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Esports Entertainment Group, Inc. (GMBL) SEC Filing 10-Q Quarterly Report for the period ending Thursday, September 30, 2021

Esports Entertainment Group, Inc.

CIK: 1451448 Ticker: GMBL

 

Exhibit 99.1

 

 

 

Esports Entertainment Group First Quarter

Revenue Rises 86% Q/Q to $16.4 Million

 

Year-over-Year and Quarterly Sequential Growth Continues

Reaffirms Fiscal 2022 Revenue Guidance of Over $100 Million

 

Hoboken, New Jersey – November xx, 2021 (GLOBE NEWSWIRE):

Esports Entertainment Group, Inc. (NasdaqCM: GMBL, GMBLW) (or the “Company”) today announced financial results for its fiscal 2022 first quarter ended September 30, 2021.

 

Fiscal First Quarter 2022 Financial Results

 

  Net revenue of $16.4 million, up $16.2 million compared to 1Q21 and an 86% increase compared to net revenue of $8.8 million in 4Q21
  Gross profit of $10.0 million, up $10.2 million compared to 1Q21 and a 92% increase compared to $5.2 million in 4Q21
  Gross margin of 61%, compared to 59% in 4Q21
  GAAP Net loss of $0.5 million, or $0.03 per share, compared to net loss of $1.8 million, or $0.15 per share in 1Q21, and net loss of $4.8 million, or $0.28 per share, in 4Q21
  Non-GAAP adjusted EBITDA* of ($2.7 million), compared to adjusted EBITDA of ($2.6 million) in 1Q21 and adjusted EBITDA of ($5.5 million) in 4Q21
  As of September 30, 2021, the Company had total cash and cash equivalents of $0.9 million
     

  Subsequent to the end of the quarter, the Company raised $8.0 million in gross proceeds via a preferred stock offering

 

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

 

First Quarter 2022 and Recent Operational Highlights

 

  Completed acquisition of BetHard, the B2C business of Gameday Group, which brought the Company gaming licenses in Sweden and Spain
  Submitted transactional waiver to the New Jersey Division of Gaming enforcement, which, pending final approval, would allow the Company to begin in-state betting operations
  Completed $8.0 million private placement of convertible notes with $17.50 conversion price
  Expanded roster of professional sports team partnerships with new agreements with the Indianapolis Colts, Tampa Bay Buccaneers and Los Angeles Chargers
  Launched fan-centered EGL ClubClash program with professional sports teams
  Partnered with Hall of Fame Resort and Entertainment Company to become the official esports provider for the Hall of Fame Village powered by Johnson Controls
  Entered into agreement to launch state-of-the-art Helix eSports gaming facility at UCLA
  Established content partnership with ESTV EsportsTV, the world’s first 24-7 live linear video channel dedicated to esports

 

 

 

 

  Partnered with NetEase to become official North American tournament and broadcast provider of Naraka: Bladepoint

 

Management Commentary

 

“Our first quarter revenue nearly matched our performance for the entirety of FY21 and reflects our recent platform building transactions. With the strong start to FY22 and continued momentum in our business, we are reiterating our expectation that Esports Entertainment will eclipse more than $100 million in revenue this fiscal year,” said Grant Johnson, CEO of Esports Entertainment Group. “The powerful combination of marquee partnerships, expansive portfolio of products and services and strategic acquisitions is expected to drive double digit year-over-year and quarterly sequential financial growth throughout fiscal 2022. We remain ideally positioned in iGaming and e-sports, two of the fastest growing entertainment verticals, and our team is focused on executing our rapid expansion strategy, which we expect will further strengthen our market position and allow us to scale and achieve operating leverage from our portfolio of unique and powerful assets.”

 

Fiscal 2022 Financial Outlook

 

The Company expects net revenue growth of at least 490% to $100 million in FY22, driven primarily by the platform-building and strategic diversification acquisitions completed in calendar 2021.

 

Conference Call

 

Esports Entertainment Group will host a conference call and webcast today, Monday, November 15, at 5:00 p.m. ET to answer questions about the Company’s operational and financial highlights for its fiscal 2022 first quarter as well as other recent developments.

 

Date:   Monday, November 15, 2021
Time:   5:00 p.m. Eastern Time
Live Call:   +1-866-269-4260 (U.S. Toll-Free) or +1-323-289-6576 (International)
Webcast:   https://viavid.webcasts.com/starthere.jsp?ei=1513062&tp_key=33147e4e48

 

For interested individuals unable to join the conference call, a dial-in replay of the call will be available until November 29 and can be accessed by dialing +1-844-512-2921 (U.S. Toll Free) or +1-412-317-6671 (International) and entering replay pin number: 8268937.

 

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/FIFA 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:

 

US Investor Relations

JCIR

Joseph Jaffoni, James Leahy, Norberto Aja

212-835-8500

gmbl@jcir.com

 

RedChip Companies, Inc.

Dave Gentry

407-491-4498

dave@redchip.com

 

Media Inquiries

 

brandon.apter@esportsentertainmentgroup.com

 

Investor Relations Inquiries

 

Jeff@esportsentertainmentgroup.com

 

 

 

 

Esports Entertainment Group, Inc.

Consolidated Balance Sheets

 

   September 30, 2021   June 30, 2021 
         
ASSETS          
           
Current assets          
Cash  $926,983   $19,917,196 
Restricted cash   2,945,654    3,443,172 
Accounts receivable, net   377,673    136,681 
Receivables reserved for users   5,061,768    2,290,105 
Other receivables   803,704    658,745 
Prepaid expenses and other current assets   2,922,104    3,264,344 
Total current assets   13,037,886    29,710,243 
           
Equipment, net   789,637    726,942 
Operating lease right-of-use asset   1,168,635    1,272,920 
Intangible assets, net   59,030,190    45,772,555 
Goodwill   52,328,021    40,937,370 
Other non-current assets   2,441,080    1,315,009 
           
TOTAL ASSETS  $128,795,449   $119,735,039 
           
LIABILITIES AND STOCKHOLDERS’ EQUITY          
           
Current liabilities          
Accounts payable and accrued expenses  $11,599,709   $8,458,689 
Payable for Bethard acqusition   4,629,388    - 
Liabilities to customers   6,116,869    3,057,942 
Deferred revenue   151,045    22,110 
Current portion of notes payable and other long-term debt   219,024    223,217 
Operating lease liability - current   375,628    414,215 
Contingent consideration - current   3,266,000    - 
Total current liabilities   26,357,662    12,176,173 
           
Senior convertible note, net of unamortized discount   7,941,998    6,302,504 
Notes payable and other long-term debt   165,599    221,300 
Warrant liability   11,691,400    23,500,000 
Deferred income taxes   5,503,861    1,870,861 
Operating lease liability - non-current   820,082    878,809 
Contingent consideration - non-current   2,583,480    - 
           
Total liabilities   55,064,083    44,949,647 
           
Stockholders’ equity          
Preferred stock $0.001 par value; 10,000,000 shares authorized, none issued and outstanding   -    - 
Common stock $0.001 par value; 500,000,000 shares authorized, 21,983,172 and 21,896,145 shares issued and outstanding as of September 30, 2021 and June 30, 2021, respectively   21,983    21,896 
Additional paid-in capital   123,264,256    122,341,002 
Accumulated deficit   (47,460,717)   (46,908,336)
Accumulated other comprehensive loss   (2,094,156)   (669,170)
Total stockholders’ equity  $73,731,366    74,785,392 
           
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY  $128,795,449   $119,735,039 

 

 

 

 

Esports Entertainment Group, Inc.

Consolidated Statements of Operations

 

   Three Months Ended September 30, 
   2021   2020 
         
Net revenue  $16,408,291   $222,392 
           
Operating costs and expenses:          
Cost of revenue   6,451,292    420,075 
Sales and marketing   7,386,463    604,118 
General and administrative   11,175,136    3,055,808 
Total operating expenses   25,012,891    4,080,001 
           
Operating loss   8,604,600    3,857,609 
           
Other income (expense):          
Interest expense   (2,345,196)   (1)
Change in fair value of warrant liability   11,808,600    2,100,953 
Other non-operating loss   (1,411,185)   (51,836)
Total other income   8,052,219    2,049,116 
           
Loss before income taxes   552,381    1,808,493 
           
Income tax benefit (expense)   -    - 
           
Net loss  $552,381   $1,808,493 
           
Basic and diluted loss per common share  $(0.03)  $(0.15)
Weighted average number of common shares outstanding, basic and diluted   21,954,892    12,173,038 

 

 

 

 

Adjusted EBITDA

 

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

 

Esports Entertainment Group, Inc.

 

Adjusted EBITDA 

 

   Three Months Ended September 30, 
   2021   2020 
         
Net income (loss)  $(552,381)  $(1,808,493)
           
Adjusted for:          
Interest   2,345,196    1 
Income tax   -    - 
Depreciation and amortization   3,342,352    266,448 
Shared based compensation   882,372    1,007,672 
Amortization of debt discount   1,639,494    - 
Transaction related expenses   63,000    - 
Other non-operating cost   1,411,185    51,836 
Change in fair value of warrant liability   (11,808,600)   (2,100,953)
Total adjusted EBITDA (loss)  $(2,677,382)  $(2,583,489)

 

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).

 

 

 

 


The following information was filed by Esports Entertainment Group, Inc. (GMBL) on Monday, November 15, 2021 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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Inside Esports Entertainment Group, Inc.'s 10-Q Quarterly Report:

Financial Statements, Disclosures and Schedules

Inside this 10-Q Quarterly Report

Cover
Condensed Consolidated Balance Sheets (Unaudited)
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical)
Condensed Consolidated Statements Of Comprehensive Income (Loss) (Unaudited)
Condensed Consolidated Statements Of Cash Flows (Unaudited)
Condensed Consolidated Statements Of Changes In Stockholders' Equity (Deficit) (Unaudited)
Condensed Consolidated Statements Of Operation(Unaudited)
Account Payable And Accrued Expenses
Account Payable And Accrued Expenses (Tables)
Business Acquisitions
Business Acquisitions (Details Narrative)
Business Acquisitions (Tables)
Commitments And Contingencies
Commitments And Contingencies (Details Narrative)
Equipment
Equipment (Details Narrative)
Equipment (Tables)
Equity
Equity (Details Narrative)
Equity (Tables)
Fair Value Measurements
Fair Value Measurements (Details Narrative)
Fair Value Measurements (Tables)
Goodwill And Intangible Assets
Goodwill And Intangible Assets (Details Narrative)
Goodwill And Intangible Assets (Tables)
Leases
Leases (Details Narrative)
Leases (Tables)
Long-Term Debt
Long-Term Debt (Details Narrative)
Long-Term Debt (Tables)
Nature Of Operations
Other Non-Current Assets
Other Non-Current Assets (Tables)
Other Receivables
Other Receivables (Tables)
Prepaid Expenses And Other Current Assets
Prepaid Expenses And Other Current Assets (Tables)
Related Party Transactions
Related Party Transactions (Details Narrative)
Revenue And Geographic Information
Revenue And Geographic Information (Tables)
Schedule Components Of Long-Term Debt (Details)
Schedule Of Account Payable And Accrued Expenses (Details)
Schedule Of Assets And Liabilities Related To Operating Leases (Details)
Schedule Of Disaggregated By Revenue (Details)
Schedule Of Equipment (Details)
Schedule Of Fair Value Of Acquired Intangible Assets (Details)
Schedule Of Fair Value Of Financial Instruments (Details)
Schedule Of Future Amortization Of Intangible Assets (Details)
Schedule Of Future Payments Of Long-Term Debt (Details)
Schedule Of Goodwill (Details)
Schedule Of Intangible Assets (Details)
Schedule Of Long-Lived Assets By Geography (Details)
Schedule Of Long-Term Debt (Details)
Schedule Of Maturity Of Operating Lease Liability (Details)
Schedule Of Other Non-Current Assets (Details)
Schedule Of Other Receivables (Details)
Schedule Of Preliminary Purchase Price Allocation Of Acquisition (Details)
Schedule Of Prepaid Expenses And Other Current Assets (Details)
Schedule Of Revenues With Customers Disaggregated By Geographical Area (Details)
Schedule Of Stock Option Activity (Details)
Schedule Of Unaudited Pro Forma Operating Results (Details)
Schedule Of Warrant Activity (Details)
Schedule Of Warrants Outstanding (Details)
Schedule Of Weighted Average Diluted Common Shares Outstanding (Details)
Schedule Of Weighted Average Remaining Lease Terms And Discount Rates (Details)
Subsequent Events
Subsequent Events (Details Narrative)
Summary Of Significant Accounting Policies
Summary Of Significant Accounting Policies (Details Narrative)
Summary Of Significant Accounting Policies (Policies)
Summary Of Significant Accounting Policies (Tables)
Summary Of The Changes In Level 3 Financial Instruments (Details)

Material Contracts, Statements, Certifications & more

Esports Entertainment Group, Inc. provided additional information to their SEC Filing as exhibits

Ticker: GMBL
CIK: 1451448
Form Type: 10-Q Quarterly Report
Accession Number: 0001493152-21-028740
Submitted to the SEC: Mon Nov 15 2021 5:14:53 PM EST
Accepted by the SEC: Mon Nov 15 2021
Period: Thursday, September 30, 2021
Industry: Amusement And Recreation Services

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