SECURITIES AND EXCHANGE COMMISSION
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MOBIQUITY TECHNOLOGIES, INC.
FORM 10-Q QUARTERLY REPORT
TABLE OF CONTENTS
| 2 |
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Mobiquity Technology, Inc.
Consolidated Balance Sheets
| September 30, | December 31, | |||||||
| 2024 (Unaudited) | 2023 | |||||||
| Assets | ||||||||
| Current Assets | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable | ||||||||
| Less: Allowance for credit losses | ( | ) | ( | ) | ||||
| Accounts receivable, net | ||||||||
| Prepaid and other current assets | ||||||||
| Total Current Assets | ||||||||
| Property and equipment, net | ||||||||
| Goodwill | ||||||||
| Intangible assets, net | ||||||||
| Capitalized software development costs, net | ||||||||
| Total Assets | $ | $ | ||||||
| Liabilities and Stockholders' Equity | ||||||||
| Current Liabilities | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Accrued interest - related party | ||||||||
| Contract liabilities | ||||||||
| Debt, current portion, net | ||||||||
| Total Current Liabilities | ||||||||
| Total Liabilities | ||||||||
| Commitments and Contingencies (Note 8) | ||||||||
| Stockholders' Equity | ||||||||
| AAA preferred stock; $ par value, shares authorized, shares issued and outstanding | ||||||||
| Preferred stock Series E; $ par value, shares authorized, shares issued and outstanding | ||||||||
| Preferred stock Series H; $ par value, shares authorized, and shares issued and outstanding | ||||||||
| Common stock; $ par value, shares authorized, and shares issued, and shares outstanding | ||||||||
| Treasury stock, at cost, $0.0001 par value and shares outstanding | ( | ) | ( | ) | ||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Stockholders' Equity | ||||||||
| Total Liabilities and Stockholders' Equity | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| 3 |
Mobiquity Technology, Inc.
Consolidated Statements of Operations (Unaudited)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Revenues | $ | $ | $ | $ | ||||||||||||
| Cost of revenues | ||||||||||||||||
| Gross profit | ||||||||||||||||
| Operating expenses | ||||||||||||||||
| General and administrative expenses | ||||||||||||||||
| Depreciation and amortization | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expense) | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ||||||||||
| Loss on extinguishment of debt - related party | ( | ) | ||||||||||||||
| Loss on disposal of fixed assets | ( | ) | ||||||||||||||
| Other income | ||||||||||||||||
| Interest income | ||||||||||||||||
| Total other income (expense) - net | ( | ) | ( | ) | ( | ) | ||||||||||
| Net loss before income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income tax benefit | ||||||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Loss per share - basic | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Loss per share - diluted | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Weighted average number of shares outstanding - basic | ||||||||||||||||
| Weighted average number of shares outstanding - diluted | ||||||||||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| 4 |
Mobiquity Technology, Inc.
Consolidated Statements of Stockholders' Equity (Deficit) (Unaudited)
For the Nine Months Ended September 30, 2024 and 2023
| Series E Preferred Stock | Series F Preferred Stock | Series G Preferred Stock | Series H Preferred Stock | |||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | |||||||||||||||||||||||||
| Balance, at December 31, 2022 | $ | $ | $ | $ | ||||||||||||||||||||||||||||
| Common stock and pre-funded warrants issued under public offering, net of issuance costs | – | – | – | – | ||||||||||||||||||||||||||||
| Common stock issued under cashless warrant exercises and exercise of pre-funded warrants | – | – | – | – | ||||||||||||||||||||||||||||
| Incentive common stock and warrants issued with long-term debt | – | – | – | – | ||||||||||||||||||||||||||||
| Stock based compensation | – | – | – | – | ||||||||||||||||||||||||||||
| Net Loss | – | – | – | – | ||||||||||||||||||||||||||||
| Balance, at March 31, 2023 | ||||||||||||||||||||||||||||||||
| Common stock and pre-funded warrants issued under public offering, net of issuance costs | – | – | – | – | ||||||||||||||||||||||||||||
| Common stock issued under cashless warrant exercises and exercise of pre-funded warrants | – | – | – | – | ||||||||||||||||||||||||||||
| Common stock issued for services rendered | – | – | – | – | ||||||||||||||||||||||||||||
| Common stock issued for conversion of interest | – | – | – | – | ||||||||||||||||||||||||||||
| Stock based compensation | – | – | – | – | ||||||||||||||||||||||||||||
| Series F preferred stock issued for cash | – | – | – | |||||||||||||||||||||||||||||
| Net Loss | – | – | – | – | ||||||||||||||||||||||||||||
| Balance, at June 30, 2023 | ||||||||||||||||||||||||||||||||
| Common stock issued under exercise of pre-funded warrants | – | – | – | – | ||||||||||||||||||||||||||||
| Stock based compensation | – | – | – | – | ||||||||||||||||||||||||||||
| Redemption of Series F preferred stock | – | – | – | – | ||||||||||||||||||||||||||||
| Net Loss | – | – | – | – | ||||||||||||||||||||||||||||
| Balance, at September 30, 2023 | $ | $ | $ | $ | ||||||||||||||||||||||||||||
| Series E Preferred Stock | Series F Preferred Stock | Series G Preferred Stock | Series H Preferred Stock | |||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | |||||||||||||||||||||||||
| Balance, at December 31, 2023 | $ | $ | $ | $ | ||||||||||||||||||||||||||||
| Common stock issued for services | – | – | – | – | ||||||||||||||||||||||||||||
| Common stock issued for cash | – | – | – | – | ||||||||||||||||||||||||||||
| Stock based compensation | – | – | – | – | ||||||||||||||||||||||||||||
| Accrued Series H Preferred Stock cash dividends | – | – | – | – | ||||||||||||||||||||||||||||
| Repurchase of common stock held in Treasury | – | – | – | – | ||||||||||||||||||||||||||||
| Net loss | – | – | – | – | ||||||||||||||||||||||||||||
| Balance, at March 31, 2024 | ||||||||||||||||||||||||||||||||
| Common stock issued for services | – | – | – | – | ||||||||||||||||||||||||||||
| Common stock issued for cash | – | – | – | – | ||||||||||||||||||||||||||||
| Common stock subscribed | – | – | – | – | ||||||||||||||||||||||||||||
| Stock based compensation | – | – | – | – | ||||||||||||||||||||||||||||
| Accrued Series H Preferred Stock cash dividends | – | – | – | – | ||||||||||||||||||||||||||||
| Warrants issued for services | – | – | – | – | ||||||||||||||||||||||||||||
| Net loss | – | – | – | – | ||||||||||||||||||||||||||||
| Balance, June 30, 2024 | ||||||||||||||||||||||||||||||||
| Common stock issued for services | – | – | – | – | ||||||||||||||||||||||||||||
| Common stock subscribed | – | – | – | – | ||||||||||||||||||||||||||||
| Common stock issued for cash | – | – | – | – | ||||||||||||||||||||||||||||
| Stock based compensation | – | – | – | – | ||||||||||||||||||||||||||||
| Accrued Series H Preferred Stock cash dividends | – | – | – | – | ||||||||||||||||||||||||||||
| Warrants issued for services | – | – | – | – | ||||||||||||||||||||||||||||
| Series H Preferred stock converted to common shares | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Series H Preferred stock dividends converted to common stock | – | – | – | – | ||||||||||||||||||||||||||||
| Net loss | – | – | – | – | ||||||||||||||||||||||||||||
| Balance, September 30, 2024 | $ | $ | $ | |||||||||||||||||||||||||||||
| 5 |
Mobiquity Technology, Inc.
Consolidated Statements of Stockholders' Equity (Deficit) (Unaudited)
For the Nine Months Ended September 30, 2024 and 2023 (Continued)
| Series AAA Preferred Stock | Common Stock | Additional Paid-in | Stock Subscription | Treasury Shares | Accumulated | Total Stockholders' Equity | ||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Receivable | Shares | Amount | Deficit | (Deficit) | |||||||||||||||||||||||||||||||
| Balance, at December 31, 2022 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||
| Common stock and pre-funded warrants issued under public offering, net of issuance costs | – | – | ||||||||||||||||||||||||||||||||||||||
| Common stock issued under cashless warrant exercises and exercise of pre-funded warrants | – | ( | ) | – | ||||||||||||||||||||||||||||||||||||
| Incentive common stock and warrants issued with long-term debt | – | – | ||||||||||||||||||||||||||||||||||||||
| Stock based compensation | – | – | – | |||||||||||||||||||||||||||||||||||||
| Net Loss | – | – | – | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Balance, at March 31, 2023 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Common stock and pre-funded warrants issued under public offering, net of issuance costs | – | – | ||||||||||||||||||||||||||||||||||||||
| Common stock issued under cashless warrant exercises and exercise of pre-funded warrants | – | ( | ) | – | ||||||||||||||||||||||||||||||||||||
| Common stock issued for services rendered | – | – | ||||||||||||||||||||||||||||||||||||||
| Common stock issued for conversion of interest | – | – | ||||||||||||||||||||||||||||||||||||||
| Stock based compensation | – | – | – | |||||||||||||||||||||||||||||||||||||
| Series F preferred stock issued for cash | – | – | – | |||||||||||||||||||||||||||||||||||||
| Net Loss | – | – | – | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Balance, at June 30, 2023 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Common stock issued under exercise of pre-funded warrants | – | ( | ) | – | ||||||||||||||||||||||||||||||||||||
| Stock based compensation | – | – | – | |||||||||||||||||||||||||||||||||||||
| Redemption of Series F preferred stock | – | – | – | |||||||||||||||||||||||||||||||||||||
| Net Loss | – | – | – | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Balance, at September 30, 2023 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||||||||
| Series AAA Preferred Stock | Common Stock | Additional Paid-in | Stock Subscription | Treasury Shares | Accumulated | Total Stockholders' | ||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Receivable | Shares | Amount | Deficit | Equity | |||||||||||||||||||||||||||||||
| Balance, at December 31, 2023 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||||||||
| Common stock issued for services | – | – | ||||||||||||||||||||||||||||||||||||||
| Common stock issued for cash | – | – | ||||||||||||||||||||||||||||||||||||||
| Stock based compensation | – | – | ||||||||||||||||||||||||||||||||||||||
| Accrued Series H Preferred Stock cash dividends | – | – | ( | ) | – | ( | ) | |||||||||||||||||||||||||||||||||
| Repurchase of common stock held in Treasury | – | – | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Net loss | – | – | – | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Balance, at March 31, 2024 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Common stock issued for services | – | – | ||||||||||||||||||||||||||||||||||||||
| Common stock issued for cash | – | – | ||||||||||||||||||||||||||||||||||||||
| Common stock subscribed | – | ( | ) | – | ||||||||||||||||||||||||||||||||||||
| Stock based compensation | – | – | – | |||||||||||||||||||||||||||||||||||||
| Accrued Series H Preferred Stock cash dividends | – | – | ( | ) | – | ( | ) | |||||||||||||||||||||||||||||||||
| Warrants issued for services | – | – | – | |||||||||||||||||||||||||||||||||||||
| Net loss | – | – | – | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Balance, June 30, 2024 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Common stock issued for services | – | – | ||||||||||||||||||||||||||||||||||||||
| Common stock subscribed | – | – | – | |||||||||||||||||||||||||||||||||||||
| Common stock issued for cash | – | – | ||||||||||||||||||||||||||||||||||||||
| Stock based compensation | – | – | – | |||||||||||||||||||||||||||||||||||||
| Accrued Series H Preferred Stock cash dividends | – | – | ( | ) | – | ( | ) | |||||||||||||||||||||||||||||||||
| Warrants issued for services | – | – | – | |||||||||||||||||||||||||||||||||||||
| Series H Preferred stock converted to common shares | – | ( | ) | – | ||||||||||||||||||||||||||||||||||||
| Series H Preferred stock dividends converted to common stock | – | – | ||||||||||||||||||||||||||||||||||||||
| Net loss | – | – | – | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Balance, September 30, 2024 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| 6 |
Mobiquity Technology, Inc.
Consolidated Statements of Cash Flows (Unaudited)
| Nine Months Ended | ||||||||
| September 30, | ||||||||
| 2024 | 2023 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation | ||||||||
| Provision for credit losses | ||||||||
| Loss on disposal of asset | ||||||||
| Amortization of intangible assets | ||||||||
| Amortization of capitalized software development costs | ||||||||
| Amortization of debt discounts | ||||||||
| Loss on debt extinguishment | ||||||||
| Common stock and warrants issued for services | ||||||||
| Stock-based compensation | ||||||||
| Income tax benefit | ||||||||
| Changes in operating assets and liabilities | ||||||||
| (Increase) decrease in accounts receivable | ( | ) | ||||||
| (Increase) decrease prepaid expenses and other assets | ||||||||
| Increase (decrease) in accounts payable and accrued expenses | ( | ) | ||||||
| Increase (decrease) in contract liabilities | ( | ) | ( | ) | ||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities | ||||||||
| Increase in software development costs | ( | ) | ( | ) | ||||
| Cash flows from financing activities | ||||||||
| Issuance of common stock for cash | ||||||||
| Issuance of long-term debt, net of discounts and issuance costs | ||||||||
| Repayments on long-term debt | ( | ) | ( | ) | ||||
| Repurchase of treasury stock | ( | ) | ||||||
| Issuance of common stock and pre-funded warrants for cash, net of issuance costs | ||||||||
| Issuance of Series F preferred stock | ||||||||
| Net cash provided by financing activities | ||||||||
| Net change in cash | ( | ) | ( | ) | ||||
| Cash - beginning of period | ||||||||
| Cash - end of period | $ | $ | ||||||
| Supplemental disclosure of cash flow Information | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for taxes | $ | $ | ||||||
| Supplemental disclosure of non-cash investing and financing activities: | ||||||||
| Accrual of Series H Preferred stock dividends | $ | $ | ||||||
| Conversion of Series H preferred stock and accrued dividends to common stock | $ | $ | ||||||
| Warrants issued in conjunction with consulting agreement | $ | $ | ||||||
| Issuance of incentive shares with debt recorded as debt discount | $ | $ | ||||||
| Warrants issued with long-term debt recorded as debt discount | $ | $ | ||||||
| Common stock issued under cashless warrant exercises | $ | $ | ||||||
| Common stock issued for accrued interest | $ | $ | ||||||
| Common stock issued for settlement of accounts payable | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| 7 |
MOBIQUITY TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2024
(UNAUDITED)
NOTE 1 – ORGANIZATION AND NATURE OF OPERATIONS
Mobiquity Technologies, Inc. and its operating subsidiaries (“Mobiquity,” “we,” “our” or “the Company”), are a next generation location data intelligence company. The Company provides precise unique, at-scale location data and insights on consumer’s real-world behavior and trends for use in marketing and research. We provide one of the most accurate and scaled solutions for mobile data collection and analysis, utilizing multiple geo-location technologies. The Company is seeking to implement several new revenue streams from its data collection and analysis, including, but not limited to, Advertising, Data Licensing, Footfall Reporting, Attribution Reporting, Real Estate Planning, Financial Forecasting and Custom Research. We also are a developer of advertising and marketing technology focused on the creation, automation, and maintenance of an advertising technology operating system (or ATOS). The ATOS platform blends artificial intelligence (or AI) and machine learning (ML) based optimization technology for automatic ad serving that manages and runs digital advertising campaigns.
Mobiquity Technologies, Inc. was incorporated in the State of New York and has the following subsidiaries:
| Company Name | State of Incorporation | |
Mobiquity Networks, Inc.
Mobiquity Networks, Inc. is a wholly owned subsidiary of Mobiquity Technologies, Inc., commencing operations in May 2018. Mobiquity Networks started and developed as a mobile advertising technology company focused on driving foot-traffic throughout its indoor network and has evolved and grown into a next generation data intelligence company. Mobiquity Networks, Inc. operates our data intelligence platform business.
Advangelists, LLC
Advangelists LLC is a wholly owned subsidiary of Mobiquity Technologies, Inc., acquired through a merger transaction in December 2018, and operates our ATOS platform business.
Reverse Stock Split
On August 7, 2023, we effected a
Liquidity, Going Concern and Management’s Plans
These consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business.
| 8 |
As reflected in the accompanying consolidated financial statements, for the nine months ended September 30, 2024, the Company had:
| · | Net loss of $ |
| · | Net cash used in operations was $ |
Additionally, at September 30, 2024, the Company had:
| · | Accumulated deficit of $ |
| · | Stockholders’ equity of $ |
| · | Working capital deficit of $ |
We manage liquidity risk by reviewing, on an
ongoing basis, our sources of liquidity and capital requirements. The Company had cash on hand of $
The Company has incurred significant losses since its inception in 1998 and has not demonstrated an ability to generate sufficient revenues from the sales of its products and services to achieve profitable operations. There can be no assurance that profitable operations will ever be achieved, or if achieved, could be sustained on a continuing basis. In making this assessment we performed a comprehensive analysis of our current circumstances including: our financial position, our cash flows and cash usage forecasts for the year ended December 31, 2023, and the nine months ended September 30, 2024, and our current capital structure including equity-based instruments and our obligations and debts.
Without sufficient revenue from operations, if the Company does not obtain additional capital, the Company will be required to reduce the scope of its business development activities or cease operations.
These factors create substantial doubt about the Company’s ability to continue as a going concern within one year after the date that these consolidated financial statements are issued, as the Company will need additional capital to meet its financial obligations. These consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. Accordingly, the consolidated financial statements have been prepared on the basis that assumes the Company will continue as a going concern and which contemplates the realization of assets and satisfaction of liabilities and commitments in the ordinary course of business.
Management’s strategic plans include the following:
| · | Execution of business plan focused on technology development and improvement, |
| · | Seek out equity and/or debt financing to obtain the capital required to meet the Company’s financial obligations. There is no assurance, however, that lenders and investors will continue to advance capital to the Company or that the new business operations will be profitable. |
| · | Continuing to explore and execute prospective partnering, distribution and acquisition opportunities, |
| · | Identifying unique market opportunities that represent potential positive short-term cash flow. |
| 9 |
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial statements (U.S. GAAP) and with the instructions to Form 10-Q and Article 8 of Regulation S-X of the United States Securities and Exchange Commission (SEC). Accordingly, they do not contain all information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements. In the opinion of the Company’s management, the accompanying consolidated financial statements contain all the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of September 30, 2024, and the results of operations and cash flows for the periods presented. The results of operations for the three months and nine months ended September 30, 2024, are not necessarily indicative of the operating results for the full fiscal year or any future period. These consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on April 8, 2024.
Management acknowledges its responsibility for the preparation of the accompanying consolidated financial statements which reflect all adjustments, consisting of normal recurring adjustments, considered necessary in its opinion for a fair statement of its consolidated financial position and the consolidated results of its operations for the periods presented.
Principles of Consolidation
These consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) and include the accounts of the Company and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated.
Business Segments and Concentrations
The Company uses the “management approach” to identify its reportable segments. The management approach requires companies to report segment financial information consistent with information used by management for making operating decisions and assessing performance as the basis for identifying the Company’s reportable segments. The Company manages its business as a single reporting segment. Customers in the United States accounted for 100% of our revenues. We do not have any property or equipment outside of the United States.
Use of Estimates
Preparing financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of Company assets and liabilities, including the allowance for credit losses, stock-based compensation, the deferred tax asset valuation allowance, and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates.
Risks and Uncertainties
The Company operates in an industry that is subject to intense competition and changes in consumer demand. The Company’s operations are subject to significant risk and uncertainties including financial and operational risks and the potential of overall business failure.
| 10 |
The Company has experienced, and in the future expects to continue to experience, variability in sales and net earnings. The factors expected to contribute to this variability include, among others, (i) the cyclical nature of the industry, (ii) general economic conditions in the various local markets in which the Company competes, including a potential general downturn in the economy, and (iii) the volatility of prices in connection with the Company’s service offerings. These factors, among others, make it difficult to project the Company’s operating results on a consistent basis.
Fair Value of Financial Instruments
The Company accounts for financial instruments at fair value, which is defined as the exchange price that would be received to sell an asset or paid to transfer a liability (exit price) in an orderly transaction between market participants at the measurement date. The valuation techniques are based on observable and unobservable inputs. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect certain market assumptions. There are three levels of inputs that may be used to measure fair value:
| · | Level 1—Valuation based on quoted market prices in active markets that the Company can access for identical assets or liabilities; | |
| · | Level 2—Valuation based on quoted prices in active markets for similar assets and liabilities and inputs that are observable for the asset or liability; and | |
| · | Level 3—Valuation based on unobservable inputs that are supported by little or no market activity, which require management’s best estimate of what market participants would use as fair value. |
Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management.
The respective carrying value of certain on-balance-sheet financial instruments approximated their fair value. These financial instruments include accounts receivable, accounts payable and accrued expenses, accrued interest – related party, and contract liabilities. On September 30, 2024, and December 31, 2023, the carrying amounts of these financial instruments approximated their fair values due to the short-term nature of these instruments. The fair value of the Company’s long-term debt approximates its carrying value based on current financing rates available to the Company.
The Company does not have any other financial or non-financial assets or liabilities that would be characterized as Level 1, Level 2, or Level 3 instruments.
Cash and Cash Equivalents and Concentrations of Risk
For the purposes of presentation in the consolidated statements of cash flows, the Company considers all highly liquid instruments with a maturity of three months or less at the purchase date and money market accounts to be cash equivalents.
On September 30, 2024, and December 31, 2023,
the Company did
The Company is exposed to credit risk on its cash in the event of default by the financial institutions to the extent account balances exceed the amount insured by the FDIC, which is $250,000. On September 30, 2024, and December 31, 2023, the Company did not experience any losses on cash balances in excess of FDIC insured limits. Any loss incurred or a lack of access to funds could have a significant impact on the Company’s consolidated financial condition, results of operations, and cash flows.
| 11 |
For the quarters ended September 30, 2024, and
2023, sales of our products to four customers and three customers generated approximately
Accounts Receivable and Allowance for Credit Losses
Effective January 1, 2023, the Company adopted Accounting Standards Update (ASU) 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments (Topic 326), which significantly change how entities measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The most significant change in this standard is a shift from the incurred loss model to the expected loss model. Under the standard, disclosures are required to provide users of the consolidated financial statements with useful information in analyzing an entity’s exposure to credit risk and the measurement of credit losses. Financial assets held by the Company that are subject to the guidance in Topic 326 were trade accounts receivable. The impact of the adoption was not considered material to the consolidated financial statements.
Accounts receivable represent customer obligations
under normal trade terms and are stated at the amount management expects to collect from outstanding customer balances. Credit is extended
to customers based on an evaluation of their financial condition and other factors. Interest is not accrued on overdue accounts receivable.
The Company does not require collateral. Two of our customers combined accounted for approximately
The Company had accounts receivable, net, of $
Management periodically assesses the Company’s accounts receivable and, if necessary, establishes an allowance for credit losses. The Company provides its allowance for credit losses based upon a review of the outstanding accounts receivable, historical collection information and existing economic conditions. Accounts determined to be uncollectible losses are charged to operations when that determination is made.
The allowance for credit losses for accounts receivable and the related activity, for the nine months ended September 30, 2024 is as follows:
| Balance, December 31, 2023 | $ | |||
| Provision for credit losses | ||||
| Write-off of previously reserved account balances | ( | ) | ||
| Balance, September 30, 2024 | $ | |||
Provision for credit losses expense (recovery) is recorded as a component of general and administrative expenses in the accompanying consolidated statements of operations.
| 12 |
Impairment of Long-lived Assets
Management evaluates the recoverability of the Company’s identifiable intangible assets and other long-lived assets when events or circumstances indicate a potential impairment exists, in accordance with the provisions of ASC 360-10-35-15“Impairment or Disposal of Long-Lived Assets.” Events and circumstances considered by the Company in determining whether the carrying value of identifiable intangible assets and other long-lived assets may not be recoverable include but are not limited to significant changes in performance relative to expected operating results; significant changes in the use of the assets; significant negative industry or economic trends; and changes in the Company’s business strategy. In determining if impairment exists, the Company estimates the undiscounted cash flows to be generated from the use and ultimate disposition of these assets and compares this to the carrying amounts of the assets.
If impairment is indicated based on a comparison
of the assets’ carrying values and the undiscounted cash flows, the impairment to be recognized is measured as the amount by which
the carrying amount of the assets exceeds the fair value of the assets.
Property and Equipment
Property and equipment are stated at cost less accumulated depreciation. Depreciation is provided on the straight-line basis over the estimated useful lives of the assets.
Expenditures for repair and maintenance which do not materially extend the useful lives of property and equipment are charged to operations. When property or equipment is sold or otherwise disposed of, the cost and related accumulated depreciation are removed from the respective accounts with the resulting gain or loss reflected in current results of operations.
Goodwill
The Company’s goodwill represents the excess of the consideration transferred for the acquisition of Advangelists LLC in December 2018 over the fair value of the underlying identifiable net assets acquired. Goodwill is not amortized but instead, it is tested for impairment at least annually. If management determines that the value of goodwill has become impaired, the Company will record a charge in an amount equal to the excess of the reporting unit’s carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit during the fiscal quarter in which the determination is made.
The Company performs its annual impairment tests
of goodwill as of December 31st of each year, or more frequently, if certain indicators are present. Goodwill is required to be tested
for impairment at the reporting unit level. A reporting unit is an operating segment or one level below the operating segment level, which
is referred to as a component. Management identifies its reporting units by assessing whether components (i) have discrete financial information
available, (ii) engage in business activities, and (iii) whether a segment manager regularly reviews the component’s operating results.
Net assets and goodwill of acquired businesses are allocated to the reporting unit associated with the acquired business based on the
anticipated organizational structure of the combined entities. If two or more components are deemed economically similar, those components
are aggregated into one reporting unit when performing the annual goodwill impairment review. The Company has one reporting unit as of
September 30, 2024, and December 31, 2023.
Intangible Assets
In December 2018, the Company acquired the majority
of its intangible assets through its acquisition of Advangelists LLC, which included customer relationships and the ATOS platform technology.
The Company amortizes its identifiable definite-lived intangible assets over an estimated period of
| 13 |
Capitalized Software Development Costs
In accordance with ASC 350-40, Internal Use Software, the Company capitalizes certain internal-use software development costs associated with creating and enhancing internally developed software related to its platforms. Software development activities generally consist of three stages (i) the research and planning stage, (ii) the application and development stage, and (iii) the post-implementation stage. Costs incurred in the research and planning stage and in the post-implementation stage of software development, or other maintenance and development expenses that do not meet the qualification for capitalization, are expensed as incurred. Costs incurred in the application and development stage, including significant enhancements and upgrades, are capitalized. These costs include personnel and related employee benefits expenses for employees or consultants directly associated with and who devote time to software projects and external direct costs of materials obtained in developing the software. These software developments and acquired technology are amortized on a straight-line basis over the estimated useful life of five years upon the initial release of the software or additional features. The Company reviews the software development costs for impairment when circumstances indicate their carrying amounts may not be recoverable. If the carrying value of an asset group is not recoverable, the Company recognizes an impairment loss for the excess of carrying value over the fair value in its consolidated statements of operations. See Note 3 for further details.
Derivative Financial Instruments
The Company analyzes all financial instruments with features of both liabilities and equity under FASB ASC Topic No. 480, (ASC 480), Distinguishing Liabilities from Equity and FASB ASC Topic No. 815, (ASC 815) Derivatives and Hedging.
Terms of financial instruments are reviewed to determine whether they contain embedded derivative instruments that are required to be accounted for separately from the host contract under ASC 815 and recorded on the balance sheet at fair value. Derivative liabilities are remeasured to reflect fair value at each reporting period, with any increase or decrease in the fair value being recorded in the results of operations. The Company generally incorporates a binomial model to determine fair value. Upon conversion of a debt instrument where an embedded conversion option has been bifurcated and accounted for separately as a derivative liability, the Company records the resulting shares issued at fair value, derecognizes all related debt principal, derivative liability, and debt discount, and recognizes a net gain or loss on debt extinguishment. Equity instruments that are initially classified as equity that become subject to reclassification under ASC 815 are reclassified to liabilities at the fair value of the instrument on the reclassification date. The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risk. As of September 30, 2024, and December 31, 2023, the Company had no derivative instruments outstanding.
Debt Issuance Costs and Debt Discounts
Debt discounts, debt issuance costs paid to lenders
or third parties, and other original issue discounts on debt, are recorded as debt discounts and amortized to interest expense in the
consolidated statement of operations, over the term of the underlying debt instrument, using the effective interest method, with the unamortized
portion reported net with related principal outstanding on the consolidated balance sheet. For the three months ended September 30, 2024,
and 2023, the Company recognized $
| 14 |
Revenue Recognition
The Company’s revenues are generated from internet advertising, the Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers (ASC 606). In accordance with ASC 606, revenue is recognized when promised services are transferred to a customer. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for these services. To achieve this core principle, the Company applies the following five steps:
Identify the contract with a customer.
A contract with a customer exists when (i) the Company enters into an enforceable contract with a customer that defines each party’s rights regarding the services to be transferred and identifies the payment terms related to these services, (ii) the contract has commercial substance and, (iii) the Company determines that collection of substantially all consideration for services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration. The Company applies judgment in determining the customer’s ability and intention to pay, which is based on a variety of factors including the customer’s historical payment experience or, in the case of a new customer, published credit and financial information pertaining to the customer.
Identify the performance obligations in the contract.
Performance obligations promised in a contract are identified based on the services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the service either on its own or together with other resources that are readily available from third parties or from the Company, and are distinct in the context of the contract, whereby the transfer of the services is separately identifiable from other promises in the contract. To the extent a contract includes multiple promised services (performance obligations), the Company must apply a judgment to determine whether promised services are capable of being distinct and distinct in the context of the contract. If these criteria are not met the promised services are accounted for as a combined performance obligation. Currently, the Company does not have any contracts that contain multiple performance obligations.
Determine the transaction price.
The transaction price is determined based on the consideration of which the Company will be entitled in exchange for transferring services to the customer. To the extent the transaction price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price utilizing either the expected value method or the most likely amount method depending on the nature of the variable consideration. Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. None of the Company’s contracts outstanding at September 30, 2024 or December 31, 2023, contained a significant financing component or variable consideration terms.
Allocate the transaction price to performance obligations in the contract.
If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. However, if a series of distinct services that are substantially the same qualifies as a single performance obligation in a contract with variable consideration, the Company must determine if the variable consideration is attributable to the entire contract or to a specific part of the contract. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative standalone selling price basis unless the transaction price is variable and meets the criteria to be allocated entirely to a performance obligation or to a distinct service that forms part of a single performance obligation.
| 15 |
Recognize revenue when or as the Company satisfies a performance obligation.
The Company satisfies performance obligations at a point in time. Revenue is recognized at the time the related performance obligation is satisfied by transferring the promised service to a customer. Under both managed services arrangements and self-service arrangements, the Company’s promised services under the contracts include identification, bidding and purchasing of advertisement opportunities. The Company also generally has discretion in establishing the pricing of the ads. Since the Company is controlling the promise to deliver the contracted services, the Company is considered the principal in all arrangements for revenue recognition purposes. The performance obligations are satisfied, and revenue recognition primarily upon publication of customer advertising content.
All revenues recognized were derived from internet advertising for the periods ended September 30, 2024, and 2023.
Payment terms and conditions vary by contract, although terms generally include a requirement of payment within 30 to 90 days.
Contract Liabilities
Contract liabilities represent deposits made by
customers before the satisfaction of performance obligation and recognition of revenue. Upon completion of the performance obligation(s)
that the Company has with the customer based on the terms of the contract, the liability for the customer deposit is relieved and revenue
is recognized. As of September 30, 2024, December 31, 2023, and January 1, 2023, there were $
Advertising
Advertising costs are expensed as incurred. Advertising costs are included as a component of general and administrative expenses in the consolidated statements of operations. Advertising costs incurred were insignificant for the periods ended September 30, 2024, and 2023.
Stock-Based Compensation
The Company accounts for our stock-based compensation, including stock options and common stock warrants, under ASC 718 Compensation – Stock Compensation, using the fair value-based method. Under this method, compensation cost is measured at the grant date based on the value of the award and is recognized over the requisite service period for employee awards, which is usually the vesting period, and when the goods are obtained or services are received, for nonemployee awards. This guidance establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services. It also applies to transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments.
In connection with certain financing, consulting and collaboration arrangements, the Company may issue warrants to purchase shares of its common stock. The outstanding warrants are standalone instruments that are not puttable or mandatorily redeemable by the holder and are classified as equity awards.
The fair value of stock-based compensation is generally determined by using the Black-Scholes valuation model as of the date of the grant or the date at which the performance of the services is completed (measurement date).
| 16 |
When determining the fair value of stock-based compensation, the Company considers the following assumptions in the Black-Scholes model:
| · | Exercise price, |
| · | Expected dividends, |
| · | Expected volatility, |
| · | Risk-free interest rate; and |
| · | Expected life of option |
Income Taxes
The Company accounts for income tax using the asset and liability method prescribed by ASC 740, Income Taxes (ASC 740). Under this method, deferred tax assets and liabilities are determined based on temporary differences between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the year in which the differences are expected to reverse. The Company records a valuation allowance to offset deferred tax assets if based on the weight of available evidence, it is more likely-than-not that all or some portion of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rates is recognized as gain or loss in the period that includes the date of the enactment.
The Company follows the accounting guidance for uncertainty in income taxes using the provisions of ASC 740. Using that guidance, tax positions initially need to be recognized in the consolidated financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. As of September 30, 2024, and December 31, 2023, the Company did not identify any uncertain tax positions that qualify for either recognition or disclosure in the consolidated financial statements.
The Company recognizes interest and penalties, if any, related to recognized uncertain income tax positions, in other expense. No interest and penalties related to uncertain income tax positions were recorded for the periods ended September 30, 2024, and 2023. Open tax years, subject to examination by the Internal Revenue Service, generally remain open for three years from the filing date. Tax years subject to examination by the state jurisdiction generally remain open for up to four years from the filing date.
Related Parties
Parties are considered to be related to the Company if the parties, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal with if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests.
Recently Adopted Accounting Pronouncements
We consider the applicability and impact of all new accounting pronouncements on our consolidated financial position, results of operations, stockholders’ equity, cash flows, or presentation thereof. Management has evaluated all recent accounting pronouncements as issued by the Financial Accounting Standards Board (FASB) through the date these consolidated financial statements were available to be issued and found no recent accounting pronouncements issued, but not yet effective, that when adopted, will have a material impact on the consolidated financial statements of the Company.
| 17 |
NOTE 3: INTANGIBLE ASSETS AND SOFTWARE DEVELOPMENT COSTS
The Company’s definite-lived intangible assets consist of a customer relationship asset acquired through the Advangelists, LLC acquisition in 2018, and capitalized software development costs. The intangible assets are being amortized over their estimated useful lives of five years. The Company periodically evaluates the reasonableness of the useful lives of these assets. These assets are also reviewed for impairment or obsolescence when events or circumstances indicate that the carrying amount may not be recoverable. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized in the amount by which the carrying amount of the asset exceeds the fair value of the asset.
| Useful Lives | September 30, 2024 | December 31, 2023 | ||||||||
| Customer relationship | $ | $ | ||||||||
| Less accumulated amortization | ( | ) | ( | ) | ||||||
| Net carrying value | $ | $ | ||||||||
| Software development costs | $ | $ | ||||||||
| Less accumulated amortization | ( | ) | ( | ) | ||||||
| Net carrying value, software development costs | $ | $ | ||||||||
During the three months ended September 30, 2024,
and 2023, the Company recognized and $
During each of the three months ended September
30, 2024, and 2023, the Company recognized $
As of September 30, 2024, and December 31, 2023,
the Company has capitalized a total of approximately $
Future amortization of the approximately
$
| Software Development Costs | ||||
| Remainder of 2024 | $ | |||
| 2025 | ||||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| Total | $ | |||
| 18 |
NOTE 4 – DEBT
Small Business Administration Loan
In June 2020, the Company received an Economic
Injury Disaster Loan of $
Investor Note Payable
On December 30, 2022, the Company and Walleye
Opportunities Master Fund Ltd, a Cayman Islands company (the Investor), entered into a Securities Purchase Agreement (the SPA) for the
Investor to purchase from the Company (i) a senior secured 20% original issue discount (OID) nine-month promissory note in an aggregate
gross principal amount of $
In conjunction with the SPA, the Company issued
shares of common stock, or approximately 5.3% of the Company’s outstanding shares at the time, to the Investor as an incentive
on the transaction (Incentive Shares). Total issuance fees of $
The Investor Note will only become convertible into common stock upon the occurrence of an Event of Default under and as defined in the Investor Note on terms set forth in the Investor Note. This Investor Note matures and was payable on or before September 30, 2023, and it provided that the Investor may demand prepayment after March 31, 2023, and before the maturity date, provided that the purchasers of securities in a future public offering by the Company, as defined in the SPA, who hold the purchased Company securities at the time the prepayment demand, unanimously consent to the prepayment. On June 30, 2023, the secured debt was paid in full through the proceeds of the Company’s June 2023 Offering. See Note 5.
The aforementioned Investor Warrant was assigned
a relative fair value of $
| 19 |
Related Party - Salkind Loans
On October 10, 2023, the Company received a $
In February 2024, Dr. Salkind, Board Chairman,
loaned the Company $
On June 27, 2024, the Company entered into a new
Loan Agreement with Dr. Salkind and a relative of Dr. Salkind (Salkind June 2024 Loan) for no additional consideration from the lenders,
effectively cancelling the Salkind February 2024 Loan. The Salkind June 2024 Loan is a $
On July 5, 2024, the Company entered into a Loan Agreement with Dr.
Salkind for additional proceeds of $
Related Party - Other Loans
During the quarter ended June 30, 2024, the Company entered into the following loan agreements with its corporate attorney in exchange for cash or the cancellation of invoices outstanding related to legal services performed by the attorney.
Loan 1, dated April 2024, was a non-interest-bearing
demand loan issued in exchange for $
Loan 2, dated April 2024, was a non-interest-bearing
demand loan issued in exchange for $
Loan 3, dated June 2024, is a non-interest-bearing
demand loan issued in exchange for the cancellation of $
| 20 |
Loan 4, dated June 2024, is a non-interest-bearing
demand loan issued in exchange for $
During the quarter ended September 30, 2024, the Company entered into the following loan agreements with its corporate attorney in exchange for cash.
Loans 5 and 6, dated July 2024, consists of two
verbal, non-interest-bearing loans totaling $
Loan 7, dated September 2024, consists of a verbal,
non-interest-bearing loan issued in exchange for $
On October 8, 2024, the corporate attorney and the Company entered into a modification to Loans 3, 4, 5, 6, and 7 above which provides the following:
| · | Loans 3 and 4 were amended to include a provision that, if the Company elects to prepay the loans, the Company will provide at least five days written notice to the debt holder of such intent for prepayment allowing the debt holder the opportunity to convert the debt. | |
| · | Loans
5, 6, and 7, totaling $ | |
| · | The parties agree that all repayments of loans by the Company to the debt holder shall first reduce the outstanding principal and OID of Loans 5, 6, and 7. |
Merchant Agreements
In November 2023, the Company entered into an
agreement for the purchase and sale of future receivables (2023 Merchant Agreement) with a financial institution in exchange for $
| 21 |
In February 2024, the Company entered into an
agreement for the purchase and sale of future receivables (February 2024 Merchant Agreement) with the same financial institution associated
with the 2023 Merchant Agreement for the sale of future receivables in exchange for $
In April 2024, the Company entered into an agreement
for the purchase and sale of future receivables (April 2024 Merchant Agreement) with a financial institution for the sale of future receivables
in exchange for $
In August 2024, the Company entered into an agreement
for the purchase and sale of future receivables (August 2024 Merchant Agreement) with a financial institution for the sale of future receivables
in exchange for $
In September 2024, the Company entered into an
agreement for the purchase and sale of future receivables (September 2024 Merchant Agreement) with a financial institution for the sale
of future receivables in exchange for $
| 22 |
For the three and nine months ended September
30, 2024, the Company recognized approximately $
2024 Promissory Notes
In March 2024, the Company issued a promissory
note in the principal amount of $
In April 2024, the Company issued a promissory
note in the principal amount of $
In September 2024, the Company issued a promissory
note in the principal amount of $
In August 2024, the Company entered into a financing
arrangement with their Directors and Officers (D&O) insurance provider to fund the annual premium related to the D&O insurance
policy. The total amount financed was $
| 23 |
Following is a summary of debt outstanding at December 31, 2023 and September 30, 2024:
| September 30, 2024 (Unaudited) | December 31, 2023 | |||||||
| Merchant Agreements | $ | $ | ||||||
| Related Party – Salkind Loans | ||||||||
| Related Party – Other Loans | ||||||||
| 2024 Promissory Notes | ||||||||
| Total Debt | ||||||||
| Less: Unamortized debt discounts | ( | ) | ( | ) | ||||
| Current portion of debt | $ | $ | ||||||
NOTE 5 – STOCKHOLDERS’ EQUITY
On August 7, 2023, the Company effected a
The Company’s authorized capital stock consists of 105,000,000 shares, comprised of shares of common stock, per share par value $, and shares of preferred stock, per share par value $.
Of the 5,000,000 shares of preferred stock authorized, the Board of Directors has designated the following:
| · | shares as Series AA Preferred Stock, outstanding | |
| · | shares as Series AAA Preferred Stock, shares outstanding | |
| · | shares as Series AAAA Preferred Stock, outstanding | |
| · | shares as Series C Preferred Stock, outstanding | |
| · | shares as Series B Preferred Stock: outstanding | |
| · | shares as Series E Preferred Stock, shares outstanding | |
| · | share of Series F Preferred Stock, outstanding | |
| · | shares of Series G Preferred Stock, outstanding | |
| · | shares of Series H Preferred Stock, outstanding |
Rights Under Preferred Stock
The Company’s classes of preferred stock include the following provisions:
Optional Conversion Rights of Preferred Stock
| · | ||
| · | ||
| · | ||
| · | ||
| · | ||
| · |
| 24 |
Redemption Rights
Series E preferred stock is redeemable at any time upon 30 days’ written notice by the Company and the shareholders, at a rate of 100% of the Stated Value, as defined.
Mandatory Conversion Right
Any outstanding shares of Series G Preferred Stock shall automatically convert into common stock based on the Series G Conversion Ratio if the closing sales price of the Company’s common stock for ten (10) consecutive trading days closes over $5.00 per share.
Any outstanding shares of Series H Preferred Stock
shall automatically convert into common stock based on the Series H Conversion Ratio at the earlier of (i) December 31, 2026, or (ii)
at such time as the closing sale price of the Company’s common stock exceeds $2.00 per share for ten (10) consecutive trading days.
In August 2024, the Series H Preferred Stock satisfied the mandatory conversion right, resulting in the conversion of all shares
outstanding into shares of common stock, exclusive of accrued dividend liabilities totaling $
Mandatory Dividend
Commencing after the later of (i) the first day of the calendar month after the month in which the Series G shares are issued or (ii) January 2, 2024, the holders of outstanding shares of Series G Preferred Stock shall receive a monthly dividend of 20% of the Stated Value per share. The dividend shall be paid at the election of the majority holder of the Series G Preferred Stock in cash or in common stock.
Commencing January 2, 2024, the holders of outstanding
shares of Series H Preferred Stock shall receive a monthly dividend of 1% of the Stated Value per share. The dividend shall be paid at
the election of the majority holder of the Series H Preferred Stock in cash or in common stock. If the election is for cash payment, the
Company has the right to deliver a one-year secured note bearing interest at the rate of 15% per annum in lieu of paying cash. As discussed
above, for the period January 1 through August 6, 2024, the mandatory conversion date, the Company accrued and paid stock dividends of
common shares totaling $
Liquidation Preference
The Series G and Series H Preferred Stock have a liquidation preference of the Stated Value per share plus accrued and unpaid dividends.
Shares Issued for Services
On October 6, 2023, the Company entered a one-year
consulting contract with Mr. Gene Salkind, its Chairman of the Board, to provide business consulting services to the Company. Mr. Salkind
received shares of restricted common stock, valued at $
In December 2023, the Company entered a one-year consulting contract with an unrelated party. In accordance with the contract, the consultant received a signing bonus of $ in cash, shares of restricted common stock valued at $, and warrants to purchase shares of common stock, exercisable over a three-year period at $ per share, valued at $. In addition, the consultant is to receive monthly cash payments of $12,500 over the term of the agreement. The value of the signing bonus, shares of restricted common stock, and warrants, totaling $, was recorded as a prepaid asset on the accompanying consolidated balance sheet and is being amortized through general and administrative expenses over the one-year term of the agreement. For the three and nine months ended September 30, 2024, the Company recognized approximately $ and $ of expense associated with amortization of the prepaid asset with approximately $ remaining unamortized at September 30, 2024.
| 25 |
On August 15, 2024, the Company entered into a
Business Development Agreement with a non-affiliated entity. The term of the agreement is three months, and the consultant has a choice
of $
Common Stock Issued in Conjunction with Debt Issuance
On December 30, 2022, the Company and Walleye
Opportunities Master Fund Ltd, a Cayman Islands company (the Investor), entered into a Securities Purchase Agreement (the Walleye SPA)
for the Investor to purchase from the Company (i) a senior secured 20% original issue discount (OID) nine-month promissory note in an
aggregate gross principal amount of $
In conjunction with the Walleye SPA, the Company
issued shares of common stock, or approximately 5.3% of the Company’s outstanding shares at that time, to the Investor as
an incentive on the transaction (Incentive Shares). Excluding the above-mentioned Investor Warrant, the shares of Common Stock exercisable
pursuant to such Investor Warrant are not being considered beneficially owned by the Investor until the Investor Warrant is exercisable
within 60 days. Total issuance fees of $
The Investor Note will only become convertible into common stock upon the occurrence of an Event of Default under and as defined in the Investor Note on terms set forth in the Investor Note. This Investor Note matures and is payable on or before September 30, 2023, and it provides that the Investor may demand prepayment after March 31, 2023, and before the maturity date, provided that the purchasers of securities in a future public offering by the Company, as defined in the Walleye SPA, who hold the purchased Company securities at the time the prepayment demand, unanimously consent to the prepayment. The Company granted a security interest in all of its assets to the Investor as collateral for its obligations under the Investor Note pursuant to a Security Agreement. In addition, the Company’s subsidiaries guaranteed the obligations of the Company under the Investor Note pursuant to a Subsidiary Guarantee and granted a first lien security interest in all their assets to the Investor as additional collateral pursuant to the Security Agreement. All securities sold in the above-described transaction contain certain piggy-back registration rights after the completion of our February 2023 Offering (see below). During the third quarter of 2023, the secured debt was paid in full through the proceeds of our June 2023 Offering.
The aforementioned Investor Warrant was deemed
to be an equity-classified derivative instrument with a fair value of $1,526,363 at the date of closing on the Agreement, incorporating
the use of the Black-Scholes valuation model, and the Incentive Shares were deemed to have a fair value of $318,863 based on the closing
market price of the Company’s common stock on the day preceding the closing of the Walleye SPA. Per accounting guidance under ASC
815, the Company recorded the fair values of the Investor Warrant and Incentive Shares based on the relative fair value allocation method,
which allocates fair values as a percentage of total fair value of the debt, Investor Warrant, and Incentive Shares, in proportion to
the net proceeds received under the Investor Note of $1,150,000. As a result of applying the relative fair value allocation method, the
Investor Warrant was assigned a relative fair value of $
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February 2023 Offering
On February 13, 2023, the Company entered into
an underwriting agreement (the Underwriting Agreement) with Spartan Capital Securities LLC (the Underwriter) relating to a public offering
of shares of common stock and pre-funded warrants to purchase shares of common stock (the Shares), for net proceeds of
$
Each pre-funded warrant is exercisable at any time, until fully exercised, to purchase one share of common stock at an exercise price of $0.0015 per share. Each Series 2023 Warrant is exercisable for five years to purchase 0.1 share of common stock at a cash exercise price of $6.975 per warrant share. The Series 2023 Warrants contain an alternative cashless exercise provision permitting the holder to acquire 0.05 share of common stock for every 0.1 warrant share any time after the earlier of (i) 30 days following the initial exercise date of February 14, 2023, and (ii) the date on which the aggregate trading volume of the Company’s common stock, beginning on the initial exercise date of the Series 2023 Warrants, exceeds 2,419,355 shares. Additionally, the exercise price of both the pre-funded warrants and the Series 2023 Warrants are subject to customary adjustments for stock splits, stock dividends, reclassifications and the like.
Pursuant to the terms of the Underwriter agreement,
and as partial consideration to the Underwriter, the Company issued a warrant for the purchase of 26,882 shares of common stock, exercisable
from February 14, 2023, through February 14, 2028, at an initial exercise price of $7.6725 per share. This warrant was cancelled by the
underwriter on or about June 30, 2023, in connection with the completion of the June 2023 Offering described below. The Company also granted
the Underwriter a 45-day option to purchase up to an additional shares and/or pre-funded warrants in lieu of shares and accompanying
Series 2023 Warrants to purchase shares at the public offering price less the underwriting discounts and commissions, to cover
over-allotments, if any. No additional shares or pre-funded warrants were purchased by the Underwriter. The Company paid a cash fee to
the Underwriter equal to 8% of the gross proceeds raised in February 2023 Offering, plus a reimbursement of Underwriter fees totaling
$
Between the closing of February 2023 Offering
and June 30, 2023, investors holding pre-funded warrants converted all their pre-funded warrants into shares of common stock and
elected the alternative cashless exercise provision for the Series 2023 Warrants, resulting in the issuance of
June 2023 Offering
On June 30, 2023, Mobiquity Technologies, Inc.
closed on a public offering selling an aggregate of shares of common stock (and common stock equivalents in the form
of pre-funded warrants to purchase 1,625,000 common shares) to investors pursuant to Securities Purchase Agreements at a public offering
price of $1.50 per share (or $1.4985 per pre-funded warrant) (the June 2023 Offering), for total gross proceeds of $
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Other 2023 Stock Transactions
In April 2023, the Board of Directors or the Compensation Committee of the Company’s Board of Directors approved the following transactions:
| · | Grant of shares of restricted common stock to Gene Salkind, Chairman of the Board, for services previously rendered, based on a per share value of $2.505. | |
| · | Grant of shares of restricted common stock each to the Company’s CEO and another member of the Board of Directors for services as directors of the Company. | |
| · | Grant of shares of common stock to Gene Salkind as payment for accrued and unpaid interest of approximately $ | |
| · | Grant of shares of restricted common stock to the Company’s legal counsel as payment for accrued and unpaid services valued at $ | |
| · | Issuance of a total of shares of restricted common stock at a per share value of $2.52 as payment and full settlement of outstanding accounts payable with a total carrying amount of $ |
Share prices used in the above transaction were based on the market price of the Company’s common stock on the consummation dates of the transactions.
Salkind October 2023 Loan Conversion and Series G Preferred Stock Issuance
Effective November 7, 2023, Mr. Gene Salkind and
parties associated with him (the Series G Preferred Shareholders), invested $
Series H Preferred Stock Issuances
On December 18, 2023, the Series G Preferred Shareholders
agreed to exchange all of the Series G Preferred Stock into shares of the Company’s newly created Series H Preferred
Stock. Also, our legal counsel agreed to exchange $
Issuance of Common Stock for Settlement of Liabilities
In January 2024, the Company issued shares
of its common stock at a per share price of $0.53 in full settlement of vendor liabilities outstanding at an amount equal to $
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Issuance of Common Stock for Cash
During the first nine months of 2024, the Company
raised a total of $
Issuance of Common Stock Warrant for Services
During June 2024, the Company entered into a consulting
agreement with an unrelated party for general business consulting services. The term of the agreement is for twelve months, commencing
in June 2024. Compensation under the agreement included an upfront payment of $
Treasury Stock
In the three months ended March 31, 2024, the Company repurchased shares of common stock for an insignificant amount, recorded as treasury stock. There were repurchases of the Company’s common stock for the year ended December 31, 2023, or the quarter ended September 30, 2024.
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 334 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 667 shares. During Fiscal 2009, the Company established a plan of long-term stock-based compensation incentives for selected Eligible Participants of the Company covering 667 shares. This plan was adopted by the Board of Directors and approved by stockholders in October 2009 (the 2009 Plan). In September 2013, the Company’s stockholders approved an increase in the number of shares covered by the 2009 Plan to 1,667 shares. In the first quarter of 2016, the Board approved, and stockholders ratified a 2016 Employee Benefit and Consulting Services Compensation Plan covering 1,667 shares (the 2016 Plan) and approved 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 5,000 shares (the 2018 Plan). On April 2, 2019, the Board approved the 2019 Plan identical to the 2018 Plan, except that the 2019 Plan covers 10,000 shares. The 2019 Plan required stockholder approval by April 2, 2020, to be able to grant incentive stock options under the 2019 Plan. On October 13, 2021, the Board approved the 2021 Plan identical to the 2018 Plan, except that the 2021 Plan covers 73,334 shares. The 2021 Plan required stockholder approval by October 13, 2022, to be able to grant incentive stock options under the 2021 Plan. On April 17, 2023, the Board approved an Equity Participation Plan similar to the Plans described herein, except that this Plan also provides for the grant of Restricted Unit Awards (the 2023 EP Plan). Under the 2023 EP Plan, which was approved by stockholders on May 15, 2023, a maximum of shares may be granted under the 2023 EP Plan. On December 19, 2023, the Board approved the 2023 Plan identical to the 2018 Plan, except that the 2023 Plan covers shares. The 2005 Plan, 2009 Plan, 2016 Plan, 2018 Plan, 2019 Plan, 2021 Plan, the 2023 EP Plan, and 2023 Plan are collectively referred to as the “Plans.”
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In April of 2022 and April 2023, Dean Julia was granted options each year from the Company’s 2021 Plan with immediate vesting, at an exercise price of $ and $ and expiration of April 2031 and April 2032, respectively.
In March and April 2023, Nate Knight and Byron Booker, respectively, were each granted options from the Company’s 2021 Plan with immediate vesting, at an exercise price of $, and expiration of March 2028 and April 2028, respectively.
On December 19, 2023, the board approved, under the 2023 Plan, granting five-year Non-Statutory Stock Options to purchase shares of common stock, immediately exercisable at $ per share to various officers, directors, employees and consultants. Exemption from registration is claimed under section 4(2) of the Securities Act of 1933, as amended.
In April 2024, Dean Julia was granted options from the Company’s 2021 Plan with immediate vesting, at an exercise price of $ and expiration of April 2033.
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.
The weighted average assumptions made by calculating the fair values of options granted during the nine months ended September 30, 2024, are as follows:
| Nine Months Ended September 30, | ||||||||
| 2024 | 2023 | |||||||
| Expected volatility | % | % | ||||||
| Expected dividend yield | ||||||||
| Risk-free interest rate | % | % | ||||||
| Expected term (in years) | ||||||||
| Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term (Years) | Aggregate Intrinsic Value | |||||||||||||
| Outstanding, January 1, 2024 | $ | $ | ||||||||||||||
| Granted | $ | $ | ||||||||||||||
| Cancelled or expired | ( | ) | $ | – | $ | |||||||||||
| Outstanding, September 30, 2024 | $ | $ | ||||||||||||||
| Options exercisable, September 30, 2024 | $ | $ | ||||||||||||||
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The aggregate intrinsic value of options outstanding and options exercisable on September 30, 2024, 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 lower than the $2.49 closing price of the Company’s common stock on September 30, 2024. Stock-based compensation expense related to stock options was $ and $ for the nine months ended September 30, 2024, and 2023, respectively, and is included in general and administrative expenses on the accompanying consolidated statements of operations.
As of September 30, 2024, there is $ in unamortized compensation cost related to unvested stock option awards to be recognized during fiscal 2024 and 2025, respectively.
Warrants
During the fiscal year ended December 31, 2023,
the Company issued a total of
On June 3, 2024, the Company entered into a one-year
consulting agreement with a non-affiliated entity. The agreement provides for cash compensation of $ (inclusive of a $
The weighted average assumptions made in calculating the fair value of warrants granted during the nine months ended September 30, 2024, and 2023, are as follows:
Nine Months Ended September 30, | ||||||||
| 2024 | 2023 | |||||||
| Expected volatility | % | % | ||||||
| Expected dividend yield | ||||||||
| Risk-free interest rate | % | % | ||||||
| Expected term (in years) | ||||||||
| Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term (Years) | Aggregate Intrinsic | |||||||||||||
| Outstanding, January 1, 2024 | $ | $ | ||||||||||||||
| Granted | $ | $ | ||||||||||||||
| Cancelled or expired | $ | – | $ | |||||||||||||
| Outstanding, September 30, 2024 | $ | $ | ||||||||||||||
| Warrants exercisable, September 30, 2024 | $ | $ | ||||||||||||||
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NOTE 7 – EARNINGS (LOSS) PER SHARE
Pursuant to ASC 260, Earnings Per Share, basic earnings (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding for the periods presented.
Diluted earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during the period. Potentially dilutive common shares may consist of common stock issuable for stock options and warrants (using the treasury stock method), convertible notes and common stock issuable. These common stock equivalents may be dilutive in the future. In the event of a net loss, diluted loss per share is the same as basic loss per share since the effect of the potential common stock equivalents upon conversion would be anti-dilutive.
The following potentially dilutive equity securities outstanding as of September 30, 2024, and December 31, 2023, are as follows:
| September 30, 2024 | December 31, 2023 | |||||||
| Stock options | ||||||||
| Warrants | ||||||||
| Series AAA preferred stock | ||||||||
| Series E preferred stock | ||||||||
| Series H preferred stock | ||||||||
| Total common stock equivalents | ||||||||
NOTE 8 – COMMITMENTS AND CONTINGENCIES
Litigation
Michael Trepeta, a former Co-CEO and director of the Company, filed a lawsuit against the Company and its subsidiary, Mobiquity Networks in April 2023 in the New York State Supreme Court, Nassau County. The claims stem from a Separation Agreement and Release that Mr. Trepeta and the Company entered into nine years ago in April 2017 which terminated Mr. Trepeta’ s employment agreement and discontinued his employment and directorship with the Company, among other things, by mutual agreement. Mr. Trepeta also gave the Company a release in the Separation Agreement and Release. Mr. Trepeta has claimed that the Company fraudulently induced him to enter into the Separation Agreement and Release; that the Company breached Mr. Trepeta’ s employment agreement; and that the Company breached its covenant of good faith and fair dealing and its fiduciary duty. Mr. Trepeta is claiming not less than $2.5 Million in damages. Based on the Company’s initial internal review of the situation, the Company believes the claims lack merit and it intends to vigorously defend same. In December 2023, the Company was notified that its motion to dismiss Mr. Trepeta’ s action was granted but Mr. Trepeta has filed a notice of appeal. Due to uncertainties inherent in litigation, the Company cannot predict the outcome of this matter at this time.
NOTE 9 – SUBSEQUENT EVENTS
On October 8, 2024, the Board of Directors of the Company approved the increase in the number of shares available under the 2023 Employee Benefit and Compensation Plan from 2,000,000 shares to 4,000,000 shares and granted a total of 1,725,000 non-statutory stock options with a 5-year term, immediately exercisable to several officers, directors, employees and consultants at an exercise price of $2.45 per share.
Between October 1, 2024 and November 12, 2024, the Company raised $540,000 from the sale of its common stock at $1.00 per share. Exemption from registration is claimed under Rule 506 and/or section 4(2) of the Securities Act of 1933, as amended. No commissions were paid in connection with these transactions.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
References in this Management’s Discussion and Analysis of Financial Condition and Results of Operations to “us,” “we,” “our,” and similar terms refer to the Company.
The information contained in this Form 10-Q and documents incorporated herein by reference are intended to update the information contained in the Company's Form 10-K for its fiscal year ended December 31, 2023 which includes our audited financial statements for the years ended December 31, 2023 and 2022 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 statement contains forward-looking statements within the meaning of the Securities Act. Discussions containing such forward-looking statements may be found throughout this statement. Actual events or results may differ materially from those discussed in the forward-looking statements as a result of various factors, including the matters set forth in this statement. The accompanying consolidated financial statements as of September 30, 2024, and 2023 includes the accounts of Mobiquity Technologies, Inc. (the “Company”) and its wholly owned subsidiaries.
This Quarterly Report includes forward-looking statements, as that term is defined in the federal securities laws, based upon current expectations that involve risks and uncertainties, such as plans, objectives, expectations, and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors. Words such as “anticipate,” “estimate,” “plan,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions are used to identify forward-looking statements. We caution you that these statements are not guarantees of future performance or events and are subject to a number of uncertainties, risks and other influences, many of which are beyond our control, which may influence the accuracy of the statements and the projections upon which the statements are based. Our actual results could differ materially from those anticipated in the forward-looking statements as a result of certain risk factors discussed in our Annual Report on Form 10-K (filed with the Securities and Exchange Commission (the “SEC”) on April 8, 2024.
Any one or more of these uncertainties, risks and other influences could materially affect our results of operations and whether forward-looking statements made by us ultimately prove to be accurate. Our actual results, performance and achievements could differ materially from those expressed or implied in these forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether from new information, future events or otherwise.
Our Company
We are a next-generation advertising technology, data compliance and intelligence company which operates through our three proprietary software platforms in the programmatic advertising industry.
The Programmatic Advertising Industry
Programmatic advertising refers to the automated buying and selling of digital ad space. In contrast to manual advertising, which relies on human interaction and negotiation between publishers and marketers, programmatic ad buying harnesses technology to purchase digital display space. This use of software and algorithms helps streamline ad buying processes, which is why programmatic has become one of the most indispensable digital marketing tools worldwide. In 2023, global programmatic ad spend reached an estimated 558 billion U.S. dollars, with spending set to surpass $700 billion by 2026. The United States remains the leading programmatic advertising market worldwide.
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Our Mission
Our mission is to help enterprises in the programmatic industry become more efficient and effective regarding the monetization of advertising, audience segments and data compliance. We do this by offering three proprietary solutions: Our ATOS platform for brands and agencies, our data intelligence platform for audience segments and targeting, and our publisher platform for privacy compliance and publisher monetization.
Our Opportunity
Due to the recent changes to Privacy Laws, such as GDPR and CCPA, along with Apple and Google’s removal of Identifiers, we believe Publishers are facing two significant issues: increasing costs due to privacy compliance laws and decreasing revenue, due to the lack of audience targeting. We believe there is a major paradigm shift occurring in the market, where user data and the targeting intelligence to use it must shift from middlemen directly to the content publishers. Publishers must own their first party data and manage their audiences’ segments in-house. We believe that irrespective of whether a publisher chooses to work with us or not, they need to find a solution that allows advertisers to buy directly from them.
Our Solutions
Programmatic Advertising Platform
Our advertising technology operating system (or ATOS) platform is a single-vendor end-to-end solution that blends artificial intelligence (or AI) and machine learning (or ML)-based optimization technology that automatically serves advertising and manages digital advertising campaigns. Our ATOS platform engages with approximately 10 billion advertisement opportunities per day.
As an automated programmatic ecosystem, ATOS increases speed and performance, by providing dynamic technology that scales in real-time. It is this proprietary cloud-based architecture that keeps costs down and allows us to pass along savings to our customers. Also, by offering more of the features inherent in a digital advertising campaign and removing the need for third-party integration of those features, we believe that our ATOS platform can be substantially more time efficient and cost efficient than other Demand-Side Platforms (or DSPs). Our ATOS platform also decreases the effective cost basis for users by integrating all the necessary capabilities at no additional cost as compared to the costs to outsource these capabilities to one or more providers in a fragmented ecosystem. DSP and bidding technologies, AdCop™ Fraud Protection, rich media and ad serving, attribution, reporting dashboard and DMP are all included in our ATOS platform.
Data Intelligence Platform
Our data intelligence platform provides precise data and insights on consumer’s real-world behavior and trends for use in marketing and research. Our management believes, based on our experience in the industry, that we provide one of the most accurate and scaled solutions for data collection and analysis, utilizing multiple internally developed proprietary technologies.
We provide our data intelligence platform to our customers on a managed services basis, and offer a self-service alternative through our MobiExchange product, which is a software-as-a-service (or SaaS) fee model. MobiExchange is a data-focused technology solution that enables users to rapidly build actionable data and insights for its own use. MobiExchange’s easy-to-use, self-service tools allow anyone to reduce the complex technical and financial barriers typically associated with turning offline data, and other business data, into actionable digital products and services. MobiExchange provides out-of-the box private labeling, flexible branding, content management, user management, user communications, subscriptions, payment, invoices, reporting, gateways to third party platforms, and help desk, among other things.
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Publisher Platform for Monetization and Compliance
Our content publisher platform is a single-vendor ad tech operating system that allows publishers to better monetize their opt-in user data and advertising inventory. The platform includes tools for: consent management, audience building, a direct advertising interface and inventory enhancement. Our publisher platform provides content publishers with the functionality to use its user identifier data to create inventories of profiled data segments and to target audiences with advertising using that data, in a data privacy compliant manner.
Our Revenue Sources
We target publishers, brands, advertising agencies and other advertising technology companies as our audience for our three platform products. Our sales and marketing strategy is focused on providing a de-fragmented operating system that facilitates a considerably more efficient and effective way for advertisers and publishers to transact with each other. Our goal is to become the programmatic display advertising industry standard for small and medium sized advertisers. We generate revenue from our platforms through two verticals:
| · | The first is licensing one or more of our platforms as a white-label product for use by advertising agencies, demand-side platforms (or DSP’s), brands and publishers. Under the white-label scenario, the user licenses a platform from us and is responsible for running its own business operations and is billed a percentage of amounts spent on advertising run through the platform. | |
| · | The third revenue stream is a managed services model, in which, the user is billed a higher percentage of revenue run through a platform, but all services are managed by us. |
Critical Accounting Policies
Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States (U.S. GAAP). The preparation of financial statements requires management to make estimates and disclosures on the date of the financial statements. On an on-going basis, we evaluate our estimates including, but not limited to, those related to revenue recognition. We use authoritative pronouncements, historical experience, and other assumptions as the basis for making judgments. We believe that the following critical accounting policies affect our more significant judgments and estimates in the preparation of our financial statements.
Use of Estimates
Preparing financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reported periods. Actual results could differ from those estimates, and those estimates may be material.
Risks and Uncertainties
The Company operates in an industry that is subject to intense competition and changes in consumer demand. The Company’s operations are subject to significant risks and uncertainties including financial and operational risks including the potential risk of business failure.
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The Company has experienced, and in the future expects to continue to experience, variability in sales and earnings. The factors expected to contribute to this variability include, among others, (i) the cyclical nature of the industry, (ii) general economic conditions in the various local markets in which the Company competes, including a potential general downturn in the economy, and (iii) the volatility of prices in connection with the Company’s distribution of the product. These factors, among others, make it difficult to project the Company’s operating results on a consistent basis.
Fair Value of Financial Instruments
The Company accounts for financial instruments at fair value, which as is defined as the exchange price that would be received to sell an asset or paid to transfer a liability (exit price) in an orderly transaction between market participants at the measurement date. The valuation techniques are based on observable and unobservable inputs. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect certain market assumptions. There are three levels of inputs that may be used to measure fair value:
| · | Level 1—Valuation based on unadjusted quoted market prices for identical assets or liabilities in active markets that the Company has the ability to access; | |
| · | Level 2—Valuation based on observable quoted prices for similar assets and liabilities in active markets; and | |
| · | Level 3—Valuation based on unobservable inputs that are supported by little or no market activity, which require management’s best estimate of what market participants would use as fair value. |
Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management.
The respective carrying value of certain on-balance-sheet financial instruments approximated their fair value. These financial instruments include accounts receivable, accounts payable, accrued interest – related party, and accrued expenses, and contract liabilities. On September 30, 2024, the carrying amounts of these financial instruments approximated their fair values due to the short-term nature of these instruments, or they are receivable or payable on demand. The fair value of the Company’s debt approximates its carrying value based on the current financing rates available to the Company and its short-term nature.
The Company does not have any other financial or non-financial assets or liabilities that would be characterized as Level 1, Level 2, or Level 3 instruments.
Accounts Receivable
Accounts receivable represent customer obligations under normal trade terms and are stated at the amount management expects to collect from outstanding customer balances. Credit is extended to customers based on an evaluation of their financial condition and other factors. Interest is not accrued on overdue accounts receivable. The Company does not require collateral.
Management periodically assesses the Company’s accounts receivable and, if necessary, establishes an allowance for credit losses. The Company provides an allowance for credit losses based upon a review of the outstanding accounts receivable, historical collection information and existing economic conditions. Accounts determined to be uncollectible are charged to operations when that determination is made.
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Provision for credit losses expense (recovery) is recorded as a component of general and administrative expenses in the consolidated statements of operations.
Impairment of Long-lived Assets
Management evaluates the recoverability of the Company’s identifiable intangible assets and other long-lived assets when events or circumstances indicate a potential impairment exists, in accordance with the provisions of ASC 360-10-35-15 Impairment or Disposal of Long-Lived Assets. Events and circumstances considered by the Company in determining whether the carrying value of identifiable intangible assets and other long-lived assets may not be recoverable include but are not limited to significant changes in performance relative to expected operating results; significant changes in the use of the assets; significant negative industry or economic trends; and changes in the Company’s business strategy. In determining if impairment exists, the Company estimates the undiscounted cash flows to be generated from the use and ultimate disposition of these assets and compares this to the carrying amounts of the assets.
If impairment is indicated based on a comparison of the assets’ carrying values and the undiscounted cash flows, the impairment to be recognized is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets.
Revenue Recognition
The Company recognizes revenue in accordance with Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers (ASC 606) to align revenue recognition more closely with the delivery of the Company’s services and will provide financial statement readers with enhanced disclosures. In accordance with ASC 606, revenue is recognized when a customer obtains control of promised services. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for these services. To achieve this core principle, the Company applies the following five steps:
Identify the contract with a customer.
A contract with a customer exists when (i) the Company enters into an enforceable contract with a customer that defines each party’s rights regarding the services to be transferred and identifies the payment terms related to these services, (ii) the contract has commercial substance and, (iii) the Company determines that collection of substantially all consideration for services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration. The Company applies judgment in determining the customer’s ability and intention to pay, which is based on a variety of factors including the customer’s historical payment experience or, in the case of a new customer, published credit and financial information pertaining to the customer.
Identify the performance obligations in the contract.
Performance obligations promised in a contract are identified based on the services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the service either on its own or together with other resources that are readily available from third parties or from the Company, and are distinct in the context of the contract, whereby the transfer of the services is separately identifiable from other promises in the contract. To the extent a contract includes multiple promised services, the Company must apply judgment to determine whether promised services are capable of being distinct and distinct in the context of the contract. If these criteria are not met the promised services are accounted for as a combined performance obligation.
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Determine the transaction price.
The transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring services to the customer. To the extent the transaction price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price utilizing either the expected value method or the most likely amount method depending on the nature of the variable consideration. Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur.
Allocate the transaction price to performance obligations in the contract.
If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. However, if a series of distinct services that are substantially the same qualifies as a single performance obligation in a contract with variable consideration, the Company must determine if the variable consideration is attributable to the entire contract or to a specific part of the contract. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative standalone selling price basis unless the transaction price is variable and meets the criteria to be allocated entirely to a performance obligation or to a distinct service that forms part of a single performance obligation.
Recognize revenue when or as the Company satisfies a performance obligation.
The Company satisfies performance obligations either overtime or at a point in time. Revenue is recognized at the time the related performance obligation is satisfied by transferring a promised service to a customer.
Each of the Company’s customer contracts is deemed to have a single performance obligation. Payment terms and conditions vary by contract, although terms generally include a requirement of payment within 30 to 90 days.
Stock-Based Compensation
The Company accounts for our stock-based compensation under ASC 718 Compensation – Stock Compensation using the fair value-based method. Under this method, compensation cost is measured at the grant date based on the fair value of the award and is recognized over the requisite service period, which is generally the vesting period. This guidance establishes standards for the accounting for transactions in which an entity exchanges equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments.
The Company uses the Black-Scholes model for measuring the fair value of options and other equity instruments granted to both employees and non-employees.
When determining fair value of stock-based compensation, the Company considers the following assumptions incorporated into the Black-Scholes model:
| · | Exercise price, | |
| · | Expected dividends, | |
| · | Expected volatility, | |
| · | Risk-free interest rate; and | |
| · | Expected life of option |
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Recently Adopted Accounting Pronouncements
We consider the applicability and impact of all new accounting pronouncements on our consolidated financial position, results of operations, stockholders’ equity, cash flows, or presentation thereof. Management has evaluated all recent accounting pronouncements as issued by the Financial Accounting Standards Board (FASB) through the date their consolidated financial statements were available to be issued and found no recent accounting pronouncements issued, but not yet effective, that when adopted, will have a material impact on the consolidated financial statements of the Company.
Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions: On September 30, 2022, the FASB issued ASU 2022-03 (ASU 2022-03), which clarifies the guidance in Topic 820 on the fair value measurement of an equity security that is subject to contractual restrictions that prohibit the sale of an equity security. The ASU also requires specific disclosures related to such an equity security, including (1) the fair value of such equity securities reflected in the balance sheet, (2) the nature and remaining duration of the corresponding restrictions, and (3) any circumstances that could cause a lapse in the restrictions. ASU 2022-03 clarifies that a “contractual restriction prohibiting the sale of an equity security is a characteristic of the reporting entity holding the equity security” and is not included in the equity security unit of account. Accordingly, an entity should not consider the contractual sale restriction when measuring the equity security’s fair value (i.e., the entity should not apply a discount related to the contractual sale restriction, as stated in ASC 820-10-35-36B as amended by the ASU). The ASU also prohibits an entity from recognizing a contractual sale restriction as a separate unit of account. For public business entities, ASU 2022-03 is effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years, with early adoption permitted. The adoption of ASU 2022-03, effective January 1, 2024, did not have an impact on the Company’s consolidated financial statements and related disclosures.
Financial Instrument – Credit Losses: In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (ASU 2016-13). ASU 2016-13 replaces the incurred loss impairment methodology under current GAAP with a methodology that reflects expected credit losses and requires a consideration of a broader range of reasonable and supportable information to inform credit loss estimates. ASU 2016-13 requires the use of a forward-looking expected credit loss model for accounts receivables, loans, and other financial instruments. In May 2019, the FASB issued ASU 2019-05, which provides transition relief for entities adopting ASU 2016-13. For entities that have adopted ASU 2016-13, the amendments in ASU 2019-05 are effective for fiscal years beginning after December 15, 2019, including interim periods therein. An entity may adopt ASU No. 2019-05 in any interim period after its issuance if the entity has adopted ASU 2016-13. For all other entities, the effective date will be the same as the effective date of ASU 2016-13. ASU 2016-13 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company adopted ASU 2016-13 on January 1, 2023, and the adoption of the guidance did not have a significant impact on its consolidated financial statements and disclosures.
Accounting for Contract Assets and Contract Liabilities from Contracts with Customers: In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (ASU 2021-08). Under ASU 2021-08, an acquirer in a business combination must apply ASC 606 principles when recognizing and measuring acquired contract assets and contract liabilities. The provisions of ASU 2021-08 are applicable for the Company for fiscal years and interim periods beginning after December 15, 2022. The Company adopted ASU 2021-08 on January 1, 2023, and the adoption of the guidance did not have a significant impact on its consolidated financial statements and disclosures.
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Plan of Operation
Mobiquity intends to hire several new sales and sales support individuals to help generate additional revenue using the Advangelists platform, our new Publisher Platform, and the Mobiquity Networks MobiExchange. Mobiquity’s sales team will focus on Advertising Agencies, Brands, and publishers to help increase both supply and demand across the Advangelists platform while providing unique data segments utilizing MobiExchange. Together the Advangelists platform and MobiExchange platform create multiple revenue streams for Mobiquity. The first is licensing the Advangelists platform as a white-label product for use by Advertising Agencies, DSP’s, Publishers, and Brands. Under the White-Label scenario, the user licenses the technology and is responsible for running its own business operations and is billed a percentage of volume run through the platform. The third revenue stream is a managed services model in which the user is billed a higher percentage of revenue run through the platform, but all services are managed by the Mobiquity/Advangelists team. The third revenue model is a seat model, where the user is billed a percentage of revenue run through the platform and business operations are shared between the user and the Mobiquity/Advangelists team. Additional revenue can be generated by offering data segments and digital audiences through MobiExchange for use in omnichannel marketing programs that include but not limited to programmatic advertising email marketing and SMS. The goal of the sales team is to inform potential users of the benefits in efficiency and effectiveness of utilizing the end-to-end, fully integrated ATOS created by Advangelists and Mobiquity Networks. New sales and support individuals are also needed to generate revenue for our new Publisher Platform. The target audiences for this platform will be website publishers, application publishers, Connected TV (CTV) publishers and Supply-Side Platform (SSP) operators.
Results of Operations
Quarter ended September 30, 2024, versus quarter ended September 30, 2023
The following table sets forth certain selected statements 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.
| Three Months Ended | ||||||||
| September 30, 2024 | September 30, 2023 | |||||||
| Revenues | $ | 566,044 | $ | 177,271 | ||||
| Cost of revenues | 230,296 | 114,174 | ||||||
| Gross profit | 335,748 | 63,097 | ||||||
| Total operating expenses | 1,314,839 | 1,458,136 | ||||||
| Loss from operations | $ | (979,091 | ) | $ | (1,395,039 | ) | ||
We generated revenues of $566,044 in the third quarter of 2024 compared to $177,271 for the same period of 2023, an increase of $388,773, or 219%. The increase can be directly attributed to the uptick of political revenue in 2024. The Company has developed several new features which we believe will help grow revenue throughout the remainder of 2024 and beyond.
Cost of revenues was $230,296 or 41% of revenues in the third quarter of 2024 as compared to $114,174 or 64% of revenues in the same fiscal period of 2023. Costs of revenues include audience building, targeting features and 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 revenues.
Gross profit was $335,748 or 59% of revenues for the third quarter of 2024 as compared to $63,097 in the same period of 2023 or 36% of revenues.
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Operating expenses were $1,314,839 in the third quarter of 2024 compared to $1,458,136 in the comparable period of the prior year, a decrease of $143,297, or 10%. The decrease in operating costs was primarily related to a decrease in professional fees of approximately $130,000 and a decrease in licenses and permits of approximately $12,000.
The loss from operations for the third quarter of 2024 was $979,091 as compared to $1,395,039 for the comparable period of the prior year. Our losses from operations decreased by approximately $416,000, or 30%, driven in part by professional fees and licenses and permits as stated above, $150,000 in amortization costs and $173,000 decrease in operating expenses is related to the Company’s capitalization of net software development costs during the third quarter of 2024 related to the development of new products. These costs were primarily internal salaries for technological engineers, and external consultant costs. Similar projects were under development during the third half of 2023. The continuing operating loss is attributable to the focused effort in creating the products and services required to move forward with our business.
Nine Months ended September 30, 2024, versus nine months ended September 30, 2023
The following table sets forth certain selected statements 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.
| Nine Months Ended | ||||||||
| September 30, 2024 | September 30, 2023 | |||||||
| Revenues | $ | 1,096,218 | $ | 441,010 | ||||
| Cost of revenues | 625,690 | 281,071 | ||||||
| Gross profit | 470,528 | 159,939 | ||||||
| Total operating expenses | 3,520,726 | 4,421,863 | ||||||
| Loss from operations | $ | (3,050,198 | ) | $ | (4,261,924 | ) | ||
We generated revenues of $1,096,218 in the first nine months of 2024 compared to $441,010 for the same period of 2023, an increase of $655,208, or 149%. The increase can be directly attributed to the uptick of political revenue in 2024. The Company has developed several new features which we believe will help grow revenue throughout the remainder of 2024 and beyond.
Cost of revenues was $625,690 or 57% of revenues in the first nine months of 2024 as compared to $281,071 or 64% of revenues in the same fiscal period of 2023. Costs of revenues include audience building, targeting features and 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 revenues.
Gross profit was $470,528 or 43% of revenues for the first nine months of 2024 as compared to $159,939 in the same period of 2023 or 36% of revenues.
Operating expenses were $3,520,726 in the first nine months of 2024 compared to $4,421,863 in the comparable period of the prior year, a decrease of $901,137, or 20%. The decrease in operating costs was primarily related to a decrease in professional fees of approximately $663,000, license and permits of approximately $150,000.
The loss from operations for the first nine months of 2024 was $3,050,198 as compared to $4,261,924 for the comparable period of the prior year. Our loss from operations decreased by approximately $1,200,000, or 28%, driven in part by amortization costs of $309,000, professional fees and licenses and permits as stated above. The decrease in operating expenses is related to the Company’s capitalization of net software development costs during the first nine months of 2024 related to the development of new products. These costs were primarily internal salaries for technological engineers, and external consultant costs. Similar projects were under development during the first nine months of 2024. The continuing operating loss is attributable to the focused effort in creating the products and services required to move forward with our business.
On November 12, 2024, we announced the expansion of our strategic partnership with Context Networks and the rollout of their advanced ad tech solution for casinos, seamlessly integrating digital ads into slot machines to enhance player engagement. This innovative approach not only transforms the in-casino experience but also extends advertising across mobile and CTV platforms, reconnecting with players after they leave. With plans for a broader rollout, we believe this technology is poised to set a new standard in multi-platform advertising within the gaming industry. Furthermore, management believes that the aforementioned strategic partnership will have a material impact on our results of operations in fiscal 2025 and beyond.
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Liquidity and Capital Resources
We have a history of operating losses, and our management has concluded that factors raise substantial doubt about our ability to continue as a going concern and our auditor has included an explanatory paragraph relating to our ability to continue as a going concern in its audit report for the fiscal year ended December 31, 2023.
The Company had cash of $189,810 at September 30, 2024. Cash used in operating activities for the nine months ended September 30, 2024, was $1,798,860. This resulted primarily from a net loss of $2,918,723 offset by stock-based compensation of $1,410, amortization of intangible assets and capitalized software development costs of $206,113, increase in accounts receivable of $202,815, an increase in accounts payable and accrued expenses of $630,497, issuance of common stock and warrants for services rendered of $749,152, provision for credit losses of $92,779, amortization of debt discounts of $265,556, decrease in contract liabilities of $118,025, and an income tax benefit of $59,324. Cash used in investing activities was related to the development of new software of $1,444,396. Cash flows provided by financing activities of $2,904,794 were related to repayment of debt of $574,746 offset by net proceeds received from the sale of common stock of $2,237,000 and proceeds from the issuance of debt of $1,242,546 and the repayments on notes payable, net of issuance costs.
The Company had cash of $140,939 at September 30, 2023. Cash used in operating activities for the nine months ended September 30, 2023, was $3,732,469. This resulted primarily from a net loss of $5,220,014 offset by stock-based compensation of $22,295, amortization of intangible assets and capitalized software development costs of $515,364, decrease in accounts receivable of $165,331, a decrease in accounts payable and accrued expenses of $626,415, loss on debt extinguishment of $396,322, amortization of debt discounts of $738,142, and an income tax benefit of $180,000. Cash used in investing activities was related to the development of new software of $1,507,045. Cash flows provided by financing activities of $5,159,599 were related to repayment of debt of $1,587,500 offset by net proceeds received from the sale of common stock and pre-funded warrants of $5,735,499 and proceeds from the issuance of debt of $1,011,500, net of issuance costs.
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 2024 and beyond until cash flow from our proximity marketing operations becomes substantial.
Debt and Equity Transactions
See Notes 4, 5, and 9 to the consolidated financial statements herein for a complete description of various debt and equity transactions in the periods covered by this report.
Off-Balance Sheet Arrangements
As of September 30, 2024, we did not have any off-balance-sheet arrangements, as defined in Item 303(a)(4)(ii) of Regulation S-K.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable
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ITEM 4. CONTROLS AND PROCEDURES
As required by Rules 13a-15 and 15d-15 under the Exchange Act, our Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of the disclosure controls and procedures as of each fiscal year and quarter. Based upon this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were not effective as of September 30, 2024, due primarily to the Company’s lack of segregation of duties in the finance and accounting department similar to other companies our size.
We maintain disclosure controls and procedures, which are designed to ensure that information required to be disclosed in the reports we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.
There were changes in the Company’s internal control over financial reporting during the most recently completed fiscal year, which includes the integration of the new staff, that have materially affected or are reasonably likely to materially affect the Company’s internal control over financial reporting.
We performed additional analysis as deemed necessary to ensure that our financial statements were prepared in accordance with U.S. generally accepted accounting principles. Accordingly, the management believes that the financial statements included in this Form 10-Q present fairly in all material respects our financial position, results of operations and cash flows for the period presented.
Continuing Internal Controls Remediation Efforts
During fiscal 2022 the Company identified control gaps and deficiencies. The Company continues to mitigate and remediate the gaps, deficiencies, and material weaknesses in its internal controls. The Board of Directors and The Audit Committee, as a priority, initiated these remediation activities to ensure the Company has proper internal controls over financial reporting and corporate governance. The Company has instituted independent monitoring and testing of these aforementioned controls. These procedures were applied during fiscal 2023 and will continue in fiscal 2024, with mitigation and revision of controls continuing to be an ongoing process. Management has decided to defer the allocation of the additional talent necessary for the full implementation of the planned remediations until late fiscal 2024. The Company has instituted detective controls as well as independent monitoring and testing of these aforementioned controls, which gives management comfort that reporting represents the financial results of the Company in all material respects.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
Michael Trepeta, a former Co-CEO and director of the Company, filed a lawsuit against the Company and its subsidiary, Mobiquity Networks in April 2023 in the New York State Supreme Court, Nassau County. The claims stem from a Separation Agreement and Release that Mr. Trepeta and the Company entered into nine years ago in April 2017 which terminated Mr. Trepeta’ s employment agreement and discontinued his employment and directorship with the Company, among other things, by mutual agreement. Mr. Trepeta also gave the Company a release in the Separation Agreement and Release. Mr. Trepeta has claimed that the Company fraudulently induced him to enter into the Separation Agreement and Release; that the Company breached Mr. Trepeta’ s employment agreement; and that the Company breached its covenant of good faith and fair dealing and its fiduciary duty. Mr. Trepeta is claiming not less than $2.5 million in damages. Based on the Company’s initial internal review of the situation, the Company believes the claims lack merit and it intends to vigorously defend the same. In December 2023, the Company was notified that its motion to dismiss Mr. Trepeta’s action was granted but Mr. Trepeta has filed a notice of appeal. Due to uncertainties inherent in litigation, the Company cannot predict the outcome of this matter at this time.
ITEM 1A. RISK FACTORS
Incorporated by reference are the risk factors contained in our Form 10-K for the fiscal year ended December 31, 2023.
ITEM 2. CHANGES IN SECURITIES.
RECENT SALES OF UNREGISTERED SECURITIES
(a) For fiscal 2023 and 2024, we had no sales or issuances of unregistered capital stock, except as described 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 | |||||
| 2023 | Common Stock | 291,891 shares | Services rendered | Rule 506, Section 4(2) | Not applicable | |||||
| 2023 | Common Stock |
626, 844 shares 2,448,427 warrants |
Shares sold for cash | Rule 506, Section 4(2) | Warrant exercise price ranging from $1.50 to 6.975 per share | |||||
| 2023 | Common Stock | 34, 849 shares | Original issue discount | Section 3 (a)(9) | Not applicable | |||||
| 2023 | Common Stock | 2,314,026 shares | Warrant conversion | Section 3 (a)(9) | Each warrant exercise price $6.975 | |||||
| 2023 | Common Stock | 92,378 shares | Interest conversion | Rule 506, Section 4(2) | Not applicable | |||||
| Jan-September 2024 |
Common Stock |
4,347,334 shares | Shares sold for cash |
Rule 506, Section 4(2) |
Not applicable | |||||
|
Jan-September 2024 |
Common Stock |
223,526 shares | Services rendered | Rule 506, Section 4(2) | Not applicable | |||||
|
Jan-September 2024 |
Common Stock |
7,684,730 shares |
Conversion of Series H Preferred stock |
Section 3 (a)(9) | Not applicable | |||||
|
Jan-September 2024 |
Common Stock |
158,840 |
Conversion of Series H Preferred dividends |
Section 3 (a)(9) | Not applicable |
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In April 2023, the Board of Directors or the Compensation Committee of the Company’s Board of Directors approved the following transactions:
| · | Grant of 6,667 shares of restricted common stock to Gene Salkind, Chairman of the Board, for services previously rendered, based on a per share value of $2.505. | |
| · | Grant of 3,333 shares of restricted common stock each to the Company’s CEO and another member of the Board of Directors for services as directors of the Company. | |
| · | Grant of 2,000 shares of common stock to Gene Salkind as payment for accrued and unpaid interest of approximately $5,000 based on a per share value of $2.505. | |
| · | Grant of 4,791 shares of restricted common stock to the Company’s legal counsel as payment for accrued and unpaid services valued at $12,000 and $2.505 per share. | |
| · | Issuance of a total of 31,891 shares of restricted common stock at a per share value of $2.52 as payment and full settlement of outstanding accounts payable with a total carrying amount of $80,411. |
Share prices used in the above transaction were based on the market price of the Company’s common stock on the consummation dates of the transactions.
Salkind October 2023 Loan Conversion and Series G Preferred Stock Issuance
Effective November 7, 2023, Mr. Gene Salkind and parties associated with him (the Series G Preferred Shareholders), invested $1,503,495 into the Company’s newly created Series G Preferred Stock, formalized through three Subscription Agreements for the sale of a combined 300,789 shares of Series G Preferred Stock for total cash proceeds of $1,200,000, plus the conversion of $300,000 in principal and $3,495 in accrued interest from the Salkind October 2023 Loan (see Note 4). Each share of the Series G Preferred Stock is convertible by the Series G Preferred Shareholders at any time after issuance into ten (10) shares of the Company’s Common Stock, or $0.50 per Common Share (Series G Conversion Ratio). The Series G Preferred Stock will automatically convert at the same Series G Conversion Ratio upon the Company’s Common Stock reporting of a closing sales price over $5.00 per share for ten (10) consecutive trading days. The Company did not pay any commissions or other compensation to any third party in connection with the transactions reported herein. Exemption from registration is claimed under section 4(2) of the Securities Act of 1933, as amended.
Series H Preferred Stock Issuances
On December 18, 2023, the Series G Preferred Shareholders agreed to exchange all 300,789 of the Series G Preferred Stock into 751,730 shares of the Company’s newly created Series H Preferred Stock. Also, our legal counsel agreed to exchange $33,000 of monies owed to the law firm for 16,500 shares of Series H Preferred Stock. Each share of the Series H Preferred Stock is convertible at any time after issuance into ten (10) shares of the Company’s Common Stock, or $0.20 per Common Share (Series H Conversion Ratio). The Series H Preferred Stock will automatically convert at the same Series H Conversion Ratio upon the Company’s Common Stock reporting of a closing sales price over $2.00 per share for ten (10) consecutive trading days or on December 31, 2026, whichever is earlier. The Company did not pay any commissions or other compensation to any third party in connection with the transactions reported herein. Exemption from registration is claimed under section 3(a)(9) of the Securities Act of 1933, as amended. During the quarter ended September 30, 2024, all outstanding shares of Series H Preferred Stock were converted into shares of the Company’s common stock, as discussed above.
Issuance of Common Stock for Settlement of Liabilities
In January 2024, the Company issued 100,000 shares of its common stock at a per share price of $0.53 in full settlement of vendor liabilities outstanding at an amount equal to $53,000. In March 2024, the Company issued 18,000 shares of its common stock in settlement of outstanding vendor liabilities at an amount equal to $12,000 stock at per share prices ranging from $0.50 to $1.00. In the third quarter of 2024, corporate counsel converted $18,000 of accrued liabilities into common stock at a conversion price of $0.50 per share.
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Issuance of Common Stock for Cash
During the first nine months of 2024, the Company raised a total of $2,237,000 in cash from various accredited investors in conjunction with common stock subscription agreements, resulting in the issuance of a total of 4,347,334 shares at per share prices ranging from $0.30 to $0.60. In the third quarter of 2024, the Company raised a total of $675,000 in cash from various accredited investors in conjunction with common stock subscription agreements, resulting in the issuance of 1,100,000 shares at per share prices ranging from $0.50 to $1.00.
Issuance of Common Stock Warrant for Services
During June 2024, the Company entered into a consulting agreement with an unrelated party for general business consulting services. The term of the agreement is for twelve months, commencing in June 2024. Compensation under the agreement included an upfront payment of $25,000 in cash, and the issuance of 100,000 common stock warrants, exercisable through June 2027, at an exercise price of $0.50 per share. The consultant also receives a monthly fee of $5,000. The fair value of the warrants at issuance was $171,800, which is being amortized, along with the upfront payment, through general and administrative expenses, straight-line, over the twelve-month service period. In September 2024, the Company amended the consulting agreement to increase the monthly cash compensation to $10,000 and to issue additional warrants to purchase a total of 150,000 shares of common stock exercisable over a three-year period. The 150,000 warrant shares consist of 100,000 exercisable at $0.50 per share and 50,000 exercisable at $1.00 per share through September 10, 2027. The new warrants issued in September 2024 were fair valued at a total of $446,200, which was recorded as prepaid assets and is being amortized through general and administrative expense straight-line over the remaining 10 months of the agreement term. Total expense recognized related to the upfront payment and issued warrants was approximately $94,000 and $110,000 for the three and nine months ended September 30, 2024, respectively.
Treasury Stock
In the three months ended March 31, 2024, the Company repurchased 17 shares of common stock in the first quarter of March 31,2024 for an insignificant amount of money, recorded as treasury stock. There were no repurchases of the Company’s common stock for the year ended December 31, 2023, or the quarter ended September 30, 2024.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not applicable.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
ITEM 5. OTHER INFORMATION.
During the quarter ended September 30, 2024, no
director or officer of the Company
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ITEM 6. EXHIBITS
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| 48 |
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__________________
| * | Filed herewith. |
| ** | Filed with form 10-K for fiscal year ended December 31, 2023 |
| *** | Previously filed under Form S-1 Registration Statement, File No. 333-260364. |
| **** | Previously filed under Form S-1 Registration Statement File No. 333-269293. |
| ***** | Previously filed under Form S-1 Registration Statement File No. 333-272572 |
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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: November 14, 2024 | By: | /s/ Dean L. Julia |
| Dean L. Julia, | ||
| Principal Executive Officer | ||
| Date: November 14, 2024 | By: | /s/ Sean McDonnell |
| Sean McDonnell, | ||
| Principal Financial Officer | ||
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