Note 8 - Related Party Transactions

9 Months Ended

Sep. 30, 2011

Related Party Transactions Disclosure [Text Block]

(8)           Related Party Transactions

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.  For the nine months ended September 30, 2010, the Company paid RedRidge $425,000 in connection with a previous credit facility, all of which was incurred during the first two quarters of 2010.  No such fees were paid to RedRidge during the three and nine months ended September 30, 2011.

The Senior Secured Revolving 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 $123,000 and $363,000 in fees in acquisition related work performed during the three and nine months ended September 30, 2010, respectively.  The Company incurred $274,000 and $461,000 in fees in acquisition related work performed during the three and nine months ended September 30, 2011, respectively.    P&P Investment, LLC (“P&P”), a company owned by Richard Perlman, Executive Chairman of the Company, and James Price, Chief Executive Officer of the Company, are minority owners of, and have loaned funds to RedRidge.  P&P, Mr. Perlman and Mr. Price have entered into a letter agreement under which P&P waived any right it had to any portion of the diligence 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.

In June 2010, the Company entered into a lease agreement with Compass Partners L.L.C. (“Compass”) for corporate office space located at 655 Madison Avenue, 23rd Floor, New York, NY. Compass is the general partner of ExamWorks Holdings, LLLP, the Company’s majority shareholder as of the date of the agreement.  The Company’s Executive Chairman, Richard Perlman, owns 99% of Compass and his wife owns the remaining 1%.  Pursuant to the lease, which runs from April 1, 2010 through June 30, 2014, the Company paid Compass a rental fee of $10,080 per month in 2010, which fee was subject to increase commencing January 1, 2011 based on a proportionate pass through of base rent increases and increases for property taxes and building operating expenses. Prior to the entry into this lease agreement, the Company did not incur costs in excess of $120,000 per year with respect to leasing this corporate office space. In June 2010, the Company paid Compass $62,000 in leasehold improvements.  For the three and nine months ended September 30, 2010, the Company paid Compass $30,000 and $113,000, respectively, in rental payments.  The Company paid Compass $33,000 and $101,000 in rental payments during the three and nine months ended September 30, 2011, respectively.