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Stockholders' Equity
 9 Months Ended
Dec. 31, 2015
Stockholders' Equity Note [Abstract]  
Stockholders’ Equity
9.
Stockholders’ Equity
 
Equity Incentive Plans  
 
The Company’s amended 2010 Equity Incentive Plan (the “2010 Plan”) allowed the Board to grant up to 1,200,000 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 December 31, 2015, there were no shares available for grant under the 2010 Plan.
 
On April 29, 2013 the Company’s Board of Directors approved the Company’s 2013 Equity Incentive Plan (the “2013 Plan”), pursuant to which 500,000 shares of the Company’s common stock were reserved for issuance thereunder and provides for awards, including incentive stock options, non-qualified options, restricted common stock, and stock appreciation rights. The Company received approval of the 2013 Plan from the Company’s stockholders on May 19, 2013. As of December 31, 2015 there were no shares available for future grants under the 2013 Plan.
 
On December 15, 2015, the Company’s Board of Directors approved the Company’s 2015 Equity Incentive Plan (the “2015 Plan”), pursuant to which 1,500,000 shares of the Company’s common stock were reserved for issuance thereunder and provides for awards, including incentive stock options, non-qualified options, restricted common stock, and stock appreciation rights. The Company will seek approval of the 2015 Plan from its stockholders at the next meeting of stockholders and must receive such approval prior to December 15, 2016 or the 2015 Plan will be null and void and any grants made under the 2015 Plan will be canceled. As of December 31, 2015, there were 1,500,000 shares available for future grants under the 2015 Plan.
 
Preferred Stock
 
On October 14, 2015, Company entered into the Agreement with 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 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 purposes.
 
The Preferred Stock 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. The Preferred Stock 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.
 
At any time prior to conversion and through the earlier to occur of (i) the later of (x) January 31, 2017 or (y) 60 days after the date on which the Company files its quarterly report on Form 10-Q for the period ending 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 above 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. Per ASC-480, as the redemption feature is not solely within the control of the Company and the Preferred Stock does not qualify as permanent equity, the Preferred Stock will be classified as temporary equity.
 
The Warrants may be 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. Accordingly, the Company has accounted for such warrants as derivative liabilities upon grant and has marked such liability to its fair value at December 31, 2015.
 
Without the written consent of NMM, between the closing date and the nine-month anniversary of the closing date, the Company shall not acquire, sell all or substantially all of its assets to, effect a change of control, or merge, combine or consolidate with, any other person engaged in the business of being a MSO, ACO or IPA, or enter into any agreement with respect to any of the foregoing.
  
Share Issuances  
 
Common Shares
 
Pursuant to the Conversion Agreement (see note 6), in October 2015, the Company issued 275,000 shares of Common Stock, together with payment in cash for all accrued and unpaid interest, in full satisfaction of NNA’s conversion and other rights under the 8% Convertible Note dated March 28, 2014. In addition, the Company issued a total of 325,000 shares of Common Stock to NNA in exchange for all warrants held by NNA, under which NNA had the right to purchase 300,000 shares of Common Stock at an exercise price of $10.00 per share and 200,000 shares at an exercise price of $20.00 per share, in each case subject to anti-dilution adjustments. The estimated fair value of 275,000 and 325,000 shares of common stock was $1,402,500 and $1,657,500, respectively, which were computed based on the market price of the Share, less a 15% marketability discount or an adjusted stock price of $5.10 per share. The marketability discount is based on management’s best estimate for its common stock at the time of the transaction.
 
Restricted Stock
 
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:
 
 
 
 
 
 
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 at March 31, 2015
 
 
12,222
 
 
0.3
 
$
0.50
 
$
4.10
 
Granted
 
 
-
 
 
 
 
 
 
 
 
 
 
Vested / lapsed
 
 
(12,222)
 
 
-
 
 
 
 
 
 
 
Forfeited
 
 
-
 
 
-
 
 
-
 
 
-
 
Unvested or unlapsed shares at December 31, 2015
 
 
-
 
 
-
 
 
-
 
 
-
 
 
Options
 
Stock option activity for the nine-month period ended December 31, 2015 is summarized below:
 
 
 
Shares
 
Weighted
Average
Per Share
Exercise
Price
 
Weighted
Average
Remaining
Life
(Years)
 
Weighted
Average
Per Share
Intrinsic
Value
 
Balance, March 31, 2015
 
 
776,500
 
$
4.69
 
 
7.4
 
$
1.50
 
Granted
 
 
-
 
 
 
 
 
 
 
 
 
 
Cancelled
 
 
-
 
 
 
 
 
 
 
 
 
 
Exercised
 
 
-
 
 
 
 
 
 
 
 
 
 
Expired
 
 
-
 
 
 
 
 
 
 
 
 
 
Forfeited
 
 
(86,500)
 
 
2.63
 
 
 
 
 
 
 
Balance, December 31, 2015
 
 
690,000
 
$
3.35
 
 
7.1
 
 
2.57
 
Vested and exercisable, December 31, 2015
 
 
619,181
 
$
2.67
 
 
7.0
 
 
2.86
 
 
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 and provides for awards, including incentive stock options, non-qualified options, restricted common stock, and stock appreciation rights. 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 stock awards under the ACO Plan during the nine months ended December 31, 2015:
 
 
 
Shares
 
Weighted
Average
Remaining
Vesting
Life
(Years)
 
Weighted
Average
Per Share
Intrinsic
Value
 
Weighted
Average
Per Share
Fair Value
 
Balance, March 31, 2015
 
 
3,752,004
 
 
0.1
 
$
0.70
 
$
0.07
 
Granted
 
 
-
 
 
-
 
 
-
 
 
-
 
Released
 
 
-
 
 
-
 
 
-
 
 
-
 
Balance, December 31, 2015
 
 
3,752,004
 
 
-
 
$
0.70
 
$
0.07
 
Vested and exercisable, end of period
 
 
3,748,675
 
 
 
 
 
 
 
 
 
 
 
Awards of restricted stock under the ACO 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 December 31, 2015, total unrecognized compensation costs related to non-vested stock-based compensation arrangements granted under the Company’s 2010 Plan and 2013 Plan, and the ACO Plan’s and the weighted-average period of years expected to recognize those costs are as follows:
 
 
 
Unrecognized
Stock
Compensation
Cost
 
Weighted
Average
Remaining
Vesting Period
(Years)
 
Common stock options
 
$
128,962
 
 
1.5
 
Restricted stock
 
$
-
 
 
-
 
ACO Plan restricted stock
 
$
-
 
 
-
 
 
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:
 
 
 
Three Months Ended
December 31,
 
Nine Months Ended
December 31,
 
 
 
2015
 
2014
 
2015
 
2014
 
Stock-based compensation expense:
 
 
 
 
 
 
 
 
 
 
 
 
 
Cost of services
 
$
1,227
 
$
1,227
 
$
3,682
 
$
12,148
 
General and administrative
 
 
25,280
 
 
155,325
 
 
175,608
 
 
1,120,062
 
 
 
$
26,507
 
$
156,552
 
$
179,290
 
$
1,132,210
 
 
Warrants
 
Warrants consisted of the following for the nine months ended December 31, 2015:
 
 
 
Weighted
Average
Per Share
 
 
 
 
 
 
Intrinsic
 
Number of
 
 
 
Value
 
Warrants
 
Outstanding at March 31, 2015
 
$
0.46
 
 
914,500
 
Granted
 
 
-
 
 
1,111,111
 
Exercised
 
 
-
 
 
(500,000)
 
Cancelled
 
 
-
 
 
-
 
Outstanding at December 31, 2015
 
$
1.94
 
 
1,525,611
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted
 
 
 
 
 
 
 
Weighted
 
 
 
 
Average
 
Exercise Price Per
Share
 
Warrants
Outstanding
 
Average Remaining
Contractual Life
 
Warrants
Exercisable
 
Exercise Price Per
Share
 
$
1.15
 
 
125,000
 
 
0.6
 
 
125,000
 
$
1.15
 
 
1.15
 
 
25,000
 
 
0.6
 
 
25,000
 
 
1.15
 
 
4.50
 
 
50,000
 
 
0.6
 
 
50,000
 
 
4.50
 
 
5.00
 
 
10,000
 
 
1.8
 
 
10,000
 
 
5.00
 
 
4.50
 
 
82,500
 
 
2.1
 
 
82,500
 
 
4.50
 
 
4.00
 
 
22,000
 
 
2.1
 
 
22,000
 
 
4.00
 
 
9.00
 
 
1,111,111
 
 
4.8
 
 
1,111,111
 
 
9.00
 
 
10.00
 
 
100,000
 
 
2.6
 
 
100,000
 
 
10.00
 
 
 
 
 
1,525,611
 
 
3.9
 
 
1,525,611
 
 
7.80
 
  
October 14, 2015, in connection with the NMM financing, the Company issued a five-year stock purchase warrant to purchase up to 1,111,111 shares of common stock at an exercise price of $9.00 per share.
 
Authorized stock
 
At December 31, 2015 the Company is authorized to issue up to 100,000,000 shares of common stock pursuant to its Certificate of Incorporation, as amended. 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% Notes, the exercise of all outstanding warrants exercisable into shares of common stock, and shares granted and available for grant under the Company’s 2010 Plan, 2013 Plan and 2015 Plan. The number of shares of common stock reserved for these purposes is as follows at December 31, 2015: 
 
Common stock issued and outstanding
 
5,463,389
 
Conversion of 9% Notes
 
275,000
 
Preferred stock
 
1,111,111
 
Warrants outstanding
 
1,525,611
 
Stock options outstanding
 
690,000
 
 
 
9,065,111