<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, 1997
[ ] 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)
(972)-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 December 31, 1996,
3,590,000 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, 1997 and
September 30, 1996 1
Statement of Loss - Three Months
And Six Months Ended March 31, 1997 2
Statement of Cash Flow - Six Months Ended
March 31, 1997 and 1996 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, 1997 Sep 30, 1996
Unaudited Audited
<S> <C> <C>
Current assets:
Cash $ 667,420 $ 364,958
Accounts receivable-affiliate 253,245 63,350
Other assets 39,726 1,996
Federal Income Tax Receivable 4,926 4,926
________ ________
Total Current Assets 965,317 435,230
Property & equipment 1,111,422 1,111,422
Less accumulated depreciation (257,081) (172,481)
_________ _________
854,341 938,941
_________ _________
$1,819,658 $1,374,171
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable
Trade $ -0- $ 33,246
Affiliate 519 171
Accrued liabilities 541 1,356
________ _________
Total current liabilities 1,060 34,773
Deferred Income Taxes 28,613 63,238
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 922,919 409,094
_________ _________
Total stockholders' equity 1,789,985 1,276,160
_________ _________
$1,819,658 $1,374,171
</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,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
REVENUES: $ 603,926 $ 402,273 $1,079,484 $749,576
EXPENSES:
Advertising 137,557 119,710 230,344 237,619
Salaries & Employee
Benefits 70,321 62,957 130,119 110,094
Depreciation 42,300 41,768 84,600 80,481
General & Administrative 59,908 39,596 120,596 64,691
_________ ________ _________ ________
310,086 264,031 565,659 492,885
Operating income 293,840 138,242 513,825 256,691
Income Taxes (Benefit) -0- -0- -0- -0-
_________ ________ _________ _________
Net income 293,840 $ 138,242 513,825 256,691
_________ ________ _________ _________
Net income per
common share $ .08 $ .04 $ .14 $ .07
Weighted average number of
shares outstanding 3,590,000 3,601,667 3,590,000 3,595,833
</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
1997 1996
(Unaudited) (Unaudited)
<S> <C> <C>
Cash flows from operating
activities:
Net income (loss) $ 513,825 $ 256,691
Adjustments to reconcile net
loss to net cash provided by
(used in) operating activities:
Depreciation 84,600 80,480
Accounts Receivable (189,895) 14,932
Other Assets (37,730) (9,487)
Accounts Payable (32,898) (7,737)
Accrued liabilities (35,440) (63,553)
________ _______
Net cash provided by
(used in) operating
activities 302,462 271,326
________ _______
Cash flows from investing activities:
Purchase of equipment -0- (141,470)
________ ________
Net increase (decrease) in cash 302,462 129,856
Cash at beginning of period 364,958 46,741
________ ________
Cash at end of period $ 667,420 $176,597
_________ ________
</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,
1996 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, 1997 are not necessarily indicative of the results that may be
expected for the year ending September 30, 1997.
All of the Company's advertising income was for services rendered
to S. J. Kechejian, M.D., P.A., Metroplex Specialties, P.A. and Metro
Pharmacy, Inc., companies owned by the 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 May 12, 1995 are the following results of the
previously separate companies:
-4-
<PAGE>
Company Division Combined
Period from Oct. 1, 1994
To May 12, 1995 (unaudited)
Revenues $ -0- $675,000 $675,000
Net income (loss) $ -0- 65,109 65,109
The Company currently offers its advertising and management
services to medical clinics of affiliated companies.
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, 1997 and 1996, the Company had
net income of $293,840 and $138,242 respectively. Revenues consisted
of $181,800 from Metroplex Specialties for lease of the Company's MRI,
$400,000 for advertising from S. J. Kechejian, M.D., P.A., Metroplex
Specialties, P.A. and Metro Pharmacy, Inc. and bank interest in the
amount of $5,014. Revenue in the amount of $17,112 was generated
through collections. The MRI income generated from Metroplex
Specialties is on a per scan basis and is expected to continue at
roughly $40,000 to $50,000 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 $290,000 during the
quarter; the advertising income generated from Metroplex Specialties,
P.A., is an ongoing arrangement with the Company billed at $90,000
during the quarter and the advertising income generated from Metro
Pharmacy, Inc., is an ongoing arrangement with the Company billed at
$20,000 during the quarter. The quarter's revenue constitutes a 50%
increase over the same quarter in 1996.
The expenses during the quarter ended March 31, 1997 included
advertising, salaries and employee benefits, depreciation and other
general and administrative costs in the amount of $310,086. This is
roughly a 17% increase in expenses over the same quarter last year
partially due to production consulting and maintenance performed on
the Company's MRI.
The Company has negotiated a Management Service Agreement with
Aldine Medical Associates ("Aldine"). As part of the start up costs
for the facility, the Company will loan Aldine the funds necessary for
operating costs as needed at ten percent (10%) interest. Aldine will
also pay a management services fee for each patient over 400 patients
per month at a rate of $25 per patient. This fee arrangement will
begin when "Aldine" reaches 400 patients per month for three
consecutive months.
-6-
<PAGE>
Liquidity and Capital Resources
The Company had total assets of $1,819,658 at March 31, 1997.
Advertising income is expected to continue at approximately $100,000
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 consisted of accrued payroll taxes in the
amount of $541 and amounts due to affiliates of $519.
-7-
<PAGE>
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 13, 1997 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-30-1996 SEP-30-1995
<PERIOD-START> JAN-01-1997 JAN-01-1997
<PERIOD-END> MAR-31-1997 MAR-31-1996
<CASH> 667,420 364,958
<SECURITIES> 0 0
<RECEIVABLES> 253,245 63,350
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 39,726 1,996
<PP&E> 1,111,422 1,111,422
<DEPRECIATION> (257,081) (172,481)
<TOTAL-ASSETS> 1,819,658 1,374,171
<CURRENT-LIABILITIES> 28,613 63,238
<BONDS> 0 0
0 0
0 0
<COMMON> 35,900 35,900
<OTHER-SE> 1,754,085 1,240,260
<TOTAL-LIABILITY-AND-EQUITY> 1,819,658 1,374,171
<SALES> 0 0
<TOTAL-REVENUES> 603,926 402,273
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 310,086 264,031
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> 293,840 138,242
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 293,840 138,242
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0
</TABLE>
