OverActive Media Reports Record Revenues and Solid Earnings Growth in 2023

Record Revenues and Rigorous Cost Controls Resulted in 29% Adjusted EBITDA Improvement. The Company Exited 2023 with $13.9 Million in Cash

TORONTO, April 29, 2024 /CNW/ - OverActive Media Corp. ("OverActive" or the "Company") (TSXV: OAM) (OTC: OAMCF), a global esports, and entertainment company for today's generation of fans, released its fourth quarter and year-end results for the three-and-twelve-month period ended December 31, 2023. Unless otherwise specified, all amounts are in Canadian dollars ($).

FY 2023 Financial Highlights

• Full-year 2023 revenue increased by $1.5 million, or 11% relative to the prior year, to a record $15.7 million,. This growth was driven by strong growth in League Revenues.
• Operating Expenses decreased by $3.2 million or 13% to $22.4 million relative to the prior year due to reduced corporate payroll expenses and lower team operating costs.
• Adjusted EBITDA lossⁱ improved by 29% to $6.2 million relative to the prior year.
• As at December 31, 2023 the Company had cash and cash equivalents of $13.9 million, compared with $13.5 million as at December 31, 2022.

Selected 2023 Achievements

• OverActive was awarded its second Gold Medal at the Sponsorship Marketing Awards for our Toronto Ultra hosted Call of Duty Major.
• OverActive was named to the Glory Power 50 list of Canada's most impactful companies alongside OVO, Lululemon and Shopify.
• The Company's MAD Lions League of Legends EMEA Championship team were the LEC Spring Split Champions, was one of only two LEC teams to qualify for the Mid-Season Invitational tournament, and one of only four LEC teams to qualify for the League of Legends World Championship.
• OverActive's Toronto Ultra won the Call of Duty Major III Championship in Arlington, TX and was a finalist in the 2023 Call of Duty World Championship in Las Vegas, NV.
• The Company hosted the Overwatch Grand Finals in Toronto from September 28 to October 1, 2023.

Fourth Quarter 2023 Financial Highlights

• Fourth quarter 2023 revenue increased by $0.3 million relative to the prior year quarter. The year-over-year growth was primarily due to higher League Revenues.
• Operating Expenses decreased by $1.4 million or 21% to $5.2 million, primarily due to reduced corporate and team-related payroll and expenses. The improvement in Operating Expenses reflects management's focus on lowering costs and increasing productivity to support revenue growth and the path to profitability.
• Adjusted EBITDA loss improved by $1.7 million, or 71% relative to the prior year quarter, to a loss of $0.7 million. The significant improvement in EBITDA loss was due to growth to historically high revenues combined with reductions in costs and improvements in productivity.

Fourth Quarter 2023 Achievements

• All outstanding Overwatch League entry fees, valued at $8.2 million (US$6 million), were waived by Activision Blizzard.
• The Company terminated its Team Participation Agreement in the Overwatch League. Under the terms of the agreement, the Company received a termination payment of approximately $7.1 million (US$5.3 million) from Activision Blizzard. This payment received during the quarter was net of approximately $0.9 million (US$0.7 million) for payments paid in advance by the Overwatch League to Toronto Defiant.
• OverActive announced that it will host the Call of Duty League Major III tournament in Toronto, Canada, from May 16 to 19, 2024.
• MAD Lions competed in the LEC 2023 Season Finals, reaching a peak match viewership of 1.3 millionⁱⁱ. Additionally, the team qualified for the World Championships for the fifth consecutive year, reaching a peak match viewership of 1.3 millionⁱⁱⁱ.

Significant Announcements Subsequent to Quarter End

• OverActive secured a new long-term agreement with the Call of Duty League, resulting in elimination of $35.1 million in outstanding entry fees and a $2.8 million cash infusion into the Company. The new agreement also entitles the Company to new revenue streams, including direct team participation for digital in-game merchandise (MTX) and opportunities for licensed third-party tournaments.
• The Company acquired esports organizations KOI and Movistar Riders, creating a global esports powerhouse. The acquisitions marked a significant milestone for the Company and aligned with the Company's expansion strategy in Spain, EMEA, and Latin America. The acquisitions are expected to be accretive to adjusted EBITDA going forward and add $10-million to $12-million in revenues in 2024. In connection with these acquisitions, Gabriel Saenz de Buruaga and Gerard Piqué joined OverActive's board of directors.
• OverActive announced Riot Games transfer approval of the VALORANT Champions Tour EMEA (VCT EMEA) team participation agreement (TPA) from KOI to a subsidiary of OverActive Media. The team is operating as Movistar KOI for the 2024 season.
• The MAD Lions KOI League of Legends EMEA Championship match on February 18^th became the most-watched LEC match since summer 2021 with 830,816 peak viewers. ^iv
• Year to date, OverActive's professional esports teams have reached more than 50 million hours watched across all tournament matches.
• OverActive renewed its relationship with Scuf Gaming and signed a new partnership agreement with emerging lifestyle and gaming brand Blacklyte.
• The Company entered into the Overwatch Champions Series (OWCS) and were the Champions of Stage 1 North America.
• Telefónica extended its partnership with Movistar Riders, resulting in the largest financial partnership in the Company's history.
• OverActive signed new partnerships with Monster Energy and Cupra.
• The Company announced that Neil Duffy has joined the company as Chief Commercial Officer, Americas.

"2023 was a transformative year for us, marked by resilience and growth as we continue to build a global esports powerhouse," said Adam Adamou, CEO of OverActive Media.  "Our success was driven by deep engagement with our passionate audience, excellent team performances and live events, and strong and enduring brand partnerships. We achieved record revenues despite a global economic slowdown while driving productivity by significantly reducing operating expenses. We also significantly deleveraged our balance sheet by restructuring our league partnerships and completed two major acquisitions in early 2024 that will be immediately accretive to revenue and adjusted EBITDA. We have an exceptionally strong financial foundation that ideally positions us as the world's leading esports organization."

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, 2023, are available on the Company's website at www.overactivemedia.com and under the Company's profile on SEDAR at www.sedarplus.ca.

The following table presents a reconciliation of net loss to adjusted EBITDA for the twelve months ended December 31, 2023 and 2022:

	Twelve months ended
	December 31, 2023	December 31, 2022
(In thousands of Canadian dollars)	$	$
Net loss for the period	(12,519)	(36,925)
Income tax recovery	(520)	(700)
Depreciation	1,800	1,465
Amortization and impairment	399	35,069
Decrease in net present value of franchise obligations	(1,059)	(9,453)
Finance income	(214)	(118)
Finance cost	5,050	5,251
Foreign exchange loss (gain)	28	1,604
Share-based compensation	152	2,433
Restructuring and business development costs	676	214
Reversal of provision	-	(1,320)
Adjusted EBITDA	(6,207)	(8,780)

Conference Call

The Company will conduct a conference call tomorrow, Tuesday, April 30, 2024 at 9:00 a.m. (Eastern Time) to review the fourth quarter 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/3JfHkZb 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 102597#. The replay will expire on Tuesday, May 7, 2024.

A live conference call webcast can be accessed on OverActive's website at www.overactivemedia.com or directly via https://app.webinar.net/xjGb9zDVroD. An online webcast archive will be available via the same link for 90 days following the call.

OVERACTIVE MEDIA CORP.
Consolidated Statements of Financial Position
(expressed in thousands of Canadian dollars)
December 31, 2023 and 2022

			2023		2022
Assets
Current assets:
Cash and cash equivalents			$                  13,933		$                  13,557
Trade and other receivables			3,997		6,589
Prepaid expenses and other current assets			1,774		2,086
Total current assets			19,704		22,232
Non-current assets:
Property and equipment			2,178		2,531
Right-of-use assets			625		1,297
Intangible assets			41,124		55,624
Goodwill			5,846		5,958
Total non-current assets			49,773		65,410
Total assets			$                69,477		$                87,642
Liabilities and Shareholders' Equity
Current liabilities:
Trade payable and accrued liabilities			$                    2,829		$                    4,256
Provisions			686		686
Notes payable			-		63
Current portion of lease liabilities			676		1,074
Contract liabilities			864		820
Current portion of franchise payables			5,832		1,581
Current portion of long-term debt			178		163
Current portion of deferred grant income			37		35
Total current liabilities			11,102		8,678
Non-current liabilities:
Deferred tax liability			7,118		8,160
Long-term portion of lease liabilities			-		349
Long-term franchise payables			15,824		22,638
Long-term debt			52		228
Long-term deferred grant income			9		46
Other long-term liabilities			-		84
Total non-current liabilities			23,003		31,505
Total liabilities			34,105		40,183
Shareholders' equity:
Share capital			133,638		133,638
Warrants reserve			-		621
Contributed surplus			9,687		8,914
Accumulated other comprehensive loss			(3,967)		(4,247)
Deficit			(103,986)		(91,467)
Total shareholders' equity			35,372		47,459
Total liabilities and shareholders' equity			$               69,477		$               87,642

OVERACTIVE MEDIA CORP.
Consolidated Statements of Net Loss and Comprehensive Loss
(expressed in thousands of Canadian dollars, except per share amounts)
Years ended December 31, 2023 and 2022

		2023		2022
Revenue		$         15,704	$         14,162
Operating costs		22,416	25,622
Loss before the undernoted		(6,712)	(11,460)
Undernoted expenses (income):
Depreciation		1,800	1,465
Amortization and impairment on intangible       assets		399	35,069
Foreign exchange loss		28	1,604
Decrease in net present value of franchise       payables		(1,059)	(9,453)
Finance income		(214)	(118)
Finance cost		5,050	5,251
Share-based compensation		152	2,433
Other income		171	(3,786)
Loss before income taxes		(13,039)	(43,925)
Income tax recovery		(520)	(7,000)
Net loss for the year		(12,519)	(36,925)
Other comprehensive income:
Foreign currency translation		280	405
Comprehensive loss for the year		$         (12,239)	$      (36,520)
Loss per share:
Basic		$ (0.16)	$ (0.46)
Diluted		(0.16)	(0.46)

OVERACTIVE MEDIA CORP.
Consolidated Statements of Cash Flows
(expressed in thousands of Canadian dollars)
Years ended December 31, 2023 and 2022

	2023	2022
Cash provided by (used in):
Operating activities:
Net loss for the year	$           (12,519)	$           (36,925)
Adjustments for:
Depreciation	1,800	1,465
Amortization of intangible assets	399	855
Foreign exchange loss	28	1,604
Share-based compensation	152	2,433
Finance cost	5,050	5,251
Decrease in net present value of franchise
payables	(1,059)	(9,453)
Income tax recovery	(520)	(7,000)
Impairment loss	-	34,214
Other	(35)	(31)
Change in non- cash operating working capital
Decrease (increase) in trade and other receivables	2,592	(1,683)
Decrease (increase) in prepaid expenses and
other current assets	194	(1,251)
Increase (decrease) in trade payable and
accrued liabilities	(1,362)	1,114
Decrease in contract and other long-term liabilities	(40)	(799)
Decrease in notes payable	(63)	(1,301)
Cash flows used in operating activities	(5,383)	(11,507)
Financing activities:
Repayment on long-term debt	(188)	(186)
Repayments of franchise payables	-	(1,812)
Principal payment of lease liability	(1,349)	(962)
Payment on interest portion of lease liability	(120)	(152)
Cash flows used in financing activities	(1,657)	(3,112)
Investing activities:
Purchase of property and equipment	(168)	(857)
Proceeds from disposal of property and equipment	-	505
Changes in non- cash working capital
related to capital expenditures	-	(505)
Purchase of player contracts	-	(823)
Purchase of intangible assets	(8)	(14)
Proceeds from League restructuring	7,065	-
Cash flows from (used) in investing activities	6,889	(1,694)
(Decrease) increase in cash and cash equivalents	(151)	(16,313)
Cash and cash equivalents, beginning of year	13,557	29,577
Effect of exchange rate changes on cash and cash equivalents	527	293
Cash and cash equivalents, end of year	$                   13,933	$                 13,557

About OverActive Media

OverActive Media Corp. (TSXV: OAM) (OTC:OAMCF) is headquartered in Toronto, Ontario, with operations in Madrid, Spain and Berlin, Germany, is a premier global esports and entertainment company for today's generation of fan. OverActive owns team franchises in professional esports leagues, including the Call of Duty League, operating as the Toronto Ultra, the League of Legends EMEA Championship (LEC), operating as MAD Lions KOI, the VALORANT Champions League (VCT) EMEA, operating as Movistar KOI and other professional esports leagues and competitions.

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 most recent annual information form and its other filings with Canadian securities regulators, copies of which may be found under OverActive's profile at www.sedarplus.ca. 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 and business development 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 nine-month periods ended December 31, 2023.

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.

_______________________

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

ⁱⁱ https://escharts.com/

ⁱⁱⁱ https://escharts.com/

^iv https://escharts.com/tournaments/lol/lec-winter-2024

SOURCE OverActive Media

Media Inquiries: Rikesh Shah, OverActive Media, CFO, [email protected]; Investor Relations: Babak Pedram, Virtus Advisory Group Inc., [phone], [email protected]