Activist state

Status of Gaming Issues for Enthusiasts –

Enthusiast Gaming is well positioned to continue delivering rapid revenue growth, while growing gross profit at a significantly faster pace after strong first quarter results that beat consensus estimates

Greywood is an investment vehicle that lacks transparency and seeks to take full control of Enthusiast Gaming’s board of directors without paying shareholders a control premium

LOS ANGELES, May 24, 2022 (GLOBE NEWSWIRE) — Cheerful Gaming Holdings Inc. (EGLX; TSX: EGLX), (“Enthusiast Gaming” or the “Company”), an integrated gaming entertainment company, today issued the following statement regarding the misleading and baseless letter to the board of directors of the company (the “Plank”) sent by activist investor Greywood Investments, LLC (“Gray Wood”).

Enthusiast Gaming regularly engages with its shareholders and continues to welcome constructive feedback focused on improving value. While the company has a policy of not commenting on specific interactions, we want to make sure the facts are clear about our business strategy, leadership, and commitment to top-notch governance. More importantly, we want to set the record straight about who Greywood is and how their baseless narrative seeks to serve their own interests.

“We believe the company is well positioned to continue accelerating both revenue and gross margin, given the exceptionally strong trends we continue to see in our business. Despite the unnecessary distraction caused by Greywood, the Board of administration and management of the company remain focused on executing our strategy,” said John Albright, Senior Director of Enthusiast Gaming. “We appreciate the trust our shareholders place in us every day and plan to continue to drive the business forward to create long-term sustainable value.”

Funds of unknown activists with suspicious motives and a hidden agenda
Shareholders are right to ask who Greywood is and what interests they serve. Greywood has kept details about himself secret and there is no information on who controls Greywood, his operations or his background. What is clear is that they have no other plan for the company than to take full control of the board, for their own undisclosed ends, without offering a bonus to shareholders. This is evidenced by Greywood’s singular focus on the CEO of Enthusiast Gaming and a list of grievances that have nothing to do with long-term shareholder value. A campaign based on what appears to be misleading complaints and personal attacks will do nothing to create long-term shareholder value and is only designed as an attempt to install the leadership candidates hand-picked by Greywood.

Enthusiast Gaming is on track to create long-term value
Enthusiast Gaming’s exceptionally capable board of directors includes seven highly qualified and actively engaged directors, all of whom know the company well and are leaders in their respective fields. Under their direction and the focused leadership of management, the Company is well positioned for continued growth, as evidenced by the multiple early successes so far this year:

  • A very strong start to the 2022 quarter with revenue of $47.2 million – a 57% year-over-year increase, well above estimates – thanks to accelerated growth and a substantial increase in margins. This was due to a combination of strong web and video views, higher direct sales, subscription growth, and better than expected contributions from U.GG and Addicting Games.
  • A growing direct sales pipeline with $5.2 million in direct sales in Q1 2022, up 136% year-over-year, supported by renewals and expansions with existing customers.
  • A 127% increase in gross margin year over year in Q1 2022, with gross margin effectively equal in Q4 2021, despite a strong seasonal difference between the two periods.
  • An 83% increase in year-over-year recurring subscription revenue in Q1 2022, driven by a 70% increase in paid subscribers.
  • All seven equity analysts covering the Company have a “buy” or “outperform” rating on its shares.

“Enthusiast Gaming remains committed to its ambitious plan to accelerate growth and continue to expand margins. Our flywheel model, centered on communities, content, creators and experiences, will continue to generate growing value. Our team is well positioned to continue to deliver rapid revenue growth, while growing gross profit at a significantly faster rate. With so much potential ahead of us, now is not the time to risking your investment in unproven activist candidates,” commented Adrian Montgomery, CEO of Enthusiast Gaming.

Kingsdale Advisors acts as the Company’s strategic shareholder and communications advisor. Norton Rose Fulbright Canada LLP is acting as legal counsel to the Company.

About Gaming Enthusiasts
Enthusiast Gaming is an integrated gaming entertainment company, creating the largest media and content platform for gaming and esports fans to connect and engage around the world. Combining elements from its four main pillars: Communities, Content, Creators, and Experiences, Enthusiast Gaming offers a unique opportunity and an integrated approach to reach and connect with its coveted GenZ and Millennial audience. Through its proprietary blend of digital media and entertainment assets, Enthusiast Gaming has built a vast network of like-minded communities to deliver the ultimate fan experience.

Relations with game-loving investors:
Eric Bernofsky, General Manager
[email protected]

Media Relations:
Wojtek Dabrowski, Foresight Communications
[email protected]