Premium-Pflegedienst Pflegeland

 (sole proprietorship)

Financial Statements

Years Ended December 1, 2012 and 2013

(Expressed in Euros)

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Premium-Pflegedienst Pflegeland (sole proprietorship)
Balance Sheets
As of December 31

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Premium-Pflegedienst Pflegeland (sole proprietorship)
Statement of Operations
As of December 31

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Premium-Pflegedienst Pflegeland (sole proprietorship)
Statements of Changes in Equity

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Premium-Pflegedienst Pflegeland (sole proprietorship)
Statements of Cash Flow
Years ended December 31

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Premium-Pflegedienst Pflegeland (sole proprietorship)
Notes to the Financial Statements
Expressed in Euros
December 31, 2013

Domicile and Legal Form of the Company
„Premium-Pflegedienst Pflegeland“ is a care enterprise managed by Dzenana Karahodza in the legal form of a sole proprietorship. The proprietorship is domiciled in Waiblinger Straße 34, 70372 Stuttgart, Germany.

Business Activities
As care service provider „Premium-Pflegedienst Pflegeland“ is engaged in the medical homecare and specialized in acute posthospital treatment and breathing improvement or rather the control of long-time home breathing. „Premium-Pflegedienst Pflegeland“ is able to take over the breathing care of all breathing patients with different clinical pictures within 24 hours:

- ALS - amyotrophic lateral sclerosis
- Persistent vegetative state
- Chronic obstructive pulmonary disease (COPD)
- Pneumonia
- Respiratory insufficiency
- Apoplectic stroke (Apoplexy)

General Principles and Accounting Standards
The present year-end financial statements of the sole proprietorship „Premium-Pflegedienst Pflegeland“ for the financial year from January 1 to December 31, 2013 are presented in Euro (EUR) and have been prepared in conformity with generally accepted accounting principles in the United States of America (“US GAAP”) in accordance with the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC").

The statement of operations has been prepared in accordance with the nature of expense method of presentation.

The year-end financial statements convey a true and fair view of the net assets, financial position and results of operations of the sole proprietorship „Premium-Pflegedienst Pflegeland“.

Recently Issued Accounting Pronouncements
The Proprietorship has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

Estimates and Assumptions
The preparation of the year-end financial statements in conformity with U.S. GAAP requires estimates and assumptions to be made by proprietor. These influence the assessment of assets and liabilities, the disclosure of contingent liabilities at the balance sheet date as well as the presentation of income and expenditures for the year under review.

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In particular, this relates to allowances for bad debts, the amount and likelihood of utilization of other provisions as well as the economic lifetime of assets. The Proprietor bases his judgment of these assumptions and estimates on past experience and the results of carefully weighing up different scenarios. Changes in the economic situation that deviate from the assumptions applied and that lie beyond the control of the proprietor may result in the actual amounts differing from the original estimates. If the original basis of estimation changes, accounting for the respective balance sheet items will be adjusted with an effect on the income statement.

Intangible Assets
Intangible Assets which were acquired in return for payment are carried at cost, reduced by normal straight-line amortization from the date on which they are first ready for use. Amortizations will be taken straight-line above the economic useful life of two to three years.

Property, Plant and Equipment
Property, plant and equipment is carried at cost less cumulative depreciation. Depreciation is recognized on a straight-line basis over the expected useful life of the asset. Expenditure for maintenance and repairs is expensed in the period in which it is incurred. The cost of an asset and the related cumulative depreciation are derecognized when assets are scrapped or disposed of, with any book gains or losses recognized in the income statement under “Other operating income” or “Other operating expenses”. Fifty years were assumed as useful life expectancy for buildings. The expected useful life for the other assets is calculated between two and ten years.

Accordingly, low-value assets with an acquisition value of no more than EUR 410 are fully depreciated in the year of acquisition. All other assets with acquisition values greater than this are capitalized and depreciated over their normal useful lives.

Impairment and Write-downs of Intangible Assets and Property, Plant and Equipment
Where the value of intangible assets or property, plant and equipment calculated using the principles described above is greater than the value attributed to them at the balance sheet date, impairment losses and write-downs are recognized accordingly. The fair value to be applied is calculated on the basis of either the net proceeds of sale or the present value of the estimated future cash flows from the use of the asset – whichever is higher. Impairment losses and write-downs are reported in other operating expenses.

Impairment losses are reversed if the reasons for their recognition no longer exist. The reversal of an impairment loss is limited to the amortized carrying amount that would have resulted if no impairment losses had been recognized in the past. Income from such reversals is reported in “Other operating income”. Impairment losses on goodwill may not be reversed.

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Receivables and other assets
Receivables and other assets are carried at the nominal value. Appropriate bad debt allowances are recognized for trade receivables in order to cover possible default risks.

Cash
Cash comprises all freely available liquid funds such as cash in hand and cash in current accounts, as well as other current bank balances available.

Payables
Liabilities are carried at amortized cost on the balance sheet date, which generally corresponds to the amount due on settlement.

Accruals
Accruals are liabilities payable for goods or services received that are neither paid nor invoiced or formally agreed upon by the supplier at the balance sheet date.

Other Provisions
Provisions for other financial obligations are recognized when a present obligation towards a third party arises from a past event, future settlement is probable and the amount can be reliably estimated. Non-current provisions with a remaining term of more than one year are recognized at the amount required to settle the obligation, discounted to the balance sheet date.

Income Taxes and Uncertain Tax Positions
The Proprietorship is not subject to German income taxes as it is exempt from trade income tax as a care service provider that charges more than 40 % of its care services to the compulsory national social security agencies.

Changes in intangible assets in the reporting period and in the previous year are shown in the statements of changes in fixed assets, which is attached as an appendix.

The position “intangible assets” only consists of software licenses.

There were no impairment write-downs to the lower value in use for the financial year as in the previous year.

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Changes in property, plant and equipment in the reporting period and in the previous year are shown in the consolidated statements of changes in fixed assets, which are attached as an appendix.

The item “Land, property rights and buildings, including buildings on third-party land” consists of the 50% share of flat or fractional property unit where the Administration of the sole proprietorship is registered. The whole flat or fractional property unit was acquired under Bosnian Law by the proprietor and her husband. The remaining 50% share is allotted to the operating assets of the proprietorship of the husband.

The whole flat or fractional property unit is encumbered with a residential property charge in an amount of EUR 110.000,00 for the loan to finance the property. The loan is repayable on maturity, so it values to EUR 110.000,00 and has a remaining term until November 2018. In accordance with the allocation of half of the flat or fractional property unit, the loan is allocated the proprietorship „Premium-Pflegedienst Pflegeland“ with 50% and has a carrying amount on the balance sheet date and in the previous year of EUR 55.000,00.

There are no other material restrictions on ownership or title in respect of the property, plant and equipment reported.

Depreciation on the lower value in use was not taken in the financial year and in the previous year.

The position “trade receivables” include receivables of care services fully provided on the balance sheet date. The billing of all care services is made on a monthly basis.

Value adjustments for trade receivables were not necessary in the financial year and the previous year.

The positions “other assets” basically consists of the positive balance of the settlement account with the sole proprietorship “Das Pflegeland”, proprietor Dr. Orhan Karahodza.

The position “cash and cash equivalents” mainly includes short-term bank balances.

As of December 31, 2013 after taking into account the net profit of the year as well as capital contributions and transfer of reserves by the proprietor, the proprietors’ equity amounts to EUR 339.694,70 (previous year: EUR 9.362,42) .

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Non-current financial liabilities fully result from bank liabilities and include the 50% share of the loan to finance the flat or fractional property unit as well as the long-term portion of the loans to finance vehicles.

The interest rate to finance flat or fractional property unit amounts to 4,8%.

The short-term financial liabilities are composed as follows:

Due to the current nature of these items, their market value does not deviate significantly from the carrying amounts presented.

Accruals are liabilities payable for goods or services received that are neither paid nor invoiced or formally agreed upon by the supplier at the balance sheet date. All of the reported amounts are short-term in nature.

The long-term financial liabilities are composed as follows:

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The provisions fully consist of duties in connection with the preparation of the year-end financial statement of the year already ended.

The cash flow statement has been prepared using the indirect method. Business transactions not affecting cash have not been included in the cash flow statement. Payments for investments in intangible assets and property, plant and equipment include only cash-effective acquisitions.

Financial instruments, which potentially expose the Proprietorship to concentrations of credit risk, consist primarily of cash and cash equivalents and accounts receivable. Cash and cash equivalents, are held with various financial institutions. These balances are maintained with high quality financial institutions which management believes limits the risk.

Details of the individual categories of financial instruments are provided in the notes on the respective balance sheet and income statement items.

Principles of the Risk Management System
Regarding its assets, liabilities and planned transactions, the proprietorship “Premium-Pflegedienst Pflegeland” is subject to default risk and liquidity risk and the risk from changes in interest rates. The aim of financial risk management is to minimize these risks through ongoing operating and finance-oriented activities. The proprietor is directly responsible for the implementation of the financial policy and ongoing risk management.

Categories of Financial Instruments
The proprietorship „Premium-Pflegedienst Pflegeland“ holds financial instruments exclusively in form of financial liabilities carried at amortized cost as well as in form of receivables carried at amortized cost. Financial instruments carried at fair value do not exist.

Default Risk
The proprietorship is exposed to counterparty default risk as a result of its operating activities and certain financing activities.

In its operating business, accounts receivable are monitored on a decentralized, ongoing basis. Default risks are taken into account through specific valuation allowances and flat-rate specific valuation allowances.

Liquidity Risk
Revolving liquidity planning is performed in order to ensure the proprietors’ solvency and financial flexibility at all times. To the extent necessary, a liquidity reserve is held in the form of credit facilities and, if required, in cash.

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Risk of Changes in the Interest Rate
The proprietorship is subject to risks of changes in the interest rate only to a limited extent and basically in relation to the 50% share of the loan for financing the flat or fractional property unit. The interest rate is determined until November 2018.

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Business transactions with related parties are on the one hand transactions with enterprises, the husband of the proprietor of the proprietorship „Premium-Pflegedienst Pflegeland“ holds a significant participating share of or over which he exercises significant influence. On the other hand, these are business transactions with close members of the family of the proprietor.

In the reporting period relevant in this context are the relation to the sole proprietorship of the husband of the proprietor („Das Pflegeland“) as well as to Medicus-Stuttgart GmbH, Stuttgart (formerly: Medicus 24 GmbH), in which the husband of the proprietor holds 100% of the shares.

Between the proprietorship „Premium-Pflegedienst Pflegeland“ and the sole proprietorship of the husband of the proprietor exists a settlement account, which shows a positive balance, i.e. a receivable in the amount of EUR -298.302,76 (previous year: EUR 0,00) from the perspective of proprietorship „Premium-Pflegedienst Pflegeland“. The settlement account is not subject to interest payments.

During the financial year under review, the proprietorship „Premium-Pflegedienst Pflegeland“ obtained services in an amount of EUR 0,00 (previous year: EUR 18.000,00) from Medicus-Stuttgart GmbH, Stuttgart (formerly: Medicus 24 GmbH).

The proprietor intends to transfer the proprietorship „Premium-Pflegedienst Pflegeland“ with all assets and liabilities, rights, accounts receivables and claims as well as duties and legal relationships to the Beatmungspflege 24 in exchange for ownership in the company.

Beyond this no major changes regarding the situation of the proprietorship as well as with respect to the branch environment resulted.

Stuttgart, October 31, 2014

Dzenana Karahodza

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Premium-Pflegedienst Pflegeland (sole proprietorship) – Appendix to the Notes
Statements of Changes in Fixed Assets
As at December 31, 2013