Propel Media Announces First Quarter 2016 Results

- First quarter revenue of $15.3 million

- First quarter operating income of $2.2 million

- First quarter adjusted EBITDA of $3.2 million

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May 13, 2016, 05:17 ET

IRVINE, Calif., May 13, 2016 /PRNewswire/ -- Propel Media, Inc. (OTCBB: PROM), a performance focused digital media company bringing together online video, display and mobile advertising technology and solutions to advertisers, app developers and publishers, today announced 2016 first quarter results. The Company achieved revenue of $15.3 million and adjusted EBITDA of $3.2 million in its 2016 first quarter.

First Quarter Business Highlights:

5^th consecutive adjusted EBITDA positive quarter since becoming a publicly-traded company.
Implementation of strategic long-term cost reduction and operational restructuring actions.
Reorganization of company's management team; Marv Tseu named Chief Executive Officer.

On April 26, 2016, the Company announced an operational restructuring and cost reduction initiative. This action was part of a strategic plan designed to improve overall cost efficiency and profitability by increasing the focus of the business on areas of strength to drive growth and revenue. As part of this restructuring effort, Marv Tseu was named Chief Executive Officer, replacing Bob Regular.

"Our performance remains strong and we are extremely optimistic about the future," said Marv Tseu, Chief Executive Officer of Propel Media. "Our restructuring efforts provide us with an opportunity to get back to the basic strategy and business model that has been so successful for us in the past. We are confident these changes will yield positive results, and we remain focused on growing the business in 2016 and beyond." Mr. Tseu added, "Bob Regular was a tremendous asset for the business and we wish him well in his future endeavors."

Further details concerning the results of operations for the first quarter ended March 31, 2016 is set forth in the Company's Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 13, 2016.

About Propel Media

Propel Media is a performance focused digital media company bringing together online video, display and mobile advertising technology and solutions to advertisers, app developers and publishers. Headquartered in Irvine, California, our mission is to provide exceptional performance for our partners.

For more information visit: www.propelmedia.com

Forward-Looking Statements:

This press release includes certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including those regarding Propel Media's capital structure, ability to execute its operating plan, anticipated financial flexibility and other statements that are not statements of historical fact, are forward-looking statements within the meaning of federal securities laws. These statements may be identified, without limitation, by the use of forward-looking terminology such as "anticipates", "expects," "will" or comparable terms or the negative thereof. Such statements are based on management's current estimates, assumptions that management believes to be reasonable, and currently available competitive, financial, and economic data as of the date hereof. Forward-looking statements are inherently uncertain and subject to a variety of events, factors and conditions, many of which are beyond the control of Propel Media and not all of which are known to Propel Media, including, without limitation those risk factors described from time to time in Propel Media's reports filed with the SEC. Among the factors that could cause actual results to differ materially are Propel Media's: loss of key advertising customers; inability to acquire new advertising customers; inability to protect its intellectual property; inability to comply with the covenants in its credit facility; inability to obtain necessary financing or enter into equity arrangements with existing or new institutional shareholders; inability to execute its acquisition strategy; inability to effectively manage its growth; failure to effectively integrate the operations of acquired businesses; competition; loss of key personnel; increases in costs of operations; continued compliance with government regulations; and general economic conditions. Further, investors should keep in mind that Propel Media's financial results in any particular period may not be indicative of future results. Propel Media is under no obligation to, and expressly disclaims any obligation to, update or alter its forward-looking statements, whether as a result of new information, future events, changes in assumptions or otherwise, except as required by law.

Use of Non-GAAP Financial Information

To supplement its consolidated financial statements, which are prepared and presented in accordance with U.S. generally accepted accounting principles ("GAAP"), Propel Media reports Adjusted EBITDA, which is a non-GAAP financial measure. Adjusted EBITDA is determined by taking net income (loss) and adding interest, taxes, depreciation, amortization, impairment charges, stock-based compensation, bank fees, losses from extraordinary, unusual or nonrecurring items, noncash items, merger and other one-time expenses and severance. We believe that this non-GAAP measure, viewed in addition to and not in lieu of our reported GAAP results, provides useful information to investors by providing a more focused measure of operating results, enhances the overall understanding of past financial performance and future prospects, and allows for greater transparency with respect to key metrics used by management in its financial and operational decision making. The non-GAAP measure presented herein may not be comparable to similarly titled measures presented by other companies. Adjusted EBITDA has been reconciled to the nearest GAAP measure in the table following the financial statements attached to this press release.

Propel Media, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets

	As of
	March 31,	December 31,
	2016	2015
Assets	(unaudited)
Current assets
Cash	$ 1,095,000	$ 1,629,000
Accounts receivable, net	6,692,000	7,559,000
Prepaid expenses	329,000	229,000
Prepaid income taxes	598,000	385,000
Total current assets	8,714,000	9,802,000

Property and equipment, net	2,201,000	2,525,000
Restricted cash	95,000	94,000
Intangible assets	20,000	188,000
Goodwill	2,869,000	2,869,000
Deferred tax assets, net	34,512,000	34,074,000
Other assets	56,000	56,000
Total assets	$ 48,467,000	$ 49,608,000

Liabilities and Stockholders' Deficit
Current liabilities
Accounts payable	$ 2,668,000	$ 4,288,000
Accrued expenses	3,205,000	2,485,000
Advertiser deposits	1,916,000	2,146,000
Current portion of long-term debt	6,020,000	5,997,000
Revolving credit facility	2,615,000	1,762,000
Total current liabilities	16,424,000	16,678,000

Long-term debt, less current portion, net	68,161,000	68,858,000
Obligations to transferors	14,125,000	13,923,000
Other non-current liabilities	379,000	425,000
Note payable stockholder, non-current, net	109,000	106,000
Total liabilities	99,198,000	99,990,000

Stockholders' Deficit
Preferred Stock, $0.0001 par value, authorized 1,000,000 shares,	-	-
no shares issued or outstanding
Common Stock, $0.0001 par value, authorized 500,000,000 shares,
issued and outstanding 250,010,162
at March 31, 2016 and December 31, 2015	25,000	25,000
Additional paid-in capital	1,431,000	1,117,000
Accumulated deficit	(52,187,000)	(51,524,000)
Total stockholders' deficit	(50,731,000)	(50,382,000)
Total liabilities and stockholders' deficit	$ 48,467,000	$ 49,608,000

Propel Media, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(unaudited)

	For the Three Months Ended March 31,
	2016	2015

Revenues	$ 15,323,000	$ 21,491,000
Cost of revenues	6,792,000	10,172,000
Gross profit	8,531,000	11,319,000

Operating expenses:
Salaries, commissions, benefits and related expenses	3,737,000	3,669,000
Technology, development and maintenance	1,106,000	889,000
Marketing and promotional	18,000	25,000
General and administrative	389,000	959,000
Professional services	324,000	737,000
Depreciation and amortization	621,000	385,000
Impairment of software and video library	183,000	-

Operating expenses	6,378,000	6,664,000

Operating income	2,153,000	4,655,000

Interest expense, net	(3,236,000)	(2,407,000)

(Loss) income before income tax benefit	(1,083,000)	2,248,000
Income tax benefit	420,000	31,324,000
Net (loss) income	$ (663,000)	$ 33,572,000

Net (loss) income per common share, basic and diluted	$ (0.00)	$ 0.15

Weighted average number of common shares outstanding, basic and diluted	250,010,162	221,244,890

Pro-forma computation related to conversion to a C corporation upon
completion of the reverse merger with Kitara Media Corp.:
Historical pre-tax net income before income taxes	$ -	$ 2,248,000
Pro-forma income tax expense	-	897,000
Pro-forma net income	$ -	$ 1,351,000

Unaudited pro-forma net income per common share - basic and diluted	$ -	$ 0.01

Weighted average number of shares outstanding - basic and diluted	250,010,162	221,244,890

Propel Media, Inc. and Subsidiaries
Reconciliation of Non-GAAP Information
(Unaudtied)

	For the Three Months Ended March 31,
	2016	2015
Net (loss) income	$ (663,000)	$ 33,572,000
Depreciation and amortization	621,000	385,000
Impairment charges	183,000	-
Interest expense	3,236,000	2,407,000
Stock-based compensation expense	314,000	139,000
Taxes	(420,000)	(31,324,000)
Bank fees (credits)	(56,000)	409,000
Merger and other one-time expenses	13,000	803,000
Severance	-	454,000
Adjusted EBITDA (a non-GAAP measure)	$ 3,228,000	$ 6,845,000