Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2017 | Aug. 07, 2017 | |
Details | ||
Registrant Name | AUXILIO INC | |
Registrant CIK | 1,011,432 | |
SEC Form | 10-Q | |
Period End date | Jun. 30, 2017 | |
Fiscal Year End | --12-31 | |
Trading Symbol | auxo | |
Tax Identification Number (TIN) | 880,350,448 | |
Number of common stock shares outstanding | 9,501,760 | |
Filer Category | Smaller Reporting Company | |
Current with reporting | Yes | |
Voluntary filer | No | |
Well-known Seasoned Issuer | No | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q2 | |
Contained File Information, File Number | 000-27507 | |
Entity Incorporation, State Country Name | Nevada | |
Entity Address, Address Line One | 27271 Las Ramblas, Suite 200 | |
Entity Address, Address Line Two | Mission Viejo, California | |
Entity Address, Postal Zip Code | 92,691 | |
City Area Code | 949 | |
Local Phone Number | 614-0700 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 2,834,859 | $ 6,090,844 |
Accounts receivable | 11,286,721 | 9,614,486 |
Supplies | 1,073,091 | 1,087,318 |
Prepaid and other current assets | 1,514,589 | 438,140 |
Total current assets | 16,709,260 | 17,230,788 |
Property and equipment, net | 940,906 | 689,418 |
Deposits | 87,376 | 41,522 |
Deferred income taxes | 5,282,531 | 5,282,531 |
Intangible assets, net | 12,121,709 | 1,112,395 |
Goodwill | 18,525,206 | 2,109,143 |
Total assets | 53,666,988 | 26,465,797 |
Current liabilities: | ||
Accounts payable and accrued expenses | 9,647,313 | 7,736,207 |
Accrued compensation and benefits | 2,890,213 | 2,495,156 |
Deferred revenue | 1,653,904 | 562,679 |
Current portion of long-term liabilities | 4,022,339 | 606,686 |
Total current liabilities | 18,213,769 | 11,400,728 |
Long-term liabilities: | ||
Term loan, less current portion | 10,628,333 | 750,000 |
Promissory notes to related parties, less current portion | 7,500,000 | 0 |
Capital lease obligations, less current portion | 187,091 | 199,644 |
Total long-term liabilities | 18,315,424 | 949,644 |
Total liabilities | 36,529,193 | 12,350,372 |
Stockholders' equity: | ||
Common stock, par value at $0.001, 33,333,333 shares authorized, 9,499,016 and 8,185,936 shares issued and outstanding at June 30, 2017 and December 31, 2016 | 9,499 | 8,186 |
Additional paid-in capital | 30,926,034 | 27,985,448 |
Accumulated deficit | (13,797,738) | (13,878,209) |
Total stockholders' equity | 17,137,795 | 14,115,425 |
Total liabilities and stockholders' equity | $ 53,666,988 | $ 26,465,797 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS - Parenthetical - $ / shares | Jun. 30, 2017 | Dec. 31, 2016 |
Details | ||
Common Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 |
Common Stock, Shares Authorized | 33,333,333 | 33,333,333 |
Common Stock, Shares, Issued | 9,499,016 | 8,185,936 |
Common Stock, Shares, Outstanding | 9,499,016 | 8,185,936 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Details | ||||
Revenues | $ 16,798,912 | $ 15,162,070 | $ 35,053,601 | $ 29,677,709 |
Cost of revenues | 12,435,758 | 12,070,163 | 26,103,300 | 24,276,490 |
Gross profit | 4,363,154 | 3,091,907 | 8,950,301 | 5,401,219 |
Operating expenses: | ||||
Sales and marketing | 1,371,847 | 730,149 | 2,740,855 | 1,401,496 |
General and administrative expenses | 2,472,576 | 1,649,006 | 5,258,577 | 3,412,027 |
Total operating expenses | 3,844,423 | 2,379,155 | 7,999,432 | 4,813,523 |
Income from operations | 518,731 | 712,752 | 950,869 | 587,696 |
Other income (expense): | ||||
Other income | 3 | 0 | 22 | 0 |
Interest expense | (376,547) | (23,554) | (788,881) | (49,254) |
Total other income (expense) | (376,544) | (23,554) | (788,859) | (49,254) |
Income before provision for income taxes | 142,187 | 689,198 | 162,010 | 538,442 |
Income tax expense | (68,000) | (41,600) | (81,539) | (44,000) |
Net income | $ 74,187 | $ 647,598 | $ 80,471 | $ 494,442 |
Net income per share: | ||||
Basic | $ 0.01 | $ 0.08 | $ 0.01 | $ 0.06 |
Diluted | $ 0.01 | $ 0.08 | $ 0.01 | $ 0.06 |
Number of weighted average shares: | ||||
Basic | 9,438,990 | 8,170,328 | 9,328,759 | 8,160,457 |
Diluted | 10,281,042 | 8,270,914 | 10,038,271 | 8,302,490 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - 6 months ended Jun. 30, 2017 - USD ($) | Total | Common Stock | Additional Paid-in Capital | Retained Earnings |
Stockholders Equity, Beginning Balance at Dec. 31, 2016 | $ 14,115,425 | $ 8,186 | $ 27,985,448 | $ (13,878,209) |
Shares, Outstanding, Beginning Balance at Dec. 31, 2016 | 8,185,936 | |||
Stock compensation expense for options and warrants granted to employees and directors | 59,265 | $ 0 | 59,265 | 0 |
Stock compensation expense for restricted stock units granted to employees | 44,183 | 0 | 44,183 | 0 |
Common stock issued in connection with the acquisition of CynergisTek, Inc., value | 2,771,999 | $ 1,166 | 2,770,833 | 0 |
Common stock issued in connection with the acquisition of CynergisTek, Inc., shares | 1,166,666 | |||
Stock options and warrants exercised, value | $ 66,452 | $ 31 | 66,421 | 0 |
Stock options and warrants exercised, shares | 103,198 | 146,204 | ||
Reverse stock split round-up shares issued, value | $ 0 | $ 116 | (116) | 0 |
Reverse stock split round-up shares issued, shares | 210 | |||
Net income | 80,471 | $ 0 | 0 | 80,471 |
Stockholders Equity, Ending Balance at Jun. 30, 2017 | $ 17,137,795 | $ 9,499 | $ 30,926,034 | $ (13,797,738) |
Shares, Outstanding, Ending Balance at Jun. 30, 2017 | 9,499,016 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Cash flows from operating activities: | ||
Net income | $ 80,471 | $ 494,442 |
Adjustments to reconcile net income to net cash used for operating activities: | ||
Depreciation | 190,159 | 101,854 |
Amortization of intangible assets | 1,040,686 | 270,833 |
Stock compensation expense for warrants and options granted to employees and directors | 59,265 | 102,192 |
Stock compensation expense for restricted stock units granted to employees | 44,183 | 0 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 54,163 | (1,314,263) |
Supplies | 14,227 | 131,845 |
Prepaid and other current assets | (730,009) | 135,374 |
Deposits | (45,854) | 16,596 |
Accounts payable and accrued expenses | (1,104,097) | (550,036) |
Accrued compensation and benefits | (640,465) | (689,213) |
Deferred revenue | (287,087) | (314,332) |
Net cash used for operating activities | (1,324,358) | (1,614,708) |
Cash flows from investing activities: | ||
Purchases of property and equipment | (220,126) | (128,184) |
Amount paid to purchase CynergisTek, net of cash received | (13,448,522) | 0 |
Net cash used for investing activities | (13,668,648) | (128,184) |
Cash flows from financing activities: | ||
Proceeds from term loan | 14,000,000 | 0 |
Payments on term loans | (2,241,667) | (250,000) |
Payments on capital leases | (87,764) | (54,978) |
Proceeds from issuance of common stock through stock options | 66,452 | 60,151 |
Net cash provided by (used for) financing activities | 11,737,021 | (244,827) |
Net decrease in cash and cash equivalents | (3,255,985) | (1,987,719) |
Cash and cash equivalents, beginning of period | 6,090,844 | 6,436,732 |
Cash and cash equivalents, end of period | $ 2,834,859 | $ 4,449,013 |
CONDENSED CONSOLIDATED STATEME7
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) - USD ($) | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Supplemental disclosure of cash flow information: | ||
Interest paid | $ 547,672 | $ 49,254 |
Income taxes paid | 178,950 | 71,703 |
Non-cash investing and financing activities: | ||
Property and equipment acquired through capital leases | 110,864 | 22,170 |
Common stock issued in connection with the acquisition of Cynergis Tek, Inc. | 2,772,000 | 0 |
Promissory note sissued in connection with the acquisition of Cynergis Tek,Inc. | 9,000,000 | 0 |
Fair value of earn-out liability in connection with the acquisition of Cynergis Tek, Inc. | $ 2,356,000 | $ 0 |
1. Basis of Presentation
1. Basis of Presentation | 6 Months Ended |
Jun. 30, 2017 | |
Notes | |
1. Basis of Presentation | 1. BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements of Auxilio, Inc. and its subsidiaries (the “Company”, “we”, “us” or “Auxilio”) have been prepared in accordance with generally accepted accounting principles of the United States of America (“GAAP”) for interim financial statements pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, these financial statements do not include all of the information and notes required by GAAP for complete financial statements. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016, as filed with the Securities and Exchange Commission (“SEC”) on March 29, 2017. The unaudited condensed consolidated financial statements included herein reflect all adjustments (which include only normal, recurring adjustments) that are, in the opinion of management, necessary to state fairly our financial position and results of operations as of and for the periods presented. The results for such periods are not necessarily indicative of the results to be expected for the full year. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. As a result, actual results could differ from those estimates. The accompanying unaudited condensed consolidated financial statements include the accounts of Auxilio and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated. Based on our integration and management strategies, we operate in a single business segment. For the periods presented, all revenues were derived from domestic operations. As described in Note 11, the Company acquired the outstanding shares of CynergisTek, Inc. on January 13, 2017. We have performed an evaluation of subsequent events through the date of filing these unaudited condensed consolidated financial statements with the SEC. |
2. Recently Issued Accounting P
2. Recently Issued Accounting Pronouncements | 6 Months Ended |
Jun. 30, 2017 | |
Notes | |
2. Recently Issued Accounting Pronouncements | 2 RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS In November 2015, the FASB issued guidance related to the presentation of deferred income taxes. The guidance requires that deferred tax assets and liabilities be classified as non-current in a consolidated balance sheet. This guidance was adopted early by us and resulted in the Company classifying its deferred tax assets as non-current assets. In May 2014, the FASB issued guidance which provides a single, comprehensive accounting model for revenue arising from contracts with customers. This guidance supersedes most of the existing revenue recognition guidance, including industry-specific guidance. Under this model, revenue is recognized at an amount that a company expects to be entitled to upon transferring control of goods or services to a customer, as opposed to when risks and rewards transfer to a customer. The new guidance also requires additional disclosures about the nature, timing and uncertainty of revenue and cash flow arising from customer contracts, including significant judgments and changes in judgments. Considering the one-year delay in the required adoption date for the guidance as issued in July 2015, the new guidance is effective for us beginning in 2018 and may be applied retrospectively to all prior periods presented or through a cumulative adjustment to the opening retained earnings balance in the year of adoption. While the Company is in the process of evaluating the impact of the new guidance, primarily by analyzing our revenue streams, currently we do not expect that this standard will have a material impact on the Company’s consolidated financial statements. In March 2016, the FASB issued a new accounting standard regarding stock compensation: improvements to employee share-based payment accounting, that simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The new standard was effective for fiscal years beginning after December 15, 2016, including interim periods within those annual years, and early adoption was permitted. We adopted the new standard prospectively in 2017. The adoption of the new standard did not have a material effect on our consolidated financial statements for the three months and six months ended June 30, 2017, and we do not expect that the adoption of the new standard will have a material effect on our consolidated financial statements for the year ended December 31, 2017. In February 2016, the FASB issued a new accounting standard on leasing. The new standard will require companies to record most leased assets and liabilities on the balance sheet, and also proposes a dual model for recognizing expense. This guidance will be effective in the first quarter of 2019 with early adoption permitted. We have evaluated the impact of adopting this guidance and we are preparing for the changes to be made to our consolidated financial statements. We expect the adoption of these accounting changes will materially increase our assets and liabilities, but will not have a material impact on our net income or equity. In January 2017, the FASB issued a new accounting standard simplifying the test for goodwill impairment. Currently, the fair value of the reporting unit is compared with the carrying value of the reporting unit (identified as "Step 1"). If the fair value of the reporting unit is lower than its carrying amount, then the implied fair value of goodwill is calculated. If the implied fair value of goodwill is lower than the carrying value of goodwill an impairment is recognized (identified as "Step 2"). The new standard eliminates Step 2 from the impairment test; therefore, a goodwill impairment will be recognized as the difference of the fair value and the carrying value. The new standard becomes effective on January 1, 2020 with early adoption permitted. We are currently evaluating the impact that the new standard will have on our financial position, results of operations and cash flows. |
3. Options, Warrants and Restri
3. Options, Warrants and Restricted Stock Units | 6 Months Ended |
Jun. 30, 2017 | |
Notes | |
3. Options, Warrants and Restricted Stock Units | 3. OPTIONS, WARRANTS AND RESTRICTED STOCK UNITS Below is a summary of stock option, warrant and restricted stock activity during the six month period ended June 30, 2017: Options Shares Weighted Average Exercise Price Weighted Average Remaining Term in Years Aggregate Intrinsic Value Outstanding at December 31, 2016 1,454,241 $ 2.87 Granted 25,000 3.06 Exercised (103,198) 2.24 Cancelled (150,398) 2.32 Outstanding at June 30, 2017 1,225,645 $ 3.00 4.47 $ 1,950,719 Exercisable at June 30, 2017 1,041,884 $ 3.02 4.47 $ 1,637,159 During the six months ended June 30, 2017, we granted a total of 25,000 options to our employees and directors to purchase shares of our common stock at an exercise price of $3.06 per share. The exercise price equals the fair value of our stock on the grant date. The options have graded vesting annually over three years. The fair value of the options was determined using the Black-Scholes option-pricing model. The assumptions used to calculate the fair market value are as follows: (i) risk-free interest rate of 0.38%; (ii) estimated volatility of 46.29%; (iii) dividend yield of 0.0%; and (iv) expected life of the options of 3 years. Warrants Shares Weighted Average Exercise Price Weighted Average Remaining Term in Years Aggregate Intrinsic Value Outstanding at December31,2016 326,249 $ 3.14 Granted - - Exercised (43,005) 3.03 Cancelled (83,807) 3.35 Outstanding at June30, 2017 199,437 $ 3.07 5.39 $ 297,768 Exercisable at June30, 2017 199,437 $ 3.07 5.39 $ 297,768 Restricted Stock Units Shares Weighted Average Price Weighted Average Remaining Term in Years Outstanding at December 31, 2016 - $ - Granted 120,000 4.77 Exercised - - Cancelled - - Outstanding at June 30, 2017 120,000 $ 4.77 2.75 On April 1, 2017, we issued to key employees a total of 120,000 shares of restricted stock units. The shares vest after three years of continuous employment. The price of the stock on the grant date was $4.77. The cost recognized for these restricted stock units totaled $44,183 for the three and six months ended June 30, 2017, and is included in sales and marketing expense in the accompanying Condensed Consolidated Statement of Operations. For the three and six months ended June 30, 2017 and 2016, stock-based compensation expense recognized in the consolidated statements of operations as follows: Three Months Six months Ended June 30, Ended June 30, 2017 2016 2017 2016 Cost of revenues $ 16,403 $ 14,512 $ 26,924 $ 23,915 Sales and marketing 44,421 8,268 44,603 16,601 General and administrative expense 17,965 33,895 31,921 61,676 Total stock based compensation expense $ 78,789 $ 56,675 $ 103,448 $ 102,192 |
4. Net Income Per Share
4. Net Income Per Share | 6 Months Ended |
Jun. 30, 2017 | |
Notes | |
4. Net Income Per Share | For the three months ended June 30, 2017, potentially dilutive securities consisted of options and warrants to purchase 1,425,082 shares of common stock at prices ranging from $0.90 to $6.45 per share. Of these potentially dilutive securities, only 842,052 of the shares to purchase common stock from the options and warrants are included in the computation of diluted earnings per share because the effect of including the remaining instruments would be anti-dilutive. For the six months ended June 30, 2017, potentially dilutive securities consisted of options and warrants to purchase 1,425,082 shares of common stock at prices ranging from $0.90 to $6.45 per share. Of these potentially dilutive securities, only 709,512 of the shares of common stock underlying the options and warrants are included in the computation of diluted earnings per share because the effect of including the remaining instruments would be anti-dilutive. For the three months ended June 30, 2016, potentially dilutive securities consisted of options and warrants to purchase 1,992,040 shares of common stock at prices ranging from $0.90 to $6.45 per share. Of these potentially dilutive securities, only 100,586 of the shares of common stock underlying the options and warrants are included in the computation of diluted earnings per share because the effect of including the remaining instruments would be anti-dilutive. For the six months ended June 30, 2016, potentially dilutive securities consisted of options and warrants to purchase 1,992,040 shares of common stock at prices ranging from $0.90 to $6.45 per share. Of these potentially dilutive securities, only 142,033 of the shares of common stock underlying the options and warrants are included in the computation of diluted earnings per share because the effect of including the remaining instruments would be anti-dilutive. Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 Numerator: Net income $ 74,187 $ 647,598 $ 80,471 $ 494,442 Denominator: Denominator for basic calculation weighted average shares 9,438,990 8,170,328 9,328,759 8,160,457 Dilutive common stock equivalents: Options and warrants 842,052 100,586 709,512 142,033 Denominator for diluted calculation weighted average shares 10,281,042 8,270,914 10,038,271 8,302,490 Net income per share: Basic net income per share $ 0.01 $ 0.08 $ 0.01 $ 0.06 Diluted net income per share $ 0.01 $ 0.08 $ 0.01 $ 0.06 |
5. Accounts Receivable
5. Accounts Receivable | 6 Months Ended |
Jun. 30, 2017 | |
Notes | |
5. Accounts Receivable | 5. ACCOUNTS RECEIVABLE A summary of accounts receivable is as follows: June 30, 2017 December 31, 2016 Trade receivables $ 10,312,345 $ 8,046,561 Unbilled revenue, net and unapplied advances 974,376 1,567,925 Allowance for doubtful accounts - - Total accounts receivable $ 11,286,721 $ 9,614,486 |
6. Intangible Assets
6. Intangible Assets | 6 Months Ended |
Jun. 30, 2017 | |
Notes | |
6. Intangible Assets | 6. INTANGIBLE ASSETS Intangible assets are amortized over expected useful lives ranging from 1.5 to 10 years and consist of the following: June 30, 2017 December 31, 2016 Gross Gross Carrying Accumulated Carrying Accumulated Amount Amortization Amount Amortization Delphiis, Inc. Acquired technology $ 900,000 $ (780,985) $ 900,000 $ (772,484) Customer relationships 400,000 (333,487) 400,000 (316,859) Trademarks 50,000 (50,000) 50,000 (50,000) Non-compete agreements 20,000 (20,000) 20,000 (19,374) Total intangible assets, Delphiis, Inc. $ 1,370,000 $ (1,184,472) $ 1,370,000 $ (1,158,717) Redspin Acquired technology $ 1,050,000 $ (548,042) $ 1,050,000 $ (515,658) Customer relationships 600,000 (450,000) 600,000 (350,000) Trademarks 200,000 (134,060) 200,000 (122,071) Non-compete agreements 100,000 (67,135) 100,000 (61,159) Total intangible assets, Redspin $ 1,950,000 $ (1,199,237) $ 1,950,000 $ (1,048,888) CynergisTek, Inc. Acquired technology $ 8,150,000 $ (407,500) $ - $ - Customer relationships 2,150,000 (268,750) - - Trademarks 1,550,000 (155,000) - - Non-compete agreements 200,000 (33,332) - - Total intangible assets, CynergisTek, Inc. $ 12,050,000 $ (864,582) $ - $ - Total intangible assets $ 15,370,000 $ (3,248,291) $ 3,320,000 $ (2,207,605) |
7. Line of Credit and Term Loan
7. Line of Credit and Term Loan | 6 Months Ended |
Jun. 30, 2017 | |
Notes | |
7. Line of Credit and Term Loan | The Fourth Avidbank Amendment provided for a term loan facility which allowed for advances up to $4,000,000 through June 19, 2016. Our initial draw was for $2,000,000 in 2015. As of December 31, 2016, outstanding borrowings under the term loan were $1,250,000 at an interest rate of 4.75%. On January 13, 2017, this loan was repaid in full. On that date, we entered into the A&R Credit Agreement which provided a term loan facility for $14,000,000. Term loan repayments shall be in 48 monthly principal installments of $198,333, plus accrued interest at an interest rate of prime plus 1.5% per annum, followed by 12 monthly principal installments of $373,333, plus accrued interest at an interest rate of prime plus 1.5%. As of June 30, 2017, outstanding borrowings under the term loan are $13,008,333 at an interest rate of 5.75%. While there are outstanding credit extensions, we are to maintain an asset coverage ratio of cash plus accounts receivable divided by all obligations owing to the bank within one year of at least 1.50 to 1.00, measured monthly, and a fixed charge coverage ratio, whereby adjusted EBITDA for the most recent twelve months shall be no less than 1.15 to 1.00 of the sum of the following: (i) Non-Financed Capital Expenditures, (ii) taxes paid in cash during such period, (iii) Distributions paid in cash during such period, (iv) any Earnout Payment paid in cash during such period, and (v) Debt Service for such period, all as determined in accordance with GAAP. We were in compliance with all covenants as of June 30, 2017 and December 31, 2016. In connection with the A&R Credit Agreement, Auxilio, and its subsidiaries Auxilio Solutions, Inc., Delphiis, Inc., and CynergisTek, Inc. (collectively the “Borrowers”) entered into a security agreement (the “Security Agreement”), pursuant to which each of the Borrowers agreed to grant to Avidbank, in its capacity as contractual representative for itself and the other lender (the “Agent”), for the ratable benefit of itself, the Lenders and the other secured parties, a first priority security interest in certain collateral to secure prompt payment and performance of the secured obligations under the A&R Credit Agreement. Pursuant to the Security Agreement, the “Collateral” was defined as including any and all (all such terms as defined in the Security Agreement) of the Accounts, Chattel Paper, Commercial Tort Claims, Deposit Accounts, Documents, Equipment, Instruments, Inventory, Investment Property, General Intangibles, Letter of Credit Rights, Negotiable Collateral, Supporting Obligations, Vehicles, Grantors’ Books, in each case whether now existing or hereafter acquired or created, any money or other assets of any Grantor that now or hereafter come into the possession, custody, or control of Agent and any Proceeds or products of any of the foregoing, or any portion thereof. In connection with the grant of the security interest in the Collateral, each of the Borrowers made standard representations and warranties relating to ownership of the collateral, location and control of the collateral, and certain rights to payment. Additionally, in connection with the A&R Credit Agreement and the CynergisTek transaction, (see Note 11), Michael Mathews, (“Mathews”), Michael McMillan (“McMillan”), Auxilio, and Avidbank entered into a subordination agreement (the “Subordination Agreement”), pursuant to which Mathews and McMillan agreed that unless and until all of Auxilio’s obligations under the A&R Credit Agreement have been repaid in full, Mathews and McMillan would not, except as provided in the Subordination Agreement, ask, demand, sue for, take or receive, or retain, from Auxilio or any other person or entity, by setoff or in any other manner, payment of all or any part of the Subordinate Debt (as defined below), or take any other action with respect to the Subordinate Debt; forgive, cancel or discharge any of the Subordinate Debt; ask, demand or receive any security for the Subordinate Debt; amend any documents relating to the Subordinate Debt or any other agreement, instrument or document evidencing or executed in connection with the Subordinate Debt in a manner that could reasonably be expected to be adverse to Lenders or Agent (or any other holders of the obligations arising under the A&R Credit Agreement); or bring or join with any creditor in bringing any insolvency proceeding against Auxilio. Additionally, Mathews and McMillan each directed Auxilio to make, and Auxilio agreed to make, such prior payment of Auxilio’s obligations under the A&R Credit Agreement to Agent and the Lenders. The Subordination Agreement defines “Subordinate Debt” to include all debt of Auxilio owing to Mathews and McMillan (or either of them) (a) under the promissory notes due to Mathews and McMillan (the “Seller Notes”) or (b) in respect of the Earn Out Payments (described in Note 11), in either case whether now existing or hereafter arising and including all principal, premium, interest, fees, attorneys’ fees, costs, charges, expenses, reimbursement obligations, any other indemnities or guarantees in each case with respect thereto, in each case whether direct or indirect, absolute or contingent, joint or several, due or not due, primary or secondary, liquidated or unliquidated, secured or unsecured. So long as the Borrowers are not in default under the terms of the A&R Credit Agreement, Auxilio may make regular payments to Mathews and McMillan under the Seller Notes. The foregoing description of the Fourth Amendment to the Loan and Security Agreement between Avidbank and Auxilio is qualified in its entirety by reference to the terms of the Fourth Amendment to the Loan and Security Agreement, which is found as Exhibit 10.1 of our Form 10-Q filed on August 14, 2015. The foregoing descriptions of the A&R Credit Agreement, Security Agreement and Subordination Agreement are qualified in their entirety by reference to the respective agreements. These agreements are found in our Form 8-K filed on January 17, 2017 as Exhibits 99.7, 99.8, and 99.9, respectively. Interest charges associated with borrowings on the line of credit for the three and six months ended June 30, 2017 were $1,285 and $1,285, respectively. In addition, on January 13, 2017, we paid a $25,000 revolving loan commitment fee. There were borrowings on the line of credit for the three and six months ended June 30, 2016. Interest charges associated with the term loans totaled $184,964 and $343,028 for the three and six months ended June 30, 2017, respectively. In addition, on January 13, 2017, we paid a $70,000 term loan commitment fee. Interest charges associated with the term loans totaled $19,016 and $39,516 for the three and six months ended June 30, 2016, respectively. As additional consideration for the original Loan and Security Agreement, we issued Avidbank a 5-year warrant to purchase up to 24,033 shares of our common stock at an exercise price of $4.16 per share. We entered into a warrant repurchase agreement with Avidbank whereby on April 6, 2017 we paid Avidbank $4,743 to repurchase these warrants. |
8. Promissory Notes
8. Promissory Notes | 6 Months Ended |
Jun. 30, 2017 | |
Notes | |
8. Promissory Notes | 8. PROMISSORY NOTES In connection with the acquisition of CynergisTek, Inc. (Note 11) we issued two promissory notes totaling $9,000,000 to Dr. Michael G. Mathews and Michael McMillan (the “Seller Notes”), with each of the Seller Notes having an initial principal amount of $4,500,000. These Seller Notes bear interest at 8% per annum, require quarterly interest-only payments during the first 12 months, quarterly payments of principal and interest during the last 24 months, using a 36-month amortization period commencing from that point, with a balloon payment due on the maturity date. Amounts due and owing under the Seller Notes are subordinate to the right of payment due under the A&R Credit Agreement pursuant to the Subordination Agreement (Note 7). Auxilio has the right to prepay all or any portion of the outstanding principal balance of the Seller Notes, provided that such prepayment is accompanied by accrued interest on the amount of principal prepaid, calculated to the date of such prepayment. The foregoing descriptions of the Seller Notes and Subordination Agreement are qualified in their entirety by reference to the respective agreements. These agreements are found in our Form 8-K filed on January 17, 2017 as Exhibits 99.3, 99.4 and 99.9, respectively. Interest charges associated with the Seller Notes totaled $179,507 and $331,397, respectively for the three months and six months ended June 30, 2017. |
9. Employment Agreements
9. Employment Agreements | 6 Months Ended |
Jun. 30, 2017 | |
Notes | |
9. Employment Agreements | Effective January 1, 2016, we entered into an employment agreement with Paul Anthony (the “2016 Anthony Agreement”). The 2016 Anthony Agreement provides that Mr. Anthony will continue to serve as our Executive Vice President (“EVP”) and CFO. The 2016 Anthony Agreement has a term of two years, and provides for an annual base salary of $245,000. The 2016 Anthony Agreement will automatically renew for subsequent twelve (12) month terms unless either party provides advance written notice to the other that such party does not wish to renew the agreement for a subsequent twelve (12) months. Mr. Anthony also receives the customary employee benefits available to our employees. Mr. Anthony is also entitled to receive a bonus of up to $132,000 per year, the achievement of which is based on Company performance metrics. We may terminate Mr. Anthony’s employment under the 2016 Anthony Agreement without cause at any time on thirty (30) days advance written notice, at which time Mr. Anthony would receive severance pay for twelve months and be fully vested in all options and warrants granted to date. The foregoing summary of the 2016 Anthony Agreement is qualified in its entirety by reference to the full context of the employment agreement, which is found as Exhibit 10.32 to our Annual Report on Form 10-K filed with the SEC on March 30, 2016. In 2017, the Board of Directors authorized an increase in Mr. Anthony’s base salary to $250,000 and increased his potential annual bonus amount to $150,000. The employment agreements of Dr. Michael G. Mathews and Michael McMillan are described in Note 11 as part of the acquisition of CynergisTek, Inc. |
10. Concentrations
10. Concentrations | 6 Months Ended |
Jun. 30, 2017 | |
Notes | |
10. Concentrations | 10. CONCENTRATIONS Cash Concentrations At times, cash balances held in financial institutions are in excess of federally insured limits. Management performs periodic evaluations of the relative credit standing of financial institutions and limits the amount of risk by selecting financial institutions with a strong credit standing . Major Customers Our two largest customers accounted for approximately 44% of our revenues for the six months ended June 30, 2017 and our two largest customers accounted for approximately 49% of our revenues for the six months ended June 30, 2016. Our largest customers had accounts receivable totaling approximately $4,300,000 and $4,000,000 as of June 30, 2017 and December 31, 2016 respectively. |
11. Stock Purchase Agreement -
11. Stock Purchase Agreement - Cynergistek, Inc | 6 Months Ended |
Jun. 30, 2017 | |
Notes | |
11. Stock Purchase Agreement - Cynergistek, Inc | · Debt Consideration . Auxilio issued promissory notes totaling $9,000,000 to the Stockholders (the “Seller Notes”), with each of the Seller Notes having an initial principal amount of $4,500,000. The Seller Notes bear interest at 8% per annum, with quarterly interest-only payments in the first year, and quarterly payments of principal and interest in the next 24 months, using a 36-month amortization period commencing from that point, with a balloon payment due on the maturity date. Amounts due and owing under the Seller Notes are subordinate to the right of payment due under the AvidBank Loan (described below) pursuant to the Subordination Agreement. Auxilio has the right to prepay all or any portion of the outstanding principal balance of the Seller Notes, provided that such prepayment is accompanied by accrued interest on the amount of principal prepaid, calculated to the date of such prepayment. · Earn-out Consideration . The Stockholders may be entitled to an additional $7,500,000 based upon the financial performance of CynergisTek after closing of the CynergisTek Transaction, to be calculated based upon EBITDA generated by the CynergisTek business during the earn-out period, which began as of January 1, 2017, and ends on December 31, 2021 (the “Earn-out Payments”). The estimated fair value of the earn-out was approximately $2.3 million at closing. Pursuant to the SPA, CynergisTek and the Stockholders agreed to deliver to Auxilio certificates representing the Shares; the corporate record books of CynergisTek; and the employment agreements (described below). Auxilio agreed to deliver the Cash Consideration, the Securities Consideration, the Debt Consideration and the signed employment agreements. By agreement of the parties, the effective date of the CynergisTek Transaction for accounting purposes was January 1, 2017. In connection with the SPA, the Company and the Stockholders also entered into a registration rights agreement (the “Registration Rights Agreement”) and employment agreements, each of which is discussed below. Registration Rights Agreement Pursuant to the Registration Rights Agreement between Auxilio and the Stockholders, Auxilio agreed to grant piggy-back registration rights under certain circumstances, and demand registration rights under other circumstances. Briefly, for the piggy-back rights, if Auxilio proposes to register the sale of any of its stock or other securities under the Securities Act of 1933, as amended (the “Securities Act”) in connection with the public offering of such securities solely for cash, or the resale of shares of its common stock by other selling stockholders, Auxilio agreed that prior to such filing, it will give written notice to the Stockholders of its intention to do so. Upon the written request of a Stockholder given within twenty (20) days after Auxilio provides such notice (which request shall state the intended method of disposition of such registrable securities by the Stockholder), Auxilio will file a registration statement to register the resale of all such registrable securities which Auxilio has been requested by such Stockholder to register. With respect to the demand registration rights, Auxilio agreed that in the event that Auxilio fails to file timely public reports with the U.S. Securities and Exchange Commission if and as required by the Securities Exchange Act of 1934, as amended, then the Stockholders shall have the right, by delivering written notice to Auxilio (a “Demand Notice”), to require Auxilio to register the number of registrable securities requested to be so registered pursuant to the terms of the Registration Rights Agreement (a “Demand Registration”). Following the receipt of a Demand Notice for a Demand Registration, Auxilio agreed to file a registration statement not later than sixty (60) days after such Demand Notice, and will use its commercially reasonable efforts to cause such registration statement to be declared effective under the Securities Act as promptly as practicable after the filing thereof. Additionally, pursuant to the Registration Rights Agreement, the rights of the Stockholders to deliver a Demand Notice for a Demand Registration shall not be effective at any time when the registrable securities held by such Stockholder may be resold under Rule 144 of the Securities Act without regard to any volume limitation requirements under Rule 144 of the Securities Act. Employment Agreements In connection with the SPA, Auxilio and each of the Stockholders entered into an employment agreement, pursuant to which McMillan was appointed President and Chief Strategy Officer of Auxilio, and Mathews was appointed Executive Vice President of Auxilio. McMillan Employment Agreement. Auxilio and McMillan entered into an employment agreement (the “McMillan Employment Agreement”), pursuant to which Auxilio employs McMillan as President and Chief Strategy Officer of Auxilio. McMillan agreed that his duties for Auxilio and its subsidiaries CynergisTek, Inc. and Delphiis, Inc. would be substantially similar to those duties that McMillan has performed on behalf of CynergisTek, and would include, without limitation, responsibility for executive leadership and business development strategy. McMillan also agreed to perform additional duties as reasonably assigned by Auxilio’s Chief Executive Officer, and/or Board of Directors in order to advance the interests of Auxilio and its subsidiaries. The initial term of the McMillan Employment Agreement is 36 months from January 13, 2017, and will automatically renew for subsequent 12-month terms unless either party provides written notice to the other party of a desire to not renew the agreement. Pursuant to the McMillan Employment Agreement, McMillan’s base salary is $250,000, and he is entitled to incentive bonus compensation and equity compensation (consisting of stock options), as set forth in the McMillan Employment Agreement. Auxilio has the right to terminate McMillan’s employment without cause at any time on thirty (30) days’ advance written notice to McMillan. Additionally, McMillan has the right to resign for “Good Reason” (as defined in the McMillan Employment Agreement) on thirty (30) days’ written notice. In the event of (i) such termination without cause, or (ii) McMillan’s inability to perform the essential functions of his position due to a mental or physical disability or his death, or (iii) McMillan’s resignation for Good Reason, McMillan is entitled to receive the base salary then in effect and full target annual bonus, prorated to the date of termination, and a “Severance Payment” equivalent to (a) payment of compensation for an additional twelve months, payable as a lump sum, and (b) the acceleration of all unvested stock options and warrants then held by McMillan, subject to certain conditions set forth in the McMillan Employment Agreement. In addition, if McMillan is terminated by Auxilio without cause (as defined in the McMillan Employment Agreement), certain of the Earn-out Payments will accelerate and become immediately due and payable, as set forth in the SPA. If McMillan resigns for other than Good Reason, he will be entitled to receive the base salary for the thirty (30) day written notice period, but no other amounts. Mathews Employment Agreement. Auxilio and Mathews entered into an employment agreement (the “Mathews Employment Agreement”), pursuant to which Auxilio employs Mathews as Executive Vice President of Auxilio. (Mathews was also appointed Chief Operation Officer on April 27, 2017). Mathews agreed that his duties for Auxilio and its subsidiaries CynergisTek, Inc. and Delphiis, Inc. would be substantially similar to those duties that Mathews has performed on behalf of CynergisTek, and would include, without limitation, day-to-day P&L responsibility for the cybersecurity service business line. Mathews also agreed to perform additional duties as reasonably assigned by Auxilio’s President, Chief Executive Officer, and/or Board of Directors in order to advance the interests of Auxilio and its subsidiaries. The initial term of the Mathews Employment Agreement is 36 months from January 13, 2017, and will automatically renew for subsequent 12-month terms unless either party provides written notice to the other party of a desire to not renew the agreement. Pursuant to the Mathews Employment Agreement, Mathew’s base salary is $250,000, and he is entitled to incentive bonus compensation and equity compensation (consisting of stock options), as set forth in the Mathews Employment Agreement. Auxilio has the right to terminate Mathew’s employment without cause at any time on thirty (30) days’ advance written notice to Mathews. Additionally, Mathews has the right to resign for “Good Reason” (as defined in the Mathews Employment Agreement) on thirty (30) days’ written notice. In the event of (i) such termination without cause, or (ii) Mathew’s inability to perform the essential functions of his position due to a mental or physical disability or his death, or (iii) Mathew’s resignation for Good Reason, Mathews is entitled to receive the base salary then in effect and full target annual bonus, prorated to the date of termination, and a “Severance Payment” equivalent to (a) payment of compensation for an additional twelve months, payable as a lump sum, and (b) the acceleration of all unvested stock options and warrants then held by Mathews, subject to certain conditions set forth in the Mathews Employment Agreement. In addition, if Mathews is terminated by Auxilio without cause (as defined in the Mathews Employment Agreement), certain of the Earn-out Payments will accelerate and become immediately due and payable, as set forth in the SPA. If Mathews resigns for other than Good Reason, he will be entitled to receive the base salary for the thirty (30) day written notice period, but no other amounts. Amended and Restated Credit Agreement and Related Agreements Also on January 13, 2017, Auxilio, and its subsidiaries Auxilio Solutions, Inc., a California corporation (“Solutions”), Delphiis, Inc., a California corporation (“Delphiis”), and immediately upon the consummation of the CynergisTek Transaction, CynergisTek (with Auxilio, Solutions, Delphiis, CynergisTek and such other subsidiaries collectively referred to as “Borrowers”), entered into an Amended and Restated Credit Agreement (the “A&R Credit Agreement”) with ZB, N.A., dba California Bank and Trust (“CBT”), and Avidbank, a California banking corporation (“Avidbank,” and together with CBT, the “Lenders”), as well as Avidbank in its capacity as contractual representative for itself and the other lender (“Agent”). By way of background, Auxilio and Solutions on the one hand and Avidbank on the other hand previously entered into a Loan and Security Agreement, dated as of April 19, 2012 (as amended to date, the “Original Credit Agreement”), pursuant to which Avidbank extended to Auxilio and Solutions a term loan and a revolving line of credit. Subsequently, Auxilio advised Agent that Auxilio desired to acquire 100% of the ownership interests of CynergisTek pursuant to the SPA. The CynergisTek Transaction is prohibited by Section 7.3 of the Original Credit Agreement. Borrowers requested that Lenders (1) consent to the CynergisTek Transaction, and (2) provide additional financing in order to finance, in part, Auxilio’s obligations under the SPA. Agent and Lenders agreed with such request in accordance with and subject to the terms and conditions of the A&R Credit Agreement and other related documents defined in the A&R Credit Agreement (the “Loan Documents”). In connection with the entry into the A&R Credit Agreement, the parties to the A&R Credit Agreement agreed that CynergisTek automatically would become a Borrower under the A&R Credit Agreement and under the Loan Documents on the closing date immediately upon consummation of the CynergisTek Transaction (and not prior thereto), without further action required by any party. Accordingly, the parties to the A&R Credit Agreement agreed that the A&R Credit Agreement and the Loan Documents would amend and restate the Original Credit Agreement in its entirety, and continue the obligations incurred thereunder and evidenced thereby. Additionally, any amounts outstanding under the Original Credit Agreement were repaid in full immediately prior to the execution of the A&R Credit Agreement. Loan Facilities Term Loans: Pursuant to the A&R Credit Agreement, the Lenders agreed to provide term loans in the aggregate amount of $14,000,000 to Auxilio, which was paid to the Stockholders as part of the Cash Consideration in the CynergisTek Transaction (described above). The term loans bear interest at a rate of Prime plus 1.5%, and the loans mature on January 12, 2022. Revolving Line of Credit: Additionally, pursuant to the A&R Credit Agreement, the Lenders agreed to provide revolving loans to the Borrowers in an aggregate amount of up to $5,000,000. At the closing of the CynergisTek Transaction, no draws were made on the revolving loans. Security Agreement In connection with the A&R Credit Agreement, the Borrowers and the Agent entered into a security agreement (the “Security Agreement”), pursuant to which each of the Borrowers agreed to grant to Agent, for the ratable benefit of itself, the Lenders and the other secured parties, a first priority security interest in certain collateral to secure prompt payment and performance of the secured obligations under the A&R Credit Agreement. Pursuant to the Security Agreement, the “Collateral” was defined as including any and all (all such terms as defined in the Security Agreement) of the Accounts, Chattel Paper, Commercial Tort Claims, Deposit Accounts, Documents, Equipment, Instruments, Inventory, Investment Property, General Intangibles, Letter of Credit Rights, Negotiable Collateral, Supporting Obligations, Vehicles, Grantors’ Books, in each case whether now existing or hereafter acquired or created, any money or other assets of any Grantor that now or hereafter come into the possession, custody, or control of Agent and any Proceeds or products of any of the foregoing, or any portion thereof. In connection with the grant of the security interest in the Collateral, each of the Borrowers made standard representations and warranties relating to ownership of the collateral, location and control of the collateral, and certain rights to payment. Seller Subordination Agreement Additionally, in connection with the A&R Credit Agreement and the CynergisTek Transaction, Mathews, McMillan, Auxilio, and Avidbank entered into a subordination agreement (the “Subordination Agreement”), pursuant to which Mathews and McMillan agreed that unless and until all of Auxilio’s obligations under the A&R Credit Agreement have been repaid in full, Mathews and McMillan would not, except as provided in the Subordination Agreement, ask, demand, sue for, take or receive, or retain, from Auxilio or any other person or entity, by setoff or in any other manner, payment of all or any part of the Subordinate Debt (as defined below), or take any other action with respect to the Subordinate Debt; forgive, cancel or discharge any of the Subordinate Debt; ask, demand or receive any security for the Subordinate Debt; amend any documents relating to the Subordinate Debt or any other agreement, instrument or document evidencing or executed in connection with the Subordinate Debt in a manner that could reasonably be expected to be adverse to Lenders or Agent (or any other holders of the obligations arising under the A&R Credit Agreement); or bring or join with any creditor in bringing any insolvency proceeding against Auxilio. Additionally, Mathews and McMillan each directed Auxilio to make, and Auxilio agreed to make, such prior payment of Auxilio’s obligations under the A&R Credit Agreement to Agent and the Lenders. The Subordination Agreement defines “Subordinate Debt” to include all debt of Auxilio owing to Mathews and McMillan (or either of them) (a) under the Seller Notes or (b) in respect of the Earn Out Payments (described above), in either case whether now existing or hereafter arising and including all principal, premium, interest, fees, attorneys’ fees, costs, charges, expenses, reimbursement obligations, any other indemnities or guarantees in each case with respect thereto, in each case whether direct or indirect, absolute or contingent, joint or several, due or not due, primary or secondary, liquidated or unliquidated, secured or unsecured. So long as the Borrowers are not in default under the terms of the A&R Credit Agreement, Auxilio may make regular payments to the Stockholders under the Seller Notes. The preliminary allocation of the purchase price of the assets acquired and liabilities assumed based on their fair values was as follows: Acquired technology $ 8,150,000 Customer relationships 2,150,000 Trademarks 1,550,000 Non-compete agreements 200,000 Goodwill 16,416,063 Cash 754,125 Accounts receivable 1,726,398 Other assets 346,439 Fixed assets, net 110,657 Accounts payable and accrued expenses (659,203) Accrued compensation (1,035,522) Deferred revenue (1,378,312) Total $ 28,330,645 Purchased identifiable intangible assets are amortized on a straight-line basis over the respective useful lives. Estimated useful lives of the identifiable intangible assets acquired ranges from three to ten years. We also recognized goodwill of $16,416,063. Goodwill is recognized as we expect to be able to realize synergies between the two companies, primarily our ability to provide market and reach for the Redspin products and services to Auxilio’s customers. The Company incurred approximately $330,000 in legal, accounting and other professional fees related to this acquisition, of which approximately $174,000 were expensed during the six months ended June 30, 2017. As of the date of this report, management is still in the process of determining the final accounting related to the CynergisTek transaction. Because management’s analysis has not yet been completed, the Company’s determination of the purchase price and the resulting purchase price allocation is preliminary. Pro Forma Information The following supplemental unaudited pro forma information presents the combined operating results of the Company and the acquired business during the three and six months ended June 30, 2017 and 2016, as if the acquisition had occurred at the beginning of each of the periods presented. The pro forma information is based on the historical financial statements of the Company and that of the acquired business. Amounts are not necessarily indicative of the results that may have been attained had the combinations been in effect at the beginning of the periods presented or that may be achieved in the future. Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 Pro forma revenue $ 16,798,912 $ 19,006,922 $ 35,053,601 $ 36,663,082 Pro forma net income $ 74,187 $ 646,285 $ 80,471 $ 404,850 Pro forma basic net income per share $ 0.01 $ 0.07 $ 0.01 $ 0.04 Pro forma diluted net income per share $ 0.01 $ 0.07 $ 0.01 $ 0.04 |
3. Options, Warrants and Rest19
3. Options, Warrants and Restricted Stock Units (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Tables/Schedules | |
Schedule of Stock Options, Activity | Below is a summary of stock option, warrant and restricted stock activity during the six month period ended June 30, 2017: Options Shares Weighted Average Exercise Price Weighted Average Remaining Term in Years Aggregate Intrinsic Value Outstanding at December 31, 2016 1,454,241 $ 2.87 Granted 25,000 3.06 Exercised (103,198) 2.24 Cancelled (150,398) 2.32 Outstanding at June 30, 2017 1,225,645 $ 3.00 4.47 $ 1,950,719 Exercisable at June 30, 2017 1,041,884 $ 3.02 4.47 $ 1,637,159 |
Schedule of Warrants, Activity | Warrants Shares Weighted Average Exercise Price Weighted Average Remaining Term in Years Aggregate Intrinsic Value Outstanding at December31,2016 326,249 $ 3.14 Granted - - Exercised (43,005) 3.03 Cancelled (83,807) 3.35 Outstanding at June30, 2017 199,437 $ 3.07 5.39 $ 297,768 Exercisable at June30, 2017 199,437 $ 3.07 5.39 $ 297,768 |
Schedule of Restricted Stock Units, Activity | Restricted Stock Units Shares Weighted Average Price Weighted Average Remaining Term in Years Outstanding at December 31, 2016 - $ - Granted 120,000 4.77 Exercised - - Cancelled - - Outstanding at June 30, 2017 120,000 $ 4.77 2.75 |
Schedule of Stock-Based Compensation Exprense Allocation | For the three and six months ended June 30, 2017 and 2016, stock-based compensation expense recognized in the consolidated statements of operations as follows: Three Months Six months Ended June 30, Ended June 30, 2017 2016 2017 2016 Cost of revenues $ 16,403 $ 14,512 $ 26,924 $ 23,915 Sales and marketing 44,421 8,268 44,603 16,601 General and administrative expense 17,965 33,895 31,921 61,676 Total stock based compensation expense $ 78,789 $ 56,675 $ 103,448 $ 102,192 |
4. Net Income Per Share (Tables
4. Net Income Per Share (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Tables/Schedules | |
Schedule of Computation of Earnings Per Share, Basic and Diluted | Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 Numerator: Net income $ 74,187 $ 647,598 $ 80,471 $ 494,442 Denominator: Denominator for basic calculation weighted average shares 9,438,990 8,170,328 9,328,759 8,160,457 Dilutive common stock equivalents: Options and warrants 842,052 100,586 709,512 142,033 Denominator for diluted calculation weighted average shares 10,281,042 8,270,914 10,038,271 8,302,490 Net income per share: Basic net income per share $ 0.01 $ 0.08 $ 0.01 $ 0.06 Diluted net income per share $ 0.01 $ 0.08 $ 0.01 $ 0.06 |
5. Accounts Receivable (Tables)
5. Accounts Receivable (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Tables/Schedules | |
Schedule of Accounts Receivable | A summary of accounts receivable is as follows: June 30, 2017 December 31, 2016 Trade receivables $ 10,312,345 $ 8,046,561 Unbilled revenue, net and unapplied advances 974,376 1,567,925 Allowance for doubtful accounts - - Total accounts receivable $ 11,286,721 $ 9,614,486 |
6. Intangible Assets (Tables)
6. Intangible Assets (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Tables/Schedules | |
Schedule of Intangible Assets | Intangible assets are amortized over expected useful lives ranging from 1.5 to 10 years and consist of the following: June 30, 2017 December 31, 2016 Gross Gross Carrying Accumulated Carrying Accumulated Amount Amortization Amount Amortization Delphiis, Inc. Acquired technology $ 900,000 $ (780,985) $ 900,000 $ (772,484) Customer relationships 400,000 (333,487) 400,000 (316,859) Trademarks 50,000 (50,000) 50,000 (50,000) Non-compete agreements 20,000 (20,000) 20,000 (19,374) Total intangible assets, Delphiis, Inc. $ 1,370,000 $ (1,184,472) $ 1,370,000 $ (1,158,717) Redspin Acquired technology $ 1,050,000 $ (548,042) $ 1,050,000 $ (515,658) Customer relationships 600,000 (450,000) 600,000 (350,000) Trademarks 200,000 (134,060) 200,000 (122,071) Non-compete agreements 100,000 (67,135) 100,000 (61,159) Total intangible assets, Redspin $ 1,950,000 $ (1,199,237) $ 1,950,000 $ (1,048,888) CynergisTek, Inc. Acquired technology $ 8,150,000 $ (407,500) $ - $ - Customer relationships 2,150,000 (268,750) - - Trademarks 1,550,000 (155,000) - - Non-compete agreements 200,000 (33,332) - - Total intangible assets, CynergisTek, Inc. $ 12,050,000 $ (864,582) $ - $ - Total intangible assets $ 15,370,000 $ (3,248,291) $ 3,320,000 $ (2,207,605) |
11. Stock Purchase Agreement 23
11. Stock Purchase Agreement - Cynergistek, Inc (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Business Acquisition, Pro Forma Information | Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 Pro forma revenue $ 16,798,912 $ 19,006,922 $ 35,053,601 $ 36,663,082 Pro forma net income $ 74,187 $ 646,285 $ 80,471 $ 404,850 Pro forma basic net income per share $ 0.01 $ 0.07 $ 0.01 $ 0.04 Pro forma diluted net income per share $ 0.01 $ 0.07 $ 0.01 $ 0.04 |
Cynergistek Inc | |
Schedule of Allocation of the Purchase Price of the Assets Acquired and Liabilities Assumed | The preliminary allocation of the purchase price of the assets acquired and liabilities assumed based on their fair values was as follows: Acquired technology $ 8,150,000 Customer relationships 2,150,000 Trademarks 1,550,000 Non-compete agreements 200,000 Goodwill 16,416,063 Cash 754,125 Accounts receivable 1,726,398 Other assets 346,439 Fixed assets, net 110,657 Accounts payable and accrued expenses (659,203) Accrued compensation (1,035,522) Deferred revenue (1,378,312) Total $ 28,330,645 |
3. Options, Warrants and Rest24
3. Options, Warrants and Restricted Stock Units: Schedule of Stock Options, Activity (Details) | 6 Months Ended |
Jun. 30, 2017USD ($)$ / sharesshares | |
Details | |
Outstanding, Beginning Balance | shares | 1,454,241 |
Outstanding, Weighted Average Exercise Price, Beginning Balance | $ / shares | $ 2.87 |
Granted | shares | 25,000 |
Granted, Weighted Average Exercise Price | $ / shares | $ 3.06 |
Exercised | shares | (103,198) |
Exercised, Weighted Average Exercise Price | $ / shares | $ 2.24 |
Cancelled | shares | (150,398) |
Cancelled, Weighted Average Exercise Price | $ / shares | $ 2.32 |
Outstanding, Ending Balance | shares | 1,225,645 |
Outstanding, Weighted Average Exercise Price, Ending Balance | $ / shares | $ 3 |
Outstanding, Weighted Average Remaining Term in Years | 4 years 5 months 19 days |
Outstanding, Aggregate Intrinsic Value | $ | $ 1,950,719 |
Exercisable | shares | 1,041,884 |
Exercisable, Weighted Average Exercise Price | $ / shares | $ 3.02 |
Exercisable, Weighted Average Remaining Term in Years | 4 years 5 months 19 days |
Exercisable, Aggregate Intrinsic Value | $ | $ 1,637,159 |
3. Options, Warrants and Rest25
3. Options, Warrants and Restricted Stock Units (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Granted | 25,000 | |||
Granted, Weighted Average Exercise Price | $ 3.06 | |||
Fair Value Assumptions, Method Used | Black-Scholes option-pricing model | |||
Fair Value Assumptions, Risk Free Interest Rate | 38.00% | |||
Fair Value Assumptions, Expected Volatility Rate | 4629.00% | |||
Fair Value Assumptions, Expected Dividend Rate | 0.00% | |||
Fair Value Assumptions, Expected Term | 3 years | |||
Stock-based compensation expense | $ 78,789 | $ 56,675 | $ 103,448 | $ 102,192 |
Selling and Marketing Expense | ||||
Stock-based compensation expense | $ 44,421 | $ 8,268 | $ 44,603 | $ 16,601 |
Restricted Stock Units (RSUs) | ||||
Granted | 120,000 | |||
Granted, Weighted Average Price | $ 4.77 | |||
Restricted Stock Units (RSUs) | Selling and Marketing Expense | ||||
Stock-based compensation expense | $ 44,183 |
3. Options, Warrants and Rest26
3. Options, Warrants and Restricted Stock Units: Schedule of Warrants, Activity (Details) - Warrant | 6 Months Ended |
Jun. 30, 2017USD ($)$ / sharesshares | |
Outstanding, Beginning Balance | shares | 326,249 |
Outstanding, Weighted Average Exercise Price, Beginning Balance | $ 3.14 |
Granted | shares | 0 |
Granted, Weighted Average Exercise Price | $ 0 |
Exercised | shares | (43,005) |
Exercised, Weighted Average Exercise Price | $ 3.03 |
Cancelled | shares | (83,807) |
Cancelled, Weighted Average Exercise Price | $ 3.35 |
Outstanding, Ending Balance | shares | 199,437 |
Outstanding, Weighted Average Exercise Price, Ending Balance | $ 3.07 |
Outstanding, Weighted Average Remaining Contractual Life | 5.39 |
Outstanding, Intrinsic Value | $ | $ 297,768 |
Exercisable | 199,437 |
Exercisable, Weighted Average Exercise Price | $ 3.07 |
Exercisable, Weighted Average Remaining Contractual Life | 5.39 |
Exercisable, Intrinsic Value | $ | $ 297,768 |
3. Options, Warrants and Rest27
3. Options, Warrants and Restricted Stock Units: Schedule of Restricted Stock Units, Activity (Details) - Restricted Stock Units (RSUs) | 6 Months Ended |
Jun. 30, 2017$ / sharesshares | |
Outstanding, Beginning Balance | 0 |
Outstanding, Weighted Average Price, Beginning Balance | $ / shares | $ 0 |
Granted | 120,000 |
Granted, Weighted Average Price | $ / shares | $ 4.77 |
Exercised | 0 |
Exercised, Weighted Average Price | $ / shares | $ 0 |
Cancelled | 0 |
Cancelled, Weighted Average Price | 0 |
Outstanding, Ending Balance | 120,000 |
Outstanding, Weighted Average Price, Ending Balance | $ / shares | $ 4.77 |
Outstanding, Weighted Average Remaining Term in Years | 2 years 9 months |
3. Options, Warrants and Rest28
3. Options, Warrants and Restricted Stock Units: Schedule of Stock-Based Compensation Exprense Allocation (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Stock-based compensation expense | $ 78,789 | $ 56,675 | $ 103,448 | $ 102,192 |
Cost of Sales | ||||
Stock-based compensation expense | 16,403 | 14,512 | 26,924 | 23,915 |
Selling and Marketing Expense | ||||
Stock-based compensation expense | 44,421 | 8,268 | 44,603 | 16,601 |
General and Administrative Expense | ||||
Stock-based compensation expense | $ 17,965 | $ 33,895 | $ 31,921 | $ 61,676 |
4. Net Income Per Share (Detail
4. Net Income Per Share (Details) - $ / shares | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Details | ||||
Potentially dilutive securities | 1,425,082 | 1,992,040 | 1,425,082 | 1,992,040 |
Exercise Price Range, Lower Range Limit | $ 0.90 | $ 0.90 | $ 0.90 | $ 0.90 |
Exercise Price Range, Upper Range Limit | $ 6.45 | $ 6.45 | $ 6.45 | $ 6.45 |
Options and warrants | 842,052 | 100,586 | 709,512 | 142,033 |
4. Net Income Per Share_ Schedu
4. Net Income Per Share: Schedule of Computation of Earnings Per Share, Basic and Diluted (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Numerator: | ||||
Net income | $ 74,187 | $ 647,598 | $ 80,471 | $ 494,442 |
Denominator: | ||||
Denominator for basic calculation weighted average shares | 9,438,990 | 8,170,328 | 9,328,759 | 8,160,457 |
Dilutive Common Stock equivalents | ||||
Options and warrants | 842,052 | 100,586 | 709,512 | 142,033 |
Diluted | 10,281,042 | 8,270,914 | 10,038,271 | 8,302,490 |
Net income per share: | ||||
Basic net income per share | $ 0.01 | $ 0.08 | $ 0.01 | $ 0.06 |
Diluted net income per share | $ 0.01 | $ 0.08 | $ 0.01 | $ 0.06 |
5. Accounts Receivable_ Schedul
5. Accounts Receivable: Schedule of Accounts Receivable (Details) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Details | ||
Trade receivables | $ 10,312,345 | $ 8,046,561 |
Unbilled revenue, net and unapplied advances | 974,376 | 1,567,925 |
Allowance for doubtful accounts | 0 | 0 |
Accounts receivable | $ 11,286,721 | $ 9,614,486 |
6. Intangible Assets_ Schedule
6. Intangible Assets: Schedule of Intangible Assets (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2017 | Dec. 31, 2016 | |
Delphiis, Inc. | ||
Gross Carrying Amount | $ 1,370,000 | $ 1,370,000 |
Accumulated Amortization | (1,184,472) | (1,158,717) |
Delphiis, Inc. | Technology-Based Intangible Assets | ||
Gross Carrying Amount | 900,000 | 900,000 |
Accumulated Amortization | (780,985) | (772,484) |
Delphiis, Inc. | Customer Relationships | ||
Gross Carrying Amount | 400,000 | 400,000 |
Accumulated Amortization | (333,487) | (316,859) |
Delphiis, Inc. | Trademarks | ||
Gross Carrying Amount | 50,000 | 50,000 |
Accumulated Amortization | (50,000) | (50,000) |
Delphiis, Inc. | Noncompete Agreements | ||
Gross Carrying Amount | 20,000 | 20,000 |
Accumulated Amortization | (20,000) | (19,374) |
Redspin, Inc. | ||
Gross Carrying Amount | 1,950,000 | 1,950,000 |
Accumulated Amortization | (1,199,237) | (1,048,888) |
Redspin, Inc. | Technology-Based Intangible Assets | ||
Gross Carrying Amount | 1,050,000 | 1,050,000 |
Accumulated Amortization | (548,042) | (515,658) |
Redspin, Inc. | Customer Relationships | ||
Gross Carrying Amount | 600,000 | 600,000 |
Accumulated Amortization | (450,000) | (350,000) |
Redspin, Inc. | Trademarks | ||
Gross Carrying Amount | 200,000 | 200,000 |
Accumulated Amortization | (134,060) | (122,071) |
Redspin, Inc. | Noncompete Agreements | ||
Gross Carrying Amount | 100,000 | 100,000 |
Accumulated Amortization | (67,135) | (61,159) |
Cynergistek Inc | ||
Gross Carrying Amount | 12,050,000 | 0 |
Accumulated Amortization | (864,582) | 0 |
Cynergistek Inc | Technology-Based Intangible Assets | ||
Gross Carrying Amount | 8,150,000 | 0 |
Accumulated Amortization | (407,500) | 0 |
Cynergistek Inc | Customer Relationships | ||
Gross Carrying Amount | 2,150,000 | 0 |
Accumulated Amortization | (268,750) | 0 |
Cynergistek Inc | Trademarks | ||
Gross Carrying Amount | 1,550,000 | 0 |
Accumulated Amortization | (155,000) | 0 |
Cynergistek Inc | Noncompete Agreements | ||
Gross Carrying Amount | 200,000 | 0 |
Accumulated Amortization | $ (33,332) | $ 0 |
Minimum | ||
Intangible Asset, Useful Life | 1 year 6 months | |
Maximum | ||
Intangible Asset, Useful Life | 10 years |
7. Line of Credit and Term Lo33
7. Line of Credit and Term Loan (Details) - USD ($) | Apr. 06, 2017 | Jan. 13, 2017 | Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2015 | Jan. 17, 2017 | Jun. 19, 2016 | Jun. 19, 2015 | May 04, 2012 |
Line of Credit Facility, Initiation Date | May 4, 2012 | ||||||||||
A&R Credit Agreement Term Loan | |||||||||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 14,000,000 | ||||||||||
Debt Instrument, Maturity Date | Jan. 12, 2022 | ||||||||||
Debt Instrument, Description of Variable Rate Basis | Prime | prime | |||||||||
Debt Instrument, Interest Rate, Effective Percentage | 575.00% | 575.00% | |||||||||
Long-term Line of Credit | $ 13,008,333 | $ 13,008,333 | |||||||||
Debt Instrument, Basis Spread on Variable Rate | 150.00% | ||||||||||
Debt Instrument, Covenant Description | While there are outstanding credit extensions, we are to maintain an asset coverage ratio of cash plus accounts receivable divided by all obligations owing to the bank within one year of at least 1.50 to 1.00, measured monthly, and a fixed charge coverage ratio, whereby adjusted EBITDA for the most recent twelve months shall be no less than 1.15 to 1.00 of the sum of the following: (i) Non-Financed Capital Expenditures, (ii) taxes paid in cash during such period, (iii) Distributions paid in cash during such period, (iv) any Earnout Payment paid in cash during such period, and (v) Debt Service for such period, all as determined in accordance with GAAP. We were in compliance with all covenants as of June 30, 2017 and December 31, 2016. | ||||||||||
A&R Credit Agreement Term Loan | Debt Instrument, Redemption, Period One | |||||||||||
Debt Instrument, Periodic Payment, Principal | $ 198,333 | ||||||||||
Debt Instrument, Basis Spread on Variable Rate | 150.00% | ||||||||||
A&R Credit Agreement Term Loan | Debt Instrument, Redemption, Period Two | |||||||||||
Debt Instrument, Periodic Payment, Principal | $ 373,333 | ||||||||||
Debt Instrument, Basis Spread on Variable Rate | 150.00% | ||||||||||
Avidbank | Term Loan | |||||||||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 4,000,000 | ||||||||||
Long-term Line of Credit | $ 1,250,000 | $ 1,250,000 | $ 2,000,000 | ||||||||
Debt Instrument, Interest Rate, Stated Percentage | 475.00% | 475.00% | |||||||||
Interest Charges | $ 184,964 | $ 19,016 | $ 343,028 | $ 39,516 | |||||||
Debt Instrument, Fee Amount | $ 70,000 | ||||||||||
Avidbank | Line of Credit | |||||||||||
Long-term Line of Credit | $ 0 | $ 0 | |||||||||
Interest Charges | $ 1,285 | $ 1,285 | |||||||||
Debt Instrument, Fee Amount | $ 25,000 | ||||||||||
Loan and Security Agreement | Avidbank | |||||||||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 2,000,000 | ||||||||||
Line of Credit Facility, Borrowing Capacity, Description | The amount available to us at any given time is the lesser of (a) $5.0 million, or (b) the amount available under our borrowing base (80% of our eligible accounts, minus (1) accrued client lease payables, and minus (2) accrued equipment pool liability). As of June 30, 2017, and December 31, 2016, no amounts were outstanding under the line of credit. | ||||||||||
Warrant exercise price | $ 4.16 | ||||||||||
Loan and Security Agreement | Avidbank | Warrant | |||||||||||
Stock Repurchased During Period, Shares | 24,033 | ||||||||||
Stock Repurchased During Period, Value | $ 4,743 | ||||||||||
Loan and Security Agreement | Avidbank | Term Loan | |||||||||||
Debt Instrument, Maturity Date | Jun. 19, 2017 | ||||||||||
Debt Instrument, Description of Variable Rate Basis | prime plus 1.0% per annum | prime plus 0.75% per annum | |||||||||
Loan and Security Agreement | Avidbank | Line of Credit | |||||||||||
Debt Instrument, Interest Rate, Effective Percentage | 525.00% | 525.00% |
8. Promissory Notes (Details)
8. Promissory Notes (Details) - Seller Notes - USD ($) | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2017 | Jan. 17, 2017 | |
Debt Instrument, Face Amount | $ 9,000,000 | ||
Debt Instrument, Interest Rate, Stated Percentage | 800.00% | ||
Interest Charges | $ 179,507 | $ 331,397 | |
Michael Mathews | |||
Debt Instrument, Face Amount | $ 4,500,000 | ||
Michael Mcmillan | |||
Debt Instrument, Face Amount | $ 4,500,000 |
9. Employment Agreements (Detai
9. Employment Agreements (Details) - USD ($) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2017 | Dec. 31, 2016 | |
Chief Executive Officer | ||
Base Salary, Annual Amount | $ 300,000 | |
Salary Bonus, Annual Amount | 180,000 | |
Chief Financial Officer | ||
Base Salary, Annual Amount | 250,000 | $ 245,000 |
Salary Bonus, Annual Amount | $ 150,000 | $ 132,000 |
10. Concentrations (Details)
10. Concentrations (Details) - USD ($) | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | |
Accounts receivable | $ 11,286,721 | $ 9,614,486 | |
Customer Concentration Risk | |||
Accounts receivable | $ 4,300,000 | $ 4,000,000 | |
Sales | Customer Concentration Risk | |||
Concentration Risk, Percentage | 4400.00% | 4900.00% |
11. Stock Purchase Agreement 37
11. Stock Purchase Agreement - Cynergistek, Inc (Details) - USD ($) | Jan. 17, 2017 | Jan. 13, 2017 | Jun. 30, 2017 | Jun. 30, 2016 |
Payments to Acquire Businesses, Gross | $ 13,448,522 | $ 0 | ||
Goodwill | $ 16,416,063 | |||
Seller Notes | ||||
Debt Instrument, Face Amount | $ 9,000,000 | |||
Debt Instrument, Interest Rate, Stated Percentage | 800.00% | |||
Michael Mathews | ||||
Base Salary, Annual Amount | $ 250,000 | |||
Michael Mathews | Seller Notes | ||||
Debt Instrument, Face Amount | 4,500,000 | |||
Michael Mcmillan | ||||
Base Salary, Annual Amount | 250,000 | |||
Michael Mcmillan | Seller Notes | ||||
Debt Instrument, Face Amount | 4,500,000 | |||
A&R Credit Agreement Term Loan | ||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 14,000,000 | |||
Debt Instrument, Description of Variable Rate Basis | Prime | prime | ||
Debt Instrument, Basis Spread on Variable Rate | 150.00% | |||
Debt Instrument, Maturity Date | Jan. 12, 2022 | |||
A&R Credit Agreement Revolving Line Of Credit | ||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 5,000,000 | |||
Cynergistek Inc | ||||
Percentage of issued and outstanding shares of common stock acquired | 10000.00% | |||
Payments to Acquire Businesses, Net of Cash Acquired | $ 14,202,645 | |||
Business Acquisition, Equity Interest Issued, Number of Shares | 1,166,666 | |||
Business Acquisition, Equity Interest Issued or Issuable, Value Assigned | $ 2,800,000 | |||
Business Combination, Contingent Consideration Arrangements, Range of Outcomes, Value, High | 7,500,000 | |||
Estimated Fair value of Earn-out | $ 2,300,000 | |||
Goodwill | $ 16,416,063 | |||
Legal, accounting and other professional fees related to acquisition | 330,000 | |||
Legal, accounting and other professional fees related to acquisition, expensed this period | $ 174,000 | |||
Cynergistek Inc | Michael Mathews | ||||
Business Acquisition, Equity Interest Issued, Number of Shares | 583,333 | |||
Cynergistek Inc | Michael Mcmillan | ||||
Business Acquisition, Equity Interest Issued, Number of Shares | 583,333 | |||
Cynergistek Inc | Term Loan | ||||
Payments to Acquire Businesses, Gross | $ 15,000,000 | |||
Payments to Acquire Businesses, Net of Cash Acquired | $ 14,000,000 |
11. Stock Purchase Agreement 38
11. Stock Purchase Agreement - Cynergistek, Inc: Schedule of Allocation of the Purchase Price of the Assets Acquired and Liabilities Assumed (Details) | 6 Months Ended |
Jun. 30, 2017USD ($) | |
Goodwill | $ 16,416,063 |
Cynergistek Inc | |
Goodwill | 16,416,063 |
Cash | 754,125 |
Accounts receivable | 1,726,398 |
Other assets | 346,439 |
Fixed assets, net | 110,657 |
Accounts payable and accrued expenses | (659,203) |
Accrued compensation | (1,035,522) |
Deferred revenue | (1,378,312) |
Total | 28,330,645 |
Cynergistek Inc | Technology-Based Intangible Assets | |
Finite-lived Intangible Assets Acquired | 8,150,000 |
Cynergistek Inc | Customer Relationships | |
Finite-lived Intangible Assets Acquired | 2,150,000 |
Cynergistek Inc | Trademarks | |
Finite-lived Intangible Assets Acquired | 1,550,000 |
Cynergistek Inc | Noncompete Agreements | |
Finite-lived Intangible Assets Acquired | $ 200,000 |
11. Stock Purchase Agreement 39
11. Stock Purchase Agreement - Cynergistek, Inc: Business Acquisition, Pro Forma Information (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Details | ||||
Pro forma revenue | $ 16,798,912 | $ 19,006,922 | $ 35,053,601 | $ 36,663,082 |
Pro forma net income | $ 74,187 | $ 646,285 | $ 80,471 | $ 404,850 |
Pro forma basic net income per share | $ 0.01 | $ 0.07 | $ 0.01 | $ 0.04 |
Pro forma diluted net income per share | $ 0.01 | $ 0.07 | $ 0.01 | $ 0.04 |