AiAdvertising Reports Third Quarter 2022 Financial Results

SAN ANTONIO–(BUSINESS WIRE)–AiAdvertising, Inc. (OTC: AIAD), a next-generation AdTech company focused on harnessing the power of artificial intelligence (AI) and machine learning (ML) to eliminate waste and maximize the return on digital ad spend, has reported its financial and operational results for the third quarter ended September 30, 2022.

Key Third Quarter and Subsequent 2022 Highlights and Business Update

  • Revenue for Q3’22 was $1.9 million, an increase of 4% from Q3’21 and a sequential increase of 19% from Q2’22.
  • Platform License (SaaS) revenues for the nine months ended September 30, 2022, increased by 817% to $0.5 million.
  • Signed a multi-million-dollar agreement with GloriFi, a pro-America, mission-driven technology company.
  • Achieved early success with BioHarvest Sciences for its first commercialized blood flow superfood supplement VINIA, with AiAdvertising delivering 48% higher return on ad spend (ROAS).
  • Announced early success in helping drive the expansion stage of Act! CRM, driving thousands of new qualified leads
  • Appointed Jerry Hug as Chairman and CEO, a finance and technology industry veteran and driving force behind the creation of the CPP
  • Engaged MZ Group to lead strategic investor relations and shareholder communications program
  • Rebranded as a next generation Ad-Tech company developing proprietary software.
  • Successfully launched V1 of our flagship solution – The Campaign Performance Platform – the industry’s first Cloud-hosted campaign management solution to leverage Artificial Intelligence and Machine Learning
  • Filed provisional patents to protect the uniqueness of our invention

Management Commentary

“During the third quarter of 2022 we continued to make significant progress in our transition from operating as an agency with inconsistent and unpredictable revenue to a SaaS platform solution with scalable and predictable, monthly recurring revenue,” said Jerry Hug, Chairman and CEO of AiAdvertising. “We signed two new platform license agreements for a total of 11 since the beginning of the year, now totaling more than $0.75 million in annualized revenue. We believe AiAdvertising can continue to scale our platform with direct-to-consumer brands that are looking to deploy large budgets at scale without having to add headcount. We are seeing growing demand for our Campaign Performance Platform (CPP) as the industry is beginning to shift toward solutions leveraging AI.

“The quarter was highlighted by a multi-million dollar and largest contract to date with GloriFi to empower its launch. In Q1 2023 GloriFi will leverage our CPP to build upon its hugely successful soft launch. This partnership represents the ideal opportunity for us to showcase the efficiencies of our platform to direct-to-consumer brands that are looking to utilize our proprietary platform to deploy large budgets when companies are ready to scale. Also, initial performance with VINIA have led to a month-over-month increase in BioHarvest’s budget and has helped drive triple digit revenue growth for VINIA sales in the third quarter. We most recently announced early success in helping drive the expansion stage of Act! Software. Act! is yet another successful example of how we are becoming the platform of choice for performance driven CMO’s providing an end-to-end solution which harnesses the power of AI.

“To support AiAdvertising’s growth we announced a rebranding effort, including the launch of a new corporate website, emphasizing the strength of our innovative brand in the advertising technology industry. This new branding and evolving positioning perfectly illustrate our growing ambition, and this initiative will help us continue to scale. This initiative includes an upcoming refresh to the investor relations section of our website to better reflect our messaging and better communicate with the investment community. As well, during the quarter I was privileged to be appointed Chairman and CEO.

“As a significant part of these initiatives we engaged MZ Group, a global IR firm, to lead a comprehensive strategic investor relations and financial communications program across all key markets to communicate the potential of our revolutionary Campaign Performance Platform and help build long-term value for our shareholders.

“Looking ahead, we have an enormous opportunity in front of us to leverage artificial intelligence and machine learning to develop a comprehensive solution that marketers can come to rely on. We have cemented our status as one of the most innovative, efficient, and advanced solutions and as a clear market leader in the rapidly emerging SaaS in the AdTech category. We continue to work to position the Company for long-term growth and refocus efforts towards SaaS, which we believe will provide long term value for our shareholders,” concluded Hug.

Third Quarter 2022 Financial Results

Revenue for the three months ended September 30, 2022, and 2021 was $1.9 million and $1.8 million, respectively, an increase of 4%, and an increase of 19% from $1.6 million three months ended June 30, 2022. Revenue for the nine months ended September 30, 2022, and 2021 was $4.7 million and $5.3, respectively, a decrease of 12%. The decrease was primarily due to the sale of the Company’s non-core web hosting business. The Platform License segment revenues for the nine months ended September 30, 2022, increased by 817% to $0.5 million.

Gross Profit for the third quarter of 2022 was $0.1 million, or 3% of revenues as compared to gross profit of $0.4 million, or 22% of revenues for the year ago period. Gross profit decreased primarily due to the cost associated with building our sales team.

Total operating expenses for three months ended September 30, 2022, were $2.1 million, compared to $1.1 million in the prior year’s quarter.

Operating activities for continuing operations used $4.2 million in net cash for the nine months ended September 30, 2022 compared to $3.3 million for the nine months ended September 30, 2021.

Net loss for the quarter ended September 30, 2022 was $2.0 million, as compared to a net income of $0.4 million in 2021. Net loss increased in the third quarter as compared to the same period last year primarily due to stock option evaluation credit adjustment in interest expense related to common stock offering during the year end December 31, 2021, a shift in revenue, partially offset by increase in salaries and SG&A expenses, and amortization.

Cash and cash equivalents totaled $0.2 million at September 30, 2022, as compared to $3.4 million at September 30, 2021.

Jerry Hug added, “As of November 15, 2022, we believe that our existing cash, together with $1.1 million in short term receivables and $9.2 million that currently remains available under our $10.0 million Equity Line of Credit with GHS Investments LLC (“GHS”) will be sufficient to meet our anticipated capital requirements to fund planned operations.”

About AiAdvertising

AiAdvertising, Inc. (OTC: AIAD) is a next-generation AdTech company focused on harnessing the power of artificial intelligence (AI) and machine learning (ML) to eliminate waste and maximize the return on digital ad spend.

Our flagship product, the Campaign Performance Platform, is a subscription-based, end-to-end Ad Management solution. The platform empowers brands and agencies to easily target, predict, create, scale, and measure hyper-personalized campaigns.

For more information about the Company, please visit www.AiAdvertising.com or our LinkedIn or Twitter pages.

Forward-Looking Statements

This press release may contain “forward-looking statements.” Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements are included in our filings with the Securities and Exchange Commission, including the “Risk Factors” section of our annual report on Form 10-K for the year ended December 31, 2020. Any forward-looking statement made by us in this release is based only on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise, except as may be required under applicable law.

AIADVERTISING, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

 

 

September 30, 2022

 

December 31, 2021

 

 

(unaudited)

 

 

ASSETS

 

 

 

 

CURRENT ASSETS

 

 

 

 

Cash

$

194,576

 

$

3,431,455

 

Accounts receivable, net

 

652,318

 

 

497,422

 

Costs in excess of billings

 

22,940

 

 

27,779

 

Prepaid and other current Assets

 

132,298

 

 

182,427

 

TOTAL CURRENT ASSETS

 

1,002,132

 

 

4,139,083

 

 

 

 

 

 

PROPERTY & EQUIPMENT, net

 

109,612

 

 

114,249

 

RIGHT-OF-USE ASSETS

 

182,467

 

 

66,369

 

 

 

 

 

 

OTHER ASSETS

 

 

 

 

Lease deposit

 

8,939

 

 

9,800

 

Goodwill and other intangible assets, net

 

20,202

 

 

20,202

 

TOTAL OTHER ASSETS

 

29,141

 

 

30,002

 

 

 

 

 

 

TOTAL ASSETS

$

1,323,352

 

$

4,349,703

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

Accounts payable

$

1,551,206

 

$

791,727

 

Accounts payable, related party

 

10,817

 

 

10,817

 

Accrued expenses

 

56,693

 

 

72,158

 

Operating lease liability

 

27,302

 

 

66,369

 

Deferred revenue and customer deposit

 

788,064

 

 

491,635

 

TOTAL CURRENT LIABILITIES

 

2,434,082

 

 

1,432,706

 

 

 

 

 

 

LONG TERM LIABILITIES

 

 

 

 

Capital lease obligation, long term

 

155,165

 

 

 

TOTAL LONG TERM LIABILITIES

 

155,165

 

 

 

 

 

 

 

 

TOTAL LIABILITIES

 

2,589,247

 

 

1,432,706

 

COMMITMENTS AND CONTINGENCIES (see Note 14)

 

 

 

 

 

 

 

 

 

SHAREHOLDERS’ EQUITY (DEFICIT)

 

 

 

 

Preferred stock, $0.001 par value; 5,000,000 Authorized shares:

 

 

 

 

Series B Preferred stock; 25,000 authorized, 18,025 shares issued and outstanding;

 

18

 

 

18

 

Series C Preferred Stock; 25,000 authorized, 14,425 shares issued and outstanding;

 

14

 

 

14

 

Series D Preferred Stock; 90,000 authorized, 86,021 and 90,000 shares issued and outstanding;

 

86

 

 

86

 

Series E Preferred stock; 10,000 authorized, 10,000 shares issued and outstanding;

 

10

 

 

10

 

Series F Preferred stock; 800,000 authorized, zero and 2,413 shares issued and outstanding;

 

 

 

 

Series G Preferred stock; 2,600 authorized, 2,597 shares issued and outstanding;

 

3

 

 

3

 

Common stock, $0.001 par value; 10,000,000,000 and 2,000,000,000 authorized shares; 1,145,958,101 and 1,007,953,473 shares issued and outstanding, respectively

 

1,145,967

 

 

1,055,566

 

Additional paid in capital

 

49,030,647

 

 

46,667,049

 

Common stock payable, consisting of 5,000,000 and 2,278,481 shares valued at $0.1128 and $0.001 respectively

 

566,278

 

 

564,000

 

Accumulated deficit

 

(52,008,918

)

 

(45,369,749

)

TOTAL SHAREHOLDERS’ EQUITY (DEFICIT)

 

(1,265,895

)

 

2,916,997

 

 

 

 

 

 

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)

$

1,323,352

 

$

4,349,703

 

 

 

 

 

 

AIADVERTISING, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

September 30, 2022

 

 

September 30, 2021

 

 

September 30, 2022

 

September 30, 2021

 

 

 

 

 

 

 

 

 

 

 

REVENUE

$

1,850,456

 

 

$

1,779,848

 

 

$

4,668,744

 

$

5,327,648

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

COST OF REVENUE

 

1,788,484

 

 

 

1,381,612

 

 

 

4,952,104

 

 

3,660,895

 

Gross Profit

 

61,972

 

 

 

398,236

 

 

 

(283,360

)

 

1,666,753

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

 

 

Salaries and outside services

 

1,125,497

 

 

 

377,101

 

 

 

3,249,006

 

 

2,503,342

 

Selling, general and administrative expenses

 

950,096

 

 

 

711,261

 

 

 

3,104,153

 

 

3,056,191

 

Depreciation and amortization

 

9,413

 

 

 

9,801

 

 

 

27,847

 

 

32,170

 

TOTAL OPERATING (INCOME) EXPENSES

 

2,085,006

 

 

 

1,098,163

 

 

 

6,381,006

 

 

5,591,703

 

 

 

 

 

 

 

 

 

 

 

 

INCOME (LOSS) FROM OPERATIONS BEFORE OTHER INCOME AND TAXES

$

(2,023,034

)

 

$

(699,927

)

 

$

(6,664,366

)

$

(3,924,950

)

 

 

 

 

 

 

 

 

 

 

 

OTHER INCOME (EXPENSE)

 

 

 

 

 

 

 

 

 

 

Gain (loss) on extinguishment of debt

 

 

 

 

186,803

 

 

 

 

 

282,418

 

Gain (loss) forgiveness of PPP Loan

 

 

 

 

 

 

 

 

 

 

Gain (loss) on Sales of Discontinued Operations

 

 

 

 

 

 

 

25,197

 

 

226,769

 

Interest expense

 

 

 

 

931,073

 

 

 

 

 

(3,155,424

)

TOTAL OTHER INCOME (EXPENSE)

$

 

 

$

1,117,876

 

 

$

25,197

 

$

(2,646,237

)

 

 

 

 

 

 

 

 

 

 

 

INCOME/(LOSS) FROM OPERATIONS BEFORE PROVISION FOR TAXES

$

(2,023,034

)

 

$

417,949

 

 

$

(6,639,169

)

$

(6,571,187

)

INCOME (LOSS) FROM DISCONTINUED OPERATIONS BEFORE PROVISION FOR TAXES

$

 

 

$

1,919

 

 

$

 

$

73,614

 

 

 

 

 

 

 

 

 

 

 

 

PROVISION (BENEFIT) FOR INCOME TAXES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME/(LOSS)

$

(2,023,034

)

 

$

419,868

 

 

$

(6,639,169

)

$

(6,497,573

)

 

 

 

 

 

 

 

 

 

 

 

PREFERRED DIVIDENDS

 

 

 

 

 

 

 

 

 

12,525

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME/(LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS

$

(2,023,034

)

 

$

419,868

 

 

$

(6,639,169

)

$

$ (6,510,098

)

 

 

 

 

 

 

 

 

 

 

 

NET LOSS PER SHARE

 

 

 

 

 

 

 

 

 

 

BASIC

$

(0.00

)

 

$

(0.00

)

 

$

(0.01

)

$

(0.01

)

DILUTED

$

(0.00

)

 

$

(0.00

)

 

$

(0.01

)

$

(0.01

)

 

 

 

 

 

 

 

 

 

 

 

WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING

 

 

 

 

 

 

 

 

 

 

BASIC

 

1,134,900,469

 

 

 

1,006,211,885

 

 

 

1,108,436,079

 

 

931,985,669

 

DILUTED

 

1,134,900,469

 

 

 

1,006,211,885

 

 

 

1,108,436,079

 

 

931,985,669

 

AIADVERTISING, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

 

 

Nine Months Ended

September 30, 2022

 

Nine Months Ended

September 30, 2021

 

 

 

 

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

Net income (loss) from continued operations

$

(6,639,169

)

$

(6,571,187

)

 

 

 

 

 

Adjustment to reconcile net loss to net cash (used in) operating activities

 

 

 

 

Bad debt expense

 

(1,150

)

 

(2,274

)

Depreciation and amortization

 

27,847

 

 

32,170

 

Finance charge, related party

 

 

 

2,820,000

 

Amortization of Debt Discount

 

 

 

274,992

 

Gain on settlement of debt

 

 

 

(282,418

)

Gain on forgiveness of PPP loan

 

 

 

 

Gain on Sale of Discontinued Operations

 

(25,197

)

 

(226,769

)

Non-cash compensation expense

 

1,392,744

 

 

728,270

 

Non-cash service expense

 

123,374

 

 

983,571

 

Issuance of Series H Pref to employee

 

 

 

511,363

 

Change in assets and liabilities:

 

 

 

 

(Increase) Decrease in:

 

 

 

 

Accounts receivable

 

(153,746

)

 

(381,553

)

Prepaid expenses and other assets

 

50,129

 

 

(129,079

)

Costs in excess of billings

 

4,839

 

 

 

Lease deposit

 

861

 

 

 

Accounts payable

 

759,479

 

 

(646,226

)

Accrued expenses

 

(15,466

)

 

(244,274

)

Customer Deposits

 

296,429

 

 

(264,336

)

NET CASH (USED IN) OPERATING ACTIVITIES – continued operations

 

(4,179,026

)

 

(3,397,750

)

NET CASH PROVIDED BY OPERATING ACTIVITIES – discontinued operations

 

 

73,614

 

NET CASH (USED IN) OPERATING ACTIVITIES

 

(4,179,026

)

 

(3,324,136

)

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

Cash paid for purchase of fixed assets

 

(23,209

)

 

(75,265

)

Proceeds from the sale of discontinued operations

 

25,197

 

 

226,769

 

NET CASH (USED IN)/PROVIDED BY INVESTING ACTIVITIES

 

1,988

 

 

151,504

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

Payment of dividend

 

 

 

(408,805

)

Proceeds of issuance of common stock, net

 

940,159

 

 

8,558,350

 

Proceeds (payments) on line of credit, net

 

 

 

(366,012

)

Proceeds (payments) of preferred stock

 

 

 

(61,325

)

Principal payments on debt, third party

 

 

 

(750,000

)

Proceeds from PPP loan

 

 

 

780,680

 

NET CASH (USED IN)/PROVIDED BY FINANCING ACTIVITIES

 

940,159

 

 

7,752,888

 

 

 

 

 

 

NET INCREASE / (DECREASE) IN CASH

 

(3,236,879

)

 

4,580,256

 

 

 

 

 

 

CASH, BEGINNING OF PERIOD

 

3,431,455

 

 

10,538

 

 

 

 

 

 

CASH, END OF PERIOD

$

194,576

 

$

4,590,794

 

 

Contacts

Investor Contact:
Larry Holub/Chris Tyson

312-261-6412

AIAD@mzgroup.us
www.mzgroup.us