U.S. SECURITIES AND EXCHANGE COMMISSION
                          Washington, D.C. 20549
                               FORM 10-KSB
  (Mark One)
  [X]  ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
       ACT OF 1934

       For the fiscal year ended September 30, 1999
  [ ]  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
       EXCHANGE ACT OF 1934

              For the transition period from _____. to ___..__
                    Commission File Number:  000-26740

                        AMERICAN HEALTHCHOICE, INC.
               (Name of small business issuer in its charter)

           New York                                  11-2931252
  (State or other jurisdiction
  of incorporation or organization      I.R.S. Employer Identification No.)

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

                Issuer's telephone number: (972) 751-1900

        Securities registered pursuant to Section 12(b) of the Act:
  Title of each class           Name of each exchange on which registered
         None                                  None

  Securities registered pursuant to Section 12(g) of the Act:

                  COMMON STOCK, PAR VALUE $.001 PER SHARE
                             (Title of class)

       Check whether  the issuer  (1) filed  all reports  required to  be
  filed by Section 13  or 15(d) of  the Exchange Act  during the past  12
  months (or for such shorter period that the registrant was required  to
  file  such  reports),  and  (2)  has   been  subject  to  such   filing
  requirements for the past 90 days. Yes ..x.. No_.

       Check if disclosure of delinquent filers  in response to Item  405
  of Regulation S-B is not contained in this form, and no disclosure will
  be contained,  to the  best of  registrant's knowledge,  in  definitive
  proxy or information statements incorporated  by reference in Part  III
  of this Form 10-KSB or any amendment to this Form 10-KSB. [X]

  State issuer's revenues for its most recent fiscal year:     $4,808,559

       State the  aggregate market  value of  the voting  and  non-voting
  common equity held by non-affiliates computed by reference to the price
  at which  the common  equity was  sold, or  the average  bid and  asked
  prices of such common equity, as of a specified date within the past 60
  days. (See definition of affiliate in Rule 12b-2 of the Exchange  Act).
  $237,000 as of December 31, 1999*.
<PAGE>
                      (ISSUERS INVOLVED IN BANKRUPTCY
                  PROCEEDINGS DURING THE PAST FIVE YEARS)

       Check whether  the  issuer has  filed  all documents  and  reports
  required to be filed  by Section 12,  13 or 15(d)  of the Exchange  Act
  after the distribution of securities under a plan confirmed by a court.
   Yes__ No X

                (APPLICABLE ONLY TO CORPORATE REGISTRANTS)
  State the number of shares outstanding of each of the issuer's  classes
  of common equity, as of the latest practicable date:
  As of  December  31,  1999,  the  Registrant had  28,144,259  shares
  outstanding of common stock.

  *    Based on the  last reported price  of an actual  transaction in
       Registrant's common stock on  December 31, 1999 and  reports of
       beneficial ownership filed by directors  and executive officers
       of Registrant and by beneficial  owners of more than  5% of the
       outstanding shares of common stock of Registrant; however, such
       determination of shares owned by affiliates does not constitute
       an admission  of  affiliate status  or  beneficial interest  in
       shares of Registrant's common stock.

                  DOCUMENTS INCORPORATED BY REFERENCE
                                  None

                 Transitional Small Business Disclosure
                           Format (Check one)
                            Yes_.      No..X

<PAGE>
                          AMERICAN HEALTHCHOICE, INC.

                               FORM 10-KSB

                            TABLE OF CONTENTS

                                                                     Page
                                                                     ----
                                  PART I

  Item 1.   Description of Business...........................         1

  Item 2.   Description of Property...........................         7

  Item 3.   Legal Proceedings.................................         7

  Item 4.   Submission of Matters to a Vote of Security Holders        9



                                 PART II

  Item 5.   Market for Common Equity and Related Stockholder Matters  10

  Item 6.   Management's Discussion and Analysis or Plan of Operation 11

  Item 7.   Financial Statements..............................        14

  Item 8.   Changes In and Disagreements with Accountants on
              Accounting and Financial Disclosure.............        32



                                 PART III

  Item 9.   Directors, Executive Officers, Promoters and Control
              Persons; Compliance with Section 16(a) of the
              Exchange Act....................................        33

  Item 10.  Executive Compensation............................        35

  Item 11.  Security Ownership of Certain Beneficial Owners and
              Management......................................        39

  Item 12.  Certain Relationships and Related Transactions....        40

  Item 13.  Exhibits and Reports on Form 8-K..................        41

  Signatures     .............................................        44

<PAGE>

                                  PART I


  ITEM 1. DESCRIPTION OF BUSINESS


  History

       American HealthChoice, Inc., a New York corporation formerly known
  as Paudan, Inc.  (together with its  subsidiaries, the "Company"),  was
  incorporated on September 14,  1988 and was  initially formed with  the
  intent of acquiring a suitable business that management determined  had
  potential for  future growth.   Until  March 1995  the Company  had  no
  operations.  On March 31, 1995,  the Company underwent a  comprehensive
  reorganization by  acquiring American  HealthChoice, Inc.,  a  Delaware
  corporation ("American HealthChoice (DE)"), formed in 1993 to  organize
  and acquire primary care clinics and  to provide, on an ongoing  basis,
  comprehensive management services.   At  the time  of this  transaction
  American HealthChoice (DE) operated six clinics which provided medical,
  chiropractic, diagnostic  and physical  therapy services  in Texas  and
  Louisiana.   The  Company  acquired American  HealthChoice  (DE)  in  a
  reverse acquisition in exchange for  4,962,000 shares of the  Company's
  $0.001 par value common stock.  In connection with the  reorganization,
  the stockholders of American HealthChoice (DE)  acquired 91.6 % of  the
  voting shares  of the  Company.   The  Company  changed its  name  from
  Paudan, Inc. to American HealthChoice, Inc. during fiscal year 1995.


  General

       The Company owns, operates  and manages eleven  clinics.  Ten  are
  primary care clinics, of which three are medical clinics and seven  are
  chiropractic clinics.  The Company also has a physical therapy facility
  at its largest chiropractic clinic.  The clinics are located in  Texas,
  Louisiana and Georgia.  The clinic locations are leased except for  one
  clinic in  San Antonio.   See  Item 2  "Description of  Property."   At
  September 30, 1999  the Company had  a total of  65 employees. Of  this
  number 25 were  employed by the  Company's medical clinics,  33 by  the
  chiropractic and  physical  therapy clinics,  and  7 at  the  Company's
  corporate office.

       All key employee/providers serve pursuant to employment  contracts
  covering compensation, benefits, terms of one year or more and, in some
  cases, agreements not to compete upon termination.  All compensation is
  based upon  fixed salaries  as set  forth in  employment contracts  for
  identifiable services.  Some  of these employee/providers are  eligible
  for a  bonus; however,  bonuses are  tied  directly to  the  employee's
  performance within the clinic and are not based on referrals.
<PAGE>
       The Company depends upon third  party payors for reimbursement  of
  approximately 95% of patient services.  The Company believes that  this
  percentage is comparable  to other  organizations providing  comparable
  patient services.    The  Company receives  reimbursement  for  medical
  services from many managed care companies including Health  Maintenance
  Organizations (HMOs),  Preferred Provider  Organizations (PPOs),  other
  health care plans, and to a lesser extent from Medicare  and  Medicaid.
  A substantial percentage  of reimbursements for  services are  received
  from  patient   insurance   settlements   administered   by   attorneys
  representing the patients.

       The address of the Company's principal office is 1300 West  Walnut
  Hill Lane,  Suite 275,  Irving, Texas  75038. The  Company's  telephone
  number is (972) 751-1900 and its fax number is (972) 751-1901.


  Business Strategy

       The Company's business strategy is as follows:

       Current Profitability.   The  Company completed  the sale  of  the
  Norcross, Georgia clinic  in February  1999 and  returned the  Conyers,
  Georgia clinic  to the  previous owner  in December  1999.   After  the
  planned sale of  the McDonough, Georgia  clinic at the  end of  January
  2000, the remaining clinics will be exclusively in Texas and Louisiana.
   As of December  31, 1999,  all clinics  are profitable  and cash  flow
  positive.  In addition,  Management has taken  further steps to  reduce
  corporate overhead during  fiscal year  1999.   Before reflecting  non-
  recurring expenses related to the Bankruptcy proceedings, the Company's
  operations are currently breakeven.  See "Recent Developments"

       Growth.  Over the past two  years, the profit margins on  personal
  injury  and   workers  compensation   services   have  proven   to   be
  significantly higher than those for services provided to patients under
  managed care contracts.   The recent  favorable court ruling  effecting
  telemarketing in Texas should allow the Company to increase the  number
  of patients at the existing clinics requiring these types of  services.
  Also,  the Company plans to acquire other established clinics in  Texas
  from individual doctors, who provide these same services.  The  Company
  will only consider acquiring clinics that are profitable and cash  flow
  positive.  In  this regard, the  Company has  developed an  acquisition
  model that requires the seller to meet predetermined cash flow  targets
  over a three-year period before receiving 100% of the purchase price.

       Reorganization.  The Company is currently operating as a debtor in
  possession pursuant  to the  provisions of  Chapter  11 of  the  United
  States  Bankruptcy  Code.   Management intends  to  file  a  Disclosure
  Statement and Plan of  Reorganization on  or before February 15,  2000.
  The Plan will include the acquisition of three clinics, an infusion  of
  between $1,000,000 and $2,000,000 in  new equity, restructuring of  the
  current debenture debt  to equity or  debt convertible to  equity at  a
  fixed price, and a payment plan for other pre-bankruptcy liabilities.

<PAGE>
  Primary Sources of Company Revenue

       The Company derives  its revenue from  several different  sources,
  including  managed  care  plans  e.g.  HMOs,  PPOs,  Medicaid/Medicare,
  indemnity plans,  insurance settlements  from  third party  payors  and
  self-pay.  The company strives to diversify its patient base and  hence
  its revenue sources so  that any one clinic  is not dependent upon  one
  source of  revenue.   In the  past, this  has caused  problems for  the
  Company from loss  of Medicaid claims,  change in  marketing laws,  and
  clinics dependent  on  one doctor.    To correct  these  problems,  the
  Company has made  concerted efforts to  diversify its  patient base  at
  each clinic.  Where the patient  base could not be diversified and  was
  incurring ongoing losses, the Company divested the clinic through  sale
  or closure.  The Company now believes each clinic is not as susceptible
  to changes in  a particular  revenue source.   The  primary sources  of
  revenue for the Company are as follows:

       Patient Insurance Settlements.  The Company's chiropractic clinics
  derive  a  significant   portion  of  their   revenue  from   insurance
  settlements to injured  patients treated by  the clinic.   The  medical
  clinics receive some revenue from patient insurance settlements but are
  not necessarily dependent on these types of settlements.  Typically,  a
  patient seeks  treatment  from a  clinic  based on  representations  by
  his/her attorney or  insurance company  that payment  for treating  the
  patient will be forthcoming upon proof  the patient is entitled to  the
  patient's medical claims.  The representations are usually in the  form
  of a Letter of Protection (LOP) or a Personal Injury Payment (PIP) from
  the   patient/insured's   insurance   policy.       Based   on    these
  representations, the clinic  will treat the  patient without  requiring
  payment at the time services are rendered.

       Due to the nature of proving  and documenting the patient  claims,
  the patient's medical  bill may not  be paid at  the time services  are
  rendered.  The delay in  payment is usually under  one year but can  be
  significantly extended  past one  year if  the attorney  and  insurance
  company go to trial  over the patient's claims.   Upon an agreement  to
  pay the patient's claims, the clinic is then paid.

       Since many  insurance settlements  are  a compromise  between  the
  insurance company and the patient, often the Company must take a lesser
  amount  than  the  original  fees  for  services  rendered.    In  some
  instances, if the patient is under a LOP and their attorney decides not
  to pursue the claim, then the clinic may have to write the account  off
  as bad  debt.   The  Company  believes that  accounts  receivable  from
  patient settlements have  been adequately reserved  to account for  the
  reduced collections.  See Item 6-"Management Discussion and Analysis or
  Plan of Operation."

       Health Plans.   These  plans traditionally  market health  benefit
  coverage to  employer  groups,  who  provide  such  benefits  to  their
  employees such as HMOs or PPOs  or other health care plans.   Employees
  can usually enroll their  spouses and dependents as  well.  Many  times
  employers will pay for all  or nearly all of  the cost of covering  the
  employee through a health plan.  Some employers will pay for all of the
  cost of dependent coverage,  while others require  the employee to  pay
  for some or all of dependent coverage.
<PAGE>
       Currently, the Company  contracts with  a number  of managed  care
  companies to provide patient  care for the  employees who enroll  under
  their health care plans.  All of the Company's medical clinics derive a
  significant amount of revenue  from these plans.   Under many of  these
  plans,  the   clinics'  agree   to   accept  predetermined   fees   for
  corresponding services  rendered.   None  of  the medical  clinics  are
  dependent on any one plan because each clinic has patients enrolled  in
  a variety of plans.

       Once services are rendered to the patient, the clinic generates  a
  bill for  the  patient and  his/her  insurance company.    The  patient
  usually makes  a  nominal co-payment  and  then the  clinic  files  the
  remaining claim with the applicable  insurance company.  Payments  from
  the insurance  company usually  take less  than thirty  days.   Due  to
  patient registration  procedures  and  set fees  predetermined  by  the
  insurance company, the Company can predict  the revenue earned for  the
  services rendered.  If the clinic's service fees exceed the amounts set
  by the insurance companies,  then the excess amount  is either paid  by
  the patient or written off as bad debt.

       If  the   provider,  usually   a   physician,  is   not   enrolled
  (credentialed) in the managed care plan, then the plan may not pay  for
  the services  performed for  their patient.    If a  particular  clinic
  experiences turnover  of  physicians,  it must  get  the  new  provider
  (physician) credentialed with each patient's plan.  This process  takes
  time, and  in the  interim, the  clinic may  treat the  patient for  no
  charge as  a  courtesy  until the  new  provider  (physician)  receives
  credentials from the various plans.

       Medicare/Medicaid.   The federal  government, through  the  Health
  Care Financing  Administration  ("HCFA"),  allows  federally  qualified
  medical organizations to enter into  agreements to provide all  covered
  medical services  to  Medicare/Medicaid  beneficiaries  who  choose  to
  enroll in  the program.   None of  the  Company's  clinics  are  solely
  dependent on payments from Medicare/Medicaid,  nor does any one  clinic
  derive a material portion of its revenue from Medicare/Medicaid.

       Self-pay.   All of  the Company's  clinics involve  some level  of
  self-pay.   Self-pay is  simply that  the  patient is  responsible  for
  payment at the  time the services  are rendered.   The amount of  self-
  paying patients varies widely depending on  the specifics of a  clinic,
  its location, and the patient base.


  Chiropractic Services

       The  Company  currently  owns  and  operates  seven  primary  care
  chiropractic clinics, which are located in suburban areas and serve the
  general population for their surrounding communities.  The services are
  based on preventative treatment and treatment  of the nerve system  and
  body structure, such as  the spinal column.   Most of the  chiropractic
  clinics have a chiropractor that  is complemented with the  appropriate
  support staff.
<PAGE>
       The Company's patient base is developed through its reputation for
  quality  treatment,  patient  referrals,  printed  advertisements,  and
  special  promotion   such   as  open   houses,   circulars,   community
  participation, etc.  The Company  obtains significant referrals due  to
  its willingness to work  with patients and  their insurance company  or
  attorney to  provide treatment  during the  pendency of  the  patient's
  injury settlement.

       Chiropractic service is a highly competitive business in which the
  Company competes  with  numerous  chiropractors in  the  same  suburban
  areas. Most,  if  not  all of  the  Company's  competition  comes  from
  privately owned  chiropractic clinics,  usually owned  by the  treating
  doctor.

       In recent years, there have been significant changes in the health
  care industry  affecting chiropractic  services.   Pressures to  reduce
  costs and show profits  has forced some managed  care plans to  exclude
  chiropractic treatment or  institute procedures that  can discourage  a
  patient to utilize their health care plan.  Additionally, in  September
  1997 the  State  of  Texas  implemented  new  regulations  that  govern
  marketing of  medical services.   The  Company adjusted  its  marketing
  efforts to  ensure compliance  with the  changes in  the new  marketing
  laws.  Specifically, the Company  ceased its telemarketing efforts  and
  strengthened its audit procedures to  ensure any new patient  referrals
  meet  the  requirements  of  the  new  law.    Citing  First  Amendment
  protection of commercial  speech, the United  States Court of  Appeals,
  5th Circuit, ruled in  September 1999 that the  1997 amendments to  the
  Texas statutes,  which  prohibited  direct  telemarketing  of  accident
  victims,  were  unconstitutional.     The  Company  has   reestablished
  telemarketing procedures at its Texas  clinics and expects an  increase
  in the number of patients seeking treatment. See "Recent Developments."

       The marketing  services offered  by the  Company are  designed  to
  assist the clinics in developing a  patient base through promoting  the
  clinics' services.  The Company provides  advice and assistance to  the
  clinics for  marketing  and advertising.    The Company  believes  that
  marketing must be integrated into all aspects of the clinic  operations
  including finance  and office  administration.   The Company's  patient
  base is developed through its reputation for quality treatment, patient
  referrals,  printed  advertisements,  and  special  promotion  such  as
  discounts, free initial examinations, open houses, circulars, community
  participation, etc.  The Company  obtains significant referrals due  to
  its willingness to work  with patients and  their insurance company  or
  attorney to  provide treatment  during the  pendency of  the  patient's
  injury settlement.    As  a result,  the  Company  believes  the  total
  management of the clinics  provides the economies  of scale to  develop
  the clinic  and provides  the best  use of  these services,  therefore,
  giving it a competitive advantage over a privately owned clinic.

       Although the Company  believes that the  services and benefits  it
  offers to providers make  the Company an  attractive purchaser of  such
  practices, there can be no assurance  that the Company will be able  to
  compete  effectively  with  competitors  on  terms  beneficial  to  the
  Company.
<PAGE>

  Medical Services

       The Company owned and operated  four primary care medical  clinics
  as of September 30, 1999.  The Conyers, Georgia clinic was returned  to
  the former owner on December 3, 1999, and the McDonough, Georgia clinic
  is under a  letter of  intent for purchase  with the  sale expected  to
  close on  January 31,  2000.   The two  remaining medical  clinics  are
  located in San Antonio.

       The Southcross clinic has a significant number of patients who are
  enrolled with a variety of different  managed care plans.  The  patient
  source for this  clinic comes from  people familiar  with the  clinic's
  location, the  provider's reputation,  managed care  plans,  commercial
  contracts, referrals  from  attorneys,  other  providers,  and  general
  advertising.   The San  Pedro clinic  services are  almost  exclusively
  personal injury and worker compensation  cases. The patient source  for
  this clinic  comes from  attorney referrals  and chiropractic  clinics,
  including company owned clinics in San Antonio.


  Government Regulation

       As a  participant  in  the health  care  industry,  the  Company's
  operations are  subject to  extensive and  increasing regulation  by  a
  number of governmental entities at the federal, state and local levels.
   The Company  is  also subject  to  laws and  regulations  relating  to
  business corporations in general.  The Company believes its  operations
  are in material compliance with applicable laws.  Nevertheless, because
  of the  structure of  the Company's  relationship with  physicians  and
  clinics, many aspects  of the  Company's business  operations have  not
  been the  subject of  state or  federal regulatory  interpretation  and
  there can be no assurance that  the health care regulatory  environment
  will not change  so as to  restrict or otherwise  adversely affect  the
  Company's or the affiliated physician's existing operations or possible
  expansion.

       The laws of many states prohibit business corporations such as the
  Company from practicing medicine  and employing physicians to  practice
  medicine.   The  Company  performs services  that  do  not  impose  any
  requirements that would violate the  ethics applicable to the  practice
  of medicine or violate any law.  The laws in most states regarding  the
  corporate practice of medicine have been subjected to limited  judicial
  and regulatory interpretation and, therefore, no assurance can be given
  that the Company's  activities will be  found to be  in compliance,  if
  challenged.
<PAGE>
       In addition  to prohibiting  the  practice of  medicine,  numerous
  states prohibit  entities like  the Company  from engaging  in  certain
  health care  related  activities such as fee-splitting with physicians.
  For example, Florida  enacted its  Patient Self-Referral  Act in  April
  1992 that severely  restricts patient referrals  for certain  services,
  prohibits  mark-ups  of  certain  procedures,  requires  disclosure  of
  ownership in businesses to which patients are referred and places other
  regulations on health care providers. The Company believes it is likely
  that  other  states  will  adopt  similar  legislation.    Accordingly,
  expansion of the  Company's operations  into Florida  and other  states
  could lead  to  structural  and  organizational  modifications  of  the
  Company's form of relationships with  physician groups.  Such  changes,
  if any, could have an adverse effect on the Company.

       Certain provisions of the  Social Security Act, commonly  referred
  to  as  the  "Anti-Kickback  Statute,"  prohibit  the  offer,  payment,
  solicitation, or receipt of any form of remuneration in return for  the
  referral of  Medicare state  health program  patients or  patient  care
  opportunities,  or  in  return  for  the  recommendation,  arrangement,
  purchase, lease  or order  of items  or services  that are  covered  by
  Medicare or state health programs.  The Anti-Kickback Statute is  broad
  in  scope  and  has  been  broadly   interpreted  by  courts  in   many
  jurisdictions.   Read  literally,  the  statute  places  at  risk  many
  legitimate   business   arrangements,   potentially   subjecting   such
  arrangements to  lengthy,  expensive  investigations  and  prosecutions
  initiated by federal  and state  governmental officials.   Many  states
  have adopted similar prohibitions  against payments intended to  induce
  referrals of  Medicaid  and other  third  party payor  patients.    The
  Company believes that it is not in a position to make or influence  the
  referral of patients of  services reimbursed under government  programs
  to the physician groups and, therefore, believes its operations do  not
  violate the Anti-Kickback Statute.

       In July  1991, in  part to  address concerns  regarding the  Anti-
  Kickback Statute,  the federal  government published  regulations  that
  provide exceptions, or  "safe harbors," for  transactions that will  be
  deemed not  to  violate the  Anti-Kickback  Statute.   Among  the  safe
  harbors included in  the regulations  were provisions  relating to  the
  sale  of  practitioner  practices,  management  and  personal  services
  agreements, and employee relationships.   Additional safe harbors  were
  published in September  1993 offering new  protections under the  Anti-
  Kickback Statute to eight activities, including referrals within  group
  practices consisting of  active investors.   The Anti-Kickback  statute
  was amended in  1996 to  simply exclude  all risk-sharing  arrangements
  from the scope of  the statute. In July  1998, the Office of  Inspector
  General ("OIG") issued  a final  rule establishing  a process  allowing
  entities to obtain  formal guidance  regarding the  application of  the
  Anti-Kickback statute, the safe harbor provisions, and other OIG health
  care fraud and abuse sanctions.  The Company does not believe it is  in
  violation of the Anti-Kickback Statute,  even though its operations  do
  not fit within any of the existing  or proposed safe harbors.  To  help
  ensure compliance, the Company owns its clinics and contractually  sets
  forth terms of  provider (employee) compensation,  severely limits  its
  providers' investment and ownership in related companies, and prohibits
  referrals for compensation.
<PAGE>
       Significant prohibitions against physician referrals were  enacted
  by Congress in  the Omnibus Budget  Reconciliation Act  of 1993.  These
  prohibitions, commonly  known as  "Stark II,"  amended prior  physician
  self-referral legislation know as  "Stark I" by dramatically  enlarging
  the field of physician owned or physician interested entities to  which
  the referral prohibitions apply.  Effective  January 1, 1995, Stark  II
  prohibits, subject to certain  exemptions, a physician  or a member  of
  his immediate family from referring Medicare or Medicaid patients to an
  entity providing "designated  health services" in  which the  physician
  has an ownership or  investment interest, or  with which the  physician
  has entered into a  compensation arrangement including the  physician's
  own group practice.  The  designated health services include  radiology
  and other diagnostic services, radiation therapy services: physical and
  occupational therapy  services, durable  medical equipment,  parenteral
  and enteral nutrients, equipment, and supplies, prosthetics, orthotics,
  outpatient prescription drugs, home health services, and inpatient  and
  outpatient hospital  services. The  penalties  for violating  Stark  II
  include a prohibition on payment by these government programs and civil
  penalties of  as  much  as $15,000  for  each  violative  referral  and
  $100,000 for participation  in a "circumvention  scheme."  The  Company
  believes that its activities are not  in violation of Stark I or  Stark
  II because it  has no referral  relationships for the  small amount  of
  Medicaid/Medicare work that is does.  However, the Stark legislation is
  broad and  ambiguous  and  interpretative  regulations  clarifying  the
  provisions of  Stark  II have  not  been  issued.   While  the  Company
  believes it  is  in  compliance  with  the  Stark  legislation,  future
  regulations could  require  the  Company to  modify  the  form  of  its
  relationships with physicians and clinics.

       There are  also  state and  federal  civil and  criminal  statutes
  imposing substantial penalties, including civil and criminal fines  and
  imprisonment, on health care providers which fraudulently or wrongfully
  bill governmental or other third party payors for health care services.
   The federal law prohibiting false billings allows a private person  to
  bring a civil action  in the name of  the United States government  for
  violations of its provision.   The Company believes  it is in  material
  compliance with such laws, but there is no assurance that the Company's
  activities will  not  be  challenged  or  scrutinized  by  governmental
  authorities.   Moreover,  technical Medicare  and  other  reimbursement
  rules affect  the structure  of physician  billing arrangements.    The
  Company believes it  is in material  compliance with such  regulations,
  although regulatory  authorities  may  differ and  in  such  event  the
  Company may  have  to  modify  its  relationship  with  physicians  and
  clinics. Noncompliance with such  regulations may adversely affect  the
  operation of the  Company and subject  it to  penalties and  additional
  costs.
<PAGE>
       Laws in  all states  regulate the  business of  insurance and  the
  operation of HMOs.   Many states  also regulate  the establishment  and
  operation of networks of  health care providers.   While these laws  do
  not generally  apply to  the hiring  and contracting  of physicians  by
  other health  care  providers  or to  companies  which  participate  in
  capitated arrangements,  there  can  be no  assurance  that  regulatory
  authorities of the states in which the Company operates would not apply
  these laws  to require  licensure of  the  Company's operations  as  an
  insurer, as an HMO or as a provider network.  The Company believes that
  it is in  compliance with these  laws in the  states in  which it  does
  business, but there can be no assurance that future interpretations  of
  insurance  laws  and  health  care  network  laws  by  the   regulatory
  authorities in these states or in the states into which the Company may
  expand will not require licensure or a restructuring of some or all  of
  the Company's operations.


  Recent Developments

       In September  1999,  the  United  States  Court  of  Appeals,  5th
  Circuit, ruled that  the 1997 amendments  to the  Texas statutes,  that
  prohibited   direct   telemarketing    of   accident   victims,    were
  unconstitutional.    In  response  to  this  ruling,  the  Company  has
  reestablished telemarketing procedures at its Texas clinics and expects
  an increase in the number of  patients seeking treatment.  The  Company
  has also implemented additional control procedures to ensure continuing
  compliance with all regulations.

       On October  19,  1999,  American HealthChoice,  Inc.,  the  parent
  company, and AHC Physicians Corporation,  Inc., a subsidiary that  owns
  the Georgia clinics,  filed Chapter  11 Bankruptcy  Petitions with  the
  United States  Bankruptcy Court,  Northern  District of  Texas,  Dallas
  Division (Case  No.  99-37314).    The  Company  elected  to  file  the
  petitions for two primary reasons.  First, it was unable to restructure
  terms of the September 1997 and August 1998 Debenture Agreements, which
  would  have  allowed  for  new funding  to acquire  profitable clinics.
  Second, in early October 1999, the  Company received an adverse  ruling
  on the Futch lawsuit.  See Item 3 "Legal Proceedings."  On December  6,
  1999, the Bankruptcy  Court granted the  Company authority to  continue
  operating under  a  cash  collateral budget through  February 29, 2000.
  The Company forecasts positive cash flow for the approved budget period
  including sufficient  cash to  pay professional  fees approved  by  the
  Bankruptcy Court.  The Company intends to file a Plan of Reorganization
  and Disclosure Statement by February 15, 2000.

       On December 3, 1999 an order  was entered by the Bankruptcy  Court
  to return the Conyers clinic to  the previous owner in settlement of  a
  lawsuit. See Item 3 "Legal Proceedings".  In compliance with the order,
  the Company will record  an asset writeoff  of accounts receivable  and
  equipment of  approximately  $130,000,  and  un-amortized  goodwill  of
  approximately $130,000.  However, the Company will recognize a gain  on
  disposition of  approximately  $30,000  after  debt  extinguishment  of
  $290,000.  Also on  January 3, 2000, the  Company executed a letter  of
  intent to sell the McDonough clinic, excluding accounts receivable, for
  $67,500 on January  31, 2000.   The sales price  approximates the  book
  value of the clinic equipment.

<PAGE>
  ITEM 2. DESCRIPTION OF PROPERTY

       The Company leases  approximately 3,500 square  feet in an  office
  building in  Irving, Texas  at a  monthly rent  $5,300 for  use as  its
  principal headquarters.  The Company currently owns a parcel of land in
  San Antonio,  Texas,  on  which  the  Company's  Southcross  clinic  is
  located.

       The Company owns, operates  and manages eleven  clinics.  Ten  are
  primary care clinics, of which three are medical clinics and seven  are
  chiropractic clinics.  The Company also has a physical therapy facility
  at its  largest chiropractic  clinic.   The following  table lists  the
  clinics, locations, monthly rents, services provided, and date acquired
  or commenced operation by the Company.
<TABLE>

Clinics in Operation   Location         Monthly      Services      Date Acquired
 in Fiscal 1999                         Rent         Provided
--------------------   ---------------  -------  ----------------- -------------
<S>                    <C>              <C>      <C>               <C>
United Health          Katy, TX         $3,400   Chiropractic &    October 1994
 Services                                         physical therapy

United Health          San Antonio, TX  $2,300   Chiropractic &    July 1994
 Services (Wurzbach)                              physical therapy

United Health          San Antonio, TX  $1,000   Chiropractic &    October 1994
 Services (San Pedro)                             physical therapy

Nationwide Sports &    San Antonio, TX  $1,000   Physical therapy  October 1994
 Injury (Bandera)

United Health          San Antonio, TX  $1,900   Chiropractic      October 1994
 Services (Bandera)

San Pedro Clinic       San Antonio, TX  $1,100   Primary medical   October 1994
                                                  care

Southcross Clinic      San Antonio, TX  owned    urgent & primary  December 1995
                                                  medical care

United Chiropractic    New Orleans, LA  $1,600   Chiropractic      July 1994
 (New Orleans East)

United Chiropractic    New Orleans, LA  $1,200   Chiropractic      July 1994
 (Uptown)

Peachtree Corners      Norcross, GA     sold     urgent & primary  July 1995
 Medical Center*                                  medical care

Peachtree Medical      Conyers, GA      returned urgent & primary  February 1996
 Center of Conyers**                              medical care

Peachtree Medical      McDonough, GA    $4,900   Primary medical   February 1996
 Center of McDonough                              care

Valley Family Health   McAllen, TX      $2,500   Chiropractic      January 1996
 Center

Total rent                              $20,900

  *    Clinic sold in second quarter of fiscal 1999.
  **   Clinic returned to previous owner in October 1999.
</TABLE>
<PAGE>
  ITEM 3. LEGAL PROCEEDINGS

       On April 14, 1998,  the American Arbitration Association,  Atlanta
  Ga., issued an  award to the  Company concerning  its Northside  clinic
  located in Atlanta, Georgia,  against the doctor  who was the  original
  seller of that  clinic.   The doctor  alleged contract  default by  the
  Company and  was  claiming  all rights  to  this  clinic.  The  Company
  contended that there  was a valid  settlement agreement concerning  the
  alleged breach  of contract.  The arbitrator  found there  was a  valid
  settlement agreement  and  issued  a  ruling  in  accordance  with  the
  reported terms of the settlement agreement. In sum, the award makes the
  doctor responsible for all sums and accounts due for operating expenses
  after March 10, 1996.  Further,  the award bars the doctor from  making
  any claims against the  Company for the  promissory note and  guarantee
  given by  the  Company,  and the  doctor's  employment  contract.    In
  exchange, the  Company  returned  the clinic  and  accounts  receivable
  collected by the Company.

       The Company settled  its litigation with  a service supplier  over
  unpaid invoices.  There are two suits filed November 1997 and September
  1997, respectively.  The cases  were: SmithKline Beecham Clinical  Labs
  v. American  HealthChoice, Inc.,  filed in  the County  Court of  Bexar
  County at Law  No. 5,  San Antonio,  Texas, and  State District  Court,
  162nd Judicial District, Dallas  County, Texas.   On February 3,  1999,
  the Company executed a settlement with the supplier on the San  Antonio
  case.  On  May 12,  1999, the Company  executed a  settlement with  the
  supplier on the  Dallas case.   The amount of  the settlement for  both
  cases was less than the liability recorded on September 30, 1998.

       The Company settled  its litigation with  a service supplier  over
  unpaid invoices.  The  case was: McKesson  General Medical v.  American
  HealthChoice, Inc., filed in the County  Court of Dallas County at  Law
  No. 2, Dallas,  Texas.   On January 25,  1999, the  Company executed  a
  settlement agreement with the supplier.   The amount of the  settlement
  was less than the liability recorded on September 30, 1998.

       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 in July 1997  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.  The case was: Malcolm P. Dulock
  v. AHC Physicians  Corporation, Inc., filed  in the  Superior Court  of
  Gwinnett County, Georgia.   The doctor  filed a  Chapter 13  Bankruptcy
  Petition on January 29, 1999 in the United States Bankruptcy Court  for
  the Northern District of Georgia.   As of December 31, 1999, there  has
  been no  further communication  from the  plaintiff or  the  Bankruptcy
  Court.  The Company has elected to offset principal amount of the  note
  payable to  Dulock against  the remaining  accounts receivable  of  the
  Norcross clinic, which was sold in February 1999.
<PAGE>
       The Company is engaged  in litigation with  an  equipment  lessor.
  The suit was filed  October 14, 1998.   The plaintiff alleges that  the
  Company is the guarantor for a company called Corrective Vision  Center
  that went out  of business.   The case was:  Advanta Business  Services
  Corp., v. American HealthChoice, Inc., filed in the County Civil  Court
  of Harris County at  Law No. 4,  Harris County, Texas.   Advanta won  a
  decision for the full amount of the suit at a summary judgement hearing
  on January 20,  1999.   Any further action  by the  plaintiff has  been
  stayed by the Chapter  11 Bankruptcy Petition filed  by the Company  on
  October 19, 1999.

       The Company settled its litigation with an equipment lessor.   The
  suit was  filed October  6, 1998.  The  plaintiff alleged  default  for
  nonpayment of a  lease and claimed  rights under the  lease.  The  case
  was: CIT  Group/Equipment Financing,  Inc., v.  American  HealthChoice,
  Inc., filed in the State District Court, 68th Judicial District, Dallas
  County, Texas.  On  April 15, 1999, the  Company executed a  settlement
  with the  lessor.   The amount  of  the settlement  was less  than  the
  liability recorded on September 30, 1998.

       The Company settled its litigation with an equipment lessor for  a
  prefab trailer used as an  office at a clinic  in  San  Antonio, Texas.
  The suit was filed December 3, 1998.  The plaintiff alleged default for
  nonpayment of a  lease and claimed  rights under the  lease.  The  case
  was: Sanwa Business Credit Corp., v. American HealthChoice, Inc., filed
  in the State  District Court, 125th  Judicial District, Harris  County,
  Texas.  On February  11, 1999, the Company  executed a settlement  with
  the lessor.  The amount of  the settlement was less than the  liability
  recorded on September 30, 1998.

       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 physician 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  account receivable  for
  patients the doctors treated  at the clinic  that were 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 case was:  Susan Johnson,  Gilberto Martorell,  and
  Henry Heard  v.  American  HealthChoice, Inc.,  dba  Peachtree  Corners
  Medical Center,  and Malcolm  Dulock, filed  in the  Superior Court  of
  Gwinnett County, Georgia.   Any  further action  in the  case has  been
  stayed by the Chapter  11 Bankruptcy Petition filed  by the Company  on
  October 19, 1999.

       The Company was served  a Complaint on  January 26, 1998  alleging
  unspecified damages  arising from  trademark infringement  and  related
  claims.   The  Company  has  retained  a  law  firm  and  is  currently
  evaluating the  allegations.    The case  was:  Unihealth  v.  American
  HealthChoice, Inc., filed in the United States District Court, Southern
  District of Texas, Houston Division.  The claim was settled on February
  12, 1999 for an immaterial amount.
<PAGE>
       A person claiming to have performed certain services in  formation
  of the Company has sued claiming he  is due a larger percentage of  the
  Company stock than what he received.  The Company was served notice  on
  March 29, 1998 and has retained  a law firm to  seek a dismissal or  in
  the alternative a change of  venue.   The  case is Stewart v.  American
  HealthChoice, Inc. filed  in the United  States District Court,  Middle
  District of Florida, Tampa  Division.  Any further  action in the  case
  has been stayed  by the  Chapter 11  Bankruptcy Petition  filed by  the
  Company on October 19, 1999.

       The Company settled its litigation with the group from which   the
  Company purchased  four  Atlanta,  Georgia area  clinics.    The  claim
  alleged failure to pay on the  promissory note for the purchase of  the
  clinics and to enforce  stock pledge obligations.   The suit was  filed
  April 14,  1998. The  case was  Metropolitan  Health Care  v.  American
  HealthChoice,  Inc.  filed  in  the  United  States  Bankruptcy  Court,
  Northern  District  of  Georgia,  Atlanta  Division.    The  claim  was
  dismissed on April 20, 1999 with the consent of all parties.

       The Company is engaged  in litigation filed  on February 23,  1998
  with a former landlord at a location where the Company closed a  clinic
  for breach of lease.  The Company answered and counter claimed  against
  landlord for landlord's failure  to perform under  the agreement.   The
  case is: Assist, Inc., v. American  HealthChoice, Inc., filed in  State
  District Court,  285th Judicial  District, Bexar  County, Texas.    Any
  further action in the case has been stayed by the Chapter 11 Bankruptcy
  Petition filed by the Company on October 19, 1999.

       The Company was engaged in litigation filed on May 14, 1998 with a
  former landlord at  a location where  the Company closed  a clinic  for
  breach of  lease.  The Company  answered  and counter  claimed  against
  landlord for landlord's failure to perform  under the agreement.    The
  case was: Dale Baldauf and Marylyn  D. Frank v. American  HealthChoice,
  Inc., and Trevino, Roman & Assoc., filed in State District Court, 138th
  Judicial District, Cameron County, Texas.   The litigation was  settled
  in August 1999.

       The Company was engaged in litigation with the former owner of the
  Conyers, Georgia medical clinic for defaulting on a security  agreement
  and note  payable in  connection with  the purchase  of the  clinic  in
  January 1996.  The case was: William A. Futch v. American HealthChoice,
  Inc. and AHC Physicians Corporation, Inc. filed January 20, 1999 in the
  Superior  Court  of   Rockdale  County,  State   of  Georgia.     After
  unsuccessful negotiations to settle the suit, Futch obtained a writ  of
  possession  and  seized  the assets of  the clinic on  October 2, 1999.
  After AHC Physicians Corporation, Inc. and American HealthChoice,  Inc.
  filed a Chapter 11  Bankruptcy Petition on October  19, 1999, the  case
  was removed to the United States Bankruptcy Court, Northern District of
  Texas, Dallas Division.  The litigation was settled on December 3, 1999
  by a  Court Order  returning the  clinic  assets to  Futch for  a  full
  release of all  claims and monies  against American HealthChoice,  Inc.
  and AHC Physicians Corporation, Inc.

       On  October  19, 1999,  American  HealthChoice, Inc.,  the  parent
  company, and AHC Physicians Corporation,  Inc., a subsidiary that  owns
  the Georgia clinics,  filed Chapter  11 Bankruptcy  Petitions with  the
  United States  Bankruptcy Court,  Northern  District of  Texas,  Dallas
  Division (Case No. 99-37314).
<PAGE>

  ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

       No matter was submitted to a vote of security holders, through the
  solicitation  of  proxies  or  otherwise,  during  the  quarter   ended
  September 30, 1999.


                                 PART II

  ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

       Market Information.  During the four quarters ended September  30,
  1998, the  Company's common  stock was  listed on  The Nasdaq  SmallCap
  Market under the symbol "AHIC".   The common stock was delisted by  The
  Nasdaq Stock Market on December 1, 1998.  From December 3, 1998 to  the
  present, the common has been quoted on the OTC Bulletin Board under the
  symbol "AHIC".

  The following  table presents  the high  and low  bid prices  for  each
  quarter:


                Quarter Ended              High Bid      Low Bid
              ------------------           --------      -------
              December 31, 1997            $6.125        $4.00
              March 31, 1998               $4.625        $0.375
              June 30, 1998                $0.50         $0.125
              September 30, 1998           $0.94         $0.0625
              December 31, 1998            $0.063        $0.0156
              March 31, 1999               $0.0625       $0.0156
              June 30, 1999                $0.2969       $0.0312
              September 30, 1999           $0.0938       $0.0156

       Holders.  Based on information provided by the Company's  transfer
  agent, the  Company had  approximately 100  holders  of record  of  its
  common stock at September 30, 1999.

       Dividends.   The Company  has paid  no  cash dividends  since  its
  inception, and it is  unlikely that any cash  dividend will be paid  in
  the future.    The declaration  in  the future  of  any cash  or  stock
  dividends will be  at the discretion  of the Board  depending upon  the
  earnings, capital requirements and  financial position of the  Company,
  general economic conditions and other pertinent factors.  There are  no
  dividend restrictions in any creditor or  other agreement to which  the
  Company is a party.

<PAGE>
  ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

  Results of Operations

       The following summary  of earnings and  related discussion of  the
  results of operations should be read in conjunction with the  Company's
  Consolidated Financial Statements and Notes thereto included  elsewhere
  in this document.

<TABLE>
                                            Years Ended September 30,

                                         1997          1998          1999
                                      ----------    ----------    ----------
     <S>                             <C>           <C>           <C>
     Net Patient Revenues            $ 9,756,000   $ 7,226,000   $ 4,809,000
     Operating Expenses:
       Compensation and benefits       9,161,000     6,009,000     3,771,000
       Allowance for doubtful at
        closed clinics                         -             -     1,848,000
       General and administrative      3,392,000     2,716,000     1,517,000
       Rent                            1,084,000       880,000       430,000
       Other                           1,488,000       248,000       170,000
                                      ----------    ----------    ----------
          Total Operating Expense     15,125,000     9,853,000     7,736,000
     Other Income (Expense):
       Interest expense and other
         costs of borrowing           (2,668,000)     (732,000)     (611,000)
       Other income (expense), net       949,000      (419,000)      693,000
                                      ----------    ----------    ----------
     Total Other Income (Expense)     (1,719,000)   (1,151,000)       83,000
                                      ----------    ----------    ----------
       Loss Before Income Taxes      $(7,088,000)  $(3,778,000)  $(2,844,000)
                                      ==========    ==========    ==========
</TABLE>

  Fiscal Ended September 30, 1999 Compared to Fiscal Ended September 30, 1998

       Net Patient Revenues.   For the  fiscal year  ended September  30,
  1999, net  patient  revenues decreased  from  $7,226,000 for  the  same
  period in 1998 to $4,809,000 in 1999.  The decrease was a result of the
  closure or sale  of five clinics  in fiscal 1998  and the  sale of  the
  Norcross  clinic.    Approximately   $1,800,000  of  the  decrease   is
  attributable to the Norcross clinic sale as of December 31, 1998.

       Compensation and Benefits.   For the  fiscal year ended  September
  30, 1999, compensation and benefits  decreased from $6,009,000 in  1998
  to $3,771,000 in  1999.  The  decrease, which  exceeded the  comparable
  percentage  decrease  in  revenues,  was  due  primarily  to  personnel
  reductions related to  closure of unprofitable  clinics in fiscal  1998
  and the sale of the Norcross  clinic.  Approximately $1,500,000 of  the
  decrease is attributable to the Norcross clinic sale as of December 31,
  1998.
<PAGE>
       Allowance for Doubtful  Accounts at Closed  Clinics.  The  Company
  closed five  clinics  in fiscal  1998  and established  allowances  for
  doubtful accounts at September 30, 1998 based on historical  collection
  experience.  However, actual collections during the twelve months ended
  September 30,  1999 have  been less  than  projected.   The  $1,848,000
  additional allowance reflects this shortfall in collections on accounts
  receivable  at  these  closed  clinics  and,  in  addition,  less  than
  anticipated  collections  of  certain   one-year  and  older   accounts
  receivable for the Norcross clinic.

       General and Administrative.  For  the fiscal year ended  September
  30, 1999, general and administrative expense decreased from  $2,716,000
  in 1998 to $1,517,000 in 1999.  Approximately $350,000 of the  decrease
  is attributable to the Norcross clinic sale as of December 31, 1998 and
  approximately  $200,000  is  attributable  to  reduced  marketing   and
  advertising.    The  remainder  of  the  decrease  is  due  to  overall
  reductions in administrative expenses including legal and travel.

       Rent.   For  the  fiscal  year  ended  September  30,  1999,  rent
  decreased $450,000 from  $880,000 in  1998 to  $430,000 in  1999.   The
  decrease was  due to  clinic  closures and  the  sale of  the  Norcross
  clinic.

       Other Income and  Expense.  Other  income in 1999  of $693,000  is
  attributable to a $272,000 gain recognized on the Norcross clinic  sale
  in February  1999 and  a $485,000  gain on  expiration of  options  and
  warrants during the fiscal year.   Other expense of $419,000 in  fiscal
  1998 is primarily attributable to establishment of a 100% reserve for a
  note receivable  in the  amount of  $225,000 related  to the  Company's
  investment in an eye clinic.


  Fiscal Year  Ended September  30, 1998  Compared to  Fiscal Year  Ended
  September 30, 1997

       Net Patient Revenues.  For fiscal  year ended September 30,  1998,
  net patient revenues decreased from $9,756,000  for the same period  in
  1997 to $7,226,000 in 1998.  The  decrease was a result of the  closure
  or sale of five clinics in fiscal 1998 and reductions in revenues  from
  chiropractic clinics due to new regulations in the State of Texas  that
  govern marketing of medical services.  Approximately $1,000,000 of  the
  decrease was  attributable  to  reduced  volume  of  patient  insurance
  settlements as a result of the changes in Texas marketing laws.

       Compensation and Benefits.   For the  fiscal year ended  September
  30, 1998, compensation and benefits  decreased from $9,161,000 in  1997
  to $6,009,000 in  1998.  The  decrease, which  exceeded the  comparable
  percentage  decrease  in  revenues,  was  due  primarily  to  personnel
  reductions related to  closure of  unprofitable clinics  in the  second
  half of fiscal 1997 and additional closures in fiscal 1998.
<PAGE>
       General and Administrative.  For  the fiscal year ended  September
  30, 1998, general and administrative expense decreased from  $3,392,000
  for fiscal year 1997 to $2,716,000 in 1998.  Approximately $300,000  of
  the  decrease  was  attributable  to  reduced  legal  and  professional
  expenses due to fewer pending suits and more legal projects assigned to
  in-house counsel,  and another  $300,000 is  related to  reductions  in
  advertising and  promotion  of  the chiropractic  clinics  due  to  new
  regulations by  the State  of Texas  that govern  marketing of  medical
  services.

       Rent.   For  the  fiscal  year  ended  September  30,  1998,  rent
  decreased $204,000 from $1,084,000  in 1997 to $880,000  in 1998.   The
  decrease was primarily  due to clinic  closures in the  second half  of
  fiscal 1997.

       Other Operating Expense.  For the fiscal year ended September  30,
  1998, other operating expenses decreased $1,240,000 from $1,488,000  in
  fiscal  1997  to  $248,000  in  1998.    This  classification  includes
  depreciation and amortization of $247,000 in 1998 and $236,000 in 1997.
   In addition, fiscal year 1997 included $1,252,000 for loan acquisition
  costs and loss on settlement of debt.

       Other Income and Expense.  In  fiscal year 1998, interest  expense
  and other costs of  borrowing were $732,000  compared to $2,668,000  in
  fiscal year 1997.  The decrease  of $1,936,000 is primarily due to  the
  reduction of  one-time  financing  costs from  $2,138,000  in  1997  to
  $300,000 in 1998.  New proceeds from debentures and notes payable  were
  approximately $11,000,000 in 1997 compared to approximately  $2,000,000
  in 1998.    Other expense  of  $419,000  in fiscal  1998  is  primarily
  attributable to establishment of a 100%  reserve for a note  receivable
  in the amount of $225,000 related to the Company's investment in an eye
  clinic.


  Liquidity and Capital Resources

       For the fiscal  year ended September  30, 1999, net  cash used  in
  operating activities was  $660,000 as  compared to  $1,343,000 for  the
  twelve months ended September  30, 1998.  The  decrease of $683,000  is
  primarily attributable to the sale of the Norcross clinic, which had an
  operating loss of  $300,000 in 1999  compared to  a $600,000  operating
  loss in 1998.  The net cash  used in operating activities for 1999  was
  funded by bridge loans and proceeds from the Norcross sale.

       Net cash  provided  by investing  activities  for the  year  ended
  September  30,  1999,  of  $379,000 is  primarily attributable  to  the
  $285,000 proceeds from the sale of the Norcross clinic.

       Net cash  provided  by financing  activities  for the  year  ended
  September 30, 1999 was $141,000  resulting  primarily from  $287,500 in
  proceeds from notes payable.
<PAGE>
       After the sale of  the Norcross clinic in  February 1999 and  some
  improvement in the profits from  the chiropractic clinics, the  Company
  continued to incur cash operating losses of approximately  $40,000  per
  month.  From January to September 1999, certain officers and directors,
  and a beneficial  owner of more  than 5% of  the common stock  advanced
  $287,5000 in bridge loans in anticipation of the Company obtaining  new
  funding to complete an  acquisition of profitable chiropractic  clinics
  in Texas.  However, the Company was unable to restructure terms of  the
  September 1997 and August 1998  debenture agreements, which would  have
  allowed for new funding under terms satisfactory to the Company and the
  prospective seller.  Also, in early October 1999, the Company  received
  an  adverse  ruling  on  the  Futch   lawsuit.    See  Item  3   "Legal
  Proceedings".  As a result of these two events, the Board of  Directors
  elected to file individual voluntary bankruptcy petitions under Chapter
  11 of  the United  States Bankruptcy  Code for  American  HealthChoice,
  Inc.,  the  parent   company,  and  its   subsidiary,  AHC   Physicians
  Corporation Inc., the owner of the Georgia medical clinics.

       The Company  intends  to  file a  Plan  of  Reorganization  before
  February 15, 2000, which will include a favorable restructuring of  the
  debenture agreements  and the  acquisition of  profitable  chiropractic
  clinics.  If the  proposed plan is confirmed  by the Bankruptcy  Court,
  after approval  by the  creditors and  other parties  in interest,  the
  Company hopes to achieve profitable operations and generate  sufficient
  cash flow to meet all obligations and fund future growth.


  Year 2000 Issue

  All of the  Company's critical  operating and  accounting systems  were
  Year 2000  compliant  by  December 31,  1999.    The  Company  incurred
  approximately  $20,000  for  new  equipment  to  meet  all  Year   2000
  requirements.


  Forward-Looking Information

       This  report  contains  certain  forward-looking  statements   and
  information relating to the  Company that are based  on the beliefs  of
  the Company's management as well as assumptions made by and information
  currently available  to  the Company's  management.  When used  in  the
  report, words such  as "anticipate,"  "believe," "estimate,"  "expect,"
  "intend," "should,"  and similar  expressions, as  they relate  to  the
  Company or its management,  identify forward-looking statements.   Such
  statements reflect the  current views of  the Company  with respect  to
  future events  and are  subject to  certain risks,  uncertainties,  and
  assumptions  relating  to  the   operations,  results  of   operations,
  liquidity, and growth  strategy of the  Company, including  competitive
  factors  and  pricing  pressures,  changes  in  legal  and   regulatory
  requirements,  interest   rate  fluctuations,   and  general   economic
  conditions, as well as other factors described in this report.   Should
  one or more of the risks materialize, or should underlying  assumptions
  prove incorrect, actual  results or outcomes  may vary materially  from
  those described herein as  anticipated, believed, estimated,  expected,
  or intended.

<PAGE>

  ITEM 7. FINANCIAL STATEMENTS

                        AMERICAN HEALTHCHOICE, INC.
                             AND SUBSIDIARIES


                                   INDEX


                                                                  Page
                                                                  ----
  FINANCIAL STATEMENTS:


  Independent Auditor Report                                        15

  Consolidated Balance Sheet - September 30, 1999                   16

  Consolidated Statements of Operations - Years Ended               17
       September 30, 1998 and 1999

  Consolidated Statement of Stockholders' Equity - Years            18
       Ended September 30, 1998 and 1999

  Consolidated Statements of Cash Flows - Years Ended               19
       September 30, 1998 and 1999

  Notes to Consolidated Financial Statements                        20


<PAGE>


                      REPORT OF INDEPENDENT AUDITORS


  To the Board of Directors
  American HealthChoice, Inc. and subsidiaries


  We have audited the accompanying consolidated balance sheet of American
  HealthChoice, Inc. and subsidiaries as of  September 30, 1999, and  the
  related consolidated  statements of  operations, stockholders'  equity,
  and cash flows for each of the two years in the period ended  September
  30,1999.      These   consolidated   financial   statements   are   the
  responsibility of the Company's management.   Our responsibility is  to
  express an opinion on these consolidated financial statements based  on
  our audits.

  We conducted our audit in  accordance with generally accepted  auditing
  standards. Those standards require that we  plan and perform the  audit
  to obtain reasonable assurance about whether the consolidated financial
  statements are  free  of  material misstatement.    An  audit  includes
  examining, on  a  test  basis,  evidence  supporting  the  amounts  and
  disclosures in  the  financial  statements.   An  audit  also  includes
  assessing the accounting principles used and significant estimates made
  by management, as  well as evaluating  the overall financial  statement
  presentation.  We believe  that our audits  provide a reasonable  basis
  for our opinion.

  In our opinion, the consolidated financial statements referred to above
  present fairly, in  all material respects,  the consolidated  financial
  position  of  American  HealthChoice,  Inc.  and  subsidiaries  as   of
  September 30, 1999, and the results of their operations and their  cash
  flows for each of the two years in the period ended September 30,  1999
  year in conformity with generally accepted accounting principles.

  The accompanying consolidated  financial statements as  of and for  the
  year ended September 30, 1999 have been prepared assuming that American
  HealthChoice, Inc. will  continue as a  going concern.   As more  fully
  described in Note 2, the Company  has incurred recurring losses.   This
  condition raises  substantial  doubt  about the  Company's  ability  to
  continue as a going concern.  Management's resolution in regard to this
  matter is  also  described  in Note  2.    The  consolidated  financial
  statements do  not  include any  adjustments  to reflect  the  possible
  future effects on  the recoverability and  classification of assets  or
  the amounts and classification of liabilities that may result from  the
  outcome of this uncertainty.

  Lane Gorman Trubitt, L.L.P.
  Dallas, Texas
  December 30, 1999
  Except for last paragraph of note 18,
  as to which date is January 12, 2000

<PAGE>
<TABLE>
                        AMERICAN HEALTHCHOICE, INC.
                             AND SUBSIDIARIES

                        CONSOLIDATED BALANCE SHEET
                            SEPTEMBER 30, 1999

                                  ASSETS
  <S>                                                            <C>
  Current Assets:
  Cash                                                           $    28,862
  Accounts receivable, less allowance                              5,162,930
    for doubtful accounts of $ 6,917,116
  Advances and notes receivable                                      199,524
  Other current assets                                                53,512
                                                                  ----------
       Total current assets                                        5,444,828

  Property and equipment, net                                        794,467
  Goodwill, net                                                      130,434
  Other assets                                                        23,868
                                                                  ----------
       Total assets                                              $ 6,393,597
                                                                  ==========

                   LIABILITIES AND STOCKHOLDERS' EQUITY

  Current Liabilities:
  Current portion of notes payable                               $   726,414
  Current portion of capital lease obligations                       229,914
  Accrued payroll and payroll taxes                                  332,437
  Accounts payable and accrued expenses                            1,306,653
                                                                  ----------
       Total current liabilities                                   2,595,418

  Convertible debentures                                           3,385,000
  Notes payable, less current portion                                      -
  Capital lease obligations, less current portion                     71,663
                                                                  ----------
       Total liabilities                                           6,052,081

  Commitments

  Stockholders' Equity:
  Preferred stock, $.001 par value; 5,000,000
   shares authorized; none issued                                          -
  Common stock, $.001 par value; 115,000,000 shares authorized;
    28,144,259 shares issued and outstanding                          28,144
  Options to acquire common stock                                    200,104
  Additional paid-in capital                                      13,363,290
  Accumulated deficit                                            (13,250,022)
                                                                  ----------
       Total stockholders' equity                                    341,516
                                                                  ----------
       Total liabilities and stockholders' equity                $ 6,393,597
                                                                  ==========

    See accompanying notes to these consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
                        AMERICAN HEALTHCHOICE, INC.
                             AND SUBSIDIARIES

                   CONSOLIDATED STATEMENTS OF OPERATIONS


                                                    Years Ended September 30,
                                                      1998            1999
                                                    ---------       ---------
  <S>                                             <C>             <C>
  Net Patient Revenues                            $ 7,226,113     $ 4,808,559

  Operating Expenses:
    Compensation and benefits                       6,009,141       3,770,514
    Allowance for doubtful accounts at
      closed clinics                                        -       1,848,000
    Depreciation and amortization                     247,392         170,348
    General and administrative                      2,715,744       1,517,158
    Rent expense                                      880,301         429,601
                                                    ---------       ---------
       Total operating expenses                     9,852,578       7,735,621

  Other Income (Expense):
    Gain on sale of clinic                                  -         272,350
    Interest expense and other costs of borrowing    (731,796)       (611,166)
    Other expense                                    (477,757)        (24,440)
    Other income                                       58,500         446,430
                                                    ---------       ---------
       Total other income (expenses)               (1,151,053)         83,174
                                                    ---------       ---------
  Net Loss                                        $(3,777,518)    $(2,843,888)
                                                    =========       =========

  Basic and Diluted Net Loss Per Share            $   (0.33)      $     (0.12)

  Weighted Average Common Shares Outstanding       11,554,428      22,924,169


    See accompanying notes to these consolidated financial statements.

</TABLE>
<PAGE>
<TABLE>
                                AMERICAN HEALTHCHOICE, INC.
                                     AND SUBSIDIARIES

                CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                     FOR THE YEARS ENDED SEPTEMBER 30, 1998 AND 1999


                                                                   Option to    Additional
                                                Common Stock        Acquire      Paid-in      Accumulated
                                               Shares    Amount     Common       Capital        Deficit        Total
                                                                     Stock
                                             ----------   ------    --------    ----------   -----------     ----------
 <S>                                         <C>         <C>       <C>         <C>          <C>             <C>
 Balances at September 30,1997                9,870,614  $ 9,871   $ 685,664   $12,003,258  $ (6,628,616)   $ 6,070,177
 Common stock issued in connection
   with debenture conversion                  3,218,296    3,218           -     1,286,717             -      1,289,935
 Common stock issued in
   connection with bridge loan                1,500,000    1,500           -       186,000             -        187,500
 Common stock issued in connection
   with employment incentives                    89,487       90           -        24,044             -         24,134
 Return to company                             (158,765)    (159)          -      (624,979)            -       (625,138)
 Net loss                                             -        -           -             -    (3,777,518)    (3,777,518)
                                             ----------   ------    --------    ----------   -----------     ----------
 Balances at September 30,1998               14,519,632   14,520     685,664    12,875,040   (10,406,134)     3,169,090

 Common stock issued in connection
   with debenture conversion                  1,826,825    1,826           -        79,974             -         81,800
 Common stock issued in connection
   with directors notes payable conversion    8,525,864    8,526           -       179,044             -        187,570
 Common stock issued in
   connection with bridge loans               2,941,938    2,942           -       209,558             -        212,500
 Common stock issued in connection
   with consulting agreement                    250,000      250           -        12,250             -         12,500
 Common stock issued in connection
   with employment incentives                    80,000       80           -         7,424             -          7,504
 Gain recognized on expiration of
   warrants and options                               -        -    (485,560)            -             -       (485,560)
 Net loss                                             -        -           -             -    (2,843,888)    (2,843,888)
                                             ----------   ------    --------    ----------   -----------     ----------
 Balances at September 30,1999               28,144,259  $28,144   $ 200,104   $13,363,290  $(13,250,022)   $   341,516
                                             ==========   ======    ========    ==========   ===========     ==========

    See accompanying notes to these consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
                          AMERICAN HEALTHCHOICE, INC.
                             AND SUBSIDIARIES

                   CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
                                                     Years Ended September 30
                                                       1998            1999
                                                     ---------       ---------
  <S>                                              <C>             <C>
  Cash Flows From Operating Activities:
  Net loss                                         $(3,777,518)    $(2,843,888)
  Adjustments to reconcile net loss to
    net cash used in operating activities:
    Allowance for doubtful accounts                  3,204,031       3,781,900
    Gain on sale of Norcross clinic assets                   -        (272,350)
    Depreciation and amortization                      247,392         170,348
    Notes payable financing costs                            -         110,483
    Loss on disposal of equipment                            -          44,413
    Stock transactions:
      Stock issued in connection with financing
        transactions                                   232,435         212,500
      Employee compensation-stock                       24,134           7,504
      Consulting fees-stock                                  -          12,500
    Gain on expiration of options and warrants               -        (485,560)
    Write-off of notes receivable                      292,770               -
    Fees deducted from debenture proceeds              607,491               -
  Change in operating assets and liabilities, net:
    Accounts receivable-trade                       (2,290,075)     (1,816,709)
    Other current assets                                51,601         (26,262)
    Accounts payable and accrued expenses               95,752         443,347
    Income taxes payable                               (31,625)              -
                                                     ---------       ---------
         Net cash used in operating activities      (1,343,612)       (661,774)

   Cash Flows From Investing Activities:
    Advances and notes receivable, net                (246,551)         98,696
    Property and equipment, net                        153,261          (4,406)
    Other assets                                        (8,408)              -
    Proceeds from sale of Norcross clinic assets             -         285,000
                                                     ---------       ---------
         Net cash provided by (used in) investing     (101,698)        379,290
           activities

  Cash Flows From Financing Activities:
    Proceeds from notes payable                        150,000         287,500
    Proceeds from debentures                         1,193,103               -
    Payments on notes payable and capital leases      (850,899)       (146,049)
                                                     ---------       ---------
         Net cash provided by financing activities     492,204         141,451
                                                     ---------       ---------

  Net Decrease In Cash                                (953,106)       (141,033)
  Cash At Beginning Of Year                          1,123,001         169,895
                                                     ---------       ---------
  Cash At End Of Year                              $   169,895     $    28,862
                                                     =========       =========
<PAGE>
  Supplemental Disclosure Of Cash Flow Information:
    Interest paid                                  $   278,684     $    32,000

  Supplemental Disclosure Of Non-cash Transactions:
    Offset accounts payable against accounts
      receivable                                             -         236,600
    Conversion of notes payable to directors
      into stock                                             -         187,570
    Offset notes payable against goodwill and
      accounts receivable                                    -         252,959
    Payoff of old debenture with proceeds from
      new debenture                                  1,584,406               -
    Conversion of debenture into stock               1,245,000          55,594
    Reinstate notes payable to directors in
      connection with return of stock to company       625,138               -
   Debenture Payment offset against proceeds
      from Norcoss sale                                      -         665,000

    See accompanying notes to these consolidated financial statements.

</TABLE>
<PAGE>

                        AMERICAN HEALTHCHOICE, INC.
                             AND SUBSIDIARIES

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

  1. Organization and Summary of Significant Accounting Policies

  Organization  -  American  HealthChoice,  Inc.  and  subsidiaries  (the
  Company) consists  of a  parent company  and eleven  clinics  providing
  medical, physical therapy,  and chiropractic services  in San  Antonio,
  McAllen, and Houston, Texas,  New Orleans, Louisiana  and in the  metro
  area of Atlanta, Georgia.  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.

  Consolidation  Policy   -  The   accompanying  consolidated   financial
  statements include the  accounts of  the Company  and its  wholly-owned
  subsidiaries.   All material  inter-company accounts  and  transactions
  have been eliminated in consolidation.

  Net Patient  Revenues  -  Revenue is  recognized  upon  performance  of
  services. Substantially all of the Company's revenues are derived  from
  personal injury  claims and  claims filed  on major  medical  policies,
  worker's compensation policies, Medicare  or Medicaid.  Allowances  for
  discounts on  services  provided  are recognized  in  the  periods  the
  related revenue  is  earned.    Allowances  are  maintained  at  levels
  considered appropriate by management  based upon historical  charge-off
  experience and other  factors deemed pertinent  by management.   Fiscal
  1999 and 1998 net patient revenues; as a percentage of total  revenues,
  for medical  and  chiropractic,  including  physical  therapy  services
  amounted to 55% and 45%, 45% and 55%, respectively.

  Cash Equivalents - For  purposes of the statements  of cash flows,  the
  Company considers all highly liquid  debt instruments purchased with  a
  maturity of three months or less  to be cash equivalents.  The  Company
  maintains its  accounts at  financial  institutions located  in  Texas,
  Louisiana, and Georgia.  The bank  accounts are insured by the  Federal
  Deposit Insurance Corporation up to $100,000.

  Capital Leases - The  assets and related  obligations for property  and
  equipment under  capital leases  are initially  recorded at  an  amount
  equal to the present  value of future minimum  lease payments.   Assets
  under capital leases are amortized over the life of the lease or useful
  life of the assets.   Interest expense is accrued  on the basis of  the
  outstanding obligations under capital leases.

  Advertising Costs - The Company's policy is to expense all  advertising
  costs in the period in which advertising first takes place. Advertising
  expense  was approximately  $117,000 and  $323,000 for  the years ended
  September 30, 1999 and 1998 respectively.

  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 straight-
  line methods.
<PAGE>
  Income taxes - The  Company accounts for  income taxes under  Financial
  Accounting Standards Board  (FASB) Statement No.  109, "Accounting  for
  Income Taxes." FASB  Statement No.  109 requires  that deferred  income
  taxes be  recorded  on a  liability  method for  temporary  differences
  between the financial reporting and tax bases of a company's assets and
  liabilities, as adjusted when new tax rates are enacted.

  Goodwill - Goodwill arose  from the Company's acquisitions  of  various
  clinics and is being amortized using  the straight-line method over  20
  years.   During 1999 goodwill  of approxiamately  $275,000  was written
  down as a part of disposing or closing clinics.

  Recent  Accounting  Pronouncements  _   There  were  no   authoritative
  pronouncements adopted in  the years ended  September30, 1999 and  1998
  that had  a material  effect on  the Company's  consolidated  financial
  statements.

  The  Financial  Accounting  Standards  Board  has  released  FAS   134,
  "Accounting  for   Mortgage-Backed   Securities  Retained   after   the
  Securitization of Mortgage loans  Held for Sale  by a Mortgage  Banking
  Enterprise," FAS 135, "Recission of FASB Statement No. 75 and Technical
  Corrections," FAS  136, "Transfers  of Assets  to a  Not-for-Profit  or
  Charitable trust That  Raises or Holds  Contributions for Others,"  and
  FAS 137, "Accounting for Derivative Instruments and Hedging Activities-
  Deferral of the Effective date of FASB Statement No. 133."  The Company
  believes that  the  impact of  these  new  standards will  not  have  a
  material effect  on  the  Company's  consolidated  financial  position,
  results of operations or disclosures.

  Use of Estimates  - In preparing  the Company's consolidated  financial
  statements, management is  required to make  estimates and  assumptions
  that effect  the amounts  reported in  these financial  statements  and
  accompanying notes.  Actual results could differ from those  estimates.
  The accounts receivable allowance is a significant estimate.

  Earnings per Share -  Basic earnings per share  are computed using  the
  weighted-average number of common shares outstanding.  Diluted earnings
  per  share  are  computed  using  the  weighted-average  common  shares
  outstanding after giving  effect to potential  common stock from  stock
  options based  on the  treasury stock  method, plus  other  potentially
  dilutive securities outstanding.  If the result of assumed  conversions
  is dilutive, net earnings are adjusted for the interest expense on  the
  convertible debt, while the average shares of common stock  outstanding
  are increased.

  The potentially dilutive securities held at September 30, 1999 and 1998
  were convertible debentures and stock options, discussed in footnotes 9
  and 13, respectively.   For  both years  presented, the  effect of  the
  assumed conversion of these securities was anti-dilutive.

  2. Recurring Losses

  For the twelve months ended September 30, 1999, the Company incurred  a
  net loss of  $2,843,888 compared to  a net loss  of $3,777,518 for  the
  twelve months ended September 30, 1998.  Although the fiscal 1999  loss
  represents a significant improvement over fiscal 1998, the Company  has
  been unable to generate  sufficient cash flow  from operations to  fund
  its operating requirements.
<PAGE>
  The Company's  largest medical  clinic, located  in Norcross,  Georgia,
  which had incurred losses of approximately $560,000 in fiscal 1998, was
  sold in February 1999.  See  Footnote 4 "Divestitures." After the  sale
  of the Norcross  clinic and some  improvement in the  profits from  the
  chiropractic clinics,  the Company  continued to  incur cash  operating
  losses of approximately  $40,000 per month.  From January to  September
  1999, certain officers and  directors, and a  beneficial owner of  more
  than 5%  of the  common stock  advanced $287,500  in  bridge  loans  in
  anticipation of  the  Company  obtaining new  funding  to  complete  an
  acquisition of profitable chiropractic clinics in Texas.  See  Footnote
  7 (Related Parties).  However,  the Company was  unable to  restructure
  terms  of  the September  1997  and  August 1998  debenture agreements,
  which would  have allowed  for new funding under terms  satisfactory to
  the Company  and the  prospective seller.  Also, in early October 1999,
  the  Company received an  adverse  ruling on  the  Futch  lawsuit.  See
  Footnote 17 "Legal Proceedings".   As a result of these two events, the
  Company elected to file voluntary bankruptcy petitions under Chapter 11
  of the United States Bankruptcy Code for  American  HealthChoice, Inc.,
  the  parent company,  and AHC Physicians Corporation Inc., the owner of
  the Georgia medical clinics.

  The Company intends to  file a Plan  of Reorganization before  February
  15, 2000, which will include a favorable restructuring of the debenture
  agreements and the acquisition of profitable chiropractic clinics.   If
  the proposed plan is confirmed by the Bankruptcy Court, after  approval
  by the creditors and  other parties of interest,  the Company hopes  to
  become profitable  and  generate  sufficient  cash  flow  to  meet  all
  obligations and fund future growth.


  3. Property and Equipment

  Property and equipment consists of the following:

                                                   Useful      September
                                                    Life         1999
                                                 ----------    ----------
       Land                                          -        $   120,000
       Building and leasehold improvements       2-39 years       232,697
       Furniture and equipment, including
         equipment under capital leases          5-15 years     1,291,601
       Less accumulated depreciation and
         amortization                                            (849,831)
                                                               ----------
                                                              $   794,467
                                                               ==========
  The following is a summary of equipment
    under capital leases:
       Equipment                                              $   627,910
       Less accumulated amortization                            (303,493)
                                                               ----------
                                                              $   324,417
                                                               ==========

  Substantially all assets  leased are  pledged as  collateral under  the
  existing capital lease agreements.
<PAGE>

  4. Divestitures

  In June 1998, as the result  of an arbitration settlement, the  Company
  returned the assets of the Peachtree Medical Center Northside Clinic to
  the original seller.  Operating  assets of approximately $188,000  were
  offset by a note payable of approximately $172,000 resulting in a  loss
  on settlement of $16,000.

  In June  1998 the  Company  sold the  assets  of the  ACME  Brownsville
  Chiropractic  Clinic  to  an  unrelated  entity  for  a  $250,000  note
  receivable.  The transaction resulted in loss on sale of $18,000.

  On February 12, 1999, the Company executed an asset purchase  agreement
  to sell substantially all  the assets of  the Norcross, Georgia  clinic
  for $1,075,000; payable $950,000  in cash and a  note for $125,000  due
  January 31, 2000.   The Company used $665,000  of the cash proceeds  to
  redeem 8% Cumulative Convertible Debentures issued September 1997 in  a
  Regulation S offering.  The book value of the assets sold was  $802,650
  as of December 31,  1998 comprised of  $227,750 in accounts  receivable
  less than  six months  old, $355,400  in inventory  and equipment,  and
  $219,500 of un-amortized goodwill attributable  to the purchase of  the
  clinic in 1996.  The Company  retained $227,750 in accounts  receivable
  less than six  months old and  all accounts receivable  older than  six
  months.

  5. Advances and Notes Receivable

  In September 1998, as  the result of a  bankruptcy filing, the  Company
  elected to provide a 100% reserve against a note receivable of $225,000
  related to the Company's investment in an eye care clinic.  The  charge
  is included in other expenses for 1998.

  The $250,000 note received as consideration for the assets of the  ACME
  Brownsville Chiropractic Clinic in June 1998  bears interest at 8%  and
  is payable in 60 monthly installments  of $5,069 and is secured by  the
  assets of the  clinic.   The principal due  at September  30, 1999  was
  $46,512.  As a result of common stock issued in connection with  bridge
  loans in fiscal 1999, the holder  of this note became beneficial  owner
  of more than  5% of the  common stock as  of September 30,  1999.   See
  Footnote 7 "Related Party Transactions."

  In  connection  with the sale of the Norcross clinic  in February 1999,
  the Company  received  a note in the amount of $125,000 due January 31,
  2000.

<PAGE>
  6. Notes Payable

                        Description                      9/30/98      9/30/99
                                                         --------     --------
   1.  Demand notes payable to two directors in
       connection with the return of 158,765 shares
       of common stock.  Interest rate is 8%.           $ 375,138    $ 187,568

   2.  Notes payable to physicians in connection
       with the Metropolitan clinic acquisition.
       Interest rates range from 8% to 10%.
       Monthly payments, including interest, range
       from $2,133 to $9,161 over periods ranging
       from five to seven years.  Collateral is
       accounts receivable and equipment.                 353,878      313,699

   3.  Unsecured notes payable to former owner of
       Norcross, Georgia Clinic.  Interest rate is 8%.     93,290            -


   4.  Notes payable to former owner of one of the
       Metropolitan clinics.                              109,669            -

   5.  Bridge loans                                             -      212,500

       Other notes payable                                 10,175       12,647
                                                         --------     --------
                                                          942,150      726,414
       Current maturities                                (701,341)    (726,414)
                                                         --------     --------
       Long-term notes payable                          $ 240,809    $       -
                                                         ========     ========




     1.     On December 17, 1998, the president and CEO, and a  principal
        shareholder and  board member,  agreed to  exchange $132,012  and
        $55,558,  respectively,  of  notes  payable  for  6,000,523   and
        2,525,341 shares  of  common  stock, respectively.    The  market
        price at the date of election was $0.022 per share.

     2.     The note payable to the physician,  who was the former  owner
        of the McDonough  Clinic with a principal  balance of $26,180  at
        September 30, 1998, was paid off in June 1999.  The note  payable
        to the physician, who was the former owner of the Conyers  Clinic
        with a principal  balance of $327,698 at  September 30, 1998  and
        $313,699 at September  30, 1999.  The doctor filed  a lawsuit for
        nonpayment March 1999.  On December 3, 1999, the Bankruptcy Court
        approved a settlement whereby the clinic assets  were conveyed to
        the  physician  in full settlement of claims against the Company.
        See Footnote  7  "Related  Party  Transactions."   The  principal
        balance of the note exceeded the book value of the clinic  assets
        by approximately $50,000.
<PAGE>
     3.     The Company has  been engaged in  litigation with the  former
        owner  of  the  Norcross clinic, Malcom Dulock,  since July 1997.
        In May 1999,  Dulock filed a  Chapter 7 Bankruptcy.   Since,  the
        bankruptcy estate  has  not asserted  a  claim, the  Company  has
        elected to offset  principal amount of  note payable against  the
        remaining accounts receivable of  the Norcross clinic, which  was
        sold in February 1999.

     4.     In connection with the acquisition of Metropolitan clinic  in
        McDonough, Georgia in  January 1996, the  Company assumed a  note
        held by a  doctor who was a  previous owner of  the clinic.   The
        doctor has not pursued payment on  the note at any time over  the
        last two years. The Company  has elected to writeoff the note  as
        a offset to goodwill attributable  to the purchase in the  amount
        of $57,500 and the remainder of $52,200 as an offset to  accounts
        receivable.

     5.     From  January  to  September   1999,  certain  officers   and
        directors, and a beneficial owner  of more than 5% of the  common
        stock advanced $287,5000 in bridge  loans in anticipation of  the
        Company obtaining  new  funding  to complete  an  acquisition  of
        profitable  chiropractic  clinics   in  Texas.    The   Company's
        President and CEO made loans in the principal amount of  $80,000.
        A  beneficial owner of more than 5% of the common stock  advanced
        $175,000 of  the total  amount.   See Footnote  7 "Related  Party
        Transactions."   Three additional loans  in the  total amount  of
        $25,000  were  made  by  two  directors  of  the  Company.    The
        remaining loan in the amount  of $7,500 was made by an  unrelated
        party. Consideration  for these loans  in the  amount of  $32,500
        was an equivalent value in common stock computed using the  share
        price on  the date  of the  loan.   In this  regard, the  Company
        issued 693,453 restricted common  shares at share prices  ranging
        from $0.035 to $0.08.


  7. Related Party Transactions

  The President  and Chief  Executive Officer  of the  Company,  provided
  bridge loans between June  and August 1999 in  the aggregate amount  of
  $80,000.   As additional  consideration for  making  the loans  in  the
  amount of  $55,000, an  equivalent value  in common  stock was  issued,
  computed using  the share  price on  the date  of the  loan.   In  this
  regard, the Company  issued 598,485 restricted  common shares at  share
  prices ranging from  $0.06 to  $0.11.  Bridge  loans in  the amount  of
  $80,000 remained outstanding at September 30, 1999.
<PAGE>
  Mainstream Enterprises LLC ("Mainstream"),  a beneficial owner of  more
  than 5% of the outstanding stock  at September 30, 1999, also  provided
  bridge loans  to the  Company  between January  and  July 1999  in  the
  aggregate amount  of $175,000.   Mainstream  first loaned  the  Company
  $25,000 on  January 1,  1999.   Consideration  for  this loan  was  the
  forgiveness  of  a  $5,069  monthly  installment  payment  on  a   note
  receivable from Mainstream related to the sale of a clinic owned by the
  Company in Brownsville, Texas in June  1998.  This loan was settled  as
  of March 31, 1999  by an offset for  equivalent amount due the  Company
  for corporate  office  expenses.   Mainstream  loaned  the  Company  an
  additional $25,000 on April 8, 1999.   Consideration for this loan  was
  the forgiveness of  a $5,069 monthly  installment payment  on the  note
  receivable for each month the loan remained outstanding.  This loan was
  settled on September 30,  1999 by an offset  to the note receivable  in
  the amount of  $25,000 related to  the sale of  a clinic to  Mainstream
  (see below) and  six monthly  installment  payments  totaling  $30,414.
  Between April  30,  1999  and July  8  1999,  Mainstream  provided  six
  additional bridge loans in  the aggregate of  $125,000.  As  additional
  consideration for making  these loans,  an equivalent  value in  common
  stock was issued,  computed using the  share price on  the date of  the
  loan.  In this regard, the  Company issued 1,650,000 restricted  common
  shares at share prices  ranging from $0.04 to  $0.10.  Bridge loans  in
  the amount of $100,000 remained outstanding at September 30, 1999.

  Between August  20  and 29,  1999,  Mainstream made  advance  principal
  payments in the amount of $75,000 on the note receivable related to the
  sale of  the  Brownsville  clinic.   Consideration  for  these  advance
  payments was  the  forgiveness of  $75,000  in principal  on  the  note
  receivable.

  On September 30, 1999, the Company  sold a chiropractic clinic  located
  in San Antonio, which had been  open for approximately four months,  to
  Mainstream for  $50,000.   The sales  price approximated  the value  of
  accounts receivable at September 30, 1999.   A bridge loan dated  April
  8, 1999 in the amount of $25,000 and  a bridge loan dated May 25,  1999
  in the amount of $25,000 were used as an offset to the sales price.
<PAGE>
  8. Commitments

  Rent expense for the years ended  September 30, 1998 and 1999  amounted
  to approximately $880,000 and  $430,000 respectively. The Company  also
  leases equipment under capital leases with interest rates ranging  from
  9.2% to 19.2%.   Future minimum lease  payments under operating  leases
  with terms in excess of one year and capital leases are as follows:

            Year ended September 30,         Operating         Capital
            ------------------------          --------         --------
            2000                             $ 110,091        $ 301,957
            2001                                68,937           38,243
            2002                                     -           38,243
            2003                                     -                -
            2004                                     -                -
                                              --------         --------
            Total minimum lease payments     $ 179,028          378,443
                                              ========
            Future interest                                     (76,866)
                                                               --------
                                                                301,577
            Less current portion                               (229,914)
                                                               --------
            Non-current portion                               $  71,663
                                                               ========

  The Company has a three-year employment  agreement ending June 1,  2000
  with its chief executive officer.   In the event of termination of  the
  agreement for any reason, he will be entitled to a severance pay  equal
  to six months of  his full salary.   After a change  of control of  the
  Company, as defined in the employment agreement, if the chief executive
  officer's employment is terminated,  he terminates his employment,  his
  duties are changed  or certain other  specified events  take place,  he
  will be entitled to  a severance payment equal  to twice his  effective
  annual compensation,  together  with  a continuation  of  all  employee
  benefits for two years.


  9. Convertible Debentures

  In September  1997,  the Company  sold  two 8%  Cumulative  Convertible
  Debentures in  the aggregate  amount of  $3,550,000 in  a Regulation  S
  offering.  The Debentures are convertible after 82 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 the Nasdaq  SmallCap
  Market 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.   An
  investment banking  firm received  $461,500 for  all fees.    Financing
  costs including interest for the debentures was recorded in the  fourth
  quarter of fiscal 1997.  Between  February 16, 1998 and August 14, 1998
  $1,245,000 of Debentures and $44,935 in accrued interest were converted
  for 3,218,296 shares of common stock.   The conversion price per  share
  ranged from $1.25 to $0.0625 per share.
<PAGE>
  In August 1998 the Company sold 8% Cumulative Convertible Debentures in
  the aggregate amount of $3,385,000 in  a Regulation D offering to  four
  limited partnerships not affiliated with  the Company.  The  debentures
  are convertible at  a conversion  price equal  to eighty  (80%) of  the
  average of the closing bid price of  the shares of common stock of  the
  Company as  quoted on  the  Nasdaq SmallCap  Market  for the  five  (5)
  trading days preceding the date of  conversion, provided no holder  may
  covert an amount of Debentures which would result in the holder and its
  affiliates beneficially owning more than 4.9% of the outstanding shares
  of common stock of the Company.  The Debentures are payable in full  on
  August 24, 2001 (the "Maturity Date"),  and may be partially  converted
  from time  to time  into Common  Stock until  the Maturity  Date.   The
  Company may  prepay the  debentures at  any  time, and  any  debentures
  remaining unpaid at the Maturity  Date will automatically be  converted
  into shares of Common Stock at the conversion rate, regardless  whether
  any holder  or its  affiliates would  then own  more than  4.9% of  the
  outstanding shares of Common Stock.  The Company has pledged all of its
  tangible and intangible personal property as security for repayment  of
  the Debentures.  Following is a  summary of Debenture activity for  the
  years ended September 30, 1998 and September 30, 1999:

<TABLE>
                                       Reg. S          Reg. D         Total
                                     ----------     ----------     ----------
 <S>                                <C>            <C>            <C>
 Principal balance at
   September 30, 1997               $ 3,550,000    $         -    $ 3,550,000
 Conversion for common shares        (1,245,000)             -     (1,245,000)
 Proceeds from Regulation D
   offering                          (1,584,406)     3,385,000      1,800,594
                                     ----------     ----------     ----------
 Principal balance at
   September 30, 1998                   720,594      3,385,000      4,105,594
 Conversion for common shares           (55,594)             -        (55,594)
 Cash Payment                          (665,000)             -       (665,000)
                                     ----------     ----------     ----------
 Principal balance at
   September 30, 1999               $         -    $ 3,385,000    $ 3,385,000
                                     ==========     ==========     ==========

</TABLE>

  10. Stockholders' Equity

  Between February  16, 1998  and August  14,  1998, the  Company  issued
  3,218,296 shares of common  stock for the  conversion of $1,245,000  of
  debentures and $44,935 in accrued interest.   The conversion price  per
  share ranged from $1.25 to $0.0625 per share.

  In July  1998  the  Company  obtained a  $50,000  bridge  loan  from  a
  stockholder and a $100,000 bridge loan from an unrelated company.   The
  Company  issued  500,000   and  1,000,000  shares   of  common   stock,
  respectively, as partial  consideration for the  loan.   The price  per
  share was  $0.125.   The loan  was paid  off in  August 1998  from  the
  proceeds of the 8% convertible debentures.
<PAGE>
  In fiscal year 1998, the Company  issued 89,487 shares of common  stock
  to employees  for employment  bonuses  and incentive  awards  including
  50,000 shares to  the President and  CEO.  The  price per share  ranged
  from $0.0625 to $0.1875.

  In fiscal year 1998, the president and CEO, and a principal shareholder
  and board member, returned 111,739 and 47,026 shares of common stock to
  treasury, respectively, in consideration for the reinstatement of notes
  payable in the amounts payable of $439,973 and $185,165,  respectively.
  $250,000  of the proceeds from the  8% convertible debentures was  used
  to repay $175,950 and $74,050, respectively.

  On  December  17,  1998,  the  president  and  CEO,  and  a   principal
  shareholder and board member, agreed to exchange $132,012 and  $55,558,
  respectively, of notes payable  for common stock.   The Company  issued
  6,000,523 and 2,525,341 shares of common stock, respectively, at $0.022
  per share, which was the market price at the date of election.

  In fiscal  year 1999,  the Company  issued 1,826,825  shares of  common
  stock for  the  conversion of  $55,594  of debentures  and  $26,206  in
  accrued interest.  The conversion price per share ranged from $0.06  to
  $0.022 per share.

  In fiscal  year 1999,  the Company  issued 2,941,938  shares of  common
  stock in connection with bridge loans  in the amount of $212,500.   See
  Footnote 6 "Notes Payable"  and Footnote 7 "Related Party Transaction."

  In fiscal year 1999, the Company  issued 80,000 shares of common  stock
  to employees  for employment  bonuses  and incentive  awards  including
  50,000 shares  to the  President and  CEO.   The  price per  share  was
  $0.0938.

  In August 1999, the  Company issued 250,000 shares  of common stock  in
  connection with a consulting agreement at $.05 per share.

  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.  Currently  there  are  no  holders  of
  preferred stock.


  11. Concentration of Credit Risk

  In the normal course of providing health care services, the Company may
  extend  credit  to  patients   without  requiring  collateral.     Each
  individual's ability to pay  balances due the  Company is assessed  and
  reserves are  established  to  provide  for  management's  estimate  of
  uncollectible balances.   Future revenues  of the  Company are  largely
  dependent  on  third-party  payors  and  private  insurance  companies,
  especially in instances where the Company accepts assignment.
<PAGE>
  The Company's trade receivables at September 30, 1998 and 1999  consist
  of the following, stated as a percentage of total accounts receivable:

                                                      1998          1999
                                                      ----          ----
         Personal injury claims                        23%           78%
         Medical claims filed with insurance
           companies                                   34            13
         Medicare/Medicaid claims                       4             -
         Workman's compensation claims                 19             8
         Other claims                                  20             1
                                                      ----          ----
                                                      100%          100%

  12.  Income Taxes

  There are two components of income tax provision, current and deferred.
  Current  income tax provisions approximate taxes to be paid or refunded
  for the applicable period.  Balance sheet amounts of deferred taxes are
  recognized on the temporary differences between the bases of assets and
  liabilities as measured by tax laws and their bases as reported in  the
  financial statements.    The  measurement of  deferred  tax  assets  is
  reduced if necessary, by the amount of any tax benefits that, based  on
  available evidence,  are not  expected to  be realized.   Deferred  tax
  expense or benefit is  then recognized for the  change in deferred  tax
  liabilities or assets between periods.

  The principal differences resulting in deferred taxes are the financial
  statement bases versus the tax base of allowance for doubtful accounts,
  amortization of goodwill, vacation accrual, employee stock options, and
  section 481 adjustment  due to a  change from cash  to accrual for  tax
  purposes in fiscal year 1997.

  The deferred tax  assets and  liabilities in  the consolidated  balance
  sheet at September 30, 1999 are as follows:

<TABLE>
      Assets:                                    Current       Non-current
                                                --------        ----------
      <S>                                      <C>             <C>
      Vacation accrual                         $  31,235       $         -
      Goodwill                                   262,578                 -
      Contributions carry-forwards                     -             9,224
      Net operating loss carry-forwards                -         5,566,425
                                                --------        ----------
                                                 293,813         5,575,649
      Liabilities:
      Employee stock options                           -          (225,121)
      Section 481 adjustment                    (574,264)                -
                                                --------        ----------
                                                (574,264)         (225,121)
                                                --------        ----------
        Deferred tax assets (liabilities), net  (280,451)        5,350,528
        Less valuation allowance                 280,451        (5,350,528)
                                                --------        ----------
                                               $       -       $         -
                                                ========        ==========
</TABLE>
<PAGE>
  At  September  30,  1999,  the  Company  has  net  operating  loss  and
  contribution carry forwards of  approximately $14,844,000 and  $25,000,
  respectively, to offset  future taxable income.   These carry  forwards
  expire through the year 2014.

  A valuation allowance was  established to reduce  the net deferred  tax
  asset for the amounts that will more likely than not be realized.  This
  reduction  is  primarily  necessary  due  to  the  uncertainty  of  the
  Company's ability  to  utilize all  of  the net  operating  loss  carry
  forwards.

  13. Stock Options and Warrants

  In August 1995, the Company adopted its 1995 Employee Stock Option Plan
  (the "Employee Plan") under which options to purchase shares of  common
  stock may be issued to employees  and consultants of the Company.   The
  Company reserved 1,000,000  shares of Common  Stock for issuance  under
  the Employee Plan.  Also in  August 1995, the Company adopted the  1995
  Non-Employee Director  Stock Option  Plan (the  "Director Plan")  which
  provides for the grant of options to directors of up to 250,000  shares
  that do not  qualify as "incentive  stock options"  under the  Internal
  Revenue Code of 1986.

  The following schedule summarizes the changes in the Employee Plan  and
  the Director Plan for the two years ended September 30, 1999:
<TABLE>
                                                         Option Price
                                                   --------------------------
                                       Number of    Per Share    Total Option
                                         Shares                      Price
                                        -------    ----------     ----------
 <S>                                  <C>         <C>            <C>
 Outstanding at September 30, 1997      737,833   $2.00-$3.00    $ 1,634,800
      (297,500 exercisable)

 For the year ended September 30,1998:
          Granted                       200,000      $0.28            56,200
          Exercised                       -            -               -
                                        -------                    ---------
 Outstanding at September 30, 1998      937,833   $0.28-$3.00      1,691,000
      (937,833 exercisable)

 For the year ended September 30, 1999:
          Granted                       200,000      $0.09            18,800
          Granted (1)                   710,000      $0.05            35,500
          Cancelled (1)                 710,000   $0.28-$2.34      1,179,400
          Expired                         3,333      $3.00            10,000
          Exercised                       -            -                      -
                                      ---------                    ---------
 Outstanding at September 30, 1999    1,134,500   $0.05-$2.00     $  555,900
      (1,134,500 exercisable)         =========                    =========
</TABLE>

            (1)      On December 17, 1998, the Board of Directors  passed
            a resolution to  lower the exercise price on 610,000  options
            under the Employee  Plan and 100,000 under the Director  Plan
            to $0.05  per share.   The reduction in  the price per  share
            for the  Director Plan options  resulted in  other income  of
            $92,542.
<PAGE>
  The Company granted an investment group the right to acquire an  option
  to acquire common stock  at specified prices over  a defined period  of
  time.  The agreement provided 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:

     Last                         Nonrefundable               Possible
    Option                            Fee To       Total      Exercise
   Purchase                          Acquire     Exercise       Price
     Date                             Option       Price      Per Share
  ------------------                --------     --------       ------
  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

  As of  September  30, 1999,  the  investment group  has  exercised  all
  options under  the  first  option, 128,827  options  under  the  second
  option, and  99,277 under  the third  option.   The  remaining  options
  available under the second  and third options  expired during the  year
  ended September  30, 1998.   The  153,061 remaining  options under  the
  fourth option, expired on December 18, 1998.

  On March 19, 1997,  the Company issued  1,000,000 warrants to  purchase
  common stock at  $2.375 per share.   On April  22, 1997, an  additional
  400,000 warrants to  purchase common  stock at  $3.00 per  share.   The
  warrants were issued in connection with  the issuance of $2,600,000  of
  8% convertible debentures.   The warrants expired April  14, 1999.   On
  December 17, 1998, the Board of Directors passed a resolution to cancel
  the 1,000,000 warrants  issued on March  19, 1997,  resulting in  other
  income of $236,945.   The  remaining 400,000  warrants expired in April
  1999, resulting in other income of $56,073.

  In compliance with SFAS  No. 123, the  Company recognizes and  measures
  compensation costs related to the Employee Plan utilizing the intrinsic
  value based  method.    Accordingly,  no  compensation  cost  has  been
  recorded.  Had compensation expense been  determined on the fair  value
  of awards  granted, net  loss and  loss per  share would  have been  as
  follows:

                                1999                       1998
                                ----                       ----
                      As Reported   Pro forma     As Reported   Pro forma
                      -----------  ----------     -----------   -----------
   Net loss          $(2,843,888) $(2,862,480)   $(3,777,518)  $(3,832,495)
   Loss per share    $     (0.12)   $   (0.12)     $   (0.33)   $    (0.33)

  The fair value  of all  options and  warrants are  estimated using  the
  Black-Scholes option-pricing model with the following assumptions: risk
  free interest rate 5.5% for 1999  and 5.3% for 1998;  expected  life  3
  years; expected  volatility  298% for 1999 and 260%  for 1998; dividend
  yield  0%.  The fair  values generated by  the Black-Scholes  model may
  not be indicative of the future benefit,  if any, which may be received
  by the  holders.   The weighted average exercise price for  all options
  outstanding was  $0.49 and $1.80  as of  September 30,  1999 and  1998,
  respectively.  Since certain options have an indeterminable expiration,
  the weighted average expiration date could not be determined.
<PAGE>

  14. Stock Purchase Plans

  In August 1995, the  Company adopted its  1995 Employee Stock  Purchase
  Plan (the  "Stock Purchase  Plan"), effective  October 1,  1995,  which
  allows employees to acquire common stock  of the Company at 85% of  its
  fair market value from payroll deductions received from the  employees.
  The  Company has reserved a total of 250,000 shares of its common stock
  to be sold to eligible employees under the Stock Purchase Plan.  As  of
  September 30,  1998,  no  employees were  participating  in  the  Stock
  Purchase Plan.  In  July 1997, the Company  adopted its 1997  Executive
  Stock Bonus Plan ("Executive Stock Bonus Plan") under which options  to
  purchase shares  of common  stock may  be issued  to employees  of  the
  Company.   The Company  reserved 260,870  shares  of Common  Stock  for
  issuance under the  Executive Bonus Plan.   As of  September 30,  1999,
  190,475 shares have been issued under the Executive Stock Bonus Plan.


  15.  Consultant Stock Plans

  In March 1997, the  Company authorized for  issuance 200,000 shares  of
  Common Stock pursuant to a consulting agreement ("Consultant Plan  1").
  In August 1997, the Company reserved 250,000 shares of Common Stock for
  issuance to other consultants ("Consultant Plan 2"). Consultant Plan  2
  expires December 31, 1999.   As of September  30, 1999, 200,000  shares
  have been  issued  under Consultant  Plan  1 and  40,000  shares  under
  Consultant Plan 2.The Company issued  two consultant stock plans  under
  an S-8 SEC registration.


  16.  Disclosures About Fair Value of Financial Instruments

  Generally, the  fair  value  of  financial  instruments  classified  as
  current assets or  liabilities approximate  carrying value  due to  the
  short-term maturity of the  instruments.  The  fair value of  long-term
  debt and capital lease instruments was based on current borrowing rates
  available for  financing  with  similar  terms  and  maturities.    The
  carrying amount and fair value amounts of long-term debt were  $726,414
  and $718,000 and capital lease obligations were  $301,577 and  $310,100
  respectively, at September 30, 1999.


  17. Legal Proceedings

  On April 14, 1998, the  American Arbitration Association, Atlanta  Ga.,
  issued an award to the Company concerning its Northside clinic  located
  in Atlanta, Georgia, against the doctor who was the original seller  of
  that clinic.  The  doctor alleged contract default  by the Company  and
  was claiming  all rights  to this  clinic. The  Company contended  that
  there was a valid settlement agreement concerning the alleged breach of
  contract. The arbitrator found there  was a valid settlement  agreement
  and issued  a ruling  in  accordance with  the  reported terms  of  the
  settlement agreement. In  sum, the award  makes the doctor  responsible
  for all sums and  accounts due for operating  expenses after March  10,
  1996.   Further, the  award  bars the  doctor  from making  any  claims
  against the Company for the promissory note and guarantee given by  the
  Company, and  the  doctor's  employment contract.    In  exchange,  the
  Company returned the  clinic and accounts  receivable collected by  the
  Company.
<PAGE>
  The Company settled its litigation with a service supplier over  unpaid
  invoices.  There are two suits filed November 1997 and September  1997,
  respectively.   The cases  were: SmithKline  Beecham Clinical  Labs  v.
  American HealthChoice, Inc., filed in the County Court of Bexar  County
  at Law  No. 5,  San Antonio,  Texas, and  State District  Court,  162nd
  Judicial District,  Dallas County,  Texas.   On February  3, 1999,  the
  Company executed  a settlement  with the  supplier on  the San  Antonio
  case.  On  May 12,  1999, the Company  executed a  settlement with  the
  supplier on the  Dallas case.   The amount of  the settlement for  both
  cases was less than the liability recorded on September 30, 1998.

  The Company settled its litigation with a service supplier over  unpaid
  invoices.    The  case  was:  McKesson  General  Medical  v.   American
  HealthChoice, Inc., filed in the County  Court of Dallas County at  Law
  No. 2, Dallas,  Texas.   On January 25,  1999, the  Company executed  a
  settlement agreement with the supplier.   The amount of the  settlement
  was less than the liability recorded on September 30, 1998.

  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  in  July  1997  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.  The case was: Malcolm P. Dulock
  v. AHC Physicians  Corporation, Inc., filed  in the  Superior Court  of
  Gwinnett County, Georgia.   The doctor  filed a  Chapter 13  Bankruptcy
  Petition on January 29, 1999 in the United States Bankruptcy Court  for
  the Northern District of Georgia.   As of December 31, 1999, there  has
  been no  further communication  from the  plaintiff or  the  Bankruptcy
  Court.  The Company has elected to offset principal amount of the  note
  payable to  Dulock against  the remaining  accounts receivable  of  the
  Norcross clinic,  which was  sold in  February 1999.   See  Footnote  5
  "Notes Payable."

  The Company is  engaged in litigation  with an equipment  lessor.   The
  suit was  filed October  14,  1998.   The  plaintiff alleges  that  the
  Company is the guarantor for a company called Corrective Vision  Center
  that went out  of business.   The case was:  Advanta Business  Services
  Corp., v. American HealthChoice, Inc., filed in the County Civil  Court
  of Harris County at  Law No. 4,  Harris County, Texas.   Advanta won  a
  decision for the full amount of the suit at a summary judgement hearing
  on January 20,  1999.   Any further action  by the  plaintiff has  been
  stayed by the Chapter  11 Bankruptcy Petition filed  by the Company  on
  October 19, 1999.

  The Company settled its litigation with an equipment lessor.  The  suit
  was filed October 6, 1998. The plaintiff alleged default for nonpayment
  of a lease  and claimed  rights under  the lease.   The  case was:  CIT
  Group/Equipment Financing, Inc., v. American HealthChoice, Inc.,  filed
  in the State  District Court,  68th Judicial  District, Dallas  County,
  Texas.  On April 15, 1999,  the Company executed a settlement with  the
  lessor.   The amount  of the  settlement was  less than  the  liability
  recorded on September 30, 1998.
<PAGE>
  The Company  settled its  litigation with  an  equipment lessor  for  a
  prefab  trailer  used as an  office at a clinic  in San Antonio, Texas.
  The suit was filed December 3, 1998.  The plaintiff alleged default for
  nonpayment of a  lease and claimed  rights under the  lease.  The  case
  was: Sanwa Business Credit Corp., v. American HealthChoice, Inc., filed
  in the State  District Court, 125th  Judicial District, Harris  County,
  Texas.  On February  11, 1999, the Company  executed a settlement  with
  the lessor.  The amount of  the settlement was less than the  liability
  recorded on September 30, 1998.

  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 physician 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  account receivable  for
  patients the doctors treated  at the clinic  that were 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 case was:  Susan Johnson,  Gilberto Martorell,  and
  Henry Heard  v.  American  HealthChoice, Inc.,  dba  Peachtree  Corners
  Medical Center,  and Malcolm  Dulock, filed  in the  Superior Court  of
  Gwinnett County, Georgia.   Any  further action  in the  case has  been
  stayed by the Chapter  11 Bankruptcy Petition filed  by the Company  on
  October 19, 1999.

  The Company  was  served  a Complaint  on  January  26,  1998  alleging
  unspecified damages  arising from  trademark infringement  and  related
  claims.   The  Company  has  retained  a  law  firm  and  is  currently
  evaluating the  allegations.    The case  was:  Unihealth  v.  American
  HealthChoice, Inc., filed in the United States District Court, Southern
  District of Texas, Houston Division.  The claim was settled on February
  12, 1999 for an immaterial amount.

  A person claiming to  have performed certain  services in formation  of
  the Company has  sued claiming  he is due  a larger  percentage of  the
  Company stock than what he received.  The Company was served notice  on
  March 29, 1998 and has retained  a law firm to  seek a dismissal or  in
  the alternative a change of  venue.   The  case is Stewart v.  American
  HealthChoice, Inc. filed  in the United  States District Court,  Middle
  District of Florida, Tampa  Division.  Any further  action in the  case
  has been stayed  by the  Chapter 11  Bankruptcy Petition  filed by  the
  Company on October 19, 1999.

  The Company  settled its  litigation with  the group  from which    the
  Company purchased  four  Atlanta,  Georgia area  clinics.    The  claim
  alleged failure to pay on the  promissory note for the purchase of  the
  clinics and to enforce  stock pledge obligations.   The suit was  filed
  April 14,  1998. The  case was  Metropolitan  Health Care  v.  American
  HealthChoice,  Inc.  filed  in  the  United  States  Bankruptcy  Court,
  Northern  District  of  Georgia,  Atlanta  Division.    The  claim  was
  dismissed on April 20, 1999 with the consent of all parties.
<PAGE>
  The Company is engaged in litigation filed on February 23, 1998 with  a
  former landlord at  a location where  the Company closed  a clinic  for
  breach of  lease.   The Company  answered and  counter claimed  against
  landlord for landlord's failure  to perform under  the agreement.   The
  case is: Assist, Inc., v. American  HealthChoice, Inc., filed in  State
  District Court,  285th Judicial  District, Bexar  County, Texas.    Any
  further action in the case has been stayed by the Chapter 11 Bankruptcy
  Petition filed by the Company on October 19, 1999.

  The Company was  engaged in  litigation filed on  May 14,  1998 with  a
  former landlord at  a location where  the Company closed  a clinic  for
  breach of  lease.  The Company  answered  and counter  claimed  against
  landlord for landlord's failure to perform  under the agreement.    The
  case was: Dale Baldauf and Marylyn  D. Frank v. American  HealthChoice,
  Inc., and Trevino, Roman & Assoc., filed in State District Court, 138th
  Judicial District, Cameron County, Texas.   The litigation was  settled
  in August 1999.

  The Company was  engaged in  litigation with  the former  owner of  the
  Conyers, Georgia medical clinic for defaulting on a security  agreement
  and note  payable in  connection with  the purchase  of the  clinic  in
  January 1996.  The case was: William A. Futch v. American HealthChoice,
  Inc. and AHC Physicians Corporation, Inc. filed January 20, 1999 in the
  Superior  Court  of   Rockdale  County,  State   of  Georgia.     After
  unsuccessful negotiations to settle the suit, Futch obtained a writ  of
  possession and seized  the assets of  the clinic  on  October  2, 1999.
  After AHC Physicians Corporation, Inc. and American HealthChoice,  Inc.
  filed a Chapter 11  Bankruptcy Petition on October  19, 1999, the  case
  was removed to the United States Bankruptcy Court, Northern District of
  Texas, Dallas Division.  The litigation was settled on December 3, 1999
  by a  Court Order  returning the  clinic  assets to  Futch for  a  full
  release of all  claims and monies  against American HealthChoice,  Inc.
  and AHC Physicians Corporation, Inc.

  On October 19, 1999, American  HealthChoice, Inc., the parent  company,
  and AHC  Physicians  Corporation,  Inc., a  subsidiary  that  owns  the
  Georgia clinics, filed Chapter 11 Bankruptcy Petitions with the  United
  States Bankruptcy Court,  Northern District of  Texas, Dallas  Division
  (Case No. 99-37314).

  The  Company  has  been  named  in  other  litigation.   In managements
  judgement  the  matters do not involve material amounts of exposure for
  the Company.
<PAGE>

  18. Subsequent Events

  On October 19, 1999, American  HealthChoice, Inc., the parent  company,
  and AHC Physicians  Corporation, Inc., a  subsidiary and  owner of  the
  Georgia clinics, filed Chapter 11 Bankruptcy Petitions with the  United
  States Bankruptcy Court,  Northern District of  Texas, Dallas  Division
  (Case No. 99-37314).  The Company elected to file the petitions for two
  primary reasons.   First, it  was unable  to restructure  terms of  the
  September 1997 and August 1998  Debenture Agreements, which would  have
  allowed for  new funding  to acquire  profitable clinics.   Second,  in
  early October 1999, the Company received an adverse ruling on the Futch
  lawsuit.  See Footnote  17 "Legal Proceedings."   On December 6,  1999,
  the  Bankruptcy  Court  granted  the  Company  authority  to   continue
  operating under a cash  collateral budget through  February  29,  2000.
  The  Company  forecasts  positive  cash  flow  for  the  budget  period
  including sufficient  cash to  pay professional  fees approved  by  the
  Bankruptcy Court.  The Company intends to file a Plan of Reorganization
  and Disclosure Statement by February 15, 2000.

  In compliance with the Bankruptcy Court  Order regarding the return  of
  the Conyers  clinic,  the Company  will  record an  asset  writeoff  of
  accounts receivable and  equipment of approximately  $130,000, and  un-
  amortized goodwill  of approximately  $130,000.   However, the  Company
  will recognize a  gain on  disposition of  approximately $30,000  after
  debt extinguishment of $290,000.  Also on January 3, 2000, the  Company
  executed a letter  of intent to  sell the  McDonough clinic,  excluding
  accounts receivable, for $67,500 on January 31, 2000.  The sales  price
  approximates the book value of the clinic equipment.



  ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
  FINANCIAL DISCLOSURE

  None to report
<PAGE>

                                PART III



  ITEM 9. DIRECTORS, EXECUTIVE  OFFICERS, PROMOTERS AND CONTROL  PERSONS;
  COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT


       DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS


  The following  table sets  forth  information regarding  the  executive
  officers and directors of the Company.


         Name                 Age     Position                 Since
  ----------------------      ---  -------------------       -----------

  Joseph W. Stucki, D.C.       41  President, Chief          March 1995
                                   Executive Officer
                                   and Chairman of the
                                   Board of Directors

  Jay R. Stucki                39  Chief Financial           December
                                   Officer, Vice             1996
                                   President, Secretary      (Resigned
                                   and General Counsel       January 1999)

  John C. Stuecheli            52  Chief Financial           January
                                   Officer, Vice             1999
                                   President
                                   and Secretary

  Jeffrey Jones, D.C.          38  Director                  March 1995

  Michael R. Smith, M.D.       41  Director                  December 1996

  John V. Mansfield            52  Director                  June 1998

  James Roberts                40  Director                  June 1998


       Joseph W. Stucki,  D.C.  Dr.  Stucki is Chairman  of the Board  of
  Directors, Chief Executive Officer and President  of the Company.   Dr.
  Stucki has been a licensed chiropractor for approximately 16 years.  In
  May 1983,  he founded  United Chiropractic  Clinics, Inc.  and, as  its
  Chairman and President, purchased or developed and opened approximately
  84   multi-disciplined   clinics   (chiropractic,   medical,   physical
  therapist, massage  therapist,  etc.).   From  1988 through  1995,  Dr.
  Stucki  served as Chairman and Chief Executive Officer of United Health
  Services.    United   Health  Services   developed  approximately   150
  franchises throughout  the  United  States.   Dr.  Stucki  has  been  a
  consultant to  health care  organizations on  various issues  including
  practice   management,   strategic   development,   and   mergers   and
  acquisitions.  Dr. Stucki  has authored several  papers and manuals  on
  practice management and has been a guest speaker on health care issues.
  Dr.  Stucki  is  a  member  of  various  national,  state,  and  local
  organizations.
<PAGE>
       Jay R. Stucki.   Mr. Stucki became  Chief Financial Officer,  Vice
  President of Finance and  Secretary of the Company  in June 1997.   Mr.
  Stucki was first employed  by the Company in  December 1996 as  General
  Counsel.  Mr. Stucki was in public administration for approximately  13
  years, last serving as  the Director of  Aviation for the  Jacksonville
  Port Authority, Florida.   Mr. Stucki  obtained his  Juris Doctor  from
  Oklahoma City  School  of Law.    He also  has  a masters  in  business
  administration from the University of  Texas-Odessa, and a bachelor  of
  business administration from the University of Albuquerque.

       John C. Stuecheli  Mr. Stuecheli  became  Chief Financial Officer,
  Vice President of Finance and Secretary of the Company in January 1999.
  Mr. Stuecheli  was first  employed by the Company  in November 1998  as
  Controller.  From November 1996 to October 1998, Mr. Stuecheli was Vice
  President of Finance  and Chief Financial  Officer for  Irata, Inc.,  a
  manufacturer and operator of photo booths and other vending  equipment.
  From  September 1993 to October 1996, he was an independent  consultant
  specializing in  financial restructuring.

       Jeffrey Jones, D.C.  Dr. Jones is  a Director of the Company.   He
  is the Clinic Director  of the United  Chiropractic Uptown Clinic,  New
  Orleans, Louisiana, owned by a subsidiary of the Company.  He  obtained
  his Louisiana Doctor of  Chiropractic license in  July 1985, and  began
  his association  with the  United  Chiropractic Uptown  clinic  shortly
  thereafter.  In the  past, Dr. Jones has  acted as Regional Manager  of
  other United Clinics in the greater New  Orleans area.  He is a  member
  of the Chiropractic Association of Louisiana, The Union of Chiropractic
  Physicians and the American Chiropractic Association.

       Michael R. Smith, M.D.  Dr. Smith became a Director of the Company
  in December 1996.  Dr. Smith, a practicing physician board certified in
  family practice, has been employed by the Company since September 1994.
  He provides  medical services at certain  of the Company's clinics  and
  serves as the  Medical Director for  the Company's Texas  clinics.   He
  also serves on the  Board of Directors  of AHC Physicians  Corporation,
  Inc., a subsidiary of the Company.  From June 1992 through August 1994,
  Dr. Smith  was  an  employee  and then  partner  at  the  Texas  Trauma
  Rehabilitation Association.  Dr. Smith graduated from The University of
  Texas Medical Branch in 1984.

       John V. Mansfield.  Mr. Mansfield became a Director of the Company
  in June 1998.  He has been the President and Chief Executive Officer of
  Harland Properties, Inc. since February 1992,  and of Axis Care  Group,
  Inc. since May 1997, two privately  owned companies located in  London,
  Ontario.  Harland Properties, Inc. is  engaged in the business of  real
  property management, development and  consulting, and Axis Care  Group,
  Inc. is engaged in the business of medical services management.

       James Roberts.  Mr.  Roberts became a Director  of the Company  in
  June 1998.  He has been the President of Health Dental Plus, Inc. since
  September 1993.  Health Dental Plus,  Inc. is engaged in the  marketing
  of dental benefits plans to employer groups and individuals.

       Dr. Joseph W. Stucki and Jay R. Stucki are brothers.
<PAGE>
       Members of the Company's  Board of Directors  are elected to  hold
  office  until  the  next  meeting  of  stockholders  and  until   their
  successors are elected and  qualified.  Officers  are elected to  serve
  subject to  the  discretion  of the  Board  of  Directors  until  their
  successors are appointed and have qualified.

       The committees of the Company's Board of Directors are as follows:

  Audit Committee               John V. Mansfield, Chairman
                                James Roberts

  Compensation Committee        James Roberts, Chairman
                                John V. Mansfield
                                Dr. Joseph W. Stucki

       The Company does not have a Nominating Committee.


   Compliance With Section 16(a) Of The Securities Exchange Act Of 1934

       Section 16(a) of the Securities Exchange Act of 1934 requires that
  the Company's officers and directors, and persons who own more than ten
  percent (10%) of a registered class of the Company's equity  securities
  file reports of ownership and changes in ownership with the  Securities
  and Exchange  Commission ("SEC")  and with  the exchange  on which  the
  Company's securities are traded. Such reporting persons are required by
  SEC regulation to furnish the Company with copies of all Section  16(a)
  forms so filed.

       Based solely  on a  review of  Forms  3, 4  and 5  and  amendments
  thereto furnished to the Company pursuant to Rule 16a-3(e)  promulgated
  under  the  Securities   Exchange  Act   of  1934,   or  upon   written
  representations received by the  Company, the Company  is not aware  of
  any failure by an  officer, director or beneficial  owner of more  than
  10% of the Company's  common stock to file  timely with the  Securities
  and Exchange Commission any Forms 3, 4 or 5 relating to the fiscal year
  ended September 30, 1999.

<PAGE>
  ITEM 10. EXECUTIVE COMPENSATION

                          Executive Compensation

       The following table sets forth information concerning all cash and
  non-cash compensation awarded to, earned by,  or paid to the  Company's
  Chief Executive Officer and the other  named executive officer for  the
  last three fiscal years.  No other executive officer of the Company who
  was serving at  the end  of fiscal 1999  earned more  than $100,000  of
  annual base compensation for services in all capacities to the  Company
  and its subsidiaries.
<TABLE>
                    Summary Compensation Table
                                                 Long-Term Compensation
                                                 -----------------------
                         Fiscal                              Under-lying
                          Year       Annual      Restricted  Securities    All other
  Name and Principal     Ending   Compensation     Stock       Options     Compensation
  Position              September    Salary      Awards ($)    (#)           ($)
                           30          ($)
  --------------------    ----     ----------   -----------   ----------    ------
  <S>                     <C>      <C>           <C>          <C>           <C>
  Dr. Joseph W. Stucki    1999     262,950        4,690 (1)   200,000(5)    55,000 (6)

  Chairman of the         1998     262,950       14,050 (1)
  Board, President and
  Chief Executive         1997     235,815      117,000 (1)
  Officer


  Jay R. Stucki           1999     100,000 (2)    2,814 (3)   600,000(5)

  Vice President,         1998     169,717 (2)    8,430 (3)   200,000
  Chief Financial
  Officer,
  Secretary and           1997      83,109 (2)   70,200 (3)   200,000
  General Counsel


  John C. Stuecheli       1999      62,500

  Vice President,         1998         -   (4)
  Chief Financial
  Officer
  and Secretary           1997         -   (4)
</TABLE>
  ___________________________
  (1)  Dr. Stucki is entitled to a stock bonus of 50,000 shares on June 1
       of each year of his employment agreement.  The closing bid  prices
       per share on June  1, 1997, 1998 and  1999 were $2.34, $0.281  and
       $0.0938, respectively.   The employment agreement  also gives  him
       the right to receive an option for 500,000 shares, at an  exercise
       price of  $0.05  per  share,  upon  the  Company  achieving  three
       consecutive quarters of profit  or upon termination of  employment
       for any  reason in  connection  with a  change  of control.    See
       "Employment Agreements", below.
<PAGE>
  (2)  Includes $47,817 and  $3,487 in 1998  and 1997, respectively,  for
       payment of student  loans pursuant to  his employment agreement.
       Mr.  Stucki  resigned  his  position  as  Vice  President,   Chief
       Financial Officer  and  Secretary  on December  31,  1998  and  as
       General Counsel on  July 31, 1999.   See "Employment  Agreements",
       below.

  (3)  Mr. Stucki was entitled to a stock bonus of 30,000 shares on  June
       1 of  each year  of his  employment agreement.   The  closing  bid
       prices per share on June 1, 1997, 1998 and 1999 were $2.34, $0.281
       and $0.0938, respectively.  The employment agreement also gave him
       the right to receive an option for 200,000 shares on each June 1.

  (4)  Mr. Stuecheli  assumed  his  position  as  Vice  President,  Chief
       Financial Officer and Secretary of the Company on January 1, 1999.
       The Company did not employ  Mr. Stuecheli in fiscal 1997 or  1998.
       See "Employment Agreements", below.

  (5)  On December 17, 1998, the Board  of Directors passed a  resolution
       to lower the exercise price to $0.05 per share on 610,000  options
       outstanding under  the 1995  Employee  Stock Plan  (the  "Employee
       Plan") and 100,000 options outstanding under the 1995 Non-Employee
       Stock Option Plan (the  "Director Plan").   The exercise price  on
       150,000 options held  by Dr. Stucki  under the  Employee Plan  was
       lowered from $2.00 per share and 50,000 options under the Director
       Plan was  lowered  from  $2.34.    For  disclosure  purposes,  the
       aforementioned 200,000 repriced options are reported as grants  to
       Dr. Stucki in  fiscal year 1999.   The exercise  price on  200,000
       options held  by Mr.  Stucki was  reduced from  $2.34 and  200,000
       options  reduced  from  $0.281.    For  disclosure  purposes,  the
       aforementioned 400,000 repriced options are reported as grants  to
       Mr. Stucki in  fiscal year  1999 in  addition to  the 200,000  new
       options granted on June 1, 1999 under his employment agreement.

  (6)  Value of  common  stock  issued as  additional  consideration  for
       bridge loans.

                   Stock Option and Stock Purchase Plans

       The following tables set  forth the number  of options granted  to
  the Company's Chief  Executive Officer  and the  other named  executive
  officer during fiscal  1999 and the  value of  the unexercised  options
  held by them at September 30, 1999.
<PAGE>
<TABLE>

                   Option/SAR Grants in Last Fiscal Year

                             Number of       % of
                            Securities       Total
                              Under-       Options/
                              lying          SARs
                             Options/      Granted     Exercise
                               SARs           to       or Base
                             Granted       Employees    Price     Expiration
        Name                   (#)      In Fiscal Year  ($/Sh)       Date
  --------------------      -----------  ------------   -----     -----------
  <S>                       <C>               <C>       <C>       <C>
  Dr. Joseph W. Stucki      150,000 (1)       16%       $0.05       9/1/01

  Dr. Joseph W. Stucki       50,000 (1)        5%       $0.05     Indefinite

  Jay R. Stucki             200,000 (1)       22%       $0.05       6/1/02

  Jay R. Stucki             200,000 (1)       22%       $0.05       6/1/03

  Jay R. Stucki             200,000           22%       $0.09       6/1/04
  ____________________

  (1)  On December 17, 1998, the Board  of Directors passed a  resolution
       to lower the exercise price to $0.05 per share on 610,000  options
       outstanding under  the 1995  Employee  Stock Plan  (the  "Employee
       Plan") and 100,000 options outstanding under the 1995 Non-Employee
       Stock Option Plan (the  "Director Plan").   The exercise price  on
       150,000 options held  by Dr. Stucki  under the  Employee Plan  was
       lowered from $2.00 per share and 50,000 options under the Director
       Plan was  lowered  from  $2.34.    For  disclosure  purposes,  the
       aforementioned 200,000 repriced options are reported as grants  in
       fiscal year 1999 for  Dr. Stucki.  The  exercise price on  200,000
       options held  by Mr.  Stucki was  reduced from  $2.34 and  200,000
       options  reduced  from  $0.281.    For  disclosure  purposes,  the
       aforementioned 400,000 repriced options are reported as grants  in
       fiscal year 1999 for Mr. Stucki in addition to the 200,000 options
       granted on June 1, 1999 under his employment agreement.

<PAGE>
            Aggregate Option/SAR Exercises in Last Fiscal Year
                And Fiscal 1998 Year-End Option/SAR Values

                                                  Number of
                                                  Securities       Value of
                                                  Underlying       Unexercised
                                                  Unexercised      In-the Money
                                                  Options/SARs     Options/SARs
                                                  At FY-End (#)    At FY-End (#)

                          Shares       Value      Exercisable/     Exercisable/
  Name                  Acquired on   Realized    Unexercisable    Unexercisable
                        Exercise (#)    ($)
  --------------------  ------------  --------    --------------   -------------
  Dr. Joseph W. Stucki        None        None    200,000/   -          - (1)

  Jay R. Stucki               None        None    600,000/   -          - (1)
  ____________________
  (1)  All options are vested.  Value  is based on the closing price  per
       share on December 31, 1999 as quoted on the OTC Bulletin Board  of
       $0.02.   None of  the options  were in-the-money  on December  31,
       1999.


                          Employee Benefit Plans

       In August 1995, the Company adopted its 1995 Employee Stock Option
  Plan (the "Employee Plan")  under which options  to purchase shares  of
  Common Stock may be issued to employees and consultants of the Company.
  The  Company reserved  1,000,000 shares  of Common  Stock for  issuance
  under the Employee Plan.  Also in August 1995, the Company adopted  the
  1995 Non-Employee  Director Stock  Option  Plan (the  "Director  Plan")
  which provides for the grant of  options to directors of up to  250,000
  shares that  do not  qualify as  "incentive  stock options"  under  the
  Internal Revenue Code of  1986.  In addition,  the Company adopted  its
  1995  Employee  Stock  Purchase  Plan  (the  "Stock  Purchase   Plan"),
  effective October 1,  1995, which  allows employees  to acquire  Common
  Stock of  the Company  at 85%  of its  fair market  value from  payroll
  deductions received from  the employees.   The Company  has reserved  a
  total of 250,000  shares of  its Common Stock  to be  sold to  eligible
  employees under the Stock Purchase Plan.  In October 1996, the Board of
  Directors amended each of the Employee Plan, the Director Plan, and the
  Stock  Purchase  Plan  to   clarify  various  matters  concerning   the
  administration of such plans.   In March  1997, the Company  authorized
  for issuance 200,000 shares  of Common Stock  pursuant to a  consulting
  agreement ("Consultant Plan 1").  In July 1997, the Company adopted its
  1997 Executive Stock  Bonus Plan ("Executive  Stock Bonus Plan")  under
  which options  to purchase  shares of  Common Stock  may be  issued  to
  employees of  the Company.   The  Company reserved  260,8700 shares  of
  Common Stock for issuance  under the Executive Bonus  Plan.  In  August
  1997, the Company reserved 250,000 shares of Common Stock for  issuance
  to other  consultants  ("Consultant  Plan 2").    The  following  table
  presents the number of shares issued  or options granted under each  of
  the Plans as of September 30, 1999:
<PAGE>

</TABLE>
<TABLE>
          Plan                 Options          Option Shares
                            Granted/Shares        Exercised
                               Issued
  -------------                -------            ---------
  <S>                          <C>                     <C>
  Employee Plan                884,500                 0

  Director Plan                250,000                 0

  Stock Purchase Plan             0                    0

  Executive Stock              190,475                 0
  Bonus Plan

  Consultant Plan 1            200,000                 0

  Consultant Plan 2            40,000                  0

</TABLE>
                         Compensation of Directors

       The Company pays its Directors $1,500  for each Board of  Director
  meeting attended in person and $250 for each telephonic Board  meeting.
   The Company  reimburses  all Directors  for  reasonable  out-of-pocket
  expenses incurred  in  connection  with  attending  Board  of  Director
  meetings.  Pursuant to the Director  Plan, any new Director elected  to
  the Board  of Directors  is to  receive a  10-year option  to  purchase
  10,000 shares of Common  Stock at an exercise  price determined by  the
  Board of Directors at the time of grant.  If a non-employee Director is
  re-elected, such Director is to receive,  upon such re-election, a  10-
  year option to  purchase 5,000 shares  of Common Stock  at an  exercise
  price determined by the Board of Directors at the time of grant.  As of
  September 30, 1999,  no options have  been granted  under the  Director
  Plan except for a one-time grant of options to purchase 100,000  shares
  granted to  a former  Director.   See  "-Employment Agreements"  for  a
  discussion of the compensation paid to Dr. Jeffrey Jones as an employee
  of the Company.  Dr. Michael R. Smith was paid a salary of $140,000  as
  an employee of  the Company  for the  fiscal year  ended September  30,
  1999.
<PAGE>
                           Employment Contracts

       Effective June  1, 1997,  the Company  entered into  a  three-year
  employment agreement with Dr.  Joseph W. Stucki  to serve as  President
  and Chief Executive Officer of the Company for an annual base salary of
  $250,000.   In addition,  he is  entitled to  a stock  bonus of  50,000
  shares at the beginning  of each year of  the employment agreement  and
  has the right to receive an option for 500,000 shares of Common  Stock,
  at an exercise  price of $2.34  per share, upon  the Company  achieving
  three consecutive quarters of profit or upon termination of  employment
  for any reason in connection with a  change of control.  Dr. Stucki  is
  also entitled to a car allowance of $1,000 per month and  reimbursement
  of up to $1,500 per year for continuing professional education.  In the
  event of termination of the agreement for any reason by the Company  or
  Dr. Stucki, he will be entitled to a severance pay equal to six  months
  of his full  salary.   After a  change of  control of  the Company,  as
  defined in  the employment  agreement, if  Dr. Stucki's  employment  is
  terminated, he terminates  his employment,  his duties  are changed  or
  certain other specified  events take place,  he will be  entitled to  a
  severance payment  equal to  twice his  effective annual  compensation,
  together with a continuation of all employee benefits for two years.

       The Company had two agreements with respect to Jay R. Stucki,  one
  for  legal  services  and one  as Chief Financial  Officer (CFO).   Mr.
  Stucki agreed  to  forgo  the base  salary  as  general  counsel  while
  operating in the combined positions.  The CFO agreement expires June 1,
  1999, subject  to automatic  renewal for  successive one  year  periods
  unless either party  provided 90-day  notice of  cancellation prior  to
  expiration of the then current term,  and the legal services  agreement
  expired September 30, 1998, subject to automatic renewal for successive
  one year  periods unless  either party  gave notice  of cancellation.
  Under the  CFO  agreement,  Mr.  Stucki  receives  $120,000  in  annual
  compensation and is entitled to receive  30,000 shares of common  stock
  and options to purchase 200,000 shares  of common stock on each June  1
  anniversary date of  the Agreement.   He is also  entitled to  standard
  employee  benefits  and   reimbursement  for  continuing   professional
  education expenses.  Under the legal services agreement, Mr. Stucki was
  entitled to annual base compensation of $75,000 (foregone while serving
  as CFO), and the Company agreed to pay his student loans in the  amount
  of approximately $58,570, which was  treated as compensation in  fiscal
  1997 and 1998.  Under the CFO agreement, Mr. Stucki is entitled to  his
  base salary  for  the  remainder  of  the  term  if  the  agreement  is
  terminated by the Company without cause.   The parties intend to  phase
  Mr. Stucki out of the CFO position at the end of the current contract.
<PAGE>
       Effective July  1, 1994,  United  Chiropractic Clinic  of  Uptown,
  Inc., a subsidiary of the Company, entered into an employment agreement
  with Dr.  Jeffrey Jones  as a  clinic director  providing  chiropractic
  services at the New  Orleans Uptown clinic.   The agreement was for  an
  initial  term  of  three  years,  and  is  automatically  renewed   for
  consecutive one year terms unless  the Company provides written  notice
  of nonrenewal not less than 90 days prior to the expiration of the then
  current term.  Dr. Jones also  may terminate the agreement at any  time
  upon 30  days'  written  notice, and  the  Company  can  terminate  the
  agreement for  cause, as  defined in  the agreement.   Dr.  Jones  gave
  notice in March 1997 that he was not renewing the employment agreement,
  although the Company and he have  continued to perform under the  terms
  of the employment agreement, and the Company believes the agreement  is
  in effect.   In December 1998  both parties agreed  to renegotiate  the
  contract.   A one  year  covenant not  to  compete commences  upon  the
  effective date of termination.  Under the agreement, Dr. Jones received
  compensation  of  $500,000 in fiscal 1998  and $210,000 in fiscal 1999.
  He is  also entitled  to standard  employee benefits  and a  term  life
  insurance policy of $500,000.

       On November  2,  1998,  the Company  entered  into  an  employment
  contract with John C. Stuecheli to  be the Chief Financial Officer  and
  Secretary effective January 1, 1999.   The agreement is for an  initial
  term of one year and shall be extended by twelve months if either party
  fails to  give sixty  (60) days  notice of  cancellation prior  to  the
  expiration date.    Under  terms of  the  agreement  Mr.  Stuecheli  is
  entitled to  annual compensation  of $75,000.  He is  also entitled  to
  standard employee benefits.   In December 1999  both parties agreed  to
  renegotiate the contract.

<PAGE>
  ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

       The following table sets forth information regarding the ownership
  of the Company's  Common stock  as of December  31, 1999,  by (i)  each
  known  beneficial  owner  of  more  than  five  percent  (5%)  of   the
  outstanding Common  Stock, (ii)  each  Director, (iii)  each  executive
  officer, and (iv) the executive officers and Directors as a group.  All
  share numbers are provided based on information supplied to  management
  of the Company by the respective individuals and members of the  group.
   Unless otherwise indicated, each of  the stockholders has sole  voting
  and investment power with respect to the shares beneficially owned.

                                                 Number of      Percent of
                                                  Shares          Class
                                                 ---------        ------
    Mainstream Enterprises LLC                   1,650,000          5.9%
    1300 West Walnut Hill Lane, Suite 275
    Irving, Texas 75038

    Joseph W. Stucki, D.C.(1)                    9,331,328         32.7%
    1300 West Walnut Hill Lane, Suite 275
    Irving, Texas 75038

    Jeffrey Jones, D.C.(2)                       3,717,516         12.9%
    807 S. Carrollton Avenue
    New Orleans, Louisiana 70118

    John C. Stuecheli                                -               -
    1300 West Walnut Hill Lane Suite 275
    Irving, Texas 75038

    Michael R. Smith, M.D.                         371,167          1.3%
    3930 E. Southcross
    San Antonio, Texas 78222

    James Roberts                                    9,500           *
    6712 Biltmore Pl.
    Plano, Texas 75023

    John V. Mansfield                                -               -
    10956 Big Canoe
    Big Canoe, Georgia 30143

    Officers and Directors as a group           13,284,511         46.7%
     (6 persons)
  __________________________
  *    Less than one percent.
  (1)  Dr. Stucki is the Chief Executive Officer, President and  Chairman
       of the Board of  Directors of the Company.   The number of  shares
       reported includes 200,000 shares issuable upon exercise of options
       at $0.05 per share, which are currently exercisable.

   (2) Dr. Jones is  a Director  of the Company.   The  number of  shares
       reported includes 110,000 shares issuable upon exercise of options
       at $0.05 per share, which are currently exercisable.

<PAGE>
  ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

       Dr. J.  W.  Stucki, the  Chief  Executive Officer,  President  and
  Chairman of  the Board  of Directors  of the  Company, provided  bridge
  loans to the  Company between  June and  August 1999  in the  aggregate
  amount of $80,000.  As additional consideration for making loans in the
  amount of  $55,000, an  equivalent value  in common  stock was  issued,
  computed using  the share  price on  the date  of the  loan.   In  this
  regard, the Company  issued 598,485 restricted  common shares at  share
  prices ranging from  $0.06 to  $0.11.  Bridge  loans in  the amount  of
  $80,000 remained outstanding at September 30, 1999.

       Mainstream Enterprises LLC ("Mainstream"),  a beneficial owner  of
  more than  5% of  the outstanding  stock at  September 30,  1999,  also
  provided bridge loans to the Company  between January and July 1999  in
  the aggregate amount of $175,000.  Mainstream first loaned the  Company
  $25,000 on  January 1,  1999.   Consideration  for  this loan  was  the
  forgiveness  of  a  $5,069  monthly  installment  payment  on  a   note
  receivable from Mainstream related to the sale of a clinic owned by the
  Company in Brownsville, Texas in June  1998.  This loan was settled  as
  of March 31, 1999  by an offset for  equivalent amount due the  Company
  for corporate  office  expenses.   Mainstream  loaned  the  Company  an
  additional $25,000 on April 8, 1999.   Consideration for this loan  was
  the forgiveness of  a $5,069 monthly  installment payment  on the  note
  receivable for each month the loan remained outstanding.  This loan was
  settled on September 30,  1999 by an offset  to the note receivable  in
  the amount of  $25,000 related to  the sale of  a clinic to  Mainstream
  (see below) and  six monthly  installment  payments  totaling  $30,414.
  Between April  30,  1999  and July  8  1999,  Mainstream  provided  six
  additional bridge loans in  the aggregate of  $125,000.  As  additional
  consideration for  making these  loans an  equivalent value  in  common
  stock was issued,  computed using the  share price on  the date of  the
  loan.  In this regard, the  Company issued 1,650,000 restricted  common
  shares at share prices  ranging from $0.04 to  $0.10.  Bridge loans  in
  the amount of $100,000 remained outstanding at September 30, 1999.

       Between August 20 and 29, 1999, Mainstream made advance  principal
  payments in the amount of $75,000 on the note receivable related to the
  sale of  the  Brownsville  clinic.   Consideration  for  these  advance
  payments was  the  forgiveness of  $75,000  in principal  on  the  note
  receivable.

       On September  30, 1999,  the Company  sold a  chiropractic  clinic
  located in  San Antonio,  which had  been open  for approximately  four
  months, to Mainstream for  $50,000.  The  sales price approximated  the
  value of the accounts receivable at September 30, 1999.  A bridge  loan
  dated April 8, 1999 in  the amount of $25,000  and a bridge loan  dated
  May 25, 1999 in  the amount of $25,000  were used as  an offset to  the
  sales price.
<PAGE>

  ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

       (a)  Exhibits Required by Item 601

       (1)  The following financial statements are filed herewith in Item 7

            (i)   Consolidated Balance sheet as of September 30, 1999
            (ii)  Consolidated Statements of Operations for the years
                  ended September 30, 1999 and 1998.
            (iii) Consolidated Statement of Stockholders' Equity for
                  the years ended September 30, 1999 and 1998.
            (iv)  Consolidated Statements of Cash Flows for the years
                  ended September 30, 1999 and 1998.
            (v)   Notes to Consolidated Financial Statements.

       (2)
            3.1   Certificate of Incorporation of American HealthChoice,
                  Inc. (incorporated by reference to Exhibit 4.1 to
                  Registration Statement on Form SB-2, Registration
                  Number 33-09311, filed on July 31, 1996)

            3.2   Certificate of Amendment to Certificate of Incorporation
                  of American HealthChoice, Inc. (incorporated by
                  reference to Exhibit 3.2 to Form 10-KSB, file number
                  000-26740, filed for the fiscal year ended September 30,
                  1996).

            3.3   Bylaws of American HealthChoice, Inc. (incorporated by
                  reference to Exhibit 3.3 to Form 10-KSB, file number
                  000- 26740, filed for the fiscal year ended September
                  30, 1996).

            4.1   Form of Debenture for $3,385,000 of 8% convertible
                  debentures due August 24, 2001 (incorporated by
                  reference to Exhibit (c)(ii) to Current Report on
                  Form 8-K dated August 24, 1998).

            4.2   Form of Subscription Agreement between the  Registrant
                  and the holders of the debentures referenced in Exhibit
                  4.1 (incorporated by reference to Exhibit (c)(ii) to
                  Current Report on Form 8-K dated August 24, 1998).

            4.3   Form of Security Agreement entered into between the
                  Registrant and the holders of the debentures referenced
                  in Exhibit 4.1 (incorporated by reference to Exhibit
                  (c)(ii) to Current Report on Form 8-K dated August 24,
                  1998).

            4.4   Form of Registrations Rights Agreement between the
                  Registrant and the holders of the debentures referenced
                  in Exhibit 4.1 (incorporated by reference to Exhibit
                  (c)(ii) to Current Report on Form 8-K dated August 24,
                  1998).
<PAGE>
            10.1  Employment Agreement for General Counsel dated December
                  16, 1996, between American HealthChoice, Inc. and Jay R.
                  Stucki. (incorporated by reference to Exhibit 10.1 to
                  Form 10-KSB, file number 000-26740, filed for the fiscal
                  year ended September 30, 1997).

            10.2  Employment Agreement for Chief Financial Officer
                  dated June 1,1997 between American HealthChoice, Inc. and
                  Jay R. Stucki. (incorporated by reference to Exhibit 10.2
                  to Form 10-KSB, file number 000-26740, filed for the
                  fiscal year ended September 30, 1997).

            10.3  1995 Non-Employee Director Stock Option Plan
                  (incorporated by reference to Exhibit 10.1 to Form
                  10-QSB, file number 33-30677-NY, filed for the quarter
                  ended June 30, 1995).

            10.4  1995 Employee Stock Purchase Plan (incorporated by
                  reference to Exhibit 10.3 to Form 10-QSB, file number
                  33-30677-NY, filed for the quarter ended June 30,1995).

            10.5  1995 Employee Stock Option Plan Amendment 1996-1.
                  (incorporated by reference to Exhibit 10.8 to Form 10-
                  QSB, file number 000-26740, filed for the quarter ended
                  June 30, 1995).

            10.6  1995 Non-Employee Director Plan Amendment
                  1996-1. (incorporated by reference to  Exhibit
                  10.9 to Form 10-KSB, file number 000-26740, filed
                  for the fiscal year ended September 30, 1996).

            10.7  1995 Employee Stock Purchase Plan Amendment
                  1996-1. (incorporated by reference to  Exhibit
                  10.10 to Form 10-KSB, file number 000-26740, filed
                  for the fiscal year ended September 30, 1996).

            10.8  1997 Consultant Stock Plan, (incorporated by reference
                  to Form S-8 file number 333-26065, filed for the quarter
                  ended March 31, 1997).

            10.9  1997 Consultant Stock Plan, (incorporated by  reference
                  to Form S-8 file number 333-35581, filed for the quarter
                  ended September 30, 1997).

            10.10 1997 Executive Bonus Plan, (incorporated by reference
                  to Form S-8 file number 333-36475, filed for the quarter
                  ended September 30, 1997).

            10.11 Loan and Security Agreement dated December 30, 1996
                  between DVI Business Credit Corporation and American
                  HealthChoice, Inc. (incorporated by reference to
                  Exhibit 10.11 to Form 10-KSB, file number 000-26740,
                  filed for the fiscal year ended September,30, 1996).

            10.12 Investor Agreement dated March 19, 1997 between
                  Wingate LLC and American HealthChoice, Inc.
                  (incorporated by reference to Exhibit 10.12 to Form
                  10-KSB, file number 000-26740, filed for the fiscal year
                  ended September 30, 1997).
<PAGE>
            10.13 Employment Agreement for Chief Executive Officer
                  dated June 1, 1997 between American HealthChoice, Inc.
                  and Dr. Wes Stucki (incorporated by reference to Exhibit
                  10.13 to Form 10-KSB,  file number 000-26740, filed  for
                  the fiscal year ended September 30, 1998).

            10.14 Asset Purchase Agreement dated February 12, 1999
                  between AHC Physicians Corporation and Georgia Clinic
                  LLC (incorporated by reference file number 000-26740,
                  filed for the fiscal quarter ended March 31,1999).

            10.15 Demand Note dated June 10, 1999 between American
                  HealthChoice, Inc. and Dr. J. W. Stucki*

            10.16 Demand Note dated June 25, 1999 between American
                  HealthChoice, Inc. and Dr. J. W. Stucki*

            10.17 Demand Note dated April 30, 1999 between American
                  HealthChoice, Inc. and Mainstream Enterprises, LLC*

            10.18 Demand Note dated May 25, 1999 between American
                  HealthChoice, Inc. and Mainstream Enterprises, LLC*

            10.19 Demand Note dated May 10, 1999 between American
                  HealthChoice, Inc. and Mainstream Enterprises, LLC*

            10.20 Demand Note dated June 15, 1999 between American
                  HealthChoice, Inc. and Mainstream Enterprises, LLC*

            10.21 Demand Note dated July 1, 1999 between American
                  HealthChoice, Inc. and Mainstream Enterprises, LLC*

            10.22 Demand Note dated July 10, 1999 between American
                  HealthChoice, Inc. and Mainstream Enterprises, LLC*

            10.23 Demand Note dated August 8, 1999 between American
                  HealthChoice, Inc. and Dr. J. W. Stucki*

            21   List of Subsidiaries of American HealthChoice, Inc.*

            27   Financial Data Schedule*

       * Filed herewith

  (b) The Company did not file any reports on Form 8-K during the quarter
      ended September 30, 1999.
<PAGE>

                                  SIGNATURES

       In accordance with Section 13 or 15(d) of the Securities  Exchange
  Act of 1934,  the Registrant  caused this Report  to be  signed on  its
  behalf by the undersigned, thereunto duly authorized.



                                     AMERICAN HEALTHCHOICE, INC.

  Date: January 13, 2000             By:  /s/ Dr. J.W. Stucki
                                     Dr. J.W. Stucki, Chief Executive
                                     Officer and President

       In accordance  with  the Securities  Exchange  Act of  1934,  this
  Report has been signed below by the following persons on behalf of  the
  Registrant and in the capacities and on the dates indicated.

       Signature                     Title                           Date
  -------------------      ---------------------------------- ----------------
  /s/ Dr. J.W. Stucki      Chief Executive Officer, President
      Dr. J.W. Stucki      and Chairman of the Board
                           (Principal Executive Officer)      January 13, 2000

  /s/ John C. Stuecheli    Chief Financial Officer and
      John C. Stuecheli    Vice President-Finance
                           (Principal Financial and
                           Accounting Officer)                January 13, 2000

  /s/ John V. Mansfield    Director, Chairman of
      John V. Mansfield    Audit Committee                    January 13, 2000

  /s/ James Roberts        Director
      James Roberts                                           January 13, 2000

  /s/ Dr. Jeff Jones       Director
      Dr. Jeff Jones                                          January 13, 2000

  /s/ Dr. Michael Smith    Director
      Dr. Michael Smith                                       January 13, 2000