ESE Entertainment Inc. (“
ESE” or the
“
Company”) (TSXV: ESE) (OTCQB: ENTEF), a gaming
and esports company that provides a range of services to leading
video game developers and publishers, is pleased to announce that
is has filed its audited annual consolidated financial statements
(the “
Financial Statements”) and related
Management Discussion and Analysis (the
“
MD&A”) for the 12 months ended October 31,
2021 (“
Fiscal 2021”) the highlights of which are
presented in this news release. The Financial Statements and
MD&A are available on www.sedar.com and on the Company’s
website.
Financial Highlights:
- Revenue of $6.24 million for the
three months ended October 31, 2021 (unaudited), representing a
3018% increase from revenue for the three months ended October 31,
2020 of $0.20 million (unaudited).
- Annual consolidated revenue in
Fiscal 2021 of $11.38 million, representing a 2818% increase from
annual consolidated revenue for the 12 months ended October 31,
2020 (“Fiscal 2020”) of $0.39 million.
- Annual gross profit in Fiscal 2021
of $1.15 million, representing a 195% increase from annual gross
profit in Fiscal 2020 of $0.39 million.
- Adjusted EBITDA¹ loss of $3.50
million in Fiscal 2021, compared to adjusted EBITDA loss of $2.04
million in Fiscal 2020.
- Total assets as at October 31, 2021
of $15.94 million, representing a 1793% increase from total assets
as at October 31, 2020 of $0.84 million. ¹ Adjusted
EBITDA is a non-IFRS measure. Refer to “Non-IFRS Measures” at the
end of this press release.
- Cash balance as at October 31, 2021
of $4.83 million compared to $0.55 million as at October 31,
2020.
“We are proud to publish a record year, with
quadruple-digit revenue growth and financial performance that
highlights the growth our company is experiencing. We are entering
2022 with momentum,” said Konrad Wasiela, CEO of
ESE. “ESE generated record quarterly revenues in the
fourth quarter of 2021, led by record organic growth in existing
assets, our ability to acquire and integrate assets, our ability to
attract and retain clients for expanded contracts, and ultimately
our ability to deliver 360 esports and gaming technology and
services for gaming publishers and developers. With the subsequent
events of acquiring Frenzy and GameAddik, we anticipate strong
continued quarterly growth.”
“Q4 2021 revenue growth was strong at 3018%
year-over-year, but it is important to note these figures do not
include the recently completed acquisitions of Frenzy and
GameAddik. We anticipate continued growth from organic business
plus these new key assets. As we move into 2022, we have an
increased focus on revenue and gross profit margin expansion,” said
Rob Kang, ESE’s Chief Financial Officer.
“Increased revenues and higher gross margins are key to reaching
our goals, and we believe our investments in operations will drive
performance in the quarters ahead.”
Q4 2021 Operational
Highlights:
- Completion of the acquisition of
Auto Simulation Ltd. DBA Digital Motorsports, an Ireland-based
provider of advanced simulation racing infrastructure, technology
and support.
- Entry into a binding share purchase
agreement to acquire Frenzy sp. z.o.o., a European esports media
and technology company (“Frenzy”).
- Launch of a set of non-fungible
tokens (NFTs) in collaboration with its esports team, K1CK esports,
and Bitcoin Vault.
Subsequent Events:
- On November 12, 2021, the Company
completed the acquisition of 100% of the issued and outstanding
shares of Frenzy, a European esports media and technology
company.
- On February 14, 2022, the Company
completed the acquisition of 100% of the issued and outstanding
shares of 9327-7358 Quebec Inc. DBA GameAddik
(“GameAddik”), a Canadian technology company
focused on gaming and esports.
The following table presents a
reconciliation of Net income (loss) to Adjusted EBITDA for Fiscal
2021 and Fiscal 2020:
|
Year ended October 31, 2021 |
Year endedOctober 31, 2020 |
(In Canadian dollars) |
$ |
$ |
Net loss for the year |
(18,663,912) |
(3,802,333) |
Provision for income taxes |
614 |
- |
Depreciation |
38,974 |
- |
Commissions |
54,861 |
- |
Finder's fees and stamp duty for acquisitions |
1,669,923 |
- |
Share-based payments |
9,630,008 |
150,651 |
Interest |
11,459 |
- |
Impairment of K1CK assets |
207,500 |
- |
Impairment of WPG assets |
3,548,313 |
- |
Listing Cost |
- |
1,600,287 |
Foreign exchange (gain) loss |
2,142 |
14,150 |
Adjusted EBITDA¹ |
(3,500,118) |
(2,037,245) |
¹ Adjusted EBITDA is a non-IFRS measure.
Refer to “Non-IFRS Measures” at the end of this press release.
The financial and operating results included in
this news release are based on the audited results which were
released on February 23, 2022. It is only in the context of the
fulsome information and disclosures contained in the Financial
Statements and MD&A that an investor can properly analyze this
information. The Financial Statements and MD&A will be
published under the Company’s profile on SEDAR at
www.sedar.com.
All amounts are in Canadian dollars.
ESE Entertainment Inc.
Konrad WasielaChief Executive Officer and
Director
About ESE Entertainment Inc.ESE
is a Europe based entertainment and technology company focused on
gaming and esports. The Company provides a range of services to
leading video game developers, publishers, and brands by providing
technology, infrastructure, and fan engagement services
internationally. ESE also operates its own ecommerce channels,
esports teams, and gaming leagues. In addition to the Company’s
organic growth opportunities, the Company is considering selective
acquisitions that align with its objective of becoming a dominant
global player in esports technology and infrastructure.
| www.esegaming.com
CAUTIONARY NOTE REGARDING
FORWARD-LOOKING INFORMATION
This news release contains certain statements
that may constitute forward-looking information under applicable
securities laws. All statements, other than those of historical
fact, which address activities, events, outcomes, results,
developments, performance or achievements that ESE anticipates or
expects may or will occur in the future (in whole or in part)
should be considered forward-looking information. Such information
may involve, but is not limited to, statements with respect to
anticipated revenue growth, financial results, and margin expansion
and the drivers thereof. Often, but not always, forward-looking
information can be identified by the use of words such as "plans",
"expects", "is expected", "budget", "scheduled", "estimates",
"forecasts", "intends", "anticipates", or "believes" or variations
(including negative variations) of such words and phrases, or
statements formed in the future tense or indicating that certain
actions, events or results "may", "could", "would", "might" or
"will" (or other variations of the forgoing) be taken, occur, be
achieved, or come to pass. Forward-looking information is based on
currently available competitive, financial and economic data and
operating plans, strategies or beliefs as of the date of this news
release, but involve known and unknown risks, uncertainties,
assumptions and other factors that may cause the actual results,
performance or achievements of ESE to be materially different from
any future results, performance or achievements expressed or
implied by the forward-looking information. Such factors may be
based on information currently available to ESE, including
information obtained from third-party industry analysts and other
third-party sources, and are based on management's current
expectations or beliefs regarding future growth, results of
operations, future capital (including the amount, nature and
sources of funding thereof) and expenditures. Any and all
forward-looking information contained in this press release is
expressly qualified by this cautionary statement. Trading in the
securities of ESE should be considered highly speculative.
This press release contains future-oriented
financial information and financial outlook information
(collectively, "FOFI") about ESE’s prospective
results of operations, revenues and margins and components thereof,
all of which are subject to the same assumptions, risk factors,
limitations, and qualifications as set forth in the above
paragraph. FOFI contained in this document was approved by
management as of the date of this document and was provided for the
purpose of providing further information about ESE’s future
business operations. ESE disclaims any intention or obligation to
update or revise any FOFI contained in this document, whether as a
result of new information, future events or otherwise, unless
required pursuant to applicable law. Readers are cautioned that the
FOFI contained in this document should not be used for purposes
other than for which it is disclosed herein.
NON-IFRS MEASURES
This press release includes references to
adjusted EBITDA. Adjusted EBITDA is a non-IFRS financial measure
and is defined by the Company as net income or loss before income
taxes, depreciation, commissions, finder's fees and stamp duty for
acquisitions, share-based payments, interest, impairment of assets,
listing costs, and foreign exchange gain or loss. We believe that
adjusted EBITDA is a useful measure of financial performance
because it provides an indication of the Company’s ability to
capitalize on growth opportunities in a cost-effective manner,
finance its ongoing operations and service its financial
obligations.
This non-IFRS financial measure is not an
earnings or cash flow measure recognized by IFRS and does not have
a standardized meaning prescribed by IFRS. Our method of
calculating such a financial measure may differ from the methods
used by other issuers and, accordingly, our definition of this
non-IFRS financial measure may not be comparable to similar
measures presented by other issuers. Investors are cautioned that
non-IFRS financial measures should not be construed as an
alternative to net income determined in accordance with IFRS as
indicators of our performance or to cash flows from operating
activities as measures of liquidity and cash flows.
Neither the TSX Venture Exchange nor its
Regulation Services Provider (as that term is defined in the
policies of the TSX Venture Exchange) accepts responsibility for
the adequacy or accuracy of this release.
For further information about ESE,
please contact:Daniel Mogil, Investor
Relationsinvestors@esegaming.com647-492-1535
ESE ENTERTAINMENT
INC.Consolidated Statements of Financial PositionAs at
October 31, 2021 and 2020(Expressed in Canadian Dollars )
|
|
2021 |
|
2020 |
|
|
|
ASSETS |
|
|
|
|
|
Current assets |
|
|
Cash |
$ |
4,825,072 |
$ |
550,011 |
Receivables (Note 7) |
|
844,148 |
|
262,596 |
Prepaid expense and deposits |
|
448,616 |
|
29,486 |
Inventory |
|
406,549 |
|
- |
|
|
6,524,385 |
|
842,093 |
|
|
|
Property and equipment (Note
8) |
|
346,995 |
|
- |
Deposit (Note 9) |
|
311,219 |
|
- |
Unallocated purchase price
(Note 6) |
|
8,761,762 |
|
- |
|
|
|
Total
assets |
$ |
15,944,361 |
$ |
842,093 |
|
|
|
LIABILITIES |
|
|
|
|
|
Current liabilities |
|
|
Accounts payable and accrued liabilities (Notes 10 and 16) |
$ |
1,000,785 |
$ |
263,425 |
Current portion of lease liabilities (Note 11) |
|
71,574 |
|
- |
Deferred revenue (Note 17) |
|
234,390 |
|
115,040 |
|
|
1,306,749 |
|
378,465 |
|
|
|
Lease
liabilities (Note 11) |
|
126,551 |
|
- |
|
|
1,433,300 |
|
378,465 |
|
|
|
EQUITY |
|
|
Share capital (Note 13) |
|
28,707,147 |
|
4,088,263 |
Share subscriptions received |
|
1,050 |
|
- |
Commitment to issue shares (Note 6, 13 and 16) |
|
4,755,754 |
|
50,000 |
Contributed surplus |
|
2,388,107 |
|
305,416 |
Accumulated other comprehensive (loss) income |
|
(107,129) |
|
5,983 |
Deficit |
|
(21,202,268) |
|
(3,986,034) |
Equity attributable to shareholders |
|
14,542,661 |
|
463,628 |
Non-controlling interest |
|
(31,600) |
|
- |
|
|
|
Total
equity |
|
14,511,061 |
|
463,628 |
|
|
|
Total
liabilities and equity |
$ |
15,944,361 |
$ |
842,093 |
ESE ENTERTAINMENT INC. Consolidated Statements
of Loss and Comprehensive LossFor the years ended October 31, 2021
and 2020(Expressed in Canadian Dollars)
|
|
2021 |
|
2020 |
Revenue |
$ |
11,384,731 |
$ |
390,171 |
Cost of sales |
|
10,234,688 |
|
- |
Gross Profit |
|
1,150,043 |
|
390,171 |
|
|
|
Expenses |
|
|
Advertising and event planning |
|
1,101,358 |
|
282,192 |
Depreciation (Note 8) |
|
38,974 |
|
- |
Bank charges |
|
26,327 |
|
- |
Consulting fees (Note 16) |
|
2,011,212 |
|
1,394,191 |
Commissions |
|
54,861 |
|
- |
Finder’s fees and stamp duty for acquisitions (Note 5, 6 and
13) |
|
1,669,923 |
|
- |
Office and miscellaneous |
|
177,107 |
|
115,589 |
Professional fees (Note 16) |
|
737,218 |
|
286,660 |
Rent |
|
30,500 |
|
18,192 |
Share-based payments (Notes 13 and 16) |
|
9,630,008 |
|
150,651 |
Transfer agent and filing fees |
|
193,835 |
|
42,644 |
Travel and conferences |
|
67,002 |
|
48,230 |
Wages and benefits |
|
326,487 |
|
245,315 |
Website hosting and development |
|
8,677 |
|
13,048 |
|
|
16,073,489 |
|
2,596,712 |
|
|
|
Loss before other items |
|
(14,923,446) |
|
(2,206,541) |
Other
items: |
|
|
Other income |
|
29,562 |
|
18,645 |
Interest |
|
(11,459) |
|
- |
Impairment of K1CK assets (Note 18) |
|
(207,500) |
|
- |
Impairment of WPG assets (Note 5) |
|
(3,548,313) |
|
- |
Listing cost (Note 4) |
|
- |
|
(1,600,287) |
Foreign exchange loss |
|
(2,142) |
|
(14,150) |
|
|
(3,739,852) |
|
(1,595,792) |
|
|
|
Net loss
for the year before taxes |
|
(18,663,298) |
|
(3,802,333) |
Provision for income taxes (Note 20) |
|
(614) |
|
- |
Net loss for the year |
|
(18,663,912) |
|
(3,802,333) |
|
|
|
Other
comprehensive income |
|
|
Gain
(loss) on translation of foreign operations |
|
(113,112) |
|
6,779 |
Total comprehensive loss for the year |
$ |
(18,777,024) |
$ |
(3,795,554) |
|
|
|
Net income
(loss) attributable to: |
|
|
Shareholders of the company |
$ |
(17,216,234) |
$ |
(3,802,333) |
Non-controlling interest |
|
(1,447,678) |
|
- |
Net loss
for the year |
$ |
(18,663,912) |
$ |
(3,802,333) |
|
|
|
Total
comprehensive income (loss) attributable to: |
|
|
Shareholders of the company |
$ |
(17,329,346) |
$ |
(3,795,554) |
Non-controlling interest |
|
(1,447,678) |
|
- |
Total comprehensive loss for the year |
$ |
(18,777,024) |
$ |
(3,795,554) |
|
|
|
Basic
and diluted loss per common share |
$ |
(0.38) |
$ |
(0.14) |
|
|
|
Weighted average number of common shares outstanding |
|
45,500,947 |
|
26,785,387 |
ESE ENTERTAINMENT INC.Consolidated Statements
of Cash FlowsFor the years ended October 31, 2021 and
2020(Expressed in Canadian Dollars)
|
|
2021 |
|
2020 |
CASH FLOWS PROVIDED BY (USED IN) |
|
|
OPERATING
ACTIVITIES |
|
|
Loss for the year |
$ |
(18,663,912) |
$ |
(3,802,333) |
Items not affecting cash: |
|
|
Accretion on lease liabilities |
|
3,785 |
|
- |
Consulting fees paid by shares |
|
- |
|
50,000 |
Depreciation |
|
38,974 |
|
- |
Finder’s fees for acquisitions paid by shares |
|
1,475,956 |
|
- |
Impairment of assets |
|
3,755,813 |
|
- |
Listing cost |
|
- |
|
1,600,287 |
Provision for income taxes |
|
614 |
|
- |
Share-based payments |
|
9,630,008 |
|
150,651 |
Change in non-cash working capital items: |
|
|
Receivables |
|
(1,503) |
|
(242,944) |
Inventory |
|
(187,660) |
|
- |
Prepaid expenses and deposits |
|
(59,222) |
|
(29,246) |
Deferred revenue |
|
(33,530) |
|
115,040 |
Accounts payable and accrued liabilities, income tax payable and
shareholder loans |
|
(449,556) |
|
191,135 |
Net cash used in operating activities |
|
(4,490,233) |
|
(1,967,410) |
INVESTING ACTIVITIES |
|
|
Cash paid to acquire WPG |
|
(128,019) |
|
- |
Cash paid to acquire Digital Motorsports |
|
(1,681,250) |
|
- |
Cash acquired on acquisition of subsidiaries |
|
208,584 |
|
77,873 |
Funds to WPG prior to acquisition |
|
(290,000) |
|
- |
Cash paid to acquire K1CK assets |
|
(120,000) |
|
- |
Loan proceeds from Kepler before RTO |
|
- |
|
25,830 |
Investment |
|
(311,219) |
|
Equipment |
|
(17,731) |
|
- |
Net cash (used in) provided by investing activities |
|
(2,339,635) |
|
103,703 |
FINANCING ACTIVITIES |
|
|
Proceeds from loan payable |
|
- |
|
20,000 |
Repayment of lease liabilities |
|
(23,953) |
|
- |
Repayment of loans and credit facilities |
|
(509,086) |
|
(20,000) |
Shares issued for cash |
|
12,698,593 |
|
2,294,475 |
Share issue cost |
|
(963,628) |
|
(41,580) |
Share subscriptions received |
|
1,050 |
|
- |
Net cash provided by financing activities |
|
11,202,976 |
|
2,252,895 |
Foreign exchange effect on cash |
|
(98,047) |
|
6,779 |
Change in cash for the year |
|
4,275,061 |
|
395,967 |
Cash, beginning of year |
|
550,011 |
|
154,044 |
Cash, end of year |
$ |
4,825,072 |
$ |
550,011 |
Cash paid for interest during the year |
$ |
- |
$ |
1,600 |
Cash paid for income taxes during the year |
$ |
- |
$ |
- |
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