OverActive Media Reports Fourth Quarter and Full Year 2021 Financial Results
*Full Year 2021 Organic Revenue Growth of 69%**Solid Cash Position of $29.6 Million*
TORONTO, April 19, 2022 (GLOBE NEWSWIRE) -- OverActive Media (“OverActive” or the “Company”) (TSXV: OAM) (OTCQB: OAMCF), a global sports, media and entertainment company for today’s generation of fans, reported financial results and operating highlights today for the three and twelve months ended December 31, 2021.
The Company’s consolidated audited financial statements, notes to financial statements, and Management's Discussion and Analysis for the three and twelve-month periods ended December 31, 2021, are available on the Company’s website at www.overactivemedia.com and under the Company’s profile on SEDAR at www.sedar.com. Unless otherwise specified, all amounts are in Canadian dollars ($).
*Fourth Quarter 2021 Financial Highlights*
· Fourth quarter 2021 total revenue increased by 340% on an absolute basis to $5.3 million. This includes a 132% year-over-year increase in business operations revenue, driven primarily by marketing partnership revenue.
· Fourth quarter 2021 total revenue increased by 49% when adjusted for differences related to the timing of certain league revenue share payments.
· Adjusted EBITDA^1 of approximately $(2.5) million, a 46% improvement compared to Adjusted EBITDA of $(4.5) million during the comparative prior-year period.
· Net loss of $(4.8) million, compared to $11.2 million during the comparative prior-year period. Net loss for the quarter included $2.3 million in non-cash costs, compared to $13.6 million in non-cash income in the comparative prior-year period. The comparative period benefitted from income recognized on modifications of certain payments related to our franchise obligations, partially offset by an increase in non-cash tax expenses.
· As of December 31, 2021, the Company had cash and cash equivalents of $29.6 million, compared to $5.6 million as of December 31, 2020.*Full Year 2021 Financial Highlights*
· Full year 2021 total revenue increased by 69% to $14.2 million, compared to $8.4 million for 2020. This includes a 109% year-over-year increase in business operations revenue, driven primarily by growth in partnership revenue.
· Adjusted EBITDA of $(7.0) million, a 35% improvement compared to Adjusted EBITDA of approximately $(10.8) million for the full year 2020. The higher revenues were the primary driver to the Adjusted EBITDA improvement.
· Net loss of $(19.4) million for the full year 2021, compared to $(6.3) million for the full year 2020. Net loss for the year included $11.2 million in non-cash costs, compared to $1.6 million in non-cash income in the prior year. The comparative period benefitted from income recognized on modifications of certain payments related to our franchise obligations, partially offset by an increase in non-cash tax expenses.“We are very proud of the strong and scalable business that we are building,” said Chris Overholt, President and CEO, OverActive Media. “We are focused on generating high quality, long term and recurring revenue streams and we are succeeding. Furthermore, our business model offers a tremendous amount of operating leverage when delivered at scale. In fact, in 2021, of the $5.8 million increase to total revenue, $3.8 or over 65%, contributed directly to an improvement in our Adjusted EBITDA.”Overholt continued, “We set out on this journey in 2018 with three fundamental beliefs: partner directly with the publishers that own the game IP as it provides the greatest monetization opportunities; greater viewership would lead to growing revenue share payments from our league partners; and improving league economics, alongside the scarcity of these assets, would result in asset appreciation of our core franchises. Based on our 2021 accomplishments, our original business thesis is in fact, becoming a reality.”
*2021 Summary*
*MAD Lions / League of Legends*
· The first sale in the secondary market of an LEC franchise was concluded in 2021, at a reported price of €26.5 million ($39 million).^2 This secondary sale reflects a 225% gain on OverActive’s purchase price of €8 million ($12 million), in December 2018.
· MAD Lions won historic back-to-back League of Legends European Championships.
· MAD Lions advanced to the semi-finals of the League of Legends Mid-Season Invitational, and the Quarter Finals of the League of Legends World Championship.
· MAD Lions reached peak concurrent viewership of 2,293,140 at the League of Legends World Championship, the highest among all western teams.^3
· MAD Lions aggregated over 56 million hours watched in 2021 (excluding China and India) ranking as the 2nd most-watched esport team in the west and 6th in the world.^4*Toronto Ultra / Call of Duty League*
· In 2021, Toronto Ultra secured close to 500,000 new followers and a 454% year-over-year growth across its respective social channels. In just two seasons, Toronto Ultra has become the most followed team in the Call of Duty League on TikTok and the second most-followed team across all other social media channels.^5
· Toronto Ultra was named ‘Property of the Year’ at the 2021 Sponsorship Marketing Awards, a first for an esport property. Toronto Ultra joined other notable winners including the Toronto Raptors, Toronto FC, the National Hockey League and the Canadian Olympic Committee.
· Toronto Ultra celebrated an incredibly successful season, winning Call of Duty Major II and appearing in the Call of Duty League Championship Grand Final, finishing 2nd.
· The Call of Duty League set viewership records in 2021 and 2022 and Call of Duty League Major I in 2022 was the most-watched Call of Duty Major in history.^6
*Toronto Defiant / Overwatch League*
· Toronto Defiant completed its best season to date in 2021, qualifying for the 2021 World Championship Play-in Tournament in North America.
· Overwatch League showed year-over-year gains in regular season viewership in 2021 and hosted the most-watched Overwatch League Grand Final in history.^7
· The Overwatch League is rebasing the game to Overwatch 2 for the 2022 season. Overwatch 2 is the highly anticipated sequel to Overwatch and will be launching an open beta on April 26, 2022.*OverActive Media*· Building on its existing roster of premium partners including Bell, Canon, imaginBank, Kappa, SCUF Gaming, Skip The Dishes, TD Bank and Universal Music Canada, OverActive added the following new marketing partners to its global roster: AOC, Bud Light, CRAVE Meals, El Corte Ingles, EPOS, GLS, GOIKO, Jack Link’s, MNP, Razer, Red Bull, SEAT, and Warner Music Spain. This drove a 109% year-over-year increase in business operations revenue.
· In February, OverActive announced intentions to build a 7,000 seat performance venue in Toronto. The performance venue reached a significant milestone in December, receiving approval from the Toronto City Council. See the press release here.*Significant Announcements Subsequent to Year End*
· OverActive entered into a five-year partnership with Zilliqa on March 2, 2022, a leading provider of eco-friendly, high-performance, high-security blockchain solutions for enterprises and decentralized applications. This is the largest partnership to date for the MAD Lions brand.
· OverActive announced its entry into the VALORANT esports ecosystem on April 14. In connection with this transition, OverActive will be exiting the CS:GO esports ecosystem.
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^1 Adjusted EBITDA is a non-IFRS measure. Refer to “Non-IFRS Measures” at the end of this press release.
^2Team BDS acquires Schalke 04's LEC slot for €26.5 million in second-largest franchise deal in Western history - Dot Esports
^3Worlds 2021 hits new peak viewership during MAD Lions' quarterfinals series against DWG KIA - Dot Esports
^4Top 10 Esports Teams in 2021 | Esports Charts (escharts.com)
^5 Data provided by Blinkfire Analytics
^6Call of Duty League sets new viewership record with CDL Stage 1 Major | The Loadout
^7Overwatch League Grand Finals Match Sets New Viewership Record (forbes.com)
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Conference Call*
The Company will conduct a conference call tomorrow, Wednesday, April 20, 2022 at 9:00 a.m. (Eastern Time) to review the fourth quarter and full-year results as well as provide an overview of the Company's recent milestones and growth strategy.
To access the conference call, please dial 1-888-390-0605, or for international callers, 416-764-8609. A replay will be available shortly after the call and can be accessed by dialling 1-888-390-0541, or for international callers, 416-764-8677. The entry code for the replay is 218969 #. The replay will expire on Wednesday, April 27, 2022.
A live webcast of the conference call can be accessed on OverActive’s website at www.overactivemedia.com or directly via https://app.webinar.net/OaqMAYNZ1jE. An online archive of the webcast will be available via the same link for 90 days following the call.
*The following table presents a reconciliation of Net income (loss) to Adjusted EBITDA (loss) for the periods ended:*
Three months ended December 31, 2021 December 31, 2020
(In thousands of Canadian dollars) $ $
Net (loss) income for the period (4,768 ) 11,187
Income tax (recovery) expense (519 ) 7,275
Depreciation 313 268
Amortization and impairment 146 5,231
Decrease in net present value of franchise obligations - (26,452 )
Finance cost 1,415 1,632
Foreign exchange gain (113 ) (1,745 )
Payroll subsidies^8 - (2,235 )
Share-based compensation 1,070 250
Restructuring costs - 72
*Adjusted EBITDA* *(2,456 * *)* *(4,517 * *)*
*FISCAL 2021* *FISCAL 2020* December 31, 2021 December 31, 2020
(In thousands of Canadian dollars) $ $
Net loss for the year (19,396 ) (6,261 )
Income tax (recovery) expense (1,214 ) 9,325
Depreciation 1,213 766
Amortization and impairment 758 5,845
Decrease in net present value of franchise obligations (388 ) (26,776 )
Finance cost 5,103 7,940
Foreign exchange (gain) loss (352 ) 285
Payroll subsidies^9 - (3,429 )
Share-based compensation 4,514 1,273
Restructuring costs - 255
Reverse takeover costs 2,756 -
*Adjusted EBITDA* *(7,006 * *)* *(10,777 * *)*
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^8 Adjusted EBITDA excludes the impact of assistance payments received from Franchise Leagues and the CEWS program in 2020.
^9 Adjusted EBITDA excludes the impact of assistance payments received from Franchise Leagues and the CEWS program in 2020. *
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*FOR FURTHER INFORMATION, PLEASE CONTACT: *
Babak Pedram, Investor Relations, Virtus Advisory Group Inc.
(416) 955-8651
bpedram@virtusadvisory.com
Leah Gaucher, Director, PR & Communications, OverActive Media
(647) 924-2614
lgaucher@oam.gg
*ABOUT OVERACTIVE MEDIA*
OverActive Media (TSXV: OAM) (OTCQB: OAMCF) is headquartered in Toronto, Ontario, with operations in Madrid, Spain and Berlin, Germany. OverActive’s mandate is to build an integrated global company delivering sports, media and entertainment products for today’s generation of fans with a focus on esports, videogames, content creation and distribution, culture, and live and online events. OverActive owns team franchises in (i) the Overwatch League, operating as the Toronto Defiant, (ii) the Call of Duty League, operating as the Toronto Ultra, (iii), and the League of Legends European Championship (“LEC”), operating as the MAD Lions, and (iv) the Superliga, operating as the MAD Lions Madrid. OverActive also operates both live and online events, operating as OAM Live and maintains an active social media presence with its fans and community members, operates fan clubs, and other fan related activities that increase the reach of its brands.
*CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION*
This press release contains statements which constitute “forward-looking statements” and “forward-looking information” within the meaning of applicable securities laws (collectively, “forward-looking statements”), including statements regarding the plans, intentions, beliefs and current expectations of OverActive with respect to future business activities and operating performance. Forward-looking statements are often identified by the words “may”, “would”, “could”, “should”, “will”, “intend”, “plan”, “anticipate”, “believe”, “estimate”, “expect” or similar expressions and includes information regarding the anticipated financial and operating results of OverActive in the future.
Investors are cautioned that forward-looking statements are not based on historical facts but instead OverActive management’s expectations, estimates or projections concerning future results or events based on the opinions, assumptions and estimates of management considered reasonable at the date the statements are made. Although OverActive believes that the expectations reflected in such forward-looking statements are reasonable, such statements involve risks and uncertainties, and undue reliance should not be placed thereon, as unknown or unpredictable factors could have material adverse effects on future results, performance or achievements of the OverActive. Among the key factors that could cause actual results to differ materially from those projected in the forward-looking statements include the following: the potential impact of OverActive’s qualifying transaction on relationships, including with regulatory bodies, employees, suppliers, customers and competitors; changes in general economic, business and political conditions, including changes in the financial markets; changes in applicable laws and regulations both locally and in foreign jurisdictions; compliance with extensive government regulation; the risks and uncertainties associated with foreign markets; the ability of the Company to continue to execute on its existing partnerships and business strategy; the ability of the MAD Lions and Call of Duty Leagues to maintain viewership; the successful completion of the Company’s new venue; and other risk factors set out in OverActive’s filing statement dated July 2, 2021, a copy of which may be found under OverActive’s profile at www.sedar.com. These forward-looking statements may be affected by risks and uncertainties in the business of OverActive and general market conditions, including COVID-19.
Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected. Although OverActive has attempted to identify important risks, uncertainties and factors which could cause actual results to differ materially, there may be others that cause results not to be as anticipated, estimated or intended and such changes could be material. OverActive does not intend and do not assume any obligation, to update the forward-looking statements except as otherwise required by applicable law.
*NON-IFRS MEASURES*
This press release includes references to adjusted EBITDA. Adjusted EBITDA is a non-IFRS financial measure and is defined by the Company as net income or loss before income taxes, finance costs, depreciation and amortization, decrease/increase in net present value of franchise obligations, foreign exchange gains/loss, assistance payments from Franchise League and government assistance, restructuring costs, reverse takeover costs, intangibles assets impairment charge and share-based compensation. We believe that adjusted EBITDA is a useful measure of financial performance because it provides an indication of the Company’s ability to capitalize on growth opportunities in a cost-effective manner, finance its ongoing operations and service its financial obligations.
This non-IFRS financial measure is not an earnings or cash flow measure recognized by IFRS and does not have a standardized meaning prescribed by IFRS. Our method of calculating such a financial measure may differ from the methods used by other issuers and, accordingly, our definition of this non-IFRS financial measure may not be comparable to similar measures presented by other issuers. Investors are cautioned that non-IFRS financial measures should not be construed as an alternative to net income determined in accordance with IFRS as indicators of our performance or to cash flows from operating activities as measures of liquidity and cash flows.
Neither the TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.
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*OVERACTIVE MEDIA CORP.*
Consolidated Statements of Financial Position
(expressed in thousands of Canadian dollars)
As at December 31, 2021 and December 31, 2020
2021 2020
*Assets*
Current assets:
Cash and cash equivalents $ 29,577 $ 5,585
Cash held in trust - 1,098
Trade and other receivables 4,906 1,920
Prepaid expenses and other current assets 1,208 1,594
Total current assets 35,691 10,197
Non-current assets:
Investments - 2,784
Property and equipment 2,698 1,749
Right-of-use assets 1,827 2,750
Intangible assets 89,648 92,093
Goodwill 5,596 5,714
Total non-current assets 99,769 105,090
*Total assets* *$* * 135,460 * *$* * 115,287 *
*Liabilities and Shareholders' Equity*
Current liabilities:
Trade payable and accrued liabilities $ 3,651 $ 2,616
Provisions 1,987 1,987
Notes payable 63 576
Current portion of lease liabilities 1,005 1,041
Current portion of contract liabilities 1,619 1,566
Current portion of payable related to franchise assets 7,359 3,918
Current portion of long-term debt 186 152
Current portion of deferred grant income 33 34
Total current liabilities 15,903 11,890
Non-current liabilities:
Deferred tax liability 14,757 16,050
Long-term portion of lease liabilities 955 1,760
Long-term portion of contract liabilities - 1,041
Long-term payable related to franchise assets 21,405 22,559
Long-term debt 350 481
Long-term deferred grant income 80 123
Other long-term liabilities 90 101
Total non-current liabilities 37,637 42,115
Total liabilities 53,540 54,005
Shareholders' equity:
Share capital 133,638 93,479
Warrants reserve 621 -
Contributed surplus 6,855 2,687
Accumulated other comprehensive loss (4,652 ) 111
Deficit (54,542 ) (34,995 )
Total shareholders' equity 81,920 61,282
*Total liabilities and shareholders' equity* * * *$* * 135,460* *$* * 115,287 *
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*OVERACTIVE MEDIA CORP.*
Consolidated Statements of Net Loss and Comprehensive Loss
(expressed in thousands of Canadian dollars, except per share amounts)
For the years ended December 31, 2021 and 2020
2021 2020
Revenue $ 14,195 $ 8,376
Operating costs 22,200 16,286
Loss before the undernoted (8,005 ) (7,910 )
Depreciation 1,213 766
Amortization and impairment 758 5,845
Foreign exchange (gain) loss (352 ) 285
Decrease in net present value of franchise obligation (388 ) (26,776 )
Finance cost 5,103 7,940
Share-based compensation 4,514 1,273
Other income (999 ) (307 )
Reverse takeover costs 2,756 -
(Loss) income before income taxes (20,610 ) 3,064
Income tax (recovery) expense (1,214 ) 9,325
Net loss for the year (19,396 ) (6,261 )
Other comprehensive (loss) income:
Foreign currency translation (2,130 ) 284
Change in equity investments (2,633 ) -
Comprehensive loss for the year $ (24,159 ) $ (5,977 )
Loss per share:
Basic $ (0.28 ) $ (0.12 )
Diluted (0.28 ) (0.12 )
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*OVERACTIVE MEDIA CORP.*
Consolidated Statements of Cash Flows
(expressed in thousands of Canadian dollars)
For the years ended December 31, 2021 and 2020
2021 2020
Cash provided by (used in):
Operating activities:
Net loss for the year $ (19,396 ) $ (6,261 )
Adjustments for:
Depreciation 1,213 766
Amortization of intangible assets 758 857
Foreign exchange (gain) loss (352 ) 285
Share-based compensation 4,514 1,273
Finance cost 5,103 7,940
Decrease in net present value of franchise obligations (388 ) (26,776 )
Income tax (recovery) expense (1,214 ) 9,325
Impairment loss - 4,988
Reverse takeover costs 2,756 -
Other (82 ) (22 )
Change in non-cash operating working capital
(Increase) decrease in trade and other receivables (2,921 ) 658
Increase in prepaid expenses and other current assets (249 ) (228 )
Increase (decrease) in accounts payable and accrued liabilities 474 (359 )
(Decrease) Increase in contract liabilities (988 ) 1,107
Increase in provisions - 1,987 (10,772 ) (4,460 )
Financing activities:
Repayment of notes payable for prior acquisitions (513 ) (692 )
Proceeds on long-term debt - 812
Repayment on long-term debt (125 ) -
Repayments of franchise asset payables (1,434 ) -
Proceeds from shares issued in prior period from cash held in trust 1,098 4,594
Proceeds from shares issued on private placement and brokered private placement, net 37,636 -
Principal payment of lease liability (807 ) (374 )
Payment on interest portion of lease liability (215 ) (118 )
Proceeds from warrants redeemed 50 - 35,690 4,222
Investing activities:
Purchase of property and equipment (2,011 ) (1,611 )
Proceeds from disposal of property and equipment 442
Changes in non-cash working capital related to capital expenditures 505 689
Purchase of player contracts (520 ) (631 )
Purchase of intangible assets (58 ) (123 )
Investments acquired - (2,633 )
Cash acquired from reverse takeover 532 - (1,110 ) (4,309 )
Increase (decrease) in cash and cash equivalents 23,808 (4,547 )
Cash and cash equivalents, beginning of year 5,585 10,208
Effect of exchange rate changes on cash and cash equivalents 184 (76 )
Cash and cash equivalents, end of year $ 29,577 $ 5,585