SOURCE: Wow Unlimited Media Inc.

WOW Unlimited Media Inc.

August 29, 2017 17:00 ET

Wow Unlimited Media Announces Financial Results for the Second Quarter of 2017

VANCOUVER, BC--(Marketwired - August 29, 2017) - Wow Unlimited Media Inc. (formerly Rainmaker Entertainment Inc.) ("Wow" or the "Company") (TSX VENTURE: WOW.A)(TSX VENTURE: WOW.B) announced its results for the three and six months ended June 30, 2017.

     
    For the three months ended   For the six months ended
    June 30,   June 30,   June 30,   June 30,
$000's, except per share amounts   2017   2016   2017   2016
Revenue $ 10,399 $ 4,964 $ 16,265 $ 9,508
Operating EBITDA   (168)   668   (963)   701
Operating (loss) profit   (814)   136   (1,998)   (419)
Net (loss) profit $ (814) $ 136 $ (1,998) $ (9,825)
Net (loss) profit per share                
 - basic $ (0.03) $ 0.08 $ (0.08) $ (5.60)
 - diluted $ (0.03) $ 0.05 $ (0.08) $ (5.60)
Weighted average number of shares outstanding                
 - basic   25,037,579   1,754,018   25,304,775   1,753,018
 - diluted   25,037,579   8,491,518   25,304,775   1,753,018

1 See section "Non-GAAP Financial Measures" in this earnings release.

2 All earnings per share data for comparative periods have been adjusted to reflect a 10:1 share consolidation completed during the year-ended December 31, 2016

FINANCIAL HIGHLIGHTS

The Company reported the following highlights from the three and six months ended June 30, 2017:

  • Second quarter revenue earned was $10.4 million. This included $2.5 million generated by Channel Frederator Network, which grew by 167 million views during the second quarter of 2017, and revenue from the delivery of Castlevania Season 1 to Netflix.
  • Net loss was $0.8 million for the 3 months ended June 30, 2017.

Michael Hirsh, Chairman and CEO, commented: "This quarter Wow continued to enjoy dynamic growth in both its Frederator and Rainmaker businesses. We announced a landmark strategic relationship with Bell Media, by virtue of which Bell is expected to become a key Wow shareholder. The launch of Frederator's Castlevania series on Netflix was a runaway success, resulting in a renewal of the series for twice as many episodes."

OPERATIONAL UPDATE

Channel Frederator Network continues to grow, with 134 channels added to the network during the second quarter, for a total of 229 channels added between January and July 2017. Monthly views increased by 74% from January 2017 to June 30, 2017, with Channel Frederator Network attracting a total of 3.9 billion views from January 2017 to June 2017. Monthly views increased by 26% for a total of 806 million views in June 2017.

Castlevania Season1, was delivered to Netflix in June and debuted on Netflix on July 7 to wide critical acclaim. As published by Parrot Analytics, Castlevania achieved the status of both most in-demand digital original and the most popular digital original series in the United States in the first two weeks of its launch. Netflix has contracted for an additional 8 episodes to be delivered in 2018.

CONSOLIDATED RESULTS FOR THE QUARTER

Selected financial information for the three and six months ended June 30, 2017 and 2016 are as follows:

   
    For the three months ended   For the six months ended  
    June 30,    June 30,   June 30,    June 30,  
$000's   2017    2016   2017    2016  
Revenue $ 10,399  $ 4,964 $ 16,265  $ 9,508  
Operating EBITDA   (168 )  668   (963 )  701  
Net finance costs   82    389   170    883  
Depreciation and amortization1   111    143   232    287  
Share based payments   453    -   633    -  
Service credits   -    -   -    (50 )
Operating (loss) profit   (814 )  136   (1,998 )  (419 )
   
Items affecting comparability:                    
 Impairments   -    -   -    567  
 Share of loss of Ratchet Productions, LLC   -    -   -    8,839  
    -    -   -    9,406  
Net (loss) profit $ (814 )$ 136 $ (1,998 )$ (9,825 )
   
Items affecting comparability:                    
 Foreign currency translation adjustment   (68 )  -   (59 )  416  
Total comprehensive (loss) profit $ (746 )$ 136 $ (1,939 )$ (10,241 )

1 Excludes amortization of investment in film and television properties

Revenue & Operating EBITDA

Revenue earned for the three months and six months ended June 30, 2017 increased by $5.4 million (52%) and $6.8 million, respectively, compared to the same periods in 2016, driven by the views and revenues generated by the Networks and Platforms segment, in particular, Channel Frederator Network, and the delivery of Castlevania Season 1.

Operating EBITDA decreased by $0.8 million and $1.7 million, respectively, for the three and six months ended June 30, 2017 compared to the same periods in 2016. This decrease was primarily due to increased employee costs and corporate head office costs as a result of incorporating the operations of Frederator Networks Inc. subsequent to the corporate reorganization and acquisition on December 15, 2016. In addition, the Company experienced foreign exchange losses of $0.2 million and $0.2 million for the three and six months ended June 30, 2017 in comparison to foreign exchange gains of $0.3 million and $0.3 million for the same periods in 2016, as a result of the strengthening of the Canadian dollar against the US dollar.

Net finance costs

The decrease in overall finance costs of $0.3 million and $0.7 million for the three and six months ended June 30, 2017 is largely due to the decrease in interest expense on convertible debentures. The convertible debentures were settled as part of the Company's corporate reorganization and acquisitions on December 15, 2016.

Depreciation and amortization

The reduced depreciation charge is as a result of amounts capitalized during the first two quarters of 2017 for assets used during the production of the one of the Company's owned IP, ReBoot.

Share based payments

Shared based payments for the three and six months ended June 30, 2017 reflects the share appreciation rights issued to certain employees by an officer of the Company , and the grant and initial vesting of stock options to certain officers of the Company approved during the second quarter, as well as the continued vesting of all options previously granted.

Impairments and Share of loss in Ratchet Productions, LLC - Ratchet & Clank

During the Company's previous fiscal year, as previously disclosed, the Company impaired its investment in Ratchet Productions, LLC ("RPLLC") ($8.8 million) and an amount of $0.6 million owing to Wow by RPLLC which was not recoverable.

NON-GAAP FINANCIAL MEASURES

The Company reports using certain supplemental indicators of the Company's financial and operating performance in addition to results reported in accordance with International Financial Reporting Standards ("GAAP"). These measures are referred to as non-GAAP measures, and include operating earnings, operating earnings per share and operating EBITDA. The Company believes these supplemental financial measures reflect the Company's ongoing business in a manner that allows for meaningful period-to-period comparisons and analysis of trends in its business.

The Company defines operating earnings as net profit or loss excluding the impact of specified items affecting comparability, including, where applicable, share of loss of equity accounted investees, other non-operational income and expenses, deferred taxes and other gains or losses. The use of the term "non-operational income and expenses" is defined by the Company as those that do not impact operating decisions taken by the Company's management and is based upon the way the Company's management evaluates the performance of the Company's business for use in the Company's internal management reports. Operating earnings per share is calculated using diluted weighted average shares outstanding and does not represent actual earnings per share attributable to shareholders. The Company believes that the disclosure of operating earnings and operating earnings per share allows investors to evaluate the operational and financial performance of the Company's ongoing business using the same evaluation measures that management uses, and is therefore a useful indicator of the Company's performance or expected performance of recurring operations.

The Company defines operating EBITDA as earnings before interest, taxes, depreciation and amortization (excluding amortization of investments in film and television properties), adjusted for certain items affecting comparability as specified in the calculation of operating earnings. The Company discloses operating EBITDA to capture the profitability of its business before the impact of items not considered in management's evaluation of operating performance. Unless otherwise stated, the Company includes the amortization of investments in film and television in the calculation of EBITDA.

Operating earnings, operating earnings per share and operating EBITDA do not have any standardized meaning prescribed by GAAP and therefore may not be comparable to similar measures presented by other companies. The Company cautions readers to consider these non-GAAP financial measures in addition to, and not as an alternative for, measures calculated in accordance with GAAP.

Forward-looking Statements

This news release contains certain forward-looking statements and forward-looking information (collectively referred to herein as "forward-looking statements") within the meaning of applicable Canadian securities laws. All statements other than statements of present or historical fact are forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "anticipate", "achieve", "could", "believe", "plan", "intend", "objective", "continuous", "ongoing", "estimate", "outlook", "expect", "may", "will", "project", "should" or similar words, including negatives thereof, suggesting future outcomes.

In particular, this news release contains forward-looking statements relating to, among other things: (i) general economic conditions; (ii) future revenues to be received by Wow; (iii) Wow's future business prospects and opportunities; (iv) Wow's ability to complete any or all of its proposed production work and (v) the completion of the proposed transactions with Bell Media.

Management of the Company believes the expectations reflected in such forward-looking statements are reasonable as of the date hereof but no assurance can be given that these expectations will prove to be correct and such forward-looking statements should not be unduly relied upon. Various material factors and assumptions are typically applied in drawing conclusions or making the forecasts or projections set out in forward-looking statements. Those material factors and assumptions are based on information currently available to the Company, including data from publicly available governmental sources as well as from market research and industry analysis and on assumptions based on data and knowledge of this industry which the Corporation believes to be reasonable. However, although generally indicative of relative market positions, market shares and performance characteristics, such data is inherently imprecise.

Forward-looking statements are not a guarantee of future performance and are subject to and involve a number of known and unknown risks and uncertainties, many of which are beyond the control of the Company, which may cause the Company's actual performance and results to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to, the risks identified in the Company's management's discussion & analysis dated April 25, 2017 and the Company's management information circular dated November 14, 2016 both of which have been filed with the Canadian Securities Administrators and available on www.sedar.com. Any forward-looking statements are made as of the date hereof and, except as required by law, the Company assumes no obligation to publicly update or revise such statements to reflect new information, subsequent or otherwise.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

About Wow Unlimited Media Inc.

Wow Unlimited Media Inc., (formerly Rainmaker Entertainment Inc.), is creating a leading next-generation kids and youth animation business by focusing on digital platforms and content. The company's key assets include: the world's No. 1 digital animation network, Frederator Networks, which consists of an animation production company Frederator Studios, as well as VOD channels on digital platforms; the world's first Hispanic animation network, Atomo Network, a joint venture with Anima Estudios; and one of Canada's largest, multifaceted animation production studios, Rainmaker Entertainment, which consists of Mainframe Studios that produces CGI animated television series, and Rainmaker Studios that produces long-form animated features.

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