Society Pass rporated(SOPA) - 2023 Q1 - Quarterly Report

PART I FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) The unaudited Q1 2023 financial statements reflect substantial revenue growth and a shift to gross income, alongside a narrowed net loss, though cash and total assets decreased due to operational usage and share repurchases Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheet Summary (as of March 31, 2023 vs. December 31, 2022) | Balance Sheet Item | March 31, 2023 (Unaudited) | December 31, 2022 (Audited) | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $13,755,377 | $18,930,986 | | Total current assets | $16,862,370 | $22,996,945 | | Intangible assets, net | $6,676,065 | $7,458,089 | | TOTAL ASSETS | $26,074,425 | $32,698,742 | | Liabilities & Equity | | | | Total current liabilities | $9,350,649 | $11,614,299 | | TOTAL LIABILITIES | $10,508,932 | $12,687,425 | | TOTAL EQUITY | $15,565,493 | $20,011,317 | | TOTAL LIABILITIES AND EQUITY | $26,074,425 | $32,698,742 | - Total assets decreased by approximately $6.6 million, primarily due to a $5.2 million reduction in cash and cash equivalents from December 31, 2022, to March 31, 2023[11] - Total equity decreased by approximately $4.4 million, driven by the net loss for the period and share repurchases, which were partially offset by share-based compensation[11] Condensed Consolidated Statements of Operations and Other Comprehensive Loss Consolidated Statement of Operations Summary (For the three months ended March 31) | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Total revenue | $2,042,580 | $445,090 | | Gross income (loss) | $686,237 | $(14,793) | | Total operating expenses | $(6,136,469) | $(6,584,931) | | Loss from operations | $(5,450,232) | $(6,599,724) | | NET LOSS | $(5,390,213) | $(6,591,405) | | Net loss per share (Basic & Diluted) | $(0.20) | $(0.30) | - Revenue increased significantly year-over-year, driven by new revenue streams from digital marketing ($1.28M) and online ticketing ($0.49M), which were not present in Q1 2022[13] - The company achieved a gross profit of $686,237 in Q1 2023, a substantial improvement from a gross loss of $14,793 in Q1 2022[13] - Net loss attributable to Society Pass Incorporated narrowed to $5.29 million from $6.55 million in the prior-year quarter[13] Condensed Consolidated Statements of Stockholders' Equity - During Q1 2023, the company repurchased 511,760 shares of its common stock for a total cost of $541,988, which are now held as treasury stock[15] - The company issued 1,088,674 new common shares during Q1 2023 for services, accrued salaries, and the exercise of options, increasing additional paid-in capital by approximately $1.8 million[15] - Total stockholders' equity decreased from $20.0 million at the beginning of the period to $15.6 million at March 31, 2023, primarily due to the net loss of $5.4 million and share repurchases[15] Condensed Consolidated Statements of Cash Flows Consolidated Statement of Cash Flows Summary (For the three months ended March 31) | Cash Flow Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | $(4,015,201) | $(2,560,917) | | Net cash used in investing activities | $(190,061) | $(225,134) | | Net cash (used in) provided by financing activities | $(541,988) | $10,532,676 | | Net change in cash and cash equivalents | $(5,175,395) | $7,702,784 | - Cash used in operating activities increased to $4.0 million in Q1 2023 from $2.6 million in Q1 2022, despite a lower net loss, primarily due to a significant decrease in accrued liabilities and other payables[21] - Financing activities resulted in a cash outflow of $542k in Q1 2023 due to share repurchases, a stark contrast to the $10.5 million cash inflow in Q1 2022 from a public offering[21] Notes to Condensed Consolidated Financial Statements - The company operates through subsidiaries in Vietnam, Singapore, India, and the Philippines, focusing on e-commerce platforms. It made several acquisitions in 2022, including businesses in online grocery, food delivery, digital media, and online ticketing[24][29] - As of March 31, 2023, the company had a cash balance of $13.8 million and an accumulated deficit of $86.4 million. Management believes it has sufficient capital to continue operations[34] - The company operates in six reportable segments: Online Grocery and Food Deliveries, Digital marketing, Online ticketing and reservation, Telecommunications Reseller, e-Commerce, and Merchant Point of Sale (POS)[48] - On January 25, 2023, the Board authorized a $2 million share repurchase program. During Q1 2023, the company repurchased 511,760 shares for $541,988[218] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes Q1 2023's significant revenue growth and improved gross margin to new acquisitions, narrowing the net loss despite high operating expenses, while liquidity decreased due to cash burn and share repurchases Overview - The company is building a next-generation digital ecosystem and loyalty platform in Southeast Asia (SEA), focusing on Singapore, Thailand, Indonesia, Vietnam, and the Philippines[261] - The business operates across six key verticals: loyalty, lifestyle, grocery and food delivery, telecommunications, digital media, and travel[263] - As of May 12, 2023, the company has onboarded over 3.3 million registered consumers and over 650,000 registered merchants onto its platform[273] Results of Operations Q1 2023 vs Q1 2022 Performance | Metric | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Revenue | $2,042,580 | $445,090 | | Gross Income (Loss) | $686,237 | $(14,793) | | Gross Margin | 34% | -3% | | Sales & Marketing Expenses | $130,664 | $196,102 | | General & Admin Expenses | $5,991,886 | $5,840,598 | | Net Loss | $5,390,213 | $6,591,405 | - The significant increase in revenue was mainly due to sales from newly acquired businesses in the digital media and travel verticals[282] - The improvement in gross margin to 34% was attributed to higher profit margins from the newly acquired businesses[285] - The decrease in net loss was primarily attributable to the increased gross profit, partially offset by high G&A expenses which include costs for acquisitions, public company expenses, and stock-based compensation[291][289] Liquidity and Capital Resources - As of March 31, 2023, the company had cash, cash equivalents, and restricted cash of $13.8 million, down from $19.0 million at December 31, 2022[292] - Net cash used in operating activities was $4.0 million for Q1 2023, primarily consisting of the net loss of $5.4 million, adjusted for non-cash items like stock-based compensation ($1.9M) and D&A ($0.9M)[297] - Net cash used in financing activities was $542k, resulting from the share buyback program[293][301] - Management believes the company has sufficient liquidity to continue its current business plans and operations for at least one year[295] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company, as a "smaller reporting company," is not required to provide this information under Regulation S-K - Disclosure is not required for "smaller reporting companies"[392] Item 4. Controls and Procedures Management concluded that the company's disclosure controls and procedures were not effective at a reasonable assurance level as of the period end, with no material changes to internal control over financial reporting during the quarter - Based on an evaluation as of the end of the period, 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[393] - There were no changes in the company's internal control over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[394] PART II OTHER INFORMATION Item 1. Legal Proceedings The company is involved in various legal proceedings in the ordinary course of business but does not anticipate that the ultimate liability from any pending matter will have a material effect on its financial condition, results of operations, or cash flows - The company is subject to various legal proceedings from time to time in the ordinary course of business[396] - Management does not expect any pending legal matters to have a material effect on the company's financial condition or results of operations[396] Item 1A. Risk Factors There have been no material changes to the risk factors previously disclosed in the company's Form 10-K filed on March 23, 2023 - As of the date of this report, there have been no material changes to the risk factors disclosed in the company's Form 10-K filed on March 23, 2023[398] Item 2. Unregistered sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the period - None[399] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including officer certifications and XBRL data files - The report includes certifications from the Principal Executive Officer and Principal Financial Officer, as well as Inline XBRL documents[404]