Welcome to the year-end report of Fragbite Group. Today, we will have three presenters, myself, Stefan Tengvall, CEO of the Group, Lars Johansson, CFO, and we also invited Herdjie Zhou, the CEO and co-founder of Lucky Kat, our latest acquisition. You have the agenda on the left. We will have a brief presentation of the Group, the highlights of the Q4, and then we will deep dive into some of our business units, and also present the financials, of course, and a summary and outlook. There will be opportunities to ask questions that we will answer for you, of course. We can take the next slide, please. Just a brief overlook of the Group. We are a global provider of digital entertainment within esports and mobile gaming. We have about 80 full-time employees, mainly situated or located in Europe.
In France, out of France, we are running the publishing and indie games division, which holds a portfolio of 16 games. These games are distributed all over the world on 15 platforms. This is a very reputable global provider of the best indie games in the world. So we get multiple inflows of requests from game developers that we consider to publish. This division mainly works with pay-to-play games. That means it is a cost for downloading the game, and a revenue for us when the player downloads the game. When it comes to esport, we have a wide portfolio of services, so acting as a full service provider or a one-stop shop partner towards our customers. We also operate the biggest or largest esport community in the Nordics, including our own IPs and tournaments towards the Nordic esport community. We do this on an agile approach.
That means we do it with different type of games, first-person shooter games, but we also had a successful launch where we had an innovative concept of launching chess as an esport tournament in Q4. Within mobile gaming, we develop our own IPs based out of scalable game engines where we can reuse a high proportion of the code to launch new titles. Today in Q4, we spent most of the time or all our resources on MMA Manager 2: Ultimate Fight or the sequel of the MMA game, which we have currently on a soft launch status, launched in multiple countries, Canada, Nordics, Italy, and some countries in Asia as well.
We closely, together with our partner, Tilting Point, monitor the KPIs and hope to launch the game globally very soon. Also, as you saw, we have Herdjie on the call. He will present our latest acquisition in Lucky Kat.
They hold 24 games in their portfolio, mostly hyper-casual games that generates revenues from ads in the game, but also quite recently entered into the next generation internet games that has a part of blockchain or built on blockchain technology. Together with that, they also quite recently signed a partnership with The Sandbox. Coming back to that a little bit later. We can flip to the next slide, please. If you look at the highlights from Q4 and the full year, I think with the three acquisitions we did during the course of 2021, we clearly established the foundation for continued growth, both organically but also inorganically, where we can add on acquisitions to the foundation that we now have. The highlight of Q4, I would say, is the acquisition of Lucky Kat.
In Lucky Kat, we have entrepreneurial, high-performing, data-driven team, also entering to the Web3 space, which Herdjie will tell you more about. We currently have two gaming projects within the Web3 space and next generation internet gaming. In terms of Playdigious, we launched Sparklite, which had a good embracement by the market and was perceived well. Within esports, we launched the Swedish Chess League together with the Swedish Chess Federation.
We will come back and tell you a little bit more about that. In terms of the financials, I think we have a solid development, and we report the growth of revenues of 37% in Q4 compared to Q3. So reported revenues in Q4 end up on SEK 60.3 million, compared to the previous quarter, of course, not compared to the fourth quarter 2020. In terms of EBITDA and profitability in Q4, we report an EBITDA of SEK 10.2 million.
That translates to an EBITDA margin of 17%. If we compare to Q2 or Q3, we increased the EBITDA with more than 250% in the Q4. Looking ahead, we have spent a lot of time to fuel our pipeline of coming releases for 2022, both in terms of games and esport concepts. Of course, this will fuel our organic growth going forward. We also spend a lot of time nurturing our M&A pipeline, as well as meeting new entrepreneurs to acquire. This is a time-consuming work that we do. Also, I think as you have seen, we are quite cautious on what kind of targets that we bring on to the Group. You can flip to the next slide, please. In terms of esport, we have a wide range of services, and we act as a full service provider or one-stop partner.
If we look to the left on the slide here, we have three business units within the Group. So we run our own IPs in terms of tournaments that we both run on our own labels, but also white labeling towards bigger customers and sponsors. We are running the biggest esport community in the Nordics with Fragbite.se, as well as an in-house marketing agency where we help customers to build marketing concept toward the audience, esporters, which is known as the unreachables. Also, we have an online ad service where we act as one service provider and can provide exposure for our customers within the entire esport ecosystem. We can flip to the next slide, please. Out of France, we are running the publishing indie games. The highlights from Q4 is what I already touched upon, the launch of Sparklite, both on Android and iOS.
A big news were the fact that Evoland were approved by China, so we will have our second title launched in China beside the Dead Cells title. We also had, during Q4, one big update of Dead Cells, Fatal Falls, which was perceived or received very well by the market. Also happy to announce or proud to announce that two of Playdigious games were nominated by the Pégases, which is the French National Video Game Association, where Northgard had the nomination as the best mobile games, besides Sparklite, which is the best international games. We will know the ceremony will be held in March, and of course, we will follow this closely. Also, I think, as you can see to the right the team in France has worked very hard with fueling the pipeline of coming titles. So looking forward to follow them.
They perform solid and according to our expectations, or even a little bit better. Can take the next slide, please. We hand over to Herdjie.
Hey, everyone. Thanks for having me. My name is Herdjie, and I'm the co-founder and CEO of Lucky Kat. Lucky Kat is a studio specialized in game development and publishing in data-driven mobile games and recently Web3 play-and-earn games. We have published over 20 games since our inception, and the portfolio has over 200 million downloads. In Q4 2021, we have been able to achieve almost 12 million downloads on both iOS and Android. In Q4, we also started with Panzerdogs, our first blockchain NFT play-and-earn game. Next slide, please. This blockchain game is called Panzerdogs. It's an online PvP tank brawler built on the Solana blockchain. We've been able to sell out the general genesis collection of 5,555 dogs completely out in December 2021.
We have airdropped the tanks to the original holders in January this year. We also have been able to release a demo, which has been played over 100,000 times. We believe that the blockchain technology gives power back to the user as you can initiate revenue share with these users. We also believe in a game first approach as opposed to a lot of other projects, and truly believe that blockchain supports our vision of empowering the level playing field between developers and players. We believe in play-and-earn, which means that a fun game experience comes first, which should be the core. At the same time, while you play, you earn, and it's not play to earn. With all of that in mind, the foundation should be the community as we can grow together with the community in these projects.
Our achievements so far with Panzerdogs is that we have minted 11,110 NFTs. These are the original dog avatars and the tanks. We have over 70,000 Solana in trading volume, and this even excludes the public mint event. We are currently a top 10 Solana gaming project following Solanalysis. We have a white paper live, which is a living document, and we recommend everyone to read it on the website. Next to that, we also have a staking pool that has been launched recently. Next slide, please. So how we retain the users in the Panzerdog ecosystem is by having players engaged in online battles in PvP. We also have a PvE mode, which will be a free-to-play mode where we can funnel the users to the PvP mode.
In a PvP mode, there will be demand for tanks and dog avatars, which will lead to premium purchases, crafting of tanks, and trading activities between users. We will take a fee of 5%-10% on marketplace activities. These revenue streams will sustain the game development and also the staking and play to earn mechanics, which will go back to the players. We truly believe that this will be a disruptive model compared to traditional models where a centralized platform like the App Store will take 30%. Again, this means that we will funnel back some of the revenue back to the users. Next slide, please. We are proud to announce or mention that we are on track and have delivered everything on the roadmap so far.
More recently, we have launched a staking pool, and we have done an alpha build event with one of the biggest influencers called [audio distortion] . The live stream of this event can be watched on YouTube. We will be releasing an alpha build very soon, think of within probably the next weeks. We have a lot of exciting plans to integrate the token in the game. I believe Panzerdogs could become one of the biggest play-and-earn game in the Solana ecosystem. Next slide, please. What is The Sandbox? Obviously, Stefan already mentioned that we have closely partnered with The Sandbox. The Sandbox is a virtual metaverse where people can play, build, and monetize virtual experiences. Basically, a Web3 version or decentralized version of Roblox. This partnership entails that we will build an experience called Lucky Kat Land, which is an amusement park-themed world.
We have chosen this theme to achieve a broader audience and therefore a lower barrier to entry for users to start playing The Sandbox. NFT collection is planned to be launched around May in 2022 for the Lucky Kat Land experience. I would like to hand over now to Lars for the next slide. Thank you.
Okay. Thank you very much, and hi, everybody. Next slide, please. In order to assist you in understanding our financial, I think I should start with explaining the accounting effects of the acquisition of Lucky Kat. We signed the agreement with the sellers in mid-December. We were in an agreement about everything, but as you all know, there is a bunch of formalities that needs to be put in place in order to be able to close that transaction. For technical reasons, read banking opening hours, that did not happen in 2021. That happened the first banking day in 2022. But since the structure of the deal was that we, as a purchaser, acquire the risks and the rewards of Lucky Kat from the effective date, and the effective date was October the 1st, i.e., the first day of the fourth quarter.
The Q4 figures in P&L terms for Lucky Kat are included in our consolidated results. As a result of the fact that we did not get hold of the shares, formally acquire the company until the first days of this year, the balance sheet and the cash flow of Lucky Kat is not included in our financials. A little bit tricky to follow, I agree with that, but I can assure you that is correct. Looking at the Q4 figures then, as Stefan said, it is due to the many great things that have happened within Fragbite Group during 2021. We felt it was more meaningful, and the great things obviously, the three acquisitions with Fragbite, Playdigious, and Lucky Kat. We felt it was more relevant to compare our Q4 figures to the previous quarter Q3 figures.
As Stefan mentioned, we had a net revenue of SEK 60.3 million in the Q4. Comparing that to the net revenue of the previous quarter of SEK 44.2 million or SEK 44.1 million, we have a 37% revenue growth, 37% top-line growth quarter-over-quarter. Looking at the EBITDA, and first we look at the adjusted EBITDA, I should mention straight away that the difference between adjusted EBITDA and reported EBITDA is non-recurring cost, a one-time cost related to the IPO that we did the previous year. We had no such cost in Q4. We had some in Q3, but the major part was in Q2. Comparing the EBITDA of Q4 to the adjusted EBITDA of Q3, we see a SEK 7.2 million growth in EBITDA. Comparing the reported to reported figures, the growth or the difference is somewhat higher at SEK 7.4 million. Back then to the Q4 figures.
As you can see, there is quite a jump from EBITDA of SEK 10.2 million down to the EBIT level of -SEK 11.3 million. That consists of two things. It is amortizations and impairment of intangible assets. Intangible assets in our case is capitalized own work, development work. That is roughly SEK 10 million. The other part is goodwill amortizations of roughly SEK 11 million. So that brings us down to an EBIT level of -SEK 11.4 million. Then you have a net result of SEK 14.3 million, and the difference between the two is basically tax and to some very smallest extent, financial cost. If you look at the full-year figure, we had a top line of SEK 124 million. We had then a reported EBITDA of SEK 6.1 million or SEK 6.2 million and an adjusted EBITDA of SEK 9.7 million.
If we make the same explanation of the difference between the two, between SEK 6.1 million, the reported, and the EBIT level of -SEK 45.7 million, same parameters come into play. We have amortizations of intangible assets and impairment of intangible assets of about SEK 16 million and goodwill amortizations of about SEK 35 million. So that brings us down to an EBIT level of -SEK 45.7 million.
We also felt that due to the many changes that happened within the Group, we also made a pro forma calculation showing as the Group, the Fragbite Group, as it would have looked like if we acquired all these companies, not in Q1, Q2, and Q4, but in Q1, 1st of January 2021. As you can see, obviously, that drives revenue quite substantially. So we would have had revenue of SEK 219 million in this pro forma year, and we would have had an EBITDA level of SEK 20.8 million.
But it also obviously drive goodwill amortizations because we then would have had goodwill amortizations for the full year for all these three acquisitions. That adds approximately SEK 35 million in goodwill amortizations, bringing us down to an EBIT level of -SEK 67 million. Next slide, please. On this slide, I tried to show both the cash flow as well as our cash position as of year-end. I will explain the right-hand part of this slide very soon. As you can see, we had cash flow from operations of the changes in working capital of +SEK 8.5 million. We had cash flow from investment activities of SEK 4.3 million. Remember then that now we look at the cash flow and balance sheet, and in those terms, the Lucky Kat transaction has not yet happened. Those figures will show up in Q1, I promise you.
Then we have cash flow from financing activities of SEK 13.7 million. Then I think to show a more accurate picture, you should also take into account the fact that we reclassified SEK 15 million being a short-term part of a long-term loan from this part in the financial analysis up to the working capital. Basically, you should really add back SEK 15 million as a plus item in the financing activities. Moving over to the right-hand slide. Due to the fact that we did not manage to acquire Lucky Kat as of year-end, create some funny effects. The balance sheet to the left, the bar to the left represent our balance sheet in terms of cash and debt as of year-end. We had a cash position of SEK 87.5 million.
The reason why the cash position was so high was that partly of this acquisition, I will explain how, was financed by bank loans. In order to be able to close the transaction prior to year-end, we actually borrowed the SEK 30 million prior to year-end. But as that did not happen, the SEK 30 million stayed on our balance sheet and in our liquidity position as of year-end. We had loans of SEK 46.5 million, bank loans of SEK 46.5 million brings us or brought us to a net cash position of SEK 41 million as of year-end. Then we went on New Year's Eve holidays and came back a few days later and closed the transaction. The transaction was the initial purchase price of Lucky Kat was EUR 7 million.
EUR 2 million of those we financed through our own equity, i.e., we were issuing shares to the sellers, now being shareholders of Fragbite Group. The remaining EUR 5 million was paid partly by own cash and partly by bank borrowings. As you can see, the cash position then went down to SEK 35.6 million. The loan borrowing position was unchanged, so that brought us down to a net debt position of roughly SEK 11 million. Just to prove that my math is correct, if you take the SEK 41 million on net cash position as of year-end and the -SEK 11 million as a net debt position, add the two together, that corresponds to the roughly SEK 52 million which is a corresponding value of EUR 5 million which we paid in cash for Lucky Kat.
And in this calculation, I am not taking into account the Lucky Kat cash flow during fourth quarter and the cash position. I hope that was reasonably clear, but if not, please come back to us with the questions in a few minutes. Now I hand over to Stefan.
Thank you. Thank you, Lars. We can take the next slide, please, and the next again. To summary, this year-end report and the outlook going forward, we are really happy to be able to welcome the Lucky Kat team, Herdjie, Hernan, the brothers and the team to the family of Fragbite Group. Looking forward to explore their gaming portfolio, including Lucky Kat being the front runners of next generation internet gaming, or within the Web3 space. We have already presented, but Q4 showed strong financial numbers, both in growth of revenues, but also in terms of EBITDA and profitability. In terms of outlook, when it comes to our portfolio, we detailed nine activities that we plan to launch or release during Q1 and Q2, so you can read the details of that in the report.
But we have worked hard with fueling our portfolio to support the organic growth, but also in terms of our acquisition strategy, expanding the team, working with the acquisitions, and also hold the portfolio that, as of today, is bigger than ever when it comes to potential targets. But bearing in mind, buying small companies, or I think when it comes to the acquisition strategy, we can conclude that we now can actually attract bigger companies into the family. So maybe that is the difference. But we will still continue to be picky in a sense, what kind of companies we bring into the Group. But we have the foundation, and now we can bring on more companies going forward. So with this slide, I want to open up the Q&A session, so feel free to ask any questions. You can either ask them through calling in or distance.
We will see if we get any questions here.
If you wish to do a question, please press zero and one on the telephone keypad. If you wish to withdraw your question, you may do so by press zero and two. There will be a brief pause while questions are being registered. We have a first question. It is from [Michael Lönn] as a private stockholder. The line is now open for you.
Yes.
Hi, my name is [Michael]. Hello?
Yeah, we hear you.
Yeah. I have just question about the IDO and how big is the IDO in dollars?
Okay.
Regarding the crypto.
Yeah. Herdjie explained, Panzerdogs will launch a token that is connected to the game. The structure of the token or Panzerdogs is not yet decided, so we cannot comment on either valuations or distributions of that yet. We are working on that during the course of next week, I would say, or Q1. So we are coming back with the specific information on that, and we will communicate that once it is settled.
Okay. Because I have some further questions regarding how much is going to stay in Lucky Kat and Fragbite, or if Fragbite will own something else, something own in the currency.
It is not-
But all come in the-
Yeah. [Michael], that is not decided yet, so I cannot comment on that.
Okay.
What you can do is, of course, look at similar projects where you have examples of the founding company or the holding company not getting anything, and then you have examples where the founding company holds some of the tokens. But we cannot comment on that.
Okay. Thank you very much.
Thank you.
Do we have any more telephone questions?
At the moment, we don't have any further questions.
Okay, we have one question here. Please elaborate about your M&A pipeline. What can we expect in the short and medium terms? I will hand that over to you, Stefan.
Thank you. As we already said, this is an important part of our growth strategy, so we are working hard on this. I am reluctant to comment on any specific number of acquisitions because, as I said, we are picky, and it needs to be right. We will never only buy turnover or top-line revenues. It needs to fit into the organization. I think we have proven that with the acquisitions we did in Q3. But we are working hard. We expanded the team. We are currently four people in the team working on this vertical. So hope to be able to present anything going forward during 2022.
Next question. I did not get whether Lars said it, but was the cash flow Q4 included Lucky Kat? No. As I said, the P&L, the results are included on a consolidated statement, but everything has to do with cash flow and balance sheet is not, because we did not get formally our hands on the shares until this year. Next question, what is the potential revenue and profits from Panzerdogs and The Sandbox?
Yeah, I'll take that one. It's hard to say. We believe in this project. As Herdjie said, it's one of the top 10 Solana games. We will do anything to support Herdjie and his team to be as successful as ever possible within this field, and we view them as front runners, and they're very reputably within the space. When it comes to revenue streams, the revenue streams that we receive is, of course, the transaction fees for people trade NFTs. Herdjie commented that's 5%-10% on the transaction, but depending on what kind of NFT. Then it will rely, of course, on the trading volume and how much actually at the end of the day, how many people that will play the game. I think Herdjie and the team has started off very well with building a very committed and engaged community.
You will be able to follow this through our information or press releases, but also on the public traded marketplaces where you can see or follow the trading volumes.
I can't see that we received any more questions, so we're closing the presentation. Thank you very much for listening and looking at us, and see you in three months.
Thank you very much.
Thank you very much. Bye-bye.
Thank you. Bye.