17.

Earnings Per Share

Basic net income (loss) per share is calculated using the weighted average number of shares of the Company’s common stock issued and outstanding during a certain period, and is calculated by dividing net income (loss) by the weighted average number of shares of the Company’s common stock issued and outstanding during such period. Diluted net income (loss) per share is calculated using the weighted average number of common and potentially dilutive common shares outstanding during the period, using the as-if converted method for secured convertible notes, preferred stock, and the treasury stock method for options and common stock warrants.

Pursuant to the Merger Agreement, ApolloMed held back 10% of the shares that were issuable to NMM shareholders (“Holdback Shares”) to secure indemnification of ApolloMed and its affiliates under the Merger Agreement. The Holdback Shares will be held for a period of up to 24 months after the closing of the Merger (to be distributed on a pro-rata basis to former NMM shareholders), during which ApolloMed may seek indemnification for any breach of, or noncompliance with, any provision of the Merger Agreement, by NMM. The Holdback Shares are excluded from the computation of basic earnings per share, but included in diluted earnings per share. As of December 31, 2017 and December 31, 2016, APC held 1,682,110 common shares of ApolloMed and NMM, respectively, which are included in treasury shares and not in the number of common shares outstanding used to calculate earnings per share.

Below is a summary of the earnings per share computations:

Years ended December 31,	2017		2016

Earnings per share – basic	$	1.01	$	0.46
Earnings per share – diluted	$	0.90	$	0.41
Weighted average shares of common stock outstanding – basic		25,525,786		24,673,081
Weighted average shares of common stock outstanding – diluted		28,661,735		27,970,431

Below is a summary of the shares included in the diluted earnings per share computations:

Years ended December 31,	2017		2016

Weighted average shares of common stock outstanding – basic		25,525,786		24,673,081
10% shares held back pursuant to indemnification clause		3,039,749		2,741,454
Stock options		44,716		555,896
Warrants		51,484		-
Weighted average shares of common stock outstanding – diluted		28,661,735		27,970,431