EX-99.1 2 scri_ex99z1.htm PRESS RELEASE Press Release

EXHIBIT 99.1

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


Press Release: Social Reality, Inc. – 


Los Angeles, CA.—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.




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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.


Contact:

Social Reality, Inc.

Laura Knapp

Laura@SocialReality.com

323-694-9800 x114









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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

 






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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

 




4



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

 






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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

)




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