GameSquare Holdings, Inc 6-K, filed Nov 30, 2022
GameSquare Holdings, Inc. (GAME)
About this 6-K
GameSquare Holdings, Inc filed this 6-K on November 30, 2022.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of November 2022.
Commission File Number: 333-254709
Engine Gaming and Media, Inc.
(Exact Name of Registrant as Specified in Charter)
77 King Street West, Suite 3000, PO Box 95, Toronto, Ontario, Canada M5K 1G8
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
Form 20-F ☐ Form 40-F ☒
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ____
Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ____
Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of the home country exchange on which the registrant’s securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant’s security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| ENGINE GAMING AND MEDIA, INC. | |||
| (Registrant) | |||
| Date: | November 30, 2022 | By: | /s/ Louis Schwartz |
| Name: | Louis Schwartz | ||
| Title: | Chief Executive Officer and Director |
||
EXHIBIT INDEX
| 99.1 | News Release dated November 29, 2022 |
Exhibit 99.1
Engine Gaming & Media, Inc. Reports Fiscal Fourth Quarter and Full Year 2022 Financial Results
~ FY 2022 record revenue of $41.9 million, up from $33.3 million YoY, an increase of 26% ~
~ Fiscal fourth quarter revenues of $11.5 million, up 24% on a sequential basis compared to the fiscal third quarter of 2022 ~
~ FY 2022 net loss improved $26.2 million to $14.5 million YoY, compared to a net loss of $40.7 million ~
NEW YORK, November 29, 2022 — Engine Gaming and Media, Inc. (“Engine” or the “Company”; NASDAQ: GAME; TSX-V: GAME), a data-driven, gaming, media and influencer marketing platform company, today announced results for its fiscal fourth quarter and full year 2022 ended August 31, 2022. All amounts are stated in U.S. dollars unless otherwise indicated.
Financial Highlights:
| ● | Total revenue for the full year 2022 increased 25.6% to $41.9 million, compared to $33.3 million in the year prior. | |
| ● | For the fiscal fourth quarter of 2022, revenues were $11.5 million, up 24.4% on a sequential basis when compared to $9.2 million in the fiscal third quarter of 2022. | |
| ● | Growth in the Company’s Advertising business in which revenues increased 28.6% to $32.7 million for the full year 2022, compared to $25.4 million in the year prior. | |
| ● | Continued growth in the Company’s SaaS business of 15.9% for the full year 2022 to $9.2 million. | |
| ● | Significant improvement in Adjusted EBITDA, inclusive of discontinued operations of 23.3% sequentially. | |
| ● | For the full year net loss improved significantly to $14.5 million, an increase of $26.2 million, compared to a net loss of $40.7 million. |
Management Commentary
“Both the fiscal fourth quarter and full year were highlighted by the top-line growth in our advertising business delivering revenue of $32.7 million for the full year, up 29% while generating $9.0 million during the fiscal fourth quarter, an increase of 29% sequentially. In addition, significant growth in our SaaS business contributed $9.2 million to full year 2022 revenues, an increase of 16%.” said Lou Schwartz, Chief Executive Officer of Engine. “Our cost cutting initiatives are most evident in our Adjusted EBITDA inclusive of our discontinued operations of $(4.3) million, an improvement of 23% on a sequential basis. These cost cutting initiatives will become more evident in our fiscal first quarter 2023 as we work towards becoming cash flow breakeven on a run-rate basis in fiscal 2023.”
Tom Rogers, Executive Chairman of the Company added, “As previously announced, we commenced a process to explore and evaluate strategic options to enhance shareholder value. With a large number of small cap companies in similar situations to our own we feel there is a lot of opportunity to create greater scale and believe we have made a lot of progress on this initiative. We continue to narrow our focus and we are confident that our efforts will result in a significant opportunity for the company to deliver on our stated goals in initiating this process.”
Fiscal Fourth Quarter and Full Year 2022 Financial Results
Total revenue in the fiscal fourth quarter of 2022 was $11.5 million, an increase of 24.4% when compared to $9.2 million in the fiscal third quarter of 2022. Sequential growth from the third quarter was particularly apparent. The increase was primarily driven by a 29.2% sequential increase in Advertising revenue to $9.0 million from $7.0 million from the fiscal third quarter of 2022, as well as a 9.4% increase in Software-as-a-Service (SaaS) revenue to $2.4 million sequentially from $2.2 million in the fiscal third quarter of 2022.
For the full year ended August 31, 2022, net loss improved significantly to $14.5 million, or $(0.93) per basic and diluted share, compared to a net loss of $40.7 million, or $(3.43) per basic and diluted share, in the same year-ago period.
Including discontinued operations, Adjusted EBITDA improved 23.3% in the fiscal fourth quarter of 2022 to $(4.3) million when compared to $(5.7) million in the fiscal third quarter of 2022. For the full year ended August 31, 2022, Adjusted EBITDA was $(20.2) million, compared to $(18.5) million in the same year-ago period.
Exclusive of discontinued operations, Adjusted EBITDA was $(4.0) million for the fiscal fourth quarter, an improvement of 2.2% when compared to $(4.1) million in the fiscal third quarter. The fiscal fourth quarter of 2022 included approximately $400,000 of additional expense related to accounting charge estimates to certain financial assets and liabilities, with comparable charges not taken in prior periods noted above. Removing these charges from the fiscal fourth quarter of 2022, results in a 12% sequential improvement, better highlighting the initial progress the Company has made in our quarter over quarter improvement in Adjusted EBITDA. For the full year ended August 31, 2022, Adjusted EBITDA was $(16.1) million compared to $(11.6) million in the full year ended August 31, 2021.
At August 31, 2022, the Company had cash of $8.6 million.
Recent Operational Highlights:
| ● | Stream Hatchet signed contract extensions with Microsoft, Activision, and Ubisoft, while expanding its list of clients with the addition of Monumental Sports, PUBG, FIFA, Logitech, NVIDIA, and Octagon. | |
| ● | Sideqik added FoodPanda, Blizzard, Fanatics, and BenQ to its growing list of blue-chip companies levering their end-to-end suite of influencer marketing and social commerce technology. Renewals and extensions include Nike, Universal Music Group, Virgin Voyages, and Riot Games. | |
| ● | Frankly signed new contracts with Barret-Jackson, FilmFeed, Scioto Valley Guardian, and Aggregated Media. |
FY Q4 and Full Year 2022 Earnings Conference Call
Management will host an investor conference call at 4:30 p.m. EDT (1:30 p.m. PDT) today, Tuesday, November 29, 2022, to discuss Engine Gaming and Media, Inc.’s fiscal fourth quarter 2022 financial results, provide a corporate update, and conclude with a Q&A from participants. To participate, please use the following information:
| Date: | Tuesday, November 29, 2022 |
| Time: | 4:30 p.m. EDT (1:30 p.m. PDT) |
| Dial-in: | 1-877-407-0784 |
| International Dial-in: | 1-201-689-8560 |
| Conference Code: | 13733976 |
| Webcast: | GAME Conference Call |
Please dial in at least 10 minutes before the start of the call to ensure timely participation.
Non-IFRS Measures
The Company reports earnings before interest, taxes, depreciation and amortization (“EBITDA”) and Adjusted EBITDA, which are not financial measures calculated and presented in accordance with International Financial Reporting Standards (“IFRS”) and therefore may not be comparable to similar measures presented by other issuers. EBITDA and Adjusted EBITDA should not be considered in isolation or as a substitute to net income (loss) or any other financial measures of performance or liquidity calculated and presented in accordance with IFRS. The Company defines Adjusted EBITDA as EBITDA, adjusted to exclude certain non-cash charges and other items that we do not believe are reflective of our ongoing operating results. The Company utilizes Adjusted EBITDA internally for purposes of forecasting, determining compensation, and assessing the performance of our business, therefore, we believe this measure provides useful supplemental information that may assist investors in assessing an investment in the Company.
The following unaudited table presents the reconciliation of net loss to Adjusted EBITDA for the three months and year ended August 31, 2022, and 2021, respectively.
| For the three months ended | For the year ended | |||||||||||||||||||
| Note | August 31, 2022 | August 31, 2021 | August 31, 2022 | August 31, 2021 | ||||||||||||||||
| $ | $ | $ | $ | |||||||||||||||||
| Net income (loss) attributable to owners of the Company | (15,214,208 | ) | (14,946,165 | ) | (14,478,598 | ) | (40,720,811 | ) | ||||||||||||
| Interest expense | 151,331 | 197,729 | 729,848 | 1,274,998 | ||||||||||||||||
| Income tax expense | - | - | - | - | ||||||||||||||||
| Amortization and depreciation | (a) | 313,394 | 296,979 | 1,242,383 | 1,112,863 | |||||||||||||||
| Impairment expense | (a) | 3,873,000 | - | 3,873,000 | - | |||||||||||||||
| Restructuring costs | 142,205 | - | 177,952 | - | ||||||||||||||||
| Share-based payments | (a) | 1,110,357 | 1,242,913 | 4,688,218 | 3,702,754 | |||||||||||||||
| Loss on foreign exchange | 303,710 | 97,408 | 400,521 | 1,090,944 | ||||||||||||||||
| Loss on extinguishment of debt | (a) | - | - | - | 2,428,900 | |||||||||||||||
| Gain on retained interest in former associate | (a) | - | - | - | (99,961 | ) | ||||||||||||||
| Transaction costs | 22,854 | 341,702 | 1,327,990 | 341,702 | ||||||||||||||||
| Arbitration settlement reserve | (a) | (206,956 | ) | 6,468,330 | (5,775,717 | ) | 6,468,330 | |||||||||||||
| Change in fair value of investment at FVTPL | (a) | 873,778 | (581,812 | ) | 873,778 | (581,812 | ) | |||||||||||||
| Change in fair value of warrant liability | (a) | (81,310 | ) | (1,965,590 | ) | (4,748,893 | ) | (9,037,108 | ) | |||||||||||
| Change in fair value of convertible debt | (a) | (240,986 | ) | (1,105,939 | ) | (2,388,120 | ) | 6,066,594 | ||||||||||||
| Share of net loss of associate | (a) | - | - | - | 103,930 | |||||||||||||||
| (Gain) loss on disposal of subsidiary | (a) | 194,268 | - | (14,934,149 | ) | 678,931 | ||||||||||||||
| (Gain) loss on disposal of asssets | (a) | (257,550 | ) | - | (257,550 | ) | - | |||||||||||||
| (Gain) loss from discontinued operations | 4,971,125 | 7,325,801 | 13,203,474 | 15,564,168 | ||||||||||||||||
| Adjusted EBITDA | (4,044,988 | ) | (2,628,644 | ) | (16,065,863 | ) | (11,605,578 | ) | ||||||||||||
Note (a) – Non-cash expense
The following unaudited table presents the reconciliation of net loss to Adjusted EBITDA, inclusive of discontinued operations, for the three months and year ended August 31, 2022, and 2021, respectively.
| For the three months ended | For the year ended | |||||||||||||||||||
| Note | August 31, 2022 | August 31, 2021 | August 31, 2022 | August 31, 2021 | ||||||||||||||||
| $ | $ | $ | $ | |||||||||||||||||
| Net income (loss) attributable to owners of the Company | (15,214,208 | ) | (14,946,165 | ) | (14,478,598 | ) | (40,720,811 | ) | ||||||||||||
| Interest expense | 155,057 | 221,333 | 817,710 | 1,400,293 | ||||||||||||||||
| Income tax expense | - | - | - | - | ||||||||||||||||
| Amortization and depreciation | (a) | 796,346 | 952,555 | 3,690,939 | 5,092,432 | |||||||||||||||
| Impairment expense | (a) | 9,038,806 | 3,885,001 | 9,515,210 | 3,885,001 | |||||||||||||||
| Restructuring costs | 359,211 | - | 485,497 | - | ||||||||||||||||
| Share-based payments | (a) | 1,110,357 | 1,243,961 | 4,688,125 | 3,702,705 | |||||||||||||||
| Loss on foreign exchange | 285,137 | 112,057 | 464,499 | 970,870 | ||||||||||||||||
| Loss on extinguishment of debt | (a) | - | - | - | 2,428,900 | |||||||||||||||
| Gain on retained interest in former associate | (a) | - | - | - | (99,961 | ) | ||||||||||||||
| Transaction costs | 22,854 | 341,702 | 1,327,990 | 341,702 | ||||||||||||||||
| Non-operational professional fees | 1,162 | 846,475 | 1,613,831 | 846,475 | ||||||||||||||||
| Arbitration settlement reserve | (a) | (206,956 | ) | 6,468,330 | (5,775,717 | ) | 6,468,330 | |||||||||||||
| Change in fair value of investment at FVTPL | (a) | 873,778 | (581,812 | ) | 873,778 | (581,812 | ) | |||||||||||||
| Change in fair value of warrant liability | (a) | (81,310 | ) | (1,965,590 | ) | (4,748,893 | ) | (9,037,108 | ) | |||||||||||
| Change in fair value of convertible debt | (a) | (240,986 | ) | (1,105,939 | ) | (2,388,120 | ) | 6,066,594 | ||||||||||||
| Share of net loss of associate | (a) | - | - | - | 103,930 | |||||||||||||||
| (Gain) loss on disposal of subsidiary | (a) | 194,268 | - | (14,934,149 | ) | 678,931 | ||||||||||||||
| (Gain) loss on disposal of asssets | (a) | (257,550 | ) | - | (257,550 | ) | - | |||||||||||||
| (Gain) loss from extinguishment of liabilities | (a) | (1,105,023 | ) | - | (1,105,023 | ) | - | |||||||||||||
| Adjusted EBITDA | (4,269,057 | ) | (4,528,092 | ) | (20,210,471 | ) | (18,453,529 | ) | ||||||||||||
Note (a) – Non-cash expense
This earnings release should be read in conjunction with the Company’s Interim Condensed Consolidated Financial Statements and accompanying notes that will be made available on Engine’s investor relations site on November 29, 2022 which can be found at https://ir.enginemediainc.com/.
About Engine Gaming and Media, Inc.
Engine Gaming and Media, Inc. (NASDAQ:GAME)(TSXV:GAME) provides unparalleled live streaming data and social analytics, influencer relationship management and monetization, and programmatic advertising to support the world’s largest video gaming companies, brand marketers, ecommerce companies, media publishers and agencies to drive new streams of revenue. The company’s subsidiaries include Stream Hatchet, the global leader in gaming video distribution analytics; Sideqik, a social influencer marketing discovery, analytics, and activation platform; and Frankly Media, a digital publishing platform used to create, distribute, and monetize content across all digital channels. Engine generates revenue through a combination of software-as-a-service subscription fees, managed services, and programmatic advertising. For more information, please visit www.enginegaming.com.
Cautionary Statement on Forward-Looking Information
This news release contains forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Engine to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Often, but not always, forward-looking statements can be identified by the use of words such as “plans”, “expects” or “does not expect”, “is expected”, “estimates”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or state that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved. In respect of the forward-looking information contained herein, Engine has provided such statements and information in reliance on certain assumptions that management believed to be reasonable at the time. Forward-looking information involves known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements stated herein to be materially different from any future results, performance or achievements expressed or implied by the forward-looking information. Actual results could differ materially from those currently anticipated due to a number of factors and risks. Accordingly, readers should not place undue reliance on forward-looking information contained in this news release.
The forward-looking statements contained in this news release are made as of the date of this release and, accordingly, are subject to change after such date. Engine does not assume any obligation to update or revise any forward-looking statements, whether written or oral, that may be made from time to time by us or on our behalf, except as required by applicable law.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Company Contact:
Lou Schwartz
647-725-7765
Investor Relations Contact:
Shannon Devine
MZ North America
Main: 203-741-8811
GAME@mzgroup.us
Engine Gaming & Media, Inc.
Consolidated Balance Sheets
| August 31, 2022 | August 31, 2021 | |||||||
| $ | $ | |||||||
| ASSETS | ||||||||
| Current | ||||||||
| Cash | 8,601,706 | 15,305,996 | ||||||
| Restricted cash | 47,455 | 331,528 | ||||||
| Accounts and other receivables | 8,404,009 | 8,646,807 | ||||||
| Government remittances | 874,334 | 1,070,216 | ||||||
| Publisher advance, current | 1,490,648 | 3,197,102 | ||||||
| Prepaid expenses and other | 2,064,221 | 3,006,033 | ||||||
| Promissory notes receivable | 576,528 | - | ||||||
| 22,058,901 | 31,557,682 | |||||||
| Non-Current | ||||||||
| Publisher advance, non-current | - | 1,337,116 | ||||||
| Investment at FVTPL | 2,629,851 | 2,629,851 | ||||||
| Property and equipment | 127,390 | 403,811 | ||||||
| Goodwill | 15,200,188 | 18,495,121 | ||||||
| Intangible assets | 2,667,363 | 12,482,244 | ||||||
| Right-of-use assets | 11,115 | 557,022 | ||||||
| 20,635,907 | 35,905,165 | |||||||
| 42,694,808 | 67,462,847 | |||||||
| August 31, 2022 | August 31, 2021 | |||||||
| $ | $ | |||||||
| LIABILITIES | ||||||||
| Current | ||||||||
| Accounts payable | 12,772,375 | 10,403,665 | ||||||
| Accrued liabilities | 3,756,758 | 5,722,470 | ||||||
| Players liability account | 47,455 | 331,528 | ||||||
| Deferred revenue | 1,077,923 | 2,644,948 | ||||||
| Lease liabilities, current | 388,834 | 222,583 | ||||||
| Long-term debt, current | - | 96,664 | ||||||
| Promissory notes payable | 771,762 | 821,948 | ||||||
| Warrant liability | 49,894 | 4,868,703 | ||||||
| Convertible debt, current | 2,267,367 | 914,427 | ||||||
| Arbitration reserve | 692,613 | 6,468,330 | ||||||
| 21,824,981 | 32,495,266 | |||||||
| Convertible debt, non-current | 4,983,236 | 9,037,069 | ||||||
| Lease liabilities, non-current | - | 364,968 | ||||||
| 4,983,236 | 9,402,037 | |||||||
| 26,808,217 | 41,897,303 | |||||||
| SHAREHOLDERS’ EQUITY (DEFICIENCY) | ||||||||
| Share capital | 124,897,859 | 122,741,230 | ||||||
| Contributed surplus | 20,351,522 | 17,819,933 | ||||||
| Foreign currency translation reserve | (2,069,219 | ) | (2,324,025 | ) | ||||
| Deficit | (127,293,571 | ) | (112,814,973 | ) | ||||
| 15,886,591 | 25,422,165 | |||||||
| Non-controlling interest | - | 143,379 | ||||||
| 15,886,591 | 25,565,544 | |||||||
| 42,694,808 | 67,462,847 | |||||||
Engine Gaming & Media, Inc.
Consolidated Statements of Operations and Comprehensive Loss
| For the year ended | ||||||||
| August 31, 2022 | August 31, 2021 | |||||||
| $ | $ | |||||||
| CONTINUING OPERATIONS | ||||||||
| REVENUE | ||||||||
| Software-as-a-service | 9,220,069 | 7,952,426 | ||||||
| Advertising | 32,662,544 | 25,392,842 | ||||||
| 41,882,613 | 33,345,268 | |||||||
| EXPENSES | ||||||||
| Salaries and wages | 14,086,955 | 12,161,000 | ||||||
| Consulting | 2,253,836 | 2,223,147 | ||||||
| Professional fees | 1,920,663 | 1,771,190 | ||||||
| Revenue sharing expense | 30,090,316 | 22,853,680 | ||||||
| Advertising and promotion | 1,187,161 | 1,299,909 | ||||||
| Office and general | 5,282,145 | 2,406,678 | ||||||
| Technology expenses | 3,062,181 | 2,309,248 | ||||||
| Amortization and depreciation | 1,242,383 | 1,112,863 | ||||||
| Share-based payments | 4,688,218 | 3,702,754 | ||||||
| Interest expense | 729,848 | 1,274,998 | ||||||
| (Gain) loss on foreign exchange | 400,521 | 1,090,944 | ||||||
| Loss on extinguishment of debt | - | 2,428,900 | ||||||
| Gain on retained interest in former associate | - | (99,961 | ) | |||||
| Transaction costs | 1,327,990 | 341,702 | ||||||
| Arbitration settlement reserve | (5,775,717 | ) | 6,468,330 | |||||
| Impairment expense | 3,873,000 | - | ||||||
| Restructuring costs | 177,952 | - | ||||||
| Change in fair value of promissory notes receivable and investment at FVTPL | 873,778 | (581,812 | ) | |||||
| Change in fair value of warrant liability | (4,748,893 | ) | (9,037,108 | ) | ||||
| Change in fair value of convertible debt | (2,388,120 | ) | 6,066,594 | |||||
| 58,284,217 | 57,793,056 | |||||||
| ASSOCIATES | ||||||||
| Share of net loss of associate | - | 103,930 | ||||||
| Net income (loss) for the year before discontinued operations | (16,401,604 | ) | (24,551,718 | ) | ||||
| Income tax expense | - | - | ||||||
| (16,401,604 | ) | (24,551,718 | ) | |||||
| DISCONTINUED OPERATIONS | ||||||||
| Gain (loss) on disposal of subsidiary | 14,934,149 | (678,931 | ) | |||||
| Gain on disposal of asssets | 257,550 | - | ||||||
| Loss from discontinued operations | (13,203,474 | ) | (15,564,168 | ) | ||||
| Net income (loss) for the year from discontinued operations | 1,988,225 | (16,243,099 | ) | |||||
| Net loss for the year | (14,413,379 | ) | (40,794,817 | ) | ||||
| Net income (loss) attributable to non-controlling interest | (65,219 | ) | 74,006 | |||||
| Net loss attributable to owners of the Company | (14,478,598 | ) | (40,720,811 | ) | ||||
| OTHER COMPREHENSIVE INCOME (LOSS) | ||||||||
| Items that may be reclassified subsequently to profit or loss | ||||||||
| Foreign currency translation differences | 393,928 | 10,250 | ||||||
| Comprehensive loss for the year | (14,084,670 | ) | (40,710,561 | ) | ||||
| INCOME (LOSS) PER SHARE | ||||||||
| Basic loss per share - continuing operations | (1.05 | ) | (2.06 | ) | ||||
| Basic income (loss) per share - discontinued operations | 0.13 | (1.37 | ) | |||||
| Basic and diluted loss per share | (0.93 | ) | (3.43 | ) | ||||
| Weighted average number of shares outstanding - Basic | 15,637,418 | 11,874,775 | ||||||