Delaware
|
13-3326724
|
(State
or other jurisdiction of
incorporation
or organization)
|
(I.R.S.
Employer
Identification
No.)
|
1510
Cotner Avenue
|
|
Los
Angeles, California
|
90025
|
(Address
of principal executive offices)
|
(Zip
Code)
|
Title of Each
Class
|
Name of each exchange
on which registered
|
Common
Stock, $.0001 par value
|
NASDAQ
Global Market
|
PART
II.
|
||
Item
8.
|
Financial
Statements and Supplementary Data
|
CERTAIN
RADNET, INC. AFFILIATES
|
COMBINED
BALANCE SHEETS
|
(IN
THOUSANDS)
|
December
31,
|
December
31,
|
|||||||
2009
|
2008
|
|||||||
(unaudited)
|
||||||||
ASSETS
|
||||||||
CURRENT
ASSETS
|
||||||||
Cash
and cash equivalents
|
$ | 1,306 | $ | 519 | ||||
Accounts
receivable, net of allowance for bad debts of $1,832 and
$1,236 at December 31, 2009 and 2008, respectively
|
5,403 | 6,094 | ||||||
Due
from affiliates
|
5,988 | 4,999 | ||||||
Prepaid
expenses and other current assets
|
956 | 465 | ||||||
Total
current assets
|
13,653 | 12,077 | ||||||
PROPERTY
AND EQUIPMENT, NET
|
19,785 | 18,731 | ||||||
Total
assets
|
$ | 33,438 | $ | 30,808 | ||||
LIABILITIES
AND PARTNERS' EQUITY
|
||||||||
CURRENT
LIABILITIES
|
||||||||
Accounts
payable and accrued expenses
|
$ | 2,717 | $ | 1,708 | ||||
Current
portion of deferred rent
|
196 | 61 | ||||||
Current
portion of equipment notes payable
|
1,368 | 1,366 | ||||||
Current
portion of obligations under capital leases
|
906 | 646 | ||||||
Total
current liabilities
|
5,187 | 3,781 | ||||||
LONG-TERM
LIABILITIES
|
||||||||
Deferred
rent, net of current portion
|
707 | 124 | ||||||
Equipment
notes payable, net of current portion
|
3,316 | 4,687 | ||||||
Obligations
under capital lease, net of current portion
|
2,331 | 2,142 | ||||||
Total
liabilities
|
11,541 | 10,734 | ||||||
COMMITMENTS
AND CONTINGENCIES
|
||||||||
PARTNERS'
EQUITY
|
||||||||
Radnet,
Inc.
|
9,836 | 9,064 | ||||||
Other
partners
|
12,061 | 11,010 | ||||||
Total
partners' equity
|
21,897 | 20,074 | ||||||
Total
liabilities and partners' equity
|
$ | 33,438 | $ | 30,808 |
The
accompanying notes are an integral part of these financial
statements.
|
CERTAIN
RADNET, INC. AFFILIATES
|
COMBINED
STATEMENTS OF INCOME
|
(IN
THOUSANDS)
|
Years
Ended December 31,
|
||||||||||||
2009
|
2008
|
2007
|
||||||||||
(unaudited)
|
(unaudited)
|
|||||||||||
NET
REVENUE
|
$ | 43,074 | $ | 43,784 | $ | 32,349 | ||||||
OPERATING
EXPENSES
|
||||||||||||
Operating
expenses
|
27,272 | 26,875 | 20,458 | |||||||||
Depreciation
and amortization
|
3,269 | 3,227 | 1,518 | |||||||||
Provision
for bad debts
|
2,482 | 2,416 | 1,510 | |||||||||
Loss
(gain) on sale of equipment
|
- | 68 | (8 | ) | ||||||||
Total
operating expenses
|
33,023 | 32,586 | 23,478 | |||||||||
INCOME
FROM OPERATIONS
|
10,051 | 11,198 | 8,871 | |||||||||
Net
interest expense
|
659 | 647 | 52 | |||||||||
NET
INCOME
|
$ | 9,392 | $ | 10,551 | $ | 8,819 |
The
accompanying notes are an integral part of these financial
statements.
|
CERTAIN
RADNET, INC. AFFILIATES
|
COMBINED
STATEMENTS OF PARTNERS' EQUITY
|
(IN
THOUSANDS)
|
Radnet,
Inc.
|
Other
Partners
|
Total
|
||||||||||
BALANCE
- January 1, 2007 (unaudited)
|
$ | 7,935 | $ | 10,434 | $ | 18,369 | ||||||
Contributions
|
714 | 744 | 1,458 | |||||||||
Net
Income
|
4,835 | 3,984 | 8,819 | |||||||||
Transfers
|
(392 | ) | 392 | - | ||||||||
Distributions
|
(5,418 | ) | (6,522 | ) | (11,940 | ) | ||||||
BALANCE
- December 31, 2007 (unaudited)
|
7,674 | 9,032 | 16,706 | |||||||||
Contributions
|
400 | 600 | 1,000 | |||||||||
Net
Income
|
4,725 | 5,826 | 10,551 | |||||||||
Distributions
|
(3,735 | ) | (4,448 | ) | (8,183 | ) | ||||||
BALANCE
- December 31, 2008 (unaudited)
|
9,064 | 11,010 | 20,074 | |||||||||
Contributions
|
- | - | - | |||||||||
Net
Income
|
4,171 | 5,221 | 9,392 | |||||||||
Distributions
|
(3,399 | ) | (4,170 | ) | (7,569 | ) | ||||||
BALANCE
- December 31, 2009
|
$ | 9,836 | $ | 12,061 | $ | 21,897 | ||||||
The
accompanying notes are an integral part of these financial
statements.
|
CERTAIN
RADNET, INC. AFFILIATES
|
||||||||||||
COMBINED
STATEMENTS OF CASH FLOWS
|
Years
Ended December 31,
|
||||||||||||
2009
|
2008
|
2007
|
||||||||||
(unaudited)
|
(unaudited)
|
|||||||||||
CASH
FLOWS FROM OPERATING ACTIVITIES
|
||||||||||||
Net
income
|
$ | 9,392 | $ | 10,551 | $ | 8,819 | ||||||
Adjustments
to reconcile net income
|
||||||||||||
to
net cash provided by operating activities:
|
||||||||||||
Depreciation
and amortization
|
3,269 | 3,227 | 1,518 | |||||||||
Provision
for bad debts
|
2,482 | 2,416 | 1,510 | |||||||||
Deferred
rent amortization
|
718 | 29 | 158 | |||||||||
Net
loss (gain) on sale of assets
|
- | 68 | (8 | ) | ||||||||
Changes
in operating assets and liabilities
|
||||||||||||
Accounts
receivable
|
(1,791 | ) | (4,009 | ) | (919 | ) | ||||||
Other
current assets
|
(1,308 | ) | (3,011 | ) | (883 | ) | ||||||
Accounts
payable and accrued expenses
|
373 | (986 | ) | 675 | ||||||||
Net
cash provided by operating activities
|
13,603 | 9,118 | 10,870 | |||||||||
CASH
FLOWS FROM INVESTING ACTIVITIES
|
||||||||||||
Purchase
of property and equipment
|
(4,046 | ) | (5,555 | ) | (6,669 | ) | ||||||
Proceeds
from sale of equipment
|
911 | 18 | 38 | |||||||||
Net
cash used in investing activities
|
(3,135 | ) | (5,537 | ) | (6,631 | ) | ||||||
CASH
FLOWS FROM FINANCING ACTIVITIES
|
||||||||||||
Principal
payments on notes and leases payable
|
(2,112 | ) | (1,457 | ) | (169 | ) | ||||||
Proceeds
from borrowings on notes payable
|
- | 2,125 | 4,742 | |||||||||
Partner
contributions
|
- | 1,000 | 1,458 | |||||||||
Distributions
to partners
|
(7,101 | ) | (7,350 | ) | (11,940 | ) | ||||||
Net
cash used in financing activities
|
(9,681 | ) | (6,515 | ) | (5,909 | ) | ||||||
NET
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
787 | (2,934 | ) | (1,670 | ) | |||||||
CASH
AND CASH EQUIVALENTS, beginning of period
|
519 | 3,453 | 5,123 | |||||||||
CASH
AND CASH EQUIVALENTS, end of period
|
$ | 1,306 | $ | 519 | $ | 3,453 | ||||||
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW INFORMATION
|
||||||||||||
Cash
paid during the period for interest
|
$ | 659 | $ | 647 | $ | 52 |
The
accompanying notes are an integral part of these financial
statements.
|
%
owned by Radnet, Inc.
|
||||
Franklin
Imaging Joint Venture
|
49%
|
|||
Carroll
County Radiology, LLC
|
40%
|
|||
MRI
at St. Joseph Medical Center
|
49%
*
|
|||
*
|
Prior
to December 2007, Radnet, Inc. owned 73% of MRI at St. Joseph Medical
Center
|
December
31,
|
||||||||
2009
|
2008
|
|||||||
(unaudited)
|
||||||||
Medical
equipment
|
$ | 19,848 | $ | 19,446 | ||||
Office
equipment, furniture and fixtures
|
1,914 | 1,846 | ||||||
Leasehold
improvements
|
11,678 | 9,097 | ||||||
Equipment
under capital leases
|
4,661 | 3,469 | ||||||
38,101 | 33,858 | |||||||
Accumulated
depreciation and amortization
|
(18,316 | ) | (15,127 | ) | ||||
$ | 19,785 | $ | 18,731 |
December
31,
|
||||||||
2009
|
2008
|
|||||||
(unaudited)
|
||||||||
Accounts
payable
|
$ | 271 | $ | 70 | ||||
Accrued
expenses
|
1,859 | 1,085 | ||||||
Accrued
payroll and vacation
|
587 | 553 | ||||||
Total
|
$ | 2,717 | $ | 1,708 |
2010
|
$ | 1,368 | ||
2011
|
1,480 | |||
2012
|
1,601 | |||
2013
|
235 | |||
Total
minimum payments
|
$ | 4,684 |
2010
|
$ | 1,134 | ||
2011
|
1,134 | |||
2012
|
978 | |||
2013
|
331 | |||
2014
|
147 | |||
Total
minimum payments
|
3,724 | |||
Amount
representing interest
|
(487 | ) | ||
Present
value of net minimum lease payments
|
3,237 | |||
Less
current portion
|
(906 | ) | ||
Long-term
portion
|
$ | 2,331 |
Facilities
|
Equipment
|
Total
|
||||||||||
2010
|
$ | 1,577 | $ | 801 | $ | 2,378 | ||||||
2011
|
1,324 | 548 | 1,872 | |||||||||
2012
|
1,335 | 91 | 1,426 | |||||||||
2013
|
1,372 | - | 1,372 | |||||||||
2014
|
1,410 | - | 1,410 | |||||||||
Thereafter
|
6,164 | - | 6,164 | |||||||||
$ | 13,182 | $ | 1,440 | $ | 14,622 |
Item
15.
Exhibits
and Financial Statement Schedules
|
Page No.
|
|
(a)
Financial Statements – The following financial statements are filed
herewith:
|
||
Report
of Independent Registered Public Accounting Firm
|
4
|
|
Combined
Balance Sheets of Certain Radnet, Inc. Affiliates
|
5
|
|
Combined
Statements of Income of Certain Radnet, Inc.
Affiliates
|
6
|
|
Combined
Statements of Partners’ Equity of Certain Radnet, Inc.
Affiliates
|
7
|
|
Combined
Statements of Cash Flows of Certain Radnet, Inc.
Affiliates
|
8
to 9
|
|
Notes to Combined
Financial Statements
|
10
to 13
|
Exhibit
No.
|
Description
of Exhibit
|
Incorporated by
Reference
to
|
||
2.1
|
Agreement
and Plan of Merger, dated as of July 6, 2006, by and among Primedex,
Radiologix, Radnet Management, Inc. and Merger Sub
|
(E)
|
||
2.2
|
Agreement
and Plan of Merger and Reorganization, dated as of September 3,
2008
|
(M)
|
||
3.1
|
Certificate
of Incorporation of RadNet, Inc., a Delaware corporation
|
(M)
|
||
3.2
|
Certificate
of Amendment to Certificate of Incorporation of RadNet, Inc., a Delaware
corporation, dated September 2, 2008
|
(M)
|
||
3.3
|
Bylaws
|
(M)
|
||
4.1
|
Form
of Common Stock Certificate
|
(G)
|
||
10.1
|
2000
Incentive Stock Option Plan (as amended)*
|
(C)
|
||
10.2
|
2006
Equity Incentive Plan*
|
(E)
|
||
10.3
|
First
Amendment to the 2006 Equity Incentive Plan*
|
(K)
|
||
10.4
|
Form
of Warrant recharacterized as under the 2006 Equity Incentive plan – Form
A
|
(K)
|
||
10.5
|
Form
of Warrant recharacterized as under the 2006 Equity Incentive plan – Form
B
|
(K)
|
||
10.6
|
Form
of Indemnification Agreement between the registrant and each of its
officers and directors*
|
(L)
|
||
10.7
|
Employment
Agreement dated as of June 12, 1992 between RadNet and Howard G. Berger,
M.D.
|
(A)
|
||
and
amendment to agreement.*
|
(D)
|
10.8
|
Employment
Agreement dated April 16, 2001, with Jeffrey L. Linden
|
(B)
|
||
and
amendment to agreement*
|
(D)
|
|||
10.9
|
Employment
Agreement with Norman R. Hames dated May 1, 2001
|
(B)
|
||
and
amendment to agreement*
|
(D)
|
|||
10.10
|
Employment
Agreement with Mark Stolper effective January 1,
2009*
|
(N)
|
||
10.11
|
Retention
Agreement with Stephen Forthuber dated November 15,
2006*
|
(H)
|
||
10.12
|
Amended
and Restated Management and Service Agreement between Radnet Management,
Inc. and Beverly Radiology Medical Group III dated January 1,
2004
|
(C)
|
||
10.14
|
Credit
Agreement, dated as November 15, 2006, among Radnet Management, Inc.,
the Credit Parties designated therein, General Electric Capital
Corporation, as Agent, the lenders described therein, and GE Capital
Markets, Inc.
|
(F)
|
||
10.15
|
Amendment
No. 1 of Existing Credit Agreement with General Electric Capital dated
April 2007.
|
(N)
|
||
10.16
|
Amendment
No. 2 of Existing Credit Agreement with General Electric Capital dated May
2007.
|
(N)
|
||
10.17
|
Amendment
No. 3 of Existing Credit Agreement with General Electric Capital
Corporation dated August 2007.
|
(I)
|
||
10.18
|
Amendment
No. 4 of Existing Credit Agreement with General Electric Capital
Corporation dated November 2007.
|
(N)
|
Amendment
No. 5 of Existing Credit Agreement with General Electric Capital
Corporation dated February 2008.
|
(J)
|
|||
10.20
|
Amendment
No. 6 of Existing Credit Agreement with General Electric Capital
Corporation dated April 2008.
|
(N)
|
||
10.21
|
Second
Lien Credit Agreement, dated as of November 15, 2006, among Radnet
Management, Inc., the Credit Parties designated therein, General Electric
Capital Corporation, as Agent, the Lenders described therein, and GE
Capital Markets, Inc.
|
(F)
|
||
10.22
|
Amendment
of Second Lien Credit Agreement with General Electric Capital Corporation
dated May 2007.
|
(N)
|
||
10.23
|
Amendment
of Second Lien Credit Agreement with General Electric Capital Corporation
dated August 2007.
|
(I)
|
||
10.24
|
Amendment
of Second Lien Credit Agreement with General Electric Capital Corporation
dated November 2007.
|
(N)
|
||
10.25
|
Guaranty,
dated as of November 15, 2006, by and among the Guarantors identified
therein and General Electric Capital Corporation.
|
(F)
|
||
10.26
|
Second
Lien Guaranty, dated as of November 15, 2006, by and among the
Guarantors identified therein and General Electric Capital
Corporation.
|
(F)
|
10.27
|
Pledge
Agreement, dated as of November 15, 2006, by and among the Pledgors
identified therein and General Electric Capital
Corporation.
|
(F)
|
||
10.28
|
Security
Agreement, dated as of November 15, 2006, by and among the Grantors
identified therein and General Electric Capital
Corporation.
|
(F)
|
||
10.29
|
Second
Lien Security Agreement, dated as of November 15, 2006, by and among
the Grantors identified therein and General Electric Capital
Corporation.
|
(F)
|
||
10.30
|
Commitment
and Term Loan Engagement Letter dated March 12, 2010.
|
(N)
|
||
14
|
Code
of Financial Ethics
|
(C)
|
||
21
|
List
of Subsidiaries
|
(N)
|
||
23.1
|
Consent
of Registered Independent Public Accounting Firm
|
(N)
|
||
23.2
|
Consent
of Registered Independent Public Accounting Firm
|
(O)
|
||
24
|
Power
of Attorney
|
(N)
|
||
31.1
|
CEO
Certification pursuant to Section 302
|
(O)
|
||
31.2
|
CFO
Certification pursuant to Section 302
|
(O)
|
||
32.1
|
CEO
Certification pursuant to Section 906
|
(O)
|
||
32.2
|
CFO
Certification pursuant to Section 906
|
(O)
|
(A)
|
Incorporated
by reference to exhibit filed in an amendment to Form 8-K report for June
12, 1992.
|
(B)
|
Incorporated
by reference to exhibit filed with the Form 10-K for the year ended
October 31, 2001.
|
(C)
|
Incorporated
by reference to exhibit filed with the Form 10-K for the year ended
October 31, 2003.
|
(D)
|
Incorporated
by reference to exhibit filed with the Form 10-Q for the quarter ended
January 31, 2004.
|
(E)
|
Incorporated
by reference to exhibit filed with Registrant’s Registration Statement on
Form S-4 (File No. 333-136800).
|
(F)
|
Incorporated
by reference to exhibit filed with Form 8-K for November 21,
2006.
|
(G)
|
Incorporated
by reference to exhibit filed with Form 10-K for October 31,
2006.
|
(H)
|
Incorporated
by reference to exhibit filed with Form 10-K/T for December 31,
2006.
|
(I)
|
Incorporated
by reference to exhibit filed with Form 8-K for August 24,
2007.
|
(J)
|
Incorporated
by reference to exhibit filed in an amendment to Form 10-K for
December 31, 2007.
|
(K)
|
Incorporated
by reference to exhibit filed with Form 10-Q for the quarter ended June
30, 2008.
|
(L)
|
Incorporated
by reference to exhibit filed with Form 10-Q for the quarter ended March
31, 2008.
|
(M)
|
Incorporated
by reference to exhibit filed with Form 8-K for September 4,
2008.
|
(N)
|
Incorporated
by reference to the Form 10-K for December 31,
2009.
|
(O)
|
Filed
herewith.
|
RADNET,
INC.
|
|||
Date: March
31, 2010
|
/
s/ HOWARD G . BERGER, M.D.
|
||
Howard
G. Berger, M.D., President,
|
|||
Chief
Executive Officer and Director
|
By
|
/
s/ HOWARD G . BERGER, M.D.
|
Date: March
31, 2010
|
||
Howard
G. Berger, M.D., Director, Chief Executive Officer and
President
|
||||
By
|
/s/
MARVIN S. CADWELL *
|
Date: March
31, 2010
|
||
Marvin
S. Cadwell, Director
|
||||
By
|
/s/
JOHN V. CRUES, III, M.D. *
|
Date: March
31, 2010
|
||
John
V. Crues, III, M.D., Director
|
||||
By
|
/s/
NORMAN R. HAMES *
|
Date: March
31, 2010
|
||
Norman
R. Hames, Director
|
||||
By
|
/s/
DAVID L. SWARTZ *
|
Date: March
31, 2010
|
||
David
L. Swartz, Director
|
By
|
/s/
LAWRENCE L. LEVITT *
|
Date: March
31, 2010
|
|
Lawrence
L. Levitt, Director
|
|||
By
|
/s/
MICHAEL L. SHERMAN, M.D. *
|
Date: March
31, 2010
|
|
Michael
L. Sherman, M.D., Director
|
|||
By
|
/s/
MARK D. STOLPER
|
Date: March
31, 2010
|
|
Mark D. Stolper, Chief Financial Officer
(Principal Accounting Officer)
|
|||