<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 December 31, 1996

[  ]     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 [X]       No [  ]

       As of December 31, 1996, there were outstanding 7,278,865 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
                        QUARTER ENDED DECEMBER 31, 1996




                                     INDEX

<TABLE>
<CAPTION>
                                                                           PAGE
PART I.  FINANCIAL INFORMATION                                            NUMBER
                                                                          ------
<S>                                                                        <C>
       ITEM 1.       Consolidated Balance Sheets  . . . . . . . . . . . . . 3

                     Consolidated Statements of Income  . . . . . . . . . . 4

                     Consolidated Statements of Cash Flows  . . . . . . . . 5

                     Notes to Consolidated Financial Statements   . . . . . 6

       ITEM 2.       Management's Discussion and Analysis of Results of
                            Operation and Financial Condition   . . . . .  10

PART II.  OTHER INFORMATION

       ITEM 1.       Legal Proceedings  . . . . . . . . . . . . . . . . .  14

       ITEM 2.       Changes in Securities    . . . . . . . . . . . . . .  14

       ITEM 3.       Defaults Upon Senior Securities  . . . . . . . . . .  14

       ITEM 4.       Submission of Matters to a Vote of
                            Securities Holders  . . . . . . . . . . . . .  14

       ITEM 5.       Other Information  . . . . . . . . . . . . . . . . .  14

       ITEM 6.       Exhibits and Reports on Form 8-K   . . . . . . . . .  14

SIGNATURES  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  15
</TABLE>




                                     F-2
<PAGE>   3
                         PART I.  FINANCIAL INFORMATION

ITEM I.  FINANCIAL STATEMENTS

                          AMERICAN HEALTHCHOICE, INC.
                                AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                    ASSETS
                                    -------                                                    September 30,     December 31,
                                                                                                    1996           1996    
                                                                                                ------------    ------------
CURRENT ASSETS:                                                                                                  (unaudited)
<S>                                                                                             <C>             <C>         
       Cash                                                                                     $    159,166    $    334,442
       Accounts receivable, less allowance for doubtful accounts of $5,480,389
              at September 30, 1996 and $7,034,073  at December 31, 1996                           7,926,609       8,077,240
       Advances due from an affiliate and stockholders                                               498,095         498,095
       Advances to physicians and employees                                                           47,104          20,667
       Income tax receivable                                                                          22,000          22,000
       Current portion of note receivable from stockholder                                            54,000          54,000
       Other current assets                                                                           97,173         816,340
                                                                                                ------------    ------------
                     Total current assets                                                          8,804,147       9,822,784

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

PROPERTY AND EQUIPMENT, net                                                                        1,259,298       1,539,092

GOODWILL, net                                                                                        633,000         466,778

OTHER ASSETS                                                                                          14,949         175,536
                                                                                                ------------    ------------

                     Total assets                                                               $ 10,927,394    $ 12,220,190
                                                                                                ============    ============

                                           LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
       Current portion of notes payable, including $176,719 due to a stockholder                $  1,799,958    $  3,601,067
       Current portion of capital lease obligations                                                  305,444         305,444
       Advances from stockholders                                                                    145,781         145,781
       Accrued payroll and payroll taxes                                                             322,062         285,222
       Accounts payable and accrued expenses                                                       1,228,516       1,385,718
       Deferred income taxes                                                                         807,783         278,949
                                                                                                ------------    ------------
                     Total current liabilities                                                     4,609,544       6,002,181

NOTES PAYABLE, less current portion                                                                1,040,741         934,664

CAPITALIZED LEASE OBLIGATIONS, less current portion                                                   64,876         250,916

STOCKHOLDERS' EQUITY:
       Preferred stock, $.001 par value; 5,000,000 shares authorized; none issued --
       Common stock option                                                                           100,000         143,750
       Common stock subscription payable                                                              78,527       1,048,727
       Common stock, $.001 par value; 115,000,000 shares authorized; 7,232,692 shares
              issued and outstanding at September 30, 1996 and 7,278,865 at December 31, 1996          7,232           7,232
       Additional paid-in capital                                                                  5,327,256       5,327,256
       Accumulated deficit                                                                          (300,782)     (1,494,536)
                                                                                                ------------    ------------
                     Total stockholders' equity                                                    5,212,233       5,032,429
                                                                                                ------------    ------------

                     Total liabilities and stockholders' equity                                 $ 10,927,394    $ 12,220,190
                                                                                                ============    ============
</TABLE>





               See accompanying notes to these unaudited interim
                      consolidated financial statements.

                                      F-3
<PAGE>   4
                          AMERICAN HEALTHCHOICE, INC.
                                AND SUBSIDIARIES



                       CONSOLIDATED STATEMENTS OF INCOME


<TABLE>
<CAPTION>
                                                             Three Months Ended
                                                                December 31,                
                                                         --------------------------
                                                            1995           1996 
                                                         -----------    -----------
                                                         (unaudited)    (unaudited)
<S>                                                      <C>            <C>        
NET PATIENT REVENUES                                     $ 2,715,559    $ 2,530,623
OPERATING EXPENSES:
       Compensation and benefits                            697,5392       ,460,293
       Advertising                                           176,789        181,342
       Depreciation and amortization                          13,428        112,047
       General and administrative, including
              management fees and other
              expenses                                     1,078,538      1,499,529
                                                         -----------    -----------


                     Total operating expenses              1,966,294      4,253,211
                                                         -----------    -----------


                     Income before income taxes
                            and pro forma income taxes       749,265     (1,722,588)

INCOME TAXES:
       Current                                               210,768        (72,348)
       Deferred                                                 --         (456,486)
                                                         -----------    -----------

                                                             210,768       (528,834)
                                                         -----------    -----------

NET INCOME (LOSS) BEFORE
       PRO FORMA INCOME TAXES                                538,497     (1,193,754)

       Pro forma income tax benefit                             --         (115,413)
                                                         -----------    -----------

NET INCOME AFTER PRO FORMA
       INCOME TAXES                                      $   538,497    $(1,078,341)
                                                         ===========    ===========

NET INCOME PER SHARE AFTER
       PRO FORMA INCOME TAXES                            $       .09    $      (.15)
                                                         ===========    ===========

WEIGHTED AVERAGE COMMON
       SHARES OUTSTANDING                                  5,797,000      7,228,865
                                                         ===========    ===========
</TABLE>





               See accompanying notes to these unaudited interim
                      consolidated financial statements.

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



                     CONSOLIDATED STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>
                                                                                  Three Months Ended
                                                                                      December 31,                 
                                                                                --------------------------
                                                                                   1995           1996 
                                                                                -----------    -----------
                                                                                (unaudited)    (unaudited)

<S>                                                                             <C>            <C>         
CASH FLOWS FROM OPERATING ACTIVITIES:
       Net income                                                               $   538,497    $(1,193,754)
       Adjustments to reconcile net income to cash from operating activities:
              Depreciation and amortization                                          13,428        112,047
              Gain on write-off of note payable                                        --          (79,363)
              Change in assets and liabilities:
                     Increase (Decrease) in trade accounts receivable, net         (587,240)      (150,631)
                     Increase (Decrease) in other current assets                   (100,838)       277,470
                     Increase (Decrease) in income taxes payable                    156,697           --
                     Increase (Decrease) in deferred taxes                             --         (528,834)
                     Decrease (Increase) in accounts payable                         (1,137)       157,202
                     Decrease (Increase) in accrued payroll and payroll taxes        (6,949)       (36,840)
                     Other, net                                                      68,272       (160,587)
                                                                                -----------    -----------
                Net cash used in operating activities                                80,730     (1,603,290)
                                                                                -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
       Amounts paid for acquisitions                                                (95,000)          --
       Advances to physicians and other receivables, net                             21,837           --
       Purchases of property and equipment                                         (343,844)      (306,256)
       Write-off of goodwill                                                           --          160,000
                                                                                -----------    -----------
                Net cash used in investing activities                              (417,007)      (146,256)
                                                                                -----------    -----------


CASH FLOWS FROM FINANCING ACTIVITIES:
       Proceeds from bridge loan                                                       --        2,200,000
       Notes to stockholder                                                            --         (131,370)
       Note payments                                                                   --         (831,370)
       Proceeds from credit revolver                                                   --          624,133
       Proceeds from sale of stock option                                              --           43,750
       Write-off of note payable                                                       --         (166,361)
       Capital lease                                                                   --          186,040
                                                                                -----------    -----------

                Net cash provided by financing activities                              --        1,924,822
                                                                                -----------    -----------

INCREASE (DECREASE) IN CASH                                                        (336,277)       175,276

CASH, beginning of period                                                           545,688        159,166
                                                                                -----------    -----------

CASH, end of period                                                             $   209,411    $   334,442
                                                                                ===========    ===========


SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONS:

Stock subscription related to bridge loan                                       $      --      $   970,200
                                                                                ===========    ===========
</TABLE>





               See accompanying notes to these unaudited interim
                       consolidated financial statements.

                                      F-5
<PAGE>   6
                          AMERICAN HEALTHCHOICE, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




1.     ORGANIZATION AND BUSINESS:

American HealthChoice, Inc. and subsidiaries (the Company) consists of a parent
company and twenty-seven 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 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 consolidated financial statements contain all
adjustments necessary to present fairly the financial position as of December
31, 1996, results of operations for the three months ended December 31, 1996
and 1995, and cash flows for the three months ended December 31, 1996 and 1995.

The results of operations for the three months ended December 31, 1996 are not
necessarily indicative of the results to be expected for the full year.  It is
suggested that the December 31, 1996 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 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 CONSOLIDATED FINANCIAL STATEMENTS




4.     ACQUISITIONS:

The Company acquired Peachtree Corners Medical Center (Peachtree) on September
22, 1995 in exchange for cash, common stock, the assumption of certain
liabilities and promissory notes due the seller. Peachtree is a medical,
clinical and urgent care center located in Atlanta, Georgia. The amount paid
for Peachtree totaled $1,113,000 as follows: Cash - $100,000; 25,000 shares of
common stock - $75,000; liabilities assumed - $287,000 and notes due the seller
totaling $651,000. The acquisition was accounted for under the purchase method
of accounting and resulted in goodwill of $651,000, which is being amortized
over 20 years on the straight-line method. During fiscal 1996, the Company
wrote down the goodwill related to the Peachtree acquisition by $376,000.
During fiscal 1996, the company wrote down goodwill related to the Peachtree
acquisition by $401,000.

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 of the Company have been restated as if the
acquisition had occurred on October 1, 1994, the date Valley Family Health
Center, L.L.C. began operations.

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 $1,564,516, 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 $908,225, which is being amortized over 20 years.
During fiscal 1996, the Company wrote down the goodwill related to the
Metropolitan acquisition by $495,166.

<TABLE>
<S>                                        <C>        
Current assets                             $   498,791
Furniture, fixtures and equipment              157,500
                                           -----------
Total assets acquired                          656,291
                                           -----------
Trade liabilities                             (402,246)
Notes payable to physicians                 (1,162,270)
                                           -----------
Total liabilities acquired                  (1,564,516)
                                           -----------
                                           $  (908,225)
                                           ===========
</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>
<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. Additionally, the Company
determined two of the Metropolitan clinics were no longer in the Company's
long-term plan and intends to close them during fiscal 1997. Based on this
analysis, the Company wrote down goodwill during fiscal 1996 by $1,054,829.
Management believes the remaining carrying value of goodwill will be supported
by the anticipated cash flows of the remaining clinics with associated
goodwill.





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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




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     EXERCISE
  PURCHASE                    ACQUIRE       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
$486,457. 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, $43,750 was received related to the third and forth 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
$1,487,477. 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 $2,200,000 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 198,000
shares of its common stock to the note holders at a cost of $.001 per share.
The notes are collateralized by accounts receivable, furniture, fixtures and
equipment, and all other assets of the Company to the extent not encumbered.





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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




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.


6.     PENDING ACQUISITIONS:

The Company has entered into letters of intent to acquire various companies
from time to time. 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. Due to the Company's operating losses and an inability to generate
sufficient cash flows from operations, the Company has determined to delay this
acquisition process.


7.     LEGAL PROCEEDINGS:

Approximately $600,00 in Medicaid accounts receivable of the Company were not
filed timely with the state of Texas and have been rejected for payment.  The
Company has submitted such claims for payment and has been granted an
administrative hearing.  In February, both sides agreed to defer the hearing to
seek alternate means of resolution.


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.  The
Company is attempting to pursue alternative dispute resolutions prior to
instituting legal action to protect the Company's assets.


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.

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.


8.     SUBSEQUENT EVENTS:

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.





                                      F-9
<PAGE>   10



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
consolidated financial statements and notes thereto for the three months ended
December 31, 1996 and 1995, 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 December 31, 1996, the Company owned 27 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>
North East MediClinic*          San Antonio, TX        San Antonio         primary medical care           12/95

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
</TABLE>





                                      F-10
<PAGE>   11



<TABLE>
<S>                             <C>                    <C>                 <C>                            <C>
South Bexar MediClinic*         San Antonio, TX        San Antonio          primary medical care,         1/95
                                                                                                          urgent care
                                                                                                 
South Cross MediClinic          San Antonio, TX        San Antonio          urgent care, primary          12/95
                                                                                                          medical care
                                                                                                 
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        Marietta, GA           Atlanta              internal medicine             2/96
of Windy Hill **                                                                                 
                                                                                                 
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

University MediClinic *         College Station, TX    College Station      primary medical care          7/96

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

Corpus Christi Medical *        Corpus Christi, TX     Corpus Christi       primary medical care          8/96

Weslaco Medical *               Weslaco, TX            Corpus Christi       primary medical care          7/96

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>


*    Clinics closed in January 1997.

**   It is anticipated that Peachtree Medical Center of Windy Hill will be
     closed in February 1997.

***  The seller of this 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. The Company is attempting to
     pursue alternative dispute resolutions prior to instituting legal action
     to protect the Company's assets.

RESULTS OF OPERATIONS

Comparison of three months ended December 31, 1996 to three months ended
December 31, 1995

For the three months ended December 31, 1996, net revenues amounted to
$2,530,000 compared to $2,716,000 for the same period in 1995.  This decrease
in net revenues is related to the increase in the provision on gross services
to 38% compared to 36% for the same period in 1995.  This increased the
provision by $335,000 as compared to 1995.  The increase in operating costs for
the three months ended December 31, 1996 were the result of increased activity
within the Company as new clinics were acquired and started up and the higher
costs of operating medical clinics as compared to chiropractic clinics.  The
Company's revenues during fiscal 1996 were derived from delivery of
chiropractic and medical services, 49% and 51%, respectively, and for the
three-month period ending December 31, 1996, 49% and 51%, respectively.

The Company's operations are labor intensive with salaries and benefits
comprising the single largest item in operations.  Payroll costs increased from
$698,000 for the three months ended December 31, 1995 compared to $2,460,000
for the three months ended December 31, 1996.  This increase reflects the
increased cost of physician compensation and the addition of





                                      F-11
<PAGE>   12



new clinics.  After discovery of the decrease in net revenues, the Company
immediately began to adjust staffing levels and clinic operations.

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 December 31, 1996
has not resulted in a corresponding increase in net income.  The Company
intends 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 were not deemed to be profitable in the immediate future were
closed or sold.

General and administrative expenses increased from $1,079,000 for the three
months ended December 31, 1995 to $1,506,000 for the three months ended
December 31, 1996. This increase is primarily due to management expenses during
the three months ended December 31, 1996 and increased operating cost related
to the Georgia clinics.  During the second quarter of fiscal 1997 the Company
will implement 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.



LIQUIDITY AND CAPITAL RESOURCES

As of December 31, 1996, the Company had cash and working capital of $334,000
and $4,263,000, respectively.  The Company's primary current asset is accounts
receivable which represents amounts due from patients for services rendered.
Approximately 77% of the Company's accounts receivable at December 31, 1996
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 49% of revenues during the three-month period ended
December 31, 1996 were derived from chiropractic services.

The Company generally acquires clinics by 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
$1,800,000 of debt associated with the acquisition of its existing clinics.
Because of the higher than expected operating costs and the reduction in
collectability of clinic receivables, the Company has experienced difficulties
in making timely payments on its debt requirements and trade payables.  During
March of 1997, the company has entered into an agreement with its investment
banker to arrange short-term funding and a private placement ranging from two
to three million dollars, to be funded in the next sixty to ninety days.  The
private placement could be affected by changing market conditions.

In November and December 1996, the Company obtained $2,200,000 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 198,000
shares of its common stock to the note holders at a cost of $.001 per share.
The notes are collateralized by accounts receivable, furniture, fixtures and
equipment, and all other assets of the Company to the extent not encumbered.

In December 1996, the Company completed a $1.5 million revolving credit
facility with a financial institution. Advances under this facility are limited
to the borrowing base as defined in the agreement and are collateralized by
substantially all of the Company's accounts receivable. Advances outstanding
under the revolving credit facility accrue interest at prime plus 3%. The
facility terminates on December 30, 1998 and is renewed for consecutive one
year terms thereafter unless the Agreement





                                      F-12
<PAGE>   13



is terminated. The revolving credit facility agreement contains covenants which
requires, among other things, the Company maintain a minimum tangible net worth
of $5,000,000. The Company is currently in default of this minimum tangible net
worth requirement.  The Company is currently in negotiations to terminate this
arrangement.

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:

<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>                            <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
$486,457. 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, $43,750 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-13
<PAGE>   14





                          PART II.  OTHER INFORMATION


              ITEM 1.       Legal Proceedings

Approximately $600,00 in Medicaid accounts receivable of the Company were not
filed timely with the state of Texas and have been rejected for payment.  The
Company has submitted such claims for payment and has been grated an
administrative hearing.  In February, both sides agreed to defer the hearing to
seek alternate means of resolution.


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.  The
Company is attempting to pursue alternative dispute resolutions prior to
instituting legal action to protect the Company's assets.


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.

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


              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





                                      F-14
<PAGE>   15



                                   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:  March 14, 1996              By:    /s/ Dr. Joseph Wesley Stucki, D.C.
                                      --------------------------------------
                                      Dr. Joseph Wesley Stucki, D.C.
                                      Chairman of the Board and President



Date:  March 14, 1996              By:   /s/ Randy Johnson                   
                                      ---------------------------------------
                                      Randy Johnson
                                      Assistant Secretary





                                      F-15