Filed 2025-04-07 · Period ending 2024-12-31 · 45,422 words · SEC EDGAR
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# MOBIVITY HOLDINGS CORP. (MFON) — 10-K **Filed:** 2025-04-07 **Period ending:** 2024-12-31 **Accession:** 0001641172-25-002942 **Source:** [SEC EDGAR](https://www.sec.gov/Archives/edgar/data/1447380/000164117225002942/) **Origin leaf:** 29cd733da6c5b6272a87ea066577dcb6823ee17fc5b2562e085721d5f1ee8afa **Words:** 45,422 --- ** UNITED STATES** **SECURITIES AND EXCHANGE COMMISSION** **WASHINGTON, D.C. 20549** **FORM 10-K** **ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** For the fiscal year ended December 31, 2024 Or **TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** For the transition period from ____________________ to ____________________ Commission file number 000-53851 **Mobivity Holdings Corp.** (Exact Name of Registrant as Specified in Its Charter) | Nevada | | 26-3439095 | | | (State or Other Jurisdiction of | | (I.R.S. Employer | | | Incorporation or Organization) | | Identification No.) | | 3133 West Frye Road, # 215 Chandler, Arizona 85226 **(Address of principal executive offices)** (877) 282-7660 **(Registrants telephone number, including area code)** **Securities registered pursuant to Section 12 (b) of the Act: None** | Title of each class | | Trading Symbol(s) | | Name of each exchange on which registered | | | None | | Not applicable | | Not applicable | | **Securities registered pursuant to section 12 (g) of the Act:** **Common Stock, $.001 par value** Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes No 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 check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No Indicate by check mark 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, smaller reporting company or an emerging growth company in Rule 12b-2 of the Exchange Act. | Large accelerated filer | | | Accelerated filer | | | | Non-accelerated filer | | | Smaller reporting company | | | | | | | Emerging growth company | | | If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. Indicate by check mark whether the registrant has filed a report on and attestation to its managements assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. Indicate by checkmark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrants executive officers during the relevant recovery period pursuant to 240.10D-1(b). Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No The aggregate market value of the voting and non-voting common equity held by non-affiliates as of June 28, 2024 was $23,850,348, calculated at the price at which the common equity was last sold. As of April 6, 2025, the registrant had 72,412,335 shares of common stock issued and outstanding. | | | | Table of Contents | | **MOBIVITY HOLDINGS CORP.** **ANNUAL REPORT ON FORM 10-K** **FISCAL YEAR ENDED December 31, 2024** **TABLE OF CONTENTS** | | | Page | | | Part I | | 1 | | | | | | | | Item 1. | Business | 1 | | | Item 1A. | Risk Factors | 8 | | | Item 1B. | Unresolved Staff Comments | 12 | | | Item 1C. | Cybersecurity | 12 | | | Item 2. | Properties | 13 | | | Item 3. | Legal Proceedings | 13 | | | Item 4. | Mine Safety | 13 | | | | | | | | Part II | | 13 | | | | | | | | Item 5. | Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 13 | | | Item 6. | [Reserved] | 14 | | | Item 7. | Managements Discussion and Analysis of Financial Condition and Results of Operations | 14 | | | Item 7A. | Quantitative and Qualitative Disclosures About Market Risk | 20 | | | Item 8. | Financial Statements and Supplementary Data | 21 | | | Item 9. | Changes in and Disagreements With Accountants on Accounting and Financial Disclosure | 49 | | | Item 9A. | Controls and Procedures | 49 | | | Item 9B. | Other Information | 50 | | | Item 9C. | Disclosure Regarding Foreign Jurisdictions that Prevent Inspections | 50 | | | | | | | | Part III | | 50 | | | | | | | | Item 10. | Directors, Executive Officers and Corporate Governance | 50 | | | Item 11. | Executive Compensation | 54 | | | Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 55 | | | Item 13. | Certain Relationships and Related Transactions, and Director Independence | 56 | | | Item 14. | Principal Accounting Fees and Services | 58 | | | | | | | | Part IV | | 58 | | | | | | | | Item 15. | Exhibits and Financial Statement Schedules | 58 | | | | | | | | Signatures | | 61 | | | -i- | | | Table of Contents | | **FORWARD-LOOKING STATEMENTS** *This Annual Report on Form 10-K, or Form 10-K, contains**forward-looking statements* *that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially and adversely from those expressed or implied by such forward-looking statements. The forward-looking statements are contained principally in Item 1**Business,* *Item 1A**Risk Factors* *and Item 7**Management**s Discussion and Analysis of Financial Condition and Results of Operations* *but appear throughout the Form 10-K. Examples of forward-looking statements include, but are not limited to our expectations, beliefs or intentions regarding our potential product offerings, business, financial condition, results of operations, strategies or prospects and other matters that do not relate strictly to historical facts or statements of assumptions underlying any of the foregoing. These statements are often identified by the use of words such as**anticipate,* *believe,* *continue,* *could,* *estimate,* *expect,* *intend,* *may,* *ongoing,* *opportunity,* *plan,* *potential,* *predicts,* *seek,* *should,* *will,* *or**would,* *and similar expressions and variations or negatives of these words. These forward-looking statements are based on the expectations, estimates, projections, beliefs and assumptions of our management based on information currently available to management, all of which are subject to change. Such forward-looking statements are subject to risks, uncertainties and other factors that are difficult to predict and could cause our actual results and the timing of certain events to differ materially and adversely from future results expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified below in Item 1A* *Risk Factors**. Furthermore, such forward-looking statements speak only as of the date of this Form 10-K. We undertake no obligation to update or revise publicly any forward-looking statements to reflect events or circumstances after the date of such statements for any reason, except as otherwise required by law.* **Part I** **Item 1. Business** **General Information** Mobivity Holdings Corp. (the Company or us, our, or we) is a Nevada corporation organized in 2008, which develops and operates proprietary platforms over which brick and mortar brands and digital first enterprises can conduct national and localized, data-driven marketing campaigns with unique targeting, incentivization and promotion to drive customer acquisition and loyalty. The companys core technology platform, RecurrencyTM, enables: | | | Transformation of messy point-of-sale (POS) data collected from thousands of points of sale into usable intelligence. | | | | | Measurement, prediction, and ability to boost guest frequency and spend by channel. | | | | | Deployment and management of one-time use offer codes and attribution of sales accurately across every channel, promotion and media program. | | | | | Delivery of uniquely attributable 1:1 offers that power incentivized actions in digital environments like user acquisition, continued monetization, and activities taken in a digital environment. | | Our recurrency platform generates revenue in two ways. First, delivered as a Software-as-a-Service (SaaS) platform used by leading convenience and quick service restaurant brands to build and engage with their loyal customers. Second, through our Connected RewardsTM business, our platform enables and powers unique incentivized programs in digital environments. Through our Connected Rewards platform, we enable businesses to reward their users and customers with products in the real world for actions taken in a digital environment. Our customers include some of the largest mobile casual game publishers in the world and some of the largest convenience and quick service restaurant brands in the world. The programs we run for our customers include incentivized user acquisition where users are rewarded with a real-world product, like a free or discounted burger, for downloading a mobile game, and rewarded play where users receive real world products for accomplishing activities in game, like achieving a certain level or winning enough points. We charge our customers for each unique action where our rewards are delivered, these include a per install or per individual engagement fee. **The Recurrency Platform** The Recurrency platform unlocks valuable POS and mobile data to help transform customer transactions into actionable and attributable marketing insights and power Connected Rewards interactions. Our technology analyzes transaction data to provide insights, delivers mobile rewards and powers redemption at all potential points of sale (*i.e*., mobile, in-store, in-app), and provides 100% attribution of the transaction. In Connected Rewards applications, Recurrency is integrated into mobile gaming platforms and mobile attribution partners to deliver the necessary data to deliver rewards for in-game actions. | -1- | | | Table of Contents | | **Company Strategy** Our objective is to build an industry-leading mobile marketing technology product that bridges between in-person and digital environments powering a unique and defensible alternative for digital-first businesses to engage and retain their customers by rewarding them with real-world products and offers. The key elements to our strategy are: | | | Exploit the competitive advantages and operating leverage of our technology platform. The core of our business is our ability to integrate our Recurrency platform into digital environments and deliver rewards based on activities taken in a digital environment. Because of our long history operating as a loyalty marketing solution we believe we have a defensible head start and ability to continue building products and features that will retain our competitive advantage. | | | | | Evolve our sales and customer support infrastructure to uniquely meet the needs of the quickly evolving digital marketing universe. We have quickly evolved our organization and business to fill a gap in the digital marketing landscape. Through continued innovation and emphasis on automation and predictive analytics we believe we will expand our niche and create further value for our Connected Rewards Customers. | | | | | Acquire complementary businesses and technologies. We will continue to search and identify unique opportunities which we believe will enhance our product features and functionality, revenue goals, and technology. We intend to target companies with some or all of the following characteristics: (1) an established revenue base; (2) strong and defensible technology services that further build out and differentiate our platform; (3) opportunities for substantial expense reductions through integration into our platform; and (4) strong sales teams. Our acquisitions have historically been consummated through the issuance of a combination of our common stock and cash. | | | | | Build our intellectual property portfolio. We currently have eight issued patents that we believe have significant potential application in the technology industry. We plan to continue our investment in building a strong intellectual property portfolio. | | While these are the key elements of our current strategy, there can be no guarantees that our strategy will not change or that our strategy will be successful. | -2- | | | Table of Contents | | **Recent Developments** *Related Party Convertible Notes* During first quarter 2024 the Company issued 8 Convertible Notes payable to related parties for $1,950,000. As an inducement we issued 3,291,664 warrants to purchase shares of our common stock at $.60 per share. Simple interest on the unpaid principal balance of this Note will accrue at the rate of 8.0% per annum. Accrual of interest will commence on the date of this Note, will continue until this Note is fully paid, and will be payable in a single installment at maturity three years from the date the Convertible Note was issued. During the second quarter of 2024 the Company issued 8 Convertible Notes payable to related parties for $2,100,000. As an inducement we issued 3,499,997 warrants to purchase shares of our common stock at $.60 per share. Simple interest on the unpaid principal balance of this Note will accrue at the rate of 8.0% per annum. Accrual of interest will commence on the date of this Note, will continue until this Note is fully paid, and will be payable in a single installment at maturity three years from the date the Convertible Note was issued. During the third quarter of 2024 the Company issued 4 Convertible Notes payable to related parties for $1,275,000. As an inducement we issued 2,124,999 warrants to purchase shares of our common stock at $.60 per share. Simple interest on the unpaid principal balance of this Note will accrue at the rate of 8.0% per annum. Accrual of interest will commence on the date of this Note, will continue until this Note is fully paid, and will be payable in a single installment at maturity three years from the date the Convertible Note was issued. During the fourth quarter of 2024 the Company issued 5 Convertible Notes payable to related parties for $1,525,000. As an inducement we issued 2,541,664 warrants to purchase shares of our common stock at $.60 per share. Simple interest on the unpaid principal balance of this Note will accrue at the rate of 8.0% per annum. Accrual of interest will commence on the date of this Note, will continue until this Note is fully paid, and will be payable in a single installment at maturity three years from the date the Convertible Note was issued. During the twelve months ended December 31, 2024 the company recorded $454,912 of interest expense in connection with the related party convertible notes and $470,267 in amortized debt discount in connections with related party convertible notes. As of December 31, 2024 the Convertible Notes issued to related parties had a principal balance of $8,850,000 with a debt discount of $1,331,375 for a net principal balance of $7,518,625 and accrued interest of $479,156. | -3- | | | Table of Contents | | **The Mobivity Solution** Our Recurrency platform is designed to leverage point-of-sale data, along with cognitive computing, to increase visits, spend, and loyalty from consumers. We do this by **capturing** transaction detail, **analyzing** the data, and **motivating** customers and employees to take actions. | | | Capture: Recall that more than 90% of our economy still functions offline. Our Recurrency solution plays an integral part in bringing brick and mortar businesses into the digital future by creating an extensible point of access to their POS data. Recapture is a lightweight software client that can be installed in just about any POS system and immediately enables applications to operate off of real-time POS data. This technology allows us to run many of our connected rewards programs by allowing access to data from POS and enabling redemption of rewards delivered for actions taken in digital environments. | | | | | Analyze. Often times marketers spend a large portion of their budget on marketing programs with little to no visibility into attributable sales. Our Recurrency solution allows for easy access to POS data enabling full attribution of our campaigns, along with potentially linking offline POS data to other forms of digital marketing such as connected rewards. | | | | | Motivating Consumers. We motivate consumers and employees through our Connected Rewards solution by powering and delivering real-world rewards for actions taken in a digital environment. | | In the future, we intend to develop additional platform features with the goal of driving additional value by helping digital first businesses and brick and mortar brands acquire and engage customers in increasingly unique and valuable ways. **Marketing and Sales** We market and sell the services offered over our proprietary platform directly through our own sales force, via resellers, and in some cases through agents. | | | Direct Sales. Our direct sales force is predominantly comprised of a team of representatives employed by us to promote and sell our services both domestically and internationally. | | | | | Resellers. We sell our services via wholesale pricing of licensing and transactional fees to various resellers who market and sell the Mobivity services under their own brand. | | | | | Agents. We also engage independent agents to market and sell our services under the Mobivity brand in return for payment of a commission or revenue share for customers they introduce to us. | | | | | In addition to our direct and indirect sales channels, we also market our services online through our website, Facebook, Twitter, LinkedIn, and other online channels. We also participate in various trade and industry events to build awareness and promote exposure to our services and brand. | | Our traditional loyalty marketing services are predominantly marketed and sold in the form of a recurring software licensing fee that is determined by desired features and the number of physical locations our customers would like to deploy the services in. For example, a customer who exclusively utilizes our SMS/MMS feature for one location will pay a much lower recurring licensing fee than a marketer who desires our full breadth of product features and needs to drive localized marketing campaigns across 500 locations in various cities or locales. Our Connected Rewards services are marketed and sold on unique fee-for action contracts such as a fee for downloading an app, or a fee for achieving a certain action in a digital app, or acquiring a loyalty member. | -4- | | | Table of Contents | | **Research and Development** We have developed an internal and external software development team with many years of experience in the mobile advertising and marketing industries. Our research and development activities are focused on enhancements to our platform, including extending our technology into payment processing, location-based services, application analytics, and other technical opportunities in the evolving mobile industry. Our total engineering, research and development expenditures in 2024 and 2023 were $1,048,464 and $438,455, respectively. **Competition** Combining POS data, cognitive computing, and various marketing applications is relatively new. The majority of our competitors are start-ups or early stage growth companies helping to pioneer the technology necessary to power digital marketing in new, valuable, and attributable channels. We believe that the key competitive factors that differentiate us from our competitors include: | | | Intellectual Property. We currently own nine patents that cover various approaches to facilitating SMS/MMS text messaging solutions and manipulating receipt content. | | **Customers** During the years ended December 31, 2024 and 2023 two customers accounted for 57% and 55% of our revenues, respectively . **Seasonality** Our business, as is typical of companies in our industry, is highly seasonal. This is primarily due to traditional marketing and advertising spending being heaviest during the holiday season, while brands, advertising agencies, mobile operators and media companies often close out annual budgets towards the end of the calendar year. Seasonal trends have historically contributed to, and we anticipate, will continue to contribute to fluctuations in our quarterly results, including fluctuations in sequential revenue growth rates. **Intellectual Property** We regard the protection of our developed technologies and intellectual property rights as an important element of our business operations and crucial to our success. We rely primarily on a combination of patent laws, trademark laws, copyright laws, trade secrets, confidentiality procedures and contractual provisions to protect our proprietary technology. We require our employees, consultants and advisors to enter into confidentiality agreements. These agreements provide that all confidential information developed or made known to the individual during the course of the individuals relationship with us is to be kept confidential and not disclosed to third parties except under specific circumstances. In the case of our employees, the agreements provide that all of the technology which is conceived by the individual during the course of employment is our exclusive property. The development of our technology and many of our processes are dependent upon the knowledge, experience and skills of key scientific and technical personnel. As of the date of this report we own eight patents. U.S. Patent numbers *7,991,388 B1*and *8,244,216 B1* were issued on August 2, 2011 and August 14, 2012, respectively. These patents cover a geo-bio-metric personal identification number, a service that authenticates a user from a feature phone or smart phone using a number of mobile attainable attributes: geolocation, facial image, accelerometer (which measures the physical orientation or movement of the device itself), and text messaging. The purpose of the geo-bio-metric PIN service is to authenticate a user while verifying the following: the user is currently using his or her other phone; the user is at the location that their phone is at; the user is not at another location and using their phone through a proxy; and an impostor is not using the phone. These patents will expire in May of 2031. | -5- | | | Table of Contents | | U.S. Patent numbers *8,463,306* and *8,818,434* were issued on June 11, 2013 and August 26, 2014, respectively. U.S. Patent *9,307,430*was issued on April 5, 2016. These patents cover a method and system for testing a SMS/MMS text messaging network. The method and system allows for real-time testing of the initiation and completion of SMS/MMS text messages and any delivery delays across the major American mobile phone carriers, and accurately measures the progress on SMS/MMS broadcasts and records when a broadcast has been completed. These patents will expire in May 2032. U.S Patent number *9,495,671* was granted on November 15, 2016. U.S. Patent *9,727,853* was issued on August 8, 2017. These patents cover a system to generate value added messages on receipts printed by POS systems based on various rules determined by information conveyed on the purchase receipt such as location, time of day, or other purchase data. The patent application claims priority to a patent application filed in 2006. These patents will expire in March 2027. U.S. Patent number 1*0,475,017 B2* was granted on November 12, 2019. This patent covers a POS terminal and a computer-readable storage medium that generates transaction information for a commercial transaction, the transaction information including customer information and purchase information. The POS terminal may generate nutritional information based on the purchase information. The POS terminal may send the customer information, the purchase information, and location information identifying a location of the POS terminal to an advertising server and may receive responsive advertising content from the advertising server. The POS terminal may print a receipt including the transaction information, the nutritional information, and the advertising content. These patents will expire in March 2027. Our issued and any future patents that we may issue may not survive a legal challenge to their scope, validity or enforceability, or provide significant protection for us. The failure of our patents, or the failure of our copyright and trade secret laws to adequately protect our technology, might make it easier for our competitors to offer similar products or technologies. In addition, patents may not issue from any of our current or any future applications. As of the date of this report, we own trademarks for Boomtext, SmartReceipt, Livelenz, and several trademarks from the Belly acquisition. **Government Regulation** The growth and development of the mobile messaging market and the market for electronic storage of personal information has resulted in a variety of stringent consumer protection laws, many of which impose significant burdens on companies that store personal information. Depending on the products and services that they offer, mobile data service providers may be subject to regulations and laws applicable to providers of mobile, Internet and VOIP services, including domestic and international laws and regulations relating to user privacy and data protection, defamation, pricing, advertising, taxation, gambling, sweepstakes, promotions, billing, real estate, consumer protection, accessibility, content regulation, quality of services, telecommunications, mobile, television and intellectual property ownership and infringement. We expect that the regulation of our industry generally will continue to increase and that we will be required to devote increasing amounts of legal and other resources to address this regulation. In addition, the application of existing domestic and international laws and regulations relating to issues such as user privacy and data protection, marketing, advertising, consumer protection and mobile disclosures in many instances is unclear or unsettled. In addition to its regulation of wireless telecommunications providers generally, the U.S. Federal Communications Commission, or FCC, has examined, or is currently examining, how and when consumers enroll in mobile services, what types of disclosures consumers receive, what services consumers are purchasing and how much consumers are charged. In addition, the Federal Trade Commission, or FTC, has been asked to regulate how mobile marketers can use consumers personal information. Consumer advocates claim that many consumers do not know when their information is being collected from cell phones and how such information is retained, used and shared with other companies. Consumer groups have asked the FTC to identify practices that may compromise privacy and consumer welfare; examine opt-in procedures to ensure consumers are aware of what data is at issue and how it will be used; investigate marketing tactics that target children; and create policies to halt abusive practices. The FTC has expressed interest, in particular, in the mobile environment and services that collect sensitive data, such as location-based information. | -6- | | | Table of Contents | | The principal laws and regulations that pertain to us and our customers in connection with their utilization of our platform, include: | | | Deceptive Trade Practice Law in the U.S. The FTC and state attorneys general are given broad powers by legislatures to curb unfair and deceptive trade practices. These laws and regulations apply to mobile marketing campaigns and behavioral advertising. The general guideline is that all material terms and conditions of the offer must be clearly and conspicuously disclosed to the consumer prior to the buying decision. The balancing of the desire to capture a potential customers attention, while providing adequate disclosure, can be challenging in the mobile context due to the lack of screen space available to provide required disclosures. | | | | | Behavioral Advertising. Behavioral advertising is a technique used by online publishers and advertisers to increase the effectiveness of their campaigns. Behavioral advertising uses information collected from an individuals web-browsing behavior, such as the pages they have visited or the searches they have made, to select which advertisements to display to that individual. This data can be valuable for online marketers looking to personalize advertising initiatives or to provide geo-tags through mobile devices. Many businesses adhere to industry self-governing principles, including an opt-out regime whereby information may be collected until an individual indicates that he or she no longer agrees to have this information collected. The FTC and EU member states are considering regulations in this area, which may include implementation of a more rigorous opt-in regime. An opt-in policy would prohibit businesses from collecting and using information from individuals who have not voluntarily consented. Among other things, the implementation of an opt-in regime could require substantial technical support and negatively impact the market for our mobile advertising products and services. A few states have also introduced bills in recent years that would restrict behavioral advertising within the state. These bills would likely have the practical effect of regulating behavioral advertising nationwide because of the difficulties behind implementing state-specific policies or identifying the location of a particular consumer. There have also been a large number of class action suits filed against companies engaged in behavioral advertising. | | | | | Behavioral Advertising-Privacy Regulation. Our business is affected by U.S. federal and state, as well as EU member state and foreign country, laws and regulations governing the collection, use, retention, sharing and security of data that we receive from and about our users. In recent years, regulation has focused on the collection, use, disclosure and security of information that may be used to identify or that actually identifies an individual, such as an Internet Protocol (IP) address or a name. Although the mobile and Internet advertising privacy practices are currently largely self-regulated in the U.S., the FTC has conducted numerous discussions on this subject and suggested that more rigorous privacy regulation is appropriate, including regulation of non-personally identifiable information which could, with other information, be used to identify an individual. Within the EU, member state data protection authorities typically regard IP addresses as personal information, and legislation adopted recently in the EU requires consent for the placement of a cookie on a user device. In addition, EU data protection authorities are following with interest the FTCs discussions regarding behavioral advertising and may follow suit by imposing additional privacy requirements for mobile advertising practices. | | | | | Marketing-Privacy Regulation. In addition, there are U.S. federal and state laws and EU member state and other country laws that govern SMS/MMS and telecommunications-based marketing, generally requiring senders to transmit messages (including those sent to mobile devices) only to recipients who have specifically consented to receiving such messages. U.S. federal, EU member state and other country laws also govern e-mail marketing, generally imposing an opt-out requirement for emails sent within an existing business relationship. | | | | | SMS/MMS and Location-Based Marketing Best Practices and Guidelines. We voluntarily comply with the guidelines of the Mobile Marketing Association, or MMA, a global association of 700 agencies, advertisers, mobile device manufacturers, wireless operators and service providers and others interested in the potential of marketing via the mobile channel. The MMA has published a code of conduct and best practices guidelines for use by those involved in mobile messaging activities. The guidelines were developed by a collaboration of the major carriers and they require adherence to them as a condition of service. We voluntarily comply with the MMA code of conduct, which generally require notice and user consent for delivery of location-based services. In addition, the Cellular Telephone Industry Association, or CTIA, has developed Best Practices and Guidelines to promote and protect user privacy regarding location-based services. | | | | | TCPA. The United States Telephone Consumer Protection Act, or TCPA, prohibits unsolicited voice and text calls to cell phones through the use of an automatic telephone-dialing system (ATDS) unless the recipient has given prior consent. The statute also prohibits companies from initiating telephone solicitations to individuals on the national Do-Not-Call list, and restricts the hours when such messages may be sent. Violations of the TCPA can result in statutory damages of $500 per violation (i.e., for each individual text message). U.S. state laws impose additional regulations on voice and text calls. We believe that our platform does not employ an ATDS within the meaning of the TCPA based on case law construing that term. | | | | | CAN-SPAM. The U.S. Controlling the Assault of Non-Solicited Pornography and Marketing Act, or CAN SPAM Act, prohibits all commercial e-mail messages, as defined in the law, to mobile phones unless the device owner has given express prior authorization. Recipients of such messages must also be allowed to opt-out of receiving future messages the same way they opted-in. Senders have ten business days to honor opt-out requests. The FCC has compiled a list of domain names used by wireless service providers to which marketers may not send commercial e-mail messages. Senders have 30 days from the date the domain name is posted on the FCC site to stop sending unauthorized commercial e-mail to addresses containing the domain name. Violators are subject to fines of up to $6.0 million and up to one year in jail for some spamming activities. Carriers, the FTC, the FCC, and State Attorneys General may bring lawsuits to enforce alleged violations of the Act. | | | -7- | | | Table of Contents | | | | | Communications Privacy Acts. Foreign and U.S. federal and state laws impose liability for intercepting communications while in transit or accessing the contents of communications while in storage. EU member state laws also require consent for our receiving this information, and if our carrier customers fail to obtain such consent we could be subjected to civil or even criminal penalties. | | | | | Security Breach Notification Requirements. EU member state laws require notice to the member state data protection authority of a data security breach involving personal data if the breach poses a risk to individuals. In addition, Germany enacted a broad requirement to notify individuals in the event of a data security breach that is likely to be followed by notification requirements to data subjects in other EU member states. In the U.S., various states have enacted data breach notification laws, which require notification of individuals and sometimes state regulatory bodies in the event of breaches involving certain defined categories of personal information. Japan and Uruguay have also enacted security breach notice requirements. This new trend suggests that breach notice statutes may be enacted in other jurisdictions, including by the U.S. at the federal level, as well. | | | | | Children. The Childrens Online Privacy Protection Act prohibit the knowing collection of personal information from children under the age of 13 without verifiable parental consent, and strictly regulate the transmission of requests for personal information to such children. Other countries do not recognize the ability of children to consent to the collection of personal information. In addition, it is likely that behavioral advertising regulations will impose special restrictions on use of information collected from minors for this purpose. | | | | | Data Privacy Acts. Individual states and countries have enacted or are moving forward with privacy compliance rules based on industry and types of data collected, such as the California Consumer Privacy Act (CCPA), Nevadas Senate Bill 220 and the EUs General Data Protection Regulation (GDPR). The acts provide residents the right to know what data is being collected about them and have access to it, whether that information is sold and the ability to refuse that data being sold, as well as the ability to opt out of its collection. Penalties for non-compliance vary by state and country, for instance the maximum penalty of the CCPA is $7,500 for intentional violations. The largest financial impact of CCPA on a business is the provisioning of the right of consumers to bring forward lawsuits. These situations may arise from instances where their non-encrypted or non-redacted personal information is breached, regardless of the harm done to the data. Under the CCPA, consumers can collect between $100 and $750 for each event. If the damages are greater than $750, then the consumer may receive even more. | | **Employees** As of March 27 2025, we had 28 employees, consisting of 13 full-time in research and development, 10 full-time in sales and marketing, and 4 full-time in general and administrative. **Available Information** The Company maintains a website at www.mobivity.com, where our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and other reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act can be found. **Item 1A. Risk Factors.** **Risks Relating to Our Business** **We may need additional financing to execute our business plan and fund operations, which additional financing may not be available on reasonable terms or at all.** As of December 31, 2024, we had working capital deficit of $4,862,421. We raised $6.9 million in cash Convertible Notes issued during 2024. In addition, we raised $2.3 million cash Convertible Notes issued during the 1st quarter of 2025. While we believe that our additional cash from our warrant conversion along with our expected cash flow from operations, may not be sufficient to fund our 12-month plan of operations, there can be no assurance that we will not require significant additional capital within 12 months. Also, we expect that we may require additional capital beyond the next 12 months unless we are able to achieve and maintain a profitable operation. In the event we require additional capital we will endeavor to raise additional funds through various financing sources, including the sale of our equity and debt securities and the procurement of commercial debt financing. However, there can be no guarantees that such funds will be available on commercially reasonable terms, if at all. If such financing is not available on satisfactory terms, we may be unable to expand or continue our business as desired and operating results may be adversely affected. Any debt financing will increase expenses and must be repaid regardless of operating results and may involve restrictions limiting our operating flexibility. If we issue equity securities to raise additional funds, the percentage ownership of our existing stockholders will be reduced, and our stockholders may experience additional dilution in net book value per share. Our ability to obtain needed financing may be impaired by such factors as the capital markets, both generally and specifically in our industry, and the fact that we are not yet profitable, which could impact the availability or cost of future financings. If the amount of capital we are able to raise from financing activities, together with our revenues from operations, is not sufficient to satisfy our capital needs, we may be required to reduce or even cease operations. | -8- | | | Table of Contents | | **Our sales efforts to large enterprises require significant time and effort and could hinder our ability to expand our customer base and increase revenue.** Attracting new customers to our large enterprise division requires substantial time and expense, especially in an industry that is so heavily dependent on personal relationships with executives. We cannot assure that we will be successful in establishing new relationships or maintaining or advancing our current relationships. For example, it may be difficult to identify, engage and market to customers who do not currently perform mobile marketing or advertising or are unfamiliar with our current services or platform. Further, many of our customers typically require input from one or more internal levels of approval. As a result, during our sales effort, we must identify multiple people involved in the purchasing decision and devote a sufficient amount of time to presenting our products and services to those individuals. The complexity of our services often requires us to spend substantial time and effort assisting potential customers in evaluating our products and services including providing demonstrations and benchmarking against other available technologies. We expect that our sales process will become less burdensome as our products and services become more widely known and used. However, if this change does not occur, we will not be able to expand our sales effort as quickly as anticipated and our sales will be adversely affected. **We may not be able to enhance our platform to keep pace with technological and market developments, or to remain competitive against potential new entrants in our markets.** The market for mobile marketing and advertising services is emerging and is characterized by rapid technological change, evolving industry standards, frequent new product introductions and short product life cycles. Our current platform and services may not in the future be acceptable to marketers and advertisers. To keep pace with technological developments, satisfy increasing customer requirements and achieve acceptance of our marketing and advertising campaigns, we will need to enhance our current mobile marketing solutions and continue to develop and introduce on a timely basis new, innovative mobile marketing services offering compatibility, enhanced features and functionality on a timely basis at competitive prices. Our inability, for technological or other reasons, to enhance, develop, introduce and deliver compelling mobile marketing services in a timely manner, or at all, in response to changing market conditions, technologies or customer expectations could have a material adverse effect on our operating results or could result in our mobile marketing services platform becoming obsolete. Our ability to compete successfully will depend in large measure on our ability to maintain a technically skilled development and engineering staff and to adapt to technological changes and advances in the industry, including providing for the continued compatibility of our mobile marketing services platform with evolving industry standards and protocols. In addition, as we believe the mobile marketing market is likely to grow substantially, other companies which are larger and have significantly more capital to invest than us may emerge as competitors. For example, in August of 2019 Attentive Mobile raised $40M in private venture financing. Similarly, in November of 2019, Punchh raised $40M in private venture funding. New entrants could seek to gain market share by introducing new technology or reducing pricing. This may make it more difficult for us to sell our products and services, and could result in increased pricing pressure, reduced profit margins, increased sales and marketing expenses or the loss of market share or expected market share, any of which may significantly harm our business, operating results and financial condition. **Our services are provided on mobile communications networks that are owned and operated by third parties who we do not control and the failure of any of these networks would adversely affect our ability to deliver our services to our customers.** Our mobile marketing and advertising platform is dependent on the reliability of mobile operators who maintain sophisticated and complex mobile networks. Such mobile networks have historically, and particularly in recent years, been subject to both rapid growth and technological change. If the network of a mobile operator with which we are integrated should fail, including because of new technology incompatibility, the degradation of network performance under the strain of too many mobile consumers using it, or a general failure from natural disaster or political or regulatory shut-down, we will not be able provide our services to our customers through such mobile network. This in turn, would impair our reputation and business, potentially resulting in a material, adverse effect on our financial results. **If our platform does not scale as anticipated, our business will be harmed.** We must be able to continue to scale to support potential ongoing substantial increases in the number of users in our actual commercial environment and maintain a stable service infrastructure and reliable service delivery for our mobile marketing and advertising campaigns. In addition, we must continue to expand our service infrastructure to handle growth in customers and usage. If our mobile marketing services platform does not efficiently and effectively scale to support and manage a substantial increase in the number of users while maintaining a high level of performance, the quality of our services could decline and our business will be seriously harmed. In addition, if we are unable to secure data center space with appropriate power, cooling and bandwidth capacity, we may not be able to efficiently and effectively scale our business to manage the addition of new customers and overall mobile marketing campaigns. | -9- | | | Table of Contents | | **The success of our business depends, in part, on wireless carriers continuing to accept our customers*** **messages for delivery to their subscriber base.*** We depend on wireless carriers to deliver our customers messages to their subscriber base. Wireless carriers often impose standards of conduct or practice that significantly exceed current legal requirements and potentially classify our messages as spam, even where we do not agree with that conclusion. In addition, the wireless carriers use technical and other measures to attempt to block non-compliant senders from transmitting messages to their customers; for example, wireless carriers block short codes or Internet Protocol addresses associated with those senders. There can be no guarantee that we, or short codes registered to us, will not be blocked or blacklisted or that we will be able to successfully remove ourselves from those lists. Although our services typically require customers to opt-in to a campaign, minimizing the risk that our customers messages will be characterized as spam, blocking of this type could interfere with our ability to market products and services of our customers and communicate with end users and could undermine the effectiveness of our customers marketing campaigns. To date we have not experienced any material blocking of our messages by wireless carriers, but any such blocking could have an adverse effect on our business and results of operations. **We depend on third party providers for a reliable Internet infrastructure and the failure of these third parties, or the Internet in general, for any reason would significantly impair our ability to conduct our business.** We outsource all of our data center facility management to third parties who host the actual servers and provide power and security in multiple data centers in each geographic location. These third-party facilities require uninterrupted access to the Internet. If the operation of our servers is interrupted for any reason, including natural disaster, financial insolvency of a third-party provider, or malicious electronic intrusion into the data center, our business would be significantly damaged. As has occurred with many Internet-based businesses, on occasion in the past, we have been subject to denial-of-service attacks in which unknown individuals bombarded our computer servers with requests for data, thereby degrading the servers performance. While we have historically been successful in relatively quickly identifying and neutralizing these attacks, we cannot be certain that we will be able to do so in the future. If either a third-party facility failed, or our ability to access the Internet was interfered with because of the failure of Internet equipment in general or we become subject to malicious attacks of computer intruders, our business and operating results will be materially adversely affected. **Failure to adequately manage our growth may seriously harm our business.** We operate in an emerging technology market and have experienced, and may continue to experience, significant growth in our business. If we do not effectively manage our growth, the quality of our products and services may suffer, which could negatively affect our brand and operating results. Our growth has placed, and is expected to continue to place, a significant strain on our managerial, administrative, operational and financial resources and our infrastructure. Our future success will depend, in part, upon the ability of our senior management to manage growth effectively. This will require us to, among other things: | | | implement additional management information systems; | | | | | develop additional levels of management within our company; | | | | | locate additional office space in various countries; and | | | | | maintain close coordination among our engineering, operations, legal, finance, sales and marketing and customer service and support organizations. | | Moreover, as our sales increase, we may be required to concurrently deploy our services infrastructure at multiple additional locations or provide increased levels of customization. As a result, we may lack the resources to deploy our mobile marketing services on a timely and cost-effective basis. Failure to accomplish any of these requirements would seriously harm our ability to deliver our mobile marketing services platform in a timely fashion, fulfill existing customer commitments or attract and retain new customers. **The gathering, transmission, storage and sharing or use of personal information could give rise to liabilities or additional costs of operation as a result of governmental regulation, legal requirements, civil actions or differing views of personal privacy rights.** We transmit and store a large volume of personal information in the course of providing our services. Federal, state and international laws and regulations govern the collection, use, retention, sharing and security of data that we receive from our customers and their users. Any failure, or perceived failure, by us to comply with U.S. federal, state, or international privacy or consumer protection-related laws, regulations or industry self-regulatory principles could result in proceedings or actions against us by governmental entities or others, which could potentially have an adverse effect on our business, operating results and financial condition. Additionally, we may also be contractually liable to indemnify and hold harmless our customers from the costs or consequences of inadvertent or unauthorized disclosure of their customers personal data which we store or handle as part of providing our services. The interpretation and application of privacy, data protection and data retention laws and regulations are currently unsettled in the U.S. and internationally, particularly with regard to location-based services, use of customer data to target advertisements and communication with consumers via mobile devices. Such laws may be interpreted and applied inconsistently from country to country and inconsistently with our current data protection policies and practices. Complying with these varying international requirements could cause us to incur substantial costs or require us to change our business practices in a manner adverse to our business, operating results or financial condition. | -10- | | | Table of Contents | | As privacy and data protection have become more sensitive issues, we may also become exposed to potential liabilities as a result of differing views on the privacy of personal information. These and other privacy concerns, including security breaches, could adversely impact our business, operating results and financial condition. In the U.S., we have voluntarily agreed to comply with wireless carrier technological and other requirements for access to their customers mobile devices, and also trade association guidelines and codes of conduct addressing the provision of location-based services, delivery of promotional content to mobile devices and tracking of users or devices for the purpose of delivering targeted advertising. We could be adversely affected by changes to these requirements, guidelines and codes, including in ways that are inconsistent with our practices or in conflict with the rules or guidelines in other jurisdictions. **We currently rely on a small concentration of customers to use our products to generate our revenues, and the loss or change in any of these significant relationships could materially reduce our revenues**. Although we believe we have a good relationship with these customers, our contracts with these customers are short-term in nature. Should these customers choose to terminate their contracts with us or if material events occur that are detrimental to these customers or their operations, it could have a significant negative impact on our financial performance. **We currently operate in limited vertical markets**. Our customers primarily operate in the quick serve restaurant (QSR) industry and we expanded to the convenience store market. Should this industry be impacted by economical or other unforeseen events, it could have a significant negative impact on our financial performance. **Risks Related to our Common Stock** **There has been a limited trading market for our common stock.** There has been a limited trading market for our common stock on the OTCQB Venture Market. The lack of an active market may impair the ability to sell your shares at the time you wish to sell them or at a price that you consider reasonable. The lack of an active market may also reduce the fair market value of your shares. An inactive market may also impair our ability to raise capital by selling shares of capital stock and may impair our ability to acquire other companies or technologies by using common stock as consideration. **The market price of our common stock may be, and is likely to continue to be, highly volatile and subject to wide fluctuations.** The market price of our common stock is likely to be highly volatile and could be subject to wide fluctuations in response to a number of factors some of which are beyond our control, including: | | | dilution caused by our issuance of additional shares of common stock and other forms of equity securities, which we expect to make in connection with future acquisitions or capital financings to fund our operations and growth, to attract and retain valuable personnel and in connection with future strategic partnerships with other companies; | | | | | announcements of new acquisitions or other business initiatives by our competitors; | | | | | our ability to take advantage of new acquisitions or other business initiatives; | | | | | quarterly variations in our revenues and operating expenses; | | | | | changes in the valuation of similarly situated companies, both in our industry and in other industries; | | | | | changes in analysts estimates affecting us, our competitors and/or our industry; | | | | | changes in the accounting methods used in or otherwise affecting our industry; | | | | | additions and departures of key personnel; | | | | | announcements by relevant governments pertaining to additional quota restrictions; and | | | | | fluctuations in interest rates and the availability of capital in the capital markets. | | Some of these factors are beyond our control, and the impact of these risks, singly or in the aggregate, may result in material adverse changes to the market price of our common stock and/or our results of operations and financial condition. **We do not expect to pay dividends in the foreseeable future.** We do not intend to declare dividends for the foreseeable future, as we anticipate that we will reinvest any future earnings in the development and growth of our business. Therefore, investors will not receive any funds unless they sell their common stock, and stockholders may be unable to sell their shares on favorable terms or at all. Investors cannot be assured of a positive return on investment or that they will not lose the entire amount of their investment in the common stock. | -11- | | | Table of Contents | | **Our common stock may be considered to be a****penny stock** **and, as such, any market for our common stock may be further limited by certain SEC rules applicable to penny stocks**. To the extent the price of our common stock remains below $5.00 per share or we have net tangible assets of $2,000,000 or less, our common shares will be subject to certain penny stock rules promulgated by the SEC. Those rules impose certain sales practice requirements on brokers who sell penny stock to persons other than established customers and accredited investors (generally institutions with assets in excess of $5,000,000 or individuals with net worth in excess of $1,000,000). For transactions covered by the penny stock rules, the broker must make a special suitability determination for the purchaser and receive the purchasers written consent to the transaction prior to the sale. Furthermore, the penny stock rules generally require, among other things, that brokers engaged in secondary trading of penny stocks provide customers with written disclosure documents, monthly statements of the market value of penny stocks, disclosure of the bid and asked prices and disclosure of the compensation to the brokerage firm and disclosure of the salesperson working for the brokerage firm. These rules and regulations adversely affect the ability of brokers to sell our common shares and limit the liquidity of our securities. **We are a****smaller reporting company** **and, as such are allowed to provide less disclosure than larger public companies**. We are currently a smaller reporting company, meaning that we are not an investment company, an asset-backed issuer, or a majority-owned subsidiary of a parent company that is not a smaller reporting company and have a public float of less than $75 million and annual revenues of less than $50 million during the most recently completed fiscal year. As a smaller reporting company, we are able to provide simplified executive compensation disclosures in our SEC filings, are exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that independent registered public accounting firms provide an attestation report on the effectiveness of internal control over financial reporting, and have certain other decreased disclosure obligations in SEC filings, including, among other things, we are only required to provide two years of audited financial statements in annual reports. Decreased disclosures in our SEC filings due to our status as a smaller reporting company may make it harder for investors to analyze our results of operations and financial prospects. **Item 1B. Unresolved Staff Comments.** Not Applicable. **Item 1C. Cybersecurity.** Over the past year, our team has implemented, optimized, and matured our cybersecurity practices, aiming to meet all major industry benchmarks. Our goal is to safeguard our information systems and protect the confidentiality, integrity, and availability of both our and our customers data. This includes measures related to cybersecurity incidents, risk management, management roles, and governance. 1) **Cybersecurity incidents:** Our public-facing website complies with WCAG 2.2 level AA standards for accessibility. We manage various databases, including those on Amazon and Google Clouds, each with three sets of development, testing, and production environments. Our main data warehousing solutions is Amazon Redshift, complemented by Amazon S3 for object storage. | | a) | To prevent unauthorized access, we have established a series of security gates across all production environments and instances | | | | b) | Only two individuals have update access to production database instances, and a limited number of individuals have read-only access to personally identifiable information (PII) data | | | | c) | In our cloud environments, 2-3 members of our Platform Engineering team have access to production and test instances, and logs are generated for any changes made | | 2) **Risk Management:** We maintain multiple AWS and Google Cloud environments, each with three sets of development, testing, and production environments. Our primary data warehousing solution is Amazon Redshift, while we use Amazon S3 Glacier for archival storage and Amazon S3 for object storage. We also employ Amazon Sagemaker for machine learning tasks and internally host Apache Superset on the AWS platform for data visualization. | | a) | All environments are isolated using credentials and accounts | | | | b) | We are following a plan to ensure scheduled patching, upgrades, and other maintenance occur every quarter. This includes updates for SQL databases and cloud instances | | | | c) | We have the capability to search our logs for security incidents | | | | d) | We are on schedule to monitor every public endpoint using a Web Application Firewall (WAF), ensuring that all traffic is logged with patterns to detect any suspicious behavior | | | | e) | We aim to enable automatic processes to ensure no production data is changed without systematic audits | | | | f) | The data visualization tool has login credentials with role-based access | | | -12- | | | Table of Contents | | 3) **Managements Role:** Our board of directors has ultimate oversight of cybersecurity risk. Our VP of Engineering and Platform Engineering Manager lead cybersecurity risk assessment and management efforts, collaborating closely with the interim CEO for guidance, strategic direction, alignment with business objectives, and environment. | | a) | The Platform Engineering Manager has over 5 years of experience and holds a bachelors degree in computer science. The VP of Digital Engineering brings 19 years of expertise in digital transformations across various industries, holding leadership roles at Nordstrom, Walgreens, T-Mobile, and Sony PlayStation, with a Masters degree in Business Administration from the University of Michigan | | | | b) | We stay informed by utilizing online SOX and SOC II policy documents | | | | c) | We have robust logging systems in place to monitor our systems, and our response plan includes promptly identifying the executives and parties affected | | 4) **Governance:** Our governance includes routing all production changes through approval processes and testing in the test environment before implementation in production. | | a) | We adhere to SOX regulations to ensure proper documentation and signoffs for any production data alterations due to incorrect data entry | | | | b) | In the event of changes, we document the reason for the update, the responsible individual, and the details of what was modified (both before and after). Additionally, all modifications undergo verification by at least one individual before and after the change | | | | c) | The board holds oversight of the Companys risks related to cybersecurity risks. | | Our business strategy, results of operations, and financial condition have not been materially affected by risks from cybersecurity threats, but we cannot provide assurance that they will not be materially affected in the future by such risks or any future material incidents. **Item 2. Properties.** We have a current lease that was entered into starting in February of 2021 for 8,898 square feet of office space located at 3133 W. Frye Road, Suite 215, Chandler, Arizona. Monthly rental payments, excluding common area maintenance charges, will be $25,953 to $28,733. The first twelve months of the lease included a 50% abatement period. The office space in Chandler has been a perfect size for a growing company, with an open concept to encourage collaboration. The Company entered in to a sublease to lease our existing office spaceatlocated at 3133 W. Frye Road, Suite 215, Chandler, Arizona, on March 1, 2024 for its office facilities in Chandler, AZ through February 28, 2025. Monthly rental payments including rental of office furniture and excluding taxes, are $24,470. **Item 3. Legal Proceedings.** As of the date of this report, the company has two pending legal proceeding related to the Telephone Consumer Protection Act, 47 U.S.C 227 et al. (TCPA). The first proceeding is a putative class action complaint alleging that Defendant initiated telephone solicitations through text messages to Plaintiff and members of a putative class in violation of the TCPA. The defense of the matter was tendered to the Company by its client, and our firm took over the defense of the matter. We have not yet responded to the complaint and no discovery has been conducted so we are unable to determine at this time whether it may result in a material exposure as defined. The Company intends to seek an individual settlement of this matter and if one cannot be reached it intends to vigorously defend the matter for its client. The second proceeding is a putative class action complaint alleging that Defendant initiated telephone solicitations through text messages in violation of the Telephone Consumer Protection Act, 47 U.S.C 227 et al. (TCPA). The defense of the matter was tendered to the Company by its client, and our firm is managing the defense of the matter. We have not yet responded to the complaint and no discovery has been conducted so we are unable to determine at this time whether it may result in a material exposure as defined. The Company intends to seek an individual settlement of this matter and if one cannot be reached it intends to vigorously defend the matter for its client. Management believes that there is no other pending litigation of which the resolution or settlement will have a material adverse effect on the results of operations or liquidity of the Company. **Item 4. Mine Safety Disclosures** **Not Applicable**. **Part II** **Item 5. Market for Registrant****s Common Equity, Related Stockholder Matter and Issuer Purchases of Equity Securities** Our common stock is quoted on the OTCQB Venture Market under the stock symbol MFON. Our common stock trades only sporadically and has experienced in the past, and is expected to experience in the future, significant price and volume volatility. Quotations reflect inter-dealer prices, without markup, markdown or commissions and may not represent actual transactions. | -13- | | | Table of Contents | | **Holders of Record** As of March 27, 2025, there were 149 holders of record of our common stock, not including shares held in street name. **Dividend Policy** We have not paid any cash dividends since our inception and do not contemplate paying dividends in the foreseeable future. It is anticipated that earnings, if any, will be retained for the operation of our business. **Stock Repurchases** We did not repurchase any of our common stock in 2024 or 2023. **Item 6. [Reserved]** **Item 7. Management****s Discussion and Analysis of Financial Condition and Results of Operations** *The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the financial statements and the related notes and other information that are included elsewhere in this Form 10-K. This discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations, and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward looking statements as a result of a number of factors, including those set forth under the cautionary note regarding**Forward Looking Statements* *contained in Item 1.A* *Risk Factors**.* **Overview** Mobivity Holdings Corp. (the Company or we) is in the business of developing and operating proprietary platforms through which brands and enterprises can conduct national and localized, data-driven marketing campaigns. Mobivitys Recurrency platform fills this need with a self-service SaaS offering, enabling operators to intelligently optimize their promotions, media and marketing spend. Recurrency drives system-wide sales producing on average a 13% increase in guest spend and a 26% improvement in frequency, ultimately delivering an average Return on Marketing Spend of 10X. In other words, for every dollar invested in marketing, retailers using Recurrency to manage, optimize and deliver multi-channel consumer promotions generate an average of ten dollars in *incremental*revenue from their customers. The Companys Recurrency platform enables multi-unit retailers to leverage the power of their own data to yield maximum customer spend, frequency and loyalty while achieving the highest ROMS possible. Recurrency powers Connected Rewards transactions and allows us to offer unique and attributable programs delivering real world rewards to consumers for actions taken in a digital environment. To date, our Connected Rewards programs have been delivered primarily in 3 ways. First, through utilizing brands owned loyalty channels like text and email. In these programs, brands will send offers to their loyalty customers incentivizing them to download an app or sign up for a digital service by rewarding them with a free or discounted product at their brand. Second, through placements in brand-owned apps. These placements incentivize download of digital apps or services with loyalty points or discounts on products at their brand. These programs are long term contracts and placements of an advertising unit in the brand owned app. Third, delivering free or discounted products for actions taken in a digital environment. An example of these programs is that a user could earn a free cheeseburger or discount on gas for achieving a certain level in a mobile casual game. **Mobivitys Recurrency platform fills this need with a self-service SaaS offering, enabling operators to intelligently optimize their promotions, media and marketing spend. Recurrency drives system-wide sales producing on average a 13% increase in guest spend and a 26% improvement in frequency, ultimately delivering an average Return on Marketing Spend of 10X. In other words, for every dollar invested in marketing, retailers using Recurrency to manage, optimize and deliver multi-channel consumer promotions generate an average of ten dollars in incremental revenue from their customers.** | -14- | | | Table of Contents | | **Recent Events** *Related Party Convertible Notes* During first quarter 2024 the Company issued 8 Convertible Notes payable to related parties for $1,950,000. As an inducement we issued 3,291,664 warrants to purchase shares of our common stock at $.60 per share. Simple interest on the unpaid principal balance of this Note will accrue at the rate of 8.0% per annum. Accrual of interest will commence on the date of this Note, will continue until this Note is fully paid, and will be payable in a single installment at maturity three years from the date the Convertible Note was issued. During the second quarter of 2024 the Company issued 8 Convertible Notes payable to related parties for $2,100,000. As an inducement we issued 3,499,997 warrants to purchase shares of our common stock at $.60 per share. Simple interest on the unpaid principal balance of this Note will accrue at the rate of 8.0% per annum. Accrual of interest will commence on the date of this Note, will continue until this Note is fully paid, and will be payable in a single installment at maturity three years from the date the Convertible Note was issued. During the third quarter of 2024 the Company issued 4 Convertible Notes payable to related parties for $1,275,000. As an inducement we issued 2,124,999 warrants to purchase shares of our common stock at $.60 per share. Simple interest on the unpaid principal balance of this Note will accrue at the rate of 8.0% per annum. Accrual of interest will commence on the date of this Note, will continue until this Note is fully paid, and will be payable in a single installment at maturity three years from the date the Convertible Note was issued. During the fourth quarter of 2024 the Company issued 5 Convertible Notes payable to related parties for $1,525,000. As an inducement we issued 2,541,664 warrants to purchase shares of our common stock at $.60 per share. Simple interest on the unpaid principal balance of this Note will accrue at the rate of 8.0% per annum. Accrual of interest will commence on the date of this Note, will continue until this Note is fully paid, and will be payable in a single installment at maturity three years from the date the Convertible Note was issued. During the twelve months ended December 31, 2024 the company recorded $454,912 of interest expense in connection with the related party convertible notes and $470,267 in amortized debt discount in connections with related party convertible notes. As of December 31, 2024 the Convertible Notes issued to related parties had a principal balance of $8,850,000 with a debt discount of $1,331,375 for a net principal balance of $7,518,625 and accrued interest of $479,156. **Results of Operations and Financial Conditions** **Year Ended December 31, 2024 Compared to Year Ended December 31, 2023** **Revenues** Revenues consist primarily of a suite of products under the Recurrency platform. The Recurrency platform is comprised of POS Data Capture, Analytics, Offers and Promotions, Predictive Offers, Personalized Receipt Promotions, Customized Mobile Messaging, Belly Loyalty, and other revenues. | -15- | | | Table of Contents | | Revenues for the twelve months ended December 31, 2024 were $1,143,535, an increaseof $75,863, or 7.1%, compared to $1,067,672 for the twelve months ended December 31, 2023. This increase is primarily due an increase in Connected Rewards customers. **Cost of Revenues** Cost of revenues consist primarily of cloud-based software licensing fees, short code maintenance expenses, personnel related expenses, and other expenses. Cost of revenues for the twelve months ended December 31, 2024 was $512,901, a decrease of $262,976, or 33.9%, compared to $775,877 for the twelve months ended December 31, 2023. This decrease is primarily due to a decrease in cost associated with providing our Connected Rewards programs. The gross profit margin was 55.0% and 27.0% for the twelve months ended December 31, 2024 and 2023, respectively. Higher gross profit margin in 2024 is primarily due to adjustments made to rewards pricing. **Bad Debt** Bad Debt expense for the twelve months ended December 31, 2024 was a gain of $971 a decrease of $29,772, or 103.4%, compared to $28,801 for the twelve months ended December 31, 2023. This decrease is due primarily to a decrease in the average bad debt in our Connected Rewards business. **General and Administrative** General and administrative expenses consist primarily of administrative salaries and personnel related expenses, legal fees, stock-based compensation expense, consulting costs and other expenses. General and administrative expenses for the twelve months ended December 31, 2024 were $1,337,644, a decrease of $2,984,680, or 69.1%, compared to $4,322,324 for the twelve months ended December 31, 2023. The decrease in general and administrative expense was primarily due an decrease in share based expense from the two warrant issuances during the previous year. **Sales and Marketing Expense** Sales and marketing expenses consist primarily of salaries and personnel related expenses, stock-based compensation expense, sales travel, consulting costs and other expenses. Sales and marketing expenses for the twelve months ended December 31, 2024 were $2,772,216, an increase of $592,806, or 27.2%, compared to $2,179,410 for the twelve months ended December 31, 2023. The increase in 2024 was primarily due to an increase trade show and travel expense to promote Connected Rewards. **Engineering, Research, and Development Expense** Engineering, research, and development expenses consist primarily of salaries and personnel related expenses, stock-based compensation expense, consulting costs and other expenses. Engineering, research, and development expenses for the twelve months ended December 31, 2024, were $3,596,761, an increase of $498,500 or 16.1%, compared to $3,098,261 for the twelve months ended December 31, 2023. The increase in 2024 was primarily due to an increase in engineering payroll dedicated to Connected Rewards. **Depreciation and Amortization Expense** Depreciation and amortization expense consist of depreciation on our equipment and amortization of our intangible assets. Depreciation and amortization expenses for the twelve months ended December 31, 2024, were $51,192 a decrease of $2,768, or 5.1%, compared to $53,960 for the twelve months ended December 31, 2023. This decrease is primarily attributable to the decrease in amortized assets. | -16- | | | Table of Contents | | **** **Interest Expense** Interest expense consists of stated or implied interest expense on our notes payable, amortization of note discounts, and amortization of deferred financing costs. Interest expense for the twelve months ended December 31, 2024 was $1,943,412, an increase of $915,730, or 89.1%, compared to $1,027,682 for the twelve months ended December 31, 2023. The increase is primarily attributable to the increased principal on short- and long-term borrowings during the year. **Settlement Losses** Settlement losses consist of legal settlement for TCPA settlements. Settlement losses for the twelve months ended December 31, 2024 were $0, a decrease of $19,250 or 100%, compared to $19,250 in the twelve months ended December 31, 2023. The decrease is due to a decrease in the number of TCPA claim settlement payments. **Loss on Settlement of Debt** Loss on Settlement of debt consists of the expense from the settlement of notes payable when they are settled into shares. Loss on settlement of debt for the twelve months ended December 31, 2024 and 2023 was $106,252 and $10,857, respectively. **Foreign Currency** The Companys financial results are impacted by volatility in the Canadian/U.S. Dollar exchange rate. The average U.S. Dollar exchange rate for the year ended December 31, 2024 and 2023 was $1 Canadian equals $0.73 and $0.74 U.S. Dollars, respectively. The Companys functional or measurement currency is the U.S. Dollar. Based on a U.S. Dollar functional currency, the following are the key areas impacted by foreign currency volatility: | | | The Company sells products primarily in U.S. Dollars; therefore, reported revenues are not highly impacted by foreign currency volatility. | | | | | A portion of the Companys expenses are incurred in Canadian Dollars and therefore fluctuate in U.S. Dollars as the U.S. Dollar varies. A weaker U.S. Dollar results in an increase in translated expenses, and a stronger U.S. Dollar results in a decrease. | | | | | Changes in foreign currency rates also impact the translated value of the Companys working capital that is held in Canadian Dollars. Foreign exchange rate fluctuations result in foreign exchange gains or losses based upon movement in the translated value of Canadian working capital into U.S. Dollars. | | The change in foreign currency was a loss of $29 and a loss of $391 for the years ended December 31, 2024 and 2023, respectively. | -17- | | | Table of Contents | | **Liquidity and Capital Resources** We have 1,261,240 of cash as of December 31, 2024. We had a net loss of $10.2 million for the year ended 2024, and we used $6.1 million of cash in our operating activities during 2024. We raised $6.9 million in cash Convertible Notes issued during 2024. Our additional cash from our convertible notes along with our expected cash flow from operations, may not be sufficient to fund our 12-month plan of operations, and there can be no assurance that we will not require significant additional capital within 12 months. If our cash reserves prove insufficient to sustain operations, we plan to raise additional capital by offering additional convertible notes. In addition we currently have an additional $126,875 available on our current line of credit. We may need additional financing thereafter until we can achieve profitability. If we cannot, we will be forced to curtail our operations or possibly be forced to evaluate a sale or liquidation of our assets. Any future financing may involve substantial dilution to existing investors. Although we are actively pursuing financing opportunities, we may not be able to raise cash on terms acceptable to us or at all. There can be no assurance that we will be successful in obtaining additional funding. Financings, if available, may be on terms that are dilutive to our shareholders, and the prices at which new investors would be willing to purchase our securities may be lower than the current price of our ordinary shares. The holders of new securities may also receive rights, preferences or privileges that are senior to those of existing holders of our ordinary shares. If additional financing is not available or is not available on acceptable terms, we will have to curtail our operations in the short term. **Cash Flows** | | | For the Year Ended | | | | | | December 31, | | | | | | 2024 | | | 2023 | | | | Net cash provided by (used in): | | | | | | | | | | | Operating activities | | $ | (6,066,156 | ) | | $ | (8,067,469 | ) | | | Investing activities | | | (13,327 | ) | | | (16,255 | ) | | | Financing activities | | | 6,842,965 | | | | 8,090,492 | | | | Effect of foreign currency translation on cash flow | | | 216,106 | | | | (17,113 | ) | | | Net change in cash | | $ | 979,588 | | | $ | (10,345 | ) | | *Operating Activities* We incurred a net loss in operating activities totaling $6,066,156 in 2024 and $8,067,469 in 2023, respectively. The decrease in net loss in operating activities in 2024 compared to 2023 was due primarily to the reduction of expense associated with warrant conversions from 2023 that were absent in 2024. *Investing Activities* Investing activities during twelve months ended December 31, 2024, $13,327 of equipment purchases compared to $16,255 in twelve months ended December 31, 2023. *Financing Activities* Financing activities for 2024 include convertible notes issued in the amount of $6,850,000 offset by payment on notes payable of $7,035. In 2023 financing activities include net proceeds from PIPE funding of $5,195,487, proceeds of $250,000 from notes payable, and $2,700,000 proceeds from related party notes, offset by payments on notes payable of $54,995. **Critical Accounting Estimates** We prepare our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Our management periodically evaluates the estimates and judgments made, Including those related to share-based compensation. Management bases its estimates and judgments on historical experience and on various factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates. | -18- | | | Table of Contents | | The following critical accounting policies affect the more significant judgments and estimates used in the preparation of the Companys consolidated financial statements. See Note 2 in Notes to Consolidated Financial Statements, Summary of Significant Accounting Policies in this Form 10-K for additional information about these critical accounting policies and estimates, as well as a description of our other accounting policies and estimates. **Income Taxes** We account for income taxes using the assets and liability method, which recognizes deferred tax assets and liabilities determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to affect taxable income. Valuation allowances are established to reduce deferred tax assets when, based on available objective evidence, it is more likely than not that the benefit of such assets will not be realized. We recognize in the consolidated financial statements only those tax positions determined to be more likely than not of being sustained. **Reportable Segments** The customer acquisition and engagement segment derives revenues from customers by ways for customers to acquirenew customers and in increase customer retention by email, text messaging and app interaction. the first is The Companys Connected Reward program that encourages engage by offering real life rewards through on of the many marketing channels. In addition, we offer SMS messaging programs that allow the companies to send company updates, offers and promotions through email and SMS/MMS messaging. The accounting policies are the same as the policies listed inthe summary of significant accounting policies. The chief operating decision maker (CODM) of the Company is our Presidentwho assesses performance of our single operating segment and decides how to allocate resources based on consolidated net loss that is reported on the consolidated statement of operations, as well as through other performance measures. The CODM considers consolidated net loss in deciding how to allocate resourcesinto the Company based on net income that also is reported on the income statement as consolidated net income. The measure of segment assets is reported on the balance sheet as total consolidated assets. The CODMuses net income to evaluate income generated from segment assets (return on assets) in deciding whether to reinvest profits into the customer acquisition and engagement or into other parts of the entity, such as for acquisitions or to pay dividends. Net income is used to monitor budget versus actual results. The CODM also uses net income in competitive analysis by benchmarking to the Companyscompetitors. The competitive analysis along with the monitoring of budgeted versus actual results are used in assessing performance of the segment and in establishing managements compensation. The Companyhas one reportable segment: customer acquisition and engagement. The customer acquisition and engagement segment provides customer with the ability to engage customers though email, SMS/MMS messaging andthrough ourunique fee-for action contracts such as a fee for downloading an app, or a fee for achieving a certain action in a digital app, or acquiring a loyalty member. The Companyderives revenue primarily in North America and manages the business activities on a consolidated basis. All revenue is derived using our Recurrency platform which is designedto leverage point-of-sale data, along with cognitive computing, to increase visits, spend, and loyalty from consumers. The following table shows net sales by operating segment: | Customer Acquisition and Engagement segment | | Revenue | | | | Revenues | | $ | 1,143,535 | | | | Less: | | | | | | | Customer Acquisition Costs | | | 512,901 | | | | Dues and Subscriptions | | | 16,278 | | | | Legal and Accounting and Professional Fees | | | 409,246 | | | | Travel Expense | | | 79,003 | | | | Administrative Expenses | | | 287,611 | | | | Advertising Expense | | | 223,129 | | | | Payroll and Related Expense | | | 6,741,575 | | | | Interest Expense | | | 1,943,412 | | | | Other Expenses (1) | | | 106,281 | | | | Customer Acquisition and Engagement segment Net Income | | $ | (9,175,901 | ) | | (1) Other Expense includes loss on settlement of debt and foreign currency gain(loss) | -19- | | | Table of Contents | | **Revenue Recognition and Concentrations** Our Recurrency platform is a hosted solution. We generate revenue from licensing our software to clients in our software as a service model, per-message and per-minute transactional fees, and customized professional services. We recognize license/subscription fees over the period of the contract, service fees as the services are performed, and per-message or per-minute transaction revenue when the transaction takes place. Under ASC 606 (as defined below), revenue is recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. We consider authoritative guidance on multiple deliverables in determining whether each deliverable represents a separate unit of accounting. Some customers are billed on a month-to-month basis with no contractual term and are collected by credit card or electronic funds transfer. Revenue is recognized at the time that the services are rendered, and the selling price is fixed with a set range of plans. Cash received in advance of the performance of services is recorded as deferred revenue. Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Accounting Standards Codification 606 (ASC 606), is a comprehensive revenue recognition standard that superseded nearly all existing revenue recognition guidance. The Company adopted this standard effective January 1, 2018, applying the modified retrospective method. Upon adoption, the Company discontinued revenue deferral under the sell-through model and commenced recording revenue upon delivery to distributors, net of estimated returns. Generally, the new standard results in earlier recognition of revenues. We determine revenue recognition through the following steps: | | | identification of the contract, or contracts, with a customer; | | | | | identification of the performance obligations in the contract; | | | | | determination of the transaction price; | | | | | allocation of the transaction price to the performance obligations in the contract; and | | | | | recognition of revenue when, or as, we satisfy a performance obligation. | | During the years ended December 31, 2024 and 2023 two customers accounted for 57% and 55% of our revenues, respectively. **Share-based compensation expense** Share-based compensation cost is measured at the date of grant, based on the calculated fair value of the stock-based award, and is recognized as expense over the employees requisite service period (generally the vesting period of the award). We estimate the fair value of employee stock options granted using the Black-Scholes Option Pricing Model. Key assumptions used to estimate the fair value of stock options include the exercise price of the award, the fair value of our common stock on the date of grant, the expected option term, the risk-free interest rate at the date of grant, the expected volatility and the expected annual dividend yield on our Companys common stock. We have elected to account for forfeitures as they occur to determine the amount of compensation cost to be recognized in each period. **Derivative Financial Instruments** We do not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks. We review the terms of the common stock, warrants and convertible debt we issue to determine whether there are embedded derivative instruments, including embedded conversion options, which are required to be bifurcated and accounted for separately as derivative financial instruments. In circumstances where the host instrument contains more than one embedded derivative instrument, including the conversion option, that is required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument. **Off-Balance Sheet Arrangements** We have no off-balance sheet arrangements. **Item 7A. Quantitative and Qualitative Disclosures About Market Risk.** Smaller reporting companies are not required to provide the information required by this item. | -20- | | | Table of Contents | | **Item 8. Financial Statements** **** ***** REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Mobivity Holdings Corp. **Opinion on the Consolidated Financial Statements** We have audited the accompanying consolidated balance sheets of Mobivity Holdings Corp. (the Company) as of December 31, 2024 and 2023, and the related consolidated statements of operations and comprehensive loss, stockholders equity (deficit), and cash flows for each of the years in the two-year period ended December 31, 2024, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America. **Going Concern** The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 4 to the financial statements, the Company has suffered net losses from operations and has a net capital deficiency, which raises substantial doubt about its ability to continue as a going concern. Managements plans regarding those matters are discussed in Note 4. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. **Basis for Opinion** These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on the Companys financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Companys internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. **Critical Audit Matter** The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates. **Revenue Recognition** As discussed in note 2 to the financial statements, the Company recognizes revenue upon transfer of control of promised services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or services. Auditing managements evaluation of agreements with customers involves significant judgment, given the fact that some agreements require managements evaluation and allocation of the standalone transaction prices to the performance obligations. To evaluate the appropriateness and accuracy of the assessment by management, we evaluated managements assessment in relationship to the relevant agreements. /s/ M&K CPAS, PLLC We have served as the Companys auditor since 2012. The Woodlands, TX April 7, 2025 Firm ID 2738 | -21- | | | Table of Contents | | **Mobivity Holdings Corp.** **Consolidated Balance Sheets** | | | December 31, | | | December 31, | | | | | | 2024 | | | 2023 | | | | ASSETS | | | | | | | | | | | Current assets | | | | | | | | | | | Cash | | $ | 1,261,240 | | | $ | 316,395 | | | | Restricted Cash | | | 134,743 | | | | 100,000 | | | | Accounts receivable, net of allowance for doubtful accounts of $44,752 and $16,107, respectively | | | 142,766 | | | | 155,854 | | | | Current assets from discontinued operations | | | 214,779 | | | | 720,611 | | | | Other current assets | | | 178,336 | | | | 135,916 | | | | Total current assets | | | 1,931,864 | | | | 1,428,776 | | | | Right to use lease assets | | | 541,618 | | | | 770,623 | | | | Intangible assets, net | | | 55,689 | | | | 65,916 | | | | Fixed Assets | | | 29,265 | | | | 69,036 | | | | TOTAL ASSETS | | $ | 2,558,436 | | | $ | 2,334,351 | | | | LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT) | | | | | | | | | | | Current liabilities | | | | | | | | | | | Accounts payable | | $ | 2,643,602 | | | $ | 3,372,141 | | | | Accrued interest | | | 497,848 | | | | 21,474 | | | | Accrued and deferred personnel compensation | | | 306,605 | | | | 272,247 | | | | Deferred revenue and customer deposits | | | 143,595 | | | | 155,472 | | | | Related party notes payable, net - current maturities | | | 2,315,703 | | | | 3,072,500 | | | | Notes payable, net - current maturities | | | | | | | 7,154 | | | | Operating lease liability | | | 302,178 | | | | 276,072 | | | | Other current liabilities | | | 584,754 | | | | 248,434 | | | | Total current liabilities | | | 6,794,285 | | | | 7,425,494 | | | | | | | | | | | | | | | Non-current liabilities | | | | | | | | | | | Related party notes payable, net - long-term | | | 11,166,945 | | | | 4,413,987 | | | | Notes payable, net - long-term | | | 227,794 | | | | 265,959 | | | | Operating lease liability | | | 358,674 | | | | 660,852 | | | | Other Non-Current Liabilities | | | 1,175,000 | | | | | | | | Total non-current liabilities | | | 12,928,413 | | | | 5,340,798 | | | | Total liabilities | | | 19,722,698 | | | | 12,766,292 | | | | Commitments and Contingencies (See Note 13) | | | - | | | | - | | | | Stockholders equity (deficit) | | | | | | | | | | | Common stock, $0.001 par value; 100,000,000 shares authorized; 70,466,103 and 67,949,709, shares issued and outstanding | | | 70,464 | | | | 67,950 | | | | Equity payable | | | 571,979 | | | | 989,947 | | | | Additional paid-in capital | | | 122,323,597 | | | | 118,624,601 | | | | Accumulated other comprehensive income (loss) | | | 63,204 | | | | (153,831 | ) | | | Accumulated deficit | | | (140,193,506 | ) | | | (129,960,608 | ) | | | Total stockholders equity (deficit) | | | (17,164,262 | ) | | | (10,431,941 | ) | | | TOTAL LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT) | | $ | 2,558,436 | | | $ | 2,334,351 | | | See accompanying notes to consolidated financial statements.* | -22- | | | Table of Contents | | **Mobivity Holdings Corp.** **Consolidated Statements of Operations and Comprehensive Loss** | | | 2024 | | | 2023 | | | | Fixed Assets | | For the Year Ended December 31, | | | | | | 2024 | | | 2023 | | | | Revenues | | | | | | | | | Revenues | | $ | 1,143,535 | | | $ | 1,067,672 | | | | Cost of revenues | | | 512,901 | | | | 775,877 | | | | Gross profit | | | 630,634 | | | | 291,795 | | | | Operating expenses | | | | | | | | | | | Bad Debt | | | (971 | ) | | | 28,801 | | | | General and administrative | | | 1,337,644 | | | | 4,322,324 | | | | Sales and marketing | | | 2,772,216 | | | | 2,179,410 | | | | Engineering, research, and development | | | 3,596,761 | | | | 3,098,261 | | | | Depreciation and amortization | | | 51,192 | | | | 53,960 | | | | Total operating expenses | | | 7,756,842 | | | | 9,682,756 | | | | Loss from operations | | | (7,126,208 | ) | | | (9,390,961 | ) | | | Other income/(expense) | | | | | | | | | | | Interest expense | | | (1,943,412 | ) | | | (1,027,682 | ) | | | Settlement Losses | | | | | | | (19,250 | ) | | | Loss on settlement of debt | | | (106,252 | ) | | | (10,857 | ) | | | Foreign currency gain (loss) | | | (29 | ) | | | (391 | ) | | | Total other income (expense) | | | (2,049,693 | ) | | | (1,058,180 | ) | | | Loss before income taxes | | | (9,175,901 | ) | | | (10,449,141 | ) | | | Income tax expense | | | | | | | | | | | Net Loss from continuing operations | | | (9,175,901 | ) | | | (10,449,141 | ) | | | Net Loss from discontinued operations | | | (1,056,997 | ) | | | (1,615,058 | ) | | | Net Loss | | | (10,232,898 | ) | | | (12,064,199 | ) | | | Other comprehensive income (loss), net of income tax | | | | | | | | | | | Foreign currency translation adjustments | | | 217,035 | | | | (52,868 | ) | | | Comprehensive loss | | $ | (10,015,863 | ) | | $ | (12,117,067 | ) | | | Net loss per share: | | | | | | | | | | | Basic and Diluted Net Loss from Continuing Operations | | | (0.13 | ) | | | (0.16 | ) | | | Basic and Diluted Net Loss from Discontinued Operations | | | (0.02 | ) | | | (0.02 | ) | | | Total Basic and Diluted | | $ | (0.15 | ) | | $ | (0.18 | ) | | | Weighted average number of shares: | | | | | | | | | | | Basic and Diluted | | | 70,246,643 | | | | 65,822,081 | | | *See accompanying notes to consolidated financial statements.* | -23- | | | Table of Contents | | **Mobivity Holdings Corp.** **Consolidated Statement of Stockholders Equity (Deficit)** | | | Shares | | | Dollars | | | Payable | | | Capital | | | Income (Loss) | | | Deficit | | | (Deficit) | | | | | | Common Stock | | | Equity | | | Additional Paid-in | | | Accumulated Other Comprehensive | | | Accumulated | | | Total Stockholders Equity | | | | | | Shares | | | Dollars | | | Payable | | | Capital | | | Income (Loss) | | | Deficit | | | (Deficit) | | | | Balance, December 31, 2022 | | | 61,311,155 | | | $ | 61,311 | | | $ | 324,799 | | | $ | 108,806,353 | | | $ | (100,963 | ) | | $ | (117,896,409 | ) | | $ | (8,804,909 | ) | | | Issuance of common stock for warrants exercised | | | 5,548,463 | | | | 5,548 | | | | | | | | 5,189,939 | | | | | | | | | | | | 5,195,487 | | | | Issuance of common stock for Settlement of Interest Payable on Related Party Debt | | | 545,079 | | | | 546 | | | | 665,148 | | | | 646,067 | | | | | | | | | | | | 1,311,761 | | | | RSUs issued - termination of a directors service | | | 545,012 | | | | 545 | | | | | | | | (545 | ) | | | | | | | | | | | | | | | Fair value of options issued with related party debt | | | | | | | | | | | | | | | 528,531 | | | | | | | | | | | | 528,531 | | | | Warrant Inducement for warrant conversion | | | | | | | | | | | | | | | 2,502,575 | | | | | | | | | | | | 2,502,575 | | | | Stock based compensation - Employees | | | | | | | | | | | | | | | 691,674 | | | | | | | | | | | | 691,674 | | | | Stock based compensation - Directors | | | | | | | | | | | | | | | 260,007 | | | | | | | | | | | | 260,007 | | | | Foreign currency translation adjustment | | | | | | | | | | | | | | | | | | | (52,868 | ) | | | | | | | (52,868 | ) | | | Net loss | | | | | | | | | | | | | | | | | | | | | | | (12,064,199 | ) | | | (12,064,199 | ) | | | Balance, December 31, 2023 | | | 67,949,709 | | | $ | 67,950 | | | $ | 989,947 | | | $ | 118,624,601 | | | $ | (153,831 | ) | | $ | (129,960,608 | ) | | $ | (10,431,941 | ) | | | Balance | | | 67,949,709 | | | $ | 67,950 | | | $ | 989,947 | | | $ | 118,624,601 | | | $ | (153,831 | ) | | $ | (129,960,608 | ) | | $ | (10,431,941 | ) | | | Issuance of common stock for Settlement of Interest payable on related party debt | | | 2,516,394 | | | | 2,514 | | | | (1,355,081 | ) | | | 1,458,819 | | | | | | | | | | | | 106,252 | | | | Interest Payable on related party debt recorded to equity payable | | | | | | | | | | | 937,113 | | | | | | | | | | | | | | | | 937,113 | | | | Fair value of options issued with related party debt | | | | | | | | | | | | | | | 1,374,870 | | | | | | | | | | | | 1,374,870 | | | | Stock-based compensation - Employees | | | | | | | | | | | | | | | 540,309 | | | | | | | | | | | | 540,309 | | | | Stock-based compensation - Directors | | | | | | | | | | | | | | | 324,998 | | | | | | | | | | | | 324,998 | | | | Foreign currency translation adjustment | | | | | | | | | | | | | | | | | | | 217,035 | | | | | | | | 217,035 | | | | Net loss | | | | | | | | | | | | | | | | | | | | | | | (10,232,898 | ) | | | (10,232,898 | ) | | | Balance, December 31, 2024 | | | 70,466,103 | | | $ | 70,464 | | | $ | 571,979 | | | $ | 122,323,597 | | | $ | 63,204 | | | $ | (140,193,506 | ) | | $ | (17,164,262 | ) | | | Balance | | | 70,466,103 | | | $ | 70,464 | | | $ | 571,979 | | | $ | 122,323,597 | | | $ | 63,204 | | | $ | (140,193,506 | ) | | $ | (17,164,262 | ) | | *See accompanying notes to consolidated financial statements.* | -24- | | | Table of Contents | | **Mobivity Holdings Corp.** **Consolidated Statements of Cash Flows** | | | 2024 | | | 2023 | | | | | | For the Year Ended | | | | | | December 31, | | | | | | 2024 | | | 2023 | | | | OPERATING ACTIVITIES | | | | | | | | | | | Net loss | | $ | (10,232,898 | ) | | $ | (12,064,199 | ) | | | Net loss from discontinued operations | | | 1,056,997 | | | | 1,615,058 | | | | Adjustments to reconcile net loss to net cash used in operating activities: | | | | | | | | | | | Bad debt expense | | | (971 | ) | | | 28,801 | | | | Loss on settlement of debt -Related Party | | | 106,252 | | | | 10,857 | | | | Stock-based compensation | | | 865,307 | | | | 3,454,252 | | | | Depreciation and amortization expense | | | 51,192 | | | | 53,960 | | | | Amortization of debt discount | | | 482,102 | | | | 136,448 | | | | Increase (decrease) in cash resulting from changes in: | | | | | | | | | | | Accounts receivable | | | 14,059 | | | | 3,384 | | | | Other current assets | | | (41,599 | ) | | | 59,101 | | | | Operating lease assets/liabilities | | | (47,067 | ) | | | (40,392 | ) | | | Accounts payable | | | (728,539 | ) | | | (40,471 | ) | | | Accrued interest | | | 1,413,487 | | | | 878,932 | | | | Accrued Professional Fees | | | 24,000 | | | | | | | | Accrued and deferred personnel compensation | | | 11,111 | | | | (297,100 | ) | | | Other liabilities - non-current | | | 1,175,000 | | | | | | | | Other liabilities - current | | | 336,320 | | | | 198,893 | | | | Deferred revenue and customer deposits | | | (11,877 | ) | | | (747,255 | ) | | | Net Cash and restricted cash used in operating activities of continuing operations | | | (5,527,124 | ) | | | (6,749,731 | ) | | | Net cash and restricted cash used in operating activities of discontinuing operations | | | (539,032 | ) | | | (1,317,738 | ) | | | Net cash and restricted cash used in operating activities | | | (6,066,156 | ) | | | (8,067,469 | ) | | | INVESTING ACTIVITIES | | | | | | | | | | | Purchases of equipment | | | (4,559 | ) | | | (16,255 | ) | | | Cash paid for patents | | | (8,768 | ) | | | | | | | Net cash and restricted cash used in investing activities | | | (13,327 | ) | | | (16,255 | ) | | | FINANCING ACTIVITIES | | | | | | | | | | | Payments on Notes Payable | | | (7,035 | ) | | | (54,995 | ) | | | Proceeds from Notes Payable | | | | | | | 250,000 | | | | Proceeds from related party notes payable | | | 6,850,000 | | | | 2,700,000 | | | | Processed from PIPE Funding | | | | | | | 5,195,487 | | | | Net cash and restricted cash provided by financing activities | | | 6,842,965 | | | | 8,090,492 | | | | | | | | | | | | | | | Effect of foreign currency translation on cash flow | | | 216,106 | | | | (17,113 | ) | | | | | | | | | | | | | | Net change in cash and restricted cash | | | 979,588 | | | | (10,345 | ) | | | Cash and restricted cash at beginning of period | | | 416,395 | | | | 426,740 | | | | Cash and restricted cash at end of period | | $ | 1,395,983 | | | $ | 416,395 | | | | Supplemental disclosures: | | | | | | | | | | | Cash paid during period for: | | | | | | | | | | | Interest | | $ | | | | $ | | | | | Non-cash investing and financing activities: | | | | | | | | | | | | | | | | | | | | | | Non-cash investing and financing activities: | | | | | | | | | | | Debt Discount on Related Party Debt | | $ | 1,374,870 | | | $ | 493,024 | | | | Debt Discount on Notes Payable | | $ | | | | | 35,507 | | | | Shares Issued for settlement of debt - related party | | $ | | | | $ | 442,660 | | | | Interest Issued as Stocks Payable | | $ | 937,113 | | | $ | 889,085 | | | | RSUs issued upon termination | | $ | | | | $ | 545 | | | *See accompanying notes to consolidated financial statements.* | -25- | | | Table of Contents | | **Mobivity Holdings Corp.** **Notes to Consolidated Financial Statements** **1. Nature of Operations** Mobivity Holdings Corp. (the Company or we) is in the business of developing and operating proprietary platforms over which brands and enterprises can conduct national and localized, data-driven marketing campaigns. Mobivitys Recurrency platform enables multi-unit retailers to leverage the power of their own data to yield maximum customer spend, frequency and loyalty while achieving the highest Return on Marketing Spend (ROMS) possible. Mobivitys customers use Recurrency to: | | | Transform messy point-of-sale (POS) data collected from thousands of points of sale into usable intelligence. | | | | | Measure, predict, and boost guest frequency and spend by channel. | | | | | Deploy and manage one-time use offer codes and attribute sales accurately across every channel, promotion and media program. | | | | | Deliver 1:1 promotions and offers with customized Mobile Messaging, Personalized Receipt Promotions and Integrated Loyalty programs. | | Mobivitys Recurrency, delivered as a SaaS platform, is used by leading brands including Subway, Sonic Drive-In, Chick-fil-A, Checkers/Rallys and Circle Ks across more than 40,000 retail locations globally. Were living in a data-driven economy. In fact, by 2003 when the concept of big data became common vernacular in marketing as much data was being created every two days as had been created in all of time prior to 2003. Today, Big Data has grown at such a rate that 90% of the worlds data has been created in the past two years. Unfortunately, despite there being so much data accumulated, only one percent of data is being utilized today by most businesses. The challenge for multi-unit retailers isnt that they dont have enough data; in fact, national retailers are collecting millions of detailed transactions daily from thousands of points of sale around the world. The challenge is being able to make sense of this transaction data, which is riddled with data entry errors, collected by multiple POS systems and complicated by a taxonomy compiled by thousands of different franchisee owners. To normalize such an overwhelming amount of data into usable intelligence and then leverage it to optimize media investment and promotion strategy requires numerous teams of data analysts and data scientists that many retailers and restaurant operators simply dont have. Which is why so many technology and data companies, that can help solve these challenges, have been invested in and acquired by brands including, McDonalds, Starbucks and Yum Brands. On September 25, 2024, the Company entered into an Asset Purchase Agreement (the Asset Purchase Agreement) with SMS Factory, Inc., a Florida corporation (SMS Factory). Pursuant to the Asset Purchase Agreement, SMS Factory purchased all of the right, title and interest in the Companys SMS/MMS text messaging customer accounts, excluding certain Excluded Assets (as defined in the Asset Purchase Agreement) utilized in the operation of the Companys SMS/MMS text messaging platform business (the Business Assets) effective as of September 25, 2024 (the Closing Date). Given that the effect of the Asset Purchase Agreement meets all the initial criteria of ASC Topic 205-20, *Presentation of Financial Statements* *Discontinued Operations* for the classification of discontinued operations, the assets, liabilities, and operating results of Mobivity Holdings Corp have been classified as discontinued operations as of December 31, 2024 and December 31, 2023 and for the twelve months ended December 31, 2024 and 2023. The consolidated financial statements for the prior periods have been adjusted to reflect comparable information. We generate revenue by charging the resellers, brands and enterprises a per-message transactional fee, or through fixed or variable software licensing fees. **2. Summary of Significant Accounting Policies** **Principles of Consolidation** The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, LiveLenz Inc. All significant intercompany balances and transactions have been eliminated. **Use of Estimates** The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Significant estimates used are those related to stock-based compensation, asset impairments, the valuation and useful lives of depreciable tangible and certain intangible assets, the fair value of common stock used in acquisitions of businesses, the fair value of assets and liabilities acquired in acquisitions of businesses, the fair value of options issued with related party debt, and the valuation allowance of deferred tax assets. Management believes that these estimates are reasonable; however, actual results may differ from these estimates. | -26- | | | Table of Contents | | **Reclassifications** Certain prior year amounts have been reclassified to conform to the current years presentation. The reclassifications had no effect on previously reported net loss. **Acquisitions** We account for acquired businesses using the purchase method of accounting. Under the purchase method, our consolidated financial statements reflect the operations of an acquired business starting from the completion of the acquisition. In addition, the assets acquired and liabilities assumed are recorded at the date of acquisition at their respective estimated fair values, with any excess of the purchase price over the estimated fair values of the net assets acquired recorded as goodwill. **Cash and Cash Equivalents** We minimize our credit risk associated with cash by periodically evaluating the credit quality of our primary financial institution. Our balances at times may exceed federally insured limits. We have not experienced any losses on our cash accounts. **Accounts Receivable, Allowance for Doubtful Accounts and Concentrations** Accounts receivable are carried at their estimated collectible amounts. We grant unsecured credit to substantially all of our customers. Ongoing credit evaluations are performed, and potential credit losses are charged to operations at the time the account receivable is estimated to be uncollectible. Since we cannot necessarily predict future changes in the financial stability of our customers, we cannot guarantee that our reserves will continue to be adequate. As of December 31, 2024 and 2023, we recorded an allowance for doubtful accounts of $44,752 and $16,107, respectively. From time to time, we may have a limited number of customers with individually large amounts due. Any unanticipated change in one of the customers credit worthiness could have a material effect on the results of operations in the period in which such changes or events occurred. As of December 31, 2024, we had four customers whose balance represented 66% of total accounts receivable. As of December 31, 2023, we had three customers whose balance represented 73% of total accounts receivable. **Goodwill and Intangible Assets** Goodwill is tested for impairment at a minimum on an annual basis. Goodwill is tested for impairment at the reporting unit level by first performing a qualitative assessment to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying value. If the reporting unit does not pass the qualitative assessment, then the reporting units carrying value is compared to its fair value. The fair values of the reporting units are estimated using market and discounted cash flow approaches. Goodwill is considered impaired if the carrying value of the reporting unit exceeds its fair value. The discounted cash flow approach uses expected future operating results. Failure to achieve these expected results may cause a future impairment of goodwill at the reporting unit. We conducted our annual impairment tests of goodwill as of December 31, 2024 and 2023. As a result of these tests, we had total impairment charges of $0 in both as of December 31, 2024 and 2023, respectively Intangible assets consist of patents and trademarks, purchased customer contracts, purchased customer and merchant relationships, purchased trade names, purchased technology, and non-compete agreements. Intangible assets are amortized over the period of estimated benefit using the straight-line method and estimated useful lives ranging from one 1 to twenty years. No significant residual value is estimated for intangible assets. We evaluate long-lived assets (including intangible assets) for impairment whenever events or changes in circumstances indicate that the carrying amount of a long-lived asset may not be recoverable. An asset is considered impaired if its carrying amount exceeds the undiscounted future net cash flow the asset is expected to generate. The Companys evaluation of its long-lived assets resulted in $0 in both of intangible impairment expense during the years ended December 31, 2024 and December 31, 2023. | -27- | | | Table of Contents | | **Software Development Costs** Software development costs include direct costs incurred for internally developed products and payments made to independent software developers and/or contract engineers. The Company accounts for software development costs in accordance with the FASB guidance for the costs of computer software to be sold, leased, or otherwise marketed (ASC Subtopic 985-20). Software development costs are capitalized once the technological feasibility of a product is established and such costs are determined to be recoverable. Technological feasibility of a product encompasses technical design documentation and integration documentation, or the completed and tested product design and working model. Technological feasibility is evaluated on a project-by-project basis. Amounts related to software development that are not capitalized are charged immediately to the appropriate expense account. Amounts that are considered research and development that are not capitalized are immediately charged to engineering, research, and development expense. Capitalized costs for those products that are cancelled or abandoned are charged to impairment expense in the period of cancellation. Commencing upon product release, capitalized software development costs are amortized to Amortization Expense - Development based on the straight-line method over a twenty-four 24 month period. The Company evaluates the future recoverability of capitalized software development costs on an annual basis. For products that have been released in prior years, the primary evaluation criterion is ongoing relations with the customer. The Companys evaluation of its capitalized software development asset resulted in impairment charges of $0 for the year ended December 31, 2024 and $0 for the year ended December 31, 2023. **Impairment of Long-Lived Assets** We evaluate long-lived assets (including intangible assets) for impairment whenever events or changes in circumstances indicate that the carrying amount of a long-lived asset may not be recoverable. An asset is considered impaired if its carrying amount exceeds the undiscounted future net cash flow the asset is expected to generate. **Foreign Currency Translation** The Company translates the financial statements of its foreign subsidiary from the local (functional) currency into US Dollars using the year or reporting period end or average exchange rates in accordance with the requirements of Accounting Standards Codification subtopic 830-10, Foreign Currency Matters (ASC 830-10). Assets and liabilities of these subsidiaries were translated at exchange rates as of the balance sheet date. Revenues and expenses are translated at average rates in effect for the periods presented. The cumulative translation adjustment is included in the accumulated other comprehensive gain (loss) within shareholders equity. Foreign currency transaction gains and losses arising from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the unaudited Condensed Consolidated Statements of Income and Comprehensive Income. **Derivative Financial Instruments** We do not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks. We review the terms of the common stock, warrants and convertible debt we issue to determine whether there are embedded derivative instruments, including embedded conversion options, which are required to be bifurcated and accounted for separately as derivative financial instruments. In circumstances where the host instrument contains more than one embedded derivative instrument, including the conversion option, that is required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument. **Revenue Recognition and Concentrations** Our Recurrency platform is a hosted solution. We generate revenue from licensing our software to clients in our software as a service model, per-message and per-minute transactional fees, and customized professional services. We recognize license/subscription fees over the period of the contract, service fees as the services are performed, and per-message or per-minute transaction revenue when the transaction takes place. Under Topic 606, revenue is recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. We consider authoritative guidance on multiple deliverables in determining whether each deliverable represents a separate unit of accounting. Some customers are billed on a month-to-month basis with no contractual term and are collected by credit card. Revenue is recognized at the time that the services are rendered, and the selling price is fixed with a set range of plans. Cash received in advance of the performance of services is recorded as deferred revenue. During the years ended December 31, 2024 and 2023, three customers accounted for 58% and 66% of our revenues, respectively. | -28- | | | Table of Contents | | **Comprehensive Income (Loss)** Comprehensive loss is defined as the change in equity during a period from transactions and other events and circumstances from non-owner sources. We are required to record all components of comprehensive loss in the consolidated financial statements in the period in which they are recognized. Net loss and other comprehensive loss, including foreign currency translation adjustments and unrealized gains and losses on investments, are reported, net of their related tax effect, to arrive at comprehensive loss. For the twelve months ended December 31, 2024 and 2023, the comprehensive loss was $10,015,863 and $12,117,067 respectively. **Stock-based Compensation** We primarily issue stock-based awards to employees in the form of stock options. We determine compensation expense associated with stock options based on the estimated grant date fair value method using the Black-Scholes valuation model. We recognize compensation expense using a straight-line amortization method over the respective vesting period. **Research and Development Expenditures** Research and development expenditures are expensed as incurred, and consist primarily of compensation costs, outside services, and expensed materials. **Advertising Expense** Direct advertising costs are expensed as incurred and consist primarily of E-commerce advertisements, sales enablement, content creation, and other direct costs. Advertising expense was $185,596 and $304,296 for the years ended December 31, 2024 and 2023, respectively. We also include the cost of attending trade shows under marketing expense. We recorded $174,544 and $63,969 of expense related to those activities for the years ended December 31, 2024 and 2023, respectively. **Income Taxes** We account for income taxes using the assets and liability method, which recognizes deferred tax assets and liabilities determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to affect taxable income. Valuation allowances are established to reduce deferred tax assets when, based on available objective evidence, it is more likely than not that the benefit of such assets will not be realized. We recognize in the consolidated financial statements only those tax positions determined to be more likely than not of being sustained. **Computation of Net Loss per Common Share** Basic net loss per share is based upon the weighted average number of common shares outstanding. Diluted net loss per share is based on the assumption that all potential common stock equivalents (convertible notes payable, stock options, and warrants) are converted or exercised. The calculation of diluted net loss per share excludes potential common stock equivalents if the effect is anti-dilutive. Our weighted average common shares outstanding for basic and diluted are the same because the effect of the potential common stock equivalents is anti-dilutive. We had the following dilutive common stock equivalents as of December 31, 2024 and 2023 which were excluded from the calculation because their effect was anti-dilutive. Schedule of Dilutive Common Stock Equivalents Excluded From Antidilutive | | | 2024 | | | 2023 | | | | | | December 31, | | | | | | 2024 | | | 2023 | | | | Outstanding employee options | | | 4,398,000 | | | | 7,297,355 | | | | Outstanding restricted stock units | | | 2,711,580 | | | | 1,799,025 | | | | Outstanding warrants | | | 21,601,207 | | | | 10,163,222 | | | | Shares Payable | | | 2,039,622 | | | | 1,465,908 | | | | Antidilutive securities | | | 30,750,409 | | | | 20,725,510 | | | **Recent Accounting Pronouncements** Accounting standards promulgated by the FASB are subject to change. Changes in such standards may have an impact on the Companys future financial statements. The following are a summary of recent accounting developments. In November 2023 FASB issued ASU 2023-07, *Segment Reporting* *Improvements to Reportable Segment Disclosures*. ASU 2023-07 requires public entities improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The Company adopted AS 2023-07 as of December 31, 2024. The Companys CODM has determined that Mobivity Holdings Corphas one reportable entity. This will result in no changes to the reporting of our or presentation our financial statements. The measure of segment assets is reported on the balance sheet as total consolidated assets. | -29- | | | Table of Contents | | **3. Discontinued Operations** On September 25, 2024, the Company entered into an Asset Purchase Agreement (the Asset Purchase Agreement) with SMS Factory, Inc., a Florida corporation (SMS Factory). Pursuant to the Asset Purchase Agreement, SMS Factory purchased all of the right, title and interest in the Companys SMS/MMS text messaging customer accounts, excluding certain Excluded Assets (as defined in the Asset Purchase Agreement) utilized in the operation of the Companys SMS/MMS text messaging platform business (the Business Assets) effective as of September 25, 2024 (the Closing Date). The following table presents a reconciliation of the carrying amounts of the major classes of these assets and liabilities to the current assets and liabilities of discontinued operations as presented on the Companys Consolidated Balance Sheets: Schedule of Consolidated Balance Sheets and Statements of Loss | | | As of December 31, 2024 | | | As of December 31, 2023 | | | | Assets | | | | | | | | | | | Current Assets | | | | | | | | | | | Accounts Receivable | | $ | 214,779 | | | $ | 720,611 | | | | | | | | | | | | | | | Total Assets | | $ | 214,779 | | | $ | 720,611 | | | The following table provides details about the major classes of line items constituting Income (loss) from discontinued operations as presented on the Companys Consolidated Statements of Loss: | | | Twelve Months Ended | | | Twelve Months Ended | | | | | | December 31, | | | December 31, | | | | | | | | | | | | | Revenue | | | | | | | | | | | Revenue | | $ | 3,640,455 | | | $ | 5,910,028 | | | | Cost of Revenue | | | 2,585,997 | | | | 4,353,744 | | | | Gross Profit | | | 1,054,458 | | | | 1,556,284 | | | | | | | | | | | | | | | Operating Expenses | | | | | | | | | | | Bad Debt | | | 89,121 | | | | (7,119 | ) | | | General and Administrative | | 1,369,545 | | | | 2,205,362 | | | | Sales and Marketing | | | 296,403 | | | | 555,652 | | | | Engineering, Research and Development | | | 356,368 | | | | 417,444 | | | | Total Operating Expenses | | | 2,111,437 | | | | 3,171,339 | | | | Loss on Operations | | | (1,056,979 | ) | | | (1,615,055 | ) | | | | | | | | | | | | | | Other Income (Expense) | | | | | | | | | | | Foreign currency loss | | | (18 | ) | | | (3 | ) | | | Total Other Income (Expense) | | | (18 | ) | | | (3 | ) | | | | | | | | | | | | | | Net Loss from Discontinued Operations | | $ | (1,056,997 | ) | | $ | (1,615,058 | ) | | The Companys execution of the Asset Purchase Agreement has met the criteria to be reported as discontinued operations. In accordance with GAAP, assets and liabilities of discontinued operations are presented separately in the Consolidated Balance Sheets, and results of discontinued operations are reported as a separate component of Consolidated net loss in the Consolidated Statements of Loss, for all periods presented, resulting in changes to the presentation of certain prior period amounts. Cash flows from discontinued operations are reported separately in the Consolidated Statements of Cash Flows. The assets and liabilities of discontinued operations are presented separately in the Consolidated Balance Sheets for all periods presented. **4. Going Concern** We have $1,261,240 of cash as of December 31, 2024. We had a net loss of $10.2 million for the year ended 2024, and we used $6.1 million of cash in our operating activities during 2024. We raised $6.9 million in cash Convertible Notes issued during 2024. Our additional cash from our convertible notes along with our expected cash flow from operations, may not be sufficient to fund our 12-month plan of operations, and there can be no assurance that we will not require significant additional capital within 12 months. There is substantial doubt that our additional cash from our warrant conversion along with our expected cash flow from operations, will be sufficient to fund our 12-month plan of operations, there can be no assurance that we will not require significant additional capital within 12 months. As shown in the accompanying financial statements, the Company has incurred net losses from operations resulting in an accumulated deficit of $(140,193,506) as of December 31, 2024. Further losses are anticipated in the development of the Companys business raising substantial doubt about the Companys ability to continue as a going concern. The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and/or obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management intends to finance operating costs over the next twelve months with the proceeds from the sale of securities, and/or revenues from operations. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty. **5. Intangible Assets** Intangible assets The following table presents components of identifiable intangible assets for the years ended December 31, 2024 and 2023: Schedule of Intangible Assets | | | December 31, 2024 | | | December 31, 2023 | | | | | | Gross Carrying Amount | | | Accumulated Amortization | | | Net Carrying Amount | | | Weighted Average Useful Life (Years) | | | Gross Carrying Amount | | | Accumulated Amortization | | | Net Carrying Amount | | | Weighted Average Useful Life (Years) | | | | Patents and trademarks | | $ | 72,663 | | | $ | (16,974 | ) | | $ | 55,689 | | | | 14 | | | $ | 63,895 | | | $ | (10,232 | ) | | $ | 53,663 | | | | 14 | | | | Customer and merchant relationships | | | 545,533 | | | | (545,533 | ) | | | | | | | 10 | | | | 545,533 | | | | (539,395 | ) | | | 6,138 | | | | 10 | | | | Trade name | | | 32,393 | | | | (32,393 | ) | | | | | | | 10 | | | | 32,393 | | | | (30,784 | ) | | | 1,609 | | | | 10 | | | | Acquired technology | | | 112,191 | | | | (112,191 | ) | | | | | | | 10 | | | | 112,191 | | | | (112,191 | ) | | | | | | 10 | | | | Non-compete agreement | | | 29,212 | | | | (29,212 | ) | | | | | | | 10 | | | | 29,212 | | | | (29,212 | ) | | | | | | | 10 | | | | | | $ | 791,992 | | | $ | (736,303 | ) | | $ | 55,689 | | | | | | | $ | 783,224 | | | $ | (721,814 | ) | | $ | 61,410 | | | | | | | | -30- | | | Table of Contents | | During the twelve months ended December 31, 2024 we recorded additional amortizable expense of $8,768 for patents and trademarks compared to $0 in 2023. During the years ended December 31, 2024 and 2023, we recorded amortization expense related to our intangible assets of $14,489 and $36,327, respectively, which is included in depreciation and amortization in the consolidated statement of operations. During the years ended December 31, 2024 and 2023, we recorded impairment of $0 and $0 respectively related to our intangible assets. The estimated future amortization expense of our intangible assets as of December 31, 2024 was as follows: Schedule of Finite Lived Intangible Assets Future Amortization Expense | Year ending December 31, | | Amount | | | | 2025 | | $ | 7,246 | | | | 2026 | | | 7,246 | | | | 2027 | | | 7,246 | | | | 2028 | | | 7,246 | | | | 2029 | | | 7,246 | | | | Thereafter | | | 19,459 | | | | Total | | $ | 55,689 | | | **6. Software Development Costs** The Company has capitalized certain costs for software developed or obtained for internal use during the application development stage as it relates to specific contracts. The amounts capitalized include external direct costs of services used in developing internal-use software and for payroll and payroll-related costs of employees directly associated with the development activities. The balance is included in the net intangible assets on the balance sheet. The following table presents details of our software development costs for the years ended December 31, 2024 and 2023: Schedule of Software Development Costs | December 31, 2024 | | | December 31, 2023 | | | | Gross Carrying Amount | | | Accumulated Amortization | | | Net Carrying Amount | | | Weighted Average Useful Life (Years) | | | Gross Carrying Amount | | | Accumulated Amortization | | | Net Carrying Amount | | | Weighted Average Useful Life (Years) | | | | $ | 2,578,611 | | | $ | (2,578,611 | ) | | $ | | | | | | | | $ | 2,578,611 | | | $ | (2,574,105 | ) | | $ | 4,506 | | | | 1 | | | | $ | 2,578,611 | | | $ | (2,578,611 | ) | | $ | | | | | | | | $ | 2,578,611 | | | $ | (2,574,105 | ) | | $ | 4,506 | | | | | | | Software development costs are being amortized on a straight-line basis over their estimated useful life of two years. During the years ended December 31, 2024 and 2023, we capitalized $0 and $0 respectively of software development. We recorded amortization expense for software development costs of $4,506 and $98,828, respectively which is included in depreciation and amortization in the consolidated statement of operations. During the years ended December 31, 2024 and 2023, we recorded impairment charges of $0 and $0, respectively related to our software development costs. | -31- | | | Table of Contents | | **7. Operating Lease Assets** *Adoption of Accounting Standards Codification (**ASC**) Topic 842,**Leases.* The Company adopted Topic 842 on January 1, 2019, using the modified retrospective method and the optional transition method to record the adoption impact through a cumulative adjustment to equity. Results for reporting periods beginning after January 1, 2019, are presented under Topic 842, while prior periods are not adjusted and continue to be reported under the accounting standards in effect for those periods. The following are additional details related to leases recorded on our balance sheet as of December 31, 2024: Schedule of Additional Details Related to Leases | Leases | | Classification | | Balance at December 31, 2024 | | | | Assets | | | | | | | | | Current | | | | | | | | | Operating lease assets | | Operating lease assets | | $ | | | | | Noncurrent | | | | | | | | | Operating lease assets | | Noncurrent operating lease assets | | | 541,618 | | | | Total lease assets | | | | $ | 541,618 | | | | | | | | | | | | | Liabilities | | | | | | | | | Current | | | | | | | | | Operating lease liabilities | | Operating lease liabilities | | $ | 302,178 | | | | Noncurrent | | | | | | | | | Operating lease liabilities | | Noncurrent operating lease liabilities | | $ | 358,674 | | | | Total lease liabilities | | | | $ | 660,852 | | | During the year ended December 31, 2024, we recorded amortization expense of $49,690 and during the year ended December 31, 2023, we recorded a credit to amortization expense of $358,240 related to the accretion of the lease liability, which is included in depreciation and amortization in the consolidated statement of operations. Rent expense was $58,769 and $355,343 for the years ended December 31, 2024 and 2023, respectively. We entered into our current lease starting in February of 2021 for 8,898 square feet of office space located at 3133 W. Frye Road, Suite 215, Chandler, Arizona. Monthly rental payments, excluding common area maintenance charges, will be $25,953 to $28,733. The first twelve months of the lease includes a 50% abatement period. An operating lease asset and liability will be recorded when the lease commences in accordance with Topic 842. The Company entered in to a sublease to lease our existing office spaceatlocated at 3133 W. Frye Road, Suite 215, Chandler, Arizona, on March 1, 2024 for its office facilities in Chandler, AZ through February 28, 2025. Monthly rental payments including rental of office furniture and excluding taxes, are $24,470. The maturity analysis below summarizes the remaining future undiscounted cash flows for our operating leases, a reconciliation to operating lease liabilities reported on the Condensed Consolidated Balance Sheet, our weighted-average remaining lease term and weighted average discount rate: Schedule of Lessee, Operating Lease Liability | Year ending December 31, | | Amount | | | | 2025 | | $ | 337,568 | | | | 2026 | | | 344,241 | | | | 2027 | | | 28,733 | | | | 2028 | | | | | | | 2029 | | | | | | | Thereafter | | | | | | | Total future lease payments | | | 710,542 | | | | Less: imputed interest | | | (49,690 | ) | | | Total | | $ | 660,852 | | | Schedule of Lease Cost | Weighted Average Remaining Lease Term (years) | | | | | | Operating leases | | | 2.33 | | | | | | | | | | | Weighted Average Discount Rate | | | | | | | Operating leases | | | 6.75 | % | | | -32- | | | Table of Contents | | **8. Notes Payable and Related Party Notes Payable** The following table presents details of our notes payable as of December 31, 2024 and 2023: Schedule of Debt | Facility | | Maturity | | Interest Rate | | | December 31, 2024 | | | December 31, 2023 | | | | ACOA Note | | February 1, 2024 | | | 0 | % | | | | | | | 7,154 | | | | Related Party Unsecured Promissory Note - Principal | | July 31, 2026 | | | 15 | % | | | 271,875 | | | | 271,875 | | | | Related Party Secured Promissory Note | | March 31, 2027 | | | 15 | % | | | 5,873,125 | | | | 5,873,125 | | | | Related Party Convertible Note | | Various | | | 8 | % | | | 8,850,000 | | | | 2,000,000 | | | | Convertible Notes | | Various | | | 8 | % | | | 250,000 | | | | 250,000 | | | | Total Notes Payable Principal | | | | | | | | | 15,245,000 | | | | 8,402,154 | | | | Less Total Debt Discount | | | | | | | | | (1,534,558 | ) | | | (642,554 | ) | | | Total Debt | | | | | | | | | 13,710,442 | | | | 7,759,600 | | | | Less current portion | | | | | | | | | (2,315,703 | ) | | | (3,079,654 | ) | | | Long-term debt, net of current portion | | | | | | | | $ | 11,394,739 | | | $ | 4,679,946 | | | Principal payments on notes payables are due as follows: Schedule of Principal Payments on Notes Payable | Year ending December 31, | | Amount | | | | 2025 | | $ | 2,315,703 | | | | 2026 | | | 3,072,500 | | | | 2027 | | | 3,006,797 | | | | 2028 | | | 6,850,000 | | | | 2029 | | | | | | | Thereafter | | | | | | | Total future debt payments | | | 15,245,000 | | | **ACOA Note** On November 6, 2017, Livelenz, entered into an amendment of the original agreement dated December 2, 2014 with the Atlantic Canada Opportunities Agency (ACOA). Under this agreement the note will mature without interest and repayments began on June 1, 2016, while the commitments terminated on February 1, 2024. The monthly principal payment amount of $3,000 CAD increased to $3,500 CAD beginning on November 1, 2019, and increased to $4,000 CAD on August 1, 2021, $4,500 CAD on August 1, 2022 and $2,215 CAD for the remaining term of the agreement. During the twelve months ended December 31, 2024 $7,035USD in principle was paid toward the ACOA loan. The final payment was made on February 28, 2024 and the loan is paid in full. | -33- | | | Table of Contents | | **Related Party Notes** Secured Promissory Notes On June 30, 2021, we entered into a Credit Facility Agreement (the Credit Agreement) with Thomas Akin, one of the Companys directors (the Lender). The Credit Agreement was amended on November 11, 2022. The Company can borrow up to $6,000,000 under the Credit Agreement (the Credit Facility). As of December 31, 2021, the Company had drawn a total of $3,478,125 including cash drawn in the amount of $3,206,250 and $271,875 of principal and accrued interest under the 2020 UP Note that was rolled into the Credit Facility and had paid a total of $200,000 toward the principal balance of the loan, The Credit Facility is secured by all of our tangible and intangible assets including intellectual property. This loan bears interest on the unpaid balance at the rate of fifteen percent (15%) per annum. The Company may prepay this loan without notice, penalty, or charge. In consideration of the Lenders agreement to provide the Credit Facility, the Company issued warrants to purchase shares of its common stock at an exercise price of $1.67 per share in connection with the issuance of funds under the Credit Agreement. The warrants are exercisable for a period commencing upon issuance of the corresponding notes and ending 36 months after issuance of the financing. In addition, the Company has agreed to issue to the Lender additional warrants entitling the Lender to purchase a number of shares of the Companys common stock equal to twenty percent (20%) of the amount of the advances made divided by the volume-weighted average price over the 30 trading days preceding the advance (the VWAP). Each warrant will be exercisable over a three-year period at an exercise price equal to the VWAP. Under the original terms of the Credit Agreement, the Company was to begin repaying the principal amount, plus accrued interest, in 24 equal monthly installments commencing on June 30, 2022, and ending on June 30, 2024. On November 11, 2022, an amendment to the Credit Agreement was signed. The amendment updated the payment terms to the following: Without limiting the foregoing Section 2.3(a), Borrower shall repay the principal amount of all Advances, plus accrued interest thereon, in 24 equal monthly installments commencing on January 31, 2023 and continuing thereafter on the last day of each month (or, if such last day is not a Business Day, on the Business Day immediately preceding such last day. Interest on the unpaid Advances will accrue from the date of each Advance at a rate equal to fifteen percent (15%) per annum. Interest will be calculated on the basis of 365 days in a year. The amendment raised the maximum amount of the Credit Facility to $6,000,000. In addition, the interest which is accrued monthly between July 1, 2022, and December 31, 2022, was settled into equity. Common Stock will be issued at the end of each month at a rate of $1.08 per share of common stock in the amount of the interest accrued for each month. On January 31, 2023, the Company then entered into Amendment No. 1 (the Amendment), which amends our existing Credit Facility Agreement1, dated as of November 11, 2022, between the Company and Thomas B. Akin, and any convertible notes issued thereunder. The Amendment amends the existing Credit Facility Agreement to extend the maturity of the agreement and related convertible notes thereunder until December 1, 2025. Principal payments have been deferred to a period beginning on January 1, 2024 and ending December 1, 2025, and further provides that any accrued interest on unpaid advances under the agreement is to be paid quarterly in shares of our common stock, at a price per share equal to the volume-weighted average price of our common stock quoted on the Over-The Counter Venture Market operated by OTC Markets Group Inc. (OTCQB) over the ninety (90) trading days immediately preceding such date. The Amendment provides for corresponding amendments to the form of convertible notes to be issued under the Credit Agreement in the future and any outstanding convertible notes issued under the existing Credit Facility Agreement. The Amendment was considered a debt modification as the cash flows under the amended terms do not differ by at least 10% from the cash flows under the original agreement. On January 31, 2024 amended terms were agreed upon and the Company then entered into Amendment No. 2 (the Amendment) signed on May 3,2024, which amends the terms of the Credit Facility Agreement, between the Company and Thomas B. Akin, and any convertible notes issued thereunder. The Amendment amends the existing Credit Facility Agreement to extend the maturity of the agreement and related convertible notes thereunder until June 30, 2026. Principal payments have been deferred to a period beginning on July 31, 2024 and ending June 30, 2026. On August 13, 2024 amended terms were agreed upon and the Company then entered into Amendment No. 3 (the Amendment) signed on August 13, 2024, which amends the terms of the Credit Facility Agreement, between the Company and Thomas B. Akin, and any convertible notes issued thereunder. The Amendment amends the existing Credit Facility Agreement to extend the maturity of the agreement and related convertible notes thereunder until October 31, 2026. Principal payments have been deferred to a period beginning on October 31, 2024 and ending September 30, 2026. On November 21, 2024 amended terms were agreed upon and the Company then entered into Amendment No. 4 (the Amendment) signed on November 21, 2024, which amends the terms of the Credit Facility Agreement, between the Company and Thomas B. Akin, and any convertible notes issued thereunder. The Amendment amends the existing Credit Facility Agreement to extend the maturity of the agreement and related convertible notes thereunder until June 30, 2026. Principal payments have been deferred to a period beginning on April 30, 2025 and ending March 31, 2027. 1 Based on historical practice, it is unlikely that an information statement will be filed within 120 days year-end, but this reserves that option. The second part is what will likely be applicable to Mobivity. | -34- | | | Table of Contents | | During the twelve months ended December 31, 2024, a total of$1,258,093of accruedinterest from equity payablewas converted into 2,395,511shares of common stock. As of December 31, 2024, the Company had a principal total of $5,873,125, a debt discount balance of $180,977 for a net principal balance of $5,692,148 and accrued interest of $895,652 that was recorded to Equity Payable. Unsecured Promissory Note On July 1, 2021, we entered into UP Notes in the aggregate principal amount of $271,875 with Talkot Fund LP and investor in the Company. Each UP Note bears interest on the unpaid balance at the rate of fifteen percent (15%) per annum and the principal and accrued interest are due and payable no later than December 31, 2023. We may prepay any of the UP Notes without notice, subject to a two percent (2%) pre-payment penalty. The UP Note offer was conducted by our management and there were no commissions paid by us in connection with the solicitation. The Company issued to Talkot Fund LP warrants to purchase an aggregate of 33,017 shares of its common stock at the stated exercise price per share in connection with the issuance of funds under this Credit Agreement. On January 31, 2023, the Lender agreed to postpone the 24-month repayment period to a later period commencing on January 31, 2024, and further agreed that interest accrued on the loan between July 1, 2022 and December 1, 2025 is to be settled in shares of the Companys common stock quarterly. On January 31 2024, the Lender agreed to postpone the 24-month repayment period to a later period commencing on July 31, 2024. As of December 31, 2024, the Company had a principal balance of $271,875 and accrued interest of $41,461 that was recorded to Equity Payable. A total of $96,988 of accrued interest from equity payable was converted into 120,883 shares of common stock. *Related Party Convertible Notes* During fourth quarter 2023 the Company issued 8 Convertible Notes payable to related parties for $2,000,000. As an inducement we issued 3,333,332 warrants to purchase shares of our common stock at $.60 per share. Simple interest on the unpaid principal balance of this Note will accrue at the rate of 8.0% per annum. Accrual of interest will commence on the date of this Note, will continue until this Note is fully paid, and will be payable in a single installment at maturity three years from the date the Convertible Note was issued. The Convertible Note and all accrued interest thereon are convertible into shares of our common stock, from time to time, at the option of the holder thereof, at a conversion price per share equal to the larger of either $0.50 or of the volume-weighted average price of our common stock quoted on the OTCQB Venture Market operated by OTC Markets Group Inc. over the thirty (30) trading days immediately preceding such date (the Conversion Price). During first quarter 2024 the Company issued 8 Convertible Notes payable to related parties for $1,950,000. As an inducement we issued 3,291,664warrants to purchase shares of our common stock at $.60 per share. Simple interest on the unpaid principal balance of this Note will accrue at the rate of 8.0% per annum. Accrual of interest will commence on the date of this Note, will continue until this Note is fully paid, and will be payable in a single installment at maturity three years from the date the Convertible Note was issued. During the second quarter of 2024 the Company issued 8 Convertible Notes payable to related parties for $2,100,000. As an inducement we issued 3,499,997 warrants to purchase shares of our common stock at $.60 per share. Simple interest on the unpaid principal balance of this Note will accrue at the rate of 8.0% per annum. Accrual of interest will commence on the date of this Note, will continue until this Note is fully paid, and will be payable in a single installment at maturity three years from the date the Convertible Note was issued. During the third quarter of 2024 the Company issued 4 Convertible Notes payable to related parties for $1,275,000. As an inducement we issued 2,124,999 warrants to purchase shares of our common stock at $.60 per share. Simple interest on the unpaid principal balance of this Note will accrue at the rate of 8.0% per annum. Accrual of interest will commence on the date of this Note, will continue until this Note is fully paid, and will be payable in a single installment at maturity three years from the date the Convertible Note was issued. During the fourth quarter of 2024 the Company issued 5 Convertible Notes payable to related parties for $1,525,000. As an inducement we issued 2,541,664 warrants to purchase shares of our common stock at $.60 per share. Simple interest on the unpaid principal balance of this Note will accrue at the rate of 8.0% per annum. Accrual of interest will commence on the date of this Note, will continue until this Note is fully paid, and will be payable in a single installment at maturity three years from the date the Convertible Note was issued. During the twelve months ended December 31, 2024 the company recorded $454,912 of interest expense in connection with the related party convertible notes and $470,267 in amortized debt discount in connections with related party convertible notes. As of December 31, 2024 the Convertible Notes issued to related parties had a principal balance of $8,850,000 with a debt discount of $1,331,375 for a net principal balance of $7,518,625 and accrued interest of $479,156. | -35- | | | Table of Contents | | *Convertible Notes* During fourth quarter 2023 the Company issued 10 Convertible Notes payable to shareholders for $250,000. As an inducement we issued 416,667 warrants to purchase shares of our common stock at $.60 per share. Simple interest on the unpaid principal balance of this Note will accrue at the rate of 8.0% per annum. Accrual of interest will commence on the date of this Note, will continue until this Note is fully paid, and will be payable in a single installment at maturity three years from the date the Convertible Note was issued. The Convertible Note and all accrued interest thereon are convertible into shares of our common stock, from time to time, at the option of the holder thereof, at a conversion price per share equal to the larger of either $0.50 or of the volume-weighted average price of our common stock quoted on the OTCQB Venture Market operated by OTC Markets Group Inc. over the thirty (30) trading days immediately preceding such date (the Conversion Price) During the twelve months ended December 31, 2024 accrued interest of $20,371 was recorded in connection with the convertible notes. As of December 31, 2024 the Convertible Notes issued to related parties had a principal balance of $250,000 with a debt discount balance of $22,206 for a net principal balance of $227,794 and accrued interest balance of $21,691. A debt discount expense of $39,627 was recorded in connection to the warrants issued. **Interest Expense** The following table summarizes interest expense for the years ended December 31, 2024 and 2023: Summary of Interest Expense | | | 2024 | | | 2023 | | | | | | December 31, | | | | | | 2024 | | | 2023 | | | | Interest expense | | $ | 1,943,412 | | | $ | 1,027,682 | | | | Total interest expense | | $ | 1,943,412 | | | $ | 1,027,682 | | | **9. Common Stock and Equity Payable** **Common Stock and Equity Payable** 2023 During the year ended December 31, 2023, the Company issued 5,548,463 shares for warrants converted, and 442,660 shares for settlement of interest payable. In addition 545,079 where issued at par value, due to expense recognition in previous years, for RSU issued on termination of a directors service. As of December 31, 2023, we had an equity payable balance of $989,947. These share consist of $889,085 interest payable to be settled into 1,007,631 shares and $100,862 in RSUs payable of 93,390 shares. 2024 During the twelve months ended December 31, 2024 the Company issued 2,516,394 shares for $1,355,081 from equity payable and recorded a losson settlement of debt for $106,252. A total of $937,113 of interest was accrued and settled to equity payable. As of the twelve months ended December 31, 2024 we had an equity payable balance of $571,979. These share consist of $471,117 interest payable to be settled into 1,946,232 shares and $100,862 in RSUs payable of 93,390 shares. | -36- | | | Table of Contents | | The following table summarizes stock option activity under our stock-based plans as of and for the years ended December 31, 2024 and 2023: Share Based Payment Arrangement Options Activity | | | Shares | | | Weighted Average Exercise Price | | | Weighted Average Remaining Contractual Term (Years) | | | Aggregate Intrinsic Value | | | | Outstanding at December 31, 2022 | | | 6,691,216 | | | $ | 1.19 | | | | 5.86 | | | $ | 7,962,547 | | | | Granted | | | 2,678,500 | | | $ | 1.02 | | | | | | | $ | | | | | Forfeit/canceled | | | (329,893 | ) | | $ | 1.09 | | | | | | | $ | | | | | Expired | | | (1,742,468 | ) | | $ | 0.98 | | | | | | | $ | | | | | Outstanding at December 31, 2023 | | | 7,297,355 | | | $ | 0.90 | | | | 7.28 | | | $ | 6,567,620 | | | | Granted | | | 260,000 | | | $ | 0.52 | | | | | | | $ | | | | | Exercised | | | | | | $ | | | | | | | | $ | | | | | Forfeit/canceled | | | (981,020 | ) | | $ | 0.78 | | | | | | | $ | | | | | Expired | | | (2,178,335 | ) | | $ | 0.86 | | | | | | | $ | | | | | Outstanding at December 31, 2024 | | | 4,398,000 | | | $ | 0.92 | | | | 7.40 | | | $ | 4,046,160 | | | | | | | | | | | | | | | | | | | | | | | Expected to vest at December 31, 2024 | | | 2,397,841 | | | $ | 0.97 | | | | 6.62 | | | $ | 2,325,906 | | | | Exercisable at December 31, 2024 | | | 2,397,841 | | | $ | 0.97 | | | | 6.62 | | | $ | 2,325,906 | | | | Unrecognized expense at December 31, 2024 | | $ | 1,159,772 | | | | | | | | | | | $ | | | | The aggregate intrinsic value of options was calculated as the difference between the exercise price of the underlying awards and the quoted price of our common stock. At December 31, 2024, options to purchase 5,500 shares of common stock were in-the-money. The weighted average grant-date fair value of options granted during the years 2024 and 2023 was $0.92 and $.90, respectively. 2023 On May 11, 2023 the Company granted three employees 295,000 options to purchase shares of the Companys common stock at the closing price as of May 11, 2023 of $0.98 per share. The option shares will vest 25% on the first anniversary of the grant, then equally in 36 monthly installments thereafter, and are exercisable until May 16, 2033. The total estimated value using the Black-Scholes Model, based on a volatility rate of 75.76% and an option fair value of $0.705183 was $208,029. On July 14, 2023 the Company granted one employees 1,000,000 options to purchase shares of the Companys common stock at the closing price as of July 14, 2023 of $0.85 per share. The option shares will vest 25% on the first anniversary of the grant, then equally in 36 monthly installments thereafter, and are exercisable until July 14, 2033. The total estimated value using the Black-Scholes Model, based on a volatility rate of 74.55% and an option fair value of $0.5590 was $605,383. On July 17, 2023 the Company granted one employees 700,000 options to purchase shares of the Companys common stock at the closing price as of July 17, 2023 of $0.79 per share. The option shares will vest 25% on the first anniversary of the grant, then equally in 36 monthly installments thereafter, and are exercisable until July 17, 2033. The total estimated value using the Black-Scholes Model, based on a volatility rate of 74.57% and an option fair value of $0.5713 was $396,441. On August 25, 2023 he Company granted four employees 650,000 options to purchase shares of the Companys common stock at the closing price as of August 25, 2023 of $0.65 per share. The option shares will vest 25% on the first anniversary of the grant, then equally in 36 monthly installments thereafter, and are exercisable until August 25, 2033. The total estimated value using the Black-Scholes Model, based on a volatility rate of 64.81% and an option fair value of $0.4257 was $285,773. On November 30, 2023, the Company granted five employees 33,500 options to purchase shares of the Companys common stock at the closing price as of November 30, 2023 of $0.3505 per share. The option shares will vest 25% on the first anniversary of the grant, then equally in 36 monthly installments thereafter, and are exercisable until November 30, 2033. The total estimated value using the Black-Scholes Model, based on a volatility rate of 83.03% and an option fair value of $0.295407 was $9,896. In the twelve months ended December 31, 2023 we had a total stock-based compensation expense of $691,674, this is comprised of $260,007 in restricted stock unit compensation expense, and $2,502,571 of stock-based compensation expense in connection with the exercise of investor-based warrants | -37- | | | Table of Contents | | 2024 On April 1, 2024, the Company granted two employees 250,000 options to purchase shares of the Companys common stock at the closing price as of April 1, 2024 of $0.502 per share. The option shares will vest 25% on the first anniversary of the grant, then equally in 36 monthly installments thereafter, and are exercisable until April 1, 2034. The total estimated value using the Black-Scholes Model, based on a volatility rate of 73.63% and an option fair value of $0.212377 was $53,094. On August 14, 2024, the Company granted one employee 10,000 options to purchase shares of the Companys common stock at the closing price as of August 14, 2024 of $0.502 per share. The option shares will vest 25% immediately, then equally in 36 monthly installments thereafter, and are exercisable until August 14, 2034. The total estimated value using the Black-Scholes Model, based on a volatility rate of 73.63% and an option fair value of $0.0724 was $724. During the twelve months ended December 31, 2024 we had a total stock-based compensation expense of $865,307 this is comprised of $324,998 in restricted stock unit compensation expense, and $540,309 of stock-based compensation expense for employee options. **Stock-based Compensation Expense** The impact on our results of operations of recording stock-based compensation expense for the years ended December 31, 2024 and 2023 was as follows: Schedule of Stock-based Compensation Expense | | | 2024 | | | 2023 | | | | | | Years Ended | | | | | | December 31, | | | | | | 2024 | | | 2023 | | | | General and administrative | | $ | (32,580 | ) | | $ | 161,593 | | | | Sales and marketing | | | 406,344 | | | | 359,253 | | | | Engineering, research, and development | | | 166,545 | | | | 170,828 | | | | Total | | $ | 540,309 | | | $ | 691,674 | | | In 2023, two executives left the company, followed by another in January 2024. Their stock options represented 73% of the companys stock-based expenses for 2023. Due to the forfeiture of unvested amortized expenses in2024, the company recorded a $32,580 gain in G&A stock-based amortized expense for the year. As of December 31, 2024, there was approximately $1,159,772 of unearned stock-based compensation that will be expensed from 2024 through 2028. If there are any modifications or cancellations of the underlying unvested awards, we may be required to accelerate, increase or cancel all or a portion of the remaining unearned stock-based compensation expense. Future unearned stock-based compensation will increase to the extent we grant additional equity awards. **Stock Option Valuation Assumptions** We calculated the fair value of each stock option award on the date of grant using the Black-Scholes option pricing model. The ranges of assumptions were used for the years ended December 31, 2024 and 2023: Schedule of Stock Options Valuation Assumptions | | | Years Ended | | | | | | December 31, | | | | | | 2024 | | | 2023 | | | | Risk-free interest rate | | 0.39% to 0.47 | % | | 0.34% to 0.44% | | | | Expected life (years) | | | 6.62 | | | | 7.00 | | | | Expected dividend yield | | | | | | | | | | | Expected volatility | | | 73.63 to 90.56 | % | | | 72.88 to 83.03% | | | The risk-free interest rate assumption is based upon published interest rates appropriate for the expected life of our employee stock options. | -38- | | | Table of Contents | | The expected life of the stock options represents the weighted-average period that the stock options are expected to remain outstanding and was determined based on historical experience of similar awards, giving consideration to the contractual terms of the stock-based awards, vesting schedules and expectations of future employee behavior as influenced by changes to the terms of its stock-based awards. The dividend yield assumption is based on our history of not paying dividends and no future expectations of dividend payouts. The expected volatility in 2024 and 2023 is based on the historical publicly traded price of our common stock. **Restricted stock units** The following table summarizes restricted stock unit activity under our stock-based plans as of and for the years ended December 31, 2024 and 2023: Schedule of Restricted Stock Unit Activity | | | Shares | | | Weighted Average Grant Date Fair Value | | | Weighted Average Remaining Contractual Term (Years) | | | Aggregate Intrinsic Value | | | | Outstanding at December 31, 2022 | | | 1,929,933 | | | $ | 1.04 | | | | | | | $ | 2,018,811 | | | | Awarded | | | 414,104 | | | $ | 0.63 | | | | | | | $ | 260,886 | | | | Released | | | (545,012 | ) | | $ | 1 | | | | | | | $ | (588,613 | ) | | | Outstanding at December 31, 2023 | | | 1,799,025 | | | $ | 0.94 | | | | | | | $ | 1,691,084 | | | | Awarded | | | 912,555 | | | $ | 0.36 | | | | | | | $ | 328,520 | | | | Outstanding at December 31, 2024 | | | 2,711,580 | | | $ | 0.75 | | | | | | | $ | 2,033,685 | | | | | | | | | | | | | | | | | | | | | | | Vested at December 31, 2024 | | | 2,711,580 | | | $ | 0.75 | | | | | | | $ | 2,033,685 | | | | Unvested at December 31, 2024 | | | | | | $ | | | | | | | | $ | | | | | Unrecognized expense at December 31, 2024 | | $ | | | | | | | | | | | | | | | | | -39- | | | Table of Contents | | 2023 On March 31, 2023, the Company granted four independent directors a total of 61,342 restricted stock units. The units were valued at $65,002 or $1.05 per share, based on the closing stock price on the date of the grant. All units vested immediately. The shares of common stock associated with the restricted stock units will be issued to each director upon the earliest to occur of (A) March 31, 2026, (B) a change in control of the Company, and (C) the termination of the directors service with the Company. On June 30, 2023, the Company granted four independent directors a total of 80,160 restricted stock units. The units were valued at $65,003 or $0.81 per share, based on the closing stock price on the date of the grant. All units vest immediately. The shares of common stock associated with the restricted stock units will be issued to each director upon the earliest to occur of (A) June 30, 2026, (B) a change in control of the Company, and (C) the termination of the directors service with the Company. On September 30, 2023, the Company granted four independent directors a total of 101,564 restricted stock units. The units were valued at $65,001 or $.64 per share, based on the closing stock price on the date of the grant. All units vest immediately. The shares of common stock associated with the restricted stock units will be issued to each director upon the earliest to occur of (A) September 30,2026, (B) a change in control of the Company, and (C) the termination of the directors service with the Company. On December 31, 2023 the Company granted four independent directors a total of 171,056 restricted stock units. The units were valued at $65,001 or $.38 per share, based on the closing stock price on the date of the grant. All units vested immediately. The shares of common stock associated with the restricted stock units will be issued to each director upon the earliest to occur of (A) December 31, 2025, (B) a change in control of the Company, and (C) the termination of the directors service with the Company. In the twelve months ended December 31, 2023, the company recorded $260,007 in restricted stock units as board compensation. 2024 On March 31, 2024 the company granted five independent directors a total of 162,500 restricted stock units. The units were valued at $81,250 or $.50 per share, based on the closing stock price on the date of the grant. All units vested immediately. The shares of common stock associated with the restricted stock units will be issued to each director upon the earliest to occur of (A) March 31, 2027, (B) a change in control of the Company, and (C) the termination of the directors service with the Company. On June 30,2024 the company granted five independent directors a total of 187,210 restricted stock units. The units were valued at $81,249 or $.434 per share, based on the closing stock price on the date of the grant. All units vested immediately. The shares of common stock associated with the restricted stock units will be issued to each director upon the earliest to occur of (A) June 30, 2027, (B) a change in control of the Company, and (C) the termination of the directors service with the Company. On September 30, 2024 the company granted five independent directors a total of 365,495 restricted stock units. The units were valued at $81,250 or $.222 per share, based on the closing stock price on the date of the grant. All units vested immediately. The shares of common stock associated with the restricted stock units will be issued to each director upon the earliest to occur of (A) September 30, 2027, (B) a change in control of the Company, and (C) the termination of the directors service with the Company. On December 31, 2024 the company granted five independent directors a total of 197,350 restricted stock units. The units were valued at $81,249 or $.412 per share, based on the closing stock price on the date of the grant. All units vested immediately. The shares of common stock associated with the restricted stock units will be issued to each director upon the earliest to occur of (A) December 31, 2027, (B) a change in control of the Company, and (C) the termination of the directors service with the Company. In the twelve months ended December 31, 2024, the company recorded $324,998 in restricted stock units as board compensation. | -40- | | | Table of Contents | | **Restricted Stock Unit Compensation Expense** The impact on our results of operations of recording stock-based compensation expense for years ended December 31, 2024 and 2023 was as follows: Schedule of Stock-based Compensation Expense | | | 2024 | | | 2023 | | | | | | Years Ended | | | | | | December 31, | | | | | | 2024 | | | 2023 | | | | General and administrative | | $ | 324,998 | | | $ | 260,007 | | | | Sales and Marketing | | | | | | | | | | | Total | | $ | 324,998 | | | $ | 260,007 | | | **10. Warrants to Purchase Common Stock** The following table summarizes investor warrant activity as of and for the years ended December 31, 2024 and 2023: Schedule of Investor Warrants | | | Shares | | | Weighted Average Exercise Price | | | Weighted Average Remaining Contractual Term (Years) | | | | Outstanding at December 31, 2022 | | | 6,147,898 | | | $ | 1.45 | | | | 2.27 | | | | Granted | | | 9,563,787 | | | $ | 0.95 | | | | 1.66 | | | | Exercised | | | (5,548,463 | ) | | $ | 1.59 | | | | | | | | Outstanding at December 31, 2023 | | | 10,163,222 | | | $ | 0.94 | | | | 2.48 | | | | Granted | | | 11,458,324 | | | $ | 0.60 | | | | 2.45 | | | | Expired | | | (20,339 | ) | | $ | 1.48 | | | | | | | | Outstanding at December 31, 2024 | | | 21,601,207 | | | $ | 0.75 | | | | 2.00 | | | | Exercisable at December 31, 2024 | | | 21,601,207 | | | $ | 0.75 | | | | 2.00 | | | We did record stock-based compensation expense of $0 and $2,502,570 for the years ended December 31, 2024 and 2023, respectively in connection with the exercise of investor-based warrants. **Warrants Exercised in 2023** During March 2023, 15 warrant holders exercised their common stock purchase warrant for 3,587,487 shares at the exercise price of $1.00 per share, resulting in additional capital of $3,557,487. As an inducement for the holders exercise of the warrants, we issued the holders 3,921,952 new warrants to purchase common stock at $2.00 per share over a three-year 3 period expiring in February 2025. The Company recorded $577,000 of stock-based expense related to warrants issued during the warrant conversion offer on February 14, 2023. The total estimated value of the warrants using the Black-Scholes Model is based on a volatility rate of 63% and an option fair value of $0.3216. During August and September of 2023, 18 warrant holders exercised their common stock purchase warrant for 1,906,976 shares at the exercise price of $.82 per share, resulting in additional capital of $3,557,487. As an inducement for the holders exercise of the warrants, we issued the holders 1,793,745 new warrants to purchase common stock at $.82 per share over a three-year 3 period expiring between August and September 2026. The Company recorded $1,146,047 of stock-based expense related to warrants issued during the warrant conversion offer on September 6, 2023. The total estimated value of the warrants using the Black-Scholes Model is based on an average volatility rate of 72% and an option fair value of $0.2922. During the fourth quarter, 15 warrant holders were issued 3,749,999 warrants as an inducement for Convertible Notes issued at the exercise price of $.60 per share, resulting in additional capital of $2,250,000. The Company recorded $471,425 of stock-based expense related to warrants issued during the warrant conversion offer on September 6, 2023. The total estimated value of the warrants using the Black-Scholes Model is based on an average volatility rate of 72% and an option fair value of $0.2922. **Warrants Exercised in 2024** During the first quarter of 2024, one warrant holders was issued 3,291,664 warrants as an inducement for Convertible Notes issued at the exercise price of $.60 per share, resulting in additional capital of $1,950,000. The Company recorded $466,594 of stock-based expense related to warrants issued with issuance of convertible notes. The total estimated value of the warrants using the Black-Scholes Model is based on an average volatility rate of 93% and an option fair value of $0.1418. | -41- | | | Table of Contents | | During the second quarter of 2024, one warrant holders was issued 3,499,997 warrants as an inducement for Convertible Notes issued at the exercise price of $.60 per share, resulting in additional capital of $2,100,000. The Company recorded $618,737 of stock-based expense related to warrants issued with issuance of convertible notes. The total estimated value of the warrants using the Black-Scholes Model is based on an average volatility rate of 91% and an option fair value of $0.1768. During the third quarter of 2024, one warrant holders was issued 2,124,999 warrants as an inducement for Convertible Notes issued at the exercise price of $.60 per share, resulting in additional capital of $1,275,000. The Company recorded $298,187 of stock-based expense related to warrants issued with issuance of convertible notes. The total estimated value of the warrants using the Black-Scholes Model is based on an average volatility rate of 104% and an option fair value of $0.1403. During the fourth quarter of 2024, one warrant holders was issued 2,541,664 warrants as an inducement for Convertible Notes issued at the exercise price of $.60 per share, resulting in additional capital of $1,525,000. The Company recorded $358,352 of stock-based expense related to warrants issued with issuance of convertible notes. The total estimated value of the warrants using the Black-Scholes Model is based on an average volatility rate of 139% and an option fair value of $0.1410. **11. Income Taxes** On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act) was enacted and signed into law in response to the market volatility and instability resulting from the COVID-19 pandemic. It includes a significant number of tax provisions and lifts certain deduction limitations originally imposed by the Tax Cuts and Jobs Act of 2017 (the 2017 Act). The changes are mainly related to: (1) the business interest expense disallowance rules for 2019 and 2020; (2) net operating loss rules; (3) charitable contribution limitations; (4) employee retention credit; and (5) the realization of corporate alternative minimum tax credits. The Company does not anticipate the application of the CARES Act provisions to materially impact the overall Consolidated Financial Statements. For the years ended December 31, 2024 and 2023 the provisions for income taxes were as follows: Schedule of Components of Income Tax Expense Benefit | | | | 2024 | | | | 2023 | | | | Federal current | | $ | | | | $ | | | | | State current | | | | | | | | | | | Foreign current | | | | | | | | | | | Total | | $ | | | | $ | | | | Under ASC 740, deferred income tax assets and liabilities reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. | -42- | | | Table of Contents | | Significant components of our net deferred tax assets and liabilities as of December 31, 2024 and 2023 are as follows: Schedule of Deferred Tax Assets and Liabilities | | | 2024 | | | 2023 | | | | Deferred tax assets (liabilities): | | | | | | | | | | | Net operating loss carryforwards | | $ | 18,867,000 | | | $ | 14,597,000 | | | | Stock based compensation | | | 5,717,000 | | | | 5,747,000 | | | | Accrued compensation | | | 57,000 | | | | 235,000 | | | | Depreciation and amortization | | | 1,683,000 | | | | 2,675,000 | | | | Other | | | | | | | | | | | Total deferred tax assets | | | 26,324,000 | | | | 23,254,000 | | | | Valuation allowance for net deferred tax assets | | | (26,324,000 | ) | | | (23,254,000 | ) | | | Total | | $ | | | | $ | | | | The Company has provided a valuation allowance against deferred tax assets recorded as of December 31, 2024 and 2023 due to uncertainties regarding the realization of such assets. The net change in the total valuation allowance for the year ended December 31, 2024 was an increase of approximately $3,070,000. The net change in the total valuation allowance for the year ended December 31, 2023 was an increase of approximately $4,854,000. In assessing the valuation of deferred tax assets, the Company considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during periods in which those temporary differences become deductible. The Company considers projected future taxable income and planning strategies in making this assessment. Based on the level of historical operating results and projections for the taxable income for the future, the Company has determined that it is more likely than not that the deferred tax assets will not be realized. Accordingly, the Company has recorded a valuation allowance to reduce deferred tax assets to zero. There can be no assurance that the Company will ever be able to realize the benefit of some or all of the federal and state loss carryforwards, either due to ongoing operating losses or due to ownership changes, which limit the usefulness of the loss carryforwards. As of December 31, 2024, the Company has available net operating loss carryforwards of approximately $71,000,000 for federal income tax purposes, which will start to expire in 2026. The net operating loss carryforwards for state purposes are approximately $71,000,000 and will start to expire in 2028. The difference between the provision for income taxes and income taxes computed using the U.S. federal income tax rate for the years ended December 31, 2024 and 2023 was as follows: Schedule of Effective Income Tax Rate Reconciliation | | | 2024 | | | 2023 | | | | Computed expected tax expense | | $ | (2,134,000 | ) | | $ | (2,533,000 | ) | | | State taxes, net of federal benefit | | | 736,000 | | | | 2,014,000 | | | | Expiration of NOL carryforwards | | | 261,000 | | | | 44,000 | | | | Other | | | 4,000 | | | | 2,253,000 | | | | Change in valuation allowance | | | 1,133,000 | | | | (1,778,000 | ) | | | Total | | $ | | | | $ | | | | The Company has determined that during 2010 it experienced a change of ownership as defined by Section 382 of the Internal Revenue Code. As such, utilization of net operating loss carryforwards and credits generated before the 2010 change in ownership will be limited to approximately $207,000 per year until such carryforwards are fully utilized. The pre change net operating loss carryforward was approximately $6,000,000. Since 2010 the Company has not conducted a study to assess whether a change of control has occurred or whether there have been multiple changes of control since inception due to the significant complexity and cost associated with such a study. If the Company has experienced a change of control, as defined by Section 382, at any time since 2010, utilization of the net operating loss carryforwards tax credit carryforwards would be subject to further annual limitation under Section 382. Any limitation may result in expiration of a portion of the net operating loss carryforwards before utilization. The Company files income tax returns in the U.S. federal jurisdiction, Arizona, and California. Because the Company is carrying forward federal and state net operating losses from 2006, the Company is subject to U.S. federal and state income tax examinations by tax authorities for all years since 2006. The Company does not have a liability for any uncertain tax positions. As of December 31, 2024, no accrued interest or penalties are recorded in the financial statements. | -43- | | | Table of Contents | | **12. Fair Value Measurements of Financial Instruments** The following table summarizes our financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2024: Schedule of Fair Value Measurements Recurring and Nonrecurring | Description | | Level 1 | | | Level 2 | | | Level 3 | | | Gains (Losses) | | | | Goodwill (non-recurring) | | $ | | | | $ | | | | $ | | | | $ | | | | | Intangibles, net (non-recurring) | | $ | | | | $ | | | | $ | 55,689 | | | $ | | | | The following table summarizes our financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2023: | Description | | Level 1 | | | Level 2 | | | Level 3 | | | Gains (Losses) | | | | Goodwill (non-recurring) | | $ | | | | $ | | | | $ | | | | $ | | | | | Intangibles, net (non-recurring) | | $ | | | | $ | | | | $ | 65,916 | | | $ | | | | The Company recorded goodwill, intangible assets and an earn-out payable as a result its business combinations, and these assets were valued with the assistance of a valuation consultant and consisted of Level 3 valuation techniques. The Companys financial instruments consist of cash, accounts receivable, accounts payable, and accrued liabilities. The estimated fair value of cash, accounts receivable, accounts payable and accrued liabilities approximate their carrying amounts due to the short-term nature of these instruments. None of these instruments are held for trading purposes. **13. Commitments and Contingencies** **Litigation** As of the date of this report, the company has two pending legal proceeding related to alleged violations of the TCPA (Telephone Consumer Protection Act) Violation. The first proceeding is a putative class action complaint alleging that Defendant initiated telephone solicitations through text messages to Plaintiff and members of a putative class in violation of the TCPA. The defense of the matter was tendered to the Company by its client, and our firm took over the defense of the matter. We have not yet responded to the complaint and no discovery has been conducted so we are unable to determine at this time whether it may result in a material exposure as defined. The Company intends to seek an individual settlement of this matter and if one cannot be reached it intends to vigorously defend the matter for its client. The second proceeding is a putative class action complaint alleging that Defendant initiated telephone solicitations through text messages in violation of the Telephone Consumer Protection Act, 47 U.S.C 227 et al. (TCPA). The defense of the matter was tendered to the Company by its client, and our firm is managing the defense of the matter. We have not yet responded to the complaint and no discovery has been conducted so we are unable to determine at this time whether it may result in a material exposure as defined. The Company intends to seek an individual settlement of this matter and if one cannot be reached it intends to vigorously defend the matter for its client. **Operating Lease** We entered into a new lease starting in February of 2021 for 8,898 square feet of office space located at 3133 W. Frye Road, Suite 215, Chandler, Arizona. Monthly rental payments, excluding common area maintenance charges, will be $25,953 to $28,733. The first twelve months of the lease included a 50% abatement period. As of December 31, 2024, we have an operating lease asset balance for this lease of $541,618 and an operating lease liability balance for this lease of $660,852 recorded in accordance with ASC 842. **14. Employee Benefit Plan** The Company has an employee savings plan (the Plan) pursuant to Section 401(k) of the Internal Revenue Code (the Code), covering all of its employees. Participants in the Plan may contribute a percentage of compensation, but not in excess of the maximum allowed under the Code. The Company may make contributions at the discretion of its Board of Directors. During the years ended December 31, 2024 and 2023, the Company made no contributions to the Plan. | -44- | | | Table of Contents | | **15. Related Party Transactions** **Related Party Notes** Secured Promissory Notes On June 30, 2021, we entered into a Credit Facility Agreement (the Credit Agreement) with Thomas Akin, one of the Companys directors (the Lender). The Credit Agreement was amended on November 11, 2022. The Company can borrow up to $6,000,000 under the Credit Agreement (the Credit Facility). As of December 31, 2021, the Company had drawn a total of $3,478,125 including cash drawn in the amount of $3,206,250 and $271,875 of principal and accrued interest under the 2020 UP Note that was rolled into the Credit Facility and had paid a total of $200,000 toward the principal balance of the loan, The Credit Facility is secured by all of our tangible and intangible assets including intellectual property. This loan bears interest on the unpaid balance at the rate of fifteen percent (15%) per annum. The Company may prepay this loan without notice, penalty, or charge. In consideration of the Lenders agreement to provide the Credit Facility, the Company issued warrants to purchase shares of its common stock at an exercise price of $1.67 per share in connection with the issuance of funds under the Credit Agreement. The warrants are exercisable for a period commencing upon issuance of the corresponding notes and ending 36 months after issuance of the financing. In addition, the Company has agreed to issue to the Lender additional warrants entitling the Lender to purchase a number of shares of the Companys common stock equal to twenty percent (20%) of the amount of the advances made divided by the volume-weighted average price over the 30 trading days preceding the advance (the VWAP). Each warrant will be exercisable over a three-year period at an exercise price equal to the VWAP. Under the original terms of the Credit Agreement, the Company was to begin repaying the principal amount, plus accrued interest, in 24 equal monthly installments commencing on June 30, 2022, and ending on June 30, 2024. On November 11, 2022, an amendment to the Credit Agreement was signed. The amendment updated the payment terms to the following: Without limiting the foregoing Section 2.3(a), Borrower shall repay the principal amount of all Advances, plus accrued interest thereon, in 24 equal monthly installments commencing on January 31, 2023 and continuing thereafter on the last day of each month (or, if such last day is not a Business Day, on the Business Day immediately preceding such last day. Interest on the unpaid Advances will accrue from the date of each Advance at a rate equal to fifteen percent (15%) per annum. Interest will be calculated on the basis of 365 days in a year. The amendment raised the maximum amount of the Credit Facility to $6,000,000. In addition, the interest which is accrued monthly between July 1, 2022, and December 31, 2022, will be settled into equity. Common Stock will be issued at the end of each month at a rate of $1.08 per share of common stock in the amount of the interest accrued for each month. On January 31, 2023, the Company then entered into Amendment No. 1 (the Amendment), which amends our existing Credit Facility Agreement[1], dated as of November 11, 2022, between the Company and Thomas B. Akin, and any convertible notes issued thereunder. The Amendment amends the existing Credit Facility Agreement to extend the maturity of the agreement and related convertible notes thereunder until December 1, 2025. Principal payments have been deferred to a period beginning on January 1, 2024 and ending December 1, 2025, and further provides that any accrued interest on unpaid advances under the agreement is to be paid quarterly in shares of our common stock, at a price per share equal to the volume-weighted average price of our common stock quoted on the Over-The Counter Venture Market operated by OTC Markets Group Inc. (OTCQB) over the ninety (90) trading days immediately preceding such date. The Amendment provides for corresponding amendments to the form of convertible notes to be issued under the Credit Agreement in the future and any outstanding convertible notes issued under the existing Credit Facility Agreement. The Amendment was considered a debt modification as the cash flows under the amended terms do not differ by at least 10% from the cash flows under the original agreement. The Company determined that the change in repayment terms should be accounted for as a modification as opposed to a complete extinguishment of debt, based on the guidance in ASU 470-50. The key components of this determination were as follows: (a) the changes in the structure of the debt was not deemed significant; and (b)the modification of terms were notdeemed substantial enough to be treated as an extinguishment, since the present value of the new note termsdid not exceeded the present value of the prior note terms by more than 10%. On January 31, 2024 amended terms were agreed upon and the Company then entered into Amendment No. 2 (the Amendment) signed on May 3,2024, which amends the terms of the Credit Facility Agreement, between the Company and Thomas B. Akin, and any convertible notes issued thereunder. The Amendment amends the existing Credit Facility Agreement to extend the maturity of the agreement and related convertible notes thereunder until June 30, 2026. Principal payments have been deferred to a period beginning on July 31, 2024 and ending June 30, 2026. The Company determined that the change in repayment terms should be accounted for as a modification as opposed to a complete extinguishment of debt, based on the guidance in ASU 470-50. The key components of this determination were as follows: (a) the changes in the structure of the debt was not deemed significant; and (b)the modification of terms were notdeemed substantial enough to be treated as an extinguishment, since the present value of the new note termsdid not exceeded the present value of the prior note terms by more than 10%. On August 13, 2024 amended terms were agreed upon and the Company then entered into Amendment No. 3 (the Amendment) signed on May 3,2024, which amends the terms of the Credit Facility Agreement, between the Company and Thomas B. Akin, and any convertible notes issued thereunder. The Amendment amends the existing Credit Facility Agreement to extend the maturity of the agreement and related convertible notes thereunder until June 30, 2026. Principal payments have been deferred to a period beginning on October 31, 2024 and ending September 30, 2026. The Company determined that the change in repayment terms should be accounted for as a modification as opposed to a complete extinguishment of debt, based on the guidance in ASU 470-50. The key components of this determination were as follows: (a) the changes in the structure of the debt was not deemed significant; and (b)the modification of terms were notdeemed substantial enough to be treated as an extinguishment, since the present value of the new note termsdid not exceeded the present value of the prior note terms by more than 10%. The Company entered into Amendment No. 4 (the Amendment) to Amended and Restated Credit Facility Agreement and Convertible Notes (the Credit Facility Agreement), signed on November 21,2024, which amends the terms of the Credit Facility Agreement, between the Company and Thomas B. Akin, and any convertible notes issued thereunder. The Amendment amends the existing Credit Facility Agreement to extend the maturity of the agreement and related convertible notes thereunder until March 31, 2027. Principal payments have been deferred to a period beginning on April 30, 2025 and ending March 31, 2027. The Company determined that the change in repayment terms should be accounted for as a modification as opposed to a complete extinguishment of debt, based on the guidance in ASU 470-50. The key components of this determination were as follows: (a) the changes in the structure of the debt was not deemed significant; and (b)the modification of terms were notdeemed substantial enough to be treated as an extinguishment, since the present value of the new note termsdid not exceeded the present value of the prior note terms by more than 10%. | -45- | | | Table of Contents | | During the twelve months ended December 31, 2024, a total of$1,258,093of accruedinterest from equity payablewas converted into 2,395,511shares of common stock. As of December 31, 2024, the Company had a principal total of $5,873,125, a debt discount balance of $180,977 for a net principal balance of $5,692,148 and accrued interest of $895,652 that was recorded to Equity Payable. Unsecured Promissory Note On July 1, 2021, we entered into UP Notes in the aggregate principal amount of $271,875 with Talkot Fund LP and investor in the Company. Each UP Note bears interest on the unpaid balance at the rate of fifteen percent (15%) per annum and the principal and accrued interest are due and payable no later than December 31, 2023. We may prepay any of the UP Notes without notice, subject to a two percent (2%) pre-payment penalty. The UP Note offer was conducted by our management and there were no commissions paid by us in connection with the solicitation. The Company issued to Talkot Fund LP warrants to purchase an aggregate of 33,017 shares of its common stock at the stated exercise price per share in connection with the issuance of funds under this Credit Agreement. On January 31, 2023, the Lender agreed to postpone the 24-month repayment period to a later period commencing on January 31, 2024, and further agreed that interest accrued on the loan between July 1, 2022 and December 1, 2025 is to be settled in shares of the Companys common stock quarterly. On January 31 2024, the Lender agreed to postpone the 24-month repayment period to a later period commencing on July 31, 2024. As of December 31, 2024, the Company had a principal balance of $271,875 and accrued interest of $41,461 that was recorded to Equity Payable. A total of $96,688 of accrued interest from equity payable was converted into 120,883 shares of common stock. *Related Party Convertible Notes* During fourth quarter 2023 the Company issued 8 Convertible Notes payable to related parties for $2,000,000. As an inducement we issued 3,333,332 warrants to purchase shares of our common stock at $.60 per share. Simple interest on the unpaid principal balance of this Note will accrue at the rate of 8.0% per annum. Accrual of interest will commence on the date of this Note, will continue until this Note is fully paid, and will be payable in a single installment at maturity three years from the date the Convertible Note was issued. The Convertible Note and all accrued interest thereon are convertible into shares of our common stock, from time to time, at the option of the holder thereof, at a conversion price per share equal to the larger of either $0.50 or of the volume-weighted average price of our common stock quoted on the OTCQB Venture Market operated by OTC Markets Group Inc. over the thirty (30) trading days immediately preceding such date (the Conversion Price). During first quarter 2024 the Company issued 8 Convertible Notes payable to related parties for $1,950,000. As an inducement we issued 3,291,664 warrants to purchase shares of our common stock at $.60 per share. Simple interest on the unpaid principal balance of this Note will accrue at the rate of 8.0% per annum. Accrual of interest will commence on the date of this Note, will continue until this Note is fully paid, and will be payable in a single installment at maturity three years from the date the Convertible Note was issued. During the second quarter of 2024 the Company issued 8 Convertible Notes payable to related parties for $2,100,000. As an inducement we issued 3,499,997 warrants to purchase shares of our common stock at $.60 per share. Simple interest on the unpaid principal balance of this Note will accrue at the rate of 8.0% per annum. Accrual of interest will commence on the date of this Note, will continue until this Note is fully paid, and will be payable in a single installment at maturity three years from the date the Convertible Note was issued. During the third quarter of 2024 the Company issued 4 Convertible Notes payable to related parties for $1,275,000. As an inducement we issued 2,124,999 warrants to purchase shares of our common stock at $.60 per share. Simple interest on the unpaid principal balance of this Note will accrue at the rate of 8.0% per annum. Accrual of interest will commence on the date of this Note, will continue until this Note is fully paid, and will be payable in a single installment at maturity three years from the date the Convertible Note was issued. During the fourth quarter of 2024 the Company issued 5 Convertible Notes payable to related parties for $1,525,000. As an inducement we issued 2,541,664 warrants to purchase shares of our common stock at $.60 per share. Simple interest on the unpaid principal balance of this Note will accrue at the rate of 8.0% per annum. Accrual of interest will commence on the date of this Note, will continue until this Note is fully paid, and will be payable in a single installment at maturity three years from the date the Convertible Note was issued. During the twelve months ended December 31, 2024 the company recorded $454,912 of interest expense in connection with the related party convertible notes and $470,267 in amortized debt discount in connections with related party convertible notes. As of December 31, 2024 the Convertible Notes issued to related parties had a principal balance of $8,850,000 with a debt discount of $1,331,375 for a net principal balance of $7,518,625 and accrued interest of $479,156. | -46- | | | Table of Contents | | **16. Reportable Segments** The customer acquisition and engagementsegment derives revenues from customers by ways for customers to acquirenew customers and in increase customer retention by email, text messaging and app interaction. the first is The Companys Connected Reward program that encourages engage by offering real life rewards through on of the many marketing channels. In addition, we offer SMS messaging programs that allow the companies to send company updates,offers and promotions through email and SMS/MMS messaging. The accounting policies are the same as the policies listed inthe summary of significant accounting policies. The chief operating decision maker (CODM) of the Company is our Presidentwho assesses performance of our single operating segment and decides how to allocate resources based on consolidated net loss that is reported on the consolidated statement of operations, as well as through other performance measures. The CODM considers consolidated net loss in deciding how to allocate resourcesinto the Company based on net income that also is reported on the income statement as consolidated net income. The measure of segment assets is reported on the balance sheet as total consolidated assets. The CODMuses net income to evaluate income generated from segment assets (return on assets) in deciding whether to reinvest profits into the customer acquisition and engagement or into other parts of the entity, such as for acquisitions or to pay dividends. Net income is used to monitor budget versus actual results. The CODM also uses net income in competitive analysis by benchmarking to the Companyscompetitors. The competitive analysis along with the monitoring of budgeted versus actual results are used in assessing performance of the segment and in establishing managements compensation. The Companyhas one reportable segment: customer acquisition and engagement.The customer acquisition and engagement segment provides customer with the ability to engage customers though email,SMS/MMS messaging andthrough ourunique fee-for action contracts such as a fee for downloading an app, or a fee for achieving a certain action in a digital app, or acquiring a loyalty member. The Companyderives revenue primarily in North America and manages the business activities on a consolidated basis. All revenue is derived using our Recurrency platform which is designedto leverage point-of-sale data, along with cognitive computing, to increase visits, spend, and loyalty from consumers. The following table shows net sales by operating segment: Schedule of Net Sales by Operating Segment | Customer Acquisition and Engagement segment | | Revenue | | | Revenues | | $ | 1,143,535 | | | | Less: | | | | | | | Customer Acquisition Costs | | | 512,901 | | | | Dues and Subscriptions | | | 16,278 | | | | Legal and Accounting and Professional Fees | | | 409,246 | | | | Travel Expense | | | 79,003 | | | | Administrative Expenses | | | 287,611 | | | | Advertising Expense | | | 223,129 | | | | Payroll and Related Expense | | | 6,741,575 | | | | Interest Expense | | | 1,943,412 | | | | Other Expenses (1) | | | 106,281 | | | | Customer Acquisition and Engagement segment Net Income | | $ | (9,175,901 | ) | | | (1) | Other Expense includes loss on settlement of debt and foreign currency gain(loss) | | | -47- | | | Table of Contents | | **17. Subsequent Events** **Convertible Notes** *Convertible Notes* On February 28, 2025 the Company issued one Convertible Notes to Thomas B. Akin for a total amount of $250,000. *Senior Secured Convertible Notes* On March 17, 2025, Mobivity Holdings Corp. (the Company) entered into a convertible promissory note purchase agreement (the Agreement) with four accredited investors, including Thomas B. Akin, a member of the Companys Board of Directors (Board), and Bruce E. Terker, an owner of 5% or more of the outstanding shares of the Companys common stock, $0.001 par value (Common Stock), who each participated on the same terms as the other accredited investors (collectively, the Investors). Pursuant to the Agreement, the Company received $2.0 million in proceeds and issued unsecured convertible promissory notes (each a Convertible Note and collectively, the Convertible Notes) in the aggregate principal amount of $2.0 million. The Convertible Notes were issued as part of a convertible note offering authorized by the Companys board of directors (the Offering) to raise up to $3.0 million from the issuance of Convertible Notes. Messrs. Akin and Terker invested $75,000 and $1.5 million, respectively, in the Offering. The Company will use the proceeds from the sale of the Convertible Notes to continue to ramp up growth of Connected Rewards and for working capital for general corporate purposes. All Convertible Notes accrue 8% interest and are due three years from issuance. *Shares Issued* On January 25, 2025 a total of 1,860,123 shares of common stock were granted from equity payable to Thomas Akin as settlement of $450,272 of interest payable. On January 25, 2025 a total of 86,109 shares of common stock were granted from equity payable to Talkot Fund LP as settlement of $20,844 of interest payable. *SMS Factory Sale of Certain Contracts Progress* As of March 26, 2025 the Company has transitions 80.4% of the daily operation of the purchased customer contracts to SMS Factory. The Company is currently still in the process of working with the remaining customer until the can be successfully transitioned. *Sublease Amendment* The Company entered in to a sublease on March 1, 2024 for its office facilities in Chandler, AZ through February 28, 2025. Monthly rental payments including rental of office furniture and excluding taxes, are $24,470. An amendment to the sublease was signed on March 13, 2025. The Sublease Term, which is scheduled to expire on February 28, 2025, is hereby extended for the period commencing on March 1, 2025, and expiring to January 25, 2027 (the Sublease Renewal Term), on all of the terms and conditions of the Sublease except as modified by this Amendment. Sublandlord and Subtenant acknowledge and agree that the Master Lease will expire on January 31, 2027, and Subtenant will have no further right to extend the Sublease Term beyond the Sublease Renewal Term. | -48- | | | Table of Contents | | **Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure** None. **Item 9A. Controls and Procedures** **Evaluation of Disclosure Controls and Procedures** Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 (the Exchange Act) is recorded, processed, summarized and reported, within the time periods specified in the SEC rules and forms. Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to management to allow timely decisions regarding required disclosure. As required by paragraph (b) of Rules 13a-15 or 15d-15 under the Exchange Act, our management, with the participation of our president (our principal executive officer) and our chief financial officer (our principal financial officer and principal accounting officer) evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this annual report, being December 31, 2024 (the Evaluation Date). Based on such evaluation and subject to the foregoing, such officers have concluded that, as of the Evaluation Date, the Companys disclosure controls and procedures are not effective at the reasonable assurance level to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SECs rules and forms and to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act is accumulated and communicated to the Companys management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. **Management****s Report on Internal Control over Financial Reporting** Our management is responsible for establishing and maintaining adequate internal control over financial reporting. The term internal control over financial reporting is defined as a process designed by, or under the supervision of, an issuers principal executive and principal financial officers, or persons performing similar functions, and effected by the issuers board of directors, management and other personnel, 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 and includes those policies and procedures that: | | (1) | pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the issuer; and | | | | (2) | provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the issuer are being made only in accordance with authorizations of management and directors of the issuer. | | | -49- | | | Table of Contents | | Under the supervision of our Chief Executive Officer, being our principal executive officer, and our Chief Financial Officer, being our principal financial officer and principal accounting officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2024 using the criteria established in Internal Control2013 Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). This evaluation included review of the documentation of controls, evaluation of the design effectiveness of controls, testing of the operating effectiveness of controls and a conclusion on this evaluation. Based on this evaluation under the criteria established in Internal Control Integrated Framework, our management concluded that our internal control over financial reporting was not effective as of December 31, 2024. As a small company with limited resources that are mainly focused on the development and sales of software products and services, the Company does not employ a sufficient number of staff in its finance department to possess an optimal segregation of duties or to provide optimal levels of oversight. This has resulted in certain audit adjustments and management believes that there may be a possibility for a material misstatement to occur in future periods while it employs the current number of personnel in its finance department. This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Managements report is not subject to attestation by our registered, public accounting firm pursuant to the rules of the SEC that permit us to provide only managements report in this annual report. **Changes in Internal Control** There was no change in our internal control over financial reporting, as defined in Rules 13a-15(f)under the Exchange Act, that occurred during the fiscal year ended December 31, 2024 and 2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. **Item 9B. Other Information** During the three months ended December 31, 2024, none of our directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) adopted, modified or terminated any contract, instruction or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) of the Exchange Act or any non-Rule 10b5-1 trading arrangement (as defined in Item 408(c) of Regulation S-K). **Item 9C.****Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.** Not applicable. **PART III** **Item 10. Directors, Executive Officers and Corporate Governance** **Information about out Executive Officers and Directors** The following table sets forth information concerning our executive officers and directors, including their ages, as of April 29, 2023: | Name | | Age | | Position | | | Thomas Akin | | 71 | | Chairman of Audit Committee and Director | | | Bryce Daniels | | 34 | | Chief Executive Officer | | | Kim Carlson | | 61 | | Chief Operating Officer | | | Skye Fossey-Tomaske | | 46 | | Interim Chief Financial Officer | | | Benjamin Weinberger | | 46 | | Chairman of Compensation Committee and Director | | | Philip Guarascio | | 83 | | Chairman of Governance and Nominating Committee and Director | | | Doug Schneider | | 62 | | Director | | | David Simon | | 42 | | Director | | | -50- | | | Table of Contents | | **Bryce D. Daniels, President** On June 12, 2024, Mobivity Holdings Corp. (the Company) announced that the Board of Directors (the Board) of the Company has appointed Bryce Daniels to serve as the President of the Company, effective as of June 12, 2024 and the Company entered into an employment agreement with Mr. Daniels effective as of the same date. Mr. Daniels, age 33, served as a portfolio manager at Talkot Capital, LLC since November 2018, where he oversaw a portfolio of private equity, venture capital, and public market investments. Talkot Capital is a significant shareholder of the Company. Mr. Daniels brings a wealth of experience in investing and building companies in a board capacity from early through late stages of their lifecycle. Prior to his role at Talkot, Mr. Daniels served as the chief investment officer at private equity-backed Encore Permian Holdings. Before that, he spent time in private equity and investment banking, which provided him with a diverse skill set and experience leading financings and, in an investor and board capacity, guiding companies through growth and monetization. As a result of these and other professional qualifications, we have concluded that Mr. Daniels is qualified to serve as an officer **Skye Fossey-Tomaske, Principal Financial Officer** On June 21, 2023, Mobivity Holdings Corp. (the Company) announced that Skye Fossey-Tomaske was appointed to serve as the Interim Chief Financial Officer of the Company, effective as of June 21, 2023. Ms. Fossey-Tomaske served as Interim CFO from June 2023 until July 2023, and from January 2024 until present. Ms. Fossey-Tomaske, age 45, has served as the Companys Corporate Controller since May 2021. Prior to joining the Company, Ms. Fossey-Tomaske held the position of Accounting Manager at Hannay Realty Advisors, LP, where she oversaw the accounting department for all of the restaurant holdings from October 2019 until April 2021. Before that, Ms. Fossey-Tomaske served as an Accounting Manager for Community Medical Services from November 2018 to October 2019. During her tenure at Community Medical Services, she successfully established a new accounting department to manage new acquisitions in the eastern United States, implemented a universal accounting system for all new subsidiaries, and enhanced various processes and procedures. As a result of these and other professional qualifications, we have concluded that Ms. Fossey-Tomaske is qualified to serve as an officer. **Kim Carlson** **Chief Operating Officer** On May 15, 2023, Mobivity Holdings Corp. (the Company) announced that Kim Carlson was appointed Chief Operating Officer of the Company, effective May 15, 2023. Ms. Carlson, age 59, joined the Company in September 2022 as the Companys Chief Revenue Officer. Prior to joining the Company, Ms. Carlson served as the Head of Global Revenue for Aarki, a mobile demand side platform, from June 2018 until its acquisition by mobile games platform Skillz in July of 2021. From May 2015 to May 2018 Ms. Carlson served as Vice President of Revenue for Appnique, an online development company specialized in Facebook Audiences as a Facebook Marketing Partner. From January 2014 until its acquisition by Tremor International in January 2015, Ms. Carlson served as Chief Revenue Officer of Taptica, a global mobile ad-tech company. Ms. Carlson additionally has revenue leadership experience that includes roles at Infospace, Marchex, and InMobi. As a result of these and other professional qualifications, we have concluded that Ms. Carlson is qualified to serve as an officer. **Thomas Akin** **Chairman of the Board of Directors and Chairman of the Audit Committee** Thomas Akin has served as a director since March 2015. Mr. Akin has been the Managing General Partner of Talkot Partners I, Talkot Partners II, LLC, Talkot Crossover Fund, LP, and Talkot Capital LLC since 1996. Mr. Akin served as the Chief Executive Officer of Dynex Capital Inc, from February 2008 to 2013. Mr. Akin was previously at Merrill Lynch and Co., serving as its Managing Director of the Western United States for Merrill Lynch Institutional Services from 1991 to 1994, and as Regional Director of the San Francisco and Los Angeles regions for Merrill Lynch Institutional Services from 1981 to 1991. Mr. Akin had been with Salomon Brothers from 1978 to 1981. He has been an Executive Chairman of Dynex Capital Inc. since January 2014, having previously been its the Chairman since May 30, 2003. He has served as the Chairman of Infotec since 2001. Mr. Akin has served as a director of Acacia Technologies Group of Acacia Research Corp. since May 1998, Dynex Capital Inc, since May 2003, and eFax.com, Inc. since July 1996. He also currently serves as a Director of ADX and as a Director CombiMatrix Corporation from May 1998. Mr. Akin holds a BA in Biology from the University of California at Santa Cruz and an MBA from the University of California at Los Angeles. Because Mr. Akin has extensive experience as a professional investor and public company director. As a result of these and other professional qualifications, we have concluded that Mr. Akin is qualified to serve as a director. | -51- | | | Table of Contents | | **Philip Guarascio - Chairman of Governance and Nominating Committee and Director** Philip Guarascio has served as a director since March 2014. Mr. Guarascio has been the Chairman and Chief Executive Officer of PG Ventures LLC since May 2000 where he serves as a marketing and advertising business consultant. He was Lead Executive, Marketing and Sales at the National Football League from 2003-2007 and has been a consultant for the for Endeavor Group Holdings, Inc, (formerly the William Morris Agency) since October 2001. For 16 years, Mr. Guarascio was at General Motors where he served as Vice President of Corporate Advertising and Marketing primarily responsible for worldwide advertising resource management, and managing consolidated media placement and before that as General Manager of Marketing and Advertising for General Motors North American Operations. Mr. Guarascio introduced the GM Card and managed the General Motors corporate brand to a 20 percent increase in customer purchase consideration. He joined General Motors in 1985 after 21 years with the New York advertising agency, DArcy, Masius, Benton & Bowles. Mr. Guarascio has extensive experience in the marketing and advertising industry. As a result of this and other professional qualifications, we have concluded that Mr. Guarascio is qualified to serve as a director. **Doug Schneider - Director** Doug Schneider has been as a director since December 2010. Mr. Schneider has a twenty-year track record of leadership and success in launching, building, and managing high-tech service-oriented companies. He has served as Executive Vice President of the SMB Solutions for the Melbourne IT Group since July 2012 and oversees a $75MM per year hosting and domain registration business across North American and Asia Pacific. From 2011 to 2012, Mr. Schneider served as CEO for Transaction Wireless, a venture backed technology company where he still resides on the board. From 2007 to 2010, Mr. Schneider was the CEO of Genea Energy, a clean tech company that provides an innovative and comprehensive SaaS based energy services platform for commercial office building portfolios. Mr. Schneider received a Bachelors degree in Mechanical Engineering from University of California, Davis and an M.B.A. from the Kellogg School of Management at Northwestern University. He also serves as an industry advisor to Pelion Venture Partners, a venture capital firm focused on the information technology sector. Mr. Schneider has extensive knowledge of corporate management. As a result of these and other professional qualifications, we have concluded that Mr. Schneider is qualified to serve as a director. **Benjamin Weinberger - Director** Benjamin Weinberger has served as a director since May 23, 2022. Mr. Weinbergers distinguished 20-year career spans roles as a founder, CEO and Chief Product Officer building and scaling digital media and entertainment businesses. He formerly served as founding SVP and Chief Product Officer at Sling TV where he helped define the next generation of television. Prior to Sling TV, Mr. Weinberger was the co-founder and CEO of Digitalsmiths, a product leader in the field of video search, recommendations and personalization. Under his leadership, Digitalsmiths developed video discovery solutions that have been adopted by several of the biggest names in cable, satellite, telco and broadcast media. In 2014, Digitalsmiths was acquired by TiVo for $135 million. He currently serves as an advisor to Drive by DraftKings and is on the board of directors of Librestream Technologies and FrndlyTV. Mr. Weinberger graduated with honors from the Department of Radio and Television at Southern Illinois University Carbondale in 2001. Mr. Weinberger has extensive knowledge of corporate management. As a result of this and other professional qualifications, we have concluded that Mr. Weinberger is qualified to serve as a director. **David J. Simon - Director** On January 21, 2025, the Board elected David J. Simon to fill the newly created vacancy on the Board, effective as of the same date, and to serve as a member of the Board until the next annual meeting of shareholders or until his successor shall have been elected and qualified. David Simon is an accomplished executive with extensive experience in revenue growth and strategic development across the technology and media sectors. Currently serving as the General Manager of Growth Initiatives at Moloco, David focuses on creating new applications for operational machine learning, specifically a Streaming ML solution. Previously, as Chief Revenue Officer at Fyber, David significantly increased company revenues from $100 million to $500 million and facilitated an acquisition by Digital Turbine. David has held various leadership roles, including Partner at Jounce Media, VP of Video Content and Syndication at Oath, and VP of Business Development at Vidible, culminating in an acquisition by AOL. Davids earlier roles include positions at Turn, Right Media, and Yahoo, spanning business development and account management. David holds a Bachelor of Science degree in Business Administration from California Polytechnic State University-San Luis Obispo. Mr. Simon has extensive knowledge of corporate management. As a result of this and other professional qualifications, we have concluded that Mr. Simon is qualified to serve as a director. **Additional Information about our Board and its Committees** All of our directors are considered by our board of directors to be independent as defined in Rule 5605(a)(2) of the rules of the Nasdaq Stock Market. | -52- | | | Table of Contents | | **Audit Committee** During the year ended December 31, 2024, our audit committee was comprised of Thomas Akin, Doug Schneider and Benjamin Weinberger. Our board of directors has appointed Mr. Akin to serve as chairman of the audit committee effective as of April 1, 2017, and has determined that Mr Akin is an audit committee financial expert, as defined under the applicable rules of the SEC. All members of our audit committee are independent, as independence is defined in Rule 5605(a)(2) of the rules of the Nasdaq Stock Market. **Compensation Committee** During the year ended December 31, 2024, our compensation committee was comprised of Benjamin Weinberger, Philip Guarascio and Thomas Akin. Mr. Weinberger currently serves as compensation committee chair. **Governance and Nominating Committee** During the year ended December 31, 2024, our governance and nominating committee was comprised of Philip Guarascio, Benjamin Weinberger and Thomas Akin. Mr. Guarascio currently serves as governance and nominating committee chair. **Code of Ethics** We have adopted a code of ethics for all our employees, including our principal executive officer, principal financial officer and principal accounting officer or controller, and/or persons performing similar functions. This code is available on the Investor RelationsGovernance Documents section of our website at www.mobivity.com. The information on our website is not, and shall not be deemed to be, a part hereof or incorporated into this or any of our other filings with the SEC. **Compensation Committee Interlocks and Insider Participation3** No member of our Compensation Committee has served as one of our officers or employees at any time. None of our executive officers serve as a member of the compensation committee of any other company that has an executive officer serving as a member of the board. None of our executive officers serves as a member of the board of directors of any other company that has an executive officer serving as a member of our Compensation Committee during the last year. | -53- | | | Table of Contents | | **Item 11. Executive Compensation** The following table summarizes the total compensation earned by our Chief Executive Officer (principal executive officer) and our other two most highly paid executive officers for the years ended December 31, 2024 and 2023. In reviewing the table, please note that: | Name and Principal Position | | Year | | | Salary | | | Bonus | | | Stock Awards (1) | | | Option Awards (1) | | | All Other Compensation | | | Total | | | | Dennis Becker, Chairman & CEO | | | 2024 | | | $ | 40,538 | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | 40,538 | | | | | | | 2023 | | | $ | 310,000 | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | 310,000 | | | | Bryce Daniels, President | | | 2024 | | | $ | 184,615 | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | 184,615 | | | | | | | 2023 | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | | Will Sanchez, Former CFO (2) | | | 2024 | | | $ | 28,000 | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | 28,000 | | | | | | | 2023 | | | $ | 124,046 | | | $ | | | | $ | | | | $ | 396,441 | | | $ | | | | $ | 520,487 | | | | Skye Fossey-Tomaske, Interim CFO (3) | | | 2024 | | | $ | 203,077 | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | 203,077 | | | | | | | 2023 | | | $ | 147,115 | | | $ | 37,500 | | | $ | | | | $ | 21,983 | | | $ | | | | $ | 206,598 | | | | Kim Carlson, COO | | | 2024 | | | $ | 275,000 | | | $ | 52,820 | | | $ | | | | $ | | | | $ | | | | $ | 327,820 | | | | | | | 2023 | | | $ | 257,019 | | | $ | 7,115 | | | $ | | | | $ | 605,383 | | | $ | | | | $ | 869,517 | | | | * | In accordance with the rules and regulations promulgated by the SEC, the table omits columns that are not applicable. | | | (1) | The value of the stock and stock option compensation was computed using the Black-Scholes Option Pricing Model and represents the aggregate grant date fair value computed in accordance with ASC Topic 718. For information on the method and assumptions used to calculate the compensation costs, see Note 9 to our audited consolidated financial statements contained herein. | | | (2) | Mr. Sanchez ceased being an executive officer of the Company on January 29, 2024. | | | (3) | Ms. Fossey-Tomaske became an executive offer of the Company effective, January 29, 2023 | | The following table presents the outstanding option awards held by each of our named executive officers as of December 31, 2024, including the value of the options awards. **Outstanding Equity Awards at December 31, 2024** | Name | | Number of Securities Underlying Unexercised Options (#) Exercisable | | | Equity Incentive Plan Awards; Number of Securities Underlying Unexercised Unearned Options (#) | | | Option Exercise Price | | | Option Expiration Date | | | Skye Fossey-Tomas, Interim CFO | | | 5,000 | | | | 520 | | | $ | 1.75 | | | 8/11/2031 | | | Skye Fossey-Tomas, Interim CFO | | | 50,000 | | | | 31,250 | | | $ | 0.65 | | | 8/25/2033 | | | Kim Carlson, COO | | | 1,000,000 | | | | 583,334 | | | $ | 0.98 | | | 9/22/2032 | | | Kim Carlson, COO | | | 1,000,000 | | | | 395,834 | | | $ | 0.85 | | | 12/7/2030 | | * In accordance with the rules and regulations promulgated by the Securities and Exchange Commission, the table omits columns that are not applicable. **Employment Agreements** We currently have no outstanding employment agreements or arrangements, whether written or unwritten **Non-Employee Director Compensation** | Name | | Fees Earned or Paid in Cash | | | Stock Awards | | | Option Awards | | | Non-Equity Incentive Plan Compensation | | | Nonqualified Deferred Compensation Earnings | | | All Other Compensation | | | Total | | | | Doug Schneider | | $ | 65,000 | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | 65,000 | | | | Thomas Akin | | $ | 65,000 | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | 65,000 | | | | Philip Guarascio | | | 65,000 | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | 65,000 | | | | Benjamin Weinberger | | $ | 65,000 | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | 65,000 | | | | David J Simon | | $ | 65,000 | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | 65,000 | | | The Company recorded an expense of $65,000 per director related to restricted stock units for members of our board of directors for the twelve months ended December 31, 2024. | -54- | | | Table of Contents | | **Item 12. Security Ownership of Certain Beneficial Owners and Management** **Securities Authorized for Issuance Under Equity Compensation Plans** The following table sets forth additional information as of December 31, 2024 with respect to the shares of common stock that may be issued upon the exercise of options and other rights under our existing equity compensation plans and arrangements in effect as of December 31, 2023. The information includes the number of shares covered by, and the weighted average exercise price of, outstanding options and the number of shares remaining available for future grant, excluding the shares to be issued upon exercise of outstanding options. | Plan Category | | Number of securities to be issued upon exercise of outstanding options (a) | | | Weighted-average exercise price of outstanding options | | | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a) | | | | Equity compensation plans not approved by security holders (1) | | | | | | $ | | | | | | | | | Equity compensation plans approved by security holders | | | 30,750,409 | | | | 0.92 | | | | | | | | Total | | | 30,750,409 | | | $ | 0.92 | | | | | | | | (1) | Comprised of our 2010 Incentive Stock Option Plan, the 2013 Incentive Stock Option Plan, the 2016 Stock Incentive Plan and the 2022 Equity Incentive Plan. See Note 9 in Notes to Consolidated Financial Statements, Stock-based Plans and Stock-based Compensation in this Form 10-K for a description of these plans. | | **Security Ownership of Certain Beneficial Owners and Management** The following table sets forth as of April 29, 2024, certain information regarding the beneficial ownership of our common stock. The table sets forth the beneficial ownership of (i) each person who, to our knowledge, beneficially owns more than 5% of our outstanding shares of Common stock; (ii) each of our directors and executive officers; and (iii) all of our executive officers and directors as a group. The number of shares owned includes all shares beneficially owned by such persons, as calculated in accordance with Rule 13d-3 promulgated under the Exchange Act. The number of shares beneficially owned by a person includes shares of common stock underlying options or warrants held by that person that are currently exercisable or exercisable within 60 days of April 29, 2023. The shares issuable pursuant to the exercise of those options or warrants are deemed outstanding for computing the percentage ownership of the person holding those options and warrants but are not deemed outstanding for the purposes of computing the percentage ownership of any other person. Unless otherwise indicated, the address of each shareholder is c/o the Company, 3133 W. Frye Road, Chandler, AZ 85226. | Name of Beneficial Owner | | Amount And Nature of Beneficial Ownership | | | Percentage of Class (1) | | | | Kim Carlson (2) | | | 1,104,166 | | | | 1.5 | % | | | Skye Fossey-Tomaske (3) | | | 25,521 | | | | 0.0 | | | | Doug Schneider (4) | | | 1,023,020 | | | | 1.4 | % | | | Thomas Akin (7) | | | 44,658,697 | | | | 61.7 | % | | | Philip Guarascio (6) | | | 882,575 | | | | 1.2 | % | | | Ben Weinberger | | | 327,630 | | | | 0.5 | | | | David Simon | | | | | | | | | | | Executive Officers and Directors as a Group (seven persons) | | | 48,021,609 | | | | 66.0 | % | | | | | | | | | | | | | | 5% or Greater Beneficial Owners | | | | | | | | | | | Bruce Terker (8) 950 West Valley Road, Suite 2900, Wayne, PA 19087 | | | 10,061,249 | | | | 14.0 | % | | | Cornelis F. Wit (9) 2700 N. Military Trail, Suite 210, Boca Raton, FL 33431 | | | 3,828,669 | | | | 5.0 | % | | | (1) | Applicable percentage of ownership is based upon 67,949,709 shares of common stock outstanding as of March 31, 2025. | | | (2) | Includes 32,500 shares of common stock issuable upon settlement of restricted stock units. Includes 192,003 shares of common stock issuable pursuant to presently exercisable stock options, including options that will vest within 60 days of April 29, 2025. | | | (3) | Includes no shares of common stock issuable pursuant to presently exercisable stock options, including options that will vest within 60 days of March 31, 2025. | | | (4) | Includes 658,247 shares of common stock issuable upon settlement of restricted stock units, including restricted stock units that will vest within 60 days of March 31, 2025. Includes 74,447 shares of common stock owned of record by The Schneider Family Trust. | | | (6) | Includes 177,619 shares of common stock issuable upon settlement of restricted stock units, including restricted stock units that will vest within 60 days of March 31, 2025. | | | (7) | Includes 9,695,469 shares of common stock owned of record by Talkot Fund, L.P., 541,703 shares of common stock issuable upon settlement of restricted stock units, including restricted stock units that will vest within 60 days of March 31, 2025. and 3,085,398 of stock warrants to purchase Common Stock | | | (8) | Based on a Schedule 13G/A filed with the SEC on January 1, 2024 by Bruce E. Terker, that he has shared voting power with respect to 8,732,332 shares and shared dispositive power with respect to 8,732,332 shares of our common stock. | | | (9) | Based on a Schedule 13G/A filed with the SEC on February 16, 2022 by Cornelis F. Wit, that he has sole voting power with respect to 3,828,669 shares and sole dispositive power with respect to 3,828,669 shares of our common stock. | | | -55- | | | Table of Contents | | **Item 13. Certain Relationships and Related Transactions, and Director Independence** **Certain Relationships and Related Transactions** **Related Party Notes** *Secured Promissory Notes* On June 30, 2021, we entered into a Credit Facility Agreement (the Credit Agreement) with Thomas Akin, one of the Companys directors (the Lender). The Credit Agreement was amended on November 11, 2022. The Company can borrow up to $6,000,000 under the Credit Agreement (the Credit Facility). As of December 31, 2021, the Company had drawn a total of $3,478,125 including cash drawn in the amount of $3,206,250 and $271,875 of principal and accrued interest under the 2020 UP Note that was rolled into the Credit Facility and had paid a total of $200,000 toward the principal balance of the loan, The Credit Facility is secured by all of our tangible and intangible assets including intellectual property. This loan bears interest on the unpaid balance at the rate of fifteen percent (15%) per annum. The Company may prepay this loan without notice, penalty, or charge. In consideration of the Lenders agreement to provide the Credit Facility, the Company issued warrants to purchase shares of its common stock at an exercise price of $1.67 per share in connection with the issuance of funds under the Credit Agreement. The warrants are exercisable for a period commencing upon issuance of the corresponding notes and ending 36 months after issuance of the financing. In addition, the Company has agreed to issue to the Lender additional warrants entitling the Lender to purchase a number of shares of the Companys common stock equal to twenty percent (20%) of the amount of the advances made divided by the volume-weighted average price over the 30 trading days preceding the advance (the VWAP). Each warrant will be exercisable over a three-year period at an exercise price equal to the VWAP. Under the original terms of the Credit Agreement, the Company was to begin repaying the principal amount, plus accrued interest, in 24 equal monthly installments commencing on June 30, 2022, and ending on June 30, 2024. On November 11, 2022, an amendment to the Credit Agreement was signed. The amendment updated the payment terms to the following: Without limiting the foregoing Section 2.3(a), Borrower shall repay the principal amount of all Advances, plus accrued interest thereon, in 24 equal monthly installments commencing on January 31, 2023 and continuing thereafter on the last day of each month (or, if such last day is not a Business Day, on the Business Day immediately preceding such last day. Interest on the unpaid Advances will accrue from the date of each Advance at a rate equal to fifteen percent (15%) per annum. Interest will be calculated on the basis of 365 days in a year. The amendment raised the maximum amount of the Credit Facility to $6,000,000. In addition, the interest which is accrued monthly between July 1, 2022, and December 31, 2022, will be settled into equity. Common Stock will be issued at the end of each month at a rate of $1.08 per share of common stock in the amount of the interest accrued for each month. On January 31, 2023, the Company then entered into Amendment No. 1 (the Amendment), which amends our existing Credit Facility Agreement[1], dated as of November 11, 2022, between the Company and Thomas B. Akin, and any convertible notes issued thereunder. The Amendment amends the existing Credit Facility Agreement to extend the maturity of the agreement and related convertible notes thereunder until December 1, 2025. Principal payments have been deferred to a period beginning on January 1, 2024 and ending December 1, 2025, and further provides that any accrued interest on unpaid advances under the agreement is to be paid quarterly in shares of our common stock, at a price per share equal to the volume-weighted average price of our common stock quoted on the Over-The Counter Venture Market operated by OTC Markets Group Inc. (OTCQB) over the ninety (90) trading days immediately preceding such date. The Amendment provides for corresponding amendments to the form of convertible notes to be issued under the Credit Agreement in the future and any outstanding convertible notes issued under the existing Credit Facility Agreement. The Amendment was considered a debt modification as the cash flows under the amended terms do not differ by at least 10% from the cash flows under the original agreement. On January 31, 2024 amended terms were agreed upon and the Company then entered into Amendment No. 2 (the Amendment) signed on May 3,2024, which amends the terms of the Credit Facility Agreement, between the Company and Thomas B. Akin, and any convertible notes issued thereunder. The Amendment amends the existing Credit Facility Agreement to extend the maturity of the agreement and related convertible notes thereunder until June 30, 2026. Principal payments have been deferred to a period beginning on July 31, 2024 and ending June 30, 2026. On August 13, 2024 amended terms were agreed upon and the Company then entered into Amendment No. 3 (the Amendment) signed on August 13, 2024, which amends the terms of the Credit Facility Agreement, between the Company and Thomas B. Akin, and any convertible notes issued thereunder. The Amendment amends the existing Credit Facility Agreement to extend the maturity of the agreement and related convertible notes thereunder until October 31, 2026. Principal payments have been deferred to a period beginning on October 31, 2024 and ending September 30, 2026. On November 21, 2024 amended terms were agreed upon and the Company then entered into Amendment No. 4 (the Amendment) signed on November 21, 2024, which amends the terms of the Credit Facility Agreement, between the Company and Thomas B. Akin, and any convertible notes issued thereunder. The Amendment amends the existing Credit Facility Agreement to extend the maturity of the agreement and related convertible notes thereunder until June 30, 2026. Principal payments have been deferred to a period beginning on April 30, 2025 and ending March 31, 2027. | -56- | | | Table of Contents | | During the twelve months ended December 31, 2024, a total of $1,258,093of accruedinterest from equity payablewas converted into 2,395,511 shares of common stock. As of December 31, 2024, the Company had a principal total of $5,873,125, a debt discount balance of $180,977 for a net principal balance of $5,692,148 and accrued interest of $895,652 that was recorded to Equity Payable. Unsecured Promissory Note On July 1, 2021, we entered into UP Notes in the aggregate principal amount of $271,875 with Talkot Fund LP and investor in the Company. Each UP Note bears interest on the unpaid balance at the rate of fifteen percent (15%) per annum and the principal and accrued interest are due and payable no later than December 31, 2023. We may prepay any of the UP Notes without notice, subject to a two percent (2%) pre-payment penalty. The UP Note offer was conducted by our management and there were no commissions paid by us in connection with the solicitation. The Company issued to Talkot Fund LP warrants to purchase an aggregate of 33,017 shares of its common stock at the stated exercise price per share in connection with the issuance of funds under this Credit Agreement. On January 31, 2023, the Lender agreed to postpone the 24-month repayment period to a later period commencing on January 31, 2024, and further agreed that interest accrued on the loan between July 1, 2022 and December 1, 2025 is to be settled in shares of the Companys common stock quarterly. On January 31 2024, the Lender agreed to postpone the 24-month repayment period to a later period commencing on July 31, 2024. As of December 31, 2024, the Company had a principal balance of $271,875 and accrued interest of $41,461 that was recorded to Equity Payable. A total of $96,988 of accrued interest from equity payable was converted into 120,883 shares of common stock. *Related Party Convertible Notes* During fourth quarter 2023 the Company issued 8 Convertible Notes payable to related parties for $2,000,000. As an inducement we issued 3,333,332 warrants to purchase shares of our common stock at $.60 per share. Simple interest on the unpaid principal balance of this Note will accrue at the rate of 8.0% per annum. Accrual of interest will commence on the date of this Note, will continue until this Note is fully paid, and will be payable in a single installment at maturity three years from the date the Convertible Note was issued. The Convertible Note and all accrued interest thereon are convertible into shares of our common stock, from time to time, at the option of the holder thereof, at a conversion price per share equal to the larger of either $0.50 or of the volume-weighted average price of our common stock quoted on the OTCQB Venture Market operated by OTC Markets Group Inc. over the thirty (30) trading days immediately preceding such date (the Conversion Price). During first quarter 2024 the Company issued 8 Convertible Notes payable to related parties for $1,950,000. As an inducement we issued 3,291,664 warrants to purchase shares of our common stock at $.60 per share. Simple interest on the unpaid principal balance of this Note will accrue at the rate of 8.0% per annum. Accrual of interest will commence on the date of this Note, will continue until this Note is fully paid, and will be payable in a single installment at maturity three years from the date the Convertible Note was issued. During the second quarter of 2024 the Company issued 8 Convertible Notes payable to related parties for $2,100,000. As an inducement we issued 3,499,997 warrants to purchase shares of our common stock at $.60 per share. Simple interest on the unpaid principal balance of this Note will accrue at the rate of 8.0% per annum. Accrual of interest will commence on the date of this Note, will continue until this Note is fully paid, and will be payable in a single installment at maturity three years from the date the Convertible Note was issued. | -57- | | | Table of Contents | | During the third quarter of 2024 the Company issued 4 Convertible Notes payable to related parties for $1,275,000. As an inducement we issued 2,124,999 warrants to purchase shares of our common stock at $.60 per share. Simple interest on the unpaid principal balance of this Note will accrue at the rate of 8.0% per annum. Accrual of interest will commence on the date of this Note, will continue until this Note is fully paid, and will be payable in a single installment at maturity three years from the date the Convertible Note was issued. During the fourth quarter of 2024 the Company issued 5 Convertible Notes payable to related parties for $1,525,000. As an inducement we issued 2,541,664 warrants to purchase shares of our common stock at $.60 per share. Simple interest on the unpaid principal balance of this Note will accrue at the rate of 8.0% per annum. Accrual of interest will commence on the date of this Note, will continue until this Note is fully paid, and will be payable in a single installment at maturity three years from the date the Convertible Note was issued. During the twelve months ended December 31, 2024 the company recorded $454,912 of interest expense in connection with the related party convertible notes and $470,267 in amortized debt discount in connections with related party convertible notes. As of December 31, 2024 the Convertible Notes issued to related parties had a principal balance of $8,850,000 with a debt discount of $1,331,375 for a net principal balance of $7,518,625 and accrued interest of $479,156. **Item 14. Principal Accounting Fees and Services** The following table represents aggregate fees billed to us for the years ended December 31, 2023 and 2022 by M&K CPAs, our principal auditors for such periods. | | | 2024 | | | 2023 | | | | Audit Fees | | $ | 94,600 | | | $ | 92,000 | | | | Audit-Related Fees | | | 41,700 | | | | 54,500 | | | | Tax Fees | | | 4,000 | | | | 4,000 | | | | All Other Fees | | | | | | | | | | | Total Fees | | $ | 140,300 | | | $ | 150,500 | | | **PART IV** **Item 15. Exhibits and Financial Statement Schedules.** (a)(1) Financial Statements The following Consolidated Financial Statements of Mobivity Holdings Corp. appear beginning on page 22 herein: | | | Report of Independent Registered Public Accounting Firm | | | | | Consolidated Balance Sheets as of December 31, 2024 and 2023 | | | | | Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2024 and 2023 | | | | | Consolidated Statements of Changes in Stockholders Equity (Deficit) for the years ended December 31, 2024 and 2023 | | | | | Consolidated Statements of Cash Flows for the years ended December 31, 2024 and 2023 | | | | | Notes to Consolidated Financial Statements | | (a)(2) Financial Statement Schedules The schedules required to be filed by this item have been omitted because of the absence of conditions under which they are required, or because the required information is included in the financial statements or the notes thereto. | -58- | | | Table of Contents | | (a)(3) Exhibits **EXHIBIT INDEX** | Exhibit Number | | Description | | | 2.1 | | Asset Purchase Agreement, dated September 25, 2024, by and between Mobivity Holdings Corp. and SMS Factory, Inc. (4) | | | 3.1 | | Restated Articles of Incorporation filed with the Nevada Secretary of State on August 12, 2022 (1) | | | 3.2 | | Bylaws (2) | | | 3.3 | | Amendment No. 1 to Bylaws (3) | | | 3.4 | | Amendment No. 2 to the Bylaws, effective as of May 20, 2013 (8) | | | 4.1 | | Description of Capital Stock (9) | | | 10.1 | | 2013 Stock Incentive Plan of the Company adopted July 18, 2013 (6) ** | | | 10.2 | | Loan and Security Agreement dated November 14, 2018 between the Company and Wintrust Bank (7) | | | 10.3 | | Mobivity Holdings Corp. 2016 Stock Incentive Plan(10) ** | | | 10.4 | | Mobivity Holdings Corp. 2022 Equity Incentive Plan (10) ** | | | 10.5 | | Form of Restricted Stock Unit Award Agreement under 2022 Equity Incentive Plan (Director Form) (18) | | | 10.6 | | Form of Restricted Stock Unit Award Agreement under 2022 Equity Incentive Plan (Employee Form) (18) ** | | | 10.7 | | Form of Non-Qualified Stock Option Agreement under 2022 Equity Incentive Plan (Director Form) (18) | | | 10.8 | | Form of Non-Qualified Stock Option Agreement under 2022 Equity Incentive Plan (Employee Form) (18) ** | | | 10.9 | | Amended and Restated Credit Facility Agreement, dated as of November 11, 2022, between Mobivity Holdings Corp. and Thomas B. Akin (11) | | | 10.10 | | Convertible Note, dated as of November 15, 2022 (11) | | | 10.11 | | Amendment No. 1 to Amended and Restated Credit Facility Agreement and Convertible Notes, dated as of January 31, 2023, between Mobivity Holdings Corp. and Thomas B. Akin (12) | | | 10.12 | | Amendment No. 2 to Amended and Restated Credit Facility Agreement and Convertible Notes, dated as of May 3, 2024, between Mobivity Holdings Corp. and Thomas B. Akin (5) | | | 10.13 | | Amendment No. 3 to Amended and Restated Credit Facility Agreement and Convertible Notes, dated as of August 13, 2024, between Mobivity Holdings Corp. and Thomas B. Akin (17) | | | 10.14 | | Amendment No. 4 to Amended and Restated Credit Facility Agreement and Convertible Notes, dated as of November 21, 2024, between Mobivity Holdings Corp. and Thomas B. Akin (4) | | | 10.15 | | Form of Exercise Notice for Offer to Amend and Exercise completed March 16, 2023 (13) | | | 10.16 | | Form of New Warrant issued March 16, 2023 (13) | | | 10.17 | | Employment Agreement, dated June 12, 2024, with Bryce Daniels (14) ** | | | 10.18 | | Form of Convertible Promissory Note Purchase Agreement (15) | | | 10.19 | | Form of Convertible Promissory Note (16) | | | 14.1 | | Code of Ethics* | | | 19.1 | | Insider Trading Policy (incorporated herein by reference to Exhibit 14.1) | | | 21.1 | | List of Subsidiaries (7) | | | 31.1 | | Certification of Interim Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002* | | | 31.2 | | Certification of Interim Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002* | | | 32.1 | | Certification of Interim Chief Executive Officer, and Interim Chief Financial Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002* | | | 101.INS | | The following financial statements from the Companys Annual Report on Form 10-K for the year ended December 31, 2024, formatted in Inline XBRL: (i) Balance Sheets, (ii) Statements of Operations and Comprehensive Loss, (iii) Statements of Stockholders Equity, (iv) Statements of Cash Flows, and (v) Notes to the Financial Statements* | | | 101.SCH | | Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) | | | 101.CAL | | Inline XBRL Taxonomy Extension Calculation Linkbase Document | | | 101.DEF | | Inline XBRL Taxonomy Definition Linkbase Document | | | 101.LAB | | Inline XBRL Taxonomy Extension Label Linkbase Document | | | 101.PRE | | Inline XBRL Taxonomy Extension Presentation Linkbase Document | | | 104 | | Cover page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101.1) | | | * | Filed herewith | | | ** | Indicates management compensatory plan, contract or arrangement | | | (1) | Incorporated by reference to the Companys Quarterly Report on Form 10-Q filed August 15, 2022 | | | -59- | | | Table of Contents | | | (2) | Incorporated by reference to the Registration Statement on Form S-1 filed with the SEC on October 20, 2008, File No. 333-154455 | | | (3) | Incorporated by reference to the Companys Current Report on Form 8-K filed December 2, 2011 | | | (4) | Incorporated by reference to the Companys Current Report on Form 8-K filed October 1, 2024 | | | (5) | Incorporated by reference to the Companys Current Report on Form 8-K filed May 9, 2024 | | | (6) | Incorporated by reference to the Companys Quarterly Report on Form 10-Q filed August 14, 2013 | | | (7) | Incorporated by reference to the Companys Annual Report on Form 10-K filed April 15, 2019 | | | (8) | Incorporated by reference to the Companys Current Report on Form 8-K filed May 24, 2013 | | | (9) | Incorporated by reference to the Companys Annual Report on Form 10-K filed March 30, 2022 | | | (10) | Incorporated by reference to the Companys Registration Statement on Form S-8 filed September 22, 2022 | | | (11) | Incorporated by reference to the Companys Current Report on Form 8-K filed November 17, 2022 | | | (12) | Incorporated by reference to the Companys Current Report on Form 8-K filed February 6, 2023 | | | (13) | Incorporated by reference to the Companys Current Report on Form 8-K filed March 16, 2023 | | | (14) | Incorporated by reference to the Companys Current Report on Form 8-K filed June 18, 2024 | | | (15) | Incorporated by reference to the Companys Current Report on Form 8-K filed March 18, 2025 | | | (16) | Incorporated by reference to the Companys Current Report on Form 8-K filed March 18, 2025 | | | (17) | Incorporated by reference to the Companys Quarterly Report on Form 10-Q filed August 19, 20204 | | | (18) | Incorporated by reference to the Companys Annual Report on Form 10-K filed April 16, 2024 | | **Item 16. Form 10-K Summary** None. | -60- | | | Table of Contents | | **SIGNATURES** Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. | DATE: April 7, 2025 | MOBIVITY HOLDINGS CORP. | | | | /s/ Skye Fossey-Tomaske | | | | Skye Fossey-Tomaske | | | | Interim Chief Financial Officer | | Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. | Signature | | Title | | Date | | | | | | | | | | /s/ Thomas Akin | | Chairman of the Board | | April 7, 2025 | | | | | | | | | | /s/ Bryce Daniels | | President (Principal Executive Officer | | April 7, 2025 | | | | | | | | | | /s/ Skye Fossey-Tomaske | | Interim Chief Financial Officer (Principal Financial Officer and Principle Accounting Officer) | | April 7, 2025 | | | | | | | | | | /s/ Philip Guarascio | | Director | | April 7, 2025 | | | | | | | | | | /s/ Ben Weinberger | | Director | | April 7, 2025 | | | | | | | | | | /s/ Doug Schneider | | Director | | April 7, 2025 | | | | | | | | | | /s/ David J. Simon | | Director | | April 7, 2025 | | | -61- | |