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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM
10-K/A
 (Amendment
No. 3)
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended September 30, 2008
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from
 _____ 

to
 _____
 Commission File Number 000-30099
 Alliance HealthCard, Inc.
  GEORGIA
(State or other jurisdiction of 
incorporation or organization)
    
    58-2445301
(I.R.S. Employer
Identification No.)
 th
 
 o þ
 Yes
o No þ
 o þ
 þ
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ
 o þ
   Class
    
    Outstanding at December 12, 2008Common Stock, $.001 par value
    
    14,833,127




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Explanatory Note
 
  
    
    Item 7  Managements Discussion and Analysis of Financial Condition and Results of
Operations was modified to incorporate the correct disclosure required by SFAS 123R.
    
    Item 8  Financial Statements and Supplementary Data has been modified as follows:
 
    
    Note 8. Stock Based Compensation was modified to incorporate the correct
disclosure required by SFAS 123R;
    
    Note 12. Claims Liability was modified to expand our disclosure as to what
these claims are, how they are generated and why we are obligated to pay them;
    
    The date of the report of Eide Baily LLP, the Companys independent registered
public accounting firm as of and for the year ended September 30, 2008 was updated;
 
    
    Item 9A  Controls and Procedures was revised to modify the disclosure regarding
the evaluation of the effectiveness of the design and operation of our disclosure controls
and procedures.
    
    Item 15  Exhibits and Financial Statement Schedules was revised to include the
contract with Rent A Center.
    
    Exhibits 31.1 and 31.2 were modified to provide certifications as exactly set forth in
Regulation S-K, Item 601(b) (31).
    
    The signature page date has been revised.




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##### 



ALLIANCE HEALTHCARD, INC.
 FORM 10-K
 INDEX
 PART IITEM 1. BUSINESS
    
    

    3ITEM 1A. RISK FACTORS
    
    
    9ITEM 1B. UNRESOLVED STAFF COMMENTS
    
    
    12ITEM 2. PROPERTIES
    
    
    12ITEM 3. LEGAL PROCEEDINGS
    
    
    13ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    13PART IIITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
    
    
    13ITEM 6. SELECTED FINANCIAL DATA
    
    
    14ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    
    
    15ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
    
    
    17ITEM 8. FINANCIAL STATEMENTS
    
    
    18ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
    
    
    39ITEM 9A. CONTROLS AND PROCEDURES
    
    
    39ITEM 9A(T). CONTROLS AND PROCEDURES
    
    
    41ITEM 9B. OTHER INFORMATION
    
    
    41PART IIIITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
    
    
    41ITEM 11. EXECUTIVE COMPENSATION
    
    
    45ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
    
    
    49ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
    
    
    50ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
    
    
    51PART IVITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
    
    
    51SIGNATURES
    
    
    52Exhibit 10.14Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   2




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ITEM 1. BUSINESS.
  INDUSTRY OVERVIEW
  HISTORY OF THE COMPANY
     BUSINESS OVERVIEW
    3




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BUSINESS STRATEGY
  
    
    increasing market penetration;
    
    maintaining and enhancing customer satisfaction;
    
    continually enhancing programs and adding benefits;
    
    managing growth effectively; and
    
    helping the market to understand how our offerings are different and superior.
  4




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Increase Market Penetration
  Maintain and Enhance Customer Satisfaction
  Continually Enhance Programs
  Manage Growth Effectively
   5




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SERVICES
  Discount Medical
    
    AutomotivePhysician Network Access
    
    Discounted Roadside AssistanceDental Network Access
    
    Automotive Service Provider SavingsVision Care & Eyewear Network Access
    
    Customer Trip RoutingPharmacy Network Discounts
    
    Car Theft RewardMail Order Pharmacy Discounts
    
    Rental Car SavingsChiropractor Network AccessHearing Aid Discounts
    
    Dealer Add-In BenefitsVitamins & Nutritional Supplements
    
    Lease Cancellation BenefitAccount ReinstatementFood and Entertainment
    
    Points Program for On Time PaymentsGrocery Coupon SavingsRestaurant Savings
    
    Miscellaneous BenefitsTheme Park Discounts
    
    Kid SecureMovie Theater Discounts
    
    Discounted Legal ServicesSavings at Choice HotelsInsurance
    
    Savings at 1-800Flowers.comAccidental Death & Dismemberment
    
    Product Service PlansInvoluntary UnemploymentLeased Property Insurance
 CUSTOMERS
   SALES AND MARKETING
    6




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COMPETITION
   GOVERNMENT REGULATION
    
    
    non-compliance may cause us to lose licensing status or to become the subject of a variety of enforcement
or private actions;
    
    compliance with changes in applicable regulations could materially increase the associated operating costs;
    
    non-compliance with any rules and regulations enforced by a federal or state consumer protection authority
may subject us or our management personnel to fines or various forms of civil or criminal prosecution; and
    
    non-compliance or alleged non-compliance may result in loss of contracts, negative publicity potentially
damaging our reputation, network relationships, client relationships and the relationship with program
members, representatives and consumers in general.
  7




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Insurance Regulations
  
    
    Similar to the insurance companies providing products and services
offered by us, we are unable to accurately predict additional
government regulations that may be enacted in the future affecting the
insurance industry and the offered products and service or how
existing or future regulations might be interpreted.
    
    Additional governmental regulation or future interpretation of
existing regulations may increase the cost of compliance or materially
affect the insurance products and services offered by us and our
profitability.
    
    We must rely on the insurance companies that provide the insurance
products and financial services offered by us to carefully monitor
state and federal legislative and regulatory activity as it affects
their insurance products and services. We believe that the insurance
products and financial services that we offer comply in all material
respects with all applicable federal and state regulations.
    
    Among the benefits afforded to the members of our association are
varying forms of insurance. Our ability to offer insurance products
that we are authorized to distribute to this association for inclusion
in its benefit packages may be affected by governmental regulation or
future interpretation of existing regulations that may increase the
cost of regulatory compliance or affect the nature and scope of
products that we may make available to such associations.
  Healthcare Regulation and Reform
      8




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##### Table of Contents



E-Commerce Regulation
  Legislative Development
   Privacy Laws
  
 ITEM 1A. RISK FACTORS.
  
    
    adversely affect the market price of our common stock,
    
    adversely affect our future operations,
    
    adversely affect our business,
    
    adversely affect our financial condition,
    
    adversely affect our results of operations,
  9




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
    
    require significant reduction or discontinuance of our operations,
    
    require us to seek a merger partner, or
    
    require us to sell additional stock on terms that are highly dilutive to our
shareholders.
 THIS REPORT CONTAINS CAUTIONARY STATEMENTS RELATING TO FORWARD LOOKING INFORMATION.
  
    
    discuss our future expectations,
 
    
    contain projections of our future operating results or of our future financial
condition, or
 
    
    states other forward-looking information.
  A SIGNIFICANT PORTION OF OUR REVENUE IS DEPENDENT ON ONE CLIENT.
  WE DEPEND ON VARIOUS THIRD-PARTY VENDORS TO SUPPLY CERTAIN PRODUCTS AND SERVICES THAT
WE MARKET.
  WE FACE COMPETITION FOR CLIENTS TO MARKET OUR PROGRAMS AS WELL AS COMPETITIVE
OFFERINGS OF BENEFIT PROGRAMS.
    10




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WE HAVE MANY COMPETITORS AND MAY NOT BE ABLE TO COMPETE EFFECTIVELY WHICH MAY LEAD TO
A LACK OF REVENUES AND DISCONTINUANCE OF OUR OPERATIONS.
   
    
    we will be able to compete successfully;
    
    our competitors will not develop programs that render our programs less marketable
or even obsolete; or
    
    we will be able to successfully enhance our programs when necessary.
 GOVERNMENT REGULATION MAY ADVERSELY AFFECT OR LIMIT OUR OPERATIONS.
   WE MAY HAVE EXPOSURE AND LIABILITY RELATING TO NON-COMPLIANCE WITH THE HEALTH
INSURANCE PORTABILITY AND ACCOUNTABILITY ACT OF 1996 AND THE COST OF COMPLIANCE COULD
BE MATERIAL.
   11




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THE FAILURE TO COMPLY WITH FEDERAL AND STATE REGULATION COULD RESULT IN ENFORCEMENT
ACTION AND IMPOSITION OF PENALTIES, MODIFICATION OF OUR OPERATIONS, AND NEGATIVE
PUBLICITY.
    
    
    result in enforcement action and imposition of penalty,
    
    require modification of our operations or programs,
    
    result in negative publicity
  THE GOODWILL RESULTING FROM OUR MERGER-ACQUISITION OF BMS HOLDING COMPANY MAY BECOME
IMPAIRED AND REQUIRE A WRITE-DOWN AND THE RECOGNITION OF AN IMPAIRMENT EXPENSE THAT MAY BE
SUBSTANTIAL.
  OUR FAILURE TO PROTECT PRIVATE DATA COULD SUBJECT US TO PENALTIES, DAMAGE OUR
REPUTATION, CAUSE US TO BE IN BREACH OF CONTRACTS AND CAUSE US TO EXPEND CAPITAL AND
OTHER RESOURCES TO PROTECT AGAINST FUTURE SECURITY BREACHES.
  
 ITEM 1B. UNRESOLVED STAFF COMMENTS.
  
 ITEM 2. PROPERTIES
   12




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ITEM 3. LEGAL PROCEEDINGS
   
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 PART II.
 
 ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND PURCHASES OF EQUITY
SECURITIES
  Price Per Common ShareHigh
    
    
    LowYear Ended September 30, 2008First Quarter ended December 31, 2007
    
    $
    1.90
    
    
    $
    1.55Second Quarter ended March 31, 2008
    
    $
    1.70
    
    
    $
    0.80Third Quarter ended June 30, 2008
    
    $
    1.25
    
    
    $
    0.75Fourth Quarter ended September 30, 2008
    
    $
    1.35
    
    
    $
    0.60Year ended September 30, 2007First Quarter ended December 31, 2006
    
    $
    1.35
    
    
    $
    0.42Second Quarter ended March 31, 2007
    
    $
    1.90
    
    
    $
    1.10Third Quarter ended June 30, 2007
    
    $
    2.20
    
    
    $
    1.61Fourth Quarter ended September 30, 2007
    
    $
    2.00
    
    
    $
    1.61
  13




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DIVIDEND POLICY
   REPURCHASE OF COMMON STOCK SHARES
  SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
  Number ofSecurities to be
    
    
    
    
    
    
    Number of securitiesissued upon exercise
    
    
    Weighted-average
    
    
    remaining availableof outstanding
    
    
    exercise price of
    
    
    for future issuanceoptions, warrants
    
    
    outstanding options,
    
    
    under equityPlan category
    
    and rights
    
    
    warrants and rights
    
    
    compensation plansEquity compensation plans
approved by security holders:2001 Stock Option Plan
    
    
    1,518,897
    
    
    $
    0.93
    
    
    
    1,287,794Equity compensation plans
not approved by security holders:
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    1,518,897
    
    
    
    
    
    
    
    1,287,794
 
 ITEM 6. SELECTED FINANCIAL DATA
   14




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ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
 Overview
    Critical Accounting Policies
 Use of Estimates
  Goodwill and Intangible Assets
     Stock Based Compensation
  Income Taxes
    Revenue Recognition
  Recent Accounting Pronouncements
         Results of Operations
 Year Ended September 30, 2008 Compared to Year Ended September 30, 2007
      15




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OFF-BALANCE SHEET ARRANGEMENTS
  LIQUIDITY AND CAPITAL RESOURCES
     
    
    A reduction of $1.6 million for distributions paid prior to the merger to former shareholders
of BMS Holding Company, Inc. for the fiscal year ended September 30, 2007;
    
    Promissory note payments to related parties of $2.3 million for the fiscal year ended
September 30, 2008 compared to $1.2 million for the fiscal year ended September 30, 2007;
    
    Proceeds of $.1 million from exercise of stock options during the fiscal year ended September
30, 2008; and
    
    Repayment of our line of credit for $.15 million for the fiscal year ended September 30,
2008.
  IMPACT OF INFLATION
   16




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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.
   17




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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
  Report of Independent Registered Public Accounting Firm
    
    
    19Consolidated Balance Sheets as of September 30, 2008 and 2007
    
    
    21Consolidated Statements of Operations for the years ended September 30, 2008 and 2007
    
    
    22Consolidated Statements of Stockholders Equity for the years ended September 30, 2008 and 2007
    
    
    23Consolidated Statements of Cash Flows for the years ended September 30, 2008 and 2007
    
    
    24Notes to Consolidated Financial Statements
    
    
    25
  18




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Report of Independent Registered Public Accounting Firm
 
    
  19




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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
    
 
 20




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Alliance HealthCard, Inc. & Subsidiaries
 
 Consolidated Balance Sheets
 September 30,2008
    
    
    2007AssetsCurrent assets:Cash and cash equivalents
    
    $
    3,012,683
    
    
    $
    2,274,411Restricted cash
    
    
    156,935
    
    
    
    Accounts receivable, net
    
    
    2,486,938
    
    
    
    2,389,541Prepaid expenses
    
    
    31,372
    
    
    
    33,666Total current assets
    
    
    5,687,928
    
    
    
    4,697,618Furniture, fixtures and equipment, net
    
    
    165,020
    
    
    
    131,969Goodwill
    
    
    2,534,152
    
    
    
    2,746,945Intangibles  Customer lists, net
    
    
    1,708,883
    
    
    
    2,212,220Deferred income taxes and other
    
    
    427,604
    
    
    
    443,537Total assets
    
    $
    10,523,587
    
    
    $
    10,232,459Liabilities and stockholders equityCurrent liabilities:Accounts payable
    
    $
    927,101
    
    
    $
    1,441,703Accrued salaries and benefits
    
    
    161,732
    
    
    
    129,525Claims liability
    
    
    462,596
    
    
    
    260,360Deferred revenue
    
    
    843,868
    
    
    
    911,588Line-of-credit
    
    
    
    
    
    
    149,980Current portion of notes payable to related parties
    
    
    2,289,663
    
    
    
    2,382,333Liability
for unrecognized tax benefit
    
    
    166,000
    
    
    
    Other accrued liabilities
    
    
    1,468,349
    
    
    
    1,323,817Total current liabilities
    
    
    6,319,309
    
    
    
    6,599,306Long term liabilities:Notes payable to related parties, net of current
portion shown above
    
    
    931,581
    
    
    
    3,200,055Total liabilities
    
    
    7,250,890
    
    
    
    9,799,361CommitmentsStockholders equity:Common stock, $.001 par value; 100,000,000
shares authorized; 14,796,763 shares issued
and outstanding at September 30, 2008 and 14,647,763 at September 30, 2007
    
    
    14,796
    
    
    
    14,647Additional paid-in-capital
    
    
    6,808,758
    
    
    
    6,677,567Accumulated deficit
    
    
    (3,550,857
    )
    
    
    (6,259,116
    )Total stockholders equity
    
    
    3,272,697
    
    
    
    433,098Total liabilities and stockholders equity
    
    $
    10,523,587
    
    
    $
    10,232,459
 See the accompanying notes to the financial statements.
  21




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Alliance HealthCard, Inc. & Subsidiaries
 
 Consolidated Statements of Operations
 Year EndedSeptember 30,2008
    
    
    2007Net revenues
    
    $
    20,913,609
    
    
    $
    17,608,747Direct costs
    
    
    11,113,452
    
    
    
    11,541,715Gross profit
    
    
    9,800,157
    
    
    
    6,067,032Marketing and sales expenses
    
    
    1,252,051
    
    
    
    916,820Depreciation and amortization expense
    
    
    550,764
    
    
    
    343,621General and administrative expenses
    
    
    3,115,049
    
    
    
    2,877,099Operating income
    
    
    4,882,293
    
    
    
    1,929,492Other income (expense):Other income
    
    
    163,951
    
    
    
    71,132Other expense, net
    
    
    (148,985
    )
    
    
    (148,972
    )14,966
    
    
    
    (77,840
    )Net income before income taxes
    
    
    4,897,259
    
    
    
    1,851,652Provision for income taxesCurrent
    
    
    2,140,000
    
    
    
    589,000Deferred tax (benefit)
    
    
    49,000
    
    
    
    (134,000
    )Total provision for income taxes
    
    
    2,189,000
    
    
    
    455,000Net income
    
    $
    2,708,259
    
    
    $
    1,396,652Less dividends and distributions
    
    
    
    
    
    
    8,243,218Net income available for common stock
    
    $
    2,708,259
    
    
    $
    (6,846,566
    )Per share data:Basic income
    
    $
    0.18
    
    
    $
    (0.47
    )Diluted income
    
    $
    0.18
    
    
    $
    (0.47
    )Basic weighted average sharesOutstanding
    
    
    14,797,612
    
    
    
    14,548,804Diluted weighted average sharesOutstanding
    
    
    15,262,596
    
    
    
    14,548,804
 See the accompanying notes to the financial statements.
  22




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Alliance HealthCard, Inc. & Subsidiaries
 
 Consolidated Statements of Stockholders Equity
 Additional
    
    
    
    
    
    
    TotalCommon Stock
    
    
    Paid-in
    
    
    Retained
    
    
    Stockholders'Shares
    
    
    Amount
    
    
    Capital
    
    
    Earnings
    
    
    EquityBalance at October 1, 2006
    
    
    10,000,000
    
    
    $
    10,000
    
    
    $
    1,553,420
    
    
    $
    587,450
    
    
    $
    2,150,870Stock Issued in connection with merger
    
    
    4,524,263
    
    
    
    4,524
    
    
    
    4,972,165
    
    
    
    
    
    
    
    4,976,689Stock issued to consultant on 2/28/07
    
    
    20,000
    
    
    
    20
    
    
    
    21,980
    
    
    
    
    
    
    
    22,000Stock options exercised on 8/17/07
    
    
    103,500
    
    
    
    103
    
    
    
    75,002
    
    
    
    
    
    
    
    75,105Stock options issued to consultant on 2/28/07
    
    
    
    
    
    
    
    
    
    
    55,000
    
    
    
    
    
    
    
    55,000Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,396,652
    
    
    
    1,396,652Dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,243,218
    )
    
    
    (8,243,218
    )Balance at September 30, 2007
    
    
    14,647,763
    
    
    
    14,647
    
    
    
    6,677,567
    
    
    
    (6,259,116
    )
    
    
    433,098Stock options exercised on 12/28/07
    
    
    149,000
    
    
    
    149
    
    
    
    112,721
    
    
    
    
    
    
    
    112,870Stock options issued to consultant on 12/31/07
    
    
    
    
    
    
    
    
    
    
    2,250
    
    
    
    
    
    
    
    2,250Stock options issued to consultant on 03/31/08
    
    
    
    
    
    
    
    
    
    
    2,250
    
    
    
    
    
    
    
    2,250Stock options issued to directors on 5/31/08
    
    
    
    
    
    
    
    
    
    
    13,970
    
    
    
    
    
    
    
    13,970Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,708,259
    
    
    
    2,708,259Balance at September 30, 2008
    
    
    14,796,763
    
    
    $
    14,796
    
    
    $
    6,808,758
    
    
    $
    (3,550,857
    )
    
    $
    3,272,697
 See the accompanying notes to the financial statements.
  23




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Alliance HealthCard, Inc. & Subsidiaries
 
 Consolidated Statements of Cash Flows
 Year EndedSeptember 30,2008
    
    
    2007Cash flows from operating activitiesNet income
    
    $
    2,708,259
    
    
    $
    1,396,652Adjustments to reconcile net income to net cash
provided by operating activities:Depreciation and amortization
    
    
    550,764
    
    
    
    343,621Deferred tax (benefit)
    
    
    49,000
    
    
    
    (134,000
    )Stock issued to consultant
    
    
    
    
    
    
    22,000Stock options issued to consultants/directors
    
    
    18,470
    
    
    
    55,000Amortization of loan discount to interest
expense
    
    
    160,194
    
    
    
    107,138Change in operating assets and liabilities:Receivables
    
    
    (88,928
    )
    
    
    (258,333
    )Prepaid expenses
    
    
    2,294
    
    
    
    216,676Other long term assets
    
    
    
    
    
    
    1,200Accounts payable
    
    
    (514,602
    )
    
    
    (850,381
    )Accrued salaries and benefits
    
    
    32,207
    
    
    
    57,366Deferred revenue
    
    
    (67,720
    )
    
    
    82,584Claims and other accrued liabilities
    
    
    471,404
    
    
    
    1,002,471Net cash provided by operating activities
    
    
    3,321,342
    
    
    
    2,041,994Cash flows from investing activitiesIncrease in
restricted cash
    
    
    (156,935
    )
    
    
    Cash received from merger
    
    
    
    
    
    
    1,065,528Purchase of equipment
    
    
    (80,479
    )
    
    
    (80,426
    )Net cash
provided by (used by) investing activities
    
    
    (237,414
    )
    
    
    985,102Cash flows from financing activitiesPayments on
notes to related parties
    
    
    (2,308,546
    )
    
    
    (1,191,167
    )Dividends and distributions paid out
    
    
    
    
    
    
    (1,576,801
    )Stock options exercised
    
    
    112,870
    
    
    
    75 105Repayment of line of credit
    
    
    (149,980
    )
    
    
    Net cash
(used by) financing activities
    
    
    (2,345,656
    )
    
    
    (2,692,863
    )Net increase in cash and cash equivalents
    
    
    738,272
    
    
    
    334,233Cash at beginning of period
    
    
    2,274,411
    
    
    
    1,940,178Cash at end of period
    
    $
    3,012,683
    
    
    $
    2,274,411
 See the accompanying notes to the financial statements.
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Alliance HealthCard, Inc. & Subsidiaries
 
 Notes to Consolidated Financial Statements
 September 30, 2008 and 2007
 1. Description of the Business
   2. Summary of Significant Accounting Policies
 Basis of Presentation
    Use of Estimates
   25




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##### Table of Contents



Alliance HealthCard, Inc. & Subsidiaries
 Notes to Consolidated Financial Statements, Continued
 2. Summary of Significant Accounting Policies (continued)
 Fair Values of Financial Instruments
  Cash and Cash Equivalents
  Restricted Cash
  Accounts Receivable and Credit Policies
  Property and Equipment
  Goodwill and Intangible Assets
     26




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##### Table of Contents



Alliance HealthCard, Inc. & Subsidiaries
 Notes to Consolidated Financial Statements, Continued
 2. Summary of Significant Accounting Policies (continued)
  Stock Based Compensation
  Income Taxes
    Revenue Recognition
 Revenue Recognition, corrected copy ,
  Segment
Reporting
   27




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##### Table of Contents



Alliance HealthCard, Inc. & Subsidiaries
 Notes to Consolidated Financial Statements, Continued
 2. Summary of Significant Accounting Policies (continued)
 Impairment of Long Lived Assets
  Advertising Expense
  Earnings per Share
  Recent Accounting Pronouncements
 Fair Value Measurements
 Employers Accounting for Defined Benefit Pension and
Other Postretirement Plans
 The Fair Value Option for Financial Assets and
Financial Liabilities
  28




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##### Table of Contents



Alliance HealthCard, Inc. & Subsidiaries
 Notes to Consolidated Financial Statements, Continued
 2. Summary of Significant Accounting Policies (continued)
      3. Supplemental Cash Flows Information
  2008
    
    
    2007Interest
    
    $
    53,020
    
    
    $
    41,262Income taxes paid
    
    $
    1,704,883
    
    
    $
    528,677Other non cash transactions are as follows:Issuance of 4,524,263 shares of common stock for the
acquisition of Alliance HealthCard, Inc., in connection with
the reverse merger
    
    $
    
    
    
    $
    4,976,689Issuance of stock and options to consultants and directors
    
    $
    18,470
    
    
    $
    77,000Notes, net of discount issued as dividends to BMS shareholders
    
    $
    
    
    
    $
    6,666,417
  29




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##### Table of Contents



Alliance HealthCard, Inc. & Subsidiaries
 Notes to Consolidated Financial Statements, Continued
 4. Mergers and Acquisitions
   Fiscal Year EndedSeptember 30,2008
    
    
    2007Issuance of notes, net of imputed interest
    
    $
    
    
    
    $
    6,666,417Cash distributions made
    
    
    
    
    
    
    1,576,801$
    
    
    
    $
    8,243,218
   Current assets
    
    $
    1,860,252Property and equipment
    
    
    3,624Other assets
    
    
    39,637Customer lists
    
    
    2,500,000Goodwill
    
    
    2,291,945Total assets acquired
    
    
    6,695,458Current liabilities assumed
    
    
    1,718,769Total liabilities assumed
    
    
    1,718,769Net assets acquired
    
    $
    4,976,689
  30




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##### Table of Contents



Alliance HealthCard, Inc. & Subsidiaries
 Notes to Consolidated Financial Statements, Continued
 4. Mergers and Acquisitions (continued)
   Goodwill
    
    $
    455,000Non-competition agreement
    
    
    10,000Software
    
    
    10,000$
    475,000
   5. Notes Payable to Related Parties
   (See Note 15  Restated Quarterly Financial Statements),
  31




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##### Table of Contents



Alliance HealthCard, Inc. & Subsidiaries
 Notes to Consolidated Financial Statements, Continued
 5. Notes Payable to Related Parties (continued)
    Principal
    
    Discount
    
    NetFiscal Year Ended September 30
    
    Payments
    
    Applied
    
    Amount Due2009
    
    
    2,431,352
    
    141,689
    
    
    2,289,6632010
    
    
    1,013,910
    
    82,329
    
    
    931,581
 6. Line of Credit
   7. Furniture and Equipment
  2008
    
    
    2007Furniture, fixtures and equipment
    
    $
    368,155
    
    
    $
    299,087Website and video training
    
    
    33,595
    
    
    
    33,595Software
    
    
    83,099
    
    
    
    71,691Leasehold improvements
    
    
    12,686
    
    
    
    12,686497,535
    
    
    
    417,059Less: accumulated depreciation and amortization
    
    
    (332,515
    )
    
    
    (285,090
    )$
    165,020
    
    
    $
    131,969
  32




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##### Table of Contents



Alliance HealthCard, Inc. & Subsidiaries
 Notes to Consolidated Financial Statements, Continued
 8. Stock Based Compensation
    Expected volatility
    
    .1Dividend yield
    
    0%Risk free interest rate
    
    1.0%Expected lives
    
    10 Years
   WeightedAverageExercise
    
    
    Options
    
    
    OptionsPrice
    
    
    Outstanding
    
    
    ExercisableBalance at September 30, 2007
    
    
    
    
    
    
    1,701,396
    
    
    
    1,668,896Granted
    
    $
    1.61
    
    
    
    82,500
    
    
    
    62,500Forfeited
    
    $
    1.37
    
    
    
    (115,999
    )
    
    
    (103,499
    )Exercised
    
    $
    0.76
    
    
    
    (149,000
    )
    
    
    (149,000
    )Became exercisable
    
    $
    0.93
    
    
    
    
    
    
    
    10,833Balance, September 30, 2008
    
    
    
    
    
    
    1,518,897
    
    
    
    1,489,730
  Range of exercise price
    
    $0.23-$1.50Number outstanding
    
    1,518,897Weighted average remaining contractual life
    
    4.4 YearsWeighted average exercise price
    
    $0.93
  Accounting
for Stock Issued to Employees
  33




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##### Table of Contents



Alliance HealthCard, Inc. & Subsidiaries
 Notes to Consolidated Financial Statements, Continued
 8. Stock Based Compensation (continued)
  Range of exercise price
    
    $
    0.23-$2.00Number outstanding
    
    
    1,518,897Weighted average remaining contractual life
    
    4.4 YearsWeighted average exercise price
    
    $
    0.93
  9. Income Taxes
  2008
    
    
    2007Current income tax expenseFederal
    
    $
    1,890,000
    
    
    $
    513,000State
    
    
    250,000
    
    
    
    76,000Total current income tax expense
    
    
    2,140,000
    
    
    
    589,000Deferred income tax (benefit)Federal
    
    
    43,000
    
    
    
    (117,000
    )State
    
    
    6,000
    
    
    
    (17,000
    )Total deferred income tax (benefit)
    
    
    49,000
    
    
    
    (134,000
    )Net income tax expense
    
    $
    2,189,000
    
    
    $
    455,000
   Fiscal Year Ended September 30,2008
    
    
    2007Computed tax at federal statutory rate of 34%
    
    $
    1,667,000
    
    
    $
    629,000State income taxes
    
    
    221,000
    
    
    
    111,000Less tax effect of earnings reported at the shareholder level
    
    
    
    
    
    
    (300,000
    )Tax effect of non deductible amortization of intangible assets
    
    
    193,000
    
    
    
    114,000Tax effect of CAPIC settlement  See Note 5
    
    
    166,000
    
    
    
    Tax effect of utilization of NOL
    
    
    (79,000
    )
    
    
    (81,000
    )Change in valuation allowance
    
    
    (100,000
    )
    
    
    Non-deductible expenses
    
    
    18,000
    
    
    
    (47,000
    )Other
    
    
    103,000
    
    
    
    29,000Provision for income taxes
    
    $
    2,189,000
    
    
    $
    455,000Effective tax rate
    
    
    45
    %
    
    
    23
    %
  34




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##### Table of Contents



Alliance HealthCard, Inc. & Subsidiaries
 Notes to Consolidated Financial Statements, Continued
 9. Income Taxes (continued)
  Deferred income tax assets2008
    
    2007Tax effect of vacation accruals not deductible for income tax reporting purposes
    
    $
    18,000
    
    $
    18,000Tax effect of book depreciation in excess of tax depreciation
    
    
    119,000
    
    
    142,000Tax effect of revenue deferred for financial reporting purposes
    
    
    325,000
    
    
    356,000Tax effect of NOL carryover
    
    
    582,000
    
    
    682,000Total deferred tax assets
    
    
    1,044,000
    
    
    1,193,000Less Valuation allowance
    
    
    (700,000
    )
    
    (800,000
    )Net Deferred income tax asset at September 30, 2008
    
    $
    344,000
    
    $
    393,000
   Fiscal year ended September 30,2021
    
    $
    608,0002023
    
    
    903,000
   Unrecognized tax benefits
    
    $
    141,000Portion that, if recognized, would reduce tax
expense and effective tax rate
    
    
    141,000Accrued interest and penalties on unrecognized tax benefits
    
    
    25,000Portion that, if recognized, would reduce tax
expense and effective tax rate
    
    
    25,000
  2008Balance at September 30, 2007
    
    $
    Additions for tax positions of the current year
    
    
    166,000Balance at September 30, 2008
    
    $
    166,000
   10. Earnings Per Share
  Fiscal Year Ended September 30,2008
    
    
    2007Weighted-average common shares
    
    
    14,797,612
    
    
    
    14,548,804Effect of dilutive securitiesOptions to purchase common stock
    
    
    464,984
    
    
    
    Diluted potential common shares
    
    
    15,262,596
    
    
    
    14,548,804
    35




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##### Table of Contents



Alliance HealthCard, Inc. & Subsidiaries
 Notes to Consolidated Financial Statements, Continued
 11. Related Party Transactions
 .
    Year Ending September 30,
    
    Amount2009
    
    
    174,793Thereafter
    
    
    8,203Total
    
    $
    182,996
   13. Concentration of Credit Risk
    14. Defined Contribution Plan
   36




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##### Table of Contents



15. Restated Quarterly Financial Statements for March 31, 2008 and June 30, 2008
    A. Restated Condensed Balance Sheets
 As PreviouslyRestated
    
    
    ReportedMarch 31, 2008
    
    
    March 31, 2008(Unaudited)
    
    
    (Unaudited)Current assets
    
    $
    5,271,479
    
    
    $
    5,271,479Other assets
    
    
    609,774
    
    
    
    609,774Goodwill
    
    
    2,746,945
    
    
    
    2,746,945Intangibles, net
    
    
    1,960,551
    
    
    
    1,960,551Total assets
    
    $
    10,588,749
    
    
    $
    10,588,749LiabilitiesCurrent liabilities
    
    $
    6,557,087
    
    
    $
    6,191,367Dividends payable
    
    
    
    
    
    
    365,720Long-term debt, related party
    
    
    2,116,438
    
    
    
    2,116,438Total liabilities
    
    
    8,673,525
    
    
    
    8,673,525Total stockholders equity
    
    
    1,915,224
    
    
    
    1,915,224Total liabilities and
stockholders equity
    
    $
    10,588,749
    
    
    $
    10,588,749
  37




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##### Table of Contents



B. Restated Condensed Statements of Operations For the Three and Six Months Ended:
 Three Months Ended
    
    
    Six Months EndedMarch 31, 2008
    
    
    March 31, 2008As Previously
    
    
    
    
    
    
    As PreviouslyRestated
    
    
    Reported
    
    
    Restated
    
    
    Reported(Unaudited)
    
    
    (Unaudited)
    
    
    (Unaudited)
    
    
    (Unaudited)Net revenues
    
    $
    5,291,812
    
    
    $
    5,291,812
    
    
    $
    10,055,445
    
    
    $
    10,055,445Gross profit
    
    
    2,356,950
    
    
    
    2,356,950
    
    
    
    4,631,036
    
    
    
    4,631,036Operating income
    
    
    1,071,100
    
    
    
    1,071,100
    
    
    
    2,156,383
    
    
    
    2,156,383Other income (expense)
    
    
    119,230
    
    
    
    484,950
    
    
    
    76,593
    
    
    
    442,313Pre-tax income
    
    
    1,190,330
    
    
    
    1,556,050
    
    
    
    2,232,976
    
    
    
    2,598,696Tax provision
    
    
    461,471
    
    
    
    461,471
    
    
    
    868,221
    
    
    
    868,221Net income prior to dividends
    
    
    728,859
    
    
    
    1,094,579
    
    
    
    1,364,755
    
    
    
    1,730,475Dividends and distributions
    
    
    
    
    
    
    365,720
    
    
    
    
    
    
    
    365,720Net income (loss) available
for common stock
    
    $
    728,859
    
    
    $
    728,859
    
    
    $
    1,364,755
    
    
    $
    1,364,755Diluted net income (loss) per share
    
    $
    0.05
    
    
    $
    0.05
    
    
    $
    0.09
    
    
    $
    0.09
 C. Restated Condensed Statements of Operations For the Nine Months Ended:
 Nine Months EndedJune 30, 2008As PreviouslyRestated
    
    
    Reported(Unaudited)
    
    
    (Unaudited)Net revenues
    
    $
    15,421,698
    
    
    $
    15,421,698Gross profit
    
    
    7,125,588
    
    
    
    7,125,588Operating income
    
    
    3,450,164
    
    
    
    3,450,164Other income (expense)
    
    
    41,337
    
    
    
    407,057Pre-tax income
    
    
    3,491,501
    
    
    
    3,857,221Tax provision
    
    
    1,596,493
    
    
    
    1,596,493Net income prior to dividends
    
    
    1,895,008
    
    
    
    2,260,728Dividends and distributions
    
    
    
    
    
    
    365,720Net income (loss) available
for common stock
    
    $
    1,895,008
    
    
    $
    1,895,008Diluted net income (loss) per share
    
    $
    0.12
    
    
    $
    0.12
 16. Selected Quarterly Financial Data (Unaudited)
 First
    
    
    Second
    
    
    Third
    
    
    FourthQuarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter(Restated)
    
    
    (Restated)2008Revenue
    
    $
    4,763,633
    
    
    $
    5,291,812
    
    
    $
    5,366,253
    
    
    $
    5,491,911Gross profit
    
    $
    2,489,547
    
    
    $
    2,356,950
    
    
    $
    2,871,701
    
    
    $
    2,674,569Net income prior to dividends
    
    $
    635,896
    
    
    $
    728,859
    
    
    $
    530,253
    
    
    $
    813,251Dividends and distributions
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Net income available for common shareholders
    
    $
    635,896
    
    
    $
    728,859
    
    
    $
    530,253
    
    
    $
    813,251Diluted net income per share
    
    $
    0.04
    
    
    $
    0.05
    
    
    $
    0.04
    
    
    $
    0.052007Revenue
    
    $
    3,655,450
    
    
    $
    4,137,161
    
    
    $
    4,762,984
    
    
    $
    5,053,152Gross profit
    
    $
    1,022,018
    
    
    $
    1,339,914
    
    
    $
    2,232,017
    
    
    $
    1,473,083Net income prior to dividends
    
    $
    214,532
    
    
    $
    723,959
    
    
    $
    705,359
    
    
    $
    (247,198
    )Dividends and distributions
    
    $
    1,576,801
    
    
    $
    6,666,417
    
    
    $
    
    
    
    $
    Net income (loss) available for common
shareholders
    
    $
    (1,362,269
    )
    
    $
    (5,942,458
    )
    
    $
    705,359
    
    
    $
    (247,198
    )Diluted net income per share
    
    $
    (0.09
    )
    
    $
    (0.41
    )
    
    $
    0.05
    
    
    $
    (0.02
    )
  38




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##### Table of Contents



Alliance HealthCard, Inc. & Subsidiaries
 Notes to Consolidated Financial Statements, Continued
 17. Legal Proceedings
  18. Subsequent Events
  
 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
    
  Evaluation of Disclosure Controls and Procedures. Our Chief Executive Officer and Chief Financial Officer and other members of our management are responsible primarily
for establishing and maintaining disclosure controls and procedures designed to ensure that information required to be
disclosed in our reports filed or submitted under the Securities and Exchange Act of 1934, as amended (the Exchange
Act) is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the
U.S Securities and Exchange Commission. These controls and procedures are designed to ensure that information required
to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to our
management, including our principal executive and principal financial officers, or persons performing similar
functions, as appropriate to allow timely decisions regarding required disclosure. Furthermore, our Chief Executive Officer and Chief Financial Officer are responsible for the design and supervision of
our internal controls over financial reporting that are then effected by and through our board of directors, management
and other personnel, to provide reasonable assurance regarding the reliability of our financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles.  39




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##### Table of Contents



Managements Annual Report on Internal Control Over Financial Reporting Our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial
Officer, carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and
procedures (as defined in Rule 13a-15(e) and 15d-15(e) of the Exchange Act) as of September 30, 2008. Prior to
September 30, 2008, management failed to complete its assessment and documentation of the design and operation of our
internal controls and procedures based on criteria established in Internal ControlIntegrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO) and thus conclude that our internal controls
were sufficiently documented and fairly stated, in all material respects, based on those criteria. As a result, our
Chief Executive Officer and Chief Financial Officer were unable to report on the assessment and evaluation of our
internal controls over financial reporting and, accordingly, and they concluded that our disclosure controls and
procedures over financial reporting was materially ineffective as of September 30, 2008. On August 12, 2009, management completed its assessment and documentation of the design and operation of our internal
controls and procedures for financial reporting based on criteria established in Internal ControlIntegrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Additionally, our Chief
Executive Officer and Chief Financial Officer issued their assessment report and concluded that the design and
operation of our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) of the Exchange
Act) were effective as of September 30, 2008 and were documented and fairly stated, in all material respects, based on
the criteria established in Internal ControlIntegrated Framework issued by the COSO. Prior to completion of managements assessment on August 12, 2009, the inability of our management, including our Chief
Executive Officer and Chief Financial Officer, to issue managements assessment report of our internal controls over
financial reporting as of September 30, 2008 was viewed as a significant deficiency in our internal controls and
procedures, and caused the design and operation of those disclosure controls and procedures (as defined in Rule
13a-15(e) and 15d-15(e) of the Exchange Act) to be materially ineffective. Furthermore, we have continued to utilize
the same accounting system and internal controls over financial reporting that we utilized before and following
completion of managements assessment and the issuance of the assessment report of our Chief Executive Officer and
Chief Financial Officer. Our Chief Executive Officer and Chief Financial Officer have concluded that the consolidated financial statements
included in this Annual Report on Form 10-K, fairly present, in all material respects, our financial condition, results
of operations and cash flows for the periods presented in accordance with United States generally accepted accounting
principles. This annual report does not include an attestation report of our registered public accounting firm regarding internal
control over financial reporting. Managements report was not subject to attestation by our registered public
accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit us to provide only
managements report in this annual report.  40




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##### Table of Contents



ITEM 9A(T). CONTROLS AND PROCEDURES
  
 ITEM 9B. OTHER INFORMATION
  
 PART III
 
 ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
 Our Directors and Executive Officers
  Name
    
    Age
    
    PositionDanny C. Wright
    
    
    57
    
    
    Chairman of the Board of Directors and Chief Executive OfficerBrett Wimberley
    
    
    46
    
    
    Director and Chief Operating OfficerRita W. McKeown
    
    
    55
    
    
    Chief Financial Officer and TreasurerRobert D. Garces
    
    
    59
    
    
    Director and Executive Vice PresidentThomas W. Kiser
    
    
    45
    
    
    Director and Executive Vice PresidentSusan Matthews
    
    
    50
    
    
    Executive Vice President of Sales and MarketingBradley W. Denison
    
    
    48
    
    
    Senior Vice President, General Counsel, and SecretaryDavid Huguelet
    
    
    49
    
    
    Senior Vice President New Business DevelopmentLarry G. Gerdes(1)
    
    
    59
    
    
    DirectorMark Kidd (1)
    
    
    42
    
    
    DirectorJohn Simonelli (1)
    
    
    62
    
    
    Director
 
 (1)
    
    Member of the Audit and Compensation Committee  41




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##### Table of Contents



Danny C. Wright
 Brett Wimberley
 Rita W. McKeown
 Robert D. Garces
 Thomas W. Kiser
 Susan Matthews
 Bradley W. Denison
 David Huguelet
  42




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##### Table of Contents



Larry G. Gerdes
 John Simonelli
 Mark Kidd
 Committees of the Board of Directors
     43




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##### Table of Contents



Code of Ethics
  
    
    honest and ethical conduct,
 
    
    full, fair, accurate, timely, and understandable disclosure in reports and documents that we
file with, or submit to, the Securities and Exchange Commission and in other public
communications made by us;
 
    
    compliance with applicable governmental laws, rules and regulations;
 
    
    prompt internal reporting of violations of the Code to an appropriate person or persons
identified in the Code; and
 
    
    accountability for adherence to the Code.
 www.alliancehealthcard.com th
 Compliance with Section 16(a) of the Exchange Act
   44




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##### Table of Contents



ITEM 11. EXECUTIVE COMPENSATION
  SUMMARY COMPENSATION TABLE
 Option
    
    
    All OtherName and Principle Position
    
    Year
    
    
    Salary
    
    
    Bonus
    
    
    Awards(1)
    
    
    Compensation
    
    
    TotalDanny C. Wright
    
    
    2008
    
    
    $
    200,000
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    200,000Chief Executive Officer
    
    
    2007
    
    
    $
    180,358
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    180,3582006
    
    
    $
    452,000
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    452,000Brett Wimberley
    
    
    2008
    
    
    $
    175,000
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    175,000Director, President
    
    
    2007
    
    
    $
    118,817
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    118,817and Chief Operating Officer
    
    
    2006
    
    
    $
    144,000
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    144,000Bradley W. Denison
    
    
    2008
    
    
    $
    250,000
    
    
    $
    10,400
    
    
    $
    6,096
    
    
    $
    
    
    
    $
    266,496Senior Vice President, General
    
    
    2007
    
    
    $
    205,743
    
    
    $
    4,800
    
    
    $
    
    
    
    $
    
    
    
    $
    210,543Counsel and Secretary
    
    
    2006
    
    
    $
    53,596
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    53,596Rita W. McKeown
    
    
    2008
    
    
    $
    94,000
    
    
    $
    5,000
    
    
    $
    
    
    
    $
    
    
    
    $
    99,000Chief Financial Officer
    
    
    2007
    
    
    $
    87,833
    
    
    $
    
    
    
    $
    11,500
    
    
    $
    
    
    
    $
    99,333and Treasurer
    
    
    2006
    
    
    $
    82,000
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    82,000Susan Matthews
    
    
    2008
    
    
    $
    175,000
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    175,000Executive Vice President
    
    
    2007
    
    
    $
    118,792
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    118,792of Sales and Marketing
    
    
    2006
    
    
    $
    144,000
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    144,000
 Outstanding Equity Awards at Fiscal Year-End
 .
 Outstanding Equity Awards at September 30, 2008
 Stock Option AwardsNumber of Common Stock
    
    
    Option
    
    
    OptionUnderlying Options
    
    
    Exercise
    
    
    ExpirationName
    
    Exercisable
    
    
    Unexercisable
    
    
    Price(1)
    
    
    DateDanny C. Wright
    
    
    -0-
    
    
    
    -0-
    
    
    $
    -0-
    
    
    
    N/ABrett Wimberley
    
    
    -0-
    
    
    
    -0-
    
    
    $
    -0-
    
    
    
    N/ABradley Denison
    
    
    2,500
    
    
    
    -0-
    
    
    $
    1.00
    
    
    May 13, 2018-0-
    
    
    
    2,500
    
    
    $
    1.00
    
    
    May 13, 2018-0-
    
    
    
    2,500
    
    
    $
    1.00
    
    
    May 13, 2018Rita McKeown
    
    
    23,410
    
    
    
    -0-
    
    
    $
    0.83
    
    
    October 1, 20096,000
    
    
    
    -0-
    
    
    $
    1.00
    
    
    October 1, 20104,999
    
    
    
    -0-
    
    
    $
    1.01
    
    
    May 26, 201410,000
    
    
    
    -0-
    
    
    $
    1.15
    
    
    February 15, 2017Susan Matthews
    
    
    -0-
    
    
    
    -0-
    
    
    
    -0-
    
    
    
    N/A
 
 (1)
    
    The closing sale price of our common stock as reported on the OTC Bulletin Board on September
30, 2008 was $0.70.  45




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##### Table of Contents



Equity Compensation Plans
 2000 Stock Option Plan.
    Employment Arrangements and Keyman Insurance
       46




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##### Table of Contents



Compensation of Directors
   
    
    Each non-employee member received a quarterly payment of $1,000 for each calendar quarter
ending June 30 and September 30, 2008.
 
    
    Alliance HealthCard reimbursed its members for travel and out of pocket expenses in
connection with their attendance at board meetings.
 
    
    Alliance HealthCard granted
stock options to the non-employee board members, all of which remain
outstanding at September 30, 2008.
 Director Name
    
    Options GrantedJohn Simonelli
    
    
    10,000Mark R. Kidd
    
    
    10,000Larry G. Gerdes
    
    
    5,000
  Fees Earned
    
    
    Optionor
    
    
    AwardsName
    
    Paid in Cash
    
    
    (1)
    
    
    TotalJohn Simonelli
    
    $
    2,000
    
    
    $
    8,291
    
    
    $
    10,291Mark R. Kidd
    
    $
    2,000
    
    
    $
    8,291
    
    
    $
    10,291Larry G. Gerdes
    
    $
    2,000
    
    
    $
    4,145
    
    
    $
    6,145
 (1)
    
    Alliance HealthCard used the Black Scholes option-pricing model to
estimate the option fair values as described in Note 2  Summary of
Significant Accounting Policies (Stock Based Compensation) of its
financial statements, to determine the value of the amounts for Option
Awards.  47




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##### Table of Contents



Officer and Director Liability and Indemnification
  
    
    One or more of our officers or employees whom the director reasonably believes to be reliable and
competent in the matters presented;
    
    Legal counsel, public accountants, investment bankers, or other persons as to matters the
director reasonably believes are within the persons professional or expert competence; or
    
    A committee of our Board of Directors of which he is not a member if the director reasonably
believes the committee merits confidence.
     48




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##### Table of Contents



ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS
  SharesOwned
    
    
    Rights
    
    
    
    
    
    
    % ofName (and Address)
    
    Of
    
    
    To
    
    
    Total
    
    
    Ownershipof Beneficial Owner
    
    Record (1)
    
    
    Acquire
    
    
    Shares
    
    
    (1) (2)Danny Wright (3) 
900 36th Avenue, NW
Norman, Oklahoma 73072
    
    
    4,014,300
    
    
    
    -0-
    
    
    
    4,014,300
    
    
    
    25.3
    %Brett Wimberley (4)
900 36th Avenue, NW
Norman, Oklahoma 73072
    
    
    4,002,500
    
    
    
    -0-
    
    
    
    4,002,500
    
    
    
    25.2
    %Susan Matthews (5)
900 36th Avenue, NW
Norman, Oklahoma 73072
    
    
    2,000,000
    
    
    
    -0-
    
    
    
    2,000,000
    
    
    
    12.6
    %Robert D. Garces (6)
3500 Parkway Lane, Suite 720
Norcross, Georgia 30092
    
    
    669,600
    
    
    
    415,000
    
    
    
    1,084,600
    
    
    
    6.8
    %Thomas W. Kiser (7)
3500 Parkway Lane, Suite 720
Norcross, Georgia 30092
    
    
    633,050
    
    
    
    380,000
    
    
    
    1,013,050
    
    
    
    6.4
    %Rita W. McKeown (8)
    
    
    -0-
    
    
    
    50,399
    
    
    
    50,399
    
    
    
    0.3
    %David Huguelet (9)
    
    
    900
    
    
    
    4,500
    
    
    
    5,400
    
    
    
    0.0
    %Bradley W. Denison (10)
    
    
    1,500
    
    
    
    7,500
    
    
    
    9,000
    
    
    
    0.1
    %Larry G. Gerdes (11)
    
    
    176,665
    
    
    
    145,000
    
    
    
    321,665
    
    
    
    2.0
    %Mark Kidd (12)
    
    
    5,000
    
    
    
    10,000
    
    
    
    15,000
    
    
    
    0.1
    %John Simonelli(12)
    
    
    5,000
    
    
    
    10,000
    
    
    
    15,000
    
    
    
    0.1
    %All directors and officers
as a group of 11
individuals (6)(11)
    
    
    11,508,515
    
    
    
    1,022,399
    
    
    
    12,530,914
    
    
    
    79.0
    %
 (1)
    
    Shares not outstanding but deemed beneficially owned by virtue of the right of a person or
members of a group to acquire them within 60 days are treated as outstanding for determining
the amount and percentage of common stock owned by such person. To our knowledge, each named
person has sole voting and sole investment power with respect to the shares shown except as
noted, subject to community property laws, where applicable.(2)
    
    Rounded to the nearest one-tenth of one percent, based upon 14,833,127 shares of common stock
outstanding at December 12, 2008.  49




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##### Table of Contents



(3)
    
    Mr. Wright is our Chairman of Board of Directors and Chief Executive Officer.(4)
    
    Mr. Wimberley is one of our directors and our President.(5)
    
    Ms. Matthews is our Vice President of Sales and Marketing(6)
    
    Mr. Garces is one of our directors and Executive Vice President. The number of shares and
the percentages include 1,050 common stock shares held of record by Mr. Garces spouse.(7)
    
    Mr. Kiser is one of our directors and Executive Vice President.(8)
    
    Ms. McKeown is our Chief Financial Officer.(9)
    
    Mr. Huguelet is our Senior Vice President of new Business Development.(10)
    
    Mr. Denison is our Senior Vice President, General Counsel and Secretary.(11)
    
    The number of shares and the percent includes 166,666 shares held by Gerdes Huff Investments
of which Mr. Gerdes is a general partner and 9,999 shares held by Gerdes Family Partnership of
which Mr. Gerdes is a general partner.(12)
    
    The named person is one of our directors. 
 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
  .
   Merger-Acquisition of BMS Holding Company
  
   50




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Director Independence
  
 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
 Audit Fees
   Tax Fees
  All Other Fees
  
 PART IV
 
 ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
  Exhibit 3.1
    
    Certificate of Incorporation, incorporated by reference to the Registration
Statement on Form 10-SB filed with the Commission on March 24, 2000.Exhibit 3.2
    
    Bylaws, incorporation by reference to the Registration Statement on Form
10-SB filed with the Commission on March 24, 2000.Exhibit 4.1
    
    Common stock certificate, incorporation by reference to the Registration
Statement on Form 10-SB filed with the Commission on March 24, 2000.Exhibit 10.1
    
    CVS Contract, incorporation by reference to the Form 10-KSB filed with the
Commission on December 22, 2004.Exhibit 10.2
    
    State Farm Contract incorporation by reference to the Form 10-KSB filed
with the Commission on December 22, 2004.Exhibit 10.3
    
    Employment Agreement Danny C. Wright, incorporation by reference to the
Form 8K filed with the Commission on March 6, 2007.Exhibit 10.4
    
    Employment Agreement Brett Wimberley, incorporation by reference to the
Form 8K filed with the Commission on March 6, 2007.Exhibit 10.5
    
    Employment Agreement Susan Matthews, incorporation by reference to the
Form 8K filed with the Commission on March 6, 2007.Exhibit 10.6
    
    Employment Agreement Robert D. Garces, incorporation by reference to the
Form 8k filed with the Commission on March 6, 2007.Exhibit 10.7
    
    Employment Agreement Thomas W. Kiser, incorporation by reference to the
Form 8K filed with the Commission on March 6, 2007.Exhibit 10.8
    
    Promissory Note Danny C. Wright, incorporation by reference to the Form 8K
filed with the Commission on March 6, 2007.Exhibit 10.9
    
    Promissory Note Brett Wimberley, incorporation by reference to the Form 8K
filed with the Commission on March 6, 2007.Exhibit 10.10
    
    Promissory Note Susan Matthews, incorporation by reference to the Form 8K
filed with the Commission on March 6, 2007.Exhibit 10.11
    
    $2,045,271 Promissory Note of Alliance HealthCard, Inc. dated January 10,
2008, and issue to Danny C. Wright, incorporation by reference to the Form 10-KSB
filed with the Commission on January 14, 2008.
 Exhibit 10.12
    
    $2,045,271 Promissory Note of Alliance HealthCard, Inc. dated January 10,
2008, and issued to Brett Wimberley, incorporation by reference to the Form 10-KSB
filed with the Commission on January 14, 2008.Exhibit 10.13
    
    $1,022,635 Promissory Note of Alliance HealthCard, Inc. dated January 10,
2008, and issued to Susan Matthews, incorporation by reference to the Form 10-KSB
filed with the Commission on January 14, 2008.Exhibit 10.14
    
    Rent A Center Agreement between Benefit Marketing Solutions, LLC.
effective March 1, 2007 (Confidential treatment has been requested for certain
portions of this exhibit pursuant to Rule 24(b)(2) and accordingly, those portions
have been omitted from this exhibit and filed separately with the Commission.Exhibit 31.1
    
    Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002Exhibit 31.2
    
    Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002Exhibit 32.1
    
    Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002Exhibit 32.2
    
    Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
  51




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SIGNATURES
  Alliance HealthCard, Inc.August 21, 2009
    By:
    /s/ Danny WrightDanny WrightChairman and Chief Executive Officer
(Principal Executive Officer)August 21, 2009
    By:
    /s/ Rita McKeownRita McKeownChief Financial Officer
(Principal Financial and Accounting Officer)  52




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EXHIBIT INDEX
 Exhibit No.
    
    DescriptionExhibit 10.14
    
    Rent A Center Agreement between Benefit Marketing Solutions, LLC.
effective March 1, 2007 (Confidential treatment has been requested for certain
portions of this exhibit pursuant to Rule 24(b)(2) and accordingly, those portions
have been omitted from this exhibit and filed separately with the Commission.Exhibit 31.1
    
    Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002Exhibit 31.2
    
    Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002Exhibit 32.1
    
    Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002Exhibit 32.2
    
    Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
  53