Diagnostic radiologists correlate imaging findings with clinical information and other medical examinations, make diagnoses and may recommend further examinations or treatments. Frost & Sullivan, a research firm, estimates that 420.7 million diagnostic imaging procedures were performed in the United States in 2003.

Due to significant advances in imaging quality and technology, diagnostic imaging procedures are becoming increasingly essential components of the practice of medicine in most medical centers and hospitals. The non-invasive nature of most diagnostic imaging procedures, combined with faster digital processing capabilities and rapid broadband connectivity that allows for the transmission of images to radiology experts, has made the performance of these procedures in the emergency room and in other treatment venues more appealing and practical. As a result, physicians are relying more heavily on imaging procedures and radiological interpretations provided by radiologists as a standard of care to aid in patient care management decisions, resulting in continuing growth in the volume of radiological procedures performed.

The advent of the Digital Imaging and Communications in Medicine, or DICOM, standard for transferring images and associated information, high-speed broadband internet connections, digitization and picture archival and communication systems, or PACS, has contributed to increased utilization of diagnostic imaging technologies by permitting radiologists to practice remotely. As a result of these improvements in image transmission technologies, the time needed for an offsite radiologist to complete a read has generally decreased. Particularly in an emergency room setting, more rapid diagnosis of acute medical problems aids in the prompt identification of patients that need urgent surgery or hospital admission, decreases mortality and morbidity, and reduces healthcare costs by averting unnecessary hospital admissions and surgery.

By using the Company’s services, radiology groups with off-hours coverage commitments may allocate scarce physician resources to periods during which the volume of radiological procedures is typically higher than during off-hours periods. This reallocation of resources can reduce the operating inefficiencies and related costs typically associated with providing off-hours coverage.

The Company’s affiliated radiologists currently receive emergency radiological examinations from more than 693 hospitals, resulting in its affiliated radiologists devoting their working hours almost exclusively to performing emergency radiology interpretations. Due to this focus, the Company considers its affiliated radiologists to be specialists in the area of emergency radiology. The Company’s affiliated radiologists work primarily in its reading facilities located in Sydney, Australia and Zurich, Switzerland where, due to geographic time differences, they perform off-hours reads for the Company’s customers during the radiologists’ local daylight hours.

The Company has developed proprietary workflow technology that is designed to distribute radiological images and data to the appropriately licensed and privileged radiologist best able to provide the radiological interpretation in the least amount of turnaround time. The Company delivers its solution primarily from centralized reading facilities located in Sydney, Australia and Zurich, Switzerland.

The Company currently contracts directly with radiology groups and hospitals to provide off-hours radiology coverage, and bills the customer for the preliminary reads that it performs. Because the contracts between the Company’s customers and third-party payors typically permit the radiologists to charge a prescribed fixed fee only for primary reads, there are no additional costs for its services to the patients or third-party payors.

The Company primarily contracts directly with radiology groups to provide off-hours radiology coverage for the hospitals that are their customers. The Company currently offers its services to the radiology group customers between the hours of 5 p.m. and 8 a.m., local time, Monday through Friday, and up to 24-hours per day on weekends and holidays.

Professional services expense increased from $6.4 million for the six months ended June 30, 2004 to $9.5 million for the six months ended June 30, 2005, a 50% increase.

Sales, general and administrative increased from approximately $5.0 million for the six months ended June 30, 2004 to $11.6 million for the six months ended June 30, 2005, a 134% increase.

The interest expense for the six months ended June 30, 2004 was $302.5 thousand and $461.4 thousand for the first quarter of 2005, an increase of $159 thousand, or 53%.