SRAX, Inc.

Hello, everyone. Welcome to the STRACCS full year 2021 conference call. We appreciate you joining us today. I'm Morgan, Vice President of Community. This is our safe harbor statement, which I will read. This presentation 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 limitations 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 31st, 2020, or 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 SRACS and are difficult to predict. SRACS undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events, or otherwise. I'd like to introduce Chris Manglino, the founder and CEO of SRACS.

Thank you, Morgan. and welcome everybody to the q4 2021 and full year 2022 conference call i want to thank you for your continued support of tracks as many of you know 2021 was a fantastic year for us and we grew significantly in all my years that I've had in business. I've not had a business that has grown as fast and has continued to grow as fast as Strax has. It was a monumental year, and as you will see as we get into the numbers, we're just getting started. While I appreciate our existing investors, I want to jump and wanting to jump right into the numbers. I want to take a minute to quickly explain to those that are new to our story a little bit about what we are doing and what is driving this significant growth. So Quire is a SaaS platform that provides public companies the ability to understand who their investors are, who's buying and selling their stock, and provides a number of tools to communicate with those investors, such as text messages, emails, surveys, and a number of other tools that help them manage their warrants, short interest data, shelf availability, and allows them to track specific financing transactions that they enter into. Once they're on the platform, we help public companies build community through a number of tools. First is our virtual events platform that allows companies, investors, and banks the ability to run virtual events. We combine this with our in-person events that gather some of the most notable investors and companies together to learn and engage from each other. We also provide news on small cap companies on both our microcaps.com website and ldmicro.com, where we have an index that tracks the microcap market. The creation of this community has taken years and our assets are well positioned to continue to grow this community. We can never accomplish this without our team. We have a team of around 150 people that are helping accomplish this goal on a daily basis. And we'd like to thank all of them for their participation in helping us accomplish these goals. And here's some of those major accomplishments that we achieved this year. We're pleased to announce that our full year revenue grew 340% year over year. This revenue continues to grow as we saw a 27% increase in Q4 revenue over Q3 revenue, which was also up 170% year over year. When we gave our revenue guidance for Big Token, we were still consolidated. With their 3.5 million in revenue and the revenue that Shracks achieved, we exceeded our guidance for 2021. Not only did we beat on the revenue side, but we continued on our trajectory of positive EBITDA. While we had a lot more expenses in Q4 due to big token spinoff, we still maintained positive EBITDA and had 3.8 million in positive EBITDA for the year. We now have 13 quarters of consecutive Sequoia revenue growth. We continue to add customers and grew the number of clients who've signed up for the platform from 284 to 307. Starting tonight, we're about to embark on our most successful in-person event we've ever thrown. LD Micro launches tonight with almost 200 companies and over 2000 one-on-one meetings. People are ready to get back to meeting in person and while we anticipate to continue, We're also live streaming the event to the investors who cannot make it to the event. At the end of the year, we held approximately $20 million in marketable securities. One thing to note here, and I know I've mentioned this many times in the past, our agreements for taking stock as service include price resets and most favored nation clauses that help us revalue our positions when stocks go down. This is, as I mentioned earlier, we exceeded our revenue guidance. And I'd like to point out how we got there. As our numbers for big token, Shracks and the Shracks gap numbers will combine to make the $31.981 million. So when you look at the Shracks financials, you're going to see That we have twenty eight point five million. That is excluding three point four million that big token had. So we gave a guidance of thirty one point five and we actually exceeded that. But now that we're deconsolidated on the numbers, you're only going to see the twenty eight. So I just wanted to be clear about that so you didn't think that we didn't hit those numbers. We did hit them, but it's just deconsolidating $3.5 million out of the P&L. We've had a great last few quarters of bookings. In just the last two quarters, we booked over $30 million in business. And I think we'll book around $12.5 million in Q2. If you look at this chart, it seems to indicate that growth is coming in three-month cycles. Since these agreements are 12-month arrangements, we have great insights into our revenue, and we're confident we'll get to $47 to $50 million this year. We also had our best one week of bookings in Q2, so the market turmoil has not derailed our growth. We continue to hold a positive EBITDA, even though we're growing the team and our infrastructure. We anticipate that Q1 will be a record EBITDA quarter for Shracks. In Q4, we had 865,000 in positive EBITDA. But getting into Q1, we anticipate to even exceed the 1.4 million that we had a few quarters ago. We continue to see that we're pacing around 25 to 30 new customers per quarter. We hope to see this increase as we have hired up on our sales team and they're bringing in a lot of companies into the pipeline. This is a look at our share structure. We have around 31.2 million shares outstanding fully diluted. This includes warrants and all of our employee options that are out there. When it comes to the warrants, we have around 3.6 million warrants that expire in October of this year. If they did get exercise, that would bring in around $7 million worth of extra cash into the company. One thing to note here is that since we didn't file this report on time, the warrants that were to be exercised in March ended up going cashless. And instead of 1.6 million shares being added to the cap table, only 194,000 shares were added to the cap table. So a significant dilution was avoided due to that, if there is any icing on the cake for filing late. So now I'd like to turn the call over to Mike for his financial review. Mike.

Thank you, Chris. As we previously mentioned, with the deconsolidation of Big Token, we're now able to present our operating results exclusively of the Sequoia business. And jumping into the fourth quarter, We're looking at revenues exceeding the prior quarter and the prior year by 27% and 170% respectively. And as Chris mentioned, this growth is as a result of the continuing bookings that we've had in the Sequoia business over the past year. Total operating expenses have increased as well. On a quarter over quarter basis, they're up 28%. And on a year over year basis, they're up 91%. Again, this is reflective of the continued investment and growth in the cost structure of the business to support the revenue growth. Now, moving to the full year, we see revenues increasing year over year 341%. And again, this is exclusive of the big token operations. This is Solis Acquire and the LD Micro Conference revenues, as well as some miscellaneous other revenues. On a cost side of things, expenses are up almost 2x or 97%. But again, roughly one third of the increase that we've seen in revenues. And again, this is mostly supporting the increased operations of the business on an overall basis. And when we move into the GAAP P&L, I think it's important that we focus, spend a little time and understand the large non-cash items that we have in the GAAP income statement. What you'll see are two large charges, both non-cash and represent the deconsolidation of big token. With the deconsolidation of big token, what we do is we consolidate all of the revenues and expenses of that business and present them in one line item on the P&L called discontinued operations. And what you'll see in terms of the entire consolidated big token business for the full year 2021, it incurred a loss, a net loss of $14.4 million. And then the second charge that we have non-cash related to the deconsolidation of big token is to dispose of the carrying value and the assets and liabilities, as well as the prior equity components of that business. And that results in a loss on deconsolidation of approximately $9.4 million. So those two charges, both non-cash as it relates to SHRACs, represent $24 million and are a one-time charge, but we will no longer see the effects of the deconsolidation on a go-forward basis. Now, moving into... Moving into the business of Sequire exclusively going forward, I think it's important, at least for this period, to understand the major movements from our net loss or gap net loss to what we represent, what we feel is an appropriate measure of the business, which is adjusted EBITDA. And so I wanted to point out, as I previously mentioned, we've had significant charges as it relates to to the big token deconsolidation, but there are some other non-cash charges that we need to add back to get to what we rep, what we believe is the appropriate measurement for our business, which is adjusted EBITDA. And so of that 20, Of the $34.3 million total net loss, approximately $24 million of that is related to the big token deconsolidation, slightly offset by the non-controlling interest in that discontinued operation. And so we find ourselves with a full year adjusted EBITDA of $3.8 million for approximately a $6 million year-over-year increase from a negative $2 million in the prior year. Now, moving into the Sequoia security portfolio, it was Chris previously mentioned, you know, we have some additional features within the, the contracts in which we obtain the securities from our, from our customers. Um, mainly if the, if the, if the, uh, company, the issue where that we've received the securities from does a dilutive financing, we get reset subject to us still holding those shares. And at the end of the year, we had receivables of approximately $2.1 million of fair market value of securities, but for GAAP accounting rules, we do not get to reflect those shares in our asset balance. We also had $1.2 million of shares that are due under new revenue contracts. We report these on the balance sheet. If we move to our balance sheet, we report these on the balance sheet as a, as a as a contract asset you're going to see that as a as a new line item on the balance sheet reflecting the value of the securities that we have yet to receive and then finally moving back to the balance sheet with a deconsolidation of of the of the big token business historically we're going to represent the assets and liabilities of big token in the respective categories of the balance sheet as discontinued operations. So you get a true sense of what the balance sheet is, as well as the income statement for this acquired business, historically and on a go-forward basis. And with that, I'd like to turn the call back to Morgan.