MOBILESMITH, INC. Information set forth in this Quarterly Report on Form 10-Q contains various
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, Section 21E of the Securities Exchange Act of 1934 (the "Exchange
Act") and other laws. Forward-looking statements consist of, among other things,
trend analyses, statements regarding future events, future financial
performance, our plan to build our business and the related expenses, our
anticipated growth, trends in our business, our ability to continue as a going
concern, and the sufficiency of our capital resources including funds that we
may be able to raise through our Series A Preferred Stock, our ability to raise
financing from other sources and/or ability to defer expenditures, the impact of
the liens on our assets securing amounts owed to third parties, expectation
regarding competitors as more and larger companies attempt to market
products/services competitive to our company, market acceptance of our new
product offerings, including updates to our Platform, rate of new user
subscriptions, market penetration of our products and expectations regarding our
revenues and expense, all of which are based on current expectations, estimates,
and forecasts, and the beliefs and assumptions of our management. Words such as
"expect," "anticipate," "project," "intend," "plan," "estimate," variations of
such words, and similar expressions also are intended to identify such
forward-looking statements. These forward-looking statements are subject to
risks, uncertainties, and assumptions that are difficult to predict. Therefore,
actual results may differ materially and adversely from those expressed in any
forward-looking statements. Readers are directed to risks and uncertainties
identified under Part I, Item 1A, "Risk Factors," in the Annual Report on Form
10-K for the year ended
The following discussion is designed to provide a better understanding of our
unaudited condensed financial statements, including a brief discussion of our
business and products, key factors that impacted our performance, and a summary
of our operating results. The following discussion should be read in conjunction
with the unaudited condensed financial statements and the notes thereto included
in Part I, Item 1 of this Quarterly Report on Form 10-Q, and the audited annual
financial statements and notes thereto and Management's Discussion and Analysis
of Financial Condition and Results of Operations contained in the Annual Report
on the Form 10-K for the period ended
Overview
· improve experience of healthcare patients and consumers, who are often at the
same time members of various medical insurance networks
· increase adoption, utilization and intelligence of EMRs (electronic medical
records), extend EMR's usability to patients and consumers of healthcare.
During 2021 we advanced our flagship PeriOp offering to be market ready. PeriOp is an EMR integrated mobile app-based set of pre and postoperative instructions (which we refer to as Clinical Pathways), that establishes a direct two-way clinical procedure management process between a patient and a healthcare provider and, by doing so, improves patient engagement and procedural adherence and also removes manual paper based pre and post procedural processes. PeriOp digitizes and streamlines for both patients and providers "the last mile of healthcare delivery" between scheduled procedure and day of surgery with emphasis on patient's readiness. PeriOp digitizes and streamlines "the first mile" of post-surgery recovery journey with a focus on maintaining positive surgical outcomes and avoidance of readmissions.
PeriOp has not yet generated significant revenue. Most of our revenue is generated from App Blueprint solutions and related supporting services, where applicable.
Target Market and Sales Channels
During 2017 we completed a strategic shift and focused our business and research
and development activities primarily on the Healthcare industry in
In 2018 we refined our healthcare focus by identifying two target markets: (i)
healthcare providers (including hospitals, hospital systems and the
In 2021 we further refined our focus within the healthcare providers. We concentrated our efforts on hospital systems with large employed physician groups who use either Cerner or Epic Systems as their primary EMRs (electronic medical records). Additionally, we are investigating ambulatory surgery centers (ASC) market for feasibility.
Both markets are targeted with a diversified sales workforce that includes direct sales and resellers, such as channel partners.
Significance of Human Capital in Our Operations.
Our success depends on the performance of employees and contractors that make up
our team of about 25 individuals. The team is by far our largest investment and
cost. We make significant investments in technical skills and knowledge of the
healthcare industry. As such, expansion of the team often comes with additional
recruiting expenses. All of our employees are currently based in
RESULTS OF OPERATIONS
Comparison of the Three Months Ended
3 Months ended 3 Months ended
March 31, March 31, Increase Increase
2022 2021 (Decrease) $ Decrease %
Revenue $ 329,902 $ 417,985 $ (88,083 ) -21 %
Cost of Revenue 123,571 214,303 (90,732 ) -42 %
Gross Profit 206,331 203,682 2,649 1 %
Selling and
Marketing 377,883 528,294 (150,411 ) -28 %
Research and
Development 1,067,196 875,666 191,530 22 %
General and
Administrative 831,934 905,884 (73,950 ) -8 %
Interest Expense 47,576 142,467 (94,891 ) -67 %
Loss on Debt
Extinguishment - 6,507,137 (6,507,137 ) -100 %
Gain on Debt
Extinguishment -
PPP Loan
Forgiveness $ - $ 542,100 $ (542,100 ) -100 %
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Revenue decreased by
Cost of Revenue decreased by
Gross Profit increased by
Selling and Marketing expense decreased by
Research and Development expense increased by
General and Administrative expense decreased by
Interest Expense decreased by
Loss on Debt Extinguishments of
Gain on Debt Extinguishments - PPP Loan Forgiveness of
Liquidity and Capital Resources
We have not yet achieved positive cash flows from operations, and our main
source of funds for our operations continues to be the sale of our Series A
Preferred Stock. We will continue to rely on this source until we are able to
generate sufficient cash from revenues to fund our operations or obtain
alternate sources of financing. We believe that anticipated cash flows from
operations, and additional funding under the Series A Preferred Stock, of which
no assurance can be provided, together with cash on hand, will provide
sufficient funds to finance our operations for the next 12 months. Changes in
our operating plans, lower than anticipated sales, increased expenses, impact of
COVID-19 pandemic (as described in "Risk Factors" of our Annual Report on Form
10-K for the period ending
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Nonetheless, there are factors that can impact our ability to continue to fund our operating activities for the next twelve months. These include:
· Our ability to expand revenue volume;
· Our ability to maintain product pricing as expected, particularly in light of
increased competition and its unknown effects on market dynamics;
· Our continued need to reduce our cost structure while simultaneously
expanding the breadth of our business, enhancing our technical capabilities,
and pursing new business opportunities.
· Our ability to predict and offset the extended impact COVID-19 will have to
our primary market's financial outcome, and our business.
In addition, we have an outstanding Loan and Security Agreement (the "LSA") with
Capital Expenditures and Investing Activities
Our capital expenditures are limited to the purchase of new office equipment and new mobile devices that are used for testing. Cash used for investing activities was not significant and we do not plan any significant capital expenditures in the near future.
Going Concern
Our independent registered public accounting firm has issued an emphasis of
matter paragraph in their report included in the Annual Report on Form 10-K for
the year ended
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