Get Started for Free Contexxia identifies hard-to-find pieces of information in SEC filings. No more highlighters, no more redlining, no more poring over huge documents. BLUE CALYPSO, INC. (1399587) 10-Q published on Nov 10, 2016 at 4:01 pm
Reporting Period: Sep 29, 2016
This report contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical facts included or incorporated by reference in this quarterly report on Form 10-Q, including without limitation, statements regarding our future financial position, business strategy, budgets, projected revenues, projected costs and plans and objective of management for future operations, are forward-looking statements. In addition, forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “will,” “expects,” “intends,” “plans,” “projects,” “estimates,” “anticipates,” or “believes” or the negative thereof or any variation thereon or similar terminology or expressions.
On July 31, 2012, the Company filed suit against Groupon, Inc. in the Eastern District of Texas in Civil Action No. 6:12-cv-00486. The Company filed additional suits against IZEA, Inc. on October 17, 2012, Yelp, Inc. on October 17, 2012, and Foursquare Labs, Inc. on October 31, 2012 in Civil Action Nos. 6:12-cv-786, 6:12-cv-788, 6:12-cv-837, respectively. Each of these cases alleged that the defendants infringed U.S. Patent Nos. 7,664,516 entitled “Method and System for Peer-to-Peer Advertising Between Mobile Communication Devices” and 8,155,679 entitled “System and Method for Peer-to-Peer Advertising Between Mobile Communication Devices.” The Company subsequently added U.S. Patent Nos. 8,438,055, 8,452,646, and 8,457,670 to the cases, alleging each defendant infringed the newly added patents. Each of the defendants answered, denying infringement and claiming that the asserted patents were invalid. Groupon, Yelp, and Foursquare filed counterclaims for declaratory judgment that the asserted patents were invalid and not infringed.
The Company measures the cost of services received in exchange for an award of equity instruments based on the fair value of the award. For employees and directors, the fair value of the award is measured on the grant date and for non-employees, the fair value of the award is generally re-measured on vesting dates and interim financial reporting dates until the service period is complete. The fair value amount is then recognized over the period during which services are required to be provided in exchange for the award, usually the vesting period. Stock-based compensation expense is recorded by the Company in the same expense classifications in the consolidated statements of operations, as if such amounts were paid in cash. Net other expense primarily consisted of 283,387 in terminated offering costs, $97,085 in interest expense offset by $188,093 in other income associated with the change in fair value of our derivative liability. With the exception of minor interest expense, no similar expenses or income occurred during the three months ended September 30, 2016.
Net Loss. For the three months ended September 30, 2016, we had a net loss of $1,109,288, as compared to a net loss of $792,942 for the three months ended September 30, 2015. The increase in net loss resulted primarily from a decrease in revenue and a net increase in operating expenses of $257,399, comprised of a decrease in cost of sales of $272,373, sales and marketing of $32,445 and depreciation and amortization of $47,044, net with an increase in general and administrative of $609,261. In addition, we incurred net other expenses of $192,379 for the three months ended September 30, 2015.
On July 23, 2016, in connection with his appointment as Chairman of the Company’s Board of Directors, Harold Brierley received a restricted stock award of 600,000 shares of the Company’s common stock (the “Shares”) pursuant to the Blue Calypso 2016 Long-Term Incentive Plan. On October 12, 2016, Mr. Brierley resigned from his position as Chairman and as a member of the Company’s Board of Directors. In connection with his resignation and transition to the Company’s Advisory Board, Mr. Brierley originally agreed to forfeit 400,000 of the Shares. Following is resignation, the Company and Mr. Brierley discussed potential additional incentives for Mr. Brierley’s continued service on the Company’s Advisory Board. On November 7, 2016, the Board of Directors of the Company approved the reinstatement of Mr. Brierley’s full restricted stock award in accordance with the original terms of the grant. The Shares were issued pursuant to an exemption from registration provided by Section 4(a)(2) of the Securities Act.