OverActive Media Reports Third Quarter 2022 Financial Results

TORONTO, Nov. 16, 2022 (GLOBE NEWSWIRE) — OverActive Media Corp. (“OverActive” or the “Company”) (TSXV: OAM) (OTCQB: OAMCF), a global sports, media, and entertainment company for today’s generation of fans, today released its third quarter results for the three-and nine-month period ended September 30, 2022. Unless otherwise specified, all amounts are in Canadian dollars ($).

  • Total revenues for the quarter grew to $5.8 million driven organically by a 23% increase in business operations revenue due to higher sponsorship and event-related revenue
  • OverActive hosted Canada’s first-ever Overwatch League tournament, the Toronto Defiant Summer Showdown presented by Bell
  • Previously announced partnerships with Bell, TD Bank Group and Zilliqa continue to power growth
  • All OverActive professional esports franchise teams qualified for the World Championships in each of their respective leagues

“In the third quarter, we continued to realize the benefit from our sponsorship model that drove 23% year-over-year organic growth in business operations revenue. We expect this partnership momentum to carry on in the fourth quarter, supported by contracted long-term recurring revenues,” said Chris Overholt, President and CEO, OverActive Media. “As we look towards 2023 and beyond, we remain confident in the strong and scalable business that we are building and are committed to a multi-faceted growth strategy.”

“While macro-economic conditions have been challenging in recent months, we are fortunate to have a solid revenue model and a healthy balance sheet with sufficient working capital to fund our operations,” added Overholt.

Third Quarter 2022 Financial Highlights

  • Third quarter 2022 total revenue increased by 6% to $5.8 million compared to $5.5 million in Q3 2021, driven primarily by a 23% year-over-year increase in sponsorship revenue. Team revenue declined by $0.1 million in the quarter due to non-recurring prize money earned in the comparative prior-year period.
  • As of September 30, 2022, the Company had cash and cash equivalents of $17.7 million, compared to cash and cash equivalents of $22.0 million as of June 30, 2022.
  • Revenue for the first nine months of 2022 was $10.2 million, a 15% improvement year-over-year, driven primarily by a 37% increase in business operations revenue attributable to revenue generated from sponsorships and hosting live esports events. Team revenue declined by $0.3 million year-over-year owing to a decline in non-recurring prize money earned in 2021.
  • Adjusted EBITDA1 loss of approximately $(0.4) million, compares to an Adjusted EBITDA loss of approximately $(0.3) million during the comparative prior-year period.
  • Adjusted EBITDA loss was $(6.4) million for the first nine months of 2022, a loss increase of 40% year-over-year driven by hosting live events.
  • Income before taxes was $0.9 million, a 114% improvement compared to loss before taxes of $(6.6 million) during the comparative prior-year period. The improvement is primarily a result of certain payment deferrals and one-time reverse takeover costs in the prior period.
  • Net income was $0.5 million, a 107% improvement compared to a net loss of $(6.4) million during the comparative prior-year period.
  • Net loss was $(6.5) million for the first nine months of 2022, a 55% improvement from the comparative 2021 period.

Third Quarter 2022 Operating Highlights

  • From September 8 to 11, OverActive hosted the Overwatch League’s Summer Showdown Tournament at Mattamy Athletic Centre in Toronto where Toronto Defiant earned their best finish in team history, securing third place. Across both major live esports events OverActive hosted this year, approximately 12,000 fans attended to experience a best-on-best of some of the greatest professional esports players from around the globe.

Team Performance Highlights

  • MAD Lions’ League of Legends team qualified for the World Championship, marking the fourth consecutive year (and every year) in the history of OverActive Media that the team has done so.
  • Toronto Defiant of the Overwatch League qualified for the Grand Finals playoffs, finishing the regular season in eighth place in the West conference.
  • Toronto Ultra qualified for the Call of Duty League Championship Weekend held in Los Angeles, CA, finishing top six in the 2022 season.

The Company’s consolidated unaudited financial statements, notes to financial statements, and Management’s Discussion and Analysis for the three and nine-month period ended September 30, 2022, are available on the Company’s website at www.overactivemedia.com and under the Company’s profile on SEDAR at www.sedar.com.

Conference Call
The Company will conduct a conference call tomorrow, Thursday, November 17, 2022, at 9:00 a.m. (Eastern Time) to review the third quarter 2022 results as well as provide an overview of the Company’s recent milestones and growth strategy.

To access the conference call, please dial 888-390-0605, or for international callers, 416-764-8609 and use participant passcode 72285940. 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 285940 #. The replay will expire on Wednesday, November 23, 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/JEoWPmWyQZw. An online archive of the webcast will be available via the same link for 90 days following the call.

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1
Adjusted EBITDA is a non-IFRS measure. Refer to “Non-IFRS Measures” at the end of this press release.

The following table presents a reconciliation of Net income (loss) to Adjusted EBITDA (loss) for the periods ended:

 
  Three months ended Nine months ended
  September 30, 2022   September 30, 2021   September 30, 2021   September 30, 2021  
(In thousands of Canadian dollars) $   $   $   $  
Net income (loss) for the period 456   (6,418 ) (6,525 ) (14,628 )
Income tax expense (recovery) 462   (215 ) 456   (695 )
Depreciation 300   303   916   900  
Amortization 199   100   482   612  
Decrease in net present value of franchise obligations (3,931 ) (388 ) (8,709 ) (388 )
Finance cost 1,473   1,355   4,120   3,688  
Foreign exchange loss (gain) 1,560   452   2,067   (239 )
Share-based compensation 337   1,787   2,001   3,444  
Restructuring costs 104     214    
Reverse takeover costs   2,756     2,756  
Reversal of provision (1,384 )   (1,384 )  
Adjusted EBITDA (424 ) (268 ) (6,362 ) (4550 )
                 


OVERACTIVE MEDIA CORP.

Condensed Consolidated Interim Statements of Financial Position
(expressed in thousands of Canadian dollars, unaudited)

As at September 30, 2022 and December 31, 2021

     
  September 30, December 31,
  2022 2021
Assets    
     
Current assets:    
Cash and cash equivalents $ 17,685   $ 29,577  
Trade and other receivables   6,727     4,906  
Prepaid expenses and other current assets   1,471     1,208  
Total current assets   25,883     35,691  
     
Non-current assets:    
     
Property and equipment   2,583     2,698  
Right-of-use assets   1,283     1,827  
Intangible assets   88,463     89,648  
Goodwill   6,042     5,596  
Total non-current assets   98,371     99,769  
     
Total assets $ 124,254   $ 135,460  
     
Liabilities and Shareholders’ Equity    
     
Current liabilities:    
Trade payables and accrued liabilities $ 3,230   $ 3,651  
Provisions   686     1,987  
Notes payable   63     63  
Current portion of lease liabilities   878     1,005  
Current portion of contract liability   1,009     1,619  
Current portion of payable related to franchise assets   1,695     7,359  
Current portion of long-term debt   175     186  
Current portion of deferred grant income   32     33  
Total current liabilities   7,768     15,903  
     
Non-current liabilities:    
Deferred tax liability   15,743     14,757  
Long-term portion of lease liabilities   547     955  
Long-term payable related to franchise assets   24,170     21,405  
Long-term debt   227     350  
Long-term deferred grant income   51     80  
Other long-term liabilities   84     90  
Total non-current liabilities   40,822     37,637  
     
Total liabilities   48,590     53,540  
     
Shareholders’ equity:    
Share capital   133,638     133,638  
Warrants reserve   621     621  
Contributed surplus   8,521     6,855  
Accumulated other comprehensive loss   (6,049 )   (4,652 )
Deficit   (61,067 )   (54,542 )
Total shareholders’ equity   75,664     81,920  
     
Total liabilities and shareholders’ equity $ 124,254   $ 135,460  
     


OVERACTIVE MEDIA CORP.

Condensed Consolidated Interim Statement of Net Loss and Comprehensive Loss
(expressed in thousands of Canadian dollars, except per share amounts, unaudited)

For the three and nine months ended September 30, 2022 and 2021

    For the three months ended   For the nine months ended
    September 30, September 30,   September 30, September 30,
  Note 2022 2021   2022 2021
             
Revenue 3 $ 5,809   $ 5,476     $ 10,248   $ 8,878  
             
Operating costs 8   6,654     5,852       19,113     14,367  
Loss before the undernoted     (845 )   (376 )     (8,865 )   (5,489 )
             
Depreciation 5 and 6   300     303       916     900  
Amortization of intangible assets 4   199     100       482     612  
Foreign exchange loss (gain) 12   1,560     452       2,067     (239 )
Decrease in net present value of            
franchise obligations 14   (3,931 )   (388 )     (8,709 )   (388 )
Finance costs     1,473     1,355       4,120     3,688  
Share-based compensation 10   337     1,787       2,001     3,444  
Other income 16   (1,701 )   (108 )     (3,673 )   (939 )
Reverse takeover costs         2,756           2,756  
Income (loss) before income taxes     918     (6,633 )     (6,069 )   (15,323 )
             
Income tax expense (recovery)     462     (215 )     456     (695 )
Net income (loss) for the period     456     (6,418 )     (6,525 )   (14,628 )
             
Other comprehensive income (loss):            
Foreign currency translation     189     (65 )     (1,397 )   (1,600 )
             
Comprehensive income (loss) for the period   $ 645   $ (6,483 )   $ (7,922 ) $ (16,228 )
             
Earnings (loss) per share:            
Basic and Diluted   $ 0.01   $ (0.08 )   $ (0.08 ) $ (0.22 )
             
 


OVERACTIVE MEDIA CORP.

Condensed Consolidated Interim Statements of Cash Flows
(expressed in thousands of Canadian dollars, unaudited)

For the nine months ended September 30, 2022 and 2021

     
  For the nine months ended
  September 30, September 30,
  2022 2021
     
Cash provided by (used in) :    
     
Operating activities:      
Net loss for the period $ (6,525 ) $ (14,628 )
Adjustments for:    
Depreciation   916     900  
Amortization of intangible assets   482     612  
Foreign exchange loss (gain)   2,067     (239 )
Share-based compensation   2,001     3,444  
Finance cost   4,120     3,688  
Decrease in net present value of franchise obligations   (8,709 )   (388 )
Income tax expense (recovery)   456     (695 )
Reverse takeover costs       2,756  
Other   (23 )   (50 )
Change in:    
Increase in trade and other receivables   (1,821 )   (768 )
Increase in prepaid expenses and other current assets   (634 )   (248 )
Decrease (increase) in trade payable and accrued liabilities   84     (971 )
Decrease in contract liabilities   (610 )   (75 )
Decrease in provisions   (1,301 )    
    (9,497 )   (6,662 )
     
Financing activities:    
Repayment of long-term debt   (134 )   (77 )
Proceeds from shares issued on private placement    
and brokered private placement, net       37,636  
Net proceeds on shares issued in prior period received from cash held in trust       1,098  
Principal payment of lease liability   (652 )   (600 )
Payment of interest portion of lease liability   (113 )   (169 )
Proceeds from warrants redeemed       50  
     
    (899 )   37,938  
     
Investing activities:    
Purchase of property and equipment   (599 )   (1,620 )
Changes in non-cash working capital related to capital expenditures       1,142  
Purchase of player contracts   (700 )   (187 )
Intangibles acquired   (8 )   (49 )
Cash acquired from reverse takeover       532  
     
     
    (1,307 )   (182 )
     
(Decrease) increase in cash and cash equivalents   (11,703 )   31,094  
Cash and cash equivalents, beginning of period   29,577     5,585  
Effect of exchange rate changes on cash and cash equivalents   (189 )   (461 )
     
Cash and cash equivalents, end of period $ 17,685   $ 36,218  
     

FOR FURTHER INFORMATION, PLEASE CONTACT:

Leah Gaucher, Director, PR & Communications, OverActive Media
(647) 924-2614
[email protected]

Babak Pedram, Investor Relations, Virtus Advisory Group Inc.
(416) 955-8651
[email protected]

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, (iv) the Superliga, operating as the MAD Lions Madrid, and (v) VALORANT Regional League France: Revolution, operating as the MAD Lions. 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: 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 annual information form for the year ended December 31, 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 does 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, restructuring costs, assistance payments from Franchise League 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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