March 4, 2020
|Toronto, Canada – March 2, 2020 - Kuuhubb Inc. (“Kuuhubb” or the “Company”) (TSX- V: KUU), a mobile game development and publishing company targeting the female audience with bespoke mobile experiences, has reported its unaudited financial results for the three- and six- month periods ended December 31, 2019. The Company’s unaudited consolidated financial statements as at, and for, the three and six months ended December 31, 2019 and related management’s discussion and analysis can be found on the Company's SEDAR profile at www.sedar.com. The Company’s financial year end is June 30.|
Highlights for the Three and Six Months Ended December 31, 2019:
Revenue for the three and six months ended December 31, 2019 was US$1.97 million and US$4.26 million, respectively (unaudited). This revenue was generated from sales of the Recolor app, the in-app sale of virtual goods from the My Hospital game and in-app ad revenue.
During the three and six months ended December 31, 2019, the Company recorded a net loss of US$1,406,595 and US$2,680,734, respectively, compared to a net loss of US$2,073,772 and US$4,364,919, respectively, incurred during the three and six months ended December 31, 2018.
The non-GAAP adjusted EBITDA during the three months ended December 31, 2019 was calculated to be negative US$539,842 by adding back non-cash depreciation and amortization of US$208,032, non-cash share-based compensation of US$267,337, non-cash net interest and accretion expenses of US$309,243, non-cash fair value change of derivative loss of US$76,435, and foreign exchange loss of US$5,706 to the net loss of US$1,406,595.
The non-GAAP adjusted EBITDA during the six months ended December 31, 2019 was calculated to be negative US$1,281,748 by adding back non-cash depreciation and amortization of US$417,584, non-cash share-based compensation of US$627,709 and net interest and accretion expenses of US$542,379, and deducting non-cash fair value change of derivative gain of US$113,261 and foreign exchange gain of US$75,425 to and from the net loss of US$2,680,734.
The authorized share capital of the Company consists of an unlimited number of common shares. The Company currently has outstanding 55,752,709 common shares and 7,250,000 stock options.
Financing Details (Fiscal Q2 2020):
On October 23, 2019, Kuuhubb Oy received €300,000 from Valiance UG as partial repayment for the outstanding loan receivable balances.
On October 23, 2019, Kuuhubb Oy completed a €605,000 private placement financing through the issuance of an unsecured loan payable in the principal amount of €605,000. The loan matures on June 28, 2021 and bears an interest rate of 7.5% per annum (payable at the end of each calendar quarter).
Additional Financial Details (Subsequent to Fiscal Q2 End):
Subsequent to the quarter ended December 31, 2019, the Company received the following additional financings and cash collections. These new financings are part of ongoing efforts to secure funding for more effective marketing, platform development and user acquisition for upcoming new products:In January 2020, the Company received $190,867 (€170,000) from Valiance UG as partial repayments for the outstanding loan receivable balances at December 31, 2019.
In February 2020, the Company closed a non-brokered private placement offering of an unsecured convertible debenture totaling €2 Million in principal amount. The convertible debenture will mature 36 months from the date of closing and bear interest at a rate of 10% per annum. The convertible debenture will be convertible at the option of the holder, in whole or in part, into common shares of the Company at a conversion price of CAD$0.80 per share.
In February 2020, Recolor Oy, a wholly-owned subsidiary of the Company has entered into a sale and purchase agreement (the “Agreement”) with Codecacao d.o.o (“Codecacao”), a company incorporated pursuant to the laws of Croatia. Pursuant to the Agreement, the Company will acquire 100% of the issued and outstanding shares of Codecacao in consideration for 1,000,000 common shares (“Kuuhubb Shares”) in the capital of the Company (the “Share Consideration”), payable in installments over a two-year period, and €150,000 (the “Transaction”). The Share Consideration shall be paid in tranches, with 250,000 Kuuhubb Shares payable after the closing date (the “Closing Date”), 50,000 Kuuhubb Shares payable after the sixth month from the Closing Date, 100,000 Kuuhubb Shares payable after the twelfth month from the Closing Date, and 100,000 Kuuhubb Shares payable after the twenty-fourth month from the Closing Date. Completion of the Transaction is subject to a number of conditions, including, but not limited to, the receipt of all necessary final regulatory approvals, including acceptance from the TSX Venture Exchange and, if applicable, shareholder approval.
New Game Expansion, Commercialization and Growth Strategy:
Jouni Keränen, CEO of Kuuhubb Inc., commented, “We are delighted to see that after several quarters of decline the revenues are starting to stabilize, and we believe that revenues will start to grow in the 2020 calendar year as we launch new products and scale up our product portfolio. We are particularly excited for the coming soft launch of our flagship second-generation Match-3 game, Tiles & Tales, in March 2020.”Kuuhubb is building a leading lifestyle game portfolio and is solidifying its position as an industry innovator, targeting the female demographic. The Company has continued to diversify its portfolio into the popular Match-3, or “tile matching”, gaming space, with the development of two new titles; Dance Talent and Tiles & Tales. Dance Talent was commercially launched in the fourth quarter of 2019. The second Match-3 title, Tiles & Tales, is the first game developed entirely in Kuuhubb’s Helsinki Game Studio using an in-house developed Match-3 engine. The Company intends to use that engine to develop other Match-3 games and expects that using the existing technology will significantly reduce the resources and time required to bring new titles to market. Tiles & Tales has an anticipated launch date during calendar H1 2020.While still focused on the commercialization of its second-generation titles, Dance Talent and Tiles & Tales, the Company’s vision remains on product innovation through the exploration of new lifestyle trends. The Company believes that female gamers continue to be underserved in the gaming industry’s latest phenomenon, esports. The Company sees a significant opportunity in the casual, mobile esports game niche and plans to combine the immensely popular casual and Battle Royale, or multiplayer elimination, genres to create a unique portfolio of games for the female market.
EBITDA - Non-IFRS Measure
EBITDA is intended to provide additional information to investors and analysts. The Company calculated EBITDA as set out on page 1 of this press release. EBITDA does not have any standardized meaning prescribed by IFRS and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. Other companies may calculate EBITDA differently.