LOS ANGELES, April 8, 2019 /PRNewswire/ -- Social Reality,
Inc. (NASDAQ: SRAX), a digital marketing and consumer data
management technology company, today announced that on April 7, 2019, management of Social Reality, Inc.
(the "Company") concluded and the audit committee of the Company
has concurred that the Company's previously issued quarterly and
year-to-date unaudited consolidated financial statements for
March 31, 2017, June 30, 2017, September
30, 2017, December 31, 2017,
March 31, 2018, June 30, 2018 and September 30, 2018 and that its audited
consolidated financial statements for the year ending December 31, 2017 should no longer be relied
upon. Similarly, related press releases, earnings releases, and
investor communications describing the Company's financial
statements for these periods should no longer be relied upon. The
errors identified are all non-cash and primarily related to the
Company's classification of certain outstanding warrants with
provisions that allow the warrant holder to force cash redemption
under certain circumstances.
Based on its preliminary assessment, the Company is providing
the following estimates regarding the aggregate impact of these
errors on consolidated total current liabilities, total
liabilities, equity, other income, net income (loss) and income
(loss) per share, calculated in accordance with accounting
principles generally accepted in the U.S., for each of the periods
presented:
SOCIAL REALITY,
INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
NINE MONTH PERIOD
ENDED SEPTEMBER 30, 2018
|
(Unaudited)
|
|
|
|
|
|
|
AS
REPORTED
|
|
|
|
Restated
|
|
|
|
YTD
September
|
|
|
|
YTD
September
|
|
|
|
2018
|
|
Adjustments
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
$
8,823,592
|
|
|
|
$
8,823,592
|
Cost of
revenue
|
|
|
2,902,179
|
|
|
|
2,902,179
|
|
|
|
|
|
|
|
|
Gross
profit
|
|
|
$
5,921,413
|
|
|
|
$
5,921,413
|
|
|
|
|
|
|
|
|
Loss from
operations
|
|
|
$
(8,492,866)
|
|
|
|
$
(8,492,866)
|
|
|
|
|
|
|
|
|
Other income
(expense)
|
|
|
|
|
|
|
|
Total interest
expense
|
|
|
$
(2,772,448)
|
|
|
|
$
(2,772,448)
|
Loss on repricing of
Series A warrants
|
|
|
$
-
|
|
|
|
$
-
|
Accretion of put
warrants
|
|
|
|
|
$
800,000
|
|
$
800,000
|
Accretion of
debenture warrants
|
|
|
|
|
$
800,000
|
|
$
800,000
|
Accretion of Leapfrog
warrants
|
|
|
|
|
$
600,000
|
|
$
600,000
|
Loss (Gain) on Sale of Fixed Assets
|
|
|
$
23,978,389
|
|
|
|
$
23,978,389
|
Other
Income
|
|
|
$
21,210,439
|
|
$
2,200,000
|
|
$
23,410,439
|
Net Income
(loss)
|
|
|
$
12,717,573
|
|
$
2,200,000
|
|
$
14,917,573
|
|
|
|
|
|
|
|
|
Net (loss) income
pershare, basic
|
|
|
$
1.59
|
|
|
|
$
1.86
|
Net (loss) income
pershare, diluted
|
|
|
$
1.59
|
|
|
|
$
1.86
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding, basic
|
|
|
8,008,717
|
|
-
|
|
8,008,717
|
Weighted average
shares outstanding, diluted
|
|
|
8,008,717
|
|
-
|
|
8,008,717
|
|
|
|
|
|
|
|
|
SOCIAL REALITY,
INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
YEAR ENDED
DECEMBER 31, 2017
|
|
|
|
|
|
|
|
|
AS
REPORTED
|
|
|
|
Restated
|
|
Full Year
|
|
|
|
Full Year
|
|
2017
|
|
Adjustments
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
$
23,348,714
|
|
|
|
$
23,348,714
|
Cost of
revenue
|
9,328,893
|
|
|
|
9,328,893
|
|
|
|
|
|
|
Gross
profit
|
$
14,019,821
|
|
|
|
$
14,019,821
|
|
|
|
|
|
|
Loss from
operations
|
$
(3,843,679)
|
|
|
|
$
(3,843,679)
|
|
|
|
|
|
|
Other income
(expense)
|
|
|
|
|
|
Total interest
expense
|
$
(2,815,203)
|
|
|
|
$
(2,815,203)
|
Loss on repricing of
Series A warrants
|
$
-
|
|
$
(100,000)
|
|
$
(100,000)
|
Accretion of put
warrants
|
|
|
$
500,000
|
|
$
500,000
|
Accretion of
debenture warrants
|
|
|
$
(700,000)
|
|
$
(700,000)
|
Accretion of Leapfrog
warrants
|
|
|
$
(1,500,000)
|
|
$
(1,500,000)
|
Loss (Gain) on Sale of Fixed Assets
|
$
-
|
|
|
|
$
-
|
Other
Income
|
$
(2,815,203)
|
|
$
(1,800,000)
|
|
$
(4,615,203)
|
Net Income
(loss)
|
$
(6,658,882)
|
|
$
(1,800,000)
|
|
$
(8,458,882)
|
|
|
|
|
|
|
Net (loss) income
pershare, basic
|
$
(0.81)
|
|
|
|
$
(1.02)
|
Weighted average
shares outstanding, basic
|
8,253,851
|
|
-
|
|
8,253,851
|
|
|
|
|
|
|
SOCIAL REALITY,
INC.
|
CONDENSED AND
CONSOLIDATED BALANCE SHEET
|
SEPTEMBER 30,
2018
|
(Unaudited)
|
|
|
September
30
|
|
|
|
September
30
|
|
2018
|
|
|
|
2018
|
|
As
Reported
|
|
Adjustments
|
|
As
Restated
|
|
|
|
|
|
|
Total
assets
|
34,341,324
|
|
-
|
|
34,341,324
|
|
|
|
|
|
|
Liabilities and
stockholders' equity
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Accounts
payable and accrued expenses
|
2,475,229
|
|
|
|
2,475,229
|
Leapfrog warrant liability
|
-
|
|
1,000,000
|
|
1,000,000
|
|
|
|
|
|
|
Warrant
liability - Series A
|
-
|
|
1,300,000
|
|
1,300,000
|
Debenture warrant liability
|
-
|
|
1,600,000
|
|
1,600,000
|
|
|
|
|
|
|
Total current
liabilities
|
2,475,229
|
|
3,900,000
|
|
6,375,229
|
|
|
|
|
|
|
Secured convertible
debentures, net
|
2,943,109
|
|
-
|
|
2,943,109
|
|
|
|
|
|
|
Total
liabilities
|
5,418,338
|
|
3,900,000
|
|
9,318,338
|
|
|
|
|
|
|
Total stockholders'
equity
|
28,922,886
|
|
(3,900,000)
|
|
25,022,886
|
|
|
|
|
|
|
Total liabilities and
stockholders' equity
|
34,341,224
|
|
-
|
|
34,341,224
|
SOCIAL REALITY,
INC.
|
CONDENSED AND
CONSOLIDATED BALANCE SHEET
|
DECEMBER 31,
2017
|
|
|
|
|
|
|
|
Restated
|
|
|
December
31,
|
|
|
|
December
|
|
|
2017
|
|
Adjustments
|
|
2017
|
|
|
|
|
|
|
|
Total
assets
|
|
23,605,699
|
|
-
|
|
23,605,699
|
|
|
|
|
|
|
|
Liabilities and
stockholders' equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
Accounts
payable and accrued expenses
|
|
5,010,815
|
|
|
|
5,010,815
|
Leapfrog warrant liability
|
|
|
|
1,700,000
|
|
1,700,000
|
|
|
|
|
|
|
|
Warrant
liability - Series A
|
|
|
|
2,100,000
|
|
2,100,000
|
Debenture warrant liability
|
|
|
|
2,500,000
|
|
2,500,000
|
|
|
|
|
|
|
|
Total current
liabilities
|
|
5,010,815
|
|
6,300,000
|
|
11,310,815
|
|
|
|
|
|
|
|
Secured convertible
debentures, net
|
|
1,711,146
|
|
-
|
|
1,711,146
|
|
|
|
|
|
|
|
Total
liabilities
|
|
6,721,961
|
|
6,300,000
|
|
13,021,961
|
|
|
|
|
|
|
|
Total stockholders'
equity
|
|
16,883,738
|
|
(6,300,000)
|
|
10,583,738
|
|
|
|
|
|
|
|
Total liabilities and
stockholders' equity
|
|
23,605,699
|
|
-
|
|
23,605,699
|
Since the Company has not yet fully completed its review, the
estimates regarding the impact set forth above are preliminary and
remain subject to change.
In connection with the restatement, management has determined
that a material weakness related to the accounting for financing
transactions in the Company's internal control over financial
reporting existed for the periods from March
31, 2017 through December 31,
2018. The Company's chief executive officer and chief
financial officer have concluded that the Company's disclosure
controls and procedures were not effective at the reasonable
assurance level as of March 31, 2017
through December 31, 2018, and the
Company's management has concluded that its internal control over
financial reporting was not effective as of December 31, 2018.
The Company anticipates that it will file amended Quarterly
Reports on Form 10-Q for the periods ended March 31, 2018, June 30,
2018 and September 30, 2018,
to amend and restate its financial condition and financial results
for the affected periods as soon as practicable.
About SRAX
Social Reality, Inc. (NASDAQ: SRAX) is a digital marketing and
consumer data management technology company. SRAX's technology
delivers the tools to unlock data to reveal brands core consumers
and their characteristics across marketing channels. Through its
blockchain identification graph technology platform, BIGtoken, SRAX
has developed a consumer-managed data marketplace where people can
own and earn from their data thereby providing everyone in the
Internet ecosystem choice, transparency, and compensation. SRAX's
technology and tools deliver a digital competitive advantage for
brands in the CPG, automotive, investor relations and lifestyle
verticals by integrating all aspects of the advertising experience,
including verified consumer participation, into one platform. For
more information on SRAX, visit www.srax.com.
About BIGtoken
BIGtoken, built by SRAX (NASDAQ: SRAX), is a consumer data
management and distribution system. BIG is the first consumer
managed data marketplace where people can own and earn from their
data. Through a transparent blockchain platform and consumer reward
systems, BIG provides consumers choice, transparency and
compensation for their data. Participating consumers earn rewards,
and developers are able to build pro-consumer online experiences on
top of the BIG platform. The system also provides advertisers and
media companies access to transparent, verified consumer data to
better reach and serve audiences. For more information on BIGtoken,
visit www.bigtoken.com.
Safe Harbor Statement
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, as
set forth in our Annual Report on Form 10-K and Quarterly Reports
on Form 10-Q, as filed 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.
CONTACTS:
Kirsten Chapman/Mary Magnani, LHA Investor Relations,
415-433-3777, srax@lhai.com
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