Exhibit
99.1
SUPER LEAGUE
GAMING REPORTS SECOND QUARTER 2020 RESULTS
Revenues Up 45%
Year-Over-Year; Gross Margins Rise Sharply on Surge in User
Engagement
SANTA MONICA, Calif., August 11, 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 second quarter ended June 30,
2020.
Recent Operational Developments
●
Reached milestone
of one billion viewer impressions year-to-date across all
platforms.
●
Exceeded two
million registered users.
●
Powered an Apex
Legends tournament and broadcast for Wounded Warrior Project (WWP),
with donations made during gameplay supporting WWP
programs.
●
Partnered with USA
Today Sports Media Group to produce esports tournaments, starting
with Madden NFL 20.
Key Performance Indicators (KPIs) Through July 31,
2020
●
Registered users
– 2.1 million, up over 115% year-to-date, exceeding 2020
target.
●
Engagement hours
– 36 million vs.15 million for all of 2019, exceeding 2020
target.
●
Viewer Impressions
– 1.1 billion vs.120 million for all of 2019, more than
double 2020 target.
Management Commentary
“Interactive
gaming in general and esports in particular, continue to be a
significant and increasingly important source of
entertainment,” said Ann Hand, CEO of Super League.
“While we are pleased to report that we have met all of our
annual KPI targets halfway through the year, we are even more
encouraged by our revenue growth and potential. The ad
inventory that we have amassed along with an investment in our
direct sales force are positioning us well to monetize a greater
portion of our growing network capacity. In addition, we have
advanced our content production and broadcast technology platform
to not only enhance our ability to deliver high quality streams,
but also create new business opportunities beyond
esports. Furthermore, we are starting to gain traction with
our direct-to-consumer offers. We will continue to invest in
growing our audience and increasing our capability to support these
diversified revenue streams, which we believe position Super League
well in the current climate and beyond.”
Second Quarter 2020 Financial Results
Revenues
in the second quarter of 2020 increased 45% to $324,000, from
$223,000 in the comparable prior year quarter. The increase was
primarily driven by a significant increase in advertising and
content sales revenues relative to the comparable prior year
quarter, reflecting our continued focus on the acceleration of the
monetization of our increasing advertising inventory and amateur
gameplay content.
Cost
of revenues in the second quarter of 2020 increased slightly to
$116,000, from $113,000 in the comparable prior year quarter, as
compared to the 45% increase in revenues for the same period. The
less than proportionate change in cost of revenues was driven by
lower costs associated with our largely digital and online revenue
generating activities in the second quarter of 2020, and the
increase in lower cost advertising and content sales in the second
quarter of 2020. Gross margins for the second quarter of 2020 were
64%, as compared to 49% for the comparable prior year
quarter.
Total
operating expenses in the second quarter of 2020 decreased to $4.8
million compared to $5.6 million in the comparable prior year
quarter. The decrease was primarily due to a $1.4 million decrease
in non-cash stock compensation expense related to the vesting of
certain employee performance-based options and warrants in the
second quarter of 2019. This was partially offset by increases in
sales and marketing personnel costs related to the investment in
our direct sales force focused on the acceleration of the
monetization of our increasing advertising inventory and premium
content, and an increase in technology platform costs and corporate
insurance costs.
On a
GAAP-basis, which includes significant non-cash charges, net loss
in the second quarter of 2020 was $4.6 million or $(0.48) per
share, compared to a net loss of $5.5 million or $(0.65) per share
in the comparable prior year quarter. Non-cash charges in the
second quarter of 2020 included $0.4 million in stock-based
compensation expenses compared to $1.8 million in the comparable
prior year quarter.
Proforma
net loss for the second quarter of 2020 was $4.1 million compared
to $3.7 million in the comparable prior year quarter.
At
June 30, 2020, the Company’s cash position totaled $6.2
million compared to $8.4 million at December 31, 2019, including
approximately $6.0 million in net proceeds from the sale of 1.85
million shares of common stock at $3.50 per share, pursuant to a
registered direct offering that closed on May 15,
2020.
Conference Call
The
Company will hold a conference call today at 5:00 p.m. Eastern time
to discuss its second quarter 2020 results and provide a business
update.
Date:
Tuesday, August 11, 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: 8415938
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 18, 2020.
Toll-free
replay number: (855) 859-2056
International
replay number: (404) 537-3406
Replay
ID: 8415938
About Super League Gaming
Super
League Gaming (Nasdaq:
SLGG) is a leading gaming community and content platform
that gives everyday gamers multiple ways to connect and engage with
others while enjoying the video games they love. Powered by
proprietary technology systems, Super League offers players the
ability to create gameplay-driven experiences they can share with
friends, the opportunity to watch live streaming broadcasts and
gameplay highlights across digital and social channels, and the
chance to compete in events and challenges designed to celebrate
victories and achievements across multiple skill levels. With
gameplay and content offerings featuring more than a dozen of the
top video game titles in the world, Super League is building a
broadly inclusive, global brand at the intersection of gaming,
experiences and entertainment. Whether to access its expanding
direct audience or the company’s unique content production
and virtual event capabilities, third parties ranging from consumer
brands, video game publishers, television companies, traditional
sports organizations, concert promoters, and more, are turning to
Super League to provide integrated solutions that drive business
growth.
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 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, 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 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:
Gillian
Sheldon
(213)
718-3880
Gillian.Sheldon@superleague.com
SUPER LEAGUE GAMING, INC.
CONDENSED BALANCE SHEETS
(Unaudited)
|
|
|
|
|
|
Assets
|
|
|
Cash
|
$6,241,000
|
$8,442,000
|
Accounts
receivable
|
497,000
|
293,000
|
Prepaid
expenses and other current assets
|
1,361,000
|
924,000
|
Total current assets
|
8,099,000
|
9,659,000
|
|
|
|
Property
and Equipment, net
|
186,000
|
239,000
|
Intangible
and Other Assets, net
|
1,953,000
|
1,984,000
|
Goodwill
|
2,565,000
|
2,565,000
|
Total assets
|
$12,803,000
|
$14,447,000
|
|
|
|
Liabilities
|
|
|
Accounts
payable and accrued expenses
|
$850,000
|
$853,000
|
Deferred
Revenue
|
-
|
151,000
|
Total current liabilities
|
850,000
|
1,004,000
|
|
|
|
Long-term
note payable
|
1,202,000
|
-
|
Total Liabilities
|
2,052,000
|
1,004,000
|
|
|
|
Stockholders’ Equity
|
|
|
Common
Stock
|
20,000
|
18,000
|
Additional
paid-in capital
|
106,237,000
|
99,237,000
|
Accumulated
deficit
|
(95,506,000)
|
(85,812,000)
|
Total stockholders’ equity
|
10,751,000
|
13,443,000
|
Total liabilities and stockholders’ equity
|
$12,803,000
|
$14,447,000
|
SUPER LEAGUE GAMING, INC.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REVENUE
|
$324,000
|
$223,000
|
$567,000
|
$472,000
|
|
|
|
|
|
COST OF REVENUE
|
(116,000)
|
(113,000)
|
(233,000)
|
(187,000)
|
|
|
|
|
|
GROSS PROFIT
|
208,000
|
110,000
|
334,000
|
285,000
|
|
|
|
|
|
OPERATING EXPENSES
|
|
|
|
|
Selling,
marketing and advertising
|
1,256,000
|
971,000
|
2,529,000
|
1,943,000
|
Technology
and platform development
|
1,685,000
|
1,264,000
|
3,590,000
|
2,428,000
|
General
and administrative
|
1,826,000
|
3,380,000
|
3,922,000
|
7,555,000
|
Total
operating expenses
|
4,767,000
|
5,615,000
|
10,041,000
|
11,926,000
|
|
|
|
|
|
NET OPERATING LOSS
|
(4,559,000)
|
(5,505,000)
|
(9,707,000)
|
(11,641,000)
|
|
|
|
|
|
OTHER INCOME (EXPENSE)
|
|
|
|
|
Interest
expense
|
(2,000)
|
-
|
(2,000)
|
(9,938,000)
|
Other
|
1,000
|
-
|
15,000
|
5,000
|
OTHER INCOME (EXPENSE)
|
(1,000)
|
-
|
13,000
|
(9,933,000)
|
|
|
|
|
|
NET LOSS
|
$(4,560,000)
|
$(5,505,000)
|
$(9,694,000)
|
$(21,574,000)
|
|
|
|
|
|
Net loss attributable to common stockholders - basic and
diluted
|
|
|
|
|
Basic
and diluted loss per common share
|
$(0.48)
|
$(0.65)
|
$(1.07)
|
$(3.00)
|
Weighted-average
number of shares outstanding, basic and diluted
|
9,547,819
|
8,413,090
|
9,066,386
|
7,199,829
|
SUPER LEAGUE GAMING, INC.
Reconciliation of GAAP to Non-GAAP Financial
Information
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net loss
|
$(4,560,000)
|
$(5,505,000)
|
$(9,694,000)
|
$(21,574,000)
|
Add
back:
|
|
|
|
|
Non-cash
stock compensation
|
397,000
|
1,799,000
|
1,099,000
|
4,529,000
|
Non-cash
debt related interest charges
|
-
|
-
|
-
|
9,937,000
|
Other
noncash items
|
107,000
|
-
|
306,000
|
-
|
Proforma net loss
|
$(4,056,000)
|
$(3,706,000)
|
$(8,289,000)
|
$(7,108,000)
|
|
|
|
|
|
Pro
forma non-GAAP net earnings (loss) per common share —
diluted
|
$(0.42)
|
$(0.44)
|
$(0.91)
|
$(0.99)
|
Non-GAAP
weighted-average shares — diluted
|
9,547,819
|
8,413,090
|
9,066,386
|
7,199,829
|
SUPER LEAGUE GAMING, INC.
CONDENSED STATEMENT OF CASH FLOWS
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Operating Activities
|
|
|
Net
loss
|
$(9,694,000)
|
$(21,574,000)
|
Adjustments to reconcile net loss to net cash provided by
operations:
|
|
Depreciation
and amortization
|
854,000
|
485,000
|
Stock-based
compensation
|
1,099,000
|
4,529,000
|
Amortization
of discount on convertible notes
|
-
|
2,684,000
|
Beneficial
conversion feature
|
-
|
7,067,000
|
Changes in assets and liabilities
|
|
|
Accounts
Receivable
|
(204,000)
|
33,000
|
Prepaid
Expenses and Other Assets
|
(484,000)
|
(598,000)
|
Accounts
payable and accrued expenses
|
(5,000)
|
284,000
|
Deferred
Revenue
|
(151,000)
|
20,000
|
Accrued
interest on convertible notes
|
-
|
187,000
|
Net Cash Provided by Operating Activities
|
(8,585,000)
|
(6,883,000)
|
|
|
|
Investing Activities
|
|
|
Cash
paid for acquisition of Framerate
|
-
|
(1,491,000)
|
Purchase
of property and equipment
|
(6,000)
|
(33,000)
|
Capitalization
of software development costs
|
(691,000)
|
(560,000)
|
Acquisition
of other intangibles
|
(72,000)
|
(105,000)
|
Net Cash Provided by Investing Activities
|
(769,000)
|
(2,189,000)
|
|
|
|
Financing Activities
|
|
|
Proceeds
from issuance of common Stock, net
|
5,953,000
|
22,458,000
|
Proceeds
from convertible notes, net
|
1,200,000
|
-
|
Proceeds
from warrant exercise
|
-
|
20,000
|
Net Cash Provided by Financing Activities
|
7,153,000
|
22,478,000
|
|
|
|
Net
Cash (Decrease) Increase for the Period
|
(2,201,000)
|
13,406,000
|
Cash at Beginning of the Period
|
8,442,000
|
2,774,000
|
Cash at End of the Period
|
$6,241,000
|
$16,180,000
|