LOS ANGELES, Nov. 14, 2016 /PRNewswire/ -- Social Reality,
Inc. (NASDAQ: SRAX), an Internet advertising and platform technology company that provides tools to automate the digital
advertising market, announced today its third quarter 2016 financial results.
Christopher Miglino, Social Reality's CEO and Chairman stated, "During the first half of the
year, we launched and enhanced new products for our custom data management platforms, and tripled our sales team. As a result,
our third quarter revenues generated strong top-line growth, reflecting the strength of our business and our relentless focus on
providing our clients with the most innovative advertising tools. We are also extremely proud of our recent corporate
developments, as we uplisted onto Nasdaq on October 13, 2016, and began trading under a new ticker,
SRAX. In addition, we engaged financial and broadcasting veteran J.P. Hannan as CFO to provide
financial stewardship during the next chapter of our business."
Mr. Miglino continued, "With respect to the overall digital ad space, real-time bidding and programmatic advertising continue
to be the strongest growth drivers and revenue generators, and we believe that our platform will generate substantial momentum in
this enormous market opportunity."
Third Quarter 2016 Financial Highlights:
- Revenue of $9,530,842 representing a 29% increase over the third quarter of 2015
- Company reaffirms 2016 revenue guidance of $40 million
- Gross profit of $2,544,008, representing a 38% decrease over the third quarter of 2015
- Net loss of $(2,375,846) as compared to a net loss of $(658,540) for the third quarter of 2015
- Adjusted EBITDA of ($734,049) as compared to Adjusted EBITDA of $774,000 for the third quarter of 2015
Recent Corporate Highlights:
- Class A common stock uplisted to the Nasdaq Capital Market under the symbol SRAX
- Raised an additional $4.6 million in capital through the sale of equity securities
- Entered into an accounts receivable factoring agreement with the goal of reducing our cost of capital
- Reduced our obligations under our credit facility to $3.9 million year to date through
November 1, 2016
- Appointed financial and broadcasting veteran J.P. Hannan as Chief Financial Officer in
October 2016
Three-month financial results for the period ended September 30, 2016
Revenues for the three months ended September 30, 2016 were $9,530,842 compared to $7,390,238 reported for the three months ended
September 30, 2015. The increase in revenues reflected an increase in revenues from our SRAX
buy-side and sell-side clients and media bought and sold as well as continuing growth in SRAXmd. These increases are offset
by a continued decline in revenues from a significant Steel Media customer at significantly reduced margins. Gross profit
decreased to $2,544,708 for the three months ended September 30, 2016
compared to $4,094,094 for the same period of 2015. Gross margin for the quarter ended September 30, 2016 was 26.6% as compared to 55.4% for the same period in 2015. Gross margins declined as a
result of the percentage of our overall lower-margin revenues attributable to a significant customer of our wholly owned
subsidiary, Steel Media. Subsequent to September 30, 2016 we have we have ceased providing the
high-volume, low margin business to this historic Steel Media client and now only offer it industry standard margin
solutions.
Loss from operations was $(1,307,882) for the third quarter of 2016 as compared to income from
operations of $342,358 in the third quarter of 2015.
Social Reality reported net loss of $(2,375,846), or $0.40 per
share, for the three months ended September 30, 2016, compared to a net loss of $(658,540), or $0.12 per share, for the corresponding period of 2015.
For the quarter ended September 30, 2016, adjusted EBITDA was $(734,049) compared to $774,000 in the third quarter of 2015.
Balance Sheet as of September 30, 2016
Cash and cash equivalents totaled $4,241,230 at September 30,
2016. Current assets and total assets were $8,863,474 and $25,916,643, respectively, and current liabilities and total liabilities were $18,289,115 and $18,289,115, respectively. The increase in current liabilities at
September 30, 2016 reflected in part the reclassification of the obligations under our revolving
credit line to short term reflecting the maturity date of that obligation on December 31, 2016. At
September 30, 2016 the Company had stockholders' equity of $7,627,528.
Conference call information:
Date: Monday, November 14, 2016
Time: 4:15 P.M. Eastern Time (ET)
Dial in Number for U.S. and Canadian Callers: (877) 407-8293
Dial in Number for International Callers (Outside of the U.S. and Canada): (201) 689-8349
Participating on the call will be Social Reality's Chief Executive Officer Christopher Miglino
and Chief Financial Officer J.P. Hannan, who will be providing a financial and operational summary
of the third quarter 2016. To join the live conference call, please dial into the above referenced telephone numbers five to ten
minutes prior to the scheduled conference call time.
If you are unable to participate in the call at this time, a replay will be available for 14 days starting on November 14, 2016 at approximately 10:30 P.M. ET. To access the replay, please
dial 877-660-6853 in the U.S. and 201-612-7415 for international callers. The conference ID# is 13649900.
About Social Reality
Social Reality, Inc. is an Internet advertising company that provides tools to automate the digital advertising market. The
company's Social Reality Ad Exchange (SRAX) is a real-time bidding (RTB) management platform for brands and publishers that
allows brands to launch, distribute, track and optimize social and digital media and consumer engagement campaigns. SRAXmd is a
healthcare-focused programmatic RTB exchange that allows pharma brands and publishers of medical content to create custom
exchanges that invite specific advertisers to bid on inventory on their sites. The SRAX Social tool is a social media platform
and complete management tool that allows brands to launch, distribute, track and optimize social and digital media and consumer
engagement campaigns. SRAX APP is a recently launched platform that allows publishers and content owners to launch native mobile
applications through our SRAX platform. For more information, please visit www.socialreality.com.
Forward-Looking Statements
This press release contains certain forward-looking statements that are based upon current expectations and involve certain
risks and uncertainties within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Words or expressions
such as "anticipate," "plan," "will," "intend," "believe" or "expect'" or variations of such words and similar expressions are
intended to identify such forward-looking statements. 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, statements made with respect to expectations of our ability to increase our revenues, satisfy our obligations
as they become due, report profitable operations and other risks and uncertainties, all as set forth in our Annual Report on Form
10-K for the year ended December 31, 2015, our most recent Form 10-Q and our subsequent filings
with the Securities and Exchange Commission. 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
the control of Social Reality and are difficult to predict. Social Reality undertakes no obligation to publicly update any
forward-looking statements, whether as a result of new information, future events or otherwise.
[Financial Tables to Follow]
SOCIAL REALITY, INC.
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2016
|
|
|
2015
|
|
|
|
(Unaudited)
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
4,241,230
|
|
|
$
|
1,091,186
|
|
Accounts receivable, net
|
|
|
4,387,878
|
|
|
|
7,056,298
|
|
Prepaid expenses
|
|
|
227,878
|
|
|
|
309,436
|
|
Other current assets
|
|
|
6,488
|
|
|
|
36,090
|
|
Total current assets
|
|
|
8,863,474
|
|
|
|
8,493,010
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net of accumulated depreciation of $69,951 and
$42,295
|
|
|
31,458
|
|
|
|
43,936
|
|
Goodwill
|
|
|
15,644,958
|
|
|
|
16,314,957
|
|
Intangibles assets – net
|
|
|
1,342,094
|
|
|
|
1,611,744
|
|
Prepaid stock based compensation
|
|
|
—
|
|
|
|
373,567
|
|
Other assets
|
|
|
34,659
|
|
|
|
34,659
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
25,916,643
|
|
|
$
|
26,871,873
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses
|
|
$
|
11,673,969
|
|
|
$
|
5,138,807
|
|
Note payable, net of unamortized costs of $838,069 and $1,076,633
|
|
|
5,095,736
|
|
|
|
1,378,367
|
|
Unearned revenue
|
|
|
19,410
|
|
|
|
1,295
|
|
Contingent consideration payable to related party- current
portion
|
|
|
—
|
|
|
|
7,585,435
|
|
Put liability
|
|
|
1,500,000
|
|
|
|
1,436,282
|
|
Total current liabilities
|
|
|
18,289,115
|
|
|
|
15,540,186
|
|
|
|
|
|
|
|
|
|
|
Notes payable, net of unamortized cost of $0 and $578,160
|
|
|
—
|
|
|
|
7,455,758
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
18,289,115
|
|
|
|
22,995,944
|
|
|
|
|
|
|
|
|
|
|
Stockholders' equity
|
|
|
|
|
|
|
|
|
Preferred stock, authorized 50,000,000 shares, $0.001 par value, no shares
issued and outstanding
|
|
|
—
|
|
|
|
—
|
|
Class A common stock, authorized 250,000,000 shares, $0.001 par value,
6,663,662 and 5,622,052 shares issued and outstanding at September 30, 2016 and December 31, 2015,
respectively
|
|
|
6,664
|
|
|
|
5,622
|
|
Class B common stock, authorized 9,000,000 shares, $0.001 par value, no
shares issued and outstanding
|
|
|
—
|
|
|
|
—
|
|
Additional paid in capital
|
|
|
20,666,933
|
|
|
|
14,012,078
|
|
Accumulated deficit
|
|
|
(13,046,069)
|
|
|
|
(10,141,771)
|
|
|
|
|
|
|
|
|
|
|
Total stockholders' equity
|
|
|
7,627,528
|
|
|
|
3,875,929
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders' equity
|
|
$
|
25,916,643
|
|
|
$
|
26,871,873
|
|
SOCIAL REALITY, INC.
|
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(Unaudited)
|
|
|
|
Three Months ended
September 30,
|
|
|
Nine Months ended
September 30,
|
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
9,530,842
|
|
|
$
|
7,390,238
|
|
|
$
|
24,249,588
|
|
|
$
|
22,173,095
|
|
Cost of revenue
|
|
|
6,986,834
|
|
|
|
3,296,144
|
|
|
|
16,430,204
|
|
|
|
10,697,062
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
2,544,008
|
|
|
|
4,094,094
|
|
|
|
7,819,384
|
|
|
|
11,476,033
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General, selling and administrative expense
|
|
|
3,851,890
|
|
|
|
3,751,736
|
|
|
|
11,082,581
|
|
|
|
10,914,488
|
|
Impairment of goodwill
|
|
|
—
|
|
|
|
—
|
|
|
|
670,000
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from operations
|
|
|
(1,307,882)
|
|
|
|
342,358
|
|
|
|
(3,933,197)
|
|
|
|
561,545
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Write off of contingent consideration
|
|
|
—
|
|
|
|
—
|
|
|
|
3,744,496
|
|
|
|
—
|
|
Interest income (expense)
|
|
|
(1,067,964)
|
|
|
|
(1,000,898)
|
|
|
|
(2,715,598)
|
|
|
|
(2,858,955)
|
|
|
|
|
(1,067,964)
|
|
|
|
(1,000,898)
|
|
|
|
1,028,898
|
|
|
|
(2,858,955)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before provision for income taxes
|
|
|
(2,375,846)
|
|
|
|
(658,540)
|
|
|
|
(2,904,299)
|
|
|
|
(2,297,410)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(2,375,846)
|
|
|
$
|
(658,540)
|
|
|
$
|
(2,904,299)
|
|
|
$
|
(2,297,410)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share, basic and diluted
|
|
$
|
(0.40)
|
|
|
$
|
(0.12)
|
|
|
$
|
(0.49)
|
|
|
$
|
(0.43)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding, basic and diluted
|
|
|
5,958,897
|
|
|
|
5,409,248
|
|
|
|
5,929,793
|
|
|
|
5,387,126
|
|
SOCIAL REALITY, INC.
|
CONSOLIDATED STATEMENT OF CASH FLOWS
|
(Unaudited)
|
|
|
|
Nine Month Period Ended
September 30,
|
|
|
|
2016
|
|
|
2015
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
Net loss
|
|
$
|
(2,904,299)
|
|
|
$
|
(2,297,410)
|
|
Adjustments to reconcile net loss to net cash provided (used) by operating
activities:
|
|
|
|
|
|
|
|
|
Amortization of stock based prepaid fees
|
|
|
373,567
|
|
|
|
475,839
|
|
Stock based compensation
|
|
|
610,397
|
|
|
|
626,539
|
|
Non-cash financing cost
|
|
|
274,695
|
|
|
|
—
|
|
Amortization of debt issue costs
|
|
|
816,705
|
|
|
|
925,612
|
|
PIK interest expense accrued to principal
|
|
|
447,738
|
|
|
|
279,216
|
|
Impairment of goodwill
|
|
|
670,000
|
|
|
|
-
|
|
Accretion of contingent consideration
|
|
|
(3,585,388)
|
|
|
|
692,674
|
|
Accretion of put liability
|
|
|
63,718
|
|
|
|
129,643
|
|
Depreciation and amortization
|
|
|
286,944
|
|
|
|
203,585
|
|
Bad debt expense
|
|
|
96,253
|
|
|
|
66,728
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
(2,767,590)
|
|
|
|
(5,102,151)
|
|
Prepaid expenses
|
|
|
81,562
|
|
|
|
91,568
|
|
Other current assets
|
|
|
29,602
|
|
|
|
(15,132)
|
|
Other assets
|
|
|
-
|
|
|
|
(10,855)
|
|
Accounts payable and accrued expenses
|
|
|
6,355,103
|
|
|
|
2,833,564
|
|
Unearned revenue
|
|
|
18,115
|
|
|
|
(23,600)
|
|
Cash provided (used) by operating activities
|
|
|
867,122
|
|
|
|
(1,124,180)
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
Purchase of equipment
|
|
|
(4,816)
|
|
|
|
(30,657)
|
|
Cash used by investing activities
|
|
|
(4,816)
|
|
|
|
(30,657)
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
Sale of units
|
|
|
3,550,815
|
|
|
|
—
|
|
Sale of warrants
|
|
|
—
|
|
|
|
6,921
|
|
Proceeds from notes payable
|
|
|
2,100,000
|
|
|
|
1,500,000
|
|
Repayments of note payable
|
|
|
(1,763,077)
|
|
|
|
(1,162,519)
|
|
Payment of contingent consideration
|
|
|
(1,600,000)
|
|
|
|
—
|
|
Cash provided by financing activities
|
|
|
2,287,738
|
|
|
|
344,402
|
|
|
|
|
|
|
|
|
|
|
Net increase in cash
|
|
|
3,150,044
|
|
|
|
(810,435)
|
|
Cash, beginning of period
|
|
|
1,091,186
|
|
|
|
1,843,393
|
|
Cash, end of period
|
|
$
|
4,241,230
|
|
|
$
|
1,032,958
|
|
|
|
|
|
|
|
|
|
|
Supplemental Schedule of Cash Flow Information:
|
|
|
|
|
|
|
|
|
Cash paid for interest
|
|
$
|
1,224,525
|
|
|
$
|
718,119
|
|
Cash paid for taxes
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
Non-cash financial activities:
|
|
|
|
|
|
|
|
|
Proceeds paid by FastPay on behalf of the Company
|
|
$
|
5,507,468
|
|
|
$
|
—
|
|
Common stock issuance for payment of contingent consideration
|
|
$
|
2,400,000
|
|
|
$
|
—
|
|
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
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
(unaudited, in thousands)
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Net income (loss)
|
|
$
|
(2,376)
|
|
$
|
(658)
|
|
$
|
(2,904)
|
|
$
|
(2,297)
|
|
plus:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity based compensation
|
|
|
207
|
|
|
237
|
|
|
984
|
|
|
1,102
|
|
Adjusted net (loss)
|
|
$
|
(2,169)
|
|
$
|
(421)
|
|
$
|
(1,920)
|
|
$
|
(1,195)
|
|
Reversal of contingent consideration
|
|
|
—
|
|
|
—
|
|
|
(3,744)
|
|
|
—
|
|
Impairment of goodwill
|
|
|
—
|
|
|
—
|
|
|
670
|
|
|
—
|
|
Adjust value of warrants
|
|
|
275
|
|
|
—
|
|
|
275
|
|
|
—
|
|
Interest expense
|
|
|
1,066
|
|
|
1,001
|
|
|
2,714
|
|
|
2,859
|
|
Depreciation and amortization
|
|
|
94
|
|
|
194
|
|
|
287
|
|
|
204
|
|
Adjusted EBITDA
|
|
$
|
(734)
|
|
$
|
774
|
|
$
|
(1,719)
|
|
$
|
1,868
|
|
Photo - http://photos.prnewswire.com/prnh/20140603/93483
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/social-reality-reports-29-year-over-year-revenue-growth-for-q3-2016-300362441.html
SOURCE Social Reality, Inc.