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Stockholders' Deficit | 2 Months Ended
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Mar. 31, 2014
Stockholders' Equity Note [Abstract] |
Stockholders' Deficit | 7. Stockholders’ Deficit Common Stock Placement On March 28, 2014, the Company entered into an equity and debt investment for up to $12.0 million with NNA of Nevada, Inc. (“NNA”). As part of the investment, the Company entered into an Investment Agreement with NNA, dated March 28, 2014 (the “Investment Agreement”), pursuant to which the Company sold NNA 2,000,000 shares of the Company’s common stock (the “Purchased Shares”) at a purchase price of $1.00 per share. In addition with the issuance of common shares, the Company issued to NNA 1,000,000 warrants to purchase the Company’s common stock for $1.00 per share. The Company used the Monte Carlo Method which used the following inputs: term of 7 years, risk free rate of 2.31%, no dividends, volatility of 71.4%, share price of $0.45 per share and a 50% probability of down-round financing The Company determined that the fair value of the shares issued was approximately $900,000, or approximately $0.45 per share. The Company also entered into a registration rights agreement (“RRA”) with NNA which requires the Company to file a registration statement to register its shares with the Securities and Exchange Commission no later than March 28, 2015. The RRA requires the Company to use commercially reasonable efforts to complete these actions. If the Initial Registration Statement is not filed with the Commission on or prior to the filing deadline the Company must pay to NNA an amount in Common Stock based upon its then fair market value, as liquidated damages equal to 1.50% of the aggregate purchase price paid by NNA. Equity Incentive Plans The Company’s amended 2010 Equity Incentive Plan (the “2010 Plan”) allowed the Board to grant up to 12,000,000 shares of the Company’s common stock, and provided for awards including incentive stock options, non-qualified options, restricted common stock, and stock appreciation rights. As of March 31, 2014 there were no shares available for grant. On April 29, 2013 the Company’s Board of Directors approved the Company’s 2013 Equity Incentive Plan (the “2013 Plan”), pursuant to which 5,000,000 shares of the Company’s common stock have been reserved for issuance thereunder. The Company received approval of the 2013 Plan from the Company’s stockholders on May 19, 2013. The Company issues new shares to satisfy stock option and warrant exercises under the 2013 Plan. As of March 31, 2014 there were 2,707,000 shares available for future grants under the 2013 Plan. Stock options and restricted common stock issued to non-employees as compensation for services to be provided to the Company are accounted for based upon the fair value of the services provided or the estimated fair value of the option or share, whichever can be more clearly determined. The Company recognizes this expense over the period in which the services are provided. Share Issuances On March 28, 2014, the Company issued 2,000,000 shares of common stock to NNA in connection with the 2014 NNA Financing (see Note 4). A summary of the Company’s restricted stock sold to employees, directors and consultants with a right of repurchase of unlapsed or unvested shares is as follows for the two months ended March 31, 2014:
|  |  |  |  | Weighted Average Remaining Vesting |  | Weighted Average Per Share |  | Weighted- average Per Share |
|  |  |  |  | Life |  | Intrinsic |  | Grant Date |
|  | Shares |  | (In years) |  | Value |  | Fair Value |
Unvested or unlapsed shares - January 31, 2014 |  |  | 1,012,963 |  |  | 1.5 |  | $ | - |  | $ | 0.41 |
Granted |  |  | - |  |  | - |  |  | - |  |  | - |
Vested / lapsed |  |  | (105,556) |  |  | - |  |  | - |  |  | - |
Forfeited |  |  | - |  |  | - |  |  | - |  |  | - |
Unvested or unlapsed shares - March 31, 2014 |  |  | 907,407 |  |  | 1.3 |  | $ | - |  | $ | 0.41 |
Options Stock option activity for the two months ended March 31, 2014 is summarized below:
|  |  |  |  | Weighted |  | Weighted |  | Weighted |
|  |  |  |  | Average |  | Average |  | Average |
|  |  |  |  | Per Share |  | Remaining |  | Per Share |
|  |  |  |  | Exercise |  | Life |  | Intrinsic |
|  | Shares |  | Price |  | (Years) |  | Value |
Balance, January 31, 2014 |  |  | 7,358,000 |  | $ | 0.17 |  |  | 9.0 |  | $ | 0.16 |
Granted |  |  | - |  |  |  |  |  |  |  |  |  |
Cancelled |  |  | (887,667) |  |  | 0.23 |  |  | 7.9 |  |  | - |
Exercised |  |  | - |  |  |  |  |  |  |  |  | - |
Expired |  |  | - |  |  |  |  |  |  |  |  | - |
Forfeited |  |  | (183,333) |  |  | 0.21 |  |  | 8.5 |  |  | - |
Balance, March 31, 2014 |  |  | 6,287,000 |  | $ | 0.20 |  |  | 8.7 |  | $ | 0.11 |
Vested and exercisable - March 31, 2014 |  |  | 5,260,889 |  | $ | 0.19 |  |  | 7.3 |  | $ | 0.12 |
ApolloMed ACO 2012 Equity Incentive Plan On October 18, 2012 ApolloMed ACO’s Board of Directors adopted the ApolloMed Accountable Care Organization, Inc. 2012 Equity Incentive Plan (the “ACO Plan”) and reserved 9,000,000 shares of ApolloMed ACO’s common stock for issuance thereunder. The purpose of the ACO Plan is to encourage selected employees, directors, consultants and advisers to improve operations and increase the profitability of ApolloMed ACO and encourage selected employees, directors, consultants and advisers to accept or continue employment or association with ApolloMed ACO. The following table summarizes the restricted stock award in the ACO Plan during the two months ended March 31, 2014:
|  |  |  |  | Weighted |  |  |  |  |
|  |  |  |  | Average |  | Weighted |  |  |
|  |  |  |  | Remaining |  | Average |  | Weighted |
|  |  |  |  | Vesting |  | Per Share |  | Average |
|  |  |  |  | Life |  | Intrinsic |  | Per Share |
|  | Shares |  | (Years) |  | Value |  | Fair Value |
Balance, January 31, 2014 |  |  | 3,752,000 |  |  | 1.0 |  | $ | 0.02 |  | $ | 0.03 |
Granted |  |  | - |  |  | - |  |  | - |  |  | - |
Released |  |  | - |  |  | - |  |  | - |  |  | - |
Balance, March 31, 2014 |  |  | 3,752,000 |  |  | 0.8 |  | $ | 0.02 |  | $ | 0.03 |
Vested and exercisable - March 31, 2014 |  |  | 2,480,042 |  |  |  |  |  |  |  |  |  |
Awards of restricted stock under the Plan vest (i) one-third on the date of grant; (ii) one-third on the first anniversary of the date of grant, if the grantee has remained in service continuously until that date; and (iii) one-third on the second anniversary of the date of grant if the grantee has remained in service continuously until that date. As of March 31, 2014, total unrecognized compensation costs related to non-vested stock-based compensation arrangements granted under the Company’s 2010 and 2013 Equity Plans, and the ACO Plan’s and the weighted-average period of years expected to recognize those costs are as follows:
Common stock options |  | $ | 99,732 |
Restricted stock |  | $ | 201,380 |
ACO Plan restricted stock |  | $ | 10,525 |
Stock-based compensation expense related to common stock and common stock option awards is recognized over their respective vesting periods and was included in the accompanying condensed consolidated statement of operations as follows:
|  | Two months ended March 31, |
|  | 2014 |  | 2013 |
Stock-based compensation expense: |  |  |  |  |  |  |
Cost of services |  | $ | 15,703 |  | $ | 14,077 |
General and administrative |  |  | 44,484 |  |  | 31,209 |
|  | $ | 60,187 |  | $ | 45,286 |
Warrants Warrants consisted of the following as of and for the two months ended March 31, 2014:
|  | Weighted |  |  |  |
|  | Average |  |  |  |
|  | Per Share |  |  |  |
|  | Intrinsic |  | Number of |
|  | Value |  | warrants |
Outstanding at February 1, 2014 |  | $ | 0.04 |  |  | 3,145,000 |
Granted |  |  | - |  |  | 4,000,000 |
Exercised |  |  | - |  |  | - |
Cancelled |  |  | - |  |  | - |
Outstanding at March 31, 2014 |  | $ | 0.02 |  |  | 7,145,000 |
Exercise Price Per Share |  | Warrants outstanding |  | Weighted average remaining contractual life |  | Warrants exercisable |  | Warrants average exercise price per share |
$ | 0.11485 |  |  | 1,250,000 |  |  | 2.50 |  |  | 1,250,000 |  | $ | 0.1149 |
$ | 0.11485 |  |  | 250,000 |  |  | 2.50 |  |  | 250,000 |  | $ | 0.1149 |
$ | 0.45000 |  |  | 500,000 |  |  | 2.50 |  |  | 500,000 |  | $ | 0.4500 |
$ | 0.50000 |  |  | 100,000 |  |  | 3.74 |  |  | 100,000 |  | $ | 0.5000 |
$ | 0.45000 |  |  | 825,000 |  |  | 4.00 |  |  | 825,000 |  | $ | 0.4500 |
$ | 0.40000 |  |  | 220,000 |  |  | 4.00 |  |  | 220,000 |  | $ | 0.4000 |
$ | 1.00000 |  |  | 2,000,000 |  |  | 7.00 |  |  | 2,000,000 |  | $ | 1.0000 |
$ | 2.00000 |  |  | 2,000,000 |  |  | 7.00 |  |  | 2,000,000 |  | $ | 2.0000 |
|  |  |  | 7,145,000 |  |  | 5.26 |  |  | 7,145,000 |  |  | 0.9600 |
In connection with the 2014 NNA Financing debt and equity investment, NNA received warrants to purchase up to 2,000,000 shares of the Company’s common stock at an exercise price of $1.00 per share and up to 2,000,000 shares at an exercise price of $2.00 per share, subject to adjustment for stock splits, reverse stock splits and stock dividends, and which are exercisable at any date prior to March 28, 2021. The warrants also contained down-round protection under which the exercise price of the warrants is subject to adjustment in the event the Company issues future common shares at a price below $0.90 per share. The Company determined that the warrants should be classified as liabilities under ASC 815-40, which requires the Company to determine the fair value of the warrants at the transaction date and at each subsequent reporting period (see Notes 2 and 4). Authorized stock At March 31, 2014 the Company was authorized to issue up to 100,000,000 shares of common stock. The Company is required to reserve and keep available out of the authorized but unissued shares of common stock such number of shares sufficient to effect the conversion of all outstanding shares of the 9% Senior Subordinated Callable Notes, the exercise of all outstanding warrants exercisable into shares of common stock, and shares granted and available for grant under the Company’s 2013 Plan. The amount of shares of common stock reserved for these purposes is as follows at March 31, 2014:
Common stock issued and outstanding |  |  | 49,134,549 |
Conversion of 9% Notes |  |  | 2,750,000 |
Warrants outstanding |  |  | 7,145,000 |
Stock options outstanding |  |  | 6,287,000 |
Remaining shares issuable under 2013 Equity Incentive Plan |  |  | 2,707,000 |
|  |  | 68,023,549 |

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- Definition The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(d),(e)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section S99 -Paragraph 4 -Subparagraph (SAB TOPIC 4.C) -URI http://asc.fasb.org/extlink&oid=27012166&loc=d3e187143-122770 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.29-31) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB TOPIC 4.E) -URI http://asc.fasb.org/extlink&oid=27010918&loc=d3e74512-122707 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 4 -Section C Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 4 -Section E Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Article 4 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 6 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21506-112644 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Glossary Preferred Stock -URI http://asc.fasb.org/extlink&oid=6521494 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 29, 30, 31 -Article 5 Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 04 -Article 3 Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21463-112644 Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.3-04) -URI http://asc.fasb.org/extlink&oid=27012166&loc=d3e187085-122770 Reference 14: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644 Reference 15: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 11 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21564-112644 Reference 16: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21488-112644 Reference 17: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21484-112644 Reference 18: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph d -Article 4 Reference 19: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 30 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6405834&loc=d3e23285-112656 + Details
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