UNITED STATES
SECURITIES AND
EXCHANGE COMMISSION
WASHINGTON, DC
20549
FORM 10-Q
(Mark One)
| x | QUARTERLY
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the fiscal quarter ended June 30, 2015 |
or
| ¨ | TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from
_______________ to _______________.
Commission file number 000-54074
ADAPTIVE MEDIAS, INC.
(Exact name of Registrant
as specified in its charter)
Nevada |
|
26-0685980 |
(State or other jurisdiction of |
|
(I.R.S. Employer Identification No.) |
incorporation or organization) |
|
|
16795 Von Karman
Avenue, Suite 240
Irvine, CA 92606
(Address of principal
executive offices - Zip Code)
Registrant's telephone
number, including area code: 949-525-4634
Securities registered
pursuant to Section 12(b) of the Act: NONE
Securities registered
pursuant to Section 12(g) of the Act: Common Stock
Indicate
by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days. Yes x
No ¨
Indicate
by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files). Yes x No
¨
Indicate by check mark whether the Registrant is a large accelerated
filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated
filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check
one):
|
Large accelerated filer ¨ |
Accelerated filer ¨ |
|
|
|
|
|
|
Non-accelerated filer ¨
(Do not check if a smaller reporting company) |
Smaller reporting company x |
|
Indicate
by check mark whether the Registrant is a shell company (as defined by Rule 12b-2 of the Act). Yes ¨
No x
As of August 15, 2015, there were 18,682,344 shares of the
Registrant's common stock outstanding.
ADAPTIVE MEDIAS, INC.
Table of Contents
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements.
ADAPTIVE MEDIAS, INC.
Condensed Consolidated Balance Sheets
(Unaudited)
| |
June 30, | | |
December 31, | |
| |
2015 | | |
2014 | |
Assets | |
| | | |
| | |
Current Assets | |
| | | |
| | |
Cash | |
$ | 62,248 | | |
$ | 2,255,784 | |
Accounts receivable, net | |
| 1,219,129 | | |
| 1,754,893 | |
Prepaid expenses | |
| 633,306 | | |
| 61,478 | |
Total Current Assets | |
| 1,914,683 | | |
| 4,072,155 | |
Furniture and fixtures, net | |
| 65,389 | | |
| 72,476 | |
Intangible assets, net | |
| 6,832,765 | | |
| 8,018,170 | |
Deposits | |
| 5,793 | | |
| 34,843 | |
Total Assets | |
$ | 8,818,630 | | |
$ | 12,197,644 | |
Liabilities and Stockholders' Equity | |
| | | |
| | |
Current Liabilities | |
| | | |
| | |
Accounts payable and accrued expenses | |
$ | 8,183,943 | | |
$ | 4,686,991 | |
Total Liabilities | |
| 8,183,943 | | |
| 4,686,991 | |
Stockholders' Equity | |
| | | |
| | |
Preferred stock, $0.001 par value, 50,000,000 shares authorized; none outstanding | |
| - | | |
| - | |
Common stock, $0.001 par value, 300,000,000 shares authorized; 16,782,344
and 13,869,771 shares issued and outstanding at June 30, 2015 and December 31, 2014, respectively | |
| 16,782 | | |
| 13,866 | |
Additional paid-in capital | |
| 51,381,684 | | |
| 47,669,503 | |
Accumulated deficit | |
| (50,763,779 | ) | |
| (40,172,716 | ) |
Total Stockholders' Equity | |
| 634,687 | | |
| 7,510,653 | |
Total Liabilities and Stockholders' Equity | |
$ | 8,818,630 | | |
$ | 12,197,644 | |
The accompanying notes are an integral
part of these condensed consolidated financial statements.
ADAPTIVE MEDIAS, INC.
Condensed Consolidated Statements of
Operations
(Unaudited)
| |
Three Months Ended | | |
Six Months Ended | |
| |
June
30, | | |
June
30, | |
| |
2015 | | |
2014 | | |
2015 | | |
2014 | |
| |
| | |
| | |
| | |
| |
Revenue | |
$ | 1,097,827 | | |
$ | 1,113,185 | | |
$ | 2,265,546 | | |
$ | 1,844,788 | |
Cost of revenue | |
| 1,070,485 | | |
| 723,678 | | |
| 2,040,844 | | |
| 1,168,038 | |
Gross Profit | |
| 27,342 | | |
| 389,507 | | |
| 224,702 | | |
| 676,750 | |
Operating expenses: | |
| | | |
| | | |
| | | |
| | |
Legal and professional fees | |
| 503,126 | | |
| 185,471 | | |
| 856,545 | | |
| 308,287 | |
Research and development | |
| 17,471 | | |
| 314,973 | | |
| 174,443 | | |
| 454,861 | |
General and administrative expenses | |
| 1,263,170 | | |
| 1,041,815 | | |
| 6,378,782 | | |
| 1,579,134 | |
Selling expenses | |
| 29,172 | | |
| 345,300 | | |
| 304,359 | | |
| 533,924 | |
Depreciation and amortization | |
| 646,356 | | |
| 120,260 | | |
| 1,301,918 | | |
| 239,872 | |
Stock compensation expense | |
| 1,137,464 | | |
| 341,798 | | |
| 1,715,097 | | |
| 661,102 | |
Total operating expenses | |
| 3,596,759 | | |
| 2,349,617 | | |
| 10,731,144 | | |
| 3,777,180 | |
Loss from operations | |
| (3,569,417 | ) | |
| (1,960,110 | ) | |
| (10,506,442 | ) | |
| (3,100,430 | ) |
Other income (expense): | |
| | | |
| | | |
| | | |
| | |
Other income | |
| 43,177 | | |
| 4,189 | | |
| 47,119 | | |
| 6,283 | |
Gain (loss) on extinguishment of debt | |
| (75,494 | ) | |
| 35,378 | | |
| (75,494 | ) | |
| (43,636 | ) |
Interest expense | |
| (30,669 | ) | |
| (1,535 | ) | |
| (56,246 | ) | |
| (1,535 | ) |
Total other income (expense) | |
| (62,986 | ) | |
| 38,032 | | |
| (84,621 | ) | |
| (38,888 | ) |
Net loss | |
$ | (3,632,403 | ) | |
$ | (1,922,078 | ) | |
$ | (10,591,063 | ) | |
$ | (3,139,318 | ) |
| |
| | | |
| | | |
| | | |
| | |
Basic and dilutive loss per common share | |
$ | (0.23 | ) | |
$ | (0.32 | ) | |
$ | (0.72 | ) | |
$ | (0.56 | ) |
Weighted average numbers of shares outstanding - basic and diluted | |
| 15,486,250 | | |
| 6,007,039 | | |
| 14,772,753 | | |
| 5,647,959 | |
The accompanying notes are an integral
part of these condensed consolidated financial statements.
ADAPTIVE MEDIAS, INC.
Condensed Consolidated Statement of
Stockholders' Equity
| |
Common
Stock | | |
Additional | | |
Accumulated | | |
Total
Stockholders' | |
| |
Shares | | |
Amount | | |
Paid-In Capital | | |
Deficit | | |
Equity | |
Balance December 31,
2014 | |
| 13,869,771 | | |
$ | 13,866 | | |
$ | 47,669,503 | | |
$ | (40,172,716 | ) | |
$ | 7,510,653 | |
Shares issued for services | |
| 747,912 | | |
| 751 | | |
| 1,548,124 | | |
| - | | |
| 1,548,875 | |
Shares issued for Cash | |
| 2,164,661 | | |
| 2,165 | | |
| 1,997,835 | | |
| - | | |
| 2,000,000 | |
Stock option expense | |
| - | | |
| - | | |
| 166,222 | | |
| - | | |
| 166,222 | |
Net loss | |
| - | | |
| - | | |
| - | | |
| (10,591,063 | ) | |
| (10,591,063 | ) |
Balance June 30, 2015 | |
| 16,782,344 | | |
$ | 16,782 | | |
$ | 51,381,684 | | |
$ | (50,763,779 | ) | |
$ | 634,687 | |
The accompanying notes are an integral
part of these condensed consolidated financial statements.
ADAPTIVE MEDIAS, INC.
Condensed Consolidated Statements of
Cash Flows
(Unaudited)
| |
For the six months ended, | |
| |
June
30, | |
| |
2015 | | |
2014 | |
Cash flows from operating activities: | |
| | | |
| | |
Net loss | |
$ | (10,591,063 | ) | |
$ | (3,139,318 | ) |
Adjustments to reconcile from net loss to net cash used in operating activities: | |
| | | |
| | |
Depreciation and amortization | |
| 1,301,918 | | |
| 239,872 | |
Allowance for bad debts | |
| 40 | | |
| 46,169 | |
Loss on extinguishment of debt | |
| - | | |
| 44,279 | |
Common stock issued for services/interest | |
| 1,548,875 | | |
| 500,484 | |
Stock option expense | |
| 166,222 | | |
| 211,666 | |
Changes in operating assets and liabilities | |
| | | |
| | |
Accounts receivable | |
| 535,724 | | |
| (932,946 | ) |
Prepaid expenses | |
| (571,828 | ) | |
| 270,486 | |
Deposits | |
| 29,050 | | |
| (54,675 | ) |
Accounts payable and accrued expenses | |
| 3,496,952 | | |
| 791,658 | |
Net cash used in operating activities | |
| (4,084,110 | ) | |
| (2,022,325 | ) |
| |
| | | |
| | |
Cash flows from investing activities: | |
| | | |
| | |
Purchases of property and equipment | |
| (4,859 | ) | |
| (4,570 | ) |
Purchases and development of intangibles | |
| (104,567 | ) | |
| (29,172 | ) |
Net cash used in investing activities | |
| (109,426 | ) | |
| (33,742 | ) |
| |
| | | |
| | |
Cash flows from financing activities: | |
| | | |
| | |
Payments of convertible notes payable | |
| - | | |
| (275,000 | ) |
Proceeds from issuance of common stock | |
| 2,000,000 | | |
| 2,455,874 | |
Net cash provided by financing activities | |
| 2,000,000 | | |
| 2,180,874 | |
| |
| | | |
| | |
Net increase (decrease) in cash | |
| (2,193,536 | ) | |
| 124,807 | |
Cash, beginning of period | |
| 2,255,784 | | |
| 22,188 | |
Cash, end of period | |
$ | 62,248 | | |
$ | 146,995 | |
| |
| | | |
| | |
Supplemental disclosure of cash flow information: | |
| | | |
| | |
Cash paid during the period for: | |
| | | |
| | |
Interest | |
$ | 56,246 | | |
$ | 1,535 | |
Income taxes | |
$ | - | | |
$ | - | |
Supplemental disclosure of non-cash investing and financing activities: | |
| | | |
| | |
Increase in prepaid common stock compensation | |
$ | - | | |
$ | 346,667 | |
Common stock issued to settle accounts payable | |
$ | - | | |
$ | 29,880 | |
Issuance of common stock for repayment of convertible
note payable | |
$ | - | | |
$ | 105,000 | |
The accompanying notes are an integral
part of these condensed consolidated financial statements.
ADAPTIVE MEDIAS, INC.
Notes to Condensed Consolidated Financial
Statements
Note 1 - Organization and Nature of
Business
Adaptive Medias, Inc., formerly known
as “Mimvi, Inc.” and prior to that as “Fashion Net, Inc.” (“Adaptive Medias” or the “Company”),
was formed on August 7, 2007 under the laws of the State of Nevada. The Company, through its core content monetization platform
and technology, provides app developers, publishers and video content developers one of the only end-to-end monetization platforms
driven by programmatic algorithms. The Company provides these unique capabilities to monetize content efficiently across multiple
marketing channels, including mobile, video and online display advertising.
Pursuant to votes of the majority of the
Board of Directors and shareholders, effective on November 6, 2013, the Company changed its name to Adaptive Medias, Inc. in order
to better and more fully demonstrate the Company’s emphasis on providing a supply-side platform for mobile, video and online
display advertising. In connection with the name change, effective on November 6, 2013, the Company’s ticker symbol was
changed to ADTM.
The Company is a programmatic audience
and content monetization company for website owners, app developers and video publishers who want to more effectively optimize
content through advertising. Adaptive Medias provides a foundation for publishers and developers looking to engage brand advertisers
through a multi-channel approach that delivers integrated, engaging and impactful ads across multiple devices. The Company meets
the needs of its publishers with an emphasis on maintaining user experience, while delivering timely and relevant ads through
its multi-channel ad delivery and content platform.
Media Graph Transaction
On July 15, 2014, the Company executed
a Stock Purchase Agreement (the “Agreement”), effective June 30, 2014, with OneScreen, Inc., a Delaware corporation
(“OneScreen”), Media Graph, Inc., a Nevada corporation and OneScreen’s spun-off former subsidiary (“Media
Graph”), and the shareholders of Media Graph (the “Selling Shareholders”) whereby the Company acquired certain
assets of OneScreen, which immediately prior thereto were held by Media Graph, in exchange for 5,000,000 shares of the Company’s
common stock (the “Acquisition”). On July 15, 2014, the parties to the Agreement executed the First Amendment to the
Stock Purchase Agreement (the “Amendment”), which (i) amended the effective date of the Agreement to July 15, 2014,
(ii) limited the scope of Section 5.04 of the Agreement to apply only to the Restricted Selling Shareholders, as defined in the
Amendment, and (iii) added the Selling Shareholders as a signatory to the Agreement.
The following table summarizes the estimated
fair values of the assets acquired and liabilities assumed at the date of acquisition and the allocation of the purchase price
to the fair value of net assets acquired:
Fixed assets | |
$ | 82,112 | |
Intangibles | |
| 6,320,000 | |
Goodwill | |
| 8,597,888 | |
Total purchase price allocated | |
$ | 15,000,000 | |
ADAPTIVE MEDIAS, INC.
Notes to Condensed Consolidated Financial
Statements
Note 2 – Basis of Presentation
and Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed consolidated
financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission.
Certain information and footnote disclosures normally included in the consolidated financial statements prepared in accordance
with U.S. generally accepted accounting principles have been condensed or omitted in accordance with such rules and regulations.
On April 14, 2014, the shareholders of
the Company authorized its Board of Directors to effectuate a reverse stock split, in the Board’s discretion (the “Reverse
Stock Split”), which was ultimately declared effective by the Board of Directors as of the close of business on July 14,
2014. As a result of the Reverse Stock Split, every thirty (30) issued and outstanding shares of the Company’s common stock
was changed and converted into one (1) share of common stock. Following the Reverse Stock Split, the Company continues to have
300,000,000 shares of common stock authorized for issuance, but the number of outstanding shares of the Company’s common
stock was reduced from 192,364,735 shares to 6,412,225 shares. As required by the Financial Accounting Standards Board’s
(FASB”) Accounting Standards Codification (“ASC”) Topic 260-10-55-12 “Earnings per Share”
all share and per-share computations presented in these condensed consolidated financial statements are based on the new number
of shares after the Reverse Stock Split.
The unaudited condensed consolidated financial
statements should be read in conjunction with the consolidated financial statements included in the Form 10-K for the year ended
December 31, 2014. In the opinion of management, all adjustments considered necessary for the fair presentation consisting
solely of normal recurring adjustments, have been made. Operating results for the period ended June 30, 2015 are not
necessarily indicative of the results that may be expected for the year ending December 31, 2015.
Principles of Consolidation
The unaudited condensed consolidated
financial statements include the Company and its wholly-owned subsidiaries. All significant intercompany accounts and transactions
have been eliminated in consolidation.
Going Concern
The Company’s unaudited condensed
consolidated financial statements are prepared using generally accepted accounting principles in the United States of America
applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course
of business. The Company has not yet established an ongoing source of revenue sufficient to cover its operating costs and allow
it to continue as a going concern. As of June 30, 2015, the Company had an accumulated deficit of $50,763,779. The ability of
the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until
it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease or reduce its operations.
In order to continue as a going concern,
the Company will need, among other things, additional capital resources. The Company will continue to raise funds through the
sale of its equity securities to obtain additional operating capital. The Company is dependent upon its ability, and will continue
to attempt, to secure additional equity and/or debt financing until the Company can earn revenue and realize positive cash flow
from its operations. There are no assurances that the Company will be successful in earning revenue and realizing positive cash
flow from its operations. Without sufficient financing it would be unlikely that the Company will continue as a going concern.
Based on the Company’s current rate
of cash outflows, cash on hand and proceeds from the prior sale of equity securities, management believes that its current cash
will not be sufficient to meet the anticipated cash needs for working capital for the next 12 months. The Company’s plans
with respect to its liquidity issues include, but are not limited to, the following:
| 1) | Continue to issue restricted stock
for compensation due to consultants and for its legacy accounts payable in lieu of cash
payments; and |
| 2) | Seek additional capital in the
public equity markets to continue its operations as it rolls out its current products
in development, responds to competitive pressures, develops new products and services,
and supports new strategic partnerships. The Company is currently evaluating additional
equity financing opportunities and may execute them when appropriate. However, there
can be no assurances that the Company can consummate such a transaction, or consummate
a transaction at favorable pricing. |
The ability of the Company to continue
as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and
eventually secure other sources of financing and achieve profitable operations. These condensed consolidated financial statements
do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification
of liabilities that might result from this uncertainty.
ADAPTIVE MEDIAS, INC.
Notes to Condensed Consolidated Financial
Statements
Reclassifications
Certain reclassifications have been made
to amounts in prior periods to conform to the current period presentation. All reclassifications have been applied consistently
to the periods presented.
Use of Estimates
The preparation of financial statements
in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those
estimates.
Revenue Recognition
The Company recognizes revenue when earned
and related costs of sales and expenses when incurred. The Company recognizes revenue in accordance with FASB ASC Topic 605-10-599, Revenue
Recognition, Overall, SEC Materials ("Section 605-10-599"). Section 605-10-599 requires that four basic criteria
must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services
rendered; (3) the fee is fixed and determinable; and (4) collectability is reasonably assured. Cost of revenue consists of the
cost of the purchased goods and labor related to the corresponding sales transaction. When a right of return exists, the Company
defers revenues until the right of return expires. The Company recognizes revenue from services at the time the services are completed.
Intangible assets
Intangible assets consisting of websites,
customer lists, content and publisher relationships, developed technology and trade names are stated at cost. Expenditures of
costs incurred to renew or extend the term of a recognized intangible asset and materially extend the useful life are capitalized.
When assets are sold or otherwise written off due to asset impairment, the cost and the related accumulated amortization are removed
from the accounts and any realized gain or loss is recognized at that time. Useful lives of intangible assets are periodically
evaluated for reasonableness and the assets are tested for impairment whenever events or changes in circumstances indicate that
the carrying amount may no longer be recoverable.
Internal Use Software Development Costs
The Company incurs costs to develop software
for internal use. The Company expenses all costs that relate to the planning and post implementation phases of development as
research and development expense. The Company capitalizes costs when preliminary efforts are successfully completed, management
has authorized and committed project funding, and it is probable that the project will be completed and will be used as intended.
Costs incurred for enhancements that are expected to result in additional material functionality are capitalized. The Company
capitalized $104,567 and $29,170 in internal use software costs during the six months ended June 30, 2015 and 2014, respectively,
which are included in intangible assets on the accompanying unaudited condensed consolidated balance sheets.
Amortization commences when the software
for internal use is ready for its intended use and the amortization period is the estimated useful life of the related asset,
which is generally two to three years. Amortization expense totaled $60,105 and $547 for the six months ended June 30, 2015 and
2014, respectively.
Net Income (Loss) Per Share
Net loss per share is provided in accordance
with FASB ASC 260-10, Earnings per Share. Basic net loss per common share ("EPS") is computed by dividing
net income (loss) available to common stockholders by the weighted average number of common shares outstanding for the period.
Diluted earnings per share is computed by dividing net income (loss) by the weighted average shares outstanding, assuming all
dilutive potential common shares were issued, unless doing so is anti-dilutive. The weighted average number of common shares outstanding
for computing basic and diluted EPS for the six months ended June 30, 2015 and 2014 were 14,772,753 and 5,647,959, respectively.
The weighted average number of common shares outstanding for computing basic and diluted EPS for the three months ended June 30,
2015 and 2014 were 15,486,250 and 6,007,039, respectively. Potential dilutive common shares for the three and six months ended
June 30, 2015 and 2014 were 8,265,194 and 8,939,964, respectively, and were not used in the calculation of diluted EPS as the
impact would be anti-dilutive.
ADAPTIVE MEDIAS, INC.
Notes to Condensed Consolidated Financial
Statements
Recently Issued Accounting Pronouncements
In May 2014, the FASB and the International
Accounting Standards Board jointly issued ASU No. 2014-9, Revenue from Contracts with Customers, which clarifies the principles
for recognizing revenue and develops a common revenue standard for U.S. GAAP and International Financial Reporting Standards.
The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services
to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods
and services. The ASU, as amended, is effective for public entities for annual and interim periods beginning after December 15,
2017. Early adoption is not permitted under U.S. GAAP and retrospective application is permitted, but not required. The Company
is currently evaluating the impact of adopting this guidance on its consolidated financial position and results of operations.
In August 2014, the FASB issued ASU No.
2014-15, Presentation of Financial Statement-Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity's
Ability to Continue as a Going Concern, which provides guidance under U.S. GAAP about management’s responsibility to
evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related
footnote disclosures. In doing so, the amendments should reduce diversity in the timing and content of footnote disclosures. The
ASU is effective for all entities and for annual periods ending after December 15, 2016, and interim periods within annual periods
beginning after December 15, 2016. Early adoption is permitted. The adoption of ASU No. 2014-15 is not expected to have a significant
impact on the Company’s consolidated financial statements and related disclosures.
Note 3 – Intangible Assets
The following table summarizes the intangible assets as of
June 30, 2015 and December 31, 2014.
| |
Useful
Lives | |
June 30, 2015 | | |
December 31, 2014 | |
| |
| |
| | |
| |
Websites | |
2 years | |
$ | 11,297 | | |
$ | 11,297 | |
Customer lists | |
1 years | |
| 306,505 | | |
| 306,505 | |
Developed technology | |
3 years | |
| 4,987,601 | | |
| 4,883,034 | |
Trade names | |
3 years | |
| 85,607 | | |
| 85,607 | |
| |
| |
| 5,391,010 | | |
| 5,286,443 | |
| |
| |
| | | |
| | |
Less: accumulated amortization | |
| |
$ | (2,956,209 | ) | |
$ | (1,666,237 | ) |
| |
| |
| | | |
| | |
Identifiable intangibles, net | |
| |
| 2,434,801 | | |
| 3,620,206 | |
| |
| |
| | | |
| | |
Goodwill | |
| |
| 4,397,964 | | |
| 4,397,964 | |
| |
| |
| | | |
| | |
Intangible assets, net | |
| |
$ | 6,832,765 | | |
$ | 8,018,170 | |
For the six months ended June 30, 2015
and 2014, the amortization of intangible assets was $1,289,972 and $239,294 respectively. . For the three months ended June 30,
2015 and 2014, the amortization of intangible assets was $639,754 and $119,220 respectively.
Note 4 – Income Taxes
The Company had net operating loss carryforwards
(“NOLs”) as of December 31, 2014 of approximately $35.5 million for federal tax purposes and approximately $34.7
million for state tax purposes, portions of which are expiring at various years through 2034. The Company may be able to
utilize its NOLs to reduce future federal and state income tax liabilities. However, these NOLs are subject to various limitations
under Internal Revenue Code (“IRC”) Section 382. IRC Section 382 limits the use of NOLs to the extent there has been
an ownership change of more than 50 percentage points. In addition, the NOL carryforwards are subject to examination by the taxing
authority and could be adjusted or disallowed due to such exams. Although the Company has not undergone an IRC Section 382 analysis,
it is possible that the utilization of the NOLs could be significantly limited. No provision for income taxes has been recorded
during the three and six month periods ended June 30, 2015 and 2014 due to the losses incurred.
ADAPTIVE MEDIAS, INC.
Notes to Condensed Consolidated Financial
Statements
Note 5 – Notes Payable
As of June 30, 2015, there were no outstanding
notes payable. On February 10, 2014, the Company settled all obligations under a previously issued convertible note payable and
cancelled the 133,334 warrants in exchange for: (i) the conversion of $105,000 of note principal at $2.25 per share, for a total
of 46,667 shares of Company common stock, pursuant to the terms of the convertible note; and (ii) a cash payment of $275,000.
The terms of this settlement were memorialized in the Settlement and General Release Agreement. This agreement settled all outstanding
obligations with the note holder. In connection with this transaction, the Company recognized a loss on the settlement of the
debt in the amount of $79,014 in its operating results for the period ending June 30, 2014.
Note 6 – Stockholders’
Equity
Issuance of
Common Stock
During the six months ended June 30, 2015,
the Company issued 747,912 shares of its common stock for to various employees and consultants in exchange for services rendered.
The aggregate fair value of these issuances was $1,548,871. Additionally, the Company issued and sold 2,164,661 shares of its
common stock (including 981,229 shares related to anti-dilution clauses) to an accredited investor for an aggregate purchase price
of $2,000,000. The total number of shares outstanding as of June 30, 2015 was 16,782,344.
During the six
months ended June 30, 2014, the Company issued 298,204 shares of its common stock to various consultants in exchange for services
rendered with an aggregate fair value of $1,058,817. The Company also issued 46,667 shares of its common stock in connection with
the settlement of a convertible note with a fair value of $105,000 (note 5). Additionally, the Company issued and sold 1,095,334
shares of its common stock to several accredited investors for an aggregate purchase price of $2,464,499. Finally, in the six
months ended June 30, 2014, the Company issued 8,998 shares of its common stock for settlement of $29,880 of accounts payable
or $3.32 per share on average. The total number of shares outstanding as of June 30, 2014 was 6,412,225.
ADAPTIVE MEDIAS, INC.
Notes to Condensed Consolidated Financial
Statements
Note 7 – Warrants and Options
Stock Option Plans
The Company’s shareholders approved
the Company’s 2010 Stock Incentive Plan (the “2010 Plan”) on November 2, 2010. The Plan provides for the grant
of non-statutory or incentive stock options, stock appreciation rights, restricted stock, restricted stock units, and other stock-based
awards to the Company’s employees, Officers, Directors or consultants. The Company’s Board of Directors administers
the 2010 Plan, selects the individuals to whom options will be granted, determines the number of options to be granted, and the
term and exercise price of each option. Stock options granted pursuant to the terms of the 2010 Plan generally cannot be granted
with an exercise price of less than 100% of the fair market value on the date of the grant. The term of the options granted under
the 2010 Plan cannot be greater than 10 years. Options vest at varying rates generally over three to five years along with performance
based options.
In September 2013, the Company approved
the increase in the number of shares issuable pursuant to the 2010 Plan to 15,000,000. In December 2013, the Company’s Board
of Directors approved an amendment to the Amended and Restated 2010 Stock Incentive Plan which increased the number of shares
issuable pursuant to the Plan by 15,000,000 to 30,000,000 shares. Both amendments were approved by the Company’s shareholders.
Upon completion of the Reverse Stock Split on April 14, 2014, the Company continues to have 30,000,000 shares issuable pursuant
to the 2010 Plan.
As of June 30, 2015, 641,633 options were
outstanding and 28,037,356 shares available for future grant. For the options granted, the Company recorded compensation expense
of $220,709 using the Black-Scholes option pricing model based upon the following assumptions: term of 3 years, average risk free
interest rate of .99%, a dividend yield of 0% and a volatility of 338%.
During the year ended December 31, 2014,
options for 1,058,770 shares had been granted, with 0 shares exercised, 122,849 shares were forfeited and cancelled and 1,477,977
remained outstanding at December 31, 2014 and 28,522,023 shares were available for future grant.
The following
table reflects the option activity during the six months ended June 30, 2015:
| |
Common | | |
Average | |
| |
Shares | | |
Exercise Price | |
Outstanding as of December 31, 2014 | |
| 1,477,977 | | |
$ | 1.11 | |
Granted | |
| 151,667 | | |
| 1.86 | |
Exercised | |
| (179,461 | ) | |
| 0.35 | |
Forfeited, cancelled, expired | |
| (808,550 | ) | |
| 1.08 | |
Outstanding as of June 30, 2015 | |
| 641,633 | | |
$ | 0.68 | |
Warrants
The following
table reflects warrant activity during the six months ended June 30, 2015:
| |
Warrants for | | |
Weighted | |
| |
Common | | |
Average | |
| |
Shares | | |
Exercise Price | |
Outstanding and exercisable as of December 31, 2014 | |
| 2,879,627 | | |
$ | 4.00 | |
Granted | |
| 1,831,361 | | |
| 2.05 | |
Exercised – cash | |
| - | | |
| - | |
Exercised - cash-less exercise | |
| - | | |
| - | |
Forfeited, cancelled, expired | |
| - | | |
| - | |
Outstanding as of June 30, 2015 | |
| 4,710,988 | | |
$ | 3.24 | |
During the six months ended June 30, 2015,
warrants for 1,831,631 shares were issued in connection with the cash sale of shares referred to above.
ADAPTIVE MEDIAS, INC.
Notes to Condensed Consolidated Financial
Statements
Note 8 – Commitments and Contingencies
Office Lease Agreements
The Company leases office space in Irvine, California under
two leases that expire at various dates through March 2017. The current monthly rent is approximately $13,100.
Minimum Fees
On July 1, 2014, the Company entered into
an agreement to purchase bandwidth for a period of 18 months with a total minimum amount of $413,775 due. Under the agreement,
the Company expensed $138,691 during the six months ended June 30, 2015.
Legal Proceedings
1) Mario Wilson v. Mimvi, Inc.,
In July 2013, the Company became aware
that a default judgment had been entered against Mimvi (now Adaptive Medias, Inc.) in favor of Mario Armando Wilson and against
the Company in the amount of $62,141 and the balance has been accruing interest. In addition to accrued interest, Wilson is also
entitled under the California Labor Code to recover attorney’s fees and costs incurred in enforcing the Judgment. By the
end of 2014, the Judgment had grown to $76,694. On or about January 5, 2015, The Company entered into an agreement with Wilson
to settle the Judgment for $74,000 in stock and cash paid over time. The Company believes this matter will be fully settled by
the end of 2015.
2) Felix Chan v. Mimvi, Inc
The Company was a party to an arbitration
case entitled Felix Chan v. Mimvi (now Adaptive Medias, Inc.) which was a proceeding before the American Arbitration
Association. On December 12, 2014, the Arbitrator issued an award against the Company in the amount of $348,803. On April 9, 2015,
the Court sided with Plaintiff, and granted his Petition to Confirm the Award, rejecting the Petition to Vacate the Award filed
by this office. The Judgment will be entered in Plaintiffs favor for approximately $358,387. As of the date hereof, the parties
reach a settlement agreement resulting in a stay of enforcement of the Judgment with payment over time until February, 2016. Upon
receipt of the full amount owing under the settlement agreement, Plaintiff shall cause to be filed a Satisfaction of Judgment.
The Company anticipates this matter to be resolved by the first quarter of 2016.
3) Rice v. Adaptive Medias, etc., et al
On September 20, 2013, Eric Rice, a former
employee, sued the Company (Rice v. Adaptive Medias, etc., et al., LASC No. LC100816, Van Nuys Superior Court). The complaint
alleges that the Company breached Mr. Rice's employment agreement and made misrepresentations when the Company terminated Mr.
Rice. The complaint does not specify the amount of alleged damages. The Company denies any breach or misrepresentation, and the
Company denies that it owes Mr. Rice anything. The parties proceeded to mediation on July 16, 2015, at which a confidential resolution
was reached for a payment of $25,000 over time. The case will be dismissed with prejudice following the completion of certain
executory obligations scheduled to conclude on October 15, 2015.
4) Khoi Senderowicz v. Kasian Franks,
Andrew Linton, Mimvi, Inc.
On July 29, 2013, Khoi Senderowicz filed
a lawsuit against the Company and two other individuals, Andrew Linton and Kasian Franks (Senderowicz v. Franks, etc., et al.,
Case No. RG13689457, Alameda County Superior Court). The suit alleges breach of leases for real property and damages to real property
and seeks $353,894 in alleged damages. In June 2015, the Company agreed to settle Senderowciz’s claims in exchange for payment
of $26,000 and cooperation in removing the restrictions on the 50,000 shares. The Company is also considering Senderowicz’s
recent demands for some additional settlement monies as a result of the stock’s decline in value due to a 30:1 reverse stock
split in 2014. The Company anticipates this matter to be settled by the end of 2015.
5) Amanda Besemer v. Adaptive Medias,
Inc., Mimvi, Inc.
In April of 2014, the Company became aware
that a lawsuit was filed against the Company in the Superior Court of Santa Clara County, California by Amanda Besemer, who was
an Advisory Board member of Mimvi from 2010-2012. Ms. Besemer seeks damages equivalent to $400,000 of stock or the cash equivalent
of such related to the termination of her Advisory Board role. The Company has filed an answer to the complaint and denied the
allegations. The Company has been informed that the case in Santa Clara has been dismissed and that Ms. Besemer has refiled in
Los Angeles Superior Court. This matter is currently pending as mediation and trial have been scheduled later this year. The Company
anticipates this matter to be resolved by the end of 2015.
ADAPTIVE MEDIAS, INC.
Notes to Condensed Consolidated Financial
Statements
6) U-Chef v.
OneScreen, Adaptive Media, Inc.
The Company has
become aware of a claim by U-Chef, a creditor of OneScreen, in the amount of $93,237 (Ratatouille dba U-Chef v. OneScreen).
On June 10, 2015, the Plaintiff dismissed its claims against the Company, without prejudice. As of the date hereof, U-Chef continues
to pursue its claims against OneScreen and may assert claims against the Company again.
7) One Screen
v. Patel; Patel v. OneScreen, Adaptive Media, Inc., and Qayed Shareef, et al.
On January 27,
2015, the Company became aware of a recent cross-complaint filed by the former CEO of OneScreen. (Patel v. OneScreen,
Adaptive Media, Inc and Qayed Shareef). On March 23, 2015, the Company joined in a demurrer to the cross-complaint. Company
also filed a Special Motion to Strike, called an Anti-SLAPP Motion in response. The Court at a hearing on June 9, 2015, sustained
the demurrer in part but denied the Anti-SLAPP Motion. An Amended Complaint was filed on July 6, 2015 removing the claims on which
the Anti-Slap Motion was filed. This matter is currently pending and the Company's position is that this case has no merit
and intends to vigorously defend against it.
8) AdOn Network, LLC v. OneScreen, Inc.,
et al.
The Company has become aware of a complaint
filed on or about January 13, 2015, by AdOn Network LLC (“Ad On”). AdOn asserts that in March, 2014, OneScreen, Inc.
executed a Settlement Agreement with it for $495,000 payable at $33,000 per month. AdOn asserts that OneScreen breached this agreement
by failing to make the payments required. AdOn claims that Adaptive Medias is responsible for this obligation claiming that Adaptive
Medias is the "successor-in interest" to OneScreen. AdOn served the subject First Amended Complaint on Adaptive Medias
on February 27, 2015. AdOn claims that Adaptive Medias’ purchase of OneScreen's assets through the Stock Purchase Agreement
requires a finding that Adaptive Medias is the “successor-in-interest" to OneScreen.
The Company believes that there are good
and meritorious defenses to this claim given that Adaptive Medias paid $16.5 million dollars in stock for the purchase of Media
Graph, Inc., an asset of OneScreen. A demurrer was filed attacking Plaintiffs First Amended Complaint which will not be heard
until September 24, 2015 given the courts backlog. The Company is awaiting the production of the underlying materials regarding
this claim.
The Company does
not believe the ultimate outcome of these proceedings will have a material adverse impact on the Company’s condensed consolidated
financial statements.
9) Peer 1 Network
USA, Inc. v. Adaptive Medias, Inc., et al.
The Plaintiff
claims to be entitled to $42,000 in fees for broadband services. Some $8,000 had already been paid on the billing when it was
determined that Adaptive was being billed on outgoing usage, rather than on the incoming usage as represented. The matter has
now been settled for $9,000 with and a dismissal with prejudice having been filed on June 19, 2015.
10) Ryan Parson
v. Adaptive Medias, Inc., OneScreen, Inc., et al.
This is one of
numerous claims against Adaptive arising from its purchase of Media Graph and its relationship with OneScreen. Mr. Parsons claims
that he is owed monies from OneScreen under a Stipulation for Entry of Judgment for $123,205. The claims against Adaptive relates
to its purchase of Media Graph; the allegations of successor liability and fraudulent transfer. Plaintiff also seeks punitive
damages. There is no published case law addressing the right of a party to seek punitive damages arising from the alleged failure
to pay a judgment. Company's position is that this case has no merit and intends to vigorously defend against it.
11) Hoomaun Ataei
v. Adaptive Medias, Inc., OneScreen, Inc., et al.
On November 7,
2014, Hoomaun Ataei, a former employee, in a written notice dated October 21, 2014, indicated his intent to file a lawsuit against
and/or seek relief from the Company for injuries alleged to be caused by Company over compensation and other matters. On or around
November 5, 2014, Mr. Ataei filed a complaint with the Department of Fair Employment and Housing (Matter Number: 410521-133960).
Thereafter, the parties agreed to attend mediation. Effective May 21, 2015, the Company entered into a Settlement Agreement and
General Release of All Claims with Mr. Ataei. Pursuant to the agreement, the Company agreed to pay to Employee and Employee’s
attorneys the combined sum of One Hundred Seventy Thousand Dollars ($170,000), as well as thirty thousand (30,000) restricted
shares of the Company’s stock and twenty-five thousand (25,000) stock purchase warrants. Under the agreement, Mr. Ataei
agreed to release, absolve and discharge the Company and its affiliates from all claims.
ADAPTIVE MEDIAS, INC.
Notes to Condensed Consolidated Financial
Statements
Note 9 –
Concentrations
The following table reflects the concentration
of revenue during the three and six months ended June 30, 2015 and 2014:
| |
For the three months ended June 30, | | |
For the six months ended June 30, | |
| |
2015 | | |
2014 | | |
2015 | | |
2014 | |
Customer 1 | |
| 17 | % | |
| 0 | % | |
| 10 | % | |
| 0 | % |
Customer 2 | |
| 14 | % | |
| 0 | % | |
| 7 | % | |
| 0 | % |
Customer 3 | |
| 0 | % | |
| 16 | % | |
| 10 | % | |
| 12 | % |
Customer 4 | |
| 4 | % | |
| 25 | % | |
| 6 | % | |
| 20 | % |
Customer 5 | |
| 0 | % | |
| 13 | % | |
| 0 | % | |
| 17 | % |
Customer 6 | |
| 0 | % | |
| 10 | % | |
| 0 | % | |
| 8 | % |
Customer 7 | |
| 0 | % | |
| 4 | % | |
| 0 | % | |
| 11 | % |
Included in accounts receivable was $808,779
and $1,104,781 from the above seven customers as of June 30, 2015 and 2014, respectively.
Note 10 – Subsequent Events
The Company follows the guidance in FASB
ASC Topic 855, Subsequent Events (“ASC 855”), which provides guidance to establish general standards of accounting
for and disclosures of events that occur after the balance sheet date but before the consolidated financial statements are issued
or are available to be issued. ASC 855 sets forth (i) the period after the balance sheet date during which management of a reporting
entity evaluates events or transactions that may occur for potential recognition or disclosure in the consolidated financial statements,
(ii) the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in
its consolidated financial statements, and (iii) the disclosures that an entity should make about events or transactions that
occurred after the balance sheet date.
Issuance of common shares
Subsequent to June 30, 2015, the company
has issued 1,900,000 shares for services rendered.
Removal of Directors
On July 6, 2015 the Company announced the removal of Norman
Brodeur from the Board of Directors.
Issuance and Repayments of Convertible Promissory Notes
On July 14th, 2015 the Company
entered into a convertible promissory note with John Strong in the amount of $100,000. The principal amount plus 5% interest was
to be repaid by July 28th, 2015. A default provision is included in the note to which the holder may elect to convert
the entire unpaid balance including interest into the Company’s common stock at a rate equal to 50% of the closing bid price
for the trading day immediately preceding the date of the conversion. The Company made payments of $100,000, and $5,000, on July
28, 2015 and August 13, 2015 in full satisfaction of the note.
On July 14th, 2015 the Company
entered into a convertible promissory note with John Strong in the amount of $100,000. The principal amount plus 10% interest
was to be repaid by September 12th, 2015. A default provision is included in the note to which the holder may elect
to convert the entire unpaid balance including interest into the Company’s common stock at a rate equal to 50% of the closing
bid price for the trading day immediately preceding the date of the conversion.
Appointment of Officers
On August 6, 2015 the board of directors
unanimously voted in favor of appointing John Strong to act as the interim Chief Executive Officer.
Rescission of Previously Announced and Accrued Settlement
On May 6, 2015, the Company entered into
a Confidential Settlement Agreement and Mutual Release (the “Settlement”) with Gregg Templeton, pursuant to which
the Company and Mr. Templeton agreed to mutually release one another from any and all obligations under previous consulting arrangements
between the parties. Pursuant to the terms of the Settlement Agreement, in exchange for consulting services previously rendered
to the Company, the Company's shall pay to Mr. Templeton (i) a cash fee in the amount of $405,000; (ii) 318,343 shares of the
Company's common stock; and (iii) a five-year warrant to purchase 1,500,000 shares of the Company's common stock at a price of
$3.00 per share. This settlement was authorized by two of three Board members at the time of our last filing and as such it was
accrued as a type II subsequent event. It was later determined that the settlement document itself was never signed by an officer
of the Company. Further, the Chairman of the Board, being the only sitting Board member as of the date of this filing, has committed
to rescinding the Board authorization for this settlement. As such we expect to reverse the effects of the settlement as described
above in the third quarter of 2015.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis
provides information to explain our results of operations and financial condition. You should also read our unaudited interim
condensed consolidated financial statements and their notes included in this Form 10-Q, and our audited consolidated financial
statements and their notes, Risk Factors and other information included in our Annual Report on Form 10-K for the year ended December
31, 2014. This report contains forward-looking statements. Forward-looking statements within this Form 10-Q are identified by
words such as “believes,” “anticipates,” “expects,” “intends,” “may,”
“will” “plans” and other similar expressions, however, these words are not the exclusive means of identifying
such statements. In addition, any statements that refer to expectations, projections or other characterizations of future events
or circumstances are forward-looking statements. These forward-looking statements are subject to significant risks, uncertainties
and other factors, which may cause actual results to differ materially from those expressed in, or implied by, these forward-looking
statements. Except as expressly required by the federal securities laws, we undertake no obligation to publicly update or revise
any forward-looking statements to reflect events, circumstances or developments occurring subsequent to the filing of this Form
10-Q with the U.S. Securities and Exchange Commission and you should not place undue reliance on these forward-looking statements.
You should carefully review and consider the various disclosures the Company makes in this report and our other reports filed
with the U.S. Securities and Exchange Commission that attempt to advise interested parties of the risks, uncertainties and other
factors that may affect our business.
Overview
The Company, through its core content
monetization platform and technology, provides app developers, publishers and video content developers one of the only end-to-end
monetization platforms driven by programmatic algorithms. The Company provides these unique capabilities to monetize content efficiently
across multiple marketing channels and devices, including mobile, video and online display advertising.
Pursuant to votes of the majority of the
Board of Directors and shareholders, effective on November 6, 2013, the Company changed its name to Adaptive Medias, Inc. in order
to better and more fully demonstrate the Company’s emphasis on providing a supply-side platform for mobile, video and online
display advertising. In connection with the name change, effective on November 19, 2013, the Company’s ticker symbol was
changed to ADTM.
The Company is a programmatic audience
and content monetization company for website owners, app developers and video publishers who want to more effectively optimize
content through advertising. The Company provides a foundation for publishers and developers looking to engage brand advertisers
through a multi-channel approach that delivers integrated, engaging and impactful ads across multiple devices. The Company meets
the needs of its publishers with an emphasis on maintaining user experience, while delivering timely and relevant ads through
its multi-channel ad delivery and content platform. Our corporate headquarters are located at 16795 Von Karman Avenue, Suite 240,
Irvine, California 92606. Our website address is www.adaptivem.com. The information contained on, or that may be obtained from,
our website is not, and shall not be deemed to be, a part of this report.
Business Overview
We are a leader in programmatic, real
time bidding (“RTB”) advertising across mobile, video and display, as well as a provider of a business-to-business
digital video content management platform SaaS.
On the supply
side, the Company provides each publishing client with unique capabilities to distribute and monetize its content across multiple
channels or operating systems, where it can serve a piece of content on a laptop, a tablet and a phone without any additional
cost or license. The optimization modules in our technology can be deployed across multiple channels on the platform to provide
capabilities such as ad serving, RTB, ad revenue waterfall management and video content management, and enabling necessities like
the video player itself. We help mobile app developers, publishers and video content developers monetize their
ad inventory through our proprietary ad-delivery and optimization platform. The Company
provides these unique capabilities to monetize content efficiently across multiple marketing channels, including mobile, video
and online display advertising. Our relationships span across health, sports, entertainment, auto, fashion, news, tech and
luxury verticals.
On the demand side, the
Company’s programmatic technology stack is advertiser-friendly; the platform provides advertisers with a brand-safe and
transparent marketplace for buying media across mobile, video and display. This is essential for big brand advertisers and brand-direct
ecommerce companies that require a high level of safety, context and relevance for their advertisements.
On June 16, 2014, the
Company launched its marketplace to enable publishers a seemingly simple marriage of quality content, users and monetization opportunities
side-by-side with advertising partners who drive demand. This is accomplished through a complex set of discovery technology solutions,
driven by patents, and efficient algorithmic data that cohesively interact in any digital marketing environment where advertising,
audience and content must come together.
Competition
There are many fractional players in this
space. There are those who provide video players like Ooyala, BrightCove and Kaltura. Others provide advertising network services
like BrightRoll, Grab and TubeMogul. A final group provides ad serving and demand services including RocketFuel, LiveRail or FreeWheel.
These providers and their fragmented solutions only complicate the choices that a publisher, app developer or video content provider
must make to participate in today’s market for audiences and advertising revenue. We believe that AOL is the only other
company that can claim to provide an end-to-end solution. It has a video player and ad serving capabilities through Adap.tv, CMS
and CDN capabilities through 5min Media and a wealth of inventory and demand through legacy AOL properties and exchange integration.
Despite AOL’s size, we believe that
we our business model has advantages that will allow us to compete in this space. The first advantage pertains to AOL’s
legacy inventory source. While AOL benefits from many domains under its control, it is also hampered by the responsibility to
fill advertising through these domains first. Our advantage is that we are inventory agnostic. If advertisers want and can benefit
from our direct publisher inventory, we are happy to provide it. If advertisers want to take advantage of efficiencies through
RTB exchange inventory, we can provide that as well. The Company is less restricted and, as a result, we believe that we can provide
better optimization choices than AOL.
The second advantage is in pricing. AOL’s
legacy properties have high floor inventory costs. While AOL addresses this issue by explaining that its inventory is “premium”,
this claim is generally made by most, if not all, inventory sources. Our inventory flexibility and existing monetization contracts
allow us to deliver advertising, which we believe has the same quality as AOL’s advertising, but at a lower cost per impression.
We believe that this allows us an edge in negotiating onto advertising campaigns where we don’t have an existing track record.
Business Development
Our business development efforts are focused
on three main areas. The first is signing content providers to syndication and monetization deals. The second is signing publishers
onto our platform. The third area of focus is driving advertising demand or fulfillment through our platform. This translates
to revenue generation in the following forms: 1) Encoding fees for uploading content; 2) Revenue share from platform publishers
consuming the content; 3) Content streaming bandwidth fees from publishers consuming content; 4) Ad server fees from publishers
consuming ads within the platform; 5) Content storage fees for housing content within the platform; and 6) Percentage of revenue
from advertisers attaching content to their video ads. In 2013, we added approximately 50 publishers. The direct impact of which
was operationally minimal as the platform lends itself extremely simplified workflows. Our overall content contracted in 2013
as we began to remove underperforming partners and categories. We expect all content categories to grow in 2015 as we move toward
stabilization of our platform and expansion of our technical capabilities while onboarding premium content providers through focused
business development efforts. During the six months ended June 30, 2015, our efforts to streamline our operations and processes
led to the successful acquisition and retention of quality publishers and content relationships. New relationships included premium
publishers and content producers, all of whom are leaders in their respective categories.
Today our advertiser campaign demand initiatives
are consistently fulfilling and scaling at sustainable rates for our growing publisher base. We have over 350,000 rights cleared
pieces of video content across all interest categories. We have recently signed a contract with Beanstock Media which increases
our publisher base with some high profile publishers including Ask.com, ChristianMingle, Dictionary.com, MeetMe, Slacker,
TheDailyBeast, and ZipRealty.
The push made in 2014, to penetrate the
comScore top 1000 publisher accounts depicted the growth and scale of our platform syndication capabilities. Engaging these publishers
will increase our platform utilization and SaaS income. It will increase the consumption and utilization of our content partners
resulting in higher income. It will also allow for greater reach for our demand partners and advertising agencies leading to higher
advertising revenues.
In addition to traditional digital publishers,
we are continuing to make a push to penetrate select top TV properties and engage them in bridging the gap between legacy TV consumption
and video advertising in digital. This is an ongoing effort that will be enabled by our proprietary technology that is currently
being developed with the support of our advisers.
Critical Accounting Policies
The preparation of financial statements
in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts in our consolidated
financial statements and related notes. Our significant accounting policies are described in Note 2 to our consolidated financial
statements included in our Annual Report on Form 10-K for the year ended December 31, 2014. There were no significant changes
to our significant accounting policies during the six months ended June 30, 2015.
Three Months Ended June 30, 2015 compared with Three
Months Ended June 30, 2014
Revenue
For the three months ended June 30, 2015,
we recognized revenue of $1,097,827 compared to $1,113,185 in the comparable period of 2014. We expect our revenue to continue
to fluctuate based on seasonal factors that affect the advertising industry as a whole. The Company is actively working to mitigate
these fluctuations by proactive planning of business development efforts to onboard more publishers, advertiser and content providers.
Cost of Revenue
For the three months ended June 30, 2015,
our cost of revenue increased to $1,070,485 compared to $723,678 in the comparable period of 2014, an increase of $346,807 or
48%. The increase was primarily due to the emergence of mobile display as the majority of our media business, which has comparatively
high volumes with low margins. In 2015 we expect to increase margins by engaging with both existing and new publisher relationships
in mobile video arena through our platform which yields higher revenues at lower costs.
Operating Expenses
As a result of the expansion of our platform
business, our operating expenses increased to $3,596,759 for the three months ended June 30, 2015, compared to $2,349,617 in the
comparable period of 2014, an increase of $1,247,142 or 53%. This increase is directly related to additional stock-based compensation
for services period over period.
For the three months ended June 30, 2015,
stock compensation expense increased to $1,137,464 from $341,798 in the comparable period of 2014, an increase of $795,666 or
233%. This increase was due to managements’ cash conservation efforts to pay for services with stock instead of cash.
For the three months ended June 30, 2015,
legal and professional fees increased to $503,126 from $185,471 in the comparable period of 2014, an increase of $317,655 or 171%.
The increase was primarily due to ongoing litigation related to matters from previously completed acquisitions. In 2015, we expect
the litigation efforts to continue but decrease as we address them accordingly.
For the three months ended June 30, 2015,
our selling expenses decreased to $29,172 from $345,300 in the comparable period of 2014. This decrease is primarily due to a
contraction of our sales and marketing personnel and related costs. In 2015 we expect to streamline our sales force with more
industry seasoned sales leaders who can bring in the network relationships and staff to help with our growth initiatives.
For the three months ended June 30, 2015,
the research and development costs that we incurred decreased to $17,471 from $314,973 in the comparable period of 2014. This
decrease is primarily due to a reduction in staff compared to the prior comparable period. Going forward we expect to maintain
a lean staff of highly motivated sales and support resources to help expand our growth efforts.
For the three months ended June 30, 2015,
general and administrative expenses increased to $1,263,170 from $1,041,815 in the comparable period of 2014, an increase of $221,355
or 21%. The increase was primarily due to the overall increase in our operations, specifically investor relations and settlement
expenses. Going forward these types of expenses will not be an issue for the company.
For the three months ended June 30, 2015,
depreciation and amortization increased to $646,356 from $120,260 in the comparable period of 2014, an increase of $526,096 or
437%. The increase was primarily due to the overall increase in furniture and fixtures and intangibles assets acquired that are
being amortized over their estimated useful lives. We expect depreciation and amortization to remain at these levelsin absolute
dollars in future periods.
Six months Ended June 30, 2015 compared
with Six months Ended June 30, 2014
Revenue
For the six months ended June 30, 2015,
we recognized revenue of $2,265,546 compared to $1,844,788 in the comparable period of 2014, an increase of $420,758 or 23%. The
increase was primarily due to an expanded product platform and general expansion of our media business. Additionally, this increase
in revenue is attributable to both increased spending by existing customers and an increase in the number of active customers
adopting our solution. We expect our revenue to continue to fluctuate based on seasonal factors that affect the advertising industry
as a whole. The Company is actively working to mitigate these fluctuations by proactive planning of business development efforts
to onboard more publishers, advertiser and content providers.
Cost of Revenue
For the six months ended June 30, 2015,
our cost of revenue increased to $2,040,844 compared to $1,168,038 in the comparable period of 2014, an increase of $872,806 or
75%. The increase was primarily due to the emergence of mobile display as the majority of our media business, which has comparatively
high volumes with low margins. In 2015 we expect to increase margins by engaging with both existing and new publisher relationships
in mobile video arena through our platform which yields higher revenues at lower costs.
Operating Expenses
As a result of the expansion of our business,
our operating expenses increased to $10,731,144 for the six months ended June 30, 2015, compared to $3,777,180 in the comparable
period of 2014, an increase of $6,953,964 or 184%. This increase is due to a one time settlement expense of $3,768,485 as discussed
in footnote 8 of the Notes to Condensed Consolidated Financial Statements. Our expectations are to grow the platform, higher margin,
side of the business throughout the remainder of the year.
For the six months ended June 30, 2015,
stock compensation expense increased to $1,715,097 from $661,102 in the comparable period of 2014, an increase of $1,053,995 or
159%. This increase was due to managements’ cash conservation efforts to pay for services with stock instead of cash, ongoing
investor relation efforts
For the six months ended June 30, 2015,
legal and professional fees increased to $856,545 from $308,287 in the comparable period of 2014, an increase of $548,258 or 178%.
The increase was primarily due to ongoing litigation related to matters from previously completed acquisitions. In 2015 we expect
the litigation efforts to continue but decrease as we address them accordingly.
For the six months ended June 30, 2015,
our selling expenses decreased to $304,359 from $533,924 in the comparable period of 2014. This decrease is primarily due to a
contraction of our sales and marketing personnel and related costs. In 2015 we expect to streamline our sales force with more
external industry seasoned sales leaders and staff, incentivized on a transaction basis, to help with our growth initiatives.
For the six months ended June 30, 2015,
the research and development costs that we incurred decreased to $174,443 from $454,861 in the comparable period of 2014. This
decrease is primarily due to a reduction in staff compared to the prior comparable period. With that effort behind us we are expecting
growth within our platform sales initiatives.
For the six months ended June 30, 2015,
general and administrative expenses increased to $6,378,782 from $1,579,134 in the comparable period of 2014, an increase of $4,799,648
or 304%. The increase was primarily due to the overall increase in our operations, specifically investor relations and one time
settlement expense, to be paid in common stock and warrants valued at $3,363,485, as discussed in footnote 10 of the Notes to
Condensed Consolidated Financial Statements above. In 2015 we expect to reduce our general and administrative cost footprint to
a minimum requirement.
For the six months ended June 30, 2015,
depreciation and amortization increased to $1,301,918 from $239,872 in the comparable period of 2014, an increase of $1,062,046
or 443%. The increase was primarily due to the overall increase in furniture and fixtures and intangibles assets acquired that
are being amortized over their estimated useful lives. We expect depreciation and amortization to increase in absolute dollars
in future periods.
Net Loss
For the six months ended June 30, 2015,
we incurred a net loss of $10,591,063, or $.72 per basic and diluted share compared to a net loss of $3,139,318, or $0.56 per
basic and diluted share for the six months ended June 30, 2014. The increase in the net loss is described above.
Liquidity and Capital Resources
As of June 30, 2015, we had total current
assets of $1,914,683 consisting of $62,248 in cash, $1,219,129 in accounts receivable, net of allowance of $411,282, and $633,306
in prepaid expenses. We had total current liabilities of $8,183,943 consisting of accounts payable and accrued expenses.
We have limited funds to pay our currently
due debts and liabilities. Should one or more of our creditors seek or demand payment, we are not likely to have the resources
to pay or satisfy any such claims. Thus, we face risk of defaulting on our obligations to our creditors with consequential legal
and other costs which would adversely impact our ability to continue our existence as a corporate enterprise.
Our insolvent financial condition also
may create a risk that we may be forced to file for protection under applicable bankruptcy laws or state insolvency statutes.
We also may face the risk that a receiver may be appointed. We face that risk and other risks resulting from our current financial
condition.
For these and other reasons, we anticipate
that unless we can obtain sufficient capital from outside sources and do so in the very near future, we may be unable to continue
to operate as a corporation, continue to meet our filing obligations under the Securities Exchange Act of 1934, or otherwise satisfy
our obligations to our vendors, stock transfer agent, our accountants, our legal counsel, our EDGAR filing agent, and many others.
For these and other reasons, our management
recognizes the adverse difficulties and continuing severe challenges we face. Apart from the funds that we have received to date,
there can be no assurance that we will receive any additional financing or funding from any source or if any financing should
be obtained, that existing shareholders will not incur substantial, immediate, and permanent dilution of their existing investment.
The following is a summary of the Company's
cash flows provided by (used in) operating, investing, and financing activities for the six months ended June 30, 2015 and 2014:
| |
For
the six months ended | |
| |
June
30, 2015 | | |
June
30, 2014 | |
| |
| | |
| |
Net cash used in operating activities | |
$ | (4,084,110 | ) | |
$ | (2,022,325 | ) |
Net cash used by investing activities | |
| (109,426 | ) | |
| (33,742 | ) |
Net cash provided by financing activities | |
| 2,000,000 | | |
| 2,180,874 | |
Net increase (decrease) in Cash | |
| (2,193,536 | ) | |
| 124,807 | |
Cash , beginning | |
| 2,255,784 | | |
| 22,188 | |
Cash, ending | |
$ | 62,248 | | |
$ | 146,995 | |
Going Concern Uncertainties
As of June 30, 2015, we do not have an
adequate source of operating revenue to cover our operating costs, and have only limited working capital with which to pursue
our business plan. The amount of capital required to sustain operations until we achieve positive cash flow from operations is
subject to future events and uncertainties. It will be necessary for us to secure additional working capital through sales of
our common stock and/or debt financing, and there can be no assurance that such funding will be available in the future. These
conditions raise substantial doubt about our ability to continue as a going concern.
Our auditor has issued a going concern
qualification as part of their opinion in their audit report contained in Form 10-K filed with the SEC for the year ended December
31, 2014.
Capital Expenditures
For the six months ended June 30, 2015,
we have not incurred any material capital expenditures.
Commitments and Contractual Obligations
As a "smaller reporting company",
the Company is not required to provide this information.
Off-Balance Sheet Arrangements
We have not entered into any off-balance
sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in
financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that would
be considered material to investors.
Changes in Senior Leadership
Effective as
of January 26, 2015, the Chief Executive Officer was terminated by the Board of Directors from his position as Chief Executive
Officer and Director. The Board of Directors has established a committee of five individuals to actively search for a qualified
successor Chief Executive Officer.
Effective as of January 25, 2015,
the Company appointed an Acting Chief Operating Officer of the Company pursuant to a consulting agreement.
Effective as of March 9, 2015, the Principal Accounting Officer
of the Company resigned.
Effective as
of March 11, 2015, Omar Akram, a Director, was appointed President and Chief Financial Officer.
Effective as of June 17, 2015, the Company
announced the resignation of Jim Waltz as intererim Chief Operations Officer and as a Director of the Company.
Effective as of July 6, 2015, the Company
announced the removal of Norman Brodeur from the Board of Directors.
Effective as of August 6, 2015, the Board
of Directors unanimously voted in favor of appointing John Strong to act as the interim Chief Executive Officer.
Item 3. Quantitative and Qualitative
Disclosures About Market Risk.
As a "smaller reporting company",
the Company is not required to provide information required by this Item.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and
Procedures
Our management, with the participation
of our Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of our "disclosure
controls and procedures" (as defined in the Securities Exchange Act of 1934 (the "Exchange Act") Rules 13a-15(e)
and 15d-15(e)) as of the end of the period covered by this report (the "Evaluation Date").. Based on that evaluation,
our President and Principal Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures
were not effective as of June 30, 2015 at a reasonable assurance level, as a result of material weaknesses primarily related to
a lack of a sufficient number of personnel with appropriate training and experience in GAAP and a proper segregation of duties
based on our size and available resources.
Remediation
To remediate
the material weaknesses, as identified above, in internal control over financial reporting, management has taken or will take
the following actions as the financial resources become available:
| · | We
have retained additional accounting personnel, and continue to enhance our internal finance
and accounting organizational structure. |
| · | We
have hired a third party consultant who has the required background and experience in
accounting principles generally accepted in the United States of America and with SEC
rules and regulations. |
| · | We
are in the process of further enhancing the supervisory procedures to include additional
levels of analysis and quality control reviews within the accounting and financial reporting
functions. |
| · | We
are in the process of strengthening our internal policies and enhancing our processes
for ensuring consistent treatment and recording of accounting estimates and ensuring
the validation of our conclusions regarding significant accounting policies and their
application to our business transactions are carried out by personnel with an appropriate
level of accounting knowledge, experience and training. |
| · | We
will build our procedures to effectively control our financial closing activities. |
| · | We
will improve and automate the preparation of our audit schedules to include a systematic
audit of all the figures presented in the financial statements. |
We believe that
the foregoing actions will improve our internal control over financial reporting, as well as our disclosure controls and procedures.
We intend to perform such procedures and commit such resources as they become available and necessary to continue to allow us
to overcome or mitigate the material weaknesses such that we can make timely and accurate quarterly and annual financial filings
until such time as the material weaknesses are fully addressed and remediated.
Changes in Internal Control over Financial
Reporting
There were no changes in our internal
controls over financial reporting that occurred during the period covered by this report that has materially affected, or
is reasonably likely to materially affect, our internal control over financial reporting.
PART II – OTHER INFORMATION
Item 1. Legal Proceedings.
The Company legal proceedings are summarized
in Note 8 of the condensed consolidated financial statements.
The Company does not believe the ultimate
outcome of these proceedings will have a material adverse impact on the Company’s consolidated financial statements.
There are presently no other material
pending legal proceedings to which the Company, any executive officer, any owner of record or beneficially of more than five percent
of any class of voting securities is a party or as to which any of the Company’s property is subject, and no such proceedings
are known to the Company to be threatened or contemplated against it.
Item 1A. Risk Factors.
As a "smaller reporting company",
the Company is not required to provide information required by this Item.
Item 2. Unregistered Sales of Equity Securities and Use
of Proceeds.
During the six months ended June 30, 2015,
the Company issued 747,912 shares of its common stock for to various employees and consultants in exchange for services rendered.
Additionally, the Company issued and sold 1,183,432 shares of its common stock to an accredited investor for an aggregate purchase
price of $2,000,000, and 981,229 shares in relation to anti-dilution clauses from the aforementioned and previous cash equity
raises.
No underwriters were involved in any of
the issuances provided in this Item 2. The shares were issued pursuant to Section 4(2) of the Securities Act of 1933, as amended
(the “Act”) because the individuals either represented that they were “accredited investors” as such term
is defined in the rules and regulations promulgated under the Securities Act or were employees of the Company and were in possession
of the information that registration of the securities would provide them. The sale of the securities did not involve any form
of general solicitation or general advertising.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information.
None.
Item 6. Exhibits
Number |
|
Exhibit |
|
|
|
31.1 |
|
Certification of the Company’s
Principal Executive Officer pursuant to 15d-15(e), under the Securities and Exchange Act of 1934. |
|
|
|
31.2 |
|
Certification of the Company’s
Principal Financial Officer pursuant to 15d-15(e), under the Securities and Exchange Act of 1934. |
|
|
|
32.1+ |
|
Certification of the Company’s
Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002. |
|
|
|
32.2+ |
|
Certification of the Company’s
Principal 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 Taxonomy Extension Schema |
|
|
|
101.CAL |
|
XBRL Taxonomy Extension Calculation Linkbase |
|
|
|
101.DEF |
|
XBRL Taxonomy Extension Definition Linkbase |
|
|
|
101.LAB |
|
XBRL Taxonomy Extension Label Linkbase |
|
|
|
101.PRE |
|
XBRL Taxonomy Extension Presentation Linkbase |
+ In accordance with the SEC Release 33-8238, deemed being
furnished and not filed.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
ADAPTIVE MEDIAS, INC. |
|
|
August 17, 2015 |
/s/ Omar Akram |
|
Omar Akram |
|
President, Chief Financial Officer and Director |
|
(Duly Authorized Officer and Principal Executive Officer and Principal
Financial Officer) |
EXHIBIT 31.1
Certification of Chief Executive Officer
Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
I, John Strong, certify that:
1. I have reviewed this Quarterly Report
on 10-Q of Adaptive Medias, 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(s)
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(s)
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 reasonably 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 control over financial reporting.
Date: August 17,
2015 |
/s/ John Strong |
|
John Strong |
|
Interim Chief Executive Officer |
EXHIBIT 31.2
Certification of Chief Financial Officer
Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
I, Omar Akram, certify that:
1. I have reviewed this Quarterly Report
on 10-Q of Adaptive Medias, 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 small business issuer as of, and for, the periods presented in this report;
4. The registrant’s other certifying
officer(s) 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 small business issuer 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 small business issuer, 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(s) 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 reasonably 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 control over financial
reporting.
Date: August 17, 2015 |
/s/ Omar Akram |
|
Omar Akram |
|
Chief Financial Officer |
|
(Principal Financial Officer) |
EXHIBIT 32.1
CERTIFICATION
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY
ACT OF 2002
(SUBSECTIONS (a) AND (b) OF SECTION 1350,
CHAPTER 63 OF TITLE 18,
UNITED STATES CODE)
Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002 (subsections (a) and (b) of Section 1350, chapter 63 of Title 18, United States Code), the undersigned officer of Adaptive
Medias, Inc. (the “Company”), does hereby certify with respect to the Quarterly Report of the Company on Form 10-Q
for the period ended June 30, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”),
to the best of the undersigned’s knowledge that:
(1) The Report fully complies with the
requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report
fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: August 17, 2015 |
/s/ John Strong |
|
John Strong |
|
Interim Chief Executive Officer |
|
(Principal Executive Officer) |
EXHIBIT 32.2
CERTIFICATION
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY
ACT OF 2002
(SUBSECTIONS (a) AND (b) OF SECTION 1350,
CHAPTER 63 OF TITLE 18,
UNITED STATES CODE)
Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002 (subsections (a) and (b) of Section 1350, chapter 63 of Title 18, United States Code), the undersigned officer of Adaptive
Medias, Inc. (the “Company”), does hereby certify with respect to the Quarterly Report of the Company on Form 10-Q
for the period ended June 30, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”),
to the best of the undersigned’s knowledge that:
(1) The Report fully complies with the
requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report
fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: August 17, 2015 |
/s/ Omar Akram |
|
Omar Akram |
|
Chief Financial Officer |
|
(Principal Financial Officer) |
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