Form 8-K SRAX, Inc. For: Apr 01

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM 8-K

 

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported) April 1, 2021 (March 29, 2021)

 

SRAX, INC.

(Exact name of registrant as specified in its charter)

 

Delaware		001-37916		45-2925231
(State or other jurisdiction of incorporation or organization)		(Commission File Number)		(I.R.S. Employer Identification No.)

 

2629 Townsgate Road #215, Westlake Village, CA		91361
(Address of principal executive offices)		(Zip Code)

 

Registrant’s telephone number, including area code:

(323) 694-9800

 

not applicable

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

[  ]	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[  ]	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[  ]	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[  ]	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Title of Class		Trading Symbol		Name of Each Exchange on Which Registered
Class A Common stock		SRAX		NASDAQ Capital Market

 

Indicate by check mark whether the registrant is an emerging growth company as defined in in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company [  ]

 

If an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [  ]

 

 

 

Item 2.02 Results of Operations and Financial Condition

 

On March 29, 2021, SRAX, Inc. (the “Company”) reported certain financial results and operational results for (i) the year ended December 31, 2020 and (ii) the three months ended December 31, 2020. The press release is attached as Exhibit 99.01 and is incorporated herein by reference.

 

On March 29, 2021, the Company held an earnings call related the foregoing results. A copy of the transcript of the call is attached hereto as Exhibit 99.02.

 

The information furnished under Items 2.02, including the accompanying Exhibits 99.01 and 99.02 shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”), or otherwise subject to the liability of such section, nor shall such information be deemed to be incorporated by reference in any subsequent filing by the Company under the Securities Act of 1933 or the Exchange Act, regardless of the general incorporation language of such filing, except as specifically stated in such filing.

 

Item 9.01 Financial Statements and Exhibits.

 

Exhibit No.		Description
99.01		Press Release Dated March 29, 2021
99.02		Conference Call Transcript

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report on Form 8-K to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date:	April 1, 2021	SRAX, Inc.
			/s/ Christopher Miglino
		By:	Christopher Miglino
			Chief Executive Officer

 

 

INDEX OF EXHIBITS

 

Exhibit No.		Description
99.01		Press Release Dated March 29, 2021
99.02		Conference Call Transcript

 

 

Exhibit 99.01

 

SRAX REPORTS Positive Net Income for Q4 2020 and Increases Guidance

 

LOS ANGELES—(BUSINESS WIRE)—SRAX, Inc. (NASDAQ: SRAX), a

 

Fourth Quarter 2020 and Recent Operational Highlights and Guidance

 

	●	Revenue for Q4 of $4.5M up 316% year-over-year, 74% sequentially quarter-over-quarter, exceeding previous guidance.
	●	Full-year revenue guidance increased from $17M - $18M to $23M - $25M
	●	Sequire bookings of $4.8M and $10M for Q4 and 1Q, respectively
	●	8 consecutive quarters of Sequire SAAS growth
	●	Currently holding approximately $23.8M worth of publicly listed securities
	●	183 public companies/partners have subscribed to Sequire, up 92 since our Q3 release
	●	Sold position in TI Health (SRAXmd) for $8M
	●	Sequire revenue to be recognized from existing contracts in 2021: $16.5M as of this release.
	●	Second Quarter revenue guidance of $7M
	●	BIGtoken share exchange completed. BIGtoken now listed under TICKER:FPVD

 

Three months ended December 31, 2020

 

	●	Total Revenue was $4.5M, an increase of 316% as compared to the same period in prior year.
	●	Gross Margin was 73%, as compared to 44% in the same period last year.
	●	Operating Expenses were $5.3M as compared to $4.8m in the same period last year.
	●	EBITDA increase of $3M, ($672K) vs ($3.7M) in Q4 2019
	●	SRAX less BIGtoken Pro forma EBITDA of $255K as compared to ($500K)
	●	Net Income of $200K compared to Net loss of $4.4M in the same period last year.

 

Full Year Ended December 31, 2020

 

	●	Total Revenue was $8.7M, an increase of 141% as compared to the same period in prior year.
	●	Gross Margin was 70%, as compared to 53% in the same period last year.
	●	Operating Expenses were $14.4M, a decrease of $3M, or 17% as compared to the same period last year.
	●	EBITDA was -$8.4M as compared to -$15.5M last year.
	●	Net Income was -$14.7M compared to -$16.9M in the same period last year.

 

“As the SEQUIRE platform continues to grow and adapt to customer needs, we are seeing a tremendous increase in our recurring revenue stream. SEQUIRE is changing the way public issuers interact with and engage their investors, and it shows. We are pleased to report our first quarter of positive EBITDA from our SEQUIRE segment,” said Chris Miglino, Founder and CEO of SRAX.

 

“The whole company is very proud of everything we’ve accomplished this quarter and is excited about the momentum we have going into quarter four. We acquired LD Micro, moved BIGToken to its own public company, and successfully sold our remaining MD asset, which was not on our balance sheet.

 

 

The number of new companies signing up on Sequire has increased substantially. We now have a clear view of the Sequire business without the BIGtoken business. We had record bookings in the first quarter of 10M in 2021 which puts us in a position where we have $16.5M in revenue that will run in the entirety of 2021.

 

Now have clear confirmation that Sequire is rapid growing and profitable business. Sequire is a profitable business. We were profitable (EBITDA and net income) in Q4 standalone, without BIGtoken. In Q1, we anticipate that we’ll be even more profitable. Giving guidance of 7M in Q2. Sold 10M of bookings in Q1.

 

We’ve launched a number of amazing products in Q1, for the Sequire platform. Talk about Shelf. Used our virtual platform to launch conferences for a number of large financial institutions. Many new features due to rollout in Q2 and Q3.

 

With the growth that we’re experiencing, we’re comfortable with giving guidance of $23-25M in revenue for the year. And look forward to continued growth of the Sequire platform

 

Conference Call:

 

Management will review the results on a conference call with a live question and answer session, March 29th, 2020, at 12:00 p.m. ET / 9:00 p.m. PT.

 

To access the live webcast and presentation, please register here: https://zoom.us/webinar/register/WN_Hj1BLJk9Rma0d-g4ZfBbVg

 

The webcast will be available on srax.com for at least 90 days. To dial-in to the conference call, please call US: +1 669 900 6833. Webinar ID: 942 4818 0377.

 

Non-GAAP Measures:

 

To supplement our condensed consolidated financial statements, which are prepared and presented in accordance with generally accepted accounting principles in the United States (GAAP), we use the following non-GAAP financial measures: EBITDA. The presentation of these financial measures is not intended to be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP. Investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures as an analytical tool. In addition, these measures may be different from non-GAAP financial measures used by other companies, limiting their usefulness for comparison purposes. We compensate for these limitations by providing specific information regarding the GAAP amounts excluded from these non-GAAP financial measures. We believe these non-GAAP financial measures provide investors with useful supplemental information about the financial performance of our business, enable comparison of financial results between periods where certain items may vary independent of business performance, and allow for greater transparency with respect to key metrics used by management in operating our business. For more information on our non-GAAP financial measures and a reconciliation of GAAP to non-GAAP measures, please see the “Reconciliation of GAAP to Non-GAAP Results” table in this press release.

 

 

SRAX less BIGtoken EBITDA is defined as earnings before interest, taxes, depreciation and amortization, changes in the fair-value of derivative and warrant liabilities and certain additional one-time charges and excluding the results from the BIGtoken carved-out entity.

 

About SRAX:

 

SRAX (NASDAQ: SRAX) is a financial technology company that unlocks data and insights for publicly traded companies. Through its premier investor intelligence and communications platform, Sequire, companies can track their investors’ behaviors and trends and use those insights to engage current and potential investors across marketing channels. For more information on SRAX, visit srax.com.

 

Safe Harbor Statement:

 

This press release contains certain forward-looking statements that are based upon current expectations and involve certain risks and uncertainties within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Words or expressions such as “anticipate,” “plan,” “will,” “intend,” “believe” or “expect’” or variations of such words and similar expressions are intended to identify such forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements, including, without limitation, statements made with respect to expectations of our ability to increase our revenues, satisfy our obligations as they become due, report profitable operations and other risks and uncertainties as set forth in our Annual Report on Form 10-K for the year ended December 31, 2019, and our subsequent Quarterly Reports on Form 10-Q as filed with the Securities and Exchange Commission. All forward-looking statements involve significant risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements, many of which are generally outside the control of SRAX and are difficult to predict. SRAX undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.

 

 

SRAX SEGMENT OPERATING RESULTS:

 

		For the Three Months Ended December 31, ( Unaudited)
		Sequire																BIGToken																Corporate and Other																Consolidated
		2020				2019				2020 vs. 2019 Change								2020				2019				2020 vs. 2019 Change								2020				2019				2020 vs. 2019 Change								2020				2019				2020 vs. 2019 Change
										$				%												$				%												$				%												$				%
Sequire platform revenue			2,970,000				46,000				2,924,000				n/m				-				-				-				n/a				-				-				-				n/a				2,970,000			$	46,000				(46,000	)			-100	%
Conference revenue			506,000				-				506,000				n/a				-				-				-				n/a				-				-				-				n/a				506,000				-				-				n/a
BIGtoken revenue			-				-				-				n/a				996,000				987,000				9,000				1	%			-				-				-				n/a				996,000				987,000				(987,000	)			-100	%
Other			-				-				-				n/a				-				-				-				n/a				52,000				55,000				(55,000	)			-100	%			52,000				55,000				(55,000	)			-100	%
Total Revenue			3,476,000				46,000				3,430,000				n/m				996,000				987,000				9,000				1	%			52,000				55,000				(55,000	)			-100	%			4,524,000				1,088,000				(1,088,000	)			-100	%
Cost of Revenue			888,000				7,000				881,000				n/m				309,000				600,000				(291,000	)			-49	%			5,000				-2,000				2,000				-100	%			1,202,000				605,000				(605,000	)			-100	%
Gross profit			2,588,000				39,000				2,549,000				n/m				687,000				387,000				300,000				78	%			47,000				57,000				(57,000	)			-100	%			3,322,000				483,000				(483,000	)			-100	%
margin %			74.5	%			84.8	%			74	%							69.0	%%			39.2	%%			3333	%							90.4	%%			103.6	%%			104	%							73.4	%%			44.4	%			44	%
Operating expenses			1,501,000				174,000				1,327,000				763	%			1,444,000				2,471,000				(1,027,000	)			-42	%			2,394,000				2,114,000				(2,114,000	)			-100	%			5,339,000				4,759,000				(4,759,000	)			-100	%
Operating Income		$	1,087,000				-135,000				1,222,000				-905	%			-757,000				-2,084,000				1,327,000				-64	%			-2,347,000				-2,057,000				2,057,000				-100	%			-2,017,000				-4,276,000				4,276,000				-100	%

 

		Year ended December 31, ( Unaudited)
		Sequire																BIGToken																Corporate and Other																Consolidated
		2020				2019				2020 vs. 2019 Change								2020				2019				2020 vs. 2019 Change								2020				2019				2020 vs. 2019 Change								2020				2019				2020 vs. 2019 Change
										$				%												$				%												$				%												$				%
Sequire platform revenue			5,781,000				87,000				5,694,000				n/m				-				-				-				n/a				-				-				-				n/a				5,781,000			$	87,000				(87,000	)			-100	%
Conference revenue			503,000				-				503,000				n/a				-				-				-				n/a				-				-				-				n/a				503,000				-				-				n/a
BIGtoken revenue			-				-				-				n/a				2,168,000				3,227,000				(1,059,000	)			-33	%			-				-				-				n/a				2,168,000				3,227,000				(3,227,000	)			-100	%
Other			-				-				-				n/a				-				-				-				n/a				195,000				269,000				(74,000	)			-28	%			195,000				269,000				(269,000	)			-100	%
Total Revenue			6,284,000				87,000				6,197,000				n/m				2,168,000				3,227,000				(1,059,000	)			-33	%			195,000				269,000				(269,000	)			-100	%			8,647,000				3,583,000				(3,583,000	)			-100	%
Cost of Revenue			1,783,000				7,000				1,776,000				n/m				800,000				1,613,000				(813,000	)			-50	%			6,000				60,000				(54,000	)			-90	%			2,589,000				1,680,000				(1,680,000	)			-100	%
Gross profit			4,501,000				80,000				4,421,000				n/m				1,368,000				1,614,000				(246,000	)			-15	%			189,000				209,000				(209,000	)			-100	%			6,058,000				1,903,000				(1,903,000	)			-100	%
margin %			72	%			92	%			71	%							63	%%			50	%%			23	%							97	%%			78	%%			78	%							70	%%			53	%			53	%
Operating expenses			3,412,000				462,000				2,950,000				639	%			5,933,000				10,751,000				(4,818,000	)			-45	%			8,310,000				8,548,000				(238,000	)			-3	%			17,655,000				19,761,000				(19,761,000	)			-100	%
Operating Income		$	1,089,000				(382,000	)			1,471,000				-385	%			(4,565,000	)			(9,137,000	)			4,572,000				-50	%			(8,121,000	)			(8,339,000	)			218,000				-3	%			(11,597,000	)			(17,858,000	)			17,858,000				-100	%

 

 

SRAX STATEMENT OF OPERATIONS

 

		For the Years Ended December 31,																For the Three Months Ended December 31,
(Unaudited) in $		2020				2019				$ CHG				% CHG				2020				2019				$ CHG				% CHG
REVENUE
Total Revenue		$	8,647,000			$	3,584,000			$	5,063,000				141	%			4,522,000				1,087,000				3,435,000				316	%
Cost of revenue			2,589,000				1,680,000				909,000				54	%			1,201,000				605,000				596,000				99	%
GROSS PROFIT			6,058,000				1,904,000				4,154,000				218	%			3,321,000				482,000				2,839,000				589	%
Gross profit margin			70	%			53	%											73	%			44	%
OPERATING EXPENSES
Employee related costs			7,895,000				8,656,000				(761,000	)			-9	%			2,489,000				1,926,000				563,000				29	%
Marketing and selling expenses			2,675,000				2,454,000				221,000				9	%			1,044,000				252,000				792,000				314	%
Platform Costs			1,667,000				1,738,000				(71,000	)			-4	%			486,000				579,000				(93,000	)			-16	%
Depreciation and amortization			1,303,000				1,164,000				139,000				12	%			341,000				330,000				11,000				3	%
General and administrative			4,115,000				5,750,000				(1,635,000	)			-28	%			958,000				1,681,000				(723,000	)			-43	%
Total operating expenses			17,655,000				19,762,000				(2,107,000	)			-11	%			5,318,000				4,768,000				550,000				12	%
LOSS FROM OPERATIONS			(11,597,000	)			(17,858,000	)			6,261,000				-35	%			(1,997,000	)			(4,286,000	)			2,289,000				-53	%
Other income (expense)
Financing Costs			(12,150,000	)			(725,000	)			(11,425,000	)			1576	%			(6,810,000	)			(366,000	)			(6,444,000	)			1761	%
Interest income							9,000				(9,000	)			-100	%			-				9,000								0	%
Gain (loss) on sale of assets			7,873,000				658,000				7,215,000				1097	%			7,873,000				263,000				7,519,000				2859	%
Other gain (loss)							-				-				n/a				(8,000	)			(14,000	)			6,000				-43	%
Exchange gain or loss							12,000				(12,000	)			-100	%			-				354,000								0	%
Gains from marketable securities			874,000				-				874,000				n/a				1,158,000				-								n/a
Change in fair value of derivative liabilities			321,000				1,045,000				(724,000	)			-69	%			-				(345,000	)			345,000				-100	%
Total other income (loss)			(3,082,000	)			999,000				(4,081,000	)			-409	%			2,213,000				(99,000	)			2,312,000				-2335	%
Loss before provision for income taxes			(14,679,000	)			(16,859,000	)			2,180,000				-13	%			216,000				(4,385,000	)			4,601,000				-105	%
Provision for income taxes			(26,000	)							(26,000	)			n/a				(26,000	)			-				(26,000	)			n/a
Net income (loss)		$	(14,705,000	)		$	(16,859,000	)			2,154,000				-13	%			190,000			$	(4,385,000	)			4,575,000				-104	%

 

 

SRAX BALANCE SHEET

 

Balance Sheets

(Unaudited)

 

In dollars		31-Dec-20				31-Dec-19
ASSETS
Current Assets
Cash			451,000				32,000
Accounts receivable, net			2,608,000				805,000
Prepaid expense			367,000				-
Securities held for sale			8,447,000				715,000
Other current assets			-				306,000
Total current assets			11,873,000				1,858,000
Notes receivable			893,000				-
Property and equipment, net			118,000				191,000
Goodwill			23,351,000				15,645,000
Intangible assets, net			2,409,000				1,966,000
Right-of-Use Asset			366,000				456,000
Other assets			3,000				118,000
Total Assets			39,013,000				20,234,000
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable and accrued expenses			3,561,000				2,442,000
Derivative liabilities			-				4,397,000
Other current liabilities			8,711,000				537,000
Payroll protection loan - current portion			747,000				-
OID convertible debentures - current portion			6,016,000				-
Total Current Liabilities			19,035,000				7,376,000
Right-of-Use liability - long term			243,000				352,000
Payroll protection loan, less current portion			379,000				-
OID convertible debentures, less current portion							-
Deffered Tax Liability			131,000
Total Liabilities			19,788,000				7,728,000
Stockholders’ equity			19,225,000				12,506,000
Total liabilities and equity			39,013,000				20,234,000

 

 

SRAX STATEMENT OF CASH FLOWS

 

STATEMENT OF CASH FLOWS

 

For the Years Ended December 31,
in dollars		2020				2019
Cash Flows From Operating Activities
Net Cash Used in Operating Activities			(13,489,000	)			(15,350,000	)
Cash Flows From Investing Activities
Proceeds from the sale of securities held for sale			916,000
Proceeds from sale of SRAXmd, net			7,000,000				570,000
Acquisition of LD Micro, net of cash received			(697,000	)			(73,000	)
Development of software			(1,205,000	)			(1,292,000	)
Other assets			32,000
Net Cash Provided (Used) by Investing Activitities			6,046,000				(795,000	)
Cash Flows From Financing Activities
Proceeds from OID notes payable, less issuance costs			11,988,000
Redemption of OID notes payable			(6,070,000	)
Proceeds from issuance of short term notes payable less issaunce costs			960,000
Repayment of short term notes payable			(100,000	)
Proceeds from payroll protection program			1,084,000
Proceeds from the issuace of notes payable			2,130,000
Repayment of notes payable			(2,130,000	)
Proceeds from the sale of common stock units							12,197,000
Proceeds from the exercise of warrants							1,196,000
Net Cash Provided by Financing Activities			7,862,000				13,393,000
Net increase (decrease) in Cash			419,000				(2,752,000	)
Cash, Beginning of Period			32,000				2,784,000
Cash, End of Period		$	451,000			$	32,000

 

 

SRAX LESS BIGTOKEN – STATEMENT OF OPERATIONS

 

		Three months ended December 31, 2020
(Unaudited)		CONSOLIDATED SRAX								BIGTOKEN CARVE-OUT								SRAX - LESS BIGTOKEN CARVE - OUT
($’s)			2020				2019				2020				2019				2020				2019
TOTAL REVENUE			4,524,000				1,088,000				994,000				986,000				3,530,000				102,000
Cost of Revenue			1,202,000				605,000				309,000				600,000				893,000				5,000
Gross Profit			3,322,000				483,000				685,000				386,000				2,637,000				97,000
Margin %			73	%			44	%			69	%			39	%			75	%			95	%
Cash OPEX			4,062,000				4,132,000				1,680,000				3,536,000				2,382,000				596,000
EBITDA			(740,000	)			(3,649,000	)			(995,000	)			(3,150,000	)			255,000				(499,000	)
Non cash OPEX			1,277,000				627,000				759,000				561,000				518,000				66,000
Operating Income			(2,017,000	)			(4,276,000	)			685,000				386,000				(2,702,000	)			(4,662,000	)

 

 

 

 

 

Exhibit 99.02

 

 

 

 

 

 

 

 

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