Snap Interactive Reports Results for the Quarter Ended June 30, 2015

Transcription

1 August 13, 2015 Snap Interactive Reports Results for the Quarter Ended June 30, 2015 NEW YORK, NY--(Marketwired - Aug 13, 2015) - Snap Interactive, Inc. ("SNAP," the "Company," "we," "our" or "us") (OTCQB: STVI), a leading online dating provider, today announced financial and operational results for the quarter ended June 30, Highlights: Total revenues decreased 7.6% and subscription revenue decreased 2.4% for the second quarter of 2015 relative to the comparable period in 2014, however, total revenues slightly increased by approximately $2.0 thousand as compared to the first quarter of 2015; SNAP incurred an operating loss of approximately $0.2 million, reflecting an improvement as compared to an operating loss of approximately $0.3 million for the comparable period in 2014; Cash and cash equivalents totaled approximately $1.9 million as of June 30, 2015, representing an increase of approximately $0.8 million from December 31, 2014; Generated positive Adjusted EBITDA of approximately $73.0 thousand, an improvement of approximately $11.0 thousand relative to the comparable period in 2014, and an improvement of approximately $685.0 thousand compared to the first quarter of 2015; Active subscriber count was 98.0 thousand as of June 30, 2015 which was relatively flat compared to the same period in 2014; and Increased user activity on The Grade, our new mobile dating application, reaching a cumulative usage milestone of more than 20.0 million swipes, as compared to cumulative usage of more than 8.0 million swipes as of March 31, /17

2 Financial Highlights 2/17

3 Current period compared with same period in prior year (unaudited): Three Months Ended June 30, Statement of Operations and Cash Flow Results % Change Total revenue $ 3,188,539 $ 3,450,010 (7.6 )% Subscription revenue $ 3,075,868 $ 3,151,002 (2.4 )% Advertising and marketing expense $ 1,338,070 $ 1,110, % Net loss $ (258,986 ) $ (259,678 ) (0.3 )% Net cash used in operating activities $ (393,872 ) $ (301,174 ) 30.8 % Non GAAP Results Active subscribers (at period end) 98,000 98, % Bookings $ 2,918,409 $ 3,021,860 (3.4 )% Adjusted EBITDA $ 73,405 $ 61, % 3/17

4 Current period compared to prior period (unaudited): Statement of Operations and Cash Flow Results Three Months Ended June 30, 2015 March 31, 2015 % Change Total revenue $ 3,188,539 $ 3,186, % Subscription revenue $ 3,075,868 $ 3,129,310 (1.7 )% Advertising and marketing expense $ 1,338,070 $ 1,726,097 (22.5 )% Net loss $ (258,986 ) $ (1,219,179 ) (78.8 )% Net cash used in operating activities $ (393,872 ) $ (1,052,770 ) (62.6 )% Non GAAP Results Active subscribers (at period end) 98, ,700 (4.6 )% Bookings $ 2,918,409 $ 3,157,566 (7.6 )% Adjusted EBITDA $ 73,405 $ (612,465 ) N/A 4/17

5 Balance Sheet Results: June 30, 2015 December 31, 2014 % Change Cash and cash equivalents $ 1,914,728 $ 1,138, % Deferred subscription revenue $ 1,822,872 $ 1,952,075 (6.6 )% Management Commentary Growth and New Initiatives In the second quarter of 2015 we achieved important milestones in growth and new initiatives, including: Board of Directors - Appointed an independent director to our Board of Directors; Reengaged Users - Reactivated 1.2 million users from the AYI database via targeted campaigns; and The Grade User Activity - As of June 30, 2015, cumulative usage of The Grade mobile application exceeded 20 million swipes. SNAP's Chief Executive Officer, Clifford Lerner, said, "Q2 was a significant quarter for SNAP, during which we achieved several milestones, with the highlight being the appointment of our first independent director, Dr. Steven Fox, to our Board of Directors. We continue to seek two other independent board members to help us achieve our strategic objective to build a portfolio of mobile and Internet dating applications and brands. In addition, SNAP has developed a valuable asset in its database of over 30.0 million users. SNAP's campaign in the second quarter to reactivate inactive users by presenting AYI and third party offers was successful, engaging approximately 1.2 million users that had formerly been inactive. SNAP's infrastructure is highly scalable and our team is capable of supporting significant future growth and profitability as we seek to grow our portfolio." Mr. Lerner continued, "The Grade, our unique female-friendly dating app and first addition to our portfolio, saw record usage in Q2, highlighted by an 81% increase in swipes in the second quarter of 2015 as compared to the first quarter of 2015, as seen in the chart below. Furthermore, The Grade also appeared in the nationally televised reality show Leah Remini: It's All Relative in the July 22nd episode 'Leah and Chelsea Handler's Dating Tips', 5/17

6 in which The Grade is used by a cast member to help find a date. We're excited to see The Grade receive a high level of exposure to a national audience." To view the chart on Total Swipe Count click the following link: swipe count.jpg SNAP's Chief Operating Officer, Alex Harrington, said, "Looking at our business overall, SNAP faced revenue headwinds in the second quarter of 2015 relative to the second quarter of This was primarily due to unfavorable international exchange rates and the termination of a large, exclusive advertising contract in 2014 in favor of more flexible, non-exclusive advertising relationships in Relative to the first quarter of 2015, revenues increased slightly as our smaller advertising relationships continue to grow. AYI has delivered stable results, with subscription revenues decreasing nominally and active subscribers flat compared to the same period last year. In the near future, we expect that the focus for AYI will be on cash efficiency, rather than growth to support other investment initiatives in our portfolio." Liquidity and Cash Flow Cash Balance - We ended the second quarter of 2015 with approximately $1.9 million of cash and cash equivalents on our balance sheet; and Reduction in Cash Used in Operating Activities: We reduced our consumption of cash from operating activities from nearly $1.1 million in the first quarter of 2015 to approximately $0.4 million in the second quarter of Mr. Harrington added, "We were pleased to reduce expenses and cash burn during the second quarter of 2015 relative to the first quarter of 2015, in which we sustained a number of one-time, non-recurring items such as a repayment of an advance under an advertising agreement, expenses associated with the relocation of our corporate headquarters and a legal settlement and related legal fees. With our current liquidity position on a solid footing, we continue to manage cash conservatively and expect still more cash-efficiency in operations going forward, while continuing to explore new avenues for growth." 6/17

7 About Snap Interactive, Inc. Snap Interactive, Inc. develops, owns and operates online dating applications for social networking websites and mobile platforms. The Grade is a mobile dating application catering to high quality singles. SNAP's flagship brand, AYI.com is a multi-platform online dating site with over one million monthly active users. For more information on SNAP, please visit The contents of our websites are not part of this press release, and you should not consider the contents of these websites in making an investment decision with respect to our common stock. Facebook is a registered trademark of Facebook, Inc. iphone is a registered trademark of Apple Inc. Android is a trademark of Google Inc. AYI.com is a registered trademark of Snap Interactive, Inc. Forward Looking Statements This press release contains "forward-looking statements" made under the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995 that are based on current expectations, estimates, forecasts and assumptions and are subject to risks and uncertainties. Words such as "anticipate," "assume," "believe," "estimate," "expect," "goal," "intend," "plan," "project," "seek," "target," and variations of such words and similar expressions are intended to identify forward-looking statements. Such forward-looking statements are subject to certain risks, uncertainties and assumptions that may cause actual results to differ materially from those expressed by the forward-looking statements, including, but not limited to, the following: general economic, industry and market sector conditions; the Company's future growth and the ability to obtain additional financing to implement the Company's growth strategy; the ability to achieve break-even cash flow or positive Adjusted EBITDA; the ability to increase or recognize revenue, decrease expenses and increase the number of active subscribers or new subscription transactions; the ability to enter into new advertising agreements; the ability to diversify new user acquisition channels or improve the conversion of users to paid subscribers; the ability to anticipate and respond to changing user and industry trends and preferences; the intense competition in the online dating marketplace; the ability to release new 7/17

8 applications or derive revenue from new applications; potential acquisitions of dating and social networking companies; the ability to use indebtedness to grow our business or increase the number of active subscribers and revenue; and circumstances that could disrupt the functioning of the Company's application and websites. In evaluating these statements, you should carefully consider these risks and uncertainties and those described under the headings "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Risk Factors" in the Company's most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other Securities and Exchange Commission filings. All forward-looking statements speak only as of the date on which they are made. The Company undertakes no obligation to update any forwardlooking statement or statements to reflect events or circumstances after the date on which such statement was made, except to the extent required by applicable securities laws. 8/17

9 Assets Current assets: SNAP INTERACTIVE, INC. CONDENSED CONSOLIDATED BALANCE SHEETS June 30, 2015 (Unaudited) December 31, 2014 Cash and cash equivalents $ 1,914,728 $ 1,138,385 Credit card holdback receivable 229, ,759 Accounts receivable, net of allowances and reserves of $59,038 and $42,533, respectively 264, ,128 Short term security deposits - 115,104 Prepaid expense and other current assets 114,961 93,542 Total current assets 2,523,190 2,216,918 Fixed assets and intangible assets, net 418, ,123 Notes receivable 79,800 78,520 Long term security deposits 335, ,000 Investments 200, ,000 Total assets $ 3,557,143 $ 3,193,561 Liabilities and stockholders' equity (deficit) Current liabilities: Accounts payable $ 896,914 $ 1,074,345 Accrued expenses and other current liabilities 360,644 1,062,836 Notes payable - 400,000 Deferred subscription revenue 1,822,872 1,952,075 Deferred advertising revenue - 13,427 Total current liabilities 3,080,430 4,502,683 Deferred rent, net of current portion 59,904 - Convertible note payable, net of discount 1,023,020 - Derivative liabilities 1,703,425 23,425 Capital lease obligations, net of current portion 113, ,055 Total liabilities 5,980,455 4,675,163 Commitments and Contingencies Stockholders' equity (deficit): Preferred stock, $0.001 par value, 10,000,000 shares authorized, none issued and outstanding - - Common stock, $0.001 par value, 100,000,000 shares authorized, 50,007,826 and 49,507,826 shares issued, respectively, and 39,682,826 and 39,182,826 shares outstanding, respectively 39,683 39,183 Additional paid-in capital 12,394,444 11,858,489 Accumulated deficit (14,857,439 ) (13,379,274 ) Total stockholders' equity (deficit) (2,423,312 ) (1,481,602 ) Total liabilities and stockholders' equity (deficit) $ 3,557,143 $ 3,193, /17

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11 SNAP INTERACTIVE, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Revenues: Three Months Ended Six Months Ended June 30, June 30, Subscription revenue $ 3,075,868 $ 3,151,002 $ 6,205,178 $ 6,290,02 Advertising revenue 112, , , ,34 Total revenues 3,188,539 3,450,010 6,374,622 6,742,36 Costs and expenses: Programming, hosting and technology expense 477, ,795 1,004,433 1,612,20 Compensation expense 777, ,859 1,513,696 1,634,26 Professional fees 176, , , ,03 Advertising and marketing expense 1,338,070 1,110,726 3,064,167 2,582,93 General and administrative expense 657, ,854 1,602,115 1,659,27 Total costs and expenses 3,426,914 3,704,110 7,595,772 8,001,70 Loss from operations (238,375 ) (254,100 ) (1,221,150 ) (1,259,34 Interest expense, net (430,611 ) (5,578 ) (667,015 ) (3,70 Change in fair value of derivative liabilities 410, ,000 70,27 Loss before provision for income taxes (258,986 ) (259,678 ) (1,478,165 ) (1,192,77 Provision for income taxes Net loss $ (258,986 ) $ (259,678 ) $ (1,478,165 ) $ (1,192,77 Net loss per share of common stock: Basic and diluted $ (0.01 ) $ (0.01 ) $ (0.04 ) $ (0.0 Weighted average number of shares of common stock used in 11/17

12 calculating net loss per share of common stock: Basic and diluted 39,682,826 39,152,713 39,550,411 39,155, /17

13 SNAP INTERACTIVE, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Cash flows from operating activities: Six Months Ended June 30, Net loss $ (1,478,165 ) $ (1,192,775 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 96,007 86,873 Stock-based compensation expense 506, ,712 Loss on disposal of fixed assets 79,628 - Amortization of debt issuance cost 60,198 - Amortization of debt discount 397,863 - Change in fair value of derivative liabilities (410,000 ) (70,275 ) Changes in operating assets and liabilities: Restricted cash - 104,893 Credit card holdback receivable 419,599 (453,752 ) Accounts receivable (43,213 ) 108,489 Security deposits (85,555 ) - Prepaid expenses and other current assets (22,210 ) (13,303 ) Accounts payable, accrued expenses and other current liabilities (873,646 ) (89,913 ) Deferred rent 49,027 (19,306 ) Deferred subscription revenue (129,203 ) 131,996 Deferred advertising revenue (13,427 ) 146,667 Net cash used in operating activities (1,446,642 ) (765,694 ) Cash flows from investing activities: Purchase of property and equipment (37,007 ) (3,731 ) Proceeds from sale of fixed assets 6,000 - Purchase of non-marketable equity securities - (50,000 ) Issuance to employees of note receivable and accrued interest (1,280 ) - Notes receivable - 47,818 Net cash used in investing activities (32,287 ) (5,913 ) Cash flows from financing activities: Payments of capital lease obligations (30,479 ) - (Repayment of) proceeds from promissory notes (400,000 ) 400,000 Payment of financing costs (314,249 ) - Proceeds from issuance of promissory notes 3,000,000 - Net cash provided by financing activities 2,255, ,000 Net increase (decrease) in cash and cash equivalents 776,343 (371,607 ) Balance of cash and cash equivalents at beginning of period 1,138, ,352 Balance of cash and cash equivalents at end of period $ 1,914,728 $ 555,745 Supplemental disclosure of cash flow 13/17

14 information: Cash paid in interest and taxes $ 90,000 $ - Non cash investing and financing activities: Compound embedded derivative under the Note and Securities Purchase Agreement recorded as derivative liabilities $ 1,748,000 $ - Warrants issued under the Advisory Services Agreement as additional consideration for the Note and recorded as derivative liabilities $ 342,000 $ - Warrants issued for debt issuance costs $ - $ 4,750 Common stock issued under the Advisory Services Agreement as additional consideration for the Note $ 30,000 $ /17

15 SNAP INTERACTIVE, INC. RECONCILIATION OF GAAP TO NON GAAP RESULTS (Unaudited) Reconciliation of Subscription Revenue to Bookings June 30, 2015 Three Months Ended March 31, 2015 June, Subscription revenue $ 3,075,868 $ 3,129,310 $ 3,151,002 Change in deferred subscription revenue (157,459 ) 28,256 (129,142 ) Bookings $ 2,918,409 $ 3,157,566 $ 3,021, /17

16 Reconciliation of net loss to Adjusted EBITDA: June 30, 2015 Three Months Ended March 31, 2015 June 30, 2014 Net loss $ (258,986 ) $ (1,219,179 ) $ (259,678 ) Interest expense, net 430, ,404 5,578 Depreciation and amortization expense 35,188 60,819 43,610 Loss on disposal of fixed assets - 79,628 - Change in fair value of derivative liabilities (410,000 ) - - Stock-based compensation expense 276, , ,236 Adjusted EBITDA $ 73,405 $ (612,465 ) $ 61,746 Non GAAP Financial Measures The Company defines Adjusted EBITDA as earnings before interest, taxes, depreciation and amortization, plus non-cash stock-based compensation and the non-cash change in fair value of derivative liabilities. The Company has provided in this release certain non-gaap financial information including bookings and Adjusted EBITDA to supplement the condensed consolidated financial statements, which are prepared in accordance with generally accepted accounting principles in the United States ("GAAP"). Management uses these non-gaap financial measures internally in analyzing the Company's financial results to assess operational performance and to determine the Company's future capital requirements. The presentation of this financial information is not intended to be considered in isolation or as a substitute for the financial information prepared in accordance with GAAP. The Company believes that both management and investors benefit from referring to these non-gaap financial measures in assessing our performance and when planning, forecasting and analyzing future periods. The Company believes these non-gaap financial measures are useful to investors and others to understand and evaluate the Company's operating results and it allows for a more meaningful comparison between the Company's performance and that of competitors. Some limitations of bookings and Adjusted EBITDA as financial measures include that: Bookings does not reflect that we recognize subscription revenue from subscription fees over the length of the subscription term and subscription revenue from micro-transactions over a two-month period; 16/17

17 Adjusted EBITDA does not (i) reflect cash capital expenditure requirements for assets underlying depreciation and amortization expense that may need to be replaced or for new capital expenditures; (ii) the Company's working capital requirements; (iii) consider the potentially dilutive impact of stock-based compensation; (iv) reflect interest expense or interest payments on our outstanding indebtedness; and (v) reflect the change in fair value of warrants; and Other companies, including companies in our industry, may calculate bookings or Adjusted EBITDA differently or choose not to calculate bookings or Adjusted EBITDA at all, which reduces their usefulness as comparative measures. Because of these limitations, you should consider this non-gaap financial information along with other financial performance measures, including total revenues, subscription revenue, deferred revenue, net income (loss), cash and cash equivalents, restricted cash, net cash used in operating activities and our financial results presented in accordance with GAAP. IR Contacts: PR Contact: Adam Handelsman News powered by ir Direct Copyright 2013 Issuer Direct Corporation. All Rights Reserved. 17/17