United States
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
  þ
    
    Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the quarterly period ended September 30, 2010
 or
 o
    
    Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the transition period from  to
 Commission File No. 001-11182
 BIOCLINICA, INC.
 (Exact Name of Registrant as Specified in Its Charter)
 Delaware
    
    11-2872047(State or Other Jurisdiction of
    
    (I.R.S. Employer Identification No.)Incorporation or Organization)826 Newtown-Yardley Road, Newtown, Pennsylvania
    
    18940-1721(Address of Principal Executive Offices)
    
    (Zip Code)
 (Registrants Telephone Number, Including Area Code)
  Yes: þ
    
    No: o
  Yes: o
    
    No: o
   Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(do not check if a smaller reporting company)
  Yes: o
    
    No: þ
  Class
    
    Number of SharesCommon Stock, $0.00025 par value
    

    15,184,937




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##### 



BIOCLINICA, INC. AND SUBSIDIARIES
 TABLE OF CONTENTS
 PagePART I. FINANCIAL INFORMATION.Item 1. Financial Statements
    
    
    1CONSOLIDATED BALANCE SHEETS (unaudited)
as of September 30, 2010 and December 31, 2009
    
    
    2CONSOLIDATED STATEMENTS OF INCOME (unaudited)
For the Three Months Ended September 30, 2010 and 2009
    
    
    3CONSOLIDATED STATEMENTS OF INCOME (unaudited)
For the Nine Months Ended September 30, 2010 and 2009
    
    
    4CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
For the Nine Months Ended September 30, 2010 and 2009
    
    
    5CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(unaudited) For the Three and Nine Months Ended September 30, 2010
and 2009
    
    
    7NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
    
    
    8Item 2. Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    20Overview
    
    
    20Forward Looking Statements
    
    
    21Recent Accounting Pronouncements
    
    
    22Results of Operations
    
    
    23Business Segments
    
    
    28Liquidity and Capital Resources
    
    
    28Changes to Critical Accounting Policies and Estimates
    
    
    31Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    31Item 4T. Controls and Procedures
    
    
    33PART II. OTHER INFORMATION.Item 1. Legal Proceedings
    
    
    34Item 1A. Risk Factors
    
    
    34Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    43Item 3. Defaults Upon Senior Securities
    
    
    43Item 4. (REMOVED AND RESERVED)
    
    
    43Item 5. Other Information
    
    
    43Item 6. Exhibits
    
    
    43SIGNATURES
    
    
    44
  -i-




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##### 



PART I. FINANCIAL INFORMATION .
 
 Item 1. Financial Statements.
    -1-




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##### 



BIOCLINICA, INC. AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
 September 30,
    
    
    December 31,(in thousands)
    
    2010
    
    
    2009ASSETSCurrent assets:Cash and cash equivalents
    
    $
    11,816
    
    
    $
    14,570Accounts receivable, net
    
    
    11,015
    
    
    
    10,966Prepaid expenses and other current assets
    
    
    2,490
    
    
    
    1,869Deferred income taxes
    
    
    3,748
    
    
    
    3,370Total current assets
    
    
    29,069
    
    
    
    30,775Property and equipment, net
    
    
    13,291
    
    
    
    9,040Intangibles, net
    
    
    2,596
    
    
    
    1,969Goodwill
    
    
    34,327
    
    
    
    32,933Deferred income tax
    
    
    229
    
    
    
    Other assets
    
    
    634
    
    
    
    620Total assets
    
    $
    80,146
    
    
    $
    75,337LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    3,830
    
    
    $
    3,899Accrued expenses and other current liabilities
    
    
    3,467
    
    
    
    4,134Deferred revenue
    
    
    13,129
    
    
    
    14,256Current liability for acquisition earn-out
    
    
    1,257
    
    
    
    1,184Current maturities of capital lease obligations
    
    
    36
    
    
    
    Total current liabilities
    
    
    21,719
    
    
    
    23,473Long-term liability for acquisition earn-out
    
    
    1,829
    
    
    
    1,657Long-term capital lease obligations
    
    
    158
    
    
    
    Deferred income tax
    
    
    1,831
    
    
    
    1,167Other liabilities
    
    
    874
    
    
    
    505Total liabilities
    
    $
    26,411
    
    
    $
    26,802Stockholders equity:Preferred stock- $0.00025 par value;
authorized 3,000,000 shares, 0 issued and
outstanding at September 30, 2010 and at
December 31, 2009
    
    
    
    
    
    
    Common stock  $0.00025 par value; authorized
36,000,000 shares, issued and outstanding
15,184,937 shares at September 30, 2010 and
14,394,374 shares at December 31, 2009
    
    
    4
    
    
    
    4Common stock consideration for earn-out
    
    
    1,309
    
    
    
    1,309Additional paid-in capital
    
    
    46,419
    
    
    
    43,104Retained earnings
    
    
    5,961
    
    
    
    4,039Accumulated other comprehensive income
    
    
    42
    
    
    
    79Total stockholders equity
    
    $
    53,735
    
    
    $
    48,535Total liabilities and stockholders equity
    
    $
    80,146
    
    
    $
    75,337
  -2-




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##### 



BIOCLINICA, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF INCOME
 For the Three Months endedSeptember 30,(in thousands, except per share data)
    
    2010
    
    
    2009Service revenues
    
    $
    15,814
    
    
    $
    14,146Reimbursement revenues
    
    
    2,352
    
    
    
    4,227Total revenues
    
    
    18,166
    
    
    
    18,373Cost and expenses:Cost of service revenues
    
    
    10,212
    
    
    
    8,937Cost of reimbursement revenues
    
    
    2,352
    
    
    
    4,227Sales and marketing expenses
    
    
    2,090
    
    
    
    1,617General and administrative expenses
    
    
    2,069
    
    
    
    1,759Amortization of intangible assets related to acquisition
    
    
    194
    
    
    
    113Mergers and acquisitions related costs
    
    
    119
    
    
    
    560Total cost and expenses
    
    
    17,036
    
    
    
    17,213Income from operations
    
    
    1,130
    
    
    
    1,160Interest income
    
    
    10
    
    
    
    5Interest expense
    
    
    (0
    )
    
    
    (1
    )Income before income tax
    
    
    1,140
    
    
    
    1,164Income tax provision
    
    
    ( 426
    )
    
    
    (463
    )Net income
    
    $
    714
    
    
    $
    701Basic income per common share
    
    $
    0.05
    
    
    $
    0.05Weighted average number of common shares
    
    
    15,174
    
    
    
    14,367Diluted income per common share
    
    $
    0.05
    
    
    $
    0.05Weighted average number of diluted shares
    
    
    15,796
    
    
    
    15,146
  -3-




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##### 



BIOCLINICA, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF INCOME
 For the Nine Months endedSeptember 30,(in thousands, except per share data)
    
    2010
    
    
    2009Service revenues
    
    $
    46,248
    
    
    $
    42,542Reimbursement revenues
    
    
    9,413
    
    
    
    9,964Total revenues
    
    
    55,661
    
    
    
    52,506Cost and expenses:Cost of service revenues
    
    
    29,109
    
    
    
    26,606Cost of reimbursement revenues
    
    
    9,413
    
    
    
    9,964Sales and marketing expenses
    
    
    6,865
    
    
    
    5,939General and administrative expenses
    
    
    6,057
    
    
    
    5,543Amortization of intangible assets related to acquisitions
    
    
    473
    
    
    
    344Mergers and acquisitions related costs
    
    
    635
    
    
    
    560Restructuring Charges
    
    
    
    
    
    
    466Total cost and expenses
    
    
    52,552
    
    
    
    49,422Income from operations
    
    
    3,109
    
    
    
    3,084Interest income
    
    
    18
    
    
    
    37Interest expense
    
    
    (7
    )
    
    
    (6
    )Income before income tax
    
    
    3,120
    
    
    
    3,115Income tax provision
    
    
    (1,198
    )
    
    
    (1,099
    )Net income
    
    $
    1,922
    
    
    $
    2,016Basic income per common share
    
    $
    0.13
    
    
    $
    0.14Weighted average number of common shares
    
    
    14,958
    
    
    
    14,346Diluted income per common share
    
    $
    0.12
    
    
    $
    0.13Weighted average number of diluted shares
    
    
    15,730
    
    
    
    15,161
  -4-




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##### 



BIOCLINICA, INC. AND SUBSIDIARIES
 
 CONSOLIDATED
STATEMENTS OF CASH FLOWS
 For the Nine Months endedSeptember 30,(in thousands)
    
    2010
    
    
    2009Cash flows from operating activities:Net income
    
    $
    1,922
    
    
    $
    2,016Adjustments to reconcile net income to net cash provided by
operating activities, net of acquisition:Depreciation and amortization
    
    
    2,501
    
    
    
    2,109Provision for deferred income taxes
    
    
    47
    
    
    
    (820
    )Bad debt (recovery) expense, net
    
    
    (9
    )
    
    
    84Stock based compensation expense
    
    
    791
    
    
    
    599Accretion of acquisition earn-out
    
    
    245
    
    
    
    Changes in operating assets and liabilities, net of acquisitions:Decrease in accounts receivable
    
    
    278
    
    
    
    1,573(Increase) decrease in prepaid expenses and other current assets
    
    
    (625
    )
    
    
    748Decrease in other assets
    
    
    17
    
    
    
    119Decrease in accounts payable
    
    
    (199
    )
    
    
    (1,204
    )(Decrease) increase in accrued expenses and other current
liabilities
    
    
    (1,136
    )
    
    
    133Decrease in deferred revenue
    
    
    (1,127
    )
    
    
    (1,407
    )Increase (decrease) in other liabilities
    
    
    368
    
    
    
    (80
    )Net cash provided by operating activities
    
    $
    3,073
    
    
    $
    3,870Cash flows from investing activities:Purchases of property and equipment
    
    $
    (2,296
    )
    
    $
    (1,506
    )Capitalized software development costs
    
    
    (3,783
    )
    
    
    (929
    )Net cash
received for sale of assets of discontinued operations
    
    
    
    
    
    
    500Cash paid for acquisitions, net of cash acquired
    
    
    
    
    
    
    (3,144
    )Net cash used in investing activities
    
    $
    (6,079
    )
    
    $
    (5,079
    )Cash flows from financing activities:Proceeds from sale/leaseback
    
    $
    195
    
    
    
    Payments under equipment lease obligations
    
    
    
    
    
    
    (43
    )Excess tax benefit related to stock options
    
    
    35
    
    
    
    Proceeds from exercise of stock options
    
    
    21
    
    
    
    27Net cash provided by (used in) financing activities
    
    $
    251
    
    
    $
    (16
    )Effect of exchange rate changes on cash
    
    
    1
    
    
    
    20Net (decrease) in cash and cash equivalents
    
    
    (2,754
    )
    
    
    (1,205
    )Cash and cash equivalents at beginning of period
    
    
    14,570
    
    
    
    14,265Cash and cash equivalents at end of period
    
    $
    11,816
    
    
    $
    13,060Supplemental disclosure of cash flow information:Cash paid during the period for interest
    
    $
    7
    
    
    $
    6Cash paid during the period for income taxes
    
    $
    1,802
    
    
    $
    185
  -5-




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##### 



BIOCLINICA, INC. AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 For the Nine Months EndedSeptember 30,2010
    
    
    2009Supplemental cash flow disclosure(in thousands)Non cash investing and financing activities:Increase in property, plant and equipment
acquisitions in accounts payable
    
    $
    125
    
    
    $
    0
 For the Nine Months EndedSeptember 30,2010
    
    
    2009Acquired business(in thousands)Accounts receivable
    
    $
    309
    
    
    $
    934Prepaid and other current assets
    
    
    
    
    
    
    55Property and equipment
    
    
    91
    
    
    
    Other assets
    
    
    33
    
    
    
    Customer relationships
    
    
    100
    
    
    
    Technology
    
    
    1,000Goodwill, including workforce
    
    
    1,394
    
    
    
    2,248Current liabilities assumed
    
    
    (459
    )
    
    
    (93
    )Common stock issued
    
    
    (2,468
    )
    
    
    Cash paid for acquired business, net of cash acquired
    
    $
    
    
    
    $
    3,144
  -6-




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##### 



BIOCLINICA, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
 For the Three Months EndedSeptember 30,2010
    
    
    2009Statement of comprehensive income(in thousands)Net income
    
    $
    714
    
    
    $
    701Equity adjustment from foreign currency translation
    
    
    166
    
    
    
    60Total comprehensive income
    
    $
    880
    
    
    $
    761
 For the Nine Months EndedSeptember 30,2010
    
    
    2009Statement of comprehensive income(in thousands)Net income
    
    $
    1,922
    
    
    $
    2,016Equity adjustment from foreign currency translation
    
    
    (37
    )
    
    
    (8
    )Total comprehensive income
    
    $
    1,885
    
    
    $
    2,008
  -7-




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##### 



BIOCLINICA, INC. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 1
 Interim Financial Statements
 Basis of Presentation.
    Acquisitions.
  Functional Currency.
 Foreign Currency Matters
 -8-




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##### 



BIOCLINICA, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 2  Stockholders Equity Rollforward
  OtherAdditional
    
    
    Common Stock
    
    
    Accumulated
    
    
    ComprehensiveCommon Stock
    
    
    Paid-in
    
    
    Consideration for
    
    
    (Deficit) Retained
    
    
    Gain
    
    
    Stockholders(in thousands)
    
    Shares
    
    
    Amount
    
    
    Capital
    
    
    Earn-out
    
    
    Earnings
    
    
    (Loss)
    
    
    EquityBalance at December 31, 2008
    
    
    14,341
    
    
    $
    4
    
    
    $
    42,270
    
    
    $
    
    
    
    $
    1,080
    
    
    $
    58
    
    
    $
    43,412Stock options exercised
    
    
    38
    
    
    
    
    
    
    
    31
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    31Restricted shares issued
    
    
    15
    
    
    
    
    
    
    
    (31
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (31
    )Stock consideration for
acquisitions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,309
    
    
    
    
    
    
    
    
    
    
    
    1,309Stock based compensation
    
    
    
    
    
    
    
    
    
    
    790
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    790Tax benefit on exercise of
stock options
    
    
    
    
    
    
    
    
    
    
    44
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    44Equity adjustment for
foreign currency translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21
    
    
    
    21Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,959
    
    
    
    
    
    
    
    2,959Balance at December 31, 2009
    
    
    14,394
    
    
    $
    4
    
    
    $
    43,104
    
    
    $
    1,309
    
    
    $
    4,039
    
    
    $
    79
    
    
    $
    48,535Stock options exercised
    
    
    213
    
    
    
    
    
    
    
    21
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21Stock consideration for
acquisitions
    
    
    578
    
    
    
    
    
    
    
    2,468
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,468Stock based compensation
    
    
    
    
    
    
    
    
    
    
    791
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    791Tax benefit on exercise of
stock options
    
    
    
    
    
    
    
    
    
    
    35
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    35Equity adjustment from
foreign currency translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (37
    )
    
    
    (37
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,922
    
    
    
    
    
    
    
    1,922Balance at September 30, 2010
    
    
    15,185
    
    
    $
    4
    
    
    $
    46,419
    
    
    $
    1,309
    
    
    $
    5,961
    
    
    $
    42
    
    
    $
    53,735
 Note 3  Earnings Per Share
  -9-




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BIOCLINICA, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Net income  basic and diluted
    
    $
    714
    
    
    $
    701
    
    
    $
    1,922
    
    
    $
    2,016Denominator  basic:Weighted average number
of common shares
    
    
    15,174
    
    
    
    14,367
    
    
    
    14,958
    
    
    
    14,346Basic income per common share
    
    $
    0.05
    
    
    $
    0.05
    
    
    $
    0.13
    
    
    $
    0.14Denominator  diluted:Weighted average number
of common shares
    
    
    15,174
    
    
    
    14,367
    
    
    
    14,958
    
    
    
    14,346Common share equivalents
of outstanding stock options
    
    
    394
    
    
    
    383
    
    
    
    453
    
    
    
    420Common share equivalents of
unrecognized compensation expense
    
    
    228
    
    
    
    396
    
    
    
    319
    
    
    
    395Weighted average number of
dilutive common equity shares
    
    
    15,796
    
    
    
    15,146
    
    
    
    15,730
    
    
    
    15,161Diluted income per
common share
    
    $
    0.05
    
    
    $
    0.05
    
    
    $
    0.12
    
    
    $
    0.13
  -10-




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##### 



BIOCLINICA, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 4  Commitments and Contingencies
   Note 5  Accounts Receivable and Allowance for Doubtful Accounts
  (in thousands)
    
    September 30, 2010
    
    
    December 31, 2009Billed trade accounts receivable
    
    $
    10,640
    
    
    $
    10,164Unbilled trade accounts receivable
    
    
    362
    
    
    
    747Other
    
    
    13
    
    
    
    55Total Receivables
    
    $
    11,015
    
    
    $
    10,966Allowance Rollforward (in thousands):Balance at January 1, 2010
    
    $
    9Additions
    
    
    0Write offs (Recoveries)
    
    
    (9
    )Balance at September 30, 2010
    
    $
    0
 -11-




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##### 



BIOCLINICA, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 6  Income Taxes
         -12-




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##### 



BIOCLINICA, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Note 7  Acquisitions
 2010 Acquisition
   Pro Forma Results.
 -13-




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##### 



BIOCLINICA, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Nine Months EndedSeptember 30,(in thousands except per share data)
    
    2010
    
    
    2009Total revenue
    
    $
    55,892
    
    
    $
    53,129Income from operations
    
    
    2,436
    
    
    
    829Net Income
    
    
    1,505
    
    
    
    557Basic earnings per share
    
    $
    0.10
    
    
    $
    0.04Diluted earnings per share
    
    $
    0.10
    
    
    $
    0.04
 Segment Reporting Intangibles
- Goodwill and Other
 Business Combinations
  TranSendaAccounts Receivable
    
    $
    309Property and Equipment
    
    
    91Other Assets
    
    
    33Other Liabilities
    
    
    (459
    )Customer Relationships
    
    
    100Technology
    
    
    1,000Goodwill, including Workforce
    
    
    1,394Total Fair Value of Purchase Price
    
    $
    2,468
  Fair Value Measurements
 -14-




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##### 



BIOCLINICA, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   2009 Acquisitions
   Pro Forma Results.
 -15-




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##### 



BIOCLINICA, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Nine MonthsEndedSeptember 30,(in thousands except per share data)
    
    2009Total revenue
    
    $
    55,581Income from operations
    
    
    3,320Net income
    
    
    2,168Basic earnings per share
    
    $
    0.15Diluted earnings per share:
    
    $
    0.14
   CardioNow
    
    
    TourtellotteCash
    
    $
    1,000
    
    
    $
    2,144Estimated earnout payments:
    
    
    Contingent consideration to be settled in cash
    
    
    
    
    
    
    2,656Contingent consideration to be settled in stock
    
    
    
    
    
    
    1,300Working capital adjustment
    
    
    
    
    
    
    94Total purchase price
    
    $
    1,000
    
    
    $
    6,194
 -16-




---



##### 



BIOCLINICA, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  CardioNow
    
    
    TourtellotteAccounts Receivable
    
    
    
    
    
    $
    934Other Assets
    
    
    
    
    
    
    55Other Liabilities
    
    
    
    
    
    
    (93
    )Customer Relationships
    
    
    
    
    
    
    393Goodwill, including Workforce
    
    $
    1,000
    
    
    
    4,905Total Fair Value of Purchase Price
    
    $
    1,000
    
    
    $
    6,194
     Fair value at
    
    
    
    
    
    Fair value atSeptember 15, 2009
    
    
    Earn out
accretion
    
    
    September 30, 2010Cash contingent
consideration
    
    $
    2,747,000
    
    
    $
    339,000
    
    
    $
    3,086,000
  Mergers and acquisition related costs
  -17-




---



##### 



BIOCLINICA,
INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
  Note 8
 Intangible Assets
  September 30,
    
    
    Estimated(in thousands)
    
    2010
    
    
    Useful LifeAmortized intangible assets:Technology
    
    $
    1,843
    
    
    5 yearsTrademarks
    
    
    48
    
    
    5 yearsCustomer backlog
    
    
    2,112
    
    
    
    3 to 7 yearsNon-competition agreement
    
    
    349
    
    
    
    2 to 3 years4,352Accumulated amortization
    
    
    (1,756
    )$
    2,596Unamortized intangible assets:Goodwill
    
    $
    34,327
  Year Ending(in thousands)
    
    December 31,Remainder of 2010
    
    $
    1652011
    
    
    6232012
    
    
    5342013
    
    
    3372014
    
    
    3092015 and beyond
    
    
    628$
    2,596
  (in thousands)Balance at December 31, 2009
    
    $
    32,933Acquisition of business
    
    
    1,394Balance at September 30, 2010
    
    $
    34,327
 -18-




---



##### 



BIOCLINICA,
INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 9
 Capital lease obligations
  -19-




---



##### 



Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of
Operations.
 
 Overview
  Market for our Services
  Sales and Backlog
    -20-




---



##### 



Acquisitions
   
 Forward Looking Statements
  -21-




---



##### 



Recent Accounting Pronouncements
  -22-




---



##### 



Results of Operations
 Three Months Ended September 30, 2010 and 2009
 Three
    
    
    
    
    
    
    ThreeMonths
    
    
    
    
    
    
    Monthsended
    
    
    % of
    
    
    ended
    
    
    % ofSeptember
    
    
    Total
    
    
    September
    
    
    Total
    
    
    
    
    
    
    %(in thousands)
    
    30, 2010
    
    
    Revenue
    
    
    30, 2009
    
    
    Revenue
    
    
    $ Change
    
    
    ChangeService revenues
    
    $
    15,814
    
    
    
    87.1
    %
    
    $
    14,146
    
    
    
    77.0
    %
    
    $
    1,668
    
    
    
    11.8
    %Reimbursement revenues
    
    
    2,352
    
    
    
    12.9
    %
    
    
    4,227
    
    
    
    23.0
    %
    
    
    (1,875
    )
    
    
    (44.4
    )%Total revenues
    
    
    18,166
    
    
    
    100.0
    %
    
    
    18,373
    
    
    
    100.0
    %
    
    
    (207
    )
    
    
    (1.1
    )%Cost and expenses:Cost of service revenues
    
    
    10,212
    
    
    
    56.2
    %
    
    
    8,937
    
    
    
    48.6
    %
    
    
    1,275
    
    
    
    14.3
    %Cost of reimbursement revenues
    
    
    2,352
    
    
    
    12.9
    %
    
    
    4,227
    
    
    
    23.0
    %
    
    
    (1,875
    )
    
    
    (44.4
    )%Sales and marketing expenses
    
    
    2,090
    
    
    
    11.5
    %
    
    
    1,617
    
    
    
    8.8
    %
    
    
    473
    
    
    
    29.3
    %General and administrative expenses
    
    
    2,069
    
    
    
    11.4
    %
    
    
    1,759
    
    
    
    9.6
    %
    
    
    310
    
    
    
    17.6
    %Amortization of intangible assets
related to
acquisitions
    
    
    194
    
    
    
    1.1
    %
    
    
    113
    
    
    
    0.6
    %
    
    
    81
    
    
    
    71.7
    %Mergers and acquisitions related costs
    
    
    119
    
    
    
    0.7
    %
    
    
    560
    
    
    
    3.0
    %
    
    
    (441
    )
    
    
    (78.8
    )%Total cost and expenses
    
    
    17,036
    
    
    
    93.8
    %
    
    
    17,213
    
    
    
    93.6
    %
    
    
    (177
    )
    
    
    (1.0
    )%Income from operations
    
    
    1,130
    
    
    
    6.2
    %
    
    
    1,160
    
    
    
    6.4
    %
    
    
    (30
    )
    
    
    (2.6
    )%Interest income
    
    
    10
    
    
    
    0.1
    %
    
    
    5
    
    
    
    0.0
    %
    
    
    5
    
    
    
    100.0
    %Interest expense
    
    
    
    
    
    
    0.0
    %
    
    
    (1
    )
    
    
    0.0
    %
    
    
    1
    
    
    
    (100.0
    )%Income before income tax
    
    
    1,140
    
    
    
    6.3
    %
    
    
    1,164
    
    
    
    6.4
    %
    
    
    (24
    )
    
    
    (2.1
    )%Income tax provision
    
    
    (426
    )
    
    
    -2.3
    %
    
    
    (463
    )
    
    
    (2.5
    )%
    
    
    37
    
    
    
    (8.0
    )%Net income
    
    $
    714
    
    
    
    4.0
    %
    
    $
    701
    
    
    
    3.9
    %
    
    $
    13
    
    
    
    1.9
    %
  -23-




---



##### 



-24-




---



##### 



-25-




---



##### 



Nine Months Ended September 30, 2010 and 2009
 NineNine Months
    
    
    
    
    
    
    MonthsEnded
    
    
    
    
    
    
    Ended
    
    
    % ofSeptember 30,
    
    
    % of
    
    
    September 30,
    
    
    Total(in thousands)
    
    2010
    
    
    Total Revenue
    
    
    2009
    
    
    Revenue
    
    
    $ Change
    
    
    % ChangeService revenues
    
    $
    46,248
    
    
    
    83.1
    %
    
    $
    42,542
    
    
    
    81.0
    %
    
    $
    3,706
    
    
    
    8.7
    %Reimbursement revenues
    
    
    9,413
    
    
    
    16.9
    %
    
    
    9,964
    
    
    
    19.0
    %
    
    
    (551
    )
    
    
    (5.5
    )%Total revenues
    
    
    55,661
    
    
    
    100.0
    %
    
    
    52,506
    
    
    
    100.0
    %
    
    
    3,155
    
    
    
    6.0
    %Cost and expenses:Cost of service revenues
    
    
    29,109
    
    
    
    52.3
    %
    
    
    26,606
    
    
    
    50.7
    %
    
    
    2,503
    
    
    
    9.4
    %Cost of reimbursement revenues
    
    
    9,413
    
    
    
    16.9
    %
    
    
    9,964
    
    
    
    19.0
    %
    
    
    (551
    )
    
    
    (5.5
    )%Sales and marketing expenses
    
    
    6,865
    
    
    
    12.3
    %
    
    
    5,939
    
    
    
    11.3
    %
    
    
    926
    
    
    
    15.6
    %General and administrative expenses
    
    
    6,057
    
    
    
    10.9
    %
    
    
    5,543
    
    
    
    10.6
    %
    
    
    514
    
    
    
    9.3
    %Amortization of intangible assets
related to acquisitions
    
    
    473
    
    
    
    0.8
    %
    
    
    344
    
    
    
    0.7
    %
    
    
    129
    
    
    
    37.5
    %Mergers and acquisitions related
costs
    
    
    635
    
    
    
    1.1
    %
    
    
    560
    
    
    
    1.1
    %
    
    
    75
    
    
    
    13.4
    %Restructuring costs
    
    
    
    
    
    
    0.0
    %
    
    
    466
    
    
    
    0.9
    %
    
    
    (466
    )
    
    
    (100.0
    )%Total cost and expenses
    
    
    52,552
    
    
    
    94.3
    %
    
    
    49,422
    
    
    
    94.3
    %
    
    
    3,130
    
    
    
    6.3
    %Income from operations
    
    
    3,109
    
    
    
    5.7
    %
    
    
    3,084
    
    
    
    5.7
    %
    
    
    25
    
    
    
    0.8
    %Interest income
    
    
    18
    
    
    
    0.0
    %
    
    
    37
    
    
    
    0.1
    %
    
    
    (19
    )
    
    
    (51.4
    )%Interest expense
    
    
    (7
    )
    
    
    0.0
    %
    
    
    (6
    )
    
    
    0.0
    %
    
    
    (1
    )
    
    
    16.7
    %Income before income tax
    
    
    3,120
    
    
    
    5.7
    %
    
    
    3,115
    
    
    
    5.8
    %
    
    
    5
    
    
    
    0.2
    %Income tax provision
    
    
    (1,198
    )
    
    
    (2.2
    )%
    
    
    (1,099
    )
    
    
    2.1
    %
    
    
    (99
    )
    
    
    9.0
    %Net income
    
    
    1,922
    
    
    
    3.5
    %
    
    
    2,016
    
    
    
    3.7
    %
    
    
    (94
    )
    
    
    (4.7
    )%
    -26-




---



##### 



-27-




---



##### 



Business Segments and Geographic Information
   
 Liquidity and Capital Resources
  Statement of Cash Flow for the nine months ended September 30, 2010 compared to September 30, 2009
 Nine Months
    
    
    Nine MonthsEnded
    
    
    Ended(in thousands)
    
    September 30, 2010
    
    
    September 30, 2009Net cash provided by operating activities
    
    $
    3,073
    
    
    $
    3,870Net cash used in investing activities
    
    $
    (6,079
    )
    
    $
    (5,079
    )Net cash provided by (used in) financing activities
    
    $
    251
    
    
    $
    (16
    )
   -28-




---



##### 



-29-




---



##### 



Payments Due By Period(in thousands)
    
    
    
    
    
    Less than 1
    
    
    
    
    
    
    
    
    
    
    More thanContractual obligations
    
    Total
    
    
    year
    
    
    1-3 years
    
    
    3-5 years
    
    
    5 yearsFacility rent operating leases
    
    $
    21,173,000
    
    
    $
    2,598,000
    
    
    $
    5,743,000
    
    
    $
    5,055,000
    
    
    $
    7,777,000Capital lease
    
    
    194,000
    
    
    
    36,000
    
    
    
    78,000
    
    
    
    80,000Employment agreements
    
    
    874,000
    
    
    
    720,000
    
    
    
    154,000
    
    
    
    
    
    
    
    Earn-outs for Tourtellotte
acquisition
    
    
    3,257,000
    
    
    
    1,257,000
    
    
    
    2,000,000
    
    
    
    
    
    
    
    Total contractual cash
obligations
    
    $
    25,498,000
    
    
    $
    4,611,000
    
    
    $
    7,975,000
    
    
    $
    5,135000
    
    
    $
    7,777,000
      
    
    our ability to gain new client contracts;
    
    project cancellations;
    
    the variability of the timing of payments on existing client contracts; and
    
    other changes in our operating assets and liabilities.
  -30-




---



##### 



Changes to Critical Accounting Policies and Estimates
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk.
 Interest Rate Risk
  Foreign Currency Risk
   -31-




---



##### 



-32-




---



##### 



Item 4T. Controls and Procedures.
 Evaluation of Disclosure Controls and Procedures.
 Changes in internal control over financial reporting
 -33-




---



##### 



PART II. OTHER INFORMATION .
 
 Item 1. Legal Proceedings.
  
 Item 1A. Risk Factors.
  Risks Related to Our Company and Business
 We may incur financial losses because contracts may be delayed or terminated or reduced in scope
for reasons beyond our control.
  
    
    unexpected or undesired clinical results;
    
    the clients decision to terminate the development of a particular product or to end a
particular study;
    
    insufficient patient enrollment in a study;
    
    insufficient investigator recruitment;
    
    failure to perform our obligations under the contract; or
    
    the failure of products to satisfy safety requirements.
    The recent economic downturn may adversely impact our ability to grow our business.
 -34-




---



##### 



We depend on a small number of industries and clients for all of our business, and the loss of one
such significant client could cause revenues to drop quickly and unexpectedly.
  
    
    our clients businesses experience financial problems or are affected by a general
economic downturn;
    
    consolidation in the pharmaceutical, biotechnology or medical device industries leads to
a smaller client base for us; or
    
    clients reduce their research and development expenditures.
  Our contracted/committed backlog may not be indicative of future results.
  
    
    the variable size and duration of the projects (some are performed over several years);
    
    the loss or delay of projects;
    
    the change in the scope of work during the course of a project; and
    
    the cancellation of such contracts by our clients.
  We made one acquisition in the first quarter 2010, two acquisitions in the third quarter of 2009,
and may engage in future acquisitions, which may be expensive and time consuming, and from which we
may not realize anticipated benefits.
  -35-




---



##### 



Loss of key personnel, or failure to attract and retain additional personnel, may cause the success
and growth of our business to suffer.
  Our revenues, earnings and operating costs are exposed to exchange rate fluctuations.
  We may be required to record additional significant charges to earnings if our goodwill becomes
impaired.
  -36-




---



##### 



We may be unable to adequately protect, and we may incur significant costs in defending, our
intellectual property and other proprietary rights.
  Risks Related to Our Industry
 Our failure to compete effectively in our industry could cause our revenues to decline.
  
    
    consultative and clinical trials design capabilities;
    
    reputation for on-time quality performance;
    
    expertise and experience in specific therapeutic areas;
    
    the scope of service offerings;
    
    strength in various geographic markets;
    
    the price of services;
    
    ability to acquire, process, analyze and report data in a time-saving and accurate
manner;
    
    ability to manage large-scale clinical trials both domestically and internationally;
    
    our size; and
    
    the service and product offerings of our competitors.
   -37-




---



##### 



Changes in outsourcing trends in the pharmaceutical and biotechnology industries could adversely
affect our operating results and growth rate.
   Consolidation among our customers could cause us to lose customers, decrease the market for our
products and result in a reduction of our revenues.
  The recent economic downturn coupled with the current regulatory environment could have a negative
impact on the pharmaceutical, biotechnology and medical device industries.
  -38-




---



##### 



Failure to comply with existing regulations could result in increased costs to complete clinical
trials.
  We may be affected by health care reform.
    Changes in governmental regulation could decrease the need for the services we provide, which would
negatively affect our future business opportunities.
  If governmental agencies do not accept the data and analyses generated by our services, the need
for our services would be eliminated or substantially reduced.
 -39-




---



##### 



Our software products and hosted solutions are at varying stages of market acceptance and the
failure of any of our products to achieve or maintain wide acceptance would harm our operating
results.
  
 
 
 
 
  We may be exposed to liability claims as a result of our involvement in clinical trials.
  -40-




---



##### 



Risks Related to Our Common Stock
 Your percentage ownership and voting power and the price of our common stock may decrease as a
result of events that increase the number of our outstanding shares.
  Common stock outstanding
    
    
    15,185Common stock issuable upon:Exercise of options which are outstanding
    
    
    1,797Exercise of options which have not been granted
    
    
    1,110Restricted stock units outstanding
    
    
    373Total common stock outstanding assuming exercise or conversion of
all of the above
    
    
    18,465
  Shares of our common stock eligible for public sale may have a negative impact on its market price.
   There are a limited number of stockholders who have significant control over our common stock,
allowing them to have significant influence over the outcome of all matters submitted to our
stockholders for approval, which may conflict with our interests and the interests of our other
stockholders.
  -41-




---



##### 



Because we do not intend to pay dividends, stockholders will benefit from an investment in our
common stock only if it appreciates in value.
  Trading in our common stock may be volatile, which may result in substantial declines in its market
price.
  
    
    operating results;
    
    analysts reports;
    
    market conditions in the industry;
    
    changes in governmental regulations; and
    
    changes in general conditions in the economy or the financial markets.
   Certain provisions of our charter and Delaware law could make a takeover difficult and may prevent
or frustrate attempts by our stockholders to replace or remove our management team.
  -42-




---



##### 



Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
  
 Item 3. Defaults Upon Senior Securities.
  
 Item 4. (Removed and Reserved)
 
 Item 5. Other Information.
  
 Item 6. Exhibits.
 31.1
    
    Certification of principal executive officer
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed
herewith).31.2
    
    Certification of principal financial and
accounting officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).32.1
    
    Certification of principal executive officer
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C.
1350 (furnished herewith).32.2
    
    Certification of principal financial and
accounting officer pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, 18 U.S.C. 1350 (furnished herewith).
 -43-




---



##### 



BIOCLINICA, INC.DATE:   November 8, 2010
    By:
    /s/ Mark L. WeinsteinMark L. Weinstein,President and Chief Executive Officer 
(Principal Executive Officer)DATE: November 8, 2010
    By:
    /s/ Ted I. KaminerTed I. Kaminer,Executive Vice President of Finance
and Administration and Chief Financial Officer
(Principal Financial and Accounting Officer) -44-