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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