Oklahoma
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73-1518725
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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Large accelerated filer o
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Accelerated filer o
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Non-accelerated filer o
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Smaller reporting company x
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(Do not check if a smaller reporting company)
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INDEX
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PART I.
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FINANCIAL INFORMATION
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ITEM 1
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Financial Statements
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Balance Sheets as of September 30, 2011 (Unaudited) and December 31, 2010 (Audited)
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5
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Statements of Operations for the three and nine months ended September 30, 2011 and 2010 (Unaudited)
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6
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Statements of Cash Flows for the nine months ended September 30, 2011 and 2010 (Unaudited)
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7
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Notes to Interim Unaudited Financial Statements
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8-15
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ITEM 2.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations
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16-22
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ITEM 3.
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Quantitative and Qualitative Disclosures about Market Risk
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22
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ITEM 4.
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Controls and Procedures
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23
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PART II.
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OTHER INFORMATION
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ITEM 1.
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Legal Proceedings
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24
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ITEM 1A.
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Risk Factors
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24
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ITEM 2.
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Unregistered Sales of Equity Securities and Use of Proceeds
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24
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ITEM 3.
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Defaults Upon Senior Securities
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25
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ITEM 4.
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(Reserved)
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25
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ITEM 5.
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Other Information
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25
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ITEM 6.
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Exhibits
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25
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SIGNATURES
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26
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MACROSOLVE, INC.
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||||||||
BALANCE SHEETS
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||||||||
(unaudited)
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(audited)
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|||||||
9/30/2011
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12/31/2010
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|||||||
ASSETS
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||||||||
CURRENT ASSETS:
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||||||||
Cash
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$ | 395,961 | $ | 187,025 | ||||
Accounts receivable - trade
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118,361 | 31,535 | ||||||
Prepaid expenses and other
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271,231 | 50,324 | ||||||
Total current assets
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785,553 | 268,884 | ||||||
PROPERTY AND EQUIPMENT, at cost:
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277,844 | 254,088 | ||||||
Less - accumulated depreciation and amortization
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(178,881 | ) | (162,194 | ) | ||||
Net property and equipment
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98,963 | 91,894 | ||||||
OTHER ASSETS:
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||||||||
Note receivable
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135,577 | 135,577 | ||||||
Software development costs, net of accumulated amortization
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||||||||
of $566,622 and $398,715 as of September 30, 2011 and
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||||||||
December 31, 2010, respectively
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1,208,854 | 938,942 | ||||||
Other assets
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73,926 | 43,999 | ||||||
Total other assets
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1,418,357 | 1,118,518 | ||||||
TOTAL ASSETS
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$ | 2,302,873 | $ | 1,479,296 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY
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||||||||
CURRENT LIABILITIES:
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||||||||
Current maturities of long-term debt
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$ | - | $ | 34,176 | ||||
Revolving Line of Credit
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200,000 | - | ||||||
Note Payable - Shareholder
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105,178 | - | ||||||
Accounts payable - trade and accrued liabilities
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449,124 | 123,022 | ||||||
Unearned income
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34,808 | 8,523 | ||||||
Total current liabilities
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789,110 | 165,721 | ||||||
LONG-TERM DEBT, less current maturities
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||||||||
Oklahoma Technology Commercialization Center
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237,500 | 237,500 | ||||||
Convertible secured debentures
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2,175,000 | 925,000 | ||||||
Total long-term debt, less current maturities
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2,412,500 | 1,162,500 | ||||||
COMMITMENTS AND CONTINGENCIES
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||||||||
STOCKHOLDERS' EQUITY:
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||||||||
Common stock, $.01 par value; authorized 200,000,000 shares;
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||||||||
issued and outstanding 112,518,423 and 98,690,490 shares, at
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||||||||
September 30, 2011 and December 31, 2010, respectively
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1,125,184 | 986,905 | ||||||
Additional paid-in capital
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9,960,642 | 9,303,920 | ||||||
Accumulated deficit
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(11,984,563 | ) | (10,139,750 | ) | ||||
Total stockholders' (deficit) equity
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(898,737 | ) | 151,075 | |||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
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$ | 2,302,873 | $ | 1,479,296 |
MACROSOLVE, INC.
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||||||||||||||||
STATEMENTS OF OPERATIONS (unaudited)
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Unaudited
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Unaudited
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||||||||||||||
For the Quarters Ended
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For the Nine Months Ended
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|||||||||||||||
For the Periods Ended September 30,
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9/30/2011
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9/30/2010
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9/30/2011
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9/30/2010
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SALES:
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||||||||||||||||
Software products and licensing
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$ | 446,707 | $ | 11,519 | $ | 519,267 | $ | 51,593 | ||||||||
Solution services
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146,536 | 114,445 | 409,407 | 403,594 | ||||||||||||
Hardware sales
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- | - | - | 78,036 | ||||||||||||
Net sales
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593,243 | 125,964 | 928,674 | 533,223 | ||||||||||||
COST OF SALES:
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||||||||||||||||
Software products and licensing
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175,358 | - | 175,358 | - | ||||||||||||
Solution services
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138,276 | 50,447 | 283,690 | 219,279 | ||||||||||||
Hardware sales
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- | - | - | 65,062 | ||||||||||||
Total cost of sales
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313,634 | 50,447 | 459,048 | 284,341 | ||||||||||||
Gross profit
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279,609 | 75,517 | 469,626 | 248,882 | ||||||||||||
OPERATING EXPENSES:
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Solution services
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88,499 | 43,077 | 266,948 | 100,786 | ||||||||||||
Depreciation and amortization
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62,519 | 82,964 | 186,246 | 189,454 | ||||||||||||
Marketing and sales
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207,983 | 136,142 | 420,518 | 391,866 | ||||||||||||
General and administrative
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455,909 | 229,455 | 1,271,701 | 752,634 | ||||||||||||
Total operating expenses
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814,910 | 491,638 | 2,145,413 | 1,434,740 | ||||||||||||
Loss from operations
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(535,301 | ) | (416,121 | ) | (1,675,787 | ) | (1,185,858 | ) | ||||||||
OTHER INCOME (EXPENSE):
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Interest income
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18 | 7 | 104 | 494 | ||||||||||||
Interest expense
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(57,664 | ) | (53,861 | ) | (94,609 | ) | (133,299 | ) | ||||||||
Loss on sale of asset
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- | - | (235 | ) | (17,944 | ) | ||||||||||
Stock based compensation
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(21,747 | ) | (45,711 | ) | (74,285 | ) | (87,326 | ) | ||||||||
Total other expense
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(79,393 | ) | (99,565 | ) | (169,025 | ) | (238,075 | ) | ||||||||
LOSS BEFORE INCOME TAXES
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(614,694 | ) | (515,686 | ) | (1,844,812 | ) | (1,423,933 | ) | ||||||||
INCOME TAXES
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- | - | - | - | ||||||||||||
NET LOSS
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$ | (614,694 | ) | $ | (515,686 | ) | $ | (1,844,812 | ) | $ | (1,423,933 | ) | ||||
LOSS ALLOCABLE TO COMMON STOCKHOLDERS:
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Net loss
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$ | (614,694 | ) | $ | (515,686 | ) | $ | (1,844,812 | ) | $ | (1,423,933 | ) | ||||
Loss allocable to common stockholders
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$ | (614,694 | ) | $ | (515,686 | ) | $ | (1,844,812 | ) | $ | (1,423,933 | ) | ||||
Basic and diluted loss per share
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$ | (0.01 | ) | $ | (0.01 | ) | $ | (0.02 | ) | $ | (0.02 | ) |
MACROSOLVE, INC.
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STATEMENTS OF CASH FLOWS (unaudited)
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For the Periods Ended September 30,
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9/30/2011
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9/30/2010
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OPERATING ACTIVITIES:
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Net loss
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$ | (1,844,814 | ) | $ | (1,423,933 | ) | ||
Adjustments to reconcile net loss to net cash
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||||||||
(used in) provided by operating activities:
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||||||||
Depreciation and amortization
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186,246 | 189,454 | ||||||
Stock based compensation
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73,002 | 49,130 | ||||||
Issuance of stock for services
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672,000 | 42,750 | ||||||
Changes in current assets and liabilities:
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(Increase) decrease in accounts receivable - trade
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(86,826 | ) | 88,998 | |||||
Decrease (increase) in inventory
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11,840 | (9,397 | ) | |||||
(Increase) in prepaid expenses and other
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(232,749 | ) | (7,699 | ) | ||||
Increase (decrease) in accounts payable - trade and
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accrued liabilities
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326,102 | (34,048 | ) | |||||
Increase (decrease) in unearned income
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26,285 | (60,685 | ) | |||||
Net cash (used in) provided by operating activities
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(868,914 | ) | (1,165,430 | ) | ||||
INVESTING ACTIVITIES:
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Purchase of equipment
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(25,643 | ) | (10,645 | ) | ||||
Sale of digiTicket assets
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- | 416,569 | ||||||
Disposal of equipment
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237 | 616 | ||||||
Software development costs
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(459,576 | ) | (244,445 | ) | ||||
Net cash provided by (used in) investing activities
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(484,982 | ) | 162,095 | |||||
FINANCING ACTIVITIES:
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Deferred offering costs
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(8,170 | ) | - | |||||
Issuance of stock for debenture conversion
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50,000 | - | ||||||
Issuance of stock for debenture interest
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- | 105,927 | ||||||
Proceeds from debenture financing
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2,025,000 | 722,816 | ||||||
Repayment of debenture financing
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(775,000 | ) | - | |||||
Repayments of notes payable
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(34,176 | ) | (37,063 | ) | ||||
Proceeds from shareholder loan, including accrued interest
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156,240 | 90,443 | ||||||
Repayment of shareholder loan, including accrued interest
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(51,062 | ) | - | |||||
Proceeds from bank line of credit
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300,000 | 100,000 | ||||||
Repayment of bank line of credit
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(100,000 | ) | - | |||||
Net cash provided by financing activities
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1,562,832 | 982,123 | ||||||
NET INCREASE IN CASH
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208,936 | (21,212 | ) | |||||
CASH, beginning of period
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187,025 | 51,120 | ||||||
CASH, end of period
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$ | 395,961 | $ | 29,908 |
1.
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BASIS OF PRESENTATION
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2.
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DESCRIPTION OF BUSINESS
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3.
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NOTE RECEIVABLE
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Note receivable at September 30, 2011 and December 31, 2010 Consist of the following: | Sep 30, 2011 | Dec 31, 2010 | |||
Convertible promissory note with a customer negotiated as part of a strategic alliance. Under the Master Services Agreement, customer may borrow up to $150,000 to finance development work with interest accrued monthly at prime rate plus 5% (8.25% at September 30, 2009), due June 30, 2011. The note may be converted to common stock of the borrower prior to the due date at MacroSolve’s discretion. The Company is currently evaluating the conversion option. | $ 135,577 | $ 135,577 |
4.
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DEBENTURES AND NOTES PAYABLE
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Notes payable at September 30, 2011 and December 31, 2010 consist of the following:
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Sep 30, 2011 | Dec 31, 2010 | |||
On July 17, 2011, the Company began offering its Convertible Debentures Series 2011 and Series B Warrants to purchase common stock to accredited investors. The Debentures mature on December 31, 2016. The Company has not established a minimum or maximum offering size; its goal is $1,000,000 in aggregate subscriptions exclusive of the exchange of previously issued debentures. The proceeds from this offering will be used by the Company for working capital to increase its market share from the sale of mobile apps in dining and other vertical markets and may include working capital for acquired companies. The offering will continue until December 31, 2011 unless terminated by the Company at an earlier date.
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The 2011 Debentures will earn interest at the annual rate of 12% which will be paid quarterly exclusively from the Debenture Account. Principal on the Debentures will be prepaid quarterly as the Debenture Account permits. The Debenture Account will be set up with a financial institution for the deposit of 25% of any recovery it receives from any judgment or settlement in any infringement case or claim it prosecutes. The Debentures may be converted to common stock by the holder into the number of shares that could have been purchased with 200% of the principal amount of the Debenture, together with accrued and unpaid interest and the shares valued using the weighted average price for a five-day trading period preceding the Debenture investment provided however, that the conversion price shall not be less than ten cents per share at any time and the conversion price shall not be more than ten cents per share for investments made prior to October 1, 2011. The Investors will also acquire Common Stock Series B Warrants in an amount equal to the shares of common stock that could be purchased at the Debenture conversion price. Each warrant has a term of five years. | $ 350,000 | $ - |
On April 11, 2011, the Company began offering its Convertible Debentures Series 2011 and Series A Warrants to purchase common stock to accredited investors. The Debentures mature on December 31, 2016. The Company has not established a minimum or maximum offering size; its goal is $1,000,000 in aggregate subscriptions exclusive of the exchange of previously issued debentures. The proceeds from this offering will be used by the Company for working capital to increase its market share from the sale of mobile apps in dining and other vertical markets and may include working capital for acquired companies. The offering will continue until December 31, 2011 unless terminated by the Company at an earlier date. The offering was closed on July 13, 2011 with a total of $950,000 in new investments and $725,000 in converted investments.
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The 2011 Debentures will earn interest at the annual rate of 12% which will be paid quarterly exclusively from the Debenture Account. Principal on the Debentures will be prepaid quarterly as the Debenture Account permits. The Debenture Account will be set up with a financial institution for the deposit of 25% of any recovery it receives from any judgment or settlement in any infringement case or claim it prosecutes. The Debentures may be converted to common stock by the holder into the number of shares that could have been purchased with 200% of the principal amount of the Debenture, together with accrued and unpaid interest and the shares valued using the weighted average price for a five-day trading period preceding the Debenture investment. The Investors will also acquire Common Stock Series A Warrants in an amount equal to the shares of common stock that could be purchased at 50% of the Debenture conversion price. Each warrant has a term of five years
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$ 1,675,000 | $ - | |||
On November 8, 2010, the Company began selling Convertible Debentures Series 2010 plus Series B Warrants. The Company has not established a minimum or maximum offering size; however, it exceeded its goal of $750,000 in aggregate subscriptions. The debentures accrue interest at 2.0% per annum with interest paid at maturity. The offering was closed on November 17, 2010. | |||||
The debentures may be prepaid in full for one hundred and fifty percent (150%) of the face amount of the debenture if notice of prepayment is given by the Company before July 1, 2011. Prepayment may be made in cash or shares of common stock at the election of the Company. If the prepayment is made in shares of common stock the shares will be valued at the volume weighted average price of the shares for the five-day trading period before the notice of prepayment. | |||||
The Debentures may be converted into Common Stock by the holders after June 30, 2011, or upon notice of prepayment by the Company if notice is given before that date. Upon conversion the holder will be entitled to receive the number of shares of Common Stock that could be purchased with two hundred percent (200%) of the face amount of the Debentures together with accrued interest and with the Common Stock valued using the weighted average price for the five-day trading period before the notice of conversion. |
Investors will acquire common stock purchase warrants, designated by the Company as Class B Warrants, in an amount equal to fifty percent (50%) of the shares of common stock that would be issued upon conversion of the Debentures upon issue. The Warrants will have a termination date of December 31, 2015 and have an initial exercise price equal to the weighted average price of the common stock upon grant of the Warrants.
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During the third quarter of 2011, eleven of the fifteen investors elected to convert a total of $725,000 Debenture Series 2010 plus Series B Warrants to Debenture Series 2011 and Series A Warrants simultaneously with their purchase of the new offering and two of the investors elected to convert a total of $50,000 debentures into 757,576 shares of common stock.
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$ 150,000 | $ 925,000 | |||
Advancing term loan with a financial institution of up to $125,000 with interest only payable monthly at prime rate plus 2.0% (5.25% at September 30, 2010), until January, 2009, with principal and interest due at prime rate plus 2.0% amortized ratably over 30 months, due August 31, 2011, and secured by substantially all assets of the company.
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$ - | $ 34,176 | |||
Advancing term loan with a financial institution of up to $200,000 with interest only payable monthly at the greater of 6% or prime rate plus 1.0% (4.25% at September 30, 2011), until September 2011, and secured by substantially all assets of the company and the personal guarantees of two company directors. In exchange for the guarantees, each director receives a $3,000 commitment fee and a five year warrant to purchase $100,000 of stock with a strike price of ten cents ($0.10) per share. | $ 200,000 | $ - | |||
Note from the State of Oklahoma Technology Business Finance Program (OTCC loan) represented by a $150,000 refundable award to be repaid at two times the amount of the award. The balance includes accrued interest (imputed at 14.27%), through September 2007. The repayment terms were modified in September, 2007 to require 24 equal monthly installments of $12,500, consisting of principal only, beginning May, 2008. The monthly payments were suspended in October 2008 with resumption anticipated upon significant equity raise.
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$ 237,500 | $ 237,500 |
5.
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SHAREHOLDER LOAN
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In March 2011, the Company placed $100,000 in promissory notes with a shareholder who is a qualified investor. The notes were unsecured and provided for accrued interest of prime plus 3% (6.25% as of September 30, 2011) payable on maturity of June 30, 2011. In April 2011, $50,000 of the amount owed was converted to the terms of the Convertible Debenture Series 2011. The balance of $50,000 was extended under the same terms until September 30, 2011. On September 8, 2011, the Company placed an additional $54,000 promissory note with the same shareholder. The note is secured by the unencumbered 75% of patent settlement license fees secondary to the security interest of a financial institution and provided for accrued interest at 12% payable on maturity at September 30, 2011. Accrued interest is $1,178 at September 30, 2011 was paid on October 20, 2011. On October 1, 2011, the Company combined the shareholder loan into one promissory for $104,000. The note is secured by the unencumbered 75% of patent settlement license fees secondary to the security interest of a financial institution and provided for accrued interest at 12% payable on maturity. The Company has agreed to apply ten percent (10%) of the net proceeds from patent settlement license fees to the reduction of principal. The note matures on December 31, 2012.
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6.
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EMPLOYEE STOCK PLANS
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Stock Options |
Restricted
Stock
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|||||||||||
Options
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Weighted
Average
Exercise Price
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Shares
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||||||||||
Outstanding – June 30, 2011
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5,933,872 | $ | 0.54 | 2,772,055 | ||||||||
Exercisable – June 30, 2011
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5,854,872 | $ | 0.51 | - | ||||||||
Granted
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4,709,930 | $ | 0.50 | 1,045,378 | ||||||||
Exercised or Vested
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- | - | (1,009,602 | ) | ||||||||
Forfeited or Expired
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(59,567 | ) | $ | 0.54 | (47,500 | ) | ||||||
Outstanding – September 30, 2011
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10,584,235 | $ | 0.52 | 2,760,331 | ||||||||
Exercisable – September 30, 2011
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5,795,305 | $ | 0.51 | - |
Stock Options | ||||||||||||
Nonvested Shares
|
Options
|
Weighted-
Average Grant
Date.Calculated Value
|
Restricted
Stock
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|||||||||
Nonvested - Beginning of Year 2011
|
153,600 | $ | - | 8,354,801 | ||||||||
Granted
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- | $ | - | 738,434 | ||||||||
Vested
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(41,400 | ) | $ | - | (3,160,687 | ) | ||||||
Forfeited
|
(29,600 | ) | $ | - | ( - | ) | ||||||
Nonvested–Quarter Ended March 31, 2011
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82,600 | $ | - | 5,932,548 | ||||||||
Granted
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200,000 | $ | - | 615,714 | ||||||||
Vested
|
(200,000 | ) | $ | - | (3,711,207 | ) | ||||||
Forfeited
|
(3,600 | ) | $ | - | ( 65,000 | ) | ||||||
Nonvested–Quarter Ended June 30, 2011
|
79,000 | $ | - | 2,772,055 | ||||||||
Granted
|
4,709,930 | $ | - | 1,045,378 | ||||||||
Vested
|
- | $ | - | (1,009,602 | ) | |||||||
Forfeited
|
- | $ | - | (47,500 | ) | |||||||
Nonvested-Quarter ended Sept 30, 2011
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4,788,930 | $ | - | 2,760,331 |
|
The Company issued a total of 8,245,414 common shares and cancelled a total of 47,500 in the quarter ended September 30, 2011, described further as follows:
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The Company’s independent directors annual compensation is $16,000 to be paid quarterly in restricted stock. The Company issued the directors 151,515 shares of restricted stock on July 1, 2011 for their second quarter 2011 compensation.
|
|
|
The Company issued 945,377 shares of common stock to management employees in lieu of $112,500 cash compensation for services rendered in the second quarter of 2011 and 100,000 shares of common stock to an executive as an employment bonus, which had been recorded at a value of $2,091 in stock based compensation based upon individual tax elections made by each recipient. The shares vest six months after issuance and are subject to forfeiture upon voluntary termination of employment. During the third quarter of 2011, 47,500 compensation shares previously issued for services were forfeited.
|
|
The Company issued 48,000 shares of restricted common stock to a former employee in exchange for $6,000 in services rendered in the second quarter of 2011. The Company issued 90,909 shares of restricted stock to its national public relations firm in exchange for $12,000 in services rendered in the second quarter of 2011. The Company issued 15,000 shares of restricted stock to two financial advisors, the first receiving 10,000 shares in exchange for $1,500 in services and the second receiving 5,000 shares for $2,500 in services. The Company issued a total of 137,037 registered compensation shares to three software subject matter experts for $15,000 in total services. The Company issued a total of 2,000,000 shares of restricted stock to its investor relations firms for six months expanded services valued at $20,000.
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On September 29, 2011, the Company entered into a Business Development and Services agreement with an investment banking firm. A one-time retainer fee of $200,000 for the twelve month agreement was paid by issuance of 4,000,000 shares of restricted common stock.
|
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The Company issued 378,788 shares of restricted stock each to two investors in the Convertible Debenture Series 2010 who elected to convert their $25,000 debenture on July 1, 2011 at the weighted average price for the five-day trading period before the notice of conversion which was $.066. Each investor received $308 to settle the accrued interest on their debenture.
|
|
The Company has calculated the loss allocable to the common shareholders for the periods ended September 30, 2011 and 2010:
|
For the Quarters Ended | For the Nine Months Ended | |||||||||||||||
Sept 30, 2011 | Sept 30, 2010 | Sept 30, 2011 | Sept 30, 2010 | |||||||||||||
Numerator: | ||||||||||||||||
Net Loss | $ | (614,694 | ) | $ | (515,686 | ) | $ | (1,844,812 | ) | $ | (1,423,933 | ) | ||||
Numerator for basic and diluted | $ | (614,694 | ) | $ | (515,686 | ) | $ | (1,844,812 | ) | $ | (1,423,933 | ) | ||||
Denominator: | ||||||||||||||||
Weighted-average number of | ||||||||||||||||
common shares outstanding | 108,419,466 | 77,950,697 | 108,419,466 | 77,950,697 | ||||||||||||
$ | (0.01 | ) | $ | (0.01 | ) | $ | (0.02 | ) | $ | (0.02 | ) |
9.
|
RELATED PARTY TRANSACTION
|
|
There were no related party transactions other than the shareholder loan discussed in footnote five.
|
10.
|
SUBSEQUENT EVENTS
|
|
The Company issued 1,011,030 shares of compensation shares to management employees in lieu of $137,500 cash compensation for services rendered during the third quarter of 2011 which had been recorded at a value of $2,022 in stock based compensation based upon individual tax elections made by each recipient. The shares were awarded on Restricted Stock Agreements which have a six month time lapse restriction and are subject to forfeiture upon voluntary termination of employment.
|
|
The Company’s independent directors annual compensation is $16,000 to be paid quarterly in restricted stock. The Company issued the directors 160,000 shares of restricted stock on October 1, 2011 for their third quarter 2011 compensation. The Company recorded $4,000 in stock based compensation for each of its five independent directors.
|
|
The Company issued 1,546,627 shares of restricted stock each to an investor in the Convertible Debenture Series 2010 who elected to convert his $100,000 debenture on October 10, 2011 at the weighted average price for the five-day trading period before the notice of conversion which was $.065. The investor received $1,859 to settle the accrued interest on his debenture.
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11.
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
|
2011 | 2010 | |||||||
Interest | $ | 14,351 | $ | 4,232 | ||||
Income taxes | $ | - | $ | - |
2011 | 2010 | |||||||
Stock based compensation | $ | 73,002 | $ | 75,380 | ||||
Stock issued for services | $ | 672,000 | $ | 16,500 | ||||
Stock issued for debenture interest | $ | - | $ | 105,927 |
Nine Months ended September 30,
|
||||||||
(In thousands)
|
2011
|
2010
|
||||||
Cash flow data:
|
||||||||
Net cash (used in) operating activities
|
$
|
(869
|
)
|
$
|
$(1,165
|
)
|
||
Net cash provided by (used in) investing activities
|
(485
|
)
|
162
|
|||||
Net cash provided by financing activities
|
1,563
|
982
|
||||||
Net increase (decrease) in cash and cash equivalents
|
209
|
(21
|
)
|
|||||
Cash and cash equivalents, beginning of period
|
187
|
51
|
||||||
Cash and cash equivalents, end of period
|
$
|
396
|
$
|
$30
|
31.01 | Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
31.02 | Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
32.01 | Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
101 INS | XBRL Instance Document* |
101 SCH | XBRL Schema Document* |
101 CAL |
XBRL Calculation Linkbase Document*
|
101 LAB | XBRL Labels Linkbase Document* |
101 PRE | XBRL Presentation Linkbase Document* |
*
|
The XBRL related information in Exhibit 101 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability of that section and shall not be incorporated by reference into any filing or other document pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing or document.
|
MACROSOLVE, INC.
|
|||
Date: November 10, 2011
|
By:
|
/s/ STEVE SIGNOFF
|
|
Steve Signoff
|
|||
Chief Executive Officer (Principal Executive Officer)
|
|||
Date: November 10, 2011
|
By:
|
/s/ KENDALL CARPENTER
|
|
Kendall Carpenter
|
|||
Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)
|
1.
|
I have reviewed this quarterly report on Form 10-Q of MacroSolve, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonable likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.
|
/s/ Steve Signoff
|
|||
Steve Signoff
|
|||
Chief Executive Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q of MacroSolve, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonable likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.
|
/s/ Kendall Carpenter
|
|||
Kendall Carpenter
|
|||
Chief Financial Officer
|
Company Name | |||
Date: November 10, 2011
|
By:
|
/s/ STEVE SIGNOFF | |
Name: STEVE SIGNOFF | |||
Title: Chief Executive Officer | |||
Company Name | |||
Date: November 10, 2011
|
By:
|
/s/ KENDALL CARPENTER | |
Name: KENDALL CARPENTER | |||
Title: Chief Financial Officer | |||
BALANCE SHEETS (Parenthenticals) (USD $) | Sep. 30, 2011 | Dec. 31, 2010 |
---|---|---|
Statement Of Financial Position [Abstract] | ||
Accumulated amortization on Software development costs (in dollars) | $ 566,622 | $ 398,715 |
Common stock, Par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares issued | 112,518,423 | 98,690,490 |
Common stock, shares outstanding | 112,518,423 | 98,690,490 |
STATEMENTS OF OPERATIONS (unaudited) (USD $) | 3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2011 | Sep. 30, 2010 | Sep. 30, 2011 | Sep. 30, 2010 | |
SALES: | ||||
Software products and licensing | $ 446,707 | $ 11,519 | $ 519,267 | $ 51,593 |
Solution services | 146,536 | 114,445 | 409,407 | 403,594 |
Hardware sales | 78,036 | |||
Net sales | 593,243 | 125,964 | 928,674 | 533,223 |
COST OF SALES: | ||||
Software products and licensing | 175,358 | 175,358 | ||
Solution services | 138,276 | 50,447 | 283,690 | 219,279 |
Hardware sales | 65,062 | |||
Total cost of sales | 313,634 | 50,447 | 459,048 | 284,341 |
Gross profit | 279,609 | 75,517 | 469,626 | 248,882 |
OPERATING EXPENSES: | ||||
Solution services | 88,499 | 43,077 | 266,948 | 100,786 |
Depreciation and amortization | 62,519 | 82,964 | 186,246 | 189,454 |
Marketing and sales | 207,983 | 136,142 | 420,518 | 391,866 |
General and administrative | 455,909 | 229,455 | 1,271,701 | 752,634 |
Total operating expenses | 814,910 | 491,638 | 2,145,413 | 1,434,740 |
Loss from operations | (535,301) | (416,121) | (1,675,787) | (1,185,858) |
OTHER INCOME (EXPENSE): | ||||
Interest income | 18 | 7 | 104 | 494 |
Interest expense | (57,664) | (53,861) | (94,609) | (133,299) |
Loss on sale of asset | (235) | (17,944) | ||
Stock based compensation | (21,747) | (45,711) | (74,285) | (87,326) |
Total other expense | (79,393) | (99,565) | (169,025) | (238,075) |
LOSS BEFORE INCOME TAXES | (614,694) | (515,686) | (1,844,812) | (1,423,933) |
INCOME TAXES | ||||
NET LOSS | (614,694) | (515,686) | (1,844,814) | (1,423,933) |
LOSS ALLOCABLE TO COMMON STOCKHOLDERS: | ||||
Net loss | (614,694) | (515,686) | (1,844,814) | (1,423,933) |
Loss allocable to common stockholders | $ (614,694) | $ (515,686) | $ (1,844,812) | $ (1,423,933) |
Basic and diluted loss per share (in dollars per share) | $ (0.01) | $ (0.01) | $ (0.02) | $ (0.02) |
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Document and Entity Information | 9 Months Ended | |
---|---|---|
Sep. 30, 2011 | Nov. 09, 2011 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | MACROSOLVE INC | |
Entity Central Index Key | 0001178727 | |
Trading Symbol | mcve | |
Entity Current Reporting Status | Yes | |
Entity Voluntary Filers | No | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 115,188,081 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2011 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2011 | |
Document Fiscal Period Focus | Q3 |
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SHAREHOLDERS' EQUITY | 9 Months Ended | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2011 | |||||||||||||||
Stockholders Equity Note [Abstract] | |||||||||||||||
SHAREHOLDERS' EQUITY | 7. SHAREHOLDERS’ EQUITY
|
NOTE RECEIVABLE | 9 Months Ended | |||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2011 | ||||||||||||||||||||
Accounts, Notes, Loans and Financing Receivable, Gross, Allowance, and Net [Abstract] | ||||||||||||||||||||
NOTE RECEIVABLE |
|
RELATED PARTY TRANSACTION | 9 Months Ended | ||||
---|---|---|---|---|---|
Sep. 30, 2011 | |||||
Related Party Transactions [Abstract] | |||||
RELATED PARTY TRANSACTION |
|
SUBSEQUENT EVENTS | 9 Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2011 | |||||||||
Subsequent Events [Abstract] | |||||||||
SUBSEQUENT EVENTS |
Effective July 26, 2011, certain Company officers and directors granted consent to the Company to take shares of Common Stock that were reserved for issuance upon the exercise and/or conversion of options, warrants and convertible debentures (the “Securities”) and consider them as authorized but unissued shares of common stock to be used for other share issuances. Currently, there were 43,279,596 shares of Common Stock reserved for issuance pursuant to the Securities. This consent is effective until December 31, 2011, when the Company is required to reserve such Common Stock issuable upon exercise of the Securities. Prior to the consent, the number of shares of Common Stock issued and outstanding as well as reserved for issuance upon exercise or conversion of outstanding options, warrants and convertible debentures was close to 200 million, which is the number of shares of Common Stock authorized for issuance by the Company pursuant to the Articles of Incorporation. This action gave the Company flexibility until it could increase the authorized number of shares of Common Stock that may be issued. On October 28, 2011 upon approval of a majority of shareholders, the Company filed an Amended Certificate of Incorporation with the Oklahoma Secretary of State increasing its authorized capital to 500,000,000 common shares.
On July 17, 2011, the Company began offering its Convertible Debentures Series 2011 and Series B Warrants to purchase common stock to accredited investors. The offering modifies the earlier 2011 debenture by adding a ten cent ($0.10) conversion floor price. An additional $375,000 in debentures have been sold during the fourth quarter 2011.
The Company is currently in settlement and licensing discussions with several companies against whom we have brought suits alleging infringement of United States Patent #7,822,816. As of the date of filing, one settlement has been finalized with proceeds paid in October 2011.
The Company renewed its advancing term loan with a financial institution for $100,000 with interest only payable monthly at the greater of 5.75% or prime rate plus 1.0% (4.25% at September 30, 2011), until September 2012, and secured by substantially all assets of the company and the personal guarantees of one company director. In exchange for the guarantee, the director receives a $3,000 commitment fee and a five year warrant to purchase $100,000 of stock with a strike price of ten cents ($0.10) per share.
On October
31, 2011, the Company entered into an expanded business development agreement with a financial advisory firm for cash bonuses equaling $60,000 and a total of 1,050,000 five year cashless warrants to purchase restricted common stock at a strike price of $0.115.
On November 4, 2011, the Company appointed Randy Ritter as its Chief Operating Officer, a newly created position. |
EARNINGS (LOSS) PER SHARE | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EARNINGS (LOSS) PER SHARE | 8. EARNINGS (LOSS) PER SHARE
|
BASIS OF PRESENTATION | 9 Months Ended | ||
---|---|---|---|
Sep. 30, 2011 | |||
Basis Of Presentation [Abstract] | |||
BASIS OF PRESENTATION |
The accompanying unaudited interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial statements and do not include all the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. The information furnished reflects all adjustments, consisting only of normal recurring items which are, in the opinion of management, necessary in order to make the financial statements not misleading. The financial statements as of December 31, 2010 have been audited by an independent registered public accounting firm. These financial statements should be read in conjunction with the financial statements and the notes thereto included in the Company’s 10K for the calendar year ended December 31, 2010. |
DEBENTURES AND NOTES PAYABLE | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DEBENTURES AND NOTES PAYABLE |
As of September 30, 2011, maturities of long-term debt are: $-0- in 2011 and $2,412,500 thereafter.
|
SHAREHOLDER LOAN | 9 Months Ended | ||||
---|---|---|---|---|---|
Sep. 30, 2011 | |||||
Shareholder Loan [Abstract] | |||||
SHAREHOLDER LOAN |
|
EMPLOYEE STOCK PLANS | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EMPLOYEE STOCK PLANS | 6. EMPLOYEE STOCK PLANS
A summary of activity under the Employee Stock Plans as of September 30, 2011 and changes during the period then ended is presented below:
The weighted-average grant-date calculated value of options granted during the period ended September 30, 2011 is not applicable. Options outstanding at September 30, 2011 had an aggregate intrinsic value of $0 and a weighted-average remaining contractual term of 3.5 years. Options that were exercisable at September 30, 2011 had an aggregate intrinsic value of $-0- and a weighted-average remaining contractual term of 3.5 years.
A summary of the status of the Company’s nonvested options and restricted stock as of and for the Quarters Ended September 30, 2011 and March 31, 2011 is presented below:
As of September 30, 2011, there was $-0- unrecognized compensation cost related to nonvested share-based compensation arrangements under the stock bonus plan. The weighted-average remaining vesting period is 6 months. |
DESCRIPTION OF BUSINESS | 9 Months Ended | ||
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Sep. 30, 2011 | |||
Description Of Business [Abstract] | |||
DESCRIPTION OF BUSINESS |
MacroSolve, Inc. is an Oklahoma corporation formed on January 17, 1997, under the laws of the State of Oklahoma and does business through Anyware Mobile Solutions and Illume Mobile, both divisions of MacroSolve. MacroSolve, Inc. filed a registration statement Form S-1 with the Securities and Exchange Commission which was declared effective on July 25, 2008. |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | 9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Elements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION |
Cash paid during Nine Months ended September 30, 2011 and 2010 are:
Noncash activities are as follows for the Nine Months ended September 30, 2011 and 2010 are:
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