Mobivity Holdings Corp. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

RESTATEMENT OF FINANCIAL STATEMENTS (Tables)

RESTATEMENT OF FINANCIAL STATEMENTS (Tables)

6 Months Ended

Jun. 30, 2012

Restatement Of Financial Statements Tables

On or about March 26, 2012, management and the Company concluded that the Company should restate goodwill related charges in connection with its three acquisitions that were completed during the year ended December 31, 2011. The Company’s method of valuing the restricted common stock issued in the acquisitions at the price paid by investors for Company shares in a number of private offerings around the time of the acquisitions was incorrect, and a revised discounted restricted common stock valuation be used, as required under FAS 157/ASC 820. This change in valuation method of securities also affected share based compensation expense and certain derivative liabilities and related expenses.

Under ASC 820 Fair Value Measurements & Disclosures, a quoted stock price in an active market is considered primary (Type I) indicator of fair value of restricted stock issued in consideration for the acquisitions completed in 2011. The Company believed that the infrequent and low volume of initial trading of its common stock did not constitute an active market. Alternatively, throughout the year the company conducted a private placement in which units comprised of shares of restricted common stock and attached warrants were sold at $1.50 per share. This price per share was bifurcated for the value of the common stock, the warrant, an embedded derivative related to down round protection on common stock, and an embedded derivative related to down round protection on the warrant. The price per common share that was determined by this valuation equaled $1.05 for the three months ended June 30, 2011. The use of this method resulted in understated asset value for certain intangible assets, understated stock based compensation expense, an understatement of certain derivative liabilities and an understatement of the related expense related to the Company’s derivative liability, as reflected in its financial statements for the quarter ended June 30, 2011.

The cumulative effect of this change through June 30, 2011 is an increase of $7,067,000 in goodwill, an increase of $32,143 in intangible assets, an increase of $590,860 in current liabilities, an increase of $7,623,382 in additional paid-in capital, and a decrease of $1,115,100 in the Company’s net income; however, this had no effect on the Company’s reported cash flows. Unaudited Tables detailing the effect of the error on the Company’s previously filed financial statements for the quarter ended June 30, 2011 are included below.


Balance Sheet

	June 30, 2011
	As Filed			Adjustments				Restated

Current Assets
Cash	$	23,195		$	-			$	23,195
Accounts Receivable		154,978			-				154,978
Other Current Assets		43,852			-				43,852
Total Current Assets		222,025			-				222,025

Equipment, Net		31,865			-				31,865
Goodwill		1,996,763			7,067,000		(a)		9,063,763
Intangible Assets, Net		2,319,240			32,143		(a)		2,351,383
Other Assets		67,750			-				67,750
TOTAL ASSETS	$	4,637,643		$	7,099,143			$	11,736,786


Current Liabilities
Accounts Payable	$	304,088		$	-			$	304,088
Accrued Interest		91,628			-				91,628
Accrued and Deferred Personnel Compensation		127,802			-				127,802
Deferred Revenue - related party		200,000			-				200,000
Deferred Revenue and Customer Deposits		143,639			-				143,639
Notes Payable, net of discount		580,895			-				580,895
Convertible notes payable, net of discount		867,111			(2,944	)	(a)		864,167
Cash payment obligation, net of discount		219,424			-				219,424
Derivative Liabilities		329,479			593,804		(a)		923,283
Other Current Liabilities		98,488			-				98,488
Total Current Liabilities		2,962,554			590,860				3,553,414

Non-Current Liabilities
Notes Payable		31,807			-				31,807
Total Non-Current Liabilities		31,807			-				31,807
Total Liabilities		2,994,361			590,860				3,585,221

Stockholders' Deficit
Common Stock, $0.001 par value; 150,000,000
shares authorized; 21,509,620 and 17,700,000 shares
issued and outstanding as of June 30, 2011 and
December 31, 2010, respectively		21,509			-				21,509
Additional Paid-in Capital		10,990,429			7,623,382		(a)		18,613,811
Accumulated Deficit		(9,368,656	)		(1,115,100	)	(a)		(10,483,756	)
Total Stockholders' Deficit		1,643,282			6,508,283				8,151,565
TOTAL LIABILITIES & STOCKHOLDERS' DEFICIT	$	4,637,643		$	7,099,143			$	11,736,786

(a) To reflect change due to the change in fair market value of restricted stock in underlying calculations


Statement of Operations


	Three months ended June 30, 2011
	As Filed			Adjustments				Restated
Revenues

Revenues	$	553,108		$	-			$	553,108
Cost of revenues		179,051			-				179,051
Gross Margin		374,057			-				374,057

Operating Expenses
General & administrative		374,448			185,187		(a)		559,635
Sales & marketing expense		200,822			15,263		(a)		216,085
Engineering, research, & development expense		161,291			17,982		(a)		179,273
Depreciation & amortization		124,741			-				124,741
Total Operating Expenses		861,302			218,432				1,079,734

Loss From Operations		(487,245	)		(218,432	)			(705,677	)

Other Income/(Expense)
Interest income		16			-				16
Interest expense		(138,258	)		-				(138,258	)
Change in fair market value of derivative liabilities		159,263			(313,367	)	(a)		(154,104	)
Total Other Income/(Expense)		21,021			(313,367	)			(292,346	)

Loss before income taxes		(466,224	)		(531,799	)			(998,023	)

Income tax benefit/(expense)		38			-				38

Net Loss	$	(466,186	)	$	(531,799	)		$	(997,985	)

Net Loss Per Share - Basic and Diluted	$	(0.02	)	$	(0.02	)	(a)	$	(0.05	)

Weighted average number of shares
during the period - basic and diluted		21,336,579			21,336,579				21,336,579


Statement of Operations


	Six months ended June 30, 2011
	As Filed			Adjustments				Restated
Revenues

Revenues	$	693,745		$	-			$	693,746
Cost of revenues		258,888			-				258,888
Gross Margin		434,857			-				434,858

Operating Expenses
General & administrative		920,443			263,406		(a)		1,183,849
Sales & marketing expense		255,679			24,331		(a)		280,010
Engineering, research, & development expense		289,862			35,902		(a)		325,764
Depreciation & amortization		126,778			-				126,778
Total Operating Expenses		1,592,762			323,639				1,916,401

Loss From Operations		(1,157,905	)		(323,639	)			(1,481,543	)

Other Income/(Expense)
Interest income		174			-				174
Interest expense		(243,666	)		-				(243,666	)
Change in fair market value of derivative liabilities		206,956			(791,462	)	(a)		(584,506	)
Total Other Income/(Expense)		(36,536	)		(791,462	)			(827,998	)

Loss before income taxes		(1,194,441	)		(1,115,100	)			(2,309,541	)

Income tax benefit/(expense)		38			-				38

Net Loss	$	(1,194,403	)	$	(1,115,100	)		$	(2,309,503	)

Net Loss Per Share - Basic and Diluted	$	(0.06	)	$	(0.06	)	(a)	$	(0.12	)

Weighted average number of shares
during the period - basic and diluted		19,534,081			19,534,081				19,534,081

(a) To reflect change due to the change in fair market value of restricted stock in underlying calculations.

- Definition

Tabular disclosure of the nature and effects of a restatement to correct an error in the reported results of operations of prior periods. When prior period adjustments are recorded, the resulting effects (both gross and net of applicable income tax) on the net income of prior periods are disclosed in the annual report for the year in which the adjustments are made, and amended filings of previously issued reports are typically issued.

+ References + Details