CynergisTek (CTEK) 10-K 30 Mar 16 2015 FY Annual report Financial data

Document and Entity Information

Document and Entity Information - USD ($)	12 Months Ended
	Dec. 31, 2015	Mar. 30, 2016	Jun. 30, 2015
Document and Entity Information
Entity Registrant Name	AUXILIO INC
Document Type	10-K
Document Period End Date	Dec. 31, 2015
Amendment Flag	false
Entity Central Index Key	1,011,432
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		24,452,085
Entity Public Float			$ 21,000,000
Entity Filer Category	Smaller Reporting Company
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Document Fiscal Year Focus	2,015
Document Fiscal Period Focus	FY
Trading Symbol	auxo

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED BALANCE SHEETS - USD ($)	Dec. 31, 2015	Dec. 31, 2014
Current assets:
Cash and cash equivalents	$ 6,436,732	$ 4,743,395
Accounts receivable, net	7,397,957	6,808,183
Prepaid and other current assets	625,806	214,105
Supplies	1,458,609	1,066,132
Total current assets	15,919,104	12,831,815
Property and equipment, net	495,324	215,747
Deposits	58,118	34,413
Intangible assets, net	2,731,250	1,265,000
Goodwill	3,665,656	2,473,656
Total assets	22,869,452	16,820,631
Current liabilities:
Accounts payable and accrued expenses	8,306,860	7,417,361
Accrued compensation and benefits	2,856,165	1,447,132
Line of credit		200,000
Deferred revenue	913,677	921,771
Current portion of long-term liabilities	598,750	55,546
Total current liabilities	12,675,452	10,041,810
Long-term liabilities:
Term loan, less current portion	1,250,000
Notes payable to related parties, net of discount of $30,189 at December 31, 2014		333,534
Capital lease obligations, less current portion	125,496	49,822
Total long-term liabilities	$ 1,375,496	$ 383,356
Commitments and contingencies
Stockholders' equity:
Common stock, par value at $0.001, 33,333,333 shares authorized, 24,452,085 shares issued and outstanding at December 31, 2015 and 23,623,619 shares issued and outstanding at December 31, 2014	$ 24,453	$ 23,625
Additional paid-in capital	27,682,061	26,576,506
Accumulated deficit	(18,888,010)	(20,204,666)
Total stockholders' equity	8,818,504	6,395,465
Total liabilities and stockholders' equity	$ 22,869,452	$ 16,820,631

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)	Dec. 31, 2015	Dec. 31, 2014
Statement of Financial Position
Common Stock, par or stated value	$ 0.001	$ 0.001
Common Stock, shares authorized	33,333,333	33,333,333
Common Stock, shares issued	24,452,085	23,623,619
Common Stock, shares outstanding	24,452,085	23,623,619
Convertible notes payable, discount		$ 30,189

CONSOLIDATED STATEMENTS OF INCO

CONSOLIDATED STATEMENTS OF INCOME - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Income Statement
Net revenues	$ 61,253,853	$ 44,032,076
Cost of revenues	50,664,713	35,799,726
Gross profit	10,589,140	8,232,350
Operating expenses:
Sales and marketing	2,809,377	2,125,085
General and administrative expenses	6,802,582	4,432,374
Total operating expenses	9,611,959	6,557,459
Income from operations	977,181	1,674,891
Other income (expense):
Interest expense	(127,576)	(259,112)
Reduction in contingent consideration in connection with acquisition of Redspin	623,000
Loss on disposition of property and equipment	(3,513)
Total other income (expense)	491,911	(259,112)
Income before provision for income taxes	1,469,092	1,415,779
Income tax expense	152,436	78,860
Net income	$ 1,316,656	$ 1,336,919
Net income per share:
Basic	$ 0.05	$ 0.06
Diluted	$ 0.05	$ 0.06
Number of weighted average shares outstanding:
Basic	24,150,572	22,062,789
Diluted	24,978,936	23,437,628

CONSOLIDATED STATEMENTS OF STOC

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($)		Common Stock		Additional Paid in Capital	Accumulated Deficit	Total
Equity Balance, beginning of period, Value at Dec. 31, 2013		$ 20,645		$ 23,491,490	$ (21,541,585)	$ 1,970,550
Equity Balance, beginning of period, Shares at Dec. 31, 2013		20,643,966
Stock compensation expense for options and warrants granted	[1]			280,061		280,061
Stock compensation expense for restricted stock granted to key employee				30,634		30,634
Stock options exercised, Value	[2]	$ 349		64,951		$ 65,300
Stock options exercised, Shares		349,247	[2]			226,747
Conversion of convertible note payable, Value		$ 1,700		1,698,300		$ 1,700,000
Conversion of convertible note payable, Shares		1,700,000
Stock issued for acquisition, Value	[3]	$ 931		1,011,070		1,012,001
Stock issued for acquisition, Shares	[3]	930,406
Net income					$ 1,336,919	1,336,919
Equity Balance, end of period, Value at Dec. 31, 2014		$ 23,625		26,576,506	$ (20,204,666)	6,395,465
Equity Balance, end of period, Shares at Dec. 31, 2014		23,623,619
Stock compensation expense for options and warrants granted	[4]			277,668		277,668
Stock compensation expense for restricted stock granted to key employee, Value		$ 100		101,780		$ 101,880
Stock compensation expense for restricted stock granted to key employee, Shares		100,000
Stock options exercised, Value		$ 18		(18)
Stock options exercised, Shares		18,347				18,347
Conversion of convertible note payable, Value	[5]	$ 258		257,577		$ 257,835
Conversion of convertible note payable, Shares	[5]	257,835
Stock issued for acquisition, Value	[6]	$ 452		468,548		469,000
Stock issued for acquisition, Shares	[6]	452,284
Net income					$ 1,316,656	1,316,656
Equity Balance, end of period, Value at Dec. 31, 2015		$ 24,453		$ 27,682,061	$ (18,888,010)	$ 8,818,504
Equity Balance, end of period, Shares at Dec. 31, 2015		24,452,085
[1]	to employees and consultants
[2]	stock options and warrants exercised
[3]	Acquisition of Delphiis, Inc.
[4]	to employees and directors
[5]	Conversion of related party note payable to common stock
[6]	Common stock issued in connection with the acquisition of Redspin

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Cash flows provided by operating activities:
Net income	$ 1,316,656	$ 1,336,919
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	155,183	107,621
Amortization of intangible assets	483,750	105,000
Bad debt	22,000
Stock compensation expense for options and warrants granted to employees and directors	277,668	280,061
Stock compensation expense for restricted stock issued to key employee	101,880	30,634
Interest expense related to accretion of debt discount costs	30,189	91,784
Interest expense related to amortization of loan acquisition costs		51,162
Loss on disposition of property and equipment	3,513
Changes in operating assets and liabilities:
Accounts receivable	(431,365)	(2,579,359)
Prepaid and other current assets	(395,870)	118,654
Supplies	(392,477)	(98,778)
Deposits	(20,527)
Accounts payable and accrued expenses	43,302	2,266,006
Accrued compensation and benefits	1,291,024	(128,690)
Deferred revenue	(39,340)	(100,504)
Net cash provided by operating activities	2,445,586	1,480,510
Cash flows (used for) investing activities:
Purchases of property and equipment	(214,478)	(94,165)
Purchase of Redspin	(1,876,966)
Purchase of Delphiis, Inc. net of cash acquired		(995,257)
Net cash (used for) investing activities	(2,091,444)	(1,089,422)
Cash flows provided by (used for) financing activities:
Net repayments on line of credit agreement	(200,000)	(200,000)
Proceeds from term loan	2,000,000
Payments on term loan	(250,000)
Payments on notes payable to related parties	(105,888)	(100,000)
Payments on capital leases	(104,917)	(81,617)
Proceeds from exercise of options and warrants		65,300
Net cash provided by (used for) financing activities	1,339,195	(316,317)
Net increase in cash and cash equivalents	1,693,337	74,771
Cash and cash equivalents, beginning of year	4,743,395	4,668,624
Cash and cash equivalents, end of year	6,436,732	4,743,395
Supplemental disclosure of cash flow information:
Interest paid	97,386	116,100
Income tax paid	158,521	102,733
Non-cash investing and financing activities:
Property and equipment acquired through capital leases	223,795	68,494
Conversion of convertible note payable		1,700,000
Conversion of note payable to related party	257,835
Common stock issued in connection with the acquisition of Redspin	$ 469,000
Common stock issued for acquisition of Delphiis, Inc.		$ 1,012,000

(1) Basis of Presentation and S

(1) Basis of Presentation and Summary of Significant Accounting Policies	12 Months Ended
	Dec. 31, 2015
Notes
(1) Basis of Presentation and Summary of Significant Accounting Policies	(1) Basis of Presentation and Summary of Significant Accounting Policies Business Activity We are engaged in the business of providing fully-outsourced managed print services and IT security consulting data security services primarily to the healthcare industry, and also to financial institutions, gaming and other industries. Our business is operated throughout the United States. Basis of Presentation The accompanying consolidated financial statements were prepared in conformity with GAAP, and include the accounts of Auxilio and our wholly-owned subsidiaries. All intercompany balances and transactions were eliminated. Use of Estimates 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 and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Revenue Recognition and Deferred Revenue The Company derives its revenue from four sources: (1) managed print services revenue; (2) equipment revenue; (3) software subscriptions and managed services revenue, which is comprised of subscription fees from customers accessing the Company's enterprise cloud computing services and customers purchasing additional ongoing managed services beyond the standard support that is included in the basic software subscription fees; and (4) cyber security professional services such as penetration testing, cyber security risk assessments and security program strategy development. The Company commences revenue recognition when all of the following conditions are satisfied: • there is persuasive evidence of an arrangement; • the service has been or is being provided to the customer; • the collection of the fees is reasonably assured; and • the amount of fees to be paid by the customer is fixed or determinable. · Managed Print Services and Equipment Revenue Revenue is recognized pursuant to ASC Topic 605, "Revenue Recognition" (ASC 605). Monthly service and supply revenue is earned monthly during the term of the contract, as services and supplies are provided. Revenues from equipment sales transactions are earned when there is persuasive evidence of an arrangement, delivery has occurred, the sales price has been determined and collectability has been reasonably assured. For equipment that is to be placed at a customer's location at a future date, revenue is deferred until the placement of such equipment. We enter into arrangements that include multiple deliverables, which typically consist of the sale of Multi-Function Device ("MFD") equipment and a support services contract. We account for each element within an arrangement with multiple deliverables as separate units of accounting. Revenue is allocated to each unit of accounting under the guidance of ASC Topic 605-25, Multiple-Deliverable Revenue Arrangements, which provides criteria for separating consideration in multiple-deliverable arrangements by establishing a selling price hierarchy for determining the selling price of a deliverable. The selling price used for each deliverable is based on vendor-specific objective evidence ("VSOE") if available, third-party evidence if VSOE is not available, or estimated selling price if neither VSOE nor third-party evidence is available. We are required to determine the best estimate of selling price in a manner that is consistent with that used to determine the price to sell the deliverable on a standalone basis. We generally do not separately sell MFD equipment or service on a standalone basis. Therefore, we do not have VSOE for the selling price of these units. As we purchase the equipment, we have third-party evidence of the cost of this element. We estimate the proceeds from the arrangement to allocate to the service unit based on historical cost experiences. Based on the relative costs of each unit to the overall cost of the arrangement, we utilize the same relative percentage to allocate the total arrangement proceeds. The Company’s contracts with customers may include provisions that relate to guaranteed savings amounts and shared savings. Such provisions are considered by management during the Company’s initial proprietary client assessment and are charged and accrued when deemed by management to be probable. The Company’s historical settlement of such amounts has been within management’s estimates. · Software Subscriptions and Managed Services Revenue Software subscriptions and managed services revenues are recognized ratably over the contract terms beginning on the commencement date of each contract, which is the date the Company's service is made available to customers. Amounts that have been invoiced are recorded in accounts receivable and in deferred revenue or revenue, depending on whether the revenue recognition criteria have been met. The Company's software subscription service arrangements are non-cancelable and do not contain refund-type provisions. · Cyber Security Professional Services Revenues The majority of the Company's cyber security services contracts are on a time and material basis. When these services are not combined with subscription revenues as a single unit of accounting, these revenues are recognized as the services are rendered for time and material contracts, and when the milestones are achieved and accepted by the customer for fixed price contracts. Cash and Cash Equivalents For purposes of the statement of cash flows and balance sheet classification, cash equivalents include all highly liquid debt instruments with original maturities of three months or less which are not securing any corporate obligations. Accounts Receivable We provide an allowance for doubtful accounts equal to the estimated uncollectible amounts. Our estimate is based on historical collection experience and a review of the current status of trade accounts receivable. It is reasonably possible that our estimate of the allowance for doubtful accounts will change. Management believes that no accounts receivable were uncollectible at December 31, 2015 or 2014. Supplies Supplies consist of parts and supplies for the automated office equipment, including copiers, facsimile machines and printers. Supplies are valued at the lower of cost or market value on a first-in, first-out basis. Property and Equipment Property and equipment are carried at cost less accumulated depreciation. Depreciation of the property and equipment is provided using the straight-line method over the assets' estimated economic lives, which range from two to seven years. Expenditures for maintenance and repairs are charged to expense as incurred. New customer implementation costs We ordinarily incur additional costs to implement our managed print services for new customers. These costs are comprised primarily of additional labor and support. These costs are expensed as incurred, and have a negative impact on our statements of income and cash flows during the implementation phase. Goodwill and Intangible Assets The Company accounts for its business combinations in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) 805-10 through ASC 805-50, “Business Combinations” which requires that the purchase method of accounting be applied to all business combinations and addresses the criteria for initial recognition of intangible assets and goodwill. In accordance with FASB ASC 350-10 through ASC 350-30, goodwill and other intangible assets with indefinite lives are not amortized but are tested for impairment annually, or more frequently if circumstances indicate the possibility of impairment. If the carrying value of goodwill or an indefinite lived intangible asset exceeds its fair value, an impairment loss shall be recognized. Based on management’s tests and reviews, no impairment of its goodwill, intangible assets or other long-lived assets existed at December 31, 2015 or 2014. However, future events or changes in current circumstances could affect the recoverability of the carrying value of goodwill and long-lived assets. Should an asset be deemed impaired, an impairment loss would be recognized to the extent the carrying value of the asset exceeded its estimated fair value. To test for impairment, first we perform a qualitative assessment. If we determine, based on qualitative factors, that the fair value of goodwill is more likely than not greater than the carrying amount, a quantitative calculation would not be needed. Our methodology for a quantitative assessment of testing for goodwill impairment consists of one, and possibly two steps. In step one of the goodwill impairment test, management compares the carrying amount (including goodwill) of the entity-wide reporting unit and the fair value based on market capitalization. Our market capitalization is based on the closing price of our Common Stock as quoted on the OTCQB multiplied by our outstanding shares of Common Stock. Long-Lived Assets In accordance with ASC Topic 350, long-lived assets, such as definite lived intangible assets, to be held and used are analyzed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If there are indications of impairment, we use future undiscounted cash flows of the related asset or asset grouping over the remaining life in measuring whether the assets are recoverable. In the event such cash flows are not expected to be sufficient to recover the recorded asset values, the assets are written down to their estimated fair value. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value of asset less the cost to sell. As of December 31, 2015 and 2014, management determined there was no impairment of these assets. Income Taxes Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial reporting requirements and those imposed under federal and state tax laws. Deferred taxes are provided for timing differences in the recognition of revenue and expenses for income tax and financial reporting purposes and are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred income tax expense represents the change during the period in the deferred tax assets and liabilities. The components of the deferred tax assets and liabilities are individually classified as current and non-current based on their characteristics. Realization of the deferred tax asset is dependent on generating sufficient taxable income in future years. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Fair Value of Financial Instruments ASC Topic 820, "Fair Value Measurements," defines fair value, provides a framework for measuring fair value and expands the disclosures required for fair value measurements. The standard applies to other accounting pronouncements, but does not require any new fair value measurements. The fair value hierarchy consists of three broad levels, which are described below: Level 1 - Quoted prices in active markets for identical assets or liabilities that the entity has the ability to access. Level 2 - Observable inputs, other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs. The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses, line of credit and capital lease obligations approximate fair value due to the short-term nature of these financial instruments. The carrying amount of our host debt contract of our convertible debt approximates its fair value as we believe the credit market has not materially changed since the original borrowing date. As described in Notes 15 and 16, certain fair value measurements were made in connection with the acquisitions of Delphiis, Inc. and Redspin. Stock-Based Compensation We account for stock options granted to employees and directors using the accounting guidance in ASC 718 “Stock Compensation” (“ASC 718”). In accordance with ASC 718, we estimate the fair value of service based options and performance based options on the date of grant, using the Black-Scholes pricing model. We recognize compensation expense for stock option awards over the requisite or implied service period of the grant. With respect to performance-based awards, compensation expense is recognized when the performance target is deemed probable. We account for stock options granted to consultants using the accounting guidance included in ASC 505-50 “Equity-Based Payments to Non-Employees.” In accordance with ASC 505-50, we estimate the fair value of service-based stock options and performance-based options at each reporting period using the Black-Scholes pricing model. The measurement date of the fair value of the equity instrument issued is the earlier of the date on which the counterparty’s performance is complete or the date on which it is probable that performance will occur. For the years ended December 31, 2015 and 2014, stock-based compensation expense recognized in the consolidated statements of income is as follows: Year Ended December 31, 2015 2014 Cost of revenues 137,279 173,089 Sales and marketing 34,203 19,371 General and administrative expenses 208,066 118,235 Total stock based compensation expense 379,548 310,695 The weighted average estimated fair value of stock options granted during 2015 and 2014 was $0.42 and $0.55 per share, respectively. These amounts were determined using the Black-Scholes option-pricing model, which values options based on the stock price at the grant date, the expected life of the option, the estimated volatility of the stock, the expected dividend payments, and the risk-free interest rate over the expected life of the option. The assumptions used in the Black-Scholes model were as follows for stock options granted in 2015 and 2014: 2015 2014 Risk-free interest rate 0.08% to 0.12% 0.07% to 0.09% Expected volatility of our Common Stock 46.74% to 54.98% 57.08% to 64.72% Dividend yield 0% 0% Expected life of options 3 years 3 years The Black-Scholes model was developed for estimating the fair value of traded options that have no vesting restrictions and are fully transferable. Because option valuation models require the use of subjective assumptions, changes in these assumptions can materially affect the fair value of the options. Compensation cost associated with grants of restricted stock units are also measured at fair value. We evaluate the assumptions used to value restricted stock units on a quarterly basis. When factors change, including the market price of the stock, share-based compensation expense may differ significantly from what was recorded in the past. If there are any modifications or cancellations of the underlying unvested securities, we may be required to accelerate, increase or cancel any remaining unearned share-based compensation expense. As of December 31, 2015, we have not granted any restricted stock units under the 2011 Stock Incentive Plan. Basic and Diluted Net Income Per Share In accordance with ASC Topic 260, "Earnings Per Share," basic net income per share is calculated using the weighted average number of shares of our Common Stock issued and outstanding during a certain period, and is calculated by dividing net income by the weighted average number of shares of our Common Stock issued and outstanding during such period. Diluted net income per share is calculated using the weighted average number of common and potentially dilutive common shares outstanding during the period, using the as-if converted method for secured convertible notes, and the treasury stock method for options and warrants. As of December 31, 2015, potentially dilutive securities consisted of options and warrants to purchase 6,529,786 shares of our Common Stock at prices ranging from $0.30 to $2.15 per share. Of these potentially dilutive securities, only 828,364 of the shares to purchase Common Stock from the options and warrants are included from the computation of diluted earnings per share because the effect of including the remaining instruments would be anti-dilutive. As of December 31, 2014, potentially dilutive securities consisted of options and warrants to purchase 7,095,394 shares of our Common Stock at prices ranging from $0.30 to $2.15 per share. Of these potentially dilutive securities, only 1,374,839 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. The following table sets forth the computation of basic and diluted net income per share: Year Ended December 31, 2015 2014 Numerator: Net income 1,316,656 1,336,919 Effects of dilutive securities: Convertible notes payable - 75,189 Income after effects of conversion of note payable 1,316,656 1,412,108 Denominator: Denominator for basic calculation weighted averages 24,150,572 22,062,789 Dilutive Common Stock equivalents: Convertible debt - - Options and warrants 828,364 1,374,839 Denominator for diluted calculation weighted average 24,978,936 23,437,628 Net income per share: Basic net income per share .05 .06 Diluted net income per share .05 .06 Segment Reporting Based on our integration and management strategies, we operate in a single business segment. For the years ended December 31, 2015 and 2014, all revenues were derived from domestic operations. New Accounting Pronouncements In April 2015 and August 2015, the FASB issued guidance which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability consistent with the presentation of debt discounts, however debt issuance costs related to revolving credit agreements may be presented in the balance sheet as an asset. This guidance is effective for us in the first quarter of 2016 and is not expected to have a material impact on our consolidated financial statements. In November 2015, the FASB issued guidance related to the presentation of deferred income taxes. The guidance requires that deferred tax assets and liabilities are classified as non-current in a consolidated balance sheet. This guidance is effective for us in the first quarter of 2017 and is not expected to materially impact our financial position or net earnings. 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. We are in the process of evaluating the impact of the new guidance on our consolidated financial statements. 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 are evaluating the impact that adopting this guidance will have on our consolidated financial statements.

(2) Accounts Receivable

(2) Accounts Receivable	12 Months Ended
	Dec. 31, 2015
Notes
(2) Accounts Receivable	(2) Accounts Receivable A summary of accounts receivable follows: As of December 31, 2015 2014 Trade receivables 7,458,022 8,105,330 Unapplied advances and unbilled revenue, net (60,065) (1,297,147) Allowance for doubtful accounts - - 7,397,957 6,808,183

(3) Property and Equipment

(3) Property and Equipment	12 Months Ended
	Dec. 31, 2015
Notes
(3) Property and Equipment	(3) Property and Equipment A summary of property and equipment follows: As of December 31, 2015 2014 Furniture and fixtures 102,316 68,184 Computers and office equipment 623,810 650,352 Fleet equipment 373,572 260,866 Leasehold improvements 103,993 3,838 1,203,691 983,240 Less accumulated depreciation and amortization (708,367) (767,493) 495,324 215,747 Depreciation and amortization expense for property, equipment, and improvements amounted to $155,183 and $107,621 for the years ended December 31, 2015 and 2014, respectively.

(4) Intangible Assets

(4) Intangible Assets	12 Months Ended
	Dec. 31, 2015
Notes
(4) Intangible Assets	(4) Intangible Assets Intangible assets are amortized over expected useful lives ranging from 1.5 to 10 years and consist of the following: As of December 31, 2015 2014 Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization Delphiis,.Inc. Acquired technology $900,000 $(135,000) $900,000 $(45,000) Customer relationships 400,000 (120,000) 400,000 (40,000) Trademarks 50,000 (50,000) 50,000 (16,667) Non-compete agreements 20,000 (10,000) 20,000 (3,333) Total intangible assets, Delphiis, Inc. $1,370,000 $(315,000) $1,370,000 $(105,000) Redspin Acquired technology $1,050,000 (78,750) - - Customer relationships 600,000 (150,000) - - Trademarks 200,000 (30,000) - - Non-compete agreements 100,000 (15,000) - - Total intangible assets, Redspin $1,950,000 $(273,750) - - Total intangible assets $3,320,000 $(588,750) $1,370,000 $(105,000) Please see Notes 15 and 16 below for further discussion of the origin of these intangible assets.

(5) Line of Credit and Term Loa

(5) Line of Credit and Term Loan	12 Months Ended
	Dec. 31, 2015
Notes
(5) Line of Credit and Term Loan	(5) Line of Credit and Term Loan On May 4, 2012, we entered into a Loan and Security Agreement (the "Loan and Security Agreement") with Avidbank Corporate Finance, a Division of Avidbank ("Avidbank"). On April 26, 2013, we amended the Loan and Security Agreement with Avidbank. On April 25, 2014, we again amended the Loan and Security Agreement with Avidbank (the "Second Avidbank Amendment"). Under the Second Avidbank Amendment, the term of the revolving line-of-credit of up to $2.0 million was extended through April 25, 2015, at an interest rate of prime plus 1.0% per annum. This line of credit was further extended through June 25, 2015 under the third amendment to the Loan and Security Agreement. On June 19, 2015, we again amended the Loan and Security Agreement with Avidbank (the "Fourth Avidbank Amendment"). Under the Fourth Avidbank Amendment, the term of the revolving line-of-credit of up to $2.0 million was extended through June 19, 2017, at an interest rate of prime plus 0.75% per annum. As of December 31, 2015, the interest rate was 4.25%. There will be no minimum interest payable with respect to any calendar quarter. The amount available to us at any given time is the lesser of (a) $2.0 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). The Fourth Avidbank Amendment also provided for a term loan facility which allows for advances up to $4,000,000 through June 19, 2016. Our initial draw was for $2,000,000 in 2015. Term loan repayments shall be in 48 equal installments of principal, plus accrued interest at an interest rate of prime plus 1.25% per annum. As of December 31, 2015 outstanding borrowings under the term loan was $1,750,000 and the interest rate was 4.75%. While there are outstanding credit extensions, we are to maintain a liquidity ratio of cash plus accounts receivable divided by all obligations owing to the bank of at least 1.75 to 1.00, measured monthly, and a debt coverage ratio, whereby adjusted EBITDA for the most recent twelve months shall be no less than 1.50 to 1.00 of the sum of the annual principal payments to come due in respect of the term loan advances plus the annualized interest expense of the quarter ending on the measurement date. We were in compliance with all of the Avidbank agreement covenants as of December 31, 2015 and December 31, 2014. The foregoing description is qualified in its entirety by reference to the Fourth Amendment to the Loan and Security Agreement between Avidbank Corporate Finance and Auxilio, Inc., which is found as Exhibit 10.1 of our form 10-Q filed on August 14, 2015. In connection with our entry into the Loan and Security Agreement, we granted Avidbank (a) a general, first-priority security interest in all of our assets, equipment and inventory, and (b) a security interest in all of our intellectual property under an Intellectual Property Security Agreement. As additional consideration for the Loan and Security Agreement, we issued Avidbank a 5-year warrant to purchase up to 72,098 shares of our common stock at an exercise price of $1.39 per share. The foregoing descriptions are qualified in their entirety by reference to the respective agreements. These agreements are found in our Form 8-K filed on May 9, 2012 as Exhibits 10.1, 10.2, 10.3 and 10.4. Interest charges associated with the Avidbank line of credit, including loan origination costs, totaled $16,347 and $22,776, respectively, for the years ended December 31, 2015 and 2014, respectively. Interest charges associated with the Avidbank term loan, including loan origination costs, totaled $59,385 for the year ended December 31, 2015.

(6) Notes Payable - Related Par

(6) Notes Payable - Related Parties	12 Months Ended
	Dec. 31, 2015
Notes
(6) Notes Payable - Related Parties	(6) Notes Payable – Related Parties We assumed debt totaling $463,723 when we acquired Delphiis, Inc. effective July 1, 2014 (see Note 15). In July 2014, we paid $100,000 to the note holders upon Delphiis's collection of $100,000 from accounts receivable outstanding as of June 30, 2014. On February 19, 2015, a holder of $257,835 of the notes agreed to convert the principal amount of his note into 257,835 shares of our common stock and the other note holder was paid $52,944. The remaining $52,944 principal was repaid in September 2015 when, pursuant to the terms of the note, we accelerated payment on the outstanding amount due at such time as Delphiis, Inc. achieved $4,000,000 of bookings measured from July 1, 2014. Pursuant to a Note Conversion Agreement, dated February 19, 2015 (the "Conversion Agreement"), the holder of the $257,835 note agreed to convert the principal amount of his note into 257,835 shares of our common stock. In February 2015 he received 128,917 shares of common stock, and in October 2015 he received the remaining 128,918 shares when, under the terms of the Conversion Agreement, we accelerated the issuance at such time as Delphiis, Inc. achieved $4,000,000 of bookings measured from July 1, 2014. The foregoing summary of the note conversion is qualified in its entirety by reference to the full context of the Conversion Agreement which is found as Exhibit 99.1 to our 8-K filing on February 27, 2015. Interest expense on the notes, including amortization of the discount, was $33,258 and $17,093 for the years ended December 31, 2015 and 2014, respectively.

(7) Convertible Notes Payable

(7) Convertible Notes Payable	12 Months Ended
	Dec. 31, 2015
Notes
(7) Convertible Notes Payable	(7) Convertible Notes Payable Effective July 29, 2011, we closed on a private offering of secured convertible promissory notes and warrants ("Units") for gross proceeds of $1,850,000. Each of the Units consisted of (i) a $5,000 secured convertible promissory note (each a "Note" and collectively "Notes") and (ii) a warrant (each a "Warrant" and collectively "Warrants") to purchase 1,000 shares of our common stock at an exercise price of $1.50 per share. The Notes matured July 29, 2014 and were secured by our tangible and intangible assets, subject to the senior security interest of AvidBank, as discussed in Note 5. The Notes accrued interest at a rate of eight percent (8%) per annum, compounded annually, and the interest on the outstanding balance of the Notes was payable no later than thirty (30) days following the close of each calendar quarter. The Notes were convertible into 1,850,000 shares of common stock. The Warrants expire April 29, 2016 and are exercisable to purchase up to 370,000 shares of our common stock. We additionally granted piggyback registration rights to the investors in this offering. Several members of our Board at the time, including John Pace, Michael Joyce, Mark St. Clare and Michael Vanderhoof, participated in the offering. We also paid Cambria Capital, LLC a placement fee of $149,850 in sales commissions, reimbursement for costs associated with the placement of the Units and issued a warrant to purchase up to 199,800 shares of common stock exercisable at a price of $1.50 per share. Cambria Capital, LLC is an affiliate of Michael Vanderhoof, a member of the Board. The engagement of Cambria Capital, LLC, the payment of the placement fee and the issuance of the warrant to Cambria Capital, LLC were approved by a majority of the disinterested members of the Board. We additionally granted piggyback registration rights to Cambria Capital, LLC that are the same as those afforded to the investors in the offering. The holders of the Notes elected to convert all of the principal into 1,850,000 shares of common stock with 150,000 shares converted during 2012 and 2013, 150,000 shares converted from March 2014 to June 2014 and the remaining 1,550,000 shares converted in July 2014. The warrants remain outstanding until their exercise or expiration. Interest charges associated with the convertible notes payable, including amortization of the discounts and loan acquisition costs, totaled $208,601 for the year ended December 31, 2014.

(8) Warrants

(8) Warrants	12 Months Ended
	Dec. 31, 2015
Notes
(8) Warrants	(8) Warrants Below is a summary of warrant activity during the years ended December 31, 2014 and 2015: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Term in Years Aggregate Intrinsic Value Outstanding at January 1, 2014 2,983,565 $1.15 Granted in 2014 - $- Exercised in 2014 (122,500) $1.01 Cancelled in 2014 (652,500) $1.31 Outstanding at December 31, 2014 2,208,565 $1.11 3.35 $235,750 Granted in 2015 - $- Exercised in 2015 - $- Cancelled in 2015 (233,334) $1.01 Outstanding at December 31, 2015 1,975,231 $1.13 3.46 $265,750 Warrants exercisable at December 31, 2015 1,508,565 $1.16 2.35 $200,417 The following tables summarize information about warrants outstanding and exercisable at December 31, 2015: Range of Exercise Prices Number of Shares Outstanding Weighted Average Remaining in Contractual Life in Years Outstanding Warrants Weighted Average Exercise Price Number of Warrants Exercisable Exercisable Warrants Weighted Average Exercise Price $0.30 to $0.75 141,667 0.36 $0.60 141,667 $0.60 $0.91 to $1.84 1,833,564 3.70 $1.17 1,366,898 $1.22 $0.30 to $1.84 1,975,231 3.46 $1.13 1,508,565 $1.16 On January 16, 2013, we granted warrants to four executive employees to purchase a total of 1,500,000 shares of common stock with a strike price set at $1.01. The exercise price equals the fair value of our stock on the grant date. Of these warrants, 150,000 vested immediately and 1,350,000 vest contingent upon the Company achieving certain performance targets for fiscal years 2013 through 2016 Year Ended December 31, Number of Shares 2013 450,000 2014 366,667 2015 366,667 2016 166,666 The fair value of the warrants that vest is 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 0.14%, (ii) estimated volatility of 62.94%; (iii) dividend yield of 0.0%; and (iv) expected life of the warrants of five years. The performance targets in 2013 were deemed achieved by the Board of Directors. We have recorded stock compensation for the 150,000 initially vested shares and the 450,000 contingent shares totaling $315,176 for the year ended December 31, 2013. In March 2014, one of the executives separated from the Company which resulted in the full vesting of all 200,000 shares of his remaining warrant grants. We have recorded stock compensation for the shares totaling $105,059 for the year ended December 31, 2014. Also in 2014, three of the executives' employment agreements provided for a modification of the vesting of this warrant grant. The revised vesting schedule is as follows: Year Ended December 31, Number of Shares 2014 233,334 2015 233,334 2016 233,332 Our Board of Directors determined that the performance measures for 2014 were not met. As such the warrants for 2014 did not vest to the three executives. This tranche of warrants was cancelled. Our Board of Directors determined that the performance measures for 2015 were met. As such the warrants for 2015 vested to the three remaining executives. We have recorded stock compensation for the shares totaling $122,569 for the year ended December 31, 2015.

(9) Stock Option and Stock Ince

(9) Stock Option and Stock Incentive Plans	12 Months Ended
	Dec. 31, 2015
Notes
(9) Stock Option and Stock Incentive Plans	(9) Stock Option and Stock Incentive Plans In October 2001, we approved the 2001 Stock Option Plan under which all employees may be granted options to purchase shares of our Common Stock. The maximum number of shares of the Common Stock available for issuance under the 2001 Plan was 5,400,000 shares. Under the 2001 Stock Option Plan (the "2001 Plan"), the option exercise price was equal to the fair market value of the Common Stock on the date of grant. Options expired no later than 10 years from the grant date and generally vested within five years. The Board approved the 2003 Stock Option Plan (the "2003 Plan") and it became effective immediately upon stockholder approval at the Annual Meeting on May 15, 2003. The maximum number of shares of Common Stock available for issuance under the 2003 Plan was 4,400,000 shares. On May 15, 2003, 899,500 shares were available to grant under the 2003 Plan, and 567,167 had been granted under our former 2000 Stock Option Plan (the "2000 Plan") and the 2001 Plan. Although we no longer granted options under the 2000 Plan or the 2001 Plan, all outstanding stock options continue to be subject to the terms and conditions of the stock option agreement and the underlying plans, except to the extent the Board or the Compensation Committee elected to extend one or more features of the 2003 Plan to the outstanding stock options that were granted pursuant to the 2000 Plan or the 2001 Plan. Under the 2003 Plan, the option exercise price was equal to the fair market value of the Common Stock at the date of grant. Stock options expired no later than 10 years from the grant date and generally vested within five years. In May of 2004, the Board and stockholders approved the 2004 Stock Incentive Plan (the "2004 Plan"). The maximum number of shares of the Common Stock available for issuance under the 2004 Plan was 6,400,000 shares. As of the date of stockholder approval, May 12, 2004, options to purchase 714,750 shares had been granted pursuant to the 2000 Plan, 2001 Plan and 2003 Plan. Under the terms and conditions of the 2004 Plan, the option exercise price is equal to the fair market value of the Common Stock at the date of grant. Options expired no later than 10 years from the grant date and generally vested within five years. The Board approved the 2007 Stock Option Plan, as amended (the "2007 Plan"), and it became effective on May 16, 2007 upon receipt of stockholder approval. On May 16, 2007, options to purchase 2,890,147 shares of Common Stock had been granted pursuant to the 2000 Plan, 2001 Plan, 2003 Plan and 2004 Plan. Under the 2007 Plan, the administrator could grant options to purchase 4,470,000 shares of Common Stock. The options granted pursuant to the 2004 Plan continue to be governed by the terms and conditions of the 2004 Plan, except to the extent the administrator elected to extend one or more features of the 2007 Plan to the outstanding stock options granted pursuant to the 2004 Plan. Under the 2007 Plan, the option exercise price was equal to the fair market value of the Common Stock at the date of grant. Options expired no later than 10 years from the grant date and generally vested within three years. On March 17, 2011, the Board approved the 2011 Stock Incentive Plan (the "2011 Plan"), and it became effective on May 12, 2011. The 2011 Plan authorizes the issuance of no more than 5,970,000 shares of our Common Stock and it provides for the granting of stock options, stock appreciation rights and restricted stock to our employees, members of the Board and service providers. As of December 31, 2015, there were 1,002,411 shares available for issuance under the 2011 Plan. Additional information with respect to these Plans' stock option activity is as follows: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Term in Years Aggregate Intrinsic Value Outstanding at January 1, 2014 5,256,349 $1.03 Granted in 2014 402,500 $1.29 Exercised in 2014 (226,747) $0.92 Cancelled in 2014 (545,273) $1.04 Outstanding at December 31, 2014 4,886,829 $1.05 4.79 $912,287 Granted in 2015 270,250 $1.15 Exercised in 2015 (18,347) $0.47 Cancelled in 2015 (584,177) $1.52 Outstanding at December 31, 2015 4,554,555 $1.00 4.22 $966,509 Options exercisable at December 31, 2015 4,099,829 $0.98 4.22 $943,089 The following table summarizes information about stock options outstanding and exercisable at December 31, 2015: Range of Exercise Prices Number of Shares Outstanding Weighted Average Remaining in Contractual Life in Years Outstanding Options Weighted Average Exercise Price Number of Options Exercisable Exercisable Options Weighted Average Exercise Price $0.30 to $0.75 913,000 2.14 $0.59 914,500 $0.59 $0.76 to $0.90 811,501 4.51 $0.80 811,723 $0.80 $0.91 to $1.84 2,800,054 4.83 $1.18 2,343,606 $1.19 $1.85 to $2.15 30,000 2.67 $2.15 30,000 $2.15 $0.30 to $2.15 4,554,555 4.22 $1.00 4,099,829 $0.98 Unamortized compensation expense associated with unvested options approximates $164,965 as of December 31, 2015. The weighted average period over which these costs are expected to be recognized is approximately 1.5 years.

(10) Restricted Stock

(10) Restricted Stock	12 Months Ended
	Dec. 31, 2015
Notes
(10) Restricted Stock	(10) Restricted Stock In July 2014, in connection with our acquisition of the common stock of Delphiis, Inc., we issued to a key employee 400,000 shares of restricted stock as part of his employment agreement. The shares vest as follows: Vesting Date Shares July 1, 2016 100,000 July 1, 2017 100,000 July 1, 2018 100,000 July 1, 2019 100,000 In August 2015, the key employee's employment agreement was revised such that the first 100,000 shares became fully vested and the remaining shares were cancelled on January 1, 2016. The stock-based compensation expense recognized for these shares totaled $101,881 for the year ended December 31, 2015.

(11) Income Taxes

(11) Income Taxes	12 Months Ended
	Dec. 31, 2015
Notes
(11) Income Taxes	(11) Income Taxes For the years ended December 31, 2015 and 2014, the components of income tax expense are as follows: Year Ended December 31, 2015 2014 Current provision: Federal $70,436 $20,712 State 82,000 58,148 152,436 78,860 Deferred: Federal - - State - - - - Income tax expense $152,436 $78,860 Income tax provision amounted to $152,436 and $78,860 for the years ended December 31, 2015 and 2014, respectively (an effective rate of 10.4% for 2015 and 5.6% for 2014). A reconciliation of the provision for income taxes with amounts determined by applying the statutory U.S. federal income tax rate to income before income taxes is as follows: Year Ended December 31, 2015 2014 Computed tax at federal statutory rate of 34% $448,479 $465,951 State taxes, net of federal benefit 54,121 37,088 Non-deductible items 43,654 148,820 Other 75,828 24,310 Change in valuation allowance (469,646) (597,309) $152,436 $78,860 Realization of deferred tax assets is dependent on future earnings, if any, the timing and amount of which is uncertain. Accordingly, a valuation allowance, in an amount equal to the net deferred tax asset as of December 31, 2015 and 2014 has been established to reflect these uncertainties. As of December 31, 2015 and 2014, the net deferred tax asset before valuation allowances is approximately $4,543,000 and $5,346,000 respectively, for federal income tax purposes, and $1,044,000 and $1,067,000, respectively for state income tax purposes. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of our deferred tax assets and liabilities are as follows: Year Ended December 31, 2015 2014 Deferred tax assets: Accrued salaries/vacation $253,600 $221,900 Accrued equipment pool 127,900 105,100 State taxes 18,700 17,900 Stock options 864,500 844,700 Credits 153,000 131,800 Net operating loss carryforwards 5,064,000 5,398,100 Total deferred tax assets 6,481,700 6,719,500 Deferred tax liabilities: Depreciation 9,100 34,500 Amortization of intangibles 343,500 4,700 Other 541,600 267,400 Total deferred tax liabilities 894,200 306,600 Net deferred assets before valuation allowance 5,587,500 6,412,900 Valuation allowance (5,587,500) (6,412,900) Net deferred tax assets $- $- At December 31, 2015, we have available unused net operating loss carryforwards of approximately $12,538,000 for federal and $11,050,000 for state that may be applied against future taxable income and that, if unused, expire beginning in 2023 through 2033. Utilization of the net operating loss carryforwards may be subject to a substantial annual limitation due to ownership change limitations provided by the Internal Revenue Code under section 382. The annual limitation may result in the expiration of net operating loss carryforwards before utilization. Our Federal and state net operating loss carryforwards will begin to expire in 2023 and 2016, respectively. We evaluate our tax positions each reporting period to determine the uncertainty of such positions based upon one of the following conditions: (1) the tax position is not ''more likely than not'' to be sustained, (2) the tax position is ''more likely than not'' to be sustained, but for a lesser amount, or (3) the tax position is ''more likely than not'' to be sustained, but not in the financial period in which the tax position was originally taken. We have evaluated our tax positions for all jurisdictions and all years for which the statute of limitations remains open. We have determined that no additional liability for unrecognized tax benefits and interest was necessary.

(12) Retirement Plan

(12) Retirement Plan	12 Months Ended
	Dec. 31, 2015
Notes
(12) Retirement Plan	(12) Retirement Plan We sponsor a 401(k) plan (the "Plan") for the benefit of employees who are at least 21 years of age. Our management determines, at its discretion, the annual and matching contribution. In 2015 we contributed a matching contribution totaling $94,042. We elected not to contribute to the Plan for the year ended December 31, 2014.

(13) Commitments

(13) Commitments	12 Months Ended
	Dec. 31, 2015
Notes
(13) Commitments	(13) Commitments Leases We lease our Mission Viejo, California facility under a non-cancellable operating lease effective December 2015 that expires in April 2021. Our Carpinteria, California office lease is currently on a month-to-month basis. Rent expense for the years ended December 31, 2015 and 2014 totaled $272,064 and $204,257 respectively. Future minimum lease payments under non-cancelable operating leases during subsequent years are as follows: December 31, Payments 2016 $297,684 2017 374,751 2018 421,084 2019 433,716 2020 446,728 Thereafter 132,926 Total $2,106,889 Employment Agreements Effective January 1, 2014, we entered into an employment agreement with Joseph J. Flynn, our President and Chief Executive Officer ("CEO") since 2009 (the "Flynn Agreement"). The Flynn Agreement provides that Mr. Flynn will continue his employment as our President and CEO. The Flynn Agreement has a term of two years, provides for an annual base salary of $275,000. Mr. Flynn also receives the customary employee benefits available to our employees. Mr. Flynn is also entitled to receive a bonus of up to $150,000 per year, the achievement of which is based on Company performance metrics. Further, the Flynn Agreement revised the vesting schedule of warrants granted to Mr. Flynn in January 2013. The revision spreads the vesting date of the remaining 300,000 unvested shares from 150,000 on January 1, 2015 and 150,000 on January 1, 2016 to 100,000 on January 1, 2015, 100,000 on January 1, 2016 and 100,000 on January 1, 2017. The warrants will vest contingent with the achievement of certain financial performance metrics of the Company for calendar years 2015 and 2016. The calendar year 2014 performance metrics were not met and as such, they did not vest. The calendar year 2015 performance metrics were met. We may terminate Mr. Flynn's employment under the Flynn Agreement without cause at any time on thirty days advance written notice, at which time Mr. Flynn would receive severance pay for twelve months and be fully vested in all options and warrants granted to date. The foregoing summary of the Flynn Agreement is qualified in its entirety by reference to the full context of the employment agreement which is found as Exhibit 10.2 to our 10-Q filing on May 14, 2014. Effective January 1, 2016, we entered into an employment agreement with Mr. Flynn (the "2016 Flynn Agreement"). The 2016 Flynn Agreement provides that Mr. Flynn will continue his employment as our President and CEO. The 2016 Flynn Agreement has a term of two years, provides for an annual base salary of $300,000, and 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. Flynn also receives the customary employee benefits available to our employees. Mr. Flynn is also entitled to receive a bonus of up to $180,000 per year, the achievement of which is based on Company performance metrics. We may terminate Mr. Flynn's employment under the Flynn Agreement without cause at any time on thirty (30) days advance written notice, at which time Mr. Flynn 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 Flynn Agreement is qualified in its entirety by reference to the full context of the employment agreement, which is found as Exhibit 10.31 to this Annual Report on Form 10-K. Effective January 1, 2014, we entered into an employment agreement with Paul T. Anthony, our Chief Financial Officer ("CFO") since 2004 (the "Anthony Agreement"). The Anthony Agreement provides that Mr. Anthony will continue to serve as our EVP and CFO. The Anthony Agreement has a term of two years, and provides for an annual base salary of $225,000. Mr. Anthony also receives the customary employee benefits available to our employees. Mr. Anthony is also entitled to receive a bonus of up to $108,000 per year, the achievement of which is based on Company performance metrics. Further, the Anthony Agreement revised the vesting schedule of warrants granted to Mr. Anthony in January 2013. The revision spreads the vesting date of the remaining 200,000 unvested shares from 100,000 on January 1, 2015 and 100,000 on January 1, 2016 to 66,667 on January 1, 2015, 66,667 on January 1, 2016 and 66,666 on January 1, 2017. The warrants will vest contingent with the achievement of certain financial performance metrics of the Company for calendar years 2015 and 2016. The calendar year 2014 performance metrics were not met and as such, they did not vest. The calendar year 2015 performance metrics were met. We may terminate Mr. Anthony's employment under the Anthony Agreement without cause at any time on thirty 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 Anthony Agreement is qualified in its entirety by reference to the full context of the employment agreement which is found as Exhibit 10.3 to our 10-Q filing on May 14, 2014. Effective January 1, 2016, we entered into a new employment agreement with Mr. 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 this Annual Report on Form 10-K.

(14) Concentrations

(14) Concentrations	12 Months Ended
	Dec. 31, 2015
Notes
(14) Concentrations	(14) Concentrations Cash Concentrations At times, cash and cash equivalent 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 For the year ended December 31, 2015, there were three customers that each generated at least 10% of our revenues and these customers represented a total of 50% of revenues. As of December 31, 2015, net accounts receivable due from these customers totaled approximately $3,100,000. For the year ended December 31, 2014, there were three customers that each generated at least 10% of our revenues and these customers represented a total of 42% of revenues. As of December 31, 2014, net accounts receivable due from these customers totaled approximately $2,800,000.

(15) Stock Purchase Agreement -

(15) Stock Purchase Agreement - Delphiis, Inc.	12 Months Ended
	Dec. 31, 2015
Notes
(15) Stock Purchase Agreement - Delphiis, Inc.	(15) Stock Purchase Agreement – Delphiis, Inc. As previously disclosed in our Current Report on Form 8-K, filed with the SEC on July 8, 2014, on July 7, 2014 we entered into a Stock Purchase Agreement (the "Agreement") with Delphiis, Inc., a California corporation ("Delphiis"), certain stockholders of Delphiis (the "Stockholders"), and Mike Gentile, as seller representative ("Gentile"). By agreement of the parties, the effective date of the Agreement was July 1, 2014. Pursuant to the Agreement, we acquired 100% of the issued and outstanding shares of common stock (the "Shares") of Delphiis from the Stockholders. The purchase price paid for the Shares consisted of three components: the Securities Consideration, the Cash Consideration, and the Debt Assumption. - The Securities Consideration consisted of 930,406 shares of our common stock, which was the number of shares having an aggregate value of $1,250,000, with the price per share equal to the average of the closing price of our common stock on the OTC Markets for the 20 most recent trading days prior to the closing date, rounded up to the nearest whole number of shares. - The Cash Consideration was equal to $1,000,000. - The Debt Assumption was equal to $463,723 which was owed by Delphiis to Gentile and two other parties. By way of background, of such amount, $363,723 is represented by certain amended and restated promissory notes (the "Notes") dated of even date with the Agreement, which bear interest at the rate of 4% per annum, and pursuant to which Delphiis was to make quarterly interest-only payments on the total principal amount outstanding at the end of each calendar quarter. The Notes have a maturity date which is 24 months from the date of the Agreement and contain no prepayment penalty. Pursuant to the terms of the Notes, Delphiis will accelerate payment on (i) fifty percent (50%) of the outstanding amount due under such Notes at such time as Delphiis achieves $1,500,000 of bookings measured from the date of the Agreement, and (ii) the remaining fifty percent (50%) will be paid at such time as Delphiis achieves $4,000,000 of bookings measured from the date of the Agreement, all as set forth in the Notes. Delphiis also agreed to pay the remaining $100,000 to Gentile and the other noteholders upon Delphiis's collection of $100,000 from accounts receivable outstanding as of June 30, 2014. Pursuant to the Agreement, Auxilio, as the sole owner of Delphiis, agreed to assume the obligations of Delphiis and to make the payments pursuant to the terms of the Notes. As set forth in Note 6 above, $257,835 of such debt was converted to equity and the remaining amounts were paid out to the noteholders. The allocation of the purchase price of the assets acquired and liabilities assumed based on their fair values was as follows: Acquired technology $900,000 Customer relationships 400,000 Trademarks 50,000 Non-compete agreements 20,000 Goodwill 956,639 Other assets received 376,775 Deferred revenue (154,089) Notes payable (424,000) Other liabilities assumed (113,325) Total $2,012,000 Purchased identifiable intangible assets are amortized on a straight-line basis over the respective useful lives. The estimated useful life of the identifiable intangible assets acquired ranges from 1.5 to 10 years. We recognized goodwill of $956,639. 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 Delphiis products and services to Auxilio's customers. The Company incurred approximately $98,000 in legal, accounting and other professional fees related to this acquisition, all of which were expensed during the year ended December 31, 2014. Escrow Agreement In connection with the Agreement, we entered into an escrow agreement with the Stockholders and Colonial Stock Transfer (the "Escrow Agent"), pursuant to which we deposited $100,000 of the Cash Consideration into an escrow to be held by the Escrow Agent to cover any indemnification claims made pursuant to the Agreement. Under this escrow agreement, if no indemnification claims have been made prior to July 7, 2015, the Escrow Agent is to release the escrowed funds to the Stockholders. On July 28, 2015, the remaining $100,000 was distributed to the Stockholders by the Escrow Agent. Employment Agreement In connection with the Agreement, we entered into an employment agreement with Gentile (the "Gentile Employment Agreement"), pursuant to which Gentile was employed to serve as our Executive Vice President of Innovation and Security. The initial term of the Gentile Employment Agreement is for three years (unless sooner terminated), and automatically renews for subsequent twelve-month periods unless either party determines to not renew. Gentile's base annual salary will be $200,000, and Gentile will be eligible to receive incentive compensation. Pursuant to the Gentile Employment Agreement, Gentile will also receive 400,000 shares of our Common Stock, vesting as follows: 100,000 shares will vest 2 years from the date of the Gentile Employment Agreement; 100,000 shares will vest 3 years from the date of the Gentile Employment Agreement; 100,000 shares will vest 4 years from the date of the Gentile Employment Agreement; and 100,000 shares will vest 5 years from the date of the Gentile Employment Agreement. On August 16, 2015, we entered into a revised employment agreement with Mr. Gentile. The initial term of the agreement was changed to terminate as of January 1, 2016. The first 100,000 restricted shares of common stock were deemed to be vested and were issued to him in August 2015 with the remaining unvested shares cancelled on January 1, 2016 (Note 10). The revised agreement required a severance payment of $120,000 which was paid in January 2016.This amount was recorded as expense for the year ended December 31, 2015.

16. Asset Purchase Agreement -

16. Asset Purchase Agreement - Redspin	12 Months Ended
	Dec. 31, 2015
Notes
16. Asset Purchase Agreement - Redspin	(16) Asset Purchase Agreement – Redspin On March 31, 2015, Auxilio entered into an Asset Purchase Agreement (the "Purchase Agreement") with Redspin, Inc., a California corporation ("Redspin") and certain owners of Redspin, to acquire substantially all of the assets and certain liabilities of Redspin (the "Acquired Assets"). A copy of the Purchase Agreement was filed as an exhibit to the Current Report on Form 8-K filed with the SEC on April 6, 2015. On April 7, 2015, the Company completed its acquisition of the Acquired Assets in an asset purchase transaction (the "Transaction") pursuant to the terms and conditions of the Purchase Agreement. As a result of the consummation of the Purchase Agreement, on April 7, 2015, in consideration for the Acquired Assets, the Company paid Redspin $2,076,966 in cash, less a holdback of $200,000 to cover any indemnification claims made pursuant to the Transaction, and issued 452,284 shares of the Company's restricted common stock, par value $0.001, which was the number of shares having an aggregate value of $500,000, with the price per share equal to the average of the closing price of Auxilio common stock on the OTC Markets for the 20 most recent trading days prior to the date of the Purchase Agreement, rounded up to the nearest whole number of shares. The Company also agreed to pay a cash Earn-out Payment, as defined in the Purchase Agreement, upon the achievement of certain earnings targets in the first year following the date of the Purchase Agreement. Management estimated the fair value of the contingent consideration to be approximately $623,000. As of December 31, 2015, Management believes that the earnings targets will not be met. Accordingly, this portion of the acquisition is recorded as other income on the consolidated statement of income for the year ended December 31, 2015. If no indemnification claims have been made prior to June 30, 2016, the Company's secretary will release the holdback funds to Redspin. The Purchase Agreement also provides for the Company to pay employee bonus shares of common stock upon the achievement of the same certain earnings targets and provided they remain with the Company for one year subsequent to the acquisition date. Management previously had considered the $124,000 of fair value of these employee bonus shares to be a component of the acquisition cost. After completing the analysis of the earn-out provisions, Management has determined that the employee bonus shares would be post-combination compensation. Management believes that the minimum earnings targets will not be achieved. Accordingly no related stock compensation expense has been recorded for the year ended December 31, 2015. The allocation of the purchase price of the assets acquired and liabilities assumed based on their fair values was as follows: Acquired technology $1,050,000 Customer relationships 600,000 Trademarks 200,000 Non-compete agreements 100,000 Goodwill 1,192,000 Accounts receivable 180,409 Other assets received 19,009 Accounts payable and accrued expenses (23,196) Accrued compensation (118,009) Deferred revenue (31,247) Total $3,168,966 Purchased identifiable intangible assets are amortized on a straight-line basis over the respective useful lives. Our estimated useful life of the identifiable intangible assets acquired ranges from three to ten years. We recognized goodwill of $1,192,000. 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 $70,000 in legal, accounting and other professional fees related to this acquisition, all of which were expensed during the year ended December 31, 2015. Employment Agreement In connection with the Purchase Agreement, Auxilio and Daniel Berger ("Berger"), CEO of Redspin, entered into an employment agreement (the "Berger Employment Agreement"), pursuant to which Berger was employed to serve as Executive Vice President of Auxilio. The initial term of the Berger Employment Agreement is for two years (unless sooner terminated), and automatically renews for subsequent twelve-month periods unless either party determines to not renew. Berger's base annual salary will be $250,000, and Berger will be eligible to receive incentive compensation, consistent with that generally offered to executives of the Company. In addition, Auxilio and John Abraham ("Abraham"), Founder of Redspin, entered into an independent contractor agreement (the "Abraham Agreement"), pursuant to which Abraham was retained to perform the work assigned by the Company. The term of the Abraham Agreement is for two years (unless sooner terminated). In consideration for such services, the Company agreed to pay Abraham $11,000 per month. Pro Forma Information The following supplemental unaudited pro forma information presents the combined operating results of the Company and the acquired business during the years ended December 31, 2015 and 2014, 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 Year Ended December 31 2015 2014 Pro forma net revenue $61,952,529 $46,662,798 Pro forma net income $1,115,777 $917,342 Pro forma basic net income per share $0.05 $0.04 Pro forma diluted net income per share $0.04 $0.04

(1) Basis of Presentation and23

(1) Basis of Presentation and Summary of Significant Accounting Policies (Policies)	12 Months Ended
	Dec. 31, 2015
Policies
Basis of Presentation	Basis of Presentation The accompanying consolidated financial statements were prepared in conformity with GAAP, and include the accounts of Auxilio and our wholly-owned subsidiaries. All intercompany balances and transactions were eliminated.
Use of Estimates	Use of Estimates 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 and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Revenue Recognition	Revenue Recognition and Deferred Revenue The Company derives its revenue from four sources: (1) managed print services revenue; (2) equipment revenue; (3) software subscriptions and managed services revenue, which is comprised of subscription fees from customers accessing the Company's enterprise cloud computing services and customers purchasing additional ongoing managed services beyond the standard support that is included in the basic software subscription fees; and (4) cyber security professional services such as penetration testing, cyber security risk assessments and security program strategy development. The Company commences revenue recognition when all of the following conditions are satisfied: • there is persuasive evidence of an arrangement; • the service has been or is being provided to the customer; • the collection of the fees is reasonably assured; and • the amount of fees to be paid by the customer is fixed or determinable. · Managed Print Services and Equipment Revenue Revenue is recognized pursuant to ASC Topic 605, "Revenue Recognition" (ASC 605). Monthly service and supply revenue is earned monthly during the term of the contract, as services and supplies are provided. Revenues from equipment sales transactions are earned when there is persuasive evidence of an arrangement, delivery has occurred, the sales price has been determined and collectability has been reasonably assured. For equipment that is to be placed at a customer's location at a future date, revenue is deferred until the placement of such equipment. We enter into arrangements that include multiple deliverables, which typically consist of the sale of Multi-Function Device ("MFD") equipment and a support services contract. We account for each element within an arrangement with multiple deliverables as separate units of accounting. Revenue is allocated to each unit of accounting under the guidance of ASC Topic 605-25, Multiple-Deliverable Revenue Arrangements, which provides criteria for separating consideration in multiple-deliverable arrangements by establishing a selling price hierarchy for determining the selling price of a deliverable. The selling price used for each deliverable is based on vendor-specific objective evidence ("VSOE") if available, third-party evidence if VSOE is not available, or estimated selling price if neither VSOE nor third-party evidence is available. We are required to determine the best estimate of selling price in a manner that is consistent with that used to determine the price to sell the deliverable on a standalone basis. We generally do not separately sell MFD equipment or service on a standalone basis. Therefore, we do not have VSOE for the selling price of these units. As we purchase the equipment, we have third-party evidence of the cost of this element. We estimate the proceeds from the arrangement to allocate to the service unit based on historical cost experiences. Based on the relative costs of each unit to the overall cost of the arrangement, we utilize the same relative percentage to allocate the total arrangement proceeds. The Company’s contracts with customers may include provisions that relate to guaranteed savings amounts and shared savings. Such provisions are considered by management during the Company’s initial proprietary client assessment and are charged and accrued when deemed by management to be probable. The Company’s historical settlement of such amounts has been within management’s estimates. · Software Subscriptions and Managed Services Revenue Software subscriptions and managed services revenues are recognized ratably over the contract terms beginning on the commencement date of each contract, which is the date the Company's service is made available to customers. Amounts that have been invoiced are recorded in accounts receivable and in deferred revenue or revenue, depending on whether the revenue recognition criteria have been met. The Company's software subscription service arrangements are non-cancelable and do not contain refund-type provisions. · Cyber Security Professional Services Revenues The majority of the Company's cyber security services contracts are on a time and material basis. When these services are not combined with subscription revenues as a single unit of accounting, these revenues are recognized as the services are rendered for time and material contracts, and when the milestones are achieved and accepted by the customer for fixed price contracts.
Cash and Cash Equivalents	Cash and Cash Equivalents For purposes of the statement of cash flows and balance sheet classification, cash equivalents include all highly liquid debt instruments with original maturities of three months or less which are not securing any corporate obligations.
Accounts Receivable	Accounts Receivable We provide an allowance for doubtful accounts equal to the estimated uncollectible amounts. Our estimate is based on historical collection experience and a review of the current status of trade accounts receivable. It is reasonably possible that our estimate of the allowance for doubtful accounts will change. Management believes that no accounts receivable were uncollectible at December 31, 2015 or 2014.
Supplies	Supplies Supplies consist of parts and supplies for the automated office equipment, including copiers, facsimile machines and printers. Supplies are valued at the lower of cost or market value on a first-in, first-out basis.
Property and Equipment	Property and Equipment Property and equipment are carried at cost less accumulated depreciation. Depreciation of the property and equipment is provided using the straight-line method over the assets' estimated economic lives, which range from two to seven years. Expenditures for maintenance and repairs are charged to expense as incurred.
New Customer Implementation Costs	New customer implementation costs We ordinarily incur additional costs to implement our managed print services for new customers. These costs are comprised primarily of additional labor and support. These costs are expensed as incurred, and have a negative impact on our statements of income and cash flows during the implementation phase.
Goodwill and Intangible Assets	Goodwill and Intangible Assets The Company accounts for its business combinations in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) 805-10 through ASC 805-50, “Business Combinations” which requires that the purchase method of accounting be applied to all business combinations and addresses the criteria for initial recognition of intangible assets and goodwill. In accordance with FASB ASC 350-10 through ASC 350-30, goodwill and other intangible assets with indefinite lives are not amortized but are tested for impairment annually, or more frequently if circumstances indicate the possibility of impairment. If the carrying value of goodwill or an indefinite lived intangible asset exceeds its fair value, an impairment loss shall be recognized. Based on management’s tests and reviews, no impairment of its goodwill, intangible assets or other long-lived assets existed at December 31, 2015 or 2014. However, future events or changes in current circumstances could affect the recoverability of the carrying value of goodwill and long-lived assets. Should an asset be deemed impaired, an impairment loss would be recognized to the extent the carrying value of the asset exceeded its estimated fair value. To test for impairment, first we perform a qualitative assessment. If we determine, based on qualitative factors, that the fair value of goodwill is more likely than not greater than the carrying amount, a quantitative calculation would not be needed. Our methodology for a quantitative assessment of testing for goodwill impairment consists of one, and possibly two steps. In step one of the goodwill impairment test, management compares the carrying amount (including goodwill) of the entity-wide reporting unit and the fair value based on market capitalization. Our market capitalization is based on the closing price of our Common Stock as quoted on the OTCQB multiplied by our outstanding shares of Common Stock.
Long-lived Assets	Long-Lived Assets In accordance with ASC Topic 350, long-lived assets, such as definite lived intangible assets, to be held and used are analyzed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If there are indications of impairment, we use future undiscounted cash flows of the related asset or asset grouping over the remaining life in measuring whether the assets are recoverable. In the event such cash flows are not expected to be sufficient to recover the recorded asset values, the assets are written down to their estimated fair value. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value of asset less the cost to sell. As of December 31, 2015 and 2014, management determined there was no impairment of these assets.
Income Taxes	Income Taxes Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial reporting requirements and those imposed under federal and state tax laws. Deferred taxes are provided for timing differences in the recognition of revenue and expenses for income tax and financial reporting purposes and are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred income tax expense represents the change during the period in the deferred tax assets and liabilities. The components of the deferred tax assets and liabilities are individually classified as current and non-current based on their characteristics. Realization of the deferred tax asset is dependent on generating sufficient taxable income in future years. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.
Fair Value of Financial Instruments	Fair Value of Financial Instruments ASC Topic 820, "Fair Value Measurements," defines fair value, provides a framework for measuring fair value and expands the disclosures required for fair value measurements. The standard applies to other accounting pronouncements, but does not require any new fair value measurements. The fair value hierarchy consists of three broad levels, which are described below: Level 1 - Quoted prices in active markets for identical assets or liabilities that the entity has the ability to access. Level 2 - Observable inputs, other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs. The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses, line of credit and capital lease obligations approximate fair value due to the short-term nature of these financial instruments. The carrying amount of our host debt contract of our convertible debt approximates its fair value as we believe the credit market has not materially changed since the original borrowing date. As described in Notes 15 and 16, certain fair value measurements were made in connection with the acquisitions of Delphiis, Inc. and Redspin.
Stock-based Compensation	Stock-Based Compensation We account for stock options granted to employees and directors using the accounting guidance in ASC 718 “Stock Compensation” (“ASC 718”). In accordance with ASC 718, we estimate the fair value of service based options and performance based options on the date of grant, using the Black-Scholes pricing model. We recognize compensation expense for stock option awards over the requisite or implied service period of the grant. With respect to performance-based awards, compensation expense is recognized when the performance target is deemed probable. We account for stock options granted to consultants using the accounting guidance included in ASC 505-50 “Equity-Based Payments to Non-Employees.” In accordance with ASC 505-50, we estimate the fair value of service-based stock options and performance-based options at each reporting period using the Black-Scholes pricing model. The measurement date of the fair value of the equity instrument issued is the earlier of the date on which the counterparty’s performance is complete or the date on which it is probable that performance will occur. For the years ended December 31, 2015 and 2014, stock-based compensation expense recognized in the consolidated statements of income is as follows: Year Ended December 31, 2015 2014 Cost of revenues 137,279 173,089 Sales and marketing 34,203 19,371 General and administrative expenses 208,066 118,235 Total stock based compensation expense 379,548 310,695 The weighted average estimated fair value of stock options granted during 2015 and 2014 was $0.42 and $0.55 per share, respectively. These amounts were determined using the Black-Scholes option-pricing model, which values options based on the stock price at the grant date, the expected life of the option, the estimated volatility of the stock, the expected dividend payments, and the risk-free interest rate over the expected life of the option. The assumptions used in the Black-Scholes model were as follows for stock options granted in 2015 and 2014: 2015 2014 Risk-free interest rate 0.08% to 0.12% 0.07% to 0.09% Expected volatility of our Common Stock 46.74% to 54.98% 57.08% to 64.72% Dividend yield 0% 0% Expected life of options 3 years 3 years The Black-Scholes model was developed for estimating the fair value of traded options that have no vesting restrictions and are fully transferable. Because option valuation models require the use of subjective assumptions, changes in these assumptions can materially affect the fair value of the options. Compensation cost associated with grants of restricted stock units are also measured at fair value. We evaluate the assumptions used to value restricted stock units on a quarterly basis. When factors change, including the market price of the stock, share-based compensation expense may differ significantly from what was recorded in the past. If there are any modifications or cancellations of the underlying unvested securities, we may be required to accelerate, increase or cancel any remaining unearned share-based compensation expense. As of December 31, 2015, we have not granted any restricted stock units under the 2011 Stock Incentive Plan.
Basic and Diluted Net Income Per Share	Basic and Diluted Net Income Per Share In accordance with ASC Topic 260, "Earnings Per Share," basic net income per share is calculated using the weighted average number of shares of our Common Stock issued and outstanding during a certain period, and is calculated by dividing net income by the weighted average number of shares of our Common Stock issued and outstanding during such period. Diluted net income per share is calculated using the weighted average number of common and potentially dilutive common shares outstanding during the period, using the as-if converted method for secured convertible notes, and the treasury stock method for options and warrants. As of December 31, 2015, potentially dilutive securities consisted of options and warrants to purchase 6,529,786 shares of our Common Stock at prices ranging from $0.30 to $2.15 per share. Of these potentially dilutive securities, only 828,364 of the shares to purchase Common Stock from the options and warrants are included from the computation of diluted earnings per share because the effect of including the remaining instruments would be anti-dilutive. As of December 31, 2014, potentially dilutive securities consisted of options and warrants to purchase 7,095,394 shares of our Common Stock at prices ranging from $0.30 to $2.15 per share. Of these potentially dilutive securities, only 1,374,839 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. The following table sets forth the computation of basic and diluted net income per share: Year Ended December 31, 2015 2014 Numerator: Net income 1,316,656 1,336,919 Effects of dilutive securities: Convertible notes payable - 75,189 Income after effects of conversion of note payable 1,316,656 1,412,108 Denominator: Denominator for basic calculation weighted averages 24,150,572 22,062,789 Dilutive Common Stock equivalents: Convertible debt - - Options and warrants 828,364 1,374,839 Denominator for diluted calculation weighted average 24,978,936 23,437,628 Net income per share: Basic net income per share .05 .06 Diluted net income per share .05 .06
Segment Reporting	Segment Reporting Based on our integration and management strategies, we operate in a single business segment. For the years ended December 31, 2015 and 2014, all revenues were derived from domestic operations.
New Accounting Pronouncements	New Accounting Pronouncements In April 2015 and August 2015, the FASB issued guidance which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability consistent with the presentation of debt discounts, however debt issuance costs related to revolving credit agreements may be presented in the balance sheet as an asset. This guidance is effective for us in the first quarter of 2016 and is not expected to have a material impact on our consolidated financial statements. In November 2015, the FASB issued guidance related to the presentation of deferred income taxes. The guidance requires that deferred tax assets and liabilities are classified as non-current in a consolidated balance sheet. This guidance is effective for us in the first quarter of 2017 and is not expected to materially impact our financial position or net earnings. 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. We are in the process of evaluating the impact of the new guidance on our consolidated financial statements. 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 are evaluating the impact that adopting this guidance will have on our consolidated financial statements.

(1) Basis of Presentation and24

(1) Basis of Presentation and Summary of Significant Accounting Policies: Stock-based Compensation: Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs (Tables)	12 Months Ended
	Dec. 31, 2015
Tables/Schedules
Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs	For the years ended December 31, 2015 and 2014, stock-based compensation expense recognized in the consolidated statements of income is as follows: Year Ended December 31, 2015 2014 Cost of revenues 137,279 173,089 Sales and marketing 34,203 19,371 General and administrative expenses 208,066 118,235 Total stock based compensation expense 379,548 310,695

(1) Basis of Presentation and25

(1) Basis of Presentation and Summary of Significant Accounting Policies: Stock-based Compensation: Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions (Tables)	12 Months Ended
	Dec. 31, 2015
Tables/Schedules
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions	The assumptions used in the Black-Scholes model were as follows for stock options granted in 2015 and 2014: 2015 2014 Risk-free interest rate 0.08% to 0.12% 0.07% to 0.09% Expected volatility of our Common Stock 46.74% to 54.98% 57.08% to 64.72% Dividend yield 0% 0% Expected life of options 3 years 3 years

(1) Basis of Presentation and26

(1) Basis of Presentation and Summary of Significant Accounting Policies: Basic and Diluted Net Income Per Share: Schedule of Earnings Per Share, Basic and Diluted (Tables)	12 Months Ended
	Dec. 31, 2015
Tables/Schedules
Schedule of Earnings Per Share, Basic and Diluted	The following table sets forth the computation of basic and diluted net income per share: Year Ended December 31, 2015 2014 Numerator: Net income 1,316,656 1,336,919 Effects of dilutive securities: Convertible notes payable - 75,189 Income after effects of conversion of note payable 1,316,656 1,412,108 Denominator: Denominator for basic calculation weighted averages 24,150,572 22,062,789 Dilutive Common Stock equivalents: Convertible debt - - Options and warrants 828,364 1,374,839 Denominator for diluted calculation weighted average 24,978,936 23,437,628 Net income per share: Basic net income per share .05 .06 Diluted net income per share .05 .06

(2) Accounts Receivable_ Schedu

(2) Accounts Receivable: Schedule of Accounts Receivable (Tables)	12 Months Ended
	Dec. 31, 2015
Tables/Schedules
Schedule of Accounts Receivable	A summary of accounts receivable follows: As of December 31, 2015 2014 Trade receivables 7,458,022 8,105,330 Unapplied advances and unbilled revenue, net (60,065) (1,297,147) Allowance for doubtful accounts - - 7,397,957 6,808,183

(3) Property and Equipment_ Pro

(3) Property and Equipment: Property, Plant and Equipment (Tables)	12 Months Ended
	Dec. 31, 2015
Tables/Schedules
Property, Plant and Equipment	A summary of property and equipment follows: As of December 31, 2015 2014 Furniture and fixtures 102,316 68,184 Computers and office equipment 623,810 650,352 Fleet equipment 373,572 260,866 Leasehold improvements 103,993 3,838 1,203,691 983,240 Less accumulated depreciation and amortization (708,367) (767,493) 495,324 215,747

(4) Intangible Assets_ Schedule

(4) Intangible Assets: Schedule of Intangible Assets (Tables)	12 Months Ended
	Dec. 31, 2015
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: As of December 31, 2015 2014 Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization Delphiis,.Inc. Acquired technology $900,000 $(135,000) $900,000 $(45,000) Customer relationships 400,000 (120,000) 400,000 (40,000) Trademarks 50,000 (50,000) 50,000 (16,667) Non-compete agreements 20,000 (10,000) 20,000 (3,333) Total intangible assets, Delphiis, Inc. $1,370,000 $(315,000) $1,370,000 $(105,000) Redspin Acquired technology $1,050,000 (78,750) - - Customer relationships 600,000 (150,000) - - Trademarks 200,000 (30,000) - - Non-compete agreements 100,000 (15,000) - - Total intangible assets, Redspin $1,950,000 $(273,750) - - Total intangible assets $3,320,000 $(588,750) $1,370,000 $(105,000)

(8) Warrants_ Warrant Activity

(8) Warrants: Warrant Activity (Tables)	12 Months Ended
	Dec. 31, 2015
Tables/Schedules
Warrant Activity	Below is a summary of warrant activity during the years ended December 31, 2014 and 2015: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Term in Years Aggregate Intrinsic Value Outstanding at January 1, 2014 2,983,565 $1.15 Granted in 2014 - $- Exercised in 2014 (122,500) $1.01 Cancelled in 2014 (652,500) $1.31 Outstanding at December 31, 2014 2,208,565 $1.11 3.35 $235,750 Granted in 2015 - $- Exercised in 2015 - $- Cancelled in 2015 (233,334) $1.01 Outstanding at December 31, 2015 1,975,231 $1.13 3.46 $265,750 Warrants exercisable at December 31, 2015 1,508,565 $1.16 2.35 $200,417

(8) Warrants_ Schedule of Share

(8) Warrants: Schedule of Share-based Compensation, Warrants, by Exercise Price Range (Tables)	12 Months Ended
	Dec. 31, 2015
Tables/Schedules
Schedule of Share-based Compensation, Warrants, by Exercise Price Range	The following tables summarize information about warrants outstanding and exercisable at December 31, 2015: Range of Exercise Prices Number of Shares Outstanding Weighted Average Remaining in Contractual Life in Years Outstanding Warrants Weighted Average Exercise Price Number of Warrants Exercisable Exercisable Warrants Weighted Average Exercise Price $0.30 to $0.75 141,667 0.36 $0.60 141,667 $0.60 $0.91 to $1.84 1,833,564 3.70 $1.17 1,366,898 $1.22 $0.30 to $1.84 1,975,231 3.46 $1.13 1,508,565 $1.16

(9) Stock Option and Stock In32

(9) Stock Option and Stock Incentive Plans: Schedule of Share-based Compensation, Stock Options, Activity (Tables)	12 Months Ended
	Dec. 31, 2015
Tables/Schedules
Schedule of Share-based Compensation, Stock Options, Activity	Additional information with respect to these Plans' stock option activity is as follows: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Term in Years Aggregate Intrinsic Value Outstanding at January 1, 2014 5,256,349 $1.03 Granted in 2014 402,500 $1.29 Exercised in 2014 (226,747) $0.92 Cancelled in 2014 (545,273) $1.04 Outstanding at December 31, 2014 4,886,829 $1.05 4.79 $912,287 Granted in 2015 270,250 $1.15 Exercised in 2015 (18,347) $0.47 Cancelled in 2015 (584,177) $1.52 Outstanding at December 31, 2015 4,554,555 $1.00 4.22 $966,509 Options exercisable at December 31, 2015 4,099,829 $0.98 4.22 $943,089

(9) Stock Option and Stock In33

(9) Stock Option and Stock Incentive Plans: Schedule of Share-based Compensation, Shares Authorized under Stock Option Plans, by Exercise Price Range (Tables)	12 Months Ended
	Dec. 31, 2015
Tables/Schedules
Schedule of Share-based Compensation, Shares Authorized under Stock Option Plans, by Exercise Price Range	The following table summarizes information about stock options outstanding and exercisable at December 31, 2015: Range of Exercise Prices Number of Shares Outstanding Weighted Average Remaining in Contractual Life in Years Outstanding Options Weighted Average Exercise Price Number of Options Exercisable Exercisable Options Weighted Average Exercise Price $0.30 to $0.75 913,000 2.14 $0.59 914,500 $0.59 $0.76 to $0.90 811,501 4.51 $0.80 811,723 $0.80 $0.91 to $1.84 2,800,054 4.83 $1.18 2,343,606 $1.19 $1.85 to $2.15 30,000 2.67 $2.15 30,000 $2.15 $0.30 to $2.15 4,554,555 4.22 $1.00 4,099,829 $0.98

(11) Income Taxes_ Schedule of

(11) Income Taxes: Schedule of Components of Income Tax Expense (Benefit) (Tables)	12 Months Ended
	Dec. 31, 2015
Tables/Schedules
Schedule of Components of Income Tax Expense (Benefit)	For the years ended December 31, 2015 and 2014, the components of income tax expense are as follows: Year Ended December 31, 2015 2014 Current provision: Federal $70,436 $20,712 State 82,000 58,148 152,436 78,860 Deferred: Federal - - State - - - - Income tax expense $152,436 $78,860

(11) Income Taxes_ Schedule o35

(11) Income Taxes: Schedule of Effective Income Tax Rate Reconciliation (Tables)	12 Months Ended
	Dec. 31, 2015
Tables/Schedules
Schedule of Effective Income Tax Rate Reconciliation	A reconciliation of the provision for income taxes with amounts determined by applying the statutory U.S. federal income tax rate to income before income taxes is as follows: Year Ended December 31, 2015 2014 Computed tax at federal statutory rate of 34% $448,479 $465,951 State taxes, net of federal benefit 54,121 37,088 Non-deductible items 43,654 148,820 Other 75,828 24,310 Change in valuation allowance (469,646) (597,309) $152,436 $78,860

(11) Income Taxes_ Schedule o36

(11) Income Taxes: Schedule of Deferred Tax Assets and Liabilities (Tables)	12 Months Ended
	Dec. 31, 2015
Tables/Schedules
Schedule of Deferred Tax Assets and Liabilities	Significant components of our deferred tax assets and liabilities are as follows: Year Ended December 31, 2015 2014 Deferred tax assets: Accrued salaries/vacation $253,600 $221,900 Accrued equipment pool 127,900 105,100 State taxes 18,700 17,900 Stock options 864,500 844,700 Credits 153,000 131,800 Net operating loss carryforwards 5,064,000 5,398,100 Total deferred tax assets 6,481,700 6,719,500 Deferred tax liabilities: Depreciation 9,100 34,500 Amortization of intangibles 343,500 4,700 Other 541,600 267,400 Total deferred tax liabilities 894,200 306,600 Net deferred assets before valuation allowance 5,587,500 6,412,900 Valuation allowance (5,587,500) (6,412,900) Net deferred tax assets $- $-

(13) Commitments_ Schedule of F

(13) Commitments: Schedule of Future Minimum Lease Payments for Operating Leases (Tables)	12 Months Ended
	Dec. 31, 2015
Tables/Schedules
Schedule of Future Minimum Lease Payments for Operating Leases	Future minimum lease payments under non-cancelable operating leases during subsequent years are as follows: December 31, Payments 2016 $297,684 2017 374,751 2018 421,084 2019 433,716 2020 446,728 Thereafter 132,926 Total $2,106,889

(15) Stock Purchase Agreement38

(15) Stock Purchase Agreement - Delphiis, Inc.: Schedule of Allocation of the Purchase Price of the Assets Acquired and Liabilities Assumed (Tables)	12 Months Ended
	Dec. 31, 2015
Delphiis, Inc.
Schedule of Allocation of the Purchase Price of the Assets Acquired and Liabilities Assumed	The allocation of the purchase price of the assets acquired and liabilities assumed based on their fair values was as follows: Acquired technology $900,000 Customer relationships 400,000 Trademarks 50,000 Non-compete agreements 20,000 Goodwill 956,639 Other assets received 376,775 Deferred revenue (154,089) Notes payable (424,000) Other liabilities assumed (113,325) Total $2,012,000

16. Asset Purchase Agreement 39

16. Asset Purchase Agreement - Redspin: Schedule of Allocation of the Purchase Price of the Assets Acquired and Liabilities Assumed (Tables)	12 Months Ended
	Dec. 31, 2015
Redspin, Inc.
Schedule of Allocation of the Purchase Price of the Assets Acquired and Liabilities Assumed	The allocation of the purchase price of the assets acquired and liabilities assumed based on their fair values was as follows: Acquired technology $1,050,000 Customer relationships 600,000 Trademarks 200,000 Non-compete agreements 100,000 Goodwill 1,192,000 Accounts receivable 180,409 Other assets received 19,009 Accounts payable and accrued expenses (23,196) Accrued compensation (118,009) Deferred revenue (31,247) Total $3,168,966

16. Asset Purchase Agreement 40

16. Asset Purchase Agreement - Redspin: Business Acquisition, Pro Forma Information (Tables)	12 Months Ended
	Dec. 31, 2015
Redspin, Inc.
Business Acquisition, Pro Forma Information	Year Ended December 31 2015 2014 Pro forma net revenue $61,952,529 $46,662,798 Pro forma net income $1,115,777 $917,342 Pro forma basic net income per share $0.05 $0.04 Pro forma diluted net income per share $0.04 $0.04

(1) Basis of Presentation and41

(1) Basis of Presentation and Summary of Significant Accounting Policies: Property and Equipment (Details)	12 Months Ended
	Dec. 31, 2015
Minimum
Property, Plant and Equipment, Useful Life	2 years
Maximum
Property, Plant and Equipment, Useful Life	7 years

(1) Basis of Presentation and42

(1) Basis of Presentation and Summary of Significant Accounting Policies: Stock-based Compensation: Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs (Details) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Allocated Share-based Compensation Expense	$ 379,548	$ 310,695
Cost of revenues
Allocated Share-based Compensation Expense	137,279	173,089
Sales and marketing
Allocated Share-based Compensation Expense	34,203	19,371
General and administrative expense
Allocated Share-based Compensation Expense	$ 208,066	$ 118,235

(1) Basis of Presentation and43

(1) Basis of Presentation and Summary of Significant Accounting Policies: Stock-based Compensation (Details) - $ / shares	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Details
Options, Granted, Weighted Average Estimated Fair Value	$ 0.42	$ 0.55

(1) Basis of Presentation and44

(1) Basis of Presentation and Summary of Significant Accounting Policies: Stock-based Compensation: Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions (Details)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Fair Value Assumptions, Method Used	Black-Scholes model
Dividend yield	0.00%	0.00%
Expected life of options	3 years	3 years
Minimum
Risk-free interest rate	0.08%	0.07%
Expected volatility of our Common Stock	46.74%	57.08%
Maximum
Risk-free interest rate	0.12%	0.09%
Expected volatility of our Common Stock	54.98%	64.72%

(1) Basis of Presentation and45

(1) Basis of Presentation and Summary of Significant Accounting Policies: Basic and Diluted Net Income Per Share (Details) - $ / shares	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	828,364	1,374,839
Options And Warrants
Potentially Dilutive Securities	6,529,786	7,095,394
Options And Warrants | Minimum
Potentially dilutive securities, exercise price	$ 0.30	$ 0.30
Options And Warrants | Maximum
Potentially dilutive securities, exercise price	$ 2.15	$ 2.15

(1) Basis of Presentation and46

(1) Basis of Presentation and Summary of Significant Accounting Policies: Basic and Diluted Net Income Per Share: Schedule of Earnings Per Share, Basic and Diluted (Details) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Numerator:
Net income	$ 1,316,656	$ 1,336,919
Effects of dilutive securities:
Convertible notes payable	0	75,189
Income after effects of conversion of note payable	$ 1,316,656	$ 1,412,108
Denominator:
Denominator for basic calculation weighted averages	24,150,572	22,062,789
Dilutive Common Stock equivalents:
Convertible debt	0	0
Options and warrants	828,364	1,374,839
Denominator for diluted calculation weighted average	24,978,936	23,437,628
Net income per share:
Basic net income (loss) per share	$ 0.05	$ 0.06
Diluted net income (loss) per share	$ 0.05	$ 0.06

(2) Accounts Receivable_ Sche47

(2) Accounts Receivable: Schedule of Accounts Receivable (Details) - USD ($)	Dec. 31, 2015	Dec. 31, 2014
Details
Trade receivables	$ 7,458,022	$ 8,105,330
Unapplied advances and unbilled revenue	(60,065)	(1,297,147)
Allowance for doubtful accounts	0	0
Accounts Receivable, Net, Current, Total	$ 7,397,957	$ 6,808,183

(3) Property and Equipment_ P48

(3) Property and Equipment: Property, Plant and Equipment (Details) - USD ($)	Dec. 31, 2015	Dec. 31, 2014
Property, Plant and Equipment, Gross	$ 1,203,691	$ 983,240
Less accumulated depreciation and amortization	(708,367)	(767,493)
Property and equipment, net	495,324	215,747
Furniture and Fixtures
Property, Plant and Equipment, Gross	102,316	68,184
Office Equipment
Property, Plant and Equipment, Gross	623,810	650,352
Fleet Equipment
Property, Plant and Equipment, Gross	373,572	260,866
Leasehold Improvements
Property, Plant and Equipment, Gross	$ 103,993	$ 3,838

(3) Property and Equipment (Det

(3) Property and Equipment (Details) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Details
Depreciation and amortization expense	$ 155,183	$ 107,621

(4) Intangible Assets_ Schedu50

(4) Intangible Assets: Schedule of Intangible Assets (Details) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Gross Carrying Amount	$ 3,320,000	$ 1,370,000
Accumulated Amortization	(588,750)	(105,000)
Delphiis, Inc.
Gross Carrying Amount	1,370,000	1,370,000
Accumulated Amortization	(315,000)	(105,000)
Delphiis, Inc. | Acquired Technology
Gross Carrying Amount	900,000	900,000
Accumulated Amortization	(135,000)	(45,000)
Delphiis, Inc. | Customer Relationships
Gross Carrying Amount	400,000	400,000
Accumulated Amortization	(120,000)	(40,000)
Delphiis, Inc. | Trademarks
Gross Carrying Amount	50,000	50,000
Accumulated Amortization	(50,000)	(16,667)
Delphiis, Inc. | Noncompete Agreements
Gross Carrying Amount	20,000	20,000
Accumulated Amortization	(10,000)	(3,333)
Redspin, Inc.
Gross Carrying Amount	1,950,000	0
Accumulated Amortization	(273,750)	0
Redspin, Inc. | Acquired Technology
Gross Carrying Amount	1,050,000	0
Accumulated Amortization	(78,750)	0
Redspin, Inc. | Customer Relationships
Gross Carrying Amount	600,000	0
Accumulated Amortization	(150,000)	0
Redspin, Inc. | Trademarks
Gross Carrying Amount	200,000	0
Accumulated Amortization	(30,000)	0
Redspin, Inc. | Noncompete Agreements
Gross Carrying Amount	100,000	0
Accumulated Amortization	$ (15,000)	$ 0
Minimum
Intangible Asset, Useful Life	1 year 6 months
Maximum
Intangible Asset, Useful Life	10 years

(5) Line of Credit and Term L51

(5) Line of Credit and Term Loan (Details) - USD ($)	1 Months Ended	12 Months Ended
	Jun. 30, 2015	Dec. 31, 2015	Dec. 31, 2014	Jun. 19, 2015	May. 09, 2012
Line of Credit Facility, Initiation Date		May 4, 2012
Line of Credit
Debt Instrument, Description of Variable Rate Basis		prime	prime
Debt Instrument, Basis Spread on Variable Rate		0.75%	1.00%
Line of Credit Facility, Maximum Borrowing Capacity				$ 2,000,000
Line of Credit Facility, Interest Rate at Period End		4.25%
Line of Credit Facility, Borrowing Capacity, Description		The amount available to us at any given time is the lesser of (a) $2.0 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).
Line of Credit | Avidbank
Interest Charges		$ 16,347	$ 22,776
Term Loan
Debt Instrument, Description of Variable Rate Basis		prime
Debt Instrument, Basis Spread on Variable Rate		1.25%
Line of Credit Facility, Maximum Borrowing Capacity				$ 4,000,000
Line of Credit Facility, Interest Rate at Period End		4.75%
Proceeds from Lines of Credit	$ 2,000,000
Long-term Line of Credit		$ 1,750,000
Line of Credit Facility, Covenant Terms		While there are outstanding credit extensions, we are to maintain a liquidity ratio of cash plus accounts receivable divided by all obligations owing to the bank of at least 1.75 to 1.00, measured monthly, and a debt coverage ratio, whereby adjusted EBITDA for the most recent twelve months shall be no less than 1.50 to 1.00 of the sum of the annual principal payments to come due in respect of the term loan advances plus the annualized interest expense of the quarter ending on the measurement date. We were in compliance with all of the Avidbank agreement covenants as of December 31, 2015 and December 31, 2014.
Term Loan | Avidbank
Warrants, Outstanding					72,098
Exercise Price of Warrants					$ 1.39
Interest Charges		$ 59,385

(6) Notes Payable - Related P52

(6) Notes Payable - Related Parties (Details) - USD ($)	1 Months Ended	3 Months Ended		4 Months Ended	12 Months Ended		24 Months Ended
	Jul. 31, 2014	Sep. 30, 2015	Mar. 31, 2015	Jun. 30, 2014	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Common Stock
Debt Conversion, Converted Instrument, Shares Issued	1,550,000			150,000			150,000
Delphiis, Inc.
Acquisition, Debt Assumed					$ 463,723	$ 463,723
Delphiis, Inc. | $100,000 Promissory Note
Repayments of Debt						100,000
Debt Conversion, Original Debt, Amount					$ 257,835
Delphiis, Inc. | Delphiis Noteholder 1 | Common Stock
Stock Issued During Period, Shares, Share-based Compensation					128,917
Delphiis, Inc. | Delphiis Noteholder 1 | Common Stock | Restricted Stock Units (RSUs)
Stock Issued During Period, Shares, Share-based Compensation					128,918
Delphiis, Inc. | Delphiis Noteholder 1 | Conversion 1
Debt Conversion, Original Debt, Amount			$ 257,835
Delphiis, Inc. | Delphiis Noteholder 1 | Conversion 1 | Common Stock
Debt Conversion, Converted Instrument, Shares Issued			257,835
Delphiis, Inc. | Delphiis Noteholder 2
Repayments of Notes Payable		$ 52,944	$ 52,944
Delphiis, Inc. | $363,723 Promissory Note
Amortization of Debt Discount					$ 33,258	$ 17,093

(7) Convertible Notes Payable (

(7) Convertible Notes Payable (Details)	1 Months Ended	4 Months Ended	12 Months Ended			24 Months Ended
	Jul. 31, 2014shares	Jun. 30, 2014shares	Dec. 31, 2015shares	Dec. 31, 2014USD ($)	Dec. 31, 2011USD ($)	Dec. 31, 2013shares	Jul. 29, 2011$ / sharesshares
Common Stock
Debt Conversion, Converted Instrument, Shares Issued | shares	1,550,000	150,000				150,000
Convertible Debt Securities
Private Offering of Secured Convertible Notes And Warrants Closed Date			Jul. 29, 2011
Proceeds From Convertible Notes and Warrants | $					$ 1,850,000
Debt Instrument, Description			Each of the Units consisted of (i) a $5,000 secured convertible promissory note (each a 'Note' and collectively 'Notes') and (ii) a warrant (each a 'Warrant' and collectively 'Warrants') to purchase 1,000 shares of our common stock at an exercise price of $1.50 per share.
Debt Instrument, Maturity Date			Jul. 29, 2014
Debt Instrument, Interest Rate, Stated Percentage			8.00%
Warrants Expiration Date			Apr. 29, 2016
Warrants, Outstanding | shares			370,000
Sales Commissions and Fees | $					$ 149,850
Interest Charges | $				$ 208,601
Convertible Debt Securities | Cambria Capital LLC
Warrants, Outstanding | shares							199,800
Exercise Price of Warrants | $ / shares							$ 1.50
Convertible Debt Securities | Common Stock
Debt Instrument, Convertible, Number of Equity Instruments			1,850,000

(8) Warrants_ Warrant Activit54

(8) Warrants: Warrant Activity (Details)	12 Months Ended
	Dec. 31, 2015USD ($)$ / sharesshares	Dec. 31, 2014USD ($)$ / sharesshares
Details
Warrants, Outstanding, Beginning Balance | shares	2,208,565	2,983,565
Outstanding, Weighted Average Exercise Price, Beginning Balance	$ 1.11	$ 1.15
Granted | shares	0	0
Granted, Weighted Average Exercise Price	$ 0	$ 0
Exercised | shares	0	(122,500)
Exercised, Weighted Average Exercise Price	$ 0	$ 1.01
Cancelled | shares	(233,334)	(652,500)
Cancelled, Weighted Average Exercise Price	$ 1.01	$ 1.31
Warrants, Outstanding, Ending Balance | shares	1,975,231	2,208,565
Outstanding, Weighted Average Exercise Price, Ending Balance	$ 1.13	$ 1.11
Outstanding, Weighted Average Remaining Contractual Life	3.46	3.35
Outstanding, Intrinsic Value | $	$ 265,750	$ 235,750
Exercisable	1,508,565
Exercisable, Weighted Average Exercise Price	$ 1.16
Exercisable, Weighted Average Remaining Contractual Life	2.35
Exercisable, Intrinsic Value | $	$ 200,417

(8) Warrants_ Schedule of Sha55

(8) Warrants: Schedule of Share-based Compensation, Warrants, by Exercise Price Range (Details) - $ / shares	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Number of Shares Outstanding	4,554,555	4,886,829	5,256,349
Warrants | $0.30 to 0.75
Number of Shares Outstanding	141,667
Weighted Average Remaining in Contractual Life in Years	4 months 10 days
Outstanding Warrants Weighted Average Exercise Price	$ 0.60
Number of Warrants Exercisable	141,667
Exercisable Warrants Weighted Average Exercise Price	$ 0.60
Exercise Price Range, Lower Range Limit	0.30
Exercise Price Range, Upper Range Limit	$ 0.75
Warrants | $0.91 to 1.84
Number of Shares Outstanding	1,833,564
Weighted Average Remaining in Contractual Life in Years	3 years 8 months 12 days
Outstanding Warrants Weighted Average Exercise Price	$ 1.17
Number of Warrants Exercisable	1,366,898
Exercisable Warrants Weighted Average Exercise Price	$ 1.22
Exercise Price Range, Lower Range Limit	0.91
Exercise Price Range, Upper Range Limit	$ 1.84
Warrants | $0.30 to 1.84
Number of Shares Outstanding	1,975,231
Weighted Average Remaining in Contractual Life in Years	3 years 5 months 16 days
Outstanding Warrants Weighted Average Exercise Price	$ 1.13
Number of Warrants Exercisable	1,508,565
Exercisable Warrants Weighted Average Exercise Price	$ 1.16
Exercise Price Range, Lower Range Limit	0.30
Exercise Price Range, Upper Range Limit	$ 1.84

(8) Warrants (Details)

(8) Warrants (Details) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013	Jan. 16, 2013
Fair Value Assumptions, Method Used	Black-Scholes model
Expected Dividend Rate	0.00%	0.00%
Expected Term	3 years	3 years
Allocated Share-based Compensation Expense	$ 379,548	$ 310,695
ExecutivePerformanceTargetWarrantsMember
Warrants, Outstanding				1,500,000
Exercise Price of Warrants				$ 1.01
Award Vesting Rights	The revised vesting schedule is as follows: Year Ended December 31, Number of Shares 2014 233,334 2015 233,334 2016 233,332		Year Ended December 31, Number of Shares 2013 450,000 2014 366,667 2015 366,667 2016 166,666
Fair Value Assumptions, Method Used	Black-Scholes option-pricing model
Risk Free Interest Rate	0.14%
Expected Volatility Rate	62.94%
Expected Dividend Rate	0.00%
Expected Term	5 years
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period		200,000
ExecutivePerformanceTargetWarrantsMember | Vested
Warrants, Outstanding				150,000
Allocated Share-based Compensation Expense	$ 122,569	$ 105,059	$ 315,176
ExecutivePerformanceTargetWarrantsMember | Unvested
Warrants, Outstanding				1,350,000

(9) Stock Option and Stock In57

(9) Stock Option and Stock Incentive Plans (Details) - USD ($)	12 Months Ended	40 Months Ended	52 Months Ended	89 Months Ended
	Dec. 31, 2015	May. 15, 2003	May. 12, 2004	May. 16, 2007	May. 12, 2011	Oct. 31, 2001
Employee Stock Option
Unamortized compensation expense associated with unvested options	$ 164,965
Weighted average period over which costs are expected to be recognized	1 year 6 months
2001 Stock Option Plan
Number of Shares Authorized						5,400,000
Terms of Award	Under the 2001 Stock Option Plan (the '2001 Plan'), the option exercise price was equal to the fair market value of the Common Stock on the date of grant. Options expired no later than 10 years from the grant date and generally vested within five years.
Granted		567,167
2003 Stock Option Plan
Number of Shares Authorized		4,400,000
Terms of Award	Under the 2003 Plan, the option exercise price was equal to the fair market value of the Common Stock at the date of grant. Stock options expired no later than 10 years from the grant date and generally vested within five years.
Number of Shares Available for Grant		899,500
Granted			714,750
2004 Stock Option Plan
Number of Shares Authorized			6,400,000
Terms of Award	Under the terms and conditions of the 2004 Plan, the option exercise price is equal to the fair market value of the Common Stock at the date of grant. Options expired no later than 10 years from the grant date and generally vested within five years.
Granted				2,890,147
2007 Stock Option Plan
Number of Shares Authorized				4,470,000
Terms of Award	Under the 2007 Plan, the option exercise price was equal to the fair market value of the Common Stock at the date of grant. Options expired no later than 10 years from the grant date and generally vested within three years.
2011 Stock Option Plan
Number of Shares Authorized					5,970,000
Number of Shares Available for Grant	1,002,411

(9) Stock Option and Stock In58

(9) Stock Option and Stock Incentive Plans: Schedule of Share-based Compensation, Stock Options, Activity (Details) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Details
Outstanding, Beginning Balance	4,886,829	5,256,349
Outstanding, Weighted Average Exercise Price, Beginning Balance	$ 1.05	$ 1.03
Granted	270,250	402,500
Granted, Weighted Average Exercise Price	$ 1.15	$ 1.29
Exercised	(18,347)	(226,747)
Exercised, Weighted Average Exercise Price	$ 0.47	$ 0.92
Cancelled	(584,177)	(545,273)
Cancelled, Weighted Average Exercise Price	$ 1.52	$ 1.04
Outstanding, Ending Balance	4,554,555	4,886,829
Outstanding, Weighted Average Exercise Price, Ending Balance	$ 1	$ 1.05
Outstanding, Weighted Average Remaining Term in Years	4 years 2 months 19 days	4 years 9 months 14 days
Outstanding, Aggregate Intrinsic Value	$ 966,509	$ 912,287
Exercisable	4,099,829
Exercisable, Weighted Average Exercise Price	$ 0.98
Exercisable, Weighted Average Remaining Term in Years	4 years 2 months 19 days
Exercisable, Aggregate Intrinsic Value	$ 943,089

(9) Stock Option and Stock In59

(9) Stock Option and Stock Incentive Plans: Schedule of Share-based Compensation, Shares Authorized under Stock Option Plans, by Exercise Price Range (Details) - $ / shares	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Number of Shares Outstanding	4,554,555	4,886,829	5,256,349
Employee Stock Option | $0.30 to 0.75
Number of Shares Outstanding	913,000
Weighted Average Remaining in Contractual Life in Years	2 years 1 month 20 days
Outstanding Options Weighted Average Exercise Price	$ 0.59
Number of Options Exercisable	914,500
Exercisable Options Weighted Average Exercise Price	$ 0.59
Exercise Price Range, Lower Range Limit	0.30
Exercise Price Range, Upper Range Limit	$ 0.75
Employee Stock Option | $0.76 to 0.90
Number of Shares Outstanding	811,501
Weighted Average Remaining in Contractual Life in Years	4 years 6 months 4 days
Outstanding Options Weighted Average Exercise Price	$ 0.80
Number of Options Exercisable	811,723
Exercisable Options Weighted Average Exercise Price	$ 0.80
Exercise Price Range, Lower Range Limit	0.76
Exercise Price Range, Upper Range Limit	$ 0.90
Employee Stock Option | $0.91 to 1.84
Number of Shares Outstanding	2,800,054
Weighted Average Remaining in Contractual Life in Years	4 years 9 months 29 days
Outstanding Options Weighted Average Exercise Price	$ 1.18
Number of Options Exercisable	2,343,606
Exercisable Options Weighted Average Exercise Price	$ 1.19
Exercise Price Range, Lower Range Limit	0.91
Exercise Price Range, Upper Range Limit	$ 1.84
Employee Stock Option | $1.85 to 2.15
Number of Shares Outstanding	30,000
Weighted Average Remaining in Contractual Life in Years	2 years 8 months 1 day
Outstanding Options Weighted Average Exercise Price	$ 2.15
Number of Options Exercisable	30,000
Exercisable Options Weighted Average Exercise Price	$ 2.15
Exercise Price Range, Lower Range Limit	1.85
Exercise Price Range, Upper Range Limit	$ 2.15
Employee Stock Option | $0.30 to 2.15
Number of Shares Outstanding	4,554,555
Weighted Average Remaining in Contractual Life in Years	4 years 2 months 19 days
Outstanding Options Weighted Average Exercise Price	$ 1
Number of Options Exercisable	4,099,829
Exercisable Options Weighted Average Exercise Price	$ 0.98
Exercise Price Range, Lower Range Limit	0.30
Exercise Price Range, Upper Range Limit	$ 2.15

(10) Restricted Stock (Details)

(10) Restricted Stock (Details) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Allocated Share-based Compensation Expense	$ 379,548	$ 310,695
Delphiis, Inc. | Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period		400,000
Award Vesting Rights		The shares vest as follows: Vesting Date Shares July 1, 2016 100,000 July 1, 2017 100,000 July 1, 2018 100,000 July 1, 2019 100,000
Allocated Share-based Compensation Expense		$ 101,881

(11) Income Taxes_ Schedule o61

(11) Income Taxes: Schedule of Components of Income Tax Expense (Benefit) (Details) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Current provision:
Federal	$ 70,436	$ 20,712
State	82,000	58,148
Deferred benefit:
Federal	0	0
State	0	0
Income tax expense	$ 152,436	$ 78,860

(11) Income Taxes (Details)

(11) Income Taxes (Details) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Effective Income Tax Rate Reconciliation, Percent	10.40%	5.60%
Minimum
Operating Loss Carryforwards, Expiration Date	Dec. 31, 2023
Maximum
Operating Loss Carryforwards, Expiration Date	Dec. 31, 2033
Internal Revenue Service (IRS)
Deferred Tax Assets, Gross, Noncurrent	$ 4,543,000	$ 5,346,000
Operating Loss Carryforwards	$ 12,538,000
Internal Revenue Service (IRS) | Minimum
Operating Loss Carryforwards, Expiration Date	Dec. 31, 2016
State and Local Jurisdiction
Deferred Tax Assets, Gross, Noncurrent	$ 1,044,000	$ 1,067,000
Operating Loss Carryforwards	$ 11,050,000
State and Local Jurisdiction | Minimum
Operating Loss Carryforwards, Expiration Date	Dec. 31, 2023

(11) Income Taxes_ Schedule o63

(11) Income Taxes: Schedule of Effective Income Tax Rate Reconciliation (Details) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Details
Computed tax at federal statutory rate of 34%	$ 448,479	$ 465,951
State taxes, net of federal benefit	54,121	37,088
Non-deductible items	43,654	148,820
Other	75,828	24,310
Change in valuation allowance	(469,646)	(597,309)
Income tax expense	$ 152,436	$ 78,860

(11) Income Taxes_ Schedule o64

(11) Income Taxes: Schedule of Deferred Tax Assets and Liabilities (Details) - USD ($)	Dec. 31, 2015	Dec. 31, 2014
Deferred tax assets:
Accrued salaries/vacation	$ 253,600	$ 221,900
Accrued equipment pool	127,900	105,100
State taxes	18,700	17,900
Stock options	864,500	844,700
Credits	153,000	131,800
Net operating loss carryforwards	5,064,000	5,398,100
Total deferred tax assets	6,481,700	6,719,500
Deferred tax liabilities:
Depreciation	9,100	34,500
Amortization of intangibles	343,500	4,700
Other	541,600	267,400
Total deferred tax liabilities	894,200	306,600
Net deferred assets before valuation allowance	5,587,500	6,412,900
Valuation allowance	(5,587,500)	(6,412,900)
Net deferred tax assets	$ 0	$ 0

(12) Retirement Plan (Details)

(12) Retirement Plan (Details)	12 Months Ended
	Dec. 31, 2015USD ($)
401(k) Plan
Defined Benefit Plan, Contributions by Employer	$ 94,042

(13) Commitments (Details)

(13) Commitments (Details) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Operating Leases, Rent Expense	$ 272,064	$ 204,257
Chief Executive Officer
Base Salary, Annual Amount	300,000	275,000
Salary Bonus, Annual Amount	180,000	$ 150,000
Employment Agreement, Revised Warrant Vesting Schedule Description		The revision spreads the vesting date of the remaining 300,000 unvested shares from 150,000 on January 1, 2015 and 150,000 on January 1, 2016 to 100,000 on January 1, 2015, 100,000 on January 1, 2016 and 100,000 on January 1, 2017. The warrants will vest contingent with the achievement of certain financial performance metrics of the Company for calendar years 2015 and 2016.
Chief Financial Officer
Base Salary, Annual Amount	245,000	$ 225,000
Salary Bonus, Annual Amount	$ 132,000	$ 108,000
Employment Agreement, Revised Warrant Vesting Schedule Description		The revision spreads the vesting date of the remaining 200,000 unvested shares from 100,000 on January 1, 2015 and 100,000 on January 1, 2016 to 66,667 on January 1, 2015, 66,667 on January 1, 2016 and 66,666 on January 1, 2017. The warrants will vest contingent with the achievement of certain financial performance metrics of the Company for calendar years 2015 and 2016.

(13) Commitments_ Schedule of67

(13) Commitments: Schedule of Future Minimum Lease Payments for Operating Leases (Details)	Dec. 31, 2015USD ($)
Details
2,016	$ 297,684
2,017	374,751
2,018	421,084
2,019	433,716
2,020	446,728
Thereafter	132,926
Total	$ 2,106,889

(14) Concentrations (Details)

(14) Concentrations (Details) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Accounts receivable, net	$ 7,397,957	$ 6,808,183
Customer Concentration Risk
Accounts receivable, net	$ 3,100,000	$ 2,800,000
Sales | Customer Concentration Risk
Concentration Risk, Percentage	50.00%	42.00%

(15) Stock Purchase Agreement69

(15) Stock Purchase Agreement - Delphiis, Inc. (Details) - USD ($)	1 Months Ended	12 Months Ended
	Jan. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Cash Payments to Acquire Business		$ 1,876,966
Shares, Granted		0	0
Mike Gentile
Base Salary, Annual Amount			$ 200,000
Common Stock | Mike Gentile
Shares, Granted		400,000
Award Vesting Rights		100,000 shares will vest 2 years from the date of the Gentile Employment Agreement; 100,000 shares will vest 3 years from the date of the Gentile Employment Agreement; 100,000 shares will vest 4 years from the date of the Gentile Employment Agreement; and 100,000 shares will vest 5 years from the date of the Gentile Employment Agreement
Common Stock | Mike Gentile | Subsequent Event
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period	100,000
Severance Costs	$ 120,000
Delphiis, Inc.
Percentage of issued and outstanding shares of common stock acquired		100.00%
Cash Payments to Acquire Business		$ 1,000,000
Acquisition, Debt Assumed		463,723	$ 463,723
Legal, accounting and other professional fees related to acquisition		98,000
Delphiis, Inc. | Funds to be Released from Escrow Upon Satisfaction of Indemnification Claims
Cash Payments to Acquire Business		$ 100,000
Delphiis, Inc. | Minimum
Estimated useful life of the identifiable intangible assets acquired		1 year 6 months
Delphiis, Inc. | Maximum
Estimated useful life of the identifiable intangible assets acquired		10 years
Delphiis, Inc. | $363,723 Promissory Note
Debt Instrument, Face Amount		$ 363,723
Debt Instrument, Interest Rate, Stated Percentage		4.00%
Debt Instrument, Maturity Date, Description		The Notes have a maturity date which is 24 months from the date of the Agreement and contain no prepayment penalty
Debt Instrument, Payment Terms		Pursuant to the terms of the Notes, Delphiis will accelerate payment on (i) fifty percent (50%) of the outstanding amount due under such Notes at such time as Delphiis achieves $1,500,000 of bookings measured from the date of the Agreement, and (ii) the remaining fifty percent (50%) will be paid at such time as Delphiis achieves $4,000,000 of bookings measured from the date of the Agreement, all as set forth in the Notes.
Delphiis, Inc. | $100,000 Promissory Note
Debt Instrument, Face Amount		$ 100,000
Debt Conversion, Original Debt, Amount		$ 257,835
Delphiis, Inc. | Common Stock
Business Acquisition, Equity Interest Issued, Number of Shares		930,406
Business Acquisition, Equity Interest Issued, Value Assigned		$ 1,250,000

(15) Stock Purchase Agreement70

(15) Stock Purchase Agreement - Delphiis, Inc.: Schedule of Allocation of the Purchase Price of the Assets Acquired and Liabilities Assumed (Details)	12 Months Ended
	Dec. 31, 2015USD ($)
Total	$ 2,012,000
Delphiis, Inc.
Goodwill	956,639
Other assets received	376,775
Deferred revenue	(154,089)
Notes payable	(424,000)
Other liabilities assumed	(113,325)
Delphiis, Inc. | Acquired Technology
Finite-lived Intangible Assets Acquired	900,000
Delphiis, Inc. | Customer Relationships
Finite-lived Intangible Assets Acquired	400,000
Delphiis, Inc. | Trademarks
Finite-lived Intangible Assets Acquired	50,000
Delphiis, Inc. | Noncompete Agreements
Finite-lived Intangible Assets Acquired	$ 20,000

16. Asset Purchase Agreement 71

16. Asset Purchase Agreement - Redspin (Details) - USD ($)	12 Months Ended
	Dec. 31, 2015		Dec. 31, 2014	[2]
Cash Payments to Acquire Business	$ 1,876,966
Stock issued for acquisition, Value	469,000	[1]	$ 1,012,001
Daniel Berger
Base Salary, Annual Amount	250,000
John Abraham
Base Salary, Monthly Amount	$ 11,000
Common Stock
Stock issued for acquisition, Shares	452,284	[1]	930,406
Stock issued for acquisition, Value	$ 452	[1]	$ 931
Redspin, Inc.
Cash Payments to Acquire Business	2,076,966
Allocated Holdback	$ 200,000
Business Combination, Contingent Consideration Arrangements, Basis for Amount	The Company also agreed to pay a cash Earn-out Payment, as defined in the Purchase Agreement, upon the achievement of certain earnings targets in the first year following the date of the Purchase Agreement. Management estimated the fair value of the contingent consideration to be approximately $623,000. As of December 31, 2015, Management believes that the earnings targets will not be met. Accordingly, this portion of the acquisition is recorded as other income on the consolidated statement of income for the year ended December 31, 2015. If no indemnification claims have been made prior to June 30, 2016, the Company's secretary will release the holdback funds to Redspin. The Purchase Agreement also provides for the Company to pay employee bonus shares of common stock upon the achievement of the same certain earnings targets and provided they remain with the Company for one year subsequent to the acquisition date. Management previously had considered the $124,000 of fair value of these employee bonus shares to be a component of the acquisition cost.
Legal, accounting and other professional fees related to acquisition	$ 70,000
Redspin, Inc. | Minimum
Estimated useful life of the identifiable intangible assets acquired	3 years
Redspin, Inc. | Maximum
Estimated useful life of the identifiable intangible assets acquired	10 years
Redspin, Inc. | Common Stock
Stock issued for acquisition, Shares	452,284
Stock issued for acquisition, Value	$ 500,000
[1]	Common stock issued in connection with the acquisition of Redspin
[2]	Acquisition of Delphiis, Inc.

16. Asset Purchase Agreement 72

16. Asset Purchase Agreement - Redspin: Schedule of Allocation of the Purchase Price of the Assets Acquired and Liabilities Assumed (Details)	12 Months Ended
	Dec. 31, 2015USD ($)
Total	$ 2,012,000
Redspin, Inc.
Goodwill	1,192,000
Accounts Receivable	180,409
Other assets received	19,009
Accounts payable and accrued expenses	(23,196)
Other liabilities assumed	(118,009)
Deferred revenue	(31,247)
Total	3,168,966
Redspin, Inc. | Acquired Technology
Finite-lived Intangible Assets Acquired	1,050,000
Redspin, Inc. | Customer Relationships
Finite-lived Intangible Assets Acquired	600,000
Redspin, Inc. | Trademarks
Finite-lived Intangible Assets Acquired	200,000
Redspin, Inc. | Noncompete Agreements
Finite-lived Intangible Assets Acquired	$ 100,000

16. Asset Purchase Agreement 73

16. Asset Purchase Agreement - Redspin: Business Acquisition, Pro Forma Information (Details) - Redspin, Inc. - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Pro forma revenue	$ 61,952,529	$ 46,662,798
Pro forma net income	$ 1,115,777	$ 917,342
Pro forma basic net income per share	$ 0.05	$ 0.04
Pro forma diluted net income per share	$ 0.04	$ 0.04