Snap Interactive Reports Fourth Quarter and Full Year 2015 Results

NEW YORK, NY--(Marketwired - Mar 14, 2016) - 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 and year ended December 31, 2015.

Highlights:

• Total revenues decreased 11.3% for the year ended December 31, 2015 as compared to 2014, due in part to a 5.7% decrease in investment in sales and marketing leading to lower subscription revenue, and a decrease in weighted average currency exchange rates in 2015 that, when compared to weighted average exchange rates in 2014, resulted in a 5.6% decrease in bookings;
  
  
• Adjusted EBITDA for the year ended December 31, 2015 was approaching breakeven, with a loss of approximately $66 thousand, an improvement of approximately $456 thousand as compared to 2014;
  
  
• The management and strategic transition launched in October 2015 delivered its first major milestone in March 2016, a relaunch of AYI under a new brand, FirstMet;
  
  
• Following November 2015, the Company produced two consecutive months of growth in bookings, and preliminary February 2016 figures indicate a potential third consecutive month of growth;
  
  
• As part of our renewed commitment to mobile, we rebuilt and re-introduced our FirstMet iPhone and Android mobile apps in March 2016, with the goal of reducing the cost of innovation on mobile platforms; 
  
  
• In May and December 2015 and again in March 2016, SNAP appointed high caliber independent directors to elevate its corporate governance practices; and
  
  
• Cash and cash equivalents totaled approximately $2.1 million as of December 31, 2015, representing an increase of approximately $1.0 million from December 31, 2014, and approximately flat with the quarter ended September 30, 2015.
  
  

Financial Highlights

Current year compared to prior year:

		Years Ended
		December 31,
GAAP Results		2015				2014				Change
	Subscription revenue	$	11,568,273			$	12,769,012			(9.4	)%
	Advertising revenue	$	452,757			$	789,678			(42.7	)%
Total revenues		$	12,021,030			$	13,558,690			(11.3	)%
Sales and marketing expense		$	5,414,563			$	5,742,935			(5.7	)%
Net loss		$	(1,297,852	)		$	(1,657,877	)		(21.7	)%
Net cash used in operating activities		$	(1,211,919	)		$	(167,574	)		623.2	%
Non-GAAP Results (unaudited)
Bookings		$	11,122,060			$	12,894,316			(13.7	)%
Adjusted EBITDA		$	(66,313	)		$	(521,842	)		(87.3	)%

Current quarter compared to same quarter prior year:

		Three Months Ended
		December 31,
GAAP Results (unaudited)		2015				2014				Change
	Subscription revenue	$	2,571,373			$	3,239,666			(20.6	)%
	Advertising revenue	$	148,342			$	92,162			61.0	%
Total revenues		$	2,719,715			$	3,331,828			(18.4	)%
Sales and marketing expense		$	1,190,035			$	1,445,835			(17.7	)%
Net loss		$	(359,040	)		$	(247,553	)		45.0	%
Net cash provided by (used in) operating activities		$	(25,582	)		$	220,659			N/A
Non-GAAP Results (unaudited)
Bookings		$	2,421,890			$	3,090,652			(21.6	)%
Adjusted EBITDA		$	91,192			$	969			9,310.6	%

Management Commentary

In 2015, we initiated a strategic review process to identify ways to unlock shareholder value. As a result, we developed a new company strategy centered around the proactive commercialization of our 30 million user database via the development of a portfolio of products that are cross-sold to our users. In addition, in the fourth quarter of 2015, we completed a management transition and appointed Alex Harrington as the Company's Chief Executive Officer. Following the management transition, the Company pursued the following strategic initiatives for the remainder of 2015:

• re-engage inactive users in the user database through several strategies, including a relaunch of AYI under a new brand;
• cut back on AYI marketing to preserve capital for increased marketing investment leading into and following the rebrand to FirstMet;
• continue to cut expenses to maintain cash levels and attempt to attain profitability, even at lower revenue levels; and
• increase our commitment to mobile by relaunching our AYI mobile apps and transition marketing resources to mobile platforms.
  
  

Alex Harrington, SNAP's Chief Executive Officer, commented, "I am pleased to say that the first order objectives we set forth in the management transition have all been accomplished. On March 3, 2016, we successfully rebranded AYI as FirstMet, a new, stronger brand designed to reengage inactive users and lower our cost of acquiring new users. Along with the debut of FirstMet, we rebuilt and relaunched the former AYI iPhone and Android apps using a more streamlined technology that will make it easier for us to continuously improve them. In addition, expense reductions of approximately $1.9 million for the year 2015 as compared to 2014 made it possible to increase cash balances over the latter half of 2015. In addition, Q3 and Q4 2015 contributed significantly higher Adjusted EBITDA relative to the same periods in 2014, even in the context of a managed decline in revenues." 

In addition, in December 2015, SNAP began achieving growth in its monthly bookings, ending a trend of declines that had lasted for several months. Although we have not completed our normal reporting procedures for determining our February 2016 results, preliminary figures indicate a third consecutive month of increases in bookings, which the Company believes to be a leading indicator of trends in GAAP revenues. 

The following table presents recent monthly bookings:

		Months Ended
		November			December			January
		2015			2015			2016
	Bookings (unaudited)	$	773,648		$	822,526		$	850,620

In the quarter ended December 31, 2015 and in early 2016, the Company also appointed two independent directors, Neil J. Foster and Judy F. Krandel, to its Board. In regard to the appointments, Mr. Harrington said, "Neil is an accomplished senior executive in the Digital Media and Interactive Entertainment fields, and Judy is a noted small cap investment manager. They both add exceptional strength in advising the Company and providing the highest standard of corporate governance. Now that we have a majority of independent directors on our Board, we have cleared an important governance standard that places us one step closer to our goal of listing on a national securities exchange."

The Company also grew activity on its new mobile app, The Grade, during the quarter ended December 31, 2015. With total cumulative swipes climbing to over 43 million at December 31, 2015, the fourth quarter of 2015 witnessed some of the highest levels of user activity ever on the app. However, beginning in December 2015, SNAP's management decided to begin reallocating a portion of its marketing investment for The Grade to the rebranded FirstMet service, which produces substantially all revenue and cash flow for the Company. As a result of this reallocation of resources, user activity on The Grade will likely be negatively affected in 2016.

Advertising revenue was an area of growth in the fourth quarter of 2015, reflecting a 61% improvement over the comparable period in 2014. This improvement was driven by additional ad placements within SNAP media and optimizations increasing the revenue earned per impression. The Company believes advertising revenue has significant potential for growth in 2016. 

Growth and New Initiatives

In 2016, the Company will seek to drive continued growth in bookings through the following initiatives:

• launching a new dating product leveraging our existing product platform and the strength of our user database;
• continuing to grow and improve our mobile platforms;
• reengaging more inactive users in our large user database; and
• driving more international growth through foreign language translations of our apps.
  
  

Mr. Harrington added, "Having only partially tapped the potential of our 30 million user database, we are excited about FirstMet and what it can mean for fueling subscription revenue growth in the business. We believe that the rebranding will provide a simple, fast way to reinvigorate growth in the product and reengage inactive users. In connection with the roll out, we have launched marketing campaigns to attract both new and existing customers. Moreover, with the rebranded FirstMet iPhone and Android apps, we have made mobile the focal point for innovation at the Company going forward. Finally, a new product launch anticipated for the third quarter of 2016 is expected to create an additional revenue opportunity for the Company."

Liquidity and Cash Flow

• Cash Balance: We ended the fourth quarter of 2015 with approximately $2.1 million of cash and cash equivalents on our balance sheet;
  
  
• Cash Provided by (Used in) Operating Activities: The fourth quarter of 2015 was approximately cash flow neutral, with $26 thousand in cash consumed from operations activities; and
  
  
• During the quarter, we continued to manage expenses in order to maintain a stable cash position. We anticipate having sufficient resources to launch our growth initiatives in the near future.
  
  

Mr. Harrington concluded, "2015 was a year of reinvention for SNAP. We appointed a new CEO, added three new members to the Board of Directors, grew our new product The Grade, rebranded the core product AYI as FirstMet, raised new capital and rebuilt and relaunched our mobile apps. We believe we have started the year auspiciously with two consecutive months and a projected third month of growth in bookings. We are proud of our accomplishments this year and expect that the foundations set in 2015 will lead to a strong 2016."

About Snap Interactive, Inc. 

Snap Interactive, Inc. develops, owns and operates dating applications for social networking websites and mobile platforms. The Grade is a patent-pending mobile dating application catering to high-quality singles. SNAP's flagship brand, FirstMet (formerly AYI.com), is a multi-platform online dating site with a large user database of approximately 30 million users.

For more information, 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. Apple, iTunes and iPhone are registered trademarks of Apple Inc. and App Store is a registered service mark of Apple Inc. Android and Google Play are registered trademarks of Google Inc. FirstMet and The Grade are trademarks and AYI.com is a registered trademark of Snap Interactive, Inc.

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 Company's ability to institute corporate governance standards or achieve compliance with national 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 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, 2015				December 31, 2014
Assets
Current assets:
	Cash and cash equivalents		$	2,131,262			$	1,138,385
	Credit card holdback receivable			165,853				648,759
	Accounts receivable, net of allowances and reserves of $55,468 and $42,533, respectively			206,547				221,128
	Short term security deposits			-				115,104
	Prepaid expense and other current assets			108,871				93,542
Total current assets				2,612,533				2,216,918
Fixed assets and intangible assets, net				387,617				563,123
Notes receivable				81,123				78,520
Long term security deposits				279,410				135,000
Investments				200,000				200,000
Total assets			$	3,560,683			$	3,193,561
Liabilities and stockholders' deficit
Current liabilities:
	Accounts payable		$	1,065,662			$	1,074,345
	Accrued expenses and other current liabilities			367,018				1,062,836
	Notes payable			-				400,000
	Deferred subscription revenue			1,505,862				1,952,075
	Deferred advertising revenue			-				13,427
Total current liabilities				2,938,542				4,502,683
Deferred rent, net of current portion				99,595				-
Convertible note payable, net of discount				1,636,585				-
Derivative liabilities				473,425				23,425
Capital lease obligations, net of current portion				75,560				149,055
Total liabilities				5,223,707				4,675,163
Commitments and Contingencies
Stockholders' 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 39,692,826 and 39,182,826 shares outstanding, respectively				39,693				39,183
Additional paid-in capital				12,974,409				11,858,489
Accumulated deficit				(14,677,126	)			(13,379,274	)
Total stockholders' deficit				(1,663,024	)			(1,481,602	)
Total liabilities and stockholders' deficit			$	3,560,683			$	3,193,561

SNAP INTERACTIVE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
			For the Years Ended December 31,
			2015				2014
Revenues:
	Subscription revenue		$	11,568,273			$	12,769,012
	Advertising revenue			452,757				789,678
Total revenue				12,021,030				13,558,690
Costs and expenses:
	Cost of revenue			1,702,321				1,860,727
	Sales and marketing expense			5,414,563				5,742,935
	Product development expense			2,103,300				2,926,802
	General and administrative expense			4,200,378				4,772,328
	Total operating costs and expenses			13,420,562				15,302,792
Loss from Operations				(1,399,532	)			(1,744,102	)
Interest expense, net				(1,538,320	)			(30,900	)
Change in fair value of derivative liabilities				1,640,000				117,125
Net loss			$	(1,297,852	)		$	(1,657,877	)
Loss per share of common stock:
Basic and diluted			$	(0.03	)		$	(0.04	)
	Weighted average number of common shares used in calculating net loss per share of common stock:
Basic and diluted				39,627,264				39,169,196

SNAP INTERACTIVE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
			Years Ended December 31,
			2015				2014
Cash flows from operating activities:
Net loss			$	(1,297,852	)		$	(1,657,877	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization				167,161				181,675
Lease obligation interest expense				-				3,473
Stock-based compensation expense				1,086,430				1,040,585
Loss on disposal of fixed assets				79,628				-
Amortization of debt issuance cost				139,406				3,958
Amortization of debt discount				932,219				-
Change in fair value of derivative liabilities				(1,640,000	)			(117,125	)
Changes in operating assets and liabilities:
	Restricted cash			-				490,315
	Credit card holdback receivable			482,906				(416,495	)
	Accounts receivable			14,581				164,242
	Security deposits			(85,554	)			(250,104	)
	Prepaid expenses and other current assets			(16,120	)			22,113
	Accounts payable, accrued expenses and other current liabilities			(703,802	)			567,579
	Deferred rent			88,718				(38,644	)
	Deferred subscription revenue			(446,213	)			125,304
	Deferred advertising revenue			(13,427	)			(286,573	)
	Net cash used in operating activities			(1,211,919	)			(167,574	)
Cash flows from investing activities:
Purchase of property and equipment				(77,283	)			(3,731	)
Proceeds from sale of fixed assets				6,000				-
Security deposits for property and equipment				56,248				-
Purchase of non-marketable equity securities				-				(100,000	)
Repayment (issuance) to employees of note receivable and accrued interest				(2,603	)			92,046
Net cash used in investing activities				(17,638	)			(11,685	)
Cash flows from financing activities:
Payments of capital lease obligations				(63,317	)			(9,708	)
Repayment of promissory notes				(400,000	)			-
Payment of financing costs				(314,249	)			-
Proceeds from issuance of convertible promissory note				3,000,000				400,000
Net cash provided by financing activities				2,222,434				390,292
Net increase in cash and cash equivalents				992,877				211,033
Balance of cash and cash equivalents at beginning of year				1,138,385				927,352
Balance of cash and cash equivalents at end of year			$	2,131,262			$	1,138,385
Supplemental disclosure of cash flow information:
Cash paid in interest			$	316,000			$	-
Cash paid in taxes			$	-			$	-
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			$	-
Warrants issued for debt issuance costs			$	-			$	4,750
Common stock issued under the Advisory Services Agreement as additional consideration for the Note			$	30,000			$	-
Equipment acquired under capital lease obligations			$	-			$	218,605

SNAP INTERACTIVE, INC
RECONCILIATION OF GAAP TO NON-GAAP RESULTS
(unaudited)
			Three Months Ended								For the Years Ended
			December 31,								December 31,
			2015				2014				2015				2014
Reconciliation of Subscription Revenue to Bookings
	Subscription revenue		$	2,571,374			$	3,239,666			$	11,568,273			$	12,769,012
	Change in deferred subscription revenue			(149,484	)			(149,014	)			(446,213	)			125,304
Bookings			$	2,421,890			$	3,090,652			$	11,122,060			$	12,894,316
			Three Months Ended December 31,								For the Years Ended December 31,
			2015				2014				2015				2014
Reconciliation of Net loss to Adjusted EBITDA:
	Net loss		$	(359,040	)		$	(247,553	)		$	(1,297,852	)		$	(1,657,877	)
	Interest expense, net			437,954				15,763				1,538,320				30,900
	Depreciation and amortization expense			35,578				51,534				167,161				181,675
	Change in fair value of derivative liabilities			(360,000	)			(70,275	)			(1,640,000	)			(117,125	)
	Loss on disposal of fixed assets			-				-				79,628				-
	Stock-based compensation expense			336,700				251,500				1,086,430				1,040,585
Adjusted EBITDA			$	91,189			$	969			$	(66,313	)		$	(521,842	)

					Months Ended
					November				December				January
					2015				2015				2016
Reconciliation of Subscription Revenue to Bookings
	Subscription revenue				$	844,268			$	866,165			$	865,896
	Change in deferred subscription revenue					(70,620	)			(43,639	)			(15,276	)
Bookings					$	773,648			$	822,526			$	850,620

Non-GAAP Financial Measures

The Company has provided in this release certain non-GAAP financial information, including bookings and Adjusted EBITDA, to supplement the 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. 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 and micro-transactions over the length of the subscription term or a two-month period, respectively;
• Adjusted EBITDA does not (i) reflect cash capital expenditures for assets underlying depreciation and amortization expense that may need to be replaced or for new capital expenditures; (ii) 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.