Hello. My name is Chris Miglino and I am the Founder and CEO at SRAX. I’m very excited to be with you today to talk to you about the fourth quarter and the full year financial results, and give you some updates on the business. We’re talking to you today from our new studio that will be used for all of our virtual events. You’ll hear more about this in the coming months. First, I’d like to say that the end of 2020 and the first quarter of 2021 has been incredible and we’ve had some amazing things to share with you today. This is the first time we’re talking to you where we have moved BIGtoken into its own public company. This will allow us to break out the financial results of Sequire so you can see how well that business is actually doing.

Thank you, Chris. As mentioned earlier, we finished the fourth quarter with revenues of $4.5 million and $8.6 million for the full year, which were up 316% and 141%, respectively. Our Sequire business represented the entirety of the increase. For the fourth quarter and full year, revenues from Sequire were $3.5 million and $6.3 million, respectively. As our business transitions to Sequire, the majority of our revenues are driven by our SaaS platform where we’ve seen substantial growth. As a result, we’ve also experienced substantial increase in our gross margins. For the fourth quarter, gross margins increased to 73% from 44% and for the full year to 70% from 53%. Operating expenses were $5.3 million, compared to $4.8 million in the prior year for the fourth quarter and $17.6 million for the full year, as compared to $19.8 million in the prior year. The decrease in operating expenses for the year is driven by a decrease in staffing through a cost rationalization process and activities we began in the second quarter of 2020. The increase in our fourth quarter operating expenses is driven by our expanded operations in Sequire to support the increased growth. Operating loss was $2 million and $11.5 million for the fourth quarter and full year, respectively, as compared to operating losses of $17.8 million and $4.3 million for the full year and fourth quarter of the prior year, respectively.

Thanks, Mike. Now we’d like to open to Q&A. A - Chris Miglino: Hey, guys. The first question is going to come from Mike Crawford at B. Riley. Hi, Mike. You there Mike?

This year we beat our guidance.

Hello. All right. Let’s try this one more time.

Now can you hear me?

Yeah. I can hear you Mike. How are you?

Okay. I’m good. So, we’re dancing around with some microphone issues there. So, Chris, at year end, how many companies were on the Sequire platform versus the number that you gave today and between managing warrants and options and broadcasts and ad events, what are the value propositions that are most resonating with these new companies that are joining?

So the -- I think the number at the end of the year was around 153. That’s when we spoke at your conference. I think that that was on the 5th of January. And then so we’ve added an additional 30 since then.

And then what is resonating the most?

Well, I think, companies want to really understand who is buying and selling their stock and then also the ability to manage all of that data. That’s really the thing that’s resonating the most. Into this next year, adding the ability for them to launch their own conferences like this. The ability for them to do their own road shows, variety of other things that are, it’s really driving adoption. I mean, they can email their shareholders. They can SMS shareholders, variety of different communication mechanisms to engage with the shareholders.

Okay. Great. And then between the $23.8 million of public securities you own today, I didn’t quite catch exactly what that number was at year end. I do see on the balance sheet that there’s this $8.5 million listed as prepaid expenses.

The -- yeah. So the -- we’ve signed up a lot more in the interim as well. So that was the number at the end of December that we actually had on hand. And then we’ve -- since then a lot of people have delivered it, because the way it works is, if we actually haven’t gotten the stock from the transfer agent, even though we have the contracts, we can’t recognize it. So a lot of that came in after the end of the year and then a lot of the new stock have -- the new deals have come in since then as well.

Okay. And…

I don’t know if that’s answering your question.

Yeah. No. That helps. So, basically -- I mean, it’s prepaid expenses are essentially converted into a public securities. That’s the way to…

Correct. Yes. It’s -- yeah. We hold them on the balance sheet as a prepaid expense, correct.

Okay. And then one clarification, you gave some guidance on quarterly revenue in the press release of $7 million, is that for the first quarter or second quarter of 21?

That’s for the second quarter. So Q1 is going to continue to be $5 million like we had announced previously and $7 million will be for Q2 and then…

Okay.

… $23 million to $25 million for the year.

Okay. Excellent. And then final question for me is, can you give us an update on the number of people that invest in stocks that you now have in your database?

That is going to be in a separate release coming up here in a week or so.

Okay. A little bit more than $3 million.

Yeah.

Okay. Thank you.

A little bit more than $3 million.

Thank you.

Thank you, Mike. Appreciate it. The next question is from McIlree. Hi, Jim. Are Jim there? Let’s see, Jim like you are maybe having a little bit of an audio issue there. If there’s anybody else that would like to ask a question please raise your hand. Mike, did you want to ask another question. Say we got there.

Can you hear me Chris?

Mike you wouldn’t ask another question.

Can you hear me?

Yes.

Okay. Yeah. You’re -- the mute and unmute function is not intuitive. So you -- Chris, you mentioned that 64% real time and BIGtoken. Do you have a sense of what BIGtoken revenue might be for the current year? I understand also right now you’re still consolidating it but if and when it raises more capital that will no longer be consolidated with SRAX’s results and then maybe walk through the mechanics of what happens to the GAAP financials at that point in time?

Yeah. So right now it’s consolidated. We don’t have any guidance for where it’d be for the year. We’ve estimated a very conservative number in our guidance that we’ve given of approximately $4 million, so if they -- I think they anticipate doing much more than that, but we use that number in providing our guidance. If we get below the 50% mark then we can unconsolidate and we can no longer need to flow their entire P&L through ours and that certainly is the goal here in the next coming months. Now on a fully consolidated basis -- I mean on a fully diluted basis, we actually fall below 50% and so that is -- if some of the warrants get exercised and some additional shares got issued that are au or below 50%.

On the digital marketing services that Sequire companies are subscribing for, are you seeing most companies take that up or is it only a few that are taking the lion’s share advantage of those services?

That’s around 30% of our customers, so around 30% of them opt in to use those services.

And would you say that’s a similar number that are using the platform attract say once in options today or?

You mean as far as the people that are using the option feature?

Yeah.

No. Like more than that are using the option and warrant feature inside the platform. It’s -- I don’t know the exact number. We can get that for you. But I’d say it’s probably higher than that.

That’s -- I’ll just do one last question for me, Chris, is, of the companies that are signing on, how many would you say came through, what I call the LD Micro channel versus otherwise?

I think we’re just at the beginning of starting to tap into the LD Micro companies. We through the conference in December, which was our first big virtual conference that we did with 250 companies and we’ve started to reach out to those companies subsequent to that. So I think we’re just starting to get there now on bringing those companies on Board. Most of the -- I think most of the companies that have come on Board thus far then referrals come in from companies and from other partners.

Excellent. Thank you.

Thank you. All right. Well, let’s see if we can go back here. Let’s see. Let’s go to Jon Hickman. So you got to unmute there, Jon. Hey, Jon. No.

Can you hear me?

How about that? I can hear you.

You can or can’t?

I can.

Hello.

Yes. I can hear you.

Okay. So, I’m sorry, I could not get on. The technology wasn’t working for me. So I missed your call. Did you go through some of the, like, the stock-based compensation numbers. Did you give us that while you were on your call?

We did not. No.

Okay. Can I get a follow-up call from you after this?

Of course.

Okay. I will call you later than. But can you give us update, like you did 92 new Sequire customers since your last update, right?

Yes.

So is there, like, are you -- is that like 25 a month or something like that now?

Well, the -- that was at the end of Q3.

Okay.

So that -- and then at the beginning of the year, we had around 153.

Yeah.

And then now we have 180. Yeah, so we did 30 in the quarter in the first quarter.

Okay. So that’s…

So that would be around 10 a month.

10 a month. Okay. So is the trend changing it all on you or is that a good…

Accelerating now.

Yeah. Is it?

So we are -- yeah. So we had our biggest quarter ever. We signed $10 million worth of new business in the first quarter. So that’s why we were able to up the guidance from $23 million to $25 million.

And it was $18 million -- $17 million to $18 million before, right?

Correct. Okay. Okay. Well, let me -- let someone else ask questions and I’ll talk to you later.

All right, Jon. All right. Let’s go to Dave at Trickle Research. Hi, Dave.

Oh! Now can you hear me?

We can hear you.

Awesome. Okay. So, can you talk a little bit about the process of sort of how you monetize these stock positions? I mean, I keep -- I know I kind of keep harping on this, but I sort of feel like you’re going to end up looking like a micro cap ETF before too long if you don’t -- if there isn’t some plan to liquidate these shares over time and can you just give us a call on how you approach that a little bit?

Yeah. So we have so many shares now from so many different companies. The idea is to just no pun intended to trickle them out into the…

Right.

… market and -- so slowly sell them. And that’s a way that we can monetize money -- the stock that we have.

Okay. So there is kind of a process…

As long as we have -- go ahead, sorry.

So there is a process that you’re going to. You fully intend to liquidate them as you sort of move forward?

Oh! Yes. Very much so. And we are now.

Okay. Good. Okay.

Yeah.

So the other thing I’m wondering is when you get to the point of not having to consolidate BIGtoken. How is that asset -- this is probably a question for Mike. But I’m a little confused, how that assets going to show up on yours -- on your balance sheet. I mean, for instance, right now, there’s obviously kind of an odd disconnect in the marketplace, when BIGtoken has considerably bigger market cap in SRAX. So I’m kind of wondering, I mean, is there going to be, how is that going to be valued once you get under 50%? How’s it going to be reflected on your balance sheet?

So I’ll let -- I can let Mike answer that question.

Yeah. Chris, can you hear me?

Yeah.

Hi, Dave. Yes. So once we get below 50%, we have to look at the -- our interest in BIGtoken under the equity method from roughly 20% to 50%. And what we will do is we will flow the earnings of FTBD through our P&L below the line as a just one item and won’t be -- won’t show the revenues and OpEx and so forth. But the basis that we will have on our books for BIGtoken will be that -- will be the same. It won’t be adjusted…

Okay.

… to reflect to the market cap. Now, if we further fall below significant influence within the company, that’s more of a facts and circumstances than just some bright line number, we will get more to look like just as we hold the securities for these other companies that we obtain securities through in Sequire.

Okay. So at some point, you may -- you might start to treat that a little bit more like some of the other, I guess, holdings in the sense that there may be some, so is -- there is some sort of mark-to-market process that you go through on that basket of securities, is that right?

So the Sequire -- the securities that we obtained through the Sequire business, yes. So every quarter, we mark them to market. I mean all of the companies that that we do business with Sequire, a publicly traded 40 companies and so we value them using the quoted market price and we just adjust that every quarter and then that adjustment will go through the P&L as a -- as part of income -- income of ours.

So then does that conversation with your auditors include any sort of adjustments for maybe stocks that are a little less liquid or additional haircuts that might -- that come about as a result of that?

Sure. Yeah. I mean, we do have a process. But that is -- I don’t even believe we have any that fall below. It falls really into that category…

Oh! Okay.

… right now. I am not -- I don’t know if that’s maybe a question for Chris, if we’re going to start to get involved in that. But I think you’ve done very well with a portfolio a lot of and as we mentioned that, only $23 million as of today and a lot of that is depreciation. Well, maybe not a lot of it, but a significant amount.

Yeah. No. No. I don’t need more detail…

And I think it’s important to add…

I think that’s -- yeah. I’m sorry. Go ahead, Chris.

I think it’s important to point out that, any fluctuations in the stock prices do not hit the revenue, so if…

Right.

If the stocks go much higher, we’re not taking more revenue from that, that’s hitting below the line.

Right. I got it. That’s helpful. Thank you.

Of course. Thanks, Dave. If there’s anybody else who’d like to ask a question, just raise your hand. I will give you one more chance. Well, thank you --oh, hold on. Here’s one. Here’s a couple more questions. Hold on one moment. Hi. It’s Rich Feldman . Hi, Rich. How are you? Rich, can you hear us? All right, well, we’re having a hard time hearing you. So why don’t we circle back around. And it’s look like we have another question from Jon.

Okay.

Jon.

Hey. Can you tell us how we can -- this has been recorded, is there a chance to listen to this again?

Of course. Yeah. We’re going to have this online and you’ll be able to listen to the whole call again.

When will that happen?

Within around 15 minutes.

Okay. Thanks so much.

No problem. Looks like Dave has another question. Hey, Dave.

Can you hear me, Chris?

Yes. We can.

Okay. Good. So I’m sort of wondering going forward, given that, I think, that the goal, obviously, is to get people who are on the platform sort of presenting at the conferences, and I guess, vice versa. So as we’ve sort of moved forward, how should we look at the conferencing piece of the business? Is that something that you still envision that you will on an ongoing basis report or even really treat like a profit center in and of itself or is that presentation thing be more and more become sort of part of the package that you sell as the Sequire platform?

Yeah. It’s a combination of those two things. So for the customers that are already on the platform, it becomes part of the package. For the people that are not part of the platform yet, it becomes a sales marketing tool to get them in. And then the additional conferences that we can launch, your conference or others, where we’re enabling those conference providers to easily launch their own conferences on our platform. And we’re partnering with you so that the companies inside the Sequire platform can have access to your audiences.

Okay. So, but going forward, would you expect conferencing in and of itself to be a separate sort of profit center still even though they’re being packaged, that conference is really being packaged as part of kind of the revenue package, like, itself, if that makes any sense?

Yeah. So the big conferences, like the LD Micro conferences.

Right.

Will continue to be a mainstay and continue to be a significant revenue stream for the company.

Great. Thank you.

Thank you. Again, if there’s anybody with a question, go ahead and raise your hand. Well, this will be available right after this call. And we’ll send an email out to everybody so you can watch it again.