Interim / Quarterly Report • Dec 11, 2023
Interim / Quarterly Report
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| 1. STATEMENT BY THE PERSON IN CHARGE 4 | |
|---|---|
| 2. HALF YEAR ACTIVITY REPORT 5 | |
| 2.1. SIGNIFICANT EVENTS OF THE PERIOD 5 | |
| 2.2. REVIEW OF THE FINANCIAL STATEMENTS 7 | |
| 2.3. EVENTS AFTER THE END OF THE INTERIM PERIOD 11 | |
| 2.4. INFORMATION ON RISKS AND UNCERTAINTIES FOR THE NEXT HALF-YEAR 12 | |
| 2.5. MAIN TRANSACTIONS WITH RELATED PARTIES 12 | |
| 3. INTERIM CONSOLIDATED ACCOUNTS 13 | |
| 3.1. CONSOLIDATED INCOME STATEMENT 13 | |
| 3.2. STATEMENTS OF COMPREHENSIVE INCOME 13 | |
| 3.3. CONSOLIDATED BALANCE SHEET 14 | |
| 3.4. CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 15 | |
| 3.5. CASH FLOW STATEMENT 16 | |
| 4. NOTES TO THE INTERIM CONSOLIDATED ACCOUNTS 17 | |
| 4.1. GENERAL NOTES 17 | |
| 4.2. NOTES TO THE INCOME STATEMENT 22 | |
| 4.3. NOTES TO THE BALANCE SHEET 24 | |
| 4.4. OTHER INFORMATION 29 | |
| 5. STATUTORY AUDITOR'S REVIEW REPORT ON THE INTERIM FINANCIAL INFORMATION 31 |
DISCLAIMER The Document contains information concerning the Group's activity and the market on which it operates. This information comes from research carried out by either internal sources or external sources (industry publications, specialized studies, information published by market research companies or analyst reports). The Group considers that this information gives a true and fair view to date of its reference market and its competitive positioning on this market. However, such information has not been verified by an independent expert and the Group cannot guarantee that a third party using different methods to collate, analyze or calculate market data would obtain the same results.
FORWARD LOOKING STATEMENTS This Document also includes information on the Group's objectives and key areas for development. These indications are sometimes identified by the use of forward-looking words, such as "estimate", "consider", "have as objective", "expect", "intend", "should", "want", "may" or other variations of such terms. These statements are based on data, assumptions and forecasts that the Group considers reasonable at the time of this Document. Readers' attention is drawn to the fact that these development strategies and objectives are not historical data and must not be interpreted as a guarantee that the facts and data presented will occur, that the assumptions will be verified or that the objectives will be achieved. These are objectives, which by their nature may not be achieved and the information contained in this Document could prove to be incorrect without the Group having any obligation to update, subject to applicable regulations, in particular the AMF General Regulations and the Regulation (EU) n°596/2014 dated April 16, 2014 on Market Abuse ("MAR Regulation").
I certify, to my knowledge, that the condensed financial statements for the past half-year ended September 30, 2023 have been prepared in accordance with applicable accounting standards and give a true and fair view of the assets, financial position and financial performance of the Company and of all the companies included in the consolidation, and that the half-yearly activity report appearing on page 4 presents a true and fair view of the significant events that occurred during the first six months of the financial year, their impact on the financial statements, the main related party transactions and describes the main risks and uncertainties for the remaining six months of the financial year.
December 8, 2023 Wade Rosen, Chairman of the Board and Chief Executive Officer of Atari S.A.
During the first-half of the year, the Company has continued to focus its resources on its activities across its four lines of business as well as the execution of its inorganic growth strategy:
Porsche Cars Australia released a campaign featuring two Porsche Taycan electric sports cars playing an intense, high-speed, real-life version of Pong, a 1970's Atari classic. Along with the video, Porsche Cars Australia have also created Taycan Arcade, an interactive web-based game inspired by Pong.
The acquired collection included notable games from the Bubsy, Hardball, Demolition Racer series, as well as the 1942: Pacific Air War, F-117A, and F-14 air combat series. Atari will seek to expand digital and physical distribution of the classic titles, create new games based on the IP, and explore brand and merchandising collaborations.
Atari also acquired the trademark to the Accolade and GTI brands. Accolade was a well-respected US-based video game developer and publisher from 1984 until 2000.
After review of new rules and regulations adopted in the United States of America and the OTC Markets listing requirements, Atari SA has received approval from the OTC Markets Group on its application to move to the OTC Pink Current market, effective as of April 26, 2023. Atari is now current with required mandatory filings.
Atari shares have been listed on US OTC Markets since October 2018 under ticker PONGF.
Atari announced the launch for the year 2023 of the action-platformer game Mr. Run and Jump. The game is available on PlayStation, Xbox, Switch, Steam, Epic Stores and on the Atari VCS.
Atari acquired more than a dozen Atari 2600 games published originally under the M Network label. The collection includes fan favorites Armor Ambush, Astroblast, Frogs And Flies, Space Attack, and Star Strike. Atari intends to develop digital and physical distribution of the classic titles, create new games based on the IP, and explore brand and merchandising collaborations. Atari also acquired the corresponding rights to the M Network brand. M Network was a video game division within Mattel that produced games for the Atari 2600 video game system during the 1980s. The M Network acquisition is the third expansion in 2023 that grows Atari's classic games catalog.
Atari closed the acquisition of Nightdive Studios Inc. ("Nightdive"), a full service game development and publishing company based in Vancouver, Washington, USA and organized under the laws of the same state, announced on March 22, 2023.
The purchase price of Nightdive consists of (i) an initial consideration of US\$9.5M, paid in cash for US\$4.5M (€ 4.1M)1 and in newly issued Atari shares for US\$5.0M (€4.5M)2 , plus (ii) an earn-out of up to US\$10M, payable in cash over the next three years based on the future performance of Nightdive Studios.
Atari launched an offering of senior unsecured bonds convertible into new ordinary shares maturing on July 31, 2026, for a nominal amount of approximately €30M, without shareholders' preferential subscription rights, by way of a public offering in France and with a priority subscription period for shareholders to subscribe for the bonds on a reducible and irreducible basis. The subscription price of the Convertible Bonds under the priority subscription period will be equal to the subscription price of the Convertible Bonds in the public offering and is set at 0.15 euro per share. Irata has irrevocably and unconditionally undertaken to subscribe for the Convertible Bonds. On June 1, 2023 Atari successfully completed its offering of senior unsecured bonds convertible into new ordinary shares due July 31, 2026, for a nominal amount of €30M. Irata subscribed to an amount corresponding to 97.58% of the total amount of the Offering (approx. €16.3M by debt set-off and €12.9M in cash).
In June 2023, Atari converted the entirety of the convertible loan amount into Antstream ordinary shares. Atari now holds around 10% of Anstream share capital.
1 Financed by a shareholder loan made available by Irata LLC (a company controlled by Wade Rosen), to be refinanced with the €30M Convertibles Bonds issuance.
2 Based on the 20-day volume weighted average price of the Atari share on Euronext Growth as of April 28, 2023 (i.e., 0.1194 euro per share), in accordance with the transaction documentation.
Atari set up a strategic collaboration with Playmaji Inc, the company behind the modular multi-system game console Polymega. The collaboration included strategic initiatives that provide support for Atari games on Polymega hardware and software and integration between Polymega and the Atari VCS. Atari has also completed an investment into Playmaji.
Atari agreed to purchase AtariAge, a retro-focused online community hub and archival website founded by Albert Yarusso. The deal unites Atari with a vibrant community of retro fans, historians, and homebrew developers. Mr. Yarusso joined Atari and will continue to manage AtariAge, as well as assume a new role as the company's internal historian.
Atari announced global pre-order availability for the Atari 2600+ – a modern day faithful recreation of the pioneering console that first appeared in 1980. The Atari 2600+ was released on November 17, 2023 and is now available to order for €119.99 / £99.99.
Changes and developments in the regulatory and legal environment related to crypto currencies have caused Atari SA to modify its original plans to launch a new proprietary utility token. Instead of launching a new Atari token, Atari has provided a claim of a fixed number of third-party SAND tokens to eligible ATRI holder's making a proper claim and identified in the snapshot on April 18, 2022. Due to the finite number of SAND tokens, this was not a one-for-one claim. The ratio of SAND tokens to ATRI tokens has been determined based upon the total number of claims. Atari focuses its resources on growing its activities across Games, Licensing and Hardware lines of business, and in Web3, with the development of the Atari Club and continued collaborations and partnerships.
My Arcade teamed up with the legendary Atari brand to introduce the Atari Gamestation Pro with 200+ games. The Atari Gamestation Pro was available for pre-order at select retailers for delivery by October 31, 2023 for MSRP of \$99.99. The Atari Gamestation Pro is the first console on the market to integrate the Atari 2600, 5200, 7800, Arcade and bonus titles into a single platform. Included are the heart-pounding favorites like Adventure, Missile Command, Asteroid, Centiped and many more.
| (M€) | H1 23/24 | H1 22/23 |
|---|---|---|
| Revenue | 6.4 | 4.3 |
| Gross margin | 4.7 | 3.3 |
| Current operating income (loss) | (3.4) | (4.2) |
| Operating income (loss) | (5.0) | (5.2) |
| NET INCOME (LOSS) FOR THE YEAR | (6.6) | (5.4) |
Revenues - For the first-half ending September 30, 2023, the Group recorded a revenue of €6.4M, compared to €4.3M for the same period last year. Revenues for the period notably include the contribution of Nightdive Studios which was fully consolidated starting May 11, 2023. This evolution represents an increase of 46% at current exchange rate and 50% at constant exchange rate.
Gross Margin – Gross margin for the period stands at €4.7M compared to €3.3M for the previous period, thanks to lower cost of goods sold, notably on hardware, and Nightdive's deferred revenue recognition, partially compensated by higher games royalty expenses paid by Atari and Nightdive.
Current Operating Income – Current operating income for the period stood at -€3.4M, compared to -€4.2M in the previous period. Research & Development expenses increased from €2.3M to €3.3M, notably with the effect of Nightdive integration and related amortisation expenses on game development. Marketing & Sales expenses increased from €0.3M to €0.5M, while General Administrative expenses decreased by €1.0M compared to the previous period.
Operating Income – Operating income for the period came at -€5.0M compared to €5.2M after taking into account €1.3M impairment on selected games and €0.3M expenses related to third-party token granted to ATRI holders as part of the claim concluded in September 2023.
| (M€) | H1 23/24 | H1 22/23 |
|---|---|---|
| CURRENT OPERATING INCOME (LOSS) | (3.4) | (4.2) |
| Other income (expense) | (1.6) | (1.0) |
| OPERATING INCOME (LOSS) | (5.0) | (5.2) |
| Cost of debt | (0.8) | (0.1) |
| Other financial income (expense) | (0.6) | (0.1) |
| Income tax | (0.0) | - |
| NET INCOME (LOSS) FROM CONTINUING OPERATIONS | (6.5) | (5.4) |
| Net income (loss) from discontinued operations | (0.1) | (0.1) |
| NET INCOME (LOSS) FOR GROUP SHARE | (6.6) | (5.4) |
Consolidated Net Income – Consolidated net income showed a loss of €6.6M for the period compared to a loss of €5.4M in the previous period. Cost of debt includes notably €0.6M accrued interests on the convertible bonds issued on June 1, 2023. Other financial expense include a negative impact of €0.9M related to convertible bonds amortisation4 , as well as a positive impact of €0.3M related to FIG debt adjustment.
ASSETS (M€) H1 23/24 FY23
3 Nightdive revenues for the period also include recognition in revenues of €1.4M cash received by Nightdive from crowdfunding campaigns for System Shock game development in prior periods (see Note 1 - Segment information - Revenues).
4 As per IFRS 9 Guidelines, amortisation of the option value component, interests and issuance costs, over the life of the instrument.
| Total assets | 54.6 | 25.2 |
|---|---|---|
| Current assets | 12.3 | 7.1 |
| Assets held for sale | 0.0 | - |
| Cash and cash equivalents | 6.5 | 1.7 |
| Other current assets | 1.9 | 1.8 |
| Trade receivables | 3.3 | 3.1 |
| Inventories | 0.5 | 0.5 |
| Non-current assets | 42.3 | 18.1 |
| Deferred tax assets | 1.2 | 1.2 |
| Non-current financial assets | 13.3 | 7.9 |
| Rights of use relating to leases | 1.1 | 1.3 |
| Property, plant and equipment | 0.0 | - |
| Other intangible assets | 14.7 | 7.7 |
| Goodwill | 11.9 | - |
The increase on non-current assets from €18.1M in March 2023 to €42.2M in September 2023, results mainly from the following effects:
Current assets increase from €7.1M to €12.3M over the period, notably due to the €4.8M increase in cash and cash equivalents, taking into account the proceeds of the convertible bonds issuance completed on June 1, 2023.
| EQUITY & LIABILITIES (M€) | H1 23/24 | FY23 |
|---|---|---|
| Capital stock | 4.2 | 3.8 |
| Share premium | 40.9 | 32.7 |
| Consolidated reserves | (27.3) | (19.2) |
| Net income (loss) Group share | (6.6) | (9.5) |
| Total equity | 11.2 | 7.8 |
| Provisions for non-current contingencies and losses | - | |
| Non-current financial liabilities | 26.9 | 7.7 |
| Long term lease liabilities | 0.8 | 1.0 |
| Other non-current liabilities | 4.8 | 0.7 |
| Non-current liabilities | 32.5 | 9.5 |
| Current financial liabilities | 0.6 | 0.2 |
| Short term lease liabilities | 0.4 | 0.4 |
| Trade payables | 3.0 | 2.7 |
| Other current liabilities | 6.8 | 4.6 |
| Liabilities held for sale | 0.0 | - |
| Current liabilities | 10.8 | 7.9 |
| Total equity and liabilities | 54.6 | 25.2 |
The Group's shareholders' equity increased from €7.8M to €11.2M. Capital stock increased from €3.8M to €4.2M resulting from the issuance of 39,662,142 total new shares with a par value of €0.01 during the period5 , notably in the context of the acquisition of Nightdive. Share premium increases from €32.7M to €36.2M, notably due to the accounting for the convertible bond derivative value for an amount of €3.6M, as well as the €0.9M gain on the conversion of Antstream convertible note.
Non-current Liabilities increased from €9.5M to €32.5M over the period, notably due to the accounting of the convertible bond debt component for €26.8M as well as a €3.9M liability estimated for the non-current part of the earn-out payable in cash to Nightdive, as per the initial terms of the acquisition.
Current Liabilities increase to €10.8M over the period and comprise notably around €2M deferred revenues from ATRI Tokens previously sold or awarded, and €1M revenues from Atari 2600+ pre-orders that will be recognized upon delivery, in the course of the second half of the year6 . Current liabilities also include a €2.3M liability estimated for the earn-out due to Nightdive for the first year after closing of the acquisition, as per the terms of the acquisition.
| (M€) | H1 23/24 | FY23 |
|---|---|---|
| Shareholders loans | - | 7.3 |
| Convertible bond | 26.8 | |
| Fig Funding | 0.1 | 0.4 |
| Non current | 26.9 | 7.7 |
| Accrued interest on convertible bonds | 0.6 | 0.2 |
| Current | 0.6 | 0.2 |
| Financial liabilities | 27.6 | 7.9 |
As of September 30, 2023, total financial debt stood at €27.6M, compared to €7.9M as of March 31, 2023. This evolution is due to:
● The redemption of all loans granted by Irata to Atari which have been redeemend in full by way of debt set-off in the context of the issuance of the convertible bonds in June 2023 for a total amount of €16.3M. This included two shareholder loans concluded after year end close, i) €5M loan agreement concluded
5 Not taking into account 20,165,794 new ordinary shares issued on November 6, 2023 in the context of Digital Eclipse acquisition.
6 Atari 2600+ pre-orders started on September 13, 2023 and was released on November 17, 2023.
on March 31, 2023 and ii) US\$4.5 M loan agreement concluded on May 5, 2023 for the financing of Nightdive acquisition.
As of September 30, 2023, net financial debt stood at €21M, including €6.5M of cash and €27.6M of financial debt.
| (M€) | H1 23/24 | H1 22/23 |
|---|---|---|
| Net cash provided by (used in) operating activities | (4.6) | (7.1) |
| Net cash provided by (used in) investing activities | (18.9) | (2.6) |
| Net cash provided by (used in) financing activities | 26.2 | 9.4 |
| NET CHANGE IN CASH AND CASH EQUIVALENTS | 4.8 | 1.9 |
| (M€) | H1 23/24 | H1 22/23 |
|---|---|---|
| Net opening cash balance | 1.7 | 0.6 |
| Net closing cash balance | 6.5 | 2.5 |
| NET CHANGE IN CASH AND CASH EQUIVALENTS | 4.8 | 1.9 |
Acquisition of Awesomenauts, Sword & Soldier from Ronimo Games - On October 24, 2023, Atari announced the acquisition of multiple titles from Ronimo Games including Awesomenauts and Swords & Soldiers. The purchase includes the games, trademarks, and the underlying property.
Acquisition of Digital Eclipse - On October 30, Atari entered into an agreement to acquire Digital Eclipse Entertainment Partners Co ("Digital Eclipse"), a game development studio originally founded in 1992 focused on the digital restoration of classic video games, based in Emeryville, California.
The acquisition of Digital Eclipse will allow Atari to expand its internal development capabilities and utilize Digital Eclipse's industry-leading experience and proprietary technology. In joining Atari, Digital Eclipse will grow its business and capabilities by expanding its development capacity and access to world-class IP and will leverage Atari's management expertise. By adding Digital Eclipse, along with Nightdive Studios in May 2023, Atari will be able to further support its retro-focused growth strategy.
Digital Eclipse is a game development studio dedicated to preserving gaming's heritage and telling the stories of gaming history through archival releases and interactive documentaries. Digital Eclipse pioneered commercial video game emulation well before it was a household concept and today Digital Eclipse is one of a select few development studios recognized as leaders in retro-focused development. On November 6, 2023 Atari announced the closing of the acquisition of Digital Eclipse. The final purchase price of US\$6.3M consists in US\$3.8M in cash and US\$2.5M in newly issued Atari ordinary shares issued at closing date, as well as a remaining earn-out of US\$13.5M. The reserved capital increase has resulted in the issuance of 20,165,794 new ordinary shares.
Official release of Atari 2600+ - The Atari 2600+ has officially been released on November 17, 2023. Units have started shipping to pre-order customers. Atari and manufacturing and distribution partner PLAION also revealed three new accessories: the CX78+ Gamepad, standalone CX30+ Paddle Pack and accessory extension cable. Additionally, in early 2024, four additional 7800/2600 games will be brought to the market.
The risk factors presented in the Universal Registration Document published by Atari on August 8, 2023 have not undergone any significant changes in nature or level, with the exception of the addition of the following Risk Factor:
Risk associated with liquidity and going concern: Given the uncertain macro-environment for video games and Web3, the Group considers that the implementation of its new growth strategy may require additional funding resources. Given its uncertain cash flow horizon in a context of transformation, the Company could in due course (i) enter into new tranches of shareholder loans with Irata on market terms and conditions, enabling it to meet certain short-term needs and/or (ii) raise new financing, under terms and conditions and within a timeframe to be determined (including, if necessary, by way of a public offering). The Company currently benefits from the continued support of its principal shareholder Irata LLC until the shareholders meeting approving the financial statements as of March 31, 2024. The Company has evaluated the "Risk associated with liquidity and going concern" as moderate.
In the second half of this fiscal year, Atari intends to continue to focus on executing its strategy across all four lines of business, as well as on the integration of recently acquired Nightdive Studios and Digital Eclipse and to expand its internal development capabilities and to support Atari's retro-focused strategy.
In a challenging macro-environment for video games, Atari intends to continue focusing on executing its roadmap and transforming its operations across all four lines of business, including via potential acquisitions and / or minority investments. Atari will continue to integrate the recently acquired companies to expand its internal development capabilities and to support Atari's retro-focused strategy.
Related parties agreements are described in the section 4 of this document "Other Information".
| (M€) | H1 23/24 | H1 22/23 |
|---|---|---|
| Revenue | 6.4 | 4.3 |
| Cost of goods sold | (1.6) | (1.0) |
| GROSS MARGIN | 4.7 | 3.3 |
| Research and development expenses | (3.3) | (2.3) |
| Marketing and selling expenses | (0.5) | (0.3) |
| General and administrative expenses | (3.9) | (4.9) |
| Other operating income (expense) | (0.4) | - |
| CURRENT OPERATING INCOME (LOSS) | (3.4) | (4.2) |
| Other income (expense) | (1.6) | (1.0) |
| OPERATING INCOME (LOSS) | (5.0) | (5.2) |
| Cost of debt | (0.8) | (0.1) |
| Other financial income (expense) | (0.6) | (0.1) |
| Share of net operational profit of equity affiliates | - | |
| Income tax | (0.0) | - |
| NET INCOME (LOSS) FROM CONTINUING OPERATIONS | (6.5) | (5.4) |
| Net income (loss) from discontinued operations | (0.1) | (0.1) |
| NET INCOME (LOSS) FOR THE YEAR | (6.6) | (5.4) |
| Group share | (6.6) | (5.4) |
| Minority interests | - | - |
| Basic earnings per share (in euro) | (0.016) | (0.014) |
| (M€) | H1 23/24 | H1 22/23 |
|---|---|---|
| CONSOLIDATED NET INCOME | (6.6) | (5.4) |
| Elements directly incurred in net equity | ||
| Translation adjustments | (1.9) | 1.6 |
| Financial assets valued at fair value through the other comprehensive | 0.9 | - |
| income | ||
| Other transactions | - | - |
| Total result directly recognised in equity | (1.0) | 1.6 |
| COMPREHENSIVE INCOME | (7.6) | (3.8) |
| Of which: Group | (7.6) | (3.8) |
| Of which: Minority interests | - | - |
| ASSETS (M€) | H1 23/24 | FY23 | |
|---|---|---|---|
| Goodwill | Note 6 | 11.9 | - |
| Other intangible assets | Note 7 | 14.7 | 7.7 |
| Property, plant and equipment | 0.0 | - | |
| Rights of use relating to leases | Note 8 | 1.1 | 1.3 |
| Non-current financial assets | Note 9 | 13.3 | 7.9 |
| Deferred tax assets | Note 10 | 1.2 | 1.2 |
| Non-current assets | 42.3 | 18.1 | |
| Inventories | Note 11 | 0.5 | 0.5 |
| Trade receivables | Note 12 | 3.3 | 3.1 |
| Other current assets | Note 13 | 1.9 | 1.8 |
| Cash and cash equivalents | Note 14 | 6.5 | 1.7 |
| Assets held for sale | 0.0 | - | |
| Current assets | 12.3 | 7.1 | |
| Total assets | 54.6 | 25.2 |
| EQUITY & LIABILITIES (M€) | H1 23/24 | FY23 | |
|---|---|---|---|
| Capital stock | Note 15 | 4.2 | 3.8 |
| Share premium | 40.9 | 32.7 | |
| Consolidated reserves | (27.3) | (19.2) | |
| Net income (loss) Group share | (6.6) | (9.5) | |
| Total equity | 11.2 | 7.8 | |
| Provisions for non-current contingencies and losses | Note 16 | - | |
| Non-current financial liabilities | Note 17 | 26.9 | 7.7 |
| Long term lease liabilities | Note 18 | 0.8 | 1.0 |
| Other non-current liabilities | Note 19 | 4.8 | 0.7 |
| Non-current liabilities | 32.5 | 9.5 | |
| Current financial liabilities | Note 17 | 0.6 | 0.2 |
| Short term lease liabilities | Note 18 | 0.4 | 0.4 |
| Trade payables | Note 19 | 3.0 | 2.7 |
| Other current liabilities | Note 19 | 6.8 | 4.6 |
| Liabilities held for sale | 0.0 | - | |
| Current liabilities | 10.8 | 7.9 | |
| Total equity and liabilities | 54.6 | 25.2 |
| (M€) | Capital | Share premium |
Treasury shares |
Consolidated reserves |
Cumulative translation adjustments |
Shareholders equity |
Minority interests |
Total equity |
|---|---|---|---|---|---|---|---|---|
| At September 30, 2022 | 3.8 | 32.6 | 0.0 | (21.9) | (1.6) | 12.9 | - | 12.9 |
| Net income (loss) for the period | - | - | - | (9.5) | - | (9.5) | - | (9.5) |
| Translation adjustments | - | - | - | - | 0.2 | 0.2 | - | 0.2 |
| Other comprehensive income | - | - | - | - | - | - | - | - |
| Comprehensive income | - | - | - | (9.5) | 0.2 | (9.3) | - | (9.3) |
| Share issues | 0.8 | 11.2 | - | - | - | 12.0 | - | 12.0 |
| Treasury shares transactions | - | - | (1.3) | 1.3 | - | - | - | - |
| Others changes | - | - | - | 0.8 | - | 0.8 | - | 0.8 |
| At March 31, 2023 | 3.8 | 32.6 | 0.4 | (26.0) | (3.0) | 7.8 | - | 7.8 |
| Net income (loss) for the period | - | - | - | (6.6) | - | (6.6) | - | (6.6) |
| Translation adjustments | - | - | - | - | (1.9) | (1.9) | - | (1.9) |
| Other comprehensive income | - | 0.9 | - | - | - | 0.9 | - | 0.9 |
| Comprehensive income | - | 0.9 | - | (6.6) | (1.9) | (7.6) | - | (7.6) |
| Share issues | 0.4 | 7.4 | - | - | - | 7.8 | - | 7.8 |
| Treasury shares transactions | - | - | - | - | - | - | - | - |
| Others changes | - | - | - | 3.2 | - | 3.2 | - | 3.2 |
| At September 30, 2023 | 4.2 | 40.9 | 0.4 | (29.4) | (4.9) | 11.2 | - | 11.2 |
| (M€) | H1 23/24 | H1 22/23 |
|---|---|---|
| Net income (loss) for the year | (6.6) | (5.4) |
| Non cash expenses and revenue | ||
| Charges (reversals) for depreciation, amortization and provisions for non | ||
| current assets | 3.9 | 3.6 |
| Cost of (revenue from) stock options and related benefits | 0.1 | 0.4 |
| Losses (gains) on disposals | (0.3) | - |
| Other non cash items | 0.5 | (0.2) |
| CASH FLOW BEFORE NET COST OF DEBT AND TAXES | (2.4) | (1.6) |
| Changes in working capital | ||
| Inventories | (0.1) | (2.1) |
| Trade receivables | - | (0.5) |
| Trade payables | (0.3) | (4.0) |
| Other current & non current assets and liabilities | (1.8) | 1.0 |
| NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES | (4.6) | (7.1) |
| Purchases of/additions to | ||
| Intangible assets | (5.6) | (2.5) |
| Non-current financial assets | - | (0.1) |
| Financial Investments | (13.3) | - |
| NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES | (18.9) | (2.6) |
| Net funds raised from | ||
| Share issues | 4.1 | 12.0 |
| Bond issuance | 30.0 | - |
| Loans | 9.0 | (2.6) |
| Net funds disbursed for | ||
| Debt repayment | (16.3) | - |
| Bond issuance costs | (0.6) | - |
| NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | 26.2 | 9.4 |
| Impact of changes in exchange rates | 2.1 | 2.2 |
| NET CHANGE IN CASH AND CASH EQUIVALENTS | 4.8 | 1.9 |
| (M€) | H1 23/24 | H1 22/23 |
| Net opening cash balance | 1.7 | 0.6 |
| Net closing cash balance | 6.5 | 2.5 |
| NET CHANGE IN CASH AND CASH EQUIVALENTS | 4.8 | 1.9 |
| Net closing cash balance | ||
| Cash and cash equivalents | 6.5 | 2.5 |
Atari SA is a French public limited company (société anonyme) registered with the Paris Trade and Companies Register under number 341 699 106 (and referred to as the "Company"). Its registered office is located in France, 25 rue Godot de Mauroy, 75009 Paris.
The consolidated accounts of Atari include the Company and its subsidiaries (together referred to as the "Group"). This note forms an integral part of the Group's condensed IFRS consolidated accounts for the six months ended September 30, 2023. All amounts are expressed in millions of euros (€M), unless otherwise stated.
Founded in 1972 by Nolan Bushnell and Ted Dabney, Atari is one of the most recognized and celebrated brands in the world. Since inception, Atari played an integral role in the development of the arcade gaming, game console, and personal computer industries in the 1970s and 1980s, which launched the video games industry.
Atari's strategy is to develop, directly or through licensing agreements, video games, hardware, consumer products and media content at the crossroads of interactive entertainment, the digital world, and Web3 to generate revenue by monetizing its portfolio of intellectual property. The Group's organization is structured around four main lines of business: Games, Hardware, Licensing, and Web3.
During the first-half of the year, the Company has continued to focus its resources on its activities across its four lines of business as well as the execution of its inorganic growth strategy:
Porsche Cars Australia released a campaign featuring two Porsche Taycan electric sports cars playing an intense, high-speed, real-life version of Pong, a 1970's Atari classic. Along with the video, Porsche Cars Australia have also created Taycan Arcade, an interactive web-based game inspired by Pong.
The acquired collection included notable games from the Bubsy, Hardball, Demolition Racer series, as well as the 1942: Pacific Air War, F-117A, and F-14 air combat series. Atari will seek to expand digital and physical distribution of the classic titles, create new games based on the IP, and explore brand and merchandising collaborations.
Atari also acquired the trademark to the Accolade and GTI brands. Accolade was a well-respected US-based video game developer and publisher from 1984 until 2000.
After review of new rules and regulations adopted in the United States of America and the OTC Markets listing requirements, Atari SA has received approval from the OTC Markets Group on its application to move to the OTC Pink Current market, effective as of April 26, 2023. Atari is now current with required mandatory filings.
Atari shares have been listed on US OTC Markets since October 2018 under ticker PONGF.
Atari announced the launch for the year 2023 of the action-platformer game Mr. Run and Jump. The game is available on PlayStation, Xbox, Switch, Steam, Epic Stores and on the Atari VCS.
Atari acquired more than a dozen Atari 2600 games published originally under the M Network label. The collection includes fan favorites Armor Ambush, Astroblast, Frogs And Flies, Space Attack, and Star Strike. Atari intends to develop digital and physical distribution of the classic titles, create new games based on the IP, and explore brand and merchandising collaborations. Atari also acquired the corresponding rights to the M Network brand. M Network was a video game division within Mattel that produced games for the Atari 2600 video game system during the 1980s. The M Network acquisition is the third expansion in 2023 that grows Atari's classic games catalog.
Atari closed the acquisition of Nightdive Studios Inc. ("Nightdive"), a full service game development and publishing company based in Vancouver, Washington, USA and organized under the laws of the same state, announced on March 22, 2023.
The purchase price of Nightdive consists of (i) an initial consideration of US\$9.5M, paid in cash for US\$4.5M (€ 4.1M)7 and in newly issued Atari shares for US\$5.0M (€4.5M)8 , plus (ii) an earn-out of up to US\$10M, payable in cash over the next three years based on the future performance of Nightdive Studios.
Atari launched an offering of senior unsecured bonds convertible into new ordinary shares maturing on July 31, 2026, for a nominal amount of approximately €30M, without shareholders' preferential subscription rights, by way of a public offering in France and with a priority subscription period for shareholders to subscribe for the bonds on a reducible and irreducible basis. The subscription price of the Convertible Bonds under the priority subscription period will be equal to the subscription price of the Convertible Bonds in the public offering and is set at 0.15 euro per share. Irata has irrevocably and unconditionally undertaken to subscribe for the Convertible Bonds. On June 1, 2023 Atari successfully completed its offering of senior unsecured bonds convertible into new ordinary shares due July 31, 2026, for a nominal amount of €30M. Irata subscribed to an amount corresponding to 97.58% of the total amount of the Offering (approx. €16.3M by debt set-off and €12.9M in cash).
In June 2023, Atari converted the entirety of the convertible loan amount into Antstream ordinary shares. Atari now holds around 10% of Anstream share capital.
Atari set up a strategic collaboration with Playmaji Inc, the company behind the modular multi-system game console Polymega. The collaboration included strategic initiatives that provide support for Atari games on Polymega hardware and software and integration between Polymega and the Atari VCS. Atari has also completed an investment into Playmaji.
Atari agreed to purchase AtariAge, a retro-focused online community hub and archival website founded by Albert Yarusso. The deal unites Atari with a vibrant community of retro fans, historians, and homebrew developers. Mr. Yarusso joined Atari and will continue to manage AtariAge, as well as assume a new role as the company's internal historian.
Atari announced global pre-order availability for the Atari 2600+ – a modern day faithful recreation of the pioneering console that first appeared in 1980. The Atari 2600+ was released on November 17, 2023 and is now available to order for €119.99 / £99.99.
Changes and developments in the regulatory and legal environment related to crypto currencies have caused Atari SA to modify its original plans to launch a new proprietary utility token. Instead of launching a new Atari token, Atari has provided a claim of a fixed number of third-party SAND tokens to eligible ATRI holder's making a proper claim and identified in the snapshot on April 18, 2022. Due to the finite number of SAND tokens, this was not a one-for-one claim. The ratio of SAND tokens to ATRI tokens has been determined based upon the total number of claims. Atari focuses its resources on growing its activities across Games, Licensing and Hardware lines of business, and in Web3, with the development of the Atari Club and continued collaborations and partnerships.
My Arcade teamed up with the legendary Atari brand to introduce the Atari Gamestation Pro with 200+ games. The Atari Gamestation Pro was available for pre-order at select retailers for delivery by October 31, 2023 for MSRP of \$99.99. The Atari Gamestation Pro is the first console on the market to integrate the Atari 2600, 5200, 7800,
7 Financed by a shareholder loan made available by Irata LLC (a company controlled by Wade Rosen), to be refinanced with the €30M Convertibles Bonds issuance.
8 Based on the 20-day volume weighted average price of the Atari share on Euronext Growth as of April 28, 2023 (i.e., 0.1194 euro per share), in accordance with the transaction documentation.
Arcade and bonus titles into a single platform. Included are the heart-pounding favorites like Adventure, Missile Command, Asteroid, Centiped and many more.
The Group's condensed interim consolidated accounts were approved by the Board of Directors of Atari SA. The interim condensed consolidated accounts for the six months ended September 30, 2023 were prepared in accordance with IAS 34 "Interim Financial Reporting" and on the basis of IFRS and interpretations published by the International Accounting Standards Board (IASB) as adopted in the European Union.
These interim condensed consolidated financial statements therefore do not include all the information necessary for a complete set of financial statements prepared in accordance with IFRS, and must be read in relation to the latest consolidated accounts for the year ended March 31, 2023 of the Group prepared on the basis of IFRS. The purpose of the explanatory notes included in these condensed interim consolidated accounts is to explain significant events and transactions with a view to understanding changes in the Group's financial position and performance since the last consolidated accounts.
The Group's condensed consolidated financial statements at March 31, 2023 have been prepared:
For the preparation of the financial statements as of September 30, 2023, the Group has applied the same accounting standards, interpretations and methods as those used in its financial statements for year ended March 31, 2023, with the exception of the standards and interpretations that come into force on April 1, 2022 as described in the paragraph below:
Preparing the consolidated financial statements in accordance with the rules of IFRS requires the Group to make a certain number of estimates and to adopt certain assumptions that it considers reasonable and realistic. These estimates and assumptions affect the amount of assets and liabilities, shareholders' equity, profits, and the amount of contingent assets and liabilities, as presented as of the balance sheet date.
The estimates and assumptions prepared on the basis of the information available as of the balance sheet date relate in particular to:
During the first half of the year, three African entities have exited the consolidation scope (Nigeria, Ghana and Liberia). Nightdive Studios has entered the consolidation perimeter as of May 11, 2023, as well as GTI Interactive LLC (as of April 17, 2023). As of September 30, 2023, Atari consolidated 22 entities according to the full consolidation method, including 4 African subsidiaries that are undergoing liquidation, and 4 inactive entities.
| Company | Country | % holding | % interest | ||
|---|---|---|---|---|---|
| H1 23/24 | FY 23 | H1 23/24 | FY 23 |
| Active subsidiaries | |||||
|---|---|---|---|---|---|
| Atari Partners S.A.S. | France | 100% | 100% | 100% | 100% |
| DeVi SA | Switzerland | 100% | 100% | 100% | 100% |
| Atari US Holdings Inc. | USA | 100% | 100% | 100% | 100% |
| Atari Inc. | USA | 100% | 100% | 100% | 100% |
| Atari Interactive Inc | USA | 100% | 100% | 100% | 100% |
| Atari Studios Inc | USA | 100% | 100% | 100% | 100% |
| Atari Games Corp | USA | 100% | 100% | 100% | 100% |
| Atari Casino LLC | USA | 100% | 100% | 100% | 100% |
| Atari VCS LLC | USA | 100% | 100% | 100% | 100% |
| Atari Hotels Corp | USA | 100% | 100% | 100% | 100% |
| Nightdive Studios LLC | USA | 100% | - | 100% | - |
| GTI Interactive LLC | USA | 100% | - | 100% | - |
| Atari X LLC9 | USA | 100% | 100% | 100% | 100% |
| Subsidiaries undergoing liquidation | |||||
| Alpha Chain SA | France | 100% | 100% | 100% | 100% |
| Atari Entertainment Africa Ltd10 | Mauritius | 100% | 100% | 100% | 100% |
| Atari Entertainment Uganda Ltd | Uganda | 100% | 100% | 100% | 100% |
| Atari Entertainment Tanzania Ltd | Tanzania | 100% | 100% | 100% | 100% |
| Atari Burundi Su | Burundi | 100% | 100% | 100% | 100% |
| Atari Services Kenya | Kenya | 100% | 100% | 100% | 100% |
| Inactive subsidiaries | |||||
| Atari Japan KK | Japan | 100% | 100% | 100% | 100% |
| Infogrames Entertainment GmbH | Germany | 100% | 100% | 100% | 100% |
| Infogrames Interactive Gmbh | Germany | 100% | 100% | 100% | 100% |
| Cubed Productions LLC | USA | 91% | 91% | 91% | 91% |
| Liquidated subsidiaries as at the date of the Document | |||||
| Atari Liberia Inc | Liberia | - | 100% | - | 100% |
| Atari Entertainment Ghana Ltd | Ghana | - | 90% | - | 90% |
| Atari Lifestyle Ltd | Nigeria | - | 99% | - | 99% |
| Non-consolidated entities | |||||
| Playmaji Inc11 | USA | 53% | - | - | |
| Antstream Limited | United-Kingdom | 10% | - | - |
Business combinations are recorded in accordance with the acquisition method as defined in IFRS 3, revised. Under this method, identifiable assets acquired and liabilities assumed of the acquiree are recorded at fair value at the acquisition date. The goodwill arising from the business combination is measured as the excess of the aggregate of the consideration transferred, the amount of any non-controlling interest and, where applicable, the fair value of any previously held interest, over the acquisition-date net amounts of the identifiable assets acquired and liabilities and contingent liabilities assumed. This goodwill is measured in the functional currency of the company acquired and recognized in assets in the Consolidated Statement of Financial Position. Pursuant to IFRS, goodwill is not amortized but is subject to impairment tests performed at least annually or, where
9 Company name "Atari X LLC" since May 4, 2023, formerly Atari Productions LLC.
10 Holding company holding the interests of the Group's entities in Africa, whose liquidation will be initiated upon finalisation of the procedures concerning its subsidiaries.
11 Atari holds a non-controlling stake of 53% on a non-diluted basis and 49% on a fully diluted basis.
appropriate, more frequently where there is evidence calling into question the net carrying amount recorded in assets in the Statement of Financial Position. Where the terms and conditions of a business combination are advantageous, negative goodwill arises. The corresponding profit is recognized in net income at the acquisition date. Acquisition-related costs are expensed in the period in which the costs are incurred and the services received. Pursuant to the provisions of IFRS 3 revised, the Group may finalize the recognition of the business combination during the measurement period. This period ends when all the necessary information has been obtained and no later than one year after the acquisition date.
The exchange rates used during the period are as follows:
| HY 23/24 | H1 22/23 | |||
|---|---|---|---|---|
| In euros | Closing rate | Average rate | Closing rate | Average rate |
| USD | 1.0587 | 1.0670 | 0.9748 | 1.0351 |
| CHF | 0.9690 | 0.9795 | 0.9561 | 0.9996 |
Given the uncertain macro-environment for video games and Web3, the Group considers that the implementation of its new growth strategy may require additional funding resources. Given its uncertain cash flow horizon in a context of transformation, the Company could in due course (i) enter into new tranches of shareholder loans with Irata on market terms and conditions, enabling it to meet certain short-term needs and/or (ii) raise new financing, under terms and conditions and within a timeframe to be determined (including, if necessary, by way of a public offering). The Company currently benefits from the continued support of its principal shareholder Irata LLC until the shareholders meeting approving the financial statements as of March 31, 2024.
The Group's organization is structured around four lines of business: Games, Hardware, Licensing and Web3.
On September 30, 2023, Atari recorded consolidated revenues of €6.4M, compared with €4.3M the first half year of 2023, an increase of +46% at current exchange rates and +50% at constant exchange rates.
Nightdive revenue for the period are recorded under Games and represent a total amount of €2.7M, including €1.4M cash received by Nightdive from crowdfunding campaigns for System Shock development that was recorded in deferred revenues in the prior period, under IFRS 15.
| (M€) | H1 23/24 | H1 22/23 |
|---|---|---|
| Games | 5.3 | 2.8 |
| Hardware | 0.5 | 0.2 |
| Licensing | 0.4 | 0.6 |
| Web3 | 0.1 | 0.7 |
| Total Revenue | 6.4 | 4.3 |
| (M€) | H1 23/24 | H1 22/23 |
|---|---|---|
| Research and development | 1.6 | 1.3 |
| Amortizations | 1.6 | 0.9 |
| Stock Options | 0.0 | 0.1 |
| Research and development expenses | 3.3 | 2.3 |
| Marketing and selling | 0.5 | 0.3 |
| Stock Options | 0.0 | - |
| Marketing and selling expenses | 0.5 | 0.3 |
| Other operating income (expenses) | (0.4) | - |
|---|---|---|
| Other operating income (expenses) | (0.4) | - |
| General and administrative expenses | 3.9 | 4.9 |
| Stock Options | 0.0 | 0.3 |
| General and administrative expenses and director fees | 3.9 | 4.6 |
Research and Development expenses – Research and development expenses during the period totaled €3.3M over the period, an increase compared to previous period, given the consolidation of Nightdive Studios as from May 11, 2023.
Marketing and Selling Expenses – Marketing and selling expenses totalled €0.5M, compared with €0.3M in the previous period, the increase versus previous period mainly consisting in Nightdive Studios marketing and selling expenses.
General and Administrative Expenses – General and administrative expenses represent €3.9M, a decrease by around €1.0M compared to previous period.
| (M€) | H1 23/24 | H1 22/23 |
|---|---|---|
| Other income | - | 2.3 |
| Other expense | (1.6) | (3.3) |
| Other income (expense) | (1.6) | (1.0) |
Other expenses include notably €1.3M impairment on selected games as well as a €0.2M expenses related to the third-party token provided in the claim to eligible ATRI holders.
| (M€) | H1 23/24 | H1 22/23 |
|---|---|---|
| Calculated expenses IFRS 16 Lease liabilities | (0.0) | - |
| Interests on debts | (0.8) | (0.1) |
| Interests on receivables | 0.0 | 0.1 |
| Cost of debt | (0.8) | - |
| Foreign exchange result | (0.0) | (0.1) |
| Impairment on non consolidated investments | (0.0) | - |
| Impairment on long term receivables | 0.0 | 0.1 |
| Loss on investment debts | - | (0.1) |
| Gain (loss) on crypto assets | 0.0 | - |
| Sales on non consolidated investments | 0.0 | - |
| Amortization of bond costs | (1.0) | - |
| Other | 0.3 | (0.1) |
| Other financial income (expense) | (0.6) | (0.2) |
| Net financial income (expense) | (1.4) | (0.2) |
Net financial expense for the period stood at €1.4M compared to €0.2M in the previous period. Cost of debt came at -€0.8M for the period, comprising notably accrued interest expenses on convertible bonds since issuance on June 1, 2023 for an amount of €0.6M. Amortization of bonds costs corresponds to the amortization of interests, derivative component and issuance costs, as per IFRS 9 guidelines. Other financial income also include a positive impact of €0.3M related to the adjustment of FIG €413k payment received in FY 2023 as part of the co-publishing agreement and aiming at developing certain new games (see Note 12 - Financial Debt).
No commitments given or received as of September 30, 2023.
Business combinations are recognized using the acquisition method at the acquisition date, which is the date on which control is transferred to the Group in accordance with IFRS 3. IFRS 3 requires the allocation of the purchase price through the fair value measurement of assets acquired and liabilities within a period of 12 months from the acquisition date. The Group values goodwill at the acquisition date as:
The consideration transferred comprises the purchase price for 100% of Nightdive shares consisting of i) an initial consideration of US\$9.5M, paid in cash for for US\$4.5M (€4.1M) and newly issued Atari shares for US\$5.0M (€4.55M), plus ii) an earn-out of up to \$10M payable in cash over the next three years based on future performance of Nightdive. The difference between the consideration transferred (€15.2M) and Nightdive's net assets (€3.3M) is presented under goodwill. The costs relating to the acquisition that the Group bears due to a business combination are recognized as expenses when they are incurred.
During the period, developments with regard to intangible assets were as follows:
| Gross value (M€) | Games | Hardware | Licenses and Goodwill |
Crypto Assets | Total |
|---|---|---|---|---|---|
| March 31, 2023 | 36.5 | - | 2.0 | 0.7 | 39.1 |
| Acquisitions | 9.0 | - | 14.4 | 0.1 | 23.5 |
| Disposals | - | - | - | (0.3) | (0.3) |
| Translation adjustments | 0.4 | - | (0.1) | (0.4) | (0.1) |
| September 30, 2023 | 45.8 | - | 16.3 | 0.2 | 62.3 |
Intangible assets gross value for the period increased from €39.1M to €62.3M:
| Amortization & provisions (M€) | Games | Hardware | Licenses and Goodwill |
Crypto Assets | Total |
|---|---|---|---|---|---|
| March 31, 2023 | (31.0) | - | (0.3) | (0.1) | (31.4) |
| Amortization / Provisions | (3.3) | 0.2 | (0.7) | (0.0) | (3.8) |
| Disposals | - | - | - | - | - |
| Translation adjustments | (0.3) | (0.2) | (0.2) | 0.1 | (0.5) |
| September 30, 2023 | (34.5) | - | (1.2) | - | (35.7) |
In context of the ongoing review of its operations, a €1.3M impairment on selected games has been recorded.
| Net value (M€) | Games | Hardware | Licenses and Goodwill |
Crypto Assets | Total |
|---|---|---|---|---|---|
| March 31, 2023 | 5.5 | - | 1.7 | 0.5 | 7.7 |
| September 30, 2023 | 11.3 | - | 15.1 | 0.2 | 26.6 |
SUMMARY OF DIGITAL ASSETS HOLDINGS OF ATARI AS OF SEPTEMBER 30, 2023
Cryptocurrencies
| Nature | Units | Value (€K) |
|---|---|---|
| ETHerum | 111 | 174 |
| WETH | 7 | 12 |
| SAND | 53,063 | 16 |
| USDC | 11,000 | 10 |
| CHAIN Token | 430,000 | 4 |
| LYM Token | 670,819 | 1 |
| Matic | 3 | 0 |
Other digital assets12
| Nature | Units |
|---|---|
| Sandbox Lands | 972 parcels |
| ATRI Tokens | 259 million |
Atari does not intend to sell ATRI Token or parcels of land in The Sandbox within the next twelve months period starting from December 16, 2022.
The application of IFRS 16 for leases is reflected in the recognition of a right-of-use asset on the office leases in New York and Paris. As of September 30, 2023, rights of use relating to leases break down as follows:
| (M€) | H1 23/24 | FY23 |
|---|---|---|
| Rights of use relating to leases gross value | 3.3 | 3.2 |
| Rights of use relating to leases amortization | (2.2) | (1.9) |
| Rights of use relating to leases | 1.1 | 1.3 |
12 Not valued in Atari financial statements.
Non-current financial assets breakdown as follows at September 30, 2023:
| (M€) | H1 23/24 | FY23 |
|---|---|---|
| Financial assets measured at fair value through OCI | 9.0 | - |
| Financial assets measured at fair value through profit & loss | 1.1 | 1.1 |
| Financial assets measured at amortized cost | 3.2 | 6.8 |
| Non-current financial assets | 13.3 | 7.9 |
Over the first-half of the year, non-current financial assets increase from €7.9M to €13.3M, notably to take into account for the investment concluded in Playmaji13 in July 2023.
Financial assets measured at fair value, through other comprehensive income include investments in Playmaji (€4.6M) and Antstream (€4.3M), pursuant to the conversion of convertible bonds held by Atari into shares that resulted in a gain of €0.9M in Other comprehensive income.
Other financial assets, measured at amortized cost, comprise notably €2.9M for receivables on Wish Holding agreement.
Deferred tax assets remain stable at €1.2M compared to March 31, 2023.
As of September 30, 2023 the Group's tax loss carry-forward were around \$286M in the United States. However, losses incurred before January 1, 2018 can only be carried forward for 20 years, while those incurred after January 1, 2018 can be carried forward indefinitely, in the limit of 80% of the taxable income of the year. As such, \$240M tax loss carryforward will expire, of which around \$13M in FY 24 and approximately 44% in the next 5 years.
The Group's tax loss carry-forwards were €738M in France. The use of these tax loss carry-forwards are highly uncertain given the lack of income attributable to France in the operating group and the limitations on their use.
On September 30, 2023, inventory was valued at €0.5M mainly consisting of VCS units, XP raw materials as well as AtariAge inventories.
Trade receivables for the period remain stable at €3.3M.
| (M€) | H1 23/24 | FY23 |
|---|---|---|
| Trade receivables | 2.6 | 3.1 |
| Provisions for impairment in value | - | - |
| Receivables invoices to be established | 0.8 | - |
| Trade receivables net value | 3.3 | 3.1 |
Other current assets breakdown as follows:
| (M€) | H1 23/24 | FY23 |
|---|---|---|
| Prepaid and recoverable taxes | 0.2 | 0.3 |
| Prepaid expenses | 1.7 | 1.5 |
| Other current assets | 1.9 | 1.8 |
Prepaid and recoverable taxes essentially correspond to VAT receivables. Prepaid expenses for the period represent €1.9M as a result of the allocation of last fiscal year prepaid expenses to the semester. The remaining correspond to the next period expenses.
13 Atari holds a non-controlling stake of 53% on a non-diluted basis and 49% on a fully diluted basis.
| (M€) | H1 23/24 | FY23 |
|---|---|---|
| Cash (Cash on hand and demand deposits) | 6.5 | 1.7 |
| Cash and cash equivalents | 6.5 | 1.7 |
The cash and cash equivalents include cash (cash on hand and demand deposits) for an amount €6.5M, an increase of €4.8M compared to previous period, after taking into account proceeds received in context of the convertible bonds offering completed in June 2023.
| H1 23/24 | FY 23 | |
|---|---|---|
| Shares outstanding at the beginning of the period | 382,534,286 | 306,027,429 |
| Capital increase | 38,129,423 | 76,506,857 |
| Exercise of stock options | - | - |
| Exercise of warrants | - | - |
| Free shares vesting | 975,000 | - |
| Convertible Bonds exercise | 557,719 | 382,534,286 |
| Shares outstanding at the end of the period | 422,196,428 | 382,534,286 |
The change in the total number share outstanding over the past six months results from:
At the date of this half-year 2024 financial report, shareholders' equity was made up of 442,362,222 shares, with a par value of €0.01 each, after taking into account 20,165,794 new shares issued in the context of Digital Eclipse acquisition which closed on November 6, 2023.
The Company holds 3,253,426 treasury shares, representing 0.7% of capital.
The tables below summarize the stock options plans, free shares and warrants currently in place.
| Plan n° 23-4 | Plan n° 24-1 | Plan n° 25-1 | Plan n° 25-2 | Plan n° 25-3 | |
|---|---|---|---|---|---|
| Plan date | 01/27/2016 | 07/12/2017 | 07/16/2018 | 07/16/2018 | 12/18/2018 |
| Start date for exercise | 01/26/2017 | 07/12/2018 | 07/16/2019 | 07/16/2019 | 12/18/2019 |
| Vesting | 1/3 per year | 1/3 per year | 1/3 per year | 1/3 per year | 1/3 per year |
| Nb. of underlying shares | 296,741 | 211,438 | 656,469 | 512,563 | 41,432 |
| Expiry date | 05/31/2024 | 07/11/2025 | 07/31/2026 | 07/31/2026 | 01/17/2027 |
| Exercise price | 0.164€ | 0.272€ | 0.377€ | 0.977€ | 0.264€ |
| Plan n° 26-1 | Plan n° 27-1 | Plan n°28-1 | Plan n°28-2 | Plan n°28-2 | |
|---|---|---|---|---|---|
| Plan date | 07/14/2020 | 11/30/2021 | 06/10/2022 | 07/08/2022 | 01/17/2023 |
| Start date | 07/14/2021 | 11/30/2022 | 06/10/2023 | 07/08/2023 | 01/17/2024 |
| Vesting | 1/4 per year | 1/4 per year | 1/4 per year | 1/4 per year | 1/4 per year |
| Nb.of underlying shares | 777,049 | 2,036,000 | 500,000 | 5,000,000 | 2,000,000 |
| Including W. Rosen | - | - | - | 4,000,000 | - |
| Expiry date | 07/14/2028 | 11/30/2029 | 06/10/2030 | 06/10/2030 | 01/17/2027 |
| Exercise price | 0,224€ | 0,399€ | 0,1615€ | 0,1478€ | 0.1882 € |
Free shares
| Grant date | Number of free shares | Vesting | Acquired | End of lock-up |
|---|---|---|---|---|
| Plan n°22-1 | ||||
| June 10, 2022 | 1.500.000 | 1/4 per year starting June 10, 2023 | 375,000 | June 10, 2024 |
| Plan n°22-2 | ||||
| June 10, 2022 | 600.000 | June 10, 2023 | 600,000 | June 10, 2024 |
| Total | 2.100.000 |
Warrants
| Grant date | Number of warrants | Expiry date | Exercise price |
|---|---|---|---|
| December 1, 2021 | 219,783 | December 1, 2029 | 0.3990 € |
At the end of the period, there were no provisions for contingencies and losses, unchanged versus previous period.
The Group's financial debt breaks down as follows:
| (M€) | H1 23/24 | FY23 |
|---|---|---|
| Shareholders loans | - | 7.3 |
| Convertible bond | 26.8 | |
| Fig Funding | 0.1 | 0.4 |
| Non current | 26.9 | 7.7 |
| Accrued interest on convertible bonds | 0.6 | 0.2 |
| Current | 0.6 | 0.2 |
| Financial liabilities | 27.6 | 7.9 |
As of September 30, 2023, total financial liabilities stood at €27.6M compared to €7.9M in the previous period. This evolution is attributable to:
The Group has applied IFRS 16 - Leases. This standard introduces a single lessee accounting model and requires lessees to account for all leases on their balance sheet by recognizing a liability corresponding to the present value of future payments using a discount rate of 3%. The maturities of the lease liabilities break down as follows:
| (M€) | H1 23/24 | FY23 |
|---|---|---|
| Lease liabilities less than 1 year | 0.4 | 0.4 |
| Lease liabilities between 1 and 5 years | 0.8 | 1.0 |
| Lease liabilities after 5 years | (0.0) | - |
| Lease liabilities | 1.2 | 1.4 |
Other liabilities break down as follows:
| (M€) | H1 23/24 | FY23 |
|---|---|---|
| Other non-current liabilities | 4.8 | 0.7 |
| Other non-current liabilities | 4.8 | 0.7 |
| Trade payables | 3.0 | 2.7 |
| Tax liabilities | - | - |
| Other current liabilities | 6.8 | 4.6 |
| Other current liabilities | 9.8 | 7.3 |
Other non-current liabilities increase from €0.7M to €4.8M over the period given the recognition of €3.9M earnout to Nightdive shareholders, as per the terms of the acquisition. This liability corresponds to the non-current part of the earn-out estimated to be paid in year 2 and 3. Other non-current liabilities also include a provision covering uncertainty over the use of historical tax-loss carry forwards in the United-States.
Other current liabilities increase over the period to €9.8M and include :
Acquisition of Awesomenauts, Sword & Soldier from Ronimo Games - On October 24, 2023, Atai announced the acquisition of multiple titles from Ronimo Games including Awesomenauts and Swords & Soldiers. The purchase includes the games, trademarks, and the underlying property.
Acquisition of Digital Eclipse - On October 30, Atari has entered into an agreement to acquire Digital Eclipse Entertainment Partners Co ("Digital Eclipse"), a game development studio originally founded in 1992 focused on the digital restoration of classic video games, based in Emeryville, California.
The acquisition of Digital Eclipse will allow Atari to expand its internal development capabilities and utilize Digital Eclipse's industry-leading experience and proprietary technology. In joining Atari, Digital Eclipse will grow its business and capabilities by expanding its development capacity and access to world-class IP and will leverage Atari's management expertise. By adding Digital Eclipse, along with Nightdive Studios in May 2023, Atari will be able to further support its retro-focused growth strategy.
Digital Eclipse is a game development studio dedicated to preserving gaming's heritage and telling the stories of gaming history through archival releases and interactive documentaries. Digital Eclipse pioneered commercial video game emulation well before it was a household concept and today Digital Eclipse is one of a select few
development studios recognized as leaders in retro-focused development. On November 6, 2023 Atari announced the closing of the acquisition of Digital Eclipse. The final purchase price of US\$6.3M consists in US\$3.8M in cash and US\$2.5M in newly issued Atari ordinary shares issued at closing date, as well as a remaining earn-out of US\$13.5M. The reserved capital increase has resulted in the issuance of 20,165,794 new ordinary shares.
The following agreement was entered into during the period:
● On May 23, 2023, Irata has irrevocably undertaken to subscribe to the Offering during the priority subscription period of the proposed issuance of the Convertible Bonds, on an irreducible basis, up to the amount of its stake in the Company's share capital (i.e. a total number of 55,460,000 Convertible Bonds) and on a reducible basis, up to the balance of the total amount of the Offering not subscribed by it on an irreducible basis, i.e. up to a maximum total amount (including issue premium) of 21,681,000 euros (i.e., up to 144,540,000 Convertible Bonds). Moreover, in the event that at the end of the subscription period of the Offering, the subscriptions do not represent 100% of the amount of the Offering, Irata has irrevocably and unconditionally undertaken to subscribe for the Convertible Bonds which will have not been fully paid by the subscribers allowing for full subscription of this threshold of 100% of the principal amount of this convertible bonds issuance, i.e. up to a maximum of 200,000,000 Convertible Bonds for an amount of €30M. The amount of the subscription commitment will be paid, in priority, by way of setoff against certain, determined in quantity and due claims that Irata holds on the Company in respect of all of the outstanding shareholders' loans previously granted for an aggregate amount of around €16,333,740.68 and the balance in cash.
All the agreements listed above have been approved by Atari's general meeting held on September 29, 2023, under the regulated agreements procedure.
For the period from April 1, 2023 to September 30, 2023
To the Chairman and Chief Executive Officer of ATARI,
As statutory auditor of ATARI and at your request, we have reviewed the accompanying condensed half-yearly consolidated financial statements for the period from April 1,2023 to September 30, 2023.
These condensed half-yearly consolidated financial statements are the responsibility of the Board of Directors. Our role is to express a conclusion on these financial statements based on our review.
We conducted our review in accordance with professional standards applicable in France and the professional guidelines of the French National Institute of Statutory Auditors (Compagnie Nationale des Commissaires aux Comptes) relating to this engagement. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with professional standards applicable in France and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit.
Based on our limited review, nothing has come to our attention that causes us to believe that the accompanying condensed half-yearly consolidated financial statements are not prepared, in all material respects, in accordance with IAS 34, Interim Financial Reporting, as adopted by the European Union.
This report is governed by French law. The Courts in France shall have exclusive jurisdiction to settle any claim, difference or dispute which may arise out of or in connection with our engagement letter or this report or any related issues.
Paris-La-Défense, December 8, 2023
The Statutory Auditor
Benoit Pimont
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