AUXILIO Inc. Reports First Quarter 2014 Financial Results

  AUXILIO Inc. Reports First Quarter 2014 Financial Results

Business Wire

MISSION VIEJO, Calif. -- May 14, 2014

AUXILIO, Inc. (OTCQB:AUXO) (“AUXILIO” or “the Company”), the nation’s pioneer
and leading Managed Print Services (MPS) company for health care, today
reported financial results for the quarter ended March 31, 2014.

Highlights

  *Q1 2014 revenues increased 2% to $10.2 million; service revenues increased
    10% to $9.8 million
  *Non-GAAP measure of adjusted income from operations were 2% of revenue in
    Q1 2014 vs. 3% in Q1 2013
  *Generated $0.1 million of cash flows from operations in Q1 2014
  *Added two new recurring revenue contracts in first three months of 2014
  *Signed one renewal contract in the first three months of 2014

“We carried the positive momentum from 2013 into the first quarter of 2014
which included the signing of two new health systems and a key renewal,”
stated Joseph J. Flynn, president and CEO of AUXILIO, Inc. “Our value
proposition is becoming more evident as more hospitals seek to outsource their
print services to a trusted provider like AUXILIO, proven to deliver superior
service while reducing the total cost of operating their print systems. We are
also excited about expanding our IT consulting services for hospitals by
leveraging our strong customer relationships with a network of new industry
contacts through our Consulting and Managed IT Services Group to further drive
incremental revenue and profit.”

Financial Results

For the three months ended March 31, 2014

For the three months ended March 31, 2014, the company reported revenues of
$10.2 million, an increase of 2% when compared to $10.1 million in the same
period in 2013. Recurring service revenues increased 10% from four new
contracts implemented since the first quarter of 2013 and expansion of
services with existing customers. Equipment revenues were approximately $0.4
million in the first quarter of 2014 compared to $1.2 million for the same
period in 2013.

Cost of revenue was $8.5 million, essentially unchanged from the same period a
year ago. Gross profit for the first three months of 2014 was $1.7 million, or
17% of revenues, compared to $1.6 million or 16% for the same period of 2013.
The gross margin improvement was a result of more contracts moving beyond the
initial implementation phase, which require more upfront investment.

Operating expenses for 2014 were $1.71 million, an increase of 2% from $1.67
million in the first quarter of 2013. Sales and marketing expenses fell by 26%
due to the termination of a joint marketing agreement with a channel partner
in 2013. General and administrative expenses increased 21% to $1.2 million due
to non-recurring severance compensation and additional travel incurred for the
purpose of promoting customer relations and extended new business development
opportunities. The Company generated $0.03 million of operating income in the
first quarter of 2014 compared to an operating loss of $0.1 million in first
quarter of 2013.

After excluding charges of $201,000 related to stock-based compensation, the
non-GAAP measure of adjusted income from operations for the three months ended
March 31, 2014 was $254,000 or 2% of revenue compared to $323,000 or 3% of
revenue after excluding charges of $197,000 related to stock-based
compensation and $190,000 in charges related to stock granted for marketing
and consulting activities in the same period of 2013.

Net loss for the three months ended March 31, 2014 was $71,000, or $0.00 per
basic share, compared to a net loss of $230,000 or $0.01 per share, in the
same period of 2013. The weighted average diluted shares outstanding increased
to 22.3 million shares from 20.1 million in the first quarter of 2013.

At March 31, 2014, the Company had $4.8 million of cash and cash equivalents,
up from $4.7 million at December 31, 2013. Cash provided by operating
activities amounted to $0.1 million compared to $1.0 million during the same
period in 2013. Net working capital improved to $0.5 million at March 31, 2014
compared to $0.3 million at December 31, 2013.

Paul Anthony, CFO of AUXILIO, explained: “We generated our sixth consecutive
quarter of positive adjusted income from operations. Our achievement was
impressive given the upfront investments we made in new contracts and new
business development opportunities. We will continue to balance our goal of
maintaining solid margins with investing prudently in future growth
initiatives.”

Business Updates

Mark Dressel joined AUXILIO in March 2014 to head up the Company’s new
Consulting and Managed IT Services Group. The Company is expanding services
beyond core MPS to meet the needs of existing and new customers in the health
care market. Mark will be responsible for driving new sources of revenue from
current and prospective customers through health care consulting, IT sourcing
and other high demand offerings; integrate AUXILIO’s MPS into strategic IT
consulting opportunities; and develop non-MPS health care-related
opportunities. Mr. Dressel has more than 25 years of experience in developing
innovative solutions for health care companies. He served as Director and
Global Practice Manager for Dell’s Healthcare Consulting Group prior to
joining AUXILIO.

Conference Call Information

CEO Joe Flynn and CFO Paul Anthony will host a conference call with investors
to discuss its first quarter 2014 earnings results.

                
Date:              Wednesday, May 14, 2014
Time:              4:30 p.m. ET
US:                877-941-1428
International:     480-629-9665
Conference ID:     4682383
Webcast:           http://public.viavid.com/confirmation/confirmwebcast.php?id=o5aroJib
                   

A replay of the call will be available from 7:30 p.m. ET on March 14, 2014 to
11:59 p.m. ET on May 28, 2014. To access the replay, please dial 877-870-5176
from the U.S. and 858-384-5517 from outside the U.S. The PIN is 4682383.

About AUXILIO, Inc.

AUXILIO is the leading provider of Managed Print Services for healthcare. A
true Management Services company, AUXILIO takes full responsibility for health
care customers’ onsite print environment through situation assessment, process
analysis, strategy development and program implementation. Hospitals and
health systems benefit from streamlined and aligned processes and
infrastructure that result in print management programs that reduce cost,
increase employee productivity and meet and exceed patient care standards.

Founded in 2004, AUXILIO serves a national portfolio in excess of 100 hospital
campuses and manages over 1.3 billion documents annually from more than 59,000
devices supporting over 250,000 caregivers. AUXILIO’s business model is vendor
neutral, provides full-time, on-site customer service and technical experts
and is exclusive to the health care industry.

For more information about AUXILIO, visit www.auxilioinc.com.

Forward Looking Statements

This release contains certain forward-looking statements relating to the
business of AUXILIO, Inc. that can be identified by the use of forward-looking
terminology such as “believes,” “expects,” “anticipates,” “may” or similar
expressions. Such forward-looking statements involve known and unknown risks
and uncertainties, including uncertainties relating to product/services
development, long and uncertain sales cycles, the ability to obtain or
maintain patent or other proprietary intellectual property protection, market
acceptance, future capital requirements, competition from other providers, the
ability of our vendors to continue supplying the company with equipment,
parts, supplies and services at comparable terms and prices and other factors
that may cause actual results to be materially different from those described
herein as anticipated, believed, estimated or expected. Certain of these risks
and uncertainties are or will be described in greater detail in our Form 10-K
and Form 10-Q filings with the Securities and Exchange Commission, which are
available at http://www.sec.gov. AUXILIO, Inc. is under no obligation (and
expressly disclaims any such obligation) to update or alter its
forward-looking statements whether as a result of new information, future
events or otherwise.


AUXILIO, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

                                       MARCH 31, 2014    DECEMBER 31, 2013
                                         (unaudited)
                                                             
ASSETS
Current assets:
Cash and cash equivalents                $ 4,752,319         $  4,668,624
Accounts receivable, net                   3,592,189            3,856,791
Supplies                                   1,039,388            967,354
Prepaid and other current assets          345,859            332,759      
Total current assets                      9,729,755          9,825,528    
                                                             
Property and equipment, net                151,222              160,709
Deposits                                   34,413               34,413
Loan acquisition costs                     29,236               51,162
Goodwill                                  1,517,017          1,517,017    
Total assets                             $ 11,461,643       $  11,588,829   
                                                             
LIABILITIES AND STOCKHOLDERS' EQUITY
                                                             
Current liabilities:
Accounts payable and accrued             $ 5,231,390         $  5,057,339
expenses
Accrued compensation and benefits          1,130,925            1,556,513
Line of credit                             400,000              400,000
Deferred revenue                           848,397              868,186
Convertible notes payable, net of
discount of $47,000 and $82,250 at         1,553,000            1,617,750
March 31, 2014 and December 31,
2013, respectively
Current portion of capital lease          64,960            71,933       
obligations
Total current liabilities                 9,228,672         9,571,721    
                                                             
Long-term liabilities:
Capital lease obligations less            32,692            46,558       
current portion
Total long-term liabilities               32,692            46,558       
                                                             
Commitments and contingencies
                                                             
Stockholders' equity:
Common stock, par value at $0.001,
33,333,333 shares authorized,
20,743,966 and 20,643,966 shares           20,745               20,645
issued and outstanding at March 31,
2014 and December 31, 2013,
respectively
Additional paid-in capital                 23,791,992           23,491,490
Accumulated deficit                       (21,612,458 )      (21,541,585  )
Total stockholders' equity                2,200,279         1,970,550    
Total liabilities and stockholders’      $ 11,461,643      $  11,588,829   
equity



AUXILIO, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

                                         Three Months Ended March 31,
                                           2014             2013
Revenues                                   $ 10,244,574       $ 10,092,152
Cost of revenues                            8,504,940        8,515,938  
Gross profit                                1,739,634        1,576,214  
Operating expenses:
Sales and marketing                          508,210            682,187
General and administrative expenses         1,201,874        992,479    
Total operating expenses                    1,710,084        1,674,666  
Income (loss) from operations               29,550           (98,452    )
Other income (expense):
Interest expense                            (98,823    )      (126,348   )
Total other income (expense)                (98,823    )      (126,348   )
Loss before provision for income taxes       (69,273    )       (224,800   )
Income tax expense                          1,600            5,500      
Net loss                                   $ (70,873    )     $ (230,300   )
                                                              
Net loss per share:
Basic                                      $ (0.00      )     $ (0.01      )
Diluted                                    $ (0.01      )     $ (0.01      )
                                                              
Number of weighted average shares:
Basic                                       20,658,573       20,115,873 
Diluted                                     22,258,573       20,115,873 



AUXILIO, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
THREE MONTHS ENDED MARCH 31, 2014
(UNAUDITED)

                                                                       
                                             Additional                           Total
                 Common Stock                Paid-in          Accumulated         Stockholders’
                 Shares         Amount       Capital          Deficit             Equity
Balance at
December 31,     20,643,966     $ 20,645     $ 23,491,490     $ (21,541,585 )     $ 1,970,550
2013
Stock
compensation
expense for
options and
warrants         -                -            200,602          -                   200,602
granted to
employees
and
directors
Conversion
of               100,000          100          99,900           -                   100,000
convertible
note payable
Net loss         -               -           -               (70,873     )      (70,873   )
Balance at
March 31,        20,743,966     $ 20,745     $ 23,791,992     $ (21,612,458 )     $ 2,200,279 
2014



AUXILIO, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

                                             Three Months Ended March 31,
                                               2014            2013
Cash flows from operating activities:
Net loss                                       $ (70,873   )     $ (230,300  )
Adjustments to reconcile net loss to net
cash provided by
operating activities:
Depreciation                                     24,169            34,487
Stock compensation expense for warrants
and options issued to employees and              200,602           196,516
directors
Fair value of stock granted for marketing        -                 190,484
services
Interest expense related to accretion of         35,250            35,250
debt discount costs
Interest expense related to amortization         21,926            37,052
of loan acquisition costs
Changes in operating assets and
liabilities:
Accounts receivable                              264,602           697,236
Supplies                                         (72,034   )       (197,928  )
Prepaid and other current assets                 (13,100   )       (54,040   )
Deposits                                         -                 1,250
Accounts payable and accrued expenses            174,051           915,760
Accrued compensation and benefits                (425,588  )       (603,921  )
Deferred revenue                                (19,789   )      25,843    
Net cash provided by operating activities       119,216         1,047,689 
Cash flows from investing activities:
Purchases of property and equipment             (14,682   )      -         
Net cash used for investing activities          (14,682   )      -         
Cash flows from financing activities:
Net repayments on line of credit agreement       -                 (528,486  )
Payments on capital leases                       (20,839   )       (26,460   )
Net proceeds from issuance of common stock      -               1,175     
through employee stock options
Net cash used for financing activities          (20,839   )      (553,771  )
Net increase in cash and cash equivalents        83,695            493,918
Cash and cash equivalents, beginning of         4,668,624       2,190,972 
period
Cash and cash equivalents, end of period       $ 4,752,319      $ 2,684,890 



AUXILIO, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(UNAUDITED)

                                                 Three Months Ended March 31,
                                                  2014             2013
Supplemental disclosure of cash flow
information:
                                                                    
Interest paid                                     $    42,313       $  54,045
                                                                    
Income taxes paid                                 $    49,460       $  5,655
Non-cash investing and financing activities:
                                                  $    -            $  25,834
Property and equipment acquired through capital
leases
                                                                    
Conversion of note payable into common stock      $    100,000      $  -


Contact:

MZ North America
Dustin Salem, SVP
949-259-4998
dustin.salem@mzgroup.us
 
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