<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, 1998
[ ] 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, 1997,
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 Sheets - March 31, 1998 and
September 30, 1997 1
Statement of Income - Three Months
and Six Months Ended March 31, 1998 and 1997 2
Statements of Cash Flows - Six Months Ended
March 31, 1998 and 1997 3
Notes to Financial Statements 4
Management's Discussion and Analysis of
Financial Condition and Results of
Operation 5-6
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 7
SIGNATURES 8
<PAGE>
ALLIANCE HEALTH, INC.
PART I - FINANCIAL INFORMATION
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
Mar 31, 1998 Sep 30, 1997
Unaudited Audited
<S> <C> <C>
Current assets:
Cash $ 353,935 $ 940,716
Accounts receivable-affiliate 56,139 178,348
Other assets 0 15,528
________ ________
Total Current Assets 410,074 1,134,592
Property & equipment 2,086,439 1,234,422
Less accumulated depreciation (438,369) (341,683)
_________ _________
1,648,070 892,739
_________ _________
Total Assets $2,058,144 $2,027,331
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable
Trade $ -0- $ 68,166
Affiliate -0- 1,592
Income taxes payable 145,448 287,231
________ _________
Total current liabilities 145,448 356,989
Stockholders' equity:
Preferred stock, $.01 par, 100,000
shares authorized, none issued
Common stock, $0.01 par, 20,000,000
shares authorized and issued,
3,590,000 shares outstanding 35,900 35,900
Paid-in capital 831,166 831,166
Retained earnings 1,045,630 803,276
_________ _________
Total stockholders' equity 1,912,696 1,670,342
_________ _________
$2,058,144 $2,027,331
</TABLE>
The accompanying notes are an integral part of these financial
statements
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<PAGE>
ALLIANCE HEALTH, INC.
STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Month Ended
Mar 31, Mar 31, Mar 31, Mar 31,
1998 1997 1998 1997
(Restated) (Restated)
<S> <C> <C> <C> <C>
REVENUES $ 628,200 $ 603,926 $1,173,300 $1,070,853
EXPENSES
Advertising 168,693 137,557 302,198 230,344
Salaries & Employee
Benefits 8l,450 70,321 178,250 130,119
Depreciation 54,387 42,300 96,687 84,600
General & Administrative 146,371 59,908 221,247 120,596
_________ ________ _________ ________
450,901 310,086 798,382 565,659
Operating income 177,299 293,840 374,918 505,194
Other Income 8,199 0 16,436 8,631
_________ ________ _________ _________
Income before taxes 185,498 293,840 391,354 513,825
Income taxes 70,500 111,600 149,000 195,200
_________ ________ _________ _________
Net Income $ 114,998 $182,240 $ 242,354 318,625
Net income per
common share $ .03 $ .05 $ .07 $ .09
Weighted average number of
shares outstanding 3,590,000 3,590,000 3,590,000 3,590,000
</TABLE>
The accompanying notes are an integral part of these financial statements.
-2-
<PAGE>
ALLIANCE HEALTH, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Six Months Ended
Mar 31 Mar 31
1998 1997
(Unaudited) (Unaudited)
(Restated)
<S> <C> <C>
Cash flows from operating
activities:
Net income $ 242,354 $ 318,625
Adjustments to reconcile net
income to net cash provided by
(used in) operating activities:
Depreciation 96,686 84,600
Accounts receivable 122,209 (189,895)
Other Assets 15,528 (37,730)
Accounts Payable (69,758) (32,898)
Accrued liabilities - (35,440)
Income Taxes (141,783) 195,200
________ _______
Net cash provided by
operating activities 265,236 302,462
________ _______
Cash flows from investing activities:
Purchase of equipment (852,017) -0-
________ ________
Net increase (decrease) in cash (586,781) 302,462
Cash at beginning of period 940,716 364,958
________ ________
Cash at end of period $ 353,935 $667,420
</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, 1997
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 six month period ended March 31, 1998 are not
necessarily indicative of the results that may be expected for the year ending
September 30, 1998.
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.
Note 3. Restatement
The statements of income for the three and six months ended March 31, 1997
have been restated to reflect an income tax provision.
-4-
<PAGE>
ALLIANCE HEALTH, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF INTERIM FINANCIAL INFORMATION
The following is management's discussion and analysis of certain signifi-
cant 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 six months ended March 31, 1998 and 1997, the Company had net
income of $243,354 and $318,625 respectively. Revenues in 1998 consisted of
$460,800 from Metroplex Specialties for lease of the Company's MRI, $712,500 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 $16,436. The MRI income
generated from Metroplex Specialties is on a per scan basis and is expected to
continue at roughly $70,000 to $75,000 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 $300,000 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 arrange-
ment with the Company billed at $22,500 during the quarter. The quarter's
revenue constitutes a 4% increase over the same quarter in 1997.
The expenses during the six months ended March 31, 1998 included
advertising, salaries and employee benefits, depreciation and other general and
administrative costs in the amount of $798,382. This is roughly a 41% increase
in expenses over the same period last year due to new production consulting and
additional advertising on TV radio and billboards. Advertising increased by
31%. A 37% increase in salaries and benefits is due to the hiring of the Chief
Operating Officer in February, 1997. Administrative costs increased by 83% as
compared to March 31, 1997. Several factors attributed to this including an
increase in equipment maintenance for the MRI (previously under warranty); and
general taxes for various corporate requirements and sales tax on the 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.
Aldine currently owes $55,546, and it is not expected that the Company will have
to loan Aldine further money. Aldine will also pay a management services fee
for each patient over 400 patients per month at a rate of $25 per patient.
-5-
<PAGE>
Liquidity and Capital Resources
The Company had total assets of $2,058,144 at March 31, 1998.
Advertising income is expected to continue at approximately $130,000 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.
The Company has purchased a new Hitachi MRI for a total cost of
$710,000, which has been installed at 1218 S. Main St., Fort Worth, Texas.
Metroplex Specialties will lease the equipment for $300 per scan
performed. The new MRI lease is expected to reduce income generated by
the current MRI Lease to some degree. Total income generated by the
leases has increased by six percent (6%) in this quarter as compared to
the quarter ended December, 1997.
The Company is working on creating standardized protocols for all
processes to aid in expansion of Company interests. A building is under
contract in Longview, Texas for $160,381 and, if purchased, is expected to
be open in May or June 1998. The property will house a clinic, physical
therapy and CT imaging center. The Longview location, as compared in
conjunction with the Tyler location, will create an East Texas division to
serve a large population in the Tyler and Longview areas. The Tyler
clinic is currently in a leased facility, and the Company is considering
purchasing a facility with enough space for a physical therapy center.
Several properties are under consideration at this time.
The Company plans to research available sites in the Marshall area
to complete the East Texas Division.
-6-
<PAGE>
ALLIANCE HEALTH, INC.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
None.
-7-
<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 4, 1998 By: Sarkis J. Kechejian, M.D.
Sarkis J. Kechejian, M.D.
President, Director and
Treasurer
-8-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 6-MOS 6-MOS
<FISCAL-YEAR-END> SEP-30-1997 SEP-30-1996
<PERIOD-START> OCT-01-1997 OCT-01-1996
<PERIOD-END> MAR-31-1998 MAR-31-1997
<CASH> 353,935 667,420
<SECURITIES> 0 0
<RECEIVABLES> 56,139 297,897
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 410,074 965,317
<PP&E> 2,086,439 1,111,422
<DEPRECIATION> (438,369) (257,081)
<TOTAL-ASSETS> 2,058,144 1,819,658
<CURRENT-LIABILITIES> 104,288 1,060
<BONDS> 0 0
0 0
0 0
<COMMON> 35,900 35,900
<OTHER-SE> 1,917,956 1,782,698
<TOTAL-LIABILITY-AND-EQUITY> 2,058,144 1,819,658
<SALES> 0 0
<TOTAL-REVENUES> 1,173,300 1,070,853
<CGS> 0 0
<TOTAL-COSTS> 798,382 565,659
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> 0 0
<INCOME-TAX> 149,000 195,200
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 242,354 318,625
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0
</TABLE>
