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Troika Media Reports Fourth Quarter and Fiscal 2021 Results and Forecasts Fiscal 2022 First Quarter Net Sales to Increase by Approximately 60% Versus the Prior-Year Period

Highlights of fiscal year 2021

  • Strengthened balance sheet with initial public offering (“IPO”) raising gross proceeds of $24.0 million
  • Completed acquisition of Redeeem, now Troika IO, and launched new division, Troika Labs
  • Continued focus on significant growth strategy post-COVID coupled with synergistic acquisitions
  • Operating cost reduction to effectively manage business environment while selectively adding new strategic growth engines

Significant highlights after the period

  • Key new business wins including Wilson Sporting Goods, F45 Fitness, PointsBet, Pac-12 and VSPN
  • Accelerating expansion in fast growing gaming and Esports market
  • Demand for client services recovering in Q1 2022 with pipeline growing
  • New client growth returning to pre-pandemic levels
  • Strong net revenue recovery expected to continue in fiscal 2022
  • With tone of business and visibility improved, and sustained public health and macro recovery, Company says it is positioned to deliver first quarter fiscal 2022 organic growth of approximately 60% 

Los Angeles, CA - (NewMediaWire) - September 29, 2021 - Troika Media Group, Inc. (Nasdaq: TRKA) ("TMG" or "Company"), a brand consultancy and marketing innovations company that provides integrated branding and marketing solutions for global brands, today announced financial results for its fiscal year ended June 30, 2021.

Robert Machinist, Troika’s Chairman and CEO, said, “As expected, our fiscal 2021 results bear the imprint of the very challenging environment created by the global pandemic. Client activity was severely reduced, and many projects were put on hold. In light of these circumstances, TMG stayed focused on maintaining the high quality of services and relationships with our clients to position us for growth as the recovery unfolded. During the fiscal year, we implemented a program of structural operating cost reduction to lower our expense base, and raise our margin potential going forward. Our balance sheet and liquidity were significantly strengthened as a result of our IPO in April 2021.

“We begin fiscal 2022 as a stronger company thanks to our employees, whose compassion, creativity, and resolve have been extraordinary during the pandemic. Our success in navigating the past year gives us confidence for the new year, as volatility and variability from COVID-19 are likely to persist for some time to come. For fiscal 2022, we expect improved revenue growth as our clients resume advertising, ad budgets are growing, and significant new client mandates are won. Our client teams in LA, NY and the UK have done an extraordinary job in responding to the new level of business activity underway and in the pipeline for fiscal 2022. We are particularly excited about the re-opening of the global economy which has led to the return of live events, an important part of our business. These positive trends have been supportive of a return to growth in most of our business lines and markets.

“Amid the challenges of the pandemic, we invested in near- and long-term growth opportunities and managed costs elsewhere with discipline, while making important progress on developing new growth engines.  We believe we can further scale our globally integrated platform by selectively acquiring other businesses, specifically, those firms in the growth markets of media/creative, experiential, and technology. Two good examples of the execution of this strategy are reflected in our formation of Troika Labs, followed by our acquisition of Redeeem, since renamed Troika IO. Troika Labs is a new division with the primary mission to leverage its expansive data and content creation capabilities to provide a fully integrated digital and creative offering to clients on a global scale. Troika IO is anticipated to increase our ability to significantly grow revenue and strategic opportunities and enhance the core businesses of TMG by immediately positioning the Company as a go-to expert in the NFT and crypto space, particularly with our sports, gaming, and entertainment clients.”

Machinist emphasized, “We are very excited about the significantly increased business activity underway in the beginning of fiscal 2022 as clients reinvest in marketing, particularly in digital media, marketing technology, and in the resumption of live promotional events.  Our teams are winning new business and our clients are expanding their creative mandates and believe we are returning to fiscal 2019 levels with good momentum into fiscal 2022. We look forward to returning to our strong trajectory of organic revenue and profit growth as the macro recovery proceeds while simultaneously entertaining new data and technology acquisition opportunities.”

COVID-19 Business Update
The COVID-19 pandemic continued to disrupt the Company’s operating environment during fiscal 2021, impacting client activities, particularly live events traffic. The resurgence of COVID-19 cases and the rapid spread of the Delta variant in most parts of the world, led to government restrictions to prevent further spread of the virus. These restrictions included the temporary closure of businesses deemed non-essential, curtailment of travel, social distancing and quarantines. In response to the ongoing impacts from the COVID-19 pandemic, the Company implemented cost control actions in certain areas of the business to effectively manage the changing business environment.

Fiscal 2021 Results

Revenues were $16.2 million for the fiscal year ended June 30, 2021, a decrease of 34% from $24.6 million in the prior-year period. The Company believes that the decrease in revenue is substantially due to the pandemic as mandatory stay at home orders, a prohibition of live-events, and social distancing negatively impacted its promotional and experiential business. However, towards the end of the fourth quarter the Company started to see client activities significantly improve, with sports, entertainment and pharma clients contracting for services across all the Company’s entities at rates similar to 2019.

The Company reported net loss of ($16.0) million, compared with net loss of ($14.4) million last year. Net loss per common share was ($1.03), compared with ($0.94) reported in the prior-year period. Adjusted net loss of ($8.1 million), or ($0.52) per share, compared to ($10.2) million, or ($0.66) per share, compared to the prior fiscal year. Adjusted EBITDA of $(8.8) million decreased 13% from the prior fiscal year.

Fourth Quarter Results

For the three months ended June 30, 2021, the Company recognized revenues of $3.8 million, a 3% decrease compared with $3.9 million in the prior-year period.  For the three months ended June 30, 2021, the Company recognized gross profits of $2.6 million, a 21% decrease compared with $3.3 million in the prior-year period.

Results in the fourth quarter reflect the comparisons with the prior-year period due to impact of COVID-19 macroeconomic disruption.

Net loss was ($6.8) million, and loss per share was ($0.44). In the prior-year quarter, the Company reported a net gain of $0.7 million and gain per share of ($0.05). Adjusted net loss of ($3.4) million, or ($0.22) per share, compared to a gain of $0.7 million, or $.05 per share, in the fourth quarter of the prior fiscal year. Adjusted EBITDA of ($3.6) million decreased 103% from the prior year quarter.

Liquidity remains strong with cash and cash equivalents totaling $12.1 million, compared to $1.1 million as of December 31, 2020.  The increase compared to December 31, 2020, mainly reflects proceeds received from the Company’s IPO on April 22, 2021, less cash used in operations during the twelve months ended June 30, 2021.

Outlook for Fiscal 2022 First Quarter

With multiple engines of growth across regions, brands, and channels, the Company is confident it is well-positioned to continue to drive a gradual recovery as macro-conditions and market dynamics support it. The Company expects to invest in areas to support the recovery, including branding, data analytics, digital technology, experiential marketing, communications and acquisition of additional strategic data and technology platforms to both drive growth in areas of opportunity and help nurture emerging trends in the rest of the business. While doing so, the Company recognizes that the COVID pandemic continues to pose a risk to the macro environment in many parts of the world.

First Quarter Fiscal 2022 Sales Outlook

Reported sales are forecasted to increase approximately 60% versus the prior-year period.

About Troika Media Group

Troika Media Group is an end-to-end brand solutions company that creates both near-term and long-term value for global brands in entertainment, sports and consumer products. Applying emerging technology, data science, and world-class creative, TMG helps brands deepen engagement with audiences and fans throughout the consumer journey and builds brand equity. Clients include Apple, Hulu, Riot Games, Belvedere Vodka, Unilever, UFC, Peloton, CNN, HBO, ESPN, Wynn Resorts and Casinos, Tiffany & Co., IMAX, Netflix, Sony, Yahoo and Coca-Cola. For more information, visit www.thetmgrp.com

Forward-Looking Statements
Certain statements in this press release that are not historical facts are forward-looking statements that reflect management's current expectations, assumptions, and estimates of future performance and economic conditions, and involve risks and uncertainties that could cause actual results to differ materially from those anticipated by the statements made herein. Forward-looking statements are generally identifiable by the use of forward-looking terminology such as "believe," "expects," "may," "looks to," "will," "should," "plan," "intend," "on condition," "target," "see," "potential," "estimates," "preliminary," or "anticipates" or the negative thereof or comparable terminology, or by discussion of strategy or goals or other future events, circumstances, or effects. Moreover, forward-looking statements in this release include, but are not limited to, the impact of the current COVID-19 pandemic, which may limit access to the Company's facilities, customers, management, support staff, and professional advisors, and to develop and deliver advanced voice and data communications systems, demand for the Company's products and services, economic conditions in the U.S. and worldwide, and the Company's ability to recruit and retain management, technical, and sales personnel. Further information relating to factors that may impact the Company's results and forward-looking statements are disclosed in the Company's filings with the SEC. The forward-looking statements contained in this press release are made as of the date of this press release, and the Company disclaims any intention or obligation, other than imposed by law, to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

Troika Media Group, Inc. and Subsidiaries 
Consolidated Statements of Operations and Comprehensive Loss 
For the Year Ended June 30, 
        
     2021 2020  
         
Project revenues, net$                16,192,000$                        24,613,000  
Cost of revenues 7,504,000                         11,636,000  
 Gross profit 8,688,000 12,977,000  
         
Operating expenses:      
 Selling, general and administrative expenses 24,040,000 24,034,000  
 Professional fees 1,332,000 1,028,000  
 Depreciation expense 131,000 344,000  
 Amortization expense of intangibles 2,168,000                           4,002,000  
 Goodwill impairment expense -                           1,985,000  
 Intangibles impairment expense - 1,867,000  
 Total operating expenses 27,671,000 33,260,000  
  Loss from operations  (18,983,000) (20,283,000)  
         
Other income (expense):      
 Income from government grants 3,140,000 -  
 Amortization expense of note payable discount                 (409,000)                         (1,092,000)  
 Interest expense (7,000)                            (239,000)  
 Foreign exchange gain (loss) (48,000)                                11,000  
 Gain on early termination of operating lease 2,000 164,000  
 Gain on change in fair value of derivative liabilities 72,000 -  
 Other income 452,000                              691,000  
 Other expenses -                              (18,000)  
  Total other income (expense)  3,202,000 (483,000)  
         
Net loss from continuing operations before income tax (15,781,000) (20,766,000)  
Income tax expense (216,000) -  
Net loss from continuing operations after income tax (15,997,000) (20,766,000)  
         
Net income from discontinued operations                           - 6,319,000  
Net loss$(15,997,000)$(14,447,000)  
Foreign currency translation adjustment (671,000) 203,000  
Comprehensive loss$(16,668,000)$(14,244,000)  
         
Earnings (loss) per share      
 Continuing operations - basic and diluted$(1.03)$                                 (1.35)  
 Discontinued operations - basic$                                        -$                                   0.41  
 Net loss attributable to common stockholders - basic and diluted$                                (1.03)$                                 (0.94)  
         
Diluted earnings per share      
 Discontinued operations$-$0.16  
         
Weighted average basic shares 15,544,032 15,423,655  
Weighted average diluted shares 15,544,032 38,736,615  
         
  
                  

Troika Media Group, Inc. and Subsidiaries

Consolidated Balance Sheets

As of June 30,

    2021 2020 
ASSETS     
Current assets:     
 Cash and cash equivalents$12,066,000$1,706,000 
 Accounts receivable, net 1,327,000 841,000 
 Prepaid expenses 670,000 143,000 
 Other assets - short term portion 1,000 1,000 
  Total current assets 14,064,000 2,691,000 
        
 Other assets - long term portion 626,000 615,000 
 Property and equipment, net 343,000 344,000 
 Operating lease right-of-use assets, net 6,887,000 8,297,000 
 Intangible assets, net 2,603,000 4,191,000 
 Goodwill 19,368,000 17,362,000 
Total assets$43,891,000$33,500,000 
        
LIABILITIES AND STOCKHOLDERS’ EQUITY     
Current liabilities:     
 Accounts payable and accrued expenses$8,363,000$8,137,000 
 Convertible notes payable 50,000     1,435,000 
 Note payable - related party - short term portion 200,000 452,000 
 Due to related parties 41,000 - 
 Contract liabilities 5,973,000 5,031,000 
 Operating lease liability - short term portion 3,344,000 2,255,000 
 Derivative liabilities 13,000 - 
 Taxes payable 62,000 - 
 Stimulus loan program - short term portion 22,000 - 
  Total current liabilities 18,068,000 17,310,000 
        
Long term liabilities:     
 Operating lease liability - long term portion 5,835,000 7,003,000 
 Note payable - related party – long term portion - 1,975,000 
 Stimulus loan program – long term portion 547,000 - 
 Rental deposits 119,000           105,000 
 Other long-term liabilities 477,000 - 
 Liabilities of discontinued operations - long term portion 107,000 107,000 
        
  Total liabilities 25,153,000      26,500,000 
        
Commitment and contingencies (Note 10 &11) - - 
      
Stockholders’ equity:     
 Preferred stock, $0.01 par value: 15,000,000 shares authorized     
 Series A Preferred Stock ($0.01 par value: 5,000,000 shares authorized, 720,000 shares issued and outstanding as of June 30, 2021 and 2020)                7,000            7,000 
 Series B Convertible Preferred Stock ($0.01 par value: 3,000,000 shares authorized, 0 and 2,495,000 shares issued and outstanding as of June 30, 2021 and 2020, respectively) - 25,000 
 Series C Convertible Preferred Stock ($0.01 par value: 1,200,000 shares authorized, 0 and 911,149 shares issued and outstanding as of June 30, 2021 and 2020, respectively) - 9,000 
 Series D Convertible Preferred Stock ($0.01 par value: 2,500,000 shares authorized, 0 and 1,979,000 shares issued and outstanding as of June 30, 2021 and 2020, respectively) - 20,000 
 Common stock, ($0.001 par value: 300,000,000 shares authorized, 39,496,588 and 15,454,623 shares issued and outstanding as of June 30, 2021 and 2020, respectively) 40,000 16,000 
 Additional paid-in-capital 204,788,000 176,262,000 
 Stock payable 1,210,000 1,300,000 
 Accumulated deficit                (186,889,000)

 
 (170,892,000) 
 Accumulated Other comprehensive (loss) income (418,000) 253,000 
  Total stockholders’ equity 18,738,000 7,000,000 
Total liabilities and stockholders’ equity $43,891,000$33,500,000 
        
        
 
         

Contact:

For Troika Media Group
Kevin Aratari
kevin@troikamedia.com

Investor Relations
TraDigital IR
Kevin McGrath
+1-646-418-7002
kevin@tradigitalir.com