Mobiquity Technologies, Inc 10-Q for FY2022 Q2
Mobiquity Technologies, Inc. (MOBQ)
About this 10-Q
Mobiquity Technologies, Inc filed this 10-Q on August 18, 2022, covering the quarter ended June 30, 2022 (FY2022 Q2).
Headline figures
Quarter ended June 30, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $1.92M
- up 173.5% from $702.43K a year earlier
- Net loss
- $1.57M
- compared with a net loss of $2.42M a year earlier
- Diluted EPS
- -$0.20
- compared with -$0.81 a year earlier
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
FOR THE QUARTERLY PERIOD ENDED
COMMISSION FILE NUMBER:
(Exact name of registrant as specified in its charter)
| (State of jurisdiction of Incorporation) | (I.R.S. Employer Identification No.) | |
| (Address of principal executive offices | (Zip Code) |
(Registrant's telephone number)
Not Applicable
(Former name, address and fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered |
| The
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| The
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Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements
for the past 90 days.
Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one)
| Large accelerated filer ☐ | Accelerated filer ☐ | |
| Smaller reporting company | ||
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐
The number of shares outstanding of the registrant’s common stock, as of August 10, 2022, was .
MOBIQUITY TECHNOLOGIES, INC.
FORM 10-Q QUARTERLY REPORT
TABLE OF CONTENTS
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MOBIQUITY TECHNOLOGIES, INC. AND SUBSIDIARIES
Mobiquity Technology, Inc.
Condensed Consolidated Balance Sheets (Unaudited)
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
| Assets | June 30, | December 31, | ||||||
| 2022 | 2021 | |||||||
| Current Assets | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable, net of allowance for doubtful accounts $ | ||||||||
| Prepaids and other | ||||||||
| Total Current Assets | ||||||||
| Property and equipment - net | ||||||||
| Intangible assets - net | ||||||||
| Goodwill | ||||||||
| Total Assets | $ | $ | ||||||
| Liabilities and Stockholders' Equity | ||||||||
| Current Liabilities | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Convertible notes payable | ||||||||
| Total Current Liabilities | ||||||||
| Notes payable | ||||||||
| Total Liabilities | ||||||||
| Stockholders' Equity | ||||||||
| AAA Preferred stock; $ par value, shares authorized; shares issued and outstanding | |
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| Series C, Preferred stock, $ par value, shares authorized, shares issued and outstanding | ||||||||
| Series E, Preferred stock, $ par value, shares authorized, shares issued and outstanding | ||||||||
| Common stock, $ par value, shares authorized and shares issued, respectively and and shares outstanding, respectively | |
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| Additional paid in capital | ||||||||
| Treasury stock $ par value shares at cost | ( | ) | ( | ) | ||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Stockholders' Equity | ||||||||
| Total Liabilities and Stockholders' Equity | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements
| 3 |
Mobiquity Technology, Inc.
Condensed Consolidated Statements of Operations (Unaudited)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2022 | 2021 (Restated) | 2022 | 2021 (Restated) | |||||||||||||
| Revenues | $ | $ | $ | $ | ||||||||||||
| Cost of revenues | ||||||||||||||||
| Gross profit (loss) | ( | ) | ( | ) | ||||||||||||
| General and administrative expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expenses) | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Loss on extinguishment of debt – related party | ( | ) | ( | ) | ||||||||||||
| Inducement expense | ( | ) | ( | ) | ||||||||||||
| Original issue discount | ( | ) | ( | ) | ||||||||||||
| Gain on debt forgiveness | ||||||||||||||||
| Interest income | ||||||||||||||||
| Gain on settlement of liability | ||||||||||||||||
| Total other expense - net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Loss per share – basic and diluted | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
| Weighted average number of shares outstanding - basic and diluted | ||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements
| 4 |
Mobiquity Technology, Inc.
Condensed Consolidated Statements of Stockholders' Equity (Unaudited)
For the Three and Six Months Ended June 30, 2022 and June 30, 2021 (Restated)
| AAA | Series E Preferred Stock | Series C Preferred Stock | Additional | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred Stock | Preferred Stock | Preferred Stock | Common Stock | Paid-in | Treasury Shares | Accumulated | Stockholders' | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Capital | Shares | Amount | Deficit | Equity | ||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, at January 1, 2022 | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued for services | – | – | – | – | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock based compensation | – | – | – | – | – | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Convertible notes converted to common stock and warrants | – | – | – | – | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net Loss | – | – | – | – | – | – | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, at March 31, 2022 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock based compensation | – | – | – | – | – | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Convertible notes converted to common stock and warrants related party | – | – | – | – | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net Loss | – | – | – | – | – | – | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, at June 30, 2022 | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||||||||||||||||||||||||||||
| AAA | Series E Preferred Stock | Series C Preferred Stock | Additional | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred Stock | Preferred Stock | Preferred Stock | Common Stock | Paid-in | Treasury Shares | Accumulated | Stockholders' | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Capital | Shares | Amount | Deficit | Equity | ||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, at January 1, 2021 | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued for services | – | – | – | – | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued for cash | – | – | – | – | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock based compensation | – | – | – | – | – | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net Loss | – | – | – | – | – | – | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, at March 31, 2021 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued for services | – | – | – | – | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued for cash | – | – | – | – | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock based compensation | – | – | – | – | – | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Notes converted to common stock | – | – | – | – |
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| Original issue discount shares | – | – | – | – | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net Loss | – | – | – | – | – | – | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, at June 30, 2021 | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements
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Mobiquity Technology, Inc.
Condensed Consolidated Statements of Cash Flows (Unaudited)
| Six Months Ended June 30, | ||||||||
| 2022 | 2021 | |||||||
| (Restated) | ||||||||
| Cash Flows from Operating Activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation | ||||||||
| Amortization of intangible assets | ||||||||
| Stock issued for services | ||||||||
| Loss on debt extinguishment – related party | ||||||||
| Gain on settlement of liability | ( | ) | ||||||
| Stock based compensation | ||||||||
| Stock issued with short-term convertible notes | ||||||||
| Inducement expense | ||||||||
| Gain on debt forgiveness | ( | ) | ||||||
| Changes in operating assets and liabilities | ||||||||
| (Increase) decrease in accounts receivable | ( | ) | ||||||
| (Increase) decrease prepaid expenses and other assets | ( | ) | ||||||
| Decrease in accounts payable and accrued expenses | ( | ) | ( | ) | ||||
| Net cash in used in operating activities | ( | ) | ( | ) | ||||
| Investing Activities | ||||||||
| Purchase of property and equipment | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ||||||
| Financing Activities | ||||||||
| Proceeds from the issuance of notes payable | ||||||||
| Common stock issued for cash, net | ||||||||
| Repayment on notes payable | ( | ) | ( | ) | ||||
| Net cash (used in) provided by financing activities | ( | ) | ||||||
| Net change in cash | ( | ) | ( | ) | ||||
| Cash – beginning of period | ||||||||
| Cash – end of period | $ | $ | ||||||
| Supplemental disclosure of cash flow Information | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for taxes | $ | $ | ||||||
| Supplemental disclosure of non-cash investing and financing activities: | ||||||||
| Conversion of debt to common stock and warrants | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements
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MOBIQUITY TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2022
(UNAUDITED)
NOTE 1 – ORGANIZATION AND NATURE OF OPERATIONS
Mobiquity Technologies, Inc. (“Mobiquity,” “we,” “our” or “the Company”), and its operating subsidiaries, is a next generation location data intelligence company. The Company provides precise unique, at-scale location data and insights on consumer’s real-world behavior and trends for use in marketing and research. We provide one of the most accurate and scaled solutions for mobile data collection and analysis, utilizing multiple geo-location technologies. The Company is seeking to implement several new revenue streams from its data collection and analysis, including, but not limited to, Advertising, Data Licensing, Footfall Reporting, Attribution Reporting, Real Estate Planning, Financial Forecasting and Custom Research. We also are a developer of advertising and marketing technology focused on the creation, automation, and maintenance of an advertising technology operating system (or ATOS). The ATOS platform blends artificial intelligence (or AI) and machine learning (ML) based optimization technology for automatic ad serving that manages and runs digital advertising campaigns.
The parent (Mobiquity Technologies, Inc.) and subsidiaries are organized as follows:
| Schedule Of Subsidiaries | ||
| Company Name | State of Incorporation | |
Liquidity, Going Concern and Management’s Plans
These consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business.
As reflected in the accompanying consolidated financial statements, for the six months ended June 30, 2022, the Company had:
| · | Net loss of $ |
| · | Net cash used in operations was $ |
Additionally, at June 30, 2022, the Company had:
| · | Accumulated deficit of $ |
| · | Stockholders’ equity of $ |
| · | Working capital of $ |
We manage liquidity risk by reviewing, on an ongoing
basis, our sources of liquidity and capital requirements. The Company has cash on hand of $
| 7 |
The Company has incurred significant losses since its inception in 1998 and has not demonstrated an ability to generate sufficient revenues from the sales of its products and services to achieve profitable operations. There can be no assurance that profitable operations will ever be achieved, or if achieved, could be sustained on a continuing basis. In making this assessment we performed a comprehensive analysis of our current circumstances including: our financial position, our cash flows and cash usage forecasts for the six months ended June 30, 2022, and our current capital structure including equity-based instruments and our obligations and debts.
Without sufficient revenues from operations, if the Company does not obtain additional capital, the Company will be required to reduce the scope of its business development activities or cease operations. The Company may explore obtaining additional capital financing and the Company is closely monitoring its cash balances, cash needs, and expense levels.
These factors create substantial doubt about the Company’s ability to continue as a going concern within the twelve-month period subsequent to the date that these consolidated financial statements are issued. The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. Accordingly, the consolidated financial statements have been prepared on a basis that assumes the Company will continue as a going concern and which contemplates the realization of assets and satisfaction of liabilities and commitments in the ordinary course of business.
Management’s strategic plans include the following:
| · | Execution of business plan focused on technology growth and improvement, |
| · | Seek out equity and/or debt financing to obtain the capital required to meet the Company’s financial obligations. There is no assurance, however, that lenders and investors will continue to advance capital to the Company or that the new business operations will be profitable. |
| · | Continuing to explore and execute prospective partnering or distribution opportunities, |
| · | Identifying unique market opportunities that represent potential positive short-term cash flow. |
Coronavirus (“COVID-19”) Pandemic
During the three months and six months ended June 30, 2022, the Company’s financial results and operations were not materially adversely impacted by the COVID-19 pandemic. However, in the prior two (2) years, the Company suffered from the Pandemic and drastically curtailed its operations. The extent to which the Company’s future financial results could be impacted by the COVID-19 pandemic depends on future developments that are highly uncertain and cannot be predicted at this time. The Company is not aware of any specific event or circumstance that would require an update to its estimates or judgments or a revision of the carrying value of its assets or liabilities.
These estimates may change, as new events occur, and additional information is obtained. Actual results could differ materially from these estimates under different assumptions or conditions.
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NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial statements (“U.S. GAAP”) and with the instructions to Form 10-Q and Article 8 of Regulation S-X of the United States Securities and Exchange Commission (“SEC”). Accordingly, they do not contain all information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements. In the opinion of the Company’s management, the accompanying unaudited consolidated financial statements contain all of the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of June 30, 2022, and the results of operations and cash flows for the periods presented. The results of operations for the three months and six months ended June 30, 2022, are not necessarily indicative of the operating results for the full fiscal year or any future period. These unaudited consolidated financial statements should be read in conjunction with the financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K/A (Amendment No. 1) for the year ended December 31, 2021, filed with the SEC on May 23, 2022.
Management acknowledges its responsibility for the preparation of the accompanying unaudited consolidated financial statements which reflect all adjustments, consisting of normal recurring adjustments, considered necessary in its opinion for a fair statement of its consolidated financial position and the consolidated results of its operations for the periods presented.
Principles of Consolidation
These consolidated financial statements have been prepared in accordance with U.S. GAAP and include the accounts of the Company and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated.
Business Segments and Concentrations
The Company uses the “management approach” to identify its reportable segments. The management approach requires companies to report segment financial information consistent with information used by management for making operating decisions and assessing performance as the basis for identifying the Company’s reportable segments. The Company manages its business as a single reporting segment.
Customers in the United States accounted for 100% of our revenues. We do not have any property or equipment outside of the United States.
Use of Estimates
Preparing financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reported period. Actual results could differ from those estimates, and those estimates may be material.
| 9 |
Risks and Uncertainties
The Company operates in an industry that is subject to intense competition and change in consumer demand. The Company’s operations are subject to significant risk and uncertainties including financial and operational risks including the potential risk of business failure.
The Company has experienced, and in the future expects to continue to experience, variability in sales and earnings. The factors expected to contribute to this variability include, among others, (i) the cyclical nature of the industry, (ii) general economic conditions in the various local markets in which the Company competes, including a potential general downturn in the economy, and (iii) the volatility of prices in connection with the Company’s distribution of the product. These factors, among others, make it difficult to project the Company’s operating results on a consistent basis.
Fair Value of Financial Instruments
The Company accounts for financial instruments under Financial Accounting Standards Board (“FASB”) ASC 820, Fair Value Measurements. ASC 820 provides a framework for measuring fair value and requires disclosures regarding fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, based on the Company’s principal or, in absence of a principal, most advantageous market for the specific asset or liability.
The Company uses a three-tier fair value hierarchy to classify and disclose all assets and liabilities measured at fair value on a recurring basis, as well as assets and liabilities measured at fair value on a non-recurring basis, in periods subsequent to their initial measurement. The hierarchy requires the Company to use observable inputs when available, and to minimize the use of unobservable inputs, when determining fair value.
The three tiers are defined as follows:
| · | Level 1 — Observable inputs that reflect quoted market prices (unadjusted) for identical assets or liabilities in active markets; | |
| · | Level 2 — Observable inputs other than quoted prices in active markets that are observable either directly or indirectly in the marketplace for identical or similar assets and liabilities; and | |
| · | Level 3 — Unobservable inputs that are supported by little or no market data, which require the Company to develop its own assumptions. |
The determination of fair value and the assessment of a measurement’s placement within the hierarchy requires judgment. Level 3 valuations often involve a higher degree of judgment and complexity. Level 3 valuations may require the use of various cost, market, or income valuation methodologies applied to unobservable management estimates and assumptions. Management’s assumptions could vary depending on the asset or liability valued and the valuation method used. Such assumptions could include estimates of prices, earnings, costs, actions of market participants, market factors, or the weighting of various valuation methods. The Company may also engage external advisors to assist us in determining fair value, as appropriate.
Although the Company believes that the recorded fair value of our financial instruments is appropriate, these fair values may not be indicative of net realizable value or reflective of future fair values.
The Company’s financial instruments, including cash, accounts receivable, accounts payable and accrued expenses, convertible notes payable and notes payable are carried at historical cost. At June 30, 2022 and December 31, 2021, respectively, the carrying amounts of these instruments approximated their fair values because of the short-term nature of these instruments.
| 10 |
Cash and Cash Equivalents and Concentration of Credit Risk
For purposes of the consolidated statements of cash flows, the Company considers all highly liquid instruments with a maturity of three months or less at the purchase date and money market accounts to be cash equivalents.
At June 30, 2022 and December 31, 2021, respectively, the Company did not have any cash equivalents.
The Company is exposed to credit risk on its cash
and cash equivalents in the event of default by the financial institutions to the extent account balances exceed the amount insured by
the FDIC, which is $250,000. At June 30, 2022 and December 31, 2021, the Company did not experience any losses on cash balances in excess
of FDIC insured limits. At June 30, 2022, and December 31, 2021, the Company exceeded FDIC insured limits by $
Accounts Receivable
Accounts receivable are stated at the amount management expects to collect from outstanding customer balances. Credit is extended to customers based on an evaluation of their financial condition and other factors. Interest is not accrued on overdue accounts receivable. The Company does not require collateral. Two of our customers accounted for approximately 39% of accounts receivable.
Management periodically assesses the Company’s accounts receivable and, if necessary, establishes an allowance for estimated uncollectible amounts. The Company provides an allowance for doubtful accounts based upon a review of the outstanding accounts receivable, historical collection information and existing economic conditions. Accounts determined to be uncollectible are charged to operations when that determination is made.
Allowance for doubtful accounts was $
Bad debt expense (recovery) is recorded as a component of general and administrative expenses in the accompanying consolidated statements of operations.
Impairment of Long-lived Assets
Management evaluates the recoverability of the Company’s identifiable intangible assets and other long-lived assets when events or circumstances indicate a potential impairment exists, in accordance with the provisions of ASC 360-10-35-15 “Impairment or Disposal of Long-Lived Assets.” Events and circumstances considered by the Company in determining whether the carrying value of identifiable intangible assets and other long-lived assets may not be recoverable include but are not limited to significant changes in performance relative to expected operating results; significant changes in the use of the assets; significant negative industry or economic trends; and changes in the Company’s business strategy. In determining if impairment exists, the Company estimates the undiscounted cash flows to be generated from the use and ultimate disposition of these assets.
If impairment is indicated based on a comparison of the assets’ carrying values and the undiscounted cash flows, the impairment to be recognized is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets.
| 11 |
Property and Equipment
Property and equipment is stated at cost less accumulated depreciation. Depreciation is provided on the straight-line basis over the estimated useful lives of the assets.
Expenditures for repair and maintenance which do not materially extend the useful lives of property and equipment are charged to operations. When property or equipment is sold or otherwise disposed of, the cost and related accumulated depreciation are removed from the respective accounts with the resulting gain or loss reflected in operations.
Management reviews the carrying value of its property and equipment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable.
Goodwill
The Company’s goodwill of $
The Company performs its annual impairment tests of goodwill as of December 31st of each year, or more frequently, if certain indicators are present. Goodwill is required to be tested for impairment at the reporting unit level. A reporting unit is an operating segment or one level below the operating segment level, which is referred to as a component. Management identifies its reporting units by assessing whether components (i) have discrete financial information available, (ii) engage in business activities, and (iii) whether a segment manager regularly reviews the component’s operating results. Net assets and goodwill of acquired businesses are allocated to the reporting unit associated with the acquired business based on the anticipated organizational structure of the combined entities. If two or more components are deemed economically similar, those components are aggregated into one reporting unit when performing the annual goodwill impairment review. The Company had one reporting unit as of December 31, 2021.
Intangible Assets
The Company acquired the majority of its intangible
assets through its acquisition of Advangelists LLC. The Company amortizes its identifiable definite-lived intangible assets over a period
of
In 2020 and 2021, the Company identified triggering
events due to the reduction in its projected revenue from adverse economic conditions caused by the COVID-19 pandemic and uncertainty
for recovery given the volatility of the capital markets. The Company performed impairment assessments of its ATOS Platform intangible
asset in December 2020 and determined that the carrying value of the asset exceeded its fair value by an estimate of $
| 12 |
Derivative Liabilities
The Company analyzes all financial instruments with features of both liabilities and equity under FASB ASC Topic No. 480, (“ASC 480”), “Distinguishing Liabilities from Equity” and FASB ASC Topic No. 815, (“ASC 815”) “Derivatives and Hedging”. Derivative liabilities are adjusted to reflect fair value at each period end, with any increase or decrease in the fair value being recorded in results of operations as adjustments to fair value of derivatives. The Company uses a binomial model to determine fair value.
Upon conversion of a note where the embedded conversion option has been bifurcated and accounted for as a derivative liability, the Company records the shares at fair value, relieves all related notes, derivatives, and debt discounts, and recognizes a net gain or loss on debt extinguishment. Equity instruments that are initially classified as equity that become subject to reclassification under ASC Topic 815 are reclassified to liabilities at the fair value of the instrument on the reclassification date. As of June 30, 2022, and December 31, 2021, the Company had no derivative liabilities.
Debt Issue Cost
Debt issuance cost paid to lenders, or third parties are amortized to interest expense in the consolidated statements of operations, over the life of the underlying debt instrument, with the unamortized portion reported net with related principal outstanding on the consolidated balance sheet.
Revenue Recognition
The Company’s revenues are generated from internet advertising, the Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers (ASC 606). In accordance with ASC 606, revenue is recognized when promised services are transferred to a customer. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for these services. To achieve this core principle, the Company applies the following five steps:
Identify the contract with a customer
A contract with a customer exists when (i) the Company enters into an enforceable contract with a customer that defines each party’s rights regarding the services to be transferred and identifies the payment terms related to these services, (ii) the contract has commercial substance and, (iii) the Company determines that collection of substantially all consideration for services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration. The Company applies judgment in determining the customer’s ability and intention to pay, which is based on a variety of factors including the customer’s historical payment experience or, in the case of a new customer, published credit and financial information pertaining to the customer.
Identify the performance obligations in the contract
Performance obligations promised in a contract are identified based on the services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the service either on its own or together with other resources that are readily available from third parties or from the Company, and are distinct in the context of the contract, whereby the transfer of the services is separately identifiable from other promises in the contract. To the extent a contract includes multiple promised services (performance obligations), the Company must apply judgment to determine whether promised services are capable of being distinct and distinct in the context of the contract. If these criteria are not met the promised services are accounted for as a combined performance obligation. Currently, the Company does not have any contracts that contain multiple performance obligations.
| 13 |
Determine the transaction price
The transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring services to the customer. To the extent the transaction price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price utilizing either the expected value method or the most likely amount method depending on the nature of the variable consideration. Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. None of the Company’s contracts as of June 30, 2022, and 2021, respectively, contained a significant financing component.
Allocate the transaction price to performance obligations in the contract
If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. However, if a series of distinct services that are substantially the same qualifies as a single performance obligation in a contract with variable consideration, the Company must determine if the variable consideration is attributable to the entire contract or to a specific part of the contract. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative standalone selling price basis unless the transaction price is variable and meets the criteria to be allocated entirely to a performance obligation or to a distinct service that forms part of a single performance obligation. Currently, the Company does not have any contracts that contain multiple performance obligations.
Recognize revenue when or as the Company satisfies a performance obligation.
The Company satisfies performance obligations at a point in time. Revenue is recognized at the time the related performance obligation is satisfied by transferring a promised service to a customer.
Payment terms and conditions vary by contract, although terms generally include a requirement of payment within 30 to 90 days.
Contract Liabilities
Contract liabilities represent deposits made by customers before the satisfaction of performance obligation and recognition of revenue. Upon completion of the performance obligation(s) that the Company has with the customer based on the terms of the contract, the liability for the customer deposit is relieved and revenue is recognized.
| 14 |
Revenues
All revenues recognized was from internet advertising for all periods ended June 30, 2022, and June 30, 2021.
Advertising
Advertising costs are expensed as incurred. Advertising costs are included as a component of general and administrative expense in the condensed consolidated statements of operations.
The Company recognized $
Stock-Based Compensation
The Company accounts for our stock-based compensation under ASC 718 “Compensation – Stock Compensation” using the fair value-based method. Under this method, compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. This guidance establishes standards for the accounting for transactions in which an entity exchanges it equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments.
The Company uses the fair value method for equity instruments granted to non-employees and use the Black-Scholes model for measuring the fair value of options.
The fair value of stock-based compensation is determined as of the date of the grant or the date at which the performance of the services is completed (measurement date) and is recognized over the vesting periods.
When determining fair value of stock-based compensation, the Company considers the following assumptions in the Black-Scholes model:
| · | Exercise price, |
| · | Expected dividends, |
| · | Expected volatility, |
| · | Risk-free interest rate; and |
| · | Expected life of option |
| 15 |
Stock Warrants
In connection with certain financing, consulting and collaboration arrangements, the Company may issue warrants to purchase shares of its common stock. The outstanding warrants are standalone instruments that are not puttable or mandatorily redeemable by the holder and are classified as equity awards. The Company measures the fair value of the awards using the Black-Scholes option pricing model as of the measurement date and records fair value as expense over the requisite service period or at the date of issuance if there is not a service period.
Income Taxes
The Company accounts for income tax using the asset and liability method prescribed by ASC 740, “Income Taxes”. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the year in which the differences are expected to reverse. The Company records a valuation allowance to offset deferred tax assets if based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rates is recognized as income or loss in the period that includes the enactment date.
The Company follows the accounting guidance for uncertainty in income taxes using the provisions of ASC 740 “Income Taxes”. Using that guidance, tax positions initially need to be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. As of June 30, 2022, and December 31, 2021, respectively, the Company had no uncertain tax positions that qualify for either recognition or disclosure in the financial statements.
The Company recognizes interest and penalties related to uncertain income tax positions in other expense. No interest and penalties related to uncertain income tax positions were recorded for the six months ended June 30, 2022, and 2021, respectively.
Pursuant to ASC 260-10-45, basic earnings (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding for the periods presented.
Diluted earnings per share is computed by dividing net income by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during the period. Potentially dilutive common shares may consist of common stock issuable for stock options and warrants (using the treasury stock method), convertible notes and common stock issuable. These common stock equivalents may be dilutive in the future. In the event of a net loss, diluted loss per share is the same as basic loss per share since the effect of the potential common stock equivalents upon conversion would be anti-dilutive.
| 16 |
The following potentially dilutive equity securities outstanding as of June 30, 2022, and 2021 were as follows:
| Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | ||||||||
| June 30, 2022 | June 30, 2021 | |||||||
| Convertible notes payable and accrued interest | ||||||||
| Stock Options | ||||||||
| Warrants | ||||||||
| Total common stock equivalents | ||||||||
Related Parties
Parties are considered to be related to the Company if the parties, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal with if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests.
Recent Accounting Pronouncements
Changes to accounting principles are established by the FASB in the form of ASU’s to the FASB’s Codification. We consider the applicability and impact of all ASU’s on our consolidated financial position, results of operations, stockholders’ equity, cash flows, or presentation thereof.
Credit Losses: In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 replaces the incurred loss impairment methodology under current GAAP with a methodology that reflects expected credit losses and requires a consideration of a broader range of reasonable and supportable information to inform credit loss estimates. ASU 2016-13 requires the use of a forward-looking expected credit loss model for accounts receivables, loans, and other financial instruments. In May 2019, the FASB issued ASU 2019-05, which provides transition relief for entities adopting ASU 2016-13. For entities that have adopted ASU 2016-13, the amendments in ASU 2019-05 are effective for fiscal years beginning after December 15, 2019, including interim periods therein. An entity may early adopt ASU No. 2019-05 in any interim period after its issuance if the entity has adopted ASU 2016-13. For all other entities, the effective date will be the same as the effective date of ASU 2016-13. ASU 2016-13 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company is currently evaluating the expected impact of adopting ASU 2016-13 on its consolidated financial statements and disclosures.
| 17 |
Accounting for Contract Assets and Contract Liabilities from Contracts with Customers: In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”). Under ASU 2021-08, an acquirer in a business combination must apply ASC 606 principles when recognizing and measuring acquired contract assets and contract liabilities. The provisions of ASU 2021-08 are applicable for the Company for fiscal years and interim periods beginning after December 15, 2022. The Company is currently evaluating the impact of ASU 2021-08 on its consolidated financial statements and related disclosures.
Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions: On June 30, 2022, the FASB issued ASU 2022-03 (“ASU 2022-03”), which clarifies the guidance in Topic 820 on the fair value measurement of an equity security that is subject to contractual restrictions that prohibit the sale of an equity security. The ASU also requires specific disclosures related to such an equity security, including (1) the fair value of such equity securities reflected in the balance sheet, (2) the nature and remaining duration of the corresponding restrictions, and (3) any circumstances that could cause a lapse in the restrictions. ASU 2022-03 clarifies that a “contractual restriction prohibiting the sale of an equity security is a characteristic of the reporting entity holding the equity security” and is not included in the equity security’s unit of account. Accordingly, an entity should not consider the contractual sale restriction when measuring the equity security’s fair value (i.e., the entity should not apply a discount related to the contractual sale restriction, as stated in ASC 820-10-35-36B as amended by the ASU). The ASU also prohibits an entity from recognizing a contractual sale restriction as a separate unit of account. For public business entities, ASU 2022-03 is effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the impact of ASU 2022-03 on its consolidated financial statements and related disclosures.
Recently Adopted Accounting Pronouncement
In August 2020, FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity; Own Equity (“ASU 2020-06”), as part of its overall simplification initiative to reduce costs and complexity of applying accounting standards while maintaining or improving the usefulness of the information provided to users of financial statements. Among other changes, the new guidance removes from GAAP separation models for convertible debt that require the convertible debt to be separated into a debt and equity component, unless the conversion feature is required to be bifurcated and accounted for as a derivative or the debt is issued at a substantial premium. As a result, after adopting the guidance, entities will no longer separately present such embedded conversion features in equity and will instead account for the convertible debt wholly as debt. The new guidance also requires use of the “if-converted” method when calculating the dilutive impact of convertible debt on earnings per share, which is consistent with the Company’s current accounting treatment under the current guidance. The guidance is effective for financial statements issued for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years, with early adoption permitted, but only at the beginning of the fiscal year.
We adopted this pronouncement on January 1, 2022; however, the adoption of this standard did not have a material effect on the Company’s consolidated financial statements.
Reclassifications
Correction of Prior Period Information
During the review of the Company’s financial statements for the three and six month periods ended June 30, 2022, the Company identified errors in the accounting and presentation of expenses and losses recorded for certain debt conversions, recording of stock option compensation expense, and expense related to shares issued for services, relating to the three months ended March 31, 2022. These errors resulted in the recording of $39,271 in less general and administrative expenses, $233,526 in additional other expenses, and a reclassification of $450,865 from general and administrative expenses to other expense, resulting in an understatement of net loss of $194,255. If reported correctly, the Company would have recorded $2,038,453 in general and administrative expenses, ($2,486,802) in loss from operations, $831,888 in other expenses, net, and a net loss of ($2,634,299) for the three months ended March 31, 2022. To correct these errors, the Company recorded the corrections in the three month period ended June 30, 2022. If reported correctly for the three months ended June 30, 2022, then the Company would have reported $2,216,694 in general and administrative expenses, ($1,048,051) in loss from operations, $329,171 in other income (expenses), net, and a net loss of ($1,377,222). In accordance with the SEC’s Staff Accounting Bulletin Nos. 99 and 108 (“SAB 99” and ”SAB 108”), the Company evaluated this error and concluded that although the adjustment to certain areas of the statement of operations was quantitatively material, the cumulative effects were quantitatively and qualitatively immaterial and would not have materially impacted a reasonable investor’s opinion of the Company. This is further supported by the fact that the impact would not have been significant in comparison to prior periods and all errors are of a non-cash nature. Therefore, as permitted by SAB 108 and treated under the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 250, Accounting Changes and Error Corrections, the Company corrected previously recorded results for the three and six months ended June 30, 2022, to account for the error in this current filing. As a result, the statement of operations for the six months ended June 30, 2022 reflects the corrected expenses, operating loss and net loss.
See also Note 3 for restatement of the three and six months ended June 30, 2021.
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NOTE 3 – RESTATEMENT
On May 23, 2022, the Company filed an amended annual report on Form 10-K/A for the year ended December 31, 2021, as a result of the identification of certain errors by management primarily relating to the accounting for share-based payments in connection with raising equity, the sale of warrants, certain gains (losses) on debt extinguishment, as well as an adjustments to its deferred tax assets and related valuation allowance. Below is a reconciliation of the effects of such restatement on the Company's consolidated statement of operations for the three and six months ended June 30, 2021, and consolidated statement of cash flows for the six months ended June 30, 2021, including previously reported values to restated values. The values as previously reported were derived from the Company's 10-Q which presented the financial statements for the period ended June 30, 2021, filed with the SEC on August 4, 2021.
As a result of the above restatement, additional paid in capital at June 30, 2021 was decreased by $219,600 from $187,117,663 (previously reported) to $186,898,063 (as restated), and accumulated deficit at June 30, 2021 decreased from ($190,992,325) to ($190,774,685).
Consolidated Statements of Operations
(As Restated)
| Three Months Ended June 30, 2021 | Six Months Ended June 30, 2021 | ||||||||||||||||||||||||
| As Previously Reported | Adjustment | As Restated | As Previously Reported | Adjustment | As Restated | ||||||||||||||||||||
| Revenues | $ | $ | $ | $ | $ | $ | |||||||||||||||||||
| Cost of revenue | |||||||||||||||||||||||||
| Gross profit | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||
| Operating expenses | |||||||||||||||||||||||||
| Selling, general and administrative | |||||||||||||||||||||||||
| Salaries | |||||||||||||||||||||||||
| Stock-based compensation | |||||||||||||||||||||||||
| Total operating expenses | |||||||||||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||
| Other income (expense) | |||||||||||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | 1 | ||||||||||||
| Interest expense - amortization of debt discount | ( | ) | ( | ) | ( | ) | ( | ) | 2 | ||||||||||||||||
| Loss on sale of company stock | ( | ) | ( | ) | 3 | ||||||||||||||||||||
| Forgiveness of SBA - PPP loan | 4 | ||||||||||||||||||||||||
| Total other income (expense) - net | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||
| Net loss | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | |||||||||||
| Loss per share - basic and diluted | $ | ) | $ | $ | ) | $ | ) | $ | $ | ) | |||||||||||||||
| Weighted average number of shares - basic and diluted | |||||||||||||||||||||||||
_____________________
| 1 | Previously reported the fair value associated with the issuance of shares of common stock in conjunction with the issuance of short-term convertible debt notes as “Loss on sale of company stock.” The value was reclassified to "Interest expense." No impact on net loss or loss per share. |
| 2 | Financial statement line description was changed from “Original issue discount” to “Interest expense - amortization of debt discount” for financial statement presentation purposes. No impact on net loss or loss per share. |
| 3 | The Company previously reported $219,600 in the consolidated financial statement line item “Loss on sale of company stock” for the excess of the fair value of shares of common stock issued upon the conversions over the face value of the convertible debt. Since the convertible debt notes were converted at original conversion terms no gain or loss should have been reflected. The $219,600 was reclassified as a reduction to “Additional paid-in capital” on the Company's consolidated balance sheet, which reduced the consolidated net loss. |
| 4 | Previously reported “Forgiveness of SBA - PPP loan” as other comprehensive income. The value was reclassified to “Other income (expense)” within continuing operations. No impact on net loss or loss per share. |
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Consolidated Statement of Cash Flows
Six Months Ended June 30, 2021
| As Previously Reported | Adjustment | As Restated | |||||||||||
| Cash flows from operating activities | |||||||||||||
| Net loss | $ | (4,823,399 | ) | $ | 219,600 | $ | (4,603,799 | ) | 4 | ||||
| Adjustments to reconcile net loss to net cash used in operating activities | |||||||||||||
| Depreciation | 3,703 | – | 3,703 | ||||||||||
| Amortization of intangibles | 900,367 | – | 900,367 | ||||||||||
| Common stock issued for services | 119,800 | – | 119,800 | ||||||||||
| Stock-based compensation | 572,731 | – | 572,731 | ||||||||||
| Stock issued with short-term convertible notes | – | 310,150 | 310,150 | 5 | |||||||||
| Gain on forgiveness of debt | – | (265,842 | ) | (265,842 | ) | 1 | |||||||
| Changes in operating assets and liabilities | |||||||||||||
| Accounts receivable | 840,740 | – | 840,740 | ||||||||||
| Prepaid expenses and other assets | 16,500 | – | 16,500 | ||||||||||
| Accounts payable and accrued expenses | (519,474 | ) | 176,340 | (343,134 | ) | 3 | |||||||
| Accrued expenses and other current liabilities | (19,473 | ) | 19,473 | – | 3 | ||||||||
| Accrued interest | 195,810 | (195,810 | ) | – | 3 | ||||||||
| Net cash used in operating activities | (2,712,695 | ) | 263,911 | (2,448,784 | ) | ||||||||
| Cash flows from investing activities | |||||||||||||
| Common stock issued for cash, net | 898,990 | (898,990 | ) | – | 2 | ||||||||
| Original issue discount shares | 268,150 | (268,150 | ) | – | 5 | ||||||||
| Note conversion to common stock | 671,602 | (671,602 | ) | – | 6 | ||||||||
| Net cash provided by investing activities | 1,838,742 | (1,838,742 | ) | – | |||||||||
| Cash flows from financing activities | |||||||||||||
| Common stock issued for cash, net | – | 898,990 | 898,990 | 2 | |||||||||
| Proceeds from issuance of notes payable, net | 1,310,000 | 510,000 | 1,820,000 | 7 | |||||||||
| SBA loan forgiveness | (265,842 | ) | 265,842 | – | 1 | ||||||||
| Repayments of notes payable | (598,816 | ) | (100,000 | ) | (698,816 | ) | 7 | ||||||
| Net cash provided by financing activities | 445,342 | 1,574,832 | 2,020,174 | ||||||||||
| Net decrease in cash | (428,610 | ) | – | (428,610 | ) | ||||||||
| Cash and cash equivalents – beginning of period | 602,182 | – | 602,182 | ||||||||||
| Cash and cash equivalents – end of period | $ | 173,571 | $ | – | $ | 173,571 | |||||||
| Supplemental disclosure of cash flow information | |||||||||||||
| Cash paid for interest | $ | 207,366 | $ | – | $ | 207,366 | |||||||
| Cash paid for taxes | $ | 25 | $ | – | $ | 25 | |||||||
| Supplemental disclosure of non-cash investing and financing activities | |||||||||||||
| Common stock issued for conversion of convertible notes | $ | 419,750 | $ | (419,750 | ) | $ | 419,750 | 6 | |||||
| Recording of debt discount upon issuance of convertible debt | $ | 110,000 | $ | (110,000 | ) | $ | – | 5 | |||||
__________________________
| 1 | Previously reported “Forgiveness of SBA – PPP loan” as cash outflow from financing activities. The non-cash value was reclassified as a net loss reconciling item in cash flows from operating activities . | |
| 2 | Previously reported item as investing activity. The cash inflow was reclassified as a financing activity. No impact on overall cash flows. | |
| 3 | Previously reported as accounts payable, accrued expenses and other current liabilities and accrued interest. Reflected as one line item “accounts payable and accrued expenses” to be consistent with the consolidated balance sheet financial statement line items. No impact on overall cash flows. | |
| 4 | The Company previously reported $219,600 on the consolidated statement of operations financial statement line item “Loss on sale of company stock” for the excess of the fair value of shares of common stock issued upon the conversion of convertible notes payable over the face value of the convertible debt. Since the convertible debt notes were converted at original conversion terms no gain or loss should have been reflected. The $219,600 was reclassified as a reduction to “Additional paid-in capital” on the Company’s consolidated balance sheet which reduced the consolidated net loss of the Company. | |
| 5. | Shares of common stock issued with notes payable and reflected as either interest expense or interest expense-amortization of debt discount on the consolidated statement of operations, previously reported as an investing activity and non-cash investing and financing activity and overstated by $68,000. The total non-cash value of $310,150 was reclassified as a net loss reconciling item in cash flows from operating activities | |
| 6. | Previously reported as an investing activity and reflects the fair value of shares of common stock issued upon the conversion of convertible notes payable. The value has been reclassified as a non-cash financing activity and adjusted for the $219,600 adjustment to Additional paid-in capital that was made to the previously reported results for the three and six months ended June 30, 2021 (see note 4 above). Restated non-cash financing activity represents the carrying value of debt converted to equity. | |
| 7. | Previously reported amounts did not include $510,000 of proceeds from the issuance of notes payable and $100,000 of payments made on convertible notes payable during the six months ended June 30, 2021. |
| 20 |
NOTE 4 – INTANGIBLE ASSETS
The Company’s identifiable intangible assets, other than goodwill, consists of customer relationships and the ATOS Platform.
The ATOS platform:
| · | creates an automated marketplace of advertisers and publishers on digital media outlets to host online auctions to facilitate the sale of ad time slots (known as digital real estate) targeted at users while engaged on their connected TV, computer, or mobile device, and |
| · | gives advertisers the capability to understand and interact with their audiences and engage them in a meaningful way by the using ads in both image and video formats (known as rich media) to increase their customer base and foot traffic to their physical locations. |
The Company’s intangible asset balances, including accumulated amortization, are as follows:
| Schedule of intangible assets | ||||||||||
| Useful Lives | June 30, 2022 | December 31, 2021 | ||||||||
| Customer relationships | $ | $ | ||||||||
| ATOS Platform | ||||||||||
| Less accumulated amortization | ( | ) | ( | ) | ||||||
| Net carrying value | $ | $ | ||||||||
During the six months ended June 30, 2022, the
Company recognized $
Future amortization, for the years ending December 31, is as follows:
| Schedule of future accumulated amortization schedule | ||||
| 2022 (balance of 2022) | $ | |||
| 2023 | ||||
| 2024 | ||||
| Total | $ | |||
NOTE 5 – NOTES PAYABLE AND CONVERTIBLE NOTES PAYABLE
Summary of notes payable and convertible notes payable:
| Summary of notes payable and convertible notes payable: | ||||||||
| June 30, 2022 | December 31, 2021 | |||||||
| Dr. Salkind - related party (d) | $ | $ | ||||||
| Small Business Administration (a) | ||||||||
| Subscription Agreements (c) | ||||||||
| Business Capital Providers (b) | ||||||||
| Total Debt | ||||||||
| Current portion of debt | ||||||||
| Long-term portion of debt | $ | $ | ||||||
__________________
| (a) | The Company received an Economic Injury Disaster Loan from the SBA which carries a thirty-year term, and a three-point seven five percent interest rate, maturity date is July of 2050. Total accrued and unpaid interest on the debt was $8,414 at June 30, 2022 and is included in accounts payable and accrued expenses on the accompanying balance sheet. | |
| (b) | Business Capital Providers, Inc. purchased certain future receivables from the Company at a discount under agreements dated July of 2021. All loans have been repaid in full as of June 30, 2022. |
| (c) | Several private investors, who were unaffiliated shareholders of the Company and accredited investors as provided under Regulation D Rule 501 promulgated under the Securities Act of 1933, provided financing under convertible debt agreements during the period June 2021 through September 2021 pursuant to subscription agreements. During the six months ended June 30, 2022, one investor agreed to convert $150,000 of debt principal at a reduced conversion rate of $2.00 per share under an induced conversion arrangement that included an explicit time limit of two dates at the reduced rate. The conversion resulted in the issuance of 75,000 shares of common stock and recognition of $101,000 in inducement expense. |
| 21 |
The remaining $100,000 in principal relates to three individual convertible notes bearing interest at 10% per annum and having a maturity date of June 30, 2022. The promissory notes contain an automatic conversion feature, effectively converting all outstanding and unpaid principal on the maturity date at a conversion rate of $4.00 per share. Total accrued and unpaid interest on the convertible notes was $8,425 at June 30, 2022 and is included in accounts payable and accrued interest on the accompanying balance sheet (see Note 9).
| (d) | Gene Salkind, who is a director of the Company, and an affiliate of Dr. Salkind executed 15% Senior Secured Convertible Promissory Notes in September 2019. The convertible promissory notes have the following terms, as amended: |
| · | The Salkind lenders may convert the notes at any time at a conversion rate of $4.00. |
| · | The Company may convert the notes at any time that the trailing thirty (30) day volume weighted average price per share (as more particularly described in the Notes) of the Company’s common stock is above $4.00 per share. |
Upon conversion of the debt principal, the Company is to issue warrants to the debt holders for the purchase of common shares of the Company. The number of shares granted under the warrants is equivalent to 50% of the total shares issued under the debt principal converted. The warrants are immediately exercisable at a price of $4.00 per share through September 2029.
The notes contained customary events of default, which, if uncured, entitle the holders to accelerate payment of the principal and all accrued and unpaid interest under their notes.
During the six months ended June 30,
2022, the debt holders converted all the remaining $
NOTE 6 – STOCKHOLDERS’ EQUITY
Shares Issued for Services
During the six months ended June 30, 2022, the
Company issued shares of common stock, at $1.69 to per share for $
| 22 |
Shares issued upon conversion of debt:
During the six months ended June 30, 2022, Dr.
Gene Salkind, his wife, and a trust converted an aggregate of $
During the six months ended June 30, 2022, a
lender also converted $
During Fiscal 2005, the Company established, and the stockholders approved, an Employee Benefit and Consulting Services Compensation Plan (the “2005 Plan”) for the granting of up to 5,000 non-statutory and incentive stock options and stock awards to directors, officers, consultants and key employees of the Company. On June 9, 2005, the Board of Directors amended the Plan to increase the number of stock options and awards to be granted under the Plan to 10,000 shares. During Fiscal 2009, the Company established a plan of long-term stock-based compensation incentives for selected Eligible Participants of the Company covering 10,000 shares. This plan was adopted by the Board of Directors and approved by stockholders in October 2009 and shall be known as the 2009 Employee Benefit and Consulting Services Compensation Plan (the “2009 Plan”). In September 2013, the Company’s stockholders approved an increase in the number of shares covered by the 2009 Plan to 25,000 shares. In February 2015, the Board approved, subject to stockholder approval within one year, an increase in the number of shares under the 2009 Plan to 50,000 shares; however, stockholder approval was not obtained within the requisite one year and the anticipated increase in the 2009 Plan was canceled. In the first quarter of 2016, the Board approved, and stockholders ratified a 2016 Employee Benefit and Consulting Services Compensation Plan covering 25,000 shares (the “2016 Plan”) and approving moving all options which exceeded the 2009 Plan limits to the 2016 Plan. In December 2018, the Board of Directors adopted and in February 2019. the stockholders ratified the 2018 Employee Benefit and Consulting Services Compensation Plan covering 75,000 shares (the “2018 Plan”). On April 2, 2019, the Board approved the “2019 Plan” identical to the 2018 Plan, except that the 2019 Plan covers 150,000 shares. The 2019 Plan required stockholder approval by April 2, 2020, to be able to grant incentive stock options under the 2019 Plan. On October 13, 2021, the Board approved the “2021 Plan” identical to the 2018 Plan, except that the 2019 Plan covers 1,100,000 post-split shares. The 2005, 2009, 2016, 2018, 2019 and 2021 plans are collectively referred to as the “Plans.”
In March of 2022 Anne S. Provost was elected to the board of directors and was issued 25,000 options from the Company’s 2021 stock option plan with immediate vesting, with an exercise price of $4.57, and expiration of December 2031.
All stock options under the Plans are granted at or above the fair market value of the common stock at the grant date. Employee and non-employee stock options vest over varying periods and generally expire either 5 or 10 years from the grant date. The fair value of options at the date of grant was estimated using the Black-Scholes option pricing model. For option grants, the Company will take into consideration payments subject to the provisions of ASC 718 “Stock Compensation”. Previously, such assumptions were determined based on historical data. The weighted average assumptions made in calculating the fair values of options granted during the three months and six months ended June 30, 2022, and June 30, 20201 are as follows:
| Schedule of assumptions used | ||||||||
| Six Months Ended June 30 | ||||||||
| 2022 | 2021 | |||||||
| Expected volatility | % | |||||||
| Expected dividend yield | ||||||||
| Risk-free interest rate | % | |||||||
| Expected life (in years) | ||||||||
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| Schedule of options outstanding | ||||||||||||||||
Option Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term | Aggregate Intrinsic Value | |||||||||||||
| Outstanding, January 1, 2022 | $ | $ | ||||||||||||||
| Granted | $ | $ | ||||||||||||||
| Cancelled and expired | ( | ) | $ | – | $ | |||||||||||
| Outstanding, June 30, 2022 | $ | $ | ||||||||||||||
| Options exercisable, June 30, 2022 | $ | $ | ||||||||||||||
The weighted-average grant-date fair value of options granted during the six months ended June 30, 2022 was $
The aggregate intrinsic value of options outstanding and options exercisable at June 30, 2022 is calculated as the difference between the exercise price of the underlying options and the market price of the Company's common stock for the shares that had exercise prices, that were lower than the $ closing price of the Company's common stock on June 30, 2022.
The Company’s results for the quarters ended June 30, 2022, and June 30, 2021, include employee share-based compensation expense totaling $ and $, respectively. Such amounts have been included in the Consolidated Statements of Operations within general and administrative expenses. The Company’s results for the six months ended June 30, 2022, and June 30, 2021, include employee share-based compensation expense totaling $ and $ respectively. Such amounts have been included in the Consolidated Statements of Operations within general and administrative expenses
As of June 30, 2022, the unamortized compensation cost related to unvested stock option awards is $.
During the six months ended June 30, 2022, the Company issued warrants to a consulting company and were issued for the conversion of secured convertible notes to a related party (see Note 5) for a total issuance of .
The weighted average assumptions made in calculating the fair value of warrants granted during the three and six months ended June 30, 2022, and 2021 are as follows:
| Schedule of warrant assumptions | ||||||||
| Six Months Ended June 30 | ||||||||
| 2022 | 2021 | |||||||
| Expected volatility | ||||||||
| Expected dividend yield | ||||||||
| Risk-free interest rate | ||||||||
| Expected life (in years) | ||||||||
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| Schedule of warrants outstanding | ||||||||||||||||
Warrant Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term | Aggregate Intrinsic Value | |||||||||||||
| Outstanding, January 1, 2022 | $ | $ | ||||||||||||||
| Granted | $ | $ | ||||||||||||||
| Expired | ( | ) | $ | – | $ | |||||||||||
| Outstanding, June 30, 2022 | $ | $ | ||||||||||||||
| Warrants exercisable, June 30, 2022 | $ | $ | ||||||||||||||
The weighted-average grant-date fair value of warrants granted during the six months ended June 30, 2022, and 2021 was $ and $, respectively.
NOTE 8 – LITIGATION
In a Current Report on Form 8-K filed by the Company on March 23, 2022, the Company reported the termination of the Employment Agreement of Donald (Trey) Barrett III as Chief Operations and Strategy Officer. On April 12, 2022, Mr. Barrett commenced an arbitration against the Company before the American Arbitration Association alleging among other things that the Company terminated Mr. Barrett without cause in breach of the Employment Agreement. On August 12, 2022 the Company and Mr. Barrett reached a settlement in which, among other things, the Company and Mr. Barrett mutually deemed that the termination was not for-cause, the Company agreed to pay Mr. Barrett a sum which is not material to the business or financial condition of the Company, and Mr. Barrett’s non-competition restrictive covenant was canceled. The Company has recorded the liability in full settlement of the claim which is included in the accounts payable and accrued expenses.
NOTE 9 – SUBSEQUENT EVENTS
On July 20, 2022, the Company received $150,000 from the sale of the Company’s common stock by issuing 120,000 shares at $1.25 per share.
On August 10, 2022, the Company received $275,000 from the sale of the Company’s common stock by issuing 220,000 shares at $1.25 per share.
On July 1, 2022, the Company issued 27,107 shares of common stock for three convertible promissory notes totaling $100,000 plus accrued interest of $8,425 at a conversion rate of $4.00 per share (see Note 5).
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
References in this Management’s Discussion and Analysis of Financial Condition and Results of Operations to “us,” “we,” “our,” and similar terms refer to the Company.
The information contained in this Form 10-Q and documents incorporated herein by reference are intended to update the information contained in the Company's Form 10-K/A for its fiscal year ended December 31, 2021 which includes our audited financial statements for the year ended December 31, 2021 and such information presumes that readers have access to, and will have read, the "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Risk Factors" and other information contained in such Form 10-K/A and other Company filings with the Securities and Exchange Commission ("SEC").
This statement contains forward-looking statements within the meaning of the Securities Act. Discussions containing such forward-looking statements may be found throughout this statement. Actual events or results may differ materially from those discussed in the forward-looking statements as a result of various factors, including the matters set forth in this statement. The accompanying consolidated financial statements as of June 30, 2022, and 2021 and for the six months ended June 30, 2022, and June 30, 2021 includes the accounts of Mobiquity Technologies, Inc. (the “Company”) and its wholly owned subsidiaries.
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements involve risks and uncertainties, and actual results could be significantly different than those discussed in this Form 10-Q. Certain statements contained in Management's Discussion and Analysis, particularly in "Liquidity and Capital Resources," and elsewhere in this Form 10-Q are forward-looking statements. These statements discuss, among other things, expected growth, future revenues and future performance. Although we believe the expectations expressed in such forward-looking statements are based on reasonable assumptions within the bounds of our knowledge of our business, a number of factors could cause actual results to differ materially from those expressed in any forward-looking statements, whether oral or written, made by us or on our behalf. The forward-looking statements are subject to risks and uncertainties including, without limitation, the following: (a) changes in levels of competition from current competitors and potential new competition, (b) possible loss of customers, and (c) the company's ability to attract and retain key personnel, (d) The Company's ability to manage other risks, uncertainties and factors inherent in the business and otherwise discussed in this 10-Q and in the Company's other filings with the SEC. The foregoing should not be construed as an exhaustive list of all factors that could cause actual results to differ materially from those expressed in forward-looking statements made by us. All forward-looking statements included in this document are made as of the date hereof, based on information available to the Company on the date thereof, and the Company assumes no obligation to update any forward-looking statements.
The following discussion and analysis of the consolidated results of operations and financial condition of the Company for the three months and six months ended June 30, 2022, and 2021, respectively, and should be read in conjunction with our consolidated financial statements and the notes thereto that are included elsewhere in this Quarterly Report on Form 10-Q.
This Quarterly Report includes forward-looking statements, as that term is defined in the federal securities laws, based upon current expectations that involve risks and uncertainties, such as plans, objectives, expectations, and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors. Words such as “anticipate,” “estimate,” “plan,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions are used to identify forward-looking statements. We caution you that these statements are not guarantees of future performance or events and are subject to a number of uncertainties, risks and other influences, many of which are beyond our control, which may influence the accuracy of the statements and the projections upon which the statements are based. Our actual results could differ materially from those anticipated in the forward-looking statements as a result of certain risk factors discussed in our Annual Report on Form 10-K/A (Amendment No. 1) filed with the Securities and Exchange Commission (the “SEC”) on May 23, 2022.
Any one or more of these uncertainties, risks and other influences could materially affect our results of operations and whether forward-looking statements made by us ultimately prove to be accurate. Our actual results, performance and achievements could differ materially from those expressed or implied in these forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether from new information, future events or otherwise.
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Company Overview
Mobiquity Technologies, Inc. is a next-generation marketing and advertising technology and data intelligence company which operates through our proprietary software platforms in the programmatic advertising space.
Our product solutions are comprised of two proprietary software platforms:
| · | Our advertising technology operating system (or ATOS) platform; and | |
| · | Our data intelligence platform. |
Our ATOS platform blends artificial intelligence (or AI) and machine learning (ML) based optimization technology for automatic ad serving that manages digital advertising inventory and campaigns. Our data intelligence platform provides precise data and insights on consumer’s real-world behavior and trends for use in marketing and research.
We operate our business through two wholly owned subsidiaries. Advangelists LLC operates our ATOS platform business, and Mobiquity Networks, Inc. operates our data intelligence platform business.
Critical Accounting Policies
Our discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States. The preparation of financial statements requires management to make estimates and disclosures on the date of the financial statements. On an on-going basis, we evaluate our estimates including, but not limited to, those related to revenue recognition. We use authoritative pronouncements, historical experience and other assumptions as the basis for making judgments. We believe that the following critical accounting policies affect our more significant judgments and estimates in the preparation of our financial statements.
Use of Estimates
Preparing financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reported period. Actual results could differ from those estimates, and those estimates may be material.
Risks and Uncertainties
The Company operates in an industry that is subject to intense competition and change in consumer demand. The Company’s operations are subject to significant risk and uncertainties including financial and operational risks including the potential risk of business failure.
The Company has experienced, and in the future expects to continue to experience, variability in sales and earnings. The factors expected to contribute to this variability include, among others, (i) the cyclical nature of the industry, (ii) general economic conditions in the various local markets in which the Company competes, including a potential general downturn in the economy, and (iii) the volatility of prices in connection with the Company’s distribution of the product. These factors, among others, make it difficult to project the Company’s operating results on a consistent basis.
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Fair Value of Financial Instruments
The Company accounts for financial instruments under Financial Accounting Standards Board (“FASB”) ASC 820, Fair Value Measurements. ASC 820 provides a framework for measuring fair value and requires disclosures regarding fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, based on the Company’s principal or, in absence of a principal, most advantageous market for the specific asset or liability.
The Company uses a three-tier fair value hierarchy to classify and disclose all assets and liabilities measured at fair value on a recurring basis, as well as assets and liabilities measured at fair value on a non-recurring basis, in periods subsequent to their initial measurement. The hierarchy requires the Company to use observable inputs when available, and to minimize the use of unobservable inputs, when determining fair value.
The three tiers are defined as follows:
| · | Level 1 —Observable inputs that reflect quoted market prices (unadjusted) for identical assets or liabilities in active markets; | |
| · | Level 2—Observable inputs other than quoted prices in active markets that are observable either directly or indirectly in the marketplace for identical or similar assets and liabilities; and | |
| · | Level 3—Unobservable inputs that are supported by little or no market data, which require the Company to develop its own assumptions. |
The determination of fair value and the assessment of a measurement’s placement within the hierarchy requires judgment. Level 3 valuations often involve a higher degree of judgment and complexity. Level 3 valuations may require the use of various cost, market, or income valuation methodologies applied to unobservable management estimates and assumptions. Management’s assumptions could vary depending on the asset or liability valued and the valuation method used. Such assumptions could include estimates of prices, earnings, costs, actions of market participants, market factors, or the weighting of various valuation methods. The Company may also engage external advisors to assist us in determining fair value, as appropriate.
Although the Company believes that the recorded fair value of our financial instruments is appropriate, these fair values may not be indicative of net realizable value or reflective of future fair values.
The Company’s financial instruments, including cash, accounts receivable, accounts payable and accrued expenses, and accounts payable and accrued expenses, are carried at historical cost. At June 30, 2022 and December 31, 2021, respectively, the carrying amounts of these instruments approximated their fair values because of the short-term nature of these instruments.
ASC 825-10 “Financial Instruments” allows entities to voluntarily choose to measure certain financial assets and liabilities at fair value (“fair value option”). The fair value option may be elected on an instrument-by-instrument basis and is irrevocable unless a new election date occurs. If the fair value option is elected for an instrument, unrealized gains and losses for that instrument should be reported in earnings at each subsequent reporting date. The Company did not elect to apply the fair value option to any outstanding financial instruments.
Accounts Receivable
Accounts receivable are stated at the amount management expects to collect from outstanding customer balances. Credit is extended to customers based on an evaluation of their financial condition and other factors. Interest is not accrued on overdue accounts receivable. The Company does not require collateral.
Management periodically assesses the Company’s accounts receivable and, if necessary, establishes an allowance for estimated uncollectible amounts. The Company provides an allowance for doubtful accounts based upon a review of the outstanding accounts receivable, historical collection information and existing economic conditions. Accounts determined to be uncollectible are charged to operations when that determination is made.
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Allowance for doubtful accounts was $820,990 at June 30, 2022 and December 31, 2021.
Bad debt expense (recovery) is recorded as a component of general and administrative expenses in the accompanying consolidated statements of operations.
Revenue Recognition
The Company recognizes revenue in accordance with ASC 606 to align revenue recognition more closely with the delivery of the Company’s services and will provide financial statement readers with enhanced disclosures. In accordance with ASC 606, revenue is recognized when a customer obtains control of promised services. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for these services. To achieve this core principle, the Company applies the following five steps:
Identify the contract with a customer
A contract with a customer exists when (i) the Company enters into an enforceable contract with a customer that defines each party’s rights regarding the services to be transferred and identifies the payment terms related to these services, (ii) the contract has commercial substance and, (iii) the Company determines that collection of substantially all consideration for services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration. The Company applies judgment in determining the customer’s ability and intention to pay, which is based on a variety of factors including the customer’s historical payment experience or, in the case of a new customer, published credit and financial information pertaining to the customer.
Identify the performance obligations in the contract
Performance obligations promised in a contract are identified based on the services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the service either on its own or together with other resources that are readily available from third parties or from the Company, and are distinct in the context of the contract, whereby the transfer of the services is separately identifiable from other promises in the contract. To the extent a contract includes multiple promised services, the Company must apply judgment to determine whether promised services are capable of being distinct and distinct in the context of the contract. If these criteria are not met the promised services are accounted for as a combined performance obligation.
Determine the transaction price
The transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring services to the customer. To the extent the transaction price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price utilizing either the expected value method or the most likely amount method depending on the nature of the variable consideration. Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. None of the Company’s contracts as of June 30, 2022, and 2021, respectively, contained a significant financing component.
Allocate the transaction price to performance obligations in the contract
If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. However, if a series of distinct services that are substantially the same qualifies as a single performance obligation in a contract with variable consideration, the Company must determine if the variable consideration is attributable to the entire contract or to a specific part of the contract. For example, a bonus or penalty may be associated with one or more, but not all, distinct services promised in a series of distinct services that forms part of a single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative standalone selling price basis unless the transaction price is variable and meets the criteria to be allocated entirely to a performance obligation or to a distinct service that forms part of a single performance obligation. The Company determines standalone selling price based on the price at which the performance obligation is sold separately. If the standalone selling price is not observable through past transactions, the Company estimates the standalone selling price taking into account available information such as market conditions and internally approved pricing guidelines related to the performance obligations.
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Recognize revenue when or as the Company satisfies a performance obligation.
The Company satisfies performance obligations either over time or at a point in time. Revenue is recognized at the time the related performance obligation is satisfied by transferring a promised service to a customer.
For each revenue stream we only have a single performance obligation.
Payment terms and conditions vary by contract, although terms generally include a requirement of payment within 30 to 90 days.
Stock-Based Compensation
The Company accounts for our stock-based compensation under ASC 718 “Compensation – Stock Compensation” using the fair value-based method. Under this method, compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. This guidance establishes standards for the accounting for transactions in which an entity exchanges it equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments.
The Company uses the fair value method for equity instruments granted to non-employees and use the Black-Scholes model for measuring the fair value of options.
The fair value of stock-based compensation is determined as of the date of the grant or the date at which the performance of the services is completed (measurement date) and is recognized over the vesting periods.
When determining fair value of stock-based compensation, the Company considers the following assumptions in the Black-Scholes model:
| · | Exercise price, |
| · | Expected dividends, |
| · | Expected volatility, |
| · | Risk-free interest rate; and |
| · | Expected life of option |
Recent Accounting Standards
Changes to accounting principles are established by the FASB in the form of ASU’s to the FASB’s Codification. We consider the applicability and impact of all ASU’s on our consolidated financial position, results of operations, stockholders’ deficit, cash flows, or presentation thereof. Management has evaluated all recent accounting pronouncements as issued by the FASB in the form of Accounting Standards Updates (“ASU”) through the date these financial statements were available to be issued and found no recent accounting pronouncements issued, but not yet effective accounting pronouncements, when adopted, will have a material impact on the consolidated financial statements of the Company.
In August 2020, FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity; Own Equity (“ASU 2020-06”), as part of its overall simplification initiative to reduce costs and complexity of applying accounting standards while maintaining or improving the usefulness of the information provided to users of financial statements. Among other changes, the new guidance removes from GAAP separation models for convertible debt that require the convertible debt to be separated into a debt and equity component, unless the conversion feature is required to be bifurcated and accounted for as a derivative or the debt is issued at a substantial premium. As a result, after adopting the guidance, entities will no longer separately present such embedded conversion features in equity and will instead account for the convertible debt wholly as debt. The new guidance also requires use of the “if-converted” method when calculating the dilutive impact of convertible debt on earnings per share, which is consistent with the Company’s current accounting treatment under the current guidance. The guidance is effective for financial statements issued for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years, with early adoption permitted, but only at the beginning of the fiscal year.
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We adopted this pronouncement on January 1, 2022; however, the adoption of this standard did not have a material effect on the Company’s consolidated financial statements.
Plan of Operation
Mobiquity intends to hire several new sales and sales support individuals to help generate additional revenue using the Advangelists platform and the Mobiquity Networks MobiExchange. Mobiquity’s sales team will focus on Advertising Agencies, Brands, and publishers to help increase both supply and demand across the Advangelists platform while providing unique data segments utilizing MobiExchange. Together the Advangelists platform and MobiExchange platform creates multiple revenue streams for Mobiquity. The first is licensing the Advangelists platform as a white-label product for use by Advertising Agencies, DSP’s, Publishers, and Brands. Under the White-Label scenario, the user licenses the technology and is responsible for running its own business operations and is billed a percentage of volume run through the platform. The second revenue stream is a managed services model in which the user is billed a higher percentage of revenue run through the platform, but all services are managed by the Mobiquity/Advangelists team. The third revenue model is a seat model, where the user is billed a percentage of revenue run through the platform and business operations are shared between the user and the Mobiquity/Advangelists team. Additional revenue can be generated by offering data segments and digital audiences through MobiExchange for use in omnichannel marketing programs that include but not limited to programmatic advertising email marketing and SMS. The goal of the sales team is to inform potential users of the benefits in efficiency and effectiveness of utilizing the end-to-end, fully integrated ATOS created by Advangelists and Mobiquity Networks.
Results of Operations
Quarter Ended June 30, 2022, versus Quarter Ended June 30, 2021
The following table sets forth certain selected condensed statement of operations data for the periods indicated in dollars. In addition, we note that the period-to-period comparison may not be indicative of future performance.
| Quarter Ended | ||||||||
| June 30, 2022 | June 30, 2021 | |||||||
| Revenues | $ | 1,920,954 | $ | 702,434 | ||||
| Cost of Revenues | 673,769 | 811,519 | ||||||
| Gross Profit (Loss) | 1,247,185 | (109,085 | ) | |||||
| General and Administrative Expenses | 2,255,965 | 2,047,428 | ||||||
| Loss from operations | (1,008,780 | ) | (2,156,513 | ) | ||||
We generated revenues of $1,920,954 in the second quarter of 2022 as compared to $702,434 in the same period for 2021, a change in revenues of $1,218,520. The nationwide economic shutdown due to COVID-19 during the past twenty-four months severely reduced operations during that period and we are now seeing a turnaround starting in the second quarter of 2022 with a decreasing impact from COVID-19. Over the last six months we have developed several new features which we believe will help grow our revenue moving forward. Further we are anticipating revenues to continue to grow each quarter through the balance of 2022.
Cost of revenues was $673,769 or 35.1% of revenues in the second quarter of 2022 as compared to $811,519 or 115.5% of revenues in the same fiscal period of fiscal 2021. Cost of revenues include web services for storage of our data and web engineers who are building and maintaining our platforms. Our ability to capture and store data for sales does not translate to increased cost of sales.
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Gross Profit (Loss) was $1,247,185 or 64.9% of revenues for the second quarter of 2022 as compared to $(109,085) in the same fiscal period of 2021 or 15.5% of revenues. When the country begins a recovery from COVID-19 and the economy begins to turn around we anticipate revenues and profits to increase.
General and administrative expenses were $2,255,965 for the second quarter of fiscal 2022 compared to $2,047,428 in the comparable period of the prior year, an increase of $208,537. Increased operating costs primarily included cash expense for salaries of $75,904, commissions of $132,530 and professional fees paid in stock valued at $84,500.
The net loss from operations for the second quarter of fiscal 2022 was $1,008,780 as compared to $2,156,513 for the comparable period of the prior year. While our loss from operations decreased by approximately $1,100,000 due to improved revenues over the comparable second quarter of 2021, the continuing operating loss is attributable to the focused effort in creating the infrastructure required to move forward with our Mobiquity and Advangelists network business and while the country emerges from the COVID-19 pandemic.
Our ability to be profitable in the future is dependent upon the successful introduction and usage of our data collection and analysis including Advertising, Data Licensing, Footfall Reporting, Attribution Reporting, Real Estate Planning, Financial Forecasting and Custom Research services.
Six Months Ended June 30, 2022, versus Six Months Ended June 30, 2021
The following table sets forth certain selected condensed statement of operations data for the periods indicated in dollars. In addition, we note that the period-to-period comparison may not be indicative of future performance.
| Six Months Ended | ||||||||
| June 30, 2022 | June 30, 2021 | |||||||
| Revenues | $ | 2,463,123 | $ | 1,224,307 | ||||
| Cost of Revenues | 979,896 | 1,748,799 | ||||||
| Gross Profit (Loss) | 1,483,227 | (524,492 | ) | |||||
| General and Administrative Expenses | 4,784,554 | 3,631,822 | ||||||
| Loss from operations | (3,301,327 | ) | (4,156,314 | ) | ||||
We generated revenues of $2,463,123 in the first six months of 2022 as compared to $1,224,307 in the same period for 2021, a change in revenues of $1,238,816. The nationwide economic impact of COVID-19 during the past twenty-four months severely reduced operations and we are now seeing a turnaround starting in the second quarter of 2022 with a decreasing impact from COVID-19. Over the last six months, we have developed several new features which we believe will help grow our revenue moving forward. Further, we are anticipating revenues to continue to grow each quarter through the balance of 2022.
Over the last six months the Company has developed several new features which we believe will help grow our revenue moving forward.
Cost of revenues was $979,896 or 39.8% of revenues in the first six months of 2022 as compared to $1,748,799 or 142.8% of revenues in the same fiscal period of fiscal 2021. Cost of revenues include web services for storage of our data and web engineers who are building and maintaining our platforms. Our ability to capture and store data for sales does not translate to increased cost of sales.
Gross Profit (Loss) was $1,483,227 or 60.2% of revenues for the first six months of 2022 as compared to $(524,492) in the same fiscal period of 2021 or 42.8% of revenues. Our improved gross profit is directly related to our improved revenues.
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General and administrative expenses were $4,784,554 for the first six months of fiscal 2022 compared to $3,631,822 in the comparable period of the prior year, an increase of $1,152,732. Increased operating costs primarily included cash expense for professional fees of $603,811, salaries of $174,083, computer support of $638,193, non-cash operating costs include professional fees paid in stock valued at $84,500.
The net loss from operations for the first six months of fiscal 2022 was $3,301,327 as compared to $4,156,314 for the comparable period of the prior year. While our loss from operations decreased by approximately $855,000 due to improved revenues over the comparable six months of 2021 the continuing operating loss is attributable to the focused effort in creating the infrastructure required to move forward with our Mobiquity and Advangelists network business and while the country emerges from the COVID-19 pandemic.
Our ability to be profitable in the future is dependent upon the successful introduction and usage of our data collection and analysis including Advertising, Data Licensing, Footfall Reporting, Attribution Reporting, Real Estate Planning, Financial Forecasting and Custom Research services.
Liquidity and Capital Resources
We have a history of operating losses, and our management has concluded that factors raise substantial doubt about our ability to continue as a going concern and our auditor has included an explanatory paragraph relating to our ability to continue as a going concern in its audit report for the fiscal years ended December 31, 2021, and 2020.
The Company had cash and cash equivalents of $2,165,977 at June 30, 2022. Cash used in operating activities for the six months ended June 30, 2022, was $3,054,760. This resulted primarily from a net loss of $4,011,521 offset by stock-based compensation of $543,754, amortization of $300,367, common stock issued for services of $84,500, increase in accounts receivable of $214,480 and $318,919 decrease in accounts payable and accrued expenses. Non-cash gain on settlement of liability $389,495 and debt conversion of $855,296 and an inducement expense of $101,000. Cash used in investing activities results from the purchase of property and equipment of $8,004. Cash flow used in financing activities of $156,504 resulted from cash paid on loans.
Our company commenced operations in 1998 and was initially funded by our three founders, each of whom has made demand loans to our company that have been repaid. Since 1999, we have relied on equity financing and borrowings from outside investors to supplement our cash flow from operations and expect this to continue in 2022 and beyond until cash flow from our proximity marketing operations become substantial.
Our Auditors Have Issued a Going Concern Opinion
The Company’s independent registered public accounting firm has expressed substantial doubt as to the Company’s ability to continue as a going concern as of December 31, 2021. The unaudited consolidated financial statements in this report on Form 10-Q have been prepared assuming that the Company will continue as a going concern. As discussed in the notes to the unaudited consolidated financial statements, these conditions raise substantial doubt from the Company’s ability to continue as a going concern. The Company’s plans in regard to these matters are also described in the notes to the Company’s unaudited consolidated financial statements. The unaudited consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result should the Company be unable to continue as a going concern.
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Bridge Financing
In September 2021, the Company entered into securities purchase agreements 2021, with two accredited investors, Talos Victory Fund, LLC, and Blue Lake Partners LLC, pursuant to which the Company issued 10% promissory notes with a maturity date of September 20, 2022, in the aggregate principal amount of $1,125,000. On the closing date of this financing, the holders delivered the net amount of $910,000 of the purchase price to the Company in exchange for the notes (which was net of the original issue discount and other fees, and expenses relate to this financing). In addition, the Company issued warrants to purchase an aggregate of 56,250 shares of its common stock to these holders. Spartan Capital Securities LLC and Revere Securities LLC acted as placement agents on this transaction.
Public Financing
On October 19, 2021, the Company filed a Form S-1 Registration Statement (File no. 333-260364) with the Securities and Exchange Commission to raise over $10 million dollars in an underwritten public offering. The next day the Company filed an application to list our common stock on the NASDAQ Capital Market under the symbol “MOBQ.” This offering was completed on December 13, 2021, and the Company retired the loans of, Talos Victory Fund, LLC and Blue Lake Partners LLC out of the gross proceeds it received of approximately $10.3 million.
Debt Financing
We have the following debt financing in place through June 30, 2022:
Gene Salkind, who is our Chairman of the Board and one of our directors, and his affiliate provided us an aggregate of $2,700,000 in convertible debt financing for convertible promissory notes and common stock purchase warrants. Dr. Salkind’s principal debt was reduced to $2,562,500 in December 2021. During the quarter ended March 31, 2022, Dr. Gene Salkind, his wife, and a trust converted an aggregate of $2,052,500 of secured debt to a total of 1,368,333 restricted common shares and warrants to purchase 684,166 additional restricted common shares at an exercise price of $4.00 per share through September 2029 leaving a balance of $510,000 in secured debt.
On June 28, 2022, Dr. Salkind and his wife converted their secured principal debt in the amount of $510,000 at a conversion price of $1.25 per share. A total of 408,000 restricted common shares were issued and per his loan agreement, the Company issued warrants to purchase 204,000 additional restricted common shares at an exercise price of $4.00 per share through September 2029. No commissions were paid in connection with this transaction which is exempt under Section 3 (a) (9) of the Securities Act of 1934, as amended. Reference is made to “note 4” which describes other debt and receivable financing, which is incorporated herein by reference.
Three of the unsecured convertible promissory outstanding notes automatically convert on June 30, 2022, at $4.00 per common share, the note holders may request Management for a more favorable conversion price.
In June 2020, the Company received a $150,000 Economic Injury Disaster Loan from the SBA which carries a 30-year term, payable in monthly installments of principal plus interest at the annual rate of 3.75% maturity date is July of 2050. This loan is secured by all the assets of the Company. Payments are deferred for the first two years, and payments of principal and interest are made over the remaining loan term.
Off-Balance Sheet Arrangements
As of June 30, 2022, we did not have any off-balance-sheet arrangements, as defined in Item 303(a)(4)(ii) of Regulation S-K.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of disclosure controls and procedures
A control deficiency exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness, yet important enough to merit the attention by those responsible for oversight of the company’s financial reporting. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.
Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (Exchange Act). Our management has determined that, as of June 30, 2022, the Company’s disclosure controls are not effective, including the following:
| · | The Company lacks segregation of duties similar to other companies our size; and |
| · | Given our restatement of the year ended December 31, 2021, financial statements, we lacked the necessary controls over financial reporting. We are in the process of hiring additional staff both internally and externally to the Finance department with sufficient GAAP and public company financial reporting experience |
We maintain disclosure controls and procedures, which are designed to ensure that information required to be disclosed in the reports we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.
There were no changes in the Company's internal control over financial reporting during the most recently completed fiscal quarter that have materially affected or are reasonably likely to materially affect the Company's internal control over financial reporting.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
From time to time, we may be engaged in various lawsuits and legal proceedings in the ordinary course of our business. We are currently not aware of any legal proceedings the ultimate outcome of which, in our judgment based on information currently available, would have a material adverse effect on our business, financial condition or results of operations. See Note 9 in the footnotes to the consolidated financial statements herein for description of legal proceedings.
ITEM 1A. RISK FACTORS
Incorporated by reference are the risk factors contained in our Form 10-K/A for the fiscal year ended December 31, 2021.
ITEM 2. CHANGES IN SECURITIES.
(a) From January 1, 2022, through June 30, 2022, we had no sales or issuances of unregistered capital stock, except as referenced above and in the table below:
| Date of Sale | Title of Security | Number Sold | Consideration Received and Description of Underwriting or Other Discounts to Market Price or Convertible Security, Afforded to Purchasers |
Exemption from Registration Claimed |
If Option, Warrant or Convertible Security, terms of exercise or conversion | |||||
| Jan. – June 2022 | Common Stock | 50,000 shares | Services rendered |
Rule 506, Section 4(2) |
Not applicable | |||||
| Jan. – March 2022 | Common Stock | 1,443,333 shares 684,166 warrants |
Note conversion of $2,502,500 of Secured debt and $150,000 of unsecured debt |
Section 3(a)(9) | Secured debt converted at $1.50 per share and unsecured debt converted at $2.00 per share (1) | |||||
| April – June 2022 | Common Stock | 408,000 shares and 204,000 warrants |
Note conversion of $510,000 |
Section 3(a)(9) | Secured debt converted at $1.25 per share (2) |
___________________
| (1) | The secured investor converted $2,502,500 of principal into 1,368,333 common shares and warrants to purchase 684,166 shares of common stock at an exercise price of $4.00 per share through September 2029. | |
| (2) | The secured investor converted $510,000 of principal into 408,000 common shares and warrants to purchase 204,000 shares of common stock at an exercise price of $4.00 per share through September 2029. |
In the six months ended June 30, 2022 and 2021, there were no repurchases by the Company of its Common Stock.
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ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not applicable.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
ITEM 5. OTHER INFORMATION.
None
ITEM 6. EXHIBITS.
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_______________
| * | Filed herewith |
| ** | Previously filed under Form S-1 Registration Statement, File No. 333-260364. |
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| MOBIQUITY TECHNOLOGIES, INC. | ||
| Date: August 18, 2022 | By: | /s/ Dean L. Julia |
| Dean L. Julia, | ||
| Principal Executive Officer | ||
| Date: August 18, 2022 | By: | /s/ Sean McDonnell |
| Sean McDonnell, | ||
| Principal Financial Officer | ||
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EXHIBIT 31.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
I, Dean L. Julia, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Mobiquity Technologies, Inc.
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report.
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared.
b) Designed such internal control over financial reporting or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
| Date: August 18, 2022 | /s/ DEAN L. JULIA |
| DEAN L. JULIA, | |
| PRINCIPAL EXECUTIVE OFFICER |
EXHIBIT 31.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
I, Sean McDonnell, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Mobiquity Technologies, Inc.
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared.
b) Designed such internal control over financial reporting or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
| Date: August 18, 2022 | /s/ SEAN MCDONNELL |
| SEAN MCDONNELL, PRINCIPAL FINANCIAL OFFICER |
EXHIBIT 32.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350
In connection with the Quarterly Report of Mobiquity Technologies, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2022, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Dean L. Julia, Principal Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
| /s/ DEAN L. JULIA | |
| DEAN L. JULIA | |
| PRINCIPAL EXECUTIVE OFFICER | |
| Date: August 18, 2022 |
EXHIBIT 32.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350
In connection with the Quarterly Report of Mobiquity Technologies, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2022, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Sean McDonnell, Principal Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
| /s/ SEAN MCDONNELL | |
| SEAN MCDONNELL | |
| PRINCIPAL FINANCIAL OFFICER | |
| Date: August 18, 2022 |