Page
|
|||
Item
1.
|
Financial
Statements (Unaudited):
|
||
Condensed
Consolidated Balance Sheet
As
of
March 31, 2007
|
3
|
||
Condensed
Consolidated Statements of Operations
for
the
Three Months Ended March 31, 2007 and 2006
|
4
|
||
Condensed
Consolidated Statements of Comprehensive Loss
for
the
Three Months Ended March 31, 2007 and 2006
|
5
|
||
Condensed
Consolidated Statement of Stockholders’ Equity
for
the
Three Months Ended March 31, 2007
|
6
|
||
Condensed
Consolidated Statements of Cash Flows
for
the
Three Months Ended March 31, 2007 and 2006
|
7
|
||
Notes
to Condensed Consolidated Financial Statements
|
9
|
||
Item
2.
|
Management's
Discussion and Analysis or Plan Of Operation
|
15
|
|
Item
3.
|
Controls
and Procedures.
|
21
|
|
PART
II - OTHER INFORMATION
|
|||
Item
1.
|
Legal
Proceedings.
|
22
|
|
Item
2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
22
|
|
Item
3.
|
Defaults
Upon Senior Securities.
|
22
|
|
Item
4.
|
Submission
of Matters to a Vote of Security Holders.
|
22
|
|
Item
5.
|
Other
Information.
|
22
|
|
Item
6.
|
Exhibits.
|
22
|
|
Signatures
|
23
|
AUXILIO,
INC. AND SUBSIDIARIES
|
||||
CONDENSED
CONSOLIDATED BALANCE SHEET
|
||||
MARCH
31, 2007
|
||||
(UNAUDITED)
|
||||
ASSETS
|
||||
Current
assets:
|
||||
Cash
and cash equivalents
|
$
|
367,598
|
||
Accounts
receivable, net
|
1,984,830
|
|||
Prepaid
and other current assets
|
167,700
|
|||
Supplies
|
643,200
|
|||
Total
current assets
|
3,163,328
|
|||
Property
and equipment, net
|
273,886
|
|||
Deposits
|
28,790
|
|||
Loan
acquisition costs, net
|
400,575
|
|||
Intangible
assets, net
|
369,597
|
|||
Goodwill
|
1,517,017
|
|||
Total
assets
|
$
|
5,753,193
|
||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||
Current
liabilities:
|
||||
Accounts
payable and accrued expenses
|
$
|
1,217,757
|
||
Accrued
compensation and benefits
|
357,034
|
|||
Deferred
revenue
|
257,750
|
|||
Income
taxes payable
|
5,600
|
|||
Current
portion of long-term debt
|
600,000
|
|||
Current
portion of capital lease obligations
|
42,418
|
|||
Revolving
loan
payable, net of discount of $45,207
|
699,793
|
|||
Total
current liabilities
|
3,180,352
|
|||
Note
payable, less current portion, net of discount of
$175,476
|
1,774,524
|
|||
Commitments
and contingencies
|
-
|
|||
Stockholders'
equity:
|
||||
Common
stock, par value at $0.001, 33,333,333 shares
|
||||
authorized,16,122,809
shares issued and outstanding
|
16,124
|
|||
Additional
paid-in capital
|
16,572,777
|
|||
Accumulated deficit
|
|
|
(15,790,584
|
)
|
Total
stockholders' equity
|
798,317
|
|||
Total
liabilities and stockholders’ equity
|
$
|
5,753,193
|
AUXILIO,
INC. AND SUBSIDIARIES
|
|||||||
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|||||||
(UNAUDITED)
|
|||||||
Three
Months Ended March 31,
|
|||||||
2007
|
2006
|
||||||
Revenues
|
$
|
5,862,911
|
$
|
2,035,193
|
|||
Cost
of revenues
|
4,300,071
|
1,971,374
|
|||||
Gross
profit
|
1,562,840
|
63,819
|
|||||
Operating
expenses:
|
|||||||
Sales
and marketing
|
274,476
|
510,903
|
|||||
General
and administrative expenses
|
675,033
|
657,164
|
|||||
Intangible
asset amortization
|
59,541
|
63,802
|
|||||
Total
operating expenses
|
1,009,050
|
1,231,869
|
|||||
Income
(loss) from operations
|
553,790
|
(1,168,050
|
)
|
||||
Other
income (expense):
|
|||||||
Interest
expense
|
(204,882
|
)
|
(9,850
|
)
|
|||
Interest
income
|
2,389
|
1,327
|
|||||
Gain
on sale of marketable securities
|
-
|
10,448
|
|||||
Total
other income (expense)
|
(202,493
|
)
|
1,925
|
||||
Income
(loss) before provision for income taxes
|
351,297
|
(1,166,125
|
)
|
||||
Income
tax expense
|
5,600
|
2,400
|
|||||
Net
income (loss)
|
$
|
345,697
|
$
|
(1,168,525
|
)
|
||
Net
income (loss) per share:
|
|||||||
Basic
|
$
|
0.02
|
$
|
(0.07
|
)
|
||
Diluted
|
$
|
(0.01
|
)
|
$
|
(0.07
|
)
|
|
Number
of weighted average shares:
|
|||||||
Basic
|
16,122,809
|
15,961,724
|
|||||
Diluted
|
18,719,135
|
15,961,724
|
AUXILIO,
INC. AND SUBSIDIARIES
|
|||||||
CONDENSED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(LOSS)
|
|||||||
(UNAUDITED)
|
|||||||
Three
Months Ended March 31,
|
|||||||
2007
|
2006
|
||||||
Net
income (loss)
|
$
|
345,697
|
$
|
(1,168,525
|
)
|
||
Other
comprehensive loss:
|
|||||||
Reclassification
of realized amounts included in net (loss)
|
-
|
-
|
|||||
Total
other comprehensive (loss)
|
-
|
-
|
|||||
Comprehensive
income (loss)
|
$
|
345,697
|
$
|
(1,168,525
|
)
|
AUXILIO,
INC. AND SUBSIDIARIES
|
|||||||||||||||||||
CONDENSED
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
|
|||||||||||||||||||
THREE
MONTHS ENDED MARCH 31, 2007
|
|||||||||||||||||||
(UNAUDITED)
|
|||||||||||||||||||
Additional
|
Total
|
||||||||||||||||||
Common
Stock
|
Paid-in
|
Accumulated
|
Stockholders'
|
||||||||||||||||
Shares
|
Amount
|
Capital
|
Deficit
|
Equity
|
|||||||||||||||
Balance
at December 31, 2006
|
16,122,809
|
$
|
16,124
|
$
|
16,430,094
|
$
|
(16,136,281
|
)
|
$
|
309,937
|
|||||||||
Stock
compensation expense for options and warrants granted to employees
and
consultants
|
-
|
-
|
142,683
|
-
|
142,683
|
||||||||||||||
Net
income
|
-
|
-
|
-
|
345,697
|
345,697
|
||||||||||||||
Balance
at March 31, 2007
|
16,122,809
|
$
|
16,124
|
$
|
16,572,777
|
$
|
(15,790,584
|
)
|
$
|
798,317
|
AUXILIO,
INC. AND SUBSIDIARIES
|
|||||||
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|||||||
(UNAUDITED)
|
|||||||
Three
Months Ended March 31,
|
|||||||
2007
|
2006
|
||||||
Cash
flows used for operating activities:
|
|||||||
Net
income (loss)
|
$
|
345,697
|
$
|
(1,168,525
|
)
|
||
Adjustments
to reconcile net income (loss) to net cash
|
|||||||
provided
by
(used for) operating activities:
|
|||||||
Depreciation
|
33,822
|
26,387
|
|||||
Amortization
of
intangible assets
|
59,541
|
63,802
|
|||||
Stock
compensation expense for warrants and options issued to employees
and
consultants
|
142,683
|
207,169
|
|||||
Stock
issued for services
|
-
|
4,953
|
|||||
Interest
expense related to amortization of warrants issued with
loans
|
41,781
|
5,474
|
|||||
Interest
expense related to amortization of loan acquisition costs
|
71,865
|
-
|
|||||
Interest
expense
|
-
|
2,055
|
|||||
Gain
on
sale of marketable securities
|
-
|
(10,448
|
)
|
||||
Changes
in operating assets and liabilities:
|
|||||||
Accounts
receivable
|
(260,572
|
)
|
119,403
|
||||
Supplies
|
47,278
|
22,774
|
|||||
Prepaid
and other current assets
|
(137,027
|
)
|
(55,963
|
)
|
|||
Accounts
payable and accrued expenses
|
(102,346
|
)
|
220,905
|
||||
Accrued
compensation and benefits
|
(9,761
|
)
|
(79,063
|
)
|
|||
Income
taxes payable
|
5,600
|
-
|
|||||
Deferred
revenue
|
(31,564
|
)
|
91,551
|
||||
Net
cash provided by (used for) operating activities
|
206,997
|
(549,526
|
)
|
||||
Cash
flows (used for) investing activities:
|
|||||||
Purchases
of
property and equipment
|
(3,939
|
)
|
(97,107
|
)
|
|||
Net
proceeds from sale of marketable securities
|
-
|
26,698
|
|||||
Net
cash (used for) investing activities
|
(3,939
|
)
|
(70,409
|
)
|
|||
Cash
flows (used for) provided by financing
activities:
|
|||||||
Proceeds
from
line of credit agreement
|
-
|
250,000
|
|||||
Payments
on
capital leases
|
(4,897
|
)
|
(2,435
|
)
|
|||
Payments
on
notes payable and long-term debt
|
(150,000
|
)
|
-
|
||||
Net
cash (used for) provided by financing activities
|
(154,897
|
)
|
247,565
|
||||
Net
increase (decrease) in cash and cash equivalents
|
48,161
|
(372,370
|
)
|
||||
Cash
and cash equivalents,
beginning of period
|
319,437
|
664,941
|
|||||
Cash
and cash equivalents, end
of period
|
$
|
367,598
|
$
|
292,571
|
AUXILIO,
INC. AND SUBSIDIARIES
|
|||||||
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
|
|||||||
(UNAUDITED)
|
|||||||
Three
Months Ended March 31,
|
|||||||
2007
|
2006
|
||||||
Supplemental
disclosure of cash flow information:
|
|||||||
Interest
paid
|
$
|
91,237
|
$
|
2,321
|
|||
Non-cash
investing and financing activities:
|
|||||||
Relative
fair
value of warrants issued related to issuance of note
payable
|
$
|
-
|
$
|
85,079
|
Options
|
|||||||||||||
Shares
|
Weighted
Average Exercise Price
|
Weighted
Average Remaining Term in Years
|
Aggregate
Intrinsic Value
|
||||||||||
Outstanding
at December 31,
2006
|
2,182,648
|
$
|
1.39
|
||||||||||
Granted
|
802,000
|
$
|
0.47
|
||||||||||
Exercised
|
-
|
-
|
|||||||||||
Cancelled
|
(94,500
|
)
|
$
|
1.54
|
|||||||||
Outstanding
at March 31,
2007
|
2,890,148
|
$
|
1.13
|
8.17
|
$
|
410,315
|
|||||||
Exercisable
at March
31, 2007
|
1,219,621
|
$
|
1.40
|
7.27
|
$
|
42,775
|
Warrants
|
|||||||||||||
Shares
|
Weighted
Average Exercise Price
|
Weighted
Average Remaining Term in Years
|
Aggregate
Intrinsic Value
|
||||||||||
Outstanding
at December 31,
2006
|
2,467,076
|
$
|
1.34
|
||||||||||
Granted
|
100,000
|
0.47
|
|||||||||||
Exercised
|
-
|
-
|
|||||||||||
Cancelled
|
-
|
-
|
|||||||||||
Outstanding
at March 31,
2007
|
2,567,076
|
$
|
1.30
|
4.30
|
$
|
577,010
|
|||||||
Exercisable
at March
31, 2007
|
2,567,076
|
$
|
1.30
|
4.30
|
$
|
577,010
|
2007
|
2006
|
||||||
Cost
of revenues
|
$
|
27,638
|
$
|
40,262
|
|||
Sales
and marketing
|
30,196
|
57,994
|
|||||
General
and administrative expenses
|
58,887
|
108,913
|
|||||
Total
stock based compensation expense
|
$
|
116,721
|
$
|
207,169
|
Three
Months Ended March 31,
|
|||||||
2007
|
2006
|
||||||
Numerator:
|
|||||||
Net
income (loss)
|
$
|
345,697
|
$
|
(1,168,525
|
)
|
||
Effects
of dilutive securities:
|
|||||||
Convertible
note payable
|
(441,747
|
)
|
-
|
||||
(Loss)
after effects of conversion of note payable
|
$
|
(96,050
|
)
|
$
|
(1,168,525
|
)
|
|
Denominator:
|
|||||||
Denominator
for
basic calculation weighted average shares
|
16,122,809
|
15,961,724
|
|||||
Dilutive
common stock equivalents:
|
|||||||
Secured
convertible notes
|
1,499,298
|
-
|
|||||
Options
and warrants
|
1,097,028
|
-
|
|||||
Denominator
for diluted calculation weighted average shares
|
18,719,135
|
15,961,724
|
|||||
Net
income (loss) per share:
|
|||||||
Basic
net income (loss) per share
|
$
|
0.02
|
$
|
(0.07
|
)
|
||
Diluted
net (loss) per share
|
$
|
(0.01
|
)
|
$
|
(0.07
|
)
|
Trade
|
$
|
2,013,339
|
||
Allowance
for doubtful accounts
|
(28,509
|
)
|
||
$
|
1,984,830
|
8. |
NOTE
PAYABLE
|
· |
revenue
recognition
|
· |
accounts
receivable valuation and related
reserves
|
· |
accounting
for income taxes
|
· |
impairment
of intangible assets
|
· |
deferred
revenue
|
· |
the
emergence of competitiors in our target market, and the quality and
development of their products and services;
and
|
· |
the
market’s acceptance of our products and
services.
|
· |
successfully
complete the development of our products and
services;
|
· |
modify
our products and services as necessary to meet the demands of our
market;
|
· |
attract
and retain highly skilled employees;
and
|
· |
respond
to competitive influences.
|
· |
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.
|
· |
net
tangible assets of at least $2,000,000, if the issuer has been in
continuous operation for at least three years, or net tangible assets
of
at least $5,000,000, if the issuer has been in continuous operation
for
less than three years; or
|
· |
average
annual revenue of at least $6,000,000 for the last three years.
|
No.
|
Item
|
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.
|
Date:
May 15, 2007
|
By: /s/ Etienne
Weidemann
|
Etienne
Weidemann
|
|
Chief
Executive Officer
|
|
(Principal
Executive Officer)
|
Date:
May 15, 2007
|
/s/
Paul T. Anthony
Paul
T.
Anthony
|
Chief
Financial Officer
|
|
(Principal
Accounting Officer)
|