SRAX, Inc. - FORM 8-K/A - EX-99.3 - PRO FORMA FINANCIAL STATEMENTS

Attached files

file	filename
8-K/A - AMENDED CURRENT REPORT - SRAX, Inc.	scri_8k.htm
EX-99.1 - AUDITED FINANCIAL STATEMENTS - SRAX, Inc.	scri_ex99z1.htm
EX-99.2 - UNAUDITED FINANCIAL STATEMENTS - SRAX, Inc.	scri_ex99z2.htm

EXHIBIT 99.3

SOCIAL REALITY, INC.

PRO FORMA BALANCE SHEET

SEPTEMBER 30, 2014


						Pro Forma Adjustments to Reflect						Balance Sheet
	Balance Sheet			Balance Sheet		The Acquisition of Steel Media						Consolidated
	Social Reality, Inc.			Steel Media		As Of September 30, 2014						Pro Forma
	September 30, 2014			September 30, 2014		Dr			Cr			September 30, 2014
Assets

Current assets:
Cash and cash equivalents	$	576,797		$	1,277,476		1,905,189	(1), (2), (3)				$	3,759,462
Accounts receivable		700,657			2,751,020					60,137	(7)		3,391,540
Prepaid expenses		70,874			1,853								72,727
Other current assets		11,548			20,000								31,548

Total current assets		1,359,876			4,050,349								7,255,277

Property and equipment		24,396			8,245								32,641

Goodwill/Other intangibles							18,584,042	(1)		882,556	(6)		17,701,486

Deferred debt issue costs		200,000			-		2,964,352	(2), (3), (4), (5)					3,164,352
Prepaid stock based compensation		1,166,630			-								1,166,630
Other assets		4,804			-								4,804

Total assets	$	2,755,706		$	4,058,594							$	29,325,190

Liabilities and stockholders' equity

Current liabilities:
Accounts payable and accrued expenses	$	659,875		$	3,176,038		98,593	(2)		379,659	(5)	$	4,056,842
							60,137	(7)
Note payable		-			-					2,500,000	(1)		2,500,000
Contingent consideration payable - current portion		-			-					3,507,828	(1)		3,507,828


Total current liabilities		659,875			3,176,038								10,064,670

Notes payable		-			-					9,000,000	(1), (3)		9,000,000
Contingent consideration payable - long term		-			-					3,076,214	(1)		3,076,214
Put liability		-			-					1,232,294	(4)		1,232,294

Total liabilities		659,875			3,176,038								23,373,178

Stockholders' equity

Preferred stock		121			-								121
Common stock		21,014			100		100	(6)		5,021	(1), (2)		26,035
Additional paid in capital		7,566,667			-					4,651,160	(1), (2)		12,217,827
							800,000	(2)
Accumulated deficit		(5,491,971	)		882,456		882,456	(6)					(6,291,971	)

Total stockholders' equity		2,095,831			882,556								5,952,012

Total liabilities and stockholders' equity	$	2,755,706		$	4,058,594							$	29,325,190

							25,294,869			25,294,869

PF-1

(1)

To record the purchase of Steel Media. As consideration, we agreed to pay up to $20 million consisting of: (i) a cash payment at closing of $7.5 million; (ii) a cash payment of $2 million; (iii) a one year secured subordinated promissory note in the principal amount of $2.5 million; and (iv) an earnout payment of up to $8 million, valued at $6,584,042 on the acquisition date.

(2)

To record the sale of 5,020,500 common stock units at a price of $1.00 per unit. Each unit consists of one share of common stock and one warrant to purchase 0.5 shares of common stock at an exercise price of $1.50 per share. We received gross proceeds of $4,220,500 from the sale of 4,220,500 units. We also issued 800,000 units, valued at $800,000, to our placement agent as compensation for acquisition related investment banking services. Of the cash proceeds, $500,000 was paid to the seller, $98,593 was used to pay accrued legal fees, $364,319 was used to pay investment banking and other fees, $580,000 was used to pay a loan origination fee and $2,677,588 was remitted to the company. We then paid $2,000,000 to the seller as partial payment of the purchase price.

(3)

To record a financing agreement entered into in conjunction with the acquisition of Steel Media. We received gross proceeds of $9,000,000 pursuant to the agreement. From the proceeds, $7,000,000 was paid to the seller as partial payment of the purchase price, $772,399 was paid for legal and other fees and $1,227,601 was remitted to the company.

(4)

To record a put liability related to warrants issued in connection with the financing agreement.

(5)

To record accrued legal fees incurred in connection with the financing agreement.

(6)

To eliminate the net equity of Steel Media against goodwill.

(7)

to eliminate intercompany receivables and payables.

PF-2

SOCIAL REALITY, INC.

PRO FORMA STATEMENT OF OPERATIONS

NINE MONTHS ENDED SEPTEMBER 30, 2014


						Pro Forma Adjustments to Reflect					Consolidated
	Social Reality, Inc.			Steel Media		The Acquisition of Steel Media					Pro Forma
	9 Months Ended			9 Months Ended		As Of September 30, 2014					9 Months Ended
	September 30, 2014			September 30, 2014		Dr			Cr		September 30, 2014


Revenues	$	1,493,755		$	6,522,225						$	8,015,980
Cost of revenue		1,066,336			2,222,236							3,288,572

Gross profit		427,419			4,299,989							4,727,408

Operating expense		2,914,356			3,744,565							6,658,921

Loss from operations		(2,486,937	)		555,424							(1,931,513	)


							361,053	(1)
							94,302	(2)
							861,575	(3)
Interest income (expense)		1,265			-		791,088	(4)				(2,106,753	)

Loss before provision for income taxes		(2,485,672	)		555,424							(4,038,266	)

Provision for income taxes		-			-							-

Net loss	$	(2,485,672	)	$	555,424						$	(4,038,266	)

Net loss per share, basic and diluted	$	(0.12	)								$	(0.16	)

Weighted average shares outstanding		20,843,431								5,020,500		25,863,931

(1)

To record accretion of contingent consideration.

(2)

To record accretion of warrant put liability incurred in connection with acquisition.

(3)

To record interest on debt incurred in connection with acquisition.

(4)

To record amortization of debt costs.

PF-3

SOCIAL REALITY, INC

PRO FORMA STATEMENTS OF OPERATIONS

YEAR ENDED DECEMBER 31, 2013


						Pro Forma Adjustments to Reflect					Consolidated
	Social Reality, Inc.			Steel Media		The Acquisition of Steel Media					Pro Forma
	Year Ended			Year Ended		As Of December 31, 2013					Year Ended
	December 31, 2013			December 31, 2013		Dr			Cr		December 31, 2013


Revenues	$	3,413,353		$	7,936,511						$	11,349,864
Cost of revenue		2,326,344			1,812,811							4,139,155

Gross profit		1,087,009			6,123,700							7,210,709

Operating expense		2,521,984			5,986,357		800,000	(6)				9,308,341

Loss from operations		(1,434,975	)		137,343							(2,097,632	)

							125,000	(1)
							925,045	(2)
							173,404	(3)
							1,242,388	(4)
Interest income (expense)		(312,465	)		-		1,054,784	(5)				(3,833,086	)

Loss before provision for income taxes		(1,747,440	)		137,343							(5,930,718	)

Provision for income taxes		-			-							-

Net loss	$	(1,747,440	)	$	137,343						$	(5,930,718	)

Net loss per share, basic and diluted	$	(0.12	)								$	(0.30	)

Weighted average shares outstanding		14,691,010								5,020,500		19,711,510

(1)

To record interest on note issued to seller.

(2)

To record accretion of contingent consideration.

(3)

To record accretion of warrant put liability incurred in connection with acquisition.

(4)

To record interest on debt incurred in connection with acquisition.

(5)

To record amortization of debt costs.

(6)

To record acquisition costs.

PF-4

SOCIAL REALITY, INC.

NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS

Unaudited Pro Forma Condensed Financial Information.

The unaudited pro forma financial statements have been prepared in order to present consolidated financial position and results of operations of Social Reality, Inc. and Steel Media as if the acquisition had occurred as of September 30, 2014 for the pro forma consolidated balance sheet and to give effect to the acquisition as if the transaction had taken place at January 1, 2013 for the pro forma condensed consolidated statement of income for the year ended December 31, 2013 and the nine months ended September 30, 2014, respectively.

The acquisition has been accounted for under the acquisition method of accounting. Under the acquisition method of accounting, the total acquisition consideration price is allocated to the assets acquired and liabilities assumed based on their preliminary estimated fair values. The fair value measurements utilize estimates based on key assumptions of the acquisition, and historical and current market data. The excess of the purchase price over the total of estimated fair values assigned to tangible and identifiable intangible assets acquired and liabilities assumed is recognized as goodwill. In order to ultimately determine the fair values of tangible and intangible assets acquired and liabilities assumed for Steel Media, we may engage a third party independent valuation specialist; however as of the date of this report, the valuation has not been undertaken. During the measurement period (which is the period required to obtain all necessary information that existed at the acquisition date, or to conclude that such information is unavailable, not to exceed one year), additional assets or liabilities may be recognized, or there could be changes to the amounts of assets or liabilities previously recognized on a preliminary basis, if new information is obtained about facts and circumstances that existed as of the acquisition date that, if known, would have resulted in the recognition of those assets or liabilities as of that date. The Company expects the purchase price allocations for the acquisition of Steel Media to be completed by September 30, 2015.

The pro forma adjustments do not reflect the amortization of intangible assets acquired, if any, in the acquisition.

PF-5

SRAX, Inc. - FORM 8-K/A - EX-99.3 - PRO FORMA FINANCIAL STATEMENTS - August 12, 2015

Attached files

SRAX, Inc. Reports