18.

Variable Interest Entities (VIEs)

A VIE is defined as a legal entity whose equity owners do not have sufficient equity at risk, or, as a group, the holders of the equity investment at risk lack any of the following three characteristics: decision-making rights, the obligation to absorb losses, or the right to receive the expected residual returns of the entity. The primary beneficiary is identified as the variable interest holder that has both the power to direct the activities of the VIE that most significantly affect the entity’s economic performance and the obligation to absorb expected losses or the right to receive benefits from the entity that could potentially be significant to the VIE.

The Company’s VIEs include APC and other immaterial entities.

Assets recognized as a result of consolidating these VIEs do not represent additional assets that could be used to satisfy claims against the Company’s general assets. Conversely, liabilities recognized as a result of consolidating these VIEs do not represent additional claims on the Company’s general assets; rather, they represent claims against the specific assets of the VIE.

The Company evaluates its relationships with its VIEs on an ongoing basis to ensure that it continues to be the primary beneficiary.

The following table includes assets that can only be used to settle the liabilities of APC and the creditors of APC have no recourse to the Company. These assets and liabilities, with the exception of the investments in other entities – cost method and amounts due to affiliate, which are eliminated upon consolidation with the NMM, are included in the accompanying consolidated balance sheets.

December 31,	2017		2016

Assets

Current assets
Cash and cash equivalents	$	54,686,370	$	42,452,619
Restricted cash – short-term		18,005,661		101,132
Fiduciary cash		2,017,437		1,050,739
Investment in marketable securities		1,057,090		1,051,807
Receivables, net		15,183,483		21,025,668
Prepaid expenses and other current assets		1,821,328		727,743

Total current assets		92,771,369		66,409,708

Noncurrent assets
Land, property and equipment, net		10,167,689		7,294,994
Intangible assets, net		70,841,907		84,473,335
Goodwill		60,012,316		56,213,448
Loans receivable – related parties		5,000,000		5,200,000
Loan receivable		5,000,000		-
Investments in other entities – equity method		21,903,524		24,256,065
Investments in other entities – cost method		4,320,000		4,320,000
Restricted cash – long-term		745,235		-
Other assets		1,371,664		1,596,848

Total noncurrent assets		179,362,335		183,354,690

Total assets	$	272,133,704	$	249,764,398
Current liabilities
Accounts payable and accrued expenses	$	3,625,610	$	4,213,551
Incentives payable		21,500,000		19,621,645
Fiduciary accounts payable		2,017,437		1,050,739
Medical liabilities		25,186,240		18,957,465
Income taxes payable		1,463,540		2,999,225
Amount due to affiliate		24,889,717		3,204,334
Bank loan, short-term		510,391		-
Capital lease obligations		98,738		-

Total current liabilities		79,291,673		50,046,959

Noncurrent liabilities
Deferred tax liability		20,970,766		36,148,696
Liability for unissued equity shares		1,185,025		1,008,925
Capital lease obligations, net of current portion		619,001		-

Total noncurrent liabilities		22,774,792		37,157,621

Total liabilities	$	102,066,465	$	87,204,580

The assets of our other consolidated VIEs were not considered significant.

Approximately $18,000,000 of restricted cash is related to an amount that, as a result of the merger between ApolloMed and NMM (see Note 3), is to be transferred into an escrow account that will be held for distribution to former NMM shareholders.