LOS ANGELES, Aug. 14, 2019 /PRNewswire/ -- SRAX, Inc. (Nasdaq:
SRAX), a digital marketing and consumer data management and
distribution technology platform company, reported results for the
three months ended June 30, 2019.
"We continue to build our data assets through increasing
adoption of our verticals and BIGtoken," stated SRAX's CEO and
Founder Christopher Miglino. "These
proprietary platforms are positioned to generate long-term revenue
and value. During the quarter, we made substantial technology
advancements in the SRAX IR platform and BIGtoken. SRAX IR is a
perfect example of the type of platform that we believe will
deliver long term recurring revenue, while building one of the most
valuable data sets in the financial markets.
"BIGtoken is the leading edge of the new data economy. Our
global and diverse BIGtoken subscriber base experienced viral
growth in April and reached 15.9 million users as of this
week. During the third quarter, we began to monetize our
BIGtoken users, as we engaged with brands and several marketing
agencies. Now, we are focused on increasing scale within certain
data segments in specific countries. In addition, our discussions
with advertisers and agencies have uncovered new revenue
opportunities that leverage our high-quality user data. Through
building what we predict will be one of the most valuable opt-in
data sets in the world, we are well positioned to generate
long-term revenue and value for shareholders.
Financial Highlights for Second Quarter 2019
- Grew Q2 2019 total revenue 53%, compared to Q1 2019.
- Increased total gross margin to 55% in the second quarter,
compared to 42% in Q1 2019.
Operating Highlights:
- BIGtoken, the first digital exchange of transparent and
verified consumer data:
-
- Signed agreement with one of India's largest conglomerate groups, Yash
Birla Group, to launch BIGtoken India.
- Partnered with several high-profile non-profit association to
provide BIGtoken users the ability to donate their earnings. They
include
-
- American Heart Association, the nation's oldest and largest
voluntary organization dedicated to fighting heart disease and
stroke;
- HealthCorps, founded by Dr. Mehmet
Oz, dedicated to helping high-school students make better
choices about their health and physical fitness; and
- ALS Association, which recently launched its Challenge Me
campaign in observance of the fifth anniversary of the ALS Ice
Bucket Challenge.
- Introduced the ability for users to receive gift cards in
exchange for giving brands access to their anonymized data.
- Formed a strategic partnership with LiveXLive, a global digital
media company focused on live entertainment, to increase each
platform's user base while generating data-based insight.
- Signed an agreement with Blue Chip, integrated marketing
agency, to activate anonymized self-attested, transaction,
location, and social media data.
- Introduced a feature for users to earn points with popular
travel, grocery, and retail loyalty/rewards programs.
- Verticals:
-
- Enhanced SRAX IR features, adding real-time trading data,
warrant management and the ability for companies to access
shareholder contact data, including email, phone number and social
media links.
- Launched SRAX Lux, in June, to target and reach luxury
consumers at luxury retail stores, high-end art, music, film,
fashion, and sports events, across all consumer devices.
- Corporate:
-
- Changing the company name to SRAX to better reflect the
positioning.
- Raised $1 million at $5 per share in a private placement to support
the launch of BIGtoken across Asia.
- Raised $7.8 million: $6.7 million from a registered direct offering
and $1.1 million from warrant
conversion.
- Raised $5.5 million from a
registered direct offering, subsequent to quarter end.
- Options trading became available for SRAX.
Conference Call:
Management will review the results on a conference call with a live
question and answer session today, August
14, 2019, at 4:30 p.m.
ET/1:30 p.m. PT.
- If calling from the U.S. or Canada, please dial 1-877-451-6152 to access
the live call and 1-844-512-2921 for the replay, code 13691889
available until Wednesday August 28,
2019.
- If calling internationally, please dial 1-201-389-0879 to
access the live call and 1-412-317-6671 for the replay, code
13691889.
- 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 measure: 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 EBITDA is defined as earnings before interest, taxes,
depreciation and amortization, changes in the fair-value of
derivative and warrant liabilities, other non-cash charges related
to financing activities and certain additional one-time
charges.
About SRAX
SRAX, Inc. (NASDAQ: SRAX) is a digital marketing and consumer
data management technology company. SRAX's technology unlocks data
to reveal brands core consumers and their characteristics across
marketing channels. Through our BIGtoken platform, 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 tools
deliver a digital competitive advantage for brands in the CPG,
automotive, investor relations, luxury, 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
|
|
|
|
June 30,
|
|
December
31,
|
|
|
2019
|
|
2018
|
|
|
(unaudited)
|
|
|
Assets
|
|
|
Current
assets:
|
|
|
Cash and cash
equivalents
|
$
|
2,465,639
|
$
|
2,784,865
|
Accounts receivable,
net
|
|
780,187
|
|
1,828,940
|
Prepaid
expenses
|
|
550,003
|
|
466,823
|
Other current
assets
|
|
300,898
|
|
387,085
|
Total current
assets
|
|
4,096,727
|
|
5,467,713
|
|
|
|
|
|
Non-current
Assets:
|
|
|
|
|
Property and
equipment, net
|
|
211,240
|
|
192,065
|
Goodwill
|
|
15,644,957
|
|
15,644,957
|
Intangible assets,
net
|
|
1,811,044
|
|
1,762,605
|
Right-of-Use Asset -
Long Term Portion
|
|
466,253
|
|
—
|
Other
assets
|
|
107,454
|
|
51,153
|
Total non-current
assets
|
|
18,240,948
|
|
17,650,780
|
Total
assets
|
$
|
22,337,675
|
$
|
23,118,493
|
|
|
|
|
|
Liabilities and
stockholders' equity
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts payable and
accrued expenses
|
|
1,456,965
|
|
3,574,926
|
Debenture warrant
liability
|
|
8,215,035
|
|
4,323,499
|
Leapfrog warrant
liability
|
|
1,161,350
|
|
622,436
|
Derivative
liability
|
|
902,915
|
|
496,260
|
Other current
liabilities
|
|
894,686
|
|
—
|
Total current
liabilities
|
|
12,630,951
|
|
9,017,121
|
Non-current
liabilities:
|
|
|
|
|
Secured convertible
debentures, net
|
|
—
|
|
—
|
Lease Obligation -
Long Term Portion
|
|
326,471
|
|
—
|
Total non-current
liabilities
|
|
326,471
|
|
—
|
Total
liabilities
|
|
12,957,422
|
|
9,017,121
|
|
|
|
|
|
Commitments and
contingencies (Note 11)
|
|
|
|
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
Preferred stock,
authorized 50,000,000 shares, $0.001 par value, no shares issued or
outstanding at June 30, 2019 and December 31, 2018,
respectively
|
|
—
|
|
—
|
Class A common stock,
authorized 250,000,000 shares, $0.001 par value, 12,546,022 and
10,109,530 shares issued and outstanding at June 30, 2019 and
December 31, 2018, respectively
|
|
12,546
|
|
10,109
|
Class B common stock,
authorized 9,000,000 shares, $0.001 par value, no shares issued or
outstanding at June 30, 2019 and December 31, 2018,
respectively
|
|
—
|
|
—
|
Common stock to be
issued
|
|
—
|
|
—
|
Additional paid in
capital
|
|
42,030,110
|
|
32,869,611
|
Accumulated
deficit
|
|
(32,662,403)
|
|
(18,778,348)
|
Total stockholders'
equity
|
|
9,380,253
|
|
14,101,372
|
Total liabilities and
stockholders' equity
|
$
|
22,337,675
|
$
|
23,118,493
|
SOCIAL REALITY,
INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(Unaudited)
|
|
|
|
Three Months
ended
|
|
Six Months
ended
|
|
|
June
30,
|
|
June
30,
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
904,222
|
|
$
|
4,697,351
|
|
$
|
1,495,977
|
|
$
|
6,808,201
|
Cost of
revenue
|
|
|
410,892
|
|
|
1,320,464
|
|
|
753,239
|
|
|
2,138,569
|
Gross
profit
|
|
|
493,330
|
|
|
3,376,887
|
|
|
742,738
|
|
|
4,669,632
|
General, selling and
administrative expense
|
|
|
5,114,115
|
|
|
5,392,625
|
|
|
9,605,377
|
|
|
9,522,883
|
Loss from
operations
|
|
|
(4,620,785)
|
|
|
(2,015,738)
|
|
|
(8,862,639)
|
|
|
(4,853,251)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
(expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
(182,957)
|
|
|
(486,758)
|
|
|
(250,944)
|
|
|
(921,543)
|
Amortization of debt
issuance costs
|
|
|
-
|
|
|
(482,588)
|
|
|
-
|
|
|
(918,254)
|
Total Interest
Expense
|
|
|
(182,957)
|
|
|
(969,346)
|
|
|
(250,944)
|
|
|
(1,839,797)
|
Gain or (loss)
on sale of Assets
|
|
|
(77,373)
|
|
|
(22,165)
|
|
|
395,106
|
|
|
(22,165)
|
Exchange
Gain or Loss
|
|
|
-
|
|
|
(596)
|
|
|
13,509
|
|
|
(5,260)
|
Loss on
repricing of equity warrants
|
|
|
(341,682)
|
|
|
-
|
|
|
(341,682)
|
|
|
-
|
Change
in Fair Value of Warrant Liability
|
|
|
(2,875,554)
|
|
|
(1,013,565)
|
|
|
(4,837,405)
|
|
|
2,710,129
|
Other non operating
income / (expense)
|
|
|
(3,294,609)
|
|
|
(1,036,326)
|
|
|
(4,770,472)
|
|
|
2,682,704
|
Total other income /
(expense)
|
|
|
(3,477,566)
|
|
|
(2,005,672)
|
|
|
(5,021,416)
|
|
|
842,907
|
Income / (Loss)
before provision for income taxes
|
|
|
(8,098,351)
|
|
|
(4,021,410)
|
|
|
(13,884,055)
|
|
|
(4,010,344)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income
taxes
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
Net income /
(loss)
|
|
$
|
(8,098,351)
|
|
$
|
(4,021,410)
|
|
$
|
(13,884,055)
|
|
$
|
(4,010,344)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income / (loss)
per share, basic and diluted
|
|
$
|
(0.67)
|
|
$
|
(0.39)
|
|
$
|
(1.24)
|
|
$
|
(0.40)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
12,129,787
|
|
|
10,213,618
|
|
|
11,210,810
|
|
|
10,126,247
|
Diluted
|
|
|
12,129,787
|
|
|
10,213,618
|
|
|
11,210,810
|
|
|
10,126,247
|
SOCIAL REALITY,
INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(Unaudited)
|
|
|
Six Months
Ended
|
|
June
30,
|
|
2019
|
|
2018
|
Cash flows from
operating activities
|
|
|
|
Net Income
(loss)
|
$
|
(13,884,055)
|
|
$
|
(4,010,344)
|
Adjustments to
reconcile net loss to net cash (used in) provided by operating
activities:
|
-
|
|
|
-
|
Stock based
compensation
|
|
446,396
|
|
|
1,161,760
|
Amortization of debt
issuance costs
|
|
-
|
|
|
300,185
|
Accretion of
debenture discount and warrants
|
|
-
|
|
|
618,069
|
Gain/Loss on
valuation of warrant derivatives
|
|
4,837,406
|
|
|
(2,710,129)
|
Amortization of
intangibles
|
|
495,178
|
|
|
350,165
|
Changes in operating
assets and liabilities:
|
|
-
|
|
|
-
|
Accounts
receivable
|
|
807,000
|
|
|
1,630,258
|
Prepaid
expenses
|
|
(83,480)
|
|
|
(47,061)
|
Other
assets
|
|
29,886
|
|
|
(2,672)
|
Accounts payable and
accrued expenses
|
|
(1,363,056)
|
|
|
2,140,856
|
Unearned
revenue
|
|
-
|
|
|
-
|
Net cash used in
operating activities
|
$
|
(8,097,541)
|
|
$
|
(554,303)
|
|
|
|
|
|
|
Cash flows from
investing activities
|
|
|
|
|
|
Purchase of
equipment
|
|
(52,924)
|
|
|
(20,793)
|
Development of
software
|
|
(543,617)
|
|
|
(451,168)
|
Net cash (used in)
provided by investing activities
|
$
|
(596,541)
|
|
$
|
(471,961)
|
|
|
|
|
|
|
Cash flows from
financing activities
|
|
|
|
|
|
Proceeds from the
issuance of common stock units
|
|
7,228,709
|
|
|
-
|
Proceeds from the
issuance of common stock in conjunction with warrant
exercised
|
|
1,146,148
|
|
|
50,001
|
Proceeds from secured
convertible debentures, net
|
|
-
|
|
|
-
|
Repayments of notes
payable
|
|
-
|
|
|
-
|
Net cash provided by
financing activities
|
$
|
8,374,857
|
|
$
|
50,001
|
|
|
|
|
|
|
Net increase /
(decrease) in cash and cash equivalents
|
|
(319,225)
|
|
|
(976,263)
|
Cash and cash
equivalents, beginning of period
|
|
2,784,865
|
|
|
1,017,299
|
Cash and cash
equivalents, end of period
|
$
|
2,465,640
|
|
$
|
41,036
|
|
|
1
|
|
|
|
Supplemental
schedule of cash flow information
|
|
|
|
|
|
Cash paid for
interest
|
$
|
-
|
|
$
|
313,791
|
Cash paid for
taxes
|
|
-
|
|
|
-
|
Supplemental
schedule of noncash financing activities
|
|
|
|
|
|
Recorded right-of-use
asset
|
|
(466,253)
|
|
|
-
|
Recorded lease
obligation
|
|
466,253
|
|
|
|
Common stock issued
for preferred stock conversion and vesting grants
|
|
-
|
|
|
-
|
Vesting of common
stock award
|
|
-
|
|
|
150,000
|
Issuance of treasury
shares for purposes of loan collateralization
|
|
220
|
|
|
-
|
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
|
|
|
June 30,
2019
|
|
March 31,
2019
|
|
June 30,
2018
|
Net Income /
(Loss)
|
|
$
|
(8,088,792)
|
|
$
|
(5,795,265)
|
|
$
|
(4,021,486)
|
Plus:
|
|
|
|
|
|
|
|
|
|
Equity based
compensation
|
|
|
316,234
|
|
|
130,161
|
|
|
995,630
|
Interest (income)
expense
|
|
|
182,957
|
|
|
67,988
|
|
|
969,346
|
Depreciation and
amortization
|
|
|
275,602
|
|
|
253,324
|
|
|
222,000
|
Change in Fair Value
of Warrant Liability
|
|
|
2,875,554
|
|
|
1,961,851
|
|
|
986,217
|
Financing
Costs
|
|
|
341,682
|
|
|
-
|
|
|
-
|
Gain on
Sale
|
|
|
77,373
|
|
|
(472,479)
|
|
|
49,513
|
Other (income)/
expense
|
|
|
-
|
|
|
(13,509)
|
|
|
596
|
Adjusted
EBITDA
|
|
$
|
(4,019,390)
|
|
$
|
(3,867,928)
|
|
$
|
(798,184)
|
|
|
For the three
months ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As Reported -
GAAP
|
|
Disc.
Products
|
|
Excl. Disc
Products
|
($s in
'000s)
|
|
June 30,
2019
|
March 31,
2019
|
June 30,
2018
|
QoQ
|
YoY
|
|
June 30,
2019
|
March 31,
2019
|
June
30,
2018
|
QoQ
|
YoY
|
|
June 30,
2019
|
March 31,
2019
|
June 30,
2018
|
QoQ
|
YoY
|
Net
Revenue
|
|
904
|
592
|
4,697
|
53%
|
-87%
|
|
-
|
-
|
3,857
|
n/m
|
-100%
|
|
904
|
592
|
840
|
53%
|
8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
revenue
|
|
411
|
342
|
1,320
|
20%
|
-74%
|
|
(4)
|
44
|
734
|
-110%
|
-101%
|
|
415
|
298
|
586
|
39%
|
-29%
|
Gross
Profit
|
|
493
|
249
|
3,377
|
98%
|
-93%
|
|
4
|
(44)
|
3,123
|
-110%
|
-100%
|
|
489
|
294
|
254
|
67%
|
92%
|
Margin
%
|
|
55%
|
42%
|
72%
|
1241
bps
|
-1733
bps
|
|
n/a
|
n/a
|
81%
|
n/m
|
n/m
|
|
54%
|
50%
|
30%
|
444
bps
|
2383
bps
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expense
|
|
5,105
|
4,501
|
5,393
|
13%
|
-17%
|
|
8
|
114
|
1,680
|
-93%
|
-93%
|
|
5,097
|
4,386
|
3,712
|
16%
|
18%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Income
|
|
(4,611)
|
(4,251)
|
(2,016)
|
8%
|
111%
|
|
(3)
|
(159)
|
1,443
|
-98%
|
-111%
|
|
(4,608)
|
(4,093)
|
(3,458)
|
13%
|
18%
|
less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity based
compensation
|
|
316
|
130
|
996
|
143%
|
-87%
|
|
-
|
-
|
-
|
n/m
|
n/m
|
|
316
|
130
|
996
|
143%
|
-68%
|
Depreciation and
amortization
|
|
276
|
253
|
222
|
9%
|
14%
|
|
-
|
-
|
54
|
-100%
|
n/m
|
|
276
|
199
|
168
|
38%
|
64%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA
|
|
(4,019)
|
(3,868)
|
(798)
|
4%
|
385%
|
|
(3)
|
(54)
|
1,497
|
-94%
|
-104%
|
|
(4,016)
|
(3,814)
|
(2,295)
|
5%
|
66%
|
View original content to download
multimedia:http://www.prnewswire.com/news-releases/srax-reports-revenue-grew-53-sequentially-for-q2-2019-300901930.html
SOURCE SRAX