UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





____________________




FORM
10-Q


____________________




(Mark
One)


x QUARTERLY REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934





For
the quarterly period ended July 31, 2009





o  TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT





For the
transition period from ___________ to ____________




____________________





Commission
File No.


000-25809


____________________





Apollo
Medical Holdings, Inc.


(Name of
small business issuer as specified in its charter)








Delaware
            
            20-8046599State
      of Incorporation
            
            IRS
      Employer Identification No.1010
      N. Central AvenueGlendale,
      California 91202(Address
      of principal executive offices)(818)
      507-4617(Issuer’s
      telephone number)




Check
whether the issuer (1) filed all reports required to be filed by Section 13 or
15(d) of the Exchange Act during the past 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days.
 Yes o           No
x


Indicate
by check mark whether the registrant is a large accelerated filer o, an accelerated filer
o, a
non-accelerated filer o, or a smaller reporting
company x




As of
August 10, 2009, there were 26,136,885 shares of the registrant's common stock,
$0.001 par value per share, issued and outstanding.







APOLLO
MEDICAL HOLDINGS, INC.
  INDEX
TO FORM 10-Q FILING
  FOR THE
THREE AND SIX MONTHS ENDED JULY 31, 2009 AND 2008
  TABLE
OF CONTENTS
  PART
      IFINANCIAL
      INFORMATION
                PAGEItem
      1.
                Financial
      Statements - UnauditedCondensed
      Consolidated Balance Sheet As of July 31, 2009 and January 31,
      2009
                3Condensed
      Consolidated Statements of Operations For the Three months and Six months
      ended July 31, 2009 and 2008
                4Condensed
      Consolidated Statements of Cash Flows For the Six months ended July 31,
      2009 and 2008
                5Notes
      to Condensed Consolidated Financial Statements
                6-16Item
      2.
                Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
                16-21Item
      3.
                Quantitative
      and Qualitative Disclosures about Market Risk
                21Item
      4.
                Control
      and Procedures.
                21PART
      IIOTHER
      INFORMATIONItem
      1.
                Legal
      Proceedings
                23Item
      2.
                Unregistered
      Sales of Equity Securities and the Use of Proceeds
                23Item
      3.
                Defaults
      upon Senior Securities
                23Item
      4.
                Submission
      of Matters to a Vote of Security Holders
                23Item
      5.
                Other
      Information
                23Item
      6.
                Exhibits
                23
 APOLLO
      MEDICAL HOLDINGS, INC.CONSOLIDATED
      BALANCE SHEETS(UNAUDITED)
  July
      31,
                
                
                January
      31,2009
                
                
                2009ASSETSCURRENT
      ASSETSCash
      and cash equivalents
                
                $
                90,737
                
                
                $
                84,161Accounts
      receivable, net
                
                
                330,980
                
                
                
                255,665Due
      from affiliate
                
                
                2,050
                
                
                
                2,050Prepaid
      expenses
                
                
                13,307
                
                
                
                25,025Total
      current assets
                
                
                473,074
                
                
                
                366,901Property
      and equipment - net
                
                
                26,654
                
                
                
                47,330TOTAL
      ASSETS
                
                $
                463,728
                
                
                $
                414,232LIABILITIES
      AND STOCKHOLDERS DEFICIT:CURRENT
      LIABILITIES:Accounts
      payable and accrued liabilities
                
                $
                55,197
                
                
                $
                65,141Shares
      to be issued
                
                
                179,167
                
                
                
                284,000Deferred
      Compensation
                
                
                22,000
                
                
                
                -Business
      Line
                
                
                12,087Convertible
      notes payable
                
                
                10,000
                
                
                
                10,000Convertible
      notes payable-related party
                
                
                23,000
                
                
                
                23,000Current
      portion of loan
                
                
                46,689
                
                
                
                41,782Total
      current liabilities
                
                
                348,139
                
                
                
                423,923Loan
                
                
                132,570
                
                
                
                156,218Convertible
      notes payable-related party
                
                
                75,000
                
                
                
                75,000Total
      liabilities
                
                
                555,709
                
                
                
                655,141STOCKHOLDERS'
      EQUITY/(DEFICIT):Preferred
      stock, par value $.001 and $0.0001 per share; 5,000,000
and25,000,000
      shares authorized, respectively; none issued
                
                
                -
                
                
                
                -Common
      Stock, par value $.001 and $0.0001, 100,000,000 shares
      authorized,26,136,885
      shares issued and outstanding
                
                
                26,137
                
                
                
                25,870Non-controlling
      interest
                
                
                281,041
                
                
                
                228,115Additional
      paid-in-capital
                
                
                749,791
                
                
                
                550,058Accumulated
      deficit
                
                
                (1,148,950
                )
                
                
                (1,044,951
                )Total
      stockholders' deficit
                
                
                (91,981
                )
                
                
                (240,909
                )TOTAL
      LIABILITIES AND STOCKHOLDERS' DEFICIT
                
                $
                463,728
                
                
                $
                414,232
 
 The
accompanying notes are an integral part of these consolidated financial
statements
 3
  APOLLO
      MEDICAL HOLDINGS, INC.CONSOLIDATED
      STATEMENTS OF OPERATIONSFOR
      THE SIX MONTHS AND THREE MONTHS ENDING JULY 31, 2009 AND
    2008(UNAUDITED)
  For
      the Three months ended
                
                
                For
      the Six months endedJuly
      31,
                
                
                July
      31,2009
                
                
                2008
                
                
                2009
                
                
                2008REVENUES
                
                $
                580,942
                
                
                $
                9,795
                
                
                $
                1,082,125
                
                
                $
                19,795Operating
      expenses:Cost
      of services - physician practice salaries, benefits and
    other
                
                
                387,692
                
                
                
                15,620
                
                
                
                807,247
                
                
                
                34,237General
      and administrative
                
                
                122,105
                
                
                
                330,980
                
                
                
                294,668
                
                
                
                395,498Depreciation
                
                
                10,338
                
                
                
                -
                
                
                
                20,675
                
                
                
                -Total
      operating expenses
                
                
                520,135
                
                
                
                346,600
                
                
                
                1,122,590
                
                
                
                429,735INCOME
      (LOSS) FROM OPERATIONS
                
                
                60,807
                
                
                
                (336,805
                )
                
                
                (40,465
                )
                
                
                (409,940
                )OTHER  EXPENSES:Interest
      expense
                
                
                4,958
                
                
                
                16,250
                
                
                
                9,807
                
                
                
                16,250NET
      INCOME (LOSS) BEFORE INCOME TAXES
                
                
                55,849
                
                
                
                (353,055
                )
                
                
                (50,272
                )
                
                
                (426,190
                )Provision
      for Income Tax
                
                
                -
                
                
                
                -
                
                
                
                800NET
      INCOME (LOSS)
                
                $
                55,849
                
                
                $
                (353,055
                )
                
                $
                (51,072
                )
                
                $
                (426,190
                )Net
      income attributable to noncontrolling interest
                
                
                39,434
                
                
                
                -
                
                
                
                52,926
                
                
                
                -Net
      income(loss) attributable to Apollo Medical Holdings, Inc.
                
                $
                16,415
                
                
                $
                (353,055
                )
                
                $
                (103,998
                )
                
                $
                (426,190
                )WEIGHTED
      AVERAGE SHARES OF COMMON STOCK OUTSTANDING,BASIC
      AND DILUTED
                
                
                26,096,306
                
                
                
                23,337,107
                
                
                
                25,985,136
                
                
                
                22,155,218*BASIC
      AND DILUTED NET INCOME (LOSS) PER SHARE
                
                $
                0.00
                
                
                $
                (0.02
                )
                
                $
                (0.00
                )
                
                $
                (0.02
                )*Weighted
      average number of shares used to compute basic and diluted loss per share
      is the samesince
      the effect of dilutive securities is anti-dilutive.
  The accompanying notes are an integral
part of these consolidated financial statements
 4
  APOLLO
      MEDICAL HOLDINGS, INC.CONSOLIDATED
      STATEMENTS OF CASH FLOWSFOR
      THE SIX MONTHS ENDED JULY 31, 2009 AND 2008(UNAUDITED)
  Six
      months ended July 31,2009
                  
                  
                  2008CASH
      FLOWS FROM OPERATING ACTIVITIES:Adjustments
      to reconcile net loss to net cash(used
      in) operating activities:Net
      Loss
                  
                  $
                  (51,072
                  )
                  
                  $
                  (426,190
                  )Depreciation
                  
                  
                  20,675
                  
                  
                  
                  -Bad
      debt expense
                  
                  
                  2,253
                  
                  
                  
                  -Shares
      to be issued for services
                  
                  
                  95,167
                  
                  
                  
                  -Accounts
      receivable
                  
                  
                  (77,567
                  )
                  
                  
                  -Prepaid
      expenses
                  
                  
                  11,718
                  
                  
                  
                  14,677Deferred
      Compensation
                  
                  
                  22,000Accounts
      payable and accrued liabilities
                  
                  
                  (9,944
                  )
                  
                  
                  1,068Net
      cash provide by (used in) operating activities
                  
                  
                  13,230
                  
                  
                  
                  (410,445
                  )CASH
      FLOWS FROM INVESTING ACTIVITIES:Property
      and Equipment
                  
                  
                  -
                  
                  
                  
                  -CASH
      FLOWS FROM FINANCING ACTIVITIES:Proceeds
      from notes payable
                  
                  
                  
                  
                  
                  
                  50,000Payments
      of notes payable
                  
                  
                  (18,741
                  )
                  
                  
                  -Proceeds
      from notes payable-affiliate
                  
                  
                  
                  
                  
                  
                  70,000Proceeds
      from business line
                  
                  
                  12,087
                  
                  
                  
                  -Increase
      in due to related parties
                  
                  
                  
                  
                  
                  
                  1,600Proceeds
      from issuance of common stock for cash
                  
                  
                  
                  
                  
                  
                  335,000Net
      cash (used in) provided by financing activities
                  
                  
                  (6,655
                  )
                  
                  
                  456,600NET
      INCREASE IN CASH & CASH EQUIVALENTS
                  
                  
                  6,576
                  
                  
                  
                  46,155CASH
      & CASH EQUIVALENTS, BEGINNING BALANCE
                  
                  
                  84,161
                  
                  
                  
                  44,352CASH
      & CASH EQUIVALENTS, ENDING BALANCE
                  
                  $
                  90,737
                  
                  
                  $
                  90,507SUPPLEMENTARY
      DISCLOSURES OF CASH FLOW INFORMATIONInterest
      paid during the quarter
                  
                  $
                  5,061
                  
                  
                  $
                  -Taxes
      paid during the quarter
                  
                  $
                  1,600
                  
                  
                  $
                  -Conversion
      of notes payable to Equity
                  
                  $
                  200,000
                  
                  
                  $
                  -
  The
accompanying notes are an integral part of these consolidated financial
statements
 5
  APOLLO
MEDICAL HOLDINGS, INC.
  NOTES TO
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
  1.
                Description
      of Business
  Apollo
Medical Holdings, Inc. is a leading provider of hospitalist services in the
Greater Los Angeles, California area. Hospitalist medicine is organized around
the admission and care of patients in an inpatient facility such as a hospital
or skilled nursing facility and is focused on providing, managing and
coordinating the care of hospitalized patients. Apollo Medical Holdings, Inc.
operates as a medical management holding company that focuses on managing the
provision of hospital-based medicine through a wholly owned
subsidiary-management company, Apollo Medical Management, Inc. (“AMM”). Through
AMM, the Company manages affiliated medical groups, which presently consist of
ApolloMed Hospitalists (“AMH”) and Apollo Medical Associates
(“AMA”).  AMM operates as a Physician Practice Management Company
(PPM) and is in the business of providing management services to Physician
Practice Companies (PPC) under Management Service Agreements.
  On June
13, 2008, Siclone Industries, Inc. (“Siclone”), Apollo Acquisition Co., Inc., a
wholly owned subsidiary of Siclone (“Acquisition”), Apollo Medical Management,
Inc. (“Apollo Medical”) and the shareholders of Apollo Medical entered into an
agreement and Plan of Merger (the “Merger Agreement”). Pursuant to the terms of
the Merger Agreement, Apollo Medical merged with and into Acquisition. The
former shareholders of Apollo Medical received 20,933,490 shares
of  Siclone’s common stock in exchange for all the issued and
outstanding shares of Apollo Medical.
  The
acquisition of Apollo Medical is accounted for as a reverse acquisition under
the purchase method of accounting since the shareholders of Apollo Medical
obtained control of the consolidated entity. Accordingly,
the reorganization of the two companies is recorded as a recapitalization
of Apollo Medical, with Apollo Medical being treated as the continuing operating
entity. The historical financial statements presented herein will be those of
Apollo Medical. The continuing entity retained January 31 as its fiscal year
end. The financial statements of the legal acquirer are not significant;
therefore, no pro forma financial information is submitted.
  On July
1, 2008, the continuing entity (i.e., the combined entity of Acquisition and
Apollo Medical) changed its name to Apollo Medical Management, Inc.
(AMM).  On July 3, 2008, Siclone changed its name to Apollo Medical
Holdings, Inc.   Following the merger, the Company is
headquartered in Glendale, California.
  On August
1, 2008, AMM completed negotiations and executed a formal Management Services
Agreement with ApolloMed Hospitalists (“AMH”), under which AMM will provide
management services to AMH.  The Agreement is effective as of August
1, 2008 and will allow AMM, which operates as a Physician Practice Management
Company, to consolidate AMH, which operates as a Physician Practice, in
accordance with EITF 97-2, Application of FASB Statement No. 94 and APB Opinion
No. 16 to Physician Management Entities and Certain Other Entities with
Contractual Management Agreements. The Management Services Agreement was amended
on March 20, 2009, to allow for the calculation of the fee on a monthly basis
with payment of the calculated fee each month.  AMH is controlled by
Dr. Hosseinion and Dr. Vazquez, the Company’s Chief Executive Officer and
President, respectively.
   6
  2.
                Summary
      of Significant Accounting Policies
 Basis
of Presentation
  The
accompanying unaudited condensed consolidated financial statements have been
prepared by Apollo in accordance with U.S. generally accepted accounting
principles for interim financial statements.  The statements consist
solely of the management company, Apollo Medical Holdings, Inc. prior to August
1, 2008.  Commencing with the Company’s third quarter on August 1,
2008, and concurrent with the execution of the Management Services Agreement,
the statements reflect the consolidation of AMM and AMH , in accordance with
EITF 97-2, Application of FASB Statement No. 94 and APB Opinion No. 16 to
Physician Management Entities and Certain Other Entities with Contractual
Management Agreements . In management’s opinion, all adjustments, consisting of
normal recurring adjustments necessary for the fair presentation of the results
of the interim periods are reflected herein. Operating results for the six month
period ended July 31, 2009 are not necessarily indicative of future financial
results.
  The
condensed consolidated financial statements and notes are presented as permitted
by Form 10-Q and do not contain all of the information that is included in the
annual financial statements and notes of the Company. The condensed consolidated
financial statements and notes presented herein should be read in conjunction
with the financial statements and notes included in the Company’s Annual Report
on Form 10-K for the year ended January 31, 2009
 
 Use
of Estimates
  The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting
period.
  Reclassification
  Certain
comparative amounts have been reclassified to conform to the
six  month periods ended July 30, 2009 and 2008.
  Fair
Value of Financial Instruments
  Statement
of financial accounting standard No. 107, Disclosures about fair value of
financial instruments, requires that the Company disclose estimated fair values
of financial instruments. The carrying amounts reported in the statements of
financial position for assets and liabilities qualifying as financial
instruments are a reasonable estimate of fair value.
  Credit
and Supply Risk
  The
Company’s case rate and capitation revenues, reported by Apollo’s affiliate,
AMH, are governed by contractual agreements with medical groups/IPA’s and
hospitals.  As a result, receivables from this business are generally
fully collected. The Company does face issues related to the timing of these
collections, and the Company must assess the level of earned but uncollected
revenue to which it is entitled at each period end. The Company does face
collection issues with regard to its fee-for-service revenues. One is the
estimation of the amount to be received from each billing since the Company
invoices on a Medicare schedule and each of many providers remits payment on a
reduced schedule.  The Company has to estimate the amount it will
ultimately receive from each billing and properly record revenue. With a wide
variety of contract terms and providers, the Company’s revenue is not
concentrated or dependent on a specific contract.  No individual
contract with our clients provides more than 20 percent of reported
revenues.
  7
  Recently
Issued Accounting Pronouncements
  In May
2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
Accounting Principles.” This Statement identifies the sources of accounting
principles and the framework for selecting the principles to be used in the
preparation of financial statements of nongovernmental entities that are
presented in conformity with generally accepted accounting principles (GAAP) in
the United States (the GAAP hierarchy). This Statement will not have an impact
on the Company’s financial statements.
  In May
2008, the FASB issued SFAS No. 163, “Accounting for Financial Guarantee
Insurance Contracts, an interpretation of FASB Statement No. 60.” The scope of
this Statement is limited to financial guarantee insurance (and reinsurance)
contracts, as described in this Statement, issued by enterprises included within
the scope of Statement 60. Accordingly, this Statement does not apply to
financial guarantee contracts issued by enterprises excluded from the scope of
Statement 60 or to some insurance contracts that seem similar to financial
guarantee insurance contracts issued by insurance enterprises (such as mortgage
guaranty insurance or credit insurance on trade receivables). This Statement
also does not apply to financial guarantee insurance contracts that are
derivative instruments included within the scope of FASB Statement No. 133,
“Accounting for Derivative Instruments and Hedging Activities.” This Statement
will not have an impact on the Company’s financial statements.
  In April 2009, the FASB issued FSP No. FAS 157-4,
“Determining Fair Values When the Volume and Level of Activity for the Asset or
Liability Have Significantly Decreased and Identifying Transactions That Are Not
Orderly.”  This FSPprovides guidance on
(1) estimating the fair value of an asset or liability when the volume and
level of activity for the asset or liability have significantly declined and
(2) identifying transactions that are not orderly. The FSP also amends
certain disclosure provisions of SFAS No. 157 to require, among other
things, disclosures in interim periods of the inputs and valuation techniques
used to measure fair value. This pronouncement is effective prospectively
beginning April 1, 2009. The Company is currently evaluating the impact of
this standard, but would not expect it to have a material impact on the
Company’s consolidated results of operations or financial
condition.
  In
April 2009, the FASB issued FSP No. FAS 115-2 and FAS 124-2,
“Recognition and Presentation of Other-Than-Temporary Impairments” (FSP 115-2).
This FSP modifies the requirements for recognizing other-than-temporarily
impaired debt securities and changes the existing impairment model for such
securities. The FSP also requires additional disclosures for both annual and
interim periods with respect to both debt and equity securities. Under the FSP,
impairment of debt securities will be considered other-than-temporary if an
entity (1) intends to sell the security, (2) more likely than not will
be required to sell the security before recovering its cost, or (3) does
not expect to recover the security’s entire amortized cost basis (even if the
entity does not intend to sell). The FSP further indicates that, depending on
which of the above factor(s) causes the impairment to be considered
other-than-temporary, (1) the entire shortfall of the security’s fair value
versus its amortized cost basis or (2) only the credit loss portion would
be recognized in earnings while the remaining shortfall (if any) would be
recorded in other comprehensive income. FSP 115-2 requires entities to initially
apply the provisions of the standard to previously other-than-temporarily
impaired debt securities existing as of the date of initial adoption by making a
cumulative-effect adjustment to the opening balance of retained earnings in the
period of adoption. The cumulative-effect adjustment potentially reclassifies
the noncredit portion of a previously other-than-temporarily impaired debt
security held as of the date of initial adoption from retained earnings to
accumulated other comprehensive income. This pronouncement is effective
April 1, 2009. The Company does not believe this standard will have a
material impact on the Company’s consolidated results of operations or financial
condition.
  8
   In
April 2009, the FASB issued FSP No. FAS 107-1 and APB 28-1, “Interim
Disclosures about Fair Value of Financial Instruments.” This FSP essentially
expands the disclosure about fair value of financial instruments that were
previously required only annually to also be required for interim period
reporting. In addition, the FSP requires certain additional disclosures
regarding the methods and significant assumptions used to estimate the fair
value of financial instruments. These additional disclosures will be required
beginning with the quarter ending July 31, 2009. The Company is currently
evaluating the requirements of these additional disclosures.
  Stock-based
compensation
  On
October 17, 2006 the Company adopted SFAS No. 123R, “Share-Based Payment, an
Amendment of FASB Statement No. 123.” As of the date of this report the Company
has no stock based incentive plan in effect.
  Basic
and Diluted Earnings Per Share
  Earnings
per share is calculated in accordance with the Statement of financial accounting
standards No. 128 (SFAS No. 128), “Earnings per share”. SFAS No. 128 superseded
Accounting Principles Board Opinion No.15 (APB 15). Net income (loss) per share
for all periods presented has been restated to reflect the adoption of SFAS No.
128. Basic net income per share is based upon the weighted average number of
common shares outstanding. Diluted net income (loss) per share is based on the
assumption that all dilutive convertible shares and stock options were converted
or exercised. Dilution is computed by applying the treasury stock method. Under
this method, options and warrants are assumed to be exercised at the beginning
of the period (or at the time of issuance, if later), and as if funds obtained
thereby were used to purchase common stock at the average market price during
the period.
  Cash
and Cash Equivalents
  Cash and
cash equivalents include cash in bank representing Company’s current operating
account
  Revenue
Recognition
  The
Company recognizes Case Rate, Hourly and Capitation revenue when persuasive
evidence of an arrangement exists, service has been rendered, the service rate
is fixed or determinable, and collection is reasonable assured.  Fee
for Service revenues are recorded at amounts reasonably assured to be collected.
The determination of reasonably assured collections is based on historical Fee
for Service collections as a percent of billings. The provisions are adjusted to
reflect actual collections in subsequent periods.
  The
estimation and the reporting of patient responsibility revenues is highly
subjective and depends on the payer mix, contractual reimbursement rates,
collection experiences, judgment and other factors.  The Company’s fee
arrangements are with various payers, including managed care organizations,
hospitals, insurance companies, individuals, Medicare and Medicaid.
  3.
              Uncertainty of ability to
      continue as a going concern
  The
Company's financial statements are prepared using the generally accepted
accounting principles applicable to a going concern, which contemplates the
realization of assets and liquidation of liabilities in the normal course of
business. However, the Company has an accumulated deficit of $1,148,950 as of
July 31, 2009.  Net Cash Flow provided by Operating Activities for the
six months ended July 31, 2009 was $13,230.
  The
financial statements do not include any adjustments relating to the
recoverability and classification     of liabilities
that might be necessary should the Company be unable to continue as a going
concern.
  To date
the Company has funded its operations from both internally generated cash flow
and external sources. In the future, the Company may pursue additional external
capitalization opportunities to fund its long-term goals and
objectives.
 9
  4.
              Accounts
      Receivable
  Accounts
Receivable is stated at the amount management expects to collect from
outstanding balances. An allowance for doubtful accounts is provided for those
accounts receivable considered to be uncollectible, based upon historical
experience and management's evaluation of outstanding accounts receivable at
each quarter end. As of July 31, 2009, Accounts Receivable totals $330,980, net
of a provision for bad debt expense of $13,717, and represents amounts invoiced
by AMH. Accounts receivable was $255,665, net of the provision for bad debt
expense of $11,465, on January 31, 2009.
  5.
              Due
      from affiliate
  Due from
affiliate totals $2,050 and represents amounts due from AMA, an unconsolidated
Affiliate of the Company as of July 31, 2009 and January 31, 2009.
..
  6.
              Prepaid
      expenses
  Prepaid
expenses of $13,307 and $25,025 as of July 31, 2009 and January 31, 2009,
respectively, are amounts prepaid for medical malpractice insurance and
Director’s and Officer’s insurance.
  7.
              Property
      and Equipment
  Property
and Equipment consists of the following as of :
  July
      31, 2009
                
                
                January
      31, 2009Computers
                
                $
                13,912
                
                
                $
                13,912Software
                
                
                138,443
                
                
                
                138,443Machinery
      and equipment
                
                
                50,815
                
                
                
                50,815Gross
      Property and Equipment
                
                
                203,170
                
                
                
                203,170Less
      accumulated depreciation
                
                
                (176,516
                )
                
                
                (155,840
                )Net
      Property and Equipment
                
                $
                26,654
                
                
                $
                47,330
  10
  Depreciation
expense was $20,676 and $0 for the six month periods ended July 31, 2009 and
2008, respectively. Depreciation expense was $10.338 and $0 for the three month
periods ended July 31, 2009 and 2008, respectively.
  8.
              Accounts
      Payable and
Accrued Liabilities
  Accounts
payable and accrued liabilities consist of the following as of:
  July
      31, 2009
              
              
              January
      31, 2009Accounts
      payable
              
              $
              30,599
              
              
              $
              30,599Accrued
      interest
              
              
              5,120
              
              
              
              507Accrued
      professional fees
              
              
              8,831
              
              
              
              20,267Accrued
      payroll and income taxes
              
              
              10,647
              
              
              
              13,768Total
              
              $
              55,197
              
              
              $
              65,141
 
 9.
              Shares
      to be Issued
  Shares to
be issued consist of the following:
  July
      31, 2009
              
              
              January
      31, 2009Accrued
      shares to be issued for note conversion
              
              $
              -
              
              
              $
              200,000Accrued
      shares to be issued for services
              
              
              179,167
              
              
              
              84,000Total
              
              $
              179,167
              
              
              $
              284,000
  11
 
 As of
July 31, 2009, 727,777 shares were not yet issued for services provided. During
the second quarter, the Company issued a total of 266,665 shares to nine holders
of convertible notes that had exercised their conversion options.
  10.
              Deferred
      Compensation
  Deferred
Compensation of $22,000 at July 31, 2009 represents compensation due under the
Agreement with Kanehoe Advisers.  (Note 19).
  11.
              Business
      Credit Line
  In the
quarter ended July 31, 2009, the Company drew $12,087 from Wells Fargo Bank
under abusiness line facility that provides short-term borrowing capability and
over-draft protection.  Thearrangement is linked to the Company's bank
account at AMH and provides total capacity up to $70,000 at an 8 percent
rate.
  12.
              Convertible
      Notes Payable
  During
the year ended January 31, 2009, the Company received $210,000 proceeds from the
issuance of convertible notes payable.  The convertible notes bear
interest at 10% and are due twelve months from the date of issuance ranging from
October 7, 2008 to December 12, 2008. In connection with the convertible notes,
the Company issued 140,000 warrants to the note holders with an exercise price
of $1.50.  There were no issuances of Convertible Notes, or attached
warrants, in the six months ended July 31, 2009.
  The
Company recorded value of warrants using the Black Scholes pricing model using
the following   assumptions: Stock price $0.27, Expected life of
3 years, Risk free bond rate of 1.05% to 2.00% and  volatility of 44%
to 61%. Based on the assumptions used the Company recorded the fair value of
warrants  amounting to $379 which was fully amortized as interest
expense during year ended January 31, 2009.
  As of
January 31, 2009, the Company received the conversion notice from the note
holders to convert $200,000 of notes into shares of the Company’s common stock.
This amount was converted into 266,665 common shares in the quarter ended July
31, 2009. The remaining balance of $10,000 is shown as Convertible Notes payable
on the accompanying financial statements.
  The
Company recorded interest expense of $4,612, related to Convertible Notes in the
six months ended July 30, 2009 and zero for the six months ended July 31, 2008.
The Company recorded interest expense of $2,344, related to Convertible Notes in
the three months ended July 30, 2009 and zero for the three months ended July
31, 2008.
  12
  13.
              Convertible
      Notes Payable-Related Party
  During
the year ended January 31, 2008, the Company received $23,000 proceeds from the
issuance of convertible notes payable to relatives of the CEO of the Company.
The convertible notes bear interest at 10% and are due twelve months from
December 25, 2008. In connection with the convertible notes, the Company issued
15,333 warrants to the note holders with an exercise price of $1.50. The Company
recorded value of warrants of $ 68 using the Black Scholes pricing model using
the following assumptions: Stock price $0.27, Expected life of 3 years, Risk
free bond rate of 1.14% and volatility of 49%.
  The
Company received $70,000 proceeds from the issuance of notes payable to the
father of the Company’s CEO. The note was due and payable in full no later than
October 1, 2008, carried no interest rate, and the Company was obligated to pay
an origination fee of $5,000 at the time of payoff.  The note was
extended by verbal agreement on its expiration date with no change in terms. On
January 24, 2009, the Company formalized the note extension with the father of
the Company’s CEO.  Under the terms of the new note, the $5,000
origination fee was added to the note, the due date was extended to March 31,
2011, the interest rate was set at eight 8% and the note is initially
convertible into 214,285 shares of common stock.  The Company has the
right to redeem the note at a 105 percent premium any time prior to the due date
on March 31, 2011.
  14.
              Notes
      payable
  There
were no additions to Notes Payable in the six months ended July 31,
2009.
  During
the year ended January 31, 2009, the Company borrowed $125,000 on June 13, 2008
from a non-related party.  The note bears no interest rate and was due
and payable in full on July 2, 2008.  The note was paid off as of
October 31, 2008.  The Company recorded a penalty of $6,250 during the
nine months ended October 31, 2008 due to late payment.
  Also,
during the third quarter, the Company borrowed $125,000 on September 24, 2008
under a note. This note bore an interest rate of 15 percent and was due and
payable in full on October 22, 2008.  The note obligated the Company
for an origination fee of $10,000 and reimbursement of legal fees totaling
$1,500 and issuance of 50,000 shares of the Company’s common stock. The note,
along with the origination fee and legal reimbursement, was paid off in full on
October 20, 2008.
  15.
              Related
      Party Transactions
  During
the six months ended July 31, 2009 and 2008, the Company generated revenue of
$201,135 and $19,795, respectively, by providing management services to
ApolloMed Hospitalists (AMH), an affiliated company with common ownership
interest. Commencing August 1, 2008, the management services fee income reported
by AMM was eliminated in consolidation against similar costs recorded at
AMH.
  The
Company borrowed $70,000 on a short-term promissory note in the quarter ended
July 2008 from a related party of the Chief Executive officer of the
Company.   The $70,000 note was due and payable in full no later than
October 1, 2008, carries no interest rate, and the Company was obligated to pay
an origination fee of $5,000 at the time of payoff.  The note was
extended by verbal agreement on its expiration date with no change in terms. On
January 24, 2009, the Company formalized the note extension.  Under
the terms of the new note, the $5,000 origination fee was added to the note, the
due date was extended to March 31, 2011, the interest rate was set at eight (8)
percent and the note is initially convertible into 214,285 shares of common
stock.  The Company has the right to redeem the note at a 105 percent
premium prior to March 31, 2011. (Note 11)
  Also,
during the fourth quarter 2009, the Company issued Convertible Notes in amounts
aggregating to $23,000 to two relatives of Warren Hosseinion, the Company’s CEO
(Note 13).
  13
  16.
              Line of
      Credit
  The
Company, through AMH, has a SBA line of credit with Wells Fargo Bank. The loan
was established on January 5, 2006, provided a total available credit of
$200,000 and had a final maturity date of February 10, 2009.  The
interest rate is the bank’s prime rate plus 2. The loan is collateralized
by all machinery, equipment, furniture, accounts, inventory and general
intangibles of AMH and personally guaranteed by the CEO of the
Company.
  On
February 3, 2009, the Company’s SBA line of credit with Wells Fargo Bank was, by
mutual agreement, converted into a four-year fully amortized loan. The credit
line was reduced to $198,000. The interest rate remained at the bank’s prime
rate 5.25% plus 2 percentage points and the maturity date was extended to
February 10, 2013 and all collateral and guarantor remained
unchanged.
  As of
July 31, 2009, the outstanding balance against this facility was $179,259, with
$46,689 in current portion. Interest expense of $5,061 related to the SBA loan
was recorded during the six months ended July 31, 2009. Interest expense of
$2,480 related to the SBA loan was recorded during the three months ended July
31, 2009.
  The
Company also has a business line with Wells Fargo Bank. This facility is
attached to the AMH bank account and provides up to $70,000 of overdraft and
short-term borrowing capacity. Draws under the facility carry an 8 percent
interest rate.  The Company drew $12,000 on this line on May 26,
2009.  As of  July 31, 2009, the outstanding balance under
this business line was $12,087 and the available capacity was
$57,913.
  17.
              Non-Controlling
      Interest
  The
Company recorded AMH owner ship interest in the accompanying financial
statements as Non-Controlling Interest
of $281,041 as of July 31, 2009. Non-Controlling Interest totaled $228,115 on
January 31, 2009.
 18.
              Stockholder’s
      Equity
  The
Company issued a total of 266,665 shares in the six months ended July 31, 2009.
The shares were issued on May 14, 2009 to nine holders of convertible notes that
had exercised their conversion rights.
  During
the period from February 1, 2007 to July 31, 2007, Apollo Medical issued 364,000
shares to investors for a total cash value $182,000. As part of issuance of
shares for cash the Company granted 91,000 stock warrants to investors. During
the period from February 1, 2008 to July 31, 2008, Apollo Medical issued 670,000
shares to investors for a total cash value $335,000. As part of issuance of
shares for cash the Company granted 167,500 stock warrants to
investors.
  As the
result of the merger on June 13, 2008, the former shareholders of Apollo Medical
received 20,933,490 shares of the Company’s common stock in exchange for all the
issued and outstanding shares of Apollo Medical. Certain former shareholders of
Apollo Medical received 470,470 warrants in exchange for warrants granted to
them in previous fund raising.
  During
the three month period ended October 31, 2008, the Company issued 268,687 shares
for legal, accounting and investment advisory services provided to the Company.
The Company also issued 50,000 shares as financing fee on a note
payable.
  On
October 27, 2008, the Company entered into a Board of Director’s Agreement with
Suresh
  Nihalani.  The
Company issued a stock award of 400,000 shares to Mr. Nihalani, under the terms
of the Director’s Agreement, which shares will be issued ratably over a
thirty-six month period commencing December 2008.  During the year ended
January 2009, Mr. Nihalani was issued 11,111 shares under this
agreement.
  14
  Warrants
outstanding:
  Aggregateintrinsic
      value
              
              
              Number
      of warrantsOutstanding
      at January 31, 2009
              
              $
              —
              
              
              
              625,803Granted
              
              
              —
              
              
              
              —Exercised
              
              
              —
              
              
              
              —Cancelled
              
              
              —
              
              
              
              —Outstanding
      at July 31, 2009
              
              $
              —
              
              
              
              625,803
  Exercise
      Price
              
              
              Warrants
                outstanding
              
              
              Weighted
                average
                remaining
                contractual
      life
              
              
              Warrants
                exercisable
              
              
              Weighted
                average
                exercise
      price$
              1.10
              
              
              
              470,470
              
              
              
              0.97
              
              
              
              470,470
              
              
              $
              0.83$
              1.50
              
              
              
              155,333
              
              
              
              0.58
              
              
              
              155,333
              
              
              $
              0.37625,803
              
              
              
              1.56
              
              
              
              625,803
  19.
              Commitments
      and Contingency
  On March
15, 2009, the Company entered into a Consulting Agreement with Kaneohe Advisors
LLC (Kyle Francis) under which Mr. Francis would become the Company’s Executive
Vice President, Business Development and Strategy. Under the terms of the
Agreement, Mr. Francis will be paid $8,000 per month, of which $2,000 will be
paid in cash and $6,000 will be deferred.  In addition, Mr. Francis
received 350,000 shares of restricted stock at the date of the Agreement and is
entitled to 350,000 additional restricted shares on the first and second
anniversaries of the Agreement, provided the Agreement is not terminated
..  The initial 350,000 shares, along with 50,000 shares granted to Mr.
Francis in the year ended January 2009, have been accrued as shares to be issued
as a liability in the accompanying financial statements.
  15
  On
September 4, 2008, Apollo Medical Management, Inc. executed an employment
agreement with Jilbert Issai, M.D., to provide services as Senior Vice
President.  The agreement is for an initial one-year term with
provision for successive one-year periods.  Under the agreement,
Doctor Issai is entitled to a nominal salary and may be granted options to
purchase an aggregate of 300,000 shares of the Company’s common stock at an
exercise price of $.10 per share when and if the Company is to adopt a stock
compensation plan.
  The
Company entered into an Advisory Agreement with Stonecreek Associates, Inc. on
October 27, 2008, under which Stonecreek will provide investment advisory
services to the Company.  Apollo is obligated to pay a fee to
Stonecreek on completion of any debt or equity financing.  The
agreement terminated on March 31, 2009.
  On
October 27, 2008, the Company entered into a Board of Director’s Agreement with
Suresh Nihalani.  The Company will issue a stock award of 400,000
shares to Mr. Nihalani, under the terms of the Director’s Agreement, which
shares will be issued ratably over a thirty-six month period commencing December
2008.  The shares will be released to Mr. Nihalani on a monthly basis
during his tenure as a Director.  The distribution of shares will
continue as long as Mr. Nihalani  serves  on the Board, but
will cease when Mr. Nihalani is no longer is a Director. Mr. Nihalani was
issued 11,111 shares under this agreement in the year ended January 31, 2009. In
addition, 77,777 shares have been accrued as shares to be issued as a liability
in the accompanying financial statements
  The
Company received a claim for $250,000 relating to amounts purportedly owed by
the Company as a result of the initial reverse acquisition
transaction.  This dispute relates to the initial letter dated June 3,
2008.  The terms of the letter of intent call for, among other things,
the payment of cash of $250,000 within 60 days of closing.  The letter
of intent states, however, that it is intended to serve as a memorandum of the
Parties current discussions, and that a definitive transaction agreement will
follow.  The letter of intent further states that both parties
acknowledge that all provisions of the letter of intent are non binding, and
that no contract or agreement providing for a transaction shall be deemed to
exist unless and until a final agreement has been negotiated and
executed.  The final merger agreement that was executed contains a
clause that it is the “entire agreement” and thus supersedes all previous
agreements including the letter of intent; moreover, management contends that
there are no additional amounts owed under the final merger agreement. The
Company has not accrued for any amount asserted in the above claim as the
attorney of the Company has advised that the claim is in its early stage and the
outcome of this matter could not be predicted at this stage.
  ITEM
2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
  The
following management’s discussion and analysis should be read in conjunction
with the unaudited condensed consolidated financial statements and the notes
thereto included in this Quarterly Report. In addition, reference is made to our
audited consolidated financial statements and notes thereto and related
Management’s Discussion and Analysis of Financial Condition and Results of
Operations included in our most recent Annual Report on Form 10-K for the year
ended January  31, 2009, filed with the Securities and Exchange Commission
( SEC) on May 18, 2009.
  16
  In
this Quarterly Report, unless otherwise expressly stated or the context
otherwise requires, “Apollo,” “we,” “us” and “our” refer to Apollo Medical
Holdings, Inc,, a Delaware corporation, and its wholly-owned
subsidiary-management company, Apollo Medical management, Inc., and affiliated
medical groups.  Our affiliated professional organizations are
separate legal entities that provide physician services in
California  and with which we have management agreements. For
financial reporting purposes we consolidate the revenues and expenses of all our
practice groups that we own or manage because we have a controlling financial
interest in these practices based on applicable accounting rules and as
described in our accompanying financial statements. Also, unless otherwise
expressly stated or the context otherwise requires, “our affiliated
hospitalists” refer to physicians employed or contracted by either our
wholly-owned subsidiaries or our affiliated professional organizations.
References to “practices” or “practice groups” refer to our
subsidiary-management company and the affiliated professional organizations of
Apollo that provide medical services, unless otherwise expressly stated or the
context otherwise requires.
  The
following discussion contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995 regarding future events and
the future results of Apollo  that are based on management’s current
expectations, estimates, projections, and assumptions about our business. Words
such as “may,” “will,” “could,” “should,” “target,” “potential,” “project,”
“expects,” “anticipates,” “intends,” “plans,” “believes,” “sees,” “estimates”
and variations of such words and similar expressions are intended to identify
such forward-looking statements. These statements are not guarantees of future
performance and involve risks, uncertainties and assumptions that are difficult
to predict. Therefore, actual outcomes and results may differ materially from
what is expressed or forecasted in such forward-looking statements due to
numerous factors, including, but not limited to, those discussed in our most
recent Annual Report on Form 10-K, including the section entitled “Risk
Factors”, as well as those discussed from time to time in the Company’s other
SEC filings and reports. In addition, such statements could be affected by
general industry and market conditions. Such forward-looking statements speak
only as of the date of this Quarterly Report or, in the case of any document
incorporated by reference, the date of that document, and we do not undertake
any obligation to update any forward-looking statement to reflect events or
circumstances after the date of this Report, or for changes made to this
document by wire services or Internet service providers. If we update or correct
one or more forward-looking statements, investors and others should not conclude
that we will make additional updates or corrections with respect to other
forward-looking statements.
  Overview
and Recent Developments
  We are a
leading provider of hospitalist services in the Greater Los Angeles, California
area. Hospitalist medicine is organized around the admission and care of
patients in an inpatient facility such as a hospital or skilled nursing facility
and is focused on providing, managing and coordinating the care of hospitalized
patients.
  New
Business
  During
the three months ended July 31, 2009, the Company signed a contract with
Greater El Monte Community Hospital LP, to provide physician services to the
hospital.  The contract has a two-year term. Under the contract, the
Company is paid a monthly fee for physician advisory services plus any case rate
or fee-for-service revenue generated by physician activity.  In
addition, we finalized an operating agreement with a Company that provides
non-emergency transportation to patients between healthcare facilities or
between healthcare facilities and patient homes.
  by
Government Sponsored Programs
  Schedule
payment rates are adjusted annually on an updated formula.  The
formula addresses the Sustainable Growth Rate (SGR) that was adopted in the
Balanced Budget Act of 1997. This formula has yielded negative updates every
year beginning in 2002, although CMS was able to take administrative steps to
avert a reduction in 2003, and Congress has taken a series of legislative
actions to prevent reductions in from 2004-2009. Based on current data, CMS is
projecting a rate reduction of 21.5% for 2010, if Congress does not take
legislative action as they have done in prior years.
  17
  On
July 1, 2009, CMS announced several proposals to refine Medicare payments
to physicians, which are expected to increase payment rates for primary care
services. The proposals include an update to the practice expense component of
physician fees. CMS is also proposing to stop making payment for consultation
codes, which are typically paid at a higher rates  than equivalent
evaluation services.  Also, CMS is proposing to refine how Medicare
recognizes the cost of professional liability insurance in its payment
system.
  If
approved, we estimate that these changes, before taking into account the
negative SGR update, will result in an estimated overall weighted average
increase of 6% to 8% in Medicare reimbursement rates for the codes applicable to
the services performed by our hospitalists.
  While
Congress has intervened in the past few years to mitigate projected CMS rate
reductions, there is no guarantee that Congress will continue to do so in the
future. Further, there is no certain way to determine the final content, timing
or effect of any other healthcare reform legislation presently being considered
by Congress, nor is it possible at this time to estimate the impact of any
potential healthcare reform legislation on our business.
  Seasonality
and Quarterly Fluctuations
  We have
historically experienced and expect to continue to experience quarterly
fluctuations in net revenue and operating results. Absent the impact and timing
of the addition of new contracts with health care facilities and employment
agreements with hospitalists,, our net revenues and operating contributions have
and will fluctuate due to the following factors:
  •
              
              the
      number of physicians we have on staff during the quarter, which may
      fluctuate based upon the timing of hires due to the end of the academic
      year for graduating resident physicians, the schedule of the Internal
      Medicine Board exams and terminations in our existing practices;
      and
  •
              
              variations
      in patient encounters, which are impacted by hospital census, which can be
      volatile, and physician productivity and often reflect seasonality due to
      the higher occurrence of illnesses such as flu and pneumonia in patient
      populations in certain quarters.
  We have
significant fixed operating costs, including physician practice salaries,
benefits and insurance premiums and financial results are highly dependent on
patient encounters and the productivity of our hospitalists to sustain
profitability. Additionally, quarterly results may be affected by the timing of
acquisitions and the hiring and termination of our affiliated
hospitalists.
  Results
of Operations and Operating Data
  Three
Months Ended July 31, 2009 vs. Three Months Ended July 31, 2008
  Net
revenues for the three months ended July 31, 2009 were $580,942, compared
to net revenues of $9,795 for the three months ended July 31, 2008. Net
revenues included $574,442 of  net billings by AMH under the various
fee structures from health plans, medical groups/IPA’s and hospitals. In
addition, net revenues included one month of  service fee income from
the recently completed Service Agreement with El Monte Community Hospital,
LP.      Prior to the Management Services
Agreement executed on August 1, 2008, the Company could only report the
management fees charged to its affiliate, AMH. Management fee revenues have been
eliminated subsequent to August 1, 2008.
  Physician
practice salaries, benefits and other expenses for the three months ended
July 31, 2009 were   $387,692, at 67% of net billing
revenues compared to $15,620 at 159% of net revenues for the three months ended
July 31, 2008.  Cost of Services includes the payroll and consulting
costs of the physicians, all payroll related costs, costs for all medical
malpractice insurance and physician privileges. The Company had seven physicians
under contract as hospitalists as of July 31, 2009.  There were no
service costs related to the service fee income.
  18
  General
and administrative expenses include all salaries, benefits, supplies and
operating expenses not specifically related to the day-to-day operations of our
physician group practices, including billing and collections
functions,  and our corporate management and overhead. General and
administrative expenses decreased $208,875, or 63%, to $122,105, at 21% of net
revenues, for the three months ended July 31, 2009. General and
Administrative expenses were $330,980, for the three months ended July 31,
2008.  The decrease in general and administrative expenses resulted
from the absence in 2009 of $278,348 of Siclone merger related costs which
occurred in July 2008.  The absence of these costs in 2009 was
partially offset by higher costs incurred to support the continuing growth of
our operations, including the full period costs of our Chief Financial Officer
and Vice President of Business Development. In addition, we experienced
increased legal, accounting and filing costs in support of our public
environment. The Company recorded non-cash compensation expenses totaling $667,
related to the issuance of shares for service in the quarter ended July 31,
2009.  There were no comparable non-cash expenses in the comparable
quarter of 2008.
  Depreciation
      and amortization expense was $10,338 for the three months ended July 31,
      2009. No depreciation expense was recorded for the comparable three-month
      period in 2008.
  The
Company reported a profit from operations of $60,807 for the three months ended
July 31, 2009, compared to a loss from operations of
$336,805  recorded in the same period of 2008. In 2008, prior to the
execution of the Management Services Agreement with AMH effective August 1,
2008, the Company only reported management fees earned and was unable to benefit
from the consolidation with AMH effective that date. In addition to the
increased net revenues reported in 2009 from this consolidation, the operating
profit in 2009 benefitted from the absence of the Siclone transaction costs
which occurred in 2008.
  Interest
expense totaled $4,958 for the three months ended July 31, 2009, as
compared to interest expense of $16,250 for the three months ended July 31,
2008. Interest expense in 2009 included interest on the convertible notes,
related party notes, and the line of credit and business overdraft facility with
Wells Fargo bank. Interest expense in 2008 consisted of a debt penalty of $6,250
for late payment and $10,000 for an origination fee.
  Net
Profit was $55,849 for the three months ended July 31,
2009,  compared to a net loss of  $353,055 for the three
months ended July 31, 2008,  The reduction in the net loss was
the result of the factors discussed above.
  Six
Months Ended July 31, 2009 vs. Six Months Ended July 31, 2008
  Apollo
      reported revenues of $1,082,125 for the  six months ended July
      2009, compared to revenues of $19,795 in the comparable six month period
      ended July 2008.  The Company increased its contracts with
      hospitals and independent physician associations to 12 at the end of July
      2009.  Prior to the execution of the Management Services
      Agreement on August 1, 2008, the Company could only report management fees
      charged to its affiliate, AMH. Subsequent to August 1, 2008, revenues
      represent the billings by AMH under the various fee structures from health
      plans, medical groups/IPA’s and hospitals. Management fee revenues have
      been eliminated subsequent to August 1, 2008. In addition, net revenues
      included one month of revenue generated from the Service Agreement with El
      Monte Community Hospital, LP.
  Physician
      practice salaries, benefits and other expenses were$807,247 for the
      six months ended July 2009, compared to $34,237 for the corresponding six
      months ended July 2008. Cost of Services were 75 % of net revenues in the
      six months ended July 2009. Cost of Services includes the payroll and
      consulting costs of the physicians, all payroll related costs, costs for
      all medical malpractice insurance and physician
  privileges.
  19
  General
and administrative expenses were $ 294,668 in the six months ended July 2009,
down $ 100,830 or 25 %,  from general and administrative costs of
$395,498 in the six months ended July 31, 2008. These expenses represented
27 % of revenues in six months just ended.  The decrease in General
and Administrative costs from 2008 to 2009 was due to the absence in 2009 of
$278,348 of costs related to the Siclone Merger which occurred in July
2009.  This reduction in costs was partially offset by higher
public-company expenses   and costs related to the continuing
growth of our operations, including the full period costs of our Chief Financial
Officer and Vice President of Business Development in 2009. The Company recorded
non-cash compensation expenses totaling $95,167, related to the issuance of
shares for service in the six months ended July 31, 2009.  There were
no comparable non-cash expenses in the comparable six months of
2008.
  Depreciation
      and amortization expense was $20,675 for the six months ended July 31,
      2009. No depreciation expense was recorded for the comparable six-month
      period in 2008.
  The
Company reported a Loss from Operations of $40,465 for the six month period
ended July 31, 2009, compared to a Loss from Operations of
$409,940  for the comparable six months ended July 31,
2008.  The decrease in the Loss from Operations of $ 369,475 from 2008
to 2009 was due to the absence of the costs incurred on the Siclone transaction
which occurred in 2008.   The Loss from Operations for the six
months ended July 2009 also benefitted from the consolidation of AMM and AMH
under the Management Services Agreement. The Loss from Operations in the six
months ended July 31, 2008, was due to the fact that the low level of management
Fee income was insufficient to cover the costs of services and administrative
costs in this formative year.
  Interest
expense was $9,807 for the six months ended July 31,
2009,  compared to interest expense of $16,250 for the six months
ended July 31, 2008.  Interest expense in 2009 included interest
on the convertible notes, related party notes, and the line of credit and
business overdraft facility with Wells Fargo bank. Interest expense in 2008
consisted of a debt penalty of $6,250 for late payment and $10,000 for an
origination fee.
  The
Company reported a net loss of $ 51,072 for the six months ended July 31,
2009, down $ 375,118 from the net loss of $426,190 for the six months ended
July 31, 2008.  The reduction in net loss from the six months
ended July 2008 to July 2009 was primarily due to the Siclone costs which
negatively impacted 2008, coupled with the contribution from the hospitalist
services provided by AMH in 2009.
  20
  Liquidity
and Capital Resources
  Net cash
provided by operating activities was $13,230 for the six months ended
June 30, 2009. The net loss for the period was $51,072 and adjustments for
non-cash charges which include depreciation, bad debt expense and shares issued
for service total $118,095; the remaining changes in operating assets and
liabilities used cash of $53,793.
  Net cash
used in operating activities was $410,445 for the six months ended June 30,
2008, representing the net loss of $426,190 adjusted for changes in operating
assets and liabilities  of $15,745.
  We did
not spend any cash for investing activities in the six months ended July 2009
and 2008.
  For the
six months ended July 31, 2009, net cash used in financing activities was
$6,654, compared to $456,600 provided by financing activities for the same
period in 2008. In  2008, the Company issued 670,000 shares for
$335,000, issued notes payable of $50,000 and a note to a related party in the
amount of $70,000.
  Credit
Facility and Liquidity
  The
Company's Business Line with Wells Fargo Bank provides a revolving line of
credit of $70,000, and is linked to the AMH bank account. The line can be used
for short-term working capital needs and provides overdraft protection. The line
cannot be used for letters of credit.
  We
continue to search for investment opportunities and anticipate that funds
generated from operations, together with our current cash on hand and funds
available under our revolving credit agreement will be sufficient to finance our
working capital requirements and fund anticipated acquisitions, contingent
acquisition consideration and capital expenditures.
  Off
Balance Sheet Arrangements
  As of
July 31, 2009, we had no off-balance sheet arrangements.
  Recently
Adopted and New Accounting Pronouncements
  See Note
2 to the Condensed Consolidated Financial Statements for information regarding
recently adopted and new accounting pronouncements.
  Liquidity
and Capital Resources
  At July
31, 2009, the Company had cash and cash equivalents of $90,737, compared to cash
and cash equivalents of $84,161 at the beginning of the fiscal year at January
31, 2009. Short-term borrowings totaled $91,775 at July 31, 2009, compared to
$74,782 as of January 31, 2009.  The Company had no short-term
borrowings at January 31, 2008. Long-term borrowings totaled $207,571 as of July
31, 2009, compared to long-term borrowings of $231,218 on January 31,
2009
  Net cash
provided by operating activities totaled $13,230 for the six months ended July
31, 2009, compared to net cash used in operations of $410,445 for the comparable
six months ended July 31, 2008.  The significantly smaller operating
loss in 2009 was primarily responsible for the improvement in the operating cash
flow.
  21
  ITEM
3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
 
 The
Company does not hold any derivative instruments and does not engage in any
hedging activities.
  ITEM
4.  CONTROLS AND PROCEDURES
  a. Evaluation
of Disclosure Controls and Procedures.
  We
carried out an evaluation, under the supervision and with the participation of
our management, including our Chief Executive Officer and Principal Financial
and Accounting Officer, of the effectiveness of our disclosure controls and
procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Securities
Exchange Act of 1934 as of the end of the period covered by this
report.  Based on that evaluation, our Chief Executive Officer and
Principal Financial and Accounting Officer have concluded that our disclosure
controls and procedures were ineffective as of July 31,
2009.  Management has identified the following three material
weaknesses in our disclosure controls and procedures, and internal controls over
financial reporting:
  1.         
We do not have written documentation of our internal control policies and
procedures.  Written documentation of key internal controls over financial
reporting is a requirement of Section 404 of the Sarbanes-Oxley Act. 
Management evaluated the impact of our failure to have written documentation of
our internal controls and procedures on our assessment of our disclosure
controls and procedures, and concluded that the control deficiency that resulted
represented a material weakness.
  2.         
We do not have sufficient segregation of duties within accounting functions,
which is a basic internal control.  Due to our size and nature, segregation
of all conflicting duties may not always be possible and may not be economically
feasible.  However, to the extent possible, the initiation of transactions,
the custody of assets and the recording of transactions should be performed by
separate individuals.  Management evaluated the impact of our failure to
have segregation of duties on our assessment of our disclosure controls and
procedures, and concluded that the control deficiency that resulted represented
a material weakness.
  3.           We
do not have review and supervision procedures for financial reporting functions.
The review and supervision function of internal control relates to the accuracy
of financial information reported. The failure to review and supervise could
allow the reporting of inaccurate or incomplete financial information. Due to
our size and nature, review and supervision may not always be possible or
economically feasible.  Management evaluated the impact of our significant
number of audit adjustments, and concluded that the control deficiency that
resulted represented a material weakness.
  Based on
the foregoing materials weaknesses, we have determined that, as of July 31,
2009, the effectiveness of our controls and procedures over financial accounting
and reporting are insufficient.  The Company is taking steps to
improve the timeliness and accuracy of its financial information, including the
hiring of additional employees to facilitate proper segregation of
duties.  It should be noted that any system of controls, however well
designed and operated, can provide only reasonable and not absolute assurance
that the objectives of the system are met. In addition, the design of any
control system is based in part upon certain assumptions about the likelihood of
certain events. Because of these and other inherent limitations of control
systems, there can be no assurance that any design will succeed in achieving its
stated goals under all potential future conditions, regardless of how
remote.
  The
Company’s Chief Executive Officer and Chief Financial Officer are responsible
for establishing and maintaining adequate internal control over financial
reporting (as defined in Rule 13a-15(f) under the Exchange
Act).  Because of its inherent limitations, internal control over
financial reporting may not prevent or detect
misstatements.  Therefore, even those systems determined to be
effective can only provide reasonable assurance of achieving their control
objectives.
  22
  b.           Changes
in Internal Controls over Financial Reporting
   There has
been no change in our internal controls over financial reporting during our most
recently completed fiscal quarter (i.e., the six-month period ended July 31,
2009) that has materially affected, or is reasonably likely to materially
affect, our internal control over financial reporting.
  PART
II – OTHER INFORMATION
  
 ITEM
1.  LEGAL PROCEEDINGS
  The
Company was not a party to any legal proceedings as of July 31, 2009 and is not
aware of any pending legal actions.
  ITEM 2. UNREGISTERED SALES OF EQUITY
SECURITIES AND USE OF PROCEEDS
 
 The
Company did not sell any Equity Securities during the periods covered by this
filing.
  ITEM
3.  DEFAULTS UPON SENIOR SECURITIES
 
 There were no defaults upon senior
securities during the six months ended July 31, 2009.
  ITEM
4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
 
 There were no matters submitted to the
vote of securities holders during the period ended July 31, 2009.
 
 ITEM
5. OTHER INFORMATION
  None
  ITEM
6. EXHIBITS
  Exhibit
      Number
              
              Description31.1
              
              Certification
      by Chief Executive Officer, required by Rule 13a-14(a) or Rule 15d-14(a)
      of the Exchange Act.31.2
              
              Certification
      by Chief Financial Officer, required by Rule 13a-14(a) or Rule 15d-14(a)
      of the Exchange Act.32.1
              
              Certification
      by Chief Executive Officer, required by Rule 13a-14(b) or Rule 15d-14(b)
      of the Exchange Act and Section 1350 of Chapter 63 of Title 18 of the
      United States Code.32.2
              
              Certification
      by Chief Financial Officer, required by Rule 13a-14(b) or Rule 15d-14(b)
      of the Exchange Act and Section 1350 of Chapter 63 of Title 18 of the
      United States Code.
 
 23
  SIGNATURES
  In accordance with the requirements of the Exchange
Act, the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
  APOLLO
      MEDICAL HOLDINGS, INC.Dated:
       September 3, 2009
              By:
              /s/
      Warren HosseinionWarren
      HosseinionChief
      Executive Officer and DirectorDated:
       September 3, 2009
              By:
              /s/
      A. Noel DeWinterA.
      Noel DeWinterChief
      Financial Officer and Principal Accounting
  Officer
  24