Greetings, and welcome to SRAX's Fourth Quarter and Full Year 2018 Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note, that this conference is being recorded.

I would now like to turn the call over to your host, Kirsten Chapman, LHA Investor Relations. Thank you. You may begin..

Thank you, operator. Good afternoon everyone. I'd like to welcome you all to SRAX's fourth quarter and year end 2018 conference call. This call is being webcast slides. To see the webcast or download the presentation, please visit our website at srax.com/investors.

With us today from management are SRAX's CEO, Christopher Miglino; and CFO, Michael Malone, COO Khristoffer Nelson and VP of Shopper, George Stella. As many Investors have asked, today management will provide more detail on the Company's offerings. Chris Miglino will open with our 2018 and early 2019 accomplishments.

Then we will review our verticals with George Stella discussing Shopper and Chris Miglino SRAX’s IR and SRAX’s Social. Khris Nelson will provide our BIGtoken update, Mike Malone will review the financials and Chris Miglino will close with the vision and open the call for questions.

Before I turn the call over to management, on slide two, I would like to remind you that this call may contain forward-looking statements which could be indicated by the words anticipate, could, enable, estimate, intend, expect, believe, potential, will, should, project and similar expressions as they relate to SRAX.

Investors are cautioned that all forward-looking statements may involve risks and uncertainties that could cause actual results to differ materially from those anticipated by SRAX at this time. In addition, other risks are more fully described in SRAX's public filings with the U.S. SEC, which can be reviewed at www.sec.gov.

Finally, please make note that on today's call management will refer to certain non-GAAP measures in which SRAX excludes stock-based compensation, amortization and depreciation expenses and other one-time items from its GAAP financial results.

Please refer to SRAX's press release for a full reconciliation of its non-GAAP performance measures to the most comparable GAAP financial measures. Now, it’s my pleasure to turn the call over to SRAX's CEO, Chris Miglino. Chris, please go ahead, sir..

Thank you, Kristen. Good afternoon everyone. Thanks for joining us today. As mentioned we want to cover a lot of ground today and we’re going to do things little bit different than we’ve done on the last few calls. We’re going to get into little bit more detail on each of our products and there’s also the deck that you follow along with.

And if you’re following along on the screen share, that’s great, and if you’re using the PDF to follow on, we’ll call out slide numbers as we move along, so you know which slide that we’re on. So, first on slide four. We’re executing the strategy to build specifications datasets through integrated areas to focus.

First, there is the data verticals, social media data and BIGtoken, our newest consumer data product. Notably, with the BIGtoken, our subscriber base has grown dramatically. We submitted the presentation you're viewing for the webcast on Friday, March 29.

At that time we had 500,000 subscribers, as you can see from the news today that number is growing significantly each day. I want to point out also the way that the – our businesses work as it relates to data in each of our individual segments.

So on the slide you can see that data comes into the SRAX’s products and then we break that up into specific verticals; shopper, investor, core, auto, social, and we become an expert and the data each of these areas and we provide insight and expertise to help the marketers that are in each of those areas to create a conversion that's important for them.

So, in the shopper area, it’s important to drive people to the store to buy a product. In the investor area it’s important for public companies to drive more purchases of stock or understand who is buying stock.

Within the automotive side of the business it’s important for car dealers to understand who is interested in buying a car and provide a bunch of services around that. So, we’re very specific with our datasets and how we target the market with those – with the data that we acquire in each of those stands.

Moving on to slide five, you can see our major accomplishments for 2018 and early 2019. I’ll provide some highlights and I’ll address each one in greater detail during the call. As many of you know, we sold our SRAX MD business for $33.5 million in cash plus a 30% ownership in the business.

We use the proceeds from that to fund our working capital and pay off our convertible debentures which reduced our interest expense and made the company debt free. We also paid off around $5 million in payables that we had on the book.

Throughout the year we also use the proceeds to improve our sales and technology infrastructure and broaden our verticals, including enhancing our shopper product, launched our SRAX’s investor IR product and launched our SRAX Social Auto Boost product.

We also developed BIGtoken which has been a long undergoing process, but we completed the beta in 2018. We launched an general available [ph] in 2019. And now we're seeing really really big subscriber growth on that platform. Moving on to slide six. Our efforts had been focused on fueling growth by expanding our sales infrastructure and technology.

We’re reinvesting the SRAX MD sales proceeds to expand sales & fund development. We’ve grown our SRAX sales force from six people in January of 2018 to 30 sales team members today. The majority of the new sales staff was brought in at the end of Q3 and Q4 of 2018 as it typically takes four to six months to get the salespeople up to speed.

We believe our strengthen resources will drive growth in 2019 and beyond. We’re focusing on industries with the greatest opportunity for near-term return. So, I just want to point out here on this particular slide, we’re really, really starting to see the salespeople kick-in now. We’re getting a lot of RFPs, a lot of close business.

And so now on the next slide we’re going to give you some insight into the pipeline that has been built up by the salespeople. And so moving on to slide seven, you can see that in Q2 of this year we have a pipeline of around $8 million worth of sales that are in the pipeline.

Now compared that to last year at this time, we only had $1.6 million worth of sales in the pipeline. Now just to be clear about what pipeline means. It means that’s the things that have high propensity to be an opportunity for a sale. Doesn’t mean it’s going to close, but it means that our salespeople have identified that as an opportunity.

So, we have a lot more opportunity in the pipe in the second quarter of this year than we did in the second quarter of last year, almost eight times as much. Now, for the year our pipeline is looking around $16.6 million right now.

So that is really driving some spectacular growth from the sale side and that's why we’re comfortable and continuing to reiterate our guidance of $20 million to $25 million with gross margins between 45% and 55%.

But as you'll see as we get into the numbers that the margins are actually trending much higher than that, but we’re being conservative here for the entire year. But margins are maintaining up in that 70% range. So we’re continuing to maintain great margins even though the SRAX MD business has moved out of the family.

Moving on to slide eight; on the R&D side and engineering side of the business we made some fantastic improvements this year. We’ve redesigned the entire engineering and operational model of how our engineers are managed and how the teams are structured. Our entire technology infrastructure team is 90 plus people.

And we made some fantastic changes around that team. We advanced our consumer data management platform BIGtoken which has been enable to scale and accommodate the growth that we’re seeing right now. We launched our SRAX IR product which is our first SaaS based monthly recurring revenue product.

And we launched the number of other advertising products for shopper and auto. We’re also ready to file around five separate patents for things that we’ve build that relate around the BIGtoken and the SRAX IR platforms.

Now what we’re going to do is we’re going to dive a little deeper into a few of our verticals and explain a little bit more about how they work and how they generate revenue and give you a little bit of a deeper look at each of them and have some of the experts in each of these areas come on the phone and talk you a little bit about them.

So, the first person we’re going to bring on to the phone is going to be George Stella who is our Vice President of Shopper Marketing. George has a long history of shopper marketing, but I’ll let him cover that for you. So, George, welcome to the call..

Thanks Chris. Hey everyone. Yes, I’m George Stella, head of SRAX Shopper. I’ve been in the media space for 25 years, within that past 20 years in digital media, and the last 10 of those in digital shopper media.

So, moving on to slide 10, in reviewing SRAX Shopper, SRAX Shopper is a platform that enables marketers to engage with shoppers and drive them into both on in-store and online stores through digital ad.

Our most important differentiator in SRAX Shopper is our unique ability to aggregate data from all of the really high indexing channels in the shoppers, digital path to purchase such as location data, social interactions, as well as online behavior for both web activity as well as shopping.

And what’s more unique is that we try all of these multiple data point into one singular product offering for these marketers. We build very customized, very simple text- based native ads that match the look and feel of the publishers and simply call out the offer to detailer and call to action.

These ads actually we’re seeing click through rates that are outperforming the market and industry standards by three to 5x. On to slide 11, we’ll review some recent accomplishments. So, to further drive the SRAX Shopper growth, we’ve recently hired shopper marketing industry veterans. I’m really, really excited about our amazing team.

We brought our team members from the shopper marketing side at Procter & Gamble and Walmart, as well as some of the big shopper media agencies. We also have the team member on the ground Bentonville, Arkansas at Walmart, or near Walmart headquarters with deep dives into that community down there which is massively invaluable in the Walmart.

It’s a really huge testament to our business that we have these veteran insiders from Procter & Gamble and Walmart which are some of the gold standards in the shopper marketing world.

Take a look under the hood at SRAX Shopper and decide to actually join on some massive validation to the marketplace and we believe their experts, intimate knowledge and relationship, product strategies, proposal creation and partnership prospecting will pay off tremendously.

So we run some great business in Q4 with some of the world’s biggest brand by Nestle, Danone, and Mattel and prove that are offering works really allow us each to these programs actually outperform industry benchmarks, and these agents are all continuing to work with us into this year.

The story and key differentiators that we developed are very much resonating in the marketplace at this point.

That’s valuable and very unique for these shopper marketers part of the in recognition is growing and there is significant growth around SRAX Shopper in the key market like Bentonville, Chicago, Cincinnati and we been able to take some really good advantage of market consolidation as well.

Turning to slide 12 there is a lot going on in this business right now. We feel like we are at our real tipping point. So far this year we’ve done over 200 meetings with some of the world’s biggest advertising brands.

This resulted in over 50 proposals out right now, and at this point we’re really bursting [Indiscernible] seeing about one to two RFPs on a daily basis. So, based on all this activity we really are at this tipping point and we’re expecting to see revenue really start ramping at this point.

Currently, we have around on the shopper side here $5.7 million in identified opportunities that we’re working to move forward. When we apply the industry standards sort of close rate of 33% against that it equals around $1.6 million in forecasted revenue so far for this year and we’re just finishing Q1. So that’s really exciting.

As you guys can see we have a ton of movement in the SRAX Shopper business. We’ve definitely had a solid niche in the marketplace and I'm really excited about our opportunity this year. So, thank you all. And I’ll turn the call back to Chris..

Thank you, George. Now I’m going to talk to you little bit about our SRAX IR products. We build our SRAX IR product to be our first SaaS revenue product. It’s a tool that allows publicly traded companies to understand who is investing in their company and look at the trends of those individual investors over time.

It also brings in information about different DTC data that starts to get aggregated against those investors.

And what we’ve been able to do is use our infrastructure of ad technology to create a platform that cannot only analyze data, but can then provide the public issuer the opportunity to reach out to the people that are investing in their company, and we do that in a few ways. So, we have three different steps that we do in the process.

We analyze the data. So we’re bringing in data into the platform. We’re bringing in shareholder data. We’re bringing in DTC data. And then from that we’re creating the opportunity for the issuers to see different trends on each of those different datasets. Then we’re showing changes in their patterns and giving insights to the market.

So that the issuers has an idea of what's going on and what’s executing against all of their information. Then we have the opportunity that to monitor. One thing that as a public issuer that you do is you hire IR firms to help you in the process of bringing help that you bring your company to market.

And our tool allows for public issuers to tell the effectiveness of each of those IR firms that you might be working with, it creates an investor contact management platform that can be used for every individual that you need on a road show or if you need different investors at events or just if people call in, all of those names go into a centralized database and we’re able to create a CRM against all of that data.

And then, we’re able to create permissions for many people to access this platform. So you can give access to your IR firm. You can give access to your CFO. You can give access to the CEO or VP of Finance; many different people can have different permissions to access different features within the platform itself.

Now once the data is in the platform, we provide the issuers the ability to market. When we get a name and an address into the platform we can do reverse the pins [ph] of emails. We can do reverse the pins of phone numbers.

We can also take that information and upload it into our ad platform and from that we can determine methods by which to target those individuals on mobile and on display. So we can start serving as to individuals that we know our investors and publicly traded companies through our platform.

We also have the ability then to do hyperally [ph] targeted local ads to those individuals and our team of ad specialist work with those companies to help them put together the programs to market out to that list of individuals.

Now the long-term opportunity here is that the data that is inside the investor platform is invaluable, it’s very valuable data about who are these individuals that are investing in publicly traded companies.

Now, who are the marketers that want to reach that list Mercedes-Benz, Cardia, Rolex, Tiffany, Jaguar, you name the high-end retailer that wants to reach those individual and we’re creating a platform by which those marketers can access this data and market out to those individuals.

And then we’re sharing the revenue that’s being generated from those ad sales back with the public companies. So, not only as our platform is a SaaS platform that the public company pays taxes on a monthly basis, but then we provide money back to the issuer through the sale of data on the platform as they opt in to our marketplace.

So it actually can become a revenue-generating stream for the company. So we’re really excited about this. Our goal is to have 100 companies signed up onto the platform by the end of the year. It’s a $3,000 a month fee to access the platform. And it's an ongoing recurring revenue model, which is a little different than our business has been in the past.

So we’re very excited about that. Now moving on to IR, I mean SRAX Social. Within SRAX Social we launched a product called SRAX Auto Boost. Now this is a tool automates the buying of advertising on social channels.

So what happens here is that marketers come into our platform and they set up specific criteria around how they want to buy media if certain things happen.

So we say, okay, in the event that this post gets two likes or in the event that this post gets five comments or a video on this post gets 10 views or somebody shares this five times, I can set then criteria about how to buy media against those things. And you could set up as many of these criteria as you want against one individual post.

And it automatically launches. It's like having a media buyer on staff but it’s in the platform itself. So all you need to do is worry about the content. Put the content up and then we’ll do the rest in buying the media through a programmatic methodology.

So we’re – as far as we know the only ones that are doing this and providing this service and it becomes an ongoing recurring revenue stream for us.

So instead of having to go out sell campaign, campaign by campaign we’re providing the service of the infrastructure and setting up the rules and taking a piece of each individual media by that’s happening. Now, the last piece that we’re going to talk about today is our BIGtoken product. I couldn’t be more excited about what's happening here.

Like we said earlier today, we have an enormous amount of growth that’s happening on this platform. And you Khris Nelson who is going to be speaking next have been instrumental in bringing this product to market and his team has done a fantastic job in getting it to a place where it is today.

We’ve proven that the product can scale and we’re having a really good time watching this thing grow. So, I’m going to go ahead and turn it over to Khris, so he can give you some more details about the BIGtoken..

Thank you, Chris. I appreciate that. It’s a pleasure to be with all of you this afternoon. As Chris mentioned earlier on the call when we filed this presentation and complete it on Friday, we had just reached 500,000 registered users. We’re so excited about that.

I hope all of you saw the news today that shared what is our growth to-date and you can see the amazing growth that we've had over the weekend. To ground this conversation a little bit deeper and make it a richer experience. On slide 23 you see some of the examples of the screens in the application.

This application is centered around consumers having control of their data, transparency into its uses and the value they can earn from it. If you haven’t experience the application yourself, I hope you go to the App Store today or Google play and download it. See what so many people are excited about.

We’re building an amazing community of people that are passionate about not only owning, but earning from their data. When I take a broad perspective and talk about what’s happened over the last two years since we started creating those application.

There’s been a fee change across many sectors, the media, regulatory, consumers and the advertising industry at large. When we started BIGtoken two years ago and we envision this product. We saw a challenge in digital advertising marketplace. And we saw a challenge that consumers were confronting.

GDPR the regulation in Europe wasn’t on our radar yet in United States. California Consumer Privacy Act hadn’t happened yet. The countless data breaches that we’ve head about over the last two years weren’t yet reported. Then the Facebook, Cambridge Analytica issue hasn’t occurred or at least hasn’t been reported.

Over the last two years there’s been a steady drumbeat. We didn’t to where we are no. I personally talked about the recognition in the advertising industry of its challenges we’re confronting.

At the IAB Leadership Conference just a couple of weeks ago, there was a good amount of time spent to what’s occurring on the regulatory front, the GDPR in the California Consumer Privacy Act. The challenges they’re going to confront marketers and ad tech platform and digital publishing are going to be enormous over the next couple of years.

This position SRAX and BIGtoken for market advantage and market leadership, while will challenge the large incumbent operated in an ecosystem at the model that no longer fits our modern point of view.

During that presentation research from Bentonville group was presented that shows a majority of marketers and advertisers are concerned about what’s going to happen in regulation and that they don't yet have the solution or answers or technology to address those.

Our leadership here at SRAX in BIGtoken, in this area, the area of consumers rights, consumer transparency, consumer privacy has led to multiple points of industry recognition for us, just one of those with our inclusion in the IAB Data Policy Board. We are at the table with the large incumbent companies like Google.

And the large data resellers, companies like Acxiom. Data creators companies like Equifax and Neustar and really the entire digital data ecosystem. We are now member of that conversation and a key driver for initiatives around consumer privacy and consumer rights in a way that facilitates a robust digital advertising ecosystem.

There’s has been more and more attention from the media over the last two years. Here on slide 26, you can see two key New York Times articles.

One back in December that it addressed location collection and the way applications are monitoring the publication whether you’re using the application or not, and here you see more recent article about how apps are providing Facebook key datapoints for consumers that are highly private.

People are becoming more and more aware and the media is doing a great job in building this aware, driving consumers to demand more privacy and more control. This has led to high profile people sharing these points of view out in public.

Gavin Newsom, state of the Union for California just a few weeks ago he said that consumers show be paid for data and presented a proposal that tech company could possibly retax in order to achieve this. The wonderful thing is BIGtoken can achieve this without new taxes. We can get consumer's control, transparency and compensation.

Well, I am just published an op ad and the economist discussing how data control as the human rights and how consumer should be compensated for their data. Wonderfully, over the last two years we’ve created the solution to achieve these things and we have one in market. Consumers have responded to this.

Here you see surveys of consumers in California in response to Gavin Newsom's statements. Consumers want more control, consumers want more privacy, consumers understand the value of data. To dig into the business of BIGtoken, quite sizing [ph] that we’ve learned over the last few months.

BIGtoken is a different and a different business then most applications in most platforms. If you look at the application environment, you either pay for any application upfront. You might download and pay subscription to utilize an application. You may utilize an application for news or content and you refer that.

Or you could utilize an application like a game or e-commerce platform or your purchasing products. All of these applications required you to be in the application it order for that company and amortize value for them. It required usage.

The main thing about BIGtoken is, we’re helping the consumer to build the dataset that they fully control and with their permission through their unawareness and choice we can monetize that data.

But the consumer didn’t monetize in the BIGtoken application, that data is utilized and BIGtoken first use case to target advertise into that consumer where there is somewhere else on the web or in the application ecosystem. This is a new business model in monetizing audiences and monetizing applications. We call this indirect long-term monetization.

A consumer can come to the BIGtoken application, create your initial profile, not return for a year, come back a year later and see hundreds of dollar in value generate from that dataset. This gives consumers the ability to extract value long-term and SRAX long-term revenue does not dependent on day to day user engagement.

So this business model is built on acquiring consumers, placing them into segments and then monetizing those segments everyone else on the web. And this has created a lot of value generation. Here on slide 32. We see what is really created a sensation of growth and community engagement. Over the past few weeks we’ve seen incredible day to day increases.

And this has been driven by the BIGtoken community. We have users posting videos on Youtube, showing people how they’ve created value from their own data and extracted that value. We have people posting on Facebook, on Instagram, on LinkedIn and Twitter sharing with people their BIGtoken experience.

We’ve seen ad placed in third party systems with users sharing their personal BIGtoken story and inviting people to sign up with their referral code. All of this being community driven. I saw on twitter yesterday, someone posted something about walking around in the neighborhood in New York signing people up for BIGtoken.

It’s truly incredible, and we are still grateful to our community for creating those. As the community expands we have many opportunities for other kinds and lines of business. That first opportunity is the ability to assist brands and advertisers with understanding the effectiveness of their advertising through attribution.

We know through our system if a consumer was served an ad based on their data, we know in our system if a consumer took action. And we will with this we'll help brand to further refine their advertising and messaging. As the community develops beyond that we'll have an opportunity for measurement.

Helping brands and third party platforms, understand how accurate their data is. BIGtoken becomes the gold standard for consumer opted in highly accurate data and we become the standard that all their data is measured against.

Other opportunities for brands sponsored content and data correction through brand partnerships also developed as this community grows. Once again, it's been a pleasure speaking with you guys. We are so excited about what's happening here with BIGtoken and are so grateful to everyone that the system and its growth.

With that, I’m going to hand the call back to Chris Miglino, our CEO..

Thanks Chris and great job to you and the team for what you've accomplished with BIGtoken. We're truly proud of it. I do now like to bring into the call Mike Malone. Mike is our CFO and today is Mike's first call with us. It's been truly a pleasure having Mike join us at SRAX.

He has done a fantastic job here since joining the board -- joining the company in January of this year. So we're very proud of having Mike on board and thank his addition to the team is creating significant value for us. So please welcome Mike Malone for the first time to the SRAX’s call..

Thank you, Chris. I'm really excited to be here. And before I move into the financials, I'd like to point out that we're still finalizing some accounting with other income and expense and therefore we'll only be providing an update on revenues and EBITDA [ph] at this point. We hope to have this finalized shortly hereafter.

I just wanted to note that fourth quarter and full year 2017 results include operations from SRAX MD and reach to provide a basis for comparison to the operations of our current business. We have broken out the financial results of these discontinued products. Now on slide 36, I'll provide Q4 2018 financial highlights.

Gross revenues is $1.1 million, this compares to 2017 gross revenue was $6.5 million which included $5.3 million from discontinued products. For the quarter we maintain relatively high gross margins of 78%. This has improved from 62% in 3Q 2018 and compared to 85% in 4Q 2017, which included high margins SRAX MD business.

Operating expenses were $4.1 million versus $5.6 million in Q4 2017 which included $1.9 million of expense from discontinued products. Our OpEx increase reflects our continued investment in BIGtoken and our sales organization.

Adjusted EBITDA loss was $2.6 million, this compares to Q4 2017 positive adjusted EBITDA of $1.2 million which included $1.9 million attributable to discontinued products. Now moving ahead to look at the full year performance. 2018 gross revenue was $9.9 million which included $6.3 million from SRAX M.D and $567,000 from reach.

This compares the gross revenues of $23.3 million which included $11.1 million from SRAX MD and $7.9 million from reach in 2017. Gross margin was 68%, up from 60% in 2017. This improvement reflects the shift in revenue from lower margin products notably reach to higher margin business.

Adjusted EBITDA loss was $8.8 million which included $3.2 million attributable to discontinued products. This compares to 2017 adjusted EBITDA loss of $382,000 which included five million dollars attributable to discontinued products. And I'll be able to provide a select few updates on our balance sheet.

Cash and cash equivalents were $2.8 million at December 31, 2019 compared to $1 million in the prior year.

And I want to point out that in the quarter we paid seven point five million dollars to redeem the remaining convertible debentures outstanding consisting of six point five million dollars of face value debentures and approximately a $1 million of associated costs with the redemption.

As of December 31, 2018 there were approximately 10.1 million shares outstanding compared to 8.3 million in the prior year? And in moving ahead, I want to point out that based on our sales outlook we're confident reiterating our guidance for 2019 of revenues between $20 million and $25 million with gross margins between 45% to 55%.

And I'd like to turn it back to Chris..

Thanks Mike. Every day you're hearing more and more concerns about consumer’s personal data. There is -- everyday there's been a new breach or trust that some of the big platforms are continuous.

So clearly markets are ripe for a solution that puts control and transparency back into the hands of the consumers, and provide accurate data to the marketers. Track spending and data management business for a decade, and we've evolved with the changing market to provide industry leading solutions.

In January of since January of 2018, the time where we had only six people, we have accomplished a lot. Now we have 30 trained sales people that are armed with enhanced products to better industry specific data verticals and social media data solutions.

And finally, we're driving BIGtoken user acquisition, and we've already reached our milestones over half a million users before the second quarter of 2019. Overall, we continue to believe the summer parts creates great synergies that will drive long term shareholder value.

Before I open the call to questions, I'd like to know if you could see us at a few investor events. We'll be at the plant at Microevent [ph] in Las Vegas April 30th to May 2nd. We'll be at the Trickle Research Rocky Mountain Microcap Conference in Denver on May 7th and we'll be at the B Riley Conference on May 22nd and 23.

With that said, I'd like to turn it over to the operator for any questions..

Thank you. At this time, we'll be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Mike Crawford with B Riley FBR. Please proceed with your question..

Thank you, Chris.

I was hoping you could just shine a little bit more light on this pipeline and these outstanding RFPs and tie that back to the data that you're collecting from the BIGtoken platform, and when we could see advertising campaign revenue directly attributable to BIGtoken?.

So there -- if I could break those into two separate questions. The -- everything that is in the pipeline today is not associated with the big platform. That – that is only associated with the different verticals. So it's IR, it is shopper, it's our core business. So it's everything that is within our social business as well.

So that's everything that's in the pipeline. So those are transactions that are you know have proposals out or are booked and in the process. As far as BIGtoken goes, that data is just getting loaded into our systems to get ready for sale.

So we -- the amount of growth that we've seen and just the last few weeks has been amazing and has you know shifted some priorities that we had around prioritizing what is getting built when. So all the pipes that we have are ready to ingest that date and start pushing it out to all the different buyers.

But now, the teams are being mobilized to take that data out to the marketplace and start to sell it. So we'll probably start to see that towards the latter part of the second quarter. But I just want to be clear that the guidance that we gave does not include any of that money coming in from big.

So even without, even without the big money coming in, we're comfortable with that guidance..

Okay. Thank you.

And then is there -- any two or three things you could point to that would explain further dramatic increase in users registering for the BIGtoken platform where it's four or five months to get the 500,000 users are now four or five days to add another 100,000 users?.

Yes. So you know we -- everything was built getting ready to reward the consumers. And we started to pay and reward the consumers for their data. And that really shifted how rapidly they were spreading the word about the platform. It's you know it just went completely viral. I mean, all over social all over.

I mean you just pull it out, you’ll see it everywhere. People are asking people to use their sign up code everywhere we go. I was -- I was on YouTube the other day. I did a search for BIGtoken and I got an ad for some kid asking me to use his sign up code for a BIGtoken.

So it's taken on a community of its own, of people that are realizing the value of their data. I mean, even today, the number is you know higher than when we submitted this stuff, you know submitted this and did the press release this morning..

Okay. Thank you very much..

Yes..

Our next question comes from the line of David Lavigne with Trickle Research. Please proceed with your question..

Hi, guys, how are you doing?.

Hi, Dave, how are you?.

Good. So Chris, I don't remember the numbers, but the sort of the uptake in big, I remember some metrics you used in the past to just sort of you know what that might mean in terms of revenues and things.

Are those – and again I don't remember what they were, but those metrics kind of still in place? Because it seems to me that you've already reached a number that we were kind of hoping you'd get to at some point in time..

Yes, and it's accelerating quickly. Yes. So we think that consumers and our model have a value of somewhere between $3 and $6 a month when maximized. So you know the numbers that we had put out before were just estimates around what we thought that revenue might look like. And you know for U.S.

consumers and that is -- that is gives you a good baseline for -- gives you a good baseline for what we could get. And obviously we have some friends that were early investors in Snapchat and they were telling us that at the beginning of Snapchat, they were seeing sign ups in the 30,000 to 50,000 people a day range.

And so we're seeing those kind of numbers here, and we're really excited about it. Now it's just a matter of continuing that growth, leveraging, leveraging it and keeping the community going viral. You can never create something on purpose to go viral. It just has to happen. So now that it has we're doing everything we can to keep that going on.

And so we're -- well we think there's a lot of value in this data and obviously consumers see the value there as well..

So when you carved out. So just so I understand with BIGtoken there's a portion that's carved out for the users, there’s a portion of BIGtoken that was kind of spun off to shareholders at one point in time.

What portion of BIGtoken will SRAX retain and then well at some point in time when will you consolidate those revenues in the future then when they come in..

Yes. So we filed an S-1 for the creation of a security that would allow consumers to benefit from everybody participating in the BIGtoken platform. So that's the S-1 that we have filed. So if anybody wants to see that you can go and read what our intention is there. We think that consumers will have an interest in being owners of their collective data.

We take 50% of that revenue and share it upto 50% of that revenue is shared back with the consumers. Now, the benefit that we get is that we're no longer paying the people that we buy media or by data from today. So currently, we buy data from Acxiom and Experian and a variety of other sellers.

So instead of them being our cost of goods sold, the cost of goods sold becomes the consumer themselves. And the consumer is delivering their data into a platform and they are receiving a benefit from it as well, because we're helping them create an online identity that they're getting rewarded for..

Okay. One last question. So, given all that's going on in this space, I mean you talked a little bit about what's going on in Europe and the state of California and you know daily we're hearing about Facebook and this issue of data. And I know that you said that you filed some patents, although some of those it sounded like were around SRAX IR.

But if given the magnitude all this and sort of what's going on out there, could -- this notion of aggregating that data and having paying consumers for it.

Is there any way you can build a mode around that, or is there some of this that you can protect with IP that may do some good going forward in terms of that?.

Yes. I mean, the mode is definitely the users themselves. So the user community is definitely a mode, the ability to scale.

Now what we're really proud of is that we were able to sign up so many people and the systems maintained and they held up and the technology infrastructure is managing you know not say without you know a lot of work over the last couple of weeks, but it's managing and we're able to keep that system up and running with so many people interacting with the platform, which is not a trivial task.

The team has done a really good job. So we have a bunch of things that we don't want to specify like it was the first presentation we actually had all of the time -- all of the patents broken out. But we don't want to do that at this point.

So we actually ended up taking those out and saying like we're going to back off on sharing those right now with everybody and we'll do that later as they get further along in the process..

Great. Thanks..

Thanks Dave..

[Operator Instructions] Our next question comes from the line of Matthew Larson with National Securities. Please proceed with your question..

Hey Chris, how are you doing?.

Hey how are you Matt?.

Good, thanks. Hey. I was wondering if you could break out a little more on your balance sheet. We got the figures for the year end. But, if I recall you have some other assets there that you know weren't really disclosed to you had there on the sale of the SRAX simply besides the $33 million in cash which you discussed.

There was, I believe a $10 million preferred that has a yield of roughly 8% that was part of that, and certainly would represent an asset on your balance sheet. And in addition, there was some sort of earn outs that you would realize based on some sort of metric achieved at year end.

Since the year end has occurred, can you confirm that you have some of these other assets or other moneys on your balance sheet for us?.

Yes that's a -- that's an asset that the auditors have indicated that even though it's our value of that business, it doesn't get called out on the balance sheet, because we never had a basis in that business before.

We created it from scratch, the same way they were creating these other businesses from scratch and there was no basis in there to have it on the balance sheet. So we're being forced to carry it at a zero value on a balance sheet.

So if it ever gets recognized in the future, if you know if we were to sell that business or if it was to put out dividends to us then that that money would just come in as an income to the company instead of going against our value on the balance sheet.

So yes, and the longer we own that piece of that business, you know this last year we got an 8% take on that and a preferred position with some other people in ownership of that -- of the MD business. So, every year they're looking at around $800,000 worth of preferred position on that. So that -- that still….

If the SRAXmd continues to perform, then there's every reason to believe that that preferred and the income flow off it would be secure. So I guess you take them to account because it's a significant part of your overall capitalization.

My second question is for your guidance for the year of 20 million to 25 million roughly, with gross margins of 40% to 45%. Is there any indication that -- that would do that's almost that means you're trading at not much but one time revenues currently.

Would any of that fall on the bottom line in your judgment?.

So just -- just so I'm clear what the if the 20 million to 25 million get us to a EBITDA break even position is that your question?.

Yes, yes, absolutely..

So it depends on the marketing spend for BIGtoken. And we had originally planned to get that to get to where we are today with BIGtoken would cost a lot of money. But we've only spent around $20,000 on marketing for BIGtoken. So, now we're shifting our model around and changing that up.

So I feel, I need to, I need to redo those numbers before I can answer that question for you, but previously we're showing there would still be a little bit of a loss with paying a bunch of money out for marketing for BIGtoken but it doesn't look like we're going to spend as much as we thought we would..

Okay great. Thanks a lot. Appreciate it..

Sure..

Our next question comes from the line of Steve Snipper [ph] with Stonebridge investments. Please proceed with your question..

Hey Chris, how are you doing?.

Doing well, how are you doing?.

Doing okay. Two questions.

Following up on the prior question, when do you expect to know on the earnout from the SRAXmd sale? And second, do you have any update on the stock buyback?.

So on SRAXmd we haven't gotten, -- they were supposed to have that to us by March 31st and audited financials. But we have not received that yet. So we're hoping that happens here in the next week or so, but we're on top of it. We're looking for those numbers.

As far as the buyback goes, where we think we're better poised for investing in these businesses. And obviously, we have a rabbit by the tail here with BIGtoken and where we're focused on growing that piece of that business. I think that's a better place to spend the money.

I'd rather if you know if other insiders want to buy the stock if it ends up coming down like I did when it came down at the beginning yes we can do that, but the company is better situated reinvesting the money into the business..

And when you get the -- on the earn out, when you get those numbers which hopefully should be in a couple of days the earnout payment itself follows right behind that or like what's the timeframe on that?.

Yes, it's supposed to be, that's why we're looking for the numbers..

Okay. Thank you..

Our next question comes from the line of Marc Steinberg with Westpark Capital. Please proceed with your question..

Yes. Hi. You mentioned that the 600,000 users that you reported, it's even more than when you reported those.

How often can we expect to be updated as far as you know the increase in users with BIGtoken and what do you expect, the increase to continue to be?.

Well -- we don't know. We'll choose keep key levels in which to keep everybody up to date on when we hit those numbers. We haven't defined a program for letting everybody know the user base and the amount of users there are, but certainly as we hit key milestones that we think that the market will be interested and we'll let everybody know.

And as far as, where do I continue to see. I mean, right now we're seeing maintain growth and it's just, it has it’s gaze, where it just really catches on. We've had so many invites go through the platform.

So I -- if you haven't signed up for BIGtoken yet, you know you can go on there and you can see how people are inviting their friends to participate in this. And are the platform for inviting friends into the plot, into BIGtoken is just cranking with invites all day long.

And that's a key metric that we use to determine how many people are using the system and signing up for it. So that doesn't really answer your question. But we'll give you some numbers as we hit some stuff that we're proud about, obviously a million people would be would be key..

I see. And in the prior question that about the share buyback. You're saying that you'd rather invest in the company, then buyback shares.

But the window is still open, correct?.

Yes. We still have -- we still have the buyback there. If we wanted to use it, but you know I think that the opportunity here is really scale continue to scale BIGtoken. And then have that grow..

Okay. Well, congratulations and thanks for answering my questions..

Thank you very much..

And so no further questions left in the queue. I would like to turn the call back over to Chris Miglino for closing comments..

I really appreciate everybody joining the call today. If you have any questions for us directly you can get in touch with us or through our IR firm, and all of our information is on the decks.

So you can download that from our website, and we’d be happy to answer any additional questions that you might have as you start to dig through the numbers here. So thank you very much. We appreciate your support..

This concludes today's conference. You may now disconnect your lines at this time. Thank you for your participation..