• Filing Date: 2012-11-19
  • Form Type: 10-Q/A
  • Description: Quarterly report (Amendment)
v2.4.0.6
Document and Entity Information
9 Months Ended
Sep. 30, 2012
Document And Entity Information  
Entity Registrant Name ACE MARKETING & PROMOTIONS INC
Entity Central Index Key 0001084267
Document Type 10-Q
Document Period End Date Sep. 30, 2012
Amendment Flag false
Current Fiscal Year End Date --12-31
Is Entity a Well-known Seasoned Issuer? No
Is Entity a Voluntary Filer? No
Is Entity's Reporting Status Current? Yes
Entity Filer Category Smaller Reporting Company
Entity Common Stock, Shares Outstanding 27,515,219
Document Fiscal Period Focus Q3
Document Fiscal Year Focus 2012
v2.4.0.6
Condensed Consolidated Balance Sheets (USD $) (USD $)
Sep. 30, 2012
Dec. 31, 2011
Assets    
Cash and cash equivalents $ 630,310 $ 605,563
Accounts receivable, net of allowance for doubtful accounts of $20,000 at September 30, 2012 and December 31, 2011 461,592 534,924
Prepaid expenses and other current assets 273,912 342,641
Total Current Assets 1,365,814 1,483,128
Property and Equipment, net 783,893 714,865
Other Assets 27,501 7,745
Total Assets 2,177,208 2,205,738
Liabilities and Stockholders' Equity    
Accounts payable 392,983 399,924
Accrued expenses 131,480 121,821
Total Current Liabilities 524,463 521,745
Long Term Liability Note Payable 284,297   
Commitments and Contingencies      
Stockholders' Equity:    
Preferred Stock, $.0001 par value; 5,000,000 shares authorized, 470,000 and 0 shares issued and outstanding at September 30, 2012 and December 31, 2011 respectively 47   
Common stock, $.0001 par value; 100,000,000 shares authorized; 27,515,219 and 23,284,236 shares issued and outstanding at September 30, 2012 and December 31, 2011, respectively 2,751 2,328
Additional paid-in capital 13,687,888 10,997,407
Accumulated deficit (12,290,737) (9,284,241)
CommonStockholdersEquity 1,399,949 1,715,494
Less: Treasury Stock, at cost, 23,334 shares (31,501) (31,501)
Total Stockholders' Equity 1,368,448 1,683,993
Total Liabilities and Stockholders' Equity $ 2,177,208 $ 2,205,738
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Condensed Consolidated Balance Sheets (Parenthetical) (USD $)
Sep. 30, 2012
Dec. 31, 2011
Statement of Financial Position [Abstract]    
Allowance for doubtful accounts (in Dollars) $ 20,000 $ 20,000
Preferred Stock par value (in Dollars per share) $ 0.0001 $ 0.0001
Preferred Stock shares authorized 5,000,000 5,000,000
Preferred Stock shares issued 470,000 0
Preferred stock shares outstanding 470,000 0
Common stock par value (in Dollars per share) $ 0.0001 $ 0.0001
Common stock shares authorized 100,000,000 100,000,000
Common stock shares issued 27,515,219 23,284,236
Common stock outstanding 27,515,219 23,284,236
Treasury Stock shares 23,334 23,334
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Condensed Consolidated Statements of Operations (Unaudited) (USD $) (USD $)
3 Months Ended 9 Months Ended
Sep. 30, 2012
Sep. 30, 2011
Sep. 30, 2012
Sep. 30, 2011
Income Statement [Abstract]        
Revenues, net $ 770,392 $ 650,370 $ 2,014,091 $ 2,284,573
Cost of Revenues 567,628 484,032 1,533,893 1,761,655
Gross Profit 202,764 166,338 480,198 522,918
Operating Expenses:        
Selling, general and administrative expenses 844,576 852,186 3,331,975 2,107,440
Total Operating Expenses 844,576 852,186 3,331,975 2,107,440
Loss from Operations (641,812) (685,848) (2,851,777) (1,584,522)
Other Income (Expense):        
Interest expense (24,869) (151) (29,978) (1,070)
Beneficial Conversion Feature     (120,254)  
Interest income 106 217 332 485
Loss on abandonment of fixed assets     (4,819)  
Total Other Income (Expense) (24,763) 66 (154,719) (585)
Net Loss $ (666,575) $ (685,782) $ (3,006,496) $ (1,585,107)
Net Loss Per Common Share:        
Basic $ (0.03) $ (0.03) $ (0.12) $ (0.09)
Weighted Average Common Shares Outstanding:        
Basic 26,507,410 21,025,193 25,621,557 18,074,187
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Condensed Consolidated Statements of Cash Flows (USD $) (USD $)
9 Months Ended
Sep. 30, 2012
Sep. 30, 2011
Cash Flows from Operating Activities:    
Net loss $ (3,006,496) $ (1,585,107)
Adjustments to reconcile net loss to net cash used in operating activities:    
Depreciation and amortization 168,917 85,380
Stock-based compensation 943,936 261,610
Beneficial Conversion Feature 120,254  
Amortization of deferred financing costs 18,772  
Abandonment of assets 4,819  
(Increase) decrease in operating assets:    
Accounts receivable 73,332 (44,045)
Prepaid expenses and other assets 48,973 (268,173)
(Decrease) Increase in operating liabilities:    
Accounts payable and accrued expenses 2,718 114,220
Total adjustments 1,381,721 148,992
Net Cash Used in Operating Activities (1,624,775) (1,436,115)
Cash Flows from Investing Activities:    
Acquisition of property and equipment (242,764) (497,715)
Net Cash Used in Investing Activities (242,764) (497,715)
Cash Flows from Financing Activities:    
Proceeds from Loan 265,525   
Proceeds from issuance of stock 1,626,761 2,264,250
Net Cash Provided by Financing Activities 1,892,286 2,264,250
Net Increase (Decrease) in Cash and Cash Equivalents 24,747 330,420
Cash and Cash Equivalents, beginning of period 605,563 763,581
Cash and Cash Equivalents, end of period 630,310 1,094,001
Supplemental Information:    
Cash paid for interest 29,978 1,070
Cash paid for taxes      
v2.4.0.6
1. BASIS OF PRESENTATION
9 Months Ended
Sep. 30, 2012
Basis Of Presentation  
Note 1. BASIS OF PRESENTATION

 

The accompanying condensed consolidated financial statements and footnotes thereto are unaudited.

 

The Condensed Consolidated Balance Sheets as of September 30, 2012 and December 31, 2011, the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2012 and 2011 and the Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2012 and 2011 have been prepared by us without audit, and in accordance with the requirements of Form 10-Q and, therefore, they do not include all information and footnotes necessary for a fair presentation of financial position, results of operations, and cash flows in conformity with accounting principles generally accepted in the United States of America. In our opinion, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary to present fairly in all material respects our financial position as of September 30, 2012, results of operations for the three and nine months ended September 30, 2012 and 2011 and cash flows for the nine months ended September 30, 2012 and 2011. All such adjustments are of a normal recurring nature. The results of operations and cash flows for the three and nine months ended September 30, 2012 are not necessarily indicative of the results to be expected for the full year. We have evaluated subsequent events through the filing of this Form 10-Q with the SEC, and determined there have not been any events that have occurred that would require adjustments to our unaudited Condensed Financial Statements.

 

The information contained in this report on Form 10-Q should be read in conjunction with our Form 10-K for our fiscal year ended December 31, 2011.

 

The preparation of financial statements in conformity with accounting principals generally accepted in the United States of America (GAAP) requires management to make estimates and assumptions that affect the amounts of assets, liabilities, revenue, costs and expenses. Actual results could differ from these estimates.

 

NATURE OF OPERATIONS - Ace Marketing & Promotions, Inc. (the "Company" or "Ace") began as promotional products company and has since evolved into an Integrated Marketing Solutions Company. Ace currently focuses on four business verticals; Branding, Interactive, Direct Relationship Marketing and Mobile Marketing.  With its newly developed suite of solutions in place, Ace now offer its clients and potential clients the ability to work smarter in addressing their marketing needs by leveraging technology platforms. The services and technology platforms assembled within each business vertical allows Ace to provide its clients with an exceptional mix of solutions for reaching their customers in ways that were previously impossible. Clients have the ability to choose a single solution within a vertical or a complete package of solutions working together seamlessly. By offering the entire suite of solutions, the need for multiple vendors has been eliminated, and Ace can be a single source provider of Branding, Interactive, Direct Relationship Marketing and Mobile Marketing Solutions.

 

Within the Branding vertical Ace has the ability to create the actual brand, in addition to providing all the branded merchandise.  This has been the core of the Ace business model since its inception.  The current focus within this vertical is to find new and innovative ways to leverage new technology platforms to drive growth beyond traditional channels.

 

  

The Interactive vertical deals with any online marketing & branding initiatives.  Utilizing the Ace Place Platform (a proprietary Content Management System); custom websites are created and total control of the site content is given back to the client.  Through the Ace Place platform, a client simply chooses from one of the many web-design packages and has the ability to change the content on the site without the need for a programmer and the high hourly fees that go along with them. With this power, their websites become dynamic and powerful marketing vehicles instead of just an online static ad.  For relevant clients, Ace can add an E-Commerce component to their website along with Email Marketing services to assist in marketing the site.  As an additional service, each site can be housed on Ace’s servers.

 

The Direct Relationship Marketing vertical creates 1 to 1 relationship marketing Solutions. Ace’s strategy for delivering successful marketing campaigns utilizes specific databases to personalize messages across a wide array of integrated delivery mechanisms. Ace has expanded its capabilities beyond direct mail to incorporate variable data programming technology into web applications, telephony, email, and print. Ace’s Direct Relationship Marketing solution helps attract new customers and retain exist ones by targeting each identified demographic group through our various tools to get the intended message across with measured results.

 

The Company's fourth business vertical is the Mobile Marketing vertical. The Mobile Marketing advertising medium is set to become the next component of marketing spends as mobile marketing continues to gain more and more momentum.  Technology allows advertisers to target and deliver rich media content to specific locations and times where it is most relevant. It gives advertisers the ability to reach consumers with their message as they are ready to make their purchasing decision. Ace Marketing & Promotions subsidiary Mobiquity Networks provides Location-Based Mobile marketing services via Bluetooth and Wi-Fi that requires no GPS tracking and no need to download and application.

 

Mobiquity Networks is a leading location based mobile marketing network in the US.  We utilize a targeted, location-based approach to reach audiences on their personal mobile devices when it matters most.  The Company employs a combination of leading-edge mobile technologies to deliver virtually any digital media content including images, videos, audio mp3s, maps, games, applications and coupons to mobile phones within targeted geographic locations. Mobiquity has focused on and built an extensive Location Based Mobile Marketing Mall Network which gives us access to over 90 million mobile customer visits per month while they are shopping. Our network allows brands to engage their potential customers with the right offer at the right place at the right time....when they are about to make a purchasing decision. Mobiquity currently has over 600 zones throughout 75 malls with over 96 million monthly visits. These zones create a cloud of coverage so that visitors do not need to go directly to one of these zone  access points. Some of our land mark malls include the following: Roosevelt Field – NY,  the Galleria-Houston, Lenox Square  -Atlanta,Northbridge-Chicago , Santa Monica Place-LA and Copley Place –Boston.

 

We have partnered with Blue Bite LLC. (“Blue Bite”), a premier provider of Proximity Marketing hardware and software solutions, and Eye Corp Pty Ltd., (“EyeCorp”) an out-of-home media company which operates the largest mall advertising display network in the United States, to roll-out an expansive network which comprises of retail, dining, transportation, sporting, music, and other high traffic venues.

     

Agreement  with Simon Property Group, L.P.

 

In April 2011, we signed an exclusive rights agreement with a Top Mall Developer (the "Simon Property Group") to create a location-based mobile marketing network called Mobiquity Networks. The 50 mall agreement runs through December of 2015 and includes top malls in the Simon Mall portfolio. This new alliance will give advertisers the opportunity to reach millions of mall visitors per month with mobile digital content and offers when they are most receptive to advertising messages.

 

In connection with Eye Corp., Mobiquity Networks will deliver digital content and offers to shoppers on their mobile devices through Eye Corp’s extensive Mall Advertising Network. Eye Corp and Mobiquity Networks have an exclusive agreement to build a location-based mobile marketing network throughout Eye Corp’s Mall Advertising network. New properties to be added to the Mobiquity Networks portfolio will include iconic malls in the top DMA’s (designated market area) in the US. These prestigious malls further complement Mobiquity Networks’ portfolio of prominent malls including Queens Center Mall in New York City, Northbridge in Chicago, and Santa Monica Place in Los Angeles.

 

Ace's Location-Based Mobile advertising medium is designed to reach on-the-go shoppers via their mobile devices with free rich media content delivered using Bluetooth or Wi-Fi. This advertising medium offers extremely targeted messaging engineered to engage and influence shoppers as they move about the mall environment. Eye Corp, along with Ace Marketing, will jointly create mobile marketing programs for existing clients in conjunction with their already active in mall advertising programs. Mobiquity Networks proximity marketing units will be strategically positioned in shopping malls near entrances, anchor stores, escalators and other high-traffic, and high dwell-time areas. Mobiquity Networks proximity marketing unit placement takes advantage of the opportunity to provide a reminder to consumers and touch them just before making a purchase decision. These units generate high awareness and brand recognition at the right time and place. When combined with the impact of other visual advertising mediums (in mall assets) or as a stand-alone medium, Mobiquity Networks is a great mobile solution to promote a brand on a local or national level.

 

v2.4.0.6
2. ACCOUNTING PRONOUNCEMENTS
9 Months Ended
Sep. 30, 2012
Accounting Pronouncements  
Note 2. ACCOUNTING PRONOUNCEMENTS

 

Except for rules and interpretive releases of the SEC under authority of federal securities laws and a limited number of grandfathered standards, the FASB Accounting Standards Codification™ (“ASC”) is the sole source of authoritative GAAP literature recognized by the FASB and applicable to the Company. Management has reviewed the aforementioned rules and releases and believes any effect will not have a material impact on the Company's present or future financial statements.

 

v2.4.0.6
3. SUMMARY OF SELECTED SIGNIFICANT ACCOUNTING POLICIES
9 Months Ended
Sep. 30, 2012
Summary Of Selected Significant Accounting Policies  
Note 3. SUMMARY OF SELECTED SIGNIFICANT ACCOUNTING POLICIES

  

Revenue Recognition - Revenue is recognized when title and risk of loss transfers to the customer and the earnings process is complete. In general, title passes to our customers upon the customer's receipt of the merchandise.  The Company applies the revenue recognition principles which provides for revenue to be recognized when (i) persuasive evidence of an arrangement exists, (ii) delivery has been completed, (iii) the customer accepts and verifies receipt, (iv) collectability is reasonably assured. The Company records all shipping and handling fees billed to customers as revenues and related costs as cost of goods sold, when incurred.

 

Estimates - The preparation of financial statements in conformity with 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 revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

Basis of Presentation - In the opinion of management, all adjustments consisting of normal recurring adjustments necessary for a fair statement of (a) the result of operations for the three and nine month periods ended September 30 2012 and 2011; (b) the financial position at September 30, 2012; and (c) cash flows for the nine month periods ended September 30, 2012 and 2011, have been made.

 

Consolidation - The Company's financial statements includes the accounts and activities of its wholly-owned subsidiary, Mobiquity Networks, Inc. All inter-company transactions have been eliminated.

  

v2.4.0.6
4. LOSS PER SHARE
9 Months Ended
Sep. 30, 2012
Loss Per Share  
Note 4. LOSS PER SHARE

  

Basic loss per common share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Dilutive loss per share gives effect to stock options and warrants, which are considered to be dilutive common stock equivalents. Basic loss per common share was computed by dividing net loss by the weighted average number of shares of common stock outstanding. The number of common shares potentially issuable upon the exercise of certain options and warrants that were excluded from the diluted loss per common share calculation was approximately 15,600,000 and 14,200,000 because they are anti-dilutive as a result of a net loss for the three months ended September 30, 2012 and 2011, respectively.

v2.4.0.6
5. STOCK COMPENSATION
9 Months Ended
Sep. 30, 2012
Stock Compensation Details Narratives  
Note 5. STOCK COMPENSATION

Compensation costs related to share-based payment transactions, including employee stock options, are recognized in the financial statements utilizing the straight line method for the cost of these awards.

 

The Company's results for the three month periods ended September 30, 2012 and 2011 include employee share-based compensation expense totaling approximately $23,000 and $85,000, respectively. The Company's results for the nine month periods ended September 30, 2012 and 2011 include employee share-based compensation expense totaling approximately $944,000 and $262,000, respectively.  Such amounts have been included in the Condensed Consolidated Statements of Operations within selling, general and administrative expenses. No income tax benefit has been recognized in the statement of operations for share-based compensation arrangements due to a history of operating losses.

 

The following table summarizes stock-based compensation expense for the three and nine months ended September 30, 2012 and 2011:

 

 

   Three Months Ended   Nine Months Ended 
   September 30,   September 30, 
   2012   2011   2012   2011 
                 
Employee stock-based compensation - option grants  $   $47,197   $238,500   $89,963 
Employee stock-based compensation - stock grants                 14,789 
Non-Employee stock-based compensation - option grants        31,180    77,364    104,232 
Non-Employee stock-based compensation - stock grants   (27,253)       577,388    14,365 
Non-Employee stock-based compensation-stock warrant   50,684    6,372    50,684    38,261 
Total  $23,431   $84,749   $943,936   $261,610 

 

v2.4.0.6
6. STOCK OPTION PLAN
9 Months Ended
Sep. 30, 2012
Stock Option Plan  
Note 6. STOCK OPTION PLAN

 

 

During Fiscal 2005, the Company established, and the stockholders approved, an Employee Benefit and Consulting Services Compensation Plan (the "2005 Plan") for the granting of up to 2,000,000 non-statutory and incentive stock options and stock awards to directors, officers, consultants and key employees of the Company. On June 9, 2005, the Board of Directors amended the Plan to increase the number of stock options and awards to be granted under the Plan to 4,000,000.  In October 2009, the Company established and the stockholders approved a 2009 Employee Benefit and Consulting Services Compensation Plan (the "2009 Plan") for granting up to 4,000,000 non-statutory and incentive stock options and awards to directors, officers, consultants and employees of the Company. (The 2005 Plan and the 2005 Plan are collectively referred to as the "Plans".)

 

All stock options under the Plans are granted at or above the fair market value of the common stock at the grant date. Employee and non-employee stock options vest over varying periods and generally expire either 5 or 10 years from the grant date.

 

The fair value of options at the date of grant was estimated using the Black-Scholes option pricing model. The fair values of these restricted stock awards are equal to the market value of the Company’s stock on the date of grant, after taking into certain discounts. The expected volatility is based upon historical volatility of our stock and other contributing factors. The expected term is based upon observation of actual time elapsed between date of grant and exercise of options for all employees. Previously, such assumptions were determined based on historical data.

   

 

The weighted average assumptions made in calculating the fair values of options granted during the three and nine months ended September 30, 2012 and 2011 are as follows:

   

    Three Months Ended
September 30
    Nine Months Ended
September 30
 
    2012     2011     2012     2011  
                         
Expected volatility      – %     187.04 %     456.70 %     108.97 %
Expected dividend yield                        
Risk-free interest rate     %     92.0 %     184.70 %     3.01 %
Expected term (in years)           7.73       6.24       7.73  

 

  

    Share     Weighted
Average
Exercise
Price
    Weighted
Average
Remaining
Contractual
Term
    Aggregate
Intrinsic
Value
 
                                 
Outstanding, January 1, 2012     3,505,000       .84       4.50     $ 0  
Granted     370,000       .69       9.50       0  
Exercised                              
Cancelled & Expired     50,000                          
                                 
Outstanding, September 30, 2012     3,825,000       .82       4.66     $ 77,250  
                                 
Options exercisable, September 30, 2012     3,825,000       .82       4.66     $ 77,250  

 

The weighted-average grant-date fair value of options granted during the nine months ended September 30, 2012 and 2011 was $.69 and $0.33, respectively.

 

The aggregate intrinsic value of options outstanding and options exercisable at September 30, 2012 is calculated as the difference between the exercise price of the underlying options and the market price of the Company's common stock for the shares that had exercise prices, that were lower than the $0.45 closing price of the Company's common stock on September 30, 2012.

 

As of September 30, 2012, the fair value of unamortized compensation cost related to unvested stock option awards was zero.

   

  

 

The weighted average assumptions made in calculating the fair value of warrants granted during the three and nine months ended September 30, 2012 and 2011 are as follows:

 

   

Three Months Ended

September 30

   

 Nine Months Ended

September 30

 
    2012     2011      2012     2011  
                                 
Expected volatility     52.88%       56.83%       52.88%       56.83%  
Expected dividend yield     -       -       -       -  
Risk-free interest rate     .3%       1.07%       .3%       1.07%  
Expected term (in years)     3.5       3       3.5       3  

 

  

    Share    

Weighted

Average

Exercise

Price

   

Weighted

Average

Remaining

Contractual

Term

   

Aggregate

Intrinsic

Value

 
                         
Outstanding, January 1, 2012     12,570,642     $ .48       1.84     $ 1,790,733   
Granted     1,730,556     $ .60       3.59          
Exercised     -       -                  
Cancelled     (2,524,877     -                  
Outstanding, September 30, 2012     11,776,321     $ .45       1.71       925,250   
                                 
Warrants exercisable, September 30, 2012     11,776,321     $ .45       1.71     $ 925,250  

 

 

v2.4.0.6
7. CONSULTING AGREEMENTS
9 Months Ended
Sep. 30, 2012
Consulting Agreements  
Note 7. CONSULTING AGREEMENTS

  

In January 2010, the Company entered into an agreement with a consulting firm to provide services over the next twelve months. The agreement provided for the issuance of 100,000 restricted common shares of Common Stock.

 

In January 2010, the Company also entered into an agreement with a two individuals to provide services over the next twelve months. The agreement provides for the issuance of 57,500 shares and 52,500 restricted common shares of Common Stock which vested immediately.

     

Pursuant to an agreement dated as of November 15, 2010, the Company entered into a three year contract with a consulting firm to provide certain financial and public relation services on a non-exclusive basis. Pursuant to the agreement, an initial retainer of $12,500 was paid. The agreement provides for the possible issuance of up to 250,000 common shares and up to $100,000 in cash compensation based upon referrals of credible and synergistic corporate partners and/or acquisitions, which acquisitions or partnerships must be approved by Ace. In January 2011 and August 2011, the Company approved the issuance of 50,000 shares and 175,000 shares of common stock, respectively, for consulting services rendered by this consultant.

 

In January 2011, the Company entered into an agreement with a consulting firm to provide business development services.  The agreement provides for the issuance of 100,000 shares of restricted Common Stock and Warrants to purchase 200,000 shares of restricted Common Stock.

 

In June 2011, we entered into a one-year Investor Relation, Public Awareness Agreement with Legend Securities, Inc. at a cost of $10,000 per month and 75,000 shares of restricted Common Stock per quarter. In June 2012, we renewed the investor relation contract for an additional one year substantially on the same terms.

 

Ace has retained an outside contractor to build its website development program at a cost of $120,000, $80,000 of which has been paid and the remaining $40,000 was accrued in the quarter ended September 30, 2011. At its option, Ace made the final $40,000 payment to the contractor through the issuance of 66,000 shares of its restricted Common Stock.

  

In April 2012, the Company entered into consulting and public relation contracts pursuant to which the Company issued an aggregate of 240,000 restricted shares of its Common Stock. These contracts have been terminated and the Company received a return of 71,040 shares in settlement of all obligations to each other. This recoupment of shares totaling $122,328 in compensation is reflected in the third quarter 2012 results of operations.

v2.4.0.6
8. PRIVATE PLACEMENT
9 Months Ended
Sep. 30, 2012
Private Placement  
Note 8. PRIVATE PLACEMENT

  

On December 8, 2009, Ace Marketing & Promotions, Inc. entered into an Introducing Agent Agreement with Legend Securities, Inc., a FINRA registered broker-dealer ("Legend"), to attempt to raise additional financing through the sale of its Common Stock and Warrants. Between December 8, 2009 and March 15, 2010, the Company closed on gross proceeds of $1,025,000 before commissions of $117,000. The planned use of proceeds is to primarily expand the Company's mobile and interactive divisions.  The Company issued pursuant to the terms of the offering an aggregate of 2,050,000 shares of Common Stock at a per share price of $.50 per share and 1,025,000 Warrants exercisable at $1.00 per share to investors in the offering and placement agent warrants to purchase an amount equal to 10% of the number of shares and the number of warrants sold in the offering. All securities were issued pursuant to Rule 506 of Regulation D promulgated under Section 4(2) of the Securities Act of 1933, as amended.

  

In August 2010, the Company raised $175,000 in gross proceeds from the sale of 437,500 shares and a like number of Warrants expiring in August 2013.  The investor paid $0.40 per Share and received Warrants exercisable at $0.60 per Share.  In November 2010, the Company commenced a plan of financing and raised an additional $800,500 in financing from the sale of 2,934,999 Shares of its restricted Common Stock at $0.30 per Share and Class E Common Stock Purchase Warrants to purchase a like number of Shares, exercisable at $0.30 per Share through August 31, 2013. Subsequent to the completion of the second financing, the Company agreed to adjust the terms of the August 2010 transaction and issue to the August 2010 investor Shares and Class E Warrants on the same terms as those sold in November - December 2010. Accordingly, an additional 145,833 Shares and a like number of Warrants were issued to the August 2010 investor, with the exercise price of the Warrants being lowered from $0.60 per Share to $0.30 per Share.

 

In March 2011, the Company commenced a private placement offering. Pursuant to said offering which terminated on April 19, 2011, the Company raised $755,000 in gross proceeds from the sale of 2,516,667 shares of common stock and a like number of warrants, exercisable at $.30 per share through August 31, 2013. An additional 100,000 shares and 100,000 warrants were issued for advisory services in connection with such offering to a person who later became a director of the Company. Exemption is claimed for the sale of securities pursuant to Rule 506 and/or Section 4(2) of the Securities Act of 1933, as amended.

 

Between May 25, 2011 and June 3, 2011, the Company received gross proceeds of $461,250 from the sale of 1,025,000 shares of Common Stock at a purchase price of $.45 per share. The sale of stock was also accompanied by Warrants expiring on May 31, 2014. Exemption is claimed for the sale of securities pursuant to Rule 506 and/or Section 4(2) of the Securities Act of 1933, as amended.

 

In July 2011, the Company commenced a private placement offering. Pursuant to said offering between July 14, 2011 and August 1, 2011, the Company raised $975,000 in gross proceeds from the sale of 1,950,000 shares of common stock and a like number of warrants, exercisable at $.60 per share through July 31, 2014. Exemption is claimed for the sale of securities pursuant to Rule 506 and/or Section 4(2) of the Securities Act of 1933, as amended.

 

Rockwell Global Capital LLC acted as Placement Agent of a private placement offering of the Company which terminated on January 30, 2012. The Company received gross proceeds of $575,000 from the sale of 958,338 shares of Common Stock at a purchase price of $.60 per share. The private placement offering also included the sale of Warrants to purchase 191,671 shares of Common Stock, exercisable at $.60 per share and expiring on January 18, 2016. The Placement Agent received a $25,000 advisory fee, $51,750 in commissions and warrants to purchase 95,833 shares identical to the warrants sold to investors in the offering. Exemption is claimed for the sale of securities pursuant to Rule 506 and/or Section 4(2) of the Securities Act of 1933, as amended. In March through June 30, 2012 and July through September 2012, the Company issued 51,736 shares and 63,670 shares of common stock, respectively, as initial liquidated damages for failing to file a registration statement to register the resale of securities issued to investors of the January 2012 private placement offering.

 

On July 10, 2012, the Company sold 1,347,201 shares of its Common Stock to various investors at $.45 per share subject to anti-dilution protection rights for a period of 24 months. The Company received gross proceeds of $606,240 before offering costs. Each investor received Fixed Price Warrants to purchase 50% of the number of shares of Common Stock purchased in the Offering. The Fixed Price Warrants are exercisable at any time from the date of issuance through July 10, 2017 at an exercise price of $.55. Each investor also received a Warrant to purchase 20% of the number of shares that were purchased in the Offering (the “Milestone Warrants”). The Milestone Warrants will automatically be exercised without any additional consideration to be paid in the event the Company reports audited gross revenues of less than $5,000,000 for the period July 1, 2012 through June 30, 2013 unless the volume weighted average price for the Company’s Common Stock exceeds $1.00 per share for a period of at least 30 trading days prior to January 5, 2013.

 

 

Between April 1, 2012 and May 15, 2012, the Company sold 470,000 shares of Series 1 Convertible Preferred Stock at $1.00 per share. The Company received $390,500 cash, net of closing costs of $79,500.

 

The Series 1 Convertible Preferred Stock has the following rights, preferences and privileges:

 

  · Automatic Conversion into Common Stock. Each Preferred Share shall automatically convert on March 31, 2013 into shares of the Company’s Common Stock (the “Common Shares”) based on a conversion price of the lower of $.60 per share or an amount equal to 90% of the average closing sales price for the Company’s Common Stock on the OTC Bulletin Board (or Pink Sheets) for the 20 trading days immediately preceding March 31, 2013, with a floor of $.45 per share.

 

  · Optional Conversion into Common Stock. Commencing July 1, 2012, each Preferred Share shall at the option of the holder become convertible into Common Shares based on a conversion price of the lower of $.60 per share or 85% of the average closing sales price for the Company’s Common Stock on the OTC Bulletin Board (or Pink Sheets) for the 20 trading days immediately preceding the Conversion Date, with a floor of $.45 per share.

 

  · Conversion Premium. Upon calculation of the number of Common Shares, the Preferred Shareholder is entitled to receive upon conversion of Series 1 Preferred Stock into Common Stock, the investor will receive an additional 8% premium. Accordingly, once the number of Common Shares is determined based upon the automatic conversion or optional conversion formulas set forth above, the investor will have that number of Common Stock multiplied by 1.08 (i.e. 108%) to determine the actual number of Common Shares to be issued upon conversion.

 

  · Voting. The Preferred Shares shall have no voting rights until converted into Common Shares, except as otherwise required by applicable state law.

 

  · Dividends. The Preferred Shares shall have no dividend rights until converted into Common Shares, except as otherwise required by applicable state law.

 

  · Liquidation Preference. The Preferred Shares shall have no liquidation preference and shall be treated the same as a holder of Common Shares.

 

  · Call Option. The Company may call the Preferred Shares for redemption at a price of $1.08 per share at any time on or after July 1, 2012, subject to the investor’s right of conversion upon no less than 10 days prior written notice of redemption to each Preferred Shareholder, which notice may only be provided to the holders so long as the Company completes a financing or series of financings totaling at least $2 million in gross proceeds (excluding monies raised from the sale of the Series 1 Preferred Stock).

 

  · Anti-Dilution. In the event of a stock split, stock dividend, combination, reclassification or the like (the “Corporate Event”), the Board of Directors of the Company shall make appropriate adjustment to the number of Common Shares into which the Preferred Shares shall convert to put the Preferred Shareholder in the same position as if the Preferred Shares were converted into Common Shares immediately before the Corporate Event took place.

 

v2.4.0.6
9. OPTIONS OUTSIDE COMPENSATION PLAN
9 Months Ended
Sep. 30, 2012
Options Outside Compensation Plan  
Note 9. OPTIONS OUTSIDE COMPENSATION PLAN

  

On March 25, 2010, the Company granted Non-Statutory Stock Options to purchase 10,000 shares of the Company’s Common Stock to an attorney for services rendered at an exercise price of $.54 per share, with 100% of the options vesting immediately and expiring on March 25, 2020.

 

On March 25, 2010, the Company issued a total of 100,000 Non-Statutory Stock Options to two key employees in accordance with their employment agreement.  The Options have an exercise price of $.54 per share, with 100% of the options vesting immediately and expiring on March 25, 2020.

 

On April 9, 2009, the Company hired a firm as an independent sales organization to promote its proximity marketing units in the sports and entertainment industry. The firm was granted options to purchase 100,000 shares at

$.90 per share outside of Ace’s compensation plan which generates approximately a non-cash $3,000 expense on a monthly basis.

v2.4.0.6
10. SHARED BASED COMPENSATION
9 Months Ended
Sep. 30, 2012
Shared Based Compensation  
Note 10. SHARED BASED COMPENSATION

 

 

On January 4, 2010, the Company issued 6,000 Warrants to purchase Common Stock to an independent consultant to manage sales relationships.  The services were recorded equal to the value of the shares at the date of grant and an expense of $3,051 is included in the operating expenses for the year ended December 31, 2010.

 

On August 17, 2010, the Company issued 145,600 Warrants to purchase Common Stock to franchisee owners of a chain store for the purpose of placing proximity marketing units in their business locations.

 

RESTRICTED STOCK GRANTS - In January 2010, the Company entered into an agreement with a consulting firm to provide services over the next twelve months.  The agreement provides for the issuance of 100,000 restricted Common Stock.

 

In January 2010, the Company also entered into an agreement with two individuals to provide services over the next twelve months.  The agreement provides for the issuance of 57,500 shares and 52,500 restricted common shares of Common Stock which vest immediately.

 

Pursuant to an agreement dated as of November 15, 2010, the Company entered into a three year contract with a consulting firm to provide certain financial and public relation services on a non-exclusive basis. Pursuant to the agreement, an initial retainer of $12,500 was paid. The agreement provides for the possible issuance of up to 250,000 common shares and up to $100,000 in cash compensation based upon referrals of credible and synergistic corporate partners and/or acquisitions, which acquisitions or partnerships must be approved by Ace. In January 2011, the Company approved the issuance of 50,000 shares of common stock for consulting services rendered by this consultant.  In August 2011, the Company issued an additional 175,000 shares of Common Stock for consulting services rendered by the consultant.

 

 

During the past three years, the Company has granted under our 2005 Plan certain employees and consultants restricted stock awards for services for the prior year with vesting to occur after the passage of an additional 12 months. These awards totaled 45,000 Shares for 2008, subject to continued services with the Company through December 31, 2009.  These awards totaled 51,000 Shares for 2009 subject to continued services with the Company through December 31, 2010.  These awards totaled 105,000 Shares for 2010 subject to continued services with the Company through December 31, 2011. These awards totaled 45,000 shares for 2011 subject to continued services with the Company through December 31, 2012.

 

The Company's results for the three months ended September 30, 2012 and 2011 include employee share-based compensation expense totaling approximately $(35,000) and $85,000, respectively. The Company's results for the nine months ended September 30, 2012 and 2011 include employee share-based compensation expense totaling approximately $926,000 and $262,000, respectively. Such amounts have been included in the Statements of Operations within selling, general and administrative expenses. No income tax benefit has been recognized in the statement of operations for share-based compensation arrangements due to a history of operating losses.    

v2.4.0.6
11. SEGMENT INFORMATION
9 Months Ended
Sep. 30, 2012
Segment Information  
Note 11. SEGMENT INFORMATION

  

Reportable operating segment is determined based on Ace Marketing & Promotion Inc.’s management approach. The management approach, as defined by accounting standards which have been codified into FASB ASC 280, “Segment Reporting,” is based on the way that the chief operating decision-maker organizes the segments within an enterprise for making decisions about resources to be allocated and assessing their performance. Our chief operating decision-maker is our Chief Executive Officer and Chief Financial Officer.

 

While our results of operations are primarily reviewed on a consolidated basis, the chief operating decision-maker also manages the enterprise in two operating segments: (i) Branding & Branded Merchandise (ii) Mobil Marketing

 

Corporate management defines and reviews segment profitability based on the same allocation methodology as presented in the segment data tables below:

  

    Quarter Ended September 30, 2012  
    Ace Marketing & Promotions, Inc.    

Mobiquity

Networks Inc.

    Total  
Net Sales   $ 730,392     $ 40,000     $ 770,392  
Operating (loss)     (186,108 )     (455,704 )     (641,812 )
Interest income     106               106  
Interest (expense)     (24,869 )             (24,869 )
Depreciation and Amortization     16,432       46,241       62,673  
Net Loss      (210,871 )     (455,704 )     (666,575 )
Total assets at September 30, 2012     1,533,382       643,827       2,177,209  
                         

   

All intersegment sales and expenses have been eliminated from the table above.

 

v2.4.0.6
12. EMPLOYMENT CONTRACTS/DIRECTOR COMPENSATION
9 Months Ended
Sep. 30, 2012
Employment Contractsdirector Compensation  
Note 12. EMPLOYMENT CONTRACTS/DIRECTOR COMPENSATION

  

On April 7, 2010, the Board of Directors approved a five-year extension of the employment contracts of Dean L. Julia and Michael D. Trepeta to expire on March 1, 2015. The Board approved the continuation of each officer's annual salary and scheduled salary increases on March 1 of each year of $2,000 per month. The Board also approved a signing bonus of stock options to purchase 200,000 shares granted to each officer which is fully vested at the date of grant and exercisable at $.50 per share through April 7, 2020; ten-year stock options to purchase 100,000 shares of Common Stock to be granted to each officer at fair market value on each anniversary date of the contract and extension thereof commencing March 1, 2011; and termination pay of one year base salary based upon the scheduled annual salary of each executive officer for the next contract year plus the amount of bonuses paid or entitled to be paid to the executive for the current fiscal year or the preceding fiscal year, whichever is higher. In the event of termination, the executives will continue to receive all benefits included in the employment agreement through the scheduled expiration date of said employment agreement prior to the acceleration of the termination date thereof.

 

On April 7, 2010, the Board of Directors approved the grant of options to purchase 150,000 shares of Common Stock to a director, exercisable at $.50 per share at any time from the date of grant through April 7, 2020. The Board also approved commencing March 1, 2011, and every March 1st thereafter, the grant of 50,000 ten-year stock options to purchase shares at the fair market value at the date of grant to each director who is not an  executive officer  of  the Company.   On March 1, 2011, the Company granted a non-executive  director options to purchase 50,000 shares exercisable at $.50 per share. The board did not take any action to authorize options to be issued to non-executive officers on March 1, 2012; however, the two non-executive directors and Sean Trepeta each were granted ten-year options to purchase 50,000 shares exercisable at $.75 per share on May 7, 2012.

 

On March 1, 2011 and March 1, 2012, Messrs. Julia and Trepeta each received 10-year options to purchase 100,000 shares, with the 2011 options exercisable at $.26 per share and the 2012 options exercisable at $.61 per share.  On April 21, 2011, a consultant who would later become a director of the Company received 100,000 shares of Common Stock valued at $.30 per share together with a warrant to purchase 100,000 shares of Common Stock exercisable at $.30 per share expiring on August 13, 2013 in exchange for advisor’s services in connection with a private offering.  In December 2011, the Company granted a director of the Company options to purchase 200,000 shares of the Company’s Common Stock exercisable at $.60 per share over a term of five years.

v2.4.0.6
13. NEW FACILITIES
9 Months Ended
Sep. 30, 2012
New Facilities  
Note 13. NEW FACILITIES

  

In February 2012, the Company entered into a lease agreement for new executive office space of approximately 4,200 square feet located at 600 Old Country Road, Garden City, NY 11530.   The lease agreement is for 63 months. The annual rent under this office facility for the first year is estimated at $127,000, including electricity, subject to an annual increase of 3%. In the event of a default in which the Company is evicted from the office space, Ace would be responsible to the landlord for an additional payment of rent of $160,000 in the first year of the lease, an additional payment of $106,667 in the second year of the lease and an additional payment of rent of $53,333 in the third year of the lease. Such additional rent would be payable at the discretion of the Company in cash or in Common Stock of the Company.

v2.4.0.6
14. WARRANT EXERCISE
9 Months Ended
Sep. 30, 2012
Warrant Exercise  
Note 14. WARRANT EXERCISE

 

 

The weighted average assumptions made in calculating the fair value of warrants granted during the three and nine months ended September 30, 2012 and 2011 are as follows:

 

   

Three Months Ended

September 30

   

 Nine Months Ended

September 30

 
    2012     2011      2012     2011  
                                 
Expected volatility     52.88%       56.83%       52.88%       56.83%  
Expected dividend yield     -       -       -       -  
Risk-free interest rate     .3%       1.07%       .3%       1.07%  
Expected term (in years)     3.5       3       3.5       3  

 

  

    Share    

Weighted

Average

Exercise

Price

   

Weighted

Average

Remaining

Contractual

Term

   

Aggregate

Intrinsic

Value

 
                         
Outstanding, January 1, 2012     12,570,642     $ .48       1.84     $ 1,790,733   
Granted     1,730,556     $ .60       3.59          
Exercised     -       -                  
Cancelled     (2,524,877     -                  
Outstanding, September 30, 2012     11,776,321     $ .45       1.71       925,250   
                                 
Warrants exercisable, September 30, 2012     11,776,321     $ .45       1.71     $ 925,250  

 

v2.4.0.6
15. COMMITTED EQUITY FACILITY AGREEMENT/REGISTRATION RIGHTS AGREEMENT
9 Months Ended
Sep. 30, 2012
Committed Equity Facility Agreementregistration Rights Agreement  
Note 15. COMMITTED EQUITY FACILITY AGREEMENT/REGISTRATION RIGHTS AGREEMENT

  

On June 12, 2012, Ace Marketing & Promotions, Inc. (the “Company”) finalized a committed equity facility (the “Equity Facility”) with TCA Global Credit Master Fund, LP, a Cayman Islands limited partnership (“TCA”), whereby the parties entered into as of May 31, 2012 (i) a committed equity facility agreement (the “Equity Agreement”) and (ii) a registration rights agreement (the “Registration Rights Agreement”).

 

Committed Equity Facility Agreement

 

On June 12, 2012, the Company finalized a Equity Agreement with TCA. Pursuant to the terms of the Equity Agreement, for a period of twenty-four months commencing on the effective date of the Registration Statement (as defined herein), TCA shall commit to purchase up to $2,000,000 of the Company’s common stock (the “Shares”), pursuant to Advances (as defined below), covering the Registrable Securities (as defined below). The purchase price of the Shares under the Equity Agreement is equal to ninety-five percent (95%) of the lowest daily volume weighted average price of the Company’s common stock during the five (5) consecutive trading days after the Company delivers to TCA an Advance notice in writing requiring TCA to advance funds (an “Advance”) to the Company, subject to the terms of the Equity Agreement.

 

The “Registrable Securities” include (i) the Shares; and (ii) any securities issued or issuable with respect to the Shares by way of exchange, stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization or otherwise.

 

As further consideration for TCA entering into and structuring the Equity Facility, the Company shall pay to TCA a fee by issuing to TCA that number of shares of the Company’s common stock that equal a dollar amount of one hundred thousand dollars ($100,000) (the “Facility Fee Shares”). It is the intention of the Company and TCA that the value of the Facility Fee Shares shall equal $100,000. In the event the value of the Facility Fee Shares issued to TCA does not equal $100,000 after a ninth month evaluation date, the Equity Agreement provides for an adjustment provision allowing for necessary action to adjust the number of shares issued.

 

Registration Rights Agreement

 

On June 12, 2012, the Company finalized the Registration Rights Agreement with TCA. Pursuant to the terms of the Registration Rights Agreement, the Company is obligated to file a registration statement (the “Registration Statement”) with the U.S. Securities and Exchange Commission (the “SEC’) to cover the Registrable Securities. The Company must use its commercially reasonable efforts to cause the Registration Statement to be declared effective by the SEC. To date, no Registration Statement has been filed by the Company.

  

v2.4.0.6
16. CONVERTIBLE PROMISSORY NOTE
9 Months Ended
Sep. 30, 2012
Convertible Promissory Note  
Note 16. CONVERTIBLE PROMISSORY NOTE

  

On June 12, 2012, Ace Marketing & Promotions, Inc. (the “Company”) closed on a security agreement dated as of May 31, 2012 (the “Security Agreement”) with TCA Global Credit Master Fund, LP, a Cayman Islands limited partnership (“TCA”), related to a $350,000 convertible promissory note issued by the Company in favor of TCA (the “Convertible Note”), which Convertible Note was funded by TCA on June 12, 2012. The maturity date of the Convertible Note is December 2013, and the Convertible Note bears interest at a rate of twelve percent (12%) per annum. The Convertible Note is convertible into shares of the Company’s common stock at a price equal to ninety-five percent (95%) of the average of the lowest daily volume weighted average price of the Company’s common stock during the five (5) trading days immediately prior to the date of conversion. The Convertible Note may be prepaid in whole or in part at the Company’s option without penalty. The Security Agreement grants to TCA a continuing, first priority security interest in all of the Company’s assets, wheresoever located and whether now existing or hereafter arising or acquired. The Company’s wholly-owned subsidiary, Mobiquity Networks, Inc., also entered into a similar Security Agreement and Guaranty Agreement.

 

v2.4.0.6
3. SUMMARY OF SELECTED SIGNIFICANT ACCOUNTING POLICIES (Policies)
9 Months Ended
Sep. 30, 2012
Basis Of Presentation Policies  
Revenue Recognition

 Revenue Recognition - Revenue is recognized when title and risk of loss transfers to the customer and the earnings process is complete. In general, title passes to our customers upon the customer's receipt of the merchandise.  The Company applies the revenue recognition principles which provides for revenue to be recognized when (i) persuasive evidence of an arrangement exists, (ii) delivery has been completed, (iii) the customer accepts and verifies receipt, (iv) collectability is reasonably assured. The Company records all shipping and handling fees billed to customers as revenues and related costs as cost of goods sold, when incurred.

Estimates

 

Estimates - The preparation of financial statements in conformity with 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 revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

Basis of Presentation

 Basis of Presentation - In the opinion of management, all adjustments consisting of normal recurring adjustments necessary for a fair statement of (a) the result of operations for the three and nine month periods ended September 30 2012 and 2011; (b) the financial position at September 30, 2012; and (c) cash flows for the nine month periods ended September 30, 2012 and 2011, have been made.

Consolidation

 

Consolidation - The Company's financial statements includes the accounts and activities of its wholly-owned subsidiary, Mobiquity Networks, Inc. All inter-company transactions have been eliminated.

v2.4.0.6
5. STOCK COMPENSATION (Tables)
9 Months Ended
Sep. 30, 2012
Stock Compensation Tables  
Stock-based compensation expense

 

The following table summarizes stock-based compensation expense for the three and nine months ended September 30, 2012 and 2011: 

 

    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
    2012     2011     2012     2011  
                         
Employee stock-based compensation - option grants   $       $ 47,197     $ 238,500     $ 89,963  
Employee stock-based compensation - stock grants                           14,789  
Non-Employee stock-based compensation - option grants             31,180       77,364       104,232  
Non-Employee stock-based compensation - stock grants     (27,253 )           577,388       14,365  
Non-Employee stock-based compensation-stock warrant     50,684       6,372       50,684       38,261  
Total   $ 23,431     $ 84,749     $ 943,936     $ 261,610  

 

v2.4.0.6
6. STOCK OPTION PLAN (Tables)
9 Months Ended
Sep. 30, 2012
Stock Option Plan Tables  
Weighted average assumptions made in calculating the fair values of options

 

 

 

The weighted average assumptions made in calculating the fair values of options granted during the three and nine months ended September 30, 2012 and 2011 are as follows:

   

    Three Months Ended
September 30
    Nine Months Ended
September 30
 
    2012     2011     2012     2011  
                         
Expected volatility      – %     187.04 %     456.70 %     108.97 %
Expected dividend yield                        
Risk-free interest rate     %     92.0 %     184.70 %     3.01 %
Expected term (in years)           7.73       6.24       7.73  

  

    Share     Weighted
Average
Exercise
Price
    Weighted
Average
Remaining
Contractual
Term
    Aggregate
Intrinsic
Value
 
                                 
Outstanding, January 1, 2012     3,505,000       .84       4.50     $ 0  
Granted     370,000       .69       9.50       0  
Exercised                              
Cancelled & Expired     50,000                          
                                 
Outstanding, September 30, 2012     3,825,000       .82       4.66     $ 77,250  
                                 
Options exercisable, September 30, 2012     3,825,000       .82       4.66     $ 77,250  

 

Weighted average assumptions made in calculating the fair value of warrants

 

 

The weighted average assumptions made in calculating the fair value of warrants granted during the three and nine months ended September 30, 2012 and 2011 are as follows:

 

   

Three Months Ended

September 30

   

 Nine Months Ended

September 30

 
    2012     2011      2012     2011  
                                 
Expected volatility     52.88%       56.83%       52.88%       56.83%  
Expected dividend yield     -       -       -       -  
Risk-free interest rate     .3%       1.07%       .3%       1.07%  
Expected term (in years)     3.5       3       3.5       3  

 

  

    Share    

Weighted

Average

Exercise

Price

   

Weighted

Average

Remaining

Contractual

Term

   

Aggregate

Intrinsic

Value

 
                         
Outstanding, January 1, 2012     12,570,642     $ .48       1.84     $ 1,790,733   
Granted     1,730,556     $ .60       3.59          
Exercised     -       -                  
Cancelled     (2,524,877     -                  
Outstanding, September 30, 2012     11,776,321     $ .45       1.71       925,250   
                                 
Warrants exercisable, September 30, 2012     11,776,321     $ .45       1.71     $ 925,250  

 

v2.4.0.6
11. SEGMENT INFORMATION (Tables)
9 Months Ended
Sep. 30, 2012
Segment Information Tables  
Segment profitability information

 

 

Corporate management defines and reviews segment profitability based on the same allocation methodology as presented in the segment data tables below:

  

    Quarter Ended September 30, 2012  
    Ace Marketing & Promotions, Inc.    

Mobiquity

Networks Inc.

    Total  
Net Sales   $ 730,392     $ 40,000     $ 770,392  
Operating (loss)     (186,108 )     (455,704 )     (641,812 )
Interest income     106               106  
Interest (expense)     (24,869 )             (24,869 )
Depreciation and Amortization     16,432       46,241       62,673  
Net Loss      (210,871 )     (455,704 )     (666,575 )
Total assets at September 30, 2012     1,533,382       643,827       2,177,209  
                         

v2.4.0.6
4. LOSS PER SHARE (Details Narratives)
3 Months Ended
Sep. 30, 2012
Sep. 30, 2011
Loss Per Share    
Shares excluded from the diluted loss per common share 15,600,000 14,200,000
v2.4.0.6
5. STOCK COMPENSATION (Details) (USD $)
3 Months Ended 9 Months Ended
Sep. 30, 2012
Sep. 30, 2011
Sep. 30, 2012
Sep. 30, 2011
Stock Compensation Details        
Employee stock-based compensation - option grants   $ 47,197 $ 238,500 $ 89,963
Employee stock-based compensation - stock grants        14,789
Non-Employee stock-based compensation - option grants   31,180 77,364 104,232
Non-Employee stock-based compensation - stock grants (27,253)    577,388 14,365
Non-Employee stock-based compensation-stock warrant 50,684 6,372 50,684 38,261
Total $ 23,431 $ 84,749 $ 943,936 $ 261,610
v2.4.0.6
5. STOCK COMPENSATION (Details Narratives) (USD $)
3 Months Ended 9 Months Ended
Sep. 30, 2012
Sep. 30, 2011
Sep. 30, 2012
Sep. 30, 2011
Stock Compensation Details Narratives        
Employee share-based compensation expense $ 23,000 $ 85,000 $ 262,000 $ 944,000
v2.4.0.6
6. STOCK OPTION PLAN (Details)
3 Months Ended 9 Months Ended
Sep. 30, 2012
Sep. 30, 2011
Sep. 30, 2012
Sep. 30, 2011
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Expected volatility    187.04% 456.70% 108.97%
Expected dividend yield            
Risk-free interest rate    92.00% 184.70% 3.01%
Expected term (in years)   7 years 9 months 6 years 3 months 7 years 9 months
Warrant [Member]
       
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Expected volatility 52.88% 56.83% 52.88% 56.83%
Expected dividend yield            
Risk-free interest rate 0.30% 1.07% 0.30% 1.07%
Expected term (in years) 3 years 6 months 3 years 3 years 6 months 3 years
v2.4.0.6
6. STOCK OPTION PLAN (Details 1) (USD $)
9 Months Ended
Sep. 30, 2012
Warrant [Member]
 
Shares  
Shares outstanding - beginning 12,570,642
Shares granted 1,730,556
Shares exercises   
Shares cancelled and expired (2,524,877)
Shares outstanding - ending 11,776,321
Shares exercisable 11,776,321
Weighted Average Exercise Price  
Weighted average exercise price - beginning $ 0.48
Weighted average exercise price - shares granted $ 0.6
Weighted average exercise price - ending $ 0.45
Weighted average exercise price - exercisable $ 0.45
Weighted Average Remaining Contractural Term  
Weighted average contractural term - beginning 1 year 10 months 10 days
Weighted average contractural term - granted 3 years 7 months 7 days
Weighted average contractural term - ending 1 year 8 months 22 days
Weighted average contractural term - exercisable 1 year 8 months 22 days
Aggregate Intrinsic Value  
Aggregate intrinsic value - beginning $ 1,790,733
Aggregate intrinsic value - ending 925,250
Aggregate intrinsic value - exercised 925,250
EmployeeStockOptionMember
 
Shares  
Shares outstanding - beginning 3,505,000
Shares granted 370,000
Shares exercises   
Shares cancelled and expired 50,000
Shares outstanding - ending 3,825,000
Shares exercisable 3,825,000
Weighted Average Exercise Price  
Weighted average exercise price - beginning $ 0.84
Weighted average exercise price - shares granted $ 0.69
Weighted average exercise price - ending $ 0.82
Weighted average exercise price - exercisable $ 0.82
Weighted Average Remaining Contractural Term  
Weighted average contractural term - beginning 4 years 6 months
Weighted average contractural term - granted 9 years 6 months
Weighted average contractural term - ending 4 years 8 months 3 days
Weighted average contractural term - exercisable 4 years 8 months 3 days
Aggregate Intrinsic Value  
Aggregate intrinsic value - beginning 0
Aggregate intrinsic value - granted 0
Aggregate intrinsic value - ending 77,250
Aggregate intrinsic value - exercised $ 77,250
v2.4.0.6
10. SHARED BASED COMPENSATION (Details Narrative) (USD $)
3 Months Ended 9 Months Ended
Sep. 30, 2012
Sep. 30, 2011
Sep. 30, 2012
Sep. 30, 2011
Shared Based Compensation Details Narrative        
Employee share-based compensation expense $ 23,000 $ 85,000 $ 944,000 $ 262,000
v2.4.0.6
11. SEGMENT INFORMATION (Details) (USD $)
3 Months Ended 9 Months Ended
Sep. 30, 2012
Sep. 30, 2011
Sep. 30, 2012
Sep. 30, 2011
Dec. 31, 2011
Financing Receivable, Allowance for Credit Losses [Line Items]          
Net Sales $ 770,392        
Operating (loss) (641,812)        
Interest income 106 217 332 485  
Interest (expense) (24,869)        
Depreciation and amortization 62,673   168,917 85,380  
Exp Net Loss (666,575) (685,782) (3,006,496) (1,585,107)  
Total assets at September 30, 2012 2,177,208   2,177,208   2,205,738
Ace Marketing And Promotions Inc [Member]
         
Financing Receivable, Allowance for Credit Losses [Line Items]          
Net Sales 730,392        
Operating (loss) (186,108)        
Interest income 106        
Interest (expense) (24,869)        
Depreciation and amortization 16,432        
Exp Net Loss (210,871)        
Total assets at September 30, 2012 1,533,382   1,533,382    
Mobiquity Networks [Member]
         
Financing Receivable, Allowance for Credit Losses [Line Items]          
Net Sales 40,000        
Operating (loss) (455,704)        
Depreciation and amortization 46,241        
Exp Net Loss (455,704)        
Mobiquity Networks Inc [Member]
         
Financing Receivable, Allowance for Credit Losses [Line Items]          
Total assets at September 30, 2012 $ 643,827   $ 643,827