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15 ABC AMBULANCE, LLC FINANCIAL STATEMENTS AND INDEPENDENT AUDITOR S REPORT December 31,

16 ABC AMBULANCE, LLC December 31, 2015 Table of Contents INDEPENDENT AUDITOR S REPORT... 1 FINANCIAL STATEMENTS Page Balance Sheet... 2 Statement of Income and Changes in Member s Equity (Deficit)... 3 Statement of Cash Flows... 4 Notes to Financial Statements

17 Board of Managers ABC Ambulance, LLC Phoenix, Arizona INDEPENDENT AUDITOR S REPORT Report on the Financial Statements We have audited the accompanying financial statements of ABC Ambulance, LLC (the Company), which comprise the balance sheet as of December 31, 2015, and the related statements of income and changes in member s equity (deficit) and cash flows for the year then ended, and the related notes to the financial statements, (collectively, financial statements). Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2015, and the results of its operations and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America. Johnson & Sheldon, PLLC Johnson & Sheldon, PLLC May 6,

18 FINANCIAL STATEMENTS

19 ABC AMBULANCE, LLC BALANCE SHEET December 31, 2015 ASSETS Current Assets 2015 Cash $ 539,897 Trade accounts receivable, net of allowance for doubtful accounts of $20, ,514 Other current assets 8,478 Total Current Assets 732,889 Equipment, net 234,947 Total Assets $ 967,836 LIABILITIES AND MEMBER'S EQUITY (DEFICIT) Current Liabilities Accounts payable, trade $ 54,327 Accounts payable, related party 807,056 Accrued expenses 15,761 Current portion of long-term debt 45,496 Total Current Liabilities 922,640 Long-Term Debt, net of current maturities 199,234 Total Liabilities 1,121,874 Member's Equity (Deficit) (154,038) Total Liabilities and Member's Equity (Deficit) $ 967,836 See accompanying notes and independent auditor's report

20 ABC AMBULANCE, LLC STATEMENT OF INCOME AND CHANGES IN MEMBER'S EQUITY (DEFICIT) Year Ended December 31, 2015 Service Fee Revenues, net of billing adjustments of $122,348 $ 232,574 Operating Expenses Professional fees 222,470 Salaries and wages 92,064 Lobbying fees 34,400 Medical supplies 24,485 Vehicle expense 22,918 Provision for doubtful accounts 20,000 Depreciation 14,832 Employee benefits 14,425 General expenses 11,791 Equipment expense 10,889 Occupancy expense 5,243 Advertising costs 3,580 Insurance 3,403 Fuel expense 2,969 Total Operating Expenses 483,469 Income (Loss) From Operations (250,895) Other Income (Expense) Interest expense (3,457) Total Other Income (Expense) (3,457) Net Loss (254,352) Member's Equity, Beginning of Year 100, Member's Equity (Deficit), End of Year $ (154,038) See accompanying notes and independent auditor's report

21 ABC AMBULANCE, LLC STATEMENT OF CASH FLOWS Year Ended December 31, Cash Flows From Operating Activities Net Loss $ (254,352) Adjustments to reconcile net income (loss) to net cash provided by operations: Depreciation 14,832 Provision for doubtful accounts (20,000) (Increase) decrease in operating assets: Trade accounts receivable (164,514) Other current assets 91,836 Increase (decrease) in operating liabilities: Accounts payable, trade 54,327 Accounts payable, related party 807,056 Accounts payable, other 15,761 Net Cash Provided by Operating Activities 544,946 Cash Flows From Investing Activities Purchases of equipment (249,779) Net Cash Used for Investing Activities (249,779) Cash Flows From Financing Activities Proceeds from long-term borrowings 248,430 Repayments on long-term borrowings (3,700) Net Cash Provided by Financing Activities 244,730 Net Increase in Cash and Cash Equivalents 539,897 Cash, beginning of year - Cash, end of year $ 539,897 Supplemental Cash Flow Information Interest paid $ 3,457 See accompanying notes and independent auditor's report

22 ABC AMBULANCE, LLC NOTES TO FINANCIAL STATEMENTS December 31, 2015 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Business ABC Ambulance, LLC, (the Company) was formed and organized during April 2011, for the performance of basic and advanced life support transportation services to individuals qualified due to medical necessity living in the Phoenix, Arizona area. During August 2015, the Company was successful in obtaining its Certificate of Necessity (CON) license from the State of Arizona. Business operations of the Company then started during October Basis of Accounting The financial statements of the Company have been prepared on the accrual basis of accounting in accordance with generally accepted accounting principles in the United States of America, and accordingly reflect all significant receivables, payables, and other liabilities. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 revenue and expenses during the reporting period. Actual results could differ from those estimates. Net Service Fee Revenue The Company recognizes service fee revenues when the transportation service has been performed, and the revenue has been earned, the amount can be determined and the collectability is reasonably assured. Net service fee revenue is reported at the estimated net realizable amount collectible from patients, third-party payors, and others for services rendered. Revenue under a reimbursement arrangement with Medicare is subject to examination and retroactive adjustment. Provisions for estimated third-party payor settlements are provided for in the period related to the services rendered. Differences between the estimated amounts accrued and interim and final settlements are reported in operations in the year of settlement. Following is a recap of the sources of net service fee revenue during the year ended December 31: 2015 Medicare 15% Private pay and other insurers 85% 100% Concentration of Credit Risk The Company maintains cash balances at various banks. Accounts are insured by the Federal Deposit Insurance Corporation up to certain limits. From time to time, the Company may have balances in bank accounts which exceed the federally insured limits. Management of the Company does not anticipate any losses associated with balances in excess of the federally insured limits

23 ABC AMBULANCE, LLC NOTES TO FINANCIAL STATEMENTS December 31, 2015 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Accounts Receivable Trade accounts receivables are carried at original invoice amount less an estimate made for doubtful receivables based on a review of all outstanding amounts on a monthly basis. Management determines the allowance for doubtful accounts by regularly evaluating individual customer receivables and considering a customer s financial condition, credit history and current economic condition. Trade receivables are written off when deemed uncollectable. Recoveries of trade receivables previously written off are recorded when received. Management has established an allowance for doubtful accounts as of December 31, 2015 of $20,000. Following is a recap of the mix of accounts receivable at December 31: 2015 Medicare 17% Private pay and other insurers 83% 100% Compliance with Rules and Regulations The laws and regulations regarding Medicare and Medicaid are very complex and are subject to possible governmental review and interpretation and potential retroactive adjustments. Management of the Company believes it is in compliance with these laws and regulations. Income Taxes As a limited liability company, the Company's taxable income or loss is allocated to its members. Therefore, no provision or liability for income taxes has been included in these financial statements. The Company complies with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic , Accounting for Uncertainty in Income Taxes, which addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under the guidance, the Company may recognize the tax benefit from an uncertain tax position only if it is more-likely-than-not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. The guidance on accounting for uncertainty in income taxes also addresses de-recognition, classification, interest and penalties on income taxes, and accounting in interim periods. Management evaluated the Company s tax positions and concluded that the Company had taken no uncertain tax positions that require adjustment to the financial statements to comply with the provisions of this guidance

24 ABC AMBULANCE, LLC NOTES TO FINANCIAL STATEMENTS December 31, 2015 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Equipment Equipment is recorded at cost less accumulated depreciation. Depreciation is provided in amounts sufficient to relate the cost of depreciable assets to operations over their estimated service lives on a declining balance method. The estimated useful lives of the various classes of equipment are as follows: Equipment Vehicles 3 to 7 years 5 to 7 years Expenditures for major renewals and betterments are capitalized and expenditures for maintenance and repairs are charged to expense as incurred. When equipment is retired or otherwise disposed of, the related costs and accumulated depreciation are removed from the accounts and any gain or loss is reflected in income. Comprehensive Income There were no items of other comprehensive income during 2015; therefore, net income is equal to comprehensive income for the year ended December 31, Advertising Costs Advertising costs are expensed when incurred. Advertising costs recognized for the year ended December 31, 2015 were approximately $3,600. Subsequent Events The Company has evaluated subsequent events through May 6, 2016 the date the financial statements were available to be issued. See Note 7, Subsequent Events, for Management s evaluation of Subsequent Events. NOTE 2 - EQUIPMENT Following is a summary of equipment at December 31: 2015 Vehicles $ 236,529 Equipment 13,250 Total equipment 249,779 Less accumulated depreciation (14,832) Total Equipment, net $ 234,947 NOTE 3 - LONG TERM DEBT During November 2015, the Company purchased three (3) ambulances under a bank note payable with Wells Fargo Equipment Finance, Inc. The note requires monthly payments in the amount of $4,631 per month and bears fixed interest at 4.5%. The note is secured by the three ambulances. The note had an outstanding balance of $244,730 at December 31, The note has a stated maturity of November

NOTE 3 - LONG TERM DEBT (continued) ABC AMBULANCE, LLC NOTES TO FINANCIAL STATEMENTS December 31, 2015 The maturities of long-term debt obligations are as follows: Years Ending December 31, NOTE 4 -

25 NOTE 3 - LONG TERM DEBT (continued) ABC AMBULANCE, LLC NOTES TO FINANCIAL STATEMENTS December 31, 2015 The maturities of long-term debt obligations are as follows: Years Ending December 31, NOTE 4 - MAJOR CUSTOMERS 2016 $ 45, , , , ,818 $ 244,730 During 2015, revenue from one local medical facility payor totaled approximately $249,000 (70% of net revenue), of which $143,703 was included in accounts receivable at December 31, Revenue from a second payor totaled approximately $75,000 (21% of net revenue), of which $34,547 was included in accounts receivable at December 31, NOTE 5 - RELATED PARTY TRANSACTIONS ComTrans, Inc. (ComTrans), who shares common ownership with the Company, provides various administrative and management services on behalf of the Company. ComTrans provides monthly accounting services which include all accounting functions of the Company and preparation of monthly financial statements. All expenses are paid by ComTrans monthly, who then bills the Company directly for the services. Related party payable as of December 31, 2015, totaled approximately $807,000. NOTE 6 - CONTINGENCIES The health care industry is subject to numerous laws and regulations of Federal, state and local governments. These laws and regulations include, but are not necessarily limited to, matters such as licensure, accreditation, Medicare and Medicaid. Government oversight and scrutiny continues to increase with respect to investigations and allegations concerning possible violations of fraud and abuse statutes and regulations by health care providers. Violations of these laws and regulations could result in expulsion with the imposition of significant fines and penalties, as well as repayments for patient services previously billed. Management believes that the Company is in compliance with fraud and abuse statutes as well as other applicable laws and regulations. Compliance with such laws and regulations can be subject to future government review and interpretation as well as regulatory actions unknown or unasserted at this time. NOTE 7 - SUBSEQUENT EVENTS During March 2016, the Company purchased one (1) ambulance under a bank note payable with Wells Fargo Equipment Finance, Inc. The note, secured by the ambulance, requires monthly payments in the amount of $1,505 per month and bears fixed interest at 4.57%. The note has a stated maturity of March

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Association for Services for the Aged

Association for Services for the Aged Financial Statements Table of Contents Page Independent Auditors Report 1 Financial Statements Statement of Financial Position 3 Statement of Activities 4 Statement