<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, 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, 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 Sheet - December 31, 1997 and
September 30, 1997 1
Statement of Operations - Three Months
Ended December 31, 1997 and
December 31, 1996 2
Statement of Cash Flow - Three Months Ended
December 31, 1997 and 1996 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 5. Exhibits and Reports on Form 8-K 7
SIGNATURES 8
<PAGE>
ALLIANCE HEALTH, INC.
PART I - FINANCIAL INFORMATION
BALANCE SHEET
ASSETS
<TABLE>
<CAPTION>
Dec 31, 1997 Sep 30, 1997
Unaudited Audited
<S> <C> <C>
Current assets:
Cash $ 781,222 $ 940,716
Accounts receivable-affiliate 113,124 178,348
Other assets 3,951 15,528
________ ________
Total Current Assets 898,297 1,134,592
Property, equipment & leasehold
improvements 1,466,922 1,234,422
Less accumulated depreciation (383,983) (341,683)
_________ _________
1,082,939 892,739
_________ _________
$1,981,236 $2,027,331
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable
Trade -0- 68,166
Affiliate 750 -0-
Accrued liabilities -0- 1,592
Income taxes payable 182,788 287,231
________ _________
Total current liabilities 183,538 356,989
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 930,632 803,276
_________ _________
Total stockholders' equity 1,797,698 1,670,342
_________ _________
$1,981,236 $2,027,331
</TABLE>
The accompanying notes are an integral part of these financial
statements
-1-
<PAGE>
ALLIANCE HEALTH, INC.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended
Dec 31, Dec 31,
1997 1996
(Unaudited) (Unaudited)
(Restated)
<S> <C> <C>
REVENUES: $ 545,100 $ 448,116
EXPENSES:
Advertising 133,505 92,787
Salaries & employees
Benefits 96,800 59,579
Depreciation 42,300 42,300
General & administrative 74,876 76,723
________ _______
347,481 271,389
Operating income 197,619 176,727
Other Income 8,237 27,442
_______ _______
Income before taxes 205,856 204,169
Income taxes (78,500) (77,600)
Net Income $ 127,356 $ 126,569
Net income per
common share $ .04 $ .04
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
1997 1996
(Unaudited) (Unaudited)
(Restated)
___________ ___________
<S> <C> <C>
Cash flows from operating
activities:
Net income (loss) $ 127,356 $ 126,569
Adjustments to reconcile net
loss to net cash provided by
(used in) operating activities:
Depreciation 42,300 42,300
Accounts Receivable 65,224 32,500
Other Assets 11,577 (12,210)
Accounts Payable (67,416) (33,417)
Accrued Liabilities (1,592) (1,168)
Income Taxes (104,443) 77,600
________ _______
Net cash provided by
operating activities 73,006 232,174
________ _______
Cash flows from investing activities:
Equipment & Leasehold Improvements (232,500) -0-
________ ________
Net increase (decrease) in cash (159,494) 232,174
Cash at beginning of period 940,716 364,958
________ ________
Cash at end of period $ 781,222 $597,132
</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, 1997 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 statement of operations and cash flow for the three months
ended December 31, 1996 have been restated to provide for an income
tax provision of $77,600.
-4-
<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, 1997 and 1996, the Company
had net income of $127,356 and $126,569 respectively. Revenues in
1997 consisted of $222,600 from Metroplex Specialties for lease of the
Company's MRI, $322,500 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 $8,237. Revenue in the amount of $27,442 in
1996 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 $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 $240,000 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
arrangement with the Company billed at $15,000 during the quarter.
The quarter's revenue constitutes a 22% increase over the same quarter
in 1996.
The expenses during the quarter ended December 31, 1997 included
advertising, salaries and employee benefits, depreciation and other
general and administrative costs in the amount of $347,481. This is
roughly a 28% increase in expenses over the same quarter last year
partially due to increased production consulting and an increase in
salaries and employee benefits. The increase in salaries is due to
the Company hiring a Chief Operating Officer in January, 1997.
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
currently owes $107,124, 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 $1,981,236 at December 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.
The Company has paid an additional $152,500 in this quarter
toward the purchase of a new Hitachi MRI for an Imaging Center to be
opened in March, 1998. The purchase price of the new MRI is $710,000,
of which $252,500 has been paid at this time. It is expected the new
MRI lease will reduce income generated by the current MRI Lease but
total income generated by the Leases should increase.
The Company is working on creating standardized protocols for
all processes to aid in expansion of Company interests. Current
projects being researched inclkude a clinic operation with physical
therapy and imaging service in Longview, Texas. This would create an
East Texas division of clinics, therapy and imaging to serve a large
population in the Tyler, Longview and Marshall areas.
-6-
<PAGE>
ALLIANCE HEALTH, INC.
PART II - OTHER INFORMATION
Item 5. 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: February 11, 1998 By: Sarkis J. Kechejian, M.D.
Sarkis J. Kechejian, M.D.
President, Director and
Treasurer
-8-
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> SEP-30-1997 SEP-30-1997
<PERIOD-START> OCT-01-1997 OCT-01-1996
<PERIOD-END> DEC-31-1997 DEC-31-1997
<CASH> 781,222 940,716
<SECURITIES> 0 0
<RECEIVABLES> 113,124 178,348
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 3,951 15,528
<PP&E> 1,466,922 1,234,422
<DEPRECIATION> 383,983 341,683
<TOTAL-ASSETS> 1,981,236 2,027,331
<CURRENT-LIABILITIES> 183,538 356,989
<BONDS> 0 0
0 0
0 0
<COMMON> 35,900 35,900
<OTHER-SE> 1,761,798 1,634,442
<TOTAL-LIABILITY-AND-EQUITY> 1,981,236 2,027,331
<SALES> 0 0
<TOTAL-REVENUES> 553,337 475,558
<CGS> 00 0
<TOTAL-COSTS> 347,481 271,389
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> 0 0
<INCOME-TAX> 78,500 77,600
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 127,356 126,569
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0
</TABLE>
