Privacy by DESIGN…

by Larry Coker, Data Protection Officer

Privacy is often seen as a compliance function, a box to be ticked to show you are compliant, and no further thought given to it. However, the goal should be to make privacy an intrinsic part of any business.

Indulge me a few minutes to delve into this.

An Esports and iGaming company will capture data to meet its regulatory obligations as well as to help continue delivering a great service to its customers. There would be no point in capturing its customers’ shoe sizes, unless there were a tournament where footwear is being supplied, and even then, it would only require this data for the purpose of providing the correct size shoes. If it were to capture this type of data (without a need) for its millions of customers and store it indefinitely, this would be pointless and costly in terms of IT, and regulatory repercussions.

For any business to succeed, it needs to maximize revenue whilst keeping spending to a minimum. This is where many go wrong as they look on functions such as privacy as an area they can afford to cut back on, doing the bare minimum to meet legal requirements. What they often misunderstand is that Privacy regulations are not set to limit the ways you can use data, but in fact operate as a framework within which businesses can increase output through intentional use of data. Take the following principles of Data Privacy found in a fair number of regulations including the GDPR:

Data Minimization

The intent of this is to minimize the amount of personal data you use only to what you need. The benefit of this is includes thinking through exactly what data you need to meet your business objectives, as opposed to gathering as much as you can with a hope of finding a use for it down the line. It also reduces your IT infrastructure spend as you require less storage space and processing power sifting through Teradata after Teradata.

Data Retention

The above also lends to retention of data, as you have defined what you require data for, you have a better understanding of when it no longer holds value, and can safely dispose of it, as opposed to retaining indefinitely “just in case”.

Data Security

By undertaking minimization, you should also have a better understanding of what type of data you hold, where it is held, and therefore be able to apply appropriate levels of security to the data.

Allow me to use an analogy to break this down even further:

When packing for a holiday, you think about the types of clothes that will work for the type of holiday and the climate of the destination. A winter coat would be pointless on a beach vacation, and likewise, shorts and t shirts may not be useful on a skiing holiday. We put thought into what we pack to maximise luggage and wardrobe functionality, and to enjoy the holiday. The clothes represent the data you collect as a business, so it makes sense to put thought into where your business is going and how to maximise the “journey”.

The bottom line is that Data Privacy needs to be part of the core of business operations, and baked in by DESIGN, as opposed to an afterthought / tick box exercise.

Esports Entertainment Group Announces Pricing of $7.5 Million Public Offering of Common Stock and Warrants

Hoboken, New Jersey–(Newsfile Corp. – September 15, 2022) – Esports Entertainment Group, Inc. (NASDAQ: GMBL) (the “Company”) today announced the pricing of its previously announced underwritten public offering of 30,000,000 shares of common stock and accompanying warrants to purchase 30,000,000 shares of common stock. Each share of common stock is being sold together with one common warrant at a combined effective offering price of $0.25. The common warrants will be immediately exercisable at a price of $0.25 per share of common stock and will expire five years from the date of issuance. The shares of common stock and the accompanying common warrants can only be purchased together in the offering, but will be issued separately and will be immediately separable upon issuance. Esports Entertainment Group has granted the underwriters a 45-day option to purchase up to an additional 4,500,000 shares of common stock and/or additional warrants to purchase up to 4,500,000 shares of common stock.

Maxim Group LLC and Joseph Gunnar & Co., LLC are acting as book-running managers for the offering.

The gross proceeds of the offering are expected to be approximately $7.5 million before deducting underwriting discounts and commissions and estimated offering expenses. This offering is expected to close on or about September 19, 2022, subject to customary closing conditions. Esports Entertainment Group intends to use the net proceeds from this offering for working capital and to repay a portion of its outstanding senior convertible note.

A registration statement relating to these securities has been filed with the U.S. Securities and Exchange Commission (SEC) and became effective on February 5, 2021. The offering is being made only by means of a written prospectus and prospectus supplement that will form a part of the registration statement. A final prospectus supplement and the accompanying prospectus relating to the offering will be filed with the SEC and will be available on the SEC’s website at www.sec.gov. Alternatively, when available, electronic copies of the final prospectus supplement and the accompanying prospectus may be obtained from Maxim Group LLC, 300 Park Avenue, 16th Floor, New York, New York 10022, at (212) 895-3745.

This press release shall not constitute an offer to sell or a solicitation of an offer to buy, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful, prior to registration or qualification under the securities laws of any such state or jurisdiction.

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.

Esports Entertainment Group Announces Proposed Public Offering of Common Stock and Warrants

Hoboken, New Jersey–(Newsfile Corp. – September 14, 2022) – Esports Entertainment Group, Inc. (NASDAQ: GMBL) (the “Company”) today announced that it is commencing an underwritten public offering of shares of common stock (or pre-funded warrants in lieu thereof) and warrants to purchase common stock. All of the securities in the offering are to be sold by the Company. The offering is subject to market and other conditions, and there can be no assurance as to whether or when the offering may be completed, or the actual size or terms of the offering.

Maxim Group LLC and Joseph Gunnar & Co., LLC are acting as book-running managers for the proposed offering.

A registration statement relating to these securities has been filed with the U.S. Securities and Exchange Commission (SEC) and became effective on February 5, 2021. The offering is being made only by means of a written prospectus and prospectus supplement that will form a part of the registration statement. A preliminary prospectus supplement and the accompanying prospectus relating to the offering will be filed with the SEC and will be available on the SEC’s website at www.sec.gov. Alternatively, copies of the preliminary prospectus supplement and the accompanying prospectus, when available, may be obtained from Maxim Group LLC, 300 Park Avenue, 16th Floor, New York, New York 10022, at (212) 895-3745.

This press release shall not constitute an offer to sell or a solicitation of an offer to buy, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful, prior to registration or qualification under the securities laws of any such state or jurisdiction.

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.

Compliance, Regulation and Fintech Partnerships

by James Lephew, Compliance Officer & MLRO, Esports Entertainment Group

The world of financial crime has dramatically changed in the past year. Following a global pandemic, the Russian invasion of Ukraine, and overall global instability, Compliance Officers and Money Laundering Reporting Officers (MLROs) need to consider some of the below major changes that are coming from supervisory agencies and national governments, which include enhanced regulations and guidance, to support anti-money laundering / countering funding of terrorism (AML/CFT) programs in this lucrative environment.

Sanctions Compliance

On the 21st February 2022, The Office of Foreign Asset Control (OFAC), the division within the U.S. Treasury responsible with enforcing economic and trade sanctions against countries and individuals, expanded the prohibition of certain transactions with respect to continued Russian efforts to undermine the sovereignty and territorial integrity of Ukraine, following Executive Order 14065 issued by U.S. President Joseph R. Biden. As such, OFAC sanctions compliance is now front and center stage in the financial crime world. Compliance Officers and MLROs should consider investing, or upgrading, in sanctions screening software and scanning logic to ensure that no transactions are being carried out by your business with any individuals, or companies mentioned on the OFAC sanctions lists. Otherwise, companies could face severe violations, regulatory repercussions, and reputational damage.  

New European-wide AML/CFT regulator

On July 21st, 2021, the European Commission proposed some major changes to AML/CFT legislation, which include the establishment of the new Anti-Money Laundering Authority (AMLA). This authority will have direct supervision powers over illicit finance across the EU member states, and will even be able to impose fines not exceeding 10 percent of annual turnover or 10 million euros, whichever is higher. AMLA is expected to be established in the year 2023 and operational by 2024. A new European-wide rule book based on technical standards and harmonized rules that include more criteria on customer due diligence (CDD), beneficial ownership, and the powers of financial intelligence units (FIUs) should be expected. Additionally, information and data collection on crypto assets will be enhanced as well.

Partnerships with fintechs and payment service providers

Fintech companies and third-party payment processors that specialize in digital payment methods are increasing in demand, while providing alternative opportunities to more conservative, traditional financial institutions, to conduct transactions. These companies are attractive because they specialize in developing innovative technologies that can help companies better manage their financial operations, use multiple digital currencies, and employ specialized software and algorithms to automate transactions. If your company establishes partnerships with these types of firms, be sure to update your company’s business risk assessment (BRA), review your internal controls, and carry out the necessary due diligence procedures in order to ensure they comply with the relevant AML/CFT regulations.

Ultimately, the goal of any AML/CFT program should be to promote the detection and prevention of money laundering, terrorist financing, proliferation of nuclear weapons, and expansion of human trafficking. By considering the above, practitioners will be better prepared to take up the fight against illicit finance during this time of uncertainty.

EEG HR: How To Create A Sense Of Purpose At Work

Find the purpose of work by creating purpose in your work – (read that again).

Many of us feel we have a purpose in life, even if we’re not sure exactly what it is. These last 2 years going through a pandemic has inspired many people to reflect on what’s truly important to them. Finding your purpose in work is not easy and often, it is a process of discovery, like most things it requires time.

You can find the meaning or purpose of any job when you change your way of looking at it. To find the purpose of your work, focus on the three elements of purpose:

1.Feeling connected to something bigger than yourself

2.Knowing your work matters

3.Understanding how your work affects other people

We spend a lot of time on the job more than with our families or doing things we love. So it’s unsurprising that most people aspire to more meaningful and satisfying work. After all, if you’re giving so much of your life and energy to something, it makes sense that you would want to enjoy it. Employees are more satisfied with their jobs when they feel they are meaningful and empowered and higher levels of job satisfaction incentivize people to work longer hours and take fewer sick days. This results in productivity gains. Having a sense of purpose at work benefits both the employee and the organization however many people aren’t sure what they’re passionate about and discover their passion, through the process of immersing in their work. As you learn more about an industry and get involved in specific problems and customers, it can pique your curiosity and ignite passion.

But why are meaning and purpose so important to human beings?

Research has shown that we are hard-wired to connect on a collective level because our ancestors depended on one another to survive. Throughout most of human history, rejection by the group was similar to a death sentence. But just because today you can order anything online rather than seeking help from others doesn’t mean you no longer need a tribe.

This intrinsic need to connect with something bigger than ourselves drives us to look for a sense of purpose or a way to contribute to the greater good. Serving people and making a difference makes us feel connected to others. This gives a sense of meaning and purpose to our lives in a way that material rewards can’t.

It is also important for leaders to encourage employees to create their own purpose at work and create a work environment that encourages team members to regularly submit suggestions and initiatives that are in line with both the individual and organizational purpose. At EEG we lead in this way and believe in investing in our people.

“When you change the way you look at things, the things you look at change” – Dr. Wayne Dyer

President of iGaming Michael Wilson talks proprietary technology, online gaming with Yogonet

The online gaming boom has resulted not only in a massive influx of players to the growing space, but also increased competitivity for companies operating within the sector. Additionally, with iGaming at a constant change, leveraging new technologies and novelties becomes a must, with all stakeholders needing to adapt their offering to the ever-changing landscape.

In conversation with YogonetEsports Entertainment Group‘s Michael Wilson, President of iGaming, discusses these topics and the importance of proprietary tech and a solid product and content offering. Additionally, the executive talks about the latest developments for the esports betting giant’s online gaming vertical, opportunities in the US and abroad, and synergies with other areas of the company.

To read the full interview, click here.

Esports Entertainment Group CEO Grant Johnson to Speak at Next World Forum – Gaming & Esports Unleashed in Riyadh

Event hosted by the Saudi Esports Federation to focus on new opportunities in gaming and esports

Hoboken, New Jersey–(Newsfile Corp. – August 31, 2022) – Esports Entertainment Group, Inc. (NASDAQ: GMBL) (NASDAQ: GMBLW) (“EEG”) today announced CEO, Grant Johnson, will speak at Next World Forum – Gaming & Esports Unleashed hosted by the Saudi Esports Federation in Riyadh, Saudi Arabia, on September 7-8.

The event will focus on the fast-growing and dynamic gaming and esports sectors, and how they are combining to offer new opportunities for companies and governments around the world.

“Esports Entertainment Group understands that video games can be experienced globally in a way traditional sports cannot,” said Grant Johnson, CEO of Esports Entertainment Group. “This forum in Saudi Arabia is an example of how online gaming has a global reach allowing people to connect and compete in ways they wouldn’t have been able to before. I am excited to speak at the Next World Forum and represent Esports Entertainment Group and help advance the understanding and appreciation for the enormous potential of our industry.”

The forum will feature a series of activations, bilateral meetings, and panels addressing ideas to fast-track the gaming and esports sectors for growth through investments and strategic collaborations. Additional speakers include H.R.H Prince Faisal bin Bandar Al Saud, Chairman of the Board Directors, Saudi Esports Federation and Chester King, CEO, British Sports & Vice-President, Global Esports Federation.

In addition, Mr. Johnson will also be speaking at the East Coast Gaming Congress (ECGC) taking place at the Hard Rock Hotel & Casino in Atlantic City, NJ, on September 23. ECGC will bring together leading industry experts to provide attendees with valuable insights about this evolving industry, as well as provide unique opportunities for networking and professional development. The conference is made possible by Cooper Levenson, Attorneys at Law, Spectrum Gaming Group, Esports Entertainment Group, and Sports Illustrated Sportsbook.

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, the UK and Malta. For more information, visit www.esportsentertainmentgroup.com.

SportNation Honored for Best UK Football Odds at Bookmaker Awards by Better Collective

Esports Entertainment Group’s betting site named top iGaming operator ahead of Premier League season launch

Hoboken, New Jersey, August 9, 2022 – Esports Entertainment Group, Inc. (NASDAQ: GMBL) (NASDAQ: GMBLW) (“EEG” or the “Company”) announced today that its iGaming platform SportNation was recognized for having the best UK football odds at the 2022 Bookmaker Awards.

“We are proud of our team at SportNation for being named a top iGaming operator by Better Collective,” said Michael Wilson, President of iGaming at Esports Entertainment Group. “We have an exceptional trading team that are worthy recipients of this recognition, given the constant passion, innovation and variety of markets they create and that our customers continue to enjoy. We take great pride in our product and with the start of the 2022-23 Premier League season, along with the World Cup approaching, we’ll continue rewarding all bets as well as offering exciting promotions and boosts around key global sporting events.”

SportNation offers a full online sports wagering and iGaming product to customers in the UK and Ireland.  

“Esports Entertainment Group’s iGaming division continues to showcase what sets us apart from our competitors,” said Grant Johnson, CEO of Esports Entertainment Group. “The expert trading teams at SportNation and our other betting platforms including Bethard, Lucky Dino, and Vie.bet are proven to offer customers the best odds in the industry.”

Better Collective’s annual Bookmaker Awards honor the top bookmakers in up to 10 categories in four markets: Denmark, Poland, Sweden, and the UK. The awards are unique in the industry as they use data from bettors to understand what they consider important when choosing a bookmaker.

About Esports Entertainment Group

Esports Entertainment Group is a full stack esports and online gambling company fueled by the growth of video-gaming and the ascendance of esports with new generations. Our mission is to help connect the world at large with the future of sports entertainment in unique and enriching ways that bring fans and gamers together. Esports Entertainment Group and its affiliates are well-poised to help fans and players to stay connected and involved with their favorite esports. From traditional sports partnerships with professional NFL/NHL/NBA/MLS teams, community-focused tournaments in a wide range of esports, and boots-on-the-ground LAN cafes, EEG has influence over the full-spectrum of esports and gaming at all levels. The Company maintains offices in New Jersey, 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.


Esports Entertainment Group, Inc. Announces Preferred Stock Dividend

Hoboken, New Jersey–(Newsfile Corp. – July 5, 2022) – Esports Entertainment Group, Inc. (NASDAQ: GMBL) (NASDAQ: GMBLP) (NASDAQ: GMBLW) (NASDAQ: GMBLZ) (or the “Company”) announced today that its Board of Directors has declared monthly cash dividends for its 10.0% Series A Cumulative Redeemable Convertible Preferred Stock (“Series A Preferred Stock”), for July, August and September 2022.

Jul. 2022 Aug. 2022 Sep. 2022
Dividend per share $0.08 $0.08 $0.08
Record date Jul. 15, 2022 Aug. 15, 2022 Sep. 15, 2022
Payment date Aug. 1, 2022 Aug. 31, 2022 Sep. 30, 2022

About Esports Entertainment Group

Esports Entertainment Group is a full stack esports and online gambling company fueled by the growth of video-gaming and the ascendance of esports with new generations. Our mission is to help connect the world at large with the future of sports entertainment in unique and enriching ways that bring fans and gamers together. Esports Entertainment Group and its affiliates are well-poised to help fans and players to stay connected and involved with their favorite esports. From traditional sports partnerships with professional NFL/NHL/NBA/MLS teams, community-focused tournaments in a wide range of esports, and boots-on-the-ground LAN cafes, EEG has influence over the full-spectrum of esports and gaming at all levels. The Company maintains offices in New Jersey, 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.

Contact:

Media Inquiries
Brandon Apter
[email protected]

[email protected]

Investor Relations Inquiries
[email protected]

Esports Entertainment Group Reports Fiscal 2022 Third Quarter Revenue of $15.7 Million

Updates Fiscal 2022 Revenue Guidance to $55 to $60 Million

Hoboken, New Jersey–(Newsfile Corp. – May 23, 2022) – Esports Entertainment Group, Inc. (NASDAQ: GMBL) (NASDAQ: GMBLW) (or the “Company”) today announced financial results for its fiscal 2022 third quarter ended March 31, 2022.

Fiscal Third Quarter 2022 Financial Results

  • Net revenue of $15.7 million, up $10.3 million compared to fiscal 3Q21, and an 8.0% sequential increase from net revenue of $14.5 million in fiscal 2Q22.
  • Gross profit of $9.4 million, up $6.3 million compared to fiscal 3Q21, and a 17.5% sequential increase from $8.0 million in fiscal 2Q22.
  • Gross margin of 60.0% favorably compares to 55.0% in fiscal 3Q21.
  • GAAP net loss to common shareholders of $63.8 million, or $2.11 per share, inclusive of a $38.6 million asset impairment charge as well as a $20.6 million charge for a derivative debt liability. This compares to a net loss of $12.4 million, or $0.73 per share in fiscal 3Q21, and a net loss to common shareholders of $34.5 million, or $1.53 per share, in fiscal 2Q22.
  • Non-GAAP adjusted EBITDA* loss of $7.3 million, inclusive of an adjustment of $38.6 million for an asset impairment charge and $20.6 million for a derivative debt liability. This compares to an adjusted EBITDA loss of $2.6 million in fiscal 3Q21 and an adjusted EBITDA loss of $6.8 million in fiscal 2Q22.
  • As of March 31, 2022, the Company had total cash and cash equivalents of $9.4 million.

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

Fiscal Third Quarter 2022 and Recent Operating Highlights

  • Subsequent to the end of the quarter, in May 2022 the Company named Jan Jones Blackhurst and Kaitesi Munroe to its Board of Directors, bringing the total number of Board members to 8, including 5 independent directors, effective June 1.
  • Subsequent to the end of the quarter, in April 2022 the Company fully launched its VIE.gg esports betting platform in the state of New Jersey following the completion of the soft play portion of the approval process which commenced in February 2022.
  • In March 2022, Damian Mathews was named the Company’s CFO. He has served on the Company’s Board of Directors since June 2020 and served as CFO of the Qatar and Abu Dhabi Investment Company from 2014 to 2020.
  • On March 19-20, the Company held the launch event for its peer-to-peer esports wagering platform at the Hard Rock Hotel & Casino Atlantic City. The landmark event drew hundreds of registered participants and over 16,000 live stream viewers.
  • In March 2022, the Company sold 15 million shares of common stock and warrants to purchase 15 million shares of common stock for a combined offering price of $1.00, raising net proceeds of approximately $13.6 million.
  • In February 2022, the Company announced that GAMMAX, a gaming and esports provider in the Netherlands, became the exclusive distributor of OMEGA in the Dutch market. GAMMAX also agreed to install the turnkey esports solution in its GAMMAX Gaming & Esports Centers and Leisure locations across the Netherlands over a five-year period.
  • In January 2022, Stuart Tilly was named the Company’s COO after serving as the Company’s Chief Legal Officer since 2020. From 2016 to 2020, he was CEO of Argyll Entertainment, a business acquired by the Company in 2020.

Management Commentary

“Our fiscal third quarter 2022 results illustrate growing top-line momentum across both our iGaming and esports verticals, which benefited from a more normalized operating environment in the quarter,” said Grant Johnson, CEO of Esports Entertainment Group. “On the iGaming front, we generated record-breaking quarterly revenue at Lucky Dino, one of our proprietary iGaming brands, experienced more balanced sportsbook hold, and improved the overall profitability of the business, reflecting initial benefits from our newly implemented efficient marketing strategy. With respect to esports, the market continues to recover from the impact of the pandemic as more live, in-person events return to calendars worldwide. Following the successful launch of our proprietary peer-to-peer wagering platform, at the Hard Rock in Atlantic City in March, we expect an increase in similar events going forward as interest in our unique esports solution continues to grow. We also completed the full launch of our mobile real money esports betting product, VIE.gg, in New Jersey and are excited to further leverage this product offering in what is the U.S.’s 11th most populous state. In addition, we continue to see healthy interest in ALPHA and OMEGA, our turnkey solutions for businesses and entertainment venues looking to add an esports attraction, from a wide variety of potential customers who are looking for ways to leverage existing facilities by expanding their current offerings and create new revenue streams.

“Despite this momentum, we are addressing several near-term challenges which are constraining our ability to grow the business and to drive that growth to the bottom line. Given our lack of liquidity, we have been unable to fully monetize certain of our esports assets – including Helix, ggCircuit and EGL. As a result, we are taking a $38.6 million impairment charge in the quarter across these three businesses. We do not see a path to attractive profitability in the Helix business given its significant overhead and ongoing capex and are currently working to divest our two existing centers. ggCircuit and EGL are two assets which we have not effectively been able to monetize due to liquidity constraints. Our team is working internally to properly forecast the long-term opportunity for these businesses, which will allow us to better establish their carrying value. To address our liquidity position and improve our ability to invest in the business and adequately support our growth initiatives, we are actively working with our lender on key modifications to the loan and hope to have more to share on this front in the near-term.

“To address these challenges, position the Company for added growth, and ultimately achieve our operational and profitability goals, we are implementing a number of strategies which we believe will allow us to create value for our shareholders. First, our team is in the final stages of dramatically simplifying our offering in the esports space, focused on SAAS-based technology under the ggCircuit brand, in-person tournaments under the EGL brands, and our peer-to-peer wagering platform. This asset-light model will allow us to more efficiently leverage our esports assets. Second, and most importantly, we are aggressively cutting costs across our seven brands. This includes removal of duplicative functions and de-emphasizing non-core assets. It has also driven our iGaming team to be more strategic in our sales and marketing initiatives in certain European markets and implement a return-focused player investment strategy that yields more attractive customer acquisition metrics. To-date, we’re projecting material savings over the next 12 months through an amended marketing strategy and through the implementation strategies to drive operating efficiencies. We have also identified further avenues to increase our cost savings and will pursue these in the coming months. We are encouraged by the early results of these efforts and expect them to have a significant positive impact on our future results, including our progress towards profitability, with a goal to achieve break-even on an annualized basis by early fiscal 2023.

“As we look ahead, the building blocks for further growth remain firmly in place. However, today’s market conditions are different and, as such, our team has adjusted to focus on achieving breakeven as quickly as possible. Given this change in focus and our third quarter performance, we believe it is prudent to update the full-year revenue expectations to a range of $55 to $60 million from the prior $70 to $75 million range. While we have come a long way in a short period of time, there is much work ahead of us as we become a leaner organization that can operate more efficiently and create greater value for our partners and shareholders.”

About Esports Entertainment Group
Esports Entertainment Group is a full stack esports and online gambling company fueled by the growth of video-gaming and the ascendance of esports with new generations. Our mission is to help connect the world at large with the future of sports entertainment in unique and enriching ways that bring fans and gamers together. Esports Entertainment Group and its affiliates are well-poised to help fans and players to stay connected and involved with their favorite esports. From traditional sports partnerships with professional NFL/NHL/NBA/MLS teams, community-focused tournaments in a wide range of esports, and boots-on-the-ground LAN cafes, EEG has influence over the full-spectrum of esports and gaming at all levels. The Company maintains offices in New Jersey, 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.

Investor Relations Inquiries
JCIR
Joseph Jaffoni, James Leahy, Norberto Aja
212-835-8500
[email protected]

Media Inquiries
[email protected]
or
[email protected]

 

Esports Entertainment Group, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)

March 31, 2022 June 30, 2021
ASSETS
Current assets
Cash $ 9,404,637 $ 19,917,196
Restricted cash 2,968,183 3,443,172
Accounts receivable, net 374,435 136,681
Receivables reserved for users 1,329,709 2,290,105
Other receivables 1,339,497 658,745
Prepaid expenses and other current assets 1,727,567 3,264,344
         Total current assets 17,144,028 29,710,243
Equipment, net 136,612 726,942
Operating lease right-of-use asset 221,332 1,272,920
Intangible assets, net 37,835,275 45,772,555
Goodwill 28,118,967 40,937,370
Other non-current assets 2,217,660 1,315,009
         TOTAL ASSETS $ 85,673,874 $ 119,735,039
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities
Accounts payable and accrued expenses $ 12,973,020 $ 8,458,689
Liabilities to customers 3,932,287 3,057,942
Deferred revenue 580,004 22,110
Senior convertible note 35,000,000
Derivative liability 20,573,051
Current portion of notes payable and other long-term debt 258,385 223,217
Operating lease liability – current 585,786 414,215
Contingent consideration – current 2,436,591
         Total current liabilities 76,339,124 12,176,173
Senior convertible note, net of unamortized discount 6,302,504
Notes payable and other long-term debt 112,425 221,300
Warrant liability 4,411,580 23,500,000
Deferred income taxes 1,870,861
Operating lease liability – non-current 1,120,225 878,809
Contingent consideration – non-current 1,296,385
         TOTAL LIABILITIES 83,279,739 44,949,647
Commitments and contingencies
Mezzanine equity:
10% Series A cumulative redeemable preferred stock, $0.001 par value, 1,725,000
authorized, 835,950 shares issued and outstanding, aggregate liquidation preference
$9,195,450 at March 31, 2022
7,707,543
Stockholders’ equity (deficit):
Preferred stock $0.001 par value, 10,00,000 shares authorized
Common stock $0.001 par value, 500,000,000 shares authorized, 40,722,944 and
21,896,145 shares issued and outstanding as of March 31, 2022 and June 30, 2021,
respectively 40,723 21,896
Additional paid-in capital 144,528,035 122,341,002
Accumulated deficit (145,364,841 ) (46,908,336 )
Accumulated other comprehensive loss (4,517,325 ) (669,170 )
         Total stockholders’ equity (deficit) (5,313,408 ) 74,785,392
         TOTAL LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’
EQUITY (DEFICIT)
$ 85,673,874 $ 119,735,039

 

Esports Entertainment Group, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)

Three Months Ended March 31, Nine Months Ended March 31,
2022 2021 2022 2021
Net revenue $ 15,699,587 $ 5,398,708 $ 46,638,925 $ 7,983,293
Operating costs and expenses:
Cost of revenue 6,282,445 2,321,620 19,248,877 4,249,889
Sales and marketing 7,074,414 2,399,200 21,332,423 4,891,688
General and administrative 14,339,615 6,291,388 38,685,937 14,082,111
Asset impairment charges 38,629,310 38,629,310
Total operating expenses 66,325,784 11,012,208 117,896,547 23,223,688
Operating loss 50,626,197 5,613,500 71,257,622 15,240,395
Other income (expense):
Interest expense (611,021 ) (5,368,933 )
Loss on conversion of Senior Convertible Notes (5,999,662 )
Loss on extinguishment of Senior Convertible Notes (28,478,804 )
Change in fair value of derivative liability on senior convertible note (20,573,051 ) (22,055,672 )
Change in fair value of warrant liability 8,181,398 (5,358,313 ) 28,641,920 (4,729,924 )
Change in fair value of contingent consideration 99,247 (1,305,804 ) 1,950,693 (1,305,804 )
Other non-operating income (loss) (39,440 ) (165,463 ) (1,391,855 ) (265,487 )
Total other income (expense) 12,942,867 (6,829,580 ) (32,702,313 ) (6,301,215 )
Loss before income taxes 63,569,064 12,443,080 103,959,935 21,541,610
Income tax benefit (expense) (431 ) 5,503,430
Net loss $ 63,569,495 $ 12,443,080 $ 98,456,505 $ 21,541,610
Dividend on 10% Series A cumulative redeemable preferred stock (200,628 ) (300,942 )
Accretion of 10% Series A cumulative redeemable preferred stock to
redemption value (73,136 ) (108,209 )
Net loss attributable to common stockholders $ 63,843,259 $ 12,443,080 $ 98,865,656 $ 21,541,610
Net loss per common share:
Basic and diluted loss per common share $ (2.11 ) $ (0.73 ) $ (3,97 ) $ (1.54 )
Weighted average number of common shares outstanding, basic and diluted 30,308,685 16,950,275 24,874,910 13,974,197

 

Adjusted EBITDA

The table below presents our Adjusted EBITDA reconciled to our net loss, the closest U.S. GAAP measure, for the periods indicated:

Three Months Ended March 31, Nine Months Ended March 31,
2022 2021 2022 2021
Net income (loss) $ (63,569,495 ) $ (12,443,080 ) $ (98,456,505 ) $ (21,541,610 )
Adjusted for:
        Interest 611,021 5,368,933
        Income tax 431 (5,503,430 )
        Depreciation and amortization 3,343,725 882,951 10,026,191 1,687,161
        Shared based compensation expense 1,346,502 743,527 3,958,275 3,055,118
        Asset impairment charges 38,629,310 38,629,310
        Transaction related expenses 13,532 1,340,249 269,013 1,435,788
        Other non-operating cost 39,440 165,463 1,391,855 265,487
        Change in fair value of warrant liability (8,181,398 ) 5,358,313 (28,641,920 ) 4,729,924
        Change in fair value of derivative liability
on senior convertible note
20,573,051 22,055,672
        Loss on conversion of senior convertible
note
5,999,662
        Loss on extinguishment of senior
convertible note
28,478,804
        Change in fair value of contingent
consideration
(99,247 ) 1,305,804 (1,950,693 ) 1,305,804
Total adjusted EBITDA (loss) $ (7,293,128 ) $ (2,646,773 ) $ (18,374,833 ) $ (9,062,328 )

 

Non-GAAP Financial Measures
To supplement its consolidated financial statements, which are prepared and presented in accordance with Generally Accepted Accounting Principles (GAAP), the Company uses adjusted EBITDA, a non-GAAP financial measure. The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. The Company uses this non-GAAP financial measure for financial and operational decision making and as a means to evaluate period-to-period comparisons. The Company believes that it provides useful information about operating results, enhances the overall understanding of past financial performance and future prospects, and allows for greater transparency with respect to key metrics used by management in its financial and operational decision making. The non-GAAP financial measure used by the Company in this press release may be different from the methods used by other companies.

We define and calculate Adjusted EBITDA as net loss before the impact of interest income or expense, income tax expense or benefit, depreciation and amortization, and further adjusted for the following items: stock-based compensation, transaction-related costs, non-core litigation, settlement and related costs, remeasurement of warrant liabilities, and certain other non-recurring, non-cash or non-core items, as described in the reconciliation below.

Adjusted EBITDA excludes certain expenses that are required in accordance with U.S. GAAP because they are non-recurring items (for example, in the case of transaction-related costs), non-cash expenditures (for example, in the case of depreciation, amortization, and stock-based compensation), or are not related to our underlying business performance (for example, in the case of interest income and expense and litigation settlement and related costs).