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Mezzanine and Stockholders' Equity
 9 Months Ended
Sep. 30, 2018
Stockholders' Equity Note [Abstract]  
Stockholders' Equity
10.
Mezzanine and Stockholders’ Equity
 
All the historical NMM share and per share information has been adjusted to reflect the exchange ratio from the Merger (see Note 3).
 
Mezzanine
 
APC
 
As the redemption feature (see Note 2) of the shares is not solely within the control of APC, the equity of APC does not qualify as permanent equity and has been classified as noncontrolling interests in mezzanine or temporary equity.
 
Stockholders’ Equity
 
As of the date of this Report, 648,705 holdback shares have not been issued to certain former NMM shareholders who were NMM shareholders at the time of Closing of the Merger, as they have yet to submit properly completed letters of transmittal to ApolloMed in order to receive their pro rata portion of ApolloMed common stock and warrants as contemplated under the Merger Agreement. Pending such receipt, such former NMM shareholders have the right to receive, without interest, their pro rata share of dividends or distributions with a record date after the effectiveness of the Merger. The condensed consolidated financial statements have treated such shares of common stock as outstanding, given the receipt of the letter of transmittal is considered perfunctory and the Company is legally obligated to issue these shares in connection with the Merger.
 
On March 21, 2018, the Company issued 37,593 shares of the Company’s common stock to the Company’s Chief Operating Officer for prior services rendered. The stock price on the date of issuance was $16.80 per share, which resulted in the Company recording $631,562 of share-based compensation expense.
 
See options and warrants section below for common stock issued upon exercise of stock options and stock purchase warrants.
 
Options
 
The Company’s outstanding stock options consisted of the following:
 
 
 
Shares
 
 
Weighted

Average

Exercise Price
 
 
Weighted

Average

Remaining

Contractual

Term

(Years)
 
 
Aggregate

Intrinsic

Value
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Options outstanding at January 1, 2018
 
 
1,141,040
 
 
$
3.95
 
 
 
5.79
 
 
$
19.81
 
Options granted
 
 
155,000
 
 
 
9.85
 
 
 
-
 
 
 
-
 
Options exercised
 
 
(426,990
)
 
 
4.27
 
 
 
-
 
 
 
15.83
 
Options forfeited
 
 
(9,000
)
 
 
3.41
 
 
 
-
 
 
 
-
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Options outstanding at September 30, 2018
 
 
860,050
 
 
$
5.17
 
 
 
4.62
 
 
$
16.90
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Options exercisable at September 30, 2018
 
 
860,050
 
 
$
5.17
 
 
 
4.62
 
 
$
16.90
 
 
During the nine months ended September 30, 2018, stock options were exercised pursuant to the cashless exercise provision of the option agreement, with respect to 60,536 shares of the Company’s common stock, which resulted in the Company issuing 47,576 net shares.
 
During the nine months September 30, 2018, stock options were exercised for 366,454 shares of the Company’s common stock, which resulted in proceeds of approximately $1.5 million. The exercise price ranged from $0.01 to $10.00 per share.
 
Outstanding stock options granted to primary care physicians to purchase shares of APC’s common stock consisted of the following:
  
 
 
Shares
 
 
Weighted

Average

Exercise Price
 
 
Weighted

Average

Remaining

Contractual

Term

(Years)
 
 
Aggregate

Intrinsic

Value
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Options outstanding at January 1, 2018
 
 
853,800
 
 
$
0.167
 
 
 
1.75
 
 
$
508,864
 
Options granted
 
 
-
 
 
 
-
 
 
 
-
 
 
 
-
 
Options exercised
 
 
-
 
 
 
-
 
 
 
-
 
 
 
-
 
Options expired/forfeited
 
 
-
 
 
 
-
 
 
 
-
 
 
 
-
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Options outstanding at September 30, 2018
 
 
853,800
 
 
$
0.167
 
 
 
1.00
 
 
$
508,864
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Options exercisable at September 30, 2018
 
 
853,800
 
 
$
0.167
 
 
 
1.00
 
 
$
508,864
 
 
The aggregate intrinsic value is calculated as the difference between the exercise price and the estimated fair value of common stock as of September 30, 2018.
 
Share-based compensation expense related to option awards granted to primary care physicians to purchase shares of APC’s common stock, are recognized over their respective vesting periods, and consisted of the following:
 
 
 
Three Months Ended

September 30,
 
 
Nine Months Ended

September 30,
 
 
 
2018
 
 
2017
 
 
2018
 
 
2017
 
Share-based compensation expense:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cost of services
 
$
-
 
 
$
1,227
 
 
$
-
 
 
$
3,681
 
General and administrative
 
 
202,382
 
 
 
320,006
 
 
 
607,146
 
 
 
960,018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
202,382
 
 
$
321,233
 
 
$
607,146
 
 
$
963,699
 
 
  
The remaining unrecognized share-based compensation expense of stock option awards granted to primary care physicians to purchase shares of APC’s common stock as of September 30, 2018 was $809,528 which is expected to be recognized over the remaining term of 1.00 year.
 
Warrants
 
The Company’s outstanding warrants consisted of the following:
 
 
 
Shares
 
 
Weighted

Average

Exercise Price
 
 
Weighted

Average

Remaining

Contractual

Term

(Years)
 
 
Aggregate

Intrinsic

Value
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Warrants outstanding at January 1, 2018
 
 
3,648,541
 
 
$
9.75
 
 
 
3.74
 
 
$
14.25
 
Warrants granted
 
 
-
 
 
 
-
 
 
 
-
 
 
 
-
 
Warrants exercised
 
 
(268,663
)
 
 
7.82
 
 
 
-
 
 
 
10.58
 
Warrants expired/forfeited
 
 
(11,250
)
 
 
-
 
 
 
-
 
 
 
-
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Warrants outstanding at September 30, 2018
 
 
3,368,628
 
 
$
9.92
 
 
 
3.21
 
 
$
12.15
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted
 
 
 
 
 
 
 
Weighted
 
 
 
 
 
Average
 
 
 
 
 
 
 
Average
 
 
 
 
 
Exercise Price
 
Exercise Price Per
 
 
Warrants
 
 
Remaining
 
 
Warrants
 
 
Per
 
Share
 
 
Outstanding
 
 
Contractual Life
 
 
Exercisable
 
 
Share
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
4.50
 
 
 
5,000
 
 
 
0.10
 
 
 
5,000
 
 
$
4.50
 
 
9.00
 
 
 
1,092,350
 
 
 
2.04
 
 
 
1,092,350
 
 
 
9.00
 
 
10.00
 
 
 
1,433,916
 
 
 
3.54
 
 
 
1,433,916
 
 
 
10.00
 
 
11.00
 
 
 
837,362
 
 
 
4.19
 
 
 
837,362
 
 
 
11.00
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
4.50 –11.00
 
 
 
3,368,628
 
 
 
3.21
 
 
 
3,368,628
 
 
$
9.92
 
 
During the nine months ended September 30, 2018, common stock warrants were exercised for 268,663 shares of the Company’s common stock, which resulted in proceeds of approximately $2.1 million. The exercise price ranged from $4.00 to $11.00 per share.
 
Treasury Stock 
 
APC owns 1,682,110 shares of ApolloMed’s common stock as of September 30, 2018 and December 31, 2017, which are legally issued and outstanding but excluded from shares of common stock outstanding in the condensed consolidated financial statements, as such shares are treated as treasury shares for accounting purposes.
 
Dividends
 
During the first quarter of 2018, APC distributed $2,000,000 of dividends to APC shareholders.
 
NMM distributed approximately $10,000,000 and $3,783,799, in April 2018 and September 2018, respectively, to former NMM shareholders, from the $18,000,000 that was previously classified as restricted cash and dividends payable. The remaining balance of $4,216,201 will be paid in the fourth quarter of 2018 pending resolution of the legal settlement with certain former NMM shareholders and was classified as restricted cash as of September 30, 2018 (see Note 11).