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The following unaudited
pro forma condensed consolidated balance sheet shall not be deemed "filed" for the purposes of Section 18 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of such section, nor
shall it be deemed incorporated by reference into any filing made under the Securities Act of 1933, as amended, or the Exchange
Act, regardless of any general incorporation language in such filing.
UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED BALANCE SHEET OF Apollo Medical Holdings, Inc. AND SUBSIDIARIES
The following unaudited pro
forma condensed consolidated balance sheet as of September 30, 2015 is based upon the financial statements of Apollo
Medical Holdings, Inc. and Subsidiaries ("the Company") as filed on Form 10-Q with the Securities and Exchange
Commission on November 16, 2015 and adjusted to reflect the effect of the following transactions: (a) On October 14, 2015,
the Company entered into a Securities Purchase Agreement (the "Agreement") with Network Medical Management,
Inc. ("NMM") pursuant to which the Company sold to NMM, for a purchase price of $10,000,000, 1,111,111
investment units (the "Units"), each unit consisting of one share of the Company's Series A Preferred Stock
(the "Preferred Stock") and a stock purchase warrant (the "Warrants") to purchase one share of
the Company's common stock (the "Common Stock") at an exercise price of $9.00 per share, (b) the retirement
of the term loan and revolving credit facility which were issued in conjunction with the Credit Agreement (the
"Credit Agreement") between the Company and NNA of Nevada, Inc. ("NNA") dated March 28, 2014, and (c)
the conversion of the convertible note and exercise of the warrants associated with the NNA financial instruments for Common
Stock issued in conjunction with the Investment Agreement (the "Investment Agreement") between the Company and
NNA dated March 28, 2014, in exchange for 600,000 shares of Common Stock pursuant to a Second Amendment and Conversion
Agreement with NNA dated November 17, 2015 (the "Conversion Agreement").
The unaudited pro forma adjustments related
to the transactions noted above have been prepared based on existing U.S. generally accepted accounting principles, which are subject
to change and interpretation. The valuation of Preferred Stock and Warrants requires extensive use of accounting estimates, assumptions
and judgments to allocate the fair values, based on their respective estimated fair values.
MEDICAL HOLDINGS, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
| 30-Sep -15 | Pro Forma | 30-Sep-15 | ||||||||||
| As Filed | Adjustments | Pro-Forma | ||||||||||
| CURRENT ASSETS | ||||||||||||
| Cash and cash equivalents | $ | 3,924,922 | $ | 2,525,018 | a | $ | 6,449,940 | |||||
| Accounts receivable, net | 4,015,715 | - | 4,015,715 | |||||||||
| Other receivables | 289,064 | - | 289,064 | |||||||||
| Due from Affiliates | 20,052 | - | 20,052 | |||||||||
| Prepaid expenses | 410,013 | - | 410,013 | |||||||||
| Total current assets | 8,659,766 | 2,525,018 | 11,184,784 | |||||||||
| Deferred financing costs, net, non-current | 217,963 | (192,000 | ) b | 25,963 | ||||||||
| Property and equipment, net | 577,701 | - | 577,701 | |||||||||
| Restricted cash | 530,000 | - | 530,000 | |||||||||
| Intangible assets, net | 1,283,163 | - | 1,283,163 | |||||||||
| Goodwill | 2,168,833 | - | 2,168,833 | |||||||||
| Other assets | 212,146 | - | 212,146 | |||||||||
| TOTAL ASSETS | $ | 13,649,572 | $ | 2,333,018 | $ | 15,982,590 | ||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY/(DEFICIT) | ||||||||||||
| CURRENT LIABILITIES | ||||||||||||
| Accounts payable and accrued liabilities | $ | 4,944,470 | $ | (88,865 | ) c | $ | 4,855,605 | |||||
| Medical liabilities | 1,337,187 | - | 1,337,187 | |||||||||
| Note and line of credit payable, net of discount, current portion | 7,282,448 | (7,187,683 | ) d | 94,765 | ||||||||
| Convertible notes payable, net of discount, current portion | 2,549,476 | (1,474,246 | ) d | 1,075,230 | ||||||||
| Warrant liability | 1,315,846 | 1,606,376 | e | 2,922,222 | ||||||||
| Total current liabilities | 17,429,427 | (7,144,418 | ) | 10,285,009 | ||||||||
| Deferred tax liability | 177,344 | - | 177,344 | |||||||||
| TOTAL LIABILITIES | 17,606,771 | (7,144,418 | ) | 10,462,353 | ||||||||
| MEZZANINE EQUITY | ||||||||||||
| Series A Preferred stock, par value $0.001; 5,000,000 shares authorized, none issued and outstanding as of June 30, 2015, 1,111,111 issued and outstanding pro forma | - | 7,077,778 | f | 7,077,778 | ||||||||
| STOCKHOLDERS' EQUITY/(DEFICIT) | ||||||||||||
| Common Stock, par value $0.001; 100,000,000 shares authorized, 4,863,389 shares issued and outstanding as of June 30, 2015, 5,463,389 issued and outstanding pro forma | 4,863 | 600 | g | 5,463 | ||||||||
| Additional paid-in-capital | 16,670,718 | 3,059,400 | g | 19,730,118 | ||||||||
| Accumulated deficit | (22,354,252 | ) | (660,342 | ) h | (23,014,594 | ) | ||||||
| Stockholders' equity/(deficit) attributable to Apollo Medical Holdings, Inc. | (5,678,671 | ) | 2,399,658 | (3,279,013 | ) | |||||||
| Non-controlling interest | 1,721,472 | - | 1,721,472 | |||||||||
| Total stockholders' equity/(deficit) | (3,957,199 | ) | 2,399,658 | (1,557,541 | ) | |||||||
| TOTAL LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS' EQUITY/(DEFICIT) | $ | 13,649,572 | $ | 2,333,018 | $ | 15,982,590 |
See accompanying notes to unaudited pro
forma condensed consolidated balance sheet.
Note 1 - Description of Transactions
Securities Purchase Agreement
On October 14, 2015,
Company entered into the Agreement NMM pursuant to which the Company sold to NMM, and NMM purchased from the Company, in a private
offering of securities, 1,111,111 Units, each Unit consisting of one share of the Company's Preferred Stock and a stock purchase
warrant to purchase one share of the Company's Common Stock at an exercise price of $9.00 per share. NMM paid the Company
an aggregate $10,000,000 for the Units, the proceeds of which were used by the Company primarily to repay certain outstanding indebtedness
owed by the Company to NNA and the balance for working capital.
has a liquidation preference in the amount of $9.00 per share plus any declared and unpaid dividends. The Preferred Stock can be
voted for the number of shares of Common Stock into which the Preferred Stock could then be converted, which initially is one-for-one.
is convertible into Common Stock, at the option of NMM, at any time after issuance at an initial conversion rate of one-for-one,
subject to adjustment in the event of stock dividends, stock splits and certain other similar transactions.
to conversion and through the later to occur of (i) January 31, 2017 or (ii) sixty (60) days after the date on which the Company
files its periodic report with the Securities and Exchange Commission for the quarter ending on September 30, 2016 (the "Redemption
Expiration Date"), the Preferred Stock may be redeemed at the option of NMM, on one occasion, in the event that the Company's
net revenues for the four quarters ending September 30, 2016, as reported in its periodic filings under the Securities Exchange
Act of 1934, as amended, are less than $60,000,000. In such event, the Company shall have up to one year from the date of the notice
of redemption by NMM to redeem the Preferred Stock, the Warrants and any shares of Common Stock issued in connection with the exercise
of any Warrants theretofore (collectively the "Redeemed Securities"), for the aggregate price paid therefor by NMM,
together with interest at a rate of 10% per annum from the date of the notice of redemption until the closing of the redemption.
Any mandatory conversion described in the previous paragraph shall not take place until such time as it is determined that that
conditions for the redemption of the Redeemed Securities have not been satisfied or, if such conditions exist, NMM has decided
not to have such securities redeemed.
exercised at any time after issuance and through October 14, 2020, for $9.00 per share, subject to adjustment in the event of stock
dividends and stock splits. The Warrants are not separately transferable from the Preferred Stock. The Warrants are subject to
redemption in the event the Preferred Stock is redeemed by NMM, as described above. In the case of a redemption event, any unexercised
warrants will be redeemed at an aggregate of $1 and exercised warrants will be redeemed based on what was paid by the holder upon
exercise (currently $9 per share).
NNA Term Loan, Revolving Credit Facility,
Convertible Note and Warrants
the transactions with NMM described above, on October 15, 2015, the Company repaid, from the proceeds of the sale of the securities
therein described, its outstanding term loan and revolving credit facility with NNA pursuant to the Credit Agreement dated March
28, 2014 between the Company and NNA in the aggregate amount of $7,304,506, consisting of principal of $7,282,500 (principal of
$6,282,500 and $1,000,000 from the term loan and revolving line of credit facility with NNA, respectively) plus $22,006 of accrued
Note 1 - Description of Transactions, continued
Pursuant to the Conversion Agreement, the
Company agreed to (a) issue 275,000 shares of Common Stock and to pay accrued and unpaid interest of $69,119, to NNA in full satisfaction
of NNA's conversion and other rights under the 8% Convertible Note dated March 28, 2014, issued by the Company to NNA, with
an original principal amount of $2,000,000 and carrying amount of $1,559,836 and accrued interest of $47,112 as of October 14,
2015, and (b) to issue a total of 325,000 shares of Common Stock to NNA in exchange for all warrants held by NNA (with a fair value
of $1,624,029 as of October 14, 2015), under which NNA had the right to purchase 300,000 shares of Common Stock at an exercise
price of $10 per share and 200,000 shares at an exercise price of $20 per share, in each case subject to anti-dilution adjustments.
Note 2 - Basis of Presentation
The accompanying unaudited pro forma condensed
consolidated balance sheet at September 30, 2015, included herein is based upon the unaudited financial statements of Apollo Medical
Holdings, Inc. and Subsidiaries and was prepared under accounting principles generally accepted in the United States.
Note 3 - Unaudited Pro Forma Adjustments
Pro forma adjustments are presented to
reflect the effects of the transactions noted above. The unaudited pro forma condensed consolidated balance sheet should be read
in conjunction with the notes to the unaudited condensed consolidated financial statements of the Company as of and for the three
and six months ended September 30, 2015, as filed on Form 10-Q on November 16, 2015.
Adjustments included in the column under
the heading "Pro Forma Adjustments" represent the following:
Note 3 - Unaudited Pro Forma Adjustments,