Author: Cheryl Vassallo

Esports Entertainment Group Reports Fiscal 2022 Fourth Quarter Revenue of $11.7 Million

Hoboken, New Jersey–(Newsfile Corp. – October 13, 2022) – Esports Entertainment Group, Inc. (NASDAQ: GMBL) (NASDAQ: GMBLP) (NASDAQ: GMBLW) (NASDAQ: GMBLZ) (or the “Company”) today announced its financial results for the fiscal 2022 fourth quarter ended June 30, 2022.

Fiscal Fourth Quarter 2022 Financial Results

  • Net revenue of $11.7 million, an increase of $2.9 million compared to fiscal 4Q ’21, and a 25.4% sequential decrease from net revenue of $15.7 million in fiscal 3Q ’22.
  • Gross profit of $6.8 million, an increase of $1.6 million compared to fiscal 4Q ’21, and a 27.8% sequential decrease from $9.4 million in fiscal 3Q ’22.
  • Gross margin of 58.0% compared to 59.0% in fiscal 4Q ’21.
  • GAAP net loss to common shareholders of $4.1 million, or a loss of $0.10 per share, inclusive of a $7.9 million asset impairment charge and a benefit recognized for changes in fair value of the derivative and warrant liabilities of $14.0 million. This compares to a net loss of $4.8 million, or a loss of $0.23 per share in fiscal 4Q ’21, and a net loss to common shareholders of $63.8 million, or a loss of $2.11 per share, in fiscal 3Q ’22 inclusive of a $38.6 million asset impairment charge and $20.6 million for a derivative debt liability.
  • Non-GAAP adjusted EBITDA* loss of $6.5 million, inclusive of a $7.9 million asset impairment charge, $2.5 million for depreciation and amortization, and a benefit recognized of $14.0 million for the change in fair value of derivative and warrant liabilities. This compares to an adjusted EBITDA loss of $5.5 million in fiscal 4Q ’21 and an adjusted EBITDA loss of $7.3 million in fiscal 3Q22.
  • As of June 30, 2022, the Company had total cash and cash equivalents of $2.5 million.

    * Reconciliation on non-GAAP financial measures provided in the tables of this press release.

Fiscal Fourth Quarter 2022 and Recent Operating and Financial Highlights

  • Sold 30 million shares of common stock and warrants for a combined offering price of $0.25, raising gross proceeds of approximately $7.5 million.
  • Appointed John Brackens, as well as independent directors Jan Jones Blackhurst and Kaitesi Munroe, to the Company’s Board of Directors.
  • Sold the assets related to the Helix esports game centers for total purchase consideration of approximately $1.2 million comprised of cash and liabilities assumed by the purchaser.
  • Signed a non-binding letter of intent to sell the Spanish iGaming operations, including the Spanish iGaming license.
  • Received a letter from Nasdaq notifying the Company it was not in compliance with the minimum bid price rule in Nasdaq Listing 5550(a)(2). The Company intends to submit an appeal to Nasdaq which stays the delisting and suspension of the Company’s securities pending a decision of the Nasdaq Hearings Panel.
  • Announced the resignations of Stuart Tilly from his position as Chief Operations Officer as well as from the Company’s Board of Directors, along with Mark Nielsen, an independent director.
  • Held the inaugural launch of the new player-versus-player skill-based betting platform at the Hard Rock Casino in Atlantic City, bringing to market the only skill-based betting platform which has attained regulatory approval for use in the state of New Jersey.

During the fiscal fourth quarter, the Company began a strategic review focused on its operations and overall efficiency to help improve its short-term performance while setting it a path for a long-term success. The Company implemented a number of initiatives including a reduction of its workforce, the removal of duplicative functions, de-emphasizing parts of the business which do not support its long-term strategic plans, and implementing a more ROI-focused approach to marketing spend, among others. These changes have already resulted in a reduction of the monthly cash burn rate.

The Company also continues to work through various options intended to monetize its non-strategic assets and improve its ability to adequately support all aspects of the business. These efforts have resulted in the sale of the Helix esports centers, a transaction that has eliminated excess cost and has mitigated risk of having to invest and incur cost associated with operating and owning real estate. The Company also entered into a letter of intent to sell its Spanish iGaming business as it looks to focus on its core iGaming markets.

Esports Entertainment Group ended fiscal 2022 with approximately $2.5 million in available cash, $35.0 million of principal outstanding under its Senior Convertible Note that matures in June of 2023, and $7.8 million in cumulative redeemable convertible preferred shares. The Company’s $20 million ATM equity program expired in September 2022 and the Company does not plan to sign a new agreement at this time.

Grant Johnson, CEO of Esports Entertainment Group, commented, “We are pleased with the initial positive impact of our restructuring efforts and the progress we are making in our strategic pivot towards further leveraging our esports assets, including BETGROUND, our proprietary esports player-versus-player skill betting platform. However, there is still much work to be done and many challenges ahead to right-size the business, lower our cash burn and further reduce our debt and our reliance on capital raises.”

About Esports Entertainment Group

Esports Entertainment Group (NASDAQ: GMBL) (EEG) is a full-service esports and online betting company. EEG focuses on three verticals: Games, iGaming, and Technology. EEG Games provides a wide array of services and infrastructure for businesses to engage esports and gaming communities around the world including Esports Gaming League (EGL), which hosts a community of more than 350,000 gamers on its proprietary tournament platform EGL.tv. EEG iGaming includes a number of award-winning brands covering traditional online sports book wagering needs as well as a multinational casino operator. EEG Technology builds next-generation platforms, features, and services for Millennials, Gen Z consumers, and brands looking to connect with these demographics. EEG has offices in New Jersey, Estonia, the UK and Malta. For more information, visit www.esportsentertainmentgroup.com.

Forward-Looking Statements

The information contained herein includes forward-looking statements. These statements relate to future events or to our future financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. You should not place undue reliance on forward-looking statements since they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond our control and which could, and likely will, materially affect actual results, levels of activity, performance or achievements. Any forward-looking statement reflects our current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, growth strategy and liquidity. We assume no obligation to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future. The safe harbor for forward-looking statements contained in the Securities Litigation Reform Act of 1995 protects companies from liability for their forward-looking statements if they comply with the requirements of the Act.

How To Support Mental Health At Work

Mental health is something we all possess. When it is good, we have a sense of purpose and direction and feel that we can cope with whatever life (and work) throws at us. But just as our physical health fluctuates, so too our mental health goes through ups and downs. Raising awareness of potential mental health issues in the workplace is part of fostering an inclusive workplace, where people feel able to bring their whole selves to work.

Evidence shows that workplaces with high levels of mental wellbeing are more productive. EEG promotes workplace wellbeing and has a business goal of being watchful of, and then improving on, the collective mental health of our global workplace environment, so that everyone feels supported and included, particularly in the more difficult times. That is why we provide Life Coaching sessions. Lorraine O’Sullivan is one of our life coaches and here she provides more insight into what she does at EEG – My name is Lorraine and I have the privilege of being one of the Life Coaches for EEG.

I was initially approached in April 2020 when Covid struck which meant that most people were working from home in isolation. EEG reached out to me as they were concerned about the potential impact of staff working alone and wanted to offer some support for those who felt they might benefit.

Initially staff who contacted were both curious and apprehensive about the coaching process. All of them expressed a feeling of being cut off and unable to talk to colleagues on a daily basis alongside a concern about being seen as having some sort of mental health crisis if they worked with me. I always reassure people that taking care of your Mental Health is like a car having an MOT, you do it to ensure that that everything continues to run smoothly and preempt any problems before they arise and become harmful. I believe it should be a normal part of life not something associated with breaking down and needing repairs.

When first meeting potential clients I also explain the fundamental difference between coaching and counselling. ‘Coaching helps people to achieve a specific aim or goal that is decided by the person whereas Counselling focuses on the problems or difficulties of life in general, where they stem from and how to overcome them’.

Since April 2020 I have worked with a number of people from EEG. I always start with an introductory session where I explain how I work, discuss the issue that someone wants to work on and agree a timescale. If people are happy to continue we start with eight weekly sessions. Some of my previous clients have successfully addressed the issue within that timeframe whilst for others it has taken a little longer. I think in all cases people are surprised at how relaxed the sessions are and how ‘normal’ it is. They actually look forward to them and have told me that they prioritize them in their diary once they get comfortable. No two clients come with the same issue but they all express surprise at how much they have successfully worked through their problem, how beneficial the process has been and in most cases how enjoyable. 

I always make sure that every client is comfortable with what we are doing and provide a safe secure space for them to talk about specific issues in total confidence. Everyone I work with knows that no reports are sent back. All EEG know is the start and end date of the set number of sessions.

I would like to thank EEG and all my clients for the privilege of working with them and for continuing to trust in me and the Coaching process. I also hope that by reading this it encourages more people to get a mental health MOT.

Below are 4 ways to support employee wellness

1. Open safe communication channels

Leaders are encouraged to have an empowering communication style and open a safe and respectful communication channel. Use communication to reduce the stigma and discrimination.

2. Promote well-being

Encourage employees to use their vacation time. Some companies do this by limiting the amount of vacation employees can roll over into the next year. Develop a return-to-work process so that employees who need to take a leave of absence because of a mental health issue feel supported when they come back.

3. Provide mental health coverage

Invest in providing mental health services in your business or as part of your health care plan. Even a life coaching package can be a first step in the right direction.

4. Create a supportive environment

Treating mental and physical health as equally important. Create opportunities for employees to build connections with each other, such as through social events, affinity groups, and electronic message boards. Workplace relationships that are positive provide a source of support.

October – Mental health awareness month is important especially because of all the misconceptions and stigma surrounding mental health issues, people often suffer in silence and don’t seek treatment for their conditions. Mental health awareness is an important initiative to improve understanding of mental health conditions and increase access to healthcare for those who need it.