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Enthusiast Gaming Reports Second Quarter 2021 Results

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Consolidated revenue of $37.1 million, including record direct sales of $4.4 million

Paid subscribers grew to a record 155,000

TORONTO, Aug. 10, 2021 (GLOBE NEWSWIRE) -- Enthusiast Gaming Holdings Inc. (NASDAQ:EGLX) (TSX:EGLX), (“Enthusiast Gaming” or the “Company”), today announced financial results for the three and six months ended June 30, 2021. All amounts are stated in Canadian dollars unless otherwise indicated.

Second Quarter 2021 Financial and Operating Highlights

  • Revenue of $37.1 million for the three months ended June 30, 2021 vs the three months ended June 30, 2020 (“Q2 2020”) revenue of $7.0 million

  • Gross profit of $8.0 million vs Q2 2020 gross profit of $3.2 million

  • Direct advertising sales of $4.4 million compared to direct advertising sales of $0.6 million in Q2 2020

  • The Company’s common shares commenced trading on the Nasdaq

  • Raised gross proceeds of $60.1 million (USD$49.5 million) in a public offering

  • Completed acquisitions of popular web properties Tabstats and Icy Veins

  • Paid subscribers of approximately 155,000 as at June 30, 2021, as compared to approximately 111,000 subscribers as at June 30, 2020

  • Net and comprehensive loss of $12.8 million, or $0.11 on a per common share basis

  • Esports division, Luminosity Gaming, ranked as the most watched team on Twitch for each month of the second quarter

“After listing on the Nasdaq, completing two major acquisitions and raising $60.1 million (USD$49.5 million) to further accelerate our accretive M&A strategy, this has been an exemplary quarter for Enthusiast Gaming,” commented Adrian Montgomery, CEO of Enthusiast Gaming. “We expect to see sequential revenue growth and margin improvements throughout the remainder of the year, driven by momentum in direct sales and our pipeline of acquisitions. While we continue to grow our subscription business from current and newly acquired properties, the game-changer for this vertical is expected to come from Project GG and its premium subscription offering, which will launch as an exclusive alpha to select gamers in late September. Our team’s ability to continue acquiring accretive properties, attract quality partners, and deliver fresh content to our fan communities continues to exceed expectations.”

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 June 30, 2021 and should be read in conjunction with them. It is only in the context of the 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 August 10, 2021, at 5:00 p.m. ET to review and discuss the second quarter 2021 results.

Conference call dial-in details:
North America (toll-free): +1 877-300-8521
International: +1 412-317-6026
Conference ID: 10159262

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 Officer
investor@enthusiastgaming.com   

Media Relations:
Carmela Antolino, Provident Communications
carmela@providentcomms.com
647-287-2286

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.

Condensed Consolidated Interim Statements of Financial Position

As at June 30, 2021 and December 31, 2020

(Unaudited - Expressed in Canadian Dollars)

 

 

 

 

 

 

 

 

 

 

 

June 30, 2021

 

 

December 31, 2020

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

Current

 

 

 

 

 

 

Cash

 

$

51,367,573

 

$

4,323,823

 

 

Trade and other receivables

 

 

22,322,613

 

 

22,424,596

 

 

Investments

 

 

2,503,692

 

 

124,998

 

 

Loans receivable

 

 

176,931

 

 

194,389

 

 

Income tax receivable

 

 

262,331

 

 

290,077

 

 

Prepaid expenses

 

 

4,093,213

 

 

576,802

 

Total current assets

 

 

80,726,353

 

 

27,934,685

 

Non-current

 

 

 

 

 

 

Property and equipment

 

 

296,112

 

 

354,850

 

 

Right-of-use asset - lease contracts

 

 

2,446,961

 

 

2,848,400

 

 

Long-term investment

 

 

-

 

 

2,606,100

 

 

Investment in associates

 

 

954,650

 

 

1,026,910

 

 

Long-term portion of prepaid expenses

 

 

256,055

 

 

263,196

 

 

Intangible assets

 

 

84,903,287

 

 

81,106,007

 

 

Goodwill

 

 

124,712,768

 

 

106,181,086

 

Total Assets

 

$

294,296,186

 

$

222,321,234

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

Current

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

$

21,901,837

 

$

23,602,547

 

 

Contract liabilities

 

 

2,672,365

 

 

1,625,594

 

 

Current portion of long-term debt

 

 

2,750,000

 

 

1,250,000

 

 

Current portion of deferred payment liability

 

1,599,657

 

 

636,600

 

 

Current portion of convertible debentures

 

 

-

 

 

7,546,453

 

 

Current portion of lease contract liabilities

 

 

503,102

 

 

578,330

 

Total current liabilities

 

 

29,426,961

 

 

35,239,524

 

Non-current

 

 

 

 

 

 

Long-term debt

 

 

7,271,115

 

 

21,651,956

 

 

Long-term lease contract liabilities

 

 

1,991,145

 

 

2,308,336

 

 

Vendor-take-back loan

 

 

-

 

 

5,559,250

 

 

Long-term portion of deferred payment liability

 

1,690,410

 

 

529,124

 

 

Deferred tax liability

 

 

16,887,505

 

 

15,161,987

 

Total liabilities

 

$

57,267,136

 

$

80,450,177

 

 

 

 

 

 

 

 

Shareholders' Equity

 

 

 

 

 

 

Share capital

 

 

345,078,178

 

 

232,616,997

 

 

Contributed surplus

 

 

16,591,617

 

 

7,494,164

 

 

Accumulated other comprehensive income (loss)

 

(75,866

)

 

45,428

 

 

Deficit

 

 

(124,564,879

)

 

(98,285,532

)

Total shareholders' equity

 

 

237,029,050

 

 

141,871,057

 

Total liabilities and shareholders' equity

 

$

294,296,186

 

$

222,321,234

 

 

 

 

 

 

 

 


Enthusiast Gaming Holdings Inc.

Condensed Consolidated Interim Statements of Loss and Comprehensive Loss

For the three and six months ended June 30, 2021 and 2020

 

 

 

 

 

 

(Unaudited - Expressed in Canadian Dollars)

 

 

 

 

 

 

 

 

 

 

For the three months ended

 

For the six months ended

 

 

 

 

June 30, 2021

 

 

June 30, 2020

 

 

June 30, 2021

 

 

June 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

37,057,601

 

$

7,029,096

 

$

67,079,936

 

$

13,958,668

 

 

Gain on player buyout

 

 

-

 

 

-

 

 

-

 

 

204,764

 

Total revenue

 

 

37,057,601

 

 

7,029,096

 

 

67,079,936

 

 

14,163,432

 

Cost of sales

 

 

29,038,301

 

 

3,807,977

 

 

53,129,628

 

 

7,649,084

 

Gross margin

 

 

8,019,300

 

 

3,221,119

 

 

13,950,308

 

 

6,514,348

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

Professional fees

 

 

1,213,479

 

 

627,703

 

 

1,950,975

 

 

913,945

 

 

Consulting fees

 

 

1,075,726

 

 

1,181,024

 

 

2,386,353

 

 

2,388,674

 

 

Advertising and promotion

 

 

813,588

 

 

212,605

 

 

1,855,942

 

 

486,491

 

 

Office and general

 

 

2,165,506

 

 

466,173

 

 

2,872,451

 

 

1,452,641

 

 

Salaries and wages

 

 

5,566,237

 

 

1,646,915

 

 

10,194,512

 

 

2,887,399

 

 

Technology support, web development and content

 

2,698,660

 

 

1,299,857

 

 

4,093,543

 

 

2,234,751

 

 

Esports player, team and game expenses

 

 

1,465,718

 

 

618,687

 

 

2,994,323

 

 

1,483,796

 

 

Foreign exchange (gain) loss

 

 

(1,066,122

)

 

108,248

 

 

(1,076,255

)

 

(48,269

)

 

Share-based compensation

 

 

3,958,309

 

 

278,875

 

 

9,718,345

 

 

669,248

 

 

Amortization and depreciation

 

 

1,659,583

 

 

1,051,392

 

 

3,295,437

 

 

2,348,532

 

Total operating expenses

 

 

19,550,684

 

 

7,491,479

 

 

38,285,626

 

 

14,817,208

 

 

 

 

 

 

 

 

 

 

 

 

Other expenses (income)

 

 

 

 

 

 

 

 

 

 

Transaction costs

 

 

209,129

 

 

-

 

 

209,129

 

 

-

 

 

Share of (income) loss from investment in associates

 

 

(6,158

)

 

1,176,518

 

 

72,260

 

 

1,272,347

 

 

Interest and accretion

 

 

480,987

 

 

1,361,524

 

 

1,272,301

 

 

2,686,785

 

 

Change in fair value of investment

 

 

160,655

 

 

(11,601

)

 

156,671

 

 

163,015

 

 

Gain on repayment of long-term debt

 

 

-

 

 

-

 

 

(39,502

)

 

-

 

 

Loss on settlement of vendor-take-back loan

 

 

316,241

 

 

-

 

 

316,241

 

 

-

 

 

Loss on revaluation of deferred payment liability

 

89,184

 

 

-

 

 

89,184

 

 

-

 

 

Interest income

 

 

(22,911

)

 

(15,007

)

 

(41,231

)

 

(76,530

)

Net loss before income taxes

 

 

(12,758,511

)

 

(6,781,794

)

 

(26,370,371

)

 

(12,348,477

)

 

 

 

 

 

 

 

 

 

 

 

Income taxes

 

 

 

 

 

 

 

 

 

 

Current tax expense

 

 

48,692

 

 

11,381

 

 

34,037

 

 

11,381

 

 

Deferred tax recovery

 

 

(45,282

)

 

(442,195

)

 

(125,061

)

 

(442,195

)

Net loss for the period

 

 

(12,761,921

)

 

(6,350,980

)

 

(26,279,347

)

 

(11,917,663

)

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income (loss)

 

 

 

 

 

 

 

 

 

Items that may be reclassified to profit or loss

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment

 

 

(73,592

)

 

(198,752

)

 

(121,294

)

 

3,619

 

Net loss and comprehensive loss for the period

 

$

(12,835,513

)

$

(6,549,732

)

$

(26,400,641

)

$

(11,914,044

)

Net loss and comprehensive loss per share,

 

 

 

 

 

 

 

 

 

 

basic and diluted

 

$

(0.11

)

$

(0.09

)

$

(0.23

)

$

(0.16

)

Weighted average number of common shares

 

 

 

 

 

 

 

 

 

 

outstanding, basic and diluted

 

 

117,523,027

 

 

74,210,312

 

 

114,509,330

 

 

73,367,225

 

 

 

 

 

 

 

 

 

 

 

 


Enthusiast Gaming Holdings Inc.

Condensed Consolidated Interim Statements of Cash Flows

For the six months ended June 30, 2021 and 2020

(Unaudited - Expressed in Canadian Dollars)

 

 

 

For the six months ended

 

 

 

June 30, 2021

 

 

June 30, 2020

 

 

 

 

 

 

 

Cash flows from operating activities

 

 

 

 

 

Net loss for the period

 

$

(26,279,347

)

$

(11,917,663

)

Items not affecting cash:

 

 

 

 

 

Amortization and depreciation

 

 

3,295,437

 

 

2,348,532

 

Share-based compensation

 

 

9,718,345

 

 

669,248

 

Interest and accretion

 

 

465,657

 

 

897,397

 

Deferred tax recovery

 

 

(125,061

)

 

(442,195

)

Gain on player buyout

 

 

-

 

 

(204,764

)

Foreign exchange loss (gain)

 

 

587,716

 

 

(14,831

)

Gain on repayment of long-term debt

 

 

(39,502

)

 

-

 

Loss on settlement of vendor-take-back loan

 

 

316,241

 

 

-

 

Loss on revaluation of deferred payment liability

 

 

89,184

 

 

-

 

Capitalized interest and success fee

 

 

-

 

 

1,382,646

 

Shares for services

 

 

185,662

 

 

92,115

 

Change in fair value of investment

 

 

156,671

 

 

163,015

 

Share of loss from investment in associates

 

 

72,260

 

 

1,272,347

 

Changes in working capital

 

 

 

 

 

Changes in trade and other receivables

 

 

375,985

 

 

(177,083

)

Changes in prepaid expenses

 

 

(3,608,526

)

 

121,589

 

Changes in loans receivable

 

 

37,500

 

 

-

 

Changes in accounts payable and accrued liabilities

 

 

(2,511,575

)

 

(902,945

)

Changes in contract liabilities

 

 

998,992

 

 

(299,600

)

Changes in income tax receivable

 

 

(206,083

)

 

(285,630

)

Net cash used in operating activities

 

 

(16,470,444

)

 

(7,297,822

)

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

Cash paid for mergers and acquisitions

 

 

(12,549,396

)

 

-

 

Cash acquired from mergers and acquisitions

 

 

162,674

 

 

-

 

Proceeds from disposal of investment

 

 

-

 

 

680,000

 

Proceeds from disposal of intangible assets

 

 

-

 

 

204,764

 

Investment in associate

 

 

-

 

 

(500,000

)

Acquisition of property and equipment

 

 

(3,398

)

 

(4,871

)

Net cash (used in) provided by investing activities

 

 

(12,390,120

)

 

379,893

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

Proceeds from the issuance of shares for offerings, net of

 

 

 

 

 

transaction costs

 

 

95,183,398

 

 

-

 

Proceeds from long-term debt

 

 

944,787

 

 

-

 

Repayment of long-term debt

 

 

(13,773,470

)

 

-

 

Proceeds from exercise of warrants

 

 

-

 

 

2,178,850

 

Proceeds from exercise of options

 

 

784,431

 

 

49,367

 

Repayment of vendor-take-back loan

 

 

(6,158,329

)

 

-

 

Lease payments

 

 

(392,175

)

 

(121,702

)

Net cash provided by financing activities

 

 

76,588,642

 

 

2,106,515

 

 

 

 

 

 

 

Foreign exchange effect on cash

 

 

(684,328

)

 

20,201

 

Net change in cash

 

 

47,043,750

 

 

(4,791,213

)

Cash, beginning of period

 

 

4,323,823

 

 

13,211,722

 

Cash, end of period

 

$

51,367,573

 

$

8,420,509