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ESE Entertainment Reports First Quarter 2023 Results

  • Quarterly revenue of $13.92 million, year-over-year increase of 73%
  • Gross profit of $2.45 million, year-over-year increase of 283%
  • Positive Adjusted EBITDA1 for the three months ended January 31, 2023

VANCOUVER, BC / ACCESSWIRE / March 31, 2023 / ESE Entertainment Inc. ("ESE" or the "Company") (TSXV:ESE)(OTCQX:ENTEF), a gaming and esports company that provides a range of services to leading video game developers and publishers, is pleased to announce that it has filed its unaudited condensed interim consolidated financial statements (the "Financial Statements") and related management's discussion and analysis (the "MD&A") for the three months ended January 31, 2023 ("Q1 2023") 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.

Q1 2023 Financial Highlights:

  • Revenue of $13.92 million for Q1 2023, representing a 73% increase from Q1 2022 revenue of $8.03 million.
  • Gross profit of $2.45 million for Q1 2023, representing a 283% increase from Q1 2022 gross profit of $0.64 million.
  • Positive Adjusted EBITDA1 of $9,480 for the three months ended January 31, 2023, compared to adjusted EBITDA loss of $795,338 for the three months ended January 31, 2022.
  • Total assets as at January 31, 2023 of $18.87 million, achieving a positive current ratio.2

"At ESE, we are dynamic and adapt to market conditions and listen to shareholder feedback, which is why we are committed to focusing on achieving profitability and high gross margins as we celebrate new milestones in our year-over-year growth. We believe that the market has not adequately valued the Company, so we have taken actionable steps to unlock value. Firstly, we have executed an LOI for the sale of Frenzy and Digital Motorsports for consideration valued at $41 million. Secondly, we are focusing more on our core intellectual property and technology offering, GameAddik. This quarter has been a period of implementation for our 2023 success plan, which will allow us to establish long term sustainability and pursuit of profitability." stated Konrad Wasiela, CEO of ESE.

"We are confident that our strategic investments and commitment to our shareholders' priorities will result in increased profitability and higher gross profits in the coming quarters, showcasing the true potential of ESE. Our financial position has shown strong improvement, underpinned by a positive current ratio, demonstrating our commitment to maintaining stability and delivering value to our shareholders." stated Andrea Lieuwen, CFO of ESE.

Q1 2023 Operational Highlights:

  • In November 2022, ESE achieved record monthly ecommerce revenue.
  • In December 2022, ESE's esports team, K1CK, qualified for an esports event with a $1 Million USD prize pool.
  • On January 4, 2023, ESE announced that its esports competition, Ultraliga, surpassed 10,000,000 views in 2022.
  • On January 10, 2023, ESE's CEO Konrad Wasiela was featured in an interview and article with the Toronto Star.
  • In January 2023, ESE completed a non-brokered private placement of units for aggregate gross proceeds of $2,000,000.

The financial and operating results discussed in this news release are based on the Financial Statements and MD&A, which were released on March 31, 2023. 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 Wasiela
Chief Executive Officer and Director
+1 (437) 826-4012

About ESE Entertainment Inc.

ESE is a global 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. |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: the Company's ability to achieve increased profitability and high gross margins; the completion of the acquisition of Frenzy and Digital Motorsports and the consideration payable thereunder; the Company's plans to focus on its core intellectual property and technology offering, GameAddik; the Company establishing long term sustainability; and the Company delivering value to its shareholders. 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 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, accretion, 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
investors@esegaming.com
+1 (437) 826-4012

ESE ENTERTAINMENT INC.
Condensed Interim Consolidated Statements of Financial Position
(Expressed in Canadian Dollars)
(Unaudited - Prepared by Management)

January 31, October 31,
Note 2023 2022
(unaudited) (audited)
ASSETS
Current assets
Cash
$ 2,468,763 $ 812,220
Receivables
8 5,734,599 9,571,707
Term deposits
- 301,799
Prepaid expense and deposits
283,979 305,393
Inventory
814,217 797,018
9,301,558 11,788,137
Property and equipment
9 2,487,698 2,500,218
Deposit and investment
12 309,408 287,841
Intangible assets
5, 7,10 3,610,000 3,713,342
Goodwill
4, 5,6, 7, 11 3,160,975 3,160,975
Total assets
$ 18,869,639 $ 21,450,513
LIABILITIES
Current liabilities
Accounts payable and accrued liabilities
13,20 $ 4,117,915 $ 6,977,112
Lease liabilities
14 281,608 301,874
Acquisition payment commitment
6,7 862,801 2,992,195
Income taxes payable
751,786 730,423
Loans and credit facilities
15 1,590,000 2,033,719
Consideration payable
6 467,582 632,928
Deferred revenue
21 140,153 268,519
8,211,845 13,936,770
Consideration payable
6 202,996 257,859
Loans payable
15 551,043 358,090
Convertible notes
16 4,094,755 2,806,965
Deferred income tax liability
915,852 915,852
Lease liabilities
14 897,793 941,082
14,874,284 19,216,618
EQUITY
Share capital
17 47,653,730 44,305,370
Share subscriptions received
1,050 8,700
Commitment to issue shares
5, 6,17 3,760,397 3,937,227
Contributed surplus
5,794,932 5,193,753
Accumulated other comprehensive loss
(72,137 ) (139,456 )
Deficit
(52,546,130 ) (50,598,482 )
Equity attributable to shareholders
4,591,842 2,707,112
Non-controlling interest
(596,487 ) (473,217 )
Total equity
3,995,355 2,233,895
Total liabilities and equity
$ 18,869,639 $ 21,450,513

Nature and continuance of operations - Note 1
Subsequent events - Note 23

ESE ENTERTAINMENT INC.
Condensed Interim Consolidated Statements of Loss and Comprehensive Loss
For the three months ended January 31, 2023 and 2022
(Expressed in Canadian Dollars)
(Unaudited - Prepared by Management)

For the three months ended January 31,
Note 2023 2022
Revenue
21 $ 13,918,390 $ 8,025,694
Cost of sales
21 11,472,667 7,390,333
Gross Profit
2,445,723 635,361
Expenses
Share-based payments
17,20 1,674,087 526,201
Wages, benefits and consulting
1,245,421 510,846
General and administration
856,641 350,307
Advertising and promotion
99,658 284,808
Professional fees
20 237,293 185,113
Finder's fees and stamp duty for acquisitions and commissions
6 57,946 281,709
Amortization
9,10 265,673 76,274
Filing fees, bad debts and other expense (recovery)
(2,770 ) 89,829
4,433,949 2,305,087
Loss before other items
(1,988,226 ) (1,669,726 )
Other items:
Interest expense
(173,306 ) (17,978 )
Accretion expense
16 (101,753 ) -
Gain on revaluation of consideration payable
6 220,209 -
Foreign exchange loss
(77,378 ) (10,291 )
(132,228 ) (28,269 )
Net loss for the period before taxes
(2,120,454 ) (1,697,995 )
Provision for income taxes
49,536 (8,062 )
Net loss for the period
(2,070,918 ) (1,706,057 )
Other comprehensive income (loss)
Gain (loss) on translation of foreign operations
67,319 198,460
Total comprehensive loss for the period
$ (2,003,599 ) $ (1,507,597 )
Net loss attributable to:
Shareholders of the company
$ (1,947,648 ) $ (1,658,622 )
Non-controlling interest
(123,270 ) (47,435 )
Net loss for the period
$ (2,070,918 ) $ (1,706,057 )
Total comprehensive loss attributable to:
Shareholders of the company
$ (1,880,329 ) $ (1,460,162 )
Non-controlling interest
(123,270 ) (47,435 )
Total comprehensive loss for the period
$ (2,003,599 ) $ (1,507,597 )
Basic and diluted loss per common share
$ (0.03 ) $ (0.03 )
Weighted average number of common shares outstanding
72,986,879 61,542,410

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

1 Adjusted EBITDA is a non-IFRS measure. Refer to "Non-IFRS Measures" at the end of this press release.

2 Current ratio is current assets divided by current liabilities.

SOURCE: ESE Entertainment Inc.



View source version on accesswire.com:
https://www.accesswire.com/747150/ESE-Entertainment-Reports-First-Quarter-2023-Results

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