Oklahoma
|
73-1518725
|
(State or other jurisdiction of incorporation
or organization)
|
(I.R.S. Employer Identification No.)
|
1717 South Boulder Ave. Suite 700
Tulsa, Oklahoma
|
74119 (918) 280-8693
|
(Address of principal executive office)
|
(Zip Code) (Registrant’s telephone number,
including area code)
|
Large accelerated filer o
|
Accelerated filer o
|
Non-accelerated filer o
|
Smaller reporting company x
|
(Do not check if a smaller reporting company)
|
PAGE
|
|||||
PART I
|
|||||
Item 1.
|
Business
|
4
|
|||
Item 1A.
|
Risk Factors
|
7
|
|||
Item 1B.
|
Unresolved Staff Comments
|
16
|
|||
Item 2.
|
Properties
|
16
|
|||
Item 3.
|
Legal Proceedings
|
16
|
|||
Item 4.
|
Mine Safety Disclosures
|
17
|
|||
PART II
|
|||||
Item 5.
|
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
|
18
|
|||
Item 6.
|
Selected Financial Data
|
19
|
|||
Item 7.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
19
|
|||
Item 7A.
|
Quantitative and Qualitative Disclosures about Market Risk
|
24
|
|||
Item 8.
|
Financial Statements and Supplementary Data
|
F1- F33
|
|||
Item 9.
|
Changes in and Disagreements with Accountants on Accounting and Financial Disclosures
|
24
|
|||
Item 9A
|
Controls and Procedures
|
25
|
|||
Item 9B.
|
Other Information
|
25
|
|||
PART III
|
|||||
Item 10.
|
Directors, Executive Officers and Corporate Governance
|
26
|
|||
Item 11.
|
Executive Compensation
|
30
|
|||
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|
35
|
|||
Item 13.
|
Certain Relationships and Related Transactions, and Director Independence
|
36
|
|||
Item 14.
|
Principal Accounting Fees and Services
|
38
|
|||
PART IV
|
|||||
Item 15.
|
Exhibits, Financial Statement Schedules
|
39
|
|||
Signatures
|
41
|
•
|
competition in the market for mobile computing products and services;
|
|
•
|
our ability to develop brand awareness and industry reputation;
|
|
•
|
our ability to adapt to rapid evolution in technology and industry standards;
|
|
•
|
our ability to attract and retain management and skilled personnel;
|
|
•
|
our growth and marketing strategies;
|
|
•
|
anticipated trends in our business;
|
|
•
|
our future results of operations;
|
|
•
|
our lack of profitable operations in recent periods;
|
|
•
|
our liquidity and ability to finance our development activities;
|
|
•
|
our ability to successfully and economically develop new products;
|
|
•
|
market conditions in the mobile solutions for business industry;
|
|
•
|
the impact of government regulation;
|
|
•
|
estimates regarding future net revenues from capitalized development costs and the present value thereof;
|
|
•
|
emerging viable and sustainable markets for wireless and mobile computing services;
|
|
•
|
significant errors or security flaws in our products and services;
|
|
•
|
insufficient protection for our intellectual property;
|
|
•
|
Our ability to enforce our intellectual property;
|
|
•
|
claims of infringement on third party intellectual property;
|
|
•
|
pricing pressures in the mobile software and technology market
|
|
•
|
our financial position, business strategy and other plans and objectives for future operations;
|
|
•
|
economic conditions in the U.S. and worldwide;
|
|
•
|
access to significant additional capital to implement growth plans; and
|
|
•
|
the ability of our management team to execute its plans to meet its goals
|
·
|
Our People – US-based development staff with experience in the latest technologies; iOS, Android, Ruby on Rails, HTML5, Hybrid Apps. On-shore staff augmentation capability when rapid scale is needed.
|
·
|
Our Platform – Proprietary, custom-designed platforms are built on a solid service oriented architecture allowing rapid creation and deployment of apps. Also custom and 3rd party service integration.
|
·
|
Our Process – Agile product development provides flexibility not available in other processes. Agile promotes teamwork, collaboration, and process adaptability throughout the life-cycle of the project.
|
·
|
Our Intellectual Property – Patent addresses mobile information distribution and collection systems across all wireless networks, smartphones, tablets, and rugged mobile devices, regardless of carrier and manufacturer.
|
·
|
Our Portfolio – Focus on business process solutions, from sales force and field service productivity to powerful marketing and promotion tools.
|
•
|
our technology or products may become obsolete upon the introduction of alternative technologies;
|
|
•
|
we may not have sufficient resources to develop or acquire new technologies or to introduce new products or services capable of competing with future technologies or service offerings of other companies; and
|
|
•
|
we may not have sufficient resources to develop or acquire new technologies or to introduce new products or services capable of competing with future technologies or service offerings of other companies.
|
•
|
growth in sales of handheld devices, smart phones and other mobile computing devices;
|
|
•
|
emergence of a viable and sustainable market for wireless and mobile computing services;
|
|
•
|
our product and services differentiation and quality;
|
|
•
|
the development of technologies that facilitate interactive communication between organizations;
|
|
•
|
our distribution and pricing strategies as compared with those of our competitors;
|
|
•
|
the growth in access to, and market acceptance of, new interactive technologies;
|
|
•
|
the effectiveness of our marketing strategy and efforts;
|
|
•
|
our industry reputation; and
|
|
•
|
general industry and economic conditions such as slowdowns in the computer or software markets or the economy.
|
•
|
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 capital financings to fund our operations and growth, to attract and retain valuable personnel and in connection with future strategic partnerships with other companies;
|
|
•
|
our results of operations and the performance of our competitors;
|
|
•
|
the public’s reaction to our press releases, our other public announcements and our filings with the Securities and Exchange Commission;
|
|
•
|
changes in earnings estimates or recommendations by research analysts who follow, or may follow, us or other companies in our industry;
|
|
•
|
changes in general economic conditions;
|
|
•
|
changes in the valuation of similarly situated companies, both in our industry and in other industries;
|
|
•
|
actions of our historical equity investors, including sales of common stock by our directors and executive officers;
|
|
•
|
actions by institutional investors trading in our stock;
|
|
•
|
disruption of our operations;
|
|
•
|
any major change in our management team;
|
|
•
|
significant sales of our common stock;
|
|
•
|
other developments affecting us, our industry or our competitors; and
|
|
•
|
U.S. and international economic, legal and regulatory factors unrelated to our performance.
|
·
|
that a broker or dealer approve a person's account for transactions in penny stocks; and
|
·
|
the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased.
|
·
|
obtain financial information and investment experience objectives of the person; and
|
·
|
make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.
|
·
|
sets forth the basis on which the broker or dealer made the suitability determination; and
|
·
|
that the broker or dealer received a signed, written agreement from the investor prior to the transaction.
|
Lease Period
|
Amount Per Month
|
|||
September 1, 2008 – February 29, 2011
|
$ | 11,833.44 | ||
March 1, 2011 – August 2013
|
$ | 12,248.65 |
Filing Date
|
Defendant
|
Case Number
|
Status
|
Date of Disposition (if any)
|
||||
March 15, 2011
|
Blue Shoe Mobile Solutions, LLC
|
6:11-CV-101
|
(b)
|
August 5, 2011
|
||||
March 15, 2011
|
Brazos Technology Corporation
|
6:11-CV-101
|
(b)
|
November 10, 2011
|
||||
March 15, 2011
|
On The Spot Systems, Inc.
|
6:11-CV-101
|
(b)
|
July 19, 2011
|
||||
March 15, 2011
|
Formstack, LLC
|
6:11-CV-101
|
(b)
|
December 15, 2011
|
||||
April 26, 2011
|
Canvas Solutions, Inc.
|
6:11-CV-194
|
(b)
|
October 3, 2011
|
||||
April 26, 2011
|
GeoAge, Inc.
|
6:11-CV-194
|
(a)
|
June 30, 2011
|
||||
April 26, 2011
|
Kony Solutions, Inc.
|
6:11-CV-194
|
(b)
|
September 14, 2011
|
||||
April 26, 2011
|
Widget Press, Inc.
|
6:11-CV-194
|
(a)
|
July 6, 2011
|
||||
April 26, 2011
|
Pogo Corporation
|
6:11-CV-194
|
(a)
|
June 30, 2011
|
||||
April 26, 2011
|
SWD Interactive, LLC
|
6:11-CV-194
|
(a)
|
August 11, 2011
|
||||
June 8, 2011
|
Agilis Systems, LLC
|
6:11-CV-287
|
Open
|
N/A
|
||||
June 8, 2011
|
Antenna Software, Inc.
|
6:11-CV-287
|
Open
|
N/A
|
||||
June 8, 2011
|
Cengea Solutions, Inc.
|
6:11-CV-287
|
(b)
|
August 31, 2011
|
||||
June 8, 2011
|
Data Systems International, Inc.
|
6:11-CV-287
|
(b)
|
November 22, 2011
|
||||
June 8, 2011
|
Environmental Systems Research Institute, Inc.
|
6:11-CV-287
|
Open
|
N/A
|
||||
June 8, 2011
|
Invensys Systems, Inc. (d/b/a Invensys Operations Management)
|
6:11-CV-287
|
Open
|
N/A
|
||||
June 8, 2011
|
TrueContext Mobile Solutions Corporation
|
6:11-CV-287
|
Open
|
N/A
|
||||
June 8, 2011
|
Spring Wireless USA, Inc.
|
6:11-CV-287
|
Open
|
N/A
|
June 8, 2011
|
Zerion Software, Inc.
|
6:11-CV-287
|
(b)
|
December 30, 2011
|
||||
June 8, 2011
|
BizSpeed, Inc.
|
6:11-CV-287
|
Open
|
N/A
|
||||
June 8, 2011
|
Syclo, LLC
|
6:11-CV-287
|
(b)
|
October 31, 2011
|
||||
June 8, 2011
|
Xora, Inc.
|
6:11-CV-287
|
Open
|
N/A
|
||||
June 8, 2011
|
Spira Data Corp.
|
6:11-CV-287
|
Open
|
N/A
|
||||
June 8, 2011
|
Survey Analytics LLC
|
6:11-CV-287
|
(b)
|
December 30, 2011
|
||||
June 8, 2011
|
The DataMax Software Group Inc.
|
6:11-CV-287
|
Open
|
N/A
|
||||
June 8, 2011
|
Ventyx Inc.
|
6:11-CV-287
|
Open
|
N/A
|
||||
June 8, 2011
|
Air2Web Inc.
|
6:11-CV-287
|
Open
|
N/A
|
||||
June 8, 2011
|
General Data Company, Inc.
|
6:11-CV-287
|
Open
|
N/A
|
||||
June 8, 2011
|
RealTime Results, LLC
|
6:11-CV-287
|
Open
|
N/A
|
||||
June 8, 2011
|
Millennium Information Technology, Inc. (d/b/a MIT Systems, Inc.)
|
6:11-CV-287
|
Open
|
N/A
|
||||
September 15, 2011
|
AT&T Inc.
|
6:11-CV-490
|
Open
|
N/A
|
||||
September 15, 2011
|
AT&T Mobility LLC
|
6:11-CV-490
|
(b)
|
January 30, 2012
|
||||
September 15, 2011
|
SalesForce.com, Inc.
|
6:11-CV-490
|
(b)
|
December 28, 2011
|
||||
September 15, 2011
|
Dell Inc dba Dell Services
|
6:11-CV-490
|
Open
|
N/A
|
||||
September 15, 2011
|
Groupon, Inc.
|
6:11-CV-490
|
Open
|
N/A
|
||||
September 15, 2011
|
Living Social, Inc.
|
6:11-CV-490
|
(b)
|
December 29, 2011
|
||||
September 15, 2011
|
Citigroup Inc.
|
6:11-CV-490
|
Open
|
N/A
|
||||
October 3, 2011
|
Whoop, Inc.
|
6:11-CV-523
|
Open
|
N/A
|
||||
December 21, 2011
|
American Airlines, Inc.
|
6:11-CV-685
|
Open
|
N/A
|
||||
December 21, 2011
|
Avis Rent A Car System, LLC
|
6:11-CV-686
|
Open
|
N/A
|
||||
December 21, 2011
|
Continental Airlines, Inc.
|
6:11-CV-687
|
Open
|
N/A
|
||||
December 21, 2011
|
The Hertz Corporation
|
6:11-CV-688
|
Open
|
N/A
|
||||
December 21, 2011
|
Hipmunk, Inc.
|
6:11-CV-689
|
Open
|
N/A
|
||||
December 21, 2011
|
Hotels.com, L.P.
|
6:11-CV-690
|
Open
|
N/A
|
||||
December 21, 2011
|
Priceline.com Incorporated
|
6:11-CV-691
|
Open
|
N/A
|
||||
December 21, 2011
|
Southwest Airlines Co.
|
6:11-CV-692
|
Open
|
N/A
|
||||
December 21, 2011
|
Travelocity.com LP
|
6:11-CV-693
|
Open
|
N/A
|
||||
December 21, 2011
|
United Air Lines, Inc.
|
6:11-CV-694
|
Open
|
N/A
|
||||
January 30, 2012
|
Facebook, Inc.
|
6:12-CV-44
|
Open
|
N/A
|
||||
January 30, 2012
|
Hyatt Corporation
|
6:12-CV-45
|
Open
|
N/A
|
||||
January 30, 2012
|
newegg
|
6:12-CV-46
|
Open
|
N/A
|
||||
January 30, 2012
|
Wal-Mart Stores, Inc.
|
6:12-CV-47
|
Open
|
N/A
|
||||
January 30, 2012
|
YELP! INC.
|
6:12-CV-48
|
Open
|
N/A
|
||||
February 17, 2012
|
GEICO Insurance Agency, Inc.
|
6:12-CV-74
|
Open
|
N/A
|
||||
February 17, 2012
|
GEICO Casualty Company and Government Employees Insurance Company
|
6:12-CV-74
|
Open
|
N/A
|
||||
February 17, 2012
|
Marriott International, Inc.
|
6:12-CV-76
|
Open
|
N/A
|
||||
February 27, 2012
|
AOL INC.
|
6:12-CV-91
|
Open
|
N/A
|
||||
February 27, 2012
|
Inter-continental Hotels Corporation
|
6:12-CV-91
|
Open
|
N/A
|
||||
February 27, 2012
|
Six Continents Hotels, Inc.
|
6:12-CV-92
|
Open
|
N/A
|
(a)
|
Lawsuit dismissed without prejudice.
|
(b)
|
Lawsuit dismissed with prejudice pursuant to a settlement agreement.
|
2011
|
2010
|
|||||||||||||||
Sales Price
|
Sales Price
|
|||||||||||||||
High
|
Low
|
High
|
Low
|
|||||||||||||
Quarter Ended
|
||||||||||||||||
March 31
|
$
|
0.26
|
$
|
0.18
|
$
|
0.05
|
$
|
0.02
|
||||||||
June 30
|
0.24
|
0.09
|
0.05
|
0.02
|
||||||||||||
September 30
|
0.18
|
0.10
|
0.05
|
0.02
|
||||||||||||
December 31
|
0.17
|
0.03
|
0.36
|
0.02
|
Equity Compensation Plan Information
|
||||||||||||
Plan category
|
Number of securities to be issued upon exercise of outstanding options
(a)
|
Weighted-average exercise price of outstanding options
(b)
|
Securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
(c)
|
|||||||||
Equity compensation plans approved by security holders
|
11,829,507
|
$
|
0.52
|
5,631,569
|
||||||||
Equity compensation plans not approved by security holders
|
-
|
-
|
5,255,782
|
|||||||||
Total
|
11,829,507
|
$
|
0.52
|
10,887,351
|
Years Ended Dec 31,
|
||||||||
2011
|
2010
|
|||||||
Cash flows (used in) operating activities
|
$
|
(1,364,509
|
)
|
$
|
(1,474,540
|
)
|
||
Cash flows (used in) provided by investing activities
|
(613,101
|
)
|
10,758
|
|||||
Cash flows provided by financing activities
|
2,063,717
|
1,599,687
|
||||||
Net increase in cash and cash equivalents
|
$
|
86,107
|
$
|
135,905
|
Name
|
Age
|
Position
|
||
Howard Janzen
|
58
|
Director and Chairman of the Board of Directors
|
||
James C. McGill
|
68
|
Vice Chairman of the Board of Directors
|
||
Steve Signoff
|
56
|
Chief Executive Officer, President, and Director
|
||
David L. Humphrey
|
56
|
Director
|
||
John Clerico
|
70
|
Director and Chairman of the Compensation Committee
|
||
Dr. Dale A. Schoenefeld
|
66
|
Director
|
||
David R. Lawson
|
60
|
Director and Chairman of the Audit Committee
|
||
Randy Ritter
|
52
|
Chief Operating Officer
|
||
Clint Parr
|
47
|
Executive Vice President
|
||
Kendall Carpenter
|
55
|
Vice President Finance and Administration, Chief Financial Officer, Secretary and Treasurer
|
1.
|
any bankruptcy petition filed by or against such person or any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;
|
|
2.
|
any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);
|
|
3.
|
being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from or otherwise limiting his involvement in any type of business, securities or banking activities or to be associated with any person practicing in banking or securities activities;
|
|
4.
|
being found by a court of competent jurisdiction in a civil action, the Securities and Exchange Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;
|
|
5.
|
being subject of, or a party to, any federal or state judicial or administrative order, judgment decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
|
|
6.
|
being subject of or party to any sanction or order, not subsequently reversed, suspended, or vacated, of any self-regulatory organization, any registered entity or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.
|
Name and Principal Position
|
Year
|
Salary
|
Bonus
|
Option and Warrant Awards (5)
|
Non-Equity Incentive Plan Compen- sation
|
Change in Pension Value and Non- Qualified Deferred Compensation Earnings ($)
|
All other Compen- sation (6)
|
Total
|
||||||||||||||||||||||
Steve Signoff,
|
2011
|
$ | 75,386 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 932 | $ | 76,318 | |||||||||||||||
Chief Executive Officer,
|
||||||||||||||||||||||||||||||
President and Director (1)
|
||||||||||||||||||||||||||||||
Kendall Carpenter,
VP Finance and
|
2011
|
$ | 114,750 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 2,648 | $ | 117,398 | |||||||||||||||
Administration,
Chief Financial Officer,
|
2010
|
$ | 114,750 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 3,180 | $ | 117,930 | |||||||||||||||
Secretary and Treasurer (2)
|
||||||||||||||||||||||||||||||
Clint Parr, Executive
Vice President
|
2011
|
$ | 148,750 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 3,459 | $ | 152,209 | |||||||||||||||
Former Chief Executive Officer,
|
2010
|
$ | 148,750 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 4,857 | $ | 153,607 | |||||||||||||||
President and Director (3)
|
||||||||||||||||||||||||||||||
Chris Kingham, Vice President (4)
|
2011
|
$ | 114,750 | $ | $0 | $ | 0 | $ | 0 | $ | 0 | $ | 2,169 | $ | 116,919 | |||||||||||||||
2010
|
$ | 114,750 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 1,069 | $ | 115,819 |
(1)
|
For services in 2011, Mr. Signoff received 183,824 shares of restricted stock valued at $.002 per share upon vesting of restricted stock awards. As an incentive bonus at employment in 2011, Mr. Signoff received 100,000 shares of restricted stock valued at $.002 per share upon vesting of restricted stock awards. Mr. Signoff received an option under the 2011 Key Employee Stock Incentive Plan to acquire 1,500,000 shares of common stock at the price of $.50 per share which vest ratably in five increments based on the Company stock trading from $1.00 to $5.00 per share over five trading days. Between August 1 and December 31, 2011, the Company deferred $35,220 in Mr. Signoff’s salary compensation.
|
(2)
|
For services in 2010, Ms. Carpenter received 2,608,626 shares of restricted and S8 registered stock valued at $.001 per share upon vesting of restricted stock awards. Ms. Carpenter received 345,330 shares of S8 registered stock in 2010 valued between $.001 and $.054 per share upon vesting of 2008 and 2009 stock bonus plans. For services in 2011, Ms. Carpenter received 493,267 shares of restricted stock valued between $.001 and $.002 per share upon vesting of restricted stock awards. Ms. Carpenter received 46,833 shares of S8 registered stock in 2011 valued between $.001 and $.20 per share upon vesting of 2008, 2009 and 2010 stock bonus plans. Ms. Carpenter received an option under the 2011 Key Employee Stock Incentive Plan to acquire 200,000 shares of common stock at the price of $.50 per share which vest ratably in five increments based on the Company stock trading from $1.00 to $5.00 per share over five trading days.
|
(3)
|
For services in 2010, Mr. Parr received 4,131,864 shares of restricted stock and S8 registered stock valued at $.001 per share upon vesting of restricted stock awards. Mr. Parr received 387,360 shares of S8 registered stock in 2010 valued between $.001 and $.054 per share upon vesting of 2008 and 2009 stock bonus plans. For services in 2011, Mr. Parr received 815,160 shares of restricted stock valued between $.001 and $.002 per share upon vesting of restricted stock awards. Mr. Parr received 93,400 shares of S8 registered stock in 2011 valued between $.001 and $.20 per share upon vesting of 2008, 2009 and 2010 stock bonus plans. Mr. Parr received an option under the 2011 Key Employee Stock Incentive Plan to acquire 1,000,000 shares of common stock at the price of $.50 per share which vest ratably in five increments based on the Company stock trading from $1.00 to $5.00 per share over five trading days.
|
(4)
|
For services in 2010, Mr. Kingham received 1,069,228 shares of restricted and S8 registered stock valued at $.001 per share upon vesting of restricted stock awards. Mr. Kingham received 114,130 shares of S8 registered stock in 2010 valued between $.001 and $.054 per share upon vesting of 2008 and 2009 stock bonus plans. For services in 2011, Mr. Kingham received 206,498 shares of restricted stock valued between $.001 and $.002 per share upon vesting of restricted stock awards. Mr. Kingham received 37,533 shares of S8 registered stock in 2011 valued between $.001 and $.20 per share upon vesting of 2008, 2009 and 2010 stock bonus plans.
|
(5)
|
Company management have determined that the options and warrants granted have no cash value and as such are calculated as zero dollars ($0.00) toward each executive’s compensation.
|
(6)
|
Fair market value of stock awards based on individual tax elections and moving expense reimbursements.
|
(a) |
Three hundred thousand (300,000) shares upon the Company’s common stock trading at or above $1.00 per share for five consecutive trading days;
|
|
(b)
|
Three hundred thousand (300,000) shares upon the Company’s common stock trading at or above $2.00 per share for five consecutive trading days;
|
(c)
|
Three hundred thousand (300,000) shares upon the Company’s common stock trading at or above $3.00 per share for five consecutive trading days;
|
(d)
|
Three hundred thousand (300,000) shares upon the Company’s common stock trading at or above $4.00 per share for five consecutive trading days; and
|
(e)
|
Three hundred thousand (300,000) shares upon the Company’s common stock trading at or above $5.00 per share for five consecutive trading days.
|
(a)
|
Two hundred forty thousand (240,000) shares upon the Company’s common stock trading at or above $1.00 per share for five consecutive trading days;
|
(b)
|
Two hundred forty thousand (240,000) shares upon the Company’s common stock trading at or above $2.00 per share for five consecutive trading days;
|
(c)
|
Two hundred forty thousand (240,000) shares upon the Company’s common stock trading at or above $3.00 per share for five consecutive trading days;
|
(d)
|
Two hundred forty thousand (240,000) shares upon the Company’s common stock trading at or above $4.00 per share for five consecutive trading days; and
|
(e)
|
Two hundred forty thousand (240,000) shares upon the Company’s common stock trading at or above $5.00 per share for five consecutive trading days.
|
Name
|
Grant Date
|
Date of Approved Equity Award
|
Date of Approved Equity Award
|
Threshold ($)
|
Target ($)
|
Maximum ($)
|
All Other Stock Awards: Number of Share of Stock or Units (#)
|
All Other Option Awards: Number of Securities Underlying Options (#)
|
Exercise or Base Price of Option Awards ($/Share)
|
Grant Date Fair Value of Stock and Option Awards ($)
|
||||||||||||||||||
Steve Signoff
|
8/1/2011
|
8/1/2011
|
100,000 | 1,500,000 | $ | 0.50 | $ | 100 | ||||||||||||||||||||
Kendall Carpenter
|
9/27/2011
|
9/27/2011
|
- | 200,000 | $ | 0.50 | $ | - | ||||||||||||||||||||
Jim McGill
|
9/27/2011
|
9/27/2011
|
- | 400,000 | $ | 0.50 | $ | - | ||||||||||||||||||||
Randy Ritter
|
11/1/2011
|
11/1/2011
|
50,000 | 1,200,000 | $ | 0.50 | $ | 100 | ||||||||||||||||||||
Clint Parr
|
9/27/2011
|
9/27/2011
|
- | 1,000,000 | $ | 0.50 | $ | - | ||||||||||||||||||||
OPTION AWARDS
|
STOCK AWARDS
|
|||||||||||||||
Name
|
Option Grant Date
|
Number of Securities Underlying Unexercised Options (#) Exercisable
|
Number of Securities Underlying Unexercised Options (#) Unexer-cisable
|
Option Exercise Price ($)
|
Option Expiration Date
|
Number of Shares or Units of Stock That Have Not Vested (#)
|
Market Value
of Shares or Units of Stock That Have Not Vested
|
|||||||||
Steve Signoff
|
2011
|
-
|
1,500,000
|
$ |
0.50
|
8/1/2017
|
283,824
|
$ |
17,029
|
|||||||
Kendall Carpenter
|
2011
|
200,000
|
$ |
0.50
|
9/27/2017
|
512,291
|
$ |
30,737
|
||||||||
Kendall Carpenter
|
2010
|
-
|
65,000
|
$ |
3,900
|
|||||||||||
Kendall Carpenter
|
2009
|
35,460
|
16,800
|
$ |
.53 - $2.21
|
9/11/2014
|
80,000
|
$ |
4,800
|
|||||||
Kendall Carpenter
|
2008
|
23,946
|
$ |
.60 - $2.50
|
9/11/2014
|
|||||||||||
Kendall Carpenter
|
2007
|
14,400
|
$ |
0.60
|
9/11/2014
|
|||||||||||
Kendall Carpenter
|
2006
|
26,600
|
$ |
0.60
|
9/11/2014
|
|||||||||||
Jim McGill
|
2011
|
400,000
|
$ |
0.50
|
9/27/2017
|
906,485
|
$ |
54,389
|
||||||||
Jim McGill
|
2010
|
-
|
51,334
|
$ |
3,080
|
|||||||||||
Jim McGill
|
2009
|
85,608
|
22,400
|
$ |
.53 - $2.21
|
9/11/2014
|
33,111
|
$ |
1,987
|
|||||||
Jim McGill
|
2008
|
129,804
|
$ |
.60 - $2.50
|
9/11/2014
|
|||||||||||
Jim McGill
|
2007
|
216,640
|
$ |
0.60
|
9/11/2014
|
|||||||||||
Jim McGill
|
2006
|
236,640
|
$ |
0.60
|
9/11/2014
|
|||||||||||
Jim McGill
|
2005
|
324,720
|
$ |
0.43
|
9/11/2014
|
|||||||||||
Jim McGill
|
2004
|
337,360
|
$ |
0.43
|
9/11/2014
|
|||||||||||
Jim McGill
|
2003
|
235,280
|
$ |
0.43
|
9/11/2014
|
|||||||||||
Jim McGill
|
2002
|
145,340
|
$ |
0.34
|
9/11/2014
|
|||||||||||
Randy Ritter
|
2011
|
-
|
1,200,000
|
$ |
0.50
|
11/1/2017
|
50,000
|
$ |
3,000
|
|||||||
Clint Parr
|
2011
|
1,000,000
|
$ |
0.50
|
9/27/2017
|
812,324
|
$ |
48,739
|
||||||||
Clint Parr
|
2010
|
-
|
92,000
|
$ |
5,520
|
|||||||||||
Clint Parr
|
2009
|
52,691
|
22,400
|
$ |
.53 - $2.21
|
9/11/2014
|
80,000
|
$ |
4,800
|
|||||||
Clint Parr
|
2008
|
69,046
|
$ |
.60 - $2.50
|
9/11/2014
|
|||||||||||
Clint Parr
|
2007
|
107,800
|
$ |
0.60
|
9/11/2014
|
|||||||||||
Clint Parr
|
2006
|
94,200
|
$ |
0.60
|
9/11/2014
|
|||||||||||
Clint Parr
|
2005
|
134,080
|
$ |
0.43
|
9/11/2014
|
|||||||||||
Clint Parr
|
2004
|
163,040
|
$ |
0.43
|
9/11/2014
|
|||||||||||
Clint Parr
|
2003
|
60,000
|
$ |
0.43
|
9/11/2014
|
|||||||||||
Clint Parr
|
2002
|
60,000
|
$ |
0.34
|
9/11/2014
|
Name
|
Fees Earned
or Paid in Cash
|
Stock Awards ($) (1)
|
Total ($)
|
|||||||||
Howard Janzen
|
$ | - | $ | 16,000 | $ | 16,000 | ||||||
David L. Humphrey
|
$ | - | $ | 16,000 | $ | 16,000 | ||||||
John Clerico
|
$ | - | $ | 16,000 | $ | 16,000 | ||||||
Dale A. Schoenfeld
|
$ | - | $ | 16,000 | $ | 16,000 | ||||||
David R. Lawson
|
$ | - | $ | 16,000 | $ | 16,000 | ||||||
Total:
|
$ | - | $ | 80,000 | $ | 80,000 |
(1)
|
Each director received $4,000 of restricted common stock per quarter served on the Board of Directors.
|
·
|
all directors and nominees, naming them,
|
·
|
our executive officers,
|
·
|
our directors and executive officers as a group, without naming them, and
|
·
|
persons or groups known by us to own beneficially 5% or more of our Common Stock or our Preferred Stock having voting rights:
|
Name and address of owner
|
Title of Class
|
Number of Shares Beneficially Owned (1)
|
Percentage of Class (2)
|
||||
Steve L. Signoff (3)
|
Common Stock
|
965,642
|
*
|
||||
James C. McGill (4)
|
Common Stock
|
25,367,522
|
16.57%
|
||||
Howard E. Janzen (5)
|
Common Stock
|
5,390,248
|
4.05%
|
||||
Kendall Carpenter (6)
|
Common Stock
|
4,387,086
|
3.32%
|
||||
Randy Ritter (7)
|
Common Stock
|
428,409
|
*
|
||||
Clint H. Parr (8)
|
Common Stock
|
8,693,133
|
6.37%
|
||||
David L. Humphrey (9)
|
Common Stock
|
1,467,394
|
1.14%
|
||||
John C. Clerico (10)
|
Common Stock
|
52,969,500
|
29.31%
|
||||
Dr. Dale A. Schoenefeld (11)
|
Common Stock
|
1,317,955
|
1.02%
|
||||
David R. Lawson (12)
|
Common Stock
|
5,071,125
|
3.82%
|
||||
Officers and Directors as a Group
|
Common Stock
|
106,058,014
|
45.37%
|
||||
(1)
|
This column represents the total number of votes each named stockholder is entitled to vote upon matters presented to the shareholders for a vote.
|
(2)
|
The percentages in the table have been calculated on the basis of treating as outstanding for a particular person, all shares of our capital stock outstanding on March 2, 2012. On March 2, 2012, there were 127,721,363 shares of our common stock outstanding. To calculate a stockholder's percentage of beneficial ownership, we include in the numerator and denominator the common stock outstanding and all shares of our common stock issuable to that person in the event of the exercise of outstanding options and other derivative securities owned by that person which are exercisable within 60 days of March 2, 2012. Common stock options and derivative securities held by other stockholders are disregarded in this calculation. Therefore, the denominator used in calculating beneficial ownership among our stockholders may differ. Unless we have indicated otherwise, each person named in the table below has sole voting power and investment power for the shares listed opposite such person's name.
|
(3)
|
Represents (i) 100,000 shares of common stock owned; and (ii) 865,642 shares of common stock issued under restrictive stock grants with voting rights.
|
(4)
|
Represents (i) 11,799,915 shares of common stock owned; (ii) 6,737,273 shares of common stock that may be acquired within 60 days through the exercise of outstanding warrants; (iii) 1,711,392 shares of common stock that may be acquired within 60 days through the exercise of outstanding options; (iv) 990,928 shares of common stock issued under restrictive stock grants with voting rights; and (v) convertible debentures which may be converted into 4,128,014 shares of common stock.
|
(5)
|
Represents (i) 1,208,486 shares of common stock owned; (ii) 1,426,456 shares of common stock that may be acquired within 60 days through the exercise of outstanding warrants; and (iii) 240,000 shares of common stock that may be acquired within 60 days through the exercise of outstanding options; and (iv) convertible debentures which may be converted in 2,515,306 shares of common stock.
|
(6)
|
Represents (i) 3,459,183 shares of common stock owned; (ii) 98,406 shares of common stock that may be acquired within 60 days through the exercise of outstanding warrants; (iii) 317,206 shares of common stock that may be acquired within 60 days through the exercise of outstanding options; and (iv) 512,291 shares of common stock issued under restrictive stock grants with voting rights.
|
(7)
|
Represents shares of common stock issued under restrictive stock grants with voting rights.
|
(8)
|
Represents (i) 6,186,095 shares of common stock owned; (ii) 781,857 shares of common stock that may be acquired within 60 days through the exercise of outstanding warrants; (iii) 740,857 shares of common stock that may be acquired within 60 days through the exercise of outstanding options; and (iv) 984,324 shares of common stock issued under restrictive stock grants with voting rights.
|
(9)
|
Represents (i) 732,395 shares of common stock owned; (ii) 240,000 shares of common stock that may be acquired within 60 days through the exercise of outstanding warrants; and (iii) 494,999 shares of common stock that may be acquired within 60 days through the exercise of outstanding options.
|
(10)
|
Represents (i) 30,289,695 shares of common stock owned; (ii) 17,761,234 shares of common stock that may be acquired within 60 days through the exercise of outstanding warrants; (iii) 240,000 shares of common stock that may be acquired within 60 days through the exercise of outstanding options; and (iii) convertible debentures which may be converted into 4,678,571 shares of common stock.
|
(11)
|
Represents (i) 757,955 shares of common stock owned; (ii) 240,000 shares of common stock that may be acquired within 60 days through the exercise of outstanding warrants; and (iii) 320,000 shares of common stock that may be acquired within 60 days through the exercise of outstanding options.
|
(12)
|
Represents (i) 371,551 shares of common stock owned; (ii) 1,454,787 shares of common stock that may be acquired within 60 days through the exercise of outstanding warrants; (iii) 40,000 shares of common stock that may be acquired within 60 days through the exercise of outstanding options; and (iii) convertible debentures which may be converted into 3,204,787 shares of common stock.
|
The following documents are filed as a part of this report or incorporated herein by reference:
|
(1)
|
Our Financial Statements are listed on page F-1 of this Annual Report.
|
|
(2)
|
Financial Statement Schedules: None.
|
3.01
|
Articles of Incorporation, filed as an exhibit to the Registration Statement on Form S-1, filed with the Securities and Exchange Commission (“Commission”) on April 18, 2008 and incorporated herein by reference.
|
|
|
3.02
|
Bylaws, filed as an exhibit to the Registration Statement on Form S-1, filed with the Commission on April 18, 2008 and incorporated herein by reference.
|
|
|
3.03
|
Certificate of Amendment to the Articles of Incorporation, filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on October 6, 2009 and incorporated herein by reference.
|
|
|
3.03
|
Certificate of Amendment to the Articles of Incorporation, filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on October 28, 2011 and incorporated herein by reference.
|
|
|
10.01
|
Form of Subscription and Investor Representation Agreement, filed as an exhibit to the Registration Statement on Form S-1, filed with the Commission on April 18, 2008 and incorporated herein by reference.
|
|
|
10.02
|
Form of Warrant to Purchase Common Stock, filed as an exhibit to the Registration Statement on Form S-1, filed with the Commission on April 18, 2008 and incorporated herein by reference.
|
|
|
10.03
|
Form of Convertible Note Subscription Agreement, filed as an exhibit to the Registration Statement on Form S-1, filed with the Commission on April 18, 2008 and incorporated herein by reference.
|
|
|
10.04
|
Form of Convertible Note, filed as an exhibit to the Registration Statement on Form S-1, filed with the Commission on April 18, 2008 and incorporated herein by reference.
|
|
|
10.05
|
Form of Director Non-Statutory Stock Option Agreement, filed as an exhibit to the Registration Statement on Form S-1, filed with the Commission on April 18, 2008 and incorporated herein by reference.
|
|
|
10.06
|
Form of Non-Statutory Stock Option Agreement, filed as an exhibit to the Registration Statement on Form S-1, filed with the Commission on April 18, 2008 and incorporated herein by reference.
|
|
|
10.07
|
Form of Warrant to Purchase Common Stock issued in connection with Series A Preferred Stock, filed as an exhibit to the Registration Statement on Form S-1, filed with the Commission on April 18, 2008 and incorporated herein by reference.
|
|
|
10.08
|
Form of Warrant to Purchase Common Stock issued in connection with Series B Preferred Stock, filed as an exhibit to the Registration Statement on Form S-1, filed with the Commission on April 18, 2008 and incorporated herein by reference.
|
|
|
10.09
|
Form of Securities Purchase Agreement, dated July 20, 2009, filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on July 24, 2009 and incorporated herein by reference.
|
|
|
10.10
|
Form of Debenture, dated July 20, 2009.
|
|
|
10.11
|
Form of Warrant, dated July 20, 2009.
|
|
|
10.12
|
Form of Securities Purchase Agreement, filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on October 6, 2009 and incorporated herein by reference.
|
|
|
10.13
|
2009 Stock Compensation Plan, filed as an exhibit to the Registration Statement on Form S-8, filed with the Commission on October 13, 2009 and incorporated herein by reference.
|
|
|
10.14
|
Employment Agreement, effective August 1, 2011, by and between MacroSolve, Inc. and Steve Signoff, filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on August 3, 2011 and incorporated herein by reference.
|
|
|
10.15
|
Form of 2010 Convertible Debenture Subscription Agreement, filed as an exhibit to the Quarterly Report on Form 10-Q, filed with the Commission on August 15, 2011 and incorporated herein by reference.
|
|
|
10.16
|
Form of 2010 Debenture, filed as an exhibit to the Quarterly Report on Form 10-Q, filed with the Commission on August 15, 2011 and incorporated herein by reference.
|
|
|
10.17
|
Form of Class B Warrant, filed as an exhibit to the Quarterly Report on Form 10-Q, filed with the Commission on August 15, 2011 and incorporated herein by reference.
|
|
|
10.18
|
Form of 2011 Convertible Debenture Subscription Agreement, filed as an exhibit to the Quarterly Report on Form 10-Q, filed with the Commission on August 15, 2011 and incorporated herein by reference.
|
|
|
10.19
|
Form of 2011 Debenture, filed as an exhibit to the Quarterly Report on Form 10-Q, filed with the Commission on August 15, 2011 and incorporated herein by reference.
|
|
|
10.20
|
Form of Class A Warrant, filed as an exhibit to the Quarterly Report on Form 10-Q, filed with the Commission on August 15, 2011 and incorporated herein by reference.
|
|
|
10.21
|
Form of Subscription Agreement, filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on October 6, 2011 and incorporated herein by reference.
|
|
|
10.22
|
Form of Summary of Terms, filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on October 6, 2011 and incorporated herein by reference. |
|
|
10.23
|
Form of Convertible Debenture, filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on October 6, 2011 and incorporated herein by reference.
|
|
|
10.24
|
Form of Warrant, filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on October 6, 2011 and incorporated herein by reference.
|
|
|
10.25
|
Employment Agreement, effective November 1, 2011, by and between MacroSolve, Inc. and Randy Ritter, filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on November 9, 2011 and incorporated herein by reference.
|
|
|
10.26
|
Form of Subscription Agreement, filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on February 21, 2012 and incorporated herein by reference.
|
|
|
10.27
|
Form of Convertible Debenture, filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on February 21, 2012 and incorporated herein by reference.
|
|
|
10.28
|
Form of Warrant, filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on February 21, 2012 and incorporated herein by reference.
|
|
|
23.01
|
Consent of Independent Registered Public Accounting Firm
|
|
|
14.01
|
Code of Business Conduct and Ethics, filed as an exhibit to the Annual Report on Form 10-K, filed with the Commission on March 30, 2010 and incorporated herein by reference.
|
|
|
31.01
|
Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
31.02
|
Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
32.01
|
Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
101 INS
|
XBRL Instance Document*
|
|
|
101 SCH
|
XBRL Schema Document*
|
|
|
101 CAL
|
XBRL Calculation Linkbase Document*
|
|
|
101 LAB
|
XBRL Labels Linkbase Document*
|
|
|
101 PRE
|
XBRL Presentation Linkbase Document*
|
|
|
101 DEF
|
XBRL Definition Linkbase Document*
|
MACROSOLVE, INC.
|
|||
Date: March 13, 2012
|
By:
|
/s/ STEVE SIGNOFF
|
|
Steve Signoff
|
|||
Chief Executive Officer (Principal Executive Officer)
|
|||
Date: March 13, 2012
|
By:
|
/s/ KENDALL CARPENTER
|
|
Kendall Carpenter
|
|||
Chief Financial Officer (Principal Accounting Officer)
|
Name
|
Position
|
Date
|
||
/s/ JAMES C. MCGILL
|
Director
|
March 13, 2012
|
||
James C. McGill
|
||||
/s/ STEVE SIGNOFF
|
Director
|
March 13, 2012
|
||
Steve Signoff
|
||||
/s/ DAVID L. HUMPHREY
|
Director
|
March 13, 2012
|
||
David L. Humphrey
|
||||
/s/ JOHN CLERICO
|
Director
|
March 13, 2012
|
||
John Clerico
|
||||
/s/ DALE A. SCHOENEFELD
|
Director
|
March 13, 2012
|
||
Dale A. Schoenefeld
|
||||
/s/ HOWARD JANZEN
|
Director
|
March 13, 2012
|
||
Howard Janzen
|
||||
Director
|
March 13, 2012
|
|||
David R. Lawson
|
||||
Report of Independent Registered Public Accounting Firm
|
F-2
|
Balance Sheets as of December 31, 2011 and 2010
|
F-3
|
Statements of Operation for the Years Ended December 31, 2011 and 2010
|
F-4
|
Statements of Stockholders’ Equity for the Years Ended December 31, 2011 and 2010
|
F-5
|
Statements of Cash Flows for the Years Ended December 31, 2011 and 2010
|
F-6
|
Notes to Financial Statements
|
F-7
|
MACROSOLVE, INC.
|
||||||||
BALANCE SHEETS
|
||||||||
12/31/2011
|
12/31/2010
|
|||||||
ASSETS
|
||||||||
CURRENT ASSETS:
|
||||||||
Cash
|
$ | 273,132 | $ | 187,025 | ||||
Accounts receivable - trade
|
288,201 | 31,535 | ||||||
Prepaid expenses and other
|
240,388 | 50,324 | ||||||
Total current assets
|
801,721 | 268,884 | ||||||
PROPERTY AND EQUIPMENT, at cost:
|
285,976 | 254,088 | ||||||
Less - accumulated depreciation and amortization
|
(188,016 | ) | (162,194 | ) | ||||
Net property and equipment
|
97,960 | 91,894 | ||||||
OTHER ASSETS:
|
||||||||
Note receivable
|
135,577 | 135,577 | ||||||
Software development costs, net of accumulated amortization
|
||||||||
of $36,316 and $398,715 as of December 31, 2011 and
|
||||||||
2010, respectively
|
1,280,903 | 938,942 | ||||||
Other assets
|
83,329 | 43,999 | ||||||
Total other assets
|
1,499,809 | 1,118,518 | ||||||
TOTAL ASSETS
|
$ | 2,399,490 | $ | 1,479,296 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
CURRENT LIABILITIES:
|
||||||||
Current maturities of long-term debt
|
$ | - | $ | 34,176 | ||||
Revolving Line of Credit
|
100,000 | - | ||||||
Note Payable - Shareholder
|
169,306 | - | ||||||
Accounts payable - trade and accrued liabilities
|
631,419 | 123,022 | ||||||
Unearned income
|
31,400 | 8,523 | ||||||
Total current liabilities
|
932,125 | 165,721 | ||||||
LONG-TERM DEBT, less current maturities
|
||||||||
Oklahoma Technology Commercialization Center
|
237,500 | 237,500 | ||||||
Convertible debentures
|
2,621,161 | 925,000 | ||||||
Total long-term debt, less current maturities
|
2,858,661 | 1,162,500 | ||||||
COMMITMENTS AND CONTINGENCIES
|
||||||||
STOCKHOLDERS' EQUITY:
|
||||||||
Common stock, $.01 par value; authorized 500,000,000 shares;
|
||||||||
issued and outstanding 122,386,894 and 98,690,490 shares, at
|
||||||||
December 31, 2011 and 2010, respectively
|
1,223,869 | 986,905 | ||||||
Additional paid-in capital
|
10,059,029 | 9,303,920 | ||||||
Accumulated deficit
|
(12,674,194 | ) | (10,139,750 | ) | ||||
Total stockholders' (deficit) equity
|
(1,391,296 | ) | 151,075 | |||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
|
$ | 2,399,490 | $ | 1,479,296 | ||||
The accompanying notes are an integral part of these statements.
|
||||||||
MACROSOLVE, INC.
|
||||||||
STATEMENTS OF OPERATIONS
|
||||||||
For the Years Ended December 31,
|
2011
|
2010
|
||||||
|
||||||||
SALES:
|
||||||||
Software products and licensing
|
1,242,336 | $ | 63,200 | |||||
Solution services
|
443,314 | 496,420 | ||||||
Hardware sales
|
- | 78,216 | ||||||
Net sales
|
1,685,650 | 637,836 | ||||||
COST OF SALES:
|
||||||||
Software products and licensing
|
513,375 | - | ||||||
Solution services
|
315,467 | 253,741 | ||||||
Hardware sales
|
- | 65,195 | ||||||
Total cost of sales
|
828,842 | 318,936 | ||||||
Gross profit
|
856,808 | 318,900 | ||||||
OPERATING EXPENSES:
|
||||||||
Solution services
|
746,481 | 187,460 | ||||||
Depreciation and amortization
|
243,318 | 248,523 | ||||||
Marketing and sales
|
239,769 | 480,692 | ||||||
General and administrative
|
1,893,402 | 1,079,193 | ||||||
Total operating expenses
|
3,122,970 | 1,995,868 | ||||||
Loss from operations
|
(2,266,162 | ) | (1,676,968 | ) | ||||
OTHER INCOME (EXPENSE):
|
||||||||
Interest income
|
134 | 662 | ||||||
Interest expense
|
(170,675 | ) | (138,833 | ) | ||||
Loss on sale of asset
|
(235 | ) | - | |||||
Stock based compensation
|
(97,506 | ) | (108,404 | ) | ||||
Total other expense
|
(268,282 | ) | (246,575 | ) | ||||
LOSS BEFORE INCOME TAXES
|
(2,534,444 | ) | (1,923,543 | ) | ||||
INCOME TAXES
|
- | - | ||||||
NET LOSS
|
(2,534,444 | ) | $ | (1,923,543 | ) | |||
LOSS ALLOCABLE TO COMMON STOCKHOLDERS:
|
||||||||
Net loss
|
(2,534,444 | ) | $ | (1,923,543 | ) | |||
Loss allocable to common stockholders
|
(2,534,444 | ) | $ | (1,923,543 | ) | |||
Basic and diluted loss per share
|
(0.02 | ) | $ | (0.03 | ) | |||
The accompanying notes are an integral part of these statements.
|
||||||||
MACROSOLVE, INC.
|
||||||||||||||||
STATEMENTS OF STOCKHOLDERS' EQUITY
|
||||||||||||||||
For the Years Ended December 31, 2011 and 2010
|
||||||||||||||||
Additional
|
||||||||||||||||
Common
|
Paid-in
|
Accumulated
|
||||||||||||||
Stock
|
Capital
|
Deficit
|
Total
|
|||||||||||||
BALANCE, at December 31, 2009
|
$ | 496,112 | $ | 7,176,360 | $ | (8,216,182 | ) | $ | (543,710 | ) | ||||||
Net Loss
|
- | - | (1,923,543 | ) | (1,923,543 | ) | ||||||||||
Common Stock issued for Services
|
4,395 | 12,105 | - | 16,500 | ||||||||||||
Common Stock issued for Debenture Interest
|
51,680 | 100,370 | - | 152,050 | ||||||||||||
Common Stock issued to Investors
|
232,628 | 2,095,075 | - | 2,327,703 | ||||||||||||
Compensation expense related to
|
||||||||||||||||
stock awards
|
202,090 | (79,990 | ) | (25 | ) | 122,075 | ||||||||||
BALANCE, at December 31, 2010
|
$ | 986,905 | $ | 9,303,920 | $ | (10,139,750 | ) | $ | 151,075 | |||||||
Net Loss
|
- | - | (2,534,444 | ) | (2,534,444 | ) | ||||||||||
Common Stock issued for Services
|
174,675 | 572,275 | - | 746,950 | ||||||||||||
Common Stock issued to Investors
|
23,042 | 126,958 | - | 150,000 | ||||||||||||
Compensation expense related to
|
||||||||||||||||
stock awards
|
39,247 | 55,876 | - | 95,123 | ||||||||||||
BALANCE, at December 31, 2011
|
$ | 1,223,869 | $ | 10,059,029 | $ | (12,674,194 | ) | $ | (1,391,296 | ) | ||||||
The accompanying notes are an integral part of these statements.
|
MACROSOLVE, INC.
|
||||||||
STATEMENTS OF CASH FLOWS
|
||||||||
For the Years Ended December 31,
|
2011
|
2010
|
||||||
OPERATING ACTIVITIES:
|
||||||||
Net loss
|
$ | (2,534,444 | ) | $ | (1,923,543 | ) | ||
Adjustments to reconcile net loss to net cash
|
||||||||
(used in) provided by operating activities:
|
||||||||
Depreciation and amortization
|
243,319 | 248,522 | ||||||
Stock based compensation
|
95,123 | 95,351 | ||||||
Issuance of stock for services
|
746,950 | 43,250 | ||||||
Issuance of stock for debenture interest
|
- | 152,050 | ||||||
Changes in current assets and liabilities:
|
||||||||
(Increase) decrease in accounts receivable - trade
|
(256,666 | ) | 72,326 | |||||
Decrease (increase) in inventory
|
11,840 | (10,388 | ) | |||||
(Increase) decrease in prepaid expenses and other
|
(201,906 | ) | 1,440 | |||||
Increase (decrease) in accounts payable - trade and
|
||||||||
accrued liabilities
|
363,798 | (65,493 | ) | |||||
Increase (decrease) in accrued debenture interest
|
144,600 | (26,422 | ) | |||||
Increase (decrease) in unearned income
|
22,877 | (61,633 | ) | |||||
Net cash (used in) operating activities
|
(1,364,509 | ) | (1,474,540 | ) | ||||
INVESTING ACTIVITIES:
|
||||||||
Purchase of equipment
|
(33,775 | ) | (15,336 | ) | ||||
Sale of digiTicket assets
|
- | 416,569 | ||||||
Disposal of equipment
|
237 | 616 | ||||||
Software development costs
|
(579,563 | ) | (368,820 | ) | ||||
Patent application fees
|
- | (22,271 | ) | |||||
Net cash (used in) provided by investing activities
|
(613,101 | ) | 10,758 | |||||
FINANCING ACTIVITIES:
|
||||||||
Deferred offering costs
|
(17,573 | ) | 1,422 | |||||
Issuance of stock for debenture conversion
|
150,000 | - | ||||||
Proceeds from debenture financing
|
2,400,000 | 1,647,816 | ||||||
Repayment of debenture financing
|
(875,000 | ) | - | |||||
Repayments of notes payable
|
(34,176 | ) | (49,551 | ) | ||||
Proceeds from shareholder loan, including accrued interest
|
398,305 | 286,189 | ||||||
Repayment of shareholder loan, including accrued interest
|
(57,839 | ) | (286,189 | ) | ||||
Proceeds from bank line of credit
|
300,000 | - | ||||||
Repayment of bank line of credit
|
(200,000 | ) | - | |||||
Net cash provided by financing activities
|
2,063,717 | 1,599,687 | ||||||
NET INCREASE IN CASH
|
86,107 | 135,905 | ||||||
CASH, beginning of period
|
187,025 | 51,120 | ||||||
CASH, end of period
|
$ | 273,132 | $ | 187,025 | ||||
The accompanying notes are an integral part of these statements.
|
||||||||
2011
|
2010
|
|||||||
Hardware
|
$ | 128,990 | $ | 98,220 | ||||
Furniture and fixtures
|
109,413 | 109,413 | ||||||
Office equipment
|
24,904 | 23,786 | ||||||
Leasehold improvements
|
22,669 | 22,669 | ||||||
285,976 | 254,088 | |||||||
Less - accumulated depreciation
|
188,016 | 162,194 | ||||||
$ | 97,960 | $ | 91,894 |
3.
|
NOTE RECEIVABLE
|
Note receivable at December 31, 2011 and 2010 consist of the following: | 2011 | 2010 | ||||||
Convertible promissory note with a customer negotiated as part of a strategic alliance. Under the Master Services Agreement, customer may borrow up to $150,000 to finance development work with interest accrued monthly at prime rate plus 5% (8.25% at September 30, 2009), due June 30, 2011. The note may be converted to common stock of the borrower prior to the due date at MacroSolve’s discretion. The Company is currently evaluating the conversion option. | ||||||||
$ | 135,577 | $ | 135,577 | |||||
4.
|
DEBENTURES AND NOTES PAYABLE
|
Notes payable at December 31, 2011 and 2010 consist of the following: | 2011 | 2010 | ||||||
On July 17, 2011, the Company began offering its Convertible Debentures Series 2011 and Series B Warrants to purchase common stock to accredited investors. The Debentures mature on December 31, 2016. The Company has not established a minimum or maximum offering size; its goal is $1,000,000 in aggregate subscriptions exclusive of the exchange of previously issued debentures. The proceeds from this offering will be used by the Company for working capital to increase its market share from the sale of mobile apps in dining and other vertical markets and may include working capital for acquired companies. The offering will continue until December 31, 2011 unless terminated by the Company at an earlier date. | ||||||||
The 2011 Debentures will earn interest at the annual rate of 12% which will be paid quarterly exclusively from the Debenture Account at management’s discretion. Principal on the Debentures will be prepaid quarterly as the Debenture Account permits. The Debenture Account will be set up with a financial institution for the deposit of 25% of any recovery it receives from any judgment or settlement in any infringement case or claim it prosecutes. The Debentures may be converted to common stock by the holder into the number of shares that could have been purchased with 200% of the principal amount of the Debenture, together with accrued and unpaid interest and the shares valued using the weighted average price for a five-day trading period preceding the Debenture investment provided however, that the conversion price shall not be less than ten cents per share at any time and the conversion price shall not be more than ten cents per share for investments made prior to October 1, 2011. By resolution of the Board on December 16, 2011, the ten cent conversion price per share was extended to investments made after October 1, 2011. The Investors will also acquire Common Stock Series B Warrants in an amount equal to the shares of common stock that could be purchased at the Debenture conversion price. Each warrant has a term of five years. | $ | 896,161 | $ | - | ||||
On April 11, 2011, the Company began offering its Convertible Debentures Series 2011 and Series A Warrants to purchase common stock to accredited investors. The Debentures mature on December 31, 2016. The Company has not established a minimum or maximum offering size; its goal is $1,000,000 in aggregate subscriptions exclusive of the exchange of previously issued debentures. The proceeds from this offering will be used by the Company for working capital to increase its market share from the sale of mobile apps in dining and other vertical markets and may include working capital for acquired companies. The offering will continue until December 31, 2011 unless terminated by the Company at an earlier date. The offering was closed on July 13, 2011 with a total of $950,000 in new investments and $725,000 in converted investments. | ||||||||
The 2011 Debentures will earn interest at the annual rate of 12% which will be paid quarterly exclusively from the Debenture Account. Principal on the Debentures will be prepaid quarterly as the Debenture Account permits. The Debenture Account will be set up with a financial institution for the deposit of 25% of any recovery it receives from any judgment or settlement in any infringement case or claim it prosecutes. The Debentures may be converted to common stock by the holder into the number of shares that could have been purchased with 200% of the principal amount of the Debenture, together with accrued and unpaid interest and the shares valued using the weighted average price for a five-day trading period preceding the Debenture investment. The Investors will also acquire Common Stock Series A Warrants in an amount equal to the shares of common stock that could be purchased at 50% of the Debenture conversion price. Each warrant has a term of five years. | $ | 1,675,000 | $ | - | ||||
On November 8, 2010, the Company began selling Convertible Debentures Series 2010 plus Series B Warrants. The Company has not established a minimum or maximum offering size; however, it exceeded its goal of $750,000 in aggregate subscriptions. The debentures accrue interest at 2.0% per annum with interest paid at maturity. The offering was closed on November 17, 2010. | ||||||||
The debentures may be prepaid in full for one hundred and fifty percent (150%) of the face amount of the debenture if notice of prepayment is given by the Company before July 1, 2011. Prepayment may be made in cash or shares of common stock at the election of the Company. If the prepayment is made in shares of common stock the shares will be valued at the volume weighted average price of the shares for the five-day trading period before the notice of prepayment. |
The Debentures may be converted into Common Stock by the holders after June 30, 2011, or upon notice of prepayment by the Company if notice is given before that date. Upon conversion the holder will be entitled to receive the number of shares of Common Stock that could be purchased with two hundred percent (200%) of the face amount of the Debentures together with accrued interest and with the Common Stock valued using the weighted average price for the five-day trading period before the notice of conversion. | ||||||||
Investors will acquire common stock purchase warrants, designated by the Company as Class B Warrants, in an amount equal to fifty percent (50%) of the shares of common stock that would be issued upon conversion of the Debentures upon issue. The Warrants will have a termination date of December 31, 2015 and have an initial exercise price equal to the weighted average price of the common stock upon grant of the Warrants. | ||||||||
During 2011, eleven of the fifteen investors elected to convert a total of $725,000 Debenture Series 2010 plus Series B Warrants to Debenture Series 2011 and Series A Warrants simultaneously with their purchase of the new offering and three of the investors elected to convert a total of $150,000 debentures into 2,304,203 shares of common stock. | $ | 50,000 | $ | 925,000 | ||||
Advancing term loan with a financial institution of up to $125,000 with interest only payable monthly at prime rate plus 2.0% (5.25% at September 30, 2010), until January, 2009, with principal and interest due at prime rate plus 2.0% amortized ratably over 30 months, due August 31, 2011, and secured by substantially all assets of the company. | $ | - | $ | 34,176 | ||||
Advancing term loan with a financial institution of up to $100,000 with interest only payable monthly at the greater of 5.75% or prime rate plus 1.0% (4.25% at December 31, 2011), until September 2012, and secured by substantially all assets of the company and the personal guaranty of a company director. In exchange for the guaranty, the director receives a $3,000 commitment fee and a five year warrant to purchase $100,000 of stock with a strike price of ten cents ($0.10) per share. | $ | 100,000 | $ | - | ||||
Note from the State of Oklahoma Technology Business Finance Program (OTCC loan) represented by a $150,000 refundable award to be repaid at two times the amount of the award. The balance includes accrued interest (imputed at 14.27%), through September 2007. The repayment terms were modified in September, 2007 to require 24 equal monthly installments of $12,500, consisting of principal only, beginning May, 2008. The monthly payments were suspended in October 2008 with resumption anticipated upon significant equity raise. | $ | 237,500 | $ | 237,500 | ||||
As of December 31, 2011, maturities of long-term debt are: $-0- in 2011 and $2,687,500 thereafter. |
5.
|
SHAREHOLDER LOANS
|
|
Stock Options and Restricted Stock Awards
|
|
The Company adopted the MacroSolve, Inc. Compensation and Stock Option Plan 2008-2010 on December 16, 2008. The Plan includes use of stock options for compensation of officers and directors. At the adoption date, 2,674,420 options which have been approved by shareholders remained available for use by the Compensation Committee of the Board of Directors. During 2011 and 2010, 1,761,569 and 335,000 options were issued, respectively, as follows:
|
At Adoption | Issued | Issued | Issued | |||||||||||||||||
Date
|
2011
|
2010
|
2009
|
Remaining
|
||||||||||||||||
Incentive Stock Options for Key Managers
|
1,300,000 | (1,076,000 | ) | - | (224,000 | ) | 0 | |||||||||||||
Director Stock Options
|
400,000 | (80,000 | ) | (160,000 | ) | (160,000 | ) | 0 | ||||||||||||
Other Awards and Reserves
|
974,420 | (605,569 | ) | (175,000 | ) | (193,851 | ) | 0 | ||||||||||||
Total
|
2,674,420 | (1,761,569 | ) | (335,000 | ) | (577,851 | ) | 0 |
|
The Plan also involves three separate incentive awards: (1) The Employee Bonus awards involve annual (or quarterly) payments of cash or restricted stock for attainment of goals. All employees will participate in the Employee Bonus program; (2) The Management Incentive Stock Option Plan awards involve annual issuance of stock options for attainment of goals. Only officers of the Company will participate in these awards; and, (3) The Senior Executive Incentive Stock Option Plan awards involve issuance of stock options for attainment of specific goals associated with public financing of the Corporation and public trading of its shares. Only the Chairman of the Board and the Chief Executive Officer will participate in these awards. As of December 31, 2011, all awards in the MacroSolve, Inc. Compensation and Stock Option Plan 2008-2010 had been granted.
|
|
On September 23, 2011, shareholders approved 10,000,000 shares of restricted common stock for management incentive plans. On that date, the Company adopted the 2011 MacroSolve, Inc. Key Employee Stock Incentive Plan. The purpose of this Plan is to provide competitive incentives that will enable the Company to attract, retain, motivate, and reward Key Employees of the Company. The approved shares may be granted as Stock Bonus Awards, Performance Unit Awards, or Restricted Stock Awards, and/or Options, which may be Incentive Stock Options or Non-Statutory Stock Options. During 2011, 4,368,431 options were issued, as follows:
|
At Adoption
|
Issued
|
Remaining
|
||||||||||
Date
|
2011
|
|||||||||||
Beginning Bal
|
10,000,000 |
|
||||||||||
Director Stock Options
|
(1,720,000 | ) | ||||||||||
Incentive Stock Options for Key Managers
|
(2,126,564 | ) | ||||||||||
Non-Statutory Stock Options for Key Managers
|
(491,867 | ) | ||||||||||
Incentive Stock Options for Key Employees | (30,000 | ) | ||||||||||
Bal Avail @ 12/31/11
|
10,000,000 | (4,368,431 | ) | 5,631,569 |
|
At the end of the second quarter 2010, employees were granted 941,500 shares of registered compensation shares under the 2010 Employee Bonus award plan. These shares will be distributed on a three year vesting schedule to employees who remain with the Company as of the distribution dates. The Company valued these awards at $942 which was the amount of compensation employees elected to take within 30 days of the grant on 83(b) elections filed with the Internal Revenue Service. The restricted stock award agreements bear a substantial risk of forfeiture by the employee in the event of their voluntary termination. Since grant, 155,500 shares have been forfeited by terminated employees. On July 12, 2011, 271,168 shares vested to fourteen employees. Remaining unvested shares are 257,418 and 257,414 which will vest on July 12, 2012 and 2013 respectively.
|
|
Prior to going public, the company used the calculated value method to account for the options. Under this method, a nonpublic entity that is unable to estimate the expected volatility of the price of its underlying share may measure awards based on a “calculated value,” which substitutes the volatility of an appropriate index for the volatility of the entity’s own share price. Although the Company became publicly traded in August 2008, the stock has been so thinly traded from that time until the present, that management determined it was unable to estimate the expected volatility of the stock price. In addition, management has not been able to identify a similar publicly held entity that can be used as a benchmark. Therefore, as a substitute for volatility, the Company used the historical volatility of the Technology Select Sector (XLK) index which is representative of the Company’s industry. The Company has used the historical closing values of that index to estimate volatility for the valuation of options in 2011 and 2010.
|
Stock Options | Restricted Stock | |||||||||||
Options
|
Weighted
Average
Exercise Price
|
Shares
|
||||||||||
Outstanding – December 31, 2010
|
5,774,763 | $ | 0.56 | 8,354,801 | ||||||||
Exercisable – December 31, 2010
|
5,620,763 | $ | 0.51 | - | ||||||||
Granted
|
6,130,000 | $ | 0.49 | 3,395,757 | ||||||||
Exercised or Vested
|
(252,350 | ) | $ | 0.93 | (8,647,702 | ) | ||||||
Forfeited or Expired
|
(75,256 | ) | $ | 0.58 | (112,500 | ) | ||||||
Outstanding – December 31,, 2011
|
11,829,507 | $ | 0.52 | 2,990,356 | ||||||||
Exercisable – December 31, 2011
|
5,801,057 | $ | 0.52 | - |
Stock Options | ||||||||||||
Nonvested Shares
|
Options
|
Weighted-
Average Grant
Date.Calculated Value
|
Restricted
Stock
|
|||||||||
Nonvested - Beginning of Year 2011
|
154,000 | $ | - | 8,354,801 | ||||||||
Granted
|
6,130,000 | $ | - | 3,395,757 | ||||||||
Vested
|
(252,350 | ) | $ | - | (8,647,702 | ) | ||||||
Forfeited
|
(3,200 | ) | $ | - | ( 112,500 | ) | ||||||
Nonvested- End of year
|
6,028,450 | $ | - | 2,990,356 |
|
Investors in the 2011 Convertible Debenture plus Series A Warrants acquired 18,475,927 common stock purchase warrants, in an amount equal to one hundred percent (100%) of the shares of common stock that would be issued upon conversion of the Debentures upon issue. The Warrants expire on December 31, 2016 and bear strike prices ranging from $0.063 to $0.109.
|
|
Investors in the Convertible Debentures Series 2010 plus Series B Warrants acquired 1,535,160 common stock purchase warrants, designated by the Company as Class B Warrants, in an amount equal to fifty percent (50%) of the shares of common stock that would be issued upon conversion of the Debentures upon issue. The Warrants expire on December 31, 2015 and bear strike prices ranging from $0.26180 to $0.32972. In 2011, eleven of the original fifteen investors elected to convert their investment to the convertible Debenture Series 2011 plus Series A Warrant, and as a result 1,191,569 of these warrants were cancelled and 343,591 remaining outstanding.
|
|
The investors in the 2009 debenture financing are awarded warrants with a $0.10 exercise price in an amount equal to their staged investment and with an expiration date of July 30, 2014. A total of 7,292,637 warrants were issued in 2010.
|
|
The Company engaged a financial advisory firm in 2011 and three of their associates received warrants to purchase an aggregate of 1,050,000 shares of common stock at a strike price of $.115. The warrants have a five year life and will expire October 31, 2015. The Company engaged an investment banking firm to provide financial advisory services in 2010. As a retainer, six of their financial advisors received warrants to purchase an aggregate of 600,000 shares of common stock at a strike price of $0.05. The warrants have a five year life and will expire by July 7, 2015.
|
|
In September 2011, the company placed a $100,000 credit facility with a bank, secured by the personal guarantee on one direct. In exchange for the guaranty, the director received a warrant to purchase 1,000,000 shares of common stock at a strike price of $0.10. The warrant has five year life and will expire on September 30, 2015. In September 2010, the Company placed a $200,000 credit facility with a bank, secured by the personal guarantees of two company directors. In exchange for the guarantees, each director a warrant to purchase 1,000,000 shares of common stock at a strike price of $0.10. The warrants have a five year life and will expire on September 30, 2015.
|
|
|
|
The following table summarizes information about outstanding warrants at December 31, 2011:
|
Year Issued
|
Number
Outstanding
|
Remaining Contractual Life in Years
|
Number Currently Exercisable
|
Weighted Average Exercise
Price
|
||||||||||||
2007
|
166,680
|
.1
|
166,680
|
$
|
0.60
|
|||||||||||
2008
|
-
|
-
|
-
|
-
|
||||||||||||
2009
|
27,682,372
|
2.4
|
27,682,372
|
$
|
0.10
|
|||||||||||
2010
|
10,236,227
|
3.1
|
10,236,227
|
$
|
0.10
|
|||||||||||
2011
|
29,680,086
|
4.7
|
29,680,086
|
0.10
|
||||||||||||
Total
|
67,765,365
|
3.3
|
67,765,365
|
$
|
0.10
|
|
The Company issued a total of 4,851,341 common shares in the quarter ended March 31, 2011, described further as follows:
|
|
The Company’s independent directors annual compensation is $16,000 to be paid quarterly in restricted stock. The Company issued the directors 87,910 shares of restricted stock on April 1, 2011 for their fourth quarter 2010 compensation.
|
|
|
The Company issued 738,434 compensation shares to employees for services rendered in the third and fourth quarters of 2010 which had been accrued at a value of $738 in stock based compensation. The shares were awarded on Restricted Stock Agreements which have a six month time lapse restriction and are subject to forfeiture upon voluntary termination of employment.
|
|
The Company engaged a national public relations firm for services valued at $8,000 per month, of which $2-$4,000 per month will be paid in common stock. The Company issued 8,137 shares of stock in exchange for services rendered in December 2010 valued at $2,000.
|
|
The Company engaged two firms who provide both public relations and investor relations services for six months of services valued at $440,000, of which $400,000 was paid by issuance of 4,000,000 shares of common stock.
|
|
The Company had a stock bonus plan for the fourth quarter of 2008 which resulted in 16,860 shares of common stock being issued to employees at a value of $3,372 in stock based compensation. These shares represent the second year of a three year vesting period.
|
|
In March 2011, the Company offered its employees a ninety day voluntary salary deferral plan while the Convertible Debenture Series 2011 funding was finalized. As an incentive to participate, each employee received a five year warrant to buy common stock at $.20 equal to the amount of their deferral. A total of 192,645 warrants were issued. The deferred salaries were repaid in June 2011.
|
|
The Company issued a total of 843,678 common shares and cancelled a total of 65,000 in the quarter ended June 30, 2011, described further as follows:
|
|
The Company’s independent directors annual compensation is $16,000 to be paid quarterly in restricted stock. The Company issued the directors 93,895 shares of restricted stock on April 1, 2011 for their first quarter 2011 compensation.
|
|
|
The Company issued 615,714 shares of common stock to management employees in lieu of $112,500 cash compensation for services rendered in the first quarter of 2011, which had been recorded at a value of $616 in stock based compensation based upon individual tax elections made by each recipient. The shares vest six months after issuance and are subject to forfeiture upon voluntary termination of employment. During the second quarter of 2011, 65,000 compensation shares previously issued for services were forfeited.
|
|
The Company issued 20,000 shares of restricted common stock to its local public relations firm in exchange for $3,000 in services rendered in the first quarter of 2011. The Company issued 47,619 shares of restricted stock to its national public relations firm in exchange for $10,000 in services rendered in the first quarter of 2011.
|
|
The Company had stock bonus plans for the third and fourth quarters of 2008 and the first quarter of 2009 which fully vested in June 2011, resulting in 66,450 shares of common stock being issued to employees at a value of $7,309 in stock based compensation.
|
|
|
The Company issued a total of 8,245,414 common shares and cancelled a total of 47,500 in the quarter ended September 30, 2011, described further as follows:
|
|
The Company’s independent directors annual compensation is $16,000 to be paid quarterly in restricted stock. The Company issued the directors 151,515 shares of restricted stock on July 1, 2011 for their second quarter 2011 compensation.
|
|
|
The Company issued 48,000 shares of restricted common stock to a former employee in exchange for $6,000 in services rendered in the second quarter of 2011. The Company issued 90,909 shares of restricted stock to its national public relations firm in exchange for $12,000 in services rendered in the second quarter of 2011. The Company issued 15,000 shares of restricted stock to two financial advisors, the first receiving 10,000 shares in exchange for $1,500 in services and the second receiving 5,000 shares for $2,500 in services. The Company issued a total of 137,037 registered compensation shares to three software subject matter experts for $15,000 in total services. The Company issued a total of 2,000,000 shares of restricted stock to its investor relations firms for six months expanded services valued at $20,000.
|
|
On September 29, 2011, the Company entered into a Business Development and Services agreement with an investment banking firm. A one-time retainer fee of $200,000 for the twelve month agreement was paid by issuance of 4,000,000 shares of restricted common stock.
|
|
The Company issued 378,788 shares of restricted stock each to two investors in the Convertible Debenture Series 2010 who elected to convert their $25,000 debenture on July 1, 2011 at the weighted average price for the five-day trading period before the notice of conversion which was $.066. Each investor received $308 to settle the accrued interest on their debenture.
|
|
The Company issued a total of 9,868,471 shares of common stock in the quarter ended December 31, 2011, described further as follows:
|
|
The Company’s independent directors annual compensation is $16,000 to be paid quarterly in restricted stock. The Company issued the directors 160,000 shares of restricted stock on October 1, 2011 for their third quarter 2011 compensation. The Company recorded $4,000 in stock based compensation for each of its five independent directors.
|
|
|
The Company issued 1,011,030 shares of common stock to management employees in lieu of $137,500 cash compensation for services rendered in the third quarter of 2011 and 50,000 shares of common stock to an executive as an employment bonus, which had been recorded at a value of $2,122 in stock based compensation based upon individual tax elections made by each recipient. The shares vest six months after issuance and are subject to forfeiture upon voluntary termination of employment.
|
|
The Company issued 1,546,627 shares of restricted stock each to an investor in the Convertible Debenture Series 2010 who elected to convert his $100,000 debenture on October 10, 2011 at the weighted average price for the five-day trading period before the notice of conversion which was $.065. The investor received $1,859 to settle the accrued interest on his debenture.
|
9.
|
EARNINGS (LOSS) PER SHARE |
|
The Company has calculated the loss allocable to the common shareholders for the 2011 and 2010 as follows:
|
|
||||||||
2011
|
2010
|
|||||||
Numerator:
|
||||||||
Net Loss
|
$ | (2,534,444 | ) | $ | (1,923,543 | ) | ||
Numerator for basic and diluted
|
$ | (2,534,444 | ) | $ | (1,923,543 | ) | ||
Denominator:
|
||||||||
Weighted-average number of
|
||||||||
common shares outstanding
|
108,447,365 | 72,838,487 | ||||||
$ | (0.02 | ) | $ | (0.03 | ) | |||
10.
|
INCOME TAXES
|
|
2011
|
2010
|
||||||
Deferred tax assets:
|
||||||||
Net operating loss carryforwards
|
$ | 2,459,000 | $ | 3,550,000 | ||||
Stock-based compensation
|
98,000 | 108,000 | ||||||
Total deferred tax assets
|
$ | 2,557,000 | 3,658,000 | |||||
Valuation allowance
|
(1,977,000 | ) | (3,629,000 | ) | ||||
Net deferred tax assets
|
580,000 | 29,000 | ||||||
Deferred tax liabilities:
|
||||||||
Property, equipment and software
|
||||||||
development costs
|
580,000 | 29,000 | ||||||
Total deferred tax liabilities
|
580,000 | 29,000 | ||||||
Net deferred tax asset
|
$ | - | $ | - |
11.
|
401(k) PLAN
|
12.
|
RELATED PARTY TRANSACTION
|
|
There were no related party transactions other than the shareholder loans discussed in footnote five.
|
13.
|
COMMITMENTS AND CONTINENGENCIES
|
|
At December 31, 2011, the Company was obligated under an operating lease for certain office space for approximately $12,000 per month. Commitments for this lease, which expires on September 19, 2013, are as follows:
|
2012
|
$
|
147,000
|
||
2013
|
$
|
105,000
|
||
$
|
252,000
|
14.
|
CONCENTRATIONS
|
|
Financial instruments, which potentially subject the Company to concentrations of credit risk, consist primarily of trade receivables. The Company performs ongoing credit evaluations of its customers and generally does not require collateral related to its receivables. At December 31, 2011, accounts receivable from seven customers comprised approximately 87% of the Company’s total accounts receivable – trade. Revenues from twelve customer approximated 79% of total revenues for 2011. At December 31, 2010, accounts receivable from three customers comprised approximately 79% of the Company’s total accounts receivable – trade. Revenues from one customer approximated 61% of total revenues for 2010.
|
15.
|
SUBSEQUENT EVENTS
|
|
The Company’s independent directors annual compensation is $16,000 to be paid quarterly in restricted stock. The Company issued the directors 363,635 shares of restricted stock on January 1, 2012 for their fourth quarter 2011 compensation. The Company recorded $4,000 in stock based compensation for each of its five independent directors.
|
16.
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
|
|
2011
|
2010
|
||||||
Interest
|
$ | 20,789 | $ | 13,205 | ||||
Income taxes
|
$ | - | $ | - | ||||
Noncash investing and financing activities for the years ended December 31:
|
||||||||
2011 | 2010 | |||||||
Stock based compensation
|
$ | 95,123 | $ | 95,351 | ||||
Stock issued for services
|
$ | 746,950 | $ | 43,250 | ||||
Debentures and Notes converted to common stock
|
$ | 150,000 | $ | 2,326,280 | ||||
$______ | Registered Debentureholder: |
____________ | |
____________ | |
____________ |
|
Until and unless it shall be changed in accordance with a subsequent provision in this subsection 2.d, the Conversion Price for the Common Stock shall be $0.10 per share.
|
|
Each term listed in this subsection 2.d shall have the meaning given in this subsection 2.d(2) whenever it is used in this Agreement.
|
|
Reverse Stock Split: Any of the following occurrences shall be deemed to be a "Reverse Stock Split": (i) any amendment to the Company's Certificate of Incorporation which shall have the effect of reducing the number of shares of Common Stock held by every holder of the Common Stock by the same proportion without providing for any distribution of anything of value to such holders in exchange for the shares lost by reason of such occurrence and (ii) any other occurrence which shall be similar in its substantive effect to the occurrence specified in clause (i) of this sentence.
|
|
Stock Dividend: Any of the following occurrences shall be deemed to be a "Stock Dividend": (i) any distribution of shares of Common Stock pro rata to the holders of outstanding Common Stock in order to effect a stock dividend or stock split, (ii) any stock split or other subdivision of the Common Stock effected by means of an amendment to the Company's Certificate of Incorporation or otherwise, or (iii) any other occurrence which (A) shall have the effect of increasing by the same proportion the number of shares of Common Stock held by every holder of Common Stock issued in connection with such occurrence or (B) shall otherwise be similar in substantive effect to any of the occurrences specified in clause (i) or clause (ii) of this sentence.
|
|
Immediately after the effective time for any Stock Dividend or Reverse Stock Split, the Conversion Price shall change to the product derived by multiplying (i) the Conversion Price in effect immediately prior to such effective time by (ii) the Adjustment Fraction applicable with respect to such Stock Dividend or Reverse Stock Split.
|
|
For purposes of this Debenture, a "Fundamental Change" shall be deemed to have occurred if there shall be: (i) any consolidation to which the Company shall be a party, (ii) any merger in which the Company shall not survive, (iii) any merger in which the Common Stock outstanding immediately prior to such merger shall be exchanged for or converted into any cash, securities or other property, (iv) any complete liquidation of the Company, or (v) any partial liquidation of the Company for which the approval of the holders of Common Stock is required or which is involuntary.
|
|
As a condition to the consummation of any Fundamental Change, lawful and adequate provision shall be made whereby the Debentureholder, if such holder shall not make a conditional conversion election pursuant to Section 2.e(2), will immediately after the consummation of such Fundamental Change have the right to convert this Debenture into such shares of stock, securities or assets which such holder could have received in such Fundamental Conversion if such holder had made a conditional conversion of this Debenture pursuant to Subsection 2.e(2). In each such case appropriate provision will be made with respect to such holder's rights and interests to the end that the provisions of Section 2 shall thereafter be applicable in relation to any shares of stock, securities or assets thereafter deliverable upon the conversion of this Debenture to provide such holder with protections after such Fundamental Change substantially equivalent to the protections provided by Section 2 prior to such Fundamental Change.
|
|
(1) any interest owed shall be past due and shall have been past due for thirty (30) days; or
|
|
(3)
|
the Company shall be in breach of any other covenant or warranty of the Company in this Debenture, the Debenture Purchase Agreement of even date herewith entered into by the Debentureholder as partial consideration for this Debenture or the Warrant issued by the Company with this Debenture and such breach shall have continued for at least thirty (30) days after there has been given to the Company by the holder, a written notice specifying such breach and requiring it to be remedied and stating that such notice is a "notice of default" hereunder; or
|
(4)
|
a decree or order by a court having jurisdiction in the premises shall have been entered adjudicating the Company a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization of the Company under the Federal Bankruptcy Code or any other similar applicable Federal or state law, and such decree or order shall have been in effect for a period of sixty (60) days; or a decree or order of a court having jurisdiction in the premises for the appointment of a receiver or liquidator or trustee or assignee in bankruptcy or insolvency of the Company or of any property of the Company or for the winding up or liquidation of its affairs shall be in effect and shall have been in effect for a period of sixty (60) days; or
|
|
(5)
|
the Company or any subsidiary shall have instituted proceedings to be adjudicated a voluntary bankrupt, or shall consent to the filing of a bankruptcy proceeding against it, or shall have filed a petition or answer or consent seeking reorganization under the Federal Bankruptcy Code or any other applicable Federal or state law, or shall have consented to the filing of any such petition, or shall consent to the appointment of a receiver or liquidator or trustee or assignee in bankruptcy or insolvency of it or of its property, or shall have made an assignment for the benefit of creditors, or shall have admitted in writing its inability to pay its debts generally as they become due, or corporate action shall be taken by the Company or any subsidiary in furtherance of any of the aforesaid purposes; or
|
|
(6)
|
the Debentureholders holding more than fifty percent (50%) in face amount of Debentures determine in their sole discretion that an event has occurred that has had or is likely to have a material adverse affect on the financial conditions or the business prospects of the Company; or
|
|
(7)
|
the Company fails to achieve any revenue, cash flow or operating milestone set forth in Exhibit F to the Securities Purchase Agreement between the Company and the Debentureholder (“Exhibit F to the SPA”).
|
MacroSolve, Inc. | |||
Dated: July ___, 2009
|
By:
|
||
Name: Clint H. Parr | |||
Title: Chief Executive Officer | |||
Issuer: | MacroSolve, Inc. |
Class of Stock: | Common Stock |
Issue Date: | July __, 2009 |
Expiration Date: | July 30, 2014 |
MacroSolve, Inc.
1717 South Boulder Ave.
Suite 700
Tulsa, OK 74119
Attention: Chief Executive Officer
|
if to the Holder, to: |
The address shown in the Holder’s Buyer Signature Page to the
Purchase Agreement
|
MacroSolve, Inc. | |||
|
|
||
By: Clint H. Parr
|
|||
Title: Chief Executive Officer | |||
1.
|
I have reviewed this annual report on Form 10-K of MacroSolve, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonable likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.
|
1.
|
I have reviewed this annual report on Form 10-K of MacroSolve, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonable likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.
|
By:
|
/s/ STEVE SIGNOFF
|
|||
Date: March 13, 2012
|
Name:
|
Steve Signoff
|
||
Title:
|
Chief Executive Officer
|
By:
|
/s/ KENDALL CARPENTER
|
|||
Date: March 13, 2012
|
Name:
|
Kendall Carpenter
|
||
Title:
|
Chief Financial Officer
|
NOTE RECEIVABLE
|
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2011
|
|||||||||||||||||||||||||||||||||||||||||||||||
Accounts, Notes, Loans and Financing Receivable, Gross, Allowance, and Net [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||
NOTE RECEIVABLE |
|
'0O:F%V87-C