UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)


☒x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, ~~2017~~2021


☐¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to __________

Commission file number 000-53851

Mobivity Holdings Corp.

(Exact Name of Registrant as Specified in Its Charter)


Nevada		26-3439095
(State or Other Jurisdiction of		(I.R.S. Employer
Incorporation or Organization)		Identification No.)

~~55 N. Arizona Place, Suite 310~~3133 West Frye Road, # 215

Chandler, Arizona ~~85225~~85226

~~(Address~~(Address of Principal Executive Offices & Zip Code)

(877) 282-7660

(Registrant’s Telephone Number)

N/A

(Former name, former address, and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading symbol(s)	Name of each exchange on which registered
None	None	None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),

and (2) has been subject to such filing requirements for the past 90 days. Yes ☒x No ☐¨

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes ☒x No ☐¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐¨	Accelerated filer	~~Accelerated filer~~	☐¨
Non-accelerated filer	~~☐ (Do not check if a smaller reporting company)~~x		Smaller reporting company	☒x
		Emerging Company	~~Emerging Company~~	☐

				¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐¨ No ☒x

As of ~~October 31, 2017,~~November 15, 2021, the registrant had ~~36,756,880~~55,410,695 shares of common stock, par value $0.001, of the registrant issued and outstanding.

‎

~~MOBIVITY~~MOBIVITY HOLDINGS CORP.

~~INDEX~~

TABLE OF CONTENTS

~~-i-~~

~~Table of Contents~~PART I – FINANCIAL INFORMATION

Pa~~rt I - Financial Information~~

ItemItem 1. Financial Statements

Mo~~bivity~~

Mobivity Holdings Corp.

Condensed Consolidated Balance Sheets



	September 30,		December 31,
	2021		2020
	(Unaudited)		(Audited)
ASSETS
Current assets
Cash	$	568,896	$	3,282,820
Accounts receivable, net of allowance for doubtful accounts of $44,386 and $33,848, respectively		1,635,438		305,693
Contracts receivable, current		943,904		943,904
Other current assets		168,685		272,736
Total current assets		3,316,923		4,805,153
Goodwill		496,352		496,352
Right to use lease assets		1,242,264		57,482
Intangible assets, net		1,253,496		1,368,329
Contracts receivable, long term		707,928		1,415,856
Other assets		181,602		25,230
TOTAL ASSETS	$	7,198,565	$	8,168,402
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities
Accounts payable	$	3,303,438	$	1,935,411
Accrued interest		72,896		47,316
Accrued and deferred personnel compensation		483,804		224,881
Deferred revenue and customer deposits		495,287		606,597
Related party notes payable		333,333		80,000
Notes payable, net - current maturities		101,481		561,676
Operating lease liability		195,270		58,173
Other current liabilities		431,027		566,303
Total current liabilities		5,416,536		4,080,357

Non-current liabilities
Related party notes payable, net - long term		1,552,112		—
Notes payable, net - long term		78,623		1,499,001
Operating lease liability		1,247,395		13,296
Other long term liabilities		415,767		831,535
Total non-current liabilities		3,293,897		2,343,832
Total liabilities		8,710,433		6,424,189

Stockholders' equity (deficit)
Common stock, $0.001 par value; 100,000,000 shares authorized; 55,410,695 and 55,410,695, shares issued and outstanding		55,411		55,411
Equity payable		100,862		100,862
Additional paid-in capital		102,063,155		101,186,889
Accumulated other comprehensive income (loss)		(45,837)		(23,446)
Accumulated deficit		(103,685,459)		(99,575,503)
Total stockholders' equity (deficit)		(1,511,868)		1,744,213
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)	$	7,198,565	$	8,168,402

September 30,

December 31,

2017

2016

(Unaudited)

(Audited)
ASSETS

Current assets

Cash

$
1,709,129

$
1,188,485
Restricted cash

-

1,000,000
Accounts receivable, net of allowance for doubtful accounts of $1,425 and $15,503, respectively

1,412,333

1,244,484
Other current assets

286,407

179,376
Total current assets

3,407,869

3,612,345
Goodwill

803,118

803,118
Intangible assets, net

773,785

627,119
Other assets

83,262

109,776
TOTAL ASSETS

$
5,068,034

$
5,152,358
LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities

Accounts payable

$
1,053,075

$
701,347
Accrued interest

3,060

2,020
Accrued and deferred personnel compensation

420,352

671,677
Deferred revenue and customer deposits

2,124,441

160,023
Notes payable, net - current maturities

2,275,069

1,011,910
Other current liabilities

95,548

115,051
Total current liabilities

5,971,545

2,662,028

Non-current liabilities

Notes payable, net - long term

255,104

361,166
Total non-current liabilities

255,104

361,166
Total liabilities

6,226,649

3,023,194
Commitments and Contingencies (See Note 9)

Stockholders' equity

Common stock, $0.001 par value; 100,000,000 shares authorized; 36,756,880 and 36,388,981, shares issued and outstanding

36,757

36,389
Equity payable

100,862

100,862
Additional paid-in capital

77,613,550

76,698,383
Accumulated other comprehensive loss

(69,157)

(32,999)
Accumulated deficit

(78,840,627)

(74,673,471)
Total stockholders' equity

(1,158,615)

2,129,164
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$
5,068,034

$
5,152,358

See accompanying notes to ~~condensed~~consolidated financial statements.

Mobivity Holdings Corp.

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

(Unaudited)



	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
Revenues
Revenues	$	2,311,548	$	3,180,173	$	7,561,966	$	10,496,827
Cost of revenues		1,008,703		943,292		3,322,639		3,742,615
Gross profit		1,302,845		2,236,881		4,239,327		6,754,212

Operating expenses
General and administrative		1,245,085		889,032		3,491,855		3,138,744
Sales and marketing		978,968		445,273		2,987,411		1,748,892
Engineering, research, and development		678,209		621,442		2,076,194		2,820,525
Impairment of intangible asset		—		—		8,286		—
Depreciation and amortization		182,663		176,127		524,474		534,972
Total operating expenses		3,084,925		2,131,874		9,088,220		8,243,133

Income (loss) from operations		(1,782,080)		105,007		(4,848,893)		(1,488,921)

Other income/(expense)
Interest income		—		309		5		1,220
Other Income		891,103		—		891,103		—
Interest expense		(88,331)		(62,621)		(144,714)		(207,899)
Impairment of intangible assets		—		(3,481)		—		(3,481)
Loss on disposal of fixed assets		—		—		(880)		(3,935)
Foreign currency gain (loss)		(4,329)		247		(6,577)		1,345
Total other income/(expense)		798,443		(65,546)		738,937		(212,750)
Income (loss) before income taxes		(983,637)		39,461		(4,109,956)		(1,701,671)
Income tax expense		—		—		—		—
Net income (loss)		(983,637)		39,461		(4,109,956)		(1,701,671)
Other comprehensive Income (loss), net of income tax
Foreign currency translation adjustments		(13,150)		30,145		(22,391)		(9,072)
Comprehensive Income (loss)	$	(996,787)	$	69,606	$	(4,132,347)	$	(1,710,743)
Net loss per share:
Basic	$	(0.02)	$	—	$	(0.07)	$	(0.03)
Diluted	$	(0.02)	$	—	$	(0.07)	$	(0.03)
Weighted average number of shares:
Basic		55,410,695		51,617,612		55,410,695		51,555,837
Diluted		55,410,695		61,106,633		55,410,695		51,555,837

See accompanying notes to consolidated financial statements (unaudited).

-1-

~~Table of Contents~~

~~Mobivity~~

Mobivity Holdings Corp.

Condensed ~~Consolidated Statements of Income and Comprehensive Income~~

~~(Unaudited)~~

��

Three Months Ended

Nine Months Ended

September 30,

September 30,

2017

2016

2017

2016
Revenues

Revenues

$
2,083,987

$
2,182,750

$
6,436,072

$
6,102,501
Cost of revenues

786,385

564,039

1,943,534

1,473,974
Gross profit

1,297,602

1,618,711

4,492,538

4,628,527

Operating expenses

General and administrative

652,762

1,139,732

2,516,249

3,125,484
Sales and marketing

836,767

1,152,849

2,673,087

3,285,655
Engineering, research, and development

1,177,318

685,311

3,080,037

1,600,377
Depreciation and amortization

105,510

194,419

273,716

501,866
Total operating expenses

2,772,357

3,172,311

8,543,089

8,513,382

Loss from operations

(1,474,755)

(1,553,600)

(4,050,551)

(3,884,855)

Other income/(expense)

Interest income

962

525

2,878

2,278
Interest expense

(62,748)

(25,900)

(115,363)

(52,960)
Foreign currency (loss) gain

(931)

372

(4,120)

1,488
Total other income/(expense)

(62,717)

(25,003)

(116,605)

(49,194)
Loss before income taxes

(1,537,472)

(1,578,603)

(4,167,156)

(3,934,049)
Income tax expense

-

-

-

-
Net loss

(1,537,472)

(1,578,603)

(4,167,156)

(3,934,049)
Other comprehensive loss, net of income tax

Foreign currency translation adjustments

(20,294)

1,696

(36,158)

(43,626)
Comprehensive loss

$
(1,557,766)

$
(1,576,907)

$
(4,203,314)

$
(3,977,675)

Net loss per share - basic and diluted

$
(0.04)

$
(0.05)

$
(0.11)

$
(0.12)
Weighted average number of shares
during the period - basic and diluted

36,683,122

33,059,007

36,488,448

31,965,484

~~See accompanying notes to condensed consolidated financial statements (unaudited).~~

-2-

~~Table of Contents~~

~~Mobivity Holdings Corp.~~

Consolidated Statement of Stockholders’ Equity (Deficit)

(Unaudited)



	Common Stock			Equity		Additional		Accumulated Other		Accumulated			Total Stockholders'	Common Stock			Equity		Additional		Accumulated Other		Accumulated		Total Stockholders'
									Comprehensive					Shares	Dollars		Payable		Paid-in Capital		Comprehensive Loss		Deficit		Equity (Deficit)
	Shares	Dollars		Payable		Paid-in Capital		Loss		Deficit			Equity (Deficit)
Balance, December 31, 2015	28,787,991	$	28,788	$	100,862	$	69,903,527	$	-	$	(65,159,010)	$	4,874,167
Issuance of common stock for acquisition	1,015,000		1,015		-		709,485		-		-		710,500
Issuance of common stock for financing	3,256,000		3,256		-		1,950,344		-		-		1,953,600
Issuance of common stock for warrant conversion	3,329,990		3,330		-		2,535,858		-		-		2,539,188
Balance, December 31, 2019														51,380,969	$	51,381	$	100,862	$	94,781,738	$	8,780	$	(96,657,106)	$	(1,714,345)
Issuance of common stock for options exercised														1,556,459		1,556		—		1,932,411		—		—		1,933,967
Issuance of common stock for warrants exercised														1,359,500		1,360		—		1,639,448		—		—		1,640,808
Issuance of common stock for debt settlement														1,113,767		1,114		—		2,059,354		—		—		2,060,468
Stock based compensation	-		-		-		1,599,169		-		-		1,599,169	—		—		—		773,938		—		—		773,938
Foreign currency translation adjustment	-		-		-		-		(32,999)		-		(32,999)	—		—		—		—		(32,226)		—		(32,226)
Net loss	-		-		-		-		-		(9,514,461)		(9,514,461)	—		—		—		—		—		(2,918,397)		(2,918,397)
Balance, December 31, 2016	36,388,981	$	36,389	$	100,862	$	76,698,383	$	(32,999)	$	(74,673,471)	$	2,129,164
Issuance of common stock for options exercised	104,168		104		-		59,693		-		-		59,797
Issuance of common stock for restricted stock awards	263,731		264		-		(264)		-		-		-
Balance, December 31, 2020														55,410,695	$	55,411	$	100,862	$	101,186,889	$	(23,446)	$	(99,575,503)	$	1,744,213
Fair value of options issued with related party debt														—		—		—		124,388		—		—		124,388
Stock based compensation	-		-		-		855,738		-		-		855,738	—		—		—		751,878		—		—		751,878
Foreign currency translation adjustment	-		-		-		-		(36,158)		-		(36,158)	—		—		—		—		(22,391)		—		(22,391)
Net loss	-		-		-		-		-		(4,167,156)		(4,167,156)	—		—		—		—		—		(4,109,956)		(4,109,956)
Balance, September 30, 2017	36,756,880	$	36,757	$	100,862	$	77,613,550	$	(69,157)	$	(78,840,627)	$	(1,158,615)
Balance, September 30, 2021														55,410,695	$	55,411	$	100,862	$	102,063,155	$	(45,837)	$	(103,685,459)	$	(1,511,868)

See accompanying notes to ~~condensed~~ consolidated financial statements (unaudited).

‎

-3-

~~Table of Contents~~

~~Mobivity~~Mobivity Holdings Corp.

Condensed Consolidated Statements of Cash Flows

(Unaudited)



	Nine Months Ended
	September 30,
	2021		2020
OPERATING ACTIVITIES
Net loss	$	(4,109,956)	$	(1,701,671)
Adjustments to reconcile net loss to net cash used in operating activities:
Bad debt expense		72,773		27,819
Stock-based compensation		751,878		509,214
Amortization of Debt Discount		9,833		—
Loss on disposal of fixed assets		880		3,935
Intangible asset impairment		8,286		3,481
Gain on Forgiveness of Debt		(891,103)		—
Depreciation and amortization expense		448,062		534,972
Increase (decrease) in cash resulting from changes in:
Accounts receivable		(1,402,518)		(592,951)
Other current assets		99,614		419,701
Operating lease assets/liabilities		76,414		—
Contracts receivable, long-term		707,928		(325,943)
Other assets		4,475		2,209
Accounts payable		1,368,027		288,417
Accrued interest		69,330		146,966
Accrued and deferred personnel compensation		258,916		30,309
Right to use leases		(415,767)		(11,678)
Other liabilities - current		(135,273)		(35,089)
Deferred revenue and customer deposits		(111,310)		199,567
Net cash used in operating activities		(3,189,511)		(500,742)

INVESTING ACTIVITIES
Purchases of equipment		(78,217)		(8,044)
Cash paid for patent activities		—		(8,755)
Capitalized software development costs		(310,546)		(196,997)
Net cash used in investing activities		(388,763)		(213,796)

FINANCING ACTIVITIES
Payments on notes payable		(490,174)		(337,394)
Payments on related party notes payable		(80,000)		—
Proceeds from notes payable		—		920,722
Proceeds from related party notes payable		1,456,250		139,300
Proceeds from conversion of common stock warrants		—		241,700
Net cash provided by financing activities		886,076		964,328

Effect of foreign currency translation on cash flow		(21,726)		(17,877)

Net change in cash		(2,713,924)		231,913
Cash at beginning of period		3,282,820		273,599
Cash at end of period	$	568,896	$	505,512

Supplemental disclosures:
Cash paid during period for:
Interest	$	66,237	$	60,933
Fixed assets contributed by lessor	$	110,000	$	—
Initial non asset and lease liability	$	1,458,527	$	—
Refinancing of debt - related party	$	543,750	$	—
Debt discount on related party debt	$	124,388	$	—

Nine Months Ended

September 30,

2017

2016
OPERATING ACTIVITIES

   Net loss

$
(4,167,156)

$
(3,934,049)
   Adjustments to reconcile net loss to net cash used in operating activities:

      Bad debt expense

(7,277)

152,938
      Amortization of deferred financing costs

20,245

8,705
      Stock-based compensation

855,738

1,187,249
      Depreciation and amortization expense

273,716

501,866
      Loss on disposal of fixed assets

-

67,185
   Increase (decrease) in cash resulting from changes in:

      Accounts receivable

(159,958)

(175,433)
      Other current assets

(106,813)

(22,455)
      Other assets

10,957

23,100
      Accounts payable

351,089

235,676
      Accrued interest

1,040

4,112
      Accrued and deferred personnel compensation

(252,394)

36,989
      Deferred revenue and customer deposits

1,963,429

199,479
      Other liabilities

(19,787)

(77,525)
Net cash provided by (used in) operating activities

(1,237,171)

(1,792,163)
INVESTING ACTIVITIES

   Purchases of equipment

(4,989)

(30,209)
    Acquisitions

-

11,088
    Cash paid for patent

(16,810)

(20,915)
    Capitalized software development costs

(382,023)

(442,267)
Net cash used in investing activities

(403,822)

(482,303)
FINANCING ACTIVITIES

    Deferred financing costs

(15,000)

(32,287)
    Net borrowings under line of credit agreement

1,999,531

-
    Proceeds (repayments) from notes payable

114,749

(4,634)
    Proceeds from issuance of common stock, net of issuance costs

59,797

1,953,600
Net cash provided by financing activities

2,159,077

1,916,679

Effect of foreign currency translation on cash flow

2,560

(2,803)

Net change in cash

520,644

(360,590)
Cash at beginning of period

1,188,485

634,129
Cash at end of period

$
1,709,129

$
273,539
Supplemental disclosures:

Cash paid during period for:

    Interest

$
115,363

$
52,960
Non-cash investing and financing activities:

Restricted cash proceeds from line of credit

$
-

$
1,000,000
Issuance of common stock from restricted stock awards

$
264

$
-

See accompanying notes to ~~condensed~~ consolidated financial ~~statements (unaudited).~~

statements.

-4-

~~Table of Contents~~

Mo~~bivity~~Mobivity Holdings Corp.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. Nature of Operations and Basis of Presentation

Mobivity Holdings Corp. (the “Company” or “we”) is in the business of developing and operating proprietary platforms over which brands and enterprises can conduct national and localized, data-driven mobile marketing campaigns. Our proprietary platforms, consisting of software available to phones, tablets, PCs, and Point of Sale ~~(POS)~~(“POS”) systems, allow resellers, brands and enterprises to market their products and services to consumers through text messages sent directly to consumers via mobile phones, mobile smartphone applications, and dynamically printed receipt content. On November 14, 2018, we completed the acquisition of certain operating assets relating to Belly, Inc.’s proprietary digital customer loyalty platform, including client contracts, accounts receivable and intellectual property. We generate revenue by charging the resellers, brands and enterprises a per-message transactional fee, through fixed or variable software licensing fees, or via advertising fees.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X promulgated by the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and disclosures required by GAAP for annual financial statements. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the ~~condensed~~audited consolidated financial statements and notes thereto in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016~~2020 filed with the SEC on March ~~31, 2017.~~30, 2021.

In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) which are considered necessary for a fair presentation of our condensed consolidated financial statements as of September 30, ~~2017,~~2021, and for the three and nine months ended September 30, ~~2017~~2021 and ~~2016.~~2020. The results of operations for the three and nine months ended September 30, ~~2017~~2021 are not necessarily indicative of the operating results for the full year ending December 31, ~~2017.~~ 2021.

2. Summary of Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned ~~subsidiary.~~subsidiaries. All significant intercompany balances and transactions have been eliminated.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Significant estimates used are those related to stock-based compensation, asset impairments, the valuation and useful lives of depreciable tangible and certain intangible assets, the fair value of common stock used in acquisitions of businesses, the fair value of assets and liabilities acquired in acquisitions of businesses, the fair value of options issued with related party debt, and the valuation allowance of deferred tax assets. Management believes that these estimates are reasonable; however, actual results may differ from these estimates.

~~Restricted cash~~

Restricted cash represents funds advanced in accordance with the Company’s Working Capital Line of Credit Facility which requires the Company to maintain collateral with a market value greater than or equal to the limit of liability.

Accounts Receivable, Allowance for Doubtful Accounts and Concentrations

Accounts receivable are carried at their estimated collectible amounts. We grant unsecured credit to substantially all of our customers. Ongoing credit evaluations are performed, and potential credit losses are charged to operations at the time the account receivable is estimated to be uncollectible. Since we cannot necessarily predict future changes in the financial stability of our customers, we cannot guarantee that our reserves will continue to be adequate.

As of September 30, ~~2017~~2021, and December 31, ~~2016,~~2020, we recorded an allowance for doubtful accounts of ~~$1,425~~$44,386 and ~~$15,503,~~$33,848, respectively.

Goodwill and Intangible Assets

Goodwill is tested for impairment at a minimum on an annual basis. Goodwill is tested for impairment at the reporting unit level by first performing a qualitative assessment to determine whether it is more likely than not that the fair value of the reporting unit is less than ~~its~~it’s carrying value. If the reporting unit does not pass the qualitative assessment, then the reporting ~~unit's~~unit’s carrying value is compared to

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its fair value. The fair values of the reporting units are estimated using market and discounted cash flow approaches. Goodwill is considered impaired if the carrying value of the reporting unit exceeds its fair value. The discounted cash flow approach uses expected future operating results. Failure to achieve these expected results may cause a future impairment of goodwill at the reporting unit.

Intangible assets consist of patents and trademarks, purchased customer contracts, purchased customer and merchant relationships, purchased trade names, purchased technology, non-compete agreements, and software development costs. Intangible assets are amortized over the period of estimated benefit using the straight-line method and estimated useful lives ranging from one to twenty years. No significant residual value is estimated for intangible assets.

Software Development Costs

Software development costs include direct costs incurred for internally developed products and payments made to independent software developers and/or contract engineers. The Company accounts for software development costs in accordance with the FASB guidance for the costs of computer software to be sold, leased, or otherwise marketed (“ASC Subtopic 985-20”). Software development costs are capitalized once the technological feasibility of a product is established, and such costs are determined to be recoverable. Technological feasibility of a product encompasses technical design documentation and integration documentation, or the completed and tested product design and working model. Software development costs are capitalized once technological feasibility of a product is established and such costs are determined to be recoverable against future revenues. Technological feasibility is evaluated on a project-by-project basis. Amounts related to software development that are not capitalized are charged immediately to the appropriate expense account. Amounts that are considered ‘research and development’ that are not capitalized are immediately charged to engineering, research, and development expense.

Capitalized costs for those products that are cancelled or abandoned are charged to product development expense in the period of cancellation. Commencing upon product release, capitalized software development costs are amortized to “Amortization Expense - Development” based on the straight-line method over a twenty-four month period.

The Company evaluates the future recoverability of capitalized software development costs on an annual basis. For products that have been released in prior years, the primary evaluation criterion is ongoing relations with the customer.

Impairment of Long-Lived Assets

We evaluate long-lived assets (including intangible assets) for impairment whenever events or changes in circumstances indicate that the carrying amount of a long-lived asset may not be recoverable. An asset is considered impaired if its carrying amount exceeds the undiscounted future net cash flow the asset is expected to generate.

Foreign Currency Translation

The Company translates the financial statements of its foreign subsidiary from the local (functional) currency into US Dollars using the year or reporting period end or average exchange rates in accordance with the requirements of Accounting Standards Codification subtopic 830-10,Foreign Currency Matters(“ (“ASC 830-10”).Assets and liabilities of these subsidiaries were translated at exchange rates as of the balance sheet date. Revenues and expenses are translated at average rates in effect for the periods presented. The cumulative translation adjustment is included in the accumulated other comprehensive gain (loss) within shareholders’ equity. Foreign currency transaction gains and losses arising from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the unaudited Condensed Consolidated Statements of Income and Comprehensive Income.

Revenue Recognition and Concentrations

Our ~~SmartReceipt and C4 Mobile Marketing and customer relationship management are~~Recurrency platform is a hosted ~~solutions.~~solution. We generate revenue from licensing our software to clients in our software as a service model, per-message and per-minute transactional fees, and customized professional services. We recognize license/subscription fees over the period of the contract, service fees as the services are performed, and per-message or per-minute transaction revenue when the transaction takes place. ~~We recognize~~Under Topic 606, revenue atis recognized when control of the ~~time~~promised goods or services is transferred to our customers, in an amount that reflects the ~~services are rendered, the selling price is fixed, and collection is reasonably assured, provided no significant obligations remain.~~consideration we expect to be entitled to in exchange for those goods or services. We consider authoritative guidance on multiple deliverables in determining whether each deliverable represents a separate unit of accounting. Some customers are billed on a ~~month to month~~month-to-month basis with no contractual term and ~~receivables~~ are collected by credit card. Revenue is recognized at the time that the services are rendered, and the selling price is fixed with a set range of plans. Cash received in advance of the performance of services is recorded as deferred revenue.

Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Accounting Standards Codification 606 (“ASC 606”), is a comprehensive revenue recognition standard that superseded nearly all existing revenue recognition guidance. The Company adopted this standard effective January 1, 2018, applying the modified retrospective method. Upon adoption, the Company

discontinued revenue deferral under the sell-through model and commenced recording revenue upon delivery to distributors, net of estimated returns. Generally, the new standard results in earlier recognition of revenues.

We ~~generate~~determine revenue ~~from~~recognition under ASC 606 through the ~~Stampt App through customer agreements with business owners. Revenue is principally derived from monthly subscription fees which provide a license for unlimited use~~following steps:

identification of the ~~Stampt App by~~contract, or contracts, with a customer;

identification of the ~~business owners and their customers. The subscription fee is billed each month~~performance obligations in the contract;

identification of the transaction price;

allocation of the transaction price to the ~~business owner. Revenue is recognized monthly~~performance obligations in the contract; and

recognition of revenue when, or as, ~~the subscription revenues are billed. There are no per-minute or transaction fees associated with the Stampt App.~~we satisfy a performance obligation.

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During the nine months ended September 30, ~~2017, two~~2021 and 2020, 2 customers accounted for ~~71%~~54% and 67% of our ~~revenues. During the nine months ended September 30, 2016, one customer accounted for 50% of our revenues.~~revenues, respectively.

Comprehensive Income (Loss)

Comprehensive ~~income (loss)~~loss is defined as the change in equity during a period from transactions and other events and circumstances from non-owner sources. We are required to record all components of comprehensive ~~income (loss)~~loss in the consolidated financial statements in the period in which they are recognized. Net ~~income (loss)~~loss and other comprehensive ~~income (loss),~~loss, including foreign currency translation adjustments and unrealized gains and losses on investments, are reported, net of their related tax effect, to arrive at comprehensive ~~income (loss).~~loss. For the ~~three and~~ nine months ended September 30, ~~2017,~~2021 and 2020, the comprehensive loss was ~~$1,557,766~~$4,132,347 and ~~$4,203,314,~~$1,710,743 respectively. ~~For the three and nine months ended September 30, 2016, the comprehensive loss was $1,576,907 and $3,977,675, respectively.~~

Net Loss Per Common Share

Basic net loss per share excludes any dilutive effects of options, shares subject to repurchase and warrants. Diluted net loss per share includes the impact of potentially dilutive securities. During the three and nine months ended September 30, ~~2017~~2021 and ~~2016,~~2020, we had securities outstanding which could potentially dilute basic earnings per share in the ~~future, but~~future. Those were excluded from the computation of diluted net loss per share aswhen their effect would have been anti-dilutive.

Reclassifications

Certain amounts from prior periods have been reclassified to conform to the current period presentation.

Recent Accounting Pronouncements

Accounting standards promulgated by the FASB are subject to change. Changes in such standards may have an impact on the Company’s future financial statements. The following are a summary of recent accounting developments.

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, “Leases (Topic 842)”. Under this guidance, an entity is required to recognize right-of-use assets and lease liabilities on its balance sheet and disclose key information about leasing arrangements. This guidance offers specific accounting guidance for a lessee, a lessor and sale and leaseback transactions. Lessees and lessors are required to disclose qualitative and quantitative information about leasing arrangements to enable a user of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. This guidance is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period, and requires a modified retrospective adoption, with early adoption permitted. The Company is currently evaluating the impact of the adoption of this standard will have on our consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09, “Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting”. The standard is intended to simplify several areas of accounting for share-based compensation arrangements, including the income tax impact, classification on the statement of cash flows and forfeitures. ASU 2016-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, and early adoption is permitted. The Company elected to early adopt the new guidance in the second quarter of fiscal year 2016 which requires us to reflect any adjustments as of January 1, 2016, the beginning of the annual period that includes the interim period of adoption. The primary impact of adoption was the recognition of additional stock compensation expense and paid-in capital for all periods in fiscal year 2016. Additional amendments to the recognition of excess tax benefits, accounting for income taxes and minimum statutory withholding tax requirements had no impact to retained earnings as of January 1, 2016, where the cumulative effect of these changes are required to be recorded. We have elected to account for forfeitures as they occur to determine the amount of compensation cost to be recognized in each period.

In May 2014, the FASB issued ASU 2014-09 regarding ASC Topic 606, “Revenue from Contracts with Customers.” ASU 2014-09 provides principles for recognizing revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In August 2015, the FASB issued ASU 2015-14 to defer the effective date by one year with early adoption permitted as of the original effective date. ASU 2014-09 will be effective for our fiscal year beginning January 1, 2018 unless we elect the earlier date of January 1, 2017. In addition, the FASB issued ASU 2016-08, ASU 2016-10, and ASU 2016-12 in March 2016, April 2016, and May 2016, respectively, to help provide interpretive clarifications on the new guidance in ASC Topic 606. The Company is currently evaluating the accounting, transition, and disclosure requirements of the standard and cannot currently estimate the financial statement impact of adoption.

In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment, which removes the second step of the two-step goodwill impairment test. Under ASU 2017-04, an entity will apply a one-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit’s carrying amount over its fair value, not to exceed the total amount of goodwill

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allocated to the reporting unit. ASU 2017-04 does not amend the optional qualitative assessment of goodwill impairment. Additionally, an entity should consider income tax effects from any tax-deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. ASU 2017-04 is effective for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019; early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company ~~is currently in the process of evaluating the impact of adopting ASU 2017-04 and cannot currently estimate the financial statement impact of adoption.~~

~~3. Acquisitions~~

~~LiveLenz Acquisition~~

On January 15, 2016, we acquired all of the outstanding capital stock of LiveLenz Inc., a Nova Scotia corporation (“LiveLenz”), pursuant to an agreement dated January 15, 2016 among the Company and the stockholders of LiveLenz. Pursuant to the agreement, we acquired all of the capital stock of LiveLenz in consideration of our issuance of 1,000,000 shares (“Consideration Shares”) of our common stock to the LiveLenz stockholders, our issuance of an additional 15,000 share of our common stock in satisfaction of certain liabilities of LiveLenz, and the assumption of their existing liabilities. The agreement included customary representations, warranties, and covenants by us and the LiveLenz stockholders, including the LiveLenz stockholders’ agreement to indemnify us against certain claims or losses resulting from certain breaches of representations, warranties or covenants by the LiveLenz stockholders in the agreement. Pursuant to the agreement, the LiveLenz stockholders have agreed to adjust the number of Consideration Shares downward based on LiveLenz’s working capitaladopted this standard as of the closing and in the event of any claims for indemnification by us. The LiveLenz stockholders have agreed that 100% of the Consideration Shares will be escrowed for a period of 18 months and subject to forfeiture based on indemnification claims by us or the final determination of LiveLenz’s working capital as of the closing date. As of the date of this report, no adjustments have been made to the working capital and the Consideration Shares have been issued to the Livelenz stockholders.

~~The allocation of the purchase price to assets and liabilities based upon fair value determinations was as follows:~~



~~Cash~~	$	~~11,088~~
~~Accounts receivable, net~~		~~718~~
~~Other assets~~		~~2,617~~
~~Fixed assets~~		~~4,407~~
~~Intangible assets~~		~~20,300~~
~~Goodwill~~		~~1,129,493~~
~~Total assets acquired~~		~~1,168,623~~
~~Liabilities assumed~~		~~(458,123)~~
~~Net assets acquired~~	$	~~710,500~~

~~The purchase price consists of the following:~~



~~Common stock~~	$	~~710,500~~
~~Total purchase price~~	$	~~710,500~~

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~~The following information presents unaudited pro forma consolidated results of operations for the nine months ended September 30, 2016 as if the Livelenz acquisition described above had occurred on~~ January 1, 2016. The pro forma financial information is not necessarily indicative of the operating results that would have occurred if the acquisition been consummated as of the date indicated, nor are they necessarily indicative of future operating results.2020.

Mobivity Holdings Corp.
Unaudited Pro Forma Condensed Consolidated Statement of Operations
Nine Months Ended September 30, 2016

Mobivity

Livelenz

Pro forma
adjustments

Pro forma
combined
Revenues

Revenues

$
6,102,501

$
4,300

$
-

$
6,106,801
Cost of revenues

1,473,974

120

-

1,474,094
Gross margin

4,628,527

4,180

-

4,632,707

Operating expenses

General and administrative

3,125,484

20,071

-

3,145,555
Sales and marketing

3,285,655

7,087

-

3,292,742
Engineering, research, and development

1,600,377

-

-

1,600,377
Depreciation and amortization

501,866

76

-

501,942
Total operating expenses

8,513,382

27,234

-

8,540,616

Loss from operations

(3,884,855)

(23,054)

-

(3,907,909)

Other income/(expense)

Interest income

2,278

-

-

2,278
Interest expense

(52,960)

(3,452)

-

(56,412)
Foreign Currency Gain/(Loss)

1,488

-

-

1,488
Total other income/(expense)

(49,194)

(3,452)

-

(52,646)

Loss before income taxes

(3,934,049)

(26,506)

-

(3,960,555)

Income tax expense

-

-

-

-

Net loss

$
(3,934,049)

$
(26,506)

$
-

$
(3,960,555)
Other comprehensive loss, net of income tax

Foreign currency translation adjustments

(43,626)

-

-

(43,626)
Comprehensive loss

$
(3,977,675)

$
(26,506)

$
-

$
(4,004,181)

Net loss per share - basic and diluted

$
(0.12)

$
(0.12)

Weighted average number of shares
during the period - basic and diluted

31,965,484

31,965,484

4.3. Goodwill and Purchased Intangibles

Goodwill

The carrying value of goodwill at September 30, ~~2017~~2021 and December 31, ~~2016~~2020 was ~~$803,118.~~ $496,352.

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~~Intangible assets~~

The following table presents details of our purchased intangible assets as of September 30, ~~2017~~2021 and December 31, ~~2016:~~2020:

Intangible assets



	Balance at December 31, 2016		Additions		Impairments		Amortization		Fx and Other		Balance at September 30, 2017		Balance at December 31, 2020		Additions		Impairments		Amortization		Fx and Other		Balance at September 30, 2021
Patents and trademarks	$	112,537	$	16,810	$	-	$	(8,868)	$	752	$	121,231	$	71,029	$	—	$	(8,286)	$	(3,930)	$	4	$	58,817
Customer and merchant relationships		178,000		-		-		(18,414)		-		159,586		642,385		—		—		(72,638)		—		569,747
Trade name		47,659		-		-		(5,015)		69		42,713		41,444		—		—		(6,790)		—		34,654
Acquired technology														128,491		—		—		(12,225)		—		116,266
Non-compete agreements														45,071		—		—		(11,895)		—		33,176
	$	338,196	$	16,810	$	-	$	(32,297)	$	821	$	323,530	$	928,420	$	—	$	(8,286)	$	(107,478)	$	4	$	812,660

The intangible assets are being amortized on a straight-line basis over their estimated useful lives of one to twenty years.

Amortization expense for intangible assets was ~~$10,796~~$35,738 and ~~$61,016~~$37,758 for the three months ended September 30, ~~2017~~2021 and ~~2016,~~2020, respectively.

Amortization expense for intangible assets was ~~$32,297~~$107,478 and ~~$167,775~~$113,202 for the nine months ended September 30, ~~2017~~2021 and ~~2016,~~2020, respectively.

The estimated future amortization expense of our intangible assets as of September 30, ~~2017~~2021 is as follows:



Year ending December 31,	Amount		Amount
2017	$	10,765
2018		43,062
2019		43,062
2020		43,062
2021		40,736	$	35,736
2022				142,944
2023				140,436
2024				103,839
2025				96,091
Thereafter		142,843		293,614
Total	$	323,530	$	812,660

5.4. Software Development Costs

The Company has capitalized certain costs for software developed or obtained for internal use during the application development stage as it relates to specific contracts. The amounts capitalized include external direct costs of services used in developing internal-use software and for payroll and payroll-related costs of employees directly associated with the development ~~activities.~~ activities

The following table presents details of our software development costs as of September 30, ~~2017~~2021 and December 31, ~~2016:~~2020:

Balance at
December 31,
2016

Additions

Amortization

Balance at
September 30,
2017
Software Development Costs

$
288,923

$
382,023

$
(220,691)

$
450,255

$
288,923

$
382,023

$
(220,691)

$
450,255



	Balance at December 31, 2020		Additions		Amortization		Balance at September 30, 2021
Software Development Costs	$	439,908	$	310,546	$	(309,618)	$	440,836
	$	439,908	$	310,546	$	(309,618)	$	440,836

Software development costs are being amortized on a straight-line basis over their estimated useful life of two years.

Amortization expense for software development costs was ~~$87,821~~$104,870 and ~~$134,590~~$141,196 for the three months ended September 30, ~~2017~~2021 and ~~2016,~~2020, respectively.

Amortization expense for software development costs was ~~$220,691~~$309,618 and ~~$323,002~~$402,211 for the nine months ended September 30, ~~2017~~2021 and ~~2016,~~2020, respectively.

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The estimated future amortization expense of software development costs as of September 30, ~~2017~~2021 is as follows:



Year ending December 31,	Amount		Amount
2017	$	94,972
2018		279,585
2019		75,698
2020		-
2021		-	$	106,477
2022				255,965
2023				78,394
2024				—
2025				—
Thereafter		-		—
Total	$	450,255	$	440,836

5. Operating Lease Assets

The Company entered into a lease agreement on February 1, 2021 for 8,898 square feet, for its office facilities in Chandler, AZ through January 2027. Monthly rental payments, excluding common area maintenance charges, are $25,953 to $28,733. The first twelve months of the lease includes a 50% abatement period and a deposit for $110,000 was required. The lessor contributed $110,000 towards the purchase of office furniture as part of the lease agreement. As of September 30, 2021, we have an operating lease asset balance of $1,242,264 and an operating lease liability balance of $1,442,665 recorded in accordance with ASC 842.

The following are additional details related to leases recorded on our balance sheet as of September 30, 2021:




Leases	Classification	Balance at ‎September 30, ‎2021
Assets
Current
Operating lease assets	Operating lease assets	$	—
Noncurrent
Operating lease assets	Noncurrent operating lease assets	$	1,242,264
Total lease assets		$	1,242,264

Liabilities
Current
Operating lease liabilities	Operating lease liabilities	$	195,270
Noncurrent
Operating lease liabilities	Noncurrent operating lease liabilities	$	1,247,395
Total lease liabilities		$	1,442,665

The maturity analysis below summarizes the remaining future undiscounted cash flows for our operating leases, a reconciliation to operating lease liabilities reported on the Condensed Consolidated Balance Sheet, our weighted-average remaining lease term and weighted average discount rate:




Year ending December 31,	Amount
2021	$	98,083
2022		318,055
2023		324,220
2024		330,894
2025		337,568
Thereafter		348,555
Total future lease payments		1,757,375
Less: imputed interest		(314,710)
Total	$	1,442,665



Weighted Average Remaining Lease Term (years)
Operating leases		5.2

Weighted Average Discount Rate
Operating leases		6.75%

6. Notes Payable and Interest Expense

The following table presents details of our notes payable as of September 30, ~~2017~~2021 and December 31, ~~2016:~~2020:



Facility	Maturity	Interest Rate	Balance at September 30, 2017		Balance at December 31, 2016		Maturity	Interest Rate	Balance at September 30, 2021		Balance at December 31, 2020
BDC Term Loan	December 15, 2018	12%	$	361,006	$	333,260	October 15, 2021	23.5%	$	62,934	$	160,088
ACOA Note	May 1, 2021	-		185,209		59,995	February 1, 2024	—		85,703		111,430
SVB Working Capital Line of Credit Facility	March 30, 2018	Variable		1,983,958		979,821
Wintrust Bank							November 14, 2021	Prime + 1.5%		—		366,667
TD Bank							December 31, 2022	—		31,467		31,390
Chase Bank							April 10, 2022	1%		—		891,102
Related Party Note							June 30, 2024	15%		1,885,445		580,000
Total Debt				2,530,173		1,373,076				2,065,549		2,140,677
Debt discount				15,795		21,003
Less current portion				(2,290,864)		(1,032,913)				(434,814)		(641,676)
Long-term debt, net of current portion			$	255,104	$	361,166			$	1,630,735	$	1,499,001

BDC Term Loan

On January 8, 2016, Livelenz, (aa wholly-owned subsidiary of the Company (“Livelenz”), entered into an amendment of their original loan agreement dated August 26, 2011 with the Business Development Bank of Canada (“BDC”). Under this agreement the loan would have matured, and the commitments would have terminated on September 15, 2019.

On July 26, 2019, Livelenz, entered into an amendment of their original loan agreement dated August 26, 2011 with BDC. Under this agreement the loan will mature, and the commitments will terminate on ~~December~~October 15, ~~2018.~~ 2021. In accordance with the amendment, the Company will commence monthly payments beginning on August 15, 2019 of principal in the amount of $8,500 CAD in addition to the monthly payment of accrued interest. These payments will increase to $10,000 CAD on November 15, 2019, $12,000 CAD on September 15, 2020, $14,000 CAD on March 15, 2021, and $16,000 CAD on September 15, 2021 in addition to the monthly interest. During the nine months ended September 30, 2021 we repaid $97,553 USD of principal.

ACOA Note

On ~~April 29, 2016,~~November 6, 2017, Livelenz (a wholly-owned subsidiary of the Company), entered into an amendment of the original agreement dated December 2, 2014 with the Atlantic Canada Opportunities Agency (“ACOA”). Under this agreement the note will mature, ~~repayments began on June 1, 2016,~~ and the commitments will terminate on February 1, 2024. The monthly principal payment amount of $3,000 CAD increased to $3,500 CAD beginning on November 1, 2019, $4,000 CAD on August 1, 2021, $4,500 CAD on August 1, 2022, and $2,215 CAD during the remaining term of the agreement. Payments from April-December of 2020 were voluntarily deferred by ACOA due to COVID-19. During the nine months ended September 30, 2021 we repaid $ 25,726 USD of principal.

Wintrust Loan

On November 14, 2018, the Company entered into a Loan and Security Agreement with Wintrust Bank. The Loan and Security Agreement provides for a single-term loan to us in the original principal amount of $1,000,000. Interest accrues on the unpaid principal amount at the rate of prime plus 1.5%. The loan is a three-year loan and is interest-only payable for the first six months of the loan. Commencing on May 1, ~~2021.~~2019, the Company commenced monthly payments of principal in the amount of $33,333 in addition to the monthly payment of accrued interest. The loan is secured by all of our assets other than our intellectual property. We used the proceeds of the loan to re-finance a loan in the principal amount of $1,000,000 we assumed as part of the acquisition of the Belly assets.

~~SVB Working Capital Line~~On August 7, 2020, the Company entered into an amendment of ~~Credit Facility~~their original loan agreement dated November 14, 2018 with Wintrust Bank. Under this agreement the covenant calculation was amended to calculate covenants under a borrowing base methodology. The Company had defaulted under the March 31, 2020 and June 30, 2020 covenants which were waived upon execution of the amendment and the Company has not committed any defaults under loan agreement subsequent to the amendment. During the nine months ended

September 30, 2021, we repaid $366,667 of principal and thereby paid the loan in full. The Company’s assets securing the loan are now free from any liens under the Wintrust Loan and Security Agreement as of June 30, 2021.

~~In March 2016,~~

Chase Loan

On April 10, 2020, we entered into a ~~Working Capital Line~~commitment loan with Chase Bank, N.A. under the CARES act and the Small Business Administration (SBA) Paycheck Protection Program (PPP), in the principal aggregate amount of $891,103, which is due and payable two years after issuance. This note bears interest on the unpaid balance at the rate of 1 percent (1%) per annum. The note contains a deferral period of ten months after the 24 week usage period, for which 0 interest or principal payments are due. Forgiveness of the loan will be obtained by meeting certain SBA requirements.

On July 21, 2021, SBA authorized full forgiveness of the $891,103 PPP Loan after the Company applied for a loan forgiveness and met all the requirements for such loan forgiveness under the SBA program. The balance of the loan was forgiven and recorded as a gain on forgiveness of debt of $891,103.

TD Bank Loan

On April 22, 2020, we entered into a commitment loan with TD Bank under the Canadian Emergency Business Account (“CEBA”), in the principal aggregate amount of $40,000 CAD, which is due and payable on December 31, 2022. This note bears interest on the unpaid balance at the rate of 0 percent (0%) per annum during the initial term. Under this note 0 interest or principal payments are due until January 1, 2023. Under the conditions of the loan, NaN percent (25%) of the loan will be forgiven if NaN percent (75%) is repaid prior to the initial term date.

Related Party Notes

During February 2018, we conducted a private placement of Unsecured Promissory Notes (individually, a “Note” and collectively, the “Notes”) in the aggregate principal amount of $1,080,000 to certain investors, officers and directors of the Company. Each Note bears interest on the unpaid balance at the rate of 15 percent (15%) per annum and the principal and accrued interest is due and payable no later than December 1, 2020. We may prepay any of the Notes without notice, subject to a 2 percent (2%) pre-payment penalty. The Note offer was conducted by our management and there were 0 commissions paid by us in connection with the solicitation.

On February 26, 2020, we issued an unsecured Note in the principle aggregate amount of $200,000, which becomes due two years after the date of issuance. This Note bears interest on the unpaid balance at the rate of 15 percent (15%) per annum. The Company may prepay this Note without notice, subject to a 2 percent (2%) pre-payment penalty.

On November 18, 2020, we issued 2 additional unsecured Notes in the principle aggregate amount of $500,000, which becomes due two years after the date of issuance. These Notes bear interest on the unpaid balance at the rate of 15 percent (15%) per annum. The Company may prepay these Notes without notice, subject to a 2 percent (2%) pre-payment penalty.

On December 31, 2020 $1,200,000 of these Notes and the accrued interest of $192,208 was settled into equity. We recorded a loss on settlement of debt of $668,260 for the year ended December 31, 2020.

On January 25, 2021, we repaid $65,000 for an unsecured Note. On January 27, 2021, we repaid the remaining $15,000 of the unsecured Note and accrued interest of $34,379.

On June 30, 2021, we entered into a Credit Facility Agreement (the ~~“Facility”~~“Credit Agreement”) with ~~Silicon Valley Bank (“SVB”) to provide~~one of the Company’s directors. The Company can borrow up to $2 million to finance our general working capital needs. The Facility is funded based on cash on deposit balances and advances against our accounts receivable based on customer invoicing. Interest on Facility borrowings is calculated at rates between the prime rate minus 1.75% and prime rate plus 3.75% based on the borrowing base formula used at the time of borrowing. The Facility contains standard events of default, including payment defaults, breaches of representations, breaches of affirmative or negative covenants, and bankruptcy.$2,000,000 under this Credit Agreement. As of September 30, ~~2017,~~2021, the company has drawn a total of $2,000,000 during the period, including cash in the amount of $1,456,250 and 543,750 of principal and accrued interest under the above-described Notes that was rolled into the Credit Facility. The loan is secured by all our tangible and intangible assets including intellectual property. We will repay the principal amount plus accrued interest in 24 equal monthly installments commencing on June 30, 2022, and ending on June 30, 2024. This loan bears interest on unpaid balance. at the rate of 15 percent (15%) per annum. The Company may prepay this Note without notice, penalty or charge. In consideration of the lender’s agreement to provide the facility, the Company ~~owes $1,983,958,~~issued warrants to purchase shares of its common stock at an exercise price of $1.67 per share in connection with the issuance of funds under this ~~facility.~~

~~Under the terms~~Credit Agreement. The warrants are exercisable for a period commencing upon issuance of the ~~Facility,~~notes and ending 36 months after issuance of the financing. In addition, the Company ~~is obligated~~has agreed to ~~pay~~issue to the lender additional warrants entitling the lender to purchase a ~~commitment fee on~~number of shares of the ~~available unused~~Company common stock equal to 10 percent (10%) of the amount of the ~~Facility commitments~~advances made divided by the volume weighted average price over the 30 trading days preceding the advance (VWAP). Each warrant will be exercisable over a three-year period at an exercise price equal to ~~0.5%~~the VWAP. During the nine months period ending September 30, 2021, the Company issued warrants to purchase an aggregate of 238,066 shares of its common stock at the stated exercise price per ~~annum.~~share in connection with

the issuance of funds under this Credit Agreement. The ~~Company capitalized debt issuance costs~~estimated aggregate fair value of ~~$42,287~~the warrants issued was $124,388 using the Black-Scholes option valuation model as of September 30, ~~2017 related to~~2021.

As of September 30, 2021, we have a principal balance of $2,000,000, discount of $114,554, and accrued interest of $73,656 outstanding under the ~~Facility, which are being amortized on a straight-line basis to interest expense over the two-year term of the Facility.~~said Credit Agreement.

Interest Expense

Interest expense was ~~$62,748~~$88,331 and ~~$25,900~~$62,621 during the three months ended September 30, ~~2017~~2021 and ~~2016,~~2020, respectively.

Interest expense was ~~$115,363~~$144,714 and ~~$52,960~~$207,899 during the nine months ended September 30, ~~2017~~2021 and ~~2016,~~2020, respectively.

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~~Table of Contents~~

7. Stockholders’ Equity

Common Stock

~~2016~~2020

On ~~January 15, 2016, we acquired all~~March 2, 2020, the Company issued 234,500 shares of common stock in exchange for cash in conjunction with a warrant exercise. The shares were exercised at the ~~outstanding capital~~strike price of $1.00 per share.

On September 17, 2020, the Company issued 15,000 shares of common stock in exchange for cash in conjunction with a stock option exercise. The shares were exercised at the strike price of ~~LiveLenz in consideration~~$0.48 per share.

In December of ~~our issuance~~2020, the Company commenced a private placement of ~~1,000,000 shares (“Consideration Shares”)~~its common stock with warrant exercises for 1 unit of our common stock at an exercise price of $1.25 per share to ~~the LiveLenz stockholders and our issuance of an additional 15,000~~receive a new warrant to purchase to 1 share of our common stock in satisfaction of certain liabilities of LiveLenz. The LiveLenz stockholders have agreed that 100% of the Consideration Shares will be escrowed for a period of 18 months and subject to forfeiture based on indemnification claims by us or the final determination of LiveLenz’s working capital as of the closing date. The Consideration Shares were valued using the closing price on the acquisition closing date of $0.70 per share for a total acquisition purchaseat an exercise price of ~~$710,500.~~$2.00 per share. As of December 31, 2020, the ~~date~~Company had sold 2,666,459 units of ~~this report, 100% of the Consideration Shares have been issued to LiveLenz stockholders.~~

~~In March 2016, we conducted the private placement of 3,256,000 shares of our~~its common stock ~~at a price of $0.60 per share,~~ for ~~the~~ gross proceeds of ~~$1,953,600. The offering was conducted by our management and no commission or other selling fees were paid by us. Pursuant to~~$3,333,074. In addition, the ~~terms~~Company issued 1,113,767 units of ~~the offering, we entered into registration rights agreement~~its common stock associated with the ~~investors pursuant~~settlement of $1,200,000 of principal, $192,208 of accrued interest, and a loss on settlement of $668,260 (See Note 6).

During 2020, the Company recorded stock-based compensation expense of $260,003 related to ~~which we agreed to file with the SEC a resale registration statement covering the common shares. The registration statement was declared effective by the SEC on August 8, 2016.~~

~~On October 31, 2016, we issued 3,329,990 shares~~restricted stock units for members of our ~~common stock, at a price~~board of ~~$0.70 per share, for the gross proceeds of $2,330,993.~~ directors.

~~2017~~

~~On June 27, 2017, we issued 61,980 shares of our common stock, at a price of $0.48 per share, for the gross proceeds of $29,750 in conjunction with one employee that exercised vested stock options.~~

~~On July 17, 2017, we issued 263,731 shares of our common stock to four board members in accordance with their restricted stock unit agreements.~~

~~On August 22, 2017, we issued 4,688 shares of our common stock, at a price of $0.41 per share, for the gross proceeds of $1,922 in conjunction with one employee that exercised vested stock options.~~

~~On August 30, 2017, we issued 37,500 shares of our common stock, at a price of $0.75 per share, for the gross proceeds of $28,125 in conjunction with one employee that exercised vested stock options.~~

As of ~~September 30, 2017 and~~ December 31, ~~2016~~2020 we had an equity payable balance of $100,862.

2021

During the nine months ended September 30, 2021, the Company recorded stock-based compensation expense of $195,005 related to restricted stock units for members of our board of directors. In addition, we also recorded $116,347 of stock-based compensation expense related to restricted stock units as employee compensation.

As of September 30, 2021 we had an equity payable balance of $100,862.

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~~Table of Contents~~

Stock-based Plans

Stock Option Activity

The following table summarizes stock option activity for the year ended December 31, ~~2016~~2020 and for the ~~nine~~six months ended September 30, ~~2017:~~2021.



		Options
Outstanding at December 31, ~~2015~~2019		~~5,043,228~~
~~Granted~~		~~1,771,500~~
~~Exercised~~		-5,781,884
~~Forfeit/canceled~~Granted	1,545,000	~~(577,817)~~
~~Expired~~Exercised	(15,000)	~~(479,031)~~
Forfeit/canceled	(814,068)
Expired	(490,264)
Outstanding at December 31, ~~2016~~2020	6,007,552	~~5,757,880~~
Granted	92,500	~~2,742,500~~
Exercised	—	~~(104,168)~~
Forfeit/canceled	(76,406)	~~(1,363,658)~~
Expired	(92,180)	~~(235,341)~~
Outstanding at September 30, ~~2017~~2021		~~6,797,213~~
		5,931,466

The weighted average exercise price of stock options granted during the period was ~~$0.64~~$1.77 and the related weighted average grant date fair value was ~~$0.46~~$1.11 per share.

~~2016~~2020

On ~~January 15, 2016,~~March 24, 2020, the Company granted ~~four employees~~1 employee a total of 167,500 options to purchase shares of the Company common stock at the closing price as of January 15, 2016 of $0.70 per share. The options vest 25% on the first anniversary of the grant, then equally in 36 monthly installments thereafter and are exercisable until January 15, 2026. The total estimated value using the Black-Scholes Model, based on a volatility rate of 114% and a call option value of $0.59 was $98,825.

On January 19, 2016, the Company granted one employee 500,000 options to purchase shares of the Company common stock at the closing price as of January 19, 2016 of $0.70 per share. The options vest 300,000 in equal monthly installments over 48 months, 100,000 upon a four-year cliff or $13 million in annual reported revenue, whichever is earlier to occur, and 100,000 upon a four-year cliff or $22 million in annual reported revenue, whichever is earlier to occur and are exercisable until January 15, 2026. The total estimated value using the Black-Scholes Model, based on a volatility rate of 114% and a call option value of $0.59 was $295,000.

~~On March 24, 2016, the Company granted nine employees a total of 258,000~~15,000 options to purchase shares of the Company common stock at the closing price as of March 24, ~~2016~~2020 of ~~$0.70~~$0.65 per share. The ~~options~~option shares will vest 25% on the first anniversary of the grant, then equally in 36 monthly installments thereafter and are exercisable until March 24, ~~2026.~~2030. The total estimated value using the Black-Scholes Model, based on a volatility rate of ~~114%~~77.56% and ~~a call~~an option fair value of ~~$0.59~~$0.43 was ~~$152,220.~~$6,472.

On ~~August 23, 2016,~~April 6, 2020, the Company granted ~~four~~4 employees a total of ~~695,000~~700,000 options to purchase shares of the Company common stock at the closing price as of April 6, 2020 of $0.70 per share. 500,000 option shares will vest 25% on the first anniversary of the grant, then equally in 36 monthly installments thereafter and are exercisable until April 6, 2030. 200,000 option shares will vest ratably over forty-eight (48) months and are exercisable until April 6, 2030. The total estimated value using the Black-Scholes Model, based on a volatility rate of 78.21% and an option fair value of $0.47 was $326,752.

On November 5, 2020, the Company granted 1 employee a total of 20,000 options to purchase shares of the Company common stock at the closing price as of November 5, 2020 of $0.96 per share. The option shares will vest 25% on the first anniversary of the grant, then equally in 36 monthly installments thereafter and are exercisable until November 5, 2030. The total estimated value using the Black-Scholes Model, based on a volatility rate of 77.36% and an option fair value of $0.63 was $12,689.

On December 7, 2020, the Company granted 1 employee a total of 600,000 options to purchase shares of the Company common stock at the closing price as of December 7, 2020 of $1.55 per share. The option shares will vest 25% on the first anniversary of the grant, then equally in 36 monthly installments thereafter and are exercisable until December 7, 2030. The total estimated value using the Black-Scholes Model, based on a volatility rate of 77.35% and an option fair value of $1.03 was $615,495.

On December 17, 2020, the Company granted 6 employees a total of 210,000 options to purchase shares of the Company common stock at the closing price as of December 17, 2020 of $1.83 per share. The option shares will vest 25% on the first anniversary of the grant, then equally in 36 monthly installments thereafter and are exercisable until December 17, 2030. The total estimated value using the Black-Scholes Model, based on a volatility rate of 77.41% and an option fair value of $1.21 was $254,373.

2021

On March 26, 2021, the Company granted 5 employees a total of 67,500 options to purchase shares of the Company common stock at the closing price as of March 26, 2021 of $1.80 per share. The option shares will vest 25% on the first anniversary of the grant, then equally in 36 monthly installments thereafter and are exercisable until March 26, 2031. The total estimated value using the Black-Scholes Model, based on a volatility rate of 73.97% and an option fair value of $1.16 was $78,492.

On May 2, 2021, the Company granted 1 employee a total of 20,000 options to purchase shares of the Company common stock at the closing price as of May 2, 2021, of $1.48 per share. The option shares will vest 25% on the first anniversary of the grant, then equally

in 36 monthly installments thereafter and are exercisable until May 2, 2031. The total estimated value using the Black-Scholes Model, based on a volatility rate of 74.79% and an option fair value of $0.93 was $18,628.

On August 11, 2021, the Company granted 1 employee a total of 5,000 options to purchase shares of the Company common stock at the closing price as of August ~~23, 2016~~11, 2021, of ~~$0.75~~$1.75 per share. The ~~options~~option shares will vest 25% on the first anniversary of the grant, then equally in 36 monthly installments thereafter and are exercisable until August ~~23, 2026.~~11, 2031. The total estimated value using the Black-Scholes Model, based on a volatility rate of ~~114% and a call option value of $0.63 was $440,573.~~

On November 17, 2016, the Company granted three employees a total of 150,000 options to purchase shares of the Company common stock at the closing price as of November 17, 2016 of $0.70 per share. The options vest 25% on the first anniversary of the grant, then equally in 36 monthly installments thereafter and are exercisable until November 17, 2026. The total estimated value using the Black-Scholes Model, based on a volatility rate of 114% and a call option value of $0.59 was $89,048.

~~2017~~

On March 23, 2017, the Company granted seven employees a total of 322,500 options to purchase shares of the Company common stock at the closing price as of March 23, 2017 of $0.72 per share. The options vest 25% on the first anniversary of the grant, then

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~~Table of Contents~~

~~equally in 36 monthly installments thereafter and are exercisable until March 23, 2027. The total estimated value using the Black-Scholes Model, based on a volatility rate of 86%~~73.29% and an option fair value of ~~$0.52~~$1.12 was ~~$167,700.~~$5,606.

On May 15, 2017, the Company granted eight employees a total of 2,105,000 options to purchase shares of the Company common stock at the closing price as of May 15, 2017 of $0.60 per share. The options vest 25% on the first anniversary of the grant, then equally in 36 monthly installments thereafter and are exercisable until May 15, 2027. The total estimated value using the Black-Scholes Model, based on a volatility rate of 85% and an option value of $0.43 was $905,150.

On June 28, 2017, the Company granted two employees a total of 150,000 options to purchase shares of the Company common stock at the closing price as of June 28, 2017 of $0.76 per share. The options vest 25% on the first anniversary of the grant, then equally in 36 monthly installments thereafter and are exercisable until June 28, 2027. The total estimated value using the Black-Scholes Model, based on a volatility rate of 86% and an option value of $0.55 was $82,500.

On August 14, 2017, the Company granted two employees a total of 165,000 options to purchase shares of the Company common stock at the closing price as of August 14, 2017 of $0.895 per share. The options vest 25% on the first anniversary of the grant, then equally in 36 monthly installments thereafter and are exercisable until August 14, 2027. The total estimated value using the Black-Scholes Model, based on a volatility rate of 86% and an option value of $0.65 was $107,250.

Stock-Based Compensation Expense from Stock Options and Warrants

The impact on our results of operations of recording stock-based compensation expense for the three and nine months ended September 30, ~~2017~~2021 and ~~2016~~2020 were as follows:




									Three Months Ended				Nine Months Ended
	Three Months Ended				Nine Months Ended				September 30,				September 30,
	September 30,				September 30,
	2017		2016		2017		2016		2021		2020		2021		2020
General and administrative	$	137,395	$	234,069	$	432,322	$	720,058	$	62,684	$	61,081	$	226,572	$	197,778
Sales and marketing		51,686		87,646		115,290		259,647		19,522		20,914		83,335		55,512
Engineering, research, and development		53,294		37,371		130,688		120,986		43,861		39,460		130,519		125,922
	$	242,375	$	359,086	$	678,300	$	1,100,691	$	126,067	$	121,455	$	440,426	$	379,212

Valuation Assumptions

The fair value of each stock option award was calculated on the date of grant using the Black-Scholes option pricing model. The following weighted average assumptions were used for the nine months ended September 30, ~~2017~~2021 and ~~2016.~~2020.


					Nine Months Ended
	Nine Months Ended				September 30,
	September 30,
	2017		2016		2021		2020
Risk-free interest rate	1.96	%	1.42	%	1.00	%	0.49	%
Expected life (years)	6.00		6.02		6.00		6.00
Expected dividend yield	-	%	-	%	—	%	—	%
Expected volatility	85	%	114	%	73.99	%	78.20	%

The risk-free interest rate assumption is based upon published interest rates appropriate for the expected life of our employee stock options.

��

The expected life of the stock options represents the weighted-average period that the stock options are expected to remain outstanding and was determined based on historical experience of similar awards, giving consideration to the contractual terms of the stock-based awards, vesting schedules and expectations of future employee behavior as influenced by changes to the terms of its stock-based awards.

The dividend yield assumption is based on our history of not paying dividends and no future expectations of dividend payouts.

The expected volatility in ~~2017~~2021 and ~~2016~~2020 is based on the historical publicly traded price of our common stock.

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~~Table of Contents~~

Restricted stock units

The following table summarizes restricted stock unit activity under our stock-based plans for the year ended December 31, ~~2016~~2020 and for the nine months ended September 30, ~~2017:~~2021:

Shares

Weighted Average
Grant Date Fair Value

Weighted Average
Remaining
Contractual Term
(Years)

Aggregate
Intrinsic Value
Outstanding at December 31, 2015

653,937

$
0.32

0.08

$
305,572
Awarded

340,480

$
0.72

0.70

$
-
Released

-

$
-

-

$
-
Canceled/forfeited/expired

-

$
-

-

$
-
Outstanding at December 31, 2016

994,417

$
0.72

0.70

$
731,845
Awarded

199,513

$
0.73

-

$
-
Released

(263,731)

$
-

-

$
-
Canceled/forfeited/expired

(47,072)

$
0.72

-

$
-
Outstanding at September 30, 2017

883,127

$
0.65

0.26

$
883,127

Expected to vest at September 30, 2017

883,127

$
-

-

$
883,127
Exercisable at September 30, 2017

764,739

$
-

-

$
764,739
Unvested at September 30, 2017

118,388

$
-

-

$
118,388
Unrecognized expense at September 30, 2017

$
80,413


	Shares
Outstanding at December 31, 2019		1,152,248
Awarded		284,480
Released		—
Canceled/forfeited/expired		—
Outstanding at December 31, 2020		1,436,728
Awarded		612,179
Released		—
Canceled/forfeited/expired		—
Outstanding at September 30, 2021		2,048,907

Expected to vest at September 30, 2021		2,048,907
Vested at September 30, 2021		1,611,407
Unvested at September 30, 2021		—
Unrecognized expense at September 30, 2021	$	—

~~2016~~2020

On ~~April 1, 2016~~March 24, 2020, the Company ~~granted five~~issued to 4 independent directors a total of ~~116,070~~100,000 restricted stock units. These restricted stock units were issued for the $65,000 of board compensation earned for the first quarter of 2020. The units were valued at ~~$81,249,~~$65,000 or ~~$0.70~~$0.65 per share, based on the closing stock price on the date of grant. All units ~~vest equally in 12 monthly installments beginning April 1, 2016.~~vested immediately. The shares of Common Stock associated with the Restricted Stock Unit evidenced by this Agreement will be issued to the director upon the earliest to occur of (A) ~~April 1, 2019,~~March 24, 2023, (B) a change in control of the Company, and (C) the termination of the director’s service with the Company.

On August ~~23, 2016~~7, 2020, the Company granted ~~five~~4 independent directors a total of ~~108,335~~81,252 restricted stock units. The units were valued at ~~$81,251,~~$65,000 or ~~$0.75~~$0.80 per share, based on the closing stock price on the date of grant. All units ~~vest equally in 12 monthly installments beginning August 23, 2016.~~vested immediately. The shares of Common Stock associated with the Restricted Stock Unit evidenced by this Agreement will be issued to the director upon the earliest to occur of (A) August ~~23, 2019,~~7, 2023, (B) a change in control of the Company, and (C) the termination of the director’s service with the Company.

On November ~~17, 2016~~5, 2020, the Company granted ~~five~~4 independent directors a total of ~~116,075~~67,708 restricted stock units. The units were valued at ~~$81,253,~~$65,000 or ~~$0.70~~$0.96 per share, based on the closing stock price on the date of grant. All units ~~vest equally in 12 monthly installments beginning November 17, 2016.~~vested immediately. The shares of Common Stock associated with the Restricted Stock Unit evidenced by this Agreement will be issued to the director upon the earliest to occur of (A) November ~~17, 2019,~~5, 2023, (B) a change in control of the Company, and (C) the termination of the director’s service with the Company.

~~2017~~

On ~~March 23, 2017~~December 17, 2020, the Company granted ~~five~~4 independent directors a total of ~~112,845~~35,520 restricted stock units. The units were valued at ~~$81,248,~~$65,000 or ~~$0.72~~$1.83 per share, based on the closing stock price on the date of grant. All units ~~vest equally~~vested immediately. The shares of Common Stock associated with the Restricted Stock Unit evidenced by this Agreement will be issued to the director upon the earliest to occur of (A) December 17, 2023, (B) a change in ~~12 monthly installments beginning~~control of the Company, and (C) the termination of the director’s service with the Company.

In the twelve months ended December 31, 2020, the company recorded $260,003 in restricted stock units as board compensation.

2021

On March ~~23,2017.~~26, 2021, the Company issued to 4 independent directors a total of 36,112 restricted stock units. These restricted stock units were issued for the $65,000 of board compensation earned for the first quarter of 2021. The units were valued at $65,002 or $1.80 per share, based on the closing stock price on the date of grant. All units vested immediately. The shares of Common Stock associated with the Restricted Stock Unit evidenced by this Agreement will be issued to the director upon the earliest to occur of (A) March ~~23, 2020,~~26, 2024, (B) a change in control of the Company, and (C) the termination of the director’s service with the Company.

‎

On ~~May 15, 2017~~March 26, 2021, the Company granted ~~the Chairman~~to 1 employee 1,000,000 restricted shares of the ~~Board~~Company’s Common Stock at the closing price as of March 26, 2021 of $1.80 per share. The restricted stock will vest as follows (a) 50% of the restricted shares will vest ratably over forty-eight (48) months; (b) 15% of the restricted shares will vest upon the Company achieving $25,000,000 in annualized recurring revenues as reported by totaling all contracted revenues for the trailing twelve months following the end of a reporting quarter; (c) the final 35% of the restricted shares will vest upon the Company achieving $50,000,000 in annualized recurring revenues as reported by totaling all contracted revenues for the trailing twelve months following the end of a reporting quarter. Vesting is dependent on the employee’s continued employment with the Company. All of the 1,000,000 ~~performance~~restricted shares will include a single trigger accelerated vesting should the Company undergo a change of control after August 1, 2021. If the Company undergoes a change of control prior to August 1, 2021, 300,000 of the restricted shares would be eligible for single trigger accelerated vesting.

On May 12, 2021, the Company issued to 4 independent directors a total of 38,924 restricted stock units. These restricted stock units were issued for the $65,000 of board compensation earned for the second quarter of 2021. The units were valued at ~~$600,000~~$65,002 or $0.60 per share, based on the closing stock price on the date of grant. These units vest upon meeting certain performance criteria. The Company expects that these units will be fully vested by December 31, 2017.

~~On May 19, 2017 the Company granted four independent directors a total of 86,668 restricted stock units. The units were valued at $65,001 or $0.75~~$1.67 per share, based on the closing stock price on the date of grant. All units ~~vest equally in 12 monthly installments beginning May 19, 2017.~~vested immediately. The shares of Common Stock associated with the Restricted Stock Unit evidenced by this Agreement will be issued to the director upon the earliest to occur of (A) May ~~19, 2020,~~2, 2024, (B) a change in control of the Company, and (C) the termination of the director’s service with the Company.

On August 11, 2021, the Company issued to 4 independent directors a total of 37,143 restricted stock units. These restricted stock units were issued for the $65,000 of board compensation earned for the third quarter of 2021. The units were valued at $65,000 or $1.75 per share, based on the closing stock price on the date of grant. All units vested immediately. The shares of Common Stock associated with the Restricted Stock Unit evidenced by this Agreement will be issued to the director upon the earliest to occur of (A) , August 11, 2024, (B) a change in control of the Company, and (C) the termination of the director’s service with the Company.

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~~Table of Contents~~

In the nine months ended September 30, 2021, the company recorded $195,005 in restricted stock units as board compensation and $116,347 as employee compensation.

Stock Based Compensation from Restricted Stock

The impact on our results of operations of recording stock-based compensation expense for restricted stock units for the three and nine months ended September 30, ~~2017~~2021 and ~~2016~~2020 was as follows:

Three Months Ended

Nine Months Ended

September 30,

September 30,

2017

2016

2017

2016
General and administrative

$
(93,935)

$
28,970

$
177,438

$
86,558

$
(93,935)

$
28,970

$
177,438

$
86,558



	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
General and administrative	$	65,000	$	65,002	$	195,005	$	130,002
Sales and marketing	$	56,635	$	—	$	116,347	$	—
	$	121,635	$	65,002	$	311,352	$	130,002

As of September 30, ~~2017,~~2021, there was 0 unearned restricted stock unit ~~compensation as described~~compensation.

Warrants

2020

On March 2, 2020 1 warrant holder exercised their common stock purchase warrant for 234,500 shares at the exercise price of $1.00 per share, resulting in ~~the tables above. If there are any modifications or cancellations~~additional capital of the underlying unvested awards, we may be required to accelerate, increase or cancel all or a portion of the remaining unearned restricted unit compensation expense. Future unearned restricted unit compensation will increase to the extent we grant additional equity awards.

~~Warrants Issued to Investors and Placement Agents~~

~~At September 30, 2017, we have~~$234,500. In December 2020, warrant holders exercised warrants to purchase ~~4,529,164~~common stock at $1.25 per share. At the commencement of the December warrant exercise, there were warrants outstanding that entitled their holders to purchase 2,691,459 shares of our common stock at exercise prices of $1.25 per share. Pursuant to the offer, warrant holders exercised warrants to purchase 2,666,459 shares of our common stock, resulting in additional capital of $3,333,074. As part of the exercise, 2,666,459 new warrants were issued to purchase common stock at $2.00 per share within three years.

2021

On June 30, 2021, the company issued warrants to purchase an aggregate of 227,994 shares of its common stock at an exercise price of $1.67 per share for 119,760 inducement warrants and VWAP for 108,234 additional warrants in connection with the issuance of a loan by a related party. The warrants are exercisable for a period commencing upon issuance of the notes and ending 36 months after issuance of the financing. The estimated aggregate fair value of the warrants issued is $119,103 using the Black-Scholes option valuation model.

On August 11, 2021 the company issued warrants of in connection with loan by related party VWAP for 10,072 additional warrants in connection with the issuance of a loan by a related party. The warrants are exercisable for a period commencing upon issuance of the notes and ending 36 months after issuance of the financing. The estimated aggregate fair value of the warrants issued is $5,285 using the Black-Scholes option valuation model

As of September 30, 2021, we have outstanding warrants to purchase 2,666,459 shares of common stock at ~~$1.20~~$2.06 per ~~share and 605,185 at $1.00 per share, respectively, which are outstanding. Of this amount,~~share. These warrants expire in 2023. We also have outstanding warrants to purchase ~~2,762,868~~238,066 shares of common stock at stated price per share in connection with the issuance of a loan with a related party. These warrants expire in ~~2018, warrants to purchase 1,558,356 shares expire in 2019, and warrants to purchase 813,125 shares expire in 2020.~~2024.

8. Fair Value Measurements

Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the authoritative guidance establishes a three-tier value hierarchy, which prioritizes the inputs used in measuring fair value as follows: (Level 1) observable inputs such as quoted prices in active markets; (Level 2) inputs other than the quoted prices in active markets that are observable either directly or indirectly; and (Level 3) unobservable inputs in which there is little or no market data, which requires us to develop our own assumptions. This hierarchy requires companies to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value. On a recurring basis, we measure certain financial assets and liabilities at fair value.

The following table presents assets that are measured and recognized at fair value as of September 30, ~~2017~~2021 on a recurring and non-recurring basis:



Description	Level 1		Level 2		Level 3		Gains (Losses)
Goodwill (non-recurring)	$	-—	$	-—	$	~~803,118~~	$496,352	-	$	—
Intangibles, net (non-recurring)	$	-—	$	-—	$	~~773,785~~	$1,253,496	-	$	—

The following table presents assets that are measured and recognized at fair value as of December 31, ~~2016~~2020 on a recurring and non-recurring basis:

Description

Level 1

Level 2

Level 3

Gains (Losses)
Goodwill (non-recurring)

$
-

$
-

$
803,118

$
(2,247,447)
Intangibles, net (non-recurring)

$
-

$
-

$
627,119

$
(1,684,203)



Description	Level 1		Level 2		Level 3		Gains (Losses)
Goodwill (non-recurring)	$	—	$	—	$	496,352	$	—
Intangibles, net (non-recurring)	$	—	$	—	$	1,368,329	$	—

9. Commitments and Contingencies

Litigation

As of the date of this report, there are no pending legal proceedings to which we or our properties are ~~subject.~~subject, except for routine litigation incurred in the normal course of business.

Operating Lease

As described in Note 5, the Company has a lease agreement for 8,898 square feet, for its office facilities in Chandler, AZ through January 2027. Monthly rental payments, excluding common area maintenance charges, are $25,953 to $28,733. The first twelve months of the lease includes a 50% abatement period. As of September 30, 2021, we have an operating lease asset balance for this lease of $1,242,264 and an operating lease liability balance for this lease of $1,442,665 recorded in accordance with ASC 842

The Company also has a lease through April 2022 for 3,248 square feet of office space located in Halifax, Nova Scotia, at a monthly rental expense of $2,665 to $3,371 per month, excluding common area maintenance charges. As of September 30, 2021, we have an operating lease asset balance for this lease of $18,082 and an operating lease liability balance for this lease of $23,075 recorded in accordance with ASC 842.

10. Related Party Transactions

~~As discussed previously,~~Unsecured Promissory Note Investments

2020

During February 2018, we conducted ~~the~~a private placement of Unsecured Promissory Notes (individually, a “Note” and collectively, the “Notes”) in the aggregate principal amount of $1,080,000 to certain investors, officers and directors of the Company. Each Note bears interest on the unpaid balance at the rate of 15 percent (15%) per annum and the principal and accrued interest is due and payable no later than December 1, 2020. We may prepay any of the Notes without notice, subject to a 2 percent (2%) pre-payment penalty. The Note offer was conducted by our ~~securities during~~management and there were 0 commissions paid by us in connection with the ~~nine months~~solicitation.

On November 18, 2020, we issued two additional unsecured Notes in the principle aggregate amount of $500,000, which becomes due two years after the date of issuance. These Notes bear interest on the unpaid balance at the rate of fifteen percent (15%) per annum. The Company may prepay these Notes without notice, subject to a 2 percent (2%) pre-payment penalty.

On December 31, 2020 $1,200,000 of these Notes and the accrued interest of $192,208 was settled into equity. We recorded a loss on settlement of debt of $668,260 for the year ended December 31, 2020.

2021

On January 25, 2021, we repaid $65,000 for an unsecured Note. On January 27, 2021, we repaid the remaining $15,000 of the unsecured Note and accrued interest of $34,379.

On June 30, 2021, we entered into a Credit Facility Agreement (the “Credit Agreement”) with one of the Company’s directors. The Company can borrow up to $2,000,000 under this Credit Agreement. As of September 30, ~~2016 for the gross proceeds of $1,953,600. One officer and one director of~~2021, the company ~~participated in the private placement investing~~has drawn a total of ~~$1,025,000, resulting~~$2,000,000 including cash in ~~1,708,333~~the amount of $1,456,250 and $543,750 of principal and accrued interest under the above-described Note that was rolled into the Credit Facility. The loan is secured by all our tangible and intangible assets including intellectual property. We will repay the principal amount plus accrued interest in 24 equal monthly installments commencing on June 30, 2022 and ending on June 30, 2024. This loan bears interest on unpaid balance at the rate of 15 percent (15%) per annum. The Company may prepay this Note without notice, penalty or charge. In consideration of the lender’s agreement to provide the facility, the Company issued warrants to purchase shares of its common stock ~~shares.~~at an exercise price of $1.67 per share in connection with the issuance of funds under this Credit Agreement. The warrants are exercisable for a period commencing upon issuance of the notes and ending 36 months after issuance of the financing. In addition, the Company has agreed to issue to the lender additional warrants entitling the lender to purchase a number of shares of the Company common stock equal to 10 percent (10%) of the amount of the advances made divided by the volume weighted average price over the 30 trading days preceding the advance (VWAP). Each warrant will be exercisable over a three-year period at an exercise price equal to the VWAP. During the nine month period ending September 30, 2021, the Company issued warrants to purchase an aggregate of 238,066 shares of its common stock at the stated exercise price per share in connection with the issuance of funds under this Credit Agreement. The estimated aggregate fair value of the warrants issued is $124,388 using the Black-Scholes option valuation model as of September 30, 2021.

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~~Table~~As of ~~Contents~~September 30, 2021, we have a principal balance of $2,000,000, discount of $114,554, and accrued interest of $73,656 outstanding under the said Credit Agreement.

11. Subsequent Events

~~There were no subsequent events through~~Subsequent to the ~~date that~~September 30, 2021, quarter end, Tom Akins advanced the ~~financial statements were issued.~~Company $600,000.

Item

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Quarterly Report on Form 10-Q contains “forward-looking statements” as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, in connection with the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially and adversely from those expressed or implied by such forward-looking statements Such forward-looking statements include statements about our expectations, beliefs or intentions regarding our potential product offerings, business, financial condition, results of operations, strategies or prospects. You can identify forward-looking statements by the fact that these statements do not relate strictly to historical or current matters. Rather, forward-looking statements relate to anticipated or expected events, activities, trends or results as of the date they are made and are often identified by the use of words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” or “will,” and similar expressions or variations. Because forward-looking statements relate to matters that have not yet occurred, these statements are inherently subject to risks and uncertainties that could cause our actual results to differ materially from any future results expressed or implied by the forward-looking statements. Many factors could cause our actual activities or results to differ materially from the activities and results anticipated in forward-looking statements. These factors include those risks disclosed under the caption “Risk Factors” included in our ~~2016~~2020 annual report on Form 10-K filed with the Securities and Exchange Commission, or the SEC, on March ~~31, 2017~~30, 2021 and in our subsequent filings with the SEC. Furthermore, such forward-looking statements speak only as of the date of this report. We undertake no obligation to update any forward-looking statements to reflect events or circumstances occurring after the date of such statements.

Overview

~~We are~~Mobivity Holdings Corp. (the “Company” or “we”) is in the business of developing and operating proprietary platforms over which ~~resellers,~~ brands and enterprises can conduct national and localized, data-driven marketing campaigns.

Mobivity’s Recurrency platform enables multi-unit retailers to leverage the power of their own data to yield maximum customer spend, frequency and loyalty while achieving the highest Return on Marketing Spend (ROMS) possible. Mobivity’s customers use Recurrency to:

Transform messy point-of-sale (POS) data collected from thousands of points of sale into usable intelligence.

Measure, predict, and boost guest frequency and spend by channel.

Deploy and manage one-time use offer codes and attribute sales accurately across every channel, promotion and media program.

Deliver 1:1 promotions and offers with customized Mobile Messaging, Personalized Receipt Promotions and Integrated Loyalty programs.

Mobivity’s Recurrency, delivered as a Software-as-a-Service (“SaaS”) platform, is used by leading brands including Subway, Sonic Drive-In, Baskin Robbins, Chick-fil-A and Checkers/Rally’s across more than 40,000 retail locations globally.

We’re living in a data-driven economy. In fact, by 2003 — when the concept of “big data” became common vernacular in marketing - as much data was being created every two day as had been created in all of time prior to 2003. Today, Big Data has grown at such a rate that 90% of the world’s data has been created in the past two years. Unfortunately, despite there being so much data accumulated, only one percent of data is being utilized today by most businesses.

The challenge for multi-unit retailers isn’t that they don’t have enough data; in fact, national retailers are collecting millions of detailed transactions daily from thousands of points of sale around the world. The challenge is being able to make sense of this transaction data, which is riddled with data entry errors, collected by multiple POS systems and complicated by a taxonomy compiled by thousands of different franchisee owners. To normalize such an overwhelming amount of data into usable intelligence and then leverage it to optimize media investment and promotion strategy requires numerous teams of data analysts and data scientists that many retailers and restaurant operators simply don’t have. Which is why so many technology and data companies, that can help solve these challenges, have been invested in and acquired by brands including, McDonald’s, Starbucks and Yum Brands.

Mobivity’s Recurrency platform fills this need with a self-service SaaS offering, enabling operators to intelligently optimize their promotions, media and marketing spend. Recurrency drives system-wide sales producing on average a 13% increase in guest spend and a 26% improvement in frequency, ultimately delivering an average Return on Marketing Spend of 10X. In other words, for every dollar invested in marketing, retailers using Recurrency to manage, optimize and deliver multi-channel consumer promotions generate an average of ten dollars in incremental revenue from their customers.

The Recurrency Platform

Mobivity’s Recurrency™ platform unlocks valuable POS and mobile data to help transform customer transactions into actionable and attributable marketing insights. Our technology provides transactional data, in real-time, that uncovers market-basket information and attributes both online and traditional promotions. Recurrency is comprised of seven components.

POS Data Capture

Recurrency captures, normalizes, integrates, and stores transaction data and is compatible with most POS systems used by restaurants and retailers today. The result is a clean useful dataset upon which to predict and influence customers’ buying behavior and deliver basket-level insights.

Analytics Powered by Machine Learning

Recurrency uses Machine Learning (“ML”) to uncover patterns in the buying behaviors of consumers and leverages that data to suggest pricing optimizations, and guide marketing campaigns.

Offers and Promotions

Recurrency provides a digital wallet system for creating and managing dynamic offers and promotions, enabling accurate and complete closed-loop attribution across all channels, media and marketing efforts. Retailers can deploy one-time, limited-use and multi-use promotions across all online and offline marketing channels that are scannable at the POS or redeemable online, enabling fraud-free, controllable promotion delivery and attribution at scale. Marketing teams can use the comprehensive attribution analysis and insights to optimize media mix and spend for maximum Return on Marketing Spend (“ROMS”).

Predictive Offers

Recurrency leverages the normalized data captured at the POS and applies Artificial Intelligence (“AI”) to build profiles of both known and anonymous customers, analyzes pre and post-redemption behavior and then predicts offers that will drive the highest increases in customer spend and frequency at the lowest discount possible. The result is optimized, personalized promotions that produce the highest ROMS possible.

Personalized Receipt Promotions

Recurrency unlocks the power of transactional data to create relevant and timely customer messages printed on the receipts already being generated at the POS. Both clients and agencies are using Recurrency to drive better results and make decisions around offers, promotions, and customer engagement through the medium of the printed receipt. Software integrated with leading POS systems, such as Oracle, MICROS, or installed directly onto receipt printer platforms, such as Epson’s OmniLink product, dynamically controls what is printed on receipts including images, coupons, announcements, or other calls-to-action, such as invitations to participate in a survey. Recurrency offers a Web-based interface where users can design receipt content and implement business rules to dictate what receipt content is printed in particular situations. All receipt content is also transmitted to cloud-based Recurrency for storage and analysis.

Customized Mobile Messaging

Recurrency transforms standard short message service (“SMS”), multimedia messaging service (“MMS”), and rich communication services (“RCS”) into a data-driven marketing medium. Recurrency tracks and measures offer effectiveness at a more granular level than other solutions, allowing clients to create smarter offers and drive higher redemption rates. Our proprietary platform connects to all wireless carriers so that any consumer, on any wireless service (for example, Verizon), can join our customer’s SMS/MMS mobile marketing campaigns. Our proprietary platforms allow resellers, brands and enterprises to market their products and services to consumers through text messages sent directly to the consumers’ mobile phones, content on printed receipts, mobile device applications, which consists of software available to both phones and tablet PCs. We generate revenue by charging the brands and enterprises a per-message transactional fee, or through fixed or variable software licensing fees.campaign. Our customers ~~include national franchisers, professional sports teams~~use Recurrency’s self-service interface to build, segment, target and ~~associations and other national brands such as Sonic, Subway, Chick-Fil-A, Baskin Robbins, and others.~~

~~Mobile phone users represent a large and captive audience. While televisions, radios, and even PCs are often shared by multiple consumers,~~optimize mobile phones are personal devices representing a unique and individual address to the end user. We believe that the future of digital media will be significantly influenced by mobile phones where a direct, personal conversation can be had with the world’s largest target audience. According to a report published by International Data Corporation (IDC), by 2015, more U.S. Internet users will access the Internet through mobile devices than through PCs or other wireline devices (Worldwide New Media Market Model 1H-2012 Highlights: Internet Becomes Ever More Mobile, Ever Less PC-Based (IDC #237459)). The IDC study further reports that the number of people accessing the Internet, in the U.S., through PCs will shrink from 240 million consumers in 2012 to 225 million in 2016. At the same time, the number of mobile users will increase from 174 million to 265 million. We believe the future of mobile applications and services includes banking, commerce, advertising, video, games and just about every other aspect of both on and offline life.

Our unique approach to personalized, targeted offline marketing is marketed through our “SmartSuite” portfolio of solutions that all leverage our proprietary path to point-of-sale data. Our primary SmartSuite product is “SmartMessenger” which utilizes a variety of communications channels for targeted awareness and offers messages to consumers, leveraging purchase data to measure and target those messages much in the same way an e-commerce operator, like Amazon, uses online shopping cart data. For example, a consumer might receive a message near lunch time offering a special discount to purchase a six-inch sub at their nearest Subway location. Once the consumer shows that message at check out on their mobile device, our SmartReceipt technology kicks in to match that customer’s purchase with their offer redemption, thereby providing the ability to assess the effectiveness of the offer. It also builds a purchase history of that customer for more targeted offers in the future.

In addition to SmartMessenger, our SmartReceipt solution is capable of controlling the printed receipt to print targeted, graphical messages, including offers and coupons, on the front of the receipt consumers receive following a purchase. With SmartReceipt, we can also transform the underutilized, printed receipt into a targeted messaging opportunity. As an example, say a consumer purchases a sandwich but doesn’t purchase a beverage. SmartReceipt sees the customer’s purchase information in real-time – and as the receipt is being printed, it can automatically see that the consumer didn’t buy a beverage and dynamically, in real time, add a strong beverage coupon to the printed receipt in an effort to influence that consumer to add a beverage on their next visit.

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~~Table of Contents~~

Our SmartSuite portfolio of solutions is rounded out with “SmartAnalytics,” which provides a set of reporting and analytics tools enabling brands to better understand their sales data across what could be a disparate collection of various point-of-sale devices.

Our goal is to expand our solution offerings to include applications that will leverage offline purchase data to provide attribution and better power mobile and online ad networks, shape marketing from real-time inventory and sales data, and apply emerging machine learning and artificial intelligence technologies to the massive purchase data sets we’re accumulatingcampaigns to drive ~~predictive~~increased guest frequency and ~~automated solutions.~~spend. Recurrency is an industry leader in RCS messaging and has an industry leading broadcast reach.

~~Recent Events~~Belly Loyalty

~~2017 Customer Contract Renewal and Expansion~~

~~On June 30, 2017 we renewed and expanded our partnership with one of our largest customers to foster additional~~Mobivity’s Belly Loyalty solution drives increased customer engagement and ~~long-term growth through utilization~~frequency with a customer-facing digital rewards platform via an app and digital pad. Using Belly, customers can customize rewards and leverage pre-built email campaigns and triggers to encourage greater frequency as well as identify and reactivate lapsed customers.

Company Strategy

Our objective is to build an industry-leading Software-as-a-Service (“SaaS”) product that connects consumers to merchants and brands. The key elements to our strategy are:

Exploit the competitive advantages and operating leverage of our technology platform. The core of our business is our proprietary POS Data Capture technology. Several years of development went into designing POS Data Capture such that the process of intercepting POS data and performing actions, such as controlling the receipt printer with receipt is scalable, portable to a wide variety of POS platforms, and does not impact performance factors including the print speed of a typical receipt printer. Furthermore, we believe the transmission of POS data to Mobivity’s cloud-based data stores presents a very competitive and innovative method of enabling POS data access. Additionally, we believe that our Recurrency platform is more advanced than technologies offered by our competitors and provides us with a significant competitive advantage. With more than ten years of development, we believe that our platform operates SMS/MMS text messaging transactions at a “least cost” relative to competitors while also being capable of supporting SMS/MMS text messaging transactional volume necessary to support our goal of several thousand end users. Leveraging our Recurrency platform allows for full attribution of SMS/MMS offers, which we believe is a unique combination of both SMS/MMS text messaging and POS data.

Evolve our sales and customer support infrastructure to uniquely serve very large customer implementations such as franchise-based brands who operate a large number of locations. Over the past few years we have focused our efforts on the development of our technology and solutions with the goal of selling and supporting small and medium-sized businesses. Going forward, we intend to increase significantly our investments in sales and customer support resources tailored to selling to customers that operate franchise brands. Today we support more than 30,000 merchant locations globally.

Acquire complementary businesses and technologies. We will continue to search and identify unique opportunities which we believe will enhance our product features and functionality, revenue goals, and technology. We intend to target companies with some or all of the ~~Mobivity SMART~~following characteristics: (1) an established revenue base; (2) strong pipeline and growth prospects; (3) break-even or positive cash flow; (4) opportunities for substantial expense reductions through integration into our platform; (5) strong sales teams; and (6) technology and services that further build out and differentiate our platform. ~~With personalized customer communications via text/social messaging (SmartMessenger), and optimized business performance (SmartAnalytics), we~~Our acquisitions have ~~crafted~~historically been consummated through the issuance of a ~~complete and self-optimizing solution for increasing customer acquisition, frequency and spend.~~

The renewed and expanded partnership utilizes the Mobivity platform for all of our customer’s locations for a term of 5 years, and includes a co-marketing commitment from both companies to ensure the continued growth in consumer subscribers to the program. The 5-year term includes a six figure monthly minimum commitment that is prepaid to Mobivity on an annual basis.

~~2016 Warrant Exercise~~

Between September 29 and October 31, 2016, we conducted an offer to the holders of our outstanding common stock purchase warrants pursuant to which our warrant holders were permitted to exercise their warrants at a reduced exercise price for a period expiring on October 31, 2016. At the commencement of the warrant offer, there were warrants outstanding that entitled their holders to purchase 8,551,168 sharescombination of our common stock and cash.

Build our intellectual property portfolio. We currently have nine issued patents that we believe have significant potential application in the technology industry. We plan to continue our investment in building a strong intellectual property portfolio.

While these are the key elements of our current strategy, there can be no guarantees that our strategy will not change or that our strategy will be successful.

Recent Events

Unsecured Promissory Note Investments in 2021

On January 25, 2021, we repaid $65,000 for an unsecured Note. On January 27, 2021, we repaid the remaining $15,000 of the unsecured Note and accrued interest of $34,379.

On June 30, 2021, we entered into a Credit Facility Agreement (the “Credit Agreement”) with one of the Company’s directors. The Company can borrow up to $2,000,000 under this Credit Agreement. As of September 30, 2021, the company has drawn a total of $2,000,000 during the period, including cash in the amount of $1,456,250 and 543,750 of principal and accrued interest under the above-described Notes that was rolled into the Credit Facility. The loan is secured by all our tangible and intangible assets including intellectual property. We will repay the principal amount plus accrued interest in 24 equal monthly installments commencing on June 30, 2022 and ending on June 30, 2024. This loan bears interest on unpaid balance at ~~exercise prices~~the rate of ~~$1.00 and $1.20~~fifteen percent (15%) per ~~share.~~annum. The ~~holders~~Company may prepay this Note without notice, penalty or charge. In consideration of ~~all~~the lender’s agreement to provide the facility, the Company issued warrants ~~were allowed~~ to ~~conduct cash-based exercises~~purchase shares of ~~their warrants~~its common stock at an exercise price of ~~$0.70~~$1.67 per share ~~up through October 31, 2016. We undertook~~ this limited-time warrant exercise price reduction in order to raise additional capital without incurring further potential dilution to our stockholders. In addition, through the warrant holders’ acceptance of our offer, we could significantly reduce the number of outstanding warrants and thereby simplify our capital structure. As of the close of the warrant offer, there have been 3,329,990 warrants exercised to purchase 3,329,990 shares of our common stock, resulting in additional capital of $2,330,993. The warrant offer was conducted by our management and there were no commissions paid by us in connection with the ~~solicitation.~~

~~LiveLenz Acquisition~~

On January 15, 2016, we acquired all of the outstanding capital stock of LiveLenz Inc., a Nova Scotia corporation (“LiveLenz”), pursuant to an agreement dated January 15, 2016 among the Company and the stockholders of LiveLenz. Pursuant to the agreement, we acquired all of the capital stock of LiveLenz in consideration of our issuance of 1,000,000 shares (“Consideration Shares”) of our common stock to the LiveLenz stockholders and our issuance of an additional 15,000 share of our common stock in satisfaction of certain liabilities of LiveLenz.funds under this Credit Agreement. The agreement included customary representations, warranties, and covenants by us and the LiveLenz stockholders, including the LiveLenz stockholders’ agreement to indemnify us against certain claims or losses resulting from certain breaches of representations, warranties or covenants by the LiveLenz stockholders in the agreement. Pursuant to the agreement, the LiveLenz stockholders have agreed to adjust the number of Consideration Shares downward based on LiveLenz’s working capital as of the closing and in the event of any claims for indemnification by us. The LiveLenz stockholders have agreed that 100% of the Consideration Shares will be escrowedwarrants are exercisable for a period ~~of 18 months and subject to forfeiture based on indemnification claims by us or the final determination of LiveLenz’s working capital as~~commencing upon issuance of the ~~closing date. As~~notes and ending 36 months after issuance of the ~~date of this report, no adjustments have been made~~financing. In addition, the Company has agreed to issue to the ~~working capital and~~lender additional warrants entitling the ~~Consideration Shares have been issued~~lender to purchase a number of shares of the Company common stock equal to ten percent (10%) of the amount of the advances made divided by the volume weighted average price over the 30 trading days preceding the advance (VWAP). Each warrant will be exercisable over a three-year period at an exercise price equal to the ~~LiveLenz stockholders.~~

~~2016 Private Placement~~

~~In March 2016, we conducted~~VWAP. During the ~~private placement~~nine months period ending September 30,2021, the Company issued warrants to purchase an aggregate of ~~3,256,000~~238,066 shares of ~~our~~its common stock at athe stated exercise price ~~of $0.60~~ per share ~~for~~in connection with the ~~gross proceeds~~issuance of ~~$1,953,000.~~funds under this Credit Agreement. The ~~offering was conducted by our management and no commission or other selling fees were paid by us. Pursuant to the terms~~estimated aggregate fair value of the ~~offering,~~warrants issued is $124,388 using the Black-Scholes option valuation model as of September 30, 2021.

As of September 30, 2021, we ~~entered into registration rights agreement with~~have a principal balance of $2,000,000, discount of $114,554, and accrued interest of $73,656 outstanding under the investors, pursuant to which we filed with the SEC a registration statement to register the resale of the private placement shares. The registration statement was declared effective by the SEC on August 8, 2016.said Credit Agreement.

~~Working Capital Line of Credit Facility~~

Chase Loan

~~In March 2016,~~

On April 10, 2020, we entered into a ~~Working Capital Line~~commitment loan with Chase Bank, N.A. under the CARES act and the Small Business Administration (SBA) Paycheck Protection Program (PPP), in the principal aggregate amount of ~~Credit Facility (the “Facility”) with Silicon Valley Bank (“SVB”) to provide up to $2 million to finance our general working capital needs. The Facility~~$891,103, which is ~~funded based on cash on deposit balances~~due and ~~advances against our accounts receivable based on customer invoicing. Interest on Facility borrowings is calculated at rates between the prime~~

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~~Table of Contents~~

~~rate minus 1.75% and prime rate plus 3.75% based~~payable two years after issuance. This note bears interest on the ~~borrowing base formula used~~unpaid balance at the ~~time~~rate of ~~borrowing.~~one percent (1%) per annum. The ~~Facility~~note contains ~~standard events~~a deferral period of ~~default, including payment defaults, breaches~~ten months after the 24 week usage period, for which no interest or principal payments are due. Forgiveness of ~~representations, breaches~~the loan may be obtained by meeting certain SBA requirements.

On July 21, 2021, SBA authorized full forgiveness of ~~affirmative~~the $891,103 PPP Loan after the Company applied for a loan forgiveness and met all the requirements for such loan forgiveness under the SBA program. The balance of the loan was written off and recorded as a gain on forgiveness of debt of $891,103.

Office Relocation

We entered into a six-year office lease starting in February of 2021 for 8,898 square feet of office space located at 3133 W. Frye Road, Suite 215, Chandler, Arizona. Monthly rental payments, excluding common area maintenance charges, will be $25,953 to $28,733. The first twelve months of the lease includes a 50% abatement period.

Intellectual Property

U.S. Patent number 10,949,868 B1 was granted on March 16, 2021. This patent covers the single use of electronic retailer coupons and referral program. The method and system prevents fraud, is specific to geolocation and provides an audit trail of the customer, cashier and marketing platform. A user can also earn a subsequent coupon by referring a friend.

US Patent number 6,788,769 B1 expired in March of 2021. This patent covered a method and system for using telephone numbers as a key to address email and online content without the use of a look-up database. Using this system, a phone number is used to access a website or ~~negative covenants, and bankruptcy.~~an email address in exactly the same way it is used to dial a telephone.

Results of Operations

Revenues

Revenues consist primarily of ~~several different lines~~a suite of ~~business. These primarily include, SMS, SmartMessenger, Smart~~products under the Recurrency platform. The Recurrency platform is comprised of POS Data Capture, Analytics, Offers and Promotions, Predictive Offers, Personalized Receipt ~~SmartAnalytics, Ad Model revenues which are paid on a per coupon redemption basis,~~Promotions, Customized Mobile Messaging, Belly Loyalty, and other revenues.

Revenues for the three months ended September 30, ~~2017~~2021, were ~~$2,083,987,~~$2,311,548 a decrease of ~~$98,763,~~$868,625 or ~~5%,~~27% compared to the same period in ~~2016. This slight decline is primarily due to front-end pricing adjustments associated with prepayments offered on long-term contracts with large enterprise customers.~~ 2020.

Revenues for the nine months ended September 30, ~~2017~~2021, were ~~$6,436,072, an increase~~$7,561,966 a decrease of ~~$333,571,~~$2,934,861 or ~~5%,~~28% compared to the same period in ~~2016. The net increase~~2020. This decrease is primarily ~~attributable~~due to ~~an increase in SMS~~the January of 2020 execution of a contract that recognized revenue of ~~$350,796 offset by decreases in other revenues.~~

~~Unbilled Deferred Revenue, an Operational Measure~~

~~The deferred revenue balance on our consolidated balance sheets does not represent~~$1,280,369 during the ~~total contract value~~nine months ended September 30, 2020. In addition, during the nine months ended September 30, 2021, we had a reduction of annual or multi-year, non-cancelable customer agreements. Unbilled deferred revenue is an operational measure that represents future billings under our customer agreements that have not been invoiced and, accordingly, are not recorded in deferred revenue. Unbilled deferred revenue amounts are reflected in the table below. Our typical contract length is between 12 and 60 months. We expect that the amount of unbilled deferred revenue will change from quarter to quarter for several reasons, including the specific timing, duration and size of customer agreements, varying billing cycles of agreements, the specific timing of customer renewals, the timing of when unbilled deferred revenue is to be recognized as revenue, and changes in customer financial circumstances. For multi-year customer agreements billed annually, the associated unbilled deferred revenue is typically high at the beginning of the contract period, zero just prior to renewal, and increases when the agreement is renewed. Low unbilled deferred revenue attributableSMS messaging volume due to a ~~particular~~very large customer ~~agreement is often associated with an impending renewal~~pausing marketing spend because of COVID-19 and ~~may not be an indicator~~$471,952 reduction due to adoption of ~~the likelihood of renewal or future revenue from such customer. Accordingly, we expect that the amount of aggregate unbilled deferred revenue will change from year-to-year depending~~new accounting standard in ~~part upon the number and dollar amount of customer agreements at particular stages in their renewal cycle. Such fluctuations are not a reliable indicator of future revenues.~~2020.

Fiscal 2017

September 30

June 30

March 31
Accounts receivable, net

$
1,412,333

$
702,199

$
114,210
Deferred revenue

2,124,441

626,670

407,436
Unbilled deferred revenue

809,800

2,349,200

1,567,600

Fiscal 2016

December 31

September 30

June 30

March 31
Accounts receivable, net

$
1,244,484

$
723,724

$
860,674

$
791,221
Deferred revenue

160,023

272,188

295,240

278,528
Unbilled deferred revenue

2,254,400

45,000

277,500

510,000

Cost of Revenues

Cost of revenues consist primarily of ~~cloud based~~cloud-based software licensing fees, short code maintenance expenses, ~~personal~~messaging related expenses, and other expenses.

Cost of revenues for the three months ended September 30, ~~2017~~2021, was ~~$786,385, an increase~~$1,008,703, a decrease of ~~$222,346,~~$65,411, or ~~39%~~7%, compared to the same period in ~~2016. This increase is primarily due to higher SMS and application costs associated with messaging fees and surcharges charged by text messaging carriers.~~ 2020.

Cost of revenues for the nine months ended September 30, ~~2017~~2021, was ~~$1,943,534, an increase~~$3,322,639 a decrease of ~~$469,560,~~$419,976, or ~~32%,~~11% compared to the same period in ~~2016.~~2020. This ~~increase~~decrease is primarily due to ~~higher~~lower SMS messaging volume and decreased application costs associated with ~~messaging fees and surcharges charged~~cost reduction initiatives by ~~text messaging carriers.~~ the Company.

General and Administrative

General and administrative expenses consist primarily of salaries and personnel related expenses, consulting costs and other expenses.

-19-

~~Table of Contents~~

General and administrative expenses ~~decreased $486,970,~~increased $356,053 or ~~43%~~40%, to $1,245,085 during the three months ended September 30, ~~2017~~2021, compared to $889,032 for the same period in ~~2016.~~2020. The ~~decrease~~increase in general and administrative expense was primarily due ~~to a decrease~~an increase in ~~bad debt expense~~legal expenses of ~~$140,034, offset~~$265,977 by ~~increases in share based compensation.~~ the Company.

General and administrative expenses ~~decreased $609,235,~~increased $353,111, or ~~19%~~11%, to $3,491,855 during the nine months ended September 30, ~~2017~~2021, compared to $3,138,744 for the same period in ~~2016. The decrease in general and administrative expense was primarily due to decreases in personnel expenses and bad debt expense.~~2020.

Sales and Marketing

Sales and marketing expenses consist primarily of salaries and personnel related expenses, stock-based compensation expense, consulting costs and other ~~expenses~~expenses.

Sales and marketing expenses ~~decreased $316,082,~~increased $533,695 or ~~27%~~120%, to $978,968 during the three months ended September 30, ~~2017~~2021, compared to $445,273 for the same period in ~~2016.~~2020. The ~~decrease~~increase was primarily due to ~~lower~~higher personnel ~~and~~costs, share based compensation ~~expenses.~~ expenses, and direct marketing activities.

Sales and marketing expenses ~~decreased $612,568,~~increased $1,238,519, or ~~19%~~71%, to $2,987,411 during the nine months ended September 30, ~~2017,~~2021 compared to $1,748,892 for the same period in ~~2016.~~2020. The ~~decrease~~increase was primarily due to ~~lower~~higher personnel ~~and~~costs, share based compensation ~~expenses.~~expenses, and direct marketing activities.

Engineering, Research & Development

Engineering, research & development costs include salaries, ~~stock based~~stock-based compensation expenses, travel, consulting costs, and other expenses.

Engineering, research & development expenses increased ~~$492,007,~~$56,767 or ~~72%~~9%, to $678,209 during the three months ended September 30, ~~2017~~2021, compared to $621,442 for the same period in 2020. This increase is primarily due to the increase in projects compared to the same period in 2016. The increase was primarily due to an increase in personnel related costs as compared to 2016 to support the Company’s growth as well as fewer software development expenses being capitalized.2020.

Engineering, research & development expenses ~~increased $1,479,660,~~decreased $744,331 or ~~92%~~26%, to $2,076,194 during the nine months ended September 30, ~~2017~~2021, compared to $2,820,525 for the same period in 2020. This decrease is primarily due to the reduction of expenses from the $683,687 related to a new contract in the previous year and $249,460 reduction due to adoption of new accounting standard in 2020.

Impairment on Intangible Asset

Impairment on intangible assets consists of an intangible asset valued at less than its carrying value. Impairment on intangible assets decreased 100% from $3,481 to $0 for the three and nine months ended September 30, 2021, compared to the same period in ~~2016. The increase was primarily due to an increase in personnel related costs as compared to 2016 to support the Company’s growth as well as fewer software development expenses being capitalized.~~2020.

Depreciation and Amortization

Depreciation and amortization expense ~~consists~~consist of depreciation on our equipment and amortization of our intangible assets.

Depreciation and amortization expense ~~decreased $88,909~~increased $6,536 or ~~46%~~4%, to $182,663 during the three months ended September 30, ~~2017~~2021 compared to the same period in ~~2016.~~ 2020.

Depreciation and amortization expense decreased ~~$228,150~~$10,498 or ~~45%~~2%, during the nine months ended September 30, ~~2017~~2021 compared to the same period in ~~2016.~~2020. This decrease is primarily due to the reduction in amortization of intangibles on software development costs.

Interest Income

Interest income consists of stated interest income on our cash balances. Interest income decreased $309 or 100% to $0, during the three months ended September 30, 2021, compared to the same period in 2020. This decrease in interest income is related to lower earnings on cash positions held throughout the year compared to the previous year.

Interest income consists of stated interest income on our cash balances. Interest income decreased $1,215, or 100%, during the nine months ended September 30, 2021, compared to the same period in 2020. This decrease in interest income is related to lower earnings on cash positions held throughout the year compared to the previous year.

Interest Expense

Interest expense consists of stated or implied interest expense on our notes payable, amortization of note discounts, and amortization of deferred financing costs. Interest expense increased ~~$36,848,~~$25,710, or ~~142%~~41%, during the three months ended September 30, ~~2017~~2021, compared to the same period in ~~2016.~~ 2020. This increase in interest expense is primarily related to an increase of borrowings from our related parties.

Interest expense ~~increased $62,403,~~decreased $63,185, or ~~118%~~30%, during the nine months ended September 30, ~~2017~~2021, compared to the same period in ~~2016.The increase~~2020. This decrease in interest expense is primarily related to a reduction of borrowings from our related parties.

Gain on Forgiveness of Debt

On July 21, 2021, SBA authorized full forgiveness of the $891,103 PPP Loan after the Company applied for loan forgiveness and met all the requirements for such loan forgiveness under the SBA program. The balance of the loan was forgiven and recorded as a gain on forgiveness of debt of $891,103.

Impairment of Intangible Assets

The change in impairment of intangibles is $3,481 in both the three and nine ~~months ended~~month period compared to $0 in both the three and nine month comparative periods.

Loss on Disposal of Fixed Assets

The loss on disposal of assets decreased by 79% from a September 30, ~~2017 is primarily related~~2020, balance of $3,935 to ~~interest~~a September 30, 2021, balance of $800, this has led to an increase in the loss on ~~notes payable for the Livelenz subsidiary and borrowings against the Facility.~~disposal of assets.

Foreign Currency

The Company’s financial results are impacted by volatility in the Canadian/U.S. Dollar exchange rate. The average U.S. Dollar exchange rate for the three and nine months ended September 30, ~~2017~~2021, was $1 Canadian equals ~~$0.80~~$0.81 and ~~$0.77~~$0.80 U.S. Dollars, respectively. This compares to an average rate of $1 Canadian equals ~~$0.77~~$0.75 and ~~$0.76 U.S. Dollars, respectively~~$.74 during the same periods of ~~2016.~~2020. The Company’s functional or measurement currency is the U.S. Dollar. Based on a U.S. Dollar functional currency, the following are the key areas impacted by foreign currency volatility:

~~The Company sells products primarily in U.S. Dollars; therefore, reported revenues are not highly impacted by foreign currency volatility.~~

A portion of the Company’s expenses are incurred in Canadian Dollars and therefore fluctuate in U.S. Dollars as the U.S. Dollar varies. A weaker U.S. Dollar results in an increase in translated expenses, and a stronger U.S. Dollar results in a decrease.

Changes in foreign currency rates also impact the translated value of the Company’s working capital that is held in Canadian Dollars. Foreign exchange rate fluctuations result in foreign exchange gains or losses based upon movement in the translated value of Canadian working capital into U.S. Dollars.

The Company sells products primarily in U.S. Dollars; therefore, reported revenues are not highly impacted by foreign currency volatility.

-20-

~~Table~~A portion of ~~Contents~~the Company’s expenses are incurred in Canadian Dollars and therefore fluctuate in U.S. Dollars as the U.S. Dollar varies. A weaker U.S. Dollar results in an increase in translated expenses, and stronger U.S. Dollar results in a decrease.

Changes in foreign currency rates also impact the translated value of the Company’s working capital that is held in Canadian Dollars. Foreign exchange rate fluctuations result in foreign exchange gains or losses based upon movement in the translated value of Canadian working capital into U.S. Dollars.

The change in foreign currency was a loss of ~~$931~~$4,329 and ~~$4,120~~a gain of $247 for the three ~~and nine~~ months ended September 30, ~~2017,~~2021 and 2020, respectively.

The change in foreign currency was a loss of $6,577 and a gain of ~~$372 and $1,488~~$1,345 for the ~~three~~nine months ended September 30, ~~2016,~~2021 and 2020, respectively.

Liquidity and Capital Resources

As of September 30, ~~2017,~~2021, we had current assets of ~~$3,407,869,~~$3,316,923, including ~~$1,709,129~~$568,896 in cash, and current liabilities of ~~$5,971,545,~~$5,416,536, resulting in a working capital deficit of ~~$(2,563,676).~~ $2,099,613.

We believe as of the date of this report, we have the working capital on hand, along with our expected cash flow from operations and budget reductions, to fund our current level of operations at least through the end of the next ~~fiscal year.~~twelve months. However, there can be no assurance that we will not require additional capital. If we require additional capital, we will seek to obtain additional working capital through the sale of our securities and, if available, bank lines of credit. However, there can be no assurance we will be able to obtain

access to capital as and when needed and, if so, the terms of any available financing may not be subject to commercially reasonable terms.

Cash Flows


					Nine Months
	Nine Months Ended				September 30,
	September 30,
	2017		2016		2021		2020
Net cash provided by (used in):
Operating activities	$	(1,237,171)	$	(1,792,163)	$	(3,189,511)	$	(500,742)
Investing activities		(403,822)		(482,303)		(388,763)		(213,796)
Financing activities		2,159,077		1,916,679		886,076		964,328
Effect of foreign currency translation on cash flow		2,560		(2,803)		(21,726)		(17,877)
Net change in cash	$	520,644	$	(360,590)	$	(2,713,924)	$	231,913

Operating Activities

We used cash from operating activities totaling ~~$1,237,171~~$3,189,511 during the nine months ended September 30, ~~2017~~2021 and used cash ~~of $1,792,163~~from operating activities totaling $500,742 during the nine months ended September 30, ~~2016.~~2020. The ~~decrease~~increase in cash used in ~~operating activities~~operations was primarily due to ~~changes~~an increase in ~~deferred revenue.~~net loss of $4,109,956 in addition to an increase to $1,402,518 of accounts receivable.

Investing Activities

Investing activities during the nine months ended September 30, ~~2017 includes $382,023~~2021, consisted of $78,217 of equipment purchases and $310,546 of capitalized software development ~~costs, $16,810 of cash paid for patents, and $4,989 of equipment purchases.~~ costs.

Investing activities during the nine months ended September 30, ~~2016 includes $30,209~~2020, consisted of $8,044 of equipment purchases, ~~$442,267 of capitalized software development costs, $20,915~~$8,755 of cash paid for patents and ~~$11,088~~$196,997 of ~~cash received from acquisitions.~~capitalized software development costs.

Financing Activities

Financing activities ~~for~~during the nine months ended September 30, ~~2017 includes net~~2021, consisted of $1,456,250 proceeds from one of the Company’s directors under a Credit Facility Agreement, $490,174 of payments on notes payable and $80,000 of ~~$114,749, proceeds from borrowings under the line of credit agreement of $1,999,531, and net proceeds from stock issued of $114,749 offset by $15,000 of cash paid for deferred financing fees.~~payments on related party notes payable.

Financing activities ~~for~~during the nine months ended September 30, ~~2016 includes~~2020 consisted of $337,394 of payments on notes payable, $920,722 of proceeds from notes payable issued in relation to emergency government funding for COVID-19, $241,700 of net proceeds from the sale of common stock units ~~of $1,953,600, offset by $32,287 of cash paid for deferred financing fees~~ and ~~$4,634~~proceeds, net of repayments, of ~~notes payable.~~$139,300 from the issuance of related party debt.

Critical Accounting Policies and Estimates

Refer to Note 2, “Summary of Significant Accounting Polices,” in the accompanying notes to the condensed consolidated financial statements for a discussion of recent accounting pronouncements.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

-21-

~~Table of Contents~~

~~Ite~~mItem 3. Quantitative and Qualitative Disclosures about Market Risk.

We are a smaller reporting company as defined by section 10(f)(1) of Regulation S-K. As such, we are not required to provide the information set forth in this item.

~~Ite~~m

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

As required by Rule 13a-15(b) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Exchange Act Rule 13a-15(e), as of the end of the period covered by this report. Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file under the Exchange Act is accumulated and communicated to our management, as appropriate to allow timely decisions regarding required disclosure. Based on this evaluation, our management, including our Chief Executive Officer and Chief Financial Officer, concluded that as of September 30, ~~2017~~2021 our disclosure controls and procedures were not effective.

Changes in Internal Control

There were no changes in our internal control over financial reporting during the ~~three~~nine months ended September 30, ~~2017~~2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

~~Ite~~m
‎

PART II – OTHER INFORMATION

Item 5. Other Information

None

Item 6. Exhibits


Exhibit No.		Description
31.1		Certification by Chief Executive Officer pursuant to Section 302 of Sarbanes Oxley Act of 2002 * *
31.2		Certification by Chief Financial Officer pursuant to Section 302 of Sarbanes Oxley Act of 2002 *
32.1		Certification Pursuant to 18 U.S.C. Section 1350 *
101.INS		XBRL Instance Document *
101.SCH		XBRL Taxonomy Schema Document
101.CAL		XBRL Taxonomy Calculation Linkbase Document *
101.DEF		XBRL Taxonomy Definition Linkbase Document *
101.LAB		XBRL Taxonomy Label Linkbase Document*
101.PRE		XBRL Taxonomy Presentation Linkbase Document *

* Filed electronically herewith

‎

~~SIGNATURES~~

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized


				Mobivity Holdings Corp.

Date: November ~~14, 2017~~15, 2021	By:	~~By:~~	/s/ Dennis Becker
			Dennis Becker
			Chairman and Chief Executive Officer
			(Principal Executive Officer)

Date: November ~~14, 2017~~15, 2021	By:	~~By:~~	/s/ ~~Christopher Meinerz~~	Lisa Brennan
			~~Christopher Meinerz~~	Lisa Brennan
			Chief Financial Officer (Principal Accounting Officer)

-22-



PART I – FINANCIAL INFORMATION			~~Page~~1
~~Part I~~Item 1. Financial Statements	~~Financial Information~~	1

~~Item 1.~~	~~Financial Statements~~		1
		Condensed Consolidated Balance Sheets	1
		Condensed Consolidated Statements of ~~Income~~Operations and Comprehensive Income (Loss)	2
		Condensed Consolidated Statement of Stockholders’ Equity (Deficit)	3
		Condensed Consolidated Statements of Cash Flows	4
		Notes to Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		17 19
Item 3.	Quantitative and Qualitative Disclosures ~~About~~about Market ~~Risk~~		22
~~Item 4.~~Risk.	~~Controls and Procedures~~	22
~~Item 6.~~	~~Exhibits~~		22
			25
~~Signature Page~~Item 4. Controls and Procedures.	22 26
PART II – OTHER INFORMATION	27
Item 6. Exhibits	27
SIGNATURES	28



Mobivity Holdings Corp.
Unaudited Pro Forma Condensed Consolidated Statement of Operations
Nine Months Ended September 30, 2016

	Mobivity		Livelenz		Pro forma adjustments		Pro forma combined
Revenues
Revenues	$	6,102,501	$	4,300	$	-	$	6,106,801
Cost of revenues		1,473,974		120		-		1,474,094
Gross margin		4,628,527		4,180		-		4,632,707

Operating expenses
General and administrative		3,125,484		20,071		-		3,145,555
Sales and marketing		3,285,655		7,087		-		3,292,742
Engineering, research, and development		1,600,377		-		-		1,600,377
Depreciation and amortization		501,866		76		-		501,942
Total operating expenses		8,513,382		27,234		-		8,540,616

Loss from operations		(3,884,855)		(23,054)		-		(3,907,909)

Other income/(expense)
Interest income		2,278		-		-		2,278
Interest expense		(52,960)		(3,452)		-		(56,412)
Foreign Currency Gain/(Loss)		1,488		-		-		1,488
Total other income/(expense)		(49,194)		(3,452)		-		(52,646)

Loss before income taxes		(3,934,049)		(26,506)		-		(3,960,555)

Income tax expense		-		-		-		-

Net loss	$	(3,934,049)	$	(26,506)	$	-	$	(3,960,555)
Other comprehensive loss, net of income tax
Foreign currency translation adjustments		(43,626)		-		-		(43,626)
Comprehensive loss	$	(3,977,675)	$	(26,506)	$	-	$	(4,004,181)

Net loss per share - basic and diluted	$	(0.12)					$	(0.12)

Weighted average number of shares during the period - basic and diluted		31,965,484						31,965,484



	Shares		Weighted Average Grant Date Fair Value		Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
Outstanding at December 31, 2015		653,937	$	0.32		0.08	$	305,572
Awarded		340,480	$	0.72		0.70	$	-
Released		-	$	-		-	$	-
Canceled/forfeited/expired		-	$	-		-	$	-
Outstanding at December 31, 2016		994,417	$	0.72		0.70	$	731,845
Awarded		199,513	$	0.73		-	$	-
Released		(263,731)	$	-		-	$	-
Canceled/forfeited/expired		(47,072)	$	0.72		-	$	-
Outstanding at September 30, 2017		883,127	$	0.65		0.26	$	883,127

Expected to vest at September 30, 2017		883,127	$	-		-	$	883,127
Exercisable at September 30, 2017		764,739	$	-		-	$	764,739
Unvested at September 30, 2017		118,388	$	-		-	$	118,388
Unrecognized expense at September 30, 2017	$	80,413


Fiscal 2017			September 30		June 30		March 31
Accounts receivable, net			$	1,412,333	$	702,199	$	114,210
Deferred revenue				2,124,441		626,670		407,436
Unbilled deferred revenue				809,800		2,349,200		1,567,600

Fiscal 2016	December 31		September 30		June 30		March 31
Accounts receivable, net	$	1,244,484	$	723,724	$	860,674	$	791,221
Deferred revenue		160,023		272,188		295,240		278,528
Unbilled deferred revenue		2,254,400		45,000		277,500		510,000