Delaware
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95-4439334
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(State or other jurisdiction of
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(I.R.S. Employer
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incorporation or organization)
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Identification No.)
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4505 Emperor Blvd., Ste. 320
Durham, North Carolina
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27703
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer
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o
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Accelerated filer
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o |
Non-accelerated filer
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o
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Smaller reporting company
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þ |
(Do not check if a smaller reporting company)
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Page No.
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13 | |||||
19 | |||||
19 | |||||
20 | |||||
Signatures | 21 |
June 30,
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December 31,
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|||||||
2013
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2012
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|||||||
(unaudited)
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||||||||
ASSETS
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||||||||
Current assets:
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||||||||
Cash and cash equivalents
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$ | 132,487 | $ | 58,458 | ||||
Restricted cash
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250,090 | 131,103 | ||||||
Accounts receivable, net
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67,903 | 36,050 | ||||||
Prepaid expenses
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76,006 | 96,670 | ||||||
Total current assets
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526,486 | 322,281 | ||||||
Property and equipment, net
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123,056 | 149,107 | ||||||
Capitalized software, net
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725,680 | 618,557 | ||||||
Intangible assets, net
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135,244 | 130,057 | ||||||
Other assets
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15,370 | 19,440 | ||||||
Assets of discontinued operations
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- | 15,834 | ||||||
TOTAL ASSETS
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$ | 1,525,836 | $ | 1,255,276 | ||||
LIABILITIES AND STOCKHOLDERS DEFICIT
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||||||||
Current liabilities:
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||||||||
Accounts payable
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$ | 92,188 | $ | 217,174 | ||||
Notes payable
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5,018,476 | 5,041,741 | ||||||
Deferred revenue
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111,943 | 82,308 | ||||||
Settlement related financial instrument liability
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2,065,000 | 2,065,000 | ||||||
Accrued interest
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275,035 | 221,404 | ||||||
Other accrued liabilities
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330,925 | 148,936 | ||||||
Liabilities of discontinued operations
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6,600 | 5,638 | ||||||
Total current liabilities
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7,900,167 | 7,782,201 | ||||||
Long-term liabilities:
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||||||||
Notes payable-Related Party
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14,557,051 | 14,557,051 | ||||||
Notes payable-Other
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8,666,878 | 6,075,267 | ||||||
Deferred revenue
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- | 1,028 | ||||||
Total long-term liabilities
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23,223,929 | 20,633,346 | ||||||
Total liabilities
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31,124,096 | 28,415,547 | ||||||
Commitments and contingencies
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||||||||
Stockholders' deficit:
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||||||||
Preferred stock, $0.001 par value, 5,000,000 shares authorized, no shares issued and outstanding at
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- | - | ||||||
June 30, 2013 and December 31, 2012
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||||||||
Common stock, $0.001 par value, 45,000,000 shares authorized, 18,352,542 shares issued and
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18,353 | 18,353 | ||||||
outstanding at June 30, 2013 and December 31, 2012
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||||||||
Additional paid-in capital
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89,399,994 | 67,157,841 | ||||||
Accumulated deficit
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(119,016,607 | ) | (94,336,465 | ) | ||||
Total stockholders' deficit
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(29,598,260 | ) | (27,160,271 | ) | ||||
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT
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$ | 1,525,836 | $ | 1,255,276 |
Three Months Ended
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Six Months Ended
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|||||||||||||||
June 30,
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June 30,
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June 30,
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June 30,
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|||||||||||||
2013
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2012
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2013
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2012
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|||||||||||||
REVENUE
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$ | 60,753 | $ | 31,847 | $ | 125,208 | $ | 64,923 | ||||||||
COST OF REVENUE
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127,347 | 36,233 | 275,227 | 49,355 | ||||||||||||
GROSS PROFIT (LOSS)
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(66,594 | ) | (4,386 | ) | (150,019 | ) | 15,568 | |||||||||
OPERATING EXPENSES:
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||||||||||||||||
Sales and marketing
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265,141 | 193,852 | 552,453 | 389,607 | ||||||||||||
Research and development
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222,386 | 17,222 | 390,216 | 33,260 | ||||||||||||
General and administrative
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346,528 | 300,486 | 764,509 | 541,350 | ||||||||||||
Impairment of long lived assets
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38,936 | - | 38,936 | - | ||||||||||||
(Gain) on legal settlements
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(5,235 | ) | - | (5,235 | ) | (100 | ) | |||||||||
Total operating expenses
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867,756 | 511,560 | 1,740,879 | 964,117 | ||||||||||||
LOSS FROM OPERATIONS
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(934,350 | ) | (515,946 | ) | (1,890,898 | ) | (948,549 | ) | ||||||||
OTHER EXPENSE:
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||||||||||||||||
Interest expense, net
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(509,360 | ) | (400,260 | ) | (981,698 | ) | (774,311 | ) | ||||||||
Loss on debt extinguishment
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(21,793,055 | ) | - | (21,793,055 | ) | |||||||||||
Change in market value of settlement related financial instrument
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- | (162,250 | ) | - | (442,500 | ) | ||||||||||
Total other expense
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(22,302,415 | ) | (562,510 | ) | (22,774,753 | ) | (1,216,811 | ) | ||||||||
LOSS FROM CONTINUING OPERATIONS
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(23,236,765 | ) | (1,078,456 | ) | (24,665,651 | ) | (2,165,360 | ) | ||||||||
DISCONTINUED OPERATIONS
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||||||||||||||||
Income (loss) from discontinued operations
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(919 | ) | 33,637 | 163 | 64,520 | |||||||||||
Impairment of assets of discontinued operations
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(14,654 | ) | - | (14,654 | ) | - | ||||||||||
NET LOSS
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$ | (23,252,338 | ) | $ | (1,044,819 | ) | $ | (24,680,142 | ) | $ | (2,100,840 | ) | ||||
NET LOSS PER COMMON SHARE:
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||||||||||||||||
Basic and fully diluted – continuing operations
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$ | (1.27 | ) | $ | (0.06 | ) | $ | (1.34 | ) | $ | (0.11 | ) | ||||
Basic and fully diluted – discontinued operations
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$ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | ||||
WEIGHTED-AVERAGE NUMBER OF SHARES USED IN COMPUTING NET LOSS PER COMMON SHARE:
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||||||||||||||||
Basic and fully diluted
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18,352,542 | 18,352,542 | 18,352,542 | 18,352,542 |
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Six Months Ended
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|||||||
June 30,
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June 30,
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|||||||
2013
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2012
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|||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
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||||||||
Net loss
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$ | (24,680,142 | ) | $ | (2,100,840 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities:
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||||||||
Depreciation and amortization
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72,394 | 39,640 | ||||||
Non cash amortization of debt discount
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1,030 | |||||||
Equity-based compensation
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24,098 | 17,303 | ||||||
Impairment of long lived assets
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53,590 | - | ||||||
Loss on debt extinguishment
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21,793,055 | - | ||||||
Changes in assets and liabilities:
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||||||||
Accounts receivable
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(23,061 | ) | (21,147 | ) | ||||
Contracts receivable
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(8,792 | ) | (10,250 | ) | ||||
Prepaid expenses
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20,662 | (78,584 | ) | |||||
Other assets
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4,070 | (4,334 | ) | |||||
Accounts payable
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(124,986 | ) | 172,388 | |||||
Deferred revenue
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29,570 | 51,958 | ||||||
Accrued and other expenses
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235,620 | 370,133 | ||||||
Net cash used in operating activities
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(2,602,892 | ) | (1,563,733 | ) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES:
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||||||||
Purchases of property and equipment
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(19,222 | ) | (18,613 | ) | ||||
Purchase of software license
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- | (75,000 | ) | |||||
Capitalized patent development costs
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(12,940 | ) | (14,072 | ) | ||||
Capitalized software
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(164,244 | ) | (513,198 | ) | ||||
Net cash used in investing activities
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(196,406 | ) | (620,883 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES:
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||||||||
Restricted cash used to pay IDB interest expense
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83,899 | 101,692 | ||||||
Deposit of cash to IDB restricted account
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(202,886 | ) | (281,247 | ) | ||||
Proceeds from debt borrowings
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3,025,000 | 2,325,000 | ||||||
Repayments of debt borrowings
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(32,686 | ) | (29,455 | ) | ||||
Net cash provided by financing activities
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2,873,327 | 2,115,990 | ||||||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
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74,029 | (68,626 | ) | |||||
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
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58,458 | 165,139 | ||||||
CASH AND CASH EQUIVALENTS, END OF PERIOD
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$ | 132,487 | $ | 96,513 | ||||
Supplemental disclosures of cash flow information:
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||||||||
Cash paid during the period for:
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||||||||
Interest
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$ | 927,058 | $ | 748,778 |
Common Stock
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Additional
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|||||||||||||||||||
Shares
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$0.001
Par
Value
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Paid-In
Capital
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Accumulated
Deficit
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Totals
|
||||||||||||||||
BALANCES, DECEMBER 31, 2012
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18,352,542 | $ | 18,353 | $ | 67,157,841 | $ | (94,336,465 | ) | $ | (27,160,271 | ) | |||||||||
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||||||||||||||||||||
Equity-based compensation
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24,098 | 24,098 | ||||||||||||||||||
Beneficial conversion feature recorded as a result of June 27, 2013 debt modification
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22,218,055 | 22,218,055 | ||||||||||||||||||
Net loss
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(24,680,142 | ) | (24,680,142 | ) | ||||||||||||||||
BALANCES, JUNE 30, 2013
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18,352,542 | $ | 18,353 | $ | 89,399,994 | $ | (119,016,607 | ) | $ | (29,598,260 | ) |
● |
Licensing of our SaaS ("Software as a Service") Mobile App Development Platform to our customers who design and build their own apps;
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● |
Custom mobile application design and development services provided by the Company;
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● |
Mobile application marketing services;
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● |
Mobile strategy implementation consulting; and
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● |
Cloud-based software hosting and management services.
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June 30,
2013
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December 31,
2012
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|||||||
Capitalized software
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$ | 829,307 | $ | 672,359 | ||||
Less accumulated amortization
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(103,627 | ) | (53,802 | ) | ||||
Capitalized software, net
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$ | 725,680 | $ | 618,557 |
June 30,
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December 31,
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||||||||||||||
Note Description
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2013
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2012
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Maturity
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Rate
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|||||||||||
IDB Bank
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$ | 5,000,000 | $ | 5,000,000 |
May-14
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4.0 | % | ||||||||
Insurance premium note
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- | 23,987 |
Jun-13
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6.9 | % | ||||||||||
Capital lease obligations
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141,375 | 150,072 |
Aug-19
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8.0 | % | ||||||||||
Convertible notes - related parties
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14,557,051 | 14,557,051 |
Nov-16
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8.0 | % | ||||||||||
Convertible notes, net of discount
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8,543,979 | 5,942,949 |
Nov-16
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8.0 | % | ||||||||||
Total debt
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28,242,405 | 25,674,059 | |||||||||||||
Less: current portion of long term debt
|
|||||||||||||||
Capital lease obligations
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18,476 | 17,754 | |||||||||||||
IDB Bank
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5,000,000 | 5,000,000 | |||||||||||||
Insurance premium note
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- | 23,987 | |||||||||||||
Total current portion of long term debt
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5,018,476 | 5,041,741 | |||||||||||||
Debt - long term
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$ | 23,223,929 | $ | 20,632,318 |
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●
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a maturity date of November 16, 2016;
|
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●
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an interest rate of 8% per year;
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●
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optional conversion at a Noteholders' request;
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●
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the borrowing commitment was increased by $10 million to $33.3 million;
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●
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a conversion price that is the greater of (i) 80% of the lowest closing price of the Common Stock in the twelve-month period immediately preceding the date of conversion or (ii) $0.50; and
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●
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if at the time any particular requested conversion the Company does not have the number of authorized shares of Common Stock sufficient to allow for such particular conversion, the Noteholders may request that the Company call a special meeting of the stockholders specifically for the purpose of increasing the number of the authorized shares of Common Stock to cover the remaining portion of the Notes outstanding.
|
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●
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volatility of stock price was determined to be 47% and was based on the volatility of the Company's stock price as quoted on the Over-the-Counter Bulletin Board (the "OTCBB") for the period of 3.4 years, which approximates the period remaining until maturity of the convertible instrument;
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●
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the risk free rate of 1.41%;
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●
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the credit spread over the risk free rate was determined to be approximately 20%, which was derived from a combination of the credit spread of CCC rated bonds with added premium for lack of marketability of the convertible instrument;
|
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●
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the nodes of the binomial model were extended for 3 years, which approximates time period until maturity of the convertible instrument; and
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●
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the conversion ratio varied from approximately 1.39 to .56 shares per dollar, depending on the node of the conversion tree. The conversion ratio varied due to projected change in value of the stock driven by historical volatility of 47%.
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Number of Shares
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Weighted Average Exercise Price
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Weighted Average Remaining Contractual Term
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Aggregate Intrinsic value
|
|||||||||||||
Outstanding, December 31, 2012
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450,900 | $ | 2.02 | |||||||||||||
Cancelled
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(19,900 | ) | 1.08 | |||||||||||||
Issued
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18,000 | 1.40 | ||||||||||||||
Outstanding, June 30, 2013
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449,000 | $ | 2.03 | 6.9 | 46,700 | |||||||||||
Vested and exercisable, June 30, 2013
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280,500 | $ | 2.42 | 5.8 | 36,800 |
|
●
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Release of MobileSmith™ 3.0 platform, which includes improvements to the user interface and streamlined workflow;
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●
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Completion of iPad AppCanvas™.3. With this release our platform can produce native iPad apps with the same ease and agility, as the iPhone and Android phone apps. Tablets are currently driving mobile app usage and MobileSmith™ became one of the first SaaS app platforms to accommodate this trend; and
|
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●
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Introduction of Enterprise App Versioning (EAV), which allows for a more structured ways of app version development and release to internal and public app stores. EAV also allows managing of multiple live app versions without forcing users to download a new version of an app.
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|
●
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the cost of developers servicing the platform and its components was approximately $11,000 compared to approximately $2,000 during the same period of last year;
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●
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the cost of professional services that include consulting and training amounted to approximately $52,000, compared to zero during the same period of last year;
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●
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the amortization of capitalized software included in cost of revenue was approximately $26,000 compared to $18,000 for the same period of last year; and
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●
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outsourced hosting fees associated with the MobileSmith™ platform were approximately $16,000 compared to $10,000 during the same period of last year.
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●
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addition of two more employees to our sales and marketing force focused on the sale of our MobileSmith™ platform services, which resulted in an increase in payroll costs of approximately $32,000;
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●
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an increased presence at tradeshows, which resulted in an increase in related expenses of approximately $7,000;
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●
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an increase in costs associated with advertising and promotion of our platform of approximately $14,000; and
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●
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increase in stock based compensation of approximately $4,000.
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●
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increase in the cost of legal services associated with extension of the IDB Credit Facility by $22,000 in comparison to the similar extension last year;
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●
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increase of $26,000 in executive compensation; and
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●
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the office rent was approximately $47,000 compared to $40,000 during the same period of last year as the rent increased on October 1, 2012 pursuant to the lease.
|
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●
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the cost of developers servicing the platform and its components was approximately $54,000 compared to approximately $7,000 during the same period of last year;
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●
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the cost of professional services that include consulting and training amounted to approximately $107,000, compared to zero during the same period of last year;
|
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●
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the amortization of capitalized software included in cost of revenue was approximately $50,000 compared to $22,000 for the same period of last year; and
|
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●
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outsourced hosting fees associated with the MobileSmith™ platform were approximately $32,000 compared to $11,000 during the same period of last year.
|
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●
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addition of two more employees to our sales and marketing force focused on the sale and promotion of our MobileSmith™ platform services, which resulted in an increase in payroll costs of approximately $79,000;
|
|
●
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an increased presence at tradeshows, which resulted in an increase in related expenses of approximately $29,000;
|
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●
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an increase in costs associated with advertising and promotion of the our platform of approximately $25,000;
|
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●
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an increase in commission expense of approximately $5,000 related to an increase in sales of our platform licenses and related services; and
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●
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an increase in sales team travel expense of approximately $7,000.
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●
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additional legal, consulting and other professional fees resulting from the compromise of our internal corporate network in June 2012. During the six-month period ended June 30, 2013, we continued to incur such expenses, which totaled approximately $73,000;
|
|
●
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increase in the cost of legal services associated with extension of the IDB Credit Facility by $22,000 in comparison to the similar extension last year;
|
|
●
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increase of $57,000 in executive compensation;
|
|
●
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$10,000 increase in consulting expenses; and
|
|
●
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an absence of a $30,000 gain related to the recovery of receivable balance previously written off. This balance was included in general and administrative expense for the six month period ended June 30, 2012.
|
Exhibit No.
|
Description
|
|
3.1
|
Composite Copy of Amended and Restated Certificate of Incorporation, dated January 4, 2005, as amended to date (
Filed herewith
)
|
|
3.2
|
Composite Copy of Amended and Restated Certificate of Incorporation, dated January 4, 2005, as amended to date (marked copy) (
Filed herewith
)
|
|
3.3
|
Seventh Amended and Restated Bylaws, effective July [1], 2013 (
Filed herewith
)
|
|
3.4
|
Seventh Amended and Restated Bylaws, effective July [1], 2013 (marked copy) (
Filed herewith
)
|
|
10.1
|
Sixth Amendment and Agreement to Join as a Party to Convertible Secured Subordinated Note Purchase Agreement, Fourth Amendment to Convertible Secured Subordinated Promissory Notes and Fifth Amendment and Agreement to Join as a Party to Registration Rights Agreement, dated June 26, 2013, by and among Smart Online, Inc., Grasford Investments Ltd., Atlas Capital S.A. and Crystal Management Ltd. (incorporated herein by reference to Exhibit 10.1 to our Current Report on Form 8-K, as filed with the SEC on July 2, 2013)
|
|
10.2
|
Promissory Note dated June 6, 2013, made by Smart Online, Inc. for the benefit of Israel Discount Bank of New York, as lender (incorporated herein by reference to Exhibit 10.2 to our Current Report on Form 8-K, as filed with the SEC on July 2, 2013)
|
|
10.3
|
Guaranty dated June 6, 2013, made by Atlas Capital, SA for the benefit of Israel Discount Bank of New York (incorporated herein by reference to Exhibit 10.3 to our Current Report on Form 8-K, as filed with the SEC on July 2, 2013)
|
|
10.4
|
Professional Services Agreement, effective as of May 1, 2013, by and between Smart Online, Inc. and Entre-Strat Consulting, LLC (portions of this exhibit have been omitted pursuant to a request for confidential treatment)
(Filed herewith)
|
|
Certification of Principal Executive Officer Pursuant to Rule 13a-14(a) (
Filed herewith
)
|
||
Certification of Principal Executive Officer Pursuant to Rule 13a-14(a) (
Filed herewith
)
|
||
Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350 (
Furnished herewith
)
|
||
Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350 (
Furnished herewith
)
|
||
101.1
|
The following materials from the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2013, formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Balance Sheets, (ii) the Condensed Statements of Operations, (iii) the Condensed Statements of Cash Flows, (iv) the Statement of Stockholders’ Deficit, and (v) related notes to these financial statements, tagged as blocks of text and in detail (
Filed herewith
)
|
MOBILESMITH, INC. | |||
By:
|
/s/
Amir Elbaz
|
||
August 14, 2013
|
Amir Elbaz
|
||
Chief Executive Officer
|
|||
By:
|
/s/
Gleb Mikhailov
|
||
August 14, 2013
|
Gleb Mikhailov
|
||
Chief Financial Officer
|
SMART ONLINE | ES CONSULTING | |||
/s/Amir Elbaz
|
/s/ Robert M. Brinson, Jr.,
|
|||
Name Amir Elbaz
|
Name Principal
|
|||
Title Chairman of the Board
|
Title Robert M. Brinson, Jr.,
|
1.
|
assist in the guidance of documentation, filings and IP management processes of Smart Online’s intellectual property;
|
2.
|
offer high-level support on HIPAA and Government technology compliance requirements;
|
3.
|
participate in industry standards and association initiatives and provide Smart Online with support regarding the results of the efforts of said initiatives;
|
4.
|
provide general assistance and info to assist the Company in its efforts to obtain security clearance for its personnel and secured facility clearance from the Department of Defense and other national security agencies; and
|
5.
|
other services as mutually agreed upon
|
i)
|
Sales and sales revenues are defined as contract value for sales or licenses of Smart Online’s software platform, intellectual property, apps, custom development services, professional services, white labels, third party products or services, etc.
|
ii)
|
Including Smart Online’s sales from resellers, partners and white labels (“
Company Partner Entities
”) that were introduced and assisted by ES Consulting and / or its Consultants or where relationships or agreements with these Company Partner Entities were made with the assistance of ES Consulting and / or Consultants. ES Consulting will not receive commissions from Smart Online for sales by Company Partner Entities if ES Consulting has an agreement for compensation with said Company Partner Entities for ES Consulting to provide Company Partner Entities with BD Services.
|
iii)
|
Three and a half percent (3.5%) commission on quarterly sales to which cash has been collected, and subsequent annual (12 month) sales revenues (“
Sales Commission
”), where such sales resulted from efforts initiated by ES Consulting and / or its Consultants, whether closed without or with the assistance of Smart Online and regardless of being an Exclusive Entity or not. Such Sales Commission shall be paid within fifteen (15) business days after the end of each calendar quarter.
|
iv)
|
One and a half percent (1.5%) commission on quarterly sales to which cash has been collected, and subsequent annual (12 month) sales revenues (“
Assistance Sales Commission
”), where such sales resulted from efforts initiated by Smart Online but where Smart Online requests or requires assistance from ES Consulting and / or its Consultants and where ES Consulting and / or its Consultants provides assistance. Such Assistance Sales Commission shall be paid within fifteen (15) business days after the end of each calendar quarter.
|
a)
|
Smart Online will pay ES Consulting, M&A professional services fees (“
M&A Fees
”) on mergers and acquisitions in part or whole of the entity Smart Online, or its subsidiaries, assigns or successors or its / their intellectual property by entities or individuals introduced by ES Consulting and / or its Consultants or where Smart Online requests the assistance of ES Consulting and / or its Consultants and ES Consulting and / or Consultants agree to provide such assistance, and where ES Consulting and / or Consultants have assisted in facilitating the merger or acquisition.
|
b)
|
The M&A Fees shall be four percent (4%) of the total net consideration of any investment, merger or acquisition proceeds or equity value received by the Company.
|
i)
|
Net consideration shall be defined for this agreement as gross consideration less the reasonable costs of the investment, merger or acquisition transaction.
|
c)
|
Payment of any M&A Fees shall be made thirty (30) days after receipt of any net consideration in any transaction by the Company.
|
i)
|
Commissions shall survive termination of this agreement, but shall be limited to twenty four (24) months post termination.
|
•
|
ES Consulting will be entitled to receive $100.00 for each patent filed for a Work and under which any of the Consultants are listed as an inventor (as such term is generally understood under U.S. law) either individually or jointly (the “
Contributed Patent
”); and
|
•
|
ES Consulting will be entitled to receive one half percent (.50%) of all gross revenues derived from Works, and to which cash has been collected, or any other Smart Online product, service and/or transaction (which incorporates or is based on a Contributed Patent (individually “
Invention
” or jointly “
Inventions
”)), for each Invention (the “
Royalty
”). ES Consulting will be entitled to receive the Royalty during the Term and for a period of four (4) calendar years after the termination of this agreement. Such Royalty shall be paid within fifteen (15) business days after the end of each calendar quarter.
|
1.
|
|
I have reviewed this Quarterly Report on Form 10-Q of MobileSmith, Inc.;
|
||
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|||
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
|||
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|||
a)
|
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
||
b)
|
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
||
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|||
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.
|
|||
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
|||
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
|||
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
/s/ Amir Elbaz
|
|
Amir Elbaz
|
|
Chairman and Chief Executive Officer
|
1.
|
|
I have reviewed this Quarterly Report on Form 10-Q of MobileSmith, Inc.;
|
||
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|||
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
|||
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|||
a)
|
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
||
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|||
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|||
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.
|
|||
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
|||
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
|||
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
/s/ Gleb Mikhailov
|
|
Gleb Mikhailov
|
|
Chief Financial Officer
|
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Amir Elbaz
|
|
Amir Elbaz
|
|
Chairman and Chief Executive Officer
|
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Gleb Mikhailov
|
|
Gleb Mikhailov
|
|
Chief Financial Officer
|