OAM Overactive Media Corp

OverActive Media (“OverActive” or the “Company”) (TSXV: OAM) (OTCQB: OAMCF), a global sports, media and entertainment company for today’s generation of fans, today released its fourth quarter and year-end results for the three-and-twelve-month periods ended December 31, 2022. Unless otherwise specified, all amounts are in Canadian dollars ($).

Full Year 2022 Achievements

• Business operations revenue grew by $1.5 million to $8.2 million, a 23% year-over-year increase, driven primarily by higher partnership and events revenue
• Franchise-related revenue share remained stable, while competition-related prize money declined by $1.3 million relative to 2021
• Strong current and projected liquidity with cash and cash equivalents of $13.6 million and net working capital of $13.6 million as of December 31, 2022
• Secured key multi-year partnerships with Bell, TD Bank Group and Zilliqa

“As a co-founder of this company, I am pleased to say that the core aspects of our business thesis are coming to fruition. Despite the economic downturn, we have grown our multi-year business operations revenue to record levels,” said Adam Adamou, Co-Founder and Interim CEO, OverActive Media. “This growth offset a decline in performance-related prize money and improved the quality of our revenues. Our esports journey is driven by fundamentals that we believe are in place, including our ability to grow our business operations and the support we’re seeing from our league partners. We’re invested in the future of esports and are confident in the quality of our team and the successful execution of our business plan.”

“Our business is rooted in long-term sustainable partnerships, audience growth and engagement, and live events,” said Alyson Walker, Chief Commercial Officer, OverActive Media. “This year, we secured significant partner renewals and agreements with Bell, TD Bank, Zilliqa, and others. Additionally, the launch of live esports events in Toronto has driven enthusiasm, engagement, and revenue to our business. Post-pandemic, we have experienced event and travel cost increases relative to 2021. As a result of the discipline we have shown in maintaining cost controls and the management of our professional teams, we expect the impact to level out in 2023.”

Fourth Quarter 2022 Financial Highlights

• Fourth quarter 2022 total revenue decreased by 26% relative to the fourth quarter of 2021 to $3.9 million. This is primarily due to timing differences in the recognition of league revenue
• Adjusted EBITDA1 of approximately $(2.4) million, a 2% improvement compared to Adjusted EBITDA of $(2.5) million during the comparative prior-year period
• Net loss of $(30.4) million, compared to $(4.8) million during the comparative prior-year period. Net loss for the quarter included $34.2 million in non-cash impairment charges in 2022
• As of December 31, 2022, the Company had cash and cash equivalents of $13.6 million

“We have reviewed the carrying value of our intangible assets and reduced them to an amount that better represents fair value in the current environment,” said Rikesh Shah, Chief Financial Officer, OverActive Media. “This has resulted in an impairment charge in the fourth quarter and fiscal 2022. These non-cash charges do not affect our continuing operations.”

Full Year 2022 Financial Highlights

• Full year 2022 total revenue was $14.2 million, the same amount as in 2021. This includes a 23% increase in business operations revenue year-over-year, driven primarily by partnership and events revenue growth. This increase was offset by a decline in team operations revenue, mainly a reduction in the prize money awarded to our competitive teams.
• Adjusted EBITDA of $(8.8) million, a 26% decrease compared to Adjusted EBITDA of approximately $(7.0) million for the full year 2021. The increased Adjusted EBITDA loss is attributable to the company’s investment in its team rosters, people, and products for future success.
• Net loss of $(36.9) million for the full year 2022, compared to $(19.4) million for the full year 2021. Net loss for the year included a non-cash impairment charge of $34.2 million in 2022, while no impairment was recognized in the prior year. As of December 31, 2022, the Company had cash and cash equivalents of $13.6 million.

Significant Announcements Subsequent to Year End

• OverActive Media received league franchise fee deferrals totalling almost $10.1 million, with payments pushed out between 12 to 24 months.
• MAD Lions, OverActive’s League of Legends team, won the LEC 2023 Spring Split Championship after finishing as a finalist in the 2023 Winter Split Championship. The team secured the EMEA’s first seed at the Mid-Season Invitation global championship in London during the month of May 2023.
• MAD Lions was the most-watched team of the LEC during the winter split, securing 7.8 million hours watched.2
• OverActive announced its entry into the VALORANT esports ecosystem. On January 31, the Company locked in an NA VALORANT Challengers League spot, and on March 30, it signed its first all-female esports team, MAD Lions Laurë, to compete in VALORANT Game Changers.
• Toronto Ultra, OverActive’s Call of Duty League franchise, won the Major III Championship on March 12. According to Esports Charts3, the final match between Toronto Ultra and OpTic Texas broke new ground, securing the highest peak viewership in Call of Duty League history, with more than 332,000 tuning in. Call of Duty League viewership has nearly doubled year-over-year on an average minute basis.4

2022 Operations Summary

OverActive Media

• The Company continued to build partnership momentum securing multi-year renewals with premium partners, including Bell, TD Bank Group and SCUF, contract extensions with MNP and Warner Music Spain, and signing on new partners, including Zilliqa and Nobis. This drove a 23% year-over-year increase in business operations revenue.
• OverActive hosted two live major esports events in Toronto in 2022; the Toronto Ultra Major III Call of Duty League Tournament and the Toronto Defiant Summer Showdown Overwatch League Tournament. Across both events, approximately 12,000 fans attended to experience a best-on-best of some of the greatest professional esports players from around the globe.
• The Company achieved a 43% year-over-year increase in total audience engagement growth from 2021 to 2022, including significant growth on TikTok.

MAD Lions / League of Legends

• MAD Lions’ League of Legends team qualified for the World Championship, marking the fourth consecutive year (and every year) in the history of OverActive that the team has done so.
• The League of Legends 2022 World Championship grand final secured a new record for peak viewership, with over 5.1 million people tuned in across multiple streaming platforms and channels.5

Toronto Ultra / Call of Duty League

• Toronto Ultra qualified for the Call of Duty League Championship Weekend finishing top six in the 2022 season.
• The Call of Duty League set viewership records when the 2022 Call of Duty League Championships brought the most peak viewers to the Call of Duty League since 2020.6
• Activision Blizzard launched their new Call of Duty title, Modern Warfare 2. The game had the highest-earning opening weekend in Call of Duty history, generating $800 million in sell-through within the first three days.7

Toronto Defiant / Overwatch League

• Toronto Defiant completed its best season in 2022, qualifying for the 2022 Grand Final Playoffs and finishing the regular season in eighth place in the West conference.
• The 2022 Overwatch League Playoffs recorded a significant viewership increase, and the 2022 Overwatch Grand Finals broke the Overwatch League’s all-time global viewership record.8
• Activision Blizzard successfully launched Overwatch 2, the highly anticipated sequel to Overwatch. The new game reached 25 million players in the first ten days and a daily player base nearly triple the previous daily player peak from the original Overwatch.9

The Company’s consolidated audited financial statements, notes to financial statements, and Management’s Discussion and Analysis for the three and twelve-month periods ended December 31, 2022, are available on the Company’s website at www.overactivemedia.com and under the Company’s profile on SEDAR at www.sedar.com.

Conference CallThe Company will conduct a conference call tomorrow, Tuesday, April 25, 2023 at 9:00 a.m. (Eastern Time) to review the fourth quarter and full-year results, as well as provide an overview of the Company’s recent milestones and growth strategy.

To access the conference call without operator assistance, please register and enter your phone number at https://emportal.ink/42iE1sD to receive an instant automated callback. To dial directly to be entered into the call by an operator, please dial 1-888-390-0605, or for international callers, 416-764-8609. A replay will be available shortly after the call and can be accessed by dialling 1-888-390-0541 or, for international callers, 416-764-8677. The entry code for the replay is 033325 #. The replay will expire on Tuesday, May 2, 2023.

A live conference call webcast can be accessed on OverActive’s website at www.overactivemedia.com or directly via https://app.webinar.net/kPd0jXw9B8Q. An online webcast archive will be available via the same link for 90 days following the call.

_____________________

1 Adjusted EBITDA is a non-IFRS measure. Refer to “Non-IFRS Measures” at the end of this press release.2 https://esportsinsider.com/2023/02/lec-winter-2023-viewership3 https://escharts.com/tournaments/cod/call-duty-league-2023-stage-3-major4 https://twitter.com/ggbreakingpoint/status/16488800751050055685 https://www.reuters.com/article/esports-lol-worlds-viewership-idUSFLMGnBXF6 https://dotesports.com/call-of-duty/news/grand-finals-of-cod-champs-2022-brings-most-peak-viewers-to-cdl-since-20207 ‘Call Of Duty: Modern Warfare II’ Passes $1 Billion In Sales In Less Than Two Weeks (forbes.cohttps://www.forbes.com/sites/erikkain/2022/11/07/call-of-duty-modern-warfare-ii-passes-1-billion-in-revenue-in-less-than-two-weeks/amp/m)8 https://esportsinsider.com/2022/11/2022-overwatch-league-playoffs-viewership-increase9 https://www.ungeek.ph/2022/10/overwatch-2-reaches-25-million-players-after-first-ten-days/

OVERACTIVE MEDIA CORP.Consolidated Statements of Financial Position(expressed in thousands of Canadian dollars)As at December 31, 2022 and December 31, 2021

		2022				2021
Assets
Current assets:
Cash and cash equivalents	$	13,557			$	29,577
Trade and other receivables		6,589				4,906
Prepaid expenses and other current assets		2,086				1,208
Total current assets		22,232				35,691
Non-current assets:
Property and equipment		2,531				2,698
Right-of-use assets		1,297				1,827
Intangible assets		55,624				89,648
Goodwill		5,958				5,596
Total non-current assets		65,410				99,769
Total assets	$	87,642			$	135,460
Liabilities and Shareholders’ Equity
Current liabilities:
Trade payable and accrued liabilities	$	4,256			$	3,651
Provisions		686				1,987
Notes payable		63				63
Current portion of lease liabilities		1,074				1,005
Current portion of contract liabilities		820				1,619
Current portion of payable related to franchise assets		1,581				7,359
Current portion of long-term debt		163				186
Current portion of deferred grant income		35				33
Total current liabilities		8,678				15,903
Non-current liabilities:
Deferred tax liability		8,160				14,757
Long-term portion of lease liabilities		349				955
Long-term payable related to franchise assets		22,638				21,405
Long-term debt		228				350
Long-term deferred grant income		46				80
Other long-term liabilities		84				90
Total non-current liabilities		31,505				37,637
Total liabilities		40,183				53,540
Shareholders’ equity:
Share capital		133,638				133,638
Warrants reserve		621				621
Contributed surplus		8,914				6,885
Accumulated other comprehensive loss		(4,247	)			(4,652	)
Deficit		(91,467	)			(54,542	)
Total shareholders’ equity		47,459				81,920
Total liabilities and shareholders’ equity	$	87,642			$	135,460

OVERACTIVE MEDIA CORP.Consolidated Statements of Net Loss and Comprehensive Loss(expressed in thousands of Canadian dollars, except per share amounts)For the years ended December 31, 2022 and 2021

		2022				2021
Revenue	$	14,162			$	14,195
Operating costs		25,622				22,200
Loss before the undernoted		(11,460	)			(8,005	)
Undernoted expenses (income):
Depreciation		1,465				1,213
Amortization and impairment on intangible assets		35,069				758
Foreign exchange loss (gain)		1,604				(352	)
Decrease in net present value of franchise obligation		(9,453	)			(388	)
Finance income		(118	)			-
Finance cost		5,251				5,103
Share-based compensation		2,433				4,514
Other income		(3,786	)			(999	)
Reverse takeover costs		-				2,756
Loss income before income taxes		(43,925	)			(20,610	)
Income tax recovery		(7,000	)			(1,214	)
Net loss for the year		(36,925	)			(19,396	)
Other comprehensive income (loss):
Foreign currency translation		405				(2,130	)
Change in equity investments		-				(2,633	)
Comprehensive loss for the year	$	(36,520	)		$	(24,159	)
Loss per share:
Basic	$	(0.46	)		$	(0.28	)
Diluted		(0.46	)			(0.28	)

The following table presents a reconciliation of net loss to adjusted EBITDA for the twelve months ended December 31, 2022 and 2021:

	Twelve months ended
	December 31, 2022		December 31, 2021
(In thousands of Canadian dollars)	$		$
Net loss for the period	(36,925	)	(19,396	)
Income tax recovery	(7,000	)	(1,214	)
Depreciation	1,465		1,213
Amortization and impairment	35,069		758
Decrease in net present value of franchise obligations	(9,453	)	(388	)
Finance income	(118	)
Finance cost	5,251		5,103
Foreign exchange loss (gain)	1,604		(352	)
Share-based compensation	2,433		4,514
Restructuring costs	214		-
Reversal of provision	(1,320	)
Reverse takeover costs	-		2,756
Adjusted EBITDA	(8,780	)	(7,006	)

OVERACTIVE MEDIA CORP.Consolidated Statements of Cash Flows(expressed in thousands of Canadian dollars)For the years ended December 31, 2022 and 2021

		2022				2021
Cash provided by (used in):
Operating activities:
Net loss for the year	$	(36,925	)		$	(19,396	)
Adjustments for:
Depreciation		1,465				1,213
Amortization of intangible assets		855				758
Foreign exchange (gain) loss		1,604				(352	)
Share-based compensation		2,433				4,514
Finance cost		5,251				5,103
Decrease in net present value of franchise
obligations		(9,453	)			(388	)
Income tax recovery		(7,000	)			(1,214	)
Impairment loss		34,214				-
Reverse takeover costs		-				2,756
Other		(31	)			(82	)
Change in non- cash operating working capital
Increase in trade and other receivables		(1,683	)			(2,921	)
Increase in prepaid expenses and
other current assets		(1,251	)			(249	)
Increase (decrease) in accounts payable and
accrued liabilities		1,114				(474	)
Decrease in contract liabilities		(799	)			(998	)
Decrease in provisions		(1,301	)			-
		(11,507	)			(10,772	)
Financing activities:
Repayment of notes payable for prior acquisitions		-				(513	)
Repayment on long-term debt		(186	)			(125	)
Repayments of franchise asset payables		(1,812	)			(1,434	)
Proceeds from shares issued in prior period from cash held in trust		-				1,098
Proceeds from shares issued on private placement  and brokered private placement, net		-				37,636
Principal payment of lease liability		(962	)			(807	)
Payment on interest portion of lease liability		(152	)			(215	)
Proceeds from warrants redeemed		-				50
		(3,112	)			35,690
Investing activities:
Purchase of property and equipment		(857	)			(2,011	)
Proceeds from disposal of property and equipment		505				442
Changes in non- cash working capital
related to capital expenditures		(505	)			505
Purchase of player contracts		(823	)			(520	)
Purchase of intangible assets		(14	)			(58	)
Cash acquired from reverse takeover		-				532
		(1,694	)			(1,110	)
(Decrease) increase in cash and cash equivalents		(16,313	)			23,808
Cash and cash equivalents, beginning of year		29,577				5,585
Effect of exchange rate changes on cash and cash equivalents		293				184
Cash and cash equivalents, end of year	$	13,557			$	29,577

ABOUT OVERACTIVE MEDIA

OverActive Media (TSXV: OAM) (OTCQB: OAMCF) is headquartered in Toronto, Ontario, with operations in Madrid, Spain and Berlin, Germany. OverActive’s mandate is to build an integrated global company delivering sports, media and entertainment products for today’s generation of fans with a focus on esports, videogames, content creation and distribution, culture, and live and online events. OverActive owns team franchises in professional esports leagues including (i) the Overwatch League, operating as the Toronto Defiant, (ii) the Call of Duty League, operating as the Toronto Ultra, and (iii) the League of Legends European Championship (“LEC”), operating as the MAD Lions. OverActive also leads OAM Live, an events arm that produces both live and online events.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION

This press release contains statements which constitute “forward-looking statements” and “forward-looking information” within the meaning of applicable securities laws (collectively, “forward-looking statements”), including statements regarding the plans, intentions, beliefs and current expectations of OverActive with respect to future business activities and operating performance. Forward-looking statements are often identified by the words “may”, “would”, “could”, “should”, “will”, “intend”, “plan”, “anticipate”, “believe”, “estimate”, “expect” or similar expressions and includes information regarding the anticipated financial and operating results of OverActive in the future.

Investors are cautioned that forward-looking statements are not based on historical facts but instead OverActive management’s expectations, estimates or projections concerning future results or events based on the opinions, assumptions and estimates of management considered reasonable at the date the statements are made. Although OverActive believes that the expectations reflected in such forward-looking statements are reasonable, such statements involve risks and uncertainties, and undue reliance should not be placed thereon, as unknown or unpredictable factors could have material adverse effects on future results, performance or achievements of the OverActive. Among the key factors that could cause actual results to differ materially from those projected in the forward-looking statements include the following: the potential impact of OverActive’s qualifying transaction on relationships, including with regulatory bodies, employees, suppliers, customers and competitors; changes in general economic, business and political conditions, including changes in the financial markets; changes in applicable laws and regulations both locally and in foreign jurisdictions; compliance with extensive government regulation; the risks and uncertainties associated with foreign markets; the ability of the Company to continue to execute on its existing partnerships and business strategy; the ability of the MAD Lions and Call of Duty Leagues to maintain viewership; the successful completion of the Company’s new venue; and other risk factors set out in OverActive’s annual information form for the year ended December 31, 2021 and its other filings with Canadian securities regulators, copies of which may be found under OverActive’s profile at www.sedar.com. These forward-looking statements may be affected by risks and uncertainties in the business of OverActive and general market conditions, including COVID-19.

Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected. Although OverActive has attempted to identify important risks, uncertainties and factors which could cause actual results to differ materially, there may be others that cause results not to be as anticipated, estimated or intended and such changes could be material. OverActive does not intend and do not assume any obligation, to update the forward-looking statements except as otherwise required by applicable law.

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, finance costs, depreciation and amortization, decrease/increase in net present value of franchise obligations, foreign exchange gains/loss, assistance payments from Franchise League and government assistance, restructuring costs, reverse takeover costs, intangibles assets impairment charge and share-based compensation. 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.

A reconciliation of Adjusted EBITDA to net income/loss may be found in the Company’s Management’s Discussion and Analysis for the three and twelve-month periods ended December 31, 2022.

Neither the TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.

FOR FURTHER INFORMATION, PLEASE CONTACT:

Leah Gaucher, Director, Marketing & Communications, OverActive Media
(647) 924-2614
lgaucher@oam.gg

Babak Pedram, Investor Relations, Virtus Advisory Group Inc.
(416) 955-8651
bpedram@virtusadvisory.com