1. SUMMARY OF BUSINESS AND DESCRIPTION OF GOING CONC

12 Months Ended

Dec. 31, 2013

Accounting Policies [Abstract]

1. SUMMARY OF BUSINESS AND DESCRIPTION OF GOING CONC

Description of Business and Going Concern

MobileSmith, Inc. was incorporated as Smart Online, Inc. in the State of Delaware in 1993. The Company changed its name to MobileSmith, Inc. effective July 1, 2013. The Company develops and markets software products and services tailored to users of mobile devices. The Company’s flagship product is the MobileSmith™ Platform (“the Platform”). The Platform is an innovative, patents pending mobile app development platform that enables organizations to rapidly create, deploy, and manage custom, native smartphone and tablet apps deliverable across iOS and Android mobile platforms.

The Company’s principal products and services include:

● Subscription to its Software as a Service (“SaaS”) cloud based mobile app development platform to its customers who design and build their own apps;

● Custom mobile application design and development services provided by the Company;

● Mobile application marketing services; and

● Mobile strategy implementation consulting.

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. During the years ended December 31, 2013 and 2012, the Company incurred net losses as well as negative cash flows, and at December 31, 2013 and 2012, had deficiencies in working capital. These factors indicate that the Company may be unable to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts or classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

The Company’s continuation as a going concern depends upon its ability to generate sufficient cash flows to meet its obligations on a timely basis, to obtain additional financing as may be required, and ultimately to attain profitable operations and positive cash flows. At December 31, 2013, the Company does have a non-binding commitment from its secured subordinated noteholders to purchase up to an additional $7,135,000 in convertible notes, of which $1,230,000 was issued through March 21, 2014. During 2013, the Company performed an internal analysis of customer utilization of the Platform and conducted internal industry research of the Company’s target markets. As a result of the review, the Company adjusted its pricing strategy to better align the subscription price to the Platform with the value the customers receive from the subscription. The Company increased its focus on the target markets of healthcare, government and large enterprise clients, where the Company’s ability to rapidly produce large volumes of customizable native apps generates significant return of investment for a customer. During 2013, the Company discontinued its legacy operations of domain hosting and e-commerce in an effort to reduce it operating costs, while focusing on the mobile industry as an area of highest growth potential.