UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
---------
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarter ended July 31, 1995 Commission File Number 0-19019
PRIMEDEX HEALTH SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
New York 13-3326724
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1516 Cotner Avenue
Los Angeles, California 90025
(Address of principal executive offices)(Zip code)
Registrant's telephone number, including area code: (310) 478-7808
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 of 15(d) of the Securities and Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
Number of shares outstanding of the issuer's common stock, as of September 18,
1995 was 40,030,260.
<PAGE>
Item 1: Financial Statements
PRIMEDEX HEALTH SYSTEMS, INC. AND AFFILIATES
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CONSOLIDATED BALANCE SHEETS [UNAUDITED]
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<TABLE>
<CAPTION>
July 31, October 31,
1 9 9 5 1 9 9 4
Assets:
Current Assets:
<S> <C> <C>
Cash and Cash Equivalents ........................ $ 2,019,312 $ 5,649,230
Accounts Receivable - Net ........................ 15,974,464 14,305,238
Accounts Receivable - Net -
Discontinued Operation .......................... -- 12,171,228
Due from Sale of Accounts Receivable Portfolio ... 9,448,061 --
Accrued Revenue .................................. 645,245 946,170
Prepaid and Other Current Assets ................. 285,474 529,663
------------ ------------
Total Current Assets ............................. 28,372,556 33,601,529
------------ ------------
Property, Plant and Equipment - Net ................ 22,253,749 26,753,778
------------ ------------
Property, Plant and Equipment -
Net - Discontinued Operation ..................... -- 778,887
------------ ------------
Other Assets:
Accounts Receivable - Net ........................ 6,439,545 6,130,816
Accounts Receivable - Net - Discontinued Operation -- 19,630,067
Due from Related Parties ......................... 2,522,097 2,490,703
Goodwill - Net ................................... 57,168,836 58,725,489
Other Assets ..................................... 5,222,473 5,439,424
------------ ------------
Total Other Assets ............................... 71,352,951 92,416,499
------------ ------------
Total Assets ..................................... $121,979,256 $153,550,693
</TABLE>
See Notes to Consolidated Financial Statements.
1
<PAGE>
PRIMEDEX HEALTH SYSTEMS, INC. AND AFFILIATES
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CONSOLIDATED BALANCE SHEETS [UNAUDITED]
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July 31, October 31,
1 9 9 5 1 9 9 4
Liabilities and Stockholders' Equity:
Current Liabilities:
Accounts Payable $3,214,629 $3,093,237
Notes Payable - Stockholders' -- 2,500,000
Accrued Expenses 4,141,264 4,710,939
Notes and Leases Payable - Current 16,174,408 14,871,927
Other Current Liabilities 1,569,766 973,225
Accrued Estimated Closing Costs 870,000 5,700,000
Accrued Restructuring Costs 840,091 1,225,000
---------- ---------
Total Current Liabilities 26,810,158 33,074,328
---------- ----------
Long-Term Liabilities:
Subordinated Debentures Payable 25,845,000 25,875,000
Notes and Leases Payable 31,642,869 34,661,928
Accrued Estimated Closing Costs -- 6,411,948
Accrued Expenses 916,132 717,669
---------- ---------
Total Long-Term Liabilities 58,404,001 67,666,545
---------- ----------
Commitments and Contingencies -- --
---------- ---------
Minority Interest 1,339,721 3,780,879
---------- ---------
Stockholders' Equity:
Common Stock - $.01 Par Value,
100,000,000 Shares Authorized; 40,030,260 and
40,026,510 Shares Issued and Outstanding
at July 31, 1995 and October 31,
1994,
Respectively 400,302 400,265
Paid-in Capital 99,377,170 102,243,835
Retained Earnings [Deficit] (64,352,096) (53,615,159)
Total Stockholders' Equity 35,425,376 49,028,941
---------- ----------
Total Liabilities and Stockholders' Equity $121,979,256 $153,550,693
See Notes to Consolidated Financial Statements.
2
<PAGE>
PRIMEDEX HEALTH SYSTEMS, INC. AND AFFILIATES
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CONSOLIDATED STATEMENTS OF OPERATIONS [UNAUDITED]
- -------------------------------------------------------------------
Three months ended Nine months ended
July 31, July 31,
------- --------
1 9 9 5 1 9 9 4 1 9 9 5 1 9 9 4
------- ------- ------- -------
Revenue:
Revenue $22,356,477 $17,424,951 $65,226,161 $51,588,926
Less: Allowances 10,116,844 9,381,905 28,920,079 25,611,164
Net Revenue 12,239,633 8,043,046 36,306,082 25,977,762
---------- --------- ---------- ----------
Operating Expenses:
Operating Expenses 9,417,737 8,874,258 30,714,152 25,975,171
Depreciation and Amortization1, 863,588 1,805,311 6,509,716 5,776,527
Provision for Bad Debts 847,683 664,086 2,474,204 1,971,784
Restructuring Costs -- -- -- 1,200,000
Total Operating Expenses 12,129,008 11,343,655 39,698,072 34,923,482
---------- ---------- ---------- ----------
Income [Loss] from Operations 110,625 (3,300,609) (3,391,990) (8,945,720)
Other Revenue and [Expenses]:
Interest Expense (1,870,819) (1,347,161) (4,758,232) (3,714,595)
Interest Income 520,091 (48,325) 658,417 493,855
Other Income/[Expense] 8,570 656,158 1,083,533 823,943
Non-Operating Income -- -- -- 2,934,504
Total Other Revenue [Expenses](1,342,158) (739,328) (3,016,282) 537,707
[Loss] Before Income Taxes,
Minority Interest in Income of
Subsidiaries, and Equity in
Loss of Investees (1,231,533) (4,039,937)(6,408,272) (8,408,013)
[Provision] Benefit for Income -- -- -- --
Taxes
Minority Interest in [Loss] of
Subsidiaries (301,054) 155,897 (315,352) (13,008)
Equity in Loss of Investees -- -- -- (25,847)
--------- --------- --------- ---------
[Loss] from Continuing
Operating
Operations - Forward $(1,532,587 $(3,884,040 $(6,723,624 $(8,446,868)
See Notes to Consolidated Financial Statements.
3
<PAGE>
PRIMEDEX HEALTH SYSTEMS, INC. AND AFFILIATES
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CONSOLIDATED STATEMENTS OF OPERATIONS [UNAUDITED]
- -------------------------------------------------------------------
Three months ended Nine months ended
July 31, July 31,
-------- --------
1 9 9 5 1 9 9 4 1 9 9 5 1 9 9 4
------- ------- ------- -------
[Loss] from Continuing
Operating
Operations - Forwarded
$(1,532,587) $(3,884,040) $(6,723,624)$ (8,446,868)
Discontinued Operations:
[Loss] from the Sale
of the Accounts
Receivable of the
Discontinued
Operation Portfolio
(4,013,313) -- (4,013,313) --
[Loss] on Operations of
Discontinued
Business -- (1,635,964) -- (2,829,450)
--------- ---------- --------- ----------
Net [Loss] $(5,545,900) $(5,520,004) $(10,736,937)$(11,276,318)
Earnings Per Share:
[Loss] from Continuing $ (.04) $ (.10) $ (.17)$ (.21)
Operations
[Loss] from Operations
of Discontinued
Business Segment (.10) (.04) (.10) (.07)
------ --------- --------- ---------
Net [Loss] Per Share $ (.14) $ (.14) $ (.27) $ (.28)
========= ========= ========= =========
Weighted Average Common
Shares Outstanding 40,027,760 40,026,510 40,026,926 40,026,510
========== ========== ========== ==========
See Notes to Consolidated Financial Statements.
4
<PAGE>
PRIMEDEX HEALTH SYSTEMS, INC. AND AFFILIATES
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CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
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<TABLE>
<CAPTION>
Common Stock Retained Total
Number of Par Value Paid-in Earnings Stockholders'
Shares Amount Capital [Deficit] Equity
<S> <C> <C> <C> <C> <C>
Balance - November 1, 1994 40,026,510 $ 400,265 $102,243,835 $(53,615,159) $ 49,028,941
Capitalization
of Additional
Advances -
CareAd -- -- (2,896,628) -- (2,896,628)
Conversion of Subordinated Debentures to
Common Stock 3,750 37 29,963 -- 30,000
Net [Loss] for the nine months ended
July 31, 1995 -- -- -- (10,736,937) (10,736,937)
---------- --------- ----------- ----------- ----------
Balance - July 31, 1995 [Unaudited] 40,030,260 $ 400,302 $ 99,377,170 $(64,352,096) $ 35,425,376
========== ========== ============ ============= ==========
</TABLE>
See Notes to Consolidated Financial Statements.
5
<PAGE>
PRIMEDEX HEALTH SYSTEMS, INC. AND AFFILIATES
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CONSOLIDATED STATEMENTS OF CASH FLOWS [UNAUDITED]
- -------------------------------------------------------------------
Nine months ended
July 31,
1 9 9 5 1 9 9 4
------- -------
Cash Generated by Continuing Operations $12,429,008 $8,152,338
Cash [Utilized] by Discontinued Operations (8,966,321) (7,058,713)
Net Cash - Operating Activities 3,462,687 1,093,625
--------- ---------
Investing Activities:
Acquisitions of Imaging Centers
Net of Cash Acquired) (1,076,098) 27,982
Purchase of Property, Plant and Equipment (225,241) (469,180)
Payments to Care Advantage (2,854,168) --
Distributions to Joint Venture -- (1,006,722)
Proceeds - Sale of Equipment -- 1,171,918
Purchase of CareAdvantage, Ststems -- (6,000,000)
Reduction in ImmunoTherapeutics -- (262,507)
Net Cash - Investing Activities (4,155,507) (6,538,509)
---------- ----------
Financing Activities:
Principal Payments on Capital Leases
and Notes Payable (5,435,852) (4,250,171)
Proceeds from Short-Term Borrowings on
Notes Payable 2,505,754 1,990,614
Payment on Stockholder Notes Payable -- (3,500,000)
Payment of Equity (7,000) 1,000
Net Cash Financing Activities (2,937,098) (5,758,557)
Net [Decrease] in Cash and Cash Equivalents (3,629,918) (11,203,441)
Cash and Cash Equivalents - Beginning of Years 5,649,230 24,557,040
--------- ----------
Cash and Cash Equivalents - End of Years $2,019,312 $13,353,599
========== ===========
Supplemental Disclosures of Cash Flow Information:
Cash paid during the years for:
Interest $4,390,924 $4,821,918
Income Taxes $ -- $ 87,993
Supplemental Schedule of Non-Cash Investing and Financing Activities:
The Radnet subsidiary entered into capital leases of approximately $575,000
during the nine months ended July 31, 1995.
During the July 31, 1995 quarter, subordinated debentures totaling $30,000
were converted into 3,750 shares of the Company's common stock.
See Notes to Consolidated Financial Statements.
6
<PAGE>
PRIMEDEX HEALTH SYSTEMS, INC. AND AFFILIATES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS [UNAUDITED]
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[1] Basis of Presentation
The accompanying interim consolidated financial statements are unaudited and
have been prepared in accordance with generally accepted accounting principles
and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X and,
therefore, do not include all information and footnotes necessary for a fair
presentation of financial position, results of operations and cash flows in
conformity with generally accepted accounting principles for complete financial
statements; however, in the opinion of the management of the Company, all
adjustments consisting of normal recurring adjustments necessary for a fair
presentation of financial position, results of operations and cash flows for the
interim periods ended July 31, 1995 and 1994 have been made. The results of
operations for any interim period are not necessarily indicative of the results
for the full year. These interim consolidated financial statements should be
read in conjunction with the consolidated financial statements and notes thereto
contained in the Registrant's annual report on Form 10-K for the fiscal year
ended October 31, 1994.
Accounts Receivable and Allowance - The Company's accounts receivable from
continuing operations as of July 31, 1995 for the Radnet subsidiary are shown
net of allowances of $18,524,160 of which $13,202,169 has been deducted in
current assets and $5,321,991 has been deducted in other assets.
Property, Plant, Equipment, Depreciation and Amortization - The Company's
property, plant and equipment as of July 31, 1995 are shown net of accumulated
depreciation and amortization of $8,808,868.
Goodwill - The Company's goodwill as of July 31, 1995 is shown net of
accumulated amortization of approximately $10,233,388 for the Radnet subsidiary.
Amortization expense for the nine months ended July 31, 1995 was approximately
$3,288,565.
[2] Due from Related Parties
The amount due from related parties consisted of a $6,000,000 loan made to the
two former owners of the Radnet subsidiary in connection with the business
acquisition. This loan was originally discounted at a 7% interest rate. In
October 1993, the installment note due February 1994 was extended until August
1994. In August of 1994, the Company and the two former owners agreed to offset
approximately $3,000,000 of their liability to the Radnet subsidiary against a
$2,500,000 liability of the Company to the two former owners and the waiver by
such former owners of rights to salary and other payments aggregating $500,000.
The remaining $3,000,000 receivable from these two individuals has been further
extended from February 1, 1995 to February 1, 1997 in consideration for these
two individuals agreeing to utilize their personal assets as collateral for
other existing Radnet loans. The note is secured by stock of the parent company,
which was issued to the two former owners of the acquired subsidiary in
connection with the acquisition.
7
<PAGE>
PRIMEDEX HEALTH SYSTEMS, INC. AND AFFILIATES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS [UNAUDITED], Sheet #2
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[3] Litigation
At November 1, 1993, the Company was a defendant in a punitive class action
pending in the United States District Court for the District of New Jersey. In
March 1994, the Court denied the plaintiffs' initial motion for class
certification. The plaintiffs subsequently amended the Consolidated Class Action
Complaint and in July 1994, filed a Second Amended and Consolidated Class Action
Complaint in the matter. In the Second Consolidated Complaint, the plaintiffs
named as defendants, among others: the Company, the Company's then principal
stockholder, an entity allegedly controlled by such principal stockholder, the
underwriter of the Company's December 1992 and June 1993 public offering, a
broker dealer and its President, and another publicly owned corporation.
In the Second Consolidated Complaint, the plaintiffs identified certain alleged
"control" companies, including the Company, and alleged that the defendants
violated the federal securities laws and the Racketeer Influenced Corrupt
Organizations ["RICO"] Act by initiating and/or joining in a conspiracy and
course of conduct designed to manipulate and artificially inflate the market
prices of the stocks of the various "control" companies in order to permit the
defendants to sell "large" amounts of the "control" companies' securities to the
public at manipulated prices and reap "huge" profits. The Second Consolidated
Complaint claims damages as well as punitive damages, interest, attorneys' fees
and costs, all of which are unspecified in amount. In September of 1994, the
Court certified the matter as a class action. Subsequent thereto, three of the
defendants filed for protection from creditors pursuant to the federal
bankruptcy laws. This proceeding is currently in the discovery stage, and no
prediction can be made at this time as to its probable outcome.
Management contends that the Company was not a party to any conspiracy and did
not engage in any illegal course of conduct. Management believes that the Second
Consolidated Complaint is without merit with regard to the Company and intends
to contest same vigorously. However, as the proceeding is currently in the
discovery stage, management is unable to evaluate the likelihood of an
unfavorable outcome or to estimate the amount or range of any potential loss. At
this time, based upon the current status of this litigation, management does not
believe the outcome will have a material adverse effect on the Company in the
foreseeable future, if at all.
In March 1993, management of the Company's Primedex subsidiary was made aware of
the prior issuance of a subpoena by a federal grand jury in Los Angeles to
obtain certain records of Primedex in conjunction with a federal investigation
of an unrelated company. Subsequently, Primedex was advised of accusations of
alleged health care fraud against Primedex, which are being investigated in the
federal investigation in response to complaints made by undisclosed third
parties. On December 1, 1992, a number of Primedex locations [as well as at
least 40 locations of other worker's compensation healthcare providers] were
searched by representatives of the Los Angeles District Attorney's office in
connection with an investigation of an advertising service previously used by
Primedex's affiliated entities and the other providers concerning possible
violations of California law in connection with referral of patients. On June
22, 1994, additional searches of the premises of the Company and its Primedex
and Radnet subsidiaries were conducted by representatives of the Los Angeles
District Attorney's office pursuant to a sealed affidavit, which management has
been unable to examine, alleging violations of California penal laws concerning
securities and tax fraud, grand theft and criminal conspiracy. Management
believes that Primedex's operations have been and are in compliance with
applicable law, is unaware of any illegal activities of the Company or its
subsidiaries, and is currently cooperating with the Los Angeles District
Attorney's office in connection with its investigation.
In connection with its cessation of operations at certain of its imaging
centers, lawsuits have been filed against Radnet by the lessors of the
properties for past due rent, future rent and damage to the premises plus costs.
The monthly rent through the lease expiration dates totals approximately
$3,700,000.
8
<PAGE>
PRIMEDEX HEALTH SYSTEMS, INC. AND AFFILIATES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS [UNAUDITED], Sheet #3
- -------------------------------------------------------------------
[3] Litigation [Continued]
Radnet has asserted certain defenses in one lawsuit on the lease and has not
been required to respond at present to the other two lawsuits. No assurances can
be given as to whether any of these lawsuits will be settled or as to the amount
of damages Radnet will suffer thereunder. Radnet has accrued approximately
$1,300,000 for past due rent.
In September 1993, a former employee filed a lawsuit against Radnet and the
medical group providing professional services at the Lancaster imaging center.
The plaintiff seeks monetary damages "in excess of $1,000,000 for mental and
emotional distress and lost compensation and also seeks punitive damages,
interest, fees and costs in unspecified amounts." The defendants have denied any
liability and the matter was expected to be tried before a judge and jury in
September 1995. This case was settled for approximately $185,000 in September of
1995.
The Company's subsidiaries are currently parties to certain other litigation,
none of which is deemed material in nature.
[4] Notes Payable - Stockholders
On January 28, 1993, the Company's four principal shareholders agreed to lend an
aggregate $12,500,000 to the Company for working capital purposes in
consideration for secured notes. One shareholder agreed to loan directly to the
Company $7,500,000. Two shareholders each agreed to release the Company from the
$1,250,000 debt obligations owed to each and incurred in conjunction with the
Radnet acquisition and to convert such indebtedness to secured notes. The fourth
shareholder agreed to loan $2,500,000 of the funds escrowed for his benefit in
conjunction with the Primedex acquisition, to the Company. Each secured note was
due and payable in 18 months with interest on the unpaid balance at the rate of
10% per annum. On July 5, 1994, a principal payment of $3,500,000 was remitted
to one shareholder and the shareholder agreed to accept the $4,000,000 balance
of his note being paid in twelve equal installments, plus interest at 10%
commencing August 1, 1994. In August of 1994, this shareholder accepted a
$3,000,000 lump sum payment in satisfaction of the $4,000,000 balance. In
consideration of the agreement, the other three noteholders agreed to defer on
similar terms the notes due them. In the fourth quarter of fiscal 1994, two
shareholders, who were owed a total of $2,500,000, agreed to offset this
liability against monies owed by them to the Radnet subsidiary. In November of
1994, the fourth shareholder, who was owed $2,500,000 pursuant to a secured note
and had a contingent right to receive an additional $2,500,000 held in escrow in
conjunction with the Primedex acquisition, entered into an agreement with the
Company whereby his liability was satisfied. In connection with that agreement,
the noteholder agreed to accept in full settlement of his note, the sum of
$500,000, and the $2,500,000 held in escrow in conjunction with the Primedex
acquisition was also released to him. The difference of $2,000,000 was credited
to accrued estimated closing costs.
[5] Discontinued Operations - Primedex Subsidiary
On July 29, 1993, the Company commenced its plans to restructure its Primedex
subsidiary and to wind down its involvement in the California worker's
compensation industry. The remaining assets of the Primedex subsidiary at July
31, 1995 consisted primarily of net accounts receivable of $22,087,070 and net
property and equipment of $605,138. These assets are shown at their expected net
realizable value.
The Primedex subsidiary reduced its accrued closing costs by $4,275,619 [through
settlements or payments] for the nine months ended July 31, 1995.
Effective July 31, 1995, the Company sold substantially all of the accounts
receivable of the discontinued segment of Primedex Corporation to Bristol LP for
approximately $9,448,000 with the entire proceeds being received on August 4,
1995. The sale resulted in a loss of $4,013,313.
9
<PAGE>
PRIMEDEX HEALTH SYSTEMS, INC. AND AFFILIATES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS [UNAUDITED], Sheet #4
- -------------------------------------------------------------------
[5] Discontinued Operations - Primedex Subsidiary [Continued]
An $870,000 discontinued operations liability remains on the Company's books for
the estimated final building lease costs on the discontinued operation.
[6] New Authoritative Pronouncements
The Financial Accounting Standards Board ["FASB"] has issued Statement of
Financial Accounting Standards ["SFAS"] No. 109, "Accounting for Income Taxes,"
and SFAS 107, "Disclosure about Fair Value of Financial Instruments." The
Company adopted SFAS 109 effective November 1, 1993. Adoption of the new
statement did not have a material impact on the Company's financial position or
results of operations. SFAS 107 was adopted on October 31, 1993. The FASB also
issued SFAS 115, "Accounting for Certain Investments in Debt and Equity
Securities," which the Company adopted on November 1, 1994. Adoption of SFAS 115
did not have a material impact on the Company. In October of 1994, the FASB
issued SFAS No. 119, "Disclosure above Derivative Financial Instruments and Fair
Value of Financial Instruments." While SFAS No. 119 primarily creates new
disclosure requirements for derivative financial instruments, which the Company
does not trade in at this time, the technical disclosure amendments to SFAS No.
107 created by SFAS No. 119 will be implemented on November 1, 1995. The
adoption of SFAS No. 107 and 119 will not have a material impact on the
Company's financial position or results of operations.
[7] Subordinated Debenture Offering
On June 8, 1993, the Company's registration statement registering a total of
$25,875,000 [including an over allotment of $3,375,000] of 10% Series A
Convertible Subordinated Debentures due 2003 for public sale was declared
effective. The net proceeds to the Company were approximately $23,000,000 after
expenses of approximately $2,800,000. These costs are to be amortized over ten
years and are classified as other assets. The amortization expense for the nine
months ended July 31, 1995 and 1994 was approximately $223,908 and $223,908,
respectively. Interest expense for the nine months ended July 31, 1995 and 1994
was $1,321,100 and $1,940,625, respectively.
During the July 31, 1995 quarter, subordinated debentures totaling $30,000 were
converted into 3,750 shares of the Company's common stock.
[8] ImmunoTherapeutics Stock [ITI] - Registration and Sale
On November 24, 1993, the Company paid $162,762 to ITI in full payment of the
balance of the purchase price owed with respect to the shares of ITI common
stock purchased in December of 1991. On December 2, 1993, a registration
statement of ITI was declared effective registering an aggregate of 1,304,224
shares of ITI common stock owned by the Company. In consideration for the filing
of such registration statement, the Company granted to the Chief Executive
Officer of ITI an option expiring on December 31, 2003 to purchase 575,000
shares of ITI stock owned by the Company at a purchase price of $3.00 per share
and granted this officer a proxy during the option term to vote such shares.
During the three months ended January 31, 1994, the Company sold 1,304,224
shares of ITI stock for net proceeds of approximately $2,934,504. This resulted
in a non-operating gain of $2,934,504.
As of July 31, 1995, the Company owns 1,150,001 shares of common stock of ITI,
which represents approximately a 19% interest in ITI. One-half of such shares
are subject to the above-described purchase option. As of July 31, 1995 and
1994, this investment is carried on the cost method.
10
<PAGE>
PRIMEDEX HEALTH SYSTEMS, INC. AND AFFILIATES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, [UNAUDITED] Sheet #5
- -------------------------------------------------------------------
[9] Acquisition and Discontinued Operations - Spin-Off of Care Advantage, Inc.
On December 23, 1993, the Company acquired Care Advantage Health Systems
["CAHS"] [formerly known as Advantage Health System, Inc.], a newly organized
corporation formed to provide medical and surgical utilization reviews for major
providers of health insurance, for $6,000,000 cash and granted options
exercisable to purchase an aggregate 1,000,000 shares of PHS common stock at an
exercise price of $9.00 per share.
In August of 1994, Care Advantage, Inc. ["Care Ad"], a wholly-owned subsidiary
of the Company, was incorporated in Delaware as a holding company to own all of
the issued and outstanding common stock of CAHS. On October 28, 1994, the
Company declared a dividend of 40,026,510 shares of the common stock of CareAd
to stockholders of record of the Company's common stock at the close of business
on November 7, 1994. The dividend was at a rate of one share of CareAd common
stock for each share of the Company's common stock owned at the Record Date. At
October 31, 1994, the Company had 40,026,510 shares of common stock outstanding.
An additional 1,700,000 shares of CareAd common stock owned by the Company were
reserved to be used in a future exchange offer for the holders of the Company's
convertible debentures. The CareAd common stock were not physically transferred
to the Company's stockholders until such time as the registration of the CareAd
shares under the Securities Act of 1933 was effective pursuant to a registration
statement filed with the Securities and Exchange Commission. The CareAd common
stock shares totaling 40,026,510 were distributed on October 31,1994 to an
independent escrow agent for the benefit of the Company's stockholders. The
distribution to the Company's stockholders was made on June 28, 1995.
[10] Acquisitions
[A] Santa Clarita - Effective January 1, 1995, Radnet Management acquired the
remaining 15% interest in the Santa Clarita Imaging Center Joint Venture.
Effective February 1, 1995, eight of the Center's limited partners were paid
$5,000 each for their share in the related entity.
[B] Antelope Valley MRI - In January 1995, the Company settled a lawsuit and
agreed to a "buy-out" price of $1,700,000 of which Radnet paid $400,000 upon
closing. Of the $1,300,000 balance, an aggregate $300,000 is payable in four
quarterly installments in calendar 1995 with interest at the rate of 8% per
annum until January 1, 1996 and then payable in 16 quarterly installments of
principal and interest through October 1, 1999.
[C] Women's Diagnostic Medical Group - Effective January 1, 1995, the Company
acquired all of the assets of Women's Diagnostic Medical Group for $200,000,
consisting of a lump-sum payment made on January 4, 1995. The majority of the
purchase, $200,000, was for the acquisition of 50% of the business owned by a
group of unrelated limited partners. The remaining 50% interest, owned by Dr.
Berger and Dr. Krane, was acquired for $1. This entity will become part of the
Tower Division.
[D] Lancaster - Effective November 1, 1994, Radnet Management acquired the
remaining 50% interest in the Lancaster Radiology Medical Group Joint Venture.
The "buy-out" purchase price was $872,194 of which $436,096 was paid upon
closing, the balance being payable in 26 consecutive quarterly installments of
principal in the amount of $16,773 through December 1997 together with interest
at the rate of 10% per annum.
11
<PAGE>
PRIMEDEX HEALTH SYSTEMS, INC. AND AFFILIATES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS [UNAUDITED], Sheet #6
- -------------------------------------------------------------------
[11] Revised Separation Agreement
[A] Separation Agreement - On January 31, 1995, the Company and CareAd executed
a separation agreement concerning additional financial support to be provided by
the Company, the transfer of certain Company senior management to comprise
CareAd's senior management and the disposition of the 1,700,000 shares of CareAd
common stock to be retained by the Company, but controlled by CareAd, after the
distribution. The separation agreement was amended on April 24, 1995 [the
"Revised Separation Agreement"].
The Company had previously agreed to capitalize its $7,000,000 of cash advances
made to or on behalf of CareAd. As part of the Revised Separation Agreement, the
Company further agreed to make an additional $2,700,000 in cash advances to
CareAd as a capital contribution, and to release CareAd from any obligation to
repay the Company an aggregate $235,823 in additional advances paid by the
Company directly to or on behalf of CareAd. With respect to the $2,700,000 of
additional advances, CareAd received $1,000,000 upon the execution and closing
of the Revised Separation Agreement. The Company paid $425,000 on April 24, 1995
and $1,000,000 on July 25, 1995. The balance of $275,000 was forgiven.
Concerning the 1,700,000 shares of CareAd common stock to be retained by the
Company after the distribution , the Company has agreed to file for a registered
exchange offer under the Securities Act of 1933 with the Securities and Exchange
Commission within eighteen months after the distribution, offering the holders
of the Company's debentures the right to exchange the debentures for the
1,700,000 retained shares. The exchange package, which has not yet been
determined, may also include other consideration. CareAd has agreed, within
eighteen months after the completion of the exchange offer and subject to
certain conditions, to file a registration statement under the Securities Act of
1933 with the Commission registering any of the retained shares not distributed
in the exchange offering for public offer and sale by the Company for the
Company's own account, and the Company has agreed to sell such shares. The
Company has agreed that CareAd's Board of Directors will hold all voting rights
with respect to the retained shares until transfer of any such shares pursuant
to the exchange offer, and, thereafter, will continue to hold all voting rights
with respect to the remaining shares until public sale of such shares.
[12] Provision for Closed and Restructured Imaging Centers
During the year ended October 31, 1994, management established a restructuring
provision of approximately $3,700,000 to implement an operational restructuring
plan developed to strengthen Radnet's competitive position and to minimize the
ongoing effects of continuing market dynamics. This plan encompasses the
consolidation or closure of certain centers, adjustments to certain professional
and technical contractual arrangements, changes to the equipment complement or
service offerings of certain centers, and legal and settlement costs.
[13] Refinancing
[A] DVI Business Credit - An additional line of credit was obtained in December
of 1994 by the Radnet subsidiary in connection with the combined operations of
Tower and Beverly/Roxsan [the "Tower Division"]. Under the revolving line of
credit agreement, due December 1997, the Tower Division may borrow the least of
50% to 75% of the eligible accounts receivable, $4,000,000, or the prior 90
days' cash collections. The credit line is collateralized by approximately 80%
of the Tower Division's accounts receivable. At July 31, 1995, the Company had
$35,000 in available credit under this line of credit. The prime rate at July
31, 1995 was 8-1/2%; the rate per the agreement is prime plus 4-1/2%. In July
1995, a total of $1,512,448 has been borrowed on this line.
[B] Note Payable - A note payable that was due January 1, 1995 for $1,500,000
was not repaid as scheduled by the Radnet subsidiary. This liability was settled
in August of 1995 for $890,000 with a lump-sum payment.
. . . . . . . . . . .
12
<PAGE>
Item 2:
PRIMEDEX HEALTH SYSTEMS, INC. AND AFFILIATES
- -------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
- -------------------------------------------------------------------
- -------------------------------------------------------------------
Discussion of Operations for the nine months ended July 31, 1995 vs. July 31,
1994
Background
Primedex Health Systems, Inc. [PHS] [formerly, CCC Franchising Corp.] was
incorporated on October 21, 1985.
On November 1, 1990, the Company acquired a 51% interest in Viromedics, Inc.
[VMI] for $700,000. On February 18, 1992, Future Medical Products [FMP], the
parent corporation of VMI, exercised its right to repurchase one-half of the VMI
stock from PHS at a price of $700,000. The Company owns approximately 19% of
VMI's outstanding capital stock at July 31, 1995.
As of January 31, 1992, the Company's wholly-owned subsidiary, CCC Franchising
Acquisition Corp. I, entered into an asset purchase agreement with Primedex
Corporation for approximately $46,250,000. On July 29, 1993, the Company
announced its plans to restructure its Primedex subsidiary to focus on providing
financial, management, marketing and data services to health care providers and
other businesses, and to wind down its involvement in the California worker's
compensation industry. Accordingly, the operating results of this subsidiary
have been reclassified as a discontinued line of business, and the appropriate
prior period amounts have been restated. The October 31, 1994 and July 31, 1995
Balance Sheets reflect the consolidation with this subsidiary.
As of April 30, 1992, the Company's wholly-owned subsidiary, CCC Franchising
Acquisition Corp. II, entered into a purchase agreement with Radnet Management,
Inc. and certain related companies [Radnet] for approximately $66,000,000. The
October 31, 1994 and July 31, 1995 Balance Sheets reflect the assets and
liabilities purchased from Radnet. The Statements of Operations and Cash Flows
for the nine months ended July 31, 1995 and 1994 reflect the operations and cash
transactions with Radnet.
On December 23, 1993, the Company acquired Advantage Health Systems, Inc. [AHS],
a newly organized corporation formed to provide medical and surgical utilization
reviews for major providers of health insurance, for $6,000,000 in cash. On
August 26, 1994, the Company announced a plan to spin-off its subsidiary, Care
Advantage, Inc. [CareAd], which owns AHS. The operations of this subsidiary have
been classified as a discontinued line of business.
The following discussion relates to the continuing activities of Primedex Health
Systems, Inc.
Results of Operations
The discussion of the results of continuing operations includes Radnet for the
nine months ended July 31, 1995 and 1994.
On July 29, 1993, the Company announced its plans to restructure its Primedex
subsidiary and to wind down its involvement in the California worker's
compensation industry. Accordingly, the operating results of this subsidiary
were classified as a discontinued line of business, and appropriate prior period
amounts were restated.
On August 26, 1994, the Company announced a plan to spin-off the CareAd
subsidiary. Accordingly, the operating loss of $2,829,450 of this subsidiary for
the nine months ended July 31, 1994 has been classified as a discontinued line
of business.
13
<PAGE>
PRIMEDEX HEALTH SYSTEMS, INC. AND AFFILIATES
- -------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
- -------------------------------------------------------------------
- -------------------------------------------------------------------
Discussion of Operations for the nine months ended July 31, 1995 vs. July 31,
1994
Results of Operations [Continued]
For the nine months ended July 31, 1995 and 1994, the Company had operating
[losses] from continuing operations of $(3,391,990) and $(8,945,720),
respectively. Radnet realized an operating loss of approximately $(1,463,019)
and $(6,560,000) for the nine months ended July 31, 1995 and 1994, respectively.
For the nine months ended July 31, 1995 and 1994, Radnet realized net revenues
of approximately $36,300,000 and $26,000,000, respectively. For the nine months
ended July 31, 1995, operating expenses totaled approximately $30,714,152 of
which approximately $29,014,089 were incurred by the Radnet operation, and
approximately $1,700,063 were incurred by PHS, the parent corporation. Operating
expenses for the nine months ended July 31, 1994 were approximately $26,000,000.
Operating expenses for Radnet consisted primarily of wages and compensation of
approximately $15,273,122, depreciation and amortization of approximately
$6,280,808 and other general and administrative expenses of approximately
$7,460,159. Wages and compensation of approximately $681,824 were incurred by
PHS.
Radnet is continuing to be impacted adversely by the effects of managed care and
heavy competition for radiological procedures. Accordingly, Radnet provided
$4,700,000 in contractual adjustments relating to its accounts receivable in
fiscal 1994. A portion of the accounts receivable contractual adjustments were
related to reductions in the worker's compensation fee schedule effective
January 1, 1994. However, Radnet management believes that price reductions for
radiological procedures will be offset over time by an increase in the number of
procedures and in contracts Radnet obtains from managed care organizations.
Radnet is continuing to improve its cost structures and delivery systems as a
result of actions begun in 1994. It also aggressively pursued new contracts and
established an operational restructuring plan to minimize the ongoing effects of
continuing market dynamics and to strengthen its competitive position for the
future. This plan anticipates the consolidation or closure of certain centers,
adjustments to certain professional and technical contractual arrangements,
reductions in fixed expenditures and changes to the equipment complement or
service offerings of certain centers.
In addition, a major earthquake in Southern California on January 17, 1994
affected the Northridge and Santa Clarita imaging centers and caused disruptions
in business throughout the area. Although all of the imaging centers including
Northridge and Santa Clarita have continued to operate, the disruption caused by
the earthquake also adversely affected Radnet's business in January and during
the first half of February 1994. There has been no continuing adverse effect on
Radnet's business due to the earthquake since such time.
Primedex reduced its accrued closing costs by approximately $11.240,000 [through
settlements, payments and the sale of the accounts receivable portfolio] for the
nine months ended July 31, 1995. The Primedex subsidiary's operating results are
reflected as discontinued operations. The Primedex portfolio was sold on August
4, 1995 [effective July 31, 1995] for $9,448,061.
For the nine months ended July 31, 1995 and 1994, interest income was
approximately $658,000 and $494,000, respectively. For the nine months ended
July 31, 1995 and 1994, interest expense was approximately $4,800,000 and
$3,700,000, respectively. Interest of approximately $900,000 was reclassified
from interest expense of the continuing operations and was allocated to accrued
estimated closing costs for the nine months ended July 31, 1995. Interest
expense of Radnet was primarily attributable to equipment financing and line of
credit.
For the nine months ended July 31, 1995 and 1994, the Company had net [losses]
from continuing operations of $(6,723,624) and $(8,446,868), respectively.
14
<PAGE>
PRIMEDEX HEALTH SYSTEMS, INC. AND AFFILIATES
- -------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
- -------------------------------------------------------------------
- -------------------------------------------------------------------
Discussion of Operations for the nine months ended July 31, 1995 vs. July 31,
1994
Liquidity and Capital Resources
The following discussion on liquidity and capital resources includes Primedex
and Radnet as of July 31, 1995.
Cash decreased for the nine months ended July 31, 1995 and 1994 by $3,629,918
and $11,203,441, respectively. Cash generated from continuing operations for the
nine months ended July 31, 1995 and 1994 was $12,429,008 and $8,152,338,
respectively. Cash utilized for discontinued operations for the nine months
ended July 31, 1995 and 1994 was $8,966,321 and $7,058,713, respectively. Cash
utilized for investing activities for the nine months ended July 31, 1995 and
1994 was $4,155,505 and $6,538,509, respectively. Cash utilized for financing
activities for the nine months ended July 31, 1995 and 1994 was $2,937,098 and
$5,758,557, respectively. During the nine months ended July 31, 1995, the
Company made principal payments to one individual totaling $500,000 on a
stockholder note payable and made advances to CareAdvantage of $2,854,168. For
the nine months ended July 31, 1995, approximately $5,436,000 was made in debt
and lease payments and approximately $2,506,000 was advanced from short-term
borrowings.
At July 31, 1995, the Company had working capital of $1,562,398 as compared to a
working capital of $10,242,905 at July 31, 1994, a decrease of $8,680,506. This
decrease is primarily attributable to the operating losses sustained by the
Company.
For the nine months ended July 31, 1995, the Primedex subsidiary generated
approximately $1,421,743 in cash after it repaid PHS $6,531,272 and made
principal repayments on notes payable and capital lease obligations of
approximately $59,000.
The Radnet operation utilized cash of $700,982 for the nine months ended July
31, 1995.
Radnet leases equipment under capital leases with annual payments for each of
the next five years estimated to be approximately $3,819,891, $3,698,868,
$3,687,532, $3,591,253 and $805,164, respectively. In addition, Radnet's
noncancellable operating leases for use of its facilities and certain medical
equipment will average approximately $3,000,000 in annual payments over the next
five years.
Radnet's anticipated debt payment through July 31, 1996 will be approximately
$12,354,517. The following four years, the annual payments will average
approximately $4,228,188. During the nine months ended July 31, 1995, Radnet
paid approximately $4,900,000 on debt and lease obligations and received
proceeds of approximately $2,506,000 on debt financing. Radnet entered into
approximately $575,000 in new capital leases for the nine months ended July 31,
1995.
Radnet's working capital needs are currently provided under two lines of credit.
One line of credit for $7,000,000 is accessible based upon the eligible accounts
receivable available for collateralization. Borrowings under this line are
repayable together with interest at an annual rate equal to the greater of (a)
the bank's prime rate plus 4%, or (b) 10%. At July 31, 1995, approximately
$5,186,814 was outstanding under this line. The bank holds a first lien on
substantially all of Radnet's assets to secure repayment under the line of
credit. A second line of credit was obtained in December of 1994. Under this
agreement, due December 1997, the Company may borrow the least of 50% to 75% of
the eligible accounts receivable, $4,000,000, or the prior 90 days' cash
collections. The credit line is collateralized by approximately 80% of the Tower
division's accounts receivable. Interest is at the rate of prime plus 4-1/2%. At
July 31, 1995, approximately $1,512,448 was outstanding under the second line of
credit.
PHS made approximately $2,400,000 in advances to Radnet during the nine months
ended July 31, 1995.
15
<PAGE>
PRIMEDEX HEALTH SYSTEMS, INC. AND AFFILIATES
- -------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
- -------------------------------------------------------------------
- -------------------------------------------------------------------
Discussion of Operations for the nine months ended July 31, 1995 vs. July 31,
1994
Liquidity and Capital Resources [Continued]
Effective October 1, 1994, Radnet merged its newly consolidated Beverly/Roxsan
facility with that of Tower Imaging Group. The cost of acquiring Tower's
existing medical equipment was $3,415,000, which was funded by a loan in that
amount. As part of the purchase agreement, goodwill was recorded for
approximately $9,850,000. The goodwill of $9,085,000 is the Company's estimated
future payments representing 6.9% of this division's cash receipts to be paid as
additional professional fees over the next six years. In addition, the Company
is obligated for professional fees due to Tower at 15.4% for total combined fees
of 22.3%. The remaining portion of goodwill, $765,000, was recognized to reflect
the assumption of an operating liability incurred as part of the acquisition.
The Antelope Valley MRI Center option was exercised during 1993, and Radnet's
partner filed a lawsuit against Radnet seeking to obtain approximately $2.8
million as the purchase price for its interest, instead of Radnet's position
that the fixed formula results in a price of $1.35 million. Although it was
Radnet's position that this option was legally invalid, and Radnet was,
therefore, not obligated to purchase its partner's interest in the Antelope
Valley facility, Radnet and its partner continued discussions for the buy-out of
this partner's interest. In January 1995, the Company settled this lawsuit and
agreed to a "buy-out" price of $1,700,000 of which Radnet paid $400,000 upon
closing. Of the $1,300,000 balance, an aggregate $300,000 is payable in four
quarterly installments in calendar 1995 with interest at the rate of 8% per
annum until January 1, 1996 and the remaining $1,000,000 payable in 16 quarterly
installments of principal and interest through October 1, 1999.
The Radnet subsidiary continues to implement its restructuring plan, which
includes additional investments in marketing and sales resources and, for
certain imaging centers, enhancements to their equipment complement. While
considerable improvements in operations have been achieved and cost reductions
effected, management now believes that market conditions will continue to
adversely affect Radnet and cause fiscal 1995 to result in a minimal operating
profit. While an operating loss was anticipated for the second quarter of fiscal
1995, results of operations fell below expectations due to revenue shortfalls
from greater than expected seasonal variations, caused by severely adverse
weather conditions, and the adverse impact on referrals caused by both federal
and state self-referral legislation at those centers in which buy-outs were
still in process during the quarter, and costs, primarily due to transition at
the new Tower division, exceeding expectations. Both additional operating
experience during fiscal 1995 and acceleration of certain portions of the
restructuring plan begun in 1994 are required before the operating targets are
revised, either upwards or downwards.
In connection with ceasing operations at certain of the Radnet imaging centers,
lawsuits have been filed against the Radnet subsidiary by lessors of the
properties for past due rent, future rent and damages to the properties plus
certain other costs. The aggregate monthly rentals through the terms of each of
the related leases approximate $3,700,000. The Radnet subsidiary has and will
assert defenses to each of these lawsuits; however, no assurances can be given
that any of these suits will settle or as to the amount of damages, if any,
Radnet will incur. Radnet has accrued approximately $1,300,000 for past due
rent.
In September 1993, a former employee filed a lawsuit against the Radnet
subsidiary and the medical group providing professional services at the
Lancaster imaging center. The plaintiff seeks damages exceeding $1,000,000 for a
variety of reasons, including punitive damages. The defendants have denied any
liability and the case settled for approximately $185,000.
The Radnet subsidiary is also a party to a number of other lawsuits, none of
which are deemed to be material in nature.
16
<PAGE>
PRIMEDEX HEALTH SYSTEMS, INC. AND AFFILIATES
- -------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
- -------------------------------------------------------------------
- -------------------------------------------------------------------
Discussion of Operations for the nine months ended July 31, 1995 vs. July 31,
1994
Liquidity and Capital Resources [Continued]
The Company had previously agreed to capitalize its $7,000,000 of cash advances
made to or on behalf of CareAd. As part of the Revised Separation Agreement, the
Company further agrees to make an additional $2,700,000 in cash advances to
CareAd as a capital contribution, and to release CareAd from any obligation to
repay the Company an aggregate $235,823 in additional advances paid by the
Company directly to or on behalf of CareAd. With respect to the $2,700,000 of
additional advances, CareAd received $1,000,000 upon the execution and closing
of the Revised Separation Agreement. The Company paid $425,000 on April 24, 1995
and $1,000,000 on July 25,1995. The balance of $275,00 was forgiven.
There have been no known trends or uncertainties, favorable or unfavorable, in
the Company's capital resources during the quarter ended July 31, 1995.
Management's efforts are focused for fiscal 1995 in fortifying the Radnet
subsidiary.
Management's plans for the Radnet subsidiary include aggressively pursuing new
contracts and having established an operational restructuring plan to minimize
the ongoing effects of continuing market dynamics and to strengthen its
competitive position for the future. This plan anticipates the consolidation or
closure of certain centers, adjustments to certain professional and technical
contractual arrangements, reductions in fixed expenditures and changes to the
equipment complement or service offerings of certain centers. It is anticipated
that the Company will be able to fund its programs internally or through the
Radnet subsidiary.
New Authoritative Pronouncements
The Financial Accounting Standards Board ["FASB"] has issued Statement of
Financial Accounting Standards ["SFAS"] No. 109, "Accounting for Income Taxes,"
and SFAS 107, "Disclosure about Fair Value of Financial Instruments." The
Company adopted SFAS 109 effective November 1, 1993. Adoption of the new
statement did not have a material impact on the Company's financial position or
results of operations. SFAS 107 has been adopted on October 31, 1993. The FASB
has also issued SFAS 115, "Accounting for Certain Investments in Debt and Equity
Securities," which the Company will adopt on November 1, 1994. In October of
1994, the FASB issued SFAS No. 119, "Disclosure above Derivative Financial
Instruments and Fair Value of Financial Instruments." While SFAS No. 119
primarily creates new disclosure requirements for derivative financial
instruments which the Company does not trade in at this time, the technical
disclosure amendments to SFAS No. 107 created by SFAS No. 119 will be
implemented on November 1, 1995. The adoption of SFAS No. 107 and 119 will not
have a material impact on the Company's financial position or results of
operations.
17
<PAGE>
PRIMEDEX HEALTH SYSTEMS, INC. AND AFFILIATES
- -------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
- -------------------------------------------------------------------
- -------------------------------------------------------------------
Discussion of Operations for the nine months ended July 31, 1995 vs. July 31,
1994
Inflation
To date, inflation has not had a material effect on the Company's operations.
18
<PAGE>
Item 6: Exhibits and Reports on Form 8-K
PRIMEDEX HEALTH SYSTEMS, INC. AND AFFILIATES
PART II - OTHER INFORMATION
- -------------------------------------------------------------------
During the Quarter ended July 31, 1995, the Company filed a current
report on Form 8-K for June 5, 1995 reporting the following items.
Item 1. Change in Control - reported the purchase of 10,000,000 shares of
the Company's Common Stock by Howard G. Berger, M.D. and that by virtue of his
stock ownership, the fact that he is a director and executive officer of the
Company and chairman of its RadNet subsidiary, Dr. Berger may be deemed the
controlling person of the Company.
Item 5 - Other Events
(a) - reported the April 24, 1995 Separation Agreement between the
Company and its CareAdvantage, Inc. subsidiary ["CareAd"] pursuant to which the
Company agreed to make an additional $2,700,000 in cash advances to CareAd as a
capital contribution and to release CareAd from any obligation to repay $235,823
in additional advances previously made, the resignation of Robert T. Caruso as
president and chief executive officer of the Company and the election of Herman
Rosenman as president and chief executive officer. Also reported the
resignations in May 1995 of Andrew C. Alson, Roger Barnett, Roger A. Bodman and
Peter W. Rodino, Jr. as directors of the Company.
Item 7 - Exhibits
10.21 Stock Purchase Agreement dated as of June 2, 1995 among Howard
G. Berger, Robert E. Brennan, the Company and Care Ad.
10.22 Separation Agreement dated April 20, 1995 between the Company
and CareAd.
19
<PAGE>
PRIMEDEX HEALTH SYSTEMS, INC. AND AFFILIATES
- -------------------------------------------------------------------
SIGNATURES
- -------------------------------------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Primedex Health Systems, Inc, and Affiliates
[Registrant]
September 18, 1995 By:
Herm Rosenman, President, Principal Executive
Officer and Director
By:
Howard G. Berger, M.D. Principal Financial
Officer and Director
20
<PAGE>
PRIMEDEX HEALTH SYSTEMS, INC. AND AFFILIATES
- -------------------------------------------------------------------
SIGNATURES
- -------------------------------------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Primedex Health Systems, Inc, and Affiliates
[Registrant]
September 18, 1995 By:/s/ Herm Rosenman
Herm Rosenman, President, Principal Executive
Officer and Director
By:/s/ Howard G. Berger
Howard G. Berger, M.D. Principal Financial
Officer and Director
20
<PAGE>
21
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AND THE CONSOLIDATED STATEMENTS OF OPERATIONS
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> JUL-31-1995
<CASH> 2,019,312
<SECURITIES> 0
<RECEIVABLES> 22,414,009
<ALLOWANCES> 10,116,844
<INVENTORY> 0
<CURRENT-ASSETS> 28,372,556
<PP&E> 22,353,749
<DEPRECIATION> 1,863,588
<TOTAL-ASSETS> 121,979,256
<CURRENT-LIABILITIES> 26,810,158
<BONDS> 0
0
0
<COMMON> 400,302
<OTHER-SE> 35,425,376
<TOTAL-LIABILITY-AND-EQUITY> 121,979,256
<SALES> 22,356,477
<TOTAL-REVENUES> 12,239,633
<CGS> 0
<TOTAL-COSTS> 12,129,008
<OTHER-EXPENSES> (1,342,158)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (1,870,819)
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,532,587)
<DISCONTINUED> (4,013,313)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,545,900)
<EPS-PRIMARY> (.14)
<EPS-DILUTED> (.14)
</TABLE>
