NEW YORK, NY / ACCESSWIRE / March 28, 2017 / Snap Interactive, Inc. (“SNAP,” the “Company,” “we,” “our,” or “us”) (OTCQB: STVI), a leading provider of live video social networking and interactive dating applications, today announced financial and operational results for the quarter and year ended December 31, 2016.
Presentation for Merger:
On October 7, 2016, we completed our previously announced merger (the “Merger”) with A.V.M. Software (“AVM”). The Merger has been accounted for as a “reverse merger” under the acquisition method of accounting for business combinations, with AVM being treated as the accounting acquirer of SNAP. Accordingly, the financial results included in this release reflect the operations of AVM for the period of January 1, 2016 through October 7, 2016, and the operations of the post-Merger Company for the period of October 8, 2016 through December 31, 2016. These results for the fiscal year ended December 31, 2016 are compared to the financial results for pre-Merger AVM for the fiscal year ended December 31, 2015.
Financial Highlights:
Completed the Merger on October 7, 2016, adding strategically valuable video assets and technology and significantly increasing business scale and management depth;
Initiated efforts to unlock financial and strategic synergies as a result of the combination;
Total revenues increased 4.3% for the year ended December 31, 2016 as compared to 2015; Total post-Merger revenues for the fourth quarter of 2016 increased 51.5%, compared to total pre-Merger revenues in the fourth quarter of 2015, reflecting the benefits of the Merger consolidation;
Total aggregate annual pro forma revenues of the post-Merger Company would be approximately $28.8 million giving effect to the Merger as if it had occurred on January 1, 2016;
Net Loss for the year ended December 31, 2016 was approximately $1.5 million, which included approximately $1.1 million of non-recurring Merger expenses;
Adjusted EBITDA, a non-GAAP measure, for the year ended December 31, 2016 was approximately $11.8 thousand; Adjusted EBITDA excluding approximately $1.1 million of one-time Merger expenses was $1,117 thousand for the year ended December 31, 2016;
Cash and cash equivalents totaled approximately $4.2 million as of December 31, 2016, after paying off pre-Merger SNAP’s debt, including a $3.0 million convertible note, with bank balances since December 31, 2016 reflecting increases in cash; and
Completed a reverse stock split at a 1-for-35 ratio on January 5, 2017 as an important step toward obtaining a listing on a national securities exchange.
Business Highlights:
Introduced a beta launch of a new dating product, 50more, in the first quarter of 2017, which targets a growing segment of the dating market of users over 50 years old;
Integrated dating functionality into Paltalk to cross sell FirstMet subscriptions to video chat users;
Continued Merger integration efforts including organizational restructuring, real estate and vendor consolidation, and standardizing our technology platform and reporting systems;
Began work on a new live video chat consumer application;
Continued development of merger and acquisition opportunities; and
Initiated legal action against Riot Games, Inc. and Valve Corporation for infringement of Patent Nos. 5,822,523 and 6,226,686 with respect to their online games League of Legends and Defense of the Ancients 2.
Financial Highlights (in thousands)
Current year compared to prior year:
Years Ended
December 31,
GAAP Results
2016
2015
Change
Subscription revenue
$
18,648
$
17,529
6.4
%
Advertising revenue
$
2,341
$
2,593
(9.7
)%
Total revenues
$
20,988
$
20,122
4.3
%
Sales and marketing expense
$
5,100
$
4,088
24.8
%
Net loss
$
(1,453
)
$
(266
)
551.1
%
Net cash (used in) provided by operating activities
$
(407
)
$
96
(523.8
)%
Financial Metrics (unaudited)
Bookings
$
18,168
$
18,294
(0.7
)%
Adjusted EBITDA (a non-GAAP measure)
$
12
$
671
(98.3
)%
Current quarter compared to same quarter prior year:
Three Months Ended
December 31,
GAAP Results (unaudited)
2016
2015
Change
Subscription revenue
$
6,204
$
3,678
68.7
%
Advertising revenue
$
843
$
974
(13.4
)%
Total revenues
$
7,047
$
4,652
51.5
%
Sales and marketing expense
$
2,375
$
1,129
110.3
%
Net loss
$
(1,025
)
$
(345
)
197.1
%
“With a pivotal merger now behind us, SNAP enters 2017 poised for more rapid growth, and the creation of shareholder value,” commented Alex Harrington, our Chief Executive Officer. “Live video remains one of the hottest segments of the consumer internet, and SNAP is strategically well-positioned as a recognized incumbent, with proven technology and an established customer base, to disproportionately benefit as this segment continues to grow. As a result of the Merger, we diversified our product array from a single revenue generating product to five, across both video chat as well as interactive dating. We have 183,000 active subscribers as of March 12, 2017, with subscription and virtual gift revenue making up approximately 89% of total revenue in 2016. In addition, the broadened product array now has strength not only in English speaking markets around the world, but also the Middle East and Southeast Asia.”
“With newfound scale as the result of the combination, we expect to benefit from aggressive cross-selling efforts, adding incremental value to several of our products. Financially, we are stronger today than we were pre-Merger, having improved our liquidity, paid off all pre-Merger SNAP debt, simplified our capital structure, and completed a reverse stock split as a step toward listing on a national securities exchange.”
“Operationally, we have significantly enhanced our management team, bringing on Jason Katz, an accomplished entrepreneur and pioneer in video web and mobile social products, as our Chairman, President and Chief Operating Officer. We hired Judy Krandel, an experienced small cap public company portfolio manager, as our Chief Financial Officer. As a result of the addition of Mr. Katz and other AVM executives to our team, we believe we have the majority of the senior team in place and are well-positioned to achieve our goals.”
Business Integration
With the consummation of the Merger, the Company identified a number of important integration goals that are targeted for completion by June 30, 2017.
Integrate additional interactive dating features into Paltalk;
Extend the launch of 50more, our new seniors dating product;
Consolidate leased office space to one primary headquarters to increase collaboration and reduce monthly expense;
Reduce reliance on co-location facilities and migrate to lower cost cloud hosting services; and
Continue to consolidate departments, vendors and leadership.
“We are well on our way to achieving our integration goals,” added Mr. Harrington. “We recently integrated dating features into Paltalk to introduce FirstMet to our video chat subscribers. This is the first of many steps to cross sell services between users of our different products, eventually including incorporating live video to the dating experience. We are in beta launch for 50more in our first major market and plan for a full-scale launch later this year. Comprehensive business integration efforts are underway, and we are excited to collaborate as a team together in one location. Our recent agreement to accelerate the termination the pre-Merger SNAP headquarters’ lease is expected to eliminate a long-term obligation of approximately $1.64 million, allowing us to consolidate in a less costly and unified space.”
Video
The Company believes the live video market is very large and has exceptional potential for growth. By 2019, 80% of the world’s mobile data traffic will be video based, according to a 2016 study from Cisco. Company management believes that underpinning this massive surge in video adoption will be a reinvention of the way people interact via social networking, entertainment and communication apps, with even more integration of video. The mission at SNAP is to deliver social experiences to users by leveraging live video. The Company is pursuing various initiatives in new and existing products incorporating live video to grow its position in this market. Along those lines, SNAP management expects to have a new live video consumer product launch later this year.
Jason Katz, our Chairman, President, and Chief Operating Officer, said, “Our foundation is live video, and we have created a unique and scalable platform to compete in this dynamic space. We have millions of users worldwide interacting through live video chat. We continue to innovate and evolve as users grow more excited about mobile video as a part of everyday life.”
Role and Performance of Our Core Business
The core dating and video chat businesses in our portfolio represent a stable foundation and platform for new growth initiatives. Company management is excited to have resumed revenue growth again at SNAP as a result of the Merger, and expects the first quarter of 2017 to yield positive cash flow from operations. SNAP intends to pursue a number of initiatives in 2017 in support of the core business, including:
The continued integration of dating features into Paltalk, which has introduced new users to FirstMet;
The launch of a next generation Paltalk app with an improved user experience;
A full commercial launch of 50more, which we expect will add incremental subscribers to our dating platform;
Reduced service outages and lost revenue as a result of the stability and enhanced security of outsourcing hosting in the cloud; and
Seeking and testing new advertising partnerships to grow advertising revenues.
“We have a number of new initiatives focused on core internal growth,” commented Mr. Harrington. “Not only do we plan to merge the best aspects of live video and interactive dating, but we are utilizing sophisticated data testing to develop enhancements to our products to drive usage, conversion, and monetization. This will take some time, but we believe we will see long term positive results.”
Liquidity and Capital Resources
Cash Balance – We ended the year with approximately $4.2 million in cash and cash equivalents and zero debt. Cash decreased from December 31, 2015, primarily from the repayment of all of pre-Merger SNAP’s debt, including a convertible note in the aggregate principal amount of $3.0 million, as well as one-time Merger expenses.
Bank balances were $4,081 thousand at December 31, 2016, and have increased to $4,664 thousand as of March 26, 2017.
Cash flow used in operations consumed approximately $406.7 thousand for the year ended December 31, 2016, versus generating $96.0 thousand in 2015. Cash flow used in operations for the year ended December 31, 2016 included $1.1 million of non-recrurring expenses related to the Merger.
We continue to focus on cost synergies as we complete the integration of our businesses. We have sufficient working capital to fund our existing operations and internal growth efforts.
Judy Krandel, Chief Financial Officer, commented, “SNAP is in the strongest financial condition it has been in for many years. We have a solid cash position with positive cash flow from operations in 2016 before one-time Merger expenses. We believe that we will realize further cost savings from transitioning to outsourced hosting in the cloud, and will also see a reduction in rent expense from consolidating real estate locations. Although we plan to invest in additional people and resources to grow our business, we will continue to focus on self-sustainability, profitability and cash flow.”
About Snap Interactive, Inc.
Snap Interactive, Inc. is a leading provider of live video social networking and interactive dating applications. SNAP has a diverse product portfolio consisting of nine products, including Paltalk and Camfrog, which together host one of the world’s largest collections of video-based communities, and FirstMet, a prominent interactive dating brand serving users 35 and older. The Company has a long history of technology innovation and holds 25 patents related to video conferencing and online gaming. Paltalk, Camfrog, FirstMet, and The Grade are trademarks of Snap Interactive, Inc.
For more information, please visit http://www.snap-interactive.com.
To be added to our distribution list, please visit http://www.snap-interactive.com/investor-relations/investor-alerts.
The contents of our website are not part of this press release, and you should not consider the contents of this website in making an investment decision with respect to our common stock.
IR Contact:
IR@snap-interactive.com
Forward-Looking Statements
This press release contains “forward-looking statements.” Such statements may be preceded by the words “intends,” “may,” “will,” “plans,” “expects,” “anticipates,” “projects,” “predicts,” “estimates,” “aims,” “believes,” “hopes,” “potential,” or similar words. Forward-looking statements are not guarantees of future performance, are based on certain assumptions and are subject to various known and unknown risks and uncertainties, many of which are beyond the Company’s control, and cannot be predicted or quantified and consequently, actual results may differ materially from those expressed or implied by such forward-looking statements. Such risks and uncertainties include, without limitation, risks and uncertainties associated with general economic, industry and market sector conditions; the ability to effectively integrate the operations of the Company and Paltalk; user acceptance of our updated applications; the Company’s ability to institute corporate governance standards or achieve compliance with national securities exchange listing requirements; the Company’s future growth and the ability to obtain additional financing to implement the Company’s growth strategy; the ability to increase or recognize revenue, decrease expenses and increase the number of active subscribers, new subscription transactions or monthly active users; the ability to enter into new advertising agreements; the Company’s ability to generate positive cash flow from operations; 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; and circumstances that could disrupt the functioning of the Company’s applications. More detailed information about the Company and the risk factors that may affect the realization of forward-looking statements is set forth in the Company’s filings with the Securities and Exchange Commission (“SEC”), including the Company’s most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Investors and security holders are urged to read these documents free of charge on the SEC’s web site at http://www.sec.gov.
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.
CONSOLIDATED BALANCE SHEETS
December 31,
2016
2015
Current assets:
Cash and cash equivalents
$
4,162,596
$
6,676,557
Credit card holdback receivable
172,169
150,000
Accounts receivable
958,695
832,621
Prepaid expense and other current assets
1,047,483
1,017,879
Total current assets
6,340,943
8,677,057
Property and equipment, net
793,305
917,720
Goodwill
14,304,667
4,344,650
Intangible assets, net
5,605,193
2,487,698
Deferred tax asset
–
754,535
Other receivables
82,435
–
Long term security deposits
397,608
82,083
Total assets
$
27,524,151
$
17,263,743
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable
1,665,831
667,782
Accrued expenses and other current liabilities
472,406
897,091
Deferred subscription revenue
2,828,827
2,262,818
Total current liabilities
4,967,064
3,827,691
Deferred rent, net of current portion
261,286
–
Deferred tax liability
1,452,339
–
Contingent liability
–
134,000
Total liabilities
6,680,689
3,961,691
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.001 par value, 14,285,715 shares authorized, 6,714,915 and 5,228,617 shares issued and outstanding, respectively
6,715
5,229
Additional paid-in capital
15,865,568
6,872,868
Retained earnings
4,971,179
6,423,955
Total stockholders’ equity
20,843,462
13,302,052
Total liabilities and stockholders’ equity
$
27,524,151
$
17,263,743
SNAP INTERACTIVE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended
December 31,
2016
2015
Revenues
Subscription revenue
$
18,647,855
$
17,529,115
Advertising revenue
2,340,574
2,593,028
Total revenue
20,988,429
20,122,143
Costs and expenses
Costs of revenue
5,015,565
5,117,277
Sales and marketing
5,099,956
4,088,113
Product development
8,600,688
8,597,175
General and administrative
4,016,068
2,790,233
Total costs and expenses
22,732,277
20,592,798
Loss from operations
(1,743,848
)
(470,655
)
Interest expense, net
(60,030
)
–
Other income, net
351,102
33,145
Loss before provision for income taxes
(1,452,776
)
(437,510
)
Income tax benefit (expense)
–
171,584
Net loss
$
(1,452,776
)
$
(265,926
)
Loss per share of common stock:
Basic and diluted
$
(0.26
)
$
(0.05
)
Weighted average number of common shares outstanding:
Basic and diluted
5,577,856
5,228,617
SNAP INTERACTIVE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
December 31,
2016
2015
Cash flows from operating activities:
Net loss
$
(1,452,776
)
$
(265,926
)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation of property and equipment
568,028
383,167
Amortization of intangible assets
834,505
552,333
Stock-based compensation expense
353,120
206,571
Change in fair value of contingent liability
(134,000
)
–
Changes in operating assets and liabilities:
Credit card holdback receivable
138,971
22,809
Accounts receivable
66,433
(268,094
)
Security deposits
(36,115
)
–
Prepaid expenses and other current assets
221,644
(193,706
)
Accounts payable, accrued expenses and other current liabilities
(1,257,735
)
111,714
Deferred tax asset
754,535
(171,584
)
Deferred rent liability
145,046
–
Deferred tax liability
(128,460
)
–
Deferred subscription revenue
(479,847
)
(281,322
)
Net cash (used in) provided by operating activities
(406,651
)
95,962
Cash flows from investing activities:
Property and equipment purchases
(345,070
)
(488,154
)
Cash acquired the Merger, net of payment of note payable
(1,739,506
)
–
Net cash used in investing activities
(2,084,576
)
(488,154
)
Cash flows from financing activities:
Payments of capital leases
(22,734
)
–
Repayment of note payable
–
(490,000
)
Net cash used in financing activities
(22,734
)
(490,000
)
Net decrease in cash and cash equivalents
(2,513,961
)
(882,192
)
Cash and cash equivalents at beginning of year
6,676,557
7,558,749
Cash and cash equivalents at end of year
$
4,162,596
$
6,676,557
Supplemental disclosure of cash flow information:
Non-cash investing and financing activities
Cash paid in interest
$
–
$
293
Cash paid in taxes
$
–
$
203,988
Cash investing and financing activities
Acquisition:
Cash and cash equivalents
$
1,460,494
$
–
Term note payable (intercompany)
(200,000
)
–
Note payable, net of discount (intercompany)
(3,000,000
)
–
Cash acquired in Merger, net of payment of note payable
$
(1,739,506
)
$
–
SNAP INTERACTIVE, INC
RECONCILIATION OF GAAP TO NON-GAAP RESULTS
(unaudited)
Year Ended
December 31,
2016
2015
Reconciliation of Net Loss to Adjusted EBITDA:
Net loss
$
(1,452,776
)
$
(265,926
)
Interest expense, net
60,030
–
Other income, net
(351,102
)
(33,145
)
Income tax expense (benefit)
–
(171,584
)
Depreciation and amortization expense
1,402,533
935,500
Stock compensation expense
353,120
206,571
Adjusted EBITDA
$
11,805
$
671,416
Merger costs
1,105,000
–
Adjusted EBITDA excluding Merger costs
$
1,116,805
$
671,416
Non-GAAP Financial Measures and Key Metrics
The Company has provided in this release certain non-GAAP financial measures, including Adjusted EBITDA, and other key metrics, including bookings, to supplement the condensed consolidated financial statements, which are prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). The Company defines Adjusted EBITDA as net loss adjusted to exclude interest income (expense), net, depreciation and amortization expense, gain (loss) on change in fair value of derivative liabilities, loss on disposal of fixed assets and stock-based compensation expense. Adjusted EBITDA excluding Merger costs is defined as Adjusted EBITDA excluding non-recurrent expenses incurred in connection with our Merger with A.V.M. Software, Inc. Management also presents Adjusted EBITDA excluding merger expenses because the Company believes that excluding expenses related to the merger is useful to investors for comparing our Adjusted EBITDA for the fiscal year ended December 31, 2016 to our Adjusted EBITDA reported for other periods.
Management uses these financial metrics 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 financial metrics in assessing our performance and when planning, forecasting and analyzing future periods. The Company believes these financial metrics 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.
Our use of Adjusted EBITDA has limitations as an analytical tool, and you should not consider this performance measure in isolation from or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:
Adjusted EBITDA does not reflect cash capital expenditures for assets underlying depreciation and amortization expense that may need to be replaced or for new capital expenditures;
Adjusted EBITDA does not reflect our working capital requirements;
Adjusted EBITDA does not consider the potentially dilutive impact of stock-based compensation; and
Other companies, including companies in our industry, may calculate Adjusted EBITDA differently, which reduces its usefulness as a comparative measure.
Because of these limitations, you should consider these financial metrics 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.
SOURCE: Snap Interactive, Inc.
ReleaseID: 458365
