Exhibit 99.1
SUPER LEAGUE GAMING REPORTS THIRD QUARTER 2020 RESULTS
Santa Monica, Calif. - (November 11, 2020) - Super League Gaming
(Super League or the Company) (NASDAQ:
SLGG), a leader in bringing live and digital esports entertainment
directly to everyday gamers around the world, reported financial
results for the third quarter ended September 30,
2020.
Highlights
●
Highest
quarterly revenue in the Company’s history, up 105% over the
prior year.
●
Gross
margin of 54%, reflecting lower cost digital
activations.
●
Operating
expenses relatively flat versus prior year period.
●
Continued
expansion of strategic partnerships including Topgolf, HIT PARADER,
the Singleton Foundation and others.
Key Performance Indicators (KPIs) Through September 30,
2020
●
Registered
users up 144% to 2.4 million versus 1.0 million at year end
2019.
●
Engagement
hours increased 218% to 47.7 million hours of gameplay versus 15.0
million hours for the full year 2019.
●
Viewer
Impressions grew to 1.4 billion, nearly 12 times the level for the
full year 2019.
Management Commentary
“In the third quarter, we
saw many of the elements of our strategic and operating plans come
together to produce our strongest quarterly revenues to
date,” said Ann Hand, CEO of Super League. “We continue
to track far ahead of our 2020 audience growth targets. In
addition, we are selling more effectively against our growing ad
inventory and expanding the breadth of our partnerships. We are
pleased to have been able to produce this growth in the midst of a
global pandemic, which continues to constrain the advertising
market.”
Third Quarter 2020 Financial Results
Revenues in the third quarter of 2020 increased 105% to $718,000
compared to $350,000 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 expanding advertising
inventory and amateur gameplay content.
Third quarter 2020 cost of revenue increased 70%
to $327,000 compared to $192,000 in the comparable prior year
quarter, as compared to the 105% increase in related revenues for
the same period. The decrease in cost of revenue as a percentage of
revenue was driven by the significant increase in lower cost
advertising and content sales revenues in the third quarter of
2020.
Total operating expenses in the third quarter of 2020 were $4.7
million compared to $4.6 million in the comparable prior year
quarter. The variance reflects
an increase in sales and marketing personnel costs related to the
investment in our direct sales force since the end of the prior
year quarter, and an increase in technology platform costs and
corporate insurance costs. The increase was partially offset by a
decrease in non-cash stock compensation costs.
On a GAAP-basis, net loss in the third quarter of 2020 was $4.3
million or $(0.36) per share, compared to a net loss of $4.4
million or $(0.52) per share in the comparable prior year quarter.
Non-cash charges in the third quarter of 2020 included $0.5 million
of stock-based compensation expenses, compared to $0.7 million in
the comparable prior year period.
Proforma net loss for the third quarter of 2020 was $3.8 million
compared to a proforma net loss of $3.7 million in the comparable
prior year quarter.
At September 30, 2020, the Company’s cash position totaled
$10.3 million compared to $8.4 million at December 31, 2019,
including approximately $8.4 million in net proceeds from the sale
of 4.98 million shares of common stock, pursuant to an underwritten
public offering that closed in the third quarter of
2020.
Conference Call
The Company will hold a conference call today at 5:00 p.m. Eastern
time to discuss its third quarter 2020 results and provide a
business update.
Date: Wednesday, November 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: 3156519
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 November 18,
2020.
Toll-free replay number: (855) 859-2056
International replay number: (404) 537-3406
Replay ID: 3156519
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 patented,
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 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 and
subsequent to the quarter ended September 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-Q for the period
ended September 30, 2019, our Annual Report on Form 10-K for the
year ended December 31, 2019 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 September 30, 2020, 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
|
$10,346,000
|
$8,442,000
|
Accounts
receivable
|
972,000
|
293,000
|
Prepaid
expenses and other current assets
|
1,213,000
|
924,000
|
Total current assets
|
12,531,000
|
9,659,000
|
|
|
|
Property
and Equipment, net
|
160,000
|
239,000
|
Intangible
and Other Assets, net
|
1,953,000
|
1,984,000
|
Goodwill
|
2,565,000
|
2,565,000
|
Total assets
|
$17,209,000
|
$14,447,000
|
|
|
|
Liabilities
|
|
|
Accounts
payable and accrued expenses
|
$727,000
|
$853,000
|
Deferred
Revenue
|
31,000
|
151,000
|
Total current liabilities
|
758,000
|
1,004,000
|
|
|
|
Long-term
note payable
|
1,205,000
|
-
|
Total Liabilities
|
1,963,000
|
1,004,000
|
|
|
|
Stockholders’ Equity
|
|
|
Common
Stock
|
25,000
|
18,000
|
Additional
paid-in capital
|
115,025,000
|
99,237,000
|
Accumulated
deficit
|
(99,804,000)
|
(85,812,000)
|
Total stockholders’ equity
|
15,246,000
|
13,443,000
|
Total liabilities and stockholders’ equity
|
$17,209,000
|
$14,447,000
|
SUPER LEAGUE GAMING, INC.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REVENUE
|
$718,000
|
$350,000
|
$1,285,000
|
$822,000
|
COST OF REVENUE
|
(327,000)
|
(192,000)
|
(560,000)
|
(379,000)
|
|
|
|
|
|
GROSS PROFIT
|
391,000
|
158,000
|
725,000
|
443,000
|
|
|
|
|
|
OPERATING EXPENSES
|
|
|
|
|
Selling,
marketing and advertising
|
1,476,000
|
1,063,000
|
4,005,000
|
3,202,000
|
Technology
and platform development
|
1,430,000
|
1,319,000
|
5,109,000
|
3,772,000
|
General
and administrative
|
1,782,000
|
2,201,000
|
5,615,000
|
9,535,000
|
Total
operating expenses
|
4,688,000
|
4,583,000
|
14,729,000
|
16,509,000
|
|
|
|
|
|
NET OPERATING LOSS
|
(4,297,000)
|
(4,425,000)
|
(14,004,000)
|
(16,066,000)
|
|
|
|
|
|
OTHER INCOME (EXPENSE)
|
|
|
|
|
Interest
expense
|
(3,000)
|
-
|
(5,000)
|
(9,938,000)
|
Other
|
2,000
|
8,000
|
17,000
|
13,000
|
OTHER INCOME (EXPENSE)
|
(1,000)
|
8,000
|
12,000
|
(9,925,000)
|
|
|
|
|
|
NET LOSS
|
$(4,298,000)
|
$(4,417,000)
|
$(13,992,000)
|
$(25,991,000)
|
|
|
|
|
|
Net loss attributable to common stockholders - basic and
diluted
|
|
|
|
|
Basic
and diluted loss per common share
|
$(0.36)
|
$(0.52)
|
$(1.39)
|
$(3.39)
|
Weighted-average
number of shares outstanding, basic and diluted
|
12,063,778
|
8,569,922
|
10,084,002
|
7,663,243
|
SUPER LEAGUE GAMING, INC.
Reconciliation of GAAP to Non-GAAP Financial
Information
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net loss
|
$(4,298,000)
|
$(4,417,000)
|
$(13,992,000)
|
$(25,991,000)
|
Add
back:
|
|
|
|
|
Non-cash
stock compensation
|
472,000
|
737,000
|
1,570,000
|
5,266,000
|
Non-cash
debt related interest charges
|
-
|
-
|
-
|
9,938,000
|
Other
noncash items
|
-
|
-
|
413,000
|
-
|
Proforma net loss
|
$(3,826,000)
|
$(3,680,000)
|
$(12,009,000)
|
$(10,787,000)
|
|
|
|
|
|
Pro
forma non-GAAP net earnings (loss) per common share —
diluted
|
$(0.32)
|
$(0.43)
|
$(1.19)
|
$(1.41)
|
Non-GAAP
weighted-average shares — diluted
|
12,063,778
|
8,569,922
|
10,084,002
|
7,663,243
|
SUPER LEAGUE GAMING, INC.
CONDENSED STATEMENT OF CASH FLOWS
(Unaudited)
|
For the Nine Months Ended
|
|
|
|
|
|
|
|
|
Operating Activities
|
|
|
Net
loss
|
$(13,992,000)
|
$(25,991,000)
|
Adjustments
to reconcile net loss to net cash used in operations:
|
|
|
Depreciation
and amortization
|
1,098,000
|
657,000
|
Stock-based
compensation
|
1,570,000
|
5,266,000
|
Amortization
of discount on convertible notes
|
-
|
2,684,000
|
Beneficial
conversion feature
|
-
|
7,067,000
|
Changes in assets and liabilities
|
|
|
Accounts
Receivable
|
(679,000)
|
171,000
|
Prepaid
Expenses and Other Assets
|
(430,000)
|
(852,000)
|
Accounts
payable and accrued expenses
|
(125,000)
|
601,000
|
Deferred
Revenue
|
(121,000)
|
68,000
|
Accrued
interest on notes
|
5,000
|
187,000
|
Net Cash Used in Operating Activities
|
(12,674,000)
|
(10,142,000)
|
|
|
|
Investing Activities
|
|
|
Cash
paid for acquisition of Framerate
|
-
|
(1,491,000)
|
Purchase
of property and equipment
|
(7,000)
|
(56,000)
|
Capitalization
of software development costs
|
(877,000)
|
(839,000)
|
Acquisition
of other intangibles
|
(104,000)
|
(138,000)
|
Net Cash Used in Investing Activities
|
(988,000)
|
(2,524,000)
|
|
|
|
Financing Activities
|
|
|
Proceeds
from issuance of common Stock, net
|
14,356,000
|
22,458,000
|
Proceeds
from long-term note payable
|
1,200,000
|
-
|
Proceeds
from option and warrant exercises
|
10,000
|
20,000
|
Net Cash Provided by Financing Activities
|
15,566,000
|
22,478,000
|
|
|
|
Net
Cash Increase for the Period
|
1,904,000
|
9,812,000
|
Cash at Beginning of the Period
|
8,442,000
|
2,774,000
|
Cash at End of the Period
|
$10,346,000
|
$12,586,000
|