Attached files
| file | filename |
|---|---|
| 8-K - CURRENT REPORT - Super League Gaming, Inc. | slgg8k_aug122021.htm |
| EX-99.2 - PRESS RELEASE - Super League Gaming, Inc. | ex99-2.htm |
Exhibit 99.1
SUPER LEAGUE GAMING REPORTS RECORD SECOND QUARTER 2021
RESULTS
Santa Monica, Calif. –
(August 12, 2021) -
Super League
Gaming (Super League or the
Company) (Nasdaq: SLGG), a global leader in video gaming and
esports experiences and entertainment for everyday players of all
ages, reported recent operational developments and financial
results for the second quarter ended June 30,
2021.
Q2 Highlights and Recent Operational Developments
●
Second quarter revenues
reach record $1.1 million in 2021, up 235% compared to Q2 2020 with
increases in all primary revenue streams.
●
Gross margin continues to
be healthy at 51% for Q2 2021.
●
Balance sheet remains
strong with $31.5 million of cash on hand as of June 30, 2021 and
no debt.
●
Successful shareholder
support for the acquisition of Mobcrush, which was completed on
June 1st
and brings synergies that will drive future revenue
growth.
●
In July 2021, Pixel
Paradise launched as the first ever Minecraft Bedrock server
focused on role-playing, joining our property Mineville as two of
seven official Minecraft servers.
●
And today, we announced the
acquisition of Bannerfy, a creator monetization and ad technology
platform, augmenting our offers to brands and
advertisers.
Management Commentary
“In the second quarter, we continued to execute on our
mission of building a world-class gaming-centric media and
entertainment platform, delivering record quarterly revenue,”
said Ann Hand, Chief Executive Officer of Super League Gaming.
“We closed the transformative acquisition of Mobcrush and
have already begun to see tremendous synergies with our combined
technology stack and advertising inventory. We are well-positioned
to take advantage of the mega trends in gaming and esports and
expect to continue growing our scale at an accelerated pace. We are
quite optimistic about the opportunities that lie ahead for Super
League and its network of gamers and creators.”
-1-
Second Quarter 2021 Financial Results
Revenues in the
second quarter of 2021 increased 235% to $1.1 million compared to
$324,000 in the comparable prior year quarter. Advertising and
sponsorship revenues comprised approximately 45% of revenues for
the second quarter of 2021 as compared to 15% for the comparable
prior year quarter, and increased 890% compared to the prior year
quarter, due to significant increases in direct sales and
programmatic advertising revenues on our owned, operated and
partners’ digital channels. Content sales revenues comprised
approximately 34% of revenues for the second quarter of 2021 as
compared to 73% for the comparable prior year quarter, and
increased 55% compared to the prior year quarter, due to an
increase in revenues generated in connection with our curation and
distribution of esports and entertainment content for our own
network of digital channels and our media and entertainment partner
channels. This includes the syndication and licensing of original
programming content, user generated content, including online
gameplay and gameplay highlights, and the creation of content for
third parties utilizing our Virtualis remote production and
broadcast technology. Direct-to-consumer revenues comprised
approximately 22% of revenues for the second quarter of 2021 as
compared to 12% for the comparable prior year quarter, and
increased 500% compared to the prior year quarter. The increase in
direct-to-consumer revenues primarily reflects one month of
Mobcrush-related Mineville digital goods sales revenues and the
continued increase in Minehut-related subscription and digital
goods sales revenues.
Second quarter
2021 cost of revenue increased to $533,000 compared to $116,000 in
the comparable prior year quarter due primarily to the increase in
related revenues. As a percent of revenue, gross profit in the
second quarter of 2021 was 51% compared to 64% in the prior year
quarter. The decrease primarily reflects lower actual costs
incurred for certain contracted activations in the second quarter
of 2020, as we transitioned certain projects online in response to
the COVID-19 pandemic.
Total operating
expense in the first quarter of 2021 was $6.9 million compared to
$4.8 million in the comparable prior year quarter due to an
increase in technology platform infrastructure costs, selling,
marketing and advertising expense in support of the increased
revenue, personnel costs related to employees acquired in
connection with the acquisition of Mobcrush, noncash amortization
of intangible assets acquired in connection with the acquisition of
Mobcrush, and Mobcrush transaction-related expenses. Non-cash stock
compensation charges for the second quarter of 2021 totaled
$561,000 compared to $397,000 in the second quarter of 2020.
Mobcrush acquisition-related transaction costs, which are required
to be expensed in period incurred, totaled $417,000 in the second
quarter of 2021.
Included in
other income (expense), net, for the second quarter of 2021 is a
$1.2 million gain recognized in connection with the forgiveness and
extinguishment of the May 2020 PPP Loan and accrued interest, which
was forgiven in May 2021, pursuant to the applicable provisions of
the Cares Act.
In addition, in
connection with the application of the acquisition method of
accounting to the Mobcrush acquisition transaction, the net
deferred tax liability resulting from the merger created a source
of income to utilize against the Company’s existing net
deferred tax assets. Accordingly, the valuation allowance on a
portion of the Company's net deferred tax assets was released,
resulting in an income tax benefit of $2.8 million, recorded as a
credit to income tax benefit for the second quarter of
2021.
-2-
On a
GAAP-basis, which includes the impact of noncash charges and
credits, net loss in the second quarter of 2021 was $2.3 million or
$(0.08) per share, compared to a net loss of $4.6 million or
$(0.48) per share in the comparable prior year quarter. The
weighted average diluted share count for the second quarter of 2021
was 27.2 million compared to 9.5 million for the second quarter of
2020. The weighted average diluted share count for the second
quarter of 2021 reflects the issuance of 12,067,571 shares of the
Company’s common stock to the former shareholders of Mobcrush
as merger consideration in the all-common stock transaction, which
closed on June 1, 2021.
Proforma net
loss for the second quarter of 2021, which excludes the impact of
noncash charges and credits, was $5.5 million, or $(0.20) per
share, compared to a proforma net loss of $4.1 million, or $(0.41)
per share in the comparable prior year quarter.
Liquidity
As of June 30, 2021, the Company had cash
of $31.5 million and no debt, compared to $36.7 million and no debt
as of March 31, 2021.
Conference Call
The Company will hold a conference call on
Thursday, August 12
at 5:00 p.m. Eastern time to
discuss its second quarter 2021 results and provide a business
update.
Date: Thursday, August 12, 2021
Time: 5:00 p.m. Eastern time (2:00 p.m. Pacific time)
Toll-free dial-in number: (866) 987-6716
International dial-in number: (630) 652-5945
Conference ID: 2093596
Please call the conference telephone number 5-10 minutes prior to
the start time. An operator will register your name and
organization. If you have any difficulty connecting with the
conference call, please contact Gateway Investor Relations at (949)
574-3860.
The conference call will be broadcast live and
available for replay here
and via the investor relations section
of the Company’s website at www.SuperLeague.com.
A replay of the conference call will be available after 8:00 p.m.
Eastern time on the same day through 8:00 p.m. Eastern time on
August 19, 2021.
Toll-free replay number: (855) 859-2056
International replay number: (404) 537-3406
Replay ID: 2093596
About Super League Gaming
Super League
Gaming (Nasdaq: SLGG) is a leading video game entertainment and
experiences company that gives tens of millions of players multiple
ways to create, connect, compete, and enjoy the video games they
love. Fueled by proprietary and patented technology systems, the
company’s offerings include gameplay properties in which
young gamers form vibrant in-game communities, content creation
platforms that power live broadcasts and on-demand video series
that generate billions of views annually across the world’s
biggest distribution channels, and competitive gaming tournaments
featuring many of the most popular global titles. Through
partnerships with top consumer brands, in-game player and brand
monetization, and a fully virtual cloud-based video production
studio, Super League is building a broadly inclusive business at
the intersection of content creation, creator monetization, and
both casual and competitive gameplay. For more, go to superleague.com.
-3-
Forward-Looking Statements
Safe Harbor Statement under the Private Securities Litigation
Reform Act of 1995. Statements in this press release that are not
strictly historical are “forward-looking” statements
within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. These statements involve substantial risks, uncertainties
and assumptions that could cause actual results to differ
materially from those expressed or implied by such statements.
Forward-looking statements in this communication include, among
other things, statements about our possible or assumed business
strategies, potential growth opportunities, new products and
potential market opportunities. Risks and uncertainties include,
among other things, our ability to implement our plans, forecasts
and other expectations with respect our business; our ability to
realize the anticipated benefits of events that took place during
and subsequent to the quarter ended June 30, 2021, including the
possibility that the expected benefits will not be realized or will
not be realized within the expected time period; unknown
liabilities that may or may not be within our control; attracting
new customers and maintaining and expanding our existing customer
base; our ability to scale and update our platform to respond to
customers’ needs and rapid technological change; increased
competition on our market and our ability to compete effectively;
expansion of our operations and increased adoption of our platform
internationally; whether the merger transaction with Mobcrush will
prove beneficial to the Company; and our ability to consummate the
acquisition transaction with Bannerfy and, if consummated, whether
the acquisition of Bannerfy will prove beneficial to the Company.
Additional risks and uncertainties that could affect our financial
results are included in the section titled “Risk
Factors” and “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” in
our Annual Report on Form 10-K for the year ended December 31, 2020
and other filings that we make from time to time with the
Securities and Exchange Commission which, once filed, are available
on the SEC’s website at www.sec.gov. In addition, any
forward-looking statements contained in this communication are
based on assumptions that we believe to be reasonable as of this
date. Except as required by law, we assume no obligation to update
these forward-looking statements, or to update the reasons if
actual results differ materially from those anticipated in the
forward-looking statements.
Information About Non-GAAP Financial Measures
As used herein, “GAAP” refers to accounting principles
generally accepted in the United States of America. To supplement
our financial statements included in our annual and quarterly
reports filed with the SEC, which financial statements are prepared
and presented in accordance with GAAP, this earnings release
includes proforma net loss, a financial measure that is considered
a non-GAAP financial measure as defined in Rule 101 of Regulation G
promulgated by the Securities and Exchange Commission. Generally, a
non-GAAP financial measure is a numerical measure of a
company’s historical or future performance, financial
position, or cash flows that either excludes or includes amounts
that are not normally excluded or included in the most directly
comparable measure calculated and presented in accordance with
GAAP. The presentation of this non-GAAP financial information is
not intended to be considered in isolation or as a substitute for,
or superior to, the financial information prepared and presented in
accordance with GAAP.
We use proforma net loss, proforma earnings per share (EPS) and
other non-GAAP financial measures for internal financial and
operational decision-making purposes and to evaluate
period-to-period comparisons of the performance and results of
operations of our business. Our management believes these non-GAAP
financial measures provide meaningful supplemental information
regarding the performance of our business by excluding non-cash
stock compensation charges, non-cash interest charges on
convertible debt, and non-cash prepaid in-kind advertising charges
that may not be indicative of our recurring core business operating
results. These non-GAAP financial measures also facilitate
management’s internal planning and comparisons to our
historical performance and liquidity. We believe these non-GAAP
financial measures are useful to investors as they allow for
greater transparency with respect to key metrics used by management
in its financial and operational decision making and are used by
our institutional investors and the analyst community to help them
analyze the performance and operational results of our core
business.
-4-
Proforma Net Loss and
EPS. We define Proforma
Net Loss as net loss calculated in accordance with GAAP, but
excluding non-cash stock compensation charges, non-cash interest
charges on convertible debt (including accrued periodic interest,
periodic or accelerated amortization of debt discount charges and
charges related to convertible debt related beneficial conversion
features), and noncash amortization on noncash intangible assets.
Proforma EPS is defined as Proforma net income divided by the
weighted average outstanding shares, on a fully diluted basis,
calculated in accordance with GAAP, for the respective reporting
period.
Due to the inherent volatility in stock prices, the use of
estimates and assumptions in connection with the valuation and
expensing of share-based awards and the variety of award types that
companies can issue under FASB ASC Topic 718, management believes
that providing a non-GAAP financial measure that excludes non-cash
stock compensation allows investors to make meaningful comparisons
between our recurring core business operating results and those of
other companies period to period, as well as providing our
management with a critical tool for financial and operational
decision making and for evaluating our own period-to-period
recurring core business operating results.
Non-cash interest charges related to convertible debt outstanding,
if any, including accrued periodic interest, periodic or
accelerated amortization of debt discount charges and charges
related to convertible debt related beneficial conversion features,
primarily reflects the attribution of value to common stock
purchase warrants and the beneficial conversion feature embedded in
the convertible debt instruments, and the expensing of these
amounts on a straight-line basis over the term of the convertible
debt as additional interest cost related to the debt. These
non-cash amounts are reflected in other expense and are not
expenses associated with our core business operations. Management
believes that providing a non-GAAP financial measure that excludes
non-cash interest charges allows investors to make meaningful
comparisons between our recurring core business operating results
and those of other companies period to period, as well as providing
our management with a critical tool for financial and operational
decision making and for evaluating our own period-to-period
recurring core business operating results.
Due to the use of estimates and assumptions pursuant to the
guidance set forth in FASB ASC Topic 805 in connection with the
valuation of assets acquired and liabilities assumed in connection
with business combinations, for all stock purchase consideration
transactions management believes that providing a non-GAAP
financial measure that excludes non-cash amortization related to
these assets acquired allows investors to make meaningful
comparisons between our recurring core business operating results
and those of other companies period to period, as well as providing
our management with a critical tool for financial and operational
decision making and for evaluating our own period-to-period
recurring core business operating results.
There are several limitations related to the use of proforma net
loss and EPS versus net loss EPS calculated in accordance with
GAAP. For example, non-GAAP net loss excludes the impact of
significant non-cash stock compensation and debt related interest
charges that are or may be recurring, and that may or will continue
to be recurring for the foreseeable future. In addition, non-cash
stock compensation is a critical component of our employee
compensation and retention programs and the cost associated with
common stock purchase warrants and beneficial conversion features
embedded in convertible debt outstanding is a critical component of
the cost of debt financings. Management compensates for these
limitations by providing specific information regarding the GAAP
amounts excluded from non-GAAP net loss and evaluating non-GAAP net
loss in conjunction with net loss and EPS calculated in accordance
with GAAP.
-5-
The accompanying table below titled
“Reconciliation of GAAP to Non-GAAP Financial
Information” provides a reconciliation of the non-GAAP
financial measures presented to the most directly comparable
financial measures prepared in accordance with
GAAP.
Investor Relations:
Cody Slach and Sophie Pearson
Gateway Investor Relations
(949) 574-3860
SLG@GatewayIR.com
Media Contact:
Gillian Sheldon
(213) 718-3880
Gillian.Sheldon@superleague.com
-6-
SUPER LEAGUE GAMING, INC.
CONDENSED BALANCE SHEETS
(Unaudited)
|
|
June 30,
2021
|
December 31, 2020
|
|
Assets
|
|
|
|
Cash
|
$31,455,000
|
$7,942,000
|
|
Accounts
receivable
|
1,721,000
|
588,000
|
|
Prepaid
expenses and other current assets
|
900,000
|
837,000
|
|
Total current assets
|
34,076,000
|
9,367,000
|
|
|
|
|
|
Property
and Equipment, net
|
122,000
|
138,000
|
|
Intangible
and Other Assets, net
|
20,221,000
|
1,907,000
|
|
Goodwill
|
46,804,000
|
2,565,000
|
|
Total assets
|
$101,223,000
|
$13,977,000
|
|
|
|
|
|
Liabilities
|
|
|
|
Accounts
payable and accrued expenses
|
$2,808,000
|
$1,829,000
|
|
Deferred
Revenue
|
142,000
|
-
|
|
Total current liabilities
|
2,950,000
|
1,829,000
|
|
|
|
|
|
Long-term
note payable
|
-
|
1,208,000
|
|
Deferred
tax liability
|
-
|
-
|
|
Total Liabilities
|
2,950,000
|
3,037,000
|
|
|
|
|
|
Stockholders’ Equity
|
|
|
|
Common
Stock
|
45,000
|
25,000
|
|
Additional
paid-in capital
|
209,703,000
|
115,459,000
|
|
Accumulated
deficit
|
(111,475,000)
|
(104,544,000)
|
|
Total stockholders’ equity
|
98,273,000
|
10,940,000
|
|
Total liabilities and stockholders’ equity
|
$101,223,000
|
$13,977,000
|
-7-
SUPER LEAGUE GAMING, INC.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
|
|
Three Months Ended
|
Six Months Ended
|
||
|
|
June 30,
|
June 30,
|
||
|
|
2021
|
2020
|
2021
|
2020
|
|
|
|
|
|
|
|
REVENUE
|
$1,084,000
|
$324,000
|
$1,872,000
|
$567,000
|
|
COST OF REVENUE
|
(533,000)
|
(116,000)
|
(875,000)
|
(233,000)
|
|
|
|
|
|
|
|
GROSS PROFIT
|
551,000
|
208,000
|
997,000
|
334,000
|
|
|
|
|
|
|
|
OPERATING EXPENSES
|
|
|
|
|
|
Selling,
marketing and advertising
|
1,934,000
|
1,256,000
|
3,417,000
|
2,529,000
|
|
Technology
and platform development
|
2,497,000
|
1,685,000
|
4,100,000
|
3,590,000
|
|
General and
administrative
|
2,433,000
|
1,826,000
|
4,419,000
|
3,922,000
|
|
Total
operating expenses
|
6,864,000
|
4,767,000
|
11,936,000
|
10,041,000
|
|
|
|
|
|
|
|
NET OPERATING LOSS
|
(6,313,000)
|
(4,559,000)
|
(10,939,000)
|
(9,707,000)
|
|
|
|
|
|
|
|
OTHER INCOME (EXPENSE)
|
|
|
|
|
|
Interest
expense
|
(2,000)
|
(2,000)
|
(5,000)
|
(2,000)
|
|
Other
|
1,216,000
|
1,000
|
1,220,000
|
15,000
|
|
OTHER INCOME (EXPENSE)
|
1,214,000
|
(1,000)
|
1,215,000
|
13,000
|
|
|
|
|
|
|
|
LOSS BEFORE BENEFIT FROM INCOME TAXES
|
(5,099,000)
|
(4,560,000)
|
(9,724,000)
|
(9,694,000)
|
|
|
|
|
|
|
|
BENEFIT FOR INCOME TAXES
|
2,793,000
|
-
|
2,793,000
|
-
|
|
|
|
|
|
|
|
NET LOSS
|
$(2,306,000)
|
$(4,560,000)
|
$(6,931,000)
|
$(9,694,000)
|
|
|
|
|
|
|
|
Net loss attributable to common stockholders - basic and
diluted
|
|
|
|
|
|
Basic and
diluted loss per common share
|
$(0.08)
|
$(0.48)
|
$(0.29)
|
$(1.07)
|
|
Weighted-average
number of shares outstanding, basic and diluted
|
$27,165,755
|
$9,548,000
|
$23,525,528
|
$9,066,000
|
-8-
SUPER LEAGUE GAMING, INC.
Reconciliation of GAAP to Non-GAAP Financial
Information
(Unaudited)
|
|
Three Months Ended
|
Six Months Ended
|
||
|
|
June 30,
|
June 30,
|
||
|
|
2021
|
2020
|
2021
|
2020
|
|
|
|
|
|
|
|
GAAP net loss
|
$(2,306,000)
|
$(4,560,000)
|
$(6,931,000)
|
$(9,694,000)
|
|
Add
back:
|
|
|
|
|
|
Non-cash
stock compensation
|
561,000
|
397,000
|
972,000
|
1,099,000
|
|
Non-cash
amortization of intangibles
|
251,000
|
-
|
251,000
|
-
|
|
Noncash
benefit for income taxes
|
(2,793,000)
|
-
|
(2,793,000)
|
-
|
|
Other
noncash items
|
(1,213,000)
|
107,000
|
(1,213,000)
|
413,000
|
|
Proforma net loss
|
$(5,500,000)
|
$(4,056,000)
|
$(9,714,000)
|
$(8,182,000)
|
|
|
|
|
|
|
|
Pro forma
non-GAAP net earnings (loss) per common share —
diluted
|
$(0.20)
|
$(0.42)
|
$(0.41)
|
$(0.90)
|
|
Non-GAAP
weighted-average shares — diluted
|
27,165,755
|
9,548,000
|
23,525,528
|
9,066,000
|
-9-
SUPER LEAGUE GAMING, INC.
CONDENSED STATEMENT OF CASH FLOWS
(Unaudited)
|
|
Three Months Ended
|
|
|
|
June 30,
|
|
|
|
2021
|
2020
|
|
|
|
|
|
Operating Activities
|
|
|
|
Net
loss
|
$(6,931,000)
|
$(9,694,000)
|
|
Adjustments
to reconcile net loss to net cash used in operations:
|
|
|
|
Depreciation
and amortization
|
801,000
|
854,000
|
|
Stock-based
compensation
|
972,000
|
1,099,000
|
|
Gain on
loan forgiveness
|
(1,213,000)
|
-
|
|
Change in
valuation allowance
|
(2,793,000)
|
-
|
|
Changes in assets and liabilities
|
|
|
|
Accounts
Receivable
|
134,000
|
(204,000)
|
|
Prepaid
Expenses and Other Assets
|
79,000
|
(484,000)
|
|
Accounts
payable and accrued expenses
|
(991,000)
|
(5,000)
|
|
Deferred
Revenue
|
12,000
|
(151,000)
|
|
Accrued
interest on notes
|
5,000
|
-
|
|
Net Cash Used in Operating Activities
|
(9,925,000)
|
(8,585,000)
|
|
|
|
|
|
Investing Activities
|
|
|
|
Cash
acquired in connection with Mobcrush Acquisition
|
586,000
|
-
|
|
Purchase of
property and equipment
|
(11,000)
|
(6,000)
|
|
Capitalization
of software development costs
|
(437,000)
|
(691,000)
|
|
Acquisition
of other intangibles
|
(137,000)
|
(72,000)
|
|
Net Cash Used in Investing Activities
|
1,000
|
(769,000)
|
|
|
|
|
|
Financing Activities
|
|
|
|
Proceeds
from issuance of common stock, net
|
33,399,000
|
5,953,000
|
|
Proceeds
from long-term note payable
|
-
|
1,200,000
|
|
Proceeds
from stock option exercises
|
38,000
|
-
|
|
Net Cash Provided by Financing Activities
|
33,437,000
|
7,153,000
|
|
|
|
|
|
Net Cash
Increase (decrease) for the Period
|
23,513,000
|
(2,201,000)
|
|
Cash at Beginning of the Period
|
7,942,000
|
8,442,000
|
|
Cash at End of the Period
|
$31,455,000
|
$6,241,000
|
-10-