10-Q/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q/A

(Amendment No. 1)

(Mark One)

x Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. For the quarterly period ended June 30, 2011.

¨ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

Commission File Number: 001-34930

EXAMWORKS GROUP, INC.

(Exact name of registrant as specified in its charter)

Delaware	27-2909425
(State or other jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

3280 PEACHTREE ROAD, N.E., SUITE 2625

ATLANTA, GEORGIA 30305

(Address of principal executive offices)

Telephone Number (404) 952-2400

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities 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 ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check One):

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	x	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ¨ No x

As of August 5, 2011, ExamWorks Group, Inc. had 34,688,218 shares of Common Stock outstanding.

EXPLANATORY NOTE

ExamWorks Group, Inc. is filing this Amendment No. 1 (the “Amendment No. 1”) to its Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2011, which was originally filed on August 10, 2011 (the “Original Filing”) for the sole purpose of furnishing Exhibit 101 to the Form 10-Q in accordance with Rule 405 of Regulation S-T. Exhibit 101 to this report provides the consolidated financial statements and related notes from the Form 10-Q formatted in XBRL (eXtensible Business Reporting Language). As required by Rule 405(a)(2)(ii) of Regulation S-T, Exhibit 101 was required to be furnished by amendment within 30 days of the original filing.

No other changes have been made to the Form 10-Q. This Amendment No.1 does not reflect events that may have occurred subsequent to the Original Filing date, and does not modify or update in any way disclosures made in the Form 10-Q.

Pursuant to Rule 406T of Regulation S-T, the interactive data files contained in Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

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Item 6. Exhibits

2.1* Agreement and Plan of Merger, dated June 23, 2010, by and among ExamWorks Group, Inc., ExamWorks, Inc. and ExamWorks Merger Sub, Inc. (incorporated by reference to Exhibit 2.1 to Form S-1 of the Registrant filed on August 13, 2010)

2.2* Stock Purchase Agreement dated as of January 11, 2011, by and among ExamWorks Group, Inc., ExamWorks, Inc., MES Group, Inc., George E. Turek, and the minority shareholders of MES Group, Inc., as set forth therein (incorporated by reference to Exhibit 2.1 to Form 8-K of the Registrant filed January 13, 2011)

2.3* Agreement for the sale and purchase of the entire issued share capital of Premex Group Limited dated May 10, 2011, among ExamWorks Group, Inc., ExamWorks UK Ltd. and the shareholders of Premex Group Limited set forth therein (incorporated by reference to Exhibit 2.1 to Form 8-K of the Registrant filed May 13, 2011)

2.4* Tax Deed dated May 10, 2011, relating to the sale and purchase of the entire issued share capital of Premex Group between ExamWorks UK Ltd. and Covenantors set forth therein (incorporated by reference to Exhibit 2.2 to Form 8-K of the Registrant filed May 13, 2011)

3.1* Amended and Restated Certificate of Incorporation of ExamWorks (incorporated by reference to Exhibit 3.1 to Form 10-K of the Registrant filed March 11, 2011)

3.2* Amended and Restated Bylaws of ExamWorks (incorporated by reference to Exhibit 3.2 to Form 10-K of the Registrant filed March 11, 2011)

4.1* Form of Common Stock Certificate of ExamWorks (incorporated by reference to Exhibit 4.1 to Amendment No. 3 to Form S-1 of the Registrant filed on October 21, 2010).

4.2* Indenture dated July 19, 2011, by and among ExamWorks Group, Inc., the Guarantors party thereto, and U.S. Bank, National Association, as Trustee (including Form of 9% Note Due 2019) (incorporated by reference to Exhibit 4.1 to Form 8-K of the Registrant filed July 22, 2011)

4.3* Registration Rights Agreement dated July 19, 2011 by and among ExamWorks Group, Inc., the Guarantors party thereto, and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as representative of the several Initial Purchasers (incorporated by reference to Exhibit 4.2 to Form 8-K of the Registrant filed July 22, 2011)

10.1* First Amendment and Consent Agreement dated as of May 6, 2011, by and among ExamWorks Group, Inc., as Borrower, Bank of America, N.A., as Administrative Agent, and the Guarantors and Lenders party thereto, amending the Credit Agreement dated as of October 2010 (incorporated by reference to Exhibit 10.1 to Form 8-K of the Registrant filed May 10, 2011)

10.2* Sales Finance Agreement – Recourse Confidential Invoice Discounting Facility (UK Debts), dated May 12, 2011, by and between Barclays Bank PLC and Premex Services Limited (incorporated by reference to Exhibit 10.1 to Form 8-K of the Registrant filed May 17, 2011)

10.3* Amendment Letter, dated May 12, 2011, by and between Barclays Bank PLC and Premex Services Limited (incorporated by reference to Exhibit 10.2 to Form 8-K of the Registrant filed May 17, 2011)

10.4*+ Separation and Release Agreement, dated May 19, 2011, by and between ExamWorks Group, Inc. and Joshua W. LeMaire (incorporated by reference to Exhibit 10.1 to Form 8-K of the Registrant filed May 20, 2011)

10.5* Second Amendment to Credit Agreement, dated as of July 7, 2011, by and among ExamWorks Group, Inc., as Borrower, Bank of America, N.A., as Administrative Agent, and the Guarantors and Lenders party thereto (incorporated by reference to Exhibit 10.1 to Form 8-K of the Registrant filed July 11, 2011)

31.1* Rule 13a-14(a)/15d -14(a) Certification of the Chief Executive Officer as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2* Rule 13a-14(a)/15d -14(a) Certification of the Chief Financial Officer as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

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32* Certifications pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS**  XBRL Instance Document

101.SCH** XBRL Taxonomy Extension Schema Document

101.CAL**  XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF** XBRL Taxonomy Extension Definition Linkbase Document

101.LAB** XBRL Taxonomy Extension Label Linkbase Document

101.PRE** XBRL Taxonomy Extension Presentation Linkbase Document

+ Denotes management contract or compensatory plan or arrangement

* These exhibits were previously filed with our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2011, filed with the Securities and Exchange Commission on August 10, 2011.

** XBRL (eXtensible Business Reporting Language) interactive data files are furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under those sections.

4

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.

	EXAMWORKS GROUP, INC.
Date: September 1, 2011		By:	/s/ J. Miguel Fernandez de Castro
			J. Miguel Fernandez de Castro
			Senior Vice President and Chief Financial Officer
			(Principal Financial Officer)

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XML



Consolidated Balance Sheets(Unaudited) (Parentheticals) (USD $)	Jun. 30, 2011	Dec. 31, 2010
Preferred stock-share par value (in Dollars per share)	$ 0.0001	$ 0.0001
Preferred stock-shares authorized	50,000,000	50,000,000
Preferred stock-shares issued	0	0
Preferred stock-shares outstanding	0	0
Common stock-share par value (in Dollars per share)	$ 0.0001	$ 0.0001
Common stock-shares authorized	250,000,000	250,000,000
Common stock-shares issued	34,608,066	32,216,104
Common stock-shares outstanding	34,608,066	32,216,104

XML



Consolidated Statements of Operations and Comprehensive (Loss) Income(Unaudited) (USD $) In Thousands, except Per Share data	3 Months Ended		6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Revenues	$ 106,742	$ 35,279	$ 173,330	$ 60,679
Costs and expenses:
Costs of revenues	70,508	22,133	114,077	38,265
Selling, general and administrative expenses	21,654	8,372	35,982	14,383
Depreciation and amortization	11,475	3,570	20,084	6,547
Total costs and expenses	103,637	34,075	170,143	59,195
Income from operations	3,105	1,204	3,187	1,484
Interest and other expenses, net:
Interest expense, net	3,018	1,307	4,200	2,746
Loss (gain) on interest rate swap	(27)	40	(197)	65
Realized foreign currency loss	223		223
Total interest and other expenses, net	3,214	1,347	4,226	2,811
Loss before income taxes	(109)	(143)	(1,039)	(1,327)
Income tax benefit	(37)	(71)	(408)	(660)
Net loss	(72)	(72)	(631)	(667)
Net loss per share:
Basic and diluted (in Dollars per share)			$ (0.02)	$ (0.05)
Weighted average number of common shares outstanding:
Basic and diluted	34,222,475	15,270,593	33,489,308	14,621,853
Comprehensive Loss:
Net loss	(72)	(72)	(631)	(667)
Foreign currency translation adjustments		(131)	(230)	(131)
Total comprehensive loss	$ (72)	$ (203)	$ (861)	$ (798)

XML



Document And Entity Information	6 Months Ended
	Jun. 30, 2011	Aug. 05, 2011
Document and Entity Information [Abstract]
Entity Registrant Name	ExamWorks Group, Inc.
Document Type	10-Q
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		34,688,218
Amendment Flag	false
Entity Central Index Key	0001498021
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Non-accelerated Filer
Entity Well-known Seasoned Issuer	No
Document Period End Date	Jun. 30, 2011
Document Fiscal Year Focus	2011
Document Fiscal Period Focus	Q2

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Note 7 - Stockholders’ Equity

6 Months Ended

Jun. 30, 2011

Stockholders' Equity Note Disclosure [Text Block]

(7)           Stockholders’ Equity

During the six months ended June 30, 2011, the Company issued approximately 2.1 million shares of common stock, with a fair value of $45.4 million, to fund the stock consideration of the acquisitions completed in 2011.

During the six months ended June 30, 2011, the Company issued approximately 275,000 shares of common stock to settle stock options exercised during the period.

During the six months ended June 30, 2011, the Company issued approximately 12,000 shares of common stock to settle warrants exercised during the period.

On April 14, 2011, the Company issued approximately 6,900 shares of common stock with an estimated fair value of $107,000 to an outside consultant as compensation for services to be provided during the year.  The Company will record the expense related to these awards in selling, general and administrative expenses over the two-year service period.

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Note 12 - Income Taxes

6 Months Ended

Jun. 30, 2011

Income Tax Disclosure [Text Block]

(12)         Income Taxes

In preparing its financial statements, the Company estimates income taxes in each of the jurisdictions in which it operates. This process involves estimating actual current tax exposure together with assessing temporary differences resulting from differing treatment of items for tax and financial reporting purposes. These differences result in deferred income tax assets and liabilities. During the year ended December 31, 2010, the Company generated $5.2 million of federal taxable income.  For the three and six months ended June 30, 2010, the Company had an income tax benefit of $71,000 and $660,000 respectively.  For the three and six months ended June 30, 2011, the Company had an income tax benefit of $37,000 and $408,000, respectively.

The Company applies the provisions of ASC 740 as it relates to uncertain tax positions. This interpretation prescribes a comprehensive model for how a company should recognize, measure, present and disclose in its financial statements uncertain tax positions that the company has taken or expects to take on a tax return. ASC 740 states that a tax benefit from an uncertain tax position may be recognized only if it is “more likely than not” that the position is sustainable, based on its technical merits. The tax benefit of a qualifying position is the largest amount of tax benefit that is greater than 50% likely of being realized upon settlement with a taxing authority having full knowledge of all relevant information.

As of December 31, 2010, the liability related to unrecognized tax benefits was $176,000. The Company recorded an additional liability for unrecognized tax benefits in the six months ended June 30, 2011 of $120,000 related to aquired liabilities for unrecognized tax benefits and interest and penalties on prior year tax positions.  The Company recognizes interest and penalties accrued related to unrecognized tax benefits in income tax expense.

The following table summarizes the activity related to the unrecognized tax benefits for the period ended June 30, 2011 (in thousands):

Balance at January 1, 2011	$	176
Increase to prior year tax positions		120
Increase to current year tax positions		—
Expiration of the statute of limitations for the assessment of taxes		—
Decrease related to settlements		—
Balance at June 30, 2011	$	296

The Company is no longer subject to U.S. federal income or state tax return examinations by tax authorities for tax years before 2006 and 2005, respectively, which periods relate to certain acquired businesses. The Internal Revenue Service (“IRS”) commenced an examination of the Company’s U.S. income tax returns for 2009 during the second quarter of 2011.  As of June 30, 2011, the IRS has not proposed any adjustments to the Company’s tax positions.  The Company operates in multiple taxing jurisdictions and faces audits from various tax authorities. The Company remains subject to examination until the statute of limitations expires for the respective tax jurisdiction. The Company does not anticipate that the amount of the unrecognized benefit will significantly increase or decrease within the next twelve months.

Undistributed earnings of the Company’s foreign subsidiaries are considered indefinitely reinvested and, accordingly, no provision for U.S. federal income taxes has been recorded. Deferred taxes are provided for earnings outside the United States when those earnings are not considered indefinitely reinvested.

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Note 3 - Acquisitions

6 Months Ended

Jun. 30, 2011

Mergers, Acquisitions and Dispositions Disclosures [Text Block]

(3)           Acquisitions

ExamWorks operates in a highly fragmented industry and has completed numerous acquisitions since July 14, 2008. A key component of ExamWorks’ acquisition strategy is growth through acquisitions that expand its geographic coverage, provide new or complementary lines of business, expand its portfolio of services and that increase its market share.

The Company has accounted for all business combinations using the purchase method to record a new cost basis for the assets acquired and liabilities assumed. The Company recorded, based on a preliminary purchase price allocation, intangible assets representing customer relationships, tradenames, covenants not to compete, and technology and the excess of purchase price over the estimated fair value of the tangible assets acquired and liabilities assumed and the separately recognized intangible assets has been recorded as goodwill in the accompanying consolidated financial statements. The goodwill is attributable to synergies achieved through the streamlining of operations combined with improved margins attainable through increased market presence. The results of operations are reflected in the consolidated financial statements of the Company from the date of acquisition.

 (a)           2010 Acquisitions

Metro Medical Acquisition

On March 26, 2010, ExamWorks acquired substantially all of the assets and assumed certain liabilities of Metro Medical Services, LLC (“Metro Medical”) for aggregate consideration of $13.5 million, comprised of $13.0 million cash consideration less cash acquired of $722,000 and 589,930 shares of the Company’s common stock with an estimated fair value of $1.3 million. In conjunction with the Metro Medical acquisition, the Company incurred transaction costs of $101,000 which were reported in selling, general and administrative expenses in the Company’s 2010 consolidated statement of operations. The Metro Medical acquisition enabled the Company to further expand its operations in the northeastern region of the United States.

The final allocation of consideration for the Metro Medical acquisition is summarized as follows (in thousands):

	Preliminary				Final
	purchase price				Purchase price
	allocation		Adjustments/		allocation
	December 31, 2010		reclassifications		June 30, 2011
Equipment and leasehold improvements	$	186	$	—	$	186
Customer relationships		4,715		—		4,715
Tradename		1,458		—		1,458
Covenants not to compete		66		—		66
Technology		100		—		100
Goodwill		5,601		—		5,601
Deferred tax asset associated with step-up in book basis		680		—		680
Assets acquired and liabilities assumed, net		682		—		682
Totals	$	13,488	$	-	$	13,488

In 2011, the Company finalized the purchase price allocation with no adjustments to the purchase price.  The goodwill and other intangible assets resulting from the Metro Medical acquisition are expected to be deductible for tax purposes.

Direct IME Acquisition

On June 30, 2010, ExamWorks acquired substantially all of the assets and assumed certain liabilities of Direct IME, a partnership (“Direct IME”), for aggregate consideration of $13.6 million, comprised of $11.9 million cash consideration less cash acquired of $50,000, 507,606 shares of the Company’s common stock with an estimated fair value of $1.4 million and $351,000 of contingent consideration. The acquisition agreement contains a clawback provision whereby certain revenue and profitability targets must be met for a period of two years. The Company expects Direct IME to achieve the targeted levels. Additionally, the acquisition agreement contains contingent consideration in the form of an earnout provision based upon the achievement of certain revenue and profitability targets. Any contingent consideration is payable at the end of a two-year period. The fair value of the contingent consideration will be adjusted quarterly based primarily on variations in the expected performance of the acquired businesses with the change being recorded as selling, general and administrative ("SGA") expenses in the accompanying consolidated statements of operations. The Company recorded additional contingent consideration of $5,000 during the six months ended June 30, 2011, resulting primarily from the change in the expected value of the earnout.  As of June 30, 2011, the range of outcomes and the assumptions used to develop the estimate have not changed. In conjunction with the Direct IME acquisition, the Company incurred transaction costs of $194,000 which were reported in selling, general and administrative expenses in the Company’s 2010 consolidated statement of operations. The Direct IME acquisition enabled the Company to expand operations into the Canadian market.

The final allocation of consideration for the Direct IME acquisition is summarized as follows (in thousands):

	Preliminary				Final
	purchase price				Purchase price
	allocation		Adjustments/		allocation
	December 31, 2010		reclassifications		June 30, 2011
Equipment and leasehold improvements	$	34	$	—	$	34
Customer relationships		5,416		—		5,416
Tradename		720		—		720
Covenants not to compete		33		—		33
Technology		48		—		48
Goodwill		5,708		—		5,708
Deferred tax asset associated with step-up in book basis		815		—		815
Assets acquired and liabilities assumed, net		855		—		855
Totals	$	13,629	$	-	$	13,629

In 2011, the Company finalized the purchase price allocation with no adjustments to the purchase price.  The goodwill and other intangible assets resulting from the Direct IME acquisition are expected to be deductible for tax purposes.

Verity Acquisition

On August 6, 2010, ExamWorks acquired substantially all of the assets and assumed certain liabilities of Verity Medical, Inc. (“Verity Medical”), for cash consideration of $14.0 million. In conjunction with the Verity Medical acquisition, the Company incurred transaction costs of $138,000 which were reported in selling, general and administrative expenses in the Company’s 2010 consolidated statement of operations. The Verity Medical acquisition enabled the Company to further expand its operations in the midwestern region of the United States.

The final allocation of consideration for the Verity Medical acquisition is summarized as follows (in thousands):

	Preliminary					Final
	purchase price					Purchase price
	allocation		Adjustments/			allocation
	December 31, 2010		reclassifications			June 30, 2011
Equipment and leasehold improvements	$	46	$	—		$	46
Customer relationships		6,063		—			6,063
Tradename		1,036		—			1,036
Covenants not to compete		51		—			51
Technology		83		—			83
Goodwill		6,160		22			6,182
Deferred tax asset associated with step-up in book basis		12		—			12
Assets acquired and liabilities assumed, net		540		(22	)		518
Totals	$	13,991	$	-		$	13,991

In 2011, the Company finalized the purchase price allocation with no adjustments to the purchase price. The goodwill and other intangible assets resulting from the Verity Medical acquisition are expected to be deductible for tax purposes.

UK Independent Medical Acquisition

On September 7, 2010, ExamWorks acquired 100% of the outstanding share capital of UK Independent Medical Services Limited (“UKIM”) for aggregate consideration of $16.0 million, comprised of $14.5 million cash consideration and 253,003 shares of the Company’s common stock with an estimated fair value of $1.5 million. In conjunction with the UKIM acquisition, the Company incurred transaction costs of $447,000 which were reported in selling, general and administrative expenses in the Company’s 2010 consolidated statement of operations. The UKIM acquisition enabled the Company to expand operations into the U.K. market.

The preliminary allocation of consideration for the UKIM acquisition is summarized as follows (in thousands)

	Preliminary					Preliminary
	purchase price					Purchase price
	allocation		Adjustments/			allocation
	December 31, 2010		reclassifications			June 30, 2011
Equipment and leasehold improvements	$	152	$	—		$	152
Customer relationships		3,238		—			3,238
Tradename		1,704		—			1,704
Covenants not to compete		107		—			107
Technology		5		—			5
Goodwill		2,895		720			3,615
Deferred tax asset associated with step-up in book basis		1,163		—			1,163
Assets acquired and liabilities assumed, net		6,358		(347	)		6,011
Totals	$	15,622	$	373		$	15,995

In 2011, the Company recorded an adjustment to working capital resulting in an increase to total consideration paid of $373,000.  The goodwill and other intangible assets resulting from the UKIM acquisition are expected to be deductible for U.S. federal income tax purposes.  The Company believes that information gathered to date provides a reasonable basis for estimating the fair values of assets acquired and liabilities assumed but the Company is waiting for additional information necessary to finalize those fair values. Thus, the provisional measurements of fair value set forth above are subject to change.  Such changes are not expected to be significant.  The Company expects to complete the purchase price allocation as soon as practicable but no later than one year from the acquisition date.

Other 2010 Acquisitions

Additionally, in 2010, the Company completed the following individually insignificant acquisitions, as defined in SEC Regulation S-X Rule 3-05, with an aggregate purchase price of $70.3 million, comprised of $62.8 million cash consideration less cash acquired of $1.0 million, 1,685,312 shares of the Company’s common stock with an estimated fair value of $5.9 million, $1.7 million of seller debt in the form of subordinated unsecured notes payable, and $786,000 of contingent consideration. A portion of this debt may be settled, at the election of the seller, with 135,282 shares of the Company’s common stock.  In conjunction with the other 2010 acquisitions, the Company incurred transaction costs of $1.2 million, which were reported in selling, general and administrative expenses in the Company’s 2010 consolidated statement of operations. These acquisitions expanded the geographic coverage and, to a lesser extent, enhanced the service offering of the Company.

Company name	Form of acquisition	Date of acquisition
American Medical Bill Review, Inc.	Substantially all of the assets and assumed certain liabilities	March 15, 2010
Medical Evaluations, Inc.	Substantially all of the assets and assumed certain liabilities	March 15, 2010
401 Diagnostics, Inc.	Substantially all of the assets and assumed certain liabilities	June 30, 2010
Independent Medical Services Corporation	Substantially all of the assets and assumed certain liabilities	June 30, 2010
Network Medical Review Company Ltd.	100% of the outstanding common stock	June 30, 2010
SOMA Medical Assessments Inc.	Substantially all of the assets and assumed certain liabilities	June 30, 2010
Exigere Corporation	100% of the outstanding common stock	August 6, 2010
Health Cost Management, LLC	Substantially all of the assets and assumed certain liabilities	September 1, 2010
BME Gateway	Substantially all of the assets and assumed certain liabilities	October 1, 2010
Royal Medical Consultants, Inc.	Substantially all of the assets and assumed certain liabilities	December 20, 2010

The preliminary allocation of consideration for these acquisitions is summarized as follows (in thousands):

	Preliminary						Preliminary
	purchase price						Purchase price
	allocation			Adjustments/			allocation
	December 31, 2010			reclassifications			June 30, 2011
Equipment and leasehold improvements	$	792		$	—		$	792
Customer relationships		24,814			—			24,814
Tradename		5,984			—			5,984
Covenants not to compete		242			—			242
Technology		1,219			—			1,219
Goodwill		37,513			162			37,675
Net deferred tax liability associated with step-up in book basis		(2,540	)		—			(2,540	)
Assets acquired and liabilities assumed, net		2,294			(232	)		2,062
Totals	$	70,318		$	(70	)	$	70,248

In 2011, the Company recorded an adjustment to working capital resulting in a decrease to total consideration paid of $70,000.  The Company expects to make further adjustments to the purchase price allocation of certain acquisitions, excluding those completed on June 30, 2010 and prior which are considered final as of June 30, 2011, principally resulting from working capital and tax related adjustments, in accordance with the purchase agreements. One of the acquisition agreements contains a clawback provision whereby certain revenue and profitability targets must be met for a period of two years. The Company expects this acquisition to achieve the targeted levels. Additionally, this acquisition agreement contains contingent consideration in the form of an earnout provision based upon the achievement of certain revenue and profitability targets. At the date of acquisition, the Company recorded $536,000 as the estimate of the fair value of the contingent consideration related to this acquisition. Any contingent consideration is payable at the end of a two-year period. The fair value of the contingent consideration will be adjusted quarterly based primarily on variations in the expected performance of the acquired businesses with the change being recorded as SGA expenses in the accompanying consolidated statements of operations. The Company recorded a reduction in contingent consideration of $580,000 during the six months ended June 30, 2011, resulting primarily from the change in the expected value of the earnout. As of June 30, 2011, the range of outcomes and the assumptions used to develop the estimate have not changed. Goodwill of $23.9 million and other intangible assets of $21.7 million are expected to be deductible for tax purposes.

The Company believes that information gathered to date provides a reasonable basis for estimating the fair values of assets acquired and liabilities assumed but the Company is waiting for additional information necessary to finalize those fair values. Thus, the provisional measurements of fair value set forth above are subject to change.  Such changes are not expected to be significant.  The Company expects to complete the purchase price allocation as soon as practicable but no later than one year from the acquisition date.

(b)           2011 Acquisitions

MES Group Acquisition

On February 28, 2011, the Company completed the acquisition of 100% of the outstanding stock of MES Group, Inc. (“MES”) for aggregate consideration of $215.0 million, comprised of $175.0 million cash consideration, 1,424,501 shares of Company common stock with a fair value of $30.0 million  (using a value of  $21.07 per share, the closing price of the Company’s common stock on February 28, 2011), and $10.0 million of assumed indebtedness under MES’ credit facility, which was paid off at closing. In conjunction with the MES acquisition, the Company incurred transaction costs of $2.0 million, of which $82,000 and $521,000 were incurred in the three and six months ended June 30, 2011 and are reported in selling, general and administrative expenses in the Company’s accompanying 2011 consolidated statement of operations. The MES acquisition broadens the Company’s product portfolio, customer base and increases the Company’s market share in the U.S.

The preliminary allocation of consideration for the MES acquisition is summarized as follows (in thousands):

	Preliminary						Preliminary
	purchase price						purchase price
	allocation			Adjustments/			allocation
	March 31, 2011			reclassifications			June 30, 2011
Building, equipment and leasehold improvements	$	1,800		$	—		$	1,800
Customer relationships		37,003			1,187			38,190
Tradename		16,805			621			17,426
Covenants not to compete		511			—			511
Technology		762			—			762
Goodwill		160,540			(1,603	)		158,937
Net deferred tax liability associated with step-up in book basis		(18,316	)		(464	)		(18,780	)
Assets acquired and liabilities assumed, net		15,909			259			16,168
Totals	$	215,014		$	—		$	215,014

  The goodwill and other intangible assets resulting from the MES acquisition are not expected to be deductible for tax purposes. The Company believes that information gathered to date provides a reasonable basis for estimating the fair values of assets acquired and liabilities assumed, but the Company is waiting for additional information necessary to finalize those fair values. Thus, the provisional measurements of fair value set forth above are subject to change. As the adjustments to the preliminary purchase price allocation are not deemed material to the consolidated financial statements, the Company has not reflected the adjustments retroactively as of the acquisition date. The Company expects to complete the purchase price allocation as soon as practicable but no later than one year from the acquisition date.  The MES acquisition contributed $37.0 million in revenues and $3.2 million in operating income for the three months ended June 30, 2011.  The MES acquisition contributed $50.2 million in revenues and $4.4 million in operating income for the six months ended June 30, 2011.

Premex Group Acquisition

On May 10, 2011, the Company completed the acquisition of 100% of the outstanding share capital of Premex Group Limited (“Premex”) for $108.4 million.  The Company paid total consideration consisting of $66.5 million in cash, 661,610 shares of Company common stock with a fair value of approximately $15.1 million (using a value of $22.85 per share, the closing price of the Company’s common stock on May 10, 2011) and $26.8 million of assumed indebtedness under Premex’s receivables facility which was paid off at closing.   In conjunction with the Premex acquisition, the Company incurred transaction costs of $652,000, of which $615,000 and $643,000 were incurred in the three and six months ended June 30, 2011 and are reported in selling, general and administrative expenses in the Company’s accompanying 2011 consolidated statement of operations. The Premex acquisition increases the Company’s market share in the U.K. and broadens the Company’s product portfolio and customer base in the U.K.

The preliminary allocation of consideration for the Premex acquisition is summarized as follows (in thousands):

	Preliminary
	purchase price
	allocation
	June 30, 2011
Building, equipment and leasehold improvements	$	650
Customer relationships		32,886
Tradename		10,602
Covenants not to compete		109
Technology		2,356
Goodwill		25,689
Deferred tax asset associated with step-up in book basis		744
Assets acquired and liabilities assumed, net		35,321
Total	$	108,357

The goodwill and other intangible assets resulting from the Premex acquisition are expected to be deductible for tax purposes. The Company believes that information gathered to date provides a reasonable basis for estimating the fair values of assets acquired and liabilities assumed, but the Company is waiting for additional information necessary to finalize those fair values. Thus, the provisional measurements of fair value set forth above are subject to change.  The Company expects to complete the purchase price allocation as soon as practicable but no later than one year from the acquisition date.  The Premex acquisition contributed $13.6 million in revenues and $919,000 in operating income for the three and six months ended June 30, 2011.

Other 2011 Acquisition

On February 18, 2011, the Company acquired 100% of the outstanding common stock of National IME (“National IME”) for $2.5 million, comprised of $2.3 million cash consideration and 11,927 shares of the Company’s common stock with a fair value of $250,000 (using a value of $21.33 per share, the closing price of the Company’s common stock on February 18, 2011). In conjunction with the National IME acquisition, the Company incurred transaction costs of $147,000, of which $102,000 and $106,000 were incurred in the three and six months ended June 30, 2011 and are reported in selling, general and administrative expenses in the Company’s accompanying 2011 consolidated statement of operations. The National IME acquisition increased the Company’s presence in the Canadian market.

The preliminary allocation of consideration for the National IME acquisition is summarized as follows (in thousands):

	Preliminary					Preliminary
	purchase price					purchase price
	allocation			Adjustments/		allocation
	March 31, 2011			reclassifications		June 30, 2011
Customer relationships	$	1,060		$	—	$	1,060
Tradename		254			—		254
Goodwill		1,576			—		1,576
Net deferred tax liability associated with step-up in book basis		(356	)		—		(356	)
Assets acquired and liabilities assumed, net		(5	)		—		(5	)
Totals	$	2,529		$	-	$	2,529

The goodwill and other intangible assets resulting from the National IME acquisition are not expected to be deductible for tax purposes. The Company believes that information gathered to date provides a reasonable basis for estimating the fair values of assets acquired and liabilities assumed but the Company is waiting for additional information necessary to finalize those fair values. Thus, the provisional measurements of fair value set forth above are subject to change.  Such changes are not expected to be significant.  The Company expects to complete the purchase price allocation as soon as practicable but no later than one year from the acquisition date.  The National IME acquisition contributed $640,000 in revenues and $68,000 in operating income for the three months ended June 30, 2011.  The National IME acquisition contributed $860,000 in revenues and $92,000 in operating income for the six months ended June 30, 2011.

(c)           Pro forma Financial Information

The unaudited pro forma results of operations for the three and six months ended June 30, 2010 and June 30, 2011 assumes that the 2010 and 2011 acquisitions were completed on January 1, 2010.

For the three months ended June 30, 2010 and June 30, 2011, the pro forma results include adjustments to reflect additional interest expense of $4.4 million and $387,000, respectively, associated with the funding of the acquisitions assuming that acquisition related debt was incurred on January 1, 2010.  In addition, incremental depreciation and amortization expense was recorded as if the acquisitions had occurred on January 1, 2010 and amounted to $7.9 million and $1.1 million for the three months ended June 30, 2010 and 2011, respectively.  Finally, adjustments of $5.8 million and $4.4 million were made to selling, general and administrative expenses for the three months ended June 30, 2010 and 2011, respectively, principally related to certain salary and other personal  expenses attributable to the previous owners of the acquired businesses.  These adjustments represent contractual reductions and are considered to be non-recurring and are not expected to have a continuing impact on the operations of the Company.

For the six months ended June 30, 2010 and June 30, 2011, the pro forma results include adjustments to reflect additional interest expense of $9.0 million and $2.7 million, respectively, associated with the funding of the acquisitions assuming that acquisition related debt was incurred on January 1, 2010.  In addition, incremental depreciation and amortization expense was recorded as if the acquisitions had occurred on January 1, 2010 and amounted to $16.7 million and $5.4 million for the six months ended June 30, 2010 and 2011, respectively.  Finally, adjustments of $12.6 million and $8.7 million were made to selling, general and administrative expenses for the six months ended June 30, 2010 and 2011, respectively, principally related to certain salary and other personal  expenses attributable to the previous owners of the acquired businesses.  These adjustments represent contractual reductions and are considered to be non-recurring and are not expected to have a continuing impact on the operations of the Company.

	Three months ended				Six months ended
	June 30,				June 30,
	2010		2011		2010		2011
Pro forma revenues	$	113,860	$	115,656	$	222,264	$	227,132
Pro forma net income		1,034		838		1,092		723
Pro forma income per share:
Basic and diluted	$	0.03	$	0.02	$	0.03	$	0.02

The pro forma financial information presented above is not necessarily indicative of either the results of operations that would have occurred had the acquisitions been effective as of January 1 of the respective years or of future operations of the Company.

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Note 9 - Commitments and Contingencies

6 Months Ended

Jun. 30, 2011

Commitments and Contingencies Disclosure [Text Block]

 (9)          Commitments and Contingencies

(a)           Lease Commitments

The Company and its subsidiaries lease office space under noncancelable operating leases with various expiration dates from 2011 through 2019.

Future minimum lease payments under the operating leases for the six months ended December 31, 2011 and in each of the years subsequent to December 31, 2011 are as follows (in thousands):

	Amount
Six months ended December 31, 2011	$	3,906
Year ended December 31:
2012		6,820
2013		4,925
2014		3,158
2015		2,489
Thereafter		1,739
Total	$	23,037

Related rent expense for the three and six months ended June 30, 2010 was $850,000 and $1.5 million, respectively.  Related rent expense for the three and six months ended June 30, 2011 was $2.2 million and $3.7 million, respectively.

(b)           Employee Benefit Plans

The Company and its subsidiaries each sponsor a separate voluntary defined contribution pension plan under Section 401(k) of the Internal Revenue Code. The plans cover substantially all employees that meet specific age and length of service requirements. The Company and its subsidiaries have various matching and vesting arrangements within their individual plans. For the three and six months ended June 30, 2010, the Company recorded $4,000 in compensation expense related to these plans. The Company did not record any compensation expense related to these plans for the three and six months ended June 30, 2011.

(c)           Letter of Credit

As of December 31, 2010 and June 30, 2011, the Company had $220,000 and $190,000, respectively outstanding under letters of credit which are used to secure certain of the Company’s leased office facilities.

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Note 14 - Subsequent Events

6 Months Ended

Jun. 30, 2011

Subsequent Events [Text Block]

(14)        Subsequent Events

The Company has evaluated subsequent events from the balance sheet date through the date of this filing and identified the following items:

Senior Unsecured Notes

On July 19, 2011, the Company closed its previously announced private offering of $250.0 million in aggregate principal amount of 9.0% senior notes due 2019 (the “Notes”). The Notes were issued at a price of 100% of their principal amount. The Notes are senior obligations of ExamWorks and are guaranteed by ExamWorks’ existing and future U.S. subsidiaries. A portion of the gross proceeds of $250.0 million were used to repay borrowings outstanding under the Company’s Senior Secured Revolving Credit Facility and pay related fees and expenses, and the remainder will be used for general corporate purposes, including acquisitions.

Amendment to Senior Secured Revolving Credit Facility

On July 7, 2011, the Company entered into the Second Amendment becoming effective simultaneously with the consummation of the Company’s announced private offering of $250.0 million aggregate principal senior notes, which were issued on July 19, 2011. The Second Amendment, among other things, reduced the aggregate revolving commitments under the Senior Secured Revolving Credit Facility by $37.5 million for a maximum commitment of $262.5 million, subject to the Company’s right to increase the aggregate revolving commitments by $37.5 million for a maximum commitment of $300.0 million, so long as the Company is not in default and the Company satisfies certain other customary conditions (see note 10). In conjunction with the reduction in the maximum commitment under the Senior Secured Revolving Credit Facility, the Company recorded debt extinguishment costs of approximately $600,000 in July 2011.

Share Repurchase Program

On August 8, 2011, the Company announced that its Board of Directors authorized the implementation of a share repurchase program to repurchase up to $20.0 million of outstanding shares of the Company’s common stock.

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Note 10 - Long-Term Debt

6 Months Ended

Jun. 30, 2011

Debt Disclosure [Text Block]

(10)            Long-Term Debt

	December 31,		June 30,
	2010		2011
Senior Secured Revolving Credit Facility, Bank of America, N.A. (a)	$	—	$	204,000
Working capital facilities, Barclays (b)		4,998		42,963
Various subordinated unsecured notes payable; maturing at various dates from 2011 through 2015 (c)		4,858		3,968
		9,856		250,931
Less current portion		2,312		2,143
	$	7,544	$	248,788

(a) The Company entered into a Senior Secured Revolving Credit Facility agreement effective November 2, 2010 with Bank of America, N.A. The facility initially consisted of a $180.0 million revolving credit facility. The facility is available to finance the Company’s acquisition program and working capital needs. On February 9, 2011, the Company exercised the accordion feature of the Senior Secured Revolving Credit Facility, increasing the facility from $180.0 million to $245.0 million.

On May 6, 2011, the Company increased and fully exercised the accordion features of the Senior Secured Revolving Credit Facility.  The increase and exercise of the accordion feature increased the committed capacity of the credit facility by $55.0 million, from a total of $245.0 million to a total of $300.0 million.

On July 7, 2011, the Company entered into a second amendment to its Senior Secured Revolving Credit Facility (the “Second Amendment”) which became effective simultaneously with the consummation of the Company’s private offering of $250.0 million aggregate principal senior notes (see note 14).  The Second Amendment amended the Senior Secured Revolving Credit Facility to, among other things, (i) extend the maturity date of the Senior Secured Revolving Credit Facility from November 2013 to July 2016; (ii) permit the issuance and sale of the Notes; (iii) replace the consolidated senior leverage ratio with a consolidated senior secured leverage ratio while permitting the maximum consolidated senior secured leverage ratio to be 3.00 to 1; (iv) permit the Company’s maximum consolidated leverage ratio to increase from 3.5 to 1 to 4.75 to 1; (v) reduce the borrowing cost; and (vi) allow the Company to complete acquisitions with a purchase price of up to $75.0 million (previously $50.0 million) without prior lender consent. The Second Amendment also reduced the aggregate revolving commitments under the Senior Secured Revolving Credit Facility by $37.5 million for a maximum commitment of $262.5 million, subject to the Company’s right to increase the aggregate revolving commitments by $37.5 million for a maximum commitment of $300.0 million, so long as the Company is not in default and the Company satisfies certain other customary conditions.

Borrowings under the Senior Secured Revolving Credit Facility, as amended, bear interest, at either (i) LIBOR plus the applicable margin or (ii) a base rate (equal to the highest of (a) the federal funds rate plus 0.5%, (b) the Bank of America prime rate and (c) LIBOR (using a one month-period) plus 1.0%), plus the applicable margin, as the Company elects. The applicable margin means a percentage per annum determined in accordance with the following table:

		Commitment
Pricing		Fee/Unused		Letter of		Eurocurrency		Base Rate
Tier	Consolidated Leverage Ratio	Line Fee		Credit Fee		Rate Loans		Loans
1	≥ 2.50 to 1.0		0.50%		3.75%		3.75%		2.75%
2	≥ 2.00 to 1.0 but < 2.50 to 1.0		0.45%		3.50%		3.50%		2.50%
3	≥ 1.50 to 1.0 but < 2.00 to 1.0		0.40%		3.25%		3.25%		2.25%
4	≥ 1.00 to 1.0 but < 1.50 to 1.0		0.35%		3.00%		3.00%		2.00%
5	< 1.00 to 1.0		0.30%		2.75%		2.75%		1.75%

In the event of default, the outstanding indebtedness under the Senior Secured Revolving Credit Facility will bear interest at an additional 2%.

The Senior Secured Revolving Credit Facility contains restrictive covenants, including among other things financial covenants requiring the Company to not exceed a maximum consolidated senior secured leverage coverage ratio, a maximum total consolidated leverage ratio and to maintain a minimum consolidated fixed charge coverage ratio. The Senior Secured Revolving Credit Facility also restricts the Company’s ability (subject to certain exceptions) to incur indebtedness, prepay or amend other indebtedness, create liens, make certain fundamental changes including mergers or dissolutions, pay dividends and make other payments in respect of capital stock, make certain investments, sell assets, change its lines of business, enter into transactions with affiliates and other corporate actions.

(b) On September 29, 2010, the Company’s indirect wholly-owned subsidiary UKIM entered into a Sales Finance Agreement (the “UKIM SFA”) with Barclays Bank PLC (“Barclays”), pursuant to which Barclays will provide UKIM a working capital facility of up to £5,000,000, subject to the terms and conditions of the UKIM SFA. The working capital facility bears a discount margin of 2.5% over Base Rate (0.5% rate on June 30, 2011) and serves to finance UKIM’s unpaid account receivables. The working capital facility operates on a co-terminus and cross-default basis with other facilities provided by Barclays and with the Senior Secured Revolving Credit Facility. As of June 30, 2011, the Company had $5.9 million outstanding under the working capital facility, resulting in approximately $2.1 million in availability.

On May 12, 2011, the Company’s indirect wholly-owned subsidiary Premex entered into a Sales Finance Agreement (the “Premex SFA”) with Barclays, pursuant to which Barclays will provide Premex a working capital facility of up to £26,500,000, subject to the terms and conditions of the Premex SFA. The working capital facility bears a discount margin of 2.4% over Base Rate (0.5% rate on June 30, 2011) and serves to finance Premex’s unpaid account receivables. The working capital facility operates on a co-terminus and cross-default basis with other facilities provided by Barclays and with the Senior Secured Revolving Credit Facility. As of June 30, 2011, the Company had $37.1 million outstanding under the working capital facility, resulting in approximately $5.4 million in availability.

(c) During 2009 and 2010, the Company issued seller debt in the form of subordinated unsecured notes payable with an estimated fair value of approximately $5.5 million relating to certain acquisitions (see note 3). These notes are unsecured and subordinated to the Senior Secured Revolving Credit Facility and the Notes issued in July 2011. Five notes payable totaling $4.4 million bear interest at 6%, and are payable quarterly with amounts ranging between $50,000 and $76,000, with maturity dates ranging from August 2011 through March 2013. The remaining balance of the notes payable, $1.1 million, are noninterest bearing and are payable annually with amounts ranging between $250,000 and $333,000, maturing in 2014. The Company made principal payments totaling $1.0 million during the six months ended June 30, 2011.

As of June 30, 2011, future maturities of long-term debt were as follows (in thousands):

	Amount
Six months ended December 31, 2011	$	1,295
Year ended December 31:
2012		1,971
2013		210,327
2014		37,338
2015		—
Total	$	250,931

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Note 8 - Related Party Transactions

6 Months Ended

Jun. 30, 2011

Related Party Transactions Disclosure [Text Block]

(8)           Related Party Transactions

In June 2009, the Company engaged RedRidge Finance Group (“RedRidge”) to assist the Company in securing additional debt financing to allow the Company to continue to implement its acquisition strategy.  For the six months ended June 30, 2010, the Company paid RedRidge $425,000, all of which was paid during the three months ended June 30, 2010 in connection with a previous credit facility.  No such fees were paid to RedRidge during the three and six months ended June 30, 2011.

The Bank of America Senior Secured Revolving Credit Facility contains a provision requiring the Company to use a third party to perform financial due diligence for acquisitions exceeding a certain size. With the approval of the senior lender, the Company engaged RedRidge to assist it with financial due diligence and incurred $112,000 and $240,000 in fees in acquisition related work performed during the three and six months ended June 30, 2010, respectively.  The Company incurred $143,000 and $187,000 in fees in acquisition related work performed during the three and six months ended June 30, 2011, respectively.    P&P Investment, LLC (“P&P”), a company owned by Richard Perlman, Executive Chairman of the Company, and James Price, Chief Executive Officer of the Company, are minority owners of, and have lent funds to, RedRidge.  P&P, Mr. Perlman and Mr. Price have entered into a letter agreement under which P&P waived any right it had to any portion of the diligence fees paid by the Company to RedRidge and agreed that such fee, minus amounts paid to RedRidge’s employees, would be paid solely to RedRidge’s majority owner.  

In June 2010, the Company entered into a lease agreement with Compass Partners L.L.C. (“Compass”) for corporate office space located at 655 Madison Avenue, 23rd Floor, New York, NY. Compass is the general partner of ExamWorks Holdings, LLLP, the Company’s majority shareholder as of the date of the agreement.  The Company’s Executive Chairman, Richard Perlman, owns 99% of Compass and his wife owns the remaining 1%.  Pursuant to the lease, which runs from April 1, 2010 through June 30, 2014, the Company paid Compass a rental fee of $10,080 per month in 2010, which fee was subject to increase commencing January 1, 2011 based on a proportionate pass through of base rent increases and increases for property taxes and building operating expenses. Prior to the entry into this lease agreement, the Company did not incur costs in excess of $120,000 per year with respect to leasing this corporate office space. In June 2010, the Company paid Compass $62,000 in leasehold improvements.  For the three and six months ended June 30, 2010, the Company paid Compass $67,000 and $83,000, respectively in rental payments.  The Company paid Compass $35,000 and $68,000 in rental payments during the three and six months ended June 30, 2011, respectively.

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Note 1 - Nature of Operations and Basis of Presentation

6 Months Ended

Jun. 30, 2011

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

(1)  Nature of Operations and Basis of Presentation

ExamWorks Group, Inc. is a leading provider of independent medical examinations (“IMEs”), peer and bill reviews and related services (“IME services” or the “IME industry”). ExamWorks, Inc. was incorporated as a Delaware corporation on April 27, 2007. In 2008, ExamWorks, Inc. acquired three companies operating in the IME industry. In 2009, ExamWorks, Inc. acquired 11 other IME companies, including a provider of software solutions to the IME industry. In 2010, ExamWorks, Inc. acquired 14 additional IME companies. In the six months ended June 30, 2011, ExamWorks, Inc. acquired three additional IME companies.  As of June 30, 2011, ExamWorks, Inc. operated out of 42 service centers serving all 50 United States, Canada and the United Kingdom. In June 2010, ExamWorks, Inc. effected a corporate reorganization creating a holding company, ExamWorks Group, Inc., with ExamWorks, Inc. becoming a wholly-owned subsidiary of ExamWorks Group, Inc. (“ExamWorks” or the “Company”).  In the fourth quarter of 2010, the Company issued 9.3 million shares of common stock in an initial public offering (“IPO”).

The consolidated financial statements of the Company as of June 30, 2010 and 2011 included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and have not been audited by its independent registered public accounting firm. In the opinion of management, all adjustments of a normal and recurring nature necessary to present fairly the financial position and results of operations and cash flows for all periods presented have been made. Pursuant to SEC rules and regulations, certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted from these statements unless significant changes have taken place since the end of the Company’s most recent fiscal year. The Company’s December 31, 2010 consolidated balance sheet was derived from audited consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010, but does not include all disclosures required by GAAP. It is suggested that these consolidated financial statements be read in conjunction with the consolidated financial statements and notes included in the aforementioned Form 10-K. The results of operations for the six months ended June 30, 2011 are not necessarily indicative of the results that may be expected for the year ending December 31, 2011.

The consolidated financial statements include the accounts of ExamWorks, its wholly-owned subsidiaries and other entities controlled by ExamWorks. Significant intercompany accounts and transactions have been eliminated in consolidation.

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Note 4 - Property, Equipment and Leasehold Improvements

6 Months Ended

Jun. 30, 2011

Property, Plant and Equipment Disclosure [Text Block]

(4)           Property, Equipment and Leasehold Improvements

Property, equipment and leasehold improvements at December 31, 2010 and June 30, 2011, consist of the following (in thousands):

	Estimated
	useful	December 31,		June 30,
	lives	2010		2011
Building	15 years	$	—	$	600
Computer and office equipment	3 years		5,738		8,170
Furniture and fixtures	3 – 5 years		1,379		2,327
Leasehold improvements	Lease term		295		673
			7,412		11,770
Less accumulated depreciation and amortization			2,542		4,275
Total		$	4,870	$	7,495

Depreciation expense for the three and six months ended June 30, 2010 was $381,000 and $593,000, respectively.  Depreciation expense for the three and six months ended June 30, 2011 was $954,000 and $1.7 million, respectively.

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Note 5 - Goodwill and Intangible Assets

6 Months Ended

Jun. 30, 2011

Goodwill and Intangible Assets Disclosure [Text Block]

(5)           Goodwill and Intangible Assets

 Goodwill at December 31, 2010 and June 30, 2011 consists of the following (in thousands):

	December 31,			June 30,
	2010			2011
Balance at beginning of period	$	32,395		$	90,582
Goodwill acquired during the period		57,877			186,202
Adjustments to prior year acquisitions		(303	)		904
Effect of foreign currency translation		613			203
Balance at end of period	$	90,582		$	277,891

Intangible assets at December 31, 2010 and June 30, 2011, consist of the following (in thousands):

		December 31, 2010
		Gross						Net
		carrying		Accumulated				carrying
	Estimated useful lives	amount		amortization				value
Amortizable intangible assets:
Customer relationships	40 to 42 months	$	70,163		$	(19,130	)	$	51,033
Tradenames	45 months		17,883			(4,606	)		13,277
Covenants not to compete	36 months		1,729			(841	)		888
Technology	24 to 40 months		3,427			(1,711	)		1,716
Totals		$	93,202		$	(26,288	)	$	66,914

		June 30, 2011
		Gross						Net
		carrying		Accumulated				carrying
	Estimated useful lives	amount		amortization				value
Amortizable intangible assets:
Customer relationships	40 to 60 months	$	142,138		$	(32,759	)	$	109,379
Tradenames	45 to 84 months		45,809			(8,199	)		37,610
Covenants not to compete	36 months		2,609			(1,222	)		1,387
Technology	24 to 40 months		6,503			(2,566	)		3,937
Totals		$	197,059		$	(44,746	)	$	152,313

The aggregate intangible amortization expense for the three and six months ended June 30, 2010 was $3.2 million and $6.0 million, respectively.  The aggregate intangible amortization expense for the three and six months ended June 30, 2011 was $10.5 million and $18.4 million, respectively.  The estimated future amortization expense of intangible assets is as follows (in thousands):

	Amount
Six months ended December 31, 2011	$	23,906
Year ended December 31:
2012		43,446
2013		37,496
2014		21,461
2015		16,913
Thereafter		9,091
Total	$	152,313

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Note 13 - Segment and Geographical Information

6 Months Ended

Jun. 30, 2011

Segment Reporting Disclosure [Text Block]

 (13)        Segment and Geographical Information

The Company complies with FASB ASC Topic 280, Segment Reporting, (“ASC 280”). ASC 280, which is based on a management approach to segment reporting, establishes requirements to report selected segment information quarterly and to report annually entity-wide disclosures about products, major customers and the geographies in which the entity holds material assets and reports revenue. An operating segment is defined as a component that engages in business activities whose operating results are reviewed by the chief operating decision maker and for which discrete financial information is available. Based on the provisions of ASC 280, the Company has determined that it operates in one segment. The Company manages its resources and assesses its performance on an enterprise-wide basis. The Company’s product groups qualify for aggregation under ASC 280 due to their similarities in customer base, economic characteristics, and the nature of products and services provided.

For the three months ended June 30, 2010, all of the Company’s revenues were generated in the U.S.  For the three months ended June 30, 2011, $82.6 million, $5.6 million and $18.5 million of the Company’s revenues were generated in the U.S., Canada and the U.K., respectively.  For the six months ended June 30, 2010, all of the Company’s revenues were generated in the U.S.  For the six months ended June 30, 2011, $139.5 million, $10.3 million and $23.5 million of the Company’s revenues were generated in the U.S., Canada and the U.K., respectively.  As of December 31, 2010, total long-lived assets located in the U.S., Canada and the U.K. were $139.4 million, $26.3 million and $8.8 million, respectively.  As of June 30, 2011, total long-lived assets located in the U.S., Canada and the U.K. were $335.6 million, $28.0 million and $79.6 million, respectively.

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Note 6 - Accrued Expenses

6 Months Ended

Jun. 30, 2011

Accounts Payable and Accrued Liabilities Disclosure [Text Block]

(6)           Accrued Expenses

Accrued expenses at December 31, 2010 and June 30, 2011 consist of the following (in thousands):

	December 31,		June 30,
	2010		2011
Accrued compensation and benefits	$	1,647	$	4,673
Accrued professional fees		1,775		1,556
Accrued income and other taxes		2,235		4,048
Accrued medical panel fees		284		1,686
Accrued value added tax		2,829		15,072
Other accrued expenses		644		1,215
Total	$	9,414	$	28,250

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Consolidated Statements of Cash Flows (Unaudited) (USD $) In Thousands	6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010
Operating activities:
Net loss	$ (631)	$ (667)
Adjustments to reconcile net loss to net cash provided by operating activities:
Loss (gain) on interest rate swap	(197)	65
Depreciation and amortization	20,084	6,547
Amortization of deferred rent	(106)	(43)
Share-based compensation	3,022	298
Excess tax benefit related to share-based compensation	(1,886)
Provision for doubtful accounts	610	375
Amortization of deferred financing costs	918	320
Deferred income taxes	(2,563)	(742)
Other	223
Changes in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable	(2,623)	(1,830)
Prepaid expenses and other current assets	(689)	(697)
Accounts payable and accrued expenses	747	2,743
Deferred revenue and customer deposits	(764)	42
Other liabilities	248	414
Net cash provided by operating activities	16,393	6,825
Investing activities:
Cash paid for acquisitions, net	(280,542)	(61,890)
Purchases of equipment and leasehold improvements, net	(2,634)	(980)
Working capital and other settlements for acquisitions	(1,636)	(220)
Net cash used in investing activities	(284,812)	(63,090)
Financing activities:
Borrowings under revolving credit facilities	264,000
Net borrowings under working capital facilities	37,794
Excess tax benefit related to share-based compensation	1,886
Proceeds from the exercise of options and warrants	1,313
Borrowings under term loan		40,969
Issuance of preferred stock, net		32,421
Issuance of common stock, net		2,772
Payment of related party notes		(3,500)
Repayment of subordinated unsecured notes payable	(1,027)	(569)
Payment of deferred financing costs	(1,838)	(1,603)
Repayments under revolving credit facilities	(60,000)	(600)
Other	(275)	(70)
Net cash provided by financing activities	241,853	69,820
Exchange rate impact on cash and cash equivalents	148
Net increase (decrease) in cash and cash equivalents	(26,418)	13,555
Cash and cash equivalents, beginning of period	33,624	1,499
Cash and cash equivalents, end of period	7,206	15,054
Supplemental disclosure of noncash investing and financing activities:
Issuance of common stock for acquisitions	45,386	6,683
Issuance of common stock for termination of agreement		1,434
Supplemental disclosures of cash flow information:
Cash paid for interest	3,702	1,985
Cash paid for income taxes	$ 1,773	$ 177

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Note 2 - Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2011

Significant Accounting Policies [Text Block]

(2)           Summary of Significant Accounting Policies

(a)           Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management bases its estimates on certain assumptions which they believe are reasonable in the circumstances and actual results could differ from those estimates. The more significant estimates reflected in these consolidated financial statements include the valuation of equity issued, purchase price allocations, useful lives of intangible assets, potential impairment of goodwill and intangible assets, the allowance for doubtful accounts and the valuation of share-based compensation and derivative instruments.

(b)           Foreign Currencies

Assets and liabilities recorded in foreign currencies are translated into U.S. dollars at the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates of exchange prevailing during the periods. Translation adjustments resulting from this process are recorded to other comprehensive income.

(c)           Cash and Cash Equivalents

The Company considers all highly liquid investments with original maturities of three months or less when purchased to be cash equivalents. The Company had no cash equivalents as of December 31, 2010 and June 30, 2011.

(d)           Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable consist of amounts owed to the Company for services provided in the normal course of business and are reported net of allowance for doubtful accounts, which amounted to $815,000 and $1.3 million  as of December 31, 2010 and June 30, 2011, respectively. Generally, no collateral is received from customers and additions to the allowance are based on ongoing credit evaluations of customers with general credit experience being within the range of management’s expectations. Accounts are reviewed regularly for collectability and those deemed uncollectible are written off.

(e)           Concentrations of Credit Risk

The Company routinely assesses the financial strength of its customers and establishes an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends and other information. For the six months ended June 30, 2010 and 2011, no individual customer accounted for more than 10% of revenues.  At December 31, 2010 and June 30, 2011, there was no individual customer that accounted for greater than 10% of the accounts receivable balance.

As of June 30, 2011, the Company had cash and cash equivalents totaling approximately $7.2 million. These amounts were held for future acquisitions and working capital purposes and were held in non-interest bearing accounts, of which $5.4 million were held in the U.S. The U.S. amounts are insured in full against bank failure through June 30, 2012 under the Federal Deposit Insurance Corporation Temporary Liquidity Guarantee Program.

(f)           Property, Equipment and Leasehold Improvements

Property, equipment and leasehold improvements are recorded at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the respective assets and accelerated methods for income tax purposes. Leasehold improvements are amortized over the lesser of their expected useful life or the remaining lease term. Maintenance and repair costs are expensed as incurred.

(g)           Long-Lived Assets

In accordance with Impairment or Disposal of Long-Lived Assets, Subsections of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification™ (“ASC”) Subtopic 360-10 (“ASC 360”), Property, Plant, and Equipment — Overall, long-lived assets, such as equipment and purchased intangible assets subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying value. If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. At December 31, 2010 and June 30, 2011, no impairment was noted.

(h)           Goodwill and Other Intangible Assets

Goodwill is an asset representing the future economic benefits arising from assets acquired in a business combination that are not individually identified and separately recognized. Goodwill is reviewed for impairment at least annually in accordance with the provisions of FASB ASC Topic 350, Intangibles — Goodwill and Other (“ASC 350”). The goodwill impairment test is a two-step test. Under the first step, the fair value of the reporting unit is compared with its carrying value (including goodwill). If the fair value of the reporting unit is less than its carrying value, an indication of goodwill impairment exists for the reporting unit and the enterprise must perform step two of the impairment test (measurement). Under step two, an impairment loss is recognized for any excess of the carrying amount of the reporting unit’s goodwill over the implied fair value of that goodwill. The implied fair value of goodwill is determined by allocating the fair value of the reporting unit in a manner similar to a purchase price allocation and the residual fair value after this allocation is the implied fair value of the reporting unit goodwill. Fair value of the reporting unit is determined using a discounted cash flow analysis. If the fair value of the reporting unit exceeds its carrying value, step two does not need to be performed.

The Company performed its annual impairment review of goodwill in October 2010, and it was determined that the carrying amount of goodwill was not impaired and there have been no subsequent developments that would indicate impairment exists as of December 31, 2010 and June 30, 2011. The goodwill impairment review will continue to be performed annually or more frequently, if facts and circumstances warrant a review.

ASC 350 also requires that intangible assets with definite lives be amortized over their estimated useful lives. Currently, customer relationships, tradenames, covenants not to compete and technology are amortized using the straight-line method over estimated useful lives.

(i)           Deferred Financing Costs

Deferred financing costs totaling $1.7 million were incurred in December 2009 in connection with a previous credit facility and were to be amortized to interest expense over the three-year term of the facility using the straight-line method, which approximates the effective interest method. In the first ten months of 2010, an additional $2.1 million of deferred financing costs were incurred as the Company expanded its borrowing availability under that facility.  The previous credit facility was repaid in November 2010 with proceeds generated from the IPO.  In connection with this early retirement of debt, the Company recognized debt extinguishment costs of approximately $3.2 million in the fourth quarter of 2010 for the unamortized portion of the loan costs.  The debt extinguishment costs were recorded as other interest expense in accordance with FASB ASC Topic 470, Debt (“ASC 470”).  In November 2010, the Company entered in to a new senior secured revolving credit facility with Bank of America N.A. ("Senior Secured Revolving Credit Facility") (see note 10) and has incurred deferred financing costs of $6.2 million, $4.4 million of which were incurred in 2010 and $1.8 million of which were incurred in the six months ended June 30, 2011.  The deferred financing costs will be amortized to interest expense over the five-year term of the facility, as amended (see note 10), using the straight-line method which approximates the effective interest method.

For the three months ended June 30, 2010 and 2011, the Company amortized approximately $174,000 and $528,000 to interest expense, respectively.  For the six months ended June 30, 2010 and 2011, the Company amortized approximately $320,000 and $918,000 to interest expense, respectively.

(j)           Revenue Recognition

Revenue related to IMEs, peer reviews, bill reviews and administrative support services is recognized at the time services have been performed and the report is shipped to the end user. The Company believes that recognizing revenue at the time the report is shipped is appropriate because the Company’s revenue policies meet the following four criteria in accordance with FASB ASC 605-10-S25, Revenue Recognition: Overall, (i) persuasive evidence that arrangement exists, (ii) shipment has occurred, (iii) the price is fixed and determinable and (iv) collectability is reasonably assured.

Revenue related to other IME services, including litigation support services and medical record retrieval services, where no report is generated, is recognized at the time the service is performed. The Company believes that recognizing revenue at the time the service is performed is appropriate because the Company’s revenue policies meet the following four criteria in accordance with FASB ASC 605-10-S25, (i) persuasive evidence that arrangement exists, (ii) services have been rendered, (iii) the price is fixed and determinable and (iv) collectability is reasonably assured.

Should changes in conditions cause management to determine these criteria are not met for certain future transactions, revenue recognized for any reporting period could be adversely affected.

(k)           Costs of Revenues

Costs of revenues are comprised of fees paid to members of the Company’s medical panel; other direct costs including transcription, film and medical record obtainment and transportation; and other indirect costs including labor and overhead related to the generation of revenues.

(l)           Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company applies the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, (included in FASB ASC Subtopic 740-10, Income Taxes — Overall), and recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. Prior to the adoption of FASB Interpretation No. 48, the Company recognized the effect of income tax positions only if such positions were probable of being sustained.

The Company records interest and penalties related to unrecognized tax benefits in income tax expense.

(m)          Loss Per Common Share

Basic loss per share is calculated by dividing net loss by the weighted-average number of common shares outstanding during each period. Diluted loss per common share is calculated by dividing net loss, adjusted on an “as if converted” basis, by the weighted-average number of actual shares outstanding and, when dilutive, the share equivalents that would arise from the assumed conversion of convertible instruments.  The effect of potentially dilutive stock options and warrants is calculated using the treasury stock method.

For the six months ended June 30, 2010, the potentially dilutive securities include options and warrants exercisable into 3.9 million shares of common stock and 228,000 shares of common stock issuable to settle the equity component of an earnout obligation.  For the six months ended June 30, 2011, the potentially dilutive securities include options and warrants exercisable into 7.3 million shares of common stock, 58,000 shares of common stock issuable to settle the equity component of an earnout obligation, and 135,000 shares of common stock issuable, at the holder’s option, to settle a subordinated unsecured note.

For the three and six months ended June 30, 2010 and 2011, all of the potentially dilutive securities were excluded from the calculation of shares applicable to loss per share, because their inclusion would have been anti-dilutive.

(n)           Share-Based Compensation

The Company has an Amended and Restated 2008 Stock Incentive Plan (the “Plan”) that provides for granting of options. The Company accounts for share-based awards in accordance with FASB ASC Topic 718, Compensation — Stock Compensation (“ASC 718”). ASC 718 requires measurement of compensation cost for all share-based awards at fair value on the grant date (or measurement date if different) and recognition of compensation expense, net of forfeitures, over the requisite service period for awards expected to vest.

The fair value of stock option grants is determined using the Black-Scholes valuation model. The Black-Scholes option-pricing model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable, characteristics not present in these employee stock options. Additionally, option valuation models require the input of highly subjective assumptions, including the expected volatility of the stock price. Because the Company’s employee stock options have characteristics significantly different from those of traded options and because changes in the subjective input assumptions can materially affect the fair value estimates, in management’s opinion, the existing models may not provide a reliable single measure of the fair value of its share-based awards. The Company’s expected volatility assumptions are based on the Company’s peer group median implied volatility. Expected life assumptions are based upon the “simplified” method as described in Securities and Exchange Commission Staff Accounting Bulletin No. 107, which is the midpoint between the vesting date and the end of the contractual term. The risk-free interest rate was selected based upon yields of U.S. Treasury issues with a term equal to the expected life of the option being valued.

The assumptions utilized for stock option grants during the six months ended June 30, 2011 were as follows:

	Six months ended
	June 30, 2011
Volatility		35.80	%
Expected life (years)		6.00
Risk-free interest rate		2.23 — 2.54	%
Dividend yield		0.00
Fair value	$	8.78 — 9.28

In the first two quarters of 2011, the Company issued approximately 2.3 million stock option awards to certain employees. The weighted average fair value of each stock option was $8.95 per option and the aggregate fair value was $20.9 million. All of these awards vest over a three-year period. All of these options could vest earlier in the event of a change in control or merger or other acquisition. Share-based compensation expense was $184,000 and $298,000 for the three and six months ended June 30, 2010, respectively, all of which was recorded in selling, general and administrative expenses.  Share-based compensation expense was $2.0 million and $3.0 million for the three and six months ended June 30, 2011, of which $650,000 was included in costs of revenues in both periods, and $1.4 million and $2.4 million was recorded in selling, general and administrative expenses for the three and six months periods, respectively.  At June 30, 2011, the unrecognized compensation expense related to stock option grants was $24.5 million with a remaining weighted average life of 2.0 years.

A summary of option activity for the six months ended June 30, 2011 follows:

				Weighted
	Number of			average
	options			exercise price
Balance at December 31, 2010		5,058,525		$	7.29
Options granted		2,330,026			23.08
Options forfeited		(217,435	)		12.58
Options exercised		(276,591	)		4.76
Balance at June 30, 2011		6,894,525		$	12.56

There were no stock options exercised during the six months ended June 30, 2010.  The total intrinsic value of stock options exercised during the six months ended June 30, 2011 was approximately $5.1 million.  As of June 30, 2011, there were 1.8 million stock options exercisable with a weighted average exercise price of $4.50.

 (o)          Fair Value Measurements

In September 2006, the FASB issued authoritative guidance codified as FASB ASC Topic 820, Fair Value Measurements and Disclosures (“ASC 820”). ASC 820 defines fair value, establishes a framework for measuring fair value in U.S. GAAP and expands disclosure about fair value measurements. ASC 820 is effective for interim reporting periods in fiscal years beginning after November 15, 2007. The Company adopted the applicable provisions of ASC 820 effective January 1, 2008.

FASB ASC Topic 825, Financial Instruments (“ASC 825”), delayed the effective date of the application of ASC 820 to fiscal years beginning after November 15, 2008 for all nonfinancial assets and nonfinancial liabilities that are recognized or disclosed at fair value in the financial statements on a nonrecurring basis. Nonrecurring nonfinancial assets and nonfinancial liabilities for which the Company has not applied the provisions of ASC 820 primarily include those measured at fair value in goodwill and long-lived asset impairment testing, those initially measured at fair value in a business combination, and nonfinancial liabilities for exit or disposal activities.

ASC 820 defines fair value as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 establishes a fair value hierarchy, which prioritizes the inputs used in measuring fair value into the following levels:

In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible as well as consider counterpart credit risk in its assessment of fair value.

Level 1 – Quoted prices in active markets for identical assets or liabilities.

Level 2 – Inputs, other than quoted prices in active markets, that are observable either directly or indirectly.

Level 3 – Unobservable inputs based on the company’s own assumptions.

The Company’s financial instruments, which are measured at fair value on a recurring basis, are categorized using the fair value hierarchy at December 31, 2010 and June 30, 2011, and are as follows (in thousands):

	Level 1		Level 2		Level 3		Total
As of December 31, 2010
Financial instruments:
Interest rate swap	$	—	$	654	$	—	$	654
Contingent consideration		—		—		6,202		6,202
As of June 30, 2011
Financial instruments:
Interest rate swap		—		457		—		457
Contingent consideration		—		—		4,599		4,599

The fair value of the interest rate swap is determined using observable market inputs, such as current interest rates, and considers nonperformance risk of the Company and that of its counterparties.

The contingent consideration relates to earnout provisions recorded in conjunction with certain acquisitions completed in 2009 and 2010 (see note 3). Of the total decrease in fair value of the contingent consideration of $1.6 million from December 31, 2010 to June 30, 2011, $293,000 was settled as cash consideration to satisfy the first installment related to a 2009 acquisition, approximately $500,000 was recorded in selling, general and administrative expenses, and approximately $800,000 was recorded in interest and other expenses, net in the consolidated statement of operations.

In February 2007, the FASB issued ASC 825, which permits entities to choose to measure many financial instruments and certain other items at fair value. This provision of ASC 825 is effective for fiscal years beginning after November 15, 2007.  As the Company did not elect the fair value option, the adoption of this provision of ASC 825 did not have a material impact on the Company’s consolidated financial position, results of operations and cash flows for the six months ended June 30, 2010 and 2011.

(p)          Comprehensive Loss

Comprehensive loss consists of two components, net loss and other comprehensive loss. Other comprehensive loss refers to revenues, expenses, gains and losses that under GAAP are recorded as a component of stockholders’ equity but are excluded from net loss. The Company’s other comprehensive loss consists of foreign currency translation adjustments from those business units not using the U.S. dollar as their functional currency.

(q)          Recent Accounting Pronouncements

In October 2009, the FASB issued Accounting Standards Update (“ASU”) 2009-13 (“ASU 2009-13”) addressing revenue arrangements with multiple deliverables. The new guidance establishes a selling price hierarchy for determining the selling price of a deliverable, eliminates the residual method of allocation, requires the allocation of arrangement consideration to all deliverables using the relative selling price method, and significantly expands disclosure requirements. The guidance is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. The Company adopted the provisions of ASU 2009-13 effective January 1, 2011 and this adoption did not have a material impact on its consolidated financial position, results of operations and cash flows.

In December 2010, the FASB issued ASU 2010-29, Disclosure of Supplementary Pro Forma Information for Business Combinations.  The amendments in this update specify that if a public entity presents comparative financial statements, the entity should disclose revenue and earnings of the combined entity as though the business combination(s) that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only.  The amendments also expand the supplemental pro forma disclosures under FASB ASC Topic 805 (“ASC 805”), Business Combinations, to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings.  The amendments in this update are effective prospectively for business combinations for which the acquisition date is on or after January 1, 2011.  The Company adopted the provisions of ASU 2010-29 effective January 1, 2011.  The adoption of ASU 2010-29 did not have a material impact on the Company’s consolidated financial statements for the six months ended June 30, 2011.  The Company included the expanded disclosure requirements required under ASU 2010-29 for all acquisitions completed in 2011 (see note 3).

In May 2011, the FASB issued ASU 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS. This ASU represents the converged guidance of the FASB and the International Accounting Standards Board on fair value measurement. These amendments have resulted in common requirements for measuring fair value and for disclosing information about fair value measurements, including a consistent meaning of the term “fair value.” The common requirements are expected to result in greater comparability of fair value measurements presented and disclosed in financial statements prepared in accordance with U.S. GAAP and International Financial Reporting Standards. The amendments are to be applied prospectively and are effective for fiscal years beginning after December 15, 2011.  The Company plans to adopt these provisions in the first quarter of 2012. Adoption of these provisions is not expected to have a material impact on the Company’s consolidated financial statements.

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Note 11 - Financial Instruments

6 Months Ended

Jun. 30, 2011

Fair Value Disclosures [Text Block]

(11)         Financial Instruments

The FASB issued ASC Topic 815, Derivatives and Hedging (“ASC 815”), which establishes accounting and reporting standards for derivative instruments. ASC 815 requires an entity to recognize all derivatives as either assets or liabilities and measure those instruments at fair value. Derivatives that do not qualify as a hedge must be adjusted to fair value in earnings. If the derivative does qualify as a hedge under ASC 815, changes in the fair value will either be offset against the change in fair value of the hedged assets, liabilities or firm commitments or recognized in accumulated other comprehensive income until the hedged item is recognized in earnings. The ineffective portion of a hedge’s change in fair value will be immediately recognized in earnings.

In August 2008, in order to protect against interest rate exposure on its variable-rate debt, the Company entered into an interest rate swap to fix the interest rate applicable to certain of its variable-rate debt. The agreement swaps one-month LIBOR for a fixed interest rate of 4.36% with a notional amount of $8.3 million and $7.4 million as of December 31, 2010 and June 30, 2011, respectively.  The Company did not meet the criteria for hedge accounting under ASC 815, thus the difference between its amortized cost and its fair value resulted in an unrealized loss (gain) for the six months ended June 30, 2010 and 2011, of $65,000 and $(197,000), respectively, and such amount was reported in interest and other expenses, net on the accompanying consolidated statements of operations.

The Company does not enter into derivative transactions for speculative purposes.

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Consolidated Balance Sheets(Unaudited) (USD $) In Thousands	Jun. 30, 2011	Dec. 31, 2010
Current assets:
Cash and cash equivalents	$ 7,206	$ 33,624
Accounts receivable, net	142,795	38,638
Other receivables	13	33
Prepaid expenses	4,393	2,175
Deferred tax assets	3,249	68
Other current assets	22	42
Total current assets	157,678	74,580
Property, equipment and leasehold improvements, net	7,495	4,870
Goodwill	277,891	90,582
Intangible assets, net	152,313	66,914
Deferred tax assets, noncurrent		7,669
Deferred financing costs, net	5,096	4,176
Other assets	425	271
Total assets	600,898	249,062
Current liabilities:
Accounts payable	51,231	19,999
Accrued expenses	28,250	9,414
Deferred revenue	835	272
Current portion of subordinated unsecured notes payable	2,143	2,312
Current portion of contingent earnout obligation	1,722	2,478
Other current liabilities	6,271	3,105
Total current liabilities	90,452	37,580
Senior revolving credit facility and working capital facilities	246,963	4,998
Long-term subordinated unsecured notes payable, less current portion	1,825	2,546
Long-term contingent earnout obligation, less current portion	1,461	2,032
Deferred tax liability, noncurrent	7,349
Other long-term liabilities	1,887	1,666
Total liabilities	349,937	48,822
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.0001 par value. Authorized 50,000,000 shares; no shares issued and outstanding at December 31, 2010 and June 30, 2011
Common stock, $0.0001 par value; Authorized 250,000,000 shares; issued and outstanding 32,216,104 and 34,608,066 shares at December 31, 2010 and June 30, 2011, respectively	3	3
Additional paid-in capital	263,443	211,861
Accumulated other comprehensive income	986	1,216
Accumulated deficit	(13,471)	(12,840)
Total stockholders’ equity	250,961	200,240
Total liabilities and stockholders’ equity	$ 600,898	$ 249,062