Mobiquity Technologies(MOBQ) - 2023 Q2 - Quarterly Report

Business Operations - The company operates three proprietary software platforms in the programmatic advertising industry, focusing on advertising technology, data compliance, and intelligence [134]. - The ATOS platform engages with around 10 billion advertisement opportunities daily, enhancing speed and performance through AI and machine learning [138]. - The data intelligence platform provides precise insights on consumer behavior, utilizing proprietary technologies for data collection and analysis [140]. - The publisher platform enables content publishers to monetize user data and advertising inventory while ensuring data privacy compliance [142]. - The company targets small and medium-sized advertisers to establish itself as the industry standard in programmatic display advertising [143]. Market Overview - The global programmatic ad spend reached approximately $418.4 billion in 2021, with expectations to surpass $493 billion by 2022, indicating significant market growth [135]. Financial Performance - Revenues for the second quarter of 2023 were $131,515, a decrease of $1,789,439 from $1,920,954 in the same period of 2022, attributed to the lack of political revenue [171]. - Cost of revenues was $104,089, representing 79.1% of revenues in Q2 2023, compared to $673,769 or 35.1% in Q2 2022 [173]. - Gross profit for Q2 2023 was $27,426, or 20.9% of revenues, down from $1,247,185 or 64.9% in Q2 2022 [174]. - Revenues for the first six months of 2023 were $263,739, down $2,199,384 from $2,463,123 in the same period of 2022 [179]. - Cost of revenues for the first half of 2023 was $166,897, or 63.3% of revenues, compared to $979,896 or 39.8% in the same period of 2022 [180]. - Gross profit for the first six months of 2023 was $96,842, or 36.7% of revenues, down from $1,483,227 or 60.2% in the same period of 2022 [181]. - General and administrative expenses decreased to $1,537,979 in Q2 2023 from $2,255,965 in Q2 2022, a reduction of $717,986 [175]. - General and administrative expenses for the first half of 2023 were $2,963,726, a decrease of $1,820,828 from $4,784,554 in the same period of 2022 [182]. - Loss from operations for Q2 2023 was $1,510,553, an increase of approximately $502,000 compared to $1,008,780 in Q2 2022 [176]. Cash Flow and Financing - Cash and cash equivalents were $1,598,160 at June 30, 2023, with cash used in operating activities amounting to $2,918,114 [185]. - The Company entered into a Securities Purchase Agreement with Walleye Opportunities Master Fund Ltd for a senior secured 20% original issue discount nine-month promissory note totaling $1,437,500, netting $1,150,000 after the discount [189]. - The Company raised net proceeds of $3,207,500 from a public offering of 3,777,634 shares and pre-funded warrants on February 16, 2023 [193]. - The June 2023 Offering generated total gross proceeds of $3,000,000 from the sale of 5,625,000 shares at a public offering price of $0.10 per share [198]. - The Company used $1,437,500 from the June 2023 Offering proceeds to fully satisfy its Senior Secured 20% OID Promissory Note [198]. - As of June 30, 2023, all pre-funded warrants and Series 2023 Warrants were exercised, resulting in the issuance of 6,048,389 shares of common stock [196]. - The Company issued 522,727 shares of common stock to the Investor, representing approximately 5.3% of the Company's outstanding shares, as an incentive for the transaction [190]. - The fair value of the Investor Warrant was recorded at $1,526,363, while the Incentive Shares were valued at $318,863, leading to total debt discounts of $1,134,466 [192]. - The Investor Note matures on September 30, 2023, and may be prepaid after March 31, 2023, with the consent of future security purchasers [191]. - The Company granted a total of 100,000 shares of restricted common stock to the Chairman of the Board and 50,000 shares each to the CEO and another Board member for services rendered [201]. Risks and Challenges - The company has experienced variability in sales and earnings due to factors such as industry cyclicality and economic conditions, impacting future projections [148]. - The company recognizes revenue in accordance with ASC Topic 606, aligning revenue recognition with service delivery [158]. - The company is subject to significant risks and uncertainties, including intense competition and potential business failure [147]. - The Company is currently addressing control gaps and deficiencies in its internal controls over financial reporting, with remediation efforts ongoing into fiscal 2023 [205].