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 AND EXCHANGE ACT OF
1934





FOR THE
QUARTERLY PERIOD ENDED October  31, 2010





OR





o TRANSITION REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF
1934





COMMISSION
FILE NUMBER: 000-25809









APOLLO
MEDICAL HOLDINGS, INC.


(Exact
name of registrant as specified in its charter)







Delaware
            
            20-8046599(State
      or other jurisdiction of
              incorporation
      or organization)
            
            (I.R.S.
      Employer
              Identification
      Number)




450
N. Brand Blvd., Suite 600


Glendale,
California 91203


(Address
of principal executive offices)





(818)
396-8050


Issuer’s
telephone number:







(Former
Name or Former Address, if Changed Since Last Report)





Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 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 x   No o .





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding
12 months (or for such shorter period that the registrant was required to submit
and post such files). Yes o No o





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





Large
      accelerated filer o
            Accelerated
      filer oNon-accelerated
      filer o
            Smaller
      reporting company x





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act):  Yes o No x





As of
November 10, 2010, there were 27,635,774 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 NINE MONTHS ENDED OCTOBER 31, 2010 AND 2009




TABLE
OF CONTENTS




PAGEPART
      IFINANCIAL
      INFORMATIONItem
      1.
                Financial
      Statements – UnauditedCondensed
      Consolidated Balance Sheet As of  October 31, 2010 and January
      31, 2010
                
                3Condensed
      Consolidated Statements of Operations For the Three and Nine
      months  ended October 31, 2010  and
    2009
                
                4Condensed
      Consolidated Statements of Cash Flows For the Nine months ended October
      31, 2010 and 2009
                
                6Notes
      to Condensed Consolidated Financial Statements
                
                7-14Item
      2.
                Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
                
                15-18Item
      3.
                Quantitative
      and Qualitative Disclosures about Market Risk
                
                19Item
      4.
                Control
      and Procedures.
                
                19PART
      IIOTHER
      INFORMATIONItem
      1.
                Legal
      Proceedings
                
                20Item
      2.
                Unregistered
      Sales of Equity Securities and the Use of Proceeds
                
                20Item
      3.
                Defaults
      upon Senior Securities
                
                20Item
      4.
                Submission
      of Matters to a Vote of Security Holders
                
                20Item
      5.
                Other
      Information
                
                20Item
      6.
                Exhibits
                
                20


2


APOLLO MEDICAL HOLDINGS, INC.


CONSOLIDATED
BALANCE SHEETS


(UNAUDITED)





October 31, 2010
                            
                            
                            January 31, 2010ASSETSCURRENT
      ASSETSCash
      and cash equivalents
                            
                            $
                            501,639
                            
                            
                            $
                            665,737Accounts
      receivable, net
                            
                            
                            643,107
                            
                            
                            
                            457,517Receivable
      from officers
                            
                            
                            8,616
                            
                            
                            
                            23,483Due
      from affiliate
                            
                            
                            3,900
                            
                            
                            
                            2,850Prepaid
      expenses
                            
                            
                            46,235
                            
                            
                            
                            30,165Total
      current assets
                            
                            
                            1,203,497
                            
                            
                            
                            1,179,752Deferred
      commission cost, net
                            
                            
                            85,938
                            
                            
                            
                            114,063Property
      and equipment, net
                            
                            
                            7,865
                            
                            
                            
                            11,627TOTAL
      ASSETS
                            
                            $
                            1,297,300
                            
                            
                            $
                            1,305,442LIABILITIES
      AND STOCKHOLDERS' DEFICITCURRENT
      LIABILITIES:Accounts
      payable and accrued liabilities
                            
                            $
                            150,116
                            
                            
                            $
                            104,252Total
      current liabilities
                            
                            
                            150,116
                            
                            
                            
                            104,252Convertible
      notes, net
                            
                            
                            1,248,186
                            
                            
                            
                            1,247,582Total
      liabilities
                            
                            
                            1,398,302
                            
                            
                            
                            1,351,834STOCKHOLDERS'
      DEFICIT:Preferred
      stock, par value $0.001 ;5,000,000  shares
      authorized; none issued
                            
                            
                            -
                            
                            
                            
                            -Common
      Stock, par value $0.001; 100,000,000 shares authorized,27,635,774
      and 27,041,328 shares issued and outstandingas
      of October 31, 2010 and January 31, 2010
                            
                            
                            27,636
                            
                            
                            
                            27,041Additional
      paid-in-capital
                            
                            
                            986,266
                            
                            
                            
                            939,483Accumulated
      deficit
                            
                            
                            (1,343,019
                            )
                            
                            
                            (1,241,031
                            )Total
                            
                            
                            (329,117
                            )
                            
                            
                            (274,507
                            )Non-controlling
      interest
                            
                            
                            228,115
                            
                            
                            
                            228,115Total
      stockholders' deficit
                            
                            
                            (101,002
                            )
                            
                            
                            (46,392
                            )TOTAL
      LIABILITIES AND STOCKHOLDERS' DEFICIT
                            
                            $
                            1,297,300
                            
                            
                            $
                            1,305,442





The
accompanying notes are an integral part of these unaudited condensed
consolidated financial statements


3


APOLLO
MEDICAL HOLDINGS, INC.


CONSOLIDATED
STATEMENTS OF OPERATIONS


FOR THE
THREE AND NINE MONTH PERIODS ENDED OCTOBER 31, 2010 AND 2009


(UNAUDITED)




For
      the Three Month Periods Ended
                              
                              
                              For
      the Nine Month Periods EndedOctober 31,
                              
                              
                              October 31,2010
                              
                              
                              2009
                              
                              
                              2010
                              
                              
                              2009NET
      REVENUE
                              
                              $
                              1,019,078
                              
                              
                              $
                              616,975
                              
                              
                              $
                              2,861,658
                              
                              
                              $
                              1,699,100COST
      OF REVENUE
                              
                              
                              868,119
                              
                              
                              
                              455,183
                              
                              
                              
                              2,407,524
                              
                              
                              
                              1,262,430GROSS
      PROFIT
                              
                              
                              150,959
                              
                              
                              
                              161,792
                              
                              
                              
                              454,134
                              
                              
                              
                              436,670Operating
      expenses:General
      and administrative
                              
                              
                              152,013
                              
                              
                              
                              139,557
                              
                              
                              
                              427,720
                              
                              
                              
                              434,225Depreciation
                              
                              
                              2,330
                              
                              
                              
                              9,622
                              
                              
                              
                              8,330
                              
                              
                              
                              30,297Total
      operating expenses
                              
                              
                              154,343
                              
                              
                              
                              149,179
                              
                              
                              
                              436,050
                              
                              
                              
                              464,522INCOME/(LOSS)
      FROM OPERATIONS
                              
                              
                              (3,384
                              )
                              
                              
                              12,613
                              
                              
                              
                              18,084
                              
                              
                              
                              (27,852
                              )OTHER
      INCOME/(EXPENSES):Interest
      expense
                              
                              
                              (31,748
                              )
                              
                              
                              (15,738
                              )
                              
                              
                              (94,736
                              )
                              
                              
                              (25,546
                              )Financing
      cost
                              
                              
                              (9,375
                              )
                              
                              
                              (25,000
                              )
                              
                              
                              (28,125
                              )
                              
                              
                              (25,000
                              )Other
      income
                              
                              
                              4,292
                              
                              
                              
                              -
                              
                              
                              
                              4,389
                              
                              
                              
                              -Total
      other expenses
                              
                              
                              (36,831
                              )
                              
                              
                              (40,738
                              )
                              
                              
                              (118,472
                              )
                              
                              
                              (50,546
                              )LOSS
      BEFORE INCOME TAXES
                              
                              
                              (40,215
                              )
                              
                              
                              (28,125
                              )
                              
                              
                              (100,388
                              )
                              
                              
                              (78,398
                              )Provision
      for Income Tax
                              
                              
                              800
                              
                              
                              
                              800
                              
                              
                              
                              1,600
                              
                              
                              
                              1,600NET
      LOSS
                              
                              $
                              (41,015
                              )
                              
                              $
                              (28,925
                              )
                              
                              $
                              (101,988
                              )
                              
                              $
                              (79,998
                              )WEIGHTED
      AVERAGE SHARES OF COMMON STOCK OUTSTANDING,BASIC
      AND DILUTED
                              
                              
                              27,635,774
                              
                              
                              
                              26,805,493
                              
                              
                              
                              27,370,367
                              
                              
                              
                              26,260,574*BASIC
      AND DILUTED NET LOSS PER SHARE
                              
                              $
                              (0.00
                              )
                              
                              $
                              (0.00
                              )
                              
                              $
                              (0.00
                              )
                              
                              $
                              (0.00
                              )





*Weighted
average number of shares used to compute basic and diluted loss per share is the
same since the effect of dilutive securities is anti-dilutive.





The
accompanying notes are an integral part of these unaudited condensed
consolidated financial statements


4


APOLLO
MEDICAL HOLDINGS, INC.


CONSOLIDATED
STATEMENT OF CASH FLOWS


FOR THE
NINE MONTH PERIODS ENDED OCTOBER 31, 2010 AND 2009


(UNAUDITED)




Nine
      months ended October 31,2010
                
                
                2009CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      loss
                
                $
                (101,988
                )
                
                $
                (79,998
                )Adjustments
      to reconcile net loss to net cash used in operating
      activities:Depreciation
                
                
                8,330
                
                
                
                30,298Bad
      debt expense
                
                
                (76,231
                )
                
                
                4,954Issuance
      of shares for services
                
                
                47,166
                
                
                
                101,455Warrant
      discount
                
                
                -
                
                
                
                9,642Amortization
      of deferred commission cost
                
                
                28,125
                
                
                
                -Amortization
      of debt discount
                
                
                604
                
                
                
                -Changes
      in assets and liabilities:Accounts
      receivable
                
                
                (109,361
                )
                
                
                (165,874
                )Receivable
      from officers
                
                
                14,867
                
                
                
                -Prepaid
      expenses
                
                
                (16,070
                )
                
                
                (10,822
                )Prepaid
      commission
                
                
                
                
                
                
                (123,438
                )Accounts
      payable and accrued liabilities
                
                
                45,866
                
                
                
                46,458Net
      cash used in operating activities
                
                
                (158,691
                )
                
                
                (187,326
                )CASH
      FLOWS FROM INVESTING ACTIVITIES:Property
      and equipment
                
                
                (4,568
                )
                
                
                -Due
      from related parties
                
                
                (1,050
                )
                
                
                (800
                )Net
      cash used in operating activities
                
                
                (5,618
                )
                
                
                (800
                )CASH
      FLOWS FROM FINANCING ACTIVITIES:Proceeds
      from issuance of shares
                
                
                211
                
                
                
                -Payments
      of notes payable - related parties
                
                
                -
                
                
                
                (75,000
                )Proceeds
      from convertible notes
                
                
                -
                
                
                
                1,240,358Payments
      of line of credit
                
                
                -
                
                
                
                (198,000
                )Net
      cash provided by financing activities
                
                
                211
                
                
                
                967,358NET
      INCREASE/(DECREASE) IN CASH & CASH EQUIVALENTS
                
                
                (164,098
                )
                
                
                779,233CASH
      & CASH EQUIVALENTS, BEGINNING BALANCE
                
                
                665,737
                
                
                
                84,161CASH
      & CASH EQUIVALENTS, ENDING BALANCE
                
                $
                501,639
                
                
                $
                863,394SUPPLEMENTARY
      DISCLOSURES OF CASH FLOW INFORMATIONInterest
      paid during the nine month period
                
                $
                62,815
                
                
                $
                13,153Taxes
      paid during the nine month period
                
                $
                1,600
                
                
                $
                1,600SUPPLEMENTARY
      DISCLOSURES OF NON-CASH ITEMSConversion
      of notes payable to equity
                
                $
                -
                
                
                $
                200,000




The
accompanying notes are an integral part of these unaudited condensed
consolidated financial statements


5


APOLLO
MEDICAL HOLDINGS, INC.





NOTES TO
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS





1.
       Description of Business





Apollo
Medical Holdings, Inc. (“Apollo” or the “Company”) 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.





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 nine
month period ended October 31, 2010 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, 2010.





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 nine month periods
ended October 31, 2010 and 2009.





Fair
Value of Financial Instruments





Statement
of financial accounting standard No. 107(ASC 825), 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.


6





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. One contract
with our clients provides  34 percent of reported
revenues.


7





Recently Issued Accounting
Pronouncements




In
January 2010, FASB issued ASU No. 2010-06 – Improving Disclosures about Fair
Value Measurements. This update provides amendments to Subtopic 820-10 that
requires new disclosure as follows: 1) Transfers in and out of Levels 1 and 2. A
reporting entity should disclose separately the amounts of significant transfers
in and out of Level 1 and Level 2 fair value measurements and describe the
reasons for the transfers. 2) Activity in Level 3 fair value measurements. In
the reconciliation for fair value measurements using significant unobservable
inputs (Level 3), a reporting entity should present separately information about
purchases, sales, issuances, and settlements (that is, on a gross basis rather
than as one net number). This update provides amendments to Subtopic 820-10 that
clarifies existing disclosures as follows: 1) Level of disaggregation. A
reporting entity should provide fair value measurement disclosures for each
class of assets and liabilities. A class is often a subset of assets or
liabilities within a line item in the statement of financial position. A
reporting entity needs to use judgment in determining the appropriate classes of
assets and liabilities. 2) Disclosures about inputs and valuation techniques. A
reporting entity should provide disclosures about the valuation techniques and
inputs used to measure fair value for both recurring and nonrecurring fair value
measurements. Those disclosures are required for fair value measurements that
fall in either Level 2 or Level 3. The new disclosures and clarifications of
existing disclosures are effective for interim and annual reporting periods
beginning after December 15, 2009, except for the disclosures about purchases,
sales, issuances, and settlements in the roll forward of activity in Level 3
fair value measurements. These disclosures are effective for fiscal years
beginning after December 15, 2010, and for interim periods within those fiscal
years. The Company is currently evaluating the impact of this ASU, however, the
Company does not expect the adoption of this ASU to have a material impact on
its consolidated financial statements.




In April
2010, the FASB issued Accounting Standards Update 2010-13 (ASU 2010-13),
"Compensation - Stock Compensation (Topic 718)." This Update provides amendments
to Topic 718 to clarity that an employee share-based payment award with an
exercise price denominated in the currency of a market in which a substantial
portion of the entity's equity securities trades should not be considered to
contain a condition that is not a market, performance, or service condition.
Therefore, an entity would not classify such an award as a liability if it
otherwise qualifies as equity. The amendments in ASU 2010-13 are effective for
fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2010.
The provisions of ASU 2010-13 are not expected to have a material effect on the
Company's consolidated financial statements.




In July
2010, the FASB issued an accounting update to provide guidance to enhance
disclosures related to the credit quality of a company's financing receivables
portfolio and the associated allowance for credit losses. Pursuant to this
accounting update, a company is required to provide a greater level of
disaggregated information about its allowance for credit loss with the objective
of facilitating users' evaluation of the nature of credit risk inherent in the
company's portfolio of financing receivables, how that risk is analyzed and
assessed in arriving at the allowance for credit losses, and the changes and
reasons for those changes in the allowance for credit losses. The revised
disclosures as of the end of the reporting period are effective for the Company
beginning in the second quarter of fiscal 2011, and the revised discourses
related to activities during the reporting period are effective for the Company
beginning in the third quarter of fiscal 2011. The Company is currently
evaluating the impact of this accounting update on its financial
disclosures.




Stock-based
compensation





On
October 17, 2006 the Company adopted SFAS No. 123R (ASC 718), “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.


8





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, ASC 260), “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 at October 31, 2010 was  $501,639 and included cash
in bank representing the Company’s current operating account and $489,459 in a
brokerage money market account.  The $12,180 balance in the Company's
operating account is insured by the FDIC.





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 reasonably 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 $1,343,019 as of
October 31, 2010. Net Cash Flow used by Operating Activities for the nine months
ended October 31, 2010 was $158,691.





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, and the proceeds available from the private placement
provide funds for near-term operations and growth. The Company will pursue
additional external capitalization opportunities, as necessary, to fund its
long-term goals and objectives.





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 October 31, 2010, Accounts receivable totals $643,107,
net of a provision for bad debt expense of $34,746, and represents amounts
invoiced by AMH. Accounts receivable was $457,517, net of the provision for bad
debt expense of $110,976, on January 31, 2010.





5.  Other
Receivables





Other
receivables total $8,616 at October 31, 2010 and  $23,483 January 31,
2010, respectively, and represent amounts due the Company from two officers. The
balances were interest free, unsecured and due on demand.


9


6.  Due
from Affiliate




Due from
affiliate totals $3,900 and $2,850 as of October 31, 2010 and January 31, 2010,
respectively, and represents amounts due from AMA, an unconsolidated affiliate
of the Company.





7. 
Prepaid Expenses




Prepaid
expenses of $46,235 and $30,165 as of October 31, 2010 and January 31, 2010,
respectively, are amounts prepaid for medical malpractice insurance and
Director’s and Officer’s insurance.




8.  Deferred
Commission Cost





Deferred
commission cost of $85,938 on October 31, 2010 and $114,063 as of January 31,
2010 represent the financing cost associated with 10% Senior Subordinated
Callable Convertible Notes due January 31, 2013, $125,000 paid by the Company on
the closing of the placement on October 16, 2009 (see Note 11).





9.
Property and Equipment




Property
and equipment consists of the following as of :




October 31,
                      2010
                    
                    
                    January 31,
                      2010Website
                    
                    $
                    4,568
                    
                    
                    $Computers
                    
                    
                    13,912
                    
                    
                    
                    13,912Software
                    
                    
                    138,443
                    
                    
                    
                    138,443Machinery
      and equipment
                    
                    
                    50,815
                    
                    
                    
                    50,815Gross
      Property and Equipment
                    
                    
                    207,738
                    
                    
                    
                    203,170Less
      accumulated depreciation
                    
                    
                    (199,873
                    )
                    
                    
                    (191,543
                    )Net
      Property and Equipment
                    
                    $
                    7,865
                    
                    
                    $
                    11,627




The
Company had no capital expenditures in the quarter ended October 31,
2010.  Capital expenditures totaled $4,568 at AMM in the quarter ended
April 30, 2010 for the development of a Company web site.




Depreciation
expense was $2,330 and $9,622 for the three month periods ended October 31, 2010
and 2009, respectively. Depreciation expense was $8,330 and $30,297 for the nine
month periods ended October 31, 2010 and 2009, respectively.


10




10.  Accounts Payable and
Accrued Liabilities





Accounts
payable and accrued liabilities consist of the following as of:





October 31,
                            2010
                          
                          
                          January 31,
                            2010Accounts payable
                          
                          $
                          57,649
                          
                          
                          $
                          32,460D&O
      insurance payable
                          
                          
                          18,956
                          
                          
                          
                          8,210Accrued
      interest payable
                          
                          
                          31,250Accrued
      professional fees
                          
                          
                          5,000
                          
                          
                          
                          22,141Accrued
      payroll and income taxes
                          
                          
                          37,261
                          
                          
                          
                          41,441Total
                          
                          $
                          150,116
                          
                          
                          $
                          104,252




11.
 Long-term Debt





The
Company’s long-term debt consisted of the following at October 31, 2010 and
January 31, 2010




October 31,
                                
                                
                                January 30,2010
                                
                                
                                2010Subordinated
      Borrowings:10%
      Senior Subordinated Convertible Notes due January 31, 2013
                                
                                $
                                1,248,186
                                
                                
                                $
                                1,247,582Total
      long-term debt
                                
                                $
                                1,248,186
                                
                                
                                $
                                1,247,582Less:
      Current Portion
                                
                                -
                                
                                
                                -Total
                                
                                $
                                1,248,186
                                
                                
                                $
                                1,247,582





Subordinated
Borrowings





10%
Senior Subordinated Callable Convertible Notes due January 31, 2013


On
October 16, 2009, the Company issued $1,250,000 of its 10% Senior Subordinated
Callable Convertible Notes. The net proceeds of $1,100,000 was used for the
repayment of existing debt, acquisitions, physician recruitment and other
general corporate purposes. The notes bear interest at a rate of 10% annually,
payable semi annually on January 31 and July 31. The notes mature and become due
and payable on January 31, 2013 and rank senior to all other unsecured debt of
the Company.




The 10%
Notes were sold through an agent in the form of a Unit. Each Unit was comprised
of one 10% Senior Subordinated Callable Note with a par value $25,000, and one
five-year warrant to purchase 25,000 shares of the Company’s common stock. The
purchase price of each Unit was $25,000, resulting in gross proceeds of
$1,250,000.


11


In
connection with the placement of the subordinated notes, the Company paid a
commission of $125,000 and $25,000 of other direct expenses. The agent also
received five-year warrants to purchase up to 250,000 shares of the Common Stock
at an initial exercise price of $0.25 per share. The agent also received 100,000
shares of restricted common stock for pre-transaction advisory services and due
diligence. The commission of $125,000 paid at closing, is accounted for as
prepaid financing cost and will be amortized over a forty-month period through
January 31, 2013, the maturity date of the notes. The $25,000 of other direct
expenses were paid at closing and reported as financing costs in the Operating
Statement in the year ended January 31, 2010. In addition, financing costs
included $4,000 related to the value of the 100,000 shares granted to the
Placement Agent.





The 10%
Notes are convertible any time prior to January 31, 2013. The initial conversion
rate is 200,000 shares of the Company’s common stock per $25,000 principal
amount of the 10% Notes (Subject to certain events). This represents an initial
conversion price of $0.125 per share of the Company’s common stock.




On or
after January 31, 2012, the Company may, at its option, upon 60 days notice to
both the Note-holders and the placement agent, redeem all or a portion of the
notes at a redemption price in cash equal to 102% of the principal amount of the
notes to be redeemed plus accrued and unpaid interest to, but excluding, the
redemption date.




The
Warrants attached to the Units are exercisable into shares of Common Stock at an
initial exercise price of $0.125.  The Warrants have a five-year term and
expire on October 31, 2014. These warrants were estimated to have a fair value
of $2,653 using the Black-Scholes pricing model which was recorded as
unamortized warrant discount on granted date and $1,814 as of October 31,
2010.




In
connection with this offering, the Company also issued warrants to purchase
250,000 shares of our common stock to the placement agent which were estimated
to have a fair value of $2,200 using the Black-Scholes pricing model and was
recorded as unamortized warrant discount on granted date. These warrants have an
exercise price of $0.25 per share, are exercisable immediately upon issuance and
expire five years after the date of issuance.





The
Company recorded interest expense of $ 31,250 and $93,750 related to these notes
for the three months and nine months ended October 31, 2010,
respectively.  Interest expense related to these notes was $9,889 in
the quarter and nine months ended October 31, 2009.  In addition, the
Company recorded $25,000 of non-accountable expenses related to this
subordinated transaction in October 2009.





12. 
Related Party Transactions




During
the nine months ended October 31, 2010 and 2009, the Company generated revenue
of $497,000 and $303,135, 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.





13.  Non-Controlling
Interest




The
Company recorded AMH owner ship interest in the accompanying financial
statements as non-controlling interest of $228,115 at October 31, 2010 and
January 31, 2010.




14 
Stockholder’s Equity





No shares
were issued by the Company in the quarter ended October 31,
2010.  Common shares outstanding totaled 27,635,774 at October 31,
2010, unchanged from July 31, 2010.





In the
second quarter ended July 31, 2010, the Company issued 211,113 common shares to
Suresh Nihalani, a Director, under an amendment to his Board of Director's
Agreement dated October 27, 2008, which brought the total outstanding shares to
27,635,774 at July 31, 2010. (see Note 15) The Company recorded an expense of
$17,100 on shares issued for the period ended July 31, 2010.




In the
first quarter ended April 30, 2010, the Company issued 383,333 common
shares.  A total of 350,000 shares were issued to Kanehoe Advisors and
33,333 shares were issued to Suresh Nihalani, a director. The total shares of
383,333 were valued at $30,066 based on the fair value of shares at issuance
dates.




The
Company issued a total of 1,171,108 common shares in the twelve months ended
January 31, 2010, including 266,665 shares in the second quarter ended July 31,
2009, 826,666 shares in the third quarter ended October 31, 2009, and
77,777 shares in the fourth quarter ended January 31, 2010. The 266,665 shares
were issued on May 14, 2009 to nine holders of convertible notes that had
exercised their conversion rights. Of the 826,666 shares, 716,666 were issued to
officers and directors, 100,000 shares were issued to the Placement Agent for
advisory services and 10,000 shares were issued to an employee. The 77,777
shares issued in the fourth quarter were to Suresh Nihalani, a Director of the
Company.


12




Warrants
outstanding:





No
warrants were issued by the Company in the nine months ended October 31,
2010.





Aggregate
                            intrinsic value
                          
                          
                          Number of
                            warrantsOutstanding
      at January 31, 2010
                          
                          $
                          —
                          
                          
                          
                          2,125,803Granted
                          
                          
                          —
                          
                          
                          
                          -Exercised
                          
                          
                          —
                          
                          
                          
                          —Lapsed
                          
                          
                          —
                          
                          
                          
                          165,620Outstanding
      at October 31, 2010
                          
                          $
                          —
                          
                          
                          
                          1,960,183




Exercise Price
                      
                      
                      Warrants
                        outstanding
                      
                      
                      Weighted
                        average
                        remaining
                        contractual life
                      
                      
                      Warrants
                        exercisable
                      
                      
                      Weighted
                        average
                        exercise price$
                      1.100
                      
                      
                      
                      304,850
                      
                      
                      
                      0.25
                      
                      
                      
                      304,850
                      
                      
                      $
                      1.10$
                      1.500
                      
                      
                      
                      155,333
                      
                      
                      
                      0.99
                      
                      
                      
                      155,333
                      
                      
                      $
                      1.50$
                      0.250
                      
                      
                      
                      1,250,000
                      
                      
                      
                      4.00
                      
                      
                      
                      1,250,000
                      
                      
                      $
                      0.25$
                      0.250
                      
                      
                      
                      250,000
                      
                      
                      
                      4.00
                      
                      
                      
                      250,000
                      
                      
                      $
                      0.25




15.
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. 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, were issued in the third quarter ended October 31,
2009. On March 15, 2010, the first anniversary of the Consulting Agreement, Mr.
Francis was granted an additional 350,000 shares (see Note 14).





On
October 27, 2008, the Company entered into a Board of Director’s Agreement with
Suresh Nihalani, under which the Company agreed to issue a stock award of
400,000 shares to Mr. Nihalani. Under the terms of the Director’s Agreement,
these 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 a Director. Mr. Nihalani was issued 188,887 shares under this Director's
Agreement through April 30, 2010 (see Note 14).





On July
16, 2010, the Company and Mr. Nihalani agreed to amend the October 27, 2008
Director's Agreement, whereby the Company issued 211,113 shares of Common Stock
to Mr. Nihalani. These 211,113 shares represented the balance of the shares due
Mr. Nihalani under his agreement and  brought the total shares held by
Suresh Nihalani to 400,000 common shares.  Under the Amendment, the Company
has the right to repurchase shares in the event that Mr. Nihalani fails to serve
as a Director through November 30, 2011.


13





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.





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





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.





To
date the Company has funded its operations from both internally generated cash
flow and external sources, and the proceeds available from the private placement
provide funds for near-term operations and growth. The Company will pursue
additional external capitalization opportunities, as necessary, to fund its
long-term goals and objectives.


14





Results
of Operations and Operating Data





Three
Months Ended October 31, 2010 vs. Three Months Ended October 31,
2009





Apollo
reported net revenues of $1,019,078 for the three months ended October 31, 2010,
compared to net revenues of $616,975 for the comparable three month period ended
October 31 2009. The revenue increase of $402,103, or 65%, was attributable to
new hospital contracts, increased same-market area growth and expansion of
services with existing medical group clients at new hospitals. Net revenues are
comprised of net billings by AMH under the various fee structures from
health plans, medical groups/IPA’s and hospitals, and income from service fee
agreements.





Physician
practice salaries, benefits and other expenses for the three months ended
October 31, 2010 totaled $868,119 and represented 85% of net revenues,
compared to $455,183 for the three months ended October 31, 2009, at 74% of net
revenues.  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 increase in cost of services were
attributable to increased physician costs associated with new contracts and
expansion of services at new hospitals in the quarter.





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 totaled $152,013, at 15% of net revenues, for the three
months ended October 31, 2010, higher by $12,456 compared to General and
administrative expenses of $139,557 in the three months ended October 31, 2009,
at 23% of net revenues.  In the third quarter of 2010, the Company
recorded bad debt expense of $17,208 compared to bad debt expense of $2,701 in
the third quarter of 2009. In addition, the Company incurred increased rent,
salaries, consulting and accounting fees in the third quarter just ended
compared to the third quarter of 2009, Legal fees declined to $688 in the
quarter just ended from $18,635 in the third quarter of 2009.





Depreciation
and amortization expense was $2,330 for the three months ended October 31, 2010,
and $9,622 for the comparable three-month period in 2009.





The
Company reported a loss from operations of $3,384 in the three months ended
October 31, 2010, compared to a profit from operations of $12,613 recorded
in the same period of 2009. Although net revenues in 2010 continued to increase
as a result of the addition of contracts with hospitals and the hiring of
several additional physicians, the higher cost of services as a percent of
revenue, 85%  in the quarter just ended versus 74% in the third
quarter of 2009, impeded the operating results.





Interest
expense and amortization of financing costs totaled $41,123 for the three months
ended October 31, 2010, compared to interest and financing costs of $40,738
in the three months ended October 31, 2009. Interest expense and financing costs
in 2010 included interest on the subordinated borrowings of $31,250, and the
amortization of financing costs of $9,375, related to these notes. Interest
expense and financing costs in the three months ended October 31, 2009 of
$40,738 represents interest expense paid on the SBA loan with Wells Fargo Bank,
interest expense on convertible notes and interest expense accrued at AMM for
related party notes.  Direct costs of $25,000, incurred on the
completion of the 10 % Subordinated Convertible Notes and paid at closing in
October 2009, were reported as financing costs (See Note 11).





A net
loss of $41,015 was reported for the three months ended October 31,
2010, compared to a net loss of $28,925 for the three months ended
October 31, 2009.  The factors contributing to the net loss in the
current quarter compared to the net income in the quarter ended October 2009 are
discussed above.


15





Nine
Months Ended October  31, 2010 vs. Nine Months Ended October 31,
2009





Net
revenues for the nine months ended October 31, 2010 of $2,861,658 increased
$1,162,558, or 68 percent, over net revenues of $1,699,100 reported for the nine
months ended October 31, 2009. Net revenues are comprised of net billings
by AMH under the various fee structures from health plans, medical groups/IPA’s
and hospitals, and income from service fee agreements. The increase was
attributable to new hospital contracts, increased same-market area growth and
expansion of services with existing medical group clients at new
hospitals.





Physician
practice salaries, benefits and other expenses for the nine months ended October
31, 2010 were $2,407,524, at 84% of net revenues, compared to $1,262,430 ,
at 74% of net revenues, for the nine months ended October31,
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. The increase in physician costs was
attributable to start-up losses on new hospital contracts and expansions of
services at new hospitals in the quarter.





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 were
$427,720, at 15% of net revenues, for the nine months ended October 31, 2010.
General and administrative expenses were $434,225 for the nine months ended
October 31, 2009, at 26% of net revenues.  In the nine months ended
October 2010, the Company recorded non-cash compensation expenses of $47,166,
related to the issuance of shares for service, lower than
the  $101,455 of such non-cash costs in the first nine months of
2009.  Also, the Company recorded a reduction in bad debt expense
of  $17,739 in the nine month period ended October 2010, compared to a
bad debt expense of $4,953 in the same nine month period ended October
2009.  The Company incurred  higher rent, consulting fees
and staff salaries which partially offset the above two favorable
factors.





Depreciation
and amortization expense was $8,330 for the nine months ended October 31, 2010,
and $30,297 for the comparable nine-month period in 2009.





The
Company reported a profit from operations of $18,084 for the nine months
ended October 31, 2010, compared to a loss from operations of
$27,852 recorded in the same period of 2009. Net revenues in 2010 continued
to benefit from the addition of contracts with hospitals and the hiring of
several additional physicians.  In addition, the operating profit in
2010 benefitted from the lower non-cash compensation costs and a
favorable adjustment to bad debt expense.





Interest
expense and the amortization of financing costs totaled $122,861 for the nine
months ended October 31, 2010, compared to interest and financing costs of
$50,546 in the nine months ended October 31, 2009. Interest expense and
financing costs in 2010 included interest of $93,750 on the subordinated
borrowings ,and the amortization of financing costs of $28,125, related to
these notes. Interest expense in the nine months ended October 31, 2009 of
$50,546 included interest on the convertible notes, interest expense paid on the
SBA loan with Wells Fargo Bank, and interest expense accrued at AMM for the
related party notes.  In addition, direct costs of $25,000, incurred
on the completion of the 10 % Subordinated Convertible Notes and paid at closing
in October 2009, were reported as financing costs (See Note 11).





Apollo
reported a net loss of $101,988 for the nine months ended October 31,
2010, compared to a net loss of $79,998 for the nine months ended
October 31, 2009.  The reduction in the net loss was the result of the
factors discussed above.





Liquidity
and Capital Resources





At
October 31, 2010, the Company had cash and cash equivalents of $501,639,
compared to cash and cash equivalents of $665,737 at January 31, 2010.
The cash balance at October 31, 2010 included $489,459 in a money market
brokerage account.  There were no short-term borrowings at October 31,
2010 or January 31, 2010.   Long-term borrowings totaled $1,248,186 as
of October 31, 2010 and  $1,247,582 on January 31,
2010.


16





Net cash
used in operating activities totaled $158,691 in the nine months ended October
31, 2010, compared to net cash used in operations of $187,326 for the
comparable nine months ended October 31, 2009.  The absence of
prepaid commissions, incurred last year, coupled with the smaller decrease in
accounts receivable, were the primary factors for the improvement in the net
cash used in operating activities from 2009 to 2010.





Net cash
used in operating activities for the nine months ended October 31, 2010 of
$158,691 was comprised of a net loss of $101,988 for the nine month
period.  Adjustments for non-cash charges which include depreciation,
bad debt expense, shares issued for service and amortization of commission cost
and debt discount, provided $7,994.  In addition, net changes in
operating assets and liabilities used cash of $64,698.





The
Company invested $4,568 to develop a web site and a $1,050 advance to an
affiliated Company during the nine months ended October
2010.  During the nine months ended October 2009, an advance of $800
was made to this affiliated Company.





For the
nine months ended October 31, 2010, the Company received $211 from the issuance
of shares to a director under financing activities. In the nine months ended
October 2009, net cash provided by financing activities totaled $967,358 and
consisted of $1,240,358 net proceeds from the issuance of the Subordinated
Convertible Notes, partially offset by principal pay downs on notes payable to
related parties of $75,000 and the payoff of borrowings on the Company's SBA
loan with Wells Fargo Bank of $198,000.





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. There were no borrowings under this
facility during the nine months ended October 31, 2010.





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
October 31, 2010, 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.


17


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





Evaluation
of Disclosure Controls and Procedures.





In
connection with the preparation of this Quarterly Report, 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 of
October 31, 2010, in accordance with Rules 13a-15(b) and 15d-15(b) of the
Exchange Act.





Based on
that evaluation, our Chief Executive Officer and Principal Financial and
Accounting Officer have concluded that our disclosure controls and procedures
were not effective as of October 31, 2010.





We have
identified the following three material weaknesses in our disclosure controls
and procedures:





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 October 31,
2010,  our disclosure controls and procedures are
insufficient.  The Company continues to take steps to improve the
timeliness and accuracy of its financial information, including the hiring of
additional employees to facilitate proper segregation of duties.  Our
management is responsible for establishing and maintaining adequate disclosure
controls and procedures, as defined in Rule 15d-15(e) under the Exchange Act,
and for assessing the effectiveness of our disclosure controls and procedures.
It should be noted that any system of controls and procedures, 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.  Therefore, even those systems determined to be effective can
only provide reasonable assurance of achieving their control
objectives.


18





Changes
in Internal Controls over Financial Reporting





There has
been no change in our internal control over financial reporting during our most
recently completed fiscal quarter (i.e., the nine-month period ended October 31,
2010) 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 is not a party to any litigation and, to its knowledge, no
action, suit or proceeding has been threatened against the company.





ITEM
1A. Not Applicable





ITEM
2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS





None





ITEM
3.  DEFAULTS UPON SENIOR SECURITIES





None





ITEM
4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS





None





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.


19




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:
       December 10, 2010
                  By:
                  /s/ Warren HosseinionWarren
      HosseinionChief
      Executive Officer and DirectorDated:
       December 10, 2010
                  By:
                  /s/ A. Noel DeWinterA.
      Noel DeWinterChief
      Financial Officer and Principal Accounting
  Officer





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