Social Reality, Inc. Reports 40x Revenue Increase For Q 4 2013 -Gross Revenue Rises 205% Year over Year

-Positive Adjusted EBITDA For Q 4 2013

- Launches Proprietary RTB platform

LOS ANGELES, March 27, 2014 /PRNewswire/ -- Social Reality, Inc. (OTCBB: 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 2013. Revenues for the fourth quarter of 2013 were $1,893,000, a 4,000% year-over-year increase from the fourth quarter of 2012 and a 122% increase sequentially over the third quarter of 2013.  Our revenues for 2013 were $3,413,353, an increase of 205% over 2012. 

"We are excited to announce our continued growth in the fourth quarter of 2013 and for the year ended. Most notably, we are excited to announce a positive Adjusted EBITDA for the fourth quarter, a significant milestone for the team. As a result of this continued growth, during the first quarter of 2014 we launched our own RTB platform.  This new platform has given us the tools we need to continue to grow our RTB business and remain competitive in the fast paced adtech world," said Christopher Miglino, Social Reality's Chairman and CEO.

Fourth Quarter and Year End 2013 Highlights

  • Quarterly revenue of $1,893,000 a 4,000% increase over the fourth quarter 2012
  • Annual revenue of $3,413,000 a 205% increase over 2012
  • Adjusted EBITDA, a non-GAAP measure, of $28,000 for the fourth quarter 2013
  • Revenues increase attributable to our SRAX real time bidding technology for website publishers.

Three-month financial results for the period ended December 31, 2013

Revenues for the three months ended December 31, 2013, were $1,893,000, as compared to $46,000 reported for the three months ended December 31, 2012. Gross profit increased to $644,000 for the three months ended December 31, 2013 compared to a loss of $83,000 for the same period of 2012.

For the quarter ended December 31, 2013, Adjusted EBITDA was $28,000 compared to $(443,000) in the fourth quarter of 2012. The company reported net loss of $263,000, or $0.01 per share, for the three months ended December 31, 2013, compared to a net loss of $466,000, or $0.04 per share loss, for the corresponding period of 2012.

12-month financial results for the year ended December 31, 2013

Revenues for the year ended December 31, 2013 were $3,413,000 as compared to $1,119,000 for the year ended December 31, 2012. Gross profit increased to $1,087,000 for the 12 months ended December 31, 2013 compared to $492,000 for the same period of 2012.

For the year ended December 31, 2013, Adjusted EBITDA was $(559,000) compared to $(1,155,000) for 2012.  The company reported a net loss of $1,747,000, or $(0.12) per share, for the year ended December 31, 2013, compared to a net loss of $1,259,000, or $(0.10) per share for the 2012 period.

Balance Sheet as of December 31, 2013

Cash and cash equivalents totaled $1,715,000 at December 31, 2013. Current assets and total assets were $2,208,000 and $3,908,000, respectively, and current liabilities and total liabilities were $813,000

First Quarter 2014 Event

In January of 2014:

  • Raised an additional $1.5 Million of financing for the company at $1.50 Per Share
  • Transitioned off of our reliance of the Google API's and launched our own RTB platform. During the first quarter of 2014 we made this transition, which caused downtime between ending our reliance on Google ADX and launching our proprietary platform.  This transition, which has now been completed  caused a temporary reduction in revenue in our first quarter 2014. 

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 involved 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 sustain our revenue growth, our ability to report profitable operations, risks associated loss of access to RTB inventory buyers and the new and untested technologies we are deploying, changes in our business, changes to economic growth in the U.S. economy; and government policies and regulations, including, but not limited to those affecting the Internet, all as set forth in our Annual Report on Form 10-K for the year ended December 31, 2013. 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 of the control of Social Reality and are difficult to predict.  Social Reality assumes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise..


Social Reality, Inc.

Statements of Operations








Three Months ended

December 31,



Years ended

December 31,




2013



2012



2013



2012




(Unaudited)



(Unaudited)





















Revenues


$

1,893,354



$

46,067



$

3,413,353



$

1,119,281


Cost of revenue



1,249,246




129,223




2,326,344




627,362


Gross profit



644,108




(83,156)




1,087,009




491,919


Operating expense



907,644




382,717




2,521,984




1,750,778


Loss from operations



(263,536)




(465,873)




(1,434,975)




(1,258,859)


Interest expense



588







(312,465)





Loss before provision for income taxes



(262,948)




(465,873)




(1,747,440)




(1,258,859)


Provision for income taxes













Net loss


$

(262,948)



$

(465,873)



$

(1,747,440)



$

(1,258,859)


Net loss per share, basic and diluted


$

(0.01)



$

(0.04)



$

(0.12)



$

(0.10)


Weighted average shares outstanding



18,830,991




12,912,129




14,691,010




12,842,770









Social Reality, Inc.

Balance Sheets










2013



2012


Assets














Current assets:







Cash and cash equivalents


$

1,715,264



$

105,987


Accounts receivable, net of allowance for doubtful accounts of $0



441,831




53,821


Prepaid expenses



46,109





Tax refunds receivable






38,000


Other current assets



5,018




5,000











Total current assets



2,208,222




202,808











Property and equipment, net of accumulated depreciation of $10,184 and $3,000



27,798




15,000











Deferred offering costs



5,453





Prepaid stock based compensation



1,662,074




58,834


Other assets



4,000




3,555











Total assets


$

3,907,547



$

280,197




















Liabilities and stockholders' equity (deficit)


















Current liabilities:









Accounts payable and accrued expenses


$

812,809



$

302,057











Total current liabilities



812,809




302,057











Stockholders' equity (deficit)


















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, 121,000 and no shares issued and outstanding, respectively



121





Class A common stock, authorized 250,000,000 shares, $0.001 par value, 19,901,794 and 3,912,129 shares issued and outstanding, respectively



19,902




3,912


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






9,000


Additional paid in capital



6,081,014




1,224,087


Accumulated deficit



(3,006,299)




(1,258,859)











Total stockholders' equity (deficit)



3,094,738




(21,860)











Total liabilities and stockholders' equity (deficit)


$

3,907,547



$

280,197






Social Reality, Inc.

Statements of Cash Flows







Years Ended

December 31,




2013



2012


Cash flows from operating activities:







Net loss


$

(1,747,440)



$

(1,258,859)


Adjustments to reconcile net loss to net cash used in operating activities:









Amortization of stock based prepaid fees



237,587




58,893


Stock based compensation



631,829




41,846


Amortization of debt issuance costs



274,737





Depreciation



7,184




3,000


Changes in operating assets and liabilities:









Accounts receivable



(388,010)




758,998


Prepaid expenses



(46,109)





Tax refunds receivable



38,000





Other current assets



(18)




200


Other assets



(445)




(3,555)


Accounts payable and accrued expenses



513,752




(133,159)


Deferred tax liability






(38,000)


Cash used in operating activities



(478,933)




(570,636)











Cash flows from investing activities:









Purchase of equipment



(19,982)




(18,000)


Cash used by investing activities



(19,982)




(18,000)











Cash flows from financing activities:









Proceeds from sales of common stock units



2,436,493





Cost of sale of common stock units



(48,111)





Proceeds from note payable, net



486,425





Repayments of note payable



(550,000)





Repurchase of common stock



(175,000)





Deferred offering costs



(5,453)





Debt issuance costs



(36,162)





Sale of common stock






472,959


Cash provided by financing activities



2,108,192




472,959











Net increase (decrease) in cash



1,609,277




(115,677)


Cash, beginning of period



105,987




221,664


Cash, end of period


$

1,715,264



$

105,987











Supplemental Schedule of Cash Flow Information:









Cash paid for interest


$



$


Cash paid for taxes


$

(38,000)



$

38,000











Non-cash financial activities:









Fees and costs deducted from proceeds of debt


$

63,575



$


Common and preferred stock issued as prepayment for services


$

1,735,000



$


Common stock warrant issued as prepayment for services


$

105,827



$


Common stock issued as payment of financing fee


$

175,000



$


Common stock issued as payment of accounts payable


$

3,000



$


Common stock Class A issued upon conversion of common stock Class B


$

9,000



$


Contribution of member interests (net assets) in Social Reality, LLC in exchange for common stock


$



$

722,194


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. Management believes that this non-GAAP measure provides useful information about the 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.

Adjusted EBITDA is defined as net income before income taxes, depreciation and amortization expenses, plus stock-based compensation and interest expense.

Reconciliation of Adjusted EBITDA to Income from Operations



For the

Three Months Ended

December 31,

(unaudited)



For the Years Ended

December 31,


(unaudited, in thousands)


2013



2012



2013



2012


Net income (loss)


$

(263)



$

(466)



$

(1,747)



$

(1,259)


plus:

















Equity based compensation



290




20




869




101


Adjusted net income (loss)


$

27



$

(446)



$

(878)




(1,158)


Interest expense



(1)







312





Depreciation of property, plant and equipment



2




3




7




3


Adjusted EBITDA


$

28



$

(443)



$

(559)



$

(1,155)


 

SOURCE Social Reality, Inc.



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