ITEM 1. CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (UNAUDITED)
Mobiquity Technology,
Inc.
Condensed
Consolidated Balance Sheets
|
|
June 30,
|
|
December 31,
|
|
|
2019
|
|
2018
|
|
|
(unaudited)
|
|
|
Assets
|
|
|
|
|
Current Assets
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
590,404
|
|
|
$
|
624,338
|
|
Accounts receivable (net of allowance for doubtful
accounts of $80,600 and $80,600, respectively)
|
|
|
2,997,180
|
|
|
|
2,479,363
|
|
Prepaid expenses and other current assets
|
|
|
216,870
|
|
|
|
11,700
|
|
Total Current Assets
|
|
|
3,804,454
|
|
|
|
3,115,401
|
|
|
|
|
|
|
|
|
|
|
Property and equipment (net of accumulated depreciation of $2,910 and $1,967, respectively)
|
|
|
17,138
|
|
|
|
6,662
|
|
Goodwill
|
|
|
11,837,408
|
|
|
|
7,425,433
|
|
Intangibles assets (net of accumulated amortization of $254,819 and $30,939, respectively)
|
|
|
2,748,857
|
|
|
|
1,825,419
|
|
|
|
|
|
|
|
|
|
|
Other assets
|
|
|
|
|
|
|
|
|
Security deposits
|
|
|
9,000
|
|
|
|
9,000
|
|
Member's Loan
|
|
|
–
|
|
|
|
131,649
|
|
Investment in corporate stock
|
|
|
2,114,093
|
|
|
|
4,284,444
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
20,530,950
|
|
|
$
|
16,798,008
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity
|
|
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
1,072,595
|
|
|
$
|
1,255,437
|
|
Accrued expenses
|
|
|
868,891
|
|
|
|
975,359
|
|
Notes payable
|
|
|
4,075,428
|
|
|
|
150,000
|
|
Total Current Liabilities
|
|
|
6,016,914
|
|
|
|
2,380,796
|
|
|
|
|
|
|
|
|
|
|
Long term portion convertible notes, net
|
|
|
4,024,492
|
|
|
|
–
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
|
10,041,406
|
|
|
|
2,380,796
|
|
|
|
|
|
|
|
|
|
|
Stockholders' Equity
|
|
|
|
|
|
|
|
|
AAA Preferred stock; 5,000,000 authorized; $0.0001 par value 944,232 and
1,090,588 shares issued and outstanding at June 30, 2019 and December 31, 2018
|
|
|
9,874,327
|
|
|
|
11,552,513
|
|
AAAA Preferred Stock; $.0001 par value; 1,250 shares authorized zero and 800
shares issued and outstanding at June 30, 2019 and December 31, 2018
|
|
|
–
|
|
|
|
8,000
|
|
Preferred stock Series C; $.0001 par value; 1,500 shares authorized 1,500
and 1,500 issued and outstanding at June 30, 2019 and December 31, 2018
|
|
|
15,000
|
|
|
|
15,000
|
|
Common stock: 2,000,000,000 authorized; $0.0001 par value 769,426,000 and
629,066,933 shares issued and outstanding at June 30, 2019 and December 31, 2018
|
|
|
76,959
|
|
|
|
62,922
|
|
Additional paid in capital
|
|
|
158,030,959
|
|
|
|
129,223,402
|
|
Accumulated deficit
|
|
|
(157,507,701
|
)
|
|
|
(127,108,103
|
)
|
Total Stockholders' Equity
|
|
|
10,489,544
|
|
|
|
13,753,734
|
|
Non-controlling interest
|
|
|
–
|
|
|
|
663,478
|
|
Total Liabilities and Stockholders' Equity
|
|
$
|
20,530,950
|
|
|
$
|
16,798,008
|
|
(The accompanying
notes are an integral part of these unaudited condensed consolidated financial statements)
Mobiquity Technology, Inc.
Condensed Consolidated Statements of Operations
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
|
June 30,
|
|
June 30,
|
|
|
|
(Unaudited)
|
|
(Unaudited)
|
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
2,249,485
|
|
|
$
|
241,573
|
|
|
$
|
3,847,494
|
|
|
$
|
280,276
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of Revenues
|
|
|
1,248,969
|
|
|
|
324,984
|
|
|
|
2,161,144
|
|
|
|
386,101
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Profit (Loss)
|
|
|
1,000,516
|
|
|
|
(83,411
|
)
|
|
|
1,686,350
|
|
|
|
(105,825
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative
|
|
|
6,456,751
|
|
|
|
782,410
|
|
|
|
11,638,472
|
|
|
|
1,673,414
|
|
Total Operating Expenses
|
|
|
6,456,751
|
|
|
|
782,410
|
|
|
|
11,638,472
|
|
|
|
1,673,414
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
(5,456,235
|
)
|
|
|
(865,821
|
)
|
|
|
(9,952,122
|
)
|
|
|
(1,779,239
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income (Expenses)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Expense
|
|
|
(16,419
|
)
|
|
|
(928,121
|
)
|
|
|
(18,392
|
)
|
|
|
(1,474,133
|
)
|
Change in derivative liability
|
|
|
–
|
|
|
|
(263,225
|
)
|
|
|
–
|
|
|
|
(9,246,435
|
)
|
Acquisition expense
|
|
|
(2,970,364
|
)
|
|
|
–
|
|
|
|
(2,970,364
|
)
|
|
|
–
|
|
Warrant expense
|
|
|
(15,391,273
|
)
|
|
|
–
|
|
|
|
(15,391,273
|
)
|
|
|
–
|
|
Unrealized holding gains arising during period
|
|
|
(3,290,266
|
)
|
|
|
135,000
|
|
|
|
(1,750,543
|
)
|
|
|
135,000
|
|
Initial derivative expense
|
|
|
–
|
|
|
|
(314,822
|
)
|
|
|
–
|
|
|
|
(559,728
|
)
|
Loss on sale of investments
|
|
|
(316,904
|
)
|
|
|
(6,965,000
|
)
|
|
|
(316,904
|
)
|
|
|
(6,965,000
|
)
|
Total Other Income (Expense)
|
|
|
(21,985,226
|
)
|
|
|
(8,336,168
|
)
|
|
|
(20,447,476
|
)
|
|
|
(18,110,296
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from continuing operations
|
|
$
|
(27,441,461
|
)
|
|
$
|
(9,201,989
|
)
|
|
$
|
(30,399,598
|
)
|
|
$
|
(19,889,535
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Comprehensive Loss
|
|
$
|
(27,441,461
|
)
|
|
$
|
(9,201,989
|
)
|
|
$
|
(30,399,598
|
)
|
|
$
|
(19,889,535
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss Per Common Share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For continued operations
|
|
$
|
(0.04
|
)
|
|
$
|
(0.04
|
)
|
|
$
|
(0.04
|
)
|
|
$
|
(0.09
|
)
|
Basic Diluted
|
|
$
|
(0.04
|
)
|
|
$
|
(0.04
|
)
|
|
$
|
(0.04
|
)
|
|
$
|
(0.09
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Common Shares Outstanding Basic and
Diluted
|
|
|
687,051,616
|
|
|
|
226,733,752
|
|
|
|
718,801,584
|
|
|
|
227,203,861
|
|
(The accompanying
notes are an integral part of these unaudited condensed consolidated financial statements)
Mobiquity Technology, Inc.
Consolidated Statement of Stockholders'
Equity
|
|
AAAA
Preferred
Stock
|
|
Mezzanine
Preferred
Stock
|
|
Series
C
Preferred
Stock
|
|
Preferred Stock
|
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
Balance, at December
31, 2017
|
|
|
–
|
|
|
$
|
–
|
|
|
|
850,588
|
|
|
$
|
11,552,538
|
|
|
|
–
|
|
|
$
|
–
|
|
|
|
240,000
|
|
|
$
|
25
|
|
Common stock issued in
exchange for interest
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
–
|
|
|
|
–
|
|
Common stock issued for
services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
–
|
|
|
|
–
|
|
Purchase of common stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
–
|
|
|
|
–
|
|
Stock based compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
–
|
|
|
|
–
|
|
Net Loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
–
|
|
|
|
–
|
|
Balance, at June 30,
2018
|
|
|
–
|
|
|
$
|
–
|
|
|
|
850,588
|
|
|
$
|
11,552,513
|
|
|
|
–
|
|
|
$
|
–
|
|
|
|
240,000
|
|
|
$
|
25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, at December
31, 2018
|
|
|
800
|
|
|
$
|
8,000
|
|
|
|
1,090,588
|
|
|
$
|
11,552,513
|
|
|
|
1,500
|
|
|
$
|
15,000
|
|
|
|
–
|
|
|
$
|
–
|
|
Common stock issued for
services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
–
|
|
|
|
–
|
|
Purchase of common stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
–
|
|
|
|
–
|
|
Stock based compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
–
|
|
|
|
–
|
|
Exchange shares
|
|
|
(800
|
)
|
|
|
(8,000
|
)
|
|
|
(146,356
|
)
|
|
|
(1,678,186
|
)
|
|
|
|
|
|
|
|
|
|
|
–
|
|
|
|
–
|
|
Cash collected from sub-
receivable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
–
|
|
|
|
–
|
|
Warrant conversions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
–
|
|
|
|
–
|
|
Warrants issued
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
–
|
|
|
|
–
|
|
Net Loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
–
|
|
|
|
|
|
Balance, at June 30,
2019
|
|
|
–
|
|
|
$
|
–
|
|
|
|
944,232
|
|
|
$
|
9,874,327
|
|
|
|
1,500
|
|
|
$
|
15,000
|
|
|
|
–
|
|
|
$
|
–
|
|
(The accompanying notes are an integral part of these unaudited condensed consolidated financial statements)
Mobiquity Technology, Inc.
Consolidated Statement of Stockholders'
Equity (continued)
|
|
Common Stock
|
|
Additional
Paid-in
|
|
Non
Controlling
|
|
Subscription
|
|
Accumulated
|
|
Total
Stockholders'
|
|
|
Shares
|
|
Amount
|
|
Capital
|
|
Interest
|
|
Receivable
|
|
Deficit
|
|
Deficit
|
Balance, at December
31, 2017
|
|
|
198,375,600
|
|
|
$
|
19,850
|
|
|
$
|
44,776,029
|
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
(61,298,474
|
)
|
|
$
|
(4,950,032
|
)
|
Common stock issued in
exchange for interest
|
|
|
11,500,000
|
|
|
|
1,150
|
|
|
|
405,225
|
|
|
|
–
|
|
|
|
|
|
|
|
–
|
|
|
|
406,375
|
|
Common stock issued for
services
|
|
|
3,100,000
|
|
|
|
310
|
|
|
|
189,430
|
|
|
|
–
|
|
|
|
|
|
|
|
–
|
|
|
|
189,740
|
|
Purchase of common stock
|
|
|
165,000,000
|
|
|
|
16,500
|
|
|
|
14,833,500
|
|
|
|
–
|
|
|
|
(260,000
|
)
|
|
|
–
|
|
|
|
14,590,000
|
|
Stock based compensation
|
|
|
–
|
|
|
|
–
|
|
|
|
327,405
|
|
|
|
–
|
|
|
|
|
|
|
|
–
|
|
|
|
327,405
|
|
Net Loss
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
|
|
|
|
|
|
|
|
(19,889,535
|
)
|
|
|
(19,889,535
|
)
|
Balance, at June 30,
2018
|
|
|
377,975,600
|
|
|
$
|
37,810
|
|
|
$
|
60,531,589
|
|
|
$
|
–
|
|
|
$
|
(260,000
|
)
|
|
$
|
(81,188,009
|
)
|
|
$
|
(9,326,047
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, at December
31, 2018
|
|
|
629,066,933
|
|
|
$
|
62,922
|
|
|
$
|
129,223,402
|
|
|
$
|
663,478
|
|
|
$
|
–
|
|
|
$
|
(127,108,103
|
)
|
|
$
|
14,417,212
|
|
Common stock issued for
services
|
|
|
158,900
|
|
|
|
16
|
|
|
|
29,942
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29,958
|
|
Purchase of common stock
|
|
|
44,643,553
|
|
|
|
4,465
|
|
|
|
3,245,035
|
|
|
|
|
|
|
|
(917,500
|
)
|
|
|
|
|
|
|
2,332,000
|
|
Stock based compensation
|
|
|
–
|
|
|
|
–
|
|
|
|
4,719,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,719,000
|
|
Exchange shares
|
|
|
94,635,600
|
|
|
|
9,464
|
|
|
|
1,676,722
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
–
|
|
Cash collected from sub-
receivable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
917,500
|
|
|
|
|
|
|
|
917,500
|
|
Warrant conversions
|
|
|
921,014
|
|
|
|
92
|
|
|
|
(92
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
–
|
|
Warrants issued
|
|
|
|
|
|
|
|
|
|
|
19,136,950
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,136,950
|
|
Net Loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(663,478
|
)
|
|
|
|
|
|
|
(30,399,598
|
)
|
|
|
(31,063,076
|
)
|
Balance, at June 30,
2019
|
|
|
769,426,000
|
|
|
$
|
76,959
|
|
|
$
|
158,030,959
|
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
(157,507,701
|
)
|
|
$
|
10,489,544
|
|
(The accompanying
notes are an integral part of these unaudited condensed consolidated financial statements)
Mobiquity Technology, Inc.
Condensed Consolidated
Statements of Cash Flows
Six Months Ended June 30, (Unaudited)
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
Cash Flows from Operating Activities:
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(30,399,598
|
)
|
|
$
|
(19,889,536
|
)
|
|
|
|
|
|
|
|
|
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
Depreciation expense
|
|
|
943
|
|
|
|
–
|
|
Amortization- Intangible Assets
|
|
|
223,880
|
|
|
|
9,800
|
|
Amortization- Debt discount
|
|
|
–
|
|
|
|
(134,488
|
)
|
Sale of stock held for investment
|
|
|
102,904
|
|
|
|
–
|
|
Warrants converted to common
|
|
|
3,745,677
|
|
|
|
–
|
|
Change in derivative instrument
|
|
|
–
|
|
|
|
9,893,866
|
|
Stock-based compensation
|
|
|
4,719,000
|
|
|
|
327,405
|
|
Initial derivative expense
|
|
|
|
|
|
|
559,728
|
|
Changes in operating assets and liabilities
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
(517,817
|
)
|
|
|
(203,384
|
)
|
Prepaid expenses and other assets
|
|
|
(205,170
|
)
|
|
|
7,313
|
|
Accounts payable
|
|
|
(182,842
|
)
|
|
|
(38,091
|
)
|
Accrued expenses and other current liabilities
|
|
|
(110,435
|
)
|
|
|
137,872
|
|
Accrued interest
|
|
|
3,967
|
|
|
|
447,608
|
|
Total Adjustments
|
|
|
7,780,107
|
|
|
|
11,007,629
|
|
Net Cash in Operating Activities
|
|
|
(22,619,491
|
)
|
|
|
(8,881,907
|
)
|
|
|
|
|
|
|
|
|
|
Cash Flows from Investing Activities
|
|
|
|
|
|
|
|
|
Purchase of property and equipment
|
|
|
(11,419
|
)
|
|
|
–
|
|
Acquisition expense
|
|
|
(2,970,364
|
)
|
|
|
–
|
|
Addition to Goodwill and Intangibles
|
|
|
(2,588,929
|
)
|
|
|
–
|
|
Net cash used in Investing Activities
|
|
|
(5,570,712
|
)
|
|
|
–
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Financing Activities
|
|
|
|
|
|
|
|
|
Proceeds from the issuance of notes, net
|
|
|
8,711,504
|
|
|
|
1,726,731
|
|
Proceeds for the issuance of common stock
|
|
|
3,249,500
|
|
|
|
–
|
|
Stock subscription receivable
|
|
|
–
|
|
|
|
(260,000
|
)
|
Warrant expense
|
|
|
15,391,273
|
|
|
|
–
|
|
Common stock issued for services
|
|
|
29,958
|
|
|
|
189,740
|
|
Investment in corporate stock
|
|
|
–
|
|
|
|
7,425,000
|
|
Cash paid on bank notes
|
|
|
(629,935
|
)
|
|
|
–
-
|
|
Loss on sale of company stock
|
|
|
316,904
|
|
|
|
–
|
|
Net Cash Provided by Financing Activities
|
|
|
27,069,204
|
|
|
|
9,081,471
|
|
|
|
|
|
|
|
|
|
|
Net change in Cash and Cash Equivalents
|
|
$
|
(1,120,999
|
)
|
|
$
|
199,564
|
|
Cash and Cash Equivalents, Beginning of period
|
|
|
624,338
|
|
|
|
56,470
|
|
Non-controlling interest
|
|
|
(663,478
|
)
|
|
|
–
|
|
Unrealized holding change on securities
|
|
|
1,750,543
|
|
|
|
(135,000
|
)
|
Cash and Cash Equivalents, end of period
|
|
$
|
590,404
|
|
|
$
|
121,034
|
|
|
|
|
|
|
|
|
|
|
Supplemental Disclosure Information
|
|
|
|
|
|
|
|
|
Cash paid for interest
|
|
$
|
–
|
|
|
$
|
5,000
|
|
Cash paid for taxes
|
|
$
|
–
|
|
|
$
|
–
|
|
|
|
|
|
|
|
|
|
|
Non-cash Disclosures:
|
|
|
|
|
|
|
|
|
Common Stock Issued for interest
|
|
$
|
–
|
|
|
$
|
406,375
|
|
(The accompanying notes are an integral part of these unaudited condensed consolidated financial statements)
MOBIQUITY TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2019 AND 2018
(UNAUDITED)
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS – On September 10,
2013, Mobiquity Technologies, Inc. changed its name from Ace Marketing & Promotions, Inc. “the Company” or “Mobiquity”).
We operate through two wholly owned U.S. subsidiaries, namely, Mobiquity Networks, Inc. and Ace Marketing& Promotions, Inc.
Mobiquity Networks owns 100% of Mobiquity Wireless S.L.U, a company incorporated in Spain. This corporation had an office in Spain
to support our U.S. operations, which office was closed in the fourth quarter of 2016. Ace Marketing, its legacy marketing and
promotions business was successfully sold on October 1, 2017, allowing us to focus our full attention to Mobiquity Networks.
Mobiquity Technologies, Inc., a New York corporation
(the “Company”), is the parent company of its operating subsidiary; Mobiquity Networks, Inc. (“Mobiquity Networks”).
The Company’s wholly owned subsidiary, Mobiquity Networks has evolved and grown from a mobile advertising technology company
focused on driving Foot-traffic throughout its indoor network, into a next generation location data intelligence company. Mobiquity
Networks provides precise unique, at-scale location data and insights on consumer’s real-world behavior and trends for use
in marketing and research. With its combined first party location data via its advanced SDK and its various exclusive data sets;
Mobiquity Networks provides one of the most accurate and scaled solution for mobile data collection and analysis, utilizing multiple
geo-location technologies. Mobiquity Networks is seeking to implement several new revenue streams from its data collection and
analysis, including, but not limited to; Advertising,
Data Licensing,
Footfall Reporting,
Attribution Reporting, Real Estate Planning, Financial Forecasting and Custom Research.
As of the filing date of
this Form 10-Q, the Company owns 100% of Advangelists, LLC. Advangelists is a developer of advertising and marketing technology focused
on the creation, automation, and maintenance of an advertising technology operating system (or ATOS). Advangelists’
ATOS platform blends artificial intelligence (or AI) and machine learning (ML) based optimization technology for automatic ad serving
that manages and runs digital advertising campaigns.
The ATOS platform:
·
|
creates an automated marketplace of advertisers and publishers on digital media outlets to host online auctions to facilitate the sale of ad time slots (known as digital real estate) targeted at users while engaged on their connected TV, computer or mobile device, and
|
|
|
·
|
gives advertisers the capability to understand and interact with their audiences and engage them in a meaningful way by the using ads in both image and video formats (known as rich media) to increase their customer base and foot traffic to their physical locations.
|
Advangelists’ marketplace engages with
approximately 20 billion advertisement opportunities per day. Our sales and marketing strategy is focused on creating a de-fragmented
operating system that makes it considerably more efficient and effective for advertisers and publishers to transact with each other.
Our goal is to create a standardized and transparent medium.
Advangelists' technology is proprietary and
has all been developed internally. We own all of our technology.
Merger
Mobiquity entered into an Agreement and Plan
of Merger (the “Merger Agreement”) with Glen Eagles Acquisition LP (“GEAL”) (which at the time owned 165,000,000
shares of common stock of Mobiquity, equivalent to approximately 29.6% of the outstanding shares), AVNG Acquisition Sub, LLC (“Merger
Sub”) and Advangelists, LLC (“Advangelists”) on November 20, 2018 which provided for Merger Sub to merge into
Advangelists, with Advangelists as the surviving company following the merger. The description of the Merger Agreement in the Report
on Form 8-K dated December 6, 2018 and in the Previous 8-K is not complete and is subject to, and qualified in its entirety by,
the full text of the Merger Agreement, a copy of which is attached to the Report on Form 8-K dated December 6, 2018 as Exhibit
2.1, the terms of which are incorporated herein by reference.
On December 6, 2018, Mobiquity and the other
parties to the Merger Agreement entered into the First Amendment to Agreement and Plan of Merger (the “Amendment”)
which amended the Merger Agreement as follows:
|
·
|
The number of warrants to purchase shares of Mobiquity’s common stock issuable as part of the merger consideration was changed from 90,000,000 shares to 107,753,750 shares, and the exercise price of the warrants was changed from $0.09 per share to $0.14 per share; and
|
|
·
|
The number of shares of Gopher Protocol Inc.’s common stock to be transferred by Mobiquity as part of the merger consideration changed from 11,111,111 to 9,209,722 shares.
|
Under the Merger Agreement and the Amendment,
in consideration for the Merger:
|
·
|
Mobiquity issued warrants for 107,753,750 shares of Mobiquity common stock at an exercise price of $0.14 per share, and, subject to the vesting threshold described below, Mobiquity transferred 9,209,722 shares of Gopher Protocol, Inc. common stock, to the pre-merger Advangelists members. The Gopher common stock was unvested at the time of transfer subject to vesting in February 2019 only if Advangelists’ combined revenues for the months of December 2018 and January 2019 were at least $250,000. The vesting threshold was met.
|
|
|
|
|
·
|
GEAL paid the pre-merger Advangelists members $10 million in cash. $500,000 was paid at closing and $9,500,000 will be paid under a promissory note that was issued at closing, in 19 monthly installments of $500,000 each, commencing on January 6, 2019.
|
The foregoing descriptions of the Amendment
and the warrants are not complete and are subject to, and qualified in its entirety by, (i) the full text of the Merger Agreement
and the Amendment, which are denoted as Exhibit 2.1 and Exhibit 2.2 to the December 6, 2018 Report, and (ii) the full text of the
warrants, the form of which is denoted as Exhibit 10.1 to this Report; the terms of both of which are incorporated into this Report
by reference.
The transactions contemplated by the Merger
Agreement were consummated on December 7, 2018 upon the filing of a Certificate of Merger by Advangelists. As a result of the merger,
Mobiquity owned 48% and GEAL owned 52% of Advangelists; and Mobiquity is the sole manager of, and controls, Advangelists.
As a result of Mobiquity having 100% control
over Advangelists ASC 810-10-05-3 states “that for LLCs with managing and non-managing members, a managing member is the
functional equivalent of a general partner and a non-managing member is the functional equivalent of a limited partner. In this
case, a reporting entity with an interest in an LLC (which is not a VIE) would likely apply the consolidation model for limited
partnerships if the managing member has the right to make the significant operating and financial decisions of the LLC.”
In this case Mobiquity has the right to make the significant operating and financial decisions of Advangelists resulting in consolidation
of Advangelists.
On April 30, 2019, the Company entered into
a Membership Interest Purchase Agreement with GEAL, pursuant to which the Company acquired from GEAL 3% of the membership interests
of Advangelists, for cash in the amount of $600,000 (the “Purchase Price”). The Purchase Price was paid by the Company
to GEAL on May 3, 2019. As a result of the Transaction, the Company then owned 51% of the membership interests of Advangelists,
with GEAL owning 49% of the membership interests of Advangelists
On May 10, 2019, the Company entered into a
Membership Purchase Agreement effective as of May 8, 2019 with Gopher Protocol, Inc. to acquire the 49% interest of Advangelists,
which it contemporaneously purchased from GEAL. As a result of this transaction, the Company owns 100% of Advangelists’s
Membership Interests.
The acquisition of the 49% of Advangelists
membership interests was accomplished in a transaction involving Mobiquity, Glen Eagles Acquisition LP, and Gopher Protocol, Inc.
Gopher acquired the 49% Advangelists membership
interest from GEAL and assumed GEAL’s purchase money promissory note to Deepankar Katyal, as representative of the former
Advangelists owners (and an officer and director of the Company), with a remaining balance of $7,512,500 in satisfaction of indebtedness
owed by GEAL to Gopher. Concurrently with that transaction, Mobiquity acquired the 49% of Advangelists membership interests from
Gopher and assumed the $7,512,500 promissory note. We refer you to Item 2.03 of the Form 8-K dated May 10, 2019 for further description
of the promissory note, transaction and exhibits. Additionally, warrants for 120 million Mobiquity shares of common stock which
are issuable upon the conversion of Mobiquity Class AAAA preferred stock owned by Gopher were amended to provide for a cashless
exercise.
Management has plans to address the Company’s
financial situation as follows:
In the near term, management plans to continue
to focus on raising the funds necessary to implement the Company’s business plan related to technology. Management will continue
to seek out equity and/or debt financing to obtain the capital required to meet the Company’s financial obligations. There
is no assurance, however, that lenders and investors will continue to advance capital to the Company or that the new business operations
will be profitable. The possibility of failure in obtaining additional funding and the potential inability to achieve profitability
raises doubts about the Company’s ability to continue as a going concern.
In the long term, management believes that
the Company’s projects and initiatives will be successful and will provide cash flow to the Company that will be used to
finance the Company’s future growth. However, there can be no assurances that the Company’s efforts to raise equity
and debt at acceptable terms or that the planned activities will be successful, or that the Company will ultimately attain profitability.
The Company’s long-term viability depends on its ability to obtain adequate sources of debt or equity funding to meet current
commitments and fund the continuation of its business operations, and the ability of the Company to achieve adequate profitability
and cash flows from operations to sustain its operations.
PRINCIPLES OF CONSOLIDATION - The accompanying
condensed consolidated financial statements include the accounts of Mobiquity Technologies, Inc., formerly known as Ace Marketing
& Promotions, Inc., and its wholly owned subsidiary, Mobiquity Networks, Inc. and its 100% owned subsidiary, Advangelists,
LLC. All intercompany accounts and transactions have been eliminated in consolidation.
The Condensed Consolidated Balance Sheets
as of June 30, 2019, the Condensed Consolidated Statements of Operations for the three months and six months ended June 30,
2019 and 2018 and the Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2019 and 2018 have
been prepared by us without audit, and in accordance with the requirements of Form 10-Q and, therefore, they do not include
all information and footnotes necessary for a fair presentation of financial position, results of operations, and cash flows
in conformity with accounting principles generally accepted in the United States of America. In our opinion, the accompanying
unaudited condensed financial statements contain all adjustments necessary to present fairly in all material respects our
financial position as of June 30, 2019, results of operations for the three months and six months ended June 30, 2019 and
2018 and cash flows for the six months ended June 30, 2019 and 2018. All such adjustments are of a normal recurring nature.
The results of operations and cash flows for the six months ended June 30, 2019 are not necessarily indicative of the
results to be expected for the full year. We have evaluated subsequent events through the filing of this Form 10-Q with the
SEC and determined there have not been any events that have occurred that would require adjustments to our unaudited
Condensed Consolidated Financial Statements.
ESTIMATES - The preparation of financial statements
in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company measures assets and liabilities
at fair value based on an expected exit price as defined by the authoritative guidance on fair value measurements, which represents
the amount that would be received on the sale of an asset or paid to transfer a liability, as the case may be, in an orderly transaction
between market participants. As such, fair value may be based on assumptions that market participants would use in pricing an asset
or liability. The authoritative guidance on fair value measurements establishes a consistent framework for measuring fair value
on either a recurring or nonrecurring basis whereby inputs, used in valuation techniques, are assigned a hierarchical level.
The following are the hierarchical levels of
inputs to measure fair value:
|
·
|
Level 1 - Observable inputs that reflect quoted market prices in active markets for identical assets or liabilities.
|
|
·
|
Level 2 - Inputs reflect quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the assets or liabilities; or inputs that are derived principally from or corroborated by observable market data by correlation or other means.
|
|
·
|
Level 3 - Unobservable inputs reflecting the Company's assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available.
|
The carrying amounts of the Company's financial
assets and liabilities, such as cash, prepaid expenses, other current assets, accounts payable & accrued expenses, certain
notes payable and notes payable - related party, approximate their fair values because of the short maturity of these instruments.
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
Fair value of derivatives
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
–
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EMBEDDED CONVERSION FEATURES
The Company evaluates embedded conversion features
within convertible debt under ASC 815 "Derivatives and Hedging" to determine whether the embedded conversion feature(s)
should be bifurcated from the host instrument and accounted for as a derivative at fair value with changes in fair value recorded
in earnings. If the conversion feature does not require derivative treatment under ASC 815, the instrument is evaluated under ASC
470-20 "Debt with Conversion and Other Options" for consideration of any beneficial conversion feature.
DERIVATIVE FINANCIAL INSTRUMENTS
The Company
has financial instruments that are considered derivatives or contain embedded features subject to derivative accounting
related
to 22 convertible notes issued totaling $4,234,000 which included a ratchet provision in the conversion price of $.02 or $.30 or
$.035 or a price equal to the last equity transaction completed by the Company as part of a subscription agreement
.
The notes have maturity dates ranging from February 11, 2018 –July 31, 2018. The Company also has financial instruments that
are considered derivatives or contain embedded features subject to derivative accounting
related to 3,200,000 warrants which
included a ratchet provision in the conversion price of $.50 as part of a conversion of preferred AAA shares, and 1,000,000 warrants
which included a ratchet provision in the conversion price of $.055 as part of a placement fee related to a note.
Embedded
derivatives are valued separately from the host instrument and are recognized as derivative liabilities in the Company’s
balance sheet. The Company measures these instruments at their estimated fair value and recognizes changes in their estimated fair
value in results of operations during the period of change. All notes were extinguished on November 30, 2018 ending the derivative
functions due to sequencing under ASC 815-40. The Company has estimated the fair value of these embedded derivatives for convertible
debentures and associated warrants using a multinomial lattice model as of December 31, 2018. The fair values of the derivative
instruments are measured each quarter, which resulted in a loss of $8,299,622 and derivative expense of $509,729 during the year
ended December 31, 2018. As of December 31, 2018, the fair market value of the derivatives aggregated $
0
using
the following assumptions: estimated 0.08 to 4.8-year term, estimated volatility of 163.71% to 394.26%, and a discount rate of
0.00% to 2.83%. All derivative instruments have been liquidated during the fourth quarter of 2018.
CASH AND CASH EQUIVALENTS - The Company considers
all highly liquid debt instruments with a maturity of three months or less, as well as bank money market accounts, to be cash equivalents.
As of June 30, 2019, and December 31, 2018, the balances are $590,404 and $624,338, respectively.
CONCENTRATION OF CREDIT RISK - Financial instruments,
which potentially subject the Company to concentrations of credit risk, consist principally of trade receivables and cash and cash
equivalents.
Concentration of credit risk with respect to
trade receivables is generally diversified due to the large number of entities comprising the Company’s customer base and
their dispersion across geographic areas principally within the United States. The Company routinely addresses the financial strength
of its customers and, consequently, believes that its receivable credit risk exposure is limited. Our current receivables at June
30, 2019 consist of 60% held by four of our largest customers. Our June 30, 2018 receivables consist of 82.8% held by five of our
largest customers.
The Company places its temporary cash investments
with high credit quality financial institutions. At times, the Company maintains bank account balances, which exceed FDIC limits.
As of June 30, 2019, and December 31, 2018, the Company exceeded FDIC limits by $161,150 and $170,762, respectively.
REVENUE RECOGNITION – On May 28, 2014,
the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (“Topic 606”), to update the financial reporting
requirements for revenue recognition. Topic 606 outlines a single comprehensive model for entities to use in accounting for revenue
arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance.
The guidance is based on the principle that an entity should recognize revenue to depict the transfer of goods or services to customers
in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.
The guidance also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising
from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to
fulfill a contract. This guidance became effective for the Company beginning on January 1, 2018, and entities have the option of
using either a full retrospective or a modified retrospective approach for the adoption of the new standard. The Company adopted
this standard using the modified retrospective approach on January 1, 2018.
In preparation for adoption of the standard,
the Company evaluated each of the five steps in Topic 606, which are as follows: 1) Identify the contract with the customer; 2)
Identify the performance obligations in the contract; 3) Determine the transaction price; 4) Allocate the transaction price to
the performance obligations; and 5) Recognize revenue when (or as) performance obligations are satisfied.
Reported revenue will not be affected materially
in any period due to the adoption of ASC Topic 606 because: (1) the Company expects to identify similar performance obligations
under Topic 606 as compared with deliverables and separate units of account previously identified; (2) the Company has determined
the transaction price to be consistent; and (3) the Company records revenue at the same point in time, upon delivery of services,
under both ASC Topic 605 and Topic 606, as applicable under the terms of the contract with the customer. Additionally, the Company
does not expect the accounting for fulfillment costs or costs incurred to obtain a contract to be affected materially in any period
due to the adoption of Topic 606.
There are also certain considerations related
to accounting policies, business processes and internal control over financial reporting that are associated with implementing
Topic 606. The Company has evaluated its policies, processes, and control framework for revenue recognition, and identified and
implemented the changes needed in response to the new guidance.
Lastly, disclosure requirements under the new
guidance in Topic 606 have been significantly expanded in comparison to the disclosure requirements under the current guidance,
including disclosures related to disaggregation of revenue into appropriate categories, performance obligations, the judgments
made in revenue recognition determinations, adjustments to revenue which relate to activities from previous quarters or years,
any significant reversals of revenue, and costs to obtain or fulfill contract.
The Company generates revenue from service
contracts with certain customers. These contracts are accounted for under the proportional performance method. Under this method,
revenue is recognized in proportion to the value provided to the customer for each project as of each reporting date. We recognize
revenues in the period in which the data transmission is provided to the licensee.
ALLOWANCE FOR DOUBTFUL ACCOUNTS - Management
must make estimates of the collectability of accounts receivable. Management specifically analyzes accounts receivable and analyzes
historical bad debts, customer concentrations, customer creditworthiness, current economic trends and changes in customer payment
terms when evaluating the adequacy of the allowance for doubtful accounts. As of June 30, 2019, and December 31, 2018, allowance
for doubtful accounts were $80,600 and $80,600, respectively.
PROPERTY AND EQUIPMENT - Property and equipment
are stated at cost. Depreciation is expensed using the straight-line method over the estimated useful lives of the related assets.
Leasehold improvements are being amortized using the straight-line method over the estimated useful lives of the related assets
or the remaining term of the lease. The costs of additions and improvements, which substantially extend the useful life of a particular
asset, are capitalized. Repair and maintenance costs are charged to expense. When assets are sold or otherwise disposed of, the
cost and related accumulated depreciation are removed from the account and the gain or loss on disposition is reflected in operating
income.
LONG LIVED ASSETS –
In
accordance with ASC 360, “
Property, Plant and Equipment
”, the Company
tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying
amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases
in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly
in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating
losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation
that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life. Recoverability
is assessed based on the carrying amount of the asset and its fair value, which is generally determined based on the sum of the
undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in
certain instances. An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value. The Company
recognized no impairment losses for the period ended June 30, 2019.
PATENTS and TRADEMARKS - Patents and trademarks
developed during the prior years were capitalized for the period of development and testing. Expenditures during the planning stage
and after implementation have been expensed in accordance with ASC 985.
ADVERTISING COSTS - Advertising costs are expensed
as incurred. For the three months ended June 30, 2019 and June 30, 2018, there were advertising costs of $6,516 and $0, respectively.
ACCOUNTING FOR STOCK BASED COMPENSATION. Stock
based compensation cost is measured at the grant date fair value of the award and is recognized as expense over the requisite service
period. The Company uses the Black-Sholes option-pricing model to determine fair value of the awards, which involves certain subjective
assumptions. These assumptions include estimating the length of time employees will retain their vested stock options before exercising
them (“expected term”), the estimated volatility of the Company’s common stock price over the expected term (“volatility”)
and the number of options for which vesting requirements will not be completed (“forfeitures”). Changes in the subjective
assumptions can materially affect estimates of fair value stock-based compensation, and the related amount recognized on the consolidated
statements of operations. Refer to Note 7 “Stock Option Plans” in the Notes to Consolidated Financial Statements in
this report for a more detailed discussion.
BENEFICIAL CONVERSION FEATURES - Debt instruments
that contain a beneficial conversion feature are recorded as deemed interest to the holders of the convertible debt instruments.
The beneficial conversion is calculated as the difference between the fair values of the underlying common stock less the proceeds
that have been received for the debt instrument limited to the value received.
INCOME TAXES - Deferred income taxes are recognized
for temporary differences between financial statement and income tax basis of assets and liabilities for which income tax or tax
benefits are expected to be realized in future years. A valuation allowance is established to reduce deferred tax assets, if it
is more likely than not, that all or some portion of such deferred tax assets will not be realized. The effect on deferred taxes
of a change in tax rates is recognized in income in the period that includes the enactment date.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In February 2016, the FASB issued Accounting
Standards Update ("ASU") No. 2016-02, Leases (Topic 842), which amended the existing accounting standards for lease accounting
to increase transparency and comparability among organizations by requiring the recognition of right-of-use assets and lease liabilities
on the balance sheet.
We adopted the standard effective January 1,
2019 and have elected to use January 1, 2019 as our date of initial application. Consequently, financial information will not be
updated, and disclosures required under the new standard will not be provided for periods presented before January 1, 2019 as these
prior periods conform to the Accounting Standards Codification 840. We elected the package of practical expedients permitted under
the transition guidance within the new standard. By adopting these practical expedients, we were not required to reassess (1) whether
an existing contract meets the definition of a lease; (2) the lease classification for existing leases; or (3) costs previously
capitalized as initial direct costs. As of June 30, 2019, we are not a lessor or lessee under any lease arrangements.
ASC 606, Revenue from contracts with customers,
the effective date for ASC 606 is for annual reporting periods beginning after December 15, 2017. It provides accounting guidance
related to revenue from contracts with customers. The Guidance applies to all entities and to all customers. The accounting for
ASC 606 will take effect for our company starting in January of 2018.
We have reviewed the FASB issued Accounting
Standards Update (“ASU”) accounting pronouncements and interpretations thereof that have effectiveness dates during
the periods reported and in future periods. The Company has carefully considered the new pronouncements that alter previous generally
accepted accounting principles and does not believe that any new or modified principles will have a material impact on the corporation’s
reported financial position or operations in the near term. The applicability of any standard is subject to the formal review of
our financial management and certain standards are under consideration.
NOTE: 2 NET LOSS PER SHARE
Basic net loss per share is computed
by dividing income available to common shareholders by the weighted-average number of common shares outstanding. Diluted earnings
per share reflect, in periods in which they have a dilutive effect, the impact of common shares issuable upon exercise of stock
options. The number of common shares potentially issuable upon the exercise of certain options and warrants that were excluded
from the diluted loss per common share calculation was approximately 416,789,299 because they are anti-dilutive, as a result of
a net loss for the six months ended June 30, 2019.
NOTE 3: GOODWILL AND INTANGIBLE ASSETS
Goodwill was generated through acquiring a
48% interest during the fourth Quarter 2018 and an additional 52% interest during the second quarter of 2019 in Advangelists, LLC.
As the total consideration paid exceeded the fair value of the net assets acquired.
The Company tests goodwill for impairment at
least annually on December 31
st
and whenever events or circumstances change that indicate impairment may have occurred.
A significant amount of judgement is involved in determining if an indicator of impairment has occurred. Such indicators may include,
among others: a significant decline in the Company’s expected future cash flows; a significant adverse change in legal factors
or in the business climate; unanticipated competition; and slower growth rates. Any adverse change in these factors could have
a significant impact on the recoverability of goodwill and the Company’s consolidated financial results.
The Company tests goodwill by estimating fair
value using a Discounted Cash Flow (“DCF”) model. The key assumptions used in the DCF model to determine the highest
and best use of estimated future cash flows include revenue growth rates and profit margins based on internal forecasts, terminal
value and an estimate of a market participant’s weighted-average cost of capital used to discount future cash flows to their
present value. There were no impairment charges during the six months ended June 30, 2019.
Intangible Assets
At June 30, 2019 and December 31, 2018, definite-lived
intangible assets primarily consist of customer relationships which are being amortized over their estimated useful lives of five
years.
The Company
periodically evaluates the reasonableness of the useful lives of these assets. Once these assets are fully amortized, they will
be removed from the accounts. These assets are reviewed for impairment or obsolescence when events or changes in circumstances
indicate that the carrying amount may not be recoverable. If impaired, intangible assets are written down to fair value based on
discounted cash flows or other valuation techniques. The Company has no intangibles with indefinite lives.
NOTE 4: CONVERTIBLE DEBT AND DERIVATIVE LIABILITIES
Summary of Convertible Promissory Notes:
|
|
June 30,
2019
|
|
December 31,
2018
|
CAVU Notes, net
|
|
$
|
100,000
|
|
|
$
|
100,000
|
|
Berg Notes (a)
|
|
|
50,000
|
|
|
|
50,000
|
|
Deepankar Katyal, et al
|
|
|
7,949,920
|
|
|
|
–
|
|
Total Debt
|
|
|
8,099,920
|
|
|
|
150,000
|
|
Current portion of debt
|
|
|
4,075,428
|
|
|
|
150,000
|
|
Long-term portion of debt
|
|
$
|
4,024,492
|
|
|
$
|
–
|
|
|
(a)
|
Between August and December 2015, the Company borrowed $3,675,000 from accredited investors. These loans are due and payable the earlier of December 31, 2016 or the completion of an equity financing of at least $2,500,000. Upon the sale of the unsecured promissory notes, the Company issued $1 of principal, one share of common stock and a warrant to purchase one share of common stock at an exercise price of $0.40 per share through August 31, 2017. Accordingly, an aggregate of 3,675,000 shares of common stock and warrants to purchase a like amount were issued in the last six months of 2015. Each noteholder has the right to convert the principal of their note and accrued interest thereon at a conversion price of $0.30 per share or at the noteholder’s option, into equity securities of the Company on the same terms as the last equity transaction completed by the Company prior to each respective conversion date. All other notes have been converted to equity.
|
In the first quarter of 2018, the Company entered
into agreements to provide $1,000,000 of short term secured debt financing in four monthly tranches. Dr. Gene Salkind made these
investments and he would become a director of the Company on January 1, 2019. The Company will issue in connection with each tranche,
a six-month secured convertible promissory note. In connection with this transaction, the Company agreed to issue an origination
fee of 1,000,000 shares of restricted common stock. Alexander Capital L.P. acted as Placement Agent and Advisor for this transaction.
Each of these new notes are on the terms of the Company's 10% Senior Secured debt.
In the second quarter of 2018, the Company
borrowed $375,000, including $125,000 from Thomas Arnost, Chairman, and $250,000 from two non-affiliated persons. The investors
received 3,500,000 shares of common stock each as an origination fee and in lieu of interest. During the fourth quarter 2018 the
notes were converted to equity.
On May 10, 2019, the Company entered into a
Promissory note with Deepankar Katyal, et al, for the acquisition of the balance of Advangelists, LLC, six monthly payments of
$250,000 starting May 15, 2019 through October 6, 2019, on December 6, 2019 a payment of $1,500,000, in January of 2020 monthly
payments of $500,000 each until October of 2020, with a stated interest rate of 1.5%. As a result of the resulting debt the Company
now owns 100% of Advangelists, LLC.
On June 26, 2019, the Company entered into
a merchant agreement with Business Capital Providers, Inc. in the amount of $250,000 payable daily at $2,556.82, per payment for
the term of 132 business days.
A recap of the derivative instruments is as follows:
Derivative Liability 2018
|
Beginning balance
|
|
$
|
(666,123
|
)
|
New Issuances
|
|
|
–
|
|
Discount on new derivative in excess of note face value
|
|
|
–
|
|
Effect on debt extinguishment
|
|
|
666,123
|
|
Ending balance
|
|
$
|
–
|
|
NOTE 5: STOCKHOLDERS’ EQUITY (DEFICIT)
Shares issued for services
During the quarter ended June 30, 2019, the
Company issued no shares of common stock in exchange for services rendered.
During the quarter ended June 30, 2018, the
Company issued 3,100,000 shares of common stock, at $0.04 to $0.08 per share for $189,740 in exchange for services rendered.
Shares issued for Original Interest Discount
No shares were issued with an original issue discount during the
quarter ended June 30, 2019. During the quarter ended June 30, 2018, the Company issued 10,500,000 shares of common stock at a
price per share between $0.04 and $0.05 for original issue discount on receipt of $490,000 in unsecured convertible promissory
notes.
Shares issued for interest
During the six months ended June 30,
2019 and June 30, 2018, no shares were issued for interest.
In the second quarter of 2019, one holder of
our Series AAA Preferred Stock converted 5,000 shares to 500,000 shares of our common stock and 500,000 warrants at an exercise
price of $0.05 per share with an expiration date of December 31, 2019. No conversions took place during the second quarter of 2018.
During the quarter ended June 30, 2019, 300,000
warrants were converted in a cashless exercise transaction submitted to the Company for 204,070 shares of common stock. No shares
were exchanged during the quarter ended June 30, 2018.
In the second quarter of 2019, the Company
received equity subscription agreements totaling $917,500, net, which include warrant coverage, at an exercise price between
$0.09 and $0.12 with an expiration date of September 30, 2023. The Company issued 12,500,000 shares of common stock and 7,500,000
warrants in connection with these transactions. No equity subscription agreements occurred during the second quarter of 2018.
NOTE 6: STOCK BASED OPTIONS AND WARRANTS COMPENSATION
Compensation costs related to share-based payment
transactions, including warrants and employee stock options, are recognized in the financial statements utilizing the straight-line
method for the cost of these awards.
The Company's results for the three-month period
ended June 30, 2019 and 2018 include warrant and employee share-based compensation expense totaling $20,110,273 and $0.00, respectively.
The Company's results for the six-month period ended June 30, 2019 and 2018 include employee share-based compensation expense totaling
$23,855,950 and $327,405, respectively. Such amounts have been included in the Condensed Consolidated Statements of Operations
within selling, general and administrative expenses. No income tax benefit has been recognized in the statement of operations for
share-based compensation arrangements due to a history of operating losses.
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Employee stock-based compensation - option grants
|
|
$
|
4,719,000
|
|
|
$
|
–
|
|
|
$
|
4,719,000
|
|
|
$
|
273,945
|
|
Employee stock-based compensation - stock grants
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
Non-Employee stock-based compensation - option grants
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
53,460
|
|
Non-Employee stock-based compensation - stock grants
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
Non-Employee stock-based compensation-stock warrant
|
|
|
15,391,273
|
|
|
|
–
|
|
|
|
19,136,950
|
|
|
|
–
|
|
Total
|
|
$
|
20,110,273
|
|
|
$
|
–
|
|
|
$
|
23,855,950
|
|
|
$
|
327,405
|
|
NOTE 7: STOCK OPTION PLANS
During Fiscal 2005, the Company established,
and the stockholders approved, an Employee Benefit and Consulting Services Compensation Plan (the “2005 Plan”) for
the granting of up to 2,000,000 non-statutory and incentive stock options and stock awards to directors, officers, consultants
and key employees of the Company. On June 9, 2005, the Board of Directors amended the Plan to increase the number of stock options
and awards to be granted under the Plan to 4,000,000. During Fiscal 2009, the Company established a plan of long-term stock-based
compensation incentives for selected Eligible Participants of the Company covering 4,000,000 shares. This plan was adopted by the
Board of Directors and approved by stockholders in October 2009 and shall be known as the 2009 Employee Benefit and Consulting
Services Compensation Plan (the “2009 Plan”). In September 2013, the Company’s stockholders approved an increase
in the number of shares covered by the 2009 Plan to 10,000,000. In February 2015, the Board approved, subject to stockholder approval
within one year, an increase in the number of shares under the 2009 Plan to 20,000,000 shares; however, stockholder approval was
not obtained within the requisite one year and the anticipated increase in the 2009 Plan was canceled. In the first quarter of
2016, the Board approved, and stockholders ratified a 2016 Employee Benefit and Consulting Services Compensation Plan covering
10,000,000 shares (the “2016 Plan”) and approving moving all options which exceeded the 2009 Plan limits to the 2016
Plan. In December 2018, the Board of Directors adopted and in February 2019. the stockholders ratified the 2018 Employee Benefit
and Consulting Services Compensation Plan covering 30,000,000 shares (the “2018 Plan”). On April 2, 2019, the Board
approved the “2019 Plan” identical to the 2018 Plan, except that the 2019 Plan covers 60,000,000 shares. The 2019 Plan
required stockholder approval by April 2, 2020 in order to be able to grant incentive stock options under the 2019 Plan. The 2005,
2009, 2016, 2018 and 2019 plans are collectively referred to as the “Plans.”
All stock options under the Plans are granted
at or above the fair market value of the common stock at the grant date. Employee and non-employee stock options vest over varying
periods and generally expire either 5 or 10 years from the grant date. The fair value of options at the date of grant was estimated
using the Black-Scholes option pricing model. For option grants, the Company will take into consideration payments subject to
the
provisions of ASC 718 “Stock Compensation”, previously Revised SFAS No. 123 “Share-Based Payment” (“SFAS
123 (R)”). The fair values of these restricted stock awards are equal to the market value of the Company’s stock on
the date of grant, after taking into certain discounts. The expected volatility is based upon historical volatility of our stock
and other contributing factors. The expected term is based upon observation of actual time elapsed between date of grant and exercise
of options for all employees. Previously, such assumptions were determined based on historical data. The weighted average assumptions
made in calculating the fair values of options granted during the three months and six months ended June 30, 2019 and June 30,
2018 are as follows:
|
|
Three Months Ended
June 30
|
|
Six Months Ended
June 30
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Expected volatility
|
|
|
98.00%
|
|
|
|
0.00%
|
|
|
|
262.38%
|
|
|
|
173.00%
|
|
Expected dividend yield
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
Risk-free interest rate
|
|
|
2.41%
|
|
|
|
0.00%
|
|
|
|
2.47%
|
|
|
|
2.43%
|
|
Expected term (in years)
|
|
|
7.50
|
|
|
|
–
|
|
|
|
6.25
|
|
|
|
5.00
|
|
|
|
Share
|
|
Weighted
Average
Exercise
Price
|
|
Weighted
Average
Remaining
Contractual
Term
|
|
Aggregate
Intrinsic
Value
|
Outstanding, January 1, 2019
|
|
|
42,000,000
|
|
|
|
0.10
|
|
|
|
4.38
|
|
|
$
|
2,981,875
|
|
Granted
|
|
|
50,700,000
|
|
|
|
0.15
|
|
|
|
9.49
|
|
|
|
–
|
|
Exercised
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cancelled & Expired
|
|
|
(50,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding, June 30, 2019
|
|
|
92,650,000
|
|
|
|
0.12
|
|
|
|
6.95
|
|
|
$
|
2,981,875
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options exercisable, June 30, 2019
|
|
|
92,650,000
|
|
|
|
0.12
|
|
|
|
6.95
|
|
|
$
|
2,981,875
|
|
The weighted-average grant-date fair value
of options granted during the six months ended June 30, 2019 and 2018 was $0.15 and $0.05, respectively.
The aggregate intrinsic value of options outstanding
and options exercisable at June 30, 2019 is calculated as the difference between the exercise price of the underlying options and
the market price of the Company's common stock for the shares that had exercise prices, that were lower than the $0.14 closing
price of the Company's common stock on June 30, 2019.
As of June 30, 2019, the fair value of unamortized
compensation cost related to unvested stock option awards is $2,272,000.
The weighted average assumptions made in calculating
the fair value of warrants granted during the three and six months ended June 30, 2019 and 2018 are as follows:
|
|
Three Months Ended
June 30
|
|
Six Months Ended
June 30
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Expected volatility
|
|
|
105.20%
|
|
|
|
0.00%
|
|
|
|
180.85%
|
|
|
|
0.00%
|
|
Expected dividend yield
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
Risk-free interest rate
|
|
|
14.41%
|
|
|
|
0.00%
|
|
|
|
9.72%
|
|
|
|
0.00%
|
|
Expected term (in years)
|
|
|
4.19
|
|
|
|
–
|
|
|
|
3.52
|
|
|
|
–
|
|
|
|
Share
|
|
|
Weighted
Average
Exercise
Price
|
|
|
Weighted
Average
Remaining Contractual
Term
|
|
|
Aggregate Intrinsic
Value
|
|
Outstanding, January 1, 2019
|
|
|
175,526,201
|
|
|
$
|
0.14
|
|
|
|
8.37
|
|
|
$
|
1,504,784
|
|
Granted
|
|
|
155,446,434
|
|
|
$
|
0.11
|
|
|
|
4.42
|
|
|
|
4,891,996
|
|
Exercised
|
|
|
–
|
|
|
$
|
–
|
|
|
|
–
|
|
|
|
–
|
|
Expired
|
|
|
(6,833,336
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding, June 30, 2019
|
|
|
324,139,299
|
|
|
$
|
0.13
|
|
|
|
6.34
|
|
|
|
6,280,113
|
|
Warrants exercisable, June 30, 2019
|
|
|
324,139,299
|
|
|
$
|
0.13
|
|
|
|
6.34
|
|
|
|
6,280,113
|
|
NOTE 8: COMMITMENTS AND CONTINGENCIES
COMMITMENTS –
In March 2014, we entered into a month-to-month
lease agreement for approximately 400 square feet of office space located in Manhattan, NY at a monthly cost of $3,700. In May
of 2015 we moved to a larger location with the same landlord on a month to month basis for $4,700 each month. In 2017 the Company
is leasing on a month-to-month basis two fully furnished executive suites in Manhattan at a monthly cost of approximately $6,700.
These executive suites are located at 85 Broadway, 16
th
Floor, Suites 16-035 and 16-040, New York, NY 10010. In 2018,
the Company is presently utilizing the office space of its Chief Financial Officer as its principal executive office located at
35 Torrington Lane, Shoreham, NY 11786. The Company is leasing on a month-to-month basis a fully furnished executive suite in Manhattan
at a monthly cost of approximately $9,000. The executive suite is located at 61 Broadway, 11
th
Floor, Suite 1105, New
York, NY 10006.
There
are currently no minimum future rentals under non-cancelable lease commitments.
Rent
expense was approximately $73,086 and $33,387 for the six months ended June 30, 2019 and 2018, respectively,
Consulting Agreements
Upon consummation of the Merger, Mobiquity
entered into consulting agreements (the “Consulting Agreements”) with certain employees and contractors of Advangelists
(the “Consultants”), pursuant to which Mobiquity (i) issued to the Consultants warrants to purchase an aggregate of
22,246,250 shares of its common stock and (ii) agreed to transfer to the Consultants an aggregate of 1,901,389 shares of common
stock of Gopher Protocol Inc. The terms of the Consultant’s warrants are substantially similar to the terms of the warrants
issued in the merger. The foregoing description of the Consulting Agreements are not complete and is subject to, and qualified
in its entirety by, the full text of form of Consulting Agreement, a copy of which is denoted as Exhibit 10.1 to this Report, the
terms of which are incorporated into this Report by reference.
Transactions with major customers
During the six months ended June 30, 2019,
four customers accounted for approximately 60% of revenues and for the six months ended June 30, 2018, one customer accounted for
approximately 82% our revenues.
NOTE 9: SUBSEQUENT EVENTS
On July 15, 2019, the Company issued 1,000,000
options to purchase shares of Company’s common stock to new employee.
On July 19, 2019, the Company issued 3,125,000
shares of common stock and 1,562,500 warrants for the subscription agreement received from board member Dr. Salkind.
On July 24, 2019, the Company issued 375,000
shares of common stock and 187,500 warrants for the subscription agreement for an individual investor.
On August 6, 2019, Gopher Protocol, Inc.
exchanged its 120 million warrants into 20 million shares of restricted common stock.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FORWARD-LOOKING STATEMENTS
The information contained
in this Form 10-Q and documents incorporated herein by reference are intended to update the information contained in the Company's
Form 10-K for its fiscal year ended December 31, 2018 which includes our audited financial statements for the year ended December
31, 2018 and such information presumes that readers have access to, and will have read, the "Management's Discussion and Analysis
of Financial Condition and Results of Operations," "Risk Factors" and other information contained in such Form 10-K
and other Company filings with the Securities and Exchange Commission ("SEC").
This Quarterly Report on
Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the
"Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended. hence forward-looking statements
involve risks and uncertainties, and actual results could be significantly different than those discussed in this Form 10-Q. Certain
statements contained in Management's Discussion and Analysis, particularly in "Liquidity and Capital Resources," and
elsewhere in this Form 10-Q are forward-looking statements. These statements discuss, among other things, expected growth, future
revenues and future performance. Although we believe the expectations expressed in such forward-looking statements are based on
reasonable assumptions within the bounds of our knowledge of our business, a number of factors could cause actual results to differ
materially from those expressed in any forward-looking statements, whether oral or written, made by us or on our behalf. The forward-looking
statements are subject to risks and uncertainties including, without limitation, the following: (a) changes in levels of competition
from current competitors and potential new competition, (b) possible loss of customers, and (c) the company's ability to attract
and retain key personnel, (d) The Company's ability to manage other risks, uncertainties and factors inherent in the business and
otherwise discussed in this 10-Q and in the Company's other filings with the SEC. The foregoing should not be construed as an exhaustive
list of all factors that could cause actual results to differ materially from those expressed in forward-looking statements made
by us. All forward-looking statements included in this document are made as of the date hereof, based on information available
to the Company on the date thereof, and the Company assumes no obligation to update any forward-looking statements.
Company Overview
The Company owns 100% of Advangelists, LLC
and it owns 100% of Mobiquity Networks, Inc.
Advangelists is a developer of advertising
and marketing technology focused on the creation, automation, and maintenance of an advertising technology operating system
(or ATOS). Advangelists’ ATOS platform blends artificial intelligence (or AI) and machine learning (ML) based optimization
technology for automatic ad serving that manages and runs digital advertising campaigns.
Mobiquity Networks is a next generation location
data intelligence company. Mobiquity Networks provides precise unique, at-scale location-based data and insights on consumer’s
real-world behavior and trends for use in marketing and research. We provide accurate and precise location data on approximately
fifty (50,000,000) million mobile devices to help marketers and researchers better understand consumer’s real-world behavior
and trends. Our data is supplied directly from our app partners or direct server-to-serve feeds. Data provided by Mobiquity Networks
is deterministic with a high degree of accuracy and precision.
Critical Accounting Policies
Revenue Recognition
–The Company
recognized revenue on arrangements in accordance with FASB Codification Topic 606, “Revenue from Contracts with Customers”
(“ASC Topic 606”). Under ASC Topic 606, revenue represents amounts earned for data licensing arrangements consisting
of flat fee, per use basis or revenue share. Licensee is sent data on a daily basis, has use of data for a period of time based
on the contract life between one month to one year. Revenue is recognized with the billing of an advertising contract or data sale.
The customer signs a contract directly with us for an advertising campaign with mutually agreed upon term and is billed on the
start date of the advertising campaign, which are normally in short duration periods. The second type of revenue is through the
licensing of our data. Revenue from data can occur in two ways; the first is a direct feed, which is billed at the end of each
month. The second way is through the purchasing of audience segments. When an audience segment is purchased, we bill the buyer
upon delivery, which is usually 1-2 days for the order date.
Allowance for Doubtful Accounts
. We
are required to make judgments based on historical experience and future expectations, as to the realizability of our accounts
receivable. We make these assessments based on the following factors: (a) historical experience, (b) customer concentrations, customer
credit worthiness, (d) current economic conditions, and (e) changes in customer payment terms.
Accounting for Stock Based Compensation
.
Stock based compensation cost is measured at the grant date fair value of the award and is recognized as expense over the requisite
service period. The company uses the Black-Sholes option-pricing model to determine fair value of the awards, which involves certain
subjective assumptions. These assumptions include estimating the length of time employees will retain their vested stock options
before exercising them (“expected term”), the estimated volatility of the company’s common stock price over the
expected term (“volatility”) and the number of options for which vesting requirements will not be completed (“forfeitures”).
Changes in the subjective assumptions can materially affect estimates of fair value stock-based compensation, and the related amount
recognized on the consolidated statements of operations.
Plan of Operation
Mobiquity has hired several new sales and sales
support individuals in the first quarter of 2019 to help generate additional revenue through the use of the Advangelists platform.
Mobiquity’s sales team will focus on Advertising Agencies, Brands and publishers to help increase both supply and demand
across the Advangelists platform. The Advangelists platform creates three revenue streams for Mobiquity. The first is licensing
the Advangelists platform as a white-label product for use by Advertising Agencies, DSP’s and Brands. Under the White-Label
scenario, the user licenses the technology and is responsible for running its own business operations and is billed a percentage
of volume run through the platform. The second revenue stream is a managed services model, in which, the user is billed a higher
percentage of revenue run through the platform, but all services are managed by the Mobiquity/Advangelists team. The third revenue
model is a seat model, whereas the user is billed a percentage of revenue run through the platform and business operations are
shared between the user and the Mobiquity/Advangelists team. The goal of the sales team is to inform potential users of the benefits
in efficiency and effectiveness of utilizing the end-to-end, fully integrated ATOS created by Advangelists.
Mobiquity Networks derives its revenue
utilizing the revenue streams mentioned above. All the products used to derive revenue for the Company are reliant on the collection
of data. To achieve management’s revenue goals moving forward, we have developed a strategy to increase the two main driving
forces behind our data collection. One strategy is to increase the total number of users we see on a monthly basis (“MAU”),
and the second strategy is to increase the total number of locations (Places) available to see our MAU’s over the same time
period. We are currently seeing over 50,000,000 unique mobile devices on a monthly basis. To continue to grow the total number
of unique devices we can see on a monthly basis, we need to increase our partnerships. We believe our unique offering to potential
partners gives us a competitive advantage over others in the industry. The task of partnering to increase MAU’s is handled
internally by our business development team.
As of June 30, 2019, we had approximately 6,000,000
Places in our proprietary Places database. We have been able to steadily increase the number of locations available in our Places
database through the use of both open source and proprietary technologies. The task of growing our Places database is handled by
our internal technology team. The Company currently utilizes both internal and outsourced resources to market and sell its product
offerings.
Results of Operations
Quarter Ended June 30, 2019 versus Quarter
Ended June 30, 2018
The following table sets
forth certain selected condensed statement of operations data for the periods indicated in dollars. In addition, we note that the
period-to-period comparison may not be indicative of future performance.
|
|
Quarter Ended
|
|
|
June 30,
2019
|
|
June 30,
2018
|
Revenue
|
|
$
|
2,249,485
|
|
|
$
|
241,573
|
|
Cost of Revenues
|
|
|
(1,248,969
|
)
|
|
|
(324,984
|
)
|
Gross Income (Loss)
|
|
|
1,000,516
|
|
|
|
(83,411
|
)
|
Selling, General and Administrative Expenses
|
|
|
(6,456,751
|
)
|
|
|
(782,410
|
)
|
Loss from operations
|
|
|
(5,456,235
|
)
|
|
|
(865,821
|
)
|
We generated revenues of
$2,249,485 in the second quarter of 2019 as compared to $241,573 in the same period for fiscal 2018, a change in revenues of $2,007,912.
In 2019, with the acquisition of Advangelists LLC we have implemented several new revenue streams from data collection and analysis
including, but not limited to; Advertising,
Data Licensing,
Footfall Reporting, Attribution
Reporting, Real Estate Planning, Financial Forecasting and Custom Research.
Cost of revenues was $1,248,969
or 55.5% of revenues in the second quarter of 2019 as compared to 324,984 or 134.5% of revenues in the same fiscal period of fiscal
2018. Cost of revenues include web services for storage of our data and web engineers who are building and maintaining our platforms.
The generated savings, on a percentage basis, arise with our increased sales. Our ability to capture and store data for sales does
not translate to increased cost of sales.
Gross Income (loss) was
$1,000,516 or 44.50% of revenues for the second quarter of 2019 as compared to $(83,411) in the same fiscal period of 2018 or (34.53%)
of revenues. As revenues from the use of our technologies increases, it is expected that our margins will increase significantly.
Selling, general, and administrative
expenses were $6,456,751 for the second quarter of fiscal 2019 compared to $782,410 in the comparable period of the prior year,
an increase of approximately $5,674,341. Such operating cost increases include payroll and related expenses, professional (consulting)
and public awareness fees, and non-cash stock-based compensation expenses of $4,391,595.
The net loss from
operations for the second quarter of fiscal 2019 was $5,456,235 as compared to $865,821 for the comparable period of the
prior year. The continuing operating loss is attributable to the focused effort in creating the infrastructure required to
move forward with our Mobiquity and Advangelists network business. Including non-cash charges of $4,719,000 for stock based
compensation, depreciation and amortization of $131,161 generating a cash loss of $606,074.
No benefit for income taxes
is provided for in the reported periods due to the full valuation allowance on the net deferred tax assets. Our ability to be profitable
in the future is dependent upon the successful introduction and usage of our data collection and analysis including Advertising,
Data Licensing, Footfall Reporting, Attribution Reporting, Real Estate Planning, Financial Forecasting and Custom Research services.
|
|
Six Months Ended
|
|
|
June 30,
2019
|
|
June 30,
2018
|
Revenue
|
|
$
|
3,847,494
|
|
|
$
|
280,276
|
|
Cost of Revenues
|
|
|
(2,161,144
|
)
|
|
|
(386,101
|
)
|
Gross Income (Loss)
|
|
|
1,686,350
|
|
|
|
(105,825
|
)
|
Selling, General and Administrative Expenses
|
|
|
(11,638,472
|
)
|
|
|
(1,673,414
|
)
|
Loss from operations
|
|
|
(9,952,122
|
)
|
|
|
(1,779,239
|
)
|
We generated revenues of
$3,847,494 in the first six months of 2019 as compared to $280,276 for the same period for fiscal 2018, a change in revenues of
$3,567,218. In 2019, with the acquisition of Advangelists LLC, we have implemented several new revenue streams from data collection
and analysis including, but not limited to; Advertising,
Data Licensing,
Footfall
Reporting, Attribution Reporting, Real Estate Planning, Financial Forecasting and Custom Research.
Cost of revenues was $2,161,144
or 56.2% of revenues in the first six months of 2019 as compared to 386,101 or 137.8% of revenues in the same fiscal period of
fiscal 2018. Cost of revenues include web services for storage of our data and web engineers who are building and maintaining our
platforms. The generated savings, on a percentage basis, arise with our increased sales. Our ability to capture and store data
for sales does not translate to increased cost of sales.
Gross Income (loss) was
$1,686,350 or 43.8% of revenues for the first six months of 2019 as compared to $(105,825) in the same fiscal period of 2018 or
(37.8%) of revenues. As revenues from the use of our technologies increases, it is expected that our margins will increase significantly.
Selling, general, and administrative
expenses were $11,638,472 for the first six months of fiscal 2019 compared to $1,673,414 in the comparable period of the prior
year, an increase of approximately $9,965,058. Such operating cost increases include payroll and related expenses, professional
(consulting) and public awareness fees, and non-cash warrant expense of $3,745,677, non-cash stock-based compensation of $4,391,595.
The net loss from operations
in the first six months of fiscal 2019 was $9,952,122 as compared to $1,779,239 for the comparable period of the prior year. The
continuing operating loss is attributable to the focused effort in creating the infrastructure required to move forward with our
Mobiquity and Advangelists network business.
No benefit for income taxes
is provided for in the reported periods due to the full valuation allowance on the net deferred tax assets. Our ability to be profitable
in the future is dependent upon the successful introduction and usage of our data collection and analysis including Advertising,
Data Licensing, Footfall Reporting, Attribution Reporting, Real Estate Planning, Financial Forecasting and Custom Research services.
Liquidity and Capital Resources
The Company had cash
and cash equivalents of $590,404 at June 30, 2019. Cash used in operating activities for the six months ended June 30, 2019 was
$22,619,491. This resulted primarily from a net loss of $30,399,598 offset by stock-based compensation of $4,719,000, warrant
expense $3,745,677 amortization of $223,880, increase in accounts receivable of $517,817, increase in prepaid expenses of $205,170.
Cash used in investing activities results from the purchase of property and equipment of $11,419, acquisition expense $2,970,364
and the increase in goodwill and intangibles of $2,588,929. Cash flow from financing activities of $27,069,204 resulted from the
proceeds from the issuance of notes of $8,711,504, proceeds from the issuance of common stock $3,249,500, warrant expense $15,391,273,
loss on sale of company stock $316,904 and cash paid on loans $629,935.
The Company had cash
and cash equivalents of $121,034 at June 30, 2018. Cash used in operating activities for the six months ended June 30, 2018 was
$8,881,907. This resulted primarily from a net loss of $19,889,536 offset by stock-based compensation of $327,405 amortization
of $9,800, increase in accounts receivable of $203,384 and an initial derivative expense of $559,728 and a change in derivatives
of $9,893,866, increase in accrued interest of $447,608, increase in accrued expenses and other current liabilities of $137,872
and an increase in other current assets of $7,313. Cash flow from financing activities of $9,081,471 resulted from the proceeds
from the issuance of notes of $1,726,731 and the investment in corporate stock of $7,425,000, common stock issued for services
for services rendered $189,740, and the increase in stock subscription receivable of $260,000.
Our company commenced operations
in 1998 and was initially funded by our three founders, each of whom has made demand loans to our company that have been repaid.
Since 1999, we have relied on equity financing and borrowings from outside investors to supplement our cash flow from operations
and expect this to continue in 2019 and beyond until cash flow from our proximity marketing operations become substantial.
Recent Financings
We have completed various
financings as described as described under the Notes to Consolidated Financial Statements.