SRAX Reports Continued Revenue Growth in Q2 2021 and Increases Full-Year Guidance

August 16, 2021 at 09:00 AM EDT

SRAX, Inc. (NASDAQ: SRAX), a financial technology company that unlocks data and insights for publicly traded companies through Sequire, its SaaS platform, is providing unaudited financial results for Q2 of 2021 today, August 16th, 2021.

Second Quarter 2021 and Recent Operational Highlights and Guidance

Revenue for Q2 of $7.7M up 557% year-over-year, 41% sequentially quarter-over-quarter, exceeding previous guidance of $7M.
Full-year revenue guidance increased from $25M - $27M to $30M - $32M
Sequire bookings of $11.4M for Q2
10 consecutive quarters of Sequire SaaS growth
Currently holding approximately $29M worth of marketable securities
225 public companies/partners have subscribed to Sequire, up 25 since our Q1 release
Sequire revenue to be recognized from existing contracts in 2021: $23.6M as of this release.
Third Quarter revenue guidance of $8.3M

SRAX less BIGtoken, Three months ended June 30, 2021

Total Revenue was $7.1M, an increase of 803% as compared to the same period last year and an increase of 49% sequentially quarter-over-quarter.
Gross Margin was 83% as compared to 97% in the same period last year.
Operating Expenses were $5M as compared to $2.8M in the same period last year.
EBITDA of $1.4M for an increase of $3M vs. ($1.6M) in Q1 2020, and a sequential quarter-over-quarter increase of $850k or 150% vs. Q1 2021

Three months ended June 30, 2021

Total Revenue was $7.7M, an increase of 557% as compared to the same period last year and an increase of 41% sequentially quarter-over-quarter .
Gross Margin was 81% as compared to 65% in the same period last year.
Operating Expenses were $7.3M as compared to $4.0M in the same period last year.
EBITDA increase of $2.2M, ($440K) vs ($2.6M) in Q2 2020 and an sequential quarter-over-quarter increase of $400k vs.($822K) Q1 2021

Video Call:

SRAX's Founder and CEO Christopher Miglino, and CFO Michael Malone will provide an operational and financial summary of Q2 2021 on a video call, with a live question and answer session, on Monday, August 16th, at 4:30 pm ET / 1:30 pm PT.

To register for the live webcast and view the presentation, please sign up here: https://srax-earnings-q2.mysequire.com

To access the conference by phone:

Dial in US +1 3462487799 | Meeting ID: 93255970733 | Passcode: 163778

The webcast will be available on srax.com following the scheduled conference call.

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 our BIGtoken operations.

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
	2Q 2021						1H 2021
SEGMENT	(Dollars, except GM%)		YoY $ Growth		YoY % Growth		(Dollars, except GM%)		YoY $ Growth		YoY % Growth

Sequire	7,160,000		6,370,000		806	%	11,420,000		10,470,000		1102	%
BIGtoken	850,000		470,000		124	%	1,700,000		1,130,000		198	%
Other / Elim	(330,000	)	(330,000	)	n/a		(660,000	)	(660,000	)	n/a
Revenue	7,680,000		6,510,000		872	%	12,460,000		10,940,000		720	%

Sequire	5,940,000		5,170,000		671	%	8,820,000		7,810,000		773	%
BIGToken	620,000		410,000		195	%	1,200,000		890,000		287	%
Other / Elim	(330,000	)	(330,000	)	n/a		(660,000	)	(660,000	)	n/a
Gross margin	6,230,000		5,250,000		709	%	9,360,000		8,040,000		609	%
Gross margin percentage	81	%	81	%			75	%	73	%

Sequire	1,400,000		2,970,000		n/a		1,962,000		4,943,000		n/a
BIGToken	(1,840,000	)	(990,000	)	n/a		(3,224,000	)	(668,000	)	n/a
Other / Elim	-		-		n/a		-		-		n/a
Adjusted EBITDA	(440,000	)	1,980,000		n/a		(1,262,000	)	4,275,000		n/a

CONSOLIDATED STATEMENT OF OPERATIONS
		For the Six Months Ended June 30,
		2021			2020

Revenues	$	13,119,000		$	1,516,000
Cost of revenues		3,103,000			508,000
Gross profit		10,016,000			1,008,000
		76.35

Employee related costs		5,143,000			4,249,000
Marketing and selling expenses		3,030,000			690,000
Platform Costs		218,000			258,000
Depreciation and amortization		756,000			630,000
General and administrative		3,364,000			2,304,000
		12,511,000			8,131,000

Loss from operations		(2,495,000	)		(7,123,000	)

Other income (expense)
Interest income		23,000
Financing Costs		(15,430,000	)		(2,038,000	)
Gain (loss) from marketable securities		(68,000	)		516,000
Other income		14,000
Change in fair value of derivative liabilities		-			321,000
Total other income (loss)		(15,461,000	)		(1,201,000	)

Loss before provision for income taxes		(17,956,000	)		(8,324,000	)

Provision for income taxes		-			-
Net income (loss)		(17,956,000	)		(8,324,000	)
Net (income) loss attributable to noncontrolling interest		1,126,000			-
Net income attributable to SRAX, Inc.	$	(16,830,000	)	$	(8,324,000	)


Net income / ( loss) per share, basic and diluted	$	(0.78	)	$	(0.59	)

Weighted average shares outstanding - basic and diluted		21,533,141			14,038,940

CONSOLIDATED BALANCE SHEET
		As of June 30,			As of December 31,
		2021			2020
Assets
Cash and cash equivalents	$	10,060,000		$	451,000
Accounts receivable		2,172,000			2,608,000
Prepaid expenses		1,125,000			367,000
Securities held for sale		24,130,000			8,447,000
Current assets		37,487,000			11,873,000

Notes receivable		917,000			893,000
Property and equipment		161,000			118,000
Intangible assets		2,046,000			2,409,000
Right of use assets		314,000			366,000
Other assets		36,000			3,000
Goodwill		23,351,000			23,351,000
Total Assets	$	64,312,000		$	39,013,000

Liabilities and stockholders' equity
Accounts payable and accrued liabilities	$	3,328,000		$	3,561,000
Other current liabilities		1,408,000			3,869,000
Deferred revenue		13,186,000			4,842,000
Payroll protection loan - current portion		1,126,000			747,000
OID notes payable - current portion		2,701,000			6,016,000
Current liabilities		21,749,000			19,035,000

Right to use liability - long term		182,000			243,000
Payroll protection loan - long term					379,000
Deferred Tax Liability		131,000			131,000
Total liabilities		22,062,000			19,788,000

Preferred stock					-
Class A common		24,000			16,000
Additional paid-in capital		98,014,000			69,551,000
Accumulated deficit		(67,172,000	)		(50,342,000	)
Total SRAX shareholders' equity		30,866,000			19,225,000
Non-controlling interest		11,384,000			-
Total stockholders' equity		42,250,000			19,225,000
Total liabilities and stockholders' equity	$	64,312,000		$	39,013,000

		-			-

Working Capital		15,738,000			(7,162,000	)

CONSOLIDATED BALANCE SHEET
	Common Stock
	Shares		Amount		Additional Paid-in Capital		Non Controlling Interest			Accumulated Deficit		Stockholders' Equity
												-
Balance, December 31, 2020	16,145,778		16,000		69,551,000		-			(50,342,000	)	19,225,000
Share based compensation					253,000							253,000
Shares issued for warrant exercise, net of offering costs	4,945,320		5,000		12,215,000							12,220,000
Shares issued for cash	53,616		-		284,000							284,000
Conversions	2,041,551		2,000		3,445,000							3,447,000
Warrants issued as inducement to exercise warrants					7,737,000							7,737,000
Warrants issued by FVPD for SRAX, Inc. debenture holders							885,000					885,000
Beneficial conversion feature FPVD series B convertible preferred stock							5,775,000					5,775,000
Series B convertible preferred stock issued by FPVD							5,775,000					5,775,000
Acquisition of noncontrolling interest							(95,000	)				(95,000	)
Net Income (Loss)							(854,000	)		(11,090,000	)	(11,944,000	)
Balance, March 31, 2021	23,186,265		23,000		93,485,000		11,486,000			(61,432,000	)	43,562,000
Share based compensation					253,000							253,000
Conversion of convertible debt to equity	350,000		-		701,000							701,000
Shares issued for warrant exercise, net of offering costs	1,310,198		1,000		3,575,000							3,576,000
Beneficial conversion feature FPVD series B convertible preferred stock							85,000					85,000
Series B convertible preferred stock issued by FPVD							85,000					85,000
Net Income (Loss)							(272,000	)		(5,740,000	)	(6,012,000	)
Balance, June 30, 2021	24,846,463		24,000		98,014,000		11,384,000			(67,172,000	)	42,250,000
	24,846,463		24,000		98,014,000		11,384,000			(67,172,000	)	42,250,000

	Common Stock
	Shares		Amount		Additional Paid-in Capital		Accumulated Deficit			Stockholders' Equity

Balance, December 31, 2019	13,997,452	$	14,000	$	48,129,000	$	(35,637,000	)	$	12,506,000
Share based compensation	-		-		260,000		-			260,000
Relative fair value of warrants issued with notes payable	-		-		83,000		-			83,000
Shares issued for extension agreement	36,700		-		71,000		-			71,000
Net loss							(3,003,000	)		(3,003,000	)
Balance, March 31, 2020	14,034,152		14,000		48,543,000		(38,640,000	)		9,917,000
Share based compensation					246,000					246,000
Reclassification of warrants from liability to equity	-		-		4,076,000		-			4,076,000
Shares issued for debt extinguishment	100,000		-		181,000		-			181,000
Premium on debt extinguishment	-		-		46,000		-			46,000
Beneficial conversion feature	-		-		3,913,000		-			3,913,000
Relative fair value of warrants issued with notes payable					2,889,000					2,889,000
Net loss	-		-		-		(5,321,000	)		(5,321,000	)
Balance, June 30, 2020	14,134,152	$	14,000	$	59,894,000		(43,961,000	)	$	15,947,000
Checking
Per June 2020 1Q	14,134,152		14,000		59,894,000		(43,961,000	)		15,947,000
Difference

CONSOLIDATED STATEMENT OF CASH FLOWS
		For the Six Months Ended June 30,
		2021			2020

Cash Flows From Operating Activities
Net Loss	$	(17,956,000	)	$	(8,324,000	)
Adjustments to reconcile net loss to net cash used in operating activities:
Interest income		(24,000	)
Unrealized loss (gain) on Securities held for sale		878,000			(140,000	)
Realized loss (gain) on Securities held for sale		(810,000	)		(376,000	)
Warrants issued by FVPD for SRAX, Inc. debenture holders		885,000
Stock-based compensation		506,000			506,000
Amortization of debt issue costs		686,000			453,000
Loss on extinguishment of debt					1,103,000
Recognition of beneficial conversion feature - FPVD preferred B		5,860,000
Warrant inducement charge		7,737,000
Change in fair value of derivative liabilities					(321,000	)
Marketable securities received for accounts receivable previously written off		(409,000	)
Provision for bad debts		79,000			41,000
Depreciation expense		39,000			38,000
Amortization of intangibles		717,000			592,000
Non-cash financing expense		147,000
Change in right of use of asset		52,000
Changes in operating assets and liabilities
Accounts receivable		766,000			117,000
Prepaid expenses		(757,000	)		352,000
Marketable securities		-
Other current assets		(1,000	)		95,000
Accounts payable and accrued expenses		(233,000	)		1,527,000
Other current liabilities		(10,754,000	)		(354,000	)
Change in right of use liability		(61,000	)		(43,000	)
Net Cash Used in Operating Activities		(12,789,000	)		(4,734,000	)

Cash Flows From Investing Activities
Available for Sale Securities		2,890,000			397,000
Deferred payments to LD Micro		(2,004,000	)
Net cash received from acquisition of FPVD		955,000
Acquisition of P& E		(82,000	)		-
Development of software		(354,000	)		(575,000	)
Other assets		(33,000	)		3,000
Net Cash Used by Investing Activities		1,508,000			(175,000	)

Cash Flows From Financing Activities
Proceeds from issuance of notes payable less issuance costs					8,415,000
Proceeds from payroll protection program					1,074,000
Issuance of Preferred Stocks		4,810,000
Proceeds from issuance of shares		284,000
Proceeds from the exercise of warrants		15,796,000
Net Cash Provided by Financing Activities		20,890,000			9,489,000

Net increase (decrease) in Cash		9,609,000			4,580,000

Cash, Beginning of Period		451,000			32,000
Cash, End of Period	$	10,060,000		$	4,612,000

Supplemental disclosure of cash flow information:
Cash paid for interest	$	14,000		$	52,000
Cash paid for income taxes	$	-		$	-

Noncash investing and financing activities:
Convertible notes converted into shares	$	6,422,000		$
Fair value of marketable securities received for revenue contracts	$	18,641,000		$
Vesting of prepaid common stock award	$			$	94,000
Relative fair value of warrants issued with term loan	$			$	83,000
Shares of common stock issued for extension agreement	$			$	71,000

NON-GAAP TO GAAP RECONCILIATIONS
	Three months ended June 30,						Six months ended June 30,
	2021			2020			2021			2020
Consolidated

Operating Income	$	(1,040,000	)	$	(3,248,000	)	$	(2,495,000	)	$	(7,123,000	)
Depreciation and Amortization		347,000			321,000			727,000			630,000
Stock-based compensation expense		253,000			294,000			506,000			648,000
Adjusted EBITDA		(440,000	)		(2,633,000	)		(1,262,000	)		(5,845,000	)

SRAX

Operating Income		939,000			(2,007,000	)		1,011,000			(3,773,000	)
Depreciation and Amortization		208,000			192,000			445,000			381,000
Stock-based compensation expense		253,000			245,000			506,000			411,000
Adjusted EBITDA		1,400,000			(1,570,000	)		1,962,000			(2,981,000	)

BIGToken

Operating Income		(1,979,000	)		(1,028,000	)		(3,506,000	)		(3,042,000	)
Depreciation and Amortization		139,000			129,000			282,000			249,000
Stock-based compensation expense		-			49,000			-			237,000
Adjusted EBITDA		(1,840,000	)		(850,000	)		(3,224,000	)		(2,556,000	)