LOS ANGELES, May 15, 2019 /PRNewswire/ -- Social Reality,
Inc. (Nasdaq: SRAX), a digital marketing and consumer data
management and distribution technology platform company, reported
results for the three months ended March 31,
2019.
"We continue to build valuable data sets that benefit our
customers across all our businesses," stated SRAX's CEO and
Founder Christopher Miglino. "Our
BIGtoken platform is poised to take advantage of the recent
exponential growth to 15.6 million registered users, as we begin to
monetize data. Strategic agency partners and several large,
internationally known consumer brands are interested in leveraging
our BIGtoken data for digital advertising and for innovative
opportunities. Further, there is a growing trend of cross
pollination between BIGtoken and our verticals, which are serving
as sales channels for the data collected through BIG.
"Our verticals grew 132% for the first quarter of 2019 as
compared to last year, reflecting our increased sales resources.
Combined with our strong sales pipeline, we expect significant
revenue growth in the second half of the year," concluded
Miglino.
First Quarter 2019 Key Metrics
- Increased sales infrastructure grew Q1 2019 vertical revenue
132% compared to Q1 2018.
Revenue
|
Three Months Ended
March 31,
|
|
|
$ in
000s
|
2019
|
|
2018
|
|
Y-o-Y%
Change
|
Verticals
Revenue
|
$
|
592
|
|
$
|
255
|
|
132%
|
SRAXmd & Other
Revenue
|
|
-
|
|
|
1,856
|
|
-100%
|
Total
Revenue
|
$
|
592
|
|
$
|
2,111
|
|
-72%
|
- Q1 2019 net loss of $5.8 million
included a charge of $2.0 million
related to non-cash warrant valuation. Q1 2018 net income
$11,000 included a benefit of
$3.7 million related to non-cash
warrant valuation as well as operations from SRAXmd and Reach,
which were sold or discontinued, respectively.
GAAP Net Income /
(Loss)
|
|
For the Three
Months Ended March 31,
|
|
$ in
000s
|
|
2019
|
|
2018
As Restated
|
|
GAAP Net Income /
(Loss)
|
|
$
|
(5,785)
|
|
$
|
11
|
|
|
Adjusted
EBITDA
|
|
For the Three
Months Ended March 31,
|
|
$ in
000s
|
|
2019
|
|
2018
|
|
Total
|
|
$
|
(3,841)
|
|
$
|
(2,464)
|
|
BIGtoken
|
|
|
(695)
|
|
|
(294)
|
|
Discontinued
Products
|
|
|
-
|
|
|
350
|
|
Continuing
Ops.
|
|
$
|
(3,146)
|
|
$
|
(2,515)
|
|
2019 Guidance
For 2019, the company reiterates full
year revenue guidance to be between $20
million and $25 million with
gross margins between 45% and 55%.
Operating Highlights:
- Corporate:
-
- Raised $8.8 million after the
quarter end: $6.7 million from a
registered direct offering, $1.1
million from warrant conversion and $1.0 million dollars from a private placement for
the BIGtoken Asian expansion.
- Options trading became available for SRAX.
- BIGtoken, the first digital exchange of transparent and
verified consumer data:
-
- Receives $1 million investment to
launch BIGtoken Asia, which will increase access to over 1 billion
internet users that want to own and earn from their data.
- Integrated mobile banking applications from some of the largest
banks in the United States.
- Introduced a feature for users to earn points with popular
travel, grocery, and retail loyalty/rewards programs enabling them
to earn more for the activities they already participate in on a
regular basis.
- Attracted more than 15.6 million registered users as of
May 15, 2019.
- Verticals:
-
- Began selling SRAX IR, the investor relations software as a
service (SaaS) platform that analyzes stock buyer behavior and
trends for issuers of publicly traded companies.
Conference Call:
Management will review the results on
a conference call with a live question and answer session today,
May 15, 2019, at 4:30 p.m. ET/1:30 p.m.
PT.
- If calling from the United
States or Canada, please
dial 1-877-451-6152 to access the live call and 1-844-512-2921 for
the replay, code 13690722 available until May 29th.
- If calling internationally, please dial 1-201-389-0879 to
access the live call and 1-412-317-6671 for the replay, code
13690722.
- The call will be webcast over the Internet and accessible at
the Company's website at https://srax.com/investors/ for at least
90 days.
Non-GAAP Measures:
To supplement our condensed
consolidated financial statements, which are prepared and presented
in accordance with generally accepted accounting principles in
the United States (GAAP), we use
the following non-GAAP financial measures: Adjusted net income
(loss) and Adjusted EBITDA The presentation of these financial
measures is not intended to be considered in isolation or as a
substitute for, or superior to, financial information prepared and
presented in accordance with GAAP. Investors are cautioned that
there are material limitations associated with the use of non-GAAP
financial measures as an analytical tool. In addition, these
measures may be different from non-GAAP financial measures used by
other companies, limiting their usefulness for comparison purposes.
We compensate for these limitations by providing specific
information regarding the GAAP amounts excluded from these non-GAAP
financial measures. We believe these non-GAAP financial measures
provide investors with useful supplemental information about the
financial performance of our business, enable comparison of
financial results between periods where certain items may vary
independent of business performance, and allow for greater
transparency with respect to key metrics used by management in
operating our business. For more information on our non-GAAP
financial measures and a reconciliation of GAAP to non-GAAP
measures, please see the "Reconciliation of GAAP to Non-GAAP
Results" table in this press release.
Adjusted net income (loss) is defined as net income (loss) less
non-cash equity-based compensation and the accretion of warrants.
Adjusted EBITDA is defined as earnings before interest, taxes,
depreciation and amortization, changes in the fair-value of
derivative and warrant liabilities and certain additional one-time
charges.
About SRAX
Social Reality, Inc. (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, verify and sell access to 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, sports 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.
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 for the year ended December 31,
2018, and our subsequent 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.
Contact Information:
Kirsten
Chapman/Mary Magnani, LHA
Investor Relations, +1 415 433 3777, srax@lhai.com
SOCIAL REALITY,
INC.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
|
March
31,
|
|
December
31,
|
|
2019
|
|
2018
|
|
(unaudited)
|
|
|
Assets
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
17,672
|
|
$
|
2,784,865
|
Accounts receivable,
net
|
|
550,857
|
|
|
1,828,940
|
Prepaid
expenses
|
|
492,231
|
|
|
466,823
|
Other current
assets
|
|
300,898
|
|
|
387,085
|
Total current
assets
|
|
1,361,658
|
|
|
5,467,713
|
|
|
|
|
|
|
Non-current
Assets:
|
|
|
|
|
|
Property and
equipment, net
|
|
196,996
|
|
|
192,065
|
Goodwill
|
|
15,644,957
|
|
|
15,644,957
|
Intangible assets,
net
|
|
1,805,283
|
|
|
1,762,605
|
Right-of-Use
Asset
|
|
505,278
|
|
|
—
|
Other
assets
|
|
107,454
|
|
|
51,153
|
Total non-current
assets
|
|
18,259,968
|
|
|
17,650,780
|
Total
assets
|
$
|
19,621,626
|
|
$
|
23,118,493
|
|
|
|
|
|
|
Liabilities and
stockholders' equity
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Accounts payable and
accrued expenses
|
$
|
3,421,911
|
|
$
|
3,574,926
|
Debenture warrant
liability
|
|
5,901,089
|
|
|
4,323,499
|
Leapfrog warrant
liability
|
|
830,507
|
|
|
622,436
|
Derivative
liability
|
|
672,155
|
|
|
496,260
|
Total current
liabilities
|
|
10,825,662
|
|
|
9,017,121
|
Non-current
liabilities:
|
|
|
|
|
|
Lease Obligation -
Long Term Portion
|
|
359,112
|
|
|
—
|
Total non-current
liabilities
|
|
359,112
|
|
|
—
|
Total
liabilities
|
|
11,184,774
|
|
|
9,017,121
|
|
|
|
|
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
|
Preferred stock,
authorized 50,000,000 shares, $0.001 par value, no shares issued or
outstanding at March 31, 2019 and December 31, 2018,
respectively
|
|
|
|
|
|
Class A common stock,
authorized 250,000,000 shares, $0.001 par value, 10,109,530 and
10,109,530 shares issued and outstanding at March 31, 2019 and
December 31, 2018, respectively
|
|
10,109
|
|
|
10,109
|
Class B common stock,
authorized 9,000,000 shares, $0.001 par value, no shares issued or
outstanding at March 31, 2019 and December 31, 2018,
respectively
|
|
—
|
|
|
—
|
Common stock to be
issued
|
|
—
|
|
|
—
|
Additional paid in
capital
|
|
32,990,496
|
|
|
32,869,611
|
Accumulated
deficit
|
|
(24,563,753)
|
|
|
(18,778,348)
|
Total stockholders'
equity
|
|
8,436,852
|
|
|
14,101,372
|
Total liabilities and
stockholders' equity
|
$
|
19,621,626
|
|
$
|
23,118,493
|
SOCIAL REALITY,
INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
THREE MONTHS ENDED
MARCH 31, 2019 AND 2018
|
(Unaudited)
|
|
|
|
March
31,
|
|
March
31,
|
|
|
|
2019
|
|
2018
|
|
|
|
|
|
As
Restated
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
591,755
|
|
$
|
2,110,850
|
|
Cost of
revenue
|
|
|
342,347
|
|
|
818,105
|
|
Gross
profit
|
|
|
249,408
|
|
|
1,292,745
|
|
Operating
expense:
|
|
|
|
|
|
|
|
General, selling and
administrative expense
|
|
|
4,490,961
|
|
|
4,108,093
|
|
Operating
expense
|
|
|
4,490,961
|
|
|
4,108,093
|
|
Loss from
operations
|
|
|
(4,241,553)
|
|
|
(2,815,348)
|
|
|
|
|
|
|
|
|
|
Other income
(expense):
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
(67,988)
|
|
|
(434,785)
|
|
Amortization of debt
issuance costs
|
|
|
—
|
|
|
(435,666)
|
|
Total Interest
Expense
|
|
|
(67,988)
|
|
|
(870,451)
|
|
Gain on sale of
Assets
|
|
|
472,479
|
|
|
(22,165)
|
|
Exchange Gain or
Loss
|
|
|
13,509
|
|
|
(4,664)
|
|
Loss on
settlement
|
|
|
|
|
|
|
|
Change in Fair Value
of Warrant Liability
|
|
|
(1,961,851)
|
|
|
3,723,696
|
|
Other non operating
income / (expense)
|
|
|
(1,475,863)
|
|
|
3,696,867
|
|
Total other income /
(expense)
|
|
|
(1,543,851)
|
|
|
2,826,416
|
|
Income / (Loss)
before provision for income taxes
|
|
|
(5,785,404)
|
|
|
11,068
|
|
|
|
|
|
|
|
|
|
Provision for income
taxes
|
|
|
—
|
|
|
—
|
|
Net income /
(loss)
|
|
$
|
(5,785,404)
|
|
$
|
11,068
|
|
|
|
|
|
|
|
|
|
Net income / (loss)
per share, basic and diluted
|
|
$
|
(0.57)
|
|
$
|
0.00
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding
|
|
|
|
|
|
|
|
Basic
|
|
|
10,109,530
|
|
|
10,037,905
|
|
Diluted
|
|
|
10,109,530
|
|
|
10,037,905
|
|
SOCIAL REALITY,
INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
THREE MONTH PERIOD
ENDED MARCH 31, 2019 AND 2018
|
(Unaudited)
|
|
|
March
31,
|
|
March
31,
|
|
2019
|
|
2018
|
|
|
|
As
Restated
|
|
|
|
|
Cash flows from
operating activities
|
|
|
|
Net Income
(loss)
|
$
|
(5,785,404)
|
|
$
|
11,068
|
Adjustments to
reconcile net loss to net cash (used in) provided by operating
activities:
|
|
|
|
|
|
Stock based
compensation
|
|
120,884
|
|
|
166,130
|
Amortization of debt
issuance costs
|
|
—
|
|
|
93,639
|
Accretion of debenture
discount and warrants
|
|
—
|
|
|
342,026
|
Gain/Loss on valuation
of warrant derivatives
|
|
1,961,852
|
|
|
(3,723,696)
|
Gain on sale of
SRAXmd
|
|
(472,479)
|
|
|
—
|
Provision for bad
debts
|
|
356
|
|
|
(425)
|
Depreciation
expense
|
|
15,968
|
|
|
9,441
|
Amortization of
intangibles
|
|
237,075
|
|
|
166,185
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
Accounts
receivable
|
|
1,277,728
|
|
|
2,614,671
|
Prepaid
expenses
|
|
(25,408)
|
|
|
(72,416)
|
Other
assets
|
|
29,886
|
|
|
(3,445)
|
Accounts payable and
accrued expenses
|
|
(299,479)
|
|
|
(178,022)
|
Net cash used in
operating activities
|
|
(2,939,021)
|
|
|
(574,844)
|
|
|
|
|
|
|
Cash flows from
investing activities
|
|
|
|
|
|
Proceeds from
SRAXmd
|
|
472,479
|
|
|
—
|
Purchase of
equipment
|
|
(20,899)
|
|
|
(20,793)
|
Development of
software
|
|
(279,752)
|
|
|
(231,774)
|
Net cash (used in)
provided by investing activities
|
|
171,828
|
|
|
(252,567)
|
|
|
|
|
|
|
Cash flows from
financing activities
|
|
|
|
|
|
Net cash provided by
financing activities
|
|
—
|
|
|
—
|
|
|
|
|
|
|
Net increase /
(decrease) in cash and cash equivalents
|
|
(2,767,193)
|
|
|
(827,411)
|
Cash and cash
equivalents, beginning of period
|
|
2,784,865
|
|
|
1,017,299
|
Cash and cash
equivalents, end of period
|
$
|
17,672
|
|
$
|
189,888
|
|
|
|
|
|
|
Supplemental
schedule of cash flow information
|
|
|
|
|
|
Cash paid for
interest
|
$
|
55,931
|
|
$
|
340,684
|
Cash paid for
taxes
|
$
|
—
|
|
$
|
—
|
Supplemental
schedule of noncash financing activities
|
|
|
|
|
|
Recorded Right of Use
Asset and Operating Lease Obligation
|
$
|
505,278
|
|
$
|
—
|
Vesting of common
stock award
|
$
|
—
|
|
$
|
150,000
|
Issuance of common
stock to be issued
|
$
|
—
|
|
$
|
869,500
|
SOCIAL REALITY,
INC.
|
Reconciliation of
GAAP to Non-GAAP results
|
(Unaudited)
|
|
|
|
For the three
months ended
|
|
|
March
31,
|
|
|
2019
|
|
2018
As Restated
|
Net Income /
(Loss)
|
|
$
|
(5,785,404)
|
|
$
|
11,068
|
Plus:
|
|
|
|
|
|
|
Equity based
compensation
|
|
|
120,884
|
|
|
166,130
|
Accretion
of beneficial conversion feature
|
|
|
-
|
|
|
-
|
Accretion
of debenture discount and warrants
|
|
-
|
|
|
9,885
|
Adjusted net income
(loss)
|
|
|
(5,664,520)
|
|
|
187,083
|
Interest (income)
expense
|
|
|
67,988
|
|
|
870,451
|
Depreciation and
amortization
|
|
|
253,043
|
|
|
175,626
|
Change in Fair Value
of Warrant Liability
|
|
|
1,961,851
|
|
|
(3,723,696)
|
Gain on
Sale
|
|
|
(472,479)
|
|
|
22,165
|
Other income
(loss)
|
|
|
13,509
|
|
|
4,664
|
Adjusted
EBITDA
|
|
$
|
(3,840,608)
|
|
$
|
(2,463,707)
|
|
For the three
months ended March 31,
|
|
As Reported -
GAAP
|
|
Less: Disc.
Products
|
|
Excl. Disc
Products
|
($s in
'000s)
|
2019
|
2018
|
%
chg
|
|
2019
|
2018
|
%
chg
|
|
2019
|
2018
|
%
chg
|
Net
Revenue
|
592
|
2,111
|
-72%
|
|
|
1,856
|
-100%
|
|
592
|
255
|
132%
|
Cost of
revenue
|
342
|
818
|
-58%
|
|
44
|
633
|
-93%
|
|
298
|
185
|
61%
|
Gross
Profit
|
250
|
1,293
|
-81%
|
|
(44)
|
1,223
|
n/a
|
|
294
|
70
|
321%
|
Margin
%
|
42%
|
61%
|
112%
|
|
n/m
|
66%
|
104%
|
|
50%
|
27%
|
243%
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expense
|
4,090
|
3,766
|
9%
|
|
10
|
1,262
|
-99%
|
|
4,107
|
2,504
|
64%
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA
|
(3,841)
|
(2,474)
|
n/a
|
|
(54)
|
(39)
|
n/a
|
|
(3,787)
|
(2,434)
|
n/a
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
|
(5,785)
|
11
|
n/a
|
|
(133)
|
(85)
|
n/a
|
|
(5,652)
|
96
|
n/a
|
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SOURCE SRAX