Exhibit 99.1
Super League Gaming Reports First Quarter 2019 Results
Santa Monica, Calif. - (May 14, 2019) - Super League Gaming
(Super League or the Company) (NASDAQ:
SLGG), a leading community and content platform enabling gamers to
compete, socialize, spectate and celebrate the amateur esports
lifestyle, reported recent operational developments and financial
results for the first quarter ended March 31,
2019.
Recent Operational Developments
●
Completion of initial public offering (IPO) on February 27, 2019
with net proceeds of $22.5 million
●
Revenues up 93% in the first quarter of 2019 compared to the prior
year quarter
●
Agreement reached with Capcom to add Street Fighter V to Super
League’s portfolio of game titles offered on its
platform
●
Partnerships reached with Topgolf and ggCircuit to bring Super
League’s esports experiences to entertainment locations
across the country
●
Agreement with NetLevel to absorb Super League’s network
connections into NetLevel’s growing fiber network for
out-of-home entertainment
●
Appointment of veteran media and gaming executive Mark Jung to the
Super League board of directors
Management Commentary
“The first quarter was transformational as Super League
became a public company, and our operational momentum has continued
well into the second quarter,” said Ann Hand, CEO of Super
League. “At a time when video game revenue exceeds Hollywood
box office, and online video game viewing sites like YouTube Gaming
and Twitch have larger audiences than HBO, Netflix and ESPN
combined, esports has becoming one of the fastest-growing and most
exciting market spaces for both players and fans.
“To date in 2019, we were able to show progress against all
of our key performance indicators, including increasing the number
of games on our platform, expanding our network of active venues,
growing our base of registered users, and seeing significant
increases in the number of views across our platform.
“Super League is uniquely positioned to capitalize on the
unmet demand of avid amateur gamers to compete and socialize in new
ways around the games they love, and our high-quality retail
partners provide them with fantastic field space for amateur
esports. Our strategic focus is on increasing the number of
touchpoints we have with amateur gamers through physical and
digital experiences to broaden our reach and cultivate audiences
for our social content and elite amateur esports broadcasts which
will ultimately drive revenue and shareholder
value.”
First Quarter 2019 Financial Results
Revenues in the first quarter of 2019 increased 93% to $249,000
compared to $129,000 in the comparable prior year quarter. The
increase was primarily driven by the emergence of our
platform-as-a-service revenue stream which allows brand partners to
deliver their own experiences powered by Super League’s
technology platform such as the Samsung 837 Fortnite activation in
March 2019.
Cost of revenues decreased 40% to $74,000 compared to $123,000 in
the comparable prior year quarter due to the delivery of higher
margin physical and digital experiences in the first quarter of
2019. In the first quarter of 2019, we increased our digital offers
such as the Logitech G challenge in partnership with Best Buy and
improved operational efficiency of our experiences.
Total operating expenses in the first quarter of 2019 increased to
$6.3 million compared to $4.1 million in the comparable prior year
quarter. The increase was primarily due to a $1.8 million increase
in non-cash stock compensation expense in connection with the
vesting of certain performance-based equity-awards upon completion
of our IPO, and slight increases in headcount, technology platform
and corporate insurance expenses.
On a GAAP-basis, which includes significant non-cash charges
totaling $12.7 million, net loss in the first quarter of 2019 was
$16.1 million or $(2.68) per share compared to a net loss of $4.2
million or $(0.91) per share in the comparable prior year quarter.
Non-cash charges in the first quarter of 2019 included interest
charges totaling $9.9 million, primarily related to the automatic
conversion of our 9% convertible notes into equity and related
recognition of the beneficial conversion feature as interest
expense, upon the closing of our IPO.
Proforma net loss for the first quarter of 2019 was $3.4 million
compared to $2.9 million in the comparable prior year quarter. As
noted above, the change was primarily due to an increase in
headcount, technology platform and corporate insurance
expenses.
At March 31, 2019, the Company’s cash position totaled $21.5
million compared to $2.8 million at December 31, 2018. The
significant increase was due to the net capital raised in the IPO.
All principal and interest related to the Company’s
convertible notes outstanding, totaling $13.8 million, was
automatically converted to equity upon the IPO close. As such,
there is no debt outstanding as of March 31, 2019.
Conference Call
The Company will hold a conference call today at 5:00 p.m. Eastern
time to discuss its first quarter 2019 results and provide a
business update.
Date: Tuesday, May 14, 2019
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: 2998938
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 May 21, 2019.
Toll-free replay number: (855) 859-2056
International replay number: (404) 537-3406
Replay ID: 2998938
About Super League Gaming
Super League Gaming, Inc. (NASDAQ: SLGG) is a leading esports
community and content platform for amateur esports players,
fans and friends of all ages and skill levels. With a focus on
positive and inclusive gameplay, Super League enables players to
experience their sport like the pros while also developing
sportsmanship, communication and team-building skills. Powered by a
proprietary technology platform, Super League operates physical and
digital experiences in partnership with publishers of top-tier
games. Local movie theatres, PC cafes, restaurant and entertainment
venues are transformed into esports arenas where gamers compete,
socialize, spectate and celebrate the amateur esports lifestyle.
Super League’s platform offers unique amateur esports
experiences that not only ratchet up the competition for avid
gamers, but also attract audiences with elite amateur broadcasts
that transform physical venues as well as fuel
SuperLeagueTV’s Twitch and YouTube channels.
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 a high degree of risk and
uncertainty, are predictions only and actual events or results may
differ materially from those projected in such forward-looking
statements. Factors that could cause or contribute to differences
include the uncertainty regarding viability and market acceptance
of the Company’s products and services, the ability to
complete software development plans in a timely manner, changes in
relationships with third parties, product mix sold by the Company
and other factors described in the Company’s most recent
public filing with the Securities and Exchange
Commission.
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 condensed financial statements included in our Quarterly Report
on Form 10-Q for the period ended March 31, 2019, which financial
statements were 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.
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
non-cash prepaid in-kind advertising charges. 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.
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.
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:
Sean McGowan and Cody Slach
Gateway Investor Relations
(949) 574-3860
SLG@GatewayIR.com
Media Contact:
Ann Kaiser
(212) 918-2029
ann@high10media.com
SUPER LEAGUE GAMING, INC.
CONDENSED BALANCE SHEETS
(Unaudited)
|
|
|
ASSETS
|
|
|
|
|
|
Current Assets
|
|
|
Cash
|
$21,486,000
|
$2,774,000
|
Accounts
receivable
|
315,000
|
488,000
|
Prepaid
expenses and other current assets
|
1,080,000
|
487,000
|
Total
current assets
|
22,881,000
|
3,749,000
|
|
|
|
Property and Equipment, net
|
299,000
|
531,000
|
Intangible and Other Assets, net
|
1,027,000
|
707,000
|
|
|
|
Total
assets
|
$24,207,000
|
$4,987,000
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
Liabilities
|
|
|
Accounts
payable and accrued expenses
|
$1,025,000
|
$814,000
|
Deferred
Revenue
|
15,000
|
45,000
|
Convertible
Debt, net
|
-
|
10,923,000
|
Total
liabilities
|
1,040,000
|
11,782,000
|
|
|
|
Commitments and Contingencies
|
|
|
|
|
|
Stockholders’ Equity
|
|
|
Common
stock, par value $0.001 per share
|
18,000
|
13,000
|
Additional
paid-in capital
|
94,351,000
|
48,325,000
|
Accumulated
deficit
|
(71,202,000)
|
(55,133,000)
|
Total
stockholders’ equity (deficit)
|
23,167,000
|
(6,795,000)
|
|
|
|
Total
liabilities and stockholders’ equity
|
$24,207,000
|
$4,987,000
|
SUPER LEAGUE GAMING, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
|
Three Months Ended March 31,
|
|
|
|
|
|
|
REVENUES
|
$249,000
|
$129,000
|
|
|
|
COST OF REVENUES
|
74,000
|
123,000
|
|
|
|
GROSS PROFIT
|
175,000
|
6,000
|
|
70%
|
5%
|
OPERATING EXPENSES
|
|
|
Selling,
marketing and advertising
|
233,000
|
496,000
|
Technology
platform development
|
710,000
|
556,000
|
General
and administrative
|
5,368,000
|
3,080,000
|
Total operating expenses
|
6,311,000
|
4,132,000
|
|
|
|
NET OPERATING LOSS
|
(6,136,000)
|
(4,126,000)
|
|
|
|
OTHER INCOME (LOSS)
|
|
|
Interest
expense - convertible debt
|
(9,938,000)
|
(45,000)
|
Other
|
5,000
|
-
|
Total other income (expense)
|
(9,933,000)
|
(45,000)
|
|
|
|
NET LOSS
|
$(16,069,000)
|
$(4,171,000)
|
|
|
|
Net loss attributable to common stockholders - basic and
diluted
|
|
Basic
and diluted loss per common share
|
$(2.68)
|
$(0.91)
|
Weighted-average
number of shares outstanding, basic and diluted
|
5,988,310
|
4,603,443
|
SUPER LEAGUE
GAMING, INC.
Reconciliation of GAAP to Non-GAAP Financial
Information
(Unaudited)
|
Three Months Ended March 31,
|
|
|
|
|
|
|
GAAP
net loss
|
$(16,069,000)
|
$(4,171,000)
|
Add
back:
|
|
|
Non-cash
stock compensation
|
2,730,000
|
860,000
|
Non-cash
debt related interest charges
|
2,871,000
|
45,000
|
Beneficial
conversion feature
|
7,067,000
|
-
|
Non-cash
In-kind advertising
|
-
|
333,333
|
Proforma
net loss
|
$(3,401,000)
|
$(2,932,667)
|
|
|
|
Pro
forma non-GAAP net earnings (loss) per common share —
diluted
|
$(0.57)
|
$(0.64)
|
GAAP
weighted-average shares — diluted
|
5,988,310
|
4,603,443
|
SUPER LEAGUE GAMING, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
|
For the Three Months Ended March 31,
|
|
|
|
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
Net
loss
|
$(16,069,000)
|
$(4,171,000)
|
Adjustments to reconcile net loss to net cash used in
operating activities:
|
|
Depreciation
and amortization
|
335,000
|
260,000
|
Stock-based
compensation
|
2,730,000
|
860,000
|
Amortization
of debt discount
|
2,684,000
|
31,000
|
Beneficial
Conversion Feature
|
7,067,000
|
-
|
In-kind
contribution of services
|
-
|
333,000
|
Changes
in assets and liabilities:
|
-
|
-
|
Accounts
receivable
|
173,000
|
(90,000)
|
Prepaid
expenses and other current assets
|
(610,000)
|
92,000
|
Accounts
payable and accrued expenses
|
211,000
|
(69,000)
|
Deferred
Revenue
|
(30,000)
|
-
|
Accrued
interest on convertible notes
|
187,000
|
14,000
|
Net cash used in operating activities
|
(3,322,000)
|
(2,740,000)
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
Purchase
of property and equipment
|
(18,000)
|
(93,000)
|
Capitalization
of software development costs
|
(332,000)
|
(21,000)
|
Acquisition
of other intangible and other assets
|
(74,000)
|
-
|
Net cash used in investing activities
|
(424,000)
|
(114,000)
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
Proceeds
from issuance of common stock, net of issuance costs
|
22,458,000
|
-
|
Proceeds
from convertible note payable, net
|
-
|
2,815,000
|
Net cash provided by financing activities
|
22,458,000
|
2,815,000
|
|
|
|
INCREASE (DECREASE) IN CASH
|
18,712,000
|
(39,000)
|
|
|
|
CASH –
beginning of
period
|
2,774,000
|
1,709,000
|
|
|
|
CASH – end of period
|
$21,486,000
|
$1,670,000
|