Document_And_Entity_Informatio
Document And Entity Information (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Jun. 30, 2014 | Mar. 25, 2015 | |
Document Information [Line Items] | |||
Document Type | 10-K | ||
Amendment Flag | FALSE | ||
Document Period End Date | 31-Dec-14 | ||
Document Fiscal Year Focus | 2014 | ||
Document Fiscal Period Focus | FY | ||
Entity Registrant Name | SOCIAL REALITY, Inc. | ||
Entity Central Index Key | 1538217 | ||
Current Fiscal Year End Date | -19 | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Public Float | $12,622,704 | ||
Common Class A [Member] | |||
Document Information [Line Items] | |||
Entity Common Stock, Shares Outstanding | 27,029,749 | ||
Common Class B [Member] | |||
Document Information [Line Items] | |||
Entity Common Stock, Shares Outstanding | 0 |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Current assets: | ||
Cash and cash equivalents | $1,843,393 | $1,715,264 |
Accounts receivable, net | 3,874,620 | 441,831 |
Prepaid expenses | 222,532 | 46,109 |
Other current assets | 7,352 | 5,018 |
Total current assets | 5,947,897 | 2,208,222 |
Property and equipment, net | 27,602 | 27,798 |
Goodwill and other intangibles | 18,318,911 | |
Deferred debt issue costs | 2,907,736 | |
Prepaid stock based compensation | 1,008,019 | 1,662,074 |
Other assets | 4,804 | 9,453 |
Total assets | 28,214,969 | 3,907,547 |
Current liabilities: | ||
Accounts payable and accrued expenses | 2,882,120 | 812,809 |
Note payable - related party | 2,500,000 | |
Notes payable, current portion | 1,350,000 | |
Unearned revenue | 25,295 | |
Contingent consideration payable to related party - current portion | 3,586,722 | |
Total current liabilities | 10,344,137 | 812,809 |
Notes payable | 7,713,014 | |
Contingent consideration payable to related party - long term | 3,145,401 | |
Put liability | 1,260,010 | |
Total liabilities | 22,462,562 | 812,809 |
Stockholders' equity: | ||
Additional paid in capital | 13,143,153 | 6,081,014 |
Accumulated deficit | -7,417,862 | -3,006,299 |
Total stockholders' equity | 5,752,407 | 3,094,738 |
Total liabilities and stockholders' equity | 28,214,969 | 3,907,547 |
Undesignated, 49,800,000 shares, no shares issued and outstanding [Member] | ||
Stockholders' equity: | ||
Preferred stock, authorized 50,000,000 shares, $0.001 par value, | ||
Series 1 Preferred stock, authorized 200,000 shares, 86,000 and 121,000 shares issued and outstanding, respectively [Member] | ||
Stockholders' equity: | ||
Preferred stock, authorized 50,000,000 shares, $0.001 par value, | 86 | 121 |
Class A common stock, authorized 250,000,000 shares, $0.001 par value, 29,416,612 and 19,901,794 shares issued at December 31, 2014 and 2013, respectively, and 27,029,749 and 19,901,794 shares outstanding at December 31, 2014 and 2013, respectively [Member] | ||
Stockholders' equity: | ||
Common stock | 27,030 | 19,902 |
Class B common stock, authorized 9,000,000 shares, $0.001 par value, no shares issued and outstanding [Member] | ||
Stockholders' equity: | ||
Common stock |
CONSOLIDATED_BALANCE_SHEETS_Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Preferred Stock, shares authorized | 50,000,000 | 50,000,000 |
Preferred Stock, par value per share | $0.00 | $0.00 |
Common Stock, shares authorized | 259,000,000 | 259,000,000 |
Undesignated Preferred Stock [Member] | ||
Preferred Stock, shares authorized | 49,800,000 | 49,800,000 |
Preferred Stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Series 1 Preferred Stock [Member] | ||
Preferred Stock, shares authorized | 200,000 | 200,000 |
Preferred Stock, par value per share | $0.00 | $0.00 |
Preferred Stock, shares issued | 86,000 | 121,000 |
Preferred stock, shares outstanding | 86,000 | 121,000 |
Class A Common Stock [Member] | ||
Common Stock, shares authorized | 250,000,000 | 250,000,000 |
Common Stock, par value per share | $0.00 | $0.00 |
Common Stock, shares issued | 29,416,612 | 19,901,794 |
Common Stock, shares outstanding | 27,029,749 | 19,901,794 |
Class B Common Stock [Member] | ||
Common Stock, shares authorized | 9,000,000 | 9,000,000 |
Common Stock, par value per share | $0.00 | $0.00 |
Common Stock, shares issued | 0 | 0 |
Common Stock, shares outstanding | 0 | 0 |
CONSOLIDATED_STATEMENTS_OF_OPE
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
CONSOLIDATED STATEMENTS OF OPERATIONS [Abstract] | ||
Revenues | $5,120,343 | $3,413,353 |
Cost of revenue | 2,791,948 | 2,326,344 |
Gross profit | 2,328,395 | 1,087,009 |
Operating expense | 6,066,611 | 2,521,984 |
Loss from operations | -3,738,216 | -1,434,975 |
Interest expense | -673,347 | -312,465 |
Loss before provision for income taxes | -4,411,563 | -1,747,440 |
Provision for income taxes | ||
Net loss | ($4,411,563) | ($1,747,440) |
Net loss per share, basic and diluted | ($0.20) | ($0.12) |
Weighted average shares outstanding | 21,808,515 | 14,691,010 |
CONSOLIDATED_STATEMENT_OF_STOC
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (USD $) | Total | Preferred Stock [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Deficit [Member] |
Balance at Dec. 31, 2012 | ($21,860) | $12,912 | $1,224,087 | ($1,258,859) | |
Balance, shares at Dec. 31, 2012 | 12,912,129 | ||||
Sale of common stock units for cash | 2,388,382 | 5,460 | 2,382,922 | ||
Sale of common stock units for cash, shares | 5,460,000 | ||||
Preferred and common stock issued for services to be rendered | 1,735,000 | 121 | 590 | 1,734,289 | |
Preferred and common stock issued for services to be rendered, shares | 121,000 | 590,000 | |||
Common stock issued for services | 318,500 | 335 | 318,165 | ||
Common stock issued for services, shares | 335,000 | ||||
Common stock awards vesting | 52 | -52 | |||
Common stock awards vesting, shares | 51,665 | ||||
Common stock issued for financing | 174 | -174 | |||
Common stock issued for financing, shares | 174,010 | ||||
Common stock warrant issued for services to be rendered | 105,827 | 105,827 | |||
Common stock issued as payment of accounts payable | 3,000 | 3 | 2,997 | ||
Common stock issued as payment of accounts payable, shares | 3,000 | ||||
Repurchase of common stock issued for financing | -174 | 174 | |||
Repurchase of common stock issued for financing, shares | -174,010 | ||||
Stock based compensation | 313,329 | 550 | 312,779 | ||
Stock based compensation, shares | 550,000 | ||||
Net loss | -1,747,440 | -1,747,440 | |||
Balance at Dec. 31, 2013 | 3,094,738 | 121 | 19,902 | 6,081,014 | -3,006,299 |
Balance, shares at Dec. 31, 2013 | 121,000 | 19,901,794 | |||
Sale of common stock units for cash | 5,107,598 | 5,199 | 5,102,399 | ||
Sale of common stock units for cash, shares | 5,199,168 | ||||
Common stock warrants subscribed | 2,100 | 2,100 | |||
Stock based compensation, shares | 800,000 | ||||
Stock based compensation | 1,203,534 | 800 | 1,202,734 | ||
Vested stock awards issued | 134 | -134 | |||
Vested stock awards issued, shares | 133,332 | ||||
Unvested stock awards issued | 45 | -45 | |||
Unvested stock awards issued, shares | 45,455 | ||||
Common stock issued for acquisition | 756,000 | 600 | 755,400 | ||
Common stock issued for acquisition, shares | 600,000 | ||||
Common stock issued upon conversion of preferred stock | -35 | 350 | -315 | ||
Common stock issued upon conversion of preferred stock, shares | -35,000 | 350,000 | |||
Net loss | -4,411,563 | -4,411,563 | |||
Balance at Dec. 31, 2014 | $5,752,407 | $86 | $27,030 | $13,143,153 | ($7,417,862) |
Balance, shares at Dec. 31, 2014 | 86,000 | 27,029,749 |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Cash flows from operating activities: | ||
Net loss | ($4,411,563) | ($1,747,440) |
Adjustments to reconcile net loss to net cash used by operating activities: | ||
Amortization of stock based prepaid fees | 654,055 | 237,587 |
Bad debts expenses | 26,488 | |
Stock based compensation | 1,203,534 | 631,829 |
Amortization of debt issue costs | 256,616 | 274,737 |
PIK interest expense accrued to principal | 63,014 | |
Accretion of contingent consideration | 148,081 | |
Accretion of put liability | 27,716 | |
Depreciation | 14,829 | 7,184 |
Changes in operating assets and liabilities: | ||
Accounts receivable | -1,196,572 | -388,010 |
Prepaid expenses | -170,902 | -46,109 |
Tax refunds receivable | 38,000 | |
Other current assets | 17,514 | -18 |
Other assets | -804 | -445 |
Accounts payable and accrued expenses | 861,148 | 513,752 |
Unearned revenue | 25,295 | |
Cash used by operating activities | -2,481,551 | -478,933 |
Cash flows from investing activities: | ||
Cash paid for acquisition | -2,000,000 | |
Cash acquired in acquisition | 32,038 | |
Purchase of equipment | -6,856 | -19,982 |
Cash used by investing activities | -1,974,818 | -19,982 |
Cash flows from financing activities: | ||
Sale of common stock | 3,950,747 | 2,436,493 |
Cost of common stock sale | -16,291 | -48,111 |
Proceeds from warrant offering | 2,100 | |
Proceeds from note payable | 1,227,601 | 486,425 |
Repayments of note payable | -550,000 | |
Repurchase of common stock | -175,000 | |
Deferred offering costs | -5,453 | |
Debt issue costs | -579,659 | -36,162 |
Cash provided by financing activities | 4,584,498 | 2,108,192 |
Net increase in cash | 128,129 | 1,609,277 |
Cash, beginning of period | 1,715,264 | 105,987 |
Cash, end of period | 1,843,393 | 1,715,264 |
Supplemental Schedule of Cash Flow Information: | ||
Cash paid for interest | 157,792 | 38,007 |
Cash paid for taxes | -38,000 | |
Non-cash financial activities: | ||
Fees and costs deducted from proceeds of debt | 1,352,399 | 63,575 |
Warrants put liability in conjunction with notes payable | 1,232,294 | |
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 | |
Net assets and liabilities recognized with the acquisition of Steel Media | 17,562,911 | |
Issuance of stock for the acquisition of Five Delta, Inc. | 756,000 | |
Common stock issued for preferred stock conversion and vesting grants | 529 | |
Account payable paid directly through escrow | 98,595 | |
Steel Media partial purchase consideration paid directly through escrow | $7,500,000 |
ORGANIZATION_AND_SUMMARY_OF_SI
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2014 | |
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Organization and Basis of Presentation | |
Social Reality, Inc. ("Social Reality", "we", "us" or "the Company") is a Delaware corporation formed on August 2, 2011. Effective January 1, 2012 we acquired all of the member interests and operations of Social Reality, LLC, a California limited liability company formed on August 14, 2009, which began business in May of 2010, in exchange for 12,328,767 shares of our Class A and Class B common stock. The former members of Social Reality, LLC owned all of our common stock after the acquisition. | |
At Social Reality, we sell digital advertising campaigns to advertising agencies and brands, we have developed technology that allows brands to launch and manage digital advertising campaigns, and we provide the platform that allows website publishers to sell their media inventory to a number of digital adverting buyers. Our focus is to provide technology tools that enable both publishers and advertisers to maximize their digital advertising initiatives. We derive our revenues from: | |
• | |
sales of digital advertising campaigns to advertising agencies and brands; | |
• | |
sales of media inventory owned by our publishing partners through real-time bidding, or RTB, exchanges; | |
• | |
sale and licensing of our GroupAd platform and related media; and, | |
. | |
creation of custom platforms for buying media on SRAX for large brands. | |
The five core elements of this business are: | |
• | |
Social Reality Ad Exchange or "SRAX" – Real Time Bidding sell side and buy side representation. Our technology assists publishers in delivering their media inventory to the real time bidding, or RTB, exchanges. | |
• | |
GroupAd. GroupAd is a social media and loyalty platform that allows brands to launch and manage their social media initiatives. | |
• | |
SRAX MD is an ad targeting & data platform for healthcare brands, agencies and medical content publishers. Healthcare and pharmaceutical publishers utilize the platform for yield optimization, audience extension campaigns and re-targeting of their healthcare professional audience. Agencies and brands purchase targeted digital and mobile ad campaigns. | |
• | |
SRAX DI is a team of social media experts that helps brands and agencies create and manage their social media presence. | |
• | |
Steel Media provides display, mobile, and email ad inventory to both brands and ad agencies. This acquisition has allowed us to begin to sell our buy side RTB services to advertising agencies, and allows us to provide digital media for Steel's campaigns, resulting in increased gross margins for the combined companies. | |
We offer our customers a number of pricing options including cost-per-thousand-impression ("CPM"), whereby our customers pay based on the number of times the target audience is exposed to the advertisement, and cost-per-engagement ("CPE"), whereby payment is triggered only when an individual takes a specific activity. | |
We also create applications as custom programs and build them on a campaign by campaign basis as well as offer them on a managed or self-service subscription basis through our GroupAd platform. GroupAd allows brand marketers to select from a number of pre-created applications and then deploy them into their social media channels. | |
Social Reality is also an approved and accredited Facebook advertising network company. We sell targeted and measurable online advertising campaigns and programs to brand advertisers and advertising agencies across large Facebook apps and large websites, generating qualified Facebook likes and quantifiable engagement for our clients, driving online sales and increased brand equity. | |
We are headquartered in Los Angeles, California. | |
Principles of Consolidation | |
The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All material intercompany transactions and balances have been eliminated in consolidation. | |
The consolidated financial statements include the accounts of the Company and its subsidiaries from the acquisition date of majority voting control and through the date of disposition, if any. | |
Use of Estimates | |
Accounting principles generally accepted in the United States ("GAAP") require management of the Company to make estimates and assumptions in the preparation of these consolidated financial statements that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from these estimates and assumptions. | |
The most significant areas that require management judgment and which are susceptible to possible change in the near term include the Company's revenue recognition, allowance for doubtful accounts and sales credits, stock-based compensation, income taxes, goodwill and other intangible assets. The accounting policies for these areas are discussed elsewhere in these consolidated financial statements. | |
Cash and Cash Equivalents | |
The Company considers all short-term highly liquid investments with a remaining maturity at the date of purchase of three months or less to be cash equivalents. | |
Revenue Recognition | |
The Company recognizes revenue when the following criteria have been met: persuasive evidence of an arrangement exists, no significant Company obligations remain, collection of the related receivable is reasonably assured, and the fees are fixed or determinable. The Company acts as a principal in its revenue transactions as the Company is the primary obligor in the transactions. Revenue is recognized on a gross basis, and media and publisher expenses that are directly related to a revenue-generating event are recorded as a component of cost of revenue. | |
Cost of Revenue | |
Cost of revenue consists of payments to media providers and website publishers that are directly related to a revenue-generating event and project and application design costs. The Company becomes obligated to make payments related to media providers and website publishers in the period the advertising impressions, click-throughs, actions or lead-based information are delivered or occur. Such expenses are classified as cost of revenue in the corresponding period in which the revenue is recognized in the accompanying income statement. | |
Accounts Receivable | |
Credit is extended to customers based on an evaluation of their financial condition and other factors. Management periodically assesses the Company's accounts receivable and, if necessary, establishes an allowance for estimated uncollectible amounts. Accounts determined to be uncollectible are charged to operations when that determination is made. The Company usually does not require collateral. | |
Concentration of Credit Risk, Significant Customers and Supplier Risk | |
Financial instruments that potentially subject the Company to concentration of credit risk consist of cash and cash equivalents and accounts receivable. Cash and cash equivalents are deposited in the United States. The balances in the United States held at any one financial institution are generally in excess of Federal Deposit Insurance Corporation ("FDIC") insurance limits. The uninsured cash bank balances were approximately $1,343,000 at December 31, 2014. The Company has not experienced any loss on these accounts. The balances are maintained in demand accounts to minimize risk. | |
At December 31, 2014, one SRAX AD Exchange customer, who collects advertising payments from multiple advertisers and one additional customer each accounted for more than 10% of the accounts receivable balance, for a total of 34%. For the year ended December 31, 2014 no one customer accounted for 10% or more of total revenue. However, 38% of our revenue was collected and paid to us by three of our RTB exchange service providers. For the year ended December 31, 2013 87% of our revenue was collected and paid to us by one of our RTB exchange service providers. | |
Fair Value of Financial Instruments | |
The Company's financial instruments, including cash and cash equivalents, net accounts receivable, accounts payable and accrued expenses, are carried at historical cost. At December 31, 2014 and 2013 the carrying amounts of these instruments approximated their fair values because of the short-term nature of these instruments. | |
Property and equipment | |
Property and equipment is stated at cost less accumulated depreciation. Depreciation is provided on the straight line basis over the estimated useful lives of the assets of three years. | |
Expenditures for repair and maintenance which do not materially extend the useful lives of property and equipment are charged to operations. When property or equipment is sold or otherwise disposed of, the cost and related accumulated depreciation are removed from the respective accounts with the resulting gain or loss reflected in operations. Management periodically reviews the carrying value of its property and equipment for impairment. | |
Business Combinations | |
For all business combinations (whether partial, full or step acquisitions), the Company records 100% of all assets and liabilities of the acquired business, including goodwill, generally at their fair values; contingent consideration, if any, is recognized at its fair value on the acquisition date and; for certain arrangements, changes in fair value are recognized in earnings until settlement; and acquisition-related transaction and restructuring costs are expensed rather than treated as part of the cost of the acquisition. | |
Goodwill | |
The Company will test for impairment of goodwill annually as of September 30 at the reporting unit level or whenever events or circumstances indicate that goodwill might be impaired. The impairment test is a two-step process, whereby in the first step, the Company compares the estimated fair value of the reporting unit with the reporting unit's carrying amount, including goodwill. The Company determines the estimated fair value of each reporting unit using a discounted cash flow approach, giving consideration to the market valuation approach. If the carrying amount of a reporting unit exceeds the reporting unit's fair value, the Company performs the second step of the goodwill impairment test to determine the amount of impairment, if any. | |
Long-lived Assets | |
Management evaluates the recoverability of the Company's identifiable intangible assets and other long-lived assets when events or circumstances indicate a potential impairment exists. Events and circumstances considered by the Company in determining whether the carrying value of identifiable intangible assets and other long-lived assets may not be recoverable include, but are not limited to: significant changes in performance relative to expected operating results; significant changes in the use of the assets; significant negative industry or economic trends; a significant decline in the Company's stock price for a sustained period of time; and changes in the Company's business strategy. In determining if impairment exists, the Company estimates the undiscounted cash flows to be generated from the use and ultimate disposition of these assets. If impairment is indicated based on a comparison of the assets' carrying values and the undiscounted cash flows, the impairment loss is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets. | |
Loss Per Share | |
We use ASC 260, "Earnings Per Share" for calculating the basic and diluted loss per share. We compute basic loss per share by dividing net loss and net loss attributable to common shareholders by the weighted average number of common shares outstanding. Basic and diluted loss per share are the same, in that any potential common stock equivalents would have the effect of being anti-dilutive in the computation of net loss per share. There were 13,096,470 common share equivalents at December 31, 2014 and 5,296,001 at December 31, 2013. For the years ended December 31, 2014 and 2013, these potential shares were excluded from the shares used to calculate diluted earnings per share as their inclusion would reduce net loss per share. | |
Income Taxes | |
We utilize ASC 740 "Income Taxes" which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at year-end based on enacted laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. | |
The Company recognizes the impact of a tax position in the financial statements only if that position is more likely than not of being sustained upon examination by taxing authorities, based on the technical merits of the position. Our practice is to recognize interest and/or penalties related to income tax matters in income tax expense. | |
Stock-Based Compensation | |
We account for our stock based compensation under ASC 718 "Compensation – Stock Compensation" using the fair value based method. Under this method, compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. This guidance establishes standards for the accounting for transactions in which an entity exchanges it equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity's equity instruments or that may be settled by the issuance of those equity instruments. | |
We use the fair value method for equity instruments granted to non-employees and use the Black-Scholes model for measuring the fair value of options. The stock based fair value compensation is determined as of the date of the grant or the date at which the performance of the services is completed (measurement date) and is recognized over the vesting periods. | |
Business Segments | |
The Company uses the "management approach" to identify its reportable segments. The management approach designates the internal organization used by management for making operating decisions and assessing performance as the basis for identifying the Company's reportable segments. Using the management approach, the Company determined that it has one operating segment due to business similarities and similar economic characteristics. | |
Recently Issued Accounting Standards | |
Management does not believe that any recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying financial statements. | |
ACQUISITIONS
ACQUISITIONS | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
ACQUISITIONS [Abstract] | |||||||||
ACQUISITIONS | NOTE 2 – ACQUISITIONS. | ||||||||
Acquisition of Steel Media | |||||||||
On October 30, 2014, we acquired 100% of the capital stock of Steel Media, a California corporation ("Steel Media"), from Richard Steel pursuant to the terms and conditions of a stock purchase agreement, dated October 30, 2014, by and among the Company, Steel Media and Mr. Steel (the "Stock Purchase Agreement"). | |||||||||
The acquisition of Steel Media is intended to complement and augment the current operations of Social Reality. Together, the companies intend to offer and deliver improved performance and technology for digital advertising buy-side and sell-side solutions, delivered to agencies, brands and publishers by our combined digital sales team. We expect that the combined expertise of the two companies will enhance the quality of our technology and service. | |||||||||
As consideration for the purchase of Steel Media, we agreed to pay Mr. Steel up to $20 million, consisting of: (i) a cash payment at closing of $7.5 million; (ii) a cash payment of $2 million which is being held in escrow to satisfy certain indemnification obligations to the extent such arise under the Stock Purchase Agreement; (iii) a one year secured subordinated promissory note in the principal amount of $2.5 million (the "Note") which is secured by 2,386,863 shares of our Class A common stock (the "Escrow Shares"); and (iv) an earnout payment of up to $8 million (the "Earnout Consideration"). We have recorded the Earnout Consideration at its present value of $6,584,042. Changes in the value will be recorded through the statement of operations. The total acquisition price aggregates $18,584,042. | |||||||||
The Earnout Consideration is payable upon the attainment of certain earnings before interest, taxes, depreciation and amortization ("EBITDA") targets of Steel Media during the two year period following the closing, 60% of which may be satisfied in shares of Social Reality's Class A common stock subject to the satisfaction of certain conditions set forth in the Stock Purchase Agreement. Further, in the event of (i) a change of control of the Company or Steel Media or (ii) Mr. Steel's termination without "cause" or resignation for "good reason" (each as defined in Mr. Steel's employment agreement (as hereinafter described)) during the two year period following the closing, we are obligated to pay Mr. Steel 100% of the Earnout Consideration (less any amount previously paid to Mr. Steel). To the extent we are prohibited from paying any Earnout Consideration in cash and Mr. Steel is prohibited from receiving same under the terms of the Subordination Agreement (as hereinafter defined) described below, Mr. Steel has the right to request that the Company pay him the prohibited cash earnout payment in shares of the Company's Class A common stock. | |||||||||
The Note issued to Mr. Steel at the closing bears interest at the rate of 5% per annum and the principal and accrued interest is due and payable on October 30, 2015. The amounts due under the Note accelerate and become immediately due and payable upon the occurrence of an event of default as described in the Note. Upon an event of default under the Note, the interest rate increases to 10% per annum. The Note may be prepaid upon five days' notice to Mr. Steel, and the Note must be prepaid upon a change of control of the Company or Steel Media. The Note is also subject to certain mandatory partial prepayments for each of the fiscal quarters ending December 31, 2014, March 31, 2015 and June 30, 2015 in an amount equal to 25% of the "Excess Cash Amount" as defined in the Note. | |||||||||
The obligations under the Note are subordinated to the Company's obligations under the Financing Agreement (as hereinafter defined) pursuant to the terms of the Subordination Agreement (as hereinafter described) and are secured by the Escrow Shares. Upon an event of default under the Note, if the Escrow Shares are released to Mr. Steel all amounts due under the Note will be deemed paid and the Note will be satisfied in full provided that (i) all of the Escrow Shares (or at least 90% of the Escrow Shares, in the case of a cut-back required by the SEC as a result of limitations under SEC Rule 415, as defined in the Registration Rights Agreement described below) are subject to a then effective SEC registration statement having a customary plan of distribution for resale, (ii) the Escrow Shares are freely tradable by Mr. Steel, without restriction of any kind or nature (other than insider trading laws), and (iii) the certificates evidencing the Escrow Shares are free of any legend or other restrictive notation. If these conditions are not each satisfied at the time of release of the Escrow Shares to Mr. Steel, then the principal and interest due under the Note remains outstanding except that it will be deemed repaid from time to time, dollar for dollar, from the proceeds realized by Mr. Steel from the sale or other disposition of the Escrow Shares. The Escrow Shares are considered issued but not outstanding and Mr. Steel does not have any voting or other rights as a stockholder to the Escrow Shares during the period they are held in escrow. The Escrow Shares are being held by an escrow agent pursuant to the terms of that certain Escrow Agreement, dated October 30, 2014, by and among Mr. Steel, the Company and Lowenstein Sandler LLP, as escrow agent (the "Escrow Shares Agreement"). Subject to the terms and conditions of the Stock Purchase Agreement and the Subordination Agreement, upon a release of the Escrow Shares to Mr. Steel, Mr. Steel has the right to put the Escrow Shares to the Company at a per share price of $1.0474 (the "Put Right"). | |||||||||
On October, 30, 2014, in connection with the acquisition of Steel Media, the Company entered into a registration rights agreement (the "Registration Rights Agreement") with Mr. Steel pursuant to which the Company agreed to register any Earnout Shares issued to him or Escrow Shares released to him. The Company granted Mr. Steel demand registration rights over the Escrow Shares and the Earnout Shares which he may exercise 90 days after such shares are issued or released to him. In addition, Mr. Steel has the right to include any Earnout Shares issued to him or Escrow Shares released to him in registration statements for offerings by the Company as well as offerings of the Company's Class A common stock held by third parties. | |||||||||
The final accounting for the acquisition of Steel Media has not been completed and will be completed during the second quarter of 2015. The preliminary allocation of the purchase price to the assets acquired and liabilities assumed based on the estimated fair values is as follows: | |||||||||
Cash | $ | 32,038 | |||||||
Accounts receivable and other assets | 2,975,728 | ||||||||
Equipment | 7,777 | ||||||||
Goodwill and other intangibles | 17,562,911 | ||||||||
Total assets acquired | 20,578,454 | ||||||||
Accounts payable and other liabilities | (1,994,412 | ) | |||||||
Total | $ | 18,584,042 | |||||||
At this time we do not expect that goodwill will be tax deductible. | |||||||||
Pro forma Results of Operations. The historical operating results of Steel Media prior to its acquisition date have not been included in the Company's historical consolidated operating results. Pro forma results of operations data (unaudited) for the years ended December 31, 2013 and 2014, as if the acquisition had occurred on January 1, 2013, are as follows: | |||||||||
December 31, | |||||||||
2014 | 2013 | ||||||||
Revenue | $ | 12,558,030 | $ | 11,349,864 | |||||
Net loss | (4,004,445 | ) | (1,417,778 | ) | |||||
Net loss per share | (0.18 | ) | (0.10 | ) | |||||
The amounts of revenue and earnings of Steel Media since the acquisition date included in the consolidated statement of operations for the year ended December 31, 2014 are approximately $1,896,000 and $490,000, respectively. | |||||||||
Acquisition of Five Delta, Inc. | |||||||||
On December 19, 2014 we acquired 100% of the outstanding capital stock of Five Delta, Inc., a Delaware corporation (" Five Delta "), in exchange for 600,000 shares of our Class A common stock pursuant to the terms and conditions of the Share Acquisition and Exchange Agreement dated December 19, 2014 (the "Five Delta Agreement") by and among Social Reality, Five Delta and the stockholders of Five Delta. The acquisition price was $756,000. | |||||||||
Five Delta is a managed advertising service that uses proprietary technology and methods to optimize digital advertising for its customers. Five Delta primarily utilizes high quality first party data from major platforms like Facebook, Yahoo, LinkedIn and Google in optimization decisions. Five Delta's goal is to maximize marketing budget utility while simultaneously reporting clear and actionable information to its clients. | |||||||||
The acquisition of Five Delta is intended to complement and augment the current operations of Social Reality and Steel Media through the integration of its proprietary technology and methods into our operations. | |||||||||
Under the terms of the Five Delta Agreement, 300,000 shares of the Class A common stock (the " Escrow Shares ") were deposited in escrow by the holders with the escrow agent pending satisfaction of certain post-closing conditions as described in the agreement. If these post-closing conditions are not satisfied by the second annual anniversary of the closing date, all or a portion of the Escrow Shares are subject to forfeiture. While the Escrow Shares remain in escrow, the holders granted Mr. Chris Miglino, our Chief Executive Officer, a voting proxy over the Escrow Shares. The Five Delta stockholders also granted us a right of first refusal over the shares of our Class A common stock tendered as consideration for a four year period from the closing date. | |||||||||
The Five Delta stockholders also entered into 24 month Lock Up Agreements at the closing of the Five Delta Agreement. The Lock Up Agreements provide that one-half of our shares of Class A common stock acquired in the transaction will be released from the lock up on the one year anniversary of the closing date, with the balance released on the two year anniversary of the closing date. Following the release of any of the shares from the Lock Up Agreement, the holders agreed to limit the resale of such shares based upon a numerical formula tied to the trading volume of our Class A common stock and agreed that all permitted resales will be made at the then current bid price of our Class A common stock. The lock up automatically terminates upon a change of control of our company. | |||||||||
The final accounting for the acquisition of Five Delta has not been completed and will be completed during the second quarter of 2015. The entire purchase price has been preliminarily allocated to intellectual property. | |||||||||
NOTES_PAYABLE
NOTES PAYABLE | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
NOTES PAYABLE [Abstract] | |||||||||||||||||
NOTES PAYABLE | NOTE 3 – NOTES PAYABLE. | ||||||||||||||||
2014 Transactions: | |||||||||||||||||
Financing Agreement with Victory Park Management, LLC as agent for the lenders | |||||||||||||||||
On October 30, 2014 (the "Financing Agreement Closing Date"), the Company entered into a financing agreement (the "Financing Agreement") with Victory Park Management, LLC, as administrative agent and collateral agent for the lenders and holders of notes and warrants issued thereunder (the "Agent"). The Financing Agreement provides for borrowings of up to $20 million to be evidenced by notes issued thereunder, which are secured by a first priority, perfected security interest in substantially all of the assets of the Company and its subsidiaries (including Steel Media) and a pledge of 100% of the equity interests of each domestic subsidiary of the Company pursuant to the terms of a pledge and security agreement (the "Pledge and Security Agreement") entered into by the Company on the Financing Agreement Closing Date (which was joined by Steel Media immediately after the Company's acquisition of Steel Media). The Financing Agreement contains covenants limiting, among other things, indebtedness, liens, transfers or sales of assets, distributions or dividends, and merger or consolidation activity. The notes (the "Financing Notes") issued pursuant to the Financing Agreement, including the note issued to the lender thereunder in the original aggregate principal amount of $9 million on the Financing Agreement Closing Date (the "Initial Financing Note"), bear interest at a rate per annum equal to the sum of (1) cash interest at a rate of 10% per annum and (2) payment-in-kind (PIK) interest at a rate of 4% per annum for the period commencing on the Financing Agreement Closing Date and extending through the last day of the calendar month during which the Company's financial statements for December 31, 2014 are delivered, and which PIK interest rate thereafter from time to time may be adjusted based on the ratio of the Company's consolidated indebtedness to its earnings before interest, taxes, depreciation and amortization. If the Company achieves a reduction in the leverage ratio as described in the Financing Agreement, the PIK interest rate declines on a sliding scale from 4% to 2%. The Financing Notes issued under the Financing Agreement are scheduled to mature on October 30, 2017, with scheduled quarterly payment dates commencing December 31, 2014. Proceeds from the Initial Financing Note issued on the Financing Agreement Closing Date were used to finance, in part, the Company's acquisition of Steel Media as described in Note 2. | |||||||||||||||||
The Financing Agreement provides for subsidiaries of the Company to join the Financing Agreement from time to time as borrowers and cross guarantors thereunder. Immediately after the Company's acquisition of Steel Media on October 30, 2014, Steel Media executed a joinder agreement under which it became a borrower under the Financing Agreement. The Company and its subsidiary, Steel Media, are cross guarantors of each other's obligations under the Financing Agreement, all of which guaranties and obligations are secured pursuant to the terms of the Pledge and Security Agreement. | |||||||||||||||||
Notes payable consists of the following: | |||||||||||||||||
December 31, | |||||||||||||||||
2014 | 2013 | ||||||||||||||||
Principal amount | $ | 9,000,000 | $ | — | |||||||||||||
PIK interest accrued | 63,014 | — | |||||||||||||||
9,063,014 | — | ||||||||||||||||
Less current portion | (1,350,000 | ) | — | ||||||||||||||
Notes payable and PIK interest accrued, net of current portion | $ | 7,713,014 | $ | — | |||||||||||||
Pursuant to the Financing Agreement, the Company also issued to the lender thereunder, on the Financing Agreement Closing Date, a five year warrant to purchase 2,900,000 shares of its Class A common stock at an exercise price of $1.00 per share (the "Financing Warrant"). The warrant holder may not, however, exercise the Financing Warrant for a number of shares of Class A common stock that would cause such holder to beneficially own shares of Class A common stock in excess of 4.99% of the Company's outstanding shares of Class A common stock following such exercise. The number of shares issuable upon exercise of the Financing Warrant and the exercise price therefor are subject to adjustment in the event of stock splits, stock dividends, recapitalizations and similar corporate events. Pursuant to the Financing Warrant, the warrant holder has the right, at any time after the earlier of April 30, 2016 and the maturity date of the Financing Notes issued pursuant to the Financing Agreement, but prior to the date that is five years after the Financing Agreement Closing Date, to exercise its put right under the terms of the Financing Warrant, pursuant to which the warrant holder may sell to the Company, and the Company will purchase from the warrant holder, all or any portion of the Financing Warrant that has not been previously exercised. In connection with any exercise of this put right, the purchase price will be equal to an amount based upon the percentage of the Financing Warrant for which the put right is being exercised, multiplied by the lesser of (A) 50% of the total revenue for the Company and its subsidiaries, on a consolidated basis, for the trailing 12- month period ending with the Company's then-most recently completed fiscal quarter, and (B) $1,500,000. We have recorded the put liability at its present value of $1,232,294 and have recorded it as deferred debt cost. We will record the accretion as interest expense. | |||||||||||||||||
As contemplated under the Financing Agreement, the Company also entered into a registration rights agreement on the Financing Agreement Closing Date (the "Financing Registration Rights Agreement") with the holder of the Financing Warrant, pursuant to which the Company granted to such holder certain "piggyback" rights to register the shares of the Company's Class A common stock issuable upon exercise of the Financing Warrant. Specifically, the holder of the Financing Warrant has the right, subject to certain allocation provisions set forth in the Financing Registration Rights Agreement, to include the shares underlying the Financing Warrant in registration statements for offerings by the Company of its Class A common stock, as well as offerings of the Company's Class A common stock held by third parties. | |||||||||||||||||
As part of the arrangements under the Financing Agreement, the Agent, Mr. Steel, and the Company and Steel Media (as borrowers under the Financing Agreement) have also entered into a subordination agreement (the "Subordination Agreement") under which Mr. Steel has agreed, subject to the terms and conditions of the Subordination Agreement, to subordinate to the lenders and holders of Financing Notes and the Financing Warrant issued under the Financing Agreement (i) certain obligations, liabilities, and indebtedness, including, without limitation, payments under the Note and payments of Earnout Consideration, owed to him by the Company and any of its subsidiaries and (ii) Mr. Steel's right to exercise the Put Right. | |||||||||||||||||
Activity for the put liability during the year ended December 31, 2014 was: | |||||||||||||||||
December 31, | Activity | Accretion | December 31, | ||||||||||||||
2013 | During | in Value | 2014 | ||||||||||||||
the Period | |||||||||||||||||
Put liability | $ | — | $ | 1,232,294 | $ | 27,716 | $ | 1,260,010 | |||||||||
Total | $ | — | $ | 1,232,294 | $ | 27,716 | $ | 1,260,010 | |||||||||
We incurred a total of $3,164,352 of costs related to the Financing Agreement. These costs will be amortized to interest expense over the life of the debt. | |||||||||||||||||
During the year ended December 31, 2014, $256,616 was amortized with a remaining balance of $2,907,736 reported as deferred debt issue costs as of December 31, 2014. | |||||||||||||||||
The approximate maturities of the long term portion of the financing agreement are as follows: | |||||||||||||||||
Year ended | |||||||||||||||||
December 31, | |||||||||||||||||
2016 | 2,250,000 | ||||||||||||||||
2017 | 5,463,000 | ||||||||||||||||
Note payable – Richard Steel | |||||||||||||||||
As partial consideration for the purchase of Steel Media described in Note 2, we executed a one year secured subordinated promissory note in the principal amount of $2.5 million (the "Note") which is secured by 2,386,863 shares of our Class A common stock (the "Escrow Shares"). | |||||||||||||||||
The Note issued to Mr. Steel bears interest at the rate of 5% per annum and the principal and accrued interest is due and payable on October 30, 2015. The amounts due under the Note accelerate and become immediately due and payable upon the occurrence of an event of default as described in the Note. Upon an event of default under the Note, the interest rate increases to 10% per annum. The Note may be prepaid upon five days' notice to Mr. Steel, and the Note must be prepaid upon a change of control of the Company or Steel Media. The Note is also subject to certain mandatory partial prepayments for each of the fiscal quarters ending December 31, 2014, March 31, 2015 and June 30, 2015 in an amount equal to 25% of the "Excess Cash Amount" as defined in the Note. | |||||||||||||||||
The obligations under the Note are subordinated to the Company's obligations under the Financing Agreement (as hereinafter defined) pursuant to the terms of the Subordination Agreement (as hereinafter described) and are secured by the Escrow Shares. Upon an event of default under the Note, if the Escrow Shares are released to Mr. Steel all amounts due under the Note will be deemed paid and the Note will be satisfied in full provided that (i) all of the Escrow Shares (or at least 90% of the Escrow Shares, in the case of a cut-back required by the SEC as a result of limitations under SEC Rule 415, as defined in the Registration Rights Agreement described below) are subject to a then effective SEC registration statement having a customary plan of distribution for resale, (ii) the Escrow Shares are freely tradable by Mr. Steel, without restriction of any kind or nature (other than insider trading laws), and (iii) the certificates evidencing the Escrow Shares are free of any legend or other restrictive notation. If these conditions are not each satisfied at the time of release of the Escrow Shares to Mr. Steel, then the principal and interest due under the Note remains outstanding except that it will be deemed repaid from time to time, dollar for dollar, from the proceeds realized by Mr. Steel from the sale or other disposition of the Escrow Shares. The Escrow Shares are considered issued but not outstanding and Mr. Steel does not have any voting or other rights as a stockholder to the Escrow Shares during the period they are held in escrow. The Escrow Shares are being held by an escrow agent pursuant to the terms of that certain Escrow Agreement, dated October 30, 2014, by and among Mr. Steel, the Company and Lowenstein Sandler LLP, as escrow agent (the "Escrow Shares Agreement"). Subject to the terms and conditions of the Stock Purchase Agreement and the Subordination Agreement, upon a release of the Escrow Shares to Mr. Steel, Mr. Steel has the right to put the Escrow Shares to the Company at a per share price of $1.0474 (the "Put Right"). | |||||||||||||||||
2013 Transactions: | |||||||||||||||||
Credit Facility and Termination Agreement: | |||||||||||||||||
During February 2013 we entered into a senior secured revolving credit facility agreement (which was amended on June 11, 2013 (the "Credit Agreement") with TCA Global Credit Master Fund, LP (the "Lender" or "TCA"). Pursuant to the Credit Agreement, the Lender agreed to loan up to $5,000,000 for working capital purposes. A total of $550,000 was funded by Lender in connection with two closings and we received net proceeds of $486,425. October 2013 we paid all amounts due under the credit facility, aggregating $550,000. Following the repayment of the credit facility, in October 2013 we entered into a Termination Agreement with TCA whereby we terminated the Amended Credit Agreement and all of our obligations thereunder. As part of this Termination Agreement, we also redeemed 174,010 Class A common shares issued to TCA pursuant to the credit facility, thereby terminating any obligations under the make whole provisions of the Termination Agreement. We paid TCA $175,000 to redeem the shares. | |||||||||||||||||
In total, we incurred costs aggregating $274,737, including the amounts allocated to the 174,010 Class A common shares issued to TCA pursuant to the credit facility. These costs have been fully amortized as interest expense during 2013. | |||||||||||||||||
STOCKHOLDERS_EQUITY
STOCKHOLDERS' EQUITY | 12 Months Ended | ||
Dec. 31, 2014 | |||
STOCKHOLDERS' EQUITY [Abstract] | |||
STOCKHOLDERS' EQUITY | NOTE 4 – STOCKHOLDERS' EQUITY | ||
Preferred Stock | |||
We are authorized to issue 50,000,000 of preferred stock, par value $0.001, of which 200,000 shares have been designated as Series 1 Preferred Stock. Our board of directors, without further stockholder approval, may issue preferred stock in one or more series from time to time and fix or alter the designations, relative rights, priorities, preferences, qualifications, limitations and restrictions of the shares of each series. The rights, preferences, limitations and restrictions of different series of preferred stock may differ with respect to dividend rates, amounts payable on liquidation, voting rights, conversion rights, redemption provisions, sinking fund provisions and other matters. Our board of directors may authorize the issuance of preferred stock, which ranks senior to our common stock for the payment of dividends and the distribution of assets on liquidation. In addition, our board of directors can fix limitations and restrictions, if any, upon the payment of dividends on both classes of our common stock to be effective while any shares of preferred stock are outstanding. | |||
On August 16, 2013 our Board of Directors approved a Certificate of Designations, Rights and Preferences pursuant to which it designated a series consisting of 200,000 shares of its blank check preferred stock as Series 1 Preferred Stock. The designations, rights and preferences of the Series 1 Preferred Stock are as follows: | |||
• | each share has a stated and liquidation value of $0.001 per share, | ||
• | the shares do not pay any dividends, except as may be declared by our Board of Directors, and are not redeemable, | ||
• | the shares do not have any voting rights, except as may be provided under Delaware law, | ||
• | each share is convertible into 10 shares of our Class A common stock, subject to customary anti-dilution provisions in the event of stock splits, recapitalizations and similar corporate events, and | ||
• | the number of shares of Series 1 Preferred Stock, as well as the number of shares of Class A common stock issued upon a conversion of shares of Series 1 Preferred Stock, that a holder may sell, transfer, assign, hypothecate or otherwise dispose of (collectively or severally, a "Disposition") at any one time shall be limited to an amount which is pari passu to any Disposition of Class A common stock by either Christopher Miglino and/or Erin DeRuggerio, executive officers and directors of our company. Notwithstanding anything contained in the designations, the holder of Series 1 Preferred Stock is not obligated to make any Dispositions of Series 1 Preferred Stock or Class A common stock issued upon the conversion of Series 1 Preferred Stock. | ||
Common Stock | |||
We are authorized to issue an aggregate of 259,000,000 shares of common stock. Our certificate of incorporation provides that we will have two classes of common stock: Class A common stock (authorized 250,000,000 shares, par value $0.001), which has one vote per share, and Class B common stock (authorized 9,000,000 shares, par value $0.001), which has ten votes per share. Any holder of Class B common stock may convert his or her shares at any time into shares of Class A common stock on a share-for-share basis. Otherwise the rights of the two classes of common stock are identical. | |||
2014 Transactions: | |||
Preferred Stock | |||
During 2014, 35,000 shares of preferred stock were converted into 350,000 shares of Class A common stock. | |||
Common Stock | |||
In January 2014 we sold an aggregate of 978,668 shares of our Class A common stock at a purchase price of $1.50 per share to 22 accredited investors in a private placement exempt from registration under the Securities Act of 1933 in reliance on exemptions provided by Section 4(a)(2) and Rule 506(b) of Regulation D. We received gross proceeds of $1,468,001. T.R. Winston & Company, LLC acted as placement agent for us in this offering. We paid the placement agent and a selling agent commissions and a non-accountable expense allowance totaling $190,840 and issued these firms three year Series B common stock purchase warrants to purchase an aggregate of 97,866 shares of our Class A common stock at an exercise price of $2.00 per share as additional compensation. We incurred additional expenses of $25,744 for this and have used net proceeds of $1,251,416 for working capital. | |||
During June 2014 we issued 133,332 shares of common stock pursuant to the vesting of stock grants. | |||
On October 30, 2014 and November 5, 2014, we sold 4,220,500 units of our securities to 28 accredited investors in a private placement exempt from registration under the Securities Act of 1933. The units were sold at a purchase price of $1.00 per unit resulting in gross proceeds to the Company of $4,220,500. Each unit consisted of one share of our Class A common stock and one three year Class A common stock purchase warrant to purchase 0.5 shares of our Class A common stock. Each redeemable three year warrant (the "Private Placement Warrants") entitles the holder to purchase one-half share of our Class A common stock at an exercise price of $1.50 per share. The Private Placement Warrants must be exercised in such denominations as to require the issuance of a whole number of shares. Providing that there is an effective registration statement registering the shares of our Class A common stock issuable upon exercise of the Private Placement Warrants, we have the right to redeem all or any portion of the warrants at a price of $0.001 per share of Class A common stock underlying such warrants upon 20 days' notice at any time that the closing price of our Class A common stock equals or exceeds $3.75 per share for 20 consecutive trading days and the daily average minimum volume of our Class A common stock during those 20 trading days is at least 100,000 shares. | |||
In addition to the units sold for cash, we also issued T.R. Winston & Company, LLC ("T.R. Winston") 800,000 units, valued at $800,000, as compensation for the firm's investment banking services to us in connection with the acquisition of Steel Media described above. The units issued to T.R. Winston are identical to the units sold in the private placement. | |||
As a result, we issued an aggregate of 5,020,500 shares of our Class A common stock and Private Placement Warrants to purchase an additional 2,510,250 shares of our Class A common stock. T.R. Winston acted as our placement agent in the private placement offering. We paid the placement agent and a selling agent cash commissions totaling $351,435 and agreed to issue T.R. Winston and the selling agent three year warrants which are identical to the Private Placement Warrant to purchase 301,230 shares of our Class A common stock at an exercise price of $1.50 per share. We incurred additional expenses of $12,885 for this and used $2,500,000 of the net proceeds from the offering as part of the cash consideration for the acquisition of Steel Media described above and used approximately $678,000 for fees in this transaction, including $580,000 to T.R. Winston as a loan origination fee for the Financing Agreement. The balance of the net proceeds will be used for general working capital. | |||
The Company has agreed to file a registration statement covering the shares underlying the Private Placement Warrants and the placement agent warrants. We anticipate that we will file the registration statements during the second quarter of 2015. We are obligated to pay all costs associated with this registration statement, other than selling expenses of the warrant holders. | |||
On December 19, 2014 we issued 600,000 shares of our Class A common stock in exchange for 100% of the outstanding capital stock of Five Delta, Inc., a Delaware corporation ("Five Delta"), pursuant to the terms and conditions of a Share Acquisition and Exchange Agreement dated December 19, 2014 (the "Five Delta Agreement") by and among Social Reality, Five Delta and the stockholders of Five Delta. | |||
During December 2014 we issued 350,000 shares of Class A common stock upon the conversion of 35,000 shares of preferred stock. | |||
Stock Awards | |||
During May 2014 we granted an aggregate of 200,000 common stock awards to ten employees. One half of the shares will vest ratably over three years and one half will vest upon the attainment of a performance condition. Compensation expense will be recognized over the vesting period. During the year ended December 31, 2014 we recorded $36,667 of compensation expense related to these awards. Awards in the amount of 40,000 shares were forfeited during 2014. | |||
On August 15, 2014 we granted 250,000 common stock awards pursuant to a restricted stock award to an employee. Of this award, 31,250 shares will vest quarterly with an initial vesting date of January 1, 2015. Compensation expense will be recognized over the vesting period. During the year ended December 31, 2014, we recorded $31,251 of compensation expense related to this award. | |||
On November 5, 2014 we issued 45,455 shares of Class A common stock pursuant to a restricted stock award to an employee. The award vests on November 5, 2015. Compensation expense will be recognized over the vesting period. During the year ended December 31, 2014, we recorded $22,644 of compensation expense related to this award. | |||
On December 19, 2014 we granted 50,000 common stock awards pursuant to a restricted stock award to an employee. The award vests on December 19, 2015. Compensation expense will be recognized over the vesting period. During the year ended December 31, 2014, we recorded $1,732 of compensation expense related to this award. | |||
During the year ended December 31, 2014 we recorded expense of $228,416 related to stock awards granted in prior years. | |||
The fair value of shares that vested during the year ended December 31, 2014 was $447,911. | |||
Stock Options and Warrants | |||
During February 2014 we granted 12,000 common stock options to a director. The options will vest quarterly over one year. The options have an exercise price of $2.70 per share and a term of five years. These options have a grant date fair value of $0.65 per option, determined using the Black-Scholes method based on the following assumptions: (1) risk free interest rate of 0.375 % ; (2) dividend yield of 0 %; (3) volatility factor of the expected market price of our common stock of 43 %; and (4) an expected life of the options of 2 years. We have recorded an expense for the director options of $7,180 for the year ended December 31, 2014. | |||
On March 15, 2014 we granted 200,000 Class A common stock options to a non-employee. The individual became an employee on June 19, 2014 and left our employ during the third quarter of 2014. Pursuant to the separation agreement all vested and unvested options were forfeited. During the year ended December 31, 2014 we have recorded expense of $7,678 related to the fair value of the options that vested. | |||
On June 19, 2014 we granted 300,000 Class A common stock options to an employee. The employee left our employ during the third quarter of 2014. Pursuant to the separation agreement all vested and unvested options were forfeited. We have not recorded any expense related to the fair value of options that were forfeited prior to vesting. | |||
On August 15, 2014 we granted 310,000 common stock options to employees. One half of the options will vest ratably over three years, such vesting to begin August 15, 2014, and one half will vest ratably over three years commencing upon the attainment of a performance condition, such vesting to begin August 15, 2016. The options subject to the performance condition will terminate if the performance condition is not met by July 31, 2015. Compensation expense will be recognized over the vesting period. The options have an exercise price of $1.00 per share and expire three years following vesting date. These options have a grant date fair value of $0.29 per option, determined using the Black-Scholes method based on the following assumptions: (1) risk free interest rate of 0.875 % ; (2) dividend yield of 0 %; (3) volatility factor of the expected market price of our common stock of 41 %; and (4) an expected life of the options of 3 years. We have recorded an expense for the options of $11,121 for the year ended December 31, 2014. | |||
On October 30, 2014 we granted 600,000 common stock options to our president. One half of the options will vest on October 30, 2017 and the remainder will vest on October 30, 2018. The options have an exercise price of $1.50 per share and a term of ten years. These options have a grant date fair value of $0.45 per option, determined using the Black-Scholes method based on the following assumptions: (1) risk free interest rate of 0.875% ; (2) dividend yield of 0%; (3) volatility factor of the expected market price of our common stock of 75%; and (4) an expected life of the options of 3.5 years. We have recorded an expense for the options of $13,012 for the year ended December 31, 2014. | |||
On October 30, 2014 we granted an aggregate of 275,000 common stock options to two employees. The options will vest ratably over four years, such vesting to begin October 30, 2015. The options have an exercise price of $1.50 per share and a term of ten years. These options have a grant date fair value of $0.36 per option, determined using the Black-Scholes method based on the following assumptions: (1) risk free interest rate of 0.625 % ; (2) dividend yield of 0%; (3) volatility factor of the expected market price of our common stock of 75%; and (4) an expected life of the options of 2.5 years. We have recorded an expense for the options of $4,114 for the year ended December 31, 2014. | |||
On November 5, 2014 we granted an aggregate of 130,000 common stock options to thirteen employees. The options will vest ratably over three years, such vesting to begin November 5, 2015. The options have an exercise price of $1.50 per share and expire three years after vesting. These options have a grant date fair value of $0.35 per option, determined using the Black-Scholes method based on the following assumptions: (1) risk free interest rate of 0.375 % ; (2) dividend yield of 0%; (3) volatility factor of the expected market price of our common stock of 75%; and (4) an expected life of the options of 2 years. We have recorded an expense for the options of $2,512 for the year ended December 31, 2014. | |||
On November 5, 2014 we granted 500,000 common stock options to our chief financial officer. The options will vest ratably over three years, such vesting to begin November 5, 2015. The options have an exercise price of $1.10 per share and expire three years after vesting. These options have a grant date fair value of $0.45 per option, determined using the Black-Scholes method based on the following assumptions: (1) risk free interest rate of 0.375 % ; (2) dividend yield of 0%; (3) volatility factor of the expected market price of our common stock of 75%; and (4) an expected life of the options of 2 years. We have recorded an expense for the options of $12,416 for the year ended December 31, 2014. | |||
On December 19, 2014 we granted 100,000 common stock options to an employee. The options will vest quarterly over two years, such vesting to begin March 31, 2016. The options have an exercise price of $1.26 per share and expire three years after vesting. These options have a grant date fair value of $0.53 per option, determined using the Black-Scholes method based on the following assumptions: (1) risk free interest rate of 0.375 % ; (2) dividend yield of 0%; (3) volatility factor of the expected market price of our common stock of 75%; and (4) an expected life of the options of 2.13 years. We have recorded an expense for the options of $739 for the year ended December 31, 2014. | |||
During the year ended December 31, 2014 we recorded expense of $33,468 related to stock options granted in prior years. | |||
2013 Transactions: | |||
Preferred Stock | |||
During August and October of 2013 we issued an aggregate of 121,000 shares of Series 1 Preferred Stock, valued at $1,167,000, pursuant to consulting agreements with terms of up to thirty six months. We will expense the value of the shares over the terms of the agreements. During the year ended December 31, 2013, we recorded expense of $124,000. | |||
Common Stock and Common Stock Units | |||
During January 2013 we issued 5,000 shares of Class A common stock, valued at $5,000, as payment for legal services. | |||
During February 2013 we issued 51,665 shares of Class A common stock upon the vesting of common stock awards. | |||
During February 2013 we issued 99,010 shares of Class A common stock pursuant to the revolving credit facility agreement described above. | |||
During June 2013 we issued 75,000 shares of Class A common stock pursuant to the revolving credit facility agreement described above. | |||
During August 2013 we issued 440,000 shares of Class A common stock, valued at $418,000, pursuant to a consulting agreement with a three year term. We will expense the value of the shares over that three year period. During the year ended December 31, 2013, we recorded expense of $52,250. | |||
During August 2013 we issued 300,000 shares of Class A common stock, valued at $285,000, to a director upon his appointment to the board. We have expensed the value of the shares upon grant. | |||
During August 2013 we issued 30,000 shares of Class A common stock, valued at $28,500, as payment for consulting services. | |||
During August 2013 we issued 550,000 shares of Class A common stock pursuant to a restricted stock award. | |||
On October 4, 2013, 9,000,000 shares of our Class B common stock was converted into an aggregate of 9,000,000 shares of our Class A common stock pursuant to the terms of the Class B common stock as set forth in our Certificate of Incorporation. | |||
During October 2013 we paid $175,000 to redeem the 174,010 common shares that had been issued in connection with the revolving credit facility agreement described above. | |||
During October 2013 we issued 150,000 shares of Class A common stock, valued at $150,000, pursuant to a consulting agreement with a two year, eight month term. We will expense the value of the shares over that thirty two month period. During the year ended December 31, 2013, we recorded expense of $9,375. | |||
Between October 8, 2013 and October 30, 2103 we sold an aggregate of 4,587,940 units of our securities to accredited investors in a private placement exempt from registration under the Securities Act, in reliance on exemptions provided by Section 4(a)(2) and Rule 506(b) of Regulation D. The units were sold at a purchase price of $0.50 per unit resulting in gross proceeds to us of $2,293,970. We also issued 212,060 units to our placement agent as payment of $106,030 of fees and expenses. Each unit consisted of one share of our Class A common stock and one three year Class A Common Stock Purchase Warrant to purchase 0.5 shares of our Class A common stock, resulting the issuance of 4,800,000 shares of our Class A common stock and Class A Common Stock Purchase Warrants to purchase an additional 2,400,000 shares of our Class A common stock. T.R. Winston & Company, LLC, a broker-dealer and member of FINRA, acted as placement agent for us in this offering. In addition to the 212,060 units referenced above, we paid the placement agent and a selling agent commissions and a non-accountable expense allowance totaling $181,976 and issued it three year warrants to purchase 480,000 of our Class A common stock at an exercise price of $1.00 per share. We used a portion of the net proceeds to satisfy our revolving note due TCA and to redeem the Facility Fee Shares and the Advisory Shares and we are using the balance of the net proceeds for general working capital. | |||
In November 2013 we sold an additional 660,000 units of our securities to accredited investors in a private placement exempt from registration under the Securities Act which were identical to the units sold in the October 2013 offering. We received gross proceeds of $330,000. We did not pay any commissions or finder's fees in this offering. We are using the proceeds for general working capital. | |||
Stock Awards | |||
During 2013 we granted an aggregate of 625,000 Class A common stock awards. The shares will vest over various periods of up to 2.75 years. Compensation expense will be recognized over the vesting period. During the year ended December 31, 2013 we recorded $177,604 of compensation expense related to these awards. | |||
The fair value of shares that vested during the year ended December 31, 2013 was $269,373. | |||
During the year ended December 31, 2013 we recorded expense of $100,656 related to stock awards granted in 2012. Unvested 2012 awards of 3,334 shares were forfeited in 2013. | |||
Stock Options and Warrants | |||
During 2013 we granted an aggregate of 350,500 Class A common stock options to employees and a director. The options will vest ratably over periods of up to three years. The options have an exercise price of $1.00 per share and a term of five years. We have recorded an expense for the employee and director options of $23,275 for the year ended December 31, 2013. | |||
During 2013 we granted 25,000 Class A common stock options to a non-employee. The options will vest ratably over a period of three years commencing on the grant date and vesting on each one year anniversary. The options have an exercise price of $1.00 per share and a term of five years. During the year ended December 31, 2013 we have recorded an expense of $9,739 related to the fair value of the options expected to vest. | |||
On August 22, 2013 we granted an aggregate of 250,000 Class A common stock warrants pursuant to an agreement for investment banking services to be provided over a three year period. The warrants vested upon grant. The exercise price of the warrants is $1. These warrants have a grant date fair value of $105,827. We have recorded an expense for the warrants of $12,738 for the year ended December 31, 2013. | |||
During the year ended December 31, 2013 we recorded expense of $2,059 related to stock options granted in 2012. Unvested 2012 options of 20,000 options were forfeited in 2013. | |||
PROPERTY_AND_EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
PROPERTY AND EQUIPMENT [Abstract] | |||||||||
PROPERTY AND EQUIPMENT | NOTE 5 – PROPERTY AND EQUIPMENT | ||||||||
Property and equipment consists of the following: | |||||||||
December 31, | |||||||||
2014 | 2013 | ||||||||
Assets: | |||||||||
Office equipment | $ | 52,615 | $ | 37,982 | |||||
Accumulated depreciation and amortization | (25,013 | ) | (10,184 | ) | |||||
Carrying value | $ | 27,602 | $ | 27,798 | |||||
Depreciation expense was $14,829 and $7,184 for the years ended December 31, 2014 and 2013, respectively. | |||||||||
RELATED_PARTY_TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Related Party Transactions [Abstract] | |||||||||||||||||
Related Party Transactions | NOTE 6 – RELATED PARTY TRANSACTIONS | ||||||||||||||||
We are obligated to Richard Steel, our president and a director, pursuant to a promissory note in the amount of $2,500,000, as described in Note 3. | |||||||||||||||||
We are also obligated to Mr. Steel for contingent Earnout Consideration of up to $8,000,000 incurred in connection with the acquisition of Steel | |||||||||||||||||
Media, as described in Note 2. The Company has initially recorded the liability at its present value of $6,584,042. Changes in the value will be recorded through the statement of operations. | |||||||||||||||||
Activity for the contingent consideration payable during the year ended December 31, 2014 was: | |||||||||||||||||
31-Dec-13 | Activity During the Period | Accretion in Value | 31-Dec-14 | ||||||||||||||
Contingent consideration payable | $ | — | $ | 6,584,042 | $ | 148,081 | $ | 6,732,123 | |||||||||
Total | $ | — | $ | 6,584,042 | $ | 148,081 | $ | 6,732,123 | |||||||||
Maturities as follows: | |||||||||||||||||
Year ended | |||||||||||||||||
December 31, | |||||||||||||||||
2015 | 3,586,722 | ||||||||||||||||
2016 | 3,145,401 |
INCOME_TAXES
INCOME TAXES | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
INCOME TAXES [Abstract] | |||||||||
INCOME TAXES | NOTE 7 - INCOME TAXES | ||||||||
The Company generated operating losses for the years ended December 31, 2014 and December 31, 2013 which are not benefitted for tax accounting purposes. The Company accounts for its state franchise and minimum taxes as a component of its general and administrative expenses. Accordingly, the Company has recorded no current or deferred income tax expense for the years ended December 31, 2014 and December 31, 2013. | |||||||||
A reconciliation of the federal statutory income tax rate to the Company's effective income tax rate is as follows: | |||||||||
Year Ended December 31, | |||||||||
2014 | 2013 | ||||||||
Federal statutory income tax rate | (34.0 | )% | (34.0 | )% | |||||
State income taxes, net of federal benefit | (5.3 | ) | (5.8 | ) | |||||
Stock based compensation | 15.4 | 0 | |||||||
Acquisition expenses | 6.2 | 0 | |||||||
Permanent differences | 1.3 | 0 | |||||||
Other | 1.5 | 1.8 | |||||||
Change in valuation allowance | 14.9 | 38 | |||||||
Provision for income taxes | 0 | % | 0 | % | |||||
Significant components of the Company's deferred income taxes are shown below: | |||||||||
Year Ended December 31, | |||||||||
2014 | 2013 | ||||||||
Deferred tax assets: | |||||||||
Net operating loss carryforwards | $ | 1,785,000 | $ | 652,000 | |||||
Fixed assets | 2,000 | — | |||||||
Stock based compensation | — | 324,000 | |||||||
Total deferred tax assets | 1,787,000 | 976,000 | |||||||
Deferred tax liabilities | |||||||||
Stock based compensation | (122,000 | ) | — | ||||||
Other accruals | (31,000 | ) | — | ||||||
Total deferred tax liabilities | (153,000 | ) | — | ||||||
Net deferred tax assets | |||||||||
Valuation allowance | (1,634,000 | ) | (976,000 | ) | |||||
Net deferred tax liability | $ | — | $ | — | |||||
The Company has established a valuation allowance against net deferred tax assets due to the uncertainty that such assets will be realized. The Company periodically evaluates the recoverability of the deferred tax assets. At such time as it is determined that it is more likely than not that deferred tax assets will be realizable, the valuation allowance will be reduced. The valuation allowance increased $658,000 for the year ended December 31, 2014. | |||||||||
At December 31, 2014, the Company has federal and state net operating losses, or NOL, carryforwards of approximately $4.5 million and $4.5 million, respectively. The federal and state NOL carryforwards begin to expire in 2032. | |||||||||
The above NOL carryforward may be subject to an annual limitation under Section 382 and 383 of the Internal Revenue Code of 1986, and similar state provisions if the Company experienced one or more ownership changes which would limit the amount of NOL and tax credit carryforwards that can be utilized to offset future taxable income and tax, respectively. In general, an ownership change, as defined by Section 382 and 383, results from transactions increasing ownership of certain stockholders or public groups in the stock of the corporation by more than 50 percentage points over a three-year period. The Company has not completed an IRC Section 382/383 analysis. If a change in ownership were to have occurred, NOL and tax credit carryforwards could be eliminated or restricted. If eliminated, the related asset would be removed from the deferred tax asset schedule with a corresponding reduction in the valuation allowance. Due to the existence of the valuation allowance, limitations created by future ownership changes, if any, will not impact the Company's effective tax rate. | |||||||||
The Company files income tax returns in the United States, and various state jurisdictions. Due to the Company's losses incurred, the Company is essentially subject to income tax examination by tax authorities from inception to date. The Company's policy is to recognize interest expense and penalties related to income tax matters as tax expense. At December 31, 2014, there are no unrecognized tax benefits, and there are no significant accruals for interest related to unrecognized tax benefits or tax penalties. | |||||||||
STOCK_OPTIONS_AND_WARRANTS
STOCK OPTIONS AND WARRANTS | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
STOCK OPTIONS AND WARRANTS [Abstract] | |||||||||||||||||
STOCK OPTIONS AND WARRANTS | NOTE 8- STOCK OPTIONS AND WARRANTS | ||||||||||||||||
2012 and 2014 Equity Compensation Plans | |||||||||||||||||
In January 2012, our board of directors and stockholders authorized the 2012 Equity Compensation Plan, which we refer to as the 2012 Plan, covering 3,000,000 shares of our Class A common stock. On November 5, 2014 our board of directors approved the adoption of our 2014 Equity Compensation Plan (the "2014 Plan") and reserved 3,000,000 shares of our Class A common stock for grants under this plan. The purpose of the 2012 and 2014 Plans is attract and retain the best available personnel for positions of substantial responsibility, to provide additional incentive to our employees, directors and consultants and to promote the success of our company's business. The 2012 and 2014 Plans are administered by our board of directors. Plan options may either be: | |||||||||||||||||
• | incentive stock options (ISOs), | ||||||||||||||||
• | non-qualified options (NSOs), | ||||||||||||||||
• | awards of our common stock, | ||||||||||||||||
• | stock appreciation rights (SARs), | ||||||||||||||||
• | restricted stock units (RSUs), | ||||||||||||||||
• | performance units, | ||||||||||||||||
• | performance shares, and | ||||||||||||||||
• | other stock-based awards. | ||||||||||||||||
Any option granted under the 2012 or 2014 Plans must provide for an exercise price of not less than 100% of the fair market value of the underlying shares on the date of grant, but the exercise price of any ISO granted to an eligible employee owning more than 10% of our outstanding common stock must not be less than 110% of fair market value on the date of the grant. The plans further provide that with respect to ISOs the aggregate fair market value of the common stock underlying the options which are exercisable by any option holder during any calendar year cannot exceed $100,000. The exercise price of any NSO granted under the 2012 or 2014 Plans is determined by the Board at the time of grant, but must be at least equal to fair market value on the date of grant. The term of each plan option and the manner in which it may be exercised is determined by the board of directors or the compensation committee, provided that no option may be exercisable more than 10 years after the date of its grant and, in the case of an incentive option granted to an eligible employee owning more than 10% of the common stock, no more than five years after the date of the grant. The terms of grants of any other type of award under the 2012 or 2014 Plans is determined by the Board at the time of grant. Subject to the limitation on the aggregate number of shares issuable under the plans, there is no maximum or minimum number of shares as to which a stock grant or plan option may be granted to any person. | |||||||||||||||||
Transactions involving our stock options are summarized as follows: | |||||||||||||||||
2014 | 2013 | ||||||||||||||||
Number | Weighted | Number | Weighted | ||||||||||||||
Average | Average | ||||||||||||||||
Exercise | Exercise | ||||||||||||||||
Price | Price | ||||||||||||||||
Outstanding at beginning of the period | 426,000 | $ | 1.04 | 70,500 | $ | 1.35 | |||||||||||
Granted during the period | 2,427,000 | 1.32 | 475,500 | 1 | |||||||||||||
Exercised during the period | — | — | — | — | |||||||||||||
Terminated during the period | (508,000 | ) | 1.35 | (120,000 | ) | 1.08 | |||||||||||
Outstanding at end of the period | 2,345,000 | $ | 1.26 | 426,000 | $ | 1.04 | |||||||||||
Exercisable at end of the period | 177,171 | $ | 1.13 | 35,834 | $ | 1.09 | |||||||||||
At December 31, 2014 options outstanding totaled 2,345,000 with a weighted average exercise price of $1.26. At December 31, 2014 these options had an intrinsic value of $261,659 and a weighted average remaining contractual term of 6.6 years. Of these options, 177,171 are exercisable at December 31, 2014, with an intrinsic value of $39,459 and a remaining weighted average contractual term of 3.2 years. Compensation cost related to the unvested options not yet recognized is $777,880 at December 31, 2014. We have estimated that approximately $283,000 will be recognized during 2015. | |||||||||||||||||
The weighted average remaining life of the options is 6.5 years. | |||||||||||||||||
Transactions involving our common stock awards are summarized as follows: | |||||||||||||||||
2014 | 2013 | ||||||||||||||||
Number | Number | ||||||||||||||||
Outstanding at beginning of the period | 650,002 | 180,000 | |||||||||||||||
Granted during the period | 545,455 | 675,000 | |||||||||||||||
Vested during the period | (316,665 | ) | (151,664 | ) | |||||||||||||
Terminated during the period | (40,000 | ) | (53,334 | ) | |||||||||||||
Unvested at end of the period | 838,792 | 650,002 | |||||||||||||||
Unrecognized compensation cost related to our common stock awards is $722,869 at December 31, 2014. We have estimated that we will recognize future compensation expense as follows: 2015, $476,000; 2016, $223,000; 2017, $24,000. | |||||||||||||||||
Transactions involving our stock warrants are summarized as follows: | |||||||||||||||||
2014 | 2013 | ||||||||||||||||
Number | Weighted | Number | Weighted | ||||||||||||||
Average | |||||||||||||||||
Exercise | Average | ||||||||||||||||
Price | Exercise | ||||||||||||||||
Price | |||||||||||||||||
Outstanding at beginning of the period | 3,460,000 | $ | 1 | — | $ | — | |||||||||||
Granted during the period | 5,809,346 | 1.26 | 3,460,000 | 1 | |||||||||||||
Exercised during the period | — | — | — | — | |||||||||||||
Terminated during the period | — | — | — | — | |||||||||||||
Outstanding at end of the period | 9,269,346 | $ | 1.16 | 3,460,000 | $ | 1 | |||||||||||
Exercisable at end of the period | 9,269,346 | $ | 1.16 | 3,460,000 | $ | 1 | |||||||||||
The weighted average remaining life of the warrants is 3.1 years. | |||||||||||||||||
COMMITMENTS_AND_CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
COMMITMENTS AND CONTINGENCIES [Abstract] | |||||
COMMITMENTS AND CONTINGENCIES | NOTE 9 - COMMITMENTS AND CONTINGENCIES | ||||
Operating Leases | |||||
The Company leases executive offices under an operating lease with lease terms which expire through December 31, 2018. The following is a schedule of the future minimum lease payments required under the operating leases that have initial non-cancelable lease terms in excess of one year: | |||||
Fiscal year ending | Minimum | ||||
December 31, | Lease | ||||
Commitments | |||||
2015 | $ | 45,865 | |||
2016 | 37,925 | ||||
2017 | 37,200 | ||||
2018 | 37,200 | ||||
Rent expense for office space amounted to $71,231 and $30,503 for the years ended December 31, 2014 and 2013, respectively. | |||||
Other Commitments | |||||
In the ordinary course of business, the Company may provide indemnifications of varying scope and terms to customers, vendors, lessors, business partners, and other parties with respect to certain matters, including, but not limited to, losses arising out of the Company's breach of such agreements, services to be provided by the Company, or from intellectual property infringement claims made by third parties. In addition, the Company has entered into indemnification agreements with its directors and certain of its officers and employees that will require the Company to, among other things, indemnify them against certain liabilities that may arise by reason of their status or service as directors, officers or employees. The Company has also agreed to indemnify certain former officers, directors and employees of acquired companies in connection with the acquisition of such companies. The Company maintains director and officer insurance, which may cover certain liabilities arising from its obligation to indemnify its directors and certain of its officers and employees, and former officers, directors and employees of acquired companies, in certain circumstances. | |||||
It is not possible to determine the maximum potential amount of exposure under these indemnification agreements due to the limited history of prior indemnification claims and the unique facts and circumstances involved in each particular agreement. Such indemnification agreements may not be subject to maximum loss clauses. | |||||
Employment agreements | |||||
We have entered into employment agreements with a number of our employees. These agreements may include provisions for base salary, guaranteed and discretionary bonuses and option grants. The agreements may contain severance provisions if the employees are terminated without cause, as defined in the agreements. | |||||
Litigation | |||||
From time to time, the Company may become subject to legal proceedings, claims and litigation arising in the ordinary course of business. In addition, the Company may receive letters alleging infringement of patent or other intellectual property rights. The Company is not currently a party to any material legal proceedings, nor is the Company aware of any pending or threatened litigation that would have a material adverse effect on the Company's business, operating results, cash flows or financial condition should such litigation be resolved unfavorably. | |||||
ORGANIZATION_AND_SUMMARY_OF_SI1
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2014 | |
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |
Organization and Basis of Presentation | Organization and Basis of Presentation |
Social Reality, Inc. ("Social Reality", "we", "us" or "the Company") is a Delaware corporation formed on August 2, 2011. Effective January 1, 2012 we acquired all of the member interests and operations of Social Reality, LLC, a California limited liability company formed on August 14, 2009, which began business in May of 2010, in exchange for 12,328,767 shares of our Class A and Class B common stock. The former members of Social Reality, LLC owned all of our common stock after the acquisition. | |
At Social Reality, we sell digital advertising campaigns to advertising agencies and brands, we have developed technology that allows brands to launch and manage digital advertising campaigns, and we provide the platform that allows website publishers to sell their media inventory to a number of digital adverting buyers. Our focus is to provide technology tools that enable both publishers and advertisers to maximize their digital advertising initiatives. We derive our revenues from: | |
• | |
sales of digital advertising campaigns to advertising agencies and brands; | |
• | |
sales of media inventory owned by our publishing partners through real-time bidding, or RTB, exchanges; | |
• | |
sale and licensing of our GroupAd platform and related media; and, | |
. | |
creation of custom platforms for buying media on SRAX for large brands. | |
The five core elements of this business are: | |
• | |
Social Reality Ad Exchange or "SRAX" – Real Time Bidding sell side and buy side representation. Our technology assists publishers in delivering their media inventory to the real time bidding, or RTB, exchanges. | |
• | |
GroupAd. GroupAd is a social media and loyalty platform that allows brands to launch and manage their social media initiatives. | |
• | |
SRAX MD is an ad targeting & data platform for healthcare brands, agencies and medical content publishers. Healthcare and pharmaceutical publishers utilize the platform for yield optimization, audience extension campaigns and re-targeting of their healthcare professional audience. Agencies and brands purchase targeted digital and mobile ad campaigns. | |
• | |
SRAX DI is a team of social media experts that helps brands and agencies create and manage their social media presence. | |
• | |
Steel Media provides display, mobile, and email ad inventory to both brands and ad agencies. This acquisition has allowed us to begin to sell our buy side RTB services to advertising agencies, and allows us to provide digital media for Steel's campaigns, resulting in increased gross margins for the combined companies. | |
We offer our customers a number of pricing options including cost-per-thousand-impression ("CPM"), whereby our customers pay based on the number of times the target audience is exposed to the advertisement, and cost-per-engagement ("CPE"), whereby payment is triggered only when an individual takes a specific activity. | |
We also create applications as custom programs and build them on a campaign by campaign basis as well as offer them on a managed or self-service subscription basis through our GroupAd platform. GroupAd allows brand marketers to select from a number of pre-created applications and then deploy them into their social media channels. | |
Social Reality is also an approved and accredited Facebook advertising network company. We sell targeted and measurable online advertising campaigns and programs to brand advertisers and advertising agencies across large Facebook apps and large websites, generating qualified Facebook likes and quantifiable engagement for our clients, driving online sales and increased brand equity. | |
We are headquartered in Los Angeles, California. | |
Principles of Consolidation | Principles of Consolidation |
The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All material intercompany transactions and balances have been eliminated in consolidation. | |
The consolidated financial statements include the accounts of the Company and its subsidiaries from the acquisition date of majority voting control and through the date of disposition, if any. | |
Use of Estimates | Use of Estimates |
Accounting principles generally accepted in the United States ("GAAP") require management of the Company to make estimates and assumptions in the preparation of these consolidated financial statements that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from these estimates and assumptions. | |
The most significant areas that require management judgment and which are susceptible to possible change in the near term include the Company's revenue recognition, allowance for doubtful accounts and sales credits, stock-based compensation, income taxes, goodwill and other intangible assets. The accounting policies for these areas are discussed elsewhere in these consolidated financial statements. | |
Cash and Cash Equivalents | Cash and Cash Equivalents |
The Company considers all short-term highly liquid investments with a remaining maturity at the date of purchase of three months or less to be cash equivalents. | |
Revenue Recognition | Revenue Recognition |
The Company recognizes revenue when the following criteria have been met: persuasive evidence of an arrangement exists, no significant Company obligations remain, collection of the related receivable is reasonably assured, and the fees are fixed or determinable. The Company acts as a principal in its revenue transactions as the Company is the primary obligor in the transactions. Revenue is recognized on a gross basis, and media and publisher expenses that are directly related to a revenue-generating event are recorded as a component of cost of revenue. | |
Cost of Revenue | Cost of Revenue |
Cost of revenue consists of payments to media providers and website publishers that are directly related to a revenue-generating event and project and application design costs. The Company becomes obligated to make payments related to media providers and website publishers in the period the advertising impressions, click-throughs, actions or lead-based information are delivered or occur. Such expenses are classified as cost of revenue in the corresponding period in which the revenue is recognized in the accompanying income statement. | |
Accounts Receivable | Accounts Receivable |
Credit is extended to customers based on an evaluation of their financial condition and other factors. Management periodically assesses the Company's accounts receivable and, if necessary, establishes an allowance for estimated uncollectible amounts. Accounts determined to be uncollectible are charged to operations when that determination is made. The Company usually does not require collateral. | |
Concentration of Credit Risk, Significant Customers and Supplier Risk | Concentration of Credit Risk, Significant Customers and Supplier Risk |
Financial instruments that potentially subject the Company to concentration of credit risk consist of cash and cash equivalents and accounts receivable. Cash and cash equivalents are deposited in the United States. The balances in the United States held at any one financial institution are generally in excess of Federal Deposit Insurance Corporation ("FDIC") insurance limits. The uninsured cash bank balances were approximately $1,343,000 at December 31, 2014. The Company has not experienced any loss on these accounts. The balances are maintained in demand accounts to minimize risk. | |
At December 31, 2014, one SRAX AD Exchange customer, who collects advertising payments from multiple advertisers and one additional customer each accounted for more than 10% of the accounts receivable balance, for a total of 34%. For the year ended December 31, 2014 no one customer accounted for 10% or more of total revenue. However, 38% of our revenue was collected and paid to us by three of our RTB exchange service providers. For the year ended December 31, 2013 87% of our revenue was collected and paid to us by one of our RTB exchange service providers. | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments |
The Company's financial instruments, including cash and cash equivalents, net accounts receivable, accounts payable and accrued expenses, are carried at historical cost. At December 31, 2014 and 2013 the carrying amounts of these instruments approximated their fair values because of the short-term nature of these instruments. | |
Property and equipment | Property and equipment |
Property and equipment is stated at cost less accumulated depreciation. Depreciation is provided on the straight line basis over the estimated useful lives of the assets of three years. | |
Expenditures for repair and maintenance which do not materially extend the useful lives of property and equipment are charged to operations. When property or equipment is sold or otherwise disposed of, the cost and related accumulated depreciation are removed from the respective accounts with the resulting gain or loss reflected in operations. Management periodically reviews the carrying value of its property and equipment for impairment. | |
Business Combinations | Business Combinations |
For all business combinations (whether partial, full or step acquisitions), the Company records 100% of all assets and liabilities of the acquired business, including goodwill, generally at their fair values; contingent consideration, if any, is recognized at its fair value on the acquisition date and; for certain arrangements, changes in fair value are recognized in earnings until settlement; and acquisition-related transaction and restructuring costs are expensed rather than treated as part of the cost of the acquisition. | |
Goodwill | Goodwill |
The Company will test for impairment of goodwill annually as of September 30 at the reporting unit level or whenever events or circumstances indicate that goodwill might be impaired. The impairment test is a two-step process, whereby in the first step, the Company compares the estimated fair value of the reporting unit with the reporting unit's carrying amount, including goodwill. The Company determines the estimated fair value of each reporting unit using a discounted cash flow approach, giving consideration to the market valuation approach. If the carrying amount of a reporting unit exceeds the reporting unit's fair value, the Company performs the second step of the goodwill impairment test to determine the amount of impairment, if any. | |
Long-lived Assets | Long-lived Assets |
Management evaluates the recoverability of the Company's identifiable intangible assets and other long-lived assets when events or circumstances indicate a potential impairment exists. Events and circumstances considered by the Company in determining whether the carrying value of identifiable intangible assets and other long-lived assets may not be recoverable include, but are not limited to: significant changes in performance relative to expected operating results; significant changes in the use of the assets; significant negative industry or economic trends; a significant decline in the Company's stock price for a sustained period of time; and changes in the Company's business strategy. In determining if impairment exists, the Company estimates the undiscounted cash flows to be generated from the use and ultimate disposition of these assets. If impairment is indicated based on a comparison of the assets' carrying values and the undiscounted cash flows, the impairment loss is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets. | |
Loss Per Share | Loss Per Share |
We use ASC 260, "Earnings Per Share" for calculating the basic and diluted loss per share. We compute basic loss per share by dividing net loss and net loss attributable to common shareholders by the weighted average number of common shares outstanding. Basic and diluted loss per share are the same, in that any potential common stock equivalents would have the effect of being anti-dilutive in the computation of net loss per share. There were 13,096,470 common share equivalents at December 31, 2014 and 5,296,001 at December 31, 2013. For the years ended December 31, 2014 and 2013, these potential shares were excluded from the shares used to calculate diluted earnings per share as their inclusion would reduce net loss per share. | |
Income Taxes | Income Taxes |
We utilize ASC 740 "Income Taxes" which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at year-end based on enacted laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. | |
The Company recognizes the impact of a tax position in the financial statements only if that position is more likely than not of being sustained upon examination by taxing authorities, based on the technical merits of the position. Our practice is to recognize interest and/or penalties related to income tax matters in income tax expense. | |
Stock-Based Compensation | Stock-Based Compensation |
We account for our stock based compensation under ASC 718 "Compensation – Stock Compensation" using the fair value based method. Under this method, compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. This guidance establishes standards for the accounting for transactions in which an entity exchanges it equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity's equity instruments or that may be settled by the issuance of those equity instruments. | |
We use the fair value method for equity instruments granted to non-employees and use the Black-Scholes model for measuring the fair value of options. The stock based fair value compensation is determined as of the date of the grant or the date at which the performance of the services is completed (measurement date) and is recognized over the vesting periods. | |
Business Segments | Business Segments |
The Company uses the "management approach" to identify its reportable segments. The management approach designates the internal organization used by management for making operating decisions and assessing performance as the basis for identifying the Company's reportable segments. Using the management approach, the Company determined that it has one operating segment due to business similarities and similar economic characteristics. | |
Recently Issued Accounting Standards | Recently Issued Accounting Standards |
Management does not believe that any recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying financial statements. | |
ACQUISITIONS_Tables
ACQUISITIONS (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
ACQUISITIONS [Abstract] | |||||||||
Schedule of preliminary allocation of the purchase price to the assets acquired and liabilities assumed based on the estimated fair values | |||||||||
Cash | $ | 32,038 | |||||||
Accounts receivable and other assets | 2,975,728 | ||||||||
Equipment | 7,777 | ||||||||
Goodwill and other intangibles | 17,562,911 | ||||||||
Total assets acquired | 20,578,454 | ||||||||
Accounts payable and other liabilities | (1,994,412 | ) | |||||||
Total | $ | 18,584,042 | |||||||
Schedule of pro forma resutlts of operations | |||||||||
December 31, | |||||||||
2014 | 2013 | ||||||||
Revenue | $ | 12,558,030 | $ | 11,349,864 | |||||
Net loss | (4,004,445 | ) | (1,417,778 | ) | |||||
Net loss per share | (0.18 | ) | (0.10 | ) |
NOTES_PAYABLE_Tables
NOTES PAYABLE (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
NOTES PAYABLE [Abstract] | |||||||||||||||||
Schedule of notes payable | |||||||||||||||||
December 31, | |||||||||||||||||
2014 | 2013 | ||||||||||||||||
Principal amount | $ | 9,000,000 | $ | — | |||||||||||||
PIK interest accrued | 63,014 | — | |||||||||||||||
9,063,014 | — | ||||||||||||||||
Less current portion | (1,350,000 | ) | — | ||||||||||||||
Notes payable and PIK interest accrued, net of current portion | $ | 7,713,014 | $ | — | |||||||||||||
Schedule of put liability | |||||||||||||||||
December 31, | Activity | Accretion | December 31, | ||||||||||||||
2013 | During | in Value | 2014 | ||||||||||||||
the Period | |||||||||||||||||
Put liability | $ | — | $ | 1,232,294 | $ | 27,716 | $ | 1,260,010 | |||||||||
Total | $ | — | $ | 1,232,294 | $ | 27,716 | $ | 1,260,010 | |||||||||
Schedule of maturities of long term debt | |||||||||||||||||
Year ended | |||||||||||||||||
December 31, | |||||||||||||||||
2016 | 2,250,000 | ||||||||||||||||
2017 | 5,463,000 |
PROPERTY_AND_EQUIPMENT_Tables
PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
PROPERTY AND EQUIPMENT [Abstract] | |||||||||
Schedule of Property and Equipment | |||||||||
December 31, | |||||||||
2014 | 2013 | ||||||||
Assets: | |||||||||
Office equipment | $ | 52,615 | $ | 37,982 | |||||
Accumulated depreciation and amortization | (25,013 | ) | (10,184 | ) | |||||
Carrying value | $ | 27,602 | $ | 27,798 | |||||
RELATED_PARTY_TRANSACTIONS_Tab
RELATED PARTY TRANSACTIONS (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Related Party Transactions [Abstract] | |||||||||||||||||
Schedule of contingent consideration payable | |||||||||||||||||
31-Dec-13 | Activity During the Period | Accretion in Value | 31-Dec-14 | ||||||||||||||
Contingent consideration payable | $ | — | $ | 6,584,042 | $ | 148,081 | $ | 6,732,123 | |||||||||
Total | $ | — | $ | 6,584,042 | $ | 148,081 | $ | 6,732,123 | |||||||||
Schedule of maturities of contingent consideration payable | |||||||||||||||||
Year ended | |||||||||||||||||
December 31, | |||||||||||||||||
2015 | 3,586,722 | ||||||||||||||||
2016 | 3,145,401 |
INCOME_TAXES_Tables
INCOME TAXES (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
INCOME TAXES [Abstract] | |||||||||
Schedule of Effective tax rate | |||||||||
Year Ended December 31, | |||||||||
2014 | 2013 | ||||||||
Federal statutory income tax rate | (34.0 | )% | (34.0 | )% | |||||
State income taxes, net of federal benefit | (5.3 | ) | (5.8 | ) | |||||
Stock based compensation | 15.4 | 0 | |||||||
Acquisition expenses | 6.2 | 0 | |||||||
Permanent differences | 1.3 | 0 | |||||||
Other | 1.5 | 1.8 | |||||||
Change in valuation allowance | 14.9 | 38 | |||||||
Provision for income taxes | 0 | % | 0 | % | |||||
Schedule of Deferred Tax Assets and Liabilities | |||||||||
Year Ended December 31, | |||||||||
2014 | 2013 | ||||||||
Deferred tax assets: | |||||||||
Net operating loss carryforwards | $ | 1,785,000 | $ | 652,000 | |||||
Fixed assets | 2,000 | — | |||||||
Stock based compensation | — | 324,000 | |||||||
Total deferred tax assets | 1,787,000 | 976,000 | |||||||
Deferred tax liabilities | |||||||||
Stock based compensation | (122,000 | ) | — | ||||||
Other accruals | (31,000 | ) | — | ||||||
Total deferred tax liabilities | (153,000 | ) | — | ||||||
Net deferred tax assets | |||||||||
Valuation allowance | (1,634,000 | ) | (976,000 | ) | |||||
Net deferred tax liability | $ | — | $ | — |
STOCK_OPTIONS_AND_WARRANTS_Tab
STOCK OPTIONS AND WARRANTS (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Stock Options [Member] | |||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||
Schedule of stock options, common stock awards and stock warrants | |||||||||||||||||
2014 | 2013 | ||||||||||||||||
Number | Weighted | Number | Weighted | ||||||||||||||
Average | Average | ||||||||||||||||
Exercise | Exercise | ||||||||||||||||
Price | Price | ||||||||||||||||
Outstanding at beginning of the period | 426,000 | $ | 1.04 | 70,500 | $ | 1.35 | |||||||||||
Granted during the period | 2,427,000 | 1.32 | 475,500 | 1 | |||||||||||||
Exercised during the period | — | — | — | — | |||||||||||||
Terminated during the period | (508,000 | ) | 1.35 | (120,000 | ) | 1.08 | |||||||||||
Outstanding at end of the period | 2,345,000 | $ | 1.26 | 426,000 | $ | 1.04 | |||||||||||
Exercisable at end of the period | 177,171 | $ | 1.13 | 35,834 | $ | 1.09 | |||||||||||
Common stock awards [Member] | |||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||
Schedule of stock options, common stock awards and stock warrants | |||||||||||||||||
2014 | 2013 | ||||||||||||||||
Number | Number | ||||||||||||||||
Outstanding at beginning of the period | 650,002 | 180,000 | |||||||||||||||
Granted during the period | 545,455 | 675,000 | |||||||||||||||
Vested during the period | (316,665 | ) | (151,664 | ) | |||||||||||||
Terminated during the period | (40,000 | ) | (53,334 | ) | |||||||||||||
Unvested at end of the period | 838,792 | 650,002 | |||||||||||||||
Stock Warrants [Member] | |||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||
Schedule of stock options, common stock awards and stock warrants | |||||||||||||||||
2014 | 2013 | ||||||||||||||||
Number | Weighted | Number | Weighted | ||||||||||||||
Average | |||||||||||||||||
Exercise | Average | ||||||||||||||||
Price | Exercise | ||||||||||||||||
Price | |||||||||||||||||
Outstanding at beginning of the period | 3,460,000 | $ | 1 | — | $ | — | |||||||||||
Granted during the period | 5,809,346 | 1.26 | 3,460,000 | 1 | |||||||||||||
Exercised during the period | — | — | — | — | |||||||||||||
Terminated during the period | — | — | — | — | |||||||||||||
Outstanding at end of the period | 9,269,346 | $ | 1.16 | 3,460,000 | $ | 1 | |||||||||||
Exercisable at end of the period | 9,269,346 | $ | 1.16 | 3,460,000 | $ | 1 | |||||||||||
COMMITMENTS_AND_CONTINGENCIES_
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
COMMITMENTS AND CONTINGENCIES [Abstract] | |||||
Schedule Of Future Minimum Payments | |||||
Fiscal year ending | Minimum | ||||
December 31, | Lease | ||||
Commitments | |||||
2015 | $ | 45,865 | |||
2016 | 37,925 | ||||
2017 | 37,200 | ||||
2018 | 37,200 |
ORGANIZATION_AND_SUMMARY_OF_SI2
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) (USD $) | 12 Months Ended | 1 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | Jan. 31, 2012 | |
item | |||
Business Acquisition [Line Items] | |||
Property and equipment estimated useful life | 3 years | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 13,096,470 | 5,296,001 | |
Number of operating segments | 1 | ||
Uninsured cash bank balance | $1,343,000 | ||
Social Reality LLC [Member] | |||
Business Acquisition [Line Items] | |||
Effective date of business acquisition | 1-Jan-12 | ||
Social Reality LLC [Member] | Class A and Class B common stock [Member] | |||
Business Acquisition [Line Items] | |||
Shares issued in business acquisition | 12,328,767 | ||
Accounts receivable [Member] | one SRAX AD Exchange customer and one additional customer [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 34.00% | ||
Revenues [Member] | Three RTB exchange service providers [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 38.00% | ||
Revenues [Member] | One RTB exchange service providers [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 87.00% |
ACQUISITIONS_Acquisition_of_St
ACQUISITIONS (Acquisition of Steel Media) (Details) (USD $) | 12 Months Ended | 0 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | Oct. 30, 2014 | |
Business Acquisition [Line Items] | |||
Cash payment | $2,000,000 | ||
Steel Media [Member] | |||
Business Acquisition [Line Items] | |||
Ownership acquired (as a percent) | 100.00% | ||
Cash payment | 7,500,000 | ||
Cash payment held in escrow | 2,000,000 | ||
Earnout consideration | 6,732,123 | ||
Value of earnout consideration | 6,584,042 | 6,584,042 | |
Acquisition price | 18,584,042 | ||
Period of earnout consideration payment | 2 years | ||
Percentage of earnout consideration | 100.00% | ||
Steel Media [Member] | Common Class A [Member] | |||
Business Acquisition [Line Items] | |||
Percentage of earnout consideration to be paid in shares | 60.00% | ||
Share price (in dollars per share) | $1.05 | ||
Period when registration rights can be exercised | 90 days | ||
Steel Media [Member] | Secured subordinated promissory note [Member] | |||
Business Acquisition [Line Items] | |||
Notes term | 1 year | ||
Notes issued | 2,500,000 | ||
Interest rate (as a percent) | 5.00% | ||
Increased interest rate (as a percent) | 10.00% | ||
Notice period for prepayment of debt | 5 days | ||
Percentage of quarterly installments | 25.00% | ||
Steel Media [Member] | Secured subordinated promissory note [Member] | Common Class A [Member] | |||
Business Acquisition [Line Items] | |||
Escrow shares | 2,386,863 | ||
Steel Media [Member] | Maximum [Member] | |||
Business Acquisition [Line Items] | |||
Purchase consideration | 20,000,000 | ||
Earnout consideration | $8,000,000 | ||
Steel Media [Member] | Minimum [Member] | Secured subordinated promissory note [Member] | Common Class A [Member] | |||
Business Acquisition [Line Items] | |||
Percentage of escrow shares subject to effective registration | 90.00% |
ACQUISITIONS_Preliminary_alloc
ACQUISITIONS (Preliminary allocation of the purchase price to the assets acquired and liabilities) (Details) (Steel Media [Member], USD $) | Oct. 30, 2014 |
Steel Media [Member] | |
Preliminary allocation of the purchase price to the assets acquired and liabilities assumed based on the estimated fair values | |
Cash | $32,038 |
Accounts receivable and other assets | 2,975,728 |
Equipment | 7,777 |
Goodwill and other intangibles | 17,562,911 |
Total assets acquired | 20,578,454 |
Accounts payable and other liabilities | -1,994,412 |
Total | $18,584,042 |
ACQUISITIONS_Pro_forma_Results
ACQUISITIONS (Pro forma Results of Operations) (Details) (Steel Media [Member], USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Steel Media [Member] | ||
Pro forma Results of Operations | ||
Revenue | $12,558,030 | $11,349,864 |
Net loss | -4,004,445 | -1,417,778 |
Net loss per share | ($0.18) | ($0.10) |
Revenue of acquiree since the acquisition date included in the consolidated statement of operations | 1,896,000 | |
Earnings of acquiree since the acquisition date included in the consolidated statement of operations | $490,000 |
ACQUISITIONS_Acquisition_of_Fi
ACQUISITIONS (Acquisition of Five Delta, Inc.) (Details) (Five Delta [Member], USD $) | 0 Months Ended |
Dec. 19, 2014 | |
Business Acquisition [Line Items] | |
Ownership acquired (as a percent) | 100.00% |
Purchase consideration | $756,000 |
Common Class A [Member] | |
Business Acquisition [Line Items] | |
Number of common stock issued | 600,000 |
Escrow shares | 300,000 |
Period from the closing date during which entity has a right of refusal over the shares of common stock | 4 years |
Lock Up Agreement term | 24 months |
Percentage of common stock released from the lock up on the one year anniversary | 50.00% |
NOTES_PAYABLE_Financing_Agreem
NOTES PAYABLE (Financing Agreement with Victory Park Management, LLC as agent for the lenders) (Details) (USD $) | 0 Months Ended | ||
Oct. 30, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | |
Debt Instrument [Line Items] | |||
Amortization of debt issue costs | $256,616 | ||
Deferred debt issue costs | 2,907,736 | ||
Financing Agreement [Member] | |||
Debt Instrument [Line Items] | |||
Notes issued | 9,000,000 | ||
Percentage of equity interest pledged | 100.00% | ||
Interest rate (as a percent) | 10.00% | ||
Paid-in-kind interest rate (as a percent) | 4.00% | ||
Exercise period of warrants | 5 years | ||
Exercise price of warrants | $1 | ||
Beneficially own shares as a percentage of shares outstanding | 4.99% | ||
Percentage of revenue used as base to calculate purchase price | 50.00% | ||
Amount used as base to calculate purchase price | 1,500,000 | ||
Present value of put liability that have recorded it as deferred debt cost | 1,232,294 | ||
Costs related to agreement | 3,164,352 | ||
Financing Agreement [Member] | Common Class A [Member] | |||
Debt Instrument [Line Items] | |||
Number of shares to be issued | 2,900,000 | ||
Maximum [Member] | Financing Agreement [Member] | |||
Debt Instrument [Line Items] | |||
Notes issued | $20,000,000 | ||
Paid-in-kind interest rate (as a percent) | 4.00% | ||
Minimum [Member] | Financing Agreement [Member] | |||
Debt Instrument [Line Items] | |||
Paid-in-kind interest rate (as a percent) | 2.00% |
NOTES_PAYABLE_Schedule_of_Note
NOTES PAYABLE (Schedule of Notes Payable) (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
NOTES PAYABLE [Abstract] | ||
Principal amount | $9,000,000 | |
PIK interest accrued | 63,014 | |
Notes payable | 9,063,014 | |
Less current portion | -1,350,000 | |
Notes payable and PIK interest accrued, net of current portion | $7,713,014 |
NOTES_PAYABLE_Schedule_of_Put_
NOTES PAYABLE (Schedule of Put Liability) (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Activity for the put liability- notes payable [Roll Forward] | ||
Beginning of period | ||
Activity During the Period | 1,232,294 | |
Accretion in Value | 27,716 | |
End of period | 1,260,010 | |
Put Liability Notes Payable [Member] | ||
Activity for the put liability- notes payable [Roll Forward] | ||
Beginning of period | ||
Activity During the Period | 1,232,294 | |
Accretion in Value | 27,716 | |
End of period | $1,260,010 |
NOTES_PAYABLE_Maturities_of_lo
NOTES PAYABLE (Maturities of long term debt) (Details) (USD $) | Dec. 31, 2014 |
Maturities of long term debt | |
2016 | $2,250,000 |
2017 | $5,463,000 |
NOTES_PAYABLE_Note_payable_Ric
NOTES PAYABLE (Note payable - Richard Steel) (Details) (Steel Media [Member], USD $) | 0 Months Ended |
Oct. 30, 2014 | |
Common Class A [Member] | |
Debt Instrument [Line Items] | |
Share Price | $1.05 |
Secured subordinated promissory note [Member] | |
Debt Instrument [Line Items] | |
Notes term | 1 year |
Notes issued | $2,500,000 |
Interest rate (as a percent) | 5.00% |
Increased interest rate (as a percent) | 10.00% |
Notice period for prepayment of debt | 5 days |
Percentage of quarterly installments | 25.00% |
Secured subordinated promissory note [Member] | Common Class A [Member] | |
Debt Instrument [Line Items] | |
Escrow shares | 2,386,863 |
Secured subordinated promissory note [Member] | Common Class A [Member] | Minimum [Member] | |
Debt Instrument [Line Items] | |
Percentage of escrow shares subject to effective registration | 90.00% |
NOTES_PAYABLE_Credit_Facility_
NOTES PAYABLE (Credit Facility and Termination Agreement) (Details) (USD $) | 0 Months Ended | 1 Months Ended | 12 Months Ended |
Jun. 11, 2013 | Oct. 31, 2013 | Dec. 31, 2013 | |
TCA Global Credit Master Fund, LP [Member] | |||
Debt Instrument [Line Items] | |||
Stock redeemed, shares | 174,010 | ||
Stock redeemed, value | $175,000 | ||
Tca Global Credit Master Fund Lp First Amendment To Credit Agreement [Member] | |||
Debt Instrument [Line Items] | |||
Maximum borrowing capacity | 5,000,000 | ||
Debt instrument, face amount | 550,000 | ||
Proceeds from Long-term Lines of Credit | 486,425 | ||
Repayments of Lines of Credit | 550,000 | ||
Stock redeemed, shares | 174,010 | ||
Stock redeemed, value | 175,000 | ||
Debt issuance costs | 274,737 | ||
Interest expense | $274,737 |
STOCKHOLDERS_EQUITY_Details
STOCKHOLDERS' EQUITY (Details) (USD $) | 0 Months Ended | 1 Months Ended | 12 Months Ended | 1 Months Ended | 0 Months Ended | 1 Months Ended | 0 Months Ended | 1 Months Ended | 0 Months Ended | 3 Months Ended | 0 Months Ended | 1 Months Ended | 0 Months Ended | 3 Months Ended | ||||||||
Oct. 30, 2014 | Jun. 30, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Oct. 31, 2013 | Jan. 31, 2014 | Nov. 30, 2013 | Aug. 31, 2013 | Dec. 19, 2014 | Feb. 28, 2014 | Nov. 05, 2014 | Feb. 28, 2013 | Jan. 31, 2013 | Jun. 30, 2013 | Jun. 19, 2014 | Mar. 15, 2014 | Oct. 31, 2013 | Aug. 22, 2013 | 31-May-14 | Aug. 15, 2014 | Sep. 30, 2014 | Oct. 04, 2013 | |
item | ||||||||||||||||||||||
Preferred Stock, shares authorized | 50,000,000 | 50,000,000 | ||||||||||||||||||||
Preferred Stock, par value per share | $0.00 | $0.00 | ||||||||||||||||||||
Common Stock, shares authorized | 259,000,000 | 259,000,000 | ||||||||||||||||||||
Expense related to restricted stock awards | $228,416 | |||||||||||||||||||||
Granted during the period | 2,427,000 | 475,500 | ||||||||||||||||||||
Share-based compensation expense | 2,059 | |||||||||||||||||||||
Sale of common stock units for cash | 5,107,598 | 2,388,382 | ||||||||||||||||||||
Common stock issued for services | 318,500 | |||||||||||||||||||||
Granted during the period | $1.32 | $1 | ||||||||||||||||||||
Amortization of fair value of stock options | 33,468 | 100,656 | ||||||||||||||||||||
Share-based compensation, shares forfeited | 508,000 | 120,000 | ||||||||||||||||||||
Fees paid to placement agents and selling agent , including commissions and a non-accountable expense allowance | 678,000 | |||||||||||||||||||||
Common stock issued pursuant to the vesting of stock grants, shares | 133,332 | |||||||||||||||||||||
Fair value of shares vested | 447,911 | 269,373 | ||||||||||||||||||||
Financing Agreement [Member] | ||||||||||||||||||||||
Exercise price of warrant | $1 | |||||||||||||||||||||
Exercise period of warrants | 5 years | |||||||||||||||||||||
T R Winston and Company LLC [Member] | Financing Agreement [Member] | ||||||||||||||||||||||
Loan origination fee | 580,000 | |||||||||||||||||||||
TCA Global Credit Master Fund, LP [Member] | ||||||||||||||||||||||
Stock redeemed, value | 175,000 | |||||||||||||||||||||
Stock redeemed, shares | 174,010 | |||||||||||||||||||||
Five Delta [Member] | ||||||||||||||||||||||
Ownership acquired (as a percent) | 100.00% | |||||||||||||||||||||
Steel Media [Member] | ||||||||||||||||||||||
Ownership acquired (as a percent) | 100.00% | |||||||||||||||||||||
Restricted Stock [Member] | ||||||||||||||||||||||
Number of shares that vested in period | 316,665 | 151,664 | ||||||||||||||||||||
Private Placement [Member] | ||||||||||||||||||||||
Exercise price of warrant | $2 | |||||||||||||||||||||
Securities sold to accredited investors in a private placement, units | 4,220,500 | 4,587,940 | 978,668 | 660,000 | ||||||||||||||||||
Puchase price, per unit | $1 | $0.50 | $1.50 | |||||||||||||||||||
Number Of Accredited Investors In Private Placement | 28 | 22 | ||||||||||||||||||||
Proceeds from issuance of private placement | 4,220,500 | 2,293,970 | 1,468,001 | 330,000 | ||||||||||||||||||
Description of units | Each unit consisted of one share of our Class A common stock and one three year Class A Common Stock Purchase Warrant to purchase 0.5 shares of our Class A common stock, resulting the issuance of 4,800,000 shares of our Class A common stock and Class A Common Stock Purchase Warrants to purchase an additional 2,400,000 shares of our Class A common stock. | |||||||||||||||||||||
Issued to placement agent as payment for fees and expenses, units | 212,060 | |||||||||||||||||||||
Issued to placement agent as payment for fees and expenses, value | 106,030 | |||||||||||||||||||||
Fees paid to placement agents and selling agent , including commissions and a non-accountable expense allowance | 181,976 | 190,840 | ||||||||||||||||||||
Warrants issued to pay placement agents and selling agent | 480,000 | 97,866 | ||||||||||||||||||||
Additional Private Placement Transaction Fees Paid | 25,744 | |||||||||||||||||||||
Private Placement Warrant Exercise Price | $1 | |||||||||||||||||||||
Private Placement [Member] | T R Winston and Company LLC [Member] | ||||||||||||||||||||||
Exercise price of warrant | $1.50 | |||||||||||||||||||||
Fees paid to placement agents and selling agent , including commissions and a non-accountable expense allowance | 351,435 | |||||||||||||||||||||
Warrants issued to pay placement agents and selling agent | 301,230 | |||||||||||||||||||||
Net proceeds used for working capital | 1,251,416 | |||||||||||||||||||||
Net proceeds from the offering | 2,500,000 | |||||||||||||||||||||
Exercise period of warrants | 3 years | |||||||||||||||||||||
Private Placement [Member] | Steel Media [Member] | T R Winston and Company LLC [Member] | ||||||||||||||||||||||
Securities sold to accredited investors in a private placement, units | 800,000 | |||||||||||||||||||||
Proceeds from issuance of private placement | 800,000 | |||||||||||||||||||||
Employee [Member] | Restricted Stock [Member] | ||||||||||||||||||||||
Share-based compensation, vesting period | 32 months | |||||||||||||||||||||
Employee [Member] | Employee Stock Option [Member] | December 19, 2014 [Member] | ||||||||||||||||||||||
Granted during the period | 100,000 | |||||||||||||||||||||
Share-based compensation, vesting period | 2 years | |||||||||||||||||||||
Share-based compensation, risk free interest rate | 0.38% | |||||||||||||||||||||
Share-based compensation, expected dividend yield | 0.00% | |||||||||||||||||||||
Share-based compensation, expected volatility rate | 75.00% | |||||||||||||||||||||
Share-based compensation, expected life in years | 2 years 1 month 17 days | |||||||||||||||||||||
Options term | 3 years | |||||||||||||||||||||
Granted during the period | $1.26 | |||||||||||||||||||||
Stock options granted, grant date fair value | $0.53 | |||||||||||||||||||||
Amortization of fair value of stock options | 739 | |||||||||||||||||||||
Pricing model used in calculation of grant-date fair value | Black-Scholes | |||||||||||||||||||||
Director [Member] | Employee Stock Option [Member] | ||||||||||||||||||||||
Granted during the period | 12,000 | |||||||||||||||||||||
Share-based compensation, vesting period | 1 year | |||||||||||||||||||||
Share-based compensation, risk free interest rate | 0.38% | |||||||||||||||||||||
Share-based compensation, expected dividend yield | 0.00% | |||||||||||||||||||||
Share-based compensation, expected volatility rate | 43.00% | |||||||||||||||||||||
Share-based compensation, expected life in years | 2 years | |||||||||||||||||||||
Options term | 5 years | |||||||||||||||||||||
Granted during the period | $2.70 | |||||||||||||||||||||
Stock options granted, grant date fair value | $0.65 | |||||||||||||||||||||
Amortization of fair value of stock options | 7,180 | |||||||||||||||||||||
Pricing model used in calculation of grant-date fair value | Black-Scholes | |||||||||||||||||||||
Two Employees [Member] | Employee Stock Option [Member] | ||||||||||||||||||||||
Granted during the period | 275,000 | |||||||||||||||||||||
Share-based compensation, vesting period | 4 years | |||||||||||||||||||||
Share-based compensation, risk free interest rate | 0.63% | |||||||||||||||||||||
Share-based compensation, expected dividend yield | 0.00% | |||||||||||||||||||||
Share-based compensation, expected volatility rate | 75.00% | |||||||||||||||||||||
Share-based compensation, expected life in years | 2 years 6 months | |||||||||||||||||||||
Options term | 10 years | |||||||||||||||||||||
Granted during the period | $1.50 | |||||||||||||||||||||
Stock options granted, grant date fair value | $0.36 | |||||||||||||||||||||
Amortization of fair value of stock options | 4,114 | |||||||||||||||||||||
Pricing model used in calculation of grant-date fair value | Black-Scholes | |||||||||||||||||||||
President [Member] | Employee Stock Option [Member] | ||||||||||||||||||||||
Granted during the period | 600,000 | |||||||||||||||||||||
Share-based compensation, risk free interest rate | 0.88% | |||||||||||||||||||||
Share-based compensation, expected dividend yield | 0.00% | |||||||||||||||||||||
Share-based compensation, expected volatility rate | 75.00% | |||||||||||||||||||||
Share-based compensation, expected life in years | 3 years 6 months | |||||||||||||||||||||
Options term | 10 years | |||||||||||||||||||||
Granted during the period | $1.50 | |||||||||||||||||||||
Stock options granted, grant date fair value | $0.45 | |||||||||||||||||||||
Amortization of fair value of stock options | 13,012 | |||||||||||||||||||||
Pricing model used in calculation of grant-date fair value | Black-Scholes | |||||||||||||||||||||
thirteen employees [Member] | Employee Stock Option [Member] | ||||||||||||||||||||||
Granted during the period | 130,000 | |||||||||||||||||||||
Share-based compensation, vesting period | 3 years | |||||||||||||||||||||
Share-based compensation, risk free interest rate | 0.38% | |||||||||||||||||||||
Share-based compensation, expected dividend yield | 0.00% | |||||||||||||||||||||
Share-based compensation, expected volatility rate | 75.00% | |||||||||||||||||||||
Share-based compensation, expected life in years | 2 years | |||||||||||||||||||||
Options term | 3 years | |||||||||||||||||||||
Granted during the period | $1.50 | |||||||||||||||||||||
Stock options granted, grant date fair value | $0.35 | |||||||||||||||||||||
Amortization of fair value of stock options | 2,512 | |||||||||||||||||||||
Pricing model used in calculation of grant-date fair value | Black-Scholes | |||||||||||||||||||||
Chief financial officer [Member] | Employee Stock Option [Member] | ||||||||||||||||||||||
Granted during the period | 500,000 | |||||||||||||||||||||
Share-based compensation, vesting period | 3 years | |||||||||||||||||||||
Share-based compensation, risk free interest rate | 0.38% | |||||||||||||||||||||
Share-based compensation, expected dividend yield | 0.00% | |||||||||||||||||||||
Share-based compensation, expected volatility rate | 75.00% | |||||||||||||||||||||
Share-based compensation, expected life in years | 2 years | |||||||||||||||||||||
Options term | 3 years | |||||||||||||||||||||
Granted during the period | $1.10 | |||||||||||||||||||||
Stock options granted, grant date fair value | $0.45 | |||||||||||||||||||||
Amortization of fair value of stock options | 12,416 | |||||||||||||||||||||
Pricing model used in calculation of grant-date fair value | Black-Scholes | |||||||||||||||||||||
Common Class A [Member] | ||||||||||||||||||||||
Common Stock, shares authorized | 250,000,000 | 250,000,000 | ||||||||||||||||||||
Common Stock, par value per share | $0.00 | $0.00 | ||||||||||||||||||||
Common stock issued upon conversion of preferred stock, shares | 350,000 | |||||||||||||||||||||
Common Stock, voting rights | One vote per share | |||||||||||||||||||||
Common Stock, shares issued | 29,416,612 | 19,901,794 | ||||||||||||||||||||
Stock issued for services | 150,000 | 5,000 | ||||||||||||||||||||
Common stock issued for services | 150,000 | 5,000 | ||||||||||||||||||||
Issuance of common stock for compensation, shares | 51,665 | |||||||||||||||||||||
Issued restricted stock, shares | 550,000 | |||||||||||||||||||||
Number of new Class A common stock shares from converted Class B common stock shares | 9,000,000 | |||||||||||||||||||||
Common Class A [Member] | Financing Agreement [Member] | ||||||||||||||||||||||
Common stock warrants issued | 2,900,000 | |||||||||||||||||||||
Common Class A [Member] | Five Delta [Member] | ||||||||||||||||||||||
Number of common stock issued | 600,000 | |||||||||||||||||||||
Shares issued in business acquisition | 600,000 | |||||||||||||||||||||
Common Class A [Member] | Steel Media [Member] | ||||||||||||||||||||||
Share price (in dollars per share) | $1.05 | |||||||||||||||||||||
Common Class A [Member] | Restricted Stock [Member] | ||||||||||||||||||||||
Granted during the period | 625,000 | |||||||||||||||||||||
Share-based compensation, vesting period | 2 years 9 months | |||||||||||||||||||||
Share-based compensation expense | 177,604 | |||||||||||||||||||||
Common Class A [Member] | Private Placement [Member] | ||||||||||||||||||||||
Common Stock, shares issued | 5,020,500 | |||||||||||||||||||||
Common stock warrants issued | 2,510,250 | |||||||||||||||||||||
Additional Private Placement Transaction Fees Paid | 12,885 | |||||||||||||||||||||
Private Placement Warrant Exercise Price | $1.50 | |||||||||||||||||||||
Exercise period of warrants | 3 years | |||||||||||||||||||||
Number of shares issued for each unit in private placement | 1 | |||||||||||||||||||||
Number of warrants issued for each unit in private placement | 1 | |||||||||||||||||||||
Notice Period for Redemption of Warrants | 20 days | |||||||||||||||||||||
Number of shares called by each warrant | 0.5 | |||||||||||||||||||||
Redemption price of warrants (in dollars per share) | $0.00 | |||||||||||||||||||||
Share price (in dollars per share) | $3.75 | |||||||||||||||||||||
Number of consecutive trading days | 20 | |||||||||||||||||||||
Daily average minimum volume in 20 consecutive trading days (in shares) | 100,000 | |||||||||||||||||||||
Common Class A [Member] | Stock Option Issuance Transaction One [Member] | ||||||||||||||||||||||
Share-based compensation expense | 52,250 | |||||||||||||||||||||
Stock issued for services | 440,000 | |||||||||||||||||||||
Common stock issued for services | 418,000 | |||||||||||||||||||||
Common Class A [Member] | Stock Option Issuance Transaction Two [Member] | ||||||||||||||||||||||
Share-based compensation expense | 9,375 | |||||||||||||||||||||
Stock issued for services | 30,000 | |||||||||||||||||||||
Common stock issued for services | 28,500 | |||||||||||||||||||||
Common Class A [Member] | Revolving Credit Facility [Member] | ||||||||||||||||||||||
Common stock issued during period for revolving credit facility agreement, shares | 99,010 | 75,000 | ||||||||||||||||||||
Common Class A [Member] | Employee [Member] | Employee Stock Option [Member] | ||||||||||||||||||||||
Granted during the period | 300,000 | |||||||||||||||||||||
Common Class A [Member] | Director [Member] | ||||||||||||||||||||||
Common stock issued for services | 285,000 | |||||||||||||||||||||
Issuance of common stock for compensation, shares | 300,000 | |||||||||||||||||||||
Common Class A [Member] | Non Employee [Member] | Employee Stock Option [Member] | ||||||||||||||||||||||
Granted during the period | 25,000 | 200,000 | ||||||||||||||||||||
Share-based compensation, vesting period | 3 years | |||||||||||||||||||||
Granted during the period | $1 | |||||||||||||||||||||
Average remaining contractual life outstanding | 5 years | |||||||||||||||||||||
Amortization of fair value of stock options | 7,678 | 9,739 | ||||||||||||||||||||
Common Class A [Member] | Employees and Director [Member] | Employee Stock Option [Member] | ||||||||||||||||||||||
Granted during the period | 350,500 | |||||||||||||||||||||
Share-based compensation, vesting period | 3 years | |||||||||||||||||||||
Granted during the period | $1 | |||||||||||||||||||||
Average remaining contractual life outstanding | 5 years | |||||||||||||||||||||
Amortization of fair value of stock options | 23,275 | |||||||||||||||||||||
Common Class B [Member] | ||||||||||||||||||||||
Common Stock, shares authorized | 9,000,000 | 9,000,000 | ||||||||||||||||||||
Common Stock, par value per share | $0.00 | $0.00 | ||||||||||||||||||||
Common Stock, voting rights | ten votes per share | |||||||||||||||||||||
Common Stock, shares issued | 0 | 0 | ||||||||||||||||||||
Number of shares of Class B common stock converted into Class A common stock | 9,000,000 | |||||||||||||||||||||
Preferred Stock [Member] | ||||||||||||||||||||||
Preferred Stock, shares authorized | 49,800,000 | 49,800,000 | ||||||||||||||||||||
Preferred Stock, shares issued | 0 | 0 | ||||||||||||||||||||
Preferred stock, shares outstanding | 0 | 0 | ||||||||||||||||||||
Number of preferred stock converted to common stock | 35,000 | |||||||||||||||||||||
Series 1 Preferred Stock [Member] | ||||||||||||||||||||||
Preferred Stock, shares authorized | 200,000 | 200,000 | ||||||||||||||||||||
Preferred Stock, par value per share | $0.00 | $0.00 | ||||||||||||||||||||
Preferred Stock, shares issued | 86,000 | 121,000 | ||||||||||||||||||||
Preferred stock, shares outstanding | 86,000 | 121,000 | ||||||||||||||||||||
Share-based compensation expense | 124,000 | |||||||||||||||||||||
Stock issued for services | 121,000 | |||||||||||||||||||||
Term of consulting agreements | 36 months | |||||||||||||||||||||
Common stock issued for services | 1,167,000 | |||||||||||||||||||||
Stock warrants [Member] | ||||||||||||||||||||||
Granted during the period | 250,000 | |||||||||||||||||||||
Share-based compensation, vesting period | 3 years | |||||||||||||||||||||
Grant date fair value of warrants | 105,827 | |||||||||||||||||||||
Amortization of fair value of stock options | 12,738 | |||||||||||||||||||||
Exercise price of warrant | $1 | |||||||||||||||||||||
Common Stock [Member] | Employee [Member] | Restricted Stock [Member] | May 2014 [Member] | ||||||||||||||||||||||
Awards granted | 200,000 | |||||||||||||||||||||
Expense related to restricted stock awards | 36,667 | |||||||||||||||||||||
Share-based compensation, vesting period | 3 years | |||||||||||||||||||||
Number of shares forfeited, stock awards | 40,000 | |||||||||||||||||||||
Common Stock [Member] | Employee [Member] | Restricted Stock [Member] | August 15, 2014 [Member] | ||||||||||||||||||||||
Awards granted | 250,000 | |||||||||||||||||||||
Number of shares will vest quarterly with an initial vesting date of January 1, 2015 | 31,250 | |||||||||||||||||||||
Expense related to restricted stock awards | 31,251 | |||||||||||||||||||||
Common Stock [Member] | Employee [Member] | Restricted Stock [Member] | November 5, 2014 [Member] | ||||||||||||||||||||||
Awards granted | 45,455 | |||||||||||||||||||||
Expense related to restricted stock awards | 22,644 | |||||||||||||||||||||
Common Stock [Member] | Employee [Member] | Restricted Stock [Member] | December 19, 2014 [Member] | ||||||||||||||||||||||
Awards granted | 50,000 | |||||||||||||||||||||
Expense related to restricted stock awards | 1,732 | |||||||||||||||||||||
Common Stock [Member] | Employee [Member] | Employee Stock Option [Member] | August 15, 2014 [Member] | ||||||||||||||||||||||
Granted during the period | 310,000 | |||||||||||||||||||||
Share-based compensation, vesting period | 3 years | |||||||||||||||||||||
Share-based compensation, risk free interest rate | 0.88% | |||||||||||||||||||||
Share-based compensation, expected dividend yield | 0.00% | |||||||||||||||||||||
Share-based compensation, expected volatility rate | 41.00% | |||||||||||||||||||||
Share-based compensation, expected life in years | 3 years | |||||||||||||||||||||
Options term | 3 years | |||||||||||||||||||||
Granted during the period | 1 | |||||||||||||||||||||
Stock options granted, grant date fair value | 0.29 | |||||||||||||||||||||
Amortization of fair value of stock options | $11,121 | $3,707 | ||||||||||||||||||||
Share-based compensation, vesting period upon the attainment of a performance condition | 3 years | |||||||||||||||||||||
Pricing model used in calculation of grant-date fair value | Black-Scholes |
PROPERTY_AND_EQUIPMENT_Schedul
PROPERTY AND EQUIPMENT (Schedule of Property and equipment) (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Property, Plant and Equipment [Line Items] | ||
Accumulated depreciation and amortization | ($25,013) | ($10,184) |
Carrying value | 27,602 | 27,798 |
Depreciation | 14,829 | 7,184 |
Office equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and Equipment | $52,615 | $37,982 |
RELATED_PARTY_TRANSACTIONS_Det
RELATED PARTY TRANSACTIONS (Details) (USD $) | Dec. 31, 2014 | Oct. 30, 2014 | Dec. 31, 2013 |
Related Party Transaction [Line Items] | |||
Note payable - related party | $2,500,000 | ||
Steel Media [Member] | |||
Related Party Transaction [Line Items] | |||
Contingent Earnout Consideration | 6,732,123 | ||
Value of earnout consideration | 6,584,042 | 6,584,042 | |
Steel Media [Member] | Maximum [Member] | |||
Related Party Transaction [Line Items] | |||
Contingent Earnout Consideration | 8,000,000 | ||
Richard Steel [Member] | Steel Media [Member] | Maximum [Member] | |||
Related Party Transaction [Line Items] | |||
Contingent Earnout Consideration | 8,000,000 | ||
Richard Steel [Member] | Promissory note [Member] | |||
Related Party Transaction [Line Items] | |||
Note payable - related party | $2,500,000 |
RELATED_PARTY_TRANSACTIONS_Sch
RELATED PARTY TRANSACTIONS (Schedule of contingent consideration payable) (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Activity for the contingent consideration payable [Roll Forward] | ||
Accretion in Value | $148,081 | |
Steel Media [Member] | ||
Activity for the contingent consideration payable [Roll Forward] | ||
Beginning of period | ||
Activity During the Period | 6,584,042 | |
Accretion in Value | 148,081 | |
End of period | 6,732,123 | |
Contingent consideration payable [Member] | Steel Media [Member] | ||
Activity for the contingent consideration payable [Roll Forward] | ||
Beginning of period | ||
Activity During the Period | 6,584,042 | |
Accretion in Value | 148,081 | |
End of period | $6,732,123 |
RELATED_PARTY_TRANSACTIONS_Sch1
RELATED PARTY TRANSACTIONS (Schedule of maturities of contingent consideration payable) (Details) (USD $) | Dec. 31, 2014 |
Maturities of: | |
2015 | $3,586,722 |
2016 | $3,145,401 |
INCOME_TAXES_Narrative_Details
INCOME TAXES (Narrative) (Details) (USD $) | 12 Months Ended |
Dec. 31, 2014 | |
INCOME TAXES [Abstract] | |
Increase (decrease) in valuation allowance | $658,000 |
Federal net operating losses, or NOL, carryforwards | 4,500,000 |
State net operating losses, or NOL, carryforwards | 4,500,000 |
Operating loss carry-forward expiration dates | 31-Dec-32 |
Unrecognized tax benefits | 0 |
Accruals for interest and penalties related to unrecognized tax benefits | $0 |
INCOME_TAXES_Schedule_of_Effec
INCOME TAXES (Schedule of Effective tax rate) (Details) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
INCOME TAXES [Abstract] | ||
Federal statutory income tax rate | -34.00% | -34.00% |
State income taxes, net of federal benefit | -5.30% | -5.80% |
Stock based compensation | 15.40% | 0.00% |
Acquisition expenses | 6.20% | 0.00% |
Permanent differences | 1.30% | 0.00% |
Other | 1.50% | 1.80% |
Change in valuation allowance | 14.90% | 38.00% |
Provision for income taxes | 0.00% | 0.00% |
INCOME_TAXES_Schedule_of_Defer
INCOME TAXES (Schedule of Deferred Tax Assets and Liabilities) (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Deferred tax assets: | ||
Net operating loss carry forward | $1,785,000 | $652,000 |
Fixed assets | 2,000 | |
Stock based compensation | 324,000 | |
Total deferred tax assets | 1,787,000 | 976,000 |
Deferred tax liabilities | ||
Stock based compensation | -122,000 | |
Other accruals | -31,000 | |
Total deferred tax liabilities | -153,000 | |
Net deferred tax assets | ||
Less: valuation allowance | -1,634,000 | -976,000 |
Net deferred tax liability |
STOCK_OPTIONS_AND_WARRANTS_Sum
STOCK OPTIONS AND WARRANTS (Summary of Stock Options Activity) (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Options | ||
Outstanding at beginning of the period | 426,000 | 70,500 |
Granted during the period | 2,427,000 | 475,500 |
Exercised during the period | ||
Terminated during the period | -508,000 | -120,000 |
Outstanding at end of the period | 2,345,000 | 426,000 |
Exercisable at end of the period | 177,171 | 35,834 |
Weighted Average Exercise Price | ||
Outstanding at beginning of the period | $1.04 | $1.35 |
Granted during the period | $1.32 | $1 |
Exercised during the period | ||
Terminated during the period | $1.35 | $1.08 |
Outstanding at end of the period | $1.26 | $1.04 |
Exercisable at end of the period | $1.13 | $1.09 |
Employee options [Member] | ||
Options | ||
Outstanding at end of the period | 2,345,000 | |
Exercisable at end of the period | 177,171 | |
Weighted Average Exercise Price | ||
Outstanding at end of the period | $1.26 | |
Intrinsic value, outstanding | $261,659 | |
Intrinsic value, exercisable | 39,459 | |
Average remaining contractual life outstanding | 6 years 7 months 6 days | |
Average remaining contractual life exercisable | 3 years 2 months 12 days | |
Compensation cost related to unvested employee options not yet recognized | 777,880 | |
Estimated compensation cost to be recognized in 2015 | $283,000 |
STOCK_OPTIONS_AND_WARRANTS_Sum1
STOCK OPTIONS AND WARRANTS (Summary of Common Stock Award Activity) (Details) (Restricted Stock [Member], USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Restricted Stock [Member] | ||
Warrant activity, number of shares: | ||
Outstanding at beginning of the period | 650,002 | 180,000 |
Granted during the period | 545,455 | 675,000 |
Vested during the period | -316,665 | -151,664 |
Terminated during the period | -40,000 | -53,334 |
Outstanding at the end of period | 838,792 | 650,002 |
Unrecognized compensation cost | $722,869 | |
2015 | 476,000 | |
2016 | 223,000 | |
2017 | $24,000 |
STOCK_OPTIONS_AND_WARRANTS_Sum2
STOCK OPTIONS AND WARRANTS (Summary of Stock Warrants Activity) (Details) (Stock warrants [Member], USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Stock warrants [Member] | ||
Warrant activity, number of shares: | ||
Outstanding at beginning of the period | 3,460,000 | |
Granted during the period | 5,809,346 | 3,460,000 |
Exercised during the period | ||
Terminated during the period | ||
Outstanding at the end of period | 9,269,346 | 3,460,000 |
Exercisable at end of the period | 9,269,346 | 3,460,000 |
Weighted average remaining life | 3 years 1 month 6 days | |
Warrant activity, weighted average exercise price: | ||
Outstanding at beginning of the period | $1 | |
Granted during the period | $1.26 | $1 |
Exercised during the period | ||
Terminated during the period | ||
Outstanding at end of the period | $1.16 | $1 |
Exercisable at end of the period | $1.16 | $1 |
STOCK_OPTIONS_AND_WARRANTS_Nar
STOCK OPTIONS AND WARRANTS (Narrative) (Details) | Jan. 31, 2012 | Nov. 05, 2014 |
2012 Plan [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of shares authorized | 3,000,000 | |
2014 Plan [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of shares authorized | 3,000,000 |
COMMITMENTS_AND_CONTINGENCIES_1
COMMITMENTS AND CONTINGENCIES (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Schedule of the future minimum lease payments | ||
2015 | $45,865 | |
2016 | 37,925 | |
2017 | 37,200 | |
2018 | 37,200 | |
Rent expense | $71,231 | $30,503 |