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 EBITDA1 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.

________________________
1 Adjusted EBITDA is a non-IFRS measure. Refer to “Non-IFRS Measures” at the end of this press release.
2 Team BDS acquires Schalke 04's LEC slot for €26.5 million in second-largest franchise deal in Western history - Dot Esports
3 Worlds 2021 hits new peak viewership during MAD Lions' quarterfinals series against DWG KIA - Dot Esports
4 Top 10 Esports Teams in 2021 | Esports Charts (escharts.com)
5 Data provided by Blinkfire Analytics
6 Call of Duty League sets new viewership record with CDL Stage 1 Major | The Loadout
7 Overwatch League Grand Finals Match Sets New Viewership Record (forbes.com)


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 
Depreciation313 268 
Amortization and impairment146 5,231 
Decrease in net present value of franchise obligations- (26,452)
Finance cost1,415 1,632 
Foreign exchange gain(113)(1,745)
Payroll subsidies8- (2,235)
Share-based compensation1,070 250 
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 
Depreciation1,213 766 
Amortization and impairment758 5,845 
Decrease in net present value of franchise obligations(388)(26,776)
Finance cost5,103 7,940 
Foreign exchange (gain) loss(352)285 
Payroll subsidies9- (3,429)
Share-based compensation4,514 1,273 
Restructuring costs- 255 
Reverse takeover costs2,756 - 
Adjusted EBITDA(7,006 )(10,777 )

________________________
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.

 


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.


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  
        


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)
   
   


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