Nevada | 3669 | 26-3439095 |
(State or jurisdiction of incorporation or organization) | (Primary Standard Industrial Classification Code Number) | (I.R.S. Employer Identification No.) |
Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] (Do not check if a smaller reporting company) Smaller reporting company [X] |
Title of each class of securities to be registered | Amount to be registered (1) | Proposed maximum offering price per share (2) | Proposed maximum aggregate offering price (2) | Amount of registration fee (2) | Amount to be registered (1) | Proposed maximum offering price per share (2) | Proposed maximum aggregate offering price (2) | Amount of registration fee | |||||||||
Common Stock, $.001 par value per share | 23,114,580 shares | $1.35 | $31,204,683.00_ | $4,020.00 | 29,877,324 shares | $ | 1.02 | $ | 30,474,870 | $ | 3,542 |
The information in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. |
1 | |
17 | |
Three Months Ended March 31, 2014 | Fiscal Year Ended December 31, 2012 | Fiscal Year Ended December 31, 2013 | ||||||||||
(Unaudited) | ||||||||||||
Statement of Operations Data: | ||||||||||||
Net sales | $ | 903,215 | $ | 4,079,745 | $ | 4,093,667 | ||||||
Net loss | $ | 1,763,748 | $ | 7,338,927 | $ | 16,759,031 |
Fiscal Year Ended December 31, 2013 | Fiscal Year Ended December 31, 2014 | |||||||
Net sales | $ | 4,093,667 | $ | 4,000,202 | ||||
Net loss | $ | 16,759,031 | $ | 10,440,764 |
March 31, 2014 | ||||
Balance Sheet Data: | (Unaudited) | |||
Total assets | $ | 13,960,411 | ||
Total liabilities | 3,777,958 | |||
Stockholders’ equity | 10,182,453 |
December 31, 2014 | ||||
Total assets | $ | 5,368,510 | ||
Total liabilities | 1,704,890 | |||
Stockholders’ equity | 3,663,620 |
● | implement additional management information systems; |
● | further develop our operating, administrative, legal, financial and accounting systems and controls; |
● | hire additional personnel; |
● | develop additional levels of management within our company; |
● | locate additional office space in various countries; and |
● | maintain close coordination among our engineering, operations, legal, finance, sales and marketing and customer service and support organizations. |
● | dilution caused by our issuance of additional shares of common stock and other forms of equity securities, which we expect to make in connection with future acquisitions or capital financings to fund our operations and growth, to attract and retain valuable personnel and in connection with future strategic partnerships with other companies; |
● | announcements of new acquisitions or other business initiatives by our competitors; |
● | our ability to take advantage of new acquisitions or other business initiatives; |
● | quarterly variations in our revenues and operating expenses; |
● | changes in the valuation of similarly situated companies, both in our industry and in other industries; |
● | changes in analysts’ estimates affecting us, our competitors and/or our industry; |
● | changes in the accounting methods used in or otherwise affecting our industry; |
● | additions and departures of key personnel; |
● | announcements by relevant governments pertaining to additional quota restrictions; and |
● | fluctuations in interest rates and the availability of capital in the capital markets. |
● | 86,590 shares of our common stock issued at closing; |
● | $120,514 in cash paid at closing; |
● | our secured subordinated promissory note in the principal amount of $175,000. This note earned interest at 6.25% per annum and was paid in full on May 31, 2012; |
● | our unsecured subordinated promissory note in the principal amount of $194,658 due and payable on October 1, 2012. The note does not bear interest and was paid in full in 2013; and |
● | an earn-out payment (payable 20 months after closing of the transaction) of a number of shares of our common stock equal to (a) 1.5, multiplied by our net revenue from acquired customers and customer prospects for the twelve-month period beginning six months after the closing date, divided by (b) the average of the volume-weighted average trading prices of our common stock for the 25 trading days immediately preceding the earn-out payment (subject to a collar of $1.49 and $2.01 per share). The final value of the earn-out payment was $2,210,667 and was satisfied through our issuance of 247,279 shares of our common stock. |
● | Our payment at closing of $2.212 million of cash, net of a $150,000 loan made by us to SmartReceipt in January 2014; |
● | Our issuance of 504,884 shares of our common stock; and |
● | Our earn-out payment of 200% of the “eligible revenue” over the 12 month period following the close of the transaction (“earn-out period”). The “eligible revenue” will consist of: 100% of our revenue derived during the earn out period from the sale of SmartReceipt products and services to certain SmartReceipt clients as of the close (the “designated SmartReceipt clients”); plus 50% of our revenue derived during the earn out period from the sale of our products and services to the designated SmartReceipt clients, plus 50% of our revenue derived during the earn out period from the sale of SmartReceipt products and services to our clients who are not designated SmartReceipt clients. The earn-out payment will be payable in our common shares (valued at the closing VWAP) no later than the 90th day following the end of the earn-out period. For purposes of the foregoing, the “closing VWAP” means the volume weighted average trading price of our common stock for the 90 trading days preceding the close of our acquisition of SmartReceipt. |
Name of Beneficial Owner | Shares Beneficially Owned Before the Offering | Maximum Number of Shares Offered | Shares Beneficially Owned After the Offering (1) | |||||||||||||||||
Number | % | Number | % | |||||||||||||||||
Sandor Capital Master Fund (2)(3) | 1,211,937 | 4.3 | % | 1,211,937 | -0- | * | ||||||||||||||
Ballyshannon Partners LP (4) | 800,000 | 2.9 | % | 800,000 | -0- | * | ||||||||||||||
Ballyshannon Family Partnership (5) | 522,800 | 1.8 | % | 522,800 | -0- | * | ||||||||||||||
Porter Partners, LP (6) | 2,332,723 | 8.3 | % | 2,332,723 | -0- | * | ||||||||||||||
EDJ Limited (7) | 376,767 | 1.3 | % | 376,767 | -0- | * | ||||||||||||||
Porter Family Living Trust dtd 9/5/2006 (8) | 291,667 | 1.0 | % | 291,667 | -0- | * | ||||||||||||||
Ben Joseph Partners (9) | 475,828 | 1.7 | % | 475,828 | -0- | * | ||||||||||||||
Alexander M. Bush | 12,500 | * | 12,500 | -0- | * | |||||||||||||||
John E. Thompson | 52,083 | * | 52,083 | -0- | * | |||||||||||||||
Diker MicroCap Fund LP (10) | 604,167 | 2.1 | % | 604,167 | -0- | * | ||||||||||||||
Trellus Partners LP (11) | 1,145,833 | 4.1 | % | 729,167 | 416,667 | 1.5 | % | |||||||||||||
Julie T. Berlacher | 352,494 | 1.2 | % | 352,494 | -0- | * | ||||||||||||||
Paul D. Berlacher TTEE Paul D. Berlacher Irrev. Trust (12) | 20,833 | * | 20,833 | -0- | * | |||||||||||||||
Audrey E. Berlacher TTEE Audrey E. Berlacher Rev Trust (13) | 20,833 | * | 20,833 | -0- | * | |||||||||||||||
David A. Houghton | 177,065 | * | 177,065 | -0- | * | |||||||||||||||
Bruce E. Terker TTEE Robert A. Berlacher 2004 Family Trust (14) | 41,667 | * | ��41,667 | -0- | * | |||||||||||||||
Chardonnay Partners, LP (15) | 178,847 | * | 178,847 | -0- | * | |||||||||||||||
Harry Mittelman Revocable Living Trust (16) | 277,323 | * | 277,323 | -0- | * | |||||||||||||||
Bruce and Katherine Evans TBE | 561,431 | 2.0 | % | 561,431 | -0- | * | ||||||||||||||
Jacqueline A. Evans | 12,500 | * | 12,500 | -0- | * | |||||||||||||||
JSL Kids Partners (3)(17) | 83,333 | * | 83,333 | -0- | * | |||||||||||||||
James C. Barragan, Jr. and Nancy F. Barragan | 57,967 | * | 41,667 | 16,300 | * | |||||||||||||||
Robert A. Elliott | 20,833 | * | 20,833 | -0- | * | |||||||||||||||
Robert B. Prag | 96,087 | * | 96,087 | -0- | * | |||||||||||||||
The Del Mar Consulting Group, Inc. Retirement Plan Trust (18) | 41,667 | * | 41,667 | -0- | * | |||||||||||||||
George I. Bridges, Jr. | 291,667 | 1.0 | % | 291,667 | -0- | * | ||||||||||||||
Carl Todd Bridges and Lori D. Bridges | 208,333 | * | 208,333 | -0- | * | |||||||||||||||
Clayton Green, Jr. | 83,333 | * | 83,333 | -0- | * | |||||||||||||||
Taylor Green | 83,333 | * | 83,333 | -0- | * | |||||||||||||||
Shelby Zimmerman | 83,333 | * | 83,333 | -0- | * | |||||||||||||||
Robert A. Smith | 208,333 | * | 208,333 | -0- | * | |||||||||||||||
Mark A. and Lucinda M. Henry | 158,744 | * | 158,744 | -0- | * | |||||||||||||||
Donald K. Thomas | 16,667 | * | 16,667 | -0- | * | |||||||||||||||
Mobivity Partners (19) | 416,667 | 1.5 | % | 416,667 | -0- | * | ||||||||||||||
John R. Harris (20) | 100,695 | * | 52,083 | 48,612 | * | |||||||||||||||
ACT Capital Partners, LP (21) | 638,219 | 2.3 | % | 638,219 | -0- | * | ||||||||||||||
Amir L. Ecker | 458,847 | 1.6 | % | 458,847 | -0- | * | ||||||||||||||
Delaware Charter G T Cust FBO Amir L. Ecker IRA (22) | 582,123 | 2.1 | % | 582,123 | -0- | * | ||||||||||||||
Cornelis F. Wit | 1,934,992 | 6.9 | % | 1,934,992 | -0- | * | ||||||||||||||
The Ecker Family Partnership (23) | 173,225 | * | 204,475 | -0- | * | |||||||||||||||
Gary Knutsen | 123,734 | * | 123,734 | -0- | * | |||||||||||||||
Gregory J. Berlacher (3) | 53,650 | * | 53,650 | -0- | * | |||||||||||||||
Emerging Growth Equities, Ltd. PSP dtd 9/1/99 FBO Gregory J. Berlacher, 401k (24)(3) | 112,883 | * | 112,883 | -0- | * | |||||||||||||||
Emerging Growth Equities, Ltd. PSP dtd 9/1/99 FBO Jay D. Seid, 401k (25)(3) | 195,745 | * | 195,745 | -0- | * | |||||||||||||||
John S. Lemak IRA Rollover Raymond James & Assoc Custodian (3)(26) | 221,433 | * | 213,142 | 49,743 | * | |||||||||||||||
Kingdom Trust Co. Roth IRA Cust FBO Robert A. Berlacher (27) | 150,064 | * | 150,064 | -0- | * | |||||||||||||||
Lancaster Investment Partners, LP (28) | 236,870 | * | 236,870 | -0- | * | |||||||||||||||
Northwood Capital Partners, LP (29) | 535,308 | 1.9 | % | 535,308 | -0- | * | ||||||||||||||
Randall Smith | 46,720 | * | 46,720 | -0- | * | |||||||||||||||
Peter and Susan Stanley JTWROS | 231,919 | * | 231,919 | -0- | * | |||||||||||||||
The Michael and Valerie Bynum Living Trust (30) | 158,305 | * | 158,305 | -0- | * | |||||||||||||||
Timothy W. Schatz | 433,072 | 1.5 | % | 33,836 | -0- | * | ||||||||||||||
Joel and Amy Wisian | 126,233 | * | 126,233 | -0- | * | |||||||||||||||
Allen M. and Emily R. Bynum | 58,881 | * | 58,881 | -0- | * | |||||||||||||||
Johnny and Debra Allen | 16,872 | * | 16,872 | -0- | * |
Shares Beneficially Owned Before the Offering | Maximum Number of Shares | Shares Beneficially Owned After the Offering (1) | ||||||||||||||||||
Name of Beneficial Owner | Number | % | Offered | Number | % | |||||||||||||||
Sandor Capital Master Fund (2)(3) | 1,211,937 | 4.3 | % | 1,211,937 | -0- | * | ||||||||||||||
Ballyshannon Partners LP (4) | 525,000 | 1.9 | % | 525,000 | -0- | * | ||||||||||||||
Ballyshannon Family Partnership (5) | 454,050 | 1.6 | % | 454,050 | -0- | * | ||||||||||||||
Porter Partners, LP (6) | 2,332,723 | 8.3 | % | 2,332,723 | -0- | * | ||||||||||||||
EDJ Limited (7) | 376,767 | 1.3 | % | 376,767 | -0- | * | ||||||||||||||
Porter Family Living Trust dtd 9/5/2006 (8) | 291,667 | 1.0 | % | 291,667 | -0- | * | ||||||||||||||
Ben Joseph Partners (9) | 475,828 | 1.7 | % | 475,828 | -0- | * | ||||||||||||||
Alexander M. Bush | 12,500 | * | 12,500 | -0- | * | |||||||||||||||
John E. Thompson | 52,083 | * | 52,083 | -0- | * | |||||||||||||||
Diker MicroCap Fund LP (10) | 604,167 | 2.1 | % | 604,167 | -0- | * | ||||||||||||||
Trellus Partners LP (11) | 1,145,833 | 4.1 | % | 729,167 | 416,667 | 1.5 | % | |||||||||||||
Julie T. Berlacher | 258,744 | * | 258,744 | -0- | * | |||||||||||||||
Paul D. Berlacher TTEE Paul D. Berlacher Irrev. Trust (12) | 20,833 | * | 20,833 | -0- | * | |||||||||||||||
Audrey E. Berlacher TTEE Audrey E. Berlacher Rev Trust (13) | 20,833 | * | 20,833 | -0- | * | |||||||||||||||
David A. Houghton | 177,065 | * | 177,065 | -0- | * | |||||||||||||||
Bruce E. Terker TTEE Robert A. Berlacher 2004 Family Trust (14) | 41,667 | * | 41,667 | -0- | * | |||||||||||||||
Chardonnay Partners, LP (15) | 178,847 | * | 178,847 | -0- | * | |||||||||||||||
Harry Mittelman Revocable Living Trust (16) | 277,323 | * | 277,323 | -0- | * | |||||||||||||||
Bruce and Katherine Evans TBE | 311,431 | 1.1 | % | 311,431 | -0- | * | ||||||||||||||
Jacqueline A. Evans | 12,500 | * | 12,500 | -0- | * | |||||||||||||||
JSL Kids Partners (3)(17) | 83,333 | * | 83,333 | -0- | * | |||||||||||||||
James C. Barragan, Jr. and Nancy F. Barragan | 57,967 | * | 41,667 | 16,300 | * | |||||||||||||||
Robert A. Elliott | 20,833 | * | 20,833 | -0- | * | |||||||||||||||
Robert B. Prag | 96,087 | * | 96,087 | -0- | * | |||||||||||||||
The Del Mar Consulting Group, Inc. Retirement Plan Trust (18) | 41,667 | * | 41,667 | -0- | * | |||||||||||||||
George I. Bridges, Jr. | 291,667 | 1.0 | % | 291,667 | -0- | * | ||||||||||||||
Carl Todd Bridges and Lori D. Bridges | 208,333 | * | 208,333 | -0- | * | |||||||||||||||
Clayton Green, Jr. | 83,333 | * | 83,333 | -0- | * | |||||||||||||||
Taylor Green | 83,333 | * | 83,333 | -0- | * | |||||||||||||||
Shelby Zimmerman | 83,333 | * | 83,333 | -0- | * | |||||||||||||||
Robert A. Smith | 208,333 | * | 208,333 | -0- | * | |||||||||||||||
Mark A. and Lucinda M. Henry | 158,744 | * | 158,744 | -0- | * | |||||||||||||||
Donald K. Thomas | 16,667 | * | 16,667 | -0- | * | |||||||||||||||
Mobivity Partners (19) | 416,667 | 1.5 | % | 416,667 | -0- | * | ||||||||||||||
John R. Harris (20) | 100,695 | * | 52,083 | 48,612 | * | |||||||||||||||
ACT Capital Partners, LP (21) | 638,219 | 2.3 | % | 638,219 | -0- | * | ||||||||||||||
Amir L. Ecker | 458,847 | 1.6 | % | 458,847 | -0- | * | ||||||||||||||
Delaware Charter G T Cust FBO Amir L. Ecker IRA (22) | 582,123 | 2.1 | % | 582,123 | -0- | * | ||||||||||||||
Cornelis F. Wit | 1,934,992 | 6.9 | % | 1,934,992 | -0- | * | ||||||||||||||
The Ecker Family Partnership (23) | 173,225 | * | 204,475 | -0- | * | |||||||||||||||
Gary Knutsen | 123,734 | * | 123,734 | -0- | * | |||||||||||||||
Gregory J. Berlacher (3) | 53,650 | * | 53,650 | -0- | * | |||||||||||||||
Emerging Growth Equities, Ltd. PSP dtd 9/1/99 FBO Gregory J. Berlacher, 401k (24)(3) | 112,883 | * | 112,883 | -0- | * | |||||||||||||||
Emerging Growth Equities, Ltd. PSP dtd 9/1/99 FBO Jay D. Seid, 401k (25)(3) | 195,745 | * | 195,745 | -0- | * | |||||||||||||||
John S. Lemak IRA Rollover Raymond James & Assoc Custodian (3)(26) | 221,433 | * | 213,142 | 49,743 | * | |||||||||||||||
Kingdom Trust Co. Roth IRA Cust FBO Robert A. Berlacher (27) | 115,064 | * | 115,064 | -0- | * | |||||||||||||||
Lancaster Investment Partners, LP (28) | 236,870 | * | 236,870 | -0- | * | |||||||||||||||
Northwood Capital Partners, LP (29) | 535,308 | 1.9 | % | 535,308 | -0- | * | ||||||||||||||
Randall Smith | 46,720 | * | 46,720 | -0- | * | |||||||||||||||
Peter and Susan Stanley JTWROS | 231,919 | * | 231,919 | -0- | * | |||||||||||||||
The Michael and Valerie Bynum Living Trust (20)(30) | 158,305 | * | 158,305 | -0- | * | |||||||||||||||
Timothy W. Schatz (20) | 433,072 | 1.5 | % | 33,836 | -0- | * | ||||||||||||||
Joel and Amy Wisian | 126,233 | * | 126,233 | -0- | * | |||||||||||||||
Allen M. and Emily R. Bynum | 58,881 | * | 58,881 | -0- | * | |||||||||||||||
Johnny and Debra Allen | 16,872 | * | 16,872 | -0- | * | |||||||||||||||
Jessie and Kimberly A. Allen | 16,872 | * | 16,872 | -0- | * | |||||||||||||||
Donald K. and Paige Matthey Bynum | 16,854 | * | 16,854 | -0- | * | |||||||||||||||
Pier Bynum | 8,427 | * | 8,427 | -0- | * | |||||||||||||||
Patrick Bynum | 8,427 | * | 8,427 | -0- | * | |||||||||||||||
Dennis Becker (20) | 1,309,179 | 4.6 | % | 60,664 | 1,248,515 | 4.4 | % | |||||||||||||
Marion Cook | 83,927 | * | 83,927 | -0- | * | |||||||||||||||
James Flanigan | 41,895 | * | 41,895 | -0- | * | |||||||||||||||
Steve Tebo | 83,790 | * | 83,790 | -0- | * | |||||||||||||||
Berlwoods Partners, LP (31) | 20,833 | * | 20,833 | -0- | * | |||||||||||||||
Cortleigh Capital Partners, LP (32) | 33,333 | * | 33,333 | -0- | * | |||||||||||||||
Phyllis D. Kalista | 20,833 | * | 20,833 | -0- | * | |||||||||||||||
Jay D. Seid (3) | 28,125 | * | 28,125 | -0- | * | |||||||||||||||
Franz J. Berlacher | 4,167 | * | 4,167 | -0- | * | |||||||||||||||
Robert D. Auritt | 8,333 | * | 8,333 | -0- | * | |||||||||||||||
Kingdom Trust Company IRA c/f Richard Johnson (33) | 16,667 | * | 16,667 | -0- | * | |||||||||||||||
Andrew S. Rosen | 106,917 | * | 83,333 | 23,584 | * | |||||||||||||||
ACT Capital Management, LLLP (34) | 33,333 | * | 33,333 | -0- | * | |||||||||||||||
Delaware Charter G&T Cust FBO Amir L. Ecker ROTH IRA (35) | 20,833 | * | 20,833 | -0- | * | |||||||||||||||
Delaware Charter G&T Cust FBO Carol G. Frankenfield IRA (36) | 20,833 | * | 20,833 | -0- | * | |||||||||||||||
Kingdom Trust Co. SEP IRA c/f Robert A. Berlacher (37) | 51,667 | * | 51,667 | -0- | * | |||||||||||||||
MJA Investments LLC (38) | 12,500 | * | 12,500 | -0- | * | |||||||||||||||
JBA Investments LLC (39) | 12,500 | * | 12,500 | -0- | * | |||||||||||||||
Elizabeth Arno | 16,667 | * | 16,667 | -0- | * | |||||||||||||||
Kingdom Trust Co. IRA FBO Daniel C. Gardner (40) | 20,833 | * | 20,833 | -0- | * | |||||||||||||||
Brodsky Family Trust (41)(20) | 125,000 | * | 125,000 | -0- | * | |||||||||||||||
Ivy L. Fredericks | 20,833 | * | 20,833 | -0- | * | |||||||||||||||
Robert Winter | 20,833 | * | 20,833 | -0- | * | |||||||||||||||
Brian J. Grossi 2007 Revocable Trust (42) | 12,500 | * | 12,500 | -0- | * | |||||||||||||||
Pak Cheong Choi & Susan Huang Choi JTWROS | 8,333 | * | 8,333 | -0- | * | |||||||||||||||
John C. Lipman | 40,417 | * | 40,417 | -0- | * | |||||||||||||||
Lipman Capital Group Inc. Retirement Plan (43) | 52,083 | * | 52,083 | -0- | * | |||||||||||||||
Marcelle Weems Bynum | 12,654 | * | 12,654 | -0- | * | |||||||||||||||
Lavonne Bynum | 12,654 | * | 12,654 | -0- | * | |||||||||||||||
Cecil Glen Bynum and Cathey Lynn Bynum, Tenants in Common | 43,578 | * | 33,744 | 9,834 | * | |||||||||||||||
David Gomez | 145,283 | * | 145,283 | -0- | * | |||||||||||||||
David Hirons | 85,075 | * | 85,075 | -0- | * | |||||||||||||||
Dillon Page and Vickie Page, Joint Tenants | 96,758 | * | 96,758 | -0- | * | |||||||||||||||
Russell Sarachek | 33,333 | * | 33,333 | -0- | * | |||||||||||||||
Mayumi Ishii Post | 20,833 | * | 20,833 | -0- | * | |||||||||||||||
Kingdom Trust Company IRA Rollover FBO Franz J. Berlacher (44) | 20,833 | * | 20,833 | -0- | * | |||||||||||||||
Kingdom Trust Co. Roth IRA c/f Julie T. Berlacher (45) | 22,083 | * | 22,083 | -0- | * | |||||||||||||||
Fraser Clarke | 20,833 | * | 20,833 | -0- | * | |||||||||||||||
BMO Nesbitt Burns ITF 365-24977-22 (46) | 62,500 | * | 62,500 | -0- | * | |||||||||||||||
David Moss | 12,630 | * | 12,630 | -0- | * | |||||||||||||||
VFT Special Ventures, Ltd (47) | 605,910 | 2.6 | % | 605,910 | -0- | * | ||||||||||||||
Trellus Small Cap Opportunity Fund LP (48) | 312,500 | 1.1 | % | 312,500 | -0- | * | ||||||||||||||
David Jacques (20) | 69,791 | * | 31,250 | -0- | * | |||||||||||||||
Kobe Partners, LP (49) | 281,250 | * | 281,250 | -0- | * | |||||||||||||||
Logos Partners L.P. (50) | 125,000 | * | 125,000 | -0- | * | |||||||||||||||
Perritt Ultra MicroCap Fund (51) | 825,000 | 2.9 | % | 825,000 | -0- | * | ||||||||||||||
Thomas B. Akin | 625,000 | 2.2 | % | 625,000 | -0- | * | ||||||||||||||
Kingdom Trust cust. FBO David A. Houghton IRA (52) | 15,625 | * | 15,625 | -0- | * | |||||||||||||||
Jon D. and Linda W. Gruber Trust (53) | 906,250 | 3.2 | % | 906,250 | -0- | * | ||||||||||||||
Steven T. Newby | 625,000 | 2.2 | % | 625,000 | -0- | * | ||||||||||||||
London Family Trust (54) | 125,000 | * | 125,000 | -0- | * | |||||||||||||||
NFS/FMTC IRA fbo Amir L. Ecker (55) | 93,750 | * | 93,750 | -0- | * | |||||||||||||||
Lacuna Hedge Fund, LLLP (56) | 125,000 | * | 125,000 | -0- | * | |||||||||||||||
John E. Thompson, III | 62,500 | * | 62,500 | -0- | * | |||||||||||||||
Lincoln Park Capital Fund, LLC (57) | 125,000 | * | 125,000 | -0- | * | |||||||||||||||
Jonathan Cassell | 12,500 | * | 12,500 | -0- | * | |||||||||||||||
Phillip Guarascio (20) | 56,250 | * | 31,250 | 25,000 | * |
Jessie and Kimberly A. Allen | 16,872 | * | 16,872 | -0- | * | |||||||||||||||
Donald K. and Paige Matthey Bynum | 16,854 | * | 16,854 | -0- | * | |||||||||||||||
Pier Bynum | 8,427 | * | 8,427 | -0- | * | |||||||||||||||
Patrick Bynum | 8,427 | * | 8,427 | -0- | * | |||||||||||||||
Dennis Becker (20) | 735,615 | 2.6 | % | 91,914 | 643,701 | 2.3%% | % | |||||||||||||
Marion Cook | 83,927 | * | 83,927 | -0- | * | |||||||||||||||
James Flanigan | 41,895 | * | 41,895 | -0- | * | |||||||||||||||
Steve Tebo | 83,790 | * | 83,790 | -0- | * | |||||||||||||||
Berlwoods Partners, LP (31) | 20,833 | * | 20,833 | -0- | * | |||||||||||||||
Cortleigh Capital Partners, LP (32) | 33,333 | * | 33,333 | -0- | * | |||||||||||||||
Phyllis D. Kalista | 20,833 | * | 20,833 | -0- | * | |||||||||||||||
Jay D. Seid (3) | 28,125 | * | 28,125 | -0- | * | |||||||||||||||
Franz J. Berlacher | 4,167 | * | 4,167 | -0- | * | |||||||||||||||
Robert D. Auritt | 8,333 | * | 8,333 | -0- | * | |||||||||||||||
Kingdom Trust Company IRA c/f Richard Johnson (33) | 16,667 | * | 16,667 | -0- | * | |||||||||||||||
Andrew S. Rosen | 106,917 | * | 83,333 | 23,584 | * | |||||||||||||||
ACT Capital Management, LLLP (34) | 33,333 | * | 33,333 | -0- | * | |||||||||||||||
Delaware Charter G&T Cust FBO Amir L. Ecker ROTH IRA (35) | 20,833 | * | 20,833 | -0- | * | |||||||||||||||
Delaware Charter G&T Cust FBO Carol G. Frankenfield IRA (36) | 20,833 | * | 20,833 | -0- | * | |||||||||||||||
Kingdom Trust Co. SEP IRA c/f Robert A. Berlacher (37) | 16,667 | * | 16,667 | -0- | * | |||||||||||||||
MJA Investments LLC (38) | 12,500 | * | 12,500 | -0- | * | |||||||||||||||
JBA Investments LLC (39) | 12,500 | * | 12,500 | -0- | * | |||||||||||||||
Elizabeth Arno | 16,667 | * | 16,667 | -0- | * | |||||||||||||||
Kingdom Trust Co. IRA FBO Daniel C. Gardner (40) | 20,833 | * | 20,833 | -0- | * | |||||||||||||||
Brodsky Family Trust (41) | 125,000 | * | 125,000 | -0- | * | |||||||||||||||
Ivy L. Fredericks | 20,833 | * | 20,833 | -0- | * | |||||||||||||||
Robert Winter | 20,833 | * | 20,833 | -0- | * | |||||||||||||||
Brian J. Grossi 2007 Revocable Trust (42) | 12,500 | * | 12,500 | -0- | * | |||||||||||||||
Pak Cheong Choi & Susan Huang Choi JTWROS | 8,333 | * | 8,333 | -0- | * | |||||||||||||||
John C. Lipman | 40,417 | * | 40,417 | -0- | * | |||||||||||||||
Lipman Capital Group Inc. Retirement Plan (43) | 52,083 | * | 52,083 | -0- | * | |||||||||||||||
Marcelle Weems Bynum | 12,654 | * | 12,654 | -0- | * | |||||||||||||||
Lavonne Bynum | 12,654 | * | 12,654 | -0- | * | |||||||||||||||
Cecil Glen Bynum and Cathey Lynn Bynum, Tenants in Common | 43,578 | * | 33,744 | 9,834 | * | |||||||||||||||
David Gomez | 145,283 | * | 145,283 | -0- | * | |||||||||||||||
David Hirons | 85,075 | * | 85,075 | -0- | * | |||||||||||||||
Dillon Page and Vickie Page, Joint Tenants | 96,758 | * | 96,758 | -0- | * | |||||||||||||||
Russell Sarachek | 33,333 | * | 33,333 | -0- | * | |||||||||||||||
Mayumi Ishii Post | 20,833 | * | 20,833 | -0- | * | |||||||||||||||
Kingdom Trust Company IRA Rollover FBO Franz J. Berlacher (44) | 20,833 | * | 20,833 | -0- | * | |||||||||||||||
Kingdom Trust Co. Roth IRA c/f Julie T. Berlacher (45) | 22,083 | * | 22,083 | -0- | * | |||||||||||||||
Fraser Clarke | 20,833 | * | 20,833 | -0- | * | |||||||||||||||
BMO Nesbitt Burns ITF 365-24977-22 (46) | 62,500 | * | 62,500 | -0- | * | |||||||||||||||
David Moss | 75,130 | * | 75,130 | -0- | * | |||||||||||||||
VFT Special Ventures, Ltd (47) | 1,362,404 | 4.9 | % | 1,362,404 | -0- | * | ||||||||||||||
Trellus Small Cap Opportunity Fund LP (48) | 312,500 | 1.1 | % | 312,500 | -0- | * | ||||||||||||||
David Jaques (20) | 69,791 | * | 31,250 | -0- | * | |||||||||||||||
Kobe Partners, LP (49) | 468,750 | * | 468,750 | -0- | * | |||||||||||||||
Logos Partners L.P. (50) | 125,000 | * | 125,000 | -0- | * | |||||||||||||||
Perritt Ultra MicroCap Fund (51) | 825,000 | 2.9 | % | 825,000 | -0- | * | ||||||||||||||
Thomas B. Akin (20) | 1,250,000 | 4.4 | % | 1,250,000 | -0- | * | ||||||||||||||
Kingdom Trust cust. FBO David A. Houghton IRA (52) | 15,625 | * | 15,625 | -0- | * | |||||||||||||||
Jon D. and Linda W. Gruber Trust (53) | 1,250,000 | 4.4 | % | 1,250,000 | -0- | * | ||||||||||||||
Steven T. Newby | 625,000 | 2.2 | % | 625,000 | -0- | * | ||||||||||||||
London Family Trust (54) | 125,000 | * | 125,000 | -0- | * | |||||||||||||||
NFS/FMTC IRA fbo Amir L. Ecker (55) | 93,750 | * | 93,750 | -0- | * | |||||||||||||||
Lacuna Hedge Fund, LLLP (56) | 125,000 | * | 125,000 | -0- | * | |||||||||||||||
John E. Thompson, III | 62,500 | * | 62,500 | -0- | * | |||||||||||||||
Lincoln Park Capital Fund, LLC (57) | 125,000 | * | 125,000 | -0- | * | |||||||||||||||
Jonathan Cassell | 12,500 | * | 12,500 | -0- | * | |||||||||||||||
IP ROI US Small Cap Aktier (58) | 468,750 | 1.6 | % | 468,750 | -0- | * | ||||||||||||||
Talkot Fund, L.P. (20) | 1,875,000 | 6.7 | % | 1,875,000 | -0- | * | ||||||||||||||
Peter Backus | 250,000 | * | 250,000 | -0- | * | |||||||||||||||
Larry C. Hopfensirger Trust (59) | 162,500 | * | 162,500 | -0- | * | |||||||||||||||
Peter S. Lynch Charitable Lead Annuity Unitrust 3/3/97 (60) | 78,125 | * | 78,125 | -0- | * | |||||||||||||||
Peter S. Lynch Charitable Lead Annuity U/A 3/27/96 (60) | 78,125 | * | 78,125 | -0- | * | |||||||||||||||
Peter S. Lynch 1999 Unitrust (61) | 156,250 | * | 156,250 | -0- | * | |||||||||||||||
Peter S. and Carolyn A. Lynch Joint Trust with Right of Survival (61) | 156,250 | * | 156,250 | -0- | * | |||||||||||||||
The Lynch Foundation (61) | 156,250 | * | 156,250 | -0- | * | |||||||||||||||
Elmer R. Salovich Revocable Living Trust (62) | 62,500 | * | 62,500 | -0- | * | |||||||||||||||
John Texter | 218,750 | * | 218,750 | -0- | * | |||||||||||||||
Wall Street Capital Partners, L.P. (63) | 125,000 | * | 125,000 | -0- | * | |||||||||||||||
Donna S. Mitchell (20) | 125,000 | * | 125,000 | -0- | * | |||||||||||||||
Alexander Shah (20) | 93,750 | * | 93,750 | -0- | * | |||||||||||||||
William Van Epps (20) | 62,500 | * | 62,500 | -0- | * | |||||||||||||||
Phillip Guarascio (20)____________________________________________ | 56,250 | * | 31,250 | 25,000 | * |
(1) | Assumes that all securities offered are sold. |
(2) | The selling stockholder indicated to us that John S. Lemak, Manager of Sandor Capital Master Fund, has voting and investment power over the shares it is offering for resale. |
(3) | The selling stockholder identified itself to us as an affiliate of a broker-dealer. It has indicated to us that it purchased the shares in the ordinary course of business, and at the time of the purchase of the shares to be resold, had no agreements or understandings, directly or indirectly, with any person to distribute the shares. |
(4) | The selling stockholder indicated to us that Bruce E. Terker, President of Ballyshannon Partners, L.P., has voting and investment power over the shares it is offering for resale. |
(5) | The selling stockholder indicated to us that Bruce E. Terker, President of Ballyshannon Family Partnership, L.P., has voting and investment power over the shares it is offering for resale. |
(6) | The selling stockholder indicated to us that Jeffrey H. Porter, General Partner of Porter Partners, L.P., has voting and investment power over the shares it is offering for resale. |
(7) | The selling stockholder indicated to us that Jeffrey H. Porter, Investment Advisor of EDJ Limited, has voting and investment power over the shares it is offering for resale. |
(8) | The selling stockholder indicated to us that Jeffrey H. Porter, Trustee of Porter Family Living Trust dtd. 9/5/2006, has voting and investment power over the shares it is offering for resale. |
(9) | The selling stockholder indicated to us that Jeffrey H. Porter, General Partner of Ben Joseph Partners, has voting and investment power over the shares it is offering for resale. |
(10) | The selling stockholder indicated to us that Ken Brower, Chief Financial Officer of Diker Micro Cap Fund LP, has voting and investment power over the shares it is offering for resale. |
(11) | The selling stockholder indicated to us that James Scaplen, Chief Financial Officer of Trellus Partners LP, has voting and investment power over the shares it is offering for resale. |
(12) | The selling stockholder indicated to us that Paul D. Berlacher, Trustee of the Paul D. Berlacher Irrev. Trust, has voting and investment power over the shares it is offering for resale. |
(13) | The selling stockholder indicated to us that Audrey E. Berlacher, Trustee of the Audrey E. Berlacher Rev Trust, has voting and investment power over the shares it is offering for resale. |
(14) | The selling stockholder indicated to us that Bruce E. Terker, Trustee of the Robert A. Berlacher 2004 Family Trust, has voting and investment power over the shares it is offering for resale. |
(15) | The selling stockholder indicated to us that Robert A. Berlacher, General Partner of Chardonnay Partners, LP, has voting and investment power over the shares it is offering for resale. |
(16) | The selling stockholder indicated to us that Harry Mittelman, Trustee of the Harry Mittelman Revocable Living Trust, has voting and investment power over the shares it is offering for resale. |
(17) | The selling stockholder indicated to us that John S. Lemak, Manager of JSL Kids Partners, has voting and investment power over the shares it is offering for resale. |
(18) | The selling stockholder indicated to us that Robert B. Prag, Trustee of The Del Mar Consulting Group, Inc. Retirement Plan Trust, has voting and investment power over the shares it is offering for resale. |
(19) | The selling stockholder indicated to us that Julie Krupala, Secretary of Mobivity Partners, has voting and investment power over the shares it is offering for resale. |
(20) | The selling stockholder is, or is an affiliate of, an executive officer or director of our company. |
(21) | The selling stockholder indicated to us that Carol Frankenfield, General Partner of ACT Capital Partners, LP, has voting and investment power over the shares it is offering for resale. |
(22) | The selling stockholder indicated to us that Amir L. Ecker, IRA Owner of Delaware Charter G T Cust. FBO Amir L. Ecker IRA, has voting and investment power over the shares it is offering for resale. |
(23) | The selling stockholder indicated to us that Amir L. Ecker, General Partner of The Ecker Family Partnership, has voting and investment power over the shares it is offering for resale. |
(24) | The selling stockholder indicated to us that Gregory J. Berlacher, Owner of Emerging Growth Equities Ltd PSP dtd 9/1/99 FBO Gergory J. Berlacher 401k, has voting and investment power over the shares it is offering for resale. |
(25) | The selling stockholder indicated to us that Jay D. Seid, Owner of Emerging Growth Equities Ltd PSP dtd 9/1/99 FBO Jay D. Seid 401k, has voting and investment power over the shares it is offering for resale. |
(26) | The selling stockholder indicated to us that John S. Lemak, IRA Owner of the John S. Lemak IRA Rollover, Raymond James & Assoc. custodian, has voting and investment power over the shares it is offering for resale. |
(27) | The selling stockholder indicated to us that Robert A. Berlacher, IRA Owner of Kingdom Trust Co. Roth IRA Cust FBO Robert A. Berlacher, has voting and investment power over the shares it is offering for resale. |
(28) | The selling stockholder indicated to us that Robert A. Berlacher, Manager of Lancaster Investment Partners, LP, has voting and investment power over the shares it is offering for resale. |
(29) | The selling stockholder indicated to us that Robert A. Berlacher, Manager of Northwood Capital Partners, LP, has voting and investment power over the shares it is offering for resale. |
(30) | The selling stockholder indicated to us that Michael K. and Valerie L. Bynum, Trustees of The Michael and Valerie Bynum Living Trust, have voting and investment power over the shares it is offering for resale. |
(31) | The selling stockholder indicated to us that Robert A. Berlacher, Managing Member of Berlwoods Partners, LP, has voting and investment power over the shares it is offering for resale. |
(32) | The selling stockholder indicated to us that Christine Groves, Partner of Cortleigh Capital Partners, LP, has voting and investment power over the shares it is offering for resale. |
(33) | The selling stockholder indicated to us that Richard Johnson, IRA Owner of Kingdom Trust Company IRA c/f Richard Johnson, has voting and investment power over the shares it is offering for resale. |
(34) | The selling stockholder indicated to us that Carol G. Frankenfield, General Partner of ACT Capital Management LLP, has voting and investment power over the shares it is offering for resale. |
(35) | The selling stockholder indicated to us that Amir L. Ecker, IRA Owner of Delaware Charter G T Cust FBO Amir L. Ecker ROTH IRA, has voting and investment power over the shares it is offering for resale. |
(36) | The selling stockholder indicated to us that Carol G. Frankenfield, IRA Owner of Delaware Charter G T Cust FBO Carol G. Frankenfield IRA, has voting and investment power over the shares it is offering for resale. |
(37) | The selling stockholder indicated to us that Robert A. Berlacher, IRA Owner of Kingdom Trust Co. SEP IRA c/f Robert A. Berlacher, has voting and investment power over the shares it is offering for resale. |
(38) | The selling stockholder indicated to us that Andrew Arno, Advisor of MJA Investments LLC, has voting and investment power over the shares it is offering for resale. |
(39) | The selling stockholder indicated to us that Andrew Arno, Advisor of JBA Investments LLC, has voting and investment power over the shares it is offering for resale. |
(40) | The selling stockholder indicated to us that Daniel C. Gardner, IRA Owner of Kingdom Trust Co. IRA FBO Daniel C. Gardner, has voting and investment power over the shares it is offering for resale. |
(41) | The selling stockholder indicated to us that Peter Brodsky, Trustee of the Brodsky Family Trust, has voting and investment power over the shares it is offering for resale. |
(42) | The selling stockholder indicated to us that Brian J. Grossi, Trustee of the Brian J. Grossi 2007 Revocable Trust, has voting and investment power over the shares it is offering for resale. |
(43) | The selling stockholder indicated to us that John C. Lipman, Owner of Lipman Capital Group Inc. Retirement Plan, has voting and investment power over the shares it is offering for resale. |
(44) | The selling stockholder indicated to us that Franz J. Berlacher, IRA Owner of Kingdom Trust Company IRA Rollover FBO Franz J. Berlacher, has voting and investment power over the shares it is offering for resale. |
(45) | The selling stockholder indicated to us that Julie T. Berlacher, IRA Owner of Kingdom Trust Co. ROTH IRA c/f Julie T. Berlacher, has voting and investment power over the shares it is offering for resale. |
(46) | The selling stockholder indicated to us that Dean McDonald, Limited Partner of BMO Nesbitt Burns ITF 365-24977-22, has voting and investment power over the shares it is offering for resale. |
(47) | Represents shares underlying warrants issued to Emergency Growth Equities, Ltd. as placement agent compensation. The selling stockholder indicated to us that Gregory J. Berlacher has voting and investment power over the shares it is offering for resale. |
(48) | The selling stockholder indicated to us that James Scaplen, Chief Financial Officer of Trellus Small Cap Opportunity Fund LP, has voting and investment power over the shares it is offering for resale. |
(49) | The selling stockholder indicated to us that Eric Carter, Portfolio Manager of Kobe Partners, LP, has voting and investment power over the shares it is offering for resale. |
(50) | The selling stockholder indicated to us that Clark Lehman, General Partner of Logos Partners, LP, has voting and investment power over the shares it is offering for resale. |
(51) | The selling stockholder indicated to us that Lynn Bermeister, Vice President of Perritt Ultra MicroCap Fund has voting and investment power over the shares it is offering for resale. |
(52) | The selling stockholder indicated to us that David Houghton has voting and investment power over the shares it is offering for resale. |
(53) | The selling stockholder indicated to us that Jon Gruber, Trustee of the Gruber Trust, has voting and investment power over the shares it is offering for resale. |
(54) | The selling stockholder indicated to us that Robert London, trustee of the London Family Trust, has voting and investment power over the shares it is offering for resale. |
(55) | The selling stockholder indicated to us that Amir Ecker has voting and investment power over the shares it is offering for resale. |
(56) | The selling stockholder indicated to us that Wink James, Managing Partner of Lacuna Hedge Fund, LLLP, has voting and investment power over the shares it is offering for resale. |
(57) | The selling stockholder indicated to us that Joshua Sheinfeld, CEO of Lincoln Park Capital Fund, LLC, has voting and investment power over the shares it is offering for resale. |
(58) | The selling stockholder indicated to us that Mitchell J. Soboleski, Invsetment Manager of IPO ROI US Small Cap Aktier has voting and investment power over the shares it is offering for resale. |
(59) | The selling stockholder indicated to us that Larry Hopfenspirger, Grantor and Trustee of Larry C. Hopfenspirger Revocable Trust has voting and investment power over the shares it is offering for resale. |
(60) | The selling stockholder indicated to us that Carolyn A. Lynch, Trustee of Peter S. Lynch Charitable Lead Unitrust 3/3/97 and Peter S. Lynch Charitable Lead Annuity U/A 3/27/96 has voting and investment power over the shares it is offering for resale. |
(61) | The selling stockholder indicated to us that Peter S. Lynch, Trustee of Peter S. Lynch 1999 Unitrust, Peter S. and Carolyn A. Lynch Joint Trust with Right of Survival and The Lynch Foundation has voting and investment power over the shares it is offering for resale. |
(62) | The selling stockholder indicated to us that E. R. Salovich, Trustee of Elmer R. Salovich Revocable Living Trust has voting and investment power over the shares it is offering for resale. |
(63) | The selling stockholder indicated to us that Jeff Kone, Managing Member of Wall Street Capital Partners, L.P. has voting and investment power over the shares it is offering for resale. |
● | ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; |
● | block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction; |
● | purchases by a broker-dealer as principal and resale by the broker-dealer for its account; |
● | an exchange distribution in accordance with the rules of the applicable exchange; |
● | privately negotiated transactions; |
● | short sales; |
● | broker-dealers may agree with the selling stockholders to sell a specified number of such shares at a stipulated price per share; |
● | a combination of any such methods of sale; and |
● | any other method permitted pursuant to applicable law. |
Year Ended December 31, 2014 | High | Low | ||||||
Fourth Quarter | $ | 1.66 | $ | 1.07 | ||||
Third Quarter | $ | 1.38 | $ | 0.86 | ||||
Second Quarter | $ | 1.50 | $ | 1.05 | ||||
First Quarter | $ | 1.89 | $ | 1.39 | ||||
Year Ended December 31, 2013 | High | Low | ||||||
Fourth Quarter | $ | 3.00 | $ | 1.70 | ||||
Third Quarter | $ | 4.20 | $ | 2.40 | ||||
Second Quarter | $ | 2.52 | $ | 1.02 | ||||
First Quarter | $ | 2.04 | $ | 1.26 |
Year Ended December 31, 2013 | High | Low | |||||||
Fourth Quarter | $ | 3.00 | $ | 1.70 | |||||
Third Quarter | $ | 4.20 | $ | 2.40 | |||||
Second Quarter | $ | 2.52 | $ | 1.02 | |||||
First Quarter | $ | 2.04 | $ | 1.26 |
Year Ended December 31, 2012 | High | Low | ||||||
Fourth Quarter | $ | 2.58 | $ | 1.32 | ||||
Third Quarter | $ | 3.72 | $ | 1.56 | ||||
Second Quarter | $ | 6.24 | $ | 3.54 | ||||
First Quarter | $ | 9.00 | $ | 6.00 |
Plan Category | Number of securities to be issued upon exercise of outstanding options | Weighted-average exercise price of outstanding options | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a) | |||||||||
(a) | (b) | (c) | ||||||||||
Equity compensation plans not approved by security holders (1) | 6,085,015 | $ | 1.92 | 94,259 | ||||||||
Equity compensation plans approved by security holders | - | - | - | |||||||||
Total | 6,085,015 | $ | 1.92 | 94,259 |
(a) Number of Securities to be Issued Upon Exercise of Outstanding | (b) Weighted-Average Exercise Price of Outstanding | (c) Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities | ||||||||||
Plan Category | Options | Options | Reflected In Column (a)) | |||||||||
Equity compensation plans approved by security holders | - | $ | - | - | ||||||||
Equity compensation plans not approved by security holders | 6,085,015 | $ | 2.08 | 261,716 | ||||||||
Total | 6,085,015 | $ | 2.08 | 261,716 |
Years ended December 31, | ||||||||
2014 | 2013 | |||||||
Net cash provided by (used in): | ||||||||
Operating activities | $ | (4,298,302 | ) | $ | (2,948,888 | ) | ||
Investing activities | (2,403,283 | ) | (466,285 | ) | ||||
Financing activities | 4,977,130 | 5,987,495 | ||||||
Net change in cash | $ | (1,724,455 | ) | $ | 2,572,322 |
Exploit the competitive advantages and operating leverage of our technology |
Acquire complementary businesses and |
Build our intellectual property portfolio. We currently have |
· | Campaign Setup: Initially, our clients will use their own C4 account on our proprietary platform to design their mobile marketing campaign for purposes of attracting customers to subscribe for the customer’s mobile messaging service. In compliance with federal and state laws relating to mobile marketing, marketers typically attract customers to their mobile messaging service through media communications distributed through non-mobile devices, media, other than mobile devices, including store signage, billboards, other forms of print media, and digital media not directed through a mobile device. Our C4 solution also allows for the creation and design of digital display graphics that can be displayed on television screens, digital scoreboards, or other digital screens where an animated or more graphically rich solicitation may be desired. Digital displays are particularly useful on large digital scoreboard displays at sporting events. Through these various forms of communication, customers of our clients will be invited to subscribe to SMS text messaging communications (for example, “Join our mobile VIP club! Text “Pizza” to 12345”) or to set-up loyalty offers through our Stampt smartphone loyalty application (for example, “Download Stampt, use your iPhone or Android phone to join our loyalty program – “buy five sandwiches and get one free!”). Consumers responding to these communications will be directed to our clients’ own C4 account on our proprietary platform, where our platform records and stores the consumer’s relevant information for access by our client stores. Once the consumer has subscribed to our customer’s mobile marketing campaign, our C4 solution serves as a tool by which our customers can initiate messages and other communications back to their subscribed consumers, as well as configure and administer their mobile marketing campaigns. |
· |
· | Customer Relationship Management |
· | Stampt Smartphone Loyalty |
· | Smart |
· |
· | Direct |
· |
· |
· | In addition to our direct and indirect sales channels, we also market our services online through our Website, Facebook, Twitter, LinkedIn, and other online channels. We also participate in various trade and industry events to build awareness and promote exposure to our services and brand. |
· | Demonstrable experience and competence. We have been providing mobile marketing services since 2006. In 2009, Sybase, an international enterprise software and services company, awarded us their Innovator of the Year. Major brands such as Sonic Drive-In, Subway, Jamba Juice, |
· | Competitive pricing. We believe we are one of the few mobile marketing providers in the industry that can provide SMS text messaging services at a flat licensing fee structure rather than charging for every SMS text message transaction processed. We also believe that we have a “least cost” operating advantage that competitors may find challenging to compete with. |
· | Scalability. We believe that our platform is more scalable than most if not all of our competitors. Many of our customers require large volumes of mobile marketing messages to be transacted and a high quantity of end users operating our Web-based product features. We have grown our monthly messaging volume from less than 1 million SMS text messages per month in 2010 to more than |
· | Deceptive Trade Practice Law in the |
· | Behavioral |
· | Behavioral Advertising-Privacy |
· | Marketing-Privacy |
· | SMS and Location-Based Marketing Best Practices and |
· |
· |
· | Communications Privacy |
· | Security Breach Notification |
· |
Name | ||||
Age | Position | |||
Dennis Becker | Chief Executive Officer and | |||
Christopher Meinerz | ||||
Chief Financial Officer | ||||
Alex Shah | ||||
Donna Mitchell | 51 | Senior Vice President Sales and Business Development | ||
William Van Epps | 66 | Executive Chairman and Director | ||
John Harris | 66 | Lead Director and Chairman of Compensation Committee | ||
David Jaques | Chairman of Audit Committee and Director | |||
Phillip Guarascio | ||||
Chairman of Governance and Nominating Committee and Director | ||||
Doug Schneider | ||||
Director |
Name and Principal Position | Year | Salary | Bonus | Option Awards | Total | Year | Salary | Bonus | Option Awards | Total | ||||||||||||||||||||||||
Dennis Becker, CEO (1) | 2013 | $ | 240,580 | $ | 37,010 | $ | 464,636 | $ | 742,226 | 2014 | $ | 214,915 | $ | - | $ | - | $ | 214,915 | ||||||||||||||||
Dennis Becker, CEO (1) | 2012 | $ | 228,906 | $ | 60,000 | $ | 191,342 | $ | 480,248 | |||||||||||||||||||||||||
Tom Tolbert, CSO (2) | 2013 | $ | 100,869 | $ | 15,250 | $ | 432,489 | $ | 548,608 | |||||||||||||||||||||||||
Michael Bynum, President (3) | 2013 | $ | 115,972 | $ | 5,249 | $ | 432,489 | $ | 553,710 | |||||||||||||||||||||||||
2013 | $ | 240,580 | $ | 37,010 | $ | 464,636 | $ | 742,226 | ||||||||||||||||||||||||||
Alex Shah (2) | 2014 | $ | 167,725 | $ | - | $ | 46,903 | $ | 214,628 | |||||||||||||||||||||||||
Tom Tolbert, Former CSO (3) | 2014 | $ | 197,525 | $ | 43,112 | $ | 868,888 | $ | 1,109,525 | |||||||||||||||||||||||||
2013 | $ | 100,869 | $ | 15,250 | $ | 432,489 | $ | 548,608 |
(1) | The Option Award expense for our executive officers refers to options granted by our board of directors pursuant to our stock-based compensation plans approved by the board of directors. |
(2) | Alex Shah was appointed Chief Technology officer effective February 10, 2014. Amounts in the table above reflect his compensation after his appointment and through December 31, 2014. |
(3) | Tom Tolbert was appointed Chief Sales Officer effective May 20, 2013. This appointment was amended November 14, 2014 to Senior Vice President Business Development. Amounts in the table above reflect his compensation after his |
Name | Fees Earned | Stock Awards | Option Awards | Non-Equity Incentive Plan Compensation | Deferred Compensation Earnings | All Other Compensation | Total | |||||||||||||||||||||
Ronald Linares | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||||||
David Jaques | - | - | 44,225 | (1) | - | - | - | 44,225 | ||||||||||||||||||||
Randall Smith | - | - | - | - | - | - | - | |||||||||||||||||||||
Fraser Clarke | - | - | 20,050 | (2) | - | - | - | 20,050 | ||||||||||||||||||||
David Souaid | - | - | 20,050 | (2) | - | - | - | 20,050 | ||||||||||||||||||||
Doug Schneider | - | - | 20,050 | (2) | - | - | - | 20,050 | ||||||||||||||||||||
John Harris | - | - | 26,733 | (3) | - | - | - | 26,733 |
Name | Fees Earned | Stock Awards | Option Awards | Non-Equity Incentive Plan Compensation | Deferred Compensation Earnings | All Other Compensation | Total | ||||||||||||||||
David Jaques | - | 65,868 | (1) | - | - | - | 65,868 | ||||||||||||||||
David Jaques | - | 54,054 | (2) | - | - | - | 54,054 | ||||||||||||||||
Doug Schneider | - | 65,868 | (1) | - | - | - | 65,868 | ||||||||||||||||
Doug Schneider | - | 50,676 | (2) | - | - | - | 50,676 | ||||||||||||||||
John Harris | - | 79,998 | (1) | - | - | - | 79,998 | ||||||||||||||||
John Harris | - | 54,054 | (2) | - | - | - | 54,054 | ||||||||||||||||
Phil Guarascio | - | 51,997 | (1) | - | - | - | 51,997 | ||||||||||||||||
Phil Guarascio | - | 54,054 | (2) | - | - | - | 54,054 | ||||||||||||||||
William Van Epps | - | 33,355 | (1) | - | - | - | 33,355 | ||||||||||||||||
William Van Epps | - | 81,512 | (2) | - | - | - | 81,512 | ||||||||||||||||
(1) | Compensation related to a restricted stock unit granted for services in 2014 of 297,086 shares. The shares of common stock associated with the restricted stock unit evidenced by this Agreement will, to the extent the Participant’s rights with respect to the restricted stock unit have become vested in accordance with Paragraph 3, be issued to the Participant upon the earliest to occur of (A) settlement date of three years from date of grant, (B) a Change in Control of the Company, and (C) the termination of the holder’s employment with the Company. All 297,086 units are vested at December 31, 2014. |
(2) | Compensation related to a restricted stock unit granted for services in 2015 of 294,350 shares. The shares of Common Stock associated with the restricted stock unit evidenced by this Agreement will, to the extent the holder’s rights with respect to the restricted stock unit have become vested in accordance with Paragraph 3, be issued to the Participant upon the earliest to occur of (A) settlement date of three years from date of grant, (B) a Change in Control of the Company, and (C) the termination of the Participant’s employment with the Company. As of December 31, 2014, no units have vested. All units will equally vest monthly starting January 31, 2015 through to December 31, 2015. |
Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Equity Incentive Plan Awards; Number of Securities Underlying Unexercised Unearned Options (#) Unexercisable | Option Exercise Price | Option Expiration Date | Number of Securities Underlying Unexercised Options (#) Exercisable | Equity Incentive Plan Awards; Number of Securities Underlying Unexercised Unearned Options (#) Unexercisable | Option Exercise Price | Option Expiration Date | |||||||||||||||||
Dennis Becker, CEO | 78,125 | 26,042 | $ | 1.92 | 12/24/2015 | 104,167 | - | $ | 1.92 | 12/24/2015 | |||||||||||||||
Dennis Becker, CEO | 156,497 | 1,095,482 | $ | 1.80 | 6/17/2023 | 469,492 | 782,487 | $ | 1.80 | 6/17/2023 | |||||||||||||||
Tom Tolbert, CSO | 278,217 | 1,112,870 | $ | 1.80 | 6/17/2023 | ||||||||||||||||||||
Alex Shah, CTO | - | 180,000 | $ | 1.40 | 02/27/2024 | ||||||||||||||||||||
Mike Bynum, President | 278,217 | 1,112,870 | $ | 1.80 | 6/17/2023 | ||||||||||||||||||||
Tom Tolbert, Former CSO | 657,292 | 342,708 | $ | 1.31 | 6/17/2023 |
● | All of our directors and executive officers, individually; |
● | All of our directors and executive officers, as a group; and |
● | All persons who beneficially owned more than 5% of our outstanding common stock. |
Name of Director or Executive Officer | Number of Shares | Percentage | ||||||
Dennis Becker (1) | 553,010 | 2.4% | ||||||
Timothy Schatz(2) | 185,160 | * | ||||||
Michael K. Bynum(3) | 559,027 | 2.5% | ||||||
David Jaques(4) | 57,098 | * | ||||||
Peter Brodsky(5) | 162,189 | * | ||||||
Doug Schneider(6) | 116,875 | * | ||||||
John Harris(7) | 83,210 | * | ||||||
Phillip Guarascio | 31,250 | * | ||||||
Tom Tolbert(8) | 726,510 | 3.2% | ||||||
*Jeff Hasen | 14,491 | * | ||||||
All Executive Officers and Directors as a Group (ten persons) | 2,488,820 | 10.4% | ||||||
* Denotes less than 1% | ||||||||
Name and Address of 5% | Number of Shares | Percentage | ||||||
Jeffrey Porter(9) | 2,696,826 | 12.1% | ||||||
300 Drakes Landing Road, Suite 175 | ||||||||
Greenbrae, CA 94941 | ||||||||
ACT Capital Management, LLLP) | 1,958,679 | 8.8% | ||||||
2 Radnor Corporate Center, Suite 111 | ||||||||
Radnor, PA 19087 | ||||||||
(1) Includes 425,097 shares underlying presently exercisable options and warrants. | ||||||||
(2) Includes 149,377 shares underlying presently exercisable options and warrants. | ||||||||
(3) Includes 446,760 shares underlying presently exercisable options and warrants. | ||||||||
(4) Includes 32,098 shares underlying presently exercisable options and warrants. | ||||||||
(5) Includes 125,000 shares owned by Brodsky Family Trust of which Mr. Brodsky may be deemed to be the beneficial owner in his capacity as trustee of that entity. Includes 5,813 shares underlying presently exercisable options. |
Name of Beneficial Owner | Number of Shares | Percentage | ||||||
Dennis Becker | 735,615 | 2.6% | ||||||
Christopher Meinerz | -- | -- | ||||||
Donna Mitchell | 125,000 | -- | ||||||
Deena McKinley | -- | -- | ||||||
Alex Shah | 93,750 | * | ||||||
Tom Tolbert | 671,875 | 2.4% | ||||||
David Jaques | 76,179 | * | ||||||
Doug Schneider | 17,792 | * | ||||||
John Harris | 142,654 | * | ||||||
Phil Guarascio | 87,308 | * | ||||||
William Van Epps | 133,540 | * | ||||||
Thomas Akin | 2,508,500 | 9.0 | % | |||||
Porter Partners LP | 2,332,723 | 8.4 | % | |||||
Executive Officers and Directors as a Group (12 persons) | 4,592,213 | 16.4 | % |
MOBIVITY HOLDINGS CORP. | Page(s) | |
50 | ||
Consolidated Balance Sheets at December 31, 2014 and 2013 | 51 | |
Consolidated Statements of Operations for the Years Ended December 31, 2014 and 2013 | 52 | |
Consolidated Statement of Stockholders’ Equity (Deficit) for the Years Ended December 31, 2014 and 2013 | 53 | |
54 | ||
Notes to the Consolidated Financial Statements | 55 | |
Report of Independent Registered Public Accounting Firm | 82 | |
Balance Sheets at December 31, 2013 and 2012 | 83 | |
84 | ||
85 | ||
86 | ||
87 | ||
Unaudited Pro Forma Condensed Consolidated Financial Statements | ||
104 | ||
Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements | 107 |
December 31, 2013 | December 31, 2012 | December 31, 2014 | December 31, 2013 | |||||||||||||
ASSETS | ||||||||||||||||
Current assets | ||||||||||||||||
Cash | $ | 2,572,685 | $ | 363 | $ | 848,230 | $ | 2,572,685 | ||||||||
Accounts receivable, net of allowance for doubtful accounts of $65,975 and $44,700, respectively | 280,667 | 414,671 | ||||||||||||||
Accounts receivable, net of allowance for doubtful accounts of $90,869 and $65,975, respectively | 378,934 | 280,667 | ||||||||||||||
Other current assets | 140,114 | 30,009 | 109,846 | 140,114 | ||||||||||||
Total current assets | 2,993,466 | 445,043 | 1,337,010 | 2,993,466 | ||||||||||||
Goodwill | 3,108,964 | 2,259,624 | 1,921,072 | 3,108,964 | ||||||||||||
Intangible assets, net | 935,316 | 444,112 | 2,010,952 | 935,316 | ||||||||||||
Other assets | 63,944 | 201,228 | 99,476 | 63,944 | ||||||||||||
TOTAL ASSETS | $ | 7,101,690 | $ | 3,350,007 | $ | 5,368,510 | $ | 7,101,690 | ||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | ||||||||||||||||
Current liabilities | ||||||||||||||||
Accounts payable | $ | 543,647 | $ | 514,949 | $ | 412,551 | $ | 543,648 | ||||||||
Accrued interest | 16,943 | 321,368 | - | 16,943 | ||||||||||||
Accrued and deferred personnel compensation | 191,041 | 299,534 | 185,214 | 191,041 | ||||||||||||
Deferred revenue - related party | - | 35,262 | ||||||||||||||
Deferred revenue and customer deposits | 136,523 | 181,731 | 180,941 | 136,523 | ||||||||||||
Convertible notes payable, net of discount | - | 2,857,669 | ||||||||||||||
Notes payable | 20,000 | 171,984 | - | 20,000 | ||||||||||||
Derivative liabilities | 106,176 | 3,074,504 | 42,659 | 106,176 | ||||||||||||
Other current liabilities | 36,372 | 250,144 | 43,525 | 36,372 | ||||||||||||
Earn-out payable | 34,755 | 2,032,881 | 840,000 | 34,755 | ||||||||||||
Total current liabilities | 1,085,458 | 9,740,026 | 1,704,890 | 1,085,458 | ||||||||||||
Non-current liabilities | ||||||||||||||||
Earn-out payable | 24,245 | - | - | 24,245 | ||||||||||||
Total non-current liabilities | 24,245 | - | - | 24,245 | ||||||||||||
Total liabilities | 1,109,703 | 9,740,026 | 1,704,890 | 1,109,703 | ||||||||||||
Commitments and Contingencies (See Note 9) | ||||||||||||||||
Commitments and Contingencies (See Note 11) | ||||||||||||||||
Stockholders' equity (deficit) | ||||||||||||||||
Common stock, $0.001 par value; 50,000,000 shares authorized;16,319,878 and 3,869,688 shares issued and outstanding | 16,320 | 3,870 | ||||||||||||||
Common stock, $0.001 par value; 50,000,000 shares authorized; 22,748,193 and 16,319,878 shares issued and outstanding | 22,748 | 16,320 | ||||||||||||||
Equity payable | 108,170 | - | 100,862 | 108,170 | ||||||||||||
Additional paid-in capital | 54,452,697 | 25,432,280 | 62,565,974 | 54,452,697 | ||||||||||||
Accumulated deficit | (48,585,200 | ) | (31,826,169 | ) | (59,025,964 | ) | (48,585,200 | ) | ||||||||
Total stockholders' equity (deficit) | 5,991,987 | (6,390,019 | ) | 3,663,620 | 5,991,987 | |||||||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | $ | 7,101,690 | $ | 3,350,007 | $ | 5,368,510 | $ | 7,101,690 |
Years ended December 31, | ||||||||
2014 | 2013 | |||||||
Revenues | ||||||||
Revenues | $ | 4,000,202 | $ | 4,093,667 | ||||
Cost of revenues | 1,066,917 | 1,122,037 | ||||||
Gross margin | 2,933,285 | 2,971,630 | ||||||
Operating expenses | ||||||||
General and administrative | 4,270,844 | 3,416,850 | ||||||
Sales and marketing | 3,895,033 | 3,469,383 | ||||||
Engineering, research, and development | 1,346,198 | 824,653 | ||||||
Depreciation and amortization | 416,436 | 270,579 | ||||||
Goodwill impairment | 4,078,693 | 1,066,068 | ||||||
Intangible asset impairment | 961,436 | 644,170 | ||||||
Total operating expenses | 14,968,640 | 9,691,703 | ||||||
Loss from operations | (12,035,355 | ) | (6,720,073 | ) | ||||
Other income/(expense) | ||||||||
Interest income | 2,131 | 747 | ||||||
Interest expense | - | (6,348,186 | ) | |||||
Change in fair value of derivative liabilities | 63,517 | (3,766,231 | ) | |||||
Gain on debt extinguishment | 36,943 | 103,177 | ||||||
Gain (loss) on adjustment in contingent consideration | 1,492,000 | (28,465 | ) | |||||
Total other income/(expense) | 1,594,591 | (10,038,958 | ) | |||||
Loss before income taxes | (10,440,764 | ) | (16,759,031 | ) | ||||
Income tax expense | - | - | ||||||
Net loss | $ | (10,440,764 | ) | $ | (16,759,031 | ) | ||
Net loss per share - basic and diluted | $ | (0.49 | ) | $ | (1.58 | ) | ||
Weighted average number of shares during the period - basic and diluted | 21,203,563 | 10,612,007 |
Common Stock | Equity | Additional | Accumulated | Total Stockholders' | ||||||||||||||||||||
Shares | Dollars | Payable | Paid-in Capital | Deficit | Equity (Deficit) | |||||||||||||||||||
Balance, December 31, 2012 | 3,869,6888 | $ | 3,870 | $ | - | $ | 25,432,280 | $ | (31,826,169 | ) | $ | (6,390,019 | ) | |||||||||||
Shares issued for Boomtext earn-out payment | 247,279 | 247 | - | 2,210,420 | - | 2,210,667 | ||||||||||||||||||
Issuance of common stock for acquisitions | 1,291,667 | 1,292 | - | 1,294,768 | - | 1,296,060 | ||||||||||||||||||
Issuance of common stock for cash, net of transaction costs of $602,823 | 6,250,000 | 6,250 | - | 6,890,927 | - | 6,897,177 | ||||||||||||||||||
Issuance of common stock for conversion of note principal and interest | 4,462,089 | 4,462 | - | 5,350,044 | - | 5,354,506 | ||||||||||||||||||
Issuance of common stock and warrants for services | 31,292 | 31 | 7,308 | 98,799 | - | 106,138 | ||||||||||||||||||
Issuance of common stock for allonge | 87,947 | 88 | - | 131,160 | - | 131,248 | ||||||||||||||||||
Adjustment of derivative liability for note conversion | - | - | 218,446 | 10,726,967 | - | 10,945,413 | ||||||||||||||||||
Adjustment of derivative liability for note repayment | - | - | - | 40,511 | - | 40,511 | ||||||||||||||||||
Adjustment of derivative liability for non-employee warrant conversion | - | - | - | 176,555 | - | 176,555 | ||||||||||||||||||
Issuance of common stock and warrants for equity payable | 39,382 | 40 | (117,584 | ) | 117,544 | - | - | |||||||||||||||||
Issuance of common stock for accrued bonuses | 19,271 | 19 | - | 36,981 | - | 37,000 | ||||||||||||||||||
Issuance of common stock for cashless exercise of warrants | 21,171 | 21 | - | 55,525 | - | 55,546 | ||||||||||||||||||
Stock based compensation | - | - | - | 1,890,216 | - | 1,890,216 | ||||||||||||||||||
Share rounding in reverse split | 92 | - | - | - | - | - | ||||||||||||||||||
Net loss | - | - | - | - | (16,759,031 | ) | (16,759,031 | ) | ||||||||||||||||
Balance, December 31, 2013 | 16,319,878 | $ | 16,320 | $ | 108,170 | $ | 54,452,697 | $ | (48,585,200 | ) | $ | 5,991,987 | ||||||||||||
Issuance of common stock for financing, net of transaction costs of $448,635 | 5,413,000 | 5,413 | - | 4,971,717 | - | 4,977,130 | ||||||||||||||||||
Issuance of common stock for acquisitions | 504,884 | 505 | - | 672,000 | - | 672,505 | ||||||||||||||||||
Issuance of common stock and warrants for services | 510,431 | 510 | (7,308 | ) | 536,225 | - | 529,427 | |||||||||||||||||
Stock based compensation | - | - | - | 1,933,335 | - | 1,933,335 | ||||||||||||||||||
Net loss | (10,440,764 | ) | (10,440,764 | ) | ||||||||||||||||||||
Balance, December 31, 2014 | 22,748,193 | $ | 22,748 | $ | 100,862 | $ | 62,565,974 | $ | (59,025,964 | ) | $ | 3,663,620 |
Years ended December 31, | ||||||||
2014 | 2013 | |||||||
OPERATING ACTIVITIES | ||||||||
Net loss | $ | (10,440,764 | ) | $ | (16,759,031 | ) | ||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||||
Bad debt expense | 4,514 | 32,858 | ||||||
Common stock and warrants issued for services | 529,427 | 106,138 | ||||||
Stock-based compensation | 1,933,335 | 1,890,216 | ||||||
Depreciation and amortization expense | 416,435 | 270,579 | ||||||
Loss (Gain) on adjustment in contingent consideration | (1,492,000 | ) | 28,465 | |||||
Loss on disposal of assets | 680 | - | ||||||
Gain on debt extinguishment | (36,943 | ) | - | |||||
Change in fair value of derivative liabilities | (63,517 | ) | 3,766,231 | |||||
Amortization of note discounts | - | 6,134,367 | ||||||
Goodwill impairment | 4,078,693 | 1,066,068 | ||||||
Intangible asset impairment | 961,436 | 644,170 | ||||||
Increase (decrease) in cash resulting from changes in: | ||||||||
Accounts receivable | 58,883 | 128,613 | ||||||
Other current assets | 30,268 | (104,605 | ) | |||||
Other assets | (1,835 | ) | 27,300 | |||||
Accounts payable | (131,098 | ) | (17,521 | ) | ||||
Accrued interest | - | 65,361 | ||||||
Accrued and deferred personnel compensation | (5,827 | ) | (71,493 | ) | ||||
Deferred revenue - related party | - | (35,262 | ) | |||||
Deferred revenue and customer deposits | (147,142 | ) | (45,208 | ) | ||||
Other liabilities | 7,153 | (76,134 | ) | |||||
Net cash used in operating activities | (4,298,302 | ) | (2,948,888 | ) | ||||
INVESTING ACTIVITIES | ||||||||
Purchases of equipment | (35,264 | ) | (51,285 | ) | ||||
Acquisition of intangible assets | - | (15,000 | ) | |||||
Acquisitions | (2,368,019 | ) | (400,000 | ) | ||||
Net cash used in investing activities | (2,403,283 | ) | (466,285 | ) | ||||
FINANCING ACTIVITIES | ||||||||
Proceeds from issuance of notes payable, net of finance offering costs | - | 700,000 | ||||||
Payments on notes payable | - | (1,609,682 | ) | |||||
Proceeds from issuance of common stock, net of issuance costs | 4,977,130 | 6,897,177 | ||||||
Net cash provided by financing activities | 4,977,130 | 5,987,495 | ||||||
Net change in cash | (1,724,455 | ) | 2,572,322 | |||||
Cash at beginning of period | 2,572,685 | 363 | ||||||
Cash at end of period | $ | 848,230 | $ | 2,572,685 | ||||
Supplemental disclosures: | ||||||||
Cash paid during period for : | ||||||||
Interest | $ | - | $ | 146,973 | ||||
Non-cash investing and financing activities: | ||||||||
Debt discount from derivatives | $ | - | $ | 4,614,714 | ||||
Adjustment to derivative liability due to note repayment | $ | - | $ | 40,511 | ||||
Adjustment to derivative liability due to note conversion | $ | - | $ | 10,726,967 | ||||
Adjustment to derivative liability due to Allonge / ASID conversion | $ | - | $ | 349,694 | ||||
Adjustment to derivative liability due to non-employee warrant conversion | $ | - | $ | 176,555 | ||||
Issuance of common stock for Boomtext earn-out | $ | - | $ | 2,210,667 | ||||
Issuance of common stock for acquisitions | $ | 672,505 | $ | 1,296,060 | ||||
Issuance of common stock for accrued bonuses | $ | - | $ | 37,000 | ||||
Issuance of common stock for cashless exercise of warrants | $ | - | $ | 55,546 | ||||
Issuance of note payable for acquisition | $ | - | $ | 1,365,096 | ||||
Earn-out payable recorded for acquisition | $ | 2,273,000 | $ | 224,000 | ||||
Conversion of notes payable into common stock | $ | - | $ | 4,984,720 | ||||
Conversion of accrued interest into common stock | $ | - | $ | 369,786 | ||||
Settlement of working capital asset related to the Boomtext acquisition | $ | - | $ | 153,317 |
Years ended December 31, | ||||||||
2013 | 2012 | |||||||
Revenues | ||||||||
Revenues | $ | 4,093,667 | $ | 4,079,745 | ||||
Cost of revenues | 1,122,037 | 1,300,325 | ||||||
Gross margin | 2,971,630 | 2,779,420 | ||||||
Operating expenses | ||||||||
General and administrative | 3,416,850 | 2,984,118 | ||||||
Sales and marketing | 3,469,383 | 1,562,933 | ||||||
Engineering, research, and development | 824,653 | 562,459 | ||||||
Depreciation and amortization | 270,579 | 549,151 | ||||||
Goodwill impairment | 1,066,068 | 742,446 | ||||||
Intangible asset impairment | 644,170 | 145,396 | ||||||
Total operating expenses | 9,691,703 | 6,546,503 | ||||||
Loss from operations | (6,720,073 | ) | (3,767,083 | ) | ||||
Other income/(expense) | ||||||||
Interest income | 747 | 2,833 | ||||||
Interest expense | (6,348,186 | ) | (4,559,564 | ) | ||||
Change in fair value of derivative liabilities | (3,766,231 | ) | 359,530 | |||||
Gain on debt extinguishment | 103,177 | - | ||||||
Gain (loss) on adjustment in contingent consideration | (28,465 | ) | 625,357 | |||||
Total other income/(expense) | (10,038,958 | ) | (3,571,844 | ) | ||||
Loss before income taxes | (16,759,031 | ) | (7,338,927 | ) | ||||
Income tax expense | - | - | ||||||
Net loss | $ | (16,759,031 | ) | $ | (7,338,927 | ) | ||
Net loss per share - basic and diluted | $ | (1.58 | ) | $ | (1.90 | ) | ||
Weighted average number of shares during the period - basic and diluted | 10,612,007 | 3,869,247 |
Common Stock | Equity | Additional | Accumulated | Total Stockholders' | ||||||||||||||||||||
Shares | Dollars | Payable | Paid-in Capital | Deficit | Equity (Deficit) | |||||||||||||||||||
Balance, December 31, 2011 | 3,792,385 | $ | 3,792 | $ | - | $ | 21,118,251 | $ | (24,487,242 | ) | $ | (3,365,199 | ) | |||||||||||
Issuance of common stock for services | 37,500 | 38 | - | 269,962 | - | 270,000 | ||||||||||||||||||
Issuance of common stock for late payment penalty | 39,241 | 39 | - | 160,429 | - | 160,468 | ||||||||||||||||||
Adjustment to derivative liability due to note repayment | 562 | 1 | - | 1,373 | - | 1,374 | ||||||||||||||||||
Adjustment of derivative liability due to note repayment | - | - | - | 67,958 | - | 67,958 | ||||||||||||||||||
Adjustment to derivative liability due to note conversion | - | - | - | 3,421,579 | - | 3,421,579 | ||||||||||||||||||
Adjustment to derivative liability due to warrant cancellation | - | - | - | 1,318 | - | 1,318 | ||||||||||||||||||
Stock based compensation | - | - | - | 391,410 | - | 391,410 | ||||||||||||||||||
Net loss | - | - | - | (7,338,927 | ) | (7,338,927 | ) | |||||||||||||||||
Balance, December 31, 2012 | 3,869,688 | 3,870 | - | 25,432,280 | (31,826,169 | ) | (6,390,019 | ) | ||||||||||||||||
Shares issued for Boomtext earn-out payment | 247,279 | 247 | - | 2,210,420 | - | 2,210,667 | ||||||||||||||||||
Issuance of common stock for acquisitions | 1,291,667 | 1,292 | - | 1,294,768 | - | 1,296,060 | ||||||||||||||||||
Issuance of common stock for cash, net of transaction costs of $602,823 | 6,250,000 | 6,250 | - | 6,890,927 | - | 6,897,177 | ||||||||||||||||||
Issuance of common stock for conversion of note principal and interest | 4,462,089 | 4,462 | - | 5,350,044 | - | 5,354,506 | ||||||||||||||||||
Issuance of common stock and warrants for services | 31,292 | 31 | 7,308 | 98,799 | - | 106,138 | ||||||||||||||||||
Issuance of common stock for allonge | 87,947 | 88 | - | 131,160 | - | 131,248 | ||||||||||||||||||
Adjustment of derivative liability for note conversion | - | - | 218,446 | 10,726,967 | - | 10,945,413 | ||||||||||||||||||
Adjustment of derivative liability for note repayment | - | - | - | 40,511 | - | 40,511 | ||||||||||||||||||
Adjustment of derivative liability for non-employee warrant conversion | - | - | - | 176,555 | - | 176,555 | ||||||||||||||||||
Issuance of common stock and warrants for equity payable | 39,382 | 40 | (117,584 | ) | 117,544 | - | - | |||||||||||||||||
Issuance of common stock for accrued bonuses | 19,271 | 19 | - | 36,981 | - | 37,000 | ||||||||||||||||||
Issuance of common stock for cashless exercise of warrants | 21,171 | 21 | - | 55,525 | - | 55,546 | ||||||||||||||||||
Stock based compensation | - | - | - | 1,890,216 | - | 1,890,216 | ||||||||||||||||||
Share rounding in reverse split | 92 | - | - | - | - | - | ||||||||||||||||||
Net loss | - | - | - | - | (16,759,031 | ) | (16,759,031 | ) | ||||||||||||||||
Balance, December 31, 2013 | 16,319,878 | $ | 16,320 | $ | 108,170 | $ | 54,452,697 | $ | (48,585,200 | ) | $ | 5,991,987 |
Years ended December 31, | ||||||||
2013 | 2012 | |||||||
OPERATING ACTIVITIES | ||||||||
Net loss | $ | (16,759,031 | ) | $ | (7,338,927 | ) | ||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||||
Bad debt expense | 32,858 | 115,059 | ||||||
Common stock and warrants issued for services | 106,138 | 270,000 | ||||||
Common stock issued for late payment | - | 160,468 | ||||||
Stock-based compensation | 1,890,216 | 391,410 | ||||||
Depreciation and amortization expense | 270,579 | 549,151 | ||||||
Gain (Loss) on adjustment in contingent consideration | 28,465 | (625,357 | ) | |||||
Change in fair value of derivative liabilities | 3,766,231 | (359,530 | ) | |||||
Amortization of deferred financing costs | - | 263,255 | ||||||
Amortization of note discounts | 6,134,367 | 3,935,108 | ||||||
Goodwill impairment | 1,066,068 | 742,446 | ||||||
Intangible asset impairment | 644,170 | 145,396 | ||||||
Loss on sale of assets | - | 164 | ||||||
Increase (decrease) in cash resulting from changes in: | ||||||||
Accounts receivable | 128,613 | (285,884 | ) | |||||
Other current assets | (104,605 | ) | (29,460 | ) | ||||
Other assets | 27,300 | 9,929 | ||||||
Accounts payable | (17,521 | ) | (327,828 | ) | ||||
Accrued interest | 65,361 | 335,035 | ||||||
Accrued and deferred personnel compensation | (71,493 | ) | 61,843 | |||||
Deferred revenue - related party | (35,262 | ) | (164,738 | ) | ||||
Deferred revenue and customer deposits | (45,208 | ) | 55,206 | |||||
Other liabilities | (76,134 | ) | (120,929 | ) | ||||
Net cash used in operating activities | (2,948,888 | ) | (2,218,183 | ) | ||||
INVESTING ACTIVITIES | ||||||||
Purchases of equipment | (51,285 | ) | (11,112 | ) | ||||
Acquisition of intangible assets | (15,000 | ) | - | |||||
Acquisitions | (400,000 | ) | - | |||||
Net cash used in investing activities | (466,285 | ) | (11,112 | ) | ||||
FINANCING ACTIVITIES | ||||||||
Proceeds from issuance of notes payable, net of finance offering costs | 700,000 | 3,148,470 | ||||||
Payments on notes payable | (1,609,682 | ) | (831,708 | ) | ||||
Payments on cash payment obligation | - | (87,500 | ) | |||||
Proceeds from issuance of common stock, net of issuance costs | 6,897,177 | - | ||||||
Net cash provided by financing activities | 5,987,495 | 2,229,262 | ||||||
Net change in cash | 2,572,322 | (33 | ) | |||||
Cash at beginning of period | 363 | 396 | ||||||
Cash at end of period | $ | 2,572,685 | $ | 363 | ||||
Supplemental disclosures: | ||||||||
Cash paid during period for : | ||||||||
Interest | $ | 146,973 | $ | 33,385 | ||||
Non-cash investing and financing activities: | ||||||||
Debt discount from derivatives | $ | 4,614,714 | $ | 5,352,404 | ||||
Adjustment to derivative liability due to note repayment | $ | 40,511 | $ | 1,374 | ||||
Adjustment to derivative liability due to note conversion | $ | 10,726,967 | $ | 3,421,579 | ||||
Adjustment to derivative liability due to Allonge / ASID conversion | $ | 349,694 | $ | - | ||||
Adjustment to derivative liability due to non-employee warrant conversion | $ | 176,555 | $ | - | ||||
Adjustment to derivative liability due to warrant cancellation | $ | - | $ | 1,318 | ||||
Issuance of common stock for Boomtext earn-out | $ | 2,210,667 | $ | - | ||||
Issuance of common stock for acquisitions | $ | 1,296,060 | $ | - | ||||
Issuance of common stock for accrued bonuses | $ | 37,000 | $ | - | ||||
Issuance of common stock for cashless exercise of warrants | $ | 55,546 | $ | - | ||||
Issuance of note payable for acquisition | $ | 1,365,096 | $ | - | ||||
Earn-out payable recorded for acquisition | $ | 224,000 | $ | - | ||||
Conversion of accrued interest into notes payable | $ | - | $ | 137,649 | ||||
Conversion of notes payable into common stock | $ | 4,984,720 | $ | - | ||||
Conversion of accrued interest into common stock | $ | 369,786 | $ | - | ||||
Settlement of working capital asset related to the Boomtext acquisition | $ | 153,317 | $ | - |
December 31, | December 31, | |||||||||||||||
2013 | 2012 | 2014 | 2013 | |||||||||||||
Outstanding employee options | 5,672,464 | 325,846 | 5,399,320 | 5,672,464 | ||||||||||||
Outstanding restricted stock units | 591,436 | - | ||||||||||||||
Outstanding non-employee warrants | 150,835 | 150,835 | 150,001 | 150,556 | ||||||||||||
Outstanding warrants | 5,187,587 | 140,372 | 7,019,840 | 5,187,587 | ||||||||||||
11,010,886 | 617,053 | 13,160,597 | 11,010,607 |
- | Present (either on the face of the statement where net income is presented or in the notes) the effects on the line items of net income of significant amounts reclassified out of accumulated other comprehensive income - but only if the item reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period; and |
- | Cross-reference to other disclosures currently required under U.S. GAAP for other reclassification items (that are not required under U.S. GAAP) to be reclassified directly to net income in their entirety in the same reporting period. This would be the case when a portion of the amount reclassified out of accumulated other comprehensive income is initially transferred to a balance sheet account (e.g., inventory for pension-related amounts) instead of directly to income or expense. |
Accounts receivable, net | $ | 161,664 | ||
Other assets | 6,620 | |||
Customer relationships | 2,010,000 | |||
Developed technology | 260,000 | |||
Trade name | 176,000 | |||
Goodwill | 2,890,801 | |||
Total assets acquired | 5,505,085 | |||
Liabilities assumed | (191,561 | ) | ||
Net assets acquired | $ | 5,313,524 |
Cash | $ | 2,368,019 | ||
Earn Out | 2,273,000 | |||
Common stock | 672,505 | |||
Total purchase price | $ | 5,313,524 |
Mobivity | SR | Pro forma adjustments | Pro forma combined | |||||||||||||
Revenues | ||||||||||||||||
Revenues | $ | 4,000,202 | $ | 214,139 | $ | - | $ | 4,214,341 | ||||||||
Cost of revenues | 1,066,917 | 54,410 | - | 1,121,327 | ||||||||||||
Gross margin | 2,933,285 | 159,729 | - | 3,093,014 | ||||||||||||
Operating expenses | ||||||||||||||||
General and administrative | 4,270,844 | 231,084 | 4,230 | (a) | 4,506,158 | |||||||||||
Sales and marketing | 3,895,033 | 60,077 | - | 3,955,110 | ||||||||||||
Engineering, research, and development | 1,346,198 | 139,649 | - | 1,485,847 | ||||||||||||
Depreciation and amortization | 416,436 | 403 | - | 416,839 | ||||||||||||
Goodwill impairment | 4,078,693 | - | - | 4,078,693 | ||||||||||||
Intangible asset impairment | 961,436 | - | - | 961,436 | ||||||||||||
Total operating expenses | 14,968,640 | 431,213 | 4,230 | 15,404,083 | ||||||||||||
Loss from operations | (12,035,355 | ) | (271,484 | ) | (4,230 | ) | (12,311,069 | ) | ||||||||
Other income/(expense) | ||||||||||||||||
Interest income | 2,131 | - | - | 2,131 | ||||||||||||
Change in fair value of derivative liabilities | 63,517 | - | - | 63,517 | ||||||||||||
Gain on debt extinguishment | 36,943 | - | - | 36,943 | ||||||||||||
Gain on adjustment of contingent consideration | 1,492,000 | - | - | 1,492,000 | ||||||||||||
Total other income/(expense) | 1,594,591 | - | - | 1,594,591 | ||||||||||||
Loss before income taxes | (10,440,764 | ) | (271,484 | ) | (4,230 | ) | (10,716,478 | ) | ||||||||
Income tax expense | - | - | - | - | ||||||||||||
Net loss | $ | (10,440,764 | ) | $ | (271,484 | ) | $ | (4,230 | ) | $ | (10,716,478 | ) | ||||
Net loss per share - basic and diluted | $ | (0.49 | ) | $ | (0.52 | ) | ||||||||||
Weighted average number of shares during the period - basic and diluted | 21,203,563 | 20,796,889 |
(a) | Represents stock based compensation in conjunction with the transaction. |
Mobivity | SR | Pro forma adjustments | Pro forma combined | |||||||||||||
Revenues | ||||||||||||||||
Revenues | $ | 4,093,667 | $ | 834,250 | $ | - | $ | 4,927,917 | ||||||||
Cost of revenues | 1,122,037 | 243,209 | - | 1,365,246 | ||||||||||||
Gross margin | 2,971,630 | 591,041 | - | 3,562,671 | ||||||||||||
Operating expenses | ||||||||||||||||
General and administrative | 3,416,850 | 211,271 | 446,094 | (a) | 4,074,215 | |||||||||||
Sales and marketing | 3,469,383 | 339,615 | - | 3,808,998 | ||||||||||||
Engineering, research, and development | 824,653 | 644,330 | - | 1,468,983 | ||||||||||||
Depreciation and amortization | 270,579 | 3,970 | - | 274,549 | ||||||||||||
Goodwill impairment | 1,066,068 | - | - | 1,066,068 | ||||||||||||
Intangible asset impairment | 644,170 | - | - | 644,170 | ||||||||||||
Total operating expenses | 9,691,703 | 1,199,186 | 446,094 | 11,336,983 | ||||||||||||
Loss from operations | (6,720,073 | ) | (608,145 | ) | (446,094 | ) | (7,774,312 | ) | ||||||||
Other income/(expense) | �� | |||||||||||||||
Interest income | 747 | - | - | 747 | ||||||||||||
Interest expense | (6,348,186 | ) | (117,944 | ) | - | (6,466,130 | ) | |||||||||
Change in fair value of derivative liabilities | (3,766,231 | ) | - | - | (3,766,231 | ) | ||||||||||
Gain on Debt Extinguishment | 103,177 | - | - | 103,177 | ||||||||||||
Loss on adjustment in contingent consideration | (28,465 | ) | - | - | (28,465 | ) | ||||||||||
Total other income/(expense) | (10,038,958 | ) | (117,944 | ) | - | (10,156,902 | ) | |||||||||
Loss before income taxes | (16,759,031 | ) | (726,089 | ) | (446,094 | ) | (17,931,214 | ) | ||||||||
Income tax expense | - | - | - | - | ||||||||||||
Net loss | $ | (16,759,031 | ) | $ | (726,089 | ) | $ | (446,094 | ) | $ | (17,931,214 | ) | ||||
Net loss per share - basic and diluted | $ | (1.58 | ) | $ | (1.61 | ) | ||||||||||
Weighted average number of shares during the period - basic and diluted | 10,612,007 | 11,116,891 |
(a) | Represents stock based compensation in conjunction with the transaction. |
Cash | $ | 5,500 | ||
Accounts receivable | 27,467 | |||
Contracts | 813,000 | |||
Customer relationships | 22,000 | |||
Developed technology | 96,000 | |||
Non-compete agreement | 124,000 | |||
Goodwill | 1,535,658 | |||
Total assets acquired | 2,623,625 | |||
Liabilities assumed | (46,219 | ) | ||
Net assets acquired | $ | 2,577,406 |
(Unaudited) | (Unaudited) | |||||||||||
Year ended December 31, | Year ended December 31, | |||||||||||
2013 | 2012 | 2013 | ||||||||||
Total revenues | $ | 4,255,947 | $ | 4,427,542 | $ | 4,255,947 | ||||||
Net loss | $ | (17,120,236 | ) | $ | (9,533,541 | ) | $ | (17,120,236 | ) | |||
Basic and diluted loss per share | $ | (1.55 | ) | $ | (0.32 | ) | $ | (1.55 | ) |
Merchant relationships | $ | 181,000 | ||
Trade name | 76,000 | |||
Developed technology | 71,000 | |||
Goodwill | 379,750 | |||
Total assets acquired | $ | 707,750 |
Goodwill | Goodwill | |||||||
December 31, 2011 | $ | 3,002,070 | ||||||
Acquired | - | |||||||
Impairment | (742,446 | ) | ||||||
December 31, 2012 | 2,259,624 | $ | 2,259,624 | |||||
Acquired | 1,915,408 | 1,915,408 | ||||||
Impairment | (1,066,068 | ) | (1,066,068 | ) | ||||
December 31, 2013 | $ | 3,108,964 | 3,108,964 | |||||
Acquired | 2,890,801 | |||||||
Impairment | (4,078,693 | ) | ||||||
December 31, 2014 | $ | 1,921,072 |
December 31, 2013 | December 31, 2012 | December 31, 2014 | December 31, 2013 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gross Carrying Amount | Accumulated Amortization and Impairment | Net Carrying Amount | Weighted Average Useful Life (Years) | Gross Carrying Amount | Accumulated Amortization and Impairment | Net Carrying Amount | Weighted Average Useful Life (Years) | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Weighted Average Useful Life (Years) | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Weighted Average Useful Life (Years) | |||||||||||||||||||||||||||||||||||||||||||||||||
Patents and trademarks | $ | 142,000 | $ | (23,902 | ) | $ | 118,098 | 20.00 | $ | 127,000 | $ | (15,381 | ) | $ | 111,619 | 20.00 | $ | 142,000 | $ | (33,048 | ) | $ | 108,952 | 20 | $ | 142,000 | $ | (23,902 | ) | $ | 118,098 | 20.00 | ||||||||||||||||||||||||||||||||
Customer contracts | 1,069,900 | (528,372 | ) | 541,528 | 5.88 | 256,900 | (178,135 | ) | 78,765 | 5.00 | 628,502 | (628,502 | ) | - | - | 1,069,900 | (528,372 | ) | 541,528 | 5.88 | ||||||||||||||||||||||||||||||||||||||||||||
Customer and merchant relationships | 1,128,583 | (1,128,583 | ) | - | 4.78 | 925,583 | (896,527 | ) | 29,056 | 3.74 | 2,830,139 | (1,290,139 | ) | 1,540,000 | 10 | 1,128,583 | (1,128,583 | ) | - | 4.78 | ||||||||||||||||||||||||||||||||||||||||||||
Trade name | 199,750 | (177,359 | ) | 22,391 | 5.00 | 123,750 | (93,162 | ) | 30,588 | 5.00 | 353,192 | (201,192 | ) | 152,000 | 10 | 199,750 | (177,359 | ) | 22,391 | 5.00 | ||||||||||||||||||||||||||||||||||||||||||||
Acquired technology | 573,550 | (391,252 | ) | 182,298 | 4.72 | 406,550 | (213,091 | ) | 193,459 | 4.61 | 686,135 | (476,135 | ) | 210,000 | 10 | 573,550 | (391,252 | ) | 182,298 | 4.72 | ||||||||||||||||||||||||||||||||||||||||||||
Non-compete agreement | 132,083 | (61,082 | ) | 71,001 | 2.90 | 8,083 | (7,458 | ) | 625 | 2.16 | 90,462 | (90,462 | ) | - | - | 132,083 | (61,082 | ) | 71,001 | 2.90 | ||||||||||||||||||||||||||||||||||||||||||||
$ | 3,245,866 | $ | (2,310,550 | ) | $ | 935,316 | $ | 1,720,866 | $ | (1,403,754 | ) | $ | 444,112 | $ | 4,730,430 | $ | (2,719,478 | ) | $ | 2,010,952 | $ | 3,245,866 | $ | (2,310,550 | ) | $ | 935,316 |
Year ending December 31, | Amount | Amount | ||||||
2014 | $ | 211,574 | ||||||
2015 | 217,624 | $ | 214,769 | |||||
2016 | 139,692 | 214,769 | ||||||
2017 | 94,319 | 214,769 | ||||||
2018 | 88,470 | 214,769 | ||||||
2019 | 214,769 | |||||||
Thereafter | 183,636 | 937,107 | ||||||
Total | $ | 935,316 | $ | 2,010,952 |
December 31, | ||||||||
Derivative Value by Instrument Type | 2013 | 2012 | ||||||
Convertible Bridge Notes | $ | - | $ | 2,850,085 | ||||
Common Stock and Warrants | 106,176 | 129,378 | ||||||
Non-employee Warrants | - | 95,041 | ||||||
$ | 106,176 | $ | 3,074,504 |
December 31, | ||||||||
Derivative Value by Instrument Type | 2014 | 2013 | ||||||
Convertible Bridge Notes | $ | - | $ | - | ||||
Common Stock and Warrants | 42,659 | 106,176 | ||||||
Non-employee Warrants | - | - | ||||||
$ | 42,659 | $ | 106,176 |
Balance December 31, 2011 | $ | 1,573,859 | ||
Issuances in derivative value due to new security issuances of notes | 5,352,404 | |||
Issuances in derivative value due to vesting of non-employee warrants | 485,700 | |||
Issuances in derivative value due to allonges | 118,633 | |||
Adjustment to derivative liability due to debt repayment | (129,139 | ) | ||
Adjustment to derivative liability due to debt conversion | (3,361,772 | ) | ||
Adjustment to derivative liability due to warrant cancellation | (1,318 | ) | ||
Change in fair market value of derivative liabilities | (963,863 | ) | ||
Balance December 31, 2012 | $ | 3,074,504 |
Balance December 31, 2012 | $ | 3,074,504 | ||||||
Issuances in derivative value due to new security issuances of notes | 4,614,714 | 4,614,714 | ||||||
Issuances in derivative value due to vesting of non-employee warrants | 26,969 | 26,969 | ||||||
Adjustment to derivative liability due to note repayment | (40,511 | ) | (40,511 | ) | ||||
Adjustment to derivative liability due to note conversion into new notes | (3,152,786 | ) | (3,152,786 | ) | ||||
Adjustment to derivative liability due to note conversion into equity | (7,923,875 | ) | (7,923,875 | ) | ||||
Adjustment to derivative liability due to non-employee warrant conversion | (176,555 | ) | (176,555 | ) | ||||
Adjustment to derivative liability due to warrant exercises | (55,546 | ) | (55,546 | ) | ||||
Change in fair value of derivative liabilities | 3,739,262 | 3,739,262 | ||||||
Balance December 31, 2013 | $ | 106,176 | 106,176 | |||||
Change in fair value of derivative liabilities | (63,517 | ) | ||||||
Balance December 31, 2014 | $ | 42,659 |
Stock prices on all measurement dates were based on the fair market |
Down round protection for dates prior to April 15, 2013 is based on the subsequent issuance of common stock at prices less than $3.00 per share and warrants with exercise prices less than $3.00 per share. Down round protection for dates between April 15, 2013 and June 17, 2013 is based on the subsequent issuance of common stock at prices less than $1.50 per share and warrants with exercise prices less than $1.50 per share. From June 17, 2013 thru March 12, 2014, the exercise price was $1.20 for issuances of common stock and warrants. Thereafter, down round protection is based on the subsequent issuance of common stock and warrants at prices less than $1.00 per |
The probability of a future equity financing event triggering the down round protection was estimated at 100% during 2013 and 0% during 2014 after the financing event that occurred during the first quarter of 2014. |
Computed volatility ranging from 86.1% to |
Risk free rates ranging from 0.05% to1.41%. |
Computed volatility of 128.9% |
Risk free rates ranging from 0.30% to 0.66% |
Expected life (years) ranging from 2.48 to 3.27 |
December 31, | ||||||||
2013 | 2012 | |||||||
Bridge notes payable | $ | - | $ | 4,342,418 | ||||
Less unamortized discounts: | ||||||||
VMCO | - | (481,390 | ) | |||||
ASID | - | (1,003,359 | ) | |||||
Bridge notes payable, net of discounts | $ | - | $ | 2,857,669 |
�� | VMCO | ASID | Total | |||||||||
December 31, 2011 | $ | (12,031 | ) | $ | (47,739 | ) | $ | (59,770 | ) | |||
Additions | (1,409,797 | ) | (3,942,607 | ) | (5,352,404 | ) | ||||||
Amortization | 940,438 | 2,986,987 | 3,927,425 | |||||||||
December 31, 2012 | (481,390 | ) | (1,003,359 | ) | (1,484,749 | ) | ||||||
Additions | (1,936,191 | ) | (2,678,523 | ) | (4,614,714 | ) | ||||||
Amortization | 2,417,581 | 3,681,882 | 6,099,463 | |||||||||
December 31, 2013 | $ | - | $ | - | $ | - |
December 31, | ||||||||
2014 | 2013 | |||||||
Bridge notes payable | $ | - | $ | - | ||||
Less unamortized discounts: | - | - | ||||||
VMCO | - | - | ||||||
ASID | - | - | ||||||
Bridge notes payable, net of discounts | $ | - | $ | - |
Notes Payable | Accrued Interest | |||||||||||||||
December 31, 2013 | December 31, 2012 | December 31, 2013 | December 31, 2012 | |||||||||||||
Bridge notes, net, as discussed above | $ | - | $ | 2,857,669 | $ | - | $ | 261,213 | ||||||||
Convertible notes payable, net of discounts | - | 2,857,669 | - | 261,213 | ||||||||||||
Unsecured (as amended) note payable due to our Company’s former Chief Executive Officer, interest accrues at the rate of 9% compounded annually, all amounts due and payable December 31, 2008. Currently past due. | 20,000 | 20,000 | 16,943 | 13,775 | ||||||||||||
Note payable due to a trust, interest accrues at the rate of 10% per annum, all amounts due and payable December 31, 2006. | - | 51,984 | - | 24,297 | ||||||||||||
Digimark, LLC subordinated promissory note, net, as discussed above. | - | 100,000 | - | 22,083 | ||||||||||||
Notes payable | 20,000 | 171,984 | 16,943 | 60,155 | ||||||||||||
Totals | $ | 20,000 | $ | 3,029,653 | $ | 16,943 | $ | 321,368 |
Notes Payable | Accrued Interest | |||||||||||||||
December 31, 2014 | December 31, 2013 | December 31, 2014 | December 31, 2013 | |||||||||||||
Unsecured (as amended) note payable due to our Company’s former Chief Executive Officer, interest accrues at the rate of 9% compounded annually, all amounts due and payable December 31, 2008. | $ | - | $ | 20,000 | $ | - | $ | 16,943 | ||||||||
Note payable due to a trust, interest accrues at the rate of 10% per annum, all amounts due and payable December 31, 2006. | - | - | - | 51,984 | ||||||||||||
Notes payable | - | 20,000 | - | 16,943 | ||||||||||||
Totals | $ | - | $ | 20,000 | $ | - | $ | 16,943 |
December 31, | December 31, | |||||||||||||||
2013 | 2012 | 2014 | 2013 | |||||||||||||
Amortization of note discounts | $ | 6,134,367 | $ | 3,935,108 | $ | - | $ | 6,134,367 | ||||||||
Amortization of deferred financing costs | - | 263,255 | ||||||||||||||
Other interest expense | 213,819 | 361,201 | - | 213,819 | ||||||||||||
$ | 6,348,186 | $ | 4,559,564 | $ | - | $ | 6,348,186 |
Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term (Years) | Aggregate Intrinsic Value | Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term (Years) | Aggregate Intrinsic Value | |||||||||||||||||||||||||
Outstanding at December 31, 2011 | 268,333 | $ | 4.92 | 5.12 | $ | 1,240,000 | ||||||||||||||||||||||||||
Granted | 113,750 | $ | 3.36 | 4.53 | ||||||||||||||||||||||||||||
Exercised | - | $ | - | - | ||||||||||||||||||||||||||||
Canceled/forfeited/expired | (56,250 | ) | $ | 3.48 | 3.15 | |||||||||||||||||||||||||||
Outstanding at December 31, 2012 | 325,833 | $ | 4.62 | 4.44 | $ | 325,833 | $ | 4.62 | 4.44 | $ | - | |||||||||||||||||||||
Granted | 5,473,705 | $ | 1.98 | 5,473,705 | $ | 1.98 | - | $ | - | |||||||||||||||||||||||
Exercised | - | $ | - | - | $ | - | - | $ | - | |||||||||||||||||||||||
Canceled/forfeited/expired | (127,097 | ) | $ | 4.06 | (127,097 | ) | $ | 4.06 | - | $ | - | |||||||||||||||||||||
Outstanding at December 31, 2013 | 5,672,464 | $ | 2.08 | 9.17 | $ | 415,259 | 5,672,464 | $ | 2.08 | 9.17 | $ | 415,259 | ||||||||||||||||||||
Expected to vest at December 31, 2013 | 2,644,882 | $ | 2.21 | 8.82 | $ | 181,501 | ||||||||||||||||||||||||||
Exercisable at December 31, 2013 | 1,021,191 | $ | 2.25 | 8.31 | $ | 79,421 | ||||||||||||||||||||||||||
Unrecognized expense at December 31, 2013 | $ | 3,074,119 | ||||||||||||||||||||||||||||||
Granted | 2,333,500 | $ | 0.84 | - | $ | - | ||||||||||||||||||||||||||
Exercised | - | $ | - | - | $ | - | ||||||||||||||||||||||||||
Canceled/forfeited/expired | (2,606,644 | ) | $ | 1.95 | - | $ | ||||||||||||||||||||||||||
Outstanding at December 31, 2014 | 5,399,320 | $ | 1.17 | 8.41 | $ | 1,915,878 | ||||||||||||||||||||||||||
Expected to vest at December 31, 2014 | 3,723,522 | $ | 1.41 | 8.30 | $ | 832,673 | ||||||||||||||||||||||||||
Exercisable at December 31,2014 | 1,830,720 | $ | 1.39 | 7.71 | $ | 584,990 | ||||||||||||||||||||||||||
Unrecognized expense at December 31, 2014 | $ | 2,551,415 |
Years ended December 31, | Years ended December 31, | |||||||||||||||
2013 | 2012 | 2014 | 2013 | |||||||||||||
General and administrative | $ | 895,903 | $ | 335,160 | $ | 948,567 | $ | 855,698 | ||||||||
Sales and marketing | 976,341 | 43,250 | 592,785 | 976,341 | ||||||||||||
Engineering, research, and development | 17,972 | 13,000 | 44,908 | 17,972 | ||||||||||||
$ | 1,890,216 | $ | 391,410 | $ | 1,586,260 | $ | 1,850,012 |
Years ended December 31, | Years ended December 31, | |||||||||||||
2013 | 2012 | 2014 | 2013 | |||||||||||
Risk-free interest rate | 0.60% to 1.03% | 0.39% to 0.57% | 1.57% to 1.91% | 0.60% to 1.03% | ||||||||||
Expected life (years) | 3.58 to 5.27 | 2.86 to 3.58 | 4.66 to 6.08 | 3.58 to 5.27 | ||||||||||
Dividend yield | 0% | 0% | - | - | ||||||||||
Expected volatility | 122.0% to 132.0% | 61.0% to 73.4% | 132.0% to 132.0% | 122.0% to 132.0% |
Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term (Years) | Aggregate Intrinsic Value | |||||||||||||
Outstanding at December 31, 2013 | - | $ | - | - | $ | - | ||||||||||
Granted | 591,436 | $ | - | - | $ | - | ||||||||||
Exercised | - | $ | - | - | $ | - | ||||||||||
Canceled/forfeited/expired | - | $ | - | - | $ | - | ||||||||||
Outstanding at December 31, 2014 | 591,436 | $ | - | 9.75 | $ | 703,809 | ||||||||||
Expected to vest at December 31, 2014 | 297,086 | $ | - | 9.61 | $ | 353,532 | ||||||||||
Exercisable at December 31,2014 | 297,086 | $ | - | 9.61 | $ | 353,532 | ||||||||||
Unvested at December 31, 2014 | 294,350 | $ | - | 9.89 | $ | 350,277 | ||||||||||
Unrecognized expense at December 31, 2014 | $ | 429,999 |
Year ended December 31, | ||||
2014 | ||||
General and administrative | $ | 347,074 | ||
$ | 347,074 |
Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term (Years) | Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term (Years) | |||||||||||||||||||
Outstanding at December 31, 2011 | 150,835 | $ | 0.33 | 5.12 | ||||||||||||||||||||
Granted | 25,000 | $ | 1.16 | 4.09 | ||||||||||||||||||||
Exercised | - | $ | - | - | ||||||||||||||||||||
Canceled/forfeited/expired | (25,000 | ) | $ | 1.16 | 4.09 | |||||||||||||||||||
Outstanding at December 31, 2012 | 150,835 | $ | 1.97 | 150,835 | $ | 1.97 | - | |||||||||||||||||
Granted | - | $ | - | - | $ | - | - | |||||||||||||||||
Exercised | - | $ | - | - | $ | - | - | |||||||||||||||||
Canceled/forfeited/expired | - | $ | - | (279 | ) | $ | 1.16 | 4.09 | ||||||||||||||||
Outstanding at December 31, 2013 | 150,835 | $ | 1.97 | 1.99 | 150,556 | $ | 1.97 | - | ||||||||||||||||
Expected to vest at December 31, 2013 | 150,835 | $ | 1.97 | 1.99 | ||||||||||||||||||||
Granted | - | $ | - | - | ||||||||||||||||||||
Exercised | - | $ | - | - | ||||||||||||||||||||
Canceled/forfeited/expired | (555 | ) | $ | 10.50 | - | |||||||||||||||||||
Outstanding at December 31, 2014 | 150,001 | $ | 1.92 | 0.99 | ||||||||||||||||||||
Expected to vest at December 31, 2014 | 150,001 | $ | 1.92 | 0.99 | ||||||||||||||||||||
Warrants exercisable | 141,546 | $ | 1.95 | 1.99 | 149,306 | $ | 1.92 | 0.99 |
Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term (Years) | Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term (Years) | |||||||||||||||||||
Outstanding at December 31, 2011 | 114,784 | $ | 0.20 | 1.42 | ||||||||||||||||||||
Granted | 25,588 | $ | 0.20 | 1.84 | ||||||||||||||||||||
Exercised | - | |||||||||||||||||||||||
Canceled/forfeited/expired | - | |||||||||||||||||||||||
Outstanding at December 31, 2012 | 140,372 | $ | 0.20 | 1.50 | 140,372 | $ | 1.20 | 1.50 | ||||||||||||||||
Granted | 5,187,587 | $ | 1.20 | 4.37 | 5,187,587 | $ | 1.20 | 4.37 | ||||||||||||||||
Exercised | (32,054 | ) | $ | 0.20 | (32,054 | ) | $ | - | - | |||||||||||||||
Canceled/forfeited/expired | - | - | $ | - | - | |||||||||||||||||||
Outstanding at December 31, 2013 | 5,295,905 | $ | 1.18 | 4.39 | 5,295,905 | $ | 1.20 | 4.39 | ||||||||||||||||
Granted | 1,723,935 | $ | 1.20 | 4.20 | ||||||||||||||||||||
Exercised | - | $ | - | - | ||||||||||||||||||||
Canceled/forfeited/expired | - | $ | - | - | ||||||||||||||||||||
Outstanding at December 31, 2014 | 7,019,840 | $ | 1.20 | 3.18 |
2013 | 2012 | 2014 | 2013 | |||||||||||||||
Federal – current | $ | - | $ | - | $ | - | $ | - | ||||||||||
State – current | - | - | - | - | ||||||||||||||
Total | $ | - | $ | - | $ | - | $ | - |
2013 | 2012 | 2014 | 2013 | |||||||||||||
Deferred tax assets (liabilities): | ||||||||||||||||
Net operating loss carryforwards | $ | 6,283,000 | $ | 4,681,000 | $ | 7,837,000 | $ | 6,283,000 | ||||||||
Stock based compensation | 1,735,000 | 940,000 | 2,716,000 | 1,735,000 | ||||||||||||
Accrued compensation | 31,000 | 70,000 | 47,000 | 31,000 | ||||||||||||
Derivative Liability | 42,000 | 634,000 | 17,000 | 42,000 | ||||||||||||
Depreciation and amortization | 5,099,000 | 4,816,000 | 6,617,000 | 5,099,000 | ||||||||||||
Other | 10,000 | 12,000 | 20,000 | 10,000 | ||||||||||||
Total deferred tax assets | 13,200,000 | 11,153,000 | 17,254,000 | 13,200,000 | ||||||||||||
Valuation allowance for net deferred tax assets | (13,200,000 | ) | (11,153,000 | ) | (17,254,000 | ) | (13,200,000 | ) | ||||||||
Total | $ | - | $ | - | $ | - | $ | - |
2013 | 2012 | 2014 | 2013 | |||||||||||||
Computed "expected tax expense | $ | (5,698,000 | ) | $ | (2,495,000 | ) | ||||||||||
Computed expected tax expense | $ | (3,548,000 | ) | $ | (5,698,000 | ) | ||||||||||
State taxes, net of federal benefit | (300,000 | ) | (155,000 | ) | (594,000 | ) | (300,000 | ) | ||||||||
Other | 3,951,000 | 1,288,000 | 88,000 | 3,951,000 | ||||||||||||
Change in valuation allowance | 2,047,000 | 1,362,000 | 4,054,000 | 2,047,000 | ||||||||||||
Total | $ | - | $ | - | $ | - | $ | - |
Description | Level 1 | Level 2 | Level 3 | Gains (Losses) | Level 1 | Level 2 | Level 3 | Gains (Losses) | ||||||||||||||||||||||||
Goodwill (non-recurring) | $ | - | $ | - | $ | 3,108,964 | $ | (1,066,068 | ) | $ | - | $ | - | $ | 1,921,072 | $ | (4,078,693 | ) | ||||||||||||||
Intangibles, net (non-recurring) | $ | - | $ | - | $ | 935,316 | $ | (644,170 | ) | $ | - | $ | - | $ | 2,010,952 | $ | (961,436 | ) | ||||||||||||||
Derivative liabilities (recurring) | $ | - | $ | - | $ | 106,176 | $ | (3,766,231 | ) | $ | - | $ | - | $ | 42,659 | $ | 63,517 | |||||||||||||||
Earn-out payable (recurring) | $ | - | $ | - | $ | 59,000 | $ | 165,000 | $ | - | $ | - | $ | 840,000 | $ | 1,492,000 |
Description | Level 1 | Level 2 | Level 3 | Gains (Losses) | Level 1 | Level 2 | Level 3 | Gains (Losses) | ||||||||||||||||||||||||
Goodwill (non-recurring) | $ | - | $ | - | $ | 2,259,624 | $ | (742,446 | ) | $ | - | $ | - | $ | 3,108,964 | $ | (1,066,068 | ) | ||||||||||||||
Intangibles, net (non-recurring) | $ | - | $ | - | $ | 444,112 | $ | (145,396 | ) | $ | - | $ | - | $ | 935,316 | $ | (644,170 | ) | ||||||||||||||
Derivative liabilities (recurring) | $ | - | $ | - | $ | 3,074,504 | $ | 359,530 | $ | - | $ | - | $ | 106,176 | $ | (3,766,231 | ) | |||||||||||||||
Earn-out payable (recurring) | $ | - | $ | - | $ | 2,032,881 | $ | 625,357 | $ | - | $ | - | $ | 59,000 | $ | (28,465 | ) |
Minimum Lease Payments | ||||
2014 | $ | 143,492 | ||
2015 | 148,281 | |||
2016 | - | |||
2017 | - | |||
2018 | - | |||
Thereafter | - | |||
$ | 291,773 |
December 31, | ||||||||
2014 | 2013 | |||||||
Outstanding employee options | 5,399,320 | 5,672,464 | ||||||
Outstanding restricted stock units | 591,436 | - | ||||||
Outstanding non-employee warrants | 150,001 | 150,556 | ||||||
Outstanding warrants | 7,019,840 | 5,187,587 | ||||||
13,160,597 | 11,010,607 |
- | Present (either on the face of the statement where net income is presented or in the notes) the effects on the line items of net income of significant amounts reclassified out of accumulated other comprehensive income - but only if the item reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period; and |
- | Cross-reference to other disclosures currently required under U.S. GAAP for other reclassification items (that are not required under U.S. GAAP) to be reclassified directly to net income in their entirety in the same reporting period. This would be the case when a portion of the amount reclassified out of accumulated other comprehensive income is initially transferred to a balance sheet account (e.g., inventory for pension-related amounts) instead of directly to income or expense. |
Accounts receivable, net | $ | 161,664 | ||
Other assets | 6,620 | |||
Customer relationships | 2,010,000 | |||
Developed technology | 260,000 | |||
Trade name | 176,000 | |||
Goodwill | 2,890,801 | |||
Total assets acquired | 5,505,085 | |||
Liabilities assumed | (191,561 | ) | ||
Net assets acquired | $ | 5,313,524 |
Cash | $ | 2,368,019 | ||
Earn Out | 2,273,000 | |||
Common stock | 672,505 | |||
Total purchase price | $ | 5,313,524 |
Mobivity | SR | Pro forma adjustments | Pro forma combined | |||||||||||||
Revenues | ||||||||||||||||
Revenues | $ | 4,000,202 | $ | 214,139 | $ | - | $ | 4,214,341 | ||||||||
Cost of revenues | 1,066,917 | 54,410 | - | 1,121,327 | ||||||||||||
Gross margin | 2,933,285 | 159,729 | - | 3,093,014 | ||||||||||||
Operating expenses | ||||||||||||||||
General and administrative | 4,270,844 | 231,084 | 4,230 | (a) | 4,506,158 | |||||||||||
Sales and marketing | 3,895,033 | 60,077 | - | 3,955,110 | ||||||||||||
Engineering, research, and development | 1,346,198 | 139,649 | - | 1,485,847 | ||||||||||||
Depreciation and amortization | 416,436 | 403 | - | 416,839 | ||||||||||||
Goodwill impairment | 4,078,693 | - | - | 4,078,693 | ||||||||||||
Intangible asset impairment | 961,436 | - | - | 961,436 | ||||||||||||
Total operating expenses | 14,968,640 | 431,213 | 4,230 | 15,404,083 | ||||||||||||
Loss from operations | (12,035,355 | ) | (271,484 | ) | (4,230 | ) | (12,311,069 | ) | ||||||||
Other income/(expense) | ||||||||||||||||
Interest income | 2,131 | - | - | 2,131 | ||||||||||||
Change in fair value of derivative liabilities | 63,517 | - | - | 63,517 | ||||||||||||
Gain on debt extinguishment | 36,943 | - | - | 36,943 | ||||||||||||
Gain on adjustment of contingent consideration | 1,492,000 | - | - | 1,492,000 | ||||||||||||
Total other income/(expense) | 1,594,591 | - | - | 1,594,591 | ||||||||||||
Loss before income taxes | (10,440,764 | ) | (271,484 | ) | (4,230 | ) | (10,716,478 | ) | ||||||||
Income tax expense | - | - | - | - | ||||||||||||
Net loss | $ | (10,440,764 | ) | $ | (271,484 | ) | $ | (4,230 | ) | $ | (10,716,478 | ) | ||||
Net loss per share - basic and diluted | $ | (0.49 | ) | $ | (0.52 | ) | ||||||||||
Weighted average number of shares during the period - basic and diluted | 21,203,563 | 20,796,889 |
(a) | Represents stock based compensation in conjunction with the transaction. |
Mobivity | SR | Pro forma adjustments | Pro forma combined | |||||||||||||
Revenues | ||||||||||||||||
Revenues | $ | 4,093,667 | $ | 834,250 | $ | - | $ | 4,927,917 | ||||||||
Cost of revenues | 1,122,037 | 243,209 | - | 1,365,246 | ||||||||||||
Gross margin | 2,971,630 | 591,041 | - | 3,562,671 | ||||||||||||
Operating expenses | ||||||||||||||||
General and administrative | 3,416,850 | 211,271 | 446,094 | (a) | 4,074,215 | |||||||||||
Sales and marketing | 3,469,383 | 339,615 | - | 3,808,998 | ||||||||||||
Engineering, research, and development | 824,653 | 644,330 | - | 1,468,983 | ||||||||||||
Depreciation and amortization | 270,579 | 3,970 | - | 274,549 | ||||||||||||
Goodwill impairment | 1,066,068 | - | - | 1,066,068 | ||||||||||||
Intangible asset impairment | 644,170 | - | - | 644,170 | ||||||||||||
Total operating expenses | 9,691,703 | 1,199,186 | 446,094 | 11,336,983 | ||||||||||||
Loss from operations | (6,720,073 | ) | (608,145 | ) | (446,094 | ) | (7,774,312 | ) | ||||||||
Other income/(expense) | �� | |||||||||||||||
Interest income | 747 | - | - | 747 | ||||||||||||
Interest expense | (6,348,186 | ) | (117,944 | ) | - | (6,466,130 | ) | |||||||||
Change in fair value of derivative liabilities | (3,766,231 | ) | - | - | (3,766,231 | ) | ||||||||||
Gain on Debt Extinguishment | 103,177 | - | - | 103,177 | ||||||||||||
Loss on adjustment in contingent consideration | (28,465 | ) | - | - | (28,465 | ) | ||||||||||
Total other income/(expense) | (10,038,958 | ) | (117,944 | ) | - | (10,156,902 | ) | |||||||||
Loss before income taxes | (16,759,031 | ) | (726,089 | ) | (446,094 | ) | (17,931,214 | ) | ||||||||
Income tax expense | - | - | - | - | ||||||||||||
Net loss | $ | (16,759,031 | ) | $ | (726,089 | ) | $ | (446,094 | ) | $ | (17,931,214 | ) | ||||
Net loss per share - basic and diluted | $ | (1.58 | ) | $ | (1.61 | ) | ||||||||||
Weighted average number of shares during the period - basic and diluted | 10,612,007 | 11,116,891 |
(a) | Represents stock based compensation in conjunction with the transaction. |
Cash | $ | 5,500 | ||
Accounts receivable | 27,467 | |||
Contracts | 813,000 | |||
Customer relationships | 22,000 | |||
Developed technology | 96,000 | |||
Non-compete agreement | 124,000 | |||
Goodwill | 1,535,658 | |||
Total assets acquired | 2,623,625 | |||
Liabilities assumed | (46,219 | ) | ||
Net assets acquired | $ | 2,577,406 |
(Unaudited) | ||||
Year ended December 31, | ||||
2013 | ||||
Total revenues | $ | 4,255,947 | ||
Net loss | $ | (17,120,236 | ) | |
Basic and diluted loss per share | $ | (1.55 | ) |
Merchant relationships | $ | 181,000 | ||
Trade name | 76,000 | |||
Developed technology | 71,000 | |||
Goodwill | 379,750 | |||
Total assets acquired | $ | 707,750 |
Goodwill | ||||
December 31, 2012 | $ | 2,259,624 | ||
Acquired | 1,915,408 | |||
Impairment | (1,066,068 | ) | ||
December 31, 2013 | 3,108,964 | |||
Acquired | 2,890,801 | |||
Impairment | (4,078,693 | ) | ||
December 31, 2014 | $ | 1,921,072 |
December 31, 2014 | December 31, 2013 | |||||||||||||||||||||||||||||||
Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Weighted Average Useful Life (Years) | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Weighted Average Useful Life (Years) | |||||||||||||||||||||||||
Patents and trademarks | $ | 142,000 | $ | (33,048 | ) | $ | 108,952 | 20 | $ | 142,000 | $ | (23,902 | ) | $ | 118,098 | 20.00 | ||||||||||||||||
Customer contracts | 628,502 | (628,502 | ) | - | - | 1,069,900 | (528,372 | ) | 541,528 | 5.88 | ||||||||||||||||||||||
Customer and merchant relationships | 2,830,139 | (1,290,139 | ) | 1,540,000 | 10 | 1,128,583 | (1,128,583 | ) | - | 4.78 | ||||||||||||||||||||||
Trade name | 353,192 | (201,192 | ) | 152,000 | 10 | 199,750 | (177,359 | ) | 22,391 | 5.00 | ||||||||||||||||||||||
Acquired technology | 686,135 | (476,135 | ) | 210,000 | 10 | 573,550 | (391,252 | ) | 182,298 | 4.72 | ||||||||||||||||||||||
Non-compete agreement | 90,462 | (90,462 | ) | - | - | 132,083 | (61,082 | ) | 71,001 | 2.90 | ||||||||||||||||||||||
$ | 4,730,430 | $ | (2,719,478 | ) | $ | 2,010,952 | $ | 3,245,866 | $ | (2,310,550 | ) | $ | 935,316 |
Year ending December 31, | Amount | |||
2015 | $ | 214,769 | ||
2016 | 214,769 | |||
2017 | 214,769 | |||
2018 | 214,769 | |||
2019 | 214,769 | |||
Thereafter | 937,107 | |||
Total | $ | 2,010,952 |
December 31, | ||||||||
Derivative Value by Instrument Type | 2014 | 2013 | ||||||
Convertible Bridge Notes | $ | - | $ | - | ||||
Common Stock and Warrants | 42,659 | 106,176 | ||||||
Non-employee Warrants | - | - | ||||||
$ | 42,659 | $ | 106,176 |
Balance December 31, 2012 | $ | 3,074,504 | ||
Issuances in derivative value due to new security issuances of notes | 4,614,714 | |||
Issuances in derivative value due to vesting of non-employee warrants | 26,969 | |||
Adjustment to derivative liability due to note repayment | (40,511 | ) | ||
Adjustment to derivative liability due to note conversion into new notes | (3,152,786 | ) | ||
Adjustment to derivative liability due to note conversion into equity | (7,923,875 | ) | ||
Adjustment to derivative liability due to non-employee warrant conversion | (176,555 | ) | ||
Adjustment to derivative liability due to warrant exercises | (55,546 | ) | ||
Change in fair value of derivative liabilities | 3,739,262 | |||
Balance December 31, 2013 | 106,176 | |||
Change in fair value of derivative liabilities | (63,517 | ) | ||
Balance December 31, 2014 | $ | 42,659 |
• | Stock prices on all measurement dates were based on the fair market value. |
• | Down round protection for dates prior to April 15, 2013 is based on the subsequent issuance of common stock at prices less than $3.00 per share and warrants with exercise prices less than $3.00 per share. Down round protection for dates between April 15, 2013 and June 17, 2013 is based on the subsequent issuance of common stock at prices less than $1.50 per share and warrants with exercise prices less than $1.50 per share. From June 17, 2013 thru March 12, 2014, the exercise price was $1.20 for issuances of common stock and warrants. Thereafter, down round protection is based on the subsequent issuance of common stock and warrants at prices less than $1.00 per share. |
• | The probability of a future equity financing event triggering the down round protection was estimated at 100% during 2013 and 0% during 2014 after the financing event that occurred during the first quarter of 2014. |
• | Computed volatility ranging from 86.1% to 137.2%. |
• | Risk free rates ranging from 0.05% to1.41%. |
• | Computed volatility of 128.9% |
• | Risk free rates ranging from 0.30% to 0.66% |
• | Expected life (years) ranging from 2.48 to 3.27 |
December 31, | ||||||||
2014 | 2013 | |||||||
Bridge notes payable | $ | - | $ | - | ||||
Less unamortized discounts: | - | - | ||||||
VMCO | - | - | ||||||
ASID | - | - | ||||||
Bridge notes payable, net of discounts | $ | - | $ | - |
Notes Payable | Accrued Interest | |||||||||||||||
December 31, 2014 | December 31, 2013 | December 31, 2014 | December 31, 2013 | |||||||||||||
Unsecured (as amended) note payable due to our Company’s former Chief Executive Officer, interest accrues at the rate of 9% compounded annually, all amounts due and payable December 31, 2008. | $ | - | $ | 20,000 | $ | - | $ | 16,943 | ||||||||
Note payable due to a trust, interest accrues at the rate of 10% per annum, all amounts due and payable December 31, 2006. | - | - | - | 51,984 | ||||||||||||
Notes payable | - | 20,000 | - | 16,943 | ||||||||||||
Totals | $ | - | $ | 20,000 | $ | - | $ | 16,943 |
December 31, | ||||||||
2014 | 2013 | |||||||
Amortization of note discounts | $ | - | $ | 6,134,367 | ||||
Other interest expense | - | 213,819 | ||||||
$ | - | $ | 6,348,186 |
Mobivity | FDI | Pro forma adjustments | Pro forma combined | |||||||||||||
Revenues | ||||||||||||||||
Revenues | $ | 4,093,667 | $ | 162,280 | $ | - | $ | 4,255,947 | ||||||||
Cost of revenues | 1,122,037 | 54,371 | - | 1,176,408 | ||||||||||||
Gross margin | 2,971,630 | 107,909 | - | 3,079,539 | ||||||||||||
Operating expenses | ||||||||||||||||
General and administrative | 3,416,850 | 71,720 | - | 3,488,570 | ||||||||||||
Sales and marketing | 3,469,383 | 4,888 | 229,258 | (b) | 3,703,529 | |||||||||||
Engineering, research, and development | 824,653 | 87,994 | - | 912,647 | ||||||||||||
Depreciation and amortization | 270,579 | - | 68,469 | (c) | 339,048 | |||||||||||
Goodwill impairment | 1,066,068 | - | - | 1,066,068 | ||||||||||||
Intangible asset impairment | 644,170 | - | - | 644,170 | ||||||||||||
Total operating expenses | 9,691,703 | 164,602 | 297,727 | 10,154,032 | ||||||||||||
Loss from operations | (6,720,073 | ) | (56,693 | ) | (297,727 | ) | (7,074,493 | ) | ||||||||
Other income/(expense) | ||||||||||||||||
Interest income | 747 | - | - | 747 | ||||||||||||
Interest expense | (6,348,186 | ) | (6,785 | ) | - | (6,354,971 | ) | |||||||||
Change in fair value of derivative liabilities | (3,766,231 | ) | - | - | (3,766,231 | ) | ||||||||||
Gain on debt extinguishment | 103,177 | - | - | 103,177 | ||||||||||||
Gain (loss) on adjustment in contingent consideration | (28,465 | ) | - | - | (28,465 | ) | ||||||||||
Total other income/(expense) | (10,038,958 | ) | (6,785 | ) | - | (10,045,743 | ) | |||||||||
Loss before income taxes | (16,759,031 | ) | (63,478 | ) | (297,727 | ) | (17,120,236 | ) | ||||||||
Income tax expense | - | - | - | - | ||||||||||||
Net loss | $ | (16,759,031 | ) | $ | (63,478 | ) | $ | (297,727 | ) | $ | (17,120,236 | ) | ||||
Net loss per share - basic and diluted | $ | (1.58 | ) | $ | (1.55 | ) | ||||||||||
Weighted average number of shares during the period - basic and diluted | 10,612,007 | 11,059,496 |
Mobivity | FDI | Pro forma adjustments | Pro forma combined | ||||||||||
Revenues | |||||||||||||
Revenues | $ | 4,079,745 | $ | 347,797 | $ | - | $ | 4,427,542 | |||||
Cost of revenues | 1,300,325 | 183,819 | - | 1,484,144 | |||||||||
Gross margin | 2,779,420 | 163,978 | - | 2,943,398 | |||||||||
Operating expenses | |||||||||||||
General and administrative | 2,984,531 | 155,568 | - | 3,140,099 | |||||||||
Sales and marketing | 1,562,520 | 45,292 | 1,541,050 | (b) | 3,148,862 | ||||||||
Engineering, research, and development | 562,459 | 199,953 | - | 762,412 | |||||||||
Depreciation and amortization | 549,151 | - | 178,509 | (c) | 727,660 | ||||||||
Goodwill impairment | 742,446 | - | - | 742,446 | |||||||||
Intangible asset impairment | 145,396 | - | - | 145,396 | |||||||||
Total operating expenses | 6,546,503 | 400,813 | 1,719,559 | 8,666,875 | |||||||||
Loss from operations | (3,767,083 | ) | (236,835 | ) | (1,719,559 | ) | (5,723,477 | ) | |||||
Other income/(expense) | |||||||||||||
Interest income | 2,833 | - | - | 2,833 | |||||||||
Interest expense | (4,559,564 | ) | (4,105 | ) | (234,115 | ) | (4,797,784 | ) | |||||
Change in fair value of derivative liabilities | 359,530 | - | - | 359,530 | |||||||||
Gain on adjustment in contingent consideration | 625,357 | - | - | 625,357 | |||||||||
Total other income/(expense) | (3,571,844 | ) | (4,105 | ) | (234,115 | ) | (3,810,064 | ) | |||||
Loss before income taxes | (7,338,927 | ) | (240,940 | ) | (1,953,674 | ) | (9,533,541 | ) | |||||
Income tax expense | - | - | - | - | |||||||||
Net loss | $ | (7,338,927 | ) | $ | (240,940 | ) | $ | (1,953,674 | ) | $ | (9,533,541 | ) | |
Net loss per share - basic and diluted | $ | (0.32 | ) | $ | (0.32 | ) | |||||||
Weighted average number of shares during the period - basic and diluted | 23,069,669 | 30,069,669 |
Mobivity Holdings Corp. | ||||||||
Consolidated Balance Sheets | ||||||||
March 31, 2014 (Unaudited) | December 31, 2013 (Audited) | |||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash | $ | 3,984,032 | $ | 2,572,685 | ||||
Accounts receivable, net of allowance for doubtful accounts of $108,067 and $65,975, respectively | 441,698 | 280,667 | ||||||
Other current assets | 128,895 | 140,114 | ||||||
Total current assets | 4,554,625 | 2,993,466 | ||||||
Goodwill | 5,999,765 | 3,108,964 | ||||||
Intangible assets, net | 3,315,083 | 935,316 | ||||||
Other assets | 90,938 | 63,944 | ||||||
TOTAL ASSETS | $ | 13,960,411 | $ | 7,101,690 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 671,209 | $ | 543,648 | ||||
Accrued interest | 17,769 | 16,943 | ||||||
Accrued and deferred personnel compensation | 195,316 | 191,041 | ||||||
Deferred revenue and customer deposits | 311,121 | 136,523 | ||||||
Notes payable | 20,000 | 20,000 | ||||||
Derivative liabilities | 76,097 | 106,176 | ||||||
Other current liabilities | 154,446 | 36,372 | ||||||
Earn-out payable | 2,321,767 | 34,755 | ||||||
Total current liabilities | 3,767,725 | 1,085,458 | ||||||
Non-current liabilities | ||||||||
Earn-out payable | 10,233 | 24,245 | ||||||
Total non-current liabilities | 10,233 | 24,245 | ||||||
Total liabilities | 3,777,958 | 1,109,703 | ||||||
Commitments and Contingencies (See Note 9) | ||||||||
Stockholders' equity (deficit) | ||||||||
Common stock, $0.001 par value; 50,000,000 shares authorized; 22,237,762 and 16,319,878 shares issued and outstanding | 22,238 | 16,320 | ||||||
Equity payable | 108,170 | 108,170 | ||||||
Additional paid-in capital | 60,400,993 | 54,452,697 | ||||||
Accumulated deficit | (50,348,948 | ) | (48,585,200 | ) | ||||
Total stockholders' equity (deficit) | 10,182,453 | 5,991,987 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | $ | 13,960,411 | $ | 7,101,690 |
Mobivity Holdings Corp. | ||||||||
Consolidated Statements of Operations | ||||||||
(Unaudited) | ||||||||
Three months ended March 31, | ||||||||
2014 | 2013 | |||||||
Revenues | ||||||||
Revenues | $ | 903,215 | $ | 1,027,993 | ||||
Cost of revenues | 260,893 | 284,622 | ||||||
Gross margin | 642,322 | 743,371 | ||||||
Operating expenses | ||||||||
General and administrative | 1,129,953 | 532,628 | ||||||
Sales and marketing | 941,085 | 362,896 | ||||||
Engineering, research, and development | 297,933 | 94,055 | ||||||
Depreciation and amortization | 68,083 | 33,813 | ||||||
Total operating expenses | 2,437,054 | 1,023,393 | ||||||
Loss from operations | (1,794,732 | ) | (280,022 | ) | ||||
Other income/(expense) | ||||||||
Interest income | 1,731 | 3 | ||||||
Interest expense | (826 | ) | (1,447,359 | ) | ||||
Change in fair value of derivative liabilities | 30,079 | (1,001,550 | ) | |||||
Gain (loss) on adjustment in contingent consideration | - | 305,712 | ||||||
Total other income/(expense) | (30,984 | ) | (2,143,194 | ) | ||||
Loss before income taxes | (1,763,748 | ) | (2,423,215 | ) | ||||
Income tax expense | - | - | ||||||
Net loss | $ | (1,763,748 | ) | $ | (2,423,215 | ) | ||
Net loss per share - basic and diluted | $ | (0.10 | ) | $ | (0.63 | ) | ||
Weighted average number of shares during the period - basic and diluted | 17,490,954 | 3,869,247 |
Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term (Years) | Aggregate Intrinsic Value | |||||||||||||
Outstanding at December 31, 2012 | 325,833 | $ | 4.62 | 4.44 | $ | - | ||||||||||
Granted | 5,473,705 | $ | 1.98 | - | $ | - | ||||||||||
Exercised | - | $ | - | - | $ | - | ||||||||||
Canceled/forfeited/expired | (127,097 | ) | $ | 4.06 | - | $ | - | |||||||||
Outstanding at December 31, 2013 | 5,672,464 | $ | 2.08 | 9.17 | $ | 415,259 | ||||||||||
Granted | 2,333,500 | $ | 0.84 | - | $ | - | ||||||||||
Exercised | - | $ | - | - | $ | - | ||||||||||
Canceled/forfeited/expired | (2,606,644 | ) | $ | 1.95 | - | $ | ||||||||||
Outstanding at December 31, 2014 | 5,399,320 | $ | 1.17 | 8.41 | $ | 1,915,878 | ||||||||||
Expected to vest at December 31, 2014 | 3,723,522 | $ | 1.41 | 8.30 | $ | 832,673 | ||||||||||
Exercisable at December 31,2014 | 1,830,720 | $ | 1.39 | 7.71 | $ | 584,990 | ||||||||||
Unrecognized expense at December 31, 2014 | $ | 2,551,415 |
Mobivity Holdings Corp. | ||||||||||||||||||||||||
Consolidated Statement of Stockholders' Equity (Deficit) | ||||||||||||||||||||||||
Common Stock | Equity | Additional Paid-in | Accumulated | Total Stockholders' Equity | ||||||||||||||||||||
Shares | Dollars | Payable | Capital | Deficit | (Deficit) | |||||||||||||||||||
Balance, December 31, 2013 | 16,319,878 | $ | 16,320 | $ | 108,170 | $ | 54,452,697 | $ | (48,585,200 | ) | $ | 5,991,987 | ||||||||||||
Issuance of common stock for financing, net of transaction costs of $448,635 | 5,413,000 | 5,413 | 4,958,945 | 4,964,358 | ||||||||||||||||||||
Issuance of common stock for acquisition | 504,884 | 505 | 672,000 | 672,505 | ||||||||||||||||||||
Stock based compensation | 317,351 | 317,351 | ||||||||||||||||||||||
Net loss | (1,763,748 | ) | (1,763,748 | ) | ||||||||||||||||||||
Balance, March 31, 2014 | 22,237,762 | $ | 22,238 | $ | 108,170 | $ | 60,400,993 | $ | (50,348,948 | ) | $ | 10,182,453 |
Consolidated Statements of Cash Flows (Unaudited) | ||||||||
Three months ended | ||||||||
March 31, | ||||||||
OPERATING ACTIVITIES | 2014 | 2013 | ||||||
Net loss | $ | (1,763,748 | ) | $ | (2,423,215 | ) | ||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||||
Bad debt expense | 3,983 | (12,772 | ) | |||||
Stock-based compensation | 317,351 | 93,502 | ||||||
Depreciation and amortization expense | 68,084 | 33,813 | ||||||
Gain (Loss) on adjustment in contingent consideration | - | (305,712 | ) | |||||
Change in fair value of derivative liabilities | (30,079 | ) | 1,001,550 | |||||
Amortization of note discounts | - | 1,334,729 | ||||||
Increase (decrease) in cash resulting from changes in: | ||||||||
Accounts receivable | (3,351 | ) | 216,165 | |||||
Other current assets | 11,219 | (59,225 | ) | |||||
Accounts payable | 127,561 | 93,165 | ||||||
Accrued interest | 826 | 108,031 | ||||||
Accrued and deferred personnel compensation | 4,275 | (24,605 | ) | |||||
Deferred revenue and customer deposits | (16,962 | ) | 5,323 | |||||
Other liabilities | 118,074 | (260 | ) | |||||
Net cash used in operating activities | (1,162,767 | ) | 60,489 | |||||
INVESTING ACTIVITIES | ||||||||
Purchases of equipment | (22,225 | ) | - | |||||
Acquisitions | (2,368,019 | ) | (195,630 | ) | ||||
Net cash used in investing activities | (2,390,244 | ) | (195,630 | ) | ||||
FINANCING ACTIVITIES | ||||||||
Proceeds from issuance of notes payable, net of finance offering costs | - | 200,000 | ||||||
Payments on notes payable | - | (21,040 | ) | |||||
Proceeds from issuance of common stock, net of issuance costs | 4,964,358 | - | ||||||
Net cash provided by financing activities | 4,964,358 | 178,960 | ||||||
Net change in cash | 1,411,347 | 43,819 | ||||||
Cash at beginning of period | 2,572,685 | 363 | ||||||
Cash at end of period | $ | 3,984,032 | $ | 44,182 | ||||
Supplemental disclosures: | ||||||||
Cash paid during period for | ||||||||
Interest | $ | - | $ | 3,960 | ||||
Non-cash investing and financing activities: | ||||||||
Note discount | $ | - | $ | 133,725 | ||||
Adjustment to derivative liability due to note repayment | $ | - | $ | 15,406 | ||||
Earn out payable for acquisitions | $ | 2,273,000 | $ | - | ||||
Common stock payable recorded for earn out payment related to the Boomtext acquisition | $ | - | $ | 1,711,490 | ||||
Issuance of common stock for acquisitions | $ | 672,505 | $ | - | ||||
Settlement of working capital asset related to the Boomtext acquisition | $ | - | $ | 153,317 |
Years ended December 31, | ||||||||
2014 | 2013 | |||||||
General and administrative | $ | 948,567 | $ | 855,698 | ||||
Sales and marketing | 592,785 | 976,341 | ||||||
Engineering, research, and development | 44,908 | 17,972 | ||||||
$ | 1,586,260 | $ | 1,850,012 |
Years ended December 31, | ||||||||
2014 | 2013 | |||||||
Risk-free interest rate | 1.57% to 1.91% | 0.60% to 1.03% | ||||||
Expected life (years) | 4.66 to 6.08 | 3.58 to 5.27 | ||||||
Dividend yield | - | - | ||||||
Expected volatility | 132.0% to 132.0% | 122.0% to 132.0% |
Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term (Years) | Aggregate Intrinsic Value | |||||||||||||
Outstanding at December 31, 2013 | - | $ | - | - | $ | - | ||||||||||
Granted | 591,436 | $ | - | - | $ | - | ||||||||||
Exercised | - | $ | - | - | $ | - | ||||||||||
Canceled/forfeited/expired | - | $ | - | - | $ | - | ||||||||||
Outstanding at December 31, 2014 | 591,436 | $ | - | 9.75 | $ | 703,809 | ||||||||||
Expected to vest at December 31, 2014 | 297,086 | $ | - | 9.61 | $ | 353,532 | ||||||||||
Exercisable at December 31,2014 | 297,086 | $ | - | 9.61 | $ | 353,532 | ||||||||||
Unvested at December 31, 2014 | 294,350 | $ | - | 9.89 | $ | 350,277 | ||||||||||
Unrecognized expense at December 31, 2014 | $ | 429,999 |
Year ended December 31, | ||||
2014 | ||||
General and administrative | $ | 347,074 | ||
$ | 347,074 |
Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term (Years) | ||||||||||
Outstanding at December 31, 2012 | 150,835 | $ | 1.97 | - | ||||||||
Granted | - | $ | - | - | ||||||||
Exercised | - | $ | - | - | ||||||||
Canceled/forfeited/expired | (279 | ) | $ | 1.16 | 4.09 | |||||||
Outstanding at December 31, 2013 | 150,556 | $ | 1.97 | - | ||||||||
Granted | - | $ | - | - | ||||||||
Exercised | - | $ | - | - | ||||||||
Canceled/forfeited/expired | (555 | ) | $ | 10.50 | - | |||||||
Outstanding at December 31, 2014 | 150,001 | $ | 1.92 | 0.99 | ||||||||
Expected to vest at December 31, 2014 | 150,001 | $ | 1.92 | 0.99 | ||||||||
Warrants exercisable | 149,306 | $ | 1.92 | 0.99 |
Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term (Years) | ||||||||||
Outstanding at December 31, 2012 | 140,372 | $ | 1.20 | 1.50 | ||||||||
Granted | 5,187,587 | $ | 1.20 | 4.37 | ||||||||
Exercised | (32,054 | ) | $ | - | - | |||||||
Canceled/forfeited/expired | - | $ | - | - | ||||||||
Outstanding at December 31, 2013 | 5,295,905 | $ | 1.20 | 4.39 | ||||||||
Granted | 1,723,935 | $ | 1.20 | 4.20 | ||||||||
Exercised | - | $ | - | - | ||||||||
Canceled/forfeited/expired | - | $ | - | - | ||||||||
Outstanding at December 31, 2014 | 7,019,840 | $ | 1.20 | 3.18 |
2014 | 2013 | |||||||
Federal – current | $ | - | $ | - | ||||
State – current | - | - | ||||||
Total | $ | - | $ | - |
2014 | 2013 | |||||||
Deferred tax assets (liabilities): | ||||||||
Net operating loss carryforwards | $ | 7,837,000 | $ | 6,283,000 | ||||
Stock based compensation | 2,716,000 | 1,735,000 | ||||||
Accrued compensation | 47,000 | 31,000 | ||||||
Derivative Liability | 17,000 | 42,000 | ||||||
Depreciation and amortization | 6,617,000 | 5,099,000 | ||||||
Other | 20,000 | 10,000 | ||||||
Total deferred tax assets | 17,254,000 | 13,200,000 | ||||||
Valuation allowance for net deferred tax assets | (17,254,000 | ) | (13,200,000 | ) | ||||
Total | $ | - | $ | - |
2014 | 2013 | |||||||
Computed expected tax expense | $ | (3,548,000 | ) | $ | (5,698,000 | ) | ||
State taxes, net of federal benefit | (594,000 | ) | (300,000 | ) | ||||
Other | 88,000 | 3,951,000 | ||||||
Change in valuation allowance | 4,054,000 | 2,047,000 | ||||||
Total | $ | - | $ | - |
Description | Level 1 | Level 2 | Level 3 | Gains (Losses) | ||||||||||||
Goodwill (non-recurring) | $ | - | $ | - | $ | 1,921,072 | $ | (4,078,693 | ) | |||||||
Intangibles, net (non-recurring) | $ | - | $ | - | $ | 2,010,952 | $ | (961,436 | ) | |||||||
Derivative liabilities (recurring) | $ | - | $ | - | $ | 42,659 | $ | 63,517 | ||||||||
Earn-out payable (recurring) | $ | - | $ | - | $ | 840,000 | $ | 1,492,000 |
Description | Level 1 | Level 2 | Level 3 | Gains (Losses) | ||||||||||||
Goodwill (non-recurring) | $ | - | $ | - | $ | 3,108,964 | $ | (1,066,068 | ) | |||||||
Intangibles, net (non-recurring) | $ | - | $ | - | $ | 935,316 | $ | (644,170 | ) | |||||||
Derivative liabilities (recurring) | $ | - | $ | - | $ | 106,176 | $ | (3,766,231 | ) | |||||||
Earn-out payable (recurring) | $ | - | $ | - | $ | 59,000 | $ | (28,465 | ) |
December 31, | ||||||||
2014 | 2013 | |||||||
Outstanding employee options | 5,399,320 | 5,672,464 | ||||||
Outstanding restricted stock units | 591,436 | - | ||||||
Outstanding non-employee warrants | 150,001 | 150,556 | ||||||
Outstanding warrants | 7,019,840 | 5,187,587 | ||||||
13,160,597 | 11,010,607 |
- | Present (either on the face of the statement where net income is presented or in the notes) the effects on the line items of net income of significant amounts reclassified out of accumulated other comprehensive income - but only if the item reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period; and |
- | Cross-reference to other disclosures currently required under U.S. GAAP for other reclassification items (that are not required under U.S. GAAP) to be reclassified directly to net income in their entirety in the same reporting period. This would be the case when a portion of the amount reclassified out of accumulated other comprehensive income is initially transferred to a balance sheet account (e.g., inventory for pension-related amounts) instead of directly to income or expense. |
Accounts receivable, net | $ | 161,664 | ||
Other assets | 6,620 | |||
Customer relationships | 2,010,000 | |||
Developed technology | 260,000 | |||
Trade name | 176,000 | |||
Goodwill | 2,890,801 | |||
Total assets acquired | 5,505,085 | |||
Liabilities assumed | (191,561 | ) | ||
Net assets acquired | $ | 5,313,524 |
Cash | $ | 2,368,019 | ||
Earn Out | 2,273,000 | |||
Common stock | 672,505 | |||
Total purchase price | $ | 5,313,524 |
Mobivity Holdings Corp. | ||||||||||||||||
Unaudited Pro Forma Condensed Consolidated Statement of Operations | ||||||||||||||||
For the quarter ended March 31, 2014 | ||||||||||||||||
Mobivity | SR | Pro forma adjustments | Pro forma combined | |||||||||||||
Revenues | ||||||||||||||||
Revenues | $ | 903,215 | $ | 214,139 | $ | - | $ | 1,117,354 | ||||||||
Cost of revenues | 260,893 | 54,410 | - | 315,303 | ||||||||||||
Gross margin | 642,322 | 159,729 | - | 802,051 | ||||||||||||
Operating expenses | ||||||||||||||||
General and administrative | 1,129,953 | 231,084 | 4,230 | (a) | 1,365,267 | |||||||||||
Sales and marketing | 941,085 | 60,077 | - | 1,001,162 | ||||||||||||
Engineering, research, and development | 297,933 | 139,649 | - | 437,582 | ||||||||||||
Depreciation and amortization | 68,083 | 403 | - | 68,486 | ||||||||||||
Total operating expenses | 2,437,054 | 431,213 | 4,230 | 2,872,497 | ||||||||||||
Loss from operations | (1,794,732 | ) | (271,484 | ) | (4,230 | ) | (2,070,446 | ) | ||||||||
Other income/(expense) | ||||||||||||||||
Interest income | 1,731 | - | - | 1,731 | ||||||||||||
Interest expense | (826 | ) | - | - | (826 | ) | ||||||||||
Change in fair value of derivative liabilities | 30,079 | - | - | 30,079 | ||||||||||||
Gain on adjustment in contingent consideration | - | - | - | - | ||||||||||||
Total other income/(expense) | 30,984 | - | - | 30,984 | ||||||||||||
Loss before income taxes | (1,763,748 | ) | (271,484 | ) | (4,230 | ) | (2,039,462 | ) | ||||||||
Income tax expense | - | - | - | - | ||||||||||||
Net loss | $ | (1,763,748 | ) | $ | (271,484 | ) | $ | (4,230 | ) | $ | (2,039,462 | ) | ||||
Net loss per share - basic and diluted | $ | (0.10 | ) | $ | (0.12 | ) | ||||||||||
Weighted average number of shares | ||||||||||||||||
during the period - basic and diluted | 17,490,954 | 17,384,367 |
Mobivity | SR | Pro forma adjustments | Pro forma combined | |||||||||||||
Revenues | ||||||||||||||||
Revenues | $ | 4,000,202 | $ | 214,139 | $ | - | $ | 4,214,341 | ||||||||
Cost of revenues | 1,066,917 | 54,410 | - | 1,121,327 | ||||||||||||
Gross margin | 2,933,285 | 159,729 | - | 3,093,014 | ||||||||||||
Operating expenses | ||||||||||||||||
General and administrative | 4,270,844 | 231,084 | 4,230 | (a) | 4,506,158 | |||||||||||
Sales and marketing | 3,895,033 | 60,077 | - | 3,955,110 | ||||||||||||
Engineering, research, and development | 1,346,198 | 139,649 | - | 1,485,847 | ||||||||||||
Depreciation and amortization | 416,436 | 403 | - | 416,839 | ||||||||||||
Goodwill impairment | 4,078,693 | - | - | 4,078,693 | ||||||||||||
Intangible asset impairment | 961,436 | - | - | 961,436 | ||||||||||||
Total operating expenses | 14,968,640 | 431,213 | 4,230 | 15,404,083 | ||||||||||||
Loss from operations | (12,035,355 | ) | (271,484 | ) | (4,230 | ) | (12,311,069 | ) | ||||||||
Other income/(expense) | ||||||||||||||||
Interest income | 2,131 | - | - | 2,131 | ||||||||||||
Change in fair value of derivative liabilities | 63,517 | - | - | 63,517 | ||||||||||||
Gain on debt extinguishment | 36,943 | - | - | 36,943 | ||||||||||||
Gain on adjustment of contingent consideration | 1,492,000 | - | - | 1,492,000 | ||||||||||||
Total other income/(expense) | 1,594,591 | - | - | 1,594,591 | ||||||||||||
Loss before income taxes | (10,440,764 | ) | (271,484 | ) | (4,230 | ) | (10,716,478 | ) | ||||||||
Income tax expense | - | - | - | - | ||||||||||||
Net loss | $ | (10,440,764 | ) | $ | (271,484 | ) | $ | (4,230 | ) | $ | (10,716,478 | ) | ||||
Net loss per share - basic and diluted | $ | (0.49 | ) | $ | (0.52 | ) | ||||||||||
Weighted average number of shares during the period - basic and diluted | 21,203,563 | 20,796,889 |
(a) | Represents stock based compensation in conjunction with the transaction. |
Mobivity Holdings Corp. | |||||||||||||||||
Unaudited Pro Forma Condensed Consolidated Statement of Operations | |||||||||||||||||
For the year ended December 31, 2013 | |||||||||||||||||
Mobivity | SR | Pro forma adjustments | Pro forma combined | ||||||||||||||
Revenues | |||||||||||||||||
Revenues | $ | 4,093,667 | $ | 832,960 | $ | - | $ | 4,926,627 | |||||||||
Cost of revenues | 1,122,037 | 74,011 | - | 1,196,048 | |||||||||||||
Gross margin | 2,971,630 | 758,949 | - | 3,730,579 | |||||||||||||
Operating expenses | |||||||||||||||||
General and administrative | 3,416,850 | 211,515 | - | 3,638,365 | |||||||||||||
Sales and marketing | 3,469,383 | 474,674 | - | 3,944,057 | |||||||||||||
Engineering, research, and development | 824,653 | 886,059 | - | 1,710,712 | |||||||||||||
Depreciation and amortization | 270,579 | 4,902 | - | 275,481 | |||||||||||||
Goodwill impairment | 1,066,068 | - | - | 1,066,068 | |||||||||||||
Intangible asset impairment | 644,170 | - | - | 644,170 | |||||||||||||
Total operating expenses | 9,691,703 | 1,587,150 | - | 11,278,853 | |||||||||||||
Loss from operations | (6,720,073 | ) | (828,201 | ) | - | (7,548,274 | ) | ||||||||||
Other income/(expense) | |||||||||||||||||
Interest income | 747 | - | - | 747 | |||||||||||||
Interest expense | (6,348,186 | ) | (797,240 | ) | - | (7,145,426 | ) | ||||||||||
Change in fair value of derivative liabilities | (3,766,231 | ) | 235,690 | - | (3,530,541 | ) | |||||||||||
Gain on Debt Extinguishment | 103,177 | - | - | 103,177 | |||||||||||||
Gain on adjustment in contingent consideration | (28,465 | ) | - | - | (28,465 | ) | |||||||||||
Total other income/(expense) | (10,038,958 | ) | (561,550 | ) | - | (10,600,508 | ) | ||||||||||
Loss before income taxes | (16,759,031 | ) | (1,389,751 | ) | - | (18,148,782 | ) | ||||||||||
Income tax expense | - | - | - | - | |||||||||||||
Net loss | $ | (16,759,031 | ) | $ | (1,389,751 | ) | $ | - | $ | (18,148,782 | ) | ||||||
Net loss per share - basic and diluted | $ | (1.58 | ) | $ | (1.63 | ) | |||||||||||
Weighted average number of shares | |||||||||||||||||
during the period - basic and diluted | 10,612,007 | 11,116,891 |
Mobivity | SR | Pro forma adjustments | Pro forma combined | |||||||||||||
Revenues | ||||||||||||||||
Revenues | $ | 4,093,667 | $ | 834,250 | $ | - | $ | 4,927,917 | ||||||||
Cost of revenues | 1,122,037 | 243,209 | - | 1,365,246 | ||||||||||||
Gross margin | 2,971,630 | 591,041 | - | 3,562,671 | ||||||||||||
Operating expenses | ||||||||||||||||
General and administrative | 3,416,850 | 211,271 | 446,094 | (a) | 4,074,215 | |||||||||||
Sales and marketing | 3,469,383 | 339,615 | - | 3,808,998 | ||||||||||||
Engineering, research, and development | 824,653 | 644,330 | - | 1,468,983 | ||||||||||||
Depreciation and amortization | 270,579 | 3,970 | - | 274,549 | ||||||||||||
Goodwill impairment | 1,066,068 | - | - | 1,066,068 | ||||||||||||
Intangible asset impairment | 644,170 | - | - | 644,170 | ||||||||||||
Total operating expenses | 9,691,703 | 1,199,186 | 446,094 | 11,336,983 | ||||||||||||
Loss from operations | (6,720,073 | ) | (608,145 | ) | (446,094 | ) | (7,774,312 | ) | ||||||||
Other income/(expense) | �� | |||||||||||||||
Interest income | 747 | - | - | 747 | ||||||||||||
Interest expense | (6,348,186 | ) | (117,944 | ) | - | (6,466,130 | ) | |||||||||
Change in fair value of derivative liabilities | (3,766,231 | ) | - | - | (3,766,231 | ) | ||||||||||
Gain on Debt Extinguishment | 103,177 | - | - | 103,177 | ||||||||||||
Loss on adjustment in contingent consideration | (28,465 | ) | - | - | (28,465 | ) | ||||||||||
Total other income/(expense) | (10,038,958 | ) | (117,944 | ) | - | (10,156,902 | ) | |||||||||
Loss before income taxes | (16,759,031 | ) | (726,089 | ) | (446,094 | ) | (17,931,214 | ) | ||||||||
Income tax expense | - | - | - | - | ||||||||||||
Net loss | $ | (16,759,031 | ) | $ | (726,089 | ) | $ | (446,094 | ) | $ | (17,931,214 | ) | ||||
Net loss per share - basic and diluted | $ | (1.58 | ) | $ | (1.61 | ) | ||||||||||
Weighted average number of shares during the period - basic and diluted | 10,612,007 | 11,116,891 |
Represents stock based compensation in conjunction with the transaction. |
Merchant relationships | $ | 181,000 | ||
Trade name | 76,000 | |||
Developed technology | 71,000 | |||
Goodwill | 379,750 | |||
Total assets acquired | $ | 707,750 |
Cash | $ | 300,000 | ||
Common stock | 183,750 | |||
Earn-out payable | 224,000 | |||
Total purchase price | $ | 707,750 |
Cash | $ | 5,500 | ||
Accounts receivable | 27,467 | |||
Contracts | 813,000 | |||
Customer relationships | 22,000 | |||
Developed technology | 96,000 | |||
Non-compete agreement | 124,000 | |||
Goodwill | 1,535,658 | |||
Total assets acquired | 2,623,625 | |||
Liabilities assumed | (46,219 | ) | ||
Net assets acquired | $ | 2,577,406 |
(Unaudited) | ||||
Year ended December 31, | ||||
2013 | ||||
Total revenues | $ | 4,255,947 | ||
Net loss | $ | (17,120,236 | ) | |
Basic and diluted loss per share | $ | (1.55 | ) |
Cash | $ | 5,500 | ||
Accounts receivable | 27,467 | |||
Contracts | 813,000 | |||
Customer relationships | 22,000 | |||
Developed technology | 96,000 | |||
Non-compete agreement | 124,000 | |||
Goodwill | 1,535,658 | |||
Total assets acquired | 2,623,625 | |||
Liabilities assumed | (46,219 | ) | ||
Net assets acquired | $ | 2,577,406 |
Merchant relationships | $ | 181,000 | ||
Trade name | 76,000 | |||
Developed technology | 71,000 | |||
Goodwill | 379,750 | |||
Total assets acquired | $ | 707,750 |
Cash | $ | 100,000 | ||
Promissory note, net | 1,365,096 | |||
Common stock | 1,112,310 | |||
Total purchase price | $ | 2,577,406 |
Goodwill | ||||
December 31, 2012 | $ | 2,259,624 | ||
Acquired | 1,915,408 | |||
Impairment | (1,066,068 | ) | ||
December 31, 2013 | 3,108,964 | |||
Acquired | 2,890,801 | |||
Impairment | (4,078,693 | ) | ||
December 31, 2014 | $ | 1,921,072 |
December 31, 2014 | December 31, 2013 | |||||||||||||||||||||||||||||||
Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Weighted Average Useful Life (Years) | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Weighted Average Useful Life (Years) | |||||||||||||||||||||||||
Patents and trademarks | $ | 142,000 | $ | (33,048 | ) | $ | 108,952 | 20 | $ | 142,000 | $ | (23,902 | ) | $ | 118,098 | 20.00 | ||||||||||||||||
Customer contracts | 628,502 | (628,502 | ) | - | - | 1,069,900 | (528,372 | ) | 541,528 | 5.88 | ||||||||||||||||||||||
Customer and merchant relationships | 2,830,139 | (1,290,139 | ) | 1,540,000 | 10 | 1,128,583 | (1,128,583 | ) | - | 4.78 | ||||||||||||||||||||||
Trade name | 353,192 | (201,192 | ) | 152,000 | 10 | 199,750 | (177,359 | ) | 22,391 | 5.00 | ||||||||||||||||||||||
Acquired technology | 686,135 | (476,135 | ) | 210,000 | 10 | 573,550 | (391,252 | ) | 182,298 | 4.72 | ||||||||||||||||||||||
Non-compete agreement | 90,462 | (90,462 | ) | - | - | 132,083 | (61,082 | ) | 71,001 | 2.90 | ||||||||||||||||||||||
$ | 4,730,430 | $ | (2,719,478 | ) | $ | 2,010,952 | $ | 3,245,866 | $ | (2,310,550 | ) | $ | 935,316 |
Balance at | Balance at | |||||||||||||||
December 31, 2013 | Additions | Amortization | March 31, 2014 | |||||||||||||
Patents and trademarks | $ | 118,098 | $ | - | $ | (2,287 | ) | $ | 115,811 | |||||||
Customer contracts | 541,528 | - | (25,033 | ) | 516,495 | |||||||||||
Customer and merchant relationships | - | 2,010,000 | (10,806 | ) | 1,999,194 | |||||||||||
Trade name | 22,391 | 176,000 | (3,368 | ) | 195,023 | |||||||||||
Acquired technology | 182,298 | 260,000 | (17,394 | ) | 424,904 | |||||||||||
Non-compete agreement | 71,001 | - | (7,345 | ) | 63,656 | |||||||||||
$ | 935,316 | $ | 2,446,000 | $ | (66,233 | ) | $ | 3,315,083 |
Fair value | Useful Life | ||||
Merchant relationships | $ | 2,010,000 | 10 years | ||
Trade name | $ | 176,000 | 10 years | ||
Developed technology | $ | 260,000 | 10 years |
Year ending December 31, | Amount | Amount | ||||||
2014 | $ | 342,693 | ||||||
2015 | 462,976 | $ | 214,769 | |||||
2016 | 385,040 | 214,769 | ||||||
2017 | 339,669 | 214,769 | ||||||
2018 | 333,820 | 214,769 | ||||||
2019 | 214,769 | |||||||
Thereafter | 1,450,885 | 937,107 | ||||||
Total | $ | 3,315,083 | $ | 2,010,952 |
December 31, | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Value by Instrument Type | 2014 | 2013 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Convertible Bridge Notes | $ | - | $ | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common Stock and Warrants | 42,659 | 106,176 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-employee Warrants | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 42,659 |
An independent valuation expert calculated the fair value of the compound embedded derivatives using a complex, customized Monte Carlo simulation model suitable to value path dependent American options. The model uses the risk neutral methodology adapted to value corporate securities. This model utilized subjective and theoretical assumptions that can materially affect fair values from period to period. Key inputs and assumptions used in valuing our derivative liabilities are as follows: For issuances of notes, common stock and warrants:
For issuances of non-employee warrants through June 17, 2013:
See Note 10 for a discussion of fair value measurements. 5. Bridge Notes, Notes Payable, Accrued Interest and Cash Payment Obligation Bridge Financing Summary Prior to June 2013, we issued 10% Senior Secured Convertible Bridge Notes Payable (“Bridge Notes” or “new Bridge Notes”) to various accredited investors, and then extended the due dates on the majority of the Bridge Notes several times. In June 2013, the outstanding principal of the Bridge Notes totaling $4,984,720 was converted into 4,153,934 shares of our common stock at $1.20 per share within the terms of the agreement; therefore, we did not recognize a gain or loss on this transaction. We no longer have any outstanding Bridge Notes. The Bridge Notes contained variable maturity dates and additional share issuance obligations and we recorded discounts to the Bridge Notes for the VMCO and ASID. The discounts were amortized to interest expense over the term of the Bridge Notes using the effective interest method. We determined that the VMCO and the ASID represented embedded derivative features, and these were recorded as derivative liabilities. See Note 4. We capitalized costs associated with the issuance of the Bridge Notes, and amortized these costs to interest expense over the term of the related Bridge Notes using the effective interest method. The following table summarizes information relative to the outstanding Bridge Notes at December 31, 2014 and 2013:
Cherry Family Trust Note This note was issued on March 1, 2007, for the principal amount of $20,000, interest accrues at the rate of 9% compounded annually, with a maturity date of December 31, 2008. Accrued interest was $0 and $16,943 as of December 31, 2014 and 2013, respectively. Although this note is currently past due, the Company is legally prohibited from paying it due to a court order dated December 7, 2007 related to a summary judgment in favor of the Company stemming from litigation between the Company and Mr. Cherry. Accordingly, we have extinguished the note payable and related accrued interest in the amounts of $20,000 and $16,943, respectively, during 2014 and recorded a gain on debt extinguishment of $36,943. Digimark, LLC Notes As partial consideration for the acquisition of Boomtext in 2011, we issued an unsecured subordinated promissory note in the principal amount of $194,658. The promissory note did not bear interest, was payable in installments (varying in amount) from August 2011 through October 2012, and was subordinated to our obligations under the Bridge Notes discussed above. We recorded the promissory note at the present value of the payments over the subsequent periods which amounted to $182,460. We amortized the discount using the effective interest method. As of December 31, 2012, the outstanding balance on the note payable was $100,000, which was paid in June 2013. Summary of Notes Payable and Accrued Interest The following table summarizes our notes payable and accrued interest as of December 31, 2014 and 2013:
Interest Expense The following table summarizes interest expense for the years ended December 31, 2014 and 2013:
6. Common Stock and Equity Payable Common Stock 2013 We issued 247,249 shares of common stock in satisfaction of the Boomtext acquisition earn-out which was valued at $2,210,667. See Equity Payable below. We issued 1,291,667 shares of common stock as part of the Sequence and FDI purchase prices which were valued at $1,296,060. The shares issued in the acquisitions were valued based on the closing market price on the acquisition dates. See Note 2. We issued 6,250,000 shares of common stock at $1.20 per share to accredited investors for net proceeds of $6,897,177. Transaction costs netted against the proceeds totaled $602,823. The issuance of these shares constituted a qualified financing, pursuant to which the Bridge Notes and accrued interest totaling $5,354,506 were converted into 4,462,089 shares of common stock, see Note 5. As the conversions of the Bridge Notes and accrued interest were within the terms of the agreement, no gain or loss was recognized in this transaction. We issued 31,292 shares of common stock, accrued a common stock payable of $7,308 (representing 2,137 shares payable) and a warrant to purchase 8,845 shares of common stock at $1.20 per share for services and recorded share-based compensation of $106,138 in general and administrative expense. We issued 87,947 shares of common stock in satisfaction of the allonges granted under the Bridge Notes valued at $131,248. See Note 4. We issued 39,382 shares of common stock and we issued warrants to purchase 25,384 shares of common stock at $1.20 per share in satisfaction of our additional share issuance obligation under the Bridge Notes, and reduced our equity payable by $117,584. See Equity Payable below. We issued 19,271 shares of common stock in satisfaction of accrued bonuses totaling $37,000 to two of our officers. We issued 21,171 shares of common stock for the cashless exercise of warrants and recorded a reduction of our derivative liabilities of $55,546. 2014 We issued 5,413,000 shares of common stock at $1.00 per unit to accredited investors for the gross proceeds of $5,413,000. Each unit consisted of one share of our common stock and a common stock purchase warrant to purchase one-quarter share of our common stock, over a five year period, at an exercise price of $1.20 per share. We entered into a Registration Rights Agreement with the investors, pursuant to which we agreed to cause a resale registration statement covering the common shares made part of the units to be filed by May 15, 2014. The Registration Rights Agreement also provides that we must make certain payments as liquidated damages to the investors if we fail to timely file the registration statement and cause it to become effective. Emerging Growth Equities, Ltd. (“EGE”) acted as placement agent for the private placement and received $370,685 in commissions from us. In addition, we issued warrants for the purchase of 370,685 common stock units at $1.00 per unit to a placement agent in connection with the equity placements. Each unit consists of one share of the Company’s common stock and a common stock purchase warrant to purchase one-quarter share of the Company’s common stock, over a five year period, at an exercise price of $1.20 per share. In addition, we issued warrants for the purchase of 1,353,238 shares of common stock at $1.20 per share in connection with equity financing. As part of the private placement share units issued, 1,353,238 warrants were issued to investors valued at $1,320,569 which expire in 2019. We issued 504,884 shares at $1.44 per share in connection with the acquisition of SmartReceipt. See Note 2. We issued 2,137 accrued shares of common stock at $3.42 per share for services that had been recorded in 2013 as equity payable. See 2013 discussion above. We issued 10,431 shares of common stock at $3.42 per share for services and recorded share-based compensation of $35,673 in general and administrative expense. We issued 500,000 shares of common stock at $1.01 per share for services and recorded share-based compensation of $505,000 in general and administrative expense. Equity Payable We had an earn-out commitment associated with the Boomtext acquisition In Stock-based Plans We have the 2010 Incentive Stock Option Plan and the 2013 Incentive Stock Option Plan under which we have granted stock options to our directors, officers and employees. At December 31, 2014, 6,085,015 shares were authorized under the plans and 94,259 shares were available for future grant. We believe that such awards better align the interests of our directors, officers and employees with those of our shareholders. Option awards are generally granted with an exercise price that equals the fair market value of our stock at the date of grant. These option awards generally vest based on four years of continuous service and have five-year or 10-year contractual terms. The following table summarizes stock option activity under our stock-based plans as of and for the year ended December 31, 2014:
The aggregate intrinsic value of options was calculated as the difference between the exercise price of the underlying awards and the quoted price of our common stock. At December 31, 2014, options to purchase 3,859,846 shares of common stock were in-the-money. The weighted average grant-date fair value of options granted during the years 2014 and 2013 was $0.67 and $1.80, respectively. On March 11, 2013 the Company granted 7 independent directors a total of 58,338 options to purchase shares of Company common stock at the closing price as of March 11, 2013 of $1.50 per share. The options vest in twelve equal monthly installments following the grant date, and are exercisable until March 11, 2023. The total estimated value using the Black-Scholes Model, based on a volatility rate of 122% and a call option value of $1.26 was $73,763. On March 11, 2013 the Company granted one employee 4,167 options to purchase shares of Company common stock at the closing price as of March 11, 2013 of $1.50 per share. The options vest 25% on the first anniversary of grant, then equally in 36 monthly installments thereafter, and are exercisable until March 11, 2018. The total estimated value using the Black-Scholes Model, based on a volatility rate of 122% and a call option value of $1.13 was $4,714. On June 12, 2013 the Company granted one employee 417,326 options to purchase shares of Company common stock at the closing price as of June 12, 2013 of $2.04 per share. The options will vest as follows: (a) 33% of the options will vest at rate of 1/48th per month for the first forty-eight (48) months following the date of grant, (b) another 33% of the options vest when the Company reports $500,000 of EBITDA for an entire fiscal year, and (c) the final 33% of the options will vest when the Company reports $5,000,000 of EBITDA for an entire fiscal year. The options are exercisable until June 12, 2023. The total estimated value using the Black-Scholes Model, based on a volatility rate of 132% and a call option value of $1.84 was $767,879. On June 17, 2013 the Company granted two employees 2,782,174 options to purchase shares of Company common stock at the closing price as of June 17, 2013 of $1.80 per share. The option will vest as follows: (a) 20% of the shares underlying the option will vest and first become exercisable upon the date of grant; (b) 40% of the shares underlying the option will vest and first become exercisable when the Company realizes $10,000,000 of gross revenue over any fiscal year; and (c) the final 40% of the shares underlying the option will vest and first become exercisable at the rate of 1/48th per month over a 48 month period commencing on grant date, provided that the vesting of the final 40% shall accelerate and become fully vested when the Company realizes $15,000,000 of gross revenue over any fiscal year. The options are exercisable until June 17, 2023. The total estimated value using the Black-Scholes Model, based on a volatility rate of 132% and a call option value of $1.55 was $4,312,370. On June 17, 2013 the Company granted two employees 1,669,306 options to purchase shares of Company common stock at the closing price as of June 17, 2013 of $1.80 per share. The options will vest and first become exercisable over a four year period at the rate of 1/48th shares per month commencing on the first month following the date of grant, and are exercisable until June 17, 2023. The total estimated value using the Black-Scholes Model, based on a volatility rate of 132% and a call option value of $1.62 was $2,704,276. On June 20, 2013 the Company granted 2 independent directors 33,334 options to purchase shares of Company common stock at the closing price as of June 20, 2013 of $2.46 per share. The options will vest and first become exercisable immediately upon the date of grant, and are exercisable until June 20, 2016. The total estimated value using the Black-Scholes Model, based on a volatility rate of 132% and a call option value of $1.43 was $47,668. On June 20, 2013 the Company granted 6 independent directors 100,002 options to purchase shares of Company common stock at the closing price as of June 20, 2013 of $2.46 per share. The options vest in three equal amounts on each of the next three anniversary dates of this agreement, and are exercisable until June 20, 2023. The total estimated value using the Black-Scholes Model, based on a volatility rate of 132% and a call option value of $2.21 was $221,004. On July 19, 2013 the Company granted two employees 33,335 options to purchase shares of Company common stock at the closing price as of July 19, 2013 of $4.20 per share. The options vest 25% on the first anniversary of grant, then equally in 36 monthly installments thereafter, and are exercisable until July 19, 2018. The total estimated value using the Black-Scholes Model, based on a volatility rate of 132% and a call option value of $3.78 was $126,006. On July 26, 2013 the Company granted four employees 27,502 options to purchase shares of Company common stock at the closing price as of July 26, 2013 of $3.90 per share. The options vest 25% on the first anniversary of grant, then equally in thirty-six monthly installments thereafter, and are exercisable until July 26, 2018. The total estimated value using the Black-Scholes Model, based on a volatility rate of 132% and a call option value of $3.52 was $96,807. On July 26, 2013 the Company granted one employees 278,218 options to purchase shares of Company common stock at the closing price as of July 26, 2013 of $3.90 per share. Options to purchase 139,109 shares of common stock will vest and first become exercisable over a four year period at the rate of 1/48th shares per month commencing on the first month following the date of grant. Options to purchase the remaining 139,109 shares of common stock will vest and first become exercisable when the Company realizes $20,000,000 of gross revenue over any fiscal year. The options are exercisable until July 26, 2023. The total estimated value using the Black-Scholes Model, based on a volatility rate of 132% and a call option value of $3.52 was $976,545. On September 13, 2013 the Company granted one employee 58,334 options to purchase shares of Company common stock at the closing price as of September 13, 2013 of $3.36 per share. The options vest 25% on the first anniversary of grant, then equally in 36 monthly installments thereafter, and are exercisable until July 19, 2018. The total estimated value using the Black-Scholes Model, based on a volatility rate of 132% and a call option value of $3.03 was $176,752. On September 13, 2013 the Company granted 4 independent directors a total of 3,335 options to purchase shares of Company common stock at the closing price as of September 13, 2013 of $3.36 per share. The options vest in twelve equal monthly installments following the grant date, and are exercisable until September 13, 2023. The total estimated value using the Black-Scholes Model, based on a volatility rate of 132% and a call option value of $2.95 was $9,838. On November 13, 2013 the Company granted one employee 8,334 options to purchase shares of Company common stock at the closing price as of November 13, 2013 of $2.75 per share. The options vest 25% on the first anniversary of grant, then equally in 36 monthly installments thereafter, and are exercisable until November 13, 2018. The total estimated value using the Black-Scholes Model, based on a volatility rate of 132% and a call option value of $2.48 was $20,668. On February 27, 2014, the Company granted one employee 180,000 options to purchase shares of the Company common stock at the closing price as of February 27, 2015 of $1.40 per share. The options vest 25% on the first anniversary of the grant, then equally in 36 monthly installments thereafter, and are exercisable until February 27, 2024. The total estimate value using the Black-Scholes Model, based on a volatility rate of 132% and a call option value of $1.26 was $226,800. On April 2, 2014, the Company granted three employees 202,500 options to purchase shares of the Company common stock at the closing price as of April 2, 2014 of $1.32 per share. The options vest in forty-eight equal monthly installments following the grant date and are exercisable until April 2, 2024. The total estimated value using the Black-Scholes Model, based on a volatility rate of 132% and a call option value of $1.19 was $240,975. On April 15, 2014, the Company granted six employees 16,000 options to purchase shares of the Company common stock at the closing price as of April 15, 2014 of $1.44 per share. The options vest in forty-eight equal monthly installments following the grant date and are exercisable until April 15, 2024. The total estimated value using the Black-Scholes Model, based on a volatility rate of 132% and a call option value of $1.30 was $20,800. On April 15, 2014, the Company granted two employees 5,000 options to purchase shares of the Company common stock at the closing price as of April 15, 2014 of $1.44 per share. The options vest 25% on the first anniversary of the grant, then equally in thirty-six monthly installments thereafter and are exercisable until April 15, 2024. The total estimated value using the Black-Scholes Model, based on a volatility rate of 132% and a call option value of $1.30 was $6,500. On August 11, 2014, the Company granted five employees 212,500 options to purchase shares of the Company common stock at the closing price as of August 11, 2014 of $0.94 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 11, 2024. The total estimated value using the Black-Scholes Model, based on a volatility rate of 132% and a call option value of $0.85 was $180,625. On September 29, 2014, the Company granted seven employees 182,500 options to purchase shares of the Company common stock at the closing price as of September 29, 2014 of $1.15 per share. The options vest 25% on the first anniversary of the grant, then equally in 36 monthly installments thereafter and are exercisable until September 29, 2024. The total estimated value using the Black-Scholes Model, based on a volatility rate of 132% and a call option value of $1.04 was $189,800. On November 13, 2014 the Company amended an Option Agreement dated June 17, 2013 (the “Option Agreement”) pursuant to which Tom Tolbert was granted the right to purchase up to 1,391,087 shares of common stock of the Company. Options to purchase 391,085 Shares that were subject to vesting as of the date of the Amendment were cancelled. In furtherance of the cancellation, the Company granted to Mr. Tolbert options to purchase all or any part of 1,000,000 shares of the Company’s Common Stock upon the following terms and conditions: Options to purchase 650,000 Shares shall vest and first become exercisable as of the date of the Amendment and the balance of Options to purchase 350,000 Shares shall vest and first become exercisable in 47 equal monthly installments of Options to purchase 7,292 Shares commencing on December 13, 2014 and on the 13th of the next 47 months and the remaining Options to purchase 7,276 Shares shall vest and first become exercisable on November 13, 2018. All other provisions of the Option Agreement remain in full force and effect. On November 18, 2014, the Company granted three employees 250,000 options to purchase shares of the Company common stock at the closing price as of November 18, 2014 of $1.48 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 18, 2024. The total estimated value using the Black-Scholes Model, based on a volatility rate of 132% and a call option value of $1.48 was $370,000. On December 30, 2014, the Company granted three employees 185,000 options to purchase shares of the Company common stock at the closing price as of December 30, 2014 of $1.23 per share. The options vest 25% on the first anniversary of the grant, then equally in 36 monthly installments thereafter and are exercisable until December 30, 2024. The total estimated value using the Black-Scholes Model, based on a volatility rate of 132% and a call option value of $1.11 was $205,350. Stock-based Compensation Expense The impact on our results of operations of recording stock-based compensation expense for
As of December 31, 2014, there was approximately $2,981,414 of unearned stock-based compensation that will be expensed from 2014 through 2018. If there are any modifications or cancellations of the underlying unvested awards, we may be required to accelerate, increase or cancel all or a portion of the remaining unearned stock-based compensation expense. Future unearned stock-based compensation will increase to the extent we grant additional equity awards.
Stock Option Valuation Assumptions
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 Restricted stock units The following table summarizes restricted stock unit activity under our stock-based plans as of and for the year ended December 31, 2014:
On July 17, 2014, the Company granted 4 independent directors a total of 231,391 restricted stock units. All units are vested by December 31, 2014. The units were valued based on the closing stock price on the date of grant. The shares of Common Stock associated with the Restricted Stock Unit evidenced by this Agreement will, to the extent the Participant’s rights with respect to the Restricted Stock Unit have become vested in accordance with Paragraph 3, be issued to the Participant upon the earliest to occur of (A) July 17, 2017, (B) a Change in Control of the Company, and (C) the termination of the Participant’s employment with the Company. On October 2, 2014, the Company granted one independent director a total of 11,743 restricted stock units. All units are vested by December 31, 2014. The units were valued based on the closing stock price on the date of grant. The shares of Common Stock associated with the Restricted Stock Unit evidenced by this Agreement will, to the extent the Participant’s rights with respect to the Restricted Stock Unit have become vested in accordance with Paragraph 3, be issued to the Participant upon the earliest to occur of (A) October 2, 2017, (B) a Change in Control of the Company, and (C) the termination of the Participant’s employment with the Company. On October 10, 2014 the Company granted five independent directors a total of 34,670 restricted stock units. All units are vested by December 31, 2014. The units were valued based on the closing stock price on the date of grant. The shares of Common Stock associated with the Restricted Stock Unit evidenced by this Agreement will, to the extent the Participant’s rights with respect to the Restricted Stock Unit have become vested in accordance with Paragraph 3, be issued to the Participant upon the earliest to occur of (A) October 10, 2017, (B) a Change in Control of the Company, and (C) the termination of the Participant’s employment with the Company. On November 6, 2014 the Company granted one independent director a total of 5,768 restricted stock units. All units are vested by December 31, 2014. The units were valued based on the closing stock price on the date of grant. The shares of Common Stock associated with the Restricted Stock Unit evidenced by this Agreement will, to the extent the Participant’s rights with respect to the Restricted Stock Unit have become vested in accordance with Paragraph 3, be issued to the Participant upon the earliest to occur of (A) November 6, 2017, (B) a Change in Control of the Company, and (C) the termination of the Participant’s employment with the Company. On November 6, 2014 the Company granted one independent director a total of 37,593 restricted stock units. The units were valued based on the closing stock price on the date of grant. All units vested equally in 12 monthly installments beginning January 31, 2015. The shares of Common Stock associated with the Restricted Stock Unit evidenced by this Agreement will, to the extent the Participant’s rights with respect to the Restricted Stock Unit have become vested in accordance with Paragraph 3, be issued to the Participant upon the earliest to occur of (A) November 6, 2017, (B) a Change in Control of the Company, and (C) the termination of the Participant’s employment with the Company. On November 18, 2014 the Company granted one independent director a total of 13,514 restricted stock units. All units are vested by December 31, 2014. The units were valued based on the closing stock price on the date of grant. The shares of Common Stock associated with the Restricted Stock Unit evidenced by this Agreement will, to the extent the Participant’s rights with respect to the Restricted Stock Unit have become vested in accordance with Paragraph 3, be issued to the Participant upon the earliest to occur of (A) November 6, 2017, (B) a Change in Control of the Company, and (C) the termination of the Participant’s employment with the Company. On November 18, 2014 the Company granted five independent directors a total of 256,757 restricted stock units. The units were valued based on the closing stock price on the date of grant. All units vested equally in 12 monthly installments beginning January 31, 2015. The shares of Common Stock associated with the Restricted Stock Unit evidenced by this Agreement will, to the extent the Participant’s rights with respect to the Restricted Stock Unit have become vested in accordance with Paragraph 3, be issued to the Participant upon the earliest to occur of (A) November 17, 2017, (B) a Change in Control of the Company, and (C) the termination of the Participant’s employment with the Company. Restricted Stock Unit Compensation Expense The impact on our results of operations of recording stock-based compensation expense for years ended December 31, 2014 and 2013 was as follows:
As of December 31, 2014, there was approximately $429,999 of unearned restricted stock unit compensation that will be expensed in 2015. If there are any modifications or cancellations 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. 8. Warrants to Purchase Common Stock Warrants Issued to Non-Employees We issued warrants to purchase We recorded stock-based compensation expense of The following table summarizes non-employee warrant activity under our stock-based plans as of and for the year ended December 31, 2014:
Warrants issued in 2013 In June 2013, we issued warrants for the purchase of In June 2013, we issued warrants for the purchase of In In July 2013, we issued warrants for We issued As of December 31, 2013, warrants with price protection to purchase 108,318 shares of common stock at $1.00 per share are outstanding. Of this amount, warrants to purchase 86,949 shares of common stock expire in 2015 and warrants to purchase 21,369 shares of common stock expire in 2016. As of December 31, 2013, we have warrants issued in 2013 to purchase 5,187,587 shares of common stock at $1.20 per share that are outstanding. Of this amount, warrants to purchase 34,229 shares of common stock expire in 2016 and warrants to purchase 5,153,358 shares of common stock expire in 2018. Warrants Issued in 2014 In March 2014, we issued warrants for the purchase of In March 2014, we issued warrants for the purchase of The following table summarizes warrant activity as of and for the year ended December 31, 2014:
9. Income Taxes For the years ended December 31, 2014 and 2013 the provisions for income taxes were as follows:
Significant components of our
The Company has provided a valuation allowance against deferred tax assets recorded as of December 31, 2014 and 2013 due to uncertainties regarding the realization of such assets. The net change in the total valuation allowance for the year ended December 31, 2014 was an increase of approximately $4,054,000. The net change in the total valuation allowance for the year ended December 31, 2013 was an increase of approximately $2,047,000. In assessing the valuation of deferred tax assets, the Company considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during periods in which those temporary differences become deductible. The Company considers projected future taxable income and planning strategies in making this assessment. Based on the level of historical operating results and projections for the taxable income for the future, the Company has determined that it is more likely than not that the deferred tax assets will not be realized. Accordingly, the Company has recorded a valuation allowance to reduce deferred tax assets to zero. There can be no assurance that the Company will ever be able to realize the benefit of some or all of the federal and state loss carryforwards, either due to ongoing operating losses or due to ownership changes, which limit the usefulness of the loss carryforwards. As of December 31, 2014, the Company has available net operating loss carryforwards of approximately $23,000,000 for federal income tax purposes, which will start to expire in 2026. The net operating loss carryforwards for state purposes are approximately $23,000,000 and will start to expire in 2016. The difference between the provision for income taxes and income taxes computed using the U.S. federal income tax rate for the years ended December 31, 2014 and 2013 was as follows:
The Company has determined that during 2010 it experienced a “change of ownership” as defined by Section 382 of the Internal Revenue Code. As such, utilization of net operating loss carryforwards and credits generated before the 2010 change in ownership will be limited to approximately $207,000 per year until such carryforwards are fully utilized. The pre change net operating loss carryforward was approximately $7,000,000. The Company files income tax returns in the U.S. federal jurisdiction and California. Because the Company is carrying forward federal and state net operating losses from 2006, the Company is subject to U.S. federal and state income tax examinations by tax authorities for all years since 2006. The Company does not have a liability for any uncertain tax positions. As of December 31, 2014, no accrued interest or penalties are recorded in the financial statements. 10. Fair Value Measurements of Financial Instruments The following table
The following table
The The Company recorded derivative liabilities as a result of: (i) the variable maturity conversion feature in Litigation As of the date of this report, there are no pending legal proceedings to which we or our properties are subject, except for routine litigation incurred in the normal course of business. The Company has a lease agreement for 6,730 square feet, as amended, for its office facilities in Chandler, AZ through December 2015. Monthly rental payments, excluding common area maintenance charges, are $11,958 in 2014 and $12,357 in 2015. The Company also has a lease through January 2018 for approximately 3,023 square feet of office space in San Diego, California at a monthly expense of $9,825, excluding common area maintenance charges. We The minimum lease payments that are required over the next five years are shown below.
Rent expense was $248,573 and $166,802 for the years ended December 31, 2014 and 2013. 12. Employee Benefit Plan The Company has an In April 2013, we issued a new Bridge Note to our former CFO totaling $20,000 that contains the same rights and privileges as the previously issued new Bridge Notes, the due date of which was extended to October 15, 2013. The note and accrued interest were converted into 16,918 shares of common stock and he received five-year warrants to purchase 16,918 shares of common stock exercisable at $1.20 per share. In May 2013, we issued a new Bridge Note to our CEO totaling $17,500 that contains the same rights and privileges as the previously issued and amended new Bridge Notes. The note and accrued interest were converted into 14,708 shares of common stock and he received five-year warrants to purchase 14,708 shares of common stock exercisable at $1.20 per share. On June 17, 2013 the Company issued to Dennis Becker an option to purchase 1,251,979 shares of Company common stock. The exercise price of the option is $1.80, the fair market value on date of grant. The options will vest and first become exercisable over a four year period at the rate of 1/48th shares per month commencing on the first month following the date of grant. On June 17, 2013 the Company issued to Timothy Schatz an option to purchase 417,326 shares of Company common stock. The exercise price of the option is $1.80, the fair market value on date of grant. The options will vest and first become exercisable over a four year period at the rate of 1/48th shares per month commencing on the first month following the date of grant. On January 13, 2015, Michael Bynum, president and a member of the his options would cease vesting upon his resignation, all unvested options would expire upon resignation and all vested options would remain exercisable for a period of 12 months following his resignation. Executive chairman appointment On January 21, 2015, the board of directors of Mobivity Holdings Corp. appointed William Van Epps to serve as executive chairman of the Company. In connection with the appointment, the Company entered into an employment agreement dated January 19, 2015 with Mr. Van Epps. Pursuant to his employment agreement, the Company has agreed to pay Mr. Van Epps a base salary $310,000, subject to annual review by the board. The Company has also agreed to pay Mr. Van Epps a signing bonus of 50,000 shares of the Company’s common stock. 2015 Private Placement In March 2015, we conducted the private placement of our securities for the gross proceeds of $4,805,000. In the private placement, we sold 4,805,000 units of our securities at a price of $1.00 per unit. Each unit consists of one share of our common stock and a common stock purchase warrant to purchase one-quarter share of our common stock, over a five year period, at an exercise price of $1.20 per share. We entered into a Registration Rights Agreement with the investors, pursuant to which we agreed to cause a resale registration statement covering the common shares made part of the units to be filed by April 30, 2015. The Registration Rights Agreement also provides that we must make certain payments as liquidated damages to the investors if it fails to timely file the registration statement and cause it to become effective. Emerging Growth Equities, Ltd. (“EGE”) acted as placement agent for the private placement and received $234,500 in commissions from us. In addition, for its services as placement agent, we issued to EGE warrants to purchase an aggregate of 234,500 units, as defined above, exercisable for a period of five years from the closing date, at an exercise price of $1.00 per unit. REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors Mobivity Holdings Corp. Chandler, AZ 85225 We have audited the accompanying balance sheets of SmartReceipt, Inc. (the “Company”) as of December 31, 2013 and 2012 and the related statements of operations, stockholders' equity (deficit) and cash flows for the twelve month periods then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial positions of the Company as of December 31, 2013 and 2012 and the results of its operations and cash flows for the periods described above in conformity with accounting principles generally accepted in the United States of America. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has incurred recurring operating losses and negative cash flows from operations and is dependent on additional financing to fund operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are described in Note 1 to the financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. /s/ M&K CPAS, PLLC www.mkacpas.com Houston, Texas May 19, 2014 SmartReceipt, Inc Balance Sheets
See accompanying notes to consolidated financial statements (audited).
SmartReceipt, Inc Notes to Financial Statements 1. Summary of significant accounting policies Nature of operations SmartReceipt, Inc (the “Company”) a marketing solutions company whose software products transform traditional retail transaction receipts for into engaging "smart" receipts that feature coupons and special offers for consumers. The Company employs a SaaS-based monthly recurring revenue business model with most of its client base within the Quick Serve Restaurant (QSR) industry. Its customers pay a set monthly fee per location for use of the service. SmartReceipt's solution is compatible with over 80% of Point-of-Sale (POS) systems available in the marketplace today and transmits the printed receipt data from POS systems to SmartReceipt's cloud-based platform, enabling the QSR to store transactional data and dynamically control the receipt content in real-time. Basis of presentation The accompanying financial statements have been prepared in accordance with generally accepted accounting principles (“GAAP”) as promulgated in the United States of America. Going concern The Company’s financial statements have been prepared assuming that they will continue as a going concern. Such assumption contemplates the realization of assets and satisfaction of liabilities in the normal course of business. However, the Company has incurred losses through the year ended December 31, 2013, has a net working capital deficiency as of December 31, 2013, and has an accumulated deficit of $15,151,341 as of December 31, 2013. These factors among others create a substantial doubt about the Company’s ability to continue as a going concern. The Company is dependent upon sufficient future revenues or obtaining financing in order to meet the Company’s operating cash requirements. Barring the Company’s generation of revenues in excess of its costs and expenses or its obtaining additional funds from equity or debt financing, the Company will not have sufficient cash to continue to fund the operations of the Company through June 30, 2014. These financial statements do not include any adjustments that might result from the outcome of this uncertainty. 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 asset impairments, the valuation and useful lives of depreciable tangible assets, and the valuation allowance of deferred tax assets. Management believes that these estimates are reasonable; however, actual results may differ from these estimates. Cash and cash equivalents The Company considers all investments with an original maturity of three months or less to be cash equivalents. Cash equivalents primarily represent funds invested in money market funds, bank certificates of deposit and U.S. government debt securities whose cost equals fair market value. At December 31, 2013 and 2012, respectively, the Company had no cash equivalents. Derivative Financial Instruments We do not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks. We review the terms of the common and preferred stock, warrants and convertible debt we issue to determine whether there are embedded derivative instruments, including embedded conversion options, which are required to be bifurcated and accounted for separately as derivative financial instruments. In circumstances where the host instrument contains more than one embedded derivative instrument, including the conversion option, that is required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument. Bifurcated embedded derivatives are initially recorded at fair value and are then revalued at each reporting date with changes in the fair value reported as non-operating income or expense. When the equity or convertible debt instruments contain embedded derivative instruments that are to be bifurcated and accounted for as liabilities, the total proceeds received are first allocated to the fair value of all the bifurcated derivative instruments. The remaining proceeds, if any, are then allocated to the host instruments themselves, usually resulting in those instruments being recorded at a discount from their face value. The fair values of the derivatives are estimated using a Monte Carlo simulation model. The model utilizes a series of inputs and assumptions to arrive at a fair value at the date of inception and each reporting period. Some of the key assumptions include the likelihood of future financing, stock price volatility, and discount rates. Accounts receivable Accounts receivable are carried at their estimated collectible amounts. The Company grants unsecured credit to substantially all of its 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 the Company cannot necessarily predict future changes in the financial stability of our customers, the Company cannot guarantee that its reserves will continue to be adequate. The Company’s allowance for doubtful accounts totaled 55,963 and $0at December 31, 2013 and 2012, respectively. As of December 31, 2013, the Company had one customer customers whose balance represented 89% of accounts receivable. As of December 31, 2012, the Company had four customers whose balances represented 45%, 22%, 18% and 11% accounts receivable. Revenue recognition The Company generates revenue from licensing its software to clients in its software as a service (Saas) model. Our SmartReceipt platform, which is a hosted solution, revenue is principally derived from subscription fees from customers. The subscription fee is billed on a month to month basis with primarily no contractual term and is collected by cash. Cash received in advance of the performance of services is recorded as deferred revenue. The Company recognizes revenue at the time that the services are rendered, the selling price is fixed, and collection is reasonably assured, provided no significant obligations remain. The Company considers authoritative guidance on multiple deliverables in determining whether each deliverable represents a separate unit of accounting. During the year ended December 31, 2013 and 2012, one customer accounted for 32% and 54%, respectively, of our revenues. Income taxes We account for income taxes using the assets and liability method, which recognizes deferred tax assets and liabilities determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to affect taxable income. Valuation allowances are established to reduce deferred tax assets when, based on available objective evidence, it is more likely than not that the benefit of such assets will not be realized. We recognize in the consolidated financial statements only those tax positions determined to be more likely than not of being sustained. The actual income tax provisions differ from the expected amounts calculated by applying the statutory income tax rate to the Company’s loss before income taxes. The components of these differences are as follows at December 31, 2013 and 2012:
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, including our derivative liabilities. The following table summarizes our financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2013:
The following table summarizes our financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2012:
The change in fair value of these liabilities is included in other income (expense) in the statements of operations. The assumptions used in the Monte-Carlo simulation used to value the derivative liabilities involve expected volatility in the price of our common stock, estimated probabilities related to the occurrence of a future financing, and interest rates. As all the assumptions employed to measure this liability are based on management’s judgment using internal and external data, this fair value determination is classified in Level 3 of the valuation hierarchy. See Note 3 for a table that provides a reconciliation of the derivative liabilities from December 31, 2011 to December 31, 2013. Recently adopted 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 July 2013, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2013-11: Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. The new guidance requires that unrecognized tax benefits be presented on a net basis with the deferred tax assets for such carryforwards. This new guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2013. We do not expect the adoption of the new provisions to have a material impact on our financial condition or results of operations. In February 2013, FASB issued ASU No. 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income, to improve the transparency of reporting these reclassifications. Other comprehensive income includes gains and losses that are initially excluded from net income for an accounting period. Those gains and losses are later reclassified out of accumulated other comprehensive income into net income. The amendments in the ASU do not change the current requirements for reporting net income or other comprehensive income in financial statements. All of the information that this ASU requires already is required to be disclosed elsewhere in the financial statements under U.S. GAAP. The new amendments will require an organization to:
The amendments apply to all public and private companies that report items of other comprehensive income. Public companies are required to comply with these amendments for all reporting periods (interim and annual). The amendments are effective for reporting periods beginning after December 15, 2012, for public companies. Early adoption is permitted. The adoption of ASU No. 2013-02 did not have a material impact on our financial position or results of operations. In January 2013, the FASB issued ASU No. 2013-01, Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities, which clarifies which instruments and transactions are subject to the offsetting disclosure requirements originally established by ASU 2011-11. The new ASU addresses preparer concerns that the scope of the disclosure requirements under ASU 2011-11 was overly broad and imposed unintended costs that were not commensurate with estimated benefits to financial statement users. In choosing to narrow the scope of the offsetting disclosures, the Board determined that it could make them more operable and cost effective for preparers while still giving financial statement users sufficient information to analyze the most significant presentation differences between financial statements prepared in accordance with U.S. GAAP and those prepared under IFRSs. Like ASU 2011-11, the amendments in this update will be effective for fiscal periods beginning on, or after January 1, 2013. The adoption of ASU 2013-01 did not have a material impact on our financial position or results of operations. In October 2012, the FASB issued ASU 2012-04, “Technical Corrections and Improvements” in Accounting Standards Update No. 2012-04. The amendments in this update cover a wide range of Topics in the Accounting Standards Codification. These amendments include technical corrections and improvements to the Accounting Standards Codification and conforming amendments related to fair value measurements. The amendments in this update will be effective for fiscal periods beginning after December 15, 2012. The adoption of ASU 2012-04 is not expected to have a material impact on our financial position or results of operations. In August 2012, the FASB issued ASU 2012-03, “Technical Amendments and Corrections to SEC Sections: Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin (SAB) No. 114, Technical Amendments Pursuant to SEC Release No. 33-9250, and Corrections Related to FASB Accounting Standards Update 2010-22 (SEC Update)” in Accounting Standards Update No. 2012-03. This update amends various SEC paragraphs pursuant to the issuance of SAB No. 114. The adoption of ASU 2012-03 is not expected to have a material impact on our financial position or results of operations. In July 2012, the FASB issued ASU 2012-02, "Testing Indefinite-Lived Intangible Assets for Impairment" in Accounting Standards Update No. 2012-02. ASU 2012-2 allows entities to use a qualitative approach to test indefinite-lived intangible assets for impairment. ASU No. 2012-02 permits an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of the indefinite-lived intangible asset is less than its carrying value. If it is concluded that this is the case, it is necessary to perform the currently prescribed quantitative impairment test. Otherwise, the quantitative impairment test is not required. ASU No. 2012-02 is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012, with early adoption permitted. The adoption of the provisions of ASU No. 2012-02 will not have a material impact on the Company's financial position or results of operations. 2. Deferred revenue Deferred revenue from all customers was $194,506 and $327,055 for the years ended December 31, 2013 and 2012, respectively. In November 2010, the Company entered into a Resale Purchase Agreement with NCR Government Systems (“NCR”). Pursuant to the agreement, the Company granted NCR a license to use certain of its software for a period of five years. Consideration for the license consisted of $530,000 in cash, all of which was collected in 2010. The Company is recognizing the $530,000 received for the license over five years. The Company recognized revenue of $120,000 and $120,000 for the years ended December 31, 2013 and 2012, respectively, related to this transaction, and deferred revenue at December 31, 2013 and 2012 from NCR totaled $191,042 and $307,990, respectively. 3. Derivative Liabilities Related to convertible notes payable As discussed in Note 4 under Convertible Notes, we previously issued convertible notes payable that included down round price protection. On November 4, 2013, we converted all of the outstanding convertible notes payable into Series Seed preferred stock, Series Prime preferred stock and common stock. At that time, the derivative liabilities related to the down round protection totaling $1,039,372 were reclassified to equity. Related to preferred stock and preferred stock warrants Series A, Series A-1, and Series A-2 preferred stock, as well as Series A-2 warrants included down round protection. We recorded derivative liabilities related to the down round price protection on the common shares and the warrants at the issuance date for each security and recorded a fair market value adjustment at the end of each reporting period. On November 4, 2013, we converted all of the Series A, Series A-1, and Series S-2 preferred stock into Series Seed preferred stock, Series Prime preferred stock and common stock. At that time, the derivative liabilities related to the down round protection totaling $5,754,268 were reclassified to equity. Summary The fair values of our derivative liabilities are estimated at the issuance date and are revalued at each subsequent reporting date using a Monte Carlo simulation discussed below. At December 31, 2013 and 2012, we recorded current derivative liabilities of $0 and $6,750,659, respectively, which are detailed by instrument type in the table below. The net change in fair value of the derivative liabilities for the years ended December 31, 2013 and 2012 was a gain of $235,690 and a gain of $1,484,678, respectively. The following table presents the derivative liabilities by instrument type as of December 31, 2013 and 2012:
The following table presents details of the Company’s derivative liabilities from December 31, 2011 to December 31, 2013:
An independent valuation expert calculated the fair value of the compound embedded derivatives using a complex, customized Monte Carlo simulation model suitable to value path dependent American options. The model uses the risk neutral methodology adapted to value corporate securities. This model utilized subjective and theoretical assumptions that can materially affect fair values from period to period. Key inputs and assumptions used in valuing our derivative liabilities are as follows for issuances of derivatives due to notes, preferred stock and preferred warrants:
The Company recorded derivative liabilities as a result of: (i) the down round price protection in the preferred stock and warrants; and (ii) the down round price protection in the convertible debt. These liabilities were valued with the assistance of a valuation consultant using a Monte-Carlo simulation model. The assumptions used in the Monte-Carlo simulation used to value the derivative liabilities involve expected volatility in the Company’s common stock, estimated probabilities related to the occurrence of a future financing, and interest rates. As all the assumptions employed to measure these liabilities are based on management’s judgment using internal and external data, this fair value determination is classified in Level 3 of the valuation hierarchy. 4. Notes Payable Summary Prior to December 31, 2011 we had $775,000 in notes payable outstanding to various investors of which the notes did not include a convertible feature. In May 2012 and August 2012 we issued another $618,000 in notes, and converted this principal of $1,393,000 and $62,228 in accrued interest into a series of convertible notes payable at 5% interest. The convertible notes contained down round and we recorded discounts to the convertible notes. The discounts were amortized to interest expense over the term of the convertible notes using the effective interest method. We determined that the down round protection represented embedded derivative features, and these were recorded as derivative liabilities at their respective issuance dates with the offset to debt discounts, which in turn were amortized into interest expense over the term of the attached note. See Note 3. We issued notes payable of $45,000 and $105,000 in 2011 and 2012, respectively, to the Company’s CEO. These were emergency bridge loans referred to as “Accounts Payable Notes”. These notes carried 8% interest and were not convertible. In 2012 we issued promissory notes to three employees for deferred compensation of $124,069. These notes carried no interest and were not convertible. During the year ended December 31, 2012 payments of $20,296 were made, leaving a balance at year-end of $103,773. In 2013 we issued promissory notes to 5 employees for deferred compensation and settlements of 353,265; of which $130,000 are considered related party transactions. During the year ended December 31, 2013, payments of $123,973 were made, leaving a balance of $333,065. As these notes do not bear interest, the Company imputed interest at a rate of 8% on these promissory notes of $9,661 and $2,752 for the years ended December 31, 2013 and 2012, respectively. The following table summarizes information relative to the outstanding notes at December 31, 2013 and 2012:
Following is a detailed discussion of the note transactions. Convertible and Non-Convertible Notes As of January 1, 2012, the principal balance on our outstanding notes totaled $775,000. The notes carried 5% interest and were not convertible. In January 2012 we issued additional notes in the aggregate of $75,000. In February 2012 we issued additional notes in the aggregate of $50,000. In March 2012 we issued additional notes in the aggregate of $25,000. In April we issued additional notes in the aggregate of $75,000. In May we issued additional notes in the aggregate of $225,000. On May 18, 2012 the combined principal of $1,225,000 and interest of $62,228 was converted into the 2012 convertible notes payable with a new aggregate principal balance of $1,287,228. These notes carried 5% interest and were automatically convertible upon the closing of $2,000,000 in financing at the latest financing price, and with a maturity date of one year from date of issue. As a result of this issuance a derivative was issued with the fair value of $1,109,128 which was recorded as a derivative liability with the offset as a debt discount. During the years ended December 31, 2013 and 2012, $419,342 and $689,786 were recorded as amortization into interest expense. As of December 31, 2013 and 2012, the debt discount balance was $0 and $419,342, respectively. In August 2012 an additional convertible note in the amount of $30,000 was issued. This note carried 5% interest and was automatically convertible upon the closing of $2,000,000 in financing at the latest financing price, and with a maturity date of May 18, 2013. As a result of this issuance a derivative was issued with the fair value of $19,660 which was recorded as a derivative liability with the offset as a debt discount. During the years ended December 31, 2013 and 2012, $9,902 and $9,758 were recorded as amortization into interest expense. As of December 31, 2013 and 2012, the debt discount balance was $0 and $9,902, respectively. In November 2012, we issued additional convertible notes in the aggregate of $40,000. These notes carried 5% interest and were automatically convertible upon the closing of $2,000,000 in financing at the latest financing price, and with a maturity date of one year from issuance. As a result of this issuance a derivative was issued with the fair value of $23,367 which was recorded as a derivative liability with the offset as a debt discount. During the years ended December 31, 2013 and 2012, $19,728 and $3,639 were recorded as amortization into interest expense. As of December 31, 2013 and 2012, the debt discount balance was $0 and $19,728, respectively. In December 2012, we issued additional convertible notes in the aggregate of $98,000. These notes carried 5% interest and were automatically convertible upon the closing of $2,000,000 in financing at the latest financing price, and with a maturity date of one year from issuance. As a result of this issuance a derivative was issued with the fair value of $63,389 which was recorded as a derivative liability with the offset as a debt discount. During the years ended December 31, 2013 and 2012, $59,937 and $3,452 were recorded as amortization into interest expense. As of December 31, 2013 and 2012, the debt discount balance was $0 and $59,937, respectively. In February 2013 we issued additional convertible notes in the aggregate of $292,637. These notes carried 10% interest and held a maturity date of June 1, 2013 and were automatically convertible upon the closing of $2,000,000 in financing at the latest financing price. As a result of this issuance a derivative was issued with the fair value of $155,117 which was recorded as a derivative liability with the offset as a debt discount. During the year ended December 31, 2013, $155,117 was recorded as amortization into interest expense. In April 2013 we issued additional convertible notes in the aggregate of $167,221. These notes carried 10% interest and held a maturity date of June 1, 2013 and were automatically convertible upon the closing of $2,000,000 in financing at the latest financing price. As a result of this issuance a derivative was issued with the fair value of $92,183 which was recorded as a derivative liability with the offset as a debt discount. During the year ended December 31, 2013, $92,183 was recorded as amortization into interest expense. In May 2013 we issued additional convertible notes in the aggregate of $58,600. These notes carried 10% interest and held a maturity date of June 1, 2013 and were automatically convertible upon the closing of $2,000,000 in financing at the latest financing price. As a result of this issuance a derivative was issued with the fair value of $31,371 which was recorded as a derivative liability with the offset as a debt discount. During the year ended December 31, 2013, $31,371 was recorded as amortization into interest expense. In June 2013 we issued additional non-convertible notes in the aggregate of $58,600. These notes carried 10% interest and held a maturity date of July 5, 2013. In July 2013 we issued additional non-convertible notes in the aggregate of $82,000. These notes carried 10% interest and held a maturity date of July 15, 2013. In August 2013 we issued additional non-convertible notes in the aggregate of $33,000. These notes carried 10% interest and held a maturity date of August 1, 2013. In September 2013 we issued additional non-convertible notes in the aggregate of $85,000. These notes carried 10% interest and held a maturity date of September 18, 2013. On November 4, 2013, in conjunction with the reverse split and recapitalization, the convertible and non-convertible notes and accrued interest were converted into shares of common stock, series seed preferred, series prime preferred. Principal and interest outstanding of $2,523,563 was converted into $1,194,219 series prime preferred, $1,044,359 series seed preferred, and $284,985 into common stock. During the years ended December 31, 2013 and 2012, we recorded convertible note discount amortization to interest expense of $787,579 and $706,636, respectively. Accounts Payable Notes As of January 1, 2012 the principal balance on our accounts payable notes totaled $45,000. These notes were issued to our CEO for emergency capital to cover key payables. The notes carried 8% interest and were not convertible, holding a maturity date of May 18, 2013. In May 2012 we issued an additional note in the amount of $5,000. In August 2012 we issued an additional note in the amount of $25,000. In September we issued additional notes in the aggregate of $50,000. In October 2012 we issued an additional note in the amount of $25,000. On November 4, 2013, in conjunction with the reverse split and recapitalization, the accounts payable notes principal and accrued interest of $165,000 were converted into series seed preferred. Deferred Compensation Promissory Notes In 2012 we issued a series of promissory notes in exchange for deferred compensation. These notes carried no interest and carried variable maturity dates. In August 2012 we issued a promissory note in the amount of $70,748. In September 2012 we issued a promissory note in the amount of $15,417. In October we issued a promissory note in the amount of $37,904. In 2012 payments of $20,296 were made against the promissory notes. In December 2013 we issued additional promissory notes in the aggregate of $63,265. In 2013 payments of $111,473 were made against the promissory notes Settlement Notes In November 2013 we entered into notes payable with certain former employees in settlement of amounts purported to be due for compensation and loan repayment. These notes had a maturity date of December 31, 2014, and were secured by the assets of the company. Notes were issued in the aggregate of $290,000 of which $130,000 was issued to two related party individuals and $160,000 was issued to a third party individual. One repayment of $12,500 was made in December 2013. As the deferred compensation and settlement notes do not bear interest, the Company imputed interest at a rate of 8% on these promissory notes of $9,661 and $2,752 for the years ended December 31, 2013 and 2012, respectively. Summary of Notes Payable and Accrued Interest The following table summarizes our notes payable and accrued interest as of December 31, 2013 and 2012:
Interest Expense The following table summarizes interest expense for the years ended December 31, 2013 and 2012:
5. Equity Common and Preferred Stock 2012 As of December 31, 2012 and December 31, 2011 the Company had 14,711,337 shares issued and outstanding. Convertible Preferred Stock Series A (“Series A”) shares were sold during 2007 for $0.385 per share and were convertible into future equity issuances at that rate; subject to down round protection based on the future equity price. This down round protection was bifurcated and valued at its fair value at issuance and at each reporting date. Holders of the Series A stock, in the event of a liquidation event, received the original purchase price prior to any proceeds going to the common stock holders as well as up to $1.00 per share on a pro-rata basis along with common stock holders. Each share of Series A stock is convertible on a one-for-one basis into common shares at any time. Convertible Preferred Stock Series A-1 (“Series A-1”) shares were sold during 2008 for $0.42 per share and were convertible into future equity issuances at that rate; subject to down round protection based on the future equity price. This down round protection was bifurcated and valued at its fair value at issuance and at each reporting date. Holders of the Series A-1 stock, in the event of a liquidation event, received the original purchase price prior to any proceeds going to the common stock holders as well as up to $1.00 per share on a pro-rata basis along with common stock holders. Each share of Series A-1 stock is convertible on a one-for-one basis into common shares at any time. Convertible Preferred Stock Series A-2 (“Series A-2”) shares were sold during 2009 and 2010 for $0.486 per share and were convertible into future equity issuances at that rate; subject to down round protection based on the future equity price. This down round protection was bifurcated and valued at its fair value at issuance and at each reporting date. Holders of the Series A-2 stock, in the event of a liquidation event, received the original purchase price prior to any proceeds going to the common stock holders as well as up to $1.00 per share on a pro-rata basis along with common stock holders. Each share of Series A-2 stock is convertible on a one-for-one basis into common shares at any time. Convertible Preferred Stock Series A-2 Warrants (“Series A-2 Warrants”) were sold during 2009 and 2010 attached to the Series A-2 shares and were convertible into future equity issuances at that rate; subject to down round protection based on the future equity price. This down round protection was bifurcated and valued at its fair value at issuance and at each reporting date. Holders of the Series A-2 Warrants were entitled to receive dividends at the same rate as common shares. Each Series A-2 Warrant is convertible at the original exercise price into common shares at any time. No shares were issued during the year ended December 31, 2012. 2013 As of December 31, 2013 and December 31, 2012 the Company had 36,243,560 and 14,711,337, respectively, of shares issued and outstanding. Convertible Preferred Series Prime (“Series Prime”) shares were sold during 2013 for $36.45 per share and were convertible into common stock at that rate. Holders of the Series Prime shares, in the event of a liquidation event, received the original purchase price prior to any proceeds going to the common stock holders as well as up to $75.00 per share on a pro-rata basis along with common stock holders. Each share of Series Prime stock is convertible on a one-for-one basis into common shares at any time. Convertible Preferred Series Seed Series (“Series Seed”) shares were sold during 2013 for $0.05583 per share and were convertible into common shares at that rate. Holders of the Series Seed stock, in the event of a liquidation event, received the original purchase price prior to any proceeds going to the common stock holders. Each share of Series Seed stock is convertible into common shares at any time at the original purchase price. On November 4, 2013, in an effort to recapitalize the Company, the Series A shares of 2,253,246, with a value of $2,253, the Series A-1 shares of 1,541,666, with a value of $1,542 and the Series A-2 shares of 4,806,460, with a value of $4,806 were converted into 65,532 shares of Series Prime shares with a value of $66 and 44,663 shares of common stock with a value of $45; the remaining balance of value of $8,491 was recorded to additional paid-in-capital. In addition, 14,349,910 shares of Series Seed shares were sold to investors for cash of $281,319. On November 4, 2013, at the same time as the recapitalization transaction, principal and accrued interest totaling $1,194,219 was converted into 32,763 shares of Series Prime. In addition, $284,985 of principal and accrued interest was converted into 7,819 shares of Common Stock. Finally, $1,209,359 of principal and accrued interest was converted into 21,661,459 shares of Series Seed. As a result of these conversions, the associated derivatives with the debt balances were settled into additional paid in capital in the amounts of $1,039,372 for the debt, $3,799,638 for the preferred shares and $1,954,630 for the preferred warrants. On November 4, 2013, the 4,111,103 Series A-2 Warrants were primarily cancelled, except for 10,418 post-split Warrants which were converted into Common Stock Warrants with an exercise price of $36.45 into shares of common stock. The common stock warrants included down round protection. The fair value of the common stock warrants was $104. Key inputs and assumptions used in valuing our common stock warrants were as follows:
On November 4, 2013, the Company completed a 75 to 1 reverse split of its common stock which transferred the amount of $6,029 from Common Stock to additional paid in capital. Additional Paid-in-capital During the years ended December 31, 2013 and 2012, we imputed interest on debt of $9,661 and $2,752, respectively. Stock-based Plans We have the 2004 Incentive Stock Option Plan under which we have granted stock options to our directors, officers and employees. At December 31, 2013, 6,085,015 shares were authorized under the plans and 261,716 shares were available for future grant. We believe that such awards better align the interests of our directors, officers and employees with those of our shareholders. Option awards are generally granted with an exercise price that equals the fair market value of our stock at the date of grant. These option awards generally vest based on four years of continuous service and have 10-year contractual terms. The following table summarizes stock option activity under our stock-based plans as of and for the year ended December 31, 2013:
The aggregate intrinsic value of options was calculated as the difference between the exercise price of the underlying awards and the quoted price of our common stock. At December 31, 2013, no options to purchase shares of common stock were in-the-money. The weighted average grant-date fair value of options granted during the years 2013 and 2012 was $0.00 and $0.23, respectively. On January 1, 2012 the Company granted eight employees 6,369 options to purchase shares of Company common stock at the price of $11.25 per share. The options vest 100% immediately. The total estimated value using the Black-Scholes Model, based on a volatility rate of 114.98% and a call option value of $16.33 was $103,988. On January 1, 2012 the Company granted one employee 666 options to purchase shares of Company common stock at the price of $11.25 per share. The options vest 100% immediately. The total estimated value using the Black-Scholes Model, based on a volatility rate of 114.94% and a call option value of $16.74 was $11,147. On February 6, 2012 the Company granted one employee 99 options to purchase shares of Company common stock at the price of $22.50 per share. The options vest 100% immediately. The total estimated value using the Black-Scholes Model, based on a volatility rate of 107.91% and a call option value of $15.50 was $1,534. On February 6, 2012 the Company granted one employee 99 options to purchase shares of Company common stock at the price of $22.50 per share. The options vest 25% at one year, then 1/48 per month for 48 months thereafter. The total estimated value using the Black-Scholes Model, based on a volatility rate of 104.14% and a call option value of $16.15 was $1,598. On August 23, 2012 the Company granted two employees 1,999 options to purchase shares of Company common stock at the price of $7.50 per share. The options vest 1/24 per month for 24 months. The total estimated value using the Black-Scholes Model, based on a volatility rate of 105.18% and a call option value of $17.78 was $35,539. On August 31, 2012 the Company granted two employees 231 options to purchase shares of Company common stock at the price of $7.50 per share. The options vest immediately. The total estimated value using the Black-Scholes Model, based on a volatility rate of 107.98% and a call option value of $17.78 was $4,074. On September 15, 2012 the Company granted one employee 999 options to purchase shares of Company common stock at the price of $11.25 per share. The options vest 1/12 per month for 12 months. The total estimated value using the Black-Scholes Model, based on a volatility rate of 106.97% and a call option value of $17.06 was $17,030. On September 15, 2012 the Company granted one employee 205 options to purchase shares of Company common stock at the price of $7.50 per share. The options vest immediately. The total estimated value using the Black-Scholes Model, based on a volatility rate of 107.92% and a call option value of $17.64 was $3,616. On September 30, 2012 the Company granted eleven employees 8,818 options to purchase shares of Company common stock at the price of $7.50 per share. The options vest immediately. The total estimated value using the Black-Scholes Model, based on a volatility rate of 108.31% and a call option value of $17.65 was $155,624. On October 2, 2012 the Company granted eight employees 2,928 options to purchase shares of Company common stock at the price of $11.25 per share. The options vest immediately. The total estimated value using the Black-Scholes Model, based on a volatility rate of 106.29% and a call option value of $17.01 was $49,681. On October 2, 2012 the Company granted four employees 3,463 options to purchase shares of Company common stock at the price of $11.25 per share. The options vest 1/48 per month for 48 months. The total estimated value using the Black-Scholes Model, based on a volatility rate of 103.59% and a call option value of $17.31 was $59,961. On October 2, 2012 the Company granted one employee 399 options to purchase shares of Company common stock at the price of $11.25 per share. The options vest 25% at one year, 1/48 per month for 48 months thereafter. The total estimated value using the Black-Scholes Model, based on a volatility rate of 103.59% and a call option value of $17.35 was $6,922. On October 2, 2012 the Company granted one employee 266 options to purchase shares of Company common stock at the price of $22.50 per share. The options vest immediately. The total estimated value using the Black-Scholes Model, based on a volatility rate of 103.59% and a call option value of $15.38 was $4,091. Stock-based Compensation Expense The impact on our results of operations of recording stock-based compensation expense for years ended December 31, 2013 and 2012 was as follows:
As of December 31, 2013, there was approximately $77,464 of unearned stock-based compensation that will be expensed from 2014 through 2016. If there are any modifications or cancellations of the underlying unvested awards, we may be required to accelerate, increase or cancel all or a portion of the remaining unearned stock-based compensation expense. Future unearned stock-based compensation will increase to the extent we grant additional equity awards. Stock Option Valuation Assumptions We calculated the fair value of each stock option award on the date of grant using the Black-Scholes option pricing model. The ranges of assumptions were used for the years ended December 31, 2013 and 2012:
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 prior to 2013 is based on the historical volatility of publicly traded surrogates in our peer group. 6. Commitments and contingencies The Company had no operating leases or other commitments with terms in excess of one year as of December 31, 2013 and 2012, except as noted below. Office lease The Company has a lease agreement for 3,310 square feet, as amended, for its office facilities in Santa Barbara, CA through September 2014. Monthly rental payments, excluding common area maintenance charges, are $5,814 in 2014 At December 31, 2013, future minimum payments under the operating lease total $52,325. Rent expense under the lease agreement for the years ended December 31, 2013 and 2012 totaled $72,382 and $79,440, respectively. 7. Related party transactions In May 2012, the company issued a convertible note payable to Jay Ferro, then CEO and greater than 10% shareholder in the amount of $75,000. In May 2012, the company issued a convertible note payable to Michael Howe, greater than 10% shareholder in the amount of $317,600. In May 2012, the company issued a convertible note payable to Arthur J. Rice, greater than 10% shareholder in the amount of $132,000. In May 2012, the company issued a convertible note payable to Dave Chambers, greater than 10% shareholder in the amount of $126,456. From May through October 2012, the company issued non-convertible notes payable (the “accounts payable notes”) to Jay Ferro, CEO and greater than 10% shareholder in the aggregate of $105,000. In November and December 2012, the company issued a series of convertible notes payable to Arthur J. Rice, greater than 10% shareholder in the aggregate amount of $48,000. In December 2012 the company issued a convertible note payable, Jay Ferro, CEO and greater than 10% shareholder in the amount of $10,000. From February to September 2013, the company issued a series of convertible and non-convertible notes payable to Arthur J. Rice, greater than 10% shareholder in the aggregate amount of $185,951. From February to September 2013, the company issued a series of convertible and non-convertible notes payable to Eric Kanowski, CEO in the aggregate amount of $132,893. From February to September 2013, the company issued a series of convertible and non-convertible notes payable to Dave Chambers, greater than 10% shareholder in the aggregate amount of $211,411. In February through May 2013, the company issued a series of convertible notes payable to Michael Howe, greater than 10% shareholder in the aggregate amount of $97,500. In November 2013, the company issued a note payable to Jay Ferro, former (at that time) CEO and greater than 10% shareholder in the amount of $60,000. In November 2013, the Company sold 11,067,041 shares of Series Seed Preferred Stock to 6 related party investors for net cash receipts of $216,961. 8. Subsequent events On March 12, 2014, Mobivity Holdings Corp. (“Mobivity”) acquired the assets of the Company, pursuant to an asset purchase agreement dated March 12, 2014, between Mobivity, the Company, and the members of the Company. Pursuant to the asset purchase agreement, Mobivity acquired all of the assets of the Company, and assumed a commercial lease, in consideration of Mobivity’s payment of $2,368,019 and issuance of 504,884 shares of Mobivity common stock, and an earn-out payment described below. The assets and liabilities acquired from the Company consisted of, accounts receivable, deferred revenues, all rights under all contracts other than excluded contracts, and all technology and intellectual property rights. The Company’s earn-out payment of 200% of the “eligible revenue” of the Company over the 12 month period following the close of the transaction (“earn-out period”). The “eligible revenue” will consist of: 100% of Company revenue derived during the earn out period from the sale of SmartReceipt products and services to certain SmartReceipt clients as of the close (the “designated SmartReceipt clients”); plus 50% of Company revenue derived during the earn out period from the sale of Company products and services to the designated SmartReceipt clients, plus 50% of the Company revenue derived during the earn out period from the sale of SmartReceipt products and services to Company clients who are not designated SmartReceipt clients. The earn-out payment will be payable in common shares of the Company (valued at the Closing VWAP) no later than the 90th day following the end of the earn-out period. For purposes of the foregoing, the “Closing VWAP” means the volume weighted average trading price of the Company’s common stock for the 90 trading days preceding the initial close of the transactions under the Asset Purchase Agreement. Pursuant to the Asset Purchase Agreement, SmartReceipt has agreed that 50% of the shares issuable to SmartReceipt or its shareholders at the initial closing will be held back by the Company for a period of 12 months and will be subject to cancellation based on indemnification claims of the Company. The asset purchase agreement contains customary representations, warranties and covenants by the parties, including each party’s agreement to indemnify the other against any claims or losses arising from their breach of the asset purchase agreement. The Company and its members have also agreed that for a period of three years following the closing not to engage in the business of providing interactive mobile marketing platforms or services or to solicit the pre-closing clients, vendors or employees of the Company, except in each case on behalf of Mobivity. SmartReceipt, Inc Mobivity Holdings Corp. Unaudited Pro Forma Condensed Consolidated Financial Statements On March 12, 2014, Mobivity Holdings Corp. (the “Company”) completed its acquisition of substantially all of the assets of SmartReceipt, Inc (“SmartReceipt”). The following unaudited pro forma condensed consolidated financial statements have been prepared to give effect to the completed acquisition, which was accounted for as a purchase. The unaudited pro forma condensed consolidated balance sheet as of December 31, 2013, and the unaudited pro forma condensed consolidated statements of operations for the year ended December 31, 2013, are presented herein. The unaudited pro forma condensed consolidated balance sheet was prepared using the historical balance sheets of the Company and SmartReceipt as of December 31, 2013. The unaudited pro forma condensed consolidated statements of operations were prepared using the historical statements of operations of the Company and SmartReceipt for the year ended December 31, 2013. The unaudited pro forma condensed consolidated balance sheet and statements of operations give effect to the acquisition as if it had been completed on January 1, 2013. The unaudited pro forma condensed consolidated financial statements presented are based on the assumptions and adjustments described in the accompanying notes. The unaudited pro forma condensed consolidated financial statements are presented for illustrative purposes and do not purport to represent what the financial position or results of operations actually would have been if the events described above occurred as of the dates indicated or what such financial position or results would be for any future periods. The unaudited pro forma condensed consolidated financial statements, and the accompanying notes, are based upon the respective historical consolidated financial statements of the Company and SmartReceipt and should be read in conjunction with the Company’s historical financial statements and related notes, and the Company’s "Management's Discussion and Analysis of Financial Condition and Results of Operation" contained elsewhere in this prospectus.
Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements Note 1. Basis of Presentation The unaudited pro forma condensed consolidated statements of operations of Mobivity Holdings Corp. (the “Company”) for The unaudited pro forma condensed consolidated statements of operations and unaudited pro forma condensed consolidated balance sheet were derived by adjusting the Company’s historical financial statements for the acquisition of substantially all of the assets of SmartReceipt. The unaudited pro forma condensed consolidated balance sheet and unaudited pro forma condensed consolidated statement of operations are provided for informational purposes only and should not be construed to be indicative of the Company’s financial position or results of operations had the transaction been consummated on the dates indicated and do not project the Company’s financial position or results of operations for any future period or date. The unaudited pro forma condensed consolidated balance sheet and unaudited condensed consolidated statements of operations and accompanying notes should be read in conjunction with the Company’s historical financial statements and related notes, and the Company’s “Management’s Discussion and Analysis of Financial Condition and Results of Operation” contained elsewhere in this prospectus. Note 2. Purchase Price Allocation The unaudited pro forma condensed consolidated financial statements reflect a purchase price of $5,313,524. Pursuant to the Asset Purchase Agreement, the Company acquired all of the assets of SmartReceipt in exchange for:
Pursuant to the Asset Purchase Agreement, SmartReceipt has agreed that 50% of the shares issuable to SmartReceipt or its shareholders at the initial closing will be held back by the Company for a period of 12 months and will be subject to cancellation based on indemnification claims of the Company.
Goodwill represents the excess of the purchase price over the fair value of the net assets acquired. Customer relationships are being amortized on a Note 3. Pro Forma Adjustments Pro Forma Adjustments The following pro forma adjustments are based upon the value of the tangible and intangible assets acquired as determined by an independent valuation firm.
PART II INFORMATION NOT REQUIRED IN PROSPECTUS Item 13. Other Expenses of Issuance and Distribution. The following table sets forth estimated expenses we expect to incur in connection with the resale of the shares being registered. All such expenses are estimated except for the SEC registration fee.
Item 14. Indemnification of Directors and Officers. (a)Certificate of Incorporation. Our Articles of Incorporation provide that to the fullest extent permitted by the Nevada General Corporation Law as the same exists or may hereafter be amended, a director of our corporation shall not be liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director. (b)Bylaws. Our Bylaws provide that we may indemnify our directors, officers, employees and other agents to the fullest extent permitted under the Nevada General Corporation Law. We have obtained liability insurance for our officers and directors. (c)Agreement. We have entered into separate indemnification agreements with each of our directors and officers. These agreements require us, among other things, to indemnify such persons against certain liabilities that may arise by reason of their status or service as directors or officers (other than liabilities arising from actions not taken in good faith or in a manner the indemnitee believed to be opposed to the best interests of our corporation), to advance their expenses incurred as a result of any proceeding against them as to which they could be indemnified. Item 15. Recent Sales of Unregistered Securities. Between November 2010 and June 2012, we conducted the private placement sale of our 10% Senior Secured Convertible Bridge Notes. We issued bridge notes to 45 purchasers in the aggregate principal amount of 4,984,721. Each of the purchasers were “accredited investors” as defined in Rule 501 under the Securities Act, expect for two purchasers who are relatives of one of our senior executive officers. The bridge notes accrued interest on the unpaid principal amount at the rate of 10% per annum. The entire principal amount of the bridge notes, plus all accrued and unpaid interest, was due on the earlier of (i) the date we completed a financing transaction for the offer and sale of shares of our common stock in an aggregate amount of no less than 125% of the principal amounts evidenced by the bridge notes (a “qualifying financing”), or (ii) a fixed maturity date, which initially was set at November 3, 2011 and later amended to October 15, 2013. On the maturity date of the bridge notes, in addition to the repayment of the principal amount and all accrued and unpaid interest, we agreed to issue to each holder of the bridge notes, at each such holder’s option, either a (i) three year warrant to purchase that number of shares of our common stock equal to the principal amount of (plus all accrued and unpaid interest on) the bridge notes held by the holder divided by the per share purchase price of the common stock offered and sold in the qualifying financing (the “offering price”) which warrants shall be exercisable at the offering price, or (ii) that number of shares of common stock equal to the product arrived at by multiplying (x) the principal amount of (plus all accrued and unpaid interest on) the bridge notes held by the holder, divided by the offering price and (y) 0.33. WFG Investments, Inc. and Emerging Growth Equities, Ltd. acted as selling agents on our behalf and we paid them selling commissions of $40,000 and $252,737, respectively. Each of the purchasers were “accredited investors” as defined in Rule 501 under the Securities Act, expect for two purchasers who are relatives of one of our senior executive officers. The shares were issued pursuant Section 4(a)(2) of the Securities Act and Rule 506 thereunder. Between March 2011 and November 2011, we conducted the private placement sale of 114,778 shares of our common stock at a price of $9.00 per share for the gross proceeds of $1,033,003. Each investor also received warrants to purchase an equivalent number of shares at an exercise price of $12.00. In October 2012, the exercise price of the warrants was reduced from $12.00 to $6.00 as a result of certain anti-dilution provisions contained in the warrant agreement. As a result of the June 2013 private placement described below, the exercise price of the warrants further reduced to $1.20 per share. There were no sales commissions paid in connection with the placement. Each of the purchasers were “accredited investors” as defined in Rule 501 under the Securities Act. The shares were issued pursuant Section 4(a)(2) of the Securities Act and Rule 506 thereunder. In April 2011, we issued 404,167 shares of our common stock to Adsparq, LLC in consideration of its transfer of certain assets to us. The shares were issued pursuant Section 4(a)(2) of the Securities Act. In April 2011, we issued 166,667 shares of our common stock to Mobivity, LLC and Mobile Visions, Inc. in consideration of their transfer of certain assets to us. The shares were issued pursuant Section 4(a)(2) of the Securities Act. August 2011, we issued 86,590 shares of our common stock to Digimark, LLC in consideration of its transfer of certain assets to us. In addition, in June 2013, we issued an additional 247,278 shares of our common stock to Digimark, LLC in satisfaction of an earn-out payable under the acquisition agreement between the parties. The shares were issued pursuant Section 4(a)(2) of the Securities Act. In May 2013, we issued 125,000 shares of our common stock to Sequence, LLC in consideration of its transfer of certain assets to us. The shares were issued pursuant Section 4(a)(2) of the Securities Act. In May 2013, we issued 1,166,667 shares of our common stock shares of our common stock to Front Door Insights, LLC in consideration of its transfer of certain assets to us. The shares were issued pursuant Section 4(a)(2) of the Securities Act. In June 2013, we issued 6,250,000 shares of our common stock at a price of $1.20 per share, for aggregate gross proceeds of $7.5 million. The shares were sold to 72 investors all of whom were “accredited investors” as such term is defined in Rule 501 under the Securities Act of 1933. Emerging Growth Equities, Ltd. acted as placement agent for the private placement and received $493,300 in commissions from us. In addition, for its services as placement agent, we issued to EGE warrants to purchase an aggregate of 605,910 shares of our common stock, exercisable for a period of five years from the closing date, at an exercise price of $1.20 per share. Each of the purchasers were “accredited investors” as defined in Rule 501 under the Securities Act. The shares were issued pursuant Section 4(a)(2) of the Securities Act and Rule 506 thereunder. In June 2013, we issued 4,462,089 shares of our common stock, at the conversion price of $1.20 per share, for the cancellation of outstanding principal of $4,984,721 and accrued interest of $369,786 under our outstanding 10% Senior Secured Convertible Bridge Notes. Each note holder also received a warrant to purchase that number of shares of our common stock calculated by dividing the outstanding principal amount plus accrued and unpaid interest of such note by the conversion price. There were no commissions or finders fees paid in connection with the issuance of these shares. Each of the purchasers were “accredited investors” as defined in Rule 501 under the Securities Act, expect for two purchasers who are relatives of one of our senior executive officers. The shares were issued pursuant Section 4(a)(2) of the Securities Act and Rule 506 thereunder. In March 2014, we acquired all of the assets of SmartReceipt, Inc. in exchange for, in addition to cash, 504,884 shares of our common stock. The shares were issued pursuant Section 4(a)(2) of the Securities Act. In March 2014, we conducted the private placement to certain accredited investors of 5,413,000 units of our securities at a price of $1.00 per unit for the gross proceeds of up to $5,413,000. Each unit consisted of one share of our common stock and a common stock purchase warrant to purchase In instances described above where we issued securities in reliance upon Rule 506 under the Securities Act, the stockholders who received the securities in such instance made representations that (a) the stockholder is acquiring the securities for his, her or its own account for investment and not for the account of any other person and not with a view to or for distribution, assignment or resale in connection with any distribution within the meaning of the Securities Act, (b) the stockholder agrees not to sell or otherwise transfer the purchased shares unless they are registered under the Securities Act and any applicable state securities laws, or an exemption or exemptions from such registration are available, (c) the stockholder has knowledge and experience in financial and business matters such that he, she or it is capable of evaluating the merits and risks of an investment in us, (d) the stockholder had access to all of our documents, records, and books pertaining to the investment and was provided the opportunity to ask questions and receive answers regarding the terms and conditions of the offering and to obtain any additional information which we possessed or were able to acquire without unreasonable effort and expense, (e) with regard to the two sales to non-accredited investors, the investors received prior to their investment decision disclosures substantially equivalent to that required by a registration statement on Form S-1, and (f) the stockholder has no need for the liquidity in its investment in us and could afford the complete loss of such investment. In addition, there was no general solicitation or advertising for the offered securities. In instances described above where we indicate that we relied upon Section 4(a)(2) of the Securities Act in issuing securities, our reliance was based upon the following factors: (a) the issuance of the securities was an isolated private transaction by us which did not involve a public offering; (b) there were only a limited number of offerees; (c) there were no subsequent or contemporaneous public offerings of the securities by us; (d) the securities were not broken down into smaller denominations; and (e) the negotiations for the sale of the stock took place directly between the offeree and us. Item 16. Exhibits and Financial Statement Schedules. Exhibit Number Description
* Filed herewith ** Indicates management compensatory plan, contract or arrangement
Item 17. Undertakings. (a)The undersigned Registrant hereby undertakes: (1)To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i)To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii)To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement; (iii)To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; (2)That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3)To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (4)For determining any liability under the Securities Act, treat each post-effective amendment that contains a form of prospectus as a new registration statement for the securities offered in the registration statement, and that offering of the securities at that time as the initial bona fide offering of those securities. (b)Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the provisions described herein, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. (c)That, for the purpose of determining liability under the Securities Act to any purchaser, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use. SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Form S-1 to be signed on its behalf by the undersigned, thereunto duly authorized, in Chandler, Arizona on
Pursuant to the requirements of the Securities Act of 1933, this
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