UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________
FORM 8-K/A
(Amendment No. 1)
__________________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
DATE OF REPORT: APRIL 30, 2007
(Date of Earliest Event Reported: April 5, 2007)
RADNET, INC.
(Exact Name of Registrant as Specified in Its Charter)
NEW YORK 0-19019 13-3326724
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
1510 COTNER AVENUE
LOS ANGELES, CALIFORNIA 90025
(Address of Principal Executive Offices) (Zip Code)
(310) 478-7808
(Registrant's Telephone Number, Including Area Code)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
|_| Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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ITEM 4.01 CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
On April 5, 2007, Moss Adams LLP, RadNet Inc.'s independent registered
public accounting firm, indicated that it will not stand for re-election as
auditors for the year ending December 31, 2007. Moss Adams LLP will complete the
audit for the two-month transition period ended December 31, 2006, and will
review the Registrant's interim consolidated financial statements included in
its Quarterly Report on Form 10-Q for the quarter ended March 31, 2007.
The audit reports of Moss Adams on the Registrant's financial statements
for the fiscal years ended October 31, 2005 and 2006 contained no adverse
opinion or disclaimer of opinion and were not qualified or modified as to
uncertainty, audit scope or accounting principles, except that Moss Adams'
report for 2006 included separate paragraphs stating the following:
"As described in Note 2 to the consolidated financial statements,
the Company restated its previously issued consolidated financial
statements to correct its accounting for leasehold improvements;"
and
"As described in Notes 2 and 10 to the consolidated financial
statements, effective November 1, 2005, the Company changed its
method of accounting for share-based payment arrangements to conform
to Statement of Financial Accounting Standard No. 123R, Share-Based
Payment."
In connection with Moss Adams' audits for the fiscal years ended October
31, 2005 and 2006 and through April 16, 2007, there were no disagreements with
Moss Adams on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure, which disagreements, if
not resolved to the satisfaction of Moss Adams, would have caused Moss Adams to
make reference to the subject matter of such disagreements in connection with
its reports.
During the course of the audit for the fiscal years ended October 31, 2005
and 2006, the Registrant and Moss Adams determined that the consolidated
financial statements for the fiscal years ended October 31, 2005 and 2004, and
the quarterly unaudited financial statements for these years and for the first
quarter ended January 31, 2006 contained errors related to the recording of the
depreciation expense of leasehold improvements and therefore could not be relied
upon and that the related auditor reports of Moss Adams LLP with respect to
these consolidated financial statements should also no longer be relied upon.
The consolidated financial statements were restated for the fiscal years ended
October 31, 2005 and 2004, and were adjusted for the quarterly unaudited
financial statements for these years and for the first quarter ended January 31,
2006.
At October 31, 2005 and October 31, 2006, the Registrant concluded that a
material weakness in the design of internal control over financial reporting
existed. This material weakness was due to insufficient personnel resources and
technical accounting expertise within the accounting function to resolve the
following non-routine accounting matters, the recording of non-typical
cost-based investments and unusual debt-related transactions and the appropriate
analysis of the amortization lives of leasehold improvements in accordance with
generally accepted accounting principles. The incorrect accounting for the
foregoing was sufficient to lead management to conclude that a material weakness
in the design of internal control over the accounting for non-routine
transactions existed at October 31, 2005 and October 31, 2006.
The Registrant provided Moss Adams with a copy of this report and
requested that Moss Adams provide a letter addressed to the Securities and
Exchange Commission stating whether it agrees with the foregoing statements.
(Please see Form 8-K filed on April 25, 2007 for a copy of that letter).
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ITEM 4.02 NON-RELIANCE ON PREVIOUSLY ISSUED FINANCIAL STATEMENTS OR A RELATED
AUDIT REPORT OR COMPLETED INTERIM REVIEW.
As previously disclosed in our Form 10-K filed on February 7, 2007, for
the fiscal year ended October 31, 2006, and in our Form 10-K/T, filed on April
17, 2007, on February 2, 2007, in connection with the preparation of our Annual
Report on Form 10-K for the fiscal year ended October 31, 2006, our management,
in consultation with our independent registered public accounting firm, Moss
Adams LLP, determined we would restate certain of our previously issued
financial statements and that they could no longer be relied upon. The
adjustments resulted from management's historical treatment of depreciation
expense related to the depreciation of leasehold improvements of our facilities.
Although the adjustments to certain prior period financial statements were all
non-cash, and did not affect our historical reported revenues, cash flows or
cash position for any of the affected fiscal or quarterly periods, the
adjustments resulted in:
o one-time adjustment to decrease retained earnings as of October 31,
2003 by $2,859,595;
o an adjustment to increase fiscal 2004 depreciation expense and
decrease retained earnings by $154,707;
o an adjustment to increase fiscal 2005 depreciation expense and
decrease retained earnings by $434,442; and
o an adjustment to increase depreciation expense and decrease retained
earnings by $33,215 for our first quarter ended January 31, 2006.
The consolidated financial statements have been adjusted for the fiscal
years ended October 31, 2005 and 2004, and are adjusted for the quarterly
unaudited financial statements for these years and for the two months ended
December 31, 2006.
As a result, the consolidated financial statements, as previously filed,
contain errors related to the recording of the depreciation expense of leasehold
improvements and should, therefore, not be relied upon. The related auditor
reports of Moss Adams LLP with respect to these consolidated financial
statements should also no longer be relied upon.
The Company's management and audit committee have discussed the subject
matter giving rise to this conclusion disclosed in this Item 4.02 with Moss
Adams LLP, its independent registered public accounting firm.
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 hereunto duly authorized.
April 30, 2007 RADNET, INC.
/s/ Howard G. Berger, M.D.
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Howard G. Berger, M.D.
PRESIDENT AND CHIEF EXECUTIVE OFFICER
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