8. SUPPLEMENTAL GUARANTOR INFORMATION

3 Months Ended

Mar. 31, 2013

Supplemental Guarantor Information

SupplementalGuarantorInformation [TextBlock]

In accordance with SEC Regulation S-X, Rule 3-10, Paragraph (d), the following tables present unaudited interim condensed consolidating financial information for: (a) RadNet, Inc. (the “Parent”) on a stand-alone basis as a guarantor of the registered senior notes due 2018 ; (b) Radnet Management, Inc., the subsidiary borrower and issuer (the “Subsidiary Issuer”) of the registered senior notes due 2018; (c) on a combined basis, the guarantor subsidiaries (the “Guarantor Subsidiaries”) of the registered senior notes due 2018, which include all other 100% owned subsidiaries of the Subsidiary Issuer; (d) on a combined basis, the non-guarantor subsidiaries, which include joint venture partnerships of which the Subsidiary Issuer holds investments of 50% or greater, as well as BRMG and the Crues Entities, which we consolidate as VIEs. Separate financial statements of the Subsidiary Issuer or the Guarantor Subsidiaries are not presented because the guarantee by the Parent and each Guarantor Subsidiary is full and unconditional, joint and several.

RADNET, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEET

March 31, 2013

(in thousands)

(unaudited)

	Parent			Subsidiary Issuer			Guarantor Subsidiary		Non-Guarantor Subsidiaries		Eliminations			Consolidated
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	–		$	–		$	431	$	–	$	–		$	431
Accounts receivable, net		–			–			64,597		70,342		–			134,939
Current deferred tax assets		–			–			8,792		–		–			8,792
Prepaid expenses and other current assets		–			13,382			6,097		734		–			20,213
Total current assets		–			13,382			79,917		71,076		–			164,375
PROPERTY AND EQUIPMENT, NET		–			49,203			161,970		6,270		–			217,443
OTHER ASSETS
Goodwill		–			49,139			143,211		4,740		–			197,090
Other intangible assets		–			160			51,974		102		–			52,236
Deferred financing costs, net		–			11,387			–		–		–			11,387
Investment in subsidiaries		(414	)		350,608			14,746		–		(364,940	)		–
Investment in joint ventures		–			–			27,959		–		–			27,959
Deferred tax assets, net of current portion		–			–			53,054		–		–			53,054
Deposits and other		–			1,596			1,935		59		–			3,590
Total assets	$	(414	)	$	475,475		$	534,766	$	82,247	$	(364,940	)	$	727,134
LIABILITIES AND EQUITY (DEFICIT)
CURRENT LIABILITIES
Intercompany	$	–		$	(165,623	)	$	112,383	$	53,240	$	–		$	–
Accounts payable, accrued expenses and other		–			56,129			48,361		8,318		–			112,808
Due to affiliates		–			–			1,495		–		–			1,495
Deferred revenue		–			–			1,276		–		–			1,276
Current portion of deferred rent		–			605			611		46		–			1,262
Current portion of notes payable		–			3,500			1,004		722		–			5,226
Current portion of obligations under capital leases		–			947			1,301		890		–			3,138
Total current liabilities		–			(104,442	)		166,431		63,216		–			125,205
LONG-TERM LIABILITIES
Deferred rent, net of current portion		–			9,703			6,290		192		–			16,185
Line of credit		–			34,500			–		–		–			34,500
Notes payable, net of current portion		–			535,640			638		1,521		–			537,799
Obligations under capital leases, net of current portion		–			488			2,318		544		–			3,350
Other non-current liabilities		–			–			8,481		–		–			8,481
Total liabilities		–			475,889			184,158		65,473		–			725,520
EQUITY (DEFICIT)
Total Radnet, Inc.'s equity (deficit)		(414	)		(414	)		350,608		14,746		(364,940	)		(414	)
Noncontrolling interests		–			–			–		2,028		–			2,028
Total equity (deficit)		(414	)		(414	)		350,608		16,774		(364,940	)		1,614
Total liabilities and equity (deficit)	$	(414	)	$	475,475		$	534,766	$	82,247	$	(364,940	)	$	727,134

RADNET, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEET

December 31, 2012

(in thousands)

				Subsidiary			Guarantor		Non-Guarantor
	Parent			Issuer			Subsidiaries		Subsidiaries		Eliminations			Consolidated
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	–		$	362		$	–	$	–	$	–		$	362
Accounts receivable, net		–			–			76,838		52,356		–			129,194
Current portion of deferred tax assets		–			–			7,607		–		–			7,607
Prepaid expenses and other current assets		–			9,735			8,308		694		–			18,737
Total current assets		–			10,097			92,753		53,050		–			155,900
PROPERTY AND EQUIPMENT, NET		–			48,025			168,401		134		–			216,560
OTHER ASSETS
Goodwill		–			48,954			144,072		845		–			193,871
Other intangible assets		–			170			51,394		110		–			51,674
Deferred financing costs		–			11,977			–		–		–			11,977
Investment in subsidiaries		(2,635	)		342,796			9,217		–		(349,378	)		–
Investment in joint ventures		–			–			28,598		–		–			28,598
Deferred tax assets, net of current portion		–			–			52,790		–		–			52,790
Deposits and other		–			1,821			1,928		–		–			3,749
Total assets	$	(2,635	)	$	463,840		$	549,153	$	54,139	$	(349,378	)	$	715,119
LIABILITIES AND EQUITY DEFICIT
CURRENT LIABILITIES
Intercompany	$	–		$	(176,217	)	$	138,223	$	37,994	$	–		$	–
Accounts payable, accrued expenses and other		–			57,939			41,696		6,294		–			105,929
Due to affiliates		–			–			1,602		–		–			1,602
Deferred revenue		–			–			1,273		–		–			1,273
Current portion of deferred rent		–			574			590		–		–			1,164
Current portion of notes payable		–			3,500			1,203		–		–			4,703
Current portion of obligations under capital leases		–			1,186			2,756		–		–			3,942
Total current liabilities		–			(113,018	)		187,343		44,288		–			118,613
LONG-TERM LIABILITIES
Deferred rent, net of current portion		–			9,579			6,271		–		–			15,850
Line of Credit		–			33,000			–		–		–			33,000
Notes payable, net of current portion		–			536,248			761		–		–			537,009
Obligations under capital leases, net of current portion		–			666			3,087		–		–			3,753
Other non-current liabilities		–			–			8,895		–		–			8,895
Total liabilities		–			466,475			206,357		44,288		–			717,120
EQUITY (DEFICIT)
Total Radnet, Inc.'s equity (deficit)		(2,635	)		(2,635	)		342,796		9,217		(349,378	)		(2,635	)
Noncontrolling interests		–			–			–		634		–			634
Total equity (deficit)		(2,635	)		(2,635	)		342,796		9,851		(349,378	)		(2,001	)
Total liabilities and equity (deficit)	$	(2,635	)	$	463,840		$	549,153	$	54,139	$	(349,378	)	$	715,119

RADNET, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For The Three Months Ended March 31, 2013

(in thousands)

(unaudited)

				Subsidiary			Guarantor			Non-Guarantor
	Parent			Issuer			Subsidiaries			Subsidiaries			Eliminations			Consolidated
NET SERVICE FEE REVENUE
Service fee revenue, net of contractual allowances and discounts	$	–		$	37,508		$	119,350		$	22,904		$	–		$	179,762
Provision for bad debts		–			(1,385	)		(4,217	)		(1,220	)		–			(6,822	)
Net service fee revenue		–			36,123			115,133			21,684			–			172,940
OPERATING EXPENSES
Cost of operations		–			33,236			95,518			20,808			–			149,562
Depreciation and amortization		–			3,128			11,323			309			–			14,760
Loss on sale and disposal of equipment		–			85			85			–			–			170
Severance costs		–			11			110			2			–			123
Total operating expenses		–			36,460			107,036			21,119			–			164,615
(LOSS) INCOME FROM OPERATIONS		–			(337	)		8,097			565			–			8,325
OTHER EXPENSES
Interest expense		–			6,673			5,391			83			–			12,147
Other income		–			–			(2	)		–			–			(2	)
Total other expenses		–			6,673			5,389			83			–			12,145
(LOSS) INCOME BEFORE INCOME TAXES AND EQUITY IN EARNINGS OF JOINT VENTURES		–			(7,010	)		2,708			482			–			(3,820	)
Benefit from (provision for) income taxes		–			–			1,254			(6	)		–			1,248
Equity in (losses) earnings of consolidated subsidiaries		(1,342	)		5,668			500						(4,826	)		–
Equity in earnings of joint ventures		–			–			1,206			–			–			1,206
NET (LOSS) INCOME		(1,342	)		(1,342	)		5,668			476			(4,826	)		(1,366	)
Net loss attributable to noncontrolling interests		–			–			–			(24	)		–			(24	)
NET (LOSS) INCOME ATTRIBUTABLE TO
RADNET, INC. COMMON STOCKHOLDERS	$	(1,342	)	$	(1,342	)	$	5,668		$	500		$	(4,826	)	$	(1,342	)

RADNET, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For The Three Months Ended March 31, 2012

(in thousands)

(unaudited)

				Subsidiary			Guarantor			Non-Guarantor
	Parent			Issuer			Subsidiaries			Subsidiaries			Eliminations			Consolidated
NET SERVICE FEE REVENUE
Service fee revenue, net of contractual allowances and discounts	$	–		$	34,544		$	119,581		$	14,375		$	–		$	168,500
Provision for bad debts		–			(1,267	)		(4,598	)		(619	)		–			(6,484	)
Net service fee revenue		–			33,277			114,983			13,756			–			162,016
OPERATING EXPENSES
Cost of operations		–			30,386			91,505			13,509			–			135,400
Depreciation and amortization		–			3,147			11,683			62			–			14,892
Loss (gain) on sale of equipment		–			137			(113	)		–			–			24
Severance costs		–			33			390			26			–			449
Total operating expenses		–			33,703			103,465			13,597			–			150,765
(LOSS) INCOME FROM OPERATIONS		–			(426	)		11,518			159			–			11,251
OTHER EXPENSES
Interest expense		–			7,978			5,589			–			–			13,567
Other (income) expenses		–			(1,213	)		66			–			–			(1,147	)
Total other expenses		–			6,765			5,655			–			–			12,420
(LOSS) INCOME BEFORE INCOME TAXES AND EQUITY IN EARNINGS OF JOINT VENTURES		–			(7,191	)		5,863			159			–			(1,169	)
Provision for income taxes		–			(2	)		(243	)		–			–			(245	)
Equity in (losses) earnings of consolidated subsidiaries		(111	)		7,082			200						(7,171	)		–
Equity in earnings of joint ventures		–			–			1,262			–			–			1,262
NET (LOSS) INCOME		(111	)		(111	)		7,082			159			(7,171	)		(152	)
Net loss attributable to noncontrolling interests		–			–			–			(41	)		–			(41	)
NET (LOSS) INCOME ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS	$	(111	)	$	(111	)	$	7,082		$	200		$	(7,171	)	$	(111	)

RADNET, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For The Three Months Ended March 31, 2013

(unaudited)

				Subsidiary			Guarantor			Non-Guarantor
	Parent			Issuer			Subsidiaries			Subsidiaries			Eliminations			Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) income	$	(1,342	)	$	(1,342	)	$	5,668		$	476		$	(4,826	)	$	(1,366	)
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Depreciation and amortization		–			3,128			11,323			309			–			14,760
Provision for bad debt		–			1,385			4,217			1,220			–			6,822
Equity in earnings of consolidated subsidiaries		1,342			(5,668	)		(500	)		–			4,826			–
Equity in earnings of joint ventures		–			–			(1,206	)		–			–			(1,206	)
Distributions from joint ventures		–			–			1,921			–			–			1,921
Deferred rent amortization		–			156			254			23			–			433
Amortization of deferred financing cost		–			457			–			–			–			457
Amortization of term loan and bond discount		–			400			–			–			–			400
Loss on sale and disposal of equipment		–			85			85			–			–			170
Stock-based compensation		–			238			714			–			–			952
Changes in operating assets and liabilities, net of assets acquired and liabilities assumed in purchase transactions:
Accounts receivable		–			–			1,214			(12,996	)		–			(11,782	)
Other current assets		–			(3,611	)		(1,606	)		118			–			(5,099	)
Other assets		–			225			(330	)		–			–			(105	)
Deferred revenue		–			–			3			–			–			3
Accounts payable, accrued expenses and other		–			7,957			(10,285	)		11,189			–			8,861
Net cash provided by operating activities		–			3,410			11,472			339			–			15,221
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of imaging facilities		–			(350	)		(3,275	)		–			–			(3,625	)
Purchase of property and equipment		–			(4,053	)		(8,847	)		(26	)		–			(12,926	)
Proceeds from sale of equipment		–			145			125			–			–			270
Proceeds from sale of joint venture interests		–			–			2,640			–			–			2,640
Purchase of equity interest in joint ventures		–			–			(724	)		–			–			(724	)
Net cash used in investing activities		–			(4,258	)		(10,081	)		(26	)		–			(14,365	)
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on notes and leases payable		–			(1,424	)		(960	)		(313	)		–			(2,697	)
Proceeds from, net of payments, on line of credit		–			1,500			–			–			–			1,500
Proceeds from issuance of common stock		–			469			–			–			–			469
Net provided by (cash used) in financing activities		–			545			(960	)		(313	)		–			(728	)
EFFECT OF EXCHANGE RATE CHANGES ON CASH					(59	)		–			–			–			(59	)
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS		–			(362	)		431			–			–			69
CASH AND CASH EQUIVALENTS, beginning of period		–			362			–			–			–			362
CASH AND CASH EQUIVALENTS, end of period	$	–		$	–		$	431		$	–		$	–		$	431

RADNET, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For The Three Months Ended March 31, 2012

(in thousands)

(unaudited)

				Subsidiary			Guarantor			Non-Guarantor
	Parent			Issuer			Subsidiaries			Subsidiaries			Eliminations			Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) income	$	(111	)	$	(111	)	$	7,082		$	159		$	(7,171	)	$	(152	)
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Depreciation and amortization		–			3,147			11,683			62			–			14,892
Provision for bad debt		–			1,267			4,598			619			–			6,484
Equity in (earnings) loss of consolidated subsidiaries		111			(7,082	)		(200	)		–			7,171			–
Distributions from consolidated subsidiaries		–			–			276			–			(276	)		–
Equity in earnings of joint ventures		–			–			(1,262	)		–			–			(1,262	)
Distributions from joint ventures		–			–			1,575			–			–			1,575
Deferred rent amortization		–			36			252			–			–			288
Amortization of deferred financing cost		–			602			–			–			–			602
Amortization of term loan and bond discount		–			234			–			–			–			234
Loss (gain) on sale of equipment		–			137			(113	)		–			–			24
Amortization of cash flow hedge		–			276			–			–			–			276
Stock-based compensation		–			294			881			–			–			1,175
Changes in operating assets and liabilities, net of assets acquired and liabilities assumed in purchase transactions:
Accounts receivable		–			–			(3,014	)		(9,009	)		–			(12,023	)
Other current assets		–			1,286			(1,472	)		(497	)		–			(683	)
Other assets		–			(19	)		(45	)		–			–			(64	)
Deferred revenue		–			–			86			–			–			86
Accounts payable, accrued expenses and other		–			3,175			(8,028	)		8,832			–			3,979
Net cash provided by (used in) operating activities		–			3,242			12,299			166			(276	)		15,431
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of imaging facilities		–			–			(580	)		–			–			(580	)
Purchase of property and equipment		–			(4,445	)		(9,517	)		–			–			(13,962	)
Proceeds from sale of equipment		–			43			367			–			–			410
Proceeds from sale of imaging facilities		–			–			2,300			–			–			2,300
Purchase of equity interest in joint ventures		–			–			(920	)		–			–			(920	)
Net cash used in investing activities		–			(4,402	)		(8,350	)		–			–			(12,752	)
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on notes and leases payable		–			(1,406	)		(3,073	)		–			–			(4,479	)
Deferred financing costs		–			–			–			–			–			–
Proceeds from, net of payments on, line of credit		–			2,700			–			–			–			2,700
Payments to counterparties of interest rate swaps, net of amounts received		–			(1,500	)		–			–			–			(1,500	)
Distributions paid to noncontrolling interests		–			–			–			(302	)		276			(26	)
Proceeds from issuance of common stock		–			–			–			–			–			–
Net cash used in financing activities		–			(206	)		(3,073	)		(302	)		276			(3,305	)
EFFECT OF EXCHANGE RATE CHANGES ON CASH					5			–						5
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS		–			(1,366	)		881			(136	)		–			(621	)
CASH AND CASH EQUIVALENTS, beginning of period		–			1,366			–			1,089			–			2,455
CASH AND CASH EQUIVALENTS, end of period	$	–		$	–		$	881		$	953		$	–		$	1,834