<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, 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)
(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 - December 31, 1996 and
September 30, 1996 1
Statement of Loss - Three Months
Ended December 31, 1996 and
December 31, 1995 2
Statement of Cash Flow - Three Months Ended
December 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>
Dec 31, 1996 Sep 30, 1996
Unaudited Audited
<S> <C> <C>
Current assets:
Cash $ 597,132 $ 364,958
Accounts receivable-affiliate 30,850 63,350
Other assets 14,206 1,996
Federal Income Tax Receivable 4,926 4,926
________ ________
Total Current Assets 647,114 435,230
Property & equipment 1,111,422 1,111,422
Less accumulated depreciation (214,781) (172,481)
_________ _________
896,641 938,941
_________ _________
$1,543,755 $1,374,171
LIABILITIES AND STOCKHOLDERS' EQUITY
<CAPTION>
<S> <C> <C>
Current liabilities:
Accounts payable
Trade $ -0- $ 33,246
Affiliate -0- 171
Accrued liabilities 188 1,356
________ _________
Total current liabilities 188 34,773
Deferred Income Taxes 63,238 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 613,263 409,094
_________ _________
Total stockholders' equity 1,480,329 1,276,160
_________ _________
$1,543,755 $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
Dec 31, Dec 31,
1996 1995
<S> <C> <C>
REVENUES: $ 448,116 $ 347,303
EXPENSES:
Advertising 92,787 117,909
Salaries & employee
Benefits 59,579 47,137
Depreciation 42,300 38,713
General & administrative 76,723 25,095
________ _________
271,389 228,854
Operating income 176,727 118,449
Other Income
Gain on Collection Services 27,442 -0-
_________ _________
Net income $ 204,169 $ 118,449
Net income per
common share $ .05 $ .03
Weighted average number of
shares outstanding 3,590,000 3,590,000
</TABLE>
The accompanying notes are an integral part of the financial
statements.
-2-
<PAGE>
ALLIANCE HEALTH, INC.
STATEMENT OF CASH FLOW
<TABLE>
<CAPTION>
Three Months Ended
Dec 31 Dec 31
1996 1995
(Unaudited) (Unaudited)
<S> <C> <C>
Cash flows from operating
activities:
Net income (loss) $ 204,169 $ 118,449
Adjustments to reconcile net
loss to net cash provided by
(used in) operating activities:
Depreciation 42,300 38,713
Accounts Receivable 32,500 8,532
Other Assets (12,210) (623)
Accounts Payable (33,417) (8,002)
Accrued liabilities (1,168) (63,553)
________ _______
Net cash provided by
(used in) operating
activities 232,174 93,516
________ _______
Cash flows from investing activities:
Purchase of equipment -0- (137,970)
________ ________
Net increase (decrease) in cash 232,174 (44,454)
Cash at beginning of period 364,958 46,741
________ ________
Cash at end of period $ 597,132 $ 2,287
_________ ________
</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
December 31, 1996 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>
<TABLE>
<CAPTION>
Company Division Combined
<S> <C> <C> <C>
Period from Oct. 1, 1994
To May 12, 1995 (unaudited)
Revenues $ -0- $675,000 $675,000
Net income (loss) $ -0- 65,109 65,109
</TABLE>
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 December 31, 1996 and 1995, the Company
had net income of $204,169 and $118,449 respectively. Revenues
consisted of $154,000 from Metroplex Specialties for lease of the
Company's MRI, $290,000 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 $3,616. Revenue in the amount of $27,442 was
generated by a hospital collection agency the Company acquired the net
assets of during the year ended September 30, 1996. This transaction
was later rescinded and the operations are shown as other income in
the accompanying combined statement of income. 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 $207,500 during the quarter; the advertising income
generated from Metroplex Specialties, P.A., is an ongoing arrangement
with the Company billed at $67,500 during the quarter and the
advertising income generated from Metro Pharmacy, Inc., is an ongoing
arrangement with the Company billed at $15,000 during the quarter.
The quarter's revenue constitutes a 37% increase over the same quarter
in 1995.
The expenses during the quarter ended December 31, 1996 included
advertising, salaries and employee benefits, depreciation and other
general and administrative costs in the amount of $271,389. This is
roughly a 19% 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 service fee for each patient over 400 patients
per month at a rate of $25 per patient.
-6-
<PAGE>
Liquidity and Capital Resources
The Company had total assets of $1,543,755 at December 31, 1996.
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 $188.
-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: February 13, 1997 By: Sarkis J. Kechejian, M.D.
Sarkis J. Kechejian, M.D.
President, Director and
Treasurer
-9-
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> SEP-30-1996 SEP-30-1995
<PERIOD-START> OCT-01-1996 OCT-01-1995
<PERIOD-END> DEC-31-1996 DEC-31-1995
<CASH> 597,132 2,287
<SECURITIES> 0 0
<RECEIVABLES> 35,776 18,000
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 14,206 2,733
<PP&E> 1,111,422 1,094,172
<DEPRECIATION> (214,781) (46,603)
<TOTAL-ASSETS> 1,543,755 1,070,589
<CURRENT-LIABILITIES> 63,426 1,704
<BONDS> 0 0
0 0
0 0
<COMMON> 35,900 35,900
<OTHER-SE> 1,444,429 1,032,985
<TOTAL-LIABILITY-AND-EQUITY> 1,543,755 1,070,589
<SALES> 0 0
<TOTAL-REVENUES> 448,116 347,303
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 271,389 228,854
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> 176,727 118,449
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 27,442 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 204,169 118,449
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0
</TABLE>
