----

----

|                                                          |                                |
|---------------------------------------------------------------|-------------------------------------|
| Nevada                                                        | 88-0350448                          |
| (State or other jurisdiction ofincorporation or organization) | (I.R.S. EmployerIdentification No.) |

----

AUXILIO, INC.

| PART I FINANCIAL INFORMATION |   |                                                                                                                  |
|-----------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------|
|                              |   |                                                                                                                  |   |   |
| Item 1                            |   | Financial Statements                                                                                                  |   | 3 |
|                              |   |                                                                                                                  |   |   |
|                              |   | Condensed Consolidated Balance Sheets as of June 30, 2010 (unaudited) and December 31, 2009                      |   | 3 |
|                              |   |                                                                                                                  |   |   |
|                              |   | Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2010 and 2009 (unaudited) |   | 4 |
|                              |   |                                                                                                                  |   |   |
|                              |   | Condensed Consolidated Statement of Stockholders’ Equity for the Six Months Ended June 30, 2010 (unaudited)     |   | 5 |
|                              |   |                                                                                                                  |   |   |
|                              |   | Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2010 and 2009 (unaudited)           |   | 6 |
|                              |   |                                                                                                                  |   |   |
|                              |   | Notes to Condensed Consolidated Financial Statements (unaudited)                                                      |   | 8 |
|                              |   |                                                                                                                  |   |   |
| Item 2                            |   | Management’s Discussion and Analysis of Financial Condition and Results of Operations                           |   | 12 |
|                              |   |                                                                                                                  |   |   |
| Item 4                            |   | Controls and Procedures                                                                                               |   | 15 |
|                              |   |                                                                                                                  |   |   |
| PART II OTHER INFORMATION    |   |                                                                                                                  |
|                              |   |                                                                                                                  |   |   |
| Item 1A                           |   | Risk Factors                                                                                                          |   | 16 |
|                              |   |                                                                                                                  |   |   |
| Item 6                            |   | Exhibits                                                                                                              |   | 19 |
|                              |   |                                                                                                                  |   |   |
| SIGNATURES                        |   | 20                                                                                                                    |

----

Table of Contents

PART I – FINANCIAL INFORMATION

| ITEM 1. | FINANCIAL STATEMENTS. |
|---------|-----------------------|

| AUXILIO, INC. AND SUBSIDIARIES                                                                                                                                                |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| CONDENSED CONSOLIDATED BALANCE SHEETS                                                                                                                                         |   |
|                                                                                                                                                                          |   |
|                                                                                                                                                                          |   |
|                                                                                                                                                                          |   | JUNE 30, 2010 |   |   | DECEMBER 31, 2009 |   |
|                                                                                                                                                                          |   | (unaudited) |   |   |   |   |
|                                                                                                                                                                          |   |
| ASSETS                                                                                                                                                                        |   |
| Current assets:                                                                                                                                                               |   |   |   |   |   |   |
| Cash and cash equivalents                                                                                                                                                     |   | $ | 2,065,842 |   |   | $ | 1,781,586 |   |
| Accounts receivable, net                                                                                                                                                      |   |   | 1,317,237 |   |   |   | 1,397,598 |   |
| Supplies                                                                                                                                                                      |   |   | 529,300 |   |   |   | 537,170 |   |
| Prepaid and other current assets                                                                                                                                              |   |   | 228,373 |   |   |   | 93,246 |   |
| Total current assets                                                                                                                                                          |   |   | 4,140,752 |   |   |   | 3,809,600 |   |
|                                                                                                                                                                          |   |   |   |   |   |   |   |   |
| Property and equipment, net                                                                                                                                                   |   |   | 250,487 |   |   |   | 277,704 |   |
| Deposits                                                                                                                                                                      |   |   | 28,013 |   |   |   | 43,792 |   |
| Goodwill                                                                                                                                                                      |   |   | 1,517,017 |   |   |   | 1,517,017 |   |
|                                                                                                                                                                          |   | $ | 5,936,269 |   |   | $ | 5,648,113 |   |
|                                                                                                                                                                          |   |   |   |   |   |   |   |   |
| LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                                                                          |   |
|                                                                                                                                                                          |   |   |   |   |   |   |   |   |
| Current liabilities:                                                                                                                                                          |   |   |   |   |   |   |   |   |
| Accounts payable and accrued expenses                                                                                                                                         |   | $ | 1,514,763 |   |   | $ | 1,246,880 |   |
| Accrued compensation and benefits                                                                                                                                             |   |   | 660,147 |   |   |   | 554,702 |   |
| Deferred revenue                                                                                                                                                              |   |   | 297,419 |   |   |   | 349,271 |   |
| Current portion of capital lease obligations                                                                                                                                  |   |   | 24,320 |   |   |   | 3,835 |   |
| Total current liabilities                                                                                                                                                     |   |   | 2,496,649 |   |   |   | 2,154,688 |   |
|                                                                                                                                                                          |   |   |   |   |   |   |   |   |
| Capital lease obligations, noncurrent                                                                                                                                         |   |   | 62,544 |   |   |   | 17,537 |   |
|                                                                                                                                                                          |   |   |   |   |   |   |   |   |
| Commitments and contingencies                                                                                                                                                 |   |   | - |   |   |   | - |   |
|                                                                                                                                                                          |   |   |   |   |   |   |   |   |
| Stockholders' equity:                                                                                                                                                         |   |   |   |   |   |   |   |   |
| Common stock, par value at $0.001, 33,333,333 shares authorized, 19,257,951 and 17,623,734 shares issued and outstanding at June 30, 2010 and December 31, 2009, respectively |   |   | 19,259 |   |   |   | 19,042 |   |
| Additional paid-in capital                                                                                                                                                    |   |   | 20,051,484 |   |   |   | 19,803,021 |   |
| Accumulated deficit                                                                                                                                                           |   |   | (16,693,667 | ) |   |   | (16,346,175 | ) |
| Total stockholders' equity                                                                                                                                                    |   |   | 3,377,076 |   |   |   | 3,475,888 |   |
| Total liabilities and stockholders’ equity                                                                                                                              |   | $ | 5,936,269 |   |   | $ | 5,648,113 |   |

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| AUXILIO, INC. AND SUBSIDIARIES                     |   |
|----------------------------------------------------|--------|
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS    |   |
| (UNAUDITED)                                        |   |
|                                               |   |
|                                               |   | Three Months |   |   | Six Months |   |
|                                               |   | Ended June 30, |   |   | Ended June 30, |   |
|                                               |   | 2010 |   |   | 2009 |   |   | 2010 |   |   | 2009 |   |
| Revenues                                           |   | $ | 3,587,851 |   |   | $ | 3,853,901 |   |   | $ | 7,286,473 |   |   | $ | 7,581,511 |   |
| Cost of revenues                                   |   |   | 2,797,753 |   |   |   | 3,036,734 |   |   |   | 5,453,583 |   |   |   | 5,901,631 |   |
|                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gross profit                                       |   |   | 790,098 |   |   |   | 817,167 |   |   |   | 1,832,890 |   |   |   | 1,679,880 |   |
|                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating expenses:                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Sales and marketing                                |   |   | 316,858 |   |   |   | 364,567 |   |   |   | 637,267 |   |   |   | 626,381 |   |
| General and administrative expenses                |   |   | 825,563 |   |   |   | 571,434 |   |   |   | 1,539,297 |   |   |   | 1,188,128 |   |
|                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total operating expenses                           |   |   | 1,142,421 |   |   |   | 936,001 |   |   |   | 2,176,564 |   |   |   | 1,814,509 |   |
|                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Loss from operations                         |   |   | (352,323 | ) |   |   | (118,834 | ) |   |   | (343,674 | ) |   |   | (134,629 | ) |
|                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other income (expense):                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest expense                                   |   |   | (1,109 | ) |   |   | (7,258 | ) |   |   | (1,566 | ) |   |   | (95,845 | ) |
| Interest income                                    |   |   | 134 |   |   |   | 96 |   |   |   | 148 |   |   |   | 1,554 |   |
| Gain on sale of fixed assets                       |   |   | - |   |   |   | 1,860 |   |   |   | - |   |   |   | 1,860 |   |
|                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total other income (expense)                       |   |   | (975 | ) |   |   | (5,302 | ) |   |   | (1,418 | ) |   |   | (92,431 | ) |
|                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Loss before provision for income taxes |   |   | (353,298 | ) |   |   | (124,136 | ) |   |   | (345,092 | ) |   |   | (227,060 | ) |
|                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income tax expense                                 |   |   | - |   |   |   | - |   |   |   | (2,400 | ) |   |   | (2,400 | ) |
|                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss                                           |   | $ | (353,298 | ) |   | $ | (124,136 | ) |   | $ | (347,492 | ) |   | $ | (229,460 | ) |
|                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss per share:                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                              |   | $ | (.02 | ) |   | $ | (.01 | ) |   | $ | (.02 | ) |   | $ | (.01 | ) |
| Diluted                                            |   | $ | (.02 | ) |   | $ | (.01 | ) |   | $ | (.02 | ) |   | $ | (.01 | ) |
|                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Number of weighted average shares:                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                              |   |   | 19,237,365 |   |   |   | 18,573,697 |   |   |   | 19,143,743 |   |   |   | 18,096,091 |   |
| Diluted                                            |   |   | 19,237,365 |   |   |   | 18,573,697 |   |   |   | 19,143,743 |   |   |   | 18,096,091 |   |

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| AUXILIO, INC. AND SUBSIDIARIES                                                         |
|----------------------------------------------------------------------------------------|
| CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY                               |
| THREE MONTHS ENDED JUNE 30, 2010                                                       |
| (UNAUDITED)                                                                            |
|                                                                                   |
|                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                   |   |   |   |   |   |   |   | Additional |   |   |   |   |   | Total |   |
|                                                                                   |   | Common Stock |   |   | Paid-in |   |   | Accumulated |   |   | Stockholders' |   |
|                                                                                   |   | Shares |   |   | Amount |   |   | Capital |   |   | Deficit |   |   | Equity |   |
| Balance at December 31, 2009                                                           |   |   | 19,040,401 |   |   | $ | 19,042 |   |   | $ | 19,803,021 |   |   | $ | (16,346,175 | ) |   | $ | 3,475,888 |   |
| Common stock issued through exercise of warrants                                       |   |   | 217,550 |   |   |   | 217 |   |   |   | 117,747 |   |   |   | - |   |   |   | 117,964 |   |
| Stock compensation expense for options and warrants granted to employees and directors |   |   | - |   |   |   | - |   |   |   | 130,716 |   |   |   | - |   |   |   | 130,716 |   |
| Net loss                                                                               |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (347,492 | ) |   |   | (347,492 | ) |
| Balance at June 30, 2010                                                               |   |   | 19,257,951 |   |   | $ | 19,259 |   |   | $ | 20,051,484 |   |   | $ | (16,693,667 | ) |   | $ | 3,377,076 |   |

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| AUXILIO, INC. AND SUBSIDIARIES                                                          |
|-----------------------------------------------------------------------------------------|
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                                         |
| (UNAUDITED)                                                                             |
|                                                                                    |   |   |
|                                                                                    |   | Six Months Ended June 30, |
|                                                                                    |   | 2010 |   | 2009 |
| Cash flows provided by operating activities:                                            |   |   |   |   |
| Net loss                                                                                |   | $ | (347,492 | ) | $ |   | (229,460 | ) |
| Adjustments to reconcile net loss to net cash                                           |   |   |   |   |   |   |   |   |   |
| provided by operating activities:                                                       |   |   |   |   |   |   |   |   |   |
| Depreciation                                                                            |   |   | 150,520 |   |   |   | 58,357 |   |
| Stock compensation expense for warrants and options issued to employees and consultants |   |   | 130,716 |   |   |   | 158,059 |   |
| Fair value of warrants issued for marketing services                                    |   |   | - |   |   |   | 76,807 |   |
| Interest expense related to amortization of warrants issued with loans                  |   |   | - |   |   |   | 23,412 |   |
| Interest expense related to amortization of loan acquisition costs                      |   |   | - |   |   |   | 44,431 |   |
| Changes in operating assets and liabilities:                                            |   |   |   |   |   |   |   |   |   |
| Accounts receivable                                                                     |   |   | 80,361 |   |   |   | 3,201,326 |   |
| Supplies                                                                                |   |   | 7,870 |   |   |   | 78,957 |   |
| Prepaid and other current assets                                                        |   |   | (135,127 | ) |   |   | (93,371 | ) |
| Deposits                                                                                |   |   | 15,779 |   |   |   | - |   |
| Accounts payable and accrued expenses                                                   |   |   | 267,883 |   |   |   | (1,656,204 | ) |
| Accrued compensation and benefits                                                       |   |   | 105,445 |   |   |   | (119,502 | ) |
| Deferred revenue                                                                        |   |   | (51,852 | ) |   |   | (84,065 | ) |
| Net cash provided by operating activities                                               |   |   | 224,103 |   |   |   | 1,458,747 |   |
| Cash flows (used for) investing activities:                                             |   |   |   |   |   |   |   |   |   |
| Purchases of property and equipment                                                     |   |   | (54,312 | ) |   |   | (72,342 | ) |
| Net cash (used for) investing activities                                                |   |   | (54,312 | ) |   |   | (72,342 | ) |
| Cash flows provided by (used for) financing activities:                                 |   |   |   |   |   |   |   |   |   |
| Net proceeds from issuance of common stock                                              |   |   | 117,964 |   |   |   | 765,001 |   |
| Payments on capital leases                                                              |   |   | (3,499 | ) |   |   | (5,755 | ) |
| Payments on notes payable and long-term debt                                            |   |   | - |   |   |   | (1,332,000 | ) |
| Net cash provided by (used for) financing activities                                    |   |   | 114,465 |   |   |   | (572,754 | ) |
| Net increase in cash and cash equivalents                                               |   |   | 284,256 |   |   |   | 813,651 |   |
| Cash and cash equivalents, beginning of period                                          |   |   | 1,781,586 |   |   |   | 1,198,126 |   |
| Cash and cash equivalents, end of period                                                |   | $ | 2,065,842 |   | $ |   | 2,011,777 |   |

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| AUXILIO, INC. AND SUBSIDIARIES                                   |   |
|------------------------------------------------------------------|--------|
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) |   |
| (UNAUDITED)                                                      |   |
|                                                             |   |   |   |   |   |   |
|                                                             |   | Six Months Ended June 30, |   |
|                                                             |   | 2010 |   |   | 2009 |   |
| Supplemental disclosure of cash flow information:                |   |   |   |   |   |   |
|                                                             |   |   |   |   |   |   |
| Interest paid                                                    |   | $ | 1,552 |   |   | $ | 27,683 |   |
|                                                             |   |   |   |   |   |   |   |   |
| Income taxes paid                                                |   | $ | - |   |   | $ | 62,000 |   |
|                                                             |   |   |   |   |   |   |   |   |
| Property and equipment acquired by capital lease                 |   | $ | 68,991 |   |   | $ | - |   |

| The accompanying notes are an integral part of these condensed consolidated financial statements. |
|---------------------------------------------------------------------------------------------------|

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| NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS |
|------------------------------------------------------|

| SIX MONTHS ENDED JUNE 30, 2010 AND 2009 |
|-----------------------------------------|

| (UNAUDITED) |
|-------------|

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| Options                          |   | Shares |      |   | Weighted Average Exercise Price |   |   | Weighted Average Remaining Term in Years |   |   | AggregateIntrinsic Value |   |
|----------------------------------|--------|--------|-----------|--------|---------------------------------|--------|--------|------------------------------------------|--------|--------|--------------------------|--------|
| Outstanding at December 31, 2009 |   |   | 5,226,195 |   |                            | $      | 1.02   |                                     |   |   |                     |   |   |   |
| Granted                          |   |   | 282,000   |   |                            |   | 1.09   |                                     |   |   |                     |   |   |   |
| Exercised                        |   |   | -         |   |                            |   | -      |                                     |   |   |                     |   |   |   |
| Cancelled                        |   |   | (712,666  | )      |                            |   | 0.96   |                                     |   |   |                     |   |   |   |
| Outstanding at June 30, 2010     |   |   | 4,795,529 |   |                            | $      | 1.03   |                                     |   |   | 6.92                     |   |   | $ | 932,480 |   |
| Exercisable at June 30, 2010     |   |   | 3,140,235 |   |                            | $      | 1.09   |                                     |   |   | 5.87                     |   |   | $ | 554,235 |   |

| Warrants                         |   | Shares |      |   | Weighted Average Exercise Price |   |   | Weighted Average Remaining Term in Years |   |   | AggregateIntrinsic Value |   |
|----------------------------------|--------|--------|-----------|--------|---------------------------------|--------|--------|------------------------------------------|--------|--------|--------------------------|--------|
| Outstanding at December 31, 2009 |   |   | 3,981,871 |   |                            | $      | 1.39   |                                     |   |   |                     |   |   |   |
| Granted                          |   |   | -         |   |                            |   | -      |                                     |   |   |                     |   |   |   |
| Exercised                        |   |   | (217,550  | )      |                            |   | .54    |                                     |   |   |                     |   |   |   |
| Cancelled                        |   |   | (186,913  | )      |                            |   | 2.79   |                                     |   |   |                     |   |   |   |
| Outstanding at June 30, 2010     |   |   | 3,577,408 |   |                            | $      | 1.37   |                                     |   |   | 2.66                     |   |   | $ | 402,664 |   |
| Exercisable at June 30, 2010     |   |   | 1,727,408 |   |                            | $      | 1.24   |                                     |   |   | 2.66                     |   |   | $ | 402,664 |   |

|                                                     |   | Three Months   |   |   | Six months     |   |
|----------------------------------------------------------|--------|----------------|--------|--------|----------------|--------|
|                                                     |   | Ended June 30, |   |   | Ended June 30, |   |
|                                                     |   | 2010           |   |   | 2009           |   |   | 2010 |   |   | 2009 |   |
| Cost of revenues                                         |   | $              | 29,457 |   |           | $      | 27,921 |   |   | $ | 52,562 |   |   | $ | 50,731 |   |
| Sales and marketing                                      |   |           | 9,553  |   |           |   | 17,097 |   |   |   | (3,975 | ) |   |   | 34,242 |   |
| General and administrative expense                       |   |           | 42,338 |   |           |   | 36,997 |   |   |   | 82,129 |   |   |   | 73,086 |   |
|    Total stock based compensation expense |   | $              | 81,348 |   |           | $      | 82,015 |   |   | $ | 130,716 |   |   | $ | 158,059 |   |

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|                                                        |   | Three Months Ended June 30, |       |   | Six Months Ended June 30, |
|-------------------------------------------------------------|--------|-----------------------------|------------|--------|---------------------------|
|                                                        |   | 2010                        |       |   | 2009                      |   |   | 2010 |   |   | 2009 |   |
|  Numerator:                                            |   |                        |       |   |                      |   |   |   |   |   |   |   |
| Net loss                                                    |   | $                           | (353,298   | )      |                      | $ | (124,136 | ) |   | $ | (347,492 | ) |   | $ | (229,460 | ) |
|                                                        |   |                        |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
|  Denominator:                                          |   |                        |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Denominator for basic calculation weighted average shares   |   |                        | 19,237,365 |   |                      |   | 18,573,697 |   |   |   | 19,143,743 |   |   |   | 18,096,091 |   |
|                                                        |   |                        |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Dilutive common stock equivalents:                          |   |                        |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Options and warrants                                        |   |                        | -          |   |                      |   | - |   |   |   | - |   |   |   | - |   |
|                                                        |   |                        |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Denominator for diluted calculation weighted average shares |   |                        | 19,237,365 |   |                      |   | 18,573,697 |   |   |   | 19,143,743 |   |   |   | 18,096,091 |   |
|                                                        |   |                        |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
|  Net loss per share:                                   |   |                        |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Basic net loss per share                                    |   | $                           | (.02       | )      |                      | $ | (.01 | ) |   | $ | (.02 | ) |   | $ | (.01 | ) |
|                                                        |   |                        |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Diluted net loss per share                                  |   | $                           | (.02       | )      |                      | $ | (.01 | ) |   | $ | (.02 | ) |   | $ | (.01 | ) |

| Trade receivable                |   | $      | 1,614,649 |   |
|---------------------------------|--------|--------|-----------|--------|
| Customer advances               |   |   | (297,412  | )      |
| Allowance for doubtful accounts |   |   | -         |   |
| Total accounts receivable       |   | $      | 1,317,237 |   |

| 6. | EMPLOYMENT AGREEMENTS |
|----|-----------------------|

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ITEM 2.                      MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OFOPERATIONS.

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| ·   | revenue recognition |
|--------------------|---------------------|

| ·   | accounts receivable valuation and related reserves |
|--------------------|----------------------------------------------------|

| ·   | impairment of intangible assets |
|--------------------|---------------------------------|

| ·   | deferred revenue |
|--------------------|------------------|

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|             |   | Payments Due by Period |    |
|------------------|--------|------------------------|---------|
|             |   | Total                  |    |   | Less than 1 year |   |   | 1-3 years |   |   | 3-5 years |   |   | More than 5 years |   |
| Capital leases   |   | $                      | 99,243  |   |   | $ | 32,919 |   |   | $ | 63,556 |   |   | $ | 2,768 |   |   | $ | - |   |
| Operating leases |   |                   | 730,169 |   |   |   | 45,380 |   |   |   | 313,222 |   |   |   | 329,599 |   |   |   | 41,968 |   |
| Total            |   | $                      | 829,412 |   |   | $ | 78,299 |   |   | $ | 376,778 |   |   | $ | 332,367 |   |   | $ | 41,968 |   |

ITEM 4.                      CONTROLS AND PROCEDURES.

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PART II - OTHER INFORMATION

| ·   | greater name recognition and larger marketing budgets and resources; |
|--------------------|----------------------------------------------------------------------|

| ·   | established marketing relationships and access to larger customer bases; |
|--------------------|--------------------------------------------------------------------------|

| ·   | substantially greater financial, technical and other resources; and |
|--------------------|---------------------------------------------------------------------|

| ·   | larger technical and support staffs. |
|--------------------|--------------------------------------|

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| ·   | develop or enhance our service offerings; |
|--------------------|-------------------------------------------|

| ·   | take advantage of future opportunities; or |
|--------------------|--------------------------------------------|

| ·   | respond to customers and competition. |
|--------------------|---------------------------------------|

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| ·   | net tangible assets of at least $2,000,000, if the issuer has been in continuous operation for at least three years, or net tangible assets of at least $5,000,000, if the issuer has been in continuous operation for less than three years; or |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | average annual revenue of at least $6,000,000 for the last three years. |
|--------------------|-------------------------------------------------------------------------|

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EXHIBITS.

| No.  | Item                                                                                                                                                                 |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 31.1 | Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended.                       |
| 31.2 | Certification  of the Chief Financial Officer  pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended. |
| 32.1 | Certification of the CEO and CFO pursuant to Rule 13a-14(b) and Rule 15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350 *.                  |

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SIGNATURES

| Date:  August 13, 2010  | By: /s/       Joseph J. Flynn           Joseph J. Flynn           Chief Executive Officer           (Principal Executive Officer) |
|----------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                   |                                                                                                                                                                                                                                                                                                                                      |
| Date:  August 13, 2010       |        /s/        Paul T. Anthony                                                                                                                                                                                                                    |
|                                   | Paul T. AnthonyChief Financial Officer(Principal Accounting Officer)                                                                                                                                                                                                                                                                 |

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