10-K/A: Beyond, Inc. Files Amended 10-K to Include tZERO Financials, Cites Going Concern

Beyond, Inc. has filed an amendment to its annual report to include financial statements for tZERO Group, Inc., a significant subsidiary, while also noting tZERO's ongoing concerns about its ability to continue as a going concern.

Summary

• Beyond, Inc. has filed an amendment (Amendment No. 2) to its Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
• This amendment includes the financial statements of tZERO Group, Inc. as of and for the years ended December 31, 2023 and 2022, as tZERO was determined to be a significant subsidiary.
• The amendment does not modify the consolidated financial position, results of operations, or cash flows of Beyond, Inc., nor does it reflect events after the original 10-K filing.
• tZERO Group, Inc. has experienced recurring losses from operations and may require additional liquidity to continue operations.
• tZERO ceased operations of its subsidiary tZERO Crypto, Inc. in 2023, and sold its broker-dealer subsidiary SpeedRoute, LLC in 2022, both of which are presented as discontinued operations.
• tZERO's financial statements show a net loss attributable to common shares of $29.48 million in 2023 and $38.64 million in 2022.
• tZERO's total revenues were $1.63 million in 2023 and $2.49 million in 2022.
• tZERO's total assets were $75.98 million in 2023 and $109.58 million in 2022.
• tZERO's total liabilities were $13.68 million in 2023 and $17.52 million in 2022.
• tZERO's cash and cash equivalents were $43.24 million in 2023 and $58.26 million in 2022.

Sentiment

Score: 3

Explanation: The document highlights significant financial losses, a going concern issue, and the discontinuation of a business unit, leading to a negative sentiment. However, the approval of the digital asset securities custody license provides a small positive offset.

Positives

• tZERO received SEC and FINRA approval for tZERO Digital Asset Securities as a special purpose broker-dealer for digital asset securities custody in September 2024.
• The company is actively working to enhance operational efficiency by consolidating investment banking activities within tZERO Securities.

Negatives

• tZERO Group, Inc. has incurred recurring losses from operations since inception.
• tZERO Group, Inc. has a going concern issue and may require additional liquidity to continue operations.
• tZERO ceased operations of its subsidiary tZERO Crypto, Inc. in 2023.
• tZERO sold its broker-dealer subsidiary SpeedRoute, LLC in 2022.
• tZERO recorded a goodwill impairment charge of $11.9 million in 2023.
• tZERO's total assets decreased from $109.58 million in 2022 to $75.98 million in 2023.

Risks

• tZERO Group, Inc. faces the risk of not being able to continue as a going concern if it does not generate sufficient revenue or obtain additional financing.
• The company's broker-dealer subsidiaries are subject to extensive regulatory requirements and potential penalties.
• The company's financial performance is dependent on the success of its technology and tokenization services for the capital markets industry.
• The company's goodwill and intangible assets are subject to impairment if there are adverse changes in the business climate or regulatory actions.

Future Outlook

The document does not provide specific forward-looking statements for Beyond, Inc., but it does highlight tZERO's need for additional liquidity and its ongoing efforts to develop and adopt digital securities.

Management Comments

• David J. Nielsen, President (Principal Executive Officer), certified that the report fairly presents the financial condition and results of operations of Beyond, Inc.
• Adrianne B. Lee, Chief Financial & Administrative Officer (Principal Financial Officer and Principal Accounting Officer), certified that the report fairly presents the financial condition and results of operations of Beyond, Inc.

Industry Context

This announcement reflects the ongoing challenges and complexities in the financial technology sector, particularly in the development and adoption of digital securities. The approval of tZERO Digital Asset Securities as a special purpose broker-dealer is a significant milestone in the industry, indicating a move towards greater regulatory acceptance of digital assets.

Comparison to Industry Standards

• tZERO's financial performance, particularly its recurring losses and going concern issues, are not uncommon for early-stage technology companies in the fintech space, especially those focused on innovative and complex areas like digital securities.
• The company's revenue of $1.63 million in 2023 is relatively low compared to established financial technology firms, but it is not unusual for companies in the early stages of developing new markets.
• The approval of tZERO Digital Asset Securities as a special purpose broker-dealer is a significant achievement, as only one other such license has been approved in the US since 2020, indicating a competitive advantage in the digital asset custody space.
• The company's decision to discontinue tZERO Crypto and sell SpeedRoute reflects a strategic shift towards focusing on its core business of digital securities and tokenization services, which is a common practice in the industry to streamline operations and improve profitability.

Legal Proceedings

• The document mentions that the broker-dealer subsidiaries are subject to various examinations, inquiries, and/or investigations by regulatory authorities, which may result in financial and other settlements or penalties.

Related Party Transactions

• The document details a transition services agreement between tZERO Group, Inc. and SpeedRoute, LLC, which was sold to related parties.
• The document mentions that a former director's software development firm has been providing services to the company.

Stakeholder Impact

• Shareholders may be concerned about the recurring losses and going concern issue at tZERO Group, Inc.
• Employees may be affected by the discontinuation of tZERO Crypto and potential restructuring.
• Customers of tZERO Securities may be impacted by regulatory actions or changes in the company's operations.
• Creditors may be concerned about the company's ability to repay its debts given the going concern issue.

Next Steps

• tZERO Group, Inc. needs to secure additional liquidity to continue operations.
• tZERO Group, Inc. will continue to develop and adopt digital securities in a regulatory-compliant environment.
• tZERO Securities, LLC will continue to operate its alternative trading system and offer primary and secondary private markets solutions.
• The company will continue to monitor the need for a valuation allowance against its remaining deferred tax assets on a quarterly basis.

Key Dates

Keywords

tZERO Group, Beyond, Inc., financial statements, 10-K, amendment, going concern, digital securities, broker-dealer, discontinued operations, impairment, SEC, FINRA, digital asset securities