OverActive Media Corp.

Hey everyone, and welcome to Overactive Media's 4th quarter and full year 2021 conference call. At this time, participants are in a listen-only mode. A question and answer session will follow management's remarks. This conference call is being recorded and a replay of today's call will be available on the Investor Relations section of Overactive Media's website and will remain posted there for the next 30 days. I will now hand the call over to Mr. Babik Pedram. Investor Relations for Overactive Media for introductions and the reading of the Safe Harbor Statement. Please go ahead, sir.

Thank you, Sylvie. Good morning, everyone, and welcome to Overactive Media's fourth quarter in 2021 year-end earnings conference call. A copy of the company's earnings press release is available on the Investor Relations section of our website at overactivemedia.com. With us on today's call are Chris Overholtz, Overactive Media's President and Chief Executive Officer, and and Rikesh Shah, Chief Financial Officer. Today, we'll review the highlights and financial results for the fourth quarter and full year 2021, as well as recent developments. Please note that, unless otherwise specified, all amounts mentioned on today's call are in Canadian dollars. I would also like to remind everyone that today's call will contain forward-looking statements. made within the meaning of applicable security laws, including statements regarding the plans, intentions, beliefs, and current expectations of overactive media with respect to future business activities and operating performance. Words such as may, would, could, should, will, intend, plan, anticipate, believe, estimate, expect, and variations of such words and similar expressions are intended to identify forward-looking statements and include information regarding the anticipated financial and operating results of overactive media in the future. These statements are not based on historical facts, but instead overactive media's management expectations, estimates, or projections concerning future results or events based on the opinions and assumptions and estimates of management considered reasonable at the date of statements are made. The forward-looking statements involve known and unknown risks and are based upon a number of assumptions and estimates, which are inherently subject to significant uncertainty and contingencies, many of which are beyond companies' control. Actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, the risk factors described in the company's most recent filing with CDAR. Except to the extent required by law, overactive media assumes no obligation to update statements as circumstances change. Now at this time, it is my pleasure to introduce Chris Overholz, President and CEO of Overactive Media. Chris, please go ahead.

Thanks Patrick and good morning everyone. It's great to have you with us today as we share our fourth quarter and year-end 21 earnings report. This marks our first quarterly earnings call as a public company and so gives Rick and I an opportunity not only to share our financial results, to give you a better understanding of how we think about our broader industry, how we see it evolving to where we are today, and Overactive Media's position within that broader ecosystem. We got a solid year and made significant progress in a number of areas, and we remain extremely excited about the company we're building, its prospects for leadership in our industry, and its corresponding financial success over time. As this is our first earnings call, and for the benefit of context, I'd like to take just a few moments to tell you who we are, highlight a few of our accomplishments on our journey so far, and provide some insight into how we're positioning our business for the future. Following that, our Chief Financial Officer, Ritesh Shah, will review our financial results. We'll then open the call for questions to give you some additional color and perspective. But before I get started, I'd like to offer a particular thank you to all of those investors who joined us early and who continue to share our vision for building a 21st century sports media and entertainment company. As traditional sports franchises have shown us over years, this is not a sprint. In 2003, the Chelsea Football Club was purchased for $233 million. Most expect they'll be sold in the months ahead for something north of $3 billion. We'd like to thank or we'd like to think, rather, we have our arms around several of these types of opportunities in our business with the esport franchises that we hold. Others in professional sport, like Robert Kraft of the New England Patriots and Peter Gruber of the LA Dodgers, feel the same and sit at the Board of Governors table with us in the leagues that we represent. We're very excited to be on this journey with all of you, and thank you for your early commitment and the long view that we clearly share to this industry and our companies. So we've got some ground to cover this morning, so let's get going. To understand where we're going, it's important to understand where we began. In 2018, it was our thesis that times were changing and that a new generation of fans were looking for more ways to engage and connect with each other and their shared interests in meaningful and decidedly different ways. Looking at the landscape, it was clear that this new generation attuned out traditional media channels and were starting to make different sports, media, and entertainment choices. They were connecting in new ways through gaming, streaming mediums, and of course on social media platforms. And they were also increasingly turning to eSports to watch the best players in the world compete in their favorite games at the highest levels. Viewership was exploding. We looked at the emerging esports landscape and formed a premise about how to best capitalize on this nascent opportunity with three fundamental beliefs. First, that partnering directly with the publishers that own the game IP would provide the best monetization opportunities for team owners. Second, that in due course, greater viewership would lead to growing revenue share payments from those league partners and game publishers that developed a franchise league model akin to professional sports leagues as we know them today. And finally, that improving league economics over time, alongside the scarcity of these unique team assets, would result in asset appreciation on the balance sheet for those who acquire teams in franchise leagues. And so from the earliest days of the company, we've worked to build a strong and scalable business built on these fundamentals. We acquired franchises in the biggest and best publisher-owned leagues. We recruited industry-leading sports media and brand marketing executives to lead the charge every day. And we set out to attract the best talent in the business. We built out a model for our business that we believed could scale globally and soon thereafter have established operations in Toronto, Madrid, and Berlin. And so today, as we like to say, We're building a 21st century sports media and entertainment company in the tradition of Madison Square Garden or maybe sports and entertainment, but for today's generation of fans. So who is our audience and why is this segment of the market so important to our business and our future? Today's generation of fans are generally 18 to 28 years old, either in fact or like me, in spirit. They are digitally native, media-savvy, global in their orientation, and disconnected from traditional media or sports. They can be highly cynical and skeptical at times, since they've grown up in an environment where algorithms and pervasively looking in to invade their privacy or to sell them something or worse from their perspective to tell them how to think or what to believe. Our business model is to connect authentically with this generation by creating a meaningful relationship with them. We validate them and their interests by showing them through our products and services and actions that they matter. We are the anti-algorithm. Rather than a faceless machine, our fans see people and players that they recognize and smiling faces at our events, along with content across our media channels that speaks to them. This is our focus and what we do every day. Remaining authentic in the products and services that we provide is top of mind for everyone at Overactive Media. We are relatable, we are authentic, and we are valuable in this context, both to our fans and to those that are seeking to connect to our fans. Our sponsors and partners recognize that machine algorithms are not generating the goodwill they need. In fact, they usually do the opposite. By partnering with us, And in sponsoring our teams, players, events, and content, brands become partners with us and our leagues in connecting to this key demographic where they are to bring enjoyment and foster passion in a curated and professional manner. Our premium roster of marketing partners, both traditional sponsors and those endemic to gaming, are illustrations of this point. Brands are highly focused on reaching Gen Z consumers as they form consumption behaviors and preferences. The gaming and esports ecosystem provide an opportunity for authentic engagement on platforms where these communities live. 2021 was a breakout year for Overactive Media. Our vision for this organization and the fundamental business thesis that supports our proposition is becoming a reality. In a few moments, Rick will share some of the financial highlights that we believe serve as a strong indication that we are on the right track and that the industry is manifesting as we had imagined. And we're only really just getting started. But before we get to the particulars, let me take a moment to highlight only a few of the significant milestones and key accomplishments achieved by this passionate and dynamic group of industry leaders. As mentioned, we think of our business today in three key verticals, sports, media, and entertainment. The sports vertical forms the bulk of our business at this stage in our development, and during the year we benefited from our strategic partnerships with two of the largest gaming publishers in the world, Riot Games and Activision Blizzard. We own franchises in every franchise league offered by Riot and Activision, and just last week we announced our entry into Valorant. More on that exciting step in a moment. Our esports franchise team holdings are obviously central to this strategy. Indeed, this is sport for today's generation. I'm so proud of what we've accomplished in 2021. Let me share just a few highlights. The Mad Lions, or the Madrid Lions, is our franchise team operating in the League of Legends European Championship, or LEC for short. We market this team with a Spanish flair and position our brand as a lifestyle choice for passionate English and Spanish-speaking esports fans around the world. Armada Lions won historic back-to-back League of Legends European Championships in 2021. This is the first expansion team since the launch of the LAC to win a championship, and we did it twice. For more than 25 years, I've been personally seeking my first championship ring, and in 2021, the Mad Lions delivered for me and all of our fans a moment and a memory none of us will soon forget. The same team also advanced to the semifinals of the League of Legends Mid-Season Invitational, a global tournament of top teams, and finally, in the fall this past year, and for the third year in a row, went all the way to Worlds, reaching the quarterfinal of the 2021 League of Legends World Championship, the Super Bowl of Esports. It was during this time that our MAD Lions reached peak concurrent viewership of over two and a quarter million, the highest among all Western-based teams last year. By the end of the year, Mad Lions has aggregated over 56 million total viewing hours watched in 2021, and they've grown to become the second most watched esport team in the Western world and the sixth most viewed in the world over the course of the year. These are simply incredible accomplishments for a team still new on this global scene and just three years young. And our Toronto-based teams were also notable in a collection of ways, both on the stage and in the boardroom. Our Call of Duty League's Toronto Ultra secured close to 500,000 new followers and a 454% year-over-year growth across its respective social media channels. In just two seasons, Toronto Ultra has become the most followed team in the Call of Duty League on TikTok and the second most followed team across all other social media channels. Toronto Ultra was named Property of the Year at the 2021 Sponsorship Marketing Awards here in Canada, a first for an esport property. Toronto Ultra joined other notable winners over the years like the Toronto Raptors, Toronto FC, the National Hockey League, and the Canadian Olympic Committee. And on the stage, these guys were formidable, winning Call of Duty Major 2 and appearing in the Call of Duty League Championship Grand Final, finishing second. And overall, in just its second full season, the Call of Duty League's had viewership records in 2021, and 2022 is already shaping up to continue this arc. Regarding the Overwatch League, the Toronto Defiant completed its best season to date in 2021, qualifying for the World Championship Play-In Tournament in North America. Overwatch League showed year-over-year games in regular season viewership in 21 and hosted the most watched Overwatch League grand final in the history, according to Forbes. It's important to note that Overwatch League is rebasing the game to Overwatch 2 for the 2022 season. Overwatch 2 is the highly anticipated sequel to Overwatch and will be launching in open beta later this month. And finally, as I mentioned earlier, Overactive has recently entered the Valorant ecosystem. Published by Riot Games, Valorant is an exciting new entrance into the first-person shooter space that we believe is quickly becoming one of the biggest esports in the world. Riot has not moved into the franchising model with Valorant as yet, but looking forward, we believe that franchising is a strong possibility. We want to be there and active when it happens. As a result, we've taken the decision to exit the game of Counter-Strike and turn our attention to what we believe is a game with better audience and financial prospects for growth for team organizations. We're looking forward to sharing more with you in the weeks and months ahead as we formally announce our Valorant plans, including team, league, and of course, our branding intentions. Now let's shift to the media vertical, where we deliver content, social media influencers, players, and promotional campaigns that we design and deliver to our partners through our media distribution channels. We are a media company for today's generation of fans, bringing connection and building relationships that are unique, real, and tangible, leveraging our team brands for authentic connection. We believe that this is a great place to be, and it is validated by our growth, reach, and now well-established marketing partnerships business. As Rick will share in more detail in just a moment, OverActive Media delivered strong year-over-year revenue growth for both the fourth quarter and full year of 2021. This growing and increasingly predictable revenue stream is anchored to a significant extent by our innovative media content delivery for our marketing partners. A growing roster, which this past year included such blue chip brands as Bell, Canon, Imagine Bank, Kappa, Scuf Gaming, Skip the Dishes, TD Bank, and Universal Music Canada. These seminal partners were further bolstered in 2021 by new brands that signed with us during the year, including AOC, Bud Light, Kraft Frozen Foods, Porte Ingles, Epos, GLS, Goico, Jack Links, M&P, Razor, Red Bull, Seat, and Warner Music Spain. These key additions, in part, helped to drive 109% year-over-year increase in business operations revenue. We are very excited by the progress we're making in this area of our business, and I look forward to expanding on the role and the impact that media and marketing partnerships vertical has on our business over the next few quarters. And finally, our focus on developing our entertainment vertical has never been more determined, underscored by our vision to build a world-leading performance venue that will in many ways shape our audience growth and engagement our first-party data strategy, and over some measure of time, we believe, our reach to the metaverse. Over the last year, we've produced live and digital live events for game publishers, marketing partners, and fans all over the world. We hosted numerous events, including six Call of Duty Warzone tournaments, two Red Bull events, along with live broadcast events for other esports teams and professional sport organizations. In addition, we opened our Red Bull Gaming Studio in our downtown Toronto facility, where our professional teams played online matches and we produced live broadcasts. And there'll be more to come in 2022. With the easing of pandemic restrictions, we are poised to host our first live in-person Call of Duty League and Overwatch League major events in June and September, respectively. These events will feature the highest expression of our Toronto Ultra and Toronto Defy brands, and we expect to be key drivers to our audience growth and engagement in Canada and a lever to growth for our marketing partnerships division. But the biggest news in the entertainment space is of our intention to build a performance venue that will all at once allow us to compete for the biggest music and entertainment acts that lands in Toronto marketplace, while also serving to create a permanent home for our two Toronto-based esports franchises and establish Toronto as a global hub for esports meetings and events conferences, and championships. In February of last year, we announced our intention to build a new 7,000-seat performance venue in Toronto that will serve as a key pillar for OAM in the entertainment vertical. This state-of-the-art theater-style entertainment venue is ultimately expected to play host to as many as 180 to 200 events per year, creating opportunities within the area for diverse employment and economic activities. The venue is designed to be a destination at its core, driven primarily by premium music and entertainment bookings, in addition to major city-wide conventions, corporate events, and product launches, award shows, and of course, a full slate of esport events increasing over time. It will be home for our fans, and a venue experience that we expect will redefine Toronto as a global music and entertainment destination. All of these factors contributed to our growth in 2021, and we expect they will continue to do so in 2022 and beyond. Earlier, I described our thesis and referenced the fact that we believe that when partnered with key publishers, we would realize the best opportunity for monetization for team owners. We still believe this today, and in fact, we believe our supposition is becoming a reality. Our business model offers a tremendous amount of operating leverage when delivered at scale, driven by the league revenue share model we are invested in and the strength of our media content and strong marketing partnership revenue focus. To illustrate this point, in 2021, of the $5.8 million increase we recorded in total revenues, $3.8 million, or approximately 65%, contributed directly to an improvement in our adjusted EBITDA. Simply stated, based on all we know and have learned over these past three years, we believe our company provides the best business model for scalability compared to other esport organizations. In addition, one of our original beliefs was that esports franchises would increase in value over time due to scarcity economics, as we typically see in traditional sport over many years now. And in 2021, we saw direct evidence of this with the first sale in the secondary market of an LEC franchise for a reported price of 26.5 million euro, or 39 million Canadian. This secondary sale reflects a potential 231% premium to Overactive's purchase price of 8 million euro, or 12 million Canadian, in December 2018. Please note that we carry our team assets at cost on our balance sheets. so the increase in potential market value is not reflected in our number. In closing, we've accomplished a great deal since we started this journey in 2018. In less than a handful of years, we've already proven the viability of our business thesis and strategy and operating model, demonstrated by our substantial revenue growth. We continue to focus on generating high-quality, long-term, and recurring revenue streams that provide strong and we believe stable operating leverage and scalability with time. We are using this momentum to continue to build a global company that will redefine the future of sports, media, and entertainment. I look forward to connecting with you throughout the year and to update you along the way as we continue to build on Overactive Media's progress against our key strategic pillars. This concludes my opening remarks. Now I'll pass on to Rakesh, who will provide a more detailed review of our financial results. Rakesh?

Thank you, Chris. Good morning, everyone. Today I'll review our fourth quarter and full year 2021 financial results. Please note the financial information we discussed today is prepared in accordance with international financial reporting standards and is in Canadian dollars unless otherwise indicated. For the fourth quarter of 2021, we reported total revenue of $5.3 million, a 340% year-over-year increase on an absolute basis, compared to $1.2 million for the fourth quarter of 2020. This includes a 132% year-over-year increase in business operations revenue, driven primarily by marketing partnership revenue. Fourth quarter 2021 total revenue increased by 49% when we adjust for differences related to the timing of certain leaked revenue share payments. In addition, for the fourth quarter of 2021, we reported an adjusted EBITDA loss of approximately $2.5 million, a 46% improvement compared to an adjusted EBITDA loss of $4.5 million during the comparative prior year period. For the full year 2021, total revenue increased by 69% to $14.2 million compared to $8.4 million for the full year 2020. This includes a 109% year-over-year increase in business operations revenue, driven primarily by growth in marketing partnership revenue. For the full year 2021, we reported an adjusted EBITDA loss of $7 million, a 35% improvement compared to an adjusted EBITDA loss approximately $10.8 million for the full year 2020. The higher revenues were the primary driver to the adjusted EBITDA improvement. And turning to our balance sheet, at December 31, 2021, our cash and cash equivalents were $29.6 million versus $5.6 million in the comparative period. Given our strong position, we believe our existing cash resources will be sufficient to meet our capital requirements to operate the business and commitments for the foreseeable future. The momentum noted above has persisted since year end, and we expect the same drivers which fueled our growth in 2021 will continue to propel our growth in 2022. As Chris noted earlier, our business model contains a considerable amount of operating leverage when delivered at scale, with 65% of our year-over-year total revenue increase going directly to reducing our adjusted EBITDA losses for the year. As we move throughout 2022, we do so as a much stronger organization. We are now a publicly traded company with a healthy balance sheet and full access to the capital markets. Our ability to generate sustainable and recurring revenues combined with our capital resources will help to support our continued growth as we continue to execute our strategic plans. Additionally, our strong balance sheet will give us added flexibility to pursue targeted strategic acquisition opportunities, if we choose to do so. These will increase our industry presence and capabilities, as well as enhance our already considerable growth trajectory. We are extremely excited for the future and look forward to sharing our progress with you next quarter. That concludes our prepared remarks. I would like to open the call for questions. Operator, please go ahead.

Thank you, sir. Ladies and gentlemen, if you would like to ask a question, please slowly press star followed by 1 on your telephone keypad. You will then hear a three-tone prompt acknowledging your request. And if you would like to withdraw your questions from the queue, please press star followed by 2. And if you're using a stick, we do ask that you please lift the handset before pressing any keys. Please go ahead and press star 1 now if you do have a question. And your first question will be from David McFadgen at Cormark. Please go ahead.

Oh, yeah. Hi. A couple of questions. So first of all, just on the Counter-Strike Global Alliance competition exit, does that mean that you're just going to shut the team down or you're going to sell it because it's a franchise, right?

Hey, David. Good morning. Morning. With respect to CSGO, maybe a little bit of background is helpful here. We created B-Side and launched Flashpoint with Eight partners as the first team-owned majority or major esport league. It had tremendous promise in increasing viewership season over season, but it was really designed pre-COVID as a league that focused on live events. And it was formed primarily by North American organizations that were disconnected from the ecosystem when the COVID restrictions hit. Valorant launched in 2020 as a direct competitor to Counter-Strike. and really changed the industry dynamics further. And then more recently, as no doubt you've noticed, our tournament partner, Faceit, was acquired by Saudi Aramco and merged with our biggest competitor in the Counter-Strike space, ESL. So as a result of the above combined factors, the best decision we felt was to move on. Specific to your question, we announced, I think, yesterday in a video that we built for the community and to our fans that we'd be exiting Counter-Strike. The cost of operating that team is roughly on par with what we expect the cost of the Valorant team to be, and so it's no impact on the 22 budget as planned.

Okay, so just to confirm you're shutting it down, you're not selling it, right? Correct. Yeah, okay. Okay, and then just in the operating costs for the quarter, you talked about in your MBA payroll subsidies. So I'm presuming this is government subsidies to help, you know, businesses survive COVID. So obviously they're not going to continue in 2022, but can you give us the total amount that you benefited from in 2021?

Yeah, absolutely, David. So just one minor item there. The subsidies were a combination of support from our lead partners as well as Canadian government. So a bit more detail on the operating costs. For the full year 2021, our operating costs were $22.2 million compared to $16.3 million for the full year 2020. And the approximate $5.9 million increase in operating costs during 2021 is primarily due to the one-time $3.4 million decrease in payroll subsidies in 2020 related to the COVID-19 pandemic. The sources of that are through, again, our lead partners as well as government subsidies. So when removing the decrease in payroll subsidies of $3.4 million, what we have are operating costs increasing by $2.5 million or 15% versus that $5.8 million increase on the revenue side or 69% increase as we've noted throughout the call.

Right, so you're talking about the $3.4 million, but you're just describing the delta, right, the decrease in the payroll subsidies. So as we look to 2022, I'm just wondering how much of the payroll subsidies were present in the 2021 results, because obviously they're not going to repeat in 2022. Can you give us that number?

Right, we did not receive payroll subsidies in 2021.

Okay, nothing in 2021. Okay, okay, okay. And then just on the theater, when do you expect to unveil your financing for that?

This year. I can't be more specific than that right now. I'm sure you can understand the nature of these types of discussions, David, but they're fluid and, of course, subject to change. But we've got great momentum on that side of our business and great discussions ongoing, so more to come. Okay.

And then just on the sponsorship revenue, obviously that revenue line has grown quite well. I'm just wondering, is the outlook for that revenue line still as robust as ever?

It is. Yeah, it is. Tyler Keenan and Allison Walker and that team have done a great job. As I referenced in my remarks, We continue to add not only marketing partners on both sides of the water, both in Europe and here in Canada, but really meaningful and significant blue chip brands. And I think that's a broader indication of not only the acceptance of Overactive Media's business, but also an acceptance by what we would term non-endemic brands of the industry and the potential of the industry against today's generation of fans. We remain very optimistic about our continued success in that space.

Okay. All right, thanks, guys. Thanks, David.

Thank you. Next question will be from Tawaki Dojima at TD Securities. Please go ahead.

Hi, everyone. Thanks for taking the questions. A few of my questions have already been asked, but I guess just to follow up on a few of David's questions, on the CSGO exit, I assume that the CSGO team had some sort of list of sponsors and whatnot, and the incoming Valorant team also has their old sponsors. Does that mean that these sponsors carry over, or do you have to kind of replace the Valorant sponsors with your current roster, and does that also mean that your current sponsorship base has the potential to grow even further, even without having to add new sponsors, but kind of get deeper into the relationship with overactive?

That's a great question. Intuitive. So one of the first things we did was spend some time talking to Tyler and Jorge over in our European offices in Madrid about making sure that our partners would be supportive of the transition from CSGO and into Valorant. Perhaps not surprising to you and others on this call, the optimism around Valorant is huge right now on a global basis.

And so

Not surprisingly to us, our marketing partners were very supportive of the notion of the pivot, and we expect to have no problems carrying our current roster of partners over into the Valorant space. As to the specifics of other team partners, again, it probably wouldn't surprise you to know that not as many organizations on a global basis are as sophisticated or have been as successful on the marketing partnership side as we have been. And so I'm not sure that that transfer of sponsors from that roster over into our business will be as onerous as we would even like. But we do expect, given the great popularity of Valorant and the great optimism around its future, that we will be able to lever our entry into Valorant community as a new way to engage partners. And maybe as importantly, beyond the Spanish market, we've had tremendous success developing our Spanish marketing, commercial marketing business over there. But we really think of our Mad Lions brand as a pan-European brand, and as I mentioned, a global brand in the context of both our English and Spanish-speaking market opportunity. You know, there are 400 million people that speak Spanish in the world. That seemed like, at the time, when we purchased the Mad Lions organization, a huge opportunity. I think the combination of our Mad Lions brand's momentum And our entry into Valorant is going to give us an even bigger and new story to tell that will be attractive to the marketing partners and fans around the world. That sounds great.

And I guess to add onto that, a lot of these sponsorship partners you've brought on in 2021, and is it a fair characterization to say that a lot of those brands that you've talked about, they haven't had a full year edition. a full year contribution in 2021. And so we should see a full year contribution in 2022 on top of any newer brands that you might add this year.

Yeah, that's again intuitive. That's not universally true of all the partners. It of course depends on when they joined us. Some of them you might remember we announced early in Q1 last year. And so we would have had largely the effect of their contribution for the full calendar year. Others, as you point out, join us along the way and maybe jump in according to key moments and beats across our team's seasons. But on balance, again, and maybe the overriding message is this is a growing and highly leveraged business for us. We and the team, I think, again, under Tyler and Jorge's leadership in Europe, have done a tremendous job telling our story. You know, we set out when we built the business to build the most professional marketing partnership sales team in the industry. We modeled it after largely my experience and others in our organization who spent all those many years selling marketing partnerships and naming rights and broadcast deals in traditional sports industry. We took that approach from day one. And more specifically, Dwaki, as I think you know, we resisted the temptation early to to get too engaged with, again, what I would term endemic partners, those that have been conditioned early days by the esport industry to do deals for value in kind or simply trade. Our deals are cash. They are typically very strategic in their orientation in terms of meeting the objectives and goals as laid out by the brands that we engage with, and they are strategic insofar as they are typically and increasingly multi-year. So when we point to the leverage opportunity as our business grows, when we talk about scalability of our business, our marketing partnerships business is really core to that strategy next to the lead revenue share that we enjoy and the franchise leads that we're invested in. Perfect. Makes sense.

And shifting gears to the venue, I'm going to push you a little bit, and I appreciate that not all the details can be provided, but I think in the MDA you talk about expecting to own a minority ownership interest, and you've actually sold – some of the production and progress into Harlow Capital. And so it's a little bit more detailed than we've gotten in the past. And so I just wanted to give you an opportunity to kind of talk about that and how far along on those discussions you are.

Yeah, we have been working closely and not surprisingly, as I'm sure you would understand, with Harlow Capital, represented by one of our larger investors, the Kimmel family. Of course, they have tremendous experience in the space and have been great supporters of the idea from the beginning. Again, it's too early to say what we have on the table yet. And again, we can say without reservation that we've made no legal or otherwise financial commitments around the venue as yet. All of it a work in progress, and we expect to have more to share within the year. Perfect. And I got one last question, and I think

You touched on it briefly, your three verticals, sports, media, and entertainment, and I think sports is covered by esports, entertainment is covered by the venue, but the last not as touched vertical is media, and I know you guys have talked about some sort of a platform that may be in the works that we might hear an update on sometime this year, and I was wondering if you've had any color to share on that.

Not today to share, but again, I think it's fair to say that... Fair to say that this space in our business remains fluid and an organization like ours needs to be smart, strategic, and I would say deliberate and intentional in evaluating its opportunities. I will say to you that we were really, really wonderfully pleased to engage with Zilliqa, our new Metaverse and NFT blockchain partner in the space. all on this call would understand the emerging and what would seem to be great potential of Web3 and some of the trends that are developing there. But you will also notice that we've been quite deliberate around that conversation. Our Zilliqa partnership was new to this calendar year, this fiscal year. But as one example, we've not waded yet into the NFT space. We've been watching and speaking to our fans. We've been watching the way they've been reacting to the launch of various NFT products around the global industry, not always met with favor, frankly, and we need to be mindful of that. We're, as I've said repeatedly on this call and in other engagements with media and investors, we're in the business of serving and developing our relationship with today's generation of fans. We're in the very early stages of Web3 and the media platforms that I think all of it will represent. And while we need to be engaged in those conversations and partnered like with a company of Zilliqa's caliber and expertise, we also need to be smart and strategic. So we expect to continue to progress in this area. More to share in the coming weeks and months, I'm sure. But again, early days.

Sounds great. Thanks for taking the question, guys. Thank you.

Thank you. As a reminder, ladies and gentlemen, if you would like to ask a question, please press star followed by one on your touchstone phone. And your next question will be from Mike Stevens at Echelon Wealth Partners.

Hi, good morning and congrats on your quarter and your first call. Thanks, Mike. Yeah, so I wanted to kind of delve into the business operation success that you guys have been seeing. And I know... I've heard Chris talk in the past about leveraging the building and in those partnerships well ahead of 2025. You know, there's been some pretty big developments with the building. So I'm wondering, are some of those tailwinds starting to materialize now or is that, you know, further out? What are you seeing and how may that affect the trajectory of the growth there?

It's, again, another great question and, again, good morning. It's already manifesting in our marketing partnership relationships in particular in ways that unfortunately I will not be able to share with you today because those are elements of agreements and confidentiality that we're obliged, of course, to keep. But maybe as a matter of strategy, let me talk to you in broader terms, general terms about why the venue made sense and frankly why we announced our intention around it as early as we did. I know from experience in past lives that the moment you announce a project of this level of significance to a community, a city, and a country, and in fact to an industry in our case, it perks everybody's ears and drives another level of conversation that maybe you otherwise wouldn't be engaged in. That's been true for Tyler and his conversations already, and you can imagine the categories that we might be engaged in talking to with right now. In this country, it's the case, of course, that, you know, telco drives a key element of any sports team or entertainment properties, you know, key relationships. And that's been true for us going back to the summer of 2019 when Bell made the very significant investment that they did in Overactive Media, both as a founding and premier partner of the organization and as an investor in Overactive Media. You know, similarly, You want to be engaged and working with early in any sport property or media company's development in this country with the banks, and we've had great discussions with a number of key partners, but TD has emerged as our lead opportunity in that space as well. As you think about building out a venue, again, you can think of the categories that might be interested, everything from carbonated soft drink to the technology space around panels and screens, to new and emerging technologies that we're starting to see and show up. And we're blessed to have a partner like Populous so early engaged in our business and guiding us. If there's something significant going on in the planet right now in venue development, Populous is attached to it. And they have been our partner from the earliest of days on all of this. So we have line of sight to new and emerging technologies independent of Populous, but certainly working closely with them as well. All of this gives Tyler ammunition to talk not only about our business today, but also the opportunities that will be presented around our venue in the next two or three years. And again, I'll point to Zilliqa as perhaps one of those key partners that we can imagine being involved in our venue experience. For years, as someone who's been around venue projects like this over one's career, I have said for years that it's It's always a big opportunity in the moment, just before you open the doors. When it lives in one's mind's eye, it's got its greatest potential. In fact, in the context of the metaverse and perhaps creating experience around the venue in the ways that we imagine, there might be an opportunity for us to even give our fans a glimpse of what it might be like to experience in real life in our venue in the future. These are all really interesting discussions and active conversations that we're having, not only with Zilliqa, but with other partners that you might think would be interested.

Okay, that's great, and I was hoping to pivot to the sports gambling launch in Ontario, and I haven't really read or seen too much with how you guys may fit into that whole space. I'm wondering whether you touched on perhaps a media platform and generating dollars that way. But would there be any gambling type of partnerships or affiliate marketing plans in the future for OAM or how may they fit in that space?

Yeah. So we have been working and keeping our eye on this space, of course, like everyone else in the sports industry for years. Now it could be fairly said years, and as you point out correctly, April 4th was a pivot point for the entire industry in that context. Again, Tyler's had a number of ongoing conversations with a collection of organizations that we might be able to appropriately partner with in this space. We are, as I said earlier, in some ways being quite patient with this space. It's new. We also need to be mindful of our industry and our league partners and making sure that we're aligned with them on strategy as well. But there's no doubt, as we've been talking around this morning, that, you know, there are new and emerging categories in our industry that frankly didn't even exist when we birthed the company in 2018. Gambling was not on the horizon for esports companies in our estimation at that time legitimately in Ontario. Certainly, you know, None of us knew too much, with the exception of perhaps Adam Adamu and Sheldon Pollack, who had an early look in on blockchain industry. But none of us knew too much, if anything, about NFTs and the way that industry has taken shape over recent times. So, again, these are all really good things for our industry and for overactive media. Good news for our developing and already strong and growing marketing partnership business. And we'll be excited, we believe, to share more in the coming months.

Awesome. And last one, if I could sneak in, the impacts of the pandemic obviously have affected your business in a lot of different ways, some negative, some positive. I'm wondering how you see this transition back to somewhat normal markets. How that may affect the top line profitability. Obviously, it's good for your business, but What should we expect to see, you know, in the second half of 2022 and 2023? Yeah.

So first and importantly, all of us at Overactive Media are bullish on the return of live events. And I think we've seen, you know, various demonstrations of the potential of the live event experience, again, as we hopefully find our way to the other side of the global pandemic. You know, as you point out, it's cut both ways, I suppose it could be said. I mean, we were so excited to be planning for and, in fact, had already sold out our first live event in 2019. At the very moment, the global pandemic struck all of us. We were getting ready to open our first live event around Overwatch in April of that year in 2019. As our first live events in Toronto start to take shape this year, we have announced already that we'll be returning to live events with our Call of Duty event planned for the early days of June. Subsequent to that, we expect to be hosting a major Overwatch tournament in the fall of this year as well. The impact on a financial basis will be better positioned to evaluate on the other side of those experiences, but to your point, there isn't a better way to be engaged with our audience and our fans than in real life. It's ironic, I think, in many ways that an industry that has grown up largely online so loves to be together and so loves to celebrate. what they love and are so passionately engaged around. But I guess we shouldn't think of it any differently than traditional sport, as I said in my remarks. This is sport for a generation of fans that thinks differently in those ways. And we're going to see great evidence of that in Overactive Media's events in June and September.

Great. Thank you, and all the best. Cheers.

Thank you. At this time, we have no further questions. Please proceed with closing remarks.

Well, thank you, everyone, for your time and for your questions. I'd like to, again, personally and on behalf of our entire organization, thank everyone again for joining us on today's call and for your continued interest in overactive media. I would look forward to having follow-up conversations with many of you and providing updates regarding our progress. Again, thanks once again for joining us and have a terrific day.

Thank you, sir. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. And at this time, we do ask that you please disconnect your lines.