<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1997
OR
[ ] 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 0-21343
MEDICAL ALLIANCE, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
TEXAS 73-1347577
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2445 GATEWAY DRIVE, SUITE 150
IRVING, TEXAS 75063
(Address of principal executive offices)
(Zip Code)
(972) 580-8999
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
As of May 9, 1997, there were 6,005,708 shares outstanding of the registrant's
common stock, $0.002 par value.
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INDEX
PART I. FINANCIAL INFORMATION
<TABLE>
<CAPTION>
PAGE NO.
--------
ITEM 1. FINANCIAL STATEMENTS:
<S> <C>
Consolidated Balance Sheets
December 31, 1996 and March 31, 1997 (Unaudited)....................................3
Consolidated Statements of Operations -
Three months ended March 31, 1996 and 1997............................................4
(Unaudited)
Consolidated Statements of Cash Flows
Three months ended March 31, 1996 and 1997 (Unaudited)..............................5
Consolidated Statement of Stockholders Equity.............................................6
Three months ended March 31, 1997 (Unaudited)
Notes to Consolidated Financial Statements (Unaudited)....................................7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS...................................................8
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.........................................................10
Signatures...............................................................................12
</TABLE>
<PAGE> 3
MEDICAL ALLIANCE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1996 AND MARCH 31, 1997
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1996 1997
------------ ------------
(UNAUDITED)
<S> <C> <C>
Current assets:
Cash and cash equivalents ....................................................... $ 20,505,787 $ 17,042,407
Restricted cash ................................................................. 31,000 15,000
Accounts receivable, less allowance for doubtful accounts of $1,859,621 and
$2,176,395 respectively ...................................................... 4,414,860 4,599,186
Prepaid expenses and other current assets ....................................... 461,743 574,250
Deferred income taxes ........................................................... 590,195 881,977
------------ ------------
Total current assets ...................................................... 26,003,585 23,112,820
Property and equipment, net ......................................................... 4,550,183 6,282,762
Other assets:
Intangible assets, net of amortization of
$59,080 and $82,186, respectively .............................................. 154,151 809,584
------------ ------------
Total assets .............................................................. $ 30,707,919 $ 30,205,166
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ................................................................ $ 2,447,108 $ 1,374,427
Accrued expenses ................................................................ 983,905 639,000
Current maturities of:
Capital lease obligations .................................................... 296,717 411,776
Deferred revenue ................................................................ 181,662 195,424
------------ ------------
Total current liabilities ................................................. 3,909,392 2,620,627
Capital lease obligations, net of current maturities ................................ 58,777 406,872
Deferred income taxes ............................................................... 654,837 744,654
------------ ------------
Total liabilities ........................................................ 4,623,006 3,772,153
------------ ------------
Stockholders' equity:
Common stock, $0.002 par value, 30,000,000 shares
authorized; 5,965,744 and 6,032,563 shares issued and
outstanding, respectively, ..................................................... 11,948 12,082
Capital in excess of par value ...................................................... 25,746,292 26,055,585
Retained earnings ................................................................... 392,617 431,290
Treasury stock at cost, 25,703 shares .............................................. (65,944) (65,944)
------------ ------------
Total stockholders' equity ............................................... 26,084,913 26,433,013
------------ ------------
Total liabilities and stockholders' equity ............................... $ 30,707,919 $ 30,205,166
============ ============
</TABLE>
SEE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.
3
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MEDICAL ALLIANCE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1997
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
(UNAUDITED)
1996 1997
----------- -----------
<S> <C> <C>
Net revenue ......................... $ 3,958,438 $ 4,868,461
----------- -----------
Costs and expenses:
Salaries and benefits ............. 1,337,827 1,791,112
Selling, general and
administrative ................. 1,395,333 1,862,396
Depreciation and
amortization ................... 283,474 636,975
Provision for uncollectible
accounts ....................... 661,484 699,974
----------- -----------
Total costs and
expenses ..................... 3,678,118 4,990,457
----------- -----------
Operating income ............... 280,320 (121,996)
----------- -----------
Other (income) expense:
Interest income and other,
net ............................ (11,857) (218,031)
Interest expense .................. 64,117 29,342
----------- -----------
Total other expense ............ 52,260 188,689
----------- -----------
Income before income taxes .......... 228,060 66,693
Provision for income taxes .......... 94,873 28,020
----------- -----------
Net income .......................... $ 133,187 $ 38,673
=========== ===========
Net income per share ................ $ .03 $ .01
=========== ===========
Weighted average number of
common shares and common
share equivalents (in
thousands) ........................ 4,168 6,289
=========== ===========
</TABLE>
SEE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
4
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MEDICAL ALLIANCE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
(UNAUDITED)
1996 1997
----------- ------------
<S> <C> <C>
Cash flows from operating activities:
Net income ............................................................... $ 133,187 $ 38,673
Adjustments to reconcile net income (loss) to net cash
used in operating activities:
Loss on joint venture ................................................. -0- 7,263
Provision for uncollectible accounts .................................. 661,484 699,974
Depreciation and amortization ......................................... 283,474 636,975
Deferred income taxes ................................................. 60,042 28,020
Changes in assets and liabilities net of effects from acquisitions:
Accounts receivable ................................................... (963,852) (826,249)
Prepaid expenses and other current assets ............................. (139,615) (112,507)
Accounts payable and accrued expenses ................................. 68,603 (1,790,638)
Deferred revenue ...................................................... (11,401) 13,762
----------- ------------
Net cash provided by (used in) operating activities ................... 91,922 (1,304,727)
Cash flows from investing activities:
Capital expenditures ..................................................... (618,489) (1,635,430)
Payment for acquisitions ................................................. (378,840) (465,978)
Change in restricted cash ................................................ -0- 16,000
----------- ------------
Net cash used in investing activities ................................. (997,329) (2,085,408)
----------- ------------
Cash flow from financing activities:
Repayment of capital lease obligations ................................... (71,257) (114,473)
Repayment of long-term debt .............................................. (91,667) -0-
Proceeds from issuance of common stock ................................... -0- 41,228
Proceeds from issuance of long-term debt ................................. 846,148 -0-
----------- ------------
Net cash provided by (used in) financing activities ................... 683,224 (73,245)
----------- ------------
Net increase (decrease) in cash and cash equivalents ....................... (222,183) (3,463,380)
Cash and cash equivalents at beginning of period ........................... 1,385,654 20,505,787
----------- ------------
Cash and cash equivalents at end of period ................................. $ 1,163,471 $ 17,042,407
=========== ============
Supplemental disclosures of cash flow information:
Supplemental schedule of noncash investing and financing
activities:
Capital lease obligations incurred ....................................... -0- 577,627
The Company has acquired businesses, as follows:
Fair value of assets acquired ............................................ 252,575 828,249
Goodwill recorded ........................................................ 126,265 675,195
Less:
Cash paid ............................................................. (378,840) (465,978)
Fair value of common stock ............................................ -0- (255,000)
----------- ------------
Liabilities assumed .................................................... -0- 782,466
=========== ============
</TABLE>
SEE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.
5
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MEDICAL ALLIANCE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 1997
<TABLE>
<CAPTION>
TOTAL
CAPITAL IN EXCESS RETAINED TREASURY STOCKHOLDERS'
COMMON STOCK OF PAR VALUE EARNINGS STOCK EQUITY
----------------------- --------------- ---------- -------- ------------
SHARES AMOUNT
------ ------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1996........ 5,965,744 $11,948 $25,746,292 $392,617 $(65,944) $26,084,913
Issuance of common stock
(unaudited)..................... 22,174 44 252,183 252,227
Options and Warrants exercised 44,645 90 57,110 57,200
(unaudited).....................
Net income (unaudited).............. 38,673 38,673
--------- ------- ----------- -------- --------- -----------
Balance at March 31, 1997
(unaudited)....................... 6,032,563 $12,082 $26,055,585 $431,290 $(65,944) $26,433,013
========= ======= =========== ======== ========= ===========
</TABLE>
6
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MEDICAL ALLIANCE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INFORMATION OF AND FOR THE THREE MONTH PERIOD ENDED
MARCH 31, 1996 AND 1997 IS UNAUDITED)
1. UNAUDITED INTERIM FINANCIAL INFORMATION
The consolidated balance sheet as of March 31, 1997, and the consolidated
statements of operations for the three months ended March 31, 1996 and 1997,
and the consolidated statements of cash flows for the three months ended March
31, 1996 and 1997, and the consolidated statements of stockholders' equity for
the three months ended March 31, 1997, have been prepared by the Company
without audit. The December 31, 1996 consolidated, condensed balance sheet is
derived from the audited consolidated balance sheet as of that date. In the
opinion of management, all adjustments (which include only normal, recurring
adjustments) necessary to present fairly the financial position at March 31,
1997, and the results of operations and cash flows for all periods presented
have been made. The results of operations for the interim periods are not
necessarily indicative of the operating results for the full year.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amount of assets, particularly accounts
receivable, and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements, and the reported amounts of revenues
and expenses during the reporting period. Actual results may, in some
instances, differ from previously estimated amounts.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to the rules and regulations
of the Securities and Exchange Commission. Accordingly, these financial
statements should be read in conjunction with the audited financial statements
and related notes of the Company for the fiscal year ended December 31, 1996
included in the Company's Form 10-K.
2. RECENT ACCOUNTING PRONOUNCEMENTS
In February 1997 the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, Earnings Per Share ("SFAS 128").
SFAS 128 simplifies the standards for computing earnings per share ("EPS")
previously found in APB Opinion No. 15, Earnings Per Share ("APB 15"), and
makes them comparable to international EPS standards. SFAS 128 replaces the
presentation of primary EPS with a presentation of basic EPS. Basic EPS
excludes dilution and is computed by dividing income available to common
shareholders by the weighted average number of common shares outstanding for
the period. Diluted EPS reflects the potential dilution that could occur if
securities or other contracts to issue common stock were exercised or converted
into common stock or resulted in the issuance of common that then shared in the
earnings of the entity. Diluted EPS is computed similarly to fully diluted EPS
pursuant to the APB 15. SFAS 128 also requires dual presentation of basic and
diluted EPS on the face of the income statement for entities with complex
capital structures and a reconciliation of the numerator and denominator of the
basic EPS computation to the numerator and denominator of the diluted EPS
computation. SFAS 128 is effective for financial statements issued for periods
ending after December 15,1997, including interim periods; earlier application
is not permitted. SFAS 128 requires restatement of all prior-period EPS data
presented. The Company is currently evaluating SFAS 128; however, management
does not believe that SFAS 128 will have a material impact on the financial
statements of the Company.
7
<PAGE> 8
3. PROPERTY AND EQUIPMENT
Property and equipment consisted of the following:
<TABLE>
<CAPTION>
(UNAUDITED)
DECEMBER 31, MARCH 31,
1996 1997
------------ ------------
<S> <C> <C>
Medical equipment ..................................... $ 5,679,297 $ 7,072,366
Furniture and fixtures ................................ 1,002,466 1,444,282
Transportation ........................................ 64,760 32,909
Leasehold improvements ................................ 18,352 33,212
Equipment under capital leases ........................ 976,033 1,493,533
------------ ------------
7,740,908 10,076,302
Less accumulated depreciation and amortization ........ (3,190,725) (3,793,540)
------------ ------------
Net property and equipment ............................ $ 4,550,183 $ 6,282,762
============ ============
</TABLE>
Accumulated amortization related to equipment under capital leases was
approximately $646,000 and $749,000 at December 31, 1996 and March 31, 1997,
respectively.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
NET REVENUES. Net revenues increased from $4.0 million for the three
months ended March 31, 1996, to $4.9 million for the three months ended March
31, 1997, an increase of $900,000 or 23%. This increase was attributable to the
growth in total procedure volume, which increased from 15,267 for the three
months ended March 31, 1996, to 20,986 for the three months ended March 31,
1997, an increase of 5,719 or 37%. Medical surgical procedures increased from
6,098 for the three months ended March 31, 1996, to 6,507 for the three months
ended March 31, 1997, an increase of 409 or 7%, which contributed to 7% of the
total increase in procedure volume. Aesthetic elective procedures increased
from 9,169 for the three months ended March 31, 1996, to 14,479 for the three
months ended March 31, 1997, an increase of 5,310 or 58%, which contributed to
93% of the total increase in procedure volume.
The average net revenue per case decreased from $259 for the three months
ended March 31, 1996, to $232 for the three months ended March 31, 1997, a
decrease of $27 per case or 10%. This decrease was attributable to a change in
case mix with aesthetic elective procedures, which had a lower average net
revenue per case of $190, compared to $271 for the medical surgical procedures,
increasing as a percentage of total procedures from 60% for the three months
ended March 31, 1996, to 69% for the three months ended March 31, 1997.
SALARIES AND BENEFITS EXPENSE. Salaries and benefits expense increased
from $1.3 million for the three months ended March 31, 1996, to $1.8 million
for the three months ended March 31,1997, an increase of $500,000 or 38%. This
increase was due to the hiring of additional field and corporate personnel to
support the Company's growth in procedure volume. Total employees for the
Company increased from 112 on March 31, 1996, to 183 on March 31, 1997, an
increase of 71 or 63%. Salaries and benefits expense as a percentage of net
revenues increased from 33.8% for the three months ended March 31, 1996, to
36.8% for the three months ended March 31, 1997.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE. Selling, general and
administrative expense increased from $1.4 million for the three months ended
March 31, 1996, to $1.9 million for the three months ended March 31, 1997, an
increase of $500,000 or 36%. This increase was partially due to an increase in
repair and maintenance expense from $112,000 for the three months ended March
31, 1996, to $252,000 for the three months ended March 31, 1997, an increase of
$140,000 or 125%. This increase was primarily due to the addition of an annual
maintenance contract on equipment to increase operational efficiencies. In
addition, vehicle expense increased from $247,000 for the three months ended
March 31, 1996, to $338,000 for the three months ended March 31, 1997, an
increase of $91,000 or 37%. This increase resulted from the increase in field
personnel from 76 as of March 31, 1996, to 139 as of March 31, 1997, each of
whom is supplied with a van for the delivery of equipment to physicians'
offices. Also, communications expense increased from $134,000 for the three
months ended March 31, 1996, to $220,000 for the three months ended March 31,
1997, an increase of $86,000 or 64%, due to the increase in field personnel.
Selling, general, and administrative expense as a percentage of net revenues
increased from 35.2% for the three months ended March 31, 1996, to 38.3% for
the three months ended March 31, 1997.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization increased
from $283,000 for the three
8
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months ended March 31, 1996, to $637,000 for the three months ended March 31,
1997, an increase of $354,000 or 125%. This increase was due to the addition of
$3.2 million in capital equipment during the twelve months ended December 31,
1996.
PROVISION FOR UNCOLLECTIBLE ACCOUNTS. Provision for uncollectible accounts
increased from $661,000 for the three months ended March 31, 1996, to $700,000
for the three months ended March 31, 1997, an increase of $39,000 or 6%. As a
percentage of net revenue, provision for uncollectible accounts decreased from
16.7% to 14.4% due mainly to a shift from provisions to discounts from gross
revenues. With the new billing processes in place, the Company is better able
to identify, on a payor specific basis, those procedures that will not be
reimbursed; thereby, resulting in a discount from gross revenues rather than a
provision for uncollectible accounts.
OPERATING INCOME. Operating income decreased from $280,000 for the three
months ended March 31, 1996, to a loss of $122,000 for the three months ended
March 31, 1997, a decrease of $402,000 or 144%. As a percentage of net
revenues, operating income decreased from 7.1% for the three months ended March
31, 1996, to (2.5%) for the three months ended March 31, 1997. This decrease
was primarily due to an increase in salaries and benefits expense and selling,
general and administrative expense as a percentage of net revenues.
INTEREST INCOME & OTHER, NET. Interest income and other, net increased
from $12,000 for the three months ended March 31, 1996, to $218,000 for the
three months ended March 31, 1997, an increase of $206,000. This increase
resulted from interest income on the cash proceeds from the initial public
offering which was completed during the fourth quarter of 1996.
NET INCOME. As a result of the items discussed above, the Company's net
income decreased from $133,000 for the three months ended March 31, 1996, to
$39,000 for the three months ended March 31, 1997 a decrease of $94,000 or 71%.
LIQUIDITY AND CAPITAL RESOURCES
From its inception through 1993, the Company's operating expenses
significantly exceeded its net revenues, resulting in an accumulated retained
deficit of approximately $1.3 million as of December 31, 1993. Since 1993, the
Company has recorded positive earnings, which has resulted in a positive
retained earnings of $431,290 as of March 31, 1997. Until October 1996, the
Company funded its operations primarily through the private placement of equity
securities, bank borrowings and cash provided by operations. Prior to its
Initial Public Offering, which was completed on October 11, 1996, the majority
of the equity capital raised by the Company had been raised from the private
placement of $2.2 million of equity securities, including $750,000 raised in
July 1992, and approximately $1.5 million raised in November 1995. The Company
obtained a $2.0 million credit facility from NationsBank of Texas, N.A.
("NationsBank") in June 1995. Such facility was composed of several tranches
bearing interest rates ranging from prime plus 0.5% to prime plus 1.5%. The net
proceeds from such facility were used to retire outstanding debt and to
purchase medical equipment. The Company's facility with NationsBank was
increased to $4.3 million in March 1996. The NationsBank debt was paid off in
full during October 1996 with a portion of the net proceeds from the Initial
Public Offering.
Net cash provided by (used in) the Company's operations was $92,000 and
$(1,305,000) for the three months ended March 31, 1996 and 1997, respectively.
For its investing activities, the Company consumed $997,000 and $2,085,000 for
the three months ended March 31, 1996 and 1997, respectively, primarily for the
purchase of medical equipment and payment for acquisitions. Capital
expenditures were $618,000 and $1,635,000 for the three months ended March 31,
1996 and 1997, respectively. Net cash provided by (used in) financing
activities were $683,000 and $(73,000) for the three months ended March 31,
1996 and 1997, respectively. The cash provided from financing activities in
such periods were primarily provided by the proceeds from bank borrowings.
PART II
ITEM 1. LEGAL PROCEEDINGS.
The Company is the plaintiff in an action entitled Medical Alliance, Inc.
vs. Palomar Medical Technologies, Inc. and Cosmetic Technology International,
Inc., pending in the United States District Court for the Northern District of
Texas, Dallas Division, Civil Action No. 3-9CV0627-D. The Company sued Palomar
and CTI ("defendants") regarding
9
<PAGE> 10
a Master Services Agreement ("Agreement") dated June 3, 1996. The
Agreement concerned the delivery of a product called the Epilaser, a medical
laser for use in hair removal. The Company seeks a declaration from the court
that (i) the Agreement required FDA approval for hair removal as a condition to
performance and/or formation; and (ii) the Agreement is terminated and of no
further force or effect. The Company further seeks a declaration that the
Company is not liable to Palomar for any damages allegedly sustained or for
expenses incurred pursuant to the Agreement. The Company seeks recovery of its
attorneys' fees. Palomar and CTI filed a counterclaim against the Company and a
third party complaint against Thermolase Corporation. In the counterclaim, the
defendants sued the Company for breach of contract, breach of implied covenant
of good faith and fair dealing, and for an equitable accounting. Defendants
seek a judgment against the Company for an unspecified amount of compensatory
damages, punitive damages, costs including reasonable attorneys' fees, and
prejudgment interest. Defendants also seek an accounting from the Company for
all gross revenues allegedly received or earned for procedures using the device
covered by the Agreement. Further, defendants sued Thermolase Corporation for
tortious interference with advantageous contractual relationships arising from
the Company's agreement with Thermolase Corporation for the supply of cosmetic
lasers.
Discovery has not commenced in regard to this matter, and it is not
possible to predict the outcome of this case.
ITEM 2. CHANGES IN SECURITIES.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ------ -------------------
<S> <C>
2.1 Asset Purchase Agreement, dated October 30, 1995, between the Company and Mobile Surgical Services of Central
Florida, Inc. (1)(5)
2.2 Asset Purchase Agreement, dated March 18, 1996, between the Company and Maasai Inc. (1)(5)
2.3 Asset Purchase Agreement, dated June 10, 1996, between the Company and Mobile Laser Services, Inc. (1)(5)
2.4 Asset Purchase Agreement, dated as of January 21, 1997 among Stone Treatment Center of New England, Inc.,
Gregory A. Mercurio, Vincent A. Catallozzi, M.D., Alexander Calenda, M.D., Gerald Marsocci, M.D. Joseph C.
Cambio, M.D. and the Company. (3)(5)
3.1 Amended and Restated Articles of Incorporation of the Company. (1)
3.2 Amended an Restated Bylaws of the Company. (1)
4.1 Specimen of Company Common Stock Certificate. (1)
4.2 Series A Convertible Preferred Stock Purchase Agreement dated July 10, 1992, between the Company and Mapleleaf
Capital, Ltd. (1)
4.3 Warrant to Purchase 60,000 shares of Series A Convertible Preferred Stock of the Company dated July 10, 1992,
between the Company and Mapleleaf Capital, Ltd. (1)
4.4 Series B Convertible Preferred Stock Purchase Agreement, dated November 17, 1995, by and among the Company and
Satana Corporation, Mapleleaf Capital, Ltd., Sunwestern Investment Fund III, Sunwestern Cayman 1988 Partners,
Montgomery Jessup & Company, L.L.P., Morris Moreland, DLJSC F. B.O. Michael Wallace, IRA, Sid Bonner, Clyde
Hutchinson, Marc Johnson, Thomas A. Montgomery, Hazelle Blair, Lloyd Jones, Bart Tucker, Jay Farris and Kevin
O'Brien. (1)
4.5 Warrant to Purchase 468,300 Shares of Common Stock of the Company dated July 10, 1992 between the
</TABLE>
10
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<TABLE>
<S> <C>
Company and Satana Corporation. (1)
4.6 Warrant to Purchase 23,416 Shares of Common Stock of the Company dated August 15, 1993 between the Company and
Columbia General Corporation. (1)
4.7 Warrant to Purchase 2,810 Shares of Common Stock of the Company dated October 17, 1993 between the Company and
Robert J. Mathews, M.D. (1)
4.8 Warrant to Purchase 2,342 Shares of Common Stock of the Company dated May 31, 1994 between the Company and
Shelly Burks. (1)
4.9 Warrant to Purchase 1,873 Shares of Common Stock of the Company dated May 31, 1994 between the Company and
Thomas A. Montgomery. (1)
4.10 Warrant to Purchase 6,556 Shares of Common Stock of the Company dated September 1, 1994 between the Company and
Thomas A. Montgomery. (1)
4.11 Warrant to Purchase 15,561 Shares of Common Stock of the Company dated July 27, 1995 between the Company and
Paul R. Herchman. (1)
10.1 Amended and Restated Revolving Credit and Term Loan Agreement dated March 20, 1996 between the Company and
NationsBank of Texas, N.A. (1)
10.2 Agreement between the Company and Coherent Medical Group. (1)
10.3 Master Lease agreement dated July 20, 1995 between the Company and Cabot Medical Corporation. (1)
10.4 Master Service Agreement dated June 3, 1996 between the Company and Cosmetic Technologies International. (2)(4)
10.5 Joint Venture Agreement dated March 25, 1996 between the Company and Coherent-AMT Inc. (2)(4)
10.6 Medical Alliance, Inc. 1994 Amended and Restated Long-Term Incentive Plan. (2)(4)
10.7 Employment Agreement between the Company and Paul Herchman. (1)(4)
10.8 Employment Agreement between the Company and Kevin O'Brien. (1)(4)
10.9 Employment Agreement between the Company and Michael G. Wallace. (1)(4)
10.10 Lease Agreement between the Company and Graymont Partners. Ltd. (1)
10.11 Strategic Alliance Agreement, dated as of December 19, 1996, by and between Laserscope and the Company. (3)
10.12 Exclusive Provider Agreement, dated as of January 21, 1997, by and between Thermolase Corporation and the
Company. (3)
10.13 Strategic Alliance Agreement, dated as of January 1, 1997, by and between Valleylab, Inc. and the Company. (3)
10.14 Exclusive Provider Agreement, dated as of February 9, 1997, by and between Imagyn Medical, Inc. and the
Company. (3)
11.1 Statement regarding computation of per share earnings. (4)
12.1 Subsidiaries of the Company. (1)
27.1 Financial Data Schedule(4)
</TABLE>
- -----------
(1) Previously filed as an exhibit to the Company's Registration Statement
on Form S-1 (No. 333-09815) and incorporated herein by reference.
(2) Previously filed as an exhibit to the Company's Registration Statement on
Form S-8 (No. 333-18545) and incorporated herein by reference.
(3) Previously filed as an exhibit to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1996, and incorporated herein by
reference.
(4) Filed herewith.
(5) Schedules and similar attachments to this Exhibit have not been filed
herewith. The Company agrees to furnish a copy of any such omitted
schedules and attachments to the Commission upon request.
(b) Reports on Form 8-K
None.
11
<PAGE> 12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Medical Alliance, Inc.
DATE: May 14, 1997
Signature Title
/s/ PAUL R. HERCHMAN
- --------------------------------- President and
Paul R. Herchman Chief Executive Officer
/s/ MICHAEL G. WALLACE
- --------------------------------- Senior Vice President and
Michael G. Wallace Chief Financial Officer
12
<PAGE> 13
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ------ -------------------
<S> <C>
2.1 Asset Purchase Agreement, dated October 30, 1995, between the Company and Mobile Surgical Services of Central
Florida, Inc. (1)(5)
2.2 Asset Purchase Agreement, dated March 18, 1996, between the Company and Maasai Inc. (1)(5)
2.3 Asset Purchase Agreement, dated June 10, 1996, between the Company and Mobile Laser Services, Inc. (1)(5)
2.4 Asset Purchase Agreement, dated as of January 21, 1997 among Stone Treatment Center of New England, Inc.,
Gregory A. Mercurio, Vincent A. Catallozzi, M.D., Alexander Calenda, M.D., Gerald Marsocci, M.D. Joseph C.
Cambio, M.D. and the Company. (3)(5)
3.1 Amended and Restated Articles of Incorporation of the Company. (1)
3.2 Amended an Restated Bylaws of the Company. (1)
4.1 Specimen of Company Common Stock Certificate. (1)
4.2 Series A Convertible Preferred Stock Purchase Agreement dated July 10, 1992, between the Company and Mapleleaf
Capital, Ltd. (1)
4.3 Warrant to Purchase 60,000 shares of Series A Convertible Preferred Stock of the Company dated July 10, 1992,
between the Company and Mapleleaf Capital, Ltd. (1)
4.4 Series B Convertible Preferred Stock Purchase Agreement, dated November 17, 1995, by and among the Company and
Satana Corporation, Mapleleaf Capital, Ltd., Sunwestern Investment Fund III, Sunwestern Cayman 1988 Partners,
Montgomery Jessup & Company, L.L.P., Morris Moreland, DLJSC F. B.O. Michael Wallace, IRA, Sid Bonner, Clyde
Hutchinson, Marc Johnson, Thomas A. Montgomery, Hazelle Blair, Lloyd Jones, Bart Tucker, Jay Farris and Kevin
O'Brien. (1)
4.5 Warrant to Purchase 468,300 Shares of Common Stock of the Company dated July 10, 1992 between the
</TABLE>
<PAGE> 14
<TABLE>
<S> <C>
Company and Satana Corporation. (1)
4.6 Warrant to Purchase 23,416 Shares of Common Stock of the Company dated August 15, 1993 between the Company and
Columbia General Corporation. (1)
4.7 Warrant to Purchase 2,810 Shares of Common Stock of the Company dated October 17, 1993 between the Company and
Robert J. Mathews, M.D. (1)
4.8 Warrant to Purchase 2,342 Shares of Common Stock of the Company dated May 31, 1994 between the Company and
Shelly Burks. (1)
4.9 Warrant to Purchase 1,873 Shares of Common Stock of the Company dated May 31, 1994 between the Company and
Thomas A. Montgomery. (1)
4.10 Warrant to Purchase 6,556 Shares of Common Stock of the Company dated September 1, 1994 between the Company and
Thomas A. Montgomery. (1)
4.11 Warrant to Purchase 15,561 Shares of Common Stock of the Company dated July 27, 1995 between the Company and
Paul R. Herchman. (1)
10.1 Amended and Restated Revolving Credit and Term Loan Agreement dated March 20, 1996 between the Company and
NationsBank of Texas, N.A. (1)
10.2 Agreement between the Company and Coherent Medical Group. (1)
10.3 Master Lease agreement dated July 20, 1995 between the Company and Cabot Medical Corporation. (1)
10.4 Master Service Agreement dated June 3, 1996 between the Company and Cosmetic Technologies International. (2)(4)
10.5 Joint Venture Agreement dated March 25, 1996 between the Company and Coherent-AMT Inc. (2)(4)
10.6 Medical Alliance, Inc. 1994 Amended and Restated Long-Term Incentive Plan. (2)(4)
10.7 Employment Agreement between the Company and Paul Herchman. (1)(4)
10.8 Employment Agreement between the Company and Kevin O'Brien. (1)(4)
10.9 Employment Agreement between the Company and Michael G. Wallace. (1)(4)
10.10 Lease Agreement between the Company and Graymont Partners. Ltd. (1)
10.11 Strategic Alliance Agreement, dated as of December 19, 1996, by and between Laserscope and the Company. (3)
10.12 Exclusive Provider Agreement, dated as of January 21, 1997, by and between Thermolase Corporation and the
Company. (3)
10.13 Strategic Alliance Agreement, dated as of January 1, 1997, by and between Valleylab, Inc. and the Company. (3)
10.14 Exclusive Provider Agreement, dated as of February 9, 1997, by and between Imagyn Medical, Inc. and the
Company. (3)
11.1 Statement regarding computation of per share earnings. (4)
12.1 Subsidiaries of the Company. (1)
27.1 Financial Data Schedule(4)
</TABLE>
- -----------
(1) Previously filed as an exhibit to the Company's Registration Statement
on Form S-1 (No. 333-09815) and incorporated herein by reference.
(2) Previously filed as an exhibit to the Company's Registration Statement on
Form S-8 (No. 333-18545) and incorporated herein by reference.
(3) Previously filed as an exhibit to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1996, and incorporated herein by
reference.
(4) Filed herewith.
(5) Schedules and similar attachments to this Exhibit have not been filed
herewith. The Company agrees to furnish a copy of any such omitted
schedules and attachments to the Commission upon request.
<PAGE> 1
EXHIBIT 11.1
MEDICAL ALLIANCE, INC.
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1996 1997
---------- ----------
<S> <C> <C>
Net Income .......................................................................... $ 133,187 $ 38,673
Less: Series A Preferred dividends .................................................. -0- -0-
Net Income applicable to common stock ............................................... 133,187 38,673
Weighted average common shares outstanding before SAB
Topic 4-D shares .................................................................. 2,332,964 5,977,405
SAB Topic 4-D computation: (1)
Incremental common shares outstanding applicable to
options issued within one year of the offering (2) .............................. 174,380 N/A
Incremental common shares outstanding applicable to
the Series B Preferred Stock issued within one year
of the Offering (3) ......................................................... 565,863 N/A
---------- ----------
Common Stock outstanding including all SAB Topic 4-D
Shares ............................................................................. 3,073,207 5,977,405
========== ==========
COMPUTATION OF PRIMARY SHARES OUTSTANDING:
Incremental common shares outstanding applicable to
"In the money" options and warrants based on the
estimated average fair market value of the stock
during the quarter(2) ............................................................. 415,747 311,148
---------- ----------
Primary shares outstanding .......................................................... 3,488,954 6,288,553
========== ==========
Primary earnings per common share (4) ............................................... $ 0.03 $ 0.01
========== ==========
COMPUTATION OF FULLY DILUTED SHARES OUTSTANDING:
Incremental common shares outstanding applicable to "In the Money" options and
warrants based on the estimated quarterly ending fair market value of the
stock (2) ........................................................................... 415,747 311,148
Incremental common shares outstanding applicable to
Series A Preferred Stock (3) ........................................................ 679,035 N/A
---------- ----------
Fully diluted shares outstanding .................................................... 4,167,989 6,288,553
========== ==========
Fully diluted earnings per common share (5) ......................................... $ 0.03 $ 0.01
========== ==========
</TABLE>
(1) SAB Topic 4-D requires the Company to report common stock, convertible
preferred stock, options, warrants and other common stock equivalents
issued within one year of an offering as issued and outstanding for all
periods prior to the offering.
(2) Determined using the Treasury Stock Method.
(3) Determined using the "If Converted" Method.
(4) Computed as net income applicable to common shares divided by primary
shares outstanding.
(5) Computed as the more dilutive of either primary earning per share or net
income divided by fully diluted shares outstanding.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> YEAR 3-MOS
<FISCAL-YEAR-END> DEC-31-1996 MAR-31-1997
<PERIOD-START> JAN-01-1996 JAN-01-1997
<PERIOD-END> DEC-31-1996 MAR-31-1997
<CASH> 20,536,787 17,057,407
<SECURITIES> 0 0
<RECEIVABLES> 6,274,481 6,775,581
<ALLOWANCES> 1,859,621 2,176,395
<INVENTORY> 0 0
<CURRENT-ASSETS> 26,003,585 23,112,820
<PP&E> 7,740,908 10,076,302
<DEPRECIATION> 3,190,725 3,793,540
<TOTAL-ASSETS> 30,707,919 30,205,166
<CURRENT-LIABILITIES> 3,909,392 2,620,627
<BONDS> 355,494 818,648
11,948 12,082
0 0
<COMMON> 0 0
<OTHER-SE> 26,072,965 26,420,931
<TOTAL-LIABILITY-AND-EQUITY> 30,707,919 30,205,166
<SALES> 0 0
<TOTAL-REVENUES> 17,350,384 4,868,461
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 3,408,360 699,974
<INTEREST-EXPENSE> 269,532 29,342
<INCOME-PRETAX> 1,602,240 66,693
<INCOME-TAX> 683,240 28,020
<INCOME-CONTINUING> 919,000 38,673
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 919,000 38,673
<EPS-PRIMARY> .24 .01
<EPS-DILUTED> .24 .01
</TABLE>
