OverActive Media Corp.

Good day, everyone, and welcome to Overactive Media's second quarter 2026 conference call. At this time, participants are in listen-only mode. This conference call has been recorded and a replay of today's call will be available on the investor relations section of Overactive Media's website. It will remain posted there for the next 30 days. I will now hand the call over to Kelly Haley, Senior Director of Global Operations at Overactive Media Corp., for introductions and questionnaire notes. Please go ahead.

Thanks, Mark, and good morning, everyone. Welcome to Overactive Media's second quarter 2026 earnings conference call. A copy of the company's earnings press release, unaudited, condensed, consolidated, interim financial statements, and management's discussion and analysis for the three and six months ended June 30th, 2026, are available on the investor relations section of our website at overactivemedia.com, and under the company's profile on Cedar Plus at cedarplus.ca. With us on today's call are Adam Adamou, Chief Executive Officer, and Louis Zhang, Chief Financial Officer. Today, we will review the highlights in financial results for the second quarter of 2026 and recent developments, unless otherwise specified, all amounts mentioned on today's call are in Canadian dollars. Before we begin, I'll read our cautionary note regarding forward-looking information. Certain information to be discussed on this call contains forward-looking statements within the meaning of applicable securities laws, including, among others, statements concerning the company's 2026 objectives, the company's strategy to achieve those objectives, and the company's ability to secure additional financing and continue as a going concern, as well as statements with respect to management's beliefs, plans, estimates, and intentions and similar statements concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts. Such forward-looking statements reflect management's current beliefs and are based on information currently available to management and are subject to a number of significant risks and uncertainties that could cause actual results to differ materially from those anticipated. For description of these risks, please refer to the company's public disclosure statements filed under its profile at CEDARplus.ca. Our commentary today will also include adjusted financial measures, which are non-IFRS measures. These should be considered a supplement, not a substitute, for IRFS financial measures. Reconciliations between the two can be found in our management's discussion and analysis and our earnings press release, both of which are available on CEDARplus and our website. At this time, it's my pleasure to introduce Adam Adamou, Chief Executive Officer of Overactive Media. Adam, please go ahead.

Thanks, Kelly, and good morning, everyone. It's good to be on the call with you today. I'll get straight to it. Revenue was down in the quarter, mostly the result of several non-recurring items that hit in 2025. Last year's second quarter included two of the biggest live events in our history, LEC on the Road in Madrid and Call of Duty League Championship Weekend in Kitchener. Neither repeats this year. Our exit from the Valorant Champions Tour Emilia League in the fourth quarter of 2025 also affected league revenues, though lower team operating expenses cushioned some of that impact. Operating expenses were down 17% in the quarter and 10% for the first half. Gross margin for the first half moved up to 52% from 50%. Net loss for the six months improved 16% year over year. The cost side of the business is doing what we planned. What I like most is how we got here. The revenue decline is a comparison story. Drip out the two non-repeating events in the VCT exit and the underlying business held up. Our cost base is leaner and our margin is up for the half. That's how we said we'd run the company in 2026. On the commercial side, our partners are showing up. Movistar Koi is seeing year-over-year growth in partnership revenue, while Toronto Koi signed a new partnership with Video Game Live Expo for an October event. Our higher margin commercial businesses grew in the quarter, and the pipeline heading into the back half is stronger than it was a year ago. Live events stayed a strength for us. Movistar COI brought around 12,000 fans to our spring road trip in Madrid. We keep filling arenas and the margin shows we're doing it more efficiently each time. In competition, our teams kept us on the big stages. Toronto COI took a third at Call of Duty League Majors III and finished in the top six at Call of Duty League Major IV. Both brands also competed at the Esports World Cup after quarter end. To our players and coaching staff, thank you for the way you represent these brands. We also brought in new capital this quarter, with directors and shareholders backing the company through secured financing. Closing out our financing plan and turning our partnership leads into signed deals are our priorities for the second half. Now I'll turn the call over to Louis, our CFO, to walk through the financial results in more detail.

Thank you, Adam, and good morning, everyone. The financial information I'll discuss today is prepared in accordance with international financial reporting standards, and all figures are in Canadian dollars unless otherwise indicated. I'll talk through revenue and gross profit, then operating costs and earnings, and finish with cash and liquidity. For the six months ended June 30, 2026, total revenue was $10.4 million compared to $13.4 million in the first half of 2025, which is a decrease of 22%. Gross margin expanded to approximately 52% from 50%. Operating costs decreased 10% to $9.1 million from $10.1 million. Adjusted EBITDA loss was $3.4 million, broadly aligned with $3.3 million in the first half of 2025. Net loss narrowed 16% to $5.6 million from $6.6 million. For the three-month period ended June 30, 2026, total revenue was $5 million compared to $8.4 million in the same period in 2025, a decrease of 40%. The prior year quarter included two major live events, LEC on the Road in Madrid and Call of Duty League Championship weekend hosted in Canada that did not repeat in 2026, along with the strong prior year agencies quarter. Team operations revenue also declined following the company's exit from VCT AMIA League in the fourth quarter of 2025. And within that, business operations revenue was $4.4 million compared to $7.2 million in the prior year quarter, reflecting the lower live event base. Team operations revenue was $0.6 million compared to $1.2 million a year ago, reflecting the timing of league and performance-based revenue recognition and the VCT exit. Gross profit was $2.2 million compared to $4 million in the second quarter of 2025, a decrease of 46%. Gross margin was 43% compared to 48% a year ago, reflecting the lower revenue base and a smaller contribution from higher margin league revenue share in the quarter. Operating costs were $4.3 million compared to $5.2 million in the second quarter of 2025, a decrease of 17%. This reflects lower roster and team payroll following the VCT exit, lower corporate payroll, and reduced team operations costs. Adjusted EBITDA loss for the quarter was $2 million compared to a loss of $1 million in the second quarter of 2025. The wider loss reflects the reduction in gross profit outpacing our operating expense savings in the quarter. Net loss for the quarter was $3.1 million compared to a net loss of $3 million in the second quarter of 2025. Reflecting lower gross profit and higher finance costs partially offset by lower operating expenses. Now turning to cash and liquidity. Cash and cash equivalent at June 30, 2026 were $2.2 million compared to $5.1 million at June 30, 2025. During the quarter, the company completed secure debt financing with entities controlled by certain directors and shareholders, including a $500,000 secure promissory note issued on May 29, 2026 to support working capital. As disclosed in our interim financial statements and MD&A, our financial statements include a material uncertainty paragraph related to the going concern assumption. To address this, management is actively pursuing a range of financing measures, including the secured financing completed this quarter and continues to implement operational efficiency and restructuring initiatives that we expect to reduce operating costs further. With that, I'll hand the call back to Adam for closing remarks.

Thanks, Louis. I said last quarter that 2026 would be about margin and cost, and the first half is early proof we're doing what we said. Gross margin is up for the half, and our cost base is down. Net loss for the first six months narrowed 16% year over year. That's the shape of the turn we're after. We also secured additional financing this quarter, supported by entities controlled by certain of our directors and shareholders to fund working capital and liquidity. The restructuring work we did earlier in the year keeps showing up in our costs, and our newer revenue lines keep building. We've kept the momentum going after quarter end. Both brands competed at the Esports World Cup and we're about to host the Bell Esports Challenge here in Toronto at the Metro Toronto Convention Center from August 27 to 30. In September, we're hosting the first round of the LEC Playoffs in Madrid. There's more to come. We have good visibility for the back half of the year and see improvements across revenue, gross profits, and adjusted EBITDA. I want to close with some thank yous. For our employees in Toronto, Madrid, and Berlin, thank you for the work and the discipline you brought to this quarter. It's showing up in the numbers. To our players and coaches, thank you for the way you represent these brands at the highest level. You're the reason millions of fans tune in and you make us all very proud. To our partners, thank you for believing in what we're building and for being on this journey with us. And to our shareholders, thank you for your continued support. We'll keep doing everything we can to earn that trust. I look forward to updating you again after the third quarter. Operator, that concludes our prepared remarks. I'll turn it back to Kelly to close out the call.

Thank you, Adam, and thank you all for joining us this morning. A replay of today's call will be available on the website at overactivemedia.com for the next 30 days. Our interim financial statements and management discussion and analysis are available on our website and on Cedar Plus. For media inquiries, please contact Adam Adamou directly. For investor inquiries, please contact me at IR at OAMGG. Mark, back to you.

Ladies and gentlemen, This concludes today's conference call. Thank you for your participation. You may now disconnect your lines. Have a good day.