FORM 8
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT TO APPLICATION OR REPORT
Filed pursuant to Section 12, 13, or 15 (d) of THE SECURITIES
EXCHANGE ACT OF 1934
FONAR CORPORATION
(Exact name of registrant as specified in charter)
Commission File No. 0-10248
AMENDMENT NO. 1
The undersigned registrant hereby amends the following items,
financial statements, exhibits or other portions of its Current Report on
Form 8-K (Date of Earliest Event Reported: June 30, 1997) as set forth in
the pages attached hereto:
Item 7 (Financial Statements and Exhibits): Amended to add the
financial statements and information required by Item 7 of Form 8-K in
connection with the acquisition described in the Form 8-K.
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this Amendment to be signed on its behalf by
the undersigned, thereunto duly authorized.
FONAR CORPORATION
(Registrant)
By: /s/ Raymond V. Damadian
Raymond V. Damadian
President & Chairman
Date: September 15, 1997
Item 7. Financial Statements and Exhibits
(Exhibits previously filed)
AFFORDABLE DIAGNOSTICS, INC.
AND AFFILIATES
COMBINED FINANCIAL REPORT
JUNE 30, 1997
AFFORDABLE DIAGNOSTICS, INC. AND AFFILIATES
INDEX TO COMBINED FINANCIAL REPORT
JUNE 30, 1997
Page Nos.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS 1
COMBINED BALANCE SHEETS 2
As of June 30, 1997 and 1996
COMBINED STATEMENTS OF INCOME 3
For the Years Ended June 30, 1997 and 1996
and For the Period from Inception
(December 14, 1994) to June 30, 1995
COMBINED STATEMENTS OF EQUITY 4
For the Years Ended June 30, 1997 and 1996
and For the Period from Inception (December 14, 1994)
to June 30, 1995
COMBINED STATEMENTS OF CASH FLOWS 5
For the Years Ended June 30, 1997 and 1996 and For the Period
from Inception (December 14, 1994) to June 30, 1995
NOTES TO COMBINED FINANCIAL REPORT 6 - 14
To the Board of Directors and Owners
of Affordable Diagnostics, Inc. and Affiliates
REPORT OF INDEPENDENT ACCOUNTANTS
We have audited the accompanying combined balance sheet of Affordable
Diagnostics, Inc. and Affiliates (the "Company") as of June 30, 1997 and
1996 and the related combined statements of income, equity, and cash flows
for the years ended June 30, 1997 and 1996 and for the period from
inception (December 14, 1994) to June 30, 1995. 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 audits.
We conducted our audits in accordance with generally accepted auditing
standards. 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 audits
provide a reasonable basis for our opinion.
In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the combined financial position of
Affordable Diagnostics, Inc. and Affiliates at June 30, 1997 and 1996 and
the combined results of their operations and their cash flows for the years
ended June 30, 1997 and 1996 and for the period from inception (December
14, 1994) to June 30, 1995, in conformity with generally accepted
accounting principles.
As more fully discussed in Note 2 to the financial statements, the Company
was merged with a subsidiary of U.S. Health Management Corporation, which
in turn is a wholly-owned subsidiary of FONAR Corporation.
/S/ TABB, CONIGLIARO & McGANN, P.C.
TABB, CONIGLIARO & McGANN, P.C.
New York, New York
September 9, 1997
AFFORDABLE DIAGNOSTICS, INC. AND AFFILIATES
COMBINED BALANCE SHEETS
June 30,
------------------------
1997 1996
---------- ----------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 1,833 $ -
Accounts receivable - net of allowance for
uncollectible accounts of $1,882,364 and
$892,594 at 1997 and 1996, respectively 1,195,912 570,140
---------- ----------
TOTAL CURRENT ASSETS 1,197,745 570,140
EQUIPMENT AND LEASEHOLD IMPROVEMENTS - at cost,
net of accumulated depreciation and amortization 800,825 386,211
EQUIPMENT UNDER CONSTRUCTION 315,000 -
OTHER ASSETS 19,906 7,500
---------- ----------
TOTAL ASSETS $2,333,476 $ 963,851
========== ==========
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Cash overdraft $ - $ 20,819
Accounts payable and accrued liabilities 84,762 57,116
Current maturities of capital lease obligations 103,420 -
Due to officers/shareholders - 2,873
Construction loan 315,000 -
---------- ------
TOTAL CURRENT LIABILITIES 503,182 80,808
CAPITAL LEASE OBLIGATIONS, net of current
maturities 420,484 -
DEFERRED RENT PAYABLE 81,900 40,375
---------- ----------
TOTAL LIABILITIES 1,005,566 121,183
---------- ----------
COMMITMENTS AND CONTINGENCIES
EQUITY
Common stock 2,000 2,000
Paid-in capital 200,000 200,000
Retained earnings 563 563
Members' equity 1,097,847 612,605
Partners' capital 27,500 27,500
---------- ----------
TOTAL EQUITY 1,327,910 842,668
---------- ----------
TOTAL LIABILITIES AND EQUITY $2,333,476 $ 963,851
========== ==========
The accompanying notes are an integral part of the combined financial
statements.
AFFORDABLE DIAGNOSTICS, INC. AND AFFILIATES
COMBINED STATEMENTS OF INCOME
For the Years Ended For the Period
June 30, from Inception
---------------------- (December 14, 1994)
1997 1996 to June 30, 1995
---------- ---------- -----------------
FEE REVENUE - NET $3,035,037 $1,385,837 $ 206,563
OPERATING COSTS (2,075,686) (719,501) (109,495)
GENERAL AND ADMINISTRATIVE
EXPENSES (654,088) (353,731) (96,505)
---------- ---------- ----------
OPERATING INCOME 305,263 312,605 563
INTEREST EXPENSE 70,021 - -
---------- ---------- ---------
INCOME BEFORE PROVISION FOR
INCOME TAXES 235,242 312,605 563
PROVISION FOR INCOME TAXES - - -
---------- ---------- ---------
NET INCOME $ 235,242 $ 312,605 $ 563
========== ========== ==========
The accompanying notes are an integral part of the combined financial
statements.
AFFORDABLE DIAGNOSTICS, INC. AND AFFILIATES
COMBINED STATEMENTS OF EQUITY
FOR THE YEARS ENDED JUNE 30, 1997 AND 1996 AND
FOR THE PERIOD FROM INCEPTION (DECEMBER 14, 1994) TO JUNE 30, 1995
Common Paid-in Retained Partners' Members'
Stock Capital Earnings Capital Equity Total
Issuance of common stock 2,000 $ - $ - $ - $ - $ 2,000
Capital contribution - 200,000 - - - 200,000
Net income - - 563 - - 563
---------- ---------- ---------- ---------- ---------- ----------
Balance at June 30, 1995 2,000 200,000 563 - - 202,563
Partners' contribution - - - 27,500 - 27,500
Members' contribution - - - - 300,000 300,000
Net income - - - - 312,605 312,605
---------- ---------- ---------- ---------- ---------- ----------
Balance at June 30, 1996 2,000 200,000 563 27,500 612,605 842,668
Members' contribution - - - - 250,000 250,000
Net income - - - - 235,242 235,242
---------- ---------- ---------- ---------- ---------- ----------
Balance at June 30, 1997 2,000 $ 200,000 $ 563 $ 27,500 $1,097,847 $1,327,910
========== ========== ========== ========== ========== ==========
The accompanying notes are an integral part of the combined financial
statements.
AFFORDABLE DIAGNOSTICS, INC. AND AFFILIATES
COMBINED STATEMENTS OF CASH FLOWS
For the Years Ended For the Period
June 30, from Inception
-------------------------- (December 14, 1994) to
1997 1996 June 30, 1995
---------- ---------- ------------------
Net income $ 235,242 $ 312,605 $ 563
Adjustments to reconcile net income
to net cash used in operating
activities:
Depreciation and amortization 164,628 90,424 25,482
Provision for uncollectible
accounts 989,770 857,101 35,493
Deferred rent payable 41,525 29,900 10,475
---------- ---------- ----------
1,431,165 1,290,030 72,013
Changes in operating assets and liabilities:
Accounts receivable (1,615,542) (1,293,524) (169,210)
Other assets (12,406) (5,241) (2,259)
Accounts payable and
accrued liabilities 27,646 15,565 41,551
Due to officers
shareholders (2,873) (17,624) 20,497
---------- ---------- ----------
NET CASH USED IN OPERATING
ACTIVITIES (172,010) (10,794) (37,408)
---------- ---------- ----------
CASH USED IN INVESTING ACTIVITIES
Purchase of equipment and
leasehold improvements (333,753) (349,709) (152,408)
---------- ---------- ----------
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from issuance of
common stock - - 2,000
Capital contributions - - 200,000
Proceeds from members'
contribution 250,000 300,000 -
Proceeds from partners'
contribution - 27,500 -
Proceeds from capital lease 349,738 - -
Repayment of capital lease
obligations (71,323) - -
---------- ---------- ------
NET CASH PROVIDED BY FINANCING
ACTIVITIES 528,415 327,500 202,000
---------- ---------- ----------
NET INCREASE (DECREASE) IN CASH 22,652 (33,003) 12,184
CASH AT BEGINNING OF THE PERIOD (20,819) 12,184 -
---------- ---------- ----------
CASH AT END OF THE PERIOD $ 1,833 $ (20,819) $ 12,184
========== ========== ==========
The accompanying notes are an integral part of the combined financial
statements.
AFFORDABLE DIAGNOSTICS, INC. AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 1997 AND 1996 AND
FOR THE PERIOD FROM INCEPTION (DECEMBER 14, 1994) TO JUNE 30, 1995
NOTE 1 - DESCRIPTION OF BUSINESS
Affordable Diagnostics, Inc. (herein referred to as "ADI" and
collectively with its affiliated companies as the "Company"), a
New York corporation, was incorporated on December 14, 1994. The
Company operates and manages three magnetic resonance imaging
centers, one out-patient primary care clinic and provides
management services including administration, accounting, billing
and collection to primary care providers.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
---------------------
The combined financial statements include the accounts of ADI and
the following companies affiliated through common ownership:
Bronx Diagnostic Imaging, LLC ("Bronx")
Yonkers Diagnostic Imaging, LLC ("Yonkers")
N.E. Medical Billing Services, Inc. ("NE")
Magnetic Connections - a partnership ("Magnetic")
All significant intercompany balances and transactions have been
eliminated in combination.
Effective June 30, 1997, ADI entered into a merger agreement,
whereby ADI merged with and into a subsidiary of U.S. Health
Management Corporation ("HMC"), which, in turn, is a wholly-owned
subsidiary of FONAR Corporation ("FONAR"). Pursuant to the merger
agreement, shareholders of ADI received 2,740,000 shares of
common stock of FONAR, of which 1,764,000 are to be held in
escrow pending registration of the shares under the Securities
Act of 1933. In addition, 576,000 shares are to be held in escrow
contingent upon ADI achieving certain defined financial goals.
The remaining 400,000 shares may be sold by the shareholders of
ADI subject to certain daily trading volume restrictions.
Concurrent with the merger agreement, ADI entered into an
agreement, whereby ADI purchased all of the assets and properties
of Bronx, Yonkers, NE and Magnetic, including its equipment,
accounts receivable, contracts and books and records.
The accompanying balance sheets reflect the assets and
liabilities of the Company immediately prior to the merger with
HMC and acquisition by ADI.
AFFORDABLE DIAGNOSTICS, INC. AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 1997 AND 1996 AND
FOR THE PERIOD FROM INCEPTION (DECEMBER 14, 1994) TO JUNE 30, 1995
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Continued)
Use of Estimates
----------------
The preparation of the combined 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 in the combined financial
statements and accompanying notes. The most significant estimates
relate to accounts receivable allowances, contingencies and the
useful lives of equipment. In addition, healthcare industry
reforms and reimbursement practices will continue to impact the
Company's operations and the determination of allowance
estimates. Actual results could differ from those estimates.
Revenue Recognition
-------------------
For the Company's diagnostic imaging centers and out-patient
primary care clinic, agreements have been entered into with five
Medical Practices (the "PC's") pursuant to which the Company
provides management services, office space, diagnostic imaging
equipment, other medical equipment and non-medical personnel to
the PC's. The agreements have terms of up to 10 years. The PC
pays a fee based on the services provided and the usage of the
equipment and premises (on a per procedure or per patient basis)
of the diagnostic equipment. These fees are recognized on the
accrual basis as earned (see Note 3).
Cash and Cash Equivalents
-------------------------
For financial statement purposes, cash and cash equivalents
include short-term investments with a maturity of three months or
less.
Equipment and Leasehold Improvements
------------------------------------
Medical equipment, office furniture and equipment are depreciated
on the straight-line basis over the estimated useful lives of the
assets (5 to 7 years). Leasehold improvements are amortized over
the shorter of the term of the lease or the life of the asset.
Expenditures for maintenance and repairs are charged to
operations. Renewals and betterments are capitalized.
AFFORDABLE DIAGNOSTICS, INC. AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 1997 AND 1996 AND
FOR THE PERIOD FROM INCEPTION (DECEMBER 14, 1994) TO JUNE 30, 1995
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Continued)
Accounting for Impairment in Long-Lived Assets
----------------------------------------------
The Financial Accounting Standards Board ("FASB") has issued SFAS
No. 121, "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets Being Disposed of", which the Company
adopted on July 1, 1996. This statement requires that long-lived
assets and identifiable intangibles be reviewed for impairment
whenever events or changes in circumstances indicate the carrying
amounts of the assets may not be recoverable. In evaluating
recoverability, the Company estimates the future cash flows
expected to result from the asset and its eventual disposition.
If the sum of future undiscounted cash flows is less than the
carrying amount of the asset, an impairment loss is recognized.
No such loss was recognized in the financial statements. The
Company reviews its long-lived assets for impairment whenever
events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. In performing this
review, the Company estimates the future cash flows expected to
result from the use of the asset and its eventual disposition.
Income Taxes
------------
For the periods through June 30, 1997, ADI and its affiliates
were either limited liability corporations, partnerships, or
elected to be treated as S corporations for federal and state tax
purposes. Consequently, the Company was not subject to federal
income taxes because the owners include the Company's income in
their own personal income tax return.
Fair Value of Financial Instruments
-----------------------------------
Cash and cash equivalents, accounts receivable, accounts payable
and accrued liabilities and loans payable are reflected in the
accompanying balance sheets at amounts considered by management
to reasonably approximate fair value.
AFFORDABLE DIAGNOSTICS, INC. AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 1997 AND 1996 AND
FOR THE PERIOD FROM INCEPTION (DECEMBER 14, 1994) TO JUNE 30, 1995
NOTE 3 - ACCOUNTS RECEIVABLE/CONCENTRATION OF CREDIT RISK
The accounts receivable balance as of June 30, 1997 and 1996 is
comprised of amounts receivable from five PC's. Collection by the
Company of its usage fees from the PC's is based on the net
realizability of the accounts receivable of the PC's. The Company
maintains a security interest in all receivables billed on behalf
of the PC's. A significant portion of the PC's receivables are
concentrated among third party medical reimbursement
organizations, principally insurance carriers, including Worker's
Compensation and no-fault insurance. In addition, the PC's also
render services for which collection is contingent upon the
settlement of pending personal injury litigation (letters of
protection). Payments for services covered by Workers'
Compensation and no-fault insurance and letters of protection
generally have long collection cycles. The Company considers the
aging of the accounts receivable in determining the amount of
allowance for uncollectible accounts.
NOTE 4 - EQUIPMENT AND LEASEHOLD IMPROVEMENTS
Equipment and leasehold improvements at June 30, 1997 and 1996
consisted of the following:
1997 1996
---------- ----------
Medical equipment $ 543,106 $ 337,170
Medical equipment under
capital lease 245,489 -
Office equipment 17,188 -
Leasehold improvements 275,576 164,947
---------- ----------
1,081,359 502,117
Less: Accumulated depreciation 280,534 115,906
---------- ----------
$ 800,825 $ 386,211
========== ==========
The equipment under capital lease had a book value of $234,441 at
June 30, 1997.
Depreciation and amortization charged to expense amounted to
$164,628, $90,424 and $25,482 for the years ended June 30, 1997
and 1996 and for the period from inception (December 14, 1994) to
June 30, 1995, respectively.
AFFORDABLE DIAGNOSTICS, INC. AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 1997 AND 1996 AND
FOR THE PERIOD FROM INCEPTION (DECEMBER 14, 1994) TO JUNE 30, 1995
NOTE 5 - EQUIPMENT UNDER CONSTRUCTION
On October 3, 1996, the Company entered into a contract with
Vision Medical Services, Inc. to promote and install a picker 1.0
HPQ system within an MRI mobile trailer. The contract price of
$525,000 is being financed through a construction loan with DVI
Financial Services, Inc. ("DVI"). The loan provides for monthly
payments of interest only (11.5% at June 30, 1997) at 3.0% above
prime. Upon acceptance of the equipment, repayment of the loan is
to be negotiated at mutually agreed upon terms. At all times, DVI
will maintain a security interest in the equipment. As of June
30, 1997, $315,000 had been advanced under the loan agreement.
NOTE 6 - CAPITAL LEASE OBLIGATIONS
Capital lease obligations at June 30, 1997 and 1996 consisted of
the following:
Amount Amount
Due Within Due After
One Year One Year
---------- ---------
a) Medical equipment - DVI Financial
Services, Inc. $ 65,342 $ 259,981
b) Medical equipment - DVI Financial
Services, Inc. 25,911 106,129
c) Medical equipment - others 12,167 54,374
---------- ----------
Total $ 103,420 $ 420,484
========== ==========
a) During the year ended June 30, 1997, the Company entered
into a capital lease transaction pursuant to which the
Company received $349,738 to fund the purchase of equipment
and for working capital. The lease calls for payment of
$8,477 per month, including interest of 12.3% through August
31, 2001, is collateralized by the related equipment and is
personally guaranteed by the members of Bronx.
b) The Company has an obligation under a capital lease for the
purchase of medical equipment aggregating $151,364. The
lease calls for payments of $3,378 per month, including
interest of 12.15% through August 2001, is collateralized by
the related equipment and is personally guaranteed by the
members of Bronx.
AFFORDABLE DIAGNOSTICS, INC. AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 1997 AND 1996 AND
FOR THE PERIOD FROM INCEPTION (DECEMBER 14, 1994) TO JUNE 30, 1995
NOTE 6 - CAPITAL LEASE OBLIGATIONS (Continued)
c) The Company has obligations under various capital leases for
the purchase of medical equipment aggregating $94,125. The
leases call for payments of $1,760 per month, including
interest at rates averaging 13.0%, expiring at various dates
through May 2002, and are collateralized by the related
equipment and are personally guaranteed by the members of
Bronx.
Minimum future lease payments due under the capital lease
obligations as of June 30, 1997 are as follows:
Year Ending
June 30, Amount
-------- ----------
1998 $ 162,226
1999 162,226
2000 162,226
2001 162,226
2002 24,218
----------
673,122
Less: Amount representing interest 149,218
----------
Present value of minimum lease payments 523,904
Less: Current maturities 103,420
----------
$ 420,484
==========
NOTE 7 - EQUITY
Common Stock - No Par Value
---------------------------
Common stock - no par value - at June 30, 1997 and 1996 consisted
of the following:
1997 1996
---------- ---------
Affordable Diagnostics, Inc.:
400 shares authorized, issued and
outstanding $ 1,000 $ 1,000
NE Medical Billing Services, Inc.:
400 shares authorized, issued and
outstanding 1,000 1,000
---------- ----------
Total $ 2,000 $ 2,000
========== ==========
AFFORDABLE DIAGNOSTICS, INC. AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 1997 AND 1996 AND
FOR THE PERIOD FROM INCEPTION (DECEMBER 14, 1994) TO JUNE 30, 1995
NOTE 8 - COMMITMENTS AND CONTINGENCIES
Leases/Related Party Transactions
---------------------------------
The Company rents four operating facilities under long-term lease
agreements, one of which is with an entity owned by the officers
/owners of the Company. The leases call for monthly payments
aggregating $14,206 and expire at various dates through August
2001. The leases generally require the Company to pay utilities,
taxes, insurance, and other costs. The leases include a provision
for annual increases. The Company has recorded rent expense under
the straight-line method based on the minimum rent payable over
the period of the lease.
At June 30, 1997, the Company has obligations under various
operating leases for automobiles, office and medical equipment.
The leases call for minimum monthly payments aggregating
approximately $7,010 and expire at various dates through August
2001.
Future minimum lease payments for all operating leases are as
follows:
Year Ending
June 30, Amount
---------- ----------
1998 $ 254,670
1999 268,368
2000 279,625
2001 257,411
2002 137,098
2003 and thereafter 520,111
----------
$1,717,283
==========
Service Contracts
-----------------
As of June 30, 1997, the Company entered into service contracts
with FONAR Corporation for their MRI scanners. The contracts
require monthly payments aggregating $20,235 and expire at
various dates through December 31, 2002.
Marketing Contracts
-------------------
On December 1, 1996, the Company entered into marketing
agreements with two companies requiring monthly payments
aggregating $20,000. The term of the contracts are for ten years
and may be cancelled by either party by giving 30-day notice.
AFFORDABLE DIAGNOSTICS, INC. AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 1997 AND 1996 AND
FOR THE PERIOD FROM INCEPTION (DECEMBER 14, 1994) TO JUNE 30, 1995
NOTE 8 - COMMITMENTS AND CONTINGENCIES (Continued)
Related Party Transactions
--------------------------
During the years ended June 30, 1997 and 1996 and for the period
from inception (December 14, 1994) to June 30, 1995, the Company
paid to entities owned by the officers of the Company the
following costs and expenses:
For the Years Ended For the Period
June 30, from Inception
--------------------- (December 14, 1994)
1997 1996 to June 30, 1995
---------- ---------- --------------
Rent $ 37,000 $ 32,000 $ 15,000
Reimbursement of
lease payments -
equipment 26,000 1,000 -
Capital expenditures 2,000 274,000 139,000
---------- ---------- ----------
$ 65,000 $ 307,000 $ 154,000
========== ========== ==========
Risk and Uncertainties
----------------------
The healthcare industry is highly regulated by numerous laws,
regulations, approvals and licensing requirements at the federal,
state and local levels. Regulatory authorities have very broad
discretion to interpret and enforce these laws and promulgate
corresponding regulation. The Company believes that its
operations under agreements pursuant to which it is currently
providing services are in compliance with these laws and
regulations. However, there can be no assurance that a court or
regulatory authority will not take the position to determine that
the Company's operations may violate applicable laws or
regulations. In such an event, the Company's business and its
prospects could be materially and adversely affected.
The Company believes that such expenses and costs paid, as
indicated above, were on terms no less favorable to the Company
than what the Company could have otherwise received from an
unrelated party.
AFFORDABLE DIAGNOSTICS, INC. AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 1997 AND 1996 AND
FOR THE PERIOD FROM INCEPTION (DECEMBER 14, 1994) TO JUNE 30, 1995
NOTE 9 - SUPPLEMENTAL CASH FLOW INFORMATION
For the Years Ended For the Period
June 30, from Inception
--------------------- (December 14, 1994)
1997 1996 to June 30, 1995
---------- ---------- --------------
Cash paid for:
Interest $ 97,103 $ - $ -
========== ========== ==========
Taxes $ - $ - $ -
========== ========== ==========
Non-Cash Transactions
---------------------
For the Year Ending June 30, 1997:
a) The Company entered into capital leases for the purchase of
medical equipment aggregating $245,489.
b) The Company entered into a construction loan to finance the
purchase of medical equipment. As of June 30, 1997, $315,000
was advanced under the agreement.