Hi, everybody, and welcome to the Q2 SRAX Conference Call. Appreciate you taking the time to join us today. We have some really good news for you today. We had another amazing quarter, probably one of our best quarters ever, in fact, it was our best quarter ever. So, let me dive right into it and share some of the information.

Year-over-year our revenue growth was 558% consolidated and 809% Sequire on its own. Quarter-over-quarter revenue growth of 41% consolidated and 46% Sequire on its own. We beat our Q2 guidance and our Q3 revenue guidance, we are going to set at $8.3 million. SRAX 1Q pro forma EBITDA of $1.4 million excluding BIGtoken.

We've had now 10 consecutive quarters of Sequire growth, we've increased the number of Sequire clients from 200 to 225. We've had -- in Q2, we had our largest booking quarter ever, we booked $11.4 million in Q2. We increased our guidance from our -- increase our guidance to $30 million to $32 million for the full year.

We're currently holding approximately $23.8 million in marketable securities and $10 million in cash on hand. And our entire position in BIGtoken has now been registered with the SEC. So, all of our shares, inside of what is now known as SPVD have been registered.

Here's a snapshot of what the business looks like without BIGtoken, because as many of you know, we consolidate BIGtoken because we own such a big piece of it, but it's its own separate company. So, what we like to do is break out the Sequire piece on its own, so you get a sense of what the true picture of our business looks like.

So, we had revenues of around $7.1 million, a year-over-year growth of 806%. We had gross margins of $5,940, so 83% gross margin and adjusted EBITDA of around $1.4. Now that is a swing from the previous year of a negative $1,569, so almost a $3 million swing to the positive side on EBITDA.

And also the EBITDA is -- last quarter was $500,000, so you're seeing a significant increase in EBITDA for the company. So, we're really excited about this.

We did have non-cash items inside of Sequire for adjustments in stock and so we have a negative net income, but that's all non-cash and Mike will walk through a detailed explanation of how that works today, so you have a much better understanding of how we do these calculations. Here's our Sequire clients.

We've -- as you can see, our bookings in Q2 were more than we've ever had in the history of the company. We're starting -- we're not seeing that slowdown at all. We're continue to have significant growth as of -- into the -- this quarter. So, we're continuing to experience rapid growth in this area.

So, we're excited about that and that's something that we think is hopefully continuing. Here's some of the major accomplishments for the quarter. We've -- we grew the client base to 225 clients that have signed up for the Sequire platform. We've held two conferences in the quarter. We held an LD Micro and a Cannabis Conference in the quarter.

We launched an email feature and SMS integration.

We launched a registered investment advisor feature where our users can search for registered investment advisors and understand who all of their -- understand who different registered investment advisors are and we give them their phone number, email address, so you can say I want to reach all the investment advisors in Westlake Village where I live and, from there, you could then go and bring up all the registered investment advisors and you could start marketing to those people and maybe set up lunch with them or whatever it is to reach out to them and educate them about your company.

We filed our first of three patents, we have another patent that will be filed by the end of this month and then we'll have two patents filed. If you remember last quarter, we said we identified three, we'll have the second one filed by the end of this quarter. We launched Microcaps.com as a site to aggregate all data around Microcaps.

One of the big things that happened for us was BIGtoken S11 effective. So, all of our shares within BIGtoken are FPVD, which is a symbol that BIGtoken trades under were registered. So, as many of you know that have been watching this, we have 159 billion shares of that stock and they've all been registered at this point.

So, we could start to monetize that asset over time. So, we're launching our First Person event if the world doesn't continue to fall apart. So, we're going to shoot for that. We've -- a big part of what got accomplished this last quarter and the team did a really good job on this was establishing all the accounts to sell all different types of stock.

So, there's many, many different places that only sell certain -- take certain socks. So, we have around, I'd say, five or six different relationships now and we're able to use that to monetize all the sock that we have. And we launched our most aggressive sprint on new offerings.

So, we've -- we implemented sprint that is going to build what we think is the -- will be the most aggressive new feature development of the Sequire platform. And we're really excited about that, and the team is working hard to get that done. Now, this is the piece that we're the most excited about.

So, today, we're announcing that we're doing a $10 million stock buyback program. We think there's a disconnect between our stock price and the quality of the business and what we're doing.

And so we're going to implement a $10 million stock buyback program and a lot of that money for the $10 million will come from new sales of -- that are coming in the door and also as we start to monetize some of the BIGtoken stuff.

And if we are able to monetize some of the BIGtoken stuff at a higher value, then we will obviously increase that number.

So, our goal is to whatever we can get for our position in FPVD will combine with stock that we're getting and sales that we're making in the marketplace, we're going to use that money to go into the market and buy some stock back.

And then today we're also announcing a one-time special dividend of approximately $6.5 million to shareholders of record on September 20th. We'll be issuing a non-voting non-tradable preferred that'll hold approximately $6.5 million in stock from our clients.

From time-to-time as our shares are sold, we'll pay out the proceeds to the preferred shareholders. So, obviously, that is -- we think a very big thing and so approximately comes out to approximately $0.23 a share.

So, hopefully, that -- hopefully $0.23 a share is a nice return for a quarter and we'll reevaluate whether we continue to do that thing -- that type of thing in the future. Now, I'm going to turn the call over to Mike Malone. Mike has a very detailed review of all of our financial information.

He has broken down exactly how all of the stock is held and owned. And so I'm going to let Mike walk you through that. And also Mike will give you a little bit more explanation on the dividend itself and how it works.

Mike?.

Thank you, Chris. Overall, we delivered another solid quarter of operating results. As mentioned earlier, we ended 2Q with revenues of $7.7 million representing year-over-year growth of approximately 870%.

Revenue continues to be driven by Sequire, which finished the quarter with revenues of approximately $7.2 million, representing year-over-year growth of approximately 800% and sequential quarter-over-quarter growth of 68%. Both were ahead of expectations. Our profit margins continue to grow and improve as aggregate revenue continues to grow.

On a consolidated basis, gross margin was 81% as compared to 66% in the prior year. Operating expenses finished at $7.3 million for the quarter, which is $3.3 million from prior year.

Sequire represented approximately $2 million of this increase, which was driven by increases in our operations and support area to support the increase in our Sequire platform. The remainder of the increase or approximately $1.3 million was attributable to BIGtoken's operations.

Operating loss for the quarter was $1 million, which is up from the prior year by $2.2 million. And on a Sequire standalone basis excluding BIGtoken, SRAX reported operating income of approximately $940,000, which was up from an operating loss of $2 million in the prior year.

Other loss for the quarter was approximately $5 million, which was driven by an unrealized loss with our marketable securities, which we'll cover in more detail in a few moments. Net loss attributable to SRAX's shareholders was $5.7 million for the quarter or loss of $0.27 per basic and diluted share.

Weighted average shares outstanding basic and diluted were $23.6 million. Now, moving to highlights from our balance sheet. As a result of the strong performance from our Sequire business, we've seen our marketable -- we've seen marketable improvements in our balance sheet.

Over the past year, we've grown our cash and marketable security balances from a total of $6.3 million to a total of $34.1 million as of June 30th, 2021. All while decreasing total gross debt from $10.4 million to approximately $3.1 million as of June 30th, 2021.

Our marketable security balance has grown significantly over the past few quarters and is now our largest -- is the largest item on our balance sheet. And I'd like to dive into this a little bit -- a little further detail. At the end of the second quarter, we reported approximately $24 million in marketable securities.

This balance represents the fair value of stock and other securities we receive as payment for services at Sequire. We mark-to-market this balance at the end of each quarter based on the quoted market prices of each of our holdings.

Any changes in the fair value are recorded as an increase or decrease in the marketable securities balance on the balance sheet with a corresponding unrealized gain or loss reported in other income section of our income statement.

Due to GAAP accounting principles, our balance sheet reporting only consists of marketable securities that the company has taken legal custody and admits balances related to additional shares that are due SRAX result of anti-dilutive provisions we have in many of our contracts and shares that are due from our customers related to contracts were recently signed.

In total, this represents an additional $4.8 million in securities that are unrecognized as of June 30th, 2021. Upon receipt of these additional shares, we'll record these as an increase in the value of our positions with a corresponding unrealized gain on our marketable security balance.

Now, another question that we often receive is around how we recognize revenue that we derive from the services that are paid for in securities or in stock. Now, looking at this example, typical of Sequire contract with a $250,000 total value in a one year term.

The total revenue recognized over the contract term is fixed based upon the total contract value agreed upon with signing of the contract.

Upon receipt of the shares, which are contractually due upon signing of the contract, we record the value of the securities in remarkable security balance with a corresponding increase in in the deferred revenue balance.

As we provide services during the term of the contract, in this case, ratably over the year, we recognize one quarter or approximately 625,000 per quarter, at any corresponding change in the fair value of the shares during this contract period is recorded in other gain/loss. And with that, I'd like to turn it back to Chris..

Thanks Mike. Now, we'll do Q&A. We have some of our analysts on the line here with us today and we'll do some Q&A from the analyst. And then we will open the questions to some of our shareholders that submitted their questions to over the last few days. .

Katherine, we have our we have our first question from Katherine at B. Riley..

Hi, Chris. Thanks for taking the question.

How many supplier subscribers additionally have purchased digital marketing services from SRAX? And further how many of these companies that have come back and purchased additional digital marketing services from you guys?.

I'll let Mike answer that one. Mike, you have--.

Yes, Katherine, can you hear me?.

Yes..

Yes..

Apologies for that. So, as of today's date, let me just pull this up here. My apologies. I've got our schedule here and--.

I can help you with that, Mike.

You need those numbers?.

Yes, maybe you could take the first part of that. I'm just pulling up my numbers here. I think we've got about 228 -- Randy and then, in terms of the managed services, I forget exactly -- I'm trying to find that number. And just everybody knows that we've, this is Randy Clark.

Randy Clark is our Chief Operating Officer and it's his first time on the earnings call with us. But welcome to the call, Randy and thank you..

Yes, thank you. So, Katherine, it looks like as of today, we -- I've got our numbers updated through today. We got 228 total platform accounts and of those 228, 79 of those have entered into manage services agreements with us. So, basically, that's around 35% of the companies that we've signed on to contracts have went on to do additional services.

And of those 79, we've run 141 total campaigns. So per client, we're running right now about 1.78 campaigns per client. So, that -- I think that's the number that you're looking for..

Great. Thank you. And one more for me.

Given trailing 12 months Sequire bookings, how much Sequire revenue already is likely to be recognized in the second half of this year, again, just based off of what you've already booked?.

So, Katherine, we've got -- in this -- in the back half from what we have booked through Friday, approximately $13 million, which will bring the full year out to closer to $24 million just at Sequire..

Okay, great. Thank you..

You're welcome. Great. Let's say--.

This is John Hickman..

Of course, John, go for it..

I have two questions.

The first one is, how -- in your dollar amount, did you liquidate any of your securities in Q2? And the second question is can you talk to us in like, I don't know, general terms about your plan to get under the 50% ownership of BIGtoken in the not too distant future?.

John, I can quickly address I think the first part of that. So, it's maybe best to just think about it for the first six months, we've sold approximately $3 million and then in the second quarter, just under $1 million that we liquidate..

Thank you..

And then as far as the our plan, there's a transaction -- there's something that we're working on with the BIGtoken that would put us in a position where we would be on consolidated. And that looks imminently like it's going to happen sometime in the next -- I'd say maybe four to six weeks..

Okay, thank you..

Sure..

Chris, it looks like Todd has his hand raised..

Yes.

Can you guys hear me?.

We can Todd. Thank you. How are you? Thanks for joining today, appreciate it..

Great quarter guys. Very impressive.

And I my specific question, because one of my questions had asked before, is there any metric in place that SRAX will be using when buying back shares that I guess maybe akin to Warren Buffett where maybe your share price to your guys is knowledge and growth rate and what you've got and bookings might be too expensive and you would wait.

Is there some kind of quarter you're looking at for the buyback on price?.

That's actually being put together right now. So, we have to have -- you have to be -- in the next couple of weeks, we'll have that all in place and so we haven't defined it fully yet. But we certainly know that down here that this is -- the stock down here is trading at a market cap of three times sales.

We said we'll do $30 million to $32 million for the year. I think that -- and we've consistently hit our numbers, the view -- I think that is a highly undervalued. I think that we are willing to buy it down here and take that back in, because it's definitely accretive and we're seeing continued EBITDA -- positive EBITDA..

Okay, great. Thanks Chris.

Second question would be on Sequire bookings or Sequire services, how many clients that you guys have booked are reupping for a second term? Is there any information on that?.

I've got that information Chris. Todd, so it looks like -- and this is this is all time today for going back to the beginning of -- really last year.

So, we've sold 228 clients, 79 of those have entered into managed service agreements, averaging around 178, which is to answer Katherine's question, that overall 36% of our managed services clients have come back to renew, add on, or contract for additional services. So, we're seeing strong numbers.

However, we're -- we really, at this time last year, started to really hit our stride. So, this next quarter and the following quarter are going to be huge for us in terms of measuring renewal and retention because almost 100% of our contracts are annual and they're just starting to expire..

Excellent. Thank you, Randy. Thank you, Chris. Look forward to more great stuff in the future. Thanks..

Thanks a lot Todd, appreciate the support..

Yes, you're welcome..

Let's see. Jim, are you there, James? I can see the phone -- I could see your phone number there..

Hello. Hey Chris.

Chris, hello?.

Hey, Jim, we can hear you. This is Mike. Chris--.

Just one -- can you talk a little bit about the BIGtoken position? I -- obviously, you can sell on the open market now, but I'm sure you've considered a dividend of those shares as well similar to what you're doing with portfolio.

Can you talk about your philosophy on BIGtoken and what your monetization strategy is?.

Yes, we've looked at that. We've looked at the idea of dividend in them out, but we'd have to do it similar to the way that we are doing this dividend that we are doing this quarter, where it would have to be a preferred share where we sell it on our own and pay those dividends out to the shareholders.

I mean, the piece -- the -- it's worth right now something like $750 million.

And -- so I mean, it's a crazy valuation for this, but yes, we've contemplated doing that and that, it'll make our lives a lot easier to get below a point where we don't have to consolidate all of this information, and we can just be much clear on the -- we could just be much clear on the true value of the company..

Got it. Thank you.

And one of the things on the Sequire business, can you talk about subscription pricing, if there's been any change or if you're contemplating any change? And then secondly, if you can talk about what you think the trend is going to be on the non-subscription revenue part of Sequire? I know that's partly driven by whatever programs companies have during the period, but maybe if you can talk about over a seasonal trend, if there is a seasonal impact, if there is any in Q3 and Q4? And then also a longer term trend of what you think the non-subscription revenues of Sequire look like?.

Randy, you want to take that?.

So, we've definitely seen quarter-over-quarter increase now for eight straight quarters and we're definitely well on our way to continuing that this quarter and I think we'll see that in Q4 as well. So, I don't see -- we're just at the tip of the iceberg in terms of the amount of revenue that we can grow within this business.

So, from my standpoint, and our projections and working with finance, on our numbers out for the next four quarters, we see this growth continuing.

Especially on the managed services side, but in the numbers of subscriptions, we've got very aggressive goals for supplier where were we want to get to -- we're 228 now, we'd like to add at least 50 subscribers per quarter. That's kind of what we're modeling ourselves after right now.

And really, there's almost unlimited cap of the number of companies that we can ultimately bring into our platform, up to the total number of companies that are publicly held.

So, I'm not sure if that gives you the exact number because we haven't forecasted into 2022 yet, but for the remainder of this year, we had to go in and revise our numbers, actually make them higher because the goals that we originally set for ourselves were we were kind of blown away..

Got it. No, I look at this business in Jekyll and Hyde way.

I mean, on the positive side, you can imagine where the revenue per subscriber continues to grow as you add more services, but on the negative side, you can think of -- well, they've gone after the low-hanging fruits and so the incremental customers would have less revenue for subscription, but being a managed services revenue.

You seem to be implying that it's the former not the latter that there's still a lot of room to grow the revenue per customer. Is that -- did I hear that correctly? Absolutely. Yes.

We're excited about the number of 36%, I think was a number that I have that we've had of our managed services clients that have come back and added more dollars to their spend. And that doesn't include the new clients that we're bringing on. So we're growing at a very aggressive pace.

And we're keeping the business that we've managed to bring on board. So we continue that formula, which is kind of what I'm charged with the CEO managing the sales and operations side of the business. We keep that trend, and I don't see the growth slowing down for a long, long time..

That's great. Thanks a lot. Appreciate the answers. Thank you..

You're welcome..

Great, Chris. I think that's all we have. We do have one other question that came in which I'll go ahead and read off. We had a question from Mark that says on the last earnings call, Chris mentioned the plan of monetizing a large portion of BIGtoken shares and provided a timeline of three months to six months, which is right about now.

Is this still the plan? And can you please explain how you plan on doing this? Chris, do we still have you? Randy, are you there? Can you maybe fill-in an answer that, I can read it again, if you need me to?.

Yes. If you don't mind? It looks like Chris may have lost his connection..

Yes. Actually there, I'm back. My son must be taking a break on his fortnight, expertise, right now. So, well, it's -- I kind of answered this before, right? Like, we've registered the shares now. The shares have now been registered, which was a big undertaking to get them all registered.

And now we have the ability to start to monetize -- to start to monetize those. So that is -- that's something that's that we'll start looking at turns out for the remainder of this year.

So, the thing that I was talking about in the previous quarters was that we had to get these shares registered, which I actually thought would take a little bit longer than it actually did. So we're just super excited about that now. Hopefully, that answers your question..

Great. Thank you, Chris..

Yes. And I appreciate everybody taking the time to come. I just want to give our analysts one more chance, if anybody has a another question before we -- before we leave..

No. Okay. And I want to thank Mike and Randy, and Morgan for working on the call today and also Tanya, who's on our team. I appreciate your help. Thank you very much, and all the analysts thank you very much for participating and asking all these questions. We look forward to seeing you again..