Eva Live Inc. (GOAI) - Q3 2024 10-Q Summary
Business Context and Reporting Period
This report covers the quarterly period ended September 30, 2024. Eva Live Inc. operates at the intersection of digital marketing and media monetization, utilizing an AI-driven platform (Eva Platform) to manage advertising campaigns and traffic arbitrage. The company is classified as a Smaller Reporting Company and an Emerging Growth Company. It is currently facing significant liquidity challenges and has restated prior financials to reclassify a 2021 transaction as a reverse capitalization rather than a reverse acquisition, eliminating $2.01 million in goodwill.
Key Financial Metrics
| Metric | Q3 2024 (3 Months) | Q3 2023 (3 Months) | YTD 2024 (9 Months) | YTD 2023 (9 Months) |
|---|---|---|---|---|
| Total Revenue | $1,982,252 | $1,699,174 | $6,407,818 | $3,124,653 |
| Net Income (Loss) | $(5,529,477) | $489,990 | $(5,699,697) | $862,402 |
| Operating Expenses | $7,495,854 | $1,209,184 | $12,085,161 | $2,262,251 |
| Cash and Equivalents | $849,263 (as of Sept 30, 2024) | |||
| Total Liabilities | $2,895,982 (as of Sept 30, 2024) | |||
| Stockholders' Equity (Deficit) | $(199,337) (as of Sept 30, 2024) |
Material Changes vs. Prior Period
- Revenue Growth: Revenue increased 16.7% in Q3 2024 compared to Q3 2023, and 105% on a year-to-date basis, driven by larger contract sizes.
- Profitability Deterioration: The company swung from a net profit of $490k in Q3 2023 to a net loss of $5.53 million in Q3 2024. This is primarily due to a massive spike in General and Administrative (G&A) expenses.
- Expense Surge: G&A expenses jumped from $176k in Q3 2023 to $6.54 million in Q3 2024. This increase is attributed to $5.56 million in share-based compensation (1.95 million shares issued) to officers, directors, and consultants.
- Media Traffic Costs: Costs for media traffic purchases remained relatively stable in Q3 ($961k vs $979k) but increased significantly YTD ($4.58m vs $1.58m) to support revenue growth.
- Debt Financing: The company raised $700,000 in cash during the nine months ended Sept 30, 2024, via convertible notes and promissory notes, compared to zero in the prior year period.
Outlook, Risks, and Contingencies
- Going Concern Warning: Management explicitly states there is substantial doubt about the company's ability to continue as a going concern for the next 12 months. The company has an accumulated deficit of nearly $30 million and relies on future equity financing or debt to meet obligations.
- Customer Concentration: Revenue is highly concentrated; the top three customers represented over 83% of revenue in Q3 2024. Loss of these clients would materially impact financial health.
- Related Party Transactions: Significant liabilities exist related to unpaid salaries to officers ($2.04 million) and media traffic purchases from a related party (Hottest Media LLC).
- Internal Controls: Management concluded that disclosure controls and internal controls over financial reporting were not effective as of September 30, 2024, citing inadequate segregation of duties and insufficient written policies.
- Subsequent Events: In October 2024, the company issued shares to settle $320,000 in convertible notes and accounts payable, indicating ongoing liquidity pressure.
Investor Verification Checklist
- Share-Based Compensation Valuation: Verify the fair value assumptions used for the $5.56 million in stock issued for services, as this is the primary driver of the current quarter's loss.
- Related Party Payroll: Confirm the status of the $2.04 million in unpaid related-party payroll liabilities and whether these are being settled in cash or equity.
- Customer Retention: Assess the stability of the top three customers who generate 83% of revenue.
- Debt Settlement Terms: Review the terms of the convertible notes settled in October 2024 to understand the dilution impact on existing shareholders.
- Capital Raise Progress: Monitor the company's ability to secure the additional capital required to fund operations for the next 12 months, as no specific agreements are currently in place.