atari - The SiLLC Assembly

Atari to announce various steps to consolidate its balance sheet, implement a reverse split and propose a transfer to Euronext Growth

Atari to announce various steps to consolidate its balance sheet, implement a reverse split and propose a transfer to Euronext Growth

Paris, February 21, 2022 – Atari, S.A., a world-wide producer in the industry of consumer brands and interactive entertainment products (the “Company”), announced today that it is working on long term solutions to reinforce its balance sheet, limit its stock volatility and reduce compliance burden by moving its stock listing to Euronext Growth.

As discussed during the General Meeting held on November 30, 2021, the Company is currently preparing a EUR 22 to 25 million recapitalization with preferential subscription rights, the completion of which remains subject to AMF’s approval on the prospectus and granting of an exemption for mandatory tender offer.

If approved by the AMF, this capital increase will be made available to the existing shareholders through a rights issue and Irata LLC, main Company shareholder, will irrevocably guarantee its completion of up to 75% of the initial size (the “Fund Raising”).

In the context of this guarantee, Irata LLC is likely to exceed the threshold of 30% of the share capital and voting rights of the Company, which would place it in a mandatory public offering situation. Irata LLC’s maximum shareholding in the Company post-Fund Raising could be between approximately 29% and 34% of the share capital and voting rights (depending on the price assumptions and including the remuneration of the guarantee which will be the subject of a receivable recognition and will be incorporated in the share capital increase). Irata LLC has therefore requested from the AMF the granting of an exemption from the obligation to file a public offer on the basis of article 234-9 2° of the AMF General Regulations (subscription to the capital increase of a company in a situation of proven financial difficulty, subject to the approval of the general meeting of its shareholders).

Following completion of the contemplated Fund Raising, the Company is contemplating a subsequent transfer of the listing of its shares from Euronext to Euronext Growth. These steps will allow Atari to appropriately fund the implementation of its strategy for the short-term and mid-term, reduce its cost-exposure to the regulatory constraints associated with the Euronext market and be listed on a simplified market which is more appropriate to the Group’s profile and current need. This will allow the Company to further focus its resources on the underlying business while maintaining a Euronext exchange listing in a more appropriate market for the Company’s size.

Such transfer to Euronext Growth will be discussed and resolved upon during a shareholder meeting that Atari will convene shortly.

This contemplated transfer from Euronext to Euronext Growth would be possibly preceded or followed by a reverse stock-split of the Company shares the modalities of which are to be further determined by the Company board of directors, in order to improve market profile and limit share price volatility.

Atari remains entirely focused and dedicated to the implementation of the Group strategy presented to the shareholders during the General Meeting held on November 30, 2021.

Following the negative vote of the shareholders of Atari S.A. during the General Meeting held on November 30, 2021 regarding the compensation of Frédéric Chesnais in connection with his former mandate of Chief Executive Officer (Directeur Général) for the financial year ending on March 31, 2021, on January 28, 2022 the Company has notified to Frédéric Chesnais its request for restitution and return of the corresponding variable and exceptional compensations that consists of 49,108,403 ATRI Atari cryptocurrency tokens and USD 94,439, in order to comply with the applicable Say-on-Pay regulations.

Atari Group has experienced certain issues in the relationship with its licensee ICICB Limited and ICICB Investments Limited in relation to Atari licences granted to ICICB. Consequently, notices of breach have been sent by Atari Group to such licensees in relation to the corresponding license agreements, requesting the remediation of the concerned breaches. In case no corrective measures are taken by ICICB in the short-term in order to remedy such breaches, Atari Group may have to terminate the related license agreements. In case such termination cannot be avoided, this would lead to a write-down on the minimum incomes booked in Atari’s accounting in accordance with applicable accounting principles, for a financial impact estimated to be up to USD 11.4 million.

It has also come to the attention of Atari that ICICB Limited has issued a press release regarding the listing of the decentralized Atari tokens in which a member of ICICB Limited has wrongfully been identified as an Atari executive. Additionally, it has come to the knowledge of Atari that past and current judicial actions may have been taken by a foreign jurisdiction against the sole shareholder and senior officer of ICICB Limited. While such judicial actions do not relate in any manner whatsoever to the activities carried out by Atari Chain, Limited and more generally by the Atari Group, Atari is assessing the most suitable course of action to minimize any adverse consequences for Atari, including with respect to potential reputational risk.

In addition, while Atari is a party to usual litigation matters related to the protection of its intellectual property, Atari is currently appealing a loss in a unique intellectual property protection case and is resisting a demand for fees and expenses of over USD 2 million. Atari views the demand as unreasonable and legally questionable and will vigorously defend against the claim.

Finally, Atari is currently reviewing its commercial strategy with regards to its hardware operations and will communicate in due course the operational and financial impacts of such decisions as required.

Disclaimer:

The realization of the plans, and their operational budget and financing plan remain inherently uncertain, and the non-realization of these assumptions may impact their value.
About Atari:

Atari, comprised of Atari SA and its subsidiaries, is a global interactive entertainment and multiplatform licensing group. The true innovator of the video game, founded in 1972, Atari owns and/or manages a portfolio of more than 200 games and franchises, including globally known brands such as Asteroids®, Centipede®, Missile Command® and Pong®. From this important portfolio of intellectual properties, Atari delivers attractive online games for smartphones, tablets, and other connected devices. Atari also develops and distributes interactive entertainment for Microsoft, Sony and Nintendo game consoles. Atari also leverages its brand and franchises with licensing agreements through other media, derivative products and publishing. For more information: www.atari.com and www.atari-investisseurs.fr/en/. Atari shares are listed in France on Euronext Paris (Compartment C, ISIN Code FR0010478248, Ticker ATA) and are eligible for the Nasdaq International program in the United States (OTC – Ticker PONGF).

Contacts

Atari – Philippe Mularski, CFO Calyptus – Marie Calleux
Tel +33 1 83 64 61 57 – pm@atari-sa.com Tel + 33 1 53 65 68 68 – atari@calyptus.net

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Disclaimer
All transaction are carrying out by SiLLC, a private portfolio management assembly. This document is not an offer of securities for sale or investment advisory services. This document contains general information only and is not intended to represent general or specific investment advice. Past performance is not a reliable indicator of future results and targets are not guaranteed. Certain statements and forecasted data are based on current expectations, current market and economic conditions, estimates, projections, opinions and beliefs of SiLLC and/or its members. Due to various risks and uncertainties, actual results may differ materially from those reflected or contemplated in such forward-looking statements or in any of the case studies or forecasts. All references to SiLLC’s advisory activities relates to SiLLC Assembly International.

Atari: Results of the first half of 2021-2022

Atari: Results of the first half of 2021-2022

Results of the first half of 2021-2022
Press Release – Paris, France – January 17, 2021 at 07:30pm

The first half of the financial year 2021-2022 ended on September 30, 2021 and the financial results as well as the semi-annual financial report have been reviewed and approved by the Board of Directors on January 17, 2021. The semi-annual financial report is available on the website of the Group (www.atari-investisseurs.fr) and has been filed today with the “Autorité des marchés financiers” (AMF).

Highlights of the first half of 2021-2022 (April 1 to September 30, 2021) :

Appointment of Wade Rosen as CEO in April 2021, replacing Frédéric Chesnais
Complete review of the business and implementation of a new strategy, aiming at an improvement in profitability, focused on the development of new premium games (PC & console), with the discontinuation of certain mobile free-to-play games and the withdrawal from the Atari Casino operations in Africa.
Implementation of the new strategy leading to a decrease in revenue (-23.8%) in the context of the transition to premium games and of the significant decline of the licensing business, still heavily impacted by the effects of the pandemic
Launch of retail sales of the Atari VCS in the United States, contributing 2.3 M€ of revenue
June 2021: Licensing agreement with CBI, a company founded and managed by Frédéric Chesnais, for the development of a virtual world (blockchain technology) in the image of the Atari brand. Resignation of Frédéric Chesnais from the Board of Directors of Atari SA to prevent conflicts of interest.

Highlights of the second half of 2021-2022 (October 1, 2021 to March 30, 2022) :

Sale of land NFTs in The Sandbox to Republic Realm for 4.3 M$
US$3.5M strategic investment in the streaming platform Antstream Limited and a related option to purchase the assets of Mobygames, the world’s largest video game database
Launch of the first premium games: Asteroids Recharged, Black Widow Recharged, Centipede Recharged, available on the Atari VCS as well as all major consoles and PC.
Financing through shareholder loans: In order not to impact the Group’s cash position in the context of its requirements to source components for the Atari VCS, the Company was granted two loans in July, August and October 2021, by two shareholders, for a total of US$2.6M. IRATA LLC, a company controlled by Wade Rosen, contributed US$2.1M to this operation.

Results of the first half 2021-2022

IFRS, in M€	2021/2022 (April – Sept.)	2020/2021 (April – Sept.)	Variation %
Revenue in millions of euros	6.0	7.8	-23.8%
Cost of sales	(2.6)	(1.5)
GROSS PROFIT MARGIN	3.3	6.3	-47.1%
*% of turnover*	56%	81%
Research and development costs	(3.5)	(4.0)
Marketing and commercial expenses	(0.6)	(1.5)
General and administrative expenses	(2.1)	(2.0)
Other operating income (expense)	–	0.0
CURRENT OPERATING INCOME	(2.8)	(1.2)	-143.6%
Other income (expense)	–	–
OPERATING INCOME	(2.8)	(1.2)	-143.6%
Cost of debt	(0.0)	(0.1)
Other financial income (expense)	0.2)	(0.3)
Share of net operational profit of equity affiliates	(0.1)	0.0
Income tax	(0.0)	(0.0)
NET INCOME (LOSS) FROM CONTINUING OPERATIONS	(2.8)	(1.5)	-80.4%
Net income (loss) from discontinued operations	(0.7)	–
NET INCOME OF THE CONSOLIDATED ENTITIES	(3.5)	(1.5)
Share attributable to the Group	(3.5)	(1.4)
Share attributable to minority interests	(0.0)	(0.1)

For the first half of the financial year 2021-2022 (April 1 to September 30, 2020), the Atari Group recorded revenue of 6.0 M€, compared to 7.8 M€ for the same half of the previous financial year. The decrease, -23.8% at current exchange rates and -20.3% at constant exchange rates, reflects the contraction in the licensing business, down by almost 73%, still significantly affected by the health crisis, as well as the slowdown in revenues from the video game business, down 51%; linked to the shift of the Atari Gaming division to new premium games and the pursuit of improved profitability for the remaining free-to-play games. This dynamic is partly compensated by the ramp-up of sales of the Atari VCS, which represented 2.3M€ over the period, while the VCS activity did not contribute to revenue in the first half of the previous financial year.

Revenues relating to the new activities developed on the blockchain represented 0.4M€, corresponding to income from NFT sales under a licensing agreement.

The gross margin level stands at 56% of turnover during the period compared to 81% for the previous period. This reflects the growing share of Atari VCS sales, whose margin is lower than that of the other games and licensing businesses of the Group.

R&D expenses are 13.4% lower due to a reduction in the amortization expenses related to R&D capitalized in previous years but also due to reduced investments in the production of new games.

Marketing and sales expenses amounted to 0.6M€ for the first half of the financial year 2021-2022. The reduction of 61% is the result of the optimization of the free-to-play games’ profitability, enabled by a drop in user acquisition costs. General and administrative expenses amounted to 2.1M€ and remained stable compared to the previous period.

In this context, the Group generated a current operating profit of -2,8 M€ during the first half of 2021-2022, compared to -1.2 M€ in the first half of 2020-2021.

Other financial income and expenses are mainly related to the accretion of long-term receivables for +€0.2M and secondary listing costs on the Nasdaq Stockholm market for -€0.1M. As a reminder, the listing of the Swedish Depositary Receipts (SDRs) on the Nasdaq First North Growth market in Stockholm was terminated on October 22, 2021 at Atari’s request.

Following the decision to withdraw from the directly-operated casino activities in Africa, the expenses linked to the wind-down of these activities are presented separately in the line item “Net income (loss) from discontinued operations” of the income statement, in accordance with IFRS 5 “Non-current Assets Held for Sale and Discontinued Operations”. These expenses amounted to 0.7M€ for the period ended September 30, 2021.

Net income of the consolidated entities thus amounts to -3.5M€, compared to -1.4M€ for the first half of 2020-2021.

Balance Sheet as at September 30, 2021

ASSETS (in millions of euros)	30.09.2021	31.03.2021
Intangible assets	11.0	11.6
Property, plant and equipment	0.0	0.0
Right of use assets related to leasing contracts	1.7	1.9
Equity affiliates	0.0	0.0
Non-current financial assets	15.8	15.8
Deferred tax assets	1.9	1.9
NON-CURRENT ASSETS	30.4	31.3
Inventories	1.6	2.5
Trade receivables	4.2	3.3
Current tax assets	0.0	0.0
Other current assets	2.8	0.6
Cash and cash equivalents	0.8	2.5
Assets held for sale	0.0	0.3
CURRENT ASSETS	9.5	9.1
TOTAL ASSETS	39.9	40.4

EQUITY & LIABILITIES (in millions of euros)	30.09.2021	31.03.2021
Capital	3.1	3.0
Share premium	31.4	19.1
Consolidated reserves	2.9	14.0
Net income Group share	(3.5)	2.3
SHAREHOLDERS’ EQUITY GROUP SHARE	23.9	24.2
Minority interests	(0.0)	(0.0)
SHAREHOLDERS’ EQUITY OF CONSOLIDATED ENTITIES	23.9	24.2
Provisions for non-current contingencies and losses	0.0	0.0
Non-current financial liabilities	1.1	–
Deferred tax liabilities	1.5	1.6
Other non-current liabilities	0.7	0.7
NON-CURRENT LIABILITIES	3.3	2.3
Provisions for current contingencies and losses	–	–
Current financial liabilities	–	–
Current lease liabilities	0.3	0.3
Trade payables	6.9	7.3
Current tax liabilities	–	–
Other current liabilities	5.2	6.3
Liabilities held for sale	0.2	–
CURRENT LIABILITIES	12.7	13.9
TOTAL EQUITY & LIABILITIES	39.9	40.4

Non-current financial assets include 14.2M€ of trade receivables with a maturity of more than one year, compared to 14.3M€ as of March 31, 2021.

Other current liabilities of 5.2M€ notably include 3.7M€ of deferred revenue : 2.7M€ for sales and allocations of the Atari Token, 0.4M€ for pre-orders of the Atari VCS in the process of being fulfilled and 0.8M€ for hotel licensing revenues.

Outlook for 2021/2022

The Group is targeting improved financial performance in the second semester over the first six months of the fiscal year. This is performance is driven by several key projects:

ATARI GAMES

Release of new premium games, beginning with the Atari Recharged line-up of game titles
The launch of Atari XP, which allows fans to purchase unreleased or rare Atari cartridges
New licensing opportunities for classic Atari games with streaming providers
Expanded opportunities with brand licensing partners as licensing demand recovers from pandemic related interruptions

ATARI VCS

The VCS is available for sale for the entirety of the second semester
Increased digital sales through the VCS platform as more game content is added

ATARI BLOCKCHAIN

Sale of a portion of Atari land in the Sandbox metaverse
Development of new NFT products leveraging the large portfolio of Atari IP as well as partnerships with third-parties

Disclaimer:
The realization of the plans, and their operational budget and financing plan remain inherently uncertain, and the non-realization of these assumptions may impact their value.

About Atari:
Atari, comprised of Atari SA and its subsidiaries, is a global interactive entertainment and multiplatform licensing group. The true innovator of the video game, founded in 1972, Atari owns and/or manages a portfolio of more than 200 games and franchises, including globally known brands such as Asteroids®, Centipede®, Missile Command® and Pong®. From this important portfolio of intellectual properties, Atari delivers attractive online games for smartphones, tablets, and other connected devices. Atari also develops and distributes interactive entertainment for Microsoft, Sony and Nintendo game consoles. Atari also leverages its brand and franchises with licensing agreements through other media, derivative products and publishing. For more information: www.atari.com and www.atari-investisseurs.fr/en/. Atari shares are listed in France on Euronext Paris (Compartment C, ISIN Code FR0010478248, Ticker ATA) and are eligible for the Nasdaq International program in the United States (OTC – Ticker PONGF).

Contacts

Atari – Philippe Mularski, CFO Calyptus – Marie Calleux
Tel +33 1 83 64 61 57 – pm@atari-sa.com Tel + 33 1 53 65 68 68 – atari@calyptus.net

APPENDIX

Net cash position at September 30, 2021

Net cash position (in millions of euros)	30.09.2021	31.03.2021
Shareholder loan	(1.1)	–
Non-current	(1.1)	–
Current financial liabilities	–	–
Current	–	–
Gross financial debt	(1.1)	–

Cash and cash equivalents	0.8	2.5

NET CASH POSITION	0.2	2.5

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Atari announces the creation of two divisions, Atari Gaming and Atari Blockchain, and a change in Leadership

Atari announces the creation of two divisions, Atari Gaming and Atari Blockchain, and a change in Leadership

Atari Gaming will operate games, the Atari VCS and licensing

Atari Blockchain will operate the Atari Token, and explore new opportunities in blockchain, NFTs, and online worlds

Effective April 6, 2021, Wade J. Rosen will become Chief Executive Officer of the entire Atari Group, Frédéric Chesnais to focus on Atari Blockchain and Licensing

Paris, April 6, 2021 – Atari, one of the world’s most iconic consumer brands and interactive entertainment producers, announced today that Wade J. Rosen, currently Chairman of the Board of Directors of Atari, will become Chief Executive Officer effective April 6, 2021. The Company also announced the creation of 2 divisions, Atari Gaming and Atari Blockchain. Frédéric Chesnais, current CEO, will focus on Licensing and Atari Blockchain.

“I’m honored to be a steward of something as iconic and legendary as Atari. I would also like to thank Fred Chesnais for turning around the company, which is now well positioned for such incredible long-term success. When Fred stepped into the role of Chief Executive Officer, he inherited a situation burdened with debt. Since then, he has eliminated debt and enacted a meaningful turnaround. He had the foresight to push Atari into cutting edge markets like Blockchain, the VCS, and the Atari Hotels. It’s because of him that the company is at its strongest valuation in seven years. We thank Fred for his leadership and are excited to continue working with Fred as he focuses on Licensing for the entire group and the development and growth of the exciting Blockchain Division created today,” said Wade J. Rosen, Chairman of the Board of Directors of Atari, S.A.

For Frédéric Chesnais, current CEO and a significant shareholder of Atari: “8 years ago, when I came back, the brand was given for dead. This spectacular turnaround is the result of solid teamwork and support from the shareholders, and I would like to thank each and every one of these individuals. We can all be proud of this outcome. The Atari brand is alive, more than ever, and this organization in two divisions will help us adapt to the changes in our business line.”.

Gaming Division. The Gaming Division of Atari, which will include all assets not included in the Blockchain Division, will be focused on gaming, and specifically the expanding market of retro gaming. Financially, Atari will prioritize incremental long-term growth and sustainable cashflow. To do this Atari will focus on three key pillars for the Gaming Division: Gaming, the VCS, and Licensing.

Gaming: Atari will continue to operate and develop its successful free-to-play mobile games. In addition, new development will be shifted to console and PC, with an emphasis on revitalizing classic Atari intellectual property for the modern era. These new releases will share the classics’ instant enjoyability, while introducing a meaningful single-player campaign, couch co-op/multiplayer, and online play.

VCS: Atari will continue to support the Atari VCS through meaningful third-party content and exclusive first-party content. The VCS community has shown an ingenuity and creativity in adapting the system, and Atari will work to support this by releasing tools that will allow creators the ability to design their own classic Atari games (beginning with the Atari 2600). With an eventual goal of making it easier to create, share and play retro gaming content in the modern era.

Licensing: Atari, and its catalogue of classic games, continues to be some of the most recognizable brands in the world. Atari will continue to leverage this notoriety in both gaming and non-gaming related fields (including hotels and casinos). Most recently, Atari has seen a tremendous amount of success in licensing the Atari related brands for the use in NFTs. We anticipate this playing an even larger part of our licensing strategy in the coming years.

Blockchain Division: All products and services related to the Blockchain business will be grouped into a division of Atari, to focus on the immense possibilities of crypto and blockchain enabled games. Given the launch of the Atari Token, the primary goal of this division will be the continued development of the Atari Token through further use cases and integration into the Atari ecosystem (as payment for digital goods within the VCS, within Atari games on the blockchain, and within 3^rd party games or applications such as opensea.io, Sandbox or Decentraland). Atari will also continue to evaluate opportunities in blockchain gaming, NFTs, and blockchain based online worlds. The creation of this division will take effect as of April 1, 2021.

As part of this venture, Atari is exploring, among several options, the potential structuring of this division as an autonomous entity with a view to a possible spin-off to Atari shareholders by listing of this new entity.

As of the date hereof, there is no assurance any such potential spin-off will occur, which would otherwise require continued business case analysis, approval of stock market regulators, approval by Atari shareholders in a general meeting, as well as confirmation that the demerger favorable regime (“régime de faveur”) would apply and, depending on a number of technical aspects, at least 12 months of additional work.

The Group confirms his objective of a positive net income for the financial year 2020-2021 despite the delays in the licensing activities and of the launch of the VCS caused by the global pandemic.

Disclaimer

The realization of the plans, and their operational budget and financing plan remain inherently uncertain, and the non-realization of these assumptions may impact their value.

About Atari

Atari, comprised of Atari SA and its subsidiaries, is a global interactive entertainment and multiplatform licensing group. The true innovator of the video game, founded in 1972, Atari owns and/or manages a portfolio of more than 200 games and franchises, including globally known brands such as Asteroids®, Centipede®, Missile Command® and Pong®. From this important portfolio of intellectual properties, Atari delivers attractive online games for smartphones, tablets, and other connected devices. Atari also develops and distributes interactive entertainment for Microsoft, Sony and Nintendo game consoles. Atari also leverages its brand and franchises with licensing agreements through other media, derivative products and publishing. For more information: www.atari.com and www.atari-investisseurs.fr/en/. Atari shares are listed in France on Euronext Paris (Compartment C, ISIN Code FR0010478248, Ticker ATA), in Sweden on Nasdaq First North Growth Market as Swedish Depositary Receipts (ISIN Code SE0012481232, Ticker ATA SDB) and are eligible for the Nasdaq International program in the United States (OTC – Ticker PONGF).

©2021 Atari Interactive, Inc. Atari and the Atari logo are registered trademarks owned by Atari Interactive, Inc. All individual Atari game names and logos are trademarks or registered trademarks of Atari Interactive, Inc. or its affiliates.

Contacts

Atari – Philippe Mularski, CFO Calyptus – Marie Calleux
Tel +33 1 83 64 61 57 – pm@atari-sa.com Tel + 33 1 53 65 68 68 – atari@calyptus.net

Redeye AB (Certified Adviser) – Catharina Prämhall
Tel: +46 8 121 576 90 – certifiedadviser@redeye.se

This is information that Atari SA. is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact persons set out above, on April 6, 2021 at 8:00am CET.

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