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 CallThe 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.
_______________________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) 924-2614lgaucher@oam.gg
Babak Pedram, Investor Relations, Virtus Advisory Group
Inc.(416) 955-8651bpedram@virtusadvisory.com
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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