Nevada
|
88-0350448
|
(State or other jurisdiction of
incorporation or organization)
|
(I.R.S. Employer
Identification No.)
|
Page
|
|
PART I - FINANCIAL INFORMATION
|
|
PART II - OTHER INFORMATION
|
|
|
|
Item 5. Other Information | 26 |
JUNE 30,
2015
|
DECEMBER 31,
2014
|
|||||||
(unaudited)
|
||||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$ | 5,088,623 | $ | 4,743,395 | ||||
Accounts receivable, net
|
8,147,778 | 6,808,183 | ||||||
Supplies
|
1,135,534 | 1,066,132 | ||||||
Prepaid and other current assets
|
848,302 | 214,105 | ||||||
Total current assets
|
15,220,237 | 12,831,815 | ||||||
Property and equipment, net
|
291,133 | 215,747 | ||||||
Deposits
|
109,011 | 34,413 | ||||||
Intangible assets, net
|
3,018,750 | 1,265,000 | ||||||
Goodwill
|
3,789,656 | 2,473,656 | ||||||
Total assets
|
$ | 22,428,787 | $ | 16,820,631 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
||||||||
Current liabilities:
|
||||||||
Accounts payable and accrued expenses
|
$ | 10,274,028 | $ | 7,417,361 | ||||
Accrued compensation and benefits
|
2,174,424 | 1,447,132 | ||||||
Line of credit
|
- | 200,000 | ||||||
Deferred revenue
|
957,296 | 921,771 | ||||||
Current portion of long-term liabilities
|
571,181 | 55,546 | ||||||
Total current liabilities
|
13,976,929 | 10,041,810 | ||||||
Long-term liabilities:
|
||||||||
Term loan, less current portion
|
1,500,000 | - | ||||||
Notes payable to related parties, net of discount of $3,007 and $30,189 at June 30, 2015 and December 31, 2014, respectively
|
49,937 | 333,534 | ||||||
Capital lease obligations less current portion
|
113,287 | 49,822 | ||||||
Total long-term liabilities
|
1,663,224 | 383,356 | ||||||
Commitments and contingencies
|
||||||||
Stockholders’ (deficit) equity:
|
||||||||
Common stock, par value at $0.001, 33,333,333 shares authorized, 24,223,167 and 23,623,619 shares issued and outstanding at June 30, 2015 and December 31, 2014, respectively
|
24,224 | 23,625 | ||||||
Additional paid-in capital
|
27,651,355 | 26,576,506 | ||||||
Accumulated deficit
|
(20,886,945 | ) | (20,204,666 | ) | ||||
Total stockholders’ (deficit) equity
|
6,788,634 | 6,395,465 | ||||||
Total liabilities and stockholders’ equity
|
$ | 22,428,787 | $ | 16,820,631 | ||||
Three Months
|
Six Months
|
|||||||||||||||
Ended June 30,
|
Ended June 30,
|
|||||||||||||||
2015
|
2014
|
2015
|
2014
|
|||||||||||||
Revenues
|
$ | 15,616,530 | $ | 10,377,272 | $ | 29,464,445 | $ | 20,621,844 | ||||||||
Cost of revenues
|
13,500,076 | 8,658,202 | 25,215,670 | 17,163,142 | ||||||||||||
Gross profit
|
2,116,454 | 1,719,070 | 4,248,775 | 3,458,702 | ||||||||||||
Operating expenses:
|
||||||||||||||||
Sales and marketing
|
808,816 | 582,503 | 1,550,888 | 1,090,714 | ||||||||||||
General and administrative expenses
|
1,923,027 | 1,044,756 | 3,309,369 | 2,246,626 | ||||||||||||
Total operating expenses
|
2,731,843 | 1,627,259 | 4,860,257 | 3,337,340 | ||||||||||||
(Loss) income from operations
|
(615,389 | ) | 91,811 | (611,482 | ) | 121,362 | ||||||||||
Other income (expense):
|
||||||||||||||||
Interest expense
|
(34,347 | ) | (105,070 | ) | (68,397 | ) | (203,893 | ) | ||||||||
Total other income (expense)
|
(34,347 | ) | (105,070 | ) | (68,397 | ) | (203,893 | ) | ||||||||
Loss before provision for income taxes
|
(649,736 | ) | (13,259 | ) | (679,879 | ) | (82,531 | ) | ||||||||
Income tax expense
|
- | - | (2,400 | ) | (1,600 | ) | ||||||||||
Net loss
|
$ | (649,736 | ) | $ | (13,259 | ) | $ | (682,279 | ) | $ | (84,131 | ) | ||||
Net loss per share:
|
||||||||||||||||
Basic
|
$ | (.03 | ) | $ | (.00 | ) | $ | (.03 | ) | $ | (.00 | ) | ||||
Diluted
|
$ | (.03 | ) | $ | (.00 | ) | $ | (.03 | ) | $ | (.00 | ) | ||||
Number of weighted average shares:
|
||||||||||||||||
Basic
|
24,191,316 | 20,877,949 | 23,936,832 | 20,768,735 | ||||||||||||
Diluted
|
24,191,316 | 20,877,949 | 23,936,832 | 20,768,735 |
Additional
|
Total
|
|||||||||||||||||||
Common Stock
|
Paid-in
|
Accumulated
|
Stockholders’
|
|||||||||||||||||
Shares
|
Amount
|
Capital
|
Deficit
|
Equity
|
||||||||||||||||
Balance at December 31, 2014
|
23,623,619 | $ | 23,625 | $ | 26,576,506 | $ | (20,204,666 | ) | $ | 6,395,465 | ||||||||||
Stock compensation expense for options and warrants granted to employees and directors
|
- | - | 184,000 | - | 184,000 | |||||||||||||||
Stock compensation expense for restricted stock granted to key employee
|
- | - | 40,613 | - | 40,613 | |||||||||||||||
Stock options exercised
|
18,347 | 18 | (18 | ) | - | - | ||||||||||||||
Conversion of related party note payable to common stock
|
128,917 | 129 | 257,706 | - | 257,835 | |||||||||||||||
Common stock issued in connection with the acquisition of Redspin
|
452,284 | 452 | 592,548 | - | 593,000 | |||||||||||||||
Net loss
|
- | - | - | (682,279 | ) | (682,279 | ) | |||||||||||||
Balance at June 30, 2015
|
24,223,167 | $ | 24,224 | $ | 27,651,355 | $ | (20,886,945 | ) | $ | 6,788,634 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
|
Six months ended June 30,
|
||||||||
2015
|
2014
|
|||||||
Cash flows from operating activities:
|
||||||||
Net loss
|
$ | (682,279 | ) | $ | (84,131 | ) | ||
Adjustments to reconcile net loss to net cash provided by operating activities:
|
||||||||
Depreciation
|
71,830 | 48,706 | ||||||
Amortization of intangible assets
|
196,250 | - | ||||||
Stock compensation expense for warrants and options issued to employees and directors
|
184,000 | 253,312 | ||||||
Stock compensation expense for restricted stock issued to key employee
|
40,613 | - | ||||||
Interest expense related to accretion of debt discount costs
|
27,182 | 70,500 | ||||||
Interest expense related to amortization of loan acquisition costs
|
- | 43,853 | ||||||
Changes in operating assets and liabilities:
|
||||||||
Accounts receivable
|
(1,159,186 | ) | (639,871 | ) | ||||
Supplies
|
(69,402 | ) | (15,710 | ) | ||||
Prepaid and other current assets
|
(624,637 | ) | 39,216 | |||||
Deposits
|
(71,420 | ) | - | |||||
Accounts payable and accrued expenses
|
2,010,470 | 902,822 | ||||||
Accrued compensation and benefits
|
609,283 | (104,439 | ) | |||||
Deferred revenue
|
4,279 | (32,255 | ) | |||||
Net cash provided by operating activities
|
536,983 | 482,003 | ||||||
Cash flows from investing activities:
|
||||||||
Purchases of property and equipment
|
(12,010 | ) | (25,466 | ) | ||||
Payment for purchase of Redspin
|
(1,876,966 | ) | - | |||||
Net cash used for investing activities
|
(1,888,976 | ) | (25,466 | ) | ||||
Cash flows from financing activities:
|
||||||||
Net repayments on line of credit agreement
|
(200,000 | ) | (200,000 | ) | ||||
Proceeds from term loan
|
2,000,000 | - | ||||||
Net proceeds from issuance of common stock through
employee stock options
|
- | 60,000 | ||||||
Payments on notes payable to related party
|
(52,944 | ) | - | |||||
Payments on capital leases
|
(49,835 | ) | (38,612 | ) | ||||
Net cash provided by (used for) financing activities
|
1,697,221 | (178,612 | ) | |||||
Net increase in cash and cash equivalents
|
345,228 | 277,925 | ||||||
Cash and cash equivalents,
beginning of period
|
4,743,395 | 4,668,624 | ||||||
Cash and cash equivalents,
end of period
|
$ | 5,088,623 | $ | 4,946,549 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
|
Six months ended June 30,
|
||||||||
2015
|
2014
|
|||||||
Supplemental disclosure of cash flow information:
|
||||||||
Interest paid
|
$ | 41,215 | $ | 89,472 | ||||
Income taxes paid
|
$ | 135,480 | $ | 56,460 | ||||
Non-cash investing and financing activities:
|
||||||||
Property and equipment acquired through capital leases
|
$ | 128,935 | $ | 42,739 | ||||
Conversion of convertible notes payable
|
$ | - | $ | 150,000 | ||||
Conversion of note payable to related party
|
$ | 257,835 | $ | - | ||||
Common stock issued in connection with the acquisition of Redspin
|
$ | 593,000 | $ |
The accompanying notes are an integral part of these condensed consolidated financial statements.
|
SIX MONTHS ENDED JUNE 30, 2015 AND 2014
|
(UNAUDITED)
|
Options
|
Shares
|
Weighted Average Exercise Price
|
Weighted Average Remaining Term in Years
|
Aggregate
Intrinsic Value
|
||||||||||||
Outstanding at December 31, 2014
|
4,886,829 | $ | 1.05 | |||||||||||||
Granted
|
227,750 | 1.17 | ||||||||||||||
Exercised
|
(18,347 | ) | 0.47 | |||||||||||||
Cancelled
|
(292,736 | ) | 1.67 | |||||||||||||
Outstanding at June 30, 2015
|
4,803,496 | $ | 1.02 | 4.77 | $ | 673,235 | ||||||||||
Exercisable at June 30, 2015
|
4,343,937 | $ | 1.01 | 4. 31 | $ | 665,860 |
Warrants
|
Shares
|
Weighted Average Exercise Price
|
Weighted Average Remaining Term in Years
|
Aggregate
Intrinsic Value
|
||||||||||||
Outstanding at December 31, 2014
|
2,208,565 | $ | 1.11 | |||||||||||||
Granted
|
- | - | ||||||||||||||
Exercised
|
- | - | ||||||||||||||
Cancelled
|
- | - | ||||||||||||||
Outstanding at June 30, 2015
|
2,208,565 | $ | 1.11 | 4.34 | $ | 141,750 | ||||||||||
Exercisable at June 30, 2015
|
1,508,565 | $ | 1.16 | 2.86 | $ | 113,750 |
Three Months
Ended June 30,
|
Six months
Ended June 30,
|
|||||||||||||||
2015
|
2014
|
2015
|
2014
|
|||||||||||||
Cost of revenues
|
$ | 9,030 | $ | 2,815 | $ | 16,944 | $ | 129,979 | ||||||||
Sales and marketing
|
8,302 | 8,337 | 17,565 | 23,412 | ||||||||||||
General and administrative expense
|
112, 748 | 41,558 | 149,491 | 99,921 | ||||||||||||
Total stock based compensation expense
|
$ | 130 , 080 | $ | 52,710 | $ | 184,000 | $ | 253,312 |
Vesting Date
|
Shares
|
|||
July 1, 2016
|
100,000 | |||
July 1, 2017
|
100,000 | |||
July 1, 2018
|
100,000 | |||
July 1, 2019
|
100,000 |
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||
2015
|
2014
|
2015
|
2014
|
|||||||||||||
Numerator:
|
||||||||||||||||
Net loss
|
$ | (649,736 | ) | $ | (13,259 | ) | $ | (682,279 | ) | $ | (84,131 | ) | ||||
Denominator:
|
||||||||||||||||
Denominator for basic calculation weighted average shares
|
24,191,316 | 20,877,949 | 23,936,832 | 20,768,735 | ||||||||||||
Denominator for diluted calculation weighted average shares
|
24,191,316 | 20,877,949 | 23,936,832 | 20,768,735 | ||||||||||||
Net loss per share:
|
||||||||||||||||
Basic net loss per share
|
$ | (.03 | ) | $ | (.00 | ) | $ | (.03 | ) | $ | (.00 | ) | ||||
Diluted net loss per share
|
$ | (.03 | ) | $ | (.00 | ) | $ | (.03 | ) | $ | (.00 | ) |
June 30,
2015
|
December 31,
2014
|
|||||||
Trade receivables
|
$ | 8,728,737 | $ | 8,105,330 | ||||
Unapplied advances and unbilled revenue
|
(580,959 | ) | (1,297,147 | ) | ||||
Allowance for doubtful accounts
|
- | - | ||||||
Total accounts receivable
|
$ | 8,147,778 | $ | 6,808,183 |
Gross
Carrying
Amount
|
Accumulated
Amortization
|
Net
Carrying
Amount
|
Useful Life (years)
|
||||||||||||
Delphiis, Inc.
|
|||||||||||||||
Acquired technology
|
$ | 900,000 | $ | (90,000 | ) | $ | 810,000 | 10 | |||||||
Customer relationships
|
400,000 | (80,000 | ) | 320,000 | 5 | ||||||||||
Trademarks
|
50,000 | (33,333 | ) | 16,667 | 1.5 | ||||||||||
Non-compete agreements
|
20,000 | (6,667 | ) | 13,333 | 3 | ||||||||||
Total intangible assets, Delphiis, Inc.
|
$ | 1,370,000 | $ | (210,000 | ) | $ | 1,160,000 | ||||||||
Redspin
|
|||||||||||||||
Acquired technology
|
$ | 1,050,000 | $ | (26,250 | ) | $ | 1,023,750 | 10 | |||||||
Customer relationships
|
600,000 | (50,000 | ) | 550,000 | 3 | ||||||||||
Trademarks
|
200,000 | (10,000 | ) | 190,000 | 5 | ||||||||||
Non-compete agreements
|
100,000 | (5,000 | ) | 95,000 | 5 | ||||||||||
Total intangible assets, Redspin
|
$ | 1,950,000 | $ | (91,250 | ) | $ | 1,858,750 | ||||||||
Total intangible assets
|
$ | 3,320,000 | $ | (301,250 | ) | $ | 3,018,750 |
-
|
The Securities Consideration consisted of 930,406 shares of our common stock, which was the number of shares having an aggregate value of $1,250,000, with the price per share equal to the average of the closing price of our common stock on the OTC Markets for the 20 most recent trading days prior to the closing date, rounded up to the nearest whole number of shares.
|
-
|
The Cash Consideration was equal to $1,000,000.
|
-
|
The Debt Assumption was equal to $463,723 which was owed by Delphiis to Gentile and two other parties. By way of background, of such amount, $363,723 is represented by certain amended and restated promissory notes (the “Notes”) dated of even date with the Agreement, which bear interest at the rate of 4% per annum, and pursuant to which Delphiis was to make quarterly interest-only payments on the total principal amount outstanding at the end of each calendar quarter. The Notes have a maturity date which is 24 months from the date of the Agreement and contain no prepayment penalty. Pursuant to the terms of the Notes, Delphiis will accelerate payment on (i) fifty percent (50%) of the outstanding amount due under such Notes at such time as Delphiis achieves $1,500,000 of bookings measured from the date of the Agreement, and (ii) the remaining fifty percent (50%) will be paid at such time as Delphiis achieves $4,000,000 of bookings measured from the date of the Agreement, all as set forth in the Notes. Delphiis also agreed to pay the remaining $100,000 to Gentile and the other noteholders upon Delphiis’s collection of $100,000 from accounts receivable outstanding as of June 30, 2014. Pursuant to the Agreement, Auxilio, as the sole owner of Delphiis, agreed to assume the obligations of Delphiis and to make the payments pursuant to the terms of the Notes.
|
Acquired technology
|
$ | 900,000 | ||
Customer relationships
|
400,000 | |||
Trademarks
|
50,000 | |||
Non-compete agreements
|
20,000 | |||
Goodwill
|
956,639 | |||
Other assets received
|
376,775 | |||
Deferred revenue
|
(154,089 | ) | ||
Notes payable
|
(424,000 | ) | ||
Other liabilities assumed
|
(113,325 | ) | ||
Total
|
$ | 2,012,000 |
Three Months
Ended June 30,
|
Six months
Ended June 30,
|
|||||||||||||||
2015
|
2014
|
2015
|
2014
|
|||||||||||||
Pro forma revenue
|
$ | 15,616,530 | $ | 10,714,367 | $ | 29,464,445 | $ | 21,215,447 | ||||||||
Pro forma net loss
|
$ | (649,736 | ) | $ | (41,576 | ) | $ | (682,279 | ) | $ | (35,297 | ) | ||||
Pro forma basic net loss per share
|
$ | (0.03 | ) | $ | (0.00 | ) | $ | (0.03 | ) | $ | (0.00 | ) | ||||
Pro forma diluted net loss per share
|
$ | (0.03 | ) | $ | (0.00 | ) | $ | (0.03 | ) | $ | (0.00 | ) |
Acquired technology
|
$ | 1,050,000 | ||
Customer relationships
|
600,000 | |||
Trademarks
|
200,000 | |||
Non-compete agreements
|
100,000 | |||
Goodwill
|
1,316,000 | |||
Accounts receivable
|
180,409 | |||
Other assets received
|
19,009 | |||
Accounts payable and accrued expenses
|
(23,196 | ) | ||
Accrued compensation
|
(118,009 | ) | ||
Deferred revenue
|
(31,247 | ) | ||
Total
|
$ | 3,292,966 |
Three Months
Ended June 30,
|
Six months
Ended June 30,
|
|||||||||||||||
2015
|
2014
|
2015
|
2014
|
|||||||||||||
Pro forma revenue
|
$ | 15,616,530 | $ | 10,926,192 | $ | 30,163,121 | $ | 21,648,081 | ||||||||
Pro forma net loss
|
$ | (649,736 | ) | $ | (170,555 | ) | $ | (883,158 | ) | $ | (500,610 | ) | ||||
Pro forma basic net loss per share
|
$ | (0.03 | ) | $ | (0.01 | ) | $ | (0.04 | ) | $ | (0.02 | ) | ||||
Pro forma diluted net loss per share
|
$ | (0.03 | ) | $ | (0.01 | ) | $ | (0.04 | ) | $ | (0.02 | ) |
·
|
Revenue recognition and deferred revenue
|
·
|
Accounts receivable valuation and related reserves
|
·
|
New customer implementation costs
|
·
|
Impairment of
goodwill and
intangible assets
|
·
|
Stock-based compensation
|
·
|
Income taxes
|
Payments Due by Period
|
||||||||||||||||||||
Total
|
Less than
1 year
|
1-3 years
|
3-5 years
|
More than
5 years
|
||||||||||||||||
Notes payable
|
$ | 56,413 | $ | 2,775 | $ | 53,638 | $ | - | $ | - | ||||||||||
Term loan
|
2,183,751 | 579,688 | 1,091,875 | 512,188 | - | |||||||||||||||
Capital leases
|
204,867 | 92,962 | 111,905 | - | - | |||||||||||||||
Operating leases
|
2,186,795 | 290,987 | 756,716 | 874,033 | 265,059 | |||||||||||||||
Total
|
$ | 4,631,82 6 | $ | 966,412 | $ | 2,014,134 | $ | 1,386,221 | $ | 265,059 |
No.
|
Item
|
3.1
|
First Amendment to Amended and Restated Bylaws of Auxilio, Inc. dated August 6, 2015
|
10.1
|
Fourth Amendment to the Loan and Security Agreement between Avidbank and Auxilio, Inc. dated June 19, 2015
|
31.1
|
Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended. †
|
31.2
|
Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended. †
|
32.1
|
Certification of the CEO and CFO pursuant to Rule 13a-14(b) and Rule 15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350. +
|
101.INS
|
XBRL Instance Document*
|
101.SCH
|
XBRL Taxonomy Extension Schema Document*
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document*
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document*
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document*
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document*
|
AUXILIO, INC. | |
Date: August 14, 2015
|
By:
/s/ Joseph J. Flynn
|
Joseph J. Flynn
Chief Executive Officer
(Principal Executive Officer)
|
|
Date: August 14, 2015
|
By:
/s/ Paul T. Anthony
|
Paul T. Anthony
Chief Financial Officer
(Principal Accounting Officer)
|
AUXILIO, INC.
By: ______________________________________
Title: _____________________________________
AUXILIO SOLUTIONS, INC.
By: ______________________________________
Title: _____________________________________
|
|
AVIDBANK CORPORATE FINANCE,
A DIVISION OF AVIDBANK
By: ______________________________________
Title: _____________________________________
|
Client:
|
Auxilio, Inc., and Auxilio Solutions, Inc.
|
Client ID:
|
___________________ |
1. Term Loan Facility Limit:
|
$4,000,000
|
2. Term Loan Advance Request Amount
|
$2,000,000
|
Bank Use Only
|
|||
Received by:
|
Date:
|
||
AUTHORIZED SIGNER
|
|||
Approved by:
|
Date:
|
||
AUTHORIZED SIGNER
|
TO:
|
AVIDBANK CORPORATE FINANCE, A DIVISION OF AVIDBANK
|
FROM:
|
AUXILIO, INC. and AUXILIO SOLUTIONS, INC.
|
Reporting Covenant
|
Required
|
Complies
|
||||
Monthly Cash Position
|
Monthly within 25 days
|
Yes
|
No
|
|||
A/R & A/P Agings + Compliance Cert
|
Monthly within 25 days
|
Yes
|
No
|
|||
Quarterly financial statements
|
Quarterly within 45 days
|
Yes
|
No
|
|||
Annual (CPA Audited)
|
FYE within 120 days
|
Yes
|
No
|
|||
10K and 10Q
|
(as applicable)
|
Yes
|
No
|
|||
A/R Audit
|
Semi-Annual
|
Yes
|
No
|
|||
IP Notices
|
As required under Section 6.10
|
Yes
|
No
|
|||
Financial Covenant
|
Required
|
Actual
|
Complies
|
|||
Minimum Liquidity Ratio (monthly)
|
1.75 : 1.00
|
_____: 1.00
|
Yes
|
No
|
||
Quarterly Debt Service Coverage Ratio
|
1.50 : 1.00
|
_____: 1.00
|
Yes
|
No
|
Comments Regarding Exceptions:
See Attached.
|
BANK USE ONLY
|
||
Received by: ___________________________________
|
|||
Sincerely,
|
AUTHORIZED SIGNER
|
||
Date:
|
|||
___________________________________ |
Verified: ___________________________________
|
||
SIGNATURE
|
AUTHORIZED SIGNER
|
||
___________________________________ |
Date:___________________________________
|
||
TITLE
|
|||
Compliance Status
|
Yes
|
No
|
|
___________________________________ | |||
DATE
|