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Q3 Conference Call. We appreciate you joining the call today. There's still a few people getting into the call, so we'll go ahead and slowly start here. We're excited for the quarter. We think we had a really good and exciting quarter. We're going to go ahead and do the presentation and then afterwards, we're going to answer some Q&A.

So if you have any Q&A questions, please go ahead and ask those questions right through the Q&A section of the platform. So I'm going to go ahead and start the start the presentation. So SRAX is a -- give you a little bit of an overview of the third quarter and so you have the Q3 2020 Conference Call.

I'm going to give you a little bit of an overview of what happened this quarter. We had a really good year-over-year call. We had 161% year-over-year growth within the company and most of that is attributed to the growth of our supplier platform and the recurring revenue nature of our Sequire platform.

We also had a quarter-over-quarter growth of approximately 124%, which we're really proud of that and we're continuing to see growth of the Sequire platform quarter-over-quarter..

Thank you, Chris. And to jump into the financials. As you can see, as we started doing the second quarter, we're now breaking out the business into our two operating segments, Sequire and BIGtoken. Just to drive into the revenues.

As you can see, total revenue for the quarter was $2.6 million, compared to $1 million in the third quarter 2019, representing an increase of 161%. The mass majority of that increase as everybody can see here is the increase in Sequire growing from $31,000 to approximately $2 million in the quarter.

Looking at the year-to-date period, we had revenues of $4.1 million compared to $2.5 million in the prior year, representing an increase of approximately 65%. Looking at the gross margins they were both 66% for the third quarter and the year-to-date period.

This is slightly down in the quarter, but up a full nine percentage points for the year-to-date period. Operating expenses were $4.2 million compared to $5.4 million in the third quarter 2019, representing a 22% decrease.

And for the year-to-date period, operating expenses were $12.4 million compared to $15 million in the year-to-date period in 2019, representing an 18% decrease.

The vast majority of this decrease in both the quarter and the year-to-date period is the rationalization of the expense base that we began to take in the first quarter towards the middle of the second quarter.

And we're going to see that partially offset by an increase in the expense base due to the acquisition of LD Micro, as we start to see that realized in our P&L beginning in the fourth quarter. Operating loss was $2.5 million and $9.6 million in the third quarter in the year-to-date period respectively.

This compares to the operating losses of $4.7 million, and $13.6 million in the third quarter periods in 2019, respectively..

Thanks, Mike. So now, we'd like to open the questions or open the presentation to Q&A. We see that we have a number of Q&A questions here. And let me go ahead, and the first is from Jim McIlree. I'll go ahead and see if we can go ahead and answer this live here..

The first question is from Jim. The Sequire platform revenue was flat quarter-to-quarter given the number of subscribers increased, why was platform revenue flat? No, I don't think that is the case Jim, we've had the Sequire revenue increased quarter-to-quarter. As of today, we have 125 subs as of today.

What was the Q1 sub, we reported the last time we reported that we had 91 subs and now we're seeing 125. On the $4 million Q4 revenue, how much is from Sequire BIG or LD ? We're not going to break that out right now. We just know that we're -- I'll just tell you this, a majority of that $4 million is coming from the Sequire platform.

So we're seeing most of that come from supplier. Let me go on to the next question is from Todd Rossmann.

Given the decrease in the debt and increase in the balance sheet and moving out BIGtoken, is really reasonable to assume that SRAX is cash flow positive, plus not needing additional funds as revenue continues to ramp up Sequire? Yes, that is definitely our projection that we are going to be able to utilize the capital that we have on the balance sheet today to get through and pay any and all debt that we have outstanding and also get Sequire to a place where it is EBITDA positive.

So thank you very much. The next question is from Dave Levine. Hey, Chris, great quarter, can you give a sense of when you may be able to stop consolidating BIGtoken? So when we do the deal, we'll have to consolidate for a little bit because at the onset, we're going to own around 88% of BIGtoken.

But the good part is they're going to have their own capital. On their side, they've been doing really well on raising capital for the business. So we will get diluted down in that business as they raise additional dollars. Hopefully, they continue to raise capital at higher and higher valuations, as they go debt goes along.

So there's not a definitive timeframe in mind yet when we would be able to stop doing that. So hopefully, as soon as possible. The next question is from Todd Rossmann again. Would it be correct to state that SRAX is now more of a pure-breed SaaS-model company? Yes, definitely. The bulk of our revenue is coming from the Sequire platform itself.

The platform is all-encompassing, the agreements that we have and the platform itself is -- we don't do any services for companies that are not on the platform itself. So every customer that we have within Sequire is a customer that is on the Sequire platform.

So our goal is to be 100% SaaS-based company, and that's why we've taken the initiative to get rid of the MD asset, to get rid of or move BIGtoken into its own public company, just so that the story is a lot more clear and there's no questions out there. The next question is also from Todd.

With LD Micro, is it expected to bring additional revenues at good margins? Yes, the margins within the LD are fantastic, not only gross margins, but the EBITDA margins are very good on the LD business. But for us really, the LD business is something that we're adding on to the platform itself.

So that as our customers are in Sequire, we're providing them additional services. So while we we'd like to see them participate in the platform to make money off of them, we're also providing it as a service to keep them involved in the LD Micro, or in this Sequire platform itself.

And LD Micro has such a strong name in the small cap business that we think that that adds a lot of value to our customers. And we're seeing that a lot of our customers really appreciate that initiative. There's a lot of conferences that happen out there.

And a lot of people try to throw conferences, but LD has been able to do something special with that community. And we'll keep that going for our customers.

Also from Todd; are there plans to also list the BIGtoken on candid board ? So as many of you might know, Malcolm has started a number of cryptocurrency companies, one of which was the WAX token, which was his most recent transaction that he did.

He raised a substantial amount of money for the WAX token, I think it was around $80 million for the WAX token and he has a very deep understanding. He has a very deep understanding of the cryptocurrency ecosystem and marketplace. So, definitely is bringing that element to the table for BIGtoken. So we're proud that Malcolm is adding that.

So, as far as listing on T-Zero itself, that's a question that Malcolm would have to answer as they get into it. But I know they've had some conversations about doing some things that are a little bit different with BIGtoken. And then we have a question. Let's see.

So the current -- the next question is from Mark Caruso is; what effect will the BIGtoken have on the FPVD shareholders? So, we entered into agreement with FPVD where we will receive 88.9% of the company. So the remaining piece is last for the existing shareholders and the existing debt holders. And then the next question is from anonymous.

Will the current SRAX shareholders receive FPVD shares? No, you will not at this point receive FPVD shares, the SRAX itself is owning those shares. So, we will be the owner of those shares, does not mean that we won't give in the mouth sometime in the future. But at this point, we are not.

So the next question is, what steps are you doing to reduce corporate operating expenses? How much will acquisition of LD Micro add to the corporate operating expenses from Christopher Sockeye? Well, we've reduced operating expenses at year-over-year on the quarter by 27%. So, we've been working hard at reducing operating expenses.

The LD Micro integration is a net positive -- they've been net income positive for many years now. It doesn't have a massive infrastructure. Chris Lahiji and the team have done a fantastic job at keeping that business running with minimal infrastructure.

And I think that the technology infrastructure that we're bringing to the table now will also cut back on their costs.

Because in the past, they'd have to outsource to other companies to have them do the virtual conference software and to do the webcasting software, which are all pieces that we are now going to be able to add without infrastructure cost.

The next one is; what is the contract length of subscribers you've entered into for the Sequire platform? It's typically a yearlong contract. So we're not entering into any agreements less than a year. So as you can see, were continuing to -- as you can see, we're continuing to add more customers to that platform.

The next one is from Mike Crawford at B. Riley. Says, can you break down Sequire revenue between media data and subscriptions in Q3? Will you report LD Micro financial results in the Sequire segment? We'll report the LD Micro financials inside the next quarter, because that's when they'll have substantial revenues.

In this quarter, their conference that they did in September was before our acquisition. So even though they did the LD 500, the numbers there didn't come into play until after the segment was over or until after the queue is in play already. So we didn't take those revenues, but we'll have them in Q4. So we'll break them out in Q4.

As far as breaking down the Sequire revenues between media data and subscriptions, I'll go ahead and let Mike take that question.

Mike?.

Sure. Yes. Mike, in Footnote two, within the 10-Q that we filed this morning, there's a segment analysis, it breaks it down in the queue. I'm sorry, it's actually Footnote number -- I think it's Footnote number four.

You can see the distribution between the shareholder and investor media services, the platform subscription, and then the BIGtoken and then there's a line for conferences. As Chris mentioned, we didn't pick up in our financials any of the activity for the third quarter that LD Micro had, as we closed that acquisition on the 16th.

And there was no revenue from the 16th through the 30th..

Okay, the next question that we have, it says, what's the status of the special dividend that was declared several years ago? As many of you know, and as many of you have, this sitting in your brokerage account, there is a special dividend that was out there.

So we continued to work with the lawyers on getting that extended and do some dividend around that. Obviously, most of that was done around BIGtoken and it was to provide a fraction of the revenue of the BIGtoken shareholders. So we're working with the lawyers to see what we can do with that, but anticipation is that something will happen there.

The next question is from anonymous attendee. What are your expectations of what SaaS revenue multiples effect will be on the stock? SaaS revenue multiples, obviously, are much higher than other multiples, and we think that will have a positive impact in long term on the stock itself. The next one is from Dave Levine.

How do you plan to liquidate the shares that you own? In other words, will you largely sell shares as they become available for sale, or where there'll be an element of trying to hold some because you have better expectations for the potential appreciation of those shares, if that makes sense? In some cases, we've been able to be in the market and sell shares over the last few months, and we haven't done so.

And so, we just think that there's either certain opportunity times to be able to do that. And obviously, we're very cautious about how we do that with our clients. So we want to make sure that we're getting the best price for those shares, without having a negative impact on our partners. So we're very conscious about how we're going about doing that.

The next one is the same question around the SRAX rights. And then, we have a question from Carl Shroeberg. Can you provide any clarity on FPVD share transfer agreement? So we filed that transfer agreement, that's publicly available for you to see, we've filed an 8-K around that, so you can actually see the deal that we did.

I would direct you towards that document itself. And then you're saying, are you reading it right, that $850,000 convertible debt will be converted via dilution. The debt in the agreement, we are taking the company debt-free. So it is the company's obligation to be delivered to us debt-free.

What are your expectations of cash burn in Q4, for considering the separation of BIGtokens? Obviously, with an increase of revenue of another million dollars, more than a million dollars are the current quarter of close to $2.7 million up to $4 million, you're going to have a lot more cash, though, that's going to reduce the burn down.

And then, we'll only have two months of BIGtoken burn in SRAX itself. So you have one month less of SRAX burn. So with that said, we haven't defined that number for the market yet, but we anticipate it would be way less than where we are today.

So take another million on the top side, reduce one third of that cost that you see inside the document now for BIGtoken, and then, apply some of the operating income or the operating corporate expenses over to BIGtoken, because there's probably around somewhere between $500,000 and $600,000 a quarter of the corporate overhead that gets shifted over to BIGtoken.

Next question is, what holds the future for SRAX after BIGtoken? Well, Sequire is the future of SRAX after BIGtoken. And that is really what we're highly focused on. Our goal is to grow this to 1000 companies. And we think that if we can accomplish that, we'll be well on our way to providing a very, very valuable tool for our customers.

We've have a lot of things that are coming in Sequire that are very unique and are things that public companies need. And I'm really excited about the future of what Sequire has got to offer to companies.

We have a literally a year's long pipeline of developments that we're bringing into the Sequire platform itself, some really exciting and interesting things like that public issuers need. And I think we're serving as a place in the market today that is not being served by anyone else. So that's the end of the Q&A. We don't have any more questions.

So I'll give you one more sec, if anybody does have another question to go ahead and enter it in there..

All right, thank you. Again, we're always open to further conversations. So if you have any questions or anything, please reach out to us, let us know, and we'd be happy to have a conversation with you about what we're doing. All right, thank you very much, appreciate it..

Goodbye..