Mobiquity Technologies, Inc 10-Q for FY2021 Q2
Mobiquity Technologies, Inc. (MOBQ)
About this 10-Q
Mobiquity Technologies, Inc filed this 10-Q on August 4, 2021, covering the quarter ended June 30, 2021 (FY2021 Q2).
Headline figures
Quarter ended June 30, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $702.43K
- up 6.9% from $657.27K a year earlier
- Net loss
- $2.64M
- compared with a net loss of $4.58M 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)
____________________________________________
(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(s) | Name of each exchange on which registered |
| N/A | N/A | N/A |
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 o | Accelerated filer o | |
| 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. o
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 3, 2021, was .
Explanatory Note
On September 9, 2020, the Company effected a one-for-400 reverse stock split. All share and per share amounts set forth herein give retroactive effect to such stock split unless the context indicates otherwise.
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MOBIQUITY TECHNOLOGIES, INC.
FORM 10-Q QUARTERLY REPORT
TABLE OF CONTENTS
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Mobiquity Technology, Inc.
Condensed Consolidated Balance Sheets
| June 30, | December 31, | |||||||
| 2021 | 2020 | |||||||
| Assets | ||||||||
| Current Assets | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total Current Assets | ||||||||
| Property and equipment (net of accumulated depreciation of $ | ||||||||
| Goodwill | ||||||||
| Intangible assets (net of accumulated amortization of $ | ||||||||
| Other assets | ||||||||
| Security deposits | ||||||||
| Investment in corporate stock | ||||||||
| Total Assets | $ | $ | ||||||
| Liabilities and Stockholders' Equity | ||||||||
| Current Liabilities | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses | ||||||||
| Notes payable | ||||||||
| Total Current Liabilities | ||||||||
| Long term portion convertible notes, net | ||||||||
| Total Liabilities | ||||||||
| Stockholders' Deficit | ||||||||
| AAA Preferred stock; and authorized; $ par value and shares issued and outstanding at June 30, 2021 and December 31, 2020 | ||||||||
| Preferred stock Series C; $ par value; shares authorized and shares issued and outstanding at June 30, 2021 and December 31, 2020 | ||||||||
| Preferred stock Series E; authorized; $ par value and shares issued and outstanding at June 30, 2021 and December 31, 2020 | ||||||||
| Common stock: authorized; $ par value and shares issued and outstanding at June 30, 2021 and December 31, 2020 | ||||||||
| Treasury stock $ par value and shares outstanding at June 30, 2021 and December 31, 2020 | ( | ) | ( | ) | ||||
| Additional paid in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Stockholders' Equity | ||||||||
| Total Liabilities and Stockholders' Equity | $ | $ | ||||||
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 Operations
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Revenue | $ | $ | $ | $ | ||||||||||||
| Cost of Revenues | ||||||||||||||||
| Gross Profit | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Operating Expenses | ||||||||||||||||
| Selling, general and administrative | ||||||||||||||||
| Salaries | ||||||||||||||||
| Stock based compensation | ||||||||||||||||
| Total Operating Expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other Income (Expenses) | ||||||||||||||||
| Interest Expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Original issue discount | ( | ) | ( | ) | ||||||||||||
| Warrant expense | ( | ) | ( | ) | ||||||||||||
| Loss on sale of company stock | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total Other Income (Expense) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Loss from continuing operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other Comprehensive Income (loss) | ||||||||||||||||
| Loan Forgiveness - SBA | ||||||||||||||||
| Unrealized holding gain (loss) arising during period | ( | ) | ( | ) | ||||||||||||
| Total other Comprehensive Income (loss) | ( | ) | ||||||||||||||
| Net Comprehensive Loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net Comprehensive Loss Per Common Share: | ||||||||||||||||
| For continued operations, basic and diluted | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Weighted Average Common Shares Outstanding, basic and diluted | ||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements
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Mobiquity Technology, Inc.
Condensed Consolidated Statement of Stockholders' Equity (Unaudited)
| Mezzanine | Series E Preferred Stock | Series C Preferred Stock | ||||||||||||||||||||||||||||||
| Preferred Stock | Preferred Stock | Preferred Stock | Common Stock | |||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | |||||||||||||||||||||||||
| 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 | – | – | – | |||||||||||||||||||||||||||||
| Original issue discount shares | – | – | – | |||||||||||||||||||||||||||||
| Net Loss | – | – | – | – | ||||||||||||||||||||||||||||
| Balance, at June 30, 2021 | $ | $ | $ | $ | ||||||||||||||||||||||||||||
| Mezzanine | Series E Preferred Stock | Series C Preferred Stock | ||||||||||||||||||||||||||||||
| Preferred Stock | Preferred Stock | Preferred Stock | Common Stock | |||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | |||||||||||||||||||||||||
| Balance, at January 1, 2020 | $ | $ | $ | $ | ||||||||||||||||||||||||||||
| Common stock issued for services | – | – | – | |||||||||||||||||||||||||||||
| Common stock issued for note conversion | – | – | – | |||||||||||||||||||||||||||||
| Preferred stock series E | – | ( | ) | ( | ) | – | ||||||||||||||||||||||||||
| Warrant conversions | – | – | – | |||||||||||||||||||||||||||||
| Net Loss | – | – | – | – | ||||||||||||||||||||||||||||
| Balance, at March 31, 2020 | $ | $ | $ | $ | ||||||||||||||||||||||||||||
| Common stock issued for services | – | – | – | ( | ) | |||||||||||||||||||||||||||
| Preferred stock series E | – | – | – | |||||||||||||||||||||||||||||
| Warrant conversions | – | – | – | |||||||||||||||||||||||||||||
| Stock based compensation | – | – | – | – | ||||||||||||||||||||||||||||
| Warrants issued | – | – | – | – | ||||||||||||||||||||||||||||
| Net Loss | – | – | – | – | ||||||||||||||||||||||||||||
| Balance, at June 30, 2020 | $ | $ | $ | $ | ||||||||||||||||||||||||||||
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Mobiquity Technology, Inc.
Condensed Consolidated Statement of Stockholders' Equity (Unaudited) (Continued)
| Additional | Total | |||||||||||||||||||
| Paid-in | Treasury Shares | Accumulated | Stockholders' | |||||||||||||||||
| Capital | Shares | Amount | Deficit | Deficit | ||||||||||||||||
| 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 | – | |||||||||||||||||||
| Original issue discount shares | – | |||||||||||||||||||
| Net Loss | – | ( | ) | ( | ) | |||||||||||||||
| Balance, at June 30, 2021 | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||
| Additional | Total | |||||||||||||||||||
| Paid-in | Treasury Shares | Accumulated | Stockholders' | |||||||||||||||||
| Capital | Shares | Amount | Deficit | Deficit | ||||||||||||||||
| Balance, at January 1, 2020 | $ | ( | ) | $ | ( | ) | $ | |||||||||||||
| Common stock issued for services | – | |||||||||||||||||||
| Common stock issued for note conversion | – | |||||||||||||||||||
| Preferred stock series E | – | |||||||||||||||||||
| Warrant conversions | – | |||||||||||||||||||
| Net Loss | – | ( | ) | ( | ) | |||||||||||||||
| Balance, at March 31, 2020 | $ | ( | ) | $ | ( | ) | $ | |||||||||||||
| Common stock issued for services | ( | ) | – | ( | ) | |||||||||||||||
| Preferred stock series E | ( | ) | – | |||||||||||||||||
| Warrant conversions | ||||||||||||||||||||
| Stock based compensation | – | |||||||||||||||||||
| Warrants issued | – | |||||||||||||||||||
| Net Loss | – | ( | ) | ( | ) | |||||||||||||||
| Balance, at June 30, 2020 | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||
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, | ||||||||
| 2021 | 2020 | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation expense | ||||||||
| Amortization- Intangible Assets | ||||||||
| Allowance for uncollectible receivables | ||||||||
| Common stock issued for services | ||||||||
| Warrant expense | ||||||||
| Stock based compensation | ||||||||
| Changes in operating assets and liabilities | ||||||||
| Accounts receivable | ||||||||
| Prepaid expenses and other assets | ( | ) | ||||||
| Accounts payable | ( | ) | ( | ) | ||||
| Accrued expenses and other current liabilities | ( | ) | ( | ) | ||||
| Accrued interest | ||||||||
| Total Adjustments | ||||||||
| Net Cash in Operating activities | ( | ) | ( | ) | ||||
| Cash Flows from Investing Activities | ||||||||
| Common stock issued for cash, net | ||||||||
| Original Issue Discount shares | ||||||||
| Note conversion to common stock | ||||||||
| Net cash used in Investing Activities | ||||||||
| Cash Flows from Financing Activities | ||||||||
| Proceeds from the issuance of notes, net | ||||||||
| SBA loan forgiveness | ( | ) | ||||||
| Cash paid on bank notes | ( | ) | ( | ) | ||||
| Net cash used in Financing Activities | ||||||||
| Net change in Cash and Cash Equivalents | ( | ) | ( | ) | ||||
| Cash and Cash Equivalents, Beginning of period | ||||||||
| Unrealized holding change on securities | ( | ) | ||||||
| Cash and Cash Equivalents, end of period | ||||||||
| Supplemental Disclosure Information | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for taxes | $ | $ | ||||||
| Non-cash investing and financing activities: | ||||||||
| Common stock issued for conversion of convertible notes | ||||||||
| Original issue discounts | ||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements
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MOBIQUITY TECHNOLOGIES, INC.
Notes to the unaudited condensed consolidated
financial statements
June 30, 2021
(Unaudited)
NOTE 1: ORGANIZATION AND GOING CONCERN
These condensed consolidated financial statements
have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities
in the normal course of business. We have a history of losses and may continue to incur losses in the future, which could negatively impact
the trading value of our common stock. The continuation of the Company as a going concern is dependent upon the continued financial support
from its shareholders, the ability of management to raise additional equity capital through private and public offerings of its common
stock, and the attainment of profitable operations. As of June 30, 2021 and December 31, 2020, the Company had an accumulated deficit
of $
These consolidated financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The recently acquired Advangelists LLC has also incurred losses and experienced negative cash flows from operations during the most recent fiscal year. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability of management to raise additional capital through private and public offerings of its common stock, and the attainment of profitable operations. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
REVERSE STOCK-SPLIT - On September 9, 2020, the
Company filed a Certificate of Amendment the Articles of Incorporation with the Secretary of State of the state of New York to implement
a
Impacts of COVID-19 to Business and the general economy
Since March 2020, COVID -19 has caused a material and substantial adverse impact on our general economy and our business operations. It has caused there to be a substantial decrease in our sales, cancellations of purchase orders and has resulted in accounts receivables not being timely paid as anticipated. Further, it has caused us to have concerns about our ability to meet our obligations as they become due and payable. In this respect, our business is directly dependent upon and correlates closely to the marketing levels and ongoing business activities of our existing clients. If material adverse developments in domestic and global economic and market conditions adversely affect our clients’ businesses, such as COVID-19, our business and results of operations could (and in the case of COVID-19) equally suffer. Our results of operations are affected directly by the level of business activity of our clients, which in turn is affected by the level of economic activity in the industries and markets that they serve. COVID-19 future widespread economic slowdowns in any of these markets, particularly in the United States, may negatively affect the businesses, purchasing decisions and spending of our clients and prospective clients, and payment of accounts receivable due us, which could result in reductions in our existing business as well as our new business development and difficulties in meeting our cash obligations as they become due. In the event of continued widespread economic downturn caused by COVID-19, we will likely continue to experience a reduction in projects, longer sales and collection cycles, deferral or delay of purchase commitments for our data products, processing functionality, software systems and services, and increased price competition, all of which could substantially adversely affect revenue and our ability to remain a going concern.
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In the event we remain a going concern, the impacts of the global emergence of Coronavirus disease (COVID-19) on our business, sources of revenues and then general economy, are currently not fully known. We are conducting business as usual with some modifications to employee work locations, and cancellation of certain marketing events, among other modifications. We lost a purchase order in excess of one million dollars with major US sports organization. We have observed other companies taking precautionary and preemptive actions to address COVID-19 and companies may take further actions that alter their normal business operations. We will continue to actively monitor the situation and may take further actions that alter our business operations as may be required by federal, state or local authorities or that we determine are in the best interests of our employees, customers, partners, suppliers and stockholders. It is not clear what the potential effects any such alterations or modifications may have on our business, including the effects on our customers and prospects, although we do anticipate it to continue to negatively impact our financial results during fiscal year 2021.
NOTE 2: SIGNIFICANT ACCOUNTING POLICIES
The accompanying unaudited interim consolidated financial statements of the Company should be read in conjunction with the consolidated financial statements and accompanying notes filed with the U.S. Securities and Exchange Commission in the Company’s Form 10-K for the year ended December 31, 2020. In the opinion of management, the accompanying financial statements reflect all adjustments of a recurring nature considered necessary to present fairly the Company’s financial position and the results of its operations and its cash flows for the periods shown.
NATURE OF OPERATIONS – Mobiquity Technologies, Inc., a New York corporation (the “Company”), is the parent company of its operating subsidiaries; Mobiquity Networks, Inc. (“Mobiquity Networks”) and Advangelists, LLC (Advangelists). Mobiquity Networks has evolved and grown from a mobile advertising technology company focused on driving Foot-traffic throughout its indoor network, into a next generation location data intelligence company. Mobiquity Networks provides precise unique, at-scale location data and insights on consumer’s real-world behavior and trends for use in marketing and research. Mobiquity Networks provides one of the most accurate and scaled solution for mobile data collection and analysis, utilizing multiple geo-location technologies. Mobiquity Networks 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. Advangelists is a developer of advertising and marketing technology focused on the creation, automation, and maintenance of an advertising technology operating system (or ATOS). Advangelists’ 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 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. |
Advangelists’ marketplace engages with approximately 20 billion advertisement opportunities per day. Our sales and marketing strategy is focused on creating a de-fragmented operating system that makes it considerably more efficient and effective for advertisers and publishers to transact with each other. Our goal is to create a standardized and transparent medium.
Advangelists' technology is proprietary and has all been developed internally. We own all of our technology.
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Recent Developments and Employment Agreement with Deepanker Katyal
Deepanker Katyal’s employment agreement which commenced December 7, 2018 has a term of three years. Mr. Katyal is required to devote at least 40 hours per week pursuant to his responsibility as CEO of Advangelists. The agreement provides for full indemnification and participation in all benefit plans, programs and perquisites as are generally provided by the Company to its employees, including medical, dental, life insurance, disability and 401(k) participation. The agreement provides for termination for cause after giving employee 30 days’ prior written notice. The agreement provides for termination by the Company without cause after 60 days’ prior written notice with severance pay as described in his agreement. His employment agreement also provides for termination by disability for a period of more than six consecutive months in any 12-month period, termination by employee for good reason as defined in the agreement and restrictive covenants for a period of one year following the termination date.
Effective as of September 13, 2019, Mobiquity Technologies, Inc. (the “Company”) entered into a Stock Purchase Agreement (the “GTECH SPA”) with GBT Technologies, Inc. (“GTECH”), pursuant to which the Company acquired from GTECH shares of the Company’s common stock that was owned by GTECH (the “MOBQ Shares”). In consideration for the purchase of the MOBQ Shares from GTECH, the Company transferred to GTECH shares of GTECH’s common stock that was owned by the Company.
On September 13, 2019, Advangelists, LLC (“AVNG”), a wholly-owned subsidiary of the Company, entered into Amendment No. 1 to Employment Agreement (the “Katyal Amendment”) with Deepankar Katyal, the CEO of AVNG, which amends Mr. Katyal’s original employment agreement (the “Original Katyal Agreement”), dated as of December 7, 2018. Pursuant to the Katyal Amendment, among other things, (i) the Company agreed to indemnify Mr. Katyal to the extent provided in the Company’s Certificate of Incorporation (the “Certificate”) and By-laws and to include Mr. Katyal as an insured under the Company’s applicable directors’ and officers’ liability insurance policies; (ii) AVNG agreed to provide Mr. Katyal with an automobile allowance of $550.00 per month, and (iii) the non-compete restrictive covenants contained in the Original Katyal Agreement ceased. In addition, the Katyal Amendment provides for the Company to redeem the shares of the Company’s Class B Preferred Stock (the “Class B Stock”) owned by Mr. Katyal, and entitles Mr. Katyal to the following additional compensation:
| · | A bonus, payable in cash or common stock of the Company, equal to 1% of the Company’s gross revenue (the “Gross Revenue”) for each completed fiscal month during the 2019 fiscal year, subject to certain revenue thresholds as set forth in the Katyal Amendment; |
| · | Commissions equal to 10% of the Net Revenues (as defined in the Katyal Amendment) of all New Katyal Managed Accounts (as defined in the Katyal Amendment); |
| · | Options to purchase 37,500 shares of the Company’s common stock at an exercise price of $36.00 per share, of which 25,000 vest on the date of the Katyal Amendment, and of which 12,500 vest on the one year anniversary of the Katyal Amendment. |
In connection with the Katyal Amendment, on September 13, 2019, the Company entered into a Class B Preferred stock Redemption Agreement (the “Katyal Redemption Agreement”), pursuant to which the Company redeemed the Company’s Class B Stock owned by Katyal.
On September 13, 2019, AVNG entered into Amendment No. 1 to Employment Agreement (the “Katyal Amendment”) with Lokesh Mehta, which amends Mr. Mehta’s original employment agreement (the “Original Mehta Agreement”), dated as of December 7, 2018. Pursuant to the Mehta Amendment, among other things, (i) the Company agreed to indemnify Mr. Mehta to the extent provided in the Company’s Certificate and By-laws and to include Mr. Mehta as an insured under the Company’s applicable directors’ and officers’ liability insurance policies; (ii) AVNG agreed to provide Mr. Mehta with an automobile allowance of $550.00 per month, and (iii) the non-compete restrictive covenants contained in the Original Mehta Agreement ceased. In addition, the Mehta Amendment provides for the Company to redeem the shares of the Company’s Class B Preferred Stock (the “Class B Stock”) owned by Mr. Mehta, and entitles Mr. Mehta to the following additional compensation:
| · | A bonus, payable in cash or common stock of the Company, equal to 1% of the Company’s Gross Revenue for each completed fiscal month during the 2019 fiscal year, subject to certain revenue thresholds as set forth in the Mehta Amendment; |
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| · | Commissions equal to 5% of the Net Revenues (as defined in the Mehta Amendment) of all New Katyal Managed Accounts (as defined in the Katyal Amendment); |
| · | Options to purchase 37,500 shares of the Company’s common stock at an exercise price of $36.00 per share, of which 25,000 vest on the date of the Mehta Amendment, and of which 12,500 vest on the one year anniversary of the Mehta Amendment. |
In connection with the Mehta Amendment, on September 13, 2019, the Company entered into a Class B Preferred Stock Redemption Agreement (the “Mehta Redemption Agreement”), pursuant to which the Company redeemed the Company’s Class B Stock owned by Mehta in exchange for an employment agreement and other good and valuable consideration including an automobile allowance.
Risks Related to Our Financial Results and Financing Plans
Management has plans to address the Company’s financial situation as follows:
In the near term, management plans to continue to focus on raising the funds necessary to implement the Company’s business plan related to technology. Management will continue to 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.
In the long term, management believes that the Company’s projects and initiatives will be successful and will provide cash flow to the Company that will be used to finance the Company’s future growth. However, there can be no assurances that the Company’s efforts to raise equity and debt at acceptable terms or that the planned activities will be successful, or that the Company will ultimately attain profitability. The Company’s long-term viability depends on its ability to obtain adequate sources of debt or equity funding to meet current commitments and fund the continuation of its business operations, and the ability of the Company to achieve adequate profitability and cash flows from operations to sustain its operations.
Related Parties
Related parties are any entities or individuals that, through employment, ownership or other means, possess the ability to direct or cause the direction of the management and policies of the Company. We disclose related party transactions that are outside of normal compensatory agreements, such as salaries or board of director fees. We consider the following individuals / companies to be related parties:
Dean Julia - Principal Executive Officer President and Director
Sean McDonnell - Chief Financial Officer
Sean Trepeta - Board Member
Dr. Gene Salkind – Board of Directors
PRINCIPLES OF CONSOLIDATION - The accompanying condensed consolidated financial statements include the accounts of Mobiquity Technologies, Inc., formerly known as Ace Marketing& Promotions, Inc., and its wholly owned subsidiary, Mobiquity Networks, Inc. and its wholly- owned subsidiary, Advangelists, LLC. All intercompany accounts and transactions have been eliminated in consolidation.
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The Condensed consolidated balance sheets as of June 30, 2021 and December 31, 2020, the Condensed consolidated statements of operations for the three months and six months ended June 30, 2021 and 2020, the Condensed consolidated statements of stockholders’ equity for the six months ended June 30, 2021 and 2020 and the Condensed consolidated statements of cash flows for the six months ended June 30, 2021 and 2020 have been prepared by us without audit, and in accordance with the requirements of Form 10-Q and, therefore, they do not include all information and footnotes necessary for a fair presentation of financial position, results of operations, and cash flows in conformity with accounting principles generally accepted in the United States of America. In our opinion, the accompanying unaudited condensed financial statements contain all adjustments necessary to present fairly in all material respects our financial position as of June 30, 2021, results of operations for the three months and six months ended June 30, 2021 and 2020 and cash flows for the six months ended June 30, 2021 and 2020. All such adjustments are of a normal recurring nature. The results of operations and cash flows for the three months ended June 30, 2021 are not necessarily indicative of the results to be expected for the full year. We have evaluated subsequent events through the filing of this Form 10-Q with the SEC and determined there have not been any events that have occurred that would require adjustments to our unaudited Condensed consolidated financial statements.
ESTIMATES - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS - The Company considers all highly liquid debt instruments with a maturity of three months or less at the time of issuance to be cash equivalents.
CONCENTRATION OF CREDIT RISK - Financial instruments, which potentially subject the Company to concentrations of credit risk, consist principally of trade receivables and cash and cash equivalents.
Concentration of credit risk with respect to trade
receivables is generally diversified due to the large number of entities comprising the Company’s customer base and their dispersion
across geographic areas principally within the United States. The Company routinely addresses the financial strength of its customers
and, consequently, believes that its receivable credit risk exposure is limited. Our current receivables at June 30, 2021 consist of
The Company places its temporary cash investments
with high credit quality financial institutions. At times, the Company maintains bank account balances, which exceed FDIC limits. As of
June 30, 2021 and December 31, 2020, the Company exceeded FDIC limits by $
REVENUE RECOGNITION – On May 28, 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (“Topic 606”), to update the financial reporting requirements for revenue recognition. Topic 606 outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The guidance is based on the principle that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to fulfill a contract. This guidance became effective for the Company beginning on January 1, 2018, and entities have the option of using either a full retrospective or a modified retrospective approach for the adoption of the new standard. The Company adopted this standard using the modified retrospective approach on January 1, 2018.
In preparation for adoption of the standard, the Company evaluated each of the five steps in Topic 606, which are as follows: 1) Identify the contract with the customer; 2) Identify the performance obligations in the contract; 3) Determine the transaction price; 4) Allocate the transaction price to the performance obligations; and 5) Recognize revenue when (or as) performance obligations are satisfied.
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Reported revenue was not affected materially in any period due to the adoption of ASC Topic 606 because: (1) the Company expects to identify similar performance obligations under Topic 606 as compared with deliverables and separate units of account previously identified; (2) the Company has determined the transaction price to be consistent; and (3) the Company records revenue at the same point in time, upon delivery of services, under both ASC Topic 605 and Topic 606, as applicable under the terms of the contract with the customer. Additionally, the Company does not expect the accounting for fulfillment costs or costs incurred to obtain a contract to be affected materially in any period due to the adoption of Topic 606.
ALLOWANCE FOR DOUBTFUL ACCOUNTS - Management must
make estimates of the collectability of accounts receivable. Management specifically analyzes accounts receivable and analyzes historical
bad debts, customer concentrations, customer creditworthiness, current economic trends and changes in customer payment terms when evaluating
the adequacy of the allowance for doubtful accounts. As of June 30, 2021 and December 31, 2020 allowance for doubtful accounts were $
PROPERTY AND EQUIPMENT - Property and equipment are stated at cost. Depreciation is expensed using the straight-line method over the estimated useful lives of the related assets. Leasehold improvements are being amortized using the straight-line method over the estimated useful lives of the related assets or the remaining term of the lease. The costs of additions and improvements, which substantially extend the useful life of a particular asset, are capitalized. Repair and maintenance costs are charged to expense. When assets are sold or otherwise disposed of, the cost and related accumulated depreciation are removed from the account and the gain or loss on disposition is reflected in operating income.
LONG LIVED ASSETS – In
accordance with ASC 360, “Property, Plant and Equipment”, the Company
tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount
may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market
price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess
of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined
with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset
will more likely than not be sold or disposed significantly before the end of its estimated useful life. Recoverability is assessed based
on the carrying amount of the asset and its fair value, which is generally determined based on the sum of the undiscounted cash flows
expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment
loss is recognized when the carrying amount is not recoverable and exceeds fair value. The Company recognized an impairment loss of $
Transactions with major customers
During the six months ended June 30, 2021,
four customers accounted for approximately
ADVERTISING COSTS - Advertising costs are expensed
as incurred. For the six months ended June 30, 2021 and for the year ended December 31, 2020 there were advertising costs of $
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BENEFICIAL CONVERSION FEATURES - Debt instruments that contain a beneficial conversion feature are recorded as deemed interest to the holders of the convertible debt instruments. The beneficial conversion is calculated as the difference between the fair values of the underlying common stock less the proceeds that have been received for the debt instrument limited to the value received.
INCOME TAXES - Deferred income taxes are recognized for temporary differences between financial statement and income tax basis of assets and liabilities for which income tax or tax benefits are expected to be realized in future years. A valuation allowance is established to reduce deferred tax assets, if it is more likely than not, that all or some portion of such deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
We adopted the lease standard ACS 842 effective January 1, 2019 and have elected to use January 1, 2019 as our date of initial application. Consequently, financial information will not be updated, and disclosures required under the new standard will not be provided for periods presented before January 1, 2019 as these prior periods conform to the Accounting Standards Codification 840. We elected the package of practical expedients permitted under the transition guidance within the new standard. By adopting these practical expedients, we were not required to reassess (1) whether an existing contract meets the definition of a lease; (2) the lease classification for existing leases; or (3) costs previously capitalized as initial direct costs. As of December 10, 2019, we are not a lessor or lessee under any lease arrangements.
We have reviewed the FASB issued Accounting Standards Update (“ASU”) accounting pronouncements and interpretations thereof that have effectiveness dates during the periods reported and in future periods. The Company has carefully considered the new pronouncements that alter previous generally accepted accounting principles and does not believe that any new or modified principles will have a material impact on the corporation’s reported financial position or operations in the near term. The applicability of any standard is subject to the formal review of our financial management and certain standards are under consideration.
The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or result of operations.
Basic net loss per share is computed by dividing income available to common shareholders by the weighted-average number of common shares outstanding. Diluted earnings per share reflect, in periods in which they have a dilutive effect, the impact of common shares issuable upon exercise of stock options and warrants. The number of common shares potentially issuable upon the exercise of certain options and warrants that were excluded from the diluted loss per common share calculation was approximately because they are anti-dilutive, as a result of a net loss for the quarter ended and six months ended June 30, 2021.
NOTE 3: ACQUISITION OF ADVANGELISTS, LLC
In December 2018, pursuant to an Agreement and Plan of Merger (the “Merger Agreement”) with Glen Eagles Acquisition LP (“GEAL”) and Mobiquity Technologies, Inc. purchased of all the issued and outstanding capital stock and membership interest of Advangelists LLC. The Company closed and completed the acquisition on December 6, 2018.
The purchase price paid includes the assumption
of certain assets, liabilities and contracts associated with Advangelists, LLC, at closing the sellers received $
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The following table summarizes the allocation of the purchase price as of the acquisition date:
Purchase Price
| Allocation of purchase price | ||||
| $9,500,000 Promissory note | $ | |||
| Cash | ||||
| Mobiquity Technologies, Inc. warrants | ||||
| Gopher Protocol Inc. common stock | ||||
| Total amount transferred | $ |
On April 30, 2019, the Company entered into a
Membership Interest Purchase Agreement with GEAL, which the Company acquired from GEAL 3% of the membership interest of Advangelists,
LLC for $
On May 8, 2019, the Company entered into
a Membership Purchase Agreement with Gopher Protocol, Inc. to acquire the 49% interest of Advangelists, LLC which it contemporaneously
purchased from GEAL. The purchase price was paid by the issuance of a $
On September 13, 2019, the Company repurchased fifteen million shares of common stock for the aggregate by exchanging shares of GTCH common stock held for investment purposes.
On September 13, 2019, Dr. Gene Salkind, is a
related party who is a director of the Company, and an affiliate of Dr. Salkind (collectively, the “Lenders”) subscribed for
convertible promissory notes (the “Note”) and loaned to the Company an aggregate of $
The Notes bear interest at a fixed rate of
Subject to the Company obtaining prior approval from the Company’s shareholders for the issuance of shares of common stock upon conversion of the Notes, if and to the extent required by the New York Business Corporation Law, the Notes will be convertible into equity of the Company upon the following events on the following terms:
| · | At any time at the option of the Lenders, the outstanding principal under the Notes will be converted into shares of common stock of the Company at a conversion price of $32.00 per post-split share (the “Conversion Price”). |
| · | 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 $400.00 per post-split share, until the Notes are no longer outstanding, the Company may convert the entire unpaid un-converted principal amount of the Notes, plus all accrued and unpaid interest thereon, into shares of the Company’s common stock at the Conversion Price. |
The Notes contain customary events of default, which, if uncured, entitle the Lenders thereof to accelerate the due date of the unpaid principal amount of, and all accrued and unpaid interest on, their Notes.
In connection with the subscription of the Notes,
the Company issued to each Lender a warrant to purchase 400 post-split shares of the Company’s common stock for every two shares
of common stock issuable upon conversion of the Notes, at an exercise price of $
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On September 13, 2019, Advangelists, LLC, a wholly-owned subsidiary of the Company (“AVNG”), entered into Amendment No. 1 to Employment Agreement (the “Katyal Amendment”) with Deepankar Katyal, who is a related party and the CEO of AVNG, which amends Mr. Katyal’s original employment agreement (the “Original Katyal Agreement”), dated as of December 7, 2018. Pursuant to the Katyal Amendment, among other things, (i) the Company agreed to indemnify Mr. Katyal to the extent provided in the Company’s Certificate of Incorporation (the “Certificate”) and By-laws and to include Mr. Katyal as an insured under the Company’s applicable directors’ and officers’ liability insurance policies; (ii) AVNG agreed to provide Mr. Katyal with an automobile allowance of $550.00 per month, and (iii) the non-compete restrictive covenants contained in the Original Katyal Agreement ceased. In addition, the Katyal Amendment provides for the Company to redeem the shares of the Company’s Class B Preferred Stock (the “Class B Stock”) owned by Mr. Katyal, and entitles Mr. Katyal to the following additional compensation:
| · | A bonus, payable in cash or common stock of the Company, equal to 1% of the Company’s gross revenue (the “Gross Revenue”) for each completed fiscal month during the 2019 fiscal year, subject to certain revenue thresholds as set forth in the Katyal Amendment; |
| · | Commissions equal to 10% of the Net Revenues (as defined in the Katyal Amendment) of all New Katyal Managed Accounts (as defined in the Katyal Amendment); |
| · | Options to purchase 37,500 post-split shares of the Company’s common stock at an exercise price of $36.00 per share, of which 25,000 vest on the date of the Katyal Amendment, and of which 12,500 vest on the one year anniversary of the Katyal Amendment. |
In connection with the Katyal Amendment, on September 13, 2019, the Company entered into a Class B Preferred stock Redemption Agreement (the “Katyal Redemption Agreement”), pursuant to which the Company redeemed the Company’s Class B Stock owned by Katyal.
In May 2019, the Company assumed a promissory
note (the “AVNG Note”) payable to Deepankar Katyal (the “Payee”), as representative of the former owners of AVNG,
which at the time of assumption had a remaining principal balance of $
| · | $ |
| · | $ |
The Second Amended AVNG Note provides that upon an Event of Default (as defined in the Second Amended AVNG Note), and upon the election of the Payee, (i) the shares of Class E Preferred Stock issuable pursuant to the terms of the Second Amended AVNG Note, and any shares of the Company’s common stock issued upon the conversion of the Class E Preferred Stock, shall be cancelled and cease to issued and outstanding, (ii) the AVNG Warrants (as defined below), to the extent unexercised, shall be cancelled, and (iii) the Second Amended AVNG Note shall be cancelled and the repayment of the principal amount remaining due to Payee shall be paid in accordance with the terms of the First Amended AVNG Note.
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Merger
Mobiquity entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Glen Eagles Acquisition LP (“GEAL”) (which at the time owned 412,000 post-split shares of common stock of Mobiquity, equivalent to approximately 29.6% of the outstanding shares), AVNG Acquisition Sub, LLC (“Merger Sub”) and Advangelists, LLC (“Advangelists”) on November 20, 2018 which provided for Merger Sub to merge into Advangelists, with Advangelists as the surviving company following the merger.
On December 6, 2018, Mobiquity and the other parties to the Merger Agreement entered into the First Amendment to Agreement and Plan of Merger (the “Amendment”) which amended the Merger Agreement as follows:
| · | The number of warrants to purchase shares of Mobiquity’s common stock issuable as part of the merger consideration was changed from 225,000 post-split shares to post-split shares, and the exercise price of the warrants was changed from $36.00 per share to $ |
| · | The number of shares of Gopher Protocol Inc.’s common stock to be transferred by Mobiquity as part of the merger consideration changed from 11,111,111 to shares. |
Under the Merger Agreement and the Amendment, in consideration for the Merger:
| · | Mobiquity issued warrants for 269,384 post-split shares of Mobiquity common stock at an exercise price of $56.00 per share and, subject to the vesting threshold described below, Mobiquity transferred shares of Gopher Protocol, Inc. common stock, to the pre-merger Advangelists members. The Gopher common stock was unvested at the time of transfer subject to vesting in February 2019 only if Advangelists’ combined revenues for the months of December 2018 and January 2019 were at least $250,000. The vesting threshold was met. | |
| · | GEAL paid the pre-merger Advangelists members $ |
The transactions contemplated by the Merger Agreement were consummated on December 7, 2018 upon the filing of a Certificate of Merger by Advangelists. As a result of the merger, Mobiquity owned 48% and GEAL owned 52% of Advangelists; and Mobiquity is the sole manager of, and controls, Advangelists at that time.
As a result of Mobiquity having 100% control over Advangelists as of December 31, 2018, ASC 810-10-05-3 states “that for LLCs with managing and non-managing members, a managing member is the functional equivalent of a general partner and a non-managing member is the functional equivalent of a limited partner. In this case, a reporting entity with an interest in an LLC (which is not a VIE) would likely apply the consolidation model for limited partnerships if the managing member has the right to make the significant operating and financial decisions of the LLC.” In this case Mobiquity has the right to make the significant operating and financial decisions of Advangelists resulting in consolidation of Advangelists.
On April 30, 2019, the Company entered into a
Membership Interest Purchase Agreement with GEAL, pursuant to which the Company acquired from GEAL 3% of the membership interests of Advangelists,
for cash in the amount of $
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On May 10, 2019, the Company entered into a Membership Purchase Agreement effective as of May 8, 2019 with Gopher Protocol, Inc. to acquire the 49% interest of Advangelists, which it contemporaneously purchased from GEAL. As a result of this transaction, the Company owns 100% of Advangelists’s Membership Interests.
The acquisition of the 49% of Advangelists membership interests was accomplished in a transaction involving Mobiquity, Glen Eagles Acquisition LP, and Gopher Protocol, Inc.
Recognized amount of identifiable assets acquired, liabilities assumed, and consideration expensed:
| Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | ||||
| Financial assets: | ||||
| Cash and cash equivalents | $ | |||
| Accounts receivable, net | ||||
| Property and equipment, net | ||||
| Intangible assets (a) | ||||
| Accounts payable and accrued liabilities | ( | ) | ||
| Purchase price expensed | ||||
| Total amount identifiable assets and liabilities | $ |
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 tests goodwill for impairment at least annually on December 31st and whenever events or circumstances change that indicate impairment may have occurred. A significant amount of judgement is involved in determining if an indicator of impairment has occurred. Such indicators may include, among others: a significant decline in the Company’s expected future cash flows; a significant adverse change in legal factors or in the business climate; unanticipated competition; and slower growth rates. Any adverse change in these factors could have a significant impact on the recoverability of goodwill and the Company’s consolidated financial results.
Our goodwill
balance is not amortized to expense, instead it is tested for impairment at least annually. We perform our annual goodwill impairment
analysis at the end of the fourth quarter. If events or indicators of impairment occur between annual impairment analyses, we perform
an impairment analysis of goodwill at that date. These events or circumstances could include a significant change in the business climate,
legal factors, operating performance indicators, competition, or sale or disposition of a significant asset. In testing for a potential
impairment of goodwill, we: (1) verify there are no changes to our reporting units with goodwill balances; (2) allocate goodwill
to our various reporting units to which the acquired goodwill relates; (3) determine the carrying value, or book value, of our reporting
units, as some of the assets and liabilities related to each reporting unit are held by a corporate function; (4) estimate the fair
value of each reporting unit using a discounted cash flow model; (5) reconcile the fair value of our reporting units in total to
our market capitalization adjusted for a subjectively estimated control premium and other identifiable factors; (6) compare the fair
value of each reporting unit to its carrying value; and (7) if the estimated fair value of a reporting unit is less than the carrying
value, we must estimate the fair value of all identifiable assets and liabilities of that reporting unit, in a manner similar to a purchase
price allocation for an acquired business to calculate the implied fair value of the reporting unit’s goodwill and recognize an
impairment charge if the implied fair value of the reporting unit’s goodwill is less than the carrying value. There were
| 18 |
Intangible Assets
At each balance sheet date herein, definite-lived intangible assets primarily consist of customer relationships which are being amortized over their estimated useful lives of five years.
The Company periodically evaluates the reasonableness of the useful lives of these assets. Once these assets are fully amortized, they will be removed from the accounts. These assets are reviewed for impairment or obsolescence when events or changes in circumstances indicate that the carrying amount may not be recoverable. If impaired, intangible assets are written down to fair value based on discounted cash flows or other valuation techniques. The Company has no intangibles with indefinite lives.
| Schedule of intangible assets | ||||||||||
| Useful Lives | June 30, 2021 | December 31, 2020 | ||||||||
| Customer relationships | $ | $ | ||||||||
| ATOS Platform | ||||||||||
| Less accumulated amortization | ( | ) | ( | ) | ||||||
| Net carrying value | $ | $ | ||||||||
Future amortization, for the years ending December 31, is as follows:
| Future accumulated amortization schedule | ||||
| 2021 | $ | |||
| 2022 | $ | |||
| 2023 | $ | |||
| 2024 | $ | |||
| Thereafter | $ |
NOTE 4: NOTES PAYABLE AND DERIVATIVE LIABILITIES
Summary of Notes payable:
| Summary of Convertible Promissory Notes | ||||||||
| June 30, 2021 | December 31, 2020 | |||||||
| Mob-Fox US LLC (b) | $ | $ | ||||||
| Dr. Salkind, et al | ||||||||
| Small Business Administration (a) | ||||||||
| Subscription Agreements (d) | ||||||||
| Steven Morse Esq (e) | ||||||||
| Business Capital Providers (c) | ||||||||
| Total Debt | ||||||||
| Current portion of debt | ||||||||
| Long-term portion of debt | $ | $ | ||||||
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| (a) | In May of 2020, the Companies applied and received Small Business Administration Cares Act loans due to the COVID-19 Pandemic. Each loan carries a five-year term, carrying a one percent interest rate. The loans turn into grants if the funds are use the for the SBA accepted purposes. The window to use the funds for the SBA specific purposes is a twenty-four-week period. If the funds are used for the allotted expenses the loans turn into grants with each loan being forgiven. The Company also received an Economic Injury Disaster Loan from the SBA which carries a thirty-year term, carrying a three point seven five percent interest rate. During second quarter 2021 the Company applied for and received forgiveness for $ | |
| (b) | In October of 2020, the Company entered into an agreement with a vendor to accept $65,000 in full settlement of our payable due. A down payment of $15,000 at the signing of the agreement and five payments of $10,000 each, the loan was paid in full. | |
| (c) |
On February 20, 2020, the Company entered
into a fourth merchant agreement with Business Capital Providers, Inc. in the amount of $
On June 12, 2020, the Company entered into a fifth
merchant agreement with Business Capital Providers, Inc. in the amount of $
On August 11, 2020, the Company entered into a
sixth merchant agreement with Business Capital Providers, Inc. in the amount of $
On November 25, 2020, the Company entered into
a seventh merchant agreement with Business Capital Providers, Inc. in the amount of $
On February 19, 2021, the Company entered into
an eight-merchant agreement with Business Capital Providers, Inc. in the amount of $
On April 29, 2021, the Company entered into a
ninth-merchant agreement with Business Capital Providers, Inc. in the amount of $ | |
| (d) |
On April 14,2021 through June 30, 2021, the Company
entered into eleven subscription convertible note agreements totaling $
| |
| (e) | On May 10, 2021, the Company received a $ |
On September 13, 2019, Dr. Gene Salkind,
who is a director of the Company, and an affiliate of Dr. Salkind (collectively, the “Lenders”) subscribed for convertible
promissory notes (the “Notes”) and loaned to the Company an aggregate of $
On June 30, 2021, Dr. Gene Salkind, director of
the Company, and an affiliate of Dr. Salkind (collectively, the “Lenders”) subscribed for convertible promissory notes (the
“Notes”) and loaned to the Company $
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The Notes bear interest at a fixed rate of 15% per annum, computed based on a 360-day year of twelve 30-day months and will be payable monthly in arrears. Interest on the Notes is payable in cash or, at the Lenders’ option, in shares of the Company’s common stock. The principal amount due under the Notes will be payable on September 30, 2029, unless earlier converted pursuant to the terms of the Notes.
Subject to the Company obtaining prior approval from the Company’s shareholders for the issuance of shares of common stock upon conversion of the Notes, if and to the extent required by the New York Business Corporation Law, the Notes will be convertible into equity of the Company upon the following events on the following terms:
| · | At any time at the option of the Lenders, the outstanding principal under the Notes will be converted into shares of common stock of the Company at a conversion price of $32 per post-split per share (the “Conversion Price”). |
| · | 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 $400.00 per share, until the Notes are no longer outstanding, the Company may convert the entire unpaid un-converted principal amount of the Notes, plus all accrued and unpaid interest thereon, into shares of the Company’s common stock at the Conversion Price. |
The Notes contain customary events of default, which, if uncured, entitle the Lenders thereof to accelerate the due date of the unpaid principal amount of, and all accrued and unpaid interest on, their Notes.
In connection with the subscription of the Notes, the Company issued to each Lender a warrant to purchase one share of the Company’s common stock for every two shares of common stock issuable upon conversion of the Notes, at an exercise price of $48.00 per post-split share (the “Lender Warrants”).
On May 16, 2019, the Company assumed a promissory note (the “AVNG Note”) payable to Deepankar Katyal (the “Payee”), as representative of the former owners of AVNG, which at the time of assumption had a remaining principal balance of $7,512,500. Simultaneously with the assumption of the AVNG Note, the AVNG Note was amended and restated (the “First Amended AVNG Note”). Effective as of September 13, 2019, the Company and Payee entered into a Second Amended and Restated Promissory Note (the “Second Amended AVNG Note”), in the principal amount of $6,750,000, pursuant to which the repayment terms under the First Amended AVNG Note were amended and restated as follows:
| · | $5,250,000 of the principal balance remaining due under the Second Amended AVNG Note is payable by the delivery of (i) 65,625 shares of the Company’s newly designated Class E Preferred Stock, which is convertible into 164,063 post-split shares the Company’s common stock, and (ii) common stock purchase warrants to purchase 82,031 post-split shares of the Company’s common stock, at an exercise price of $48.00 per share (the “AVNG Warrant”). |
| · | $1,530,000 of the principal balance, inclusive of all accrued and unpaid interest, remaining due under the Second Amended AVNG Note in three equal consecutive monthly installments of $510,000, commencing on September 15, 2019 and on the 15th day of each month thereafter until paid in full. |
The Second Amended AVNG Note provides that upon an Event of Default (as defined in the Second Amended AVNG Note), and upon the election of the Payee, (i) the shares of Class E Preferred Stock issuable pursuant to the terms of the Second Amended AVNG Note, and any shares of the Company’s common stock issued upon the conversion of the Class E Preferred Stock, shall be cancelled and cease to issued and outstanding, (ii) the AVNG Warrants (as defined below), to the extent unexercised, shall be cancelled, and (iii) the Second Amended AVNG Note shall be cancelled and the repayment of the principal amount remaining due to Payee shall be paid in accordance with the terms of the First Amended AVNG Note.
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NOTE 5: INCOME TAXES
The Company accounts for income taxes using the asset and liability method in accordance with ASC 740, “Accounting for Income Taxes”. The asset and liability method provides that deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.
The Company conducts business, and files federal and state income, franchise or net worth, tax returns in the United States, in various states within the United States. The Company determines it’s filing obligations in a jurisdiction in accordance with existing statutory and case law. The Company may be subject to a reassessment of federal and provincial income taxes by tax authorities for a period of three years from the date of the original notice of assessment in respect of any particular taxation year statutes of limitations for income tax assessment vary from state to state. Tax authorities of the U.S. have not audited any of the Company’s, or its subsidiaries’, income tax returns for the open taxation years.
NOTE 6: STOCKHOLDERS’ EQUITY (DEFICIT)
Shares issued for services:
During the six months ended June 30, 2020, the
Company issued shares of common stock, at $12.00 to $40.00 per share for $
Shares issued for interest:
During the six months ended June 30, 2020 and June 30, 2021, the Company did not issue any shares for interest.
In the six months ended June 30, 2020, one
holder of our Series E Preferred Stock converted
shares to
post-split shares of our common stock and
warrants at an exercise price of $
During the six months ended June 30, 2020, , post-split, warrants were converted to common stock, at $8.00 to $28.00 per share. No warrants were converted during the six months ended June 30, 2021.
In the six months ended June 30, 2020, one
note holder converted $
Stock and Loan Transactions for Cash
On April 8, 2021, the Company sold shares of its restricted common stock at $ per share to one investor.
On April 14, 2021, the Company received a short-term
$
| 22 |
On April 16, 2021, the Company sold shares of restricted common stock at $ per share to one investor.
On April 21, 2021, the $
On April 30, 2021, the Company issued a two-month
loan to an investor in exchange for $
On May 10, 2021, the Company received a short-term
$
On May 17, 2021, the Company received a short-term
$
On May 18, 2021, the Company received a short-term
$
On May 19, 2021, the Company received a short-term
$
On May 24, 2021, the Company received a short-term
$
On June 9, 2021, the Company received short-term
$
On June 18, 2021, the Company received short-term
$
Consulting Agreements
On May 28, 2021, the Company entered into a consulting agreement with Sterling Asset Management to provide business advisory services. The company will provide assistance and recommendations to help build strategic partnerships, to provide the Company with advice regarding revenue opportunities, mergers and acquisitions. The six- month engagement commenced on May 28, 2021. The consultant receives 2,500 restricted common shares each month of the agreement with a retainer of $10,000.
NOTE 7: OPTIONS AND WARRANTS
The Company’s results for the quarters ended June 30, 2021, and June 30, 2020, include employee share-based compensation expense totaling $555,892 and $1,618,686, respectively. Such amounts have been included in the Statements of Operations within selling, general and administrative expenses and other expenses. No income tax benefit has been recognized in the statement of operations for share-based compensation arrangements due to a history of operating losses.
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Schedule of stock based compensation expense
The following table summarizes stock-based compensation expense for the quarters ended June 30, 2021, and 2020:
| Quarters Ended June 30, | ||||||||
| 2021 | 2020 | |||||||
| Employee stock-based compensation - option grants | $ | $ | ||||||
| Employee stock-based compensation - stock grants | ||||||||
| Non-Employee stock-based compensation - option grants | ||||||||
| Non-Employee stock-based compensation - stock grants | ||||||||
| Non-Employee stock-based compensation - warrants | ||||||||
| $ | $ | |||||||
The Company’s results for the six months ended June 30, 2021, and June 30, 2020, include employee share-based compensation expense totaling $572,731 and $1,875,764, respectively. Such amounts have been included in the Statements of Operations within selling, general and administrative expenses and other expenses. No income tax benefit has been recognized in the statement of operations for share-based compensation arrangements due to a history of operating losses.
The following table summarizes stock-based compensation expense for the six months ended June 30, 2021 and 2020:
| Six Months Ended June 30, | ||||||||
| 2021 | 2020 | |||||||
| Employee stock-based compensation - option grants | $ | $ | ||||||
| Employee stock-based compensation - stock grants | ||||||||
| Non-Employee stock-based compensation - option grants | ||||||||
| Non-Employee stock-based compensation - stock grants | ||||||||
| Non-Employee stock-based compensation - warrants for retirement of debt | ||||||||
| $ | $ | |||||||
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 post-split 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 post-split shares. During Fiscal 2009, the Company established a plan of long-term stock-based compensation incentives for selected Eligible Participants of the Company covering 10,0000 post-split 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 post-split 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 post-split 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 post-split 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 post-split 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 post-split shares. The 2019 Plan required stockholder approval by April 2, 2020 in order to be able to grant incentive stock options under the 2019 Plan. The 2005, 2009, 2016, 2018 and 2019 plans are collectively referred to as the “Plans.”
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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 Revised SFAS No. 123 “Share-Based Payment” (“SFAS 123 (R)”). The fair values of these restricted stock awards are equal to the market value of the Company’s stock on the date of grant, after taking into certain discounts. The expected volatility is based upon historical volatility of our stock and other contributing factors. The expected term is based upon observation of actual time elapsed between date of grant and exercise of options for all employees. 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, 2021, and June 30, 2020, are as follows:
| Assumptions used | ||||||||||||||||
| Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Expected volatility | ||||||||||||||||
| Expected dividend yield | ||||||||||||||||
| Risk-free interest rate | ||||||||||||||||
| Expected term (in years) | – | – | – | |||||||||||||
| Schedule of options outstanding | ||||||||||||||||
| Share | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term | Aggregate Intrinsic Value | |||||||||||||
| Outstanding, January 1, 2021 | $ | |||||||||||||||
| Granted | – | |||||||||||||||
| Exercised | – | |||||||||||||||
| Cancelled & Expired | ( | ) | – | |||||||||||||
| Outstanding, June 30, 2021 | $ | |||||||||||||||
| Options exercisable, June 30, 2021 | $ | |||||||||||||||
The weighted-average grant-date fair value of options granted during the six months ended June 30, 2021, and 2020 was $ and $, respectively.
The aggregate intrinsic value of options outstanding and options exercisable at June 30, 2021 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, 2021.
As of June 30, 2021, the fair value of unamortized compensation cost related to unvested stock option awards is $.
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The weighted average assumptions made in calculating the fair value of warrants granted during the three and six months ended June 30, 2021 and 2020 are as follows:
| Assumptions used | ||||||||||||||||
| Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Expected volatility | ||||||||||||||||
| Expected dividend yield | ||||||||||||||||
| Risk-free interest rate | ||||||||||||||||
| Expected term (in years) | ||||||||||||||||
| Schedule of warrants outstanding | ||||||||||||||||
| Share | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term | Aggregate Intrinsic Value | |||||||||||||
| Outstanding, January 1, 2021 | $ | $ | ||||||||||||||
| Granted | $ | – | $ | |||||||||||||
| Exercised | $ | – | $ | |||||||||||||
| Expired | $ | – | $ | |||||||||||||
| Outstanding, June 30, 2021 | $ | $ | ||||||||||||||
| Warrants exercisable, June 30, 2021 | $ | $ | ||||||||||||||
NOTE 9: LITIGATION
We are not a party to any pending material legal proceedings, except as follow:
Washington Prime Group, Inc.(“WPG”), a successor in interest to Simon Property Group, L.P., commenced an action in the Marion Superior Court, County of Marion, State of Indiana against the Company alleging default on 36 commercial leases which the Company had entered into in 36 separate shopping mall locations across the United States. Plaintiff alleges damages from unpaid rent of $892,332. Plaintiff is seeking a judgment from the Court to collect said unpaid rent plus attorneys’ fees and other costs of collection. On September 18,2020, the Parties entered into a settlement agreement with respect to this lawsuit. Subject to the terms, conditions, and provisions of the settlement Agreement, Mobiquity paid WPG One Hundred Thousand Dollars and No/100 Cents ($100,000.00).
In the Supreme Court of New York, county of Nassau, Carter, Deluca & Farrell LP, a law firm filed a summons and Complaint against the Company seeking $113,654 in past due legal fees allegedly owed. The Company disputed the amount owed to said firm. On March 13, 2020, the Company entered into a settlement agreement and paid the law firm $60,000 to settle the lawsuit.
The Company’s wholly-owned subsidiary, Advangelists LLC is a defendant in a lawsuit filed in Tel Aviv brought by the Plaintiff Fyber Monetization, a private Israeli company, in the business of digital advertising. In its statement of claim, Fyber alleges June through November 3 of 2019 unpaid invoices totaling $584,945 US Dollars. Advangelists has disputed any monies being owed and it intends to vigorously defend this lawsuit.
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FunCorp Limited has filed a lawsuit in Superior Court, State of Washington, County of King alleging Advangelists owes for services rendered unpaid invoices totaling $42,464. Advangelists has disputed any monies being owed and it intends to vigorously defend this lawsuit.
NOTE 10: COMMITMENTS:
The following are outstanding commitments as of June 30, 2021:
| · | $5,250,000 of the principal balance remaining due under the Second Amended AVNG Note is payable by the delivery of (i) 65,625 shares of the Company’s newly designated Class E Preferred Stock, which is convertible into 164,063 post-split shares the Company’s common stock, and (ii) common stock purchase warrants to purchase 82,032 shares of the Company’s common stock, at an exercise price of $48.00 post-split per share (the “AVNG Warrant”). In February of 2020 one Class E Preferred Stock shareholder converted 3,937 shares were exchanged for 9,348, post-split shares of the Company’s Common Stock. |
NOTE 11: OTHER MATERIAL EVENTS
In May of 2020, Deepankar Katyal resigned from the board to spend more time necessary to run the day to day operations of Advangelists, LLC focusing on technology and revenue growth.
Interest payments due on Dr. Salkind notes have been halted in the second quarter of 2020 due to COVID-19 issues affecting our collections on our accounts receivable.
As a result of our declining revenue, during the COVID-19 pandemic, our management team decided it was necessary to reduce overhead. The following steps were taken to lower expenses, while still keeping the business operational and ready to expand when needed; salaries were cut between 10% and 40%, several employees were laid-off or resigned, all travel and advertising were suspended and office space rent was suspended, allowing the entire staff to work remotely.
NOTE 12: SUBSEQUENT EVENTS
On July 7, 2021, a note holder converted their $105,000 secured convertible note to 21,000 common shares.
On July 6, 2021, a note holder converted their $50,000 secured convertible note to 10,000 common shares.
On July 8, 2021, a note holder converted their $50,000 secured convertible note to 10,000 common shares.
On July 9, 2021, a note holder converted their $55,000 secured convertible note to 10,462 common shares.
On July 22, 2021, two note holder converted their $110,000 secured convertible note to 19,678 common shares.
On July 29, 2021, the Company received a short term note of $300,000 payable at $2,531.25 for 160 payments.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FORWARD-LOOKING STATEMENTS
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 for its fiscal year ended December 31, 2020 which includes our audited financial statements for the year ended December 31, 2020 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 and other Company filings with the Securities and Exchange Commission ("SEC").
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.
Company Overview
Mobiquity Technologies, Inc., a New York corporation (the “Company”) owns 100% of Advangelists, LLC (“Advangelists”) and 100% of Mobiquity Networks, Inc. (“Mobiquity Network”) as wholly owned subsidiaries.
Advangelists is a developer of advertising and marketing technology focused on the creation, automation, and maintenance of an advertising technology operating system (or ATOS). Advangelists’ ATOS platform blends artificial intelligence (or AI) and machine learning (ML) based optimization technology for automatic ad serving that manages and runs digital advertising inventory and campaigns.
Mobiquity Networks has evolved and grown from a mobile advertising technology company focused on driving Foot-traffic throughout its indoor network, into a next generation data intelligence company. Mobiquity Networks provides precise unique, at-scale data and insights on consumer’s real-world behavior and trends for use in marketing and research. Mobiquity Networks provides one of the most accurate and scaled solution for data collection and analysis, utilizing multiple technologies. Mobiquity Networks’ technology allows for the ingestion and normalization of various data sources, such as location data, transactional data, and search data to reach the right target audience with the right message. Utilizing massively parallel cluster computing and machine learning algorithms and technology, Mobiquity Networks, makes available actionable data for marketers, researchers and application publishers through an automated platform. Mobiquity Networks is seeking to execute on several revenue streams from its data collection and analysis, including, but not limited to; Advertising, Data Licensing, Footfall Reporting, Attribution Reporting, and Custom Research.
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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. Actual results could differ from those estimates. We believe that the following critical accounting policies affect our more significant judgments and estimates in the preparation of our financial statements.
Revenue Recognition –On May 28, 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (“Topic 606”), to update the financial reporting requirements for revenue recognition. Topic 606 outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The guidance is based on the principle that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to fulfill a contract. This guidance became effective for the Company beginning on January 1, 2018, and entities have the option of using either a full retrospective or a modified retrospective approach for the adoption of the new standard. The Company adopted this standard using the modified retrospective approach on January 1, 2018.
In preparation for adoption of the standard, the Company evaluated each of the five steps in Topic 606, which are as follows: 1) Identify the contract with the customer; 2) Identify the performance obligations in the contract; 3) Determine the transaction price; 4) Allocate the transaction price to the performance obligations; and 5) Recognize revenue when (or as) performance obligations are satisfied.
Reported revenue will not be affected materially in any period due to the adoption of ASC Topic 606 because: (1) the Company expects to identify similar performance obligations under Topic 606 as compared with deliverables and separate units of account previously identified; (2) the Company has determined the transaction price to be consistent; and (3) the Company records revenue at the same point in time, upon delivery of services, under both ASC Topic 605 and Topic 606, as applicable under the terms of the contract with the customer. Additionally, the Company does not expect the accounting for fulfillment costs or costs incurred to obtain a contract to be affected materially in any period due to the adoption of Topic 606.
There are also certain considerations related to accounting policies, business processes and internal control over financial reporting that are associated with implementing Topic 606. The Company has evaluated its policies, processes, and control framework for revenue recognition, and identified and implemented the changes needed in response to the new guidance.
Lastly, disclosure requirements under the new guidance in Topic 606 have been significantly expanded in comparison to the disclosure requirements under the current guidance, including disclosures related to disaggregation of revenue into appropriate categories, performance obligations, the judgments made in revenue recognition determinations, adjustments to revenue which relate to activities from previous quarters or years, any significant reversals of revenue, and costs to obtain or fulfill contract.
The Company generates revenue from service contracts with certain customers. These contracts are accounted for under the proportional performance method. Under this method, revenue is recognized in proportion to the value provided to the customer for each project as of each reporting date. We recognize revenues in the period in which the data transmission is provided to the licensee.
Allowance for Doubtful Accounts. We are required to make judgments as to the realizability of our accounts receivable. We make these assessments based on the following factors: (a) historical experience, (b) customer concentrations, (c) customer credit worthiness, (d) current economic conditions, and (e) changes in customer payment terms.
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Accounting for Stock Based Compensation.
Stock based compensation cost is measured at the grant date fair value of the award and is recognized as expense over the requisite service period. The Company uses the Black-Sholes option-pricing model to determine fair value of the awards, which involves certain subjective assumptions. These assumptions include estimating the length of time employees will retain their vested stock options before exercising them (“expected term”), the estimated volatility of the company’s common stock price over the expected term (“volatility”) and the number of options for which vesting requirements will not be completed (“forfeitures”). Changes in the subjective assumptions can materially affect estimates of fair value stock-based compensation, and the related amount recognized on the consolidated statements of operations.
Goodwill and Intangible Assets
Goodwill represents the future economic benefit arising from other assets acquired that could not be individually identified and separately recognized. The goodwill arising from the Company’s acquisitions is attributable to the value of the potential expanded market opportunity with new customers. Intangible assets have either an identifiable or indefinite useful life. Intangible assets with identifiable useful lives are amortized on a straight-line basis over their economic or legal life, whichever is shorter. The Company’s amortizable intangible assets consist of customer relationships and non-compete agreements. Their useful lives range from 1.5 to 10 years. The Company’s indefinite-lived intangible assets consist of trade names.
Goodwill and indefinite-lived assets are not amortized but are subject to annual impairment testing unless circumstances dictate more frequent assessments. The Company performs an annual impairment assessment for goodwill during the fourth quarter of each year and more frequently whenever events or changes in circumstances indicate that the fair value of the asset may be less than the carrying amount. Goodwill impairment testing is a two-step process performed at the reporting unit level. Step one compares the fair value of the reporting unit to its carrying amount. The fair value of the reporting unit is determined by considering both the income approach and market approaches. The fair values calculated under the income approach and market approaches are weighted based on circumstances surrounding the reporting unit. Under the income approach, the Company determines fair value based on estimated future cash flows of the reporting unit, which are discounted to the present value using discount factors that consider the timing and risk of cash flows. For the discount rate, the Company relies on the capital asset pricing model approach, which includes an assessment of the risk-free interest rate, the rate of return from publicly traded stocks, the Company’s risk relative to the overall market, the Company’s size and industry and other Company specific risks. Other significant assumptions used in the income approach include the terminal value, growth rates, future capital expenditures and changes in future working capital requirements. The market approaches use key multiples from guideline businesses that are comparable and are traded on a public market. If the fair value of the reporting unit is greater than its carrying amount, there is no impairment. If the reporting unit’s carrying amount exceeds its fair value, then the second step must be completed to measure the amount of impairment, if any. Step two calculates the implied fair value of goodwill by deducting the fair value of all tangible and intangible net assets of the reporting unit from the fair value of the reporting unit as calculated in step one. In this step, the fair value of the reporting unit is allocated to all of the reporting unit’s assets and liabilities in a hypothetical purchase price allocation as if the reporting unit had been acquired on that date. If the carrying amount of goodwill exceeds the implied fair value of goodwill, an impairment loss is recognized in an amount equal to the excess.
Determining the fair value of a reporting unit is judgmental in nature and requires the use of significant estimates and assumptions, including revenue growth rates, strategic plans and future market conditions, among others. There can be no assurance that the Company’s estimates and assumptions made for purposes of the goodwill impairment testing will prove to be accurate predictions of the future. Changes in assumptions and estimates could cause the Company to perform impairment test prior to scheduled annual impairment tests.
The Company performed its annual fair value assessment at December 31, 2019, there were no impairment charges during the year. For the year ended December 31, 2020, there was a $4,000,000 impairment.
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Plan of Operation
Mobiquity intends to hire several new sales and sales support individuals to help generate additional revenue through the use of the Advangelists platform. Mobiquity’s sales team will focus on Advertising Agencies, Brands and publishers to help increase both supply and demand across the Advangelists platform. The Advangelists platform creates three 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, whereas 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. 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.
Results of Operations
Quarter Ended June 30, 2021 versus Quarter Ended June 30, 2020
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, 2021 | June 30, 2020 | |||||||
| Revenue | $ | 702,434 | $ | 657,269 | ||||
| Cost of Revenues | (811,519 | ) | (871,000 | ) | ||||
| Gross (Loss) | (109,085 | ) | (213,731 | ) | ||||
| Selling, General and Administrative Expenses | 2,047,428 | 3,553,285 | ||||||
| Loss from operations | (2,156,513 | ) | (3,767,016 | ) | ||||
We generated revenues of $702,434 in the second quarter of 2021 as compared to $657,269 in the same period for 2020, a change in revenues of $45,165. The nationwide economic shutdown due to COVID-19 during the second quarter severely reduced current operations.
Cost of revenues was $811,519 or 115.5% of revenues in the second quarter of 2021 as compared to 871,000 or 132,5% of revenues in the same fiscal period of fiscal 2020. 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 (Loss) was $(109,085) or 15.5% of revenues for the second quarter of 2021 as compared to $213,731 in the same fiscal period of 2020 or 32.5% of revenues. When the country comes out of COVID-19 and the economy begins to turn around we anticipate income to increase.
Selling, general, and administrative expenses were $2,047,428 for the second quarter of fiscal 2021 compared to $3,553,285 in the comparable period of the prior year, a decrease of approximately $1,505,857. Decreased cash expense salaries of $378,612, non-cash operating costs include stock-based compensation of $720,978, and warrant expense of $598,894.
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The net loss from operations for the second quarter of fiscal 2021 was $2,156,513 as compared to $3,767,016 for the comparable period of the prior year. 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.
No benefit for income taxes is provided for in the reported periods due to the full valuation allowance on the net deferred tax assets. 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, 2021 versus Six months Ended June 30, 2020
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, 2021 | June 30, 2020 | |||||||
| Revenue | $ | 1,224,307 | $ | 1,602,368 | ||||
| Cost of Revenues | (1,748,799 | ) | (1,659,911 | ) | ||||
| Gross (Loss) | (524,492 | ) | (57,543 | ) | ||||
| Selling, General and Administrative Expenses | 3,631,822 | 5,935,213 | ||||||
| Loss from operations | (4,156,314 | ) | (5,992,756 | ) | ||||
We generated revenues of $1,224,307 in the six months of 2021 as compared to $1,602,368 in the same period for 2020, a change in revenues of $378,061. The nationwide economic shutdown due to COVID-19 during the six months ended severely reduced current operations.
Cost of revenues was $1,748,799 or 142.8% of revenues in the six months of 2021 as compared to 1,659,911 or 103.4% of revenues in the same fiscal period of fiscal 2020. 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 (Loss) was $(524,492) or 42.8% of revenues for the six months of 2021 as compared to $57,543 in the same fiscal period of 2020 or 3.6% of revenues. When the country fully comes out of COVID-19 and the economy turns around we anticipate income to increase.
Selling, general, and administrative expenses were $3,631,822 for the six months of fiscal 2021 compared to $5,935,213 in the comparable period of the prior year, a decrease of approximately $2,303,391. Decreased operating costs include professional fees of $306,883, salaries of $378,612, non-cash expenses of stock-based compensation of $704,139, amortization costs of $400,000 and warrant expense of $598,894.
The net loss from operations for the six months of fiscal 2021 was $4,156,314 as compared to $5,992,756 for the comparable period of the prior year. 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.
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No benefit for income taxes is provided for in the reported periods due to the full valuation allowance on the net deferred tax assets. 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
The Company had cash and cash equivalents of $173,571 at June 30, 2021. Cash used in operating activities for the six months ended June 30, 2021, was $2,712,694. This resulted primarily from a net loss of $4,823,399 offset by stock-based compensation of $572,731, amortization of $900,367, common stock issued for services of $119,800, accrued interest of $195,811, decrease in accounts receivable of $840,740 and $519,474 decrease in accounts payable, decrease in prepaid expenses of $16,500. Cash used in investing activities results from note converted to common stock of $671,602, common stock issued for cash $898,990 and Original issue discount of $268,150. Cash flow from financing activities of $445,342 resulted from the proceeds from the issuance of notes of $1,310,000, and cash paid on loans $598,816 and the forgiveness of Small Business Administration of $265,842.
The Company had cash and cash equivalents of $440,075 at June 30, 2020. Cash used in operating activities for the six months ended June 30, 2020 was $1,116,388. This resulted primarily from a net loss of $7,019,253 offset by stock-based compensation of $1,276,870, warrant expense $1,354,817 amortization of $1,300,368, allowance for uncollectible receivables of $306,000, common stock issued for services of $375,000, decrease in accounts receivable of $1,930,915 and $625,562 decrease in accounts payable, increase in prepaid expenses of $14,000. Cash used in investing activities results from note converted to common stock of $30,695. Cash flow from financing activities of $282,694 resulted from the proceeds from the issuance of notes of $745,388, and cash paid on loans $462,694.
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 2019 and beyond until cash flow from our proximity marketing operations become substantial.
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 2021 and beyond until cash flow from our proximity marketing operations become substantial
Recent Financings
We have completed various financings as described as described under the Notes to Consolidated Financial Statements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market risk is the risk of loss arising from adverse changes in market rates and prices, such as interest rates, foreign currency exchange rates and commodity prices. Our primary exposure to market risk is interest rate risk associated with our short-term money market investments. The Company does not have any financial instruments held for trading or other speculative purposes and does not invest in derivative financial instruments, interest rate swaps or other investments that alter interest rate exposure. The Company does not have any credit facilities with variable interest rates.
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ITEM 4. CONTROLS AND PROCEDURES
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.
Under the supervision and with the participation of our management, including our CEO and CFO, an evaluation was performed on the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this quarterly report. Based on that evaluation, our management, including our CEO and CFO, concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this report.
There were no changes in the Company's internal controls 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.
As of the filing date of this Form 10-Q, we are not a party to any pending legal proceedings, except as described herein.
ITEM 1A. RISK FACTORS
As a Smaller Reporting Company as defined Rule 12b-2 of the Exchange Act and in item 10(f)(1) of Regulation S-K, we are electing scaled disclosure reporting obligations and therefore are not required to provide the information requested by this Item 1A. Nevertheless, reference is made to our Form 10-K for the fiscal year ended December 31, 2020 for a description of our risk factors.
ITEM 2. CHANGES IN SECURITIES.
(a) From January 1, 2020 through June 30, 2020 and January 1, 2021 through June 30, 2021, 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 2020 | Common Stock | 13,750 shares | Services rendered | Rule 506, Section 4(2) | Not applicable | |||||
| Jan. – June 2020 | Common Stock | 1,918 shares | Note conversion | Section 3(a)(9) | Not applicable | |||||
| Jan. – June 2020 | Common Stock | 60,026 shares | $755,923 Warrant conversions | Rule 506, Section 4(2) | Each warrant exercise price from $8 to $28, expiration dates 1-23-2025 and 2-4-2025 | |||||
| Jan. – June 2020 | Common Stock | 9,843 shares | Series E Preferred Stock conversion | Section 3(a)(9) | 4,921 warrant exercise price $48 expiration date 1-8-2025 | |||||
| Jan. – June 2021 | Common Stock | 15,000 shares | Services rendered | Rule 506, Section 4(2) | Not applicable | |||||
| Jan. – June 2021 | Common Stock | 149,836 shares | $898,990 received, sale of Company stock | Rule 506 Section 4(2) | Not applicable | |||||
| Jan. – June 2021 | Convertible Promissory Notes | $92,761 in principal notes issued | $671,602 of cash received; no commissions paid | Rule 506; Section 4(2) | Notes convertible in some cases from $4.81 per share to $5.00 per share. | |||||
| Jan – June 2021 | Original issue discount | 39,500 shares | Note issuance | Rule 506; Section 4(2) | Not applicable |
In the six months ended June 30, 2021 and 2020, 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.
Not applicable.
ITEM 6. EXHIBITS.
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| Exhibit | ||
| Number | Exhibit Title | |
| 99.1 | 2005 Employee Benefit and Consulting Services Compensation Plan (2) | |
| 99.2 | Amendment to 2005 Plan (4) | |
| 99.3 | 2009 Employee Benefit and Consulting Services Compensation Plan (3) | |
| 99.4 | 2018 Employee Benefit and Consulting Services Compensation Plan. (Incorporated by reference to Definitive Proxy Statement filed with the SEC on January 11, 2019.) | |
| 101.INS | Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104 | Cover Page Interactive Data File (formatted in IXBRL, and included in exhibit 101). |
_____________________
* Filed herewith.
| (1) | Incorporated by reference to Registrant's Registration Statement on Form 10-SB as filed with the Commission on February 10, 2005. |
| (2) | Incorporated by reference to Registrant’s Registration Statement on Form 10-SB/A filed with the Commission March 21, 2005. |
| (3) | Incorporated by reference to Form 10-K filed for the fiscal year ended December 31, 2009. |
| (4) | Incorporated by reference to the Registrant's Form 10-QSB/A filed with the Commission on August 15, 2005. |
| (5) | Incorporated by reference to the Registrant's Form 10-KSB for its fiscal year ended December 31, 2005. |
| (6) | Left blank intentionally. |
| (7) | Incorporated by reference to the Registrant's Form 8-K dated September 21, 2007. |
| (8) | Left blank intentionally. |
| (9) | Left blank intentionally. |
| (10) | Incorporated by reference to the Registrant’s Form 10-Q for the quarter ended June 30, 2011. |
| (11) | Incorporated by reference to the Registrant's Form 10-K for its fiscal year ended December 31, 2012. |
| (12) | Left blank intentionally. |
| (13) | Left blank intentionally. |
| (14) | Left blank intentionally. |
| (15) | Left blank intentionally. |
| (16) | Incorporated by reference to Form 8-K filed June 6, 2013. |
| (17) | Left blank intentionally. |
| (18) | Left blank intentionally. |
| (19) | Incorporated by reference to Form 8-K filed with the SEC on December 24, 2014. |
|
(20) (21) |
Incorporated by reference to Form 8-K dated December 19, 2014. Incorporated by reference to Form 8-K dated March 24, 2016. |
| (22) | Incorporated by reference to Form 8-K dated March 1, 2017. |
| (23) | Incorporated by reference to Form 10-K for the fiscal year ended December 31, 2015. |
| (24) | Incorporated by reference to Form 10-K for the fiscal year ended December 31, 2016. |
|
(25) (26) |
Incorporated by reference to Form 8-K dated December 11, 2018. Incorporated by reference to Form 10-K for the fiscal year ended December 31, 2018. |
| (27) | Incorporated by reference to Form 8-K dated July 15, 2019. |
| (28) | Incorporated by reference to Form 8-K dated April 30, 2019. |
| (29) | Incorporated by reference to Form 8-K dated May 10, 2019. |
| (30) | Incorporated by reference to Form 10-K/A filed with the SEC on April 26, 2019. |
| (31) | Incorporated by reference to Form 8-K dated September 13, 2019. |
| (32) | Incorporated by reference to Form 8-K/A dated September 13, 2019. |
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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 4, 2021 | By: | /s/ Dean L. Julia |
| Dean L. Julia, | ||
| Principal Executive Officer | ||
| Date: August 4, 2021 | By: | /s/ Sean McDonnell |
| Sean McDonnell, | ||
| Principal Financial Officer | ||
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