Prospect Medical Closes Private Equity Offering of $8.7 Million

CULVER CITY, Calif.— (BUSINESS WIRE)— Jan. 20, 2004— Prospect Medical Holdings, Inc. (OTC:PMHX.PK - News) a Southern California health care management services company, today announced that it closed a private offering of its Series A Convertible Preferred Stock at $5.50 per share, raising gross proceeds of $8,704,500. Each share of the preferred stock sold in the offering is convertible into one share of common stock, subject to adjustments.

The Company paid a 10% placement agent's fee and issued warrants to the placement agent for the purchase of preferred stock in an amount equal to 20% of the shares sold in the offering. The Company intends to use the net proceeds from the offering for acquisitions and other corporate purposes.

The securities sold in this offering have not been registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.