EX-99.73 74 ex99-73.htm NEWS RELEASE DATED NOVEMBER 16, 2020

Exhibit 99.73

 

image

 

Enthusiast Gaming Announces $31.7 Million of Pro Forma Revenue in Q3 2020

 

Completed transformational acquisition of Omnia Media on August 30, 2020

 

TORONTO, Nov. 16, 2020 --

 

Enthusiast Gaming Holdings Inc. (“Enthusiast Gaming” or the “Company”) (TSX: EGLX)(OTCQB: ENGMF)(FSE: 2AV), today announced results for the third quarter ended September 30, 2020.

 

“The third quarter was another record quarter for us. The acquisition of Omnia in August was transformational, and Omnia’s assets and viewers are proving to be a natural fit for our ecosystem,” commented Adrian Montgomery, Chief Executive Officer of Enthusiast Gaming. “We are on a mission to prove the earnings power of our platform of 300 million gamers monthly. We are growing rapidly and look forward to continued strong performances in the fourth quarter and in 2021.”

 

Third Quarter 2020 Highlights:

 

 

•

Reported revenue was $16.3 million, an increase of 133% compared to $7.0 million in the second quarter;

 

•

Pro forma revenue was $31.7 million for Q3 2020, an increase of 17% compared to $27.2 million in the second quarter;

 

•

Reported gross margin was $4.1 million, an increase of 28% compared to $3.2 million in the second quarter;

 

•

Pro forma gross margin was $5.3 million, an increase of 18% compared to $4.5 million in the second quarter;

 

•

Reported operating expenses were $8.2 million, an increase of 9% compared to $7.5 million in Q2;

 

•

Pro forma operating expenses were $9.3 million, an increase of 4% compared to $8.9 million in the second quarter;

 

•

Net loss and comprehensive loss for Q3 was $8.0 million, compared to $6.5 million in the second quarter, resulting in a net and comprehensive loss per share, basic and diluted, of $0.10 and $0.09, respectively;

 

•

Pro forma total views across written and video content were 10.6 billion for Q3, and 32.2 billion year-to-date;

 

•

Direct sales were approximately $1.0 million, an increase of 67% compared to the second quarter;

 

•

Closed the acquisition of Omnia Media on August 30, 2020;

 

•

Closed a $17.25 million bought deal public offering on August 31, 2020;

 

•

Introduced two new paid subscription offerings, Siliconera+ and The Escapist+; and,

 

•

Added three senior media executives to the leadership team.

 

The Company completed the acquisition of Omnia Media Inc. (“Omnia”) on August 30, 2020 (see press release dated August 31, 2020). The unaudited condensed consolidated interim financial statements of the Company for the three and nine months ended September 30, 2020 (the “Financial Statements”) include the financial results of Omnia from August 30 through September 30, 2020. References to “pro forma” figures herein will assume the acquisition of Omnia took place on the first day of the respective period. The Company is providing pro forma quarterly information for 2020 as a number of mergers and acquisitions closed in the second half of 2019 reduce the comparability of year-over-year figures. The Financial Statements contain comparative figures for the three and nine months ended September 30, 2019. Results are presented in Canadian dollars.

 

Pro Forma Metrics

 

Select Pro Forma Financial Metrics: Quarterly and 9 Months 2020
Pro Forma for Omnia Acquisition

(in $M except for EPS)

 

Q120

 

 

Q220

 

 

Q320

 

 

9 months FY20

 

Total Revenue

 

$

26.2

 

 

$

27.2

 

 

$

31.7

 

 

$

85.1

 

Media and Content

 

$

22.5

 

 

$

24.4

 

 

$ 

29.0

 

 

$ 

75.9

 

Subscription

 

$

1.2

 

 

$ 

1.7

 

 

$ 

1.6

 

 

$ 

4.5

 

Esports and Entertainment

 

$ 

2.5

 

 

$

1.1

 

 

$ 

1.1

 

 

$ 

4.7

 

Gross Margin

 

$

4.7

 

 

$

4.5

 

 

$

5.3

 

 

$

14.6

 

Gross Margin%

 

 

18.0

% 

 

 

16.7

% 

 

 

16.8

% 

 

 

17.2

% 

Operating Income (loss)

 

$

(4.6

) 

 

$

(4.3

) 

 

$

(4.0

) 

 

$

(12.9

) 

Operating Margin

 

 

-17.4

% 

 

 

-15.9

% 

 

 

-12.6

% 

 

 

-15.2

% 

Net Income (loss)

 

$

(6.1

) 

 

$

(6.4

) 

 

$

(8.0

) 

 

$

(20.5

) 

Earnings (loss) Per Share (basic & diluted)

 

$

(0.08

) 

 

$

(0.09

) 

 

$

(0.10

) 

 

$

(0.27

) 

 

 

 

  

Select Pro Forma Operating Metrics: Quarterly and 9 Months 2020

Pro Forma for Omnia Acquisition

 

 

Q120

 

 

Q220

 

 

Q320

 

 

9 months FY20

 

Total Views (millions)

 

 

9,201

 

 

 

12,485

 

 

 

10,554

 

 

 

32,240

 

Web pageviews

 

 

2,296

 

 

 

3,119

 

 

 

2,427

 

 

 

7,842

 

Video views

 

 

6,905

 

 

 

9,366

 

 

 

8,127

 

 

 

24,398

 

Paid Subscribers (thousands - as at end of period)

 

 

92

 

 

 

111

 

 

 

112

 

 

 

112

 

  

Certain information provided in this news release is extracted from Financial Statements and Management’s Discussion & Analysis (“MD&A”) of the Company for the three and nine months ended September 30, 2020, 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 www.sedar.com.

 

Earnings Announcement and Supplemental Information

 

Management will host a conference call and webcast on November 16, 2020, at 5:00 p.m. Eastern Time to review and discuss third quarter results.

 

Please call the following numbers (at least 10 minutes before the scheduled time) to participate:

 

North America (toll-free): 1-877-407-9039

 

International: +1 201-689-8470

 

Conference ID: 13713075

 

A live webcast can be heard at https://www.enthusiastgaming.com/shareholder-information/.

 

If you are unable to join live, a replay of the call will be accessible until November 30, 2020, as follows: North America: 1-844-512-2921; International: +1 412-317-6671. The conference ID is 13713075. A recorded version of the webcast will also be available via the Enthusiast Gaming investor relations website.

 

About Enthusiast Gaming

 

Enthusiast Gaming (TSX: EGLX) (OTCQB: ENGMF)(FSE: 2AV) is building the world’s largest social network of communities for gamers and esports fans that reaches over 300 million gaming enthusiasts on a monthly basis. Already the largest gaming platform in North America and the United Kingdom, the Company’s business is comprised of four main pillars: Esports, Content, Talent and Entertainment. Enthusiast Gaming’s esports division, Luminosity Gaming, is a leading global esports franchise that consists of 7 professional esports teams under ownership and management, including the Vancouver Titans Overwatch team and the Seattle Surge Call of Duty team. Enthusiast’s gaming content division includes 2 of the top 20 gaming media and entertainment video brands with BCC Gaming and Arcade Cloud, reaching more than 50MM unique viewers a month across 9 YouTube pages, 8 Snapchat shows and related Facebook, Instagram and TikTok accounts. Its 100 gaming-related websites include The Sims Resource, Destructoid, and The Escapist. Enthusiast’s talent division works with approximately 500 YouTube creators such as Pokimane, Flamingo, Anomaly, and The Sidemen. Enthusiast’s entertainment business includes Canada’s largest gaming expo, EGLX (eglx.com), and the largest mobile gaming event in Europe, Pocket Gamer Connects (pgconnects.com). For more information on the Company visit enthusiastgaming.com. For more information on Luminosity Gaming visit luminosity.gg.

 

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.
Condensed Interim Consolidated Statements of Financial Position
As at September 30, 2020 and December 31, 2019

 

 

 

September 30, 2020

 

 

December 31, 2019

 

 

 

 

 

 

(Audited)

 

ASSETS

 

 

 

 

 

 

 

 

Current

 

 

 

 

 

 

 

 

Cash

 

$

8,526,400

 

 

$

13,211,722

 

Investments

 

 

125,002

 

 

 

804,865

 

Trade and other receivables

 

 

17,230,810

 

 

 

6,701,087

 

Loans receivable

 

 

205,235

 

 

 

205,936

 

Income tax receivable

 

 

283,065

 

 

 

-

 

Prepaid expenses

 

 

821,029

 

 

 

612,386

 

Total current assets

 

 

27,191,541

 

 

 

21,535,996

 

Non-current

 

 

 

 

 

 

 

 

Property and equipment

 

 

406,949

 

 

 

298,312

 

Right-of-use asset - lease contract

 

 

3,178,922

 

 

 

733,413

 

Long-term investment

 

 

2,755,340

 

 

 

2,480,405

 

Investment in associates

 

 

1,003,687

 

 

 

914,295

 

Long-term portion of prepaid expenses

 

 

-

 

 

 

104,630

 

Intangible assets

 

 

82,625,437

 

 

 

60,017,320

 

Goodwill

 

 

110,149,496

 

 

 

83,259,416

 

Total Assets

 

$

227,311,372

 

 

$

169,343,787

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

Current

 

 

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

$

19,182,061

 

 

$

7,423,396

 

Deferred revenue

 

 

1,260,183

 

 

 

1,647,594

 

Income tax payable

 

 

-

 

 

 

2,415

 

Deferred payment liability

 

 

1,332,854

 

 

 

1,208,413

 

Current portion of lease contract liability

 

 

512,789

 

 

 

193,366

 

Total current liabilities

 

 

22,287,887

 

 

 

10,475,184

 

Non-current

 

 

 

 

 

 

 

 

Long-term debt

 

 

22,310,203

 

 

 

19,691,220

 

Long-term lease contract liability

 

 

2,703,040

 

 

 

548,846

 

Convertible debentures

 

 

7,656,712

 

 

 

7,015,820

 

Vendor-take-back loan

 

 

5,401,037

 

 

 

-

 

Deferred payment liability

 

 

536,372

 

 

 

473,413

 

Deferred tax liability

 

 

18,708,353

 

 

 

12,482,605

 

Total liabilities

 

$

79,603,604

 

 

$

50,687,088

 

 

 

 

 

 

 

 

 

 

Shareholders’ Equity

 

 

 

 

 

 

 

 

Share capital

 

 

226,212,402

 

 

 

176,511,857

 

Shares to be returned to treasury

 

 

-

 

 

 

(3,858,756

)

Warrants reserve

 

 

8,037,946

 

 

 

15,404,728

 

Contributed surplus

 

 

9,872,621

 

 

 

9,439,324

 

Accumulated other comprehensive income

 

 

156,117

 

 

 

90,078

 

Deficit

 

 

(96,571,318)

 

 

 

(78,930,532

)

Total shareholders’ equity

 

 

147,707,768

 

 

 

118,656,699

 

Total liabilities and shareholders’ equity

 

$

227,311,372

 

 

$

169,343,787

 

 

 

 

 

 

Enthusiast Gaming Holdings Inc.
Condensed Interim Consolidated Statements of Loss and Comprehensive
Loss
For the three and nine months ended September 30, 2020 and 2019

 

 

 

For the three months ended

 

 

For the nine months ended

 

 

 

September 30,

 

 

September 30,

 

 

September 30,

 

 

September 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

16,328,946

 

 

$

3,007,307

 

 

$

30,287,614

 

 

$

3,007,307

 

Gain on player buyout

 

 

-

 

 

 

-

 

 

 

204,764

 

 

 

-

 

Total revenue

 

 

16,328,946

 

 

 

3,007,307

 

 

 

30,492,378

 

 

 

3,007,307

 

Cost of sales

 

 

12,268,906

 

 

 

1,048,215

 

 

 

19,917,990

 

 

 

1,048,215

 

Gross margin

 

 

4,060,040

 

 

 

1,959,092

 

 

 

10,574,388

 

 

 

1,959,092

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Professional fees

 

 

549,942

 

 

 

724,644

 

 

 

1,463,887

 

 

 

1,371,092

 

Consulting fees

 

 

1,336,461

 

 

 

2,118,877

 

 

 

3,725,135

 

 

 

2,617,586

 

Advertising and promotion

 

 

215,410

 

 

 

630,555

 

 

 

701,901

 

 

 

1,118,975

 

Office and general

 

 

625,296

 

 

 

283,431

 

 

 

2,077,937

 

 

 

401,929

 

Salaries and wages

 

 

2,304,003

 

 

 

591,490

 

 

 

5,191,402

 

 

 

658,516

 

Technology support, web development and content

 

 

1,163,126

 

 

 

115,622

 

 

 

3,397,877

 

 

 

115,622

 

eSports player, team and game Expenses

 

 

760,844

 

 

 

808,063

 

 

 

2,244,640

 

 

 

808,063

 

Foreign exchange (gain) loss

 

 

(23,125)

 

 

 

120,347

 

 

 

(71,394)

 

 

 

135,975

 

Share-based compensation

 

 

203,963

 

 

 

2,156,199

 

 

 

873,211

 

 

 

2,549,819

 

Amortization and depreciation

 

 

1,042,072

 

 

 

259,771

 

 

 

3,390,604

 

 

 

259,771

 

Total operating expenses

 

 

8,177,992

 

 

 

7,808,999

 

 

 

22,995,200

 

 

 

10,037,348

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other expenses (income)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Listing expense

 

 

-

 

 

 

6,891,713

 

 

 

-

 

 

 

6,891,713

 

Transaction cost

 

 

1,621,775

 

 

 

2,873,606

 

 

 

1,621,775

 

 

 

2,873,606

 

Share of loss from investment in

 

 

808,011

 

 

 

-

 

 

 

2,080,358

 

 

 

-

 

associates

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and accretion

 

 

1,264,594

 

 

 

1,134,007

 

 

 

3,951,379

 

 

 

1,134,007

 

Change in fair value of investment

 

 

(374,065)

 

 

 

-

 

 

 

(211,050)

 

 

 

-

 

Loss on modification of long-term debt

 

 

806,879

 

 

 

-

 

 

 

806,879

 

 

 

-

 

Interest income

 

 

(14,775)

 

 

 

(590,292

)

 

 

(91,305)

 

 

 

(658,515

)

Net loss before income taxes

 

 

(8,230,371)

 

 

 

(16,158,941

)

 

 

(20,578,848)

 

 

 

(18,319,067

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current income tax expense

 

 

9,139

 

 

 

-

 

 

 

20,520

 

 

 

-

 

Deferred income tax recovery

 

 

(143,623)

 

 

 

-

 

 

 

(585,818)

 

 

 

-

 

Net loss for the period

 

 

(8,095,887)

 

 

 

(16,158,941

)

 

 

(20,013,550)

 

 

 

(18,319,067

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Items that may be reclassified to profit or loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation Adjustment

 

 

62,420

 

 

 

19,397

 

 

 

66,039

 

 

 

19,397

 

Net loss and comprehensive loss for the period

 

$

(8,033,467

) 

 

$

(16,139,544

)

 

$

(19,947,511

) 

 

$

(18,299,670

)

Net loss and comprehensive loss per share, basic and diluted

 

$

(0.10

) 

 

$

(0.42

)

 

$

(0.26

) 

 

$

(0.69

)

Weighted average number of common shares outstanding, basic and diluted

 

 

83,147,816

 

 

 

38,601,234

 

 

 

76,651,219

 

 

 

26,376,710

 

 

 

 

 

 

Enthusiast Gaming Holdings Inc.
Condensed Interim Consolidated Statements of Cash Flows
For the three and nine months ended September 30, 2020 and 2019

 

 

 

For the nine months ended

 

 

 

September 30, 2020

 

 

September 30, 2019

 

 

 

 

 

 

 

 

 

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

Net loss for the period

 

$

(20,013,550

) 

 

$

(18,319,067

)

Items not affecting cash:

 

 

 

 

 

 

 

 

Amortization and depreciation

 

 

3,390,604

 

 

 

259,771

 

Share-based compensation

 

 

873,211

 

 

 

2,549,819

 

Interest and accretion

 

 

1,378,077

 

 

 

1,015,791

 

Deferred income tax recovery

 

 

(585,818)

 

 

 

-

 

Gain on player buyout

 

 

(204,764)

 

 

 

-

 

Foreign exchange (gain) loss

 

 

(7,050)

 

 

 

124,412

 

Listing expense

 

 

-

 

 

 

6,891,713

 

Capitalized interest and success fee

 

 

1,494,910

 

 

 

43,803

 

Shares issued for services

 

 

138,172

 

 

 

355,892

 

Loss on modification of long-term debt

 

 

806,879

 

 

 

-

 

Provisions

 

 

90,366

 

 

 

-

 

Change in fair value of investment

 

 

(211,050)

 

 

 

-

 

Share of loss from investment in associates

    

2,080,358

          

Changes in working capital

 

 

 

 

 

 

-

 

Changes in trade and other receivables

 

 

(1,916,067)

 

 

 

(1,376,401

)

Changes in prepaid expenses

 

 

63,250

 

 

 

14,868

 

Changes in accounts payable and accrued liabilities

 

 

2,288,492

 

 

 

1,267,787

 

Changes in deferred revenue

 

 

(387,411)

 

 

 

-

 

Changes in income tax receivable

 

 

(285,480)

 

 

 

-

 

Net cash used in operating activities

 

 

(11,006,871)

 

 

 

(7,171,612

)

 

 

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

 

 

Cash paid for acquisitions

 

 

(10,500,000)

 

 

 

(1,500,000

)

Business acquisitions, net of cash acquired

 

 

281,125

 

 

 

(10,727,844

)

Proceeds from disposal of investment

 

 

680,000

 

 

 

-

 

Deferred payment liability

 

 

-

 

 

 

(11,965,500

)

Proceeds from disposal of intangible assets

 

 

204,764

 

 

 

-

 

Investment in associate

 

 

(2,169,750)

 

 

 

(1,330,690

)

Acquisition of property and equipment

 

 

(4,871)

 

 

 

(48,438

)

Net cash used in investing activities

 

 

(11,508,732)

 

 

 

(25,572,472

)

 

 

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

 

 

Proceeds from the issuance of shares for the Offering, net of transaction cost

 

 

15,609,257

 

 

 

-

 

Proceeds from the issuance of shares for subcription receipt proceeds, net of transaction cost

 

 

-

 

 

 

23,937,295

 

Proceeds from convertible debenture, net of transaction costs

 

 

-

 

 

 

9,345,004

 

Proceeds from long-term debt, net of tansaction costs

 

 

-

 

 

 

2,170,000

 

Proceeds from exercise of warrants

 

 

2,354,246

 

 

 

345,531

 

Proceeds from exercise of options

 

 

49,366

 

 

 

19,237

 

Lease payments

 

 

(221,764)

 

 

 

(22,186

)

Net cash provided by financing activities

 

 

17,791,105

 

 

 

35,794,881

 

 

 

 

 

 

 

 

 

 

Foreign exchange effect on cash

 

 

39,176

 

 

 

(6,491

)

Net change in cash

 

 

(4,685,322)

 

 

 

3,044,306

 

Cash, beginning of period

 

 

13,211,722

 

 

 

4,155,054

 

Cash, end of period

 

$

8,526,400

 

 

$

7,199,360

 

 

For further information: Enthusiast Gaming Contact: Alex Macdonald, CFO, 416.623.9360

 

Investor Relations Contact:
Eric Bernofsky, Chief Corporate Officer, 416.623.9360
investor@enthusiastgaming.com

 

Media Relations – ID Public Relations
EnthusiastGaming@id-pr.com