SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
10-Q
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR
THE QUARTERLY PERIOD ENDED MARCH 31, 2015
COMMISSION FILE NUMBER: 000-51160
MOBIQUITY
TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
NEW
YORK |
|
11-3427886 |
(State
of jurisdiction of Incorporation) |
|
(I.R.S.
Employer Identification No.) |
600
OLD COUNTRY ROAD, SUITE 541
GARDEN CITY, NY 11530
(Address
of principal executive offices)
(516)
256-7766
(Registrant's
telephone number)
(Former
name, address and fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements
for the past 90 days.
Yes
☒ No ☐
Indicate
by checkmark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive
Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the 12 preceding months (or such shorter period
that the registrant was required to submit and post such file).
Yes
☒ No ☐
Indicate
by checkmark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.
Large
Accelerated Filer ☐ |
Accelerated
Filer ☐ |
Accelerated
Filer ☐ |
Smaller
Reporting Company ☒ |
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes
☐ No ☒
As of May
1, 2015, the registrant had a total of 72,328,719 shares of Common Stock outstanding.
MOBIQUITY
TECHNOLOGIES, INC.
FORM
10-Q QUARTERLY REPORT
TABLE
OF CONTENTS
|
PAGE |
PART I. FINANCIAL
INFORMATION |
|
|
|
Item
1. Financial Statements (Unaudited) |
|
|
|
Condensed
Consolidated Balance Sheets as of March 31, 2015 (unaudited) and December 31, 2014 (audited) |
1 |
|
|
Condensed
Consolidated Statements of Operations for the Three Months Ended March 31, 2015 and March 31, 2014 (unaudited) |
2 |
|
|
Condensed
Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2015 and March 31, 2014 (unaudited) |
3 |
|
|
Notes
to Condensed Financial Statements (unaudited) |
4 |
|
|
Item
2. Management's Discussion and Analysis of Financial Condition and Results of Operations |
20 |
|
|
Item
3 Quantitative and Qualitative Disclosures |
27 |
|
|
Item
4. Controls and Procedures |
27 |
|
|
PART II. OTHER
INFORMATION |
|
|
|
Item
1. Legal Proceedings |
27 |
|
|
Item
la. Risk Factors |
27 |
|
|
Item
2. Changes in Securities |
28 |
|
|
Item
3. Defaults Upon Senior Securities |
29 |
|
|
Item
4. Mine Safety Disclosures |
29 |
|
|
Item
5. Other Information |
29 |
|
|
Item
6. Exhibits and Reports on Form 8-K |
29 |
|
|
SIGNATURES |
32 |
MOBIQUITY
TECHNOLOGIES, INC.
Condensed
Balance Sheets
| |
March 31, | | |
December 31, | |
| |
2015 | | |
2014 | |
| |
Unaudited | | |
Audited | |
Assets | |
| | |
| |
| |
| | |
| |
Current Assets: | |
| | |
| |
Cash and cash equivalents | |
$ | 1,515,175 | | |
$ | 1,654,171 | |
Accounts receivable, net | |
| 243,937 | | |
| 445,892 | |
Inventory, net | |
| 149,278 | | |
| 190,854 | |
Prepaid expenses and other current assets | |
| 184,558 | | |
| 152,502 | |
Total Current Assets | |
| 2,092,948 | | |
| 2,443,419 | |
| |
| | | |
| | |
Property and equipment, net | |
| 211,650 | | |
| 262,480 | |
| |
| | | |
| | |
Intangible assets, net | |
| 87,167 | | |
| 94,328 | |
| |
| | | |
| | |
Other Assets | |
| 33,741 | | |
| 33,741 | |
Total Assets | |
$ | 2,425,506 | | |
$ | 2,833,968 | |
| |
| | | |
| | |
Liabilities and Stockholders' Deficit | |
| | | |
| | |
| |
| | | |
| | |
Current Liabilities: | |
| | | |
| | |
Accounts payable | |
$ | 453,738 | | |
$ | 609,957 | |
Accrued expenses | |
| 338,054 | | |
| 369,383 | |
Convertible promissory note | |
| 322,000 | | |
| 322,000 | |
Total Current Liabilities | |
| 1,113,792 | | |
| 1,301,340 | |
| |
| | | |
| | |
Long-term portion of convertible notes | |
| 3,928,860 | | |
| 2,573,979 | |
Total Liabilities | |
| 5,042,652 | | |
| 3,875,319 | |
| |
| | | |
| | |
Stockholders'
Deficit: | |
| | | |
| | |
Preferred Stock, $.0001 par value; 5,000,000 shares authorized, zero and 220,000 shares issued and outstanding at March 31, 2015 and December 31, 2014 respectively | |
| - | | |
| - | |
Common stock, $.0001 par value; 200,000,000 and 100,000,000 shares authorized; 66,652,053 and 64,818,243 shares issued and outstanding at 2015 and 2014, respectively | |
| 6,667 | | |
| 6,482 | |
Additional paid-in capital | |
| 29,968,625 | | |
| 28,966,269 | |
Accumulated other comprehensive income (loss) | |
| (1,584 | ) | |
| (2,236 | ) |
Accumulated deficit | |
| (32,590,854 | ) | |
| (30,011,866 | ) |
Total Stockholders' Deficit | |
| (2,617,146 | ) | |
| (1,041,351 | ) |
Total Liabilities and Stockholders' Deficit | |
$ | 2,425,506 | | |
$ | 2,833,968 | |
The
accompanying notes are an integral part of these condensed consolidated financial statements.
MOBIQUITY
TECHNOLOGIES, INC.
Condensed
Consolidated Statements of Operations
Three
Months Ended March 31,
| |
2015 | | |
2014 | |
| |
Unaudited | | |
Unaudited | |
| |
| | |
| |
Revenues, net | |
$ | 515,383 | | |
$ | 626,572 | |
Cost of Revenues | |
| 437,424 | | |
| 505,900 | |
Gross Profit | |
| 77,959 | | |
| 120,672 | |
| |
| | | |
| | |
Operating Expenses: | |
| | | |
| | |
Selling, general and administrative expenses | |
| 2,578,105 | | |
| 2,461,357 | |
Total Operating Expenses | |
| 2,578,105 | | |
| 2,461,357 | |
| |
| | | |
| | |
Loss from Operations | |
| (2,500,146 | ) | |
| (2,340,685 | ) |
| |
| | | |
| | |
Other Income (Expense): | |
| | | |
| | |
Interest expense | |
| (78,866 | ) | |
| (10,129 | ) |
Interest income | |
| 24 | | |
| 51 | |
Total Other Income (Expense) | |
| (78,842 | ) | |
| (10,078 | ) |
| |
| | | |
| | |
Net Loss | |
$ | (2,578,988 | ) | |
$ | (2,350,763 | ) |
| |
| | | |
| | |
Other Comprehensive Income (Loss) | |
$ | - | | |
$ | - | |
Net Comprehensive Loss | |
$ | (2,578,988 | ) | |
$ | (2,350,763 | ) |
| |
| | | |
| | |
Net Loss Per Common Share: | |
| | | |
| | |
| |
| | | |
| | |
Basic and Diluted | |
$ | (0.04 | ) | |
$ | (0.04 | ) |
| |
| | | |
| | |
Weighted Average Common Shares Outstanding: | |
| | | |
| | |
| |
| | | |
| | |
Basic and Diluted | |
| 64,933,423 | | |
| 56,936,376 | |
The
accompanying notes are an integral part of these condensed consolidated financial statements.
MOBIQUITY
TECHNOLOGIES, INC.
Condensed
Consolidated Statements of Cash Flows
Three
Months Ended March 31,
| |
2015 | | |
2014 | |
| |
Unaudited | | |
Unaudited | |
Cash Flows from Operating Activities: | |
| | |
| |
Net
loss | |
$ | (2,578,988 | ) | |
$ | (2,350,763 | ) |
Adjustments to reconcile net loss to
net cash used in operating activities: | |
| | | |
| | |
Depreciation and
amortization | |
| 61,499 | | |
| 80,685 | |
Stock-based compensation | |
| 453,941 | | |
| 1,091,052 | |
Stock issued for
services | |
| 21,600 | | |
| - | |
Debt discount on deferred financing | |
| 4,881 | | |
| - | |
Changes in operating
assets and liabilities: | |
| | | |
| | |
(Increase) decrease in operating assets: | |
| | | |
| | |
Accounts receivable | |
| 201,955 | | |
| 98,430 | |
Inventory | |
| 41,576 | | |
| (82,990 | ) |
Prepaid expenses
and other assets | |
| (32,056 | ) | |
| (7,622 | ) |
Increase (decrease) in operating liabilities: | |
| | | |
| | |
Accounts payable | |
| (156,219 | ) | |
| 16,199 | |
Accrued expenses | |
| (4,329 | ) | |
| (93,272 | ) |
Changes
in foreign currency translation | |
| - | | |
| (5,990 | ) |
Net Cash Used
in Operating Activities | |
| (1,986,140 | ) | |
| 1,096,492 | |
| |
| | | |
| | |
Cash Flows from Investing Activities: | |
| | | |
| | |
Purchase
of property and equipment | |
| (3,508 | ) | |
| (7,431 | ) |
Net Cash Used
in Investing Activities | |
| (3,508 | ) | |
| (7,431 | ) |
| |
| | | |
| | |
Cash Flows from Financing Activities: | |
| | | |
| | |
Proceeds from Loan(s) | |
| 1,350,000 | | |
| - | |
Proceeds
from issuance of stock | |
| 500,000 | | |
| 2,023,800 | |
Net Cash Provided
by Financing Activities | |
| 1,850,000 | | |
| 2,023,800 | |
| |
| | | |
| | |
Net Increase (Decrease) in Cash and
Cash Equivalents | |
| (139,648 | ) | |
| 762,098 | |
Cash and Cash Equivalents, beginning
of period | |
| 1,654,171 | | |
| 1,740,989 | |
Change in foreign
currency | |
| 652 | | |
| - | |
Cash and Cash Equivalents,
end of period | |
$ | 1,515,175 | | |
$ | 2,503,087 | |
| |
| | | |
| | |
Supplemental Disclosure Information: | |
| | | |
| | |
Cash
paid for interest | |
$ | 39,075 | | |
$ | 10,129 | |
Cash
paid for taxes | |
$ | - | | |
$ | - | |
| |
| | | |
| | |
Non-cash Disclosures: | |
| | | |
| | |
Stock
issued for interest | |
$ | 27,000 | | |
$ | - | |
The
accompanying notes are an integral part of these condensed consolidated financial statements.
MOBIQUITY TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 2015 AND 2014
(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
has an office in Spain to support our U.S. operations.
We operate a national location-based
mobile advertising network that has developed a consumer-focused proximity network which we believe is unlike any other in the
United States. Our integrated suite of proprietary location based mobile advertising technologies allows clients to execute more
personalized and contextually relevant experiences, driving brand awareness and incremental revenue.
Leveraging
our agreement with Simon Property Group,. Inc. (which we refer to herein as Simon or Simon Property), the largest mall operator
in the U.S. in terms of number of properties, we have installed our location-based mobile advertising solutions in the common
areas of approximately 240 Simon retail destinations across the U.S. to create "smart malls" using Bluetooth-enabled
iBeacon compatible technology. In April 2015, we entered into an agreement with Macerich Partnership, L.P. (which we refer to
herein as Macerich) to expand our mall footprint into approximately 55 Macerich malls by June 1, 2015. We plan to expand our mall
footprint into the common areas of other malls and outside of malls with additional synergistic venues that will allow for cross
marketing opportunities, including venues such as stadiums, arenas, additional college campuses, airports and retail chains. For
example, we have entered into an agreement with the New York State University at Stony Brook to deploy a mobile advertising network
in their new arena. This type of installation will enable fan engagement, cross-marketing opportunities, sponsorship activation
and create interactive event experiences. This is our first installation in the university market.
Ace
Marketing is our legacy marketing and promotions business which provides integrated marketing services to our commercial customers.
While Ace Marketing currently represents substantially all of our revenue, we anticipate that activity from Ace Marketing will
represent a diminishing portion of corporate revenue as our attention is now principally focused on developing and executing on
opportunities in our Mobiquity Networks business.
Our Agreements with Mall Property Owners/Managers
and IBM
Simon Properties
We entered into an initial
agreement with Simon Property in April 2011. This agreement was amended in September 2013 and July 2014 to, among other things,
expand the number of Simon mall properties covered by the agreement. Pursuant to our agreement with Simon, we have the right,
on an exclusive basis, to install Bluetooth proximity marketing equipment to send information across the air space of the common
areas of our Simon mall network, which includes approximately 240 malls across the United States. Under a master agreement and
related agreements between us and Simon covering approximately 240 Simon malls, Simon is entitled to receive fees from us equal
to a minimum fee plus the greater of a pre-set, per mall fee or a percentage of revenues derived from within the Simon mall network
as well as certain commission fees based on revenues generated through Simon's sales efforts. We believe that the revenue share
in which Simon participates will exceed the minimum annual mall fees if we generate revenues within the Simon network of approximately
$14 million or more in a calendar year. Our agreement with Simon requires us to maintain letters of credit for each calendar year
under the agreement represented by the minimum amount of fees due for such calendar year as well as certain levels of insurance.
The agreement also provides for Simon to adjust the number of malls subject to the agreement from time to time based upon changes
in its beneficial ownership interest in the malls. Our agreement with Simon expires on December 31, 2017. Our agreement with Simon
is subject to earlier termination by either us or Simon following a notice and cure period in the event of a material breach of
the agreement.
Macerich
In
April 2015, we entered into a license agreement with Macerich. Pursuant to our agreement with Macerich, we have the right to install
Mobi-Beacons to send information across the air space of the common areas of our Macerich mall network, which will, when fully
installed we estimate to include approximately 55 malls, across the United States. Our right to install our Mobi-Beacons to market
and sell third party paid advertising in the interior common areas of these malls shall be exclusive. Under a Macerich license
agreement between us and Macerich currently covering 55 malls, Macerich is entitled to receive fees from us equal to a minimum
fee plus the greater of a pre-set per mall fee or a percentage of revenues derived from within the Macerich mall network as well
as certain commission fees based on revenues generated through Macerich's sales efforts. We believe that the revenue share in which
Macerich participates will exceed the minimum annual mall fees if we generate revenues with the Macerich network of approximately
$3 million or more in a calendar year. The agreement also provides for Macerich to adjust the number of malls subject to the agreement
from time-to-time based upon changes in its beneficial ownership in the malls. Our agreement with Macerich has a term of three
years but is subject to earlier termination (i) with cause following a notice and cure period in the event of material breach of
the agreement or (ii) without cause by Macerich after one year on 90 days' prior written notice to us. In the event of termination
of the agreement without cause, Macerich will reimburse us for certain out-of-pocket expenses.
IBM
In April 2015, we entered
into a Joint Initiative Agreement with IBM and enrolled as an IBM Business Partner through IBM's PartnerWorld program. We are teaming
with IBM to deliver jointly developed solutions for mall-based tenants, including retail clients. These solutions leverage the
Mobiquity Networks beacon platform deployed exclusively in the common areas of our mall footprint across the United States, as
well as our SDK which can be embedded within mall clients' mobile apps, to deliver relevant content in real time to shoppers' smart
phones as they visit these malls. IBM has agreed to work with these clients to provide the analytics solutions needed to deliver
personalized, one-on-one content to shoppers through our platform, and to help clients obtain insights from shopper transactions
to drive improved customer experience and business performance. IBM services will also provide the integration capabilities needed
to combine the Mobiquity Network platform in the mall common areas with the in-store server and network infrastructure, to optimize
delivery of context-relevant content for the shopper. Together, our Joint initiative Agreement with IBM can help their mall clients
provide enhanced omni-channel marketing solutions and optimize business results. The agreement
has an initial terms of two years and may be extended by agreement of the parties.
PRINCIPLES OF CONSOLIDATION
- The accompanying consolidated financial statements include the accounts of Mobiquity Technologies, Inc., formerly known as Ace
Marketing & Promotions, Inc., and its wholly owned subsidiaries, Mobiquity Networks, Inc., Ace Marketing, Inc., (which has
had its name changed to Ace Marketing & Promotions, Inc. and Mobiquity Wireless S.L.U.). All intercompany accounts and transactions
have been eliminated in consolidation.
The
Condensed Consolidated Balance Sheets as of March 31, 2015 and December 31, 2014, the Condensed Consolidated Statements of Operations
for the three months ended March 31, 2015 and 2014 and the Condensed Consolidated Statements of Cash Flows for the three months
ended March 31, 2015 and 2014 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 consolidated financial statements contain all adjustments necessary to present
fairly in all material respects our financial position as of March
31, 2015, results of operations for the three months ended March 31, 2015 and 2014 and cash flows for the three months ended March
31, 2015 and 2014. All such adjustments are of a normal recurring nature. The results of operations and cash flows for the three
months ended March 31, 2015 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 Financial Statements.
The information contained
in this report on Form 10-Q should he read in conjunction with our Form 10-K for our fiscal year ended December 31, 2014.
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 - Effective January 1, 2008, the Company adopted FASB ASC 820, "Fair Value Measurements and Disclosures"
("ASC 820"), for assets and liabilities measured at fair value on a recurring basis. ASC 820 establishes a common definition
for fair value to be applied to existing generally accepted accounting principles that require the use of fair value measurements,
and establishes a framework for measuring fair value and expands disclosure about such fair value measurements. The adoption of
ASC 820 did not have an impact on the Company's financial position or operating results, but did expand certain disclosures.
ASC 820 defines fair value
as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants
at the measurement date. Additionally, ASC 820 requires the use of valuation techniques that maximize the use of observable inputs
and minimize the use of unobservable inputs. These inputs are prioritized below:
Level
1: Observable inputs such as quoted market prices in active markets for identical assets or liabilities.
Level
2: Observable market-based inputs or unobservable inputs that are corroborated by market data.
Level 3: Unobservable inputs for which
there is little or no market data, which require the use of the reporting entity's own assumptions.
Cash
and cash equivalents include money market securities that are considered to be highly liquid and easily tradable as of March 31,
2015 and December 31, 2014. These securities are valued using inputs observable in active markets for identical securities and
are therefore classified as Level 1 within our fair value hierarchy.
The
carrying amounts of financial instruments, including accounts receivable, accounts payable and accrued liabilities, and promissory
note, approximated fair value as of March 31, 2015 and December 31, 2014, because of the relatively short-term maturity of these
instruments and their market interest rates. No instruments are carried at fair value.
RECLASSIFICATIONS - Certain
amounts in the prior period financial statements have been reclassified to conform to the current period presentation. These reclassifications
had no effect on reported losses.
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 March 31, 2015 and
December 31, 2014, the balances were $1,515,175 and $1,654,171, 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, as a consequence, believes that its receivable credit risk exposure is limited.
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 March 31, 2015 and December 31, 2014, the Company exceeded FDIC limits by $1,136,541 and $1,292,227,
respectively.
REVENUE RECOGNITION —
The Company recognizes revenue, for all revenue streams, when it is realized or realizable and estimable in accordance with ASC
605, "Revenue Recognition". The Company will recognize revenue only when all of the following criteria have been
met:
|
· |
Persuasive evidence for an agreement exists; |
|
· |
Service has been provided; |
|
· |
The fee is fixed or determinable; and, |
|
· |
Collection is reasonably assured. |
ACE
MARKETING — Ace Marketing's revenue is recognized when title and risk of loss transfers to the customer and the earnings
process is complete. In general, title passes to our customers upon the customer's receipt of the merchandise. Revenue is recognized
on a gross basis since Ace Marketing has the risks and rewards of ownership, latitude in selection of vendors and pricing, and
bears all credit risk. Advance payments made by customers are included in customer deposits. Ace Marketing records all shipping
and handling fees billed to customers as revenues and related costs as cost of goods sold, when incurred. Additional source of
revenue, derived from emails/texts directly to consumers are recognized under contractual arrangements. Revenue from this advertising
method is recognized at the time of service provided.
MOBIQUITY
NETWORKS — Mobiquity Networks. Mobiquity has three avenues of income with our beacon platform, Bluetooth Push and Wi-Fi.
Revenue is realized with the signing of the advertising contract. 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. Revenue is recognized the same way for the three mobile solutions. The first option to earn revenue with the
beacon platform is for customers to contract for advertising campaigns, on our platform, either directly through their own app
or through various third party apps. The second option to earn revenue is through a revenue share with advertising exchanges and
networks that deliver advertising campaigns to their customers based on our real-time location signal data. The third option would
be through selling our historical data to data management platform companies.
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 credit-worthiness, current economic trends
and changes in customer payment terms when evaluating the adequacy of the allowance for doubtful accounts. As of March 31, 2015
and December 31, 2014, allowance for doubtful accounts were $40,000 and $40,000, respectively.
INVENTORY
— Inventory is recorded at cost (First In, First Out) and is comprised of finished goods. The Company maintains an inventory
on hand for its largest customer's frequent order items. All items held are branded for the customer, therefore are not available
for public distribution. The Company has an agreement with this customer, for cost recovery, if vendor relationship is terminated.
There have been minimal reserves placed on inventory, based on this arrangement. As of March 31, 2015 and December 31, 2014, the
Company has reserved against $31,676 and $31,676, 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 - Long-lived assets such as property, equipment and identifiable intangibles are reviewed for impairment whenever
facts and circumstances indicate that the carrying value may not be recoverable. When required impairment losses on assets to
be held and used are recognized based on the fair value of the asset. The fair value is determined based on estimates of future
cash flows, market value of similar assets, if available, or independent appraisals, if required. If the carrying amount of the
long-lived asset is not recoverable from its undiscounted cash flows, an impairment loss is recognized for the difference between
the carrying amount and fair value of the asset. When fair values are not available, the Company estimates fair value using the
expected future cash flows discounted at a rate commensurate with the risk associated with the recovery of the assets. We did
not recognize any impairment losses for any periods presented.
WEBSITE TECHNOLOGY - Website
technology 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 ASC985.
ADVERTISING COSTS
- Advertising costs are expensed as incurred. For the years ended March 31, 2015 and March 31, 2014, there were advertising
costs of $200 and $288, 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 8 "Stock
Option Plans" in the Notes to Consolidated Financial Statements in this report for a more detailed discussion.
BENEFICIAL CONVERSIONS
- 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.
FOREIGN
CURRENCY TRANSLATIONS - The Company's functional and reporting currency is the U.S. dollar. We own a subsidiary in Europe. Our
subsidiary's functional currency is the EURO. All transactions initiated in EUROs are translated into U.S. dollars in accordance
with ASC 830-30, "Translation of Financial Statements," as follows:
| (i) | Monetary assets and liabilities at the rate of exchange in effect at the balance sheet date. |
| (ii) | Fixed assets and equity transactions at historical rates. |
| (iii) | Revenue and expense items at the average rate of exchange prevailing during the period. |
Adjustments arising from
such translations are deferred until realization and are included as a separate component of stockholders' equity as a component
of comprehensive income or loss. Therefore, translation adjustments are not included in determining net income (loss) but reported
as other comprehensive income.
No significant realized
exchange gains or losses were recorded since March 7, 2013 (date of acquisition of subsidiary) to March 31, 2015.
INCOME TAXES - Deferred
income taxes are recognized for temporary differences between financial statement and income tax basis of assets and liabilities
for which income tax or tax benefits are expected to be realized in future years. A valuation allowance is established to reduce
deferred tax assets, if it is more likely than not, that all or some portion of such deferred tax assets will not be realized.
The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
We 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: LOSS PER SHARE
Basic loss per common share
is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Dilutive
loss per share gives effect to stock options and warrants, which are considered to be dilutive common stock equivalents. Basic
loss per common share was computed by dividing net loss by the weighted average number of shares of common stock outstanding. 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 45,878,110 and 33,554,000 because they are anti-dilutive as a result of a net
loss for the three months ended March 31, 2015 and 2014, respectively.
NOTE 3: CONVERTIBLE PROMISSORY NOTE
Summary of Convertible Promissory Notes:
| |
March 31, | | |
March 31, | |
| |
2015 | | |
2014 | |
Arnost Note (a) | |
$ | 322,000 | | |
$ | 322,000 | |
Cavu Notes (b), net of $43,140 debt discounts | |
| 206,860 | | |
| - | |
Berg Notes (c)(d) | |
| 3,722,000 | | |
| - | |
Total Debt | |
| 4,250,860 | | |
| 322,000 | |
Current portion of debt | |
| 322,000 | | |
| 322,000 | |
Long-term portion of debt | |
$ | 3,928,860 | | |
$ | - | |
| (a) | On June 12, 2012, the Company closed on a security
agreement (the "Security Agreement") with TCA related to a $350,000 Convertible promissory note issued by the
Company in favor of TCA (the "Convertible Note"), which Convertible Note was funded by TCA on June 12, 2012. The
maturity date of the Convertible Note was December 2013, and the Convertible Note bears interest at a rate of twelve percent
(12%) per annum. The Convertible Note is convertible into shares of the Company's common stock at a price equal to
ninety-five percent (95%) of the average of the lowest daily volume weighted average price of the Company's common stock
during the five (5) trading days immediately prior to the date of conversion. The Convertible Note may be prepaid in whole
or in part at
the Company's option without penalty. The Security Agreement granted to TCA a continuing, first priority
security interest in all of the Company's assets, wheresoever located and whether now existing or hereafter arising or
acquired. The Company's wholly-owned subsidiary, Mobiquity Networks, Inc., also entered into a similar Security Agreement
and Guaranty
Agreement. On December 12, 2013, TCA sold its entire interest in the Company's $350,000 secured promissory note to
Thomas Arnost, a director of the Company, at face value. Mr. Arnost entered into an amendment to the note to extend the
maturity date of the note to June 12, 2014, which was later extended to December 12, 2014 and again extended to December 31,
2015, subject to his right to declare the note due and payable at any time in his sole discretion. Also, the interest rate
was raised from 12% per annum to 15% and the conversion price of the shares issuable upon conversion of the note was fixed
at $.30 per
share. The aforementioned note is convertible at the sole discretion of the noteholder. The Company recognized a
beneficial conversion, in the amount of $116,667, based on the fixed conversion price, compared to the fair market
trading value at the date of the agreement. The noteholder immediately converted $28,000 into 93,334 shares of common stock
in December 2013. The balance on the note is $322,000 as of March 31, 2015 and December 31, 2014. |
| (b) | In July 2014, the Company raised
$250,000 in gross proceeds from the sale of convertible promissory notes in the principal amount of $250,000 with a maturity date
of July 31, 2017. The noteholders also received Class CC Warrants to purchase 125,000 shares of common Stock, exercisable at $1.20
per share through July 31, 2017. The placement agent received $17,500 in cash, 25,000 shares of restricted Common Stock and five-year
warrants to purchase 7,500 shares of Common Stock at an exercise price of $.60 per share. The notes bear interest at the rate
of 6% per annum with semi-annual payments to be paid on January 31' and July 31' of each year with the first interest payment
due on January 31, 2015. At the option of the noteholder, the principal and accrued interest thereon is convertible at the greater
of $.50 per share or 85% of the average daily volume weighted average price of the Company's Common Stock on the OTCQB during
the 20 trading days immediately preceding the applicable interest date or conversion date. In the event the Company's Common Stock
has a closing sales price of at least $1.00 per share on the OTCQB for a period of at least 10 trading days with an average daily
volume weighted average of at least 25,000 shares, then the Company's promissory notes shall automatically converted into shares
of the Company's Common Stock at 85% of the average VWAP during the 20 trading days immediately preceding the conversion date. |
The Company evaluated the terms of
the new note in accordance with ASC Topic No. 815 - 40, Derivatives and Hedging - Contracts in Entity's Own Stock. The Company
determined that the conversion feature did not meet the definition of a derivative and therefore did not bifurcate the conversion
feature and account for it as a separate derivative liability. The Company valued the warrants and allocated $33,362 to the warrants;
increasing additional paid in capital and off-setting the notes by the warrant value as debt discount. The Company is amortizing
the debt discount over the term of the notes, accreting the costs until the note balance equals the face value of the note. The
Company recognized $9,110 of interest due to the amortization of the debt discount. The Company evaluated the conversion feature
for a beneficial conversion feature. The effective conversion price was compared to the market price on the date of the note and
was deemed to be less than the market value of underlying common stock at the inception of the note. Therefore, the Company recognized
the beneficial conversion feature in the amount of $59,379 in 2014. The beneficial conversion feature was recorded as an
increase in additional paid-in capital.
| (c) | In November 2014, Carl and Mary Ann Berg 2011 CRT, Carl Berg Trustee, loaned us $1,000,000 pursuant
to a two-year unsecured loan. This loan is repayable in November 2016 with interest at the rate of 4% per annum. Carl Berg is the
brother of Clyde Berg. In December 2014, the Clyde Berg 2011 CRT with Carl Berg as Trustee, loaned us $1,000,000 pursuant to a
two-year unsecured loan. This loan is repayable in December 2016 with interest at the rate of 4% per annum. We have an agreement
with the Bergs to loan us an additional $500,000 on the same terms. These monies were received by us in January 2015. On December
29, 2014, Clyde Berg's daughter loaned us $50,000 pursuant to a two-year note. The principal and accrued interest thereon is convertible
at any time by the noteholders into shares of common stock at a conversion price of $.50 per share. For every $1.00 of principal
and accrued interest thereon converted, the noteholder will also receive a five-year warrant to purchase one share of common stock
at an exercise price of $1.00 per share. |
| (d) | On December 15, 2014, we entered into a letter agreement with Carl E. Berg. The agreement recognized
that Carl and Mary Ann Berg 2011 CRT, Carl Berg Trustee, and Clyde Berg 2011 CRT, Carl Berg Trustee, will have provided $2.5 million
of unsecured loans to us between November and December 2014 ($2 million received in 2014, $500,000 received in January 2015). The
notes mature two years from the origination date and bear interest at 4%. Pursuant to said letter agreement, we agreed that these
unsecured loans may be sold, assigned or transferred to Clyde J. Berg, Carl E. Berg and/or Kara Ann Berg or any entity controlled
by any of the aforementioned individuals in a combination of the aforementioned persons or entities. This letter agreement provides
that if Mr. Carl E. Berg or any permitted transferee purchases or otherwise acquires the $2.5 million of unsecured notes, that
these notes shall be convertible at any time prior to maturity or redemption thereof at a conversion price of $.50 per share. For
every $1.00 in principal converted, a five-year warrant to purchase one additional share of common stock at an exercise price of
$1.00 per share will be issued. In the event that $2.5 million is timely converted on or before January 30, 2015, we will also
issue as a bonus warrants to purchase 1,000,000 shares of common stock, exercisable at $.50 per share over a five year period from
the date of issuance. We also agreed to grant Mr. Berg the right to lend us up to an additional $3.75 million of optional loans
on the same terms and conditions described above on or before February 15, 2015, 850,000 of which was received by us in February
2015. In the event such optional loan is converted into common stock on or before March 31, 2015, we will also issue as an additional
bonus warrants to purchase up to 1,000,000 shares of common stock at an exercise price of $.50 per share from the date of issuance.
We also agreed to grant him the right to lend us up to an additional $3.75 million on the same terms and conditions on or before
May 15, 2015 and in the event such additional optional loan is converted into common stock on or before June 30, 2015, we will
also issue bonus warrants to Mr. Berg to purchase up to 1,000,000 shares of common stock at an exercise price of $.50 per share
over a period of five years from the date of issuance. All bonus warrants contain cashless exercise provisions. The 2,000,000 bonus
warrants described above assumes full funding of the $7.5 million optional loans and 100% conversion on or before the dates described
above. In the event the amount of optional loans is less than an aggregate of $3.75 million converted prior to March 31, 2015 and
an additional $3.75 million converted prior to June 30, 2015, then the bonus warrants to purchase an aggregate of 2,000,000 shares
will be proportionately reduced. In summary, in the event all $10 million is provided to us, including an additional $7.5 million
on a timely basis, subject to our right of acceptance or rejection in our sole discretion, and all loans are timely converted on
or before the dates described above, we will have issued 20 million shares of common stock, 10 million warrants to purchase shares
of common stock at an exercise price of $1.00 per share, plus five year bonus warrants to purchase 3,000,000 shares of our common
stock at an exercise price of $.50 per share with cashless exercise provisions pertaining to the bonus warrants. Also, in the event
the $10 million of funding is completed, Mr. Berg has the right to appoint one independent member to the board, which nominee will
be subject to normal background checks. |
The Company evaluated the terms of
December 15, 2014 agreement and accounted for the modification of the original notes as an extinguishment of the old notes and
fair valued the new note agreement. The Company valued the note with conversion features and warrants and determined that the value
of the new agreement resulted in a $322,000 loss on the extinguishment of debt and a corresponding premium to the loan value.
NOTE
4: STOCKHOLDERS' EQUITY (DEFICIT)
During 2014, the Company
has raised gross proceeds of $3,276,310, net of offering costs of $283,990, from the sale of its Common Stock, at $0.30 to $0.50
per share, in exchange for 10,867,669 common shares and warrants to purchase 4,433,839 shares at an exercise price of $.50 to $1.00
per share through December 31, 2017 and 2019.
During 2014 the
Company received $175,000 of the stock subscription receivables from 2013.
During
2014, the Company issued to consultants and employees, 784,000 shares of stock for services rendered, at a fair market value of
$366,541. Also, the Company issued another 135,000 shares of the common stock to a consultant for prepaid services, at a fair market
value of $53,055.
During
2014, the Company recorded 3,117,000 for stock based compensation related to warrants and options. The Company also recorded a
beneficial conversion feature of $59,379 related to a convertible promissory note for $250,000.
December
2014, the Company issued 500,000 common shares for the receipt of $150,000 cash, from the exercise of 500,000 warrants.
During
the year ending December 2014, cashless exercise of warrants resulted in the issuance of 66,536 shares of common stock.
During
2014, the Company issued 62,791 common shares, valued at $27,000, in payment of interest expense.
In
March 2015, the Company commenced a private placement offering at an offering price of $.30 per share with matching warrants
issued to purchase an additional share of common stock at $.45 per share through March 31, 2015. Three investors purchased
and aggregate of $500,000 of our private placement offering on March 30, 2015. In conjunction with the equity purchase, one
of the investors who had previously provided a letter of credit to Simon Properties in the amount of $1,350,000 negotiated
the right to convert the cash underlying the letter of credit into additional common stock at a reduced exercise price of
$.30 per share.
During
the quarter ended March 31, 2015, the Company issued or was required to issue 90,000 shares of common stock in exchange for services
rendered.
NOTE
5: STOCK COMPENSATION
Compensation costs
related to share-based payment transactions, including 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 periods ended March 31, 2015 and 2014 include employee share-based compensation expense totaling
$453,941 and $1,091,052, 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.
The
following table summarizes stock-based compensation expense for the three months ended
March 31, 2015 and 2014:
| |
Three Months Ended March 31, | |
| |
2015 | | |
2014 | |
Employee stock-based compensation - option grants | |
$ | 368,691 | | |
$ | 14,791 | |
Employee stock-based compensation - stock grants | |
| - | | |
| - | |
Non-Employee stock-based compensation - option grants | |
| 82,250 | | |
| 920,261 | |
Non-Employee stock-based compensation - stock grants | |
| - | | |
| 156,000 | |
Non-Employee stock-based compensation-stock warrant | |
| - | | |
| - | |
| |
| | | |
| | |
Total | |
$ | 453,941 | | |
$ | 1,091,052 | |
NOTE 6: STOCK OPTION PLAN
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. (The 2005 and 2009 Plans are collectively referred to as the "Plans" and the Company
has a combined 14,000,000 shares, which will increase to 24,000,000 shares upon stockholder approval of the increase in the 2009
Plan, available for issuance under 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 under
the Plans during the three months ended March 31, 2015 and 2014 are as follows:
| |
Three Months Ended March 31, | |
| |
2015 | | |
2014 | |
Expected volatility | |
| 162.32 | % | |
| 30.88 | % |
Expected dividend yield | |
| - | | |
| - | |
Risk-free interest rate | |
| 1.47 | % | |
| 2.66 | % |
Expected term (in years) | |
| 10 | | |
| 9.82 | |
| |
| | |
| | |
Weighted | | |
| |
| |
| | |
Weighted | | |
Average | | |
| |
| |
| | |
Average | | |
Remaining | | |
Aggregate | |
| |
| | |
Exercise | | |
Contractual | | |
Intrinsic | |
| |
Share | | |
Price | | |
Term | | |
Value | |
| |
| | | |
| | | |
| | | |
| | |
Outstanding | |
| 16,980,000 | | |
| .51 | | |
| 5.74 | | |
$ | 160,100 | |
Granted | |
| 850,000 | | |
| .53 | | |
| 8.62 | | |
| | |
Exercised | |
| - | | |
| | | |
| | | |
| | |
Cancelled | |
| (600,000 | ) | |
| | | |
| | | |
| | |
Outstanding, March 31, 2015 | |
| 17,230,000 | | |
| .42 | | |
| 7.75 | | |
| 5,000 | |
Options exercisable, March 31, 2015 | |
| 13,154,169 | | |
| .51 | | |
| 5.43 | | |
$ | 8,400 | |
The
weighted-average grant-date fair value of options granted during the three months ended
March 31, 2015 and 2014 was $.53 and $.27, respectively.
The
aggregate intrinsic value of options outstanding and options exercisable at March 31, 2015 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 $0.24 closing price of the Company's common stock on March 31, 2015.
As
of March 31, 2015, the fair value of unamortized compensation cost related to unvested stock option awards was $1,095,825.
The
weighted average assumptions made in calculating the fair value of warrants granted during
the three months ended March 31, 2015 and 2014 are as follows:
| |
Three Months Ended March 31, | |
| |
2015 | | |
2014 | |
Expected volatility | |
| 182.46 | % | |
| 0.00 | % |
Expected dividend yield | |
| - | | |
| - | |
Risk-free interest rate | |
| 2.12 | % | |
| 0.00 | % |
Expected term (in years) | |
| | | |
| | |
| |
| | |
| | |
Weighted | | |
| |
| |
| | |
Weighted | | |
Average | | |
| |
| |
| | |
Average | | |
Remaining | | |
Aggregate | |
| |
| | |
Exercise | | |
Contractual | | |
Intrinsic | |
| |
Share | | |
Price | | |
Term | | |
Value | |
| |
| | |
| | |
| | |
| |
Outstanding | |
| 23,773,914 | | |
$ | .58 | | |
| 2.50 | | |
$ | 53,500 | |
Granted | |
| 1,666,667 | | |
$ | .41 | | |
| 5.01 | | |
| | |
Exercised | |
| - | | |
| - | | |
| | | |
| | |
Cancelled | |
| | | |
| - | | |
| | | |
| | |
Outstanding, March 31, 2015 | |
| 25,440,581 | | |
$ | .69 | | |
| 4.36 | | |
| 7,000 | |
Options warrants exercisable, March 31, 2015 | |
| 25,440,581 | | |
$ | .72 | | |
| 2.58 | | |
$ | 7,000 | |
NOTE 7: COMMITMENTS AND CONTINGENCIES
COMMITMENTS—
In
April 2011, we entered into our agreement with Simon Property Group, which
agreement was amended first in September 2013 and then in July 2014. This second amendment provides for us to expand our
location-based mobile mall network footprint to about 240 Simon malls across the United States. Our agreement with Simon
currently expires December 31, 2017. Simon is entitled to receive fees from us equal to the greater of a pre-set per mall fee
or a percentage of revenues derived from within the Simon Mall network. The revenue share agreement in which Simon
participates will exceed the minimum annual mall fees if the Company has generated revenues within the Simon network of about
$15 million or more in a calendar year. Our agreement with Simon requires the company to maintain letters of credit for each
calendar year under the agreement represented by the minimum amount of fees due for such calendar year. For 2015, the minimum
fees of $2.7 million has been secured through two bank letters of credit, one of which was issued in the amount of
$1,350,000 utilizing the funds of a non-affiliated stockholder and the second letter of credit was obtained in the same
amount through the funds of Thomas Arnost, our Executive Chairman. In the event Simon draws down upon either letter of
credit, we have 30 days after the draw down to obtain replacement letters of credit. Each person who secured our letters of
credit has the opportunity to notify us that they wish to turn the cash funds securing the letters of credit over to us and
to convert such funds into Common Stock originally at a conversion price of $1.00 per share and recently adjusted to $.30
per share. Also, each person who issued the letter of credit is receiving quarterly, while the letters of credit are
outstanding, options to purchase 125,000 shares of Common Stock, exercisable at the prevailing market price per share on the
date of grant and interest at the rate of 8% per annum on the monies that they have had to set aside in their bank accounts
and are unable to have access to such monies.
In
February 2012, the Company entered into a lease agreement for new executive office space of approximately 4,200 square feet located
at 600 Old Country Road, Suite 541, Garden City, NY 11530. The lease agreement is for 63 months, commencing April 2012 and expiring
June 2017. The annual rent under this office facility for the first year is estimated at $127,000, including electricity, subject
to an annual increase of 3%. In the event of a default in which the Company is evicted from the office space, Mobiquity would
be responsible to the landlord for an additional payment of rent of $160,000 in the first year of the lease, an additional payment
of $106,667 in the second year of the lease and an additional payment of rent of $53,333 in the third year of the lease. Such
additional rent would be payable at the discretion of the Company in cash or in Common Stock of the Company.
The
Company leases office space under non-cancelable operating leases in Farmingville, NY which expired in November 2014. The Company
is currently operating on a month to month basis with an increase of 5% in rents. The Company is obligated for the payment of real
estate taxes under these leases. The Company also leases on a month to month basis another office in the 600 Old Country Road building
which is approximately 800 square feet at a cost of $1650 per month. The Company also leases approximately 1,200 square feet of
office and warehouse space in Spain at a monthly cost of approximately $2,200.
In March of 2014, the
Company entered into a month to month lease agreement for approximately a 400 square foot office space in
Manhattan NY at $3,700 per month.
Rent and real estate tax expense was approximately $739,500 and $293,000 for the three
months ended March 31, 2015 and 2014, respectively.
EMPLOYMENT
CONTRACTS —
Michael
D. Trepeta and Dean L. Julia
On
March 1, 2005, the Company entered into employment contracts with two of its
officers, namely, Dean L. Julia and Michael D. Trepeta. The employment agreements provide for minimum annual salaries,
currently $30,000 per month (which does not include $2,000 per month which has been deferred until receipt of additional
financing), plus bonuses equal to 5% of pre-tax earnings (as defined) and other perquisites commonly found in such
agreements. On March 1st of each year, each officer receives a $2,000 per month salary increase. In addition, pursuant to the
employment contracts, the Company annually grants each officer options to purchase 200,000 shares of common stock.
On
August 22, 2007, the Company approved a three year extension of the employment contracts with two of its officers expiring on
February 28, 2011. The employment agreements provided for minimum annual salaries with scheduled increases per annum to occur
on every anniversary date of the contract and extension commencing on March 1, 2008. A signing bonus of options to purchase 150,000
shares granted to each executive were fully vested at the date of the grant and exercisable at $1.20 per share through August
22, 2017. Ten year options to purchase 50,000 shares of common stock are to be granted at fair market value on each anniversary
date of the contract and extension commencing March 1, 2008. Termination pay of one year base salary based upon the scheduled
annual salary of each executive officer for the next contract year, plus the amount of bonuses paid (or entitle to be paid) to
the executive for the current fiscal year of the preceding fiscal year, whichever is higher.
On
April 7, 2010, the Board of Directors approved a five-year extension of the employment contract of Dean L. Julia and Michael D.
Trepeta to expire on March 1, 2015, The Board approved the continuation of each officer's current salary and scheduled salary
increases on March 1st of each year. The Board also approved a signing bonus of stock options to purchase 200,000 shares
granted to each officer which is fully vested at the date of grant and exercisable at $.50 per share through April 7, 2020; ten-year
stock options to purchase 100,000 shares of Common Stock to be granted to each officer at fair market value on each anniversary
date of the contract and extension thereof commencing March 1, 2011; and termination pay of one year base salary based upon the
scheduled annual salary of each executive officer for the next contract year plus the amount of bonuses paid or entitled to be
paid to the executive for the current fiscal year or the preceding fiscal year, whichever is higher. In the event of termination,
the executives will continue to receive all benefits included in the employment agreement through the scheduled expiration date
of said employment agreement prior to the acceleration of the termination date thereof.
In
July 2012, the Company approved and in January 2013 the Company implemented amending the employment agreements of Messrs. Julia
and M. Trepeta to expire on February 28, 2017, subject to an automatic one year renewal on March 1, 2013 and on each March 1' thereafter,
unless the Employment Agreement is terminated in accordance with its terms on or before December 30th of the prior calendar year.
In the event of termination without cause, the executives will continue to receive all salary and benefits included in the employment
agreement through the scheduled expiration date of said employment agreement prior to the acceleration of the termination date
thereof, plus one year termination pay.
On
May 28, 2013, the Company approved amending the employment agreements of Messrs. Julia and Trepeta to provide that each officer
may choose an annual bonus equal to 5% of pre-tax earnings for the most recently completed
year before deduction of annual bonuses paid to officers or, in the event majority control of the Company is acquired by a person
or a group of persons during the prior fiscal year, the officer may choose to receive the aforementioned bonus or 1% of the control
consideration paid by acquirer(s) to acquire majority control of the Company.
Thomas Arnost
In December 2014, we entered
into a three-year employment agreement with Thomas Arnost serving as Executive Chairman of the board. Mr. Arnost receives a monthly
salary of $10,000 plus an annual grant of options for serving on the board of directors. In the event of his termination, by Mr.
Arnost or by the company for cause, Mr. Arnost will receive his pay through the termination date. In the event that Mr. Arnost
is terminated without cause, he shall be entitled to receive his salary paid through the end of the term of his agreement. Mr.
Arnost may terminate the agreement at any time by giving three months prior written notice to our board of directors. Mr. Arnost
will also be entitled to indemnification against all claims, judgments, damages, liabilities, costs and expenses (including reasonably
legal fees) arising out of, based upon or related to his performance of services to us, to the maximum extent permitted by law.
Sean Trepeta
In December 2014, Mobiquity
Networks entered into an employment agreement with Sean Trepeta, to serve as President of Mobiquity Networks as an employee at
will. Mr. Trepeta, as a full-time employee, is to be paid a salary at the rate of $20,000 per month. Upon the execution of the
agreement, he received 10-year options to purchase 1,500,000 shares of our common stock vesting quarterly over a period of three
years. For calendar 2015, he will be entitled to a bonus of $125,000 upon revenues of Mobiquity Networks achieving a minimum of
$6 million in revenues and a further bonus of $125,000 for a total of $250,000 at such time as Mobiquity Network's revenues achieve
a minimum of $12 million, it being understood that any revenues which do not have a 30% margin shall not count toward these totals.
All options granted to Mr. Trepeta will become immediately vested in the event of a change in control of our Company or sale of
substantially all of our assets. In the event we terminate Mr. Trepeta without cause, after six months of continued employment
under the employment agreement, Mr. Trepeta is entitled to receive three months' severance pay.
Paul Bauersfeld
In
December 2014, we entered into an employment agreement with Paul Bauersfeld, our Chief Technology Officer, who is an employee
at will. Mr. Bauersfeld, as a full-time employee, is to be paid a salary at the rate of $25,000 per month. Upon the execution
of the agreement, he received 10-year options to purchase 1,000,000 shares of our common stock vesting quarterly over a period
of three years. For calendar 2015, he will be entitled to a bonus of $125,000 upon revenues of Mobiquity Networks achieving a
minimum of $6 million in revenues and a further bonus of $125,000 for a total of $250,000 at such time as Mobiquity Network's
revenues achieve a minimum of $12 million, it being understood that any revenues which do not have a 30% margin shall not count
toward these totals. The foregoing compensatory arrangements with Mr. Bauersfeld is in addition to the non-statutory stock options
to purchase 2,600,000 shares of our common stock previously granted to Mr. Bauersfeld. All options granted to Mr. Bauersfeld will
become immediately vested in the event of a change of control of our company or sale of substantially all of our assets. In the
event we terminate Mr. Bauersfeld without cause. Mr. Bauersfeld is entitled to receive six months' severance pay.
Sean McDonnell
Sean McDonnell, our Chief
Financial Officer, is an employee at will and is currently receiving a salary of $132,000 per annum.
TRANSACTIONS
WITH MAJOR CUSTOMERS —
The
Company sells its branded merchandise to a geographically diverse group of customers, performs ongoing credit evaluations of its
customers and generally does not require collateral. During the three months ended March 31,
2015 a customer accounted for approximately 39% of net revenues and for the three months ended March 31, 2014 a customer accounted
for approximately 25% of net revenues. The Company holds on hand certain items that are ordered on a regular basis.
NOTE 8: SEGMENT INFORMATION
Reportable
operating segment is determined based on Mobiquity Technologies, Inc.'s management approach. The management approach, as defined
by accounting standards which have been codified into FASB ASC 280, "Segment Reporting," is based on the way that the
chief operating decision-maker organizes the segments within an enterprise for making decisions about resources to be allocated
and assessing their performance. Our chief operating
decision-maker is our Chief Executive Officer and Chief Financial Officer.
While
our results of operations are primarily reviewed on a consolidated basis, the chief operating decision-maker also manages the enterprise
in two operating segments: (i) Ace Marketing and Promotions, Inc. captures Branding
& Branded Merchandise (ii) Mobiquity Networks represent our Mobil Marketing.
Corporate management defines
and reviews segment profitability based on the same allocation methodology as presented in the segment data tables below:
First
Quarter of Fiscal 2015
| |
Quarter Ended March 31, 2015 | |
| |
Ace Marketing & Promotions, Inc. | | |
Mobiquity Networks, Inc. | | |
Total | |
Revenues, net | |
$ | 515,383 | | |
| - | | |
$ | 515,383 | |
Operating (loss), before interest amortization, depreciation and taxes | |
| (640,113 | ) | |
| (1,798,800 | ) | |
| (2,438,913 | ) |
Interest income | |
| 24 | | |
| - | | |
| 24 | |
Interest (expense) | |
| (78,866 | ) | |
| - | | |
| (78,866 | ) |
Depreciation and amortization | |
| (22,607 | ) | |
| (38,626 | ) | |
| (61,233 | ) |
Net Loss | |
| (741,562 | ) | |
| (1,837,426 | ) | |
| (2,578,988 | ) |
Assets at March 31, 2015 | |
| 2,052,468 | | |
| 373,038 | | |
| 2,425,506 | |
First Quarter of Fiscal 2014
| |
Quarter Ended March 31, 2014 | |
| |
Ace Marketing & Promotions, Inc. | | |
Mobiquity Networks, Inc. | | |
Total | |
Revenues, net | |
| 546,054 | | |
| 80,500 | | |
| 626,554 | |
Operating (loss), before interest amortization, depreciation and taxes | |
| (326,185 | ) | |
| (1,933,639 | ) | |
| (2,259,824 | ) |
Interest income | |
| 51 | | |
| | | |
| 51 | |
Interest (expense) | |
| (10,129 | ) | |
| | | |
| (10,129 | ) |
Depreciation and amortization | |
| (25,555 | ) | |
| (55,306 | ) | |
| (80,861 | ) |
Net Loss | |
| (361,818 | ) | |
| (1,988,945 | ) | |
| (2,350,763 | ) |
Assets at March 31, 2014 | |
| 3,274,192 | | |
| 635,338 | | |
| 3,909,530 | |
All intersegment sales
and expenses have been eliminated from the table above.
NOTE 9: COMMON STOCK PURCHASE AGREEMENT
On March 31, 2014, the
Company entered into a common stock purchase agreement (referred to herein as the "Purchase Agreement"), with Aspire
Capital Fund, LLC, an Illinois limited liability company (referred to herein as "Aspire Capital"), which provides that,
upon the terms and subject to the conditions and limitations set forth therein, Aspire Capital is committed to purchase up to
an aggregate of $15.0 million of Common Stock over the approximately 24-month term of the Purchase Agreement. In consideration
for entering into the Purchase Agreement, concurrently with the execution of the Purchase Agreement, we issued to Aspire Capital
1,000,000 shares of Common Stock as a commitment fee (referred to in herein as the "Commitment Shares"). Upon execution
of the Purchase Agreement, we sold to Aspire Capital 1,000,000 shares of Common Stock (referred to herein as the "Initial
Purchase Shares"). Concurrently with entering into the Purchase Agreement, we also entered into a registration rights agreement
with Aspire Capital (referred to herein as the "Registration Rights Agreement"), in which we agreed to file one or more
registration statements as permissible and necessary to register under the Securities Act of 1933, as amended, or the Securities
Act, the sale of the shares of Common Stock that have been and may be issued to Aspire Capital under the Purchase Agreement.
Pursuant to the Purchase
Agreement and the Registration Rights Agreement, the Company was obligated to register 15,000,000 shares of
Common Stock under the Securities Act, which includes the Commitment Shares and Initial Purchase Shares that have already been
issued to Aspire Capital and an additional 13,000,000 shares of Common Stock which the Company may issue to Aspire Capital after
the registration statement is declared effective under the Securities Act. Said Registration Statement was declared effective by
the SEC on April 28, 2014.
Since
April 28, 2014, the effective date of the Registration Statement, on any trading day on which the closing sale price of our Common
Stock exceeds $0.16, we have the right, in our sole discretion, to present Aspire Capital with a purchase notice (each, a "Purchase
Notice"), directing Aspire Capital (as principal) to purchase up to 200,000 shares of Common Stock per trading day, provided
that the aggregate price of such purchase shall not exceed $250,000 per trading day, up to $15.0 million of Common Stock in the
aggregate at a per share price (the "Purchase Price") calculated by reference to the prevailing market price of the Common
Stock (as more specifically described below).
In
addition, on any date on which we submit a Purchase Notice for 200,000 shares to Aspire Capital and the closing sale price of
the Common Stock is equal to or greater than $0.50 per share, we also have the right, in our sole discretion, to present Aspire
Capital with a volume-weighted average price purchase notice (each, a "VWAP Purchase Notice") directing Aspire Capital
to purchase an amount of stock equal to up to 30% of the aggregate shares of Common Stock traded on the OTCQB on the next trading
day (the "VWAP Purchase Date"), subject to a maximum number of shares we may determine (the "VWAP Purchase Share
Volume Maximum") and a minimum trading price (the "VWAP Minimum Price Threshold") (as more specifically described
below). The purchase price per Purchase Share pursuant to such VWAP Purchase Notice (the "VWAP Purchase Price") is calculated
by reference to the prevailing market price of Common Stock (as more specifically described below).
The
Purchase Agreement provides that the Company and Aspire Capital shall not affect any sales under the Purchase Agreement on any
purchase date where the closing sale price of the Common Stock is less than $0.16 per share (the "Floor Price"). This
Floor Price and the respective prices and share numbers in the preceding paragraphs shall be appropriately adjusted for any reorganization,
recapitalization, non-cash dividend, stock split, reverse stock split or other similar transaction. There are no trading volume
requirements or restrictions under the Purchase Agreement, and the Company will control the timing and amount of any sales of
Common Stock to Aspire Capital. Aspire Capital has no right to require any sales by us, but is obligated to make purchases from
us as the Company directs in accordance with the Purchase Agreement. There are no limitations on use of proceeds, financial or
business covenants, restrictions on future fundings, rights of first refusal, participation rights, penalties or liquidated damages
in the Purchase Agreement. The Purchase Agreement may be terminated by the Company at any time, at its discretion, without any
penalty or cost to the Company.
NOTE 10: STOCKHOLDER AUTHORIZATION OF REVERSE
STOCK SPLIT
On November 17, 2014, we
held a special meeting of our stockholders to approve authorizing our board of directors to effectuate a reverse stock split in
its sole discretion of not less than 1-for-5 and not greater than 1-for-20 for the purpose of attempting to obtain a listing of
our common stock on the NYSE MKT. Such approval was obtained. As of the date of this Report, the Board has not taken any action
to act upon this authorization.
NOTE 11: SUBSEQUENT EVENTS
There are no subsequent
events required to be disclosed in the Notes to Financial Statements through the date of the report, except as follows:
In April 2015, the Company
received $1,710,000 from the sale to three accredited investors of 5,700,000 shares of its common stock and a like number of warrants
exercisable at $.45 per share through March 31, 2020. In May 2015, the Company received $210,000 from the sale to one accredited
investor of 700,000 shares of its common stock and a like number of warrants exercisable at 5.45 per share through March 31, 2020.
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, 2014 which includes our audited financial statements
for the year ended December 31, 2014 and such information presumes that readers have access to, and will have read, the "Management's
Discussion and Analysis of Financial Condition and Results of Operations," "Risk Factors" and other information
contained in such Form 10-K and other Company filings with the Securities and Exchange Commission ("SEC").
This
Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933,
as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking
statements involve risks and uncertainties, and actual results could be significantly different than those discussed in this Form
10-Q. Certain statements contained in Management's Discussion and Analysis, particularly in "Liquidity and Capital Resources,"
and elsewhere in this Form 10-Q are forward-looking statements. These statements discuss, among other things, expected growth,
future revenues and future performance. Although we believe the expectations expressed in such forward-looking statements are
based on reasonable assumptions within the bounds of our knowledge of our business, a number of factors could cause actual results
to differ materially from those expressed in any forward-looking statements, whether oral or written, made by us or on our behalf.
The forward-looking statements are subject to risks and uncertainties including, without limitation, the following: (a) changes
in levels of competition from current competitors and potential new competition, (b) possible loss of customers, and (c) the company's
ability to attract and retain key personnel, (d) The Company's ability to manage other risks, uncertainties and factors inherent
in the business and otherwise discussed in this 10-Q and in the Company's other filings with the SEC. The foregoing should not
be construed as an exhaustive list of all factors that could cause actual results to differ materially from those expressed in
forward-looking statements made by us. All forward-looking statements included in this document are made as of the date hereof,
based on information available to the Company on the date thereof, and the Company assumes no obligation to update any forward-looking
statements.
Company
Overview
We
operate a national location-based mobile advertising network that has developed a consumer-focused proximity network which we
believe is unlike any other in the United States. Our integrated suite of proprietary location based mobile advertising technologies
allows clients to execute more personalized and contextually relevant experiences, driving brand awareness and incremental revenue.
We
have installed our location-based mobile advertising solutions in approximately 240 Simon Mall locations to create "smart
malls" using Bluetooth-enabled iBeacon compatible technology. We plan to expand our mall footprint in other malls and outside
the malls with additional synergistic venues that will allow for cross marketing opportunities in such venues as stadiums, arenas,
additional college campuses, airports and retail chains. For example, we have entered into an agreement with the New York State
University at Stony Brook to deploy a mobile advertising network in their new arena. This type of installation will enable fan
engagement, cross-marketing opportunities, sponsorship activation and create interactive event experiences. This is our first
installation in the university market.
Ace
Marketing is our legacy marketing and promotions business which provides integrated marketing services to our commercial customers.
While Ace Marketing currently represents substantially all of our revenue, we anticipate that activity from Ace Marketing will
represent a diminishing portion of corporate revenue as our attention is now principally focused on developing and executing on
opportunities in our Mobiquity Networks business.
Our
Agreements with Mall Property Owners/Managers and IBM
Simon Properties
We
entered into an initial agreement with Simon Property in April 2011. This agreement was amended in September 2013 and July 2014
to, among other things, expand the number of Simon mall properties covered by the agreement. Pursuant to our agreement with Simon,
we have the right, on an exclusive basis, to install Bluetooth proximity marketing equipment to send information across the air
space of the common areas of our Simon mall network, which includes approximately 240 malls across the United States. Under a
master agreement and related agreements between us and Simon covering approximately 240 Simon malls, Simon is entitled to receive
fees from us equal to a minimum fee plus the greater of a pre-set, per mall fee or a percentage of revenues derived from within
the Simon mall network as well as certain commission fees based on revenues generated through Simon's sales efforts. We believe
that the revenue share in which Simon participates will exceed the minimum annual mall fees if we generate revenues within the
Simon network of approximately $14 million or more in a calendar year. Our agreement with Simon requires us to maintain letters
of credit for each calendar year under the agreement represented by the minimum amount of fees due for such calendar year as well
as certain levels of insurance. The agreement also provides for Simon to adjust the number of malls subject to the agreement from
time to time based upon changes in its beneficial ownership interest in the mails. Our agreement with Simon expires on December
31, 2017. Our agreement with Simon is subject to earlier termination by either us or Simon following a notice and cure period
in the event of a material breach of the agreement.
Macerich
In
April 2015, we entered into a license agreement with Macerich. Pursuant to our agreement with Macerich, we have the right to install
Mobi-Beacons to send information across the air space of the common areas of our Macerich mall network, which will, when fully
installed we estimate to include approximately 55 malls, across the United States. Our right to install our Mobi-Beacons to market
and sell third party paid advertising in the interior common areas of these malls shall be exclusive. Under a Macerich license
agreement between us and Macerich currently covering 55 malls, Macerich is entitled to receive fees from us equal to a minimum
fee plus the greater of a pre-set per mall fee or a percentage of revenues derived from within the Macerich mall network as well
as certain commission fees based on revenues generated through Macerich's sales efforts. We believe that the revenue share in
which Macerich participates will exceed the minimum annual mall fees if we generate revenues with the Macerich network of approximately
$3 million or more in a calendar year. The agreement also provides for Macerich to adjust the number of malls subject to the agreement
from time-to-time based upon changes in its beneficial ownership in the malls. Our agreement with Macerich has a term of three
years but is subject to earlier termination (i) with cause following a notice and cure period in the event of material breach
of the agreement or (ii) without cause by Macerich after one year on 90 days' prior written notice to us. In the event of termination
of the agreement without cause, Macerich will reimburse us for certain out-of-pocket expenses.
IBM
In
April 2015, we entered into a Joint Initiative Agreement with IBM and enrolled as an IBM Business Partner through IBM's PartnerWorld
program. We are teaming with IBM to deliver jointly developed solutions for mall-based tenants, including retail clients. These
solutions leverage the Mobiquity Networks beacon platform deployed exclusively in the common areas of our mall footprint across
the United States, as well as our SDK which can be embedded within mall clients' mobile apps, to deliver relevant content in real
time to shoppers' smart phones as they visit these malls. IBM has agreed to work with these clients to provide the analytics solutions
needed to deliver personalized, one-on-one content to shoppers through our platform, and to help clients obtain insights from
shopper transactions to drive improved customer experience and business performance. IBM services will also provide the integration
capabilities needed to combine the Mobiquity Network platform in the mall common areas with the in-store server and network infrastructure,
to optimize delivery of context-relevant content for the shopper. Together, our Joint Initiative Agreement with IBM can help their
mall clients provide enhanced omni-channel marketing solutions and optimize business results. The agreement has an initial terms
of two years and may be extended by agreement of the parties.
Critical Accounting Policies
Our
discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have
been prepared in accordance with generally accepted accounting principles in the United States. The preparation of financial statements
requires management to make estimates and disclosures on the date of the financial statements. On an on-going basis, we evaluate
our estimates including, but not limited to, those related to revenue recognition. We use authoritative pronouncements, historical
experience and other assumptions as the basis for making judgments. Actual results could differ from those estimates. We believe
that the following critical accounting policies affect our more significant judgments and estimates in the preparation of our
financial statements.
REVENUE
RECOGNITION – The Company recognizes revenue, for all revenue streams, when it is realized or realizable and estimable
in accordance with ASC 605, "Revenue Recognition". The Company will recognize revenue only when all of the
following criteria have been met:
|
● |
Persuasive evidence for an agreement
exists; |
|
|
|
|
● |
Service has been provided; |
|
|
|
|
● |
The fee is fixed or determinable;
and, |
|
|
|
|
● |
Collection is reasonably assured. |
ACE
MARKETING – Ace Marketing's revenue is recognized when title and risk of loss transfers to the customer and the earnings
process is complete. In general, title passes to our customers upon the customer's receipt of the merchandise. Revenue is recognized
on a gross basis since Ace Marketing has the risks and rewards of ownership, latitude in selection of vendors and pricing, and
bears all credit risk. Advance payments made by customers are included in customer deposits. Ace Marketing records all shipping
and handling fees billed to customers as revenues and related costs as cost of goods sold, when incurred. Additional source of
revenue, derived from emails/texts directly to consumers are recognized under contractual arrangements. Revenue from this advertising
method is recognized at the time of service provided.
MOBIQUITY
NETWORKS – Mobiquity Networks. Mobiquity has three avenues of income with our beacon platform, Bluetooth Push and Wi-Fi. Revenue
is realized with the signing of the advertising contract. 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. Revenue is recognized the same way for the three mobile solutions. The first option to earn revenue with the beacon platform
is for customers to contract for advertising campaigns, on our platform, either directly through their own app or through various
third party apps. The second option to earn revenue is through a revenue share with advertising exchanges and networks that deliver
advertising campaigns to their customers based on our real-time location signal data. The third option would be through selling
our historical data to data management platform companies.
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
Our
goal is to enhance the shopper experience with retail customers by providing valuable and relevant content in real-time based
on location. We achieve this goal by providing our customers (such as retailers, brands, and the entertainment industry) with
a highly targeted form of mobile marketing engagement. Our platform enables interaction and advertising based on time, location
and personalization to create the most effective campaigns and experiences possible, in a way that is not possible without our
network. We connect customers to brands in the retail space by increasing individual retail location app usage and driving foot
traffic to such individual retail locations. We have deployed our Mobiquity hardware solutions in about 240 Simon malls in the
United States and we intend to expand to 55 Macerich malls by June 1, 2015. We intend to utilize the proceeds of this offering
to expand our sales and marketing human resource capability to focus on generating revenue over our network. Our sales and marketing
team will be seeking to generate revenue over our network through five primary verticals:
|
● |
Retailers, Brands and Apps relevant
to the shopping experience. |
|
|
|
|
● |
Shopping/Coupon related Apps
with relevant offers. |
|
|
|
|
● |
Entertainment Apps relevant
to the shopper demographic. |
|
|
|
|
● |
Advertising Networks and Exchanges
serving location relevant ads. |
|
|
|
|
● |
Data Analytic and Social Media
Apps requesting real-time location based signal. |
We
plan to expand on our current footprint into the common areas of other mall operations as well as outside of the malls with additional
synergistic venues that will allow for cross marketing opportunities. Such venues include but are not limited to; stadiums, arenas,
college campuses, airports and retail chains. The purpose of this type of expansion will be to create a unified network that will
allow relevant beacon companies the opportunity to become part of our Mobiquity network. They may find it advantageous to become
part of our network, so they will have the ability to drive traffic into their stores. In the future, we may also build a private
advertising exchange system that would allow for programmatic buying where advertisers will be given permission to engage with
shoppers through our Mobiquity network. Additionally, we plan to add other mobile services and plug-ins such as; loyalty programs,
indoor mapping, security and mobile payments.
We
anticipate continuing to rely on external financing from sales of our common stock to support our operations until cash flow from
operations has a positive impact on operations, although no assurances can be given in this regard.
RESULTS
OF OPERATIONS
The
following table sets forth certain selected unaudited condensed statement of operations data for the periods indicated in dollars
and as a percentage of total net revenues. The following discussion relates to our results of operations for the periods noted
and is not necessarily indicative of the results expected for any other interim period or any future fiscal year. In addition,
we note that the period-to-period comparison may not be indicative of future performance.
| |
Three Months Ended March 31 | |
| |
2015 | | |
2014 | |
Revenue | |
$ | 515,383 | | |
$ | 626,572 | |
Cost of Revenues | |
$ | 437,424 | | |
$ | 505,900 | |
Gross Profit | |
$ | 77,959 | | |
$ | 120,672 | |
Selling, General and Administrative Expenses | |
$ | 2,578,105 | | |
$ | 2,461,357 | |
(Loss) from Operations | |
$ | (2,500,146 | ) | |
$ | (2,340,685 | ) |
We
generated revenues of $515,383 in the first quarter of 2015 compared to $626,572 in the same period of the prior year, an decrease
in revenues of $111,189. As our mall network has only recently been constructed and is being expanded, at the current time, revenues
from the use of our Mobiquity devices are not a material portion of our consolidated revenues. In the last six months of
2015, we anticipate our revenues increasing in our Mobiquity Networks subsidiary due to the implementation of our Mobi-Beacons
and the expectation that advertisers will begin to utilize our mall network.
Cost
of revenues was $437,424 or 84.8% of revenues in the first quarter of 2015 compared to $505,900 or 80.7% of revenues in the
same fiscal period of the prior year. Cost of revenues includes purchases and freight costs associated with the shipping of
merchandise to our customers. The decrease in cost of revenues of $68,476 in 2015 is related to volume and product mix of the
products our customers purchased.
Gross
profit was $77,959 for the first quarter of 2015 or 15.2% of net revenues compared to $120,672 in the same fiscal period of the
prior year or 19.3% of revenues. Gross profits will vary period-to-period depending upon a number of factors including the mix
of items sold and the volume of product sold. Also, it is our practice to pass freight costs on to our customers with low to no
profit margin. As advertising revenue from the use of our Mobiquity devices increases, it is expected that our margins will increase
significantly. As our mall network has only recently been constructed and is currently being expanded, at the current time, revenues
from the use of our Mobiquity devices are not a material portion of our consolidated revenues.
Selling,
general, and administrative expenses were $2,578,105 for the first quarter of 2015 compared to $2,461,357 in the comparable
period of the prior year, an increase of approximately $116,748. Such operating costs include payroll and related
expenses, commissions, insurance, rents, fee payments to Simon Property Group, professional (consulting) and public awareness
fees. The increase in operating expenses was primarily due to the increase in salaries.
The
net loss for the first quarter of 2015 was ($2,500,146) as compared to ($2,340,685) for the comparable period of the
prior year. The increase in operating loss is attributable to the focused effort in creating the infrastructure required to
move forward with the mall network, and the hiring of additional Company personnel to provide information technology support,
sales and office employees.
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 proximity marketing
services.
Liquidity and Capital
Resources
The
Company had cash and cash equivalents of $1,515,175 at March 31, 2015. Cash used in operating activities for the three months ended
March 31, 2015 was $1,986,140. This resulted primarily from a net loss of $2,578,988, offset by stock based payments of $475,541
a decrease in accounts receivable of $201,955 and an decrease in prepaid expenses and other assets of $9,520 and an decrease of
accounts payable and accrued expenses of $97,601. The Company had an increase in investing activities of $3,508 with the purchase
of equipment. Net cash was provided by financing activities of $1,850,000 from the sale of the Company's Common Stock for the
quarter ended March 31, 2015.
The
Company had cash and cash equivalents of $2,503,087 at March 31, 2014. Cash used in operating activities for the three months
ended March 31, 2014 was $1,254,272. This resulted primarily from a net loss of $2,350,763, offset by stock based compensation
of $1,091,052 a decrease in accounts receivable of $98,430 and an increase in prepaid expenses and other assets of $7,622 and
an increase of accounts payable and accrued expenses of $16,199. The Company had an increase in investing activities of $7,430
with the purchase of equipment. Net cash was provided by financing activities of $2,023,800 from the sale of the Company's Common
Stock for the quarter ended March 31, 2014.
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 primarily on equity financing from outside investors to supplement our
cash flow from operations.
We
anticipate that our future liquidity requirements will arise from the need to finance our accounts receivable and inventories,
hire additional sales persons, capital expenditures and possible acquisitions. The primary sources of funding for such requirements
will be cash generated from operations, raising additional capital from the sale of equity or other securities and borrowings
under debt facilities which currently do not exist. We believe that we can generate sufficient cash flow from these sources to
fund our operations for at least the next twelve months. In the event we should need additional financing, we can provide no assurances
that we will be able to obtain financing on terms satisfactory to us, if at all.
Recent
Financings
Since
January 1, 2013, we have completed the various financing summarized below.
Date | |
Dollar Amount | | |
# of Securities Sold |
| |
| | |
|
During 2013 | |
$ | 5,562,816 | | |
Issued 19,125,000 common shares and warrants to purchase 9,562,000 shares |
January/February 2014 | |
$ | 2,060,300 | | |
Issued 6,867,669 common shares and warrants to purchase 3,433,339 shares |
March 2014 | |
$ | 500,000 | | |
Issued 2,000,000 common shares. |
July 2014 | |
$ | 1,000,000 | | |
Issued 2,000,000 shares and warrants to purchase 1,000,000 shares |
July 2014 | |
$ | 250,000 | | |
Issued convertible note in the principal amount of $250,000 and warrants to purchase 125,000 shares |
November 2014 (1) | |
$ | 1,000,000 | | |
Issued two-year promissory note in the principal amount of $1,000,000 |
December 2014 (1) | |
$ | 1,050,000 | | |
Issued two-year promissory note in the principal amount of $1,050,000 |
January 2015 (1) | |
$ | 500,000 | | |
Issued two-year promissory note in the principal amount of $500,000 |
February 2015 (1) | |
$ | 850,000 | | |
Issued two-year promissory note in the principal amount of $850,000 |
March 2015 | |
$ | 500,000 | | |
Issued 1,666,667 common shares and a like number of warrants |
April 2015 | |
$ | 1,710,000 | | |
Issued 5,700,000 common shares and a like number of warrants |
May 2015 | |
$ | 210,000 | | |
Issued,700,000 common shares and a like number of warrants |
(1) See
"Agreement with Carl E. Berg" below.
Agreement
with Carl E. Berg
On
December 15, 2014, we entered into a letter agreement with Carl E. Berg. The agreement recognized that Carl and Mary Ann Berg
2011 CRT, Carl Berg Trustee, and Clyde Berg 2011 CRT, Carl Berg Trustee, will have provided $2.5 million of unsecured loans to
us between November and December 2014. Pursuant to said letter agreement, we agreed that these unsecured loans may be sold, assigned
or transferred to Clyde J. Berg, Carl E. Berg and/or Kara Ann Berg or any entity controlled by any of the aforementioned individuals
in a combination of the aforementioned persons or entities. This letter agreement, as amended, provides that if Mr. Carl E. Berg
or any permitted transferee purchases or otherwise acquires the $2.5 million of unsecured notes, that these notes shall be convertible
at any time prior to maturity or redemption thereof at a conversion price of $.50 per share. For every $1.00 in principal converted,
a five-year warrant to purchase one additional share of common stock at an exercise price of $1.00 per share will be issued. In
the event that $2.5 million is timely converted on or before June 30, 2015, we will also issue as a bonus warrants to purchase
1,000,000 shares of common stock, exercisable at $.50 per share over a five year period from the date of issuance. We also agreed
to grant Mr. Berg the right to lend us up to an additional $7.5 million of optional loans on the same terms and conditions described
above on or before June 30, 2015, $850,000 of which was received by us in February 2015. In the event such optional loan is converted
into common stock on or before June 30, 2015, we will also issue as an additional bonus warrants to purchase up to 2,000,000 shares
of common stock at an exercise price of $.50 per share from the date of issuance. All bonus warrants contain cashless exercise
provisions. The 2,000,000 bonus warrants described above assumes full funding of the $7.5 million optional loans and 100% conversion
on or before June 30, 2015. In the event the amount of optional loans is less than an aggregate of $7.5 million converted prior
June 30, 2015, then the bonus warrants to purchase an aggregate of 2,000,000 shares will be proportionately reduced. In summary,
in the event all $10 million is provided to us, including an additional $7.5 million on a timely basis, subject to our right of
acceptance or rejection in our sole discretion, and all loans are timely converted on or before June 30, 2015, we will have issued
20 million shares of common stock, 10 million warrants to purchase shares of common stock at an exercise price of $1.00 per share,
plus five year bonus warrants to purchase 3,000,000 shares of our common stock at an exercise price of $.50 per share with cashless
exercise provisions pertaining to the bonus warrants. Also, in the event the $10 million of funding is completed, Mr. Berg has
the right to appoint one independent member to the board, which nominee will be subject to normal background checks.
Assignment
of Secured Promissory Note
In
December 2013, Thomas Arnost, current Vice Chairman of Mobiquity, purchased from TCA Global Credit Master Fund, the Company's
outstanding secured convertible promissory note in the amount of $350,000. Subsequently, Mr. Arnost and the Company agreed to
fix the conversion price of the note at $.30 per share, extend the due date of the Note to June 12, 2014, which was subsequently
extended to December 22, 2014 and again extended to December 31, 2015, subject to Mr. Arnost's right to call the note at any time
in his sole discretion, and increase the interest rate to 15% per annum. The Company has the right to prepay the note, subject
to Mr. Arnost's right of conversion.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK
Market
risk is the risk of loss arising from adverse changes in market rates and prices, such as interest rates, foreign currency exchange
rates and commodity prices. Our primary exposure to market risk is interest rate risk associated with our short term money market
investments. The Company does not have any financial instruments held for trading or other speculative purposes and does not invest
in derivative financial instruments, interest rate swaps or other investments that alter interest rate exposure. The Company does
not have any credit facilities with variable interest rates.
ITEM
4. CONTROLS AND PROCEDURES
We
maintain disclosure controls and procedures, which are designed to ensure that information required to be disclosed in the reports
we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within
the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated
and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.
Under
the supervision and with the participation of our management, including our CEO and CFO, an evaluation was performed on the effectiveness
of the design and operation of our disclosure controls and procedures as of the end of the period covered by this quarterly report.
Based on that evaluation, our management, including our CEO and CFO, concluded that our disclosure controls and procedures were
effective as of the end of the period covered by this report.
There
were no changes in the Company's internal controls over financial reporting during the most recently completed fiscal quarter
that have materially affected or are reasonably likely to materially affect the Company's internal control over financial reporting.
PART
II. OTHER INFORMATION
ITEM
1. LEGAL PROCEEDINGS.
As
of the filing date of this Form 10-Q, we are not a party to any pending legal proceedings.
ITEM
1A. RISK FACTORS
As
a Smaller Reporting Company as defined Rule 12b-2 of the Exchange Act and in item 10(f)(1) of Regulation S-K, we are
electing scaled disclosure reporting obligations and therefore are not required to provide the information requested by this
Item 1A.
ITEM
2. CHANGES IN SECURITIES.
(a)
From January 1, 2015 through March 31, 2015, we had no sales or issuances of unregistered common stock, except we made sales or
issuances of unregistered securities listed in the table below:
| |
| |
| |
Consideration Received
and Description of
Underwriting or Other | |
| |
If Option, Warrant |
Date
of Sale | |
Title
of Security | |
Number
Sold | |
Discounts
to Market
Price or Convertible
Security, Afforded to
Purchasers | |
Exemption
from
Registration
Claimed | |
or
Convertible
Security, terms
of exercise or
conversion |
| |
| |
| |
| |
| |
|
Jan. – March 2015 | |
Promissory Notes | |
$1,350,000 in principal amount | |
$1,350,000 in principal amount; no cash compensation was paid. | |
Section 4(2) | |
Not
applicable (1) |
| |
| |
| |
| |
| |
|
March 2015 | |
Common Stock and Warrants | |
1,666,667 common Shares and warrants | |
$500,000 received;
no commissions paid | |
Rule 506 | |
Warrants exercisable at $.45 through March 31, 2020 |
| |
| |
| |
| |
| |
|
Jan. – March 2015 | |
Common Stock | |
90,000
shares | |
Services rendered;
no commissions paid | |
Section 4(2) | |
Not applicable |
| |
| |
| |
| |
| |
|
(1)
On December 15, 2014, we entered into a letter agreement with Carl E. Berg. The agreement recognized that Carl
and Mary Ann Berg 2011 CRT, Carl Berg Trustee, and Clyde Berg 2011 CRT, Carl Berg Trustee, will have provided $2.5 million of
unsecured loans to us between November and December 2014 ($2 million received in 2014, $500,000 received in January 2015). The
notes mature two years from the origination date and bear interest at 4%. Pursuant to said letter agreement, we agreed that these
unsecured loans may be said, assigned or transferred to Clyde J. Berg, Carl E. Berg and/or Kara Ann Berg or any entity
controlled by any of the aforementioned individuals in a combination of the aforementioned persons or entities. This letter agreement
provides that if Mr. Carl E. Berg or any permitted transferee purchases or otherwise acquires the $2.5 million of unsecured notes,
that these notes shall be convertible at any time prior to maturity or redemption thereof at a conversion price of $.50 per share.
For every $1.00 in principal converted, a five-year warrant to purchase one additional share of common stock at an exercise price
of $1.00 per share will be issued. In the event that $2.5 million is timely converted on or before January 30, 2015, we will also
issue as a bonus warrants to purchase 1,000,000 shares of common stock, exercisable at $.50 per share over a five year period
from the date of issuance. We also agreed to grant Mr. Berg the right to lend us up to an additional $3.75 million of optional
loans on the same terms and conditions described above on or before February 15, 2015, 850,000 of which was received by us in
February 2015. In the event such optional loan is converted into common stock on or before March 31, 2015, we will also issue
as an additional bonus warrants to purchase up to 1,000,000 shares of common stock at an exercise price of $.50 per share from
the date of issuance. We also agreed to grant him the right to lend us up to an additional $3.75 million on the same terms and
conditions on or before May 15, 2015 and in the event such additional optional loan is converted into common stock on or before
June 30, 2015, we will also issue bonus warrants to Mr. Berg to purchase up to 1,000,000 shares of common stock at an exercise
price of $.50 per share over a period of five years from the date of issuance. All bonus warrants contain cashless exercise provisions.
The 2,000,000 bonus warrants described above assumes full funding of the $7.5 million optional loans and 100% conversion on or
before the dates described above. In the event the amount of optional loans is less than an aggregate of $3.75 million converted
prior to March 31, 2015 and an additional $3.75 million converted prior to June 30, 2015, then the bonus warrants to purchase
an aggregate of 2,000,000 shares will be proportionately reduced. In summary, in the event all $10 million is provided
to us, including an additional $7.5 million on a timely basis, subject to our right of acceptance or rejection in our sole discretion,
and all loans are timely converted on or before the dates described above, we will have issued 20 million shares of common stock,
10 million warrants to purchase shares of common stock at an exercise price of $1.00 per share, plus five year bonus warrants
to purchase 3,000,000 shares of our common stock at an exercise price of $.50 per share with cashless exercise provisions pertaining
to the bonus warrants. Also, in the event the $10 million of funding is completed, Mr. Berg has the right to appoint one independent
member to the board, which nominee will be subject to normal background checks.
(b) Rule
463 of the Securities Act is not applicable to the Company.
(c) In
the three months ended March 31, 2015, there were no repurchases by the Company of its Common Stock.
ITEM
3. DEFAULTS UPON SENIOR SECURITIES.
Not
applicable.
ITEM
4. MINE SAFETY DISCLOSURES.
Not
applicable.
ITEM
5. OTHER INFORMATION.
Not
applicable.
ITEM
6. EXHIBITS.
Exhibit
Number | |
Exhibit
Title |
| |
|
3.1 | |
Certificate
of Incorporation filed March 26, 1998 (1) |
3.2 | |
Amendment to Certificate
of Incorporation filed June 10, 1999 (1) |
3.3 | |
Amendment to Certificate
of Incorporation approved by stockholders in 2005 (1) |
3.4 | |
Amendment to Certificate
of Incorporation dated September 11, 2008 (11) |
3.5 | |
Amendment to Certificate
of Incorporation dated October 7, 2009 (11) |
3.6 | |
Amendment to Certificate
of Incorporation dated May 18, 2012 (11) |
3.7 | |
Amendment to Certificate
of Incorporation dated September 10, 2013 (17) |
3.8 | |
Amended By-Laws
(1) |
3.9 | |
2014 Amendment
to By-Laws (19) |
4.1 | |
Registration Rights
Agreement (18) |
10.1 | |
Employment Agreement
- Michael Trepeta (2) |
10.2 | |
Employment Agreement
- Dean Julia (2) |
10.3 | |
Amendments to
Employment Agreement - Michael Trepeta (5)(7) |
10.4 | |
Amendments to
Employment Agreement - Dean L. Julia (5)(7) |
10.5 | |
Joint Venture
Agreement with Atrium Enterprises Ltd. (6) |
10.6 | |
Agreement with
Aon Consulting (6) |
10.7 | |
Amendment to Exhibits
10.3 and 10.4 dated April 7, 2010 (10) |
10.8 | |
Office Lease for
Garden City, NY (11) |
10.9 | |
Amendment to Employment
Agreement - Dean L. Julia (11) |
10.10 | |
Amendment to Employment
Agreement - Michael D. Trepeta (11) |
10.11 | |
Convertible Promissory
Note (12) |
10.12 | |
Registration Rights
Agreement dated June 12, 2012 by and between the company and TCA (13) |
10.13 | |
Equity Agreement
dated June 12, 2012 by and between the company and TCA (13) |
10.14 | |
Amendment to Dean
L. Julia's Employment Agreement (16) |
10.15 | |
Amendment
to Michael D. Trepeta's Employment Agreement (16) |
10.16 | |
Common Stock Purchase
Agreement with Aspire Capital (18) |
10.17 | |
Termination of
TCA Registration Rights Agreement and Equity Agreement (18) |
10.18 | |
Employment Agreement
- Sean Trepeta (19) |
10.19 | |
Employment Agreement
- Paul Bauersfeld (19) |
10.20 | |
Employment Agreement
- Thomas Arnost (20) |
10.21 | |
December 2013
Agreement with Thomas Arnost modifying secured debt purchased by Arnost from TCA (19) |
10.22 | |
Letter Agreement
dated December 9, 2014 with Thomas Arnost to extend expiration date of secured note to December 31, 2015 (19) |
10.23 | |
Letter Agreement
dated July 8, 2013 with Thomas Arnost to provide letter of credit for $1,350,000 (19) |
10.24 | |
Letter Agreement
dated July 8, 2013 with SNW Properties to provide letter of credit for $1,350,000 (19) |
10.25 | |
Letter Agreement
dated December 15, 2014 with Carl E. Berg (19) |
11.1 | |
Statement re:
Computation of per share earnings. See Statement of Operations and Notes to Financial Statements |
14.1 | |
Code of Ethics/Code
of Conduct (21) |
21.1 | |
Subsidiaries of
the Issuer (15) |
31.1 | |
Rule 13a-14(a)
Certification in accordance with Section 302 of the Sarbanes-Oxley Act of 2002 (*) |
31.2 | |
Rule 13a-14(a)
Certification in accordance with Section 302 of the Sarbanes-Oxley Act of 2002 (*) |
32.1 | |
Certification
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (*) |
32.2 | |
Certification
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (*) |
99.1 | |
2005 Employee
Benefit and Consulting Services Compensation Plan (2) |
99.2 | |
Form of Class
A Warrant (2) |
99.3 | |
Form of Class
B Warrant (2) |
99.4 | |
Amendment to 2005
Plan (4) |
99.5 | |
Form of Class
C Warrant (8) |
99.6 | |
2009 Employee
Benefit and Consulting Services Compensation Plan (3) |
99.7 | |
Form of Class
D Warrant (3) |
99.8 | |
Form or Class
E Warrant (9) |
99.9 | |
Form of Class
F Warrant (9) |
99.10 | |
Form of Class
G Warrant (9) |
99.11 | |
Form of Class
H Warrant (9) |
99.12 | |
Form of Class
AA Warrant (11) |
99.13 | |
Form of Class
BB Warrant (11) |
99.14 | |
Form of Class
CC Warrant (19) |
101.INS | |
XBRL Instance
Document (*) |
101.SCH | |
Document, XBRL
Taxonomy Extension (*) |
101.CAL | |
Calculation Linkbase,
XBRL Taxonomy Extension Definition (*) |
101.DEF | |
Linkbase, XBRL
Taxonomy Extension Labels (*) |
101.LAB | |
Linkbase, XBRL
Taxonomy Extension (*) |
101.PRE | |
Presentation Linkbase
(*) |
* Filed herewith.
(1) | Incorporated
by reference to Registrant's Registration Statement on Form 10-SB as filed with the Commission
on February 10, 2005. |
(2) | Incorporated
by reference to Registrant's Registration Statement on Form 10-SB/A filed with the Commission
March 18, 2005. |
(3) | Incorporated
by reference to Form 10-K filed for the fiscal year ended December 31, 2009. |
(4) | Incorporated
by reference to the Registrant's Form 10-QSB/A filed with the Commission on August 18,
2005. |
(5) | Incorporated
by reference to the Registrant's Form 10-KSB for its fiscal year ended December 31, 2005. |
(6) |
Incorporated
by reference to the Registrant's Form I 0-KSB for its fiscal year ended December 31, 2006. |
(7) |
Incorporated
by reference to the Registrant's Form 8-K dated September 21, 2007. |
(8) |
Incorporated
by reference to the Registrant's Form 10-QSB for its quarter ended September 30, 2006. |
(9) |
Incorporated
by reference to the Registrant's Form 10-K for its fiscal year ended December 31, 2010. |
(10) |
Incorporated
by reference to the Registrant's Form 10-Q for the quarter ended June 30, 2011. |
(11) |
Incorporated
by reference to the Registrant's Form 10-K for its fiscal year ended December 31, 2012. |
(12) |
Incorporated
by reference to the Registrant's Form 8-K dated June 14, 2012. |
(13) |
Incorporated
by reference to the Registrant's Form 8-K dated June 15, 2012. |
(14) |
Incorporated
by reference to the Registrant's Form 8-K dated June 6, 2013. |
(15) |
Incorporated
by reference to the Registrant's Form 10-K for its fiscal year ended December 31, 2013. |
(16) |
Incorporated
by reference to Form 8-K filed June 6, 2013. |
(17) |
Incorporated
by reference to Form 8-K filed September 11, 2013. |
(18) |
Incorporated
by reference to Form 8-K filed April 1, 2014. |
(19) |
Incorporated
by reference to Form 8-K filed with the SEC on December 19, 2014. |
(20) |
Incorporated
by reference to Form 8-K dated December 2, 2014. |
(21) |
Incorporated
by reference to the Registrant's Form 10-K for its fiscal year ended December 31, 2014. |
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
|
MOBIQUITY
TECHNOLOGIES, INC. |
|
|
|
Date:
May 15, 2015 |
By: |
/s/
Dean L. Julia |
|
|
Dean
L. Julia, |
|
|
Co-Principal
Executive Officer |
|
|
|
Date:
May 15, 2015 |
By: |
/s/
Michael D. Trepeta |
|
|
Michael
D. Trepeta, |
|
|
Co-Principal
Executive Officer |
|
|
|
Date:
May 15, 2015 |
By: |
/s/
Sean McDonnell |
|
|
Sean
McDonnell, |
|
|
Principal
Financial Officer |
32
EXHIBIT 31.1(a)
CERTIFICATION OF CO-PRINCIPAL EXECUTIVE OFFICER
I, Dean L. Julia, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Mobiquity
Technologies, Inc.;
2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are
responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant
and have:
a) Designed
such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,
to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in which this report is being prepared;
b) Designed
such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated
the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;
and
d) Disclosed
in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most
recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control
over financial reporting; and
5. The registrant's other certifying officer and I have disclosed,
based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee
of the registrant's board of directors (or persons performing the equivalent functions):
a) All significant
deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b) Any fraud,
whether or not material, that involves management or other employees who have a significant role in the registrant's internal control
over financial reporting.
DATE: May 15, 2015 |
/S/ DEAN L. JULIA |
|
DEAN L. JULIA, |
|
CO-PRINCIPAL EXECUTIVE OFFICER |
EXHIBIT 31.1(b)
CERTIFICATION OF CO-PRINCIPAL EXECUTIVE OFFICER
I, Michael D. Trepeta, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Mobiquity
Technologies, Inc.;
2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are
responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant
and have:
a) Designed
such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,
to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in which this report is being prepared;
b) Designed
such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated
the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;
and
d) Disclosed
in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most
recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control
over financial reporting; and
5. The registrant's other certifying officer and I have disclosed,
based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee
of the registrant's board of directors (or persons performing the equivalent functions):
a) All significant
deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b) Any fraud,
whether or not material, that involves management or other employees who have a significant role in the registrant's internal control
over financial reporting.
DATE: May 15, 2015 |
/S/ MICHAEL D. TREPETA |
|
MICHAEL D. TREPETA, |
|
CO-PRINCIPAL EXECUTIVE OFFICER |
EXHIBIT 31.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
I, Sean McDonnell, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Mobiquity
Technologies, Inc.;
2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible
for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e))
and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and
have:
a) Designed
such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,
to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in which this report is being prepared;
b) Designed
such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated
the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;
and
d) Disclosed
in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most
recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control
over financial reporting; and
5. The registrant's other certifying officer and I have disclosed,
based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee
of the registrant's board of directors (or persons performing the equivalent functions):
a) All significant
deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b) Any fraud,
whether or not material, that involves management or other employees who have a significant role in the registrant's internal control
over financial reporting.
DATE: May 15, 2015 |
/S/ SEAN MCDONNELL |
|
SEAN MCDONNELL, PRINCIPAL FINANCIAL OFFICER |
EXHIBIT 32.1(a)
CERTIFICATION OF CO-PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO 18U.S.C. SECTION 1350
In connection with the Quarterly Report of Mobiquity Technologies,
Inc. (the “Company”) on Form 10-Q for the period ending March 31, 2015 as filed with the Securities and Exchange Commission
on the date hereof (the "Report"), I, Dean L. Julia, Co-Principal Executive Officer of the Company, certify, pursuant
to 18 U.S.C. ss.1350, as adopted pursuant to ss.906 of the Sarbanes-Oxley Act, that:
(1) The Report fully complies with the requirements of Section 13(a)
or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in
all material respects, the financial condition and result of operations of the Company.
|
/S/ DEAN L. JULIA |
|
DEAN L. JULIA |
|
CO-PRINCIPAL EXECUTIVE OFFICER |
|
May 15, 2015 |
EXHIBIT 32.1(b)
CERTIFICATION OF CO-PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO 18U.S.C. SECTION 1350
In connection with the Quarterly Report of Mobiquity Technologies,
Inc. (the “Company”) on Form 10-Q for the period ending March 31, 2015 as filed with the Securities and Exchange Commission
on the date hereof (the "Report"), I, Michael D. Trepeta, Co-Principal Executive Officer of the Company, certify, pursuant
to 18 U.S.C. ss.1350, as adopted pursuant to ss.906 of the Sarbanes-Oxley Act, that:
(1) The Report fully complies with the requirements of Section 13(a)
or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in
all material respects, the financial condition and result of operations of the Company.
|
/S/ MICHAEL D. TREPETA |
|
MICHAEL D. TREPETA |
|
CO-PRINCIPAL EXECUTIVE OFFICER |
|
May 15, 2015 |
EXHIBIT 32.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
PURSUANT TO 18U.S.C. SECTION 1350
In connection with the Quarterly Report of Mobiquity Technologies,
Inc. (the “Company”) on Form 10-Q for the period ending March 31, 2015 as filed with the Securities and Exchange Commission
on the date hereof (the "Report"), I, Sean McDonnell, Principal Financial Officer of the Company, certify, pursuant to
18 U.S.C. ss.1350, as adopted pursuant to ss.906 of the Sarbanes-Oxley Act, that:
(1) The Report fully complies with the requirements of Section 13(a)
or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in
all material respects, the financial condition and result of operations of the Company.
|
/S/ SEAN MCDONNELL |
|
SEAN MCDONNELL |
|
PRINCIPAL FINANCIAL OFFICER |
|
May 15, 2015 |
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