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Initiation of Coverage July 24, 2012

OTCBB Symbol: AUXO

Analyst: Ross Silver Email: info@vistapglobal.com Phone: 877.215.4813

Price in USD (as of date of report): $0.90

Corporate Overview
AUXILIO, Inc. (AUXO), headquartered in Mission Viejo, California, is the health care industrys leader in Managed Print Services (MPS), working exclusively with hospitals and hospital systems in the United States. It is a business outsourcing, service-centric company which provides intelligent print management programs and guaranteed savings. Once contracted, the Company assumes all expenses related to the production of documents in hospitals and affiliated clinics including services, supplies, equipment, legacy service agreements, parts, finance charges and labor which results in a predictable fixed rate for its customers. The Companys full-time, on-site teams of print experts help hospitals and health systems substantially reduce document production expenses through continuous process improvements methodologies, education and training for hospital staff, and efficiency tools and techniques that reduce paper volume and improve end-user satisfaction. The Company customizes its MPS program to meet the needs of each customer, manages vendor relations, equipment and supply chains, and centralizes cost centers to better manage the finances and assets of print infrastructures. The Company is vendor independent.

Website: www.auxilioinc.com

Stock Data
Sector: Market Cap: Cash & STI (mrq): 52 Week Range: Revenue (ttm): Healthcare Services $17.6M $1.8M $0.52 $1.47 $21.9M Price Target: Avg. Volume (10 day): Float: Shares Outstanding: Enterprise Value: $3.35 4,375 15.0M 19.5M $18.2M

Highlights
Capturing significant and growing opportunities in $22B Healthcare MPS market Signed $35M MPS contract with Bon Secours Health System Signed five year $10M contract with Sharp HealthCare Leveraging unique vendor-neutral MPS & proprietary benchmark data Established business model with services in over 84 hospitals and over 2,000 health care offices 100% customer retention since formation, including many early renewals Improving financial base with recurring revenue base & solid balance sheet

Table of Contents
Business Description Managed Print Services 2011 Financial Results Risks Management Bios Financial Statements Legal Notes & Disclosures .... 2 .... 6 .... 9 .... 9 .... 10 .... 13 .... 16

Outlook, Conclusion& Valuation .... 2

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Vista Partners LLC www.vistapglobal.com

Initiation of Coverage July 24, 2012

OTCBB Symbol: AUXO

Business Description AUXILIO, Inc. (AUXO), headquartered in Mission Viejo, California, is the health care industrys leader in Managed Print Services (MPS), working exclusively with hospitals and hospital systems in the United States. It is a business outsourcing, service-centric company which provides intelligent print management programs, and guaranteed savings. Once contracted, the Company assumes all expenses related to the production of documents in hospitals and affiliated clinics including services, supplies, equipment, legacy service agreements, parts, finance charges and labor which results in a predictable fixed rate for its customers. The Companys full-time, on-site teams of print experts help hospitals and health systems substantially reduce document production expenses through continuous process improvements methodologies, education and training for hospital staff, and efficiency tools and techniques that reduce paper volume and improve end-user satisfaction. The Company customizes its MPS program to meet the needs of each customer, manages vendor relations, equipment and supply chains, and centralizes cost centers and better manages the finances and assets of print infrastructures. The Company is vendor independent. Outlook, Conclusion & Valuation

Outlook Health care organizations are historically dependent on paper for clinical and medical purposes, legal and regulatory requirements, psychological reasons and business transactions. AUXOs proprietary data research indicates hospitals generate millions of pages of print volume annually with a typical 500-bed hospital producing about 35M pages per year at an approximate cost of $1.5M. AUXO expects these health care organizations will continue to struggle with escalating costs in their print environments due to increased paper volume, the lack of transparency for the spend and decentralized cost centers which have resulted in a swelling array of printers and multi-function devices, overburdened IT staffs, ineffective equipment vendor management and inefficient workflow processes. This condition positions AUXOs MPS strategy as an attractive costsaving opportunity to health care organizations, evidenced by 14 new, expanded or extended MPS contracts signed between January 2010 and December 2011, including two in December with multi-hospital systems which included a $40M agreement that is the largest in its history. In
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www.vistapglobal.com

Initiation of Coverage July 24, 2012

OTCBB Symbol: AUXO

addition, the Company has signed two new contracts in the past two months, a contract valued at approximately $10M over five years with Sharp HealthCare in San Diego, CA and a contract valued at approximately $35 million over five years with Bon Secours Health System (BHSI). BSHSI is a $3.3 billion not-for-profit Catholic health system, sponsored by Bon Secours Ministries, that is widely recognized for providing outstanding patient care and consistently setting the standard in clinical excellence. It is headquartered in Marriottsville, MD, and owns, manages, or joint ventures a total of 19 acute-care hospitals, one psychiatric hospital, five nursing care facilities, four assisted living facilities, and 14 home care and hospice services. BSHSI has more than 22,000 employees and 10,000 physicians in New York, Maryland, Virginia, South Carolina, Kentucky and Florida. This is a massive contract win for AUXO and we may begin to see additional contracts of this size in the future considering AUXO has demonstrated the ability to take on large healthcare centers. These multi-hospital system contracts are massive wins for AUXO and AUXO may begin to see additional contracts of this size in the future. AUXO has demonstrated the ability to take on large health care centers, and scale its operations unit to meet the demands of the health care market which is experiencing a heightened interest in consolidation and M&A activity. As a direct result of the American Recovery and Reinvestment Act (ARRA) in 2009, which mandates hospitals implement Electronic Health Records (EHR) by 2015, an added strain to compliance has occurred placing new demands on IT departments and an escalation of paper volume due to on-demand printing, mobile devices and the public concern for rampant data security breaches of electronic medical files. Additionally, interoperability of e-record technology is scattered across care organizations with multiple EHR vendor products and hospitalowned and developed technology causing networking and system confusion and a lack of functionality among and between hospitals, clinical offices and patients. This technology chaos and the disparate skill level of technology use by caregivers results in paper records remaining the most commonly used method for the exchange of medical information. Additionally, the fact that hospital divisions, like intensive care units, still document patient care with hard copy charts results in the continuation of paper use and printing. Furthermore, the increased emphasis on emergency contingency planning has many hospitals maintaining paper files and/or backing up their EHRs with hard
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Vista Partners LLC www.vistapglobal.com

Initiation of Coverage July 24, 2012

OTCBB Symbol: AUXO

copies in order to facilitate continued care in the event of power loss or network compromise, although this trend may change in the future as hospitals become more adept at using electronic records and as the technology related to EHRs improves over time. As mentioned earlier in this section, in December 2011, AUXO signed its largest MPS contract to date with Catholic Health East, a multiinstitutional Catholic health care network with 54,000 full-time employees. The five year, $40M contract placed AUXOs MPS services in 19 hospitals, three long-term care facilities, and numerous clinical and administrative entities in 11 states from Maine to Florida. AUXO estimates that the contract will save Catholic Health East approximately $12M over five years. We should note that in July 2010, AUXILIO announced a five-year contract with Johns Hopkins Health System (JHHS). JHHS recently expanded its MPS contract to include Suburban Hospital in Montgomery County, Maryland. The 238-bed campus and affiliated care facilities will be integrated into the original JHHS contract. The Johns Hopkins Hospital, flagship of JHHS, has been ranked Americas #1 hospital by U.S. News & World Report in its annual Best Hospitals issue for the past 20 years. As a result of these large and market leading reference customers, AUXO may be able to attract business with customers of a similar or greater size. In addition, the sales cycle for attracting customers similar to the ones mentioned may be reduced. Conclusion Hospitals remain paper intensive environments even with the advent of electronic health records. Few hospitals have clarity as to the total volume and cost of their document production or how to efficiently and cost-effectively strike a balance between end-users satisfaction, workflow processes, and hardware and technology to manage their print infrastructures to reduce costs. As a result, AUXOs MPS services are more desireable than ever. As the only vendor neutral, health care exclusive MPS company in the U.S., AUXILIO is poised to provide hospitals with specialized knowledge of urgent care print environments that aids with cost reduction, assists with e-records execution and provides on-site planning as a strategy partner to substantially reduce volume. According to IDC, printed page volume in the United States is expected to reach 1.2 Trillion pages by 2015. With hospitals adopting new point of service diagnostic devices and multifunctional devices like iPads and e-charts with built-in print functions, print volume in hospitals is
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Initiation of Coverage July 24, 2012

OTCBB Symbol: AUXO

actually on the rise. Paper documents provide comfort and familiarity to caregivers and patients, while also remaining valuable from a legal and regulatory standpoint. The federal regulation of electronic recordkeeping has contributed to increased print volume with easier access giving way to more copies being produced. As one physician noted in an interview with NPR radio and reported in Modern Healthcare Magazine, the paperless hospital is as likely as the paperless bathroom. AUXO offers a comprehensive solution to managing and controlling print costs, paper volume reduction and end-user satisfaction for its customers which makes their service offering highly attractive. AUXILIO was recently recognized by its peers as a true pioneer in the MPS industry for its work in hospitals, and cited as a best-of-breed independent document management service provider by an unbiased global research company, Quocirca, for its risk-free model, with no upfront costs and advanced skill and knowledge of EMR readiness strategies for health care. Also, the company was recognized with a 2012 MPSA Leadership Award for the second year in a row for its strategic creativity and operational excellence in the delivery of MPS service to its customers. AUXO conducts a no-cost assessment of a hospitals document production environment; more often than not, finding decentralized cost centers and chaotic infrastructures of equipment, technology and print-related supplies that result in high costs and workflow inefficiencies. AUXO then places its own full-time trained MPS experts on site, who customize and rationalize print environments to optimize workflow and end-user productivity by creating a fully organized and networked system. MPS experts also train hospital staff in print process improvement techniques and volume reduction efficiency print practices to maximize productivity. AUXO also renegotiates vendor contracts in order to further reduce inefficiency and waste. The Company believes that its MPS strategy can offer up to a 30% reduction in print costs. With approximately 5,795 hospitals in the United States, AUXO values the market potential for its service at up to $22B. The average 1,000 bed hospital produces roughly five million documents per month, a number that will only grow as print volumes increase. Garnering just 5% of the market could result in approximately $1.1B of revenue for AUXO. AUXOs MPS strategies represent a better option than relying on manufacturers and vendors for a number of reasons. The Companys
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Vista Partners LLC www.vistapglobal.com

Initiation of Coverage July 24, 2012

OTCBB Symbol: AUXO

health care-specific focus provides an advantage because no other vendor or manufacturer has the same or longitudinal proprietary information, knowledge base and ability to address problems specific to the health care industry. Working on-site with hospital customers gives AUXO an advantage over third-party vendors or manufacturers by reducing the wait time between a problem arising and a solution being found. Manufacturers and vendors serve a wide net of clients, resulting in increased response time for service, goods, and troubleshooting. Lastly, being vendor independent allows AUXO to better manage the finances and supply chain of the full range of a hospitals print-related supplies and equipment that ensures higher quality at a lower cost. Potential Acquisition Candidate As AUXO continues to gain traction within the MPS segment, the more potentially attractive AUXO becomes as an acquisition target. We believe additional large contract wins, similar to the size of Catholic Health East, could make AUXO very much in play as an acquisition candidate for a larger suitor which could be beneficial for shareholders. Valuation Our 12-month target price of $3.35 is based on our risk adjusted net present value calculation, which we conservatively estimate to be $100M. We understand there is significant execution risk for AUXO. With that said, we believe the current valuation doesnt reflect the potential upside. We highly doubt AUXO will continue to trade at a discount for much longer. We could revise our price target higher depending upon Auxilios ability to obtain new contracts in the future. Managed Print Services

Managed Print Services AUXILIO began offering Managed Print Services (MPS) to hospitals and health care organizations in 2004. Since then, AUXO has grown to have contracts with 64 hospitals and over 1,500 affiliated clinical and medical facilities and administrative entities. AUXOs service allows hospitals to streamline their document production infrastructure through AUXOs health care exclusive, vendor-neutral business model. Adopting the AUXO service can reduce actual per document printing costs immediately and provide signficant seven figure savings over the length of a contract, which is typically 3 to 5 years.

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Vista Partners LLC www.vistapglobal.com

Initiation of Coverage July 24, 2012

OTCBB Symbol: AUXO

Addressable Market

Source: Company

The Auxilio Process: Below is an illustration of the current purchasing process by hospitals:

Auxilio condenses the currently fragmented purchasing process as illustrated below:

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Vista Partners LLC www.vistapglobal.com

Initiation of Coverage July 24, 2012

OTCBB Symbol: AUXO

Competition The majority of the competition in the healthcare industry market for print management services comes from the large photocopy/multifunctional digital device manufacturers such as Xerox, Canon, Konica Minolta, Ricoh and Sharp. The competitive landscape also contains a number of regional and local equipment dealers and distributors that exist in the communities which the hospitals serve. In addition, AUXO competes with in-house departments performing the functions that AUXO is seeking to have them outsource. Based on AUXOs analysis of the competitive landscape, AUXO believes a very strong opportunity for fully outsourced managed print services to the healthcare industry exists. AUXO has a strong competitive position in the marketplace due to a number of important reasons: AUXO is entirely focused on the healthcare industry. No other vendor/service provider has its entire business dedicated to solving issues within the healthcare industry with the expertise and knowledge base unmatched in the market. AUXO has a unique approach to providing fully outsourced print management programs. AUXOs program is completely outsourced and hospitals need only pay a single invoice. AUXO operates the print management process as a department in the hospital with full-time on-site staff. In contrast, vendors and dealers, in the vast majority of instances, have multiple small and large customers in a geographic area with whom they are providing services, which result in major delays in providing service and supplies to the hospitals. By focusing solely on the hospital campus, AUXO enjoys much lower turn-around times for service, greater up sell opportunities and a much deeper service relationship with the customer. AUXO is not restricted to any single equipment vendor, which allows them to bring customized hardware and software solutions to their customers. AUXOs approach is to provide technology solutions to its customers without any prejudice as to equipment. AUXO maintains a daily connection with the hospital, which allows them to provide a detailed strategy and plan on equipment acquisitions saving the organization a great deal of time, effort and money in this process.

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Vista Partners LLC www.vistapglobal.com

Initiation of Coverage July 24, 2012

OTCBB Symbol: AUXO

2011 Financial Results

For the year ended December 31, 2011, net revenue increased by $6,438,067 to $21,845,619, a near 42% increase, as compared to the same period in 2010. Service revenue in 2011 totaled approximately $19,800,000 compared to approximately $14,700,000 in 2010. The increase was primarily a result of the addition of seven new recurring revenue contracts between October 2010 and July 2011, partially offset by recent renewals of several customer service contracts last year, which contain programs to assist the customer in cost reduction. AUXO anticipates overall revenue growth in 2012 as a result of the expansion of their customer base. Equipment revenue totaled approximately $2,050,000 in 2011 compared to approximately $750,000 in 2010, with approximately half of the 2011 revenue occurring from one customer. However, it is important to note that AUXO expects to significantly decrease the percentage of revenue from equipment relative to total revenue as they continue to focus on recurring service revenue.

Risks

In 2011 cash used for operating activities was $2,023,052 as compared to cash provided by operating activities of $414,466 for the same period in 2010. The difference in cash from operating activities was primarily due to the costs incurred to implement new recurring revenue contracts, more aggressive sales and marketing efforts to obtain new clients and legal and consulting fees in connection with the development of operational training tools, statutory filings, the drafting and adoption of a new stock incentive plan and investor relations. AUXO expects to continue to establish recurring revenue contracts to new customers throughout 2012. AUXO expects higher cost of revenues at the start of their engagement with most new customers, and they may seek additional financing, which may include debt and/or equity financing or funding through third party agreements. In July of 2011, AUXO closed on a private offering of secured convertible notes and warrants with gross proceeds of $1,850,000. In addition, AUXO entered into an asset based line of credit agreement with Avidbank. This facility provides for borrowings up to $2,000,000 not to exceed 80% of eligible receivables. AUXO may seek additional financing; however there can be no assurance that additional financing will be available on acceptable terms, if at all. Any equity financing may result in dilution to existing stockholders and any debt financing may include restrictive covenants. Management believes that cash generated from debt and/or equity financing arrangements along with funds from operations will be sufficient to sustain business operations over the next twelve months.
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Vista Partners LLC

www.vistapglobal.com

Initiation of Coverage July 24, 2012

OTCBB Symbol: AUXO

We encourage investors to view all risks listed in the Companys annual report on file with the Securities Exchange Commission which is available on the SEC website, www.sec.gov. Management Bios

Joseph J. Flynn President & Chief Executive Officer Joseph J. Flynn is the co-founder and President & CEO of AUXO. Under Flynns leadership and strategic direction, the Company has experienced continued and successful growth since its inception in 2004. He is an accomplished business leader in the IT, media, and market research industries. Mr. Flynn has over 20 years of international and domestic business management experience with some of the worlds largest global companies such as the Nielsen Corporation and Advanstar Communications. Flynn is fluent in Spanish, French, and Portuguese and earned a post-graduate secondary education degree in foreign language education from the University of Rhode Island. He is a graduate of the Catholic University of America in Washington D.C. with a BA in international affairs. Paul Anthony, CPA Chief Financial Officer & Corporate Secretary Paul Anthony is a Certified Public Accountant and an expert in financial management, investor relations, tax, treasury, and risk management with nearly 15 years of professional services experience with worldwide enterprises, publicly traded companies, and start-ups. He has worked for a number of the largest companies in the world, including KPMG Peat Marwick LLP and IBM-Access360. Since 2005, Mr. Anthony has worked as the lead financial management advisor and analyst for AUXO, the pioneer of managed print services for the health care industry. He earned a Bachelor of Science in accounting from Northern Illinois University. Simon Vermooten, Six Sigma Business Process Professional Executive Vice President With 25 years experience in key positions with a number of global copy/print manufacturers and service companies, including Lexmark International and IKON, Mr. Vermootens professional responsibilities included developing business and print strategy solutions for clients such as Boeing, Bank of America, Kaiser Permanente, the US Navy and the US Department of Veterans Affairs. Mr. Vermooten graduated from the University of Surrey in England, earning a BSc in Business and Hotel Management and a BA in Marketing. He also holds an MBA in Global Management and is a certified Six Sigma Process Professional.
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Vista Partners LLC

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Initiation of Coverage July 24, 2012

OTCBB Symbol: AUXO

Scott Mumby Executive Vice President of Operations Scott Mumby is a proven strategic leader, with 15 years of experience implementing and managing growth and transformation initiatives for organizations ranging in size from mid-market to Fortune 500. His strength lies in leading change, from initial vision to implementation and successful realization of expected benefits. As a member of PricewaterhouseCoopers Strategic Change Practice, Mr. Mumby was an Organization Transformation leader focused on managing complex technology driven change in a variety of industries from banking to manufacturing to high technology. Since then, in a succession of consulting and enterprise leadership roles, Mr. Mumby has provided hands-on management of initiatives that span a full range of corporate functions, including marketing, IT, human resources, finance and enterprise learning. Mr. Mumby earned his MS in organizational psychology from California School of Professional Psychology and his undergraduate degree from California State University, San Diego. Lisa MacDonald Senior Vice President, East Coast Operations Lisa MacDonald is a highly experienced operations and health care services executive who leads the East Coast portfolio of hospitals and hospital systems for AUXO. With 18 years of experience with ServiceMaster Management Services, she held leadership positions in its Operations of Integrated Services departments supporting the integration of network delivery systems in the areas of environmental services, food services, engineering, clinical equipment and materials management. Her expertise is in the strategic design, operations and management of health care systems and processes that maximize efficiency standards and streamline human resources and supply chain resources. As a member of the Companys executive team, Ms. MacDonald is responsible for providing business leadership and direction to the Companys highly recognized Centers of Excellence professional print strategy consultants and support staff. As a professional change management expert, her skills include process redesign, training and professional development, customer relations and business management. She earned a business administration degree from Taylor University and holds certifications from the ServiceMaster Graduate Program. Jeff Butler Vice President of Business Development Jeff Butler has dedicated his prestigious career to the health care industry having over 25 years of executive experience in strategic business and market development, team building and customer
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Initiation of Coverage July 24, 2012

OTCBB Symbol: AUXO

relations, and has been instrumental in the design of original professional services initiatives for hospitals. Prior to his 2004 appointment with AUXO, he held several national leadership positions with ServiceMaster (now Aramark) in its hospital outsourcing services areas, including acute and long-term care; and he led the Hill-Rom Companys sales force for its western region in the areas of patient room systems and therapeutic surfaces. As a key executive liaison to the Companys hospital-partners, he is a health care print strategist and expert process manager of its professional services to hospitals and hospital systems. Mr. Butler earned a Bachelor of Arts from the University of California, at Irvine, where he was a scholarship athlete. Amer Otri - VP of Operations, Western Region. Amer Otri has an extensive background in technology, management and operations, and leads the companys expanding footprint in the Northwest. He has been at the forefront of helping to execute AUXOs growth strategy to the health care industry. Prior to his new position, Mr. Otri had been Director of Operations for the Southwest Region. He has over 16 years of international experience in operations management and IT solutions with some of the largest IT and logistics companies in the world, including DHL, New Horizons Computer Learning Centers and AgilienceME, a global leader in product development and adaptation of IT solutions to drive process improvement. He is a graduate of Kakatiya University in India with a degree in commerce.

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Vista Partners LLC www.vistapglobal.com

Initiation of Coverage July 24, 2012

OTCBB Symbol: AUXO

Financial Statements Income Statement:


Year Ended December 31, 2011 2010

Net revenues Cost of revenues Gross profit Operating expenses: Sales and marketing General and administrative expenses Total operating expenses Loss from operations Other income (expense): Interest expense Interest income Change in fair value of derivative liabilities Total other income (expense) Loss before provision for income taxes Income tax expense Net loss Net loss per share: Basic Diluted Number of weighted average shares outstanding: Basic Diluted

$ 21,845,619 19,131,257 2,714,362 1,830,538 3,360,513 5,191,051 (2,476,689) (171,945) 2,487 62,000 (107,458) (2,584,147) 7,495 $ (2,591,642)

$ 15,407,552 12,532,193 2,875,359 1,566,137 2,861,844 4,427,981 (1,552,622) (6,918) 1,301 (5,617) (1,558,239) 11,479 $ (1,569,718)

$ $

(0.13) (0.13)

$ $

(0.08) (0.08)

19,376,214 19,376,214

19,226,357 19,226,357

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Vista Partners LLC www.vistapglobal.com

Initiation of Coverage July 24, 2012

OTCBB Symbol: AUXO

Balance Sheet:
As of December 31, 2011 2010

ASSETS Current assets: Cash and cash equivalents Accounts receivable, net Prepaid and other current assets Supplies Total current assets Property and equipment, net Deposits Loan acquisition costs Goodwill Total assets LIABILITIES AND STOCKHOLDERS EQUITY Current liabilities: Accounts payable and accrued expenses Accrued compensation and benefits Deferred revenue Current portion of capital lease obligations Total current liabilities $ 1,832,115 2,032,738 74,977 651,874 4,591,704 191,810 28,013 226,576 1,517,017 $ 6,555,120 $ 2,249,907 1,160,251 331,483 687,845 4,429,486 234,975 28,013 1,517,017 $ 6,209,491

$ 2,757,670 1,031,748 381,767 49,881 4,221,066

$ 2,538,828 772,532 255,802 41,776 3,608,938

Long-term liabilities: Convertible notes payable, net of discount of $364,250 at December 31, 2011 Derivative warrant liability Derivative additional investment rights liability Capital lease obligations less current portion Total long-term liabilities Commitments and contingencies Stockholders equity: Common stock, par value at $0.001, 33,333,333 shares authorized, 19,449,783 shares issued and outstanding at December 31, 2011 and 19,336,651 shares issued and outstanding at December 31, 2010 Additional paid-in capital Accumulated deficit Total stockholders equity Total liabilities and stockholders equity

1,485,750 126,000 235,000 80,735 1,927,485 -

79,524 79,524 -

19,451 20,894,653 (20,507,535) 406,569 $ 6,555,120

19,338 20,417,584 (17,915,893) 2,521,029 $ 6,209,491

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Vista Partners LLC www.vistapglobal.com

Initiation of Coverage July 24, 2012

OTCBB Symbol: AUXO

Statement of Cash Flows:


Year Ended December 31, 2011 2010

Cash flows provided by operating activities: Net loss Adjustments to reconcile net loss to net cash provided by (used for) operating activities: Depreciation and amortization Stock compensation expense for options and warrants granted to employees and consultants Fair value of restricted stock granted for marketing services Fair value of warrants issued for marketing services Change in fair value of derivative liabilities Interest expense related to accretion of debt discount costs Interest expense related to amortization of loan acquisition costs Changes in operating assets and liabilities: Accounts receivable Prepaid and other current assets Supplies Deposits Accounts payable and accrued expenses Accrued compensation and benefits Deferred revenue Net cash provided by (used for) operating activities Cash flows (used for) investing activities: Purchases of property and equipment Net cash (used for) investing activities Cash flows provided by financing activities: Net proceeds from issuance of Common Stock Proceeds from convertible notes payable Acquisition fees paid for convertible notes payable Payments on capital leases Net cash provided by financing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents, beginning of year Cash and cash equivalents, end of year

$ (2,591,642)

$ (1,569,718)

125,601 303,979 81,703 (62,000) 58,750 36,544 (872,487) 256,506 35,971 218,842 259,216 125,965 (2,023,052) (24,669) (24,669) 1,850,000 (171,620) (48,451) 1,629,929 (417,792) 2,249,907 $ 1,832,115

250,252 363,248 90,161 237,347 (238,237) (150,675) 15,779 1,291,948 217,830 (93,469) 414,466 (88,240) (88,240) 161,450 (19,355) 142,095 468,321 1,781,586 $ 2,249,907

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Vista Partners LLC www.vistapglobal.com

Initiation of Coverage July 24, 2012

OTCBB Symbol: AUXO

Legal Notes & Disclosures


This report has been prepared by Vista Partners LLC (Vista) with the assistance of Auxilio, Inc. (the Company) based upon information provided by the Company. Vista has not independently verified such information, and in addition, Vista has been compensated by the Company for advisory services. Statements in this report that are not historical facts are forward-looking statements that involve risks and uncertainties. Forward-looking statements can be identified by the use of words such as opportunities, trends, potential, estimates, may, will, could, should, anticipates, expects or comparable terminology or by discussions of strategy. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from the results, performance or achievements expressed or implied by such forward-looking statements. Additional risks, uncertainties and other factors are identified under the captions Risk Factors and Special Note Regarding Forward-Looking Statements in the Companys reports filed from time to time with the Securities and Exchange Commission, including its Annual Report for the current fiscal year. Vista and the Company disclaim any intention or obligation to update publicly or revise any forward-looking statements, whether as a result of new or additional information, future events or otherwise, except as required by applicable law. The Company is solely responsible for the accuracy of that information. Information as to other companies has been prepared from publicly available information and has not been independently verified by the Company or Vista. For more complete information about the Company, the reader is directed to the Company's website, http://www.auxilioinc.com. Vistas reports are based on data obtained from sources we believe to be reliable, but are not guaranteed as to accuracy and do not purport to be complete. Because of individual objectives, this report should not be construed as advice designed to meet the particular investment needs of any investor. Any opinions expressed by Vistas analysts are subject to change. This report is published solely for informational purposes and is not to be construed as an offer to sell or the solicitation of an offer to buy any security in any state. Past performance does not guarantee future performance. Free additional information about the Company and its public filings, as well as free copies of this report can be obtained in either a paper or electronic format by calling 877.215.4813.For additional disclosures and disclaimers please visit http://www.vistapglobal.com/pdf/Disclaimer.pdf.

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