<PAGE>   1


                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 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

     or the transition period from ___________________ to ___________________

Commission file number 0-18443

                       MEDICIS PHARMACEUTICAL CORPORATION
             (Exact name of Registrant as specified in its charter)

            Delaware                                    52-1574808
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
 incorporation or organization)

                            4343 East Camelback Road
                           Phoenix, Arizona 85018-2700
                    (Address of principal executive offices)

                                 (602) 808-8800
              (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    
     ---             ---

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

<TABLE>
<CAPTION>
             Class                                   Outstanding at May 3, 1999
             -----                                   --------------------------
<S>                                                  <C>       
Class A Common Stock $.014 Par Value                         28,219,931
Class B Common Stock $.014 Par Value                            422,962
</TABLE>
<PAGE>   2
                       MEDICIS PHARMACEUTICAL CORPORATION

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
PART I.  FINANCIAL INFORMATION                                              Page
                                                                            ----
<S>      <C>       <C>                                                      <C>
         Item 1--Financial Statements

                   Condensed Consolidated Balance Sheets as of
                   March 31, 1999, and June 30, 1998                         3

                   Condensed Consolidated Statements of
                   Operations for the Three Months and Nine Months
                   Ended March 31, 1999 and 1998                             5

                   Condensed Consolidated Statements of Cash
                   Flows for the Nine Months Ended
                   March 31, 1999 and 1998                                   6

                   Notes to the Condensed Consolidated Financial
                   Statements                                                7

         Item 2--Management's Discussion and Analysis of Financial
                   Condition and Results of Operations                      10

PART II. OTHER INFORMATION

         Item 6--Exhibits and Reports on Form 8-K                           21

SIGNATURE                                                                   21
</TABLE>


                                       2
<PAGE>   3
PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS


                       MEDICIS PHARMACEUTICAL CORPORATION

                      CONDENSED CONSOLIDATED BALANCE SHEETS

                                     ASSETS

<TABLE>
<CAPTION>
                                                 March 31, 1999    June 30, 1998
                                                 --------------    -------------
<S>                                              <C>               <C>         
ASSETS
   Current assets:
     Cash and cash equivalents                    $112,180,344      $147,411,127
     Short-term investments                        139,497,770        90,510,029
     Accounts receivable, net                       25,270,163        18,899,868
     Inventories, net                               10,608,323         9,208,384
     Deferred tax assets                             2,843,167         3,300,000
     Accrued interest income                         2,156,688         2,050,264
     Other current assets                            5,637,218         6,750,170
                                                  ------------      ------------
       Total current assets                        298,193,673       278,129,842
                                                  ------------      ------------

   Property and equipment, net                       1,407,512         1,343,603

   Intangible assets:
     Intangible assets related to
     acquisitions                                  143,666,115        70,386,665
     Other intangible assets                         4,168,144         6,874,626
     Less accumulated amortization                   9,335,634         5,977,399
                                                  ------------      ------------
       Net intangible assets                       138,498,625        71,283,892
                                                  ------------      ------------

   Other non-current assets                          1,245,684         1,592,907
                                                  ------------      ------------

                                                  $439,345,494      $352,350,244
                                                  ============      ============
</TABLE>


         The accompanying notes are an integral part of this statement.


                                       3
<PAGE>   4
                       MEDICIS PHARMACEUTICAL CORPORATION

                      CONDENSED CONSOLIDATED BALANCE SHEETS

                      LIABILITIES AND STOCKHOLDERS' EQUITY


<TABLE>
<CAPTION>
                                                  March 31, 1999  June 30, 1998
                                                  --------------  -------------
<S>                                                <C>            <C>          
LIABILITIES
   Current liabilities:
     Accounts payable                              $  6,486,124   $   5,496,526
     Notes payable                                       11,546          11,364
     Accrued incentives                               1,867,431       1,786,392
     Accrued royalties                                  742,705       1,040,993
     Short-term contract obligation                  22,000,000              --
     Other accrued liabilities                        6,832,282       6,838,397
                                                   ------------   -------------
       Total current liabilities                     37,940,088      15,173,672
                                                   ------------   -------------
   Long-term liabilities:
     Notes payable                                       88,783          94,556
     Other non-current liabilities                      128,512         124,115
     Long-term contract obligation                   33,994,948              --
      Deferred tax liability                          6,522,281      10,502,416

COMMITMENTS AND CONTINGENCIES

MINORITY INTEREST                                     2,010,934       1,960,000

STOCKHOLDERS' EQUITY:
   Preferred Stock, $0.01 par value, 5,000,000
     shares authorized; no shares issued                     --              --
   Class A Common Stock, $0.014 par value;
     shares authorized: 50,000,000; issued and
     outstanding: 28,218,806 and 27,712,837 at
     March 31, 1999 and at June 30, 1998,
     respectively                                       395,063         387,980
   Class B Common Stock, $0.014 par value;
     shares authorized: 1,000,000; issued and
     outstanding: 422,962 at March 31, 1999
     and June 30, 1998                                    5,921           5,921
   Additional paid-in capital                       353,246,370     343,976,037
   Accumulated deficit                                5,012,594     (19,874,453)
                                                   ------------   -------------
     Total stockholders' equity                     358,659,948     324,495,485
                                                   ------------   -------------
                                                   $439,345,494   $ 352,350,244
                                                   ============   =============
</TABLE>

         The accompanying notes are an integral part of this statement.


                                       4
<PAGE>   5
                       MEDICIS PHARMACEUTICAL CORPORATION

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                              Three Months Ended             Nine Months Ended
                                                   March 31,                       March 31,
                                         ----------------------------    ----------------------------
                                             1999            1998            1999            1998
                                         ------------    ------------    ------------    ------------
<S>                                      <C>             <C>             <C>             <C>         
Net revenue                              $ 30,182,792    $ 22,526,851    $ 82,980,347    $ 53,365,759
                                         ------------    ------------    ------------    ------------
Operating costs and expenses:
   Cost of product revenue                  5,024,787       3,991,792      15,048,458       9,541,034
   Selling, general and administrative      9,455,013       8,069,996      27,188,347      19,648,557
   Research and development                   710,195         874,483       1,914,813       2,337,139
   In-process research and development             --              --       9,500,000      35,400,000
   Depreciation and amortization            1,573,834         926,857       3,879,629       2,018,564
                                         ------------    ------------    ------------    ------------
     Operating costs and expenses          16,763,829      13,863,128      57,531,247      68,945,294
                                         ------------    ------------    ------------    ------------
Operating income (loss)                    13,418,963       8,663,723      25,449,100     (15,579,535)
Interest income                             2,762,959       1,898,225       8,720,165       4,025,190
Interest expense                             (726,120)         (3,313)     (1,096,731)        (18,202)
Gain on sale of assets                      7,135,932              --       7,135,932              --
                                         ------------    ------------    ------------    ------------
Income (loss) before taxes                 22,591,734      10,558,635      40,208,466     (11,572,547)
Income tax expense                         (8,616,983)     (4,124,444)    (14,963,088)     (9,296,217)
                                         ------------    ------------    ------------    ------------
Net income (loss)                        $ 13,974,751    $  6,434,191    $ 25,245,378    $(20,868,764)
                                         ============    ============    ============    ============
Basic net income (loss) per common
   share                                 $       0.49    $       0.25    $       0.89    $      (0.92)
                                         ============    ============    ============    ============
Diluted net income (loss) per common
   share                                 $       0.47    $       0.24    $       0.86    $      (0.92)
                                         ============    ============    ============    ============
Shares used in computing basic net
   income (loss) per common share          28,575,688      25,326,399      28,336,602      22,764,699
                                         ============    ============    ============    ============
Shares used in computing diluted net
   income (loss) per common share          29,811,235      26,328,760      29,471,262      22,764,699
                                         ============    ============    ============    ============
</TABLE>


         The accompanying notes are an integral part of this statement.


                                       5
<PAGE>   6
                       MEDICIS PHARMACEUTICAL CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                  Nine Months Ended
                                                           -------------------------------
                                                           March 31, 1999   March 31, 1998
                                                           --------------   --------------
<S>                                                        <C>              <C>           
Net income                                                  $  25,245,378    $ (20,868,764)
Adjustments to reconcile net income (loss) to
   net cash provided by operating activities:
     In-process research and development                        9,500,000       35,400,000
     Gain on sale of intangible assets                         (7,135,932)
     Minority interest                                             50,934               --
     Depreciation and amortization                              3,879,629        2,018,564
     Provision for doubtful accounts                             (576,082)         750,000
     Deferred income tax (benefit) expense                     (3,523,302)       9,714,000
     Other non-cash expenses                                       10,000           56,500
     Gain (loss) on sale of available-for-sale securities          14,682          (23,863)
     Accretion of discount on investments                        (259,271)        (171,727)
     Accretion of discount on contract obligation               1,080,377               --
     Change in operating assets and liabilities:
       Inventories                                             (1,325,179)      (3,353,830)
       Accounts receivable                                     (5,868,973)      (9,093,939)
       Accounts payable                                           989,598          884,989
       Accrued incentives                                          81,039         (157,436)
       Other current liabilities                                 (554,402)      (5,880,795)
       Other current assets                                     4,655,677         (844,911)
                                                            -------------    -------------
         Net cash provided by operating activities             26,264,173        8,428,788
                                                            -------------    -------------

Cash flows from investing activities:
   Purchase of property and equipment                            (585,303)        (612,312)
   Proceeds from sale of intangible assets                      9,849,970        3,000,000
   Purchase of common stock of GenDerm, net of cash
     acquired                                                          --      (57,982,386)
   Purchase of intangible assets                              (25,726,678)      (1,010,000)
   Payment of license agreement                                        --       (3,783,752)
   Decrease in other assets                                       347,224          500,000
   Purchase of available-for-sale investments                (162,579,569)     (80,800,841)
   Sale of available-for-sale securities                       33,415,086       49,021,703
   Maturity of available-for-sale securities                   80,150,000       23,500,000
                                                            -------------    -------------
         Net cash used in investing activities                (65,129,270)     (68,167,588)
                                                            -------------    -------------

Cash flows from financing activities:
   Proceeds from the exercise of stock options                  3,735,843          803,520
   Payments of notes payable                                           --           (5,245)
   (Decrease) increase in other non-current liabilities            (1,194)          37,359
   Proceeds from common stock sale, net                                --      198,071,432
                                                            -------------    -------------
         Net cash provided by financing activities              3,734,649      198,907,066
                                                            -------------    -------------

Effect of foreign currency exchange rate
     on cash and cash equivalents                                (100,335)              --
                                                            -------------    -------------

Net (decrease) increase in cash and cash equivalents          (35,230,783)     139,168,266
Cash and cash equivalents at beginning of period              147,411,127       33,623,397
                                                            -------------    -------------
Cash and cash equivalents at end of period                  $ 112,180,344    $ 172,791,663
                                                            =============    =============
</TABLE>

         The accompanying notes are an integral part of this statement.


                                       6
<PAGE>   7
                       MEDICIS PHARMACEUTICAL CORPORATION

            NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 1999


1.       ORGANIZATION AND BASIS OF PRESENTATION

         Medicis Pharmaceutical Corporation ("Medicis" or the "Company") is the
         leading independent pharmaceutical company in the United States
         focusing primarily on the treatment of dermatological conditions. The
         Company offers prescription, over-the-counter ("OTC"), and cosmetic
         dermatology products emphasizing the clinical effectiveness, quality,
         affordability and cosmetic elegance of its products. Medicis has
         achieved a leading position in branded products for the treatment of
         acne, acne-related conditions, psoriatic conditions and anti-pruritic
         conditions while also offering the leading OTC Capsaicin and fade cream
         products line in the United States. The Company has built its business
         by successfully introducing prescription pharmaceuticals such as the
         DYNACIN(R) and TRIAZ(R) products for the treatment of acne, and
         LUSTRA(R) for the treatment of dyschromia and other discolorations of
         the skin. The Company's business has also been built by acquiring and
         successfully marketing prescription pharmaceuticals such as the
         LIDEX(R) and SYNALAR(R) corticosteroid products for the treatment of
         psoriasis and eczema; LOPROX(R) for the treatment of fungal infections;
         NOVACET(R) for the treatment of acne rosacea and the OTC fade cream
         product, ESOTERICA(R).

         The financial information is unaudited but reflects all adjustments,
         consisting only of normal recurring accruals, which are, in the opinion
         of the Company's management, necessary to a fair statement of the
         results for the interim periods presented. Interim results are not
         necessarily indicative of results for a full year. The financial
         statements should be read in conjunction with the Company's audited
         financial statements and notes thereto and Management's Discussion and
         Analysis of Financial Condition and Results of Operations relating
         thereto included in the Company's Annual Report on Form 10-K for the
         fiscal year ended June 30, 1998 ("fiscal 1998"). Certain immaterial
         amounts on the face of the balance sheet have been reclassified to
         conform with the current period's presentation.

         Except as otherwise specified herein, all information in this Form 10-Q
         has been adjusted to reflect a 3-for-2 stock split in the form of a 50%
         stock dividend paid on February 16, 1999 to holders of record on
         January 29, 1999.

2.       IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

         In June 1997, the Financial Accounting Standards Board issued Statement
         of Financial Accounting Standards ("SFAS") No. 131, "Disclosure about
         Segments of an Enterprise and Related Information," ("SFAS No. 131").
         SFAS No. 131 establishes a new method by which companies will report
         operating segment information. This method is based on the manner in
         which management organizes the segments within a company for making
         operating decisions and assessing performance. The Company is
         evaluating the provisions of SFAS No. 131 and, upon adoption, may
         report operating segments. The adoption of 


                                       7
<PAGE>   8
         SFAS No. 131 will have no impact on the Company's consolidated results
         of operations, financial position or cash flows.

         As of July 1, 1998, the Company adopted SFAS No. 130, "Reporting
         Comprehensive Income," ("SFAS No. 130"). SFAS No. 130 establishes new
         rules for the reporting and display of comprehensive income and
         shareholders' equity. SFAS No. 130 requires certain items such as
         unrealized foreign currency exchange gains or losses and unrealized
         gains or losses on the Company's available-for-sale securities to be
         included in other comprehensive income as separately presented portions
         of other comprehensive income in shareholders equity. During the third
         quarter of fiscal 1999 and fiscal 1998, the amounts of unrealized
         foreign currency exchange gains and losses and unrealized gains or
         losses on securities were not material.

3.       SALE OF PRODUCTS TO BIOGLAN PHARMA PLC

         In February 1999, the Company sold a portfolio of nine dermatological
         products to Bioglan, Inc., an American subsidiary of Bioglan Pharma,
         PLC ("Bioglan"), for a net payment of $10.85 million in cash and
         certain technologies that may further enhance the Company's research
         and development pipeline. The products included in the sale were
         A-FIL(TM), AFIRM(R), BEZASHAVE(R), BETA-LIFTx(R), METED(R),
         PRAMEGEL(R), PACKER'S TAR SOAP(R), THERAMYCIN Z(R), and TEXACORT(R).
         Under a separate agreement, the Company licensed to Bioglan three
         additional products for a period of three years with a buyout option of
         $15.5 million at the end of the third term. Medicis will receive
         quarterly license payments for three years from Bioglan. The licensed
         products include OCCLUSAL(R), PENTRAX(R) and SALAC(R).

4.       EARNINGS PER SHARE

         The following table sets forth the computation of basic and diluted
         earnings per share:

<TABLE>
<CAPTION>
                                      THREE MONTHS ENDED     NINE MONTHS ENDED
                                           MARCH 31,             MARCH 31,
                                           ---------             ---------
                                        1999       1998       1999       1998
                                      -------    -------    -------    --------
                                        (in thousands, except per share data)
<S>                                   <C>        <C>        <C>        <C>      
Numerator:
   Net income (loss)                  $13,975    $ 6,434    $25,245    $(20,869)
                                      -------    -------    -------    --------

Denominator for basic
   earnings per common
   share                               28,576     25,326     28,337      22,765

Effect of dilutive
securities:
    Stock options                       1,235      1,003      1,134          --
                                      -------    -------    -------    --------

Denominator for diluted
   earnings per common
   share                               29,811     26,329     29,471      22,765
                                      =======    =======    =======    ========

Basic net income (loss)
   per common share                   $  0.49    $  0.25    $  0.89    $  (0.92)
                                      =======    =======    =======    ========

Diluted net income
    (loss) per common share           $  0.47    $  0.24    $  0.86    $  (0.92)
                                      =======    =======    =======    ========
</TABLE>


                                       8
<PAGE>   9
         Options to purchase 91,913 and 127,038 shares of common stock at prices
         ranging from $39.38 to $44.67 and $33.33 to $44.67 per share were
         outstanding for the three and nine months ended March 31, 1999,
         respectively. These were not included in the computation of diluted
         earnings per share because the option exercise price was greater than
         the average market price of the Company's common shares and, therefore,
         the effect would be anti-dilutive. The Company also had no dilutive
         securities for the 1998 nine month period given that inclusion of such
         securities would be dilutive to net loss.

5.       CONTINGENCIES

         The Company and certain of its subsidiaries, from time to time, are
         parties to certain actions and proceedings incident to their business.
         Liability in the event of final adverse determinations in any of these
         matters is either covered by insurance and/or established reserves or,
         in the opinion of management, after consultation with counsel, should
         not, in the aggregate, have a material adverse effect on the
         consolidated financial position or results of operations of the Company
         and its subsidiaries.

6.       INVENTORIES

         Although the Company utilizes third parties to manufacture and package
         inventories held for sale, the Company takes title to certain
         inventories and records the associated liability once inventories are
         manufactured. Inventories are valued at the lower of cost or market as
         determined by net realizable value using the first-in-first-out method.
         Inventories, net of reserves, at March 31, 1999, and June 30, 1998,
         consist of the following:

<TABLE>
<CAPTION>
                                      March 31, 1999  June 30, 1998
                                      --------------  -------------
<S>                                   <C>              <C>       
             Raw materials             $ 2,935,717      $1,086,585
             Finished goods              7,672,606       8,121,799
                                       -----------      ----------
                Total inventories      $10,608,323      $9,208,384
                                       ===========      ==========
</TABLE>


7.       INCOME TAXES

         Income taxes have been provided using the liability method in
         accordance with SFAS No. 109, "Accounting for Income Taxes." The
         provision for income taxes reflects management's estimation of the
         effective tax rate expected to be applicable for the full fiscal year.
         This estimate is reevaluated by management each quarter based on
         estimated tax expenses for the year.

         At March 31, 1999 the Company took advantage of additional tax
         deductions available relating to the exercise of non-qualified stock
         options and disqualified dispositions of incentive stock options.
         Accordingly, the Company recorded a $1.3 million increase to equity
         with a corresponding $1.3 million reduction to taxes payable. Quarterly
         adjustments for the exercise of non-qualified stock options and
         disqualified dispositions of incentive stock options may vary as they
         relate to the actions of the option holder or stockholder.


                                       9
<PAGE>   10
8.       SUBSEQUENT EVENT

         On April 19, 1999 the Company purchased Ucyclyd Pharma, Inc.
         ("Ucyclyd"), a privately held pharmaceutical company based in
         Baltimore, Maryland for approximately $23.4 million in cash. Ucyclyd's
         primary product is the orphan drug BUPHENYL(TM), which is indicated in
         the treatment of Urea Cycle Disorders.

         Under terms of the agreement, Medicis paid $15.1 million at the close
         of the transaction and will pay $5.7 million on the first anniversary
         of the closing date subject to certain manufacturing conditions and
         $2.7 million upon regulatory approval of a product line extension.
         Medicis will also receive certain technologies that will further
         enhance the Company's research and development pipeline.

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

         The following discussion should be read in conjunction with the
         attached condensed consolidated financial statements and notes thereto
         and with the Company's audited financial statements, notes to the
         consolidated financial statements and Management's Discussion and
         Analysis of Financial Condition and Results of Operations relating
         thereto included in the Company's Annual Report on Form 10-K for the
         fiscal year ended June 30, 1998 (the "1998 Form 10-K").

         This report on Form 10-Q contains certain "forward-looking statements"
         within the meaning of the Private Securities Litigation Reform Act of
         1995. In addition, from time to time, the Company or its
         representatives have made or may make forward-looking statements,
         orally or in writing. Forward-looking statements involve known and
         unknown risks and uncertainties. The Company's actual actions or
         results could differ materially from those anticipated in
         forward-looking statements as a result of certain factors including,
         but not limited to, those factors discussed in the documents filed by
         the Company with the Securities and Exchange Commission from time to
         time, including the prospectus dated February 6, 1998, which is set
         forth in the Company's Registration Statement on Form S-3 and the 1998
         Form 10-K. The Company undertakes no obligation to update any forward
         looking statements.

         OVERVIEW

         Medicis was founded in 1987 to develop and market prescription and
         over-the-counter ("OTC") products to treat dermatological conditions.
         Innovative Therapeutics, Inc. (the predecessor of the Company) was
         incorporated under the laws of the District of Columbia on July 1,
         1987, subsequently changed its name to Medicis Corporation and was
         merged with and into Medicis Corporation, which was incorporated in
         July 29, 1988 under the laws of Delaware, pursuant to an Agreement of
         Merger dated July 29, 1988. Medicis Corporation subsequently changed
         its name to Medicis Pharmaceutical Corporation.


                                       10
<PAGE>   11
         Medicis Pharmaceutical Corporation ("Medicis" or the "Company") is the
         leading independent pharmaceutical company in the United States
         focusing primarily on the treatment of dermatological conditions. The
         Company offers prescription, over-the-counter ("OTC"), and cosmetic
         dermatology products emphasizing the clinical effectiveness, quality,
         affordability and cosmetic elegance of its products. Medicis has
         achieved a leading position in branded products for the treatment of
         acne, acne-related conditions, psoriatic conditions and anti-pruritic
         conditions while also offering the leading OTC Capsaicin and fade cream
         products line in the United States. The Company has built its business
         by successfully introducing prescription pharmaceuticals such as the
         DYNACIN(R) and TRIAZ(R) products for the treatment of acne, and
         LUSTRA(R) for the treatment of dyschromia and other discolorations of
         the skin. The Company's business has also been built by acquiring and
         successfully marketing prescription pharmaceuticals such as the
         LIDEX(R) and SYNALAR(R) corticosteroid products for the treatment of
         psoriasis and eczema; LOPROX(R) for the treatment of fungal infections;
         NOVACET(R) for the treatment of acne rosacea and the OTC fade cream
         product, ESOTERICA(R).

         Prescription pharmaceuticals accounted for 77.0%, 86.5% and 83.2% of
         net revenue in the fiscal years ending June 30, 1998 ("fiscal 1998"),
         June 30, 1997 ("fiscal 1997") and June 30, 1996 ("fiscal 1996"),
         respectively. Although DYNACIN(R) accounted for a majority of the
         Company's total revenue in fiscal 1997 and fiscal 1996, the Company no
         longer derives the majority of its net revenue from DYNACIN(R).

         The Company derives a majority of its revenue from sales of DYNACIN(R),
         LIDEX(R), TRIAZ(R), LUSTRA(R), ZOSTRIX(R) and the recently acquired
         LOPROX(R) product (the "Key Products"). The Company believes that sales
         of the Key Products will constitute the majority of net revenue for the
         foreseeable future. Accordingly, any factor adversely affecting the
         sale of the Key Products individually or collectively would have a
         material adverse effect on the Company's business, financial condition
         and results of operations. Each of the Key Products could be rendered
         obsolete or uneconomical by regulatory or competitive changes. The sale
         of the Key Products could also be affected adversely by other factors
         including manufacturing or supply interruptions; the development of new
         competitive pharmaceuticals to treat the conditions addressed by the
         Key Products; technological advances; factors affecting the cost of
         production, marketing or pricing actions by one or more of the
         Company's competitors; changes in the prescribing practices of
         dermatologists; changes in the reimbursement policies of third-party
         payors; product liability claims or other factors.

         The Company's results of operations may vary from period to period due
         to a variety of factors including expenditures incurred to acquire,
         license and promote pharmaceuticals; expenditures and timing relating
         to divestitures, acquisition and integration of businesses; changes in
         prescribing practices of dermatologists; the introduction of new
         products by the Company or its competitors; cost increases from
         third-party manufacturers; supply interruptions; the availability and
         cost of raw materials; the mix of products sold by the Company; changes
         in marketing and sales expenditures; market acceptance of the Company's
         products; competitive pricing pressures; general economic and industry
         conditions that affect customer demand; and the Company's level of
         research and 


                                       11
<PAGE>   12
         development activities. In addition, the Company's business has
         historically been subject to seasonal fluctuations, with lower sales
         generally being experienced in the first quarter of each fiscal year.
         As a result of customer buying patterns, a substantial portion of the
         Company's revenues has been in the last month of each quarter. The
         Company schedules its inventory purchases to meet anticipated customer
         demand. As a result, relatively small delays in the receipt of
         manufactured products by the Company could result in revenues being
         deferred or lost. The Company's operating expenses are based on
         anticipated sales levels, and a high percentage of the Company's
         expenses are relatively fixed in the short term. Consequently,
         variations in the timing of recognition of revenue could cause
         significant fluctuations in operating results from period to period and
         may result in unanticipated periodic earnings shortfalls or losses.
         There can be no assurance that the Company will maintain or increase
         revenues or profitability or avoid losses in any future period.

         The Company's strategy for growth is substantially dependent upon its
         continued ability to acquire products primarily targeted at the skin
         care market. The Company engages in limited proprietary research and
         development of new products and must rely upon the willingness of other
         companies to sell or license product lines or technologies. Other
         companies, including those with substantially greater financial,
         marketing and sales resources, compete with the Company to acquire such
         products. There can be no assurance that the Company will be able to
         acquire rights to additional products on acceptable terms, or at all.
         The failure of the Company to acquire additional products or
         successfully introduce new products could have a material adverse
         effect on the Company's business, financial condition and results of
         operations. Further, any new internally developed or acquired products
         may have different distribution channels, pricing resources and levels
         or competition than the Company's current products. Consequently, there
         can be no assurance that the Company will be able to compete favorably
         and attain market acceptance in any new product category or
         successfully integrate any acquired products or businesses. In
         addition, any such products may require the Company to significantly
         increase its sales force and incur commensurate expense levels in
         anticipation of a new product introduction. Failure of the Company to
         successfully introduce and market new products, whether internally
         developed or acquired from third parties, would have a material adverse
         effect on the Company's business, financial condition and results of
         operations.

         The Company has recently experienced, and will continue to experience,
         a period of significant expansion of its operations that has placed a
         significant strain upon its management system and resources. The
         Company's ability to compete effectively and to manage future growth,
         if any, will require the Company to continue to improve its financial
         and management controls; reporting systems and procedures on a timely
         basis; and expand, hire, train and manage an increasing number of
         employees. The Company's failure to do so would have a material adverse
         effect upon the Company's business, financial condition and results of
         operations. The Company's business strategy includes potential
         acquisitions of products and businesses and introductions of new
         products. The Company anticipates that the integration of additional
         new businesses or potential products, if any, would require significant
         expense and management time and attention. 


                                       12
<PAGE>   13
         Failure to manage such change effectively would have a material adverse
         effect on the Company's business, financial condition and results of
         operations.

         The Company recognizes revenues from sales upon shipment to its
         customers. At the time of sale, the Company records reserves for
         returns based upon estimates using historical experience. Revenue is
         reported net of actual and estimated product returns and net of pricing
         adjustments and/or discounts. The Company applies royalty obligations
         to the cost of revenues in the period the corresponding revenues are
         recognized.

         The Company's customers include the nation's leading wholesale
         pharmaceutical distributors, such as McKesson Drug Company
         ("McKesson"), Bergen Brunswig Drug Company ("Bergen Brunswig"),
         Cardinal Health, Inc. ("Cardinal"), and other major drug chains. In
         fiscal 1998, McKesson, Bergen Brunswig and Cardinal accounted for
         16.9%, 13.2% and 12.6%, respectively, of the Company's revenue. In
         fiscal 1997, McKesson, Cardinal and Bergen Brunswig accounted for
         20.6%, 16.3% and 10.9%, respectively, of the Company's revenue. The
         loss of, or deterioration in, any of these customer accounts could have
         a material adverse effect upon the Company's business, financial
         condition or results of operations.

         To enable Medicis to focus on its core marketing and sales activities,
         the Company selectively out-sources certain non-sales and non-marketing
         functions, such as laboratory research, manufacturing and warehousing.
         As the Company expands its activities in these areas, additional
         financial resources are expected to be utilized. The Company typically
         does not enter into long-term manufacturing contracts with third-party
         manufacturers. Whether or not such contracts exist, there can be no
         assurance that the Company will be able to obtain adequate supplies of
         such products in a timely fashion, or at all.

         The Company may increase total expenditures for research and
         development and expects that research and development expenditures as a
         percentage of net revenue will fluctuate from period to period. Actual
         expenditures will depend on a variety of factors, including the
         Company's financial condition, as well as the results of clinical
         testing, delays or changes in government-required testing and approval
         procedures, technological and competitive developments and strategic
         marketing decisions. There can be no assurance that any product or
         technology under development will result in the successful introduction
         of any new product.

         The Year 2000 issue results from the inability of some computer
         programs to identify the year 2000 properly, potentially leading to
         errors or system failure. A company's business may be adversely
         affected if it, or any of its suppliers and customers or others with
         whom it transacts business (including its banks and governmental
         agencies), have not timely resolved the year 2000 issue. In response to
         its rapid growth, the Company selected a new management information
         system in fiscal 1997, which was implemented in fiscal 1998, that is
         expected to meet its presently anticipated needs. In selecting a
         system, Year 2000 compliance was one of the criteria. The Company
         continues to review the areas within its business and operations which
         could be adversely affected by Year 2000 issues and to evaluate the
         costs of modifying and testing its systems for the Year 2000. 


                                       13
<PAGE>   14
         Although the Company is not yet able to estimate its incremental cost
         for the Year 2000 issues, within its internal information systems,
         based on its preliminary review to date, the Company does not believe
         Year 2000 issues will have a material adverse effect on the Company's
         business, financial condition and results of operations. The Company
         continues to work with critical third parties to determine the impact
         of Year 2000 issues on their business and operations and potential
         collateral impact on the business and operations of the Company and to
         determine such third parties' plans to remediate Year 2000 issues where
         their systems interface with the Company's systems. The assessment and
         necessary modification for the Year 2000 issue should be completed in
         late 1999.

         RESULTS OF OPERATIONS

         The following table sets forth certain data as a percentage of net
         revenue for the periods indicated.

<TABLE>
<CAPTION>
                                      THREE MONTHS ENDED  NINE MONTHS ENDED
                                           MARCH 31,           MARCH 31,
                                        1999      1998      1999      1998
                                        ----      ----      ----      ----
<S>                                    <C>       <C>       <C>       <C>   
      Net revenue ..................   100.0%    100.0%    100.0%    100.0%
      Gross profit .................    83.4      82.3      81.9      82.1
      In-process research and
         development ...............      --        --     (11.4)    (66.3)
      Operating expenses (1) .......   (38.9)    (43.8)    (39.7)    (45.0)
      Operating income (loss) ......    44.5      38.5      30.8     (29.2)
      Net interest income ..........     6.7       8.4       9.2       7.5
      Gain on sale of assets .......    23.6        --       8.6        --
      Income tax benefit (expense)..   (28.5)    (18.3)    (18.0)    (17.4)
                                       -----     -----     -----     -----
      Net income (loss) ............    46.3%     28.6%     30.6%    (39.1)%
                                       =====     =====     =====     =====
</TABLE>

         (1) Excludes in-process research and development

         THREE MONTHS ENDED MARCH 31, 1999 COMPARED TO THE THREE MONTHS ENDED
         MARCH 31, 1998

         Net Revenue

         Net revenue for the three months ended March 31, 1999 (the "third
         quarter of fiscal 1999") increased 34.0%, or $7.7 million, to $30.2
         million from $22.5 million for the three months ended March 31, 1998
         (the "third quarter of fiscal 1998"). The Company's net revenue
         increased in the third quarter of fiscal 1999 primarily as a result of
         the effect of revenue associated with the acquisition of the LOPROX(R)
         and TOPICORT(R) products which were acquired in November 1998 and the
         continued unit and dollar sales growth of the Company's LUSTRA(R),
         DYNACIN(R), and TRIAZ(R) products. The Company's prescription products
         accounted for 76.6% of net revenue in the third quarter of fiscal 1999
         and 80.5% of net revenue in the third quarter of fiscal 1998. The OTC
         products and contract revenue accounted for 23.4% and 19.5% of net
         revenue in the third quarter of fiscal 1999 and 1998, respectively. The
         Company expects the majority of revenue in the future to be
         attributable to the Company's prescription brands.


                                       14
<PAGE>   15
         Gross Profit

         Gross profit during the third quarter of fiscal 1999 increased 35.7%,
         or $6.6 million, to $25.2 million from $18.6 million in the third
         quarter of fiscal 1998. As a percentage of net revenue, gross profit
         increased to 83.4% in the third quarter of fiscal 1999 from 82.3% in
         the third quarter of fiscal 1998. This increase was primarily due to
         sales associated with LOPROX(R), TOPICORT(R), LUSTRA(R) and TRIAZ(R),
         which enjoy higher gross profit percentages than the Company's other
         products. Gross profit percentage also increased due to the sale of
         nine products to Bioglan which consisted primarily of products which
         have a lower gross profit percentage than the Company's prescription
         products, and the license of three products to Bioglan which the
         Company recorded as contract revenue.

         Selling, General and Administrative Expenses

         Selling, general and administrative expenses in the third quarter of
         fiscal 1999 increased 17.2%, or $1.4 million, to $9.5 million from $8.1
         million in the third quarter of fiscal 1998, primarily due to the
         expenses associated with an increase in variable costs commensurate
         with increased sales volume, the expansion of the Company's sales force
         and additional personnel costs attributable to the hiring of additional
         full-time equivalent employees and cost-of-living salary adjustments.
         Selling, general and administrative costs, as a percentage of net
         revenue decreased 4.5 percentage points in the third quarter of fiscal
         1999 relative to the third quarter of fiscal 1998.

         Research and Development Expenses

         Research and development expenses in the third quarter of fiscal 1999
         decreased 18.8%, or $164,000, to $710,000 from $874,000 in the third
         quarter of fiscal 1998. This decrease was due primarily to the timing
         of various research and development projects.

         Depreciation and Amortization Expenses

         Depreciation and amortization expenses in the third quarter of fiscal
         1999 increased 69.8%, or $647,000, to $1,574,000 from $927,000 in the
         third quarter of fiscal 1998. This income was due primarily to
         amortization of intangible assets associated with the Company's
         acquisition of the LOPROX(R) and TOPICORT(R) products in November 1998.

         Operating Income

         Operating income during the third quarter of fiscal 1999 increased
         54.9%, or $4.8 million, to $13.4 million from $8.6 million in the third
         quarter of fiscal 1998. This increase was primarily a result of higher
         sales volume, a 1.1 percentage point increase in gross profit
         percentage, and a 4.5 percentage point decrease in operating costs as a
         percentage of net revenue.


                                       15
<PAGE>   16
         Interest Income

         Interest income in the third quarter of fiscal 1999 increased 45.6%, or
         $0.9 million, to $2.8 million from approximately $1.9 million in the
         third quarter of fiscal 1998. This increase was due primarily to higher
         cash equivalent and short-term investment balances in the third quarter
         of fiscal 1999. These balances are primarily the result of the
         Company's cash flow from operations.

         Interest Expense

         Interest expense in the third quarter of fiscal 1999 increased
         approximately $723,000 to $726,000 from $3,000 in the third quarter of
         fiscal 1998 primarily as a result of interest expense of $720,000
         related to the acquisition of the LOPROX(R) and TOPICORT(R) products.

         Gain on Sale of Intangible Assets

         The Company recognized a gain of $7.1 million, $4.3 million net of tax,
         on the sale of nine products to Bioglan for $10.85 million in cash and
         certain technologies that may further enhance the Company's research
         and development pipeline. The products included in the sale were
         A-FIL(TM), AFIRM(R), BENZASHAVE(R), BETA-LIFTx(R), METED(R),
         PRAMEGEL(R), PACKER'S TAR SOAP(R), THERAMYCIN Z(R), and TEXACORT(R).

         Income Tax Expense

         Income tax expense during the third quarter of fiscal 1999 increased
         $4.5 million to $8.6 million from $4.1 million in the third quarter of
         fiscal 1998. The provision for income taxes recorded for the third
         quarter of fiscal 1999 reflects management's estimate of the effective
         tax rate expected to be applicable for the full fiscal year. This
         estimate is reevaluated by management each quarter based upon forecasts
         of income before taxes for the year. The increase in income tax
         expense, as compared to the third quarter of fiscal 1998, is due to an
         increase in pre-tax income. The decrease in the effective tax rate, as
         compared to the third quarter of fiscal 1998, is primarily attributable
         to an increase in tax exempt interest income.

         Net Income

         Net income during the third quarter of fiscal 1999 increased 117.2%, or
         $7.6 million, to $14.0 million from $6.4 million in the third quarter
         of fiscal 1998. This increase is primarily attributable to an increase
         in sales volume, higher gross profits, lower operating expenses as a
         percentage of net revenue, and interest income generated by higher cash
         and cash equivalent balances.


                                       16
<PAGE>   17
         NINE MONTHS ENDED MARCH 31, 1999 COMPARED TO THE NINE MONTHS ENDED
         MARCH 31, 1998

         Net Revenue

         Net revenue for the nine months ended March 31, 1999 (the "1999 nine
         months") increased 55.5% or $29.6 million, to $83.0 million from $53.4
         million for the nine months ended March 31, 1998 (the "1998 nine
         months") primarily as a result of the LOPROX(R) and TOPICORT(R) product
         acquisition in November 1998 and the unit and dollar sales growth of
         the LUSTRA(R) and DYNACIN(R) products. The Company's prescription
         products accounted for 74.3% of net revenue in the 1999 nine months as
         compared to 77.0% of net revenue in the 1998 nine months. The OTC
         products accounted for 25.7% of net revenue in the 1999 nine months as
         compared to 23.0% of net revenue for the 1998 nine months.

         Gross Profit

         Gross Profit in the 1999 nine months increased 55.0%, or $24.1 million,
         to $67.9 million from $43.8 million in the 1998 nine months. As a
         percentage of net revenue, gross profit decreased 0.2 percentage points
         to 81.9% in the 1999 nine months from 82.1% in the 1998 nine months,
         primarily as a result of greater OTC revenue as a percentage of total
         net revenue. OTC products have a lower gross profit percentage than the
         Company's prescription products.

         Selling, General and Administrative Expenses

         Selling, general and administrative expenses in the 1999 nine months
         increased 38.4%, or $7.5 million, to $27.1 million from $19.6 million
         in the 1998 nine months. This increase is primarily due to an increase
         in selling, general and administrative expenses associated with the
         promotion and administration of the LOPROX(R) and TOPICORT(R) products
         acquired in November 1998, and the sampling and advertising of the
         Company's existing products.

         Additionally, selling, general and administrative expenses increased
         due to variable compensation commensurate with increased sales volume,
         personnel costs attributable to an increase in full-time equivalent
         employees, and cost-of-living salary adjustments. Selling, general and
         administrative costs, as a percentage of net revenue, have decreased
         4.0 percentage points in the 1999 nine months compared to the 1998 nine
         months.

         Research and Development Expenses

         Research and development expenses in the 1999 nine months decreased
         18.1% or $0.4 million to approximately $1.9 million, from $2.3 million
         in the 1998 nine months primarily due to the timing of various research
         and development projects.


                                       17
<PAGE>   18
         Depreciation and Amortization Expenses

         Depreciation and amortization expenses in the 1999 nine months
         increased 92.2%, or $1.9 million, to $3.9 million from $2.0 million in
         the 1998 nine months. This increase was due primarily to amortization
         of the intangible assets associated with the Company's acquisition of
         the LOPROX(R) and TOPICORT(R) products in November 1998, and a full
         nine months of amortization as a result of the GenDerm Corporation
         ("Genderm") acquisition in December 1997.

         In-Process Research and Development

         The Company recorded a $9.5 million charge to operations as in-process
         research and development during the 1999 nine months as part of the
         allocated purchase price on the acquisition of the LOPROX(R) and
         TOPICORT(R) products. In the 1998 nine months, the Company recorded a
         $35.4 million charge to operations as in-process research and
         development as part of the allocated purchase price of GenDerm. The
         amounts allocated to in-process research and development were based
         upon independent appraisals.

         Operating Income

         Operating income in the 1999 nine months increased $41.0 million to
         $25.4 million from a net operating loss of $15.6 million in the 1998
         nine months primarily as a result of the $35.4 charge for in-process
         research and development to operating expenses relating to the
         Company's purchase of GenDerm in December 1997. Absent special charges,
         operating income in the 1999 nine months increased 76.3%, or $15.1
         million, to $34.9 from $19.8 million in the 1998 nine months as a
         result of higher sales volume, coupled with an 4.0 percentage point
         decrease in the Company's selling, general and administrative expenses
         as a percentage of net revenue.

         Interest Income

         Interest income in the 1999 nine months increased 116.6%, or $4.7
         million to $8.7 million from approximately $4.0 million in the 1998
         nine months. This increase was due primarily to higher cash and
         short-term investment balances in the 1999 nine months which were
         generated from cash flow from operations and the public offering
         completed by the Company in February 1998.

         Interest Expense

         Interest expense in the 1999 nine months increased approximately $1.1
         million to $1.1 million from approximately $18,000 primarily as a
         result of interest expense of approximately $1.1 million related to the
         acquisition of the LOPROX(R) and TOPICORT(R) products.


                                       18
<PAGE>   19
         Gain on Sale of Intangible Assets

         The Company recognized a gain of $7.1 million, $4.3 million net of tax,
         on the sale of nine products to Bioglan for $10.85 million in cash and
         certain technologies that may further enhance the Company's research
         and development pipeline. The products included in the sale were
         A-FIL(TM), AFIRM(R), BENZASHAVE(R), BETA-LIFTx(R), METED(R),
         PRAMEGEL(R), PACKER'S TAR SOAP(R), THERAMYCIN Z(R), and TEXACORT(R).

         Income Tax Expense

         Income tax expense in the 1999 nine months increased 61.0%, or $5.7
         million to $15.0 million from $9.3 million in the 1998 nine months. The
         provision for income taxes recorded for the 1999 nine months reflects
         management's estimate of the effective tax rate expected to be
         applicable for the full fiscal year. This estimate is reevaluated by
         management each quarter based upon forecasts of income before taxes for
         the year. The increase in income tax expense in the 1999 nine months,
         as compared to the 1998 nine months, is due to a increase in pre-tax
         income offset by the special charge for in-process research and
         development in fiscal 1998 for which no tax benefit was realized. A tax
         benefit is associated with the charge for in-process research and
         development incurred in the 1999 nine months as a result of the
         LOPROX(R) and TOPICORT(R) product acquisition. No income tax benefit is
         associated with the charge for in-process research and development
         incurred in the 1998 nine months as a result of the GenDerm
         acquisition. The decrease in the effective tax rate in the 1999 nine
         months, as compared to the 1998 nine months, is primarily attributable
         to an increase in tax exempt interest income.

         Net Income

         Net income in the 1999 nine months increased approximately $46.1
         million to $25.2 million from a net loss of $20.9 million in the 1998
         nine months. This increase is a result of the $35.4 million charge for
         in-process research and development to operating expenses relating to
         the Company's purchase of GenDerm in the 1998 nine months. Absent
         special charges, net income in the 1999 nine months increased 139.1%,
         or $20.2 million, to $34.7 million from $14.5 million in the 1998 nine
         months as a result of an increase in sales volume and a decrease in
         selling, general and administrative costs as a percentage of sales.

         LIQUIDITY AND CAPITAL RESOURCES

         At March 31, 1999 and June 30, 1998, the Company had cash equivalents
         and short-term investments of approximately $251.7 million and $237.9
         million, respectively. The Company's working capital was $260.3 million
         and $263.0 million at March 31, 1999 and June 30, 1998, respectively.
         The decrease in working capital is primarily attributable to a $22.0
         million payment and a short-term obligation of $22.0 million incurred
         by the Company as a result of the LOPROX(R) and TOPICORT(R) product
         acquisition offset by the Company's cash flow from operations of
         approximately $26.3 million, and the $9.8 million proceeds received as
         a result of the sale of products to Bioglan.


                                       19
<PAGE>   20
         At March 31, 1999 and June 30, 1998, the Company had inventories of
         $10.6 million and $9.2 million, respectively. The increase in the
         Company's inventory balances is primarily related to inventory
         associated with the LOPROX(R) and TOPICORT(R) products acquired by the
         Company in November 1998 and an increase in the Company's inventory
         held by third parties which the Company is required to record in its
         inventory balance and which fluctuates due to the timing of the third
         parties' manufacturing cycles which the Company does not control.

         At March 31, 1999 and June 30, 1998, the Company had accounts
         receivable of $25.3 million and $18.9 million, respectively. The
         increase in the Company's accounts receivable balance is primarily
         related to a 24.7% increase in revenue for the three months ended March
         31, 1999 as compared to the three months ended June 30, 1998.

         At March 31, 1999 and June 30, 1998, the Company had current
         liabilities of $37.9 million and $15.2 million, respectively. The
         increase is primarily due to the $22.0 million short-term obligation
         incurred by the Company as a result of the acquisition of the LOPROX(R)
         and TOPICORT(R) products.

         In accordance with various manufacturing agreements, the Company is
         required to provide manufacturers with pro forma estimated production
         requirements by product and in accordance with minimum production runs.
         From time to time, the Company may not take possession of all
         merchandise which has been produced by the manufacturer. However, the
         Company records its obligation to the manufacturer at the time finished
         inventory is produced.

         In November 1998, the Company agreed to license, with an option to
         purchase the LOPROX(R), TOPICORT(R) and A/T/S(R) products from Hoechst
         Marion Roussel. The Company, using cash reserves, paid $22.0 million
         and will make two additional annual payments of $22.0 million. Medicis
         then has the option to purchase the products for $16.5 million after
         three years. The $22.0 million due on the first anniversary of the
         transaction is recorded as a short-term obligation and the remaining
         $33.3 million is recorded as a long-term obligation. For accounting
         purposes, the Company has recorded the transaction as an acquisition.

         On January 12, 1999, the Company announced that its Board of Directors
         had approved a 3-for-2 stock split to be effected in the form of a 50%
         stock dividend. The dividend was paid on February 16, 1999 to holders
         of record of the Class A and Class B Common Stock on January 29, 1999.
         Holders of the Company's Class A and Class B Common Stock received one
         additional share of Common Stock for each two shares held. Adjustments
         due to the stock split were made under the Company's stock option plans
         and the Company's Shareholder Rights Plan.

         Inflation did not have a significant impact upon the results of the
         Company during the nine months ended March 31, 1999.


                                       20
<PAGE>   21
PART II. OTHER INFORMATION


ITEM 6.  EXHIBITS AND REPORTS ON FORMS 8-K

(a) Exhibits

         No. 3.3(a) AMENDED and RESTATED BY-LAWS of the COMPANY

         No. 27.1   Financial Data Schedule

         (see Note 3 to the Notes to the Condensed Consolidated Financial
         Statements incorporated herein for computation of Per Common Share
         results.)

(b) Reports on Form 8-K

         The Company filed the following report on Form 8-K:

         (i)      Current report on Form 8-K dated April 23, 1999 reporting
                  under Item 5 that the Company acquired all the issued and
                  outstanding common stock of Ucyclyd Pharma, Inc.


                                    SIGNATURE

                  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.


                                    MEDICIS PHARMACEUTICAL CORPORATION

Date: 5/14/99                       

                                        By: /s/ Jonah Shacknai 
                                            Jonah Shacknai
                                            Chairman and Chief Executive Officer

Date: 5/14/99                           By: /s/ Mark A. Prygocki, Sr.
                                            Mark A. Prygocki, Sr.
                                            Chief Financial Officer
                                            Secretary and Treasurer


                                       21