Society Pass rporated(SOPA) - 2023 Q2 - Quarterly Report

PART I - FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Unaudited financials reflect asset and revenue growth, a shift to gross income, and a narrowed net loss Condensed Consolidated Balance Sheets Total assets increased to $32.7 million by June 30, 2023, driven by cash, with liabilities and equity rising Condensed Consolidated Balance Sheet Highlights (in US$) | Metric | June 30, 2023 (Unaudited) | December 31, 2022 (Audited) | | :--- | :--- | :--- | | Total Current Assets | $22,996,945 | $14,594,840 | | Cash and cash equivalents | $18,930,986 | $10,839,434 | | Total Assets | $32,698,742 | $23,973,480 | | Total Current Liabilities | $11,614,299 | $10,198,391 | | Total Liabilities | $12,687,425 | $11,263,652 | | Total Equity | $20,011,317 | $12,709,828 | Condensed Consolidated Statements of Operations and Other Comprehensive Loss Revenue surged to $4.23 million, yielding $1.26 million gross income, and narrowing net loss to $8.61 million Statement of Operations Highlights (in US$) | Metric | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | Total Revenue | $4,229,812 | $944,152 | | Sales – digital marketing | $2,794,734 | $0 | | Sales – online ticketing and reservation | $1,042,749 | $0 | | Gross Income (Loss) | $1,263,396 | ($14,931) | | Loss from Operations | ($8,866,045) | ($14,215,836) | | Net Loss Attributable to Society Pass | ($8,610,185) | ($14,052,702) | | Net Loss Per Share (Basic & Diluted) | ($0.30) | ($0.61) | Condensed Consolidated Statements of Stockholders' Equity Stockholders' equity decreased to $12.7 million due to net loss and share repurchases, offset by issuances - The company repurchased 611,605 shares for a total cost of $640,525 during the six months ended June 30, 2023[17][245] - Shares were issued for services ($696,125), accrued salaries ($344,332), and exercise of options ($1,226,793) during the first six months of 2023[17] Condensed Consolidated Statements of Cash Flows Net cash used in operations increased to $6.9 million, with financing activities using $0.6 million, leading to an $8.1 million cash decrease Cash Flow Summary (in US$) | Metric | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | ($6,886,251) | ($5,448,474) | | Net cash used in investing activities | ($217,521) | ($227,873) | | Net cash provided by (used in) financing activities | ($640,525) | $10,351,413 | | Net Change in Cash and Cash Equivalents | ($8,083,271) | $4,748,069 | Notes to Condensed Consolidated Financial Statements Notes detail the company's e-commerce ecosystem, accounting policies, liquidity, segment revenue, acquisitions, and compensation - The company operates in six reportable segments: e-Commerce, Merchant POS, Online grocery and food deliveries, Telecommunication reseller, Digital marketing, and Online ticketing and reservation[46][140] - In Q2 2023, the company acquired PT Wahana Cerita Indonesia (digital marketing) and Mekong Leisure Travel Join Stock Company (travel agency), accounting for them as business combinations[26][149][157] - As of June 30, 2023, the company had cash of $10.9 million, a working capital surplus of $4.4 million, and an accumulated deficit of $89.7 million[35][323] - For the six months ended June 30, 2023, one customer (Customer A, located in the United States) accounted for 47.92% of total revenues[274][309] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes revenue growth to new acquisitions, improved gross income, and reduced operating expenses, maintaining liquidity - The company is building a digital ecosystem and loyalty platform in Southeast Asia, focusing on six operating verticals: loyalty, lifestyle, grocery and food delivery, telecommunications, digital marketing, and travel[289][291] - As of August 9, 2023, the company has onboarded over 3.3 million registered consumers and over 650,000 registered merchants on its platform[302] - Management believes the company has sufficient liquidity to continue its business plans and operations for at least one year, expecting to rely on cash generated through future financing activities[323] Results of Operations Revenue increased to $4.2 million, leading to $1.3 million gross income and a narrowed net loss of $8.7 million from acquisitions and cost controls Comparison of Results of Operations (Six Months Ended June 30) | Metric | 2023 (in US$) | 2022 (in US$) | Change Driver | | :--- | :--- | :--- | :--- | | Revenue | $4,229,812 | $944,152 | Increase from newly acquired digital marketing and online ticketing businesses | | Gross Income (Loss) | $1,263,396 | ($14,931) | Turnaround due to higher margin revenue from new acquisitions | | Sales and Marketing Expenses | ($229,378) | ($449,392) | Decrease due to planned cost reductions and marketing strategy redesign | | General and Administrative Expenses | ($9,870,935) | ($13,186,062) | Decrease due to effectiveness of cost control plan | | Net Loss | ($8,699,443) | ($14,177,999) | Decreased loss due to higher revenue, gross income, and lower operating expenses | - The net loss for the six months ended June 30, 2023 includes significant non-cash items: $2,267,250 in stock-based compensation and $935,531 in depreciation and amortization[318] Liquidity and Capital Resources As of June 30, 2023, the company held $10.9 million cash, with $6.9 million used in operations, asserting sufficient liquidity Cash and Liquidity Position (as of June 30, 2023) | Metric | Amount (in US$) | | :--- | :--- | | Cash and cash equivalents | $10,839,434 | | Restricted cash | $80,631 | | Stockholders' Equity | $13,123,593 | Cash Flow Summary (Six Months Ended June 30, 2023) | Metric | Amount (in US$) | | :--- | :--- | | Net cash used in operating activities | ($6,886,251) | | Net cash used in investing activities | ($217,521) | | Net cash used in financing activities | ($640,525) | Item 3. Quantitative and Qualitative Disclosures About Market Risk This section is not applicable as the company qualifies as a "smaller reporting company" - Disclosure is not required for "smaller reporting companies"[426] Item 4. Controls and Procedures Management concluded disclosure controls were not effective as of June 30, 2023, with no material changes - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures are not effective at the reasonable assurance level[427] - No material changes in internal control over financial reporting were identified during the quarter[428] PART II - OTHER INFORMATION Item 1. Legal Proceedings The company is involved in various legal proceedings, but management anticipates no material effect on financial condition - The company is subject to various legal proceedings but does not expect them to have a material adverse effect on its financial condition[431] Item 1A. Risk Factors No material changes to risk factors previously disclosed in the Form 10-K filed on March 23, 2023 - There have been no material changes to the risk factors disclosed in the company's Form 10-K filed on March 23, 2023[433] Item 2. Unregistered sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities were reported during the period - None[434] Item 3. Defaults Upon Senior Securities This section is not applicable - Not applicable[434] Item 4. Mining Safety Disclosure This section is not applicable - Not applicable[435] Item 5. Other Information This section is not applicable - Not applicable[436] Item 6. Exhibits This section lists exhibits filed with the report, including required certifications and Inline XBRL documents - Exhibits filed include CEO and CFO certifications (31.1, 31.2, 32.1) and Inline XBRL data files (101 series)[438]