[X] | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
[ ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Nevada
|
88-0350448
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer
Identification No.) |
Large accelerated filer
☐
|
Accelerated filer
☐
|
Non-accelerated filer
☐
|
Smaller reporting company
ý
|
Page
|
||
Cautionary Note Regarding Forward-Looking Statements
|
1
|
|
PART I
|
|
1
|
ITEM 1.
|
BUSINESS
|
1
|
ITEM 1A.
|
RISK FACTORS
|
3
|
ITEM 1B.
|
UNRESOLVED STAFF COMMENTS
|
9
|
ITEM 2.
|
PROPERTIES
|
9
|
ITEM 3.
|
LEGAL PROCEEDINGS
|
9
|
ITEM 4.
|
MINE SAFETY DISCLOSURES
|
9
|
PART II
|
10
|
|
ITEM 5.
|
MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|
10
|
ITEM 6.
|
SELECTED FINANCIAL DATA
|
11
|
ITEM 7.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
11
|
ITEM 7A.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
16
|
ITEM 8.
|
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
16
|
ITEM 9.
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|
17
|
ITEM 9A.
|
CONTROLS AND PROCEDURES
|
17
|
ITEM 9B.
|
OTHER INFORMATION
|
17
|
PART III
|
18
|
|
ITEM 10.
|
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
18
|
ITEM 11.
|
EXECUTIVE COMPENSATION
|
18
|
ITEM 12.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
18
|
ITEM 13.
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
|
18
|
ITEM 14.
|
PRINCIPAL ACCOUNTING FEES AND SERVICES
|
18
|
PART IV
|
19
|
|
ITEM 15.
|
EXHIBITS, FINANCIAL STATEMENT SCHEDULES
|
19
|
ITEM 1. | BUSINESS. |
· | We are primarily focused on the healthcare industry. We are not aware of any other vendor/service provider which has a majority of its business dedicated to solving issues within the healthcare provider industry with the expertise and knowledge base that we have. This is unmatched in the market. |
· | By focusing solely on the hospital campus, we enjoy much lower turn-around times for service, greater up-sell opportunities and a much deeper service relationship with the customer. |
· | We have technology that is revolutionizing the way in which healthcare providers perform their annual HIPAA analysis, regulatory and on-going risk assessments, by making it fast, effective and affordable for both the assessor and responder. |
· | We believe that we are the only provider offering a unique approach to managed security services. We can deploy a knowledgeable resource allocated 100% to perform a predefined security role on-site or virtually for a defined amount of time, which results in hospital gaining the staff with expertise they need. |
· | We have a unique approach to providing fully-outsourced managed print service programs. Our program is completely outsourced and hospitals need only pay a single invoice. We operate the print management process as a department in the hospital with full-time staff on-site. In contrast, other print vendors and dealers in the majority of instances do not provide full-time staff on-site, which results in delays in providing service and supplies to the hospitals. |
· | We are not restricted to any single equipment vendor, which allows us to bring the best printer and copier hardware and software solutions to our customers. Our approach is to use the most appropriate technology to provide a superior solution without any prejudice as to equipment. |
· | We maintain a daily connection with the hospital, which allows us to provide a detailed strategy and plan on printer and copier equipment acquisitions saving the organization a great deal of time, effort and money in this process. |
ITEM 1A. | RISK FACTORS |
· | greater name recognition and larger marketing budgets and resources; |
· | established marketing relationships and access to larger customer bases; |
· | substantially greater financial, technical and other resources; and |
· | larger technical and support staffs. |
· | develop or enhance our service offerings; |
· | take advantage of future opportunities; or |
· | respond to customers and competition. |
· | fluctuations in our quarterly revenues and earnings or those of our competitors; |
· | variations in our operating results compared to levels expected by the investment community; |
· | announcements concerning us or our competitors; |
· | announcements of technological innovations; |
· | sale or purchases of shares by traders or other investors; |
· | market conditions in the industry; and |
· | the conditions of the securities markets. |
ITEM 1B. | UNRESOLVED STAFF COMMENTS. |
ITEM 2. | PROPERTIES. |
ITEM 3. | LEGAL PROCEEDINGS. |
ITEM 4. | MINE SAFETY DISCLOSURES. |
ITEM 5. | MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. |
High
|
Low
|
|||||||
Fiscal Year Ending December 31, 2016
|
||||||||
First Quarter (through March 28, 2016)
|
$
|
1.17
|
$
|
0.76
|
||||
Fiscal Year Ended December 31, 2015
|
||||||||
First Quarter
|
$
|
1.25
|
$
|
0.96
|
||||
Second Quarter
|
$
|
1.24
|
$
|
1.01
|
||||
Third Quarter
|
$
|
1.15
|
$
|
0.95
|
||||
Fourth Quarter
|
$
|
1.17
|
$
|
0.91
|
||||
Fiscal Year Ended December 31, 2014
|
||||||||
First Quarter
|
$
|
1.72
|
$
|
1.18
|
||||
Second Quarter
|
$
|
1.72
|
$
|
1.21
|
||||
Third Quarter
|
$
|
1.33
|
$
|
0.96
|
||||
Fourth Quarter
|
$
|
1.17
|
$
|
0.81
|
Plan
|
Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights
|
Weighted Average Exercise Price of Outstanding Options, Warrants and Rights
|
Number of Securities Remaining Available for Future Issuances Under Plans (excluding securities reflected in column (a))
|
|||||||||
(a)
|
(b)
|
(c)
|
||||||||||
Equity compensation plans approved by security holders (1)
|
4,554,555
|
$
|
1.00
|
1,002,411
|
||||||||
Equity compensation plans not approved by security holders (2)
|
1,975,231
|
$
|
1.13
|
-
|
||||||||
Total
|
6,529,786
|
1,002,411
|
(1) | These plans consist of the 2001 Stock Option Plan, the 2003 Stock Option Plan, the 2004 Stock Option Plan, the 2007 Stock Option Plan and the 2011 Stock Incentive Plan. |
(2) | From time to time and at the discretion of the Board, we may issue warrants to our key individuals or officers as performance-based compensation. We have also issued warrants to debt holders in connection with a convertible debt agreement and to Cambria Capital, LLC in consideration for financing arrangements. |
ITEM 6. | SELECTED FINANCIAL DATA. |
ITEM 7. | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. |
· | there is persuasive evidence of an arrangement; |
· | the service has been or is being provided to the customer; |
· | the collection of the fees is reasonably assured; and |
· | the amount of fees to be paid by the customer is fixed or determinable. |
· | Managed Print Services and equipment revenue |
· | Software Subscriptions and Managed Services Revenue |
· | Cyber Security Professional Services Revenue |
Payments Due by Period
|
||||||||||||||||||||
Total
|
Within 1 year
|
Year 2-3
|
Year 4-5
|
More than 5 years
|
||||||||||||||||
Term loan
|
$
|
1,923,907
|
$
|
577,813
|
$
|
1,088,125
|
$
|
257,969
|
$
|
-
|
||||||||||
Capital leases
|
248,663
|
123,135
|
125,528
|
-
|
-
|
|||||||||||||||
Operating leases
|
2,106,889
|
297,684
|
795,835
|
880,444
|
132,926
|
|||||||||||||||
Total
|
$
|
4,279,459
|
$
|
998,632
|
$
|
2,009,488
|
$
|
1,138,413
|
$
|
132,926
|
ITEM 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. |
ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. |
ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. |
ITEM 9A. | CONTROLS AND PROCEDURES. |
ITEM 9B. | OTHER INFORMATION. |
ITEM 10. | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE. |
ITEM 11. | EXECUTIVE COMPENSATION. |
ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS. |
ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE. |
ITEM 14. | PRINCIPAL ACCOUNTING FEES AND SERVICES. |
ITEM 15. | EXHIBITS, FINANCIAL STATEMENT SCHEDULES. |
Page
|
|
Report of Independent Registered Public Accounting Firm
|
F-1
|
Consolidated Balance Sheets as of December 31, 2015 and 2014
|
F-2
|
Consolidated Statements of Income for the years ended December 31, 2015 and 2014
|
F-3
|
Consolidated Statements of Stockholders' Equity for the years ended December 31, 2015 and 2014
|
F-4
|
Consolidated Statements of Cash Flows for the years ended December 31, 2015 and 2014
|
F-5
|
Notes to Consolidated Financial Statements
|
F-7
|
As of December 31,
|
||||||||
2015
|
2014
|
|||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
6,436,732
|
$
|
4,743,395
|
||||
Accounts receivable, net
|
7,397,957
|
6,808,183
|
||||||
Prepaid and other current assets
|
625,806
|
214,105
|
||||||
Supplies
|
1,458,609
|
1,066,132
|
||||||
Total current assets
|
15,919,104
|
12,831,815
|
||||||
Property and equipment, net
|
495,324
|
215,747
|
||||||
Deposits
|
58,118
|
34,413
|
||||||
Intangible assets, net
|
2,731,250
|
1,265,000
|
||||||
Goodwill
|
3,665,656
|
2,473,656
|
||||||
Total assets
|
$
|
22,869,452
|
$
|
16,820,631
|
||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
Current liabilities:
|
||||||||
Accounts payable and accrued expenses
|
$
|
8,306,860
|
$
|
7,417,361
|
||||
Accrued compensation and benefits
|
2,856,165
|
1,447,132
|
||||||
Line of credit
|
-
|
200,000
|
||||||
Deferred revenue
|
913,677
|
921,771
|
||||||
Current portion of long-term liabilities
|
598,750
|
55,546
|
||||||
Total current liabilities
|
12,675,452
|
10,041,810
|
||||||
Long-term liabilities:
|
||||||||
Term loan, less current portion
|
1,250,000
|
-
|
||||||
Notes payable to related parties, net of discount of $30,189 at December 31, 2014
|
-
|
333,534
|
||||||
Capital lease obligations, less current portion
|
125,496
|
49,822
|
||||||
Total long-term liabilities
|
1,375,496
|
383,356
|
||||||
Commitments and contingencies
|
||||||||
Stockholders' equity:
|
||||||||
Common stock, par value at $0.001, 33,333,333 shares authorized, 24,452,085 shares issued and outstanding at December 31, 2015 and 23,623,619 shares issued and outstanding at December 31, 2014
|
24,453
|
23,625
|
||||||
Additional paid-in capital
|
27,682,061
|
26,576,506
|
||||||
Accumulated deficit
|
(18,888,010
|
)
|
(20,204,666
|
)
|
||||
Total stockholders' equity
|
8,818,504
|
6,395,465
|
||||||
Total liabilities and stockholders' equity
|
$
|
22,869,452
|
$
|
16,820,631
|
Year Ended December 31,
|
||||||||
2015
|
2014
|
|||||||
Net revenues
|
$
|
61,253,853
|
$
|
44,032,076
|
||||
Cost of revenues
|
50,664,713
|
35,799,726
|
||||||
Gross profit
|
10,589,140
|
8,232,350
|
||||||
Operating expenses:
|
||||||||
Sales and marketing
|
2,809,377
|
2,125,085
|
||||||
General and administrative expenses
|
6,802,582
|
4,432,374
|
||||||
Total operating expenses
|
9,611,959
|
6,557,459
|
||||||
Income from operations
|
977,181
|
1,674,891
|
||||||
Other income (expense):
|
||||||||
Interest expense
|
(127,576
|
)
|
(259,112
|
)
|
||||
Reduction in contingent consideration in connection with acquisition of Redspin
|
623,000
|
-
|
||||||
Loss on disposition of property and equipment
|
(3,513
|
)
|
-
|
|||||
Total other income (expense)
|
491,911
|
(259,112
|
)
|
|||||
Income before provision for income taxes
|
1,469,092
|
1,415,779
|
||||||
Income tax expense
|
152,436
|
78,860
|
||||||
Net income
|
$
|
1,316,656
|
$
|
1,336,919
|
||||
Net income per share:
|
||||||||
Basic
|
$
|
0.05
|
$
|
0.06
|
||||
Diluted
|
$
|
0.05
|
$
|
0.06
|
||||
Number of weighted average shares outstanding:
|
||||||||
Basic
|
24,150,572
|
22,062,789
|
||||||
Diluted
|
24,978,936
|
23,437,628
|
Common Stock
|
||||||||||||||||||||
Shares
|
Amount
|
Additional Paid-in Capital
|
Accumulated Deficit
|
Total Stockholders' Equity (Deficit)
|
||||||||||||||||
Balance at January 1, 2014
|
20,643,966
|
$
|
20,645
|
$
|
23,491,490
|
$
|
(21,541,585
|
)
|
$
|
1,970,550
|
||||||||||
Stock compensation expense for options and warrants granted to employees and consultants
|
-
|
-
|
280,061
|
-
|
280,061
|
|||||||||||||||
Stock compensation expense for restricted stock granted to key employee
|
-
|
-
|
30,634
|
-
|
30,634
|
|||||||||||||||
Options and warrants exercised
|
349,247
|
349
|
64,951
|
-
|
65,300
|
|||||||||||||||
Conversion of convertible note payable
|
1,700,000
|
1,700
|
1,698,300
|
-
|
1,700,000
|
|||||||||||||||
Acquisition of Delphiis, Inc.
|
930,406
|
931
|
1,011,070
|
-
|
1,012,001
|
|||||||||||||||
Net income
|
-
|
-
|
-
|
1,336,919
|
1,336,919
|
|||||||||||||||
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
|
-
|
-
|
277,668
|
-
|
277,668
|
|||||||||||||||
Stock compensation expense for restricted stock granted to key employee
|
100,000
|
100
|
101,780
|
-
|
101,880
|
|||||||||||||||
Stock options exercised
|
18,347
|
18
|
(18
|
)
|
-
|
-
|
||||||||||||||
Conversion of related party note payable to common stock
|
257,835
|
258
|
257,577
|
-
|
257,835
|
|||||||||||||||
Common stock issued in connection with the acquisition of Redspin
|
452,284
|
452
|
468,548
|
-
|
469,000
|
|||||||||||||||
Net income
|
-
|
-
|
-
|
1,316,656
|
1,316,656
|
|||||||||||||||
Balance at December 31, 2015
|
24,452,085
|
$
|
24,453
|
$
|
27,682,061
|
$
|
(18,888,010
|
)
|
$
|
8,818,504
|
Year Ended December 31,
|
||||||||
2015
|
2014
|
|||||||
Cash flows provided by operating activities:
|
||||||||
Net income
|
$
|
1,316,656
|
$
|
1,336,919
|
||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
Depreciation
|
155,183
|
107,621
|
||||||
Amortization of intangible assets
|
483,750
|
105,000
|
||||||
Bad debt
|
22,000
|
-
|
||||||
Stock compensation expense for options and warrants granted to employees and directors
|
277,668
|
280,061
|
||||||
Stock compensation expense for restricted stock issued to key employee
|
101,880
|
30,634
|
||||||
Interest expense related to accretion of debt discount costs
|
30,189
|
91,784
|
||||||
Interest expense related to amortization of loan acquisition costs
|
-
|
51,162
|
||||||
Loss on disposition of property and equipment
|
3,513
|
-
|
||||||
Changes in operating assets and liabilities:
|
||||||||
Accounts receivable
|
(431,365
|
)
|
(2,579,359
|
)
|
||||
Prepaid and other current assets
|
(395,870
|
)
|
118,654
|
|||||
Supplies
|
(392,477
|
)
|
(98,778
|
)
|
||||
Deposits
|
(20,527
|
)
|
-
|
|||||
Accounts payable and accrued expenses
|
43,302
|
2,266,006
|
||||||
Accrued compensation and benefits
|
1,291,024
|
(128,690
|
)
|
|||||
Deferred revenue
|
(39,340
|
)
|
(100,504
|
)
|
||||
Net cash provided by operating activities
|
2,445,586
|
1,480,510
|
||||||
Cash flows (used for) investing activities:
|
||||||||
Purchases of property and equipment
|
(214,478
|
)
|
(94,165
|
)
|
||||
Purchase of Redspin
|
(1,876,966
|
)
|
-
|
|||||
Purchase of Delphiis, Inc. net of cash acquired
|
-
|
(995,257
|
)
|
|||||
Net cash (used for) investing activities
|
(2,091,444
|
)
|
(1,089,422
|
)
|
||||
Cash flows provided by (used for) financing activities:
|
||||||||
Net repayments on line of credit agreement
|
(200,000
|
)
|
(200,000
|
)
|
||||
Proceeds from term loan
|
2,000,000
|
-
|
||||||
Payments on term loan
|
(250,000
|
)
|
-
|
|||||
Payments on notes payable to related parties
|
(105,888
|
)
|
(100,000
|
)
|
||||
Payments on capital leases
|
(104,917
|
)
|
(81,617
|
)
|
||||
Proceeds from exercise of options and warrants
|
-
|
65,300
|
||||||
Net cash provided by (used for) financing activities
|
1,339,195
|
(316,317
|
)
|
|||||
Net increase in cash and cash equivalents
|
1,693,337
|
74,771
|
||||||
Cash and cash equivalents
, beginning of year
|
4,743,395
|
4,668,624
|
||||||
Cash and cash equivalents
, end of year
|
$
|
6,436,732
|
$
|
4,743,395
|
Year Ended December 31,
|
||||||||
2015
|
2014
|
|||||||
Supplemental disclosure of cash flow information:
|
||||||||
Interest paid
|
$
|
97,386
|
$
|
116,100
|
||||
Income tax paid
|
$
|
158,521
|
$
|
102,733
|
||||
Non-cash investing and financing activities:
|
||||||||
Property and equipment acquired through capital leases
|
$
|
223,795
|
$
|
68,494
|
||||
Conversion of convertible note payable
|
$
|
-
|
$
|
1,700,000
|
||||
Conversion of note payable to related party
|
$
|
257,835
|
$
|
-
|
||||
Common stock issued in connection with the acquisition of Redspin
|
$
|
469,000
|
$
|
-
|
||||
Common stock issued for acquisition of Delphiis, Inc.
|
$
|
-
|
$
|
1,012,000
|
• | there is persuasive evidence of an arrangement; |
• | the service has been or is being provided to the customer; |
• | the collection of the fees is reasonably assured; and |
• | the amount of fees to be paid by the customer is fixed or determinable. |
· | Managed Print Services and Equipment Revenue |
· | Software Subscriptions and Managed Services Revenue |
· | Cyber Security Professional Services Revenues |
Year Ended December 31,
|
||||||||
2015
|
2014
|
|||||||
Cost of revenues
|
$
|
137,279
|
$
|
173,089
|
||||
Sales and marketing
|
34,203
|
19,371
|
||||||
General and administrative expenses
|
208,066
|
118,235
|
||||||
Total stock based compensation expense
|
$
|
379,548
|
$
|
310,695
|
2015
|
2014
|
|||||||
Risk-free interest rate
|
0.08% to 0.12%
|
0.07% to 0.09%
|
||||||
Expected volatility of our Common Stock
|
46.74% to 54.98%
|
57.08% to 64.72%
|
||||||
Dividend yield
|
0%
|
|
0%
|
|
||||
Expected life of options
|
3 years
|
3 years
|
Year Ended December 31,
|
||||||||
2015
|
2014
|
|||||||
Numerator:
|
||||||||
Net income
|
$
|
1,316,656
|
$
|
1,336,919
|
||||
Effects of dilutive securities:
|
||||||||
Convertible notes payable
|
-
|
75,189
|
||||||
Income after effects of conversion of note payable
|
$
|
1,316,656
|
$
|
1,412,108
|
||||
Denominator:
|
||||||||
Denominator for basic calculation weighted averages
|
24,150,572
|
22,062,789
|
||||||
Dilutive Common Stock equivalents:
|
||||||||
Convertible debt
|
-
|
-
|
||||||
Options and warrants
|
828,364
|
1,374,839
|
||||||
Denominator for diluted calculation weighted average
|
24,978,936
|
23,437,628
|
||||||
Net income per share:
|
||||||||
Basic net income per share
|
$
|
.05
|
$
|
.06
|
||||
Diluted net income per share
|
$
|
.05
|
$
|
.06
|
As of December 31,
|
||||||||
2015
|
2014
|
|||||||
Trade receivables
|
$
|
7,458,022
|
$
|
8,105,330
|
||||
Unapplied advances and unbilled revenue, net
|
(60,065
|
)
|
(1,297,147
|
)
|
||||
Allowance for doubtful accounts
|
-
|
-
|
||||||
$
|
7,397,957
|
$
|
6,808,183
|
As of December 31,
|
||||||||
2015
|
2014
|
|||||||
Furniture and fixtures
|
$
|
102,316
|
$
|
68,184
|
||||
Computers and office equipment
|
623,810
|
650,352
|
||||||
Fleet equipment
|
373,572
|
260,866
|
||||||
Leasehold improvements
|
103,993
|
3,838
|
||||||
1,203,691
|
983,240
|
|||||||
Less accumulated depreciation and amortization
|
(708,367
|
)
|
(767,493
|
)
|
||||
$
|
495,324
|
$
|
215,747
|
As of December 31,
|
||||||||||||||||
2015
|
2014
|
|||||||||||||||
Gross
Carrying
Amount
|
Accumulated
Amortization
|
Gross
Carrying
Amount
|
Accumulated
Amortization
|
|||||||||||||
Delphiis, Inc.
|
||||||||||||||||
Acquired technology
|
$
|
900,000
|
$
|
(135,000
|
)
|
$
|
900,000
|
$
|
(45,000
|
)
|
||||||
Customer relationships
|
400,000
|
(120,000
|
)
|
400,000
|
(40,000
|
)
|
||||||||||
Trademarks
|
50,000
|
(50,000
|
)
|
50,000
|
(16,667
|
)
|
||||||||||
Non-compete agreements
|
20,000
|
(10,000
|
)
|
20,000
|
(3,333
|
)
|
||||||||||
Total intangible assets, Delphiis, Inc.
|
$
|
1,370,000
|
$
|
(315,000
|
)
|
$
|
1,370,000
|
$
|
(105,000
|
)
|
||||||
Redspin
|
||||||||||||||||
Acquired technology
|
$
|
1,050,000
|
$
|
(78,750
|
)
|
$
|
-
|
$
|
-
|
|||||||
Customer relationships
|
600,000
|
(150,000
|
)
|
-
|
-
|
|||||||||||
Trademarks
|
200,000
|
(30,000
|
)
|
-
|
-
|
|||||||||||
Non-compete agreements
|
100,000
|
(15,000
|
)
|
-
|
-
|
|||||||||||
Total intangible assets, Redspin
|
$
|
1,950,000
|
$
|
(273,750
|
)
|
$
|
$
|
-
|
||||||||
Total intangible assets
|
$
|
3,320,000
|
$
|
(588,750
|
)
|
$
|
1,370,000
|
$
|
(105,000
|
)
|
Number of Shares
|
Weighted Average Exercise Price
|
Weighted Average Remaining Term in Years
|
Aggregate Intrinsic Value
|
|||||||||||||
Outstanding at January 1, 2014
|
2,983,565
|
$
|
1.15
|
|||||||||||||
Granted in 2014
|
-
|
$
|
-
|
|||||||||||||
Exercised in 2014
|
(122,500
|
)
|
$
|
1.01
|
||||||||||||
Cancelled in 2014
|
(652,500
|
)
|
$
|
1.31
|
||||||||||||
Outstanding at December 31, 2014
|
2,208,565
|
$
|
1.11
|
3.35
|
$
|
235,750
|
||||||||||
Granted in 2015
|
-
|
$
|
-
|
|||||||||||||
Exercised in 2015
|
-
|
$
|
-
|
|||||||||||||
Cancelled in 2015
|
(233,334
|
)
|
$
|
1.01
|
||||||||||||
Outstanding at December 31, 2015
|
1,975,231
|
$
|
1.13
|
3.46
|
$
|
265,750
|
||||||||||
Warrants exercisable at December 31, 2015
|
1,508,565
|
$
|
1.16
|
2.35
|
$
|
200,417
|
Range of
Exercise Prices |
Number of Shares Outstanding
|
Weighted Average Remaining in Contractual Life
in Years |
Outstanding Warrants Weighted Average Exercise Price
|
Number of Warrants Exercisable
|
Exercisable Warrants Weighted Average Exercise Price
|
|||||||||||||||||
$
|
0.30 to $0.75
|
141,667
|
0.36
|
$
|
0.60
|
141,667
|
$
|
0.60
|
||||||||||||||
$
|
0.91 to $1.84
|
1,833,564
|
3.70
|
$
|
1.17
|
1,366,898
|
$
|
1.22
|
||||||||||||||
$
|
0.30 to $1.84
|
1,975,231
|
3.46
|
$
|
1.13
|
1,508,565
|
$
|
1.16
|
Year Ended
December 31,
|
Number of Shares
|
|||
2013
|
450,000
|
|||
2014
|
366,667
|
|||
2015
|
366,667
|
|||
2016
|
166,666
|
Year Ended
December 31,
|
Number of Shares
|
|||
2014
|
233,334
|
|||
2015
|
233,334
|
|||
2016
|
233,332
|
(9) | Stock Option and Stock Incentive Plans |
Number of Shares
|
Weighted Average Exercise Price
|
Weighted Average Remaining Term in Years
|
Aggregate Intrinsic Value
|
|||||||||||||
Outstanding at January 1, 2014
|
5,256,349
|
$
|
1.03
|
|||||||||||||
Granted in 2014
|
402,500
|
$
|
1.29
|
|||||||||||||
Exercised in 2014
|
(226,747
|
)
|
$
|
0.92
|
||||||||||||
Cancelled in 2014
|
(545,273
|
)
|
$
|
1.04
|
||||||||||||
Outstanding at December 31, 2014
|
4,886,829
|
$
|
1.05
|
4.79
|
$
|
912,287
|
||||||||||
Granted in 2015
|
270,250
|
$
|
1.15
|
|||||||||||||
Exercised in 2015
|
(18,347
|
)
|
$
|
0.47
|
||||||||||||
Cancelled in 2015
|
(584,177
|
)
|
$
|
1.52
|
||||||||||||
Outstanding at December 31, 2015
|
4,554,555
|
$
|
1.00
|
4.22
|
$
|
966,509
|
||||||||||
Options exercisable at December 31, 2015
|
4,099,829
|
$
|
0.98
|
4.22
|
$
|
943,089
|
Range of
Exercise Prices |
Number of Shares Outstanding
|
Weighted Average Remaining in Contractual Life
in Years |
Outstanding Options Weighted Average Exercise Price
|
Number of Options Exercisable
|
Exercisable Options Weighted Average Exercise Price
|
||||||||||||||||
$0.30 to $0.75
|
913,000
|
2.14
|
$
|
0.59
|
914,500
|
$
|
0.59
|
||||||||||||||
$0.76 to $0.90
|
811,501
|
4.51
|
$
|
0.80
|
811,723
|
$
|
0.80
|
||||||||||||||
$0.91 to $1.84
|
2,800,054
|
4.83
|
$
|
1.18
|
2,343,606
|
$
|
1.19
|
||||||||||||||
$1.85 to $2.15
|
30,000
|
2.67
|
$
|
2.15
|
30,000
|
$
|
2.15
|
||||||||||||||
$0.30 to $2.15
|
4,554,555
|
4.22
|
$
|
1.00
|
4,099,829
|
$
|
0.98
|
Vesting Date
|
Shares
|
|||
July 1, 2016
|
100,000
|
|||
July 1, 2017
|
100,000
|
|||
July 1, 2018
|
100,000
|
|||
July 1, 2019
|
100,000
|
Year Ended December 31,
|
||||||||
2015
|
2014
|
|||||||
Current provision:
|
||||||||
Federal
|
$
|
70,436
|
$
|
20,712
|
||||
State
|
82,000
|
58,148
|
||||||
152,436
|
78,860
|
|||||||
Deferred:
|
||||||||
Federal
|
-
|
-
|
||||||
State
|
-
|
-
|
||||||
-
|
-
|
|||||||
Income tax expense
|
$
|
152,436
|
$
|
78,860
|
Year Ended December 31,
|
||||||||
2015
|
2014
|
|||||||
Computed tax at federal statutory rate of 34%
|
$
|
448,479
|
$
|
465,951
|
||||
State taxes, net of federal benefit
|
54,121
|
37,088
|
||||||
Non-deductible items
|
43,654
|
148,820
|
||||||
Other
|
75,828
|
24,310
|
||||||
Change in valuation allowance
|
(469,646
|
)
|
(597,309
|
)
|
||||
$
|
152,436
|
$
|
78,860
|
Year Ended December 31,
|
||||||||
2015
|
2014
|
|||||||
Deferred tax assets:
|
||||||||
Accrued salaries/vacation
|
$
|
253,600
|
$
|
221,900
|
||||
Accrued equipment pool
|
127,900
|
105,100
|
||||||
State taxes
|
18,700
|
17,900
|
||||||
Stock options
|
864,500
|
844,700
|
||||||
Credits
|
153,000
|
131,800
|
||||||
Net operating loss carryforwards
|
5,064,000
|
5,398,100
|
||||||
Total deferred tax assets
|
6,481,700
|
6,719,500
|
||||||
Deferred tax liabilities:
|
||||||||
Depreciation
|
9,100
|
34,500
|
||||||
Amortization of intangibles
|
343,500
|
4,700
|
||||||
Other
|
541,600
|
267,400
|
||||||
Total deferred tax liabilities
|
894,200
|
306,600
|
||||||
Net deferred assets before valuation allowance
|
5,587,500
|
6,412,900
|
||||||
Valuation allowance
|
(5,587,500
|
)
|
(6,412,900
|
)
|
||||
Net deferred tax assets
|
$
|
-
|
$
|
-
|
December 31,
|
Payments
|
|||
2016
|
$
|
297,684
|
||
2017
|
374,751
|
|||
2018
|
421,084
|
|||
2019
|
433,716
|
|||
2020
|
446,728
|
|||
Thereafter
|
132,926
|
|||
Total
|
$
|
2,106,889
|
-
|
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. As set forth in Note 6 above, $257,835 of such debt was converted to equity and the remaining amounts were paid out to the noteholders.
|
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
|
(16) | Asset Purchase Agreement – Redspin |
Acquired technology
|
$
|
1,050,000
|
||
Customer relationships
|
600,000
|
|||
Trademarks
|
200,000
|
|||
Non-compete agreements
|
100,000
|
|||
Goodwill
|
1,192,000
|
|||
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
|
$
|
3,168,966
|
Year Ended December 31
|
||||||||
2015
|
2014
|
|||||||
Pro forma net revenue
|
$
|
61,952,529
|
$
|
46,662,798
|
||||
Pro forma net income
|
$
|
1,115,777
|
$
|
917,342
|
||||
Pro forma basic net income per share
|
$
|
0.05
|
$
|
0.04
|
||||
Pro forma diluted net income per share
|
$
|
0.04
|
$
|
0.04
|
No.
|
Item
|
2.1
|
Agreement and Plan of Reorganization dated as of November 20, 2001, by and between Auxilio and e-Perception, Inc., incorporated by reference to Exhibit 1.1 to our Form 8-K filed on January 24, 2002.
|
2.2
|
Agreement and Plan of Merger, dated April 1, 2004, by and between Auxilio, PPVW Acquisition Corporation, and Alan Mayo & Associates, Inc., incorporated by reference to Exhibit 2.1 to our Form 8-K filed on April 16, 2004.
|
3.1
|
Articles of Incorporation of Auxilio, Inc. as amended, incorporated by reference to Exhibit 3.1 to our Form 10-KSB filed on April 19, 2005.
|
3.2
|
Amended and Restated Bylaws of Auxilio, incorporated by reference to Exhibit 2 to our Form 10-SB filed on October 1, 1999.
|
3.3
|
First Amendment to Amended and Restated Bylaws of Auxilio, Inc. dated August 6, 2015, incorporated by reference to Exhibit 10.1 to our 10-Q filed on August 14, 2015.
|
4.1
|
Subscription Agreement, dated January 9, 2002, by and among Auxilio and each of the stockholders of e-Perception, Inc., incorporated by reference to Exhibit 1.1 to our Form 8-K filed on January 24, 2002.
|
4.2
|
Form of Subscription Agreement entered into between April 6, 2009 and April 15, 2009 with Michael Vanderhoof and Edward B. Case, incorporated by reference to Exhibit 4.1 of our Form 8-K filed on May 14, 2009.
|
10.1
|
Auxilio's 2001 Stock Option Plan, incorporated by reference to Exhibit 4.1 to our Form S-8 filed on March 3, 2011.*
|
10.1.1
|
Form of Stock Option Agreement under Auxilio's 2001 Stock Option Plan, incorporated by reference to Exhibit 4.6 to our Form S-8 filed on March 3, 2011.*
|
10.2
|
Auxilio's 2003 Stock Option Plan, incorporated by reference to Exhibit 4.2 to our Form S-8 filed on March 3, 2011.*
|
10.2.1
|
Form of Stock Option Agreement under Auxilio's 2003 Stock Option Plan, incorporated by reference to Exhibit 4.7 to our Form S-8 filed on March 3, 2011.*
|
10.3
|
Auxilio's 2004 Stock Option Plan, incorporated by reference to Exhibit 4.3 to our Form S-8 filed on March 3, 2011.*
|
10.3.1
|
Form of Stock Option Agreement under Auxilio's 2004 Stock Option Plan, incorporated by reference to Exhibit 4.8 to our Form S-8 filed on March 3, 2011.*
|
10.4
|
Auxilio's 2007 Stock Option Plan, incorporated by reference to Exhibit 4.4 to our Form S-8 filed on March 3, 2011.*
|
10.5
|
Amendment to
Auxilio
2007 Stock Option Plan, incorporated by reference to Exhibit 4.5 to
our
Form S-8 filed on March 3, 2011.*
|
10.5.1
|
Form of 2007 Stock Option Agreement, incorporated by reference to Exhibit 4.9 to our Form S-8 filed on March 3, 2011.*
|
10.6
|
Auxilio's 2011 Stock Incentive Plan, incorporated by reference to Exhibit 4.1 to our Form S-8 filed on August 24, 2011.*
|
10.6.1
|
Form of Auxilio's 2011 Stock Option Agreement under the 2011 Stock Incentive Plan, incorporated by reference to Exhibit 4.3 to our Form S-8 filed on August 24, 2011.*
|
10.6.2
|
Form of Restricted Stock Agreement under the Auxilio 2011 Stock Incentive Plan, incorporated by reference to Exhibit 4.4 to our Form S-8 filed on August 24, 2011.*
|
10.7
|
Asset Purchase Agreement between Workstream USA, Inc., Workstream, Inc. and PeopleView, Inc. dated March 8,
.
2004, incorporated by reference to Exhibit 2.1 to our Form 8-K filed on April 2, 2004.
|
10.8
|
Addendum dated as of May 27, 2004 to Asset Purchase Agreement dated March 17th, 2004 between Workstream Inc. Workstream USA, Inc. and PeopleView, Inc., incorporated by reference to Exhibit 2.1 to our Form 8-K/A filed on August 3, 2004.
|
10.9
|
Office Lease between MVPlaza, Inc. and Auxilio, Inc., dated as of June 24, 2015, incorporated by reference to Exhibit 10.1 to our Form 10-Q filed on November 13, 2015.
|
No.
|
Item
|
10.10
|
Executive Employment Agreement, effective January 1, 2014, by and between Auxilio and Joseph Flynn, incorporated by reference to Exhibit 10.2 to our 10-Q filing on May 14, 2014.
|
10.11
|
Executive Employment Agreement, effective January 1, 2014, by and between Auxilio and Paul T. Anthony, incorporated by reference to Exhibit 10.2 to our 10-Q filing on May 14, 2014.
|
10.12
|
Form of 8% Convertible Promissory Note, dated July 29, 2011, incorporated by reference to Exhibit 10.1 to our Form 8-K filed on August 3, 2011.
|
10.13
|
Form of Warrant to Purchase Common Stock, dated July 29, 2011, incorporated by reference to Exhibit 10.2 to our Form 8-K filed on August 3, 2011.
|
10.14
|
Placement Agent Warrant to Purchase Common Stock, dated July 29, 2011, incorporated by reference to Exhibit 10.3 to our Form 8-K filed on August 3, 2011.
|
10.15
|
Form of Security Agreement, dated July 29, 2011, incorporated by reference to Exhibit 10.4 to our Form 8-K filed on August 3, 2011.
|
10.16
|
Form of Registration Rights Agreement, dated July 29, 2011, incorporated by reference to Exhibit 10.5 to our Form 8-K filed on August 3, 2011.
|
10.17
|
Form of Investment Unit Purchase Agreement, dated July 29, 2011, incorporated by reference to Exhibit 10.6 to our Form 8-K filed on August 3, 2011.
|
10.18
|
Loan and Security Agreement by and among Auxilio, Inc., Auxilio Solutions, Inc. and AvidBank Corporate Finance, a division of AvidBank, dated effective April 19, 2012, incorporated by reference to Exhibit 10.1 to our Form 8-K filed on May 9, 2012.
|
10.19
|
Intellectual Property Security Agreement by and among Auxilio, Inc., Auxilio Solutions, Inc. and AvidBank Corporate Finance, a division of AvidBank, dated effective April 19, 2012, incorporated by reference to Exhibit 10.2 to our Form 8-K filed on May 9, 2012.
|
10.20
|
Form of Subordination by and among AvidBank Corporate Finance, a division of AvidBank and certain individual creditors dated effective April 19, 2012, incorporated by reference to Exhibit 10.3 to our Form 8-K filed on May 9, 2012.
|
10.21
|
Warrant to Purchase Stock issued by Auxilio, Inc. to AvidBank Holdings, Inc. dated effective April 24, 2012, incorporated by reference to Exhibit 10.4 to our Form 8-K filed on May 9, 2012.
|
10.22
|
Warrant to Purchase Common Stock issued by Auxilio, Inc. to Joseph Flynn dated January 16, 2013, incorporated by reference to Exhibit 10.1 to our Form 8-K filed on January 22, 2013.
|
10.23
|
Warrant to Purchase Common Stock issued by Auxilio, Inc. to Paul Anthony dated January 16, 2013, incorporated by reference to Exhibit 10.1 to our Form 8-K filed on January 22, 2013..
|
10.24
|
Warrant to Purchase Common Stock issued by Auxilio, Inc. to Simon Vermooten dated January 16, 2013, incorporated by reference to Exhibit 10.1 to our Form 8-K filed on January 22, 2013..
|
10.25
|
Stock Purchase Agreement between Auxilio, Inc., Delphiis, Inc., certain stockholders of Delphiis, Inc., and Mike Gentile as Seller's Representative dated effective July 1, 2014, incorporated by reference to Exhibit 99.11 to our Form 8-K filed on July 8, 2014.
|
10.26
|
Second Amendment to Loan and Security Agreement dated as of April 25, 2014, incorporated by reference to Exhibit 10.1 to our 10-Q filed on May 14, 2014.
|
10.27
|
Note Conversion Agreement between Auxilio, Inc. and Mike Gentile dated effective as of January 12, 2015, incorporated by reference to Exhibit 99.1 to our Form 8-K filed on February 27, 2015.
|
10.28
|
Asset Purchase Agreement between Auxilio, Inc. and Redspin, Inc. dated as of March 31, 2015, incorporated by reference to Exhibit 99.1 to our Form 8-K filed on April 6, 2015.
|
10.29
|
Third Amendment to the Loan and Security Agreement between Avidbank Corporate Finance and Auxilio, Inc., dated as of April 24, 2015, incorporated by reference to Exhibit 10.1 to our Form 10-Q filed on May 15, 2015.
|
10.30
|
Fourth Amendment to the Loan and Security Agreement between Avidbank and Auxilio, Inc. dated June 19, 2015, incorporated by reference to Exhibit 10.1 to our 10-Q filed on August 14, 2015.
|
10.31
|
Executive Employment Agreement, effective January 1, 2016, by and between Auxilio and Joseph J. Flynn.
|
10.32
|
Executive Employment Agreement, effective January 1, 2016, by and between Auxilio and Paul T. Anthony.
|
14
|
Code of Ethics, incorporated by reference to Exhibit 14.1 to our Form 10-KSB filed on April 14, 2004.
|
No.
|
Item
|
16.1
|
Letter regarding change in certifying accountants, dated February 14, 2002, incorporated by reference to Exhibit 16 to our Form 8-K filed on February 15, 2002.
|
16.2
|
Letter regarding change in certifying accountants dated December 22, 2005, incorporated by reference to Exhibit 16.1 to our Form 8-K/A filed on January 24, 2006.
|
21.1
|
Subsidiaries.
|
23.1
|
Consent of Haskell & White LLP, Independent Registered Public Accounting Firm.
|
24
|
Power of Attorney (included on the Signature Page).
|
31.1
|
Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a).
|
31.2
|
Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a).
|
32.1
|
Certification of CEO and CFO pursuant to 18 U.S.C. §1350 as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002.
|
AUXILIO, INC. | |
By:
/s/ Joseph J. Flynn
|
|
Joseph J. Flynn
|
|
Chief Executive Officer and
|
|
Principal Executive Officer
|
|
March 30, 2016
|
|
By:
/s/ Paul T. Anthony
|
|
Paul T. Anthony
|
|
Chief Financial Officer and
|
|
Principal Financial Officer
|
|
March 30, 2016
|
Signature
|
Title
|
Date
|
|
/s/ Joseph J. Flynn
|
Chief Executive Officer
|
March 30, 2016
|
|
Joseph J. Flynn
|
(Principal Executive Officer and Director)
|
||
/s/ Paul T. Anthony
|
Chief Financial Officer
|
March 30, 2016
|
|
Paul T. Anthony
|
(Principal Financial Officer and Accounting Officer)
|
||
/s/ Edward Case
|
March 30, 2016
|
||
Edward Case
|
Director
|
||
/s/ Brooks Corbin
|
March 30, 2016
|
||
Brooks Corbin
|
Director
|
||
/s/ John D. Pace
|
March 30, 2016
|
||
John D. Pace
|
Director (Non-executive Chairman of the Board)
|
||
/s/ Michael Vanderhoof
|
March 30, 2016
|
||
Michael Vanderhoof
|
Director
|
Dated: ________________________ _______________________________
|
Joseph Flynn
|
President & Chief Executive Officer
|
Dated: ________________________
By: _______________________________
|
John D. Pace
|
Chairman of the Board of Directors
|
AUXILIO, Inc.
|
27401 Los Altos, Suite 100
|
Mission Viejo, CA 92691
|
1. | 40% of bonus potential tied to board approved EBITDA target for 2016. |
2. | 40% of bonus potential tied to board approved Revenue target for 2016. Payout for achievement between 80%-89% and 100%-120% equals the achievement percentage. Payout for achievement of 90%-100% equals 100%. |
3. | 10% of bonus potential tied to having 4 MPS Sales Executive on staff by July 1st and December 31 st . |
4. | 10% of bonus potential tied to executing Security related contracts for services with 3 existing MPS customers as of January 1, 2015. 1 account pays 0%. 2 accounts pays 80%, 3 accounts pays 100%, 4 pays 110% and 5 pays 120%. |
Dated: ________________________ _______________________________
|
Paul T. Anthony
|
Executive Vice President & Chief Financial Officer
|
Dated: ________________________
By: _______________________________
|
Joseph Flynn
|
President and Chief Executive Officer
|
AUXILIO, Inc.
|
27401 Los Altos, Suite 100
|
Mission Viejo, CA 92691
|
1. | 40% of bonus potential tied to board approved EBITDA target for 2016. |
2. | 40% of bonus potential tied to board approved Revenue target for 2016.. Payout for achievement between 80%-89% and 100%-120% equals the achievement percentage. Payout for achievement of 90%-100% equals 100%. |
3. | 10% of bonus potential tied to the closing of 3 new MPS accounts excluding add-on accounts to existing customers. 1 new account pays 0%. 2 new accounts pays 80%, 3 new accounts pays 100%, 4 pays 110% and 5 pays 120%. |
4. | 10% of bonus potential tied to executing Security related contracts for services with 3 existing MPS customers as of January 1, 2015. 1 account pays 0%. 2 accounts pays 80%, 3 accounts pays 100%, 4 pays 110% and 5 pays 120%. |
Entity
|
State of Incorporation
|
Percentage of Ownership
|
Auxilio Solutions, Inc.
|
California
|
100%
|
Delphiis, Inc.
|
California
|
100%
|
1. | I have reviewed this Annual Report on Form 10-K of Auxilio, Inc.; |
2. | Based on my knowledge, this Annual Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Annual Report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this Annual Report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this Annual Report; |
4. | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Annual Report is being prepared; |
(b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this Annual Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Annual Report based on such evaluation; and |
(d) | disclosed in this Annual Report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
(a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
(b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
1. | I have reviewed this Annual Report on Form 10-K of Auxilio, Inc.; |
2. | Based on my knowledge, this Annual Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Annual Report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this Annual Report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this Annual Report; |
4. | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Annual Report is being prepared; |
(b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this Annual Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Annual Report based on such evaluation; and |
(d) | disclosed in this Annual Report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
(a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
(b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |