MOBIVITY HOLDINGS CORP. '
s Discussion and Analysis of Financial Condition and Results of Operations
This Quarterly Report on Form 10-Q contains "forward-looking statements" as
defined in Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, in
connection with the Private Securities Litigation Reform Act of 1995 that
involve risks and uncertainties, as well as assumptions that, if they never
materialize or prove incorrect, could cause our results to differ materially and
adversely from those expressed or implied by such forward-looking statements
Such forward-looking statements include statements about our expectations,
beliefs or intentions regarding our potential product offerings, business,
financial condition, results of operations, strategies or prospects. You can
identify forward-looking statements by the fact that these statements do not
relate strictly to historical or current matters. Rather, forward-looking
statements relate to anticipated or expected events, activities, trends or
results as of the date they are made and are often identified by the use of
words such as "anticipate," "believe," "continue," "could," "estimate,"
"expect," "intend," "may," or "will," and similar expressions or variations.
Because forward-looking statements relate to matters that have not yet occurred,
these statements are inherently subject to risks and uncertainties that could
cause our actual results to differ materially from any future results expressed
or implied by the forward-looking statements. Many factors could cause our
actual activities or results to differ materially from the activities and
results anticipated in forward-looking statements. These factors include those
risks disclosed under the caption "Risk Factors" included in our 2020 annual
report on Form 10-K filed with the
Overview
? Transform messy point-of-sale (POS) data collected from thousands of points of
sale into usable intelligence.
? Measure, predict, and boost guest frequency and spend by channel.
? Deploy and manage one-time use offer codes and attribute sales accurately
across every channel, promotion and media program.
? Deliver 1:1 promotions and offers with customized Mobile Messaging,
Personalized Receipt Promotions and Integrated Loyalty programs.
We're living in a data-driven economy. By 2003 - when the concept of "Big Data" became common vernacular in marketing - the amount of data being created every two days was equal to the amount created in all of time prior to 2003. Today, 90% of the world's data has been created in just the past two years. Unfortunately, despite there being so much data accumulated, only one percent of data is being utilized today by most businesses.
The challenge for multi-unit retailers isn't that they don't have enough data; in fact, national retailers are collecting millions of detailed transactions daily from thousands of points of sale around the world. The challenge is being able to make sense of this transaction data, which is riddled with data entry errors, collected by multiple POS systems and complicated by a taxonomy compiled by thousands of different franchisee owners. To normalize such an overwhelming amount of data into usable intelligence and then leverage it to optimize media investment and promotion strategy requires numerous teams of data analysts and data scientists that many retailers and restaurant operators simply don't have. This is why so many technology and data companies, that can help solve these challenges, have been invested in and acquired by brands including, McDonald's, Starbucks and Yum Brands.
The Recurrency Platform
POS Data Capture
Recurrency captures, normalizes, integrates, and stores transaction data and is compatible with most POS systems used by restaurants and retailers today. The result is a clean useful dataset upon which to predict and influence customers' buying behavior and deliver basket-level insights.
Analytics Powered by Machine Learning
Recurrency uses Machine Learning ("ML") to uncover patterns in the buying behaviors of consumers and leverages that data to suggest pricing optimizations, and guide marketing campaigns.
Offers and Promotions
Recurrency provides a digital wallet system for creating and managing dynamic offers and promotions, enabling accurate and complete closed-loop attribution across all channels, media and marketing efforts. Retailers can deploy one-time, limited-use and multi-use promotions across all online and offline marketing channels that are scannable at the POS or redeemable online, enabling fraud-free, controllable promotion delivery and attribution at scale. Marketing teams can use the comprehensive attribution analysis and insights to optimize media mix and spend for maximum Return on Marketing Spend ("ROMS").
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Table of Contents Predictive Offers
Recurrency leverages the normalized data captured at the POS and applies Artificial Intelligence ("AI") to build profiles of both known and anonymous customers, analyzes pre and post-redemption behavior and then predicts offers that will drive the highest increases in customer spend and frequency at the lowest discount possible. The result is optimized, personalized promotions that produce the highest ROMS possible.
Personalized Receipt Promotions
Recurrency unlocks the power of transactional data to create relevant and timely
customer messages printed on the receipts already being generated at the POS.
Both clients and agencies are using Recurrency to drive better results and make
decisions around offers, promotions, and customer engagement through the medium
of the printed receipt. Software integrated with leading POS systems, such as
Oracle or MICROS, or installed directly onto receipt printer platforms, such as
Epson's
Customized Mobile Messaging
Recurrency transforms standard short message service ("SMS"), multimedia messaging service ("MMS"), and rich communication services ("RCS") into a data-driven marketing medium. Recurrency tracks and measures offer effectiveness at a more granular level than other solutions, allowing clients to create smarter offers and drive higher redemption rates. 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/MMS mobile marketing campaign. Our customers use Recurrency's self-service interface to build, segment, target and optimize mobile messaging campaigns to drive increased guest frequency and spend. Recurrency is an industry leader in RCS messaging and has an industry leading broadcast reach.
Belly Loyalty
Company Strategy
Our objective is to build an industry-leading 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 POS Data Capture
technology. Several years of development went into designing POS Data Capture
such that the process of intercepting POS data and performing actions, such as
controlling the receipt printer with receipt is scalable, portable to a wide
variety of POS platforms, and does not impact performance factors including
the print speed of a typical receipt printer. Furthermore, we believe the
transmission of POS 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 Recurrency platform is more advanced than technologies
offered by our competitors and provides us with a significant competitive
advantage. With more than ten years of development, we believe that our
platform operates SMS/MMS text messaging transactions at a "least
cost" relative to competitors while also being capable of supporting SMS/MMS
text messaging transactional volume necessary to support our goal of
several thousand end users. Leveraging our Recurrency platform allows for full
attribution of SMS/MMS offers, which we believe is a unique combination of
both SMS/MMS text messaging and POS data.
? 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
significantly increase our investments in sales and customer support resources
tailored to selling to customers that operate franchise brands. Today we
support more than 30,000 merchant locations globally.
? 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 nine issued
patents that we believe have significant potential application in the
technology industry. We plan to continue our investment in building a strong
intellectual property portfolio.
While these are the key elements of our current strategy, there can be no guarantees that our strategy will not change or that our strategy will be successful.
Recent Events
Unsecured Promissory Note Investments in 2021
During the year ended
Unsecured Promissory Note Investments in 2022
As of
Secured Promissory Note Investments in 2021
During the year ended
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Secured Note Investments in 2022
During the six months period ending
On
Office Relocation
We entered into a six-year office lease starting in February of 2021 for 8,898
square feet of office space located at
Intellectual Property
US Patent number 6,788,769 B1 expired in March of 2021. This patent covered 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.
Results of Operations Revenues
Revenues consist primarily of those generated by a suite of products under the Recurrency platform. The Recurrency platform is comprised of POS Data Capture, Analytics, Offers and Promotions, Predictive Offers, Personalized Receipt Promotions, Customized Mobile Messaging, Belly Loyalty, and other revenues.
Revenues for the three months ended
Revenues for the six months ended
This decrease is primarily due to a decrease in revenue of
Cost of Revenues
Cost of revenues consist primarily of cloud-based software licensing fees, short code maintenance expenses, messaging related expenses, and other expenses.
Cost of revenues for the three months ended
Cost of revenues for the six months ended
This increase is primarily due to an increase in customer acquisitions costs.
General and Administrative
General and administrative expenses consist primarily of salaries and personnel related expenses, consulting costs and other expenses.
General and administrative expenses decreased
General and administrative expenses decreased
Sales and Marketing
Sales and marketing expenses consist primarily of salaries and personnel related expenses, stock-based compensation expense, consulting costs and other expenses.
Sales and marketing expenses decreased
Sales and marketing expenses decreased
Engineering, Research & Development
Engineering, research & development costs include salaries, stock-based compensation expenses, travel, consulting costs, and other expenses.
Engineering, research & development expenses increased
Engineering, research & development expenses increased
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Impairment on Intangible Asset
Impairment on intangible assets consists of an intangible asset valued at less
than its carrying value. Impairment on intangible assets decreased 100% from
Depreciation and Amortization
Depreciation and amortization expense consist of depreciation on our equipment and amortization of our intangible assets.
Depreciation and amortization expense decreased
Depreciation and amortization expense decreased
Interest Income
Interest income consists of stated interest income on our cash balances.
Interest income was
Interest income consists of stated interest income on our cash balances.
Interest income decreased
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 increased
Interest expense increased
Foreign Currency
The Company's financial results are impacted by volatility in the Canadian/
? The Company sells products primarily inU.S. Dollars; therefore, reported revenues are not highly impacted by foreign currency volatility. ? A portion of the Company's expenses are incurred in Canadian Dollars and therefore fluctuate inU.S. Dollars as theU.S. Dollar varies. A weakerU.S. Dollar results in an increase in translated expenses, and strongerU.S. Dollar results in a decrease. ? Changes in foreign currency rates also impact the translated value of the Company's working capital that is held in Canadian Dollars. Foreign exchange rate fluctuations result in foreign exchange gains or losses based upon movement in the translated value of Canadian working capital intoU.S. Dollars.
The change in foreign currency was a loss of
The change in foreign currency was a gain of
Liquidity and Capital Resources
As of
We believe as of the date of this report, we do not have the working capital on hand, along with our expected cash flow from operations and budget reductions, to sufficiently to fund our current level of operations through the end of the next twelve months or beyond. However, there can be no assurance that we will not require additional capital. 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. There can be no assurance we will be able to obtain access to capital as and when needed, or that the terms of any available financing will be commercially reasonable.
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