Stockwatch

ESE Entertainment Inc
Symbol	ESE
Shares Issued	80,370,803
Close 2023-09-29	C$ 0.14
Market Cap	C$ 11,251,912
Recent Sedar+ Documents

ESE Entertainment loses $1.73-million in Q3 2023

2023-09-29 16:56 ET - News Release

Subject: ESE Entertainment (TSXV: ESE) Word Document File: '\\swfile\EmailIn\20230929 134351 Attachment ESE Financials Q3 2023 - News Release (final).docx' ESE ENTERTAINMENT REPORTS THIRD QUARTER 2023 RESULTS VANCOUVER, BC, September 29, 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 July 31, 2023 ("Q3 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. Q3 2023 Financial Highlights: Total Revenue of $11.72 million (including discontinued operations) Gross Profit of $1.63 million (from discontinued operations) Loss Per Share improvement to $0.02, compared to $0.13 in Q3 2022 Total assets as at July 31, 2023 of $15.25 million "The Third Quarter was dynamic and critical in ESE's trajectory toward long-term success. We successfully executed the sale of 70% of GameAddik for $9.1 million - our largest non-dilutive cash injection since ESE's inception. The cash has allowed us to eliminate our secured debt, clean up our overall balance sheet, and position us for future growth. Our sustained momentum, evidenced by our consistent execution quarter-over-quarter, fuels our enthusiasm as we look forward to a promising year ahead." stated Konrad Wasiela, CEO of ESE. "With ESE's improved balance sheet and strategic asset management, we are setting a solid foundation for forthcoming fiscal growth. Our focus remains on operational efficiencies and prudent cost management, underscoring our commitment to long-term financial stability." stated Andrea Hayward, CFO of ESE. Q3 2023 Operational Highlights: In May 2023, ESE Successfully Produced 18 Days of Broadcast for LEC 2023 Spring Season, Garnering 3 Million Views and 1.2 Million Hours Watched. In July 2023, ESE announced that Samsung became the title partner ESE Entertainment's Gaming Tournament, Ultraliga. In July 2023, ESE announced that automotive company Kia, became an official sponsor of ESE Entertainment's Gaming Tournament, Ultraliga. In July 2023, ESE announced that it produced and distributed the Championship Tournament for Riot Games, Teamfight Tactics. Highlighted Subsequent Events: Subsequent to July 31, 2023, in August 2023, the Company completed the sale of 70% of the shares of the Company's wholly-owned subsidiary, GameAddik for an aggregate purchase price of $9,100,000 in cash, subject to customary adjustments. The remaining 30% of GameAddik has been retained by the Company as an asset. Subsequent to July 31, 2023, the Company repaid $2,192,889 of the principal amount of the convertible notes and promissory notes. The financial and operating results discussed in this news release are based on the Financial Statements and MD&A, which were released on September 29, 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. SOURCE ESE Entertainment Inc. For further information about ESE, please contact: investors@esegaming.com ESE ENTERTAINMENT INC. Condensed Interim Consolidated Statements of Financial Position (Expressed in Canadian Dollars) (Unaudited - Prepared by Management) July 31, October 31, 2023 2022 (unaudited) (audited) ASSETS Current assets Cash $ 327,505 $ 812,220 Receivables 8 1,283,113 9,571,707 Term deposits - 301,799 Prepaid expense and deposits 154,110 305,393 Inventory 239,153 797,018 Assets held-for-sale 23 12,091,310 - 14,095,291 11,788,137 Property and equipment 9 822,674 2,500,218 Deposit and investment 12 330,520 287,841 Intangible assets 5, 7, 10 - 3,713,342 Goodwill 5, 6, 7, 11 - 3,160,975 Total assets $ 15,248,385 $ 21,450,513 LIABILITIES Current liabilities Accounts payable and accrued liabilities 13, 20 $ 2,848,276 $ 6,977,112 Lease liabilities 14 153,918 301,874 Acquisition payment commitment 6, 7 862,801 2,992,195 Income taxes payable 18,251 730,423 Loans and credit facilities 15 384,763 2,033,719 Current portion of convertible notes 16 3,296,742 - Consideration payable 6 217,588 632,928 Deferred revenue 21 17,848 268,519 Liabilities held-for-sale 23 3,949,903 - 11,750,090 13,936,770 Consideration payable 6 - 257,859 Loans payable 15 820,035 358,090 Convertible notes 16 810,147 2,806,965 Deferred income tax liability 5,301 915,852 Lease liabilities 14 75,197 941,082 13,460,770 19,216,618 EQUITY Share capital 17 51,519,634 44,305,370 Share subscriptions received 1,050 8,700 Commitment to issue shares 5, 6, 17 2,235,346 3,937,227 Contributed surplus 5,857,289 5,193,753 Accumulated other comprehensive loss (11,589) (139,456) Deficit (57,030,763) (50,598,482) Equity attributable to shareholders 2,570,967 2,707,112 Non-controlling interest (783,352) (473,217) Total equity 1,787,715 2,233,895 Total liabilities and equity $ 15,248,385 $ 21,450,513 Nature and continuance of operations - Note 1 Subsequent events - Notes 24 ESE ENTERTAINMENT INC. Condensed Interim Consolidated Statements of Loss and Comprehensive Loss For the three and nine months ended July 31, 2023 and 2022 (Expressed in Canadian Dollars) (Unaudited - Prepared by Management) For the three months ended July 31, For the nine months ended July 31, Note 2023 2022 2023 2022 Revenue 21 $ 5,662,998 $ 9,977,770 $ 18,074,756 $ 25,844,091 Cost of sales 21 6,262,479 9,564,830 17,872,962 24,083,430 Gross (Loss) Profit (599,481) 412,940 201,794 1,760,661 Expenses Share-based payments 17, 20 1,168,683 8,468,466 3,967,910 10,623,885 Wages, benefits and consulting 258,030 642,164 1,049,487 1,550,350 General and administration (288,078) 446,378 628,976 1,134,974 Advertising and promotion 79,439 338,655 359,825 855,571 Professional fees 20 251,625 81,110 756,940 736,908 Finder's fees and stamp duty for acquisitions and commissions 6 43,424 49,792 161,089 1,133,827 Amortization 9, 10 74,322 71,624 283,400 218,245 Filing fees, bad debts and other expenses 10,839 77,073 214,597 286,239 1,598,284 10,175,262 7,422,224 16,539,999 Loss before other items (2,197,765) (9,762,322) (7,220,430) (14,779,338) Other items: Interest expense 154,418 (88,707) (265,702) (156,005) Other expense (2,330) - (1,086) - Accretion expense 16 (158,749) (71,895) (426,387) (104,900) Gain on debt settlement 17 - - 22,105 - Gain (loss) on revaluation of consideration payable 6 57,079 (230,655) 437,957 (230,655) Foreign exchange gain (loss) 17,045 (28,287) (161,078) 21,679 67,463 (419,544) (394,191) (469,881) Net loss for the period before taxes (2,130,302) (10,181,866) (7,614,621) (15,249,219) Provision for income taxes (115,717) (31,981) (69,046) (52,373) Net loss for the period from continuing operations (2,246,019) (10,213,847) (7,683,667) (15,301,592) Net income for the period from discontinued operations 23 511,077 728,002 941,251 2,095,557 Net (loss) income for the period (1,734,942) (9,485,845) (6,742,416) (13,206,035) Other comprehensive income (loss) Gain (loss) on translation of foreign operations (149,440) (148,954) 127,867 (53,589) Total comprehensive loss for the period $ (1,884,382) $ (9,634,799) $ (6,614,549) $ (13,259,624) Net loss attributable to: Shareholders of the company $ (1,646,930) $ (9,317,008) $ (6,432,281) $ (13,090,899) Non-controlling interest (88,012) (168,837) (310,135) (115,136) Net loss for the period $ (1,734,942) $ (9,485,845) $ (6,742,416) $ (13,206,035) Total comprehensive loss attributable to: Shareholders of the company $ (1,796,370) $ (9,465,962) $ (6,304,414) $ (13,144,488) Non-controlling interest (88,012) (168,837) (310,135) (115,136) Total comprehensive loss for the period $ (1,884,382) $ (9,634,799) $ (6,614,549) $ (13,259,624) Basic and diluted loss per common share $ (0.02) $ (0.13) $ (0.08) $ (0.20) Basic and diluted loss per common share - continuing operations $ (0.03) $ (0.15) $ (0.10) $ (0.23) Basic and diluted income per common share - discontinued operations $ 0.01 $ 0.01 $ 0.01 $ 0.03 Weighted average number of common shares outstanding 80,370,803 70,375,651 77,592,025 65,886,490