Enthusiast Gaming Reports First Quarter 2021 Financial Results
May 12 2021 - 4:15PM
Enthusiast Gaming Holdings Inc. (NASDAQ:EGLX)
(TSX:EGLX), (“Enthusiast Gaming” or the “Company”), today announced
financial results for the first quarter ended March 31, 2021. All
amounts are stated in Canadian dollars unless otherwise indicated.
“Our first quarter results were fueled by our
focused acquisition strategy as well as organic growth gains coming
from direct sales and premium subscriptions,” commented
Adrian Montgomery, CEO of Enthusiast Gaming. “We have
leveraged this momentum in our growth strategy, announcing earlier
today our accelerated plans to launch a gaming social network and
premium subscription offering with the acquisition of Tabwire,
enabling us to evolve further into a technology-driven media,
esports and entertainment company.”
First Quarter 2021
Highlights:
- Revenue was $30.0 million, a 321%
increase vs Q1 2020 revenue of $7.1 million.
- Gross profit was $5.9 million, an
increase of 80% vs Q1 2020 gross profit of $3.3 million.
- Net loss and comprehensive loss was
$13.6 million, resulting in a net loss and comprehensive loss per
share, basic and diluted, of $0.12.
- Direct advertising sales of $2.2 million, compared to $60
thousand in the same period last year.
- Paid subscribers grew 49% over the past 12 months to 137,000
paid subscribers as of March 31, 2021.
- 9.9 billion total views across
written and video content.
- Strengthened balance sheet by
approximately $50 million with the combination of a bought deal
financing for gross proceeds of $42.5 million and the reduction of
indebtedness through the conversion of outstanding debentures of
approximately $9 million.
- Announced key partnership deals
with Samsung and TikTok.
- Was ranked as a Top 100 Internet
Properties in the United States by Comscore, one of only two gaming
properties to make the list alongside Amazon’s TWITCH.TV, and
ranked #1 Gaming Information property for unique visitor traffic
from mobile devices.
- Announced and closed subsequent to
Q1, the acquisition of Vedatis SAS, owners of Icy Veins, one of the
largest Activision Blizzard fan communities.
“We continue to see the benefits of our
investments in key areas that drive long-term revenue and margin
growth. For any media company, Q1 is seasonally the lowest quarter,
but our results are off to a strong start and point to a promising
year ahead. As a result, we will continue to execute our strategy
of combining accretive acquisitions with organic growth through our
proprietary flywheel.”
Significant events subsequent to First
Quarter 2021:
- Signed an integrated and strategic
partnership deal with ESPAT TV, a strong producer of gaming and
entertainment content across multiple distribution channels, and
including ESPAT TV’s Creative Collective, which consists of Ridley
Scott Creative Group, Petrol, PRG, and Movers & Shakers, has
produced work across the globe partnering with publishers, brands,
live events, and advertising agencies alike.
- Luminosity Gaming, the Company’s
esports organization, was ranked by Streams Charts as the most
popular esports community on Twitch in March 2021, with 40 million
hours watched, outpacing the runner up by more than 15 million
hours.
- Filed a Registration Statement on
Form 40-F with the United States Securities and Exchange
Commission (“SEC”) becoming a reporting issuer in the United
States.
- Announced that the Company’s common
shares were approved for listing on the Nasdaq Global Select Market
(“Nasdaq”) under the trading ticker symbol “EGLX” and commenced
trading on April 21, 2021.
- Appointed NFL superstar, Silicon
Valley advisor and community leader, Richard Sherman to its Board
of Directors.
- Announced a partnership deal with
ExitLag, a Latin American software developer with proprietary
technology to improve routing connections for
gamers.
- Filed a short form base shelf
prospectus in Canada and the US up to an aggregate total of $250
million.
- Announced plans to create a
subscription-based gaming social network, Project GG, facilitated
by entering into a definitive agreement to acquire Tabwire LLC, a
technology and data platform that gives gamers the ability to login
directly to view their game data in real time with 13 billion gamer
profiles, for US$11 million in cash and stock.
Certain information provided in this news
release is extracted from the unaudited condensed consolidated
interim financial statements (the “Financial Statements”) and
Management’s Discussion & Analysis (“MD&A”) of the Company
for the three months ended March 31, 2021 and should be read in
conjunction with them. It is only in the context of the fulsome
information and disclosures contained in the Financial Statements
and MD&A that an investor can properly analyze this
information. The Financial Statements and MD&A can be found
under the Company’s profile on SEDAR and EDGAR.
Earnings Announcement and Supplemental
Information
Management will host a conference call and
webcast on May 12, 2021, at 5:00 p.m. EDT to review and discuss the
first quarter 2021 results.
Conference call dial-in details:North America
(toll-free): +1 877-407-9039International: +1
201-689-8470Conference ID: 13718919
A live webcast can be accessed
at https://www.enthusiastgaming.com/investors/.
If you are unable to join live, an archived
recording of the webcast will be available on the investor
relations section of the Enthusiast Gaming website.
About Enthusiast Gaming
Enthusiast Gaming is building the largest media
platform for video game and esports fans to connect and engage
worldwide. Combining the elements of its four core pillars; Media,
Talent, Esports and Experiences, Enthusiast Gaming provides a
unique opportunity and integrated approach to reach and connect
with its coveted GenZ and Millennial audience. Through its
proprietary mix of digital media and entertainment assets,
Enthusiast Gaming has built a vast network of like-minded
communities to deliver the ultimate fan experience.
Contacts
Enthusiast Gaming Investor Relations:Eric
Bernofsky, Chief Corporate
Officerinvestor@enthusiastgaming.com
Media Relations:Carmela Antolino, Provident
Communicationscarmela@providentcomms.com647-287-2286
Forward Looking Statements
This news release contains certain statements
that may constitute forward-looking information under applicable
securities laws. All statements, other than those of historical
fact, which address activities, events, outcomes, results,
developments, performance or achievements that Enthusiast
anticipates or expects may or will occur in the future (in whole or
in part) should be considered forward-looking information. Such
information may involve, but is not limited to, comments with
respect to strategies, expectations, planned operations and future
actions of the Company. Often, but not always, forward-looking
information can be identified by the use of words such as "plans",
"expects", "is expected", "budget", "scheduled", "estimates",
"forecasts", "intends", "anticipates", or "believes" or variations
(including negative variations) of such words and phrases, or
statements formed in the future tense or indicating that certain
actions, events or results "may", "could", "would", "might" or
"will" (or other variations of the forgoing) be taken, occur, be
achieved, or come to pass. Forward-looking information is based on
currently available competitive, financial and economic data and
operating plans, strategies or beliefs as of the date of this news
release, but involve known and unknown risks, uncertainties,
assumptions and other factors that may cause the actual results,
performance or achievements of Enthusiast to be materially
different from any future results, performance or achievements
expressed or implied by the forward-looking information. Such
factors may be based on information currently available to
Enthusiast, including information obtained from third-party
industry analysts and other third-party sources, and are based on
management's current expectations or beliefs regarding future
growth, results of operations, future capital (including the
amount, nature and sources of funding thereof) and expenditures.
Any and all forward-looking information contained in this press
release is expressly qualified by this cautionary statement.
Trading in the securities of the Company should be considered
highly speculative.
Neither the TSX Exchange nor its Regulation
Services Provider (as that term is defined in the policies of the
TSX Exchange) accepts responsibility for the adequacy or accuracy
of this release.
Enthusiast
Gaming Holdings Inc. |
|
|
|
|
|
Consolidated Statements of Financial Position |
|
|
|
|
|
As at
March 31, 2021 and December 31, 2020 |
|
|
|
|
|
(Unaudited -
Expressed in Canadian Dollars) |
|
|
|
|
|
|
|
|
|
March 31, 2021 |
|
|
December 31, 2020 |
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
Current |
|
|
|
|
|
|
Cash |
|
$ |
24,400,296 |
|
$ |
4,323,823 |
|
|
Investments |
|
|
124,997 |
|
|
124,998 |
|
|
Trade and other
receivables |
|
|
18,123,771 |
|
|
22,424,596 |
|
|
Loans receivable |
|
|
179,391 |
|
|
194,389 |
|
|
Income tax receivable |
|
|
290,077 |
|
|
290,077 |
|
|
Prepaid
expenses |
|
|
539,770 |
|
|
576,802 |
|
Total
current assets |
|
|
43,658,302 |
|
|
27,934,685 |
|
Non-current |
|
|
|
|
|
|
Property and equipment |
|
|
325,885 |
|
|
354,850 |
|
|
Right-of-use asset - lease
contracts |
|
|
2,648,341 |
|
|
2,848,400 |
|
|
Long-term investment |
|
|
2,577,922 |
|
|
2,606,100 |
|
|
Investment in associates |
|
|
948,492 |
|
|
1,026,910 |
|
|
Long-term portion of prepaid
expenses |
|
|
259,794 |
|
|
263,196 |
|
|
Intangible assets |
|
|
79,672,394 |
|
|
81,106,007 |
|
|
Goodwill |
|
|
106,181,086 |
|
|
106,181,086 |
|
Total Assets |
|
$ |
236,272,216 |
|
$ |
222,321,234 |
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
|
|
Current |
|
|
|
|
|
|
Accounts payable and accrued
liabilities |
|
$ |
17,610,564 |
|
$ |
23,602,547 |
|
|
Contract liabilities |
|
|
1,865,475 |
|
|
1,625,594 |
|
|
Current portion of long-term
debt |
|
|
2,000,000 |
|
|
1,250,000 |
|
|
Current portion of deferred
payment liability |
|
|
- |
|
|
636,600 |
|
|
Current portion of convertible
debentures |
|
|
- |
|
|
7,546,453 |
|
|
Current portion of lease
contract liabilities |
|
|
540,020 |
|
|
578,330 |
|
Total current liabilities |
|
|
22,016,059 |
|
|
35,239,524 |
|
Non-current |
|
|
|
|
|
|
Long-term debt |
|
|
8,026,237 |
|
|
21,651,956 |
|
|
Long-term lease contract
liabilities |
|
|
2,113,162 |
|
|
2,308,336 |
|
|
Vendor-take-back loan |
|
|
5,711,756 |
|
|
5,559,250 |
|
|
Long-term portion
of deferred payment liability |
|
539,730 |
|
|
529,124 |
|
|
Deferred tax liability |
|
|
15,082,200 |
|
|
15,161,987 |
|
Total liabilities |
|
$ |
53,489,144 |
|
$ |
80,450,177 |
|
|
|
|
|
|
|
|
Shareholders' Equity |
|
|
|
|
|
|
Share capital |
|
|
281,716,168 |
|
|
232,616,997 |
|
|
Contributed surplus |
|
|
12,872,136 |
|
|
7,494,164 |
|
|
Accumulated other
comprehensive income (loss) |
|
(2,274 |
) |
|
45,428 |
|
|
Deficit |
|
|
(111,802,958 |
) |
|
(98,285,532 |
) |
Total shareholders' equity |
|
|
182,783,072 |
|
|
141,871,057 |
|
Total liabilities and shareholders' equity |
|
$ |
236,272,216 |
|
$ |
222,321,234 |
|
Enthusiast
Gaming Holdings Inc. |
|
|
|
|
|
Consolidated Statements of Loss and Comprehensive
Loss |
|
|
|
|
For the
three months ended March 31, 2021 and 2020 |
|
|
|
|
(Unaudited -
Expressed in Canadian Dollars) |
|
|
|
|
|
|
|
Three months ended March 31, 2021 |
|
|
Three months ended March 31, 2020 |
|
|
|
|
|
|
|
|
Revenue |
|
|
|
|
|
|
Revenue |
|
$ |
30,022,335 |
|
$ |
6,929,572 |
|
|
Gain on
player buyout |
|
|
- |
|
|
204,764 |
|
Total
revenue |
|
|
30,022,335 |
|
|
7,134,336 |
|
Cost of
sales |
|
|
24,091,327 |
|
|
3,841,107 |
|
Gross margin |
|
|
5,931,008 |
|
|
3,293,229 |
|
Operating
expenses |
|
|
|
|
|
|
Professional fees |
|
|
737,496 |
|
|
286,242 |
|
|
Consulting fees |
|
|
1,310,627 |
|
|
1,207,650 |
|
|
Advertising and promotion |
|
|
1,042,354 |
|
|
273,886 |
|
|
Office and general |
|
|
706,945 |
|
|
986,468 |
|
|
Salaries and wages |
|
|
4,628,275 |
|
|
1,240,484 |
|
|
Technology support, web
development and content |
|
|
1,394,883 |
|
|
934,894 |
|
|
Esports player, team and game
expenses |
|
|
1,528,605 |
|
|
865,109 |
|
|
Foreign exchange gain |
|
|
(10,133 |
) |
|
(156,517 |
) |
|
Share-based compensation |
|
|
5,760,036 |
|
|
390,373 |
|
|
Amortization and
depreciation |
|
|
1,635,854 |
|
|
1,297,140 |
|
Total operating expenses |
|
|
18,734,942 |
|
|
7,325,729 |
|
|
|
|
|
|
|
|
Other
expenses (income) |
|
|
|
|
|
|
Share of loss from investment
in associates |
|
|
78,418 |
|
|
95,829 |
|
|
Interest and accretion |
|
|
791,314 |
|
|
1,325,261 |
|
|
Change in fair value of
investment |
|
|
(3,984 |
) |
|
174,616 |
|
|
Gain on repayment of long-term
debt |
|
|
(39,502 |
) |
|
- |
|
|
Interest income |
|
|
(18,320 |
) |
|
(61,523 |
) |
Net loss before income taxes |
|
|
(13,611,860 |
) |
|
(5,566,683 |
) |
|
|
|
|
|
|
|
Income
taxes |
|
|
|
|
|
|
Current tax recovery |
|
|
(14,655 |
) |
|
- |
|
|
Deferred tax recovery |
|
|
(79,779 |
) |
|
- |
|
Net loss
for the period |
|
|
(13,517,426 |
) |
|
(5,566,683 |
) |
|
|
|
|
|
|
|
Other
comprehensive income (loss) |
|
|
|
|
|
Items that may be
reclassified to profit or loss |
|
|
|
|
|
|
Foreign currency translation
adjustment |
|
|
(47,702 |
) |
|
202,371 |
|
Net loss and comprehensive loss for the
period |
|
$ |
(13,565,128 |
) |
$ |
(5,364,312 |
) |
Net loss
and comprehensive loss per share, |
|
|
|
|
|
|
basic and diluted |
|
$ |
(0.12 |
) |
$ |
(0.07 |
) |
Weighted
average number of common shares |
|
|
|
|
|
|
outstanding, basic and diluted |
|
|
111,462,147 |
|
|
72,524,137 |
|
Enthusiast Gaming
Holdings Inc. |
|
|
|
|
|
Consolidated
Statements of Cash Flows |
|
|
|
|
|
For the
three months ended March 31, 2021 and 2020 |
(Unaudited - Expressed in
Canadian Dollars) |
|
|
|
|
|
|
|
|
Three months ended March 31, 2021 |
|
|
Three months ended March 31, 2020 |
|
|
|
|
|
|
|
Cash flows from
operating activities |
|
|
|
|
|
Net loss for the period |
|
$ |
(13,517,426 |
) |
$ |
(5,566,683 |
) |
Items not affecting cash: |
|
|
|
|
|
Amortization and depreciation |
|
|
1,635,854 |
|
|
1,297,140 |
|
Share-based compensation |
|
|
5,760,036 |
|
|
390,373 |
|
Interest and accretion |
|
|
274,083 |
|
|
438,989 |
|
Deferred tax recovery |
|
|
(79,779 |
) |
|
- |
|
Gain on player buyout |
|
|
- |
|
|
(204,764 |
) |
Foreign exchange gain |
|
|
(696 |
) |
|
(69,000 |
) |
Gain on repayment of long-term debt |
|
|
(39,502 |
) |
|
- |
|
Capitalized interest and success fee |
|
|
- |
|
|
683,595 |
|
Shares for services |
|
|
93,553 |
|
|
46,058 |
|
Change in fair value of investment |
|
|
(3,984 |
) |
|
174,616 |
|
Share of loss from investment in associates |
|
|
78,418 |
|
|
95,829 |
|
Changes in working
capital |
|
|
|
|
|
Changes in trade and other receivables |
|
|
4,300,825 |
|
|
(717,375 |
) |
Changes in prepaid expenses |
|
|
(5,623 |
) |
|
(2,012 |
) |
Changes in loans receivable |
|
|
12,500 |
|
|
- |
|
Changes in accounts payable and accrued liabilities |
|
|
(6,035,820 |
) |
|
(1,021,719 |
) |
Changes in contract liabilities |
|
|
239,881 |
|
|
(480,454 |
) |
Changes in income tax receivable |
|
|
- |
|
|
4,762 |
|
Net cash used in operating activities |
|
|
(7,287,680 |
) |
|
(4,930,645 |
) |
|
|
|
|
|
|
Cash flows from
investing activities |
|
|
|
|
|
Proceeds from disposal of
investment |
|
|
- |
|
|
680,000 |
|
Proceeds from disposal of
intangible assets |
|
|
- |
|
|
204,764 |
|
Acquisition of property and
equipment |
|
|
(3,398 |
) |
|
(4,871 |
) |
Net cash (used in) provided by investing
activities |
|
|
(3,398 |
) |
|
879,893 |
|
|
|
|
|
|
|
Cash flows from
financing activities |
|
|
|
|
|
Proceeds from the
issuance of shares for the Offering, net of |
|
39,862,514 |
|
|
- |
|
transaction costs |
|
|
|
|
|
Proceeds from long-term
debt |
|
|
944,787 |
|
|
- |
|
Repayment of long-term
debt |
|
|
(13,773,470 |
) |
|
- |
|
Proceeds from exercise of
warrants |
|
|
- |
|
|
2,160,342 |
|
Proceeds from exercise of
options |
|
|
594,836 |
|
|
49,367 |
|
Lease payments |
|
|
(236,614 |
) |
|
(60,252 |
) |
Net cash provided by financing activities |
|
|
27,392,053 |
|
|
2,149,457 |
|
|
|
|
|
|
|
Foreign exchange effect on
cash |
|
|
(24,502 |
) |
|
177,776 |
|
Net change in cash |
|
|
20,076,473 |
|
|
(1,723,519 |
) |
Cash,
beginning of period |
|
|
4,323,823 |
|
|
13,211,722 |
|
Cash, end of period |
|
$ |
24,400,296 |
|
$ |
11,488,203 |
|
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