EX-99.3 4 dex993.htm SELECT HISTORICAL UNAUDITED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2007 Select historical unaudited financial statements as of September 30, 2007

Exhibit 99.3

SELECTMRI, LLC

FINANCIAL STATEMENTS

DECEMBER 31, 2006


TABLE OF CONTENTS

 

Independent Auditors’ Report

   1

Financial Statements:

  

Balance Sheets

   2

Statements of Operations

   3

Statements of Changes in Members’ Equity

   4

Statements of Cash Flows

   5

Notes to Financial Statements

   6 - 8

Schedule I — Unaudited Financial Statements as of September 30, 2007 and for the periods ended September 30, 2007 and 2006

   9


INDEPENDENT AUDITORS’ REPORT

To the Members of selectMRI, LLC

Delray Beach, Florida

We have audited the accompanying balance sheet of selectMRI, LLC as of December 31, 2006, and the related statements of operations, changes in members’ equity and cash flows for the period January 19, 2006 (inception) through December 31, 2006. 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 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 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 selectMRI, LLC for the period January 19, 2006 (inception) through December 31, 2006 in conformity with accounting principles generally accepted in the United States of America.

/s/ Daszkal Bolton LLP

Jupiter, Florida

March 26, 2008


SELECT MRI, LLC

BALANCE SHEET

DECEMBER 31, 2006

 

ASSETS

Current assets:

  

Cash

   $ 19,987

Accounts receivable, net

     227,306
      

Total current assets

     247,293
      

Receivable from related parties

     507

Property and equipment, net

     20,433
      

Total assets

   $ 268,233
      
LIABILITIES AND MEMBERS' EQUITY

Current liabilities:

  

Accounts payable

   $ 83,406

Due to related parties

     4,729

Insurance companies overpayments

     20,125

Accrued expenses and other current liabilities

     123,430
      

Total current liabilities

     231,690
      

Total liabilities

     231,690
      

Commitments and contingencies

  

Members’ equity

     36,543
      

Total liabilities and members’ equity

   $ 268,233
      

See accompanying notes to financial statements.

 

2


SELECT MRI, LLC

STATEMENT OF OPERATIONS

FOR THE PERIOD FROM JANUARY 19, 2006 (INCEPTION) TO DECEMBER 31, 2006

 

Revenues

  

Medical logistics services

   $ 1,016,037  
        

Total revenue

     1,016,037  

Cost of revenues

  

Medical logistics services

     806,850  
        
     806,850  
        

Gross profit

     209,187  

Selling, general and administrative expense

     550,144  
        

Net income

   $ (340,957 )
        

See accompanying notes to financial statements.

 

3


SELECT MRI, LLC

STATEMENT OF CHANGES IN MEMBERS’ EQUITY

FOR THE PERIOD FROM JANUARY 19, 2006 (INCEPTION) TO DECEMBER 31, 2006

 

     Capital
Contributions
   Retained
Earnings
    Total
Members’
Equity
 

Balance at January 19, 2006 (Inception)

   $ —      $ —       $ —    
                       

Net loss

     —        (340,957 )     (340,957 )

Capital Contributions

     377,500      —         377,500  

Distributions

     —        —         —    
                       

Balance as of December 31, 2006

   $ 377,500    $ (340,957 )   $ 36,543  
                       

See accompanying notes to financial statements.

 

4


SELECT MRI, LLC

STATEMENT OF CASH FLOWS

FOR THE PERIOD FROM JANUARY 19, 2006 (INCEPTION) TO DECEMBER 31, 2006

 

Cash flows from operating activities:

  

Net (loss) income

   $ (340,957 )

Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:

  

Depreciation and amortization

     4,891  

Changes in operating assets and liabilities:

  

(Increase) decrease in:

  

Accounts receivable

     (227,306 )

Related party receivable

     (507 )

Increase (decrease) in:

  

Accounts payable and accrued expenses

     226,961  

Related party payable

     4,729  
        

Net cash provided by operating activities

     (332,189 )
        

Cash flows from investing activities:

  

Purchases of property and equipment

     (25,324 )
        

Cash flows from financing activities:

  

Member contributions

     377,500  
        

Net cash used in financing activities

     377,500  
        

Net increase (decrease) in cash

     19,987  

Cash, at January 19, 2006 (Inception)

     —    
        

Cash, end of year

   $ 19,987  
        

See accompanying notes to financial statements.

 

5


SELECT MRI, LLC

NOTES TO FINANCIAL STATEMENTS

NOTE 1—ORGANIZATION AND NATURE OF BUSINESS

selectMRI, LLC (the “Company”) is a national provider of imaging logistics services to the workers’ compensation industry.

The Company was organized on December 13, 2005 as a limited liability company pursuant to the Florida Limited Liability Company Law.

NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

The preparation of financial statements in conformity with 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. Actual results could differ from those estimates.

Revenue Recognition

The Company recognizes revenue when persuasive evidence of an arrangement exists, shipment has occurred and/or services are rendered, price is fixed or determinable and collectibility is reasonably assured.

Cash and Cash Equivalents

The Company considers all highly liquid investments with an initial maturity of three months or less to be cash equivalents. At December 31, 2006, there are no cash equivalents.

Property and Equipment

Property and equipment are stated at cost. Incidental expenditures for maintenance and repairs are charged against operations. Renewals and betterment that materially extend the life of assets are capitalized. Depreciation is provided on property and equipment over the equipments estimated useful service lives and is computed under the straight-line method of depreciation. The estimated useful lives range from 3 to 5 years.

Income Taxes

The Company has elected be unanimous consent of its shareholders to be taxed as a Limited Liability Company for Federal and State income tax purposes. Under those provisions, the Company does not pay federal income taxes on its taxable income. Instead, the shareholders are liable for individual federal income taxes on their respective share of the Company’s taxable income.

Advertising Costs

Advertising and marketing costs are expensed as incurred. Advertising expense totaled $5,605 for the year ended December 31, 2006.

 

6


SELECT MRI, LLC

NOTES TO FINANCIAL STATEMENTS

 

NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

 

New Accounting Pronouncements

In September 2006, the FASB issued SFAS 157, “Fair Value Measurements,” which defines fair value, establishes a framework for measuring fair value in GAAP, and expands disclosures about fair value measurements. SFAS 157 does not require any new fair value measurements, but provides guidance on how to measure fair value by providing a fair value hierarch used to classify the source of the information. This statement is effective for fiscal years beginning after November 15, 2006. The Company is evaluating whether adoption of this statement will result in a change to its fair value measurements.

NOTE 3—CONCENTRATION OF CREDIT RISK

Cash

The Company maintains its cash in a bank deposit account which, at times, may exceed federally insured limits. Accounts are guaranteed by the Federal Deposit Insurance Corporation (“FDIC”) up to $100,000 per institution. At December 30, 2006, the Company’s cash balance exceeded the insured limit by $42,134.

Accounts Receivable and Revenues

Accounts receivable at December 31, 2006 is distributed among approximately 40 customers. Three customers account for more than 10% of the total accounts receivable balance at December 31, 2006, representing 18%, 14% and 14% respectively, of the total balance.

Sales to the Company’s three largest customers totaled $605,575 for the year ended December 31, 2006 representing approximately 59.6% of the Company’s total sales for the year.

NOTE 4—PROPERTY AND EQUIPMENT

Fixed assets and accumulated depreciation as of December 31, 2006 are summarized below:

 

     2006  

Computer equipment

   $ 15,252  

Office equipment

   $ 6,877  

Computer software

     3,195  
        

Total

     25,324  

Accumulated depreciation

     (4,891 )
        
   $ 20,433  
        

Depreciation expense was $4,891 for the year ended December 31, 2006.

 

7


SELECT MRI, LLC

NOTES TO FINANCIAL STATEMENTS

 

NOTE 5—RELATED PARTY TRANSACTIONS

The Company’s related parties include officers, directors and members. Related party transactions during the year ended December 31, 2006 include the allocation of administrative expenses, including rent payments for lease of the building. Loans and advances to related parties at December 31, 2006 were $507. In addition, payables to related parties at December 31, 2006 were $4,729 for rent payments. Rent payments and other expenses allocated for the Company’s office space lease for the year ended December 31, 2006 were $10,432. Payroll expense allocated to the Company from related entities amounted to $7,859 for the year ended December 31, 2006.

NOTE 6—SUBSEQUENT EVENTS

On January 28, 2008, Medical Services Company, Inc. acquired the Company, along with ZoneCare USA of Delray, LLC and Speedy Re-Employment, LLC.

 

8


SCHEDULE I — UNAUDITED FINANCIAL STATEMENTS

BALANCE SHEETS AS OF SEPTEMBER 30, 2007 AND 2006

 

ASSETS
     30-Sep-07    30-Sep-06
     (Unaudited)    (Unaudited)

Current assets:

     

Cash

   $ 64,000    $ 20,000

Accounts receivable, net

   $ 275,000    $ 228,000

Other current assets

     9,000   
         

Total current assets

     348,000      248,000
             

Property and equipment, net

     22,000      20,000
             

Total assets

   $ 370,000    $ 268,000
             
LIABILITIES AND MEMBERS’ EQUITY

Current liabilities:

     

Accounts payable

   $ 165,000    $ 83,000

Accrued expenses and other current liabilities

     98,000      149,000
             

Total current liabilities

     263,000      232,000
             

Total liabilities

     263,000      232,000
             

Commitments and contingencies

     

Members’ equity

     107,000      36,000
             

Total liabilities and members’ equity

   $ 370,000    $ 268,000
             

 

9


SCHEDULE I — UNAUDITED FINANCIAL STATEMENTS

STATEMENTS OF OPERATIONS FOR THE PERIOD FROM INCEPTION TO SEPTEMBER 30, 2006 AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007

 

     30-Sep-07    30-Sep-06  
     (Unaudited)    (Unaudited)  

Revenues, net

   $ 1,635,000    $ 628,000  

Cost of revenues

     1,249,000      479,000  
               

Gross profit

     386,000      149,000  

Selling, general and administrative expenses

     347,000      407,000  
               

Net income

   $ 39,000    $ (258,000 )
               

 

10