Greetings and welcome to Social Reality’s 2015 Fourth Quarter and Full Year Conference Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the call, please press star, zero on your telephone keypad.

As a reminder, this conference is being recorded. It is now my pleasure to introduce Robert Haag, Managing Director at IRTH Communications. Mr. Haag, you may begin..

Good afternoon everyone. I would like to welcome all of you to Social Reality’s Fourth Quarter and Full Year 2015 conference call. With us today is Social Reality’s Chief Executive Officer, Christopher Miglino.

Before I turn the call over to Christopher, I would like to remind you that in this call, management’s prepared remarks contain forward-looking statements, which are subject to risks and uncertainties, and management may make additional forward-looking statements during the question and answer session.

These forward-looking statements are subject to risks and uncertainties and actual results may differ materially. When used in this call, the words anticipate, could, enable, estimate, intend, expect, believe, potential, will, should, project, and similar expressions as they relate to Social Reality, Inc., are, as such, a forward-looking statement.

Investors are cautioned that all forward-looking statements involve risks and uncertainties which may cause actual results to differ from those anticipated by Social Reality at this time. In addition, other risks are more fully described in Social Reality's public filings with the U.S.

Securities and Exchange Commission, which can be reviewed at www.sec.gov. Finally, please note that on today’s call management will refer to certain non-GAAP financial measures in which Social Reality excludes certain expenses from its GAAP financial results.

Please refer to Social Reality's 2015 10-K for a full reconciliation of its non-GAAP performance measures to the most comparable GAAP financial measures.

Last Wednesday, March 16th, the company filed its 10K with the SEC and afterwards issued a press release announcing its financial results, so participants in this call who may not have already done so, may wish to look at those documents as we provide a summary of the results on this call.

I would like to now turn the call over to Social Reality’s CEO, Christopher Miglino, who will give an overview of the Company’s business activities and developments for the Fourth Quarter and Full Year 2015, as well as an overview of the Company’s operating and financial metrics. We will then open the call for Q&A.

Christopher?.

Revenue for the fourth quarter of 2015 was $8.1 million, an increase of 124% over the fourth quarter of 2014, and an increase of 10% sequentially from the third quarter of 2015. Gross profit increased to $4.4 million for the fourth quarter of 2015, compared to $1.9 million for the same period of 2014.

We reported a net loss of $426,499 for the fourth quarter of 2015, compared to a net loss of $1.9 million for the corresponding period of 2014. Adjusted EBITDA was $1.1 million for the quarter ended December 31, 2015, compared to a loss of $119,000 for the same period of 2014. Our cash and cash equivalents totaled $1,091,186 on December 31, 2015.

Current assets and total assets were $8.5 million and $28.5 million respectively, while current liabilities and total liabilities were $16.6 million and $24.6 million respectively. As of December 31, 2015, we had stockholders' equity of $3.9 million.

During the fourth quarter, we launched a new version of our SRAX APP product for large influencers and our next generation SRAX MD medical programmatic digital ad platform. We also increased our visibility with the investment community through the attendance of financial investor conferences.

On the corporate side, we recently announced the appointment of Rodney J. Dillman to our board of directors.

He currently serves as the non-executive Chairman of Board of Directors of Babson Capital Global Short Duration High Yield Fund, a $500 million closed-end fund trading on the New York Stock Exchange and brings with him an expertise in corporate and capital markets.

We believe he will serve as an invaluable asset to our management team and look forward to benefitting from his judgment and counsel. We have also announced today, the appointment of Rahul Thumati as the new CFO of Social Reality.

We are very excited to have Rahul join the team and help us provide our analyst community with more insight into the financial performance of the company. I would like to thank you for your support. We are very encouraged by the opportunities we have generated thus far and believe we offer a compelling investment proposition to our investors.

Our management team remains committed to providing the most effective tools for brand advertisers to maximize their media planning, buying and measurement through our suite of proprietary products.

Our focus for 2016 will be on the development and execution of our specialty platforms directed at specific verticals to further differentiate Social Reality’s services and to generate value for our new and existing brand advertising clients as well as our stockholders. We look forward to sharing our progress with you again in the next quarter.

We would now like to open up the call for questions..

[Operator Instructions] Our first question is from [indiscernible]. Please go ahead..

Yes, it's a simple question. One factor was very strong, it was very insightful, can we get a written document of the delivery of the content because it was all to kind of stay up the all the details..

We filed an 8-K that has been filed with the details of the statements that we just made. So I need to file that. We'll also have that person on our website within the few hours..

Yes, congratulations. This is extraordinary..

Thank you, Don. I appreciate you joining the call. Thank you very much..

Very impressive results in the well-deserved 8-K, well deserved..

Thank you very much sir. I appreciate that..

Our next question comes from [indiscernible]. Please go ahead..

Thanks so much for holding the call. Appreciate the opportunity. So listen, you mentioned that your objective this year would be to continue the development of your specialty platforms and you talked about obviously SRAX Social and SRAX MD.

I’m wondering if you have other things up to your sleeve you're thinking about and whether or not you might be able to offer some insight on how revenues might break down on those platforms.

Clearly MD is a new launch so there wasn't much contribution from that this past year but I'm wondering if you could offer some insight on how the other platforms compare with each other..

So we haven’t given any guidance that's breaking out the revenue between the different groups but we anticipate that we will be doing that in the next few quarters and that’s one of the main tasks that we will be - that we'll have the new CFO working on is to be giving you some more insight into how each of the business units are performing.

But on a general level, we’re finding that customizing our platforms too specific verticals that we have expertise in as providing a lot of value for us and for our customers.

So we anticipate to continue to enhance those existing platforms that we have now and to look for other opportunities outside of the retail which is consumer packaged goods category which we're doing a lot of work in and also within the pharmaceutical business which we're doing a significant amount of work in.

So we're looking at other opportunities and as we think that there is a market to develop there, we’ll start to build platforms but really now we’re focused on enhancing the platforms that we have and continuing to grow those..

Fair enough, thanks Chris.

Given the push to develop your reach both on the buy and sell side can you speak to your plans regarding headcount and operating expenses and your expectations in each of those for 2016?.

Yes. So we've grown a lot through this last year and we've beefed up the development team significantly over the course of 2015 and I think we find ourselves in a pretty good spot not needing to really add too much more there.

We've beefed up in anticipation of the growth that we’ve had and we continue to look for good developers on the tax side and when we find people are we think are really valuable for the team, we try to bring them on board.

But its - I think we’ve seen a lot of growth within 2015 and we're kind of stabilizing a little bit here and not growing people wise as much as we did and we over hired because we needed to do that because we are growing the revenue side so fast. So I don’t know that we add the big hires that we have now.

We're bringing on a new CFO which is a role that hasn’t been filled here for a while, and I’m really looking forward to having somebody there to take a lot of that activity off of our plate.

We’ve really leaned heavily on our senior management team of Richard Steel and Chad Holsinger and over at Steel Media for helping us grow that side of the business and on the operational side and on the building to platform side both Kris Nelson and Dustin Suchter have done a great job in providing the growth and maintaining the platforms and building the platforms.

So I think that as we find opportunity for more growth and need to add we will but at this point, I think there is a few open roles that we have but not as crazy as we were in 2015..

Okay.

I was curious to on the sales and marketing side Chris because I know that you would have an opportunity to present Social Reality to people that might not be familiar with it yet and I’m just kind of curious on how you see that changing and how you might focus resources on developing the sales and marketing effort and where you see that headcount at the end of the year versus what it could be by the end of 2016?.

So in - on the marketing side, we beefed up the marketing side in 2015 and halfway through the year hired a Senior VP of Marketing and then beefed up internally on the marketing side and they've been doing a fantastic job on content creation and reach-out and leads and acquiring new customers from marketing perspective.

And then from the sell side, we’re going out to market and looking for additional sales people to help us sell the SRAX MD product and to also bring additional platform sales into market.

So it’s a very - we’re looking for high end sales people there and we’re very - we’ve been very picky about who we’re bringing in for that and so we continue to look.

And similar to the programming side as we find talented good people that we think will bring value to the organization then we’ll go ahead and hire them but you have to kiss a lot of frogs in that side of the game.

So I think in the hi-tech business finding the right sales team is probably one of the hardest pieces of the business and it’s one of the things that the Steel team has been fantastic of doing is bringing in some amazing sales people and they have a really good detailed understanding about how to do that and how to execute against that..

Okay. Last question from me Chris, could you talk a little bit about the company's cap structure, you’re still carrying some debt but you’re starting to throw some cash.

So how do you see that sort of progressing through the course of this year?.

Yes, we paid down a good chunk of the debt in excess cash flow payments over the year and then we borrowed some again because we - Richard Steel had his payment for his earn-out.

So we had which is in the 10-K as well, we had issued to Richard a $4 million earn-out and we paid $2.6 million of that in stock and the rest in cash - I'm sorry, $1.6 million in cash and the rest in stock.

So that additional shareholder equity is what's giving us enough to get out to a National Exchange and also at the same time which is in our 10-K we did another round internally from our existing investors of around another $0.5 million in cash just to give us a little bit more shareholder equity.

So we anticipate that over this year we'll continue to pay down the Victory Park note and through our excess cash flow payments. And then we also have - we have some warrants that expire in October of this next year.

So there is our core underlying investors that are around five or six investors own some warrants that expire in October of this year that are not cashless, none of them are cashless warrants that except for some that went to some of the bankers but most of them are not cashless.

So we anticipate that those will get exercise as well, those are at a dollar - is around 5 million of those..

I'm sorry Chris, I lied. One last question. Just coming it seems that you spoke to acquisitions obviously a few that you did in 2014, I’m just kind of curious, how you’re looking at that now.

Obviously you spoke to it being component of your growth strategy, what sort of focus is that getting vis-à-vis developing more platforms in-house and if you’re really looking at it, can you give us an idea of what you’re seeing and what the pipeline might look like?.

It's been an interesting year for the ad tech space. When we said that we did the acquisitions in 2014, really it was – either we ended them in October 2014.

So really is into 2015 that those acquisitions kicked in and so we learned a lot about doing the acquisitions and what we needed to do and how we integrate and it’s been a fantastic learning experience for all of us.

And we think that we’re finding that there is other ad tech companies that are not now afforded an opportunity to go to market that are - that are not able to go back to the venture capital well or have been companies that have been generating EBITDA and are just looking for an opportunity to join along with the bigger company.

So we’re seeing those opportunities and we explore them on an opportunistic basis.

I'd say there is lots of different bankers are bringing deals to us and asking us if we take a look at few different things and we do and when we find something that looks good and it’s - when it’s not that thing, that's like almost breakeven at a 100,000 loss a month, we’ll take a look at it.

But if it's, we're not interested in looking at ad tech companies that are losing a bunch of money. We're interesting in stuff that’s accretive and can add to our EBITDA and help us grow the company.

We got in 2015, we made it pretty far down the line with one company, spent a lot of time on it that just ended up not happening a deal that was being presented would not have been favorable to the shareholders of the companies that we ended up not doing that transaction. So, we’re continuing to look..

Great, okay Chris, thanks so much for all the color. Appreciate it..

Thank you, Kevin. Appreciate it..

Our next question is from [Mike Randall] [ph] from Ages Capital. Please go ahead..

Hi, Chris thanks for the call. Can you talk a little bit about revenue for 2016, any color that you can provide on the magnitude of growth that you're putting guidance out there – not quite sure. And then can you comment on the impact of SRAX MD becoming more problem in the picture and the impact on gross margin for the year..

So all questions I would love to answer but I think my attorneys would kill me if I answered any of those right now. So we’re going to give some guidance when we put out our first Q for the year and at that time like I said earlier was that new CFO coming on board, we’ll try to give some color to the MD business itself.

But we’re - obviously we have a big focus on the MD business and there is a lot of technology that’s been built there and a lot of big brands that are making buys across that platform. But we think there is a - we think that piece of the business can grow significantly.

But I'd like to - if I could, reserve that until we give some guidance and have a little bit more structure around how we are going to break out those business units so that you guys can understand the need separately..

Great. And along those lines any thoughts or discussion about some operational metrics that you can put out for us so we can better track and model your development..

Yes, both of those are key components of bringing down the new CFO. So that we can have those metrics for you so that we can help you guys in developing the models..

Okay, all right. Fantastic, thanks..

I really appreciate it. Thanks Mike..

[Operator Instructions] And if there are no further questions, I'd like to turn the floor back over to Mr. Haag for any closing remarks..

Thanks everyone. So with that, I would like to thank all Social Reality stockholders for their participation on today’s call and their support for the company. This concludes our fourth quarter and 2015 full year conference call. Thank you very much..

Thank you everybody..

Thank you. This concludes today's conference. You may disconnect your lines at this time..