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NOTE 9 - CONTROLLING AND NONCONTROLLING INTERESTS | 12 Months Ended
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Jun. 30, 2014
Noncontrolling Interest [Abstract] |
NOTE 9 - CONTROLLING AND NON CONTROLLING INTERESTS | NOTE 9 – CONTROLLING AND NONCONTROLLING INTERESTS On February 13, 2013 the Company entered into an agreement with outside investors to acquire a 50.5% controlling interest in a newly formed limited liability company, Health Diagnostics Management LLC (HDM). According to the February 13, 2013 LLC operating agreement of HDM there are two classes of members; Class A members and one Class B member. The Class A members have an ownership interest of 49.5% of HDM. The Class B member (HMCA) has an ownership of 50.5% of HDM. On all matters on which members may vote every member is entitled to cast the percentage of votes equal to their percentage of ownership interest. Profits and losses an all items of income, gain or loss, deductions or other allocations of the Company will be allocated among the members in the same proportions as their membership interests in the Company bear to all the Class A and Class B membership interests of the Company in the aggregate outstanding. All of the depreciation and amortization of the assets of the Company will be allocated solely to the Class A members, unless and until their interests have been redeemed by the Company in full pursuant to the provisions of the operating agreement. During March 2013 the Company contributed $20,200,000 to HDM and the group of outside investors contributed $19,800,000 for its non-controlling membership interest. To fund its capital contribution the Company borrowed a total of $14,000,000 from a bank in the form of a term loan aggregating $11,000,000 and a revolving credit loan aggregating $3,000,000. The term loan is payable in 60 consecutive monthly installments, commencing September 1, 2013. The term loan bears interest at 4.75% per annum and is payable monthly. The revolving credit loan is due March 5, 2016. The Company can prepay the loan in whole or in part in multiples of $100,000 at any time without penalty. The revolving credit note bears interest at a rate of 4% per annum and is payable monthly. All borrowings under the loan agreements are collateralized by substantially all of the Company’s assets. The loan agreements also contain certain financial covenants that must be met on a periodic basis. On March 5, 2013 HDM purchased from Health Diagnostics, LLC (“HD”) and certain of its subsidiaries, a business managing twelve (12) Stand-Up® MRI Centers and two (2) other scanning centers located in the States of New York and Florida for a total purchase price (including consideration of $1.5 million to outside investors) aggregating $35.9 million. Concurrently with the acquisition, HDM entered into several consulting and non-competition agreements for a consideration of $4.1 million. The acquisition was accounted for using the purchase method in accordance with ASC 805, “Business Combinations”. The accompanying consolidated financial statements include the operations of HDM from the date of acquisition. The Company recognizes and measures goodwill as of the acquisition date, as the excess of the fair value of the consideration paid over the fair value of the identified net assets acquired. The following table summarizes the estimated fair values of the assets and liabilities assumed at the acquisition date:
Management fee receivable |  | $ | 6,667,259 |
Medical receivables |  |  | 7,389,953 |
Prepaid expenses and other current assets |  |  | 10,262 |
Property and equipment |  |  | 14,912,650 |
Intangible assets |  |  | 9,200,000 |
Goodwill |  |  | 1,767,098 |
Other assets |  |  | 332,949 |
Other current liabilities |  |  | (6,323 | )
Long term debt |  |  | (273,848 | )
Net assets acquired |  | $ | 40,000,000 |
The purchase price was allocated to the tangible and intangible assets and liabilities assumed based on estimates of their respective fair values at the date of acquisition with the remaining unallocated purchase price recorded as goodwill. Management is responsible for the valuation of net assets acquired and considered a number of factors, including valuations and appraisals, when estimating the fair values and estimated useful lives of acquired assets and liabilities. The intangible assets, excluding goodwill, are being amortized on a straight-line basis over their weighted average lives as follows:
|  |  | Fair Value |  |  |  |  |
Non compete |  | $ | 4,100,000 |  |  |  | 7 years |
Customer relationships |  |  | 3,800,000 |  |  |  | 20 years |
Developed software |  |  | 1,300,000 |  |  |  | 5 years |
Total intangible assets |  | $ | 9,200,000 |  |  |  |  |
The following unaudited pro forma results of operations for the twelve months ended June 30, 2013 assumes that the above acquisitions were made at the beginning of the year of acquisition. The unaudited pro forma information does not purport to be indicative of the results that would have been obtained if the acquisitions had actually occurred at the beginning of the year prior to acquisition, nor of the results that may be reported in the future.
|  | Year ended June 30, 2013
Total Revenues - Net |  |  | 69,723,542 |
Net Income - Controlling Interests |  |  | 17,442,337 |
Net Income Available to Common Stockholders |  |  | 16,294,377 |
Net Income Available to Class A Non-Voting Preferred Stockholders |  |  | 855,597 |
Net Income Available to Class C Common Stockholders |  |  | 292,363 |
Basic Net Income Per Common Share Available to Common Stockholders |  |  | 2.75 |
Diluted Net Income Per Common Share Available to Common Stockholders |  |  | 2.69 |
Basic and Diluted Income Per Share - Common C |  |  | 0.76 |
Weighted Average Basic Shares Outstanding |  |  | 5,933,318 |
Weighted Average Diluted Shares Outstanding |  |  | 6,060,822 |
Weighted Average Basic and Diluted Shares Outstanding - Class C Common |  |  | 382,513 |
HDM’s total net revenues and income from operations for the period from the acquisition date (March 5, 2013) to June 30, 2013 was $14,834,143 and $1,958,714, respectively. Amount of each class of members’ equity as of June 30, 2014 and 2013
|  | June 30, 2014 |  | June 30, 2013
|  | Class A Members |  | Class B Member |  | Class A Members |  | Class B Member
Opening Members’ Equity |  | $ | 19,526,475 |  |  | $ | 20,763,830 |  |  | $ | — |  |  | $ | — |
Share of Net Income |  |  | 2,266,473 |  |  |  | 4,566,186 |  |  |  | 543,225 |  |  |  | 1,397,080 |
Contributions |  |  | — |  |  |  | — |  |  |  | 19,800,000 |  |  |  | 20,200,000 |
Distributions |  |  | (4,133,250 | ) |  |  | (4,216,750 | ) |  |  | (816,750 | ) |  |  | (833,250 | )
Ending Members’ Equity |  | $ | 17,659,698 |  |  | $ | 21,113,266 |  |  | $ | 19,526,475 |  |  | $ | 20,763,830 |
On May 2, 2011, the Company completed a private placement of equity and succeeded in raising $6,000,000. The offering consisted of Preferred Class A membership interests in a newly formed limited liability company, Imperial Management Services, LLC (“Imperial”). The Class B membership interests in Imperial, all of which were retained by the Company’s subsidiary, HMCA, hold a 75% equity interest in Imperial. The Class A membership interests are entitled to receive a dividend of 18% per annum of their cash capital contribution of $6,000,000. HMCA contributed all of its assets, together with its liabilities, to Imperial as HMCA’s capital contribution. The Imperial operating agreement provides for the Class A members to receive priority distributions until their original capital contributions are returned. Dividends are payable quarterly beginning August 1, 2011. On May 1, 2014 and on May 1, 2013, the Company returned a portion of the Class A Members capital contribution in the amount of $1,125,100 and $1,424,900, respectively. As of June 30, 2014, the Company’s subsidiary, HMCA, now owns approximately 91% interest in Imperial Management Services. Amount of each class of members’ equity as of June 30, 2014 and 2013
|  | June 30, 2014 |  | June 30, 2013
|  |  | Class A Members |  |  |  | Class B Member |  |  |  | Class A Members |  |  |  | Class B Member |
Opening Members’ Equity |  | $ | 3,599,519 |  |  | $ | 7,772,781 |  |  | $ | 4,918,365 |  |  | $ | 3,824,945 |
Share of Net Income |  |  | 536,913 |  |  |  | 3,306,536 |  |  |  | 959,254 |  |  |  | 3,947,836 |
Contributions |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Distributions |  |  | (607,520 | ) |  |  | — |  |  |  | (853,200 | ) |  |  | — |
Redemption |  |  | (1,125,100 | ) |  |  | — |  |  |  | (1,424,900 | ) |  |  | — |
Ending Members’ Equity |  | $ | 2,403,812 |  |  | $ | 11,079,317 |  |  | $ | 3,599,519 |  |  | $ | 7,772,781 |
On May 1, 2010, the Company purchased a 15.2% interest from an unrelated party of an entity that provides management services to a diagnostic center in the New York Metropolitan area. On January 1, 2011, the Company purchased an additional 34.8% interest by the issuance of a promissory note of $400,000. Commencing January 1, 2011, the Company consolidates the activity of this entity. On June 1, 2013, the Company purchased from the noncontrolling members their remaining 50% interest for $700,000. The Company also has a 50% controlling interest in an entity which the Company consolidates, that provides management services to a diagnostic center in the New York Metropolitan area. The center began operations during January 2012. The noncontrolling interest as of June 30, 2014 and 2013 aggregated $531,474 and $559,221, respectively.

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- Definition The entire disclosure for noncontrolling interest in consolidated subsidiaries, which could include the name of the subsidiary, the ownership percentage held by the parent, the ownership percentage held by the noncontrolling owners, the amount of the noncontrolling interest, the location of this amount on the balance sheet (when not reported separately), an explanation of the increase or decrease in the amount of the noncontrolling interest, the noncontrolling interest share of the net Income or Loss of the subsidiary, the location of this amount on the income statement (when not reported separately), the nature of the noncontrolling interest such as background information and terms, the amount of the noncontrolling interest represented by preferred stock, a description of the preferred stock, and the dividend requirements of the preferred stock. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.31) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 810 -SubTopic 10 -Section 50 -Paragraph 1A -URI http://asc.fasb.org/extlink&oid=18733093&loc=SL4573702-111684 + Details
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