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) August 19, 2020 (August 14, 2020)
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.) |
456 Seaton Street, Los Angeles, CA | 90013 | |
(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 August 14, 2020, SRAX, Inc. (the “Company”) filed its quarterly report on Form 10-Q for the quarter ended June 30, 2020, and on August 17, 2020, disclosed certain financial results and operational results for the quarter ended June 30, 2020 in a press release. The press release is attached as Exhibit 99.01 and is incorporated herein by reference.
The information furnished under Items 2.02, including the accompanying Exhibit 99.01 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 7.01 Regulation FD Disclosure
On August 17, 2020, the Company held an earnings call. A video and audio of the earnings call, along with the slides presented are contained under the Multimedia tab of the Company’s website at the following link: https://srax.com/newsroom#multimedia.
The information contained in this Item 7.01 to this Current Report on Form 8-K and the exhibit attached hereto pertaining to this item shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, nor shall such information or such exhibits be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing. The information set forth in the exhibits to this Form 8-K relating to this item 7.01 shall not be deemed an admission as to the materiality of any information in this report that is required to be disclosed solely to satisfy the requirements of Regulation FD
Item 9.01 Financial Statements and Exhibits.
Exhibit No. |
Description | |
99.01 |
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: | August 19, 2020 | SRAX, Inc. | |
/s/ Christopher Miglino | |||
By: | Christopher Miglino | ||
Chief Executive Officer |
INDEX OF EXHIBITS
Exhibit No. |
Description | |
99.01 |
Exhibit 99.01
SRAX
Reports Q2 2020 Revenue Growth of 29% Year-over-Year and
Accelerating Growth for Remainder of 2020
LOS ANGELES—(BUSINESS WIRE)—SRAX, Inc. (NASDAQ: SRAX), a digital marketing and consumer data management technology company, reported results for the three months ended June 30, 2020.
Second Quarter 2020 and Recent Operational Highlights
● | Revenue of $1.1M - up 232% sequentially over Q1 and 29% year-over-year | |
● | Gross margin increased to 66% from 54% in the same period last year | |
● | Reduced operating expenses by 21% year-over-year | |
● | EBITDA increase of 18% over Q1 and 35% year-over-year | |
● | Bookings have increased to $8.6M for the year of which $4.1M was booked in Q3 to-date | |
● | 6 consecutive quarters of Sequire SAAS growth | |
● | 91 public companies have subscribed to Sequire | |
● | 1 million investors/traders now part of Sequire platform | |
● | Completed the integration of institutional investor data and the ability for issuers to survey their shareholders from the Sequire platform | |
● | Closed transactions with some of the largest advertisers in the world on the BIGtoken platform | |
● | Closed a convertible debt offering of $16.1M which puts the company in a strong cash position to accommodate growth. |
Second Quarter 2020
● | Total Revenue was $1,165,000, an increase of 29% as compared to Q2 2019 and up 232% from Q1 2020. | |
● | Gross Margin was $769,000 or 66%, an increase of $277,000 as compared to the same period last year. | |
● | Operating Expenses were $4 million, a decrease of 21% as compared to the same period last year. | |
● | Cash totaled $4.6 million as of June 30, 2020, compared with $32,000 at December 31, 2019. |
Six Months Ended June 30, 2020
● | Total Revenue was $1.5 million, an increase of 1% from the prior year. | |
● | Gross Margin was $1 million or 66%, an increase of $266,000 or 36% as compared to the same period last year due to our high margin SAAS Sequire platform. | |
● | Operating Expenses were $8.1 million, reflecting a decrease of $1.5 million or 15% compared to the same period last year. |
“The growth we experienced this last quarter and through today has been the fastest growth we have encountered as a public company. For the past six weeks we have closed close to $1M per week in business, mostly driven by our Sequire platform,” said Christopher Miglino, Founder and CEO of SRAX. “Public issuers are seeing the benefits of the platform and our data teams are gaining significant insights from that growth. Sequire now has over 1 million investors and traders, a significant portion of which are from the Robinhood platform.”
Miglino adds, “The more data that we drive into the system the better we become at delivering measurable results to our clients. Our system of identifying existing and prospective investors utilizes cutting edge machine learning to drive awareness and convert prospective investors. We have hit a tipping point in the business and we look forward to quickly passing 100 clients with our premier operating system for public companies.”
Conference Call:
Management will review the results on a conference call with a live question and answer session, August 17, 2020, at 4:30 p.m. ET / 1:30 p.m. PT.
To access the live webcast and presentation and to ask questions, please register here: https://vr.mysequire.com/registration/?id=6515854.
To access the conference call without the ability to ask questions, please dial US +1 (206) 928-9280. The conference ID is 6515854.
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: Adjusted 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.
Adjusted 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.
About SRAX
SRAX (NASDAQ: SRAX) is a digital marketing and consumer data management technology company. SRAX’s technology unlocks data for brands in the CPG, investor relations, and lifestyle verticals. Through its various platforms, SRAX is monetizing its data sets and growing multiple recurring revenue streams. BIGtoken is a consumer-managed data marketplace where people can own and earn from their data. The platform also provides advertisers and media companies access to transparent, verified consumer data to better reach and serve audiences. Sequire is a premier platform for investor intelligence and communication. Through Sequire, public 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 and its verticals, 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.
Contacts
Natalie Santos
press@srax.com
STATEMENT OF OPERATIONS | ||||||||||||||||||||||||||||||||
(Unaudited) | Three months ending June 30 | Six months ending June 30 | ||||||||||||||||||||||||||||||
In dollars | 2020 | 2019 | $ CHG | % CHG | 2020 | 2019 | $ CHG | % CHG | ||||||||||||||||||||||||
REVENUE | ||||||||||||||||||||||||||||||||
Total revenues | 1,165,000 | 904,000 | 261,000 | 29 | % | 1,516,000 | 1,496,000 | 20,000 | 1 | % | ||||||||||||||||||||||
COST OF REVENUES | ||||||||||||||||||||||||||||||||
Total cost of revenues | 396,000 | 412,000 | (16,000 | ) | -4 | % | 508,000 | 754,000 | (246,000 | ) | -33 | % | ||||||||||||||||||||
Gross profit | 769,000 | 492,000 | 277,000 | 56 | % | 1,008,000 | 742,000 | 266,000 | 36 | % | ||||||||||||||||||||||
Gross profit margin | 66 | % | 54 | % | 66 | % | 50 | % | ||||||||||||||||||||||||
OPERATING EXPENSES | ||||||||||||||||||||||||||||||||
Employee related costs | 1,691,000 | 2,370,000 | (679,000 | ) | -29 | % | 3,717,000 | 4,568,000 | (851,000 | ) | -19 | % | ||||||||||||||||||||
Marketing and selling expenses | 370,000 | 632,000 | (262,000 | ) | -41 | % | 690,000 | 1,087,000 | (397,000 | ) | -37 | % | ||||||||||||||||||||
Platform Costs | 387,000 | 367,000 | 20,000 | 5 | % | 790,000 | 706,000 | 84,000 | 12 | % | ||||||||||||||||||||||
Depreciation and amortization | 321,000 | 277,000 | 44,000 | 16 | % | 629,000 | 530,000 | 99,000 | 19 | % | ||||||||||||||||||||||
General selling general and administrative | 1,249,000 | 1,468,000 | (219,000 | ) | -15 | % | 2,305,000 | 2,715,000 | (410,000 | ) | -15 | % | ||||||||||||||||||||
Total operating expenses | 4,018,000 | 5,114,000 | (1,096,000 | ) | -21 | % | 8,131,000 | 9,606,000 | (1,475,000 | ) | -15 | % | ||||||||||||||||||||
(LOSS) INCOME FROM OPERATIONS | (3,249,000 | ) | (4,622,000 | ) | 1,373,000 | -30 | % | (7,123,000 | ) | (8,864,000 | ) | 1,741,000 | -20 | % | ||||||||||||||||||
(LOSS) INCOME BEFORE INCOME TAXES | (5,321,000 | ) | (8,100,000 | ) | 2,779,000 | -34 | % | (8,324,000 | ) | (13,885,851 | ) | 5,561,851 | -40 | % | ||||||||||||||||||
Provision for income taxes | - | - | - | - | ||||||||||||||||||||||||||||
NET (LOSS) INCOME | (5,321,000 | ) | (8,100,000 | ) | 2,779,000 | -34 | % | (8,324,000 | ) | (13,885,851 | ) | 5,561,851 | -40 | % | ||||||||||||||||||
NET (LOSS) INCOME PER SHARE, BASIC AND DILUTED | $ | (0.38 | ) | $ | (0.67 | ) | 0.29 | -44 | % | $ | (0.59 | ) | $ | (0.67 | ) | 0.08 | -12 | % | ||||||||||||||
Weighted average shares used in computing net (loss) income per share, basic and diluted | 14,080,890 | 12,129,787 | 1,951,103 | 16 | % | 14,038,940 | 11,210,810 | 2,828,130 | 25 | % |
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION | ||||||||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||||||
In dollars | 2020 | 2019 | $ CHG | % CHG | 2020 | 2019 | $ CHG | % CHG | ||||||||||||||||||||||||
Net income (loss) - GAAP | (5,321,000 | ) | (8,100,000 | ) | 2,779,000 | -34 | % | (8,324,000 | ) | (13,885,851 | ) | 5,561,851 | -40 | % | ||||||||||||||||||
OPERATING EXPENSES | ||||||||||||||||||||||||||||||||
Equity based compensation | 294,265 | 316,000 | 648,265 | 436,884 | ||||||||||||||||||||||||||||
Adjustments to derivative liabilities | 980,873 | 2,875,554 | (321,127 | ) | 4,837,405 | |||||||||||||||||||||||||||
Interest expense and financing costs | 1,678,000 | 525,000 | 2,038,000 | 592,988 | ||||||||||||||||||||||||||||
Depreciation and amortization | 321,000 | 277,000 | 629,000 | 530,000 | ||||||||||||||||||||||||||||
Gain on Sale | - | - | (472,479 | ) | ||||||||||||||||||||||||||||
Other income | - | 78,000 | 71,000 | 64,491 | ||||||||||||||||||||||||||||
Gain / (Loss) from marketable securities | (587,000 | ) | - | (587,000 | ) | - | ||||||||||||||||||||||||||
Adjusted EBITDA - NON GAAP | (2,633,863 | ) | (4,028,446 | ) | 1,394,584 | -35 | % | (5,845,863 | ) | (7,896,562 | ) | 2,050,700 | -26 | % |
Balance Sheets | ||||||||||||||||
(Unaudited) | ||||||||||||||||
In dollars | 30-Jun-20 | 31-Dec-19 | $ CHG | % CHG | ||||||||||||
ASSETS | ||||||||||||||||
Current Assets | ||||||||||||||||
Cash | 4,612,000 | 32,000 | 4,580,000 | n/m | ||||||||||||
Accounts receivable, net | 647,000 | 805,000 | (158,000 | ) | -20 | % | ||||||||||
Prepaid expense | 434,000 | 715,000 | (281,000 | ) | -39 | % | ||||||||||
Securities held for sale | 1,666,000 | - | 1,666,000 | n/a | ||||||||||||
Other current assets | 211,000 | 306,000 | (95,000 | ) | -31 | % | ||||||||||
Total current assets | 7,570,000 | 1,858,000 | 5,712,000 | 307 | % | |||||||||||
Property and equipment, net | 153,000 | 191,000 | (38,000 | ) | -20 | % | ||||||||||
Goodwill | 15,645,000 | 15,645,000 | - | 0 | % | |||||||||||
Intangible assets, net | 1,949,000 | 1,966,000 | (17,000 | ) | -1 | % | ||||||||||
Right-of-Use Asset | 413,000 | 456,000 | (43,000 | ) | -9 | % | ||||||||||
Other assets | 32,000 | 118,000 | (86,000 | ) | -73 | % | ||||||||||
Total Assets | 25,762,000 | 20,234,000 | 5,528,000 | 27 | % | |||||||||||
LIABILITIES AND EQUITY | ||||||||||||||||
Current Liabilities | ||||||||||||||||
Accounts payable and accrued expenses | 4,300,000 | 2,442,000 | 1,858,000 | 76 | % | |||||||||||
Derivative liabilities | - | 4,397,000 | -4,397,000 | -100 | % | |||||||||||
Other current liabilities | 1,604,000 | 537,000 | 1,067,000 | 199 | % | |||||||||||
Accounts receivable loan | - | - | - | n/a | ||||||||||||
Short-term notes | - | - | - | n/a | ||||||||||||
Term loan note - current portion | - | - | - | n/a | ||||||||||||
Payroll protection loan - current portion | 403,000 | - | 403,000 | n/a | ||||||||||||
OID convertible debentures - current portion | 1,264,000 | - | 1,264,000 | n/a | ||||||||||||
Total Current Liabilities | 7,571,000 | 7,376,000 | 195,000 | 3 | % | |||||||||||
Right-of-Use liability - long term | 309,000 | 352,000 | -43,000 | -12 | % | |||||||||||
Term loan note, less current portion | - | - | - | n/a | ||||||||||||
Payroll protection loan, less current portion | 671,000 | - | 671,000 | n/a | ||||||||||||
OID convertible debentures, less current portion | 1,264,000 | - | 1,264,000 | n/a | ||||||||||||
Total Liabilities | 9,815,000 | 7,728,000 | 2,087,000 | 27 | % | |||||||||||
Stockholders’ equity | 15,947,000 | 12,506,000 | 3,441,000 | 28 | % | |||||||||||
Total liabilities and equity | 25,762,000 | 20,234,000 | 5,528,000 | 27 | % |