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Social Reality 2014 Annual Revenue up 50%; Q4 Revenue up 92% Year-Over-Year; Q1 2015 Revenue Guidance Is $3.7M, a 560% Increase Year-Over-Year

SRAX

LOS ANGELES, CA--(Marketwired - March 31, 2015) - Social Reality, Inc. (OTCQB: SCRI), an Internet advertising and platform technology company that provides tools to automate the digital advertising market, today announced its fourth quarter and full year financial results for 2014. Revenues for 2014 were $5,120,343, an increase of 50% over 2013. Revenues for the fourth quarter of 2014 were $3,626,588, a 92% year-over-year increase from the fourth quarter of 2013 and a 447% increase sequentially over the third quarter of 2014. The company also reported gross margins of 45% for 2014, which was an increase from 32% in 2013.

"While we are very pleased with our results for 2014, we are even more excited about the growth in 2015. Based on the increased current run rate we are experiencing, mainly due to our RTB platform, the integration of Steel Media, Five Delta and the addition of the Social Spotlight Media team, we expect Q1 2015 gross revenues to increase to $3,700,000, a 560% increase over Q1 2014," said Christopher Miglino, Social Reality's Chairman and CEO. "We continue to look for additional acquisitions, and we are very pleased with our organic business growth," added Miglino.

Fourth Quarter and Year End 2014 Highlights

  • Quarterly revenue of $3,626,588 represented a 92% increase over the fourth quarter 2013
  • 71% of revenue for 2014 was generated in the fourth quarter
  • Annual revenue of $5,120,343 was a 50% increase over 2013

Three-month financial results for the period ended December 31, 2014

Revenues for the three months ended December 31, 2014, were $3,626,588, compared to $1,893,354 reported for the three months ended December 31, 2013. Gross profit increased to $1,900,976 for the three months ended December 31, 2014 compared to $644,108 for the same period of 2013.

For the quarter ended December 31, 2014, Adjusted EBITDA was ($119,000) compared to $28,000 in the fourth quarter of 2013. The company reported net loss of $1,925,891 or $0.08 per share, for the three months ended December 31, 2014, compared to a net loss of $262,948, or $0.01 per share loss, for the corresponding period of 2013. The increase in the loss is mostly attributed to the one-time cost associated with the financing of the Steel Media acquisition, and infrastructure costs associated with servicing the growth of our RTB platform.

12-month financial results for the year ended December 31, 2014

Revenues for the year ended December 31, 2014 were $5,120,343 as compared to $3,413,353 for the year ended December 31, 2013. Gross profit increased to $2,328,395 for the 12 months ended December 31, 2014 compared to $1,087,009 for the same period of 2013.

For the year ended December 31, 2014, Adjusted EBITDA was $(1,866,000) compared to $(559,000) for 2013. The company reported a net loss of $4,411,563, or $0.20 per share, for the year ended December 31, 2014, compared to a net loss of $1,747,440, or $0.12 per share for the 2013 period.

Balance Sheet as of December 31, 2014

Cash and cash equivalents totaled $1,843,393 at December 31, 2014. Current assets and total assets were $5,947,897 and $28,214,969, respectively, and current liabilities and total liabilities were $10,344,137 and $22,462,562, respectively. At December 31, 2014 we had stockholders' equity of $5,752,407.

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

This press release contains forward-looking statements that are based upon current expectations and involve certain risks. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements, including, without limitation, our ability to grow our revenues and manage our gross margins; our history of losses; our limited operating history; risks associated with the integration of Steel Media and Five Delta; the terms of the Financing Agreement and their impact on our business and operations; risks associated with the terms of the Steel Note; the impact of our debt obligations on our liquidity and financial condition; the impact of the earn out payments to Mr. Steel on our cash flows in future periods; our possible need for additional financing and the requirement under the Financing Agreement to use the proceeds of any additional financings to reduce the obligations to the lender; risks associated with loss of access to the Facebook platform; risks associated with loss of access to RTB inventory buyers; the continued appeal of digital advertising; our dependence on our publishers; risks related to possible future acquisitions; the limited market for our Class A common stock; and the impact of penny stock rules on the trading in our Class A common stock, among others, all as set forth in our Annual Report on Form 10-K for the year ended December 31, 2014. Social Reality assumes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.

  
SOCIAL REALITY, INC. 
CONSOLIDATED STATEMENTS OF OPERATIONS 
YEARS ENDED DECEMBER 31, 2014 AND 2013 
  
   Years ended December 31,  
   2014   2013  
            
Revenues  $5,120,343   $3,413,353  
Cost of revenue   2,791,948    2,326,344  
            
Gross profit   2,328,395    1,087,009  
            
Operating expense   6,066,611    2,521,984  
            
Loss from operations   (3,738,216 )  (1,434,975 )
            
Interest expense   (673,347 )  (312,465 )
            
Loss before provision for income taxes   (4,411,563 )  (1,747,440 )
            
Provision for income taxes   -    -  
            
Net loss  $(4,411,563 ) $(1,747,440 )
            
Net loss per share, basic and diluted  $(0.20 ) $(0.12 )
            
Weighted average shares outstanding   21,808,515    14,691,010  
         
  
SOCIAL REALITY, INC. 
CONSOLIDATED BALANCE SHEETS 
  
   December 31,  
   2014   2013  
            
Assets           
            
Current assets:           
 Cash and cash equivalents  $1,843,393   $1,715,264  
 Accounts receivable, net   3,874,620    441,831  
 Prepaid expenses   222,532    46,109  
 Other current assets   7,352    5,018  
Total current assets   5,947,897    2,208,222  
            
Property and equipment, net   27,602    27,798  
            
Goodwill and other intangibles   18,318,911    -  
Deferred debt issue costs   2,907,736    -  
Prepaid stock based compensation   1,008,019    1,662,074  
Other assets   4,804    9,453  
            
Total assets  $28,214,969   $3,907,547  
            
Liabilities and stockholders' equity           
            
Current liabilities:           
 Accounts payable and accrued expenses  $2,882,120   $812,809  
 Note payable - related party   2,500,000    -  
 Notes payable, current portion   1,350,000    -  
 Unearned revenue   25,295    -  
 Contingent consideration payable to related party - current portion   3,586,722    -  
Total current liabilities   10,344,137    812,809  
            
Notes payable   7,713,014    -  
Contingent consideration payable to related party - long term   3,145,401    -  
Put liability   1,260,010    -  
Total liabilities   22,462,562    812,809  
            
Stockholders' equity:           
 Preferred stock, authorized 50,000,000 shares, $0.001 par value, Undesignated, 49,800,000 shares, no shares issued and outstanding   -    -  
 Series 1 Preferred stock, authorized 200,000 shares, 86,000 and 121,000 shares issued and outstanding, respectively   86    121  
 Class A common stock, authorized 250,000,000 shares, $0.001 par value, 29,416,612 and 19,901,794 shares issued at December 31, 2014 and 2013, respectively, and 27,029,749 and 19,901,794 shares outstanding at December 31, 2014 and 2013, respectively   27,030    19,902  
 Class B common stock, authorized 9,000,000 shares, $0.001 par value, no shares issued and outstanding   -    -  
 Additional paid in capital   13,143,153    6,081,014  
 Accumulated deficit   (7,417,862 )  (3,006,299 )
Total stockholders' equity   5,752,407    3,094,738  
            
Total liabilities and stockholders' equity  $28,214,969   $3,907,547  
         
  
SOCIAL REALITY, INC. 
CONSOLIDATED STATEMENTS OF CASH FLOWS 
YEARS ENDED DECEMBER 31, 2014 AND 2013 
  
   Year Ended December 31,  
   2014   2013  
          
Cash flows from operating activities:           
 Net loss  $(4,411,563 ) $(1,747,440 )
 Adjustments to reconcile net loss to net cash used by operating activities:           
  Amortization of stock based prepaid fees   654,055    237,587  
  Bad debts expenses   26,488       
  Stock based compensation   1,203,534    631,829  
  Amortization of debt issue costs   256,616    274,737  
  PIK interest expense accrued to principal   63,014    -  
  Accretion of contingent consideration   148,081    -  
  Accretion of put liability   27,716    -  
  Depreciation   14,829    7,184  
 Changes in operating assets and liabilities:           
  Accounts receivable   (1,196,572 )  (388,010 )
  Prepaid expenses   (170,902 )  (46,109 )
  Tax refunds receivable   -    38,000  
  Other current assets   17,514    (18 )
  Other assets   (804 )  (445 )
  Accounts payable and accrued expenses   861,148    513,752  
  Unearned revenue   25,295    -  
   Cash used by operating activities   (2,481,551 )  (478,933 )
            
Cash flows from investing activities:           
 Cash paid for acquisition   (2,000,000 )  -  
 Cash acquired in acquisition   32,038    -  
 Purchase of equipment   (6,856 )  (19,982 )
   Cash used by investing activities   (1,974,818 )  (19,982 )
            
Cash flows from financing activities:           
 Sale of common stock   3,950,747    2,436,493  
 Cost of common stock sale   (16,291 )  (48,111 )
 Proceeds from warrant offering   2,100    -  
 Proceeds from note payable   1,227,601    486,425  
 Repayments of note payable   -    (550,000 )
 Repurchase of common stock   -    (175,000 )
 Deferred offering costs   -    (5,453 )
 Debt issue costs   (579,659 )  (36,162 )
   Cash provided by financing activities   4,584,498    2,108,192  
            
Net increase in cash   128,129    1,609,277  
Cash, beginning of period   1,715,264    105,987  
Cash, end of period  $1,843,393   $1,715,264  
         

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. Adjusted EBITDA is defined as net income before income taxes, depreciation and amortization expenses, plus stock-based compensation and interest expense. Management believes that this non-GAAP measure provides useful information about 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. This non-GAAP measure should be considered a supplement to, and not a substitute for, or superior to, financial measures calculated in accordance with GAAP.

Reconciliation of Adjusted EBITDA to GAAP

          
   For the Three Months Ended
December 31,
  For the Years Ended
December 31,
 
(unaudited, in thousands)  2014   2013   2014   2013  
Net income (loss)  $(1,926 ) $(263 ) $(4,412 ) $(1,747 )
plus:                     
 Equity based compensation   1,127    290    1,858    869  
 Adjusted net income (loss)  $(799 ) $27   $(2,554 )  (878 )
 Interest expense   675    (1 )  673    312  
 Depreciation of property, plant and equipment   5    2    15    7  
Adjusted EBITDA  $(119 ) $28   $(1,866 ) $(559 )
                 

Contact:
Social Reality, Inc.
Laura Knapp
Laura@SocialReality.com
323-694-9800 x114



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