<PAGE>   1

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                  FORM 10-QSB


[X]     QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                   ACT OF 1934
                  For the Quarterly Period Ended June 30, 1997

[ ]     TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                  ACT OF 1934


                       Commission File Number 33-30677-NY


                          AMERICAN HEALTHCHOICE, INC.
       -----------------------------------------------------------------
       (Exact Name of Small Business Issuer as Specified in Its Charter)


         New York                                         11-2931252
-------------------------------                       -------------------
(State or Other Jurisdiction of                        (I.R.S. Employer
Incorporation or Organization)                        Identification No.)

1300 West Walnut Hill Lane, Suite 275, Irving, Texas          75038
----------------------------------------------------        ----------
    (Address of principal executive offices)                (Zip Code)


Registrant's telephone number, including area code: (972) 751-1900


         Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
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 [  ]          No [X]

         As of June 30, 1997, there were outstanding 9,281,913 shares of the
issuer's Common Stock, par value $.001 per share.

Transitional Small Business Disclosure Format

         Yes [  ]          No [X]



                                      F-1
<PAGE>   2

                          AMERICAN HEALTHCHOICE, INC.

                    QUARTERLY REPORT ON FORM 10-QSB FOR THE
                          QUARTER ENDED JUNE 30, 1997

                                     INDEX

                                                                         PAGE
PART I.  FINANCIAL INFORMATION                                          NUMBER
                                                                        ------

     ITEM 1.   Condensed Consolidated Balance Sheets......................F-3

               Condensed Consolidated Statements of Income................F-4

               Condensed Consolidated Statements of Cash Flows............F-5

               Notes to Condensed Consolidated Financial Statements.......F-6

     ITEM 2.   Management's Discussion and Analysis of Results of 
                    Operation and Financial Condition....................F-11

PART II.  OTHER INFORMATION

     ITEM 1.   Legal Proceedings.........................................F-16

     ITEM 2.   Changes in Securities ....................................F-16

     ITEM 3.   Defaults Upon Senior Securities...........................F-16

     ITEM 4.   Submission of Matters to a Vote of Securities Holders.....F-16

     ITEM 5.   Other Information.........................................F-17

     ITEM 6.   Exhibits and Reports on Form 8-K..........................F-17

SIGNATURES...............................................................F-17



                                     F-2
<PAGE>   3


                         PART I. FINANCIAL INFORMATION

ITEM I.  FINANCIAL STATEMENTS

                          AMERICAN HEALTHCHOICE, INC.
                                AND SUBSIDIARIES

                     CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                September 30,      June 30,
                                                                                    1996             1997
                                                                               ------------      ------------
                                                                                                  (unaudited)
                                     ASSETS
<S>                                                                            <C>               <C>         
CURRENT ASSETS:
   Cash                                                                        $    159,166      $    491,681
   Accounts receivable, less allowance for doubtful accounts of $5,480,389
        in 1996 and $7,923,123 in 1997                                            7,926,609         8,070,392
   Advances due from an affiliate and stockholders                                  498,095           338,117
Advances to physicians and employees                                                 47,104            80,565
   Income tax receivable                                                             22,000            22,000
   Current portion of note receivable from stockholder                               54,000            54,000
   Other current assets                                                              97,173            77,767
                                                                               ------------      ------------
            Total current assets                                                  8,804,147         9,134,522

NOTE RECEIVABLE FROM STOCKHOLDER, less current portion                              216,000           135,710

PROPERTY AND EQUIPMENT, net                                                       1,259,298         1,517,222

GOODWILL, net                                                                       633,000           454,334

OTHER ASSETS                                                                         14,949           153,889
                                                                               ------------      ------------
            Total assets                                                       $ 10,927,394      $ 11,395,677
                                                                               ============      ============

                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
   Current portion of notes payable, including $176,719 due
       to a stockholder in 1996 and 1997                                       $  1,799,958      $  2,716,675
   Current portion of capital lease obligations                                     305,444            96,609
   Advances from stockholders                                                       145,781           228,135
   Accrued payroll and payroll taxes                                                322,062           162,221
   Accounts payable and accrued expenses                                          1,228,516         1,886,309
   Deferred income taxes                                                            807,783                --
                                                                               ------------      ------------
            Total current liabilities                                             4,609,544         5,089,949

NOTES PAYABLE, less current portion                                               1,040,741           840,411

CAPITALIZED LEASE OBLIGATIONS, less current portion                                  64,876           293,358

STOCKHOLDERS' EQUITY:
   Preferred stock, $.001 par value; 5,000,000 shares
        authorized; none issued                                                          --                --
   Common stock option                                                              100,000            12,498
   Common stock subscription payable                                                 78,527           101,296
   Common stock, $.001 par value; 115,000,000 shares
        authorized; 7,232,692 shares issued and outstanding
        in 1996 and 9,281,913 in 1997                                                 7,232             9,270
   Additional paid-in capital                                                     5,327,256        10,279,208
   Retained earnings                                                               (300,782)       (5,230,313)
                                                                               ------------      ------------
            Total stockholders' equity                                            5,212,233         5,171,959
                                                                               ------------      ------------

            Total liabilities and stockholders' equity                         $ 10,927,394      $ 11,395,677
                                                                               ============      ============
</TABLE>

          See accompanying notes to these unaudited interim condensed
                      consolidated financial statements.


                                      F-3
<PAGE>   4

                          AMERICAN HEALTHCHOICE, INC.
                                AND SUBSIDIARIES

                  CONDENSED CONSOLIDATED STATEMENTS OF INCOME


<TABLE>
<CAPTION>

                                                         Three Months Ended               Nine months Ended
                                                             June 30,                          June 30,
                                                     --------------------------      -----------------------------
                                                       1996            1997             1996              1997
                                                     ----------     -----------      -----------      ------------
                                                    (unaudited)     (unaudited)      (unaudited)       (unaudited)
<S>                                                  <C>            <C>              <C>              <C>         
NET PATIENT REVENUES                                 $3,854,107     $ 2,342,231      $ 9,538,294      $  7,562,467
OPERATING EXPENSES:
   Compensation and benefits                          1,699,631       2,096,411        4,197,097         6,911,040
   Advertising                                          191,674         125,201          514,702           444,943
   Depreciation and amortization                         30,017         100,232           77,476           329,557
   General and administrative, including
        management fees and other expenses
        paid to related parties of $117,000
        for the nine months ended June 30, 1997;
        and $104,000 for the nine months ended
        June 30, 1996                                 1,532,095         966,458        3,155,089         3,058,519
                                                     ----------     -----------      -----------      ------------

            Total operating expenses                  3,453,417       3,288,302        7,944,364        10,744,059
                                                     ----------     -----------      -----------      ------------

            Operating income (loss)                     400,690        (946,071)       1,593,930        (3,181,592)

            Financing costs                                  --       1,829,094               --         2,555,722
                                                     ----------     -----------      -----------      ------------

            Income (Loss) before income taxes
                and pro forma income taxes              400,690      (2,775,165)       1,593,930        (5,737,314)

INCOME TAXES:
   Current                                              144,248              --           11,248          (110,510)
   Deferred                                                  --              --          793,961          (697,273)
                                                     ----------     -----------      -----------      ------------
                                                        144,248              --          805,209          (807,783)

NET INCOME (LOSS) BEFORE
   PRO FORMA  INCOME TAXES                              256,442      (2,775,165)         788,721        (4,929,531)
   Pro forma income tax benefit                              --              --         (213,496)               --
                                                     ----------     -----------      -----------      ------------
NET INCOME (LOSS) AFTER PRO FORMA
   INCOME TAXES                                      $  256,442     $(2,775,165)     $ 1,002,217      $ (4,929,531)
                                                     ==========     ===========      ===========      ============

NET INCOME (LOSS) PER SHARE AFTER
   PRO FORMA INCOME TAXES                            $      .04     $      (.36)     $       .15      $       (.65)
                                                     ==========     ===========      ===========      ============

WEIGHTED AVERAGE COMMON
   SHARES OUTSTANDING                                 6,624,150       7,947,055        6,767,667         7,619,971
                                                     ==========     ===========      ===========      ============

</TABLE>

          See accompanying notes to these unaudited interim condensed
                      consolidated financial statements.


                                      F-4
<PAGE>   5
                          AMERICAN HEALTHCHOICE, INC.
                                AND SUBSIDIARIES

                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                             Nine months Ended
                                                                                  June 30,
                                                                        ----------------------------
                                                                            1996             1997
                                                                        -----------      -----------
                                                                         (unaudited)      (unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                     <C>              <C>         
   Net income (loss)                                                    $ 1,002,216      $(4,929,531)
   Adjustments to reconcile net income to cash from
   operating activities:
        Depreciation and amortization                                        62,474          329,557
        Gain on forgiveness of debt                                              --          (79,363)
        Common stock issued in connection with financing,
        capital purchasing and consulting                                        --        2,438,517
        Change in assets and liabilities:
            Increase in trade accounts receivable, net                   (3,536,143)        (143,783)
            Increase in other current assets                                (46,776)         186,592
            Increase in deferred taxes                                      844,836         (807,783)
            Other, net                                                      630,017         (165,266)
                                                                        -----------      -----------
                Net cash used in operating activities                    (1,043,376)      (3,004,699)
                                                                        -----------      -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Note receivable from stockholder                                        (216,000)              --
   Cash acquired from acquisitions                                           99,434               --
   Cash acquired in Peachtree acquisition                                  (234,887)              --
   Advances to physicians and other receivables, net                        (59,112)         (33,461)
   Purchases of property and equipment                                     (645,634)        (264,611)
   Other, net                                                               231,054         (138,940)
                                                                        -----------      -----------
                Net cash used in investing activities                      (825,145)        (741,216)
                                                                        -----------      -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from bridge loan                                                     --        2,310,000
   Issuance of Convertible Debentures                                            --        2,600,000
   Payments on notes payable and capital leases                            (177,579)      (1,419,063)
   Proceeds from sale of common stock                                     2,433,477               --
   Proceeds from sale of stock option                                       100,000           43,750
   Proceeds from credit revolver                                                 --          354,744
   Write-off of note payable                                                     --         (166,361)
   Common stock issued for capital additions                                     --           51,156
   Dividends paid to members of Valley Family Health Center, L.L.C         (140,768)              --
   Cash advances from (to) stockholders, net                                (54,493)              --
                                                                        -----------      -----------

                Net cash provided by financing activities                   292,116        4,078,430
                                                                        -----------      -----------

INCREASE (DECREASE) IN CASH                                                (182,018)         332,515

CASH, beginning of period                                                   876,300          159,166
                                                                        -----------      -----------

CASH, end of period                                                     $   402,166      $   491,681
                                                                        ===========      ===========


SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONS:
   Net liabilities purchased                                            $  (893,931)     $        --
   Stock issued for financing charges                                            --          189,875
   Stock issued for clinic                                                       --           51,156
   Stock issued for consulting                                                   --           24,500
   Stock issued for Debenture consulting                                         --          437,600
   Stock issued for conversion of Debenture                                      --        3,165,633
   Stock issued for bridge loan fee                                              --           67,375
   Capital lease for equipment                                                   --          304,204
   Stock subscription related to bridge loan                                     --        1,018,710
                                                                        -----------      -----------
                                                                        $  (893,931)     $ 4,954,849
                                                                        ===========      ===========
</TABLE>

          See accompanying notes to these unaudited interim condensed
                      consolidated financial statements.


                                      F-5
<PAGE>   6

                          AMERICAN HEALTHCHOICE, INC.
                                AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.  ORGANIZATION AND BUSINESS:

American HealthChoice, Inc. and subsidiaries (the Company) consists of a parent
company and twenty-two clinics providing physical therapy, chiropractic and
medical services in San Antonio and Houston, Texas, New Orleans, Louisiana and
Atlanta, Georgia, and one clinic providing diagnostic services in San Antonio,
Texas. Substantially all of the Company's revenues are derived from
chiropractic, physical therapy and medical services provided to individuals
living in the vicinity of the clinics.

On March 31, 1995, Paudan, Inc. acquired 100% of the outstanding common stock
of the Company in exchange for 91.6% of the outstanding common stock of Paudan,
Inc. As a result, the stockholders of American HealthChoice, Inc. became the
controlling stockholders of Paudan, Inc. Paudan, Inc. was an inactive public
shell company which had total assets of $200,000, consisting entirely of cash,
and no liabilities at the time of the acquisition. This transaction was
accounted for as a reverse acquisition of Paudan, Inc. by American
HealthChoice, Inc. The accompanying financial statements are those of American
HealthChoice, Inc. for all periods presented. The legal name of Paudan, Inc.
was changed to American HealthChoice, Inc. after the merger.


2.  BASIS OF PRESENTATION:

The accompanying condensed consolidated financial statements have been prepared
by the Company. Certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. In the opinion of the
Company's management, the disclosures made are adequate to make the information
presented not misleading, and the condensed consolidated financial statements
contain all adjustments necessary to present fairly the financial position as
of June 30, 1997, results of operations for the three months and nine months
ended June 30, 1997 and 1996 and cash flows for the nine months ended June 30,
1997 and 1996.

The results of operations for the nine months ended June 30, 1997 are not
necessarily indicative of the results to be expected for the full year. It is
suggested that the June 30, 1997 financial information be read in conjunction
with the financial statements and notes thereto included in the Company's Form
10-KSB dated September 30, 1996.


3.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Net Patient Revenues - Revenue is recognized upon performance of services.
Substantially all of the Company's revenues are derived from personal injury
claims, claims filed on major medical policies, worker's compensation policies
and Medicare or Medicaid. Allowances for doubtful accounts and contractual
allowances are maintained at levels considered appropriate by management based
upon historical charge-off experience and other factors deemed pertinent by
management.

Property and Equipment, net - Property and equipment are stated at cost less
accumulated depreciation. Depreciation is provided over the estimated useful
lives of the related assets, primarily using accelerated methods. Leasehold
improvements are amortized over the shorter of the lease term or the estimated
useful lives of the improvements.

Goodwill - Goodwill arose from the Company's acquisitions of various clinics
and is being amortized on the straight-line method over 20 years (see Note 4).



                                      F-6
<PAGE>   7
                          AMERICAN HEALTHCHOICE, INC.
                                AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

4.  ACQUISITIONS:

During the second quarter of fiscal 1996, the Company acquired 100% of the
ownership interest of Valley Family Health Center, L.L.C. (a chiropractic
clinic) for 360,000 shares of its common stock. This acquisition was accounted
for under the pooling of interests method of accounting. Accordingly, the
historical financial statements presented herein of the Company have been
restated as if the acquisition had occurred on the first day of the periods
presented (November 1, 1995).

The Valley Family Health Center, L.L.C. was owned by an individual, who became
a consultant to the Company, and a limited liability company equally owned by
the Company's chief executive officer and an individual who also became a
consultant to the Company.

In March 1996, the Company acquired substantially all of the assets and
liabilities of four medical clinics located in and around Atlanta, Georgia
(Metropolitan) for $1,565,000, consisting of various trade liabilities, notes
payable due physicians assumed by the Company and direct acquisition costs.
This acquisition was accounted for on the purchase method of accounting and
gave rise to goodwill of $908,000, which is being amortized over 20 years.
During fiscal 1996, the Company wrote down the goodwill related to the
Metropolitan acquisition by $525,000.

<TABLE>
<CAPTION>

<S>                                      <C>        
Current assets                           $   499,000
Furniture, fixtures and equipment            157,000
                                         -----------
Total assets acquired                        656,000
                                         -----------
Trade liabilities                           (402,000)
Notes payable to physicians               (1,162,000)
                                         -----------
Total liabilities acquired                (1,564,000)
                                         -----------
                                         $  (908,000)
                                         =========== 
</TABLE>


In December 1995, the Company acquired a medical clinic in San Antonio
(Southcross) for $315,000 consisting of cash of $100,000, a note for $200,000
and direct acquisition costs of $15,000. This acquisition was accounted for on
the purchase method of accounting and gave rise to goodwill of $55,000. During
fiscal 1996, the Company wrote down the amount of goodwill related to the
Southcross Joint Venture by $55,000. The following is a summary of the assets
acquired:

<TABLE>
<CAPTION>

<S>                                      <C>     
Accounts receivable and inventory        $ 45,000
Land and buildings                        165,000
Furniture and fixtures                     50,000
                                         --------
                                         $260,000
                                         ========
</TABLE>

The poorer than expected 1996 operating results for the Peachtree, Metropolitan
and Southcross clinics during fiscal 1996 resulted in an evaluation of related
goodwill for possible impairment. The Company evaluated the clinics and
determined based on their expected future revenues and cash flows that the
goodwill relating to these clinics was impaired. The Company closed one of the
Metropolitan clinics on February 28, 1997. Additionally, the seller of
Peachtree Medical Center Northside clinic has alleged contract default by the
Company and is claiming all rights to this clinic. The seller has taken
possession of the clinic to the exclusion of the Company. A suit was filed in
federal court by Dr. Bailey. The Company filed a counterclaim which, among
other claims, asks the Court to compel arbitration. At the time of this
writing, the Company expects a mediation to take place in mid September, and
the Company will seek arbitration if the matter is not resolved. Based on this
analysis, the Company wrote down goodwill during fiscal 1996 by $1,055,000.
Management believes the remaining carrying value of goodwill will be supported
by the anticipated cash flows of the remaining clinics.

The Company and the Provider at the Windy Hill Clinic mutually terminated the
Provider Agreement in October 1996. The Separation Agreement terminated the
Provider Agreement in exchange for forgiveness of a note in the amount of
$166,000 and 


                                      F-7
<PAGE>   8
                          AMERICAN HEALTHCHOICE, INC.
                                AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

the transfer of leased equipment in the amount of $73,000 to the Company. The
Company wrote-off $160,000 of goodwill associated with the clinic. The
transaction resulted in a gain of $79,000.


5.  STOCKHOLDERS' EQUITY:

The Company granted an investment group the right to acquire an option to
acquire the Company's common stock at specified prices over a defined period of
time. The agreement provides for each option to be issued in exchange for
$100,000, which amount will be applied to the purchase of common stock, when
and if the option is exercised. The following is a summary of the terms of the
transaction:

<TABLE>
<CAPTION>

     LAST                        NONREFUNDABLE      POSSIBLE
    OPTION                          FEE TO            TOTAL                   
   PURCHASE                         ACQUIRE         EXERCISE    EXERCISE PRICE
    DATE                            OPTION            PRICE        PER SHARE  
   --------                      -------------      ---------   ---------------
<S>                              <C>              <C>              <C>     
March 18, 1996                   $    100,000     $    750,000     $   2.25
June 18, 1996                    $    100,000     $    750,000     $   4.90
September 18, 1996               $    100,000     $    750,000     $   4.90
December 18, 1996                $    100,000     $    750,000     $   4.90
</TABLE>

The first option was exercised in May 1996 and 333,333 shares of common stock
were issued for $750,000. The second option was exercised in August 1996 and
102,041 shares of common stock were issued for $500,000. The third option was
exercised in September 1996 and 99,277 shares of common stock were issued for
$486,000. In addition, $100,000 was received in September 1996 to acquire the
fourth option. Under the terms of the second, third and fourth options, the
options are exercisable over the 24-month period following the acquisition of
the option. As of September 30, 1996, under the terms of the second, third and
fourth options, the investment group has the right to purchase an additional
257,865 shares of the Company's common stock at $4.90 per share. In December
1996, $44,000 was received related to the third and fourth options. The shares
were issued in February 1997. To the extent an option is not purchased, then
all rights to the remaining options are forfeited. The Company has granted
registration rights to all of the shares issued and to be issued in connection
with this transaction.

The Company issued 768,001 shares of common stock during the second quarter of
fiscal 1996 in connection with a private placement of its stock. The Company
sold 711,111 shares at $2.25 per share and issued 56,890 shares to the
placement agent as compensation. The net proceeds of the offering amounted to
$1,487,000. Under the terms of the private placement agreement, the Company
agreed to file a registration statement with the Securities and Exchange
Commission within a specified period of time following the private placement
for the purpose of registering such shares. The Company failed to file a
registration statement within the period specified and, as a result, was
required to issue each holder of the shares sold in the private placement, one
share of common stock for every ten shares held by such stockholder. The
company issued an additional 142,222 shares in February 1997, in accordance
with the provision for not filing.

The Company issued 100,000 shares of its common stock during the second quarter
of fiscal 1996 for $2.00 per share under Regulation S of the Securities Act of
1933. Total proceeds from this transaction amounted to $200,000. The Company
has granted registration rights to the holders of these shares.

The holders of any preferred stock which might be issued shall have such
rights, preferences and privileges as may be determined by the Company's board
of directors.

In November and December 1996, the Company obtained $2,310,000 in a private
placement of promissory notes. The notes bear interest at 10% and are due the
earlier of twelve months after the final closing of the private placement or
the closing of a public 





                                      F-8
<PAGE>   9
                          AMERICAN HEALTHCHOICE, INC.
                                AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

offering of the Company's equity securities which produces gross proceeds of at
least $10 million. The Company issued 207,900 shares of its common stock to the
note holders at a cost of $4.90 per share, a financing cost of $1,019,000
amortized over the term of the note. The notes are collateralized by accounts
receivable, furniture, fixtures and equipment, and all other assets of the
Company to the extent not encumbered. The cost of arranging the bridge loan was
$110,000 in the form of a note payable and 13,750 shares valued at $4.90 per
share a value of $67,000, for a combined additional cost of $177,000 amortized
over the term of the private placement promissory notes.

For the first quarter the Company issued 38,700 shares of common stock in
connection with an amendment to several notes. The Company issued 2,500 shares
of common stock to a new Board member for agreeing to serve on the Company's
Board.

The Company sold two (2) 8% Cumulative Convertible Debentures dated April 22,
1997 and April 25, 1997 in the aggregate amount of two million six hundred
thousand dollars ($2,600,000) in a Regulation S offering. The Debentures are
convertible after 41 days at a conversion price equal to eighty (80%) of the
average closing bid price of the shares of common stock of the Company as
quoted on NASDAQ for the five (5) trading days preceding the date of
conversion. The interest on the note is payable in cash or in kind as shares.
The investment banking firm received $338,000 in addition to 400,000 two year
warrants at an option price of $3.00. During the interim a bridge loan of
$750,000 was advanced to the company by an investor group. The loan was at a
rate of 10% annually and as additional compensation for brokering the placement
the group received 1,000,000 warrants at $2.375. A consultant of the group
received 200,000 shares of the Company's common stock as compensation. On June
4, 1997, the Debentures were converted including the accrued interest of
$36,000 for 1,414,890 shares of common stock. The average bid price of the
shares for the five (5) preceding trading days was $2.31875. The conversion
price was $1.855 resulting in an additional financing cost for the third
quarter of $530,000. Unamortized prepaid financing costs associated with the
Debentures of $646,000 were also recognized in the third quarter.

The president and CEO of the Company loaned $127,000 to the Company on May 13,
1997. The loan bears interest at 10% and is convertible in 90 days at a 15%
discount fixed, on date of execution. A financing cost of $23,000 related to
the discount was booked in the third quarter of 1997.


6. PENDING ACQUISITIONS:

The Company has no outstanding letters of intent to acquire new companies. From
time to time to time the Company does seek acquisitions, however, these
potential acquisitions are subject to due diligence, further negotiations,
execution of definitive agreements and the success of the Company to obtain
additional funds (total or partial) for the acquisition price.


7. LEGAL PROCEEDINGS:

In May of 1997, the Texas Department of Health notified the Company that it
would process the previously rejected claims. In June of 1997 the Company
estimated these claims would amount to approximately $700,000. The Company is
currently reconciling all the processed claims to determine the actual amount
recovered for the approximately 13,000 claims.

The seller of Peachtree Medical Center Northside clinic has alleged contract
default by the Company and is claiming all rights to this clinic. The seller
has taken possession of the clinic to the exclusion of the Company. A suit was
filed in federal court by Dr. Bailey. The Company filed a counterclaim which,
among other claims, asks the Court to compel arbitration. At the time of this
writing, the Company expects a mediation to take place in mid September, and
the Company will seek arbitration if the matter is not resolved.

The Company has received notice that a shareholder is considering possible
legal action against the Company due to alleged material changes reported in
the Form 10-QSB for the period ending July 31, 1996 as compared to the Form
10-KSB for fiscal 



                                      F-9
<PAGE>   10
                          AMERICAN HEALTHCHOICE, INC.
                                AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

year 1996. The same shareholder has made similar representations with regard to
investing in the November 1996 private placement. This shareholder has since
resolved these issues with the Company at no cost to the Company.

The Company is engaged in litigation with the doctor who managed the Norcross,
Georgia clinic. The Company found it necessary to terminate the managing
doctor. The managing doctor then filed a claim against the Company for breach
of contract and sought an injunction to prevent the Company from enforcing its
non-compete clause. The Court declined to enter a temporary restraining order
against enforcement of the non-compete clause. The Company filed a counter
claim against the doctor primarily for losses the Company sustained while he
managed the clinic.

One former doctor and two physicians assistants who worked at the Norcross,
Georgia clinic have filed a law suit naming the Company as a codefendant. The
one doctor and one of the physicians assistants worked at the clinic prior to
the Company purchasing the clinic. The other physicians assistant left the
clinic within one year of the Company's purchase. The claim alleges a right to
the accounts receivable for patients the doctors treated at the clinic that was
collected after the doctors employment ended with the clinic. The Company
denies any liability and intends to cross claim against the former managing
doctor of the clinic.

The Company is not involved in any other material litigation nor is management
aware of any other pending litigation that would substantially impact the
Company's financial position.




                                     F-10
<PAGE>   11

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

OVERVIEW

The following discussion of the results of operations and financial condition
of the Company should be read in conjunction with the Company's audited
consolidated financial statements and notes thereto for the fiscal years ended
September 30, 1996 and September 30, 1995 and the Company's unaudited condensed
consolidated financial statements and notes thereto for the three months and
nine months ended June 30, 1997 and 1996, included elsewhere in this document.

The Company is an integrated provider network with an emphasis on non-invasive,
primary care and rehabilitative services. The Company acquires, organizes and
manages physician groups into cost-effective delivery systems which respond to
the economic imperative to control and reduce health care expenditures. The
Company will continue seeking acquisitions in its existing and expanding
regional markets. In addition, the Company plans to vertically integrate health
care services in order to deliver an increasing proportion of covered benefits
and to achieve operational efficiencies within its system. The Company provides
a variety of services to physicians' practices for the purposes of maximizing
revenues and services to the health care markets. Being able to supply more
services in a given market provides a strong competitive edge when bidding on a
contract basis. More important is the Company's ability to focus on improved
health care and reduced costs, and the Company's ability to help ensure that
each patient receives appropriate and necessary quality care.

The Company has unilateral control over the assets and operations of the
various medical practices. American HealthChoice, Inc. manages all aspects of
the clinic other than the provision of medical services which is controlled by
the employed or contracted physician groups. The Company's financial
relationship with each practice offers the physician an opportunity to earn a
level of compensation commensurate with the marketplace, but usually less than
that which the physician earned prior to the affiliation, while giving the
practices access to capital, management expertise, information systems, and
managed care contracts.

The Company's profitability depends on enhancing clinic operating efficiency,
expanding health care services provided, increasing market share, and assisting
affiliated physicians in managing the delivery of medical care. The Company
does not charge management fees for managing the operations of the clinics
which it owns.

As of June 30, 1997, the Company owned 22 clinics in three states: Texas,
Louisiana, and Georgia. The following chart details the clinics, location,
metropolitan areas served, services provided and date acquired or commenced
operation by the Company.

<TABLE>
<CAPTION>
                                METROPOLITAN AREA
CLINIC                          LOCATION                  SERVED          SERVICES PROVIDED      DATE ACQUIRED
------                          -----------------         ------          -----------------      -------------
<S>                             <C>                       <C>             <C>                    <C>
Nationwide Sports &             Katy, TX                  Houston         physical therapy       10/94
  Injury

United Health Services          Katy, TX                  Houston         chiropractic           10/94

Nationwide Sports &             San Antonio, TX           San Antonio     physical therapy        7/94
  Injury

United Health Services          San Antonio, TX           San Antonio     chiropractic            7/94

Nationwide Sports &             San Antonio, TX           San Antonio     physical therapy       10/94
  Injury

United Health Services          San Antonio, TX           San Antonio     chiropractic           10/94

Nationwide Sports &             San Antonio, TX           San Antonio     physical therapy       10/94
  Injury

United Health Services          San Antonio, TX           San Antonio     chiropractic           10/94

Peachtree Corners               Norcross, GA              Atlanta         primary medical care,   9/95
Medical Center                                                            urgent care

San Pedro MediClinic            San Antonio, TX           San Antonio     primary medical care   10/94

South Cross MediClinic          San Antonio, TX           San Antonio     urgent care, primary   12/95
                                                                          medical care


</TABLE>


                                     F-11

<PAGE>   12

<TABLE>
<CAPTION>
<S>                                 <C>                    <C>                   <C>                                <C>
United Chiropractic                 New Orleans, LA        New Orleans           chiropractic                       7/94
New Orleans East

United Chiropractic                 New Orleans, LA        New Orleans           chiropractic                       7/94
Uptown

Peachtree Medical Center            Atlanta, GA            Atlanta               internal medicine                  2/96
of Northside *

Peachtree Medical Center            Conyers, GA            Atlanta               primary medical care               2/96
of Conyers

Peachtree Medical Center            McDonough, GA          Atlanta               primary medical care               2/96
of McDonough

Valley Family Health                McAllen, TX            McAllen               chiropractic                       1/96
Center

Valley Family Health                Weslaco, TX            Weslaco               primary medical care               7/96
Center

ACME Brownsville                    Brownsville, TX        Rio Grande Valley     chiropractic                       7/96
Chiropractic

Corpus Christi Rehabilitation       Corpus Christi, TX     Corpus Christi        primary medical care               6/96

SouthMost Medical Clinic            Brownsville, TX        Rio Grand Valley      primary medical care               9/96


</TABLE>

 *  See legal notes


RESULTS OF OPERATIONS

Comparison of three months ended June 30, 1997 to three months ended June 30,
1996

For the three months ended June 30, 1997, net revenues amounted to $2,342,000
compared to $3,854,000 for the same period in 1996. This decrease in net
revenues is partially related to the increase in the provision on gross
services to 38% compared to 27% for the same period in 1996. The 11% increase
resulted in an additional $416,000 in the provision. Gross services decreased
by $1,500,000, resulting in a $930,000 decrease in net revenue. The decrease is
also related to the closing of three clinics and the discontinuing of the
medical testing operations. The overall decrease in operating costs for the
three months ended June 30, 1997 are the result of the closing of the three
medical clinics and overall reductions in staff, contract doctors and operating
costs. The Company's revenues for the third quarter 1997 were derived from 53%
delivery of chiropractic services and 47% from medical services, for the
three-month period.

The Company's operations are labor intensive with salaries and benefits
comprising the single largest item in operations. Payroll costs increased from
$1,700,000 for the three months ended June 30, 1996 compared to $2,096,000 for
the three months ended June 30, 1997. The Company paid an annual bonus to one
doctor according to his contract of $175,000, booked in the third quarter of
1997. Benefits insurance increased by $100,000 from third quarter 1996 to the
same period 1997. This relates to higher claims in 1997 compared to 1996. The
Company is adjusting staffing levels and clinic operations at all clinics to
reduce payroll costs.

The Company has continued its transition from the chiropractic to the primary
care medical services business; however, this has had a significant impact on
the profitability of the Company given the higher operating costs and lower
margins of the physician practices acquired by the Company. As a result, the
decrease in net revenues during the three-month period ended June 30, 1997 has
resulted in a larger decrease in net income. The Company has and is continuing
to adjust the number of employees at the medical clinics and to renegotiate
physician contracts to establish a more acceptable level of physician and staff
costs in relation to revenues produced in those clinics. Clinics that are not
deemed to be profitable in the immediate future will be closed or sold.

On June 4, 1997, the Convertible Debentures were converted to stock. As a
result $646,000 of prepaid financing costs were recognized in addition to the
discount on the conversion price compared to the market price in the amount of
$530,000. The total financing costs the for third quarter was $1,829,000.



                                     F-12
<PAGE>   13

General and administrative expenses decreased from $1,732,000 for the three
months ended June 30, 1996 to $966,000 for the three months ended June 30,
1997. This decrease is primarily due to reduction of management expenses during
the three months ended June 30, 1997, reclassifing contract doctors to payroll
and decreased operating cost related to the closing of unprofitable clinics and
the reductions in staff and operating costs at all clinics. During the second
quarter of fiscal 1997 the Company implemented operational changes intended to
return the Georgia clinics to profitability. Similarly, personnel and
operations at the Company headquarters were evaluated and the appropriate cuts
made. The Company is continuing efforts to reduce costs and boost revenues.

Comparison of nine months ended June 30, 1997 to nine months ended June 30,
1996

For the nine months ended June 30, 1997, net revenues amounted to $7,562,000
compared to $9,538,000 for the same period in 1996. This decrease in net
revenues is related to the increase in the provision on gross services to 38%
compared to 27% for the same period in 1996. This increased the provision by
11% or $1,344,000 as compared to 1996. The increase in operating costs for the
nine months ended June 30, 1996 were the result of the higher operating costs
of medical clinics as compared to chiropractic clinics. The majority of the
clinics responsible for these additional costs were closed in the second
quarter of 1997 resulting in the $165,000 reduction in operating costs in the
third quarter of 1997. The Company's revenues for the first half of 1997 were
derived from delivery of chiropractic and medical services, 51% and 49%,
respectively.

The Company's operations are labor intensive with salaries and benefits
comprising the single largest item in operations. Payroll costs increased from
$4,197,000 for the nine-months ended June 30, 1996 to $6,911,000 for the nine
months ended June 30, 1997. This increase reflects the increased cost of
physician compensation and the larger staffs required at medical clinics as
opposed to chiropractic clinics. During the second and third quarters of 1996
nine new clinics were opened. The costs related to these new clinics caused the
increase in the 1997 payroll costs. The Company has closed three unprofitable
medical clinics reducing staffing costs and had reduction in staffing levels at
other clinics to bring down future payroll costs.

The Company has continued its transition from the chiropractic to the primary
care medical services business; however, this has had a significant impact on
the profitability of the Company given the higher operating costs and lower
margins of the physician practices acquired by the Company. The Company has and
is continuing to adjust the number of employees at the medical clinics and to
renegotiate physician contracts to establish a more acceptable level of
physician and staff costs in relation to revenues produced in those clinics.

General and administrative expenses decreased from $3,355,000 for the nine
months ended June 30, 1996 to $3,058,000 for the nine months ended June 30,
1997. As a percentage of net patient revenues, general and administrative
expense increased from 35% for the nine months ended June 30, 1996 to 40% for
the nine months ended June 30, 1997. This increase came as a result of the
increase in the number of clinics and the higher costs associated with medical
clinic operations as opposed to chiropractic clinics. The percentage of net
patient revenues compared to general and administrative expense for the six
months ended March 30, 1997 was 54% compared to the current 40%, a 14%
reduction over the third quarter. The Company has a three year agreement with
an outside management firm to evaluate clinic operations in Norcross, Georgia.

On June 4, 1997, the Convertible Debentures were converted to stock. As a
result $646,000 of prepaid financing costs were recognized in addition to the
discount on the conversion price compared to the market price in the amount of
$530,000. The total financing costs the for the nine months ended June 30, 1997
was $2,556,000.


LIQUIDITY AND CAPITAL RESOURCES

As of June 30, 1997, the Company had cash and working capital of $491,000 and
$4,045,000 respectively. The Company's primary current asset is accounts
receivable which represents amounts due from patients for services rendered.
Approximately 73% of the Company's accounts receivable at June 30, 1997
represent receivables from the delivery of chiropractic services, of which the
majority represent personal injury claims which are typically collected once
the lawsuit or claim to which they relate is settled. As a result, the
Company's collections on personal injury claims are often more than a year
after the services are rendered. This extended collection period can and does
cause cash flow difficulties because of the growth in the number of
chiropractic clinics the Company operates and the acquisitions the Company has
consummated. Approximately 53% of revenues during the nine-month period ended
June 30, 1997 were derived from chiropractic services.


                                     F-13
<PAGE>   14

The Company generally acquires clinics by a combination of cash payment,
installment purchase financing and the issuance of Common Stock of the Company.
The Company then relies upon increases in revenues or decreases in operating
costs of the clinics, or a combination thereof, to repay the installment
financing.

The Company is dependent on the revenues from its existing clinics to fund the
Company's working capital requirements, including the payment of approximately
$1,000,000 of debt associated with the acquisition of its existing clinics.
Because of the higher than expected operating costs, the reduction in
collectability of clinic receivables and problems with management in the
Norcross, Georgia clinic, the Company has experienced difficulties in making
timely payments on its debt requirements and trade payables.

In November and December 1996, the Company obtained $2,310,000 in a private
placement of promissory notes. The notes bear interest at 10% and are due the
earlier of twelve months after the final closing of the private placement or
the closing of a public offering of the Company's equity securities which
produces gross proceeds of at least $10 million. The Company issued 207,900
shares of its common stock to the note holders at a cost of $4.90 per share, a
financing cost of $1,019,000 amortized over the term of the note. The notes are
collateralized by accounts receivable, furniture, fixtures and equipment, and
all other assets of the Company to the extent not encumbered. The cost of
arranging the bridge loan was $110,000 in the form of a note payable and 13,750
shares valued at $4.90 per share a value of $67,000, for a combined additional
cost of $177,000 amortized over the term of the private placement promissory
notes.


In December 1996, the Company completed a $1.5 million revolving credit
facility with a financial institution. The revolving credit facility agreement
contains covenants which requires, among other things, the Company maintain a
minimum tangible net worth of $5,000,000. As of May 1, 1997, this revolving
credit facility, in the amount of $272,000, was suspended and assigned to an
investment group for a pay down of $50,000 per month. The Company will receive
a release of the Collateral Security Agreement after the investment group is
paid in full.

The Company sold two (2) 8% Cumulative Convertible Debentures dated April 22,
1997 and April 25, 1997 in the aggregate amount of two million six hundred
thousand dollars ($2,600,000) in a Regulation S offering. The Debentures are
convertible after 41 days at a conversion price equal to eighty (80%) of the
average closing bid price of the shares of common stock of the Company as
quoted on NASDAQ for the five (5) trading days preceding the date of
conversion. The interest on the note is payable in cash or in kind as shares.
The investment banking firm received $338,000 in addition to 400,000 two year
warrants at an option price of $3.00. During the interim a bridge loan of
$750,000 was advanced to the company by an investor group. The loan was at a
rate of 10% annually and as additional compensation for brokering the placement
the group received 1,000,000 warrants at $2.375. A consultant of the group
received 200,000 shares of the Company's common stock as compensation. On June
4, 1997, the Debentures were converted including the accrued interest of
$36,000 for 1,414,890. The average bid price of the shares for the five (5)
preceding trading days was $2.31875. The conversion price was $1.855 resulting
in an additional financing cost for the third quarter of $530,000. Prepaid
financing costs associated with the Debentures of $646,000 were also recognized
in the third quarter.


The president and CEO of the Company loaned $127,000 to the Company on May 13,
1997. The loan bears interest at 10% and is convertible in 90 days at a 15%
discount fixed, on date of execution.

In March 1996, the Company entered into an agreement with an investment group
whereby the group was granted the option to purchase up to four options to
acquire the Common Stock of the Company under the following summarized terms:



                                     F-14
<PAGE>   15

<TABLE>
<CAPTION>

     Payable 10                    Non-Refundable                     Total                        Lowest
     Days From                      Option Fee,                      Exercise                     Possible
    Closing and                  Credited To Price                  Price (i.e.,                  Exercise
    90 Days Each                  Upon Exercise                   Before Credit)                 Price/Share
    ------------                 ---------------                  --------------                 -----------
<S>                                <C>                              <C>                           <C>            
March 18, 1996                     $  100,000                       $  750,000                    $     2.25     
June 18, 1996                      $  100,000                       $  750,000                    $     4.90     
September 18, 1996                 $  100,000                       $  750,000                    $     4.90     
December 18, 1996                  $  100,000                       $  750,000                    $     4.90     
                                   ----------                       ----------                    ----------     
                                                                                                                 
Totals                             $  400,000                       $3,000.000     

</TABLE>

The first option was exercised in May 1996 and 333,333 shares of common stock
were issued for $750,000. The second option was exercised in August 1996 and
102,041 shares of common stock were issued for $500,000. The third option was
exercised in September 1996 and 99,277 shares of common stock were issued for
$486,000. In addition, $100,000 was received in September 1996 to acquire the
fourth option. Under the terms of the second, third and fourth options, the
options are exercisable over the 24-month period following the acquisition of
the option. As of September 30, 1996, under the terms of the second, third and
fourth options, the investment group has the right to purchase an additional
257,865 shares of the Company's common stock at $4.90 per share. In December
1996, $44,000 was received related to the third and fourth options. The shares
were issued in February 1997. To the extent an option is not purchased, then
all rights to the remaining options are forfeited. The Company has granted
registration rights to all of the shares issued and to be issued in connection
with this transaction.



                                     F-15
<PAGE>   16

                           PART II. OTHER INFORMATION

                 ITEM 1.         Legal Proceedings

In May of 1997, the Texas Department of Health notified the Company that it
would process the previously rejected claims. In June of 1997 the Company
estimated these claims would amount to approximately $700,000. The Company is
currently reconciling all the processed claims to determine the actual amount
recovered for the approximately 13,000 claims.

The seller of Peachtree Medical Center Northside clinic has alleged contract
default by the Company and is claiming all rights to this clinic. The seller
has taken possession of the clinic to the exclusion of the Company. A suit was
filed in federal court by Dr. Bailey. The Company filed a counterclaim which,
among other claims, asks the Court to compel arbitration. At the time of this
writing, the Company expects a mediation to take place in mid September, and
the Company will seek arbitration if the matter is not resolved.

The Company has received notice that a shareholder is considering possible
legal action against the Company due to alleged material changes reported in
the Form 10-QSB for the period ending July 31, 1996 as compared to the Form
10-KSB for fiscal year 1996. The same shareholder has made similar
representations with regard to investing in the November 1996 private
placement. This shareholder has since resolved these issues with the Company at
no cost to the Company.

The Company is engaged in litigation with the doctor who managed the Norcross,
Georgia clinic. The Company found it necessary to terminate the managing
doctor. The managing doctor then filed a claim against the Company for breach
of contract and sought an injunction to prevent the Company from enforcing its
non-compete clause. The Court declined to enter a temporary restraining order
against enforcement of the non-compete clause. The Company filed a counter
claim against the doctor primarily for losses the Company sustained while he
managed the clinic.

One former doctor and two physicians assistants who worked at the Norcross,
Georgia clinic have filed a law suit naming the Company as a codefendant. The
one doctor and one of the physicians assistants worked at the clinic prior to
the Company purchasing the clinic. The other physicians assistant left the
clinic within one year of the Company's purchase. The claim alleges a right to
the accounts receivable for patients the doctors treated at the clinic that was
collected after the doctors employment ended with the clinic. The Company
denies any liability and intends to cross claim against the former managing
doctor of the clinic.

The Company is not involved in any other material litigation nor is management
aware of any other pending litigation that would substantially impact the
Company's financial position.

                 ITEM 2.         Changes in Securities

                                 None

                 ITEM 3.         Defaults Upon Senior Securities

                                 Not Applicable

                 ITEM 4.         Submission of Matters to a Vote
                                 of Security Holders

                                 Not Applicable


                                     F-16
<PAGE>   17


                 ITEM 5.         Other Information

The Company's Board of Directors on March 6, 1997 accepted the resignations of
its Vice President of Operations, Mr. Jon A. Sommerhauser and its Chief
Financial Officer, Mr. C. Dean York. Mr. Jay Stucki, currently in-house counsel
for the Company, is serving as the interim CFO. The changes were partly done as
a move to cut overhead at Company headquarters and regain investor confidence
in the Company turnaround.

                 ITEM 6.         Exhibits and Reports on Form 8-K

                                 Included by reference

                                   SIGNATURES


Pursuant to the requirements 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.


                                      American HealthChoice, Inc.
                                      (Registrant)


Date:  August 14, 1997                By:    /s/ Dr. Joseph Wesley Stucki, D.C.
                                      -------------------------------------
                                             Dr. Joseph Wesley Stucki, D.C.
                                             Chairman of the Board
                                             and President



Date:  August 14, 1997                By:    /s/ Randy Johnson
                                      -------------------------------------
                                            Randy Johnson
                                            Assistant Secretary


                                     F-17
<PAGE>   18
                               INDEX TO EXHIBITS


EXHIBIT
NUMBER                    DESCRIPTION
------                    -----------

  27               Financial Data Schedule