424B4 1 t68491_424b4.htm 424B4

Filed Pursuant to Rule 424(b)(4)
Registration No. 333-168831


10,300,000 Shares



ExamWorks Group, Inc.

Common Stock

This is the initial public offering of shares of common stock of ExamWorks Group, Inc.

ExamWorks is offering 7,745,114 of the shares to be sold in the offering. The selling stockholders identified in this prospectus are offering an additional 2,554,886 shares. ExamWorks will not receive any of the proceeds from the sale of the shares being sold by the selling stockholders.

Prior to this offering, there has been no public market for the common stock. The New York Stock Exchange has authorized the listing of the common stock under the symbol “EXAM.”

See “Risk Factors” beginning on page 11 to read about factors you should consider before buying shares of the common stock.

Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.


	Per Share		Total

Initial public offering price	$	16.00	$	164,800,000
Underwriting discount	$	1.12	$	11,536,000
Proceeds, before expenses, to ExamWorks	$	14.88	$	115,247,296
Proceeds, before expenses, to the selling stockholders	$	14.88	$	38,016,704

To the extent that the underwriters sell more than 10,300,000 shares of common stock, the underwriters have the option to purchase up to an additional 1,545,000 shares from us at the initial public offering price less the underwriting discount.

This is a firm commitment underwritten offering. The underwriters expect to deliver the shares against payment in New York, New York on November 2, 2010.


Goldman, Sachs & Co.	Credit Suisse	Barclays Capital

William Blair & Company

Needham & Company, LLC

Prospectus dated October 27, 2010.

Request for IME Services

IME Referral Sources

Insurance Companies

Self-Insureds

State Funds

Government Agencies

Third-Party Administrators

Legal Professionals

ExamWorks IME Services

ExamWorks Review Services

Schedule Examination

Conduct Peer, Bill and
Utilization Reviews

Medical Panel

Identify Physician by Specialty

Assign Credentialed Physician

Assemble All Medical Records

Conduct Examination

Quality Assurance

Final Report

TABLE OF CONTENTS



		Page

Prospectus Summary		1
Risk Factors		10
Forward-Looking Statements		21
Use of Proceeds		22
Dividend Policy		23
Capitalization		24
Dilution		25
Unaudited Pro Forma Condensed Combined Financial Information		27
Selected Consolidated Financial Data		38
Management’s Discussion and Analysis of Financial Condition and Results of Operations		40
Business		62
Management and Board of Directors		76
Executive Compensation		85
Principal and Selling Stockholders		94
Certain Relationships and Related Party Transactions		99
Description of Capital Stock		101
Shares Eligible for Future Sale		105
Material U.S. Federal Tax Considerations		107
Underwriting		111
Legal Matters		115
Experts		115
Where You Can Find More Information		116
Index to Consolidated Financial Statements		F-1

Through and including November 21, 2010 (the 25th day after the date of this prospectus), all dealers effecting transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to a dealer’s obligation to deliver a prospectus when acting as an underwriter and with respect to an unsold allotment or subscription.

We and the selling stockholders have not authorized anyone to provide any information or to make any representations other than those contained in this prospectus or in any free writing prospectuses we have prepared. Neither we nor the selling stockholders take responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. This prospectus is an offer to sell only the shares offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus is current only as of its date.

Industry and market data used throughout this prospectus were obtained through our research and surveys and studies conducted by third parties as well as industry and general publications. Association of Workers’ Compensation Boards of Canada, Centers for Medicare and Medicaid Services, Insurance Board of Canada, National Council on Compensation Insurance, National Health Care Anti-Fraud Association, PricewaterhouseCoopers, National Association of Insurance Commissioners Property and Casualty Statement Schedule P 2003-2009 and SEAK, Inc. are the primary sources for such third-party industry and market data. Some data and other information are also based on our good faith estimates, which are derived from our knowledge of the IME market, our review and analysis of relevant market data and internal surveys and independent sources. Although we believe that these sources are credible, we have not independently verified any of the data from third-party sources nor have we ascertained any underlying economic assumptions relied upon therein. While we are not aware of any misstatements regarding the industry and market data presented herein, estimates involve risks and uncertainties and are subject to change based on various factors, including those discussed under the heading “Risk Factors.”

ExamWorks is a registered trademark of ExamWorks, Inc. Solely for convenience, our ExamWorks trademark may appear in this prospectus without the ® symbol, but such references are not intended, to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights to the ExamWorks trademark.

PROSPECTUS SUMMARY

This summary highlights certain information contained elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our common stock. You should carefully read the entire prospectus, including the section entitled “Risk Factors” and our financial statements and related notes, before you decide whether to invest in our common stock. If you invest in our common stock, you are assuming a high degree of risk. See the section entitled “Risk Factors.” References to “we,” “our,” “us,” “Company,” or “ExamWorks” refer to ExamWorks Group, Inc. and its consolidated subsidiaries. Unless otherwise indicated, industry data are derived from publicly available sources, which we have not independently verified.

Overview

ExamWorks is a leading provider of independent medical examinations, or “IMEs”, peer and bill reviews, and related services, which include, litigation support services, administrative support services, and medical record retrieval services, and which we collectively refer to as IME services or the IME industry. We provide these IME services through our medical panel of approximately 13,500 independently contracted, credentialed physicians and other medical providers. Our clients include property and casualty insurance carriers, law firms, third-party claim administrators, and government agencies that use independent services to confirm the veracity of claims by sick or injured individuals for workers’ compensation, automotive, personal injury liability and disability insurance coverage. We help our clients manage costs and enhance their risk management processes by verifying the validity, nature, cause and extent of claims, identifying fraud and providing fast, efficient and quality IME services.

We provide our clients with the local presence, expertise and broad geographic coverage they increasingly require. Our size and geographic reach give our clients access to our medical panel and proprietary information technology infrastructure that has been specifically designed to streamline the complex process of coordinating referrals, scheduling appointments, complying with regulations and client reporting. Our primary service is to provide IMEs that give our clients authoritative and accurate answers to questions regarding the nature and permanency of medical conditions or personal injury, their cause and appropriate treatment. Additionally, we provide peer and bill reviews, which consist of medical opinions by members of our medical panel without conducting physical exams, and the review of physician and hospital bills to examine medical care rendered and its conformity to accepted standards of care. On a pro forma basis for acquisitions completed to date, we provided in excess of 344,000 IMEs and reviews in the twelve months ended September 30, 2010.

The qualifications, experience and availability of physicians and other medical providers are critical to the IME industry, as they are the primary determinants of the speed and quality with which IME services are performed. We provide our physicians and other medical providers with seamless document management, scheduling, transcription and tracking systems, helping them increase efficiency and optimize the number of IME services they can conduct based on their availability. Our ability to minimize administrative burden and schedule appointments efficiently encourages physicians and other medical providers to perform IME services through us. Based on client and physician feedback, we believe our medical panel effectively meets our clients’ needs and represents an important competitive advantage.

On July 14, 2008, we acquired three IME businesses in New York, New Jersey and Texas. As of October 1, 2010, we acquired an additional 24 IME businesses including two IME businesses in Canada, one IME business in the United Kingdom and the foremost provider of software solutions to the IME industry. As a result of our corporate infrastructure and scale, our acquired businesses have been able to increase revenues and improve operating margins post acquisition. In addition, we have developed and refined our services by identifying and integrating processes from acquired businesses throughout our entire organization that require accountability, set clear sales goals, and track progress effectively. Our geographic reach, scale, brand recognition, long-standing industry relationships, management experience and capital resources position us as an acquiror of choice and give us a distinct advantage that we believe is difficult for our traditional industry competitors to emulate and new market entrants to achieve.

Our revenues consist primarily of fees per IME service performed. Our fees vary by physician/medical provider, specialty and type of service. Pro forma for acquisitions completed through October 1, 2010, we had revenues of $207.4 million and $170.4 million for the year ended December 31, 2009 and the nine months ended September 30, 2010, respectively. See “Unaudited Pro Forma Condensed Combined Financial Information.” Our primary costs are the payments made to physicians and other medical providers on our medical panel. Our costs are variable as members of our medical panel are independent contractors, allowing us to maintain and manage our operating margins more effectively. We have long-standing relationships with clients, resulting in consistent, recurrent demand for our services.

Industry Opportunity

We believe the IME industry represented sales volumes in 2009 of approximately $4 billion in the U.S., $0.6 billion in Canada and $0.5 billion in the United Kingdom based on our analysis of available data reported by the U.S. National Association of Insurance Commissioners, the Insurance Bureau of Canada, the Association of Workers’ Compensation Boards of Canada and the Association of British Insurers regarding the number of claims made in 2009 for which IME services may be requested in insurance lines we service, the estimated number of IME providers, the estimated average price for IMEs and our knowledge of the IME market, our competitors and potential acquisition targets.

The following clients routinely request IME services:


Clients		Description


Insurance Companies	Mainly claims adjusters and in-house counsel for major insurance companies covering workers’ compensation, automotive, personal injury liability and disability insurance claims.

Law Firms	Attorneys who request IME services based on specific claims for insurance carriers.

Third-Party Claim Administrators (“TPA”)	Process claims and administer benefits for large self-insured corporations that outsource claims management.

Government Agencies	Government agencies across the federal, state and local levels (e.g., U.S. Department of Labor and Health Canada).

State Funds	State-run payors that provide mandatory workers’ compensation insurance to companies.

The IME industry is highly fragmented, consisting of an estimated 500 companies in the U.S., most of which are privately owned and generate less than $10 million in annual revenues, and thousands of independent physicians and other medical providers. Most of these companies provide IME services to only one line of business and only at a local level. In contrast, the needs and requirements of IME clients are increasingly sophisticated, requiring a broader portfolio of services, uniform quality standards, consistent reporting and robust administrative and information systems necessary to meet their needs across multiple geographies and lines of business.

IME Industry Growth Drivers

We believe the IME industry presents large IME services providers like us with continued potential for growth and profitability through consolidation, growth in international markets, and capture of market share from smaller IME companies. The following are some of the factors that contribute to these opportunities:


	•	IME services are used for a large number of claims. IME services are regularly used by insurance companies, law firms, TPAs, government agencies and state funds for the evaluation of non-litigated and litigated claims.

	•	Cost containment and risk management will continue to be primary areas of focus. Current macroeconomic, demographic and regulatory trends will continue to pressure users of IME services to better manage costs and mitigate risks.

	•	Demand for IME services due to the prevalence of fraud. The National Health Care Anti-Fraud Association estimates approximately $68 billion in healthcare spending in 2007 was lost to fraud. With ongoing efforts to address healthcare fraud, we expect the demand for IME services to increase.

	•	Sources of low-risk revenue are increasingly attractive to physicians. Pressure in the healthcare industry on physician compensation encourages physicians to take on additional work, including performing IME services to supplement their incomes. There is almost no reimbursement risk associated with performing IME services as physicians are paid on a per service basis at a pre-negotiated rate. Consequently, demand from physicians to perform IME services is expected to remain strong.

	•	International markets represent key growth opportunities. There are several international markets with demand for IME services either due to regulatory requirements, such as national health programs, or private-sector adoption of claims validation practices to better manage costs and mitigate risks.

	•	Industry fragmentation, inefficiencies and lack of scale present challenges for smaller IME companies. With ongoing pressure in the IME industry to reduce costs, improve quality, and improve workflow efficiency, the market opportunity for IME companies with a comprehensive portfolio of services and broad geographic coverage is significant.

Our Competitive Strengths

While we compete with a large number of primarily local and regional IME providers, we believe our competitive strengths include the following:


	•	Growing brand name associated with market leading capabilities. Our ExamWorks brand has distinct geographic and market strengths which continue to grow stronger as we build our national and international presence.

	•	Well positioned to capture market share. With our focus on national accounts, our longstanding local relationships and our national and international footprint, we believe we are well positioned to continue to capture market share at the local and national level.

	•	Large, qualified and experienced medical panel. We believe our medical panel represents one of the IME industry’s leading groups of widely accessible, experienced and credible physicians and other medical providers across nearly every medical specialty.

	•	Leading technology platform. We believe our leading technology team and proprietary infrastructure, which has been specifically designed to meet the needs of the IME industry, provide us with a sustainable competitive advantage.

	•	Proven track record of successfully completing and integrating key acquisitions. Since our founding, we have acquired 27 IME businesses and have a track record of successfully integrating acquired businesses into our operations.


	•	Experienced management team. Our management team has an in-depth understanding of the IME industry as well as extensive experience growing companies profitably, both organically and through acquisitions.

Our Growth Strategies

Our objective is to continue to be a leading provider of IME services, and to build on our position as an essential and trusted service provider in claims validation and verification processes. Our principal strategies to meet our objectives are:

Maintain Strong Organic Growth

In the year ended December 31, 2009 and the nine months ended September 30, 2010, our revenues from existing businesses grew by approximately 17% and 14%, respectively. We believe the following initiatives will allow us to continue realizing strong organic growth:


	•	Drive sales growth. As many of our acquired companies were family-owned businesses, they often did not have well-developed management strategies, policies and procedures. We have been able to implement processes that require accountability, set clear sales goals, and track progress effectively, enabling us to increase the number of IME services provided to existing clients.

	•	Sell additional services to existing clients. With locations serving the U.S., Canada and the United Kingdom, we are able to use our large network to efficiently share services and expertise within our sales force. This allows us to capture additional market share and grow our presence in markets by increasing utilization of our existing platform across all IME service offerings.


	•	Cross-sell into other insurance lines of business. Currently we have clients that use our services for a specific line of business. We can increase sales to existing clients through cross-selling into additional lines of business, such as workers’ compensation, automotive, personal injury liability and disability.

	•	Expand geographic footprint with existing clients. We intend to build on our local relationships and expand into new geographies where our clients operate. As many of our clients have a broad national and/or international presence, we believe our strong relationships and reputation for providing quality IME services will provide us with opportunities to receive intra-client referrals and increase our geographic footprint.

Pursue Acquisitions

We believe, based on our knowledge of the IME market, our competitors, our acquired businesses and potential acquisition targets, that we are the largest provider of IME services in the U.S. based on revenues, and the only provider with operations in both Canada and the United Kingdom. However, we estimate that our revenues represent only approximately 4% of the markets we serve. We believe that the remainder of the market is serviced by local and regional companies and as a result, we believe this fragmented industry provides many opportunities for acquisitions. We plan to continue to pursue acquisitions to enhance our strategic and competitive positions in existing markets and add new service areas and geographies, including new international markets. We have a history of successfully integrating acquired businesses and have acquired 27 IME businesses to date. The acquisitions have allowed us to diversify our portfolio of services and expand our geographic footprint.

Summary Risk Factors

Investing in our common stock involves a high degree of risk. You should consider carefully the risks and uncertainties summarized below, the risks described under “Risk Factors,” the other information contained in this prospectus and our consolidated financial statements and the related notes before you decide whether to invest in our common stock.


	•	We have a limited history and may not be able to achieve financial or operational success.

	•	We may not be successful in implementing our growth strategy and acquiring companies that complement our business, which would adversely impact our growth and profitability.

	•	We may be unable to successfully integrate completed acquisitions and such acquisitions may fail to achieve the financial results we expected.

	•	We may need additional capital to fund our operations and finance our growth and we may not be able to secure such capital on terms acceptable to us, or at all.

	•	Our industry may be regulated at the federal, state and local levels and government authorities may determine that we have failed to comply with applicable laws and regulations.

	•	Changes in government regulations could increase our costs of operations and/or reduce the demand for our services, which would negatively impact our growth and profitability.

	•	Competition in our industry could result in a reduction in our revenues and earnings and adversely affect our financial condition.

	•	If we lose our key management personnel or if we are unable to attract, hire, integrate and retain key personnel and other necessary employees, our business would be harmed.

	•	Our international expansion and operations in foreign markets expose us to risks associated with international sales and operations.

Corporate Information

ExamWorks, Inc., which we refer to herein as EWI, was incorporated in Delaware on April 27, 2007. ExamWorks Group, Inc. was incorporated in Delaware on June 22, 2010, to enable its now wholly-owned subsidiary, EWI, to implement a holding company organizational structure. Effective June 23, 2010, EWI reorganized into a holding company structure, which we refer to herein as the Reorganization. See “Business—Corporate Structure.”

Our executive offices are located at 3280 Peachtree Road, N.E., Suite 2625, Atlanta, GA 30305 and our telephone number at this location is (404) 952-2400. Our website is www.examworks.com. Information included or referred to on, or otherwise accessible through, our website is not intended to form a part of or be incorporated by reference into this prospectus.


The Offering

Common stock offered by us		7,745,114 shares

Common stock offered by the selling stockholders		2,554,886 shares

Common stock to be outstanding after this offering		30,439,451 shares

Option to purchase additional shares		1,545,000 shares

Directed Share Program		The underwriters have reserved for sale to our officers, directors and employees, immediate family members of the foregoing, and other persons selected by us, up to 3% of the shares of the common stock offered by this prospectus at the initial public offering price. We will offer these shares to the extent permitted under applicable regulations in the United States and in various countries. The number of shares available for sale to the general public in this offering will be reduced to the extent these persons purchase reserved shares. Any reserved shares not purchased will be offered by the underwriters to the general public on the same terms as the other shares. See the section entitled “Underwriting-Directed Share Program.”

Use of proceeds		We intend to use the net proceeds of this offering to repay our existing credit facility, fund our acquisition program and for working capital, capital expenditures and general corporate purposes. We will not receive any of the proceeds from the sale of shares by the selling stockholders. See the section entitled “Use of Proceeds.”

New York Stock Exchange symbol		“EXAM”

The number of shares of our common stock to be outstanding immediately after this offering is based on the number of shares outstanding as of October 18, 2010, after giving effect to the conversion of our preferred stock into shares of common stock (as described in the section entitled “Description of Capital Stock”), and excludes:


	•	447,763 shares of common stock issuable upon the exercise of warrants outstanding as of October 18, 2010 at an exercise price of $6.63 per share;

	•	5,341,797 shares of common stock issuable upon the exercise of stock options outstanding as of October 18, 2010 at a weighted average exercise price of $7.19 per share; and

	•	4,877,119 shares of common stock available for future issuance under our equity compensation plans as of October 18, 2010.

Assumptions Used in This Prospectus

Except as otherwise indicated, all information contained in this prospectus assumes:


	•	the underwriters do not exercise their option to purchase up to an additional 1,545,000 shares of our common stock;

	•	the conversion of all outstanding shares of our preferred stock into an aggregate of shares of common stock which will happen simultaneously upon the completion of this offering;

	•	a 5.1411 for 1 stock split of our outstanding capital stock to be consummated in connection with this offering; and

	•	our issuance of 7,745,114 shares of common stock in this offering.

Summary Predecessor, Successor and Pro Forma Consolidated Financial Data

The following tables set forth, for the periods and as of the dates indicated, our summary predecessor and successor consolidated financial data and summary pro forma financial data. For financial statement presentation purposes, CFO Medical Services, P.A. (“CFO”) has been identified as the predecessor. The summary predecessor statement of operations data for the year ended December 31, 2007 and for the period from January 1, 2008 to July 13, 2008 are derived from the audited consolidated financial statements included elsewhere in this prospectus. The predecessor statement of operations data for the years ended December 31, 2005 and 2006 are derived from unaudited financial statements not included in this prospectus. ExamWorks is the successor company, having been founded on April 27, 2007 for the purpose of acquiring companies in the IME industry. The successor summary statement of operations data for the period from April 27, 2007 (inception) to December 31, 2007, for each of the years in the two years ended December 31, 2009 and the summary balance sheet data as of December 31, 2008 and 2009 are derived from our audited consolidated financial statements included elsewhere in this prospectus. The predecessor summary balance sheet data as of December 31, 2007 are derived from CFO’s audited financial statements included elsewhere in this prospectus. The predecessor summary balance sheet data as of December 31, 2005 and 2006 are derived from CFO’s unaudited financial statements not included in this prospectus. The successor summary balance sheet data as of December 31, 2007 are derived from our audited financial statements not included in this prospectus. The successor summary statement of operations data for the nine months ended September 30, 2009 and 2010 and the summary balance sheet data as of September 30, 2010 are derived from our unaudited consolidated financial statements, included elsewhere in this prospectus. Our unaudited consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and notes thereto and, in the opinion of management, include all adjustments (consisting of normal recurring adjustments) necessary for a fair statement of the information for the unaudited interim periods. Historical results are not indicative of the results to be expected in the future and results of interim periods are not necessarily indicative of results for the entire year.

The unaudited pro forma summary statement of operations data combine our results of operations and each of the acquisitions completed in 2009 and 2010 for the year ended December 31, 2009 and for the nine months ended September 30, 2010, as if the acquisitions had occurred on January 1, 2009. The unaudited pro forma summary balance sheet data are pro forma as if the acquisitions subsequent to September 30, 2010 had occurred on September 30, 2010. For a description of the acquisitions included, and assumptions used, in preparing the unaudited pro forma financial statements, see “Unaudited Pro Forma Condensed Combined Financial Information.” The summary unaudited pro forma financial statement information is presented for informational purposes only, does not purport to represent what our results of operations or financial condition actually would have been had the relevant transactions been consummated on the dates indicated and is not necessarily indicative of our results of operations for any future period or our financial condition as of any future date.

You should read the following information together with the more detailed information contained in “Selected Consolidated Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the accompanying notes appearing elsewhere in this prospectus.


	Predecessor

								For the period ended July 13,
	For the years ended, December 31,
	For the years ended, December 31,

	2005		2006			2007		2008(1)

	(In thousands, except share and per share data)

Consolidated Statement of Operations Data:
Revenues	$	7,391	$	9,145		$	9,783	$	6,072
Costs and expenses:
Costs of revenues		5,123		6,466			5,873		3,757
Selling, general and administrative expenses		1,938		2,637			3,772		2,304
Depreciation and amortization		45		80			57		33

Total costs and expenses		7,106		9,183			9,702		6,094
Income (loss) from operations		285		(38	)		81		(22	)
Interest and other expenses, net		4		7			13		11

Income (loss) before income taxes		281		(45	)		68		(33	)
Provision for income taxes		12		11			4		3

Net income (loss)	$	269	$	(56	)	$	64	$	(36	)

Other Financial Data:
Adjusted EBITDA(3)	$	330	$	42		$	138	$	11



	Successor															Pro Forma

	For the years ended, December 31,									For the nine months ended September 30,						For the year ended December 31, 2009			For the nine months ended September 30, 2010



	2007(2)			2008			2009			2009				2010

	(In thousands)

Consolidated Statement of Operations Data:
Revenues	$	—		$	14,694		$	49,634		$	33,796		$	109,242		$	207,389		$	170,400
Costs and expenses:
Costs of revenues		—			9,828			32,026			21,582			68,693			132,070			107,549
Selling, general and administrative expenses		226			4,610			15,811			9,933			23,970			39,303			29,215
Depreciation and amortization		—			2,392			6,889			4,630			12,452			27,920			20,816

Total costs and expenses		226			16,830			54,726			36,145			105,115			199,293			157,580
Income (loss) from operations		(226	)		(2,136	)		(5,092	)		(2,349	)		4,127			8,096			12,820
Interest and other expenses, net		—			1,470			1,925			841			5,344			10,298			8,575

Income (loss) before income taxes		(226	)		(3,606	)		(7,017	)		(3,190	)		(1,217	)		(2,202	)		4,245
Provision (benefit) for income taxes		—			(1,434	)		(2,613	)		(1,188	)		(627	)		(821	)		1,667

Net income (loss)	$	(226	)	$	(2,172	)	$	(4,404	)	$	(2,002	)	$	(590	)	$	(1,381	)	$	2,578

Other Financial Data:
Adjusted EBITDA(3)	$	(36	)	$	1,076		$	6,496		$	4,669		$	20,264		$	38,606		$	34,195



	Predecessor							Successor								Pro Forma as of September 30, 2010

	As of December 31,							As of December 31,						As of September 30, 2010

	2005			2006		2007		2007		2008		2009

	(In thousands)

Consolidated Balance Sheet Data:
Cash and cash equivalents	$	215		$	180	$	191	$	416	$	1,203	$	1,499	$	7,720	$	870
Current assets		353			1,601		1,625		416		4,735		11,497		50,682		46,732
Total assets		410			1,755		1,883		689		38,898		76,547		206,545		214,868
Current portion of long-term debt		—			—		—		—		1,534		3,263		18,660		19,989
Current portion of subordinated unsecured notes payable		—			—		—		—		—		1,565		1,836		2,544
Current liabilities		402			921		648		434		5,700		20,871		55,654		58,018
Revolving line of credit and discount facility		289			251		500		—		1,500		600		6,448		6,448
Long-term debt, less current portion		—			—		49		—		10,205		29,371		70,960		76,281
Long-term subordinated unsecured notes payable, less current portion		—			—		—		—		—		3,552		2,510		3,148
Total liabilities		691			1,172		1,197		434		18,375		56,147		138,319		146,642
Convertible preferred stock		—			—		—		—		—		—		33,000		33,000
Total stockholders’ equity (deficit)		(281	)		583		686		255		20,523		20,400		68,226		68,226



(1)	Includes the period from January 1, 2008 to July 13, 2008 for the predecessor company.
(2)	Includes the period from April 27, 2007 (inception) to December 31, 2007 for the successor company.
(3)	Adjusted EBITDA is a non-GAAP measure that is described and reconciled to net loss below and is not a substitute for the GAAP equivalent. We define Adjusted EBITDA as earnings before interest, taxes, depreciation, amortization, acquisition related transaction costs, stock based compensation expenses, and other non-recurring costs. We believe that Adjusted EBITDA is an important measure of our operating performance because it allows management, lenders, investors and analysts to evaluate and assess our core operating results from period to period after removing the impact of changes to our capitalization structure, acquisition related costs, income tax status, and other items of a non-operational nature that affect comparability. The following table presents a reconciliation of Adjusted EBITDA to net income (loss), the most comparable GAAP measure, for each of the periods indicated. The following table also presents a reconciliation of pro forma Adjusted EBITDA to pro forma net income (loss), for each of the periods indicated. See also “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations—Adjusted EBITDA.”


	Predecessor

								For the period ended July 13,
	For the years ended, December 31,
	For the years ended, December 31,

	2005		2006			2007		2008(i)

	(In thousands)

Reconciliation of Adjusted EBITDA:
Net income (loss)	$	269	$	(56	)	$	64	$	(36	)
Share-based compensation expense		—		—			—		—
Depreciation and amortization		45		80			57		33
Acquisition-related transaction costs		—		—			—		—
Monitoring fee(iii)		—		—			—		—
Other non-recurring costs(iv)		—		—			—		—
Interest and other expenses, net		4		7			13		11
Income tax provision		12		11			4		3

Adjusted EBITDA:	$	330	$	42		$	138	$	11


	Successor															Pro Forma

	For the years ended, December 31,									For the nine months ended September 30,						For the year ended December 31, 2009			For the nine months ended September 30, 2010



	2007(ii)			2008			2009			2009			2010

	(In thousands)
Reconciliation of Adjusted EBITDA:
Net income (loss)	$	(226	)	$	(2,172	)	$	(4,404	)	$	(2,002	)	$	(590	)	$	(1,381	)	$	2,578
Share-based compensation expense		—			101			218			211			559			218			559
Depreciation and amortization		—			2,392			6,889			4,630			12,452			27,920			20,816
Acquisition-related transaction costs		—			719			2,109			1,308			3,126			—			—
Monitoring fee(iii)		—			—			1,738			270			—			1,738			—
Other non-recurring costs(iv)		190			—			634			599			—			634			—
Interest and other expenses, net		—			1,470			1,925			841			5,344			10,298			8,575
Income tax provision (benefit)		—			(1,434	)		(2,613	)		(1,188	)		(627	)		(821	)		1,667

Adjusted EBITDA:	$	(36	)	$	1,076		$	6,496		$	4,669		$	20,264		$	38,606		$	34,195



(i)	Includes the period from January 1, 2008 to July 13, 2008 for the predecessor company.
(ii)	Includes the period from April 27, 2007 (inception) to December 31, 2007 for the successor company.
(iii)	See “Certain Relationships and Related Party Transactions—Monitoring Fee Agreement” for a description of the monitoring fee.
(iv)	Other non-recurring costs consist of start-up costs incurred in 2007 and severance and facility termination costs in 2009.

RISK FACTORS

An investment in our common stock involves risk. You should carefully consider the following risks as well as the other information included in this prospectus, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and related notes, before investing in our common stock. Any of the following risks could materially and adversely affect our business, financial condition, results of operations or prospects, and cause the value of our common stock to decline, which could cause you to lose all or part of your investment in our Company.

Risks Related to Our Business

We have a limited history and may not be able to achieve financial or operational success.

We are a relatively new company with an approximate three year history. Our operations are subject to all risks inherent in the establishment of a recently formed business. Our success may be limited by problems, fluctuations in expenses, difficulties and delays frequently encountered with new businesses as well as competition in the IME industry. While we have been able to generate revenues, we may not be able to increase the amount of revenues we generate, and we will likely continue to incur net losses for some time as we continue to grow. Any evaluation of our business and our prospects must be considered in light of these factors and the risks and uncertainties often encountered by companies in our state of development. Further, we may not be able to successfully implement any of our plans in a timely or effective manner which would negatively impact our ability to generate revenues as well as our results of operations and financial condition.

We may not be successful in implementing our growth strategy and acquiring companies that complement our business, which would adversely impact our growth and profitability.

Our growth strategy is primarily dependent on acquiring and integrating the operations of companies in the IME industry. From July 2008 through October 1, 2010, we acquired 27 IME businesses, including the leading provider of software solutions to the IME industry. To continue this strategic growth, we will need to continue to identify appropriate businesses to acquire and successfully undertake the acquisition of these businesses on reasonable terms. Although we expect to continue to evaluate such strategic acquisitions, we may not be successful in pursuing acquisition opportunities and implementing our growth strategy if, including, without limitation:


	•	suitable acquisition candidates are not available;

	•	acquisitions cannot be completed on reasonable terms;

	•	we inherit or assume significant liabilities relating to acquired entities or businesses, including liabilities for failure to comply with applicable laws; or

	•	we are unable to raise the funds necessary to make acquisitions.

In addition, in the future we may compete for acquisitions with other potential acquirers, some of which may have greater financial or operational resources than we do. If we are not successful in finding attractive acquisition candidates that we can acquire on satisfactory terms, or if we cannot complete those acquisitions that we identify, we will not be able to realize the benefit of this part of our growth strategy which could harm our future profitability.

If we finance acquisitions by issuing equity securities or securities convertible into equity securities, our existing stockholders will be diluted. If we finance an acquisition with debt, it will result in higher leverage and interest costs. As a result, if we fail to evaluate and execute acquisitions properly, we might not achieve the anticipated benefits of these acquisitions, and we may increase our acquisition costs.

The terms of certain of our acquisitions have included, and may in the future include, earnout provisions or the issuance of indebtedness of the seller. Such earnout provisions may require us to make additional payments in cash which would reduce the amount of cash available to us or could cause us to incur additional indebtedness or cause us to issue additional shares resulting in an increase in the number of our outstanding shares. In addition, these arrangements may make it more difficult to consummate such acquisitions and can sometimes complicate integration efforts.

We may be unable to successfully integrate completed acquisitions and such acquisitions may fail to achieve the financial results we expected.

From July 2008 through October 1, 2010 we acquired 27 IME businesses. These acquisitions have involved, and could continue to involve, the integration of a separate company that previously operated independently and had different systems, processes and cultures, into our existing operations. While we expect to continue to evaluate potential strategic acquisitions that might augment our existing services, we may be unable to successfully integrate businesses we acquire, including our recently completed acquisitions, and such acquisitions may fail to achieve the financial results we expected. Integrating completed acquisitions into our existing operations involves numerous short-term and long-term risks, including diversion of our management’s attention, failure to retain key personnel, and failure of the acquired entity to be financially successful. In addition, we cannot be certain of the extent of any unknown or contingent liabilities of any acquired business, including liabilities for failure to comply with applicable laws. We may incur material liabilities for past activities of acquired businesses. Also, depending on the location of the acquired business, we may be required to comply with laws and regulations that may differ from those of the jurisdictions in which our operations are currently conducted. Our inability to successfully integrate businesses we acquire, or if such businesses do not achieve the financial results we expect, may increase our costs and have a material adverse impact on our financial condition and results of operations.

Our international expansion and operations in foreign markets expose us to risks associated with international sales and operations.

On June 30, 2010, we acquired substantially all of the assets of SOMA Medical Assessments Inc. and Direct IME, which provide IME and certain medical review services in Canada. On September 7, 2010, we acquired the entire issued capital of UK Independent Medical Services Limited, which provides IME services in the United Kingdom. We intend to continue to expand internationally and operate in select foreign markets. Managing a global organization is difficult, time consuming, and expensive. Our inexperience in operating our business globally increases the risk that any future international expansion efforts that we may undertake will not be successful. In addition, conducting international operations subjects us to new risks that we have not generally faced. These risks include: lack of familiarity with and unexpected changes in foreign regulatory requirements; longer accounts receivable payment cycles and difficulties in collecting accounts receivable; difficulties in managing and staffing international operations; fluctuations in currency exchange rates; potentially adverse tax consequences, including foreign value added tax systems, and restrictions on the repatriation of earnings; the burdens of complying with a wide variety of foreign laws and legal standards; increased financial accounting and reporting burdens and complexities; and political, social, and economic instability abroad. Operating in international markets also requires significant management attention and financial resources. The investment and additional resources required to establish operations and manage growth in other countries may not produce desired levels of revenue or profitability.

We may need additional capital to fund our operations and finance our growth, and we may not be able to secure such capital on terms acceptable to us, or at all.

In order for us to grow and successfully execute our business plan, we may require additional financing which may not be available or may not be available on acceptable terms. If such financing is available, it may dilute the existing stockholders’ ownership interests in the Company. Failure to obtain financing may have a material adverse effect on our financial position and may cause you to lose your entire investment in the Company. In addition, if we are unable to secure additional financing on acceptable terms or at all, it will impact our ability to conduct acquisitions.

Our industry may be regulated at the federal, state and local levels and government authorities may determine that we have failed to comply with applicable laws and regulations.

As a company involved in the provision of IME services, we are subject to certain federal, state and local laws and regulations. There are significant costs involved in complying with these laws and regulations. Moreover, if we are found to have violated any applicable laws and regulations, we could be subject to civil and/or criminal damages, fines, sanctions, or penalties and have our licenses revoked. If our arrangements or business practices become subject to government scrutiny or are found to violate laws or regulations, we could incur significant costs and may be required to modify certain aspects of our operations. Government audits, investigations and prosecutions, even if we ultimately are found to be without fault, can be costly and disruptive to our business. Any of these actions could have a material adverse effect on our business, financial condition and results of operations.

Unintended consequences of recently adopted health reform legislation in the U.S. may adversely effect our business.

The healthcare industry is undergoing fundamental changes resulting from political, economic and regulatory influences. In the U.S., comprehensive programs are under consideration that seek to, among other things, increase access to healthcare for the uninsured and control the escalation of healthcare expenditures within the economy. On March 23, 2010, health reform legislation was approved by Congress and has been signed into law. While we do not believe this legislation will have a direct impact on our business, the legislation has only recently been enacted and requires the adoption of implementing regulations, which may have unintended consequences or indirectly impact our business. For instance, the scope and implications of the recent amendments pursuant to the Fraud Enforcement and Recovery Act of 2009 (“FERA”), have yet to be fully determined or adjudicated and as a result it is difficult to predict how future enforcement initiatives may impact our business. Also, in some instances our clients are health insurers that will be subject to limitations on their administrative expenses and new federal review of “unreasonable” rate increases which could impact the prices they pay our affiliates for our services. If the legislation causes such unintended consequences or indirect impact, it could have a material adverse effect on our business, financial condition and results of operations.

Changes in government regulations could increase our costs of operations and/or reduce the demand for our services, which would negatively impact our growth and profitability.

Federal and state legislatures may review and consider legislation that may impact our business and our industry. If new laws or regulations are implemented or changes are made to existing laws or regulations impacting the IME industry, we may be required to incur additional costs or make changes to our services which could have a material adverse impact on our financial condition and results of operations.

The Province of Ontario has recently enacted amendments to the Statutory Accident Benefits Schedule, which governs motor vehicle accident claims in Ontario, Canada. Recent amendments that took effect on September 1, 2010 no longer require insurance companies to first obtain medical assessments before denying claims, but clarify that denials must state a medical or other reason, require that all fees and expenses for conducting medical assessments, other than those requested by insurance companies, be paid out of a claimant’s medical and rehabilitation benefits and cap at C$2,000 the fees that may be charged for all medical assessments. Since the amendments have only recently become effective, we cannot at this time predict the effects and implications of these amendments on the financial condition and results of operations of our Canadian business.

In addition, the confidentiality, and security of patient records and the circumstances under which such information may be used or released are subject to substantial regulation by state and federal laws and regulations. The administrative simplification provisions of the Health Insurance Portability and Accountability Act of 1996 as amended (“HIPAA”) and other regulations governing privacy, security, and electronic health data transmissions, including under the American Recovery and Reinvestment Act of 2009 (“ARRA”), are evolving rapidly through regulation and are often unclear and difficult to apply. If we violate HIPAA, ARRA or other state or federal laws or regulations, we could be subject to fines and penalties. Further, final or new regulations may require costly system purchases or additional modifications to our policies and procedures, which could have a material adverse impact on our financial condition and results of operations.

Changes in laws, at either the national or state level, making it more difficult to bring certain kinds of cases or that limit jury awards, commonly referred to as tort reform, could lead to a smaller number of insurance or other claims, which in term could result in a decrease in demand for IMEs and other services we provide. Such a decrease in demand for our services could have a material adverse impact on our financial condition and results of operations.

We may not be able to maintain or expand our accreditation, which may adversely affect our ability to market our services.

Certain of our subsidiaries and/or divisions are accredited by third-party accreditation bodies. We intend to further expand our accreditation in the U.S. However, we may not be able to maintain or expand our accreditation which may adversely impact our ability to competitively market our services. The costs of initial accreditation and maintenance of accreditation may exceed our expectations, and the benefits of accreditation may be outweighed by the related costs.

If we cannot update and maintain our information technology platform so that we can meet critical client requirements, the competitiveness of our business will suffer.

Our information technology platform is critical to our competitive position and success. If we are unable, for technological or other reasons, to develop and introduce new software solutions or enhance our existing ones in a cost-effective and timely manner and to respond to changing market conditions or client requirements, our business, results of operations and financial conditions may be adversely affected.

We rely on a combination of internal development and strategic relationships to develop our infrastructure platform and software solutions. Through our acquisition of IME Software Solutions in July 2009, we acquired the leading platform software solution for the IME industry and are in the process of deploying this technology throughout our entire organization. Our information technology platform is built in a Private Virtual Cloud Computing Network (“PVCCN”). Our development and implementation of new generation software solutions and an information technology infrastructure may take longer than originally expected and require the acquisition of additional personnel and other resources, which may adversely affect our business, results of operations and financial condition.

Failures of interruptions of, or a breach in security relating to, our information systems could adversely affect us.

Any system failure that causes an interruption in service or availability of our information technology infrastructure could adversely affect our operations. Even though we have implemented network security measures, our servers may be vulnerable to computer viruses, break-ins and similar disruptions from unauthorized tampering. In addition, certain of our services are based upon the collection, distribution and protection of sensitive private data. Unauthorized users might access that data, and human error or technological failures might cause the wrongful dissemination of that data. The occurrence of any of the events described above could result in interruptions, delays, the loss or corruption of data, cessations in the availability of systems or liability under privacy laws, all of which could have a material adverse effect on our financial position and results of operations.

Our intellectual property rights are valuable, and if we are unable to protect them or are subject to intellectual property rights claims, our business may be harmed.

Our intellectual property rights include certain trademarks, copyrights and trade secrets, which are important assets for our business. Although we take precautions to protect our intellectual property rights, these efforts may not be sufficient or effective. In addition, various events outside of our control pose a threat to our intellectual property rights as well as to our business. For example, we may be subject to third-party intellectual property rights claims. Regardless of the merits of the claims, any intellectual property claims could be time-consuming and expensive to litigate or settle. In addition, if any claims against us are successful, we may have to pay substantial monetary damages or discontinue any of our practices that are found to be in violation of another party’s rights. We may also have to seek a license to continue such practices, which may significantly increase our operating expenses or may not be available to us at all. Any significant impairment of our intellectual property rights could harm our business or our ability to compete.

Our operations and reputation may be harmed if we do not adequately secure information.

Federal and state laws regulate the disclosure of certain medical test results and other nonpublic medical-related personal information. If we do not adequately safeguard such information and it were to become available to persons or entities that should not have access to it, our business could be impaired, our reputation could suffer and we could be subject to fines, penalties and litigation. In addition, any incidents with respect to the handling of such information could involve us in litigation or indemnification claims with members of our medical panel, our clients or other parties. Although we have implemented security measures to protect confidential information, our infrastructure is vulnerable to computer viruses, break-ins and similar disruptive problems caused by our clients or others, which could potentially jeopardize the security of confidential information stored physically at our locations or electronically in our computer systems. Such an event could damage our reputation, cause us to lose existing clients and deter potential clients, as well as expose us to liability to parties whose security or privacy has been infringed. Moreover, if we do not protect the confidentiality of private information in accordance with applicable laws, we could face significant civil or criminal sanctions. The occurrence of any of the foregoing events could adversely impact our business.

Competition in the IME industry could result in a reduction in our revenues and earnings and adversely affect our financial condition.

The IME industry is highly fragmented and competitive. Our primary competitors in the IME industry include companies and individual physicians that specialize in one or more services similar to those offered by us on a local or regional basis as well as insurance companies and other organizations which have established an in-house capability of performing such services. It is also possible that our clients may establish the in-house capability of performing certain services offered by us. We also compete with national, regional and local firms specializing in case management, medical records reviews and other services we provide. It is possible that now or in the future some of our competitors could have greater financial and market resources than us. Increased competition or new entrants to our key markets could prevent price increases for our services or could require price reductions for our services, which could adversely affect our results of operations.

If we are unable to attract and retain qualified physicians and other medical providers as independent contractors to perform IME services on our behalf, our financial condition may suffer.

Our performance and future success depends on the talents and efforts of the physicians and other medical providers on our medical panel who perform the IME services on our behalf on an independent contractor basis and on our ability to maintain good relations with those physicians and other medical providers. If we do not succeed in attracting qualified physicians and other medical providers, or retaining or motivating physicians or other medical providers, our performance may suffer and we may be unable to grow our business effectively. Further, we may be required to enhance compensation in order to recruit and retain physicians and other medical providers on an independent contractor basis. As a result, our medical panel costs could increase and we may not be able to raise rates to offset these increased costs, which could have a material, adverse effect on our results of operations.

Our clients may terminate their relationships with us or reduce the fees they pay us, which may have a negative impact on our business.

Our operations depend upon our relationships with our clients. Our clients are primarily insurance companies, law firms, TPAs, government agencies and state funds. We do not have formal written agreements with most of our clients and to the extent we do, such agreements do not generally restrict our clients from terminating or deciding not to renew our contracts. If clients attempt to introduce unfavorable terms or limit the services and products we provide them, our revenues could be negatively impacted. In addition, the termination of business by any of our clients could have a material adverse effect on our operations. There is no guaranty that we will be able to retain our existing clients or develop relationships with new clients.

We may be subject to possible litigation and legal liability, which could adversely affect our business or results of operations.

Through the medical certifications of our independent contractor medical panel, we make recommendations concerning the appropriateness of providers’ medical treatment plans of patients throughout the U.S., Canada and the United Kingdom, and could share in potential liabilities for adverse medical consequences if the independent contractor negligently provides its services or we and/or the independent contractor are alleged to have inappropriately failed to certify a condition requiring care or treatment plans. We do not grant or deny claims for payment of benefits and we do not believe that we engage in the practice of medicine or the delivery of medical services. However, we may become subject to claims or litigation related to the grant or denial of claims for payment of benefits or allegations that we engage in the practice of medicine or the delivery of medical services. We credential our medical panel utilizing a reputable contractor. If such credentialing is not carried out appropriately by our contractor or if we do not recredential at appropriate intervals to identify changes in licensure or other status, we may become subject to claims or litigation. Our clients might also allege that we negligently failed to detect provider fraud. In addition, we may become subject to other litigation that may adversely affect our business or results of operations. We maintain professional liability and other insurance as we believe are reasonable in light of our experience to date. However, such insurance may not be sufficient or available in the future at reasonable cost to protect us from liability which might adversely affect our business or results of operations.

If we lose our key management personnel or if we are unable to attract, hire, integrate and retain key personnel and other necessary employees, our business would be harmed.

We are dependent on our executive officers and other key personnel and those of the acquired companies, the loss of one or more of whom could materially and adversely affect us. Some of these personnel are new to the industry and some have been part of target companies for many years but have no experience managing a larger company and integrating the separate operations of newly acquired entities. Currently, we do not have employment agreements with any of our executive officers. Our success will depend in large part on our ability to attract and retain talented and qualified employees as well as our executive officers. We may not be able to retain our executive officers and key employees or attract, assimilate and retain other qualified personnel in the future.

The terms of our existing credit facility and future indebtedness could restrict our operations, particularly our ability to respond to changes in our business or to take specified actions.

Our existing credit facility contains, and any future indebtedness would likely contain, a number of restrictive covenants that impose significant operating and financial restrictions on us, including restrictions on our ability to take actions that may be in our best interests. The credit facility includes covenants, including requirements that:


	•	restrict our ability to pay dividends on, repurchase or make distributions in respect of our capital stock or make other restricted payments;

	•	limit our ability to make certain investments or sell or transfer assets;

	•	require us to obtain consent from our lenders with respect to acquisitions;

	•	we grant security interests in newly-acquired companies;

	•	restrict our ability to consolidate, merge, sell or otherwise dispose of our properties or assets; and

	•	we do not impair our lenders’ security interests in our assets.

As discussed above, our credit facility requires us to satisfy and maintain specified financial ratios. Our ability to meet those financial ratios can be affected by events beyond our control, and we may not be able to continue to meet those ratios. A breach of any of these covenants could result in a default under the credit facility. Upon the occurrence of an event of default, our lenders could elect to declare all amounts outstanding under the credit facility to be immediately due and payable and terminate all commitments to extend further credit. If we were unable to repay those amounts, the lenders under the credit facility could proceed against the collateral granted to them to secure such indebtedness. We have pledged all of our assets and personal property as collateral under the credit facility. If any of the lenders accelerate the repayment of borrowings, we may not have sufficient funds to repay our existing debt.

We may be able to incur substantially more debt, which could further exacerbate the risks we face.

We and our subsidiaries have the ability to incur additional indebtedness in the future, subject to the restrictions contained in our credit facility. If we amend the credit facility to increase the level of our indebtedness or if we enter into new facilities to incur more debt, we may be faced with additional risks and restrictions on our operations, including the following:


	•	an increase in our vulnerability to downturns or adverse changes in general economic, industry or competitive conditions and adverse changes in government regulations;

	•	a requirement to dedicate a substantial portion of cash flow from operations to the payment of principal and interest on our indebtedness, therefore reducing our ability to use our cash flow to fund our operations, capital expenditures and future business opportunities;

	•	a limit on our ability to make strategic acquisitions;

	•	a limit on our ability to obtain additional financing for working capital, capital expenditures, debt service requirements and general corporate or other purposes; and

	•	a limit on our ability to adjust to changing market conditions and placing us at a competitive disadvantage compared to our competitors who are less highly leveraged.

Risks Related to the Offering and Share Ownership

An active, liquid trading market for our common stock may not develop.

Prior to this offering, there has not been a public market for shares of our common stock. We have applied to list our common stock on the New York Stock Exchange. If an active and liquid trading market does not develop, you may have difficulty selling any of our common stock that you purchase. The initial public offering price for the shares will be determined by negotiations between us and the representatives of the underwriters and may not be indicative of prices that will prevail in the open market following this offering. The market price of our common stock may decline below the initial offering price, and you may not be able to sell your shares at or above the price you paid in this offering, or at all.

Our stock price may change significantly following this offering and you could lose all or part of your investment as a result.

You may not be able to resell your shares at or above the initial public offering price due to a number of factors, some of which are beyond our control, including, without limitation:


	•	quarterly variations in our results of operations;

	•	results of operations that vary from the expectations of securities analysts and investors;

	•	the failure of securities analysts to publish research about us after this offering or to make changes in their financial estimates;

	•	results of operations that vary from those of our competitors;

	•	changes in expectations as to our future financial performance, including financial estimates by securities analysts and investors;

	•	announcements by us, our competitors or our vendors of significant contracts, acquisitions, joint marketing relationships, joint ventures or capital commitments;

	•	announcements by third parties or governmental entities of significant claims or proceedings against us;

	•	new laws and governmental regulations applicable to the IME industry;

	•	a default under agreements covering our existing or future indebtedness;

	•	future sales of our common stock by us, directors, executives and significant stockholders; and

	•	changes in economic and political conditions in our markets.

Furthermore, the stock market has recently experienced extreme volatility that has particularly affected the market price of the stock of many early-stage companies and that, in some cases, has been unrelated or disproportionate to the operating performance of these companies. These broad market and industry fluctuations may adversely affect the market price of our common stock, regardless of our actual operating performance. Further, securities class action suits have been filed against companies following periods of market volatility in the price of their securities. If such an action is instituted against us, we may incur substantial costs and diversion of management attention and resources, which would seriously harm our business, financial condition and results of operations, regardless of the outcome of such litigation.

We will incur increased costs and demands upon our management and other personnel as a result of complying with the laws and regulations affecting public companies, which could harm our operating results.

We have never operated as a public company. As a public company, we will be subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and requirements of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”). These requirements may place a strain on our systems and resources. The Exchange Act requires that we file annual, quarterly and current reports with respect to our business and financial condition. The Sarbanes-Oxley Act as well as rules subsequently implemented by the Securities and Exchange Commission (the “SEC”) and the New York Stock Exchange, have imposed various requirements on public companies, including requiring changes in corporate governance practices. The cost of preparing and filing annual and quarterly reports, proxy statements and other information with the SEC and furnishing audited reports to stockholders will cause our expenses to be higher than they would be if we remained a privately-held company. Our management and other personnel will need to devote a substantial amount of time to comply with these rules and regulations.

In addition, the Sarbanes-Oxley Act requires that we maintain effective disclosure controls and procedures and internal control over financial reporting. To maintain and improve the effectiveness of our disclosure controls and procedures, significant resources and management oversight will be required. We will be implementing additional procedures and processes for the purpose of addressing the standards and requirements applicable to public companies. We expect to incur significant additional annual expenses related to these activities and, among other things, additional directors’ and officers’ liability insurance, director fees, reporting requirements, transfer agent fees, hiring additional accounting, legal and administrative personnel, increased auditing and legal fees and similar expenses.

Failure to design, implement and maintain effective internal controls could have a material adverse effect on our business and stock price.

As a public company, we will have significant requirements for enhanced financial reporting and internal controls. The process of designing and implementing effective internal controls is a continuous effort that requires us to anticipate and react to changes in our business and the economic and regulatory environments and to expend significant resources to maintain a system of internal controls that is adequate to satisfy our reporting obligations as a public company. If we are unable to establish appropriate internal financial reporting controls and procedures, it could cause us to fail to meet our reporting obligations on a timely basis, result in material misstatements in our financial statements and harm our operating results. In addition, we will be required, pursuant to Section 404 of the Sarbanes-Oxley Act, to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting for the first fiscal year beginning after the effective date of this offering. This assessment will need to include disclosure of any material weaknesses identified by our management in our internal control over financial reporting, as well as a statement that our auditors have issued an attestation report on effectiveness of our internal controls. Testing and maintaining internal controls may divert our management’s attention from other matters that are important to our business. We may not be able to conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404 or our independent registered public accounting firm may not issue a favorable assessment. If either we are unable to conclude that we have effective internal control over financial reporting or our independent registered public accounting firm are unable to provide us with an unqualified report, investors could lose confidence in our reported financial information, which could have a negative effect on the trading price of our stock.

Future sales of shares by existing stockholders could cause our stock price to decline.

If our existing stockholders sell, or indicate an intention to sell, substantial amounts of our common stock in the public market after the contractual lock-up agreements described below expire and other restrictions on resale lapse, the trading price of our common stock could decline below the initial public offering price. Based on shares outstanding as of October 18, 2010, upon the closing of this offering, we will have outstanding 30,439,451 shares of common stock. Of these shares, all of the shares of common stock offered in connection with this offering will be eligible for sale in the public market and substantially all of the remaining shares of common stock will be subject to a 180-day contractual lock-up with the underwriters. Goldman, Sachs & Co. and Credit Suisse Securities (USA) LLC, acting as representatives of the underwriters, may permit our executive officers, directors, employees and current stockholders who are subject to the contractual lock-up to sell shares prior to the expiration of the lock-up agreements. Upon expiration of the contractual lock-up agreements with the underwriters, and based on shares outstanding as of October 18, 2010, approximately 20,139,451 additional shares will be eligible for sale in the public market.

You will experience an immediate and substantial dilution of the net tangible book value of the common shares you purchase in this offering.

The initial public offering price per share of our common stock is substantially higher than our net tangible book value per common share immediately after this offering. For this purpose, the net tangible book value per share represents the total amount of the Company’s tangible assets, less the total amount of liabilities, divided by the total number of shares outstanding, and dilution is determined by subtracting the net tangible book value per share after the offering from the initial public offering price per share. As a result, you may pay a price per share that substantially exceeds the book value of our assets after subtracting our liabilities. Investors who purchase common stock in this offering will be diluted by $14.76 per share after giving effect to the sale of shares of common stock in this offering at the initial public offering price. If we grant options in the future to our employees, and those options are exercised or other issuances of common stock are made, there will be further dilution.

Further, we may need to raise additional funds in the future to finance our operations and/or acquire complimentary businesses. If we obtain capital in future offerings on a per-share basis that is less than the initial public offering price per share, the value of the price per share of your common stock will likely be reduced. In addition, if we issue additional equity securities in a future offering and you do not participate in such offering, there will effectively be dilution in your percentage ownership interest in the Company.

Under the Company’s Amended and Restated 2008 Stock Incentive Plan, the Company granted, and in the future intends to grant, awards of stock options to purchase common stock and other awards to our officers, directors, employees and consultants. As of October 18, 2010, we have granted stock options (excluding canceled stock options) with respect to 5,347,764 shares of common stock, (of which, options to purchase 5,967 shares have been exercised as of October 18, 2010). Stock options granted prior to February 4, 2010, will vest and become exercisable upon the consummation of this offering. Generally, stock options granted after such date will not vest in connection with this offering; provided that an aggregate of 514,110 stock options granted to Mr. Perlman and Mr. Price on March 26, 2010, will vest and become exercisable upon the consummation of this offering.

We will in the future grant stock options and other awards to certain current or future officers, directors, employees and consultants of the Company under additional plans or individual agreements. The grant and exercise of these awards, as applicable, will have the effect of diluting your ownership interests in the Company. We may also issue additional equity securities in connection with other types of transactions, including shares issued as part of the purchase price for acquisitions of assets or other companies from time to time in connection with strategic partnerships or joint ventures, or as incentives to management or other providers of resources to the Company. Such additional issuances are likely to have the same dilutive effect.

Because we do not currently intend to pay cash dividends on our common stock for the foreseeable future and our credit facility prohibits us from paying such cash dividends, you may not receive any return on investment unless you sell your common stock for a price greater than that which you paid for it.

To date, the Company has not paid any dividends on its capital stock. The Company does not anticipate making any cash dividends or other distributions to the stockholders in the immediate or foreseeable future, and any future decision to make such distributions will be at the discretion of the Board of Directors of the Company, referred to herein as the Board of Directors or the Board, and, in any event, will be dependent upon the Company’s financial condition, results of operations, capital requirements, contractual restrictions and such other factors as the Board of Directors deems relevant. Further, our existing credit facility prohibits us from paying cash dividends, and any future financing agreements may prohibit us from paying any type of dividends. As a result, you may not receive any return on an investment in your shares of common stock unless you sell such shares for a price greater than that which you paid. In addition, to the extent we do not pay dividends, our common stock may be less valuable because a return on investment will only occur if and to the extent our stock price appreciates, which may never occur.

Your ability to influence corporate matters may be limited because a small number of stockholders beneficially own a substantial amount of our common stock and will continue to have substantial control over us after the offering.

Upon completion of this offering, our officers, directors and principal stockholders (greater than 5% stockholders) collectively will beneficially own approximately 26.7% of our issued and outstanding common stock. As a result, these stockholders will be able to exert significant influence over all matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions, such as a merger or other sale of our Company or its assets, and may have interests that are different from yours and may vote in a way with which you disagree and which may be adverse to your interests. In addition, this concentration of ownership may have the effect of preventing, discouraging or deferring a change of control, which could depress the market price of our common stock.

Transactions engaged in by our principal stockholders, our officers or directors involving our common stock may have an adverse effect on the price of our stock.

As described above, our officers, directors and principal stockholders (greater than 5% stockholders) collectively will control approximately 26.7% of our issued and outstanding common stock upon completion of this offering. Subsequent sales of our shares by these stockholders could have the effect of lowering our stock price. The perceived risk associated with the possible sale of a large number of shares by these stockholders, or the adoption of significant short positions by hedge funds or other significant investors, could cause some of our stockholders to sell their stock, thus causing the price of our stock to decline. In addition, actual or anticipated downward pressure on our stock price due to actual or anticipated sales of stock by our directors or officers could cause other institutions or individuals to engage in short sales of our common stock, which may further cause the price of our stock to decline.

From time to time our directors and executive officers may sell shares of our common stock on the open market. These sales will be publicly disclosed in filings made with the SEC. In the future, our directors and executive officers may sell a significant number of shares for a variety of reasons unrelated to the performance of our business. Our stockholders may perceive these sales as a reflection on management’s view of the business and result in some stockholders selling their shares of our common stock. These sales could cause the price of our stock to drop.

Provisions in our amended and restated certificate of incorporation, which will be in effect upon the completion of this offering, and Delaware law may discourage a takeover attempt.

Provisions contained in our amended and restated certificate of incorporation, which will be in effect upon the completion of this offering, and Delaware law impose various procedural and other requirements, which could make it more difficult for a third party to acquire us or for stockholders to effect certain corporate actions. For example, our amended and restated certificate of incorporation will authorize our Board of Directors to determine the rights, preferences, privileges and restrictions of unissued series of preferred stock, without any vote or action by our stockholders. Therefore, the Board of Directors can authorize and issue shares of preferred stock with voting or conversion rights that could adversely affect the voting or other

rights of holders of our common stock. In addition, as of the closing of this offering, our amended and restated certificate of incorporation and amended and restated bylaws will provide for a staggered, or classified board of directors consisting of three classes of directors, each serving staggered three-year terms. These rights may have the effect of delaying or deterring a change of control of our Company. These provisions could limit the price that certain investors may be willing to pay in the future for shares of our common stock.

We will have broad discretion in using the proceeds of this offering, and we cannot assure that we will effectively expend the proceeds.

We intend to use the net proceeds of this offering to repay our existing credit facility, fund our acquisition program and for working capital, capital expenditures and general corporate purposes. We will have significant flexibility and broad discretion in applying the net proceeds of this offering and there can be no assurance that we will apply the proceeds of this offering effectively. Our management might not be able to yield a significant return, if any, on any investment of these net proceeds. You will not have the opportunity to influence our decisions on how to use our net proceeds from this offering.

Congress has enacted new legislation that affects the taxation of common stock held by or through foreign entities.

Recently enacted legislation generally will impose a withholding tax of 30% on dividend income from our common stock and the gross proceeds of a disposition of our common stock paid to certain foreign entities after December 31, 2012, unless the foreign entity complies with certain conditions or an exception applies. Please see “Material U.S. Federal Tax Considerations—Non-U.S. Holders—New Legislation Affecting Taxation of Common Stock Held By or Through Foreign Entities” for more information.

FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements that involve risks and uncertainties. Forward-looking statements convey our current expectations or forecasts of future events. All statements contained in this prospectus other than statements of historical fact, including statements regarding our future results of operations and financial position, business strategy and plans, use of the net proceeds of this offering, and our objectives for future operations, are forward-looking. You can identify forward-looking statements by terminology such as “project,” “believe,” “anticipate,” “plan,” “expect,” “estimate,” “intend,” “should,” “would,” “could,” “will,” “can,” “continue,” or “may,” or the negative of these terms or other similar expressions that convey uncertainty of future events or outcomes. The following uncertainties and factors, among others (including the factors described in the section entitled “Risk Factors” in this prospectus), could affect our future performance and cause actual results to differ materially from those expressed or implied by forward-looking statements:


	•	our limited operating history;

	•	our ability to implement our growth strategy and acquisition program;

	•	our ability to integrate completed acquisitions;

	•	our expansion into international markets;

	•	our ability to secure additional financing;

	•	regulation of our industry;

	•	our information technology systems;

	•	our ability to protect our intellectual property rights and other information;

	•	our ability to compete successfully with our competitors;

	•	our ability to retain qualified physicians and other medical providers for our medical panel;

	•	our ability to retain our clients;

	•	our ability to provide accurate health-related risk assessment analyses of data;

	•	our ability to retain key management personnel; and

	•	restrictions in our credit facility and future indebtedness.

There are a number of important factors that could cause actual results to differ materially from the results anticipated by these forward-looking statements. These important factors include those that we discuss in this prospectus under the caption “Risk Factors.” You should read these factors and the other cautionary statements made in this prospectus as being applicable to all related forward-looking statements wherever they appear in this prospectus. If one or more of these factors materialize, or if any underlying assumptions prove incorrect, our actual results, performance or achievements may vary materially from any future results, performance or achievements expressed or implied by these forward-looking statements. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

This prospectus also contains statistical data and estimates, including those relating to market size and growth rates of the markets in which we participate, that we obtained from industry publications and generated with internal analysis and estimates. These publications include forward-looking statements made by the authors of such reports. These forward-looking statements are subject to a number of risks, uncertainties, and assumptions. Actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. Some data and information are also based on our good faith estimates, which are derived from our review of internal surveys as well as the independent sources listed above. Although we believe these sources are reliable, we have not independently verified the information and cannot assure you of its accuracy or completeness.

You should rely only on the information contained in this prospectus. We and the selling stockholders have not authorized anyone to provide information different from that contained in this prospectus. We and the selling stockholders are offering to sell, and seeking offers to buy, shares of common stock only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of our common stock.

USE OF PROCEEDS

We estimate that our net proceeds from the sale of the shares of common stock by us will be approximately $111.6 million, after deducting the underwriting discounts and commissions and estimated offering expenses payable by us. If the underwriters exercise their option to purchase additional shares in full, the net proceeds to us will be approximately $134.6 million. We will not receive any of the proceeds from the sale of shares by the selling stockholders.

We intend to use $99.9 million of the net proceeds to repay in full all outstanding amounts under our existing credit facility which was $99.9 million as of October 18, 2010. The proceeds from such outstanding amounts were used to fund acquisitions and for working capital. The remaining approximately $11.7 million will be used to continue to expand our business through acquisitions and for working capital and other general corporate purposes.

Our existing credit facility matures on December 18, 2012. Borrowings under the existing credit facility bear interest at a base rate plus 5.0% for base rate loans or at a LIBOR base rate plus 5.5% for LIBOR Loans with a LIBOR floor of 2.0%. There is no prepayment penalty if our existing credit facility is repaid in connection with this offering. Other than the agreement with the lenders under our existing credit facility, we have no definitive agreements with respect to any of the above activities.

Pending the foregoing uses, we intend to invest the net proceeds in high quality, investment grade U.S. government-backed obligations.

DIVIDEND POLICY

Since our incorporation in 2007, we have not declared or paid any dividends on our common stock. We currently intend to retain all of our future earnings, if any, to finance the growth and development of our business and do not anticipate paying cash dividends for the foreseeable future. Our existing credit facility prohibits us from paying cash dividends, and any future financing agreements may prohibit us from paying any type of dividends.

CAPITALIZATION

The following table sets forth our cash and cash equivalents and capitalization as of September 30, 2010, as follows:


	•	on an actual basis; and


	•	on a pro forma basis to reflect (1) the acquisition completed in October of 2010, (2) the write off of deferred financing costs related to the termination of our existing credit facility and entering in to a new credit facility in conjunction with this offering, and (3) the automatic conversion of all outstanding shares of our preferred stock into common stock simultaneously with the closing of this offering; and

	•	on a pro forma as adjusted basis to reflect (1) the items described in the preceding bullet, (2) our issuance and sale of 7,745,114 shares of common stock in this offering after deducting the underwriting discounts and commissions and estimated offering expenses payable by us, and (3) the application of the net proceeds therefrom as described in “Use of Proceeds”.

You should read this information in conjunction with “Use of Proceeds,” our consolidated financial statements and the related notes appearing at the end of this prospectus and the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section and other financial information contained in this prospectus.



	Actual			Pro Forma			Pro Forma as Adjusted

				(unaudited)
	(In thousands, except share and per share data)
Cash and cash equivalents	$	7,720		$	870		$	16,236

Revolving line of credit and discount facility	$	6,448		$	6,448		$	6,448
Total long-term debt related to credit facility, including current portion		89,620			96,270			—
Total long-term subordinated unsecured notes payable, including current portion		4,346			5,692			5,692

Stockholders’ equity:
Series A convertible preferred stock, $0.0001 par value: 50,000,000 shares authorized; 4,975,180 issued and outstanding, actual; 50,000,000 shares authorized, 0 shares issued or outstanding — pro forma and pro forma as adjusted		33,000			—			—
Common stock, $0.0001 par value: 250,000,000 shares authorized, 17,709,760 shares issued and outstanding — actual; 250,000,000 shares authorized, 22,684,940 issued and outstanding — pro forma; and 250,000,000 shares authorized, 30,430,054 shares issued and outstanding — pro forma as adjusted		2			2			3
Additional paid-in capital		41,545			74,543			186,178
Accumulated other comprehensive income		1,071			1,071			1,071
Accumulated deficit		(7,392	)		(9,245	)		(9,245	)

Total stockholders’ equity		68,226			66,371			178,007

Total capitalization	$	168,640		$	174,781		$	190,147

The table above does not include:


	•	447,763 shares of common stock issuable upon the exercise of warrants outstanding as of October 18, 2010 at an exercise price of $6.63 per share;

	•	5,341,797 shares of common stock issuable upon the exercise of stock options outstanding as of October 18, 2010 at a weighted average exercise price of $7.19 per share;

	•	4,877,119 shares of common stock available for future issuance under our equity compensation plans as of October 18, 2010.

DILUTION

If you invest in our common stock in this offering, your ownership interest will be immediately diluted to the extent of the difference between the initial public offering price per share and the net tangible book value per share of our common stock after this offering. Dilution results from the fact that the initial public offering price per share of common stock is substantially in excess of the net tangible book value per share of our common stock attributable to existing stockholders for our presently outstanding shares of common stock. We calculate net tangible book value per share of our common stock by dividing the net tangible book value (total consolidated tangible assets less total consolidated liabilities) by the number of outstanding shares of our common stock, including shares of common stock issuable upon conversion of our preferred stock simultaneously with the completion of this offering. Our net tangible book value (deficit) as of September 30, 2010 was $(73.8) million, or $(3.25) per share of our common stock, based on 22,684,940 shares of our common stock outstanding immediately prior to the closing of this offering. Net tangible book value represents the amount of total tangible assets less total liabilities. Dilution is determined by subtracting net tangible book value per share of our common stock from the initial public offering price per share of our common stock.

After giving effect to the sale of 7,745,114 shares of our common stock in this offering less the underwriting discounts, commissions and estimated offering expenses payable by us, and without taking into account any other changes in such net tangible book value after September 30, 2010, our pro forma as adjusted net tangible book value as of September 30, 2010 would have been $37.9 million or $1.24 per share. This represents an immediate increase in net tangible book value of $4.49 per share of our common stock to the existing stockholders and an immediate dilution in net tangible book value of $14.76 per share of our common stock, or 92.2% of the initial public offering price of $16.00, to investors purchasing shares of our common stock in this offering. The following illustrates such dilution per share of our common stock:



Initial public offering price per share	$	16.00

Pro forma tangible net book value per share at September 30, 2010		(3.25	)
Increase in pro forma net tangible book value per share attributable to new investors		4.49

Pro forma as adjusted net tangible book value per share after offering dilution per share to new investors		1.24

Dilution per share to new investors		14.76

If the underwriters exercise in full their option to purchase additional shares of our common stock in this offering, the pro forma as adjusted net tangible book value after the offering would be $1.90 per share, the increase in pro forma net tangible book value to existing stockholders would be $5.15 per share and the dilution to new investors would be $14.10 per share.

The following table summarizes, as of September 30, 2010, the differences between the number of shares purchased from us, the total consideration paid to us in cash and the average price per share that existing stockholders and new investors paid. The calculation below is based on the initial public offering price of $16.00 per share before deducting the underwriting discounts and commissions and estimated offering expenses payable by us.


	Shares Purchased					Total Consideration					Average Per Share

	Number		Percent			Amount		Percent

Existing stockholders		22,685,000		75	%	$	74,545,000		38	%	$	3.29
New investors		7,745,000		25	%	$	123,920,000		62	%	$	16.00

Total		30,430,000		100	%	$	198,465,000		100	%	$

The discussion and tables above assume no exercise of the underwriters’ option to purchase additional shares from us. If the underwriters’ option is exercised in full:



	•	the number of shares of common stock held by existing stockholders will represent 70.9% of the total number of shares of common stock to be outstanding after this offering; the number of shares of common stock held by investors participating in this offering will represent 29.1% of the total number of shares of common stock to be outstanding after this offering; and



	•	our adjusted pro forma net tangible book value at September 30, 2010 will be $60.9 million, or $1.90 per common stock, representing an immediate increase in pro forma net tangible book value of $5.15 per share of common stock to our existing stockholders and an immediate dilution of $14.10 per share to investors purchasing shares in this offering.

The foregoing tables and calculations are based on the number of shares of our common stock outstanding as of September 30, 2010 after giving effect to the automatic conversation of all outstanding shares of our preferred stock simultaneously with the closing of this offering and, excludes:


	•	447,763 shares of common stock issuable upon the exercise of warrants outstanding as of October 18, 2010 at an exercise price of $6.63 per share.

	•	5,341,797 shares of common stock issuable upon the exercise of stock options outstanding as of October 18, 2010 at a weighted average exercise price of $7.19 per share.

	•	4,877,119 shares of common stock available for future issuance under our equity compensation plans as of October 18, 2010.

To the extent any of these outstanding options or warrants are exercised, there will be further dilution to new investors. To the extent all of such outstanding options and warrants had been exercised as of September 30, 2010, the pro forma as adjusted net tangible book value (deficit) per share after this offering would be $2.19 and total dilution per share to new investors would be $13.81.

For a description of our equity incentive plan, see “Executive Compensation—Equity Incentive Plans.”

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

We operate in a highly fragmented industry and have completed numerous acquisitions. Central to our strategy is growth through acquisitions that will expand our geographic coverage, provide new or complementary lines of business, expand our portfolio of services, and increase our market share.

Following is a list of the acquisitions completed by us since July 2008:


Date	Name

October 1, 2010	•	BMEGateway

September 7, 2010	•	UK Independent Medical Services

September 1, 2010	•	Health Cost Management

August 6, 2010	•	Verity Medical
	•	Exigere

June 30, 2010	•	SOMA Medical Assessments
	•	Direct IME
	•	Network Medical Review
	•	Independent Medical Services
	•	401 Diagnostics

March 26, 2010	•	Metro Medical Services

March 15, 2010	•	American Medical Bill Review
	•	Medical Evaluations

December 31, 2009	•	Abeton
	•	Medical Assurance Group
	•	MedNet I.M.S.
	•	Qualmed
	•	IME Operations of Physician Practice

August 14, 2009	•	The Evaluation Group

August 4, 2009	•	Benchmark Medical Consultants

July 7, 2009	•	IME Software Solutions

May 21, 2009	•	Florida Medical Specialists
	•	Marquis Medical Administrators

April 17, 2009	•	Ricwel

July 14, 2008	•	CFO Medical Services
	•	Crossland Medical Review Services
	•	Southwest Medical

The unaudited pro forma condensed combined statements of operations combine our consolidated results of operations and each of the acquisitions completed in 2009 and 2010 for the year ended December 31, 2009 and for the nine months ended September 30, 2010, as if the acquisitions had occurred on January 1, 2009. The unaudited pro forma condensed combined balance sheet combines our consolidated balance sheet as of September 30, 2010 as if the October 2010 acquisition had occurred on September 30, 2010.

The unaudited pro forma condensed combined financial information has been prepared from, and should be read in conjunction with, our historical consolidated financial statements and related notes and the audited financial statements with respect to the acquisitions included elsewhere in this prospectus.

The historical financial statements of SOMA and Direct IME were presented in Canadian dollars and the historical financial statements of UK Independent Medical Services (“UKIM”) were presented in pounds sterling. The historical profit and loss accounts and balance sheet of UKIM have been prepared in accordance with generally accepted accounting principles in the United Kingdom (“UK GAAP”). For purposes of presenting the unaudited pro forma consolidated financial information, the profit and loss accounts have

been adjusted to conform to U.S. generally accepted accounting principles as described in Note 5. Additionally, for the purpose of presenting the unaudited pro forma condensed combined financial information, the adjusted income statements of SOMA, Direct IME and UKIM for the periods ended December 31, 2009 and September 30, 2010 have been translated into U.S. Dollars at the average daily rates for the periods ended December 31, 2009 and September 30, 2010, respectively.

The pro forma acquisition adjustments described in Note 4 were based on available information and certain assumptions made by our management and may be revised as additional information becomes available. The unaudited pro forma condensed combined financial information included in this prospectus is not intended to represent what our financial position is or results of operations would have been if the acquisition had occurred on that date or to project our results of operations for any future period. Since the Company and each of the acquired businesses were not under common control or management for some of or any period presented, the unaudited pro forma condensed combined financial results may not be comparable to, or indicative of, future performance.

The unaudited pro forma condensed combined statements of operations included herein have been prepared pursuant to the rules and regulations of the SEC. Certain information and certain footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to these rules and regulations; however, management believes that the disclosures are adequate to make the information presented not misleading.

The unaudited pro forma condensed combined financial information does not reflect any cost savings, operating synergies or revenue enhancements that the combined company may achieve as a result of the acquisition, the costs to combine our operations and the acquisitions or the costs necessary to achieve these cost savings, operating synergies and revenue enhancements.

EXAMWORKS AND ACQUIRED BUSINESSES
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2009

(In thousands, except share and per share data)


	ExamWorks			Abeton Group		2009 Individually Insignificant Acquisitions			Metro Medical Services			Direct IME		Verity		UK Independent Medical		2010 Individually Insignificant Acquisitions (January 1 through September 30, 2010)		2010 Individually Insignificant Acquisition (Post September 30, 2010)		Pro Forma Adjustments			Pro Forma Combined

Revenues	$	49,634		$	15,229	$	24,765		$	15,534		$	6,918	$	8,790	$	16,380	$	56,811	$	13,555	$	(227	)(a)	$	207,389
Costs and expenses:
Costs of revenues		32,026			9,165		15,602			10,885			3,908		5,148		11,757		35,834		7,972		(227	)(a)		132,070
Selling, general and administrative		15,811			4,622		6,967			2,437			400		1,225		2,310		17,164		4,803		(16,436	)(b)		39,303
Depreciation and amortization		6,889			624		98			28			8		30		218		511		88		19,426	(c)		27,920

Total costs and expenses		54,726			14,411		22,667			13,350			4,316		6,403		14,285		53,509		12,863		2,763			199,293
Income (loss) from operations		(5,092	)		818		2,098			2,184			2,602		2,387		2,095		3,302		692		(2,990	)		8,096
Other expenses (income)		1,925			585		141			(19	)		2		—		146		239		—		7,279	(d)		10,298

Income (loss) before income taxes		(7,017	)		233		1,957			2,203			2,600		2,387		1,949		3,063		692		(10,269	)		(2,202	)
Provision (benefit) for income taxes		(2,613	)		20		(77	)		—			—		7		586		133		—		1,123	(e)		(821	)

Net income (loss)	$	(4,404	)	$	213	$	2,034		$	2,203		$	2,600	$	2,380	$	1,363	$	2,930	$	692	$	(11,392	)	$	(1,381	)

Net income (loss) attributable to common stockholders per share — basic and diluted	$	(0.42	)																						$	(0.08	)

Pro Forma weighted average number of common shares outstanding used in computing per share amounts — basic and diluted		10,479,155																								16,447,386	(f)

The accompanying notes are an integral part of these unaudited pro forma condensed combined financial statements.

EXAMWORKS AND ACQUIRED BUSINESSES
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010

(In thousands, except share and per share data)



	ExamWorks			Metro Medical Services		Direct IME		Verity		UK Independent Medical			Individually Insignificant Acquisition (January 1 through September 30, 2010)			Individually Insignificant Acquisition (Post September 30, 2010)		Pro Forma Adjustments			Pro Forma Combined

Revenues	$	109,242		$	4,149	$	5,158	$	5,382	$	11,576		$	25,507		$	9,450	$	(64	)(a)	$	170,400
Costs and expenses:
Costs of revenues		68,693			2,781		2,764		3,095		8,254			16,260			5,766		(64	)(a)		107,549
Selling, general and administrative		23,970			665		483		679		2,425			6,254			2,696		(7,957	)(b)		29,215
Depreciation and amortization		12,452			9		4		22		161			150			66		7,952	(c)		20,816

Total costs and expenses		105,115			3,455		3,251		3,796		10,840			22,664			8,528		(69	)		157,580
Income (loss) from operations		4,127			694		1,907		1,586		736			2,843			922		5			12,820
Other expenses		5,344			11		2		—		763			(416	)		383		2,488	(d)		8,575

Loss before income taxes		(1,217	)		683		1,905		1,586		(27	)		3,259			539		(2,483	)		4,245
Provision (benefit) for income taxes		(627	)		—		—		—		(38	)		41			—		2,291	(e)		1,667

Net income (loss)	$	(590	)	$	683	$	1,905	$	1,586	$	11		$	3,218		$	539	$	(4,774	)	$	2,578

Net loss attributable to common shareholders per share — basic	$	(0.04	)																		$	0.15

Diluted	$	(0.04	)																		$	0.11

Pro Forma weighted average number of common shares outstanding used in computing per share amounts
Basic —		15,571,924																				17,516,977	(f)

Diluted —		15,571,924																				22,828,607	(f)

The accompanying notes are an integral part of these unaudited pro forma condensed combined financial statements.

EXAMWORKS AND ACQUIRED BUSINESSES
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

AS OF SEPTEMBER 30, 2010

(In thousands)



	ExamWorks			2010 Individually Insignificant Acquisition (Post September 30, 2010)			Pro Forma Adjustments			Pro Forma Combined

Assets
Current assets:
Cash and cash equivalents	$	7,720		$	403		$	(7,253	) (g)	$	870
Accounts receivable, net		37,556			2,353			—			39,909
Other receivables		134			—			—			134
Prepaid expenses		1,859			547			—			2,406
Deferred tax assets		1,117			—			—			1,117
Other current assets		2,296			—			—			2,296

Total current assets		50,682			3,303			(7,253	)		46,732
Equipment and leasehold improvements, net		3,242			174			(32	) (h)		3,384
Goodwill		77,391			—			6,338	(i)		83,729
Intangible assets, net		64,590			—			5,736	(i)		70,326
Deferred tax assets, noncurrent		7,419			—			—			7,419
Deferred financing costs, net		2,988			—			—			2,988
Other assets		233			57			—			290

Total assets	$	206,545		$	3,534		$	4,789		$	214,868


Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	18,073		$	91		$	—		$	18,164
Accrued expenses		12,715			236			—			12,951
Deferred revenue		938			—			—			938
Current portion of long-term debt		18,660			208			1,121	(j)		19,989
Current portion of subordinated unsecured notes payable		1,836			—			708	(j)		2,544
Other current liabilities		3,432			—			—			3,432

Total current liabilities		55,654			535			1,829			58,018
Revolving line of credit and discount facility		6,448			—			—			6,448
Long-term debt, less current portion		70,960			834			4,487	(j)		76,281
Long-term subordinated unsecured notes payable, less current portion		2,510			—			638	(j)		3,148
Other long-term liabilities		2,747			—			—			2,747

Total liabilities		138,319			1,369			6,954			146,642
Commitments and contingencies Stockholders’ equity:
Preferred stock		33,000			—			—			33,000
Common stock		2			—			—			2
Dividends paid		—			(2,250	)		2,250	(k)		—
Additional paid-in capital		41,545			1			(1	) (k)		41,545
Accumulated other comprehensive loss		1,071			—			—			1,071
(Accumulated deficit) retained earnings		(7,392	)		4,414			(4,414	) (k)		(7,392	)

Total stockholders’ equity (deficit)		68,226			2,165			(2,165	)		68,226

Total liabilities and stockholders’ equity	$	206,545		$	3,534		$	4,789		$	214,868

The accompanying notes are an integral part of these unaudited pro forma condensed combined financial statements.

EXAMWORKS AND ACQUIRED BUSINESSES

Notes to the Unaudited Pro Forma Condensed Combined Financial Statements

NOTE 1 — Basis of Presentation

The acquisitions are accounted for under the acquisition method of accounting in accordance with ASC Topic 805-10, “Business Combinations—Overall” (“ASC 805-10”). The Company accounts for the transaction by using its historical information and accounting policies and adding the assets and liabilities of the acquired businesses as of each respective acquisition date at their respective fair values. Pursuant to ASC 805-10, under the acquisition method, the total estimated purchase price for each acquisition (consideration transferred) as described in Note 3, Preliminary Purchase Price Allocation, is measured at the acquisition closing dates using the fair value of the net assets acquired. The assets and liabilities of the acquisitions have been measured based on various estimates and assumptions that the Company’s management believes are reasonable and appropriate given the currently available information. Use of different estimates and judgments could yield different results.

The process for estimating the fair values of identifiable intangible assets and certain tangible assets requires the use of significant estimates and assumptions, including estimating future cash flows and developing appropriate discount rates. The excess of the purchase price (consideration transferred) over the estimated amounts of identifiable assets and liabilities of the acquisitions as of the effective date was allocated to goodwill in accordance with ASC 805-10.

For purposes of measuring the estimated fair value of the assets acquired and liabilities assumed as reflected in the unaudited pro forma condensed combined financial statements, the Company used the guidance in ASC Topic 820-10, “Fair Value Measurement and Disclosure—Overall” (“ASC 820-10”), which established a framework for measuring fair values. ASC 820-10 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). Market participants are assumed to be buyers and sellers in the principal (most advantageous) market for the asset or liability. Additionally, under ASC 820-10, fair value measurements for an asset assume the highest and best use of that asset by market participants. As a result, the Company may be required to value assets of the acquired companies at fair value measures that do not reflect the Company’s intended use of those assets. Use of different estimates and judgments could yield different results.

Under ASC 805-10, acquisition related transaction costs (e.g., advisory, legal, valuation, and other professional fees) are not included as a component of consideration transferred but are required to be expensed as incurred.

NOTE 2 — Accounting Policies

Upon completion of each acquisition, the Company has performed a detailed review of each acquired business’ accounting policies. As a result, the Company has adjusted the financial statements of each acquired entity to conform to the Company’s presentation and policies. As such, the presented pro forma financial information is consistent with the acquiree and conforms to requirements as promulgated by U.S. GAAP.

NOTE 3 — Purchase Price Allocation

Other Individually Insignificant Acquisitions — Post September 30, 2010

On October 1, 2010, we acquired substantially all of the assets and assumed certain liabilities of Boston Medical Evaluation/Examination, Inc., Gateway Medical Services, Inc., and BME Gateway of New York, Inc. (collectively, “BMEGateway”). BMEGateway was acquired for an aggregate purchase price of $14.8 million, comprised of $13.5 million in cash and $1.3 million in an unsecured, subordinated promissory note.

EXAMWORKS AND ACQUIRED BUSINESSES

Notes to the Unaudited Pro Forma Condensed Combined Financial Statements (Continued)

The preliminary allocation of consideration for this individually insignificant acquisition is summarized as follows (in thousands):


Equipment and leasehold improvements	$	142
Client relationships		4,578
Tradenames		946
Covenants not to compete		55
Technology		157
Goodwill		6,338
Assets acquired and liabilities assumed, net		2,629

Totals	$	14,845

We have not completed our valuation of the assets acquired and liabilities assumed; accordingly, we have assumed that the fair value of the tangible assets acquired and liabilities assumed approximate their historic book values and have allocated a portion of the excess cost of the acquisition to identified intangibles using the results of the valuations of our other recent acquisitions. On this basis, we have estimated the fair value of identified intangibles to be $5.7 million and goodwill to be $6.3 million.

NOTE 4 — Pro Forma Adjustments

Item (a): Adjustment represents the elimination of revenues and related costs of revenue related to revenues between certain acquired businesses during the year ended December 31, 2009 and nine months ended September 30, 2010 of approximately $227,000 and $64,000, respectively.

Item (b): Adjustment represents the elimination of certain selling, general and administrative costs that represent material, non-recurring costs related to the acquired entities.

Adjustments of approximately $16.4 million and $8.0 million for the year ended December 31, 2009 and for the nine months ended September 30, 2010, respectively, represent certain salary and related personal expenses attributable to the previous owners of the acquired businesses. These adjustments represent contractual reductions for new compensation terms entered into as part of the acquisition agreement. The expenses in the historical financial statements are considered to be non-recurring and are not expected to have a continuing impact on the operations of the Company.

Item (c): Adjustments to reflect incremental depreciation and amortization expense for the pro forma periods are as follows (in thousands):


	Fair value		Useful life (months)		Expected depreciation and amortization for the year ended December 31, 2009

Equipment and leasehold improvements	$	1,718		12	$	1,718
Client relationships		56,206		42		16,059
Non-compete agreement		1,353		36		451
Tradename		13,334		45		3,556
Technology		2,762		24		1,381

	$	75,373				23,165

Less amounts recorded						3,739

Net adjustment to depreciation and amortization expense					$	19,426

EXAMWORKS AND ACQUIRED BUSINESSES

Notes to the Unaudited Pro Forma Condensed Combined Financial Statements (Continued)


	Fair value		Useful life (months)		Expected depreciation and amortization for the nine months ended September 30, 2010

Equipment and leasehold improvements	$	1,336		12	$	1,002
Client relationships		42,361		42		9,077
Non-compete agreement		456		36		114
Tradename		9,219		45		1,844
Technology		1,374		24		515

	$	54,746				12,552

Less amounts recorded						4,600

Net adjustment to depreciation and amortization expense					$	7,952

Item (d): Adjustment assumes that acquisition related debt was incurred on January 1, 2009 and reflects additional interest expense incurred from this borrowing. Adjustments to interest expense consist of the following (in thousands):


	Year ended December 31, 2009			Nine months ended September 30, 2010

Incremental interest expense on term loan and revolver borrowings to finance acquisitions (assuming an interest rate of 7.5%)	$	6,813		$	2,860
Eliminate acquired companies’ pre-acquisition interest expense		(881	)		(743	)
Incremental interest expense incurred from the amortization of capitalized loan costs		1,246			295
Incremental interest on seller note acquired		101			76

	$	7,279		$	2,488

Item (e): Adjustment reflects the calculated income tax provision for acquired businesses considered to be flow through entities prior to acquisition.

Item (f): Adjustment to the weighted average number of common shares outstanding used in computing per share amounts, basic and diluted, is as follows:


	Year ended December 31, 2009		Nine months ended September 30, 2010

Historical weighted average common shares outstanding		10,479,155		17,068,421
Common shares issued in connection with acquisitions		5,968,231		448,556

Pro forma weighted average number of common shares outstanding:
Basic:		16,447,386		17,516,977

Impact of dilutive instruments		—		5,311,630

Diluted:		16,447,386		22,828,607

EXAMWORKS AND ACQUIRED BUSINESSES

Notes to the Unaudited Pro Forma Condensed Combined Financial Statements (Continued)

Item (g): Adjustments to cash and cash equivalents are as follows (in thousands):


	September 30, 2010

Total gross purchase price	$	14,845
Borrowings under term loan credit facility		(6,650	)
Borrowings of subordinated unsecured notes payable		(1,346	)
Cash and cash equivalents not acquired, net		403

Total adjustment to cash and cash equivalents	$	7,252

Item (h): Adjustments to equipment and leasehold improvements are as follows (in thousands):


	September 30, 2010

Book value of fixed assets acquired	$	(174	)
Fair value of fixed assets acquired		142

Net adjustment to equipment and leasehold improvements:	$	(32	)

Item (i): Adjustment to record intangible assets, goodwill and the related deferred tax liability in the combined balance sheet as detailed in Note 3 — Preliminary Purchase Price Allocation.

Item (j): Adjustments to debt are as follows (in thousands):


	September 30, 2010

Borrowings of subordinated unsecured notes payable — current	$	638
Borrowings of subordinated unsecured notes payable — long term		708

Total	$	1,346

Borrowings under credit facility to fund acquisitions — current	$	1,330
Repayment of acquired company’s debt — current		(209	)

Total	$	1,121

Borrowings under credit facility to fund acquisitions — long term		5,320
Repayment of acquired company’s debt — long term		(833	)

Total	$	4,487

Item (k): Adjustments to stockholders’ equity reflects adjustments to the following (in thousands):

An adjustment was made to eliminate dividends paid by the acquired business.

Adjustments to additional paid-in capital:



•	An adjustment of approximately $4.4 million was made to retained earnings (accumulated deficit) to eliminate the acquired business’ historical retained earnings.


•	An adjustment was made to common stock to reflect acquisition consideration, at par, and to eliminate the acquired business’ historical common stock, at par.

EXAMWORKS AND ACQUIRED BUSINESSES

Notes to the Unaudited Pro Forma Condensed Combined Financial Statements (Continued)

NOTE 5 — UK GAAP to US GAAP Adjustments

The following tables show a reconciliation of the historical statement of operations of UK Independent Medical for the year ended December 31, 2009 and the historical statement of operations for the nine months ended September 30, 2010 prepared in accordance with UK GAAP and in pounds sterling, to the statements of operations under US GAAP and in U.S. Dollars included in the unaudited pro forma combined condensed statements of operations.

UK GAAP to US GAAP Reconciliation
Year ended December 31, 2009


	UK Independent Medical Services (GBP)		UK GAAP to US GAAP Presentation Adjustments (GBP)			UK GAAP to US GAAP Presentation (GBP)		UK GAAP to US GAAP Adjustments (GBP)			UK Independent Medical Services (GBP)		UK Independent Medical Services (USD)

													(c)
Turnover	£	10,461	£	(10,461	)(a)	£	—	£	—		£	—	$	—
Revenues		—		10,461	(a)		10,461		—			10,461		16,381
Costs and expenses
Costs of revenues		7,508		—			7,508		—			7,508		11,757
Selling, general and administrative		1,618		(143	)(a)		1,475		—			1,475		2,310
Depreciation and amortization		—		143	(a)		143		(4	)(b)		139		218

Total costs and expenses		9,126		—			9,126		(4	)		9,122		14,285
Income from operations		1,335		—			1,335		4			1,339		2,096
Other expenses		93		—			93		—			93		146

Income before income taxes		1,242		—			1,242		4			1,246		1,950
Provision for income taxes		374		—			374		—			374		586

Net income	£	868	£	—		£	868	£	4		£	872	$	1,364

EXAMWORKS AND ACQUIRED BUSINESSES

Notes to the Unaudited Pro Forma Condensed Combined Financial Statements (Continued)

UK GAAP to US GAAP Reconciliation
For the Period of January 1, 2010 to September 7, 2010



	UK Independent Medical			UK GAAP to US GAAP Presentation Adjustments (GBP)			UK GAAP to US GAAP Presentation Period From January 1 – September 30, 2010 (GBP)			UK GAAP to US GAAP Adjustments Period From January 1 – September 30, 2010 (GBP)			UK Independent Medical Period From January 1 – September 30, 2010 (GBP)			UK Independent Medical Period From January 1 – September 30, 2010 (USD)

																(c)

Turnover	£	7,556		£	(7,556	)(a)	£	—		£	—		£	—		$	—
Net revenues		—			7,556	(a)		7,556			—			7,556			11,576
Costs and expenses
Costs of revenues		5,388			—			5,388			—			5,388			8,254
Selling, general and administrative		1,691			(108	)(a)		1,583			—			1,583			2,425
Depreciation and amortization		—			108	(a)		108			(3	)(b)		105			161

Total costs and expenses		7,079			—			7,079			(3	)		7,076			10,840
Income from operations		477			—			477			3			480			736
Other expenses		498			—			498			—			498			763

Loss before income taxes		(21	)		—			(21	)		3			(18	)		(27	)
Benefit for income taxes		(25	)		—			(25	)		—			(25	)		(38	)

Net income	£	4		£	—		£	4		£	3		£	7		$	11

The UK GAAP to US GAAP adjustments represent the adjustments that are required to reconcile the statements of operations of UKIM to US GAAP and provide descriptions of the nature of each adjustment as follows:

Notes:


(a):	Reclassification from UKIM’s UK GAAP income statement presentation to US GAAP statements of operations presentation. This includes conforming adjustments to make UKIM’s presentation for revenues, and selling, general and administrative expenses and depreciation and amortization expenses consistent with the presentation of the Company’s financial statement line items.
(b):	Adjustment to remove amortization expense related to the amortization of goodwill as allowed by UK GAAP.
(c):	Results are converted to U.S. Dollars using the average exchange rate for the periods presented.

SELECTED CONSOLIDATED FINANCIAL DATA

The following tables set forth, for the periods and as of the dates indicated, our predecessor and successor summary consolidated financial data. For financial statement presentation purposes, CFO Medical Services, P.A. (“CFO”) has been identified as the predecessor. The summary predecessor statement of operations data for the year ended December 31, 2007 and for the period from January 1, 2008 to July 13, 2008 are derived from the audited financial statements included elsewhere in this prospectus. The summary predecessor statement of operations data for the years ended December 31, 2006 and 2005 are derived from unaudited financial statements not included in this prospectus. ExamWorks is the successor company, having been founded on April 27, 2007 for the purpose of acquiring companies in the IME industry. The successor summary consolidated statement of operations data for the period from April 27, 2007 (inception) to December 31, 2007, each of the years in the two-year period ended December 31, 2009 and the successor summary consolidated balance sheet data as of December 31, 2008 and 2009 are derived from our audited consolidated financial statements included elsewhere in this prospectus. The summary predecessor balance sheet data as of December 31, 2007 are derived from CFO’s audited financial statements included elsewhere in this prospectus. The predecessor summary balance sheet data as of December 31, 2006 and 2005 are derived from CFO’s unaudited financial statements not included in this prospectus. The successor summary consolidated balance sheet data as of December 31, 2007 are derived from our consolidated audited financial statements not included in this prospectus. The successor summary consolidated statement of operations data for the nine months ended September 30, 2009 and 2010 and the summary balance sheet data as of September 30, 2010 are derived from our unaudited financial statements, included elsewhere in this prospectus. Our unaudited consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and notes thereto and, in the opinion of management, include all adjustments (consisting of normal recurring adjustments) necessary for a fair statement of the information for the unaudited interim periods. Historical results are not indicative of the results to be expected in the future and results of interim periods are not necessarily indicative of results for the entire year.

You should read the following selected consolidated financial data below in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements, related notes and other financial information included in this prospectus.



	Predecessor										Successor

								For the period ended July 13, 2008(1)
	For the years ended December 31,													For the years ended, December 31,						For the nine months ended September 30,

	2005		2006			2007					2007(2)			2008			2009			2009			2010

	(In thousands, except share and per share data)
Consolidated Statement of Operations Data:(4)(5)
Revenues	$	7,391	$	9,145		$	9,783	$	6,072		$	—		$	14,694		$	49,634		$	33,796		$	109,242
Costs and expenses:
Costs of revenues		5,123		6,466			5,873		3,757			—			9,828			32,026			21,582			68,693
Selling, general and administrative expenses		1,938		2,637			3,772		2,304			226			4,610			15,811			9,933			23,970
Depreciation and amortization		45		80			57		33			—			2,392			6,889			4,630			12,452

Total costs and expenses		7,106		9,183			9,702		6,094			226			16,830			54,726			36,145			105,115

Income (loss) from operations		285		(38	)		81		(22	)		(226	)		(2,136	)		(5,092	)		(2,349	)		4,127
Interest and other expenses, net		4		7			13		11			—			1,470			1,925			841			5,344

Income (loss) before income taxes		281		(45	)		68		33			(226	)		(3,606	)		(7,017	)		(3,190	)		(1,217	)
Provision (benefit) for income taxes		12		11			4		3			—			(1,434	)		(2,613	)		(1,188	)		(627	)

Net income (loss)	$	269	$	(56	)	$	64	$	(36	)	$	(226	)	$	(2,172	)	$	(4,404	)	$	(2,002	)	$	(590	)


Net income (loss) per share attributable to common stockholders — basic and diluted	$	269.00	$	(56.00	)	$	54.01	$	(30.38	)	$	(0.73	)	$	(0.44	)	$	(0.42	)	$	(0.19	)	$	(0.04	)
Weighted average shares outstanding — common stock		1,000		1,000			1,185		1,185			308,466			4,895,962			10,479,155			10,302,888			15,571,924
Pro forma net loss per share — basic and diluted		—		—			—		—			—			—			—			—		$	(0.03	)
Pro forma weighted average shares outstanding — common stock(3)		—		—			—		—			—			—			—			—			20,547,104
Other Financial Data:
Adjusted EBITDA(4)	$	330	$	42		$	138	$	11		$	(36	)	$	1,076		$	6,496		$	4,669		$	20,264



	Predecessor							Successor

														As of September 30, 2010
	As of December 31,							As of December 31,

	2005			2006		2007		2007		2008		2009

								(In thousands)
Consolidated Balance Sheet Data:
Cash and cash equivalents	$	215		$	180	$	191	$	416	$	1,203	$	1,499	$	7,720
Current assets		353			1,605		1,625		416		4,735		11,497		50,682
Total assets		410			1,755		1,883		689		38,898		76,547		206,545
Current portion of long-term debt		—			—		—		—		1,534		3,263		18,660
Current portion of subordinated unsecured notes payable		—			—		—		—		—		1,565		1,836
Current liabilities		402			921		648		434		5,700		20,871		55,654
Revolving line of credit and discount facility		—			—		500		—		1,500		600		6,448
Long-term debt, less current portion		—			—		49		—		10,205		29,371		70,960
Long-term subordinated unsecured notes payable, less current portion		289			251		—		—		—		3,552		2,510
Total liabilities		691			1,172		1,197		434		18,375		56,147		138,319
Convertible preferred stock		—			—		—		—		—		—		33,000
Total stockholders’ equity (deficit)	$	(281	)	$	583	$	686	$	255	$	20,523	$	20,400	$	68,226



(1)	Includes the period from January 1, 2008 to July 13, 2008 for the predecessor company.
(2)	Includes the period from April 27, 2007 (inception) to December 31, 2007 for the successor company.
(3)	The pro forma weighted average number of shares of common stock outstanding give effect to the automatic conversion of all of our outstanding preferred stock into common stock upon the closing of this offering.
(4)	Adjusted EBITDA is a non-GAAP measure that is described and reconciled to net loss below and is not a substitute for the GAAP equivalent. We define Adjusted EBITDA as earnings before interest, taxes, depreciation, amortization, acquisition related transaction costs, stock based compensation expenses, and other non-recurring costs. We believe that Adjusted EBITDA is an important measure of our operating performance because it allows management, lenders, investors and analysts to evaluate and assess our core operating results from period to period after removing the impact of changes to our capitalization structure, acquisition related costs, income tax status, and other items of a non-operational nature that affect comparability. The following table presents a reconciliation of Adjusted EBITDA to net loss, the most comparable GAAP measure, for each of the periods indicated. See also “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations—Adjusted EBITDA.”
(5)	The significant changes in balances impacting comparability are the result of business combinations. See further discussion in Note 3 to the Consolidated Financial Statements.



	Predecessor								Successor

	For the years ended, December 31,		For the period ended, July 13,						For the years ended, December 31,						For the nine months ended September 30,

	2007		2008(i)			2007(ii)			2008			2009			2009			2010

	(In thousands)
Reconciliation of Adjusted EBITDA:
Net income (loss)	$	64	$	(36	)	$	(226	)	$	(2,172	)	$	(4,404	)	$	(2,002	)	$	(590	)
Share-based compensation expense		—		—			—			101			218			211			559
Depreciation and amortization expense		57		33			—			2,392			6,889			4,630			12,452
Acquisition-related transaction costs		—		—			—			719			2,109			1,308			3,126
Monitoring fee(iii)		—		—			—			—			1,738			270			—
Other non-recurring costs(iv)		—		—			190			—			634			599			—
Interest and other expenses, net		13		11			—			1,470			1,925			841			5,344
Provision (benefit) for income taxes		4		3			—			(1,434	)		(2,613	)		(1,188	)		(627	)

Adjusted EBITDA	$	138	$	11		$	(36	)	$	1,076		$	6,496		$	4,669		$	20,264



(i)	Includes the period from January 1, 2008 to July 13, 2008 for the predecessor company.
(ii)	Includes the period from April 27, 2007 (inception) to December 31, 2007 for the successor company.
(iii)	See “Certain Relationships and Related Party Transactions—Monitoring Fee Agreement” for a description of the monitoring fee.
(iv)	Other non-recurring costs consist of start-up costs incurred in 2007 and severance and facility termination costs in 2009.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read together with “Selected Consolidated Financial Data,” and our consolidated financial statements and the related notes and the other financial information appearing elsewhere in this prospectus. This discussion contains forward-looking statements that involve risks and uncertainties, such as statements of our plans, objectives, expectations and intentions. Our actual results could differ materially from those anticipated in the forward-looking statements as a result of various factors, including those discussed below and elsewhere in this prospectus, particularly under “Risk Factors” and “Forward-Looking Statements.” All forward-looking statements in this document are based on information available to us as of the date hereof, and we assume no obligation to update any such forward-looking statements.

Our Business

We are a leading provider of independent medical examinations, or “IMEs”, peer and bill reviews, and related services, which include litigation support services, administrative support services and medical record retrieval services. We were incorporated as a Delaware corporation on April 27, 2007. On July 14, 2008, we acquired three IME businesses in New York, New Jersey and Texas. In 2009, we acquired 11 additional IME businesses, including the leading provider of software solutions to the IME industry. We acquired 13 additional IME businesses through October 1, 2010 and currently operate out of 26 locations servicing all 50 U.S. states, Canada and the United Kingdom. In June 2010, we effected a corporate reorganization creating a holding company, ExamWorks Group, Inc., with ExamWorks, Inc. becoming a wholly-owned subsidiary of ExamWorks Group, Inc.

We provide our services to property and casualty insurance carriers, law firms, third-party claim administrators, government agencies, and state funds that use independent services to confirm the veracity of claims by sick or injured individuals for workers’ compensation, automotive, personal injury liability and disability insurance coverage. We help our clients manage costs and enhance their risk management processes by verifying the validity, nature, cause and extent of claims, identifying fraud and providing fast, efficient and quality IME services.

We provide our clients with the local presence, expertise and broad geographic coverage they increasingly require. Our size and geographic reach give our clients access to our medical panel of approximately 13,500 credentialed physicians and other medical providers and our proprietary information technology infrastructure that has been specifically designed to streamline the complex process of coordinating referrals, scheduling appointments, complying with regulations and client reporting. Our primary service is to provide IMEs that give our clients authoritative and accurate answers to questions regarding the nature and permanency of medical conditions or personal injury, their cause and appropriate treatment. Additionally, we provide peer and bill reviews, which consist of medical opinions by members of our medical panel without conducting physical exams, and the review of physician and hospital bills to examine medical care rendered and its conformity to accepted standards of care.

Our Industry

The IME industry is a large, highly fragmented industry. Our primary markets are the U.S., Canada and the United Kingdom. We believe the IME industry represented sales volumes in 2009 of approximately $4 billion in the U.S., $0.6 billion in Canada and $0.5 billion in the United Kingdom based on our analysis of data reported by the U.S. National Association of Insurance Commissioners (the “U.S. NAIC”), the Insurance Bureau of Canada, the Association of Workers’ Compensation Boards of Canada and the Association of British Insurers regarding the number of claims made in 2009 for which IME services may be requested in insurance lines we service, the estimated average price for IMEs and our knowledge of the IME market, our competitors and potential acquisition targets.

In the U.S. IME market, we estimate, based on data reported by the U.S. NAIC, that approximately 25 million workers’ compensation, automotive, personal injury liability and disability insurance claims are made per year, many of which are potentially subject to IME services. Particular types of claims with high economic value, such as permanent disability and bodily injury, typically require IMEs and have shown strong demand in recent years.

We believe that Canada and the United Kingdom also represent a significant growth opportunity for us. As described above, we believe the Canadian and the United Kingdom IME industries represent sales volumes in 2009 of approximately $0.6 billion and $0.5 billion, respectively.

Acquisitions

We operate in a highly fragmented industry and have completed numerous acquisitions. A key component of our business strategy is growth through acquisitions that expand our geographic coverage, provide new or complementary lines of business, expand our portfolio of services, and increase our market share. Another central feature of our business strategy is to grow our business organically by selling additional services to existing clients, cross-selling into additional insurance lines of business and expanding our geographic footprint with existing clients. To date, we have completed the following 27 acquisitions:


Acquisition Date	Name

October 1, 2010	•	BMEGateway

September 7, 2010	•	UK Independent Medical Services

September 1, 2010	•	Health Cost Management

August 6, 2010	•	Verity Medical
	•	Exigere

June 30, 2010	•	SOMA Medical Assessments
	•	Direct IME
	•	Network Medical Review
	•	Independent Medical Services
	•	401 Diagnostics

March 26, 2010	•	Metro Medical Services

March 15, 2010	•	American Medical Bill Review
	•	Medical Evaluations

December 31, 2009	•	Abeton
	•	Medical Assurance Group
	•	MedNet I.M.S.
	•	Qualmed
	•	IME Operations of Physicians Practice

August 14, 2009	•	The Evaluation Group

August 4, 2009	•	Benchmark Medical Consultants

July 7, 2009	•	IME Software Solutions

May 21, 2009	•	Florida Medical Specialists
	•	Marquis Medical Administrators

April 17, 2009	•	Ricwel

July 14, 2008	•	CFO Medical Services
	•	Crossland Medical Review Services
	•	Southwest Medical

Sources of Revenues and Expenses

Revenues

We derive revenue primarily from fees charged for independent medical examinations, peer and bill reviews and other related services, which include litigation support services, administrative support services and medical record retrieval services. Revenues are recognized at the time services have been performed and, if applicable, at the time the report is shipped to the end user. We expect revenue to continue to increase principally through organic and acquisition growth. Our revenue is derived from services performed in different geographic areas. Pro forma for acquisitions completed through October 1, 2010, no client contributed more than 10% of pro forma total revenue in 2009 and the nine months ended September 30, 2010.

Costs of revenues

Costs of revenues are comprised of fees paid to members of our medical panel; other direct costs including transcription, film and medical record obtainment and transportation; and other indirect costs including labor and overhead related to the generation of revenue. We expect these operationally driven costs to increase to support future revenue growth and as we continue to grow through acquisitions.

Selling, general and administrative expenses

Selling, general and administrative (“SGA”) expenses consist primarily of expenses for administrative, human resource related, corporate information technology support, legal (primarily from transaction costs related to acquisitions), finance and accounting personnel, professional fees (primarily from transaction costs related to acquisitions), insurance and other corporate expenses. We expect that SGA expenses will increase as we continue to add personnel to support the growth of our business and pursue acquisition growth. In addition, we anticipate that we will incur additional personnel expenses, professional service fees, including audit and legal, investor relations, costs of compliance with securities laws and regulations, and higher director and officer insurance costs related to operating as a public company. As a result, we expect that our SGA expenses will continue to increase in the future but decrease as a percentage of revenue over time as our revenue increases.

Depreciation and amortization

Depreciation and amortization (“D&A”) expense consists primarily of amortization of our finite lived intangible assets obtained through acquisitions completed to date and, to a lesser extent, depreciation of equipment and leasehold improvements. We expect that depreciation and amortization expense will increase as we continue our acquisition strategy.

Results of Operations

ExamWorks was formed on April 27, 2007 for the purpose of acquiring companies in the IME industry and is the successor company. For financial statement purposes, CFO Medical Services, P.A. (“CFO”) has been identified as the predecessor. The following table sets forth the predecessor, successor and pro forma combined consolidated statement of operations data for the periods indicated. The pro forma combined consolidated statement of operations data combine our results of operations for the year ended December 31, 2008 and the predecessor’s results of operations for the period from January 1, 2008 to July 13, 2008, as if the predecessor acquisition had occurred on January 1, 2008. See below for a description of the assumptions used in preparing the pro forma combined consolidated statement of operations data for the year ended 2008. The pro forma combined consolidated financial statement information is presented for informational purposes only, does not purport to represent what our results of operations actually would have been had the predecessor relevant transactions been consummated on the dates indicated and is not necessarily indicative of our results of operations for any future period or our financial condition as of any future date.



	Predecessor					Successor															Pro Forma

	For the year ended, December 31,		For the period ended July 13,			For the years ended, December 31,									For the nine months ended September 30,						For the year ended, December 31,

	2007		2008(1)			2007(2)			2008			2009			2009			2010			2008(4)

	(In thousands, except share and per share data)
Revenues	$	9,783	$	6,072		$	—		$	14,694		$	49,634		$	33,796		$	109,242		$	20,766
Costs and expenses:
Costs of revenues		5,873		3,757			—			9,828			32,026			21,582			68,693			13,585
Selling, general and administrative expenses(5)		3,772		2,304			226			4,610			15,811			9,933			23,970			5,090
Depreciation and amortization(6)		57		33			—			2,392			6,889			4,630			12,452			3,149

Total costs and expenses		9,702		6,094			226			16,830			54,726			36,145			105,115			21,824

Income (loss) from operations		81		(22	)		(226	)		(2,136	)		(5,092	)		(2,349	)		4,127			(1,058	)
Interest and other expenses, net(7)		13		11			—			1,470			1,925			841			5,344			1,770

Loss before income tax benefit		68		(33	)		(226	)		(3,606	)		(7,017	)		(3,190	)		(1,217	)		(2,828	)
Provision (benefit) for income taxes(8)		4		3			—			(1,434	)		(2,613	)		(1,188	)		(627	)		(1,124	)

Net loss	$	64	$	(36	)	$	(226	)	$	(2,172	)	$	(4,404	)	$	(2,002	)	$	(590	)	$	(1,704	)


Net loss per share attributable to common stockholders — basic and diluted	$	54.01	$	(30.38	)	$	(0.73	)	$	(0.44	)	$	(0.42	)	$	(0.19	)	$	(0.04	)


Weighted average shares outstanding — common stock		1,185		1,185			308,466			4,895,962			10,479,155			10,302,888			15,571,924
Other Financial Data:
Adjusted EBITDA(3)	$	138	$	11		$	(36	)	$	1,076		$	6,496		$	4,669		$	20,264		$	2,911



(1)	Includes the period from January 1, 2008 to July 13, 2008 for the predecessor company.

(2)	Includes the period from April 27, 2007 (inception) to December 31, 2007 for the successor company.

(3)	Adjusted EBITDA is a non-GAAP measure that is described and reconciled to net loss in the next section and is not a substitute for the GAAP equivalent.

(4)	The pro forma combined consolidated financial information has been prepared from, and should be read in conjunction with, our historical consolidated financial statements and related notes and the audited financial statements with respect to the Predecessor company included elsewhere in this prospectus. The pro forma acquisition adjustments described in (5), (6), (7), and (8) below were based on available information and certain assumptions made by our management and may be revised as additional information becomes available. The unaudited pro forma combined consolidated financial information included in this prospectus is not intended to represent what our financial position is or results of operations would have been if the acquisition had occurred on that date or to project our results of operations for any future period. Since the Company and the predecessor business were not under common control or management for some of the period presented, the pro forma combined consolidated financial results may not be comparable to, or indicative of, future performance. The pro forma combined consolidated statements of operations included herein have been prepared pursuant to the rules and regulations of the SEC. Certain information and certain footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to these rules and regulations; however, management believes that the disclosures are adequate to make the information presented not misleading. The pro forma combined consolidated financial information does not reflect any cost savings, operating synergies or revenue enhancements that the combined company may achieve as a result of the acquisition, the costs to combine our operations or the costs necessary to achieve these cost savings, operating synergies and revenue enhancements.


(5)	The predecessor’s pre acquisition selling, general and administrative expenses were $2.3 million, the successor’s selling, general and administrative expenses were $4.6 million, for combined selling, general and administrative expenses of $6.9 million prior to this adjustment. This adjustment represents the elimination of certain selling, general and administrative costs that represent material, non-recurring costs related to predecessor entity. To arrive at pro forma selling, general and administrative costs of $5.1 million, an adjustment of $(1.8) million was recorded representing certain salary and related personal expenses attributable to the previous owners of the predecessor. These adjustments represent contractual reductions for new compensation terms entered into as part of the acquisition agreement. The expenses in the predecessor historical financial statements are considered to be non-recurring and are not expected to have a continuing impact on the operations of the Company.

(6)	The predecessor’s pre acquisition depreciation and amortization expenses were $33,000, the successor’s depreciation and amortization expenses were $2.4 million, for combined depreciation and amortization expenses of $2.4 million prior to this adjustment. To arrive at pro forma depreciation and amortization expenses of $3.1 million, an adjustment of $700,000 was recorded to reflect incremental depreciation and amortization expense for the pro forma period. The pro forma incremental depreciation and amortization expense represents approximately 6.5 months of incremental depreciation and amortization expense resulting primarily from acquired intangibles.

(7)	The predecessor’s pre acquisition interest and other expenses, net were $11,000, the successor’s interest and other expenses, net were $1.5 million, for combined interest and other expenses, net of $1.5 million prior to this adjustment. To arrive at pro forma interest and other expenses, net of $1.8 million, an adjustment of $300,000 was recorded assuming that acquisition related debt was incurred on January 1, 2008 and reflecting incremental interest expense incurred on this borrowing. The pro forma incremental interest expense represents approximately 6.5 months of incremental interest expense resulting primarily from the debt incurred to acquire the predecessor.

(8)	The predecessor’s pre acquisition provision (benefit) for income taxes were $3,000, the successor’s provision (benefit) for income taxes were $(1.4) million, for combined provision (benefit) for income taxes of $(1.4) million prior to this adjustment. To arrive at pro forma provision (benefit) for income taxes of $(1.1) million an adjustment of $(300,000) was recorded to reflect the calculated income tax provision for the predecessor acquisition due to it being a flow through entity prior to acquisition.

Adjusted EBITDA

In connection with the ongoing operation of our business, our management regularly reviews Adjusted EBITDA, a non-GAAP financial measure, to assess our performance. We define Adjusted EBITDA as earnings before interest, taxes, depreciation, amortization, acquisition-related transaction costs, share-based compensation expenses, and other non-recurring costs. We believe that Adjusted EBITDA is an important measure of our operating performance because it allows management, lenders, investors and analysts to evaluate and assess our core operating results from period to period after removing the impact of changes to our capitalization structure, acquisition related costs, income tax status, and other items of a non-operational nature that affect comparability.

We believe that various forms of the Adjusted EBITDA metric are often used by analysts, investors and other interested parties to evaluate companies such as ours for the reasons discussed above. Additionally, Adjusted EBITDA is used to measure certain financial covenants in our credit facility. Adjusted EBITDA is also used for planning purposes and in presentations to our Board of Directors as well as in our incentive compensation programs for our employees, excluding our senior management.

Non-GAAP information should not be construed as an alternative to GAAP information, as the items excluded from the non-GAAP measures often have a material impact on our financial results. Management uses, and investors should use, non-GAAP measures in conjunction with our GAAP results.

The following table presents a reconciliation of Adjusted EBITDA to net loss, the most comparable GAAP measure, for each of the periods indicated. The following table also presents a reconciliation of pro forma Adjusted EBITDA to pro forma net loss for the period presented.



	Predecessor					Successor															Pro Forma

	For the year ended, December 31,		For the period ended July 13,			For the years ended, December 31,									For the nine months ended September 30,						For the year ended, December 31,

	2007		2008(i)			2007(ii)			2008			2009			2009			2010			2008

	(In thousands, except share and per share data)

Reconciliation of Adjusted EBITDA:
Net loss	$	64	$	(36	)	$	(226	)	$	(2,172	)	$	(4,404	)	$	(2,002	)	$	(590	)	$	(1,704	)
Share-based compensation expense		—		—			—			101			218			211			559			101
Depreciation and amortization		57		33			—			2,392			6,889			4,630			12,452			3,149
Acquisition-related transaction costs		—		—			—			719			2,109			1,308			3,126			719
Monitoring fee(iii)		—		—			—			—			1,738			270			—			—
Other non-recurring costs(iv)		—		—			190			—			634			599			—			—
Other expenses, net		13		11			—			1,470			1,925			841			5,344			1,770
Provision (benefit) for income taxes		4		3			—			(1,434	)		(2,613	)		(1,188	)		(627	)		(1,124	)

Adjusted EBITDA	$	138	$	11		$	(36	)	$	1,076		$	6,496		$	4,669		$	20,264		$	2,911



(i)	Includes the period from January 1, 2008 to July 13, 2008 for the predecessor company.
(ii)	Includes the period from April 27, 2007 (inception) to December 31, 2007 for the successor company.
(iii)	See “Certain Relationships and Related Party Transactions—Monitoring Fee Agreement” for a description of the monitoring fee.
(iv)	Other non-recurring costs consist of start-up costs in 2007 and severance and facility termination costs in 2009.

Comparison of the Nine Months Ended September 30, 2010 and 2009 – Successor

Revenues. Revenues were $109.2 million for the nine months ended September 30, 2010 compared to $33.8 million for the nine months ended September 30, 2009, an increase of $75.4 million, or 223%. The increase in revenue over the 2009 period was due to the following:


	•	$70.7 million, or 209%, was attributable to acquisitions completed during the third and fourth quarter of 2009 and the first nine months of 2010.

	•	$4.7 million, or 14%, was due to organic growth primarily attributable to increased volume and, to a lesser extent, a favorable change in sales mix.

Costs of revenues. Costs of revenues were $68.7 million for the nine months ended September 30, 2010 compared to $21.6 million for the nine months ended September 30, 2009, an increase of $47.1 million, or 218%. The increase in costs of revenues over the 2009 period was due to the following:


	•	$45.2 million, or 209%, was attributable to acquisitions completed during the third and fourth quarter of 2009 and the first nine months of 2010.


	•	$1.9 million, or 9%, was primarily attributable to increased fees paid to members of our medical panel and, to a lesser extent, an increase in other direct costs.

	•	Costs of revenues as a percentage of revenues for the nine months ended September 30, 2010 and 2009 decreased slightly from 64% for the nine months ended September 30, 2009 to 63% for the nine months ended September 30, 2010.

Selling, general and administrative. SGA expenses were $24.0 million for the nine months ended September 30, 2010 compared to $9.9 million for the nine months ended September 30, 2009, an increase of $14.0 million, or 141%. The increase in SGA expenses over the 2009 period was due to the following:


	•	$11.1 million, or 112%, was attributable to the acquisitions completed during 2009 and the first nine months of 2010.

	•	$2.9 million, or 29%, was primarily attributable to increased transaction costs of $1.8 million related to the acquisitions completed in 2010 and, to a lesser extent, increased corporate expenses, including personnel related, to support our growing operations.

Depreciation and amortization. D&A expenses were $12.5 million for the nine months ended September 30, 2010 compared to $4.6 million for the nine months ended September 30, 2009, an increase of $7.8 million, or 169%. The increase in D&A expenses over the 2009 period was due to the following:


	•	$8.0 million, or 172%, was attributable to growth resulting from additional amortization of finite-lived intangibles and tangible assets related to acquisitions completed during 2009 and the first nine months of 2010.

	•	$(160,000), or (3)%, was attributable to certain intangible assets arising from 2008 acquisitions becoming fully amortized in 2010 resulting in a decrease in amortization expense.

Interest and other expenses, net. Interest and other expenses, net were $5.3 million for the nine months ended September 30, 2010 compared to $841,000 for the nine months ended September 30, 2009, an increase of $4.5 million, or 535%. Interest expense increased $3.7 million due to increased borrowings for purposes of financing our acquisitions completed in 2009 and 2010. As of September 30, 2010, the amount outstanding under our senior credit facility was $89.6 million as compared to $17.9 million outstanding as of September 30, 2009. In addition, amortization of capitalized loan costs increased by approximately $550,000. Coupled with, the increase in other expenses, net attributable to the net loss on the interest rate swap of approximately $71,000 for the nine months ended September 30, 2010, compared to the net gain on the interest rate swap of $(254,000) during the nine months ended September 30, 2009. The increase in net loss on the interest rate swap was primarily due to the change in the fair value of the instrument primarily driven by falling interest rates from 2009 and 2010.

Income tax benefit. Income tax benefit was $627,000 for the nine months ended September 30, 2010 compared to $1.2 million for the nine months ended September 30, 2009, a decrease of $561,000, or 47%. Our effective income tax rate was 51.5% and 37.2% for the nine months ending September 30, 2010 and 2009, respectively. The tax rates in the 2010 period were favorably impacted primarily by state net operating losses.

Net loss. For the foregoing reasons, net loss was $590,000 for the nine months ended September 30, 2010 compared to $2.0 million for the nine months ended September 30, 2009, a decrease of $1.4 million, or 71%.

Comparison of Years Ended December 31, 2009 and December 31, 2008 – Successor

Revenues. Revenues were $49.6 million for the year ended December 31, 2009 compared to $14.7 million for the year ended December 31, 2008, an increase of $34.9 million, or 238%. The increase in revenue over the 2008 period was due to the following:


	•	$32.4 million, or 221%, was attributable to acquisitions completed in 2008 and 2009.

	•	$2.5 million, or 17%, was due to organic growth primarily attributable to increased volume and, to a lesser extent, a favorable change in sales mix.

Costs of revenues. Costs of revenues were $32.0 million for the year ended December 31, 2009 compared to $9.8 million for the year ended December 31, 2008, an increase of $22.2 million, or 226%. The increase in costs of revenues over the 2008 was due to the following:


	•	$21.4 million, or 218%, was attributable to acquisitions completed in 2008 and 2009.


	•	$750,000, or 8%, was primarily attributable to increased fees paid to members of our medical panel and other direct costs resulting from increased revenues.

	•	Costs of revenues as a percentage of revenues was 65% for the year ended December 31, 2009 compared to 67% for the year ended December 31, 2008. The improvement in this percentage was primarily due to the impact of a favorable change in sales mix to higher margin services.

Selling, general and administrative. SGA expenses were $15.8 million for the year ended December 31, 2009 compared to $4.6 million for the year ended December 31, 2008, an increase of $11.2 million, or 243%. The increase in SGA expenses over the 2008 was due to the following:


	•	$5.1 million, or 110%, was attributable to the acquisitions completed in 2008 and 2009.

	•	$6.1 million, or 133%, was primarily attributable to increased corporate headcount and other overhead expenses of $2.7 million to support our growing operations and develop the related corporate infrastructure, costs of $1.7 million incurred under the monitoring fee agreement, and increased transaction costs of $1.4 million related to the eleven acquisitions completed in 2009.

Depreciation and amortization. D&A expenses were $6.9 million for the year ended December 31, 2009 compared to $2.4 million for the year ended December 31, 2008, an increase of $4.5 million, or 188%. The increase in D&A expenses over the 2008 was due to the following:


	•	$4.3 million, or 179%, was attributable to the acquisitions completed in 2008 and 2009.

	•	$220,000, or 9%, was primarily attributable to increased depreciation expense resulting from continued capital expenditures to support our growing operations.

Interest and other expenses, net. Interest and other expenses, net were $1.9 million for the year ended December 31, 2009 compared to $1.5 million for the year ended December 31, 2008, an increase of $455,000, or 31%. Interest expense increased by $1.3 million, or 251%, primarily due to borrowings incurred to complete the 2008 and 2009 acquisitions. As of December 31, 2009, borrowings under our then outstanding senior credit facility were $33.5 million compared to $13.2 million as of December 31, 2008. In December 2009, we entered into a new senior credit facility and repaid and terminated our previous senior credit facility. The original credit facility was terminated in order for us to enter into our existing credit facility, which is larger and allowed us to further finance our growth. The original lender is a significant participant in our existing credit facility. In conjunction with the termination of the prior facility, we recognized a loss from early extinguishment of debt in the amount of approximately $461,000 attributable to the unamortized portion of capitalized loan costs. The increase in other expenses was partially offset by the net gain in the interest rate swap of approximately $343,000 in the year ended December 31, 2009, an increase of approximately 136% compared to a net loss recorded in the prior year. This increase in net gain resulted from the change in the fair value of the instrument primarily due to an increase in interest rates in 2009 compared to 2008.

Income tax benefit. Income tax benefit was $2.6 million for the year ended December 31, 2009 compared to $1.4 million for the year ended December 31, 2008, an increase of $1.2 million or 82%. Our effective income tax rate was 37.2% and 39.8% for the years ended December 31, 2009 and 2008, respectively. The decrease in the effective income tax rates in 2009 was primarily due to changes in state tax apportionment factors as we expanded our geographic footprint.

Net loss. For the foregoing reasons, net loss was $4.4 million for the year ended December 31, 2009 compared to $2.2 million for the year ended December 31, 2008, an increase of $2.2 million, or 100%.

Comparison of the Year Ended December 31, 2008 and the Period from April 27, 2007 (inception) to December 31, 2007 – Successor

Revenues. Revenues were $14.7 million in the year ended December 31, 2008. Revenues in 2008 were attributable to the July 14, 2008 acquisition of three IME businesses. No revenues were recorded in the period from April 27, 2007 (inception) to December 31, 2007.

Costs of revenues. Costs of revenues were $9.8 million in the year ended December 31, 2008. No costs of revenues were recorded in the period from April 27, 2007 (inception) to December 31, 2007.

Selling, general and administrative. SGA expenses were $4.6 million for the year ended December 31, 2008 compared to $0.2 million for the period from April 27, 2007 (inception) to December 31, 2007, an increase of $4.4 million. SGA expenses in 2008 were primarily attributable to expenses incurred in

connection with the three IME businesses acquired in July 2008, including certain transaction costs. SGA expenses in 2007 consisted primarily of legal, consulting, and other fees and expenses related to our analysis of the IME industry, the establishment of industry relationships and the identification of and diligence on potential acquisition targets.

Depreciation and amortization. D&A expenses were $2.4 million in the year ended December 31, 2008. Approximately $2.0 million of expense was attributable to the amortization of finite lived intangibles recorded in conjunction with the acquisitions completed in July 2008. The remaining D&A expenses in 2008 were due to capital expenditures made during 2008 to support operations. No D&A expenses were incurred in 2007.

Interest and other expenses, net. Interest and other expenses, net were $1.5 million in the year ended December 31, 2008. Approximately $515,000 was interest expense due to borrowings incurred to complete the 2008 acquisitions. As of December 31, 2008, the outstanding principal amount of our then outstanding senior credit facility was $13.2 million. Other expenses, net, also included an unrealized loss recorded on the interest rate swap of approximately $1.0 million resulting from the difference between the amortized cost and fair value of the instrument and was primarily driven by falling interest rates. We entered into the interest rate swap in August 2008 to manage the interest rate exposure on our then outstanding senior credit facility which included a variable interest rate. No other expenses, net were incurred in 2007.

Income tax benefit. Income tax benefit was $1.4 million in the year ended December 31, 2008. Our effective income tax rate was 39.8% and 0% for the year ended December 31, 2008 and the period from April 27, 2007 (inception) to December 31, 2007, respectively.

Net loss. For the foregoing reasons, net loss was $2.2 million for the year ended December 31, 2008 compared to $226,000 for the year ended December 31, 2007, an increase of $2.0 million.

Comparison of the Period from January 1, 2008 to July 13, 2008 (acquisition) and the Year Ended December 31, 2007 – Predecessor

Revenues. Revenues were $6.1 million in the period ended July 13, 2008 compared to $9.8 million for the year ended December 31, 2007. On an annualized basis, revenues for the period ended July 13, 2008 would have been $11.0 million, representing an increase of 12% over the year ended December 31, 2007. This increase is due to increased volume, and to a lesser extent, a change in sales mix.

Costs of revenues. Costs of revenues were $3.8 million in the period ended July 13, 2008 compared to $5.9 million for the year ended December 31, 2007. Costs of revenues as a percentage of revenues was 62% for the period ended July 13, 2008 compared to 60% for the year ended December 31, 2007. The decline in this percentage was primarily due to an unfavorable change in sales mix to lower margin services.

Selling, general and administrative. SGA expenses were $2.3 million in the period ended July 13, 2008 compared to $3.8 million for the year ended December 31, 2007. SGA expenses as a percentage of revenues remained constant over these two periods.

Depreciation and amortization. D&A expenses were $33,000 in the period ended July 13, 2008 compared to $57,000 for the year ended December 31, 2007.

Interest and other expenses, net. Interest and other expenses, net were $11,000 in the period ended July 13, 2008 compared to $13,000 for the year ended December 31, 2007.

Provision for income taxes. Provision for income taxes were $3,000 in the period ended July 13, 2008 compared to $4,000 for the year ended December 31, 2007. The Company was a pass through entity for federal tax purposes and therefore is only subject to state income taxes.

Net income (loss). For the foregoing reasons, net loss was $(36,000) in the period ended July 13, 2008 compared to net income of $64,000 for the year ended December 31, 2007.

Comparison of Year Ended December 31, 2009 and Pro Forma Year Ended December 31, 2008

Revenues. Revenues were $49.6 million for the year ended December 31, 2009 compared to $20.8 million for the pro forma year ended December 31, 2008, an increase of $28.8 million, or 138%. The increase in revenue over the 2008 pro forma period was due to the following:

$25.9 million, or 125%, was attributable to the Crossland and Southwest Medical acquisitions completed in 2008 and acquisitions completed in 2009.

$2.9 million, or 13%, was due to organic growth primarily attributable to increased volume and, to a lesser extent, a change in sales mix.

Costs of revenues. Costs of revenues were $32.0 million for the year ended December 31, 2009 compared to $13.6 million for the pro forma year ended December 31, 2008, an increase of $18.4 million, or 136%. The increase in costs of revenues over the pro forma 2008 period was due to the following:

$16.0 million, or 118%, was attributable to the Crossland and Southwest Medical acquisitions completed in 2008 and acquisitions completed in 2009.
$2.4 million, or 18%, was primarily attributable to increased fees paid to members of our medical panel and other direct costs resulting from increased revenues.
Costs of revenues as a percentage of revenues remained consistent at 65% for the years ended December 31, 2009 and 2008.

Selling, general and administrative. SGA expenses were $15.8 million for the year ended December 31, 2009 compared to $5.1 million for the pro forma year ended December 31, 2008, an increase of $10.7 million, or 211%. The increase in SGA expenses over the pro forma 2008 period was due to the following:

$4.3 million, or 84%, was attributable to the Crossland and Southwest Medical acquisitions completed in 2008 and acquisitions completed in 2009.
$6.4 million, or 127%, was primarily attributable to increased corporate headcount and other overhead expenses of $2.7 million to support our growing operations and develop the related corporate infrastructure, costs of $1.7 million incurred under the monitoring fee agreement, and increased transaction costs of $1.4 million related to the eleven acquisitions completed in 2009.

Depreciation and amortization. D&A expenses were $6.9 million for the year ended December 31, 2009 compared to $3.1 million for the pro forma year ended December 31, 2008, an increase of $3.8 million, or 119%. The increase in D&A expenses over the pro forma 2008 period was due to the following:

$3.6 million, or 113%, was attributable to the Crossland and Southwest Medical acquisitions completed in 2008 and acquisitions completed in 2009.
$200,000, or 6%, was primarily attributable to increased depreciation expense resulting from continued capital expenditures to support our growing operations.

Interest and other expenses, net. Interest and other expenses, net were $1.9 million for the year ended December 31, 2009 compared to $1.8 million for the pro forma year ended December 31, 2008, an increase of $155,000, or 9%. Interest expense increased by $1.0 million, or 123%, primarily due to borrowings incurred to complete the 2008 Crossland and Southwest Medical acquisitions and to complete the 2009 acquisitions. As of December 31, 2009, borrowings under our then outstanding senior credit facility were $33.5 million compared to $13.2 million as of December 31, 2008. In December 2009, we entered into a new senior credit facility and repaid and terminated our original senior credit facility. In conjunction with the termination of the original facility, we recognized a loss from early extinguishment of debt in the amount of approximately $461,000 attributable to the unamortized portion of capitalized loan costs. The increase in other expenses was partially offset by the net gain in the interest rate swap of approximately $343,000 during the year ended December 31, 2009, resulting in an increase of approximately $1.3 million or 136% compared to a net loss of approximately $1.0 million recorded in the prior year. This increase in net gain resulted from the change in the fair value of the instrument primarily due to an increase in interest rates in 2009 compared to 2008.

Income tax benefit. Income tax benefit was $2.6 million for the year ended December 31, 2009 compared to $1.1 million for the pro forma year ended December 31, 2008, an increase of $1.5 million or 132%. Our effective income tax rate was 37.2% and 39.7% for the years ended December 31, 2009 and 2008, respectively. The decrease in the effective income tax rates in 2009 was primarily due to changes in state tax apportionment factors as we expanded our geographic footprint.

Net loss. For the foregoing reasons, net loss was $4.4 million for the year ended December 31, 2009 compared to $1.7 million for the pro forma year ended December 31, 2008, an increase of $2.7 million, or 159%.

Selected Quarterly Financial Data

The following table sets forth selected unaudited consolidated quarterly operating data for each of the two quarters during the period ended June 30, 2008 for the predecessor and for each of the nine quarters during the period from July 1, 2008 to September 30, 2010 for the successor. We completed the acquisition of the predecessor and two other IME businesses in July 2008, as a result, we have not included the first two quarters of 2008 for the successor nor the period from July 1, 2008 to July 13, 2008 for the predecessor. In our opinion, the following selected unaudited consolidated quarterly operating data have been prepared on the same basis as the audited consolidated financial statements included in this prospectus and reflect all necessary adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of these data. You should read this information together with our consolidated financial statements and the related notes appearing elsewhere in this prospectus. Operating results for any fiscal quarter are not necessarily indicative of results for the full year. Historical results are not necessarily indicative of the results to be expected in future periods.


	Predecessor				Successor

	For the three months ended,				For the three months ended,

	March 31, 2008		June 30, 2008		September 30, 2008			December 31, 2008			March 31, 2009

	(In thousands, except share and per share data)
Revenues	$	2,773	$	2,888	$	6,739		$	7,955		$	8,697
Costs and expenses:
Costs of revenues		1,692		1,763		4,524			5,304			5,569
Selling, general and administrative expenses		948		988		1,873			2,211			2,455
Depreciation and amortization		14		14		1,087			1,305			1,228

Total costs and expenses		2,654		2,765		7,484			8,820			9,252
Income (loss) from operations		119		123		(745	)		(865	)		(555	)
Other expenses, net		5		6		457			1,013			221

Income (loss) before income taxes		114		117		(1,202	)		(1,878	)		(776	)
Provision (benefit) for income taxes		2		3		(478	)		(746	)		(289	)

Net income (loss)	$	112	$	114	$	(724	)	$	(1,132	)	$	(487	)

Net income (loss) per share attributable to common stockholders: Basic —	$	94.51	$	96.20	$	(0.08	)	$	(0.11	)	$	(0.05	)
Diluted —	$	94.51	$	96.20	$	(0.08	)	$	(0.11	)	$	(0.05	)

Weighted average shares outstanding —common stock: Basic —		1,185		1,185		8,727,814			10,023,160			10,023,160
Diluted —		1,185		1,185		8,727,814			10,023,160			10,023,160
Other Financial Data:
Adjusted EBITDA(1)	$	133	$	137	$	456		$	1,145		$	1,450



	Successor

	For the three months ended,

	June 30, 2009			September 30, 2009			December 31, 2009			March 31, 2010			June 30, 2010			September 30, 2010

	(In thousands, except share and per share data)
Revenues	$	10,931		$	14,168		$	15,838		$	25,400		$	35,279		$	48,563
Costs and expenses:
Costs of revenues		6,787			9,226			10,445			16,132			22,133			30,428
Selling, general and administrative expenses		3,627			3,851			5,877			6,011			8,372			9,587
Depreciation and amortization		1,364			2,038			2,259			2,977			3,570			5,905

Total costs and expenses		11,778			15,115			18,581			25,120			34,075			45,920
Income (loss) from operations		(847	)		(947	)		(2,743	)		280			1,204			2,643
Other expenses, net		98			522			1,084			1,464			1,347			2,533

Income (loss) before income taxes		(945	)		(1,469	)		(3,827	)		(1,184	)		(143	)		110
Provision (benefit) for income taxes		(352	)		(547	)		(1,425	)		(589	)		(71	)		33

Net income (loss)	$	(593	)	$	(922	)	$	(2,402	)	$	(595	)	$	(72	)		77

Net income (loss) per share attributable to common stockholders: Basic —	$	(0.06	)	$	(0.09	)	$	(0.22	)	$	(0.04	)	$	–			–
Diluted —	$	(0.06	)	$	(0.09	)	$	(0.22	)	$	(0.04	)	$	–			–

Weighted average shares outstanding —common stock: Basic —		10,158,839			10,722,997			10,986,551			13,943,454			15,270,593			17,367,540
Diluted —		10,158,839			10,722,997			10,986,551			13,943,454			15,270,593			22,342,793
Other Financial Data:
Adjusted EBITDA(1)	$	1,358		$	1,861		$	1,827		$	4,166		$	6,183		$	9,915



(1)	Adjusted EBITDA is a non-GAAP measure that is described and reconciled to net loss below and is not a substitute for the GAAP equivalent. We define Adjusted EBITDA as earnings before interest, taxes, depreciation, amortization, acquisition-related transaction costs, share-based compensation expenses, and other non-recurring costs. We believe that Adjusted EBITDA is an important measure of our operating performance because it allows management, lenders, investors and analysts to evaluate and assess our core operating results from period to period after removing the impact of changes to our capitalization structure, acquisition related costs, income tax status, and other items of a non-operational nature that affect comparability. The following table presents a reconciliation of Adjusted EBITDA to net loss, the most comparable GAAP measure, for each of the periods indicated. See also “Results of Operations—Adjusted EBITDA.”


	Predecessor				Successor

	For the three months ended,				For the three months ended,

	March 31, 2008		June 30, 2008		September 30, 2008			December 31, 2008			March 31, 2009

	(In thousands, except share and per share data)
Reconciliation to Adjusted EBITDA:
Net income (loss)	$	112	$	114	$	(724	)	$	(1,132	)	$	(487	)
Share-based compensation expense		—		—		39			62			59
Depreciation and amortization expense		14		14		1,087			1,305			1,228
Acquisition-related transaction costs		—		—		75			644			192
Monitoring Fee(i)		—		—		—			—			197
Other non-recurring costs(ii)		—		—		—			—			329
Other expenses, net		5		6		457			1,013			221
Provision (benefit) for income taxes		2		3		(478	)		(746	)		(289	)

Adjusted EBITDA:	$	133	$	137	$	456		$	1,146		$	1,450



	Successor

	For the three months ended,

	June 30, 2009			September 30, 2009			December 31, 2009			March 31, 2010			June 30, 2010			September 30, 2010

	(In thousands, except share and per share data)
Reconciliation to Adjusted EBITDA:
Net income (loss)	$	(593	)	$	(922	)	$	(2,402	)	$	(595	)	$	(72	)	$	77
Share-based compensation expense		73			79			7			114			184			261
Depreciation and amortization expense		1,364			2,038			2,259			2,977			3,570			5,905
Acquisition-related transaction costs		499			617			801			795			1,225			1,106
Monitoring Fee(i)		73			—			1,468			—			—			—
Other non-recurring costs(ii)		196			74			35			—			—			—
Other expenses, net		98			522			1,084			1,464			1,347			2,533
Provision (benefit) for income taxes		(352	)		(547	)		(1,425	)		(589	)		(71	)		33

Adjusted EBITDA:	$	1,358		$	1,861		$	1,827		$	4,166		$	6,183		$	9,915



(i)	See “Certain Relationships and Related Party Transactions—Monitoring Fee Agreement” for a description of the monitoring fee.
(ii)	Other non-recurring costs consist of severance and facility termination costs.

Liquidity and Capital Resources

Our principal capital requirements are to fund operations and acquisitions. To date, we have funded our capital needs from cash flow generated from operations, private placements of common and preferred stock, and borrowings under our existing credit facility. We have also funded our acquisition program with equity issuances to sellers and with seller debt financing. We expect that cash and cash equivalents, availability under our existing credit facility, and cash flows from operations will be sufficient to support our operations, planned capital expenditures and acquisitions for at least the next 12 months.

Although we believe that our current cash and cash equivalents and funds available under our term loan facility will be sufficient to meet our working capital and acquisition plans for at least the next 12 months, we may need to raise additional funds through public or private financings or increase borrowings to fund acquisitions. If we raise additional funds through the issuance of equity or convertible debt securities, the percentage ownership of our existing stockholders will be reduced and these securities might have rights, preferences and privileges senior to those of our current stockholders. Additional financing may not be available or, if available, such financing may not be obtained on terms favorable to our stockholders and us.

Private Placements

From our inception through July 2008, we privately placed an aggregate of 6,169,320 shares of common stock to one investor for gross proceeds of $12.0 million.

In January 2010, we issued an aggregate of 1,989,867 shares of common stock for gross proceeds of $3.5 million and as consideration for the termination of the monitoring fee. See “Certain Relationships and Related Party Transactions—Monitoring Fee Agreement.”

On August 13, 2010, we issued 8,585 shares of common stock each to two investors at a purchase price of $11.67 per share.

In May 2010, we completed a private placement of our Series A Convertible Preferred Stock, which are convertible into shares of our common stock at the option of the holder, to raise additional capital to fund our acquisition program. We also increased the number of our authorized shares to 250 million shares of common stock and 50 million shares of preferred stock. Between March 2010 and May 2010, we issued an aggregate of 4,975,180 shares of Series A Convertible Preferred Stock, for approximately $33.0 million in gross proceeds to the Company. These shares of preferred stock have an aggregate initial liquidation preference of $33.0 million and accrue dividends at an annual rate of 12%, in each case payable only upon liquidation or deemed liquidation event. As of September 30, 2010, no preferred stock dividends had been accrued. The preferred stock will automatically convert into shares of our common stock simultaneously with the closing of this offering. Pursuant to investor rights agreements with the holders of the preferred stock, unless there has been a liquidation event, we are required to file for an underwritten initial public offering within 18 months of the termination of the private placement and to consummate such offering within 24 months of termination of the private placement or face certain cash penalties outlined in the agreements.

Credit Facilities

Existing Credit Facility

Our existing credit facility, which is available to finance our acquisition program and working capital needs, consists of a $95 million term loan and a $15 million revolving credit facility. All of our obligations under the existing credit facility are secured, subject to permitted liens and certain other exceptions, by a first-priority lien on substantially all of our assets and the assets of our domestic subsidiaries, including but not limited to, (i) a pledge of the capital stock of each of such subsidiary and (ii) a security interest in substantially all of the tangible and intangible assets owned by such domestic subsidiaries. The existing credit facility provides for monthly interest payments which commenced on January 1, 2010 and for the term loan, monthly installments of principal which commenced on July 1, 2010. The existing credit facility contains certain financial and nonfinancial covenants and restricts the payment of cash dividends. As of September 30, 2010, we had $89.6 million outstanding under the term loan of the credit facility, no amounts outstanding pursuant to the revolving credit facility, $220,000 of outstanding letters of credit and $685,000 of interest rate hedging losses, resulting in availability under the revolving credit facility of $14.1 million. As of October 18, 2010, we had $94.5 million outstanding pursuant to the term loan of the credit facility and $5.4 million outstanding under the revolving credit facility. We intend to repay outstanding amounts under the existing credit facility with the proceeds received from this offering.

New Credit Facility

We have entered into a new senior revolving credit facility with Bank of America, N.A., as administrative agent and the other lenders party thereto, which provides for borrowings of up to $180 million. The initial funding of the new senior credit facility is subject to the satisfaction of certain conditions, including, but not limited to, the completion of this offering on or before December 31, 2010. Up to $15 million of the new senior credit facility may be in the form of letters of credit, and up to $15 million may be in the form of swingline loans. We may elect to increase the new senior credit facility by an additional $50 million, so long as we are not in default under its terms and subject to the agreement of our lenders or new lenders to provide additional credit. Loans under the new senior credit facility will be used to fund our acquisition program (plans) and for general corporate purposes, including permitted acquisitions, and will be available for three years after the funding date of the new senior credit facility.

Our obligations under the new senior credit facility will be guaranteed by each of our existing and future direct and indirect domestic subsidiaries, and such obligations will be secured by substantially all of the assets of us and our domestic subsidiaries; however, in the case of our foreign subsidiaries, no more than 65% of the capital stock of first-tier subsidiaries shall be pledged, and no assets will be encumbered by liens in favor of our lenders.

Borrowings under the new senior credit facility will bear interest, at either (i) LIBOR plus the applicable margin or (ii) a base rate (equal to the highest of (a) the federal funds rate plus 0.5%, (b) the Bank of America prime rate and (c) LIBOR (using a one month-period) plus 1.0%), plus the applicable margin, as we elect. The applicable margin means a percentage per annum determined in accordance with the following table:


Pricing Tier	Consolidated Leverage Ratio	Commitment Fee/Unused Line Fee	Letter of Credit Fee	Eurocurrency Rate Loans	Base Rate Loans

1	³ 2.50 to 1.0	0.50%	3.75%	3.75%	2.75%
2	< 2.50 to 1.0 but ³ 1.75 to 1.0	0.625%	3.50%	3.50%	2.50%
3	< 1.75 to 1.0 but ³ 1.0 to 1.0	0.625%	3.25%	3.25%	2.25%
4	< 1.0 to 1.0	0.75%	3.00%	3.00%	2.00%

In the event of default, the outstanding indebtedness under the new credit facility will bear interest at an additional 2%.

The new senior credit facility will contain restrictive covenants, including among other things financial covenants requiring us to not exceed a maximum consolidated senior leverage coverage ratio, a maximum total consolidated leverage ratio and to maintain a minimum consolidated fixed charge coverage ratio. The new senior credit facility will also restrict our ability (subject to certain exceptions) to incur indebtedness, prepay or amend other indebtedness, create liens, make certain fundamental changes including mergers or dissolutions, pay dividends and make other payments in respect of capital stock, make certain investments, sell assets, change our lines of business, enter into transactions with affiliates and other corporate actions.

The new senior credit facility will also include events of default typical of these types of credit facilities and transactions, including, but not limited to, the nonpayment of principal, interest, fees or other amounts owing under the new senior credit facility, the violation of covenants, the inaccuracy of representations and warranties, cross defaults, insolvency, certain ERISA events, material judgments and change of control. The occurrence of an event of default could result in the lenders not being required to lend any additional amounts and the acceleration of obligations under the new senior credit facility, causing such obligations to be due and payable immediately, which could materially and adversely affect us.

We expect the closing of our new senior credit facility to occur immediately after the completion of this offering, at which time the existing credit facility will be paid in full from the proceeds of this offering and will terminate. As a result, we expect to write-off deferred financing costs of $3.0 million in the fourth quarter of 2010 related to the termination of our existing credit facility.

Working Capital Facility

On September 29, 2010, our indirect wholly-owned subsidiary UK Independent Medical Services Limited (“UKIM”) entered into a Sales Finance Agreement (“SFA”) with Barclays Bank PLC (“Barclays”), pursuant to which Barclays will provide UKIM a working capital facility of up to £5,000,000, subject to the terms and conditions of the SFA. The working capital facility bears a discount margin of 2.5% over Base Rate and serves to finance UKIM’s unpaid account receivables. The working capital facility will operate on a co-terminus and cross-default basis with other facilities provided by Barclays Bank PLC and with our new senior credit facility with Bank of America, N.A. As of September 30, 2010, we had $6.4 million outstanding under the working capital facility, resulting in $1.5 million in availability.

Cash Flow Summary

Cash and cash equivalents were $1.5 million at December 31, 2009, as compared with $1.2 million at December 31, 2008 and $416,000 at December 31, 2007. Cash and cash equivalents were $7.7 million at September 30, 2010, as compared with $328,000 at September 30, 2009.

Our cash flows from operating, investing and financing activities, as reported in our consolidated financial statements included elsewhere in this prospectus, are summarized as follows:


	Predecessor						Successor

	For the year ended December 31, 2007			For the period from January 1, 2008 to July 1, 2008
							For the years ended December 31,

							2007(1)			2008			2009

	(In thousands)
Net cash provided by (used in) operating activities	$	(117	)	$	693		$	(65	)	$	(289	)	$	4,177
Net cash used in investing activities		(122	)		—			—			(23,173	)		(25,775	)
Net cash provided by (used in) financing activities		249			(549	)		481			24,249			21,894

Increase in cash and cash equivalents	$	10		$	144		$	416		$	787		$	296



(1)	Includes the period from April 27, 2007 (inception) to December 31, 2007 for the successor company.

Operating Activities. Net cash provided by operating activities was $4.2 million in the year ended December 31, 2009 as compared with net cash used in operating activities of $(289,000) in the year ended December 31, 2008. Net cash provided by operating activities for 2009 consisted of our net loss of $(4.4) million which was offset by non-cash charges of $4.9 million (including $6.9 million in depreciation and amortization and $(2.7) million from deferred income taxes) and a decrease in working capital of approximately $3.6 million in 2009. The decrease in working capital primarily consisted of increases in accounts receivable of $(1.1) million, offset by increases in trade accounts payable and accrued expenses of $3.0 million and amounts due to related parties of $1.9 million.

Net cash used in operating activities was $(289,000) and $(65,000) in the years ended December 31, 2008 and 2007, respectively. Net cash used in operating activities for 2008 resulted from our net loss of $(2.2) million and a net increase in working capital of approximately $591,000, primarily due to cash provided by increases in trade accounts payable and accrued liabilities, which was offset by non-cash charges of $2.5 million.

Net cash used in operating activities for the predecessor was $(117,000) for the year ended December 31, 2007, resulting from net income of $64,000 and a net decrease in working capital of $(235,000), principally due to the reduction of accounts payable and accrued expenses.

Net cash provided by operating activities for the predecessor was $693,000 for the period from January 1, 2008 to July 13, 2008, resulting from net income of $218,000 and a net increase in working capital of $440,000, principally due to the reduction of accounts receivable and an increase in accounts payable and accrued expenses.

Investing Activities. Net cash used in investing activities was $(25.8) million and $(23.2) million in the years ended December 31, 2009 and 2008, respectively. This increase was directly attributable to cash paid for increased acquisition activity and capital asset purchases during 2009 of approximately $(25.7) million and $(1.6) million, respectively. The increase in cash used was partially offset by increases in other acquisition settlement related activities of approximately $1.5 million.

Net cash used in investing activities was $(23.2) million in the year ended December 31, 2008. The cash used in investing activities in 2008 was primarily attributable to cash paid of approximately $(22.7) million to complete three acquisitions on July 14, 2008.

Net cash used in investing activities for the predecessor was $(122,000) for the year ended December 31, 2007, resulting from purchases of property and equipment.

No such amounts were incurred in the period from January 1, 2008 to July 13, 2008.

Financing Activities. Net cash provided by financing activities was $21.9 million and $24.2 million in the years ended December 31, 2009 and 2008, respectively. This decrease was primarily attributable to the net decrease of borrowings and repayments under our existing credit facility of approximately $8.6 million, and a reduction of proceeds from the issuance of common stock of approximately $(10.9) million year over year.

Net cash provided by financing activities was $24.2 million and $481,000 in the years ended December 31, 2008 and 2007, respectively. Cash provided by financing activities of $24.2 million during 2008 resulted primarily from the net borrowings and repayments under our credit facility of $12.4 million, coupled with $11.5 million in proceeds from the issuance of our common stock completed in July 2008. The cash provided by financing activities during 2007 was limited to cash received from investors of approximately $0.5 million.

Net cash provided by financing activities for the predecessor was $249,000 for the year ended December 31, 2007, resulting from net draws from its revolving line of credit facility used to finance the operating and investing activities.

Net cash used in financing activities for the predecessor was $(549,000) for the period from January 1, 2008 to July 13, 2008, resulting from net repayments of $(500,000) on its revolving line of credit facility and repayments of $(49,000) on a note payable.



	For the nine months ended September 30,

	2009			2010

	(In thousands)
Net cash provided by operating activities	$	3,023		$	14,255
Net cash used in investing activities		(11,349	)		(97,978	)
Net cash provided by financing activities		7,451			89,909
Exchange rate impact on cash and cash equivalents		—			35

Increase (decrease) in cash and cash equivalents	$	(875	)	$	6,221

Operating Activities. Net cash provided by operating activities was $14.3 million in the nine months ended September 30, 2010 compared with $3.0 million provided in the nine months ended September 30, 2009. This increase was due to the level of our operations in the 2010 period compared to the 2009 period. Net cash provided by operating activities for the nine months ended September 30, 2010 consisted of our net loss of $590,000 offset by non-cash charges of $9.9 million (including $12.5 million in depreciation and amortization) and an increase in working capital of approximately $5.0 million. The increase in working capital was primarily due to increased accounts receivable of $(2.4) million, offset by increases in trade accounts payable and accrued expenses of $6.4 million.

Investing Activities. Net cash used in investing activities was $(98.0) million and $(11.3) million for the nine months ended September 30, 2010 and 2009, respectively. The increase in cash used in investing activities was primarily due to $97.0 million used to complete twelve acquisitions in the first nine months of 2010 as well as $1.3 million used for capital expenditures.

Financing Activities. Net cash provided by financing activities was $89.9 million and $7.5 million for the nine months ended September 30, 2010 and 2009, respectively. In the 2010 period, we received $56.9 million in net proceeds from borrowings under our existing credit facility, $6.4 million in borrowings from the U.K. discount facility, $32.4 million in net proceeds from the issuance of preferred stock, and $3.0 million in net proceeds from the issuance of common stock, offset by repayments to related parties of $(3.5) million and the payment of deferred loan costs of $(1.9) million.

Contingencies

We record contingent liabilities resulting from asserted and unasserted claims against us when it is probable that a liability has been incurred and the amount of the loss is reasonably estimable. We disclose contingent liabilities when there is a reasonable possibility that the ultimate loss will exceed the recorded liability. Estimating probable losses requires analysis of multiple factors, in some cases including judgments about the potential actions of third-party claimants and courts. Therefore, actual losses in any future period are inherently uncertain. We currently are not involved in any material legal proceedings. It is possible, however, that future results of operations for any particular quarterly or annual period could be materially

affected by changes in our assumptions or the effectiveness of our strategies related to any future proceedings. Contingent liabilities are described in Note 9 to the consolidated financial statements included elsewhere in this prospectus.

Contractual Obligations and Commitments

Our contractual cash payment obligations as of September 30, 2010 are set forth below:



	Payments due by period

	Total		October 1, 2010 – December 31, 2010		2011		2012		2013		2014		Thereafter

	(In thousands)
Operating leases	$	14,354	$	1,062	$	3,764	$	3,041	$	2,277	$	1,523	$	2,687
Amounts outstanding under credit facility		89,620		4,481		17,924		67,215		—		—		—
Amounts outstanding under discount facility		6,448		—		—		—		6,448		—		—
Subordinated unsecured notes payable and deferred payments		5,013		838		1,969		1,527		419		260		—

Total:	$	115,435	$	6,381	$	23,657	$	71,783	$	9,144	$	1,783	$	2,687

We lease our office spaces for our corporate locations in Atlanta, Georgia and New York, New York and also for our 24 locations in various cities under non-cancelable lease agreements.

We have certain contractual obligations including various debt agreements with requirements to make interest payments. These amounts are subject to the level of borrowings in future periods and the interest rate for the applicable periods, and therefore the amounts of these payments are not determinable. Borrowings under our existing credit facility bear interest at a base rate plus 5.0% for base rate loans or at a LIBOR base rate plus 5.5% for LIBOR Loans with a LIBOR floor of 2.0%. The existing credit facility also requires the payment of a monthly commitment fee for any availability at a rate of 0.5%. Borrowings under our discount facility bear interest at a base rate plus 2.5%.

Off-Balance Sheet Arrangements

We engage in no activities, obligations or exposures associated with off-balance sheet arrangements.

Critical Accounting Policies and Estimates

Overview and Definitions

We have identified the policies below as critical to our business operations and understanding of our results of operations. The impact and any associated risks related to these policies on our business operations are discussed throughout this management’s discussion and analysis of financial condition and results of operations where such policies affect our reported and expected financial results. Our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles, require us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, cash flow and related disclosure of contingent assets and liabilities. Our estimates include those related to accounts receivable reserves, goodwill and other intangible assets, share-based compensation other equity instruments, income and other taxes, derivative instruments and contingent obligations. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ from these estimates, and the impact of changes in key assumptions may not be linear. Our management has reviewed the application of these policies with the audit committee of our board of directors. For a detailed discussion on the application of these and other accounting policies, see Note 2 to the consolidated financial statements included elsewhere in this prospectus. We believe that our most critical accounting policies and estimates relate to the following:

Revenue Recognition

Revenue related to IMEs, peer reviews, bill reviews and administrative support services is recognized at the time services have been performed and the report is shipped to the end user. We believe that recognizing revenue at the time the report is shipped is appropriate because we meet the following four

criteria in accordance with ASC 605-10-S25, Revenue Recognition: Overall, (i) persuasive evidence that arrangement exists, (ii) shipment has occurred, (iii) the price is fixed and determinable and (iv) collectability is reasonably assured.

Revenue related to other IME services, including litigation support services and medical record retrieval services, where no report is generated, is recognized at the time the service is performed. We believe that recognizing revenue at the time the service is performed is appropriate because we meet the following four criteria in accordance with ASC 605-10-S25, (i) persuasive evidence that arrangement exists, (ii) services have been rendered, (iii) the price is fixed and determinable and (iv) collectability is reasonably assured.

Should changes in conditions cause management to determine these criteria are not met for certain future transactions, revenue recognized for any reporting period could be adversely affected.

Trade Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable balances consist of amounts owed to us for services provided in the normal course of business and are reported net of an allowance for doubtful accounts. Generally, no collateral is received from clients and the collectability of trade receivable balances is regularly evaluated based on a combination of factors such as client credit-worthiness, past transaction history with the customer, current economic industry trends and changes in customer payment patterns and additions to the allowance are made based on these trends. Accounts are reviewed regularly for collectability and those deemed uncollectible are written off.

Goodwill and Other Intangible Assets

Goodwill is an asset representing the future economic benefits arising from assets acquired in a business combination that are not individually identified and separately recognized. Based on the provisions of ASC 350, Intangibles—Goodwill and Other (“ASC 350”), goodwill and indefinite lived intangible assets are tested for impairment annually or more frequently if impairment indicators arise. We evaluate the carrying value of goodwill during the fourth quarter of each fiscal year and between annual valuations if events occur or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying amount. Such circumstances include: (1) a significant adverse change in legal factors or in business climate, (2) unanticipated competition, or (3) an adverse action or assessment by a regulator. When evaluating whether goodwill is impaired, we compare the fair value of the reporting unit to which the goodwill is assigned to the reporting unit’s carrying amount, including goodwill. The fair value of the reporting unit is estimated using primarily the income, or discounted cash flows, approach. If the carrying amount of a reporting unit exceeds its fair value, then the amount of the impairment loss must be measured. The impairment loss is calculated by comparing the implied fair value of the reporting unit’s goodwill to its carrying amount. In calculating the implied fair value of the reporting unit’s goodwill, the fair value of the reporting unit is allocated to all of the other assets and liabilities of that unit based on their fair values. The excess of the fair value of a reporting unit over the amount assigned to its other assets and liabilities is the implied fair value of goodwill. An impairment loss would be recognized when the carrying amount of goodwill exceeds its implied fair value.

Intangible assets, including client relationships, trade names, covenants not to compete and technology that have finite lives are amortized over their useful lives.

We performed our annual impairment review of goodwill in October of 2008 and 2009, respectively, and reviewed subsequent events through December 31, 2008 and 2009, respectively, and determined that the carrying value of goodwill was not impaired as of each respective year end. Further, we believe that there have been no facts or circumstances subsequent to December 31, 2009 that indicate an impairment of goodwill exists.

Deferred Income Taxes

In preparing our financial statements, we are required to estimate our income taxes in each of the jurisdictions in which we operate. This process involves estimating actual current tax exposure together with assessing temporary differences resulting from differing treatment of items for tax and financial reporting purposes. These differences result in deferred income tax assets and liabilities.

As of December 31, 2008 and 2009, respectively, we had net operating losses (“NOLs”) of approximately $700,000 and $800,000, which are subject to annual limitations of $800,000 resulting from the change in control provisions in Section 382 of the Internal Revenue Code. We generated $9.9 million of federal taxable income in the nine months ended September 30, 2010, which we expect will fully utilize the NOLs in 2010.

Additionally, we currently have significant deferred tax assets and other deductible temporary differences including basis differences between intangible assets. We do not provide a valuation allowance against our deferred tax assets as we believe that it is more likely than not that some or all of the deferred tax assets will be realized based on available evidence including scheduled reversal of deferred tax liabilities, projected future taxable income, carry-back opportunities and other tax planning considerations.

Effective January 1, 2009, we adopted the provisions of ASC 740, Income Taxes (“ASC 740”), as it relates to uncertain tax positions. This guidance prescribes a comprehensive model for how a company should recognize, measure, present and disclosure in its financial statements uncertain tax positions that the Company has taken or expects to take on a tax return. ASC 740 states that a tax benefit from an uncertain tax position may be recognized only if it is “more likely than not” that the position is sustainable, based on its technical merits. The tax benefit of a qualifying position is the largest amount of tax benefit that is greater than 50% likely of being realized upon settlement with a taxing authority having full knowledge of all relevant information. As of January 1, 2009, we recognized a liability for unrecognized tax liabilities of approximately $100,000. We recorded an additional $50,000 liability for unrecognized tax benefits in the nine months ended September 30, 2010 related to prior year tax positions of an acquired company. Additionally, the Company recognizes interest and penalties accrued related to unrecognized tax benefits in income tax expense.

We are no longer subject to U.S. federal income or state tax return examinations by tax authorities before 2005 and 2004, respectively, which periods relate to certain acquired businesses. We operate in multiple taxing jurisdictions and face audits from various tax authorities. We remain subject to examination until the statute of limitations expires for the respective tax jurisdiction. We do not anticipate that the amount of the unrecognized benefit will significantly increase or decrease within the next twelve months.

Share-Based Compensation and Other Equity Instruments

Our stock incentive plans provides for the granting of stock options and share-based awards in accordance with ASC Topic 718, Compensation—Stock Compensation (“ASC 718”). ASC 718 requires measurement of compensation cost for all share based awards at fair value on the grant date (or measurement date, if different) and recognition of compensation expense, net of forfeitures, over the requisite service period for awards expected to vest. We use the straight-line amortization method for recognizing share based compensation expense.

The fair value of stock option grants is determined using the Black-Scholes valuation model. The Black-Scholes option-pricing model was developed for use in estimating the fair value of traded stock options that have no vesting restrictions and are fully transferable, characteristics not present in these stock options. Additionally, option valuation models require the input of highly subjective assumptions, including the expected volatility of the stock price. Because the Company’s stock options have characteristics significantly different from those of traded stock options and because changes in the subjective input assumptions can materially affect the fair value estimates, in management’s opinion, the existing models may not provide a reliable single measure of the fair value of its share-based awards. Our expected volatility assumptions are based on publicly traded peer group’s average implied historical volatility. We expect to continue to use an estimate based on our peer group’s historical volatility until we have adequate historical data regarding the volatility of our traded stock price. Expected life assumptions are based upon the average of the “simplified” method as described in SEC Staff Accounting Bulletin No. 107, which is the midpoint between the vesting date and the end of the contractual term, and the contractual term of the option, in accordance with ASC 718, which states that if no amount within the range is more or less likely than any other amount, an average of the range (its expected value) should be used. This option has been elected as we do not have sufficient stock option exercise experience to support a reasonable estimate of the expected term. The risk-free interest rate was selected based upon yields currently available on U.S. Treasury zero-coupon issues with a remaining term approximating the expected term of the option. We recognize compensation expense for only the portion of stock options that are expected to vest. Accordingly, we have estimated expected forfeitures of

stock options based on historical forfeiture experience rates and used these to develop a future rate. If our actual forfeiture rate varies from our historical rates and estimates, additional adjustments to compensation expense may be required in future periods.

The per share exercise price of our stock option grants is no less than the fair market value of our common stock on the date of grant, and historically has been substantially in excess of fair market value. The fair market value of our common stock is determined on a quarterly basis by our Board of Directors in consultation with management. Starting in 2009, our Board began performing quarterly valuations of our common stock using discounted future cash flows and taking into consideration a number of subjective factors including the illiquid nature of our stock and expected time to liquidity. The per share exercise price of our stock options, however, has been determined based on a number of objective factors, primarily the contractual value of our stock issued to sellers in acquisitions and the price per share at which we sold stock in equity financings. For example, in acquisitions, we have valued our stock, and sellers have accepted valuations, based on a multiple of our pro forma Adjusted EBITDA. The multiple has been based on a number of factors, including our size and growth rate.

The following table summarizes the number of stock options granted from January 1, 2008 through September 30, 2010, the per share exercise price of the stock options and estimated per share weighted average fair value of stock options:



Quarter ending	Number of shares subject to options granted and outstanding		Weighted average per share exercise price of options		Weighted average per share estimated fair value of options (1)

September 30, 2008		580,224	$	2.80	$	0.78
June 30, 2009		466,382	$	2.80	$	0.66
September 30, 2009		147,355	$	3.89	$	1.02
December 31, 2009		107,214	$	3.89	$	0.99
March 31, 2010		1,441,978	$	6.12	$	0.64
June 30, 2010		685,832	$	6.63	$	0.66
September 30, 2010		507,015	$	7.71	$	1.13



(1)	As described above, the per share estimated fair value of stock options was estimated for the date of grant using the Black-Scholes option-pricing model. This model estimates the fair value by applying a series of factors including the exercise price of the stock option, the fair market value of our common stock, a risk free interest rate, the expected term of the stock option, expected share price volatility of the underlying common stock and expected dividends on the underlying common stock. Additional information regarding our valuation of common stock and option awards is set forth in Note 2 to our consolidated financial statements included elsewhere in this prospectus.

Accounting for Acquisitions

Accounting for acquisitions requires us to recognize and measure identifiable assets acquired, liabilities assumed and any non-controlling interest in the acquired entity. Our accounting for acquisitions involves significant judgments and estimates, including the fair value of certain forms of consideration such as our common stock, the fair value of acquired intangible assets, which involve projections of future revenues, cash flows and terminal value, which are then discounted at an estimated discount rate, the fair value of other acquired assets and assumed liabilities, including potential contingencies, and the useful lives of the assets. The projections are developed using internal forecasts, available industry and market data and estimates of long-term rates of growth for our business. The impact of prior or future acquisitions on our financial position or results of operations may be materially impacted by the change in or initial selection of assumptions and estimates.

Financial Instruments

In September 2006, the Financial Accounting Standards Board (“FASB”) issued authoritative guidance codified as ASC 820, Fair Value Measurements and Disclosures (“ASC 820”). ASC 820 defines fair value, establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America and expands disclosure about fair value measurements. ASC 820 is effective for interim reporting periods in fiscal years beginning after November 15, 2007. As such, we adopted the provisions of ASC 820 effective January 1, 2008.

ASC 825, Financial Instruments (“ASC 825”), delayed the effective date of the application of ASC 820 to fiscal years beginning after November 15, 2008 for all nonfinancial assets and nonfinancial liabilities that are recognized or disclosed at fair value in the financial statements on a nonrecurring basis. Nonrecurring

nonfinancial assets and nonfinancial liabilities for which the Company has not applied the provisions of ASC 820 primarily include those measured at fair value in goodwill and long-lived asset impairment testing, those initially measured at fair value in a business combination, and nonfinancial liabilities for exit or disposal activities.

ASC 820 defines fair value as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 establishes a fair value hierarchy, which prioritizes the inputs used in measuring fair value into the following levels:

In determining fair value, we utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible as well as consider counterpart credit risk in the assessment of fair value.

Level 1 — Quoted prices in active markets for identical assets or liabilities.

Level 2 — Inputs, other than quoted prices in active markets, that are observable either directly or indirectly.

Level 3 — Unobservable inputs based on the company’s own assumptions.

Our financial liabilities, which are measured at fair value on a recurring basis, are categorized using the fair value hierarchy as of the year ended December 31, 2008 and 2009 and as of the nine months ended September 30, 2010 were as follows:



	Level 1		Level 2		Level 3		Total

	(In thousands)
As of December 31, 2008:
Financial liabilities:
Interest rate swap	$	—	$	611	$	—	$	611
As of December 31, 2009:
Financial liabilities:
Interest rate swap		—		485		—		485
Contingent consideration		—		—		2,630		2,630
As of September 30, 2010:
Financial liabilities:
Interest rate swap		—		685		—		685
Contingent consideration		—		—		3,883		3,883

The fair value of the interest rate swap is determined using observable market inputs, such as current interest rates, and considers nonperformance risk of the Company and that of our counterparties. The contingent consideration relates to earn-out provisions recorded in conjunction with certain acquisitions completed in 2009 and 2010.

In February 2007, the FASB issued authoritative guidance codified as ASC 825, which permits entities to choose to measure many financial instruments and certain other items at fair value. As we did not elect the fair value option, the adoption of this provision of ASC 825 did not have a material impact on our consolidated financial position, results of operations and cash flows for the years ended December 31, 2008 and 2009.

Recent Accounting Pronouncements

In addition to the recently adopted accounting pronouncements discussed above in conjunction with our critical accounting policies, we believe the following recently adopted accounting pronouncements are important to an understanding of our financial statements.

Recently Adopted Accounting Pronouncements

In June 2009, the FASB issued the Accounting Standards Codification, or ASC, as the single source of authoritative U.S. GAAP recognized by the FASB to be applied by nongovernmental entities in preparation of financial statements in conformity with U.S. GAAP. The ASC supersedes existing FASB, American Institute of Certified Public Accountants, Emerging Issues Task Force and related literature. While the adoption of the ASC as of July 1, 2009 changes how we reference accounting standards, the adoption did not have an impact on our financial position, results of operations or cash flows.

In December 2007, the FASB issued authoritative guidance codified as ASC 805, Business Combinations (“ASC 805”). ASC 805 changes accounting for business combinations through a requirement to recognize 100% of the fair values of assets acquired, liabilities assumed, and noncontrolling interests in acquisitions of less than a 100% controlling interest when the acquisition constitutes a change in control of the acquired entity. Other requirements include capitalization of acquired in-process research and development assets, expensing, as incurred, acquisition-related transaction costs and capitalizing restructuring charges as part of the acquisition only if requirements of ASC 420, Exit or Disposal Cost Obligations, are met. ASC 805 is effective for business combination transactions for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The Company adopted ASC 805 effective January 1, 2009 and applied the principles contained in this standard to all acquisitions that were completed in 2009. Our consolidated financial position, results of operations and cash flows for the year ended December 31, 2009, along with the results of operations and cash flows for the nine months ended September 30, 2009 and 2010, reflect the adoption of ASC 805.

In March 2008, the FASB issued authoritative guidance codified as ASC 815, Derivatives and Hedging (“ASC 815”). ASC 815 requires additional disclosures about the objectives of the derivative instruments and hedging activities, the method of accounting for such instruments, and a tabular disclosure of the effects of such instruments and related hedged items on the Company’s financial position, results of operations, and cash flows. ASC 815 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early adoption encouraged. We adopted ASC 815 effective January 1, 2009 and the adoption did not have a material impact on our consolidated financial position, results of operations and cash flows for the year and nine months ended December 31, 2009 and September 30, 2010, respectively.

In May 2009, the FASB issued authoritative guidance codified as ASC 855, Subsequent Events (“ASC 855”). ASC 855 requires that an entity shall recognize in the financial statements the effects of all subsequent events that provide additional evidence about conditions that existed at the date of the balance sheet, including the estimates inherent in the process of preparing financial statements. ASC 855 defines two types of subsequent events: “recognized subsequent events” and “non-recognized subsequent events.” Recognized subsequent events provide additional evidence about conditions that existed at the balance sheet date and must be reflected in the Company’s financial statements. Non-recognized subsequent events provide evidence about conditions that arose after the balance sheet date and are not reflected in the financial statements of a company. The standard also requires entities to disclose the date through which subsequent events have been evaluated, as well as whether that date is the date the financial statements were issued or the date the financial statements were available to be issued. ASC 855 is effective for interim or annual financial periods ending after June 15, 2009, and is to be applied prospectively. We adopted the provisions of ASC 855 for the year ended December 31, 2009. The adoption of the provisions of ASC 855 did not have a material effect on our consolidated financial condition, results of operations and cash flows. In accordance with ASC 855, we have evaluated subsequent events through the date that the consolidated financial statements were issued for the year and nine month period ended December 31, 2009 and September 30, 2010, respectively. No events have taken place that meet the definition of a recognized subsequent event that requires disclosure in the consolidated financial statements included elsewhere in this prospectus.

In January 2010, the FASB issued Accounting Standards Update, Fair Value Measurements and Disclosure. This update provides amendments to Codification topic, Fair Value Measurements and Disclosures, which require new disclosures about transfers in and out of Levels 1 and 2 and the reasons for the transfers as well as reconciliation for fair value measurements using significant unobservable inputs (Level 3). The update is effective for interim and annual reporting periods beginning after December 15, 2009. Adoption of this update did not have a material impact on our financial statements.

Accounting Pronouncements Not Yet Adopted

In October 2009, the FASB issued ASU 2009-13 (“ASU 2009-13”), addressing revenue arrangements with multiple deliverables. The new guidance establishes a selling price hierarchy for determining the selling price of a deliverable, eliminates the residual method of allocation, requires the allocation of arrangement consideration to all deliverables using the relative selling price method, and significantly expands disclosure requirements. The guidance is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. We do not expect the adoption of the ASU 2009-13 to have a material impact on our consolidated financial position, results of operations and cash flows.

There were various other accounting standards and interpretations issued during 2009 and through September 30, 2010 that we have not yet been required to adopt, none of which are expected to have a material impact on our financial position, results of operations or cash flows.

Quantitative and Qualitative Disclosures about Market Risk

Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our market risk exposure results primarily from fluctuations in interest rates as well as inflation. In the normal course of business, we are exposed to market risks, including changes in interest rates which affect our debt as well as cash flows. We may also face additional exchange rate risk in the future as we expand our business internationally.

Interest Rate Risk. As of September 30, 2010, we had cash and cash equivalents totaling approximately $7.7 million. These amounts were held for future acquisition and working capital purposes and were held in non-interest bearing accounts. Therefore, these amounts are insured in full through June 30, 2012 against bank failure under the Federal Deposit Insurance Corporation Temporary Liquidity Guarantee Program.

Our outstanding debt of $96.1 million at September 30, 2010 related to indebtedness under our existing credit facility and discount facility contains a floating interest rate. Thus, our interest rate is subject to market risk in the form of fluctuations in interest rates. The effect of a hypothetical one percentage point increase in our variable rate debt would result in an increase of $1.0 million in our annual pre-tax net loss assuming no further changes in the amount of borrowings subject to variable rate interest from amounts outstanding at September 30, 2010.

In August 2008, as required under our then existing credit facility, in order to protect against interest rate exposure on its variable-rate debt, we entered into an interest rate swap to fix the interest rate applicable to our variable-rate debt. The agreement swaps one-month LIBOR for a fixed interest rate of 4.36%. We do not, and do not intend to, engage in the practice of trading derivative securities for profit.

Foreign Exchange Risk. As of September 30, 2010, we have foreign currency risks related to our revenues and operating expenses denominated in currencies other than the U.S. dollar, the Canadian dollar and the Pound Sterling. Our financial results could be affected by factors such as changes in foreign currency exchange rates or weak economic conditions in foreign markets. We do not currently hedge our exposure to foreign currency exchange rate fluctuations given that the net difference between foreign currency denominated revenue and operating expenses is relatively small. In the future, however, we may hedge such exposure to foreign currency exchange rate fluctuations.

BUSINESS

Overview

ExamWorks is a leading provider of independent medical examinations, or “IMEs”, peer and bill reviews, and related services, which include, litigation support services, administrative support services and medical record retrieval services, and which we collectively refer to as IME services or the IME industry. We provide these IME services through our medical panel of approximately 13,500 independently contracted, credentialed physicians and other medical providers. Our clients include property and casualty insurance carriers, law firms, third-party claim administrators, and government agencies that use independent services to confirm the veracity of claims by sick or injured individuals for workers’ compensation, automotive, personal injury liability and disability insurance coverage. We help our clients manage costs and enhance their risk management processes by verifying the validity, nature, cause and extent of claims, identifying fraud and providing fast, efficient and quality IME services.

We provide our clients with the local presence, expertise and broad geographic coverage they increasingly require. Our size and geographic reach give our clients access to our medical panel and proprietary information technology infrastructure that has been specifically designed to streamline the complex process of coordinating referrals, scheduling appointments, complying with regulations and client reporting. Our primary service is to provide IMEs that give our clients authoritative and accurate answers to questions regarding the nature and permanency of medical conditions or personal injury, their cause and appropriate treatment. Additionally, we provide peer and bill reviews, which consist of medical opinions by members our medical panel without conducting physical exams, and the review of physician and hospital bills to examine medical care rendered and its conformity to accepted standards of care. On a pro forma basis for acquisitions completed to date, we provided in excess of 344,000 IMEs and reviews in the twelve months ended September 30, 2010.

The qualifications, experience and availability of physicians and other medical providers are critical to the IME industry, as they are the primary determinants of the speed and quality with which IME services are performed. We provide our physicians and other medical providers with seamless document management, scheduling, transcription and tracking systems, helping them increase efficiency and optimize the number of IME services they can conduct based on their availability. Our ability to minimize administrative burden and schedule appointments efficiently, encourages physicians and other medical providers to perform IME services through us. Based on client and physician feedback, we believe our medical panel effectively meets our clients’ needs and represents an important competitive advantage.

Our revenues consist primarily of fees per IME service performed. Our fees vary by physician/medical provider, specialty and type of service. Pro forma for acquisitions completed by October 1, 2010, we had revenues of $207.4 million and $170.4 million for the year ended December 31, 2009 and the nine months ended September 30, 2010, respectively. See “Unaudited Pro Forma Condensed Combined Financial Information.” Our primary costs are the payments made to physicians and other medical providers on our medical panel. Our costs are variable as members of our medical panel are independent contractors, allowing us to maintain and manage our operating margins more effectively. We have long-standing relationships with clients, resulting in consistent, recurrent demand for our services.

ExamWorks was formed on April 27, 2007 for the purpose of acquiring companies in the IME industry. On July 14, 2008, CFO Medical Services, P.A. (“CFO”) merged into a wholly-owned subsidiary of ExamWorks for $13.6 million, comprised of $7.1 million cash consideration including transaction costs of $220,000 less cash acquired of $335,000, and 2,351,004 shares of ExamWorks’ common stock with an estimated fair value of $6.6 million. CFO, who we have identified as our predecessor for financial statement purposes, enabled us to commence operations in New Jersey. On July 14, 2008, we acquired two additional IME businesses in New York and Texas. As of October 1, 2010, we acquired an additional 24 IME businesses including two IME businesses in Canada, one IME business in the United Kingdom and the foremost provider of software solutions to the IME industry. As a result of our corporate infrastructure and scale, our acquired businesses have been able to increase revenues and improve operating margins post acquisition. Our geographic reach, scale, brand recognition, long-standing industry relationships, management experience and capital resources position us as an acquiror of choice and give us a distinct advantage that we believe is difficult for our traditional industry competitors to emulate and new market entrants to achieve.

Today, we are an international company delivering our services in all 50 U.S. states, Canada and the United Kingdom. Our operating model enables us to provide our clients with localized services they are accustomed to, while realizing the benefits of scale that accrue to a larger, integrated company.

Industry Opportunity

We believe the IME industry represented sales volumes in 2009 of approximately $4 billion in the U.S., $0.6 billion in Canada and $0.5 billion in the United Kingdom based on our analysis of data reported by the U.S. National Association of Insurance Commissioners, the Insurance Bureau of Canada, the Association of Workers’ Compensation Boards of Canada and the Association of British Insurers regarding the number of claims made in 2009 for which IME services may be requested in insurance lines we service, the estimated average price for IMEs and our knowledge of the IME market, our competitors and potential acquisition targets.

The following clients routinely request IME services:


Clients		Description

Insurance Companies	Mainly claims adjusters and in-house counsel for major insurance companies covering workers’ compensation, automotive, personal injury liability and disability insurance claims.

Law Firms	Attorneys who request IME services based on specific claims for insurance carriers.

Third-Party Claim Administrators (“TPA”)	Process claims and administer benefits for large self-insured corporations that outsource claims management.

Government Agencies	Government agencies across the federal, state and local levels (e.g., U.S. Department of Labor and Health Canada).

State Funds	State-run payors that provide mandatory workers’ compensation insurance to companies.

IME Industry Growth Drivers

We believe the IME industry presents large IME services providers like us with continued potential for growth and profitability through consolidation, growth in international markets, and capture of market share from smaller IME companies without a national infrastructure, large credentialed medical panel and/or technology platform. The following are some of the factors that contribute to these opportunities:


	•	IME services are used for a large number of claims. IME services are regularly used by insurance companies, law firms, TPAs, government agencies and state funds for the evaluation of non-litigated and litigated claims. In the U.S. IME market, we estimate, based on data reported by the U.S. NAIC, that approximately 25 million workers’ compensation, automotive, personal injury liability and disability insurance claims are made per year, many of which are potentially subject to IME services. Particular types of claims with high economic value, such as permanent disability, typically require IMEs and have shown strong demand in recent years.

	•	Cost containment and risk management will be primary areas of focus. Current macroeconomic, demographic and regulatory trends, including increased medical costs and administrative and regulatory burdens, will continue to pressure users of IME services to better manage costs and mitigate risks. If settled, claims are usually paid as a multiple of medical expenses and other costs accrued. Consequently, clients increasingly demand fast and efficient provision of IME services to help manage costs.

	•	Demand for IME services due to the prevalence of fraud. The National Health Care Anti-Fraud Association estimates that 3% of all healthcare spending in the U.S., approximately $68 billion in 2007, was lost to fraud. With ongoing efforts to address healthcare fraud, we expect the demand for IME services to increase.


	•	Sources of low-risk revenue are increasingly attractive to physicians. Pressure in the healthcare industry on physician compensation encourages physicians to take on additional work, including performing IME services to supplement their incomes. There is almost no reimbursement risk associated with performing IME services as physicians are paid on a per service basis at a pre-negotiated rate. Consequently, demand from physicians to perform IME services is expected to remain strong.

	•	International markets represent key growth opportunities. There are several international markets with demand for IME services either due to regulatory requirements, such as national health programs, or private-sector adoption of claims validation practices to better manage costs and mitigate risks.

	•	Industry fragmentation, inefficiencies and lack of scale present challenges for smaller IME companies. The IME industry is highly fragmented and smaller IME companies may provide IME services inefficiently and with inconsistent quality. With ongoing pressure in the IME industry to reduce costs, improve quality, and improve workflow efficiency, the market opportunity for IME companies with a comprehensive portfolio of services and broad geographic coverage is significant.

Our Competitive Strengths

While we compete with a large number of primarily local and regional IME providers, we believe our competitive strengths include the following:

	•	Growing brand name associated with market leading capabilities. Our ExamWorks brand has distinct geographic and market strengths which continue to grow stronger as we build our national and international presence. We are known by our clients as having industry leading capabilities and continue to position ourselves as the optimal IME services provider for insurance companies and other clients as well as physicians and other medical providers. As we acquire companies, we market and deliver our services under the ExamWorks corporate brand, while maintaining the relationships and recognition associated with the acquired local brand. We believe that as our brand strength improves, we will continue to attract clients and qualified physicians and other medical providers to our medical panel.

	•	Well positioned to capture market share. With our focus on national accounts, our long-standing local relationships and our national and international footprint, we believe we are well positioned to continue to capture market share at the local and national level. To date, we have been successful in being named a preferred vendor for many of the largest insurers and are in the process of adding more national accounts to our client list. As a preferred vendor, clients are encouraged to utilize our services over other vendors, if possible. Consequently, as we add national accounts and proactively sell our services to our clients through our sales force, we should continue to receive new business and grow our market share. The quality of our long-standing relationships with our clients provides consistent, recurrent demand for our services.

	•	Large, qualified and experienced medical panel. We believe our medical panel represents one of the IME industry’s leading groups of widely accessible, experienced and credible physicians and other medical providers. We have relationships with physicians and other medical providers across nearly every medical specialty. We are able to attract and retain our highly qualified medical panel through our ability to fill schedules and offer a full range of administrative services. We believe that quality of service, professionalism and speed of IME or review completion are key areas of focus for our clients and we work with our medical panel to ensure that we meet or exceed client expectations.

	•	Leading technology platform. We believe our leading technology team and proprietary infrastructure provide us with a sustainable competitive advantage. Our IME*Centric technology platform streamlines our business processes and reduces administrative operating costs with industry leading coordination of patient referrals, appointment scheduling, client reporting and real-time case tracking. We believe that the complexities of the IME industry and client demand for a broader, more cost-effective portfolio of services will continue to benefit companies like us, which remain at the forefront of technological innovation.



	•	Proven track record of successfully completing and integrating key acquisitions. Our growth is supplemented by selective, disciplined acquisitions to expand our geographic coverage, provide new or complementary lines of business, expand our portfolio of services and increase our market share. Since our founding, we have acquired 27 IME businesses and have a track record of successfully integrating acquired businesses into our operations. Through rapid and effective integration, we have been able to utilize acquired platforms to cross-sell IME services. As awareness of our brand continues to increase, we find that smaller IME companies increasingly want to join ExamWorks. To date, we have successfully realized several key benefits through our acquisition strategy, including (i) the scale to operate efficiently while retaining the critical local office presence, (ii) the ability to offer our clients a leading medical panel, (iii) service-specific processes which are rapidly shared throughout our entire Company and (iv) the opportunity to introduce new products and services, and enter new markets and geographies.


	•	Experienced management team. Our management team has an in-depth understanding of the IME industry as well as extensive experience growing companies profitably, both organically and through acquisitions. Prior to founding our Company, our senior executive team founded and operated three successful public companies. They bring extensive experience in growing businesses organically and acquisitively, having successfully integrated over 80 acquisitions during their careers. Many of the members of the executive management team have worked together closely over the past 15 years. Since ExamWorks’ inception, the management team has sourced and successfully completed 27 acquisitions.

Our Growth Strategies

Our objective is to continue to be a leading provider of IME services, and to build on our position as an essential and trusted service provider in claims validation and verification processes. Our principal strategies to meet our objectives are:

Maintain Strong Organic Growth


In the year ended December 31, 2009 and the nine months ended September 30, 2010, our revenues from existing businesses grew by approximately 17% and 14%, respectively. We believe the following initiatives will allow us to continue realizing strong organic growth:



	•	Drive sales growth. As many of our acquired companies were family-owned businesses built on local relationships, they often did not have well-developed management strategies, policies and procedures. We have been able to implement processes that require accountability, set clear sales goals, and track progress effectively, enabling us to increase the number of IME services provided to existing clients. This, in turn, has increased the growth and profitability of our acquired companies.

	•	Sell additional services to existing clients. With locations serving the U.S., Canada and the United Kingdom, we are able to use our large network to efficiently share services expertise within our sales force. By accelerating the knowledge transfer and cross-selling capabilities of our sales force, we are able to offer additional IME services to existing clients (for example, peer and bill reviews to existing IME clients). This allows us to capture additional market share and grow our presence in markets by increasing utilization of our existing platform across all IME service offerings.



	•	Cross-sell into other insurance lines of business. Currently we have clients that use our services for a specific line of business. We can increase sales to existing clients through cross-selling into additional lines of business, such as workers’ compensation, automotive, personal injury liability and disability.


	•	Expand geographic footprint with existing clients. We intend to build on our local relationships and expand into new geographies where our clients operate. As many of our clients have a broad national and/or international presence, we believe our strong relationships and reputation for providing quality IME services will provide us with opportunities to receive intra-client referrals and increase our geographic footprint. As we expand geographically and serve clients in new geographic regions, we expect our national account program to build momentum and for us to become a preferred provider for more of our clients.

Pursue Acquisitions

As we grow our reputation and recognition in the IME industry, we believe more IME companies will want to join ExamWorks. Since the IME industry is highly fragmented, we believe we will have additional opportunities to identify and capitalize on complementary acquisitions in the future.

Our Services, Medical Panel and Technology Platform

Our services primarily include IMEs and peer and bill reviews. Our portfolio of IME services meets the urgent claims evaluation needs of our clients by verifying the validity, nature, cause and extent of claims, identifying fraud and providing fast, efficient and quality IME services.

Independent Medical Examinations (“IMEs”)

Our primary service is to provide IMEs that give our clients authoritative and accurate answers to questions regarding the nature and permanency of medical conditions or personal injury, their cause and appropriate treatment. Clients use IMEs as part of their claims or liability management process in order to confirm the veracity of claims by sick or injured individuals for workers’ compensation, automotive, personal injury liability and disability insurance coverage. Our independent and clearly written opinions, prepared by our credentialed panel of physicians and other medical providers, address both medical and legal competencies. In most cases, clients cannot perform the services in-house, as there is a need to perform IMEs independently, objectively and in a cost-effective manner. IMEs are also used by attorneys for legal disputes and proceedings related to personal injury and other claims. In the case of litigated claims, physicians and medical providers on our medical panel are able to provide expert testimony.

Peer Reviews

We offer a full range of peer review services, including medical record reviews, nurse file reviews, utilization reviews and radiology reviews by members of our medical panel. Our peer reviews, which are performed by members of our medical panel, provide an informed, credible, and evidence-based medical opinion of a claimant’s condition and treatment. These reviews examine and include opinions as to (i) causal relationships, (ii) reasonableness and appropriateness of treatment, (iii) mitigating conditions with relevant associated and degenerative conditions and (iv) the necessity of medical service and treatment, all for the purpose of facilitating the fair and proper handling of claims.

Bill Reviews

We offer a full range of bill review services, including physician and hospital bill reviews and surgical cost estimates. Bill reviews examine the specific medical care rendered and how its relevance and cost conform to industry accepted standards of care. Physician and hospital bill reviews are used to facilitate the adjudication, settlement or resolution of a medical bill or claim, through a line item audit for every charge on the bill, based on service rates from local market data. Our surgical cost estimates, performed by credentialed registered nurses on our medical panel, highlight ways in which costs can be anticipated, managed, and reduced, by providing usual, customary and reasonable costs associated with the procedure itemized by service category. This service provides insight into prospective procedures, likely rehabilitation and implications for disability and costs, and is particularly helpful in addressing claims where medical severity continues to increase.

Other IME related services

We also offer a variety of other IME related services including litigation support services, medical record retrieval services and administrative support services. Litigation support services involve a member of our medical panel providing expert testimony on behalf of our clients. Medical record retrieval services are performed by an ExamWorks employee and involve the physical retrieval of the claimant’s historical medical records typically in conjunction with an IME or a peer review. Administrative support services are performed by an ExamWorks employee and involve the completion and submission of forms required for the request of exams on behalf of our clients.

Medical Panel

Our IME services are performed by a panel of approximately 13,500 experienced and credentialed physicians and other medical providers, which include dentists, chiropractors, psychologists, acupuncturists, physical therapist, nurses, and social workers, among others. Our medical panel consists of physicians and other medical providers who have performed services and received compensation from us and our acquired businesses. These physicians and other medical providers are engaged by us on an independent contractor basis, which is customary in the IME industry. Because members of our medical panel are independent contractors, as opposed to employees, we do not withhold income or other employment related taxes, pay employment related taxes, provide workers’ compensation insurance, or directly assume any malpractice liabilities with respect to them. Utilization of members on our medical panel is heavily dependent on geographic location and certain specialties, including orthopedic, chiropractic, rehabilitation and neurology specialties. Importantly, our medical panel costs are variable, allowing us to effectively maintain and manage our operating margins. We have been able to attract and retain members of our own panel through our ability to fill schedules and offer a full range of administrative services. We also employ in-house recruiters who are responsible for the identification and recruitment of members of our medical panel, and members of our panel also serve as a source of referrals.

Members of our medical panel must have extensive applicable experience and a clinical background, an active medical practice, and/or hold a position in a reputable medical or clinical facility. To the extent applicable, we require our physicians and other medical providers to (i) be board certified, licensed or accredited practitioners of related and supporting medical specialties, (ii) have proof of medical malpractice insurance; (iii) pass background checks for disciplinary action; (iv) maintain offices that are well kept and clean; (v) submit to regularly scheduled site inspections to ensure that the highest standards of courtesy and professionalism are observed; and (vi) be available to testify when needed.

The credentialing of physicians and other medical providers is a critical component of our ability to provide and maintain the integrity and quality of our services and compete effectively. All physicians and other medical providers in our panel must comply with any and all requests for information and with our credentialing procedures. The process starts with each physician and other medical provider completing a comprehensive questionnaire that is reviewed carefully, and primary source verification methods are used to verify his or her license status and other professional qualifications. Primary source verification involves a direct contact with the sources of licenses and qualifications to confirm that information provided to us about licenses and qualifications are legitimate and current. As we acquire businesses, we implement our credentialing policies and procedures to ensure that all of our acquired businesses operate on a consistent basis and in conformity with our procedures as quickly as reasonably possible after being acquired.

IME*Centric Technology Platform

Through our acquisition of IME Software Solutions in July 2009, we acquired the leading platform software solution for the IME industry and are in the process of deploying this technology throughout our entire company. We are now able to customize specific software initiatives to meet our clients’ needs and to support our strategic objectives. With IME*Centric, we provide clients with access to our HIPAA-compliant web portal and computing network that automates a host of tasks that can otherwise consume a significant amount of time for both our staff and our clients. Specific functions of our technology platform include central data collection, data privacy controls, elimination of cost centers, business continuity procedures, and data mining capabilities. We use real-time feedback from our clients to improve functionality and performance of our technology and processes and incorporate these improvements into our portfolio of services on a regular basis.

IME*Centric links our clients with our IME platform, and medical panel and allows for the following functionality:


	•	Online referrals and electronic record submission.

	•	Automated forms generation.

	•	Search and scheduling.

	•	Review and comment on documents and doctor reports.

	•	Tracking and auditing.

The architecture of our technology platform is built in a Private Virtual Cloud Computing Network (“PVCCN”). The development and deployment of IME*Centric software solution at the business unit level is managed centrally by a team leader and four members of our information technology department. To date, the IME*Centric software solution has been deployed in the majority of our locations. Deployment schedules are based on a variety of factors. For example, locations that have less developed software systems and whose clients we can better serve through faster deployment become high priority locations.

We plan to continue developing our technological capabilities nationally and internationally and enhancing the competitive advantages our technology platform provides.

Acquisitions

We have substantial experience in identifying, acquiring and integrating IME services businesses. Since our inception, we have acquired 27 IME businesses and have a track record of successfully integrating acquired businesses into our operations. These acquisitions have enabled us to establish a presence in new markets, strengthen our position in existing markets and add new or complementary lines of business to our portfolio of services. Our management team executes our growth strategy by being involved in the process of identifying complementary acquisition opportunities in new and existing markets. Our management team is experienced, having collectively coordinated due diligence, negotiation and execution for all acquisitions to date.

We anticipate that we will continue to acquire companies in geographic regions in which we currently have a limited presence or that offer a complementary portfolio of services to those that we already provide, and would consider suitable acquisition candidates, characterized by several, if not all, of the following attributes:


	•	an experienced and talented management team prepared to make a commitment to executing our strategic business plan.

	•	specialization in certain services that may be beneficial to or complement our other companies.

	•	a demonstrated record of organic growth and profitability, or capable of achieving our minimum financial performance targets in the near term.

Our process to source, execute and integrate acquisition targets has been successful to date, as we have been able to identify suitable targets efficiently and close the vast majority of transactions we initiated. Our acquisition process includes several key steps. During sourcing, we either identify potential targets directly or receive inbound requests from smaller IME or IME-related businesses interested in joining ExamWorks. Our preliminary assessment consists of an evaluation of the target’s financial performance and fit with our business model and culture. If a proposal is considered, we formulate a suitable bid based on a critical assessment of the target’s historical and projected performance. We always aim to negotiate and complete purchase agreements as efficiently as possible. During the final stage of closing and integration, we strive to introduce concrete goals and objectives and implement professional management practices to ensure that the target’s culture and processes are consistent with those of ExamWorks.

ExamWorks Acquisitions

Since our inception, we have closed the following acquisitions:


Acquisition Date	Name	Year Founded	Main Office Location

October 1, 2010	BMEGateway	1990	Woburn, MA
September 7, 2010	UK Independent Medical Services	2003	Durham, England
September 1, 2010	Health Cost Management	1997	Beaverton, OR
August 6, 2010	Verity Medical	2001	Madison, WI
August 6, 2010	Exigere	1996	Bellevue, WA
June 30, 2010	SOMA Medical Assessments	1999	Toronto, ON
June 30, 2010	Direct IME	2003	Toronto, ON
June 30, 2010	Network Medical Review	1995	Rockford, IL
June 30, 2010	Independent Medical Services	1999	St. Paul, MN
June 30, 2010	401 Diagnostics	2002	Sacramento, CA
March 26, 2010	Metro Medical Services	1987	East Rockaway, NY
March 15, 2010	American Medical Bill Review	1989	Redding, CA
March 15, 2010	Medical Evaluations	1984	Minneapolis, MN
December 31, 2009	Abeton	1984	Portland, OR
December 31, 2009	Medical Assurance Group	2001	Phoenix, AZ
December 31, 2009	MedNet I.M.S.	1992	Atlanta, GA
December 31, 2009	QualMed	1994	Mount Laurel, NJ
December 31, 2009	IME Operations of Physician Practice	2007	Boynton Beach, FL
August 14, 2009	The Evaluation Group	2000	Southfield, MI
August 4, 2009	Benchmark Medical Consultants	1989	Sacramento, CA
July 7, 2009	IME Software Solutions	2002	Farmington Hills, MI
May 21, 2009	Florida Medical Specialists	1989	Fort Lauderdale, FL
May 21, 2009	Marquis Medical Administrators	2002	Roseland, NJ
April 17, 2009	Ricwel	1987	Dublin, OH
July 14, 2008	CFO Medical Services	1990	Roseland, NJ
July 14, 2008	Crossland Medical Review Services	1992	Syosset, NY
July 14, 2008	Southwest Medical	1992	Dallas, TX

Geographic Information

Through September 30, 2010, $102.8 million, $5.1 million, and $1.3 million of our revenues were generated in the U.S., Canada, and the U.K., respectively. With the acquisition of SOMA and Direct IME on June 30, 2010, we entered the Canadian market and with the acquisition of UK Independent Medical Services on September 7, 2010, we entered the U.K. market. Total long-lived assets in the U.S., Canada and the U.K. were $121.6 million, $24.9 million and $9.4 million as of September 30, 2010, respectively.

Sales and Marketing

We employ a direct sales force of approximately 85 representatives with in-depth knowledge of the IME industry. Given the experience of our sales team and the constant sharing of market data and other relevant information from each of our 26 locations, we believe our sales force provides us with a competitive advantage. Our sales force promotes and sells our services to existing and new clients and seeks to expand the services we provide to our existing client base. We focus on both our clients who request IME services and the physicians and other medical providers who perform them.

Physician and other medical providers’ enrollment and retention are critical aspects of our sales strategy. It is important for us to have a large, motivated network of physicians and other medical providers who collectively offer diverse expertise and enable accelerated IME and review times. We recruit physicians and other medical providers through various channels, including med-legal conferences, referrals and continuing medical education seminars. Our ability to recruit physicians and other medical providers has been supported by the increasing prominence of our brand, both domestically and abroad.

Our marketing efforts focus on creating a strong brand identity for ExamWorks through industry trade shows, websites, print media and development of industry related seminars and continuing medical education opportunities. Our brand awareness in the IME industry has resulted in several companies proactively reaching out to us to join ExamWorks, and aided in our national account program to become a preferred service provider for clients. We have developed, and intend to continue to develop, local, regional, national and international marketing programs designed to create a strong brand identity for ExamWorks, emphasizing our wide geographic footprint, capabilities and technology platform.

Clients

Our clients include insurance companies, law firms, TPAs, government agencies and state funds. Our client base is diversified, with only one client, Progressive Casualty Insurance Company, contributing 11% of total revenue in the year ended December 31, 2009, and no client contributing more than 10% of total revenue in the nine months ended September 30, 2010. Pro forma for acquisitions completed through October 1, 2010, no client contributed more than 10% of pro forma total revenue in 2009 and the nine months ended September 30, 2010.

Competitive Landscape

Our competitors primarily consist of significantly smaller, local and regional companies in a fragmented landscape. In the U.S., we estimate that there are approximately 500 mainly private companies and thousands of independent physicians and medical providers that provide IME services. Small, local and regional providers often lack the scale and experience to provide multiple products across multiple service lines. Typically, these companies are able to provide just one product. We indirectly compete with local providers, HMOs and non-profit hospitals utilizing staff physicians, insurance companies employing in-house staff, and public companies providing services as a subset of a core line of business. In the U.S., Canada and the United Kingdom, IME providers compete on the basis of their geographic footprint, the strength of their client relationships, quality of reports, availability of qualified physicians and other medical providers, service offering and, to a lesser extent, price. Increasingly IME providers in all three countries also compete on the strength of their technology platform to streamline the IME business processes of their clients.

The competitive landscapes in Canada and the United Kingdom have similar characteristics in that IME services are mainly provided by smaller companies and independent physicians. We estimate that there are in excess of 90 and 40 companies that provide IME services in Canada and the United Kingdom, respectively. We believe there is an opportunity for an IME services company such as ExamWorks, with broad infrastructure and extensive experience, to grow and expand in Canada and the United Kingdom.

Some of our competitors may have a more significant historical relationship with clients in their geographic area or may be perceived as having more experience than we do in the specific line of insurance they serve. Some of our competitors may also have greater financial resources.

Government Regulation

As a participant in the healthcare industry, our operations and relationships with our clients, physician contractors and other medical professionals are subject to a variety of government regulations. These laws and regulations are broad in scope and they are subject to evolving interpretations, which could require us to incur substantial costs associated with compliance and to alter one or more of our practices. We devote significant efforts to establish and maintain compliance with all regulatory requirements that we believe are applicable to our business and the services we offer. Specifically, but without limitation, the following laws and regulations may affect our operations and contractual relationships:

Government Regulation of Health Information

HIPAA. The Health Insurance Portability and Accountability Act of 1996, as amended (including by the Health Information Technology for Economic and Clinical Health Act (“HITECH”)), including the regulations issued and effective thereunder, which we collectively refer to as HIPAA, contains substantial restrictions and requirements with respect to the use and disclosure of individuals’ protected health information. HIPAA applies to covered entities, such as certain healthcare providers and health plans, as well as business associates that perform functions on behalf of or provide services to covered entities.

As a result of our dealings with clients, suppliers and contractors in the medical industry which may be considered covered entities under or otherwise subject to the requirements of HIPAA, we are, in some circumstances, considered a business associate under HIPAA. As a business associate, we are subject to the HIPAA requirements relating to the privacy and security of protected health information. Among other things, HIPAA requires business associates to (i) maintain physical and technical and administrative safeguards to prevent protected health information from misuse, (ii) report security incidents and other inappropriate uses or disclosures of the information, including to individuals and governmental authorities, and (iii) assist covered entities from which we obtain health information with certain of their duties under HIPAA. We have policies and safeguards in place intended to protect health information as required by HIPAA and have processes in place to assist us in complying with applicable laws and regulations regarding the protection of this data and responding to any security incidents.

On July 14, 2010, the Department of Health and Human Services published a set of proposed regulations designed to modify and add provisions to HIPAA to reflect HITECH. If finalized, these proposed HITECH regulations could expand the applicability of HIPAA to our business. For example, the proposed HITECH regulations would, among other things:


	•	Expand the circumstances we could be considered a business associate subject to HIPAA;

	•	Require us to comply directly with many of HIPAA’s privacy requirements for which currently we are only obligated to comply contractually via our agreements with covered entities and other business associates; and

	•	Require us to implement additional provisions in our agreements with our subcontractors.

We are monitoring these proposed changes to HIPAA with the goal of effecting compliance when and if any new regulations go into effect.

Other Laws. In addition to HIPAA, most states have enacted confidentiality laws that protect against the unauthorized disclosure of confidential health information, and many states have adopted or are considering further legislation in this area, including privacy safeguards, security standards and data security breach notification requirements. Such state laws, if more stringent than HIPAA requirements, are not preempted by the federal requirements, and we must comply with them even though they may be subject to different interpretations by various courts and other governmental authorities. In addition, numerous other state and federal laws govern the collection, dissemination, use, accesses to, confidentiality and retention of health information.

False or Fraudulent Claim Laws

There are numerous federal and state laws that forbid submission of false information or the failure to disclose information in connection with the submission and payment of physician claims for reimbursement. In some cases, these laws also forbid abuse of existing systems for such submission and payment, for example, by systematic over treatment or duplicate billing of the same services to collect increased or duplicate payments.

In particular, the federal False Claims Act, or FCA, prohibits a person from knowingly presenting or causing to be presented a false or fraudulent claim for payment or approval by an officer, employee or agent of the U.S. In addition, the FCA prohibits a person from knowingly making, using, or causing to be made or used a false record or statement material to such a claim. The FCA’s “reverse false claim” provision also creates liability for persons who knowingly and improperly conceal the retention of an overpayment of government money. Violations of the FCA may result in treble damages, significant monetary penalties, and other collateral consequences including, potentially, exclusion from participation in federally funded health care programs. The scope and implications of the FERA amendments have yet to be fully determined or adjudicated and as a result it is difficult to predict how future enforcement initiatives may impact our business.

In addition, under the Civil Monetary Penalty Act of 1981, the Department of Health and Human Services Office of Inspector General has the authority to impose administrative penalties and assessments against any person, including an organization or other entity, who, among other things, knowingly presents, or causes to be presented, to a state or federal government employee or agent certain false or otherwise improper claims.

State and Local Laws and Licenses

We are subject to various federal, state and local laws, rules and regulations relating to our industry and our specific lines of business, including, without limitation, workers’ compensation, auto-injury and insurance laws. These laws are wide-ranging in scope and effect and range from requiring that we register with a governmental agency to imposing specific limitations on how medical assessments must be scheduled and conducted and how payment must be collected. In some states, these laws require us to obtain and maintain licenses, certifications and/or accreditations in order to conduct business (as, for example, an independent review organization or utilization review agent). We are subject to periodic inspection by governmental and other authorities to assure continued compliance with the various standards necessary for licensing and accreditations. We are taking the steps that we believe are required to maintain or obtain all requisite licenses and certifications and to comply with these laws.

State Laws Regarding Prohibition of Corporate Practice of Medicine and Fee Splitting Arrangements

The practice of most healthcare professions requires appropriate licensing under applicable state law. Some states prohibit general business entities, such as we are, from practicing medicine, controlling physicians’ medical decisions and engaging in some practices such as fee-splitting. Among other things, we currently contract with physicians to facilitate provision of IMEs in all 50 U.S. states. Although we are not in the business of providing healthcare or practicing medicine, and notwithstanding the way our arrangements our structured, others could potentially allege that we are in violation of some or all of these laws. If a state determines that some portion of our business violates these laws, it may seek to have us discontinue those portions or subject us to penalties, fines, certain license requirements or other measures. Any determination that we have acted improperly in this regard may result in liability to us. Even an unsuccessful challenge by regulatory authorities or others of our practices could result in adverse publicity and be costly to respond to.

Healthcare Reform Law

On March 23, 2010, the healthcare reform bill passed into law as the Patient Protection and Affordable Care Act as amended by the Healthcare and Education Reconciliation Act. This law and related measures call for increased scrutiny of, and may impose requirements on, physicians and insurance companies, and their third party contractors. While we are not in the business of providing healthcare, to the extent we contract with these physicians and insurance companies, these reforms could indirectly affect our business; however, at this time, we do not believe that these reforms will have a significant impact on our business.

Foreign Regulations

In General. Our operations in Canada are subject to a variety of federal and provincial regulations related to privacy, security and employment.

Canada. The Personal Information Protection and Electronic Documents Act (“PIPEDA”) is federal legislation that applies to federally regulated private sector organizations, including organizations in the transportation, communications, broadcasting and banking sectors, and to provincially regulated private sector organizations in provinces that have not enacted “substantially similar” legislation. PIPEDA applies to personal information, including health information, which is collected, used or disclosed in the course of commercial activity that takes place across the Canadian border, between provinces, or within a Canadian province that has not enacted substantially similar legislation.

The province of Ontario has not enacted a privacy law of general application; thus, PIPEDA applies to the activities of organizations operating within the province of Ontario, including SOMA Medical Assessments and Direct IME. PIPEDA requires that organizations obtain consent from individuals for the collection, use or disclosure of their personal information, subject to limited exceptions. PIPEDA also requires that organizations (i) protect collected information with reasonable security measures, (ii) implement a privacy policy (including an information retention policy), (iii) appoint a privacy officer responsible for representing the organization in privacy matters, and (iv) provide individuals with the right to access personal information held by the organization and to challenge its accuracy. Physicians and other persons providing services to us may also be subject to other provincial laws governing health information that is transmitted to us in connection with these services.

In Ontario, the conduct of medical assessments and examinations, as IMEs are called in Canada, and the preparation of reports in connection with motor vehicle accident claims are governed by the Statutory Accident Benefit Schedule (“SABS”) set forth in Regulations promulgated under the Insurance Act (Ontario). Under SABS, insurers are generally required to pay for all reasonable expenses incurred by or on behalf of an insured person for the purpose of obtaining and attending an examination or assessment or in obtaining a certificate, report or treatment plan. Recent amendments to the SABS that went into effect on September 1, 2010, no longer require insurance companies to first obtain medical assessments before denying claims, but clarify that denials must state a medical or other reason, require that all fees and expenses for conducting medical assessments, other than those requested by insurance companies, be paid out of a claimant’s medical and rehabilitation benefits and cap at C$2,000 the fees that may be charged for all medical assessments. Historically, fees for medical assessments for non-catastrophic automobile injuries, which constitute the substantial majority of medical assessments performed by us, are well below the new C$2,000 cap. As a result, we do not currently anticipate the cap itself to significantly impact our business. The cap would impact fees charged for medical assessments related to catastrophic injuries, which are typically well in excess of the cap. However, those constitute only a small number of the medical assessments we provide and there is uncertainty in the industry as to the real effect this cap will have on the demand for, and the willingness of providers to perform, medical assessments for catastrophic claims. As a result, new rules and regulations are currently being discussed presumably to mitigate the impact that the cap would have on IMEs for catastrophic claims. There is also uncertainty in the industry as to the effect that the changes related to insurers’ ability to deny claims without a medical assessment and charging claimant’s benefits for the cost of medical assessments will have on the demand for medical assessments. Some observers argue that the impact on demand will be limited, if any, since insurers have to state the medical or other reasons for denials, which would generally require an IME, and claimants faced with denied claims will demand medical assessments. Since the amendments have only recently become effective, we cannot at this time predict the effects and implications of the SABS amendments. However, we do not currently expect such amendment to have a material impact on our business.

United Kingdom. In the United Kingdom, the collection and use of personal data is principally governed by the Data Protection Act 1998 (the “Data Protection Act”). The Data Protection Act applies to the “processing” of “personal data”, with both of these terms being widely defined. Consequently, virtually every business operating in the United Kingdom holding information about employees, customers or anyone else is required to comply with the Data Protection Act which is administered and enforced by the Information Commissioner.

Subject to some limited exceptions, the Data Protection Act requires those subject to it to notify the Information Commissioner prior to commencing the processing of information. Notifications need to include specific information including: (i) the processor’s name, (ii) a description of the personal information being processed, (iii) the reasons the information needs to be processed, (iv) security measures in place relating to the information and (v) details about whom the information is processed by.

The Data Protection Act also imposes obligations on those processing personal data including: (i) a right for the individual to inspect their personal data, (ii) restrictions on the transfer of data outside the European Economic Area without adequate safeguards, (iii) a need to have in place appropriate security measures to safeguard the personal data (iv) a requirement that the data held is not excessive in relation to the purpose for holding the information and (v) an obligation not to retain data longer than necessary. A breach of data protection legislation can result in civil and criminal sanctions as well as the risk of adverse publicity.

Intellectual Property

Our success and ability to compete depend in part on our ability to protect our intellectual property rights. We rely on a combination of copyright, trademark, trade secret and other related laws and confidentiality procedures and contractual provisions to protect, maintain and enforce our proprietary technology and intellectual property rights. Our two main intellectual properties are the registered trademark of “ExamWorks” and our ExamWorks domain name. We also own the copyright to the IME*Centric software as well as the trademarks and service marks for the names of our acquired businesses and their domain names. We own no patents. In the U.S. and many foreign jurisdictions, trademark protection can potentially be perpetual, provided the relevant mark is still used in commerce and all applicable fees are paid. Likewise, domain names typically can be renewed perpetually upon the payment of applicable registrar and renewal fees. Copyrights have a limited duration, but such duration, in the U.S. for works made for hire, is 95 years from publication or 120 years from creation, whichever is earlier. As such, almost all copyrightable works are protected beyond their useful life. In the case of IME*Centric, the copyright is protected for approximately 70 years. All of our trademarks are currently used in commerce and we have paid all applicable trademark, domain name and copyright fees.

Despite our efforts to protect our proprietary technology and intellectual property rights, we may fail to adequately protect our copyright, trademark or trade secret rights, while trademark, copyright, and trade secret protection may be unavailable or limited in some countries or may expire or provide us commercial advantage for only a limited period of time. Furthermore, third parties may use our proprietary technology and intellectual property rights without our consent. As such, it is possible we will not be able to protect, maintain, or enforce our proprietary technology and intellectual property rights.

Legal Proceedings

From time to time, we are involved in various legal proceedings arising from the normal course of business activities. We are not presently a party to any litigation the outcome of which, we believe, if determined adversely to us, would individually or in the aggregate have a material adverse effect on our business, operating results or financial condition.

Properties and Facilities

We lease our corporate headquarters at 3280 Peachtree Road NE, Suite 2625, Atlanta, GA 30305 (approximately 6,900 square feet). We also lease office space for our corporate office in New York, New York (approximately 4,200 square feet) as well as our 25 locations in the U.S., Canada and the United Kingdom under non-cancelable lease agreements. The lease for our corporate headquarters in Atlanta, Georgia expires on May 3, 2014. The lease for our corporate office in New York expires on June 30, 2014. We lease office space that is readily available in all of our locations and do not believe that our leased locations throughout the U.S., Canada and the United Kingdom are materially important.

We believe that our current facilities are sufficient for our current needs. We intend to add new facilities or expand existing facilities as we add employees or expand our geographic markets, and we believe that suitable additional or substitute space will be available as needed to accommodate any such expansion of our operations.

Employees

As of October 18, 2010, we had approximately 950 employees, of whom approximately 785 are full-time employees. None of our employees are represented by a union or collective bargaining agreements. We believe our relationship with our employees to be positive, which is a key component of our operating strategy. We seek to create a corporate culture in which virtually every employee benefits from his or her and our success through participation in our employee stock option program and a culture that rewards performance and accountability.

Our employees are required to participate in various training sessions each year. Our ongoing training and executive learning programs are modeled after the practices of companies that we believe have reputations for service excellence.

Independent Contractors

We also have a medical panel consisting of approximately 13,500 credentialed physicians and other medical providers. Our member panel costs are variable, as members of our medical panel are independent contractors, allowing us to effectively maintain and manage our operating margins.

Corporate Structure

ExamWorks, Inc., which we refer to herein as EWI, was incorporated in Delaware on April 27, 2007. ExamWorks Group, Inc. was incorporated in Delaware on June 22, 2010, to enable its now wholly-owned subsidiary, EWI, to implement a holding company organizational structure. Effective June 23, 2010, EWI reorganized into a holding company structure, effected by a merger conducted pursuant to Section 251(g) of the General Corporation Law of the State of Delaware, which we refer to herein as the Reorganization.

Immediately prior to the Reorganization, ExamWorks was a direct, wholly-owned subsidiary of EWI and ExamWorks Merger Sub, Inc., a Delaware corporation, which we refer to herein as the Merger Sub, was a direct, wholly-owned subsidiary of ExamWorks. Both ExamWorks and Merger Sub were organized for the sole purpose of implementing the holding company structure. Pursuant to the Reorganization, the Merger Sub merged with and into EWI, with EWI continuing as the surviving corporation. Each issued and outstanding share of common stock and preferred stock of EWI was converted into one share of common stock or preferred stock of ExamWorks, as applicable. The separate corporate existence of Merger Sub ceased and all of the issued and outstanding shares of ExamWorks owned by EWI were automatically canceled and retired. As a result of the Reorganization, each stockholder of EWI became a holder of the common stock and/or the preferred stock of ExamWorks, evidencing the same proportional interests, and EWI became a direct, wholly-owned subsidiary of ExamWorks.

In connection with the Reorganization, ExamWorks assumed EWI’s 2008 Stock Option Plan, as amended. In addition, ExamWorks assumed EWI’s obligations under the various warrants to purchase an aggregate of 447,763 shares of EWI’s common stock, which were issued on May 7, 2010 in connection with the private placement of Series A Convertible Preferred Stock. Outstanding options and warrants to purchase EWI’s common stock were automatically converted into options and warrants to purchase an equal number of shares of common stock of ExamWorks. ExamWorks also assumed EWI’s obligations under the various agreements executed in connection with such private placement, including but not limited to (i) Subscription Agreements, dated as of March 12, 2010, March 26, 2010 and May 7, 2010, by and among EWI and the subscribers party thereto, (ii) Investor Rights Agreements, dated as of March 12, 2010, March 26, 2010, and May 7, 2010, by and among EWI and the investors party thereto; and (iii) the Registration Rights Agreement, dated as of May 7, 2010, by and among EWI, Broadband Capital Management LLC and the officers and employees of Broadband Capital Management LLC party thereto.

The conversion of shares of capital stock in the Reorganization occurred without an exchange of certificates. The initial certificate of incorporation and bylaws of ExamWorks were identical to those of EWI prior to the Reorganization. The initial directors and executive officers of ExamWorks were the same individuals who were directors and executive officers of EWI immediately prior to the Reorganization. The other liabilities of EWI, including the existing credit facility, were not assumed by ExamWorks in the transaction and therefore continue to be obligations of EWI, and the assets of EWI were not transferred to ExamWorks and continue to be the assets of EWI.

Corporate Information

MANAGEMENT AND BOARD OF DIRECTORS

Our Executive Officers, Certain Key Employees and Directors

The following table and descriptions sets forth certain information concerning our executive officers, certain key employees and directors as of October 18, 2010:


Name	Age	Position

Richard E. Perlman	64	Executive Chairman of the Board
James K. Price	52	Chief Executive Officer and Director
Wesley J. Campbell	44	President
J. Miguel Fernandez de Castro	38	Senior Vice President and Chief Financial Officer
Kevin J. Kozlowski	47	Vice President and Chief Information Officer
Joshua W. LeMaire	37	Vice President, Sales and Marketing
Crystal B. Patmore	38	Vice President and Secretary
Clare Y. Arguedas	29	Vice President, General Counsel and Assistant Secretary
Brian K. Denton	43	Chief Technology Officer
Robert C. Porter, M.D.	61	Chief Medical Director
Peter B. Bach, M.D., MAPP	46	Director
Peter M. Graham	55	Director
J. Thomas Presby	70	Director
William A. Shutzer	63	Director
David B. Zenoff	72	Director

Richard E. Perlman has been our Executive Chairman of the Board since August 12, 2010. Previously, Mr. Perlman served as our Co-Chairman of the Board, Co-Chief Executive Officer and a director from July 2008. Mr. Perlman is also the President of Compass Partners, L.L.C. (“Compass Partners”), a merchant banking and financial advisory firm he founded in 1995 that specializes in middle market companies and corporate restructuring. Mr. Perlman served as Chairman and Director of TurboChef Technologies, Inc., a commercial food equipment manufacturer, from October 2003 until January 2009, when TurboChef was acquired by The Middleby Corporation. Mr. Perlman was the Chairman of PracticeWorks, Inc., a dental software company, from March 2001 until its acquisition by The Eastman Kodak Company in October 2003. Mr. Perlman served as Chairman and Treasurer of AMICAS, Inc. (formerly VitalWorks Inc.), a software company specializing in healthcare practice management, from January 1998 and as a Director from March 1997 until the completion of the spin-off of PracticeWorks, Inc. in March 2001. Prior to this time, Mr. Perlman was involved in the acquisition and operation of several private companies in the home furnishings, automobile replacement parts and real estate industries where he was a principal and Chief Executive Officer. Mr. Perlman is a Director of Alloy, Inc., a media and marketing services company as well as several other privately held companies. Mr. Perlman serves as a Trustee of the James Beard Foundation and as a Director on the non-profit board of Fighting Chance. Mr. Perlman received a B.S. in Economics from the Wharton School of the University of Pennsylvania and a Masters in Business Administration from Columbia University Graduate School of Business.

We believe Mr. Perlman’s qualifications to serve on our Board of Directors include his expertise in business and corporate strategy, his prior experience at public companies, including with respect to acquisition transactions, his knowledge regarding our Company and our industry and his experience as a merchant banker and financial advisor.

James K. Price has been our Chief Executive Officer since August 12, 2010 and a director since July 2008. Previously, Mr. Price served as our Co-Chairman of the Board and Co-Chief Executive Officer from July 2008. From October 2003 to January 2009, Mr. Price served as President, Chief Executive Officer and Director of TurboChef Technologies, Inc. Mr. Price served as President, Chief Executive Officer and a Director of PracticeWorks, Inc. from March 2001 until its acquisition by The Eastman Kodak Company in October 2003. Mr. Price was a co-founder of AMICAS, Inc. (formerly VitalWorks Inc.) and served as its Executive Vice President and Secretary from July 1997 until the completion of the spin-off of PracticeWorks, Inc. in March 2001. Mr. Price also served as an executive officer of American Medcare and also co-founded and was an executive officer of International Computer Solutions, which companies both provided healthcare software systems and information services and were acquired by VitalWorks Inc. Mr. Price sits on the Board of Directors of several other privately held companies and non-profit organizations. Mr. Price holds a B.A. in marketing from the University of Georgia.

We believe Mr. Price’s qualifications to serve on our Board of Directors include his expertise in business and corporate strategy, his prior experience at public companies, including with respect to acquisition transactions, and his knowledge regarding our Company and our industry.

Wesley J. Campbell has been our President since July 2008. Mr. Campbell manages the daily corporate operations and oversees the integration of newly acquired companies. During his career, Mr. Campbell has played a key role in acquiring and integrating over 80 companies and has over 20 years experience in the medical and dental technology industries. From April 2007 to July 2008, Mr. Campbell served as Chief Operations Officer of 360Imaging, Inc., a diagnostic imaging company for dentists. Mr. Campbell served as Vice President of International of PracticeWorks, Inc. from May 2006 to May 2007, President of PracticeWorks, Inc. from October 2003 to May 2006 and Vice President of Operations of PracticeWorks, Inc. from March 2001 to October 2003. From October 1997 to March 2001, Mr. Campbell served as Vice President of Technical Services for AMICAS, Inc. (formerly VitalWorks Inc.) and from March 1986 to October 1997 served as General Manager of Commercial Computers, Inc., a medical software company, Mr. Campbell graduated from DeVry Institute of Technology.

J. Miguel Fernandez de Castro has been our Senior Vice President and Chief Financial Officer since March 2009. Mr. Fernandez de Castro manages the finance and treasury functions as well as acquisition due diligence. From October 2007 to February 2009, Mr. Fernandez de Castro was Senior Vice President and Chief Financial Officer of TurboChef Technologies, Inc. and Vice President of Finance and Controller since April 2004. From October 2003 to February 2004, Mr. Fernandez de Castro served as the Controller of PracticeWorks, Inc. and served as Director of Financial Reporting from August 2000 until its acquisition by The Eastman Kodak Company in October 2003, during which time PracticeWorks was a publicly-traded company. Mr. Fernandez de Castro served as Manager of Financial Reporting of AMICAS, Inc. (formerly VitalWorks Inc.) from August, 2000 until the completion of the spin-off of PracticeWorks, Inc. in March 2001. Mr. Fernandez de Castro began his career in the audit services group of BDO Seidman, LLP., which provides assurance, tax, financial advisory and consulting services. Mr. Fernandez de Castro is a Certified Public Accountant and a member of the Georgia Society of CPAs. Mr. Fernandez de Castro received a B.A. in Economics and Spanish and a Masters in Accounting from the University of North Carolina at Chapel Hill.

Kevin J. Kozlowski has been our Vice President and Chief Information Officer since July 2008. Mr. Kozlowski oversees our information systems, architecture and infrastructure and has more than 25 years of experience in the healthcare information technology industry. From July 2007 to July 2008, Mr. Kozlowski served as Chief Technology Officer of 360Imaging, Inc. From October 2003 to June 2007, Mr. Kozlowski served as Vice President, Research and Development at Kodak Dental Systems, a dental products company, and from March 2001 to October 2003 at PracticeWorks, Inc. Mr. Kozlowski was Vice President of Research and Development for the Dental Division of AMICAS, Inc. (formerly VitalWorks Inc.) from December 1999 until the completion and spin-off of PracticeWorks, Inc. in March 2001. Mr. Kozlowski was President and founder of Human Touch Software from 1984 to December 1999, where he was the lead developer of the PatientBase dental practice management system. Mr. Kozlowski received a B.S. in computer science from California State University at Sacramento.

Joshua W. LeMaire has been our Vice President, Sales and Marketing since September 2008. Mr. LeMaire manages our corporate branding initiative, sales and marketing programs and strategic corporate relationships. At Becker-Parkin Dental Supply Co., a dental supply company, Mr. LeMaire served as Executive Vice President of Sales and Marketing from January 2006 to September 2007 and Vice President of Full Service Sales from March 2003 to December 2005. From January 2001 to February 2003, Mr. LeMaire was National Sales Manager at Sky Financial Solutions, a dental financing company. From September 2007 to September 2008, Mr. LeMaire pursued personal interests.

Crystal B. Patmore has been our Secretary and Vice President, Human Resources since March 2009. Ms. Patmore works closely with the finance team and is integral in the due diligence and forensic accounting processes, and is also responsible for our risk management function. From December 2003 to February 2009, Ms. Patmore served as Vice President of Human Resources and Director of Business Development for TurboChef Technologies, Inc. From March 2001 to October 2003, Ms. Patmore was the Controller at PracticeWorks, Inc. From 1997 to March 2001, Ms. Patmore served as the Accounting Manager at AMICAS, Inc. (formerly VitalWorks Inc.). Ms. Patmore started her career at International Computer Solutions and American Medcare. Ms. Patmore holds a B.B.A. in accounting from Georgia State University.

Clare Y. Arguedas has been our Vice President, General Counsel and Assistant Secretary since February 2010. Prior to joining ExamWorks, Ms. Arguedas was an attorney at the law firm of Paul, Hastings, Janofsky & Walker LLP from September 2006 to February 2010. Ms. Arguedas has been named one of America’s leading lawyers for business by Chambers & Partners. Ms. Arguedas received a B.A. from the University of Pennsylvania and a J.D. from Emory University School of Law.

Brian K. Denton has been our Chief Technology Officer since September 2008. Mr. Denton is responsible for the development and integration of our systems and software platform. From May 2003 to August 2008, Mr. Denton served as Chief Information Officer for Kodak Dental Systems and from December 1997 to March 2003 served as Director of Information Technology for AJC International, which markets proteins. Mr. Denton has been recognized as an innovator and named in numerous publications including The Wall Street Journal and White Papers by Bomgar Corporation and VMware. Mr. Denton has been a member of several Fortune 1000 technical advisory boards. Mr. Denton has more than 10 years of experience focusing on medical and dental technology and over 30 years of IT experience. Mr. Denton holds a B.S. in computer science from the University of Georgia.

Dr. Robert C. Porter has been our Chief Medical Director since July 2010 and President of Network Medical Review subsidiary since its founding in September 1995. Over the past 30 years, Dr. Porter has cultivated an interdisciplinary career that encompasses the clinical practice of medicine, medical evaluation, healthcare management and academia. He is a noted industry speaker and widely published. He has held numerous positions in the private sector including the position of Medical Director, Pioneer Life Insurance Company of Illinois, an insurance company, and President, National Health Services, Inc., a nonprofit providing healthcare. Dr. Porter has served in the public sector as the Director, Outpatient Healthcare Services and Director and Chairman, Department of Emergency Medicine and Occupational Medicine, Swedish American Hospital. From September 2006 to October 2009, he served as the Executive Director of Occupational Health Services for Sherman Health System, a hospital and healthcare system. He holds the academic appointment of Assistant Professor at the University of Illinois, College of Medicine. His medical practice experience includes the emergency, occupational and insurance disciplines. Dr. Porter is board certified by the following organizations: American Board of Preventive Medicine Occupational Medicine; American Board of Emergency Medicine; and American Board of Family Practice. Dr. Porter did his residency at the Toronto Western Hospital. He received a B.S. and M.D. from the University of Toronto.

Peter B. Bach, M.D., MAPP has been a director of the Company since July 2010. Dr. Bach is also an attending physician for the Department of Medicine, Memorial Hospital for Cancer and Allied Diseases, and holds a Full Member academic position with Memorial Sloan-Kettering Cancer Center. Dr. Bach has held both of these positions since his promotion from associate attending physician and Associate Member, respectively, in September 2009. From October 2004 to September 2009, Dr. Bach was an associate attending physician for the Department of Medicine, Memorial Hospital for Cancer and Allied Diseases and held an Associate Member academic position with Memorial Sloan-Kettering Cancer Center. Dr. Bach is a member of the working group on HIT for the President’s Council of Advisors on Science and Technology. From February 2005 to November 2006, Dr. Bach served as the Senior Advisor to the Administrator of the Centers for Medicare and Medicaid Services, a federal agency in Washington, D.C. Dr. Bach has been a member of a number of professional associations and regularly reviews manuscripts for professional medical journals. Dr. Bach has been a licensed physician in Illinois from June 1995 to June 1997 and in New York since October 1998. He is board certified in Internal Medicine, Pulmonary Medicine and Critical Care Medicine. Dr. Bach received a B.A. in English and American Literature from Harvard University, an M.D. from the University of Minnesota, and an M.A. in Public Policy from the Harris School of Public Policy at the University of Chicago.

We believe Dr. Bach’s qualifications to serve on our Board of Directors include his extensive experience practicing and teaching medicine at the highest levels and his knowledge of the healthcare industry.

Peter M. Graham has been a director of the Company since September 2010. Mr. Graham has also been a director of Alloy, Inc., a media and marketing programs provider, since November 1998, where he serves as chair of the audit committee and the compensation committee. Since 2000, Mr. Graham has been the Chairman of the Board of Seventh Generation, Inc., a privately held company of consumer products. From 1994 through December 2004, Mr. Graham held positions with Ladenburg Thalmann Group Inc., an investment banking organization, including Principal, President, Vice Chairman and Managing Director of its principal subsidiary, Ladenburg Thalmann & Co. Inc. Mr. Graham joined Ladenburg Thalmann & Co. Inc. in 1976 after having attended the Wharton School of Business at the University of Pennsylvania.

Based on Mr. Graham’s experience within the investment banking industry, we believe his knowledge of capital markets and business enterprises provides the Company with unique insights and financial guidance.

J. Thomas Presby has been a director of the Company since June 2009. In June 2002, Mr. Presby retired as a partner with Deloitte Touche Tohmatsu, an international accounting and consulting firm. Over a period of 30 years, Mr. Presby held many positions with Deloitte in the U.S. and abroad, including deputy chairman and chief operating officer from January 1995 until his retirement. Mr. Presby currently serves as a director and audit committee chair of Tiffany & Co., Invesco Ltd., American Eagle Outfitters Inc., First Solar, Inc. and World Fuel Services Corporation. Mr. Presby served as a director of PracticeWorks, Inc. from June 2002 to October 2003 and served as a director of GreenPoint Financial Corporation from January 2003 to October 2004. From December 2003 to January 2009, Mr. Presby was a director of TurboChef Technologies, Inc. Mr. Presby received a B.S. in Electrical Engineering from Rutgers University, and an M.S. in Industrial Administration from the Carnegie Mellon University Graduate School of Business. Mr. Presby is a Certified Public Accountant in New York and Ohio.

We believe Mr. Presby’s qualifications to serve on our Board of Directors include his extensive experience at the highest levels of finance and accounting, having served for three decades as a partner, as well as in positions of senior management (including Chief Operating Officer), at one of the world’s largest accounting firms. Mr. Presby serves a number of leading companies by chairing their audit committees, a role which he also fulfills for ExamWorks, where he is recognized by the Board as its audit committee financial expert. The Board has determined that Mr. Presby’s simultaneous service on six audit committees will not impair his ability to effectively serve as the chair of our audit committee.

William A. Shutzer has been a director of the Company since July 2010. Mr. Shutzer has been a Senior Managing Director of Evercore Partners, a financial advisory and private equity firm since April 2004. He previously served as a Managing Director of Lehman Brothers, an investment banking firm, from October 2000 through December 2003, a Partner in Thomas Weisel Partners LLC, a merchant banking firm, from September 1999 through June 2000, Chairman of Investment Banking of ING Baring Furman Selz LLC, an investment banking and brokerage firm, from January 1998 through June 1999, President of Furman Selz Inc., an investment banking and brokerage firm, from October 1996 through December 1997, Executive Vice President of Furman Selz, Inc., from March 1994 through September 1996 and as a Managing Director of Lehman Brothers and its predecessors from September 1978 through February 1994. Mr. Shutzer is also a member of the Board of Directors of Tiffany & Co. and WebMedia Brands Inc. (formerly known as Jupiter Media Corp.). He has been a director of the following public companies during the past five years: American Financial Group (2003-2006); CSK Auto (2002-2008); and TurboChef Technologies (2003-2009). Mr. Shutzer received both his B.A. and M.B.A. degrees from Harvard University.

We believe Mr. Shutzer’s qualifications to serve on our Board of Directors include his knowledge of and experience in finance, investment banking, investor relations and corporate strategy.

David B. Zenoff has been a director of the Company since July 2010. Mr. Zenoff is also President of David B. Zenoff and Associates, Inc., a strategy and administrative practices firm he founded in 1973. Mr. Zenoff currently serves as a director of Williams-Sonoma, Inc. and Depomed, Inc. From 1966 to 1972, Mr. Zenoff was a full-time faculty member at the Columbia Graduate School of Business. During the 1970s and the 1980s, Mr. Zenoff was a part-time faculty member at the Stanford University Graduate School of Business, and from 1983 to 1984, he was a visiting professor at IMD, a business school (formerly IMEDE) in Lausanne, Switzerland. He has authored eight books on management, finance and marketing. Mr. Zenoff received a B.A. in Economics from Stanford, a doctorate in International Business and an M.B.A. from Harvard University.

We believe Mr. Zenoff’s qualifications to serve on our Board of Directors include his extensive strategic and management consulting experience with over 90 large companies and organizations in 31 countries and his expertise in guiding long-term strategic and corporate management planning and advising on organization renewal, increasing organization performance, marketplace strategy, and executive team-building and business leadership practices.

Our Board of Directors

Currently, there are seven members of our Board of Directors, all of whom were designated by ExamWorks Holdings, LLLP (“Holdings”) and elected as directors pursuant to our existing stockholders’ agreement between us and our existing stockholders. The existing stockholders’ agreement will be automatically terminated immediately prior to the consummation of our initial public offering, and ExamWorks Holding LLLP’s right to designate board members, as referenced above, will no longer exist. Our directors hold office until their successors have been elected and qualified or until the earlier of their resignation or removal. There are no family relationships among any of our directors or executive officers.

As of the closing of this offering, our amended and restated certificate of incorporation and amended and restated bylaws will provide for a staggered, or classified, Board of Directors consisting of three classes of directors, each serving staggered three-year terms, as follows:


	•	the Class I directors will be Mr. Zenoff, and Mr. Presby, and their terms will expire at the annual meeting of stockholders to be held in 2011;

	•	the Class II directors will be Mr. Graham, Mr. Shutzer and Dr. Bach, and their terms will expire at the annual meeting of stockholders to be held in 2012; and

	•	the Class III directors will be Mr. Perlman and Mr. Price, and their terms will expire at the annual meeting of stockholders to be held in 2013.

Upon expiration of the term of a class of directors, directors for that class will be elected for three-year terms at the annual meeting of stockholders in the year in which that term expires. Each director’s term continues until the election and qualification of his successor, or his earlier death, resignation or removal. Any increase or decrease in the number of directors will be distributed among the three classes so that, as nearly as possible, each class will consist of one-third of the directors. This classification of our Board of Directors may have the effect of delaying or preventing changes in control of our Company.

Director Independence

Upon completion of this offering, our Board of Directors will consist of seven members, a majority of whom will be independent under the rules of the New York Stock Exchange. Pursuant to the corporate governance listing standards of the New York Stock Exchange, a director employed by us cannot be deemed to be an “independent director”, and each other director will qualify as “independent” only if our Board of Directors affirmatively determines that he has no material relationship with us, either directly or as a partner, stockholder or officer of an organization that has a relationship with us. Ownership of a significant amount of our stock, by itself, does not constitute a material relationship.

Our Board of Directors has affirmatively determined that each of Dr. Bach and Messrs. Presby, Shutzer, Zenoff and Graham is “independent” in accordance with Section 303A.02(b) of the NYSE Listed Company Manual.

All of the members of the Board’s audit committee, compensation committee and corporate governance and nominating committee described below are independent as defined under the rules of the New York Stock Exchange.

Messrs. Perlman, Presby and Shutzer have invested in unrelated businesses together in the past and may, as may other directors, make other investments together in the future.

Board Committees

Our Board of Directors has established an audit committee, a compensation committee, a corporate governance and nominating committee and an acquisition committee. Our Board of Directors may also establish such other committees as it deems appropriate, in accordance with applicable law and regulations and our amended and restated certificate of incorporation and amended and restated bylaws, which will be in effect upon the completion of this offering.

Audit Committee

Our audit committee consists of Messrs. Presby (chair), Shutzer and Graham, all three of which are “independent” as defined under, and required by, the federal securities laws and the rules of the New York Stock Exchange. Our Board of Directors has determined that each of the members of our audit committee satisfy the requirements for financial literacy under the current requirements of the New York Stock Exchange. Our Board of Directors has determined that Mr. Presby is an “audit committee financial expert,” as that term is defined by the SEC. The primary function of the audit committee is to assist the Board in monitoring (1) the integrity of our financial statements, (2) the qualifications, performance and independence of the independent registered public accounting firm, (3) the performance of the internal auditors, and (4) our compliance with regulatory and legal requirements. The audit committee has direct responsibility for the appointment, compensation, retention and oversight of the work of our independent registered public accounting firm, KPMG LLP. In addition, approval of the audit committee is required prior to our entering into any related-party transaction. It is also responsible for “whistle-blowing” procedures and certain other compliance matters. The audit committee has adopted a charter which will be posted on the Investor Relations section of our website upon or prior to the effectiveness of the registration statement of which this prospectus forms a part.

Compensation Committee

Our compensation committee currently consists of Mr. Shutzer (chair), Dr. Bach and Mr. Graham. Among other things, the compensation committee is required to review, and make recommendations to the Board of Directors regarding, the compensation and benefits of our executive officers. The compensation committee also administers the issuance of stock options and other awards under our equity incentive plans and will establish and review policies relating to the compensation and benefits of our employees and consultants. The compensation committee has adopted a charter which will be posted on the Investor Relations section of our website upon or prior to the effectiveness of the registration statement of which this prospectus forms a part.

Corporate Governance and Nominating Committee

Our corporate governance and nominating committee currently consists of Mr. Zenoff and Mr. Presby. The corporate governance and nominating committee is responsible for, among other things, developing and recommending to our Board of Directors our corporate governance guidelines, identifying individuals qualified to become board members, overseeing the evaluation of the performance of the Board of Directors, selecting the director nominees for the next annual meeting of stockholders, and selecting director candidates to fill any vacancies on the Board of Directors. The corporate governance and nominating committee has adopted a charter which will be posted on the Investor Relations section of our website upon or prior to the effectiveness of the registration statement of which this prospectus forms a part.

Compensation Committee Interlocks and Insider Participation

No current member of our compensation committee has ever been an officer or employee of ours. None of our executive officers serves, or has served during the past fiscal year, as a member of the board of directors or compensation committee of any other company that has one or more executive officers serving as a member of our Board of Directors or compensation committee.

The members of our compensation committee do not have any interlocking relationships as defined under SEC regulations.

Acquisition Committee

Our acquisition committee currently consists of Messrs. Perlman, Price and Presby. The acquisition committee is authorized to approve acquisitions up to an individual purchase price of $20 million per acquisition in cash, stock or a combination thereof. Acquisitions with a purchase price in excess of this limit must be approved by the Board of Directors. The acquisition committee’s charter will be posted on the Investor Relations section of our website upon or prior to the effectiveness of the registration statement of which this prospectus forms a part.

Director Qualifications

The corporate governance and nominating committee is responsible for identifying qualified individuals to become members of the Board of Directors. We select individuals as director nominees with the goal of creating a balance of knowledge, experience and interest on the Board. Candidates are evaluated for their character, judgment, business experience and acumen. We believe that, at a minimum, a director candidate must possess personal and professional integrity, sound judgment and forthrightness. A director candidate must also have sufficient time and energy to devote to the affairs of the Company and be free from conflicts of interest with the Company. The following criteria are also considered when reviewing a director candidate:


	•	The extent of the director candidate’s educational, business, non-profit or professional acumen and experience;

	•	Whether the director candidate assists in achieving a mix of Board members that represents a diversity of background, perspective and experience;

	•	Whether the director candidate meets the independence requirements of the listing standards of the New York Stock Exchange; and

	•	Whether the director candidate possesses the ability to work as part of a team in an environment of trust.

Specific weights are not assigned to any particular criteria and no particular criterion is necessarily applicable to all prospective director candidates. We do not pay a fee to any third party to identify or evaluate director candidates.

Board Leadership Structure

From July 2008 through August 11, 2010, Messrs. Perlman and Price each held the position of Co-Chairman of the Board and Co-Chief Executive Officer. Effective, August 12, 2010, Mr. Price was appointed the Chief Executive Officer and continues to serve as a director and Mr. Perlman was appointed as the Executive Chairman of the Board. We believe that this structure provides strength to the Company by giving the Chief Executive Officer a respected voice on our Board, while at the same time giving leadership of the Board to another individual who, together with the other directors, provides active oversight of management and its implementation of our strategic plans. Each of our directors serves on one or more of the committees of the Board and actively and regularly participates in the various functions of these committees. The committee structure enables the duties of the Board to be divided among the directors. This division of duties allows each of the directors to concentrate his or her energies in a focused way on a narrower area of Board responsibility and helps insure that adequate time is being given to the many oversight responsibilities of the Board.

Board’s Role in Risk Oversight and Risk Management

The Board of Directors is actively involved in oversight of risks that could affect our Company. This oversight is conducted primarily through committees of the Board, as disclosed in the descriptions of each of the Board committees, but the full Board has retained responsibility for general oversight of risks. The Board satisfies this responsibility through full reports by each committee chair regarding the committee’s considerations and actions, as well as through regular reports directly from officers responsible for oversight of particular risks within the Company.

At the present time, we have determined that any risks from our compensation programs and policies are not reasonably likely to have a materially adverse effect on us. We believe that our compensation programs and policies mitigate risk by combining competitive salaries, discretionary and performance-based bonuses and equity incentives that align the interests of our executive officers (and other employees) and stockholders, thereby reducing the incentives to unnecessary risk taking. In addition, our compensation committee will be responsible for assuring that our compensation structures for our executive officers and other employees reduce the incentives to excessive or otherwise undesirable risk-taking.

Code of Conduct and Ethics

Prior to the closing of this offering, our Board of Directors intends to adopt a written code of business conduct and ethics that will apply to our directors, officers and employees, including our chief executive officer and senior financial officers. Following this offering, a copy of the code of business conduct and ethics will be posted on the Investor Relations section of our website. We intend to disclose future amendments to our code of conduct and ethics, or certain waivers of such provisions, at the same location on our website identified above and also in public filings.

Director Compensation

During the fiscal year ended December 31, 2009, our directors did not receive any cash fees for their services on the board of directors, but were entitled to reimbursement of all reasonable out-of-pocket expenses incurred in connection with their service and attendance at board of directors and board committee meetings.


Name and Principal Position	Fees Earned or Paid		Stock Awards		Option Awards(1)			Non-equity Incentive Plan Compensation		Change in Pension Value and NQDC Earnings		All Other Compensation		Total

Peter B. Bach, M.D., MAPP(2)		—		—		—			—		—		—		—
J. Thomas Presby		—		—	$	8,000	(3)		—		—		—	$	8,000	(3)
William A. Shutzer(2)		—		—		—			—		—		—		—
David B. Zenoff(2)		—		—		—			—		—		—		—
Peter M. Graham(4)		—		—		—			—		—		—		—



(1)	The fair value for awards is calculated for option awards, by using the Black-Scholes option pricing model. This value does not reflect estimated forfeitures or awards actually forfeited during the year. The actual value, if any, that will be realized upon the exercise of an option will depend upon the difference between the exercise price of the option and the market price of the common stock on the date the option is exercised.

(2)	Messrs. Shutzer and Zenoff and Dr. Bach became directors of the Company in July 2010.

(3)	On August 14, 2009 we granted Mr. Presby stock options to purchase 7,711 shares of our common stock at an exercise price of $3.89 per share. The grant date fair value of this option award was approximately $8,000. A discussion of the assumptions used in calculating the option award’s grant date fair value may be found in Note 2 to our consolidated financial statements included elsewhere in this prospectus.

(4)	Mr. Graham became a director of the Company in September 2010.

Effective July 16, 2010, we amended our director compensation program to provide for cash and equity based retainers to be paid to non-employee directors as follows (Messrs. Perlman and Price intend to waive any such compensation for at least one year after the closing of this offering):

Cash Compensation. Each non-employee director will receive a $40,000 annual cash retainer. The chair of the audit committee will receive an additional annual cash retainer of $5,000 and the chairs of the compensation committee and corporate governance and nominating committee will each receive an additional annual cash retainer of $2,500. Non-employee directors will receive an additional cash payment of $2,500 per additional meeting attended in person, if the director attends more than five Board meetings during a year, or more than three committee meetings during a year on dates different than Board meetings. In addition, non-employee directors will receive an additional cash payment of $750 per additional meeting attended by telephone, if the director attends more than five Board meetings during a year, or more than three committee meetings during a year on dates different than Board meetings. Cash fees will be paid quarterly in arrears to the non-employee directors who were serving as directors at the end of the quarter.

Restricted Stock. On July 16, 2010, each of the following non-employee directors (with the exception of Mr. Graham, whose grant took place on October 11, 2010) was granted the number of shares of restricted stock pursuant to our Amended and Restated 2008 Stock Incentive Plan set forth below. Such restricted stock awards shall vest on the one year anniversary of the grant date or upon a change of control.


Name:	Number of Restricted Shares:		Grant Date Value ($)(1)

			(in thousands)
Peter B. Bach, M.D., MAPP		10,266		34
Peter M. Graham		6,853		43
J. Thomas Presby		11,546		38
William A. Shutzer		10,904		36
David B. Zenoff		10,904		36



(1)	This column reports the grant date fair value of awards computed in accordance with stock-based compensation accounting rules (ASC Topic 718) for 2010. A discussion of the assumptions used in calculating the award values may be found in Note 2 to our consolidated financial statements included elsewhere in this prospectus.

In addition, each non-employee director shall receive an annual restricted stock grant pursuant to our Amended and Restated 2008 Stock Incentive Plan with a value as of each grant date equal to $80,000. In addition, the chair of the audit committee will receive an additional annual restricted stock grant with a value as of each grant date equal to $10,000 and the chairs of the compensation committee and corporate governance and nominating committee will each receive an additional annual restricted stock grant with a value as of each grant date equal to $5,000.

Expenses. We reimburse each non-employee director for ordinary and reasonable expenses incurred in attending board and board committee meetings.

EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

This section discusses the principles underlying our executive compensation policies and decisions and the most important factors relevant to an analysis of these policies and decisions. It provides qualitative information regarding the manner and context in which compensation is awarded to and earned by our named executive officers (“NEOs”), and is intended to place in perspective the data presented in the tables and narrative that follow. Based on applicable securities laws, the following were our NEOs for 2009. For the biographical information of our NEOs, see “Management and Board of Directors.”


	•	Richard E. Perlman, Co-Chief Executive Officer and Co-Chairman of the Board in 2009

	•	James K. Price, Co-Chief Executive Officer and Co-Chairman of the Board in 2009

	•	J. Miguel Fernandez de Castro, Senior Vice President and Chief Financial Officer

	•	Wesley J. Campbell, President

	•	Kevin J. Kozlowski, Vice President and Chief Information Officer

	•	Crystal B. Patmore, Secretary and Vice President, Human Resources

Prior to the appointment of new directors and the establishment of our compensation committee effective July 16, 2010, our Board of Directors had been responsible for the administration and oversight of our executive compensation program. Effective July 16, 2010, this responsibility was delegated to the compensation committee. Once we become a public company, our compensation committee will administer and oversee all elements of our executive compensation program, including the function and design of our annual cash incentive and equity incentive programs. In the future, the compensation committee will evaluate the need for revisions to our executive compensation program to ensure our program is competitive with the companies with which we compete for superior executive talent. As part of this process, the compensation committee will, among other things, consider the competitiveness of the elements of the compensation packages we offer to our executives, as well as their total compensation packages. While neither an independent compensation consultant nor peer group comparisons have been used to date in determining executive compensation, the compensation committee may in the future retain an independent compensation consultant and review peer group data to assist it in this process.

Overview

We seek to provide a compensation package for executives reasonably sufficient to attract and hold talented, experienced, energetic, and entrepreneurial-minded individuals for our key management positions. We balance offering compensation consistent with the executive marketplace and common sense affordability for a company of our size, revenues, market position and growth opportunities. Management strives to hire and maintain an executive workforce with individuals having the abilities and capacities to manage today as well as carry us through significant growth tomorrow and beyond. We also want to align the interests of our employees with the interests of our stockholders, so we follow a compensation strategy that includes a meaningful equity component for future value. Accordingly, our philosophy is to provide reasonably competitive salaries and potential cash bonuses with growth potential through equity incentives. While executive compensation structures and changes are typically initiated by senior management, historically our Board of Directors, and going forward, our compensation committee, reviews and approves salary, bonus and equity incentive proposals prior to implementation.

We view base salary as a component of compensation designed to reflect the executive’s relative level of responsibilities and value to the organization and as a reflection of market competition for individuals with similar skill sets and experience. We are not tied to a specific ratio of amounts among the three main components of executive compensation, but believe base salary presents the threshold level necessary to compensate and retain qualified individuals before any consideration of the other components of compensation. Bonuses are also considered as no less important to encouraging and rewarding extraordinary performance and results. In 2009, the only year for which bonuses have been paid, we paid discretionary bonuses to our NEOs in the form of cash, although the Board has the discretion to pay bonuses in stock or combinations thereof. Finally, we believe an equity component of compensation provides a dual benefit of aligning the interests of executives with those of other stockholders.

Base Salary

In 2009, executive base salaries were determined by our Co-Chairmen and Co-Chief Executive Officers, in their sole discretion. The 2009 base salaries for our NEOs are set forth in the “Summary Compensation Table” below.

In recommending cash compensation levels for executives, senior management considers the qualifications of the executive, the current needs and expected future needs of the Company, the competitive opportunities for individuals with similar executive skill sets and experience and the expected budget. Going forward, the compensation committee will consider the recommendations of senior management in determining whether to adjust the salary component of overall compensation in light of the overall compensation package and how the balance of the components for an individual matches the overall compensation philosophy.

Annual Cash Incentives

In 2009, discretionary cash bonuses were determined by our Co-Chairmen and Co-Chief Executive Officers, in their sole discretion. The determination of the bonus payment amounts were made after considering each individual executive officer’s achievement during the year, as well as the assessment of our past and future performance. Specifically, the 2009 bonuses recognized the significant and successful work of our executives in acquiring, integrating and operating the businesses acquired during the year. In 2009, our Co-Chief Executive Officers did not receive any annual cash incentive. In connection with the termination of the Company’s obligation to pay cash monitoring fees on its Monitoring Fee Agreement with Compass Partners, our Executive Chairman and our Chief Executive Officer each agreed that they would not be entitled to receive any cash incentive payment or bonus payment in 2010. See “Certain Relationships and Related Party Transactions.” Our compensation committee, in consultation with management, will be responsible in the future for determining the qualitative and other individual corporate performance factors that will be taken into account when awarding cash incentives.

Equity Incentives

In 2009, stock option grants were recommended by our Co-Chairmen and Co-Chief Executive Officers and were subject to review and approval by the members of Board of Directors. Mr. Fernandez de Castro and Ms. Patmore were granted stock options in 2009 in connection with the commencement of their employment. In 2009, at the recommendation of the Co-Chairmen and Co-Chief Executive Officers, Mr. Kozlowski was awarded 30,846 stock options in consideration for his performance and his achievements during the year and the Board of Directors approved such grant. Mr. Kozlowski’s achievements included his successful and timely implementation and integration of our technology platform in the businesses acquired by us in 2009. See “Grants of Plan-Based Awards in 2009” below for information regarding stock options granted to NEOs in 2009. We view equity incentives as a means for aligning one aspect of executive compensation with stockholders’ interests. In addition, vesting of equity incentives over a continued period of employment can assist in our efforts to retain qualified executive personnel. The amount of an equity award given to an executive officer normally is proposed by senior management to the Board of Directors, and going forward, the compensation committee, for its consideration and approval. While equity incentives are viewed as longer term, forward-looking forms of compensation, the recommendation by senior management to award equity incentives, other than in connection with the hiring of a new executive, generally is based on past performance of the executive, on the needs of the Company to retain that executive and the expected contribution from that executive to the Company’s success going forward. Stock option awards in 2009 were made under and pursuant to the terms and conditions of the Company’s Amended and Restated 2008 Stock Incentive Plan. See “Equity Incentive Plans” below.

Perquisites

Other payments or benefits in the form of perquisites are not a significant component of executive compensation. Executives enjoy the same insurance coverages as other employees. Our general policies applicable to all employees govern paid vacation and other time off.

Employment Agreements

Other than the standard confidentiality and non-disclosure agreement that we enter into with all of our employees, none of the NEOs is party to an employment agreement.

Impact of Accounting and Tax Considerations

We maintain awareness of the accounting and tax implications of Sections 162(m) and 409A of the Internal Revenue Code. Section 162(m) limits the Company’s deduction of certain non-performance based compensation paid to executive officers in excess of $1 million per year. We believe the full deductibility for federal income tax purposes of our executive compensation is not adversely impacted by Section 162(m).

Base salary and bonuses are expensed by the Company when the services are rendered (base bonuses are expensed ratably and incentive bonuses are expensed when attainment of financial or operational goals is determinable).

Actions Regarding Executive Compensation Taken After the End of Fiscal Year 2009

This section provides a summary of significant compensation-related decisions and actions that were taken after the end of fiscal year 2009 with respect to the NEOs.

Messrs. Perlman and Price, as the founders of the Company who designed our business model, received no compensation in 2008 and nominal compensation in 2009, as it was initially contemplated that they were to provide management oversight and assistance with financing, acquisition and other strategic matters to the Company. As our business continued to grow, Messrs. Perlman and Price became fully engaged in numerous areas of the Company on a full-time basis, including leading the acquisition program, supervising the integration of acquired companies, coordinating financings to fund our growth, recruiting management and executive level employees and leading and providing management oversight of our operations. In light of the foregoing, on March 26, 2010, the Board of Directors approved a stock option grant to each of Messrs. Perlman and Price of stock options to purchase 514,110 shares of common stock of the Company at an exercise price of $6.63 per share. The options expire ten years from the date of grant and 257,055 of such options will vest upon the earlier of 18 months from the date of grant or the closing of this offering and the remaining 257,055 of such options will vest on the date that is 12 months following the closing of this offering. These stock option awards were further conditioned on Messrs. Perlman’s and Price’s continued employment for 12 months following the closing of this offering. Consequently, the 257,055 options that vest on the 12-month anniversary following the closing of this offering constitute each of Messrs. Perlman and Price’s primary compensation from the Company for that period. Messrs. Perlman and Price each agreed that they would not be eligible (i) for any additional grants of equity under the stock incentive plan until the date that is 12 months following the closing of this offering and (ii) to receive any cash compensation (including base salary) beyond the minimum required to qualify for benefits under our benefit plans generally available to our employees, other than reimbursement for out-of-pocket expenses incurred on behalf of the Company, consistent with Company policy.

On February 15, 2010, the Board of Directors approved discretionary stock option grants to certain of our NEOs at the recommendation of Messrs. Perlman and Price. Mr. Fernandez de Castro received stock options to purchase 5,182 shares of common stock of the Company, Mr. Campbell received stock options to purchase 6,477 shares of common stock of the Company, Mr. Kozlowski received stock options to purchase 2,591 shares of common stock of the Company, and Ms. Patmore received stock options to purchase 12,852 shares of common stock of the Company. All of the options have an exercise price of $4.86 per share, subject to adjustment as specified in the stock incentive plan. The options expire ten years from the date of grant. Such options will vest in one-third annual increments beginning one year from the grant date. Similarly, on October 6, 2010, the compensation committee approved discretionary stock option grants to Mr. Fernandez de Castro and Mr. Campbell, both of whom received stock options to purchase 102,822 shares of common stock of the Company, and to Mr. Kozlowski and Ms. Patmore, both of whom received stock options to purchase 51,411 shares of common stock of the Company. All of the options have an exercise price of $11.67 per share, subject to adjustment as specified in the stock incentive plan. The options expire ten years from the date of grant. Such options will vest in one-third annual increments beginning one year from the grant date.

Effective July 12, 2010, we amended and restated our stock incentive plan. See “Stock Incentive Plans” below.

Effective August 12, 2010, Mr. Perlman became our sole Executive Chairman of the Board and Mr. Price became our sole Chief Executive Officer and continued as a director.

Summary Compensation Table

The following table sets forth summary information concerning certain compensation awarded to, paid to, or earned by, our NEOs for all services rendered to us for fiscal year ended December 31, 2009.


Name and Principal Position	Year		Salary ($)		Bonus ($)(2)		Option Awards ($)(3)		All Other Compensation ($)(4)		Total ($)

Richard E. Perlman Chairman of the Board(1)		2009		21,840		—		—		990,217		1,012,057

James K. Price Chief Executive Officer and Director(1)		2009		21,840		—		—		700,000		721,840

J. Miguel Fernandez de Castro Senior Vice President and Chief Financial Officer		2009		165,385		32,000		134,132		18,171		349,688

Wesley J. Campbell President		2009		237,000		32,000		—		18,171		287,171

Kevin J. Kozlowski Vice President and Chief Information Officer		2009		212,000		20,000		31,620		6,144		269,764

Crystal B. Patmore Secretary and Vice President, Human Resources		2009		100,961		25,000		60,200		6,845		193,006



(1)	From July 2008 through August 11, 2010, Messrs. Perlman and Price each held the office of Co-Chairman of the Board and Co-Chief Executive Officer.
(2)	This column reports the discretionary bonuses awarded to our NEOs for fiscal year 2009.
(3)	This column reports the grant date fair value of awards computed in accordance with stock-based compensation accounting rules (ASC Topic 718) for 2009. A discussion of the assumptions used in calculating the award values may be found in Note 2 to our consolidated financial statements included elsewhere in this prospectus. Options are exercisable in one-third annual increments beginning one year from the grant date. See “Outstanding Equity Awards at Fiscal Year End.”
(4)	All other compensation for our NEOs for 2009 included the following:


	Richard E. Perlman		James K. Price		J. Miguel Fernandez de Castro		Wesley J. Campbell		Kevin J. Kozlowski		Crystal B. Patmore

Medical Premiums/ HSA Contributions	$	217	$	—	$	16,374	$	16,374	$	5,121	$	6,215
Dental Premiums		—		—		1,156		1,156		381		173
Short-term, long-term and life insurance premiums		—		—		641		641		641		457
Other(i)		990,000		700,000		—		—		—		—

Total	$	990,217	$	700,000	$	18,171	$	18,171	$	6,144	$	6,845

(i)

Compass Partners was paid approximately $290,000 and was issued 739,506 shares of Company common stock in 2009 pursuant to a Monitoring Fee Agreement in connection with advisory and consulting services and in connection with the termination of the Company’s obligation to pay cash monitoring fees thereunder, respectively. The 739,506 shares were determined to have a fair value of $1.4 million in accordance with stock-based compensation accounting rules (ASC Topic 718) for 2009. The Company therefore incurred approximately $1.7 million of costs under the Monitoring Fee Agreement in 2009. Mr. Perlman controls Compass Partners and owns 99% of the outstanding stock of Compass Partners, and Compass Partners directed the Company to issue one half of such shares to each of Mr. Perlman and Mr. Price. See “Certain Relationships and Related Party Transactions.”

Grants of Plan-Based Awards in 2009

The following table sets forth information regarding grants of awards made to our NEOs during the fiscal year ended December 31, 2009.


Name	Grant Date		All Other Option Awards: Number of Securities Underlying Options (#)		Exercise or Base Price of Option Awards ($/Sh)		Grant Date Fair Value of Stock and Option Awards ($)(1)

Richard E. Perlman		—		—		—		—
James K. Price		—		—		—		—
J. Miguel Fernandez de Castro		4/3/2009		200,461		2.80		134,132
Wesley J. Campbell		—		—		—		—
Kevin J. Kozlowski		8/14/2009		30,846		3.89		31,620
Crystal B. Patmore		4/3/2009		89,969		2.80		60,200



(1)	This column reports the grant date fair value of awards computed in accordance with stock-based compensation accounting rules (ASC Topic 718) for 2009. A discussion of the assumptions used in calculating the award values may be found in Note 2 to our consolidated financial statements included elsewhere in this prospectus. Options are exercisable in one-third annual increments beginning one year from the grant date. See “Outstanding Equity Awards at Fiscal Year End.”

Outstanding Equity Awards at Fiscal Year End

The following table sets forth information regarding outstanding option awards held by our NEOs as of December 31, 2009.


				Option Awards

Name	Grant Date			Number of Securities Underlying Unexercised Options (#) Exercisable		Number of Securities Underlying Unexercised Options (#) Unexercisable		Option Exercise Price ($)		Option Expiration Date

Richard E. Perlman		—			—		—		—		—
James K. Price		—			—		—		—		—
J. Miguel Fernandez de Castro		4/3/2009	(1)		—		200,461		2.80		4/3/2019
Wesley J. Campbell		8/7/2008	(1)		83,522		167,054		2.80		8/7/2018
Kevin J. Kozlowski		8/7/2008	(1)		33,406		66,824		2.80		8/7/2018
		8/14/2009	(1)		—		30,846		3.89		8/14/2019
Crystal B. Patmore		4/3/2009	(1)		—		89,969		2.80		4/3/2019



(1)	Options are exercisable in one-third annual increments beginning one year from the grant date.

Potential Payments upon Termination or Change of Control

Except with respect to the automatic vesting of options in connection with termination following a change of control, none of the NEOs are entitled to receive any payments upon termination of employment, regardless of the reason thereof. The table below sets forth the stock options that would vest (and the related exercise price) if each of the NEOs had been terminated as of December 31, 2009 following a change of control. The fair value of our common stock as of December 31, 2009 was less than the exercise price of the options set forth below.


Name	Number of Stock Options That Will Vest		Option Exercise Price ($)

Richard E. Perlman		—		—
James K. Price		—		—
J. Miguel Fernandez de Castro		200,461		2.80
Wesley J. Campbell		167,054		2.80
Kevin J. Kozlowski		66,824		2.80
		30,846		3.89
Crystal B. Patmore		89,969		2.80

Equity Incentive Plans

Amended and Restated 2008 Stock Incentive Plan

In connection with the Reorganization, we assumed the ExamWorks Inc.’s 2008 Stock Option Plan, and effective July 12, 2010, we amended and restated the plan, including amending its name to the ExamWorks’ Group, Inc.’s Amended and Restated 2008 Stock Incentive Plan, which we refer to herein as the Plan. This Plan authorizes the Company to make grants of stock options to purchase shares of common stock, stock appreciation rights (“SARs”), restricted shares, restricted share units (“RSUs”), unrestricted shares, deferred share units (“DSUs”), performance and cash-settled awards and dividend equivalent rights to our employees, directors and/or consultants. As of October 18, 2010, we have granted stock options to purchase an aggregate of 5,347,764 shares of common stock (excluding canceled stock options) under the Plan, of which options to purchase 655,456 shares of common stock have vested. The initial definition of change of control included in the Plan provided that stock options would automatically vest and become exercisable upon the closing of an initial public offering. Effective February 4, 2010, the definition of change of control was amended such that, unless specifically provided in a specific option award agreement, future stock option grants will no longer vest upon the closing of an initial public offering. As such, of the outstanding stock options as of October 18, 2010, stock options to purchase an aggregate of 682,991 shares of common stock will vest and become exercisable upon the closing of this initial public offering. The following summary of the Plan does not purport to be complete and is subject to and qualified in its entirety by reference to the Plan.

A maximum of 10,282,200 shares is available for issuance under the Plan (with such total number of shares being adjusted for future stock splits, stock dividends, recapitalizations, and other similar transactions). The shares of our common stock that are subject to any award that expire, or are forfeited, cancelled, settled, or become unexercisable without the issuance of shares, will again be available for subsequent awards. We receive no cash consideration for the granting of awards under the Plan. However, if a stock option were to be exercised, we would receive the exercise price for the shares being purchased, unless the exercise occurs pursuant to a cashless alternative that the committee approves.

The Plan was approved by written consent of our stockholders on September 15, 2010. Stockholder approval of the Plan primarily enables us to satisfy New York Stock Exchange listing requirements, and to make awards that qualify as performance-based compensation that is exempt from the deduction limitation set forth under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”). Section 162(m) generally limits the corporate income tax deduction to $1,000,000 annually for the non performance-based compensation paid to each of the Chief Executive Officer and the three other highest paid executive officers of the Company (other than the Chief Financial Officer).

Administration of the Plan will be carried out by our compensation committee or our Board of Directors if no such committee is appointed; provided that our Board may act in lieu of the compensation committee at any time. Either our compensation committee or our Board of Directors may delegate its authority under the Plan to one or more officers but it may not delegate its authority with respect to making awards to individuals subject to Section 16 of the Exchange Act. As used in this summary, the term administrator means the compensation committee or the Board of Directors or its delegate, if any. The Plan provides that we and our affiliates will indemnify members of the administrative committee and their delegates against any claims, liabilities, or costs arising from the good faith performance of their duties under the Plan.

Subject to the terms of the Plan, the administrator has express authority to determine the eligible persons who will receive awards, the number of shares of our common stock to be covered by each award, and the terms and conditions of awards. The administrator has broad discretion to prescribe, amend, and rescind rules relating to the Plan and its administration, to interpret and construe the Plan and the terms of all award agreements, and to take all actions necessary or advisable to administer the Plan. Within the limits of the Plan, the administrator may accelerate the vesting of any awards, allow the exercise of unvested awards, and may modify, replace, cancel, or renew any awards.

The administrator may grant options that are intended to qualify as incentive stock options (“ISOs”), only to employees, if any, and may grant all other awards to eligible persons. Stock options granted under the Plan will provide award recipients, or participants, with the right to purchase shares of our common stock at a predetermined exercise price. The administrator may grant stock options that are intended to qualify as ISOs or that are not intended to so qualify (“Non-ISOs”). The Plan also provides that ISO treatment may not be available for stock options that become first exercisable in any calendar year to the extent the value of the shares that are the subject of the stock option exceed $100,000, based upon the fair market value of the shares of our common stock on the option grant date.

An SAR generally permits a participant who receives it to receive, upon exercise, cash and/or shares of our common stock equal in value to the excess of the fair market value, on the date of exercise, of the shares of our common stock with respect to which the SAR is being exercised, over the exercise price of the SAR for such shares. The administrator may grant SARs in tandem with options, or independently of them. SARs that are independent of options may limit the value payable on its exercise to a percentage.

The exercise price of ISOs, Non-ISOs, and SARs may not be less than 100% of the fair market value on the grant date of the shares of our common stock subject to the award, although the exercise price of ISOs may not be less than 110% of the fair market value on the grant date of the underlying shares of our common stock subject to the award for participants who own more than 10% of our shares of common stock on the grant date. To the extent vested and exercisable in accordance with the agreement granting them, a stock option or SAR may be exercised in whole or in part, and from time to time during its term, subject to earlier termination relating to a holder’s termination of employment or service. With respect to stock options, unless otherwise provided in an award agreement, payment of the exercise price may be made in any of the following forms, or combination of them: cash or check in U.S. dollars, certain shares of our common stock, cashless exercise under a program the administrator approves or certain full recourse promissory notes approved by the administrator.

The term over which participants may exercise stock options and SARs may not exceed ten years from the date of grant; five years in the case of ISOs granted to employees who, at the time of grant, own more than 10% of our outstanding shares of common stock. Under the Plan, subject to certain exceptions, no participant may receive stock options and SARs that relate to more than 2,056,440 shares of our common stock issuable under the Plan during the term of the Plan.

Under the Plan, the administrator may grant restricted stock that is forfeitable until certain vesting requirements are met, may grant RSUs that represent the right to receive shares of our common stock after certain vesting requirements are met or cash under certain circumstances, and may grant unrestricted stock as to which the participant’s interest is immediately vested. For restricted awards, the Plan provides the administrator with discretion to determine the terms and conditions under which a participant’s interests in such awards become vested.

The Plan also authorizes awards of deferred share units in order to permit certain directors, officers, consultants, or select members of management to defer their receipt of compensation payable in cash or shares of our common stock, including shares that would otherwise be issued upon the vesting of restricted stock and RSUs. Deferred share units represent a future right to receive shares of our common stock.

The Plan authorizes the administrator to grant performance-based awards in the form of performance units that the administrator may, or may not, designate as “performance compensation awards” that are intended to be exempt from Code Section 162(m) limitations. In either case, performance units will vest and/or become payable based upon the achievement, within the specified period of time, of performance objectives applicable to the individual, us, or any affiliate. Performance units will be payable in shares of common stock, cash, or some combination of the two, subject to an individual participant limit of 2,056,440 shares (subject to adjustment) or if settled in cash, $8,000,000. The administrator will decide the length of performance periods, but the periods may not be less than one fiscal year.

With respect to performance compensation awards, the Plan requires that the administrator specify in writing the performance period to which the award relates, and an objective formula by which to measure whether and the extent to which the award is earned on the basis of the level of performance achieved with respect to one or more performance measures. Once established for a performance period, the performance measures and performance formula applicable to the award may not be amended or modified in a manner that would cause the compensation payable under the award to fail to constitute performance-based compensation under Code Section 162(m). Under the Plan, the possible performance measures for performance compensation awards may include one or more of the following, applied in total or on a per share basis, (i) basic, diluted or adjusted earnings per share, (ii) sales or revenue, (iii) EBITDA, or earnings before interest, taxes, depreciation and amortization, and other adjustments, (iv) basic or adjusted net income, (v) returns on equity, assets, capital, revenue or similar measure, (vi) economic value added, (vii) working capital, (viii) total stockholder return and (ix) cash flow, margin, product development, product market share, research, licensing, litigation, human resources, information services, mergers, acquisitions, and sales of assets of affiliates or business units.

Each performance measure will be, to the extent applicable, determined in accordance with generally accepted accounting principles as consistently applied by us, or such other standard applied by the administrator and, if so determined by the administrator, and in the case of a performance compensation award, to the extent permitted under Code Section 162(m), adjusted to omit the effects of extraordinary items, gain or loss on the disposal of a business segment, unusual or infrequently occurring events and transactions and cumulative effects of changes in accounting principles. Performance measures may vary from performance period to performance period, and from participant to participant, and may be established on a stand-alone basis, in tandem or in the alternative.

As a condition to the issuance of shares of our common stock pursuant to awards, the Plan requires satisfaction of any applicable federal, state, local, or foreign withholding tax obligations that may arise in connection with the award or the issuance of shares of our common stock.

Finally, the Plan authorizes the awarding of dividend equivalent rights to any eligible person. These rights may be independent of other awards, or attached to awards (other than stock options and SARs), and in all cases represent the participant’s right to collect any dividends that we declare and pay to our stockholders during the term of the dividend equivalent right. Unless an award agreement provides otherwise, the distributions attributable to dividend equivalent rights that are attached to other awards shall occur when shares of our common stock are issued to settle the underlying award.

Awards may not be sold, pledged, assigned, hypothecated, transferred, or disposed of other than by will or the laws of descent and distribution, except to the extent the administrator permits lifetime transfers to charitable institutions, certain family members, or related trusts, or as otherwise approved by the administrator.

The administrator will equitably adjust the number of shares covered by each outstanding award, and the number of shares that have been authorized for issuance under the Plan, but as to which no awards have yet been granted or that have been returned to the Plan upon cancellation, forfeiture, or expiration of an award, as well as the price per share covered by each such outstanding award, to reflect any increase or decrease in the number of issued shares resulting from a stock split, reverse stock split, stock dividend, combination, recapitalization or reclassification of the shares of our common stock, or any other increase or decrease in the number of issued shares effected without receipt of consideration by us. In the event of any such transaction or event, the administrator may (and shall if we are not the surviving entity or our shares are no longer outstanding) provide in substitution for any or all outstanding awards under the Plan such alternative consideration, including securities of any surviving entity, as it may in good faith determine to be equitable under the circumstances and may require in connection therewith the surrender of all options so replaced. In any case, such substitution of securities will not require the consent of any person who is granted awards pursuant to the Plan.

In addition, in the event or in anticipation of a change of control, as defined in the Plan, subject to the terms of any award agreements, the administrator may at any time in its sole and absolute discretion and authority, without obtaining the approval or consent of our stockholders or any participant with respect to his or her outstanding awards, except to the extent an award provides otherwise, take one or more of the following actions: (i) arrange for or otherwise provide that each outstanding award will be assumed or substituted with a substantially equivalent award by a successor corporation or a parent or subsidiary of such successor corporation; (ii) accelerate the vesting of awards, so that awards shall vest (and, to the extent applicable, become exercisable) as to the shares of our common stock that otherwise would have been unvested and provide that our repurchase rights with respect to shares of our common stock issued upon exercise of an award shall lapse as to the shares of our common stock subject to such repurchase right; (iii) arrange or otherwise provide for payment of cash or other consideration to participants in exchange for the satisfaction and cancellation of outstanding awards; or (iv) terminate all or some of the awards upon consummation of the transaction, provided that all awards so terminated are vested in full immediately prior to the consummation of such transaction.

Notwithstanding the above, the Plan provides that in the event a participant holding an award assumed or substituted by the successor corporation in a change of control is involuntarily terminated, as defined in the Plan, by the successor corporation in connection with, or within 12 months following, the change of control, then any assumed or substituted award held by the terminated participant at the time of termination shall accelerate and become fully vested, and exercisable in full in the case of options and SARs, and any repurchase right applicable to any shares of our common stock shall lapse in full. The acceleration of vesting and lapse of repurchase rights provided for in the previous sentence shall occur immediately prior to the effective date of the participant’s termination. Finally, if we dissolve or liquidate, all awards will immediately terminate, subject to the ability of our Board of Directors to exercise any discretion that the Board of Directors may exercise in the case of a change of control.

The Plan shall terminate on July 14, 2018, unless terminated prior to such date by the Board of Directors. Our Board of Directors may from time to time, amend, alter, suspend, discontinue, or terminate the Plan; provided that no amendment, suspension, or termination of the Plan shall materially and adversely affect awards already granted unless it is required by applicable law, relates to an adjustment pursuant to certain change of control transactions or it is otherwise mutually agreed between the participant and the administrator.

Limitations on Liability; Indemnification of Directors and Officers

Our amended and restated certificate of incorporation and amended and restated bylaws, which will be in effect upon the completion of this offering, will contain provisions that limit the personal liability of our directors for monetary damages to the fullest extent permitted by Delaware law. Consequently, our directors will not be personally liable to us or our stockholders for monetary damages for any breach of fiduciary duties as directors, except liability for:


	•	any breach of the director’s duty of loyalty to us or our stockholders;

	•	any act or omission not in good faith or that involves intentional misconduct or a knowing violation of law;

	•	unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the DGCL; or

	•	any transaction from which the director derived an improper personal benefit.

Our amended and restated certificate of incorporation and amended and restated bylaws to be in effect upon the completion of this offering will provide that we shall indemnify our directors and officers, in each case to the fullest extent permitted by Delaware law. Our amended and restated bylaws will also provide that we are obligated to advance expenses incurred by a director or officer in advance of the final disposition of any action or proceeding, and permit us to secure insurance on behalf of any officer, director, employee or other agent for any liability arising out of his or her actions in that capacity regardless of whether we would otherwise be permitted to indemnify him or her under the provisions of Delaware law. We expect to enter into agreements to indemnify our directors, executive officers and other employees as determined by our Board of Directors. With specified exceptions, these agreements will provide for indemnification for related expenses including, among other things, attorneys’ fees, judgments, fines and settlement amounts incurred by any of these individuals in any action or proceeding. We believe that these provisions in our amended and restated certificate of incorporation and amended and restated bylaws and indemnification agreements are necessary to attract and retain qualified persons as directors and officers. We also maintain directors’ and officers’ liability insurance. The limitation of liability and indemnification provisions in our amended and restated certificate of incorporation and amended and restated bylaws may discourage stockholders from bringing a lawsuit against our directors and officers for breach of their fiduciary duties. They may also reduce the likelihood of derivative litigation against our directors and officers, even though an action, if successful, might benefit us and other stockholders. Further, a stockholder’s investment may be adversely affected to the extent that we pay the costs of settlement and damage awards against directors and officers as required by these indemnification provisions. At present, there is no pending litigation or proceeding involving any of our directors, officers or employees for which indemnification is sought, and we are not aware of any threatened litigation that may result in claims for indemnification.

PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth information with respect to the beneficial ownership of our common stock as of October 18, 2010, subject to certain assumptions set forth in the footnotes and as adjusted to reflect the sale of the shares of our common stock offered in this offering under this prospectus for:


	•	each stockholder, or group of affiliated stockholders, who we know beneficially owns more than 5% of the outstanding shares of our common stock;

	•	each of our current directors;

	•	each of our named executive officers;

	•	all of our current directors and current executive officers as a group; and

	•	the selling stockholders.

Beneficial ownership is determined in accordance with rules of the SEC and generally includes any shares over which a person exercises sole or shared voting and/or investment power. Shares of common stock subject to options and warrants currently exercisable or exercisable within 60 days are deemed outstanding for computing the percentage ownership of the person holding the options but are not deemed outstanding for computing the percentage ownership of any other person. Except as otherwise indicated, we believe the beneficial owners of the common stock listed below, based on information furnished by them, have sole voting and investment power with respect to the number of shares listed opposite their names.

The number of shares and percentages of beneficial ownership prior to this offering set forth below are based on 22,694,337 shares of common stock outstanding as of October 18, 2010, which gives effect to the conversion of all outstanding shares of preferred stock into 4,975,180 shares of common stock simultaneously with the closing of this offering.

The number of shares and percentages of beneficial ownership after this offering set forth below are based on the number of shares of our common stock to be issued and outstanding immediately after the consummation of this offering, assuming no exercise of the underwriters’ option to purchase up to an aggregate of 1,545,000 shares of our common stock from us.

Unless otherwise indicated, the address of each of the individuals and entities named in the table below under “5% Stockholders” and “Named Executive Officers and Directors” is ExamWorks Group, Inc., 3280 Peachtree Road, N.E., Suite 2625, Atlanta, GA 30305.


	Shares Beneficially Owned Prior to the Offering		Number of Shares Offered(2)	Shares Beneficially Owned After the Offering
Name of Beneficial Owner	Number(1)	Percent (%)	Number of Shares Offered(2)	Number(3)	Percent (%)
5% Stockholders
ExamWorks Holdings, LLLP(4)	6,728,018	29.6	672,802	6,055,216	19.9
Steven G. Robbins(5)	1,281,953	5.6	229,700	1,052,253	3.5
Thomas P. Anderson and
Lynn C. Anderson(6)	1,250,459	5.5	187,567	1,062,892	3.5
Jane Y. Decter(7)	1,175,502	5.2	211,590	963,912	3.2
Named Executive Officers
and Directors
Richard E. Perlman(8)	7,354,826	32.1	0	6,682,007	22.0
James K. Price(9)	1,859,700	8.1	0	1,736,410	5.7
Wesley Campbell(10)	278,610	1.2	46,059	229,748	*
J. Miguel Fernandez de Castro(11)	338,876	1.5	0	330,466	1.1
Kevin Kozlowski(12)	246,386	1.1	0	239,378	*
Crystal Patmore(13)	225,093	*	0	216,683	*
Clare Arguedas	11,310	*	0	11,310	*
Joshua LeMaire(14)	117,252	*	0	117,252	*
Peter B. Bach(15)	17,977	*	0	17,977	*
Peter M. Graham(16)	45,411	*	0	45,411	*
J. Thomas Presby(17)	168,311	*	0	161,303	*
William A. Shutzer(18)	1,270,079	5.6	0	1,146,731	3.8
David B. Zenoff(19)	26,327	*	0	26,327	*
All directors and executive officers
as a group (13 persons)(20)	9,157,397	38.2	46,059	8,438,519	26.7
Other Selling Stockholders
Michael J. Attkiss	45,241	*	8,106	37,135	*
Michael Balducci	44,727	*	4,473	40,254	*
Lisa Bergstol	30,157	*	4,524	25,633	*
BMS Capital Partners, Inc.
Pension Plan(21)	26,373	*	12,213	14,160	*
Capela Overseas Ltd.(22)	61,693	*	11,054	50,639	*
The Chase 1992 Family Trust,
as amended and restated(23)	549,018	2.4	30,234	518,784	1.7
Daniel T. Ciporin and Jill Bayer
Ciporin, as Joint Tenants	22,620	*	4,053	18,567	*
Robert Collins(24)	107,937	*	21,643	86,294	*
Crescent International Ltd.(25)	75,419	*	13,514	61,905	*
Brian Denton(26)	69,404	*	13,818	55,586	*
The Douglas M. Leveille Revocable
Trust, dated March 7, 2006(27)	132,686	*	12,852	119,834	*
Paul C. Faust	37,324	*	3,598	33,726	*
Fortis Business Holdings, LLC(28)	128,141	*	52,538	75,603	*
Genesis Capital Advisors LLC(29)	45,241	*	8,106	37,135	*
Garry Goldberg	22,610	*	4,051	18,559	*
Chris Greco(30)	72,504	*	20,394	52,110	*
George Greco(31)	144,937	*	53,495	91,442	*
Timothy P. Hanley and Monica
Hanley, as Joint Tenants	75,574	*	7,557	68,017	*
Patrick Haskell(32)	30,486	*	5,462	25,024	*
Hochman Family
Partnership, LP(33)	23,134	*	4,145	18,989	*


	Shares Beneficially Owned Prior to the Offering		Number of Shares Offered(2)	Shares Beneficially Owned After the Offering
Name of Beneficial Owner	Number(1)	Percent (%)	Number of Shares Offered(2)	Number(3)	Percent (%)
William Hullinger(34)	299,818	1.3	74,955	224,863	*
JLCSGC-I, LLC(35)	83,635	*	83,635	0	*
J W Partners, LP(36)	15,423	*	2,763	12,660	*
K/O Argosy LLC(37)	22,610	*	11,305	11,305	*
David Kalajian	15,423	*	2,763	12,660	*
Lake Avenue Associates, LLC(38)	75,574	*	18,894	56,680	*
The LMK Family Partnership LP(39)	37,684	*	15,450	22,234	*
LR Holdings Associates(40)	38,044	*	5,012	33,032	*
Brian M. McCoy(41)	251,862	1.1	47,431	204,431	*
Joyce Nichol(42)	162,232	*	26,069	136,163	*
Rohan Oza	151,148	*	27,083	124,065	*
Robert C. Porter, M.D.(43)	565,474	2.5	282,760	282,714	*
Arlene Rapoport(44)	15,423	*	2,763	12,660	*
Theodore A. Rice(45)	273,110	1.2	48,936	224,174	*
Michael Schultz	22,615	*	4,052	18,563	*
Fran and Paul Slansky(46)	157,959	*	80,265	77,694	*
Greg Slansky(47)	72,504	*	12,991	59,513	*
Philip Wagenheim(48)	205,525	*	36,826	168,699	*
Paul P. Warley Jr. and Cindy O.
Warley, as Joint Tenants(49)	26,866	*	694	24,772	*
Ivy Zelanka	265,470	1.2	47,567	217,903	*
Kerry Zelanka	162,227	*	29,068	133,159	*
Donald Zoltan	38,044	*	6,817	31,227	*
All other selling stockholders(50)	160,411	*	43,239	117,172	*

*	less than 1%.

(1)	This column lists all shares of common stock beneficially owned, whether or not registered hereunder, including all shares of common stock that can be acquired through warrant or option exercises within 60 days of October 18, 2010. Beneficial ownership of certain officers, directors, and selling stockholders is shown as if shares of common stock have been distributed by Holdings to its partners. Other than Mr. Perlman, those certain officers, directors, and selling stockholders disclaim beneficial ownership of common stock currently owned by Holdings.

(2)	Assumes no exercise of the underwriters’ option to purchase additional shares.

(3)	Assumes all shares of common stock registered hereunder are sold by the selling stockholders and, with respect to certain officers, directors, and selling stockholders, that all shares owned by Holdings were distributed to such limited partners prior to the offering and sold by such limited partners in the offering.

(4)	The sole general partner of Holdings is Compass Partners. Mr. Perlman is the President of Compass Partners and is also a limited partner of Holdings. Holdings’ address is ExamWorks Holdings, LLLP, c/o Richard E. Perlman, 655 Madison Avenue, 23rd Floor, New York, NY 10065.

(5)	Shares beneficially owned by Dr. Robbins include (i) 102,822 shares of common stock owned by the Robbins Family 2010 Irrevocable Long Term Trust u/a/d October 14, 2010, of which Richard Robbins is the trustee, and (ii) 514,110 shares of common stock owned by the Steven G. Robbins 2010 Grantor Retained Annuity Trust u/a/d October 14, 2010, of which Richard Robbins is the trustee. Dr. Robbins’ address is 1500 Pleasant Valley Way, Suite 301, West Orange, NJ 07052.

(6)	Mr. and Mrs. Anderson’s address is 215 Viking Place, Alamo, CA 94507.

(7)	Shares beneficially owned by Ms. Decter include 117,546 shares of common stock owned by the Jane Y. Decter 2010 GRAT of which Ms. Decter is a co-trustee. Ms. Decter’s address is 46 Sullivan Drive, West Orange, NJ 07052.

(8)	Shares beneficially owned by Mr. Perlman include (i) 257,055 shares of common stock issuable upon exercise of stock options that will vest upon the earlier of the consummation of this offering and eighteen months following the grant date of March 26, 2010, and (ii) 6,728,018 shares of common stock currently owned by Holdings, which is controlled by Mr. Perlman. If Holdings distributed such shares of common stock to its limited partners prior to and following the offering, Mr. Perlman would own, respectively, (i) 1,095,793 and 986,213 shares of common stock directly, (ii) 124,824 and 112,342 shares of common stock through a Roth IRA, and (iii) 12,852 and 11,567 shares of common stock indirectly through Compass Partners.

(9)	Shares beneficially owned by Mr. Price include (i) 257,055 shares of common stock issuable upon exercise of stock options that will vest upon the earlier of the consummation of this offering and eighteen months following the grant date of March 26, 2010 and (ii) 1,232,892 shares of common stock currently owned by Holdings prior to the offering and 1,109,602 shares following the offering, which Mr. Price would own if distributed by Holdings to its limited partners.

(10)	Shares beneficially owned by Mr. Campbell include (i) 250,577 shares of common stock issuable upon exercise of stock options of which 167,049 are currently vested and 83,528 will vest upon the consummation of this offering, and (ii) 28,033 shares of common stock currently owned by Holdings prior to the offering and 25,230 shares following the offering, which Mr. Campbell would own if distributed by Holdings to its limited partners.

(11)	Shares beneficially owned by Mr. Fernandez de Castro include (i) 200,461 shares of common stock issuable upon exercise of stock options, of which 66,818 are currently vested and 133,643 will vest upon the consummation of this offering, and (ii) 84,100 shares of common stock currently owned by Holdings prior to the offering and 75,690 shares following the offering, which Mr. Fernandez de Castro would own if distributed by Holdings to its limited partners.

(12)	Shares beneficially owned by Mr. Kozlowski include (i) 131,077 shares of common stock issuable upon exercise of stock options, of which 77,101 are currently vested and 53,976 will vest upon the consummation of this offering, and (ii) 70,083 shares of common stock currently owned by Holdings prior to the offering and 63,075 shares following the offering, which Mr. Kozlowski would own if distributed by Holdings to its limited partners.

(13)	Shares beneficially owned by Ms. Patmore include (i) 89,969 shares of common stock issuable upon exercise of stock options, of which 29,988 are currently vested and 59,981 will vest upon the consummation of this offering, and (ii) 84,100 shares of common stock currently owned by Holdings prior to the offering and 75,690 shares following the offering, which Ms. Patmore would own if distributed by Holdings to its limited partners.

(14)	Shares beneficially owned by Mr. LeMaire include 64,263 shares of common stock issuable upon exercise of stock options, of which 38,553 are currently vested and 25,710 will vest upon the consummation of this offering.

(15)	Shares beneficially owned by Dr. Bach include 10,266 shares of restricted stock issued pursuant to the Company’s Amended and Restated 2008 Stock Incentive Plan, or the Plan, that are not yet vested, but are eligible to be voted. The restricted shares will vest upon the earlier of (i) July 16, 2011 and (ii) the occurrence of a change of control, as defined in the Plan.

(16)	Shares beneficially owned by Mr. Graham include 6,853 shares of restricted stock issued pursuant to the Plan that are not yet vested, but are eligible to be voted.

(17)	Shares beneficially owned by Mr. Presby include (i) 7,711 shares of common stock issuable upon exercise of stock options, of which 2,570 are currently vested and 5,141 will vest upon the consummation of this offering, (ii) 70,083 of shares of common stock currently owned by Holdings prior to the offering and 63,075 shares following the offering, which Mr. Presby would own if distributed by Holdings to its limited partners, and (iii) 11,546 shares of restricted stock issued pursuant to the Plan that are not yet vested, but are eligible to be voted. The restricted shares will vest upon the earlier of (i) July 16, 2011 and (ii) the occurrence of an event of change of control, as defined in the Plan.

(18)	Shares beneficially owned by Mr. Shutzer include (i) 1,233,470 shares of common stock currently owned by Holdings prior to the offering and 1,110,122 shares following the offering, half of which Mr. Shutzer would own directly and half of which Mr. Shutzer would own through the Shutzer Family Grantor Retained Annuity Trust if distributed by Holdings to its limited partners and (ii) 10,904 shares of restricted stock issued pursuant to the Plan that are not yet vested, but are eligible to be voted. The restricted shares will vest upon the earlier of (i) July 16, 2011 and (ii) the occurrence of a change of control, as defined in the Plan. Mr. Shutzer disclaims beneficial ownership of 25,705 shares owned by the Shutzer Family Limited Partnership, of which Mr. Shutzer’s wife is a general partner.

(19)	Shares beneficially owned by Mr. Zenoff include 10,904 shares of restricted stock issued pursuant to the Plan that are not yet vested, but are eligible to be voted. The restricted shares will vest upon the earlier of (i) July 16, 2011 and (ii) the occurrence of a change of control, as defined in the Plan.

(20)	Shares beneficially owned prior to the offering include 1,258,168 shares of common stock issuable upon exercise of options and 6,728,018 shares currently owned by Holdings, which is indirectly controlled by our Executive Chairman, Mr. Perlman.

(21)	Barry Salzman is the trustee of BMS Capital Partners, Inc. Pension Plan. Mr. Salzman also claims beneficial ownership of shares beneficially owned by BMS Capital Partners, Inc. Pension Plan. Mr. Salzman also claims beneficial ownership of 95,752 shares beneficially owned by BMS Capital Partners, Inc., of which Mr. Salzman is president, none of which shares are offered for sale in this offering.

(22)	Michael A. Barth has sole voting power of Capela Overseas Ltd.

(23)	John L. Chase and Susan Chase are the trustees of The Chase 1992 Family Trust.

(24)	Mr. Collins is employed as a General Manager of the Company.

(25)	Maxi Brezzi and Bachir Taleb-Ibrahimi have voting power of Crescent International Ltd.

(26)	Shares beneficially owned by Mr. Denton are all shares of common stock issuable upon exercise of stock options, of which 46,269 are currently vested and 23,134 will vest upon the consummation of this offering. Mr. Denton is employed as the Chief Technology Officer of the Company.

(27)	Shares beneficially owned by The Douglas M. Leveille Revocable Trust, dated March 7, 2006, of which Douglas M. Leveille is the trustee, include 6,425 shares of common stock held by Mr. Leveille issuable upon exercise of stock options, of which 2,138 are currently vested and 4,287 will vest upon the consummation of this offering. Mr. Leveille is employed as an Implementation Manager of the Company.

(28)	Louis, Joel, and Sarah Kestenbaum have voting power of Fortis Business Holdings, LLC. Louis Kestenbaum, Margaret Kestenbaum, Joel Kestenbaum, and Sarah Rosenfeld also claim beneficial ownership of Fortis Business Holdings, LLC’s shares.

(29)	Ethan Benovitz, Daniel Saks, and Jaime Hartman have voting power of Genesis Capital Advisors LLC.

(30)	Shares beneficially owned by Mr. Greco include 14,235 shares of common stock issuable upon exercise of stock options, of which 9,490 are currently vested and 4,745 will vest upon the consummation of this offering. Mr. Greco is employed as a General Manager of the Company.

(31)	Shares beneficially owned by Mr. Greco include 28,398 shares of common stock issuable upon exercise of stock options, of which 18,929 are currently vested and 9,469 will vest upon the consummation of this offering. Mr. Greco is employed as a Vice President, Eastern Region, of the Company. Karen Greco also claims beneficial ownership of Mr. Greco’s shares.

(32)	Colleen Haskell also claims beneficial ownership of Mr. Haskell’s shares.

(33)	Richard H. Hochman has sole voting power of Hochman Family Partnership, LP.

(34)	Mr. Hullinger is employed as a General Manager of the Company. Carol Hullinger also claims beneficial ownership of Mr. Hullinger’s shares.

(35)	John L. Chase and Susan G. Chase have sole voting power of JLCSGC-I, LLC and also claim beneficial ownership of JLCSGC-I, LLC's shares.

(36)	Jason Wild has voting power of J W Partners, LP.

(37)	Sheldon Salcman has sole voting power of K/O Argosy LLC.

(38)	Joseph W. Blount has sole voting power of Lake Avenue Associates, LLC.

(39)	Louis Kestenbaum and Sarah Rosenfeld have voting power of The LMK Family Partnership LP. Louis Kestenbaum and Margaret Kestenbaum also claim beneficial ownership of The LMK Family Partnership LP’s shares.

(40)	Leslie Rieder and Samuel J. Rieder have voting power of LR Holdings Associates.

(41)	Brian M. McCoy is employed as a Vice President, Sales Eastern Region, of the Company.

(42)	Ms. Nichol is employed as a General Manager of the Company.

(43)	Dr. Porter is employed as a Chief Medical Officer of the Company.

(44)	Shares beneficially owned by Ms. Rapoport are warrants to purchase 15,423 shares of common stock. Ms. Rapoport purchased the warrants from Michael Rapoport, who acquired them in connection with the private placement of Series A Convertible Preferred Stock.

(45)	Shares beneficially owned by Mr. Rice include (i) 14,045 shares of common stock owned by Mr. Rice and Caryl Ann Rice and (ii) 51,410 shares of common stock for which Mr. Rice acts as the custodian for the benefit of his minor grandchildren. Mr. Rice is employed as the President of The Ricwel Corporation, a subsidiary of the Company.

(46)	Shares beneficially owned by Ms. and Mr. Slansky include 2,570 shares of common stock held by Ms. Slansky issuable upon exercise of stock options, all of which will vest upon the consummation of this offering. Ms. Slansky is employed as a Vice President, and Mr. Slansky is also employed by the Company.

(47)	Shares beneficially owned by Mr. Slansky include 14,235 shares of common stock issuable upon exercise of stock options, of which 9,490 are currently vested and 4,745 will vest upon the consummation of this offering. Mr. Slansky is employed as a Sales Manager of the Company. Cindy Slansky, the wife of Mr. Slansky, also claims beneficial ownership of Mr. Slansky’s stock.

(48)	Shares beneficially owned by Mr. Wagenheim include warrants to purchase 99,989 shares of common stock, which were issued in connection with the private placement of Series A Convertible Preferred Stock.

(49)	Shares beneficially owned by Mr. and Ms. Warley include 14,017 shares of common stock currently owned by Holdings prior to the offering and 12,614 shares following the offering, which Mr. Warley would own if distributed by Holdings to its limited partners.

(50)	Consists of the combined beneficial ownership of 22 selling stockholders. Collectively, the shares subject to this footnote include warrants to purchase 8,194 shares of common stock, which were issued in connection with the private placement of Series A Convertible Preferred Stock. Two of the stockholders subject to this footnote are former employees of the Company. John Turner was employed as an office manager until April 2010, and Darlene Lambert was also employed until April 2010. One of the stockholders subject to this footnote is the father of J. Miguel Fernandez de Castro, who is the Senior Vice President and Chief Financial Officer of the Company, and another is the daughter of J. Thomas Presby, who is a Director of the Company.

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

In addition to the director and executive officer compensation arrangements discussed above under “Executive Compensation”, the following is a description of transactions since April 27, 2007, our inception, to which we have been a party in which the amount involved or exceeded or will exceed $120,000 and in which any of our directors, executive officers, beneficial holders of more than 5% of our capital stock, or persons or entities affiliated with them, had or will have a direct or indirect material interest.

Monitoring Fee Agreement

We entered into a Monitoring Fee Agreement, dated July 14, 2008 (as amended, the “Monitoring Fee Agreement”), with Compass Partners, L.L.C. (“Compass Partners”), which is the general partner of our majority stockholder, ExamWorks Holdings, LLLP. Our Executive Chairman of the Board, Richard E. Perlman, owns 99% of Compass Partners and his wife owns the remaining 1%. In accordance with the Monitoring Fee Agreement, Compass Partners renders to us monitoring, advisory and consulting services in relation to our debt and equity offerings, dispositions or acquisitions and other similar transactions. In consideration of the services provided, we originally agreed to pay Compass Partners a monitoring fee equal to 5% of our Adjusted EBITDA. In order to, among other things, maximize the amount of cash available to us, the Board of Directors determined that it was in the Company’s and its stockholders’ best interest to eliminate our obligation to pay Compass Partners this monitoring fee. Accordingly, the Monitoring Fee Agreement has been amended to eliminate the ongoing obligation to pay the monitoring fee in exchange for the one-time issuance of 739,506 shares issued in connection with our private placement of common stock on January 7, 2010. Compass Partners directed us to issue one half of such shares to each of Richard E. Perlman and James K. Price. The number of shares issued was determined based on the present value of projected future cash payments due to Compass Partners as determined by an independent appraisal obtained by us. In addition to the 739,506 shares, which were determined to have a fair value of $1.4 million, we paid Compass Partners approximately $290,000 in cash pursuant to the Monitoring Fee Agreement for services rendered prior to the effectiveness of the amendment described above. As a result, we incurred approximately $1.7 million of costs under the Monitoring Fee Agreement in 2009. The Monitoring Fee Agreement will terminate upon the completion of this offering (with the exception of the indemnification provisions set forth in the Monitoring Fee Agreement, which will survive its termination).

RedRidge Finance Group

RedRidge Finance Group (“RedRidge”) provides us with financial due diligence services in connection with our acquisition program and served as our financial advisor with respect to our existing credit facility. P&P Investments, LLC (“P&P”), a company owned by Richard E. Perlman and James K. Price, owns approximately 33% of RedRidge. In 2009, we paid approximately $52,000 to RedRidge for diligence services and $500,000 in connection with the existing credit facility. Pursuant to a letter agreement dated December 11, 2009, as subsequently amended, Richard E. Perlman and James K. Price agreed to waive any right to distributions from RedRidge related to all fees RedRidge receives in connection with services provided to the Company. Through September 30, 2010, we have paid RedRidge approximately $363,000 for diligence services and $425,000 in connection with the existing credit facility, in each case, for services rendered during 2010.

Consulting and Services Agreements

The Company is a party to certain services agreements with each of Dr. Edward M. Decter and Dr. Steven G. Robbins. During 2009, Dr. Robbins and Dr. Decter each owned over 5% of the outstanding capital stock of the Company. The services agreements set forth the terms and conditions upon which Dr. Decter and Dr. Robbins are entitled to compensation for IMEs and other services performed by them on behalf of the Company. Such services agreements provide that Dr. Decter and Dr. Robbins are to be provided with a minimum number of IMEs and specify the minimum percentage fee they are entitled to. These services agreements are for an initial term of three years expiring on July 13, 2011, and thereafter automatically renew from year to year unless terminated by either party. In 2009, Dr. Decter and Dr. Robbins received an aggregate of $819,000 and $360,000, respectively, for IME services performed pursuant to these services agreements.

In addition, the Company is a party to certain consulting agreements with Dr. Decter and Dr. Robbins, pursuant to which Dr. Decter and Dr. Robbins have agreed to provide certain business, training, marketing, recruiting and strategic advice related to our business as may be reasonably requested by us. These consulting agreements are for an initial term of three years expiring on July 13, 2011, and thereafter automatically renew from year to year unless terminated by either party. If services are requested under these consulting agreements, Dr. Decter and Dr. Robbins are entitled to consulting fees at an hourly rate of $500, up to $4,000 per day. In 2009, no payments were made to Dr. Decter and Dr. Robbins under the consulting agreements.

Stockholder Notes

In December 2009, our Executive Chairman of the Board, Richard E. Perlman, and our Chief Executive Officer and director of the Company, James K. Price, who are both stockholders of the Company, advanced the Company $3.5 million in the form of subordinated promissory notes to fund a portion of the cash consideration of the acquisitions completed in December 2009. The notes accrued interest at 7.5% per annum and were repaid in January 2010. We paid a total of $13,754 in interest to Richard E. Perlman and a total of $9,386 in interest to James K. Price.

Compass Partners Lease

In June 2010, we entered into a lease agreement with Compass Partners for corporate office space located at 655 Madison Avenue, 23rd Floor, New York, NY. Pursuant to the lease, from April 1, 2010 through June 30, 2014, we will initially pay Compass Partners $10,080 per month, subject to increase commencing January 1, 2011 based on a proportionate pass through of rent increases and increases for property taxes and building operating expenses for which Compass might be subject. The aggregate amount of all periodic rental payments we have made to Compass Partners under the lease is $50,400. In addition, in June 2010, we paid Compass Partners $40,320 as advance rent payment for the last four months of the lease and approximately $62,000 as our share of leasehold improvements. Prior to the entry into this lease agreement, we did not incur costs in excess of $120,000 per year with respect to leasing this corporate office space.

Director Independence

For a discussion of the independence of our directors, please see “Management and Board of Directors—Director Independence” above.

Policies and Procedures for Related Party Transactions

Pursuant to our audit committee charter, our audit committee is responsible for reviewing and approving in advance any related party transaction. Prior to the formation of our audit committee, our full Board of Directors reviewed all material related party transactions. We intend to amend our code of conduct and ethics, which we expect will include a formal policy regarding conflicts of interest. All of the transactions described above were entered into prior to the adoption of this policy. Upon completion of this offering, we will post the full text of the code on our website.

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DESCRIPTION OF CAPITAL STOCK

The following is a summary of our capital stock and certain provisions of our amended and restated certificate of incorporation and amended and restated bylaws, each of which will be in effect immediately prior to the closing of this offering. This summary does not purport to be complete and is qualified in its entirety by the provisions of the certificate of incorporation and bylaws, copies of which have been filed as exhibits to the registration statement of which this prospectus is a part, and by the provisions of applicable law.

General

The shares registered pursuant to the registration statement, of which this prospectus is a part, are shares of common stock, all of the same class and entitled to the same rights and privileges as all other shares of common stock. We currently have authorized capital of 300,000,000 shares, of which 250,000,000 shares have been designated as common stock, par value $0.0001 per shares and 50,000,000 shares as preferred stock, par value $0.0001 per share. As of October 18, 2010, there were 22,694,337 shares of common stock outstanding (after giving effect to the conversion of all of our outstanding shares of Series A Convertible Preferred Stock into shares of common stock, as described below) held of record by approximately 210 stockholders. As of October 18, 2010, there were 4,975,180 shares of Series A Convertible Preferred Stock issued and outstanding, all of which will convert into shares of common stock simultaneously with the closing of this offering. Upon the closing of this offering, there will be 30,439,451 shares of common stock outstanding (assuming no exercise of the underwriters’ option to purchase additional shares of common stock from us and no exercise of outstanding options) and 50,000,000 shares of undesignated preferred stock.

Common Stock

Holders of our common stock are entitled to one vote for each share of stock held of record on all matters submitted to a vote of the stockholders, and do not have cumulative voting rights. Subject to rights that may be fixed for holders of preferred stock, when and if any preferred stock is issued, holders of common stock are entitled to receive ratably such dividends, if any, as may be declared from time to time by our Board of Directors out of funds legally available for dividend payments. The existing credit facility imposes restrictions on our ability to declare dividends with respect to our common stock. See the section entitled “Dividend Policy.” In the event of our liquidation, dissolution, winding up or merger, consolidation, sale or transfer of all or substantially all of our assets, holders of common stock will be entitled to share in our assets that are remaining after payment or provision for payment of all of our debts. Holders of common stock have no preemptive or conversion rights or other subscription rights. There are no redemption or sinking fund provisions applicable to our common stock.

Preferred Stock

Upon the closing of this offering, all outstanding shares of our Series A Convertible Preferred Stock will be converted into shares of common stock and such preferred stock shall automatically be returned to our authorized, unissued and undesignated shares of preferred stock. Thereafter, our Board of Directors will have the authority, without further action by the stockholders, to issue up to 50,000,000 shares of preferred stock in one or more series and to determine the rights, preferences, privileges and restrictions of each such series, any or all of which may be greater than or senior to the rights of the common stock. The issuance of preferred stock could adversely affect the voting power of holders of common stock and reduce the likelihood that such holders will receive dividend payments and payments upon liquidation, and may have the effect of delaying, deterring or preventing a change in control, which could depress the market price of our common stock. We have no current plan to issue any shares of preferred stock.

We have entered into investor rights agreements with holders of shares of the Series A Convertible Preferred Stock to pay to such holders a cash penalty of 2% of the purchase price for the shares of the Series A Convertible Preferred Stock paid by such holder in the event we do not file for an underwritten initial public offering of our common stock within 18 months from May 7, 2010, and consummate such initial public offering within 24 months of May 7, 2010 (subject to certain limited exceptions). The filing of the registration statement of which this prospectus is a part satisfies the filing requirement specified in the immediately preceding sentence. The payment of this penalty is subordinated to the rights of the lenders under our existing credit facility and may only be paid to the extent that we are not in default under the existing credit facility and the payment of such penalty would not result in a default under the existing credit facility. If, as a result of the foregoing, we are unable to make a penalty payment if and when due, such payment will be accrued and we will be required to pay all accrued and unpaid penalty payments as soon as we are permitted to do so.

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Outstanding Warrants

In connection with the issuance of the Series A Convertible Preferred Stock, we issued warrants to Broadband Capital Management LLC and certain of its employees to purchase an aggregate of 447,763 shares of our common stock at an exercise price of $6.63 per share. Each warrant has an initial term of five years from the issue date. The warrant holders are entitled to antidilution rights in certain events, including, but not limited to: (i) stock dividends, splits or combinations; (ii) reorganization, reclassification, consolidation, merger or sale of the Company; (iii) the issuance of stock options and/or convertible securities; and (iv) the issuance of shares of common stock without consideration or for a consideration per share less than the exercise price then in effect. The common stock underlying the warrants, when issued upon exercise of a warrant, will be fully paid and non-assessable.

The warrants may be exercised at any time upon delivery to us, prior to the expiration date of the warrant, of the exercise form, found as an exhibit to the warrant completed and executed as indicated, accompanied by payment of the exercise price for the number of shares of common stock with respect to which the warrant is being exercised. The warrants may be exercised on a cashless basis at the sole option of the holder of the warrant.

Registration Rights Agreements

Upon completion of this offering, and after the expiration or waiver of the lock-up agreements described in the section entitled “Shares Eligible for Future Sale,” certain holders of our common stock and other securities will be entitled to rights to register the shares held by them under the Securities Act pursuant to registration rights granted to such holders of these securities. If we propose to register any of our securities under the Securities Act, either for our own account or for the account of others, the holders of these shares are entitled to notice of the registration and are entitled to include, at our expense, their shares of common stock in the registration and any related underwriting, provided, among other conditions and limitations, that the underwriters may limit the number of shares to be included in the registration and in some cases exclude these shares entirely.

Anti-Takeover Provisions Under Our Charter and Bylaws and Delaware Law

Certain provisions of Delaware law, our amended and restated certificate of incorporation and amended and restated bylaws that will be in effect upon the closing of this offering contain provisions that could have the effect of delaying, deferring or discouraging another party from acquiring control of us. These provisions, which are summarized below, may have the effect of discouraging coercive takeover practices and inadequate takeover bids. These provisions are also designed, in part, to encourage persons seeking to acquire control of us to first negotiate with our Board of Directors. We believe that the benefits of increased protection of our potential ability to negotiate with an unfriendly or unsolicited acquiror outweigh the disadvantages of discouraging a proposal to acquire us because negotiation of these proposals could result in an improvement of their terms.

Board of Directors

Our amended and restated certificate of incorporation provides that the Board of Directors will be classified with approximately one-third elected each year. The number of directors will be fixed from time to time by a majority of the total number of directors which we would have at the time such number is fixed if there were no vacancies. The directors will be divided into three classes, designated class I, class II and class III. Each class will consist, as nearly as may be possible, of one-third of the total number of directors constituting the entire Board. The initial division of the Board into classes will be made by the decision of a majority of the entire Board. The term of the initial class I directors will terminate on the date of the annual meeting of stockholders; the term of initial class II directors will terminate on the date of the annual meeting of stockholders; and the term of initial class III directors will terminate on the date of the annual meeting of stockholders. At each annual meeting of stockholders beginning in 2011, successors to the class of directors whose term expires at that annual meeting will be elected for a three-year term. In addition, if the number of directors is changed, any increase or decrease will be apportioned among the classes so as to maintain the number of directors in each class as nearly equal as possible, and any additional director of any class elected to fill a vacancy resulting from an increase in such class will hold office for a term that will coincide with the remaining term of that class, but in no case will a decrease in the number of directors shorten the term of any incumbent director. The Board of Directors has the sole authority to fill any vacancy on the Board, whether such vacancy occurs as a result of an increase in the number of directors or otherwise. Our amended and restated certificate of incorporation also provides that directors may be removed only for cause at a meeting of stockholders at which a quorum is present by the affirmative vote of at least two-thirds of the votes entitled to be cast thereon. Any amendment to the provisions of our certificate of incorporation described in this paragraph requires the affirmative vote of at least 66²/3% of the votes entitled to be cast on such matter.

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Undesignated Preferred Stock

As discussed above, our Board of Directors has the ability to issue, without stockholder approval, preferred stock with voting or other rights or preferences as may be fixed by the Board of Directors that could impede the success of any takeover attempt. This and other provisions may have the effect of deferring hostile takeovers or delaying changes in control or management of the Company.

Limitations on the Ability of Stockholders to Act by Written Consent or Call a Special Meeting

Our amended and restated certificate of incorporation provides that our stockholders may not act by written consent. The inability of our stockholders to act by written consent may lengthen the amount of time required to take stockholder actions. As a result, a holder controlling a majority of our capital stock would not be able to amend our bylaws or remove directors without holding a meeting of our stockholders called in accordance with our bylaws.

In addition, our amended and restated certificate of incorporation and amended and restated bylaws provide that special meetings of the stockholders may be called only by the Board of Directors. A stockholder may not call a special meeting, which may delay the ability of our stockholders to force consideration of a proposal or for holders controlling a majority of our capital stock to take any action, including the removal of directors.

Requirements for Advance Notification of Stockholder Nominations and Proposals

Our amended and restated bylaws establish advance notice procedures with respect to stockholder proposals and the nomination of candidates for election as directors, other than nominations made by or at the direction of the Board of Directors or a committee of the Board of Directors. These provisions may have the effect of precluding the conduct of certain business at a meeting if the proper procedures are not followed. These provisions may also discourage or deter a potential acquiror from conducting a solicitation of proxies to elect the acquiror’s own slate of directors or from otherwise attempting to obtain control of the Company.

Board Vacancies Filled Only by Majority of Directors

Vacancies and newly created seats on our Board of Directors may be filled only by a majority of the number of then-authorized members of our Board of Directors. Only our Board of Directors may determine the number of directors on our Board. The inability of stockholders to determine the number of directors or to fill vacancies or newly created seats on our Board of Directors makes it more difficult to change the composition of our Board of Directors, but these provisions promote a continuity of existing management.

No Cumulative Voting

The Delaware General Corporation Law provides that stockholders are not entitled to the right to cumulate votes in the election of directors unless our certificate of incorporation provides otherwise. Our amended and restated certificate of incorporation and amended and restated bylaws do not expressly provide for cumulative voting.

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Directors Removed Only for Cause

Our amended and restated certificate of incorporation provides for the removal of directors only for cause and only upon the affirmative vote of the holders of a majority of our outstanding capital stock entitled to vote generally in the election of directors.

Amendment of Charter Provisions

The amendment of certain of the above provisions in our amended and restated certificate of incorporation and amended and restated bylaws requires approval by holders of at least two-thirds of our outstanding capital stock entitled to vote generally in the election of directors.

Delaware Anti-Takeover Statute

We are subject to DGCL Section 203, which regulates corporate acquisitions. DGCL Section 203 prevents certain Delaware corporations, including those whose securities are listed on the New York Stock Exchange, from engaging, under certain circumstances, in a business combination with any interested stockholder for three years following the date that such stockholder became an interested stockholder. For purposes of DGCL Section 203, a business combination includes, among other things, a merger or consolidation involving us and the interested stockholder and the sale of 10% or more of our assets. In general, DGCL Section 203 defines an interested stockholder as any entity or person owning 15% or more of our outstanding voting stock and any entity or person affiliated with or controlling or controlled by such entity or person. A Delaware corporation may opt out of DGCL Section 203 with an express provision in its original certificate of incorporation or an express provision in its certificate of incorporation or bylaws resulting from amendments approved by the holders of at least a majority of the corporation’s outstanding voting shares. We have not opted out of the provisions of DGCL Section 203. This provision has an anti-takeover effect with respect to transactions not approved in advance by our Board of Directors, including discouraging takeover attempts that might result in a premium over the market price for our shares.

The provisions of Delaware law, our amended and restated certificate of incorporation and amended and restated bylaws could have the effect of discouraging others from attempting hostile takeovers and, as a consequence, they may also inhibit temporary fluctuations in the market price of our common stock that often result from actual or rumored hostile takeover attempts. These provisions may also have the effect of preventing changes in our management. It is possible that these provisions could make it more difficult to accomplish transactions that stockholders may otherwise deem to be in their best interests.

Transfer Agent and Registrar

The transfer agent and registrar for the common stock is Mellon Investor Services, LLC. The transfer agent’s address is 480 Washington Blvd., Jersey City, NJ 07310 and its telephone number is (201) 680-5390.

Listing

The New York Stock Exchange has authorized the listing of our common stock under the symbol “EXAM.”

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SHARES ELIGIBLE FOR FUTURE SALE

Prior to this offering, there has been no public market for our common stock. Future sales of substantial amounts of our common stock in the public market could reduce prevailing market prices. Furthermore, since a substantial number of shares will be subject to contractual and legal restrictions on resale as described below, sales of substantial amounts of our common stock in the public market after these restrictions lapse could adversely affect the prevailing market price and our ability to raise equity capital in the future.

Upon completion of this offering, we will have outstanding an aggregate of 30,439,451 shares of common stock, assuming no exercise of the underwriters’ option to purchase additional shares and no exercise of outstanding options or warrants. Of these shares, all of the shares sold in this offering will be freely tradable without restriction or further registration under the Securities Act, unless these shares are purchased by affiliates. Substantially all of the remaining shares of common stock held by existing stockholders are “restricted securities” as that term is defined in Rule 144 under the Securities Act or are subject to the contractual restrictions described below. Restricted securities may be sold in the public market only if registered or if the transaction qualifies for an exemption from registration described below under Rules 144 or 701 promulgated under the Securities Act.

“Restricted” shares and shares subject to the contractual restrictions described below will be available for sale in the public market as follows:


	•	20,139,451 shares subject to contractual restrictions will be eligible for sale upon the expiration of the lock-up agreements, described below, beginning 180 days after the date of this prospectus; and

	•	1,278,570 shares will be eligible for sale upon the exercise of vested options upon the effectiveness of the applicable registration statement on Form S-8.

In addition, of the 5,341,797 shares of our common stock that were subject to stock options outstanding as of October 18, 2010, options to purchase an aggregate of 1,278,570 shares of common stock will be vested and will be eligible for sale upon the effectiveness of the applicable registration statement on Form S-8. In addition, as of October 18, 2010, warrants to purchase 447,763 shares of our common stock with an exercise price of $6.63 were outstanding.

Lock-Up Agreements and Obligations

Each of our officers and directors and certain of our stockholders, who together hold substantially all outstanding common stock as of October 18, 2010, have agreed not to lend, offer, sell, contract to sell, pledge, grant any option to purchase, make any short sale or otherwise dispose of any shares of our common stock, or any options or warrants to purchase any shares of our common stock, or any securities convertible into, exchangeable for or that represent the right to receive shares of our common stock, whether directly or indirectly for a period of at least 180 days after the date of this prospectus, except for bona fide gifts to immediate family members, transfers to family trusts, distributions to affiliates or transfers pursuant to testate, intestate succession or bona fide estate planning. Transfers or dispositions can be made sooner only under the conditions described above or with the prior written consent of each of the representatives.

Rule 144

In general, under Rule 144 as currently in effect, a person (or persons whose shares are aggregated) who is not deemed to have been an affiliate of ours at any time during the three months preceding a sale, and who has beneficially owned restricted securities within the meaning of Rule 144 for at least six months (including any period of consecutive ownership of preceding non-affiliated holders) would be entitled to sell those shares, subject only to the availability of current public information about us. A non-affiliated person who has beneficially owned restricted securities within the meaning of Rule 144 for at least one year would be entitled to sell those shares without regard to the provisions of Rule 144.

In general, under Rule 144 as currently in effect, our affiliates or persons selling shares on behalf of our affiliates are entitled to sell upon expiration of the lock-up agreements described above, within any three-month period beginning 90 days after the date of this prospectus, a number of shares that does not exceed the greater of:


	•	1% of the number of shares of common stock then outstanding, which will equal approximately 304,395 shares immediately after this offering; or

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	•	the average weekly trading volume of the common stock during the four calendar weeks preceding the filing of a notice on Form 144 with respect to such sale.

Sales under Rule 144 by our affiliates or persons selling shares on behalf of our affiliates are also subject to certain manner of sale provisions and notice requirements and to the availability of current public information about us.

Rule 701

Rule 701 of the Securities Act, as currently in effect, permits any of our employees, officers, directors, consultants or advisors who purchase or receive shares from us pursuant to a written compensatory plan or contract to resell such shares in reliance upon Rule 144, but without compliance with certain restrictions. Subject to any applicable lock-up agreements, Rule 701 provides that affiliates may sell their Rule 701 shares under Rule 144 beginning 90 days after the date of this prospectus without complying with the holding period requirement of Rule 144 and that non-affiliates may sell such shares in reliance on Rule 144 beginning 90 days after the date of this prospectus without complying with the holding period, public information, volume limitation or notice requirements of Rule 144.

Form S-8 Registration Statements

Following the completion of this offering, we intend to file one or more registration statements on Form S-8 under the Securities Act to register the shares of our common stock that are issuable pursuant to our Amended and Restated 2008 Stock Incentive Plan. See the section entitled “Management and Board of Directors—Equity Incentive Plan.” Subject to the lock-up agreements described above and any applicable vesting restrictions, shares registered under these registration statements will be available for resale in the public market immediately upon the effectiveness of these registration statements, except with respect to Rule 144 volume limitations that apply to our affiliates.

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MATERIAL U.S. FEDERAL TAX CONSIDERATIONS

The following is a general discussion of the material U.S. federal income and certain estate tax considerations relating to the acquisition, ownership and disposition of our common stock to a holder that acquires shares of common stock in this offering and that holds the common stock as a capital asset (generally, property held for investment within the meaning of Section 1221 of the United States Internal Revenue Code of 1986, as amended (the “Code”)). This discussion is based on currently existing provisions of the Code, Treasury regulations promulgated thereunder, and administrative and judicial interpretations thereof, all as in effect on the date hereof and all of which are subject to change, possibly with retroactive effect, or different interpretations.

This discussion is for general information only and does not address all of the tax considerations that may be relevant to specific holders in light of their particular circumstances or to holders subject to special treatment under U.S. federal tax laws (such as certain financial institutions, regulated investment companies, real estate investment trusts, partnerships or other pass-through entities, insurance companies, tax-exempt entities, retirement plans, brokers or dealers in securities, traders in securities that elect to use a mark-to-market method of accounting for their securities holdings, persons liable for alternative minimum tax, expatriates, persons who hold our common stock as part of a straddle, hedge, conversion transaction or other risk-reduction or integrated investment, controlled foreign corporations, passive foreign investment companies, foreign personal holding companies, companies that accumulate earnings to avoid U.S. federal income tax, taxpayers whose functional currency is not the U.S. dollar, and persons who hold or receive our common stock as compensation).

Except as specifically noted below, this discussion does not address U.S. federal taxes other than the federal income tax. In addition, this discussion does not address the U.S. state and local or non-U.S. tax considerations relating to the acquisition, ownership and disposition of our common stock.

As used in this discussion, the term “U.S. holder” means a beneficial owner of our common stock that is for U.S. federal income tax purposes:


	•	an individual citizen or resident of the U.S.;

	•	a corporation or other entity taxable as a corporation created or organized in or under the laws of the U.S. or of any state or political subdivision thereof or therein, including the District of Columbia;

	•	an estate, the income of which is subject to U.S. federal income tax regardless of the source thereof; or

	•	a trust, if (a) a court within the U.S. is able to exercise primary supervision over its administration and one or more U.S. persons have the authority to control all of its substantial decisions or (b) it has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person.

The term “non-U.S. holder” means a beneficial owner of our common stock that is not a U.S. holder and that is not a partnership.

If a partnership (including an entity or arrangement treated as a partnership for U.S. federal income tax purposes) holds our common stock, the tax treatment of a partner will generally depend on the status of the partner and the activities of the partnership. If you are a partner of a partnership holding our common stock, we suggest that you consult your own tax advisor as to the particular U.S. federal income and estate tax consequences applicable to you.

Prospective purchasers are urged to consult their own tax advisors as to the particular tax considerations applicable to them relating to the acquisition, ownership and disposition of our common stock, including the application of U.S. federal, state or local tax laws or non-U.S. tax laws, any changes in applicable tax laws and any pending or proposed legislation or regulations.

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U.S. Holders

Dividends

Distributions paid on shares of our common stock will be treated as dividends for U.S. federal income tax purposes to the extent they are paid out of our current or accumulated earnings and profits and, to the extent so treated, will be includible in gross income by a U.S. holder upon receipt. To the extent that the amount of any distribution paid on shares of our common stock exceeds our current and accumulated earnings and profits, such excess will be treated first as a return of capital, which will be applied against and reduce your adjusted tax basis (but not below zero) in such shares of our common stock, and thereafter as capital gain.

If you are an individual, dividends received by you on a share of our common stock generally will be subject to a reduced maximum U.S. federal income tax rate of 15% for taxable years beginning prior to January 1, 2011, if you meet certain holding period and other requirements. If you are a corporation, dividends on our common stock generally will be eligible for the dividends-received deduction, if you meet the holding period and other requirements for the dividends-received deduction.

Sale, Exchange or Other Disposition

Upon a sale, exchange or other taxable disposition of our common stock, a U.S. holder will recognize capital gain or loss in an amount equal to the difference between the amount realized on the sale, exchange or other disposition and such U.S. holder’s adjusted tax basis in the share of our common stock. Such gain or loss will be capital gain or loss and will be long-term capital gain or loss if your holding period for such share of our common stock exceeds one year. Long-term capital gain of a noncorporate U.S. holder is subject to a maximum tax rate of 15% for taxable years beginning prior to January 1, 2011. The deduction of capital losses is subject to limitations.

Information Reporting and Backup Withholding Tax

In general, dividends on our common stock and payments of the proceeds of a sale, exchange or other disposition of our common stock paid to a U.S. holder may be subject to information reporting. Certain U.S. holders may be subject to backup withholding tax (currently at a rate of 28%) on payments made on or with respect to our common stock if such U.S. holder fails to supply a correct taxpayer identification number or otherwise fails to comply with applicable U.S. information reporting or certification requirements. Certain persons are exempt from backup withholding including, in certain circumstances, corporations and financial institutions.

Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules from a payment to a U.S. holder will be allowed as a refund or a credit against such U.S. holder’s U.S. federal income tax liability, if any, provided that the required information is furnished to the Internal Revenue Service (the “IRS”). U.S. holders should consult their own tax advisors regarding the filing of a U.S. tax return for claiming a refund of such backup withholding.

Non-U.S. Holders

Dividends

We or another withholding agent will be required to withhold U.S. federal withholding tax at a rate of 30% from the gross amount of any dividends on our common stock paid to a non-U.S. holder, unless (a) an applicable income tax treaty reduces or eliminates such tax, and such non-U.S. holder claiming the benefit of such treaty provides to us or such agent proper IRS documentation, or (b) the dividends are effectively connected with such non-U.S. holder’s conduct of a trade or business in the U.S. and the non-U.S. holder provides to us or such agent proper IRS documentation. In the latter case, such non-U.S. holder generally will be subject to U.S. federal income tax on a net income basis, at the same graduated individual and corporate rates applicable to U.S. persons. Additionally, a non-U.S. holder that is taxed as a corporation may be subject to a branch profits tax on its effectively connected earnings and profits, as adjusted for certain items, at a rate of 30% (or at a reduced rate under an applicable income tax treaty).

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Where dividends are paid to a non-U.S. holder that is a partnership or other pass-through entity, persons holding an interest in the entity may need to provide certification claiming an exemption or reduction in withholding under an applicable income tax treaty in order for the entity to obtain an exemption or reduction in withholding. If a non-U.S. holder is eligible for a reduced rate of U.S. federal withholding tax pursuant to an income tax treaty, such non-U.S. holder may obtain a refund of any excess amount withheld by timely filing an appropriate claim for refund with the IRS.

Sale, Exchange or Other Disposition

Generally, a non-U.S. holder will not be subject to U.S. federal income tax on gain realized upon the sale, exchange or other disposition of our common stock unless:


	•	such non-U.S. holder is an individual present in the U.S. for 183 days or more in the taxable year of the sale, exchange or other disposition and certain other conditions are met;

	•	the gain is effectively connected with such non-U.S. holder’s conduct of a trade or business in the U.S. (and, under certain income tax treaties, is attributable to a U.S. permanent establishment of such non-U.S. holder); or

	•	we are or have been a “United States real property holding corporation” for U.S. federal income tax purposes (which we believe that we are not and have never been, and do not anticipate that we will become) and the non-U.S. holder holds or has held, directly or indirectly, at any time within the shorter of the five-year period preceding such sale, exchange or disposition or the period that such non-U.S. holder held our common stock, more than 5% of our common stock.

If the first exception applies, the non-U.S. holder generally will be subject to U.S. federal income tax at a rate of 30% (or at a reduced rate under an applicable income tax treaty) on the amount by which capital gains allocable to U.S. sources (including gains from the sale, exchange or other disposition of our common stock) exceed capital losses allocable to U.S. sources. If the second or third exception applies, the non-U.S. holder generally will be subject to U.S. federal income tax with respect to such gain on a net-income basis in the same manner as a U.S. citizen or corporation, as applicable, unless otherwise provided in an applicable income tax treaty, and a non-U.S. holder that is a corporation may also be subject to a branch profits tax at a rate of 30% (or at a reduced rate under an applicable income tax treaty).

Information Reporting and Backup Withholding Tax

We must report annually to the IRS the amount of dividends or other distributions we pay to you on your shares of common stock and the amount of tax we withhold on these distributions regardless of whether withholding is required. The IRS may make this information available to the tax authorities in the country in which you reside pursuant to the provisions of an applicable income tax treaty or exchange of information agreement. Backup withholding tax (currently at a rate of 28%) may also apply to payments made to a non-U.S. holder on or with respect to our common stock, unless the non-U.S. holder certifies as to its status as a non-U.S. holder under penalties of perjury or otherwise establishes an exemption, and certain other conditions are satisfied.

Information reporting and backup withholding generally are not required with respect to the amount of any proceeds from the sale of your shares of common stock outside the U.S. through a foreign office of a foreign broker that does not have certain specified connections to the U.S. However, if you sell your shares of common stock through a U.S. office of a broker, the broker will be required to report the amount of proceeds paid to you to the IRS and also to impose backup withholding on that amount unless you provide appropriate certification to the broker of your status as a non-U.S. holder or you otherwise establish an exemption. Information reporting, but not backup withholding, will apply if you sell your shares of common stock through a foreign office of a broker that has any of certain connections to the U.S., unless such broker has documentary evidence in its records that you are a non-U.S. holder and certain other conditions are met or you otherwise establish an exemption.

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Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules from a payment to a non-U.S. holder will be allowed as a refund or a credit against such non-U.S. holder’s U.S. federal income tax liability, if any, provided that the required information is timely furnished to the IRS. Non-U.S. holders should consult their own tax advisors regarding the filing of a U.S. tax return for claiming a refund of such backup withholding.

Federal Estate Tax

Common stock owned or treated as owned by an individual who is not a citizen or resident (as defined for U.S. federal estate tax purposes) of the U.S. at the time of his or her death generally will be included in the individual’s gross estate for U.S. federal estate tax purposes and therefore may be subject to U.S. federal estate tax unless an applicable estate tax treaty provides otherwise. Under current law, there is no U.S. estate tax for persons dying in 2010.

New Legislation Affecting Taxation of Common Stock Held By or Through Foreign Entities

Recently enacted legislation generally will impose a withholding tax of 30% on dividend income from our common stock and the gross proceeds of a disposition of our common stock paid to a foreign financial institution, unless such institution enters into an agreement with the U.S. government to collect and provide to the U.S. tax authorities substantial information regarding U.S. account holders of such institution (which would include certain equity and debt holders of such institution, as well as certain account holders that are foreign entities with U.S. owners). Absent any applicable exception, this legislation also generally will impose a withholding tax of 30% on dividend income from our common stock and the gross proceeds of a disposition of our common stock paid to a foreign entity that is not a foreign financial institution unless such entity provides the withholding agent with a certification identifying the substantial U.S. owners of the entity, which generally includes any U.S. person who directly or indirectly owns more than 10% of the entity. Under certain circumstances, a non-U.S. holder of our common stock might be eligible for refunds or credits of such taxes, and a non-U.S. holder might be required to file a U.S. federal income tax return to claim such refunds or credits. This legislation generally is effective for payments made after December 31, 2012. Investors are encouraged to consult with their own tax advisors regarding the implications of this legislation on their investment in our common stock.

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UNDERWRITING

We, the selling stockholders and the underwriters named below will enter into an underwriting agreement with respect to the shares being offered. Subject to certain conditions, each underwriter has severally agreed to purchase the number of shares indicated in the following table. Goldman, Sachs & Co. and Credit Suisse Securities (USA) LLC are the representatives of the underwriters.


	Underwriters				Number of Shares

	Goldman, Sachs & Co.				3,877,950
	Credit Suisse Securities (USA) LLC				3,877,950
	Barclays Capital Inc.				1,090,770
	William Blair & Company, L.L.C.				1,090,770
	Needham & Company, LLC				362,560

	Total				10,300,000

The underwriters are committed to take and pay for all of the shares being offered, if any are taken, other than the shares covered by the option described below unless and until this option is exercised.

If the underwriters sell more shares than the total number set forth in the table above, the underwriters have an option to buy up to an 1,545,000 additional shares from us. They may exercise that option for 30 days. If any shares are purchased pursuant to this option, the underwriters will severally purchase shares in approximately the same proportion as set forth in the table above.

The following tables show the per share and total underwriting discounts and commissions to be paid to the underwriters by us and the selling stockholders. Such amounts are shown assuming both no exercise and full exercise of the underwriters’ option to purchase additional shares.

Paid by the Company


	No Exercise		Full Exercise

Per Share	$	1.12	$	1.12
Total	$	8,674,528	$	10,404,928

Paid by the Selling Stockholders


	No Exercise		Full Exercise

Per Share	$	1.12	$	1.12
Total	$	2,861,472	$	2,861,472

Shares sold by the underwriters to the public will initially be offered at the initial public offering price set forth on the cover of this prospectus. Any shares sold by the underwriters to securities dealers may be sold at a discount of up to $0.576 per share from the initial public offering price. If all the shares are not sold at the initial public offering price, the representatives may change the offering price and the other selling terms. The offering of the shares by the underwriters is subject to receipt and acceptance and subject to the underwriters’ right to reject any order in whole or in part.

We and our officers, directors, and holders of substantially all of our common stock, including the selling stockholders, have agreed with the underwriters, subject to certain exceptions, not to dispose of or hedge any of our common stock or securities convertible into or exchangeable for shares of common stock during the period from the date of this prospectus continuing through the date 180 days after the date of this prospectus, except with the prior written consent of the representatives. See “Shares Eligible for Future Sale” for a discussion of certain transfer restrictions.

This restriction shall not apply to (i) transfers of shares of our common stock as a bona fide gift or gifts, provided that the donee or donees thereof agree to be bound in writing by such restrictions, (ii) transfers of shares of our common stock to any affiliate or a trust for the direct or indirect benefit of the transferor or the immediate family of the transferor, provided that the affiliate or such trustee of the trust, as the case may be, agrees to be bound in writing by such restrictions, and provided further, that any such transfer shall not involve a disposition for value, (iii) as a result of testate, intestate succession or bona fide estate planning, provided that the transferee agrees to be bound in writing by any such restrictions, and provided further that any such transfer shall not involve a disposition for value (iv) our issuance of shares, or options to purchase shares, of common stock under our equity incentive plans as currently in effect, and (iv) our issuance of shares, options or warrants to purchase shares or any securities that are convertible into or exchangeable for shares of common stock in an amount not to exceed 15% of the sum of our fully-diluted common stock outstanding as of the date of the prospectus and the shares of common stock offered hereby, as consideration in connection with acquisitions by us, provided that the recipient of any such securities agrees to be bound in writing by such restrictions.

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The 180-day restricted period described in the preceding paragraph will be automatically extended if: (1) during the last 17 days of the 180-day restricted period we issue an earnings release or announce material news or a material event; or (2) prior to the expiration of the 180-day restricted period, we announce that we will release earnings results during the 15-day period following the last day of the 180-day period, in which case the restrictions described in the preceding paragraph will continue to apply until the expiration of the 18-day period beginning on the issuance of the earnings release of the announcement of the material news or material event.

Prior to the offering, there has been no public market for the shares. The initial public offering price has been negotiated among us, the selling stockholders and the representatives. Among the factors to be considered in determining the initial public offering price of the shares, in addition to prevailing market conditions, will be our historical performance, estimates of our business potential and earnings prospects, an assessment of our management and the consideration of the above factors in relation to market valuation of companies in related businesses.

The New York Stock Exchange has authorized the listing of our common stock under the symbol “EXAM.” In order to meet one of the requirements for listing the common stock on the New York Stock Exchange, the underwriters have undertaken to sell lots of 100 or more shares to a minimum of 400 beneficial holders.

In connection with the offering, the underwriters may purchase and sell shares of common stock in the open market. These transactions may include short sales, stabilizing transactions and purchases to cover positions created by short sales. Shorts sales involve the sale by the underwriters of a greater number of shares than they are required to purchase in the offering. “Covered” short sales are sales made in an amount not greater than the underwriters’ option to purchase additional shares from us in the offering. The underwriters may close out any covered short position by either exercising their option to purchase additional shares or purchasing shares in the open market. In determining the source of shares to close out the covered short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase additional shares pursuant to the option granted to them. “Naked” short sales are any sales in excess of such option. The underwriters must close out any naked short position by purchasing shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the common stock in the open market after pricing that could adversely affect investors who purchase in the offering. Stabilizing transactions consist of various bids for or purchases of common stock made by the underwriters in the open market prior to the completion of the offering.

The underwriters may also impose a penalty bid. This occurs when a particular underwriter repays to the underwriters a portion of the underwriting discount received by it because the representatives have repurchased shares sold by or for the account of such underwriter in stabilizing or short covering transactions.

Purchases to cover a short position and stabilizing transactions, as well as other purchases by the underwriters for their own accounts, may have the effect of preventing or retarding a decline in the market price of our common stock, and together with the imposition of the penalty bid, may stabilize, maintain or otherwise affect the market price of the common stock. As a result, the price of the common stock may be higher than the price that otherwise might exist in the open market. If these activities are commenced, they may be discontinued at any time. These transactions may be effected on the New York Stock Exchange, in the over-the-counter market or otherwise.

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European Economic Area

In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a “Relevant Member State”), each underwriter has represented and agreed that with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State (the “Relevant Implementation Date”) it has not made and will not make an offer of shares to the public in that Relevant Member State prior to the publication of a prospectus in relation to the shares which has been approved by the competent authority in that Relevant Member State or, where appropriate, approved in another Relevant Member State and notified to the competent authority in that Relevant Member State, all in accordance with the Prospectus Directive, except that it may, with effect from and including the Relevant Implementation Date, make an offer of shares to the public in that Relevant Member State at any time:


	(a) to legal entities which are authorised or regulated to operate in the financial markets or, if not so authorised or regulated, whose corporate purpose is solely to invest in securities;

	(b) to any legal entity which has two or more of (1) an average of at least 250 employees during the last financial year; (2) a total balance sheet of more than €43,000,000 and (3) an annual net turnover of more than €50,000,000, as shown in its last annual or consolidated accounts;

	(c) to fewer than 100 natural or legal persons (other than qualified investors as defined in the Prospectus Directive) subject to obtaining the prior consent of the representatives for any such offer; or

	(d) in any other circumstances which do not require the publication by the Issuer of a prospectus pursuant to Article 3 of the Prospectus Directive.

For the purposes of this provision, the expression an “offer of shares to the public” in relation to any shares in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the shares to be offered so as to enable an investor to decide to purchase or subscribe the shares, as the same may be varied in that Relevant Member State by any measure implementing the Prospectus Directive in that Relevant Member State and the expression Prospectus Directive means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member State.

Each underwriter has represented and agreed that:


	(a) it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the FSMA) received by it in connection with the issue or sale of the shares in circumstances in which Section 21(1) of the Financial Services and Markets Act 2000 (the “FSMA”) would not apply to the Issuer, and

	(b) it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the shares in, from or otherwise involving the United Kingdom.

The shares may not be offered or sold by means of any document other than (i) in circumstances which do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap.32, Laws of Hong Kong), or (ii) to “professional investors” within the meaning of the Securities and Futures Ordinance (Cap.571, Laws of Hong Kong) and any rules made thereunder, or (iii) in other circumstances which do not result in the document being a “prospectus” within the meaning of the Companies Ordinance (Cap.32, Laws of Hong Kong), and no advertisement, invitation or document relating to the shares may be issued or may be in the possession of any person for the purpose of issue (in each case whether in Hong Kong or elsewhere), which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the laws of Hong Kong) other than with respect to shares which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” within the meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder.

This prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the shares may not be circulated or distributed, nor may the shares be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the “SFA”), (ii) to a relevant person, or any person pursuant to Section 275(1A), and in accordance with the conditions, specified in Section 275 of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.

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Where the shares are subscribed or purchased under Section 275 by a relevant person which is: (a) a corporation (which is not an accredited investor) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or (b) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary is an accredited investor, shares, debentures and units of shares and debentures of that corporation or the beneficiaries’ rights and interest in that trust shall not be transferable for six months after that corporation or that trust has acquired the shares under Section 275 except: (1) to an institutional investor under Section 274 of the SFA or to a relevant person, or any person pursuant to Section 275(1A), and in accordance with the conditions, specified in Section 275 of the SFA; (2) where no consideration is given for the transfer; or (3) by operation of law.

The securities have not been and will not be registered under the Financial Instruments and Exchange Law of Japan (the “Financial Instruments and Exchange Law”) and each underwriter has agreed that it will not offer or sell any securities, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan), or to others for re-offering or resale, directly or indirectly, in Japan or to a resident of Japan, except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the Financial Instruments and Exchange Law and any other applicable laws, regulations and ministerial guidelines of Japan.

The underwriters do not expect sales to discretionary accounts to exceed 5% of the total number of shares offered.

We will pay all of the expenses in connection with this offering, except that the selling stockholders will pay any applicable underwriting fees, discounts or commissions and transfer taxes.

We and the selling stockholders have agreed to indemnify the several underwriters against certain liabilities, including liabilities under the Securities Act of 1933.

The underwriters and their respective affiliates are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, investment research, principal investment, hedging, financing and brokerage activities. Certain of the underwriters and their respective affiliates have, from time to time, performed, and may in the future perform, various financial advisory and investment banking services for the issuer, for which they received or will receive customary fees and expenses. Affiliates of Goldman, Sachs & Co., Credit Suisse Securities (USA) LLC, and Barclays Capital Inc., will be lenders under our new senior revolving credit facility and will receive customary fees in connection therewith.

In the ordinary course of their various business activities, the underwriters and their respective affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their clients, and such investment and securities activities may involve securities and/or instruments of the issuer. The underwriters and their respective affiliates may also make investment recommendations and/or publish or express independent research views in respect of such securities or instruments and may at any time hold, or recommend to clients that they acquire, long and/or short positions in such securities and instruments.

Directed Share Program

At our request, the underwriters have reserved for sale to our officers, directors and employees, immediate family members of the foregoing, and other persons selected by us, up to 309,000 shares of the common stock offered by this prospectus, at the initial public offering price. Any shares purchased by officers and directors in the directed share program will be subject to the 180 day lock-up agreements described above.

The number of shares of common stock available for sale to the general public will be reduced to the extent such persons purchase such reserved shares. Any reserved shares of common stock that are not so purchased will be offered by the underwriters to the general public on the same basis as the other shares of common stock offered by this prospectus. In connection with the sale of directed shares we have agreed to indemnify the underwriters against certain liabilities and expenses, including losses due to the failure of directed share participants to pay for shares they subscribe for and for liabilities under the Securities Act.

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LEGAL MATTERS

Certain legal matters with respect to the validity of the shares of common stock offered hereby will be passed upon for us by Paul, Hastings, Janofsky & Walker LLP, Atlanta, Georgia. A partner at Paul, Hastings, Janofsky & Walker LLP directly owns 55,291 shares of our common stock and is a limited partner of ExamWorks Holdings, LLLP. If shares of our common stock owned by ExamWorks Holdings were to be distributed to its limited partners, this partner would own an additional 84,100 shares of our common stock prior to the offering and 75,690 shares following the offering. Certain legal matters in connection with this offering will be passed upon for the underwriters by Kirkland & Ellis LLP.

EXPERTS

The consolidated financial statements and schedule of ExamWorks Group, Inc. and subsidiaries as of December 31, 2008 and 2009 and June 30, 2010 and for the period from April 27, 2007 (inception) to December 31, 2007, each of the years in the two-year period ended December 31, 2009, and the six months ended June 30, 2010, have been included herein and in the registration statement in reliance upon the reports of KPMG LLP, independent registered public accounting firm, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing.

The financial statements and schedule of CFO Medical Services, P.A. (Predecessor Company) as of December 31, 2007, and for the year then ended and for the period from January 1, 2008 to July 13, 2008 have been included herein and in the registration statement in reliance upon the reports of KPMG LLP, independent registered public accounting firm, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing.

The financial statements of Crossland Medical Review Services, Inc. as of December 31, 2007 and for the year then ended have been included herein and in the registration statement in reliance upon the report of KPMG LLP, independent registered public accounting firm, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing.

The consolidated financial statements of Southwest Medical Examination Services, Inc. and subsidiaries as of December 31, 2007, and for the year then ended have been included herein and in the registration statement in reliance upon the report of KPMG LLP, independent registered public accounting firm, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing.

The financial statements of The Evaluation Group, Inc. as of December 31, 2008 and for the year then ended have been included herein and in the registration statement in reliance upon the report of KPMG LLP, independent registered public accounting firm, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing.

The financial statements of Benchmark Medical Consultants, Inc. as of July 31, 2009, and for the year then ended have been included herein and in the registration statement in reliance upon the report of KPMG LLP, independent registered public accounting firm, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing.

The consolidated financial statements of Abeton Group, Inc. and subsidiaries as of December 31, 2008 have been included herein and in the registration statement in reliance upon the report of KPMG LLP, independent registered public accounting firm, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing.

The financial statements of MedNet I.M.S., Inc. as of December 31, 2008 and for the year then ended have been included herein and in the registration statement in reliance upon the report of KPMG LLP, independent registered public accounting firm, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing.

The financial statements of American Medical Bill Review, Inc. as of December 31, 2009 and for the year then ended have been included herein and in the registration statement in reliance upon the report of KPMG LLP, independent registered public accounting firm, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing.

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The financial statements of Medical Evaluations, Inc. as of December 31, 2009 and for the year then ended have been included herein and in the registration statement in reliance upon the report of KPMG LLP, independent registered public accounting firm, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing.

The financial statements of Metro Medical Services, LLC as of December 31, 2009 and for the year then ended have been included herein and in the registration statement in reliance upon the report of KPMG LLP, independent registered public accounting firm, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing.

The financial statements of Direct IME as of December 31, 2009 and for the year then ended have been included herein and in the registration statement in reliance upon the report of KPMG LLP, independent registered public accounting firm, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing.

The consolidated financial statements of Network Medical Review Company, Ltd. and subsidiaries as of September 30, 2009 and for the year then ended have been included herein and in the registration statement in reliance upon the report of KPMG LLP, independent registered public accounting firm, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing.

The financial statements of Exigere Corporation as of December 31, 2009 and for the year then ended have been included herein and in the registration statement in reliance upon report of KPMG LLP, independent registered public accounting firm, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing.

The financial statements of Verity Medical, Inc. as of December 31, 2009 and for the year then ended have been included herein and in the registration statement in reliance upon the report of KPMG LLP, independent registered public accounting firm, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing.

The financial statements of UK Independent Medical Services Limited as of 31 March 2010, and for the year then ended have been included herein and in the registration statement in reliance upon the report of KPMG LLP, independent auditors, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing.

WHERE YOU CAN FIND MORE INFORMATION

We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the shares of common stock we are offering under this prospectus. As permitted under the rules and regulations of the SEC, this prospectus does not contain all of the information set forth in the registration statement and exhibits and schedule to the registration statement. You should refer to the registration statement and its exhibits and schedule for additional information. Statements contained in this prospectus as to the contents of any contract, agreement or any other document referred to are not necessarily complete, and in each instance, we refer you to the copy of the contract, agreement or other document filed as an exhibit to the registration statement. Each of these statements is qualified in all respects by this reference.

Copies of the registration statement, including its exhibits and schedules, may be examined without charge at the Public Reference Room of the SEC, 100 F Street, N.E., Washington, D.C. 20549. Information about the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0300. Copies of all or a portion of the registration statement may be obtained from the Public Reference Room of the SEC upon payment of prescribed fees. Our SEC filings, including our registration statement are also available to you, free of charge, on the SEC’s website at www.sec.gov.

Upon completion of this offering, we will be subject to the information and reporting requirements of the Securities Exchange Act of 1934, as amended, and we will file reports, proxy statements and other information with the SEC. We will make available to our stockholders annual reports containing consolidated financial statements audited by our independent registered public accounting firm and quarterly reports for the first three quarters of each fiscal year containing unaudited interim financial information.

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INDEX TO FINANCIAL STATEMENTS



		Page


EXAMWORKS GROUP, INC. AND SUBSIDIARIES
Report of Independent Registered Public Accounting Firm		F-5
Consolidated Balance Sheets as of December 31, 2008 and 2009 and June 30, 2010		F-6
Consolidated Statements of Operations and Comprehensive Loss for the period from April 27, 2007 (inception) to December 31, 2007, for the years ended December 31, 2008 and 2009 and for the six months ended June 30, 2010 and 2009 (unaudited)		F-7
Consolidated Statements of Stockholders’ Equity for the period from April 27, 2007 (inception) to December 31, 2007, for the years ended December 31, 2008 and 2009 and for the six months ended June 30, 2010		F-8
Consolidated Statements of Cash Flows for the period from April 27, 2007 (inception) to December 31, 2007, for the years ended December 31, 2008 and 2009 and for the six months ended June 30, 2010 and 2009 (unaudited)		F-9
Notes to the Consolidated Financial Statements		F-10

Consolidated Balance Sheets as of December 31, 2009 and September 30, 2010 (unaudited)		F-39
Consolidated Statements of Operations and Comprehensive (Loss) Income for the nine months ended September 30, 2009 (unaudited) and 2010 (unaudited)		F-40
Consolidated Statements of Cash Flows for the nine months ended September 30, 2009 (unaudited) and 2010 (unaudited)		F-41
Notes to Consolidated Financial Statements		F-42

CFO MEDICAL SERVICES, P.A. (Predecessor Company)
Report of Independent Registered Public Accounting Firm		F-64
Balance Sheet as of December 31, 2007		F-65
Statements of Operations and Changes in Retained Earnings for the year ended December 31, 2007 and for the period from January 1, 2008 to July 13, 2008		F-66
Statements of Cash Flows for the year ended December 31, 2007 and for the period from January 1, 2008 to July 13, 2008		F-67
Notes to Financial Statements		F-68

CROSSLAND MEDICAL REVIEW SERVICES, INC.
Independent Auditors’ Report		F-73
Balance Sheets as of December 31, 2007 and June 30, 2008 (unaudited)		F-74
Statements of Operations and Changes in Retained Earnings for the year ended December 31, 2007 and six months ended June 30, 2007 (unaudited) and 2008 (unaudited)		F-75
Statements of Cash Flows for the year ended December 31, 2007 and six months ended June 30, 2007 (unaudited) and 2008 (unaudited)		F-76
Notes to Financial Statements		F-77

SOUTHWEST MEDICAL EXAMINATION SERVICES, INC.
Independent Auditors’ Report		F-83
Consolidated Balance Sheets as of December 31, 2007 and June 30, 2008 (unaudited)		F-84
Consolidated Statements of Operations and Changes in Retained Earnings for the year ended December 31, 2007 and six months ended June 30, 2007 (unaudited) and 2008 (unaudited)		F-85
Consolidated Statements of Cash Flows for the year ended December 31, 2007 and six months ended June 30, 2007 (unaudited) and 2008 (unaudited)		F-86
Notes to Consolidated Financial Statements		F-87

F-1

INDEX TO FINANCIAL STATEMENTS (Continued)



		Page


THE EVALUATION GROUP, INC.
Independent Auditors’ Report		F-92
Balance Sheets as of December 31, 2008 and June 30, 2009 (unaudited)		F-93
Statements of Operations and Changes in Retained Earnings for the year ended December 31, 2008 and six months ended June 30, 2008 (unaudited) and 2009 (unaudited)		F-94
Statements of Cash Flows for the year ended December 31, 2008 and six months ended June 30, 2008 (unaudited) and 2009 (unaudited)		F-95
Notes to Financial Statements		F-96

BENCHMARK MEDICAL CONSULTANTS, INC.
Independent Auditors’ Report		F-101
Balance Sheet as of July 31, 2009		F-102
Statement of Operations and Changes in Retained Earnings for the year ended July 31, 2009		F-103
Statement of Cash Flows for the year ended July 31, 2009		F-104
Notes to Financial Statements		F-105

ABETON GROUP, INC. AND SUBSIDIARIES
Independent Auditors’ Report		F-111
Consolidated Balance Sheets as of December 31, 2008 and September 30, 2009 (unaudited)		F-112
Consolidated Statements of Operations for the year ended December 31, 2008 and nine months ended September 30, 2008 (unaudited) and 2009 (unaudited)		F-113
Consolidated Statements of Stockholders’ Deficit for the year ended December 31, 2008 and nine months ended September 30, 2009 (unaudited)		F-114
Consolidated Statements of Cash Flows for the year ended December 31, 2008 and nine months ended September 30, 2008 (unaudited) and 2009 (unaudited)		F-115
Notes to Consolidated Financial Statements		F-116

MEDNET I.M.S., INC.
Independent Auditors’ Report		F-126
Balance Sheets as of December 31, 2008 and September 30, 2009 (unaudited)		F-127
Statements of Operations and Changes in Retained Earnings for the year ended December 31, 2008 and nine months ended September 30, 2008 (unaudited) and 2009 (unaudited)		F-128
Statements of Cash Flows for the year ended December 31, 2008 and nine months ended September 30, 2008 (unaudited) and 2009 (unaudited)		F-129
Notes to Financial Statements		F-130

AMERICAN MEDICAL BILL REVIEW, INC.
Independent Auditors’ Report		F-135
Balance Sheet as of December 31, 2009		F-136
Statement of Operations and Changes in Retained Earnings for the year ended December 31, 2009		F-137
Statement of Cash Flows for the year ended December 31, 2009		F-138
Notes to Financial Statements		F-139

MEDICAL EVALUATIONS, INC.
Independent Auditors’ Report		F-143
Balance Sheet as of December 31, 2009		F-144
Statement of Operations for the year ended December 31, 2009		F-145
Statement of Stockholders’ Equity for the year ended December 31, 2009		F-146
Statement of Cash Flows for the year ended December 31, 2009		F-147
Notes to Financial Statements		F-148

F-2

INDEX TO FINANCIAL STATEMENTS (Continued)



		Page


METRO MEDICAL SERVICES, LLC
Independent Auditors’ Report		F-152
Balance Sheet as of December 31, 2009		F-153
Statement of Operations and Changes in Members’ Equity for the year ended December 31, 2009		F-154
Statement of Cash Flows for the year ended December 31, 2009		F-155
Notes to Financial Statements		F-156

DIRECT IME
Independent Auditors’ Report		F-161
Balance Sheets as of December 31, 2009 and March 31, 2010 (unaudited)		F-162
Statements of Operations and Changes in Partners’ Equity for the year ended December 31, 2009 and three months ended March 31, 2009 (unaudited) and 2010 (unaudited)		F-163
Statements of Cash Flows for the year ended December 31, 2009 and three months ended March 31, 2009 (unaudited) and 2010 (unaudited)		F-164
Notes to Financial Statements		F-165

NETWORK MEDICAL REVIEW COMPANY, LTD. AND SUBSIDIARIES
Independent Auditors’ Report		F-169
Consolidated Balance Sheets as of September 30, 2009 and March 31, 2010 (unaudited)		F-170
Consolidated Statements of Operations for the year ended September 30, 2009 and six months ended March 31, 2009 (unaudited) and 2010 (unaudited)		F-171
Consolidated Statements of Stockholders’ Equity and Comprehensive Income for the year ended September 30, 2009 and six months ended March 31, 2009 (unaudited) and 2010 (unaudited)		F-172
Consolidated Statements of Cash Flows for the year ended September 30, 2009 and six months ended March 31, 2009 (unaudited) and 2010 (unaudited)		F-173
Notes to Consolidated Financial Statements		F-174

EXIGERE CORPORATION
Independent Auditors’ Report		F-181
Balance Sheets as of December 31, 2009 and June 30, 2010 (unaudited)		F-182
Statements of Operations and Changes in Retained Earnings for the year ended December 31, 2009 and six months ended June 30, 2009 (unaudited) and 2010 (unaudited)		F-183
Statements of Cash Flows for the year ended December 31, 2009 and six months ended June 30, 2009 (unaudited) and 2010 (unaudited)		F-184
Notes to Financial Statements		F-185

VERITY MEDICAL, INC.
Independent Auditors’ Report		F-192
Balance Sheets as of December 31, 2009 and June 30, 2010 (unaudited)		F-193
Statements of Operations and Changes in Retained Earnings for the year ended December 31, 2009 and six months ended June 30, 2009 (unaudited) and 2010 (unaudited)		F-194
Statements of Cash Flows for the year ended December 31, 2009 and six months ended June 30, 2009 (unaudited) and 2010 (unaudited)		F-195
Notes to Financial Statements		F-196

UK INDEPENDENT MEDICAL SERVICES LIMITED
Independent auditors’ report to the members of UK Independent Medical Services Limited		F-201
Profit and loss account for the year ended 31 March 2010		F-202
Balance sheet at 31 March 2010		F-203
Cash flow statement for the year ended 31 March 2010		F-204
Reconciliation of movements in shareholders’ funds for the year ended 31 March 2010		F-205
Notes to financial statements		F-206

F-3

EXAMWORKS GROUP, INC. AND SUBSIDIARIES

Index


		Page


Report of Independent Registered Public Accounting Firm		F-5

Consolidated Balance Sheets as of December 31, 2008 and 2009 and June 30, 2010		F-6

Consolidated Statements of Operations and Comprehensive Loss for the period from April 27, 2007 (inception) to December 31, 2007, the years ended December 31, 2008 and 2009 and for the six months ended June 30, 2009 (unaudited) and 2010		F-7

Consolidated Statements of Stockholders’ Equity for the period from April 27, 2007 (inception) to December 31, 2007, the years ended December 31, 2008 and 2009 and for the six months ended June 30, 2010		F-8

Consolidated Statements of Cash Flows for the period from April 27, 2007 (inception) to December 31, 2007, the years ended December 31, 2008 and 2009 and for the six months ended June 30, 2009 (unaudited) and 2010		F-9

Notes to Consolidated Financial Statements		F-10

F-4

R eport of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders
ExamWorks Group, Inc.:

We have audited the accompanying consolidated balance sheets of ExamWorks Group, Inc. and subsidiaries (the Company) as of December 31, 2008 and 2009 and June 30, 2010, and the related consolidated statements of operations and comprehensive loss, stockholders’ equity and cash flows for the period from April 27, 2007 (inception) to December 31, 2007, each of the years in the two-year period ended December 31, 2009 and for the six months ended June 30, 2010. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of ExamWorks Group, Inc. and subsidiaries as of December 31, 2008 and 2009 and June 30, 2010, and their results of operations and their cash flows for the period from April 27, 2007 (inception) to December 31, 2007, each of the years in the two-year period ended December 31, 2009 and for the six months ended June 30, 2010, in conformity with U.S. generally accepted accounting principles.

/s/ KPMG LLP

Atlanta, Georgia

August 13, 2010, except for Note 15 as to
which the date is October 12, 2010

F-5

EXAMWORKS GROUP, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(In thousands, except share and per share amounts)


	December 31,						June 30, 2010

	2008			2009

Assets
Current assets:
Cash and cash equivalents	$	1,203		$	1,499		$	15,054
Accounts receivable, net		2,924			8,506			19,838
Other receivables		38			57			722
Prepaid expenses		253			793			1,193
Due from related parties		130			—			—
Deferred tax assets		187			642			779
Other current assets		—			—			873

Total current assets		4,735			11,497			38,459
Equipment and leasehold improvements, net		687			1,972			2,988
Goodwill		19,960			32,395			61,772
Intangible assets, net		12,892			26,902			52,945
Deferred tax assets, noncurrent		—			1,948			5,597
Deferred financing costs, net		456			1,680			2,963
Due from related parties		13			—			—
Other assets		155			153			74

Total assets	$	38,898		$	76,547		$	164,798


Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	1,919		$	6,819		$	11,717
Accrued expenses		944			2,057			4,507
Deferred revenue		78			64			1,073
Due to related parties		20			4,936			—
Current portion of long-term debt		1,534			3,263			14,721
Current portion of subordinated unsecured notes payable		—			1,565			2,083
Other current liabilities		1,205			2,167			2,692

Total current liabilities		5,700			20,871			36,793
Revolving line of credit		1,500			600			—
Long-term debt, less current portion		10,205			29,371			58,883
Long-term subordinated unsecured notes payable, less current portion		—			3,552			2,809
Other long-term liabilities		706			1,753			3,103
Deferred tax liabilities, noncurrent		264			—			—

Total liabilities		18,375			56,147			101,588

Commitments and contingencies
Stockholders’ equity:
Series A convertible preferred stock, $0.0001 par value. Authorized 50,000,000; no shares issued and outstanding at December 31, 2008 and 2009, 4,975,180 issued and outstanding at June 30, 2010		—			—			33,000
Common stock, $0.0001 par value. Authorized 250,000,000; issued and outstanding 10,023,160, 12,356,942, and 17,068,421 shares at December 31, 2008 and 2009 and June 30, 2010, respectively		—			—			—
Additional paid-in capital		22,921			27,202			37,810
Accumulated other comprehensive loss		—			—			(131	)
Accumulated deficit		(2,398	)		(6,802	)		(7,469	)

Total stockholders’ equity		20,523			20,400			63,210

Total liabilities and stockholders’ equity	$	38,898		$	76,547		$	164,798

See accompanying notes to consolidated financial statements.

F-6

EXAMWORKS GROUP, INC. AND SUBSIDIARIES

Consolidated Statements of Operations and Comprehensive Loss

(In thousands, except share and per share amounts)


	Period from April 27, 2007 (inception) to December 31, 2007

				Years ended December 31,						Six months ended June 30,

				2008			2009			2009			2010

										(unaudited)
Revenues	$	—		$	14,694		$	49,634		$	19,628		$	60,679
Costs and expenses:
Costs of revenues		—			9,828			32,026			12,356			38,265
Selling, general and administrative expenses		226			4,610			15,811			6,082			14,383
Depreciation and amortization		—			2,392			6,889			2,592			6,547

Total costs and expenses		226			16,830			54,726			21,030			59,195

Income (loss) from operations		(226	)		(2,136	)		(5,092	)		(1,402	)		1,484

Other expenses:
Interest expense, net		—			515			1,807			604			2,746
Loss on early extinguishment of debt		—			—			461			—			—
(Gain) loss on interest rate swap		—			955			(343	)		(285	)		65

Total other expenses		—			1,470			1,925			319			2,811

Loss before income taxes		(226	)		(3,606	)		(7,017	)		(1,721	)		(1,327	)
Income tax benefit		—			(1,434	)		(2,613	)		(641	)		(660	)

Net loss	$	(226	)	$	(2,172	)	$	(4,404	)	$	(1,080	)	$	(667	)


Per share data:
Net loss per share:
Basic and diluted	$	(0.73	)	$	(0.44	)	$	(0.42	)	$	(0.11	)	$	(0.05	)


Weighted average number of common shares outstanding: Basic and diluted		308,466			4,895,962			10,479,155			10,090,997			14,621,853

Comprehensive Loss:
Net loss	$	(226	)	$	(2,172	)	$	(4,404	)	$	(1,080	)	$	(667	)
Foreign currency translation adjustments		—			—			—			—			(131	)

Total comprehensive loss	$	(226	)	$	(2,172	)	$	(4,404	)	$	(1,080	)	$	(798	)

See accompanying notes to consolidated financial statements.

F-7

EXAMWORKS GROUP, INC. AND SUBSIDIARIES

Consolidated Statements of Changes in Stockholders’ Equity

Period from April 27, 2007 (inception) to December 31, 2007, years ended
December 31, 2008 and 2009 and six months ended June 30, 2010

(In thousands, except share amounts)


	Series A convertible preferred stock				Common stock				Additional paid-in capital			Accumulated other comprehensive loss			Accumulated deficit			Total stockholders’ equity

	Shares		Amount		Shares		Amount

Balances at April 27, 2007 (inception)		—	$	—		—	$	—	$	—		$	—		$	—		$	—
Issuance of common stock, net of related costs, for cash		—		—		308,466		—		481			—			—			481
Net loss		—		—		—		—		—			—			(226	)		(226	)

Balances at December 31, 2007		—		—		308,466		—		481			—			(226	)		255
Issuance of common stock, net of related costs, for cash		—		—		5,860,854		—		11,520			—			—			11,520
Issuance of common stock for acquisitions		—		—		3,853,840		—		10,819			—			—			10,819
Share-based compensation		—		—		—		—		101			—			—			101
Net loss		—		—		—		—		—						(2,172	)		(2,172	)

Balances at December 31, 2008		—		—		10,023,160		—		22,921			—			(2,398	)		20,523
Issuance of common stock, net of related costs, for cash		—		—		210,204		—		560			—			—			560
Issuance of common stock for acquisitions		—		—		2,123,578		—		3,503			—			—			3,503
Share-based compensation		—		—		—		—		218			—			—			218
Net loss		—		—		—		—		—			—			(4,404	)		(4,404	)

Balances at December 31, 2009		—		—		12,356,942		—		27,202			—			(6,802	)		20,400
Issuance of preferred stock for cash		4,975,180		33,000		—		—		(579	)		—			—			32,421
Issuance of common stock, net of related costs		—		—		1,447,219		—		2,772			—			—			2,772
Issuance of common stock, net of related costs, for termination of agreement		—		—		739,506		—		1,434			—			—			1,434
Issuance of common stock for acquisitions		—		—		2,524,754		—		6,683			—			—			6,683
Share-based compensation		—		—		—		—		298			—			—			298
Net loss		—		—		—		—		—			—			(667	)		(667	)
Other comprehensive loss:
Foreign currency translation adjustments		—		—		—		—		—			(131	)		—			(131	)

Balances at June 30, 2010		4,975,180	$	33,000		17,068,421	$	—	$	37,810		$	(131	)	$	(7,469	)	$	63,210

See accompanying notes to consolidated financial statements.

F-8

EXAMWORKS GROUP, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(In thousands)


	Period from April 27, 2007 (inception) to December 31, 2007

				Years ended December 31,						Six months ended June 30,

				2008			2009			2009			2010

										(unaudited)
Operating activities:
Net loss	$	(226	)	$	(2,172	)	$	(4,404	)	$	(1,080	)	$	(667	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Loss (gain) on interest rate swap		—			955			(343	)		(285	)		65
Depreciation and amortization		—			2,392			6,889			2,592			6,547
Amortization of deferred rent		—			101			71			10			(43	)
Share-based compensation		—			101			218			132			298
Provision for doubtful accounts		—			322			226			50			375
Amortization of deferred financing costs		—			53			132			54			320
Loss on early extinguishment of debt		—			—			461			—			—
Deferred income taxes		—			(1,450	)		(2,723	)		(641	)		(742	)
Other		—			—			10			62			—
Changes in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable		—			(173	)		(1,100	)		(107	)		(1,830	)
Prepaid expenses and other current assets		(40	)		100			141			211			(697	)
Accounts payable and accrued expenses		201			(596	)		2,982			1,289			2,743
Deferred revenue and customer deposits		—			78			(270	)		(183	)		42
Due to related parties and other current liabilities		—			—			1,887			79			414

Net cash provided by (used in) operating activities		(65	)		(289	)		4,177			2,183			6,825

Investing activities:
Cash paid for acquisitions, net		—			(22,731	)		(25,707	)		(4,462	)		(61,890	)
Purchases of equipment and leasehold improvements		—			(358	)		(1,559	)		(621	)		(980	)
Working capital and other settlements for acquisitions		—			—			1,482			1,207			(220	)
Other		—			(84	)		9			—			—

Net cash used in investing activities		—			(23,173	)		(25,775	)		(3,876	)		(63,090	)

Financing activities:
Issuance of preferred stock, net		—			—			—			—			32,421
Issuance of common stock, net		481			11,519			560			—			2,772
Borrowings under credit facility		—			12,390			40,134			3,500			40,969
Borrowings (repayments) under revolving line of credit		—			1,500			(900	)		(1,466	)		(600	)
Payments under credit facility		—			(651	)		(19,238	)		(766	)		—
Payment of deferred financing costs		—			(509	)		(1,817	)		(52	)		(1,603	)
Repayment of subordinated unsecured notes payable		—			—			(345	)		—			(639	)
Advances (repayments) from related parties		—			—			3,500			—			(3,500	)

Net cash provided by financing activities		481			24,249			21,894			1,216			69,820

Net increase (decrease) in cash and cash equivalents		416			787			296			(477	)		13,555
Cash and cash equivalents, beginning of period		—			416			1,203			1,203			1,499

Cash and cash equivalents, end of period	$	416		$	1,203		$	1,499		$	726		$	15,054

Supplemental disclosures of cash flow information:
Cash paid for interest	$	—		$	457		$	1,332		$	540		$	1,985
Cash paid for income taxes	$	—		$	—		$	207		$	—		$	177

See accompanying notes to consolidated financial statements.

F-9

EXAMWORKS GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 31, 2007, 2008 and 2009 and June 30, 2009 and 2010


(1)	Nature of Operations and Basis of Presentation

	ExamWorks Group, Inc. is a leading provider of independent medical examinations (IMEs), peer and bill reviews and related services (IME services or the IME industry). ExamWorks, Inc. was incorporated as a Delaware corporation on April 27, 2007. In 2008, ExamWorks, Inc. acquired three companies operating in the independent medical examination (IME) industry. In 2009, ExamWorks, Inc. acquired 11 other IME companies, including a provider of software solutions to the IME industry. In the first eight months of 2010, ExamWorks, Inc. acquired 10 additional IME companies. ExamWorks, Inc. currently operates out of 24 regional locations serving all 50 United States and Canada. In June 2010, ExamWorks, Inc. effected a corporate reorganization creating a holding company, ExamWorks Group, Inc., with ExamWorks, Inc. becoming a wholly-owned subsidiary of ExamWorks Group, Inc. (ExamWorks or the Company).

	The consolidated financial statements include the accounts of ExamWorks and its wholly-owned subsidiaries. Significant intercompany accounts and transactions have been eliminated in consolidation.

(2)	Summary of Significant Accounting Policies

	(a)	Use of Estimates

		The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management bases its estimates on certain assumptions which they believe are reasonable in the circumstances and actual results could differ from those estimates. The more significant estimates reflected in these consolidated financial statements include the valuation of equity issued, purchase price allocations, useful lives of intangible assets, potential impairment of goodwill and intangible assets, the allowance for doubtful accounts and the valuation of share-based compensation and derivative instruments.

	(b)	Unaudited Interim Financial Statements

		The accompanying interim consolidated statements of operations and cash flows for the six months ended June 30, 2009 are unaudited and have been prepared in accordance with the rules and regulations of the U.S. Securities and Exchange Commission. They do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. The unaudited interim consolidated financial statements have been prepared on the same basis as the audited consolidated financial statement and, in the opinion of the Company’s management, reflect all adjustments consisting of normal recurring accruals considered necessary to present fairly the Company’s results of its operations and its cash flows for the six months ended June 30, 2009.

	(c)	Foreign Currencies

		Assets and liabilities recorded in foreign currencies are translated into U.S. dollars at the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates of exchange prevailing during the year. Translation adjustments resulting from this process are recorded to other comprehensive loss.

	(d)	Cash and Cash Equivalents

		The Company considers all highly liquid investments with original maturities of three months or less when purchased to be cash equivalents. The Company had no cash equivalents as of December 31, 2008 and 2009 and June 30, 2010.

F-10

EXAMWORKS GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2007, 2008 and 2009 and June 30, 2009 and 2010


(e)	Accounts Receivable and Allowance for Doubtful Accounts

	Accounts receivable consist of amounts owed to the Company for services provided in the normal course of business and are reported net of allowance for doubtful accounts, which amounted to $301,000, $432,000 and $641,000 as of December 31, 2008 and 2009 and June 30, 2010, respectively. The Company had no outstanding accounts receivables or allowance for doubtful accounts as of December, 31, 2007. Generally, no collateral is received from customers and additions to the allowance are based on ongoing credit evaluations of customers with general credit experience being within the range of management’s expectations. Accounts are reviewed regularly for collectability and those deemed uncollectible are written off.

(f)	Concentrations of Credit Risk

	The Company routinely assesses the financial strength of its customers and establishes an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends and other information. For the years ended December 31, 2008 and 2009, 18% and 11%, respectively, of total revenues were associated with one customer. For the six months ended June 30, 2009 (unaudited), 15% of total revenues were associated with one customer. For the six months ended June 30, 2010, there was no customer that accounted for greater than 10% of revenue. At December 31, 2008 and 2009 and June 30, 2010, there was no customer that accounted for greater than 10% of the accounts receivable balance. As of December 31, 2007, and for the period from April 27, 2007 (inception) to December 31, 2007, the Company had no accounts receivable or revenues.

(g)	Equipment and Leasehold Improvements

	Equipment and leasehold improvements are recorded at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the respective assets and accelerated methods for income tax purposes. Leasehold improvements are amortized over the lesser of their expected useful life or the remaining lease term. Maintenance and repair costs are expensed as incurred.

(h)	Long-Lived Assets

	In accordance with Impairment or Disposal of Long-Lived Assets, Subsections of Financial Accounting Standards Board (FASB) ASC Subtopic 360-10 (ASC 360), Property, Plant, and Equipment — Overall, long-lived assets, such as equipment and purchased intangible assets subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying value. If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. At December 31, 2008 and 2009 and June 30, 2010, no impairment was noted.

(i)	Goodwill and Other Intangible Assets

	Goodwill is an asset representing the future economic benefits arising from assets acquired in a business combination that are not individually identified and separately recognized. Goodwill is reviewed for impairment at least annually in accordance with the provisions of FASB ASC Topic 350, Intangibles — Goodwill and Other (ASC 350). The goodwill impairment test is a two-step test. Under the first step, the fair value of the reporting unit is compared with its carrying value (including goodwill). If the fair value of the reporting unit is less than its carrying value, an indication of goodwill impairment exists for the reporting unit and the enterprise must perform step two of the impairment test (measurement). Under step two, an impairment loss is recognized for any excess of the carrying amount of the reporting unit’s goodwill over the implied fair value of that goodwill. The implied fair value of goodwill is determined by allocating the fair value of the reporting unit in a manner similar to a purchase price allocation and the residual fair value after this allocation is the implied fair value of the reporting unit goodwill. Fair value of the reporting unit is determined using a discounted cash flow analysis. If the fair value of the reporting unit exceeds its carrying value, step two does not need to be performed.

F-11

EXAMWORKS GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2007, 2008 and 2009 and June 30, 2009 and 2010


	The Company performed its annual impairment review of goodwill in October 2008 and 2009, and it was determined that the carrying amount of goodwill was not impaired and there has been no subsequent developments that would indicate impairment exists as of December 31, 2008 and 2009 and June 30, 2010. The goodwill impairment review will continue to be performed annually or more frequently if facts and circumstances warrant a review.

	ASC 350 also requires that intangible assets with definite lives be amortized over their estimated useful lives. Currently, customer relationships, trade names, covenants not-to-compete and technology are amortized using the straight-line method over estimated useful lives.

(j)	Deferred Financing Costs

	Deferred financing costs totaling $1.7 million were incurred in December 2009 in connection with the Fifth Third Credit Facility (see note 10) and will be amortized to interest expense over the three-year term of the facility using the straight-line method, which approximates the effective interest method. The Company’s previous credit facility was repaid in December 2009 with proceeds from the Fifth Third Credit Facility. In connection with this early retirement of debt, the Company recognized debt extinguishment costs of approximately $461,000 for the unamortized portion of the loan costs. The debt extinguishment costs were recorded as other interest expense in accordance with ASC Topic 470, Debt (ASC 470). In the first half of 2010, an additional $1.6 million of deferred financing costs were incurred as the Company expanded its borrowing availability under the Fifth Third Credit Facility (see note 10).

	For the years ended December 31, 2008 and 2009, the Company amortized $53,000 and $132,000 to interest expense, respectively. For the six months ended June 30, 2009 and 2010, the Company amortized $54,000 (unaudited) and $320,000 to interest expense, respectively. There was no amortization of deferred financing costs for the period from April 27, 2007 (inception) to December 31, 2007.

(k)	Deferred Rents

	The Company entered into various leases for buildings that have certain escalation clauses or other features which require rental expense to be recognized on a straight-line basis over the life of the lease. At December 31, 2008 and 2009 and at June 30, 2010, the deferred rent balance was $173,000, $493,000 and $971,000, respectively, and is included in other current and long-term liabilities in the accompanying consolidated balance sheets. There was no deferred rent balance as of December 31, 2007.

(l)	Revenue Recognition

	Revenue related to IMEs, peer reviews, bill reviews and administrative support services is recognized at the time services have been performed and the report is shipped to the end user. The Company believes that recognizing revenue at the time the report is shipped is appropriate because the Company’s revenue policies meet the following four criteria in accordance with ASC 605-10-S25, Revenue Recognition: Overall, (i) persuasive evidence that arrangement exists, (ii) shipment has occurred, (iii) the price is fixed and determinable and (iv) collectability is reasonably assured.

F-12

EXAMWORKS GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2007, 2008 and 2009 and June 30, 2009 and 2010


	Revenue related to other IME services, including litigation support services and medical record retrieval services, where no report is generated, is recognized at the time the service is performed. The Company believes that recognizing revenue at the time the service is performed is appropriate because the Company’s revenue policies meet the following four criteria in accordance with ASC 605-10-S25, (i) persuasive evidence that arrangement exists, (ii) services have been rendered, (iii) the price is fixed and determinable and (iv) collectability is reasonably assured.

	Should changes in conditions cause management to determine these criteria are not met for certain future transactions, revenue recognized for any reporting period could be adversely affected.

(m)	Costs of Revenues

	Costs of revenues are comprised of fees paid to members of the Company’s medical panel; other direct costs including transcription, film and medical record obtainment and transportation; and other indirect costs including labor and overhead related to the generation of revenues.

(n)	Shipping and Handling Costs

	Shipping and handling charges billed to customers are recorded as revenue; the corresponding costs are included in costs of revenues.

(o)	Marketing and Advertising Costs

	Marketing and advertising costs are expensed as incurred and amounted to $137,000, $448,000, $127,000 (unaudited) and $345,000 for the years ended December 31, 2008 and 2009 and for the six months ended June 30, 2009 and 2010, respectively. There were no marketing or advertising costs incurred for the period from April 27, 2007 (inception) to December 31, 2007.

(p)	Accounting for Leases

	The Company leases office and warehouse space under operating lease agreements with original lease periods of up to 7.5 years. Certain of the lease agreements contain renewal and rent escalation provisions. Rent escalation provisions are considered in determining straight-line rent expense to be recorded over the lease term. The lease term begins on the date of initial possession of the lease property for purposes of recognizing lease expense on a straight-line basis over the term of the lease. Lease renewal periods are considered on a lease-by-lease basis and are generally not included in the initial lease term. Landlord allowances for improvements to leaseholds are included in property and equipment and offset by a corresponding deferred rent credit. The Company amortizes the leasehold improvements over the shorter of the life of the improvements or the life of the lease. The deferred rent credit is included in other liabilities (current and long term) in the accompanying consolidated balance sheets and will be amortized as a reduction of rent expense over the term of the applicable lease.

F-13

EXAMWORKS GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2007, 2008 and 2009 and June 30, 2009 and 2010


(q)	Income Taxes

	Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Beginning with the adoption of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, (included in FASB ASC Subtopic 740-10, Income Taxes — Overall), as of January 1, 2009, the Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. Prior to the adoption of FASB Interpretation No. 48, the Company recognized the effect of income tax positions only if such positions were probable of being sustained.

	The Company records interest and penalties related to unrecognized tax benefits in income tax expense.

(r)	Loss Per Common Share

	Basic loss per share is calculated by dividing net loss by the weighted-average number of common shares outstanding during each period. Diluted loss per common share is calculated by dividing net loss, adjusted on an “as if converted” basis, by the weighted-average number of actual shares outstanding and, when dilutive, the share equivalents that would arise from the assumed conversion of convertible instruments.

	The effect of potentially dilutive stock options and warrants is calculated using the treasury stock method. For the year ended December 31, 2008 and 2009, the potentially dilutive securities include options exercisable into 817,000 and 1.3 million shares of common stock, respectively. For the six months ended June 30, 2009 (unaudited), the potentially dilutive securities include options exercisable into 1.1 million shares of common stock. For the six months ended June 30, 2010, the potentially dilutive securities include options and warrants exercisable into 3.9 million shares of common stock and preferred stock convertible into 5.0 million shares of common stock. For the years ended December 31, 2008 and 2009 and for the six months ended June 30, 2009 and 2010, all of the potentially dilutive securities were excluded from the calculation of shares applicable to loss per share, because their inclusion would have been anti-dilutive. There were no potentially dilutive securities for the period from April 27, 2007 (inception) to December 31, 2007.

(s)	Share-Based Employee Compensation

	The Company has an Amended and Restated 2008 Stock Incentive Plan (the Plan) that provides for granting of options. The Company accounts for share-based awards in accordance with ASC Topic 718, Compensation — Stock Compensation (ASC 718). ASC 718 requires measurement of compensation cost for all share-based awards at fair value on the grant date (or measurement date if different) and recognition of compensation expense, net of forfeitures, over the requisite service period for awards expected to vest.

	The fair value of stock option grants is determined using the Black-Scholes valuation model. The Black-Scholes option-pricing model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable, characteristics not present in these employee stock options. Additionally, option valuation models require the input of highly subjective assumptions, including the expected volatility of the stock price. Because the Company’s employee stock options have characteristics significantly different from those of traded options and because changes in the subjective input assumptions can materially affect the fair value estimates, in management’s opinion, the existing models may not provide a reliable single measure of the fair value of its share-based awards. The Company’s expected volatility assumptions are based on the Company’s peer group average implied volatility. Expected life assumptions are based upon the average of the “simplified” method as described in Securities and Exchange Commission Staff Accounting Bulletin No. 107, which is the midpoint between the vesting date and the end of the contractual term, and the contractual term of the option, in accordance with ASC 718, which states that if no amount within the range is more or less likely than any other amount, an average of the range (its expected value) should be used. The risk-free interest rate was selected based upon yields of U.S. Treasury issues with a term equal to the expected life of the option being valued.

F-14

EXAMWORKS GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2007, 2008 and 2009 and June 30, 2009 and 2010

The assumptions utilized for stock option grants during 2008 and 2009 and the first six months of 2010 were as follows:


	2008			2009			2010

Volatility		39.73	%		45.06 – 47.87	%		43.93 – 44.31	%
Expected life (years)		8.00			8.00			7.80 – 8.00
Risk-free interest rate		3.35	%		2.64 – 3.30	%		3.30 – 3.53	%
Dividend yield		—			—			—
Fair value	$	0.78		$	0.66 – $1.02		$	0.63 – $0.66

In 2008 and 2009 and the first six months of 2010, the Company issued 820,458, 772,239 and 2,132,965, respectively, stock option awards to employees and non-employee directors. The weighted average fair value of each stock option was $0.78, $0.79 and $0.65 per option, respectively, and the aggregate fair value was $645,000, $614,000 and $1.4 million, respectively. The majority of these awards vest over a three-year period, with the remaining awards vesting 50% over the earlier of 18 months or an initial public offering (IPO) and 50% over a 12 month period following an IPO, provided the individual remains in the employment of the Company as of the vesting date. Additionally, all these options could vest earlier in the event of a change in control or merger or other acquisition and 1,810,166 of these options could vest earlier in the event of an IPO. Share-based compensation expense related to the awards was $101,000 and $218,000 for the years ended December 31, 2008 and 2009, respectively. Share-based compensation expense related to these awards was $132,000 (unaudited) and $298,000 for the six months ended June 30, 2009 and 2010, respectively. At December 31, 2009 and June 30, 2010, the unrecognized compensation expense related to stock option grants was $751,000 and $1.8 million, respectively, with a remaining weighted average life of 2.0 and 2.3 years, respectively.

In 2007, there were no outstanding stock options and the Company did not issue any stock option awards.

A summary of option activity for the years ended December 31, 2008 and 2009 and for the six months ended June 30, 2010 follows:


	Number of options			Weighted average exercise price

Balance at January 1, 2008		—		$	—
Options granted		820,458			2.80
Options forfeited		(3,342	)		2.80

Balance at December 31, 2008		817,116			2.80
Options granted		772,239			3.20
Options forfeited		(265,573	)		2.89

Balance at December 31, 2009		1,323,782			3.02
Options granted		2,132,965			6.28
Options forfeited		(27,505	)		3.47

Balance at June 30, 2010		3,429,242		$	5.04

F-15

EXAMWORKS GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2007, 2008 and 2009 and June 30, 2009 and 2010


		There were no options exercisable as of December 31, 2008, 234,845 options exercisable as of December 31, 2009 with an exercise price of $2.81 and 356,109 options exercisable as of June 30, 2010 with an exercise price of $2.81.

	(t)	Fair Value Measurements

		In September 2006, the FASB issued authoritative guidance codified as ASC Topic 820, Fair Value Measurements and Disclosures (ASC 820). ASC 820 defines fair value, establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America and expands disclosure about fair value measurements. ASC 820 is effective for interim reporting periods in fiscal years beginning after November 15, 2007. The Company adopted the applicable provisions of ASC 820 effective January 1, 2008.

		ASC Topic 825, Financial Instruments (ASC 825), delayed the effective date of the application of ASC 820 to fiscal years beginning after November 15, 2008 for all nonfinancial assets and nonfinancial liabilities that are recognized or disclosed at fair value in the financial statements on a nonrecurring basis. Nonrecurring nonfinancial assets and nonfinancial liabilities for which the Company has not applied the provisions of ASC 820 primarily include those measured at fair value in goodwill and long-lived asset impairment testing, those initially measured at fair value in a business combination, and nonfinancial liabilities for exit or disposal activities.

		ASC 820 defines fair value as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 establishes a fair value hierarchy, which prioritizes the inputs used in measuring fair value into the following levels:

		In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible as well as consider counterpart credit risk in its assessment of fair value.

		Level 1 – Quoted prices in active markets for identical assets or liabilities.

		Level 2 – Inputs, other than quoted prices in active markets, that are observable either directly or indirectly.

		Level 3 – Unobservable inputs based on the company’s own assumptions.

		The Company’s financial liabilities, which are measured at fair value on a recurring basis, are categorized using the fair value hierarchy at December 31, 2008 and 2009 and June 30, 2010, and are as follows (in thousands):


	Level 1		Level 2		Level 3		Total

As of December 31, 2008:
Financial liabilities:
Interest rate swap	$	—	$	611	$	—	$	611

As of December 31, 2009:
Financial liabilities:
Interest rate swap		—		485		—		485
Contingent consideration		—		—		2,630		2,630

As of June 30, 2010:
Financial liabilities:
Interest rate swap		—		677		—		677
Contingent consideration		—		—		4,250		4,250

F-16

EXAMWORKS GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2007, 2008 and 2009 and June 30, 2009 and 2010


		The fair value of the interest rate swap is determined using observable market inputs, such as current interest rates, and considers nonperformance risk of the Company and that of its counterparties.

		The contingent consideration relates to earnout provisions recorded in conjunction with certain acquisitions completed in 2009 and 2010 (see note 3).

		In February 2007, the FASB issued authoritative guidance codified as ASC 825, which permits entities to choose to measure many financial instruments and certain other items at fair value. This provision of ASC 825 is effective for fiscal years beginning after November 15, 2007. As the Company did not elect the fair value option, the adoption of this provision of ASC 825 did not have a material impact on the Company’s consolidated financial position, results of operations and cash flows for the years ended December 31, 2008 and 2009 and for the six months ended June 30, 2010.

	(u)	Comprehensive Loss

		Comprehensive loss consists of two components, net loss and other comprehensive loss. Other comprehensive loss refers to revenues, expenses, gains and losses that under GAAP are recorded as a component of stockholders’ equity but are excluded from net loss. The Company’s other comprehensive loss consists of foreign currency translation adjustments from those business units not using the U.S. dollar as their functional currency. There has been no tax effects provided on currency translation amounts as the amounts are considered to be permanently invested.

	(v)	Recent Accounting Pronouncements

		Recently Adopted Accounting Pronouncements

		In June 2006, the FASB issued authoritative guidance codified as ASC Topic 740, Income Taxes (ASC 740) which clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements. ASC 740 also prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. In addition, ASC 740 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. ASC 740 deferred adoption for most nonpublic enterprises to annual periods beginning after December 15, 2008. The Company, pursuant to ASC 740, elected to defer its application until its required effective date of January 1, 2009. The Company’s policy for evaluating uncertain tax positions prior to the adoption of ASC 740 has been to provide for income taxes based on positions taken on the Company’s tax return with valuation allowances established for uncertain positions based on the guidance established by ASC Topic 450, Contingencies. The Company adopted the provisions of ASC 740 effective January 1, 2009 and the adoption did not have a material impact on the Company’s consolidated financial position, results of operations and cash flows for the year ended December 31, 2009 and for the six months ended June 30, 2010.

		In December 2007, the FASB issued authoritative guidance codified as ASC Topic 805, Business Combinations (ASC 805). ASC 805 changes accounting for business combinations through a requirement to recognize 100% of the fair values of assets acquired, liabilities assumed, and noncontrolling interests in acquisitions of less than a 100% controlling interest when the acquisition constitutes a change in control of the acquired entity. Other requirements include capitalization of acquired in-process research and development assets, expensing, as incurred, acquisition-related transaction costs and capitalizing restructuring charges as part of the acquisition only if requirements of ASC 420, Exit or Disposal Cost Obligations, are met. ASC 805 is effective for business combination transactions for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The Company adopted ASC 805 effective January 1, 2009 and applied the principles contained in this standard to all acquisitions that were completed in 2009. The Company’s consolidated financial position, results of operations and cash flows for the year ended December 31, 2009 and for the six months ended June 30, 2010 reflect the adoption of ASC 805.

F-17


EXAMWORKS GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2007, 2008 and 2009 and June 30, 2009 and 2010

		In March 2008, the FASB issued authoritative guidance codified as ASC Topic 815, Derivatives and Hedging (ASC 815). ASC 815 requires additional disclosures about the objectives of the derivative instruments and hedging activities, the method of accounting for such instruments, and a tabular disclosure of the effects of such instruments and related hedged items on the Company’s financial position, results of operations, and cash flows. ASC 815 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early adoption encouraged. The Company adopted ASC 815 effective January 1, 2009 and the adoption did not have a material impact on the Company’s consolidated financial position, results of operations and cash flows for the year ended December 31, 2009 and for the six months ended June 30, 2010.

		In April 2008, the FASB issued authoritative guidance codified as ASC 350 which is effective for all fiscal years and interim periods beginning after December 15, 2008. Early adoption of the provisions of ASC 350 is not permitted. ASC 350 requires additional footnote disclosures about the impact of the Company’s ability or intent to renew or extend agreements related to existing intangibles or expected future cash flows from those intangibles, how the Company accounts for costs incurred to renew or extend such agreements, the time until the next renewal or extension period by asset class, and the amount of renewal or extension costs capitalized, if any. For any intangibles acquired after January 1, 2009, ASC 350 requires that the Company consider its experience regarding renewal and extensions of similar arrangements in determining the useful life. If the Company does not have experience with similar arrangements, ASC 350 requires that the Company use the assumptions of a market participant putting the intangible to its highest and best use in determining the useful life. The Company adopted the provisions of ASC 350 effective January 1, 2009 and the adoption did not have a material impact on the Company’s consolidated financial position, results of operations and cash flows for the year ended December 31, 2009 and for the six months ended June 30, 2010.

		In May 2009, the FASB issued authoritative guidance codified as ASC Topic 855, Subsequent Events (ASC 855). ASC 855 requires that an entity shall recognize in the financial statements the effects of all subsequent events that provide additional evidence about conditions that existed at the date of the balance sheet, including the estimates inherent in the process of preparing financial statements. ASC 855 defines two types of subsequent events: “recognized subsequent events” and “nonrecognized subsequent events.” Recognized subsequent events provide additional evidence about conditions that existed at the balance sheet date and must be reflected in the company’s financial statements. Nonrecognized subsequent events provide evidence about conditions that arose after the balance sheet date and are not reflected in the financial statements of a company. The standard also requires entities to disclose the date through which subsequent events have been evaluated, as well as whether that date is the date the financial statements were issued or the date the financial statements were available to be issued. ASC 855 is effective for interim or annual financial periods ending after June 15, 2009, and is to be applied prospectively. The Company adopted the provisions of ASC 855 for the year ended December 31, 2009 and for the six months ended June 30, 2010. The adoption of the provisions of ASC 855 did not have a material effect on the Company’s consolidated financial condition, results of operations and cash flows. In accordance with ASC 855, the Company has evaluated subsequent events through the date that the consolidated financial statements were issued.

F-18


EXAMWORKS GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2007, 2008 and 2009 and June 30, 2009 and 2010

		In June 2009, the FASB issued ASC Topic 105, Generally Accepted Accounting Principles: a Brief History (ASC 105). ASC 105 will supersede existing non-SEC accounting and reporting standards. The codification will not change GAAP but will rather organize it into a new hierarchy with two levels: authoritative and nonauthoritative. All authoritative GAAP will carry equal weight and be organized in a topical structure. ASC 105 is effective for interim and annual reporting periods ending after September 15, 2009. The Company adopted the provisions of ASC 105 for the year ended December 31, 2009 and for the six months ended June 30, 2010. The adoption of the provisions of ASC 105 did not have a material effect on the Company’s consolidated financial condition, results of operations and cash flows.

		In January 2010, the FASB issued Accounting Standards Update (“ASU”) 2010-06, Fair Value Measurements and Disclosure. This update provides amendments to Codification topic, Fair Value Measurements and Disclosures, which require new disclosures about transfers in and out of Levels 1 and 2 and the reasons for the transfers as well as reconciliation for fair value measurements using significant unobservable inputs (Level 3). The update is effective for interim and annual reporting periods beginning after December 15, 2009. Adoption of this update did not have a material impact on the Company’s consolidated financial condition, results of operations and cash flows.

		Accounting Pronouncements Not Yet Adopted

		In October 2009, the FASB ASU 2009-13 (ASU 2009-13), addressing revenue arrangements with multiple deliverables. The new guidance establishes a selling price hierarchy for determining the selling price of a deliverable, eliminates the residual method of allocation, requires the allocation of arrangement consideration to all deliverables using the relative selling price method, and significantly expands disclosure requirements. The guidance is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. The Company does not expect the adoption of the ASU 2009-13 to have a material impact on the Company’s consolidated financial position, results of operations and cash flows.

(3)	Acquisitions

	ExamWorks operates in a highly fragmented industry and has completed numerous acquisitions since July 14, 2008. A key component of ExamWorks’ acquisition strategy is growth through acquisitions that expand its geographic coverage, that provide new or complementary lines of business, expand its portfolio of services and that increase its market share.

	The Company has accounted for all business combinations using the purchase method to record a new cost basis for the assets acquired and liabilities assumed. The Company recorded, based on a preliminary purchase price allocation, intangible assets representing client relationships, tradenames, covenants not to compete, and technology and the excess of purchase price over the estimated fair value of the tangible assets acquired and liabilities assumed and the separately recognized intangible assets has been recorded as goodwill in the accompanying consolidated financial statements. The goodwill is attributable to synergies achieved through the streamlining of operations combined with improved margins attainable through increased market presence. The results of operations are reflected in the consolidated financial statements of the Company from the date of acquisition.

	(a)	2008 Acquisitions

		On July 14, 2008, ExamWorks completed the acquisitions of CFO Medical Services, Inc., Crossland Medical Review Services, Inc., Southwest Medical Exam Services, Inc., Diagnostic Imaging Institute, Inc., Pacific Billing Services, Inc. and Southwest Medical Exam Services of Louisiana, LLC enabling the Company to provide IME services in the New Jersey, New York and Texas areas.

F-19

EXAMWORKS GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2007, 2008 and 2009 and June 30, 2009 and 2010


	CFO Medical Services Acquisition

	On July 14, 2008, CFO Medical Services, Inc. (CFO) merged into a wholly-owned subsidiary of ExamWorks for $13.6 million, comprised of $7.1 million cash consideration including transaction costs of $220,000 less cash acquired of $335,000, and 2,351,004 shares of the Company’s common stock with an estimated fair value of $6.6 million. The CFO acquisition enabled the Company to commence its operations in New Jersey.

	The final allocation of consideration for the CFO acquisition is summarized as follows (in thousands):


	Preliminary purchase price allocation December 31, 2008		Adjustments/ reclassifications			Final purchase price allocation December 31, 2009

Equipment and leasehold improvements	$	205	$	—		$	205
Customer relationships		3,170		—			3,170
Tradename		933		—			933
Covenants not to compete		129		—			129
Technology		211		—			211
Goodwill		8,964		(249	)		8,715
Assets acquired and liabilities assumed, net		273		(35	)		238

Totals	$	13,885	$	(284	)	$	13,601


	In 2009, the Company finalized the working capital adjustment resulting in a decrease to total consideration paid of $284,000. The goodwill and other intangible assets resulting from the CFO acquisition are expected to be deductible for tax purposes.

	Crossland Medical Review Services Acquisition

	On July 14, 2008, ExamWorks acquired 100% of the outstanding common stock of Crossland Medical Review Services, Inc. (Crossland) for $6.2 million, comprised of $5.7 million cash consideration including transaction costs of $98,000 less cash acquired of $557,000, and 356,211 shares of the Company’s common stock with an estimated fair value of $1.0 million. The Crossland acquisition enabled the Company to expand operations in New York.

	The final allocation of consideration for the Crossland acquisition is summarized as follows (in thousands):


	Preliminary purchase price allocation December 31, 2008			Adjustments/ reclassifications			Final purchase price allocation December 31, 2009

Equipment and leasehold improvements	$	121		$	—		$	121
Customer relationships		2,890			—			2,890
Tradename		953			—			953
Covenants not to compete		112			—			112
Technology		157			—			157
Goodwill		4,322			(194	)		4,128
Deferred tax liability associated with step-up in book basis		(1,527	)		—			(1,527	)
Assets acquired and liabilities assumed, net		(615	)		30			(585	)

Totals	$	6,413		$	(164	)	$	6,249

F-20

EXAMWORKS GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2007, 2008 and 2009 and June 30, 2009 and 2010


	In 2009, the Company finalized the working capital adjustment resulting in a decrease to total consideration paid of $164,000. The goodwill and other intangible assets resulting from the Crossland acquisition are not expected to be deductible for tax purposes.

	Southwest Medical Examination Services Acquisitions

	On July 14, 2008, ExamWorks acquired 100% of the outstanding common stock of Southwest Medical Examination Services, Inc., Diagnostic Imaging Institute, Inc., Pacific Billing Services, Inc. and Southwest Medical Exam Services of Louisiana, LLC (collectively known as the Southwest Medical acquisition) for $12.2 million, comprised of $9.1 million cash consideration including transactions costs of $171,000 less cash acquired of $260,000, and 1,146,625 shares of the Company’s common stock with an estimated fair value of $3.2 million. The Southwest Medical acquisition enabled the Company to expand operations in Texas.

	The final allocation of consideration for the Southwest Medical acquisition is summarized as follows (in thousands):


	Preliminary purchase price allocation December 31, 2008			Adjustments/ reclassifications			Final purchase price allocation December 31, 2009

Equipment and leasehold improvements	$	221		$	—		$	221
Customer relationships		5,370			—			5,370
Tradename		845			—			845
Covenants not to compete		190			—			190
Technology		106			—			106
Goodwill		6,674			(1,084	)		5,590
Assets acquired and liabilities assumed, net		(154	)		50			(104	)

Totals	$	13,252		$	(1,034	)	$	12,218


		The purchase agreement required the sellers to make a tax election under Internal Revenue Code Section 338(h)(10) (338 election) effectively treating the transaction as an asset acquisition. The Company agreed to reimburse the sellers for the estimated incremental taxes owed as a result of this election and deposited $465,000 into escrow on the acquisition date recording this payment as purchase consideration paid in 2008. In 2009, the Company finalized the 338 election analysis and the working capital adjustment, resulting in a decrease in total consideration paid of $1.0 million. The goodwill and other intangible assets resulting from the Southwest Medical acquisition are expected to be deductible for tax purposes.

	(b)	2009 Acquisitions

		Abeton Acquisition

		On December 31, 2009, ExamWorks acquired, in two separate transactions, substantially all of the assets and assumed certain liabilities of Abeton, Inc. and Medical Assurance Group, Inc., both subsidiaries of The Abeton Group (collectively, the Abeton acquisition), for aggregate consideration of $9.6 million, comprised of $7.0 million cash consideration, $2.4 million in seller debt, and 153,996 shares of the Company’s common stock with an estimated fair value of $254,000. In conjunction with the Abeton acquisition, the Company incurred transaction costs of $310,000 which are reported in selling, general and administrative expenses in the accompanying 2009 consolidated statement of operations. The Abeton acquisition enabled the Company to expand its operations in the Pacific Northwest and Southwest regions.

F-21

EXAMWORKS GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2007, 2008 and 2009 and June 30, 2009 and 2010


	The preliminary allocation of consideration for the Abeton acquisition is summarized as follows (in thousands):


	Preliminary purchase price allocation December 31, 2009		Adjustments / reclassifications			Preliminary purchase price allocation June 30, 2010

Equipment and leasehold improvements	$	124	$	—		$	124
Customer relationships		3,525		—			3,525
Tradename		1,072		—			1,072
Covenants not to compete		46		—			46
Technology		99		—			99
Goodwill		4,340		13			4,353
Deferred tax asset associated with step-up in book basis		224		—			224
Assets acquired and liabilities assumed, net		224		(86	)		138

Totals	$	9,654	$	(73	)	$	9,581


	In 2010, the Company recorded an adjustment to working capital resulting in a decrease to total consideration paid of $73,000. The goodwill and other intangible assets resulting from the Abeton acquisition are expected to be deductible for tax purposes. The Company expects to make further adjustment to the purchase price allocation, principally resulting from working capital adjustments, in accordance with the purchase agreement.

	Other 2009 Acquisitions

	Additionally, in 2009, the Company completed the following individually insignificant acquisitions, as defined in SEC Regulation S-X Rule 3-05, with an aggregate purchase price of $26.2 million, comprised of $19.1 million cash consideration less cash acquired of $443,000, 1,613,998 shares of the Company’s common stock with an estimated fair value of $2.7 million, $2.0 million of seller debt in the form of subordinated unsecured notes payable, $389,000 of deferred payments, and $2.3 million of contingent consideration. In conjunction with the other 2009 acquisitions, the Company incurred transaction costs of $1.1 million, which are reported in selling, general and administrative expenses in the accompanying 2009 consolidated statement of operations. These acquisitions expanded the Company’s geographic coverage and, to a lesser extent, enhanced its portfolio of services.


Company name	Form of acquisition	Date of acquisition

The Ricwel Corporation	100% of the outstanding common stock	April 17, 2009
Ricwel of West Virginia, LLC	100% of the membership interest	April 17, 2009
Marquis Medical Administrators, Inc.	100% of the outstanding common stock	May 21, 2009
Florida Medical Services, Inc.	100% of the outstanding common stock	May 21, 2009
IME Software Solutions, LLC	100% of the membership interest	July 7, 2009
Benchmark Medical Consultants, Inc.	100% of the outstanding common stock	August 4, 2009
The Evaluation Group, Inc.	Substantially all of the assets and assumed certain liabilities	August 14, 2009
MedNet I.M.S. Inc.	Substantially all of the assets and assumed certain liabilities	December 31, 2009
Qualmed Evaluations, LLC	Substantially all of the assets and assumed certain liabilities	December 31, 2009
IME operations of Dr. Chalal and Dr. Zeide	Substantially all of the assets and assumed certain liabilities	December 31, 2009

F-22

EXAMWORKS GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2007, 2008 and 2009 and June 30, 2009 and 2010


	The preliminary allocation of consideration for these acquisitions is summarized as follows (in thousands):


	Preliminary purchase price allocation December 31, 2009			Adjustments/ reclassifications		Preliminary purchase price allocation June 30, 2010

Equipment and leasehold improvements	$	258		$	—	$	258
Customer relationships		10,320			—		10,320
Tradename		3,043			—		3,043
Covenants not to compete		851			—		851
Technology		1,289			—		1,289
Goodwill		9,622			25		9,647
Net deferred tax liability associated with step-up in book basis		(280	)		35		(245	)
Assets acquired and liabilities assumed, net		1,008			40		1,048

Totals	$	26,111		$	100	$	26,211

In 2010, the Company recorded an adjustment to working capital for one of the insignificant 2009 acquisitions resulting in an increase to total consideration paid of $100,000. The Company expects to make further adjustment to the purchase price allocation, principally resulting from working capital and tax related adjustments, in accordance with the purchase agreements. Certain of these transactions contain earnout provisions based upon the achievement of certain revenue targets and profitability targets and payable annually over a two-year or a 4.75 year period. Based on estimates of expected cash payments and the probability of acquired businesses achieving certain results, the Company recorded $2.3 million of contingent consideration in conjunction with the preliminary purchase price allocation. The contingent consideration includes seller debt in the form of subordinated unsecured notes payable with an estimated fair value of $1.1 million, 355,584 shares of the Company’s common stock with an estimated fair value of $572,000, and deferred payments with an estimated fair value of $618,000. The seller debt and the shares of the Company’s stock are subject to clawback provisions in the event that certain revenue targets are not achieved over the earnout period. The deferred payments are payable annually over a two–year period, 50% payable in cash and 50% payable with the Company’s common stock. The fair value of the deferred payments are adjusted quarterly based primarily on the movement in the fair value of the Company’s common stock to be issued with the change being recorded as other (income) expense in the accompanying consolidated statements of operations. In 2009 and in the first six months of 2010, the Company recorded additional contingent consideration of $300,000 and $449,000, respectively, resulting primarily from the change in the value of the earnout. As of December 31, 2009 and June 30, 2010, the range of outcomes and the assumptions used to develop the estimate have not changed. Goodwill of $5.2 million and other intangible assets of $9.9 million are expected to be deductible for tax purposes.

F-23

EXAMWORKS GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2007, 2008 and 2009 and June 30, 2009 and 2010


	(c)	2010 Acquisitions

		Metro Medical Acquisition

		On March 26, 2010, ExamWorks acquired substantially all of the assets and assumed certain liabilities of Metro Medical Services, LLC (Metro Medical) for aggregate consideration of $13.6 million, comprised of $13.0 million cash consideration less cash acquired of $722,000 and 589,930 shares of the Company’s common stock with an estimated fair value of $1.3 million. In conjunction with the Metro Medical acquisition, the Company incurred transaction costs of $101,000 which are reported in selling, general and administrative expenses in the accompanying 2010 consolidated statement of operations. The Metro Medical acquisition enabled the Company to further expand its operations in the northeastern region of the United States.

		The preliminary allocation of consideration for the Metro Medical acquisition is summarized as follows (in thousands):


	Preliminary purchase price allocation June 30, 2010

Equipment and leasehold improvements	$	186
Customer relationships		4,715
Tradename		1,458
Covenants not to compete		66
Technology		100
Goodwill		5,654
Deferred tax asset associated with step-up in book basis		680
Assets acquired and liabilities assumed, net		722

Totals	$	13,581


	The goodwill and other intangible assets resulting from the Metro Medical acquisition are expected to be deductible for tax purposes. The Company expects to make further adjustment to the purchase price allocation, principally resulting from working capital adjustments, in accordance with the purchase agreement.

	Direct IME Acquisition

	On June 30, 2010, ExamWorks acquired substantially all of the assets and assumed certain liabilities of Direct IME, A Partnership, (Direct IME) for aggregate consideration of $13.6 million, comprised of $11.9 million cash consideration less cash acquired of $50,000, 507,606 shares of the Company’s common stock with an estimated fair value of $1.4 million and $351,000 of contingent consideration. The acquisition agreement contains a clawback provision whereby certain revenue and profitability targets must be met for a period of two years. The Company expects Direct IME to achieve the targeted levels. Additionally, the acquisition agreement contains contingent consideration in the form of an earnout provision based upon the achievement of certain revenue and profitability targets. Any contingent consideration is payable at the end of a two-year period. The fair value of the contingent consideration will be adjusted quarterly based primarily on variations in the expected performance of the acquired businesses with the change being recorded as other (income) expense in the accompanying consolidated statements of operations. As of June 30, 2010, the range of outcomes and the assumptions used to develop the estimate have not changed. In conjunction with the Direct IME acquisition, the Company incurred transaction costs of $158,000 which are reported in selling, general and administrative expenses in the accompanying 2010 consolidated statement of operations. The Direct IME acquisition enabled the Company to expand operations into the Canadian market.

F-24

EXAMWORKS GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2007, 2008 and 2009 and June 30, 2009 and 2010


	The preliminary allocation of consideration for the Direct IME acquisition is summarized as follows (in thousands):


	Preliminary purchase price allocation June 30, 2010

Equipment and leasehold improvements	$	34
Customer relationships		5,975
Tradename		756
Covenants not to compete		35
Technology		49
Goodwill		3,928
Deferred tax asset associated with step-up in book basis		1,469
Assets acquired and liabilities assumed, net		1,383

Totals	$	13,629


	The goodwill and other intangible assets resulting from the Direct IME acquisition are expected to be deductible for tax purposes. The Company expects to make further adjustment to the purchase price allocation, principally resulting from working capital adjustments, in accordance with the purchase agreement.

	Other 2010 Acquisitions

	Additionally, in the first half of 2010, the Company completed the following individually insignificant acquisitions, as defined in SEC Regulation S-X Rule 3-05, with an aggregate purchase price of $42.1 million, comprised of $37.5 million cash consideration less cash acquired of $631,000, 1,427,218 shares of the Company’s common stock with an estimated fair value of $4.0 million, $400,000 of seller debt in the form of subordinated unsecured notes payable, and $786,000 of contingent consideration. In conjunction with the other 2010 acquisitions, the Company incurred transaction costs of $642,000, which are reported in selling, general and administrative expenses in the accompanying 2010 consolidated statement of operations. These acquisitions expanded the geographic coverage and, to a lesser extent, enhanced the service offering of the Company.


Company name	Form of acquisition	Date of acquisition

American Medical Bill Review, Inc. (AMBR)	Substantially all of the assets and assumed certain liabilities	March 15, 2010
Medical Evaluations, Inc. (MEI)	Substantially all of the assets and assumed certain liabilities	March 15, 2010
401 Diagnostics, Inc.	Substantially all of the assets and assumed certain liabilities	June 30, 2010
Independent Medical Services Corporation	Substantially all of the assets and assumed certain liabilities	June 30, 2010
Network Medical Review Co. Ltd.	100% of the outstanding common stock	June 30, 2010
SOMA Medical Assessments, Inc.	Substantially all of the assets and assumed certain liabilities	June 30, 2010

F-25

EXAMWORKS GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2007, 2008 and 2009 and June 30, 2009 and 2010


	The preliminary allocation of consideration for these acquisitions is summarized as follows (in thousands):


	Preliminary purchase price allocation June 30, 2010

Equipment and leasehold improvements	$	408
Customer relationships		14,423
Tradename		3,517
Covenants not to compete		176
Technology		726
Goodwill		19,757
Net deferred tax liability associated with step-up in book basis		(505	)
Assets acquired and liabilities assumed, net		3,573

Totals	$	42,075


		The Company expects to make further adjustment to the purchase price allocation, principally resulting from working capital and tax related adjustments, in accordance with the purchase agreements. One of the acquisition agreements contains a clawback provision whereby certain revenue and profitability targets must be met for a period of two years. The Company expects this acquisition to achieve the targeted levels. Additionally, this acquisition agreement contains contingent consideration in the form of an earnout provision based upon the achievement of certain revenue and profitability targets. The Company recorded $536,000 as the estimate of the fair value of the contingent consideration related to this acquisition. Any contingent consideration is payable at the end of a two-year period. The fair value of the contingent consideration will be adjusted quarterly based primarily on variations in the expected performance of the acquired businesses with the change being recorded as other (income) expense in the accompanying consolidated statements of operations. As of June 30, 2010, the range of outcomes and the assumptions used to develop the estimate have not changed. Goodwill of $10.3 million and other intangible assets of $12.1 million are expected to be deductible for tax purposes.

	(d)	Pro forma Financial Information

		The following unaudited pro forma results of operations for the year ended December 31, 2008 assumes that the 2008 and 2009 acquisitions were completed on January 1, 2008. The unaudited pro forma results of operations for the year ended December 31, 2009 and the six months ended June 30, 2009 assumes that the 2009 and 2010 acquisitions were completed on January 1, 2009. The unaudited pro forma results of operations for the six months ended June 30, 2010 assumes that the 2010 acquisitions were completed on January 1, 2010. The 2010 acquisitions include acquisitions completed through August 12, 2010. The pro forma results include adjustments to reflect additional interest expense to fund the acquisitions, amortization of intangibles associated with the acquisitions, and other costs deemed to be non-recurring in nature.


	Years ended December 31,						Six months ended

	2008			2009			June 30, 2009			June 30, 2010

Pro forma revenues	$	83,847		$	175,100		$	83,654		$	97,218
Pro forma net income (loss)		(2,043	)		(1,506	)		(1,093	)		2,166

Pro forma income (loss) per share:
Basic	$	(0.07	)	$	(0.09	)	$	(0.07	)	$	0.13

Diluted	$	(0.07	)	$	(0.09	)	$	(0.07	)	$	0.10

F-26

EXAMWORKS GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2007, 2008 and 2009 and June 30, 2009 and 2010


	The pro forma financial information presented above is not necessarily indicative of either the results of operations that would have occurred had the acquisitions been effective as of January 1 of the respective years or of future operations of the company.


(4)	Equipment and Leasehold Improvements

	Equipment and leasehold improvements at December 31, 2008 and 2009 and at June 30, 2010, consist of the following (in thousands):


	Estimated useful lives	December 31,				June 30, 2010

		2008		2009

Computer and office equipment	3 years	$	386	$	1,971	$	3,186
Furniture and fixtures	3 – 5 years		452		736		1,055
Leasehold improvements	Lease term		67		139		211

			905		2,846		4,452
Less accumulated depreciation and amortization			218		874		1,464

Total		$	687	$	1,972	$	2,988


	Depreciation expense was $218,000 and $656,000 for the years ended December 31, 2008 and 2009, respectively, and $277,000 (unaudited) and $593,000 and for the six months ended June 30, 2009 and 2010, respectively. There were no equipment and leasehold improvements or depreciation expense as of and for the year ended December 31, 2007.

(5)	Intangible Assets

	Intangible assets at December 31, 2008 and 2009 and at June 30, 2010, consist of the following (in thousands):


		December 31, 2008

	Estimated useful lives	Gross carrying amount		Accumulated amortization			Net carrying value

Amortizable intangible assets:
Customer relationships	40 to 42 months	$	11,430	$	(1,654	)	$	9,776
Tradenames	45 months		2,731		(364	)		2,367
Covenants not to compete	36 months		431		(72	)		359
Technology	24 to 40 months		474		(84	)		390

Totals		$	15,066	$	(2,174	)	$	12,892


		December 31, 2009

	Estimated useful lives	Gross carrying amount		Accumulated amortization			Net carrying value

Amortizable intangible assets:
Customer relationships	40 to 42 months	$	25,274	$	(5,843	)	$	19,431
Tradenames	45 months		6,846		(1,386	)		5,460
Covenants not to compete	36 months		1,328		(326	)		1,002
Technology	24 to 40 months		1,861		(852	)		1,009

Totals		$	35,309	$	(8,407	)	$	26,902

F-27

EXAMWORKS GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2007, 2008 and 2009 and June 30, 2009 and 2010


		June 30, 2010

	Estimated useful lives	Gross carrying amount		Accumulated amortization			Net carrying value

Amortizable intangible assets:
Customer relationships	40 to 42 months	$	50,388	$	(10,105	)	$	40,283
Tradenames	45 months		12,577		(2,483	)		10,094
Covenants not to compete	36 months		1,605		(559	)		1,046
Technology	24 to 40 months		2,737		(1,215	)		1,522

Totals		$	67,307	$	(14,362	)	$	52,945


The aggregate intangible amortization expense was $2.2 million and $6.2 million for the years ended December 31, 2008 and 2009, respectively, and $2.3 million (unaudited) and $6.0 million for the six months ended June 30, 2009 and 2010, respectively. The estimated future amortization expense of intangible assets is as follows (in thousands):


	Amount

Six months ended December 31, 2010	$	9,571
Year ended December 31:
2011		18,925
2012		14,443
2013		9,795
2014		211

Total	$	52,945


	There were no intangible assets or amortization expense as of and for the year ended December 31, 2007.

(6)	Accrued Expenses

	Accrued expenses at December 31, 2008 and 2009 and at June 30, 2010 consist of the following (in thousands):


	December 31,				June 30, 2010

	2008		2009

Accrued compensation and benefits	$	380	$	995	$	1,279
Accrued professional fees		71		733		971
Accrued income and other taxes		320		149		1,932
Accrued medical panel fees		112		12		104
Other accrued expenses		61		168		221

Total	$	944	$	2,057	$	4,507

F-28


EXAMWORKS GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2007, 2008 and 2009 and June 30, 2009 and 2010

(7)	Stockholders’ Equity

	From inception in April 2007 through July 2008, the Company issued 6,169,320 shares of common stock to one investor in exchange for $12.0 million. Proceeds from this issuance were used to fund the cash consideration of the 2008 acquisitions and related transaction costs.

	In July 2008, the Company issued 3,853,840 shares of common stock, with a value of $10.8 million, to fund the stock consideration of the CFO, Crossland and Southwest acquisitions.

	During the year ended December 31, 2009, the Company issued 1,767,994 shares of common stock, with a fair value of $2.9 million, to fund the stock consideration of the acquisitions completed in 2009. Additionally, the Company issued 355,584 shares of common stock, with a fair value of $572,000 to fund the stock component of the contingent consideration of an acquisition completed in 2009.

	In December 2009, the Company initiated an equity offering of 1,250,361 shares of common stock in exchange for $3.5 million, of which $560,000 was received in December 2009 with the balance being received and shares issued in January 2010. Proceeds from this issuance were used to repay the December 2009 subordinated promissory notes (see note 8).

	In January 2010, the Company issued 739,506 shares of common stock with an estimated fair value of $1.4 million to Compass Partners, LLC (Compass) as consideration for the termination of the monitoring fee (see note 8).

	During the first quarter of 2010, the Company commenced a private placement of Series A Convertible Preferred Stock to raise between $5 million and $33.0 million of additional capital, with the final closing occurring on May 7, 2010. As of June 30, 2010, the Company had issued 4,975,253 preferred shares, representing approximately $33.0 million in proceeds to the Company. These preferred shares have an initial liquidation preference of $33.0 million, accrue dividends at an annual rate of 12%, in each case payable only upon a liquidation or deemed liquidation event, and are convertible into shares of ExamWorks common stock. As of June 30, 2010, no preferred stock dividends had been accrued. Pursuant to an investor rights agreement with the holders of Series A Convertible Preferred Stock, unless there has been a liquidation or deemed liquidation event, the Company is required to file for an underwritten initial public offering (IPO) within 18 months of May 7, 2010 and to consummate such IPO within 24 months of such date. For each month that the Company fails to meet either of these deadlines, the Company is required to pay the holders of Series A Convertible Preferred Stock a monthly cash penalty of 2% of the purchase price for the Series A Convertible Preferred Stock, subject to certain limited exceptions. Such penalties would continue for so long as the Company has not filed for or consummated an IPO, redeemed the Series A Preferred Stock or consummated a liquidation or deemed liquidation event. The Company has not accrued any amounts related to the penalty as of June 30, 2010 as it expects to file for and consummate an IPO within the required deadlines. The Company has the right, at any time on or after three years from the termination of the private placement, to redeem all of the outstanding shares of Series A Convertible Preferred Stock at a price of $6.63 (subject to adjustment) multiplied by 1.75.

	The Company was required to issue a warrant to purchase shares of common stock to the private placement agent equal to 9% of the total number of shares of Series A Convertible Preferred Stock sold in the private placement. The warrant is exercisable for five years and has an exercise price of $6.63 per share. In addition, the placement agent elected to receive its placement agent fee and expense allowance of 7% and 2%, respectively, of proceeds from the private placement in shares of ExamWorks common stock and $270,000 in cash consideration. In conjunction with the final closing of the private placement on May 7, 2010, the Company issued 447,763 warrants to the placement agent, as described above, with an estimated fair value of $126,000 as of that date. In addition, as partial payment for its services, the Company issued 407,062 shares of the Company’s common with an estimated fair value of $1.0 million, to the placement agent as of that date.

F-29


EXAMWORKS GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2007, 2008 and 2009 and June 30, 2009 and 2010

	During the six months ended June 30, 2010, the Company issued 2,524,754 shares of common stock, with a fair value of $6.7 million, to fund the stock consideration of the acquisitions completed in the first half of 2010.

(8)	Related Party Transactions

	As of December 31, 2008, the Company had a $130,000 noninterest bearing loan receivable due from a stockholder which was repaid in full in January 2009. The Company also had a $13,000 noninterest bearing loan receivable due from a stockholder, which was repaid in 2009. The notes are included in due from related parties in the accompanying 2008 consolidated balance sheet.

	In December 2009, two stockholders advanced the Company $3.5 million in the form of subordinated promissory notes to fund a portion of the cash consideration of the acquisitions completed in December 2009. The notes bear interest at an annual rate of 7.5% and were repaid in January 2010. The notes are included in due to related parties in the accompanying 2009 consolidated balance sheet.

	Beginning in July 2008 and through December 2009, the Company was party to a monitoring fee agreement with Compass, whereby the Company would pay Compass, on a quarterly basis, 5% of Adjusted EBITDA, as defined. In December 2009, the Company and Compass agreed to terminate the monitoring fee agreement in exchange for a one-time payment of $2.0 million, to be settled with 739,506 shares of ExamWorks common stock, as approved by the Company’s independent director. The shares were issued in January 2010. The Company recorded a charge in the fourth quarter of 2009 of $1.4 million (included in selling, general and administrative expenses in the accompanying 2009 consolidated statement of operations), representing the estimated fair value of the shares to be issued to settle the termination obligation. The liability is included in due to related parties in the accompanying 2009 consolidated balance sheet. Inclusive of this charge, the Company incurred $1.7 million and $50,000 in monitoring fees for the year ended December 31, 2009 and 2008, respectively. Compass is an entity owned and controlled by Richard Perlman, the Company’s then Co-Chairman and Co-CEO.

	In June 2009, the Company engaged RedRidge Finance Group (RedRidge) to assist the Company in securing additional debt financing to allow the Company to continue to implement its acquisition strategy. In December 2009, in conjunction with the closing of the Fifth Third Credit Facility (see note 10), the Company paid RedRidge $500,000 in broker fees and recorded them as deferred financing costs in the consolidated balance sheet. P&P Investment, LLC (P&P), a company owned by Richard Perlman and James Price, the then Co-Chairmen and Co-CEO’s of the Company, are minority owners of RedRidge. For the six months ended June 30, 2010, the Company paid RedRidge $425,000 in connection with the credit facility. Pursuant to the payment of the broker fees, the Company, RedRidge, P&P, Mr. Perlman and Mr. Price entered into a letter agreement under which P&P waived any right it had to any portion of the broker fees paid by the Company to RedRidge and agreed that such fee, minus amounts paid to RedRidge’s employees, would be paid solely to RedRidge’s majority owner.

	The Fifth Third Credit Facility contains a provision requiring the Company to use a third party to perform financial due diligence for acquisitions exceeding a certain size. With the approval of the senior lender, the Company engaged RedRidge to assist it with financial due diligence and incurred $52,000 in fees in 2009 related to acquisitions completed in December 2009 and $240,000 in fees in the first six months of 2010 related to acquisitions during that period. P&P, Mr. Perlman and Mr. Price have likewise waived any right P&P had to any portion of the diligence fees paid by the Company to RedRidge.

	The Company is a party to certain consulting agreements with each of Dr. Edward M. Decter and Dr. Steven G. Robbins, who are stockholders of the Company and members of its medical panel, which set forth the terms and conditions upon which Dr. Decter and Dr. Robbins are entitled to compensation for IMEs and other services performed by them on behalf of the Company. In addition, such agreements provide that Dr. Decter and Dr. Robbins are to be provided with a minimum number of IMEs. For the years ended December 31, 2008 and 2009 and for the six months ended June 30, 2009 and 2010, the Company paid Dr. Decter $279,000, $819,000, $398,000 (unaudited) and $540,000, respectively, for IME services performed. For the years ended December 31, 2008 and 2009 and for the six months ended June 30, 2009 and 2010, the Company paid Dr. Robbins $122,000, $360,000, $201,000 (unaudited) and $193,000, respectively, for IME services performed.

F-30


EXAMWORKS GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2007, 2008 and 2009 and June 30, 2009 and 2010

(9)	Commitments and Contingencies

	(a)	Lease Commitments

		The Company and its subsidiaries lease office space under noncancelable operating leases with various expiration dates from 2010 through 2017.

		Future minimum lease payments under the operating leases in each of the years subsequent to June 30, 2010 are as follows (in thousands):


	Amount

Six months ended December 31, 2010	$	1,702
Year ended December 31:
2011		2,929
2012		2,257
2013		1,659
2014		1,152
Thereafter		1,559

Total	$	11,258


		Related rent expense was $498,000 and $1.7 million for the years ended December 31, 2008 and 2009, respectively, and $700,000 (unaudited) and $1.2 million for the six months ended June 30, 2009 and 2010, respectively. There was no rent expense for the period from April 27, 2007 (inception) to December 31, 2007.

	(b)	Employee Benefit Plans

		The Company and its subsidiaries each sponsor a separate voluntary defined contribution pension plan under Section 401(k) of the Internal Revenue Code. The plans cover substantially all employees that meet specific age and length of service requirements. The Company and its subsidiaries have various matching and vesting arrangements within their individual plans. For the years ended December 31, 2008 and 2009, the Company recorded $55,000 and $18,000, respectively, in compensation expense related to these plans. For the six months ended June 30, 2009 and 2010, the Company recorded $8,000 (unaudited) and $4,000 in compensation expense related to these plans. There was no compensation expense incurred related to employee benefit plans for the period from April 27, 2007 (inception) to December 31, 2007.

	(c)	Letter of Credit

		As of December 31, 2008 and 2009 and June 30, 2010, the Company had $30,000 and $220,000, respectively, outstanding under letters of credit which are used to secure two of the Company’s leased office facilities.

F-31


EXAMWORKS GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2007, 2008 and 2009 and June 30, 2009 and 2010

(10)	Long-Term Debt


	December 31,				June 30, 2010

	2008		2009

Credit facility, Fifth Third Bank (Fifth Third) (a)	$	—	$	32,634	$	73,604
Revolving facility, Fifth Third (a)		—		600		—
Credit facility, Bank of America (BOA) (b)		11,739		—		—
Revolving facility, BOA (b)		1,500		—		—
Various subordinated unsecured notes payable; maturing at various dates from 2011 through 2014 (c)		—		5,117		4,892

		13,239		38,351		78,496
Less current portion		1,534		4,828		16,804

	$	11,705	$	33,523	$	61,692


	(a)	The Company entered into a loan and security agreement dated December 18, 2009, (Fifth Third Credit Facility). The facility initially consisted of a $50.0 million term loan facility and a $5.0 million revolving credit facility. The revolving credit facility is subject to borrowing base limitations. The Fifth Third Credit Facility is available to finance the Company’s acquisition program and working capital needs. Borrowings under the Fifth Third Credit Facility bear interest at a base rate plus 5.0% for base rate loans or at a LIBOR base rate plus 5.5% for LIBOR loans with a LIBOR floor of 2.0%. The Fifth Third Credit Facility also requires the payment of a monthly commitment fee for any availability at a rate 0.5%. On April 26, 2010, the Fifth Third Credit Facility was amended increasing the term loan facility from $50.0 million to $65.0 million, for a total facility of $70.0 million. On June 23, 2010, the Fifth Third Credit Facility was further amended increasing the term loan facility from $65.0 million to $105.0 million, for a total facility of $110.0 million.

		All of the Company’s obligations under the credit facility are secured, subject to permitted liens and other exceptions (including, without limitation, exceptions for accounts used for payroll and other employee payments, amounts deposited in escrow pursuant to acquisition documents and certain other exceptions), by a first-priority lien on substantially all of the Company’s assets, including but not limited to, (i) a pledge of the capital stock of each of the Company’s subsidiaries and (ii) a security interest in substantially all of the tangible and intangible assets owned by the Company’s subsidiaries.

		The credit facility provides for monthly interest payments which commenced on January 1, 2010 and for the term loan facility, monthly installments of principal which commenced on July 1, 2010. The credit facility contains certain financial and nonfinancial covenants and restricts the payment of cash dividends. As of June 30, 2010, the Company had no amounts outstanding on the revolving credit facility, $220,000 of outstanding letters of credit, and $677,000 of interest rate hedging losses, resulting in $4.1 million available under the revolving credit facility.

	(b)	The Company’s previous BOA credit facility was repaid in December 2009 with proceeds from the Fifth Third Credit Facility. In connection with this early retirement of debt, the Company recognized debt extinguishment costs of approximately $461,000 for the unamortized portion of the loan costs. The debt extinguishment costs were recorded as other interest expense in accordance with ASC 470. As of December 31, 2008, the Company was not in compliance with one of its financial covenants. The Company received a waiver for the aforementioned covenant violations from BOA dated April 9, 2009.

F-32

EXAMWORKS GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2007, 2008 and 2009 and June 30, 2009 and 2010


	(c)	During 2009, the Company issued seller debt in the form of subordinated unsecured notes payable with an estimated fair value of approximately $5.5 million relating to certain acquisitions (see note 3). These notes are unsecured and subordinated to the Fifth Third Credit Facility. Five notes payable totaling $4.4 million bear interest at 6%, and are payable quarterly with amounts ranging between $50,000 and $76,000, with maturity dates ranging from August 2011 through March 2013. The remaining balance of the notes payable, $1.1 million, are noninterest bearing and are payable annually with amounts ranging between $250,000 and $333,000, maturing in 2014. The Company made principal payments totaling $392,000 during 2009.

	As of June 30, 2010, future maturities of long-term debt were as follows (in thousands):


	Amount

Six months ended December 31, 2010	$	8,672
Year ended December 31:
2011		16,351
2012		52,796
2013		416
2014		261

Total	$	78,496


(11)	Financial Instruments

	The FASB issued ASC 815 which establishes accounting and reporting standards for derivative instruments. ASC 815 requires an entity to recognize all derivatives as either assets or liabilities and measure those instruments at fair value. Derivatives that do not qualify as a hedge must be adjusted to fair value in earnings. If the derivative does qualify as a hedge under ASC 815, changes in the fair value will either be offset against the change in fair value of the hedged assets, liabilities or firm commitments or recognized in accumulated other comprehensive income until the hedged item is recognized in earnings. The ineffective portion of a hedge’s change in fair value will be immediately recognized in earnings.

	In August 2008, in order to protect against interest rate exposure on its variable-rate debt, the Company entered into an interest rate swap to fix the interest rate applicable to certain of its variable-rate debt. The agreement swaps one-month LIBOR for a fixed interest rate of 4.36% with a notional amount of $11.7 million, $10.5 million and $9.6 million as of December 31, 2008 and 2009 and June 30, 2010, respectively. The Company did not meet the criteria for hedge accounting under ASC 815, thus the difference between its amortized cost and its fair value resulted in an unrealized gain (loss) at December 31, 2008 and 2009 and June 30, 2009 and 2010, of $(955,000), $343,000, $285,000 (unaudited), and $(65,000), respectively, and such amount was reported in other expenses on the accompanying consolidated statements of operations for the years ended December 31, 2008 and 2009 and for the six months ended June 30, 2009 and 2010, respectively.

	The Company does not enter into derivative transactions for speculative purposes.

F-33

EXAMWORKS GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2007, 2008 and 2009 and June 30, 2009 and 2010


(12)	Income Taxes

	The components of the benefit for income taxes for the period from April 27, 2007 (inception) to December 31, 2007, the years ended December 31, 2008 and 2009 and for the six months ended June 30, 2010 were as follows (in thousands):


	Period from April 27, 2007 (inception) to December 31,			December 31,						June 30,

	2007			2008			2009			2010

Current:
Federal	$	—		$	—		$	4		$	1,093
State		—			16			106			279

		—			16			110			1,372

Deferred:
Federal		(76	)		(1,174	)		(2,169	)		(1,506	)
State		(9	)		(191	)		(554	)		(526	)
Change in deferred tax asset valuation allowance		85			(85	)		—			—

Total		—			(1,450	)		(2,723	)		(2,032	)

Benefit for income taxes	$	—		$	(1,434	)	$	(2,613	)	$	(660	)


	Deferred taxes result from temporary differences between the bases of assets and liabilities for financial reporting purposes and such amounts as measured by tax laws and regulations. The sources of the temporary differences and their effect on deferred tax assets and liabilities as of December 31, 2008 and 2009 and as of June 30, 2010 were as follows (in thousands):


	December 31

	2008						2009						June 30, 2010

	Current			Noncurrent			Current			Noncurrent			Current			Noncurrent

Deferred tax assets:
Allowance for doubtful accounts	$	162		$	—		$	279		$	—		$	403		$	—
Basis difference of intangible assets		—			—			—			958			—			4,250
Loss on interest rate swap		—			362			—			240			—			266
Net operating loss carryforwards		—			263			—			316			—			139
Shared-based compensation		—			39			—			689			—			726
Other deferred tax assets		85			—			420			181			413			443

Total deferred tax assets		247			664			699			2,384			816			5,824

Deferred tax liabilities:
Basis difference of intangible assets		—			(912	)		—			(75	)		—			—
Basis difference of property and equipment		—			(16	)		—			(204	)		—			(97	)
Other deferred tax liabilities		(60	)		—			(57	)		(157	)		(37	)		(130	)

Total deferred tax liabilities		(60	)		(928	)		(57	)		(436	)		(37	)		(227	)

Net deferred tax assets (liabilities)	$	187		$	(264	)	$	642		$	1,948		$	779		$	5,597

F-34

EXAMWORKS GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2007, 2008 and 2009 and June 30, 2009 and 2010


	The reconciliation of income tax computed at the U.S. federal statutory rate to income tax expense for the period from April 27, 2007 (inception) to December 31, 2009 and for the years ended December 31, 2008 and 2009 and for the six months ended June 30, 2010 were as follows (in thousands):


	Period from April 27, 2007 (inception) to December 31,			December 31,						June 30,

	2007			2008			2009			2010

Expected tax benefit	$	(77	)	$	(1,226	)	$	(2,386	)	$	(451	)
Increase (decrease) in income taxes resulting from: State income taxes, net of federal benefit		(8	)		(123	)		(234	)		(60	)
Other		—			—			7			(149	)
Change in valuation allowance		85			(85	)		—			—

Income tax benefit	$	—		$	(1,434	)	$	(2,613	)	$	(660	)


	As of December 31, 2008 and 2009, the Company had federal net operating losses (NOLs) totaling $700,000 and $800,000, respectively. These NOLs will be available to offset any future taxable income and will begin to expire in 2027. On December 31, 2009, a change in ownership took place as defined for income tax purposes under Internal Revenue Code Section 382 (IRC Section 382), limiting the annual utilization of $800,000 of the NOL carryforward. Management believes that it is more likely than not that the recorded deferred tax assets will be realized. The Company generated $3.6 million of federal taxable income in the six months ended June 30, 2010, fully utilizing the federal NOLs and resulting in income taxes payable of $1.4 million as of June 30, 2010, included in accrued expenses in the accompanying June 30, 2010 consolidated balance sheet. For the six months ended June 30, 2009, the Company had an income tax benefit of $641,000 (unaudited).

	Effective January 1, 2009, the Company adopted the provisions of ASC 740 as it relates to uncertain tax positions. This interpretation prescribes a comprehensive model for how a company should recognize, measure, present and disclose in its financial statements uncertain tax positions that the company has taken or expects to take on a tax return. ASC 740 states that a tax benefit from an uncertain tax position may be recognized only if it is “more likely than not” that the position is sustainable, based on its technical merits. The tax benefit of a qualifying position is the largest amount of tax benefit that is greater than 50% likely of being realized upon settlement with a taxing authority having full knowledge of all relevant information.

	As of the adoption date, the total amount of liability for unrecognized tax benefits related to federal and state taxes was approximately $96,000. As of December 31, 2009, the corresponding balance of liability for unrecognized tax benefits was approximately $96,000 plus $4,000 of accrued interest and penalties. The Company recorded an additional $50,000 liability for unrecognized tax benefits in the six months ended June 30, 2010 related to prior year tax positions of an acquired company. The Company recognizes interest and penalties accrued related to unrecognized tax benefits in income tax expense.

F-35

EXAMWORKS GROUP, INC. AND SUBSIDIARIES

Notes to Financial Statements (Continued)

December 31, 2007, 2008 and 2009 and June 30, 2009 and 2010


	The following table summarizes the activity related to the unrecognized tax benefits for the year ended December 31, 2009 and the six months ended June 30, 2010 (dollars in thousands):


Balance at January 1, 2009	$	96
Increase to prior year tax positions		—
Increase to current year tax positions		—
Expiration of the statute of limitations for the assessment of taxes		—
Decrease related to settlements		—

Balance at December 31, 2009		96
Increase to prior year tax positions		50
Increase to current year tax positions		—
Expiration of the statute of limitations for the assessment of taxes		—
Decrease related to settlements		—

Balance at June 30, 2010	$	146


	The Company is no longer subject to U.S. federal income or state tax return examinations by tax authorities for tax years before 2005 and 2004, respectively, which periods relate to certain acquired businesses. The Company operates in multiple taxing jurisdictions and faces audits from various tax authorities. The Company remains subject to examination until the statute of limitations expires for the respective tax jurisdiction. The Company does not anticipate that the amount of the unrecognized benefit will significantly increase or decrease within the next 12 months.

(13)	Consolidated Statements of Cash Flows

	In connection with the 2008 acquisitions, the Company issued $10.8 million in common stock. In connection with the 2009 acquisitions, the Company issued $3.5 million in common stock, $5.5 million in subordinated unsecured notes payable and $389,000 in deferred payments. In connection with the 2010 acquisitions, the Company issued $6.7 million in common stock and $400,000 in subordinated unsecured notes payable. Refer to Note 3 for summary of acquisitions and the assets acquired and liabilities assumed. In addition, in 2010 the Company issued 739,506 shares of common stock with an estimated fair value of $1.4 million as consideration for the termination of the Compass monitoring fee agreement.

(14)	Segment and geographical information

	The Company complies with ASC Topic 280, Segment Reporting, (ASC Topic 280). ASC Topic 280, which is based on a management approach to segment reporting, establishes requirements to report selected segment information quarterly and to report annually entity-wide disclosures about products, major customers and the geographies in which the entity holds material assets and reports revenue. An operating segment is defined as a component that engages in business activities whose operating results are reviewed by the chief operating decision maker and for which discrete financial information is available. Based on the provisions of ASC Topic 280, the Company has determined that it operates in one segment. The Company manages its resources and assesses its performance on an enterprise-wide basis. The Company’s product groups qualify for aggregation under ASC Topic 280 due to their similarities in customer base, economic characteristics, and the nature of products and services provided.

	Through June 30, 2010, all of the Company’s revenues were generated within the U.S. With the acquisition of two IME businesses on June 30, 2010, the Company entered the Canadian Market. Total long-lived assets in the U.S. and Canada were $96.0 million and $21.7 million as of June 30, 2010, respectively.

F-36

EXAMWORKS GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2007, 2008 and 2009 and June 30, 2009 and 2010


(15)	Subsequent events

	The Company has evaluated subsequent events from the balance sheet date through October 12, 2010, the date at which the consolidated financial statements were available to be issued and identified the following items.

	On August 6, 2010, the Company acquired, in separate transactions, substantially all of the assets and assumed certain liabilities of Verity Medical, Inc. (Verity) and 100% of outstanding stock of Exigere Corporation (Exigere) for an aggregate price of $20.9 million, comprised of $20.0 million cash consideration and 167,317 shares of the Company’s common stock with an estimated fair value of $928,000. The Verity acquisition increased the Company’s market share in the Midwest region and the Exigere acquisition increased the Company’s market share in the Pacific Northwest region. See note 3 for pro forma financial information.

	On September 7, 2010, the Company acquired 100% of the outstanding stock of UK Independent Medical Services Limited (UKIM) for $15.6 million, comprised of $14.2 million cash consideration and 253,003 shares of the Company’s common stock with an estimated fair value of $1.4 million. With the UKIM acquisition, the Company entered into the IME market in the United Kingdom.

	On September 1, 2010 and October 1, 2010, the Company acquired, in separate transactions, substantially all of the assets and assumed certain liabilities of Health Cost Management (HCM) and Boston Medical Evaluation/Examination, Inc., Gateway Medical Services, Inc., and BME Gateway of New York, Inc. (collectively BME Gateway), respectively, for an aggregate purchase price of $16.4 million, comprised of $14.8 million cash consideration, 52,881 shares of the Company’s common stock with an estimated fair value of $300,000 and $1.3 million in an unsecured subordinated promissory note. The BME Gateway acquisition increased the Company’s market share in the Northeast region.

	On October 11, 2010, the Company entered into a new senior revolving credit facility with Bank of America, N.A., as administrative agent and the other lenders party thereto, which provides for borrowings of up to $180 million. The initial funding of the new senior credit facility is subject to the satisfaction of certain conditions, including, but not limited to, the completion of a public offering on or before December 31, 2010. The Company may elect to increase the new senior credit facility by an additional $50 million, so long as the Company is not in default under its terms and subject to the agreement of the Company’s lenders or new lenders to provide additional credit.

	On October 12, 2010, the board of directors approved an amended and restated certificate of incorporation that will, prior to the effectiveness of the registration statement, effect a stock split of every 1 outstanding shares of preferred stock and common stock into 5.1411 shares of preferred stock or common stock, respectively. The par value of the common and convertible preferred stock will not be adjusted as a result of the stock split. All issued and outstanding common stock, convertible preferred stock, warrants and options for common stock and per share amounts contained in the financial statements have been retroactively adjusted to reflect this stock split for all periods presented. The board of directors also approved an increase in the authorized capital to 50 million shares of preferred stock and 250 million shares of common stock.

F-37



EXAMWORKS GROUP, INC. AND SUBSIDIARIES



Index


		Page

Consolidated Balance Sheets as of December 31, 2009 and September 30, 2010 (unaudited)		F-39

Consolidated Statements of Operations and Comprehensive (Loss) Income for the nine months ended September 30, 2009 (unaudited) and 2010 (unaudited)		F-40

Consolidated Statements of Cash Flows for the nine months ended September 30, 2009 (unaudited) and 2010 (unaudited)		F-41

Notes to Consolidated Financial Statements		F-42

F-38

EXAMWORKS GROUP, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(In thousands, except share and per share amounts)

(Unaudited)



	December 31, 2009			September 30, 2010

Assets

Current assets:
Cash and cash equivalents	$	1,499		$	7,720
Accounts receivable, net		8,506			37,556
Other receivables		57			134
Prepaid expenses		793			1,859
Deferred tax assets		642			1,117
Other current assets		—			2,296

Total current assets		11,497			50,682
Equipment and leasehold improvements, net		1,972			3,242
Goodwill		32,395			77,391
Intangible assets, net		26,902			64,590
Deferred tax assets, noncurrent		1,948			7,419
Deferred financing costs, net		1,680			2,988
Other assets		153			233

Total assets	$	76,547		$	206,545


Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	6,819		$	18,073
Accrued expenses		2,057			12,715
Deferred revenue		64			938
Due to related parties		4,936			—
Current portion of long-term debt		3,263			18,660
Current portion of subordinated unsecured notes payable		1,565			1,836
Other current liabilities		2,167			3,432

Total current liabilities		20,871			55,654
Revolving line of credit and discount facility		600			6,448
Long-term debt, less current portion		29,371			70,960
Long-term subordinated unsecured notes payable, less current portion		3,552			2,510
Other long-term liabilities		1,753			2,747

Total liabilities		56,147			138,319

Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.0001 par value. Authorized 50,000,000 shares; no shares issued and outstanding at December 31, 2009, 4,975,180 issued and outstanding at September 30, 2010		—			33,000
Common stock, $0.0001 par value. Authorized 250,000,000 shares; issued and outstanding 12,356,942 and 17,709,760 shares at December 31, 2009 and September, 30, 2010 respectively		—			2
Additional paid-in capital		27,202			41,545
Accumulated other comprehensive income		—			1,071
Accumulated deficit		(6,802	)		(7,392	)

Total stockholders’ equity		20,400			68,226

Total liabilities and stockholders’ equity	$	76,547		$	206,545

See accompanying notes to consolidated financial statements.

F-39

EXAMWORKS GROUP, INC. AND SUBSIDIARIES

Consolidated Statements of Operations and Comprehensive (Loss) Income

(In thousands, except share and per share amounts)

(Unaudited)



	Nine months ended September 30,

	2009			2010


Revenues	$	33,796		$	109,242
Costs and expenses:
Costs of revenues		21,582			68,693
Selling, general and administrative expenses		9,933			23,970
Depreciation and amortization		4,630			12,452

Total costs and expenses		36,145			105,115

Income (loss) from operations		(2,349	)		4,127

Other expenses:
Interest expense, net		1,095			5,423
(Gain) loss on interest rate swap		(254	)		71
Realized foreign currency gain		—			(150	)

Total other expenses		841			5,344

Loss before income taxes		(3,190	)		(1,217	)
Income tax benefit		(1,188	)		(627	)

Net loss	$	(2,002	)	$	(590	)

Per share data:
Net loss per share:
Basic and Diluted	$	(0.19	)	$	(0.04	)

Weighted average number of common shares outstanding:
Basic and Diluted		10,302,888			15,571,924

Comprehensive (Loss) Income:
Net loss	$	(2,002	)	$	(590	)
Foreign currency translation adjustments		—			1,071
Total comprehensive (loss) income	$	(2,002	)	$	481

See accompanying notes to consolidated financial statements.

F-40

EXAMWORKS GROUP, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)


	Nine months ended September 30,
	2009			2010
Operating activities:
Net loss	$	(2,002	)	$	(590	)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Loss (gain) on interest rate swap		(254	)		71
Depreciation and amortization		4,630			12,452
Amortization of deferred rent		77			(48	)
Share-based compensation		211			559
Provision for doubtful accounts		89			427
Amortization of deferred financing costs		86			638
Deferred income taxes		(1,188	)		(4,221	)
Changes in operating assets and liabilities, net of effects
of acquisitions:
Accounts receivable		(739	)		(2,357	)
Prepaid expenses and other current assets		60			(70	)
Accounts payable and accrued expenses		2,120			6,375
Deferred revenue and customer deposits		(288	)		(627	)
Other current liabilities		221			1,646

Net cash provided by operating activities		3,023			14,255

Investing activities:
Cash paid for acquisitions, net		(11,548	)		(96,945	)
Purchases of equipment and leasehold improvements		(1,008	)		(1,339	)
Working capital and other settlements for acquisitions		1,207			306

Net cash used in investing activities		(11,349	)		(97,978	)

Financing activities:
Issuance of preferred stock, net		—			32,421
Issuance of common stock, net		—			2,972
Proceeds from the issuance of options		—			9
Borrowings under credit facility		7,500			60,666
Borrowings (repayments) under revolving line of credit		1,656			(600	)
Borrowings under discount facility		—			6,448
Payments under credit facility		(1,332	)		(3,681	)
Payment of deferred financing costs		(112	)		(1,947	)
Repayment of subordinated unsecured notes payable		(261	)		(1,280	)
Repayments to related parties		—			(3,500	)
Other		—			(1,599	)

Net cash provided by financing activities		7,451			89,909

Exchange rate impact on cash and cash equivalents		—			35

Net increase (decrease) in cash and cash equivalents		(875	)		6,221
Cash and cash equivalents, beginning of year		1,203			1,499

Cash and cash equivalents, end of period	$	328		$	7,720

Supplemental disclosures of cash flow information:
Cash paid for interest	$	898		$	3,778
Cash paid for income taxes	$	173		$	207

See accompanying notes to consolidated financial statements.

F-41

EXAMWORKS GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

September 30, 2009 and 2010

(Unaudited)



(1)	Nature of Operations and Basis of Presentation



	ExamWorks Group, Inc. (ExamWorks or the Company) is a leading provider of independent medical examinations (IMEs), peer and bill reviews and related services (IME services or the IME industry). ExamWorks, Inc. was incorporated as a Delaware corporation on April 27, 2007. In 2008, ExamWorks, Inc. acquired three companies operating in the independent medical examination (IME) industry. In 2009, ExamWorks, Inc. acquired 11 other IME companies, including a provider of software solutions to the IME industry. Through October 1, 2010, ExamWorks, Inc. acquired 13 additional IME companies. ExamWorks, Inc. currently operates out of 26 regional locations serving all 50 United States and Canada. In June 2010, ExamWorks, Inc. effected a corporate reorganization creating a holding company, ExamWorks Group, Inc., with ExamWorks, Inc. becoming a wholly-owned subsidiary of ExamWorks Group, Inc.



	The consolidated financial statements include the accounts of ExamWorks and its wholly-owned subsidiaries. Significant intercompany accounts and transactions have been eliminated in consolidation.



(2)	Summary of Significant Accounting Policies

	(a)	Stock Split

		On October 12, 2010, the Board of Directors approved an amended and restated certificate of incorporation that will, prior to the effectiveness of the registration statement, effect a stock split of every 1 outstanding shares of preferred stock and common stock into 5.1411 shares of preferred stock or common stock, respectively. The par value of the common and convertible preferred stock will not be adjusted as a result of the stock split. All issued and outstanding common stock, convertible preferred stock, warrants and options for common stock and per share amounts contained in the financial statements have been retroactively adjusted to reflect this stock split for all periods presented. The Board of Directors also approved an increase in the authorized capital to 50.0 million shares of preferred stock and 250 million shares of common stock.



	(b)	Use of Estimates



		The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management bases its estimates on certain assumptions which they believe are reasonable in the circumstances and actual results could differ from those estimates. The more significant estimates reflected in these consolidated financial statements include the valuation of equity issued, purchase price allocations, useful lives of intangible assets, potential impairment of goodwill and intangible assets, the allowance for doubtful accounts and the valuation of share-based compensation and derivative instruments.



	(c)	Unaudited Interim Financial Statements



		The accompanying interim consolidated statements of operations and cash flows for the nine months ended September 30, 2009 and 2010 are unaudited and have been prepared in accordance with the rules and regulations of the U.S. Securities and Exchange Commission. They do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. The unaudited interim consolidated financial statements have been prepared on the same basis as the audited consolidated financial statement and, in the opinion of the Company’s management, reflect all adjustments consisting of normal recurring accruals considered necessary to present fairly the Company’s results of its operations and its cash flows for the nine months ended September 30, 2009 and 2010.

F-42

EXAMWORKS GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

September 30, 2009 and 2010

(Unaudited)



	(d)	Foreign Currencies

		Assets and liabilities recorded in foreign currencies are translated into U.S. dollars at the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates of exchange prevailing during the year. Translation adjustments resulting from this process are recorded to other comprehensive loss.

	(e)	Accounts Receivable and Allowance for Doubtful Accounts



		Accounts receivable consist of amounts owed to the Company for services provided in the normal course of business and are reported net of allowance for doubtful accounts, which amounted to $432,000 and $1.2 million as of December 31, 2009 and September 30, 2010, respectively. Generally, no collateral is received from customers and additions to the allowance are based on ongoing credit evaluations of customers with general credit experience being within the range of management’s expectations. Accounts are reviewed regularly for collectability and those deemed uncollectible are written off.



	(f)	Concentrations of Credit Risk



		The Company routinely assesses the financial strength of its customers and establishes an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends and other information. For the nine months ended September 30, 2009, 14% of total revenues were associated with one customer. For the nine months ended September 30, 2010, there was no customer that accounted for greater than 10% of revenue. At September 30, 2010, there was no customer that accounted for greater than 10% of the accounts receivable balance.



	(g)	Long-Lived Assets



		In accordance with Impairment or Disposal of Long-Lived Assets, Subsections of Financial Accounting Standards Board (FASB) ASC Subtopic 360-10 (ASC 360), Property, Plant, and Equipment — Overall, long-lived assets, such as equipment and purchased intangible assets subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying value. If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. At December 31, 2009 and September 30, 2010, no impairment was noted.



	(h)	Goodwill and Other Intangible Assets



		Goodwill is an asset representing the future economic benefits arising from assets acquired in a business combination that are not individually identified and separately recognized. Goodwill is reviewed for impairment at least annually in accordance with the provisions of FASB ASC Topic 350, Intangibles — Goodwill and Other (ASC 350). The goodwill impairment test is a two-step test. Under the first step, the fair value of the reporting unit is compared with its carrying value (including goodwill). If the fair value of the reporting unit is less than its carrying value, an indication of goodwill impairment exists for the reporting unit and the enterprise must perform step

F-43

EXAMWORKS GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

September 30, 2009 and 2010

(Unaudited)



		two of the impairment test (measurement). Under step two, an impairment loss is recognized for any excess of the carrying amount of the reporting unit’s goodwill over the implied fair value of that goodwill. The implied fair value of goodwill is determined by allocating the fair value of the reporting unit in a manner similar to a purchase price allocation and the residual fair value after this allocation is the implied fair value of the reporting unit goodwill. Fair value of the reporting unit is determined using a discounted cash flow analysis. If the fair value of the reporting unit exceeds its carrying value, step two does not need to be performed. The Company performed its annual impairment review of goodwill in October 2009, and it was determined that the carrying amount of goodwill was not impaired and there has been no subsequent developments that would indicate impairment exists as of December 31, 2009 and September 30, 2010. The goodwill impairment review will continue to be performed annually or more frequently if facts and circumstances warrant a review.



		ASC 350 also requires that intangible assets with definite lives be amortized over their estimated useful lives. Currently, customer relationships, trade names, covenants not-to-compete and technology are amortized using the straight-line method over estimated useful lives.



	(i)	Deferred Financing Costs



		Deferred financing costs totaling $1.7 million were incurred in December 2009 in connection with the Fifth Third Credit Facility (see note 10) and will be amortized to interest expense over the three-year term of the facility using the straight-line method, which approximates the effective interest method. The Company’s previous credit facility was repaid in December 2009 with proceeds from the Fifth Third Credit Facility. In connection with this early retirement of debt, the Company recognized debt extinguishment costs of approximately $461,000 for the unamortized portion of the loan costs. The debt extinguishment costs were recorded as other interest expense in accordance with ASC Topic 470, Debt (ASC 470). For the nine month period ended September 30, 2010, an additional $1.9 million of deferred financing costs were incurred as the Company expanded its borrowing availability under the Fifth Third Credit Facility.



		For the nine months ended September 30, 2009 and 2010, the Company amortized $88,000 and $637,000 to interest expense, respectively.



	(j)	Revenue Recognition



		Revenue related to IMEs, peer reviews, bill reviews and administrative support services is recognized at the time services have been performed and the report is shipped to the end user. The Company believes that recognizing revenue at the time the report is shipped is appropriate because the Company’s revenue policies meet the following four criteria in accordance with ASC 605-10-S25, Revenue Recognition: Overall (ASC 605-10-S25), (i) persuasive evidence that arrangement exists, (ii) shipment has occurred, (iii) the price is fixed and determinable and (iv) collectability is reasonably assured.



		Revenue related to other IME services, including litigations support services, and medical record retrieval services, where no report is generated, is recognized at the time the service is performed. The Company believes that recognizing revenue at the time the service is performed is appropriate because the Company’s revenue policies meet the following four criteria in accordance with ASC 605-10-S25, (i) persuasive evidence that arrangement exists, (ii) services have been rendered, (iii) the price is fixed and determinable and (iv) collectability is reasonably assured.



		Should changes in conditions cause management to determine these criteria are not met for certain future transactions, revenue recognized for any reporting period could be adversely affected.

F-44

EXAMWORKS GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

September 30, 2009 and 2010

(Unaudited)



	(k)	Costs of Revenues



		Costs of revenues are comprised of fees paid to members of the Company’s medical panel; other direct costs including transcription, film and medical record obtainment and transportation; and other indirect costs including labor and overhead related to the generation of revenues.

	(l)	Income Taxes



		Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Beginning with the adoption of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, (included in FASB ASC Subtopic 740-10, Income Taxes — Overall), as of January 1, 2009, the Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. Prior to the adoption of FASB Interpretation No. 48, the Company recognized the effect of income tax positions only if such positions were probable of being sustained.



		The Company records interest and penalties related to unrecognized tax benefits in income tax expense.



	(m)	Loss Per Common Share



		Basic loss per share is calculated by dividing net loss by the weighted-average number of common shares outstanding during each period. Diluted loss per common share is calculated by dividing net loss, adjusted on an “as if converted” basis, by the weighted-average number of actual shares outstanding and, when dilutive, the share equivalents that would arise from the assumed conversion of convertible instruments.



		The effect of potentially dilutive stock options and warrants is calculated using the treasury stock method. For the nine months ended September 30, 2009, the potentially dilutive securities include options exercisable into 1.2 million shares of common stock. For the nine months ended September 30, 2010, the potentially dilutive securities include options and warrants exercisable into 4.3 million shares of common stock and preferred stock convertible into 5.0 million shares of common stock. For the nine months ended September 30, 2009 and 2010, all of the potentially dilutive securities were excluded from the calculation of shares applicable to loss per share, because their inclusion would have been anti-dilutive.



	(n)	Share-Based Employee Compensation



		The Company has an Amended and Restated 2008 Stock Incentive Plan (the Plan) that provides for granting of options. The Company accounts for share-based awards in accordance with ASC Topic 718, Compensation — Stock Compensation (ASC 718). ASC 718 requires measurement of compensation cost for all share-based awards at fair value on the grant date (or measurement date if different) and recognition of compensation expense, net of forfeitures, over the requisite service period for awards expected to vest.

F-45

EXAMWORKS GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

September 30, 2009 and 2010

(Unaudited)



		The fair value of stock option grants is determined using the Black-Scholes valuation model. The Black-Scholes option-pricing model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable, characteristics not present in these employee stock options. Additionally, option valuation models require the input of highly subjective assumptions, including the expected volatility of the stock price. Because the Company’s employee stock options have characteristics significantly different from those of traded options and because changes in the subjective input assumptions can materially affect the fair value estimates, in management’s opinion, the existing models may not provide a reliable single measure of the fair value of its share-based awards. The Company’s expected volatility assumptions are based on the Company’s peer group average implied volatility. Expected life assumptions are based upon the average of the “simplified” method as described in Securities and Exchange Commission Staff Accounting Bulletin No. 107, which is the midpoint between the vesting date and the end of the contractual term, and the contractual term of the option, in accordance with ASC 718, which states that if no amount within the range is more or less likely than any other amount, an average of the range (its expected value) should be used. The risk-free interest rate was selected based upon yields of U.S. Treasury issues with a term equal to the expected life of the option being valued.



		The assumptions utilized for stock option grants during the nine months ended September 30, 2010 were as follows:


		2010

Volatility		43.54 – 44.31%
Expected life (years)		8.00
Risk-free interest rate		2.68 – 3.53%
Dividend yield		—
Fair value		$0.64 – 1.13



		In the first nine months of 2010, the Company issued 2.6 million stock option awards to employees and non-employee directors. The weighted average fair value of each stock option was $0.74 per option and the aggregate fair value was $2.0 million. The majority of these awards vest over a three-year period, with the remaining awards vesting 50% over the earlier of 18 months or an initial public offering (IPO) and 50% over a 12 month period following an IPO, provided the individual remains in the employment of the Company as of the vesting date. Additionally, all these options could vest earlier in the event of a change in control or merger or other acquisition and 217,000 of these options could vest earlier in the event of an IPO. Share-based compensation expense related to the awards was $211,000 and $523,000 for the nine months ended September 30, 2009 and 2010, respectively. At September 30, 2010, the unrecognized compensation expense related to stock option grants was $2.1 million with a remaining weighted average life of 2.1 years.



		A summary of option activity for the nine months ended September 30, 2010 follows:


	Number of options			Weighted average exercise price

Balance at December 31, 2009		1,324,000		$	3.02
Options granted		2,640,000			6.57
Options exercised		(4,000	)		2.80
Options forfeited		(148,000	)		5.25

Balance at September 30, 2010		3,812,000		$	5.40



		There were 626,000 options exercisable as of September 30, 2010 with an exercise price of $2.89.



	(o)	Fair Value Measurements

F-46

EXAMWORKS GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

September 30, 2009 and 2010

(Unaudited)



	(o)	Fair Value Measurements

		In September 2006, the FASB issued authoritative guidance codified as ASC Topic 820, Fair Value Measurements and Disclosures (ASC 820). ASC 820 defines fair value, establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America and expands disclosure about fair value measurements. ASC 820 is effective for interim reporting periods in fiscal years beginning after November 15, 2007. The Company adopted the applicable provisions of ASC 820 effective January 1, 2008.

		ASC Topic 825, Financial Instruments (ASC 825), delayed the effective date of the application of ASC 820 to fiscal years beginning after November 15, 2008 for all nonfinancial assets and nonfinancial liabilities that are recognized or disclosed at fair value in the financial statements on a nonrecurring basis. Nonrecurring nonfinancial assets and nonfinancial liabilities for which the Company has not applied the provisions of ASC 820 primarily include those measured at fair value in goodwill and long-lived asset impairment testing, those initially measured at fair value in a business combination, and nonfinancial liabilities for exit or disposal activities.



		ASC 820 defines fair value as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 establishes a fair value hierarchy, which prioritizes the inputs used in measuring fair value into the following levels:



		In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible as well as consider counterpart credit risk in its assessment of fair value.



		Level 1 – Quoted prices in active markets for identical assets or liabilities.



		Level 2 – Inputs, other than quoted prices in active markets, that are observable either directly or indirectly.



		Level 3 – Unobservable inputs based on the company’s own assumptions.



		The Company’s financial liabilities, which are measured at fair value on a recurring basis, are categorized using the fair value hierarchy at December 31, 2009 and September 30, 2010, and are as follows (in thousands):



	Level 1		Level 2		Level 3		Total

As of December 31, 2009:
Financial liabilities:
Interest rate swap	$	—	$	485	$	—	$	485
Contingent consideration		—		—		2,630		2,630
As of September 30, 2010:
Financial liabilities:
Interest rate swap	$	—	$	685	$	—	$	685
Contingent consideration		—		—		3,883		3,883



		The fair value of the interest rate swap is determined using observable market inputs, such as current interest rates, and considers nonperformance risk of the Company and that of its counterparties.



		The contingent consideration relates to earnout provisions recorded in conjunction with certain acquisitions completed in 2009 and 2010 (see note 3).



		In February 2007, the FASB issued authoritative guidance codified as ASC 825, which permits entities to choose to measure many financial instruments and certain other items at fair value.

F-47

EXAMWORKS GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

September 30, 2009 and 2010

(Unaudited)



		This provision of ASC 825 is effective for fiscal years beginning after November 15, 2007. As the Company did not elect the fair value option, the adoption of this provision of ASC 825 did not have a material impact on the Company’s consolidated financial position, results of operations and cash flows for the year ended December 31, 2009 and for the nine months ended September 30, 2010.

	(p)	Comprehensive (Loss) Income



		Comprehensive (loss) income consists of two components, net loss and other comprehensive (loss) income. Other comprehensive (loss) income refers to revenues, expenses, gains and losses that under GAAP are recorded as a component of stockholders’ equity but are excluded from net loss. The Company’s other comprehensive (loss) income consists of foreign currency translation adjustments from those business units not using the U.S. dollar as their functional currency. There has been no tax effects provided on currency translation amounts as the amounts are considered to be permanently invested.



	(q)	Recent Accounting Pronouncements



		Recently Adopted Accounting Pronouncements



		In January 2010, the FASB issued Accounting Standards Update (“ASU”) 2010-06, Fair Value Measurements and Disclosure. This update provides amendments to Codification topic, Fair Value Measurements and Disclosures, which require new disclosures about transfers in and out of Levels 1 and 2 and the reasons for the transfers as well as reconciliation for fair value measurements using significant unobservable inputs (Level 3). The update is effective for interim and annual reporting periods beginning after December 15, 2009. Adoption of this update did not have a material impact on the Company’s consolidated financial condition, results of operations and cash flows.



		Accounting Pronouncements Not Yet Adopted



		In October 2009, the FASB ASU 2009-13 (ASU 2009-13), addressing revenue arrangements with multiple deliverables. The new guidance establishes a selling price hierarchy for determining the selling price of a deliverable, eliminates the residual method of allocation, requires the allocation of arrangement consideration to all deliverables using the relative selling price method, and significantly expands disclosure requirements. The guidance is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. The Company does not expect the adoption of the ASU 2009-13 to have a material impact on the Company’s consolidated financial position, results of operations and cash flows.



(3)	Acquisitions



	ExamWorks operates in a highly fragmented industry and has completed numerous acquisitions since July 14, 2008. A key component of ExamWorks’ acquisition strategy is growth through acquisitions that expand its geographic coverage, that provide new or complementary lines of business, expand its portfolio of services and that increase its market share.



	The Company has accounted for all business combinations using the purchase method to record a new cost basis for the assets acquired and liabilities assumed. The Company recorded, based on a preliminary purchase price allocation, intangible assets representing client relationships, tradenames, covenants not to compete, and technology and the excess of purchase price over the estimated fair value of the tangible assets acquired and liabilities assumed and the separately recognized intangible assets has been recorded as goodwill in the accompanying consolidated financial statements. The goodwill is attributable to synergies achieved through the streamlining of operations combined with improved margins attainable through increased market presence. The results of operations are reflected in the consolidated financial statements of the Company from the date of acquisition.

F-48

EXAMWORKS GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

September 30, 2009 and 2010

(Unaudited)



	(a)	2009 Acquisitions



		Abeton Acquisition



		On December 31, 2009, ExamWorks acquired, in two separate transactions, substantially all of the assets and assumed certain liabilities of Abeton, Inc. and Medical Assurance Group, Inc., both subsidiaries of The Abeton Group (collectively, the Abeton acquisition), for aggregate consideration of $9.6 million, comprised of $7.0 million cash consideration, $2.4 million in seller debt, and 154,000 shares of the Company’s common stock with an estimated fair value of $254,000. In conjunction with the Abeton acquisition, the Company incurred transaction costs of $343,000 which are reported in selling, general and administrative expenses in the consolidated statement of operations. The Abeton acquisition enabled the Company to expand its operations in the Pacific Northwest and Southwest regions.



		The preliminary allocation of consideration for the Abeton acquisition is summarized as follows (in thousands):


	Preliminary purchase price allocation December 31, 2009		Adjustments / reclassifications			Preliminary purchase price allocation September 30, 2010

Equipment and leasehold improvements	$	124	$	—		$	124
Customer relationships		3,525		—			3,525
Tradename		1,072		—			1,072
Covenants not to compete		46		—			46
Technology		99		—			99
Goodwill		4,340		13			4,353
Deferred tax asset associated with step-up in book basis		224		—			224
Assets acquired and liabilities assumed, net		224		(86	)		138

Totals	$	9,654	$	(73	)	$	9,581



	In 2010, the Company recorded an adjustment to working capital resulting in a decrease to total consideration paid of $73,000. The goodwill and other intangible assets resulting from the Abeton acquisition are expected to be deductible for tax purposes. The Company expects to make further adjustments to the purchase price allocation, principally resulting from working capital adjustments, in accordance with the purchase agreement.



	Other 2009 Acquisitions



	Additionally, in 2009, the Company completed the following individually insignificant acquisitions, as defined in SEC Regulation S-X Rule 3-05, with an aggregate purchase price of $26.2 million, comprised of $19.1 million cash consideration less cash acquired of $443,000, 1.6 million shares of the Company’s common stock with an estimated fair value of $2.7 million, $2.0 million of seller debt in the form of subordinated unsecured notes payable, $389,000 of deferred payments, and $2.3 million of contingent consideration. In conjunction with the other 2009 acquisitions, the Company incurred transaction costs of $1.2 million, which are reported in selling, general and administrative expenses in the consolidated statement of operations. These acquisitions expanded the Company’s geographic coverage and, to a lesser extent, enhanced its portfolio of services.

F-49

EXAMWORKS GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

September 30, 2009 and 2010

(Unaudited)


Company name	Form of acquisition	Date of acquisition

The Ricwel Corporation(1)	100% of the outstanding common stock	April 17, 2009
Ricwel of West Virginia, LLC(1)	100% of the membership interest	April 17, 2009
Marquis Medical Administrators, Inc.(1)	100% of the outstanding common stock	May 21, 2009
Florida Medical Services, Inc.(1)	100% of the outstanding common stock	May 21, 2009
IME Software Solutions, LLC(1)	100% of the membership interest	July 7, 2009
Benchmark Medical Consultants, Inc.(1)	100% of the outstanding common stock	August 4, 2009
The Evaluation Group, Inc.(1)	Substantially all of the assets and assumed certain liabilities	August 14, 2009
MedNet I.M.S, Inc.	Substantially all of the assets and assumed certain liabilities	December 31, 2009
Qualmed Evaluations, LLC	Substantially all of the assets and assumed certain liabilities	December 31, 2009
IME operations of Dr. Chalal and Dr. Zeide	Substantially all of the assets and assumed certain liabilities	December 31, 2009


(1)	The purchase price allocations for these acquisitions, included in the table below, are considered final as of September 30, 2010.



	The preliminary allocation of consideration for these acquisitions is summarized as follows (in thousands):


	Preliminary purchase price allocation December 31, 2009			Adjustments/ reclassifications			Preliminary purchase price allocation September 30, 2010

Equipment and leasehold improvements	$	258		$	—		$	258
Customer relationships		10,320			—			10,320
Tradename		3,043			—			3,043
Covenants not to compete		851			—			851
Technology		1,289			—			1,289
Goodwill		9,622			(75	)		9,547
Net deferred tax liability associated with step-up in book basis		(280	)		35			(245	)
Assets acquired and liabilities assumed, net		1,008			140			1,148

Totals	$	26,111		$	100		$	26,211



	In 2010, the Company recorded an adjustment to working capital for one of the insignificant 2009 acquisitions resulting in an increase to total consideration paid of $100,000. The Company expects to make further adjustments to the purchase price allocation, principally resulting from working capital and tax related adjustments, in accordance with the purchase agreements. Certain of these transactions contain earnout provisions based upon the achievement of certain revenue targets and profitability targets and payable annually over a two-year or a 4.75 year period. Based on estimates of expected cash payments and the probability of acquired businesses achieving certain results, the Company recorded $2.3 million of contingent consideration in conjunction with the preliminary purchase price allocation. The contingent consideration includes seller debt in the form of subordinated unsecured notes payable with an estimated fair value of $1.1 million, 356,000 shares of the Company’s common stock with an estimated fair value of $572,000, and deferred payments with an estimated fair value of $618,000. The seller debt and the shares of the Company’s stock are subject to clawback provisions in the event that certain revenue targets are not achieved over the earnout period. The deferred payments are payable annually over a

F-50

EXAMWORKS GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

September 30, 2009 and 2010

(Unaudited)



		two-year period, 50% payable in cash and 50% payable with the Company’s common stock. The fair value of the deferred payments are adjusted quarterly based primarily on the movement in the fair value of the Company’s common stock to be issued with the change being recorded as other (income) expense in the accompanying consolidated statements of operations.

		In the first nine months of 2010, the Company recorded additional contingent consideration of $967,000 resulting primarily from the change in the value of the earnout. In the third quarter of 2010, the Company fulfilled the first earnout obligation related to one of the 2009 acquisitions and paid $292,000 in cash and issued 104,000 shares of the Company’s common stock with an estimated fair value of $576,000. As of December 31, 2009 and September 30, 2010, the range of outcomes and the assumptions used to develop the estimate have not changed. Goodwill of $5.1 million and other intangible assets of $9.9 million are expected to be deductible for tax purposes.



	(b)	2010 Acquisitions



		Metro Medical Acquisition



		On March 26, 2010, ExamWorks acquired substantially all of the assets and assumed certain liabilities of Metro Medical Services, LLC (Metro Medical) for aggregate consideration of $13.6 million, comprised of $13.0 million cash consideration less cash acquired of $722,000 and 590,000 shares of the Company’s common stock with an estimated fair value of $1.3 million. In conjunction with the Metro Medical acquisition, the Company incurred transaction costs of $101,000 which are reported in selling, general and administrative expenses in the accompanying 2010 consolidated statement of operations. The Metro Medical acquisition enabled the Company to further expand its operations in the northeastern region of the United States.



		The preliminary allocation of consideration for the Metro Medical acquisition is summarized as follows (in thousands):


	Preliminary purchase price allocation September 30, 2010

Equipment and leasehold improvements	$	186
Customer relationships		4,715
Tradename		1,458
Covenants not to compete		66
Technology		100
Goodwill		5,689
Deferred tax asset associated with step-up in book basis		680
Assets acquired and liabilities assumed, net		687

Totals	$	13,581



		The goodwill and other intangible assets resulting from the Metro Medical acquisition are expected to be deductible for tax purposes. The Company expects to make further adjustments to the purchase price allocation, principally resulting from working capital adjustments, in accordance with the purchase agreement.



		Direct IME Acquisition



		On June 30, 2010, ExamWorks acquired substantially all of the assets and assumed certain liabilities of Direct IME, A Partnership, (Direct IME) for aggregate consideration of $13.6 million, comprised of $11.9 million cash consideration less cash acquired of $50,000, 508,000 shares of

F-51

EXAMWORKS GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

September 30, 2009 and 2010

(Unaudited)



		the Company’s common stock with an estimated fair value of $1.4 million and $351,000 of contingent consideration. The acquisition agreement contains a clawback provision whereby certain revenue and profitability targets must be met for a period of two years. The Company expects Direct IME to achieve the targeted levels. Additionally, the acquisition agreement contains contingent consideration in the form of an earnout provision based upon the achievement of certain revenue and profitability targets. Any contingent consideration is payable at the end of a two-year period. The fair value of the contingent consideration will be adjusted quarterly based primarily on variations in the expected performance of the acquired businesses with the change being recorded as other (income) expense in the accompanying consolidated statements of operations. As of September 30, 2010, the range of outcomes and the assumptions used to develop the estimate have not changed. In conjunction with the Direct IME acquisition, the Company incurred transaction costs of $189,000 which are reported in selling, general and administrative expenses in the accompanying 2010 consolidated statement of operations. The Direct IME acquisition enabled the Company to expand operations into the Canadian market.



		The preliminary allocation of consideration for the Direct IME acquisition is summarized as follows (in thousands):


	Preliminary purchase price allocation September 30, 2010

Equipment and leasehold improvements	$	34
Customer relationships		5,416
Tradename		720
Covenants not to compete		33
Technology		48
Goodwill		4,419
Deferred tax asset associated with step-up in book basis		1,469
Assets acquired and liabilities assumed, net		1,490

Totals	$	13,629



	The goodwill and other intangible assets resulting from the Direct IME acquisition are expected to be deductible for tax purposes. The Company expects to make further adjustments to the purchase price allocation, principally resulting from working capital adjustments, in accordance with the purchase agreement.



	Verity Medical Acquisition



	On August 6, 2010, ExamWorks acquired substantially all of the assets and assumed certain liabilities of Verity Medical, Inc, (Verity Medical) for cash consideration of $14.1 million. In conjunction with the Verity Medical acquisition, the Company incurred transaction costs of $111,000 which are reported in selling, general and administrative expenses in the accompanying 2010 consolidated statement of operations. The Verity Medical acquisition enabled the Company to further expand its operations in the midwestern region of the United States.

F-52

EXAMWORKS GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

September 30, 2009 and 2010

(Unaudited)



		The preliminary allocation of consideration for the Verity Medical acquisition is summarized as follows (in thousands):


	Preliminary purchase price allocation September 30, 2010

Equipment and leasehold improvements	$	46
Customer relationships		6,063
Tradename		1,036
Covenants not to compete		51
Technology		83
Goodwill		6,261
Deferred tax asset associated with step-up in book basis		12
Assets acquired and liabilities assumed, net		556

Totals	$	14,108



		The goodwill and other intangible assets resulting from the Verity acquisition are expected to be deductible for tax purposes. The Company expects to make further adjustments to the purchase price allocation, principally resulting from working capital adjustments, in accordance with the purchase agreement.



		UK Independent Medical Acquisition



		On September 7, 2010, ExamWorks acquired 100% of the outstanding common stock of UK Independent Medical Systems (UKIM) for aggregate consideration of $15.6 million, comprised of $14.1 million cash consideration and 255,000 shares of the Company’s common stock with an estimated fair value of $1.5 million. In conjunction with the UKIM acquisition, the Company incurred transaction costs of $714,000 which are reported in selling, general and administrative expenses in the accompanying 2010 consolidated statement of operations. The UKIM acquisition enabled the Company to expand operations into the UK market.



		The preliminary allocation of consideration for the UKIM acquisition is summarized as follows (in thousands):


	Preliminary purchase price allocation September 30, 2010

Equipment and leasehold improvements	$	152
Customer relationships		4,250
Tradename		1,060
Covenants not to compete		159
Technology		210
Goodwill		2,168
Deferred tax asset associated with step-up in book basis		1,292
Assets acquired and liabilities assumed, net		6,331

Totals	$	15,622



		The goodwill and other intangible assets resulting from the UKIM acquisition are expected to be deductible for U.S. federal income tax purposes. The Company expects to make further adjustments to the purchase price allocation, principally resulting from working capital adjustments, in accordance with the purchase agreement, and the allocation of intangible assets upon the completion of an outside valuation.

F-53

EXAMWORKS GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

September 30, 2009 and 2010

(Unaudited)



		Other 2010 Acquisitions



		Additionally, in the first nine months of 2010, the Company completed the following individually insignificant acquisitions, as defined in SEC Regulation S-X Rule 3-05, with an aggregate purchase price of $50.1 million, comprised of $44.6 million cash consideration less cash acquired of $942,000, 1.6 million shares of the Company’s common stock with an estimated fair value of $5.2 million, $400,000 of seller debt in the form of subordinated unsecured notes payable, and $786,000 of contingent consideration. In conjunction with the other 2010 acquisitions, the Company incurred transaction costs of $869,000, which are reported in selling, general and administrative expenses in the accompanying 2010 consolidated statement of operations. These acquisitions expanded the geographic coverage and, to a lesser extent, enhanced the service offering of the Company.


Company name	Form of acquisition	Date of acquisition

American Medical Bill Review, Inc. (AMBR)	Substantially all of the assets and assumed certain liabilities	March 15, 2010
Medical Evaluations, Inc. (MEI)	Substantially all of the assets and assumed certain liabilities	March 15, 2010
401 Diagnostics, Inc.	Substantially all of the assets and assumed certain liabilities	June 30, 2010
Independent Medical Services Corporation	Substantially all of the assets and assumed certain liabilities	June 30, 2010
Network Medical Review Co. Ltd.	100% of the outstanding common stock	June 30, 2010
SOMA Medical Assessments, Inc.	Substantially all of the assets and assumed certain liabilities	June 30, 2010
Exigere Corporation	100% of the outstanding common stock	August 6, 2010
Health Cost Management, LLC	Substantially all of the assets and assumed certain liabilities	September 1, 2010



		The preliminary allocation of consideration for these acquisitions is summarized as follows (in thousands):


	Preliminary purchase price allocation September 30, 2010

Equipment and leasehold improvements	$	606
Customer relationships		17,670
Tradename		4,329
Covenants not to compete		209
Technology		869
Goodwill		26,230
Deferred tax liability associated with step-up in book basis		(1,819	)
Assets acquired and liabilities assumed, net		1,997

Totals	$	50,091



		The Company expects to make further adjustments to the purchase price allocation, principally resulting from working capital and tax related adjustments, in accordance with the purchase agreements. One of the acquisition agreements contains a clawback provision whereby certain revenue and profitability targets must be met for a period of two years. The Company expects this acquisition to achieve the targeted levels. Additionally, this acquisition agreement contains contingent consideration in the form of an earnout provision based upon the achievement of certain revenue and profitability targets. The Company recorded $536,000 as the estimate of the

F-54

EXAMWORKS GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

September 30, 2009 and 2010

(Unaudited)



		fair value of the contingent consideration related to this acquisition. Any contingent consideration is payable at the end of a two-year period. The fair value of the contingent consideration will be adjusted quarterly based primarily on variations in the expected performance of the acquired businesses with the change being recorded as other (income) expense in the accompanying consolidated statements of operations. As of September 30, 2010, the range of outcomes and the assumptions used to develop the estimate have not changed. Goodwill of $11.9 million and other intangible assets of $13.2 million are expected to be deductible for tax purposes.



	(d)	Pro forma Financial Information



		The unaudited pro forma results of operations for the nine months ended September 30, 2009 assumes that the 2009 and 2010 acquisitions were completed on January 1, 2009. The unaudited pro forma results of operations for the nine months ended September 30, 2010 assumes that the 2010 acquisitions were completed on January 1, 2010. The 2010 acquisitions include acquisitions completed through October 1, 2010. The pro forma results include adjustments to reflect additional interest expense to fund the acquisitions, amortization of intangibles associated with the acquisitions, and other costs deemed to be non-recurring in nature.


	Nine months ended September 30,

	2009			2010

Pro forma revenues	$	154,704		$	170,400
Pro forma net income (loss)		(2,343	)		2,578
Pro forma income (loss) per share:
Basic	$	(0.15	)	$	0.15

Diluted	$	(0.15	)	$	0.11



		The pro forma financial information presented above is not necessarily indicative of either the results of operations that would have occurred had the acquisitions been effective as of January 1 of the respective periods or of future operations of the company.



(4)	Equipment and Leasehold Improvements



	Equipment and leasehold improvements at December 31, 2009 and at September 30, 2010, consist of the following (in thousands):


	Estimated useful lives	December 31, 2009		September 30, 2010

Computer and office equipment	3 years	$	1,971	$	3,719
Furniture and fixtures	3 – 5 years		736		1,256
Leasehold improvements	Lease term		139		222

			2,846		5,197
Less accumulated depreciation and amortization			874		1,955

Total		$	1,972	$	3,242



	Depreciation expense was $436,000 and $1.1 million and for the nine months ended September 30, 2009 and 2010, respectively.

F-55

EXAMWORKS GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

September 30, 2009 and 2010

(Unaudited)



(5)	Intangible Assets and Goodwill



	Intangible assets at December 31, 2009 and at September 30, 2010, consist of the following (in thousands):


	December 31, 2009

	Estimated life	Gross carrying amount		Accumulated amortization			Net carrying value

Amortized intangible assets:
Customer relationships	40 to 42 months	$	25,274	$	(5,843	)	$	19,431
Tradenames	45 months		6,846		(1,386	)		5,460
Covenants not to compete	36 months		1,328		(326	)		1,002
Technology	24 to 40 months		1,861		(852	)		1,009

Totals		$	35,309	$	(8,407	)	$	26,902


	September 30, 2010

	Estimated life	Gross carrying amount		Accumulated amortization			Net carrying value

Amortized intangible assets:
Customer relationships	40 to 42 months	$	63,780	$	(14,197	)	$	49,583
Tradenames	45 months		1,853		(702	)		1,151
Covenants not to compete	36 months		15,541		(3,422	)		12,119
Technology	24 to 40 months		3,182		(1,445	)		1,737

Totals		$	84,356	$	(19,766	)	$	64,590



	The aggregate intangible amortization expense was $4.2 million and $11.4 million for the nine months ended September 30, 2009 and 2010, respectively. The estimated future amortization expense of intangible assets is as follows (in thousands):


	Amount

Three months ended December 31, 2010	$	6,016
Year ended December 31:
2011		23,847
2012		19,283
2013		14,464
2014		980

Total	$	64,590

Changes in the carrying amount of goodwill for the nine months ended September 30, 2010 and as follows (in thousands):


Balance as of January 1, 2010	$	32,395
Goodwill acquired during the year		44,767
Adjustments to prior year acquistitions		(105	)
Effect of foreign currency translation		334

Balance as of September 30, 2010	$	77,391

F-56

EXAMWORKS GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

September 30, 2009 and 2010

(Unaudited)


(6)	Accrued Expenses



	Accrued expenses at December 31, 2009 and at September 30, 2010 consist of the following (in thousands):


	December 31, 2009		September 30, 2010

Accrued compensation and benefits	$	995	$	2,622
Accrued professional fees		733		1,831
Accrued income and other taxes		149		7,495
Other accrued expenses		180		767

Total	$	2,057	$	12,715



(7)	Stockholders’ Equity



	In December 2009, the Company initiated an equity offering of 1.3 million shares of common stock in exchange for $3.5 million, of which $560,000 was received in December 2009 with the balance being received and shares issued in January 2010. Proceeds from this issuance were used to repay the December 2009 subordinated promissory notes (see note 8).



	In January 2010, the Company issued 740,000 shares of common stock with an estimated fair value of $1.4 million to Compass Partners, LLC (Compass) as consideration for the termination of the monitoring fee (see note 8).



	During the first quarter of 2010, the Company commenced a private placement of Series A Convertible Preferred Stock to raise between $5.0 million and $33.0 million of additional capital, with the final closing occurring on May 7, 2010. As of September 30, 2010, the Company had issued 4,975,000 preferred shares, representing approximately $33.0 million in proceeds to the Company. These preferred shares have an initial liquidation preference of $33.0 million, accrue dividends at an annual rate of 12%, in each case payable only upon a liquidation or deemed liquidation event, and are convertible into shares of ExamWorks common stock. As of September 30, 2010, no preferred stock dividends had been accrued. Pursuant to an investor rights agreement with the holders of Series A Convertible Preferred Stock, unless there has been a liquidation or deemed liquidation event, the Company is required to file for an underwritten initial public offering (IPO) within 18 months of May 7, 2010 and to consummate such IPO within 24 months of such date. For each month that the Company fails to meet either of these deadlines, the Company is required to pay the holders of Series A Convertible Preferred Stock a monthly cash penalty of 2% of the purchase price for the Series A Convertible Preferred Stock, subject to certain limited exceptions. Such penalties would continue for so long as the Company has not filed for or consummated an IPO, redeemed the Series A Preferred Stock or consummated a liquidation or deemed liquidation event. The Company has not accrued any amounts related to the penalty as of September 30, 2010 as it expects to file for and consummate an IPO within the required deadlines. The Company has the right, at any time on or after three years from the termination of the private placement, to redeem all of the outstanding shares of Series A Convertible Preferred Stock at a price of $6.63 (subject to adjustment) multiplied by 1.75.



	The Company was required to issue a warrant to purchase shares of common stock to the private placement agent equal to 9% of the total number of shares of Series A Convertible Preferred Stock sold in the private placement. The warrant is exercisable for five years and has an exercise price of $6.63 per share. In addition, the placement agent elected to receive its placement agent fee and expense allowance of 7% and 2%, respectively, of proceeds from the private placement in shares of ExamWorks common stock and $270,000 in cash consideration. In conjunction with the final closing of the private placement on May 7, 2010, the Company issued 448,000 warrants to the placement agent, as described above, with an estimated fair value of $126,000 as of that date. In addition, as partial payment for its services, the Company issued 407,000 shares of the Company’s common with an estimated fair value of $1.0 million, to the placement agent as of that date.

F-57

EXAMWORKS GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

September 30, 2009 and 2010

(Unaudited)



	On July 16, 2010, the Company issued 44,000 shares of restricted stock with an estimated fair value of $145,000 to the members of the Board of Directors as compensation for services to be provided in the upcoming year. The Company will record the expense related to these awards in selling, general and administrative expenses over the service period.

	On August 4, 2010, the Company issued 104,000 shares of common stock with a fair value of $576,000 to fund the stock component of the first earnout obligation from a 2009 acquisition.

	On August 23 2010, the Company sold 17,000 shares of common stock for $200,000 in cash.

	During the nine months ended September 30, 2010, the Company issued 3.0 million shares of common stock, with a fair value of $9.4 million, to fund the stock consideration of the acquisitions completed in the nine month period ended September 30, 2010.



(8)	Related Party Transactions



	In December 2009, two stockholders advanced the Company $3.5 million in the form of subordinated promissory notes to fund a portion of the cash consideration of the acquisitions completed in December 2009. The notes bear interest at an annual rate of 7.5% and were repaid in January 2010. The notes are included in due to related parties in the accompanying 2009 consolidated balance sheet.



	Beginning in July 2008 and through December 2009, the Company was party to a monitoring fee agreement with Compass, whereby the Company would pay Compass, on a quarterly basis, 5% of adjusted EBITDA, as defined. In December 2009, the Company and Compass agreed to terminate the monitoring fee agreement in exchange for a one-time payment of $2.0 million, to be settled with 740,000 shares of ExamWorks common stock, as approved by the Company’s independent director. The shares were issued in January 2010. The Company recorded a charge in the fourth quarter of 2009 of $1.4 million (included in selling, general and administrative expenses in the accompanying 2009 consolidated statement of operations), representing the estimated fair value of the shares to be issued to settle the termination obligation. The liability is included in due to related parties in the accompanying 2009 consolidated balance sheet. Inclusive of this charge, the Company incurred $1.7 million in monitoring fees for the year ended December 31, 2009. Compass is an entity owned and controlled by Richard Perlman, the Company’s then Co-Chairman and Co-CEO.



	In June 2009, the Company engaged RedRidge Finance Group (RedRidge) to assist the Company in securing additional debt financing to allow the Company to continue to implement its acquisition strategy. In December 2009, in conjunction with the closing of the Fifth Third Credit Facility (see note 10), the Company paid RedRidge $500,000 in broker fees and recorded them as deferred financing costs in the consolidated balance sheet. P&P Investment, LLC (P&P), a company owned by Richard Perlman and James Price, the then Co-Chairmen and Co-CEO’s of the Company, are minority owners of RedRidge. For the nine months ended September 30, 2010, the Company paid RedRidge $425,000 in connection with the credit facility. Pursuant to the payment of the broker fees, the Company, RedRidge, P&P, Mr. Perlman and Mr. Price entered into a letter agreement under which P&P waived any right it had to any portion of the broker fees paid by the Company to RedRidge and agreed that such fee, minus amounts paid to RedRidge’s employees, would be paid solely to RedRidge’s majority owner.



	The Fifth Third Credit Facility contains a provision requiring the Company to use a third party to perform financial due diligence for acquisitions exceeding a certain size. With the approval of the senior lender, the Company engaged RedRidge to assist it with financial due diligence and incurred $52,000 in fees in 2009 related to acquisitions completed in December 2009 and $363,000 in fees in the first nine months of 2010 related to acquisitions during that period. P&P, Mr. Perlman and Mr. Price have likewise waived any right P&P had to any portion of the diligence fees paid by the Company to RedRidge.

F-58

EXAMWORKS GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

September 30, 2009 and 2010

(Unaudited)



(9)	Commitments and Contingencies



	(a)	Lease Commitments



		The Company and its subsidiaries lease office space under noncancelable operating leases with various expiration dates from 2010 through 2017.



		Future minimum lease payments under the operating leases in each of the years subsequent to September 30, 2010 are as follows (in thousands):


	Amount

Three months ended December 31, 2010	$	1,062
Year ended December 31:
2011		3,764
2012		3,041
2013		2,277
2014		1,523
Thereafter		2,687

Total	$	14,354



		Related rent expense was $1.2 million and $2.6 million for the nine months ended September 30, 2009 and 2010, respectively.



	(b)	Letter of Credit



		As of December 31, 2009 and September 30, 2010, the Company had $220,000 outstanding under letters of credit which are used to secure two of the Company’s leased office facilities.



(10)	Long-Term Debt


	December 31, 2009		September 30, 2010

Credit facility, Fifth Third Bank (Fifth Third)(a)	$	32,634	$	89,620
Revolving facility, Fifth Third(a)		600		—
Discount facility, Barclays(b)		—		6,448
Various subordinated unsecured notes payable; maturing at various dates from 2011 through 2014(c)		5,117		4,346

		38,351		100,414
Less current portion		4,828		20,496

	$	33,523	$	79,918





	(a)	The Company entered into a loan and security agreement dated December 18, 2009, (Fifth Third Credit Facility). The facility initially consisted of a $50.0 million term loan facility and a $5.0 million revolving credit facility. The revolving credit facility is subject to borrowing base limitations. The Fifth Third Credit Facility is available to finance the Company’s acquisition program and working capital needs. Borrowings under the Fifth Third Credit Facility bear interest at a base rate plus 5.0% for base rate loans or at a LIBOR base rate plus 5.5% for LIBOR loans with a LIBOR floor of 2.0%. The Fifth Third Credit Facility also requires the payment of a monthly commitment fee for any availability at a rate 0.5%. On April 26, 2010, the Fifth Third Credit Facility was amended increasing the term loan facility from $50.0 million to $65.0 million, for a total facility of $70.0 million. On June 23, 2010, the Fifth Third Credit Facility was further amended increasing the term loan facility from $65.0 million to $105.0 million, for a total facility of $110.0 million. On September 7, 2010, the Fifth Third Facility was further amended reducing the term loan facility from $105.0 million to $95.0 million and increasing the revolving facility from $5.0 million to $15.0 million, for a total facility of $110.0 million.



		All of the Company’s obligations under the credit facility are secured, subject to permitted liens and other exceptions (including, without limitation, exceptions for accounts used for payroll and other employee payments, amounts deposited in escrow pursuant to acquisition documents and certain other exceptions), by a first-priority lien on substantially all of the Company’s assets, including but not limited to, (i) a pledge of the capital stock of each of the Company’s subsidiaries and (ii) a security interest in substantially all of the tangible and intangible assets owned by the Company’s subsidiaries.

F-59

EXAMWORKS GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

September 30, 2009 and 2010

(Unaudited)



		The credit facility provides for monthly interest payments which commenced on January 1, 2010 and for the term loan facility, monthly installments of principal which commenced on July 1, 2010. The credit facility contains certain financial and nonfinancial covenants and restricts the payment of cash dividends. As of September 30, 2010, the Company had no amounts outstanding on the revolving credit facility, $220,000 of outstanding letters of credit, and $685,000 of interest rate hedging losses, resulting in $14.1 million available under the revolving credit facility.

	(b)	The Company, through its UKIM subsidiary in the UK, entered into a discount facility agreement dated September 29, 2010 (Discount Facility). The facility consists of a 5.0 million GBP accounts receivable discount facility. The Discount Facility is available to fund UKIM’s working capital needs and is subject to borrowing base limitations. The Discount Facility bears interest at a base rate plus 2.5% (3.0% at September 30, 2010) and is secured by UKIM’s outstanding accounts receivable.






	(c)	During 2009, the Company issued seller debt in the form of subordinated unsecured notes payable with an estimated fair value of approximately $5.5 million relating to certain acquisitions (see note 3). These notes are unsecured and subordinated to the Fifth Third Credit Facility. Five notes payable totaling $4.4 million bear interest at 6%, and are payable quarterly with amounts ranging between $50,000 and $76,000, with maturity dates ranging from August 2011 through March 2013. The remaining balance of the notes payable, $1.1 million, are noninterest bearing and are payable annually with amounts ranging between $250,000 and $333,000, maturing in 2014. The Company made principal payments totaling $1.3 million in the nine months ended September 30, 2010.



	As of September 30, 2010, future maturities of long-term debt were as follows (in thousands):


	Amount

Three months ended December 31, 2010	$	5,236
Years ended December 31:
2011		19,559
2012		68,492
2013		6,867
2014		260

	$	100,414



(11)	Financial Instruments



	The FASB issued ASC 815 which establishes accounting and reporting standards for derivative instruments. ASC 815 requires an entity to recognize all derivatives as either assets or liabilities and measure those instruments at fair value. Derivatives that do not qualify as a hedge must be adjusted to fair value in earnings. If the derivative does qualify as a hedge under ASC 815, changes in the fair value will either be offset against the change in fair value of the hedged assets, liabilities or firm commitments or recognized in accumulated other comprehensive income until the hedged item is recognized in earnings. The ineffective portion of a hedge’s change in fair value will be immediately recognized in earnings.



	In August 2008, in order to protect against interest rate exposure on its variable-rate debt, the Company entered into an interest rate swap to fix the interest rate applicable to certain of its variable-rate debt. The agreement swaps one-month LIBOR for a fixed interest rate of 4.36% with a notional amount of $10.5 million and $9.2 million as of December 31, 2009 and September 30, 2010, respectively. The Company did not meet the criteria for hedge accounting under ASC 815, thus the difference between its amortized cost and its fair value resulted in an unrealized gain (loss) at September 30, 2009 and 2010 of $254,000 and $(71,000), respectively, and such amount was reported in other expenses on the accompanying consolidated statements of operations for the nine months ended September 30, 2009 and 2010, respectively.



	The Company does not enter into derivative transactions for speculative purposes.



(12)	Income Taxes



	In preparing its financial statements, the Company estimates income taxes in each of the jurisdictions in which it operates. This process involves estimating actual current tax exposure together with assessing temporary differences resulting from differing treatment of items for tax and financial reporting

F-60

EXAMWORKS GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

September 30, 2009 and 2010

(Unaudited)



	purposes. These differences result in deferred income tax assets and liabilities. As of December 31, 2009, the Company had federal net operating losses (NOLs) totaling $800,000. These NOLs will be available to offset any future taxable income and will begin to expire in 2027. Additionally, on December 31, 2009, a change in ownership took place as defined for income tax purposes under Internal Revenue Code Section 382 (IRC Section 382), limiting the annual utilization of $800,000 of the NOL carryforward. Management believes that it is more likely than not that the recorded deferred tax assets will be realized. The Company generated $9.9 million of federal taxable income in the nine months ended September 30, 2010, fully utilizing the federal NOLs and resulting in income taxes payable of $3.6 million as of September 30, 2010, included in accrued expenses in the accompanying September 30, 2010 consolidated balance sheet. For the nine months ended September 30, 2009, and 2010, the Company had an income tax benefit of $1.2 million and $627,000, respectively. The Company has utilized its actual tax rate for the period ended September 30, 2010 as it is viewed as the best estimate of the annual effective tax rate.



	Effective January 1, 2009, the Company adopted the provisions of ASC 740 as it relates to uncertain tax positions. This interpretation prescribes a comprehensive model for how a company should recognize, measure, present and disclose in its financial statements uncertain tax positions that the company has taken or expects to take on a tax return. ASC 740 states that a tax benefit from an uncertain tax position may be recognized only if it is “more likely than not” that the position is sustainable, based on its technical merits. The tax benefit of a qualifying position is the largest amount of tax benefit that is greater than 50% likely of being realized upon settlement with a taxing authority having full knowledge of all relevant information.



	As of the adoption date, the total amount of liability for unrecognized tax benefits related to federal and state taxes was approximately $96,000. As of December 31, 2009, the corresponding balance of liability for unrecognized tax benefits was approximately $96,000 plus $4,000 of accrued interest and penalties. The Company recorded an additional $50,000 liability for unrecognized tax benefits in the nine months ended September 30, 2010 related to prior year tax positions of acquired companies. The Company recognizes interest and penalties accrued related to unrecognized tax benefits in income tax expense. The following table summarizes the activity related to the unrecognized tax benefits for the year ended December 31, 2009 and the nine months ended September 30, 2010 (dollars in thousands):


Balance at January 1, 2009	$	96
Increase to prior year tax positions		—
Increase to current year tax positions		—
Expiration of the statute of limitations for the assessment of taxes		—
Decrease related to settlements		—

Balance at December 31, 2009		96
Increase to prior year tax positions		50
Increase to current year tax positions		—
Expiration of the statute of limitations for the assessment of taxes		—
Decrease related to settlements		—

Balance at September 30, 2010	$	146



	The Company is no longer subject to U.S. federal income or state tax return examinations by tax authorities for tax years before 2005 and 2004, respectively, which periods relate to certain acquired businesses. The Company operates in multiple taxing jurisdictions and faces audits from various tax authorities. The Company remains subject to examination until the statute of limitations expires for the respective tax jurisdiction. The Company does not anticipate that the amount of the unrecognized benefit will significantly increase or decrease within the next 12 months.

F-61

EXAMWORKS GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

September 30, 2009 and 2010

(Unaudited)



(13)	Consolidated Statements of Cash Flows



	In connection with 2009 acquisitions completed through September 30, 2009, the Company issued $3.5 million in common stock, $5.5 million in subordinated unsecured notes payable and $389,000 in deferred payments. In connection with the 2010 acquisitions completed through September 30, 2010, the Company issued $9.4 million in common stock and $400,000 in subordinated unsecured notes payable. The Company also issued $576,000 in common stock to settle the equity component of the first earn out obligation of a 2009 acquisition. Refer to note 3 for a summary of acquisitions and the assets acquired and liabilities assumed. In addition, in 2010 the Company issued 740,000 shares of common stock with an estimated fair value of $1.4 million as consideration for the termination of the Compass monitoring fee agreement. .



(14)	Segment and geographical information



	The Company complies with ASC Topic 280, Segment Reporting, (ASC Topic 280). ASC Topic 280, which is based on a management approach to segment reporting, establishes requirements to report selected segment information quarterly and to report annually entity-wide disclosures about products, major customers and the geographies in which the entity holds material assets and reports revenue. An operating segment is defined as a component that engages in business activities whose operating results are reviewed by the chief operating decision maker and for which discrete financial information is available. Based on the provisions of ASC Topic 280, the Company has determined that it operates in one segment. The Company manages its resources and assesses its performance on an enterprise-wide basis. The Company’s product groups qualify for aggregation under ASC Topic 280 due to their similarities in customer base, economic characteristics, and the nature of products and services provided.



	For the nine months ended September 30, 2009, all of the Company’s revenues were generated in the U.S. For the nine months ended September 30, 2010, $102.8 million, $5.1 million and $1.3 million of the Company’s revenues were generated in the U.S., Canada and the U.K., respectively. As of December 31, 2009, all of the Company’s long-lived assets were located in the U.S. With the acquisition of SOMA and Direct IME in June 2010 the Company entered the Canadian market and with the acquisition of UKIM in September 2010 the Company entered the U.K. market. As of September 30, 2010, total long-lived assets located in the U.S, Canada and the U.K. were $121.6 million, $24.9 million and $9.4 million, respectively.



(15)	Subsequent events



	The Company has evaluated subsequent events from the balance sheet date through October 20, 2010, the date at which the consolidated financial statements were available to be issued and identified the following items.



	On October 1, 2010, the Company acquired substantially all of the assets and assumed certain liabilities of BME Gateway, Inc. (BME Gateway) for an aggregate price of $14.8 million, comprised of $13.5 million cash consideration and $1.3 million in the form of a subordinated unsecured note payable. The BME Gateway acquisition enhanced the Company’s presence in the New England and Northeastern regions of the US. See note 3 for pro forma financial information.

	On October 11, 2010, the Company entered into a new senior revolving credit facility with Bank of America, N.A., as administrative agent and the other lenders party thereto, which provides for borrowings of up to $180 million. The initial funding of the new senior credit facility is subject to the satisfaction of certain conditions, including, but not limited to, the completion of a public offering on or before December 31, 2010. The Company may elect to increase the new senior credit facility by an additional $50 million, so long as the Company is not in default under its terms and subject to the agreement of the Company’s lenders or new lenders to provide additional credit.

F-62

CFO MEDICAL SERVICES, P.A.

(Predecessor Company)

Index


		Page

Report of Independent Registered Public Accounting Firm		F-64

Balance Sheet as of December 31, 2007		F-65

Statements of Operations and Changes in Retained Earnings for the year ended December 31, 2007 and for the period from January 1, 2008 to July 13, 2008		F-66

Statements of Cash Flows for the year ended December 31, 2007 and for the period from January 1, 2008 to July 13, 2008		F-67

Notes to Financial Statements		F-68

F-63

Report of Independent Registered Public Accounting Firm

The Stockholders
CFO Medical Services, P.A.:

We have audited the accompanying balance sheet of CFO Medical Services, P.A. (the Predecessor Company) as of December 31, 2007, and the related statements of operations and changes in retained earnings and cash flows for the year ended December 31, 2007 and for the period from January 1, 2008 to July 13, 2008. These financial statements are the responsibility of the Predecessor Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of CFO Medical Services, P.A. as of December 31, 2007, and the results of its operations and its cash flows for the year then ended and for the period from January 1, 2008 to July 13, 2008, in conformity with U.S. generally accepted accounting principles.

/s/ KPMG LLP

Atlanta, Georgia

October 12, 2010

F-64

CFO MEDICAL SERVICES, P.A.

(Predecessor Company)

Ba lance Sheet


	December 31, 2007

Assets
Current assets:
Cash and cash equivalents	$	190,504
Accounts receivable, net		1,341,270
Prepaid expenses and other current assets		93,692

Total current assets		1,625,466
Equipment and leasehold improvements, net		238,387
Other assets		18,895

Total assets	$	1,882,748

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	344,109
Accrued expenses		304,151

Total current liabilities		648,260
Revolving line of credit		500,000
Note payable		48,818

Total liabilities		1,197,078

Commitments and contingencies
Stockholders’ equity:
Common stock, $1.00 par value. Authorized 5,000 shares, issued and outstanding 1,185 shares		1,185
Retained earnings		684,485

Total stockholders’ equity		685,670

Total liabilities and stockholders’ equity	$	1,882,748

See accompanying notes to financial statements.

F-65

CFO MEDICAL SERVICES, P.A.

(Predecessor Company)

Statements of Operations and Changes in Retained Earnings


	Year ended December 31, 2007		Period from January 1, 2008 to July 13, 2008

Revenues	$	9,783,011	$	6,071,647
Costs and expenses:
Costs of revenues		5,873,047		3,756,413
Selling, general and administrative expenses		3,771,905		2,304,395
Depreciation and amortization		57,445		33,080

Total costs and expenses		9,702,397		6,093,888

Income (loss) from operations		80,614		(22,241	)

Other expenses, net:
Interest expense, net		12,998		10,822

Total other expenses, net		12,998		10,822

Income (loss) before income taxes		67,616		(33,063	)
Income tax expense		3,406		2,805

Net income (loss)		64,210		(35,868	)
Retained earnings, beginning of period		620,275		684,485

Retained earnings, end of period	$	684,485	$	648,617

See accompanying notes to financial statements.

F-66

CFO MEDICAL SERVICES, P.A.

(Predecessor Company)

Statements of Cash Flows


	Year ended December 31, 2007			Period from January 1, 2008 to July 13, 2008

Operating activities:
Net income (loss)	$	64,210		$	(35,868	)
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:
Depreciation and amortization		57,445			33,080
Changes in operating assets and liabilities:
Accounts receivable, net		41,099			168,823
Prepaid expenses and other current assets		(55,299	)		(556	)
Accounts payable and accrued expenses		(224,095	)		527,566

Net cash (used in) provided by operating activities		(116,640	)		693,045

Investing activity:
Purchases of equipment and leasehold improvements		(122,767	)		—

Net cash used in investing activity		(122,767	)		—

Financing activities:
Principal payment on note payable		—			(48,818	)
Additions (reductions) to revolving line of credit facility, net		249,303			(500,000	)
Issuance of common stock, net		185			—

Net cash provided by (used in) financing activities		249,488			(548,818	)

Net increase in cash and cash equivalents		10,081			144,227
Cash and cash equivalents, beginning of period		180,423			190,504

Cash and cash equivalents, end of period	$	190,504		$	334,731

Supplemental disclosures of cash flow information:
Cash paid for interest	$	13,065		$	10,822
Cash paid for income taxes	$	2,690		$	2,805

See accompanying notes to financial statements.

F-67

CFO MEDICAL SERVICES, P.A.
(Predecessor Company)

N otes to Financial Statements


(1)	Nature of Operations and Basis of Presentation

	CFO Medical Services, P.A. (CFO or the Company) was founded in 2001. The Company’s independent review services include medical evaluation programs for group health, disability, workers’ compensation, automobile, and general liability. The Company’s main office is located in Roseland, New Jersey and primarily serves the states of New Jersey and New York. On July 14, 2008, the Company was merged into a wholly-owned subsidiary of ExamWorks, Inc. The Company is considered to be the predecessor company of ExamWorks, Inc.

(2)	Summary of Significant Accounting Policies

	(a)	Use of Estimates

		The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management bases its estimates on certain assumptions which they believe are reasonable in the circumstances and actual results could differ from those estimates. The most significant estimate reflected in these financial statements is the allowance for doubtful accounts.

	(b)	Cash and Cash Equivalents

		The Company considers all highly liquid investments with maturities of three months or less when purchased to be cash equivalents. The Company had no cash equivalents as of December 31, 2007.

	(c)	Accounts Receivable and Allowance for Doubtful Accounts

		Accounts receivable consist of amounts owed to the Company for services provided in the normal course of business and are reported net of allowance for doubtful accounts, which amounted to $54,512 as of December 31, 2007. Generally, no collateral is received from customers and additions to the allowance are based on ongoing credit evaluations of customers with general credit experience being within the range of management’s expectations. Accounts are reviewed regularly for collectibility and those deemed uncollectible are written off.

	(d)	Concentrations of Credit Risk

		The Company routinely assesses the financial strength of its customers and establishes an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends and other information. For the year ended December 31, 2007 and for the period from January 1, 2008 to July 13, 2008, there was no customer that accounted for greater than 10% of revenues. At December 31, 2007, there was no customer that accounted for greater than 10% of the accounts receivable balance.

	(e)	Equipment and Leasehold Improvements

		Equipment and leasehold improvements are recorded at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the respective assets and accelerated methods for income tax purposes. Leasehold improvements are amortized over the lesser of their expected useful life or the remaining lease term. Maintenance and repair costs are expensed as incurred.

F-68

CFO MEDICAL SERVICES, P.A.
(Predecessor Company)

Notes to Financial Statements (Continued)


	(f)	Long-Lived Assets

		In accordance with Impairment or Disposal of Long-Lived Assets Subsections of Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Subtopic 350-10 (ASC 360), Property, Plant, and Equipment — Overall, long-lived assets, such as equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying value. If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. At December 31, 2007 no impairment was indicated.

	(g)	Revenue Recognition

		Revenue related to IMEs and administrative support services is recognized at the time services have been performed and the report is shipped to the end user. The Company believes that recognizing revenue at the time the report is shipped is appropriate because the Company’s revenue policies meet the following four criteria in accordance with ASC 605-10-S25, Revenue Recognition: Overall, (i) persuasive evidence that arrangement exists, (ii) shipment has occurred, (iii) the price is fixed and determinable and (iv) collectability is reasonably assured.

		Revenue related to other IME services, including litigation support services, and medical record retrieval services, where no report is generated, is recognized at the time the service is performed. The Company believes that recognizing revenue at the time the service is performed is appropriate because the Company’s revenue policies meet the following four criteria in accordance with ASC 605-10-S25, (i) persuasive evidence that arrangement exists, (ii) services have been rendered, (iii) the price is fixed and determinable and (iv) collectability is reasonably assured.

	(h)	Costs of Revenues

		Costs of revenues are comprised of fees paid to members of the Company’s medical panel; other direct costs including transcription, film and medical record obtainment and transportation; and other indirect costs including labor and overhead related to the generation of revenues.

	(i)	Marketing and Advertising Costs

		Marketing and advertising costs are expensed as incurred and amounted to $100,920 and $52,272 for the year ended December 31, 2007, and for the period from January 1, 2008 to July 13, 2008, respectively.

	(j)	Fair Value Measurements

		The Company has adopted the provisions of FASB Statement No. 157, Fair Value Measurements, included in ASC Topic 820, Fair Value Measurements and Disclosures, for fair value measurements of financial assets and financial liabilities. ASC Topic 820 (Statement 157) defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 (Statement 157) also established a framework for measuring fair value and expands disclosures about fair value measurements.

F-69

CFO MEDICAL SERVICES, P.A.
(Predecessor Company)

Notes to Financial Statements (Continued)


		The Company uses financial instruments in the normal course of its business. The carrying values of cash, accounts receivable, prepaid assets, accounts payable, and accrued expenses approximate each of their fair values due to the short-term maturities of these assets and liabilities. Fair value is defined as the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

	(k)	Income Taxes

		The Company has elected with the Internal Revenue Service to be taxed as an S corporation. Accordingly, the Company is not liable to pay federal income taxes. Rather, the stockholders separately account for their pro rata share of corporate items of income, deduction, loss, and credits in their personal income tax returns. Items affecting the stockholders’ individual income tax liability are separately stated. The Company is subject to the state tax in New Jersey and in New York. Such tax provisions are classified in income tax expense, and were $3,406 and $2,805 for the year ended December 31, 2007 and for the period from January 1, 2008 to July 13, 2008, respectively.

(3)	Equipment and Leasehold Improvements

	Equipment and leasehold improvements consist of the following:


	Estimated useful lives	December 31, 2007


Computer and office equipment	3 years	$	221,769
Furniture and fixtures	3 years		132,569
Leasehold improvements	Lease term		70,396

			424,734
Less accumulated depreciation			186,347

Total		$	238,387


	Depreciation expense was $57,445 and $33,080 for the year ended December 31, 2007 and for the period from January 1, 2008 to July 13, 2008, respectively.

(4)	Accrued Expenses

	Accrued expenses consist of the following:


	December 31, 2007

Accrued compensation and benefits	$	254,925
Other accrued expenses		49,226

Total	$	304,151


(5)	Commitments and Contingencies

	(a)	Lease Commitments

		The Company leases office space under noncancelable operating leases expiring May 31, 2011.

		Future minimum lease payments under noncancelable operating leases in each of the years subsequent to December 31, 2007 are as follows:


Year ending December 31:
2008	$	135,370
2009		139,431
2010		143,614
2011		61,634

Total	$	480,049

F-70

CFO MEDICAL SERVICES, P.A.
(Predecessor Company)

Notes to Financial Statements (Continued)


		Related rent expense for the Company’s offices was $258,367 and $136,906 for the year ended December 31, 2007 and for the period from January 1, 2008 to July 13, 2008, respectively.

(6)	Related Party Transactions

	At December 31, 2007, the Company guaranteed a $300,000 unsecured personal loan for each of the stockholders totaling $600,000. In connection with the sale of the Company to ExamWorks, Inc., the stockholders repaid these loans in full on July 15, 2008.

	The Company also maintained a loan receivable due from ExamWorks, Inc. in the amount of $61,549 as of December 31, 2007 related to due diligence services performed by a third party firm. Such costs were paid by CFO on behalf on ExamWorks, Inc. prior to the Company’s acquisition. The loan receivable is contained within other assets in the accompanying balance sheets.

(7)	Debt

	(a)	Line of Credit

		The Company has an available line of credit for $800,000, which matures on December 31, 2009. Unpaid principal balances bear interest at an annual rate of prime plus 0.50%, adjusting with prime rate changes or 7.75% at December 31, 2007. Borrowings are secured by substantially all of the Company’s assets. As of December 31, 2007, the Company had borrowings outstanding of $500,000.

	(b)	Notes Payable

		As of December 31, 2007, the Company had a note payable of $48,818. The note bears interest at a 7% rate.

(8)	Subsequent Event

	On July 14, 2008, the Company merged into a wholly-owned subsidiary of ExamWorks, Inc.

F-71

CROSSLAND MEDICAL REVIEW SERVICES, INC.

Index


		Page

Independent Auditors’ Report		F-73

Balance Sheets as of December 31, 2007 and June 30, 2008 (unaudited)		F-74

Statements of Operations and Changes in Retained Earnings for the year ended December 31, 2007 and six months ended June 30, 2007 (unaudited) and 2008 (unaudited)		F-75

Statements of Cash Flows for the year ended December 31, 2007 and six months ended June 30, 2007 (unaudited) and 2008 (unaudited)		F-76

Notes to Financial Statements		F-77

F-72

Independent Auditors’ Report

The Stockholders
Crossland Medical Review Services, Inc.:

We have audited the accompanying balance sheet of Crossland Medical Review Services, Inc. (the Company) as of December 31, 2007, and the related statements of operations and changes in retained earnings and cash flows for the year then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards as established by the Auditing Standards Board (United States) and in accordance with the auditing standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Crossland Medical Review Services, Inc. as of December 31, 2007, and the results of its operations and its cash flows for the year then ended, in conformity with U.S. generally accepted accounting principles.

/s/ KPMG LLP

Atlanta, Georgia

August 13, 2010

F-73

CROSSLAND MEDICAL REVIEW SERVICES, INC.

Balance Sheets


	December 31, 2007			June 30, 2008

				(unaudited)
Assets
Current assets:
Cash	$	384,019		$	455,606
Accounts receivable		807,393			664,857
Prepaid expenses and other current assets		8,521			7,671
Deferred income taxes		—			—

Total current assets		1,199,933			1,128,134
Equipment, net		129,899			118,500
Other assets		33,787			33,787

Total assets	$	1,363,619		$	1,280,421


Liabilities and Stockholders’ Deficit
Current liabilities:
Accounts payable	$	1,320,786		$	1,104,346
Income tax payable		42,206			69,949
Accrued expenses		113,935			85,381
Other current liabilities		6,953			10,727

Total current liabilities		1,483,880			1,270,403
Other noncurrent liabilities		67,229			59,978
Deferred income taxes		50,253			45,843

Total liabilities		1,601,362			1,376,224

Commitments and contingencies
Stockholders’ deficit:
Common stock, $5 par value. Authorized 200 shares, issued and outstanding 200 shares		1,000			1,000
Accumulated deficit		(238,743	)		(96,803	)

Total stockholders’ deficit		(237,743	)		(95,803	)

Total liabilities and stockholders’ deficit	$	1,363,619		$	1,280,421

See accompanying notes to financial statements.

F-74

CROSSLAND MEDICAL REVIEW SERVICES, INC.

Statements of Operations and Changes in Retained Earnings


	Year ended December 31, 2007
				Six months ended June 30,

				2007			2008

				(unaudited)			(unaudited)

Revenues	$	11,758,836		$	5,532,565		$	5,185,950
Costs and expenses:
Costs of revenues		8,125,546			2,968,635			3,518,787
Selling, general, and administrative expenses		3,177,134			2,235,394			1,402,474
Depreciation		20,399			5,012			21,218

Total costs and expenses		11,323,079			5,209,041			4,942,479

Income from operations		435,747			323,524			243,471

Other (expenses) income, net:
Interest expense, net		(4,454	)		(7,892	)		—
Other income		117			—			940

Total other (expenses) income, net		(4,337	)		(7,892	)		940

Income before income taxes		431,410			315,632			242,531
Income tax expense		187,525			128,871			100,591

Net income		243,885			186,761			141,940
Accumulated deficit, beginning of period		(482,628	)		(482,628	)		(238,743	)

Accumulated deficit, end of period	$	(238,743	)	$	(295,867	)	$	(96,803	)

See accompanying notes to financial statements.

F-75

CROSSLAND MEDICAL REVIEW SERVICES, INC.

Statements of Cash Flows


	Year ended December 31, 2007			Six months ended June 30,

				2007			2008

				(unaudited)			(unaudited)
Operating activities:
Net income	$	243,885		$	186,761		$	141,940
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		20,399			5,012			21,218
Deferred income tax		31,910			(311	)		(4,410	)
Changes in operating assets and liabilities:
Accounts receivable		101,494			8,130			142,536
Prepaid expenses and other current assets		(5,721	)		(3,400	)		850
Accounts payable, accrued expenses and other current liabilities		40,026			223,596			(241,220	)
Other noncurrent liabilities		67,229			70,706			(7,251	)
Income tax payable		42,206			—			27,743

Net cash provided by operating activities		541,428			490,494			81,406

Investing activity:
Purchases of equipment, net		(102,887	)		(4,207	)		(9,819	)

Net cash used in investing activities		(102,887	)		(4,207	)		(9,819	)

Financing activity:
Repayments under revolving line of credit, net		(171,282	)		(34,145	)		—

Net cash used in financing activities		(171,282	)		(34,145	)		—

Net increase in cash		267,259			452,142			71,587
Cash, beginning of period		116,760			116,760			384,019

Cash, end of period	$	384,019		$	568,902		$	455,606

Supplemental disclosures of cash flow information:
Cash paid for interest	$	4,454		$	1,927		$	—
Cash paid for income taxes, net of refunds received	$	113,409		$	—		$	77,258

See accompanying notes to financial statements.

F-76

CROSSLAND MEDICAL REVIEW SERVICES, INC.

Notes to Financial Statements

December 31, 2007 and June 30, 2007 and 2008


(1)	Nature of Operations and Basis of Presentation

	Crossland Medical Review Services, Inc. (Crossland or the Company) was founded in 1992. The Company’s independent review services include medical evaluation programs for group health, disability, workers’ compensation, automobile, and general liability. The Company’s main office is located in New York and primarily serves the states of New York and New Jersey.

(2)	Summary of Significant Accounting Policies Unaudited Interim Financial Information

	(a)	Unaudited Interim Financial Information

		The accompanying interim balance sheet as of June 30, 2008, the statements of operations and changes in retained earnings and cash flows for the six months ended June 30, 2007 and 2008 are unaudited. These unaudited interim financial statements have been prepared in accordance with U.S. generally accepted accounting principles. In the opinion of the Company’s management, the unaudited interim financial statements have been prepared on the same basis as the audited financial statements and include all adjustments consisting of normal recurring adjustments necessary for the fair presentation of the Company’s financial position at June 30, 2008, and its results of operations and cash flows for the six months ended June 30, 2007 and 2008. The results of operations for the six months ended June 30, 2007 and 2008, are not necessarily indicative of the results to be expected for any other interim period or any fiscal year.

	(b)	Use of Estimates

		The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management bases its estimates on certain assumptions which they believe are reasonable in the circumstances and actual results could differ from those estimates. The most significant estimate reflected in these financial statements include the allowance for doubtful accounts.

	(c)	Accounts Receivable

		Accounts receivable consist of amounts owed to the Company for services provided in the normal course of business. Generally, no collateral is received from customers and the allowance is based on ongoing credit evaluations of customers with general credit experience being within the range of management’s expectations. Accounts are reviewed regularly for collectibility and those deemed uncollectible are written off. Allowance for doubtful accounts was $0 as of December 31, 2007 and June 30, 2008 (unaudited).

	(d)	Concentrations of Credit Risk

		The Company routinely assesses the financial strength of its customers and establishes an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends and other information. For the year ended December 31, 2007 and the six months ended June 30, 2007 and 2008 (unaudited), there were three customers that accounted for greater than 10% of revenues. At December 31, 2007, there were two customers that accounted for greater than 10% of the accounts receivable balance. At June 30, 2008 (unaudited), there were three customers that accounted for greater than 10% of the accounts receivable balance.

F-77

CROSSLAND MEDICAL REVIEW SERVICES, INC.

Notes to Financial Statements (Continued)

December 31, 2007 and June 30, 2007 and 2008


	(e)	Equipment

		Equipment is recorded at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the respective assets and accelerated methods for income tax purposes. Maintenance and repair costs are expensed as incurred.

	(f)	Long-Lived Assets

		In accordance with Impairment or Disposal of Long-Lived Assets Subsections of Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Subtopic 350-10 (ASC 360), Property, Plant, and Equipment — Overall, long-lived assets, such as equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying value. If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. At December 31, 2007, no impairment was noted.

	(g)	Deferred Rents

		The Company has entered into a lease for its headquarter offices in Syosset, New York that has certain escalation clauses or other features which require rental expense to be recognized on a straight-line basis over the life of the lease. At December 31, 2007 and June 30, 2008, the deferred rent balance was $74,182 and $70,705 (unaudited), respectively, and is included in other current and noncurrent liabilities in the accompanying balance sheets.

	(h)	Revenue Recognition

		Revenue is recognized at the time services have been performed and, if applicable, the medical report is sent to the end user. The Company believes that recognizing revenue at the time the report is sent is appropriate because the Company’s revenue policies meet the following four criteria: (i) persuasive evidence that arrangement exists, (ii) shipment has occurred, (iii) the price is fixed and determinable and (iv) collectibility is reasonably assured.

	(i)	Costs of Revenues

		Costs of revenues are comprised of fees paid to members of the Company’s medical panel; other direct costs including transcription, film and medical record obtainment and transportation; and other indirect costs including labor and overhead related to the generation of revenues.

	(j)	Marketing and Advertising Costs

		Marketing and advertising costs are expensed as incurred and amounted to $13,351, $4,320 (unaudited) and $10,103 (unaudited) for the year ended December 31, 2007, and the six months ended June 30, 2007 and 2008, respectively.

F-78

CROSSLAND MEDICAL REVIEW SERVICES, INC.

Notes to Financial Statements (Continued)

December 31, 2007 and June 30, 2007 and 2008


	(k)	Income Taxes

		Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

	(l)	Fair Value Measurements

		The Company has adopted the provisions of FASB Statement No. 157, Fair Value Measurements, included in ASC Topic 820, Fair Value Measurements and Disclosures, for fair value measurements of financial assets and financial liabilities. ASC Topic 820 (Statement 157) defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 (Statement 157) also established a framework for measuring fair value and expands disclosures about fair value measurements.

		The Company uses financial instruments in the normal course of its business. The carrying values of cash, accounts receivable, prepaid assets, accounts payable, and accrued expenses approximate each of their fair values due to the short-term maturities of these assets and liabilities. Fair value is defined as the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

(3)	Equipment

	Equipment consists of the following:


	Estimated useful lives		December 31, 2007		June 30, 2008

					(unaudited)
Computer and office equipment		3 years	$	19,960	$	22,666
Furniture and fixtures		3 years		70,267		77,380
Software		3 years		81,325		81,325

				171,552		181,371
Less accumulated depreciation				41,653		62,871

Total			$	129,899	$	118,500


	Depreciation expense was $20,399, $5,012 (unaudited) and $21,218 (unaudited) for the year ended December 31, 2007 and the six months ended June 30, 2007 and 2008, respectively.

(4)	Accrued Expenses

	Accrued expenses consist of the following:


	December 31, 2007		June 30, 2008

			(unaudited)
Accrued compensation and benefits	$	82,433	$	81,941
Other accrued expenses		31,502		3,440

Total	$	113,935	$	85,381

F-79

CROSSLAND MEDICAL REVIEW SERVICES, INC.

Notes to Financial Statements (Continued)

December 31, 2007 and June 30, 2007 and 2008


(5)	Income Taxes

	Income tax expense (benefit) for the year ended December 31, 2007 and six months ended June 30, 2008 (unaudited) and 2007 (unaudited) consists of:


	Current		Deferred			Total

December 31, 2007:
U.S. federal	$	136,765	$	28,045		$	164,810
State and local		18,850		3,865			22,715

	$	155,615	$	31,910		$	187,525

June 30, 2007 (unaudited):
U.S. federal	$	113,534	$	(274	)	$	113,260
State and local		15,648		(37	)		15,611

	$	129,182	$	(311	)	$	128,871

June 30, 2008 (unaudited):
U.S. federal	$	92,282	$	(3,876	)	$	88,406
State and local		12,719		(534	)		12,185

	$	105,001	$	(4,410	)	$	100,591

Deferred taxes result from temporary differences between the bases of assets and liabilities for financial reporting purposes and such amounts as measured by tax laws and regulations. The sources of the temporary differences and their effect on deferred tax assets and liabilities as of December 31, 2007 and June 30, 2008 (unaudited) were as follows:


	December 31, 2007 Noncurrent			June 30, 2008 Noncurrent

				(unaudited)
Deferred tax liabilities:
Basis difference of equipment	$	(50,253	)	$	(45,843	)

Total deferred tax liabilities		(50,253	)		(45,843	)

Net deferred tax assets
(liabilities)	$	(50,253	)	$	(45,843	)

The reconciliation of income tax computed at the U.S. federal statutory rate to income tax expense for the year ended December 31, 2007 and six months ended June 30, 2007 (unaudited) and 2008 (unaudited) were as follows:


	December 31, 2007		June 30,

			2007		2008

			(unaudited)		(unaudited)
Expected tax expense (federal)	$	146,679	$	107,315	$	91,484
Increase (decrease) in income taxes resulting from:
State income taxes, net of Federal benefit		22,715		15,611		12,185
Other		18,131		5,945		3,078

Income tax expense	$	187,525	$	128,871	$	100,591

The deferred tax assets are subject to periodic assessment as to recoverability. The Company has concluded that it is more likely than not that deferred tax assets will be realized in future periods.

F-80

CROSSLAND MEDICAL REVIEW SERVICES, INC.

Notes to Financial Statements (Continued)

December 31, 2007 and June 30, 2007 and 2008


(6)	Commitments and Contingencies

	(a)	Lease Commitments

		The Company leases office space under a noncancelable operating lease expiring October 1, 2011.

		Future minimum lease payments under the operating leases in each of the years subsequent to December 31, 2007 are as follows:


Year ending December 31:
2008	$	215,832
2009		223,380
2010		231,204
2011		239,280

Total	$	909,696


		Related rent expense for the Company’s main offices was $248,923, $127,410 (unaudited) and $108,614 (unaudited) for the year ended December 31, 2007 and the six months ended June 30, 2007 and 2008, respectively.

	(b)	Employee Benefit Plan

		The Company sponsors a voluntary defined contribution plan under section 401(k) of the Internal Revenue Code. The plan covers substantially all employees that meet specific age and length of service requirements. The Company has matching and vesting arrangements within the plan. The Company recorded compensation expense related to this plan, which amounted to $5,750, $2,875 (unaudited) and $6,206 (unaudited) for the year ended December 31, 2007, and the six months ended June 30, 2007 and 2008, respectively.

(7)	Debt

	Line of Credit

	The Company has an available line of credit for $200,000, which was due April 1, 2010. Unpaid principal balances initially bore interest at an annual rate of prime less 0.25%, adjusting with prime rate changes or 3.0% at December 31, 2007. Borrowings are secured by substantially all of the Company’s assets. As of December 31, 2007 and June 30, 2008 (unaudited), the Company had no borrowings outstanding.

(8)	Subsequent Event

	The Company has evaluated subsequent events from the balance sheet date through August 13, 2010, the date at which the financial statements were available to be issued and identifies the following item:

	On July 14, 2008, 100% of the outstanding common stock of the Company was acquired by ExamWorks, Inc.

F-81

SOUTHWEST MEDICAL EXAMINATION SERVICES, INC. AND SUBSIDIARIES

Index


		Page

Independent Auditors’ Report		F-83

Consolidated Balance Sheets as of December 31, 2007 and June 30, 2008 (unaudited)		F-84

Consolidated Statements of Operations and Changes in Retained Earnings for the year ended December 31, 2007 and six months ended June 30, 2007 (unaudited) and 2008 (unaudited)		F-85

Consolidated Statements of Cash Flows for the year ended December 31, 2007 and six months ended June 30, 2007 (unaudited) and 2008 (unaudited)		F-86

Notes to Consolidated Financial Statements		F-87

F-82

Independent Auditors’ Report

The Stockholders
Southwest Medical Examination Services, Inc.:

We have audited the accompanying consolidated balance sheet of Southwest Medical Examination Services, Inc. and subsidiaries (the Company) as of December 31, 2007, and the related consolidated statements of operations and changes in retained earnings and cash flows for the year then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Southwest Medical Examination Services, Inc. and subsidiaries as of December 31, 2007, and their results of operations and their cash flows for the year then ended, in conformity with U.S. generally accepted accounting principles.

/s/ KPMG LLP

Atlanta, Georgia

August 13, 2010

F-83

SOUTHWEST MEDICAL EXAMINATION SERVICES, INC. AND SUBSIDIARIES

Consolidated Balance Sheets


	December 31, 2007		June 30, 2008

			(unaudited)
Assets
Current assets:
Cash	$	53,804	$	217,728
Accounts receivable, net		1,252,078		1,084,366
Prepaid expenses and other current assets		79,278		101,615
Other receivables		5,332		6,536

Total current assets		1,390,492		1,410,245
Equipment and leasehold improvements, net		121,135		70,009
Other assets		29,935		22,050

Total assets	$	1,541,562	$	1,502,304


Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	139,350	$	160,421
Accrued expenses and other current liabilities		1,130,538		1,218,131

Total current liabilities		1,269,888		1,378,552
Other noncurrent liabilities		4,271		11,973

Total liabilities		1,274,159		1,390,525

Commitments and contingencies
Stockholders’ equity:
Common stock, $10 par value. Authorized 60,000 shares; issued and outstanding 100 shares		12,000		12,000
Retained earnings		255,403		99,779

Total stockholders’ equity		267,403		111,779

Total liabilities and stockholders’ equity	$	1,541,562	$	1,502,304

See accompanying notes to consolidated financial statements.

F-84

SOUTHWEST MEDICAL EXAMINATION SERVICES, INC. AND SUBSIDIARIES

Consolidated Statements of Operations and Changes in Retained Earnings


	Year ended December 31, 2007			Six months ended June 30,

				2007			2008

				(unaudited)			(unaudited)
Revenues	$	11,644,212		$	5,950,462		$	5,897,779
Costs and expenses:
Costs of revenues		6,713,755			3,293,178			3,465,520
Selling, general and administrative expenses		2,776,706			1,422,907			1,721,135
Depreciation and amortization		127,846			58,105			61,968

Total costs and expenses		9,618,307			4,774,190			5,248,623

Income from operations		2,025,905			1,176,272			649,156

Other income and (expenses):
Interest income, net		6,288			—			—
Other expenses		(3,243	)		(2,326	)		(2,689	)

Total other income, net		3,045			(2,326	)		(2,689	)

Income before income taxes		2,028,950			1,173,946			646,467
Income tax expense		47,790			25,440			27,702

Net income		1,981,160			1,148,506			618,765
Retained earnings, beginning of period		617,613			617,613			255,403
Dividends paid		(2,343,370	)		(851,809	)		(774,389	)

Retained earnings, end of period	$	255,403		$	914,310		$	99,779

See accompanying notes to consolidated financial statements.

F-85

SOUTHWEST MEDICAL EXAMINATION SERVICES, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows


	Year ended December 31, 2007			Six months ended June 30,

				2007			2008

				(unaudited)			(unaudited)
Operating activities:
Net income	$	1,981,160		$	1,148,506		$	618,765
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		127,846			58,105			61,968
Provision for doubtful accounts		173,003			87,500			64,413
Changes in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable		(367,456	)		(445,336	)		103,299
Prepaid expenses, other receivables and other current assets		18,638			78,068			(23,541	)
Accounts payable and accrued expenses		65,401			(39,291	)		45,307
Other changes in assets and liabilities		(4,416	)		—			78,942

Net cash provided by operating activities		1,994,176			887,552			949,155

Investing activity:
Purchases of equipment and leasehold improvements		(113,567	)		(76,819	)		(10,842	)

Net cash used in investing activity		(113,567	)		(76,819	)		(10,842	)

Financing activities:
Dividends paid		(2,343,370	)		(851,809	)		(774,389	)

Net cash used in financing activities		(2,343,370	)		(851,809	)		(774,389	)

Net increase (decrease) in cash		(462,761	)		(41,076	)		163,924
Cash, beginning of period		516,565			515,565			53,804

Cash, end of period	$	53,804		$	474,489		$	217,728

Supplemental disclosures of cash flow information:
Cash paid for interest	$	—		$	1,477		$	1,477

See accompanying notes to consolidated financial statements.

F-86


SOUTHWEST MEDICAL EXAMINATION SERVICES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 31, 2007, June 30, 2007 and 2008

(1)	Nature of Operations and Basis of Presentation

	Southwest Medical Examination Services was founded in 1992. In addition to providing comprehensive independent medical examination services to the industry, Southwest Medical Examination Services provides management, administration, training and support services to physicians in the medical legal arena. The head office is located in Dallas, Texas and serves the states of Colorado, Louisiana, Oklahoma and Texas. The consolidated financial statements include the two wholly-owned subsidiaries, Pacific Billing Services, Inc. (PBS) and Diagnostic Imaging Institutes, Inc. (DII). All significant intercompany accounts and transactions have been eliminated in consolidation.

(2)	Summary of Significant Accounting Policies

	(a)	Unaudited Interim Financial Information

		The accompanying interim consolidated balance sheet as of June 30, 2008, the consolidated statements of operations and changes retained earnings and cash flows for the six months ended June 30, 2007 and June 30, 2008 are unaudited. These unaudited interim financial statements have been prepared in accordance with U.S. generally accepted accounting principles. In the opinion of the Company’s management, the unaudited interim financial statements have been prepared on the same basis as the audited financial statements and include all adjustments consisting of normal recurring adjustments necessary for the fair presentation of the Company’s financial position at June 30, 2008, and their results of operations and cash flows for the six months ended June 30, 2007 and 2008. The results of operations for the six months ended June 30, 2007 and 2008 are not necessarily indicative of the results to be expected for any other interim period or any fiscal year.

	(b)	Use of Estimates

		The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management bases its estimates on certain assumptions which they believe are reasonable in the circumstances and actual results could differ from those estimates. The most significant estimate reflected in these financial statements is the allowance for doubtful accounts.

	(c)	Accounts Receivable and Allowance for Doubtful Accounts and Contractual Allowances

		Accounts receivable consist of amounts owed to the Company for services provided in the normal course of business and are reported net of allowance for doubtful accounts and contractual allowances, which amounted to $1,673,355 and $1,737,768 (unaudited) as of December 31, 2007 and June 30, 2008, respectively. Generally, no collateral is received from customers and additions to the allowance are based on ongoing credit evaluations of customers with general credit experience being within the range of management’s expectations. Accounts are reviewed regularly for collectability and those deemed uncollectible are written off.

	(d)	Concentrations of Credit Risk

		The Company routinely assesses the financial strength of its customers and establishes an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends and other information. For the year ended December 31, 2007, there were two customers that individually accounted for greater than 10% of revenues. For the six months ended June 30, 2007 (unaudited), there were two customers that accounted for greater than 10% of sales, respectively. At December 31, 2007, there were two customers that accounted for greater than 10% of the accounts receivable balance. At June 30, 2008 (unaudited), there was one customer that accounted for greater than 10% of the accounts receivable balance.

F-87


SOUTHWEST MEDICAL EXAMINATION SERVICES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2007 and June 30, 2007 and 2008

	(e)	Equipment and Leasehold Improvements

		Equipment and leasehold improvements are recorded at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the respective assets and accelerated methods for income tax purposes. Leasehold improvements are amortized over the lesser of their expected useful life or the remaining lease term. Maintenance and repair costs are expensed as incurred.

	(f)	Long-Lived Assets

		In accordance with Impairment or Disposal of Long-Lived Assets Subsections of Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Subtopic 350-10 (ASC 360), Property, Plant, and Equipment – Overall, long-lived assets, such as equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying value. If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. At December 31, 2007, no impairment was noted.

	(g)	Deferred Rents

		The Company has entered into a lease for its headquarter offices in Dallas, Texas that has certain escalation clauses or other features which require rental expense to be recognized on a straight-line basis over the life of the lease. At December 31, 2007 and June 30, 2008, the deferred rent balance was $4,271 and $11,973 (unaudited), respectively, and is included in other current and noncurrent liabilities in the accompanying consolidated balance sheets.

	(h)	Revenue Recognition

		Revenue is recognized at the time services have been performed and, if applicable, the medical report is shipped to the end user. The Company believes that recognizing revenue at the time the report is sent is appropriate because the Company’s sales policies meet the following four criteria: (i) persuasive evidence that arrangement exists, (ii) shipment has occurred, (iii) the price is fixed and determinable and (iv) collectibility is reasonably assured.

	(i)	Costs of Revenues

		Costs of revenues are comprised of fees paid to members of the Company’s medical panel; other direct costs including transcription, film and medical record obtainment and transportation; and other indirect costs including labor and overhead related to the generation of revenues.

	(j)	Marketing and Advertising Costs

		Marketing and advertising costs are expensed as incurred and amounted to $8,858, $2,803 (unaudited), and $30,627 (unaudited), for the year ended December 31, 2007 and the six months ended June 30, 2007 and 2008, respectively.

F-88


SOUTHWEST MEDICAL EXAMINATION SERVICES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2007 and June 30, 2007 and 2008

	(k)	Income Taxes

		The Company has elected with the Internal Revenue Service to be taxed as an S corporation. Accordingly, the Company does not pay federal income taxes. Rather, the stockholders separately account for their pro rata share of corporate items of income, deductions, loss and credits in their personal income tax returns. The company is subject to state and local tax in Texas and Louisiana. The Company is subject to taxes using an income-based measure in Texas. Such taxes have been classified as income tax expense within the consolidated statements of operations, and amounted to $47,790 for the year ended December 31, 2007 and $25,440 (unaudited) and $27,702 (unaudited) for the periods ended June 30, 2007 and 2008, respectively. Remaining tax expense (not based on an income measure) of $222,518 for the year ended December 31, 2007 and $122,814 (unaudited) and $133,736 (unaudited) for the periods ended June 30, 2007 and 2008, respectively, are classified within other expenses, net.

	(l)	Fair Value Measurements

		The Company has adopted the provisions of FASB Statement No. 157, Fair Value Measurements, included in ASC Topic 820, Fair Value Measurements and Disclosures, for fair value measurements of financial assets and financial liabilities. ASC Topic 820 (Statement 157) defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 (Statement 157) also established a framework for measuring fair value and expands disclosures about fair value measurements.

		The Company uses financial instruments in the normal course of its business. The carrying values of cash and cash equivalents, accounts receivable, prepaid assets, accounts payable, and accrued expenses approximate each of their fair values due to the short term maturities of these assets and liabilities. Fair value is defined as the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

(3)	Equipment and Leasehold Improvements

	Equipment and leasehold improvements consist of the following:


	Estimated useful lives	December 31, 2007		June 30, 2008

				(unaudited)
Furniture and equipment	3–7 years	$	288,982	$	299,825
Less accumulated depreciation and amortization			167,847		229,816

Total		$	121,135	$	70,009


	Depreciation and amortization expense was $127,846, $58,105 (unaudited), and $61,968 (unaudited) for the year ended December 31, 2007, and the six months ended June 30, 2007 and 2008, respectively.

(4)	Accrued Expenses and Other Current Liabilities

	Accrued expenses consist of the following:


	December 31, 2007		June 30, 2008

			(unaudited)
Accrued compensation and benefits	$	196,493	$	248,148
Accrued taxes		52,913		28,250
Other		881,132		941,733

Total	$	1,130,538	$	1,218,131


Other current liabilities principally consist of deferred revenue and customer refunds.

F-89

SOUTHWEST MEDICAL EXAMINATION SERVICES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2007 and June 30, 2007 and 2008


(5)	Commitments and Contingencies

	The Company leases office space under noncancelable operating leases expiring December 31, 2013 and November 30, 2012 for the Dallas and Houston offices, respectively.

	Future minimum lease payments under the operating leases in each of the years subsequent to December 31, 2007 are as follows:


Year ended December 31:
2008	$	61,937
2009		268,054
2010		274,192
2011		280,329
2012		282,051
2013		229,389

Total	$	1,395,952


	Related rent expense for the Company’s main offices was $484,150, and $237,952 (unaudited) and $280,573 (unaudited) for the year ended December 31, 2007, and the six months ended June 30, 2007 and 2008, respectively.

(6)	Subsequent Event

	The Company has evaluated subsequent events from the balance sheet date through August 13, 2010, the date at which the financial statements were available to be issued and identified the following item.

	On July 14, 2008, 100% of the Common Stock of the Company was acquired by ExamWorks, Inc.

F-90

THE EVALUATION GROUP, INC.

Table of Contents


		Page

Independent Auditors’ Report		F-92

Balance Sheets as of December 31, 2008 and June 30, 2009 (unaudited)		F-93

Statements of Operations and Changes in Retained Earnings for the year ended December 31, 2008 and six months ended June 30, 2008 (unaudited) and 2009 (unaudited)		F-94

Statements of Cash Flows for the year ended December 31, 2008 and six months ended June 30, 2008 (unaudited) and 2009 (unaudited)		F-95

Notes to Financial Statements		F-96

F-91

Independent Auditors’ Report

The Stockholder
The Evaluation Group, Inc.:

We have audited the accompanying balance sheet of The Evaluation Group, Inc. (the Company) as of December 31, 2008, and the related statements of operations and changes in retained earnings and cash flows for the year then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of The Evaluation Group, Inc. as of December 31, 2008, and the results of its operations and its cash flows for the year then ended, in conformity with U.S. generally accepted accounting principles.

/s/ KPMG LLP

Atlanta, Georgia

August 13, 2010

F-92

THE EVALUATION GROUP, INC.

Balance Sheets


	December 31, 2008		June 30, 2009

			(unaudited)
Assets
Current assets:
Cash	$	201,941	$	100,705
Accounts receivable, net		675,582		730,221
Prepaid expenses and other current assets		43,378		66,901

Total current assets		920,901		897,827
Equipment and leasehold improvements, net		100,657		97,287
Other assets		29,000		29,000

Total assets	$	1,050,558	$	1,024,114


Liabilities and Stockholder’s Equity
Current liabilities:
Accounts payable	$	462,126	$	588,194
Accrued expenses		231,657		26,387
Other current liabilities		11,673		16,443

Total current liabilities		705,456		631,024
Revolving line of credit		100,000		—
Other noncurrent liabilities		81,588		72,903

Total liabilities		887,044		703,927


Commitments and contingencies
Stockholder’s equity:
Common stock, $10 par value. Authorized 60,000 shares; issued and outstanding 100 shares		1,000		1,000
Retained earnings		162,514		319,187

Total stockholder’s equity		163,514		320,187

Total liabilities and stockholder’s equity	$	1,050,558	$	1,024,114

See accompanying notes to financial statements.

F-93

THE EVALUATION GROUP, INC.

Statements of Operations and Changes in Retained Earnings


	Year ended December 31, 2008			Six months ended June 30,

					2008		2009

				(unaudited)		(unaudited)
Revenues	$	7,066,796		$	3,460,266	$	3,652,728
Costs and expenses:
Costs of revenues		4,038,900			1,690,627		1,826,373
Selling, general and administrative expenses		3,255,701			1,685,216		1,623,136
Depreciation and amortization		56,781			25,306		27,424

Total costs and expenses		7,351,382			3,401,149		3,476,933

(Loss) income from operations		(284,586	)		59,117		175,795

Other income and (expenses):
Interest income (expense), net		1,226			248		(1,441	)

Total other income (expenses)		1,226			248		(1,441	)

(Loss) income before income taxes		(283,360	)		59,365		174,354
Income tax expense		41,154			7,500		17,681

Net (loss) income		(324,514	)		51,865		156,673
Retained earnings, beginning of period		562,028			562,028		162,514
Dividends paid		(75,000	)		—		—

Retained earnings, end of period	$	162,514		$	613,893	$	319,187

See accompanying notes to financial statements.

F-94

THE EVALUATION GROUP, INC.

Statements of Cash Flows


	Year ended December 31, 2008			Six months ended June 30,

				2008			2009

				(unaudited)			(unaudited)
Operating activities:
Net (loss) income	$	(324,514	)	$	51,865		$	156,673
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Depreciation and amortization		56,781			25,306			27,424
Provision for doubtful accounts		5,311			6,018			477
Changes in operating assets and liabilities:
Accounts receivable		69,506			6,749			(55,116	)
Prepaid expenses and other current assets		(37,542	)		(29,678	)		(23,523	)
Accounts payable and accrued expenses		533,757			169,839			(174,409	)
Other changes in assets and liabilities		(4,294	)		(4,460	)		(3,915	)

Net cash provided by (used in) operating activities		299,005			225,639			(72,389	)

Investing activity:
Purchases of equipment and leasehold improvements		(26,857	)		(9,712	)		(24,054	)

Net cash used in investing activity		(26,857	)		(9,712	)		(24,054	)

Financing activities:
Borrowings (repayments) under revolving line of credit		100,000			—			(100,000	)
Dividends paid		(75,000	)		(75,000	)		—
Outstanding checks in excess of funds on deposit		(95,207	)		(95,207	)		95,207

Net cash used in financing activities		(70,207	)		(170,207	)		(4,793	)

Net increase (decrease) in cash		201,941			45,720			(101,236	)
Cash, beginning of period		—			—			201,941

Cash, end of period	$	201,941		$	45,720		$	100,705

Supplemental disclosures of cash flow information:
Cash paid for interest	$	—		$	—		$	1,477
Cash paid for income taxes		—			7,500			17,681

See accompanying notes to financial statements.

F-95

THE EVALUATION GROUP, INC.

Notes to Financial Statements

December 31, 2008 and June 30, 2008 and 2009


(1)	Nature of Operations and Basis of Presentation

	The Evaluation Group, Inc. (TEG or the Company) was founded in 2000. The Company’s independent review services include medical evaluation programs for group health, disability, workers’ compensation, automobile and general liability. The Company’s main office is located in Southfield, Michigan and primarily serves the states of Illinois and Michigan.

(2)	Summary of Significant Accounting Policies

	(a)	Unaudited Interim Financial Information

		The accompanying interim balance sheet as of June 30, 2009, the statements of operations and changes in retained earnings and cash flows for the six months ended June 30, 2008 and 2009 are unaudited. These unaudited interim financial statements have been prepared in accordance with U.S. accounting principles generally accepted. In the opinion of the Company’s management, the unaudited interim financial statements have been prepared on the same basis as the audited financial statements and include all adjustments consisting of normal recurring adjustments necessary for the fair presentation of the Company’s financial position at June 30, 2009, and its results of operations and cash flows for the six months ended June 30, 2008 and 2009. The results of operations for the six months ended June 30, 2008 and 2009, are not necessarily indicative of the results to be expected for any other interim period or any fiscal year.

	(b)	Use of Estimates

		The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management bases its estimates on certain assumptions which they believe are reasonable in the circumstances and actual results could differ from those estimates. The most significant estimate reflected in these financial statements is the allowance for doubtful accounts.

	(c)	Cash and Cash Equivalents

		The Company considers all highly liquid investments with maturities of three months or less when purchased to be cash equivalents. At December 31, 2008 and June 30, 2009 (unaudited), there were no cash equivalents on hand.

		It is the policy of the Company to record checks issued in excess of funds on deposit as accounts payable for balance sheet presentation, and include the changes in the positions as cash flows from financing activities in the statements of cash flows. Accounts payable included reclassification of checks issued in excess of funds on deposit in the amount of $190,395 at December 31, 2008. At June 30, 2009, funds on deposit were in excess of checks issued and no reclassification was necessary.

	(d)	Accounts Receivable and Allowance for Doubtful Accounts

		Accounts receivable consist of amounts owed to the Company for services provided in the normal course of business and are reported net of allowance for doubtful accounts, which amounted to $5,311 and $5,788 (unaudited) as of December 31, 2008 and June 30, 2009, respectively. Generally, no collateral is received from customers and additions to the allowance are based on ongoing credit evaluations of customers with general credit experience being within the range of management’s expectations. Accounts are reviewed regularly for collectability and those deemed uncollectible are written off.

F-96

THE EVALUATION GROUP, INC.

Notes to Financial Statements (Continued)

December 31, 2008 and June 30, 2008 and 2009


	(e)	Concentrations of Credit Risk

		The Company routinely assesses the financial strength of its customers and establishes an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends and other information. For the year ended December 31, 2008, there was one customer that accounted for greater than 10% of revenues. For the six months ended June 30, 2008 and 2009 (unaudited), there were two customers that accounted for greater than 10% of revenues. At December 31, 2008, there were no customers that accounted for greater than 10% of the accounts receivable balance. At June 30, 2009 (unaudited), there was one customer that accounted for greater than 10% of the accounts receivable balance.

	(f)	Equipment and Leasehold Improvements

		Equipment and leasehold improvements are recorded at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the respective assets and accelerated methods for income tax purposes. Leasehold improvements are amortized over the lesser of their expected useful life or the remaining lease term. Maintenance and repair costs are expensed as incurred.

	(g)	Long-Lived Assets

		In accordance with Impairment or Disposal of Long-Lived Assets Subsections of Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Subtopic 350-10 (ASC 360), Property, Plant, and Equipment — Overall, long-lived assets, such as equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying value. If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. At December 31, 2008, no impairment was noted.

	(h)	Deferred Rents

		The Company has entered into a lease for its headquarter offices in Southfield, Michigan that has certain escalation clauses or other features which require rental expense to be recognized on a straight-line basis over the life of the lease. At December 31, 2008 and June 30, 2009, the deferred rent balance was $93,262 and $87,996 (unaudited), respectively, and is included in other current and noncurrent liabilities in the accompanying balance sheets.

	(i)	Revenue Recognition

		Revenue is recognized at the time services have been performed and, if applicable, the medical report is shipped to the end user. The Company believes that recognizing revenue at the time the report is sent is appropriate because the Company’s revenue policies meet the following four criteria: (i) persuasive evidence that arrangement exists, (ii) shipment has occurred, (iii) the price is fixed and determinable and (iv) collectibility is reasonably assured.

	(j)	Costs of Revenues

		Costs of revenues are comprised of fees paid to members of the Company’s medical panel; other direct costs including transcription, film and medical record obtainment and transportation; and other indirect costs including labor and overhead related to the generation of revenues.

F-97

THE EVALUATION GROUP, INC.

Notes to Financial Statements (Continued)

December 31, 2008 and June 30, 2008 and 2009


	(k)	Marketing and Advertising Costs

		Marketing and advertising costs are expensed as incurred and amounted to $42,471, $28,797 (unaudited) and $22,293 (unaudited) for the year ended December 31, 2008, and the six months ended June 30, 2008 and 2009, respectively.

	(l)	Income Taxes

		The Company has elected with the Internal Revenue Service to be taxed as an S corporation. Accordingly, the Company does not pay federal income taxes. Rather, the stockholder separately accounts for his pro rata share of corporate items of income, deduction, loss, and credits in his personal income tax return. Items affecting the stockholder individual income tax liability are separately stated. The Company is subject to state tax in Illinois and Michigan. Such tax provisions are classified in income tax expense, and were $41,154, $13,083 (unaudited) and $17,681 (unaudited) for the year ended December 31, 2008 and the six months ended June 30, 2008 and 2009, respectively.

	(m)	Fair Value Measurements

		The Company has adopted the provisions of FASB Statement No. 157, Fair Value Measurements, included in ASC Topic 820, Fair Value Measurements and Disclosures, for fair value measurements of financial assets and financial liabilities. ASC Topic 820 (Statement 157) defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 (Statement 157) also established a framework for measuring fair value and expands disclosures about fair value measurements.

		The Company uses financial instruments in the normal course of its business. The carrying values of cash and cash equivalents, accounts receivable, prepaid assets, accounts payable, and accrued expenses approximate each of their fair values due to the short term maturities of these assets and liabilities. Fair value is defined as the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

(3)	Equipment and Leasehold Improvements

	Equipment and leasehold improvements consist of the following:


	Estimated useful lives		December 31, 2008		June 30, 2009

					(unaudited)
Computer and office equipment		3 years	$	261,073	$	285,127
Furniture and fixtures		3 years		213,404		213,404
Leasehold improvements		Lease term		34,989		34,989
Medical equipment		3 years		40,617		40,617
Vehicles		3 years		30,840		30,840

				580,923		604,977
Less accumulated depreciation and amortization				480,266		507,690

Total			$	100,657	$	97,287

Depreciation and amortization expense was $56,781, $31,024 (unaudited) and $27,424 (unaudited) for the year ended December 31, 2008 and six months ended June 30, 2008 and 2009, respectively.

F-98

THE EVALUATION GROUP, INC.

Notes to Financial Statements (Continued)

December 31, 2008 and June 30, 2008 and 2009


(4)	Accrued Expenses

Accrued expenses consist of the following:


	December 31, 2009		June 30, 2009

			(unaudited)
Accrued compensation and benefits	$	200,000	$	1,054
Accrued state taxes		6,780		—
Accrued professional fees		5,000		11,735
Other accrued expenses		19,877		13,598

Total	$	231,657	$	26,387


(5)	Commitments and Contingencies

	(a)	Lease Commitments

		The Company leases office space under a noncancelable operating lease expiring March 1, 2013.

		Future minimum lease payments under the operating lease in each of the years subsequent to December 31, 2008 are as follows:


Year ending December 31:
2009	$	165,192
2010		172,032
2011		178,862
2012		185,700
2013		31,140

Total	$	732,926


		Related rent expense for the Company’s main offices was $153,519, $78,607 (unaudited) and $76,760 (unaudited) for the year ended December 31, 2008 and the six months ended June 30, 2008 and 2009, respectively.

	(b)	Line of Credit

		As of December 31, 2008 and June 30, 2009, the Company had $100,000 and $0 (unaudited), respectively, outstanding under a line of credit that expires April 1, 2010. The interest rate applicable to this line was the prime rate of interest, less 25 basis points, or 3.0% at December 31, 2008 and at June 30, 2009 (unaudited).

(6)	Subsequent Event

	The Company has evaluated subsequent events from the balance sheet date through August 13, 2010, the date at which the financial statements were available to be issued and identified the following item.

	On August 14, 2009, ExamWorks, Inc. acquired substantially all of the assets and certain assumed liabilities of the Company.

F-99

BENCHMARK MEDICAL CONSULTANTS, INC.

Index


		Page

Independent Auditors’ Report		F-101

Balance Sheet as of July 31, 2009		F-102

Statement of Operations and Changes in Retained Earnings for the year ended July 31, 2009		F-103

Statement of Cash Flows for the year ended July 31, 2009		F-104

Notes to Financial Statements		F-105

F-100

Independent Auditors’ Report

The Stockholders
Benchmark Medical Consultants, Inc.:

We have audited the accompanying balance sheet of Benchmark Medical Consultants, Inc. (the Company) as of July 31, 2009, and the related statements of operations and changes in retained earnings and cash flows for the year then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Benchmark Medical Consultants, Inc. as of July 31, 2009, and the results of its operations and its cash flows for the year then ended, in conformity with U.S. generally accepted accounting principles.

/s/ KPMG LLP

Atlanta, Georgia

August 13, 2010

F-101

BENCHMARK MEDICAL CONSULTANTS, INC.

Balance Sheet

July 31, 2009


Assets
Current assets:
Cash and cash equivalents	$	70,844
Accounts receivable, net		871,179
Prepaid expenses and other current assets		51,100
Deferred tax assets		73,668

Total current assets		1,066,791
Equipment and leasehold improvements, net		89,010
Deferred tax assets, noncurrent		31,811

Total assets	$	1,187,612


Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	503,774
Revolving line of credit		170,000
Accrued expenses		77,624
Unearned revenue		237,188

Total current liabilities		988,586

Commitments and contingencies
Stockholders’ equity:
Common stock, $0.001 par value. Authorized 1,200,000 shares, issued and outstanding 827,000 shares		827
Retained earnings		198,199

Total stockholders’ equity		199,026

Total liabilities and stockholders’ equity	$	1,187,612

See accompanying notes to financial statements.

F-102

BENCHMARK MEDICAL CONSULTANTS, INC.

Statement of Operations and Changes in Retained Earnings

Year ended July 31, 2009


Revenues	$	6,070,197
Costs and expenses:
Costs of revenues		4,187,922
Selling, general, and administrative expenses		2,083,993
Depreciation and amortization		31,659

Total costs and expenses		6,303,574

Loss from operations		(233,377	)

Other expenses, net:
Interest expense, net		9,503
Other expense, net		(10,820	)

Total other expenses, net		(1,317	)

Loss before income taxes		(234,694	)
Income tax benefit		(88,497	)

Net loss		(146,197	)

Retained earnings, beginning of year		388,396
Dividends paid		(44,000	)

Retained earnings, end of year	$	198,199

See accompanying notes to financial statements.

F-103

BENCHMARK MEDICAL CONSULTANTS, INC.

Statement of Cash Flows

Year ended July 31, 2009


Operating activities:
Net loss	$	(146,197	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		31,659
Provision for doubtful accounts		182,375
Deferred income taxes		(88,497	)
Changes in operating assets and liabilities:
Accounts receivable		50,120
Prepaid expenses and other current assets		24,448
Accounts payable and accrued expenses		(96,277	)
Unearned revenue		175,765
Other changes in assets and liabilities		65,011

Net cash provided by operating activities		198,407

Investing activity:
Purchases of equipment and leasehold improvements		(37,725	)

Net cash used in investing activity		(37,725	)

Financing activities:
Borrowings of revolving line of credit		170,000
Repayment of loan payable		(301,863	)
Dividends paid		(44,000	)

Net cash used in financing activities		(175,863	)

Net decrease in cash and cash equivalents		(15,181	)
Cash and cash equivalents, beginning of year		86,025

Cash and cash equivalents, end of year	$	70,844

Supplemental disclosures of cash flow information:
Cash paid for interest	$	1,700
Cash paid for income taxes		8,634

See accompanying notes to financial statements.

F-104

BENCHMARK MEDICAL CONSULTANTS, INC.

Notes to Financial Statements

July 31, 2009


(1)	Nature of Operations and Basis of Presentation

	Benchmark Medical Consultants, Inc. (Benchmark or the Company) was founded in 1989. Benchmark’s independent review services include medical evaluation programs for group health, disability, workers’ compensation, automobile and general liability insurance carriers, third-party administrators and law firms. The Company’s main office is located in Sacramento, California.

(2)	Summary of Significant Accounting Policies

	(a)	Use of Estimates

		The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management bases its estimates on certain assumptions which they believe are reasonable in the circumstances and actual results could differ from those estimates. The most significant estimate reflected in these financial statements is the allowance for doubtful accounts.

	(b)	Cash and Cash Equivalents

		The Company considers all highly liquid investments with original maturities of three months or less when purchased to be cash equivalents. The Company had no cash equivalents as of July 31, 2009.

	(c)	Accounts Receivable and Allowance for Doubtful Accounts

		Accounts receivable consist of amounts owed to the Company for services provided in the normal course of business and are reported net of allowance for doubtful accounts, which amounted to $161,500 as of July 31, 2009. Generally, no collateral is received from customers and additions to the allowance are based on ongoing credit evaluations of customers with general credit experience being within the range of management’s expectations. Accounts are reviewed regularly for collectibility and those deemed uncollectible are written off.

	(d)	Concentrations of Credit Risk

		The Company routinely assesses the financial strength of its customers and establishes an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends and other information. For the year ended July 31, 2009, there was no customer that accounted for greater than 10% of revenues. At July 31, 2009, there was no customer that accounted for greater than 10% of the accounts receivable balance.

	(e)	Equipment and Leasehold Improvements

		Equipment and leasehold improvements are recorded at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the respective assets and accelerated methods for income tax purposes. Leasehold improvements are amortized over the lesser of their expected useful life or the remaining lease term. Maintenance and repair costs are expensed as incurred.

F-105

BENCHMARK MEDICAL CONSULTANTS, INC.

Notes to Financial Statements (Continued)

July 31, 2009


	(f)	Long-Lived Assets

		In accordance with Impairment or Disposal of Long-Lived Assets Subsections of Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Subtopic 350-10 (ASC 360), Property, Plant, and Equipment — Overall, long-lived assets, such as equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying value. If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. At July 31, 2009, no impairment was noted.

	(g)	Deferred Rent

		The Company has entered into a lease for its headquarter offices in Sacramento, California that has certain escalation clauses or other features which require rental expense to be recognized on a straight-line basis over the life of the lease. At July 31, 2009, the deferred rent balance was $8,148, and is included in other current and noncurrent liabilities in the accompanying balance sheet.

	(h)	Revenue Recognition

		Revenue is recognized at the time services have been performed and, if applicable, the medical report is shipped to the end user. The Company believes that recognizing revenue at the time the report is sent is appropriate because the Company’s revenue policies meet the following four criteria: (i) persuasive evidence that arrangement exists, (ii) shipment has occurred, (iii) the price is fixed and determinable and (iv) collectibility is reasonably assured.

	(i)	Costs of Revenues

		Costs of revenues are comprised of fees paid to members of the Company’s medical panel; other direct costs including transcription, film and medical record obtainment and transportation; and other indirect costs including labor and overhead related to the generation of revenues.

	(j)	Marketing and Advertising Costs

		Marketing and advertising costs are expensed as incurred and amounted to $58,656 for the year ended July 31, 2009.

	(k)	Income Taxes

		Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

	(l)	Fair Value Measurements

		The Company has adopted the provisions of FASB Statement No. 157, Fair Value Measurements, included in ASC Topic 820, Fair Value Measurements and Disclosures, for fair value measurements of financial assets and financial liabilities. ASC Topic 820 (Statement 157) defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 (Statement 157) also established a framework for measuring fair value and expands disclosures about fair value measurements.

F-106

BENCHMARK MEDICAL CONSULTANTS, INC.

Notes to Financial Statements (Continued)

July 31, 2009


		The Company uses financial instruments in the normal course of its business. The carrying values of cash and cash equivalents, accounts receivable, prepaid assets, accounts payable, and accrued expenses approximate each of their fair values due to the short-term maturities of these assets and liabilities. Fair value is defined as the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

(3)	Equipment and Leasehold Improvements

	Equipment and leasehold improvements consist of the following:


	Estimated useful lives	July 31, 2009

Furniture and fixtures	5 years	$	20,878
Computer and office equipment	3-5 years		82,553
Leasehold improvements	Lease term		47,061

			150,492
Less accumulated depreciation and amortization			61,482

Total		$	89,010


	Depreciation and amortization expense was $31,659 and for the year ended July 31, 2009.

(4)	Accrued Expenses

	Accrued expenses as of July 31, 2009 principally consist of accrued compensation and benefits.

(5)	Income Taxes

	The components of the income tax benefit for the year ended July 31, 2009 was as follows (in thousands):


Current:
Federal	$	—
State		—

		—

Deferred:
Federal		(74,814	)
State		(13,683	)

Total		(88,497	)

Income tax benefit	$	(88,497	)

F-107

BENCHMARK MEDICAL CONSULTANTS, INC.

Notes to Financial Statements (Continued)

July 31, 2009


Deferred taxes result from temporary differences between the bases of assets and liabilities for financial reporting purposes and such amounts as measured by tax laws and regulations. The sources of the temporary differences and their effect on deferred tax assets and liabilities as of July 31, 2009:

	Current		Noncurrent

Deferred tax assets:
Allowance for doubtful accounts	$	64,333	$	—
Other deferred tax assets		9,335		42,400

Total deferred tax assets		73,668		42,400

Deferred tax liabilities:
Basis difference of property and equipment		—		(10,589	)

Total deferred tax liabilities		—		(10,589	)

Net deferred tax assets	$	73,668	$	31,811


The reconciliation of income tax computed at the U.S. federal statutory rate to income tax benefit for the year ended July 31, 2009 was as follows:


Expected income tax benefit	$	(79,796	)
Increase in income tax benefit resulting from:
State income tax benefit, net of Federal benefit		(13,693	)
Other		4,992

Income tax benefit	$	(88,497	)


	The deferred tax assets are subject to periodic assessment as to recoverability. The Company has concluded that it is more likely than not that deferred tax assets will be realized in future periods.

(6)	Commitments and Contingencies

	Lease Commitments

		The Company leases office space under a noncancelable operating lease expiring September 5, 2011.

		Future minimum lease payments under the operating leases in each of the years subsequent to July 31, 2009 are as follows:


Year ending December 31:
2010	$	134,442
2011		11,543

Total	$	145,985


		Related rent expense for the Company’s main offices was $174,323 for the year ended July 31, 2009.

(7)	Line of Credit

	The Company repaid and closed an existing line of credit in March 2009. Subsequently, the Company entered into a $400,000 secured line of credit of which $170,000 was outstanding as of July 31, 2009. The line of credit expires on March 10, 2010 and bears interest at the greater of prime rate plus 2.00%, or 5.00%. The interest rate as of July 31, 2009 was 5.25%.

F-108

BENCHMARK MEDICAL CONSULTANTS, INC.

Notes to Financial Statements (Continued)

July 31, 2009


(8)	Subsequent Event

	The Company has evaluated subsequent events from the balance sheet date through August 13, 2010, the date at which the financial statements were available to be issue and identified the following item.

	On August 4, 2009, 100% of the outstanding common stock was acquired by ExamWorks, Inc.

F-109

ABETON GROUP, INC. AND SUBSIDIARIES

Index


		Page

Independent Auditors’ Report		F-111

Consolidated Balance Sheets as of December 31, 2008 and September 30, 2009 (unaudited)		F-112

Consolidated Statements of Operations for the year ended December 31, 2008 and nine months ended September 30, 2008 (unaudited) and 2009 (unaudited)		F-113

Consolidated Statements of Stockholders’ Deficit for the year ended December 31, 2008 and nine months ended September 30, 2009 (unaudited)		F-114

Consolidated Statements of Cash Flows for the year ended December 31, 2008 and nine months ended September 30, 2008 (unaudited) and 2009 (unaudited)		F-115

Notes to Consolidated Financial Statements		F-116

F-110

Independent Auditors’ Report

The Stockholders
Abeton Group, Inc.:

We have audited the accompanying consolidated balance sheet of Abeton Group, Inc. and subsidiaries (the Company) as of December 31, 2008, and the related consolidated statements of operations, stockholders’ deficit and cash flows for the year then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Abeton Group, Inc. and subsidiaries as of December 31, 2008, and the results of their operations and their cash flows for the year then ended, in conformity with U.S. generally accepted accounting principles.

/s/ KPMG LLP

Atlanta, Georgia

August 13, 2010

F-111

ABETON GROUP, INC. AND SUBSIDIARIES

Consolidated Balance Sheets


	December 31, 2008			September 30, 2009

				(unaudited)
Assets
Current assets:
Cash	$	57,151		$	417,436
Accounts receivable, net		1,573,880			1,476,401
Prepaid expenses and other current assets		173,670			225,769

Total current assets		1,804,701			2,119,606
Equipment and leasehold improvements, net		340,364			271,202
Intangible assets, net of accumulated amortization		926,690			519,290
Goodwill		2,324,585			2,324,585
Other long term deposits		—			4,757
Deferred financing costs, net		137,657			119,652

Total assets	$	5,533,997		$	5,359,092


Liabilities and Stockholders’ Deficit
Current liabilities:
Accounts payable	$	567,165		$	699,038
Line of credit		344,534			—
Accrued expenses		282,434			283,716
Deferred revenue		163,079			215,500
Current portion of long-term debt		969,040			1,428,796

Total current liabilities		2,326,252			2,627,050
Long-term debt, less current portion		7,347,432			6,301,594

Total liabilities		9,673,684			8,928,644

Commitments and contingencies
Stockholders’ deficit:
Common stock, no par value. Authorized 10,000,000 shares; issued and outstanding 3,785,710 shares		4,201,000			4,201,000
Unearned ESOP compensation		(8,213,609	)		(8,176,823	)
Common stock warrants		50,000			50,000
Notes receivable on issue of common stock warrants		(40,643	)		(36,637	)
Retained earnings (accumulated deficit)		(136,435	)		392,908

Total stockholders’ deficit		(4,139,687	)		(3,569,552	)

Total liabilities and stockholders’ deficit	$	5,533,997		$	5,359,092

See accompanying notes to consolidated financial statements.

F-112

ABETON GROUP, INC. AND SUBSIDIARIES

Consolidated Statements of Operations


	Year ended December 31, 2008		Nine months ended September 30,

			2008		2009

			(unaudited)		(unaudited)
Revenues	$	15,223,602	$	11,480,988	$	11,621,039
Costs and expenses:
Costs of revenues		10,216,676		7,705,022		8,239,933
Selling, general and administrative expenses		3,473,217		2,727,252		1,990,981
Depreciation and amortization		670,963		503,454		499,725

Total costs and expenses		14,360,856		10,935,728		10,730,639

Income from operations		862,746		545,260		890,400

Other expenses, net:
Interest expense, net		511,098		390,228		296,581
Other expense, net		64,860		39,072		49,031

Total other expenses, net		575,958		429,300		345,612

Income before income taxes		286,788		115,960		544,788
Income tax expense		11,893		8,809		15,445

Net income	$	274,895	$	107,151	$	529,343

See accompanying notes to consolidated financial statements.

F-113

ABETON GROUP, INC. AND SUBSIDIARIES

C onsolidated Statements of Stockholders’ Deficit

Year ended December 31, 2008 and nine months ended September 30, 2009 (unaudited)


					Unearned ESOP compensation			Common stock warrants		Notes receivable on issuance of common stock warrants			Accumulated deficit			Total stockholders’ deficit

	Common Stock

	Number of shares		Amount

Balances at December 31, 2007		3,785,710	$	4,201,000	$	(8,262,658	)	$	50,000	$	(48,602	)	$	(411,330	)	$	(4,471,590	)
Net income		—		—		—			—		—			274,895			274,895
ESOP compensation expense		—		—		49,049			—		—			—			49,049
Principal payments received on notes receivable for common stock warrants		—		—		—			—		7,959			—			7,959

Balances at December 31, 2008		3,785,710		4,201,000		(8,213,609	)		50,000		(40,643	)		(136,435	)		(4,139,687	)
Net income		—		—		—			—		—			529,343			529,343
ESOP compensation expense		—		—		36,786			—		—			—			36,786
Principal payments received on notes receivable for common stock warrants		—		—		—			—		4,006			—			4,006

Balances at September 30, 2009 (unaudited)		3,785,710	$	4,201,000	$	(8,176,823	)	$	50,000	$	(36,637	)	$	392,908		$	(3,569,552	)

See accompanying notes to consolidated financial statements.

F-114

ABETON GROUP, INC. AND SUBSIDIARIES

C onsolidated Statements of Cash Flows


	Year ended December 31, 2008			Nine months ended September 30,
				Nine months ended September 30,

				2008			2009

				(unaudited)			(unaudited)
Operating activities:
Net income	$	274,895		$	107,151		$	529,343
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		670,963			503,454			499,725
ESOP compensation expense		49,049			36,787			51,003
Provision for doubtful accounts		23,848			24,208			15,150
Amortization of deferred financing costs		21,292			14,537			18,005
Changes in operating assets and liabilities:
Accounts receivable		(235,209	)		(241,287	)		77,572
Prepaid expenses and other current assets		5,196			(29,249	)		(66,316	)
Accounts payable and accrued expenses		(162,301	)		(55,883	)		133,155
Deferred revenue and customer deposits		(171,151	)		(114,686	)		52,421

Net cash provided by operating activities		476,582			245,032			1,310,058

Investing activities:
Purchases of equipment and leasehold improvements		(133,869	)		(85,444	)		(23,163	)
Principal payments received on notes receivable for common stock warrants		7,959			6,644			4,006

Net cash used in investing activities		(125,910	)		(78,800	)		(19,157	)

Financing activities:
Borrowings (payments) under line of credit		96,319			96,319			(344,534	)
Payments on long-term debt		(580,299	)		(348,646	)		(586,082	)

Net cash used in financing activities		(483,980	)		(252,327	)		(930,616	)

Net increase (decrease) in cash		(133,308	)		(86,095	)		360,285
Cash, beginning of period		190,459			190,459			57,151

Cash, end of period	$	57,151		$	104,364		$	417,436

Supplemental disclosures of cash flow information:
Cash paid during the period for interest	$	481,570		$	228,053		$	270,685
Cash paid during the period for income taxes	$	—		$	—		$	18,103

See accompanying notes to consolidated financial statements.

F-115

ABETON GROUP, INC. AND SUBSIDIARIES

Notes to Financial Statements

December 31, 2008 and September 30, 2008 and 2009


(1)	Nature of Operations and Basis of Presentation

	Abeton Group, Inc. (Abeton Group or the Company) was formed as a holding company in February 2007. In March 2007, in a Plan of Reorganization and Share Exchange, Abeton, Inc. (Abeton) became a wholly-owned subsidiary of Abeton Group, and Abeton Employee Stock Ownership Trust (the Trust) became the sole stockholder of Abeton Group. The Company acquired Washington-based Independent Medical Services of Washington in 2006 and Arizona-based Medical Assurance Specialists, Inc. in 2007, thereby creating Abeton Group.

	The Company contracts with physicians primarily in Oregon, Arizona, Nevada, Colorado, Utah, and Washington to perform independent medical evaluations (IMEs) and peer reviews. These IMEs and peer reviews are conducted for the insurance industry, including workers’ compensation, disability, and personal auto liability.

	The accompanying consolidated financial statements include the accounts and transactions of Abeton Group (an Oregon corporation) and its wholly-owned subsidiaries, Abeton (an Oregon corporation), Medical Assurance Specialists, Inc. (MAS) (an Arizona corporation), and Abeton’s wholly-owned subsidiary, Independent Medical Services of Washington (IMS) (a Washington corporation) (collectively the Company). All significant intercompany accounts and transactions have been eliminated in consolidation.

(2)	Summary of Significant Accounting Policies

	(a)	Unaudited Interim Financial Information

		The accompanying interim consolidated balance sheet as of September 30, 2009, the related statements of operations, stockholders’ deficit and cash flows for the nine months ended September 30, 2009 and 2008, are unaudited. These unaudited interim consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles. In the opinion of the Company’s management, the unaudited interim consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and include all adjustments consisting of normal recurring adjustments necessary for the fair presentation of the Company’s financial position at September 30, 2009, and their results of operations and their cash flows for the nine months ended September 30, 2008 and 2009. The results of operations for the nine months ended September 30, 2008 and 2009 are not necessarily indicative of the results to be expected for any other interim period or any fiscal year.

	(b)	Use of Estimates

		The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management bases its estimates on certain assumptions which they believe are reasonable in the circumstances and actual results could differ from those estimates. The more significant estimates reflected in these financial statements include the allowance for doubtful accounts, useful lives of intangible assets and assessment of goodwill for impairment.

	(c)	Accounts Receivable and Allowance for Doubtful Accounts

		Accounts receivable consist of amounts owed to the Company for services provided in the normal course of business and are reported net of allowance for doubtful accounts, which amounted to $19,494 and $8,671 (unaudited) as of December 31, 2008 and September 30, 2009, respectively. Generally, no collateral is received from customers and additions to the allowance are based on ongoing credit evaluations of customers with general credit experience being within the range of management’s expectations. Accounts are reviewed regularly for collectibility and those deemed uncollectible are written off.

F-116

ABETON GROUP, INC. AND SUBSIDIARIES

Notes to Financial Statements (Continued)

December 31, 2008 and September 30, 2008 and 2009


	(d)	Concentrations of Credit Risk

		The Company routinely assesses the financial strength of its customers and establishes an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends and other information. For the year ended December 31, 2008, 29% of revenues was associated with one customer. For the nine months ended September 30, 2008 and 2009 respectively (unaudited), 19% of total revenues was associated with one customer. At December 31, 2008 and September 30, 2009 (unaudited), there was one customer that accounted for greater than 10% of the consolidated accounts receivable balance.

	(e)	Equipment and Leasehold Improvements

		Equipment and leasehold improvements are recorded at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the respective assets and accelerated methods for income tax purposes. Leasehold improvements are amortized over the lesser of their expected useful life or the remaining lease term. Maintenance and repair costs are expensed as incurred.

	(f)	Goodwill and Intangible Assets

		Goodwill represents the excess purchase price in a business combination that is not individually identified and separately recognized. Goodwill is reviewed for impairment at least annually in accordance with the provisions of Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 350, Intangibles — Goodwill and Other (ASC 350). The goodwill impairment test is a two-step test. Under the first step, the fair value of the reporting unit is compared with its carrying value (including goodwill). If the fair value of the reporting unit is less than its carrying value, an indication of goodwill impairment exists for the reporting unit and the enterprise must perform step two of the impairment test (measurement). Under step two, an impairment loss is recognized for any excess of the carrying amount of the reporting unit’s goodwill over the implied fair value of that goodwill. The implied fair value of goodwill is determined by allocating the fair value of the reporting unit in a manner similar to a purchase price allocation and the residual fair value after this allocation is the implied fair value of the reporting unit goodwill. Fair value of the reporting unit is determined using a discounted cash flow analysis. If the fair value of the reporting unit exceeds its carrying value, step two does not need to be performed.

		The Company has adopted December 31 as its annual impairment test evaluation date and has evaluated goodwill as of December 31, 2008. As a result of these evaluations, no impairment was indicated for the year ended December 31, 2008.

		ACS 350 also requires that intangible assets with definite lives be amortized over their estimated useful lives. Currently, customer relationships and trade names are amortized using the straight-line method over their estimated useful lives.

F-117

ABETON GROUP, INC. AND SUBSIDIARIES

Notes to Financial Statements (Continued)

December 31, 2008 and September 30, 2008 and 2009


	(g)	Long-Lived Assets

		In accordance with Impairment or Disposal of Long-Lived Assets Subsections of Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Subtopic 350-10 (ASC 360), Property, Plant, and Equipment — Overall, long-lived assets, such as equipment and purchased intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying value. If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. At December 31, 2008, no impairment was noted.

	(h)	Deferred Rents

		The Company has entered into a lease for its headquarter offices in Portland, Oregon that has certain escalation clauses or other features which require rental expense to be recognized on a straight-line basis over the life of the lease. At December 31, 2008 and September 30, 2009, the deferred rent balance was $28,490 and $2,849 (unaudited), respectively, and is included in accrued expenses in the accompanying consolidated balance sheets.

	(i)	Deferred Financing Costs

		Deferred financing costs are amortized over the term of the related debt using a method that approximates the effective interest method. At December 31, 2008 and September 30, 2009, the deferred financing cost balance was $137,657 and $119,652 (unaudited), respectively, and is included in other noncurrent assets in the accompanying consolidated balance sheets.

	(j)	Employee Stock Ownership Plan

		The Company accounts for the Abeton Employee Stock Ownership Plan (the ESOP) and the Trust in accordance with Statement of Position No. 93-6, Employers Accounting for Employee Stock Ownership Plans. Accordingly, the Company has recorded the debt of the ESOP in the accompanying consolidated balance sheets with corresponding charges to unearned ESOP compensation in stockholders’ deficit. The Company recognizes compensation expense (and unearned ESOP compensation is reduced) as the Company contributes amounts to the ESOP to make the required payments on the debt.

	(k)	Revenue Recognition

		Revenue is recognized at the time services have been performed and, if applicable, the medical report is shipped to the end user. The Company believes that recognizing revenue at the time the report is sent is appropriate because the Company’s revenue policies meet the following four criteria: (i) persuasive evidence that arrangement exists, (ii) shipment has occurred, (iii) the price is fixed and determinable and (iv) collectibility is reasonably assured.

	(l)	Costs of Revenues

		Costs of revenues are comprised of fees paid to members of the Company’s medical panel; other direct costs including transcription, film and medical record obtainment and transportation; and other indirect costs including labor and overhead related to the generation of revenues.

	(m)	Marketing and Advertising Costs

		Marketing and advertising costs are expensed as incurred and amounted to $94,799, $55,721 (unaudited) and $56,459 (unaudited) for the year ended December 31, 2008, and the nine months ended September 30, 2008 and 2009, respectively.

F-118

ABETON GROUP, INC. AND SUBSIDIARIES

Notes to Financial Statements (Continued)

December 31, 2008 and September 30, 2008 and 2009


	(n)	Income Taxes

		The Company has elected with the Internal Revenue Service to be taxed as an S corporation. Accordingly, the Company does not pay federal income taxes. Rather, the stockholders separately account for their pro rata share of corporate items of income, deductions, loss and credits in their personal income tax returns. The Company is subject to state and local tax in a variety of states, including Oregon, Arizona, Utah, Idaho and California, among others. The Company is subject to taxes using an income-based measure in Oregon (principally local taxes) and Utah. Such taxes have been classified as income tax expense within the consolidated statements of operations, and amounted to $11,893 for the year ended December 31, 2008 and $8,809 (unaudited) and $15,445 (unaudited) for the periods ended September 30, 2008 and 2009, respectively. Remaining tax expense (not based on an income measure) of $16,122 for the year ended December 31, 2008 and $13,452 (unaudited) and $23,585 (unaudited) for the periods ended September 30, 2008 and 2009, respectively, are classified within other expenses, net.

	(o)	Fair Value Measurements

		The Company has adopted the provisions of FASB Statement No. 157, Fair Value Measurements, included in ASC Topic 820, Fair Value Measurements and Disclosures, for fair value measurements of financial assets and financial liabilities. ASC Topic 820 (Statement 157) defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 (Statement 157) also established a framework for measuring fair value and expands disclosures about fair value measurements.

		The Company uses financial instruments in the normal course of its business. The carrying values of cash and cash equivalents, accounts receivable, prepaid assets, accounts payable, and accrued expenses approximate each of their fair values due to the short term maturities of these assets and liabilities.

(3)	Intangible Assets

	The carrying amount of intangibles assets, net were $926,690 and $519,290 at December 31, 2008 and September 30, 2009 (unaudited), respectively.

	Intangible assets, net consisted of the following at December 31, 2008 and September 30, 2009 (unaudited):


	Amortization period	December 31, 2008		September 30, 2009

				(unaudited)
Customer relationships	3.5 years	$	1,516,009	$	1,516,009
Trade names	3.75 years		412,707		412,707

			1,928,716		1,928,716
Less accumulated amortization			1,002,026		1,409,426

Intangible assets, net		$	926,690	$	519,290


	The aggregate intangible amortization expense was $543,201 for the year ended December 31, 2008, and $407,400 (unaudited) for the periods ended September 30, 2008 and 2009, respectively. The estimated future amortization expense of intangible assets is as follows:


	Amount

Year ending December 31:
2009	$	543,200
2010		383,490

Total	$	926,690

F-119

ABETON GROUP, INC. AND SUBSIDIARIES

Notes to Financial Statements (Continued)

December 31, 2008 and September 30, 2008 and 2009


(4)	Equipment and Leasehold Improvements

	Equipment and leasehold improvements consist of the following:


	Estimated useful lives	December 31, 2008		September 30, 2009

				(unaudited)
Computer and office equipment	3 – 7 years	$	824,829	$	831,767
Furniture and fixtures	5 years		190,629		192,753
Clinical equipment	5 years		45,696		49,731
Leasehold improvements	Lease term		119,455		119,455

			1,180,609		1,193,706
Less accumulated depreciation and amortization			840,245		922,504

Total		$	340,364	$	271,202


	Depreciation and amortization expense was $127,762, $96,054 (unaudited) and $92,325 (unaudited) for the year ended December 31, 2008 and nine months ended September 30, 2008 and 2009, respectively.

(5)	Accrued Expenses

	Accrued expenses consist of the following:


	December 31, 2008		September 30, 2009

			(unaudited)
Accrued compensation and benefits	$	218,811	$	213,888
Accrued taxes		5,335		5,168
Deferred rent		28,490		2,849
Accrued interest		16,060		9,837
Other accrued expenses		13,738		51,974

Total	$	282,434	$	283,716


(6)	Debt Agreements

	Long-term debt consisted of the following:


	December 31, 2008		September 30, 2009

			(unaudited)
Notes payable by the Trust to former stockholders of Abeton	$	2,235,098	$	2,239,537
Note payable by the Trust to National Cooperative Bank, FSB (NCB)		1,679,601		1,537,313
Notes payable to former stockholders of Abeton		532,165		533,223
Notes payable to former stockholders of MAS		1,869,942		1,689,090
Note payable to NCB		1,732,500		1,575,000
Term note payable to NCB		199,299		138,877
Note payable to NCB under line of credit agreement		344,534		—
Other		67,867		17,350

		8,661,006		7,730,390
Less current portion of line of credit		344,534		—
Less current portion of long-term debt		969,040		1,428,796

Long-term debt, net of current portion	$	7,347,432	$	6,301,594

F-120

ABETON GROUP, INC. AND SUBSIDIARIES

Notes to Financial Statements (Continued)

December 31, 2008 and September 30, 2008 and 2009


	In conjunction with the sale of Abeton to the Trust effective September 15, 2006, the Trust entered into note payable agreements with Abeton’s two former stockholders (the former Abeton stockholders) aggregating $2.1 million (the $2.1 million Abeton stock note payable agreements) and a note payable agreement with NCB for $2.0 million (the $2.0 million Abeton/NCB note payable agreement).

	Under the $2.1 million Abeton stockholder note payable agreements, outstanding borrowings are secured by a pledge of approximately 51% of Abeton’s common stock, are guaranteed by Abeton, are subordinate to the $2.0 million Abeton/NCB note payable agreement, and bear interest at 6.00%. Monthly interest-only payments are scheduled through August 2009. Commencing in September 2009, aggregate principal and interest payments of approximately $41,000 are scheduled to be due monthly through July 2011, and a final aggregate principal and interest payment of approximately $1,574,000 is scheduled in August 2011. At December 31, 2008 and September 30, 2009, accrued interest of approximately $135,000 and $102,000 (unaudited), respectively, related to the $2.1 million stockholder note payable agreements is included in long-term debt, as such amount will be paid as part of the principal payments which commenced in September 2009.

	Under the $2.0 million Abeton/NCB note payable agreement, outstanding borrowings bear interest at NCB’s prime rate plus 0.50% (3.75% at December 31, 2008), adjusted monthly. The $2.0 million Abeton/NCB note payable agreement requires aggregate monthly principal and interest payments of approximately $22,000, which is adjusted at least annually such that the outstanding borrowings will be amortized and fully repaid by September 2016. Borrowings under the $2.0 million Abeton/NCB note payable agreement are secured by substantially all of Abeton’s assets and by a pledge of approximately 49% of Abeton’s common stock. In addition, Abeton has guaranteed payment of such borrowings. The U.S. Small Business Administration has guaranteed 75% of the $2.0 million Abeton/NCB note payable.

	Also on September 15, 2006, Abeton entered into additional note payable agreements with Abeton’s two former stockholders aggregating $500,000 (the $500,000 stockholder note payable agreements). Under the $500,000 stockholder note payable agreements, outstanding borrowings are unsecured and subordinate to the $2.0 million Abeton/NCB note payable and bear interest at 6.00%. Monthly interest-only payments are scheduled to be due through August 2009. Commencing in September 2009, aggregate principal and interest payments of approximately $10,000 are scheduled to be due monthly through July 2011, and a final aggregate principal and interest payment of approximately $375,000 is scheduled to be due in August 2011. At December 31, 2008 and September 30, 2009, accrued interest of approximately $32,000 and $24,000 (unaudited), respectively, related to the $500,000 stockholder note payable agreements is included in long-term debt, as such amount will be paid as part of the principal payments which commenced in September 2009.

	In conjunction with the MAS acquisition in, March 2007, the Company entered into note payable agreements with the two former stockholders of MAS aggregating $2.1 million (the $2.1 million acquisition company stockholder note payable agreements) and a note payable agreement with NCB for $2.1 million (the $2.1 million acquisition company/NCB note payable agreement).

	Under the $2.1 million acquisition company stockholder note payable agreements, outstanding borrowings are secured by a pledge of approximately 50% of MAS’s common stock; are guaranteed by MAS, the Company, and Abeton; are subordinate to the $2.1 million acquired company/NCB note payable agreement; and bear interest at 5.00%. No payments were due until March 2008. Commencing in April 2008, aggregate principal and interest payments of approximately $42,000 are scheduled to be due monthly through August 2012, except that in each March beginning in 2008, an additional principal payment of $45,000 is also scheduled to be due, and a final aggregate principal and interest payment of approximately $336,000 is scheduled to be due in August 2012. At December 31, 2008 and September 30, 2009, accrued interest of approximately $104,000 and $69,000 (unaudited), respectively, related to the $2.1 million acquisition company stockholder note payable agreements is included in long-term debt, as such amount is being paid as part of the principal payments that commenced in April 2008.

F-121

ABETON GROUP, INC. AND SUBSIDIARIES

Notes to Financial Statements (Continued)

December 31, 2008 and September 30, 2008 and 2009


	Under the $2.1 million acquisition company/NCB note payable agreement, outstanding borrowings bear interest at the 30-day London Interbank Offered Rate plus 3.00% (approximately 3.44% at December 31, 2008), adjusted monthly. The $2.1 million acquisition company/NCB note payable agreement requires monthly principal payments of $17,500 plus interest which will be adjusted monthly such that the outstanding borrowings will be amortized and fully repaid by April 2017. Borrowings under the $2.1 million acquisition/NCB note payable agreement are secured by substantially all of the Company’s assets and by a pledge of approximately 50% of the acquired company’s common stock. In addition, the Company has guaranteed payment of such borrowings.

	The Company entered into a new $350,000 line of credit agreement (NCB line of credit) with NCB that is scheduled to mature on April 1, 2009. Borrowings outstanding under the new LOC agreement are secured by substantially all of the Company’s assets. Under the terms of the NCB line of credit, the Company is required to make monthly interest only payments at the prime rate (as published in The Wall Street Journal) plus 0.50% (4.5% as of December 31, 2008), and all outstanding principal and accrued interest is due on April 1, 2009. As of December 31, 2008 and September 30, 2009, the Company had $344,534 and $0 (unaudited), respectively, in borrowings outstanding under the NCB line of credit. Required principal payments on the Company’s long-term debt for the five years subsequent to December 31, 2008, and thereafter, are approximately as follows:


2009	$	969,000
2010		1,424,000
2011		3,113,000
2012		1,048,000
2013		432,000
Thereafter		1,330,000

	$	8,316,000


	Cash paid for interest on long-term debt was approximately $297,000 for the year ended December 31, 2008 and $228,053 (unaudited) and $270,685 (unaudited) for the nine months ended September 30, 2008 and 2009, respectively.

	The $2.1 million acquisition/NCB note payable agreement, the NCB term note payable agreement, and NCB line of credit (collectively, the NCB agreements) contain positive and negative financial covenants, including but not limited to maintaining a debt service coverage ratio of at least 1.25:1.00 measured quarterly on a year-to-date basis and limit the amount of additional indebtedness and capital expenditures. For the year ended December 31, 2008, the Company was not in compliance with this financial ratio covenant; however, on January 30, 2009, NCB waived compliance with this financial ratio covenant for the year ended December 31, 2008.* As a result of the Company not meeting this financial ratio covenant, NCB required the Company to stop making any principal or interest payments to the former Abeton stockholders and the former acquisition company stockholders (collectively, the former stockholders). NCB has indicated that if the Company is in compliance with this financial ratio covenant for the quarter ended March 31, 2009, payments to the former stockholders can be resumed. The Company determined compliance was achieved during the period ended March 31, 2009, and payments to former stockholders resumed in April 2009. As of September 30, 2009, the Company met the financial ratio covenant for the respective year-to-date quarterly measurement. Accordingly, the long-term portion of borrowings under the NCB agreements has been classified as long-term in the accompanying September 30, 2009 consolidated balance sheet.



*	Accordingly, all non-current portions of principal have been classified as long-term in the accompanying December 31, 2008 consolidated balance sheet.

F-122

ABETON GROUP, INC. AND SUBSIDIARIES

Notes to Financial Statements (Continued)

December 31, 2008 and September 30, 2008 and 2009


(7)	Common Stock Warrants

	In March 2007, as a result of the 2006 sale of Abeton to the Trust, the Company sold the former Abeton stockholders the right to purchase up to 30.6% of the issued and outstanding shares (e.g., 30.6% of approximately 3,785,710 shares as of December 31, 2008) of the Company’s common stock at an exercise price of $4.10 per share (the estimated fair value per share, of the Company’s common stock at the grant date (the Abeton CS warrants). The purchase price for the Abeton CS warrants was $50,000. After the acquisition of MAS, in accordance with the terms of the agreements related to the Abeton CS warrants, the strike price for the Abeton CS warrants was adjusted to $1.47 per share. The outstanding Abeton CS warrants are fully vested and may only be exercised during specified time periods each year, as outlined in the Abeton CS warrant agreements. The Abeton CS warrants expire in March 2013.

	In connection with the Abeton CS warrants, the Company entered into promissory note receivable agreements totaling $50,000 (the warrant note agreements). Amounts outstanding under the warrant note agreements bear interest at 6.00%, aggregate principal and interest payments of approximately $1,000 are due to the Company monthly, and all remaining unpaid principal and interest is due to the Company on the earlier of August 15, 2011 or the exercise dates as set forth in the Abeton CS warrant agreements. During the periods ended December 31, 2008 and September 30, 2009, principal payments of $7,959 and $4,006 (unaudited), respectively, were received on the warrant note agreements. The outstanding amounts due under the warrant note agreements of $40,643 and $36,637 (unaudited) as of December 31, 2008 and September 30, 2009, respectively, have been offset against stockholders’ equity in the accompanying consolidated financial statements.

	Also in March 2007, in connection with the acquisition of MAS, the Company issued the former MAS stockholders an irrevocable right to purchase 278,572 shares of the Company’s common stock at an exercise price of $1.51 per share (the estimated, fair value per share of the Company’s common stock at the grant date) (the MAS CS warrants). The outstanding MAS CS warrants are fully vested and may only be exercised during specified time periods each year, as outlined in the MAS CS warrant agreements. The MAS CS warrants expire in March 2013.

	There were no stock warrants exercised or forfeited during the year ended December 31, 2008 or periods ended September 30, 2008 (unaudited) or 2009 (unaudited), respectively.

(8)	Employee Stock Ownership Plan

	The Company sponsors a defined contribution ESOP that covers all employees who complete 1,000 hours of service during the year and are still employed at December 31 of that year.

	Any cash dividends or distributions received on shares of the Company’s common stock will be allocated to the respective cash accounts of the participants in the ESOP; however, any cash dividends which are currently distributed to the participants is not credited to such cash accounts. Any stock dividends received on shares of the Company’s common stock is be credited to the account to which such common stock was allocated at the time the dividend was declared. Any dividends or distributions received on unallocated shares of the Company’s common stock is allocated to each participant’s account based on the respective participant’s compensation in comparison to the total of all participants’ compensation.

	The Company made principal payments of approximately $220,000 and $172,000 (unaudited) to the ESOP during the year ended December 31, 2008 and the nine months ended September 30, 2009, respectively. In addition, the Company made interest payments of approximately $300,000 and $115,000 (unaudited) to the ESOP during the year ended December 31, 2008 and the nine months ended September 30, 2009, respectively. Shares of the Company’s common stock are released for allocation to participants in the ESOP based on the Company’s principal payments to the ESOP related to the $2.0 million Abeton/NCB note payable agreement and principal and interest payments to the ESOP related to the $2.1 million MAS/NCB note payable agreement. As a result of principal and interest payments made by the Company to the ESOP, 134,275 shares of common stock were released for allocation to participants in the ESOP during the year ended December 31, 2008. The ESOP held 3,530,812 unreleased shares as of December 31, 2008 with an estimated net fair value of approximately $1,290,000 as of December 31, 2008. The Company records ESOP compensation expense based on the fair value of the shares on the date that they are released.

F-123

ABETON GROUP, INC. AND SUBSIDIARIES

Notes to Financial Statements (Continued)

December 31, 2008 and September 30, 2008 and 2009


	The following is a summary of the activity related to the ESOP during the periods ended December 31, 2008 and September 30, 2008 and 2009, respectively:


	Year end December 31, 2008		Nine months ended September 30,
			Nine months ended September 30,

			2008		2009

			(Unaudited)		(Unaudited)
ESOP compensation expense recognized by the Company	$	49,049	$	36,787	$	51,003
Cash contributions from the Company to the ESOP		532,213		306,347		286,141
Interest payments made by the ESOP		312,136		188,145		114,599
ESOP shares allocated to participants in the ESOP		134,275		—		—


(9)	Commitments and Contingencies

	Lease Commitments

	The Company leases office its office facilities under noncancelable operating lease agreements which expire at various dates through December 2015. The Company also leases certain equipment under noncancelable operating lease agreements which expire at various dates through March 2013. As of December 31, 2008, the future minimum lease commitments for the five years subsequent to December 31, 2008, and thereafter, under all noncancelable operating lease agreements that have initial or remaining lease terms in excess of one year are as follows:


Year ended December 31:
2009	$	512,669
2010		511,741
2011		502,693
2012		426,241
2013		321,288
Thereafter		661,710

Total	$	2,936,342


	Total rent expense for all operating leases was $636,000, $462,203 (unaudited) and $368,034 (unaudited) for the year ended December 31, 2008 and the nine months ended September 30, 2008 and 2009, respectively.

(10)	Subsequent Event

	The Company has evaluated subsequent events from the balance sheet date through August 13, 2010, the date at which the financial statements were available to be issued and identified the following item.

	On December 31, 2009, ExamWorks, Inc. acquired substantially all of the assets and assumed certain liabilities of the Company.

F-124

MEDNET I.M.S., INC.

Index


		Page

Independent Auditors’ Report		F-126

Balance Sheets as of December 31, 2008 and September 30, 2009 (unaudited)		F-127

Statements of Operations and Changes in Retained Earnings for the year ended December 31, 2008 and nine months ended September 30, 2008 (unaudited) and 2009 (unaudited)		F-128

Statements of Cash Flows for the year ended December 31, 2008 and nine months ended September 30, 2008 (unaudited) and 2009 (unaudited)		F-129

Notes to Financial Statements		F-130

F-125

I ndependent Auditors’ Report

The Stockholders
MedNet I.M.S., Inc.:

We have audited the accompanying balance sheet of MedNet I.M.S., Inc. (the Company) as of December 31, 2008, and the related statements of operations and changes in retained earnings and cash flows for the year then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of MedNet I.M.S., Inc. as of December 31, 2008, and the results of its operations and its cash flows for the year then ended, in conformity with U.S. generally accepted accounting principles.

/s/ KPMG LLP

Atlanta, Georgia

August 27, 2010

F-126

MEDNET I.M.S., INC.

B alance Sheets


	December 31, 2008		September 30, 2009

			(Unaudited)
Assets
Current assets:
Accounts receivable, net	$	837,798	$	1,296,490
Prepaid expenses and other current assets		223,122		271,413

Total current assets		1,060,920		1,567,903
Equipment and leasehold improvements, net		8,815		7,251
Other assets		7,267		7,267

Total assets	$	1,077,002	$	1,582,421


Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	678,612	$	1,070,111
Accrued expenses		70,456		85,496

Total current liabilities		749,068		1,155,607
Other noncurrent liabilities		166,338		137,276

Total liabilities		915,406		1,292,883
Commitments and contingencies
Stockholders’ equity:
Common stock, no par value. Authorized 1,000 shares; issued and outstanding 210 shares		1,050		1,050
Retained earnings		160,546		288,488

Total stockholders’ equity		161,596		289,538

Total liabilities and stockholders’ equity	$	1,077,002	$	1,582,421

See accompanying notes to financial statements.

F-127

MEDNET I.M.S., INC.

S tatements of Operations and Changes in Retained Earnings


	Year ended December 31, 2008			Nine months ended September 30,
				Nine months ended September 30,

				2008			2009

				(Unaudited)			(Unaudited)
Revenues	$	5,469,842		$	4,155,938		$	5,234,082
Costs and expenses:
Costs of revenues		3,928,089			2,962,238			4,112,595
Selling, general and administrative expenses		1,174,544			780,634			880,101

Total costs and expenses		5,102,633			3,742,872			4,992,696

Income from operations		367,209			413,066			241,386

Other expenses, net:
Interest expense, net		37,015			29,745			32,966
Other expense, net		2,891			2,786			1,864

Total other expenses, net		39,906			32,531			34,830

Net income		327,303			380,535			206,556
Retained earnings, beginning of period		139,424			139,424			160,546
Dividends paid		(306,181	)		(183,300	)		(78,614	)

Retained earnings, end of period	$	160,546		$	336,659		$	288,488

See accompanying notes to financial statements.

F-128

MEDNET I.M.S., INC.

S tatements of Cash Flows


	Year ended December 31, 2008			Nine months ended September 30,
				Nine months ended September 30,

				2008			2009

				(Unaudited)			(Unaudited)
Operating activities:
Net income	$	327,303		$	380,535		$	206,556
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		1,665			1,206			1,564
Provision for doubtful accounts		30,420			30,420			13,349
Changes in operating assets and liabilities:
Accounts receivable		211,401			226,266			(472,041	)
Prepaid expenses and other assets		(14,327	)		(271,546	)		(48,291	)
Accounts payable and accrued expenses		(122,908	)		78,259			430,813

Net cash provided by operating activities		433,554			445,140			131,950

Investing activity:
Purchases of equipment and leasehold improvements		(3,351	)		(2,407	)		—

Net cash used in investing activity		(3,351	)		(2,407	)		—

Financing activities:
Principal payments on related party debt		(150,564	)		(78,441	)		(19,792	)
Dividends paid		(306,181	)		(183,300	)		(78,614	)
Change in outstanding checks in excess of funds on deposit		26,542			(75,500	)		(33,544	)

Net cash used in financing activities		(430,203	)		(337,241	)		(131,950	)

Net increase in cash		—			105,492			—
Cash, beginning of period		—			—			—

Cash, end of period	$	—		$	105,492		$	—

Supplemental disclosures of cash flow information:
Cash paid for interest	$	33,688		$	28,559		$	30,706

See accompanying notes to financial statements.

F-129

MEDNET I.M.S., INC.

N otes to Financial Statements

December 31, 2008 and September 30, 2008 and 2009


(1)	Nature of Operations and Basis of Presentation

	MedNet I.M.S., Inc. (MedNet or the Company) was founded in 1992. The Company’s independent review services include medical evaluation programs for group health, disability, workers’ compensation, automobile, and general liability. MedNet serves a variety of states including most notably New York, Florida, New Jersey, Maryland, Pennsylvania, and Georgia. The Company’s main office is located in Johns Creek, Georgia.

(2)	Summary of Significant Accounting Policies

	(a)	Unaudited Interim Financial Information

		The accompanying interim balance sheet as of September 30, 2009 and the statements of operations and changes in retained earnings and cash flows for the nine months ended September 30, 2008 and 2009 are unaudited. These unaudited interim financial statements have been prepared in accordance with U.S. generally accepted accounting principles. In the opinion of the Company’s management, the unaudited interim financial statements have been prepared on the same basis as the audited financial statements and include all adjustments consisting of normal recurring adjustments necessary for the fair presentation of the Company’s financial position at September 30, 2009, and its results of operations and cash flows for the nine months ended September 30, 2008 and 2009. The results of operations for the nine months ended September 30, 2008 and 2009 are not necessarily indicative of the results to be expected for any other interim period or any fiscal year.

	(b)	Use of Estimates

		The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management bases its estimates on certain assumptions that they believe are reasonable in the circumstances and actual results could differ from those estimates. The most significant estimate reflected in these financial statements is the allowance for doubtful accounts.

	(c)	Cash and Cash Equivalents

		The Company considers all highly liquid investments with maturities of three months or less when purchased to be cash equivalents. At December 31, 2008 and September 30, 2009 (unaudited), there were no cash equivalents on hand.

		It is the policy of the Company to record checks issued in excess of funds on deposit as accounts payable for balance sheet presentation, and include the changes in the positions as cash flows from financing activities in the statements of cash flows. Accounts payable included reclassification of checks issued in excess of funds on deposit in the amount of $102,042 at December 31, 2008 and $68,498 (unaudited) at September 30, 2009.

	(d)	Accounts Receivable and Allowance for Doubtful Accounts

		Accounts receivable consist of amounts owed to the Company for services provided in the normal course of business and are reported net of allowance for doubtful accounts, which amounted to $47,870 and $43,769 (unaudited) as of December 31, 2008 and September 30, 2009, respectively. Generally, no collateral is received from customers and additions to the allowance are based on ongoing credit evaluations of customers with general credit experience being within the range of management’s expectations. Accounts are reviewed regularly for collectability and those deemed uncollectible are written off.

F-130

MEDNET I.M.S., INC.

Notes to Financial Statements (Continued)

December 31, 2008 and September 30, 2008 and 2009


	(e)	Concentrations of Credit Risk

		The Company routinely assesses the financial strength of its customers and establishes an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends and other information. For the year ended December 31, 2008, there were four customers that accounted for 25%, 23%, 14% and 14% of revenues, respectively. For the nine months ended September 30, 2008 (unaudited), there were four customers that accounted for 23%, 23%, 14% and 14% of revenues, respectively. For the nine months ended September 30, 2009 (unaudited), there were four customers that accounted for 33%, 19%, 12% and 10% of revenues, respectively. At December 31, 2008, there were three customers that accounted for 34%, 29% and 13% of the accounts receivable balance, respectively. At September 30, 2009 (unaudited), the same three customers accounted for 24%, 38% and 13% of the accounts receivable balance, respectively.

	(f)	Equipment and Leasehold Improvements

		Equipment and leasehold improvements are recorded at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the respective assets and accelerated methods for income tax purposes. Leasehold improvements are amortized over the lesser of their expected useful life or the remaining lease term. Maintenance and repair costs are expensed as incurred.

	(g)	Long-Lived Assets

		In accordance with Impairment or Disposal of Long-Lived Assets Subsections of Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Subtopic 350-10 (ASC 360), Property, Plant, and Equipment – Overall, long-lived assets, such as equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying value. If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. At December 31, 2008, no impairment was noted.

	(h)	Deferred Rents

		The Company has entered into a lease for its headquarter offices in Johns Creek, Georgia that has certain escalation clauses or other features which require rental expense to be recognized on a straight-line basis over the life of the lease. At December 31, 2008 and September 30, 2009, the deferred rent balance was $24,481 and $16,967 (unaudited), respectively, and is included in accrued expenses and other noncurrent liabilities in the accompanying balance sheets.

	(i)	Revenue Recognition

		Revenue is recognized at the time services have been performed and, if applicable, the medical report is shipped to the end-user. The Company believes that recognizing revenue at the time the report is sent is appropriate because the Company’s sales policies meet the following four criteria: (i) persuasive evidence that arrangement exists, (ii) shipment has occurred, (iii) the price is fixed and determinable, and (iv) collectibility is reasonably assured.

F-131

MEDNET I.M.S., INC.

Notes to Financial Statements (Continued)

December 31, 2008 and September 30, 2008 and 2009


	(j)	Costs of Revenues

		Costs of revenues are comprised of fees paid to physicians, other direct costs including transcription, film and medical record obtainment, and transportation, and other indirect costs including labor and overhead related to the generation of revenue.

	(k)	Marketing and Advertising Costs

		Marketing and advertising costs are expensed as incurred and amounted to $3,647 and $2,856 (unaudited) and $3,117 (unaudited) for the year ended December 31, 2008, and the nine months ended September 30, 2008 and 2009, respectively.

	(l)	Income Taxes

		The Company has elected with the Internal Revenue Service to be taxed as an S corporation. Accordingly, the Company does not pay federal income taxes. Rather, the stockholders separately account for their pro rata share of corporate items of income, deduction, loss, and credits in their personal income tax returns. The Company is subject to state and local taxes in Georgia. Such tax provisions are not based upon income and are classified in other expenses, net, and were $1,542, and $1,436 (unaudited) and $1,389 (unaudited) for the year ended December 31, 2008, and the nine months ended September 30, 2008 and 2009, respectively.

	(m)	Fair Value Measurements

		The Company has adopted the provisions of FASB Statement No. 157, Fair Value Measurements, included in ASC Topic 820, Fair Value Measurements and Disclosures, for fair value measurements of financial assets and financial liabilities. ASC Topic 820 (Statement 157) defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 (Statement 157) also established a framework for measuring fair value and expands disclosures about fair value measurements.

		The Company uses financial instruments in the normal course of its business. The carrying values of cash and cash equivalents, accounts receivable, prepaid assets, accounts payable, and accrued expenses approximate each of their fair values due to the short-term maturities of these assets and liabilities. Fair value is defined as the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

(3)	Equipment and Leasehold Improvements


	Estimated useful lives		December 31, 2008		September 30, 2009

					(unaudited)
Computer and office equipment		3 years	$	8,062	$	8,062
Furniture and fixtures		7 years		3,350		3,350

				11,412		11,412
Less accumulated depreciation				2,597		4,161

Total			$	8,815	$	7,251

F-132

MEDNET I.M.S., INC.

Notes to Financial Statements (Continued)

December 31, 2008 and September 30, 2008 and 2009


	Depreciation expense was $1,665, $1,206 (unaudited) and $1,564 (unaudited) for the year ended December 31, 2008 and the nine months ended September 30, 2008 and 2009, respectively.

(4)	Accrued Expenses

	Accrued expenses consist of the following:


	December 31, 2008		September 30, 2009

			(Unaudited)
Accrued compensation and benefits	$	54,655	$	69,188
Accrued payroll tax deposits		5,329		4,078
Other accrued expenses		10,472		12,230

Total	$	70,456	$	85,496


(5)	Commitments and Contingencies

	The Company leases office space under a noncancelable operating lease expiring January 31, 2011. Future minimum lease payments under the operating leases in each of the years subsequent to December 31, 2008 are as follows:


Year ending December 31:
2009	$	94,534
2010		96,885
2011		8,189

Total	$	199,608


	Related rent expense for the Company’s main offices was $84,061, $63,046 (unaudited) and $63,046 (unaudited) for the year ended December 31, 2008, and the nine months ended September 30, 2008 and 2009, respectively.

(6)	Related Party Transactions

	During 2008, the Company paid $150,564 on an interest bearing loan payable to one of its shareholders. The outstanding payable to the shareholder is $152,300 and $132,508 (unaudited) as of December 31, 2008 and September 30, 2009, respectively, and is included in other noncurrent liabilities in the accompanying balance sheets. The Company recorded interest expense on the related party loan in the amount of $37,042, $29,745 (unaudited) and $32,966 (unaudited) for the year ended December 31, 2008 and the nine months ended September 30, 2008 and 2009, respectively.

(7)	Subsequent Event

	The Company has evaluated subsequent events from the balance sheet date through August 27, 2010, the date at which the financial statements were available to be issued and identified the following item.

	On December 31, 2009, ExamWorks, Inc. acquired substantially all of the assets and assumed certain liabilities of the Company.

F-133

AMERICAN MEDICAL BILL REVIEW, INC.

Table of Contents


		Page

Independent Auditors’ Report		F-135

Balance Sheet as of December 31, 2009		F-136

Statement of Operations and Changes in Retained Earnings for the year ended December 31, 2009		F-137

Statement of Cash Flows for the year ended December 31, 2009		F-138

Notes to Financial Statements		F-139

F-134

I ndependent Auditors’ Report

The Stockholder
American Medical Bill Review, Inc.:

We have audited the accompanying balance sheet of American Medical Bill Review, Inc. (the Company) as of December 31, 2009, and the related statements of operations and changes in retained earnings and cash flows for the year then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of American Medical Bill Review, Inc. as of December 31, 2009, and the results of its operations and its cash flows for the year then ended, in conformity with U.S. generally accepted accounting principles.

/s/ KPMG LLP

Atlanta, Georgia

August 13, 2010

F-135

AMERICAN MEDICAL BILL REVIEW, INC.

B alance Sheet

December 31, 2009


Assets

Current assets:
Cash	$	8,753
Accounts receivable, net		517,094

Total current assets		525,847
Equipment and leasehold improvements, net		274,616
Other assets		7,800

Total assets	$	808,263


Liabilities and Stockholder’s Equity

Current liabilities:
Accounts payable	$	33,888
Accrued expenses		108,454

Total current liabilities		142,342

Total liabilities		142,342

Commitments and contingencies
Stockholder’s equity:
Common stock, $1.00 par value. Authorized 50,000 shares; issued and outstanding 50,000 shares		50,000
Retained earnings		615,921

Total stockholder’s equity		665,921

Total liabilities and stockholder’s equity	$	808,263

See accompanying notes to financial statements.

F-136

AMERICAN MEDICAL BILL REVIEW, INC.

S tatement of Operations and Changes in Retained Earnings

Year ended December 31, 2009


Revenues	$	3,782,487
Costs and expenses:
Costs of revenues		1,590,155
Selling, general, and administrative expenses		1,545,568
Depreciation and amortization		83,138

Total costs and expenses		3,218,861

Income from operations		563,626

Other expenses, net:
Interest expense, net		9,404
Other expense, net		3,575

Total other expenses, net		12,979

Net income		550,647
Retained earnings, beginning of year		534,345
Dividends paid		(469,071	)

Retained earnings, end of year	$	615,921

See accompanying notes to financial statements.

F-137

AMERICAN MEDICAL BILL REVIEW, INC.

S tatement of Cash Flows

Year ended December 31, 2009


Operating activities:
Net income	$	550,647
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		83,138
Provision for doubtful accounts		1,083
Changes in operating assets and liabilities:
Accounts receivable		(81,448	)
Accounts payable and accrued expenses		57,498

Net cash provided by operating activities		610,918

Investing activity:
Purchases of equipment and leasehold improvements		(82,115	)

Net cash used in investing activity		(82,115	)

Financing activities:
Collection of loan receivable		57,000
Repayment of loan payable		(107,979	)
Dividends paid		(469,071	)

Net cash used in financing activities		(520,050	)

Net increase in cash		8,753
Cash, beginning of year		—

Cash, end of year	$	8,753

Supplemental disclosure of cash flow information:
Cash paid for interest	$	9,404

See accompanying notes to financial statements.

F-138

AMERICAN MEDICAL BILL REVIEW, INC.

N otes to Financial Statements

December 31, 2009


(1)	Nature of Operations and Basis of Presentation

American Medical Bill Review, Inc. (AMBR or the Company) was formed in 1989 and specializes in medical bill review. AMBR provides services in all 50 states including all lines of the insurance industry, third-party administrators, government agencies, independent adjusting companies, and the legal community.

(2)	Summary of Significant Accounting Policies

	(a)	Use of Estimates

		The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management bases its estimates on certain assumptions which they believe are reasonable in the circumstances and actual results could differ from those estimates. The most significant estimate reflected in these financial statements includes the allowance for doubtful accounts.

	(b)	Accounts Receivable and Allowance for Doubtful Accounts

		Accounts receivable consist of amounts owed to the Company for services provided in the normal course of business and are reported net of any allowance for doubtful accounts. There was no accounts receivable allowance as of December 31, 2009. Generally, no collateral is received from customers and additions to the allowance are based on ongoing credit evaluations of customers with general credit experience being within the range of management’s expectations. Accounts are reviewed regularly for collectibility and those deemed uncollectible are written off.

	(c)	Concentrations of Credit Risk

		The Company routinely assesses the financial strength of its customers and establishes an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends and other information. For the year ended December 31, 2009, there was no customer that accounted for greater than 10% of revenues. At December 31, 2009, there was no customer that accounted for greater than 10% of the accounts receivable balance.

	(d)	Equipment and Leasehold Improvements

		Equipment and leasehold improvements are recorded at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the respective assets. Leasehold improvements are amortized over the lesser of their expected useful life or the remaining lease term. Maintenance and repair costs are expensed as incurred.

	(e)	Long-Lived Assets

		In accordance with Impairment or Disposal of Long-Lived Assets Subsections of FASB ASC Subtopic 350-10 (ASC 360), Property, Plant, and Equipment — Overall, long-lived assets, such as equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying value. If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. At December 31, 2009, no impairment was noted.

F-139

AMERICAN MEDICAL BILL REVIEW, INC.

Notes to Financial Statements (Continued)

December 31, 2009


	(f)	Revenue Recognition

		Revenue is recognized at the time services have been performed and, if applicable, the medical bill review report is shipped to the end user. The Company believes that recognizing revenue at the time the medical bill review report is sent is appropriate because the Company’s revenue policies meet the following four criteria: (i) persuasive evidence that arrangement exists, (ii) shipment has occurred, (iii) the price is fixed and determinable, and (iv) collectibility is reasonably assured.

	(g)	Costs of Revenues

		Costs of revenues are comprised of fees paid to members of the Company’s medical panel; other direct costs including transcription, film and medical record obtainment and transportation; and other indirect costs including labor and overhead related to the generation of revenues.

	(h)	Marketing and Advertising Costs

		Marketing and advertising costs are expensed as incurred and amounted to $5,545 for the year ended December 31, 2009.

	(i)	Income Taxes

		The Company has elected with the Internal Revenue Service to be taxed as an S corporation. Accordingly, the Company does not pay federal income taxes. Rather, the stockholder separately accounts for his pro rata share of corporate items of income, deduction, loss, and credits in personal income tax returns. Items affecting the stockholder individual income tax liability are separately stated.

		The Company is subject to state tax in California. Such tax provisions are not based upon income and are classified in other expenses, net and were $3,575 for the year ended December 31, 2009.

	(j)	Fair Value Measurements

		The Company has adopted the provisions of FASB Statement No. 157, Fair Value Measurements, included in ASC Topic 820, Fair Value Measurements and Disclosures, for fair value measurements of financial assets and financial liabilities. ASC Topic 820 (Statement 157) defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 (Statement 157) also established a framework for measuring fair value and expands disclosures about fair value measurements.

		The Company uses financial instruments in the normal course of its business. The carrying values of cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses approximate each of their fair values due to the short-term maturities of these assets and liabilities. Fair value is defined as the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

F-140

AMERICAN MEDICAL BILL REVIEW, INC.

Notes to Financial Statements (Continued)

December 31, 2009


(3)	Equipment and Leasehold Improvements

	Equipment and leasehold improvements consist of the following:


	Estimated useful lives	December 31, 2009

Computer and office equipment	5 years	$	274,133
Furniture and fixtures	5 years		53,256
Leasehold improvements	Shorter of
	lease term or
	10 years		223,391

			550,780
Less accumulated depreciation and amortization			276,164

Total		$	274,616


	Depreciation and amortization expense was $83,138 for the year ended December 31, 2009.

(4)	Accrued Expenses

	Accrued expenses consist of the following:


Accrued compensation and benefits	$	105,027
Other accrued expenses		3,427

Total	$	108,454


(5)	Commitments and Contingencies

	Lease Commitments

	The Company leases office space from its stockholder. There is no formal lease agreement. Related rent expense for the Company’s main offices was $159,626 for the year ended December 31, 2009.

(6)	Related Party Transactions

	During 2009, the Company received the outstanding balance of $57,000 from a loan to its stockholder. In addition, the Company paid $107,979 on a loan payable to its shareholder during 2009. The outstanding payable to the stockholder as of December 31, 2009 was less than $4,000 and is included in accrued expenses on the balance sheet.

(7)	Subsequent Event

	The Company has evaluated subsequent events from the balance sheet date through August 13, 2010, the date at which the financial statements were available to be issued and identified the following item.

	On March 15, 2010, ExamWorks, Inc. acquired substantially all of the assets and assumed certain liabilities of the Company.

F-141

MEDICAL EVALUATIONS, INC.

Table of Contents


		Page

Independent Auditors’ Report		F-143

Balance Sheet as of December 31, 2009		F-144

Statement of Operations for the year ended December 31, 2009		F-145

Statement of Stockholders’ Equity for the year ended December 31, 2009		F-146

Statement of Cash Flows for the year ended December 31, 2009		F-147

Notes to Financial Statements		F-148

F-142

Independent Auditors’ Report

The Stockholders
Medical Evaluations, Inc.:

We have audited the accompanying balance sheet of Medical Evaluations, Inc. (the Company) as of December 31, 2009, and the related statements of operations, stockholders’ equity and cash flows for the year then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Medical Evaluations, Inc. as of December 31, 2009, and the results of its operations and its cash flows for the year then ended, in conformity with U.S. generally accepted accounting principles.

/s/ KPMG LLP

Atlanta, Georgia

August 13, 2010

F-143

MEDICAL EVALUATIONS, INC.

Balance Sheet

December 31, 2009


Assets

Current assets:
Cash and cash equivalents	$	446,742
Accounts receivable, net		1,667,222
Prepaid expenses and other current assets		214,506

Total current assets		2,328,470
Equipment and leasehold improvements, net		182,432

Total assets	$	2,510,902


Liabilities and Stockholders’ Equity

Current liabilities:
Accounts payable	$	800,728
Accrued expenses		248,092
Other current liabilities		30,943

Total current liabilities		1,079,763
Other noncurrent liabilities		32,411

Total liabilities		1,112,174

Commitments and contingencies
Stockholders’ equity:
Class A common stock, $0.01 par value. Authorized 60,000 shares; issued and outstanding 53,800 shares		538
Class B common stock, $0.01 par value. Authorized 40,000 shares; no shares outstanding		—
Retained earnings		1,623,159
Class B treasury stock, 3,100 shares, at cost		(224,969	)

Total stockholders’ equity		1,398,728

Total liabilities and stockholders’ equity	$	2,510,902

See accompanying notes to financial statements.

F-144

MEDICAL EVALUATIONS, INC.

Statement of Operations

Year ended December 31, 2009


Revenues	$	12,849,355
Costs and expenses:
Costs of revenues		8,452,735
Selling, general, and administrative expenses		3,242,815
Depreciation and amortization		104,941

Total costs and expenses		11,800,491

Income from operations		1,048,864

Other expenses, net:
Interest expense, net		4,070

Total other expenses, net		4,070

Income before income taxes		1,044,794
Income tax expense		4,606

Net income	$	1,040,188

See accompanying notes to financial statements.

F-145

MEDICAL EVALUATIONS, INC.

Statement of Stockholders’ Equity

Year ended December 31, 2009


	Class A Common stock			Class B Common stock					Retained earnings			Treasury stock			Total stockholders’ equity
	Class A Common stock			Class B Common stock

	Shares	Amount		Shares		Amount

Balances at January 1, 2009	53,800	$	538	3,100		$	31		$	1,432,971		$	—		$	1,433,540
Net income	—		—	—			—			1,040,188			—			1,040,188
Dividends declared:
Class A Common stock, $15.63/share	—		—	—			—			(840,700	)		—			(840,700	)
Class B Common stock, $3.00/share	—		—	—			—			(9,300	)		—			(9,300	)
Repurchase of 3,100 Class B common shares	—		—	(3,100	)		(31	)		—			(224,969	)		(225,000	)

Balances at December 31, 2009	53,800	$	538	—		$	—		$	1,623,159		$	(224,969	)	$	1,398,728

See accompanying notes to financial statements.

F-146

MEDICAL EVALUATIONS, INC.

Statement of Cash Flows

Year ended December 31, 2009


Operating activities:
Net income	$	1,040,188
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		104,941
Provision for doubtful accounts		11,000
Changes in operating assets and liabilities:
Accounts receivable		(224,714	)
Prepaid expenses and other current assets		(103,254	)
Accounts payable and accrued expenses		184,401
Other changes in assets and liabilities		(19,319	)

Net cash provided by operating activities		993,243

Investing activity:
Purchases of equipment and leasehold improvements		(67,818	)

Net cash used in investing activity		(67,818	)

Financing activities:
Payments for repurchase of common shares		(225,000	)
Principal reductions on capital lease obligations		(16,900	)
Dividends paid		(850,000	)

Net cash used in financing activities		(1,091,900	)

Net decrease in cash and cash equivalents		(166,475	)
Cash and cash equivalents, beginning of year		613,217

Cash and cash equivalents, end of year	$	446,742


Supplemental disclosure of cash flow information:
Cash paid for interest	$	4,116

See accompanying notes to financial statements.

F-147

MEDICAL EVALUATIONS, INC.

Notes to Financial Statements

December 31, 2009


(1)	Nature of Operations and Basis of Presentation

	Medical Evaluations, Inc. (MEI or the Company) was founded in 1984. The Company’s independent review services include independent medical evaluations (IMEs), medical record reviews, and coordinating depositions and live testimony for workers’ compensation, no fault, personal injury, disability and malpractice claims. The Company’s main office is located in Minneapolis, Minnesota with a satellite office in Brookfield, Wisconsin. MEI primarily serves the midwestern United States.

(2)	Summary of Significant Accounting Policies

	(a)	Use of Estimates

		The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management bases its estimates on certain assumptions which they believe are reasonable in the circumstances and actual results could differ from those estimates. The most significant estimate reflected in these financial statements is the allowance for doubtful accounts.

	(b)	Cash and Cash Equivalents

		The Company considers all highly liquid investments with maturities of three months or less when purchased to be cash equivalents. The Company sold all cash equivalents during the fiscal year 2009.

	(c)	Accounts Receivable and Allowance for Doubtful Accounts

		Accounts receivable consist of amounts owed to the Company for services provided in the normal course of business and are reported net of allowance for doubtful accounts, which amounted to $60,257 as of December 31, 2009. Generally, no collateral is received from customers and additions to the allowance are based on ongoing credit evaluations of customers with general credit experience being within the range of management’s expectations. Accounts are reviewed regularly for collectibility and those deemed uncollectible are written off.

	(d)	Concentrations of Credit Risk

		The Company routinely assesses the financial strength of its customers and establishes an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends and other information. For the year ended December 31, 2009, there were two customers that accounted for greater than 10% of revenues. At December 31, 2009, there was one customer that accounted for greater than 10% of the accounts receivable balance.

	(e)	Equipment and Leasehold Improvements

		Equipment and leasehold improvements are recorded at cost. Depreciation is computed using the double-declining method over the estimated useful lives of the respective assets. Leasehold improvements are amortized using the straight line method over the lesser of their expected useful life or the remaining lease term. Maintenance and repair costs are expensed as incurred.

F-148

MEDICAL EVALUATIONS, INC.

Notes to Financial Statements (Continued)

December 31, 2009


	(f)	Long-Lived Assets

		In accordance with Impairment or Disposal of Long-Lived Assets Subsections of FASB ASC Subtopic 350-10 (ASC 360), Property, Plant, and Equipment — Overall, long-lived assets, such as equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying value. If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. At December 31, 2009, no impairment was noted.

	(g)	Deferred Rent

		The Company has entered into various leases for its offices in Minneapolis, Minnesota and Brookfield, Wisconsin that has certain escalation clauses or other features which require rental expense to be recognized on a straight-line basis over the life of the lease. At December 31, 2009, the deferred rent balance was $28,141, and is included in other current and noncurrent liabilities in the accompanying balance sheet.

	(h)	Revenue Recognition

		Revenue is recognized at the time services have been performed and, if applicable, the medical report is shipped to the end user. The Company believes that recognizing revenue at the time the report is sent is appropriate because the Company’s revenue policies meet the following four criteria: (i) persuasive evidence that arrangement exists, (ii) shipment has occurred, (iii) the price is fixed and determinable and (iv) collectibility is reasonably assured.

	(i)	Costs of Revenues

		Costs of revenues are comprised of fees paid to members of the Company’s medical panel; other direct costs including transcription, film and medical record obtainment and transportation; and other indirect costs including labor and overhead related to the generation of revenues.

	(j)	Marketing and Advertising Costs

		Marketing and advertising costs are expensed as incurred and amounted to $39,816 for the year ended December 31, 2009.

	(k)	Income Taxes

		The Company has elected with the Internal Revenue Service to be taxed as an S corporation. Accordingly, the Company does not pay federal income taxes. Rather, the stockholders separately account for their pro rata share of corporate items of income, deduction, loss, and credits in their personal income tax returns. Items affecting the stockholders’ individual income tax liability are separately stated. The Company is subject to state tax in Minnesota and Wisconsin. Such tax provisions are classified in income tax expense and were $4,606 for the year ended December 31, 2009.

	(l)	Fair Value Measurements

		The Company has adopted the provisions of FASB Statement No. 157, Fair Value Measurements, included in ASC Topic 820, Fair Value Measurements and Disclosures, for fair value measurements of financial assets and financial liabilities. ASC Topic 820 (Statement 157) defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 (Statement 157) also established a framework for measuring fair value and expands disclosures about fair value measurements.

F-149

MEDICAL EVALUATIONS, INC.

Notes to Financial Statements (Continued)

December 31, 2009


		The Company uses financial instruments in the normal course of its business. The carrying values of cash and cash equivalents, accounts receivable, prepaid assets, accounts payable, and accrued expenses approximate each of their fair values due to the short-term maturities of these assets and liabilities. Fair value is defined as the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

(3)	Equipment and Leasehold Improvements

	Equipment and leasehold improvements consist of the following:


	Estimated useful lives	December 31, 2009

Computer hardware and software	3 – 5 years	$	309,954
Furniture and equipment	7 years		306,694
Leasehold improvements	4 – 6 years		78,036

			694,684
Less accumulated depreciation and amortization			512,252

Total		$	182,432


	Depreciation and amortization expense was $104,941 for the year ended December 31, 2009.

(4)	Accrued Expenses

	Accrued expenses consist of the following:


	December 31, 2009

Unearned revenue	$	86,350
Accrued compensation and benefits		161,742

Total	$	248,092


(5)	Commitments and Contingencies

	(a)	Lease Commitments

	The Company leases office space under noncancelable operating leases expiring March 31, 2012 and December 31, 2010 for the Minneapolis, Minnesota and Brookfield, Wisconsin offices, respectively. Future minimum lease payments under the operating leases in each of the years subsequent to December 31, 2009 are as follows:


Year ended December 31:
2010	$	162,963
2011		84,591
2012		21,269

Total	$	268,823


	Related rent expense for the Company’s main offices was $145,618 the year ended December 31, 2009.

(6)	Subsequent Event

The Company has evaluated subsequent events from the balance sheet date through August 13, 2010, the date at which the financial statements were available to be issued and identified the following item.

On March 15, 2010, ExamWorks, Inc. acquired substantially all of the assets and assumed certain liabilities of the Company.

F-150

METRO MEDICAL SERVICES, LLC

Index


		Page(s)

Independent Auditors’ Report		F-152

Balance Sheet as of December 31, 2009		F-153

Statement of Operations and Changes in Members’ Equity for the year ended December 31, 2009		F-154

Statement of Cash Flows for the year ended December 31, 2009		F-155

Notes to Financial Statements		F-156

F-151

I ndependent Auditors’ Report

The Members
Metro Medical Services, LLC:

We have audited the accompanying balance sheet of Metro Medical Services, LLC (the Company) as of December 31, 2009, and the related statements of operations and changes in members’ equity and cash flows for the year then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Metro Medical Services, LLC as of December 31, 2009, and the results of its operations and its cash flows for the year then ended, in conformity with U.S. generally accepted accounting principles.

/s/ KPMG LLP

Atlanta, Georgia

August 13, 2010

F-152

METRO MEDICAL SERVICES, LLC

B alance Sheet

December 31, 2009


Assets

Current assets:
Cash and cash equivalents	$	829,195
Accounts receivable, net		1,698,032
Investment in trading securities, at fair value		88,614
Prepaid expenses and other current assets		9,744

Total current assets		2,625,585
Equipment, net		51,592

Total assets	$	2,677,177


Liabilities and Members’ Equity

Current liabilities:
Accounts payable	$	975,463
Accrued expenses		41,310
Other current liabilities		17,388

Total current liabilities		1,034,161
Other noncurrent liabilities		7,719

Total liabilities		1,041,880

Commitments and contingencies
Members’ equity		1,635,297

Total liabilities and members’ equity	$	2,677,177

See accompanying notes to financial statements.

F-153

METRO MEDICAL SERVICES, LLC

S tatement of Operations and Changes in Members’ Equity

Year ended December 31, 2009


Revenues	$	15,534,238
Costs and expenses:
Costs of revenues		10,861,935
Selling, general, and administrative expenses		2,460,312
Depreciation and amortization		28,037

Total costs and expenses		13,350,284

Income from operations		2,183,954

Other income (expenses):
Interest and dividend income		1,591
Unrealized gain on investments		20,308
Other expense		(3,000	)

Total other income		18,899

Net income		2,202,853
Members’ equity, beginning of year		803,944
Members’ draws during year		(1,371,500	)

Members’ equity, end of year	$	1,635,297

See accompanying notes to financial statements.

F-154

METRO MEDICAL SERVICES, LLC

S tatement of Cash Flows

Year ended December 31, 2009


Operating activities:
Net income	$	2,202,853
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		28,037
Unrealized gain on investments measured at fair value		(20,308	)
Provision for bad debt		114,253
Changes in operating assets and liabilities:
Accounts receivable		(892,668	)
Prepaid expenses and other current assets		(3,284	)
Accounts payable and accrued expenses		396,797
Other changes in liabilities		(10,719	)

Net cash provided by operating activities		1,814,961

Investing activity:
Purchases of equipment		(19,001	)

Net cash used in investing activity		(19,001	)

Financing activity:
Members’ draws		(1,371,500	)

Net cash used in financing activity		(1,371,500	)

Net increase in cash and cash equivalents		424,460
Cash and cash equivalents, beginning of year		404,735

Cash and cash equivalents, end of year	$	829,195

See accompanying notes to financial statements.

F-155

METRO MEDICAL SERVICES, LLC

N otes to Financial Statements

December 31, 2009


(1)	Nature of Operations and Basis of Presentation

	Metro Medical Services, LLC (MMS or the Company) was founded in 1987 as a limited liability company. The Company’s independent review services include medical evaluation programs for group health, disability, workers’ compensation, automobile, and general liability. The Company’s office is located in East Rockaway, New York and primarily serves the state of New York.

(2)	Summary of Significant Accounting Policies

	(a)	Use of Estimates

		The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management bases its estimates on certain assumptions, which they believe are reasonable in the circumstances and actual results could differ from those estimates. The most significant estimate reflected in these financial statements is the allowance for doubtful accounts.

	(b)	Cash and Cash Equivalents

		The Company considers all highly liquid investments with maturities of three months or less when purchased to be cash equivalents. The Company had no cash equivalents as of December 31, 2009.

	(c)	Accounts Receivable and Allowance for Doubtful Accounts

		Accounts receivable consist of amounts owed to the Company for services provided in the normal course of business and are reported net of allowance for doubtful accounts, which amounted to $203,159 as of December 31, 2009. Generally, no collateral is received from customers and additions to the allowance are based on ongoing credit evaluations of customers with general credit experience being within the range of management’s expectations. Accounts are reviewed regularly for collectibility and those deemed uncollectible are written off.

	(d)	Concentrations of Credit Risk

		The Company routinely assesses the financial strength of its customers and establishes an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends, the aging of accounts receivable and other information. For the year ended December 31, 2009, three customers each accounted for greater than 10% of revenues with 37%, 32% and 18%, respectively. At December 31, 2009, the same customers represented 24%, 42% and 8% of the accounts receivable balance, respectively. Based on the volume of transactions and the frequency of payments of these customers, the Company believes collectibility is reasonably assured based on historical data and therefore the high percentages do not present an unusual credit risk.

	(e)	Investment Securities

		Investment securities as of December 31, 2009, consist of equity securities. The Company classifies its equity securities that have readily determinable fair values into trading or available-for-sale. The Company has classified all of its investment securities as of December 31, 2009 as trading. Trading securities are bought and held principally for the purpose of selling them in the near term. Trading securities are recorded at fair value measured using quoted market prices at the reporting date multiplied by the quantity held.

F-156

METRO MEDICAL SERVICES, LLC

Notes to Financial Statements (Continued)

December 31, 2009


		Unrealized holding gains and losses on trading securities are included in net income, as well as dividends received from these investments.

	(f)	Equipment

		Equipment is recorded at cost. Equipment under capital leases is recorded at the present value of minimum lease payments. Depreciation is computed using the straight-line method over the estimated useful lives of the respective assets for book purposes. Equipment held under capital leases are amortized on a straight-line basis over the shorter of the lease term or their expected useful life. Maintenance and repair costs are expensed as incurred.

	(g)	Long-Lived Assets

		In accordance with Impairment or Disposal of Long-Lived Assets Subsections of Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Subtopic 350-10 (ASC 360), Property, Plant, and Equipment — Overall, long-lived assets, such as equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying value. If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values, and third-party independent appraisals, as considered necessary. At December 31, 2009, no impairment was noted.

	(h)	Deferred Rents

		The Company has entered into a lease for its headquarters office in East Rockaway, New York that has certain escalation clauses or other features, which require rental expense to be recognized on a straight-line basis over the life of the lease. At December 31, 2009, the deferred rent balance was $12,042 and is included in other current and noncurrent liabilities in the accompanying balance sheet.

	(i)	Fair Value Measurements

		The Company has adopted the provisions of FASB Statement No. 157, Fair Value Measurements, included in ASC Topic 820, Fair Value Measurements and Disclosures, for fair value measurements of financial assets and financial liabilities. ASC Topic 820 (Statement 157) defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 (Statement 157) also established a framework for measuring fair value and expands disclosures about fair value measurements.

	(j)	Revenue Recognition

		Revenue is recognized at the time services have been performed and, if applicable, the medical report is shipped to the end user. The Company believes that recognizing revenue at the time the report is sent is appropriate because the Company’s revenue policy meet the following four criteria: (i) persuasive evidence that arrangement exists, (ii) shipment has occurred, (iii) the price is fixed and determinable, and (iv) collectibility is reasonably assured.

F-157

METRO MEDICAL SERVICES, LLC

Notes to Financial Statements (Continued)

December 31, 2009


	(k)	Costs of Revenues

		Costs of revenues are comprised of fees paid to members of the Company’s medical panel; other direct costs including transcription, film and medical record obtainment and transportation; and other indirect costs including labor and overhead related to the generation of revenues.

	(l)	Marketing and Advertising Costs

		Marketing and advertising costs are expensed as incurred and amounted to $7,981 for the year ended December 31, 2009.

	(m)	Income Taxes

		The Company has elected with the Internal Revenue Service to be taxed as a limited liability company with a partnership election. Accordingly, the Company does not pay federal income taxes. Rather, the members separately account for their pro rata ownership of income, deduction, loss, and credits in their personal income tax returns. Items affecting the members’ individual income tax liability are separately stated.

		The Company is subject to state tax in New York. Such tax provisions are not based upon income and are classified in other expenses and were $3,000 for the year ended December 31, 2009.

(3)	Fair Value of Financial Instruments and Fair Value Hierarchy

	The Company uses financial instruments in the normal course of its business. The carrying values of cash and cash equivalents, accounts receivable, prepaid assets, accounts payable, and accrued expenses approximate each of their fair values due to the short-term maturities of these assets and liabilities. Fair value is defined as the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

	The Company adopted ASC Topic 820 (Statement 157) on January 1, 2008 for fair value measurements of financial assets and financial liabilities and for fair value measurements of nonfinancial items that are recognized or disclosed at fair value in the financial statements on a recurring basis. ASC Topic 820 (Statement 157) establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:

	•	Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

	•	Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

	•	Level 3 inputs are unobservable inputs for the asset or liability.

	The level in the fair value hierarchy within which a fair measurement in its entirety falls is based on the lowest level input that is significant to the fair value measurement in its entirety.

	The following table presents the carrying amounts, estimated fair value, and fair value hierarchy of all trading securities as follows:


	December 31, 2009

	Carrying amount		Fair value		Fair value measurements

Trading securities	$	88,614	$	88,614		Level 1

F-158

METRO MEDICAL SERVICES, LLC

Notes to Financial Statements (Continued)

December 31, 2009


(4)	Equipment

Equipment consists of the following:


	Estimated useful lives	December 31, 2009

Computer and office equipment	5 years	$	123,566
Furniture and fixtures	7 years		28,947

			152,513
Less accumulated depreciation and amortization			100,921

Total		$	51,592


	Computer and office equipment above includes assets under two capital leases for office equipment (i.e. photocopier and other computer equipment), which will terminate in July 2010 and August 2011, respectively. The remaining lease obligations for these two assets is $13,075 and is included in other current and noncurrent liabilities in the accompanying balance sheet.

	Depreciation and amortization expense was $28,037 for the year ended December 31, 2009.

(5)	Accrued Expenses

	Accrued expenses consist of the following:


	December 31, 2009

Accrued compensation and benefits	$	11,785
Other accrued expenses		29,525

Total	$	41,310


(6)	Commitments and Contingencies

	(a)	Lease Commitments

	The Company leases office equipment and office space under noncancelable operating leases expiring July 10, 2014.

	Future minimum lease payments under noncancelable operating leases in each of the years subsequent to December 31, 2009 are as follows:


Year ending December 31:
2010	$	271,712
2011		179,590
2012		45,405
2013		14,900
2014		3,387

Total	$	514,994


	Rent expense was $249,774 for the year ended December 31, 2009.

(7)	Subsequent Event

The Company has evaluated subsequent events from the balance sheet date through August 13, 2010, the date at which the financial statements were available to be issued and identified the following item.

On March 26, 2010, ExamWorks, Inc. acquired substantially all of the assets and assumed certain liabilities of the Company.

F-159

DIRECT IME

(A Partnership)

Table of Contents


		Page

Independent Auditors’ Report		F-161

Balance Sheets as of December 31, 2009 and March 31, 2010 (unaudited)		F-162

Statements of Operations and Changes in Partners’ Equity for the year ended December 31, 2009 and three months ended March 31, 2009 (unaudited) and 2010 (unaudited)		F-163

Statements of Cash Flows for the year ended December 31, 2009 and three months ended March 31, 2009 (unaudited) and 2010 (unaudited)		F-164

Notes to Financial Statements		F-165

F-160

I ndependent Auditors’ Report

The Partners
Direct IME:

We have audited the accompanying balance sheet of Direct IME (a Partnership) as of December 31, 2009, and the related statements of operations and changes in partners’ equity and cash flows for the year then ended. These financial statements are the responsibility of the Partnership’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards as established by the Auditing Standards Board (United States) and in accordance with the auditing standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Partnership is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Partnership’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Direct IME as of December 31, 2009, and the results of its operations and its cash flows for the year then ended, in conformity with U.S. generally accepted accounting principles.

/s/ KPMG LLP
Atlanta, Georgia

September 17, 2010

F-161

DIRECT IME
(A Partnership)

(Stated in Canadian Dollars)

Balance Sheets


	December 31, 2009		March 31, 2010

			(Unaudited)
Assets
Current assets:
Cash	$	512,232	$	880,587
Accounts receivable		1,833,787		1,877,871
Loan receivable		6,850		6,177

Total current assets		2,352,869		2,764,635
Equipment, net		10,861		9,992

Total assets	$	2,363,730	$	2,774,627


Liabilities and Partners’ Equity
Current liabilities:
Accounts payable	$	491,116	$	559,687
Accrued expenses		59,278		48,357

Total current liabilities		550,394		608,044

Commitments and contingencies Partners’ equity		1,813,336		2,166,583

Total liabilities and partners’ equity	$	2,363,730	$	2,774,627

See accompanying notes to financial statements.

F-162

DIRECT IME
(A Partnership)

(Stated in Canadian Dollars)

Statements of Operations and Changes in Partners’ Equity


	Year ended December 31, 2009			Three months ended March 31,

				2009			2010

				(Unaudited)			(Unaudited)
Net revenues	$	7,858,800		$	1,536,466		$	2,323,246
Costs and expenses:
Costs of revenues		4,440,386			964,036			1,445,639
Selling, general and administrative expenses		454,342			87,313			121,962
Depreciation		9,025			2,542			2,542

Total costs and expenses		4,903,753			1,053,891			1,570,143

Income from operations		2,955,047			482,575			753,103

Other (expenses) income, net:
Other expenses, net		(1,855	)		(70	)		(139	)

Total other expenses, net		(1,855	)		(70	)		(139	)

Net income		2,953,192			482,505			752,964
Partner’s equity, beginning of period		1,470,144			1,470,144			1,813,336
Partners’ draws during the period		(2,610,000	)		(610,000	)		(399,717	)

Partners’ equity, end of period	$	1,813,336		$	1,342,649		$	2,166,583

See accompanying notes to financial statements.

F-163

DIRECT IME
(A Partnership)

(Stated in Canadian Dollars)

Statements of Cash Flows


	Year ended December 31, 2009			Three months ended March 31,

				2009			2010

				(Unaudited)			(Unaudited)
Operating activities:
Net income	$	2,953,192		$	482,505		$	752,964
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		9,025			2,542			2,542
Changes in operating assets and liabilities:
Accounts receivable		(790,996	)		277,762			(44,084	)
Loan receivable		(5,976	)		(10,000	)		673
Accounts payable and accrued expenses		106,638			(140,740	)		57,650

Net cash provided by operating activities		2,271,883			612,069			769,745

Investing activity:
Purchases of equipment		—			—			(1,673	)

Net cash used in investing activity		—			—			(1,673	)

Financing activities:
Partners’ Draws		(2,610,000	)		(610,000	)		(399,717	)

Net cash used in financing activities		(2,610,000	)		(610,000	)		(399,717	)

Net (decrease) increase in cash		(338,117	)		2,069			368,355
Cash, beginning of period		850,349			850,349			512,232

Cash, end of period	$	512,232		$	852,418		$	880,587

See accompanying notes to financial statements.

F-164

DIRECT IME
(A Partnership)

(Stated in Canadian Dollars)

Notes to Financial Statements

December 31, 2009 and March 31, 2009 and 2010


(1)	Nature of Operations and Basis of Presentation

	Direct IME (Direct IME or the Partnership) was founded in 2003. The Partnership’s independent review services include medical evaluation programs for group health, disability, workers’ compensation, automobile, and general liability. The Partnership’s main office is located in Scarborough, Ontario and primarily serves the province of Ontario.

(2)	Summary of Significant Accounting Policies and Unaudited Interim Financial Information

	(a)	Unaudited Interim Financial Information

		The accompanying interim balance sheet as of March 31, 2010, the statements of operations and changes in partners’ equity and cash flows for the three months ended March 31, 2009 and 2010 are unaudited. These unaudited interim financial statements have been prepared in accordance with U.S. generally accepted accounting principles. In the opinion of the Partnership’s management, the unaudited interim financial statements have been prepared on the same basis as the audited financial statements and include all adjustments consisting of normal recurring adjustments necessary for the fair presentation of the Partnership’s financial position at March 31, 2010 and its results of operations and cash flows for the three months ended March 31, 2009 and 2010. The results of operations for the three months ended March 31, 2009 and 2010, are not necessarily indicative of the results to be expected for any other interim period or any fiscal year.

	(b)	Use of Estimates

		The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management bases its estimates on certain assumptions which they believe are reasonable in the circumstances and actual results could differ from those estimates. The most significant estimate reflected in these financial statements is the allowance for doubtful accounts.

	(c)	Accounts Receivable

		Accounts receivable consist of amounts owed to the Partnership for services provided in the normal course of business and are reported net of allowance for doubtful accounts, which amounted to $0 as of December 31, 2009 and March 31, 2010 (unaudited). Generally, no collateral is received from customers and the allowance is based on ongoing credit evaluations of customers with general credit experience being within the range of management’s expectations. Accounts are reviewed regularly for collectibility and those deemed uncollectible are written off.

	(d)	Concentrations of Credit Risk

		The Partnership routinely assesses the financial strength of its customers and establishes an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends and other information. For the year ended December 31, 2009 and the three months ended March 31, 2010 (unaudited), there were two customers that accounted for greater than 10% of revenues. For the three months ended March 31, 2009 (unaudited), there were five customers that accounted greater than 10% of revenues. At December 31, 2009 and March 31, 2010 (unaudited), there were three customer that accounted for greater than 10% of the accounts receivable balance.

F-165

DIRECT IME
(A Partnership)

(Stated in Canadian Dollars)

Notes to Financial Statements (Continued)

December 31, 2009 and March 31, 2009 and 2010


	(e)	Equipment

		Equipment is recorded at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the respective assets. Maintenance and repair costs are expensed as incurred.

	(f)	Long-Lived Assets

		In accordance with Impairment or Disposal of Long-Lived Assets Subsections of Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Subtopic 350-10 (ASC 360), Property, Plant, and Equipment — Overall, long-lived assets, such as equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group be tested for possible impairment, the Partnership first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying value. If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. At December 31, 2009, no impairment was indicated.

	(g)	Revenue Recognition

		Revenue is recognized at the time services have been performed and, if applicable, the medical report is shipped to the end user. The Partnership believes that recognizing revenue at the time the report is sent is appropriate because the Partnership’s revenues policies meet the following four criteria: (i) persuasive evidence that arrangement exists, (ii) shipment has occurred, (iii) the price is fixed and determinable and (iv) collectibility is reasonably assured. Sales taxes collected from customers and remitted to government authorities are accounted for on a net basis and therefore are excluded from revenues in the statements of operations.

	(h)	Costs of Revenues

		Costs of revenues is comprised of fees paid to physicians, other direct costs including transcription, film and medical record obtainment, and transportation, and other indirect costs including labor and overhead related to the generation of revenues.

	(i)	Marketing and Advertising Costs

		Marketing and advertising costs are expensed as incurred and amounted to $12,341, $606 (unaudited) and $0 (unaudited) for the year ended December 31, 2009, and the three months ended March 31, 2009 and 2010, respectively.

	(j)	Fair Value Measurements

		The Partnership has adopted the provisions of FASB Statement No. 157, Fair Value Measurements, included in ASC Topic 820, Fair Value Measurements and Disclosures, for fair value measurements of financial assets and financial liabilities. ASC Topic 820 (Statement 157) defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 (Statement 157) also established a framework for measuring fair value and expands disclosures about fair value measurements.

F-166

DIRECT IME
(A Partnership)

(Stated in Canadian Dollars)

Notes to Financial Statements (Continued)

December 31, 2009 and March 31, 2009 and 2010


		The Partnership uses financial instruments in the normal course of its business. The carrying values of cash, accounts receivable, loan receivable, accounts payable, and accrued expenses approximate each of their fair values due to the short-term maturities of these assets and liabilities. Fair value is defined as the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

	(k)	Income Taxes

		The Partnership has elected with the Canada Revenue Agency to be taxed as a Partnership. Accordingly, the Partnership is not liable to pay federal and provincial income taxes. Rather, the partners separately account for their pro rata share of corporate items of income, deduction, loss, and credits in their personal income tax returns. Items affecting the partners’ individual income tax liability are separately stated. Therefore, income taxes are not provided for on the books of the Partnership.

(3)	Equipment

	Equipment consist of the following:


	Estimated useful lives	December 31, 2009		March 31, 2010

				(Unaudited)
Computer and office equipment	3 to 5 years	$	36,778	$	37,835
Furniture and fixtures	5 years		4,932		5,548

			41,710		43,383
Less accumulated depreciation			30,849		33,391

Total		$	10,861	$	9,992


	Depreciation expense was $9,025, $2,542 (unaudited) and $2,542 (unaudited) for the year ended December 31, 2009 and the three months ended March 31, 2009 and 2010, respectively.

(4)	Accrued Expenses

	Accrued expenses consist of the following:


	December 31, 2009		March 31, 2010

			(Unaudited)
Accrued compensation and benefits	$	31,140	$	35,981
Other accrued expenses		28,138		12,376

Total	$	59,278	$	48,357


(5)	Subsequent Event

	The Partnership has evaluated subsequent events from the balance sheet date through September 17, 2010, the date of which the financial statements were available to be issued and identified the following item.

	On June 30, 2010, substantially all of the assets and operations of the Partnership were acquired by ExamWorks, Inc.

F-167

NETWORK MEDICAL REVIEW COMPANY, LTD. AND SUBSIDIARIES

Index


		Page(s)

Independent Auditors’ Report		F-169

Consolidated Balance Sheets as of September 30, 2009 and March 31, 2010 (unaudited)		F-170

Consolidated Statements of Operations for the year ended September 30, 2009 and six months ended March 31, 2009 (unaudited) and 2010 (unaudited)		F-171

Consolidated Statement of Stockholders’ Equity for the year ended September 30, 2009 and six months ended March 31, 2010 (unaudited)		F-172

Consolidated Statements of Cash Flows for the year ended September 30, 2009 and six months ended March 31, 2009 (unaudited) and 2010 (unaudited)		F-173

Notes to Consolidated Financial Statements		F-174

F-168

Independent Auditors’ Report

The Stockholder
Network Medical Review Company, Ltd.:

We have audited the accompanying consolidated balance sheet of Network Medical Review Company, Ltd. and subsidiaries (the Company) as of September 30, 2009, and the related consolidated statements of operations, stockholder’s equity, and cash flows for the year then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Network Medical Review Company, Ltd. and subsidiaries as of September 30, 2009, and their results of operations and their cash flows for the year then ended, in conformity with U.S. generally accepted accounting principles.

/s/ KPMG LLP

Atlanta, Georgia

September 17, 2010

F-169

NETWORK MEDICAL REVIEW COMPANY, LTD. AND SUBSIDIARIES

Consolidated Balance Sheets


	September 30, 2009		March 31, 2010

Assets			(Unaudited)
Current assets:
Cash	$	302,132	$	965,809
Accounts receivable, net		1,863,030		1,721,052
Prepaid expenses and other current assets		108,478		228,814

Total current assets		2,273,640		2,915,675
Equipment, net		431,010		411,767
Other assets		5,640		6,703

Total assets	$	2,710,290	$	3,334,145


Liabilities and Stockholder’s Equity
Current liabilities:
Accounts payable	$	412,368	$	179,425
Accrued expenses		332,070		453,728
Income taxes payable		18,332		134,898
Shareholder loan		705,414		587,195
Other current liabilities		15,469		5,156

Total current liabilities		1,483,653		1,360,402

Noncurrent liability:
Non-current deferred tax liability		32,014		129,065

Total liabilities		1,515,667		1,489,467

Commitments and contingencies
Stockholder’s equity:
Common stock, no par value. Authorized 1,000 shares; issued and outstanding 100 shares as of September 30, 2009 and March 31, 2010		1,000		1,000
Additional paid-in capital		261,600		461,600
Retained earnings		932,023		1,382,078

Total stockholder’s equity		1,194,623		1,844,678

Total liabilities and stockholder’s equity	$	2,710,290	$	3,334,145

See accompanying notes to consolidated financial statements.

F-170

NETWORK MEDICAL REVIEW COMPANY, LTD. AND SUBSIDIARIES

Consolidated Statements of Operations


	Year ended September 30, 2009			Six months ended March 31,

				2009			2010

				(Unaudited)			(Unaudited)
Revenues	$	17,430,537		$	8,028,883		$	8,882,815
Costs and expenses:
Costs of revenues		12,986,424			6,066,325			6,274,688
Selling, general and administrative expenses		4,255,436			1,386,802			1,712,801
Depreciation		151,620			73,641			88,092

Total costs and expenses		17,393,480			7,526,768			8,075,581

Income from operations		37,057			502,115			807,234

Other expenses, net:
Interest expense, net		19,011			10,735			9,625
Other income, net		(494	)		(198	)		(28,091	)

Total other expenses (income), net		18,517			10,537			(18,466	)

Income before income tax expense		18,540			491,578			825,700
Income tax expense		13,281			194,212			325,751

Net income	$	5,259		$	297,366		$	499,949

See accompanying notes to consolidated financial statements.

F-171

NETWORK MEDICAL REVIEW COMPANY, LTD. AND SUBSIDIARIES

Consolidated Statements of Stockholders’ Equity


	Common stock									Total stockholders’ equity
					Additional Paid-in Capital		Retained earnings
	Shares		Amount		Additional Paid-in Capital		Retained earnings

Balances at October 1, 2008		100	$	1,000	$	261,600	$	926,764		$	1,189,364
Net income		—		—		—		5,259			5,259

Balances at September 30, 2009		100		1,000		261,600		932,023			1,194,623

Cumulative effect of the adoption of accounting for uncertain tax positions		—		—		—		(49,894	)		(49,894	)
Net income		—		—		—		499,949			499,949
Issuance of common stock in subsidiary		—		—		200,000		—			200,000

Balances at March 31, 2010		100	$	1,000	$	461,600	$	1,382,078		$	1,844,678

See accompanying notes to consolidated financial statements.

F-172

NETWORK MEDICAL REVIEW COMPANY, LTD. AND SUBSIDIARIES

Consolidated Statements of Cash Flows


	Year ended September 30, 2009			Six months ended March 31,

				2009			2010

				(Unaudited)			(Unaudited)
Operating activities:
Net income	$	5,259		$	297,366		$	499,949
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		151,620			73,641			88,092
Deferred income taxes		(39,577	)		42,499			97,051
Changes in operating assets and liabilities:
Accounts receivable		280,748			507,052			141,978
Prepaid expenses and other assets		81,350			(8,900	)		(121,398	)
Income taxes payable		18,332			151,712			66,672
Accounts payable and accrued expenses		(15,442	)		(143,288	)		(121,599	)

Net cash provided by operating activities		482,290			920,082			650,745

Investing activity:
Purchases of furniture and equipment		(149,271	)		(67,535	)		(68,849	)

Net cash used in investing activity		(149,271	)		(67,535	)		(68,849	)

Financing activities:
Principal payments on related party debt		(329,801	)		(631,036	)		(118,219	)
Capital contribution		—			—			200,000

Net cash (used in) provided by financing activities		(329,801	)		(631,036	)		81,781

Net increase in cash		3,218			221,511			663,677
Cash, beginning of period		298,914			298,914			302,132

Cash, end of period	$	302,132		$	520,425		$	965,809


Supplemental disclosures of cash flow information:
Cash paid for interest	$	19,211		$	13,513		$	9,681
Cash paid for income taxes	$	—		$	—		$	121,229

See accompanying notes to consolidated financial statements.

F-173

NETWORK MEDICAL REVIEW COMPANY, LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

September 30, 2009 and March 31, 2009 and 2010


(1)	Nature of Operations and Basis of Presentation

	Network Medical Review Company, Ltd (NMR or the Company) was founded in 1995. The Company’s independent review services include medical evaluation programs for group health, disability, workers’ compensation, automobile and general liability. The Company’s main office is located in Rockford, Illinois and the Company provides services in all 50 states encompassing a panel of over 2,500 credentialed physician reviewers.

	The accompanying consolidated financial statements include the four wholly-owned subsidiaries, Network Medical Management Company, Ltd, Insurance Appeals, Ltd, Elite Physicians, Ltd, and WorkersFirst, Ltd (collectively the Company). All significant intercompany accounts and transactions have been eliminated in consolidation.

(2)	Summary of Significant Accounting Policies

	(a)	Unaudited Interim Financial Information

		The accompanying interim consolidated balance sheet as of March 31, 2010 and the related consolidated statements of operations stockholder’s equity and cash flows for the six months ended March 31, 2009 and 2010 are unaudited. These unaudited interim financial statements have been prepared in accordance with U.S. generally accepted accounting principles. In the opinion of the Company’s management, the unaudited interim financial statements have been prepared on the same basis as the audited consolidated financial statements and include all adjustments consisting of normal recurring adjustments necessary for the fair presentation of the Company’s financial position at March 31, 2010, and their results of operations and cash flows for the six months ended March 31, 2009 and 2010. The results of operations for the six months ended March 31, 2009 and 2010 are not necessarily indicative of the results to be expected for any other interim period or any fiscal year.

	(b)	Use of Estimates

		The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management bases its estimates on certain assumptions which they believe are reasonable in the circumstances and actual results could differ from those estimates. The most significant estimate reflected in these financial statements is the allowance for doubtful accounts.

	(c)	Accounts Receivable and Allowance for Doubtful Accounts

		Accounts receivable consist of amounts owed to the Company for services provided in the normal course of business and are reported net of allowance for doubtful accounts, which amounted to $0 as of September 30, 2009 and March 31, 2010 (unaudited). Generally, no collateral is received from customers and management believes it is not necessary to establish allowance for doubtful accounts based on historical collectability. Accounts are reviewed regularly for collectability and those deemed uncollectible are directly written off.

	(d)	Concentrations of Credit Risk

		The Company routinely assesses the financial strength of its customers and establishes an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends and other information. For the year ended September 30, 2009, there was one customer that accounted for 72% of revenues. For the six months ended March 31, 2009 (unaudited) and 2010 (unaudited), the same customer accounted for 69% and 75% of revenues, respectively. At September 30, 2009, there was one customer that accounted for 75% of the accounts receivable balance. At March 31, 2010 (unaudited), there were two customers that accounted for 62% and 14% of the accounts receivable balance, respectively.

F-174

NETWORK MEDICAL REVIEW COMPANY, LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

September 30, 2009 and March 31, 2009 and 2010


(e)	Furniture and Equipment

	Furniture and Equipment and leasehold improvements are recorded at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the respective assets and accelerated methods for income tax purposes. Maintenance and repair costs are expensed as incurred.

(f)	Long-Lived Assets

	In accordance with Impairment or Disposal of Long-Lived Assets Subsections of Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Subtopic 350-10 (ASC 360), Property, Plant, and Equipment – Overall, long-lived assets, such as equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying value. If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. At September 30, 2009, no impairment was noted.

(g)	Deferred Rents

	The Company has entered into two leases including its main office in Rockford, Illinois and another office in Aspen, Colorado that have certain escalation clauses or other features which require rental expenses to be recognized on a straight-line basis over the life of the lease. At September 30, 2009 and March 31, 2010, the deferred rent balance was $15,469 and $5,156 (unaudited), respectively, and is included in other current liabilities in the accompanying consolidated balance sheets.

(h)	Revenue Recognition

	Revenue is recognized at the time services have been performed and, if applicable, the medical report is shipped to the end user. The Company believes that recognizing revenue at the time the report is sent is appropriate because the Company’s revenue policies meet the following four criteria: (i) persuasive evidence that arrangement exists, (ii) shipment has occurred, (iii) the price is fixed and determinable and (iv) collectibility is reasonably assured.

(i)	Costs of Revenues

	Costs of revenues are comprised of fees paid to members of the Company’s medical panel, other direct costs including transcription, film and medical record obtainment and transportation, and other indirect costs including labor and overhead related to the generation of revenues.

(j)	Marketing and Advertising Costs

	Marketing and advertising costs are expensed as incurred and amounted to $8,489 and $4,293 (unaudited) and $778 (unaudited) for the year ended September 30, 2009, and the six months ended March 31, 2009 and 2010, respectively.

F-175

NETWORK MEDICAL REVIEW COMPANY, LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

September 30, 2009 and March 31, 2009 and 2010


	(k)	Income Taxes

		Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

		Beginning with the adoption of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, (included in FASB ASC Subtopic 740-10, Income Taxes – Overall) for the fiscal period beginning October 1, 2009, the Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. Prior to the adoption of FASB Interpretation No. 48, the Company recognized the effect of income tax positions only if such positions were probable of being sustained.

		The Company records interest and penalties related to unrecognized tax benefits in income tax expense.

	(l)	Fair Value Measurements

		The Company has adopted the provisions of FASB Statement No. 157, Fair Value Measurements, included in ASC Topic 820, Fair Value Measurements and Disclosures, for fair value measurements of financial assets and financial liabilities. ASC Topic 820 (Statement 157) defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 (Statement 157) also established a framework for measuring fair value and expands disclosures about fair value measurements.

		The Company uses financial instruments in the normal course of its business. The carrying values of cash and cash equivalents, accounts receivable, prepaid assets, accounts payable, and accrued expenses approximate each of their fair values due to the short term maturities of these assets and liabilities. Fair value is defined as the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

(3)	Equipment


	Estimated useful lives		September 30, 2009		March 31, 2010

					(Unaudited)
Furniture and equipment		3-7 years	$	929,050	$	997,899

				929,050		997,899
Less accumulated depreciation				498,040		586,132

Total			$	431,010	$	411,767


	Depreciation expense was $151,260, $73,641 (unaudited) and $88,092 (unaudited) for the year ended September 30, 2009 and the six months ended March 31, 2009 and 2010, respectively.

F-176

NETWORK MEDICAL REVIEW COMPANY, LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

September 30, 2009 and March 31, 2009 and 2010


(4)	Accrued Expenses

	Accrued expenses consist of the following:


	September 30, 2009		March 31, 2010

			(Unaudited)
Accrued employee lease costs	$	245,150	$	239,049
Accrued vacation		86,920		46,975
Accrued insurance premiums		—		81,000

Total	$	332,070	$	367,024


(5)	Income Taxes

	The components of the income tax expense for the year ended September 30, 2009 and six months ended March 31, 2009 and 2010 was as follows:


	Current		Deferred			Total

September 30, 2009:
U.S. federal	$	42,710		(34,666	)		8,044
State and local		10,149		(4,912	)		5,237

	$	52,859		(39,578	)		13,281


March 31, 2009 (unaudited):
U.S. federal	$	122,260		37,225			159,485
State and local		29,452		5,275			34,727

	$	151,712		42,500			194,212


March 31, 2010 (unaudited):
U.S. federal	$	185,320		85,006			270,326
State and local		40,984		12,046			53,030

	$	226,304		97,052			323,356


	Deferred taxes result from temporary differences between the bases of assets and liabilities for financial reporting purposes and such amounts as measured by tax laws and regulations. The sources of the temporary differences and their effect on deferred tax assets and liabilities as of September 30, 2009 and March 31, 2010 (unaudited) were as follows:


	September 30, 2009					March 31, 2010

	Current		Noncurrent			Current		Noncurrent

						(unaudited)
Deferred tax assets
R&D credits	$	—		103,900			—		—

Total deferred tax assets		—		103,900			—		—

Deferred tax liabilities:
Basis difference of furniture and equipment		—		(135,914	)		—		(129,065	)

Total deferred tax liabilities		—		(135,914	)		—		(129,065	)

Net deferred tax liabilities		—		(32,014	)		—		(129,065	)

F-177

NETWORK MEDICAL REVIEW COMPANY, LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

September 30, 2009 and March 31, 2009 and 2010


	The reconciliation of income tax computed at the U.S. federal statutory rate to income tax benefit for the year ended September 30, 2009 and six months ended March 31, 2009 (unaudited) and 2010 (unaudited) were as follows:


	September 30, 2009		March 31,

			2009		2010

			(unaudited)		(unaudited)
Expected tax expense (federal)	$	6,303		167,137		280,738
Increase (decrease) in income taxes resulting from:
State income taxes, net of Federal benefit		1,648		24,105		40,134
Other		5,330		2,970		2,484

Income tax expense	$	13,281		194,212		323,356


	The deferred tax assets are subject to periodic assessment as to recoverability. The Company has concluded that it is more likely than not that deferred tax assets will be realized in future periods.

	Effective October 1, 2009, the Company adopted the provisions of ASC 740 as it relates to uncertain tax positions. This interpretation prescribes a comprehensive model for how a company should recognize, measure, present and disclose in its financial statements uncertain tax positions that the company has taken or expects to take on a tax return. ASC 740 states that a tax benefit from an uncertain tax position may be recognized only if it is “more likely than not” that the position is sustainable, based on its technical merits. The tax benefit of a qualifying position is the largest amount of tax benefit that is greater than 50% likely of being realized upon settlement with a taxing authority having full knowledge of all relevant information.

	As of the adoption date, the total amount of liability for unrecognized tax benefits related to federal and state taxes was approximately $49,894 (unaudited), including interest and penalties. As of March 31, 2010, the corresponding balance of liability for unrecognized tax benefits was approximately $39,915 (unaudited) plus $12,374 (unaudited) of accrued interest and penalties. The Company recognizes interest and penalties accrued related to unrecognized tax benefits in income tax expense.

	The following table summarizes the activity related to the unrecognized tax benefits for the period ended March 31, 2010 (unaudited):


Balance at October 1, 2009	$	49,894
Increase to prior year tax positions		2,395
Increase to current year tax positions		—
Expiration of the statute of limitations for the assessment of taxes		—
Decrease related to settlements		—

Balance at March 31, 2010	$	52,289


	The Company is not currently under examination by any tax authority. The Company does not anticipate that the amount of the unrecognized benefit will significantly increase or decrease within the next 12 months.

(6)	Commitments and Contingencies

	(a)	Lease Commitments

		The Company leases main office space in Rockford, Illinois and another office in Aspen, Colorado under a noncancelable operating lease expiring July 31, 2010 and June 30, 2010, respectively.

F-178

NETWORK MEDICAL REVIEW COMPANY, LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

September 30, 2009 and March 31, 2009 and 2010


		The Company makes the full monthly payment on the Aspen, Colorado lease, and allocates 25% of such payment to rent expense, with the remaining 75% reflected as a reduction of the outstanding loan payable to the Company’s shareholder.

		Future minimum lease payments under the operating leases in 2010 amount to $102,275. Related rent expense for the Company’s two offices was $118,691 and $59,340 (unaudited) and $59,340 (unaudited) for the year ended September 30, 2009 and the six months ended March 31, 2009 and 2010, respectively.

(7)	Related Party Transactions

	At September 30, 2009 and March 31, 2010 (unaudited), the Company reflected an outstanding balance on a loan payable to its shareholder in the amount of $705,414 and $587,195, respectively. The loan bears interest at 3.00% until paid in full, and has been classified as current within the accompanying consolidated balance sheets.

(8)	Subsequent Event

	The Company has evaluated subsequent events from the balance sheet date through September 17, 2010, the date at which the financial statements were available to be issued and identified the following item.

	On June 30, 2010, 100% of the Common stock of the Company was acquired by ExamWorks Group, Inc.

F-179

EXIGERE CORPORATION

Index


		Page

Independent Auditors’ Report		F-181

Balance Sheets as of December 31, 2009 and June 30, 2010 (unaudited)		F-182

Statements of Operations and Changes in Retained Earnings for the year ended December 31, 2009 and six months ended June 30, 2009 (unaudited) and 2010 (unaudited)		F-183

Statements of Cash Flows for the year ended December 31, 2009 and six months ended June 30, 2009 (unaudited) and 2010 (unaudited)		F-184

Notes to Financial Statements		F-185

F-180

Independent Auditors’ Report

The Stockholders
Exigere Corporation:

We have audited the accompanying balance sheet of Exigere Corporation (the Company) as of December 31, 2009, and the related statements of operations and changes in retained earnings and cash flows for the year then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Exigere Corporation as of December 31, 2009, and the results of its operations and its cash flows for the year then ended, in conformity with U.S. generally accepted accounting principles.

/s/ KPMG LLP

Atlanta, Georgia

October 12, 2010

F-181

EXIGERE CORPORATION

Balance Sheets


	December 31, 2009		June 30, 2010

			(Unaudited)
Assets
Current assets:
Cash	$	43,464	$	268,649
Trade accounts receivable, net		778,186		649,852
Prepaid expenses		65,634		16,044
Deferred tax asset		10,916		14,371
Other current assets		80,000		2,181

Total current assets		978,200		951,097
Equipment and leasehold improvements, net		375,978		354,049
Deferred tax assets, noncurrent		—		6,420
Other assets		38,816		38,816

Total assets	$	1,392,994	$	1,350,382


Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	265,556	$	383,293
Accrued expenses		151,932		121,127
Income taxes payable		266,006		265,817
Line of credit		50,000		—
Note payable		176,257		157,230

Total current liabilities		909,751		927,467
Noncurrent deferred tax liability		20,917		—
Other noncurrent liability		58,216		99,423

Total liabilities		988,884		1,026,890

Commitments and contingencies
Stockholders’ equity:
Common stock, no par value. Authorized 10,000 shares; issued and outstanding 8,100 shares		600		600
Retained earnings		403,510		322,892

Total stockholders’ equity		404,110		323,492

Total liabilities and stockholders’ equity	$	1,392,994	$	1,350,382

See accompanying notes to financial statements.

F-182

EXIGERE CORPORATION

Statements of Operations and Changes in Retained Earnings


	Year ended December 31, 2009			Six months ended June 30,

				2009		2010

				(Unaudited)		(Unaudited)
Revenues	$	8,856,470		$	4,650,233	$	3,503,308
Costs and expenses:
Costs of revenues		4,981,500			2,575,961		2,202,367
Selling, general and administrative expenses		3,878,467			1,891,919		1,359,766
Depreciation		77,482			40,606		42,273

Total costs and expenses		8,937,449			4,508,486		3,604,406

(Loss) income from operations		(80,979	)		141,747		(101,098	)

Other expenses:
Interest expense, net		9,544			3,368		4,449

Total other expenses		9,544			3,368		4,449

(Loss) income before income taxes		(90,523	)		138,379		(105,547	)
Income tax (benefit) expense		19,646			65,327		(24,929	)

Net (loss) income		(110,169	)		73,052		(80,618	)
Retained earnings, beginning of period		513,679			513,679		403,510

Retained earnings, end of period	$	403,510		$	586,731	$	322,892

See accompanying notes to financial statements.

F-183

EXIGERE CORPORATION

S tatements of Cash Flows


	Year ended December 31, 2009			Six months ended June 30,
				Six months ended June 30,

				2009			2010

				(Unaudited)			(Unaudited)
Operating activities:
Net (loss) income	$	(110,169	)	$	73,052		$	(80,618	)
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation		77,482			40,606			42,273
Provision for doubtful accounts		(111,769	)		15,846			10,160
Deferred rent amortization		33,818			18,494			41,207
Deferred tax (benefit) expense		(8,108	)		57,736			(30,792	)
Changes in operating assets and liabilities:
Accounts receivable		405,982			146,880			118,174
Prepaid expenses		(14,099	)		29,301			49,590
Accounts payable and accrued expenses		(3,209	)		173,082			86,932
Income taxes payable		1,076			(19,087	)		(189	)
Other		(109,334	)		(29,334	)		77,819

Net cash provided by operating activities		161,670			506,576			314,556

Investing activity:
Purchases of equipment and leasehold improvements		(246,476	)		(245,975	)		(20,344	)

Net cash used in investing activity		(246,476	)		(245,975	)		(20,344	)

Financing activities:
Borrowings (payments) on note payable, net		176,257			194,009			(19,027	)
Principal payments on line of credit		(150,000	)		(100,000	)		(50,000	)

Net cash provided by (used in) financing activities		26,257			94,009			(69,027	)

Net (decrease) increase in cash		(58,549	)		354,610			225,185
Cash, beginning of period		102,013			102,013			43,464

Cash, end of period	$	43,464		$	456,623		$	268,649

Supplemental disclosures of cash flow information:
Cash paid for interest	$	10,270		$	3,943		$	4,449
Cash paid for income taxes		26,678			26,678			6,053

See accompanying notes to financial statements.

F-184

EXIGERE CORPORATION

N otes to Financial Statements

December 31, 2009 and June 30, 2009 and 2010


(1)	Nature of Operations and Basis of Presentation

	Exigere Corporation (Exigere or the Company) was founded in 1996. The Company provides independent medical review services for the State of Washington Department of Labor and Industry (L&I), and other third party administrators, insurance companies, and self-insured companies to support the settlement worker’s compensation claims. The Company only conducts its business in Washington.

(2)	Summary of Significant Accounting Policies

	(a)	Unaudited Interim Financial Information

		The accompanying interim balance sheet as of June 30, 2010 and the statements of operations and changes in retained earnings and cash flows for the six months ended June 30, 2009 and 2010 are unaudited. These unaudited interim financial statements have been prepared in accordance with U.S. generally accepted accounting principles. In the opinion of the Company’s management, the unaudited interim financial statements have been prepared on the same basis as the audited financial statements and include all adjustments consisting of normal recurring adjustments necessary for the fair presentation of the Company’s financial position at June 30, 2010, and its results of operations and cash flows for the six months ended June 30, 2009 and 2010. The results of operations for the six months ended June 30, 2009 and 2010 are not necessarily indicative of the results to be expected for any other interim period or any fiscal year.

	(b)	Use of Estimates

		The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management bases its estimates on certain assumptions that they believe are reasonable in the circumstances and actual results could differ from those estimates. The most significant estimate reflected in these financial statements is the allowance for doubtful accounts.

	(c)	Accounts Receivable and Allowance for Doubtful Accounts

		Accounts receivable consist of amounts owed to the Company for services provided in the normal course of business and are reported net of allowance for doubtful accounts, which amounted to $32,107 and $42,267 (unaudited) as of December 31, 2009 and June 30, 2010, respectively. Generally, no collateral is received from customers and additions to the allowance are based on ongoing credit evaluations of customers with general credit experience being within the range of management’s expectations. Accounts are reviewed regularly for collectability and those deemed uncollectible are written off.

	(d)	Concentrations of Credit Risk

		The Company routinely assesses the financial strength of its customers and establishes an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends and other information. For the year ended December 31, 2009, there was one customer that accounted for 90.6% of revenues. For the six months ended June 30, 2009 (unaudited) and June 30, 2010 (unaudited), the same customer accounted for 89.9% and 90.5% of revenues, respectively. At December 31, 2009, there was one customer that accounted for 85.2% of the accounts receivable balance. At June 30, 2010 (unaudited), the same customer accounted for 85.9% of the accounts receivable balance.

F-185

EXIGERE CORPORATION

Notes to Financial Statements (Continued)

December 31, 2009 and June 30, 2009 and 2010


	(e)	Equipment and Leasehold Improvements

		Equipment and leasehold improvements are recorded at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the respective assets and accelerated methods for income tax purposes. Leasehold improvements are amortized over the lesser of their expected useful life or the remaining lease term. Maintenance and repair costs are expensed as incurred.

	(f)	Long-Lived Assets

		In accordance with Impairment or Disposal of Long-Lived Assets Subsections of Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Subtopic 350-10 (ASC 360), Property, Plant, and Equipment – Overall, long-lived assets, such as equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying value. If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. At December 31, 2009, no impairment was noted.

	(g)	Deferred Rents

		The Company has entered into multiple leases that have escalation clauses or other features which require rental expense to be recognized on a straight-line basis over the life of the lease. At December 31, 2009 and June 30, 2010, the deferred rent balance was $58,216 and $99,423 (unaudited), respectively, and is included in other noncurrent liabilities in the accompanying balance sheets.

	(h)	Revenue Recognition

		Revenue related to IMEs, peer reviews, bill reviews and administrative support services is recognized at the time services have been performed and the report is shipped to the end user. The Company believes that recognizing revenue at the time the report is shipped is appropriate because the Company’s revenue policies meet the following four criteria in accordance with ASC 605-10-S25, Revenue Recognition: Overall, (i) persuasive evidence that arrangement exists, (ii) shipment has occurred, (iii) the price is fixed and determinable and (iv) collectability is reasonably assured.

		Revenue related to other IME services, including litigation support services, and medical record retrieval services, where no report is generated, is recognized at the time the service is performed. The Company believes that recognizing revenue at the time the service is performed is appropriate because the Company’s revenue policies meet the following four criteria in accordance with ASC 605-10-S25, (i) persuasive evidence that arrangement exists, (ii) services have been rendered, (iii) the price is fixed and determinable and (iv) collectability is reasonably assured.

	(i)	Costs of Revenues

		Costs of revenues are comprised of fees paid to physicians, other direct costs including transcription, film and medical record obtainment, transportation, and other indirect costs including labor and overhead related to the generation of revenue.

	(j)	Marketing and Advertising Costs

		Marketing and advertising costs are expensed as incurred and amounted to $9,631, $809 (unaudited) and $1,955 (unaudited) for the year ended December 31, 2009 and the six months ended June 30, 2009 and 2010, respectively.

F-186

EXIGERE CORPORATION

Notes to Financial Statements (Continued)

December 31, 2009 and June 30, 2009 and 2010


	(k)	Income Taxes

		Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

		Beginning with the adoption of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, (included in FASB ASC Subtopic 740-10, Income Taxes – Overall) for the fiscal period beginning January 1, 2009, the Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. Prior to the adoption of FASB Interpretation No. 48, the Company recognized the effect of income tax positions only if such positions were probable of being sustained.

		The Company records interest and penalties related to unrecognized tax benefits in income tax expense.

	(l)	Fair Value Measurements

		The Company has adopted the provisions of FASB Statement No. 157, Fair Value Measurements, included in ASC Topic 820, Fair Value Measurements and Disclosures, for fair value measurements of financial assets and financial liabilities. ASC Topic 820 (Statement 157) defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 (Statement 157) also established a framework for measuring fair value and expands disclosures about fair value measurements.

		The Company uses financial instruments in the normal course of its business. The carrying values of cash, accounts receivable, prepaid assets, accounts payable, and accrued expenses approximate each of their fair values due to the short-term maturities of these assets and liabilities. Fair value is defined as the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

(3)	Equipment and Leasehold Improvements


	Estimated useful lives	December 31, 2009		June 30, 2010

				(Unaudited)
Computer and office equipment	5 years	$	184,995	$	192,495
Furniture and fixtures	7 years		311,651		324,495
Leasehold Improvements	life of the lease		5,790		5,790

			502,436		522,780
Less accumulated depreciation			126,458		168,731

Total		$	375,978	$	354,049

	Depreciation expense was $77,482, $40,606 (unaudited) and $42,273 (unaudited) for the year ended December 31, 2009 and the six months ended June 30, 2009 and 2010, respectively.

F-187

EXIGERE CORPORATION

Notes to Financial Statements (Continued)

December 31, 2009 and June 30, 2009 and 2010


(4)	Accrued Expenses

	Accrued expenses consist of the following:


	December 31, 2009		June 30, 2010

			(Unaudited)
Accrued compensation and benefits	$	99,242	$	87,004
Accrued payroll tax deposits		1,653		1,450
Other accrued expenses		51,037		32,673

Total	$	151,932	$	121,127


(5)	Income Taxes

	Income tax expense (benefit) for the year ended December 31, 2009 and six months ended June 30, 2009 (unaudited) and 2010 (unaudited) consists of:


	Current		Deferred			Total

December 31, 2009:
U.S. federal	$	27,754	$	(8,108	)	$	19,646
State and local		—		—			—

	$	27,754	$	(8,108	)	$	19,646


June 30, 2009 (unaudited):
U.S. federal	$	7,591	$	57,736		$	65,327
State and local		—		—			—

	$	7,591	$	57,736		$	65,327


June 30, 2010 (unaudited):
U.S. federal	$	5,863	$	(30,792	)	$	(24,929	)
State and local		—		—			—

	$	5,863	$	(30,792	)	$	(24,929	)


Deferred taxes result from temporary differences between the bases of assets and liabilities for financial reporting purposes and such amounts as measured by tax laws and regulations. The sources of the temporary differences and their effect on deferred tax assets and liabilities as of December 31, 2009 and June 30, 2010 (unaudited) were as follows:


	December 31, 2009					June 30, 2010

	Current		Noncurrent			Current		Noncurrent

						(Unaudited)
Deferred tax assets:
Allowance for doubtful accounts	$	10,916	$	—		$	14,371	$	—
Net operating loss carryforwards		—		94,767			—		114,615
Other deferred tax assets		—		12,149			—		12,182

Total deferred tax assets		10,916		106,916			14,371		126,797

Deferred tax liabilities:
Basis difference of equipment		—		(127,833	)		—		(120,377	)

Total deferred tax liabilities		—		(127,833	)		—		(120,377	)

Net deferred tax assets (liabilities)	$	10,916	$	(20,917	)	$	14,371	$	6,420

F-188

EXIGERE CORPORATION

Notes to Financial Statements (Continued)

December 31, 2009 and June 30, 2009 and 2010


The reconciliation of income tax computed at the U.S. federal statutory rate to income tax expense for the year ended December 31, 2009 and six months ended June 30, 2009 and 2010 (unaudited) were as follows:

	December 31, 2009			June 30,

				2009		2010

				(Unaudited)		(Unaudited)
Expected Federal tax (benefit) expense	$	(30,778	)	$	47,049	$	(35,886	)
Increase (decrease) in income taxes resulting from:
State income taxes, net of Federal benefit		—			—		—
Other		50,424			18,278		10,957

Income tax (benefit) expense	$	19,646		$	65,327	$	(24,929	)


	The deferred tax assets are subject to periodic assessment as to recoverability. The Company has concluded that it is more likely than not that deferred tax assets will be realized in future periods.

	Effective January 1, 2009, the Company adopted the provisions of ASC 740 as it relates to uncertain tax positions. This interpretation prescribes a comprehensive model for how a company should recognize, measure, present and disclose in its financial statements uncertain tax positions that the company has taken or expects to take on a tax return. ASC 740 states that a tax benefit from an uncertain tax position may be recognized only if it is “more likely than not” that the position is sustainable, based on its technical merits. The tax benefit of a qualifying position is the largest amount of tax benefit that is greater than 50% likely of being realized upon settlement with a taxing authority having full knowledge of all relevant information.

	The Company recorded a liability for interest and penalties associated with certain prior year tax positions of $27,754 as of December 31, 2009. As of June 30, 2010, the Company recorded an additional liability of $5,864 (unaudited) related to interest and penalties. The Company recognizes interest and penalties accrued related to unrecognized tax benefits in income tax expense.

	The Company is not currently under examination by any tax authority. The Company does not anticipate that the amount of the unrecognized benefit will significantly increase or decrease within the next 12 months.

(6)	Commitments and Contingencies

	The Company leases office and clinic space under noncancelable operating leases with various expiration dates from 2013 to 2019. Future minimum lease payments under the operating leases in each of the years subsequent to December 31, 2009 are as follows:


Year ending December 31:
2010	$	497,660
2011		445,420
2012		416,092
2013		410,266
2014		296,285
Thereafter		1,026,678

Total	$	3,092,401


	Related rent expense for the Company’s leases was $546,179, $275,580 (unaudited) and $350,294 (unaudited) for the year ended December 31, 2009, and the six months ended June 30, 2009 and 2010, respectively.

F-189

EXIGERE CORPORATION

Notes to Financial Statements (Continued)

December 31, 2009 and June 30, 2009 and 2010


(7)	Debt

	Line of Credit

	The Company has an available line of credit for $400,000, which is due April 1, 2010. Unpaid principal balances bore interest at an annual rate of prime adjusting with prime rate changes at December 31, 2009. Borrowings are secured by substantially all of the Company’s assets. As of December 31, 2009 and June 30, 2010 (unaudited), the Company had $50,000 and $0, respectively, in borrowings outstanding relating to the line of credit.

	Note Payable

	In 2009, the Company obtained a note payable for $200,000, which is due April 15, 2014. This note has an interest rate of 5.47%. Borrowings are secured by substantially all of the Company’s assets. As of December 31, 2009 and June 30, 2010 (unaudited), the Company had $176,257 and $157,230 outstanding, respectively. This was deemed a current payable at both balance sheet dates as the Company did not provide audited financial statements to its bank within 120 days of the fiscal year-end as required per the note agreement, thus the debt could have been callable by the bank.

(8)	Subsequent Event

	The Company has evaluated subsequent events from the balance sheet date through October 12, 2010, the date at which the financial statements were available to be issued and identified the following item.

	On August 6, 2010, 100% of the Common stock of the Company was acquired by ExamWorks Group, Inc.

F-190

VERITY MEDICAL, INC.

Index


		Page

Independent Auditors’ Report		F-192

Balance Sheets as of December 31, 2009 and June 30, 2010 (unaudited)		F-193

Statements of Operations and Changes in Retained Earnings for the year ended December 31, 2009 and six months ended June 30, 2009 (unaudited) and 2010 (unaudited)		F-194

Statements of Cash Flows for the year ended December 31, 2009 and six months ended June 30, 2009 (unaudited) and 2010 (unaudited)		F-195

Notes to Financial Statements		F-196

F-191

Independent Auditors’ Report

The Stockholders
Verity Medical, Inc.:

We have audited the accompanying balance sheet of Verity Medical, Inc. (the Company) as of December 31, 2009, and the related statements of operations and changes in retained earnings and cash flows for the year then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Verity Medical, Inc. as of December 31, 2009, and the results of its operations and its cash flows for the year then ended, in conformity with U.S. generally accepted accounting principles.

/s/ KPMG LLP

Atlanta, Georgia

October 12, 2010

F-192

VERITY MEDICAL, INC.

Ba lance Sheets


	December 31, 2009		June 30, 2010

			(Unaudited)
Assets
Current assets:
Cash	$	524,853	$	580,984
Accounts receivable, net		786,753		723,944
Prepaid expenses and other current assets		25,449		51,373

Total current assets		1,337,055		1,356,301
Equipment, furniture and fixtures, net		116,303		129,691

Total assets	$	1,453,358	$	1,485,992

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	157,383	$	54,749
Accrued expenses and other current liabilities		86,210		55,604

Total current liabilities		243,593		110,353

Total liabilities		243,593		110,353

Commitments and contingencies
Stockholders’ equity:
Common stock, no par value. Authorized 9,000 shares; issued and outstanding 200 shares		2,000		2,000
Retained earnings		1,207,765		1,373,639

Total stockholders’ equity		1,209,765		1,375,639

Total liabilities and stockholders’ equity	$	1,453,358	$	1,485,992

See accompanying notes to financial statements.

F-193

VERITY MEDICAL, INC.

Statements of Operations and Changes in Retained Earnings


	Year ended December 31, 2009			Six months ended June 30,
				Six months ended June 30,

				2009			2010

				(Unaudited)			(Unaudited)
Revenues	$	8,789,668		$	4,352,855		$	4,473,497
Costs and expenses:
Costs of revenues		5,148,020			2,406,779			2,568,819
Selling, general and administrative expenses		1,225,194			496,530			575,764
Depreciation		30,233			13,870			17,446

Total costs and expenses		6,403,447			2,917,179			3,162,029

Income from operations		2,386,221			1,435,676			1,311,468

Other (income) expense, net:
Interest income		(326	)		(326	)		—
Interest expense		37			—			50

Total other (income) expense, net		(289	)		(326	)		50

Income before income taxes		2,386,510			1,436,002			1,311,418
Income tax expense		6,318			4,402			3,473

Net income		2,380,192			1,431,600			1,307,945

Retained earnings, beginning of period		899,696			899,696			1,207,765
Dividends paid		(2,072,123	)		(996,090	)		(1,142,071	)

Retained earnings, end of period	$	1,207,765		$	1,335,206		$	1,373,639

See accompanying notes to financial statements.

F-194

VERITY MEDICAL, INC.

S tatements of Cash Flows


	Year ended December 31, 2009			Six months ended June 30,
				Six months ended June 30,

				2009			2010

				(Unaudited)			(Unaudited)
Operating activities:
Net income	$	2,380,192		$	1,431,600		$	1,307,945
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		30,233			13,870			17,446
Loss on disposal of fixed assets		3,476			—			—
Changes in operating assets and liabilities:
Accounts receivable		(132,255	)		(130,066	)		62,809
Prepaid expenses and other assets		49,749			47,116			(25,924	)
Accounts payable and accrued expenses		(128,970	)		(294,000	)		(133,240	)

Net cash provided by operating activities		2,202,425			1,068,520			1,229,036

Investing activity:
Purchases of equipment, furniture and fixtures		(65,438	)		(72,451	)		(30,834	)

Net cash used in investing activity		(65,438	)		(72,451	)		(30,834	)

Financing activity:
Dividends paid		(2,072,123	)		(996,090	)		(1,142,071	)

Net cash used in financing activities		(2,072,123	)		(996,090	)		(1,142,071	)

Net increase (decrease) in cash		64,864			(21	)		56,131
Cash, beginning of period		459,989			459,989			524,853

Cash, end of period	$	524,853		$	459,968		$	580,984

Supplemental disclosures of cash flow information:
Cash paid for interest	$	164		$	—		$	—
Cash paid for income taxes	$	5,341		$	3,581		$	2,200

See accompanying notes to financial statements.

F-195

VERITY MEDICAL, INC.

N otes to Financial Statements

December 31, 2009 and June 30, 2009 and 2010


(1)	Nature of Operations and Basis of Presentation

	Verity Medical, Inc. (Verity Medical or the Company) was founded on September 24, 2001. The Company’s independent review services include medical evaluation programs for group health, disability, workers’ compensation, automobile, and general liability. The Company utilizes the services of physicians from around the country. Most of the independent medical exams (IMEs) are performed in Wisconsin with the balance occurring in Minnesota and Illinois. The Company’s main office is located in Madison, Wisconsin.

(2)	Summary of Significant Accounting Policies

	(a)	Unaudited Interim Financial Information

		The accompanying interim balance sheet as of June 30, 2010 and the statements of operations and changes in retained earnings and cash flows for the six months ended June 30, 2009 and 2010 are unaudited. These unaudited interim financial statements have been prepared in accordance with U.S. generally accepted accounting principles. In the opinion of the Company’s management, the unaudited interim financial statements have been prepared on the same basis as the audited financial statements and include all adjustments consisting of normal recurring adjustments necessary for the fair presentation of the Company’s financial position at June 30, 2010, and its results of operations and cash flows for the six months ended June 30, 2009 and 2010. The results of operations for the six months ended June 30, 2009 and 2010 are not necessarily indicative of the results to be expected for any other interim period or any fiscal year.

	(b)	Use of Estimates

		The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management bases its estimates on certain assumptions that they believe are reasonable in the circumstances and actual results could differ from those estimates. The most significant estimate reflected in these financial statements is the allowance for doubtful accounts.

	(c)	Accounts Receivable and Allowance for Doubtful Accounts

		Accounts receivable consist of amounts owed to the Company for services provided in the normal course of business and are reported net of allowance for doubtful accounts, which amounted to $0 as of December 31, 2009 and June 30, 2010 (unaudited). Generally, no collateral is received from customers and additions to the allowance are based on ongoing credit evaluations of customers with general credit experience being within the range of management’s expectations. Accounts are reviewed regularly for collectability and those deemed uncollectible are written off.

	(d)	Concentrations of Credit Risk

		The Company routinely assesses the financial strength of its customers and establishes an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends and other information. For the year ended December 31, 2009, there was one customer that accounted for 12% of revenues. For the six months ended June 30, 2009 (unaudited) and 2010 (unaudited), the same customer accounted for 11% of revenues, respectively. At December 31, 2009, there was one customer that accounted for 16% of the accounts receivable balance. At June 30, 2010 (unaudited), there was one customer that accounted for 10% of the accounts receivable balance.

F-196

VERITY MEDICAL, INC.

Notes to Financial Statements (Continued)

December 31, 2009 and June 30, 2009 and 2010


	(e)	Equipment and Furniture and Fixtures

		Equipment and furniture and fixtures are recorded at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the respective assets and accelerated methods for income tax purposes. Maintenance and repair costs are expensed as incurred.

	(f)	Long-Lived Assets

		In accordance with Impairment or Disposal of Long-Lived Assets Subsections of Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Subtopic 350-10 (ASC 360), Property, Plant, and Equipment – Overall, long-lived assets, such as equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying value. If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. At December 31, 2009, no impairment was noted.

	(g)	Deferred Rents

		The Company has entered into a lease for its headquarter offices in Madison, Wisconsin that has certain escalation clauses or other features which require rental expense to be recognized on a straight-line basis over the life of the lease. At December 31, 2009 and June 30, 2010, the deferred rent balance was $13,825 and $14,332 (unaudited), and is included in accrued expenses and other current liabilities in accompanying balance sheets.

	(h)	Revenue Recognition

		Revenue related to IMEs, peer reviews, bill reviews and administrative support services is recognized at the time services have been performed and the report is shipped to the end user. The Company believes that recognizing revenue at the time the report is shipped is appropriate because the Company’s revenue policies meet the following four criteria in accordance with ASC 605-10-S25, Revenue Recognition: Overall, (i) persuasive evidence that arrangement exists, (ii) shipment has occurred, (iii) the price is fixed and determinable and (iv) collectability is reasonably assured.

		Revenue related to other IME services, including litigation support services, and medical record retrieval services, where no report is generated, is recognized at the time the service is performed. The Company believes that recognizing revenue at the time the service is performed is appropriate because the Company’s revenue policies meet the following four criteria in accordance with ASC 605-10-S25, (i) persuasive evidence that arrangement exists, (ii) services have been rendered, (iii) the price is fixed and determinable and (iv) collectability is reasonably assured.

	(i)	Costs of Revenues

		Costs of revenues are comprised of fees paid to physicians, other direct costs including transcription, film and medical record obtainment, transportation, and other indirect costs including labor and overhead related to the generation of revenues.

F-197

VERITY MEDICAL, INC.

Notes to Financial Statements (Continued)

December 31, 2009 and June 30, 2009 and 2010


	(j)	Marketing and Advertising Costs

		Marketing and advertising costs are expensed as incurred and amounted to $71,802, $34,412 (unaudited) and $43,878 (unaudited) for the year ended December 31, 2009, and the six months ended June 30, 2009 and 2010, respectively.

	(k)	Income Taxes

		The Company elected S corporation status with the Internal Revenue Service as of September 24, 2001. Accordingly, the Company does not pay federal income taxes. Rather, the stockholders separately account for their pro rata share of corporate items of income, deduction, loss, and credits in their personal income tax returns. The Company is subject to taxes using an income-based measure in Wisconsin. Such taxes are classified as income tax expense within the statements of operations, and amounted to $6,318, $4,402 (unaudited) and $3,473 (unaudited) for the year ended December 31, 2009, and the six months ended June 30, 2009 and 2010, respectively.

	(l)	Fair Value Measurements

		The Company has adopted the provisions of FASB Statement No. 157, Fair Value Measurements, included in ASC Topic 820, Fair Value Measurements and Disclosures, for fair value measurements of financial assets and financial liabilities. ASC Topic 820 (Statement 157) defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 (Statement 157) also established a framework for measuring fair value and expands disclosures about fair value measurements.

		The Company uses financial instruments in the normal course of its business. The carrying values of cash, accounts receivable, prepaid assets, accounts payable, and accrued expenses approximate each of their fair values due to the short-term maturities of these assets and liabilities. Fair value is defined as the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

(3)	Equipment and Furniture and Fixtures


	Estimated useful lives	December 31, 2009		June 30, 2010

				(Unaudited)
Computer and office equipment	5 years	$	147,008	$	172,991
Furniture and fixtures	7 years		85,163		90,013

			232,171		263,004
Less accumulated depreciation			115,868		133,313

Total		$	116,303	$	129,691


	Depreciation expense was $30,233, $13,870 (unaudited) and $17,446 (unaudited) for the year ended December 31, 2009 and the six months ended June 30, 2009 and 2010, respectively.

F-198

VERITY MEDICAL, INC.

Notes to Financial Statements (Continued)

December 31, 2009 and June 30, 2009 and 2010


(4)	Accrued Expenses

	Accrued expenses consist of the following:


	December 31, 2009		June 30, 2010

			(Unaudited)
Accrued compensation and benefits	$	72,385	$	37,799
Other accrued expenses		13,825		17,805

Total	$	86,210	$	55,604


(5)	Commitments and Contingencies

	The Company leases office space under a noncancelable operating leases with various expiration dates from 2012 through 2016. Future minimum lease payments under the operating leases in each of the years subsequent to December 31, 2009 are as follows:


Year ending December 31:
2010	$	73,316
2011		75,263
2012		61,300
2013		50,985
2014		52,004
Thereafter		102,558

Total	$	415,426


	Related rent expense for the Company’s main offices was $74,745, $37,471 (unaudited) and $36,286 (unaudited) for the year ended December 31, 2009, and the six months ended June 30, 2009 and 2010, respectively.

(6)	Subsequent Event

	The Company has evaluated subsequent events from the balance sheet date through October 12, 2010, the date at which the financial statements were available to be issued and identified the following item.

	On August 6, 2010, ExamWorks, Inc. acquired substantially all of the assets and assumed certain liabilities of the Company.

F-199

UK INDEPENDENT MEDICAL SERVICES LIMITED

Index


		Page

Independent auditors’ report to the members of UK Independent Medical Services Limited		F-201

Profit and loss account for the year ended 31 March 2010		F-202

Balance sheet at 31 March 2010		F-203

Cash flow statement for the year ended 31 March 2010		F-204

Reconciliation of movements in shareholders’ funds for the year ended 31 March 2010		F-205

Notes to financial statements		F-206

F-200

Independent auditors’ report to the members of UK Independent Medical Services Limited

We have audited the accompanying balance sheet of UK Independent Medical Services Limited as of 31 March 2010 and the related profit and loss account, cash flow statement and reconciliation of movements in shareholders’ funds for the year then ended. These financial statements are the responsibility of the company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of UK Independent Medical Services Limited as of 31 March 2010, and the results of its operations and its cash flows for the year then ended in conformity with UK Generally Accepted Accounting Practice.


/s/ KPMG LLP

Newcastle upon Tyne

England, UK

October 20, 2010

F-201

UK INDEPENDENT MEDICAL SERVICES LIMITED

Profit and loss account

for the year ended 31 March 2010


	Note	2010 £

Turnover	2	10,879,197
Cost of sales		(7,552,233	)

Gross profit		3,326,964
Administrative expenses		(2,390,499	)

Operating profit		936,465
Interest payable and similar charges	6	(99,550	)

Profit on ordinary activities before taxation	2-6	836,915
Tax on profit on ordinary activities	7	(254,697	)

Profit for the financial year	18	582,218

The company has no recognised gains and losses other than those shown above and therefore no separate statement of total recognised gains and losses has been presented.

All results derive from continuing operations.

F-202

UK INDEPENDENT MEDICAL SERVICES LIMITED

Balance sheet

at 31 March 2010


		2010

	Note	£		£

Fixed assets
Intangible assets	9			179,715
Tangible assets	10			220,868
Investments	11			607

				401,190
Current assets
Stocks	12	444,257
Debtors	13	9,737,355
Cash at bank and in hand		2,289

		10,183,901
Creditors: amounts falling due within one year	14	(9,231,950	)

Net current assets				951,951

Total assets less current liabilities				1,353,141
Creditors: amounts falling due after more than one year	15			(101,453	)
Provisions for liabilities	16			(35,150	)

Net assets				1,216,538

Capital and reserves
Called up share capital	17			100,000
Profit and loss account	18			1,116,538

Shareholders’ funds				1,216,538

These financial statements were approved by the board of directors on 20 October 2010.

F-203

UK INDEPENDENT MEDICAL SERVICES LIMITED

Cash flow statement

for the year ended 31 March 2010


	Note	2010 £

Operating profit		936,465
Depreciation charges		103,772
Amortisation charges		55,293
Increase in stocks		(21,811	)
Increase in debtors		(1,814,979	)
Increase in creditors		1,637,417


Net cash inflow from operating activities		896,157

Returns on investments and servicing of finance	21	(99,550	)
Taxation		(308,745	)
Capital expenditure	21	(89,003	)
Dividends paid on shares classified in shareholders’ funds		(405,000	)


Cash outflow before financing		(6,141	)

Financing	21	(71,632	)

Decrease in net cash in the period		(77,773	)


Reconciliation of net cash flow to movement in net debt	22

Decrease in net cash in the period		(77,773	)
Financing		71,632

Movement in net debt in the year		(6,141	)
Net debt at the start of the year		(304,019	)

Net debt at the end of the year		(310,160	)

F-204

UK INDEPENDENT MEDICAL SERVICES LIMITED

Reconciliation of movements in shareholders’ funds

for the year ended 31 March 2010

	2010 £

Profit for the financial year		582,218
Dividends on shares classified in shareholders funds		(405,000


Net addition to shareholders’ funds		177,218
Opening shareholders’ funds		1,039,320


Closing shareholders’ funds		1,216,538

F-205


UK INDEPENDENT MEDICAL SERVICES LIMITED

Notes to Financial Statements

(forming part of the financial statements)

(1)	Accounting policies

	The following accounting policies have been applied consistently in dealing with items which are considered material in relation to the financial statements.

	Basis of preparation

	The financial statements have been prepared in accordance with applicable accounting standards, and under the historical cost accounting rules.

	The company has not prepared group financial statements on the grounds of materiality. All subsidiaries are dormant and are therefore considered immaterial. These financial statements present information about the company as an individual undertaking and not about its group.

	As 100% of the company’s voting rights are controlled within the group headed by ExamWorks Group Inc, the company has taken advantage of the exemption contained in FRS 8 and has therefore not disclosed transactions or balances which form part of the group.

	Goodwill

	Purchased goodwill (representing the excess of the fair value of the consideration given over the fair value of the separable net assets acquired) arising on business combinations in respect of acquisitions since 1 January 1998 is capitalised. Positive goodwill is amortised to nil by equal annual instalments over its estimated useful life. The estimated useful life of the group’s goodwill is 20 years.

	On the subsequent disposal or termination of a business acquired since 1 January 1998, the profit or loss on disposal or termination is calculated after charging the unamortised amount of any related goodwill.

	Intangible fixed assets and amortisation

	Intangible fixed assets purchased separately from a business are capitalised at their cost.

	Development expenditure is amortised to nil by equal annual instalments over their useful economic lives, generally their respective unexpired periods, of five years.

	Investments

	Investments in subsidiary undertakings, associates and joint ventures are stated at cost less amounts written off.

	Tangible fixed assets and depreciation

	Depreciation is provided to write off the cost less the estimated residual value of tangible fixed assets by equal instalments over their estimated useful economic lives as follows:


	Fixtures and fittings	— 25% per annum
	Motor vehicles	— 20% per annum


	Leases

	Assets acquired under finance leases are capitalised and the outstanding future lease obligations are shown in creditors. Operating lease rentals are charged to the profit and loss account on a straight line basis over the period of the lease.

F-206


UK INDEPENDENT MEDICAL SERVICES LIMITED

Notes to Financial Statements (Continued)

(forming part of the financial statements)

	Post-retirement benefits

	The company operates a defined contribution pension scheme. The assets of the scheme are held separately from those of the company in an independently administered fund. The amount charged to the profit and loss account represents the contributions payable to the scheme in respect of the accounting period.

	Research and development expenditure

	Expenditure on research and development is written off to the profit and loss account in the year in which it is incurred. Development expenditure is capitalised only where there is a clearly defined project, the expenditure is separately identifiable, the outcome of the project can be assessed with reasonable certainty, aggregate costs are expected to exceed related future sales and adequate resources exist to enable the project to be completed.

	Stocks

	Work in progress is stated at the lower of cost and net realisable value. Cost includes all direct expenditure based on normal levels of activity.

	Taxation

	The charge for taxation is based on the profit for the year and takes into account taxation deferred because of timing differences between the treatment of certain items for taxation and accounting purposes.

	Deferred tax is recognised, without discounting, in respect of all timing differences between the treatment of certain items for taxation and accounting purposes which have arisen but not reversed by the balance sheet date, except as otherwise required by FRS 19.

	Classification of financial instruments issued by the company

	Financial instruments issued by the company are treated as equity (i.e. forming part of shareholders’ funds) only to the extent that they meet the following two conditions:

	a)	they include no contractual obligations upon the company to deliver cash or other financial assets or to exchange financial assets or financial liabilities with another party under conditions that are potentially unfavourable to the company; and

	b)	where the instrument will or may be settled in the company’s own equity instruments, it is either a non-derivative that includes no obligation to deliver a variable number of the company’s own equity instruments or is a derivative that will be settled by the company’s exchanging a fixed amount of cash or other financial assets for a fixed number of its own equity instruments.

	To the extent that this definition is not met, the proceeds of issue are classified as a financial liability. Where the instrument so classified takes the legal form of the company’s own shares, the amounts presented in these financial statements for called up share capital and share premium account exclude amounts in relation to those shares.

	Finance payments associated with financial liabilities are dealt with as part of interest payable and similar charges. Finance payments associated with financial instruments that are classified as part of shareholders’ funds (see dividends on shares presented within shareholders’ funds), are dealt with as appropriations in the reconciliation of movements in shareholders’ funds.

F-207


UK INDEPENDENT MEDICAL SERVICES LIMITED

Notes to Financial Statements (Continued)

(forming part of the financial statements)

	Turnover

	Turnover is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods and services provided in the normal course of business, net of discounts, VAT and other sales related taxes.

	Turnover is recognised when the significant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, there is no continuing management involvement with the goods, and the amount of turnover can be measured reliably.

	Dividends on shares presented within shareholders’ funds

	Dividends unpaid at the balance sheet date are only recognised as a liability at that date to the extent that they are appropriately authorised and are no longer at the discretion of the company. Unpaid dividends that do not meet these criteria are disclosed in the notes to the financial statements.

	Cash

	Cash, for the purpose of the cash flow statement, comprises cash in hand and deposits repayable on demand, less overdrafts payable on demand.

(2)	Analysis of turnover


	2010 £

By activity

Medical legal services		10,347,452
Other services		531,745

		10,879,197


(3)	Notes to the profit and loss account


	2010 £

Profit on ordinary activities before taxation is stated after charging:

Depreciation and other amounts written off tangible fixed assets:
Owned		90,004
Leased		13,768
Amortisation of goodwill		3,486
Amortisation of development costs		51,807
Hire of assets – operating leases		65,451

F-208


UK INDEPENDENT MEDICAL SERVICES LIMITED

Notes to Financial Statements (Continued)

(forming part of the financial statements)

(4)	Remuneration of directors


	2010 £

Directors emoluments		466,345
Company contributions to money purchase pension schemes		376,530


	The emoluments of the highest paid director was £229,584, and company pension contributions of £192,000 were made to a money purchase scheme on his behalf.

	Retirement benefits are accruing to three directors under money purchase schemes.

(5)	Staff numbers and costs

	The average number of persons employed by the company (including directors) during the year, analysed by category, was as follows:


	Number of employees 2010

Management		8
Direct staff		50
Indirect staff		12
Finance staff		8

		78


	The aggregate payroll costs of these persons were as follows:


	2010 £

Wages and salaries		1,903,953
Social security costs		146,370
Other pension costs (see note 20)		459,435

		2,509,758


(6)	Interest payable and similar charges


	2010 £

On bank loans and overdrafts		463
On amounts payable to factors		96,007
Finance charges payable in respect of finance leases and hire purchase contracts		3,080

		99,550

F-209


UK INDEPENDENT MEDICAL SERVICES LIMITED

Notes to Financial Statements (Continued)

(forming part of the financial statements)

(7)	Taxation

	Analysis of charge in period


	2010

	£			£

UK corporation tax

Current tax on income for the period		260,438
Adjustments in respect of prior periods		(31	)

Total current tax					260,407

Deferred tax (see note 16)

Origination/reversal of timing differences		(5,710	)
Adjustment in respect of previous years		—

Total deferred tax					(5,710	)

Tax on profit on ordinary activities					254,697


	Factors affecting the tax charge for the current period

	The current tax charge for the period is higher than the standard rate of corporation tax in the UK (28%). The differences are explained below.


	2010 £

Current tax reconciliation

Profit on ordinary activities before tax		836,915

Current tax at 28%		234,336

Effects of:

Expenses not deductible for tax purposes		29,778
Depreciation for period in excess of capital allowances		5,710
Marginal relief		(9,386	)
Adjustments to tax charge in respect of previous periods		(31	)

Total current tax charge (see above)		260,407


	Factors that may affect future current and total tax charges

	On 28 July 2010 a change in the rate of corporation tax was substantively enacted, with corporation tax reduced from 28% to 27% with effect from 1 April 2011. Any timing differences which reverse before 1 April 2011 will be charged/credited at 28% and any timing differences which exist at 1 April 2011 will reverse at 27%. The directors do not expect this change to have a material impact on the financial statements.

F-210


UK INDEPENDENT MEDICAL SERVICES LIMITED

Notes to Financial Statements (Continued)

(forming part of the financial statements)

(8)	Dividends

	The aggregate amount of dividends comprise:


	2010 £

Interim dividends paid in respect of the current year		405,000


(9)	Intangible fixed assets


		Goodwill £		Development costs £		Total £

	*Cost*

	At beginning of year		69,246		245,489		314,735
	Additions		—		53,814		53,814

	At end of year		69,246		299,303		368,549


	Amortisation

	At beginning of year		3,486		130,055		133,541
	Charged in year		3,486		51,807		55,293

	At end of year		6,972		181,862		188,834


	Net book value

	At 31 March 2010		62,274		117,441		179,715



(10)	Tangible fixed assets

		Fixtures, fittings and equipment £		Motor vehicles £		Total £

	Cost
	At beginning of year		476,782		41,745		518,527
	Additions		30,434		4,755		35,189

	At end of year		507,216		46,500		553,716


	Depreciation

	At beginning of year		227,916		1,160		229,076
	Charge for year		90,844		12,928		103,772

	At end of year		318,760		14,088		332,848


	Net book value

	At 31 March 2010		188,456		32,412		220,868


	Included in the net book value of motor vehicles is £27,657 and fixtures, fittings and equipment is £2,427 in respect of assets held under finance leases and similar hire purchase contracts. Depreciation for the year on these assets was £12,928 and £840 respectively.

F-211

UK INDEPENDENT MEDICAL SERVICES LIMITED

Notes to Financial Statements (Continued)

(forming part of the financial statements)


(11)	Fixed asset investments


	Shares in group undertakings £


Cost

At beginning and end of year		21,359


Provisions

At beginning and end of year		20,752


Net book value

At 31 March 2010		607


	The principal companies in which the company’s interest at the year end is more than 20% are as follows:


	Country of incorporation	Principal activity	Class and percentage of shares held


Subsidiary undertakings

Axis Costs Limited	England and Wales	Dormant	100% Ordinary
Independent Medical Experts Limited	England and Wales	Dormant	100% Ordinary
Independent Medicals Limited	England and Wales	Dormant	100% Ordinary
Independent Medical Assessment Services Limited	England and Wales	Dormant	100% Ordinary
Independent Medical Providers Limited	England and Wales	Dormant	100% Ordinary
Independent Medical Reporting (IMR) Limited	England and Wales	Dormant	100% Ordinary
Independent Reports Limited	England and Wales	Dormant	100% Ordinary
UK Legal Funding Solutions Limited	England and Wales	Dormant	100% Ordinary
UK Legal Imaging Services Limited	England and Wales	Dormant	100% Ordinary
Independent Medical Reports Limited	England and Wales	Dormant	100% Ordinary


(12)	Stocks


		2010 £

	Work in progress		444,257


(13)	Debtors

		2010 £


	Trade debtors		9,321,327
	Other debtors		39,265
	Prepayments and accrued income		376,763

			9,737,355

F-212

UK INDEPENDENT MEDICAL SERVICES LIMITED

Notes to Financial Statements (Continued)

(forming part of the financial statements)


(14)	Creditors: amounts falling due within one year


		2010 £


	Bank overdrafts		283,273
	Other loans		—
	Obligations under finance leases and hire purchase contracts (see note 15)		8,727
	Trade creditors		3,463,026
	Corporation tax		260,438
	Other taxes and social security		1,456,242
	Other creditors		3,704,276
	Accruals and deferred income		55,968

			9,231,950


	Included within other creditors is £3,704,276 secured against trade debtors under an invoice discounting arrangement.

(15)	Creditors: amounts falling due after more than one year


		2010 £

	Amounts owed to group undertakings		81,004
	Obligations under finance leases and hire purchase contracts		20,449

			101,453


	The maturity of obligations under finance leases and hire purchase contracts is as follows:

		2010 £

	Within one year		8,727
	In the second to fifth years		20,449

			29,176


	The finance leases and hire purchase contracts are secured upon the assets to which they relate.

(16)	Provisions for liabilities


	Deferred taxation £


At beginning of year	40,860
Credit to the profit and loss for the year	(5,710	)

At end of year	35,150


The elements of deferred taxation are as follows:

	2010 £

Difference between accumulated depreciation and amortisation and capital allowances		35,150

F-213

UK INDEPENDENT MEDICAL SERVICES LIMITED

Notes to Financial Statements (Continued)

(forming part of the financial statements)


(17)	Called up share capital


		2010 £


	Authorised, allotted, called up and fully paid

	100,000 ordinary shares of £1 each		100,000

	Shares classified in shareholders’ funds		100,000


(18)	Reserves


	Profit and loss account £

At beginning of year		939,320
Profit for the year		582,218
Dividends on shares classified in shareholders’ funds		(405,000	)

At end of year		1,116,538


(19)	Commitments

	Annual commitments under non-cancellable operating leases are as follows:


		2010

		Land and buildings £		Other £

	Operating leases which expire:
	Within one year		—		2,071
	In the second the fifth years inclusive		67,563		—

			67,563		2,071


(20)	Pension scheme

	The company operates a defined contribution pension scheme. The pension cost charge for the period represents contributions payable by the company to the scheme and amounted to £459,435.

	Contributions amounting to £6,839 were payable to the scheme and are included in creditors.

F-214

UK INDEPENDENT MEDICAL SERVICES LIMITED

Notes to Financial Statements (Continued)

(forming part of the financial statements)


(21)	Analysis of cash flows


	2010 £

Returns on investment and servicing of finance

Interest paid		(96,470	)
Interest element of finance lease rental payments		(3,080	)

		(99,550	)


Capital expenditure

Purchase of tangible fixed assets		(35,189	)
Purchase of intangible fixed assets		(53,814	)

		(89,003	)


Financing

Repayment of borrowings		(61,611	)
Capital element of finance lease rental payments		(10,021	)

		(71,632	)


(22)	Analysis of net debt


		At beginning of year £			Cash flow £			At end of year £

	Cash in hand, at bank		2,486			(197	)		2,289
	Overdrafts		(205,697	)		(77,576	)		(283,273	)

						(77,773	)
	Finance leases		(39,197	)		10,021			(29,176	)
	Debt due within one year		(61,611	)		61,611			—

	Total		(304,019	)		(6,141	)		(310,160	)


(23)	Post balance sheet events

	On 7 September 2010 the entire share capital of the company was acquired by ExamWorks Inc.

(24)	Ultimate parent company

	The company is a subsidiary undertaking of ExamWorks UK Limited, incorporated in England and Wales. The ultimate parent company is ExamWorks Group Inc, incorporated in the United States of America.

F-215

Leading National
and Expanding
International Presence

Proprietary
IME*Centric Platform

Large Highly Credentialed
Medical Panel

Exceptional Customer
Experience

Broad Portfolio of
Services and Products

Superior Quality
Assurance Management

10,300,00 Shares

ExamWorks Group, Inc.

Common Stock

(EXAMWORKS LOGO)

Goldman, Sachs & Co.

Credit Suisse

Barclays Capital

William Blair & Company

Needham & Company, LLC