<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, 1999
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 14, 1999, there were 6,134,251 shares outstanding of the registrant's
common stock, $0.002 par value.
<PAGE> 2
INDEX
PART I. FINANCIAL INFORMATION
<TABLE>
<CAPTION>
PAGE NO.
<S> <C> <C>
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED):
Consolidated Balance Sheets
December 31, 1998 and March 31, 1999 ...............................................3
Consolidated Statements of Operations
Three months ended March 31, 1998 and 1999............................................4
Consolidated Statements of Cash Flows
Three months ended March 31, 1998 and 1999 .........................................5
Consolidated Statement of Stockholders' Equity............................................6
Three months ended March 31, 1999
Notes to Consolidated Financial Statements ...............................................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.........................................................11
Signatures...............................................................................13
</TABLE>
<PAGE> 3
MEDICAL ALLIANCE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1998 AND MARCH 31, 1999
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
1998 1999
------------ ------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents ................................... $ 14,377,781 $ 14,021,130
Accounts receivable, less allowance for doubtful accounts
of $1,001,851 and $774,124 respectively .................. 1,711,558 1,681,985
Prepaid expenses and other current assets ................... 1,090,736 1,519,864
Refundable federal and state income taxes ................... 205,297 152,774
Deferred taxes .............................................. 488,918 488,918
------------ ------------
Total current assets .................................. 17,874,290 17,864,671
------------ ------------
Property and equipment, net ..................................... 5,868,543 5,980,042
------------ ------------
Other assets:
Intangible assets, net of amortization of
$265,934 and $285,734, respectively ........................ 778,232 758,432
Acquisition costs ........................................... -0- 430,670
------------ ------------
Total other assets .................................... 778,232 1,189,102
------------ ------------
Total assets .......................................... $ 24,521,065 $ 25,033,815
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ............................................ $ 356,509 $ 792,071
Accrued expenses ............................................ 789,238 812,495
Capital lease obligations ................................... 202,593 208,999
Deferred revenue ............................................ 92,139 90,620
------------ ------------
Total current liabilities ............................ 1,440,479 1,904,185
Capital lease obligations, net of current maturities ............ 37,336 43,681
Deferred taxes .................................................. 488,918 488,918
------------ ------------
Total liabilities .................................... 1,966,733 2,436,784
------------ ------------
Stockholders' equity:
Common stock, $0.002 Par value, 30,000,000 shares
authorized; 6,117,079 shares issued and
outstanding ............................................. 12,753 12,753
Capital in excess of par value .............................. 26,664,309 26,664,309
Accumulated deficit ......................................... (3,277,976) (3,235,277)
Treasury stock at cost, 277,203 shares ..................... (844,754) (844,754)
------------ ------------
Total stockholders' equity ........................... 22,554,332 22,597,031
------------ ------------
Total liabilities and stockholders' equity ........... $ 24,521,065 $ 25,033,815
============ ============
</TABLE>
SEE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.
3
<PAGE> 4
MEDICAL ALLIANCE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1999
(UNAUDITED)
<TABLE>
<CAPTION>
1998 1999
------------ ------------
<S> <C> <C>
Net revenue ........................................... $ 4,154,422 $ 4,126,851
------------ ------------
Costs and expenses:
salaries and benefits ............................... 2,087,612 1,969,678
Selling, general and
administrative ................................... 1,771,347 1,359,834
Depreciation and
amortization ..................................... 585,021 613,954
Provision for uncollectible
accounts ......................................... 536,320 277,902
------------ ------------
Total costs and
expenses ....................................... 4,980,300 4,221,368
------------ ------------
Operating loss ................................... (825,878) (94,517)
------------ ------------
Other (income) expense:
interest income and other,
net .............................................. (196,011) (177,499)
Interest expense .................................... 18,808 11,817
------------ ------------
Total other (income) expense ..................... (177,203) (165,682)
------------ ------------
Income (loss) before income taxes ..................... (648,675) 71,165
Provision for income taxes ............................ 0 28,466
------------ ------------
Net income (loss) ..................................... $ (648,675) $ 42,699
============ ============
Net income (loss) per share (basic) ................... $ (.10) $ .01
============ ============
Net income (loss) per share (diluted) ................. $ (.10) $ .01
============ ============
Weighted average number of common shares and
common share equivalents (in thousands) (basic) ...... 6,251 6,117
Weighted average number of common shares and
common share equivalents (in thousands) (diluted) .... 6,251 6,150
</TABLE>
See Notes to the Consolidated Financial Statements.
4
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MEDICAL ALLIANCE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1999
(UNAUDITED)
<TABLE>
<CAPTION>
1998 1999
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) ............................................. $ (648,675) $ 42,699
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Provision for uncollectible accounts ....................... 536,320 277,902
Depreciation and amortization .............................. 585,021 613,954
Gain from disposal of equipment ............................ -0- (1,622)
Changes in assets and liabilities:
accounts receivable ..................................... (133,819) (248,329)
Prepaid expenses and other current assets ............... 680,044 (376,605)
Accounts payable and accrued expenses ................... (313,588) 458,819
Deferred revenue ........................................ 24,570 (1,519)
------------ ------------
Net cash provided by operating activities ................ 729,873 765,299
------------ ------------
Cash flows from investing activities:
property and equipment purchases ........................... (485,090) (646,576)
Proceeds from disposal of equipment ........................ -0- 12,431
Acquisition costs .......................................... -0- (430,670)
Other ...................................................... (8,532) -0-
------------ ------------
Net cash used in investing activities .................... (493,622) (1,064,815)
------------ ------------
Cash flow from financing activities:
repayment of capital lease obligations ..................... (81,046) (57,135)
Proceeds from issuance of common stock ..................... 210,003 -0-
------------ ------------
Net cash provided by (used in) financing activities ...... 128,957 (57,135)
------------ ------------
Net increase (decrease) in cash and cash equivalents ............ 365,208 (356,651)
Cash and cash equivalents at beginning of period ................ 14,902,578 14,377,781
------------ ------------
Cash and cash equivalents at end of period ...................... $ 15,267,786 $ 14,021,130
============ ============
Supplemental schedule of noncash investing and financing
activities-capital lease obligations incurred ................. $ -0- $ 69,886
============ ============
</TABLE>
See Notes to the Consolidated Financial Statements.
5
<PAGE> 6
MEDICAL ALLIANCE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
COMMON STOCK TOTAL
--------------------- CAPITAL IN EXCESS ACCUMULATED TREASURY STOCKHOLDERS'
SHARES AMOUNT OF PAR VALUE DEFICIT STOCK EQUITY
--------- -------- ------------ ------------ --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1998......... 6,117,079 $12,753 $26,664,309 $(3,277,976) $(844,754) $22,554,332
Net income ....................... 42,699 42,699
--------- -------- ----------- ------------ --------- -----------
Balance at March 31, 1999............ 6,117,079 $12,753 $26,664,309 $(3,235,277) $(844,754) $22,597,031
========= ======== =========== ============ ========= ===========
</TABLE>
See Notes to the Consolidated Financial Statements.
6
<PAGE> 7
MEDICAL ALLIANCE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INFORMATION OF AND FOR THE THREE MONTH PERIOD ENDED
MARCH 31, 1998 AND 1999 IS UNAUDITED)
1. UNAUDITED INTERIM FINANCIAL INFORMATION
The consolidated balance sheet as of March 31, 1999, and the consolidated
statements of operations, and the consolidated statements of cash flows for the
three months ended March 31, 1998 and 1999, and the consolidated statement of
stockholders' equity for the three months ended March 31, 1999, have been
prepared by the Company without audit. The December 31, 1998 consolidated
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, 1999, 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.
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, 1998 included in the
Company's Form 10-K.
2. PROPERTY AND EQUIPMENT
Property and equipment consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1998 1999
------------ ------------
<S> <C> <C>
Medical equipment ............................................... $ 9,155,481 $ 9,628,239
Furniture and fixtures .......................................... 2,140,049 2,187,539
Vehicles ........................................................ 1,255,940 1,363,241
Leasehold improvements .......................................... 53,361 53,361
Equipment under capital leases .................................. 1,493,533 1,563,419
------------ ------------
14,098,364 14,795,799
Less accumulated depreciation and amortization .................. (8,229,821) (8,815,757)
------------ ------------
Net property and equipment ...................................... $ 5,868,543 $ 5,980,042
============ ============
</TABLE>
Depreciation expense related to property and equipment was approximately
$557,000 and $594,000 for the three months ended March 31, 1998 and 1999,
respectively. Accumulated amortization related to equipment under capital leases
was approximately $1,195,000 and $1,242,000 at December 31, 1998 and March 31,
1999, respectively.
7
<PAGE> 8
3. EARNINGS PER SHARE
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, MARCH 31,
1998 1999
---------- ----------
<S> <C> <C>
Basic:
Weighted average number of common shares outstanding (basic) ......... 6,250,964 6,117,079
========== ==========
Net income (loss) .................................................... $ (648,675) $ 42,699
========== ==========
Net income (loss) per share (basic) .................................. $ (.10) $ .01
========== ==========
Diluted:
Weighted average number of common shares outstanding (basic) ......... 6,250,964 6,117,079
Incremental common shares outstanding applicable to
"In the Money" options and warrants based on the
estimated year or quarter end fair market value of the stock ........ (a) 32,621
---------- ----------
Weighted average number of common shares outstanding (diluted) ....... 6,250,964 6,149,700
========== ==========
Net income (loss) .................................................... $ (648,675) $ 42,699
========== ==========
Net income (loss) per share (diluted) ................................ $ (.10) $ .01
========== ==========
</TABLE>
(a) Incremental common shares outstanding applicable to "in the money"
options and warrants were not included in the computation of diluted
earnings per share for the three months ended March 31, 1998 as their
inclusion would be antidilutive for the respective period. The shares
not included totaled 153,281 for the three months ended March 31,
1998.
Options excluded from the diluted earnings per share computation because to
do so would have been antidilutive (including contingent options) totaled
833,836 and 871,530 as of March 31, 1998 and 1999, respectively.
4. PROPOSED MERGER
On February 18, 1999, the Company and Diagnostic Health Services, Inc.
("DHS") and a wholly-owned subsidiary of DHS ("Sub") entered into an Agreement
and Plan of Merger (the "Merger Agreement"), pursuant to which Sub will merge
with and into the Company, resulting in the Company becoming a wholly-owned
subsidiary of DHS. Under the terms of the Merger Agreement, holders of the
Company's Common Stock will receive 1.57 shares of DHS common stock for each
share of the Company's Common Stock held. In connection with the execution of
the Merger Agreement, members of the Boards of Directors of the Company and
DHS, in their capacities as shareholders, (individually and on behalf of their
affiliates), entered into a Voting Agreement pursuant to which they agreed to
vote their shares of capital stock in favor of this transaction.
The Merger is subject to various conditions precedent, including without
limitation, approval by the shareholders of both companies and various state and
federal regulatory agencies. The Company is currently negotiating with DHS to
restructure this proposed transaction. However, the Company has not entered
into any amendment of the original agreement, and there can be no assurance as
to whether or when a transaction with DHS will be consummated.
As of March 31, 1999, all of the costs related to the proposed merger
between the Company and DHS have been deferred and recorded as acquisition costs
on the balance sheet as a noncurrent asset. These costs include legal,
accounting, and investment banking fees. The total amount deferred as of March
31, 1999 is $430,670.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1999 AND 1998
NET REVENUES. Net revenues decreased slightly from $4,154,000 for the three
months ended March 31, 1998, to $4,127,000 for the three months ended March 31,
1999, a decrease of only $27,000. Total net patient service revenue per case
decreased from $212 for the three months ended March 31, 1998, to $206 for the
three months ended March 31, 1999, a decrease of $6 or 3%. The net revenue per
case decrease is mainly due to a shift to lower net revenue per case procedures
within the medical surgical product line mix. Total procedure volume increased
from 19,451 for the three months ended March 31, 1998, to 20,010 for the three
months ended March 31, 1999, an increase of 559 or 3%.
The other revenue component of seminars decreased from $40,000 for the
three months ended March 31, 1998, to $7,000 for the three months ended March
31, 1999, a decrease of $33,000 or 83%.
8
<PAGE> 9
SALARIES AND BENEFITS EXPENSE. Salaries and benefits expense decreased from
$2,088,000 for the three months ended March 31, 1998, to $1,970,000 for the
three months ended March 31,1999, a decrease of $118,000 or 6%. Average total
full-time employees for the Company decreased from 162 for the three months
ended March 31, 1998, to 154 for the three months ended March 31, 1999, a
decrease of 8 or 5%. Furthermore, there was approximately $60,000 paid in
severance packages during the first quarter of 1998 related to a reduction in
corporate personnel. Salaries and benefits expense as a percentage of net
revenues decreased from 50.3% for the three months ended March 31, 1998, to
47.7% for the three months ended March 31, 1999.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE. Selling, general and
administrative expense decreased from $1,771,000 for the three months ended
March 31, 1998, to $1,360,000 for the three months ended March 31, 1999, a
decrease of $411,000 or 23%. Selling, general and administrative expense as a
percentage of net revenues decreased from 42.6% for the three months ended March
31, 1998, to 33.0% for the three months ended March 31, 1999. The following
items were attributable to the decrease in selling, general, and administrative
expenses:
Vehicle expense decreased from $405,000 for the three months ended March 31,
1998, to $153,000 for the three months ended March 31, 1999, a decrease of
$252,000 or 62%. This decrease is mainly due to the Company's $1.2 million
vehicle lease buyout of the entire fleet which occurred during the third quarter
of 1998. Furthermore, the number of field employees has declined slightly from
107 for the three months ended March 31, 1998, to 104 for the three months ended
March 31, 1999, a decrease of 3 or 3%.
Leasing expense decreased from $145,000 for the three months ended March
31, 1998, to $96,000 for the three months ended March 31, 1999, a decrease of
$49,000 or 34%. This decrease is mainly due to the Company's buyout of various
medical equipment operating leases during the third and fourth quarters of 1998.
The monthly lease payments were approximately $19,000.
Insurance expense decreased from $103,000 for the three months ended March
31, 1998, to $58,000 for the three months ended March 31, 1999, a decrease of
$45,000 or 44%.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization increased from
$585,000 for the three months ended March 31, 1998, to $614,000 for the three
months ended March 31, 1999, an increase of $29,000 or 5%.
PROVISION FOR UNCOLLECTIBLE ACCOUNTS. Provision for uncollectible accounts
decreased from $536,000 for the three months ended March 31, 1998, to $278,000
for the three months ended March 31, 1999, a decrease of $258,000 or 48%. As a
percentage of net patient service revenue, provision for uncollectible accounts
decreased from 13.0% for the three months ended March 31, 1998, to 6.7% for the
three months ended March 31, 1999. This significant improvement is primarily
attributable to the Company's processes including scheduling, preregistration,
and preverification and a payor shift mix from noncontracted third party payors
to contracted payors related to the medical surgical product lines.
OPERATING LOSS. Operating loss decreased from $826,000 for the three months
ended March 31, 1998, to $95,000 for the three months ended March 31, 1999, a
decrease of $731,000 or 89%. As a percentage of net revenues, operating loss
decreased from 19.9% for the three months ended March 31, 1998, to 2.3% for the
three months ended March 31, 1999. This decrease was primarily due to the
significant decreases in selling, general and administrative expense and
provision for uncollectible accounts of $411,000 and $258,000, respectively.
INTEREST INCOME AND OTHER, NET. Interest income and other, net decreased
slightly from $196,000 for the three months ended March 31, 1998, to $177,000
for the three months ended March 31, 1999, a decrease of $19,000 or 10%.
PROVISION FOR INCOME TAXES. For the three months ended March 31, 1998, the
Company did not record a current or deferred tax benefit due to the Company's
continuing operating loss trend and the uncertainty of utilization of net
operating loss carryforwards in future periods. For the three months ended March
31, 1999, the Company recorded a tax provision for federal and state income
taxes with an effective tax rate of 40%.
NET INCOME (LOSS). As a result of the items discussed above, the Company's
net loss of $649,000 for the three months ended March 31, 1998 increased to a
net income of $43,000 for the three months ended March 31, 1999, an increase of
$692,000 or 107%.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 1999, the Company has an accumulated retained deficit of
$3.2 million, primarily due to losses incurred during the twelve months ended
December 31, 1997 and the twelve months ended December 31, 1998.
9
<PAGE> 10
Net cash provided by the operating activities was $730,000 and $765,000 for
the three months ended March 31, 1998 and 1999, respectively. For its investing
activities, the Company consumed $494,000 and $1,065,000 for the three months
ended March 31, 1998 and 1999, respectively, primarily for the purchase of
medical equipment and acquisition costs related to the proposed merger (See Note
4 to the Notes to Consolidated Financial Statements). Capital expenditures were
$485,000 and $647,000 for the three months ended March 31, 1998 and 1999,
respectively. Net cash provided by (used in) financing activities was $129,000
and $(57,000) for the three months ended March 31, 1998 and 1999, respectively.
YEAR 2000 COMPLIANCE
The Company is in the process of evaluating its Year 2000 ("Y2K")
compliance status. The Company is testing its information technology, such as
software regarding Y2K compliance and is seeking certification of Y2K compliance
from its third party vendors. Because its software and information technology
come from third party vendors, who would be called on to replace or upgrade
non-compliant software, the Company does not expect that its Y2K-related
expenditures with respect to information technology will be significant. Based
upon the Company's current evaluation of the Y2K compliance of its information
technology, its polling of third party vendors, and its intention to replace or
upgrade any non-compliant information technology, the Company does not
anticipate that there will be a material Y2K problem with respect thereto.
In addition, certain of the Company's medical equipment contains embedded
technology that could have Y2K-related problems. The Company has polled the
manufacturers and vendors of such equipment regarding Y2K compliance and, based
on such polling, all equipment known to the Company to be non-Y2K compliant has
been replaced or upgraded. The Company does not expect to conduct independent
tests of all its medical equipment to assess Y2K compliance. Based upon the
Company's actions in preparation for Y2K, and responses received from its
third-party vendors, the Company does not anticipate that there will be a
material Y2K problem with respect to its equipment. Furthermore, because its
equipment comes from third party vendors, which are being requested to replace
or upgrade all non-compliant equipment, the Company does not expect that its
Y2K-related expenditures with respect to embedded technology will be
significant.
Notwithstanding the foregoing, there can be no assurances (a) that the
representations provided by third party vendors with respect to Y2K compliance
will be accurate, or (b) that the Company will have any recourse against such
vendors if the representations prove to be inaccurate. A Y2K- related failure of
the Company's medical equipment and/or information technology could have a
material adverse effect on the Company and its results of operations.
Furthermore, there can be no assurances that Y2K-related failure caused by third
parties, such as utility providers, transportation companies or others, will not
have a material adverse effect on the Company. The Company is currently in the
process of preparing contingency plans related to possible Y2K-related failure
caused by third parties.
Based on the Company's process of evaluating its Y2K compliance status, the
Company has currently expended an estimated $12,000 related to addressing Y2K
issues. The Company expects the total costs in regard to addressing Y2K issues
to be an estimated $50,000. The Company also anticipates the project to be
substantially completed by the third quarter of 1999. Furthermore, there can be
no assurance that all Y2K issues will be addressed which could result in
additional costs for the Company.
PART II
ITEM 1. LEGAL PROCEEDINGS.
As of the date hereof, there are no legal proceedings pending against or
involving the Company that in the opinion of management, could have a material
adverse effect on the business, financial condition or results of operations of
the Company.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
10
<PAGE> 11
ITEM 5. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ------- -------------------
<S> <C> <C>
2.1 - Asset Purchase Agreement, dated March 18, 1996 between the Company and Maasai Inc. (1) (5)
2.2 - Asset Purchase Agreement, dated June 10, 1996 between the Company and Mobile Laser Services,
Inc. (1) (5)
2.3 - 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. (6)(5)
2.4 - Agreement and Plan of Merger, dated as of February 18, 1999 between Diagnostic Health Services,
Inc. and the Company. (7)
3.1 - Amended and Restated Articles of Incorporation of the Company. (1)
3.2 - Amended and Restated Bylaws of the Company. (1)
4.1 - Specimen of Company Common Stock Certificate. (1)
4.2 - Warrant to Purchase 15,651 Shares of Common Stock of the Company dated July 27, 1995 between
the Company and Paul R. Herchman. (1)
4.3 - Warrant to Purchase 23,416 Shares of Common Stock of the Company dated August 15, 1993
between the Company and Columbia General Corporation. (1)
4.4 - Warrant to Purchase 2,810 Shares of Common Stock of the Company dated October 17, 1993
between the Company and Robert J. Matthews, M.D. (1)
4.5 - Warrant to Purchase 2,342 Shares of Common Stock of the Company dated May 31, 1994 between
the Company and Shelly Burks. (1)
4.6 - Warrant to Purchase 1,873 Shares of Common Stock of the Company dated May 31, 1994 between
the Company and Thomas A. Montgomery. (1)
4.7 - Warrant to Purchase 6,556 Shares of Common Stock of the Company dated May 31, 1994 between
the Company and Thomas A. Montgomery. (1)
10.1 - Agreement between the Company and Coherent Medical Group. (1)
10.2 - Master Lease Agreement dated July 20, 1995 between the Company and Cabot Medical Corporation.
(1)
10.3 - Master services Agreement dated June 3, 1996 between the Company and Cosmetic Technologies
International. (1)
10.4 - Joint Venture Agreement dated March 25, 1996 between the Company and Coherent-AMT Inc. (1)
10.5 - Medical Alliance, Inc. 1994 Amended and Restated Long-Term Incentive Plan. (2) (4)
10.6 - Employment Agreement between the Company and Paul Herchman. (1) (4)
10.7 - Employment Agreement between the Company and Gary Hill. (7) (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. (1)
10.11 - Strategic Alliance Agreement, dated as of December 19, 1996, by and between Laserscope and the
Company. (6)
10.12 - Exclusive Provider Agreement, dated as of January 21, 1997, by and between Thermolase
Corporation and the Company. (6)
10.13 - Strategic Alliance Agreement, dated as of January 1, 1997, by and between Valleylab, Inc. and the
Company. (6)
10.14 - Exclusive Provider Agreement, dated as of February 9, 1997, by and between Imagyn Medical, Inc.
and the Company. (6)
10.15 - Paul Herchman Severance Agreement.(7)
10.16 - Voting Agreement, dated as of February 18, 1999, by and between Diagnostic Health Services, Inc.,
MAI Acquisition Corp., and Medical Alliance, Inc.(7)
12.1 - Subsidiaries of the Company. (1)
27.1 - Financial Data Schedule. (3)
</TABLE>
- ------------
11
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(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) Filed herewith.
(4) Management contract or compensatory plan or arrangement, which is being
identified as such pursuant to Item 14(a)3 of Form 10-K.
(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.
(6) Previously filed as an exhibit to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1997, and incorporated
herein by reference.
(7) Previously filed as an exhibit to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1998, and incorporated
herein by reference.
12
<PAGE> 13
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, 1999
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
/s/ PAUL R. HERCHMAN
-----------------------------
Paul R. Herchman Chief Executive Officer
/s/ MARK NOVY
-----------------------------
Mark Novy Vice President of Finance
</TABLE>
13
<PAGE> 14
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ------- -------------------
<S> <C> <C>
2.1 - Asset Purchase Agreement, dated March 18, 1996 between the Company and Maasai Inc. (1) (5)
2.2 - Asset Purchase Agreement, dated June 10, 1996 between the Company and Mobile Laser Services,
Inc. (1) (5)
2.3 - 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. (6)(5)
2.4 - Agreement and Plan of Merger, dated as of February 18, 1999 between Diagnostic Health Services,
Inc. and the Company. (7)
3.1 - Amended and Restated Articles of Incorporation of the Company. (1)
3.2 - Amended and Restated Bylaws of the Company. (1)
4.1 - Specimen of Company Common Stock Certificate. (1)
4.2 - Warrant to Purchase 15,651 Shares of Common Stock of the Company dated July 27, 1995 between
the Company and Paul R. Herchman. (1)
4.3 - Warrant to Purchase 23,416 Shares of Common Stock of the Company dated August 15, 1993
between the Company and Columbia General Corporation. (1)
4.4 - Warrant to Purchase 2,810 Shares of Common Stock of the Company dated October 17, 1993
between the Company and Robert J. Matthews, M.D. (1)
4.5 - Warrant to Purchase 2,342 Shares of Common Stock of the Company dated May 31, 1994 between
the Company and Shelly Burks. (1)
4.6 - Warrant to Purchase 1,873 Shares of Common Stock of the Company dated May 31, 1994 between
the Company and Thomas A. Montgomery. (1)
4.7 - Warrant to Purchase 6,556 Shares of Common Stock of the Company dated May 31, 1994 between
the Company and Thomas A. Montgomery. (1)
10.1 - Agreement between the Company and Coherent Medical Group. (1)
10.2 - Master Lease Agreement dated July 20, 1995 between the Company and Cabot Medical Corporation.
(1)
10.3 - Master services Agreement dated June 3, 1996 between the Company and Cosmetic Technologies
International. (1)
10.4 - Joint Venture Agreement dated March 25, 1996 between the Company and Coherent-AMT Inc. (1)
10.5 - Medical Alliance, Inc. 1994 Amended and Restated Long-Term Incentive Plan. (2) (4)
10.6 - Employment Agreement between the Company and Paul Herchman. (1) (4)
10.7 - Employment Agreement between the Company and Gary Hill. (7) (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. (1)
10.11 - Strategic Alliance Agreement, dated as of December 19, 1996, by and between Laserscope and the
Company. (6)
10.12 - Exclusive Provider Agreement, dated as of January 21, 1997, by and between Thermolase
Corporation and the Company. (6)
10.13 - Strategic Alliance Agreement, dated as of January 1, 1997, by and between Valleylab, Inc. and the
Company. (6)
10.14 - Exclusive Provider Agreement, dated as of February 9, 1997, by and between Imagyn Medical, Inc.
and the Company. (6)
10.15 - Paul Herchman Severance Agreement.(7)
10.16 - Voting Agreement, dated as of February 18, 1999, by and between Diagnostic Health Services, Inc.,
MAI Acquisition Corp., and Medical Alliance, Inc.(7)
12.1 - Subsidiaries of the Company. (1)
27.1 - Financial Data Schedule. (3)
27.2 - Financial Data Schedule. (3)
</TABLE>
- ------------
<PAGE> 15
(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) Filed herewith.
(4) Management contract or compensatory plan or arrangement, which is being
identified as such pursuant to Item 14(a)3 of Form 10-K.
(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.
(6) Previously filed as an exhibit to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1997, and incorporated
herein by reference.
(7) Previously filed as an exhibit to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1998, and incorporated
herein by reference.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 14,021,130
<SECURITIES> 0
<RECEIVABLES> 2,456,109
<ALLOWANCES> 774,124
<INVENTORY> 0
<CURRENT-ASSETS> 17,864,671
<PP&E> 14,795,799
<DEPRECIATION> 8,815,757
<TOTAL-ASSETS> 25,033,815
<CURRENT-LIABILITIES> 1,904,185
<BONDS> 252,680
0
0
<COMMON> 12,753
<OTHER-SE> 22,584,278
<TOTAL-LIABILITY-AND-EQUITY> 25,033,815
<SALES> 0
<TOTAL-REVENUES> 4,126,851
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 277,902
<INTEREST-EXPENSE> 11,817
<INCOME-PRETAX> 71,165
<INCOME-TAX> 28,466
<INCOME-CONTINUING> 42,699
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 42,699
<EPS-PRIMARY> .01
<EPS-DILUTED> .01
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 14,377,781
<SECURITIES> 0
<RECEIVABLES> 2,713,409
<ALLOWANCES> 1,001,851
<INVENTORY> 0
<CURRENT-ASSETS> 17,874,290
<PP&E> 14,098,364
<DEPRECIATION> 8,229,821
<TOTAL-ASSETS> 24,521,065
<CURRENT-LIABILITIES> 1,440,479
<BONDS> 239,929
0
0
<COMMON> 12,753
<OTHER-SE> 22,541,579
<TOTAL-LIABILITY-AND-EQUITY> 24,521,065
<SALES> 0
<TOTAL-REVENUES> 16,132,206
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,690,293
<INTEREST-EXPENSE> 59,306
<INCOME-PRETAX> (773,583)
<INCOME-TAX> 0
<INCOME-CONTINUING> (773,583)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (773,583)
<EPS-PRIMARY> (.12)
<EPS-DILUTED> (.12)
</TABLE>
