SRAX(US:SRAX)2023-10-31 21:13Financial Performance - Revenues for Q3 2022 were $5.309 million, a decrease of 22.9% compared to $6.888 million in Q3 2021[15] - Net loss for Q3 2022 was $3.819 million, compared to a net loss of $3.829 million in Q3 2021, indicating a slight improvement[15] - The company reported a basic and diluted loss per share of $0.14 for Q3 2022, compared to a loss of $0.15 in Q3 2021[15] - The company reported a net income of $3,728,000 for the quarter ending March 31, 2022, compared to a net loss of $(23,030,000) for the quarter ending June 30, 2022[16] - The company experienced a net loss of $(3,819,000) for the quarter ending September 30, 2022, following a net loss of $(23,030,000) for the quarter ending June 30, 2022[16] - For the nine months ended September 30, 2022, the net loss from continuing operations was $23,120,000, compared to a net loss of $10,804,000 for the same period in 2021[21] Assets and Liabilities - Total assets decreased to $30.625 million as of September 30, 2022, down from $43.676 million at the end of 2021, representing a decline of 30%[13] - Total liabilities increased to $31.432 million as of September 30, 2022, up from $22.930 million at the end of 2021, reflecting a rise of 37%[13] - Cash and cash equivalents decreased significantly to $116,000 from $1.348 million at the end of 2021, a drop of approximately 91.4%[13] - Accounts receivable decreased to $319,000 from $821,000, a decline of 61%[13] - The total stockholders' equity decreased from $20,746,000 on December 31, 2021, to $(807,000) by September 30, 2022, indicating a significant decline[16] Impairments and Costs - The company reported an impairment of goodwill amounting to $10.2 million during the nine months ended September 30, 2022[15] - The company incurred financing costs of $2.377 million in Q3 2022, compared to $528,000 in Q3 2021, an increase of 349%[15] - Employee-related costs rose to $2.185 million in Q3 2022, up from $1.892 million in Q3 2021, an increase of 15.5%[15] - The company reported an impairment of goodwill amounting to $10,200,000 and an impairment of intangibles of $1,481,000 during the nine months ended September 30, 2022[21] Cash Flow and Operations - Cash used in operating activities for the nine months ended September 30, 2022, was $8,680,000, a decrease from $18,670,000 in the same period of 2021[21] - The cash balance at the end of the period was $116,000, significantly lower than $6,823,000 at the end of the same period in 2021[23] - The company expects that existing cash and accounts receivable will not be sufficient to fund operations for the next year[29] - The company has incurred significant losses since inception and has not generated cash in excess of operating expenses for a sustained period[29] Marketable Securities and Investments - As of September 30, 2022, marketable securities were approximately $21.1 million, an increase from $15.6 million as of December 31, 2021[46] - The company recorded a realized loss of approximately $6.5 million from the sale of marketable securities for the nine months ended September 30, 2022, with sales proceeds of approximately $3.4 million and a book basis of approximately $9.9 million[79] - The Company invested $1,000,000 in a simple agreement for future equity (SAFE) with its former BIGToken subsidiary, which is currently valued at $0 due to the subsidiary's financial condition[84] Capital Raising and Financing - The Company anticipates raising additional capital through private and public sales of equity or debt securities, and selling marketable securities, but there are no assurances that financing will be available when needed[33] - The Company issued $16,101,000 in principal amount of Original Issue Discount Senior Secured Convertible Debentures for a net amount of $14,169,000, resulting in net proceeds of approximately $9,100,000 after expenses[93] - The Company has a Senior Secured Revolving Credit Facility agreement allowing for borrowing up to $9,450,000, with an initial advance of $5,580,000[109][110] Stock and Shareholder Matters - The Company has authorized a share repurchase program of up to $10,000,000 for Class A Common Stock, with $9.2 million remaining as of June 30, 2022[120][121] - The Company issued options to purchase 380,000 shares of Class A common stock with an exercise price of $4.25 per share, valued at $1,038,000[136] - The Company recorded stock-based compensation expense of $281,000 for the three months ended September 30, 2022, and a total of $908,000 for the nine months ended September 30, 2022, resulting in a net stock-based compensation benefit of $(231,000) due to a cumulative adjustment[142][143] Strategic Developments - The company divested its LD Micro subsidiary on March 3, 2023, as part of its strategic restructuring[28] - The Company created an Advisory Board on July 17, 2023, to provide strategic guidance in the financial technology sector[181] - A total of 500,000 shares of common stock were granted to Advisory Board members as compensation, aligning their interests with those of the Company's shareholders[182]