SearchCore Reports Full Year 2011 Results

Full Year Revenues Increased 256%; Income from Continuing Operations Increased 172%

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Mar 22, 2012, 08:00 ET

NEWPORT BEACH, Calif., March 22, 2012 /PRNewswire/ -- SearchCore, Inc. (OTCBB: SRER), (OTCQX: SRER), a technology-based Internet marketing services company that connects consumers with brands, products and services, today announced its consolidated financial results for the fiscal year ended December 31, 2011.

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Fiscal Year 2011 Highlights

Total revenues were $11.9 million, an increase of 256% over fiscal year 2010.
EBITDA was $1.8 million, an increase of 216% over fiscal year 2010.
Operating income was $1.5 million, an increase of 218% over the prior year.
Income from continuing operations was $1.0 million, an increase of 172% over the prior year.
Fully diluted income per share from continuing operations was $0.01 for both fiscal years.

Management Commentary

"We had an exceptionally strong year in 2011," said Jim Pakulis, CEO of SearchCore, Inc. "Revenues, EBITDA, and operating income all improved significantly. We generated strong cash flow from operations and we closed the year with a cash balance in excess of $1.5 million. We also made the decision to discontinue operating an unprofitable business segment. I believe SearchCore is on very solid ground for another strong year in 2012."

"I am proud to report that we exceeded both our revenue and profit expectation for 2011, which is a credit to the exceptional performance of our subsidiary, WeedMaps Media," said Doug Francis, President of SearchCore, Inc. "Throughout 2011, we carefully allocated our talent and capital resources to building out our technology base within WeedMaps. As a result, we have created a robust technology platform that enables us to continuously enhance our client service and capabilities offering. Equally important, our technology is designed to scale. Looking to the future, we anticipate leveraging our technology platform to create similarly successful finder sites in verticals beyond the cannabis industry."

Fiscal Year 2011 Financial Results

SearchCore's revenues for the year ended December 31, 2011 totaled $11.9 million, a year-over-year increase of 256% compared with $3.4 million for the year ended December 31, 2010. The increase in revenues was primarily due to an increase in the number of customers, the number of 'listing packages' offered to customers and the fees charged for the packages.

Total operating expenses were $10.5 million for 2011, or 88% of revenue, as compared with $2.9 million, or 86% of revenue for 2010. The increase in operating expenses was primarily due to higher investments in technology and expenses in support of business expansion efforts. In addition, non-cash amortization and depreciation expense increased by $0.4 million in 2011 due to recent acquisitions and expenses associated with moving into new corporate offices.

EBITDA for 2011 increased 216% to $1.8 million from $0.6 million for 2010. Operating income for 2011 increased 218% to $1.5 million, as compared with $0.5 million for 2010.

Income from continuing operations increased 172% to $1.0 million, or $0.01 per fully diluted share, for the year ending December 31, 2011, based on 83.1 million weighted average shares outstanding. This compares with income from continuing operations of $0.4 million, or $0.01 per fully diluted share, for the year ended December 31, 2010, based on 28.9 million weighted average shares outstanding.

Net loss was $3.0 million for the year ended December 31, 2011. This was primarily due to a $4.1 million loss related to the Company's decision to exit its medical clinic management business, General Health Solutions, Inc.

Balance Sheet Overview

At December 31, 2011, SearchCore had cash and equivalents of $1.5 million and total debt of $7.1 million as compared with $1.4 million in cash and equivalents and $3.6 million in total debt at December 31, 2010.

About SearchCore, Inc.

SearchCore, Inc., formerly General Cannabis, Inc., is a technology-based Internet marketing services company that offers customers an integrated suite of services including media, technology, marketing and information. Founded in 2010, SearchCore is headquartered in Newport Beach, California. The Company's common stock trades on the OTC market's highest tier, OTCQX, under the ticker symbol "SRER." www.SearchCore.com

Safe Harbor Notice

Certain statements contained herein are "forward-looking statements" (as defined in the Private Securities Litigation Reform Act of 1995). SearchCore, Inc. cautions that statements made in this news release constitute forward-looking statements and makes no guarantee of future performance. Forward-looking statements are based on estimates and opinions of management at the time statements are made. These statements may address issues that involve significant risks, uncertainties, estimates and assumptions made by management. Actual results could differ materially from current projections or implied results. SearchCore, Inc. undertakes no obligation to revise these statements following the date of this news release.

- financial tables to follow -

SEARCHCORE, INC.

Consolidated Statements of Operations (Audited)

	Years Ended
	December 31,		December 31,
	2011		2010


REVENUE
Sales	$	11,928,932	$	3,355,878

Total revenue		11,928,932		3,355,878

OPERATING EXPENSES
Cost of sales		793,789		365,702
Selling, general and administrative expenses		9,684,963		2,533,659

Total operating expenses		10,478,752		2,899,361

Operating Income		1,450,180		456,517

Other Income (Expense)
Interest income		213		66
Interest expense		(13,241)		—

Total other income (expense)		(13,028)		66


INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES		1,437,152		456,583

Provision for Income Taxes		416,130		80,914
INCOME FROM CONTINUING OPERATIONS		1,021,022		375,669

Loss from discontinued operations, net of $133,500 and $18,100 tax benefit for the years ended December 31, 2011 and 2010, respectively		(4,060,367)		(25,174)

NET (LOSS) INCOME	$	(3,039,345)	$	350,495

Income (loss) per share, Basic and Diluted
Income from continuing operations	$	0.012	$	0.013
Loss from discontinued operations		(0.049)		(0.001)
Total income (loss) per share	$	(0.037)	$	0.012

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING		83,140,256		28,868,864

SEARCHCORE, INC.

Consolidated Balance Sheets (Audited)

		December 31,		December 31,
		2011		2010

ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	1,512,590	$	1,388,574
Accounts receivable		206,091		—
Inventory		9,830		—
Other current assets		379,860		1,104,337
Current assets - discontinued operations		51,795		—
TOTAL CURRENT ASSETS	$	2,160,166	$	2,492,911

Property and equipment, net		430,041		2,202
Property and equipment - discontinued operations		—		44,966
Intangible assets:
Domain names		114,119		9,076
Domain name - Marijuana.com		4,250,000		—
Web software		501,343		—
Goodwill		486,403		—
Intangible assets - discontinued operations		—		4,156,835
Other assets		82,332		900,000
Other assets - discontinued operations		51,976		33,872

TOTAL ASSETS	$	8,076,380	$	7,639,862

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES
Accounts payable	$	50,632	$	46,757
Accrued liabilities		759,312		1,037,670
Note payable		708,901		—
Note payable - related party		1,130,000		—
Current liabilities - discontinued operations		243,017		202,596

TOTAL CURRENT LIABILITIES	$	2,891,862	$	1,287,023

LONG TERM LIABILITIES

Other accrued liabilities		155,025		900,000
Note payable		3,416,099		—
Note payable - related party		1,800,000		3,600,000
Earn-out provisions, WeedMaps		18,362,269		18,362,269

TOTAL LONG TERM LIABILITIES		23,733,393		22,862,269

TOTAL LIABILITIES	$	26,625,255	$	24,149,292

STOCKHOLDERS' EQUITY

Preferred stock, $0.001 par value: 20,000,000 shares authorized;
zero shares issued and outstanding at December 31, 2011;
zero shares issued and outstanding at December 31, 2010;		—		—
Common stock, $0.001 par value: 200,000,000 shares authorized;
83,140,256 shares issued and outstanding at December 31, 2011;
82,640,256 shares issued and outstanding at December 31, 2010;		83,140		82,640
Paid-in capital		(15,965,044)		(16,964,444)
Retained earnings (accumulated deficit)		(2,666,971)		372,374

TOTAL STOCKHOLDERS' EQUITY (DEFICIT)		(18,548,875)		(16,509,430)


TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	8,076,380	$	7,639,862

SEARCHCORE, INC.

Consolidated Statements of Cash Flows (Audited)

	Years Ended
	December 31,		December 31,
	2011		2010
Cash flows from operating activities:
Net income from continuing operations	$	(3,039,345)	$	350,495
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation		71,295		115,319
Amortization		284,856		—
Stock-based compensation		—		87,777
Loss on abandonment		4,142,835		—
Changes in operating assets and liabilities:
Accounts receivable		(206,091)		—
Inventories		(9,830)		—
Prepaid expenses and deposits		672,682		878,670
Other assets		54,589		—
Accounts payable and accrued liabilities		(234,062)		(62,161)


Net cash provided by operating activities		1,736,929		1,370,100

Cash flows from investing activities:
Purchases of property and equipment		(454,168)		(211,781)
Purchases of intangible assets		(488,746)		(327,834)

Net cash used in investing activities		(942,913)		(539,615)

Cash flows from financing activities:
Proceeds from issuance of common stock		—		1,650,000
Payments from note payable		—		(40,000)
Payments from convertible notes		—		(419,392)
Convertible note related party		—		(211,489)
Payments on note payable - related party		(670,000)		(437,543)

Net cash used by financing activities		(670,000)		541,576

Net increase (decrease) in cash and cash equivalents		124,016		1,372,061

Cash and cash equivalents at beginning of period		1,388,574		16,513

Cash and cash equivalents at end of period	$	1,512,590	$	1,388,574

Non-cash investing and financing activity:

Issuance of warrants to consultants		—		250,000
Shares issued pursuant to Revyv acquisition	$	500,000	$	—
Shares issued pursuant to consulting agreement	$	—	$	50,000