Society Pass rporated(SOPA) - 2022 Q2 - Quarterly Report

PART I - FINANCIAL INFORMATION Financial Statements (Unaudited) For H1 2022, revenue significantly increased to $944,152, but net loss widened to $14.18 million due to higher expenses, while cash rose to $28.0 million from a public offering Condensed Consolidated Balance Sheets Total assets increased to $37.5 million by June 30, 2022, driven by cash growth, with total equity rising to $34.4 million Condensed Consolidated Balance Sheet Highlights (as of June 30, 2022 vs. Dec 31, 2021) | Metric | June 30, 2022 (Unaudited) ($) | December 31, 2021 ($) | | :--- | :--- | :--- | | Total Assets | $37,497,014 | $35,176,357 | | Cash and cash equivalents | $28,012,846 | $23,264,777 | | Total current assets | $32,950,966 | $29,632,687 | | Total Liabilities | $3,134,026 | $2,850,674 | | Total current liabilities | $2,707,376 | $2,439,621 | | Total Equity | $34,362,988 | $32,325,683 | | Accumulated deficit | $(61,405,158) | $(47,352,456) | Condensed Consolidated Statements of Operations and Other Comprehensive Loss H1 2022 revenue surged to $944,152, but net loss widened to $14.05 million due to higher expenses, despite improved loss per share Statement of Operations Summary (Six Months Ended June 30) | Metric | 2022 ($) | 2021 ($) | | :--- | :--- | :--- | | Total Revenue | $944,152 | $17,289 | | Gross Loss | $(14,931) | $(87,568) | | Total Operating Expenses | $(14,200,905) | $(6,431,072) | | General and administrative expenses | $(13,186,062) | $(6,121,899) | | Loss from Operations | $(14,215,836) | $(6,518,640) | | Net Loss Attributable to Society Pass | $(14,052,702) | $(7,099,731) | | Net Loss Per Share (Basic & Diluted) | $(0.61) | $(0.96) | Condensed Consolidated Statements of Stockholders' Equity Shareholders' equity increased from $32.3 million to $34.4 million in H1 2022, driven by a $10.4 million public offering and share issuances, partially offset by net loss - Key equity changes in the first six months of 2022 included raising $10.4 million (net) from a public offering, issuing shares for services ($1.63 million), business acquisitions ($0.8 million), and warrant exercises ($0.36 million)[20] Condensed Consolidated Statements of Cash Flows For H1 2022, net cash used in operating activities increased to $5.4 million, while financing activities provided $10.4 million, resulting in a $4.7 million net cash increase and an ending balance of $28.0 million Cash Flow Summary (Six Months Ended June 30) | Metric | 2022 ($) | 2021 ($) | | :--- | :--- | :--- | | Net cash used in operating activities | $(5,448,474) | $(1,513,720) | | Net cash used in investing activities | $(227,873) | $(200,000) | | Net cash provided by financing activities | $10,351,413 | $1,322,505 | | Net Change in Cash | $4,748,069 | $(364,033) | | Cash at End of Period | $28,012,846 | $142,633 | Notes to Condensed Consolidated Financial Statements The notes detail business operations, recent acquisitions like New Retail Experience and Gorilla Networks, and segment reporting across e-Commerce, POS, Online Grocery/Food Delivery, and Telecommunications Reseller, with further acquisitions post-quarter end - The company operates an online lifestyle platform ("Leflair"), provides POS hardware/software, and recently expanded into online grocery/food delivery and telecommunications through acquisitions in the Philippines and Vietnam[25] - As of June 30, 2022, the company had a cash balance of $28.0 million and an accumulated deficit of $61.4 million, with net cash from financing activities at $10.4 million for H1 2022, primarily from a public offering[33] - Subsequent to the quarter end, the company acquired Thoughtful Media Group (July 2022) and Mangan PH Food Delivery Services (July 2022), continuing its M&A strategy[287][289] Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes H1 2022 revenue growth to online platforms and acquisitions, while the widening net loss is due to increased general and administrative expenses; liquidity improved significantly with $28.0 million cash from a public offering, though disclosure controls are ineffective due to material weaknesses - The company operates five business verticals: lifestyle, grocery and food delivery, merchant software, telecommunication reseller, and loyalty, focusing on expanding its e-commerce ecosystem in Vietnam, Indonesia, and the Philippines (VIP countries)[294][295] Results of Operations Summary (Six Months Ended June 30) | Metric | 2022 ($) | 2021 ($) | | :--- | :--- | :--- | | Revenue, net | $944,152 | $17,289 | | Gross Loss | $(14,931) | $(87,568) | | General and administrative expenses | $(13,186,062) | $(6,121,899) | | Net Loss | $(14,177,999) | $(7,099,731) | - The company's liquidity position strengthened significantly, with cash increasing to $28.0 million at June 30, 2022, from $23.3 million at year-end 2021, primarily due to $10.4 million in net proceeds from a public offering[318][319] Quantitative and Qualitative Disclosures About Market Risk No disclosure is provided as the company qualifies as a "smaller reporting company" - Disclosure is not required as the company qualifies as a "smaller reporting company"[404] Controls and Procedures Management concluded that disclosure controls and procedures were ineffective as of June 30, 2022, due to a material weakness in internal controls stemming from inadequate segregation of accounting duties, with no material changes to internal controls during the quarter - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures are not effective at a reasonable assurance level[405] - The ineffectiveness is attributed to a material weakness caused by an inadequate level of supervision and segregation of duties due to the company's small size[406] PART II - OTHER INFORMATION Legal Proceedings The company is involved in several legal proceedings, including employment actions and a dispute with SOSV IV LLC, as detailed in Note 23, but does not anticipate a material financial impact - Material legal proceedings are described in Note 23 of the Notes to Condensed Consolidated Financial Statements[412] - As of June 30, 2022, the company had $240,981 in outstanding legal fees related to these matters[413] Risk Factors No disclosure is provided as the company qualifies as a "smaller reporting company" - Disclosure is not required as the company qualifies as a "smaller reporting company"[414] Unregistered sales of Equity Securities and Use of Proceeds All unregistered sales of equity securities during the reported period were previously disclosed in a Current Report on Form 8-K - Unregistered sales of equity during the period were previously reported on Form 8-K[414] Defaults Upon Senior Securities Not applicable Mining Safety Disclosure Not applicable Other Information Not applicable Exhibits This section provides an index of all exhibits filed with the Form 10-Q, including articles of incorporation, bylaws, warrant agreements, material contracts, and officer certifications