Mobiquity Technologies(MOBQ) - 2023 Q4 - Annual Report

Business Model and Revenue Streams - The data intelligence platform aims to generate multiple revenue streams, including advertising, data licensing, and custom research [23]. - The revenue model includes licensing platforms as white-label products and a managed services model, with varying billing percentages based on usage [41]. - The revenue model includes licensing platforms as white-label products and a managed services model, with users billed a percentage of advertising revenue run through the platform [173]. - The company recognizes revenue in accordance with ASC Topic 606, aligning revenue recognition with the delivery of services [183]. Financial Performance - The company reported net losses of $6,533,117 for fiscal 2023 and$ 8,062,328 for fiscal 2022, with an accumulated deficit of $217,040,339 as of December 31, 2023 [49]. - Revenues for fiscal 2023 were$ 860,090, a decrease of $3,307,182 compared to$ 4,167,272 in fiscal 2022, primarily due to the lack of political revenue and downturns in cryptocurrency and automotive sectors [197]. - Cost of revenues was $480,160, representing 56% of revenues in fiscal 2023, compared to$ 2,295,404 or 55% of revenues in fiscal 2022 [198]. - Gross profit for fiscal 2023 was $379,930, or 44% of revenues, down from$ 1,871,868 or 45% of revenues in fiscal 2022 [199]. - Total operating expenses decreased to $5,928,678 in fiscal 2023 from$ 9,213,632 in the prior year, a reduction of $3,284,954 [199]. - The loss from operations for fiscal 2023 was$ 5,548,748, an improvement of approximately $1,793,000 compared to a loss of$ 7,341,764 in fiscal 2022 [200]. - Cash used in operating activities for fiscal 2023 was $4,395,868, resulting from a net loss of$ 6,533,117 [203]. - Cash provided by financing activities in fiscal 2023 was $6,861,216, primarily from the issuance of common stock and preferred stock [203]. Customer Dependency and Risks - For fiscal years 2023 and 2022, sales to two customers accounted for approximately 73% and 48% of total revenues, respectively [44]. - The company relies heavily on a limited number of customers, making it vulnerable to revenue fluctuations if these customers reduce their spending or terminate contracts [74]. - The company faces intense competition from both small and large firms, which could lead to reduced sales and operating margins [66]. - The company is subject to various risks, including cybersecurity threats and the need to comply with data protection regulations, which could adversely affect its operations and reputation [59]. - Changes in consumer sentiment regarding data privacy could adversely affect the company's ability to generate revenues [81]. - Evolving government regulations on e-commerce and data privacy may pose risks to the company's operations and financial condition [82]. Technology and Operations - The ATOS platform engages with approximately 10 billion advertisement opportunities per day, enhancing efficiency for advertisers and publishers [17]. - The proprietary ATOS technology includes features such as machine learning optimization, audience targeting, and real-time reporting [19]. - The company utilizes Amazon Web Services (AWS) for its data intelligence platform, leveraging services like EC2, Lambda, and Machine Learning [25]. - The technology and business processes may contain undetected errors, which could limit service provision and diminish product attractiveness [63]. - The complexity of the company's data products requires highly trained personnel, and competition for such talent may hinder business operations [87]. - The company must invest in technology and resources to keep pace with rapid changes in the digital advertising market [76]. Compliance and Internal Controls - The company is committed to compliance with privacy and data protection laws, which may impact operational costs and revenue [40]. - The company has identified a material weakness in internal control over financial reporting, which could lead to material misstatements in financial statements [104]. - The company is taking steps to enhance its internal control environment to prevent future material weaknesses and ensure accurate financial reporting [109]. - The company has implemented policies to manage cybersecurity risks, although it lacks formal cybersecurity policies [124]. Market Trends and Future Outlook - The global programmatic ad spend reached an estimated$ 558 billion in 2023, projected to surpass $700 billion by 2026, indicating a growing market for the company's services [160]. - The market for programmatic advertising is evolving, and the company expects it to remain a significant revenue source, dependent on increased spending through its platform [70]. - Mobiquity Technologies expects its three platforms—Advangelists, MobiExchange, and AdHere—to contribute to overall financial success in 2024 [36]. - The company must continually innovate and adapt to changing consumer needs and industry standards to maintain its competitive position [69]. Stock and Corporate Governance - The company's common stock and warrants are subject to "penny stock" rules due to being quoted in the OTC Markets, which may limit trading activity and liquidity [93]. - The company has experienced volatility in its stock price, which may continue due to factors such as low trading volume and overall market fluctuations [99]. - Principal stockholders, directors, and executive officers own over 50% of the outstanding common stock, potentially influencing corporate actions [114]. - The board of directors has the authority to issue preferred stock without shareholder approval, which could affect common stockholder rights [115]. - The company’s common stock was delisted from NasdaqCM on December 6, 2023, due to failure to meet listing requirements, and is now trading on OTC Markets [133].