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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 March 31, 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 number: 001-13326
 MEDQUIST INC.
 (Exact name of registrant as specified in its charter)
 New Jersey
    
    22-2531298(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)1000 BISHOPS GATE BOULEVARDSUITE 300MOUNT LAUREL, NEW JERSEY
    
    08054-4632(Address of principal executive offices)
    
    (Zip Code)
 (856) 206-4000  (Registrants telephone number, including area code)
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




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##### 



MEDQUIST INC.
INDEX
 PagePART I. FINANCIAL INFORMATION
    
    1Item 1. Financial Statements
    
    1Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    11Item 4. Controls and Procedures
    
    20PART II. OTHER INFORMATION
    
    21Item 1. Legal Proceedings
    
    21Item 1A. Risk Factors
    
    23Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    23Item 3. Defaults Upon Senior Securities
    
    23Item 5. Other Information
    
    23Item 6. Exhibits
    
    23EX-10.4EX-10.5EX-31.1EX-31.2EX-32.1EX-32.2




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Item 1. Financial Statements
 MedQuist Inc. and Subsidiaries
Consolidated Statements of Operations
(In thousands, except per share amounts)
Unaudited
 Three months endedMarch 31,2010
    
    
    2009Net revenues
    
    $
    73,981
    
    
    $
    78,944Operating costs and expenses:Cost of revenues
    
    
    49,833
    
    
    
    53,868Selling, general and administrative
    
    
    8,797
    
    
    
    9,438Research and development
    
    
    2,281
    
    
    
    2,416Depreciation
    
    
    1,910
    
    
    
    2,552Amortization of intangible assets
    
    
    1,820
    
    
    
    1,511Cost of legal proceedings and settlements
    
    
    1,043
    
    
    
    1,924Acquisition related charges
    
    
    894
    
    
    
    Restructuring charges
    
    
    60
    
    
    
    Total operating costs and expenses
    
    
    66,638
    
    
    
    71,709Operating income
    
    
    7,343
    
    
    
    7,235Equity in income of affiliated company
    
    
    514
    
    
    
    72Interest income (expense), net
    
    
    (146
    )
    
    
    46Income before income taxes
    
    
    7,711
    
    
    
    7,353Income tax provision
    
    
    367
    
    
    
    499Net income
    
    $
    7,344
    
    
    $
    6,854Net income per share:Basic
    
    $
    0.20
    
    
    $
    0.18Diluted
    
    $
    0.20
    
    
    $
    0.18Weighted average shares outstanding:Basic
    
    
    37,556
    
    
    
    37,556Diluted
    
    
    37,556
    
    
    
    37,556
 The accompanying notes are an integral part of these consolidated financial statements.
 1




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MedQuist Inc. and Subsidiaries
Consolidated Balance Sheets
(In thousands)
Unaudited
 March 31,
    
    
    December 31,2010
    
    
    2009AssetsCurrent assets:Cash and cash equivalents
    
    $
    21,726
    
    
    $
    25,216Accounts receivable, net of allowance of $2,984 and $3,159, respectively
    
    
    43,897
    
    
    
    43,627Income tax receivable
    
    
    283
    
    
    
    772Other current assets
    
    
    5,299
    
    
    
    4,940Total current assets
    
    
    71,205
    
    
    
    74,555Property and equipment, net
    
    
    10,758
    
    
    
    11,772Goodwill
    
    
    40,723
    
    
    
    40,813Other intangible assets, net
    
    
    36,032
    
    
    
    36,307Deferred income taxes
    
    
    1,312
    
    
    
    1,396Other assets
    
    
    17,769
    
    
    
    9,818Total assets
    
    $
    177,799
    
    
    $
    174,661Liabilities and Shareholders EquityCurrent liabilities:Accounts payable
    
    $
    7,544
    
    
    $
    8,687Accrued expenses
    
    
    22,634
    
    
    
    22,848Accrued compensation
    
    
    10,495
    
    
    
    12,432Deferred income taxes
    
    
    4
    
    
    
    4Deferred revenue
    
    
    10,112
    
    
    
    10,854Total current liabilities
    
    
    50,789
    
    
    
    54,825Deferred income taxes
    
    
    3,424
    
    
    
    3,240Other non-current liabilities
    
    
    1,745
    
    
    
    1,848Commitments and contingencies (Note 8)Shareholders equity:Common stock  no par value; authorized 60,000 shares;
37,556 and 37,556 shares issued and outstanding, respectively
    
    
    237,896
    
    
    
    237,848Accumulated deficit
    
    
    (118,510
    )
    
    
    (125,854
    )Accumulated other comprehensive income
    
    
    2,455
    
    
    
    2,754Total shareholders equity
    
    
    121,841
    
    
    
    114,748Total liabilities and shareholders equity
    
    $
    177,799
    
    
    $
    174,661
 The accompanying notes are an integral part of these consolidated financial statements.
 2




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MedQuist Inc. and SubsidiariesConsolidated Statements of Cash Flows
(In thousands)
Unaudited
 Three months endedMarch 31,2010
    
    
    2009Operating activities:Net income
    
    $
    7,344
    
    
    $
    6,854Adjustments to reconcile net income to cash
provided by
operating activities:Depreciation and amortization
    
    
    3,730
    
    
    
    4,063Equity in income of affiliated company
    
    
    (514
    )
    
    
    (72
    )Deferred income tax provision
    
    
    182
    
    
    
    309Stock option expense
    
    
    48
    
    
    
    48Provision for (recovery of) doubtful accounts
    
    
    779
    
    
    
    (105
    )Loss on disposal of property and equipment
    
    
    
    
    
    
    24Changes in operating assets and liabilities:Accounts receivable
    
    
    (1,035
    )
    
    
    3,920Income tax receivable
    
    
    483
    
    
    
    (20
    )Other current assets
    
    
    (166
    )
    
    
    923Other non-current assets
    
    
    65
    
    
    
    (18
    )Accounts payable
    
    
    (819
    )
    
    
    392Accrued expenses
    
    
    (482
    )
    
    
    (1,739
    )Accrued compensation
    
    
    (1,938
    )
    
    
    930Deferred revenue
    
    
    (766
    )
    
    
    (1,424
    )Other non-current liabilities
    
    
    (84
    )
    
    
    63Net cash provided by operating activities
    
    $
    6,827
    
    
    $
    14,148Investing activities:Purchase of property and equipment
    
    
    (1,737
    )
    
    
    (1,393
    )Capitalized software
    
    
    (925
    )
    
    
    (766
    )Deposit for Spheris Acquisition
    
    
    (7,500
    )
    
    
    Net cash used in investing activities
    
    
    (10,162
    )
    
    
    (2,159
    )Financing activities:Debt issuance costs
    
    
    (195
    )
    
    
    Net cash used in financing activities
    
    
    (195
    )
    
    
    Effect of exchange rate changes
    
    
    40
    
    
    
    (53
    )Net increase (decrease) in cash and cash equivalents
    
    
    (3,490
    )
    
    
    11,936Cash and cash equivalents  beginning of period
    
    
    25,216
    
    
    
    39,918Cash and cash equivalents  end of period
    
    $
    21,726
    
    
    $
    51,854Supplemental cash flow information:Cash paid (recovered) for income taxes
    
    $
    (695
    )
    
    $
    (131
    )Accommodation payments paid with credits
    
    $
    
    
    
    $
    61
 The accompanying notes are an integral part of these consolidated financial statements.
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MedQuist Inc. & Subsidiaries
Notes to Consolidated Financial Statements
(In thousands, except for per share amounts)
Unaudited
 1. Basis of Presentation
   Recent Developments
 Recent Accounting Pronouncements
      2. Comprehensive income
  Three months ended March 31,2010
    
    
    2009Net income
    
    $
    7,344
    
    
    $
    6,854Foreign currency translation adjustment
    
    
    (299
    )
    
    
    (265
    )Comprehensive income
    
    $
    7,045
    
    
    $
    6,589
 3. Net Income per Share
  4




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MedQuist Inc. & Subsidiaries
Notes to Consolidated Financial Statements
(In thousands, except for per share amounts)
Unaudited
  Three months ended March 31,2010
    
    
    2009Net income
    
    $
    7,344
    
    
    $
    6,854Weighted average shares outstanding:Basic
    
    
    37,556
    
    
    
    37,556Effect of dilutive shares
    
    
    
    
    
    
    Diluted
    
    
    37,556
    
    
    
    37,556Net income per share:Basic
    
    $
    0.20
    
    
    $
    0.18Diluted
    
    $
    0.20
    
    
    $
    0.18
  4. Accrued Expenses
  March 31, 2010
    
    
    December 31, 2009Customer accommodations
    
    $
    11,477
    
    
    $
    11,635Other (no item exceeds 5% of current liabilities)
    
    
    11,157
    
    
    
    11,213Total accrued expenses
    
    $
    22,634
    
    
    $
    22,848
    Three months ended
    
    
    Year endedMarch 31, 2010
    
    
    December 31, 2009Beginning balance
    
    $
    11,635
    
    
    $
    12,055Payments and other adjustments
    
    
    (158
    )
    
    
    (317
    )Credits
    
    
    
    
    
    
    (103
    )Ending balance
    
    $
    11,477
    
    
    $
    11,635
 5




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MedQuist Inc. & Subsidiaries
Notes to Consolidated Financial Statements
(In thousands, except for per share amounts)
Unaudited
 2009 Restructuring Plan
  Three Months Ended
    
    
    Year EndedMarch 31, 2010
    
    
    December 31, 2009Beginning balance
    
    $
    2,064
    
    
    $
    Charge
    
    
    60
    
    
    
    2,810Cash paid
    
    
    (495
    )
    
    
    (746
    )Ending balance
    
    $
    1,629
    
    
    $
    2,064
  5. Cost of Legal Proceedings and Settlements
  Three months ended March 31,2010
    
    
    2009Legal fees
    
    $
    1,043
    
    
    $
    1,894Other professional fees
    
    
    
    
    
    
    30Total
    
    $
    1,043
    
    
    $
    1,924
  6. Income Taxes
    7. Credit Agreement
  6




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MedQuist Inc. & Subsidiaries
Notes to Consolidated Financial Statements
(In thousands, except for per share amounts)
Unaudited
   8. Commitments and Contingencies
 Customer Litigation
 Kaiser Litigation
    Kahn Putative Class Action
  7




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MedQuist Inc. & Subsidiaries
Notes to Consolidated Financial Statements
(In thousands, except for per share amounts)
Unaudited
      Reseller Arbitration Demand
  8




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MedQuist Inc. & Subsidiaries
Notes to Consolidated Financial Statements
(In thousands, except for per share amounts)
Unaudited
     SEC Investigations of Former Officers
  9. Related Party Transactions
    9




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MedQuist Inc. & Subsidiaries
Notes to Consolidated Financial Statements
(In thousands, except for per share amounts)
Unaudited
     10. Investment in A-Life Medical, Inc. (A-Life)
  11. Subsequent Events
   10




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MedQuist Inc. & Subsidiaries
Notes to Consolidated Financial Statements
(In thousands, except for per share amounts)
Unaudited
        
 Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
  
    
    each of the factors discussed in Item 1A, Risk Factors, of this report as well as risks discussed elsewhere in this report;
    
    each of the matters discussed in Part II, Item 1, Legal Proceedings;
    
    our ability to recruit and retain qualified medical transcriptionists (MTs) and other employees;
 11




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MedQuist Inc. & Subsidiaries
Notes to Consolidated Financial Statements
(In thousands, except for per share amounts)
Unaudited
 
    
    changes in law, including, without limitation, the impact HIPAA will have on our business;
    
    the impact of our new services and products on the demand for our existing services and products;
    
    our increased dependence on speech recognition technology, which we license, but do not own;
    
    our current dependence on medical transcription for a significant portion of our technology-enabled clinical documentation
services;
    
    our ability to expand our customer base;
    
    infringement on the proprietary rights of others;
    
    our ability to diversify into other businesses;
    
    our increased dependence on CBay Systems & Services, Inc. as the exclusive provider of medical transcription performed in
Asia, the current location of all our medical transcription and medical editing work performed outside of North America;
    
    our ability to effectively integrate the newly-acquired business and operations of Spheris;
    
    the effectiveness of Spheris internal controls, which we are in the process of evaluating;
    
    competitive pricing and service feature pressures in the clinical documentation industry and our response to those
pressures;
    
    our ability to operate the business given our restrictions under the GE Credit Agreement;
    
    difficulties relating to our significant management turnover; and
    
    general conditions in the economy and capital markets.
    12




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MedQuist Inc. & Subsidiaries
Notes to Consolidated Financial Statements
(In thousands, except for per share amounts)
Unaudited
 Executive Overview
 tm
 Recent Developments
  
    
    A shortage of qualified domestic medical transcriptionists
(MTs) and medical editors (MEs) has increased the demand
for offshore medical transcription services by healthcare
providers. This demand for qualified MTs and MEs, combined
with budgetary pressures experienced by healthcare
providers nationwide, has also caused many more healthcare
providers to evaluate and consider the use of offshore
medical transcription services.
    
    Several low cost providers have emerged and aggressively
moved into our market offering medical transcription
services (performed both domestically and offshore) at
prices significantly below our traditional price point.
While we believe the market for outsourced medical
transcription continues to expand, the growing acceptance
of utilizing offshore labor by healthcare providers has
further increased the competitive environment in the
medical transcription industry.
    
    Technological advances including speech recognition
products reduce the length of time required to transcribe
medical reports, in turn reducing the overall cost of
medical transcription services.
    
    Growing market penetration of EHR and certain other
technologies have eliminated or shortened the length of
certain work types produced through transcription.
  13




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MedQuist Inc. & Subsidiaries
Notes to Consolidated Financial Statements
(In thousands, except for per share amounts)
Unaudited
  
    
    Reductions in overhead and other administrative costs;
    
    Improvements in the quality and delivery speed of transcribed medical reports;
    
    Access to leading technologies, such as speech recognition technology, without development and investment risk;
    
    Implementation and management of a medical transcription system tailored to the providers specific requirements;
    
    Access to skilled MTs and MEs;
    
    Solutions for compliance with governmental and industry mandated privacy and security requirements; and
    
    Product offerings that interface with EHR initiatives.
  
    
    Revenues;
    
    Operating income;
    
    Net income per share;
    
    Adjusted earnings before interest, taxes, depreciation and amortization;
    
    Net cash provided by operating activities; and
    
    Days sales outstanding.
   Critical Accounting Policies, Judgments and Estimates
   14




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MedQuist Inc. & Subsidiaries
Notes to Consolidated Financial Statements
(In thousands, except for per share amounts)
Unaudited
 Valuation of Long-Lived and Other Intangible Assets and Goodwill:
   
    
    our net book value compared to our fair value;
    
    significant adverse economic and industry trends;
    
    significant decrease in the market value of the asset;
    
    the extent that we use an asset or changes in the manner that we use it;
    
    significant changes to the asset since we acquired it; and
    
    other changes in circumstances that potentially indicate all or a portion of the company will be sold.
 Deferred income taxes.
 Commitments and contingencies.
 Revenue recognition.
   Accounts receivable and allowance for doubtful accounts.
 15




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MedQuist Inc. & Subsidiaries
Notes to Consolidated Financial Statements
(In thousands, except for per share amounts)
Unaudited
    Customer Accommodation Program.
  Basis of Presentation
 Sources of Revenues
  Cost of Revenues
  Selling, General and Administrative (SG&A)
  Research and Development (R&D)
  Depreciation and Amortization
  16




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MedQuist Inc. & Subsidiaries
Notes to Consolidated Financial Statements
(In thousands, except for per share amounts)
Unaudited
 Legal Matters
  Consolidated Results of Operations
  Comparison of Three Months Ended March 31, 2010 and 2009
 Three
Months Ended March 31,2010
    
    

2009% of Net
    
    
    
    
    
    
    % of Net($
in thousands)
    

Amount
    
    

Revenues
    
    

Amount
    
    

Revenues
    
    

$
Change
    
    

%
ChangeNet revenues
    
    $
    73,981
    
    
    
    100.0
    %
    
    $
    78,944
    
    
    
    100.0
    %
    
    $
    (4,963
    )
    
    
    (6.3
    %)Operating costs and expenses:Cost of revenues
    
    
    49,833
    
    
    
    67.4
    %
    
    
    53,868
    
    
    
    68.2
    %
    
    
    (4,035
    )
    
    
    (7.5
    %)Selling, general and administrative
    
    
    8,797
    
    
    
    11.9
    %
    
    
    9,438
    
    
    
    12.0
    %
    
    
    (641
    )
    
    
    (6.8
    %)Research and development
    
    
    2,281
    
    
    
    3.1
    %
    
    
    2,416
    
    
    
    3.1
    %
    
    
    (135
    )
    
    
    (5.6
    %)Depreciation
    
    
    1,910
    
    
    
    2.6
    %
    
    
    2,552
    
    
    
    3.2
    %
    
    
    (642
    )
    
    
    (25.2
    %)Amortization of intangible assets
    
    
    1,820
    
    
    
    2.5
    %
    
    
    1,511
    
    
    
    1.9
    %
    
    
    309
    
    
    
    20.5
    %Cost of
legal proceedings and settlements
    
    
    1,043
    
    
    
    1.4
    %
    
    
    1,924
    
    
    
    2.4
    %
    
    
    (881
    )
    
    
    (45.8
    %)Acquisition related charges
    
    
    894
    
    
    
    1.2
    %
    
    
    
    
    
    
    
    
    
    
    894
    
    
    
    n.a.Restructuring charges
    
    
    60
    
    
    
    0.1
    %
    
    
    
    
    
    
    
    
    
    
    60
    
    
    
    n.a.Total operating costs and expenses
    
    
    66,638
    
    
    
    90.1
    %
    
    
    71,709
    
    
    
    90.8
    %
    
    
    (5,071
    )
    
    
    (7.1
    %)Operating income
    
    
    7,343
    
    
    
    9.9
    %
    
    
    7,235
    
    
    
    9.2
    %
    
    
    108
    
    
    
    1.5
    %Equity in income of affiliated company
    
    
    514
    
    
    
    0.7
    %
    
    
    72
    
    
    
    0.1
    %
    
    
    442
    
    
    
    613.9
    %Interest income (expense), net
    
    
    (146
    )
    
    
    (0.2
    %)
    
    
    46
    
    
    
    0.1
    %
    
    
    (192
    )
    
    
    (417.4
    %)Income before income taxes
    
    
    7,711
    
    
    
    10.4
    %
    
    
    7,353
    
    
    
    9.3
    %
    
    
    358
    
    
    
    4.9
    %Income tax provision
    
    
    367
    
    
    
    0.5
    %
    
    
    499
    
    
    
    0.6
    %
    
    
    (132
    )
    
    
    (26.5
    %)Net income
    
    $
    7,344
    
    
    
    9.9
    %
    
    $
    6,854
    
    
    
    8.7
    %
    
    $
    490
    
    
    
    7.1
    %
 Net revenues
  Cost of revenues
  
    
    reduced transcription costs of $1.9 million related to our increased use of speech recognition technology, which
reduces the payroll costs associated with the production of revenues and an increase in the use of outsourced
medical transcription volumes to our international labor partners;
    
    reduced costs of $2.8 million resulting from headcount reductions taken in 2009 to better align our overhead costs
with our lower revenue levels; offset by
    
    an increase of $0.7 million due to a one-time benefit in the 2009 period for the release of a prior period reserve.
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MedQuist Inc. & Subsidiaries
Notes to Consolidated Financial Statements
(In thousands, except for per share amounts)
Unaudited
  Selling, general and administrative
  Research & development
  Depreciation
  Amortization
  Cost of legal proceedings and settlements
  Equity in income of affiliated company
  Income tax provision
   18




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MedQuist Inc. & Subsidiaries
Notes to Consolidated Financial Statements
(In thousands, except for per share amounts)
Unaudited
 Liquidity and Capital Resources
   Subsequent Events
      19




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MedQuist Inc. & Subsidiaries
Notes to Consolidated Financial Statements
(In thousands, except for per share amounts)
Unaudited
    Off-Balance Sheet Arrangements
  
 Item 4. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Control Over Financial Reporting
  20




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PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
 Customer Litigation
 Kaiser Litigation
    Kahn Putative Class Action
   21




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Reseller Arbitration Demand
     22




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SEC Investigations of Former Officers
  
 Item 1A. Risk Factors
    We may pursue future transactions, which could require us to incur debt and assume contingent liabilities and expenses, and we may not be able to effectively integrate new operations.
    We may not be able to effectively integrate the operation of Spheris Inc. and the internal controls
of Spheris Inc. may not be effective.
  Our ability to operate the business given our restrictions under the GE Credit Agreement.
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 3. Defaults Upon Senior Securities
  
 Item 5. Other Information
  
 Item 6. Exhibits
 Exhibits
 No.
    
    Description10.1(1)
    
    Stock and Asset Purchase
Agreement, dated February 2, 2010,
between Spheris Holding II, Inc.,
Spheris Inc., Spheris Operations LLC,
Vianeta Communications, Spheris Leasing
LLC, Spheris Canada Inc., CBay Inc. and
MedQuist Inc.10.2(2)
    
    Stock and Asset Purchase
Agreement, dated April 15, 2010,
between Spheris Holding II, Inc.,
Spheris Inc., Spheris Operations LLC,
Vianeta Communications, Spheris Leasing
LLC, Spheris Canada Inc., CBay Inc. and
MedQuist Inc.10.3(3)
    
    Credit Agreement dated as April
22, 2010 among MedQuist Transcriptions,
Ltd. as Borrower, MedQuist Inc. as
Holdings, the Lenders and L/C Issuers
party thereto, and General Electric
Capital Corporation as Administrative
Agent and Collateral Agent,
CapitalSource Bank as Syndication
Agent, and Fifth Third Bank as
Documentation Agent.10.4
    
    MedQuist Transcriptions, Ltd. Subordinated Promissory Note dated April 22, 201010.5(#)
    
    Sales & Services Agreement dated March 9, 2010 by and between MedQuist, Inc. and CBay
Systems & Services, Inc.
 23




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##### Table of Contents



No.
    
    Description31.1
    
    Certification of Chief Executive
Officer required by Rule 13a-14(a) or
Rule 15d-14(a) of the Securities
Exchange Act of 1934, as adopted
pursuant to Section 302 of the
Sarbanes-Oxley Act of 200231.2
    
    Certification of Chief Financial
Officer required by Rule 13a-14(a) or
Rule 15d-14(a) of the Securities
Exchange Act of 1934, as adopted
pursuant to Section 302 of the
Sarbanes-Oxley Act of 200232.1
    
    Certification of Chief Executive
Officer pursuant to 18 U.S.C. 1350, as
adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 200232.2
    
    Certification of Chief Financial
Officer pursuant to 18 U.S.C. 1350, as
adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
 
 #
    
    Portions of this Exhibit are omitted and filed separately with the Secretary of the SEC pursuant
to a request for confidential treatment that has been filed with the SEC.(1)
    
    Incorporated by reference to our Current Report on Form 8-K filed with the SEC on February 4, 2010.(2)
    
    Incorporated by reference to our Current Report on Form 8-K filed with the SEC on April 21, 2010.(3)
    
    Incorporated by reference to our Current Report on Form 8-K filed with the SEC on April 28, 2010. 24




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##### Table of Contents



SIGNATURES
  MEDQUIST INC.Date: May 10, 2010
    /s/ Peter MasanottiPeter MasanottiPresident and Chief Executive Officer
(Principal Executive Officer)Date: May 10, 2010
    /s/ Dominick GolioDominick GolioChief Financial Officer
(Principal Financial Officer) 25




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##### Table of Contents



Exhibit Index
 No.
    
    Description10.4
    
    MedQuist Transcriptions, Ltd. Subordinated Promissory Note dated
April 22, 2010Sales & Services Agreement dated March 9, 2010 by
and between MedQuist, Inc. and CBay Systems & Services, Inc.10.5(#)
    
    Sales & Services Agreement dated March 9, 2010 by and between
MedQuist, Inc. and CBay Systems & Services, Inc.31.1
    
    Certification of Chief Executive Officer required by
Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of
1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act
of 200231.2
    
    Certification of Chief Financial Officer required by
Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of
1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act
of 200232.1
    
    Certification of Chief Executive Officer pursuant to 18 U.S.C.
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 200232.2
    
    Certification of Chief Financial Officer pursuant to 18 U.S.C.
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002
 
 #
    
    Portions of this Exhibit are omitted and filed separately with the Secretary of the SEC pursuant
to a request for confidential treatment that has been filed with the SEC. 26