EXHIBIT 99.2
SUPER LEAGUE GAMING REPORTS FIRST QUARTER 2020 RESULTS
Santa Monica, Calif. – (May 14, 2020) - Super League Gaming
(Super League or the Company) (Nasdaq:
SLGG), a global leader in competitive video gaming and esports
entertainment for everyday players around the world, reported
recent operational developments and financial results for the first
quarter ended March 31, 2020.
Recent Operational Developments
●
Reached
agreements with institutional investors to raise net proceeds of
over $6.0 million in new equity capital.
●
Received
notice of allowance of a patent by the United States Patent Office
for AI-based spectating of gaming.
●
Content
creation agreements with notable partners, including Snapchat,
Topgolf and esports leader Gen.G.
Key Performance Indicators (KPIs) Through April 30,
2020
●
Registered
users – 1.6 million, up over 60% year-to-date
●
Engagement
hours – 16 million compared to 15 million for all of
2019
●
Viewer
Impressions – 225 million compared to 120 million for all of
2019
Management Commentary
“During
this time of unprecedented disruption around the world, we expected
and have experienced an increase in consumer interest in
competitive video gaming,” said Ann Hand, CEO of Super
League. “While COVID-19 inevitably caused advertisers to take
a pause and reset their marketing strategies, Super League’s
significant surge in online gamer engagement across our digital
channels has positioned us as an attractive marketing channel going
forward. With live sports from the professional level to your
local neighborhood playing field on hold for now, competitive video
gaming, also known as esports, is still happening. In
addition, esports is about teamwork, leadership, connecting with
old friends and making new ones, all of which provides an outlet
for positive gaming and social connections during this isolating
time.
“The
material increase in engagement on our digital channels generates
more advertising inventory we can monetize and drives more players
to our direct-to-consumer offering. In addition, the pandemic
has accelerated new revenue opportunities, specifically with
respect to our virtual, fully-remote content production technology,
which is of interest to a variety of teams, leagues and media
outlets searching for ways to connect to fans and fill the void of
fresh content. With our recent infusion of additional
capital, we believe we will be able to capitalize on the growing
field of opportunity we see in esports and other entertainment and
are confident that we will be able to show significant growth in
2020.”
First Quarter 2020 Financial Results
Revenues in the first quarter of 2020 were $243,000 compared to
$249,000 in the comparable prior year quarter. The modest decrease
reflects the impact of the general deferral in advertising spending
by brands and sponsors during the early stages of the COVID-19
pandemic.
First quarter 2020 cost of revenue was $117,000 compared to $74,000
in the comparable prior year quarter. The increase was driven by a
higher number of live events in the first quarter of 2020 compared
to the prior year quarter, and lower cost brand sponsor revenues
recognized in the first quarter of 2019.
Total operating expenses in the first quarter of 2020 were $5.3
million compared to $6.3 million in the comparable prior year
quarter. The change was primarily due to a net decrease in non-cash
stock compensation expense related to the vesting of certain
IPO-related employee performance-based options and warrants in the
first quarter of 2019. Non-cash stock compensation charges for the
first quarter of 2020 and 2019 totaled $702,000 and $2.7 million,
respectively.
Excluding non-cash compensation and interest charges, operating
expenses in the first quarter of 2020 totaled $4.6 million compared
to $3.6 million in the first quarter of 2019. The increase was
primarily due to higher public company related insurance and
corporate expenses for the full first quarter of 2020, an increase
in direct sales and marketing personnel costs in connection with
our focus on monetization and an increase in technology platform
and infrastructure costs.
On a GAAP-basis, which includes the impact of non-cash charges, net
loss in the first quarter of 2020 was $5.1 million or $(0.60) per
share, compared to a net loss of $16.1 million or $(2.68) per share
in the comparable prior year quarter. In addition to the non-cash
compensation charges described above, net loss for the first
quarter of 2019 included non-cash interest expense related to
convertible debt outstanding at December 31, 2018, totaling $9.9
million. All principal and interest related to the Company’s
convertible notes was automatically converted to equity upon the
close of the IPO in the first quarter of 2019.
Proforma net loss for the first quarter of 2020, which excludes the
impact of noncash charges, was $4.1 million compared to $3.4
million in the comparable prior year quarter.
At March 31, 2020, the Company’s cash position totaled $4.8
million with no debt outstanding, compared to $8.4 million in cash at
December 31, 2019.
Events Subsequent to the First Quarter 2020
On May
13, 2020, Super League entered into securities purchase agreements
with institutional investors for the purchase and sale of 1,825,000
shares of common stock, par value $0.001 per share, at an offering
price of $3.50 per share, pursuant to a registered direct offering
priced at-the-market under Nasdaq rules. The gross proceeds of the
offering will be approximately $6.4 million before deducting fees
and other estimated offering expenses. The closing of the
registered direct offering is expected to take place on or about
May 15, 2020, subject to the satisfaction of customary closing
conditions. This offering was made pursuant to an effective shelf
registration statement on Form S-3 previously filed with the U.S.
Securities and Exchange Commission.
Conference Call
The Company will hold a conference call today at 5:00 p.m. Eastern
time to discuss its first quarter 2020 results and provide a
business update.
Date: Thursday, May 14, 2020
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: 1869269
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, 2020.
Toll-free replay number: (855) 859-2056.
International replay number: (404) 537-3406
Replay ID: 1869269
About Super League Gaming
Super League Gaming, Inc. (Nasdaq: 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 March 31, 2020, 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, 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 Annual Report on Form 10-K for the year ended December 31,
2019, filed on March 23, 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 Quarterly and Annual
reports, 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:
Gillian Sheldon
(213) 718-3880
Gillian.Sheldon@superleague.com
SUPER LEAGUE GAMING, INC.
CONDENSED BALANCE SHEETS
(Unaudited)
SUPER LEAGUE GAMING, INC.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
SUPER LEAGUE GAMING, INC.
Reconciliation of GAAP to Non-GAAP Financial
Information
(Unaudited)
SUPER LEAGUE GAMING, INC.
CONDENSED STATEMENT OF CASH FLOWS
(Unaudited)