Gfinity (AIM: GFIN ) has announced its acquisition of Epicstream, an online news community with 0.6m unique monthly visitors, to be satisfied through the issue of 10m new ordinary shares in GFIN and certain payments on revenue generated by EpicStream.
This means that Gfinity will assume ownership of the EpicStream.com website, its extensive social media network, including its Facebook group which has over 6 million likes on 30 pages, as well as its historic content libraries.
The majority of Epicstream's users are based in the US and Canada, with a growing following in the UK, each of which have been described as ‘attractive high value advertising markets.’
GDM delivered another record month in November, with 14 million monthly users across all sites (12 million in October) and revenues in the month exceeding £275,000 for the first time.
In addition, GDM's fourth website, www.racing games.gg, went live during the month. The group said the website is focused on virtual motorsport, a key strength of the Company and ‘reflects the board's view of the growing interest and commercial opportunities in this area.’
For the year ended 31 December 2019, Epicstream reported unaudited revenue of $0.4m and net income of $0.3m. As at 31 December 2019, it had unaudited assets valued at $0.1m.
The acquisition is seen as a further step forward in the Company's strategic focus on owned content and comes as a time when GDM continues to make ‘excellent progress.’ GDM remains on target to deliver revenue of approximately £2m during the current financial year.
Acquisition Consideration
The two founders of Epicstream will each be issued with 10m new ordinary Gfinity shares in consideration for the acquisition, of which two-thirds will be locked-in for a period of one year.
The founders will also be entitled to an annual payment of 30% of revenues generated by EpicStream, subject to appropriate caps, in each of the first two years following the Acquisition, payable in annual instalments at the end of each year.
Epicstream will join Gfinity Digital Media group ("GDM"), Gfinity’s digital media proposition, with the continued growth of the platform to be supported by its founders who will both be joining GDM.
"We are delighted to welcome the Epicstream team into the Gfinity family. Francis and Brian have built a highly engaged community around all things fantasy and Sci-Fi. It is a perfect fit for GDM,” commented John Clarke, Chief Executive of Gfinity.
He added, “The team is also focused on identifying acquisition opportunities. Epicstream is the first of these and we could not be more excited about having the team on board."
“With Gfinity's talented minds and position in the esports industry combined with Epicstream's passionate community and wide range of sub genres we cover, I believe that we're just barely scratching the surface of what is possible,” said Francis Bayog, Founder of Epicstream.
“With Gfinity's talent, technical expertise, and resources, we will be able to greatly accelerate our plans to make this vision a reality,” added Brian McCormick, joint founder of Epicstream.
Formal Sales Process Update
The Formal Sales Process (FSP) is progressing as planned and Gfinity continues to engage in various conversations to evaluate the best options to accelerate the growth of the business.
Shares in Gfinity have increased by 24% since the beginning of October 2020 to open 1.39% higher this morning at 3.65p following the announcement.
Reasons to Follow GFIN
The esports industry represents an exciting investment opportunity for Gfinity which is the only established UK listed company in the esports sector. In 2018, global esports revenue grew by 38%, with a projected esports market value of $1.5bn by 2020.
Last month, Gfinity launched a formal sales process as part of a strategic review which it said will help it continue its current pathway towards profitability forecasted for Q1 2021.
Gfinity has seen three major progressions with regards to joint ventures and partnerships, including partnerships with BT Sport, ViacomCBS and Abu Dhabi Motorsport Management.
The group said it is on track to deliver target revenues for this financial year of around £2m, leading the Company towards its maiden profit. GFIN is currently technically in an offer period post the announcement of its strategic review on 9 October 2020.
‘While the Company continues on its current pathway towards profitability, at this point in time it is important to all its stakeholders to ensure that it has explored all strategic options to capitalise on the potential market opportunity,’ Gfinity noted.
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