Exhibit 99.1
SUPER LEAGUE GAMING REPORTS SECOND QUARTER 2019
RESULTS
Santa Monica, Calif. - (August 14, 2019) - Super League Gaming
(Super League or the Company) (NASDAQ:
SLGG), a leading content and community platform providing
competitive and social gameplay experiences across game titles,
skill levels and venues, reported recent operational developments
and financial results for the second quarter ended June 30,
2019.
Recent Operational Developments
●
Partnered
with Tencent America to provide competitive experiences to PUBG
Mobile players in local communities nationwide and create new PUBG
Mobile content programming across social and digital
platforms.
●
Formally
announced its network of digital channels that provide gamers with
multiple forms of esports content furthering Super League’s
mission to celebrate the amateur gamer and esports
lifestyle.
●
Appointed
Samir Ahmed, most recently head of consumer technology for
Amazon’s IMDb business, to the role of Super League’s
chief technology officer.
●
Acquired
Framerate, one of the fastest-growing independent social video
networks in esports, adding millions of views to Super
League’s platform.
Management Commentary
“The momentum Super League demonstrated in the first quarter
of 2019 continued into the second quarter, as we made significant
strides in our goal to create and disseminate high-quality gaming
content to a growing audience of players, spectators and
competitive gaming enthusiasts around the country,” said Ann
Hand, CEO of Super League. “Our first half revenues were
fairly consistent with last year’s level despite our
strategic decision to reduce the number of pay-to-play
events.
“We are on track to meet or exceed our full-year targets for
all of the key performance indicators we outlined at the start of
the year. As of today, we have achieved our full-year target for
number of game titles on our platform and have exceeded our target
for both registered users with over 600,000, and aggregate
viewership with over 12 million views across our digital network,
up from approximately one million during 2018.
“The fact that amateur video game players can capture
headlines around the world and earn millions of dollars by winning
an esports tournament demonstrates how much interest there is in
esports among players, sponsors, fans, and the growing legion of
companies looking to capitalize on this growing
phenomenon.
“Super League is solidifying its position at the epicenter of
esports, connecting fans, game publishers, retail venue partners,
sponsors, professional teams and social media giants. Our strategic
focus continues to be on increasing the number of ways that fans of
competitive gaming can enjoy physical and digital experiences,
allowing us to broaden our reach and build audiences for our social
content and elite amateur esports broadcasts which will ultimately
drive revenue and shareholder value.”
Second Quarter 2019 Financial Results
Revenues in the second quarter of 2019 were $223,000 compared to
$358,000 in the comparable prior year quarter. The decrease was
primarily driven by the timing of brand and media sponsorship
activities during the period, partially offset by
platform-as-a-service revenues totaling $91,000 in the second
quarter of 2019.
Cost of revenue improved to $113,000 compared to $182,000 in the
comparable prior year quarter due to operational efficiencies
resulting in lower direct costs for Super League’s physical
and digital experiences during the second quarter of
2019.
Total operating expenses in the second quarter of 2019 increased to
$5.6 million compared to $3.8 million in the comparable prior year
quarter. The increase was primarily due to a $1.0 million increase
in non-cash stock compensation expense in connection with the
vesting of certain performance-based equity-awards upon achievement
of certain operational performance targets during the second
quarter of 2019, and increases in headcount, technology platform,
insurance and other corporate expenses.
On a GAAP-basis, which includes significant non-cash charges, net
loss in the second quarter of 2019 was $5.5 million or $(0.65) per
share, compared to a net loss of $4.0 million or $(0.86) per share
in the comparable prior year quarter. Non-cash charges in the
second quarter of 2019 included $1.8 million in stock-based
compensation expenses.
Proforma net loss for the second quarter of 2019 was $3.7 million
compared to $2.8 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 June 30, 2019, the Company’s cash position totaled $16.2
million compared to $2.8 million at December 31, 2018. The
significant increase was due to the net capital raised during the
Company’s IPO. All principal and interest related to the
Company’s convertible notes outstanding, totaling $13.8
million, was automatically converted to equity upon completion of
the IPO. As such, there is no debt outstanding as of June 30, 2019.
Cash paid and the fair value of common stock issued, in connection
with the acquisition of Framerate, totaled $1.5 million and $1.0
million, respectively. In connection with the accounting for the
acquisition of Framerate, the Company recorded intangible assets
acquired and goodwill totaling $2.8 million as of June 30,
2019.
Conference Call
The Company will hold a conference call today at 5:00 p.m. Eastern
time to discuss its second quarter 2019 results and provide a
business update.
Date: Wednesday, August 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: 7034869
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 August 21, 2019.
Toll-free replay number: (855) 859-2056
International replay number: (404) 537-3406
Replay ID: 7034869
About Super League Gaming
Super League Gaming, Inc. (NasdaqCM: SLGG) is a leading
esports community and content platform for competitive, everyday
gamers, 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 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
the quarter ended June 30, 2019, including the possibility that the
expected benefits will not be realized or will not be realized
within the expected time period; unknown liabilities; 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,
and expansion of our operations and increased adoption of our
platform internationally. 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
prospectus dated February 25, 2019, our Quarterly Report on
Form 10-Q for the quarter ended June 30, 2019 and other filings
that we make from time to time with the Securities and Exchange
Commission which 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 condensed financial statements included in our Quarterly Report
on Form 10-Q for the period ended June 30, 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
|
|
|
Cash
|
$16,180,000
|
$2,774,000
|
Accounts
receivable
|
470,000
|
488,000
|
Prepaid
expenses and other current assets
|
1,238,000
|
487,000
|
Total current assets
|
17,888,000
|
3,749,000
|
Property
and Equipment, net
|
272,000
|
531,000
|
Intangible
and Other Assets, net
|
1,369,000
|
707,000
|
Goodwill
|
2,565,000
|
-
|
Total assets
|
$22,094,000
|
$4,987,000
|
|
|
|
Liabilities
|
|
|
Accounts
payable and accrued expenses
|
$1,120,000
|
$813,000
|
Deferred
Revenue
|
65,000
|
45,000
|
Convertible
Debt, net
|
-
|
10,923,000
|
Total liabilities
|
1,185,000
|
11,781,000
|
|
|
|
Stockholders’ Equity
|
|
|
Common
Stock
|
18,000
|
14,000
|
Additional
paid-in capital
|
97,598,000
|
48,325,000
|
Accumulated
deficit
|
(76,707,000)
|
(55,133,000)
|
Total stockholders’ equity
|
20,909,000
|
(6,794,000)
|
Total liabilities and stockholders’ equity
|
$22,094,000
|
$4,987,000
|
SUPER LEAGUE GAMING, INC.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REVENUE
|
$223,000
|
$358,000
|
$472,000
|
$487,000
|
|
|
|
|
|
COST
OF REVENUE
|
(113,000)
|
(182,000)
|
(187,000)
|
(305,000)
|
|
|
|
|
|
GROSS
PROFIT
|
110,000
|
176,000
|
285,000
|
182,000
|
|
|
|
|
|
OPERATING
EXPENSES
|
|
|
|
|
Selling,
marketing and advertising
|
271,000
|
173,000
|
472,000
|
669,000
|
Technology
and platform development
|
682,000
|
558,000
|
1,392,000
|
1,115,000
|
General
and administrative
|
4,662,000
|
3,047,000
|
10,062,000
|
6,137,000
|
Total
operating expenses
|
5,615,000
|
3,778,000
|
11,926,000
|
7,921,000
|
|
|
|
|
|
NET
OPERATING LOSS
|
(5,505,000)
|
(3,602,000)
|
(11,641,000)
|
(7,739,000)
|
|
|
|
|
|
OTHER
INCOME (EXPENSE)
|
-
|
(361,000)
|
(9,933,000)
|
(395,000)
|
|
|
|
|
|
NET
LOSS
|
$(5,505,000)
|
$(3,963,000)
|
$(21,574,000)
|
$(8,134,000)
|
|
|
|
|
|
Net loss attributable to common stockholders - basic and
diluted
|
|
|
|
|
Basic
and diluted loss per common share
|
$(0.65)
|
$(0.86)
|
$(3.00)
|
$(1.77)
|
Weighted-average
number of shares outstanding, basic and diluted
|
8,413,090
|
4,604,104
|
7,199,829
|
4,603,741
|
SUPER LEAGUE GAMING, INC.
Reconciliation of GAAP to Non-GAAP Financial
Information
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net loss
|
$(5,505,000)
|
$(3,963,000)
|
$(21,574,000)
|
$(8,134,000)
|
Add
back:
|
|
|
|
|
Non-cash
stock compensation
|
1,799,000
|
827,000
|
4,529,000
|
1,688,000
|
Non-cash
debt related interest charges
|
-
|
363,000
|
9,937,000
|
397,000
|
Non-cash
In-kind advertising
|
-
|
|
|
333,000
|
Proforma net loss
|
$(3,706,000)
|
$(2,773,000)
|
$(7,108,000)
|
$(5,716,000)
|
|
|
|
|
|
Pro
forma non-GAAP net earnings (loss) per common share —
diluted
|
$(0.44)
|
$(0.60)
|
$(0.99)
|
$(1.24)
|
Non-GAAP
weighted-average shares — diluted
|
8,413,090
|
4,604,104
|
7,199,829
|
4,603,741
|
SUPER LEAGUE
GAMING, INC.
CONDENSED STATEMENT OF CASH FLOWS
(Unaudited)
|
|
|
|
|
|
|
|
Operating Activities
|
|
|
Net
Income
|
$(21,574,000)
|
$(8,134,000)
|
Adjustments
to reconcile Net Income to net cash provided by
operations:
|
|
|
Depreciation
and amortization
|
485,000
|
536,000
|
Stock-based
compensation
|
4,529,000
|
1,688,000
|
Amortization
of discount on convertible notes
|
2,684,000
|
298,000
|
Beneficial
conversion feature
|
7,067,000
|
-
|
In-kind
contribution of services
|
-
|
295,000
|
Changes in assets and liabilities
|
|
|
Accounts
Receivable
|
33,000
|
(289,000)
|
Prepaid
Expenses and Other Assets
|
(598,000)
|
109,000
|
Accounts
payable and accrued expenses
|
284,000
|
(96,000)
|
Deferred
Revenue
|
20,000
|
-
|
Accrued
interest on convertible notes
|
187,000
|
99,000
|
Net Cash Provided by Operating Activities
|
(6,883,000)
|
(5,493,000)
|
|
|
|
Investing Activities
|
|
|
Cash
paid for acquisition of Framerate
|
(1,491,000)
|
-
|
Purchase
of property and equipment
|
(33,000)
|
(135,000)
|
Capitalization
of software development costs
|
(560,000)
|
(80,000)
|
Acquisition
of other intangibles
|
(105,000)
|
(27,000)
|
Net Cash Provided by Investing Activities
|
(2,189,000)
|
(242,000)
|
|
|
|
Financing Activities
|
|
|
Proceeds
from issuance of common Stock, net
|
22,458,000
|
-
|
Proceeds
from convertible notes, net
|
-
|
4,812,000
|
Proceeds
from warrant exercise
|
20,000
|
-
|
Net Cash Provided by Financing Activities
|
22,478,000
|
4,812,000
|
|
|
|
Net
Cash Increase for the Period
|
13,406,000
|
(924,000)
|
Cash at Beginning of the Period
|
2,774,000
|
1,709,000
|
Cash at End of the Period
|
$16,180,000
|
$785,000
|