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Basis of Presentation
9 Months Ended
Sep. 30, 2012
Basis of Presentation [Abstract]  
Basis of Presentation

Note 2 – Basis of Presentation

Going Concern and Management’s Plan – As of September 30, 2012, the Company had an accumulated deficit of approximately $44.5 million and reported a net loss of approximately $9.4 million for the nine months then ending. In addition, the Company used approximately $3.7 million in cash from operating activities from continuing operations during the nine months ending September 30, 2012. In August 2012, the Company executed a definitive agreement to purchase Foundation Surgery Affiliates, LLC and Foundation Surgical Hospital Affiliates, LLC (collectively “Foundation”) for 35 million shares of the Company’s common stock and a warrant for the purchase of 4 million shares of the Company’s common stock at an exercise price of $1.50 (assuming conversion of the preferred stock which was to be issued at closing). The Foundation acquisition has not closed and management does not believe that it will close in its current form due to certain external factors including the inability to obtain the consent of certain preferred interest holders of certain subsidiaries of Foundation. Management is working on an alternative structure for the Foundation transaction, but there is no assurance that the Foundation acquisition will be closed. On November 12, 2012, the Company executed a subscription agreement with Graymark Investments, LLC (doing business as Oklahoma Health Partners (“OHP”)) in which OHP agreed to purchase 1,444,445 shares of the Company’s common stock for $650,000 ($0.45 per share). The proceeds from OHP were received on November 13, 2012 and will be used to fund the operations of the Company. Including the stock proceeds from OHP, management estimates that the Company has enough cash to operate through December 31, 2012. Management also plans on raising equity capital or issuing additional debt in the near term to meet the Company’s additional cash needs in 2013. In addition, management has initiated a cost reduction plan that is estimated will save the Company in excess of $2 million in 2013. The cost reduction plan includes a reduction in the labor force and general corporate expenses as well as process improvements that will result in lower bad debt expense. During the fourth quarter of 2012, management also anticipates developing a plan to close certain non-profitable lab locations. Historically, management has been able to raise the capital necessary to fund the operation and growth of the Company, but there is no assurance that the Company will be successful in raising the necessary capital to fund the Company’s operations.

As noted in Note 6 – Borrowings, the Company’s Debt Service Coverage Ratio is less than 1.25 to 1 which will be the required ratio under the Company’s loan agreement with Arvest Bank for each quarterly period beginning after March 31, 2013. In addition, beginning on March 31, 2013, the Company must have Positive EBITDA (“earnings before interest, taxes, depreciation and amortization”), as defined by Arvest Bank, for the previous three month period. Since the Debt Service Coverage Ratio becomes effective in less than 12 months and it is unlikely that we will initially meet the requirement, the associated debt with Arvest Bank has been classified as current in the accompanying condensed consolidated balance sheets as of September 30, 2012. Historically, the Company has been successful in obtaining default waivers from Arvest Bank, but there is no assurance that Arvest Bank will waive any future defaults.

These uncertainties raise substantial doubt regarding the Company’s ability to continue as a going concern. The consolidated condensed financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

Reverse Stock Split – On June 3, 2011, the Company executed a reverse stock split of the Company’s common stock in a ratio of 1-for-4. The effect of the reverse split reduced the Company’s outstanding common stock shares from 34,126,022 to 8,531,506 shares as of the date of the reverse split. The accompanying condensed consolidated financial statements give effect to the reverse split as of the first date presented.