SOURCE: SNAP Interactive, Inc.

Snap Interactive, Inc.

May 15, 2015 19:40 ET

Snap Interactive Reports Results for the Quarter Ended March 31, 2015

NEW YORK, NY--(Marketwired - May 15, 2015) - Snap Interactive, Inc. ("SNAP," the "Company," "we," "our" or "us") (OTCQB: STVI), a leading online dating provider, today announced financial and operational results for the quarter ended March 31, 2015.

Highlights:

  • Raised aggregate gross proceeds of $3.0 million in a private placement of debt and equity securities;
  • Total revenues decreased 3.2% and subscription revenue decreased 0.3% for the first quarter of 2015 relative to the comparable period in 2014;
  • Net loss was approximately $1.2 million, or $0.03 per share of basic and diluted common stock, for the first quarter of 2015 as compared with net loss of approximately $0.9 million, or $0.02 per share of basic and diluted common stock, for the comparable period in 2014;
  • Cash and cash equivalents totaled approximately $2.3 million as of March 31, 2015, representing an increase of approximately $1.2 million from December 31, 2014;
  • Increased active subscriber count as of March 31, 2015 to approximately 102,700 from approximately 100,700 as of December 31, 2014, representing an increase of 2%; and
  • Increased user activity on The Grade, our new mobile dating application, reaching a usage threshold of more than 8 million swipes.

Financial Highlights

       
    Three Months Ended  
    March 31,  
Statement of Operations and Cash Flow Results   2015     2014  
Total revenue   $ 3,186,083     $ 3,292,353  
Subscription revenue   $ 3,129,310     $ 3,139,020  
Advertising and marketing expense   $ 1,726,097     $ 1,472,210  
Net loss   $ (1,219,179 )   $ (933,094 )
Net cash used in operating activities   $ (1,052,770 )   $ (464,520 )
                 
Non-GAAP Results                
Active subscribers (at period end)     102,700       90,000  
Bookings   $ 3,157,566     $ 3,400,158  
Adjusted EBITDA   $ (612,465 )   $ (739,504 )
                 
         
    March 31,   December 31,
Balance Sheet Results   2015   2014
Cash and cash equivalents   $ 2,327,806   $ 1,138,385
Deferred subscription revenue   $ 1,980,331   $ 1,952,075
             
Non-GAAP Results            
Active subscribers (at period end)     102,700     100,700
             

Management Commentary 

Growth and New Initiatives

Despite some challenges in the first quarter of 2015, we achieved important milestones in growth and new initiatives, including:

  • Active Subscribers - Active subscribers at March 31, 2015 increased 14% as compared to the first quarter of 2014 and 2% as compared to December 31, 2014. We achieved a sixth consecutive fiscal quarter increase in active subscribers and the highest month-end active subscriber count since October 31, 2012;
  • Completion of Financing - On February 13, 2015, we closed a private placement of a convertible note and equity securities for aggregate gross proceeds of $3.0 million for general corporate purposes, which may include, among other things, capital expenditures and working capital for growth and new initiatives;
  • New Spanish Language Version of AYI - In March, we introduced a Spanish-language version of the AYI Android application as part of our initiative to introduce localized versions of our AYI application in large foreign markets; and
  • The Grade User Activity - As of March 31, 2015, usage of The Grade mobile application exceeded 8 million swipes.

SNAP's Chief Executive Officer, Clifford Lerner, commented, "The first quarter of 2015 was a landmark quarter for us in that we closed a financing, built an active community on our new mobile application, The Grade, and commenced the next stage of execution of our portfolio strategy by launching the first translated version of our AYI Android application. We were also pleased that we experienced a new 24-month high in the number of active subscribers during the first quarter of 2015." 

SNAP faced headwinds in revenue growth in the quarter ended March 31, 2015. The Company's contribution of revenue from international territories in the first quarter of 2015 was negatively impacted by unfavorable foreign exchange rates as compared to the first quarter of 2014. We also experienced elevated levels of consumer refunds and chargebacks in the first quarter of 2015, which contributed to a decrease in subscription revenue compared to the first quarter of 2014. Excluding the effect of refunds and chargebacks in both periods, subscription revenue would have been 3% higher in the quarter ended March 31, 2015, as compared to the same period in 2014. Variability in advertising revenue also contributed to the shortfall in the year-over-year comparison of our revenue growth, as we terminated a large, exclusive advertising contract in 2014 in favor of more flexible, non-exclusive advertising relationships in 2015, which, comparatively, initially generate revenue at lower levels.

Liquidity and Cash Flow

  • Cash Balance - We ended the first quarter of 2015 with approximately $2.3 million of cash and cash equivalents on our balance sheet, representing the highest balance of cash and cash equivalents reported at quarter-end since June 30, 2013;
  • Completion of Financing - On February 13, 2015, we received net proceeds of $2.7 million from a private placement of a convertible note and equity securities;
  • Note Repayment - We repaid an aggregate of $400 thousand of promissory notes in February and March 2015;
  • One-Time Payments - During the first quarter of 2015, we incurred a significant amount of one-time, non-recurring payments that had a negative effect on cash flow from operating activities. These included a repayment of an advance under an advertising agreement, an increase in security deposit and moving costs in connection with the relocation of our corporate headquarters and a legal settlement and related legal fees; and
  • Advertising and Marketing - We invested incrementally in new marketing opportunities in the first quarter of 2015 that yielded lower short term returns than expected and we subsequently scaled down our investments in these marketing opportunities.

SNAP's Chief Operating Officer, Alex Harrington, commented, "We are excited to have new capital in our business available to fund growth opportunities. Although we had to meet several one-time cash commitments in the first quarter of 2015, we expect to continue to operate a lean and cash efficient business."

Mr. Harrington continued, "Also, as we embark on our portfolio strategy, we foresee our industry consolidating, and we will consider certain acquisition opportunities, including dating and social networking companies with strong brands, cash flow and management."

About Snap Interactive, Inc.

Snap Interactive, Inc. develops, owns and operates dating applications for social networking websites and mobile platforms. SNAP's flagship brand, AYI.com is a multi-platform online dating site with over one million monthly active users. The Grade is a mobile dating application catering to high quality singles. For more information, please visit http://www.snap-interactive.com.

For more information on SNAP, please visit http://www.snap-interactive.com.

The contents of our websites are not part of this press release, and you should not consider the contents of these websites in making an investment decision with respect to our common stock.

Facebook is a registered trademark of Facebook, Inc. iPhone is a registered trademark of Apple Inc. Android is a trademark of Google Inc. AYI.com is a registered trademark of Snap Interactive, Inc.

Forward-Looking Statements

This press release contains "forward-looking statements" made under the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995 that are based on current expectations, estimates, forecasts and assumptions and are subject to risks and uncertainties. Words such as "anticipate," "assume," "believe," "estimate," "expect," "goal," "intend," "plan," "project," "seek," "target," and variations of such words and similar expressions are intended to identify forward-looking statements. Such forward-looking statements are subject to certain risks, uncertainties and assumptions that may cause actual results to differ materially from those expressed by the forward-looking statements, including, but not limited to, the following: general economic, industry and market sector conditions; the Company's future growth and the ability to obtain additional financing to implement the Company's growth strategy; the ability to achieve break-even cash flow or positive Adjusted EBITDA; the ability to increase or recognize revenue, decrease expenses and increase the number of active subscribers or new subscription transactions; the ability to enter into new advertising agreements; the ability to diversify new user acquisition channels or improve the conversion of users to paid subscribers; the ability to anticipate and respond to changing user and industry trends and preferences; the intense competition in the online dating marketplace; the ability to release new applications or derive revenue from new applications; potential acquisitions of dating and social networking companies; the ability to use indebtedness to grow our business or increase the number of active subscribers and revenue; and circumstances that could disrupt the functioning of the Company's application and websites. In evaluating these statements, you should carefully consider these risks and uncertainties and those described under the headings "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Risk Factors" in the Company's most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other Securities and Exchange Commission filings.

All forward-looking statements speak only as of the date on which they are made. The Company undertakes no obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which such statement was made, except to the extent required by applicable securities laws.

 
SNAP INTERACTIVE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
 
    March 31,
2015
    December 31,
2014
 
    (Unaudited)        
Assets            
Current assets:            
  Cash and cash equivalents   $ 2,327,806     $ 1,138,385  
  Credit card holdback receivable     215,913       648,759  
  Accounts receivable, net of allowances and reserves of $54,256 and $42,533, respectively     249,518       221,128  
  Short term security deposits     24,956       115,104  
  Prepaid expense and other current assets     109,103       93,542  
Total current assets     2,927,296       2,216,918  
Fixed assets and intangible assets, net     442,868       563,123  
Notes receivable     79,154       78,520  
Long term security deposits     335,659       135,000  
Investments     200,000       200,000  
Total assets   $ 3,984,977     $ 3,193,561  
                 
Liabilities and stockholders' equity (deficit)                
Current liabilities:                
  Accounts payable   $ 1,109,319     $ 1,074,345  
  Accrued expenses and other current liabilities     350,767       1,062,836  
  Notes payable     -       400,000  
  Deferred subscription revenue     1,980,331       1,952,075  
  Deferred advertising revenue     20,786       13,427  
Total current liabilities     3,461,203       4,502,683  
Convertible note payable, net of discount     719,572       -  
Derivative liabilities     2,113,425       23,425  
Capital lease obligations     131,695       149,055  
Total liabilities     6,425,895       4,675,163  
Commitments and Contingencies                
Stockholders' equity (deficit):                
Preferred stock, $0.001 par value, 10,000,000 shares authorized, none issued and outstanding     -       -  
Common stock, $0.001 par value, 100,000,000 shares authorized, 50,007,826 and 49,507,826 shares issued, respectively, and 39,682,826 and 39,182,826 shares outstanding, respectively     39,683       39,183  
Additional paid-in capital     12,117,852       11,858,489  
Accumulated deficit     (14,598,453 )     (13,379,274 )
Total stockholders' equity (deficit)     (2,440,918 )     (1,481,602 )
Total liabilities and stockholders' equity (deficit)   $ 3,984,977     $ 3,193,561  
                 
 
SNAP INTERACTIVE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 (Unaudited)
 
    Three Months Ended  
    March 31,  
    2015     2014  
Revenues:            
  Subscription revenue   $ 3,129,310     $ 3,139,020  
  Advertising revenue     56,773       153,333  
Total revenues     3,186,083       3,292,353  
Costs and expenses:                
  Programming, hosting and technology expense     526,947       942,411  
  Compensation expense     736,580       769,403  
  Professional fees     234,633       250,155  
  Advertising and marketing expense     1,726,097       1,472,210  
  General and administrative expense     944,601       863,417  
Total costs and expenses     4,168,858       4,297,596  
Loss from operations     (982,775 )     (1,005,243 )
  Interest (expense) income, net     (236,404 )     1,874  
  Change in fair value of derivative liabilities     -       70,275  
Loss before provision for income taxes     (1,219,179 )     (933,094 )
Provision for income taxes     -       -  
Net loss   $ (1,219,179 )   $ (933,094 )
                 
Net loss per share of common stock:                
  Basic and diluted   $ (0.03 )   $ (0.02 )
Weighted average number of shares of common stock used in calculating net loss per share of common stock:                
  Basic and diluted     39,413,824       39,142,548  
                   
 
SNAP INTERACTIVE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Unaudited)
 
    Three Months Ended
March 31,
 
    2015     2014  
Cash flows from operating activities:                
Net loss   $ (1,219,179 )   $ (933,094 )
Adjustments to reconcile net loss to net cash used in operating activities:                
Depreciation and amortization     60,819       43,263  
Lease obligation interest expense     7,778       --  
Stock-based compensation expense     229,863       222,476  
Loss on disposal of fixed assets     79,628       --  
Amortization of debt issuance costs     21,023       --  
Amortization of debt discount     133,589       --  
Change in fair value of derivative liabilities     --       (70,275 )
Changes in operating assets and liabilities:                
  Restricted cash     --       104,988  
  Credit card holdback receivable     432,846       (78,049 )
  Accounts receivable     (28,390 )     63,518  
  Security deposits     (110,511 )     --  
  Prepaid expenses and other current assets     (16,352 )     39,089  
  Accounts payable, accrued expenses and other current liabilities     (683,598 )     46,002  
  Deferred rent     4,099       (10,243 )
  Deferred subscription revenue     28,256       261,138  
  Deferred advertising revenue     7,359       (153,333 )
  Net cash used in operating activities     (1,052,770 )     (464,520 )
Cash flows from investing activities:                
Purchase of property and equipment     (26,192 )     (3,730 )
Proceeds from sale of fixed assets     6,000       --  
Purchase of non-marketable equity securities     --       (25,000 )
Notes receivable     (634 )     (1,233 )
Net cash used in investing activities     (20,826 )     (29,963 )
Cash flows from financing activities:                
Payments of capital lease obligations     (22,734 )     --  
Repayment of promissory notes     (400,000 )     --  
Payment of financing costs     (314,249 )     --  
Proceeds received under Securities Purchase Agreement     3,000,000       --  
Net cash provided by financing activities     2,263,017       --  
Net increase (decrease) in cash and cash equivalents     1,189,421       (494,483 )
Balance of cash and cash equivalents at beginning of period     1,138,385       927,352  
Balance of cash and cash equivalents at end of period   $ 2,327,806     $ 432,869  
             
Non-cash investing and financing activities:            
Compound embedded derivative under the Note and Securities Purchase Agreement recorded as derivative liabilities (See Note 5)   $ 1,748,000   $ --
Warrants issued under the Advisory Services Agreement as additional consideration for the Note and recorded as derivative liabilities (See Note 5)   $ 342,000   $ --
Common stock issued under the Advisory Services Agreement as additional consideration for the Note   $ 30,000   $ --
             
 
SNAP INTERACTIVE, INC.
RECONCILIATION OF GAAP TO NON-GAAP RESULTS
 (Unaudited)
 
    Three Months Ended
March 31,
    2015   2014
Reconciliation of Subscription Revenue to Bookings        
Subscription revenue   $ 3,129,310   $ 3,139,020
Change in deferred subscription revenue     28,256     261,138
Bookings   $ 3,157,566   $ 3,400,158
             
     
  Three Months Ended
March 31,
 
  2015     2014  
Reconciliation of Net loss to Adjusted EBITDA:          
  Net loss $ (1,219,179 )   $ (933,094 )
  Interest expense (income), net   236,404       (1,874 )
  Loss on disposal of fixed assets   79,628       --  
  Depreciation and amortization expense   60,819       43,263  
  Change in fair value of derivative liabilities   --       (70,275 )
  Stock-based compensation expense   229,863       222,476  
Adjusted EBITDA $ (612,465 )   $ (739,504 )
               

Non-GAAP Financial Measures

The Company defines Adjusted EBITDA as earnings before interest, taxes depreciation and amortization, plus non-cash stock-based compensation and the change in fair value of derivative liabilities. The Company has provided in this release certain non-GAAP financial information including bookings and Adjusted EBITDA to supplement the condensed consolidated financial statements, which are prepared in accordance with generally accepted accounting principles in the United States ("GAAP"). Management uses these non-GAAP financial measures internally in analyzing the Company's financial results to assess operational performance and to determine the Company's future capital requirements. The presentation of this financial information is not intended to be considered in isolation or as a substitute for the financial information prepared in accordance with GAAP. The Company believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting and analyzing future periods. The Company believes these non-GAAP financial measures are useful to investors and others to understand and evaluate the Company's operating results and it allows for a more meaningful comparison between the Company's performance and that of competitors.
Some limitations of bookings and Adjusted EBITDA as financial measures include that:

  • Bookings does not reflect that we recognize subscription revenue from subscription fees over the length of the subscription term and subscription revenue from micro-transactions over a two-month period;
  • Adjusted EBITDA does not (i) reflect cash capital expenditure requirements for assets underlying depreciation and amortization expense that may need to be replaced or for new capital expenditures; (ii) the Company's working capital requirements; (iii) consider the potentially dilutive impact of stock-based compensation; (iv) reflect interest expense or interest payments on our outstanding indebtedness; and (v) reflect the change in fair value of warrants; and
  • Other companies, including companies in our industry, may calculate bookings or Adjusted EBITDA differently or choose not to calculate bookings or Adjusted EBITDA at all, which reduces their usefulness as comparative measures.

Because of these limitations, you should consider this non-GAAP financial information along with other financial performance measures, including total revenues, subscription revenue, deferred revenue, net income (loss), cash and cash equivalents, restricted cash, net cash used in operating activities and our financial results presented in accordance with GAAP.

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