.D., P.A. or Metroplex
Specialties, P.A. opens additional facilities. The Company is
continuing to market the advertising package to other medical
providers.
Current liabilities included accounts payable trade (1,465) and
accounts payable officer (3,905). Currently, the Company owes S. J.
Kechejian, M.D., P.A. $1,454 for property and workmen's compensation
insurance, $1,700 for additional capital contributed and $751 in
postage. Postage is billed quarterly and paid quarterly on the 15th
day of the following month.
-7-
<PAGE>
ALLIANCE HEALTH, INC.
PART II - OTHER INFORMATION
Item 5. Exhibits and Reports on Form 8-K
-8-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Section 13 or 15 (d) of the
Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned thereunto duly
authorized.
DATED: May 20, 1996 By: Sarkis J. Kechejian, M.D.
Sarkis J. Kechejian, M.D.
President, Director and
Treasurer
-9-
<PAGE>
EXHIBIT "1"
BILL OF SALE
Rick A. Elina d/b/a Elina & Associates ("Seller"), for Seventy
Thousand (70,000) shares of the common stock of Alliance Health, Inc.
and other good and valuable consideration to him in hand paid, the
receipt and adequacy of which are hereby acknowledged, hereby sells,
sets over, assigns, transfers and delivers unto Alliance Health, Inc.
("Purchaser"), its successors and assigns, all of the property
("Property") described and/or listed on Exhibit "A", attached hereto
and fully incorporated herein for all purposes.
To Have and To Hold unto Purchaser, its successors and assigns,
forever. Seller represents and warrants that he is the sole and
lawful owner of the Property, free and clear of all liens and
encumbrances and has good and lawful right to transfer and dispose of
the Property by and in this Bill of Sale, and that he shall and will
forever warrant and defend the title to the Property against the
claims and demands of any and all persons and entities whomsoever.
Seller further agrees that he will execute and deliver any and
all conveyances, deeds, assignments, bills of sale, certificates,
instruments of transfer, and other documents which may be necessary or
appropriate to fully effectuate the terms hereof, and to vest in the
Purchaser, its representatives, successors, and assigns, title in and
to each and all of the above-described assets and properties.
This instrument is effective as of the 15th day of March, 1996.
This instrument was executed on the date of the acknowledgment set
forth below.
Seller:
/s/ Rick A. Elina d/b/a
Elina & Associates
THE STATE OF TEXAS )
)
COUNTY OF DALLAS )
This instrument was acknowledged before me on the 15th day of
March, 1996, by Rick A. Elina d/d/a Elina & Associates.
/s/ K. A. Underwood
Notary Public, State of Texas
My Commission Expires:
1/19/99
<PAGE>
EXHIBIT "A"
Furniture, Fixtures and Equipment
15 Computers (3 are rentals)
1 HP Laser Jet 4 Plus Printer
1 High Speed Epson Printer DFX 5000
1 Fax Machine Broither Intellifax
1 AN Router
1 On-Site Repeater
6 Metal Desks and Chairs
2-(6) Wood Desks
2-(4) Wood Shelves
10 File Cabinets
1 16-Line Phone System with 12-14 Phones, Samsung ProStar 56EY
1 Alarm System
1 Thermal Printer
Various Tables, Chairs and Credenzas
Time Clock
1 UPS
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> SEP-30-1995 SEP-30-1994
<PERIOD-START> JAN-01-1996 JAN-01-1995
<PERIOD-END> MAR-31-1996 MAR-31-1995
<CASH> 176,597 46,741
<SECURITIES> 0 0
<RECEIVABLES> 15,000 26,532
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 11,597 2,110
<PP&E> 1,104,672 956,202
<DEPRECIATION> (88,370) (7,890)
<TOTAL-ASSETS> 1,219,496 1,023,695
<CURRENT-LIABILITIES> 5,370 73,259
<BONDS> 0 0
<COMMON> 36,600 35,900
0 0
0 0
<OTHER-SE> 1,177,526 914,536
<TOTAL-LIABILITY-AND-EQUITY> 1,219,496 1,023,695
<SALES> 0 0
<TOTAL-REVENUES> 402,273 360,000
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 264,031 167,867
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> 138,242 192,133
<INCOME-TAX> 0 65,500
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 138,242 126,633
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0
</TABLE>
