Form 8-K SITO MOBILE, LTD. For: Nov 14

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

The Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): November 14, 2016

 

SITO MOBILE, LTD.

(Exact name of registrant as specified in its charter)

 

Delaware		001-37535		13-4122844
(State or other jurisdiction of Incorporation)		(Commission File Number)		(I.R.S. Employer Identification No.)

 

The Newport Corporate Center, 100 Town Square Place, Suite 204, Jersey City, NJ 07301

(Address of principal executive offices) (Zip Code)

 

(201) 275-0555

(Registrant’s telephone number, including area code)

 

n/a

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

Item 2.02 Results of Operations and Financial Condition.

 

On November 14, 2016, SITO Mobile, Ltd. (the “Company”) issued a press release announcing the financial results for its third fiscal quarter ended September 30, 2016. A copy of the Company’s press release is attached as Exhibit 99.1 to this current report on Form 8-K.

 

The information disclosed under this Item 2.02, including Exhibit 99.1 hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended, except as expressly set forth in such filing.

 

Item 9.01 Financial Statements and Exhibits.

 

(d) Exhibits

 

99.1	Press Release dated November 14, 2016

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date:   November 14, 2016

 

	SITO MOBILE, LTD.
	By:	/s/ Jerry Hug
	Name:	Jerry Hug
	Title:	Chief Executive Officer

 

 

 3

 

Exhibit 99.1

 

 

SITO Mobile Reports Third Quarter 2016 Financial Results

 

Q3 Revenue $10.3 Million, Up 129% Year-Over-Year; Led by Media Placement Revenue of $8.4 Million, Up 179% Year-Over-Year

 

JERSEY CITY, N.J., November 14, 2016 (GLOBE NEWSWIRE) -- SITO Mobile Ltd. (NASDAQ: SITO), a leading mobile engagement platform, today announced its results for the third quarter ended September 30, 2016.

 

Third Quarter 2016 Business Highlights

 

●

TOTAL REVENUE: was $10.3 million, an increase of 129% year-over-year.

 

●

MEDIA PLACEMENT REVENUE: (SITO Mobile’s programmatic advertising revenue) was $8.4 million, an increase of 179% year-over-year.

 

●

GROSS PROFIT: was $5.7 million (55% gross margin), up from $2.4 million (52% gross margin) in Q3 2015. (Please refer to the supplemental schedule below for calculation of Gross Profit and Gross Margin).

 

●

ADJUSTED EBITDA: was $1.8 million, up from a loss of $(0.7) million in Q3 of 2015. (See attached schedule for reconciliation of Adjusted EBITDA to GAAP)

 

●

NET INCOME: was $501 thousand which equates to $0.03 (diluted) earnings per share on total (diluted) shares outstanding of 19.5 million.

 

“Q3 was another successful and productive quarter for SITO Mobile,” said Jerry Hug, SITO Mobile’s CEO. “Our media placement business once again delivered stellar year-over-year growth and we made good progress on our key priorities. We added new customers and increased total campaigns while also adding more partners to our data ecosystem. Our RFP pipeline is growing and our pool of opportunities is increasing as current and prospective clients begin to recognize, appreciate and embrace the value of SITO Mobile’s location-based marketing platform.”

 

Hug Continued, “In September we raised $10.3 million in net proceeds through an equity offering. This successful offering was enabled by the strength of our strategic positioning in the mobile adtech marketplace coupled with our strong revenue growth and profitability. As a result of this offering, we added several new institutional shareholders and increased market awareness and liquidity. The proceeds from this offering strengthen our balance sheet, and provide financial flexibility as we execute our plan.”

Conference call information:

Date: Monday, November 14, 2016
Time: 4:30 P.M. Eastern Time (ET)
Dial in Number for U.S. & Canadian Callers: 877-407-8293
Dial in Number for International Callers (Outside U.S. & Canada): 201-689-8349

Participating on the call will be SITO Mobile's Chief Executive Officer Jerry Hug and Chief Financial Officer Kurt Streams. To join the live conference call, please dial into the above referenced telephone numbers five to ten minutes prior to the scheduled conference call time.

A replay will be available for 2 weeks starting on November 14, 2016 at approximately 8:00 P.M. ET. To access the replay, please dial 877-660-6853 in the U.S. and 201-612-7415 for international callers. The conference ID# is 13649156.

About SITO Mobile Ltd.

 

SITO Mobile provides a mobile engagement platform that enables brands to increase awareness, loyalty, and ultimately sales. For more information, visit www.sitomobile.com.

 

Forward-Looking Statements

 

This press release contains "forward-looking statements" within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, sales growth, our reliance on brand owners and wireless carriers, the possible need for additional capital as well as other risks identified in our filings with the SEC. Any forward-looking statement made by us in this press release is based only on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.

 

[FINANCIAL TABLES TO FOLLOW]

 

 

SITO Mobile, Ltd.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 

		For the Three Months Ended								For the Nine Months Ended
		September 30,								September 30,
		2016				2015				2016				2015
Revenue
Media placement		$	8,424,099			$	3,023,222			$	21,583,479			$	6,804,752
Wireless applications			1,790,135				1,346,642				4,735,213				4,738,271
Licensing and royalties			127,196				144,469				388,561				419,008
Total revenue			10,341,430				4,514,333				26,707,253				11,962,031
Costs and Expenses
Cost of revenue			4,648,156				2,163,333				12,135,274				5,614,836
Sales and marketing			2,798,283				1,198,469				7,561,188				2,951,750
General and administrative			1,792,440				2,253,446				5,143,764				4,892,354
Loss on impairment of long-lived asset			-				831,000				-				831,000
Depreciation and amortization			164,269				208,891				489,073				354,333
Total costs and expenses			9,403,148				6,655,139				25,329,299				14,644,273
Income (loss) from operations			938,282				(2,140,806	)			1,377,954				(2,682,242	)
Other Income (Expense)
Interest expense			(436,782	)			(475,265	)			(1,321,895	)			(1,309,700	)
Net income (loss) before income taxes			501,500				(2,616,071	)			56,059				(3,991,942	)
Provision for income taxes			-				-				-				-
Net income (loss)		$	501,500			$	(2,616,071	)		$	56,059			$	(3,991,942	)
Basic earnings (loss) per share		$	0.03			$	(0.16	)		$	0.00			$	(0.25	)
Basic weighted average shares outstanding			17,433,011				16,422,988				17,714,960				15,735,226
Diluted earnings (loss) per share		$	0.03			$	(0.16	)		$	0.00			$	(0.25	)
Diluted weighted average shares outstanding			19,573,308				16,422,988				19,762,037				15,735,226

  

Non-GAAP Financial Measures

 

This press release uses Adjusted EBITDA, a non-GAAP financial measure. Adjusted EBITDA should not be considered a replacement for, and should be read together with, the most comparable GAAP financial measure, which is Operating Profit (Loss). A reconciliation of Adjusted EBITDA to Operating Profit (Loss) is included herein.

 

To supplement our financial results and guidance presented in accordance with U.S. generally accepted accounting principles (GAAP), the Company uses certain non-GAAP financial measures in this press release, including EBITDA. The Company believes that non-GAAP financial measures are helpful in understanding its past financial performance and potential future results, particularly in light of the effect of various acquisition transactions effected by the Company. Non-GAAP financial measures are not meant to be considered in isolation or as a substitute for or superior to comparable GAAP measures and should be read in conjunction with the consolidated financial statements prepared in accordance with GAAP. 

 

 

Management excludes stock based compensation expense because they believe that the non-GAAP financial measures excluding this item provide meaningful supplemental information regarding operational performance. In particular, because of varying available valuation methodologies, subjective assumptions and the variety of award types that companies can use under FASB ASC 718, we believe that providing non-GAAP financial measures that exclude this expense allows investors to make more meaningful comparisons between our operating results and those of other companies. Accordingly, management believes that excluding this expense provides investors and management with greater visibility to the underlying performance of our business operations, facilitates comparison of our results with other periods, and may also facilitate comparison with the results of other companies in our industry. Management uses Adjusted EBITDA in managing and analyzing its business and financial condition. Management believes that the presentation of non-GAAP financial measures provides investors greater transparency into ongoing results of operations allowing investors to better compare the Company's results from period to period.

 

		For the Three Months Ended September 30								For the Nine Months Ended September 30
		2016				2015				2016				2015
Net income (loss)			501,500				(2,616,071	)			56,059				(3,991,942	)
Adjustments to reconcile net income (loss) to EBITDA:
Depreciation and amortization expense included in costs and expenses:
Amortization included in cost of revenue			292,955				226,593				820,744				553,005
Depreciation and other amortization			164,269				208,891				489,073				354,333
Total depreciation and amortization expense			457,224				435,484				1,309,817				907,338
Interest expense			436,782				475,265				1,321,895				1,309,700
Loss on impairment of long-lived asset			-				831,000				-				831,000
Provision for income taxes			-				-				-				-
EBITDA			1,395,506				(874,322	)			2,687,771				(943,904	)
Adjustments to reconcile EBITDA:
Stock based compensation expense included in costs and expenses:
Sales and marketing			70,728				30,366				220,090				66,521
General and administrative			304,961				174,790				715,033				319,540
Total stock based compensation expense			375,689				205,156				935,123				386,061
Adjusted EBITDA			1,771,195				(669,166	)			3,622,894				(557,843	)

 

 

SITO Mobile, Ltd.

CONDENSED CONSOLIDATED BALANCE SHEETS

 

		September 30,				December 31,
		2016				2015
		(Unaudited)
Assets
Current assets
Cash and cash equivalents		$	9,836,888			$	2,615,184
Accounts receivable, net			9,813,623				6,167,816
Other prepaid expenses			287,707				123,692
Total current assets			19,938,218				8,906,692
Property and equipment, net			458,348				585,356
Other assets
Capitalized software development costs, net			1,858,921				1,600,813
Intangible assets:
Patents			514,327				445,473
Patent applications cost			811,248				897,087
Other intangible assets, net			1,506,757				1,714,477
Goodwill			6,444,225				6,444,225
Deferred loan costs, net			47,023				78,116
Other assets including security deposits			108,938				84,829
Total other assets			11,291,439				11,265,020
Total assets		$	31,688,005			$	20,757,068
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable		$	4,412,043			$	4,828,600
Accrued expenses			1,953,505				1,277,896
Deferred revenue			431,780				532,909
Current obligations under capital lease			3,402				11,699
Note payable, net - current portion			2,475,304				3,984,219
Total current liabilities			9,276,034				10,635,323
Long-term liabilities
Obligations under capital lease			3,622				6,201
Note payable, net			4,644,983				4,934,966
Total long-term liabilities			4,648,605				4,941,167
Total liabilities			13,924,639				15,576,490
Stockholders' Equity
Preferred stock, $.0001 par value, 5,000,000 shares authorized; none outstanding			-				-
Common stock, $.001 par value; 100,000,000 shares authorized, 20,587,770 shares issued and outstanding as of September 30, 2016 and $.001 par value; 300,000,000 shares authorized, 17,157,520 shares issued and outstanding as of December 31, 2015			20,587				17,156
Additional paid-in capital			157,061,545				144,538,247
Accumulated deficit			(139,318,766	)			(139,374,825	)
Total stockholders' equity			17,763,366				5,180,578
Total liabilities and stockholders' equity		$	31,688,005			$	20,757,068

 

 

SITO Mobile, Ltd.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

  

		For the Three Months Ended
		September 30,
		2016				2015
Cash Flows from Operating Activities
Net income (loss)		$	501,500			$	(2,616,071	)
Adjustments to reconcile net income (loss) to net cash (used in) operating activities:
Depreciation expense			43,774				47,117
Amortization expense - software development costs			292,956				230,689
Amortization expense - patents			52,744				49,001
Amortization expense - discount of debt			200,281				165,681
Amortization expense - deferred costs			9,497				14,478
Amortization expense - intangible assets			67,750				112,773
Provision for bad debt			(10,673	)			240,000
Loss on disposition of assets			237				-
Loss on impairment of long-lived asset			-				831,000
Stock based compensation			375,689				336,835
Changes in operating assets and liabilities:
(Increase) in accounts receivable, net			(983,224	)			(298,682	)
(Increase) in prepaid expenses			(196,655	)			(98,008	)
Decrease (increase) in other assets			-				50,000
(Decrease) increase in accounts payable			(2,425,512	)			545,993
Increase in accrued expenses			158,268				72,511
(Decrease) in deferred revenue			(132,195	)			(280,214	)
Increase in accrued interest			60,567				87,116
Net cash provided by (used in) operating activities			(1,984,996	)			(509,781	)
Cash Flows from Investing Activities
Patents and patent applications costs			(42,803	)			(119,869	)
Purchase of property and equipment			(11,050	)			(140,922	)
Proceeds from sale of property and equipment			700				-
Capitalized software development costs			(305,546	)			(541,592	)
Purchase of intangible assets			-				(1,300,000	)
Net cash (used in) investing activities		$	(359,399	)		$	(2,102,383	)
Cash Flows from Financing Activities
Proceeds from issuance of common stock		$	12,203,605			$	1,909,000
Stock issuance costs			(1,180,000	)			(75,000	)
Restructuring of debt			-				-
Principal reduction on obligation under capital lease			(807	)			(4,946	)
Principal reduction on repayment of debt			(525,000	)			-
Net cash provided by financing activities			10,497,798				1,829,054
Net decrease in cash and cash equivalents			8,154,103				(783,110	)
Cash and cash equivalents - beginning of period			1,682,785				2,787,250
Cash and cash equivalents - ending of period		$	9,836,888			$	2,004,140
Supplemental Information:
Interest expense paid		$	232,238			$	208,161
Income taxes paid		$	16,900			$	4,600

 

 

SITO Mobile, Ltd.

Supplemental Schedule

Amounts in thousands except percentages

 

		September 30, 2015								December 31, 2015				Fiscal Year 2015								March 31, 2016				June 30, 2016				September 30, 2016
			Reported				Adjusted				Reported				Reported				Adjusted				Reported				Reported				Reported
Revenue
Media placement			3,023				3,023				5,345				12,150				12,150				4,862				8,298				8,424
Wireless Applications			1,347				1,347				1,622				6,360				6,360				1,491				1,454				1,790
Licensing and royalties			144				144				245				664				664				135				126				127
Total Revenue			4,514				4,514				7,212				19,174				19,174				6,488				9,878				10,341
Cost of Revenue			1,513				2,164				3,449				7,987				9,064				3,057				4,431				4,648
Gross Profit			3,001				2,350				3,763				11,187				10,110				3,431				5,448				5,693
Gross Margin			66	%			52	%			52	%			58	%			53	%			53	%			55	%			55	%
Operating Expenses
General and administrative			2,241				2,254				1,584				6,439				6,476				1,897				1,454				1,792
Sales & marketing			1,849				1,198				1,877				5,906				4,829				2,100				2,663				2,798
Research and development			13				0				0				37				0				0				0				0
Loss on impairment of long-lived asset			831				831				0				831				831				0				0				0
Depreciation & amortization			209				209				219				573				573				164				160				164
Total Operating Expenses			5,143				4,492				3,680				13,786				12,709				4,161				4,276				4,755
Income (Loss) from Operations			(2,142	)			(2,142	)			83				(2,599	)			(2,599	)			(730	)			1,171				938

 

Note: Certain reclassifications have been made to conform the fiscal 2015 quarterly amounts to the fiscal 2016 classifications for comparative purposes. The Company is reporting a vendor cost in cost or revenue that had been previously reported in sales and marketing expense and is reporting research and development cost in general and administrative expense. The changes are only expense reclassifications and do not affect revenue, total costs and revenues, income (loss) from operations, net income or any balance sheet accounts. Amounts affected by the reclassification are shown in bold in the table above.

 

Contacts:

Investor Relations:

Joseph Wilkinson

SVP Investor Relations

[email protected]

 

Media Relations:

Alexandra Levy
Silicon Alley Media
[email protected]

 

RELATED LINKS
http://www.sitomobile.com

 

 

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