Company: MFON
Filing Date: 2025-06-06
Form Type: 10-Q
Source: 0001641172-25-014006
Chunk: 88

Company: MOBIVITY HOLDINGS CORP.
Filing Date: 2025-06-06
Form: 10-Q
Item: Part I, Item 8
Chunk 88
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Note.

Acquisition of Certain Contracts by SMS Factory

On September 25, 2024, the Company entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”) with SMS Factory,
Inc., a Florida corporation (“SMS Factory”). Pursuant to the Asset Purchase Agreement, SMS Factory purchased all of the right,
title and interest in the Company’s SMS/MMS text messaging customer accounts, excluding certain Excluded Assets (as defined in the
Asset Purchase Agreement) utilized in the operation of the Company’s SMS/MMS text messaging platform business (the “Business
Assets”) effective as of September 25, 2024 (the “Closing Date”).

In consideration for the Business Assets, SMS Factory is expected to assume certain Performance Obligations and pay to the Company, for
a period of two years following the Closing Date, an Earn-Out Payment in an amount equal to two times the Gross Profit earned from each
Customer Account, including an upfront pre-payment of the Earn-Out Payment equal to $303,000. The Asset Purchase Agreement includes customary
representations, warranties and covenants by the parties.

24

Results of Operations

Revenues

Revenues consist primarily of those generated by a
suite of products under the Recurrency platform. The Recurrency platform is comprised of POS Data Capture, Analytics, Offers and Promotions,
Predictive Offers, Personalized Receipt Promotions, Customized Mobile Messaging, Belly Loyalty, and other revenues.

Revenues for the three months ended March 31, 2025,
were $513,311 an increase of $214,077 compared to $299,234 for the same period in 2024.

This increase is primarily due to an increase of Connected
Rewards revenue.

Cost of Revenues

Cost of revenues consists primarily of cloud-based
software licensing fees, short code maintenance expenses, messaging-related expenses, and other expenses.

Cost of revenues for the three months ended March
31, 2025, was $239,593, an increase of $194,659, or 433%, compared to $44,934 for the same period in 2024.

This increase is primarily due to an increase in Connected Rewards
revenue resulting in a higher cost of good sold. As revenue from SMS and MMS services grew, the associated direct costs of delivering these services also rose.

Bad Debt Expense

Bad Debt expense for the three months ended March
31, 2025 was $1692, an increase of $1,692, or 100