XML 50 R15.htm IDEA: XBRL DOCUMENT

NOTE 9 - ACQUISITION

3 Months Ended

Mar. 31, 2013

On February 13, 2013 the Company entered into an agreement with outside investors to acquire a 50.5% controlling interest in a newly formed limited liability company, Health Diagnostics Management LLC (HDM). During March 2013 the Company contributed $20,200,000 to HDM and the group of outside investors contributed $19,800,000 for its non-controlling membership interest.

To fund its capital contribution the Company borrowed a total of $14 million from a bank in the form of a term loan aggregating $11 Million and a revolving credit loan aggregating $3 million. The term loan is payable in 60 consecutive monthly installments, commencing September 1, 2013. The term loan bears interest at 4.75% per annum and is payable monthly. The revolving credit loan is due March 5, 2016. The Company can prepay the loan in whole or in part in multiples of $100,000 at any time without penalty. The revolving credit note bears interest at a rate of 4% per annum and is payable monthly. All borrowings under the loan agreements are collateralized by substantially all of the Company’s assets. The loan agreements also contain certain financial covenants that must be met on a periodic basis.

On March 5, 2013 HDM purchased from Health Diagnostics, LLC (“HD”) and certain of its subsidiaries, a business managing twelve (12) Stand-Up® MRI Centers and two (2) other scanning centers located in the States of New York and Florida for a total purchase price (including consideration of $1.5 million to outside investors) aggregating $35.9 million. Concurrently with the acquisition, HDM entered into several consulting and non-competition agreements for a consideration of $4.1 million. The acquisition was accounted for using the purchase method in accordance with ASC 805, “Business Combinations”. The accompanying condensed consolidated financial statements include the operations of HDM from the date of acquisition.

The following table summarizes the estimated fair values of the assets and liabilities assumed at the acquisition date:

Management fee receivable	$	9,234,462
Medical receivables		4,512,740
Prepaid expenses and other current assets		10,262
Property and equipment		14,912,650
Intangible assets		9,400,000
Goodwill		1,667,108
Other assets		542,949
Other current liabilities		(6,323	)
Long term debt		(273,848	)
Net assets acquired	$	40,000,000

The purchase price was allocated to the tangible and intangible assets and liabilities assumed based on estimates of their respective fair values at the date of acquisition with the remaining unallocated purchase price recorded as goodwill. Management is responsible for the valuation of net assets acquired and considered a number of factors, including valuations and appraisals, when estimating the fair values and estimated useful lives of acquired assets and liabilities. The intangible assets, excluding goodwill, are being amortized on a straight-line basis over their weighted average lives as follows:

Fair Value

Non compete	$	4,100,000	7 years
Customer relationships		4,000,000	20 years
Developed software		1,300,000	5 years
Total intangible assets	$	9,400,000

The HDM acquisition operating results have been included within the Company’s condensed consolidated financial statements since the date of acquisition. The following unaudited pro forma information assumes that the acquisition had been completed as of July 1, 2012:

	For The Three Months Ended March 31, 2013		For The Nine Months Ended March 31, 2013
Total Revenues – Net	$	15,115	$	51,049
Net Income – Controlling Interests		1,446		5,356
Net Income Available to Common Stockholders		1,351		5,003
Net Income Available to Class A Non-Voting Preferred Stockholders		71		263
Net Income Available to Class C Common Stockholders		24		90
Basis Net Income Per Common Share Available to Common Stockholders	$	0.23		0.84
Diluted Net Income Per Common Share Available to Common Stockholders		0.22		0.83
Basic and Diluted Income Per Share – Common C		0.06		0.23
Weighted Average Basic Shares Outstanding		5,937,096		5,921,540
Weighted Average Diluted Shares Outstanding		6,064,600		6,049,044
Weighted Average Basic and Diluted Shares Outstanding – Class C Common		382,513		382,513