HIPCRICKET, INC. - FORM 10-Q

Attached files

file	filename
EX-31.1 - EXHIBIT 31.1 - HIPCRICKET, INC.	ex31_1.htm
EX-31.2 - EXHIBIT 31.2 - HIPCRICKET, INC.	ex31_2.htm
EX-32.1 - EXHIBIT 32.1 - HIPCRICKET, INC.	ex32_1.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended November 30, 2010

[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________________ to __________________

Commission File Number 333-57818

AUGME TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)

DELAWARE

(State or other jurisdiction of incorporation or organization)

20-0122076

(I.R.S. Employer Identification No.)

43 WEST 24th STREET, 11th Floor

NEW YORK, NY 10010

(Address of principal executive offices)

(Zip Code)

(800) 825-8135

(Registrant's telephone number, including area code)

__________________________________________________________________

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No _____

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period than the registrant was required to submit and post such files). Yes ____ No _____

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer,” and “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer _____	Accelerated filer __X___
Non-accelerated filer _____ (Do not check if a smaller reporting company)	Smaller reporting company

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes _ No X

As of January 5, 2011 the issuer had 62,408,607 shares of common stock, par value $.0001, issued and outstanding.

TABLE OF CONTENTS

PART I	FINANCIAL INFORMATION	2

Item 1.	Financial Statements	2

	Consolidated Balance Sheets as of November 30, 2010, 2010 (unaudited) and February 28, 2010	F-1

	Consolidated Statements of Operations for the three months ended November 30, 2010 and 2009 (unaudited)	F-2

	Consolidated Statements of Operations for the nine months ended November 30, 2010 and 2009 (unaudited)	F-3

	Consolidated Statement of Stockholders' Equity for the nine months ended November 30, 2010 (unaudited)	F-4

	Consolidated Statements of Cash Flows for the nine months ended November 30, 2010 and 2009 (unaudited)	F-5

	Condensed Notes to Consolidated Financial Statements (unaudited)	F-6

	Note 2 – Equity Transactions	F-7

	Warrants	F-8

	Note 3 – Discontinued Operations	F-9

	Note 4 – Prior Year Acquisition	F-10

Item 2.	Management's Discussion and Analysis or Plan of Operation	3

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	10

Item 4.	Controls and Procedures	10

PART II	OTHER INFORMATION	11

Item 1.	Legal Proceedings	11

Item 1A.	Risk Factors	12

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	14

Item 3.	Defaults Upon Senior Securities	14

Item 4.	(Removed and Reserved)	14

Item 5.	Other Information	14

Item 6.	Exhibits	14

SIGNATURES		15

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Our financial statements start on the following page, beginning with page F-1

AUGME TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEETS

	November 30,			February 28,
	2010			2010
ASSETS	(unaudited)
CURRENT ASSETS:
Cash and cash equivalents	$	657,584		$	1,617,573
Accounts receivable, net of allowance for
doubtful accounts of $74,783and $63,747, respectively		1,073,276			115,747
Stock subscriptions receivable		400,000			-
Prepaid expenses and other current assets		201,848			79,133

Total current assets		2,332,708			1,812,453

Property and equipment net of accumulated depreciation of
$965,453and $733,241, respectively		664,239			464,690
Goodwill		13,106,969			13,106,969
Intangible assets, net of accumulated amortization of
$1,977,392and $1,456,679, respectively		3,932,786			4,442,187
Deposits		27,450			27,450

TOTAL ASSETS	$	20,064,152			19,853,749

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable	$	1,026,121		$	879,584
Accrued liabilities		246,458			362,193
Deferred revenue, current		396,160			222,345
Total current liabilities		1,668,739			1,464,122

Long-term deferred revenue		12,930			11,691

Total liabilities		1,681,669			1,475,813

STOCKHOLDERS' EQUITY:
Common stock, $.0001 par value; 100,000,000 shares authorized;
61,734,440 and 57,256,750 shares issued and
outstanding, respectively		6,173			5,726
Additional paid-in capital		52,372,736			45,846,778
Accumulated deficit		(33,996,426	)		(27,474,568	)
Total stockholders' equity		18,382,483			18,377,936

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	20,064,152		$	19,853,749

See accompanying notes to the consolidated financial statements.

F-1

AUGME TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
	Three Months Ended
	November 30,			November 30,
	2010			2009
REVENUE	$	853,169		$	71,132

COST OF REVENUES:
Production and service delivery costs		361,349			28,349

GROSS PROFIT		491,820			42,776

OPERATING EXPENSES:
Selling, general, and administrative		3,064,546			1,297,543
Depreciation and amortization		261,209			280,481

Total operating expenses		3,325,755			1,578,024

LOSS FROM OPERATIONS		(2,833,935	)		(1,535,241	)

OTHER INCOME
Interest income/(expense)		7			(590	)
Loss on derivative instruments		0			(158,588	)

LOSS FROM CONTINUING OPERATIONS		(2,833,928	)		(1,377,243	)

DISCONTINUED OPERATIONS:

LOSS FROM DISCONTINUED OPERATIONS		-			(381,005	)

NET LOSS	$	(2,833,928	)	$	(1,758,248	)
BASIC AND DILUTED NET LOSS PER SHARE:
Loss from continuing operations	$	(.05	)	$	(.02	)
Loss from discontinued operations	$			$	(.00	)
NET LOSS PER SHARE – basic and diluted	$	(.05	)	$	(.03	)
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic and diluted		60,412,028			52,979,068

See accompanying notes to the consolidated financial statements.

F-2

AUGME TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
	Nine Months Ended
	November 30,			November 30,
	2010			2009

REVENUE	$	1,858,208		$	149,334

COST OF REVENUES:
Production and service delivery costs		846,387			199,110

GROSS PROFIT		1,011,821			(49,781	)

OPERATING EXPENSES:
Selling, general, and administrative		6,780,777			3,297,252
Depreciation and amortization		752,925			641,603

Total operating expenses		7,533,702			3,938,855

LOSS FROM OPERATIONS		(6,521,881	)		(3,988,631	)

OTHER INCOME
Interest income/(expense)		23			(980	)
Loss on derivative instruments		0			(389,864	)

LOSS FROM CONTINUING OPERATIONS		(6,521,858	)		(4,379,475	)

DISCONTINUED OPERATIONS:
Loss from discontinued operations		-			(599,555	)
LOSS FROM DISCONTINUED OPERATIONS		-			(599,555	)

NET LOSS	$	(6,521,858	)	$	(4,979,030	)
BASIC AND DILUTED NET LOSS PER SHARE:
Loss from continuing operations	$	(0.11	)	$	(.02	)
Loss from discontinued operations	$			$	(.00	)
NET LOSS PER SHARE – basic and diluted	$	(.11)		$	(.07	)
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic and diluted		58,549,934			49,347,095

See accompanying notes to the consolidated financial statements.

F-3

AUGME TECHNOLOGIES, INC.

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE NINE MONTHS ENDED NOVEMBER 30, 2010

(UNAUDITED)

	Common Stock				Paid-in			Accumulated			Stockholders
	Shares		Amount		Capital			Deficit			Equity
Balances, February 28, 2010		57,256,750	$	5,726	$	45,846,778		$	(27,474,568	)	$	18,377,936
Common stock issued for cash for:
Option /Warrants exercise		4,106,579		409		4,279,350						4,279,759
Common stock issued for:
Cashless option exercise		371,111		38		(38	)
Employee stock option expense						1,835,962						1,835,962
Warrant expense						410,684						410,684
Net loss									(6,521,858	)		(6,521,858	)
Balances, November 30, 2010		61,734,440	$	6,173	$	52,372,736		$	(33,996,426	)	$	18,382,483

See accompanying notes to the consolidated financial statements.

F-4

AUGME TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
	NINE MONTHS ENDED
	November 30,			November 30,
	2010			2009
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(6,521,858	)	$	(4,979,030	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		752,925			890,680
Bad debt expense					109,651
Stock option expense		2,246,655			680,657
Stock issued for services					429,617
Stock issued for settlement					285,001
Warrants granted for services					63,258
Loss on derivative instruments					389,864
Changes in operating assets and liabilities:
Receivables		(1,357,529	)		478,876
Prepaid expenses and other current assets		(122,715)			(29,013	)
Accounts payable and accrued expenses		30,802			(420,038	)
Deferred revenue		175,054			(349,948	)
Net cash used in operating activities		(4,796,666	)		(2,450,164	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment		(207,271	)		(172,413	)
Capitalization of Software Development Costs		(235,802	)
Purchase of assets from New Aug, LLC					(324,000	)
Cash paid for patent defense costs					(185,262	)
Net cash used in investing activities		(443,073	)		(681,675	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the sale of common stock		2,261,000			2,049,997
Proceeds received from the exercise of warrants					753,752
Proceeds received from the exercise of stock options		2,018,750			75,750
Payments on related party note payable					(15,574	)
Payments on Capital lease obligation					(1,350	)
Net cash provided by financing activities		4,279,750			2,862,575

NET CHANGE IN CASH AND CASH EQUIVALENTS		(959,989	)		(269,264	)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		1,617,573			374,696
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	657,584		$	105,432

SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid	$			$
Income taxes paid		16,752			-
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING
Stock issued for New Aug, LLC assets					(13,832,002	)
Shares issued for patent defense					443,145
Derivative reclassification to equity					938,334
Stock Issued for Radio Pilot assets					122,000
Note payable issued for purchase of assets	$			$	24,215

See accompanying notes to the consolidated financial statements

F-5

AUGME TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION

The accompanying unaudited interim financial statements of Augme Technologies, Inc. ("Augme", “we”, “our”, or the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission, and should be read in conjunction with the audited financial statements and notes thereto contained in Augme's Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on June 1, 2010.

In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. Certain prior year amounts have been reclassified to be consistent with the current period classification. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements that would substantially duplicate the disclosures contained in the audited financial statements for the fiscal year ended February 28, 2010 as reported in Form 10-K have been omitted.

Revenue Recognition Policy

Upon completion and execution of a Master Service Agreement or Statement of Work (the "SOW") is booked into the accounting system. If the SOW is to be completed in 1 year the entry is Debit Accounts receivable and credit deferred revenue in current assets and liabilities, respectively. If the SOW extends over a year then the short term portion, less than a year is booked as short term and the long term portion or over a year is booked as such.

Revenue is recognized and reclassified from Deferred revenue to current period income depending on the type of revenue. Implementation and set up fees are bookedupon signature or upon mobilization to start work on the project. Campaign fees are incurred monthly and recognized over the term of the contract. Software license fees are recognized over the term of the SOW on a prorate basis.

F-6

NOTE 2 – EQUITY TRANSACTIONS

COMMON STOCK:

During the nine months ended November 30, 2010, Augme completed the following common stock transactions:

Issued 50,000 common shares in connection with the exercise of options for $12,500.

Issued 170,227 common shares in connection with the cashless exercise of options.

Issued 225,000 common shares in connection with an employment agreement.

Issued 937,500 common shares and had 1,062,500 common shares pending issuance in connection with a private placement financing of unaffiliated individuals and investors.

Issued 1,000,000 common shares in connection with a private placement financing to both affiliated and unaffiliated individuals and entities.

Issued 300,000 common shares in connection with the exercise of options for $186,000 to an ex-officer of the Company.

Issued 56,522 common shares in connection with the exercise of a warrant to an unaffiliated individual.

STOCK OPTIONS:

As of November 30, 2010, there was $8,116,774 of unamortized stock option expense, which is expected to be amortized through February 2016.

The summary of activity for Augme's stock options is presented below:

	Number of Options		Weighted Average Exercise Price

Options outstanding at February 28, 2010		5,258,415	$	1.51
Granted		7,399,333		1.79
Exercised		(530,227)	$	0.59
Forfeited		(100,000)	$	0.25
Cancelled/Expired		(140,428)	$	0.25
Options outstanding at November 30, 2010		11,887,093	$	1.54
Options exercisable at November 30, 2010		4,490,164	$	1.54

Exercise price per share of options outstanding	$	0.25-3.90

Weighted average remaining contractual lives	4.42

The intrinsic value of the exercisable options at November 30, 2010 was $4,769,155.

F-7

WARRANTS:

As of November 30, 2010 there was $1,609,209 of unamortized expense, which is expected to be expensed through November 2013.

The summary of activity for Augme's warrants is presented below:

	Number of Warrants			Weighted Average Exercise Price

Warrants outstanding at February 28, 2010		5,663,011		$	1.60
Granted		9,699,365		$	0.88
Cancelled/Expired		(1,600,178	)	$	1.26
Warrants Exercised		(56,522	)	$	1.15
Warrants outstanding at November 30, 2010		13,705,676		$	1.38
Warrants exercisable at November 30, 2010		13,518,019		$	1.38

Price per share of warrants outstanding	$	0.50-4.00

Weighted average remaining contractual lives		3.42

The intrinsic value of the exercisable warrants at November 30, 2010 was $15,215,326.

F-8

NOTE 3 - DISCONTINUED OPERATIONS

On December 31, 2009, the Company entered into to a binding letter of intent with World Talk Radio, LLC (“WTR”), an Arizona limited liability company, regarding the disposition of certain assets and liabilities related to the Internet Radio operations based in Tempe, AZ.

On February 25, 2010, the Company and WTR executed the final Asset Purchase Agreement in connection with the binding letter of intent.

As consideration for the sale of the assets of the Internet Radio operations, the Company will receive a perpetual royalty as a percentage of gross revenue collected by WTR, based on the following schedule:

January 1, 2010 – March 31, 2010	- 5% of Gross revenues collected
April 1, 2010 – June 30, 2010	- 10% of Gross revenues collected
July 1, 2010 – June 30, 2015	- 15% of Gross revenues collected
July 1, 2015 and after	- 5% of Gross revenues collected

Management evaluated the future royalty payments and determined the cash flows are indirect. Management then performed an evaluation under FASB ASC 205-20 and determined there was no significant continuing involvement by Augme in the operations of the disposed Internet Radio component. Augme does not retain an interest and there are no existing contracts that would allow Augme to influence the operating or financial policies of the Internet Radio component.

	For the Quarter Ended
	November 30, 2009
Revenues	$	312,002

Cost of revenues		168,075
Operating expenses		524,932

Income (loss) from discontinued operations before income taxes	$	(381,005	)

F-9

NOTE 4 - PRIOR YEAR ACQUISITION

Acquisition of New Aug, LLC: On July 14, 2009, the Company completed the acquisition of one hundred percent (100%) of the business and assets of New Aug, LLC, a provider of a web-based marketing platform that provides marketers, brands and advertising agencies the ability to create, deliver, manage and track interactive marketing campaigns targeting mobile consumers through traditional print advertising channels. The results of New Aug, LLC’s operations, which now represents our AD LIFE™ operating division, have been included in the consolidated financial statements of the Company since that date.

The results of this acquisition are included in the consolidated financial statements from the date of acquisition. The following table presents the pro forma statements of operations obtained by combining the historical consolidated statements of operations of the Company and New Aug, LLC for the nine months ended November 30, 2010 giving effect to the merger as if it occurred on March 1, 2009:

	Nine Months Ended November 30
	2010

Pro forma revenues	$	78,614
Pro forma net loss		(1,627,901	)
Pro forma weighted average common shares		49,266,301
Pro forma basic and diluted net loss per share	$	(0.03	)

NOTE 5 – SUBSEQUENT EVENTS

In December 2010, we issued 752,727 restricted common shares to one individual that exercised 1,500,000 cashless warrants. The shares are subject to a 6 month lock up provision, followed by a ensuing sale restriction of 50,000 shares per month for the following 6 months.

In January 2011, we received approximately $2,346,208 for the exercise of 1,388,667 warrants. We have issued 666,667 restricted common shares to one institution and have pending issuance 732,000 restricted common shares to five individuals and two institutions.

F-10

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL

THE FOLLOWING DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OUR OPERATIONS SHOULD BE READ IN CONJUNCTION WITH FINANCIAL STATEMENTS AND THE NOTES TO THOSE STATEMENTS INCLUDED ELSEWHERE IN THIS REPORT. THIS DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS REFLECTING OUR CURRENT EXPECTATIONS THAT INVOLVE RISKS AND UNCERTAINTIES. ACTUAL RESULTS AND THE TIMING OF EVENTS MAY DIFFER MATERIALLY FROM THOSE CONTAINED IN THESE FORWARD-LOOKING STATEMENTS DUE TO A NUMBER OF FACTORS, INCLUDING THOSE DISCUSSED UNDER BUSINESS- RISK FACTORS NOTED IN OUR FORM 10-K FOR THE FISCAL YEAR ENDED FEBRUARY 28, 2010 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.

OVERVIEW

Founded in 1999, Augme Technologies, Inc. (”Augme”) provides Internet applications and services based upon marketing driven technology platforms that enhance the delivery of marketing communications through intelligent distribution to all Internet-enabled devices. Augme owns the “Method and System for Adding Function to a Webpage” portfolio of patents, which cover technical processes and methods which are an indispensable component of behavioral targeting – the automatic provision of customized content to individuals based on information such as past web activity, personal preferences, geography, or demographic data. Augme platforms enable Internet video broadcasting, Internet advertising, and mobile marketing – all aimed at increasing marketing return on investment (“ROI”) or monetizing audio and video content delivery to Internet-enabled devices.

In 2009, Augme initiated a comprehensive business growth strategy aimed at fully leveraging the value of its technology and patent portfolio by accelerating the advanced development of technology platforms that apply the most valuable aspects of the patents.

In an effort to support Augme’s new business strategy, and in conjunction with the repositioning of other corporate assets earlier in 2009, Augme executed a Letter of Intent, effective December 31, 2009, to dispose of certain tangible and intangible assets and certain liabilities and to transfer certain obligations related to our Internet Radio services. This transaction transferred the business operations of our Internet Radio services to World Talk Radio, LLC, an Arizona based limited liability company (“WTR”) to be owned and operated by VoiceAmerica.

The disposition of the Internet Radio operations resulted in a reduction in our expenses, enabling management to focus all available resources on the corporate strategy defined in 2009 that includes an expanded IP licensing structure as well as supporting the development and further commercialization of marketing driven technologies. Furthermore, as part of the strategy to streamline operations and to create non-encumbered revenues to support growth businesses, we will receive a perpetual royalty as a percentage of gross revenue generated by WTR for as long as the new entity provides Internet radio services.

With the disposition of the Internet Radio operations effective December 31, 2009, we are managing two newly defined operating divisions in the high growth markets of mobile marketing (AD LIFETM) and Augme Mobile Health (AMH). These two divisions are branded under “Augme” – derived from the verb Augment: to make something greater by adding to it. The Augme branded portfolio offers products and services based upon marketing driven technology platforms that enhance the delivery of marketing communications through intelligent distribution to all Internet-enabled devices.

AD LIFETM (“Augme Mobile”) is our interactive platform to provide marketers, brands and advertising agencies the ability to create, deliver, manage and track interactive marketing campaigns targeting mobile consumers through traditional print advertising channels. AD LIFETM continues to validate its growth plan of becoming the premier mobile marketing provider for the world’s largest consumer package goods (CPG) companies and their marketing agencies. By integrating the AD LIFETM platform within the marketing technology function of these formidable clients, we anticipate highly annuitized growth as the platform is utilized across multiple brands under a single master contract. AD LIFETM is experiencing significant momentum, evidenced by our success with Fortune 500 CPGs as clients and some of the most common household brands, where we were able to compete successfully against major corporations for these clients. Our websites are located at www.augmemobile.com and www.augme.com and include a complete overview of our technology.

We provide interactive media marketing platforms that enable marketers and advertising agencies to integrate brands, promotions, video, and other digital content through the Internet and mobile communications. Our intuitive new media marketing platforms give companies the control they need to quickly create, deploy and measure rich-media, interactive marketing campaigns across all networks and devices. We believe our integrated, easy-to-use, end-to-end platform is the most extensive mobile marketing and advertising campaign management platform in the industry. Campaigns built on our marketing platforms condense the customer loyalty cycle by delivering personalized brand experience to customers where they work, play and live. We were formerly known as Modavox, Inc. and changed our name to Augme Technologies, Inc. in February 2010. Augme Technologies was founded in 1999 and is based in New York, New York.

Our AD LIFE platform enables Internet video broadcasting, Internet advertising, and mobile marketing. AD LIFE provides marketers, brands, and advertising agencies the ability to create, deliver, manage, and track interactive marketing campaigns aimed at mobile consumers regardless of network, operating system, or device type. Our products and services include: website mobilization, content rendering, mobile campaign management, ad serving, data analytics and tracking, as well as content distribution, among other services.

We currently employ over 50 people including an internal direct sales team of ten. In addition, we also maintain an indirect sales network of over 500 through channel partnerships with Graphic Packaging, News Corp’s News America Marketing, Clear Channel Outdoor, and Inmar. We have an expanding marquee customer base including a growing list of 23 Fortune 500 companies in the Healthcare, Pharmaceutical, and Consumer Package Goods industries, among others. We also own four patents, which are the basis of ongoing patent infringement suits in which we have perused over 200 identified possible infringer’s including Yahoo! and America Online.

Currently, we generate revenue by providing mobile marketing services through our AD LIFE platform. The majority of our sales are driven by individual campaign fees, which usually include various levels of recurring fees throughout each campaign’s term. Although we generated revenues of just over $1.0 million during the first six months of our fiscal year ending 2011, we believe our progress made with acquiring a marquee list of customers and developing valuable partnerships will drive significant growth. We forecasted that revenues should exceed $12.0 million during the next twelve months, based on an estimate that approximately 50% of current bookings will convert into revenues within that period of time. We are currently doing business with three of the world’s top ten pharmaceutical companies that have combined net revenues of over $150 billion. Some of our other clients include three Fortune 100 companies, six Fortune 200 companies and three Global Fortune 500 companies.

Our Solution

Our proprietary AD LIFE platform allows our customers to conduct highly targeted and measurable campaigns and addresses many of the current challenges with mobile marketing and advertising by delivering the following benefits:

Our Augme Mobile Marketing division offers AD LIFE, an interactive platform to provide marketers, brands, and advertising agencies the ability to create, deliver, manage, and track interactive marketing campaigns targeting mobile consumers through print advertising channels. AD LIFE offers the only end-to-end mobile solution that allows brands a scalable, centralized execution and reporting platform. More importantly, AD LIFE solves numerous mobile complications using the only content rendering and device detection patents in the industry. Our patents allow us to provide our clients a full suite of mobile marketing services, thus providing an end-to-end mobile campaign management software system. Our AD LIFE platform delivers the following benefits to our customers:

·	Device recognition technology formats traditional digital assets into content that can be viewed on virtually any mobile device regardless of operating system or network provider;

·	Our open architecture offers the widest variety of Consumer Response Tags (“CRTs”) in the market today, including SMS, 2D codes, Logo, and Audio recognition, these CRTs allow consumers to use their mobile devices to easily and instantly access on-demand digital content;

·	Ability to measure campaign effectiveness using data analysis gathered and processed using proprietary techniques, these key metrics and results of client campaigns including demographic and behavioral data;

·	Integration with brands’ existing ERP and CRM systems provides the ability to optimize campaigns and fulfillment;

·	Our software platform enables our customers to implement mobile campaigns in a short time frame, typically 10-20 days and is significantly more cost effective than sourcing technology;

·	Provides brands with centralized database and access to over 120 million consumer data records.

Additionally, our platform allows our customers the ability to deliver content to any mobile network, operating system or device, regardless of how the device landscape changes. This ensures that brands, have the capacity to reach 100% of any intended marketplace for their messaging, whether through text, quality resolution code, or other means.

Our Strategy

Our strategy is to be the leading provider of mobile marketing and advertising solutions globally across multiple media types and channels. The principal elements of our strategy are to:

·	Capitalize upon our existing patented technology to further develop new product innovations and licensing opportunities;

·	Deepen our existing and add new strategic, customer relationships as our markets expand;

·	Enhance our platform by addressing technology shifts in mobile devices and computing;

·	Continue global expansion and pursuer strategic partnerships and acquisitions;

·	Focus on earned versus paid media using engagement-based techniques and behavioral targeting;

·	Continue to transition and proliferate into a software-as-a-service business model.

We believe our mobile marketing solutions together with our patents that are critical to behavioral targeting will enable us to pioneer a new era in marketing and new media communications with Internet applications and services for targeted consumers and communities worldwide.

On August 16, 2010, Augme Technologies, Inc. received US Patent #7,783,721 from the United States Patent and Trademark Office (USPTO) entitled “Method and Code Module for Adding Function to a Web Page.” The patent was filed by the Company on September 4, 2007 and is a continuation of the Company's previously issued patent number 7,269,636. The Company believes that this issuance further establishes Augme as the owner of foundational Internet content targeting technology.

On November 9, 2010, US Patent #7,831,690 was issued to us by the United States Patent and Trademark Office (“USPTO”) entitled "Appliance Metaphor for adding Media Function to a Web Page." This patent was filed by Augme on August 3, 2007 and its issuance further establishes us as the owner of foundational Internet content targeting technology.

The claims of the ‘690 patent define our technology that enables content targeting by publishers of Internet and mobile web destinations.

The newly issued patent claims provide ownership of:

·	Technology that adds content customization capability to a web page;

·	Technology that allows any device, network appliance, or browser to receive an optimized service response automatically; and

·	A service delivery of a consumer targeted response formed by a server system and customized in response to information about a web page .

Our solutions are supported by our intellectual property portfolio, and we now owns four patents and have additional patents pending with the United States Patent & Trademark Office (“USPTO”). The patents contain a broad range of claims covering our proprietary technologies and products. We also own four trademarks protecting the names of its products and identity in the marketplace.

Critical Accounting Policies

General

Our discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the U.S. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities and expenses. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The Company’s significant accounting policies are disclosed in the Company’s Annual Report on Form 10-K for the year ended February 28, 2010. The Company has not materially changed its significant accounting policies.

Revenue Recognition Policy

Upon completion and execution of a Master Service Agreement or Statement of Work (the "SOW") is booked into the accounting system. If the SOW is to be completed in 1 year, the entry is Debit Accounts receivable and credit deferred revenue in current assets and liabilities, respectively. If the SOW extends over a year then the short term portion, less than a year is booked as short term and the long term portion or over a year is booked as such.

Measuring Fair Value

In September 2006, the FASB issued ASC 820 that defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The provisions of ASC 820 were effective January 1, 2008. The provisions delayed the effective date of ASC 820 for nonfinancial assets and liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually), until fiscal years beginning after November 15, 2008.

As defined in ASC 820, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. The Company classifies fair value balances based on the observation of those inputs. ASC 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurement).

The three levels of the fair value hierarchy defined by ASC 820 are as follows:

Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of financial instruments such as exchange-traded derivatives, marketable securities and listed equities.

Level 2 – Pricing inputs are other than quoted prices in active markets included in level 1, which are either directly or indirectly observable as of the reported date. Level 2 includes those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors, and current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. Instruments in this category generally include non-exchange-traded derivatives such as commodity swaps, interest rate swaps, options and collars.

Level 3 – Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value.

As required by ASC 820, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels.

Results of Operations

The discussion of the results of operations compares the quarter ended November 30, 2010 with the quarter ended November 30, 2009, and is not necessarily indicative of the result which may be expected for any subsequent period. Our prospects should be considered in light of the risks, expenses and difficulties encountered by companies in similar positions. We may not be successful in addressing these risks and difficulties.

Three Months Ended November 30, 2010 versus November 30, 2009

For the quarter ended November 30, 2010, revenues were $853,169 compared to $71,132 for the quarter ended November 30, 2009. The resulting increase is directly related to the added emphasis on providing mobile media marketing and services. Production and service delivery costs were $361,349 for the November 30, 2010 quarter compared to 28,349 for the quarter ended November 30, 2009 reflecting additional costs related to human resources in order to facilitate the delivery of the new service oriented philosophy.

Selling, general, and administrative expenses were $3,064,546 for the quarter ended November 30, 2010 compared with $1,297,543 for the quarter ended November 30, 2009, an increase of 136%. The current quarter expense consisted primarily of approximately $832,358 of non-cash stock option expense, and approximately $2,232,188 of expenses, including payroll, accounting, consulting fees and software development expenses. Professional services costs (“Professional Fees”) comprise a major percentage of the costs in the approximate amount of $991,743 in the aggregate.

Depreciation and amortization expense was $261,209 for the quarter ended November 30, 2010 compared with $280,481 in the quarter ended November 30, 2009. Amortization expense decreased to $170,688 for the quarter ended November 30, 2010 compared to $194,164 for the quarter ended November 30, 2009. Depreciation expense for the quarter ended November 30, 2010 increased to $90,521 compared to $86,317 for the quarter ended November 30, 2009. The total change in depreciation and amortization relates to the change in intangible assets associated with the New Aug, LLC acquisition last year.

Interest income was $7 for the three months ended November 30, 2010 versus interest expense of $590 for the quarter ended November 30, 2009.

The Gain (loss) on derivative instruments was $0 for the three months ended November 30, 2010 compared to $158,588 for the quarter ended November 30, 2009.

During the quarter ended November 30, 2010, the Company incurred a net loss of $2,833,928 compared to a net loss of $1,758,248 in the prior year quarter. The $1,075,680 increase in the net loss is a result of increased expenses, including non-cash expenses, and increased professional fees, as described above.

Pursuant to accounting rules for discontinued operations, we have included the results for the comparable prior reporting period to present the activity related to the Internet Radio operations as a discontinued operation. Discontinued operations for the three months ended November 30, 2009 are summarized as follows: Revenues of $312,002; Cost of Revenues at ($168,075); Operating Expenses of ($524,932), giving us a Loss from discontinued operations (before income taxes) of ($381,005).

Nine Months Ended November 30, 2010 versus 2009

For the nine months ended November 30, 2010, revenues were $1,858,208 compared to $149,334 for the nine months ended November 30, 2009, an increase of 1144%. The increase in overall revenues is due to increased customer demand for our Ad Life platform. Deferred Revenue increased to $409,090 for the period ended November 30, 2010 from $234,036 for the period ended February 28, 2010.

Production and service delivery costs were $846,387 for the nine months ended November 30, 2010 compared to $199,110 during the nine months ended November 30, 2009 reflecting higher sales volume and higher overall costs related to telecommunications, higher cost of hosting our content as well as higher personnel costs associated with increased staffing and compensation levels.

Selling, general, and administrative expenses were $6,780,777 for the nine months ended November 30, 2010 compared with $3,297,252 for the nine months ended November 30, 2009, a change of 3,483,525, or 106%. Professional services costs (“Professional Fees”) comprise a major percentage of the costs in the approximate amount of $1,718,783 in the aggregate.

The change in expense primarily consisted of $1,641,483 of increased non-cash stock option expense, $1,842,042 due to increased staffing and employee benefits and outside contracting costs associated with an increased level of product development. Of these administrative expenses, $1,219,658 of the increase is related to increased staffing and compensation levels in sales and general management, and $622,384 in professional fees is related to investor relations, accounting, legal, software development, and other consulting fees and other expenses.

Approximately $2,246,655 of the total selling, general, and administrative expenses for the nine months ended November 30, 2010 was non-cash in nature versus approximately $605,172 for the nine months ended November 30, 2009, and consisted of the fair value accounting for stock options and certain expenses that were paid with shares of common stock of the Company.

Depreciation and amortization expense was $752,925 for the nine months ended November 30, 2010 compared with $641,603 in the comparable 2009 period. Amortization expense increased to $520,713 for the nine months ended November 30, 2010 compared to $401,608 for the comparable 2009 period. Depreciation expense for the nine months ended November 30, 2010 decreased to $232,212 compared to $239,995 for the nine months ended November 30, 2009. The net result of changes in depreciation and amortization relate to the increased capitalization of internal software and for the intangible assets related to the New Aug, LLC; and Radio Pilot acquisitions.

Interest income was $23 for the nine months ended September 30, 2010 versus interest expense of $980 for the nine months ended November 30, 2009.

The loss on derivative instruments was $0 for the nine months ended November 30, 2010 compared to a loss of $389,864 for the nine months ended September 30, 2009.

For the nine months ended November 30, 2010, the Company incurred a net loss of $6,521,858 compared to a net loss of $4,979,030 in the comparable prior year period. The $1,542,828 increase in the net loss is a result of increased direct expenses and increased selling, general and administrative expenses including non-cash expenses and Professional Fees, as described above.

Liquidity and Capital Resources

Working capital, which is defined as current assets less current liabilities, increased by $315,638 to a working capital surplus of $663,969 as of November 30, 2010 compared to a working capital surplus of $348,331 as of February 28, 2010. We have utilized our cash resources from the beginning of the year to fund operations. This was offset by signed investor agreements resulting in a substantial increase in receivables, and also decreased current liabilities through the recognition of deferred revenues. These results served to increase our working capital surplus.

As of November 30, 2010, we had a cash balance of $657,584 and we used cash of $959,989 to fund our operating activities during the nine months ended November 30, 2010.

Based on the amount of capital we have raised since November 30, 2009 and the potential to raise additional capital from the exercise of warrants and options and the sale of additional common stock if required, we believe that we will have enough cash flow from operations and financing activities to support our business for at least the next twelve months. In fact, we believe that we have the capital necessary to implement our growth strategy in our core businesses and ensure a vigorous effort in protecting our intellectual property. However, no assurances can be made that we will have adequate capital or be successful in raising additional financing on terms that are acceptable to the Company or at all if our future financial results are not in line with our expectations.

Forward Looking Statements

This Quarterly Report on Form 10-Q and the documents incorporated herein by reference contain forward-looking statements that have been made pursuant to the provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current expectations, estimates and projections about our industry, management's beliefs, and certain assumptions made by management. Words such as "anticipate," "expect," "intend", "plans," "believe," "seek," "estimate" and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and actual actions or results may differ materially. These statements are subject to certain risks, uncertainties and assumptions that are difficult to predict, including those noted in the documents incorporated herein by reference. Particular attention should also be paid to the cautionary language appearing elsewhere in this report. We undertake no obligation to update publicly any forward-looking statements as a result of new information, future events or otherwise, unless required by law. Readers should, however, carefully review the risk factors included in other reports or documents we file from time to time with the Securities and Exchange Commission, including in our Annual Report Form 10-K for our fiscal year ended February 28, 2010.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our exposure to market risk relates primarily to our future cash needs and the effect that changes in economy reflect in the capital markets. Historically, we have had access to capital in the equity markets on an acceptable basis. Refer to Item 2 (“Unregistered Sales of Equity Securities and Use of Proceeds”) for discussion of new financing in the period ended November 30, 2010.

As of January 5, 2011 we did not hold any derivative financial instruments for speculative or trading purposes. The primary objective of our investment activities is the preservation of principal while maximizing investment income and minimizing risk. As of November 30, 2010, we had $657,584 in cash and cash equivalents including short-term investments purchased with original maturities of three months or less. Due to the short duration of these financial instruments, we do not expect that a change in interest rates would result in any material loss to our investment portfolio.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Securities Exchange Act of 1934, as amended is accumulated and communicated to the issuer's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. It should be noted that the design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote. As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer (principal executive officer), who also serves as our principal financial officer and our Corporate Controller of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, our Chief Executive Officer, in both capacities as principal executive officer and principal financial officer, has concluded that the Company’s disclosure controls and procedures are not effective because of the identification of a material weakness in our internal control over financial reporting which we view as an integral part of our disclosure controls and procedures. The material weakness relates to the lack of segregation of duties in financial reporting, as our financial reporting and several of our accounting functions are performed by internal employees with limited oversight by a professional with accounting expertise. Our Chief Executive Officer is not a Certified Public Accountant.

Beginning in the fourth quarter of the fiscal year ended February 28, 2009, and continuing into the new fiscal year, the Company has taken tangible steps to address certain deficiencies in disclosure controls and procedures. These steps include adding two new members to the Board of Directors with extensive experience in accounting and financial operations: Shelly Meyers, Chairwoman of the Board and John Devlin, Board Member. The Company is committed, under Board direction, to ensure that adequate disclosure controls and procedures are in place. The Company fully intends to remedy our existing control deficiencies, including hiring the necessary personnel, subject to having adequate finances as may be needed to address our internal control weaknesses.

Changes in Internal Controls over Financial Reporting.

Other than as set forth above, there have been no changes in our internal controls over financial reporting that occurred during the quarter ended November 30, 2010 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Tacoda, Inc., AOL, LLC, Time Warner, Inc., and Platform-A, Inc.

In 2007, Augme filed a lawsuit against Tacoda, Inc. in the U.S. District Court, Southern District of New York, alleging infringement of Augme-owned U.S. Patent Nos. 6,594,691 (“Method and System for Adding Function to a Web Page”) and 7,269,636 (“Method and Code Module for Adding Function to a Web Page”). We previously reported this proceeding in our Quarterly Report on Form 10-Q for the quarter ended May 31, 2010 filed with the SEC on July 9, 2010. We also reported in such Form 10-Q our complaint filed against AOL, LLC in the U.S. District Court, Central District of California, for infringement of our trademark BOOMBOX RADIO and our First Amended Complaint filed against AOL, LLC, Time Warner, Inc. and Platform-A, Inc., for trademark infringement relating to our word-mark BOOMBOX RADIO, and infringement of our U.S. Patent Nos. 6,594,691 and 7,269,636. Per court order dated April 14, 2009, the case was transferred to the Court where our complaint against Tacoda, Inc. for infringement of our U.S. Patent Nos. 6,594,691 and 7,269,636 is pending. In our case against Tacoda, Inc., AOL, LLC, Time Warner, Inc. and Platform-A, Inc., Judge Robert W. Sweet endorsed a letter on August 26, 2010 that was dated August 17, 2010, requesting that the Court assign to Magistrate Judge Ronald L. Ellis the above action for settlement purposes.

On October 28, 2010, a mediation hearing was held before Magistrate Judge Ronald L. Ellis. It was also ordered that all proceedings relating to the mediation hearing were to be held confidential, that all information disclosed between the parties would be subject to the strict confidentiality requirements of mediation hearing practices, and that this confidentiality would carry on subsequent to the meeting.

Yahoo! Inc.

On November 16, 2009, Augme filed a Complaint against Yahoo! Inc. for patent infringement relating to U.S. Patent Nos. 6,594,691 and 7,269,636, which patents relate to methods and systems for delivery of selected content from a network to a web page visitor. The matter is currently pending in the United States District Court for the Northern District of California, Case No. C-09-5386 EDL. The remedies available to Augme, if successful, include an injunction prohibiting any infringing actions, an award of damages adequate to compensate for the infringement, and costs of the action. We previously reported this proceeding in our Quarterly Report on Form 10-Q for the quarter ended May 31, 2010 filed with the SEC on July 9, 2010.

A settlement conference was held on July 28, 2010. An order was issued by Magistrate Judge Elizabeth D. Laporte directing that the parties attending the settlement conference be members of management with full knowledge of the case and full authority to settle. It was also ordered that all proceedings relating to the settlement conference were to be held confidential, that all information disclosed between the parties would be subject to the strict confidentiality requirements of settlement conference practices, and that this confidentiality would carry on subsequent to the meeting.

On November 12, 2010, Yahoo! filed a motion for summary judgment with the United States District Court for the Northern District of California. On December 3, 2010, an order was issued by Magistrate Judge Joseph C. Spero denying the Yahoo! motion without prejudice. On December 3, 2010, Yahoo! filed a Notice of Motion and Motion for Leave to File Amended Answer with Additional Counterclaims and to join WorldTalk Radio, LLC as a Counterclaim Defendant. Augme denies that any merit exists with respect to these counterclaims and will continue to pursue the prosecution of Yahoo!'s infringement against the Company's patent claims.

ITEM 1A. RISK FACTORS

You should carefully consider the risks described below together with all of the other information included in this report before making an investment decision with regard to our securities. The statements contained in this report that are not historic facts are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by forward-looking statements. If any of the following risks actually occurs, our business, financial condition or results of operations could be harmed. In that case, the trading price of our common stock could decline, and you may lose all or part of your investment.

We have a history of losses and negative cash flows from operations and we may not be profitable in the future.

We had a loss of $6,521,858 for the nine months ended November 30, 2010, a loss of $8,378,499 for the fiscal year ended February 28, 2010, and a loss of $5,325,510 for the fiscal year ended February 28, 2009. We had an accumulated deficit at November 30, 2010 of $33,996,426. Our ability to generate positive cash flows from operations and net income is dependent, among other things, on the acceptance of our products in the marketplace, market conditions, cost control, and our ability to raise capital on acceptable terms. The financial statements included elsewhere in this document do not include any adjustments that might result from the outcome of these uncertainties. Furthermore, developing and expanding our business will require significant additional capital and other expenditures. Accordingly, if we are not able to increase our revenue, then we may never achieve or sustain profitability.

Although we have been able to meet our operating requirements since November 30, 2010 and received approximately $2,250,000 of additional financing, we may need to receive additional capital to continue our operations beyond the next twelve months.

Cash Flow and Capital Availability Risk.

Financing may not be available to us on commercially reasonable terms, if at all. There is no assurance that we will be successful in raising additional capital or that the proceeds of any future financings will be sufficient to meet our future capital needs.

Stock Volatility and Securities Litigation Risk.

The trading price of our Common Stock could continue to be subject to wide fluctuations in response to business or other factors, many of which are beyond our control. As long as the trading price of our common shares is below $5 per share, the open-market trading of our common shares will be subject to the “penny stock” rules.

Management Ability to Function as a Team and Lack of Operating History.

There can be no assurance that management will function successfully as a management team to implement our business strategy. Our performance is dependent on the services of our management as well as on our ability to recruit, retain and motivate other key employees in the fields of engineering, marketing and finance.

Future Advertising and Competition in the Mobile Device Market Risk.

Newer technology may render our technology obsolete which would have a material, adverse impact on our business and results of operations. We may also be required to collaborate with third parties to develop our products and may not be able to do so on a timely and cost-effective basis, if at all.

Information Technology, Network and Data Security Risk.

Our business faces security risks. Our failure to adequately address these risks could have an adverse effect on our business and reputation. Computer viruses, break-ins, or other security problems could lead to misappropriation of proprietary information and interruptions, delays, or cessation in service to our customers.

Partnering Risk.

We rely on certain technology services from third party service providers, and there can be no assurance that these third party service providers will be available to us on acceptable commercial terms or at all.

Investment in Technological Innovation and Regulatory Oversight Risk.

If we fail to invest sufficiently in research and product development, then our products could become less attractive to potential customers, which could have a material adverse effect on our results of operations and financial condition. A number of laws and regulations may be adopted with respect to the Internet or other mobile phone services covering issues such as user privacy, “indecent” materials, freedom of expression, pricing content and quality of products and services, taxation, advertising, intellectual property rights and information security. Adoption of any of these regulatory requirements might impact our ability to deliver increasing levels of technology innovation due to the competition for available financial resources.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

In October 2010, we had pending issuance a total of 1,000,000 shares of Common Stock to fourteen individuals and two institutions in lieu of an aggregate $2,000,000 equity investment in the Company. This purchase entitles the institution to 3-year warrants exercisable for an aggregate 500,000 shares of our common stock at $2.50 per share. The shares were issued without registration under the Securities Act in reliance upon the exemptions from registration set forth in Section 4(2) and Regulation D. We based such reliance upon factual representations by the recipients of the shares to us regarding their investment interest and sophistication, among other things. As of November 30, 2010 we had collected $1,600,000 and had $400,000 of stock subcriptions receivable. All of the stock subcriptions receivable were received in early December 2010. The shares were issued without registration under the Securities Act in reliance upon the exemptions from registration set forth in Section 4(2) and Regulation D. We based such reliance upon factual representations by the recipients of the shares to us regarding their investment interest and sophistication, among other things.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

Exhibit Number	Document

3.1	Certificate of Incorporation, as amended (Filed on July 9, 2010 as an exhibit to our Quarterly Report on Form 10-Q, and incorporated herein by reference.)

3.2	Bylaws, as amended (Filed on April 28, 2006 as an exhibit to our Current Report on Form 8-K, and incorporated herein by reference.)

10.1	Form of Subscription Agreement for the August 31, 2010 financing (Filed on September 3, 2010 as an exhibit to our Current Report on Form 8-K, and incorporated herein by reference.)

10.2	Form of Warrant for the August 31, 2010 financing (Filed on September 3, 2010 as an exhibit to our Current Report on Form 8-K, and incorporated herein by reference.)

10.3	Form of Subscription Agreement for the November 30, 2010 financing (Filed on December 1, 2010 as an exhibit to our Current Report on Form 8-K, and incorporated herein by reference.)

10.4	Form of Warrant for the November 30, 2010 financing (Filed on December 1, 2010 as an exhibit to our Current Report on Form 8-K, and incorporated herein by reference.)

31.1	Rule 13a-14(a) / 15d-14(a) Certification of Principal Executive Officer (Filed herewith.)

31.2	Rule 13a-14(a) / 15d-14(a) Certification of Principal Financial Officer (Filed herewith.)

32.1	Section 1350 Certification of Principal Executive Officer and Principal Financial Officer (Filed herewith.)

SIGNATURES

In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	AUGME TECHNOLOGIES, INC.
	(Registrant)

Date: January 7, 2011	By:	/s/ Paul R. Arena
		Paul R. Arena
		Chief Executive Officer

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