Purchase of Business

9 Months Ended

Mar. 31, 2013

Purchase of Business:

Purchase of Business

2. Purchase of Business

On September 3, 2012, (amended on November 30, 2012 with an effective date of September 3, 2012), the Company’s wholly owned subsidiary OneHealth Urgent Care, Inc. (“OHUC”) purchased from MCS Ventures I thru VII all of the assets, liabilities and operations of those entities comprising and including Alliance Urgent Care PLLC (“AUC”) pursuant to an Asset Purchase Agreement for 10 million shares of the Company’s common stock. In addition, under a separate employment agreement executed on the same day as the purchase, the Company committed to issue an additional 10.6 million shares of its common stock as a onetime stock bonus. The Company is a publicly traded entity whose stock is quoted under the symbol CGHC on the OTCQB operated by OTC Markets (the “OTC QB”). After the date of the purchase, AUC operates as a wholly owned subsidiary of OHUC.

The stock that the Company issued pursuant to both the Asset Purchase Agreement and the Employment Agreement contain a stock price guarantee as follows:

 A.           Stock Price Guarantee for Year #1, if by September 5, 2013, the Closing Price of the common stock of Capital Group Holdings, Inc. has not been equal to or exceeding $1.00 for 20 consecutive trading days immediately prior, Capital Group Holdings, Inc. shall issue to Sellers such number of additional restricted shares of its common stock as to make up the difference between $10,000,000 (10,000,000 purchase shares X $1.00) and the actual Closing Price of the common stock multiplied by 10,000,000 shares.  (For example if the actual Closing Price of the common stock was $.80, Sellers would be issued 2,500,000 additional shares. {$10 million – $8 million [$0.80 X 10,000,000 = $8,000,000] = $2 million shortfall; $2,000,000/$0.80 per share = 2,500,000 shares).

Floor Price. For purposes of calculating the Stock Price Guarantee there shall be a floor price set for each of the two periods limiting the amount of stock to be issued to compensate Sellers for certain price fluctuations;  $0.53  per share for the Stock Price Guarantee for Year # 1.

The same price guarantee and floor price applies to the 10,600,000 common shares issued under the one-time bonus; however, the date of the guarantee is June 30, 2013.

 B.           Stock Price Guarantee for Year # 2, if by September 5, 2014, the Closing Price of the common stock of Capital Group Holdings, Inc., has not been equal to or exceeding $1.50 for 20 consecutive trading days immediately prior, Capital Group Holdings, Inc. shall issue to Sellers such number of additional restricted shares of its common stock as to make up the difference between $15,000,000 (10,000,000 purchase shares X $1.50) and the actual Closing Price of the common stock multiplied by 10,000,000 shares. (For example if the actual Closing Price of the common stock was $ 1.00, Sellers would be issued 5,000,000 additional shares).

Floor Price. For purposes of calculating the Stock Price Guarantee there shall be a floor price set for each of the two periods limiting the amount of stock to be issued to compensate Sellers for certain price fluctuations;  $0.20 per share for the Stock Price Guarantee for Year # 2

The same price guarantee and floor price applies to the 10,600,000 common shares issued under the one-time bonus; however, the date of the guarantee is June 30, 2014.

Pursuant to this acquisition, the Company had an appraisal performed to identify fair market value of the assets and obligations purchased. An independent appraiser that valued, among other things, the asset purchase agreement consideration, the value of an employment agreement associated with the purchase and an upfront signing bonus, conducted the appraisal. The total value of the purchase was estimated to be $12,000,000. The net tangible assets acquired had a value of $1,584,200 with the remainder of the purchase price, $10,415,800, was allocated by the appraiser to intangible assets as follows: trade name - $300,000, customer related intangibles - $1,900,000, specific processes - $2,900,000, and the remainder associated with cost-in-excess of these assets, or goodwill, of $5,315,800 (not including the effect of the deferred taxes noted below for $231,109). It was estimated that the trade name and goodwill would have an indefinite life, with the customer related intangible and the processes having lives of fourteen (14) and eleven (11) years, respectively. Goodwill and trade name would be subject to impairment valuations periodically in accordance with GAAP.

The $12,000,000 purchase price, and its allocation, is preliminary as of March 31, 2013. The preliminary estimates of fair values recorded are determined by management on various market and asset appraisals, and in consultation with an independent third-party appraiser. The purchase price, and its allocation, will remain preliminary until the Company receives a completed third-party valuation report that determines the fair value of the assets acquired, and management has reviewed and concurred with the report. The final amounts allocated to the assets acquired could differ significantly from the preliminary recorded amounts.

The following table summarizes the fair values of the assets acquired and liabilities assumed at the acquisition date:

Goodwill	$  5,546,909
Trade Name	300,000
Customer Related Intangibles	1,900,000
Process Related Intangibles	2,900,000
Liabilities Assumed	(860,000)
Deferred Income Tax	(231,109)
Cash	562,800
Receivables	573,100
Other Receivables	105,000
Prepaid Expenses	219,700
Property and Equipment	667,200
Deposits	65,700
Note Receivable - Capital Group	250,700
Total Value of Common Stock Issued	$ 12,000,000