Jerrick Media Holdings, Inc. Reports Fiscal Year 2018 Financial Results

NEW YORK, April 2, 2019 /PRNewswire/ -- Jerrick Media Holdings, Inc., (OTCQB: JMDA) (the "Company" or "Jerrick"), a technology company and the creator of Vocal, today announced financial results for its full year ended December 31, 2018. This year was marked by the Company's conversion of substantially all preferred and convertible debt, that was previously outstanding prior to year-end, into equity, as well as the close on $6.2 million of new capital in four separate financings. In addition, continued development of the Company's core technology platform and the upcoming integration of Vocal's creator subscription model have positioned Jerrick to begin generating revenues in the third quarter from a suite of premium tools for creators and brands.

"During 2018, we removed a number of the financial hindrances Jerrick was experiencing, most notably through deleveraging our balance sheet, making further product enhancements and strengthening our management and advisory team, including the appointment of Jerrick's new president, Vocal co-founder and Head of Product Justin Maury," commented CEO Jeremy Frommer.

Key 2018 Business and Financial Highlights:

• Total liabilities decreased by 64% to $2,699,529.
• Converted 100% of all previously outstanding convertible debt and preferred stock ($13.9 million) into a total of 72.0 million shares of common shares during Q4 2018. As inducement to convert their debt and preferred stock, investors were issued a total of 26.0 million warrants with an exercise price of $.30. Additional convertible notes in the aggregate principal amount of $1,092,500 were issued through the February 2019 offering, as disclosed in the 8-K filed April 2, 2019.
• Reduced account payables by 15% to $1,246,207, decreased short-term notes by 38% to approximately $1.27 million (96% of which is held by a related party), repaid all credit lines, and eliminated 97% of its long-term debt in Q4 2018. This decrease was offset by a $122,886 gain on settlement of vendor liabilities.
• Registered a total of 127,545,482 total securities (shares, warrants, and shares underlying convertible securities).
• December 2018 saw Jerrick have two registration statements for separate offerings declared effective by the SEC.

Key 2018 Operational Highlights:

• Streamlined Vocal creator onboarding experience.
• Increased platform security, privacy policies, and instituted GDPR compliant protocols.
• Enhanced Vocal's underlying content publishing capabilities, platform efficiency and Editor features for in-house moderators, including enhanced content preview and embed functionality.
• Launched in-house agency services, Vocal for Brands, which generates revenues via branded editorial campaigns. Vocal for Brands works with clients to create custom, branded stories that are published on the Vocal platform, and promoted through organic and paid media promotion to Vocal's audience of creators and readers.
• Improved monetization capabilities for creators.
• Improved KPI and reporting capabilities for brands.
• Completed three additional platform integrations: Stripe Express, Unsplash and Flipboard.
• Stripe Express: In the fourth quarter, Vocal integrated Stripe Express into its Wallet feature, allowing US-based creators to easily create and connect their Stripe account to Vocal.
• Unsplash: Unsplash's integration is utilized by companies such as Adobe, Squarespace and Google. The 2018 integration of the world's largest collection of royalty-free, high quality photos into the Vocal platform allows creators, specifically on mobile devices, to more efficiently create quality, rich-media content.
• Flipboard: in late 2018, Vocal was approved as a Flipboard publisher, allowing (i) creators' stories to reach Flipboard's 100 million monthly active users and (ii) enabling easier discoverability and potential further monetization for the creator.
• Expanded IP portfolio including domains, trademarks, and additions to Jerrick's content library.
• Relocated corporate headquarters to Fort Lee, New Jersey, into a larger and more cost-effective facility.
• Engaged Rosenberg Rich Baker Berman & Co as the Company's new independent auditor.
• Jerrick successfully concluded beta-testing six revenue streams throughout fiscal year 2018 including:
• Subscription-based features and tools for both creators and brands;
• Transactional fees between creators and their audience;
• Affiliate Sales & Marketing, internal and on behalf of clients;
• Branded Content & Native Advertising campaigns;
• Performance Consulting & Digital Development Projects; and
• E-commerce & Direct-to-Consumer Sales.

Key Operational & Financial Highlights Subsequent to Year-End 2018:

• Completed the filing of all prior year corporate income taxes with no material adjustments.
• Offered the Company's warrant holders an opportunity to exchange their $0.20 warrants (representing approximately 56% of the company's total outstanding warrants) for the Company's common stock. The offer expires on April 9, 2019, per the extension announced on April 2, 2019. As of this date, the Company's investors have elected to exchange 67% of the eligible warrants, exchanging 42.0 million warrants for 14.0 million shares of Jerrick common stock.
• Justin Maury, previously Head of Product, appointed to President of the Company.
• Vocal surpassed 400,000 registered content creators.
• Introduced design and development plan for new technology product, Maven.
• Release of Jerrick's newly branded corporate site: https://jerrick.media/
• On April 2, 2019, the Company announced the second close of its February 2019 offering, bringing the total proceeds from this raise to $1,092,500.

"We created Vocal to help creators of all shapes and sizes get discovered and fund their creativity. Over the past two years, we have partnered with over 400,000 writers, musicians, filmmakers, podcasters and more to build a platform that provides the tools and communities to help those creators thrive. We are excited to announce the next-generation Vocal. Starting in 2019, we expect to release a series of new premium features that we expect will not only provide value to our creators, but also should strengthen and scale the Vocal ecosystem," explained Jerrick President Justin Maury.

For the year 2018, Jerrick reported net revenues of $81,000 compared to net revenue of $96,000 for the full year 2017. Management anticipates Jerrick will exit 2019 very close to breakeven, due to the launch and growth of the revenue lines described above and a continued effort to reduce operating costs. The Company reported a net loss attributable to common shareholders of $(14.2) million or $(0.21) per basic share for the full year 2018, which included a non-cash inducement expense of $2.0 million related to its preferred stock conversion into one class of common shares accomplished during the second half of 2018. This compares to a net loss of $(9.0) million or $(0.23) per basic share for the full year 2017. Jerrick reported a loss from operations of $(5.7) million in 2018 versus a loss from operations of $(5.6) million in the prior year. Operating expenses in 2018 totaled $5.8 million, a $109,000 increase over the prior year, including a $90,000 increase in outside consulting fees, which was partially offset by a decrease in compensation of $364,000. Jerrick anticipates its operational expenses to be less than $425,000 per month on a go-forward basis. Technology development is expected to represent greater than 40% of monthly expenses.

The Company incurred other expenses in 2018 of $6.3 million, which included interest expense of $923,000, debt discount and issuance costs of $2.1 million and a loss on extinguishment of debt of $3.5 million. This compares to 2017's other expenses totaling $3.2 million, inclusive of interest expense of $477,000, debt discount of $1.8 million and a loss on extinguishment of debt of $907,000. Going forward, the Company anticipates these expenses to represent a minimal percentage of the Company's overall expenses.

At December 31, 2018, the Company significantly reduced its total liabilities by approximately 64% through the successful conversion of convertible debt and repayment of payables, short term debt and all credit lines. During 2018, Jerrick reported approximately a 30% decrease in current liabilities to $2.6 million of which, short term debt accounted for approximately $1.27 million of which 96% is held by a related party and advisor to the Company. During 2018, the Company raised approximately $6.2 million, 55% of which was comprised of an equity raise that closed in October and 35% through the sale of a 2-year secured convertible promissory notes early in the year that were fully converted to common stock in September and October 2018.

On December 31, 2018, Jerrick had approximately 129.5 million shares of Common Stock outstanding, compared to 39.5 million shares outstanding at year-end 2017. The substantial share increase is fully attributed to the August conversion of the Company's convertible debt and preferred stock into shares of common stock resulting in 69.5 million additional outstanding shares as well as the simultaneous $3.4 million up-round, above market equity private placement at $0.25 per share with 100% warrant coverage exercisable at $0.30.

During first quarter 2018, Jerrick elected to be an early adopter of a recent accounting provision ASC606 that permits companies to retrospectively revise their accounting around complex financial instruments, details of which are available in the Company's filings with the SEC. The result of this adoption for Jerrick was the elimination of certain derivative liabilities.

On a fully diluted basis at year-end 2018, Jerrick has stock options (17.6 million common shares equivalent with an average exercise price of $0.42) and warrants (110.8 million common shares equivalent with an average exercise price of $0.27) that collectively would result in the issuance of an additional 128.4 million shares of Common Stock. Subsequent to year-end 2018, during March 2019, the Company offered its holders of its $0.20 warrants totaling 61.8 million share- equivalent, an opportunity to exchange their warrants into the Company's common stock. This offer expires on April 9, 2019. As of April 2, 2019, investors elected to proceed to exchange 41.7 million warrants for 13.9 million common shares. As of December 31, 2018, the Company had federal and state tax loss carry forwards of approximately $14.8 million, which expire through the fiscal year ending December 31, 2035.

On April 2nd, 2019, the Company announced the second close of its February 2019 offering, bringing the total proceeds from this raise to $1,092,500.

More details related to these financial results can be found on sec.gov in the Company's Annual Report on Form 10-K filed on April 01, 2019 with the SEC, as well as posted on the Company's investor relations website.