<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 June 30, 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 June 30, 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 - June 30, 1996 and
September 30, 1995 1
Statement of Loss - Three Months and
Six Months Ended June 30, 1996 2
Statement of Cash Flow - Six Months Ended
June 30, 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
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<PAGE>
ALLIANCE HEALTH, INC.
PART I - FINANCIAL INFORMATION
BALANCE SHEET
ASSETS
<TABLE>
<CAPTION>
Jun 30, 1996 Sep 30, 1995
Unaudited Audited
<S> <C> <C>
Current assets:
Cash $ 317,980 $ 46,741
Accounts receivable-affiliate 22,750 26,532
Other assets 22,728 2,110
________ ________
Total Current Assets 363,458 75,383
Property & equipment 1,118,372 956,202
Less accumulated depreciation (130,430) (7,890)
_________ _________
987,942 948,312
_________ _________
$1,351,400 $1,023,695
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable
Trade $ 4,935 $ 8,251
Affiliate 160 1,455
Accrued liabilities 1,429 63,553
Income taxes payable 40,100 0
________ _________
Total current liabilities 46,624 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 430,710 83,370
_________ _________
Total stockholders' equity 1,304,776 950,436
_________ _________
$1,351,400 $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 Nine Months Ended
Jun 30, Jun 30, Jun 30, Jun 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
REVENUES: $ 492,171 $ 180,000 $1,241,746 $ 720,000
________ __________ __________ ________
EXPENSES:
Advertising 135,531 138,317 373,150 398,697
Salaries & employee
Benefits 111,669 56,166 220,438 192,541
Depreciation 42,059 2,783 122,540 2,783
General & administrative 72,162 31,405 138,178 88,363
_________ ________ _________ _________
361,421 228,671 854,306 682,384
Operating income 130,750 (48,671) 387,440 37,616
Income taxes (benefit) 40,100 -0- 40,100 12,800
_________ ________ _________ _________
Net income $ 90,650 $ (48,671)$ 347,340 $ 24,816
_________ ________ _________ _________
Net income per
common share $ .04 $ (.02)$ .11 $ .00
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>
Nine Months Ended
Jun 30 Jun 30
1996 1995
(Unaudited) (Unaudited)
<S> <C> <C>
Cash flows from operating
activities:
Net income (loss) $ 347,340 $ 24,816
Adjustments to reconcile net
loss to net cash provided by
(used in) operating activities:
Depreciation 122,540 2,783
Accounts Receivable 3,782 293,392
Income Tax Payable 40,100 -0-
Other Assets (20,618) -0-
Accounts Payable (4,611) 68
Accrued liabilities (62,124) 847
________ _______
Net cash provided by
(used in) operating
activities 426,409 321,906
________ _______
Cash flows from investing activities:
Purchase of equipment (155,170) (100,000)
________ ________
Net increase (decrease) in cash 271,239 221,906
Cash at beginning of period 46,741 1,297
________ ________
Cash at end of period $ 317,980 $223,203
_________ ________
</TABLE>
Non-cash transaction: During the nine months ended June 30, 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 June
30, 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
Nine Months ended
June 30, 1995:
Revenues $135,000 $585,000 $720,000
Net income (loss) $ 31,214 (6,398) 24,816
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 June 30, 1996 and 1995, the Company had
net income of $90,650 and a loss of $48,671 respectively. Revenues
consisted of $105,600 from Metroplex Specialties for lease of the
Company's MRI, $294,500 for advertising from S. J. Kechejian, M.D.,
P.A. and Metroplex Specialties, P.A. and bank interest in the amount
of $1,408. Revenue in the amount of $92,164 was generated by the
Financial Health Dept. from workmen's compensation hospital account
claims processing and $499 from seminars given. Bank interest was
earned in the amount of $1,408. The income generated from Metroplex
Specialties is on a per scan basis and 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 $202,500 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
$90,000 during the quarter. The quarter's revenue constitutes a 175%
increase over the same quarter in 1995. For the nine months ended
June 30, 1996, the Company had a net income of $347,340. Revenues
consisted of $247,200 from Metroplex Specialties for the lease of the
Company's MRI, $900,000 for advertising from S. J. Kechejian, M.D.,
P.A. and Metroplex Specialties, $1,883 in bank interest, $92,164 from
claims processing and $499 from seminars given. The Company's 1996
revenue constitutes a 73% increase over the same nine months ended
June 30, 1995 and is attributed to the acquisition of the advertising
department in May, 1996 and the Financial Health Department operations
which began in March, 1996.
During the quarter, the Company purchased a new phone system.
Other expenses during the quarter ended June 30, 1996 included
advertising, salaries and employee benefits, depreciation and other
general and administrative costs in the amount of $361,421. This is
roughly a 58% increase in expenses from last year at this time
partially due to the acquisition of the assets of Elina & Associates
and equipment and leasehold depreciation. For the nine months ended
June 30, 1996, expenses for advertising, salaries and employee
benefits and other general and administrative costs were $854,306.
This represents only a 26% increase in costs from the nine months
ended June 30, 1995.
-6-
<PAGE>
Liquidity and Capital Resources
The Company had total assets of $1,351,400 at June 30, 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. Claims processing and seminar income should continue at
approximately $30,000 per month and may increase as new accounts are
acquired in the Financial Health Department.
Current liabilities included accounts payable trade ($4,935),
accounts payable affiliates ($161), accrued payroll taxes ($1,429) and
accrued income tax ($40,100).
-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: July 31, 1996 By: Sarkis J. Kechejian, M.D.
Sarkis J. Kechejian, M.D.
President, Director and
Treasurer
-9-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> SEP-30-1995 SEP-30-1994
<PERIOD-END> JUN-30-1996 JUN-30-1995
<CASH> 317,980 46,741
<SECURITIES> 0 0
<RECEIVABLES> 22,750 28,642
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 22,728 0
<PP&E> 1,118,372 956,202
<DEPRECIATION> (130,430) (7,890)
<TOTAL-ASSETS> 1,351,400 1,023,695
<CURRENT-LIABILITIES> 46,624 73,259
<BONDS> 0 0
<COMMON> 36,600 35,900
0 0
0 0
<OTHER-SE> 1,268,176 914,356
<TOTAL-LIABILITY-AND-EQUITY> 1,351,400 1,023,695
<SALES> 0 0
<TOTAL-REVENUES> 492,171 180,000
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 361,421 228,671
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> 130,750 (48,671)
<INCOME-TAX> (40,100) 0
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 90,650 (48,671)
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0
</TABLE>
