Published on June 19, 2008
Report
of Independent Registered Public Accounting Firm
Board
of
Directors and Stockholders of
Apollo
Medical Management, Inc
(A
Development Stage Company)
We
have audited the accompanying balance sheet of Apollo Medical Management, Inc
(a
development stage company) as of January 31, 2008 and the related statements
of
operations, stockholders' equity, and cash flows for each of the years in the
two year period ended January 31, 2008 and for the period from inception
(October 17, 2006) to January 31, 2008. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an
opinion on these financial statements based on our audits.
We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining,
on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In
our opinion, the financial statements referred to above present fairly, in
all
material respects, the financial position of Apollo Medical Management, Inc
(a
development stage company) as of January 31, 2008, and the results of their
operations and their cash flows for each of the years in the two year period
ended January 31, 2008 and for the period from inception (October 17, 2006)
to
January 31, 2007, in conformity with U.S. generally accepted accounting
principles.
The
Company's financial statements are prepared using the generally accepted
accounting principles applicable to a going concern, which contemplates the
realization of assets and liquidation of liabilities in the normal course of
business. The Company is a development stage entity and has accumulated deficit
of $153,136 for the period from inception (October 17, 2006) to January 31,
2008, working capital of $28,864 and cash flows from operating activities of
$155,555. This factor, as discussed in Note 2 to the financial statements raises
substantial doubt about the Company's ability to continue as a going concern.
Management's plans in regard to the matter are also described in Note 2. The
statements do not include any adjustments that might result from the outcome
of
this uncertainty.
/s/
Kabani & Company, Inc.
Certified
Public Accountants
Los
Angeles, California
April
10,
2008
|
APOLLO
MEDICAL MANAGEMENT, INC
|
||||
|
(A
DEVELOPMENT STAGE COMPANY)
|
||||
|
BALANCE
SHEET
|
||||
|
JANUARY
31, 2008
|
||||
|
ASSETS
|
||||
|
CURRENT
ASSETS:
|
|
|||
|
Cash
and cash equivalents
|
$
|
44,352
|
||
|
Prepaid
expenses
|
15,719
|
|||
|
Total
Current Assets
|
$
|
60,071
|
||
|
|
||||
|
LIABILITIES
AND STOCKHOLDER'S DEFICIT
|
||||
|
|
||||
|
CURRENT
LIABILITIES:
|
||||
|
Accrued
expenses
|
$
|
13,300
|
||
|
Due
to related parties
|
17,907
|
|||
|
Total
current liabilities
|
31,207
|
|||
|
|
||||
|
STOCKHOLDERS'
DEFICIT:
|
||||
|
Preferred
stock, par value $.0001 per share; 25,000,000 shares authorized;
none
issued
|
-
|
|||
|
Common
stock, $.0001 par value; 100,000,000 shares authorized; 11,064,000
shares
issued and 10,364,000 shares outstanding
|
1036
|
|||
|
Additional
paid in capital
|
180,964
|
|||
|
Accumulated
deficit
|
(153,136
|
)
|
||
|
Total
stockholders' deficit
|
28,864
|
|||
|
Total
liabilities and stockholder's deficit
|
$
|
60,071
|
||
|
The
accompany notes are an integral part of these audited financial
statements
|
Page
2
|
APOLLO
MEDICAL MANAGEMENT, INC
|
|||||||||
|
(A
DEVELOPMENT STAGE COMPANY)
|
|||||||||
|
STATEMENTS
OF OPERATIONS
|
|||||||||
|
FOR
THE YEARS ENDED JANUARY 31, 2008 AND 2007
|
|||||||||
|
AND
FOR THE PERIOD FROM INCEPTION (OCTOBER 17, 2006) TO JANUARY 31,
2008
|
|
For
the Year Ended January 31,
|
For
The Period From October 17, 2006 (Inception) to January 31,
|
|||||||||
|
|
2008
|
2007
|
2008
|
|||||||
|
NET
REVENUE
|
$
|
90,500
|
$
|
45,000
|
$
|
135,500
|
||||
|
|
||||||||||
|
COST
OF REVENUE
|
44,643
|
3,124
|
47,767
|
|||||||
|
|
||||||||||
|
GROSS
PROFIT
|
45,857
|
41,876
|
87,733
|
|||||||
|
|
||||||||||
|
OPERATING
EXPENSES
|
||||||||||
|
General
and administrative expenses
|
199,519
|
39,750
|
239,269
|
|||||||
|
|
||||||||||
|
NET
LOSS BEFORE INCOME TAXES
|
(153,662
|
)
|
2,126
|
(151,536
|
)
|
|||||
|
|
||||||||||
|
Provision
for Income Tax
|
800
|
800
|
1,600
|
|||||||
|
|
||||||||||
|
NET
LOSS
|
$
|
(154,462
|
)
|
$
|
1,326
|
$
|
(153,136
|
)
|
||
|
#REF!
|
#REF!
|
|||||||||
|
WEIGHTED
AVERAGE SHARES OF COMMON STOCK OUTSTANDING, BASIC AND
DILUTED
|
10,105,710
|
9,433,962
|
||||||||
|
|
||||||||||
|
*BASIC
AND DILUTED NET LOSS PER SHARE
|
$
|
(0.02
|
)
|
$
|
-
|
|||||
The
accompanying notes are an integral part of these audited financial
statements
*
Weighted average number of shares used to compute basis and diluted loss
per
share is the same since the effect of dilutive securities is
anti-dilutive
Page
3
|
APOLLO
MEDICAL MANAGEMENT, INC
|
||||||||||||
|
(A
DEVELOPMENT STAGE COMPANY)
|
||||||||||||
|
STATEMENTS
OF CASH FLOWS
|
||||||||||||
|
FOR
THE YEARS ENDED JANUARY 31, 2008 AND 2007
|
||||||||||||
|
AND
FOR THE PERIOD FROM INCEPTION (OCTOBER 17, 2006) TO JANUARY 31,
2008
|
||||||||||||
|
January
31
|
For
the period from October 17, 2006 (inception) to January
31,
|
|||||||||
|
|
2008
|
2007
|
2008
|
|||||||
|
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|||||||
|
Net
income (loss)
|
$
|
(154,462
|
)
|
$
|
1,326
|
$
|
(153,136
|
)
|
||
|
Adjustments
to reconcile netincome/(loss) to net cash used in
|
||||||||||
|
operating
activities:
|
||||||||||
|
Change
in assets and liabilities
|
||||||||||
|
Prepaid
expense
|
(1,320
|
)
|
(14,398
|
)
|
(15,719
|
)
|
||||
|
Accrued
expenses
|
(1,756
|
)
|
15,057
|
13,300
|
||||||
|
Net
cash provided by/(used in) operating activities
|
(157,539
|
)
|
1,984
|
(155,555
|
)
|
|||||
|
|
||||||||||
|
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||||
|
Proceeds
from Issuance of Shares
|
182,000
|
-
|
182,000
|
|||||||
|
Proceeds
from (payments to) related party loans
|
17,707
|
200
|
17,907
|
|||||||
|
Net
cash provided by financing activities
|
199,707
|
200
|
199,907
|
|||||||
|
|
||||||||||
|
NET
INCREASE IN CASH & CASH EQUIVALENTS
|
42,168
|
2,184
|
44,352
|
|||||||
|
|
||||||||||
|
CASH
& CASH EQUIVALENTS, BEGINNING BALANCE
|
2,184
|
-
|
-
|
|||||||
|
|
||||||||||
|
CASH
& CASH EQUIVALENTS, ENDING BALANCE
|
$
|
44,352
|
$
|
2,184
|
$
|
44,352
|
||||
|
The
accompanying notes are an integral part of these audited financial
statements
|
Page
4
|
APOLLO
MEDICAL MANAGEMENT, INC
|
|||||||||
|
(A
DEVELOPMENT STAGE COMPANY)
|
|||||||||
|
STATEMENTS
OF STOCKHOLDERS' DEFICIT
|
|||||||||
|
FOR
THE PERIOD FROM OCTOBER 17, 2006 (INCEPTION) TO JANUARY 31,
2008
|
|
Common
Stock
|
||||||||||||||||
|
Number
of
|
Additional
|
Accumulated
|
Stockholders'
|
|||||||||||||
|
shares
|
Amount
|
paid
in capital
|
Deficit
|
equity
(deficit)
|
||||||||||||
|
Issuance
of founders shares
|
10,000,000
|
$
|
1000
|
$
|
(1000
|
) |
$
|
-
|
-
|
|||||||
|
Net
income
|
|
|
|
1326
|
1326
|
|||||||||||
|
Balance
at January 31, 2007
|
10,000,000
|
$
|
1000
|
(1000
|
) |
-
|
-
|
|||||||||
|
Issuance
of shares for cash
|
364,000 | 36 |
181,964
|
-
|
182,000
|
|||||||||||
|
Net
loss for the year ended January 31, 2008
|
-
|
-
|
(154,462
|
)
|
(154,462
|
)
|
||||||||||
|
Balance
at January 31, 2008
|
10,364,000
|
$
|
1036
|
$
|
180,964
|
$
|
(153,136
|
)
|
$
|
28,864
|
||||||
|
The
accompany notes are an integral part of these audited financial
statements
|
Page
5
APOLLO
MEDICAL MANAGEMENT, INC.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO
FINANCIAL STATEMENTS
JANUARY
31, 2008
| NOTE 1 - |
DESCRIPTION
OF DEVELOPMENT STAGE OPERATIONS AND SUMMARY OF SIGNIFICANT
ACCOUNTING
POLICIES
|
Description
of operations
Apollo
Medical Management, Inc., a Delaware corporation (the "Company"), was
incorporated on October 17, 2006
The
Company is a medical management company focused on managing the provision
of
hospital-based medicine through its Affiliated Medical Groups, which currently
consist of ApolloMed Hospitalists (“AMH”) and Apollo Medical Associates (“AMA”).
The Company’s goal is to become a leading provider of management services to
medical groups that provide comprehensive inpatient care services such
as
hospitalists, emergency room physicians, and other hospital-based specialists.
The
Company has contracted to provide management services to AMH and AMA, both
of
which are affiliates of the Company, by virtue of their management agreements
with the Company and/or common management and/or common ownership by Warren
Hosseinion, M.D. and Adrian Vazquez, M.D., who are also the Company’s directors
and executive officers. AMH was founded in June 2001 and currently provides
hospitalist services at seven hospitals. AMA was founded in October 2006
as a
vehicle for acquisition of hospital-based medical practices.
Development
stage operations
Basis
of Presentation
The
accompanying financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America.
Use
of
estimates
The
preparation of financial statements in conformity with generally accepted
accounting principles 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.
Fair
Value of Financial Instruments
Statement
of financial accounting standard No. 107, Disclosures about fair value
of
financial instruments, requires that the Company disclose estimated fair
values
of financial instruments. The carrying amounts reported in the statements
of
financial position for assets and liabilities qualifying as financial
instruments are a reasonable estimate of fair value.
Concentration
of Credit Risk
Financial
instruments, which potentially subject the Company to concentrations of
credit
risk, consist of cash and cash equivalents. The Company monitors its exposure
for credit losses and maintains allowances for anticipated losses, as required.
Stock-based
compensation
On
October 17, 2006 the Company adopted SFAS No. 123R, “Share-Based Payment, an
Amendment of FASB Statement No. 123.” As of the date of this report the Company
has no stock based incentive plan in effect.
Page
6
APOLLO
MEDICAL MANAGEMENT, INC.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO
FINANCIAL STATEMENTS
JANUARY
31, 2008
Basic
and Diluted Earnings Per Share
Earnings
per share is calculated in accordance with the Statement of financial accounting
standards No. 128 (SFAS No. 128), “Earnings per share”. SFAS No. 128 superseded
Accounting Principles Board Opinion No.15 (APB 15). Net income (loss) per
share
for all periods presented has been restated to reflect the adoption of
SFAS No.
128. Basic net income per share is based upon the weighted average number
of
common shares outstanding. Diluted net income (loss) per share is based
on the
assumption that all dilutive convertible shares and stock options were
converted
or exercised. Dilution is computed by applying the treasury stock method.
Under
this method, options and warrants are assumed to be exercised at the beginning
of the period (or at the time of issuance, if later), and as if funds obtained
thereby were used to purchase common stock at the average market price
during
the period.
Cash
and cash equivalents
Cash
and
cash equivalents include cash in bank representing Company’s current operating
account.
Income
taxes
The
Company utilizes SFAS No. 109, “Accounting for Income Taxes,” which requires the
recognition of deferred tax assets and liabilities for the expected future
tax
consequences of events that have been included in the financial statements
or
tax returns. Under this method, deferred income taxes are recognized for
the tax
consequences in future years of differences between the tax bases of assets
and
liabilities and their financial reporting amounts at each period end based
on
enacted tax laws and statutory tax rates applicable to the periods in which
the
differences are expected to affect taxable income. Valuation allowances
are
established, when necessary, to reduce deferred tax assets to the amount
expected to be realized.
Costs
of services
The
Company bears all the costs of services which include insurance, maintenance,
professional privileges and communications costs.
Recently
Issued Accounting Pronouncements
In
September 2006, FASB issued SFAS 158 'Employers' Accounting for Defined
Benefit
Pension and Other Postretirement Plans—an amendment of FASB Statements No. 87,
88, 106, and 132(R). This Statement improves financial reporting by requiring
an
employer to recognize the over funded or under funded status of a defined
benefit postretirement plan (other than a multiemployer plan) as an asset
or
liability in its statement of financial position and to recognize changes
in
that funded status in the year in which the changes occur through comprehensive
income of a business entity or changes in unrestricted net assets of a
not-for-profit organization. This Statement also improves financial reporting
by
requiring an employer to measure the funded status of a plan as of the
date of
its year-end statement of financial position, with limited exceptions.
An
employer with publicly traded equity securities is required to initially
recognize the funded status of a defined benefit postretirement plan and
to
provide the required disclosures as of the end of the fiscal year ending
after
December 15, 2006. An employer without publicly traded equity securities
is
required to recognize the funded status of a defined benefit postretirement
plan
and to provide the required disclosures as of the end of the fiscal year
ending
after June 15, 2007. However, an employer without publicly traded equity
securities is required to disclose the following information in the notes
to
financial statements for a fiscal year ending after December 15, 2006,
but
before June 16, 2007, unless it has applied the recognition provisions
of this
Statement in preparing those financial statements:
| a. |
A
brief description of the provisions of this Statement
|
| b. |
The
date that adoption is required
|
| c. |
The
date the employer plans to adopt the recognition provisions of
this
Statement, if earlier.
|
The
requirement to measure plan assets and benefit obligations as of the date
of the
employer's fiscal year-end statement of financial position is effective
for
fiscal years ending after December 15, 2008. Currently management has no
defined
benefit pension and post retirement plan and as such this statement has
no
effect on the Company’s financial statements.
In
February 2007, FASB issued FASB Statement No. 159, The Fair Value Option
for
Financial Assets and Financial Liabilities. FAS 159 is effective for fiscal
years beginning after November 15, 2007. Early adoption is permitted subject
to
specific requirements outlined in the new Statement. Therefore, calendar-year
companies may be able to adopt FAS 159 for their first quarter 2007 financial
statements.
Page
7
APOLLO
MEDICAL MANAGEMENT, INC.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO
FINANCIAL STATEMENTS
JANUARY
31, 2008
The
new Statement allows entities to choose, at specified election dates, to
measure
eligible financial assets and liabilities at fair value that are not otherwise
required to be measured at fair value. If a company elects the fair value
option
for an eligible item, changes in that item's fair value in subsequent reporting
periods must be recognized in current earnings. FAS 159 also establishes
presentation and disclosure requirements designed to draw comparison between
entities that elect different measurement attributes for similar assets
and
liabilities. Management is currently evaluating the effect of this pronouncement
on financial statements.
In
December 2007, the FASB issued SFAS No. 160, "Non-controlling Interests
in
Consolidated Financial Statements". This Statement amends ARB 51 to establish
accounting and reporting standards for the non-controlling (minority) interest
in a subsidiary and for the deconsolidation of a subsidiary. It clarifies
that a
non-controlling interest in a subsidiary is an ownership interest in the
consolidated entity that should be reported as equity in the consolidated
financial statements. SFAS No. 160 is effective for the Company's fiscal
year
beginning October 1, 2009. This pronouncement has no effect on Company’s
financial statements as the Company does not have any non controlling interest.
In
March 2008, the FASB issued FASB Statement No. 161, Disclosures about Derivative
Instruments and Hedging Activities. The new standard is intended to improve
financial reporting about derivative instruments and hedging activities
by
requiring enhanced disclosures to enable investors to better understand
their
effects on an entity's financial position, financial performance, and cash
flows
The new standard also improves transparency about the location and amounts
of
derivative instruments in an entity's financial statements; how derivative
instruments and related hedged items are accounted for under Statement
133; and
how derivative instruments and related hedged items affect its financial
position, financial performance, and cash flows. . It is effective for
financial
statements issued for fiscal years and interim periods beginning after
November
15, 2008, with early application encouraged. Management is currently evaluating
the effect of this pronouncement on financial statements. This pronouncement
has
no effect on Company’s financial statements as the Company does not have any
derivative instruments.
In
December 2007, the FASB issued SFAS No. 141(R), "Business Combinations".
This
Statement replaces SFAS No. 141, Business Combinations. This Statement
retains
the fundamental requirements in Statement 141 that the acquisition method
of
accounting (which Statement 141 called the purchase method) be used for
all
business combinations and for an acquirer to be identified for each business
combination. This Statement also establishes principles and requirements
for how
the acquirer: a) recognizes and measures in its financial statements the
identifiable assets acquired, the liabilities assumed, and any non-controlling
interest in the acquiree; b) recognizes and measures the goodwill acquired
in
the business combination or a gain from a bargain purchase and c) determines
what information to disclose to enable users of the financial statements
to
evaluate the nature and financial effects of the business combination.
SFAS No.
141(R) will apply prospectively to business combinations for which the
acquisition date is on or after Company's fiscal year beginning October
1, 2009.
At present this pronouncement has no effect on Company’s financial statements.
NOTE
2 - GOING CONCERN MATTERS
The
accompanying financial statements have been prepared on a going concern
basis
which contemplates the realization of assets and the satisfaction of liabilities
in the normal course of business. As shown in the financial statements,
during
the period from inception (October 17, 2006) to January 31, 2008, the Company
has net accumulated deficit of $(153,136), working capital of $28,864 and
cash
flows from operating activities of $(155,555). These factors, among others,
raise substantial doubt about the Company’s ability to continue as a going
concern. The Company’s need for working capital is a key issue for management
and necessary for the Company to meet its goals and objectives. The Company
continues to pursue additional capitalization opportunities. There is no
assurance, however, that the Company will be successful in meeting its
goals and
objectives in the future.
The
financial statements do not include any adjustments relating to the
recoverability and classification of liabilities that might be necessary
should
the Company be unable to continue as a going concern.
The
Company has taken certain restructuring steps to provide the necessary
capital
to continue its operations. These steps included: 1) identification and
integration of profitable businesses with the Company’s existing operations 2)
raise funds through private placement
Page
8
APOLLO
MEDICAL MANAGEMENT, INC.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO
FINANCIAL STATEMENTS
JANUARY
31, 2008
NOTE
3 - PREPAID EXPENSES
Prepaid
Expenses consist of the following:
|
January
31, 2008
|
||||
|
Prepaid
Professional Fees
|
$
|
2,292
|
||
|
Prepaid
Insurance
|
13,427
|
|||
|
$
|
15,719
|
|||
The
Company is responsible for providing malpractice insurance coverage to
the
‘ApolloMed Hospitalists’ an affiliated company as part of its management service
agreement.
NOTE
4 - ACCRUED EXPENSES
Accrued
expenses consist of the following:
|
January
31, 2008
|
||||
|
Accrued
professional fees
|
$
|
12,443
|
||
|
Accrued
Payroll Taxes
|
857
|
|||
|
$
|
13,300
|
|||
NOTE
5 -RELATED PARTY TRANSACTION
As
of
January 31, 2008, the company had an unsecured, non interest bearing, due
on
demand loan of $17,907 payable to a director and shareholder. The loan
is
advance to the Company to open bank accounts and to pay for insurance
malpractice.
During
the year ended January 31, 2008 the Company generated revenue of $95,000
compared to $45,000 in 2007 by providing management services to the ‘ApolloMed
Hospitalists’ (AMH), an affiliated company with common ownership interest.
On
July
18, 2007 ApolloMed
Hospitalists, A Medical Corporation (“AMH”) and the Company entered into an
agreement whereby ApolloMed Hospitalists is allowing the Company exclusive
use
of its proprietary ApolloWeb web-based database beginning on August 1,
2007. AMH
will, until further notice, not bill the Company for using its software.
Apollo
Medical Management, Inc., in lieu of free use of the software, will not
bill
AMH, until further notice, its management fee beginning on August 1, 2007.
The
Company currently charges a management fee of 10% of AMH net revenue. Both
parties agree to continue this arrangement until further
notice.
Page
9
APOLLO
MEDICAL MANAGEMENT, INC.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO
FINANCIAL STATEMENTS
JANUARY
31, 2008
NOTE
6 - STOCKHOLDERS' EQUITY
a)
Capitalization
The
total
number of shares of stock which the Company has the authority to issue
is
125,000,000 consisting of 100,000,000 shares of common stock, $0.0001 par
value,
25,000,000 shares of preferred stock, $0.0001 par value. The total number
of
shares of the Company’s common stock issued is 11,064,000 and outstanding is
10,364,000 as of January 31, 2008.
b)
Issuance of founders shares
During
the period from inception (October 17, 2006) to January 31, 2008, the Company
issued 5,000,000 shares to each of its two executive officers as founders
shares.
c)
Issuance of shares for services
During
the period from inception (October 17, 2006) to January 31, 2008, the Company
transferred to escrow 300,000 shares in the name of RBS Technologies, LLC,
which
were later cancelled and reissued and transferred to escrow in the name
of
Stonecreek Associates, Inc. on April 23, 2007 based on the supplemental
agreement, to provide consulting services.
During
the period from inception (October 17, 2006) to January 31, 2008 the Company
transferred to escrow 400,000 shares in the name of Westcap Securities,
Inc to
provide financial advisory services.
At
the
date of this report these (Stonecreek & Westcap) shares are held in the
Escrow and are subject to the completion of the services based on the individual
agreements (See note 8). These shares have been classified as issued but
not
outstanding, at January 31, 2008, in the accompanying financial statements.
d)
Issuance of shares to investors
During
the period February 1, 2007 to July 31, 2007, the Company issued 364,000
shares
to investors for a total cash value $182,000, resulting in common stock
amounting to $36 and additional paid-in capital of $181,964. As part of
issuance
of shares for cash the Company granted 91,000 stock warrants to investors.
The
proceeds from the issuance of the 364,000 shares were recorded net of the
fair
value of the warrants.
Warrants
outstanding:
|
Aggregate
intrinsic value
|
Number
of warrants
|
|
|
Outstanding
at January 31, 2007
|
$-
|
-
|
|
Granted
|
|
91,000
|
|
Exercised
|
-
|
-
|
|
Cancelled
|
-
|
-
|
|
Outstanding
at January 31, 2008
|
$-
|
91,000
|
Page
10
APOLLO
MEDICAL MANAGEMENT, INC.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO
FINANCIAL STATEMENTS
JANUARY
31, 2008
|
Exercise
Price
|
Warrants
outstanding
|
Weighted
average remaining contractual life
|
Warrants
exercisable
|
Weighted
average exercise price
|
|
$2.00
|
91,000
|
2.7
|
91,000
|
$2.00
|
The
grant
date fair value of warrants amounting $1,331 which was calculated using
the
Black-Scholes Option Pricing Model using the following assumptions: risk
free
rate of return 2.125%, volatility 45.98%, dividend yield of 0% and expected
life
of 3 years.
NOTE
7 - INCOME TAXES
The
Company accounts for income taxes under the provisions of Statement of
Financial
Accounting Standards No. 109 ("SFAS 109"). Under SFAS 109,
deferred income tax assets or liabilities are computed based on the temporary
difference between the financial statement and income tax bases of assets
and
liabilities using the currently enacted marginal income tax rate. Deferred
income tax expenses or credits are based on the changes in the deferred
income
tax assets or liabilities from period to period.
The
following is a reconciliation of the provision for income taxes at the
U.S.
federal income tax rate to the income taxes reflected in the Statement
of
Operations:
|
2008
|
2007
|
|
|
Current
tax expense:
|
||
|
Federal
|
-
|
-
|
|
State
|
800
|
800
|
|
Total
current
|
800
|
800
|
|
Deferred
tax credit:
|
||
|
Federal
|
55,000
|
-
|
|
State
|
10,000
|
-
|
|
Less:
Valuation allowance
|
(65,000)
|
-
|
|
Net
deferred tax credit
|
-
|
-
|
|
Tax
expense
|
$800
|
$800
|
The
components of deferred tax assets are summarized below:
|
2008
|
2007
|
|
|
Deferred
tax asset:
|
||
|
Federal
|
||
|
Balance
carry forward January 31, 2007
|
$-
|
$-
|
|
Net
loss for 2008
|
55,000
|
-
|
|
State
|
||
|
Balance
carry forward January 31, 2007
|
-
|
-
|
|
Net
loss for 2008
|
10,000
|
|
|
Total
deferred tax asset
|
65,000
|
-
|
|
Less:
Valuation allowance
|
(65,000)
|
-
|
|
Deferred
tax asset
|
$-
|
$-
|
Page
11
APOLLO
MEDICAL MANAGEMENT, INC.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO
FINANCIAL STATEMENTS
JANUARY
31, 2008
The
following is a reconciliation of the provision for income taxes at the
U.S.
federal income tax rate to the income taxes reflected in the Statement
of
Operations:
|
2008
|
2007
|
|
|
Tax
expense (credit) at statutory -rate - Federal
|
34%
|
34%
|
|
State
tax expense net of federal tax
|
6%
|
6%
|
|
Less:
Valuation allowance
|
(40)%
|
(40)%
|
|
Tax
expense at actual rate
|
0%
|
0%
|
NOTE
8 - COMMITMENTS & CONTINGENCIES
Consulting
Agreements:
On
September 5, 2006, ApolloMed Hospitalists, Inc (AMH) a Medical Corporation
and
its affiliates, subsequently Apollo Medical Management, Inc., entered into
a
consulting agreement with RBS Technologies, LLC (RBS), which was later
assigned
to Stonecreek Associates, Inc. on April 23, 2007. According to the terms
of this
agreement i) RBS will provide certain services to AMH and its affiliated
management company in connection with a reverse merger or similar transaction
to
which the Company, subsequently Apollo Medical Management, Inc., will be
a
party; ii) prior to the transaction the Company will issue to RBS 300,000
shares
of its common stock, as such amount may be adjusted pursuant to the terms
of the
consulting agreement.
AMH
and
RBS (subsequently Stonecreek) desire that AMH (or, following its incorporation,
the Company, if AMH so elects in its sole and absolute discretion) acts
as
escrow agent to hold the certificates representing the stock and to deliver
the
certificates to Stonecreek only if, as and when the transaction is consummated.
The
agreement and the shares to be issued according to the agreement, between
AMH
and RBS Technologies, LLC were assigned to Stonecreek Associates, Inc.
on April
23, 2007. On October 18, 2007, Stonecreek Associates, Inc. entered into
an
agreement with Apollo Medical Management, Inc., which supplements the agreement
between RBS Technologies, LLC and ApolloMed Hospitalists dated September
5,
2006. According to the terms, Stonecreek will provide the Company with
advice in
connection with Financing, which is defined as any capital raising event
in
which the source of capital has been identified by either Westcap Securities,
Inc., Stonecreek or a third party introduced to the Company by Stonecreek.
In
consideration for its advisory services, the Company agrees to pay Stonecreek
a
bonus fee of two percent (2%) of the gross proceeds of the financing. The
bonus
fee is immediately payable in cash upon closing of the first financing
or at any
successive closing(s) of subsequent financing tranches. The bonus fee herein
replaces the cash fee portion of compensation according to the RBS Technologies
agreement with AMH.
On
September 5, 2006, Westcap Securities, Inc was engaged by ApolloMed Hospitalist,
Inc (AMH) a Medical Corporation and an affiliate to the Company to act
as
exclusive financial adviser. According to the terms of the engagement agreement,
Westcap will provide following services.
Page
12
APOLLO
MEDICAL MANAGEMENT, INC.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO
FINANCIAL STATEMENTS
JANUARY
31, 2008
|
a)
|
Provide
advice regarding capital formation and financial market
awareness
|
|
b)
|
Provide
advice on market potential, financial outlook, and
valuation
|
|
c)
|
Assist
in the “going public” strategy of the
Company
|
|
d)
|
Assist
in preparing marketing materials for proposed financing of the
Company
|
|
e)
|
Provide
general assistance as request by
management
|
The
expiration date of the agreement was November 28, 2006 or the completion
of a
transaction if in process. For services rendered Westcap will receive at
the
time of closing of a transaction contemplated by the agreement 400,000
shares in
AMH (on a post - reverse split basis in AMH or the successor management
company). This share amount is based upon a total of 13,000,000 fully diluted
shares outstanding for the Company prior to the closing of the initial
financing. Any change in the pre - financing fully diluted amount will
adjust
the share amount due to Westcap on a proportional basis.
On
September 5, 2006, Westcap Securities, Inc was engaged by ApolloMed Hospitalist,
Inc (AMH) a Medical Corporation and an affiliate to the Company to act
as lead
placement agent in the proposed offering, issuance and sale of the company’s
stock, preferred stock, convertible debentures, debt or any other securities
by
the company or other similar financing transaction. The
expiration date of the agreement was November 28, 2006 or at such date
as may be
mutually agreed upon by the parties in writing.
The
company agrees to pay Westcap for its services a fee (Transaction Fee)
equal to
8% and a non-accountable fee of 3% of the aggregated gross proceeds received
by
the company from the sale of securities in any transaction during the term.
In
addition, the company agrees to pay Westcap for its services a fee in the
form
of warrants (Warrant Fee) equal to 3% of the aggregated gross proceeds
received
by the company from the sale of securities in any transaction during the
term.
Lastly, the company agrees to pay Westcap for its services a fee (Warrant
Exercise Fee) equal to 5% of the aggregated proceeds received by the company
as
a result of warrants exercised by investors, on the warrants received as
a
result of the transaction including issuance of any additional warrants
pursuant
to a “green shoe” if applicable, at any time they are exercised. The transaction
fee shall be due and payable and warrant fee shall be issued on the closing
of
any transaction. The warrant exercise fee shall be payable within 10 business
days of receipt of good funds by the company as a result of the exercise
of the
warrants. In regards to gross proceeds that are not secured by Westcap,
the
company will pay to Westcap a cash commission of 3.5% of these gross proceeds.
Page
13
APOLLO
MEDICAL MANAGEMENT, INC.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO
FINANCIAL STATEMENTS
JANUARY
31, 2008
Employment
Agreements:
On
March
1st, 2007 the Company entered into an employment agreement with Jagdish
Belgaum.
As per the terms of the agreement Jagdish will provide services as Chief
Technology Officer of the Company for the period of year starting the date
of
the agreement. As part of compensation, the Company will pay Jagdish $1.0
per
annum as salary. In addition Jagdish will received stock options to purchase
an
aggregate of 75,000 shares of common stock with an exercise price of $0.10
per
share subject to adoption and approval of stock option or similar plan
by the
shareholders.
On
March
14th, 2007 the Company entered into an employment agreement with Roy Fu,
M.D. As
per the terms of the agreement Roy will provide services as Chief Medical
Officer of the Company for the period of year starting the date of the
agreement. As part of compensation, the Company will pay Roy $1.0 per annum
as
salary. In addition Roy will received stock options to purchase an aggregate
of
125,000 shares of common stock with an exercise price of $0.10 per share
subject
to adoption and approval of stock option or similar plan by the
shareholders.
On
June
4th, 2007 the Company entered into an employment agreement with Valente
C Ramos,
M.D. As per the terms of the agreement Valente will provide services as
Vice
President of Operations of the Company for the period of year starting
the date
of the agreement. As part of compensation, the Company will pay Valente
$1.0 per
annum as salary. In addition Valente will received stock options to purchase
an
aggregate of 200,000 shares of common stock with an exercise price of $0.10
per
share subject to adoption and approval of stock option or similar plan
by the
shareholders.
NOTE
9 - SUBSEQUENT EVENTS
Consulting
Agreement:
FA
Corp.
entered into an agreement with Apollo Medical Management, Inc. on February
11,
2008. FA agrees to provide the Company with advice on accounting and financial
matters involved with reverse mergers and PIPE transactions; as well as
on-going
accounting, SEC financial reporting and “Public Company” related issues.
According to the terms of the Consulting Agreement, FA Corp. will receive
the
amount of eight thousand dollars ($8,000.00) per month and 1/60 of 4.99
percent
of the total shares outstanding on a fully-diluted basis, upon closing
of the
reverse merger, in the form of restricted common stock. All shares shall
be
placed in escrow maintained at all times by the Company, and issued according
to
the above formula on the last day of each month. Either party can terminate
this
Consulting Agreement at any time for any reason, with or without cause,
by
giving written notice to the other party, it being understood that upon
termination, the Agreement shall have no further force or effect.
Page
14