LOS ANGELES, CA--(Marketwired - Nov 14, 2013) - Social Reality, Inc. (OTCBB: SCRI), an Internet advertising, and platform technology company that provides tools to automate the digital advertising market, today announced its third quarter 2013 financial results. Revenues were $853,000, a 251% year-over-year increase from the third quarter of 2012 and a 72% increase sequentially over its second quarter of 2013. Social Reality is providing revenue guidance for the fourth quarter of 2013 in the range of $1.8 to $2.1 million. In addition, Social Reality is providing 2014 revenue guidance, based on its current monthly sales, in the range of $10 million to $12 million.
"Social Reality's technology platforms are growing rapidly while providing for consistent recurring revenue. In support of our expected growth, we raised $2.7 million in the 4th quarter of 2013. We will accelerate our sales and marketing efforts with the capital that we have raised, which should increase our market share in 2014. During 2014, we plan to build further value for our stockholders by continuing our current growth trajectory and pursuing strategic transactions," said Christopher Miglino, Social Reality's Chairman and CEO.
Third Quarter 2013 Highlights
- Revenue of $853,338 a 251% increase over the third quarter 2012
- Operating expense of $864,394, which includes $486,000 in stock-based compensation, compared to $481,456 in the third quarter of 2012.
- Adjusted EBITDA, a non-GAAP measure, reflects a loss of $195,000
Three-month financial results for the period ended September 30, 2013
Revenues for the three months ended September 30, 2013, were $853,338, as compared to the $242,799 reported in the three months ended September 30, 2012. The higher year over year revenue comparison for the quarter was due to an increase in our SRAX real time bidding technology for website publishers. Gross profit increased to $181,926 in the three months ended September 30, 2013 compared to $164,774 in the same period of 2012.
For the quarter ended September 30, 2013, Adjusted EBITDA, a non-GAAP measure, increased to $195,000 loss compared to $103,000 loss in the second quarter of 2013 and $296,000 loss in the third quarter of 2012. The company reported net loss of $829,616, or $0.06 per share, for the three months ended September 30, 2013, compared to a net loss of $316,682, or $0.02 per share loss, for the corresponding period last year.
Nine-month financial results for the period ended September 30, 2013
Revenues for the first nine months of 2013 were $1,519,999, up from the $1,073,214 reported in the same nine months of 2012. Gross profit decreased to $442,901 in the nine months ended September 30, 2013 compared to $575,075 in the same period of 2012.
For the nine months ended September 30, 2013, Adjusted EBITDA, a non-GAAP measure, decreased to $587,000 loss compared to $712,000 loss for the nine months ended September 30, 2012. The company reported net loss of $1,484,492 for the nine months ended September 30, 2013 or $0.11 per share, compared to a net loss of $792,986 or a $0.06 per share loss for the corresponding period last year.
Balance Sheet as of September 30, 2013
Cash and cash equivalents totaled $145,818 at September 30, 2013. Current assets and total assets were $632,321 and $1,994,162, respectively and current liabilities and total liabilities were $1,643,813.
Fourth Quarter 2013 Events
In October 2013, we:
- Raised $2.7 Million of financing for the company
- Paid off note payable and related liabilities and substantially reduced accounts payable
About Social Reality, Inc.
Social Reality, Inc. is an internet advertising company that provides tools that automate the digital advertising market. The company has built technologies and leveraged partner technologies that service social media and the Real Time Bidding (RTB) markets. For more information, please visit www.socialreality.com.
Forward-Looking Statements
Certain matters discussed in this press release may be forward-looking statements. Such matters involve risks and uncertainties that may cause actual results to differ materially, including the following: changes in economic conditions; general competitive factors; acceptance of Social Reality's products in the market; the company's success in obtaining new customers; Social Reality's success in technology and product development; the company's ability to execute its business model and strategic plans; and all the risks and related information described from time to time in Social Reality's filings with the Securities and Exchange Commission ("SEC"), including the financial statements and related information contained in the company's Annual Report on Form 10-K for the year ended December 31, 2012 and interim Quarterly Reports on Form 10-Q. All forward looking statements involve significant risks and uncertainties that could cause actual results to differ materially from those in the forward looking statements, many of which are generally outside of the control of Social Reality and are difficult to predict. Social Reality assumes no obligation to update the cautionary information in this release.
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| SOCIAL REALITY, INC. |
| CONDENSED STATEMENTS OF OPERATIONS |
| THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 2013 AND 2012 |
| (Unaudited) |
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Three Months ended
September 30, |
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Nine Months ended
September 30, |
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2013 |
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2012 |
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2013 |
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2012 |
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| Revenues |
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$ |
853,338 |
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|
$ |
242,799 |
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|
$ |
1,519,999 |
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$ |
1,073,214 |
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| Cost of revenue |
|
|
671,412 |
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|
78,025 |
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1,077,098 |
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|
498,139 |
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| Gross profit |
|
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181,926 |
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164,774 |
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442,901 |
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575,075 |
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| Operating expense |
|
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864,394 |
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481,456 |
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1,614,340 |
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1,368,061 |
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| Loss from operations |
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(682,468 |
) |
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(316,682 |
) |
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(1,171,439 |
) |
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(792,986 |
) |
| Interest expense |
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(147,148 |
) |
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- |
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(313,053 |
) |
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- |
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| Loss before provision for income taxes |
|
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(829,616 | ) |
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|
(316,682 |
) |
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(1,484,492 |
) |
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|
(792,986 |
) |
| Provision for income taxes |
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|
- |
|
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- |
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- |
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- |
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| Net loss |
|
$ |
(829,616 |
) |
|
$ |
(316,682 |
) |
|
$ |
(1,484,492 |
) |
|
$ |
(792,986 |
) |
| Net loss per share, basic and diluted |
|
$ |
(0.06 |
) |
|
$ |
(0.02 |
) |
|
$ |
(0.11 |
) |
|
$ |
(0.06 |
) |
| Weighted average shares outstanding |
|
|
13,801,891 |
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12,912,129 |
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13,295,851 |
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12,819,481 |
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| SOCIAL REALITY, INC. |
| CONDENSED BALANCE SHEETS |
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September 30, |
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December 31, | |
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2013 |
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2012 |
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(Unaudited) |
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| Assets |
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| Current assets: |
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Cash and cash equivalents |
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$ |
145,818 |
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$ |
105,987 |
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Accounts receivable, net of allowance for doubtful accounts of $0 |
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|
481,101 |
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|
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53,821 |
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Tax refunds receivable |
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|
- |
|
|
|
38,000 |
|
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Other current assets |
|
|
5,402 |
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|
|
5,000 |
|
| Total current assets |
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632,321 |
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|
|
202,808 |
|
| Property and equipment, net of accumulated depreciation of $7,500 and $3,000 |
|
|
10,500 |
|
|
|
15,000 |
|
| Deferred offering costs |
|
|
14,539 |
|
|
|
- |
|
| Prepaid fees |
|
|
1,333,247 |
|
|
|
58,834 |
|
| Other assets |
|
|
3,555 |
|
|
|
3,555 |
|
| Total assets |
|
$ |
1,994,162 |
|
|
$ |
280,197 |
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| Liabilities and stockholders' equity (deficit) |
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| Current liabilities: |
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Accounts payable and accrued expenses |
|
$ |
1,097,516 |
|
|
$ |
302,057 |
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Note payable |
|
|
371,297 |
|
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- |
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Common stock put liability payable |
|
|
175,000 |
|
|
|
- |
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| Total current liabilities |
|
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1,643,813 |
|
|
|
302,057 |
|
| Stockholders' equity (deficit) |
|
|
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Preferred stock, undesignated; authorized 49,800,000 shares, $0.001 par value, no shares issued and outstanding |
|
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- |
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- |
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Preferred stock, Series 1; authorized 200,000 shares, $0.001 par value, 86,000 and no shares issued and outstanding, respectively |
|
|
86 |
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|
- |
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Class A common stock, authorized 250,000,000 shares, $0.001 par value, 5,465,804 and 3,912,129 shares issued and outstanding, respectively |
|
|
5,466 |
|
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|
3,912 |
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Class B common stock, authorized 9,000,000 shares, $0.001 par value, 9,000,000 and 9,000,000 shares issued and outstanding, respectively |
|
|
9,000 |
|
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|
9,000 |
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Additional paid in capital |
|
|
3,079,148 |
|
|
|
1,224,087 |
|
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Accumulated deficit |
|
|
(2,743,351 |
) |
|
|
(1,258,859 |
) |
| Total stockholders' equity (deficit) |
|
|
350,349 |
|
|
|
(21,860 |
) |
| Total liabilities and stockholders' equity (deficit) |
|
$ |
1,994,162 |
|
|
$ |
280,197 |
|
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| SOCIAL REALITY, INC. |
| CONDENSED STATEMENTS OF CASH FLOWS |
| NINE MONTH PERIODS ENDED SEPTEMBER 30, 2013 AND 2012 |
| (Unaudited) |
| |
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Nine Month Periods Ended
September 30, |
|
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|
2013 |
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2012 |
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| Cash flows from operating activities: |
|
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Net loss |
|
$ |
(1,484,492 |
) | |
$ |
(792,986 |
) |
| |
Adjustments to reconcile net loss to net cash used in operating activities: |
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Amortization of stock based prepaid fees |
|
|
85,503 |
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|
49,089 |
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| |
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Stock based compensation |
|
|
493,785 |
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|
|
31,770 |
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| |
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Amortization of debt issuance costs |
|
|
274,737 |
|
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|
- |
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| |
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Depreciation |
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|
4,500 |
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|
|
1,500 |
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| |
Changes in operating assets and liabilities: |
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Accounts receivable |
|
|
(427,280 |
) |
|
|
423,531 |
|
| |
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Prepaid expenses |
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|
- |
|
|
|
(85,821 |
) |
| |
|
Tax refunds receivable |
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|
38,000 |
|
|
|
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|
| |
|
Other current assets |
|
|
(402 |
) |
|
|
200 |
|
| |
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Other assets |
|
|
- |
|
|
|
(3,555 |
) |
| |
|
Accounts payable and accrued expenses |
|
|
798,459 |
| |
|
(178,246 |
) |
| |
|
Deferred tax liability |
|
|
- |
|
|
|
(38,000 |
) |
| Cash used in operating activities |
|
|
(217,190 |
) |
|
|
(592,518 |
) |
| Cash flows from investing activities: |
|
|
|
|
|
|
|
|
| |
Purchase of equipment |
|
|
- |
|
|
|
(18,000 |
) |
| Cash used in investing activities |
|
|
- |
|
|
|
(18,000 |
) |
| Cash flows from financing activities: |
|
|
|
|
|
|
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|
| |
Proceeds from note payable, net |
|
|
486,425 |
|
|
|
- |
|
| |
Repayments of note payable |
|
|
(178,703 |
) |
|
|
- |
|
| |
Deferred offering costs |
|
|
(14,539 |
) |
|
|
- |
|
| |
Debt issuance costs |
|
|
(36,162 |
) |
|
|
- |
|
| |
Sale of common stock |
|
|
- |
|
|
|
472,959 |
|
| Cash provided by financing activities |
|
|
257,021 | |
|
|
472,959 |
|
| Net increase (decrease) in cash |
|
|
39,831 |
|
|
|
(137,559 |
) |
| Cash, beginning of period |
|
|
105,987 |
|
|
|
221,664 |
|
| Cash, end of period |
|
$ |
145,818 |
|
|
$ |
84,105 |
|
| Supplemental Schedule of Cash Flow Information: |
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| |
Cash paid for interest |
|
$ |
37,318 |
|
|
$ |
- |
|
| |
Cash paid for taxes |
|
$ |
(38,000 |
) |
|
$ |
38,000 |
|
| Non-cash financial activities: |
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|
|
|
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|
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|
| |
Fees and costs deducted from proceeds of debt |
|
$ |
63,575 |
|
|
$ |
- |
|
| |
Common and preferred stock issued as prepayment for services |
|
$ |
1,235,000 |
|
|
$ |
- |
|
| |
Common stock warrant issued as prepayment for services |
|
$ |
124,916 |
|
|
$ |
- |
|
| |
Common stock issued as payment of financing fee |
|
$ |
175,000 |
|
|
$ |
- |
|
| |
Common stock issued as payment of accounts payable |
|
$ | 3,000 |
|
|
$ |
- |
|
| |
Contribution of member interests (net assets) in Social Reality, LLC in exchange for common stock |
|
$ |
- |
|
|
$ |
575,194 |
|
| |
|
|
|
|
|
|
|
|
|
Use of Non-GAAP Measure - Adjusted EBITDA
Social Reality's management evaluates and makes operating decisions using various financial metrics. In addition to the company's GAAP results, management also considers the non-GAAP measure of Adjusted EBITDA. Management believes that this non-GAAP measure provides useful information about the Social Reality's operating results. The tables below provide a reconciliation of this non-GAAP financial measure with the most directly comparable GAAP financial measure.
Adjusted EBITDA is defined as net income before income taxes, depreciation and amortization expenses, plus stock-based compensation and interest expense.
Reconciliation of Adjusted EBITDA to Income from Operations
| |
|
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|
| |
|
For the Three Months Ended September 30, |
|
|
For the Nine Months Ended September 30, |
|
| (unaudited, in thousands) |
|
2013 |
|
|
2012 |
|
|
2013 |
|
|
2012 |
|
| Net income (loss) |
|
$ |
(830 |
) |
|
$ |
(317 |
) |
|
$ |
(1,484 |
) |
|
$ |
(793 |
) |
| plus: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Equity based compensation |
|
|
486 |
|
|
|
21 |
|
|
|
579 |
|
|
|
81 |
|
| Adjusted net income (loss) |
|
$ |
(344 |
) |
|
$ |
(296 |
) |
|
$ |
(905 |
) |
|
$ |
(712 | ) |
| |
Interest expense |
|
|
147 |
|
|
|
-- |
|
|
|
313 |
|
|
|
-- |
|
| |
Depreciation of property, plant and equipment |
|
|
2 |
|
|
|
-- |
|
|
|
5 |
|
|
|
-- |
|
| Adjusted EBITDA |
|
$ |
(195 |
) |
|
$ |
(296 |
) |
|
$ |
(587 |
) |
|
$ |
(712 |
) |