10-Q: Mobivity Reports Soaring Losses, Plans Reverse Split & Deregistration

Sentiment:

Quarterly Report 29 December 2025 3:26 PM

Mobivity Holdings Corp. reported a significant increase in net losses and operating expenses for the nine months ended September 30, 2025, while announcing a plan for a 1-for-25,000 reverse stock split and subsequent deregistration.

Delay expectedRepayment of the Unsecured Promissory Notes (UP Notes) was postponed multiple times, most recently to July 31, 2024, from an original due date of December 31, 2023.Principal payments on the Secured Promissory Notes under the Credit Facility Agreement have been deferred multiple times, most recently to a period beginning April 30, 2025, and ending March 31, 2027, from an original start date of June 30, 2022.

Capital raiseThe company raised $6,115,680 in cash from related party convertible notes during the nine months ended September 30, 2025.An additional $250,000 was raised from convertible notes during the nine months ended September 30, 2025.The company issued 5 Convertible Notes payable to Thomas B. Akin for $250,000 in Q1 2025, $950,000 in Q2 2025, and $300,000 in Q3 2025, often with warrants as inducements.7 Senior Secured Convertible Notes were issued to related party investors for $1,575,000 in Q1 2025.11 Convertible Notes (Related Party Senior Secured Notes Round 2) were issued to related party investors for $4,040,681 in Q3 2025.10 Senior Secured Convertible Notes were issued for $425,000 in Q1 2025.Management explicitly stated its intention to finance operating costs over the next 12 months with proceeds from the sale of securities.

Worse than expectedNet loss from continuing operations significantly increased to $(8,524,778) for the nine months ended September 30, 2025, from $(3,021,456) in the prior year.Total operating expenses surged by 277% to $7,321,185, outpacing the 156% revenue growth.Cash used in operating activities increased to $5,970,967, indicating a higher burn rate.The company's working capital deficit worsened to $7,567,500, and the accumulated deficit grew to $148.8 million.Management explicitly stated substantial doubt about the company's ability to continue as a going concern.

Summary

Net loss for the nine months ended September 30, 2025, increased to $8,604,594, compared to $7,228,914 for the same period in 2024.
Revenue from continuing operations grew by 156% to $2,305,942 for the nine months ended September 30, 2025, up from $900,008 in the prior year.
Operating expenses surged by 277% to $7,321,185 for the nine months ended September 30, 2025, primarily driven by increases in general and administrative, sales and marketing, and engineering, research, and development costs.
The company's accumulated deficit reached $148.8 million as of September 30, 2025, and it reported a working capital deficit of $7,567,500.
Management expressed substantial doubt about the company's ability to continue as a going concern, citing anticipated further losses and reliance on future financing.
A 1-for-25,000 reverse stock split was approved by a Special Committee on July 31, 2025, with the intent to cash out stockholders holding fewer than 25,000 shares at $0.29 per share and terminate public company reporting obligations.
The estimated aggregate cost of the reverse stock split and deregistration is approximately $1,500,000.
The company is involved in a legal proceeding with SMS Factory, Inc. related to an asset purchase agreement, with SMS Factory seeking over $50,000 in damages and Mobivity filing a counterclaim.

Sentiment

Score: 2

Explanation: The company faces severe financial distress, evidenced by escalating net losses, a substantial accumulated deficit, and a working capital deficit. The explicit 'going concern' warning, coupled with ineffective internal controls and a plan to deregister, indicates a highly precarious financial position and significant risks for public shareholders, despite some revenue growth in continuing operations.

Positives

Revenue from continuing operations increased by 156% to $2,305,942 for the nine months ended September 30, 2025, compared to $900,008 for the same period in 2024, primarily due to growth in Connected Rewards revenue.
Gross profit increased by 164% to $946,575 for the nine months ended September 30, 2025, up from $358,847 in the prior year.
Net loss from discontinued operations significantly improved to $(79,816) for the nine months ended September 30, 2025, from $(4,207,458) in the prior year, following the sale of the SMS/MMS text messaging business.

Negatives

Net loss for the nine months ended September 30, 2025, worsened to $8,604,594, compared to $7,228,914 for the same period in 2024.
Loss from operations significantly increased to $(6,374,610) for the nine months ended September 30, 2025, from $(1,583,773) in the prior year.
Total operating expenses surged by 277% to $7,321,185 for the nine months ended September 30, 2025, driven by substantial increases in general and administrative (340%), sales and marketing (384%), and engineering, research, and development (173%) expenses.
Interest expense increased by 50% to $2,140,792 for the nine months ended September 30, 2025, due to increased balances on related party notes payable and convertible notes.
The company has an accumulated deficit of $148.8 million and a working capital deficit of $7,567,500 as of September 30, 2025.
Cash used in operating activities increased to $5,970,967 for the nine months ended September 30, 2025, from $5,405,028 in the prior year.
Management concluded that disclosure controls and procedures were not effective as of September 30, 2025, due to insufficient finance staff and lack of optimal segregation of duties.

Risks

Substantial doubt exists about the company's ability to continue as a going concern due to recurring net losses and insufficient working capital to fund operations for the next 12 months.
The proposed 1-for-25,000 reverse stock split and subsequent deregistration could negatively affect the liquidity and trading prices of common stock, potentially limiting trading to privately negotiated sales or the OTC Pink Market.
Deregistration would remove protections for stockholders provided by the Exchange Act and Sarbanes-Oxley Act, including liability provisions, proxy solicitation rules, and stock ownership reporting rules.
The company faces ongoing litigation related to alleged TCPA violations, with one pending class action and a settlement loss of $2,500 accrued for a previous case.
Reliance on related party financing, including convertible notes and secured promissory notes from a director and significant investors, introduces potential conflicts of interest and dependence on a limited number of funding sources.
The company's disclosure controls and procedures were deemed ineffective due to limited finance staff, raising the possibility of material misstatements in future financial reporting.

Future Outlook

Management anticipates further losses in the development of the company's business. The ability to continue as a going concern is dependent on generating profitable operations or obtaining necessary financing, which may include proceeds from the sale of securities and/or revenues from operations. The company plans to continue its strategy of exploiting competitive advantages of its Recurrency platform, evolving sales and customer support for the digital marketing universe, acquiring complementary businesses and technologies, and building its intellectual property portfolio. A significant future event is the proposed reverse stock split and subsequent deregistration, which is subject to stockholder approval and could be abandoned by the Special Committee.

Management Comments

Management believes that the estimates used in financial statements are reasonable; however, actual results may differ from these estimates.
Management intends to finance operating costs over the next 12 months with proceeds from the sale of securities, and/or revenues from operations.
Management concluded that as of September 30, 2025, disclosure controls and procedures were not effective due to insufficient finance staff, which may lead to material misstatements in future periods.

Industry Context

Mobivity operates in the mobile marketing technology sector, focusing on bridging in-person and digital environments through its Recurrency platform, which includes SaaS solutions and Connected Rewards. The company aims to differentiate itself by leveraging point-of-sale data and offering unique incentivized programs in digital environments, targeting mobile casual game publishers and quick service restaurant brands. The strategy to acquire complementary businesses and build intellectual property aligns with a growth-oriented approach in a competitive and evolving digital marketing landscape. However, the significant losses and going concern warning suggest challenges in achieving profitability and scaling effectively within this context.

Comparison to Industry Standards

The filing does not provide specific industry benchmarks or comparable company data to assess results against global standards. Therefore, a direct comparison is not feasible based solely on the provided information.

Management Changes

Role	Previous Person	New Person	Effective Date	Reason
Director	Dennis Becker	NA	2025-07-15	Termination of service, resulting in the issuance of 182,511 shares of common stock for vested Restricted Stock Units.

Corporate Governance

Change Type	Description	Effective Date	Impact Assessment
Proposed Reverse Stock Split and Deregistration	A Special Committee of independent directors approved a 1-for-25,000 reverse stock split to cash out small stockholders at $0.29 per share and terminate public company reporting obligations. This will eliminate protections under the Exchange Act and Sarbanes-Oxley Act for remaining stockholders.	NA (subject to stockholder approval)	Significantly reduces shareholder base, eliminates public reporting requirements, reduces liquidity for remaining shares, and removes regulatory protections for investors. This is a major shift from public to effectively private operation.
Internal Control Deficiency	Management concluded that disclosure controls and procedures were not effective as of September 30, 2025, due to insufficient finance staff leading to a lack of optimal segregation of duties and oversight.	2025-09-30	Increases the risk of material misstatements in financial reporting and indicates a weakness in the company's financial governance structure.

Legal Proceedings

One pending putative class action complaint alleging violations of the TCPA (Telephone Consumer Protection Act) related to unsolicited text messages. The company is currently unable to determine if it will result in a material exposure.
A settlement was reached and signed on April 9, 2025, in a previously active TCPA case, resulting in a settlement loss of $2,500 accrued during the three months ended June 30, 2025.
SMS Factory, Inc. filed a complaint against the company on November 7, 2025, seeking monetary damages in excess of $50,000 related to an Asset Purchase Agreement. The company denies the allegations and has filed a counterclaim.

Related Party Transactions

Unsecured Promissory Notes (UP Notes) with Talkot Fund, LP (an investor) for an aggregate principal amount of $271,875, bearing 15% interest per annum. Accrued interest is settled in common stock, leading to dilution.
Secured Promissory Notes under a Credit Facility Agreement with Thomas Akin (a director) for up to $6,000,000, bearing 15% interest per annum. Accrued interest is settled in common stock, leading to dilution.
Related Party Convertible Notes with Thomas B. Akin and other investors, totaling $10,350,000 in principal as of September 30, 2025, accruing 8% interest, convertible into common stock. Warrants were issued as inducements.
Related Party Senior Secured Convertible Notes with Thomas B. Akin, Bruce E. Terker (a 5%+ owner), and other accredited investors, totaling $1,575,000 in principal as of September 30, 2025, accruing 15% interest, automatically convertible into equity securities.
Related Party Senior Secured Notes Round 2 with related party investors, totaling $4,040,681 in principal as of September 30, 2025, accruing 15% interest, automatically convertible into equity securities.

Stakeholder Impact

**Shareholders:** Significant dilution from interest settlements in common stock and warrant issuances. The proposed 1-for-25,000 reverse stock split will cash out small shareholders at $0.29 per share, eliminating their ownership. Remaining shareholders will face reduced liquidity and loss of public company protections (SEC reporting, Sarbanes-Oxley).
**Employees:** Stock-based compensation is a notable component of overall compensation, with $400,021 in stock-based compensation expense for employee options and $243,747 for restricted stock units during the nine months ended September 30, 2025.
**Customers:** The company's focus on its Recurrency and Connected Rewards platforms indicates continued investment in these services. However, the company's going concern risk could impact long-term service stability.
**Creditors:** Related party creditors (Thomas Akin, Talkot Fund, LP, Bruce E. Terker) are significant lenders, with substantial amounts in secured and convertible notes. Repayment terms have been repeatedly deferred, indicating ongoing financial strain on the company's ability to meet its obligations.
**Regulatory Bodies:** The company's plan to deregister will remove it from SEC reporting requirements, reducing transparency and oversight.

Next Steps

Submit the proposed 1-for-25,000 reverse stock split to a vote of stockholders at a Special Meeting.
If approved, effect the reverse stock split and proceed with terminating public company reporting obligations under the Exchange Act.
Vigorously defend against the complaint filed by SMS Factory, Inc. and pursue the company's counterclaim.
Continue efforts to generate profitable operations and/or obtain necessary financing to address the going concern uncertainty.

Key Dates

Date	Description
2021-02-01	Company entered into a lease agreement for its office facilities in Chandler, AZ.
2021-06-30	Company entered into a Credit Facility Agreement with Thomas Akin.
2021-07-01	Company entered into Unsecured Promissory Notes (UP Notes) with Talkot Fund, LP.
2022-11-11	Amendment to the Credit Facility Agreement with Thomas Akin was signed.
2023-01-31	Lender agreed to postpone the 24-month repayment period for UP Notes to January 31, 2024; Amendment No. 1 to Credit Facility Agreement extended maturity to December 1, 2025.
2024-01-31	Lender agreed to postpone the 24-month repayment period for UP Notes to July 31, 2024.
2024-03-01	Company entered into a sublease for its office facilities in Chandler, AZ.
2024-03-31	Company granted five independent directors a total of 162,500 restricted stock units.
2024-04-01	Company granted two employees 250,000 options to purchase shares of common stock.
2024-05-03	Amendment No. 2 to Credit Facility Agreement was signed, extending maturity to June 30, 2026, and deferring principal payments to July 31, 2024.
2024-06-30	Company granted five independent directors a total of 187,210 restricted stock units; $445,379 of interest accrued and settled to equity payable for 1,093,267 shares of common stock; $20,617 of interest accrued and settled to equity payable for 50,609 shares of common stock.
2024-08-13	Amendment No. 3 to Credit Facility Agreement was agreed upon, deferring principal payments to October 31, 2024.
2024-09-25	Company entered into an Asset Purchase Agreement with SMS Factory, Inc. for its SMS/MMS text messaging customer accounts.
2024-09-30	Company granted five independent directors a total of 365,495 restricted stock units; $225,136 of interest accrued and settled to equity payable for 964,593 shares of common stock; $10,422 of interest accrued and settled to equity payable for 44,653 shares of common stock.
2024-11-21	Amendment No. 4 to Credit Facility Agreement was signed, extending maturity to March 31, 2027, and deferring principal payments to April 30, 2025.
2025-01-24	1,860,123 shares of common stock granted to Thomas Akin as settlement of $450,272 interest payable; 86,109 shares of common stock granted to Talkot Fund LP as settlement of $20,844 interest payable.
2025-02-28	Amendment to the sublease for office facilities was signed, extending the term until January 25, 2027.
2025-03-17	Company entered into a convertible promissory note purchase agreement (Senior Secured Notes) with four accredited investors, including Thomas B. Akin and Bruce E. Terker.
2025-03-31	Company granted five independent directors a total of 225,690 restricted stock units; $220,242 of interest accrued and settled to equity payable for 620,821 shares of common stock; $10,195 of interest accrued and settled to equity payable for 28,739 shares of common stock.
2025-04-09	A settlement was reached and signed in a previously active TCPA case, resulting in a $2,500 settlement loss.
2025-06-30	Company granted five independent directors a total of 292,610 restricted stock units; $222,689 of interest accrued and settled to equity payable for 699,796 shares of common stock; $10,309 of interest accrued and settled to equity payable for 32,394 shares of common stock.
2025-07-15	620,821 shares of common stock granted to Thomas Akin as settlement of $220,242 interest payable; 28,739 shares of common stock granted to Talkot Fund LP as settlement of $10,195 interest payable; 182,511 shares issued to Dennis Becker, a former director, upon termination of service.
2025-07-23	699,796 shares of common stock granted to Thomas Akin as settlement of $222,689 interest payable; 32,394 shares of common stock granted to Talkot Fund LP as settlement of $10,309 interest payable.
2025-07-31	A Special Committee of the Board approved a 1-for-25,000 reverse stock split as part of a plan to deregister the company's common stock.
2025-09-30	End of the quarterly period covered by this report; Company granted five independent directors a total of 338,540 restricted stock units; $225,136 of interest accrued and settled to equity payable for 886,394 shares of common stock; $10,422 of interest accrued and settled to equity payable for 41,031 shares of common stock.
2025-11-07	SMS Factory, Inc. filed a complaint against the Company in the Circuit Court of the Fifteenth Judicial Circuit in and for Palm Beach County, Florida.
2025-12-29	Date of filing of this Quarterly Report on Form 10-Q.

Recommendation

strong sell

The company faces severe financial challenges, including substantial and increasing net losses, a significant accumulated deficit, and a critical working capital deficit. The explicit 'going concern' warning indicates a high risk of business failure or significant restructuring. The proposed 1-for-25,000 reverse stock split, designed to cash out small shareholders and deregister the company, is highly detrimental to public investors, eliminating liquidity, regulatory protections, and future upside. The reliance on related party debt, coupled with ineffective internal controls, further exacerbates the risk profile. Given these factors, a seasoned investor would strongly recommend selling any remaining shares.

Keywords

Mobivity Holdings Corp, 10-Q, Quarterly Report, Financial Results, Net Loss, Revenue Growth, Operating Expenses, Going Concern, Reverse Stock Split, Deregistration, SEC Filing, Connected Rewards, SaaS, Mobile Marketing, Related Party Debt, Litigation, TCPA, Internal Controls

Disclaimer:The information provided here is for general informational purposes only and does not constitute financial advice, recommendation, or endorsement of any kind. It may contain errors or omissions. You should not rely on this information to make financial decisions. Always seek the advice of a qualified financial professional before making any investment or financial decisions. Use of this information is at your own risk.