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Australia Acquisition: The Oxford Centre, Inc Oxford, Mississippi

The following excerpt is from the company's SEC filing.

We have audited the accompanying consolidated balance sheets of The Oxford Centre, Inc. (the Company) as of December 31, 2013 and 2014, and the related consolidated statements of income, equity, and cash flows for the years ended December 31, 2013 and 2014. These consolidated financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan an d perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Companys internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of The Oxford Centre, Inc. at December 31, 2013 and 2014, and the consolidated results of its operations and its cash flows for the years ended December 31, 2013 and 2014, in conformity with accounting principles generally accepted in the United States of America.

/s/ BDO USA, LLP

July 12, 2015

Consolidated Balance Sheets

Assets

Current assets

Cash and cash equivalents (Variable Interest Entities: 2013: $572; 2014: $72)

192,993

52,776

Investment securities, at market value

1,373,044

Accounts receivable, net of allowances (Variable Interest Entities: 2013: $29,705; 2014: $65,331)

2,003,689

2,541,160

Prepaid expenses and other (Variable Interest Entities: 2013: $1,000; 2014: $1,000)

14,635

23,733

Total current assets

2,211,317

3,990,713

Property and equipment, net

(Variable Interest Entities: 2013: $1,653,523; 2014: $3,335,351)

2,459,399

4,548,460

Total assets

4,670,716

8,539,173

Liabilities and Equity

Current liabilities

Accounts payable (Variable Interest Entities: 2013: $204; 2014: $30,657)

19,182

177,770

Accrued liabilities

162,622

147,227

Current portion of long-term debt (Variable Interest Entities: 2013: $112,417; 2014: $121,847)

511,730

142,124

Total current liabilities

693,534

467,121

Long term liabilities

Long-term debt, net of current portion (Variable Interest Entities: 2013: $1,301,835; 2014: $1,377,518)

1,369,550

1,408,306

Total liabilities

2,063,084

1,875,427

Commitments and contingencies (Note 9)

Stockholders equity of The Oxford Centre, Inc.

2,449,160

4,792,012

Noncontrolling interests

158,472

1,871,734

Total equity including noncontrolling interests (Note 8)

2,607,632

6,663,746

Total liabilities and equity

See accompanying notes to consolidated financial statements.

Consolidated Statements of Income

Years ended December 31,

Revenues

6,556,459

12,163,439

Operating expenses

Salaries, wages, and benefits

1,803,350

2,933,745

Client related services

1,040,472

1,203,763

Other operating expenses

917,700

1,029,513

Rentals and leases

101,962

110,907

Provision for doubtful accounts

835,872

1,262,431

Depreciation and amortization

102,296

209,920

Total operating expenses

4,801,652

6,750,279

Income from operations

1,754,807

5,413,160

Other income (expense), net

Interest expense, net

(59,097

(75,652

Other income, net

Total other expense

(58,956

(74,328

Net income

1,695,851

5,338,832

Less: net income attributable to noncontrolling interests

82,497

218,008

Net income attributable to The Oxford Centre, Inc.

1,613,354

5,120,824

Consolidated Statements of Equity

Interests

Total Equity

Equity at December 31, 2012

1,370,878

75,975

1,446,853

Distributions

(535,072

Net Income

Equity at December 31, 2013

Contributions

1,495,254

(2,777,972

Equity at December 31, 2014

Consolidated Statements of Cash Flows

Cash flows from operating activities:

Adjustments to reconcile net income to net cash provided by operating activities:

Bad debt expense

Unrealized loss on investments

26,653

Loss on disposal of equipment

17,413

Changes in assets and liabilities:

(1,739,522

(1,799,902

Prepaid expenses and other assets

(10,445

(9,098

(85,319

158,588

46,228

(15,395

Net cash provided by operating activities

844,961

5,189,442

Cash flows from investing activities:

Purchase of marketable securities

(1,399,697

Purchase of property and equipment

(1,651,493

(2,316,393

Net cash used in investing activities

(3,716,090

Cash flows from financing activities:

Proceeds from debt

1,813,570

265,306

Repayment of debt

(774,305

(596,157

Net cash provided by (used in) financing activities

504,193

(1,613,569

Net decrease in cash and cash equivalents

(302,339

(140,217

Cash and cash equivalents, beginning of year

495,332

Cash and cash equivalents, end of period

Supplemental disclosures of cash flow information:

Noncash transactions:

Property and equipment acquired via capital leases

47,983

59,695

Cash and cash equivalents paid for:

Notes to the Consolidated Financial Statements

Description of Business

The Oxford Centre, Inc. (The Oxford Centre or the Company) is a comprehensive treatment center for drug and alcohol addiction located in Etta, Mississippi. Situated 60 miles southeast of Memphis, the centers 110 acre campus offers a pastoral setting with high quality facilities for treatment and recovery.

The Company provides medical detoxification and stabilization services as well as residential treatment services and a continuum of support after treatment. The Company also offers equine and music therapy as part of its residential program. Situated around a seven-acre lake, the residential campus includes residential cabins, a main lodge, a lakeside pavilion, a fitness center and a medical-services facility.

The Oxford Centre also maintains outpatient service offices in Oxford, Tupelo and Olive Branch to serve patients who continue to work or attend school while receiving counseling, education and in some cases, medical services for substance use and abuse. Services provided at the outpatient centers also include drug and alcohol assessments, drug testing and intervention services.

The Oxford Centre was incorporated on June 16, 2011 and opened in January 2012. The Company has a residential capacity of 76 patients. It is accredited by CARF International and licensed through the Mississippi Department of Mental Health, Bureau of Alcohol and Drug Services.

The Company holds variable interests in two entities for which the Company is the primary beneficiary. Those two entities are Oxford Centre Physician Group, PA and River Road Management, LLC.

Oxford Centre Physician Group, PA (Physician Group) is a physician practice entity with common ownership to The Oxford Centre, Inc. The Physician Group provides clinician services to The Oxford Centre. The Oxford Centre manages the Physician Group in return for a management fee paid by the Physician Group to The Oxford Centre. The management fee was $97,641 and $272,477 for the years ended December 31, 2013 and 2014, respectively, and has been eliminated in consolidation.

River Road Management, LLC (RRM) is a real estate entity with identical ownership to The Oxford Centre, Inc. This entity owns the property and facilities from which The Oxford Centre operates its residential program and has no other activities...


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