EX-99.1 2 scri_ex99z1.htm PRESS RELEASE Press Release

EXHIBIT 99.1

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Social Reality Reports 492% Year-Over-Year Revenue Growth for Full Year 2015


-Company Beats Full Year 2015 Guidance of $30M Revenue

-Achieves Positive Operating Income of $1.1M and Significant Gross Margin Improvement

- Company Achieves Positive Adjusted EBITDA of $2.9M for the Year



LOS ANGELES - March 16, 2016 - Social Reality, Inc. (OTCQB: SCRI), an Internet advertising and platform technology company that provides tools to automate and maximize the digital advertising market, announced its financial results for the fourth quarter and full year 2015. Revenue for the quarter ended December 31, 2015 was $8,121,070, an increase of 124% over the fourth quarter of 2014. Revenue for the full year 2015 was $30,294,165, an increase of 492% compared to $5,120,343 for the full year of 2014.


“We ended 2015 achieving several important milestones that has made us even more competitive in the massive $200 billion digital advertising market. During the quarter we surpassed our year end target revenue guidance of $30 million, significantly improved our operational performance, and demonstrated fantastic progress with our SRAX MD platform,” said Christopher Miglino, Social Reality's CEO and Chairman. “We remain committed to providing the most effective tools for brand advertisers to maximize their media planning, buying and measurement through our suite of proprietary products. Our focus for 2016 will be on the development and execution of our specialty platforms directed at specific verticals to further differentiate Social Reality’s services and to generate value for our new and existing brand advertising clients as well as our stockholders.”


Fourth Quarter and Full Year 2015 Highlights

·

Revenue of $8,121,070 for the fourth quarter of 2015, represents a 124% increase over the fourth quarter 2014

·

$1,071,032 in Adjusted EBITDA for the fourth quarter 2015

·

Operating income of $490,491 for the fourth quarter 2015 vs. a loss of $(1,251,279) for the fourth quarter of 2014

·

Revenue of $30,294,165 for the full year 2015, represents a 492% increase over the full year 2014

·

$2.938 million in positive Adjusted EBITDA for the full year 2015

·

Operating income of $1,052,036 for the full year 2015 vs. a loss of $(3,738,216) for the full year 2014

·

Gross margins were 52% for the full year 2015 as compared to 45% for the full year 2014




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Fourth Quarter and Recent Operational Highlights


·

Appointment of Rodney J. Dillman to Board of Directors to deepen the Company’s corporate and capital markets expertise and help prepare for uplisting to a major exchange

·

Launched a next-generation medical programmatic digital ad platform

·

Launched the SRAX APP product for large influencers

·

Attended financial investor conferences to increase Social Reality’s visibility with the investment community


Fourth Quarter and Full Year 2015 Financial Summary


Revenue for the three months ended December 31, 2015, totaled $8,121,070 compared to $3,626,588 reported for the three months ended December 31, 2014. Revenue for the full year 2015 was $30,294,165, an increase of 492% compared to $5,120,343 for the full year of 2014. Gross profit increased to $4,410,769 for the three months ended December 31, 2015, compared to $1,900,976 for the same period of 2014. Gross profit increased to $15,886,802 for the full year 2015, compared to $2,328,395 for the full year 2014.


The company reported a net loss of $(426,499) for the three months ended December 31, 2015, compared to a net loss of $(1,925,891) for the corresponding period of 2014. The company reported a net loss of $(2,723,909) for the full year of 2015, a significant improvement when compared to a net loss of $(4,411,563) for the full year of 2014. The improvement in net loss was attributed to the growth of revenue from the Company’s SRAX platform clients. For the year ended December 31, 2015, net loss was $(0.10) per diluted share, compared to a net loss of $(0.20) per diluted share for the year ended December 31, 2014.


Adjusted EBITDA was $1.071 million for the quarter ended December 31, 2015, compared to $(119,000) in the same period of 2014. For the full year of 2015, Adjusted EBITDA was $2.938 million compared to $(1.866 million) for the full year of 2014.  As shown in the following table, Reconciliation of Adjusted EBITDA to GAAP, the differences between net (loss) and Adjusted EBITDA are primarily composed of non-cash stock-based compensation, amortization, depreciation and interest expenses.

 

Cash and cash equivalents totaled $1,091,186 on December 31, 2015. Current assets and total assets were $8,493,010 and $28,526,646, respectively, while current liabilities and total liabilities were $16,616,819 and $24,650,717 respectively. As of December 31, 2015, the company had stockholders' equity of $3,875,929.


Conference call information:

Date:  Tuesday, March 22, 2016

Time:  4:15 P.M. Eastern Time (ET)

Dial in Number for U.S. & Canadian Callers: (877) 407-8293

Dial in Number for International Callers (Outside of the U.S. & Canada): (201) 689-8349




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Participating on the call will be Social Reality’s Chief Executive Officer Christopher Miglino who will be providing a financial and operational summary of the fourth quarter and year ended December 31, 2015. 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 March 22, 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 13632963.


About Social Reality

Social Reality, Inc. is an Internet advertising company that provides tools to 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 may contain forward-looking statements. These forward-looking statements are based on current expectations and involve inherent risks and uncertainties that could cause actual results to differ materially from those projected or anticipated. 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, including, without limitation: our ability to grow our revenues and manage our gross margins; our history of losses; our limited operating history; the terms of our financing agreement with Victory Park Management, LLC as agent for the lenders; the impact of our debt obligations on our liquidity and financial conditions; the impact of the earn out payments to Mr. Steel; our possible need for additional financing; 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, 2015 as filed with the Securities and Exchange Commission, and our other filings with the SEC. Except for our ongoing obligations to disclose material information under the Federal securities laws, Social Reality undertakes no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events. These forward-looking statements speak only as of the date of this report, and you should not rely on these statements.




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SOCIAL REALITY, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

YEARS ENDED DECEMBER 31, 2015 AND 2014


 

 

Years ended December 31,

 

 

 

2015

 

 

2014

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

30,294,165

 

 

$

5,120,343

 

Cost of revenue

 

 

14,407,363

 

 

 

2,791,948

 

 

 

 

 

 

 

 

 

 

Gross profit

 

 

15,886,802

 

 

 

2,328,395

 

 

 

 

 

 

 

 

 

 

Operating expense

 

 

14,834,766

 

 

 

6,066,611

 

 

 

 

 

 

 

 

 

 

Income (loss) from operations

 

 

1,052,036

 

 

 

(3,738,216

)

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(3,775,945

)

 

 

(673,347

)

 

 

 

 

 

 

 

 

 

Loss before provision for income taxes

 

 

(2,723,909

)

 

 

(4,411,563

)

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

 

—

 

 

 

—

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(2,723,909

)

 

$

(4,411,563

)

 

 

 

 

 

 

 

 

 

Net loss per share, basic and diluted

 

$

(0.10

)

 

$

(0.20

)

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding

 

 

27,073,550

 

 

 

21,808,515

 








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SOCIAL REALITY, INC.

CONSOLIDATED BALANCE SHEETS


 

 

December 31,

 

 

 

2015

 

 

2014

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

1,091,186

 

 

$

1,843,393

 

Accounts receivable, net

 

 

7,056,298

 

 

 

3,874,620

 

Prepaid expenses

 

 

309,436

 

 

 

222,532

 

Other current assets

 

 

36,090

 

 

 

7,352

 

Total current assets

 

 

8,493,010

 

 

 

5,947,897

 

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

43,936

 

 

 

27,602

 

 

 

 

 

 

 

 

 

 

Goodwill

 

 

16,314,957

 

 

 

16,312,911

 

Intangible assets, net

 

 

1,611,744

 

 

 

2,006,000

 

Deferred debt issue costs

 

 

1,654,773

 

 

 

2,907,736

 

Prepaid stock based compensation

 

 

373,567

 

 

 

1,008,019

 

Other assets

 

 

34,659

 

 

 

4,804

 

 

 

 

 

 

 

 

 

 

Total assets

 

$

28,526,646

 

 

$

28,214,969

 

 

 

 

 

 

 

 

 

 

Liabilities and stockholders' equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable and accrued expenses

 

$

5,138,807

 

 

$

2,882,120

 

Note payable - related party

 

 

—

 

 

 

2,500,000

 

Notes payable, current portion

 

 

2,455,000

 

 

 

1,350,000

 

Unearned revenue

 

 

1,295

 

 

 

25,295

 

Contingent consideration payable to related party - current portion

 

 

7,585,435

 

 

 

3,586,722

 

Put liability

 

 

1,436,282

 

 

 

—

 

Total current liabilities

 

 

16,616,819

 

 

 

10,344,137

 

 

 

 

 

 

 

 

 

 

Notes payable

 

 

8,033,898

 

 

 

7,713,014

 

Contingent consideration payable to related party - long term

 

 

—

 

 

 

3,145,401

 

Put liability

 

 

—

 

 

 

1,260,010

 

 

 

 

 

 

 

 

 

 

Total liabilities

 

 

24,650,717

 

 

 

22,462,562

 

 

 

 

 

 

 

 

 

 

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, no shares and 86,000 shares issued and outstanding, respectively

 

 

—

 

 

 

86

 

Class A common stock, authorized 250,000,000 shares, $0.001 par value, 28,110,229 and 29,416,612 shares issued at December 31, 2015 and 2014, respectively, and 28,110,229 and 27,029,749 shares outstanding at December 31, 2015 and 2014, respectively

 

 

28,110

 

 

 

27,030

 

Class B common stock, authorized 9,000,000 shares, $0.001 par value, no shares issued and outstanding

 

 

—

 

 

 

—

 

Additional paid in capital

 

 

13,989,590

 

 

 

13,143,153

 

Accumulated deficit

 

 

(10,141,771

)

 

 

(7,417,862

)

 

 

 

 

 

 

 

 

 

Total stockholders' equity

 

 

3,875,929

 

 

 

5,752,407

 

 

 

 

 

 

 

 

 

 

Total liabilities and stockholders' equity

 

$

28,526,646

 

 

$

28,214,969

 



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SOCIAL REALITY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 2015 AND 2014


 

 

Year Ended December 31,

 

 

 

2015

 

 

2014

 

Cash flows from operating activities:

 

 

 

 

 

 

Net loss

 

$

(2,723,909

)

 

$

(4,411,563

)

Adjustments to reconcile net loss to net cash provided (used) by operating activities:

 

 

 

 

 

 

 

 

Amortization of stock based prepaid fees

 

 

634,452

 

 

 

654,055

 

Stock based compensation

 

 

840,512

 

 

 

1,203,534

 

Amortization of debt issue costs

 

 

1,252,963

 

 

 

256,616

 

PIK interest expense accrued to principal

 

 

390,462

 

 

 

63,014

 

Accretion of contingent consideration

 

 

853,312

 

 

 

148,081

 

Accretion of put liability

 

 

176,272

 

 

 

27,716

 

Bad debts

 

 

86,946

 

 

 

26,488

 

Depreciation and amortization

 

 

411,538

 

 

 

14,829

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(3,287,624

)

 

 

(1,196,572

)

Prepaid expenses

 

 

(86,904

)

 

 

(170,902

)

Other current assets

 

 

(28,738

)

 

 

17,514

 

Other assets

 

 

(10,855

)

 

 

(804

)

Accounts payable and accrued expenses

 

 

2,254,639

 

 

 

861,148

 

Unearned revenue

 

 

(24,000

)

 

 

25,295

 

Cash provided (used) by operating activities

 

 

739,066

 

 

 

(2,481,551

)

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Cash paid for acquisition

 

 

—

 

 

 

(2,000,000

)

Cash acquired in acquisition

 

 

—

 

 

 

32,038

 

Purchase of equipment

 

 

(33,616

)

 

 

(6,856

)

Cash used by investing activities

 

 

(33,616

)

 

 

(1,974,818

)

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Sale of common stock

 

 

—

 

 

 

3,950,747

 

Cost of common stock sale

 

 

—

 

 

 

(16,291

)

Proceeds from warrant offering

 

 

6,921

 

 

 

2,100

 

Proceeds from note payable

 

 

2,900,000

 

 

 

1,227,601

 

Repayments of note payable

 

 

(4,364,578

)

 

 

—

 

Debt issue costs

 

 

—

 

 

 

(579,659

)

Cash (used) provided by financing activities

 

 

(1,457,657

)

 

 

4,584,498

 

 

 

 

 

 

 

 

 

 

Net (decrease) increase in cash

 

 

(752,207

)

 

 

128,129

 

Cash, beginning of period

 

 

1,843,393

 

 

 

1,715,264

 

Cash, end of period

 

$

1,091,186

 

 

$

1,843,393

 

 

 

 

 

 

 

 

 

 

Supplemental Schedule of Cash Flow Information:

 

 

 

 

 

 

 

 

Cash paid for interest

 

$

1,133,847

 

 

$

157,792

 

Cash paid for income taxes

 

$

—

 

 

$

—

 

 

 

 

 

 

 

 

 

 

Non-cash financial activities:

 

 

 

 

 

 

 

 

Fees and costs deducted from proceeds of debt

 

$

—

 

 

$

1,352,399

 

Warrant put liability in conjunction with notes payable

 

$

—

 

 

$

1,232,294

 

Net assets and liabilities recognized with the acquisition of Steel media

 

$

—

 

 

$

17,562,911

 

Issuance of stock for the acquisition of Five Delta, Inc.

 

$

—

 

 

$

756,000

 

Common stock issued for preferred stock conversion and vesting grants

 

$

988

 

 

$

529

 

Accounts payable paid directly through escrow

 

$

—

 

 

$

98,595

 

Steel Media partial purchase consideration paid directly through escrow

 

$

—

 

 

$

7,500,000

 



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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)

 

2015

 

 

2014

 

 

2015

 

 

2014

 

Net income (loss)

 

$

(427

)

 

$

(1,926

)

 

$

(2,724

)

 

$

(4,412

)

plus:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity based compensation

 

 

373

 

 

 

1,127

 

 

 

1,475

 

 

 

1,858

 

Adjusted net income (loss)

 

$

(54

)

 

$

(799

)

 

$

(1,249

)

 

 

(2,554

)

Interest expense

 

 

917

 

 

 

675

 

 

 

3,776

 

 

 

673

 

Depreciation of property, plant and equipment

 

 

207

 

 

 

5

 

 

 

411

 

 

 

15

 

Adjusted EBITDA

 

$

1,070

 

 

$

(119

)

 

$

2,938

 

 

$

(1,866

)



Contact:

Robert Haag
Managing Director
IRTH Communications
SCRI@irthcommunications.com
866.976.4784




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