<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 December 31, 1995
[ ] 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.
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(Exact name of small business issuer as specified in its charter)
Delaware 75-2192377
- ------------------------------- --------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
421 E. Airport Freeway, Irving, Texas 75062
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(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
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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 December 31, 1995, 3,590,000
shares of common stock, $0.01 par value, were outstanding.
Transitional Small Business Disclosure Format (Check one):
Yes No X
--- ---
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ALLIANCE HEALTH, INC.
INDEX
PAGE NUMBER
PART I FINANCIAL INFORMATION
Balance Sheet - December 31, 1995 and
September 30, 1995 1
Statement of Loss - Three Months Ended
December 31, 1995 and December 31, 1994 2
Statement of Cash Flow - Three Months Ended
December 31, 1995 and December 31, 1994 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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ALLIANCE HEALTH, INC.
PART I - FINANCIAL INFORMATION
BALANCE SHEET
ASSETS
<TABLE>
<CAPTION>
Dec 31, 1995 Sep 30, 1995
------------ ------------
Unaudited Audited
<S> <C> <C>
Current assets:
Cash $ 2,287 $ 46,741
Accounts receivable-affiliate 18,000 26,532
Other Assets 2,733 2,110
---------- ----------
Total Current Assets 23,020 75,383
Property & Equipment 1,094,172 956,202
Less Accumulated Depreciation (46,603) (7,890)
---------- ----------
$1,070,589 $1,023,695
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable
Trade $ -0- $ 8,251
Officer 1,704 1,455
Accrued liabilities - 63,553
---------- ----------
Total Current Liabilities $ 1,704 $ 73,259
---------- ----------
Stockholders' Equity:
Common stock-par value of $0.01 per
share; authorized 20,000,000, issued
3,590,000 shares 35,900 35,900
Additional paid-in capital 831,166 831,166
Retained earnings 201,819 83,370
---------- ----------
Total Stockholders' equity 1,068,885 950,436
---------- ----------
1,070,589 1,023,695
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements
1
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ALLIANCE HEALTH, INC.
STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
----------------------
Dec 31, Dec 31,
1995 1994
----------- ----------
<S> <C> <C>
REVENUES: $ 347,303 $ 180,000
---------- ----------
EXPENSES:
Advertising 117,909 162,371
Salaries & Employee Benefits 47,137 81,704
Depreciation 38,713 -0-
G&A 25,095 41,771
---------- ----------
228,854 285,846
Operating income (loss) 118,449 (105,846)
Income Taxes (Benefit) -0- (36,000)
---------- ----------
Net income (loss) $ 118,449 $ (69,846)
========== ==========
Net income (loss) per common share $ .03 $ (.02)
========== ==========
Weighted average number of
shares outstanding 3,590,000 3,390,000
========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
2
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ALLIANCE HEALTH, INC.
STATEMENT OF CASH FLOW
<TABLE>
<CAPTION>
Three Months Ended
------------------------
Dec 31 Dec 31
1995 1994
----------- -----------
(Unaudited) (Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 118,449 $(69,846)
Adjustments to reconcile net loss
To net cash provided by (used in)
operating activities:
Depreciation 38,713 -0-
Other assets (623) -0-
Accounts payable (8,002) -0-
Accrued liabilities (63,553) -0-
--------- --------
Net cash provided by
(used in) operating activities 84,984 (69,846)
--------- --------
Cash flows from investing activities:
Purchase of equipment (137,970) -0-
--------- --------
Cash flows from financing activities:
Net change in due to affiliates 8,532 69,665
--------- --------
Net increase (decrease) in cash (44,454) (181)
Cash at beginning of period 46,741 1,297
--------- --------
Cash at end of period $ 2,287 $ 1,116
========= ========
</TABLE>
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 December 31, 1995 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., a company 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 December 31, 1994 are the following results of the previously
separate companies:
4
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Company Division Combined
-------- --------- ---------
Three Months ended December 31, 1994
Revenues $ - $180,000 $180,000
Net income (loss) $(181) (69,665) (69,846)
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 1994 financial statements have been restated to reflect the combination
of the Division as explained in Note 1.
Note 4. INCOME TAXES
No income taxes have been provided for the three months ended December 31,
1995, due to existing net operating loss carryforwards. For tax purposes, the
Company has approximately $168,000 of net operating loss carryfowards at
December 31, 1995.
5
<PAGE>
ALLIANCE HEALTH, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATION
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 December 31, 1995, the Company had an operating
profit of $118,449. Revenues consisted of $77,100 from Metroplex Specialties
for MRI scan readings, $270,000 for advertising from S. J. Kechejian, M.D., P.A.
and bank interest in the amount of $203. 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
$90,000 per month. This will change effective January 1, 1996, with S. J.
Kechejian, M.D., P.A. paying $67,500 and $22,500 will be paid by Metroplex
Specialties (both entities are owned by the company's major stockholder). The
quarter's revenue constitutes a 93% increase over the same quarter in 1994.
Final payments were made on the purchase of a Magnetic Resonance Imaging
System (MRI) increasing equipment $78,711 and leasehold improvements $59,259,
bringing total property and equipment to $1,094,172. Depreciation expense was
$38,713 for the period. Other expenses included advertising, salaries and
employee benefits and other general and administrative costs in the amount of
$190,141. This is roughly a 20% decrease in expenses from last year at this
time.
On August 3, 1995, the Company purchased the assets of Aldine Medical
Clinic ("Clinic"). The assets consisted of equipment, leasehold improvements,
furniture and fixtures 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. At September 30, 1995, the Clinic owed
the Company $23,000. During the period, the Clinic repaid $10,000 of the
advanced funds.
Accrued liabilities were paid in the form of sales tax on the MRI
($63,533). Accounts payable trade ($8,251) and accounts payable officer ($1,455)
were also paid during the quarter. Currently, the Company owes S. J. Kechejian,
M.D., P.A. $1,454 for property and workmen's compensation insurance and $250 in
postage. Postage is billed monthly and paid monthly.
6
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Liquidity and Capital Resources
- -------------------------------
The Company had total assets of $1,070,589 at December 31, 1995.
Advertising income is expected to continue at $90,000 per month and may increase
if S. J. Kechejian, M.D., P.A. opens additional facilities. The Company is
continuing to market the advertising package to other medical providers.
7
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ALLIANCE HEALTH, INC.
PART II - OTHER INFORMATION
Item 5. Exhibits and Reports on Form 8-K
--------------------------------
None.
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: February 15, 1996 By: Sarkis J. Kechejian, M.D.
-------------------------
Sarkis J. Kechejian, M.D.
President, Director and
Treasurer
9
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 3-MOS YEAR
<FISCAL-YEAR-END> SEP-30-1995 SEP-30-1994
<PERIOD-START> OCT-01-1995 OCT-01-1994
<PERIOD-END> DEC-31-1995 DEC-31-1994
<CASH> 2,287 46,741
<SECURITIES> 0 0
<RECEIVABLES> 18,000 26,532
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 2,733 2,110
<PP&E> 1,094,172 956,202
<DEPRECIATION> (46,603) (7,890)
<TOTAL-ASSETS> 1,070,589 1,023,695
<CURRENT-LIABILITIES> 1,704 73,259
<BONDS> 0 0
0 0
0 0
<COMMON> 35,900 35,900
<OTHER-SE> 1,032,985 914,536
<TOTAL-LIABILITY-AND-EQUITY> 1,070,589 1,023,695
<SALES> 0 0
<TOTAL-REVENUES> 347,303 180,000
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 228,854 285,846
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> 118,449 (105,846)
<INCOME-TAX> 0 (36,000)
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 118,449 (69,846)
<EPS-PRIMARY> .03 .02
<EPS-DILUTED> .03 .02
</TABLE>
