UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
Exhibit
99.1
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL
INFORMATION
Overview
On March 9,
2021, Super League Gaming, Inc. (the “Company” or
“Super League”) entered into an Agreement and Plan of
Merger (the “Merger Agreement”) by and among Mobcrush
Streaming, Inc. (“Mobcrush”), the Company, and SLG
Merger Sub II, Inc., a wholly-owned subsidiary of the Company
(“Merger Co”). The Merger Agreement provides for the
acquisition of Mobcrush by the Company pursuant to the merger of
Merger Co with and into Mobcrush, with Mobcrush as the surviving
corporation (the “Merger”).
On June 1, 2021
(the “Closing Date”), the Company completed the
acquisition of Mobcrush pursuant to which the Company acquired all
of the issued and outstanding shares of Mobcrush. In accordance
with the terms and subject to the conditions of the Merger
Agreement: (A) each outstanding share of Mobcrush common stock, par
value $0.001 per share ("Mobcrush Common Stock"), and Mobcrush
preferred stock, par value $0.001 ("Mobcrush Preferred Stock,")
(other than dissenting shares) was canceled and converted into the
right to receive (i) 0.528 shares of the Company's common stock,
par value $0.001 per share ("Company Common Stock"), as determined
in the Merger Agreement, and (ii) any cash in lieu of fractional
shares of Company Common Stock otherwise issuable under the Merger
Agreement (the "Merger Consideration"). At closing, the Company
issued to the former stockholders of Mobcrush an aggregate total
of 12,067,571 shares of Company Common Stock and reserved
an aggregate total of 514,633 shares of Company Common
Stock for future stock option grants,
under the Super League 2014 Stock Option and Incentive Plan, to the
former Mobcrush employees retained by the Company in connection
with the Merger, resulting in a total of 12,582,204 shares
of Company Common Stock issued and reserved as Merger
Consideration. Upon completion of the Merger, Mobcrush became a
wholly-owned subsidiary of the Company.
The Merger was
approved by the board of directors of each of the Company and
Mobcrush, and was approved by the stockholders of Mobcrush. For
purposes of complying with Nasdaq Listing Rule 5635, Super
League’s stockholders approved the issuance of an
aggregate of 12,582,204 shares of Common Stock to be issued in
connection with the Merger.
Mobcrush is a
live streaming technology platform used by hundreds of thousands of
gaming influencers who generate and distribute almost two million
hours of original content annually and have accumulated more than
4.5 billion fans and subscribers across the most popular live
streaming and social media platforms, including Twitch, YouTube,
Facebook, Instagram, Twitter, and more. Mobcrush also operates
Mineville, one of six official Minecraft servers in partnership
with Microsoft, reaching more than 20 million players
annually.
Pro Forma Condensed Combined Information
The following unaudited pro forma
condensed combined financial information combines the historical
financial statements of Super League and Mobcrush and gives effect
to the Merger as if the Merger had previously occurred on the dates
specified below. The pro forma adjustments reflecting the
completion of the Merger are based upon the acquisition method of
accounting in accordance with U.S. generally accepted accounting
principles ("GAAP"), and upon the assumptions set forth in the
notes to the unaudited pro forma condensed combined financial
statements.
In accordance with the acquisition method of accounting, the
financial statements of Super League reflect the Mobcrush
acquisition only from and after the Closing Date.
The unaudited
pro forma condensed combined balance sheet as of March 31, 2021,
gives effect to the Merger as if it had taken place on March 31,
2021. The unaudited pro forma condensed combined statements of
operations for the year ended December 31, 2020, and the three
months ended March 31, 2021 reflect the Merger as if it had taken
place on January 1, 2020.
The unaudited
pro forma condensed combined financial information, and the
accompanying notes, should be read in conjunction with the
historical financial statements of the Company as of and for the
year ended December 31, 2020, which are included in the
Company’s Annual Report on Form 10-K filed with the
Securities and Exchange Commission on March 19, 2021, including the
notes thereto. The unaudited pro forma condensed combined financial
information, and the accompanying notes, should also be read in
conjunction with the historical financial statements of Mobcrush as
of and for the years ended December 31, 2020, and 2019, including
the notes thereto.
The estimated
acquisition consideration and estimated fair value of assets
acquired and liabilities assumed in Note 2 and the preliminary pro
forma adjustments in Note 3, are based upon preliminary estimates
and currently available information. Final acquisition accounting
adjustments may differ from the preliminary pro forma adjustments
presented herein.
For purposes of
the pro forma condensed combined information, adjustments for
estimated transaction and integration costs for the Merger have
been excluded. Aggregate estimated transaction costs incurred were
approximately $829,000 and include costs associated with legal,
advisory, proxy and accounting fees of both companies. In addition,
the combined company will incur integration costs related to system
and other conversions and other integration costs. The specific
details of these integration plans will continue to be refined over
the next several quarters.
The unaudited
pro forma condensed combined financial information included herein
does not give effect to any potential cost reductions or other
operating efficiencies that could result from the Merger, including
but not limited to those associated with potential
(i) reductions of corporate overhead, (ii) eliminations
of duplicate functions and (iii) increased operational
efficiencies through the adoption of best practices and
capabilities from each company.
The unaudited
pro forma condensed combined balance sheet and statements of
operations are for informational purposes only. They do not purport
to indicate the results that would have actually been obtained had
the acquisition been completed on the assumed date or for the
periods presented, or which may be obtained in the
future.
-1-
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
As of March 31, 2021
|
|
Super
League
Gaming,
Inc.
|
Mobcrush
Successor
|
Preliminary Pro Forma
Adjustments
|
|
Pro Forma
Combined
|
|
Assets
|
|
|
|
|
|
|
Current
Assets
|
|
|
|
|
|
|
Cash
|
$36,742,000
|
$958,000
|
-
|
|
$37,700,000
|
|
Accounts
receivable
|
915,000
|
2,046,000
|
-
|
|
2,961,000
|
|
Prepaid expenses and other
current assets
|
751,000
|
148,000
|
-
|
|
899,000
|
|
Total
current assets
|
38,408,000
|
3,152,000
|
-
|
|
41,560,000
|
|
Property and equipment,
net
|
119,000
|
16,000
|
(3,000)
|
(A)
|
132,000
|
|
Intangible and other
assets, net
|
1,927,000
|
2,374,000
|
17,126,000
|
(A),(B)
|
21,427,000
|
|
Goodwill
|
2,565,000
|
1,116,000
|
42,247,000
|
(A),(B)
|
45,928,000
|
|
Total
assets
|
$43,019,000
|
$6,658,000
|
$59,370,000
|
|
$109,047,000
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
|
|
Accounts payable and
accrued expenses
|
$1,637,000
|
$2,915,000
|
$498,000
|
(D)
|
$5,050,000
|
|
Deferred
revenue
|
8,000
|
185,000
|
-
|
|
193,000
|
|
Convertible
note
|
-
|
506,000
|
(506,000)
|
(E)
|
-
|
|
Total
current liabilities
|
1,645,000
|
3,606,000
|
(8,000)
|
|
5,243,000
|
|
|
|
|
|
|
|
|
Note payable
|
1,211,000
|
-
|
-
|
|
1,211,000
|
|
Deferred tax
liability
|
-
|
-
|
3,073,000
|
(F)
|
3,073,000
|
|
Total
liabilities
|
2,856,000
|
3,606,000
|
3,065,000
|
|
9,527,000
|
|
|
|
|
|
|
|
|
Stockholders’
Equity
|
|
|
|
|
|
|
Preferred stock, par value
$0.001 per share; 10,000,000 shares authorized; no shares issued or
outstanding
|
|
|
|
|
|
|
Preferred Series A -
Mobcrush
|
|
3,415,000
|
(3,415,000)
|
(C)
|
-
|
|
Preferred Series A-1-
Mobcrush
|
|
4,891,000
|
(4,891,000)
|
(C)
|
-
|
|
Common stock, par value
$0.001 per share; 100,000,000 shares authorized; 23,133,918 shares
issued and outstanding as of March 31, 2021; 27,550,581 shares
issued and outstanding as of March 31, 2021 pro forma.
|
33,000
|
-
|
12,000
|
(C)
|
45,000
|
|
Additional paid-in
capital
|
149,299,000
|
66,000
|
59,777,000
|
(C)
|
209,142,000
|
|
Accumulated
deficit
|
(109,169,000)
|
(5,320,000)
|
4,822,000
|
(C),(D)
|
(109,667,000)
|
|
Total
stockholders’ equity
|
40,163,000
|
3,052,000
|
56,305,000
|
|
99,520,000
|
|
Total
liabilities and stockholders’ equity
|
$43,019,000
|
$6,658,000
|
$59,370,000
|
|
$109,047,000
|
-2-
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF
OPERATIONS
For the Three Months Ended March 31, 2021
|
|
Mobcrush
|
Preliminary Pro Forma
Adjustments
|
|
Pro
Forma Combined
|
|
|
Revenue
|
$788,000
|
$2,377,000
|
$-
|
|
$3,165,000
|
|
Cost of
revenues
|
(342,000)
|
(1,581,000)
|
-
|
|
(1,923,000)
|
|
Gross
profit
|
446,000
|
796,000
|
-
|
|
1,242,000
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
|
Selling, marketing and
advertising
|
1,483,000
|
455,000
|
586,000
|
(G),(H)
|
2,524,000
|
|
Technology platform and
infrastructure
|
1,603,000
|
793,000
|
223,000
|
(G),(H)
|
2,619,000
|
|
General and
administrative
|
1,986,000
|
771,000
|
(343,000)
|
(G),(H),(J)
|
2,414,000
|
|
Total
operating expenses
|
5,072,000
|
2,019,000
|
466,000
|
|
7,557,000
|
|
Net
operating loss
|
(4,626,000)
|
(1,223,000)
|
(466,000)
|
|
(6,315,000)
|
|
|
|
|
|
|
|
|
Other
income (expense)
|
|
|
|
|
|
|
Interest
expense
|
(3,000)
|
(6,000)
|
6,000
|
(I)
|
(3,000)
|
|
Other
|
4,000
|
(2,000)
|
-
|
|
2,000
|
|
Total
other income (expense)
|
1,000
|
(8,000)
|
6,000
|
|
(1,000)
|
|
Net
loss
|
$(4,625,000)
|
$(1,231,000)
|
$(460,000)
|
|
$(6,316,000)
|
|
|
|
|
|
|
|
|
Basic and diluted loss per
common share
|
$(0.23)
|
|
$-
|
|
$(0.20)
|
|
Weighted-average number of
shares outstanding, basic and diluted
|
19,807,775
|
|
12,067,571
|
(K)
|
31,875,346
|
-3-
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF
OPERATIONS
For the Year Ended December 31, 2020
|
|
|
Mobcrush
|
|
|
|
|
|
|
|
Successor
|
Predecessor
|
|
|
|
|
|
Period from May 4, 2020 to
December 31, 2020
|
Period from January 1, 2020
to May 3, 2020
|
Preliminary Pro Forma
Adjustments
|
|
Pro
Forma Combined
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
$2,064,000
|
$4,457,000
|
$2,070,000
|
$-
|
|
$8,591,000
|
|
Cost of
revenues
|
(856,000)
|
(2,967,000)
|
(1,202,000)
|
-
|
|
(5,025,000)
|
|
Gross
profit
|
1,208,000
|
1,490,000
|
868,000
|
-
|
|
3,566,000
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
|
|
Selling, marketing and
advertising
|
5,403,000
|
1,211,000
|
1,001,000
|
2,018,000
|
(G),(H)
|
9,633,000
|
|
Technology platform and
infrastructure
|
6,647,000
|
2,118,000
|
1,433,000
|
893,000
|
(G),(H)
|
11,091,000
|
|
General and
administrative
|
7,901,000
|
2,263,000
|
1,722,000
|
249,000
|
(G),(H),(J)
|
12,135,000
|
|
Total
operating expenses
|
19,951,000
|
5,592,000
|
4,156,000
|
3,160,000
|
|
32,859,000
|
|
Net
operating loss
|
(18,743,000)
|
(4,102,000)
|
(3,288,000)
|
(3,160,000)
|
|
(29,293,000)
|
|
Other
income (expense)
|
|
|
|
|
|
|
|
Interest
expense
|
(8,000)
|
|
(54,000)
|
54,000
|
(I)
|
(8,000)
|
|
Other
|
19,000
|
(8,000)
|
7,000
|
-
|
|
18,000
|
|
Total
other income (expense)
|
11,000
|
(8,000)
|
(47,000)
|
54,000
|
|
10,000
|
|
Net
loss
|
$(18,732,000)
|
$(4,110,000)
|
$(3,335,000)
|
$(3,106,000)
|
|
$(29,283,000)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted loss per
common share
|
$(1.64)
|
|
|
$-
|
|
$(1.25)
|
|
Weighted-average number of
shares outstanding, basic and diluted
|
11,430,057
|
|
|
12,067,571
|
(K)
|
23,497,628
|
|
|
|
|
|
|
|
|
-4-
NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL
STATEMENTS
1. Description of Transaction and Basis of
Presentation
On March 9,
2021, the Company entered into a Merger Agreement by and among
Mobcrush, the Company, and Merger Co. The Merger Agreement provided
for the acquisition of Mobcrush by the Company pursuant to the
merger of Merger Co with and into Mobcrush, with Mobcrush as the
surviving corporation.
On June 1,
2021, the Company completed the acquisition of Mobcrush pursuant to
which the Company acquired all of the issued and outstanding shares
of Mobcrush. In accordance with the terms and subject to the
conditions of the Merger Agreement: (A) each outstanding share of
Mobcrush Common Stock, and Mobcrush Preferred Stock, (other than
dissenting shares) was canceled and converted into the right to
receive (i) 0.528 shares of Company Common Stock, as determined in
the Merger Agreement, and (ii) any cash in lieu of fractional
shares of Company Common Stock otherwise issuable under the Merger
Agreement. At closing, the Company issued to the former
stockholders of Mobcrush an aggregate total
of 12,067,571 shares of Company Common Stock and reserved
an aggregate total of 514,633 shares of Company Common
Stock for future stock option grants, under the Super League 2014
Stock Option and Incentive Plan, to the former Mobcrush employees
retained by the Company in connection with the Merger, resulting in
a total of 12,582,204 shares of Company Common Stock issued and
reserved as consideration for the Merger. Upon completion of the
merger, Mobcrush became a wholly-owned subsidiary of the
Company.
The
accompanying unaudited pro forma condensed combined financial
statements have been prepared pursuant to the rules and regulations
of the Securities and Exchange Commission. Certain information and
certain footnote disclosures normally included in financial
statements prepared in accordance with GAAP have been condensed or
omitted pursuant to such rules and regulations; however, management
believes that the disclosures are adequate to make the information
presented not misleading.
The
accompanying unaudited pro forma condensed combined balance sheet
as of March 31, 2021 gives effect to the Merger as if it had taken
place on March 31, 2021. The unaudited pro forma condensed combined
statements of operations for the three months ended March 31, 2021
and the year ended December 31, 2020, reflect the Merger as if it
had taken place on January 1, 2020. The estimated fair values of
the assets acquired and liabilities assumed in Note 2 and the
preliminary pro forma adjustments in Note 3, are based upon
preliminary estimates and currently available information. Final
acquisition method accounting adjustments may differ from the pro
forma adjustments presented.
The pro forma
adjustments include the application of the acquisition method of
accounting pursuant to ASC Topic 805, "Business Combinations"
(“ASC 805”). ASC 805 requires, among other things, that
identifiable assets acquired and liabilities assumed be recognized
at their fair values as of the acquisition date. Under the
acquisition method of accounting, the purchase consideration is
allocated to the assets acquired, including tangible assets, and
identifiable intangible assets and liabilities assumed, based on
their estimated fair market values on the date of acquisition. Any
excess purchase price after the initial allocation to identifiable
net tangible and identifiable intangible assets is assigned to
goodwill. Amounts attributable to intangible assets other than
goodwill are amortized using the straight-line method over the
estimated economic useful life of the underlying intangible asset.
Fair value measurements can be highly subjective, and it is
possible that other professionals, applying reasonable judgment to
the same facts and circumstances, could develop and support a range
of alternative estimated amounts.
The historical
consolidated financial data has been adjusted to give effect to pro
forma events that are (1) directly attributable to the Merger, (2)
factually supportable, and (3) with respect to the statements of
operations, expected to have a continuing impact on the combined
results. The pro forma adjustments are preliminary and based on
management’s preliminary estimates of the fair value and
useful lives of the assets acquired and liabilities assumed and
have been prepared to illustrate the estimated effect of the
acquisition and certain other adjustments.
-5-
2. Merger Consideration and Estimated Fair Value
of Assets Acquired and Liabilities Assumed
The following
preliminary allocation of the Merger Consideration is based on the
Company’s preliminary estimates of the fair value of the
tangible and intangible assets and liabilities of Mobcrush as of
March 31, 2021. The final determination of the allocation of the
purchase price will be based on the fair value of such assets and
liabilities as of the Closing Date. Such final determination of the
purchase price allocation may be different than the preliminary
estimates used in these pro forma condensed combined financial
statements.
Merger Consideration. As described
above, the Merger Consideration was comprised of 12,067,571 shares
of Company Common Stock issued to the former shareholders of
Mobcrush on the Closing Date. The estimated Merger Consideration
was calculated as follows: (rounded to nearest thousandth, except
share and per share information):
|
|
Amount
|
|
Equity Consideration at
closing
|
12,067,571
|
|
Super League closing stock
price per share – June 1, 2021
|
$4.96
|
|
Fair value of common stock
issued
|
$59,855,000
|
The fair value of the Company Common Stock used in
determining the estimated fair value of the Merger Consideration
was $4.96 per share based on the closing price of Company Common
Stock on June 1, 2021, as quoted on the Nasdaq Capital
Market.
Pursuant to the
terms of the Merger Agreement, immediately prior to the effective
time of the Merger, each vested option to acquire shares of
Mobcrush Common Stock held by former Mobcrush employees was
exercised so that, at the effective time of the Merger, shares of
Mobcrush Common Stock issued upon exercise of these vested options
received shares of Company Common Stock issuable as Merger
Consideration. Unvested options to acquire shares of Mobcrush
Common Stock that were outstanding immediately prior to the Closing
Date were canceled, and a number of options to purchase shares of
Company Common Stock were issued to Mobcrush employees retained to
replace the cancelled Mobcrush options in a manner consistent with
options historically granted by Super League under the 2014 Plan
(the “Replacement
Options”).
Pursuant to
the terms of the Merger Agreement, 514,633 shares of Company
Common Stock were reserved for issuance as Replacement Options to
the former Mobcrush employees retained by the Company in connection
with the Merger. Under ASC 805, consideration arrangements in which
the payments are automatically forfeited if employment terminates
is considered to be compensation for post-combination services, and
not acquisition consideration. As such, the 514,633 shares of
Company Common Stock reserved at closing for future stock option
grants to former Mobcrush employees retained by the Company are not
included as a component of the consideration paid in connection
with the Merger, and will be accounted for pursuant to ASC 718,
“Stock based Compensation,” upon grant.
Estimated Fair Value of Assets Acquired and
Liabilities Assumed.
The unaudited pro forma condensed combined balance sheet as of
March 31, 2021 gives pro forma effect to the Merger as if it was
completed on March 31, 2021. The estimated preliminary purchase
price of Mobcrush is allocated to the assets acquired and
liabilities assumed, based on the following preliminary basis as of
March 31, 2021:
|
|
Amount
|
|
Assets
Acquired and Liabilities Assumed:
|
|
|
Cash
|
$958,000
|
|
Accounts
receivable
|
2,046,000
|
|
Prepaids
|
148,000
|
|
Property and
equipment
|
13,000
|
|
Identifiable intangible
assets
|
19,500,000
|
|
Accounts payable and
accrued expenses
|
(2,915,000)
|
|
Deferred
revenue
|
(185,000)
|
|
Net deferred income tax
liability
|
(3,073,000)
|
|
Identifiable net assets
acquired
|
16,492,000
|
|
Goodwill
|
43,363,000
|
|
Total purchase
price
|
$59,855,000
|
-6-
The following
table presents details of the acquired intangible assets of
Mobcrush:
|
|
Estimated Useful Life (in
years)
|
Amount
|
|
Preferred Partner
Relationship
|
7
|
10,700,000
|
|
Developed Technology
|
5
|
3,900,000
|
|
Influencers/Content
Creators
|
5
|
2,000,000
|
|
Advertiser and Agency
Relationships
|
5
|
1,900,000
|
|
Trademarks
|
7
|
500,000
|
|
Customer Relationships
|
5
|
500,000
|
|
Total intangible assets
acquired
|
|
$19,500,000
|
Estimated
aggregate amortization expense for the three months ended March 31,
2021 and year ended December 31, 2020 related to intangible assets
acquired in connection with the Merger, was $815,000 and
$3,260,000, respectively.
Management is
primarily responsible for determining the fair value of the
tangible and identifiable intangible assets acquired and
liabilities assumed as of the acquisition date. For the final
analysis, management anticipates considering a number of factors,
including reference to an independent analysis of estimated fair
values solely for the purpose of allocating the purchase price,
which is not yet complete. The preliminary estimates are subject to
revision as more detailed analysis is completed and additional
information on the fair values of the assets and liabilities
acquired as of the acquisition date becomes available. Any change
in the estimated fair value of the net assets acquired will change
the amount of the Merger Consideration allocable to the net
tangible and intangible assets acquired, and to goodwill, if any.
Final acquisition method accounting adjustments may therefore
differ materially from the proforma adjustments presented
herein.
The Merger will
be treated for tax purposes as a nontaxable transaction and, as
such, the historical tax bases of the acquired assets and assumed
liabilities, net operating losses, and other tax attributes of
Mobcrush will carryover. As a result, no new tax goodwill will be
created in connection with the Merger as there is no step-up to
fair value of the underlying tax bases of the acquired net
assets.
The acquisition
method of accounting includes the establishment of a net deferred
tax asset or liability resulting from book tax basis differences
related to assets acquired and liabilities assumed on the date of
acquisition. Acquisition date deferred tax assets primarily relate
to certain net operating loss carryforwards of Mobcrush.
Acquisition date deferred tax liabilities related to specifically
identified non-goodwill intangibles resulting from the acquisition.
The estimated net deferred tax liability was determined as
follows:
|
|
Book
Basis
|
Tax
Basis
|
Difference
|
|
Intangible assets
acquired
|
$19,500,000
|
$2,635,000
|
$(16,865,000)
|
|
Tangible assets acquired
|
13,000
|
|
(13,000)
|
|
Estimated net operating loss carryforwards -
Mobcrush
|
-
|
5,895,000
|
5,895,000
|
|
Net deferred tax liability -
pretax
|
|
|
(10,983,000)
|
|
Estimated tax rate
|
|
|
27.98%
|
|
Estimated net deferred tax
liability
|
|
|
$(3,073,000)
|
3. Adjustments to Unaudited Pro Forma Condensed
Combined Financial Statements
The following
is a discussion of the adjustments made in connection with the
preparation of the unaudited pro forma condensed combined financial
statements. Each of these adjustments is based on a preliminary
assessment of currently available information, including
preliminary estimates of the fair values of Mobcrush's assets and
liabilities and estimated periodic amortization of amounts to the
extent applicable, and other preliminary estimates, as described
above. Actual adjustments will be made when the final estimate of
the fair value of Mobcrush's assets and liabilities on the
acquisition date is determined. Accordingly, the actual adjustments
to Mobcrush’s assets and liabilities and the related
amortization of such adjustments, and other estimates, may differ
materially from the estimates reflected in the unaudited pro forma
condensed combined financial statements contained
herein.
The
accompanying unaudited pro forma combined balance sheet gives
effect to the Merger as if it had taken place on March 31, 2021.
The column entitled "Mobcrush " on the unaudited pro forma combined
balance sheet reflects the historical unaudited balance sheet of
Mobcrush as of March 31, 2021. The unaudited pro forma combined
statements of operations for the three months ended March 31, 2021
and the year ended December 31, 2020, reflect the Merger as if it
had taken place on January 1, 2020. The columns entitled
“Mobcrush," “Mobcrush Successor" and “Mobcrush
Predecessor” on the unaudited pro forma condensed combined
statements of operations reflect the historical unaudited operating
results of Mobcrush for the applicable periods
presented.
Historical Unaudited Consolidated Financial
Statements of Mobcrush. As a result of the change in control
of Mobcrush on May 4, 2020, Mobcrush Streaming, Inc. applied the
acquisition method of accounting with respect to the assets and
liabilities of Mobcrush, Inc. and its subsidiary INPvP, LLC that it
acquired, which were remeasured to fair value as of the date of the
transaction. Mobcrush’s historical unaudited consolidated
financial statements for fiscal year 2020, following the close of
the transaction, are labeled “Successor” and reflect
Mobcrush Streaming Inc.’s basis of accounting in the new fair
values of the assets and liabilities of the Mobcrush Inc. acquired
businesses. All periods prior to the close of the transaction
reflect the historical accounting basis in the Mobcrush’s
assets and liabilities and are labeled “Predecessor”.
Mobcrush’s unaudited consolidated financial statements and
footnotes include a black line division, which appears between the
columns titled Predecessor and Successor, which signifies that the
amounts shown for the periods to and following the May 4, 2020
transaction are not comparable.
-7-
Unaudited
Pro Forma Condensed Combined Balance Sheet
The unaudited
pro forma condensed combined balance sheet give effect to the
following pro forma adjustments:
(A)
To reflect the preliminary
estimated fair value of identifiable assets acquired and
liabilities assumed as described at Note 2
above.
(B)
To reflect the
reversal of Mobcrush’s existing, pre-Merger tangible assets,
intangible assets and goodwill as of March 31, 2021, in connection
with the application of the acquisition method of
accounting.
(C)
To reflect the transfer of
the Merger Consideration, as described above, consisting of the
issuance of 12,067,571 shares of Company Common Stock to the
selling shareholders of Mobcrush, pursuant to the terms of the
Merger Agreement. Also includes pro forma adjustments to eliminate
the historical net equity of Mobcrush in connection with the
application of the acquisition method of accounting.
(D)
To accrue
for additional anticipated acquisition-related costs as of March
31, 2021.
(E)
To
eliminate the Mobcrush convertible bridge note and accrued interest
(the “Note”) as of March 31, 2021. In accordance with
the terms of the Merger Agreement, upon the closing of the Merger
transaction, the Note was automatically converted into 179,474
shares of Company Common Stock, which was included as a component
of the 12,067,571 shares issued to the former shareholders of
Mobcrush upon the closing of the Merger. No additional shares were
issued in excess of the 12,067,571 shares issued as Merger
Consideration in connection with the conversion of the
Note.
(F)
To reflect
the estimated net deferred tax liability assumed as of the Closing
Date, as described at Note 2 above.
Unaudited
Pro Forma Condensed Combined Income Statement
The unaudited
pro forma condensed combined income statement also give effect to
the following pro forma adjustments:
(G)
To reflect the
amortization of the estimated intangible assets acquired on a
straight-line basis over the estimated economic useful life of the
respective assets. Refer to Note 2 above for information regarding
intangible assets acquired and related estimated useful lives.
Amortization by pro forma financial statement line item presented
was as follows:
|
|
Three Months
Ended
March 31,
2021
|
Year
Ended December 31, 2020
|
|
Selling, marketing and
advertising
|
$502,000
|
$2,009,000
|
|
Technology Platform and
Infrastructure
|
195,000
|
780,000
|
|
General and
administrative
|
118,000
|
471,000
|
|
Total amortization
expense
|
$815,000
|
3,260,000
|
Also
reflects the reversal of depreciation and amortization expense for
Mobcrush related to pre-Merger existing fixed assets and intangible
assets, totaling $132,000, and $368,000 for the three months ended
March 31, 2021 and the year ended December 31, 2020,
respectively.
(H)
To record
estimated noncash stock compensation expense, totaling $114,000 and
$463,000, for the three months ended March 31, 2021 and year ended
December 31, 2020, respectively, in connection with the issuance of
an estimated 415,000 Replacement Options by Super League to certain
Mobcrush employees assumed in connection with the Merger, estimated
using a Black-Scholes calculation, based on the applicable grant
date closing stock price.
(I)
To exclude interest expense
related to the Note described above.
(J)
To eliminate acquisition-related costs reflected in
the income statement for the pro forma combined entities for the
three months ended March 31, 2021. The adjustment does not include
an adjustment to record acquisition related costs incurred
subsequent to March 31, 2021 because they are nonrecurring, and
would not be considered to have a continuing impact, and therefore
are not reflected in the pro forma totals for the statements of
operations for the periods presented.
(K)
The denominator in
computing pro forma earnings (loss) per share includes only those
common shares to be issued as Merger Consideration in connection
with the Merger on a pro forma basis, totaling 12,067,571 shares.
Refer to Note 2 for details regarding the treatment of the Company
Common Stock reserved for future issuances of Replacement
Options.
-8-
