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Entry into Management Service Agreement
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9 Months Ended |
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Jun. 30, 2011
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| Entry into Management Service Agreement [Abstract] | |
| Entry into Management Service Agreement |
3. Entry into Management Service Agreement In conjunction with the Asset Purchase Agreement for DMCC and RFFG of Cleveland, BMP, an Ohio corporation and a wholly-owned subsidiary of the Company, entered into the Management Agreement with RFFG. The Management Agreement became effective on November 1, 2010.
Pursuant to the Management Agreement, BMP agreed to provide services to RFFG to operate its day-to-day business, including services related to accounting, sales, finance, workers' compensation, benefits, physical locations, IT and employees. The Management Agreement provides that additional services may be added if BMP and RFFG mutually agree to the cost to be charged by BMP for such services and as long as BMP has the resources to provide such services.
In consideration of the services provided under the Management Agreement, RFFG will pay BMP monthly fees that will approximate 6% of its gross revenues on an annual basis. Fees may be adjusted up or down by mutual agreement of the parties to accommodate seasonal trends in revenues of RFFG. The Management Agreement may be terminated by either BMP or RFFG upon 180 days prior written notice. The Company added employees to provide the services required under the Management Agreement.
For the nine months and quarter ended June 30, 2011, the Company recorded approximately $786,000 and $336,000 of revenue related to this agreement, respectively. As of June 30, 2011, BMP has $523,000 of management fee receivable.
Due to an unresolved issue with the Ohio Bureau of Workers Compensation, the former owners RFFG have ceased operations as of July 15, 2011. Management is assessing the impact on the $1,180,000 of unamortized management agreement intangible assets and the $2,240,000 contingent earn-out liabilities in the financial statements.
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