April 30, 2015 - S-1: General form of registration statement for all companies including face-amount certificate companies

As filed with the Securities and Exchange Commission on April 30, 2015

Registration No. 333-_____

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM S-1 REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

MOBIVITY HOLDINGS CORP.

(Exact name of registrant as specified in its charter)

Nevada	3669	26-3439095
(State or jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification No.)

58 West Buffalo Street, Suite 200

Chandler, Arizona 85225

(866) 622-4261

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

_________________________________________________

Dennis Becker

58 West Buffalo Street, Suite 200

Chandler, Arizona 85225

(866) 622-4261

(Name, address, including zip code, and telephone number, including area code, of agent for service)

_________________________________________________

Copies to:

Daniel K. Donahue, Esq.

Greenberg Traurig, LLP

3161 Michelson, Suite 1000

Irvine, CA 92612

(949) 732-6500

________________________________________________

Approximate date of commencement of proposed sale to the public:

As soon as practicable after this Registration Statement becomes effective.

_____________________________________________

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box: [X]

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.[ ]

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” and “smaller reporting company” in Rule 12b2 of the Exchange Act.

Large accelerated filer [ ] Accelerated filer [ ]

Non-accelerated filer [ ] (Do not check if a smaller reporting company) Smaller reporting company [X]

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to Section 8(a), may determine.

CALCULATION OF REGISTRATION FEE

Title of each class of securities to be registered	Amount to be registered (1)	Proposed maximum offering price per share (2)		Proposed maximum aggregate offering price (2)		Amount of registration fee

Common Stock, $.001 par value per share	29,877,324 shares	$	1.02	$	30,474,870	$	3,542

(1) In addition, pursuant to Rule 416 under the Securities Act of 1933, this Registration Statement includes an indeterminate number of additional shares as may be issuable as a result of stock splits or stock dividends which occur during this continuous offering.

(2) Estimated solely for the purpose of calculating the amount of the registration fee pursuant to Rule 457(c) under the Securities Act of 1933.

The information in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED APRIL 30, 2015

PROSPECTUS

29,877,324 Shares Mobivity Holdings Corp.

Common Stock

This prospectus relates to shares of common stock of Mobivity Holdings Corp. that may be offered for sale for the account of the selling stockholders identified in this prospectus. The selling stockholders may offer and sell from time to time up to 29,877,324 shares of our common stock, which amount includes 8,551,168 shares to be issued to the selling stockholders only if and when they exercise warrants held by them.

The shares owned by the selling stockholders may be sold in the over-the-counter market, or otherwise, at prices and terms then prevailing or at prices related to the then-current market price, or in negotiated transactions. Although we will incur expenses in connection with the registration of the common stock, we will not receive any of the proceeds from the sale of the shares of common stock by the selling stockholders. We will receive gross proceeds of up to $10,217,433 from the exercise of the warrants, if and when they are exercised.

Our common stock is quoted on the OTC Markets under the symbol “MFON”. The last reported sale price of our common stock as reported by the OTC Markets on April 28, 2015 was $1.10 per share.

We may amend or supplement this prospectus from time to time by filing amendments or supplements as required. You should read this entire prospectus and any amendments or supplements carefully before you make your investment decision.

_______________________

The shares of common stock offered under this prospectus involve a high degree of risk. See “Risk Factors” beginning at page 2.

_______________________

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.

_______________________

The date of this prospectus is , 2015

TABLE OF CONTENTS

SUMMARY	1
RISK FACTORS	2
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING INFORMATION	7
OUR COMPANY	8
SELLING STOCKHOLDERS	11
PLAN OF DISTRIBUTION	17
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS	19
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	20
OUR BUSINESS	27
MANAGEMENT	37
PRINCIPAL STOCKHOLDERS	46
DESCRIPTION OF SECURITIES	47
LEGAL MATTERS	48
EXPERTS	48
AVAILABLE INFORMATION	48
INDEX TO THE FINANCIAL STATEMENTS	49

We have not authorized any person to give you any supplemental information or to make any representations for us. You should not rely upon any information about our company that is not contained in this prospectus. Information contained in this prospectus may become stale. You should not assume that the information contained in this prospectus or any prospectus supplement is accurate as of any date other than their respective dates, regardless of the time of delivery of this prospectus, any prospectus supplement or of any sale of the shares. Our business, financial condition, results of operations and prospects may have changed since those dates. The selling stockholders are offering to sell, and seeking offers to buy, shares of our common stock only in jurisdictions where offers and sales are permitted.

In this prospectus, “Mobivity,” the “company,” “we,” “us,” and “our” refer to Mobivity Holdings Corp., a Nevada corporation, and its wholly- owned subsidiary, Mobivity, Inc., a Nevada corporation.

Table of Contents

SUMMARY

You should read this summary in conjunction with the more detailed information and financial statements appearing elsewhere in this prospectus.

On November 12, 2013, we effected a 1 for 6 reverse stock split of our outstanding common shares. All share amounts and share prices, including the exercise price and the number of common shares issuable under our outstanding options and warrants, have been adjusted to give effect to the reverse stock split.

Our Company

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 mobile marketing campaigns. Our proprietary platforms, consisting of software available to phones, tablets PCs, and Point of Sale (POS) systems, allow resellers, brands and enterprises to market their products and services to consumers through text messages sent directly to the consumers’ via mobile phones, mobile smartphone applications, and dynamically printed receipt content. We generate revenue by charging the resellers, brands and enterprises a per-message transactional fee, through fixed or variable software licensing fees, or via advertising fees. Our customers include national franchisers, professional sports teams and associations and other national brands such as the Sonic Drive-In, Subway, Jamba Juice, Chick-Fil-A, and others.

Our executive offices are located at 58 West Buffalo Street, Suite 200, Chandler, Arizona 85225. Our phone number is (866) 622-4261. Our website address is www.mobivity.com. Information contained in, or accessible through, our website does not constitute part of this prospectus.

The Offering

This offering relates to the offer and sale of our common stock by the selling stockholders identified in this prospectus. The selling stockholders will offer and sell the shares of our common stock at prices related to the then-current market price or in negotiated transactions. Although we have agreed to pay the expenses related to the registration of the shares being offered, we will not receive any proceeds from the sale of the shares by the selling stockholders.

Summary Financial Information

The following summary financial data for the fiscal years ended December 31, 2014 and 2013 is derived from our audited consolidated financial statements included elsewhere in this prospectus. This information is only a summary and does not provide all of the information contained in our financial statements and related notes. You should read “Management’s Discussion and Analysis of Financial Condition and Results of Operations” beginning on page 16 of this prospectus and our financial statements and related notes included elsewhere in this prospectus.

Statement of Operations Data:

	Fiscal Year Ended December 31, 2013		Fiscal Year Ended December 31, 2014
Net sales	$	4,093,667	$	4,000,202
Net loss	$	16,759,031	$	10,440,764

Balance Sheet Data:

	December 31, 2014
Total assets	$	5,368,510
Total liabilities		1,704,890
Stockholders’ equity		3,663,620

-1-

Table of Contents

RISK FACTORS

You should carefully consider the following risk factors before investing in our common stock. Our business and results of operations could be seriously harmed by any of the following risks. The trading price of our common stock could decline due to any of these risks, and you may lose part or all of your investment.

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, 2014, we had negative working capital of $(367,880). Current liabilities as of December 31, 2014 included an estimated earn-out in the amount of $840,000 and derivative liabilities in the amount of $42,659, all of which are payable in shares of our common stock. Giving no effect to the estimated earn-out and derivative liabilities, we had pro forma working capital as of December 31, 2014 in the amount of $514,779. We also received proceeds from our March 2015 financing of $4,570,500, net of fees and amounts paid to the placement agent. While we believe that our working capital on hand 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. Also, we expect that we will 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.

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.

-2-

Table of Contents

We may not be able to enhance our mobile marketing and advertising 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 May 2010, Google, Inc. acquired Admob, Inc. Similarly, in January 2010, Apple, Inc. acquired Quattro Wireless, Inc. 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 mobile marketing and advertising services 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.

-3-

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;

●	further develop our operating, administrative, legal, financial and accounting systems and controls;

●	hire additional personnel;

●	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.

-4-

Table of Contents

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.

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.

Our management team has limited experience in public company matters, which could impair our ability to comply with legal and regulatory requirements. Our management team has only limited public company management experience or responsibilities, which could impair our ability to comply with legal and regulatory requirements and applicable federal securities laws including filing required reports and other information required on a timely basis. There can be no assurance that our management will be able to implement and affect programs and policies in an effective and timely manner that adequately respond to increased legal, regulatory compliance and reporting requirements imposed by such laws and regulations. Our failure to comply with such laws and regulations could lead to the imposition of fines and penalties and further result in the deterioration of our business.

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 Over-the- Counter Bulletin Board. 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 that 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;

-5-

Table of Contents

●	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.

The offering of up to 29,877,324 shares of our common stock by selling stockholders could depress our common stock price. Certain of our stockholders are offering pursuant to this prospectus up to 29,877,324 shares of our common stock in a secondary offering, which amount includes 8,551,168 shares of common stock issuable upon exercise of outstanding warrants. Sales of a substantial number of shares of our common stock in the public market could adversely affect the market for our common shares and make it more difficult for us to sell equity securities at times and prices that we determine to be appropriate. None of our shareholders are subject to any lock-up or other agreement that contractually restricts their ability to publicly resell their common shares.

Our common stock may be considered to be a “penny stock” and, as such, any the 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 a 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 purchaser’s 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 sales person 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.

-6-

Table of Contents

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 their SEC filings, including, among other things, only being 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.

CAUTIONARY STATEMENT CONCERNING FORWARD LOOKING INFORMATION

This prospectus and the documents to which we refer you contain forward-looking statements. In addition, from time to time, we or our representatives may make forward-looking statements orally or in writing. We base these forward-looking statements on our expectations and projections about future events, which we derive from the information currently available to us. Such forward-looking statements relate to future events or our future performance. You can identify forward-looking statements by those that are not historical in nature, particularly those that use terminology such as “may,” “will,” “should,” “expects,” “anticipates,” “contemplates,” “estimates,” “believes,” “plans,” “projected,” “predicts,” “potential” or “continue” or the negative of these or similar terms. In evaluating these forward-looking statements, you should consider various factors, including those described in this prospectus under the heading “Risk Factors” beginning on page 2. These and other factors may cause our actual results to differ materially from any forward-looking statement. Forward-looking statements are only predictions. The forward-looking events discussed in this prospectus, the documents to which we refer you and other statements made from time to time by us or our representatives, may not occur, and actual events and results may differ materially and are subject to risks, uncertainties and assumptions about us.

-7-

Table of Contents

OUR COMPANY

We were incorporated in the State of Nevada on September 25, 2008 under the names Ares Ventures Corporation for purposes of engaging in the acquisition, exploration and development of natural resource properties. From our organization and until November 2010, we were an exploration stage company with no revenues and a limited operating history.

Acquisitions

On November 2, 2010, we completed the acquisition of Mobivity, Inc., a Nevada corporation engaged in the business of mobile marketing, which at the time was known as CommerceTel, Inc., in exchange for 1,666,667 shares of our common stock. In anticipation of the transaction, on October 5, 2010, we changed our name from Ares Ventures Corporation to CommerceTel Corporation. Upon our acquisition of Mobivity, Inc., we ceased all operations related to the acquisition, exploration and development of natural resource properties and since that time have engaged exclusively in our current business, the development and operation of proprietary platforms over which brands and enterprises can conduct mobile marketing campaigns.

In April 2011, we acquired substantially all of the assets of the Txtstation interactive mobile marketing platform and services business from Adsparq Limited. The purchase price for the acquisition was 354,167 shares of our common stock and $300,000 in cash, which was paid over an 11 month period.

In April 2011, we entered into an acquisition agreement with Mobivity, LLC and Mobile Visions, Inc. pursuant to which we acquired the assets of their Mobivity interactive mobile marketing platform and services business. The purchase price for the acquisition was 166,667 shares of our common stock, $64,969 in cash paid at closing and a secured subordinated promissory note in the principal amount of $606,054. The promissory note accrued interest on the unpaid principal amount at the rate of 6.25% per annum and principal and interest were paid in six quarterly installments of $105,526 starting May 1, 2011. The note was paid in full on May 31, 2012.

In connection with the Mobivity acquisition, in June 2012 we changed our corporate name to Mobivity Holdings Corp.

In August 2011, we acquired substantially all of the assets of the BoomText interactive mobile marketing services business from Digimark, LLC. The purchase price for the acquired assets consisted of:

●	86,590 shares of our common stock issued at closing;

●	$120,514 in cash paid at closing;

●	our secured subordinated promissory note in the principal amount of $175,000. This note earned interest at 6.25% per annum and was paid in full on May 31, 2012;

●	our unsecured subordinated promissory note in the principal amount of $194,658 due and payable on October 1, 2012. The note does not bear interest and was paid in full in 2013; and

●

an earn-out payment (payable 20 months after closing of the transaction) of a number of shares of our common stock equal to (a) 1.5, multiplied by our net revenue from acquired customers and customer prospects for the twelve-month period beginning six months after the closing date, divided by (b) the average of the volume-weighted average trading prices of our common stock for the 25 trading days immediately preceding the earn-out payment (subject to a collar of $1.49 and $2.01 per share). The final value of the earn-out payment was $2,210,667 and was satisfied through our issuance of 247,279 shares of our common stock.

-8-

Table of Contents

In May 2013, we acquired the assets of Sequence, LLC related to a mobile customer loyalty application. The acquired assets include all application software, URL’s, websites, trademarks, brands, customers and customer lists. The purchase price consisted of: $300,000 in cash which was paid prior to closing; 125,000 shares of our common stock which were issued at closing valued, based on the closing price of our common stock on May 13, 2013, at $183,750; and our agreements to pay 24 monthly earn-out payments consisting of 10% of the eligible monthly revenue subsequent to closing.

Also in May 2013, we acquired certain assets of Front Door Insights, LLC. The assets acquired from Front Door Insights consisted of cash on hand, accounts receivable, all rights under all contracts other than excluded contracts, prepaid expenses, all technology and intellectual property rights, accounts payable, and obligations under a commercial lease. The purchase price consisted of: $100,000 in cash; (2) our promissory note in the principal amount of $1,400,000; and (3) 1,666,667 shares of our common stock valued, based on the closing price of our common stock on May 20, 2013, at $1,034,310.

In March 2014, we acquired all of the assets of SmartReceipt, Inc., a Delaware corporation in exchange for:

●	Our payment at closing of $2.212 million of cash, net of a $150,000 loan made by us to SmartReceipt in January 2014;

●	Our issuance of 504,884 shares of our common stock; and

●

Our earn-out payment of 200% of the “eligible revenue” over the 12 month period following the close of the transaction (“earn-out period”). The “eligible revenue” will consist of: 100% of our revenue derived during the earn out period from the sale of SmartReceipt products and services to certain SmartReceipt clients as of the close (the “designated SmartReceipt clients”); plus 50% of our revenue derived during the earn out period from the sale of our products and services to the designated SmartReceipt clients, plus 50% of our revenue derived during the earn out period from the sale of SmartReceipt products and services to our clients who are not designated SmartReceipt clients. The earn-out payment will be payable in our common shares (valued at the closing VWAP) no later than the 90th day following the end of the earn-out period. For purposes of the foregoing, the “closing VWAP” means the volume weighted average trading price of our common stock for the 90 trading days preceding the close of our acquisition of SmartReceipt.

Pursuant to our agreement with SmartReceipt, SmartReceipt has agreed that 50% of the shares issuable to it or its shareholders at the initial closing will be held back by us for a period of 12 months and will be subject to cancellation based on indemnification claims on our part. These shares were released to SmartReceipt in April 2015.

Financing Transactions

Between March 2011 to November 2011, we conducted the private placement sale of 114,778 shares of our common stock at a price of $9.00 per share for the gross proceeds of $1,033,003. Each investor also received warrants to purchase an equivalent number of shares at an exercise price of $12.00. In October 2012, the exercise price of the warrants was reduced from $12.00 to $3.00 as a result of certain anti-dilution provisions contained in the warrant agreement. As a result of the June 2013 private placement described below, the exercise price of the warrants was further reduced to $1.20 per share in June 2013.

-9-

Table of Contents

Between November 2010 and June 2012, we conducted the private placement sale of our 10% Senior Secured Convertible Bridge Notes. The bridge notes accrued interest on the unpaid principal amount at the rate of 10% per annum. The entire principal amount of the bridge notes, plus all accrued and unpaid interest, was due on the earlier of (i) the date we completed a financing transaction for the offer and sale of shares of our common stock in an aggregate amount of no less than 125% of the principal amounts evidenced by the bridge notes (a “qualifying financing”), or (ii) a fixed maturity date, which initially was set at November 3, 2011 and later amended to October 15, 2013. On the maturity date of the bridge notes, in addition to the repayment of the principal amount and all accrued and unpaid interest, we agreed to issue to each holder of the bride notes, at each such holder’s option, either (i) a three year warrant to purchase that number of shares of our common stock equal to the principal amount of (plus all accrued and unpaid interest on) the bridge notes held by the holder divided by the per share purchase price of the common stock offered and sold in the qualifying financing (the “offering price”) which warrants shall be exercisable at the offering price, or (ii) that number of shares of common stock equal to the product arrived at by multiplying (x) the principal amount of (plus all accrued and unpaid interest on) the bridge notes held by the holder, divided by the offering price and (y) 1.98. Our obligations under the bridge notes were secured by all of our assets.

As of May 31, 2013, the outstanding principal amount and accrued interest under the bridge notes was $4,984,721 and $441,973, respectively. As described below, all of the principal and substantially all of the accrued interest under the bridge notes were converted into shares of our common stock and warrants to purchase our common stock in June 2013.

On June 17, 2013, we entered into a securities purchase agreement and a registration rights agreement with certain accredited investors in connection with our private placement sale of 6,250,000 shares of our common stock at a price of $1.20 per share, for aggregate gross proceeds of $7.5 million. Pursuant to the terms of the registration rights agreement, we agreed to file with the SEC a resale registration statement covering the shares. Emerging Growth Equities, Ltd. acted as placement agent for the private placement and received $493,300 in commissions from us. In addition, for its services as placement agent, we issued to EGE warrants to purchase an aggregate of 605,910 shares of our common stock, exercisable for a period of five years from the closing date, at an exercise price of $1.20 per share.

In connection with the private placement, we also entered into a convertible secured promissory note conversion agreement on June 17, 2013, with the holders of our bridge notes. Pursuant to the note conversion agreement, we agreed to issue to the holders of our bridge notes 4,462,089 shares of our common stock, at the conversion price of $1.20 per share, for the cancellation of outstanding principal of $4,984,721 and accrued interest of $369,786 under the notes. Certain holders elected to receive, and we made, cash payments on the accrued interest on their notes in lieu of shares of common stock. Each note holder also received a warrant to purchase that number of shares of our common stock calculated by dividing the outstanding principal amount plus accrued and unpaid interest of such note by the conversion price. We issued warrants to purchase a total of 4,541,592 shares of our common stock to the note holders. The warrants are exercisable for a period of five years at an exercise price of $1.20 per share. In connection the sale of the bridge notes, we agreed to file with the SEC a resale registration statement covering the securities issued upon conversion of the Bridge Notes.

In March 2014, we conducted the private placement to certain accredited investors of 5,413,000 units of our securities at a price of $1.00 per unit for the gross proceeds of up to $5,413,000. Each unit consisted of one share of our common stock and a common stock purchase warrant to purchase one- quarter share of our common stock, over a five year period, at an exercise price of $1.20 per share. In connection with the placement, we entered into a registration rights agreement with the investors, pursuant to which we agreed to cause a resale registration statement covering the common shares made part of the units to be filed by May 15, 2014. The registration rights agreement also provides that we must make certain payments as liquidated damages to the investors if we fail to timely file the registration statement and cause it to become effective. Emerging Growth Equities, Ltd. acted as placement agent for the private placement and received $370,685 in commissions from us. In addition, for its services as placement agent, we issued to EGE warrants to purchase an aggregate of 370,685 units, as defined above, exercisable for a period of five years from the closing date, at an exercise price of $1.00 per unit. The warrants had a fair value on date of issuance of $461,598.

In March 2015, we conducted the private placement to certain accredited investors of 4,805,000 units of our securities at a price of $1.00 per unit for the gross proceeds of $4,805,000. Each unit consisted of one share of our common stock and a common stock purchase warrant to purchase one-quarter share of our common stock, over a five year period, at an exercise price of $1.20 per share. In connection with the placement, we entered into a registration rights agreement with the investors, pursuant to which we agreed to cause a resale registration statement covering the common shares made part of the units to be filed by April 30, 2015. The registration rights agreement also provides that we must make certain payments as liquidated damages to the investors if we fail to timely file the registration statement and cause it to become effective. Emerging Growth Equities, Ltd. acted as placement agent for the private placement and received $234,500 in commissions from the us. In addition, for its services as placement agent, we issued to Emerging Growth Equities warrants to purchase an aggregate of 234,500 units, exercisable over a period of five years from the closing date, at an exercise price of $1.00 per unit.

-10-

Table of Contents

SELLING STOCKHOLDERS

This prospectus relates to the offering and sale, from time to time, of up to 29,877,324 shares of our common stock, held by the stockholders named in the table below, which amount includes 8,551,168 common shares issuable upon the exercise of warrants held by the selling stockholders. The selling stockholders may exercise their warrants at any time in their sole discretion. All of the selling stockholders named below acquired their shares of our common stock and warrants directly from us in private transactions.

On June 17, 2013, we entered into a securities purchase agreement and a registration rights agreement with certain accredited investors in connection with our private placement sale of 6,250,000 shares of our common stock at a price of $1.20 per share, for aggregate gross proceeds of $7.5 million. Pursuant to the terms of the registration rights agreement, we agreed to file with the SEC a resale registration statement covering the shares. Emerging Growth Equities, Ltd. acted as placement agent for the private placement and received $439,300 in commissions from us. In addition, for its services as placement agent, we issued to EGE warrants to purchase an aggregate of 605,910 shares of our common stock, exercisable for a period of five years from the closing date, at an exercise price of $1.20 per share.

In connection with the private placement, we also entered into a convertible secured promissory note conversion agreement on June 17, 2013, with certain holders of our outstanding 10% senior secured convertible bridge notes due October 15, 2013. Pursuant to the note conversion agreement, we agreed to issue to the holders of the notes 4,462,089 shares of our common stock, at the conversion price of $1.20 per share, for the cancellation of outstanding principal of $4,984,721 and accrued interest of $369,786 under the notes. Certain holders elected to receive, and we agreed to make, cash payments on the accrued interest on their notes in lieu of shares of common stock. Each note holder also received a warrant to purchase that number of shares of our common stock calculated by dividing the outstanding principal amount plus accrued and unpaid interest of such note by the conversion price. The warrants are exercisable for a period of five years at an exercise price of $1.20 per share. In connection the sale of the bridge notes, we agreed to file with the SEC a resale registration statement covering the securities issued upon conversion of the notes.

-11-

Table of Contents

Except as indicated below, none of the selling stockholders has held a position as an officer or director of the company, nor has any selling stockholder had any material relationship of any kind with us or any of our affiliates. Except as otherwise indicated in the footnotes to the table, the selling stockholders possess sole voting and investment power with respect to the shares shown, and no selling stockholder is a broker-dealer or an affiliate of a broker-dealer. All information with respect to share ownership has been furnished by the selling stockholders. The shares being offered are being registered to permit public secondary trading of the shares and each selling stockholder may offer all or part of the shares owned for resale from time to time.

The following table sets forth certain information known to us as of the date of this prospectus and as adjusted to reflect the sale of the shares offered hereby, with respect to the beneficial ownership of our common stock by the selling stockholders who participated in the private placement mentioned above. The share amounts under the columns “Shares Beneficially Owned Before the Offering” and “Maximum Number of Shares Offered” consist of the shares of our common stock sold by us in the private placement described above, including shares issuable to the selling shareholder upon the exercise of outstanding warrants. The share amounts under the columns “Shares Beneficially Owned after the Offering” assume all of the offered shares are sold pursuant to this prospectus.

-12-

Table of Contents

Name of Beneficial Owner	Shares Beneficially Owned Before the Offering					Maximum Number of Shares Offered		Shares Beneficially Owned After the Offering (1)
	Number		%					Number		%
Sandor Capital Master Fund (2)(3)		1,211,937		4.3	%		1,211,937		-0-		*
Ballyshannon Partners LP (4)		800,000		2.9	%		800,000		-0-		*
Ballyshannon Family Partnership (5)		522,800		1.8	%		522,800		-0-		*
Porter Partners, LP (6)		2,332,723		8.3	%		2,332,723		-0-		*
EDJ Limited (7)		376,767		1.3	%		376,767		-0-		*
Porter Family Living Trust dtd 9/5/2006 (8)		291,667		1.0	%		291,667		-0-		*
Ben Joseph Partners (9)		475,828		1.7	%		475,828		-0-		*
Alexander M. Bush		12,500		*			12,500		-0-		*
John E. Thompson		52,083		*			52,083		-0-		*
Diker MicroCap Fund LP (10)		604,167		2.1	%		604,167		-0-		*
Trellus Partners LP (11)		1,145,833		4.1	%		729,167		416,667		1.5	%
Julie T. Berlacher		352,494		1.2	%		352,494		-0-		*
Paul D. Berlacher TTEE Paul D. Berlacher Irrev. Trust (12)		20,833		*			20,833		-0-		*
Audrey E. Berlacher TTEE Audrey E. Berlacher Rev Trust (13)		20,833		*			20,833		-0-		*
David A. Houghton		177,065		*			177,065		-0-		*
Bruce E. Terker TTEE Robert A. Berlacher 2004 Family Trust (14)		41,667		*			41,667		-0-		*
Chardonnay Partners, LP (15)		178,847		*			178,847		-0-		*
Harry Mittelman Revocable Living Trust (16)		277,323		*			277,323		-0-		*
Bruce and Katherine Evans TBE		561,431		2.0	%		561,431		-0-		*
Jacqueline A. Evans		12,500		*			12,500		-0-		*
JSL Kids Partners (3)(17)		83,333		*			83,333		-0-		*
James C. Barragan, Jr. and Nancy F. Barragan		57,967		*			41,667		16,300		*
Robert A. Elliott		20,833		*			20,833		-0-		*
Robert B. Prag		96,087		*			96,087		-0-		*
The Del Mar Consulting Group, Inc. Retirement Plan Trust (18)		41,667		*			41,667		-0-		*
George I. Bridges, Jr.		291,667		1.0	%		291,667		-0-		*
Carl Todd Bridges and Lori D. Bridges		208,333		*			208,333		-0-		*
Clayton Green, Jr.		83,333		*			83,333		-0-		*
Taylor Green		83,333		*			83,333		-0-		*
Shelby Zimmerman		83,333		*			83,333		-0-		*
Robert A. Smith		208,333		*			208,333		-0-		*
Mark A. and Lucinda M. Henry		158,744		*			158,744		-0-		*
Donald K. Thomas		16,667		*			16,667		-0-		*
Mobivity Partners (19)		416,667		1.5	%		416,667		-0-		*
John R. Harris (20)		100,695		*			52,083		48,612		*
ACT Capital Partners, LP (21)		638,219		2.3	%		638,219		-0-		*
Amir L. Ecker		458,847		1.6	%		458,847		-0-		*
Delaware Charter G T Cust FBO Amir L. Ecker IRA (22)		582,123		2.1	%		582,123		-0-		*
Cornelis F. Wit		1,934,992		6.9	%		1,934,992		-0-		*
The Ecker Family Partnership (23)		173,225		*			204,475		-0-		*
Gary Knutsen		123,734		*			123,734		-0-		*
Gregory J. Berlacher (3)		53,650		*			53,650		-0-		*
Emerging Growth Equities, Ltd. PSP dtd 9/1/99 FBO Gregory J. Berlacher, 401k (24)(3)		112,883		*			112,883		-0-		*
Emerging Growth Equities, Ltd. PSP dtd 9/1/99 FBO Jay D. Seid, 401k (25)(3)		195,745		*			195,745		-0-		*
John S. Lemak IRA Rollover Raymond James & Assoc Custodian (3)(26)		221,433		*			213,142		49,743		*
Kingdom Trust Co. Roth IRA Cust FBO Robert A. Berlacher (27)		150,064		*			150,064		-0-		*
Lancaster Investment Partners, LP (28)		236,870		*			236,870		-0-		*
Northwood Capital Partners, LP (29)		535,308		1.9	%		535,308		-0-		*
Randall Smith		46,720		*			46,720		-0-		*
Peter and Susan Stanley JTWROS		231,919		*			231,919		-0-		*
The Michael and Valerie Bynum Living Trust (30)		158,305		*			158,305		-0-		*
Timothy W. Schatz		433,072		1.5	%		33,836		-0-		*
Joel and Amy Wisian		126,233		*			126,233		-0-		*
Allen M. and Emily R. Bynum		58,881		*			58,881		-0-		*
Johnny and Debra Allen		16,872		*			16,872		-0-		*

-13-

Table of Contents

Jessie and Kimberly A. Allen	16,872	*		16,872	-0-	*
Donald K. and Paige Matthey Bynum	16,854	*		16,854	-0-	*
Pier Bynum	8,427	*		8,427	-0-	*
Patrick Bynum	8,427	*		8,427	-0-	*
Dennis Becker (20)	735,615	2.6	%	91,914	643,701	2.3%%	%
Marion Cook	83,927	*		83,927	-0-	*
James Flanigan	41,895	*		41,895	-0-	*
Steve Tebo	83,790	*		83,790	-0-	*
Berlwoods Partners, LP (31)	20,833	*		20,833	-0-	*
Cortleigh Capital Partners, LP (32)	33,333	*		33,333	-0-	*
Phyllis D. Kalista	20,833	*		20,833	-0-	*
Jay D. Seid (3)	28,125	*		28,125	-0-	*
Franz J. Berlacher	4,167	*		4,167	-0-	*
Robert D. Auritt	8,333	*		8,333	-0-	*
Kingdom Trust Company IRA c/f Richard Johnson (33)	16,667	*		16,667	-0-	*
Andrew S. Rosen	106,917	*		83,333	23,584	*
ACT Capital Management, LLLP (34)	33,333	*		33,333	-0-	*
Delaware Charter G&T Cust FBO Amir L. Ecker ROTH IRA (35)	20,833	*		20,833	-0-	*
Delaware Charter G&T Cust FBO Carol G. Frankenfield IRA (36)	20,833	*		20,833	-0-	*
Kingdom Trust Co. SEP IRA c/f Robert A. Berlacher (37)	16,667	*		16,667	-0-	*
MJA Investments LLC (38)	12,500	*		12,500	-0-	*
JBA Investments LLC (39)	12,500	*		12,500	-0-	*
Elizabeth Arno	16,667	*		16,667	-0-	*
Kingdom Trust Co. IRA FBO Daniel C. Gardner (40)	20,833	*		20,833	-0-	*
Brodsky Family Trust (41)	125,000	*		125,000	-0-	*
Ivy L. Fredericks	20,833	*		20,833	-0-	*
Robert Winter	20,833	*		20,833	-0-	*
Brian J. Grossi 2007 Revocable Trust (42)	12,500	*		12,500	-0-	*
Pak Cheong Choi & Susan Huang Choi JTWROS	8,333	*		8,333	-0-	*
John C. Lipman	40,417	*		40,417	-0-	*
Lipman Capital Group Inc. Retirement Plan (43)	52,083	*		52,083	-0-	*
Marcelle Weems Bynum	12,654	*		12,654	-0-	*
Lavonne Bynum	12,654	*		12,654	-0-	*
Cecil Glen Bynum and Cathey Lynn Bynum, Tenants in Common	43,578	*		33,744	9,834	*
David Gomez	145,283	*		145,283	-0-	*
David Hirons	85,075	*		85,075	-0-	*
Dillon Page and Vickie Page, Joint Tenants	96,758	*		96,758	-0-	*
Russell Sarachek	33,333	*		33,333	-0-	*
Mayumi Ishii Post	20,833	*		20,833	-0-	*
Kingdom Trust Company IRA Rollover FBO Franz J. Berlacher (44)	20,833	*		20,833	-0-	*
Kingdom Trust Co. Roth IRA c/f Julie T. Berlacher (45)	22,083	*		22,083	-0-	*
Fraser Clarke	20,833	*		20,833	-0-	*
BMO Nesbitt Burns ITF 365-24977-22 (46)	62,500	*		62,500	-0-	*
David Moss	75,130	*		75,130	-0-	*
VFT Special Ventures, Ltd (47)	1,362,404	4.9	%	1,362,404	-0-	*
Trellus Small Cap Opportunity Fund LP (48)	312,500	1.1	%	312,500	-0-	*
David Jaques (20)	69,791	*		31,250	-0-	*
Kobe Partners, LP (49)	468,750	*		468,750	-0-	*
Logos Partners L.P. (50)	125,000	*		125,000	-0-	*
Perritt Ultra MicroCap Fund (51)	825,000	2.9	%	825,000	-0-	*
Thomas B. Akin (20)	1,250,000	4.4	%	1,250,000	-0-	*
Kingdom Trust cust. FBO David A. Houghton IRA (52)	15,625	*		15,625	-0-	*
Jon D. and Linda W. Gruber Trust (53)	1,250,000	4.4	%	1,250,000	-0-	*
Steven T. Newby	625,000	2.2	%	625,000	-0-	*
London Family Trust (54)	125,000	*		125,000	-0-	*
NFS/FMTC IRA fbo Amir L. Ecker (55)	93,750	*		93,750	-0-	*
Lacuna Hedge Fund, LLLP (56)	125,000	*		125,000	-0-	*
John E. Thompson, III	62,500	*		62,500	-0-	*
Lincoln Park Capital Fund, LLC (57)	125,000	*		125,000	-0-	*
Jonathan Cassell	12,500	*		12,500	-0-	*
IP ROI US Small Cap Aktier (58)	468,750	1.6	%	468,750	-0-	*
Talkot Fund, L.P. (20)	1,875,000	6.7	%	1,875,000	-0-	*
Peter Backus	250,000	*		250,000	-0-	*
Larry C. Hopfensirger Trust (59)	162,500	*		162,500	-0-	*
Peter S. Lynch Charitable Lead Annuity Unitrust 3/3/97 (60)	78,125	*		78,125	-0-	*
Peter S. Lynch Charitable Lead Annuity U/A 3/27/96 (60)	78,125	*		78,125	-0-	*
Peter S. Lynch 1999 Unitrust (61)	156,250	*		156,250	-0-	*
Peter S. and Carolyn A. Lynch Joint Trust with Right of Survival (61)	156,250	*		156,250	-0-	*
The Lynch Foundation (61)	156,250	*		156,250	-0-	*
Elmer R. Salovich Revocable Living Trust (62)	62,500	*		62,500	-0-	*
John Texter	218,750	*		218,750	-0-	*
Wall Street Capital Partners, L.P. (63)	125,000	*		125,000	-0-	*
Donna S. Mitchell (20)	125,000	*		125,000	-0-	*
Alexander Shah (20)	93,750	*		93,750	-0-	*
William Van Epps (20)	62,500	*		62,500	-0-	*
Phillip Guarascio (20)____________________________________________	56,250	*		31,250	25,000	*

* Less than 1%.

-14-

Table of Contents

(1)	Assumes that all securities offered are sold.

(2)	The selling stockholder indicated to us that John S. Lemak, Manager of Sandor Capital Master Fund, has voting and investment power over the shares it is offering for resale.

(3)

The selling stockholder identified itself to us as an affiliate of a broker-dealer. It has indicated to us that it purchased the shares in the ordinary course of business, and at the time of the purchase of the shares to be resold, had no agreements or understandings, directly or indirectly, with any person to distribute the shares.

(4)	The selling stockholder indicated to us that Bruce E. Terker, President of Ballyshannon Partners, L.P., has voting and investment power over the shares it is offering for resale.

(5)	The selling stockholder indicated to us that Bruce E. Terker, President of Ballyshannon Family Partnership, L.P., has voting and investment power over the shares it is offering for resale.

(6)	The selling stockholder indicated to us that Jeffrey H. Porter, General Partner of Porter Partners, L.P., has voting and investment power over the shares it is offering for resale.

(7)	The selling stockholder indicated to us that Jeffrey H. Porter, Investment Advisor of EDJ Limited, has voting and investment power over the shares it is offering for resale.

(8)	The selling stockholder indicated to us that Jeffrey H. Porter, Trustee of Porter Family Living Trust dtd. 9/5/2006, has voting and investment power over the shares it is offering for resale.

(9)	The selling stockholder indicated to us that Jeffrey H. Porter, General Partner of Ben Joseph Partners, has voting and investment power over the shares it is offering for resale.

(10)	The selling stockholder indicated to us that Ken Brower, Chief Financial Officer of Diker Micro Cap Fund LP, has voting and investment power over the shares it is offering for resale.

(11)	The selling stockholder indicated to us that James Scaplen, Chief Financial Officer of Trellus Partners LP, has voting and investment power over the shares it is offering for resale.

(12)	The selling stockholder indicated to us that Paul D. Berlacher, Trustee of the Paul D. Berlacher Irrev. Trust, has voting and investment power over the shares it is offering for resale.

(13)	The selling stockholder indicated to us that Audrey E. Berlacher, Trustee of the Audrey E. Berlacher Rev Trust, has voting and investment power over the shares it is offering for resale.

(14)	The selling stockholder indicated to us that Bruce E. Terker, Trustee of the Robert A. Berlacher 2004 Family Trust, has voting and investment power over the shares it is offering for resale.

(15)	The selling stockholder indicated to us that Robert A. Berlacher, General Partner of Chardonnay Partners, LP, has voting and investment power over the shares it is offering for resale.

(16)	The selling stockholder indicated to us that Harry Mittelman, Trustee of the Harry Mittelman Revocable Living Trust, has voting and investment power over the shares it is offering for resale.

(17)	The selling stockholder indicated to us that John S. Lemak, Manager of JSL Kids Partners, has voting and investment power over the shares it is offering for resale.

(18)	The selling stockholder indicated to us that Robert B. Prag, Trustee of The Del Mar Consulting Group, Inc. Retirement Plan Trust, has voting and investment power over the shares it is offering for resale.

(19)	The selling stockholder indicated to us that Julie Krupala, Secretary of Mobivity Partners, has voting and investment power over the shares it is offering for resale.

(20)	The selling stockholder is, or is an affiliate of, an executive officer or director of our company.

(21)	The selling stockholder indicated to us that Carol Frankenfield, General Partner of ACT Capital Partners, LP, has voting and investment power over the shares it is offering for resale.

(22)	The selling stockholder indicated to us that Amir L. Ecker, IRA Owner of Delaware Charter G T Cust. FBO Amir L. Ecker IRA, has voting and investment power over the shares it is offering for resale.

(23)	The selling stockholder indicated to us that Amir L. Ecker, General Partner of The Ecker Family Partnership, has voting and investment power over the shares it is offering for resale.

(24)	The selling stockholder indicated to us that Gregory J. Berlacher, Owner of Emerging Growth Equities Ltd PSP dtd 9/1/99 FBO Gergory J. Berlacher 401k, has voting and investment power over the shares it is offering for resale.

(25)	The selling stockholder indicated to us that Jay D. Seid, Owner of Emerging Growth Equities Ltd PSP dtd 9/1/99 FBO Jay D. Seid 401k, has voting and investment power over the shares it is offering for resale.

(26)	The selling stockholder indicated to us that John S. Lemak, IRA Owner of the John S. Lemak IRA Rollover, Raymond James & Assoc. custodian, has voting and investment power over the shares it is offering for resale.

(27)	The selling stockholder indicated to us that Robert A. Berlacher, IRA Owner of Kingdom Trust Co. Roth IRA Cust FBO Robert A. Berlacher, has voting and investment power over the shares it is offering for resale.

(28)	The selling stockholder indicated to us that Robert A. Berlacher, Manager of Lancaster Investment Partners, LP, has voting and investment power over the shares it is offering for resale.

(29)	The selling stockholder indicated to us that Robert A. Berlacher, Manager of Northwood Capital Partners, LP, has voting and investment power over the shares it is offering for resale.

(30)	The selling stockholder indicated to us that Michael K. and Valerie L. Bynum, Trustees of The Michael and Valerie Bynum Living Trust, have voting and investment power over the shares it is offering for resale.

(31)	The selling stockholder indicated to us that Robert A. Berlacher, Managing Member of Berlwoods Partners, LP, has voting and investment power over the shares it is offering for resale.

-15-

Table of Contents

(32)	The selling stockholder indicated to us that Christine Groves, Partner of Cortleigh Capital Partners, LP, has voting and investment power over the shares it is offering for resale.

(33)	The selling stockholder indicated to us that Richard Johnson, IRA Owner of Kingdom Trust Company IRA c/f Richard Johnson, has voting and investment power over the shares it is offering for resale.

(34)	The selling stockholder indicated to us that Carol G. Frankenfield, General Partner of ACT Capital Management LLP, has voting and investment power over the shares it is offering for resale.

(35)	The selling stockholder indicated to us that Amir L. Ecker, IRA Owner of Delaware Charter G T Cust FBO Amir L. Ecker ROTH IRA, has voting and investment power over the shares it is offering for resale.

(36)	The selling stockholder indicated to us that Carol G. Frankenfield, IRA Owner of Delaware Charter G T Cust FBO Carol G. Frankenfield IRA, has voting and investment power over the shares it is offering for resale.

(37)	The selling stockholder indicated to us that Robert A. Berlacher, IRA Owner of Kingdom Trust Co. SEP IRA c/f Robert A. Berlacher, has voting and investment power over the shares it is offering for resale.

(38)	The selling stockholder indicated to us that Andrew Arno, Advisor of MJA Investments LLC, has voting and investment power over the shares it is offering for resale.

(39)	The selling stockholder indicated to us that Andrew Arno, Advisor of JBA Investments LLC, has voting and investment power over the shares it is offering for resale.

(40)	The selling stockholder indicated to us that Daniel C. Gardner, IRA Owner of Kingdom Trust Co. IRA FBO Daniel C. Gardner, has voting and investment power over the shares it is offering for resale.

(41)	The selling stockholder indicated to us that Peter Brodsky, Trustee of the Brodsky Family Trust, has voting and investment power over the shares it is offering for resale.

(42)	The selling stockholder indicated to us that Brian J. Grossi, Trustee of the Brian J. Grossi 2007 Revocable Trust, has voting and investment power over the shares it is offering for resale.

(43)	The selling stockholder indicated to us that John C. Lipman, Owner of Lipman Capital Group Inc. Retirement Plan, has voting and investment power over the shares it is offering for resale.

(44)	The selling stockholder indicated to us that Franz J. Berlacher, IRA Owner of Kingdom Trust Company IRA Rollover FBO Franz J. Berlacher, has voting and investment power over the shares it is offering for resale.

(45)	The selling stockholder indicated to us that Julie T. Berlacher, IRA Owner of Kingdom Trust Co. ROTH IRA c/f Julie T. Berlacher, has voting and investment power over the shares it is offering for resale.

(46)	The selling stockholder indicated to us that Dean McDonald, Limited Partner of BMO Nesbitt Burns ITF 365-24977-22, has voting and investment power over the shares it is offering for resale.

(47)	Represents shares underlying warrants issued to Emergency Growth Equities, Ltd. as placement agent compensation. The selling stockholder indicated to us that Gregory J. Berlacher has voting and investment power over the shares it is offering for resale.

(48)	The selling stockholder indicated to us that James Scaplen, Chief Financial Officer of Trellus Small Cap Opportunity Fund LP, has voting and investment power over the shares it is offering for resale.

(49)	The selling stockholder indicated to us that Eric Carter, Portfolio Manager of Kobe Partners, LP, has voting and investment power over the shares it is offering for resale.

(50)	The selling stockholder indicated to us that Clark Lehman, General Partner of Logos Partners, LP, has voting and investment power over the shares it is offering for resale.

(51)	The selling stockholder indicated to us that Lynn Bermeister, Vice President of Perritt Ultra MicroCap Fund has voting and investment power over the shares it is offering for resale.

(52)	The selling stockholder indicated to us that David Houghton has voting and investment power over the shares it is offering for resale.

(53)	The selling stockholder indicated to us that Jon Gruber, Trustee of the Gruber Trust, has voting and investment power over the shares it is offering for resale.

(54)	The selling stockholder indicated to us that Robert London, trustee of the London Family Trust, has voting and investment power over the shares it is offering for resale.

(55)	The selling stockholder indicated to us that Amir Ecker has voting and investment power over the shares it is offering for resale.

(56)	The selling stockholder indicated to us that Wink James, Managing Partner of Lacuna Hedge Fund, LLLP, has voting and investment power over the shares it is offering for resale.

(57)	The selling stockholder indicated to us that Joshua Sheinfeld, CEO of Lincoln Park Capital Fund, LLC, has voting and investment power over the shares it is offering for resale.

(58)	The selling stockholder indicated to us that Mitchell J. Soboleski, Invsetment Manager of IPO ROI US Small Cap Aktier has voting and investment power over the shares it is offering for resale.

(59)	The selling stockholder indicated to us that Larry Hopfenspirger, Grantor and Trustee of Larry C. Hopfenspirger Revocable Trust has voting and investment power over the shares it is offering for resale.

(60)	The selling stockholder indicated to us that Carolyn A. Lynch, Trustee of Peter S. Lynch Charitable Lead Unitrust 3/3/97 and Peter S. Lynch Charitable Lead Annuity U/A 3/27/96 has voting and investment power over the shares it is offering for resale.

(61)	The selling stockholder indicated to us that Peter S. Lynch, Trustee of Peter S. Lynch 1999 Unitrust, Peter S. and Carolyn A. Lynch Joint Trust with Right of Survival and The Lynch Foundation has voting and investment power over the shares it is offering for resale.

(62)	The selling stockholder indicated to us that E. R. Salovich, Trustee of Elmer R. Salovich Revocable Living Trust has voting and investment power over the shares it is offering for resale.

(63)	The selling stockholder indicated to us that Jeff Kone, Managing Member of Wall Street Capital Partners, L.P. has voting and investment power over the shares it is offering for resale.

-16-

Table of Contents

PLAN OF DISTRIBUTION

The selling stockholders may, from time to time, sell any or all of their shares of common stock on any stock exchange, market or trading facility on which the shares are traded or in private transactions. The shares owned by the selling stockholders may be sold at the then-current market price or in negotiated transactions. The selling stockholders may use any one or more of the following methods when selling shares:

●	ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;

●	block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;

●	purchases by a broker-dealer as principal and resale by the broker-dealer for its account;

●	an exchange distribution in accordance with the rules of the applicable exchange;

●	privately negotiated transactions;

●	short sales;

●	broker-dealers may agree with the selling stockholders to sell a specified number of such shares at a stipulated price per share;

●	a combination of any such methods of sale; and

●	any other method permitted pursuant to applicable law.

The selling stockholders may also sell shares under Rule 144 under the Securities Act, if available, rather than under this prospectus.

The selling stockholders may also engage in puts and calls and other transactions in our securities or derivatives of our securities and may sell or deliver shares in connection with these trades.

Broker-dealers engaged by the selling stockholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the selling stockholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated. The selling stockholders do not expect these commissions and discounts to exceed what is customary in the types of transactions involved. Any profits on the resale of shares of common stock by a broker-dealer acting as principal might be deemed to be underwriting discounts or commissions under the Securities Act. Discounts, concessions, commissions and similar selling expenses, if any, attributable to the sale of shares will be borne by a selling stockholder. The selling stockholders may agree to indemnify any agent, dealer or broker-dealer that participates in transactions involving sales of the shares if liabilities are imposed on that person under the Securities Act.

The selling stockholders may from time to time pledge or grant a security interest in some or all of the shares of common stock owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell the shares of common stock from time to time under this prospectus after we have filed a supplement to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act of 1933 amending the list of selling stockholders to include the pledgee, transferee or other successors in interest as selling stockholders under this prospectus.

-17-

Table of Contents

The selling stockholders also may transfer the shares of common stock in other circumstances, in which case the transferees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus and may sell the shares of common stock from time to time under this prospectus after we have filed a supplement to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act of 1933 amending the list of selling stockholders to include the pledgee, transferee or other successors in interest as selling stockholders under this prospectus.

The selling stockholders and any broker-dealers or agents that are involved in selling the shares of common stock may be deemed to be “underwriters” within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares of common stock purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act.

We are required to pay all fees and expenses incident to the registration of the shares of common stock. We have agreed to indemnify the selling stockholders against certain claims, damages and liabilities, including liabilities under the Securities Act.

The selling stockholders have advised us that they have not entered into any agreements, understandings or arrangements with any underwriters or broker-dealers regarding the sale of their shares of common stock, nor is there an underwriter or coordinating broker acting in connection with a proposed sale of shares of common stock by any selling stockholder. If we are notified by any selling stockholder that any material arrangement has been entered into with a broker-dealer for the sale of shares of common stock, if required, we will file a supplement to this prospectus. If the selling stockholders use this prospectus for any sale of the shares of common stock, they will be subject to the prospectus delivery requirements of the Securities Act.

The anti-manipulation rules of Regulation M under the Securities Exchange Act of 1934 may apply to sales of our common stock and activities of the selling stockholders.

-18-

Table of Contents

MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Our common stock is quoted on the OTC Bulletin Board 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.

The following table shows the reported high and low closing sale prices for our common stock based on information provided by the OTC Bulletin Board for the periods indicated.

Year Ended December 31, 2014	High		Low
Fourth Quarter	$	1.66	$	1.07
Third Quarter	$	1.38	$	0.86
Second Quarter	$	1.50	$	1.05
First Quarter	$	1.89	$	1.39
Year Ended December 31, 2013	High		Low
Fourth Quarter	$	3.00	$	1.70
Third Quarter	$	4.20	$	2.40
Second Quarter	$	2.52	$	1.02
First Quarter	$	2.04	$	1.26

Holders of Record

As of the date of this prospectus, there were 298 record holders of our common stock.

Dividends

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.

Equity Compensation Plan Information

The following table sets forth additional information as of December 31, 2014 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, 2014. 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		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)
	(a)		(b)		(c)
Equity compensation plans not approved by security holders (1)		6,085,015	$	1.92		94,259
Equity compensation plans approved by security holders		-		-		-
Total		6,085,015	$	1.92		94,259

(1) Comprised of our 2010 Incentive Stock Plan and our 2013 Incentive Stock Plan

-19-

Table of Contents

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 prospectus. 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 in the section “Risk Factors.”

Overview

We are in the business of developing and operating proprietary platforms over which resellers, brands and enterprises can conduct localized mobile marketing campaigns. Our proprietary platforms allow resellers, brands and enterprises to market their products and services to consumers through text messages sent directly to the consumers’ mobile phones, content on printed receipts, mobile device applications, which consists of software available to both phones and tablet PCs. We generate revenue by charging the brands and enterprises a per-message transactional fee, or through fixed or variable software licensing fees. Our customers include national franchisers, professional sports teams and associations and other national brands such as Sonic Drive-In, Subway, Jamba Juice, Chick-Fil-A, and others.

Mobile phone users represent a large and captive audience. While televisions, radios, and even PCs are often shared by multiple consumers, mobile phones are personal devices representing a unique and individual address to the end user. We believe that the future of digital media will be significantly influenced by mobile phones where a direct, personal conversation can be had with the world’s largest target audience. According to a report published by International Data Corporation (IDC), by 2015, more U.S. Internet users will access the Internet through mobile devices than through PCs or other wireless devices (Worldwide New Media Market Model 1H-2012 Highlights: Internet Becomes Ever More Mobile, Ever Less PC-Based (IDC #237459)). The IDC study further reports that the number of people accessing the Internet, in the U.S., through PCs will shrink from 240 million consumers in 2012 to 225 million in 2016. At the same time, the number of mobile users will increase from 174 million to 265 million. We believe the future of mobile applications and services includes banking, commerce, advertising, video, games and just about every other aspect of both on and offline life.

Our “C4” Mobile Marketing and customer relationship management platform is a Web-hosted software solution enabling our clients to develop, execute, and manage a variety of marketing engagements, to a consumer’s mobile phone. Our C4 solution allows our clients to communicate directly with their customers through Short Messaging Service, or SMS, multi-media messaging, and interactive voice response interactions, all of which are facilitated via a set of graphical user interfaces operated from any Web browser.

Stampt’s nearby feature shows consumers all of the rewards they can earn at nearby businesses. From the Stampt mobile device application, consumers simply tap any business to learn more about that business and to see all of the loyalty points they have earned at that business. Consumers can keep track of all of the rewards they are close to earning through the “my cards” feature displayed in the application’s interface. Once a consumer has earned all of the Stampt’s they need for a reward, they simply show the cashier and click “tap to redeem” button from the application interface on their device. Our customers can create and manage any Stampt program from the C4 platform’s set of Web-based interfaces.

-20-

Table of Contents

Our SmartReceipt solution enables our customers with the ability to control the content on receipts printed from their point of sale, or POS system. SmartReceipt is a software application that is installed on the POS which dynamically controls what is printed on receipts such as coupons, announcements, or other calls-to-action such as invitations to participate in a survey. Receipt includes a Web-based interface where users can design receipt content and implement business rules to dictate what receipt content is printed in particular situations. All receipt content is also transmitted to SmartReceipt’s server back-end for storage and analysis. Our C4 solution integrates with SmartReceipt by support SMS marketing or Stampt mobile application calls-to-action which can be printed on receipt content by SmartReceipt.

We also offer our clients reporting and analytics capabilities through the C4 solution which allows our clients to assess the effectiveness of their mobile marketing campaigns and design more effective campaigns. Our proprietary platform connects to all wireless carriers so that any consumer, on any wireless service (for example, Verizon), can join our customer’s mobile marketing campaign. Once the consumer has subscribed to our customer’s mobile marketing campaign, our C4 Web-based software solution serves as a tool by which our customers can initiate messages and other communications back to their subscribed consumers, as well as configure and administer their mobile marketing campaigns.

We believe that mobile devices are emerging as an important interactive channel for brands to reach consumers since it is the only media platform that has access to the consumer virtually anytime and anywhere. According to eMarketer’s article, published August 1, 2013 (http://www.emarketer.com/Article/Digital-Set-Surpass-TV-Time-Spent-with-US-Media/1010096), U.S. adults now spend more time on their mobile device than any other digital channel such as PCs. eMarketer also reports that U.S. adults already spend more time on their mobile phone than viewing print or listening to radio combined. We believe that brands and advertising agencies are recognizing the unique benefits of the mobile channel and they are increasingly integrating mobile media within their overall advertising and marketing campaigns. Our objective is to become the industry leader in connecting brands and enterprises to consumers’ mobile phones.

Recent Events

2015 Securities Purchase Agreement

In March 2015, we conducted the private placement of our securities for the gross proceeds of $4,805,000. In the private placement, we sold 4,805,000 units of our securities at a price of $1.00 per unit. Each unit consists of one share of our common stock and a common stock purchase warrant to purchase one-quarter share of our common stock, over a five year period, at an exercise price of $1.20 per share. We entered into a Registration Rights Agreement with the investors, pursuant to which we agreed to cause a resale registration statement covering the common shares made part of the units to be filed by April 30, 2015. The Registration Rights Agreement also provides that we must make certain payments as liquidated damages to the investors if it fails to timely file the registration statement and cause it to become effective.

Emerging Growth Equities, Ltd. (“EGE”) acted as placement agent for the private placement and received $234,500 in commissions from us. In addition, for its services as placement agent, we issued to EGE warrants to purchase an aggregate of 234,500 units, as defined above, exercisable for a period of five years from the closing date, at an exercise price of $1.00 per unit.

-21-

Table of Contents

2014 Smart Receipt Acquisition

On March 12, 2014, we acquired all of the assets of SmartReceipt, Inc. in exchange for: (1) our payment at closing of $2.212 million of cash, net of a $150,000 loan made by us to SmartReceipt in January 2014; (2) our issuance of 504,884 shares of our common stock; and (3) our earn-out payment of 200% of the “eligible revenue” over the 12 month period following the close of the transaction (“earn-out period”). The “eligible revenue” will consist of: 100% of our revenue derived during the earn out period from the sale of SmartReceipt products and services to certain SmartReceipt clients as of the close (the “designated SmartReceipt clients”); plus 50% of our revenue derived during the earn out period from the sale of our products and services to the designated SmartReceipt clients, plus 50% of our revenue derived during the earn out period from the sale of SmartReceipt products and services to our clients who are not designated SmartReceipt clients. The earn-out payment will be payable in our common shares at a rate of $1.38 per share, representing the volume weighted average trading price of our common stock for the 90 trading days preceding the initial close.

2014 Securities Purchase Agreement

In March 2014, we conducted the private placement of 5,413,000 units of our securities at a price of $1.00 per unit for the gross proceeds of up to $5,413,000. Each unit consisted of one share of our common stock and a common stock purchase warrant to purchase one-quarter share of our common stock, over a five year period, at an exercise price of $1.20 per share. We entered into a Registration Rights Agreement with the investors, pursuant to which we agreed to cause a resale registration statement covering the common shares made part of the units to be filed by May 15, 2014. The Registration Rights Agreement also provides that we must make certain payments as liquidated damages to the investors if we fail to timely file the registration statement and cause it to become effective. EGE acted as placement agent for the private placement and received $370,685 in commissions from us. In addition, for its services as placement agent, we issued to EGE warrants to purchase an aggregate of 370,685 units, as defined above, exercisable for a period of five years from the closing date, at an exercise price of $1.00 per unit.

Reverse Stock Split

On November 12, 2013, we effected a 1 for 6 reverse stock split of the outstanding shares of our common stock and reduced our authorized common stock to 50,000,000 shares. All historical share and share price information have been adjusted retrospectively to give effect to the reverse stock split.

2013 Acquisitions

In May 2013, we acquired the assets of Sequence, LLC (“Sequence”) related to a mobile customer loyalty application (“Stampt)”. The acquired assets include all application software, URL’s, websites, trademarks, brands, customers and customer lists. We assumed no liabilities of Sequence.

The purchase price consisted of: (1) $300,000 in cash; (2) 125,000 shares of our common stock which were valued at $183,750 based on the closing market price on the acquisition date; and (3) twenty-four monthly earn-out payments consisting of 10% of the eligible monthly revenue subsequent to closing.

Also in May 2013, we acquired certain assets and liabilities of Front Door Insights, LLC (“FDI”) pursuant to an asset purchase agreement. The assets and liabilities acquired from FDI consisted of cash on hand, accounts receivable, all rights under all contracts other than excluded contracts, prepaid expenses, all technology and intellectual property rights, accounts payable, and obligations under a commercial lease.

The purchase price consisted of: (1) $100,000 in cash; (2) a promissory note in the principal amount of $1,400,000; and (3) 1,166,667 shares of our common stock which were valued at $1,112,310 based on the closing market price on the acquisition date.

-22-

Table of Contents

2013 Private Placement and Conversion of Bridge Notes

Between June and August 2013, we conducted the private placement of 6,130,000 shares of our common stock at $1.20 per share and received net proceeds of $6,897,177. We also converted all of our outstanding Bridge Notes and substantially all of our interest payable on the Bridge Notes into 4,462,089 shares of our common stock at a rate of $1.20 per share. We no longer have any Bridge Notes outstanding. EGE acted as a placement agent for the private placement and received $439,300 in commissions from us. In addition, for its services as placement agent, we issued to EGE warrants to purchase an aggregate of 605,910 shares of our common stock, exercisable for a period of five years from the closing date, at an exercise price of $1.20 per share.

Results of Operations

Year Ended December 31, 2014 Compared to Year Ended December 31, 2013

Revenues

Revenues for 2014 were $4,000,202, a decrease of $93,465, or 2.0%, compared to 2013. The decrease is primarily attributable to attrition of large enterprise clients, as well as revenue from one-time events that did not recur in 2014, in the amount of $747,059, and declining small business based revenues of $385,334. These decreases were offset by an increase of $232,985 in Reseller based revenues, and an increase of $805,943 resulting from the Company’s acquisition of SmartReceipt, and other minor factors.

Cost of Revenues

Cost of revenues for 2014 was $1,066,917, a decrease of $55,120, or 5.0%, compared to 2013. This decrease is primarily attributable to a $93,179 reduction in SMS costs resulting from negotiated cost reductions and lower overall messaging volume, and savings in merchant fees and affiliate commissions. These savings were partially offset by higher server costs as compared to 2013 resulting from additional needs to support the various acquisitions that took place in 2013 and 2014.

General and Administrative

General and administrative expenses consist primarily of salaries and personnel related expenses, stock-based compensation expense, consulting costs and other expenses.

General and administrative expenses increased $853,994, or 25%, during 2014 compared to 2013. The increase in general and administrative expense was primarily due to higher stock based compensation expense of $823,000; higher facilities costs of $97,000 due to the SmartReceipt acquisition and additional office space in San Diego, CA; additional personnel expenses of $82,000, which included additional HR fees due to the procurement of TriNet PEO HR services; and higher dues and subscriptions of $67,000, partially from the SmartReceipt acquisition and from companywide software licensing fees increased due to staffing increases. These increases were partially offset by reductions in legal expense of $236,000.

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 increased $425,650, or 12%, during 2014 compared to 2013. The increase in sales and marketing expense was primarily due to higher employee related expense of $687,000 due to the acquisition of SmartReceipt, and higher travel and tradeshow expenses of $198,000 partially offset by a decrease in stock based compensation expense of $384,000.

-23-

Table of Contents

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 increased $521,545, or 63%, during 2014 compared to 2013. The increase in engineering, research, and development expenses was primarily due to higher employee related expenses.

Depreciation and Amortization Expense

Depreciation and amortization expense consists of depreciation on our equipment and amortization of our intangible assets.

Depreciation and amortization expense increased $145,857, or 54%, during 2014 compared to 2013 as a result of an increase in amortization expense from our acquired intangible assets of SmartReceipt in 2014.

Amortizable base of our intangible assets in 2014 increased because of the acquisition of SmartReceipt in 2014.

Goodwill Impairment and Intangible Asset Impairment

During 2014 and 2013, we recorded goodwill impairment charges of $4,078,693 and $1,066,068, respectively, relating to our recent acquisitions. Also during 2014 and 2013, we recorded intangible asset impairment charges of $961,436 and $644,170, respectively. The impairment charges were based on our valuation of these acquired assets at December 31, 2014 and 2013.

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 decreased $6,348,186 or 100%, during 2014 compared to 2013. The decrease in interest expense was attributable to our conversion of debt (convertible notes) in 2013, which eliminated the majority of our debt.

Change in Fair Market Value of Derivative Liabilities

The change in fair value of derivative liabilities for 2014 and 2013 was a gain of $63,517 and a loss of $3,766,231, respectively. The value of the derivative liabilities at any given date is based upon the value and volatility of our common stock and the number of potentially issuable shares, among other less significant factors. In periods when our stock price or volatility rises, we expect to record a loss in the change in fair value of the derivative liabilities. During the first half of 2013, there were several triggering events for the derivative liabilities which increased the number of potentially issuable shares due to a lower exercise price; which greatly increased the liability and derivative losses recorded. However, during the second half of 2013, starting with the June 17, 2013 conversion of the bridge notes into equity, our exposure to these variations in derivative liabilities was significantly reduced. See Note 4 for further information.

Gain on Adjustment in Contingent Consideration

The gain (loss) on adjustment in contingent consideration for 2014 and 2013 was a gain of $1,492,000 and a loss of $28,464, respectively. The gain in 2014 relates to decrease in estimated earn out payable for SmartReceipt acquisition. The loss in 2013 relates to an increase in the estimated earn-out for the BoomText acquisition on the payment closing date, partially offset by a decrease in the estimated earn out payable from the Sequence acquisition.

-24-

Table of Contents

Liquidity, Capital Resources and Going Concern

As of December 31, 2014, we had current assets of $1,337,010, including $848,230 in cash, and current liabilities of $1,704,890, resulting in a working capital deficit of $(367,880). Current liabilities as of December 31, 2014 included an estimated earn-out in the amount of $840,000 and derivative liabilities in the amount of $42,659, all of which are payable in shares of our common stock. Giving no effect to the estimated earn-out and derivative liabilities, we had pro forma working capital as of December 31, 2014 in the amount of $514,779. Since December 31, 2014, our working capital has increased as a result of our gross receipts from our private placement of $4,805,000 of our securities in March 2015, partially offset by continuing losses from operations. We believe that as of the date of this report, we have working capital on hand adequate to support our working capital for at least the next 12 months. However, there can be no assurance that we will not require additional capital within the next 12 months. If we require additional capital, we will seek to obtain additional working capital through the sale of our securities and, if available, bank lines of credit. However, there can be no assurance we will be able to obtain access to capital as and when needed and, if so, the terms of any available financing may not be subject to commercially reasonable terms.

Cash Flows

	Years ended December 31,
	2014			2013
Net cash provided by (used in):
Operating activities	$	(4,298,302	)	$	(2,948,888	)
Investing activities		(2,403,283	)		(466,285	)
Financing activities		4,977,130			5,987,495
Net change in cash	$	(1,724,455	)	$	2,572,322

Operating Activities

We used cash in operating activities totaling $4,298,302 in 2014 and $2,948,888 in 2013, respectively. The increase in cash used in operating activities in 2014 compared to 2013 was due primarily to increased payroll related expenses, increased travel related expenses, and increased consulting expenses that we added during the year to support our sales effort and continued development effort of the technology we acquired during 2013 and 2014.

Investing Activities

Investing activities during 2014 includes $2,368,019 in cash consideration used in our acquisitions during the year, and the remainder relates to additions to our fixed assets and capitalized patent costs.

Financing Activities

Financing activities for 2014 include net proceeds from the sale of common stock of $4,977,130. Financing activities for 2013 include net proceeds from the sale of common stock of $6,897,177 and proceeds from the issuance of notes payable of $700,000, partially offset by payments on notes payable of $1,609,682.

Critical Accounting Policies and 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 and valuation of the derivative liability. 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.

-25-

Table of Contents

The following critical accounting policies affect the more significant judgments and estimates used in the preparation of the Company’s consolidated financial statements.

Revenue recognition

Our SmartReceipt and C4 Mobile Marketing and customer relationship management are hosted solutions. 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. We recognize revenue at the time that the services are rendered, the selling price is fixed, and collection is reasonably assured, provided no significant obligations remain. 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 is 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.

We generate revenue from the Stampt App through customer agreements with business owners. Revenue is principally derived from monthly subscription fees which provide a license for unlimited use of the Stampt App by the business owners and their customers. The subscription fee is billed each month to the business owner. Revenue is recognized monthly as the subscription revenues are billed. There are no per-minute or transaction fees associated with the Stampt App.

During the year ended December 31, 2014, one customer accounted for 29% of our revenues. During the year ended December 31, 2013, one customer accounted for 31% of our revenues.

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 employee’s 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 the 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 Company’s common stock. We use comparable public company data among other information to estimate the expected price volatility and the expected forfeiture rate.

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 convertible debt and equity instruments we issue to determine whether there are embedded derivative instruments, including the embedded conversion option, that are required to be bifurcated and accounted for separately as a derivative financial instrument. In circumstances where the convertible 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. Also, in connection with the sale of convertible debt and equity instruments, we may issue freestanding warrants that may, depending on their terms, be accounted for as derivative instrument liabilities, rather than as equity.

Bifurcated embedded derivatives are initially recorded at fair value and are then revalued at each reporting date with changes in the fair value reported as non-operating income or expense. When the convertible debt or equity instruments contain embedded derivative instruments that are to be bifurcated and accounted for as liabilities, the total proceeds allocated to the convertible host instruments are first allocated to the fair value of all the bifurcated derivative instruments. The remaining proceeds, if any, are then allocated to the convertible instruments themselves, usually resulting in those instruments being recorded at a discount from their face value. The discount from the face value of the convertible debt, together with the stated interest on the instrument, is amortized over the life of the instrument through periodic charges to income, using the effective interest method.

The fair value of the derivatives is estimated using a Monte Carlo simulation model. The model utilizes a series of inputs and assumptions to arrive at a fair value at the date of inception and each reporting period. Some of the key assumptions include the likelihood of future financing, stock price volatility, and discount rates.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

-26-

Table of Contents

OUR BUSINESS

General

We are in the business of developing and operating proprietary platforms over which brands and enterprises can conduct national and localized data-driven mobile marketing campaigns. Our proprietary platforms, consisting of software available to phones, tablets PCs, and Point of Sale (POS) systems, allow resellers, brands and enterprises to market their products and services to consumers through text messages sent directly to the consumers’ mobile phones, mobile smartphone applications and dynamically printed receipt content. We generate revenue by charging the resellers, brands and enterprises a per-message transactional fee, through fixed or variable software licensing fees or via advertising fees. Our customers include national franchisers, professional sports teams and associations and other national brands such as the Sonic Drive-In, Subway, Chick-Fil-A, Jamba Juice, and others.

Our “C4” Mobile Marketing and customer relationship management platform is a Web-hosted software solution enabling our clients to develop, execute, and manage a variety of marketing engagements to a consumer’s mobile phone. Our C4 solution allows our clients to communicate directly with their customers through Short Messaging Service, or SMS, multi-media messaging, smartphone application development and interactive voice response interactions, all of which are facilitated via a set of graphical user interfaces operated from any Web browser.

Our C4 platform also allows our customers to deploy and administer our “Stampt” mobile device loyalty application. Stampt is a smartphone replacement for “Buy 10, Get 1 free” punch cards. Consumers no longer need to worry about forgetting paper-based loyalty punch cards. Stampt makes it easy to receive all of the rewards consumers want from their favorite businesses. Consumers can use Stampt throughout the United States to earn free sandwiches, coffee, pizza, frozen yogurt, donuts, bagels and more. Stampt’s nearby feature shows consumers all of the rewards they can earn at nearby businesses. From the Stampt mobile device application, consumers simply tap any business to learn more about that business and to see all of the loyalty points they have earned at that business. Consumers can keep track of all of the rewards they are close to earning through the “my cards” feature displayed in the application’s interface. Once a consumer has earned all of the Stampts they need for a reward, they simply show the cashier and click “tap to redeem” button from the application interface on their device. Our customers can create and manage any Stampt program from the C4 platform’s set of Web-based interfaces.

Our “SmartReceipt” solution enables our customers with the ability to control the content on receipts printed from their point of sale, or POS system. SmartReceipt is a software application that is installed on the POS, or directly onto receipt printer platforms, such as Epson’s OmniLink product, which dynamically controls what is printed on receipts such as coupons, announcements, or other calls-to-action, such as invitations to participate in a survey. SmartReceipt includes a Web-based interface where users can design receipt content and implement business rules to dictate what receipt content is printed in particular situations. All receipt content is also transmitted to SmartReceipt’s server back-end for storage and analysis. Our SmartReceipt solution is fully integratable with our C4 platform and allows our customers to print SMS marketing or Stampt mobile application calls-to-action on receipts.

We also offer our clients reporting and analytics capabilities through the C4 solution which allows our clients to assess and optimize their mobile marketing and SmartReceipt campaigns. . Our proprietary platform connects to all wireless carriers so that any consumer, on any wireless service (for example, Verizon), can join our customer’s SMS mobile marketing campaign. Once the consumer has subscribed to our customer’s SMS mobile marketing campaign, our C4 Web-based software solution serves as a tool by which our customers can initiate messages and other communications back to their subscribed consumers, as well as configure and administer their mobile marketing campaigns.

-27-

Table of Contents

We believe that mobile devices are emerging as an important interactive channel for brands to reach consumers since it is the only media platform that has access to the consumer virtually anytime and anywhere. According to an August 2013 eMarketer report, U.S. adults now spend more time on their mobile device than any other digital channel such as PCs. eMarketer also reports that U.S. adults already spend more time on their mobile phone than viewing print or listening to radio combined. We believe that brands and advertising agencies are recognizing the unique benefits of the mobile channel and they are increasingly integrating mobile media within their overall advertising and marketing campaigns. We also believe the future of mobile applications and services includes banking, commerce, advertising, video, games and just about every other aspect of both on and offline life. Our objective is to become the industry leader in connecting brands and enterprises to consumers’ mobile phones.

Company Strategy

Our objective is to build an industry-leading Software-as-a-Service (SaaS) product that connects consumers to merchants and brands. 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 proprietary “SmartReceipt” receipt intercept technology. Several years of development went into designing SmartReceipt such that the process of intercepting receipt data and controlling the receipt printer is scalable, portable to a wide variety of POS platforms, and does not impact the print speed of other performance characteristics of a typical receipt printer. Furthermore, we believe the transmission of receipt data to Mobivity’s cloud-based data stores presents a very competitive and innovative method of enabling POS data access. Additionally, we believe that our C4 SMS text messaging platform is more advanced than technologies offered by our competitors and provides us with a significant competitive advantage. With more than seven years of development, we believe that our C4 platform operates SMS text messaging transactions at a “least cost” relative to competitors while also being capable of supporting SMS text messaging transactional volume necessary to support our goal of several thousand end users. Additionally, our C4 platform supports interactive voice response, or, capabilities that we believe are unique to our solution and will allow Mobivity to deliver additional capabilities beyond SMS text messaging that will be unique and valuable to the marketplace. Our C4 platform also provides features that allow our customers to manage their Stampt mobile device application in conjunction with SMS text messaging campaigns, which we believe is a unique combination of both SMS text messaging and mobile device application management.

Evolve our sales and customer support infrastructure to uniquely serve very large customer implementations such as franchise-based brands who operate a large number of locations. Over the past few years we have focused our efforts on the development of our technology and solutions with the goal of selling and supporting small and medium-sized businesses. Going forward, we intend to increase significantly our investments in sales and customer support resources tailored to selling to customers that operate franchise brands.

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 pipeline and growth prospects; (3) break-even or positive cash flow; (4) opportunities for substantial expense reductions through integration into our platform; (5) strong sales teams; and (6) technology and services that further build out and differentiate our platform. 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 five issued patents that we believe have significant potential application in the mobile marketing 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.

-28-

Table of Contents

Industry Background

We believe industry trends point to a shift in the local marketing industry in both how merchants and brands market their products and services to local customers. We believe that consumers are transitioning to new digital channels and moving away from legacy marketing channels. It is this transition that we believe has created an opportunity for new and innovative local marketing services and technologies to evolve. We believe that consumers are increasingly devoting their attention and lifestyle to mobile devices and that marketers will need new products, technologies, and services tailored for consumer’s mobile devices.

According to BIA/Kelsey’s U.S. Local Media Forecast (2012-2017), local marketing spend is projected to grow from $132.5 billion in 2012 to $148.8 billion by 2017. Local marketing is comprised of “traditional” channels, such as radio, print, or television, and “digital” channels such as personal computers, mobile phones, or tablets. BIA/Kelsey projects that local marketing spend on traditional channels will decrease 2.2% in 2013, while local marketing spend on digital channels will grow 11.7%. BIA/Kelsey also forecasts that local mobile marketing spend will increase 750% by 2017 to $9.1B.

According to tracking firm eMarketer's data, while U.S. adults spend on average 4 hours and 31 minutes per day viewing TV, in 2013 they will spend 5 hours and 9 minutes every day on average using digital media such as mobile apps, streaming video, games, or browsing the Web. Furthermore, eMarketer reports that the leading digital platform is the mobile device which, at 2 hours and 21 minutes per day, exceeds the combined time spent on print (32 minutes) and radio (1 hour, 26 minutes).

Mobile marketing campaigns use multiple channels to reach the consumer, including mobile web sites, mobile applications, mobile messaging and mobile video, all of which can be integrated into interactive campaigns. Each channel can link to additional mobile content or channels, as well as to complementing traditional media. Mobile marketing provides a powerful, instant and interactive response path in that consumers may send a keyword to a short code via SMS, or register on a mobile web site. This makes the mobile phone a precisely targeted communication channel, where users are highly engaged with content. As a result, the mobile channel is believed to be a highly effective campaign tool and its response levels are high compared to other media. We believe that mobile is valuable as a stand-alone medium for marketing, but it is also well suited for a vital role in fully integrated cross-media campaign plans, including TV, print, radio, outdoor, cinema, online and direct mail. We believe that the future of digital media will be significantly influenced by mobile phones where a direct, personal conversation can be had with the world’s largest network.

The Mobivity Solution

Our mobile marketing platform is designed to allow brands to operate mobile marketing campaigns, as well as resellers to market their own mobile marketing platform under their own brand identity. As of the date of this report, we have approximately 8,000 customers utilizing our mobile marketing platform and we deliver on their behalf an average of 8 million SMS text messages per month. We have approximately 9,000 additional customers using our Smart Receipt solution and we process on their behalf an average of 20.4 million receipt transactions per month. Our customers are spread over all industries that market to individual consumers and range in size from national franchisers to the single site family-owned business. Our clients access our “C4” solution through a standard Web browser that allows them to directly conduct the setup, messaging, and ongoing customer relationship management with the consumers they market to. Our customers are given a dedicated support representative along with account credentials to access their own C4 account from any Web browser.

-29-

Table of Contents

Campaign Setup: Initially, our clients will use their own C4 account on our proprietary platform to design their mobile marketing campaign for purposes of attracting customers to subscribe for the customer’s mobile messaging service. In compliance with federal and state laws relating to mobile marketing, marketers typically attract customers to their mobile messaging service through media communications distributed through non-mobile devices, media, other than mobile devices, including store signage, billboards, other forms of print media, and digital media not directed through a mobile device. Our C4 solution also allows for the creation and design of digital display graphics that can be displayed on television screens, digital scoreboards, or other digital screens where an animated or more graphically rich solicitation may be desired. Digital displays are particularly useful on large digital scoreboard displays at sporting events. Through these various forms of communication, customers of our clients will be invited to subscribe to SMS text messaging communications (for example, “Join our mobile VIP club! Text “Pizza” to 12345”) or to set-up loyalty offers through our Stampt smartphone loyalty application (for example, “Download Stampt, use your iPhone or Android phone to join our loyalty program – “buy five sandwiches and get one free!”). Consumers responding to these communications will be directed to our clients’ own C4 account on our proprietary platform, where our platform records and stores the consumer’s relevant information for access by our client stores. Once the consumer has subscribed to our customer’s mobile marketing campaign, our C4 solution serves as a tool by which our customers can initiate messages and other communications back to their subscribed consumers, as well as configure and administer their mobile marketing campaigns.

Messaging. Our C4 platform allows for marketers to instantly message their subscribers via SMS text messaging or “push” messaging to users of the Stampt smartphone application. Our platform is designed to be a fully automated, self-executing tool where our clients access their own C4 account on our proprietary platform, design and create their mobile marketing message, designate to whom among their list of opted-in consumers the message will be sent and then select the time (or times) the message will be distributed. Each customer is assigned a dedicated support representative to provide support in this process, however the platform is designed to provide the customer with the ability to design and carry-out the entire campaign through their remote online access to our platform. Our customers are provided with an instant communication channel to alert their subscribers of events, specials, or other announcements. Our C4 platform provides various messaging tools for marketers to create and initiate these messages in real-time or for future broadcasts. The solution also allows the marketer to connect to Facebook or Twitter accounts so that their messaging broadcasts can be promoted to select social media channels if desired.

Customer Relationship Management (CRM). Our C4 solution offers our customers a variety of CRM services, including the success rate for each media campaign designed to attract subscribers to the customer’s mobile marketing campaign, historical data and success rate with regard to each mobile message sent. The subscriber records and through various reporting features offered by the CRM function provide marketers with quick access to a variety of useful data points. Tracking subscriber and messaging activity over time is useful in handling customer inquiries or issues with the marketing program or to gain insights into subscriber behavior. For example, a marketer might want to examine how the total number of subscribers gained from a recent promotion of their call-to-action. The Mobivity solution provides various default reports while allowing for Mobivity customers to request custom reports tailored for their specific needs.

Stampt Smartphone Loyalty Application. Stampt is a smartphone application available to both iPhone and Android smartphones. The application is acquired by consumers via download from the Apple App Store or Google Play market service. Once installed, consumers can view local merchants who are setup on our C4 platform to offer mobile loyalty cards. Mobile loyalty cards allow consumers using Stampt to visit merchants and participate in loyalty programs (for example, “buy 10, get 1 free”) that are setup by merchants using the Mobivity solution. Consumers can also receive instant offers sent from merchants through our platform’s messaging features. The Stampt application allows consumers to register purchases by using the Stampt application on their smartphone to take a quick picture of a special code that the merchant provides at the time of purchase. The purchase is also registered on the merchant’s own account on our C4 platform. The Stampt application instantly verifies the consumer’s location at the related merchant’s location of business and registers the purchase. Purchases are then depicted on the Stampt application so the consumer and the merchant know how many purchases are required to earn a reward.

-30-

Table of Contents

Smart Receipt. Our SmartReceipt solution enables our customers the ability to control the content on receipts printed from their point of sale, or POS system. SmartReceipt is a software application that is installed on the POS which dynamically controls what is printed on receipts such as coupons, announcements, or other calls-to-action such as invitations to participate in a survey. SmartReceipt includes a Web-based interface where users can design receipt content and implement business rules to dictate what receipt content is printed in particular situations. All receipt content is also transmitted to SmartReceipt’s server back-end for storage and analysis. Our C4 solution integrates with SmartReceipt by supporting SMS marketing or Stampt mobile application calls-to-action which can be printed on receipt content by SmartReceipt.

Resellers. Our platform can be white-labeled to allow for resellers or agents to market and deliver their own branded mobile marketing solution complete with all of the features of the C4 platform. Resellers are provisioned their own Web-based administration system whereby they can create and track their own customers’ use of the product.

In the future, we intend to develop additional platform features that with the goal of driving additional value to the evolving mobile marketing industry.

Marketing and Sales

We market and sell the services offered over our proprietary C4 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 four sales representatives employed by us to promote and sell our services in various geographical areas.

·	Resellers. We sell our services via wholesale pricing of licensing and transactional fees to 55 various resellers who market and sell the Mobivity services under their own brand.

·	Agents. We also engage eight 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 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 text messaging feature for one location will pay a much lower recurring licensing fee that a marketer who desires our full breadth of product features and needs to drive localized marketing campaigns across 50 locations in various cities or locales.

In addition to license fees, we also arrange for a transaction fee in special cases where our customers require greater bandwidth or throughput to process large volumes of mobile messaging transactions. For example, a customer may want to utilize our services for a major sporting event when there may be tens of thousands of fans who are expecting a “score alert” sent to their mobile phone via a SMS text message. In this case, the required resources to facilitate a large number of SMS messages in a short period of time is much higher and therefore we may charge an additional per-SMS text message fee to our customer.

-31-

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. As of the date of this report, we have four full time employees engaged in engineering and software developments and one full-time employee engaged in quality assurance and testing in our development centers located at our facilities in San Diego, CA. We have one full time employee engaged in engineering and software development at our corporate headquarters in Chandler, AZ. Additionally, we have software development and engineering contractors located in California, Sri Lanka and Spain that are used on an as needed basis. We also contract with various outsourced development and engineering partners in the United States. 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 2014 and 2013 were $1,346,198 and $824,653, respectively.

Competition

Although the market for mobile marketing software and solutions is relatively new, it is very competitive. We compete with companies of all sizes in select geographies that offer solutions that compete with various elements of our platform and offering, such as SMS text messaging service providers or providers of mobile smartphone applications. We also compete at times with interactive and traditional advertising agencies that perform mobile marketing as part of their services to their customers. Many of these entities have significantly greater resources than we do. In addition, we compete with traditional offline coupon and discount services, as well as television, radio, newspapers, magazines and other traditional media companies that provide coupon and discount products and services to their retail enterprise customers.

Many of the leading providers of online services have begun to develop or acquire mobile marketing platforms with features similar to ours. For example, in May 2010, Google, Inc. acquired Admob, Inc. and in January 2010 Apple, Inc. acquired Quattro Wireless. Each of the acquired companies was engaged in mobile marketing. In addition, we believe that Facebook, AOL, Microsoft and Yahoo! have each begun to develop mobile marketing platforms.

We believe that the key competitive factors that differentiate us from our competitors include:

Demonstrable experience and competence. We have been providing mobile marketing services since 2006. In 2009, Sybase, an international enterprise software and services company, awarded us their Innovator of the Year. Major brands such as Sonic Drive-In, Subway, Jamba Juice, Chick-Fil-A have selected Mobivity’s products and services.

Competitive pricing. We believe we are one of the few mobile marketing providers in the industry that can provide SMS text messaging services at a flat licensing fee structure rather than charging for every SMS text message transaction processed. We also believe that we have a “least cost” operating advantage that competitors may find challenging to compete with.

Scalability. We believe that our platform is more scalable than most if not all of our competitors. Many of our customers require large volumes of mobile marketing messages to be transacted and a high quantity of end users operating our Web-based product features. We have grown our monthly messaging volume from less than 1 million SMS text messages per month in 2010 to more than 8 million per month as of the date of this report. The number of customers utilizing our Web-based products has also grown from less than 100 in 2010 to more than 8,000 as of the date of this report.

-32-

Table of Contents

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 individual's 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 five patents. U.S. Patent numbers 7991388 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.

In March 2011, we acquired US Patent number 6788769 B1 which covers a method and system for using telephone numbers as a key to address email and online content without the use of a look-up database. Using this system, a phone number is used to access a website or an email address in exactly the same way it is used to dial a telephone.

U.S. Patent numbers 8,463,306 and 8,818,434 were issued on June 11, 2013 and August 26, 2014, respectively. These patents cover a method and system for testing a SMS text messaging network. The method and system allows for real-time testing of the initiation and completion of SMS text messages and any delivery delays across the major American mobile phone carriers, and accurately measures the progress on SMS broadcasts and records when a broadcast has been completed.

Our issued and any future patents that 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.

-33-

Table of Contents

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.

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 customer's 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 individual's 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.

-34-

Table of Contents

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 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 FTC's 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 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 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.

-35-

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 Children's 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.

Employees

As of March 15, 2015, we had 44 employees, consisting of seven full-time and two part-time in research and development, 27 full-time and one part-time in sales and marketing, five full-time in general and administrative and two full-time in operations.

Property

We currently lease 6,730 square feet of office space located at 58 W. Buffalo St., Chandler, Arizona. Monthly rental payments, excluding common area maintenance charges, are $11,557 in 2013, $11,958 in 2014 and $12,357 in 2015. The 63 month lease term expires December 31, 2015. We believe the property is sufficient for our needs at this time.

We also have a month to month lease for approximately 1000 square feet of office space in Solana Beach, California at a monthly expense of $2,500; a month to month lease for approximately 700 square feet of office space in North Huron, Michigan at a monthly expense of $600; and a lease through September 2014 of approximately 2,864 square feet of office space in Santa Barbara, California at a monthly expense of $6,800.

We also have a month lease for approximately 700 square feet of office space in North Huron, Michigan at a monthly expense of $600.

Litigation

There are no pending legal proceedings, other than routine litigation incidental to our business, to which we or our properties are subject.

-36-

Table of Contents

MANAGEMENT

Set forth below are our directors and officers:

Name	Age	Position
Dennis Becker	41	Chief Executive Officer and Director
Christopher Meinerz	48	Chief Financial Officer
Alex Shah	45	Chief Technology Officer
Donna Mitchell	51	Senior Vice President Sales and Business Development
Deena McKinley	40	Senior Vice President Client Services and Marketing
William Van Epps	66	Executive Chairman and Director
John Harris	66	Lead Director and Chairman of Compensation Committee
David Jaques	59	Chairman of Audit Committee and Director
Phillip Guarascio	73	Chairman of Governance and Nominating Committee and Director
Doug Schneider	52	Director

Dennis Becker - Chief Executive Officer and Director

Dennis Becker was appointed our Chief Executive Officer and a Director effective as of our acquisition of Mobivity, Inc. in November 2010. Mr. Becker has also served as President and Chief Executive Officer of Mobivity, Inc. since September, 2007. He was a founder of Frontieric Corporation, a pioneer in providing complex call routing and merchant processing applications, where he was Chief Executive Officer from 2002 to 2005. Mr. Becker was also Chief Executive Officer of Bexel Technologies, which served solutions to large enterprise, from 1999 to 2001. Mr. Becker studied Computer Science at the University of Oregon and served in the United States Air Force.

Mr. Becker has extensive knowledge of the mobile message marketing industry. As a result of these and other professional qualifications, we have concluded that Mr. Becker is qualified to serve as a director.

Christopher Meinerz - Chief Financial Officer

On February 16, 2015, the board of directors of the Company appointed Christopher Meinerz to serve as Chief Financial Officer of the Company. Prior to joining the Company, Mr. Meinerz served as Director, Chief Financial Officer, Chief Compliance Officer, Secretary and Treasurer of Spindle, Inc., a mobile marketing and payment processing company based in Scottsdale, Arizona, from April 2014 to February 2015. Mr. Meinerz will maintain his Director position with Spindle, Inc. going forward. Prior to his role with Spindle, Inc., Mr. Meinerz served as Chief Financial Officer and Chief Compliance Officer at Next Generation Insurance Group (“NGI”), a national specialty insurance marketing firm located in Phoenix, Arizona, from October 2011 to April 2014. Before his tenure at NGI, Mr. Meinerz was Executive Vice President of Finance and Treasury for DDi Corp., an Anaheim, California-based provider of circuit board engineering and manufacturing services, from March 2010 to October 2011. In addition, Mr. Meinerz served as global Vice President of Finance for eTelecare of Scottsdale, Arizona, from January 2006 to December 2009, where he successfully helped launch that company’s initial public offering in 2007. Mr. Meinerz is a graduate of the University of Wisconsin with degrees in accounting and finance and is a Certified Public Accountant. He began his career in public accounting with BDO Seidman in Chicago, Illinois, and Grant Thornton in Madison, Wisconsin.

Alex Shah – Chief Technology Officer

Mr. Shah was appointed as the Company’s Chief Technology Officer (CTO) on February 10, 2014. From October 2004 to February 2014, Mr. Shah served as owner and principle architect of TeamSOA, a software architecture consulting for several financial industry related clients, including VISA Int’l Inc., and France Telecom. Mr. Shah was also CTO for CommerceTel from November 2010 to January 2012. Previously, he was Senior Vice President of R&D at Blue Titan, a Draper Fisher funded venture, from January 2002 to October 2004 where he led the development of software tools to manage complex IT integration challenges. Mr. Shah holds eight patents for his inventions.

-37-

Table of Contents

Donna Mitchell – Senior Vice President Sales and Business Development

Ms. Mitchell has served as our Senior Vice President Sale and Business Development since January 5, 2015. Prior to joining the Company, Ms. Mitchell was most recently an Adjunct Instructor of Management Information Systems at Daymar College in Louisville, Kentucky beginning in March 2014. Prior to that experience, Ms. Mitchell was Chief Development Officer of Northwestern Mutual Financial Network from November 2011 to March 2014. Ms. Mitchell also spent twelve years at Papa John's International Inc. and Papa John's Food Service, Inc. ("Papa John's") from February 1998 to May 2010, ultimately serving on the Executive Management Team as Senior Vice President, Global Research, Development and Quality Assurance, where she led the global research and development, quality assurance and equipment technology teams supporting over 3,500 franchise locations. Ms. Mitchell also led Papa John's Franchise Product Advisory Committee for new product development, limited time offers, and product enhancements influencing buy-in at the store level. Ms. Mitchell served in the United States Marine Corps for nine years and holds a Bachelor of Science in Business Management from McKendree University.

Deena McKinley – Senior Vice President Client Services and Marketing

Ms. McKinley has served as our Senior Vice President Client Services and Marketing since February 2, 2015. Ms. Mckinley has spent over fourteen years in marketing and advertising, ultimately serving as Executive Vice President, Managing Director and Chief Client Officer at Zimmerman Advertising from August 2014 to February 2015, where she worked with major QSR, fast casual, casual dining and general retail brands with nearly 10,000 individual locations, various franchisees and co-op groups, and managed key client relationships at the executive level. Ms. McKinley also led the Papa John's International business relationship from January 2005 to January 2014 as Executive Vice President and Managing Director of ZGroup Advertising, serving as the key client contact and providing strategic direction, brand positioning, and leading agency integration efforts for all omnichannel advertising campaigns. Earlier in her career, Ms. McKinley was a Regional Marketing Director at Papa John's International from January 2004 to January 2005, working with over twenty markets, 100 operators and seven agencies to align national strategies at the local market level. Ms. McKinley holds a Bachelor of Arts in English and a Master of English Education from the University of Florida.

William Van Epps – Executive Chairman and Director

On January 21, 2015, the board of directors of the Company appointed William Van Epps to serve as Executive Chairman of the Company. Mr. Van Epps was initially appointed to the Company’s board of directors on October 2, 2014. Prior to joining the Company, Mr. Van Epps served as chief executive officer of Agile Pursuits Franchising, Inc., a wholly-owned subsidiary of The Procter and Gamble Company, from December 2009 to October 2011, where he established Tide Dry Cleaners and Mr. Clean Car Wash operations. Prior to his experience at Agile Pursuits Franchising, Inc., Mr. Van Epps served as president at Papa John's International Inc. from April 2006 to April 2009, and as chief operating officer and senior vice president of Papa John's International Inc. from January 2004 to April 2006, where he was responsible for domestic corporate and franchised restaurant operations and international operations. Mr. Van Epps also served as managing director of International at Papa John's International from September 2001 to January 2004. Prior to joining Papa John's, he served as president of the International Division of Yorkshire Global Restaurants from August 1999 to August 2001, where he was responsible for the international development of Long John Silvers and A&W restaurants. From August 1993 to August 1999, Mr. Van Epps served as president of the International Division at AFC Enterprises where he developed international brand deployments for Popeye's, Church's Chicken, Cinnabon, Seattle Coffee Co., and Chesapeake Bakery Cafe. Mr. Van Epps began his career working alongside Pizza Hut founder, Frank Carney, where, from March 1974 through February 1981, he helped expand Pizza Hut into Hong Kong, Thailand and Singapore while also overseeing stores in Australia, New Zealand, as well as a joint venture in Japan.

Mr. Van Epps has extensive knowledge of business development, retail and restaurant operations, and corporate management. As a result of these and other professional qualifications, we have concluded that Mr. Van Epps is qualified to serve as a director.

-38-

Table of Contents

John Harris – Lead Director and Chairman of Compensation Committee

Mr. Harris has been a director since January 2011. Mr. Harris has served as an operating partner with GlendonTodd Capital, a Dallas based private equity firm since February 2011. From 2010 to 2012, Mr. Harris was CEO and investor with Chemical Information Services, a leading provider of database services to the chemical and pharmaceutical industries. From 2006 to 2009, Mr. Harris was President and CEO of eTelecare Global Solutions; a business process outsourcing (“BPO”) company delivering technical support, sales, and customer care services to the Fortune 1000 market. In that capacity, he successfully led the company’s IPO, privatization and ultimate merger in 2009. Previously, Mr. Harris served in various executive level positions with Electronic Data Systems over a 25 year period, including President of the Communications Industry Group. Mr. Harris graduated from the University of West Georgia with a BBA and MBA and is on the Board of Advisors to the Richardson School of Business. He has held board positions with a number of public and private telecommunications and technology services companies, and he currently sits on the boards of Premier Global Services, The Hackett Group and Sizmek Corporation. Mr. Harris is a non-executive Chairman of Sizmek, Lead Director and Chairman of the Compensation Committee at Premier Global Services and serves on the Audit, Compensation and Governance Committees at The Hackett Group.

Mr. Harris has extensive knowledge of corporate management. As a result of these and other professional qualifications, we have concluded that Mr. Harris is qualified to serve as a director.

David Jaques –Chairman of Audit Committee and Director

David Jaques has served as a director since December 2011. Mr. Jaques has held senior financial positions in banking, corporate and venture capital. In his early career, he held various positions with Barclays Bank in London and provided advisory services in currency and interest rate risk management to the bank’s corporate clients. He held a similar role at Barclays Bank, New York from 1988 to 1993. He was Senior Vice President and Treasurer of Silicon Valley Bank between 1994 and 1999; founding CFO for PayPal from 1999 to 2001 and CFO of BlueRun Ventures from 2001 to 2008. Since 2008 he has provided CFO consulting services with Greenough Consulting Group and holds a board position at UBL Interactive, Inc. (UBLI.PK).

Mr. Jaques has extensive knowledge of finance and accounting. As a result of these and other professional qualifications, we have concluded that Mr. Jaques is qualified to serve as a director.

Phillip Guarascio - Chairman of Governance and Nominating Committee and Director

Mr. 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 William Morris Agency since October 2001. For 16 years, Mr. Guarascio was with General Motors where he served as Vice President of Corporate Advertising and Marketing primarily responsible for worldwide advertising resource management, 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, D'Arcy, Masius, Benton & Bowles.

Mr. Guarascio has extensive experience in the marketing and advertising industry. Based on this and other professional qualifications, we have concluded that Mr. Guarascio is qualified to serve as a director.

-39-

Table of Contents

Doug Schneider - Director

Mr. Schneider has been 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 Bachelor's 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.

Thomas Akin - Director

Mr. Akin has been 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 and was appointed as a director in March 2015. Mr. Akin served as the Chief Executive Officer of Dynex Capital Inc, from February 04, 2008 to 2013. Mr. Akin had been with Merrill Lynch and Co., including served 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 01, 2014 and has been its the Chairman since May 30, 2003. He served as the Chairman of Infotec since 2001. Mr. Akin has been a Director of Acacia Technologies Group of Acacia Research Corp. since May 1998, Dynex Capital Inc, since May 2003, Acacia Research Corp. since May 1998 and eFax.com, Inc. since July 1996. He serves as a Director of ADX. He served as a Director CombiMatrix Corporation since May 1998. Mr. Akin holds a B.A. in Biology from the University of California at Santa Cruz and an M.B.A. from the University of California at Los Angeles.

Because Mr. Akin has extensive experience as a professional investor and public company director, we have concluded that Mr. Akin is qualified to serve as a director.

Executive Compensation

The following table summarizes the total compensation earned by our chief executive officer and our other two most highly paid executive officers for the years ended December 31, 2014 and 2013.

-40-

Table of Contents

Summary Compensation Table*

Name and Principal Position	Year	Salary		Bonus		Option Awards		Total
Dennis Becker, CEO (1)	2014	$	214,915	$	-	$	-	$	214,915
	2013	$	240,580	$	37,010	$	464,636	$	742,226
Alex Shah (2)	2014	$	167,725	$	-	$	46,903	$	214,628
Tom Tolbert, Former CSO (3)	2014	$	197,525	$	43,112	$	868,888	$	1,109,525
	2013	$	100,869	$	15,250	$	432,489	$	548,608

*In accordance with the rules and regulations promulgated by the Securities and Exchange Commission, the table omits columns that are not applicable.

(1)	The Option Award expense for our executive officers refers to options granted by our board of directors pursuant to our stock-based compensation plans approved by the board of directors.

(2)	Alex Shah was appointed Chief Technology officer effective February 10, 2014. Amounts in the table above reflect his compensation after his appointment and through December 31, 2014.

(3)	Tom Tolbert was appointed Chief Sales Officer effective May 20, 2013. This appointment was amended November 14, 2014 to Senior Vice President Business Development. Amounts in the table above reflect his compensation after his appointment and up to his amended position.

The amounts reported in Option Awards column of the table above reflect the aggregate compensation costs for financial statement reporting purposes for fiscal 2014 and 2013 under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718, Compensation – Stock Compensation (formerly referenced as Statement of Financial Accounting Standards No. 123(R)). These amounts do not reflect amounts paid to or realized by the executive officers for fiscal 2014 or 2013. Actual amounts earned for fiscal 2014 and 2013 are included in the Summary Compensation Table above. For information on the method and assumptions used to calculate the compensation costs, see Note 7 to our audited consolidated financial statements contained herein.

Narrative Disclosure to Executive Compensation Table; Employment Agreements

Dennis Becker

On January 11, 2011, we entered into an employment agreement with Dennis Becker. Under the terms of the agreement, Mr. Becker will serve as our President and Chief Executive Officer for an initial term of three years from December 24, 2010 (the “Effective Date”). Unless terminated no less than 90 days prior to the expiration date by either party, the agreement is renewed automatically for successive one year periods. Under the agreement, Mr. Becker is paid a base annual salary of $120,000. The base salary is subject to an annual increase at the sole discretion our board of directors. In addition to regular annual increases, the base salary will be increased by $30,000 (up to a cumulative maximum of $60,000) for each acquisition of the stock or all or substantially all of the assets of a third party entity, or the formation of joint ventures resulting in operating cash flows minus capital expenditures and dividends of no less than $25,000 during a three month period ending six months after the completion of each such acquisition or formation of such joint venture. In addition, his salary will be increased to $225,000 in the event we complete a financing transaction of no less than $3,000,000 and we complete one acquisition. The board may further award him, at its sole discretion, an annual bonus of up to 50% of his base salary and grant him stock options.

Effective March 30, 2015, based on the successful results of the March 2015 capital raise, the board increased Mr. Becker’s annual base salary by $50,000 to $275,000, awarded him a bonus payment of $30,000, and also granted him options to purchase 100,000 shares of our common stock at an exercise price of $1.28 with 25% vesting after 1 year from date of grant and 1/36 per month afterwards.

If the agreement is terminated by us without cause (as defined in the agreement) or the we notify Mr. Becker that we will not renew the agreement, we will be required to pay him a severance payment equal to six months of his base salary payable in regular intervals following such termination or expiration of the agreement.

-41-

Table of Contents

The agreement includes non-compete, non-solicitation, intellectual property assignment and confidentiality provisions that are customary in our industry.

Tom Tolbert

In connection with our acquisition of FDI, on May 20, 2013, our board of directors appointed Tom Tolbert to serve as our chief sales officer. On November 14, 2014, the Company and Mr. Tolbert entered into an amendment to Mr. Tolbert’s Employment Agreement dated May 20, 2013. Pursuant to the amendment, Mr. Tolbert will from the date of the amendment forward serve as the Company’s Senior Vice President Business Development, with responsibility for large account lead generation and sales and the executive management of certain national accounts. Pursuant to the amendment, Mr. Tolbert’s base salary will be $120,000 per year. Mr. Tolbert’s quarterly bonus going forward will be (i) fifteen percent (15%) of collected revenues on all new accounts acquired primarily through the efforts of Mr. Tolbert, provided that this bonus shall only be paid on collected revenue during the initial term of the customer agreement with the Company, and (ii) five percent (5%) of all collected revenue on all customer accounts that are renewed by the customer primarily through the efforts of Mr. Tolbert, provided that this bonus shall only be paid on collected revenue during periods of renewal subsequent to the current term of such account as of the date of the amendment. Except as provided above, all other terms of Mr. Tolbert’s Employment Agreement remain in effect and unchanged. Pursuant to his employment agreement with us, Mr. Tolbert is eligible to participate in all benefits, plans, and programs, including improvements or modifications of the same, which are now, or may hereafter be, available to our other executive employees. Mr. Tolbert’s employment agreement contains standard provisions concerning noncompetition, nondisclosure and indemnification.

On November 13, 2014 the Company amended an Option Agreement dated June 17, 2013 (the “Option Agreement”) pursuant to which Tom Tolbert was granted the right to purchase up to 1,391,087 shares of common stock of the Company. Options to purchase 391,085 Shares that were subject to vesting as of the date of the Amendment were cancelled. In furtherance of the cancellation, the Company granted to Mr. Tolbert options to purchase all or any part of 1,000,000 shares of the Company’s Common Stock upon the following terms and conditions: Options to purchase 650,000 Shares shall vest and first become exercisable as of the date of the Amendment and the balance of Options to purchase 350,000 Shares shall vest and first become exercisable in 47 equal monthly installments of Options to purchase 7,292 Shares commencing on December 13, 2014 and on the 13th of the next 47 months and the remaining Options to purchase 7,276 Shares shall vest and first become exercisable on November 13, 2018. All other provisions of the Option Agreement remain in full force and effect.

-42-

Table of Contents

Non-Employee Director Compensation

2014 Director Compensation Table

Name	Fees Earned		Stock Awards		Option Awards	Non-Equity Incentive Plan Compensation		Deferred Compensation Earnings		All Other Compensation		Total

David Jaques		-	65,868	(1)			-		-		-		65,868
David Jaques		-	54,054	(2)			-		-		-		54,054

Doug Schneider		-	65,868	(1)			-		-		-		65,868
Doug Schneider		-	50,676	(2)			-		-		-		50,676

John Harris		-	79,998	(1)			-		-		-		79,998
John Harris		-	54,054	(2)			-		-		-		54,054

Phil Guarascio		-	51,997	(1)			-		-		-		51,997
Phil Guarascio		-	54,054	(2)			-		-		-		54,054

William Van Epps		-	33,355	(1)			-		-		-		33,355
William Van Epps		-	81,512	(2)			-		-		-		81,512

(1)

Compensation related to a restricted stock unit granted for services in 2014 of 297,086 shares. The shares of common stock associated with the restricted stock unit evidenced by this Agreement will, to the extent the Participant’s rights with respect to the restricted stock unit have become vested in accordance with Paragraph 3, be issued to the Participant upon the earliest to occur of (A) settlement date of three years from date of grant, (B) a Change in Control of the Company, and (C) the termination of the holder’s employment with the Company. All 297,086 units are vested at December 31, 2014.

(2)

Compensation related to a restricted stock unit granted for services in 2015 of 294,350 shares. The shares of Common Stock associated with the restricted stock unit evidenced by this Agreement will, to the extent the holder’s rights with respect to the restricted stock unit have become vested in accordance with Paragraph 3, be issued to the Participant upon the earliest to occur of (A) settlement date of three years from date of grant, (B) a Change in Control of the Company, and (C) the termination of the Participant’s employment with the Company. As of December 31, 2014, no units have vested. All units will equally vest monthly starting January 31, 2015 through to December 31, 2015.

-43-

Table of Contents

Narrative Disclosure to Director Compensation Table

Our non-employee directors were granted stock options as set forth in the director compensation table and notes thereto above as compensation for their service as directors. No other compensation was paid to the non-employee directors for their services. All of our directors will receive reimbursement for out-of-pocket expenses for attending board of directors meetings. In the future, our outside directors may receive an attendance fee for each meeting of the board of directors or other forms of compensation. From time to time, we may also engage certain future outside members of the board of directors to perform services on our behalf and we will compensate such persons for the services which they perform.

Outstanding Equity Awards at December 31, 2014

The following table presents the outstanding option awards held by each of our named executive officers as of December 31, 2014, including the value of the options awards.

Name	Number of Securities Underlying Unexercised Options (#) Exercisable		Equity Incentive Plan Awards; Number of Securities Underlying Unexercised Unearned Options (#) Unexercisable		Option Exercise Price		Option Expiration Date
Dennis Becker, CEO		104,167		-	$	1.92	12/24/2015
Dennis Becker, CEO		469,492		782,487	$	1.80	6/17/2023

Alex Shah, CTO		-		180,000	$	1.40	02/27/2024

Tom Tolbert, Former CSO		657,292		342,708	$	1.31	6/17/2023

Compensation Committee Interlocks and Insider Participation

During the year ended December 31, 2014, our compensation committee was comprised John Harris and Peter Brodsky until Mr. Brodsky’s resignation from the board on June 17, 2014. David Jaques was then appointed to the committee until he was replaced by William Van Epps on October 10, 2014. Mr. Harris currently serves as compensation committee chair. None of our executive officers serve on the board of directors of another entity, whose executive officers serves on our board of directors.

Limitation of Liability of Directors and Indemnification of Directors and Officers

We have entered into indemnity agreements with certain directors, officers and other key employees of ours under which we agreed to indemnify those individuals under the circumstances and to the extent provided for in the agreements, for expenses, damages, judgments, fines, settlements and any other amounts they may be required to pay in actions, suits or proceedings which they are or may be made a party or threatened to be made a party by reason of their position as a director, officer or other agent of ours, and otherwise to the fullest extent permitted under Nevada law and our bylaws. We also have an insurance policy covering our directors and executive officers with respect to certain liabilities, including liabilities arising under the Securities Act of 1933, as amended, or otherwise. We believe that these provisions and insurance coverage are necessary to attract and retain qualified directors, officers and other key employees.

-44-

Table of Contents

Related Party Transactions, Promoters and Director Independence

We had no transactions or series of transactions since January 1, 2012, and we have no currently proposed transactions, to which we have been or are proposed to be a party, in which the amount involved in the transaction or series of transactions exceeds the lesser of $120,000 or one percent of the average of our total assets as of December 31, 2014 and December 31, 2013, and in which any of our directors, executive officers or persons who we know held more than five percent of any class of our capital stock, including their immediate family members, had or will have a direct or indirect material interest, other than as described below or compensation arrangements that are described under “Employment Agreements” above.

The board conducts an appropriate review of and oversees all related party transactions on a continuing basis and reviews potential conflict of interest situations where appropriate. The board has not adopted formal standards to apply when it reviews, approves or ratifies any related party transaction. However, the board has followed the following standards: (i) all related party transactions must be fair and reasonable to us and on terms comparable to those reasonably expected to be agreed to with independent third parties for the same goods and/or services at the time they are authorized by the board and (ii) all related party transactions should be authorized, approved or ratified by the affirmative vote of a majority of the directors who have no interest, either directly or indirectly, in any such related party transaction.

We consider David Jaques, Doug Schneider, John Harris and Phillip Guarascio to be independent directors as such term is defined by the listing rules of the NASDAQ Stock Market.

-45-

Table of Contents

PRINCIPAL STOCKHOLDERS

The table below sets forth the beneficial ownership of our common stock as of the date of this prospectus by:

●	All of our directors and executive officers, individually;

●	All of our directors and executive officers, as a group; and

●	All persons who beneficially owned more than 5% of our outstanding common stock.

The beneficial ownership of each person was calculated based on 27,864,078 shares of our common stock outstanding as of the date of this prospectus. The SEC has defined “beneficial ownership” to mean more than ownership in the usual sense. For example, a person has beneficial ownership of a share not only if he owns it in the usual sense, but also if he has the power (solely or shared) to vote, sell or otherwise dispose of the share. Beneficial ownership also includes the number of shares that a person has the right to acquire within 60 days of the date of this prospectus, pursuant to the exercise of options or warrants or the conversion of notes, debentures or other indebtedness, but excludes stock appreciation rights. Two or more persons might count as beneficial owners of the same share. Unless otherwise indicated, the address of each person or entity below is c/o the Company, 58 West Buffalo Road, Suite 200, Chandler, AZ 85225.

Name of Beneficial Owner	Number of Shares		Percentage
Dennis Becker		735,615		2.6%
Christopher Meinerz		--		--
Donna Mitchell		125,000		--
Deena McKinley		--		--
Alex Shah		93,750		*
Tom Tolbert		671,875		2.4%
David Jaques		76,179		*
Doug Schneider		17,792		*
John Harris		142,654		*
Phil Guarascio		87,308		*
William Van Epps		133,540		*
Thomas Akin		2,508,500		9.0	%
Porter Partners LP		2,332,723		8.4	%

Executive Officers and Directors as a Group (12 persons)		4,592,213		16.4	%

* Denotes less than 1%

-46-

Table of Contents

DESCRIPTION OF SECURITIES

Common Stock

We are authorized to issue 50,000,000 shares of common stock. As of the date of this prospectus, there are 27,864,078 shares of our common stock issued and outstanding. Except as described below, there are no other agreements or outstanding options, warrants or similar rights that entitle their holder to acquire from us any of our equity securities.

Holders of shares of common stock are entitled to one vote per share on all matters to be voted upon by the shareholders generally. Shareholders are entitled to receive such dividends as may be declared from time to time by the board of directors out of funds legally available therefore, and in the event of liquidation, dissolution or winding up of the company to share ratably in all assets remaining after payment of liabilities. The holders of shares of common stock have no preemptive, conversion, subscription rights or cumulative voting rights.

Dividends

We do not anticipate the payment of cash dividends on our common stock in the foreseeable future.

Stock Incentive Plans

We have adopted the 2010 Incentive Stock Plan providing for the grant of non-qualified stock options and incentive stock options to purchase shares of our common stock and for the grant of restricted share grants. We have reserved 520,667 shares of our common stock under the plan. The purpose of the plan is to provide eligible participants with an opportunity to acquire an ownership interest in our company. All officers, directors, employees and consultants to our company are eligible to participate under the plan. The plan provides that options may not be granted at an exercise price less than the fair market value of our common shares on the date of grant. As of the date of this prospectus, there are outstanding options which entitle their holders to purchase 190,697 shares of our common stock at a weighted-average exercise price of $2.84 per share. All of the options are subject to vesting based on the holders’ continued service to the Company.

We have also adopted the Mobivity Holdings Corp. 2013 Stock Incentive Plan providing for the grant of non-qualified stock options and incentive stock options to purchase shares of our common stock and for the grant of restricted share grants. We have reserved 5,564,348 shares of our common stock under the plan. The purpose of the plan is to provide eligible participants with an opportunity to acquire an ownership interest in our company. All officers, directors, employees and consultants to our company are eligible to participate under the plan. The plan provides that options may not be granted at an exercise price less than the fair market value of our common shares on the date of grant. As of the date of this prospectus, there are outstanding options which entitle their holders to purchase 5,170,961 shares of our common stock at a weighted-average exercise price of $1.29 per share. All of the options are subject to vesting based on the holders’ continued service to the Company.

Warrants

We entered into various private placements pursuant to which we have issued to investors and related placement agents warrants to purchase an aggregate of 8,258,043 shares of our common stock at an exercise price of $1.20 per share.

Transfer Agent

The transfer agent for our common stock is VStock Transfer, LLC, 18 Lafayette Place, Woodmere, New York 11598.

-47-

Table of Contents

LEGAL MATTERS

Certain legal matters with respect to the shares of common stock offered hereby will be passed upon for us by Greenberg Traurig, LLP, Irvine, California.

EXPERTS

M&K CPAS, PLLC has audited, as set forth in their report appearing elsewhere in this prospectus, our financial statements as of and for the fiscal years ended December 31, 2014 and 2013. We have included our financial statements in the prospectus in reliance on M&K CPAS, PLLC’s report, given on their authority as experts in accounting and auditing.

AVAILABLE INFORMATION

Upon the effectiveness of our registration statement on Form S-1, of which this prospectus is made part, we will be subject to the informational requirements of the Securities Exchange Act of 1934 and, in accordance therewith, will file reports, proxy statements and other information with the SEC. Our reports, proxy statements and other information filed pursuant to the Securities Exchange Act of 1934 may be inspected and copied, at prescribed rates, at the Public Reference Room maintained by the SEC at 100 F. Street, N.E., Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains a Web site that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC. The address of the SEC’s Web site is http://www.sec.gov.

We have filed with the SEC a registration statement on Form S-1 under the Securities Act of 1933 with respect to the common stock offered hereby. As permitted by the rules and regulations of the SEC, this prospectus, which is part of the registration statement, omits certain information, exhibits, schedules and undertakings set forth in the registration statement. Copies of the registration statement and the exhibits are on file with the SEC and may be obtained from the SEC’s Web site or upon payment of the fee prescribed by the SEC, or may be examined, without charge, at the offices of the SEC set forth above. For further information, reference is made to the registration statement and its exhibits.

-48-

Table of Contents

Mobivity Holdings Corp.

INDEX TO THE FINANCIAL STATEMENTS

MOBIVITY HOLDINGS CORP.		Page(s)

Report of Independent Registered Public Accounting Firm		50
Consolidated Balance Sheets at December 31, 2014 and 2013		51
Consolidated Statements of Operations for the Years Ended December 31, 2014 and 2013		52
Consolidated Statement of Stockholders’ Equity (Deficit) for the Years Ended December 31, 2014 and 2013		53
Consolidated Statements of Cash Flows for the Years Ended December 31, 2014 and 2013		54
Notes to the Consolidated Financial Statements		55

SMARTRECEIPT, INC.

Report of Independent Registered Public Accounting Firm		82
Balance Sheets at December 31, 2013 and 2012		83
Statements of Operations for the Years Ended December 31, 2013 and 2012		84
Statement of Stockholders’ Equity (Deficit) for the Years Ended December 31, 2013 and 2012		85
Statements of Cash Flows for the Years Ended December 31, 2013 and 2012		86
Notes to the Consolidated Financial Statements		87
Unaudited Pro Forma Condensed Consolidated Financial Statements		104
Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements		107

-49-

Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors

Mobivity Holdings Corp.

Chandler, AZ 85225

We have audited the accompanying consolidated balance sheets of Mobivity Holdings Corp. (the “Company”) as of December 31, 2014 and 2013 and the related statements of operations, stockholders' equity (deficit) and cash flows for the twelve month periods then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial positions of the Company as of December 31, 2014 and 2013 and the results of its operations and cash flows for the periods described above in conformity with accounting principles generally accepted in the United States of America.

/s/ M&K CPAS, PLLC

www.mkacpas.com

Houston, Texas

March 31, 2015

-50-

Table of Contents

Mobivity Holdings Corp.

Consolidated Balance Sheets

	December 31, 2014			December 31, 2013
ASSETS
Current assets
Cash	$	848,230		$	2,572,685
Accounts receivable, net of allowance for doubtful accounts of $90,869 and $65,975, respectively		378,934			280,667
Other current assets		109,846			140,114
Total current assets		1,337,010			2,993,466

Goodwill		1,921,072			3,108,964
Intangible assets, net		2,010,952			935,316
Other assets		99,476			63,944
TOTAL ASSETS	$	5,368,510		$	7,101,690

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities
Accounts payable	$	412,551		$	543,648
Accrued interest		-			16,943
Accrued and deferred personnel compensation		185,214			191,041
Deferred revenue and customer deposits		180,941			136,523
Notes payable		-			20,000
Derivative liabilities		42,659			106,176
Other current liabilities		43,525			36,372
Earn-out payable		840,000			34,755
Total current liabilities		1,704,890			1,085,458

Non-current liabilities
Earn-out payable		-			24,245
Total non-current liabilities		-			24,245
Total liabilities		1,704,890			1,109,703

Commitments and Contingencies (See Note 11)

Stockholders' equity (deficit)
Common stock, $0.001 par value; 50,000,000 shares authorized; 22,748,193 and 16,319,878 shares issued and outstanding		22,748			16,320
Equity payable		100,862			108,170
Additional paid-in capital		62,565,974			54,452,697
Accumulated deficit		(59,025,964	)		(48,585,200	)
Total stockholders' equity (deficit)		3,663,620			5,991,987
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)	$	5,368,510		$	7,101,690

See accompanying notes to consolidated financial statements.

-51-

Table of Contents

Mobivity Holdings Corp.

Consolidated Statements of Operations

	Years ended December 31,
	2014			2013
Revenues
Revenues	$	4,000,202		$	4,093,667
Cost of revenues		1,066,917			1,122,037
Gross margin		2,933,285			2,971,630

Operating expenses
General and administrative		4,270,844			3,416,850
Sales and marketing		3,895,033			3,469,383
Engineering, research, and development		1,346,198			824,653
Depreciation and amortization		416,436			270,579
Goodwill impairment		4,078,693			1,066,068
Intangible asset impairment		961,436			644,170
Total operating expenses		14,968,640			9,691,703

Loss from operations		(12,035,355	)		(6,720,073	)

Other income/(expense)
Interest income		2,131			747
Interest expense		-			(6,348,186	)
Change in fair value of derivative liabilities		63,517			(3,766,231	)
Gain on debt extinguishment		36,943			103,177
Gain (loss) on adjustment in contingent consideration		1,492,000			(28,465	)
Total other income/(expense)		1,594,591			(10,038,958	)
Loss before income taxes		(10,440,764	)		(16,759,031	)
Income tax expense		-			-
Net loss	$	(10,440,764	)	$	(16,759,031	)

Net loss per share - basic and diluted	$	(0.49	)	$	(1.58	)

Weighted average number of shares during the period - basic and diluted		21,203,563			10,612,007

See accompanying notes to consolidated financial statements.

-52-

Table of Contents

Mobivity Holdings Corp.

Consolidated Statement of Stockholders' Equity (Deficit)

	Common Stock				Equity			Additional		Accumulated			Total Stockholders'
	Shares		Dollars		Payable			Paid-in Capital		Deficit			Equity (Deficit)
Balance, December 31, 2012		3,869,6888	$	3,870	$	-		$	25,432,280	$	(31,826,169	)	$	(6,390,019	)
Shares issued for Boomtext earn-out payment		247,279		247		-			2,210,420		-			2,210,667
Issuance of common stock for acquisitions		1,291,667		1,292		-			1,294,768		-			1,296,060
Issuance of common stock for cash, net of transaction costs of $602,823		6,250,000		6,250		-			6,890,927		-			6,897,177
Issuance of common stock for conversion of note principal and interest		4,462,089		4,462		-			5,350,044		-			5,354,506
Issuance of common stock and warrants for services		31,292		31		7,308			98,799		-			106,138
Issuance of common stock for allonge		87,947		88		-			131,160		-			131,248
Adjustment of derivative liability for note conversion		-		-		218,446			10,726,967		-			10,945,413
Adjustment of derivative liability for note repayment		-		-		-			40,511		-			40,511
Adjustment of derivative liability for non-employee warrant conversion		-		-		-			176,555		-			176,555
Issuance of common stock and warrants for equity payable		39,382		40		(117,584	)		117,544		-			-
Issuance of common stock for accrued bonuses		19,271		19		-			36,981		-			37,000
Issuance of common stock for cashless exercise of warrants		21,171		21		-			55,525		-			55,546
Stock based compensation		-		-		-			1,890,216		-			1,890,216
Share rounding in reverse split		92		-		-			-		-			-
Net loss		-		-		-			-		(16,759,031	)		(16,759,031	)
Balance, December 31, 2013		16,319,878	$	16,320	$	108,170		$	54,452,697	$	(48,585,200	)	$	5,991,987
Issuance of common stock for financing, net of transaction costs of $448,635		5,413,000		5,413		-			4,971,717		-			4,977,130
Issuance of common stock for acquisitions		504,884		505		-			672,000		-			672,505
Issuance of common stock and warrants for services		510,431		510		(7,308	)		536,225		-			529,427
Stock based compensation		-		-		-			1,933,335		-			1,933,335
Net loss											(10,440,764	)		(10,440,764	)
Balance, December 31, 2014		22,748,193	$	22,748	$	100,862		$	62,565,974	$	(59,025,964	)	$	3,663,620

See accompanying notes to consolidated financial statements.

-53-

Table of Contents

Mobivity Holdings Corp.

Consolidated Statements of Cash Flows

	Years ended December 31,
	2014			2013
OPERATING ACTIVITIES
Net loss	$	(10,440,764	)	$	(16,759,031	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Bad debt expense		4,514			32,858
Common stock and warrants issued for services		529,427			106,138
Stock-based compensation		1,933,335			1,890,216
Depreciation and amortization expense		416,435			270,579
Loss (Gain) on adjustment in contingent consideration		(1,492,000	)		28,465
Loss on disposal of assets		680			-
Gain on debt extinguishment		(36,943	)		-
Change in fair value of derivative liabilities		(63,517	)		3,766,231
Amortization of note discounts		-			6,134,367
Goodwill impairment		4,078,693			1,066,068
Intangible asset impairment		961,436			644,170
Increase (decrease) in cash resulting from changes in:
Accounts receivable		58,883			128,613
Other current assets		30,268			(104,605	)
Other assets		(1,835	)		27,300
Accounts payable		(131,098	)		(17,521	)
Accrued interest		-			65,361
Accrued and deferred personnel compensation		(5,827	)		(71,493	)
Deferred revenue - related party		-			(35,262	)
Deferred revenue and customer deposits		(147,142	)		(45,208	)
Other liabilities		7,153			(76,134	)
Net cash used in operating activities		(4,298,302	)		(2,948,888	)

INVESTING ACTIVITIES
Purchases of equipment		(35,264	)		(51,285	)
Acquisition of intangible assets		-			(15,000	)
Acquisitions		(2,368,019	)		(400,000	)
Net cash used in investing activities		(2,403,283	)		(466,285	)

FINANCING ACTIVITIES
Proceeds from issuance of notes payable, net of finance offering costs		-			700,000
Payments on notes payable		-			(1,609,682	)
Proceeds from issuance of common stock, net of issuance costs		4,977,130			6,897,177
Net cash provided by financing activities		4,977,130			5,987,495

Net change in cash		(1,724,455	)		2,572,322
Cash at beginning of period		2,572,685			363
Cash at end of period	$	848,230		$	2,572,685

Supplemental disclosures:
Cash paid during period for :
Interest	$	-		$	146,973
Non-cash investing and financing activities:
Debt discount from derivatives	$	-		$	4,614,714
Adjustment to derivative liability due to note repayment	$	-		$	40,511
Adjustment to derivative liability due to note conversion	$	-		$	10,726,967
Adjustment to derivative liability due to Allonge / ASID conversion	$	-		$	349,694
Adjustment to derivative liability due to non-employee warrant conversion	$	-		$	176,555
Issuance of common stock for Boomtext earn-out	$	-		$	2,210,667
Issuance of common stock for acquisitions	$	672,505		$	1,296,060
Issuance of common stock for accrued bonuses	$	-		$	37,000
Issuance of common stock for cashless exercise of warrants	$	-		$	55,546
Issuance of note payable for acquisition	$	-		$	1,365,096
Earn-out payable recorded for acquisition	$	2,273,000		$	224,000
Conversion of notes payable into common stock	$	-		$	4,984,720
Conversion of accrued interest into common stock	$	-		$	369,786
Settlement of working capital asset related to the Boomtext acquisition	$	-		$	153,317

See accompanying notes to consolidated financial statements.

-54-

Table of Contents

Mobivity Holdings Corp.

Notes to Consolidated Financial Statements

1. The Company and Summary of Significant Accounting Policies

The Company

We develop and operate proprietary platforms over which resellers, brands and enterprises can conduct localized mobile marketing campaigns. Our proprietary platforms allow resellers, brands and enterprises to market their products and services to consumers through text messages sent directly to the consumers’ mobile phones and mobile smartphone applications, consisting of software available to both phones and tablets PCs. Our customers include national franchisers, professional sports teams and associations and other national brands such as Sonic Drive-In, Subway, Jamba Juice, Chick-Fil-A, and others.

Our “C4” Mobile Marketing and customer relationship management platform is a Web-hosted software solution enabling our clients to develop, execute, and manage a variety of marketing engagements to a consumer’s mobile phone. Our C4 solution allows our clients to communicate directly with their customers through Short Messaging Service, or SMS, multi-media messaging, smartphone application development and interactive voice response interactions, all of which are facilitated via a set of graphical user interfaces operated from any Web browser.

We generate revenue by charging the resellers, brands and enterprises a per-message transactional fee, or through fixed or variable software licensing fees.

Our SmartReceipt solution enables our customers with the ability to control the content on receipts printed from their point of sale, or POS system. SmartReceipt is a software application that is installed on the POS which dynamically controls what is printed on receipts such as coupons, announcements, or other calls-to-action such as invitations to participate in a survey. SmartReceipt includes a Web-based interface where users can design receipt content and implement business rules to dictate what receipt content is printed in particular situations. All receipt content is also transmitted to SmartReceipt’s server back-end for storage and analysis. Our SmartReceipt solution is fully integratable with our C4 platform and allows our customers to print on receipts SMS marketing or Stampt mobile application calls-to-actions.

Liquidity

We have $0.8 million of cash as of December 31, 2014. We had a net loss of $10.4 million for the year then ended, and we used $4.3 million of cash in our operating activities during 2014. In March 2015, we conducted the private placement of our securities for gross proceeds of $4,805,000. Based on our projected 2015 results and, if necessary, our ability to reduce certain variable operating expenses, we believe that our existing capital, together with anticipated cash flows from operations, will be sufficient to finance our operations through the first quarter of 2016.

If our cash reserves prove insufficient to sustain operations, we plan to raise additional capital by selling shares of capital stock or other equity or debt securities. However, there are no commitments or arrangements for future financings in place at this time, and we can give no assurance that such capital will be available on favorable terms or at all. 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.

-55-

Table of Contents

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.

Principles of Consolidation and Basis of Presentation

The accompanying financial statements are consolidated and include the financial statements of Mobivity Holdings Corp. and our wholly-owned subsidiary. Intercompany transactions are eliminated.

Use of Estimates

Preparation of our consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP) requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying disclosures. These estimates are based on management's best knowledge of current events and actions we may undertake in the future. Significant estimates used are those related to: stock-based compensation; valuation of acquired assets, intangible assets and liabilities; useful lives for depreciation and amortization of long-lived assets; future cash flows associated with impairment testing for goodwill, indefinite-lived intangible assets and other long-lived assets; valuation of derivative liabilities; valuation allowance for deferred tax assets; and contingencies.

Actual results may ultimately differ from estimates, although management does not generally believe such differences would materially affect the consolidated financial statements in any individual year. However, in regard to ongoing impairment testing of goodwill and indefinite-lived intangible assets, significant deterioration in future cash flow projections or other assumptions used in estimating fair values versus those anticipated at the time of the initial valuations, could result in impairment charges that materially affect the consolidated financial statements in a given year.

Reverse Stock Split

We effected a 1 for 6 reverse stock split of our outstanding shares of common stock on November 12, 2013. All historical share and share price information have been adjusted to give effect to the reverse stock split.

Reclassifications

Certain prior year amounts have been reclassified to conform to the current year’s 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.

-56-

Table of Contents

As of December 31, 2014 and 2013, we recorded an allowance for doubtful accounts of $90,869 and $65,975, 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 customer’s 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, 2014, we had one customer whose balance represented 23% of total accounts receivable. As of December 31, 2013, we had one customer whose balance represented 23% 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 unit's 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, 2014 and 2013. As a result of these tests, we recorded impairment charges to our goodwill during the years ended December 31, 2014 and 2013 of $4,078,693 and $1,066,068, 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 two to twenty years. No significant residual value is estimated for intangible assets.

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.

The Company’s evaluation of its long-lived assets completed during the years ended December 31, 2014 and 2013 resulted in impairment charges of $961,436 and $644,170, respectively.

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.

-57-

Table of Contents

Revenue Recognition and Concentrations

During the years ended December 31, 2014 and 2013, one customer accounted for 29% and 31% of our revenues, 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 generally recognize compensation expense using a straight-line amortization method over the respective vesting period for awards that are ultimately expected to vest. Accordingly, stock-based compensation expense for 2014 and 2013 has been reduced for estimated forfeitures. When estimating forfeitures, we consider voluntary termination behaviors as well as trends of actual option forfeitures.

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 and other direct costs. Advertising expense was $20,677 and $19,959 for years ended December 31, 2014 and 2013, 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.

-58-

Table of Contents

We had the following dilutive common stock equivalents as of December 31, 2014 and 2013 which were excluded from the calculation because their effect was anti-dilutive.

	December 31,
	2014		2013
Outstanding employee options		5,399,320		5,672,464
Outstanding restricted stock units		591,436		-
Outstanding non-employee warrants		150,001		150,556
Outstanding warrants		7,019,840		5,187,587
		13,160,597		11,010,607

Recent Accounting Pronouncements

Accounting standards promulgated by the FASB are subject to change. Changes in such standards may have an impact on the Company’s future financial statements. The following are a summary of recent accounting developments.

On August 2014, The Financial Accounting Standards Board (FASB) issued Accounting Standard Update No. 2014-15, Presentation of Financial Statements – Going Concerns (Subtopic 205-40): Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern. The amendments require management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. Specifically, the amendments (1) provide a definition of the term substantial doubt, (2) require an evaluation every reporting period including interim periods, (3) provide principles for considering the mitigating effect of management’s plans, (4) require certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans, (5) require an express statement and other disclosures when substantial doubt is not alleviated, and (6) require an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). The amendments in this Update are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The adoption of ASU 2014-15 is not expected to have a material impact on our financial position or results of operations.

In June 2014, the FASB issued ASU No. 2014-12, Compensation – Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period. The new guidance requires that share-based compensation that require a specific performance target to be achieved in order for employees to become eligible to vest in the awards and that could be achieved after an employee completes the requisite service period be treated as a performance condition. As such, the performance target should not be reflected in estimating the grant-date fair value of the award. Compensation costs should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. If the performance target becomes probable of being achieved before the end of the requisite service period, the remaining unrecognized compensation cost should be recognized prospectively over the remaining requisite service period. The total amount of compensation cost recognized during and after the requisite service period should reflect the number of awards that are expected to vest and should be adjusted to reflect those awards that ultimately vest. The requisite service period ends when the employee can cease rendering service and still be eligible to vest in the award if the performance target is achieved. This new guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2015. Early adoption is permitted. Entities may apply the amendments in this Update either (a) prospectively to all awards granted or modified after the effective date or (b) retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter. The adoption of ASU 2014-12 is not expected to have a material impact on our financial position or results of operations.

In July 2013, the FASB issued ASU No. 2013-11: Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. The new guidance requires that unrecognized tax benefits be presented on a net basis with the deferred tax assets for such carryforwards. This new guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2013. We do not expect the adoption of the new provisions to have a material impact on our financial condition or results of operations.

-59-

Table of Contents

In February 2013, FASB issued ASU No. 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income, to improve the transparency of reporting these reclassifications. Other comprehensive income includes gains and losses that are initially excluded from net income for an accounting period. Those gains and losses are later reclassified out of accumulated other comprehensive income into net income. The amendments in the ASU do not change the current requirements for reporting net income or other comprehensive income in financial statements. All of the information that this ASU requires already is required to be disclosed elsewhere in the financial statements under U.S. GAAP. The new amendments will require an organization to:

Present (either on the face of the statement where net income is presented or in the notes) the effects on the line items of net income of significant amounts reclassified out of accumulated other comprehensive income - but only if the item reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period; and

Cross-reference to other disclosures currently required under U.S. GAAP for other reclassification items (that are not required under U.S. GAAP) to be reclassified directly to net income in their entirety in the same reporting period. This would be the case when a portion of the amount reclassified out of accumulated other comprehensive income is initially transferred to a balance sheet account (e.g., inventory for pension-related amounts) instead of directly to income or expense.

The amendments apply to all public and private companies that report items of other comprehensive income. Public companies are required to comply with these amendments for all reporting periods (interim and annual). The amendments are effective for reporting periods beginning after December 15, 2012, for public companies. Early adoption is permitted. The adoption of ASU No. 2013-02 did not have a material impact on our financial position or results of operations.

In January 2013, the FASB issued ASU No. 2013-01, Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities, which clarifies which instruments and transactions are subject to the offsetting disclosure requirements originally established by ASU 2011-11. The new ASU addresses preparer concerns that the scope of the disclosure requirements under ASU 2011-11 was overly broad and imposed unintended costs that were not commensurate with estimated benefits to financial statement users. In choosing to narrow the scope of the offsetting disclosures, the Board determined that it could make them more operable and cost effective for preparers while still giving financial statement users sufficient information to analyze the most significant presentation differences between financial statements prepared in accordance with U.S. GAAP and those prepared under IFRSs. Like ASU 2011-11, the amendments in this update will be effective for fiscal periods beginning on, or after January 1, 2013. The adoption of ASU 2013-01 did not have a material impact on our financial position or results of operations.

2. Acquisitions

We completed the following acquisitions in furtherance of our strategy to acquire small, privately owned enterprises in the mobile marketing sector through asset purchase structures. We made the acquisitions to expand our market presence and product offerings.

The purchase consideration for each acquisition was allocated to the tangible assets and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values on the acquisition date, with the remaining unallocated consideration recorded as goodwill. An independent valuation expert assisted us in determining these fair values.

We have included the financial results of these acquisitions in our consolidated financial statements from the date of acquisition.

SmartReceipt

In March 2014, we acquired all the assets of SmartReceipt, Inc. in exchange for: (1) our payment at closing of $2.212 million of cash, net of a $150,000 loan made by us to SmartReceipt in January 2014; (2) our issuance of 504,884 shares of its $0.001 par value common stock; and (3) our earn-out payment of 200% of the “eligible revenue” of us over the 12 month period following the close of the transaction (“earn-out period”). The “eligible revenue” will consist of: 100% our revenue derived during the earn out period from the sale of SmartReceipt products and services to certain SmartReceipt clients as of the close (the “designated SmartReceipt clients”); plus 50% of our revenue derived during the earn out period from the sale of our products and services to the designated SmartReceipt clients, plus 50% of our revenue derived during the earn out period from the sale of SmartReceipt products and services to our clients who are not designated SmartReceipt clients. The earn-out payment will be payable in our common shares at the rate of $1.85 per share, representing the volume weighted average trading price of our common stock for the 90 trading days preceding the initial close of the transactions under the Asset Purchase Agreement.

-60-

Table of Contents

The acquisition was accounted for as a business combination and we valued all assets and liabilities acquired at their fair values on the date of acquisition. An independent valuation expert assisted us in determining these fair values. The assets and liabilities of the acquired entity were recorded at their estimated fair values at the date of the acquisition.

The allocation of the purchase price to assets and liabilities based upon fair value determinations was as follows:

Accounts receivable, net	$	161,664
Other assets		6,620
Customer relationships		2,010,000
Developed technology		260,000
Trade name		176,000
Goodwill		2,890,801
Total assets acquired		5,505,085
Liabilities assumed		(191,561	)
Net assets acquired	$	5,313,524

The purchase price consists of the following:

Cash	$	2,368,019
Earn Out		2,273,000
Common stock		672,505
Total purchase price	$	5,313,524

The following information presents unaudited pro forma consolidated results of operations for the year ended December 31, 2014 as if the SmartReceipt acquisition described above had occurred on January 1, 2014. The following unaudited pro forma financial information gives effect to certain adjustments, including the increase in stock based compensation expense that had not been valued prior to acquisition. The pro forma financial information is not necessarily indicative of the operating results that would have occurred if the acquisition been consummated as of the date indicated, nor are they necessarily indicative of future operating results.

-61-

Table of Contents

Mobivity Holdings Corp.

Unaudited Pro Forma Condensed Consolidated Statement of Operations

For the year ended December 31, 2014


	Mobivity			SR			Pro forma adjustments			Pro forma combined
Revenues
Revenues	$	4,000,202		$	214,139		$	-		$	4,214,341
Cost of revenues		1,066,917			54,410			-			1,121,327
Gross margin		2,933,285			159,729			-			3,093,014

Operating expenses
General and administrative		4,270,844			231,084			4,230	(a)		4,506,158
Sales and marketing		3,895,033			60,077			-			3,955,110
Engineering, research, and development		1,346,198			139,649			-			1,485,847
Depreciation and amortization		416,436			403			-			416,839
Goodwill impairment		4,078,693			-			-			4,078,693
Intangible asset impairment		961,436			-			-			961,436
Total operating expenses		14,968,640			431,213			4,230			15,404,083

Loss from operations		(12,035,355	)		(271,484	)		(4,230	)		(12,311,069	)

Other income/(expense)
Interest income		2,131			-			-			2,131
Change in fair value of derivative liabilities		63,517			-			-			63,517
Gain on debt extinguishment		36,943			-			-			36,943
Gain on adjustment of contingent consideration		1,492,000			-			-			1,492,000
Total other income/(expense)		1,594,591			-			-			1,594,591

Loss before income taxes		(10,440,764	)		(271,484	)		(4,230	)		(10,716,478	)

Income tax expense		-			-			-			-

Net loss	$	(10,440,764	)	$	(271,484	)	$	(4,230	)	$	(10,716,478	)

Net loss per share - basic and diluted	$	(0.49	)							$	(0.52	)

Weighted average number of shares during the period - basic and diluted		21,203,563									20,796,889

Pro Forma Adjustments

The following pro forma adjustments are based upon the value of the tangible and intangible assets acquired as determined by an independent valuation firm.

(a)	Represents stock based compensation in conjunction with the transaction.

The following information presents unaudited pro forma consolidated results of operations for the year ended December 31, 2013 as if the SmartReceipt acquisition described above had occurred on January 1, 2013. The following unaudited pro forma financial information gives effect to certain adjustments, including the increase in stock based compensation expense that had not been valued prior to acquisition. The pro forma financial information is not necessarily indicative of the operating results that would have occurred if the acquisition been consummated as of the date indicated, nor are they necessarily indicative of future operating results.

-62-

Table of Contents

Mobivity Holdings Corp.

Unaudited Pro Forma Condensed Consolidated Statement of Operations

For the year ended December 31, 2013

	Mobivity			SR			Pro forma adjustments			Pro forma combined
Revenues
Revenues	$	4,093,667		$	834,250		$	-		$	4,927,917
Cost of revenues		1,122,037			243,209			-			1,365,246
Gross margin		2,971,630			591,041			-			3,562,671

Operating expenses
General and administrative		3,416,850			211,271			446,094	(a)		4,074,215
Sales and marketing		3,469,383			339,615			-			3,808,998
Engineering, research, and development		824,653			644,330			-			1,468,983
Depreciation and amortization		270,579			3,970			-			274,549
Goodwill impairment		1,066,068			-			-			1,066,068
Intangible asset impairment		644,170			-			-			644,170
Total operating expenses		9,691,703			1,199,186			446,094			11,336,983
Loss from operations		(6,720,073	)		(608,145	)		(446,094	)		(7,774,312	)

Other income/(expense)
Interest income		747			-			-			747
Interest expense		(6,348,186	)		(117,944	)		-			(6,466,130	)
Change in fair value of derivative liabilities		(3,766,231	)		-			-			(3,766,231	)
Gain on Debt Extinguishment		103,177			-			-			103,177
Loss on adjustment in contingent consideration		(28,465	)		-			-			(28,465	)
Total other income/(expense)		(10,038,958	)		(117,944	)		-			(10,156,902	)

Loss before income taxes		(16,759,031	)		(726,089	)		(446,094	)		(17,931,214	)

Income tax expense		-			-			-			-

Net loss	$	(16,759,031	)	$	(726,089	)	$	(446,094	)	$	(17,931,214	)

Net loss per share - basic and diluted	$	(1.58	)							$	(1.61	)

Weighted average number of shares during the period - basic and diluted		10,612,007									11,116,891

Pro Forma Adjustments

The following pro forma adjustments are based upon the value of the tangible and intangible assets acquired as determined by an independent valuation firm.

(a)	Represents stock based compensation in conjunction with the transaction.

-63-

Table of Contents

Front Door Insights

We acquired certain assets and liabilities of Front Door Insights, LLC (“FDI”) in May 2013 in exchange for: (1) $100,000 in cash; (2) a non-interest bearing promissory note in the principal amount of $1,400,000, which was discounted by $34,904; and (3) 1,166,667 shares of our common stock valued based on the closing market price on the acquisition date at $1,112,310. The promissory note was settled in full in June 2013.

The asset purchase agreement included a working capital adjustment pursuant to which the number of shares issuable to FDI would be increased, or decreased, in the event the working capital of FDI exceeded, or was less than, $10,000, respectively, as of the closing. The working capital adjustment was immaterial and was settled in cash.

The asset purchase agreement contained customary representations, warranties and covenants by the parties, including each party’s agreement to indemnify the other against any claims or losses arising from their breach of the asset purchase agreement. FDI and its members have also agreed that for a period of three years following the closing not to engage in the business of providing interactive mobile marketing platforms or services or to solicit the pre-closing clients, vendors or employees of FDI, except in each case on our behalf.

During the year ended December 31, 2013, we adjusted the liabilities assumed in the transaction, in accordance with the asset purchase agreement, from $162,886 to $46,219, which resulted in an increase in additional paid-in capital of $78,000 and a reduction of goodwill of $38,667.

The allocation of the purchase consideration to assets acquired and liabilities assumed was as follows:

Cash	$	5,500
Accounts receivable		27,467
Contracts		813,000
Customer relationships		22,000
Developed technology		96,000
Non-compete agreement		124,000
Goodwill		1,535,658
Total assets acquired		2,623,625
Liabilities assumed		(46,219	)
Net assets acquired	$	2,577,406

The following information presents unaudited pro forma consolidated results of operations for the twelve months ended December 31, 2013 as if the FDI acquisition described above had occurred on January 1, 2013. The following unaudited pro forma financial information gives effect to certain adjustments, including the increase in compensation expense related to additional head-count and amortization of acquired intangible assets. The pro forma financial information is not necessarily indicative of the operating results that would have occurred if the acquisition been consummated as of the date indicated, nor are they necessarily indicative of future operating results. The unaudited pro forma financial information is as follows:

	(Unaudited)
	Year ended December 31,
	2013
Total revenues	$	4,255,947
Net loss	$	(17,120,236	)
Basic and diluted loss per share	$	(1.55	)

-64-

Table of Contents

Sequence (Stampt)

We acquired certain assets of Sequence, LLC (“Sequence”) in May 2013 in exchange for: (1) $300,000 in cash; (2) 125,000 shares of our common stock valued based on the closing market price on the acquisition date at $183,750; and (3) twenty-four monthly earn-out payments consisting of 10% of the eligible monthly revenue subsequent to closing, with a fair value of $224,000.

The allocation of the purchase consideration to the assets acquired was as follows:

Merchant relationships	$	181,000
Trade name		76,000
Developed technology		71,000
Goodwill		379,750
Total assets acquired	$	707,750

Pro forma results of operations are not presented due to the investment test not reaching the level of a significant acquisition.

3. Goodwill and Intangible Assets

Goodwill

The following table presents goodwill and impairment for the years ended December 31, 2014 and 2013:

	Goodwill
December 31, 2012	$	2,259,624
Acquired		1,915,408
Impairment		(1,066,068	)
December 31, 2013		3,108,964
Acquired		2,890,801
Impairment		(4,078,693	)
December 31, 2014	$	1,921,072

We conducted our annual impairment test of goodwill as of December 31, 2014 and 2013, which resulted in impairment charges of $4,078,693 and $1,066,068, respectively.

Intangible assets

The following table presents components of identifiable intangible assets for the years ended December 31, 2014 and 2013:

	December 31, 2014									December 31, 2013
	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	$	142,000	$	(33,048	)	$	108,952		20	$	142,000	$	(23,902	)	$	118,098		20.00
Customer contracts		628,502		(628,502	)		-		-		1,069,900		(528,372	)		541,528		5.88
Customer and merchant relationships		2,830,139		(1,290,139	)		1,540,000		10		1,128,583		(1,128,583	)		-		4.78
Trade name		353,192		(201,192	)		152,000		10		199,750		(177,359	)		22,391		5.00
Acquired technology		686,135		(476,135	)		210,000		10		573,550		(391,252	)		182,298		4.72
Non-compete agreement		90,462		(90,462	)		-		-		132,083		(61,082	)		71,001		2.90
	$	4,730,430	$	(2,719,478	)	$	2,010,952			$	3,245,866	$	(2,310,550	)	$	935,316

-65-

Table of Contents

During the years ended December 31, 2014 and 2013, we recorded amortization expense related to our intangible assets of $408,928 and $262,626, respectively, which is included in depreciation and amortization in the consolidated statement of operations.

During the years ended December 31, 2014 and 2013, we recorded impairment charges related to our intangible assets of $961,436 and $644,170, respectively.

Expected future intangible asset amortization as of December 31, 2014 is as follows:

Year ending December 31,	Amount
2015	$	214,769
2016		214,769
2017		214,769
2018		214,769
2019		214,769
Thereafter		937,107
Total	$	2,010,952

4. Derivative Liabilities

Related to convertible notes payable and underlying warrants

As discussed in Note 5 under Bridge Financing, we previously issued convertible notes payable that provided for the issuance of warrants to purchase our common stock at a future date. The conversion term for the convertible notes was variable based on certain factors. The number of warrants to be issued was based on the future price of our common stock.

As of December 31, 2012 and through June 17, 2013, the number of warrants to be issued was indeterminate. Due to the fact that the number of warrants issuable was indeterminate, the equity environment was tainted. Because the equity environment was tainted, we accounted for the variable maturity conversion feature (“VMCO”) and the additional share issuance feature (“ASID”) contained in the convertible notes payable as derivative liabilities on the issuance date of the convertible notes payable.

On June 17, 2013, we converted all of the outstanding convertible notes payable into shares of our common stock, and issued the warrants underlying the convertible notes payable. At that time, the taint on the equity environment was removed, and the derivative liabilities related to the VMCO and ASID totaling $7,792,657 were reclassified to equity.

Related to private placement shares and warrants

We completed a private placement in September 2011 for the sale of units consisting of shares of common stock and warrants to purchase our common stock. Both the common shares and the warrants contain anti-dilutive, or down round, price protection. We recorded derivative liabilities related to the down round price protection on the common shares and the warrants at the issuance date.

The down round price protection on the common shares in 2012 and the down round protection for the warrant terminates when the warrant expires or is exercised.

Our derivative liabilities at December 31, 2014 relate to these warrants.

Related to allonges

As discussed in Note 5 under Bridge Financing, all note holders with convertible notes payable maturing in February 2012 extended the maturity date through May 2012. As consideration to the note holders for the extension of the maturity date, we provided allonges which consisted of the accrued interest on each convertible note payable as of January 31, 2012. The allonges were convertible into shares of common stock at the latest financing price. The value of the allonges was recorded as a derivative liability at the issuance date.

-66-

Table of Contents

In June 2013, the number of common shares issuable under the allonges was determined to be 87,947 and these shares were issued in July 2013.

Related to non-employee warrants

As discussed in Note 8, we previously accounted for warrants issued to non-employees as derivative liabilities. On June 17, 2013, the equity environment was no longer tainted and the value of the derivative liabilities related to the non-employee warrants totaling $176,555 was reclassified to equity.

Summary

The fair values of our derivative liabilities are estimated at the issuance date and are revalued at each subsequent reporting date using a Monte Carlo simulation discussed below.

At December 31, 2014 and 2013, we recorded current derivative liabilities of $42,659 and $106,176, respectively, which are detailed by instrument type in the table below.

The net change in fair value of the derivative liabilities for the years ended December 31, 2014 and 2013 was a loss of $63,517 and a gain of $3,766,231, respectively.

The following table presents the derivative liabilities by instrument type as of December 31, 2014 and 2013:

	December 31,
Derivative Value by Instrument Type	2014		2013
Convertible Bridge Notes	$	-	$	-
Common Stock and Warrants		42,659		106,176
Non-employee Warrants		-		-
	$	42,659	$	106,176

The following table presents details of the Company’s derivative liabilities from December 31, 2012 to December 31, 2014:

Balance December 31, 2012	$	3,074,504
Issuances in derivative value due to new security issuances of notes		4,614,714
Issuances in derivative value due to vesting of non-employee warrants		26,969
Adjustment to derivative liability due to note repayment		(40,511	)
Adjustment to derivative liability due to note conversion into new notes		(3,152,786	)
Adjustment to derivative liability due to note conversion into equity		(7,923,875	)
Adjustment to derivative liability due to non-employee warrant conversion		(176,555	)
Adjustment to derivative liability due to warrant exercises		(55,546	)
Change in fair value of derivative liabilities		3,739,262
Balance December 31, 2013		106,176
Change in fair value of derivative liabilities		(63,517	)
Balance December 31, 2014	$	42,659

An independent valuation expert calculated the fair value of the compound embedded derivatives using a complex, customized Monte Carlo simulation model suitable to value path dependent American options. The model uses the risk neutral methodology adapted to value corporate securities. This model utilized subjective and theoretical assumptions that can materially affect fair values from period to period.

Key inputs and assumptions used in valuing our derivative liabilities are as follows:

For issuances of notes, common stock and warrants:

•	Stock prices on all measurement dates were based on the fair market value.

•

Down round protection for dates prior to April 15, 2013 is based on the subsequent issuance of common stock at prices less than $3.00 per share and warrants with exercise prices less than $3.00 per share. Down round protection for dates between April 15, 2013 and June 17, 2013 is based on the subsequent issuance of common stock at prices less than $1.50 per share and warrants with exercise prices less than $1.50 per share. From June 17, 2013 thru March 12, 2014, the exercise price was $1.20 for issuances of common stock and warrants. Thereafter, down round protection is based on the subsequent issuance of common stock and warrants at prices less than $1.00 per share.

•	The probability of a future equity financing event triggering the down round protection was estimated at 100% during 2013 and 0% during 2014 after the financing event that occurred during the first quarter of 2014.

•	Computed volatility ranging from 86.1% to 137.2%.

•	Risk free rates ranging from 0.05% to1.41%.

-67-

Table of Contents

For issuances of non-employee warrants through June 17, 2013:

•	Computed volatility of 128.9%

•	Risk free rates ranging from 0.30% to 0.66%

•	Expected life (years) ranging from 2.48 to 3.27

See Note 10 for a discussion of fair value measurements.

5. Bridge Notes, Notes Payable, Accrued Interest and Cash Payment Obligation

Bridge Financing

Summary

Prior to June 2013, we issued 10% Senior Secured Convertible Bridge Notes Payable (“Bridge Notes” or “new Bridge Notes”) to various accredited investors, and then extended the due dates on the majority of the Bridge Notes several times. In June 2013, the outstanding principal of the Bridge Notes totaling $4,984,720 was converted into 4,153,934 shares of our common stock at $1.20 per share within the terms of the agreement; therefore, we did not recognize a gain or loss on this transaction. We no longer have any outstanding Bridge Notes.

The Bridge Notes contained variable maturity dates and additional share issuance obligations and we recorded discounts to the Bridge Notes for the VMCO and ASID. The discounts were amortized to interest expense over the term of the Bridge Notes using the effective interest method. We determined that the VMCO and the ASID represented embedded derivative features, and these were recorded as derivative liabilities. See Note 4.

We capitalized costs associated with the issuance of the Bridge Notes, and amortized these costs to interest expense over the term of the related Bridge Notes using the effective interest method.

The following table summarizes information relative to the outstanding Bridge Notes at December 31, 2014 and 2013:

	December 31,
	2014		2013
Bridge notes payable	$	-	$	-
Less unamortized discounts:		-		-
VMCO		-		-
ASID		-		-
Bridge notes payable, net of discounts	$	-	$	-

Cherry Family Trust Note

This note was issued on March 1, 2007, for the principal amount of $20,000, interest accrues at the rate of 9% compounded annually, with a maturity date of December 31, 2008. Accrued interest was $0 and $16,943 as of December 31, 2014 and 2013, respectively. Although this note is currently past due, the Company is legally prohibited from paying it due to a court order dated December 7, 2007 related to a summary judgment in favor of the Company stemming from litigation between the Company and Mr. Cherry. Accordingly, we have extinguished the note payable and related accrued interest in the amounts of $20,000 and $16,943, respectively, during 2014 and recorded a gain on debt extinguishment of $36,943.

Digimark, LLC Notes

As partial consideration for the acquisition of Boomtext in 2011, we issued an unsecured subordinated promissory note in the principal amount of $194,658. The promissory note did not bear interest, was payable in installments (varying in amount) from August 2011 through October 2012, and was subordinated to our obligations under the Bridge Notes discussed above.

-68-

Table of Contents

We recorded the promissory note at the present value of the payments over the subsequent periods which amounted to $182,460. We amortized the discount using the effective interest method.

As of December 31, 2012, the outstanding balance on the note payable was $100,000, which was paid in June 2013.

Summary of Notes Payable and Accrued Interest

The following table summarizes our notes payable and accrued interest as of December 31, 2014 and 2013:

	Notes Payable				Accrued Interest
	December 31, 2014		December 31, 2013		December 31, 2014		December 31, 2013

Unsecured (as amended) note payable due to our Company’s former Chief Executive Officer, interest accrues at the rate of 9% compounded annually, all amounts due and payable December 31, 2008.	$	-	$	20,000	$	-	$	16,943

Note payable due to a trust, interest accrues at the rate of 10% per annum, all amounts due and payable December 31, 2006.		-		-		-		51,984

Notes payable		-		20,000		-		16,943

Totals	$	-	$	20,000	$	-	$	16,943

Interest Expense

The following table summarizes interest expense for the years ended December 31, 2014 and 2013:

	December 31,
	2014		2013
Amortization of note discounts	$	-	$	6,134,367
Other interest expense		-		213,819
	$	-	$	6,348,186

6. Common Stock and Equity Payable

Common Stock

2013

We issued 247,249 shares of common stock in satisfaction of the Boomtext acquisition earn-out which was valued at $2,210,667. See Equity Payable below.

We issued 1,291,667 shares of common stock as part of the Sequence and FDI purchase prices which were valued at $1,296,060. The shares issued in the acquisitions were valued based on the closing market price on the acquisition dates. See Note 2.

We issued 6,250,000 shares of common stock at $1.20 per share to accredited investors for net proceeds of $6,897,177. Transaction costs netted against the proceeds totaled $602,823. The issuance of these shares constituted a qualified financing, pursuant to which the Bridge Notes and accrued interest totaling $5,354,506 were converted into 4,462,089 shares of common stock, see Note 5. As the conversions of the Bridge Notes and accrued interest were within the terms of the agreement, no gain or loss was recognized in this transaction.

We issued 31,292 shares of common stock, accrued a common stock payable of $7,308 (representing 2,137 shares payable) and a warrant to purchase 8,845 shares of common stock at $1.20 per share for services and recorded share-based compensation of $106,138 in general and administrative expense.

-69-

Table of Contents

We issued 87,947 shares of common stock in satisfaction of the allonges granted under the Bridge Notes valued at $131,248. See Note 4.

We issued 39,382 shares of common stock and we issued warrants to purchase 25,384 shares of common stock at $1.20 per share in satisfaction of our additional share issuance obligation under the Bridge Notes, and reduced our equity payable by $117,584. See Equity Payable below.

We issued 19,271 shares of common stock in satisfaction of accrued bonuses totaling $37,000 to two of our officers.

We issued 21,171 shares of common stock for the cashless exercise of warrants and recorded a reduction of our derivative liabilities of $55,546.

2014

We issued 5,413,000 shares of common stock at $1.00 per unit to accredited investors for the gross proceeds of $5,413,000. Each unit consisted of one share of our common stock and a common stock purchase warrant to purchase one-quarter share of our common stock, over a five year period, at an exercise price of $1.20 per share. We entered into a Registration Rights Agreement with the investors, pursuant to which we agreed to cause a resale registration statement covering the common shares made part of the units to be filed by May 15, 2014. The Registration Rights Agreement also provides that we must make certain payments as liquidated damages to the investors if we fail to timely file the registration statement and cause it to become effective.

Emerging Growth Equities, Ltd. (“EGE”) acted as placement agent for the private placement and received $370,685 in commissions from us. In addition, we issued warrants for the purchase of 370,685 common stock units at $1.00 per unit to a placement agent in connection with the equity placements. Each unit consists of one share of the Company’s common stock and a common stock purchase warrant to purchase one-quarter share of the Company’s common stock, over a five year period, at an exercise price of $1.20 per share.

In addition, we issued warrants for the purchase of 1,353,238 shares of common stock at $1.20 per share in connection with equity financing. As part of the private placement share units issued, 1,353,238 warrants were issued to investors valued at $1,320,569 which expire in 2019.

We issued 504,884 shares at $1.44 per share in connection with the acquisition of SmartReceipt. See Note 2.

We issued 2,137 accrued shares of common stock at $3.42 per share for services that had been recorded in 2013 as equity payable. See 2013 discussion above.

We issued 10,431 shares of common stock at $3.42 per share for services and recorded share-based compensation of $35,673 in general and administrative expense.

We issued 500,000 shares of common stock at $1.01 per share for services and recorded share-based compensation of $505,000 in general and administrative expense.

Equity Payable

We had an earn-out commitment associated with the Boomtext acquisition we completed in 2011 that was due in 2013. The earn-out payment consisted of a number of shares of our common stock equal to (a) 1.5, multiplied by our net revenue from acquired customers and customer prospects for the twelve-month period beginning six months after the closing date, divided by (b) the average of the volume-weighted average trading prices of our common stock for the 25 trading days immediately preceding the earn-out payment (subject to a collar of $8.94 and $12.06 per share).

The final value of the earn-out payment of $2,210,667 was satisfied through the issuance of 247,279 shares of common stock in 2013. At December 31, 2012, the estimated value of the earn-out payment of $2,032,881 was recorded as a current liability.

In 2013, we recorded equity payable of $218,446 related to the additional share issuance obligations under the Bridge Notes. As discussed above under Common Stock and in Note 8 under Warrants Issued in 2013, we satisfied a portion of these obligations in 2013 through the issuance of shares of common stock or warrants to purchase common stock.

-70-

Table of Contents

7. Stock-based Plans and Stock-based Compensation

Stock-based Plans

We have the 2010 Incentive Stock Option Plan and the 2013 Incentive Stock Option Plan under which we have granted stock options to our directors, officers and employees. At December 31, 2014, 6,085,015 shares were authorized under the plans and 94,259 shares were available for future grant.

We believe that such awards better align the interests of our directors, officers and employees with those of our shareholders. Option awards are generally granted with an exercise price that equals the fair market value of our stock at the date of grant. These option awards generally vest based on four years of continuous service and have five-year or 10-year contractual terms.

The following table summarizes stock option activity under our stock-based plans as of and for the year ended December 31, 2014:

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value

Outstanding at December 31, 2012		325,833		$	4.62		4.44	$	-
Granted		5,473,705		$	1.98		-	$	-
Exercised		-		$	-		-	$	-
Canceled/forfeited/expired		(127,097	)	$	4.06		-	$	-
Outstanding at December 31, 2013		5,672,464		$	2.08		9.17	$	415,259
Granted		2,333,500		$	0.84		-	$	-
Exercised		-		$	-		-	$	-
Canceled/forfeited/expired		(2,606,644	)	$	1.95		-	$
Outstanding at December 31, 2014		5,399,320		$	1.17		8.41	$	1,915,878

Expected to vest at December 31, 2014		3,723,522		$	1.41		8.30	$	832,673
Exercisable at December 31,2014		1,830,720		$	1.39		7.71	$	584,990
Unrecognized expense at December 31, 2014	$	2,551,415

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, 2014, options to purchase 3,859,846 shares of common stock were in-the-money.

The weighted average grant-date fair value of options granted during the years 2014 and 2013 was $0.67 and $1.80, respectively.

On March 11, 2013 the Company granted 7 independent directors a total of 58,338 options to purchase shares of Company common stock at the closing price as of March 11, 2013 of $1.50 per share. The options vest in twelve equal monthly installments following the grant date, and are exercisable until March 11, 2023. The total estimated value using the Black-Scholes Model, based on a volatility rate of 122% and a call option value of $1.26 was $73,763.

On March 11, 2013 the Company granted one employee 4,167 options to purchase shares of Company common stock at the closing price as of March 11, 2013 of $1.50 per share. The options vest 25% on the first anniversary of grant, then equally in 36 monthly installments thereafter, and are exercisable until March 11, 2018. The total estimated value using the Black-Scholes Model, based on a volatility rate of 122% and a call option value of $1.13 was $4,714.

On June 12, 2013 the Company granted one employee 417,326 options to purchase shares of Company common stock at the closing price as of June 12, 2013 of $2.04 per share. The options will vest as follows: (a) 33% of the options will vest at rate of 1/48th per month for the first forty-eight (48) months following the date of grant, (b) another 33% of the options vest when the Company reports $500,000 of EBITDA for an entire fiscal year, and (c) the final 33% of the options will vest when the Company reports $5,000,000 of EBITDA for an entire fiscal year. The options are exercisable until June 12, 2023. The total estimated value using the Black-Scholes Model, based on a volatility rate of 132% and a call option value of $1.84 was $767,879.

-71-

Table of Contents

On June 17, 2013 the Company granted two employees 2,782,174 options to purchase shares of Company common stock at the closing price as of June 17, 2013 of $1.80 per share. The option will vest as follows: (a) 20% of the shares underlying the option will vest and first become exercisable upon the date of grant; (b) 40% of the shares underlying the option will vest and first become exercisable when the Company realizes $10,000,000 of gross revenue over any fiscal year; and (c) the final 40% of the shares underlying the option will vest and first become exercisable at the rate of 1/48th per month over a 48 month period commencing on grant date, provided that the vesting of the final 40% shall accelerate and become fully vested when the Company realizes $15,000,000 of gross revenue over any fiscal year. The options are exercisable until June 17, 2023. The total estimated value using the Black-Scholes Model, based on a volatility rate of 132% and a call option value of $1.55 was $4,312,370.

On June 17, 2013 the Company granted two employees 1,669,306 options to purchase shares of Company common stock at the closing price as of June 17, 2013 of $1.80 per share. The options will vest and first become exercisable over a four year period at the rate of 1/48th shares per month commencing on the first month following the date of grant, and are exercisable until June 17, 2023. The total estimated value using the Black-Scholes Model, based on a volatility rate of 132% and a call option value of $1.62 was $2,704,276.

On June 20, 2013 the Company granted 2 independent directors 33,334 options to purchase shares of Company common stock at the closing price as of June 20, 2013 of $2.46 per share. The options will vest and first become exercisable immediately upon the date of grant, and are exercisable until June 20, 2016. The total estimated value using the Black-Scholes Model, based on a volatility rate of 132% and a call option value of $1.43 was $47,668.

On June 20, 2013 the Company granted 6 independent directors 100,002 options to purchase shares of Company common stock at the closing price as of June 20, 2013 of $2.46 per share. The options vest in three equal amounts on each of the next three anniversary dates of this agreement, and are exercisable until June 20, 2023. The total estimated value using the Black-Scholes Model, based on a volatility rate of 132% and a call option value of $2.21 was $221,004.

On July 19, 2013 the Company granted two employees 33,335 options to purchase shares of Company common stock at the closing price as of July 19, 2013 of $4.20 per share. The options vest 25% on the first anniversary of grant, then equally in 36 monthly installments thereafter, and are exercisable until July 19, 2018. The total estimated value using the Black-Scholes Model, based on a volatility rate of 132% and a call option value of $3.78 was $126,006.

On July 26, 2013 the Company granted four employees 27,502 options to purchase shares of Company common stock at the closing price as of July 26, 2013 of $3.90 per share. The options vest 25% on the first anniversary of grant, then equally in thirty-six monthly installments thereafter, and are exercisable until July 26, 2018. The total estimated value using the Black-Scholes Model, based on a volatility rate of 132% and a call option value of $3.52 was $96,807.

On July 26, 2013 the Company granted one employees 278,218 options to purchase shares of Company common stock at the closing price as of July 26, 2013 of $3.90 per share. Options to purchase 139,109 shares of common stock will vest and first become exercisable over a four year period at the rate of 1/48th shares per month commencing on the first month following the date of grant. Options to purchase the remaining 139,109 shares of common stock will vest and first become exercisable when the Company realizes $20,000,000 of gross revenue over any fiscal year. The options are exercisable until July 26, 2023. The total estimated value using the Black-Scholes Model, based on a volatility rate of 132% and a call option value of $3.52 was $976,545.

On September 13, 2013 the Company granted one employee 58,334 options to purchase shares of Company common stock at the closing price as of September 13, 2013 of $3.36 per share. The options vest 25% on the first anniversary of grant, then equally in 36 monthly installments thereafter, and are exercisable until July 19, 2018. The total estimated value using the Black-Scholes Model, based on a volatility rate of 132% and a call option value of $3.03 was $176,752.

On September 13, 2013 the Company granted 4 independent directors a total of 3,335 options to purchase shares of Company common stock at the closing price as of September 13, 2013 of $3.36 per share. The options vest in twelve equal monthly installments following the grant date, and are exercisable until September 13, 2023. The total estimated value using the Black-Scholes Model, based on a volatility rate of 132% and a call option value of $2.95 was $9,838.

-72-

Table of Contents

On November 13, 2013 the Company granted one employee 8,334 options to purchase shares of Company common stock at the closing price as of November 13, 2013 of $2.75 per share. The options vest 25% on the first anniversary of grant, then equally in 36 monthly installments thereafter, and are exercisable until November 13, 2018. The total estimated value using the Black-Scholes Model, based on a volatility rate of 132% and a call option value of $2.48 was $20,668.

On February 27, 2014, the Company granted one employee 180,000 options to purchase shares of the Company common stock at the closing price as of February 27, 2015 of $1.40 per share. The options vest 25% on the first anniversary of the grant, then equally in 36 monthly installments thereafter, and are exercisable until February 27, 2024. The total estimate value using the Black-Scholes Model, based on a volatility rate of 132% and a call option value of $1.26 was $226,800.

On April 2, 2014, the Company granted three employees 202,500 options to purchase shares of the Company common stock at the closing price as of April 2, 2014 of $1.32 per share. The options vest in forty-eight equal monthly installments following the grant date and are exercisable until April 2, 2024. The total estimated value using the Black-Scholes Model, based on a volatility rate of 132% and a call option value of $1.19 was $240,975.

On April 15, 2014, the Company granted six employees 16,000 options to purchase shares of the Company common stock at the closing price as of April 15, 2014 of $1.44 per share. The options vest in forty-eight equal monthly installments following the grant date and are exercisable until April 15, 2024. The total estimated value using the Black-Scholes Model, based on a volatility rate of 132% and a call option value of $1.30 was $20,800.

On April 15, 2014, the Company granted two employees 5,000 options to purchase shares of the Company common stock at the closing price as of April 15, 2014 of $1.44 per share. The options vest 25% on the first anniversary of the grant, then equally in thirty-six monthly installments thereafter and are exercisable until April 15, 2024. The total estimated value using the Black-Scholes Model, based on a volatility rate of 132% and a call option value of $1.30 was $6,500.

On August 11, 2014, the Company granted five employees 212,500 options to purchase shares of the Company common stock at the closing price as of August 11, 2014 of $0.94 per share. The options vest 25% on the first anniversary of the grant, then equally in 36 monthly installments thereafter and are exercisable until August 11, 2024. The total estimated value using the Black-Scholes Model, based on a volatility rate of 132% and a call option value of $0.85 was $180,625.

On September 29, 2014, the Company granted seven employees 182,500 options to purchase shares of the Company common stock at the closing price as of September 29, 2014 of $1.15 per share. The options vest 25% on the first anniversary of the grant, then equally in 36 monthly installments thereafter and are exercisable until September 29, 2024. The total estimated value using the Black-Scholes Model, based on a volatility rate of 132% and a call option value of $1.04 was $189,800.

On November 18, 2014, the Company granted three employees 250,000 options to purchase shares of the Company common stock at the closing price as of November 18, 2014 of $1.48 per share. The options vest 25% on the first anniversary of the grant, then equally in 36 monthly installments thereafter and are exercisable until November 18, 2024. The total estimated value using the Black-Scholes Model, based on a volatility rate of 132% and a call option value of $1.48 was $370,000.

On December 30, 2014, the Company granted three employees 185,000 options to purchase shares of the Company common stock at the closing price as of December 30, 2014 of $1.23 per share. The options vest 25% on the first anniversary of the grant, then equally in 36 monthly installments thereafter and are exercisable until December 30, 2024. The total estimated value using the Black-Scholes Model, based on a volatility rate of 132% and a call option value of $1.11 was $205,350.

-73-

Table of Contents

Stock-based Compensation Expense

The impact on our results of operations of recording stock-based compensation expense for years ended December 31, 2014 and 2013 was as follows:

	Years ended December 31,
	2014		2013

General and administrative	$	948,567	$	855,698
Sales and marketing		592,785		976,341
Engineering, research, and development		44,908		17,972
	$	1,586,260	$	1,850,012

As of December 31, 2014, there was approximately $2,981,414 of unearned stock-based compensation that will be expensed from 2014 through 2018. 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, 2014 and 2013:

	Years ended December 31,
	2014		2013
Risk-free interest rate	1.57% to 1.91%		0.60% to 1.03%
Expected life (years)	4.66 to 6.08		3.58 to 5.27
Dividend yield		-		-
Expected volatility	132.0% to 132.0%		122.0% to 132.0%

The risk-free interest rate assumption is based upon published interest rates appropriate for the expected life of our employee stock options.

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 2015 is based on the historical publicly traded price of our common stock. The expected volatility prior to 2014 is based on the historical volatility of publicly traded surrogates in our peer group.

-74-

Table of Contents

Restricted stock units

The following table summarizes restricted stock unit activity under our stock-based plans as of and for the year ended December 31, 2014:

	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value

Outstanding at December 31, 2013		-	$	-		-	$	-
Granted		591,436	$	-		-	$	-
Exercised		-	$	-		-	$	-
Canceled/forfeited/expired		-	$	-		-	$	-
Outstanding at December 31, 2014		591,436	$	-		9.75	$	703,809

Expected to vest at December 31, 2014		297,086	$	-		9.61	$	353,532
Exercisable at December 31,2014		297,086	$	-		9.61	$	353,532
Unvested at December 31, 2014		294,350	$	-		9.89	$	350,277
Unrecognized expense at December 31, 2014	$	429,999

On July 17, 2014, the Company granted 4 independent directors a total of 231,391 restricted stock units. All units are vested by December 31, 2014. The units were valued based on the closing stock price on the date of grant. The shares of Common Stock associated with the Restricted Stock Unit evidenced by this Agreement will, to the extent the Participant’s rights with respect to the Restricted Stock Unit have become vested in accordance with Paragraph 3, be issued to the Participant upon the earliest to occur of (A) July 17, 2017, (B) a Change in Control of the Company, and (C) the termination of the Participant’s employment with the Company.

On October 2, 2014, the Company granted one independent director a total of 11,743 restricted stock units. All units are vested by December 31, 2014. The units were valued based on the closing stock price on the date of grant. The shares of Common Stock associated with the Restricted Stock Unit evidenced by this Agreement will, to the extent the Participant’s rights with respect to the Restricted Stock Unit have become vested in accordance with Paragraph 3, be issued to the Participant upon the earliest to occur of (A) October 2, 2017, (B) a Change in Control of the Company, and (C) the termination of the Participant’s employment with the Company.

On October 10, 2014 the Company granted five independent directors a total of 34,670 restricted stock units. All units are vested by December 31, 2014. The units were valued based on the closing stock price on the date of grant. The shares of Common Stock associated with the Restricted Stock Unit evidenced by this Agreement will, to the extent the Participant’s rights with respect to the Restricted Stock Unit have become vested in accordance with Paragraph 3, be issued to the Participant upon the earliest to occur of (A) October 10, 2017, (B) a Change in Control of the Company, and (C) the termination of the Participant’s employment with the Company.

On November 6, 2014 the Company granted one independent director a total of 5,768 restricted stock units. All units are vested by December 31, 2014. The units were valued based on the closing stock price on the date of grant. The shares of Common Stock associated with the Restricted Stock Unit evidenced by this Agreement will, to the extent the Participant’s rights with respect to the Restricted Stock Unit have become vested in accordance with Paragraph 3, be issued to the Participant upon the earliest to occur of (A) November 6, 2017, (B) a Change in Control of the Company, and (C) the termination of the Participant’s employment with the Company.

On November 6, 2014 the Company granted one independent director a total of 37,593 restricted stock units. The units were valued based on the closing stock price on the date of grant. All units vested equally in 12 monthly installments beginning January 31, 2015. The shares of Common Stock associated with the Restricted Stock Unit evidenced by this Agreement will, to the extent the Participant’s rights with respect to the Restricted Stock Unit have become vested in accordance with Paragraph 3, be issued to the Participant upon the earliest to occur of (A) November 6, 2017, (B) a Change in Control of the Company, and (C) the termination of the Participant’s employment with the Company.

-75-

Table of Contents

On November 18, 2014 the Company granted one independent director a total of 13,514 restricted stock units. All units are vested by December 31, 2014. The units were valued based on the closing stock price on the date of grant. The shares of Common Stock associated with the Restricted Stock Unit evidenced by this Agreement will, to the extent the Participant’s rights with respect to the Restricted Stock Unit have become vested in accordance with Paragraph 3, be issued to the Participant upon the earliest to occur of (A) November 6, 2017, (B) a Change in Control of the Company, and (C) the termination of the Participant’s employment with the Company.

On November 18, 2014 the Company granted five independent directors a total of 256,757 restricted stock units. The units were valued based on the closing stock price on the date of grant. All units vested equally in 12 monthly installments beginning January 31, 2015. The shares of Common Stock associated with the Restricted Stock Unit evidenced by this Agreement will, to the extent the Participant’s rights with respect to the Restricted Stock Unit have become vested in accordance with Paragraph 3, be issued to the Participant upon the earliest to occur of (A) November 17, 2017, (B) a Change in Control of the Company, and (C) the termination of the Participant’s employment with the Company.

Restricted Stock Unit Compensation Expense

The impact on our results of operations of recording stock-based compensation expense for years ended December 31, 2014 and 2013 was as follows:

	Year ended December 31,
	2014

General and administrative	$	347,074
	$	347,074

As of December 31, 2014, there was approximately $429,999 of unearned restricted stock unit compensation that will be expensed in 2015. 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 restricted unit compensation expense. Future unearned restricted unit compensation will increase to the extent we grant additional equity awards.

8. Warrants to Purchase Common Stock

Warrants Issued to Non-Employees

We issued warrants to purchase 150,835 shares of common stock to non-employees in 2010 and 2011. Prior to June 2013, the warrants were accounted for as derivative liabilities because the equity environment was tainted as discussed in Note 4. The equity environment was no longer tainted as of June 2013, and our independent valuation expert calculated the stock-based compensation for these warrants using the Black-Scholes valuation model. The valuation assumptions used are consistent with the valuation information for options above.

We recorded stock-based compensation expense of $5,844 in general and administrative expense and we recorded a gain of $-0- in change in fair value of derivative liabilities for the year ended December 31, 2014. We recorded a gain of $123,946 in change in fair value of derivative liabilities for the year ended December 31, 2013.

The following table summarizes non-employee warrant activity under our stock-based plans as of and for the year ended December 31, 2014:

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)
Outstanding at December 31, 2012		150,835		$	1.97		-
Granted		-		$	-		-
Exercised		-		$	-		-
Canceled/forfeited/expired		(279	)	$	1.16		4.09
Outstanding at December 31, 2013		150,556		$	1.97		-
Granted		-		$	-		-
Exercised		-		$	-		-
Canceled/forfeited/expired		(555	)	$	10.50		-
Outstanding at December 31, 2014		150,001		$	1.92		0.99
Expected to vest at December 31, 2014		150,001		$	1.92		0.99
Warrants exercisable		149,306		$	1.92		0.99

-76-

Table of Contents

Warrants with Price Protection

In 2011, we issued warrants for the purchase of 114,784 shares of common stock at $2.00 per share in connection with a private placement. In 2012, we issued warrants for the purchase of 25,588 shares of common stock at $2.00 per share in connection with the conversion of a portion of our Bridge Notes. These warrants are exercisable for four years from the date of issuance, and contain anti-dilution, or down round, price protection as long as the warrants remain outstanding. The current exercise price of these warrants is $1.20 per share as a result of the price protection guarantee contained in the warrant agreements.

Warrants issued in 2013

In June 2013, we issued warrants for the purchase of 4,541,612 shares of common stock at $1.20 per share in connection with the conversion of the Bridge Notes into equity. The warrants are exercisable for five years from the date of issuance.

In June 2013, we issued warrants for the purchase of 611,746 shares of common stock at $1.20 per share to placement agents connected with the Bridge Note conversions and equity placements. The warrants are exercisable for five years from the date of issuance.

In July 2013, we issued 21,171 shares of common stock upon the cashless exercise of warrants to purchase 32,054 shares of common stock.

In July 2013, we issued warrants for the purchase of 25,384 shares of common stock at $1.20 per share to previous note holders in satisfaction of our additional share issuance obligation under the Bridge Notes. The warrants are exercisable for three years from the date of issuance.

We issued warrants for the purchase of 8,845 shares of common stock at $1.20 per share to an individual for services rendered, and recorded stock-based compensation of $16,188 in general and administrative expense.

As of December 31, 2013, warrants with price protection to purchase 108,318 shares of common stock at $1.00 per share are outstanding. Of this amount, warrants to purchase 86,949 shares of common stock expire in 2015 and warrants to purchase 21,369 shares of common stock expire in 2016.

As of December 31, 2013, we have warrants issued in 2013 to purchase 5,187,587 shares of common stock at $1.20 per share that are outstanding. Of this amount, warrants to purchase 34,229 shares of common stock expire in 2016 and warrants to purchase 5,153,358 shares of common stock expire in 2018.

Warrants Issued in 2014

In March 2014, we issued warrants for the purchase of 1,353,250 shares of common stock at $1.20 per share in connection with a private placement. The warrants are exercisable for the five years from the date of issuance.

In March 2014, we issued warrants for the purchase of 370,685 common stock units at $1.00 per unit to a placement agent in connection with the equity placements. Each unit consists of one share of the Company’s common stock and a common stock purchase warrant to purchase one-quarter share of the Company’s common stock, over a five year period, at an exercise price of $1.20 per share. At March 31, 2014, the value of the 370,685 warrants was $448,705. As part of the private placement share units issued, 1,353,238 warrants were issued to investors valued at $1,320,569 which expire in 2019.

As of December 31, 2014, we have warrants issued in 2014 to purchase 7,019,840 shares of common stock at $1.20 per share that are outstanding. Of this amount, warrants to purchase 86,949 shares of common stock will expire in 2015, warrants to purchase 55,598 shares of common stock expire in 2016, warrants to purchase 5,153,358 shares of common stock expire in 2018 and warrants to purchase 1,723,935 shares of common stock expire in 2019.

The following table summarizes warrant activity as of and for the year ended December 31, 2014:

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)
Outstanding at December 31, 2012		140,372		$	1.20		1.50
Granted		5,187,587		$	1.20		4.37
Exercised		(32,054	)	$	-		-
Canceled/forfeited/expired		-		$	-		-
Outstanding at December 31, 2013		5,295,905		$	1.20		4.39
Granted		1,723,935		$	1.20		4.20
Exercised		-		$	-		-
Canceled/forfeited/expired		-		$	-		-
Outstanding at December 31, 2014		7,019,840		$	1.20		3.18

-77-

Table of Contents

9. Income Taxes

For the years ended December 31, 2014 and 2013 the provisions for income taxes were as follows:

	2014		2013
Federal – current	$	-		$	-
State – 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.

Significant components of our net deferred tax assets and liabilities as of December 31, 2014 and 2013 are as follows:

	2014			2013
Deferred tax assets (liabilities):
Net operating loss carryforwards	$	7,837,000		$	6,283,000
Stock based compensation		2,716,000			1,735,000
Accrued compensation		47,000			31,000
Derivative Liability		17,000			42,000
Depreciation and amortization		6,617,000			5,099,000
Other		20,000			10,000
Total deferred tax assets		17,254,000			13,200,000
Valuation allowance for net deferred tax assets		(17,254,000	)		(13,200,000	)
Total	$	-		$	-

The Company has provided a valuation allowance against deferred tax assets recorded as of December 31, 2014 and 2013 due to uncertainties regarding the realization of such assets.

The net change in the total valuation allowance for the year ended December 31, 2014 was an increase of approximately $4,054,000. The net change in the total valuation allowance for the year ended December 31, 2013 was an increase of approximately $2,047,000. 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, 2014, the Company has available net operating loss carryforwards of approximately $23,000,000 for federal income tax purposes, which will start to expire in 2026. The net operating loss carryforwards for state purposes are approximately $23,000,000 and will start to expire in 2016.

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, 2014 and 2013 was as follows:

	2014			2013
Computed expected tax expense	$	(3,548,000	)	$	(5,698,000	)
State taxes, net of federal benefit		(594,000	)		(300,000	)
Other		88,000			3,951,000
Change in valuation allowance		4,054,000			2,047,000
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 $7,000,000.

-78-

Table of Contents

The Company files income tax returns in the U.S. federal jurisdiction 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, 2014, no accrued interest or penalties are recorded in the financial statements.

10. 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, 2014:

Description	Level 1		Level 2		Level 3		Gains (Losses)
Goodwill (non-recurring)	$	-	$	-	$	1,921,072	$	(4,078,693	)
Intangibles, net (non-recurring)	$	-	$	-	$	2,010,952	$	(961,436	)
Derivative liabilities (recurring)	$	-	$	-	$	42,659	$	63,517
Earn-out payable (recurring)	$	-	$	-	$	840,000	$	1,492,000

The following table summarizes our financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2013:

Description	Level 1		Level 2		Level 3		Gains (Losses)
Goodwill (non-recurring)	$	-	$	-	$	3,108,964	$	(1,066,068	)
Intangibles, net (non-recurring)	$	-	$	-	$	935,316	$	(644,170	)
Derivative liabilities (recurring)	$	-	$	-	$	106,176	$	(3,766,231	)
Earn-out payable (recurring)	$	-	$	-	$	59,000	$	(28,465	)

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 Company recorded derivative liabilities as a result of: (i) the variable maturity conversion feature in its convertible notes payable; (ii) the additional security issuance feature in its convertible notes payable notes, common stock and warrants; and (iii) warrants issued to non-employees that were treated as derivative liabilities. These liabilities were valued with the assistance of a valuation consultant using a Monte-Carlo simulation model. The assumptions used in the Monte-Carlo simulation used to value the derivative liabilities involve expected volatility in the Company’s common stock, estimated probabilities related to the occurrence of a future financing, and interest rates. As all the assumptions employed to measure these liabilities are based on management’s judgment using internal and external data, this fair value determination is classified in Level 3 of the valuation hierarchy.

The Company’s 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.

11. Commitments and Contingencies

Litigation

As of the date of this report, there are no pending legal proceedings to which we or our properties are subject, except for routine litigation incurred in the normal course of business.

Operating Lease

The Company has a lease agreement for 6,730 square feet, as amended, for its office facilities in Chandler, AZ through December 2015. Monthly rental payments, excluding common area maintenance charges, are $11,958 in 2014 and $12,357 in 2015.

-79-

Table of Contents

The Company also has a lease through January 2018 for approximately 3,023 square feet of office space in San Diego, California at a monthly expense of $9,825, excluding common area maintenance charges.

We also have a month to month lease for approximately 700 square feet of office space in North Huron, Michigan at a monthly expense of $600.

The minimum lease payments that are required over the next five years are shown below.

Minimum Lease Payments
2015	$	227,484
2016		122,734
2017		126,361
2018		10,732
2019		-
Thereafter		-
	$	487,311

Rent expense was $248,573 and $166,802 for the years ended December 31, 2014 and 2013.

12. 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, 2014 and 2013, the Company made no contributions to the Plan.

13. Related Party Transactions

In April 2013, we issued a new Bridge Note to our former CFO totaling $20,000 that contains the same rights and privileges as the previously issued new Bridge Notes, the due date of which was extended to October 15, 2013. The note and accrued interest were converted into 16,918 shares of common stock and he received five-year warrants to purchase 16,918 shares of common stock exercisable at $1.20 per share.

In May 2013, we issued a new Bridge Note to our CEO totaling $17,500 that contains the same rights and privileges as the previously issued and amended new Bridge Notes. The note and accrued interest were converted into 14,708 shares of common stock and he received five-year warrants to purchase 14,708 shares of common stock exercisable at $1.20 per share.

On June 17, 2013 the Company issued to Dennis Becker an option to purchase 1,251,979 shares of Company common stock. The exercise price of the option is $1.80, the fair market value on date of grant. The options will vest and first become exercisable over a four year period at the rate of 1/48th shares per month commencing on the first month following the date of grant.

On June 17, 2013 the Company issued to Timothy Schatz an option to purchase 417,326 shares of Company common stock. The exercise price of the option is $1.80, the fair market value on date of grant. The options will vest and first become exercisable over a four year period at the rate of 1/48th shares per month commencing on the first month following the date of grant.

14. Subsequent Events

Director and officer resignation

On January 13, 2015, Michael Bynum, president and a member of the board of directors of Mobivity Holdings Corp, resigned as an officer, director and employee of the Company and all subsidiaries. In connection with Mr. Bynum's resignation, he and the Company entered into a customary separation agreement providing for mutual releases and other standard covenants and acknowledgements. In addition, the separation agreement modified Mr. Bynum's rights to severance under his employment agreement dated May 17, 2013 with the Company. Pursuant to his employment agreement, Mr. Bynum was entitled to one year of salary, or $200,000, upon his resignation. However, under the separation agreement, Mr. Bynum agreed to accept 260,870 shares of the common stock of the Company in lieu of cash severance. In addition, pursuant to his employment agreement, Mr. Bynum's options would continue to vest for three months following his resignation and all vested options would remain exercisable for a period of six months following his resignation. However, under the separation agreement, Mr. Bynum agreed that his options would cease vesting upon his resignation, all unvested options would expire upon resignation and all vested options would remain exercisable for a period of 12 months following his resignation.

-80-

Table of Contents

Executive chairman appointment

On January 21, 2015, the board of directors of Mobivity Holdings Corp. appointed William Van Epps to serve as executive chairman of the Company. In connection with the appointment, the Company entered into an employment agreement dated January 19, 2015 with Mr. Van Epps. Pursuant to his employment agreement, the Company has agreed to pay Mr. Van Epps a base salary $310,000, subject to annual review by the board. The Company has also agreed to pay Mr. Van Epps a signing bonus of 50,000 shares of the Company’s common stock.

2015 Private Placement

-81-

Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors Mobivity Holdings Corp. Chandler, AZ 85225

We have audited the accompanying balance sheets of SmartReceipt, Inc. (the “Company”) as of December 31, 2013 and 2012 and the related statements of operations, stockholders' equity (deficit) and cash flows for the twelve month periods then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial positions of the Company as of December 31, 2013 and 2012 and the results of its operations and cash flows for the periods described above in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has incurred recurring operating losses and negative cash flows from operations and is dependent on additional financing to fund operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are described in Note 1 to the financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ M&K CPAS, PLLC www.mkacpas.com Houston, Texas

May 19, 2014

-82-

Table of Contents

SmartReceipt, Inc

Balance Sheets

	December 31, 2013			December 31, 2012
ASSETS
Current assets
Cash	$	96,921		$	31,566
Accounts receivable, net of allowance for doubtful accounts of $55,963 and $-0-, respectively		124,318			50,292
Other current assets		5,383			6,107
Total current assets		226,622			87,965

Other assets		9,336			11,371
TOTAL ASSETS	$	235,958		$	99,336

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities
Accounts payable	$	359,292		$	344,431
Accrued interest		478			49,559
Accrued and deferred personnel compensation		59,699			46,284
Deferred revenue and customer deposits		194,506			327,055
Convertible debt – related party, net		10,000			520,686
Convertible debt – third party, net		-			425,633
Notes payable – related party		130,000			150,000
Notes payable – third party		203,065			103,774
Derivative liabilities		-			6,750,659
Other current liabilities		292,690			859,125
Total current liabilities		1,249,730			9,577,206

Total liabilities		1,249,730			9,577,206

Commitments and Contingencies (See Note 9)

Stockholders' equity (deficit)
Common stock, $0.001 par value; 60,000,000 and 40,000,000 shares authorized; 133,938 and 6,109,965 shares issued and outstanding		134			6,110
Preferred stock - series A		-			2,253
Preferred stock - series A-1		-			1,542
Preferred stock - series A-2		-			4,806
Preferred stock - series prime		98			-
Preferred stock - series seed		36,011			-
Additional paid-in capital		14,101,326			4,269,009
Accumulated deficit		(15,151,341	)		(13,761,590	)
Total stockholders' equity (deficit)		(1,013,772	)		(9,477,870	)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)	$	235,958		$	99,336

See accompanying notes to consolidated financial statements (audited).

-83-

Table of Contents

SmartReceipt, Inc.
Statements of Operations

	Years ended December 31,
	2013			2012
Revenues
Revenues	$	832,960		$	449,415
Cost of revenues		74,011			25,126
Gross margin		758,949			424,289

Operating expenses
General and administrative		113,439			207,227
Sales and marketing		474,674			605,116
Research and development		886,059			1,129,549
Depreciation		4,902			2,951
Total operating expenses		1,479,074			1,944,843

Loss from operations		(720,125	)		(1,520,554	)

Other income/(expense)
Interest income		-			-
Interest expense		(905,316	)		(784,548	)
Change in fair value of derivative liabilities		235,690			1,484,678
Total other income/(expense)		(669,626	)		700,130
Loss before income taxes		(1,389,751	)		(820,424	)
Income tax expense		-			-
Net loss	$	(1,389,751	)	$	(820,424	)

Net loss per share - basic and diluted	$	(0.11	)	$	(0.09	)

Weighted average number of shares
during the period - basic and diluted		12,986,839			8,682,828

See accompanying notes to consolidated financial statements (audited).

-84-

Table of Contents

SmartReceipt, Inc.
Statement of Stockholders' Equity (Deficit)

	Preferred Stock Series A Convertible						Preferred Stock Series A-1 Convertible						Preferred Stock Series A-2 Convertible						Preferred Stock Series Seed Convertible				Preferred Stock Series Prime Convertible				Common Stock						Additional Paid-in Capital		Accum-ulated Deficit			Total Stock-holders' Equity (Deficit)
	Shares			Dollars			Shares			Dollars			Shares			Dollars			Shares		Dollars		Shares		Dollars		Shares			Dollars			Additional Paid-in Capital		Accum-ulated Deficit			Total Stock-holders' Equity (Deficit)
Balance, December 31, 2011		2,253,246		$	2,253			1,541,666		$	1,542			4,806,460		$	4,806			-	$	-		-	$	-		6,109,965		$	6,110		$	3,906,855	$	(12,941,166	)	$	(9,019,600	)
Imputed Interest Expense		-			-			-			-			-			-			-		-		-		-		-			-			2,752		-			2,752
Stock based compensation		-			-			-			-			-			-			-		-		-		-		-			-			359,402		-			359,402
Net loss		-			-			-			-			-			-			-		-		-		-		-			-			-		(820,424	)		(820,424	)
Balance, December 31, 2012		2,253,246			2,253			1,541,666			1,542			4,806,460			4,806			-		-		-		-		6,109,965			6,110			4,269,009		(13,761,590	)		(9,477,870	)
Conversion of Debt to Shares		-			-			-			-			-			-			21,661,459		21,661		32,763		33		7,819			8			2,666,861		-			2,688,563
Adjustment of Derivative Liability Due to Conversion		-			-			-			-			-			-			-		-		-		-		-			-			6,793,640		-			6,793,640
Issuance of Series Seed Preferred Stock for Cash		-			-			-			-			-			-			14,349,910		14,350		-		-		-			-			266,969		-			281,318

Conversion of Series A, A-1, A-2 to Series Prime Stock & Common Stock		(2,253,246	)		(2,253	)		(1,541,666	)		(1,542	)		(4,806,460	)		(4,806	)		-		-		65,532		65		44,663			45			8,491		-			-
Reverse Split 75:1		-			-			-			-			-			-			-		-		-		-		(6,028,509	)		(6,029	)		6,029		-			-
Imputed Interest Expense		-			-			-			-			-			-			-		-		-		-		-			-			9,661		-			9,661
Stock based compensation		-			-			-			-			-			-			-		-		-		-		-			-			80,667		-			80,667
Net loss		-			-			-			-			-			-			-		-		-		-		-			-			-		(1,389,751	)		(1,389,751	)
Balance, December 31, 2013		-		$	-			-		$	-			-		$	-			36,011,369	$	36,011		98,295	$	98		133,938		$	134		$	14,101,326	$	(15,151,341	)	$	(1,013,772	)

See accompanying notes to consolidated financial statements (audited).

-85-

Table of Contents

SmartReceipt, Inc.
Statements of Cash Flows

	Years ended December 31,
	2013			2012
OPERATING ACTIVITIES
Net loss	$	(1,389,751	)	$	(820,424	)
Adjustments to reconcile net income to net cash:
Stock-based compensation		80,667			359,402
Amortization of debt discount		787,579			706,636
Fair value adjustment to derivative liabilities		(235,690	)		(1,484,678	)
Imputed interest expense		9,661			2,752
Depreciation expense		4,902			2,951
Allowance for bad debt		73,196			-
Changes in operating assets and liabilities:
Accounts receivable		(147,222	)		(396	)
Prepaid expenses		1,510			(6,107	)
Accounts payable		14,861			132,625
Accrued expenses		(92,828	)		494,368
Deferred revenue		(132,549	)		(118,366	)
Net cash used in operating activities		(1,025,664	)		(731,237	)

INVESTING ACTIVITIES
Cash paid for purchase of fixed assets		(3,653	)		(4,758	)
Net cash used in investing activities		(3,653	)		(4,758	)

FINANCING ACTIVITIES
Borrowings on convertible notes payable – related party		338,600			133,000
Borrowings on convertible notes payable – third party		179,859			35,000
Borrowings on notes payable – related party		243,244			480,000
Borrowings on notes payable – third party		175,624			75,000
Proceeds from sale of preferred seed stock		281,318			-
Repayment of notes payable – third party		(123,973	)		(20,296	)
Net cash provided by financing activities		1,094,672			702,704

Net change in cash		65,355			(33,291	)
Cash at beginning of period		31,566			64,857
Cash at end of period	$	96,921		$	31,566

Supplemental disclosures:
Non-cash transactions:
Debt/Accrued interest converted to equity	$	2,688,563		$	-
Conversion of accrued compensation to debt – related party	$	130,000		$	-
Conversion of accrued compensation to debt – third party	$	223,265		$	124,069
Debt discount recorded due to derivative liability	$	278,671		$	1,215,544
Extinguishment of derivative due to equity issued	$	6,793,640		$	-
Conversion of series A preferred stock to common stock	$	8,535		$	-
Effect of reverse split	$	6,029		$	-
Transfer of accrued interest to debt	$	-		$	62,228

See accompanying notes to consolidated financial statements.

-86-

Table of Contents

SmartReceipt, Inc

Notes to Financial Statements

1. Summary of significant accounting policies

Nature of operations

SmartReceipt, Inc (the “Company”) a marketing solutions company whose software products transform traditional retail transaction receipts for into engaging "smart" receipts that feature coupons and special offers for consumers. The Company employs a SaaS-based monthly recurring revenue business model with most of its client base within the Quick Serve Restaurant (QSR) industry. Its customers pay a set monthly fee per location for use of the service. SmartReceipt's solution is compatible with over 80% of Point-of-Sale (POS) systems available in the marketplace today and transmits the printed receipt data from POS systems to SmartReceipt's cloud-based platform, enabling the QSR to store transactional data and dynamically control the receipt content in real-time.

Basis of presentation

The accompanying financial statements have been prepared in accordance with generally accepted accounting principles (“GAAP”) as promulgated in the United States of America.

Going concern

The Company’s financial statements have been prepared assuming that they will continue as a going concern. Such assumption contemplates the realization of assets and satisfaction of liabilities in the normal course of business. However, the Company has incurred losses through the year ended December 31, 2013, has a net working capital deficiency as of December 31, 2013, and has an accumulated deficit of $15,151,341 as of December 31, 2013. These factors among others create a substantial doubt about the Company’s ability to continue as a going concern. The Company is dependent upon sufficient future revenues or obtaining financing in order to meet the Company’s operating cash requirements. Barring the Company’s generation of revenues in excess of its costs and expenses or its obtaining additional funds from equity or debt financing, the Company will not have sufficient cash to continue to fund the operations of the Company through June 30, 2014. These financial statements do not include any adjustments that might result from the outcome of this uncertainty.

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 asset impairments, the valuation and useful lives of depreciable tangible assets, and the valuation allowance of deferred tax assets. Management believes that these estimates are reasonable; however, actual results may differ from these estimates.

Cash and cash equivalents

The Company considers all investments with an original maturity of three months or less to be cash equivalents. Cash equivalents primarily represent funds invested in money market funds, bank certificates of deposit and U.S. government debt securities whose cost equals fair market value. At December 31, 2013 and 2012, respectively, the Company had no cash equivalents.

-87-

Table of Contents

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 and preferred 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.

The fair values of the derivatives are estimated using a Monte Carlo simulation model. The model utilizes a series of inputs and assumptions to arrive at a fair value at the date of inception and each reporting period. Some of the key assumptions include the likelihood of future financing, stock price volatility, and discount rates.

Accounts receivable

Accounts receivable are carried at their estimated collectible amounts. The Company grants unsecured credit to substantially all of its 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 the Company cannot necessarily predict future changes in the financial stability of our customers, the Company cannot guarantee that its reserves will continue to be adequate. The Company’s allowance for doubtful accounts totaled 55,963 and $0at December 31, 2013 and 2012, respectively.

As of December 31, 2013, the Company had one customer customers whose balance represented 89% of accounts receivable.

As of December 31, 2012, the Company had four customers whose balances represented 45%, 22%, 18% and 11% accounts receivable.

Revenue recognition

The Company generates revenue from licensing its software to clients in its software as a service (Saas) model. Our SmartReceipt platform, which is a hosted solution, revenue is principally derived from subscription fees from customers. The subscription fee is billed on a month to month basis with primarily no contractual term and is collected by cash. Cash received in advance of the performance of services is recorded as deferred revenue. The Company recognizes revenue at the time that the services are rendered, the selling price is fixed, and collection is reasonably assured, provided no significant obligations remain. The Company considers authoritative guidance on multiple deliverables in determining whether each deliverable represents a separate unit of accounting.

During the year ended December 31, 2013 and 2012, one customer accounted for 32% and 54%, respectively, of our revenues.

-88-

Table of Contents

Income taxes

The actual income tax provisions differ from the expected amounts calculated by applying the statutory income tax rate to the Company’s loss before income taxes. The components of these differences are as follows at December 31, 2013 and 2012:

	12/31/13			12/31/12
Net tax loss carry-forwards	$	14,355,685		$	14,177,478
Statutory rate		34	%		34	%
Expected tax recovery		4,880,933			4,820,343
Change in valuation allowance		(4,880,933 )			(4,820,343	)
Income tax provision	$	-		$	-

Components of deferred tax asset:
Non capital tax loss carry forwards	$	4,880,933		$	4,820,343
Less: valuation allowance		(4,880,933	)		(4,820,343	)
Net deferred tax asset	$	-		$	-

Fair Value Measurements

Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the authoritative guidance establishes a three-tier value hierarchy, which prioritizes the inputs used in measuring fair value as follows: (Level 1) observable inputs such as quoted prices in active markets; (Level 2) inputs other than the quoted prices in active markets that are observable either directly or indirectly; and (Level 3) unobservable inputs in which there is little or no market data, which requires us to develop our own assumptions. This hierarchy requires companies to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value. On a recurring basis, we measure certain financial assets and liabilities at fair value, including our derivative liabilities.

The following table summarizes our financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2013:

Description	Level 1		Level 2		Level 3		Gains (Losses)
Preferred stock and warrant derivatives (recurring)	$	-	$	-	$	-	$	62,852
Convertible debt derivatives (recurring)	$	-	$	-	$	-	$	172,838

-89-

Table of Contents

The following table summarizes our financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2012:

Description	Level 1		Level 2		Level 3		Gains (Losses)
Preferred stock and warrant derivatives (recurring)	$	-	$	-	$	5,817,120	$	1,202,673
Convertible debt derivatives (recurring)	$	-	$	-	$	933,539	$	282,005

The change in fair value of these liabilities is included in other income (expense) in the statements of operations. The assumptions used in the Monte-Carlo simulation used to value the derivative liabilities involve expected volatility in the price of our common stock, estimated probabilities related to the occurrence of a future financing, and interest rates. As all the assumptions employed to measure this liability are based on management’s judgment using internal and external data, this fair value determination is classified in Level 3 of the valuation hierarchy.

See Note 3 for a table that provides a reconciliation of the derivative liabilities from December 31, 2011 to December 31, 2013.

Recently adopted accounting pronouncements

In July 2013, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2013-11: Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. The new guidance requires that unrecognized tax benefits be presented on a net basis with the deferred tax assets for such carryforwards. This new guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2013. We do not expect the adoption of the new provisions to have a material impact on our financial condition or results of operations.

-90-

Table of Contents

In October 2012, the FASB issued ASU 2012-04, “Technical Corrections and Improvements” in Accounting Standards Update No. 2012-04. The amendments in this update cover a wide range of Topics in the Accounting Standards Codification. These amendments include technical corrections and improvements to the Accounting Standards Codification and conforming amendments related to fair value measurements. The amendments in this update will be effective for fiscal periods beginning after December 15, 2012. The adoption of ASU 2012-04 is not expected to have a material impact on our financial position or results of operations.

In August 2012, the FASB issued ASU 2012-03, “Technical Amendments and Corrections to SEC Sections: Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin (SAB) No. 114, Technical Amendments Pursuant to SEC Release No. 33-9250, and Corrections Related to FASB Accounting Standards Update 2010-22 (SEC Update)” in Accounting Standards Update No. 2012-03. This update amends various SEC paragraphs pursuant to the issuance of SAB No. 114. The adoption of ASU 2012-03 is not expected to have a material impact on our financial position or results of operations.

In July 2012, the FASB issued ASU 2012-02, "Testing Indefinite-Lived Intangible Assets for Impairment" in Accounting Standards Update No. 2012-02. ASU 2012-2 allows entities to use a qualitative approach to test indefinite-lived intangible assets for impairment. ASU No. 2012-02 permits an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of the indefinite-lived intangible asset is less than its carrying value. If it is concluded that this is the case, it is necessary to perform the currently prescribed quantitative impairment test. Otherwise, the quantitative impairment test is not required. ASU No. 2012-02 is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012, with early adoption permitted. The adoption of the provisions of ASU No. 2012-02 will not have a material impact on the Company's financial position or results of operations.

2. Deferred revenue

Deferred revenue from all customers was $194,506 and $327,055 for the years ended December 31, 2013 and 2012, respectively.

In November 2010, the Company entered into a Resale Purchase Agreement with NCR Government Systems (“NCR”). Pursuant to the agreement, the Company granted NCR a license to use certain of its software for a period of five years. Consideration for the license consisted of $530,000 in cash, all of which was collected in 2010. The Company is recognizing the $530,000 received for the license over five years. The Company recognized revenue of $120,000 and $120,000 for the years ended December 31, 2013 and 2012, respectively, related to this transaction, and deferred revenue at December 31, 2013 and 2012 from NCR totaled $191,042 and $307,990, respectively.

-91-

Table of Contents

3. Derivative Liabilities

Related to convertible notes payable

As discussed in Note 4 under Convertible Notes, we previously issued convertible notes payable that included down round price protection. On November 4, 2013, we converted all of the outstanding convertible notes payable into Series Seed preferred stock, Series Prime preferred stock and common stock. At that time, the derivative liabilities related to the down round protection totaling $1,039,372 were reclassified to equity.

Related to preferred stock and preferred stock warrants

Series A, Series A-1, and Series A-2 preferred stock, as well as Series A-2 warrants included down round protection. We recorded derivative liabilities related to the down round price protection on the common shares and the warrants at the issuance date for each security and recorded a fair market value adjustment at the end of each reporting period. On November 4, 2013, we converted all of the Series A, Series A-1, and Series S-2 preferred stock into Series Seed preferred stock, Series Prime preferred stock and common stock. At that time, the derivative liabilities related to the down round protection totaling $5,754,268 were reclassified to equity.

Summary

The fair values of our derivative liabilities are estimated at the issuance date and are revalued at each subsequent reporting date using a Monte Carlo simulation discussed below.

At December 31, 2013 and 2012, we recorded current derivative liabilities of $0 and $6,750,659, respectively, which are detailed by instrument type in the table below.

The net change in fair value of the derivative liabilities for the years ended December 31, 2013 and 2012 was a gain of $235,690 and a gain of $1,484,678, respectively.

The following table presents the derivative liabilities by instrument type as of December 31, 2013 and 2012:

	December 31,
Derivative Value by Instrument Type	2013		2012
Convertible Bridge Notes	$	-	$	933,539
Preferred Stock and Warrants		-		5,817,120
	$	-	$	6,750,659

-92-

Table of Contents

The following table presents details of the Company’s derivative liabilities from December 31, 2011 to December 31, 2013:

Balance December 31, 2011	$	7,019,793
Issuances of derivative due to new convertible notes		1,215,544
Change in fair market value of derivative liabilities		(1,484,678	)
Balance December 31, 2012	$	6,750,659
Issuances of derivative due to new convertible notes		278,671
Adjustment to derivative liability due to note conversion into equity		(1,039,372	)
Adjustment to derivative liability due to share conversion into equity		(3,799,638	)
Adjustment to derivative liability due to warrant conversion into equity		(1,954,630	)
Change in fair value of derivative liabilities		(235,690	)
Balance December 31, 2013	$	-

Key inputs and assumptions used in valuing our derivative liabilities are as follows for issuances of derivatives due to notes, preferred stock and preferred warrants:

·	Stock prices on all measurement dates were based on a 409A common stock valuation as of December 31, 2010

·	The probability of a future equity financing event triggering the down round protection was estimated at 100%

·	Computed volatility ranging from 85.03% to 106.54%

·	Risk free rates ranging from 0.49 to 2.01%

The Company recorded derivative liabilities as a result of: (i) the down round price protection in the preferred stock and warrants; and (ii) the down round price protection in the convertible debt. These liabilities were valued with the assistance of a valuation consultant using a Monte-Carlo simulation model. The assumptions used in the Monte-Carlo simulation used to value the derivative liabilities involve expected volatility in the Company’s common stock, estimated probabilities related to the occurrence of a future financing, and interest rates. As all the assumptions employed to measure these liabilities are based on management’s judgment using internal and external data, this fair value determination is classified in Level 3 of the valuation hierarchy.

-93-

Table of Contents

4. Notes Payable

Summary

Prior to December 31, 2011 we had $775,000 in notes payable outstanding to various investors of which the notes did not include a convertible feature. In May 2012 and August 2012 we issued another $618,000 in notes, and converted this principal of $1,393,000 and $62,228 in accrued interest into a series of convertible notes payable at 5% interest. The convertible notes contained down round and we recorded discounts to the convertible notes. The discounts were amortized to interest expense over the term of the convertible notes using the effective interest method. We determined that the down round protection represented embedded derivative features, and these were recorded as derivative liabilities at their respective issuance dates with the offset to debt discounts, which in turn were amortized into interest expense over the term of the attached note. See Note 3.

We issued notes payable of $45,000 and $105,000 in 2011 and 2012, respectively, to the Company’s CEO. These were emergency bridge loans referred to as “Accounts Payable Notes”. These notes carried 8% interest and were not convertible.

In 2012 we issued promissory notes to three employees for deferred compensation of $124,069. These notes carried no interest and were not convertible. During the year ended December 31, 2012 payments of $20,296 were made, leaving a balance at year-end of $103,773. In 2013 we issued promissory notes to 5 employees for deferred compensation and settlements of 353,265; of which $130,000 are considered related party transactions. During the year ended December 31, 2013, payments of $123,973 were made, leaving a balance of $333,065. As these notes do not bear interest, the Company imputed interest at a rate of 8% on these promissory notes of $9,661 and $2,752 for the years ended December 31, 2013 and 2012, respectively.

The following table summarizes information relative to the outstanding notes at December 31, 2013 and 2012:

	December 31,
	2013		2012
Convertible notes payable – related party	$	10,000	$	809,944
Convertible notes payable – third party		-		645,284
Less unamortized discounts:		-		(508,909	)
Convertible notes payable, net of discounts		10,000		946,319
Accounts payable notes		-		150,000
Settlement Notes – related party		130,000		-
Settlement Notes – third party		147,500		-
Deferred compensation promissory notes		55,565		103,774
Bridge notes payable, net of discounts	$	343,065	$	1,200,093

Following is a detailed discussion of the note transactions.

-94-

Table of Contents

Convertible and Non-Convertible Notes

As of January 1, 2012, the principal balance on our outstanding notes totaled $775,000. The notes carried 5% interest and were not convertible. In January 2012 we issued additional notes in the aggregate of $75,000. In February 2012 we issued additional notes in the aggregate of $50,000. In March 2012 we issued additional notes in the aggregate of $25,000. In April we issued additional notes in the aggregate of $75,000. In May we issued additional notes in the aggregate of $225,000. On May 18, 2012 the combined principal of $1,225,000 and interest of $62,228 was converted into the 2012 convertible notes payable with a new aggregate principal balance of $1,287,228. These notes carried 5% interest and were automatically convertible upon the closing of $2,000,000 in financing at the latest financing price, and with a maturity date of one year from date of issue. As a result of this issuance a derivative was issued with the fair value of $1,109,128 which was recorded as a derivative liability with the offset as a debt discount. During the years ended December 31, 2013 and 2012, $419,342 and $689,786 were recorded as amortization into interest expense. As of December 31, 2013 and 2012, the debt discount balance was $0 and $419,342, respectively.

In August 2012 an additional convertible note in the amount of $30,000 was issued. This note carried 5% interest and was automatically convertible upon the closing of $2,000,000 in financing at the latest financing price, and with a maturity date of May 18, 2013. As a result of this issuance a derivative was issued with the fair value of $19,660 which was recorded as a derivative liability with the offset as a debt discount. During the years ended December 31, 2013 and 2012, $9,902 and $9,758 were recorded as amortization into interest expense. As of December 31, 2013 and 2012, the debt discount balance was $0 and $9,902, respectively.

In November 2012, we issued additional convertible notes in the aggregate of $40,000. These notes carried 5% interest and were automatically convertible upon the closing of $2,000,000 in financing at the latest financing price, and with a maturity date of one year from issuance. As a result of this issuance a derivative was issued with the fair value of $23,367 which was recorded as a derivative liability with the offset as a debt discount. During the years ended December 31, 2013 and 2012, $19,728 and $3,639 were recorded as amortization into interest expense. As of December 31, 2013 and 2012, the debt discount balance was $0 and $19,728, respectively.

In December 2012, we issued additional convertible notes in the aggregate of $98,000. These notes carried 5% interest and were automatically convertible upon the closing of $2,000,000 in financing at the latest financing price, and with a maturity date of one year from issuance. As a result of this issuance a derivative was issued with the fair value of $63,389 which was recorded as a derivative liability with the offset as a debt discount. During the years ended December 31, 2013 and 2012, $59,937 and $3,452 were recorded as amortization into interest expense. As of December 31, 2013 and 2012, the debt discount balance was $0 and $59,937, respectively.

In February 2013 we issued additional convertible notes in the aggregate of $292,637. These notes carried 10% interest and held a maturity date of June 1, 2013 and were automatically convertible upon the closing of $2,000,000 in financing at the latest financing price. As a result of this issuance a derivative was issued with the fair value of $155,117 which was recorded as a derivative liability with the offset as a debt discount. During the year ended December 31, 2013, $155,117 was recorded as amortization into interest expense.

In April 2013 we issued additional convertible notes in the aggregate of $167,221. These notes carried 10% interest and held a maturity date of June 1, 2013 and were automatically convertible upon the closing of $2,000,000 in financing at the latest financing price. As a result of this issuance a derivative was issued with the fair value of $92,183 which was recorded as a derivative liability with the offset as a debt discount. During the year ended December 31, 2013, $92,183 was recorded as amortization into interest expense.

In May 2013 we issued additional convertible notes in the aggregate of $58,600. These notes carried 10% interest and held a maturity date of June 1, 2013 and were automatically convertible upon the closing of $2,000,000 in financing at the latest financing price. As a result of this issuance a derivative was issued with the fair value of $31,371 which was recorded as a derivative liability with the offset as a debt discount. During the year ended December 31, 2013, $31,371 was recorded as amortization into interest expense.

-95-

Table of Contents

In June 2013 we issued additional non-convertible notes in the aggregate of $58,600. These notes carried 10% interest and held a maturity date of July 5, 2013.

In July 2013 we issued additional non-convertible notes in the aggregate of $82,000. These notes carried 10% interest and held a maturity date of July 15, 2013.

In August 2013 we issued additional non-convertible notes in the aggregate of $33,000. These notes carried 10% interest and held a maturity date of August 1, 2013.

In September 2013 we issued additional non-convertible notes in the aggregate of $85,000. These notes carried 10% interest and held a maturity date of September 18, 2013.

On November 4, 2013, in conjunction with the reverse split and recapitalization, the convertible and non-convertible notes and accrued interest were converted into shares of common stock, series seed preferred, series prime preferred. Principal and interest outstanding of $2,523,563 was converted into $1,194,219 series prime preferred, $1,044,359 series seed preferred, and $284,985 into common stock.

During the years ended December 31, 2013 and 2012, we recorded convertible note discount amortization to interest expense of $787,579 and $706,636, respectively.

Accounts Payable Notes

As of January 1, 2012 the principal balance on our accounts payable notes totaled $45,000. These notes were issued to our CEO for emergency capital to cover key payables. The notes carried 8% interest and were not convertible, holding a maturity date of May 18, 2013. In May 2012 we issued an additional note in the amount of $5,000. In August 2012 we issued an additional note in the amount of $25,000. In September we issued additional notes in the aggregate of $50,000. In October 2012 we issued an additional note in the amount of $25,000.

On November 4, 2013, in conjunction with the reverse split and recapitalization, the accounts payable notes principal and accrued interest of $165,000 were converted into series seed preferred.

Deferred Compensation Promissory Notes

In 2012 we issued a series of promissory notes in exchange for deferred compensation. These notes carried no interest and carried variable maturity dates. In August 2012 we issued a promissory note in the amount of $70,748. In September 2012 we issued a promissory note in the amount of $15,417. In October we issued a promissory note in the amount of $37,904. In 2012 payments of $20,296 were made against the promissory notes. In December 2013 we issued additional promissory notes in the aggregate of $63,265. In 2013 payments of $111,473 were made against the promissory notes

Settlement Notes

In November 2013 we entered into notes payable with certain former employees in settlement of amounts purported to be due for compensation and loan repayment. These notes had a maturity date of December 31, 2014, and were secured by the assets of the company. Notes were issued in the aggregate of $290,000 of which $130,000 was issued to two related party individuals and $160,000 was issued to a third party individual. One repayment of $12,500 was made in December 2013.

As the deferred compensation and settlement notes do not bear interest, the Company imputed interest at a rate of 8% on these promissory notes of $9,661 and $2,752 for the years ended December 31, 2013 and 2012, respectively.

-96-

Table of Contents

Summary of Notes Payable and Accrued Interest

The following table summarizes our notes payable and accrued interest as of December 31, 2013 and 2012:

	Notes Payable				Accrued Interest
	December 31, 2013		December 31, 2012		December 31, 2013		December 31, 2012
Convertible and non-convertible notes, net of discounts	$	10,000	$	946,320	$	478	$	42,870

Accounts payable notes		-		150,000		-		6, 689

Deferred compensation notes		55,565		103,773

Settlement notes		277,500				-

Totals	$	343,065	$	1,200,093	$	478	$	49,559

Interest Expense

The following table summarizes interest expense for the years ended December 31, 2013 and 2012:

	December 31,
	2013		2012
Amortization of note discounts	$	787,579	$	706,636
Interest expense		108,076		75,160
Imputed interest expense		9,661		2,752
	$	905,316	$	784,548

5. Equity

Common and Preferred Stock

2012

As of December 31, 2012 and December 31, 2011 the Company had 14,711,337 shares issued and outstanding.

Convertible Preferred Stock Series A (“Series A”) shares were sold during 2007 for $0.385 per share and were convertible into future equity issuances at that rate; subject to down round protection based on the future equity price. This down round protection was bifurcated and valued at its fair value at issuance and at each reporting date. Holders of the Series A stock, in the event of a liquidation event, received the original purchase price prior to any proceeds going to the common stock holders as well as up to $1.00 per share on a pro-rata basis along with common stock holders. Each share of Series A stock is convertible on a one-for-one basis into common shares at any time.

Convertible Preferred Stock Series A-1 (“Series A-1”) shares were sold during 2008 for $0.42 per share and were convertible into future equity issuances at that rate; subject to down round protection based on the future equity price. This down round protection was bifurcated and valued at its fair value at issuance and at each reporting date. Holders of the Series A-1 stock, in the event of a liquidation event, received the original purchase price prior to any proceeds going to the common stock holders as well as up to $1.00 per share on a pro-rata basis along with common stock holders. Each share of Series A-1 stock is convertible on a one-for-one basis into common shares at any time.

-97-

Table of Contents

Convertible Preferred Stock Series A-2 (“Series A-2”) shares were sold during 2009 and 2010 for $0.486 per share and were convertible into future equity issuances at that rate; subject to down round protection based on the future equity price. This down round protection was bifurcated and valued at its fair value at issuance and at each reporting date. Holders of the Series A-2 stock, in the event of a liquidation event, received the original purchase price prior to any proceeds going to the common stock holders as well as up to $1.00 per share on a pro-rata basis along with common stock holders. Each share of Series A-2 stock is convertible on a one-for-one basis into common shares at any time.

Convertible Preferred Stock Series A-2 Warrants (“Series A-2 Warrants”) were sold during 2009 and 2010 attached to the Series A-2 shares and were convertible into future equity issuances at that rate; subject to down round protection based on the future equity price. This down round protection was bifurcated and valued at its fair value at issuance and at each reporting date. Holders of the Series A-2 Warrants were entitled to receive dividends at the same rate as common shares. Each Series A-2 Warrant is convertible at the original exercise price into common shares at any time.

No shares were issued during the year ended December 31, 2012.

2013

As of December 31, 2013 and December 31, 2012 the Company had 36,243,560 and 14,711,337, respectively, of shares issued and outstanding.

Convertible Preferred Series Prime (“Series Prime”) shares were sold during 2013 for $36.45 per share and were convertible into common stock at that rate. Holders of the Series Prime shares, in the event of a liquidation event, received the original purchase price prior to any proceeds going to the common stock holders as well as up to $75.00 per share on a pro-rata basis along with common stock holders. Each share of Series Prime stock is convertible on a one-for-one basis into common shares at any time.

Convertible Preferred Series Seed Series (“Series Seed”) shares were sold during 2013 for $0.05583 per share and were convertible into common shares at that rate. Holders of the Series Seed stock, in the event of a liquidation event, received the original purchase price prior to any proceeds going to the common stock holders. Each share of Series Seed stock is convertible into common shares at any time at the original purchase price.

On November 4, 2013, in an effort to recapitalize the Company, the Series A shares of 2,253,246, with a value of $2,253, the Series A-1 shares of 1,541,666, with a value of $1,542 and the Series A-2 shares of 4,806,460, with a value of $4,806 were converted into 65,532 shares of Series Prime shares with a value of $66 and 44,663 shares of common stock with a value of $45; the remaining balance of value of $8,491 was recorded to additional paid-in-capital. In addition, 14,349,910 shares of Series Seed shares were sold to investors for cash of $281,319.

On November 4, 2013, at the same time as the recapitalization transaction, principal and accrued interest totaling $1,194,219 was converted into 32,763 shares of Series Prime. In addition, $284,985 of principal and accrued interest was converted into 7,819 shares of Common Stock. Finally, $1,209,359 of principal and accrued interest was converted into 21,661,459 shares of Series Seed. As a result of these conversions, the associated derivatives with the debt balances were settled into additional paid in capital in the amounts of $1,039,372 for the debt, $3,799,638 for the preferred shares and $1,954,630 for the preferred warrants.

On November 4, 2013, the 4,111,103 Series A-2 Warrants were primarily cancelled, except for 10,418 post-split Warrants which were converted into Common Stock Warrants with an exercise price of $36.45 into shares of common stock. The common stock warrants included down round protection. The fair value of the common stock warrants was $104. Key inputs and assumptions used in valuing our common stock warrants were as follows:

·	Stock prices on all measurement dates were based on a 409A common stock valuation as of December 31, 2010

·	The probability of a future equity financing event triggering the down round protection was estimated at 100%

·	Computed volatility ranging from 55.08% to 85.03%

·	Risk free rates ranging from 0.60 to 0.78%

-98-

Table of Contents

On November 4, 2013, the Company completed a 75 to 1 reverse split of its common stock which transferred the amount of $6,029 from Common Stock to additional paid in capital.

Additional Paid-in-capital

During the years ended December 31, 2013 and 2012, we imputed interest on debt of $9,661 and $2,752, respectively.

Stock-based Plans

We have the 2004 Incentive Stock Option Plan under which we have granted stock options to our directors, officers and employees. At December 31, 2013, 6,085,015 shares were authorized under the plans and 261,716 shares were available for future grant.

The following table summarizes stock option activity under our stock-based plans as of and for the year ended December 31, 2013:

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value

Outstanding at December 31, 2011		4,287,713		$	0.11
Granted		1992,800		$	0.13
Exercised		-		$	-
Canceled/forfeited/expired		(15,014	)	$	0.30
Outstanding at December 31, 2012		6,265,499		$	8.81		6.61	$	968,941
Granted		-		$	-
Exercised		-		$	-
Canceled/forfeited/expired		(13,165	)	$	7.54
Split Adjustment		(5,568,562	)	$
Outstanding at December 31, 2013		69,751		$	9.05		5.72	$	793,862
Expected to vest at December 31, 2013		4,724		$	15.00		8.25	$	28,852
Exercisable at December 31, 2013		65,026		$	8.62		5.53	$	765,010
Unrecognized expense at December 31, 2013	$	77,464

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, 2013, no options to purchase shares of common stock were in-the-money.

-99-

Table of Contents

The weighted average grant-date fair value of options granted during the years 2013 and 2012 was $0.00 and $0.23, respectively.

On January 1, 2012 the Company granted eight employees 6,369 options to purchase shares of Company common stock at the price of $11.25 per share. The options vest 100% immediately. The total estimated value using the Black-Scholes Model, based on a volatility rate of 114.98% and a call option value of $16.33 was $103,988.

On January 1, 2012 the Company granted one employee 666 options to purchase shares of Company common stock at the price of $11.25 per share. The options vest 100% immediately. The total estimated value using the Black-Scholes Model, based on a volatility rate of 114.94% and a call option value of $16.74 was $11,147.

On February 6, 2012 the Company granted one employee 99 options to purchase shares of Company common stock at the price of $22.50 per share. The options vest 100% immediately. The total estimated value using the Black-Scholes Model, based on a volatility rate of 107.91% and a call option value of $15.50 was $1,534.

On February 6, 2012 the Company granted one employee 99 options to purchase shares of Company common stock at the price of $22.50 per share. The options vest 25% at one year, then 1/48 per month for 48 months thereafter. The total estimated value using the Black-Scholes Model, based on a volatility rate of 104.14% and a call option value of $16.15 was $1,598.

On August 23, 2012 the Company granted two employees 1,999 options to purchase shares of Company common stock at the price of $7.50 per share. The options vest 1/24 per month for 24 months. The total estimated value using the Black-Scholes Model, based on a volatility rate of 105.18% and a call option value of $17.78 was $35,539.

On August 31, 2012 the Company granted two employees 231 options to purchase shares of Company common stock at the price of $7.50 per share. The options vest immediately. The total estimated value using the Black-Scholes Model, based on a volatility rate of 107.98% and a call option value of $17.78 was $4,074.

On September 15, 2012 the Company granted one employee 999 options to purchase shares of Company common stock at the price of $11.25 per share. The options vest 1/12 per month for 12 months. The total estimated value using the Black-Scholes Model, based on a volatility rate of 106.97% and a call option value of $17.06 was $17,030.

On September 15, 2012 the Company granted one employee 205 options to purchase shares of Company common stock at the price of $7.50 per share. The options vest immediately. The total estimated value using the Black-Scholes Model, based on a volatility rate of 107.92% and a call option value of $17.64 was $3,616.

On September 30, 2012 the Company granted eleven employees 8,818 options to purchase shares of Company common stock at the price of $7.50 per share. The options vest immediately. The total estimated value using the Black-Scholes Model, based on a volatility rate of 108.31% and a call option value of $17.65 was $155,624.

On October 2, 2012 the Company granted eight employees 2,928 options to purchase shares of Company common stock at the price of $11.25 per share. The options vest immediately. The total estimated value using the Black-Scholes Model, based on a volatility rate of 106.29% and a call option value of $17.01 was $49,681.

On October 2, 2012 the Company granted four employees 3,463 options to purchase shares of Company common stock at the price of $11.25 per share. The options vest 1/48 per month for 48 months. The total estimated value using the Black-Scholes Model, based on a volatility rate of 103.59% and a call option value of $17.31 was $59,961.

On October 2, 2012 the Company granted one employee 399 options to purchase shares of Company common stock at the price of $11.25 per share. The options vest 25% at one year, 1/48 per month for 48 months thereafter. The total estimated value using the Black-Scholes Model, based on a volatility rate of 103.59% and a call option value of $17.35 was $6,922.

On October 2, 2012 the Company granted one employee 266 options to purchase shares of Company common stock at the price of $22.50 per share. The options vest immediately. The total estimated value using the Black-Scholes Model, based on a volatility rate of 103.59% and a call option value of $15.38 was $4,091.

-100-

Table of Contents

Stock-based Compensation Expense

The impact on our results of operations of recording stock-based compensation expense for years ended December 31, 2013 and 2012 was as follows:

	Years ended December 31,
	2013		2012

General and administrative	$	11,293	$	50,316
Sales and marketing		24,200		107,821
Engineering, research, and development		45,174		201,265
Total	$	80,667	$	359,402

As of December 31, 2013, there was approximately $77,464 of unearned stock-based compensation that will be expensed from 2014 through 2016. 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

	Years ended December 31,
	2013	2012
Risk-free interest rate	N/A	0.54% to 01.14%
Expected life (years)	N/A	3.71 to 6.33
Dividend yield	N/A	0%
Expected volatility	N/A	73.33% to 82.82%

The risk-free interest rate assumption is based upon published interest rates appropriate for the expected life of our employee stock options.

The dividend yield assumption is based on our history of not paying dividends and no future expectations of dividend payouts.

The expected volatility prior to 2013 is based on the historical volatility of publicly traded surrogates in our peer group.

-101-

Table of Contents

6. Commitments and contingencies

The Company had no operating leases or other commitments with terms in excess of one year as of December 31, 2013 and 2012, except as noted below.

Office lease

The Company has a lease agreement for 3,310 square feet, as amended, for its office facilities in Santa Barbara, CA through September 2014. Monthly rental payments, excluding common area maintenance charges, are $5,814 in 2014

At December 31, 2013, future minimum payments under the operating lease total $52,325.

Rent expense under the lease agreement for the years ended December 31, 2013 and 2012 totaled $72,382 and $79,440, respectively.

7. Related party transactions

In May 2012, the company issued a convertible note payable to Jay Ferro, then CEO and greater than 10% shareholder in the amount of $75,000.

In May 2012, the company issued a convertible note payable to Michael Howe, greater than 10% shareholder in the amount of $317,600.

In May 2012, the company issued a convertible note payable to Arthur J. Rice, greater than 10% shareholder in the amount of $132,000.

In May 2012, the company issued a convertible note payable to Dave Chambers, greater than 10% shareholder in the amount of $126,456.

From May through October 2012, the company issued non-convertible notes payable (the “accounts payable notes”) to Jay Ferro, CEO and greater than 10% shareholder in the aggregate of $105,000.

In November and December 2012, the company issued a series of convertible notes payable to Arthur J. Rice, greater than 10% shareholder in the aggregate amount of $48,000.

In December 2012 the company issued a convertible note payable, Jay Ferro, CEO and greater than 10% shareholder in the amount of $10,000.

From February to September 2013, the company issued a series of convertible and non-convertible notes payable to Arthur J. Rice, greater than 10% shareholder in the aggregate amount of $185,951.

From February to September 2013, the company issued a series of convertible and non-convertible notes payable to Eric Kanowski, CEO in the aggregate amount of $132,893.

From February to September 2013, the company issued a series of convertible and non-convertible notes payable to Dave Chambers, greater than 10% shareholder in the aggregate amount of $211,411.

In February through May 2013, the company issued a series of convertible notes payable to Michael Howe, greater than 10% shareholder in the aggregate amount of $97,500.

In November 2013, the company issued a note payable to Jay Ferro, former (at that time) CEO and greater than 10% shareholder in the amount of $60,000.

-102-

Table of Contents

In November 2013, the Company sold 11,067,041 shares of Series Seed Preferred Stock to 6 related party investors for net cash receipts of $216,961.

8. Subsequent events

On March 12, 2014, Mobivity Holdings Corp. (“Mobivity”) acquired the assets of the Company, pursuant to an asset purchase agreement dated March 12, 2014, between Mobivity, the Company, and the members of the Company. Pursuant to the asset purchase agreement, Mobivity acquired all of the assets of the Company, and assumed a commercial lease, in consideration of Mobivity’s payment of $2,368,019 and issuance of 504,884 shares of Mobivity common stock, and an earn-out payment described below. The assets and liabilities acquired from the Company consisted of, accounts receivable, deferred revenues, all rights under all contracts other than excluded contracts, and all technology and intellectual property rights.

The Company’s earn-out payment of 200% of the “eligible revenue” of the Company over the 12 month period following the close of the transaction (“earn-out period”). The “eligible revenue” will consist of: 100% of Company revenue derived during the earn out period from the sale of SmartReceipt products and services to certain SmartReceipt clients as of the close (the “designated SmartReceipt clients”); plus 50% of Company revenue derived during the earn out period from the sale of Company products and services to the designated SmartReceipt clients, plus 50% of the Company revenue derived during the earn out period from the sale of SmartReceipt products and services to Company clients who are not designated SmartReceipt clients. The earn-out payment will be payable in common shares of the Company (valued at the Closing VWAP) no later than the 90th day following the end of the earn-out period. For purposes of the foregoing, the “Closing VWAP” means the volume weighted average trading price of the Company’s common stock for the 90 trading days preceding the initial close of the transactions under the Asset Purchase Agreement.

Pursuant to the Asset Purchase Agreement, SmartReceipt has agreed that 50% of the shares issuable to SmartReceipt or its shareholders at the initial closing will be held back by the Company for a period of 12 months and will be subject to cancellation based on indemnification claims of the Company.

The asset purchase agreement contains customary representations, warranties and covenants by the parties, including each party’s agreement to indemnify the other against any claims or losses arising from their breach of the asset purchase agreement. The Company and its members have also agreed that for a period of three years following the closing not to engage in the business of providing interactive mobile marketing platforms or services or to solicit the pre-closing clients, vendors or employees of the Company, except in each case on behalf of Mobivity.

-103-

Table of Contents

SmartReceipt, Inc

Mobivity Holdings Corp.

Unaudited Pro Forma Condensed Consolidated Financial Statements

On March 12, 2014, Mobivity Holdings Corp. (the “Company”) completed its acquisition of substantially all of the assets of SmartReceipt, Inc (“SmartReceipt”). The following unaudited pro forma condensed consolidated financial statements have been prepared to give effect to the completed acquisition, which was accounted for as a purchase.

The unaudited pro forma condensed consolidated balance sheet as of December 31, 2013, and the unaudited pro forma condensed consolidated statements of operations for the year ended December 31, 2013, are presented herein. The unaudited pro forma condensed consolidated balance sheet was prepared using the historical balance sheets of the Company and SmartReceipt as of December 31, 2013. The unaudited pro forma condensed consolidated statements of operations were prepared using the historical statements of operations of the Company and SmartReceipt for the year ended December 31, 2013. The unaudited pro forma condensed consolidated balance sheet and statements of operations give effect to the acquisition as if it had been completed on January 1, 2013.

The unaudited pro forma condensed consolidated financial statements presented are based on the assumptions and adjustments described in the accompanying notes. The unaudited pro forma condensed consolidated financial statements are presented for illustrative purposes and do not purport to represent what the financial position or results of operations actually would have been if the events described above occurred as of the dates indicated or what such financial position or results would be for any future periods. The unaudited pro forma condensed consolidated financial statements, and the accompanying notes, are based upon the respective historical consolidated financial statements of the Company and SmartReceipt and should be read in conjunction with the Company’s historical financial statements and related notes, and the Company’s "Management's Discussion and Analysis of Financial Condition and Results of Operation" contained elsewhere in this prospectus.

-104-

Table of Contents

Mobivity Holdings Corp.
Unaudited Pro Forma Condensed Consolidated Balance Sheets
As of December 31, 2013

	Mobivity			SmartReceipt			Pro forma adjustments				Pro forma combined

ASSETS
Current assets
Cash	$	2,572,685		$	96,921		$	(96,921	)	(a)	$	2,572,685
								(2,368,019	)	(b)		(2,368,019	)

Accounts receivable, net of allowance for doubtful accounts		280,667			124,318							404,985
Other current assets		140,114			5,383			(5,383	)	(a)		140,114
Total current assets		2,993,466			226,622			(2,470,323	)			749,765

Goodwill		3,108,964			-			2,890,801		(b)		5,999,765
Intangible assets, net		935,316			-			2,446,000		(b)		3,381,316
Other assets		63,944			9,336			-				73,280
TOTAL ASSETS	$	7,101,690		$	235,958		$	2,866,478			$	10,204,126

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities
Accounts payable	$	543,648		$	359,292		$	(359,292	)	(a)	$	543,648
Accrued interest		16,943			478			(478	)	(a)		16,943
Accrued and deferred personnel compensation		191,041			59,699			(59,699	)	(a)		191,041
Deferred revenue and customer deposits		136,523			194,506							331,029
Notes payable		20,000			343,065			(343,065	)	(a)		20,000
Derivative liabilities		106,176			-							106,176
Other current liabilities		36,372			292,690			(292,690	)	(a)		36,372
Earn-out payable		34,755										34,755
Total current liabilities		1,085,458			1,249,730			(1,055,224	)			1,279,964

Non-current liabilities
Earn-out payable		24,245			-			2,273,000		(b)		2,297,245
Total non-current liabilities		24,245			-			2,273,000				2,297,245
Total liabilities		1,109,703			1,249,730			1,217,776				3,577,209

Commitments and Contingencies (See Note 9)

Stockholders' equity (deficit)

Common stock		16,320			134			505		(b)		16,959
Preferred stock		-			36,109			-				36,109
Equity payable		108,170			-			-				108,170
Additional paid-in capital		54,452,697			14,101,326			672,000		(b)		69,226,023
Accumulated deficit		(48,585,200	)		(15,151,341	)		976,197		(a)		(62,760,344	)
Total stockholders' equity (deficit)		5,991,987			(1,013,772	)		1,648,702				6,626,917
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)	$	7,101,690		$	235,958		$	2,866,478			$	10,204,126

-105-

Table of Contents

Mobivity Holdings Corp.
Unaudited Pro Forma Condensed Consolidated Statement of Operations
For the year ended December 31, 2013

	Mobivity			SR			Pro forma adjustments		Pro forma combined
Revenues
Revenues	$	4,093,667		$	832,960		$	-	$	4,926,627
Cost of revenues		1,122,037			74,011			-		1,196,048
Gross margin		2,971,630			758,949			-		3,730,579

Operating expenses
General and administrative		3,416,850			221,515			-		3,638,365
Sales and marketing		3,469,383			474,674			-		3,944,057
Engineering, research, and development		824,653			886,059			-		1,710,712
Depreciation and amortization		270,579			4,902			-		275,481
Goodwill impairment		1,066,068			-			-		1,066,068
Intangible asset impairment		644,170			-			-		644,170
Total operating expenses		9,691,703			1,587,150			-		11,278,853

Loss from operations		(6,720,073	)		(828,201	)		-		(7,548,274	)

Other income/(expense)
Interest income		747			-			-		747
Interest expense		(6,348,186	)		(797,240	)		-		(7,145,426	)
Change in fair value of derivative liabilities		(3,766,231	)		235,690			-		(3,530,541	)
Gain on Debt Extinguishment		103,177			-					103,177
Gain on adjustment in contingent consideration		(28,465	)		-			-		(28,465	)
Total other income/(expense)		(10,038,958	)		(561,550	)		-		(10,600,508	)

Loss before income taxes		(16,759,031	)		(1,389,751	)		-		(18,148,782	)

Income tax expense		-			-			-		-

Net loss	$	(16,759,031	)	$	(1,389,751	)	$	-	$	(18,148,782	)

Net loss per share - basic and diluted	$	(1.58	)						$	(1.63	)

Weighted average number of shares
during the period - basic and diluted		10,612,007								11,116,891

-106-

Table of Contents

Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements

Note 1. Basis of Presentation

The unaudited pro forma condensed consolidated statements of operations of Mobivity Holdings Corp. (the “Company”) for the year ended December 31, 2013 give effect to the acquisition of substantially all of the assets of SmartReceipt, Inc (“SmartReceipt”) as if the transaction had been completed on the first day of the period. The unaudited pro forma condensed consolidated balance sheet as of December 31, 2013 gives effect to the acquisition of substantially all of the assets of SmartReceipt as if the transaction had occurred on January 1, 2013.

The unaudited pro forma condensed consolidated statements of operations and unaudited pro forma condensed consolidated balance sheet were derived by adjusting the Company’s historical financial statements for the acquisition of substantially all of the assets of SmartReceipt. The unaudited pro forma condensed consolidated balance sheet and unaudited pro forma condensed consolidated statement of operations are provided for informational purposes only and should not be construed to be indicative of the Company’s financial position or results of operations had the transaction been consummated on the dates indicated and do not project the Company’s financial position or results of operations for any future period or date.

The unaudited pro forma condensed consolidated balance sheet and unaudited condensed consolidated statements of operations and accompanying notes should be read in conjunction with the Company’s historical financial statements and related notes, and the Company’s “Management’s Discussion and Analysis of Financial Condition and Results of Operation” contained elsewhere in this prospectus.

Note 2. Purchase Price Allocation

The unaudited pro forma condensed consolidated financial statements reflect a purchase price of $5,313,524. Pursuant to the Asset Purchase Agreement, the Company acquired all of the assets of SmartReceipt in exchange for:

·	the Company’s payment at closing of $2.212 million of cash, net of a $150,000 loan made by the Company to SmartReceipt in January 2014;

·	the Company’s issuance of 504,884 shares of its $0.001 par value common stock; and

The allocation of the purchase price to assets and liabilities based upon fair value determinations was as follows:
Accounts receivable, net	$	161,664
Other assets		6,620
Customer relationships		2,010,000
Developed technology		260,000
Trade name		176,000
Goodwill		2,890,801
Total assets acquired		5,505,085
Liabilities assumed		(191,561	)
Net assets acquired	$	5,313,524

Goodwill represents the excess of the purchase price over the fair value of the net assets acquired. Customer relationships are being amortized on a straight- line basis over five years. Developed technology is being amortized on a straight-line basis over ten years. The trade name agreement is being amortized on a straight-line basis over ten years.

Note 3. Pro Forma Adjustments

Pro Forma Adjustments

The following pro forma adjustments are based upon the value of the tangible and intangible assets acquired as determined by an independent valuation firm.

(a)	Represents the elimination of SmartReceipt’s assets, liabilities and deficit not acquired in the transaction.

(b)	Represents the purchase price and allocation of the purchase price to the assets and liabilities acquired in the transaction, as if the transaction had occurred December 31, 2013.

-107-

Table of Contents

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution.

The following table sets forth estimated expenses we expect to incur in connection with the resale of the shares being registered. All such expenses are estimated except for the SEC registration fee.

SEC registration fee	$	3,542
Printing expenses	$	5,000
Fees and expenses of counsel for the Company	$	20,000
Fees and expenses of accountants for Company	$	10,000
Miscellaneous	$	2,000
Total	$	40,542

Item 14. Indemnification of Directors and Officers.

(a) Certificate of Incorporation. Our Articles of Incorporation provide that to the fullest extent permitted by the Nevada General Corporation Law as the same exists or may hereafter be amended, a director of our corporation shall not be liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director.

(b) Bylaws. Our Bylaws provide that we may indemnify our directors, officers, employees and other agents to the fullest extent permitted under the Nevada General Corporation Law. We have obtained liability insurance for our officers and directors.

(c) Agreement. We have entered into separate indemnification agreements with each of our directors and officers. These agreements require us, among other things, to indemnify such persons against certain liabilities that may arise by reason of their status or service as directors or officers (other than liabilities arising from actions not taken in good faith or in a manner the indemnitee believed to be opposed to the best interests of our corporation), to advance their expenses incurred as a result of any proceeding against them as to which they could be indemnified.

Item 15. Recent Sales of Unregistered Securities.

Between November 2010 and June 2012, we conducted the private placement sale of our 10% Senior Secured Convertible Bridge Notes. We issued bridge notes to 45 purchasers in the aggregate principal amount of 4,984,721. Each of the purchasers were “accredited investors” as defined in Rule 501 under the Securities Act, expect for two purchasers who are relatives of one of our senior executive officers. The bridge notes accrued interest on the unpaid principal amount at the rate of 10% per annum. The entire principal amount of the bridge notes, plus all accrued and unpaid interest, was due on the earlier of (i) the date we completed a financing transaction for the offer and sale of shares of our common stock in an aggregate amount of no less than 125% of the principal amounts evidenced by the bridge notes (a “qualifying financing”), or (ii) a fixed maturity date, which initially was set at November 3, 2011 and later amended to October 15, 2013. On the maturity date of the bridge notes, in addition to the repayment of the principal amount and all accrued and unpaid interest, we agreed to issue to each holder of the bridge notes, at each such holder’s option, either a (i) three year warrant to purchase that number of shares of our common stock equal to the principal amount of (plus all accrued and unpaid interest on) the bridge notes held by the holder divided by the per share purchase price of the common stock offered and sold in the qualifying financing (the “offering price”) which warrants shall be exercisable at the offering price, or (ii) that number of shares of common stock equal to the product arrived at by multiplying (x) the principal amount of (plus all accrued and unpaid interest on) the bridge notes held by the holder, divided by the offering price and (y) 0.33. WFG Investments, Inc. and Emerging Growth Equities, Ltd. acted as selling agents on our behalf and we paid them selling commissions of $40,000 and $252,737, respectively. Each of the purchasers were “accredited investors” as defined in Rule 501 under the Securities Act, expect for two purchasers who are relatives of one of our senior executive officers. The shares were issued pursuant Section 4(a)(2) of the Securities Act and Rule 506 thereunder.

-108-

Table of Contents

Between March 2011 and November 2011, we conducted the private placement sale of 114,778 shares of our common stock at a price of $9.00 per share for the gross proceeds of $1,033,003. Each investor also received warrants to purchase an equivalent number of shares at an exercise price of $12.00. In October 2012, the exercise price of the warrants was reduced from $12.00 to $6.00 as a result of certain anti-dilution provisions contained in the warrant agreement. As a result of the June 2013 private placement described below, the exercise price of the warrants further reduced to $1.20 per share. There were no sales commissions paid in connection with the placement. Each of the purchasers were “accredited investors” as defined in Rule 501 under the Securities Act. The shares were issued pursuant Section 4(a)(2) of the Securities Act and Rule 506 thereunder.

In April 2011, we issued 404,167 shares of our common stock to Adsparq, LLC in consideration of its transfer of certain assets to us. The shares were issued pursuant Section 4(a)(2) of the Securities Act.

In April 2011, we issued 166,667 shares of our common stock to Mobivity, LLC and Mobile Visions, Inc. in consideration of their transfer of certain assets to us. The shares were issued pursuant Section 4(a)(2) of the Securities Act.

August 2011, we issued 86,590 shares of our common stock to Digimark, LLC in consideration of its transfer of certain assets to us. In addition, in June 2013, we issued an additional 247,278 shares of our common stock to Digimark, LLC in satisfaction of an earn-out payable under the acquisition agreement between the parties. The shares were issued pursuant Section 4(a)(2) of the Securities Act.

In May 2013, we issued 125,000 shares of our common stock to Sequence, LLC in consideration of its transfer of certain assets to us. The shares were issued pursuant Section 4(a)(2) of the Securities Act.

In May 2013, we issued 1,166,667 shares of our common stock shares of our common stock to Front Door Insights, LLC in consideration of its transfer of certain assets to us. The shares were issued pursuant Section 4(a)(2) of the Securities Act.

In June 2013, we issued 6,250,000 shares of our common stock at a price of $1.20 per share, for aggregate gross proceeds of $7.5 million. The shares were sold to 72 investors all of whom were “accredited investors” as such term is defined in Rule 501 under the Securities Act of 1933. Emerging Growth Equities, Ltd. acted as placement agent for the private placement and received $493,300 in commissions from us. In addition, for its services as placement agent, we issued to EGE warrants to purchase an aggregate of 605,910 shares of our common stock, exercisable for a period of five years from the closing date, at an exercise price of $1.20 per share. Each of the purchasers were “accredited investors” as defined in Rule 501 under the Securities Act. The shares were issued pursuant Section 4(a)(2) of the Securities Act and Rule 506 thereunder.

In June 2013, we issued 4,462,089 shares of our common stock, at the conversion price of $1.20 per share, for the cancellation of outstanding principal of $4,984,721 and accrued interest of $369,786 under our outstanding 10% Senior Secured Convertible Bridge Notes. Each note holder also received a warrant to purchase that number of shares of our common stock calculated by dividing the outstanding principal amount plus accrued and unpaid interest of such note by the conversion price. There were no commissions or finders fees paid in connection with the issuance of these shares. Each of the purchasers were “accredited investors” as defined in Rule 501 under the Securities Act, expect for two purchasers who are relatives of one of our senior executive officers. The shares were issued pursuant Section 4(a)(2) of the Securities Act and Rule 506 thereunder.

In March 2014, we acquired all of the assets of SmartReceipt, Inc. in exchange for, in addition to cash, 504,884 shares of our common stock. The shares were issued pursuant Section 4(a)(2) of the Securities Act.

-109-

Table of Contents

In March 2015, we conducted the private placement to certain accredited investors of 4,805,000 units of our securities at a price of $1.00 per unit for the gross proceeds of $4,805,000. Each unit consisted of one share of our common stock and a common stock purchase warrant to purchase one-quarter share of our common stock, over a five year period, at an exercise price of $1.20 per share. Emerging Growth Equities, Ltd. acted as placement agent for the private placement and received $234,500 in commissions from us. In addition, for its services as placement agent, we issued to Emerging Growth Equities warrants to purchase an aggregate of 234,500 units, exercisable over a period of five years from the closing date, at an exercise price of $1.00 per unit. The securities were issued pursuant Section 4(a)(2) of the Securities Act and Rule 506 thereunder.

In instances described above where we issued securities in reliance upon Rule 506 under the Securities Act, the stockholders who received the securities in such instance made representations that (a) the stockholder is acquiring the securities for his, her or its own account for investment and not for the account of any other person and not with a view to or for distribution, assignment or resale in connection with any distribution within the meaning of the Securities Act, (b) the stockholder agrees not to sell or otherwise transfer the purchased shares unless they are registered under the Securities Act and any applicable state securities laws, or an exemption or exemptions from such registration are available, (c) the stockholder has knowledge and experience in financial and business matters such that he, she or it is capable of evaluating the merits and risks of an investment in us, (d) the stockholder had access to all of our documents, records, and books pertaining to the investment and was provided the opportunity to ask questions and receive answers regarding the terms and conditions of the offering and to obtain any additional information which we possessed or were able to acquire without unreasonable effort and expense, (e) with regard to the two sales to non-accredited investors, the investors received prior to their investment decision disclosures substantially equivalent to that required by a registration statement on Form S-1, and (f) the stockholder has no need for the liquidity in its investment in us and could afford the complete loss of such investment. In addition, there was no general solicitation or advertising for the offered securities.

In instances described above where we indicate that we relied upon Section 4(a)(2) of the Securities Act in issuing securities, our reliance was based upon the following factors: (a) the issuance of the securities was an isolated private transaction by us which did not involve a public offering; (b) there were only a limited number of offerees; (c) there were no subsequent or contemporaneous public offerings of the securities by us; (d) the securities were not broken down into smaller denominations; and (e) the negotiations for the sale of the stock took place directly between the offeree and us.

-110-

Table of Contents

Item 16. Exhibits and Financial Statement Schedules.

Exhibit Number

Description

3.1	Articles of Incorporation (2)

3.2	Bylaws (2)

3.3	Amendment to Bylaws (3)

3.4	Articles of Merger filed August 6, 2012 (7)

3.5	Amendment No. 2 to the Bylaws., effective as of May 20, 2013 (9)

3.6	Amendment to Articles of Incorporation filed with the Nevada Secretary of State on November 12, 2013 (14)

4.1	Form of Warrant issued as part of Secured Subordinated Promissory Note, effective as of April 1, 2011 (1)

4.2	Form of Common Stock Purchase Warrant issued pursuant to Convertible Secured Promissory Note Conversion Agreement dated as of June 17, 2013 (10)

4.3	Form of Common Stock Purchase Warrant issued pursuant to Securities Purchase Agreement dated March 10, 2014(15)

4.4	Form of 2012 10% Senior Secured Promissory Bridge Note (5)

4.5	Form of Amendment to 2012 10% Senior Secured Convertible Bridge Notes (7)

4.6	Form of Common Stock Purchase Warrant issued pursuant to Securities Purchase Agreement dated March 2, 2015 (18)

5.1	Opinion of Greenberg Traurig, LLP*

10.1	Employment Agreement dated December 24, 2010 with Dennis Becker (4)**

10.2	Form of Securities Purchase Agreement for 2012 10% Senior Secured Promissory Bridge Note (5)

10.3	Form of Security Agreement for 2012 10% Senior Secured Promissory Bridge Note (5)

10.4	Form of Guaranty for 2012 10% Senior Secured Promissory Bridge Note (5)

10.5	Form of Registration Rights Agreement for 2012 10% Senior Secured Promissory Bridge Note (5)

10.6	Employment Agreement entered into August 1, 2012 by and between the Company and Timothy Schatz (6) **

10.7	Asset Purchase Agreement by and among the Company and Sequence LLC (8)

10.8	Asset Purchase Agreement dated May 20, 2013 between the Company and Front Door Insights, LLC (9)

10.9	Promissory Note dated May 20, 2013 made by the Company in favor of Front Door Insights, LLC (9)

10.10

Employment Agreement dated May 20, 2013 between the Company and Michael K. Bynum (9) **

10.11

Employment Agreement dated May 20, 2013 between the Company and Tom Tolbert (9) **

10.12

Securities Purchase Agreement by and among the Company and the purchasers identified on the signature pages thereto, dated as of June 17, 2013 (10)

10.13

Registration Rights Agreement by and among the Company and the purchasers identified on the signature pages thereto, dated as of June 17, 2013 (10)

10.14

Convertible Secured Promissory Note Conversion Agreement by and among the Company and the Note holders identified on the signature pages thereto, dated as of June 17, 2013 (10)

10.15

Employment Agreement entered into June 21, 2013 with Geri Suster (11) **

10.16

Employment Agreement dated July 22, 2013 with Jeff Hasen (12) **

10.17

2013 Stock Incentive Plan of the Company adopted July 18, 2013 (13) **

10.18

Asset Purchase Agreement dated March 12, 2014 between Company and SmartReceipt, Inc. (15)

10.19

Form of Securities Purchase Agreement dated March 10, 2014 between the Company and the investors named herein (17)

10.20

Form of Registration Rights Agreement dated March 10, 2014 between the Company and the investors named herein (17)

10.21

Amendment No. 1 dated November 13, 2014 to Employment Agreement dated May 20, 2014 with Tom Tolbert (19)**

10.22

Employment Agreement dated January 21, 2015 with William Van Epps (20)**

10.23

Employment Agreement dated February 16, 2015 with Christopher Meinerz (21)**

10.24

Form of Securities Purchase Agreement dated March 2, 2015 between the Company and the investors named herein (18)

10.25

Form of Registration Rights Agreement dated March 2, 2015 between the Company and the investors named herein (18)

21.1	List of Subsidiaries (16)

23.1	Consent of Greenberg Traurig, LLP (filed as part of Exhibit 5.1)*

23.2	Consent of M&K CPAS, PLLC*

101.INS

XBRL Instance Document (22)

101.SCH

XBRL Taxonomy Extension Schema Document (20)(22)

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document (20)(22)

101.LAB

XBRL Taxonomy Extension Label Linkbase Document (20)(22)

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document (20)(22)

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document (20)(22)

-111-

Table of Contents

* Filed herewith

** Indicates management compensatory plan, contract or arrangement

(1)	Incorporated by reference to the Company’s Annual Report on Form 10-K filed on April 14, 2011

(2)	Incorporated by reference to the Company’s Registration Statement on Form S-1 filed with the SEC on October 20, 2008, File No. 333-154455

(3)	Incorporated by reference to the Company’s Current Report on Form 8-K filed December 2, 2011

(4)	Incorporated by reference to the Company’s Current Report on Form 8-K filed January 18, 2011

(5)	Incorporated by reference to the Company’s Current Report on Form 8-K filed June 4, 2012

(6)	Incorporated by reference to the Company’s Current Report on Form 8-K filed August 7, 2012

(7)	Incorporated by reference to the Company’s Current Report on Form 8-K filed October 19, 2012

(8)	Incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed May 15, 2013

(9)	Incorporated by reference to the Company’s Current Report on Form 8-K filed May 24, 2013

(10)	Incorporated by reference to the Company’s Current Report on Form 8-K filed June 20, 2013

(11)	Incorporated by reference to the Company’s Current Report on Form 8-K filed June 26, 2013

(12)	Incorporated by reference to the Company’s Current Report on Form 8-K filed August 1, 2013

(13)	Incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed August 14, 2013

(14)	Incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed November 14, 2013

(15)	Incorporated by reference to the Company’s Current Report on Form 8-K filed March 18, 2014

(16)	Incorporated by reference to the Company’s Registration Statement on Form S-1 filed with the SEC on August 16, 2013, File No. 333-190692

(17)	Incorporated by reference to the Company's Annual Report on Form 10-K filed on March 31, 2014.

(18)	Incorporated by reference to the Company’s Current Report on Form 8-K filed March 6, 2015.

(19)	Incorporated by reference to the Company’s Current Report on Form 8-K filed November 24, 2014

(20)	Incorporated by reference to the Company’s Annual Report on Form 10-K filed on March 31, 2015

(21)	Incorporated by reference to the Company’s Current Report on Form 8-K filed February 20, 2015

(22)	Incorporated by reference to the Company’s Registration Statement on Form S-1 filed with the SEC on May 19, 2014, File No. 333-196084

Item 17. Undertakings.

(a) The undersigned Registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement;

(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;

(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

-112-

Table of Contents

(4) For determining any liability under the Securities Act, treat each post-effective amendment that contains a form of prospectus as a new registration statement for the securities offered in the registration statement, and that offering of the securities at that time as the initial bona fide offering of those securities.

(b) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the provisions described herein, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

(c) That, for the purpose of determining liability under the Securities Act to any purchaser, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

-113-

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Form S-1 to be signed on its behalf by the undersigned, thereunto duly authorized, in Chandler, Arizona on April 30, 2015.

MOBIVITY HOLDINGS CORP.

By: /s/ Dennis Becker

Dennis Becker, Chief Executive Officer

POWER OF ATTORNEY

Each person whose signature appears below constitutes and appoints Dennis Becker and Christopher Meinerz and each of them, his true and lawful attorney-in-fact and agent, each with full power of substitution and resubstitution, severally, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this registration statement on Form S-1, any subsequent registration statements pursuant to Rule 462 of the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them or their or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof. This power of attorney may be executed in counterparts.

Pursuant to the requirements of the Securities Act of 1933, this registration statement on Form S-1 has been signed by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Dennis Becker Dennis Becker	Chief Executive Officer and Director (Principal Executive Officer)	April 30, 2015
/s/ William Van Epps William Van Epps	President and Director	April 30, 2015
/s/ Christopher Meinerz Christopher Meinerz	Chief Financial Officer (Chief Accounting Officer)	April 30, 2015
/s/ David Jaques David Jaques	Director	April 30, 2015
/s/ John Harris John Harris	Director	April 30, 2015
/s/ Philip Guarascio Philip Guarascio	Director	April 30, 2015
/s/ Doug Schneider Doug Schneider	Director	April 30, 2015
/s/ Thomas Akin Thomas Akin	Director	April 30, 2015

Form: S-1

Documents