Document And Entity Information
Document And Entity Information - shares | 9 Months Ended | |
Sep. 30, 2015 | Nov. 09, 2015 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2015 | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q3 | |
Entity Common Stock, Shares Outstanding | 27,250,229 | |
Entity Registrant Name | SOCIAL REALITY, Inc. | |
Entity Central Index Key | 1,538,217 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Trading Symbol | SCRI |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Current assets: | ||
Cash and cash equivalents | $ 1,032,958 | $ 1,843,393 |
Accounts receivable, net of allowance for doubtful accounts of $119,066 and $52,338 | 8,910,043 | 3,874,620 |
Prepaid expenses | 130,964 | 222,532 |
Other current assets | 22,484 | 7,352 |
Total current assets | 10,096,449 | 5,947,897 |
Property and equipment, net of accumulated depreciation of $37,626 and $25,013 | 45,646 | 27,602 |
Goodwill | 16,314,957 | 16,312,911 |
Intangible assets, net of accumulated amortization of $190,972 and $0 | 1,815,028 | 2,006,000 |
Deferred debt issue costs | 1,982,124 | 2,907,736 |
Prepaid stock based compensation | 532,180 | 1,008,019 |
Other assets | 15,659 | 4,804 |
Total assets | 30,802,043 | 28,214,969 |
Current liabilities: | ||
Accounts payable and accrued expenses | 5,717,731 | 2,882,120 |
Note payable - related party | 2,258,263 | 2,500,000 |
Notes payable, current portion | 1,881,000 | 1,350,000 |
Unearned revenue | 1,695 | 25,295 |
Contingent consideration payable to related party - current portion | 3,955,763 | $ 3,586,722 |
Put liability | 1,389,653 | |
Total current liabilities | 15,204,105 | $ 10,344,137 |
Notes payable | 8,040,448 | 7,713,014 |
Contingent consideration payable to related party - long term | $ 3,469,034 | 3,145,401 |
Put liability | 1,260,010 | |
Total liabilities | $ 26,713,587 | 22,462,562 |
Stockholders' equity: | ||
Additional paid in capital | 13,776,392 | 13,143,153 |
Accumulated deficit | (9,715,272) | (7,417,862) |
Total stockholders' equity | 4,088,456 | 5,752,407 |
Total liabilities and stockholders' equity | $ 30,802,043 | $ 28,214,969 |
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 shares issued and outstanding, respectively [Member] | ||
Stockholders' equity: | ||
Preferred stock, authorized 50,000,000 shares, $0.001 par value | $ 86 | $ 86 |
Class A common stock, authorized 250,000,000 shares, $0.001 par value, 29,637,092 and 29,416,612 shares issued, respectively, and 27,250,229 and 27,029,749 shares outstanding, respectively [Member] | ||
Stockholders' equity: | ||
Common stock | $ 27,250 | $ 27,030 |
Class B common stock, authorized 9,000,000 shares, $0.001 par value, no shares issued and outstanding [Member] | ||
Stockholders' equity: | ||
Common stock |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Allowance for doubtful accounts | $ 119,066 | $ 52,338 |
Property and equipment, accumulated depreciation | 37,626 | 25,013 |
Intangible assets, accumulated amortization | $ 190,972 | $ 0 |
Preferred Stock, shares authorized | 50,000,000 | 50,000,000 |
Preferred Stock, par value per share | $ 0.001 | $ 0.001 |
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, shares issued | 86,000 | 86,000 |
Preferred stock, shares outstanding | 86,000 | 86,000 |
Class A Common Stock [Member] | ||
Common Stock, shares authorized | 250,000,000 | 250,000,000 |
Common Stock, par value per share | $ 0.001 | $ 0.001 |
Common Stock, shares issued | 29,637,092 | 29,416,612 |
Common Stock, shares outstanding | 27,250,229 | 27,029,749 |
Class B Common Stock [Member] | ||
Common Stock, shares authorized | 9,000,000 | 9,000,000 |
Common Stock, par value per share | $ 0.001 | $ 0.001 |
Common Stock, shares issued | 0 | 0 |
Common Stock, shares outstanding | 0 | 0 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS [Abstract] | ||||
Revenues | $ 7,390,238 | $ 663,144 | $ 22,173,095 | $ 1,493,755 |
Cost of revenue | 3,296,144 | 489,416 | 10,697,062 | 1,066,336 |
Gross profit | 4,094,094 | 173,728 | 11,476,033 | 427,419 |
Operating expense | 3,751,736 | 1,091,749 | 10,914,488 | 2,914,356 |
Income (loss) from operations | 342,358 | (918,021) | 561,545 | (2,486,937) |
Interest income (expense) | (1,000,898) | 271 | (2,858,955) | 1,265 |
Loss before provision for income taxes | $ (658,540) | $ (917,750) | $ (2,297,410) | $ (2,485,672) |
Provision for income taxes | ||||
Net loss | $ (658,540) | $ (917,750) | $ (2,297,410) | $ (2,485,672) |
Net loss per share, basic and diluted | $ (0.02) | $ (0.04) | $ (0.09) | $ (0.12) |
Weighted average shares outstanding | 27,046,241 | 20,692,959 | 26,935,631 | 20,522,596 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Cash flows from operating activities: | ||
Net loss | $ (2,297,410) | $ (2,485,672) |
Adjustments to reconcile net loss to net cash used by operating activities: | ||
Amortization of stock based prepaid fees | 475,839 | 495,444 |
Stock based compensation | 626,539 | $ 235,348 |
Amortization of debt issue costs | 925,612 | |
PIK interest expense accrued to principal | 279,216 | |
Accretion of contingent consideration | 692,674 | |
Accretion of put liability | 129,643 | |
Depreciation and amortization | 203,585 | $ 10,258 |
Bad debt expense | 66,728 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | (5,102,151) | $ (258,826) |
Prepaid expenses | 91,568 | (24,765) |
Other current assets | (15,132) | (6,530) |
Other assets | (10,855) | (804) |
Accounts payable and accrued expenses | 2,833,564 | $ (152,934) |
Unearned revenue | (23,600) | |
Cash used by operating activities | (1,124,180) | $ (2,188,481) |
Cash flows from investing activities: | ||
Purchase of equipment | (30,657) | (6,856) |
Cash used by investing activities | $ (30,657) | (6,856) |
Cash flows from financing activities: | ||
Sale of common stock | 1,273,161 | |
Cost of common stock sale | $ (16,291) | |
Proceeds from warrant offering | $ 6,921 | |
Proceeds from note payable | 1,500,000 | |
Repayments of notes payable | $ (1,162,519) | |
Debt issue costs | $ (200,000) | |
Cash provided by financing activities | $ 344,402 | 1,056,870 |
Net decrease in cash | (810,435) | (1,138,467) |
Cash, beginning of period | 1,843,393 | 1,715,264 |
Cash, end of period | 1,032,958 | $ 576,797 |
Supplemental Schedule of Cash Flow Information: | ||
Cash paid for interest | $ 718,119 | |
Cash paid for taxes |
ORGANIZATION AND SUMMARY OF SIG
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2015 | |
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 12,328,767 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 GroupAd SRAX MD SRAX DI Steel Media 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, and 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 Facebook advertising partner, through Facebook's PMD (Preferred Marketing Developer) program. We sell targeted and measurable online advertising campaigns and programs to brand advertisers and advertising agencies across large Facebook apps and 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. Basis of Presentation The accompanying condensed consolidated financial statements are unaudited. The unaudited interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP") and pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC"). Certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading. These interim financial statements as of and for the three and nine months ended September 30, 2015 and 2014 are unaudited; however, in the opinion of management, such statements include all adjustments (consisting of normal recurring accruals) necessary to present fairly the financial position, results of operations and cash flows of the Company for the periods presented. The results for the three and nine months ended September 30, 2015 are not necessarily indicative of the results to be expected for the year ending December 31, 2015 or for any future period. All references to September 30, 2015 and 2014 in these footnotes are unaudited. These unaudited condensed financial statements should be read in conjunction with our audited financial statements and the notes thereto for the year ended December 31, 2014, included in the Company's annual report on Form 10-K filed with the SEC on March 31, 2015. The condensed balance sheet as of December 31, 2014 has been derived from the audited financial statements at that date but does not include all disclosures required by the accounting principles generally accepted in the United States of America. 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 $ 533,000 . At September 30, 2015 , two customers each accounted for more than 10% of the accounts receivable balance, for a total of 61 nine months ended September 30, 2015 one customer accounted for 50 58 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 September 30, 2015 and December 31, 2014 the carrying amounts of these instruments approximated their fair values because of the short-term nature of these instruments. 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 Our goodwill consists of the excess purchase price paid in business combinations over the fair value of assets acquired. Goodwill is considered to have an indefinite life. The Company employs the non-amortization approach to account for goodwill. Under the non-amortization approach, goodwill is not amortized into the results of operations, but instead is reviewed annually or more frequently if events or changes in circumstances indicate that the asset might be impaired, to assess whether the fair value exceeds the carrying value. The Company performs its annual goodwill and impairment assessment on September 30 of each year. When evaluating the potential impairment of goodwill we first assess a range of qualitative factors, including but not limited to, macroeconomic conditions, industry conditions, the competitive environment, changes in the market for the Company's products and services, regulatory and political developments, entity specific factors such as strategy and changes in key personnel, and the overall financial performance for each of the Company's reporting units. If, after completing this assessment, it is determined that it is more likely than not that the fair value of a reporting unit is less than its carrying value, we then proceed to a two-step impairment testing methodology using the income approach (discounted cash flow method). In the first step of the two step testing methodology, we compare the carrying value of the reporting unit, including goodwill, with its fair value, as determined by its estimated discounted cash flows. If the carrying value of a reporting unit exceeds its fair value, we then complete the second step of the impairment test to determine the amount of impairment to be recognized. In the second step, we estimate an implied fair value of the reporting unit's goodwill by allocating the fair value of the reporting unit to all of the assets and liabilities other than goodwill (including any unrecognized intangible assets). If the carrying value of a reporting unit's goodwill exceeds its implied fair value, the Company records an impairment loss equal to the difference in that period. When required, we arrive at our estimates of fair value using a discounted cash flow methodology which includes estimates of future cash flows to be generated by particular assets, as well as selecting a discount rate to measure the present value of those anticipated cash flows. Estimating future cash flows requires significant judgment and includes making assumptions about projected growth rates, industry-specific factors, working capital requirements, weighted average cost of capital, and current and anticipated operating conditions. The use of different assumptions or estimates for future cash flows could produce different results. No impairment of goodwill has been recorded in 2015. 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. Earnings (loss) Per Share We use ASC 260, "Earnings Per Share" for calculating the basic and diluted earnings (loss) per share. We compute basic earnings (loss) per share by dividing net income (loss) by the weighted average number of common shares outstanding. Diluted earnings (loss) per share is computed based on the weighted average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method. Dilutive potential common shares include outstanding stock options and warrants and stock awards. For periods with a net loss, 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 13,984,016 September 30, 2015 and 5,754,535 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 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. |
RECENT ACQUISITIONS
RECENT ACQUISITIONS | 9 Months Ended |
Sep. 30, 2015 | |
RECENT ACQUISITIONS [Abstract] | |
RECENT ACQUISITIONS | NOTE 2 RECENT ACQUISITIONS Acquisition of Steel Media On October 30, 2014, we acquired 100 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 the Seller up to $ 20 7.5 2 one 2.5 2,386,863 8 6,584,042 18,584,042 The final accounting for the acquisition of Steel Media has been completed during the third quarter of 2015. The final 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 Non-compete agreement 1,250,000 Goodwill 16,314,957 Total assets acquired 20,580,500 Accounts payable and other liabilities (1,996,458 ) Total $ 18,584,042 Goodwill will not be tax deductible. Amortization of the non-compete agreement was $ 190,972 six Acquisition of Five Delta, Inc. On December 19, 2014 we acquired 100 600,000 756,000 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. The final accounting for the acquisition of Five Delta has not been completed and will be completed during the fourth quarter of 2015. The entire purchase price has been preliminarily allocated to intellectual property. |
NOTES PAYABLE
NOTES PAYABLE | 9 Months Ended |
Sep. 30, 2015 | |
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 $ 20 100 9 10 4 4 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. On May 14, 2015 we entered into the First Amendment to Financing Agreement with Victory Park Management, LLC, as administrative agent and collateral agent for the lenders. Under the terms of the amendment, the leverage ratio, senior leverage ratio, fixed charge coverage ratio and interest coverage ratio under the Financing Agreement were all modified, and the minimum current ratio was reduced. The amendment also modified our obligations with respect to the delivery of certain reports, certain representations by us as well as clarifying other additional terms by which the loan is administered. On July 6, 2015 we borrowed an additional $ 1,500,000 Notes payable consists of the following: Principal amount $ 9,595,689 PIK interest accrued 325,759 9,921,448 Less current portion (1,881,000 ) Notes payable and PIK interest accrued, net of current portion $ 8,040,448 Pursuant to the Financing Agreement, the Company also issued to the lender thereunder, on the Financing Agreement Closing Date, a five 2,900,000 1.00 50 1,500,000 1,232,294 Activity for the put liability during the nine months ended September 30, 2015 was: December 31, 2014 Activity During the Period Accretion in Value September 30, 2015 Put liability $ 1,260,010 $ $ 129,643 $ 1,389,653 Total $ 1,260,010 $ $ 129,643 $ 1,389,653 We incurred a total of $ 3,164,352 During the three and nine months ended September 30, 2015, $ 297,242 925,612 1,982,124 Note payable Richard Steel As partial consideration for the purchase of Steel Media described in Note 2, we executed a one 2.5 2,386,863 The Note issued to Mr. Steel bears interest at the rate of 5 10 five 25 During August 2015 we made a partial prepayment on the note in the amount of $ 241,737 2,258,263 122,861 |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 9 Months Ended |
Sep. 30, 2015 | |
STOCKHOLDERS' EQUITY [Abstract] | |
STOCKHOLDERS' EQUITY | NOTE 4 STOCKHOLDERS' EQUITY Preferred Stock We are authorized to issue 50,000,000 0.001 200,000 Common Stock We are authorized to issue an aggregate of 259,000,000 250,000,000 0.001 9,000,000 0.001 In January 2015 we sold three 882,001 1.50 8,820 During the nine months ended September 30, 2015 we issued 128,331 During the nine months ended September 30, 2015 we issued 92,149 101,364 Stock Awards On September 22, 2015 we granted an aggregate of 220,000 nine three 2,643 During the three and nine months ended September 30, 2015 we recorded expense of $ 60,958 364,800 Awards in the amount of 95,456 Stock Options and Warrants During February 2015 we granted 12,000 one 1.20 five 0.62 Black-Scholes 0.50 0 99 2 1,867 4,978 . On August 5, 2015 we granted 200,000 three 1.65 three 0.74 Black-Scholes 0.625 0 85 2 8,191 On September 22, 2015 we granted 385,000 three 1.73 three 0.79 Black-Scholes 0.625 0 85 2 2,107 During the three and nine months ended September 30, 2015 we recorded expense of $ 2,726 142,456 Awards in the amount of 521,000 |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended |
Sep. 30, 2015 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | NOTE 5 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 We are also obligated to Mr. Steel for contingent Earnout Consideration of up to $ 8,000,000 Media, as described in Note 2. The Company 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 nine months ended September 30, 2015 was: December 31, 2014 Activity During the Period Accretion in Value September 30, 2015 Contingent consideration payable $ 6,732,123 $ $ 692,674 $ 7,424,797 Total $ 6,732,123 $ $ 692,674 $ 7,424,797 Maturities of contingent consideration are as follows: Year ended December 31, 2015 $ 3,955,763 2016 $ 3,469,034 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2015 | |
COMMITMENTS AND CONTINGENCIES [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 6 COMMITMENTS AND CONTINGENCIES Operating Leases The Company leases executive offices under operating leases with lease terms which expire through September 30, 2021. Rent expense for office space amounted to $ 42,322 11,682 118,343 37,095 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. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2015 | |
SUBSEQUENT EVENTS [Abstract] | |
SUBSEQUENT EVENTS | NOTE 7 SUBSEQUENT EVENTS On October 26, 2015 we borrowed an additional $ 1,400,000 1,400,000 10 4 2 towards the payment of the secured promissory note due Richard Steel described in Note 3, and On October 29, 2015 we paid $ 2,381,124 . |
ORGANIZATION AND SUMMARY OF S13
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2015 | |
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 12,328,767 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 GroupAd SRAX MD SRAX DI Steel Media 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, and 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 Facebook advertising partner, through Facebook's PMD (Preferred Marketing Developer) program. We sell targeted and measurable online advertising campaigns and programs to brand advertisers and advertising agencies across large Facebook apps and 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. |
Basis of Presentation | Basis of Presentation The accompanying condensed consolidated financial statements are unaudited. The unaudited interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP") and pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC"). Certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading. These interim financial statements as of and for the three and nine months ended September 30, 2015 and 2014 are unaudited; however, in the opinion of management, such statements include all adjustments (consisting of normal recurring accruals) necessary to present fairly the financial position, results of operations and cash flows of the Company for the periods presented. The results for the three and nine months ended September 30, 2015 are not necessarily indicative of the results to be expected for the year ending December 31, 2015 or for any future period. All references to September 30, 2015 and 2014 in these footnotes are unaudited. These unaudited condensed financial statements should be read in conjunction with our audited financial statements and the notes thereto for the year ended December 31, 2014, included in the Company's annual report on Form 10-K filed with the SEC on March 31, 2015. The condensed balance sheet as of December 31, 2014 has been derived from the audited financial statements at that date but does not include all disclosures required by the accounting principles generally accepted in the United States of America. |
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 $ 533,000 . At September 30, 2015 , two customers each accounted for more than 10% of the accounts receivable balance, for a total of 61 nine months ended September 30, 2015 one customer accounted for 50 58 |
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 September 30, 2015 and December 31, 2014 the carrying amounts of these instruments approximated their fair values because of the short-term nature of these instruments. |
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 Our goodwill consists of the excess purchase price paid in business combinations over the fair value of assets acquired. Goodwill is considered to have an indefinite life. The Company employs the non-amortization approach to account for goodwill. Under the non-amortization approach, goodwill is not amortized into the results of operations, but instead is reviewed annually or more frequently if events or changes in circumstances indicate that the asset might be impaired, to assess whether the fair value exceeds the carrying value. The Company performs its annual goodwill and impairment assessment on September 30 of each year. When evaluating the potential impairment of goodwill we first assess a range of qualitative factors, including but not limited to, macroeconomic conditions, industry conditions, the competitive environment, changes in the market for the Company's products and services, regulatory and political developments, entity specific factors such as strategy and changes in key personnel, and the overall financial performance for each of the Company's reporting units. If, after completing this assessment, it is determined that it is more likely than not that the fair value of a reporting unit is less than its carrying value, we then proceed to a two-step impairment testing methodology using the income approach (discounted cash flow method). In the first step of the two step testing methodology, we compare the carrying value of the reporting unit, including goodwill, with its fair value, as determined by its estimated discounted cash flows. If the carrying value of a reporting unit exceeds its fair value, we then complete the second step of the impairment test to determine the amount of impairment to be recognized. In the second step, we estimate an implied fair value of the reporting unit's goodwill by allocating the fair value of the reporting unit to all of the assets and liabilities other than goodwill (including any unrecognized intangible assets). If the carrying value of a reporting unit's goodwill exceeds its implied fair value, the Company records an impairment loss equal to the difference in that period. When required, we arrive at our estimates of fair value using a discounted cash flow methodology which includes estimates of future cash flows to be generated by particular assets, as well as selecting a discount rate to measure the present value of those anticipated cash flows. Estimating future cash flows requires significant judgment and includes making assumptions about projected growth rates, industry-specific factors, working capital requirements, weighted average cost of capital, and current and anticipated operating conditions. The use of different assumptions or estimates for future cash flows could produce different results. No impairment of goodwill has been recorded in 2015. |
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. |
Earnings (loss) Per Share | Earnings (loss) Per Share We use ASC 260, "Earnings Per Share" for calculating the basic and diluted earnings (loss) per share. We compute basic earnings (loss) per share by dividing net income (loss) by the weighted average number of common shares outstanding. Diluted earnings (loss) per share is computed based on the weighted average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method. Dilutive potential common shares include outstanding stock options and warrants and stock awards. For periods with a net loss, 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 13,984,016 September 30, 2015 and 5,754,535 |
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 |
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. |
RECENT ACQUISITIONS (Tables)
RECENT ACQUISITIONS (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
RECENT ACQUISITIONS [Abstract] | |
Schedule of final 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 Non-compete agreement 1,250,000 Goodwill 16,314,957 Total assets acquired 20,580,500 Accounts payable and other liabilities (1,996,458 ) Total $ 18,584,042 |
NOTES PAYABLE (Tables)
NOTES PAYABLE (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
NOTES PAYABLE [Abstract] | |
Schedule of notes payable | Principal amount $ 9,595,689 PIK interest accrued 325,759 9,921,448 Less current portion (1,881,000 ) Notes payable and PIK interest accrued, net of current portion $ 8,040,448 |
Schedule of put liability | December 31, 2014 Activity During the Period Accretion in Value September 30, 2015 Put liability $ 1,260,010 $ $ 129,643 $ 1,389,653 Total $ 1,260,010 $ $ 129,643 $ 1,389,653 |
RELATED PARTY TRANSACTIONS (Tab
RELATED PARTY TRANSACTIONS (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Related Party Transactions [Abstract] | |
Schedule of Contingent Consideration Payable | December 31, 2014 Activity During the Period Accretion in Value September 30, 2015 Contingent consideration payable $ 6,732,123 $ $ 692,674 $ 7,424,797 Total $ 6,732,123 $ $ 692,674 $ 7,424,797 |
Schedule of Maturities of Contingent Consideration | Year ended December 31, 2015 $ 3,955,763 2016 $ 3,469,034 |
ORGANIZATION AND SUMMARY OF S17
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||
Jan. 31, 2012shares | Sep. 30, 2015USD ($)shares | Sep. 30, 2014shares | Sep. 30, 2015USD ($)itemshares | Sep. 30, 2014shares | |
Business Acquisition [Line Items] | |||||
Number of operating segments | item | 1 | ||||
Uninsured cash bank balance | $ | $ 533,000 | $ 533,000 | |||
Antidilutive common share equivalents | 13,984,016 | 5,754,535 | 13,984,016 | 5,754,535 | |
Accounts Receivable [Member] | Credit Concentration Risk [Member] | |||||
Concentration Risk [Line Items] | |||||
Concentration risk percentage | 61.00% | ||||
Revenues [Member] | Customer Concentration Risk [Member] | |||||
Concentration Risk [Line Items] | |||||
Concentration risk percentage | 50.00% | ||||
Revenues [Member] | Credit Concentration Risk [Member] | |||||
Concentration Risk [Line Items] | |||||
Concentration risk percentage | 58.00% | ||||
Social Reality LLC [Member] | |||||
Business Acquisition [Line Items] | |||||
Effective date of business acquisition | Jan. 1, 2012 | ||||
Social Reality LLC [Member] | Class A and Class B common stock [Member] | |||||
Business Acquisition [Line Items] | |||||
Shares issued in business acquisition | 12,328,767 |
RECENT ACQUISITIONS (Acquisitio
RECENT ACQUISITIONS (Acquisition of Steel Media) (Details) - Steel Media [Member] - USD ($) | Oct. 30, 2014 | Sep. 30, 2015 | Dec. 31, 2014 |
Business Acquisition [Line Items] | |||
Ownership acquired (as a percent) | 100.00% | ||
Cash payment | $ 7,500,000 | ||
Cash payment held in escrow | 2,000,000 | ||
Maximum earnout consideration | 8,000,000 | ||
Value of earnout consideration | 6,584,042 | $ 7,424,797 | $ 6,732,123 |
Acquisition price | $ 18,584,042 | ||
Secured subordinated promissory note [Member] | |||
Business Acquisition [Line Items] | |||
Notes term | 1 year | ||
Notes issued | $ 2,500,000 | ||
Secured subordinated promissory note [Member] | Common Class A [Member] | |||
Business Acquisition [Line Items] | |||
Escrow shares | 2,386,863 | ||
Maximum [Member] | |||
Business Acquisition [Line Items] | |||
Purchase consideration | $ 20,000,000 |
RECENT ACQUISITIONS (Final allo
RECENT ACQUISITIONS (Final allocation of the purchase price to the assets acquired and liabilities) (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2015 | Dec. 31, 2014 | Oct. 30, 2014 | |
Final allocation of the purchase price to the assets acquired and liabilities assumed based on the estimated fair values | ||||
Goodwill | $ 16,314,957 | $ 16,314,957 | $ 16,312,911 | |
Steel Media [Member] | ||||
Final 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 | |||
Non-compete agreement | 1,250,000 | |||
Goodwill | 16,314,957 | |||
Total assets acquired | 20,580,500 | |||
Accounts payable and other liabilities | (1,996,458) | |||
Total | $ 18,584,042 | |||
Amortization | $ 190,972 | $ 190,972 | ||
Term period of amortization | 6 years |
RECENT ACQUISITIONS (Acquisit20
RECENT ACQUISITIONS (Acquisition of Five Delta, Inc.) (Details) - Five Delta [Member] | Dec. 19, 2014USD ($)shares |
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 | shares | 600,000 |
NOTES PAYABLE (Financing Agreem
NOTES PAYABLE (Financing Agreement with Victory Park Management, LLC as agent for the lenders) (Details) - USD ($) | Oct. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2015 | Sep. 30, 2014 | Jul. 06, 2015 | Dec. 31, 2014 |
Debt Instrument [Line Items] | ||||||
Present value of put liability | $ 1,389,653 | $ 1,389,653 | $ 1,260,010 | |||
Amortization of debt issue costs | 297,242 | 925,612 | ||||
Deferred debt issue costs | $ 1,982,124 | $ 1,982,124 | $ 2,907,736 | |||
Financing Agreement [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Notes issued | $ 9,000,000 | $ 1,500,000 | ||||
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 | |||||
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 | 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 ($) | Sep. 30, 2015 | Dec. 31, 2014 |
NOTES PAYABLE [Abstract] | ||
Principal amount | $ 9,595,689 | |
PIK interest accrued | 325,759 | |
Notes payable | 9,921,448 | |
Less current portion | (1,881,000) | $ (1,350,000) |
Notes payable and PIK interest accrued, net of current portion | $ 8,040,448 | $ 7,713,014 |
NOTES PAYABLE (Schedule of Put
NOTES PAYABLE (Schedule of Put Liability) (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Activity for the put liability- notes payable [Roll Forward] | ||
Beginning balance | $ 1,260,010 | |
Activity During the Period | ||
Accretion in Value | $ 129,643 | |
Ending balance | 1,389,653 | |
Put Liability Notes Payable [Member] | ||
Activity for the put liability- notes payable [Roll Forward] | ||
Beginning balance | $ 1,260,010 | |
Activity During the Period | ||
Accretion in Value | $ 129,643 | |
Ending balance | $ 1,389,653 |
NOTES PAYABLE (Note payable - R
NOTES PAYABLE (Note payable - Richard Steel) (Details) - Secured subordinated promissory note [Member] - Steel Media [Member] - USD ($) | Oct. 30, 2014 | Oct. 29, 2015 | Aug. 31, 2015 |
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% | ||
Notes repaid | $ 241,737 | ||
Subsequent Event [Member] | |||
Debt Instrument [Line Items] | |||
Notes repaid | $ 2,258,263 | ||
Accrued interest | $ 122,861 | ||
Common Class A [Member] | |||
Debt Instrument [Line Items] | |||
Escrow shares | 2,386,863 |
STOCKHOLDERS' EQUITY (Details)
STOCKHOLDERS' EQUITY (Details) | Sep. 22, 2015item$ / sharesshares | Aug. 05, 2015$ / sharesshares | Feb. 28, 2015$ / sharesshares | Jan. 31, 2015USD ($)$ / sharesshares | Sep. 30, 2015USD ($)$ / sharesshares | Sep. 30, 2015USD ($)$ / sharesshares | Dec. 31, 2014$ / sharesshares |
Preferred Stock, shares authorized | 50,000,000 | 50,000,000 | 50,000,000 | ||||
Preferred Stock, par value per share | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 | ||||
Common Stock, shares authorized | 259,000,000 | 259,000,000 | 259,000,000 | ||||
Amortization of fair value of stock options | $ | $ 2,726 | $ 142,456 | |||||
Employee Stock Option [Member] | |||||||
Awards forfeited | 521,000 | ||||||
Common stock awards [Member] | |||||||
Expense related to restricted stock awards | $ | 2,643 | $ 2,643 | |||||
Share-based compensation, vesting period | 3 years | ||||||
Common stock awards granted | 220,000 | ||||||
Number of employees to whom common stock awards granted | item | 9 | ||||||
Awards forfeited | 95,456 | ||||||
Common stock awards granted in prior years [Member] | |||||||
Expense related to restricted stock awards | $ | 60,958 | $ 364,800 | |||||
Director [Member] | Employee Stock Option [Member] | |||||||
Granted during the period | 12,000 | ||||||
Share-based compensation, vesting period | 1 year | ||||||
Granted during the period, exercise price | $ / shares | $ 1.20 | ||||||
Award term | 5 years | ||||||
Stock options granted, grant date fair value | $ / shares | $ 0.62 | ||||||
Pricing model used in calculation of grant-date fair value | Black-Scholes | ||||||
Share-based compensation, risk free interest rate | 0.50% | ||||||
Share-based compensation, expected dividend yield | 0.00% | ||||||
Share-based compensation, expected volatility rate | 99.00% | ||||||
Share-based compensation, expected life in years | 2 years | ||||||
Amortization of fair value of stock options | $ | 1,867 | $ 4,978 | |||||
Employee, One [Member] | Employee Stock Option [Member] | |||||||
Granted during the period | 200,000 | ||||||
Share-based compensation, vesting period | 3 years | ||||||
Granted during the period, exercise price | $ / shares | $ 1.65 | ||||||
Award term | 3 years | ||||||
Stock options granted, grant date fair value | $ / shares | $ 0.74 | ||||||
Pricing model used in calculation of grant-date fair value | Black-Scholes | ||||||
Share-based compensation, risk free interest rate | 0.625% | ||||||
Share-based compensation, expected dividend yield | 0.00% | ||||||
Share-based compensation, expected volatility rate | 85.00% | ||||||
Share-based compensation, expected life in years | 2 years | ||||||
Amortization of fair value of stock options | $ | 8,191 | $ 8,191 | |||||
Employee, Two [Member] | Employee Stock Option [Member] | |||||||
Granted during the period | 385,000 | ||||||
Share-based compensation, vesting period | 3 years | ||||||
Granted during the period, exercise price | $ / shares | $ 1.73 | ||||||
Award term | 3 years | ||||||
Stock options granted, grant date fair value | $ / shares | $ 0.79 | ||||||
Pricing model used in calculation of grant-date fair value | Black-Scholes | ||||||
Share-based compensation, risk free interest rate | 0.625% | ||||||
Share-based compensation, expected dividend yield | 0.00% | ||||||
Share-based compensation, expected volatility rate | 85.00% | ||||||
Share-based compensation, expected life in years | 2 years | ||||||
Amortization of fair value of stock options | $ | $ 2,107 | $ 2,107 | |||||
Common Class A [Member] | |||||||
Common Stock, shares authorized | 250,000,000 | 250,000,000 | 250,000,000 | ||||
Common Stock, par value per share | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 | ||||
Common Stock, voting rights | One vote per share | ||||||
Shares issued for stock awards that have vested | 128,331 | ||||||
Common stock issued for consulting services, shares | 92,149 | ||||||
Common stock issued for consulting services | $ | $ 101,364 | ||||||
Common Class B [Member] | |||||||
Common Stock, shares authorized | 9,000,000 | 9,000,000 | 9,000,000 | ||||
Common Stock, par value per share | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 | ||||
Common Stock, voting rights | ten votes per share | ||||||
Series 1 Preferred Stock [Member] | |||||||
Preferred Stock, shares authorized | 200,000 | 200,000 | 200,000 | ||||
Warrants [Member] | |||||||
Warrants to purchase shares of common stock, number of shares of common stock | 882,001 | ||||||
Exercise price of warrant | $ / shares | $ 1.50 | ||||||
Proceeds from issuance of private placement | $ | $ 8,820 | ||||||
Exercise period of warrants | 3 years |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 | Oct. 30, 2014 |
Related Party Transaction [Line Items] | |||
Note payable - related party | $ 2,258,263 | $ 2,500,000 | |
Steel Media [Member] | |||
Related Party Transaction [Line Items] | |||
Contingent Earnout Consideration | 7,424,797 | $ 6,732,123 | $ 6,584,042 |
Maximum earnout consideration | $ 8,000,000 | ||
Richard Steel [Member] | Steel Media [Member] | |||
Related Party Transaction [Line Items] | |||
Maximum 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 ($) | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Activity for the contingent consideration payable [Roll Forward] | ||
Accretion in Value | $ 692,674 | |
Steel Media [Member] | ||
Activity for the contingent consideration payable [Roll Forward] | ||
Beginning of period | $ 6,732,123 | |
Activity During the Period | ||
Accretion in Value | $ 692,674 | |
End of period | 7,424,797 | |
Contingent consideration payable [Member] | Steel Media [Member] | ||
Activity for the contingent consideration payable [Roll Forward] | ||
Beginning of period | $ 6,732,123 | |
Activity During the Period | ||
Accretion in Value | $ 692,674 | |
End of period | $ 7,424,797 |
RELATED PARTY TRANSACTIONS (S28
RELATED PARTY TRANSACTIONS (Schedule of maturities of contingent consideration payable) (Details) | Sep. 30, 2015USD ($) |
Maturities of: | |
2,015 | $ 3,955,763 |
2,016 | $ 3,469,034 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Schedule of the future minimum lease payments | ||||
Rent expense | $ 42,322 | $ 11,682 | $ 118,343 | $ 37,095 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - USD ($) | Oct. 26, 2015 | Oct. 30, 2014 | Oct. 29, 2015 | Jul. 06, 2015 |
Secured subordinated promissory note [Member] | Steel Media [Member] | ||||
Subsequent Event [Line Items] | ||||
Debt instrument, face amount | $ 2,500,000 | |||
Interest rate (as a percent) | 5.00% | |||
Financing Agreement [Member] | ||||
Subsequent Event [Line Items] | ||||
Debt instrument, face amount | $ 9,000,000 | $ 1,500,000 | ||
Interest rate (as a percent) | 10.00% | |||
Paid-in-kind interest rate (as a percent) | 4.00% | |||
Maximum [Member] | Financing Agreement [Member] | ||||
Subsequent Event [Line Items] | ||||
Debt instrument, face amount | $ 20,000,000 | |||
Paid-in-kind interest rate (as a percent) | 4.00% | |||
Minimum [Member] | Financing Agreement [Member] | ||||
Subsequent Event [Line Items] | ||||
Paid-in-kind interest rate (as a percent) | 2.00% | |||
Subsequent Event [Member] | Secured subordinated promissory note [Member] | Steel Media [Member] | ||||
Subsequent Event [Line Items] | ||||
Notes repaid | $ 2,381,124 | |||
Subsequent Event [Member] | Financing Agreement [Member] | ||||
Subsequent Event [Line Items] | ||||
Proceeds from agreement | $ 1,400,000 | |||
Debt instrument, face amount | $ 1,400,000 | |||
Interest rate (as a percent) | 10.00% | |||
Subsequent Event [Member] | Maximum [Member] | Financing Agreement [Member] | ||||
Subsequent Event [Line Items] | ||||
Paid-in-kind interest rate (as a percent) | 4.00% | |||
Subsequent Event [Member] | Minimum [Member] | Financing Agreement [Member] | ||||
Subsequent Event [Line Items] | ||||
Paid-in-kind interest rate (as a percent) | 2.00% |